<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------------
FORM 8-K/A
CURRENT REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): SEPTEMBER 5, 1997
<TABLE>
<S> <C>
CHANCELLOR MEDIA CORPORATION CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
(Exact Name of Registrant as (Exact Name of Registrant as
Specified in Charter) Specified in Charter)
000-21570 333-32259
(Commission File No.) (Commission File No.)
75-2247099 75-2451687
(IRS Employer (IRS Employer
Identification No.) Identification No.)
DELAWARE DELAWARE
(State or Other Jurisdiction (State or Other Jurisdiction
of Incorporation) of Incorporation)
</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)
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<PAGE> 2
This Amendment (the "Amendment") to the Current Report on Form 8-K dated
September 5, 1997 and filed on September 17, 1997 (the "Original 8-K") by
Chancellor Media Corporation, a Delaware corporation formerly known as Evergreen
Media Corporation ("Chancellor Media") and Chancellor Media Corporation of Los
Angeles, a Delaware corporation formerly known as Evergreen Media Corporation of
Los Angeles ("CMCLA") is submitted to provide financial data related to the
consummation of the Amended and Restated Agreement and Plan of Merger, dated as
of February 19, 1997 and amended and restated as of July 31, 1997 (the "Merger
Agreement"), among Chancellor Broadcasting Company ("Chancellor"), Chancellor
Radio Broadcasting Company ("CRBC"), Evergreen Media Corporation ("Evergreen"),
Evergreen Mezzanine Holdings Corporation and Evergreen Media Corporation of Los
Angeles ("EMCLA").
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
7(a) Financial Statements of Businesses Acquired
Historical financial statements for (i) Chancellor and CRBC as of
December 31, 1995 and 1996 and June 30, 1997 and for the years ended
December 31, 1994, 1995 and 1996 and for the six months ended June 30,
1996 and 1997 and (ii) Trefoil Communications, Inc. as of December 31,
1994 and 1995 and for the years ended December 31, 1994 and 1995 and
for the period ended February 13, 1996 have been previously reported
by Chancellor Media and CMCLA pursuant to Chancellor Media's
Registration Statement on Form S-4 (Reg. No. 333-32677) and CMCLA's
Registration Statement on Form S-4 (Reg. No. 333-32259), including
documents incorporated by reference therein prior to the distribution
of the securities registered therein and thus, pursuant to General
Instruction B.3 of Form 8-K, are not required to be reported again in
this Current Report on Form 8-K.
7(b) Pro Forma Financial Information
The following pro forma financial statements reflecting the
transactions contemplated by the Merger Agreement are attached:
<TABLE>
<S> <C>
CHANCELLOR MEDIA CORPORATION AND SUBSIDIARIES:
Unaudited Pro Forma Condensed Combined Balance Sheet at
June 30, 1997.......................................... A-2
Unaudited Pro Forma Condensed Combined Statement of
Operations for the year ended December 31, 1996........ A-3
Unaudited Pro Forma Condensed Combined Statement of
Operations for the six months ended June 30, 1997...... A-4
Notes to Unaudited Pro Forma Condensed Combined Financial
Statements............................................. A-5
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES AND
SUBSIDIARIES:
Unaudited Pro Forma Condensed Combined Balance Sheet at
June 30, 1997.......................................... B-2
Unaudited Pro Forma Condensed Combined Statement of
Operations for the year ended December 31, 1996........ B-3
Unaudited Pro Forma Condensed Combined Statement of
Operations for the six months ended June 30, 1997...... B-4
Notes to Unaudited Pro Forma Condensed Combined Financial
Statements............................................. B-5
</TABLE>
2
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each
of the registrants has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
<TABLE>
<C> <C>
CHANCELLOR MEDIA CORPORATION CHANCELLOR MEDIA CORPORATION OF
LOS ANGELES
By: /s/ MATTHEW E. DEVINE By: /s/ MATTHEW E. DEVINE
- -------------------------------------------- --------------------------------------------
Matthew E. Devine Matthew E. Devine
Chief Financial Officer Chief Financial Officer
</TABLE>
Date: September 24, 1997
3
<PAGE> 4
PRO FORMA FINANCIAL INFORMATION
CHANCELLOR MEDIA CORPORATION
The unaudited pro forma condensed combined financial statements of
Chancellor Media Corporation presented herein are presented using the purchase
method of accounting for all acquisitions and reflect (i) the combination of
consolidated historical financial data of Evergreen, Chancellor, each of the
stations acquired in the completed transactions of each of Evergreen and
Chancellor and each of the stations to be acquired by Chancellor Media in the
pending transactions of Chancellor Media and (ii) the elimination of the
consolidated historical data of the stations sold in the completed transactions
of each of Evergreen and Chancellor and stations to be sold or swapped by
Chancellor Media in its pending transactions. The unaudited pro forma condensed
combined balance sheet data at June 30, 1997 presents adjustments for those
completed transactions of each of Evergreen and Chancellor consummated since
such date, the pending transactions of Chancellor Media and the financing
transactions of Chancellor and Evergreen and their subsidiaries as if each such
transaction had occurred at June 30, 1997. The unaudited pro forma condensed
combined statement of operations data for the twelve months ended December 31,
1996 and the six months ended June 30, 1997 present adjustments for the
following transactions as if each had occurred on January 1, 1996: (i) the
completed transactions of each of Evergreen and Chancellor, (ii) the 1996
Evergreen Offering (as defined), (iii) the 1996 Preferred Stock Conversion (as
defined), (iv) the Chancellor Offerings (as defined), (v) the pending
transactions of Chancellor Media and (vi) the financing transactions of
Chancellor and Evergreen and their subsidiaries. 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
proposed acquisition by Chancellor Media of Katz Media Group, Inc. because such
transaction has not yet been completed and does not constitute the acquisition
of a significant business for purposes of Rule 3-05 and Rule 11-01 of Regulation
S-X of the Commission's rules. Certain capitalized terms used herein without
definition have the meanings given to such terms in the Joint Proxy
Statement/Prospectus contained in Evergreen's Registration Statement on Form S-4
(Reg. No. 333-32677), filed August 1, 1997.
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 transactions and
the pending 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 transactions and the Chancellor Merger 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 Chancellor Media's management, all adjustments have been
made that are necessary to present fairly the pro forma data.
The unaudited pro forma condensed combined financial statements should be
read in conjunction with the respective financial statements and related notes
thereto of Chancellor and Evergreen which have been previously reported. The
unaudited pro forma condensed combined financial statements are presented for
illustrative purposes only and are not necessarily indicative of the results of
operations or financial position that would have been achieved had the
transactions reflected therein been consummated as of the dates indicated, or of
the results of operations or financial positions for any future periods or
dates.
A-1
<PAGE> 5
CHANCELLOR MEDIA CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AT JUNE 30, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
CHANCELLOR
EVERGREEN AS AS ADJUSTED PRO FORMA COMPANY AS PRO FORMA
ADJUSTED FOR FOR 1997 ADJUSTMENTS ADJUSTED FOR ADJUSTMENTS
1997 COMPLETED COMPLETED FOR THE THE FOR THE
EVERGREEN CHANCELLOR CHANCELLOR COMPLETED PENDING
TRANSACTIONS(1) TRANSACTIONS(2) MERGER TRANSACTIONS TRANSACTIONS
--------------- --------------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Current assets......................... $ 125,837 $ 83,334 $ -- $ 209,171 $ --
Property and equipment, net............ 67,239 74,321 -- 141,560 11,457(5)
Intangible assets, net................. 1,652,404 1,421,770 432,368(3) 3,789,987 429,043(5)
283,445(4)
Other assets........................... 37,038 22,524 (1,183)(3) 58,379 (8,350)(5)
---------- ---------- -------- ---------- --------
Total assets......................... $1,882,518 $1,601,949 $714,630 $4,199,097 $432,150
========== ========== ======== ========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Liabilities
Other current liabilities.............. $ 42,883 $ 36,142 $ -- $ 79,025 $ --
Long-term debt, excluding current
portion.............................. 908,059 957,344 29,000(3) 1,894,403 432,150(5)
Deferred tax liabilities (assets)...... 90,134 (443) 283,445(4) 373,136 --
Other liabilities...................... 902 997 -- 1,899 --
---------- ---------- -------- ---------- --------
Total liabilities.................... 1,041,978 994,040 312,445 2,348,463 432,150
Redeemable preferred stock............. -- 424,312 15,736(3) 440,048 --
STOCKHOLDERS' EQUITY:
Preferred stock........................ 299,500 -- -- 299,500 --
Common stock........................... 422 189 (16)(3) 595 --
Additional paid in capital............. 651,383 245,595 324,278(3) 1,221,256 --
Accumulated deficit.................... (110,765) (61,149) 61,149(3) (110,765) --
Treasury stock......................... -- (1,038) 1,038(3) -- --
---------- ---------- -------- ---------- --------
Total stockholders' equity........... 840,540 183,597 386,449 1,410,586 --
---------- ---------- -------- ---------- --------
Total liabilities and stockholders'
equity............................ $1,882,518 $1,601,949 $714,630 $4,199,097 $432,150
========== ========== ======== ========== ========
<CAPTION>
COMPANY
PRO FORMA
COMBINED
----------
<S> <C>
ASSETS:
Current assets......................... $ 209,171
Property and equipment, net............ 153,017
Intangible assets, net................. 4,219,030(6)
Other assets........................... 50,029
----------
Total assets......................... $4,631,247
==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Liabilities
Other current liabilities.............. $ 79,025
Long-term debt, excluding current
portion.............................. 2,326,553
Deferred tax liabilities (assets)...... 373,136
Other liabilities...................... 1,899
----------
Total liabilities.................... 2,780,613
Redeemable preferred stock............. 440,048
STOCKHOLDERS' EQUITY:
Preferred stock........................ 299,500
Common stock........................... 595
Additional paid in capital............. 1,221,256
Accumulated deficit.................... (110,765)
Treasury stock......................... --
----------
Total stockholders' equity........... 1,410,586
----------
Total liabilities and stockholders'
equity............................ $4,631,247
==========
</TABLE>
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial
Statements
A-2
<PAGE> 6
CHANCELLOR 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>
EVERGREEN AS CHANCELLOR AS PRO FORMA COMPANY
ADJUSTED FOR ADJUSTED FOR ADJUSTMENTS AS ADJUSTED
COMPLETED COMPLETED FOR THE FOR THE
EVERGREEN CHANCELLOR CHANCELLOR COMPLETED
YEAR ENDED DECEMBER 31, 1996 TRANSACTIONS(7) TRANSACTIONS(8) MERGER TRANSACTIONS
---------------------------- --------------- --------------- ----------- ---------------
<S> <C> <C> <C> <C>
Gross revenues.................................... $441,266 $328,522 $ -- $ 769,788
Less: agency commissions.......................... (58,631) (43,553) -- (102,184)
-------- -------- --------- ---------
Net revenues...................................... 382,635 284,969 -- 667,604
Station operating expenses excluding depreciation
and amortization................................ 216,340 172,729 -- 389,069
Depreciation and amortization..................... 156,605 46,909 104,689(9) 308,203
Corporate general and administrative expenses..... 8,065 5,657 (832)(10) 12,890
Stock option compensation......................... -- 3,800 -- 3,800
-------- -------- --------- ---------
Operating income (loss)........................... 1,625 55,874 (103,857) (46,358)
Interest expense.................................. 70,229 82,655 (12,026)(12) 140,858
Other (income) expense............................ (1,359) (148) -- (1,507)
-------- -------- --------- ---------
Income (loss) before income taxes................. (67,245) (26,633) (91,831) (185,709)
Income tax expense (benefit)...................... (17,930) (6,653) (26,708)(13) (51,291)
Dividends and accretion on preferred stock of
subsidiary...................................... -- 38,400 -- 38,400
-------- -------- --------- ---------
Net income (loss)................................. (49,315) (58,380) (65,123) (172,818)
Preferred stock dividends......................... 17,970 7,700 -- 25,670
-------- -------- --------- ---------
Income (loss) attributable to common
stockholders.................................... $(67,285) $(66,080) $ (65,123) $(198,488)
======== ======== ========= =========
Income (loss) per common share.................... $ (1.60)
========
Weighted average common shares outstanding........ 42,155 17,265
======== =========
Broadcast cash flow............................... $166,295 $112,240 $ -- $ 278,535
======== ======== ========= =========
<CAPTION>
PRO FORMA
ADJUSTMENTS
PENDING FOR THE COMPANY
TRANSACTIONS PENDING PRO FORMA
YEAR ENDED DECEMBER 31, 1996 HISTORICAL(14) TRANSACTIONS COMBINED
---------------------------- -------------- ------------ ---------
<S> <C> <C> <C>
Gross revenues.................................... $ 77,200 $ (1,963)(15) $ 845,025
Less: agency commissions.......................... (11,640) -- (113,824)
-------- -------- ---------
Net revenues...................................... 65,560 (1,963) 731,201
Station operating expenses excluding depreciation
and amortization................................ 35,637 (4,000)(15) 420,706
Depreciation and amortization..................... 2,468 25,417(16) 336,088
Corporate general and administrative expenses..... 1,024 -- 13,914
Stock option compensation......................... -- -- 3,800
-------- -------- ---------
Operating income (loss)........................... 26,431 (23,380) (43,307)
Interest expense.................................. (367) 30,835(17) 171,326
Other (income) expense............................ 360 -- (1,147)
-------- -------- ---------
Income (loss) before income taxes................. 26,438 (54,215) (213,486)
Income tax expense (benefit)...................... -- (9,722)(18) (61,013)
Dividends and accretion on preferred stock of
subsidiary...................................... -- -- 38,400
-------- -------- ---------
Net income (loss)................................. 26,438 (44,493) (190,873)
Preferred stock dividends......................... -- -- 25,670
-------- -------- ---------
Income (loss) attributable to common
stockholders.................................... $ 26,438 $(44,493) $(216,543)
======== ======== =========
Income (loss) per common share.................... $ (3.64)
=========
Weighted average common shares outstanding........ 59,420
=========
Broadcast cash flow............................... $ 29,923 $ 2,037 $ 310,495
======== ======== =========
</TABLE>
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial
Statements
A-3
<PAGE> 7
CHANCELLOR MEDIA CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
EVERGREEN AS CHANCELLOR AS PRO FORMA COMPANY
ADJUSTED FOR ADJUSTED FOR ADJUSTMENTS AS ADJUSTED
COMPLETED COMPLETED FOR THE FOR THE
EVERGREEN CHANCELLOR CHANCELLOR COMPLETED
SIX MONTHS ENDED JUNE 30, 1997 TRANSACTIONS(7) TRANSACTIONS(8) MERGER TRANSACTIONS
- ------------------------------ --------------- --------------- ----------- ------------
<S> <C> <C> <C> <C>
Gross revenues.................................... $249,578 $176,189 $ -- $425,767
Less: agency commissions.......................... (32,722) (22,252) -- (54,974)
-------- -------- -------- --------
Net revenues...................................... 216,856 153,937 -- 370,793
Station operating expenses excluding depreciation
and amortization................................ 121,767 91,833 -- 213,600
Depreciation and amortization..................... 77,061 23,237 52,913(9) 153,211
Corporate general and administrative expenses..... 5,781 4,058 (675)(10) 9,164
Merger expense.................................... -- 2,515 (2,515)(11) --
Stock option compensation......................... -- 1,900 -- 1,900
-------- -------- -------- --------
Operating income (loss)........................... 12,247 30,394 (49,723) (7,082)
Interest expense.................................. 33,946 40,614 (4,131)(12) 70,429
Other (income) expense............................ (12,460) (1,607) -- (14,067)
-------- -------- -------- --------
Income (loss) before income taxes................. (9,239) (8,613) (45,592) (63,444)
Income tax expense (benefit)...................... (431) (1,445) (13,476)(13) (15,352)
Dividends and accretion on preferred stock of
subsidiary...................................... -- 19,626 -- 19,626
-------- -------- -------- --------
Net income (loss)................................. (8,808) (26,794) (32,116) (67,718)
Preferred stock dividends......................... 8,986 3,850 -- 12,836
-------- -------- -------- --------
Income (loss) attributable to common
stockholders.................................... $(17,794) $(30,644) $(32,116) $(80,554)
======== ======== ======== ========
Income (loss) per common share.................... $ (0.42)
========
Weighted average common shares outstanding........ 42,208 17,265
======== ========
Broadcast cash flow............................... $ 95,089 $ 62,104 $ -- $157,193
======== ======== ======== ========
<CAPTION>
PRO FORMA
ADJUSTMENTS
PENDING FOR THE COMPANY
TRANSACTIONS PENDING PRO FORMA
SIX MONTHS ENDED JUNE 30, 1997 HISTORICAL(14) TRANSACTIONS COMBINED
- ------------------------------ -------------- ------------ ---------
<S> <C> <C> <C>
Gross revenues..................... $31,881 $ (2,000)(15) $455,648
Less: agency commissions........... (4,705) -- (59,679)
------- -------- --------
Net revenues....................... 27,176 (2,000) 395,969
Station operating expenses excludin
and amortization................. 18,272 (2,476)(15) 229,396
Depreciation and amortization...... (370) 12,887(16) 165,728
Corporate general and administrativ -- -- 9,164
Merger expense..................... -- -- --
Stock option compensation.......... -- -- 1,900
------- -------- --------
Operating income (loss)............ 9,274 (12,411) (10,219)
Interest expense................... -- 15,418(17) 85,847
Other (income) expense............. (65) -- (14,132)
------- -------- --------
Income (loss) before income taxes.. 9,339 (27,829) (81,934)
Income tax expense (benefit)....... -- (6,471)(18) (21,823)
Dividends and accretion on preferre
subsidiary....................... -- -- 19,626
------- -------- --------
Net income (loss).................. 9,339 (21,358) (79,737)
Preferred stock dividends.......... -- -- 12,836
------- -------- --------
Income (loss) attributable to commo
stockholders..................... $ 9,339 $(21,358) $(92,573)
======= ======== ========
Income (loss) per common share..... ($ 1.56)
========
Weighted average common shares outs 59,473
========
Broadcast cash flow................ $ 8,904 $ 476 $166,573
======= ======== ========
</TABLE>
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial
Statements
A-4
<PAGE> 8
ADJUSTMENTS TO EVERGREEN'S HISTORICAL CONDENSED COMBINED BALANCE SHEET RELATED
TO THE 1997 COMPLETED EVERGREEN TRANSACTIONS COMPLETED AFTER JUNE 30, 1997
(1) The historical balance sheet of Evergreen at June 30, 1997 and the pro forma
adjustments related to the 1997 Completed Evergreen Transactions that were
completed after June 30, 1997 is summarized below:
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS EVERGREEN AS
FOR ADJUSTED FOR
EVERGREEN 1997 COMPLETED 1997 COMPLETED
HISTORICAL EVERGREEN EVERGREEN
AT 6/30/97 TRANSACTIONS TRANSACTIONS
---------- -------------- --------------
<S> <C> <C> <C>
ASSETS:
Current assets............................... $ 112,339 $ 13,498(a) $ 125,837
Property and equipment, net.................. 64,817 2,422(a) 67,239
Intangible assets, net....................... 1,183,569 468,835(a) 1,652,404
Assets held for sale......................... 50,000 (50,000)(a) --
Other assets................................. 72,788 (35,750)(a) 37,038
---------- -------- ----------
Total assets.............................. $1,483,513 $399,005 $1,882,518
========== ======== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Liabilities:
Other current liabilities.................... $ 32,994 $ 9,889(a) $ 42,883
Long-term debt, excluding current portion.... 525,000 383,059(a) 908,059
Deferred tax liability....................... 88,014 2,120(a) 90,134
Other liabilities............................ 902 -- 902
---------- -------- ----------
Total liabilities......................... 646,910 395,068 1,041,978
Stockholders' equity:
Preferred stock.............................. 299,500 -- 299,500
Common stock................................. 422 -- 422
Additional paid-in capital................... 651,383 -- 651,383
Accumulated deficit.......................... (114,702) 3,937(a) (110,765)
---------- -------- ----------
Total stockholders' equity................ 836,603 3,937 840,540
---------- -------- ----------
Total liabilities and stockholders'
equity.................................. $1,483,513 $399,005 $1,882,518
========== ======== ==========
</TABLE>
A-5
<PAGE> 9
(a) Reflects the 1997 Completed Evergreen Transactions that were completed after
June 30, 1997 as follows:
<TABLE>
<CAPTION>
PURCHASE PRICE ALLOCATION
--------------------------------------------------------------------------------------------------------
PROPERTY AND ASSETS DEFERRED
1997 COMPLETED PURCHASE CURRENT EQUIPMENT, HELD INTANGIBLE CURRENT TAX ACCUMULATED
EVERGREEN TRANSACTIONS PRICE ASSETS NET(i) FOR SALE ASSETS, NET(i) LIABILITIES LIABILITIES DEFICIT
- ---------------------- -------- ------- ------------ -------- --------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Evergreen Viacom
Acquisition(ii)...... $612,388 $13,498 $3,607 $ 81,000 $518,093 $(3,810) $ -- $ --
WJZW-FM(iii)........... (68,000) -- -- (68,000) -- -- -- --
San Francisco
Frequency(iv)........ (44,000) -- (262) -- (41,012) -- (954) (1,772)
KDFC-FM(v)............. (50,000) -- -- (50,000) -- -- -- --
WBZS-AM, WZHF-AM,
KDFC-AM(vi).......... (18,000) -- (198) (13,000) (4,802) -- -- --
WEJM-AM(vii)........... (7,500) -- (725) -- (3,444) -- (1,166) (2,165)
-------- ------- ------ -------- -------- ------- ------- -------
Total........... $424,888 $13,498 $2,422 $(50,000) $468,835 $(3,810) $(2,120) $(3,937)
======== ======= ====== ======== ======== ======= ======= =======
<CAPTION>
FINANCING
----------------------------------------
(INCREASE) INCREASE INCREASE
DECREASE IN (DECREASE) IN
1997 COMPLETED IN OTHER CURRENT LONG-TERM
EVERGREEN TRANSACTIONS ASSETS LIABILITIES DEBT
- ---------------------- ---------- ----------- -------------
<S> <C> <C> <C>
Evergreen Viacom
Acquisition(ii)...... $ 53,750 $ 6,079 $552,559
WJZW-FM(iii)........... -- -- (68,000)
San Francisco
Frequency(iv)........ -- -- (44,000)
KDFC-FM(v)............. -- -- (50,000)
WBZS-AM, WZHF-AM,
KDFC-AM(vi).......... (18,000) -- --
WEJM-AM(vii)........... -- -- (7,500)
-------- ------- --------
Total........... $ 35,750 $ 6,079 $383,059
======== ======= ========
</TABLE>
A-6
<PAGE> 10
- ---------------
(i) Evergreen has assumed that historical balances of net property and
equipment acquired approximate fair value for the preliminary
allocation of the purchase price. Such amounts are based primarily
on information provided by the management of Viacom. Evergreen, on
a preliminary basis, has allocated the $518,093 of intangible
assets related to the Evergreen Viacom Acquisition to broadcast
licenses. This preliminary allocation is based on historical
information from prior acquisitions.
(ii) On July 2, 1997, Evergreen acquired, in the Evergreen Viacom
Acquisition, WLTW-FM and WAXQ-FM in New York and WMZQ-FM, WJZW-FM,
WZHF-AM, and WBZS-AM in Washington, D.C. for approximately
$612,388 in cash including various other direct acquisition costs.
The Evergreen Viacom Acquisition was financed with (i) bank
borrowings under the Senior Credit Facility of $552,559; (ii)
$53,750 in escrow funds paid by Evergreen on February 19, 1997 and
classified as other assets at June 30, 1997 and (iii) $6,079
financed through working capital. In June 1997, Evergreen issued
5,990,000 shares of $3.00 Convertible Exchangeable Preferred Stock
for net proceeds of approximately $287,808 which were used to
repay borrowings under the Senior Credit Facility and subsequently
were reborrowed on July 2, 1997 as part of the financing of the
Evergreen Viacom Acquisition. The assets of WJZW-FM, WZHF-AM, and
WBZS-AM in Washington, D.C. are classified as assets held for sale
in connection with the purchase price allocation of the Evergreen
Viacom Acquisition (see (iii) and (vi) below).
(iii) On July 7, 1997, Evergreen sold, in the ABC/Washington
Disposition, WJZW-FM in Washington (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 was recognized by Evergreen upon consummation
of the sale.
(iv) On July 7, 1997, Evergreen sold, 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 and recognized a gain of
$1,772, net of taxes of $954.
(v) On July 21, 1997, Evergreen sold, in the Bonneville/KDFC
Disposition, KDFC-FM in San Francisco for $50,000 in cash. The
assets of KDFC-FM are classified as assets held for sale at June
30, 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 was recognized by Evergreen upon consummation of the
KDFC-FM sale.
(vi) On August 13, 1997, Evergreen sold, in the Douglas AM Dispositions,
WBZS-AM and WZHF-AM in Washington (acquired as part of the
Evergreen Viacom Acquisition) and KDFC-AM in San Francisco for
$5,500, $7,500 and $5,000, respectively, payable in the form of a
promissory note in the aggregate amount of $18,000. The assets of
WBZS-AM and WZHF-AM are classified as assets held for sale in
connection with the purchase price allocation of the Evergreen
Viacom Acquisition and no gain or loss was recognized by Evergreen
upon consummation of the sale.
(vii) On August 26, 1997, Evergreen sold, in the Douglas Chicago
Disposition, WEJM-AM in Chicago for $7,500 in cash and recognized
a gain of $2,165, net of taxes of $1,166.
A-7
<PAGE> 11
ADJUSTMENTS TO CHANCELLOR'S HISTORICAL CONDENSED COMBINED BALANCE SHEET RELATED
TO THE 1997 COMPLETED CHANCELLOR TRANSACTIONS COMPLETED AFTER JUNE 30, 1997
(2) The historical balance sheet of Chancellor at June 30, 1997 and the pro
forma adjustments related to the 1997 Completed Chancellor Transactions that
were completed after June 30, 1997 are summarized below:
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS CHANCELLOR AS
FOR ADJUSTED FOR
CHANCELLOR 1997 COMPLETED 1997 COMPLETED
HISTORICAL CHANCELLOR CHANCELLOR
AT 6/30/97 TRANSACTIONS TRANSACTIONS
---------- -------------- --------------
<S> <C> <C> <C>
ASSETS:
Current assets............................... $ 72,352 $ 10,982(a) $ 83,334
Property and equipment, net.................. 69,581 4,740(a) 74,321
Intangible assets, net....................... 970,080 451,690(a) 1,421,770
Other assets................................. 71,760 (53,750)(a) 22,524
4,514(c)
---------- -------- ----------
Total assets............................... $1,183,773 $418,176 $1,601,949
========== ======== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Liabilities:
Current portion of long-term debt............ $ 1,928 $ (1,928)(b) $ --
Other current liabilities.................... 26,939 9,203(a) 36,142
---------- -------- ----------
Total current liabilities.................. 28,867 7,275 36,142
Long-term debt, excluding current portion.... 545,335 404,459(a) 957,344
5,622(c)
1,928(b)
Deferred tax liability....................... -- (443)(c) (443)
Other liabilities............................ 997 -- 997
---------- -------- ----------
Total liabilities.......................... 575,199 418,841 994,040
Redeemable preferred stock................... 424,312 -- 424,312
STOCKHOLDERS' EQUITY:
Common stock................................. 189 -- 189
Additional paid-in capital................... 245,595 -- 245,595
Accumulated deficit.......................... (60,484) (665)(c) (61,149)
Treasury stock............................... (1,038) -- (1,038)
---------- -------- ----------
Total stockholders' equity................. 184,262 (665) 183,597
---------- -------- ----------
Total liabilities and stockholders'
equity.................................. $1,183,773 $418,176 $1,601,949
========== ======== ==========
</TABLE>
(a) Reflects the 1997 Completed Chancellor Transactions that were completed
after June 30, 1997 as follows:
<TABLE>
<CAPTION>
PURCHASE PRICE ALLOCATION FINANCING
---------------------------------------------------------- ----------------------
PROPERTY INCREASE
PURCHASE/ AND ASSETS INTANGIBLE DECREASE IN
1997 COMPLETED (SALES) CURRENT EQUIPMENT, HELD ASSETS, CURRENT IN OTHER CURRENT
CHANCELLOR TRANSACTIONS PRICE ASSETS NET FOR SALE NET LIABILITIES ASSETS LIABILITIES
----------------------- --------- ------- ---------- -------- ---------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Chancellor Viacom
Acquisition(i)............. $500,789 $10,982 $4,740 $ 37,000 $451,690 $(3,623) $53,750 $5,580
WDRQ-FM(ii).................. (37,000) -- -- (37,000) -- -- -- --
-------- ------- ------ -------- -------- ------- ------- ------
Total................ $463,789 $10,982 $4,740 $ -- $451,690 $(3,623) $53,750 $5,580
======== ======= ====== ======== ======== ======= ======= ======
<CAPTION>
FINANCING
-------------
INCREASE
(DECREASE) IN
1997 COMPLETED LONG-TERM
CHANCELLOR TRANSACTIONS DEBT
----------------------- -------------
<S> <C>
Chancellor Viacom
Acquisition(i)............. $441,459
WDRQ-FM(ii).................. (37,000)
--------
Total................ $404,459
========
</TABLE>
- ---------------
(i) On July 2, 1997, Chancellor acquired, in the Chancellor Viacom
Acquisition, KIBB-FM and KYSR-FM in Los Angeles, WLIT-FM in Chicago and
WDRQ-FM in Detroit for approximately $500,789 in cash including various
other direct acquisition costs. The Chancellor Viacom Acquisition was
financed with (i) bank borrowings of $273,159 under the CRBC Restated
Credit Agreement; (ii) borrowings under the Chancellor Interim
Financing of $168,300; (iii) escrow funds of $53,750 paid by Chancellor
on February 19, 1997 and classified as other assets at June 30, 1997
and (iv) $5,580 financed through working
A-8
<PAGE> 12
capital. The assets of WDRQ-FM in Detroit are classified as assets held for sale
in connection with the purchase price allocation of the Chancellor Viacom
Acquisition (see (ii) below). 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. The intangible assets
of $451,690 have been allocated to broadcast licenses on a preliminary
basis. This preliminary allocation is based on historical information
from prior acquisitions.
(ii) On August 11, 1997, Chancellor sold, in the ABC/Detroit Disposition,
WDRQ-FM in Detroit (acquired as part of the Chancellor Viacom
Acquisition) for $37,000 in cash. The net proceeds from the sale of
WDRQ-FM were used to repay borrowings under the Chancellor Interim
Financing. 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 was recognized by
Chancellor upon consummation of the sale.
(b) On July 2, 1997, Chancellor refinanced its senior credit agreement (the
"CRBC Restated Credit Agreement") in connection with the Chancellor Viacom
Acquisition. The CRBC Restated Credit Agreement consists of a $400,000 term
loan facility and a $350,000 revolving loan facility. Reflects the $1,928
adjustment to decrease current maturities of long-term debt under the CRBC
Restated Credit Agreement to $0.
(c) Reflects (i) the adjustment to write-off the unamortized balance of deferred
loan fees of $665 (net of a tax benefit of $443) at June 30, 1997 related to
CRBC's previous senior credit agreement as an extraordinary item and (ii)
the adjustment to record new loan fees of $5,622 incurred in connection with
the CRBC Restated Credit Agreement and Chancellor Interim Financing on July
2, 1997 and financed through additional bank borrowings under such
agreement.
ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET RELATED TO
THE CHANCELLOR MERGER
(3) Merger Purchase Price Information. In connection with the Chancellor Merger,
each outstanding share of Chancellor Common Stock was converted into the
right to receive 0.9091 shares of Chancellor Media Common Stock. For
purposes of the unaudited pro forma condensed combined financial statements,
the fair market value of Chancellor Media Common Stock is calculated by
using $31.00 per share which is based on the market price of Evergreen Class
A Common Stock on or 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............... 18,991,513
Exchange ratio.............................................. .9091
----------
Shares of Chancellor Media Common Stock issued in connection
with the Chancellor Merger................................ 17,265,184
==========
AGGREGATE PURCHASE PRICE:
Estimated fair value of Chancellor Media Common Stock issued in
connection with the Chancellor Merger (17,265,184 shares @ $31.00
per share)......................................................... $ 535,221
Chancellor debt and equity assumed at fair values:
Long-term debt outstanding:
Term Loan.............................................. 424,344
9 3/8% Senior Subordinated Notes due 2004.............. 200,000
8 3/4% Senior Subordinated Notes due 2007.............. 200,000
Chancellor Interim Financing........................... 133,000
-------
Total long-term debt outstanding................................... 957,344
12 1/4% Series A Senior Cumulative Exchangeable Preferred Stock.... 117,670
12% Junior Exchangeable Preferred Stock............................ 210,774
7% Convertible Preferred Stock..................................... 111,604
Stock options issued to Chancellor stock option holders............ 34,825
Financial advisors, legal, accounting and other professional
fees............................................................ 29,000
----------
Aggregate purchase price........................................... $1,996,438
==========
</TABLE>
A-9
<PAGE> 13
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........................ $ 83,334 $ (83,334) $ -- $ --
Property and equipment, net(a)........ 74,321 (74,321) -- --
Intangible assets(a).................. 1,854,138 (1,421,770) -- 432,368
Other assets(b)....................... 21,341 (22,524) -- (1,183)
Current liabilities................... (36,142) 36,142 -- --
Long-term debt........................ -- 957,344 (986,344)(c) (29,000)
Deferred tax liability................ 443 (443) -- --
Other liabilities..................... (997) 997 -- --
Redeemable preferred stock............ -- 424,312 (440,048)(d) (15,736)
Common stock.......................... -- 189 (173)(e) 16
Additional paid-in capital............ -- 245,595 (569,873)(f) (324,278)
Accumulated deficit................... -- (61,149) -- (61,149)
Treasury stock........................ -- (1,038)(g) -- (1,038)
---------- ----------- ----------- ---------
Aggregate Purchase Price.............. $1,996,438 $ -- $(1,996,438) $ --
========== =========== =========== =========
</TABLE>
- ---------------
(a) Evergreen has assumed that historical balances of net property and equipment
acquired approximate fair value for the preliminary allocation of the
purchase price. Evergreen, on a preliminary basis, has allocated the
$1,854,138 of intangible assets to broadcast licenses. This preliminary
allocation is based upon historical information from prior acquisitions and
appraisals provided by the management of Chancellor.
(b) The difference in the estimated fair value of other assets and the
historical balance of other assets represents Chancellor's historical
deferred tax asset balance of $1,183 at June 30, 1997. The deferred tax
liability will be revalued to reflect the difference between the financial
statement carrying amount and the tax basis of Chancellor acquired assets
(see (4)).
(c) Reflects the adjustment to record debt assumed or incurred by Chancellor
Media including (i) Chancellor's and CRBC's long-term debt of $957,344 and
(ii) additional bank borrowings of $29,000 required to finance estimated
financial advisors, legal, accounting and other professional fees.
(d) Reflects the adjustment to record the estimated fair value of redeemable
preferred stock to be issued (a) by CMCLA in exchange for (i) CRBC's 12 1/4%
Series A Senior Cumulative Exchangeable Preferred Stock of $117,670
(including accrued and unpaid dividends of $17,670) and (ii) CRBC's 12%
Junior Exchangeable Preferred Stock of $210,774 (including accrued and
unpaid dividends of $10,774) and (b) by Chancellor Media in exchange for
Chancellor's 7% Convertible Preferred Stock of $111,604 (including accrued
and unpaid dividends of $1,604).
(e) Reflects 17,265,184 shares of the Chancellor Media Common Stock at a par
value of $0.01 issued in connection with the Chancellor Merger.
(f) Reflects additional paid-in capital of $535,048 related to 17,265,184 shares
of the Chancellor Media Common Stock issued in connection with the
Chancellor Merger and the fair value of stock options assumed by Chancellor
Media of $34,825. The $34,825 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 June 30, 1997, Chancellor had 1,990,259 options
outstanding with exercise prices ranging from $7.50 to $36.75.
(g) Reflects the elimination of Chancellor's treasury stock which was cancelled
and retired upon consummation of the Chancellor Merger.
A-10
<PAGE> 14
(4) To record a $283,445 deferred tax liability related to the difference
between the financial statement carrying amount and the tax basis of
Chancellor acquired assets.
ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET RELATED TO
THE PENDING CHANCELLOR MEDIA TRANSACTIONS
(5) Reflects the Pending Chancellor Media Transactions as follows:
<TABLE>
<CAPTION>
DECREASE
PROPERTY AND IN INCREASE IN
PURCHASE EQUIPMENT, INTANGIBLE OTHER LONG-TERM
PENDING CHANCELLOR MEDIA TRANSACTIONS PRICE NET(a) ASSETS, NET(a) ASSETS DEBT
------------------------------------- -------- ------------ --------------- -------- -----------
<S> <C> <C> <C> <C> <C>
WBAB-FM, WBLI-FM, WBGG-AM,
WHFM-FM(b)......................................... $11,000 $ 1,494 $ 9,506 $ -- $ 11,000
Gannett(c)........................................... 340,000 5,376 334,624 -- 340,000
Chicago/Dallas Exchange(d)........................... 3,500 3,255 245 8,350 (4,850)
KXPK-FM(e)........................................... 26,000 477 25,523 -- 26,000
Bonneville Option(f)................................. 60,000 855 59,145 -- 60,000
-------- ------- -------- ------ --------
Total........................................ $440,500 $11,457 $429,043 $8,350 $432,150
======== ======= ======== ====== ========
</TABLE>
- ---------------
(a) Chancellor Media has assumed that historical balances of net property and
equipment 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 Chancellor
Media Pending Transactions. Chancellor Media, on a preliminary basis, has
allocated the $429,043 of intangible assets related to the Chancellor Media
Pending Transactions to broadcast licenses. This preliminary allocation is
based on historical information from prior acquisitions.
(b) 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 8 (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 (consisting of broadcast licenses) are based upon
preliminary appraisals of the assets to be acquired.
(c) On April 4, 1997, Evergreen 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 for
$340,000 in cash. 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.
(d) On June 24, 1997, Evergreen entered into an agreement to acquire, in the
Bonneville Acquisition, KZPS-FM and KDGE-FM in Dallas for $83,500 in cash.
On June 29, 1997, Evergreen paid $8,350 in escrow funds which are classified
as other assets at June 30, 1997. On July 14, 1997, Evergreen completed the
disposition of WLUP-FM in Chicago to Bonneville and placed $80,000 in a
trust pending the completion of the deferred exchange of the WLUP-FM in
Chicago and an additional $3,500 in cash for KZPS-FM and KDGE-FM in Dallas
(the "Chicago/Dallas Exchange"). The Chicago/Dallas Exchange will be
accounted for as a like-kind exchange and no gain or loss will be recognized
upon the consummation of the exchange. The decrease in long-term debt of
$4,850 represents the refund of $8,350 in escrow funds previously paid by
Evergreen less $3,500 in cash boot owed to Bonneville.
(e) On July 30, 1997, Chancellor entered into an agreement to acquire, in the
Denver Acquisition, KXPK-FM in Denver from Evergreen Wireless LLC (which is
unrelated to Evergreen) for $26,000 in cash and paid $1,650 in escrow funds
which were classified as other assets.
(f) On August 6, 1997, Evergreen and Chancellor announced that they had paid
$3,000 to Bonneville for an option to exchange Evergreen's station WTOP-AM
in Washington and Chancellor's stations KZLA-FM in Los Angeles and WGMS-FM
in Washington plus an additional $57,000 in cash for Bonneville's stations
WDBZ-FM in New York, KLDE-FM in Houston and KBIG-FM in Los Angeles (the
"Bonneville Option"). As of September 10, 1997, the Bonneville Option had
not been exercised. The Bonneville Option expires on December 31, 1997.
A-11
<PAGE> 15
(6) The Company Pro Forma Combined intangible assets of $4,219,030 consists of
the following at June 30, 1997:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIFE
-----------
<S> <C> <C>
Broadcast licenses.......................................... 15-40 $3,662,214
Goodwill.................................................... 15-40 413,612
Other intangibles........................................... 1-40 382,179
----------
$4,458,005
Less: accumulated amortization.............................. (238,975)
----------
Net intangible assets....................................... $4,219,030
==========
</TABLE>
Evergreen discloses broadcast license value separately from goodwill and
amortizes such intangible assets over an estimated average life of 15 years,
whereas, Chancellor groups all broadcast license value with goodwill and
amortizes such intangibles assets over an estimated average life of 40 years. In
connection with the application of purchase accounting for the Chancellor
Merger, broadcast license value and goodwill have been separately identified and
disclosed and amortized over an estimated average life of 15 years in accordance
with Evergreen's policies and procedures. The intangible assets have been
treated in a consistent manner for the Combined Company in the Unaudited
Combined Condensed Pro Forma Financial Statements and, following the
consummation of the Chancellor Merger, will be accounted for similarly in the
Chancellor Media's financial statements.
Evergreen amortizes such intangible assets using the straight-line method
over estimated useful lives ranging from 1 to 40 years. Evergreen continually
evaluates the propriety of the carrying amount of goodwill and other intangible
assets as well as the amortization period to determine whether current events or
circumstances warrant adjustments to the carrying value and/or revised estimates
of useful lives. This evaluation consists of the projection of undiscounted
operating income before depreciation, amortization, nonrecurring charges and
interest for each of Evergreen's radio stations over the remaining amortization
periods of the related intangible assets. The projections are based on a
historical trend line of actual results since the acquisitions of the respective
stations adjusted for expected changes in operating results. To the extent such
projections indicate that undiscounted operating income is not expected to be
adequate to recover the carrying amounts of the related intangible assets, such
carrying amounts are written down by charges to expense.
A-12
<PAGE> 16
EVERGREEN'S HISTORICAL CONDENSED COMBINED STATEMENTS OF OPERATIONS AND
ADJUSTMENTS RELATED TO THE COMPLETED EVERGREEN TRANSACTIONS
(7) Evergreen's historical condensed combined statement of operations for the
year ended December 31, 1996 and the six months ended June 30, 1997 and pro
forma adjustments related to the Completed Evergreen Transactions are
summarized below:
<TABLE>
<CAPTION>
ACQUISITIONS
-----------------------------------------------------------------------------------
WWRC-AM WWWW-FM/ KKSF-FM/
PYRAMID KYLD-FM WGAY-FM WEDR-FM WDFN-AM KDFC-FM/AM
EVERGREEN HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL
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) 1/1-10/31(F)
---------- ----------- ----------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996
Gross revenues................ $337,405 $2,144 $ 2,308 $ 3,264 $ 7,933 $ 839 $13,646
Less: agency commissions...... (43,555) (216) (363) (409) (1,066) (102) (1,746)
-------- ------ ------- ------- ------- ----- -------
Net revenues.................. 293,850 1,928 1,945 2,855 6,867 737 11,900
Station operating expenses
excluding depreciation and
amortization................ 174,344 1,489 1,885 3,493 2,933 815 6,358
Depreciation and
amortization................ 93,749 502 749 314 29 45 2,351
Corporate general and
administrative expenses..... 7,797 123 256 477 1,401 -- --
-------- ------ ------- ------- ------- ----- -------
Operating income (loss)....... 17,960 (186) (945) (1,429) 2,504 (123) 3,191
Interest expense.............. 37,527 343 1,094 -- -- -- 429
Other (income) expense........ (477) (5) (97) 5 (15) -- (48)
-------- ------ ------- ------- ------- ----- -------
Income (loss) before income
taxes....................... (19,090) (524) (1,942) (1,434) 2,519 (123) 2,810
Income tax expense
(benefit)................... (2,896) -- -- (453) -- -- --
-------- ------ ------- ------- ------- ----- -------
Net income (loss)............. (16,194) (524) (1,942) (981) 2,519 (123) 2,810
Preferred stock dividends..... 3,820 -- -- -- -- -- --
-------- ------ ------- ------- ------- ----- -------
Income (loss) attributable to
common stockholders......... $(20,014) $ (524) $(1,942) $ (981) $ 2,519 $(123) $ 2,810
======== ====== ======= ======= ======= ===== =======
Income (loss) per common
share....................... $ (0.66)
========
Weighted average common shares
outstanding (w)............. 30,207
========
Broadcast Cash Flow........... $119,506 $ 439 $ 60 $ (638) $ 3,934 $ (78) $ 5,542
======== ====== ======= ======= ======= ===== =======
<CAPTION>
ACQUISITIONS
--------------------------------------------------------
EVERGREEN
WJLB-FM/ WUSL-FM VIACOM
WMXD-FM WDAS-FM/AM WIOQ-FM ACQUISITION
HISTORICAL HISTORICAL HISTORICAL HISTORICAL
1/1-8/31(G) 1/1-12/31(H) 1/1-12/31(I) 1/1-12/31(J)
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996
Gross revenues................ $15,408 $16,809 $20,152 $66,726
Less: agency commissions...... (1,881) (2,142) (2,369) (10,493)
------- ------- ------- -------
Net revenues.................. 13,527 14,667 17,783 56,233
Station operating expenses
excluding depreciation and
amortization................ 5,721 7,759 9,519 26,598
Depreciation and
amortization................ 2,415 2,763 -- 6,267
Corporate general and
administrative expenses..... 1,005 620 533 1,617
------- ------- ------- -------
Operating income (loss)....... 4,386 3,525 7,731 21,751
Interest expense.............. 1,406 79 3,001 --
Other (income) expense........ -- (39) 58 (741)
------- ------- ------- -------
Income (loss) before income
taxes....................... 2,980 3,485 4,672 22,492
Income tax expense
(benefit)................... 180 -- -- 10,612
------- ------- ------- -------
Net income (loss)............. 2,800 3,485 4,672 11,880
Preferred stock dividends..... -- -- -- --
------- ------- ------- -------
Income (loss) attributable to
common stockholders......... $2,800 $ 3,485 $ 4,672 $11,880
======= ======= ======= =======
Income (loss) per common
share.......................
Weighted average common shares
outstanding (w).............
Broadcast Cash Flow........... $7,806 $ 6,908 $ 8,264 $29,635
======= ======= ======= =======
</TABLE>
A-13
<PAGE> 17
<TABLE>
<CAPTION>
DISPOSITIONS
-------------------------------------------------------------------------
WPEG-FM
WBAV-FM/AM
WRFX-FM SAN FRANCISCO
WFNZ-FM WNKS-FM WEJM-FM/AM WJZW-FM FREQUENCY
HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL
1/1-12/31(i) 1/1-12/31(h) 1/1-12/31(l) 1/1-12/31(m) 1/1-12/31(n)
------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996
Gross revenues..................... $(20,818) $ (3,303) $(2,690) $(8,443) $(2,736)
Less: agency commissions........... 2,733 337 293 1,311 358
-------- -------- ------- ------- -------
Net revenues....................... (18,085) (2,966) (2,397) (7,132) (2,378)
Station operating expenses
excluding depreciation and
amortization..................... (9,509) (2,461) (2,217) (3,998) (3,159)
Depreciation and amortization...... -- (548) (1,719) (589) (3,826)
Corporate general and
administrative expenses.......... -- -- -- (206) --
-------- -------- ------- ------- -------
Operating income (loss)............ (8,576) 43 1,539 (2,339) 4,607
Interest expense................... -- -- -- -- --
Other (income) expense............. -- -- -- -- --
-------- -------- ------- ------- -------
Income (loss) before income
taxes............................ (8,576) 43 1,539 (2,339) 4,607
Income tax expense (benefit)....... -- -- -- (913) --
-------- -------- ------- ------- -------
Net income (loss).................. (8,576) 43 1,539 (1,426) 4,607
Preferred stock dividends.......... -- -- -- -- --
-------- -------- ------- ------- -------
Income (loss) attributable to
common stockholders.............. $ (8,576) $ 43 $ 1,539 $(1,426) $ 4,607
======== ======== ======= ======= =======
Income (loss) per common share.....
Weighted average common shares
outstanding (w)..................
Broadcast Cash Flow................ $ (8,576) $ (505) $ (180) $(3,134) $ 781
======== ======== ======= ======= =======
<CAPTION>
DISPOSITIONS
---------------------------
WBZS-AM EVERGREEN AS
WZHF-AM ADJUSTED FOR
KDFC-FM KDFC-AM COMPLETED
HISTORICAL HISTORICAL PRO FORMA EVERGREEN
1/1-12/31(o) 1/1-12/31(p) ADJUSTMENTS TRANSACTIONS
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996
Gross revenues..................... $(5,138) $(2,240) $ -- $441,266
Less: agency commissions........... 643 36 -- (58,631)
------- ------- -------- --------
Net revenues....................... (4,495) (2,204) -- 382,635
Station operating expenses
excluding depreciation and
amortization..................... (2,300) (930) -- 216,340
Depreciation and amortization...... (853) (30) 54,986(r) 156,605
Corporate general and
administrative expenses.......... -- (43) (5,515)(s) 8,065
------- ------- -------- --------
Operating income (loss)............ (1,342) (1,201) (49,471) 1,625
Interest expense................... -- -- 26,350(t) 70,229
Other (income) expense............. -- -- (1,359)
------- ------- -------- --------
Income (loss) before income
taxes............................ (1,342) (1,201) (75,821) (67,245)
Income tax expense (benefit)....... -- (271) (24,189)(u) (17,930)
------- ------- -------- --------
Net income (loss).................. (1,342) (930) (51,632) (49,315)
Preferred stock dividends.......... -- -- 14,150(v) 17,970
------- ------- -------- --------
Income (loss) attributable to
common stockholders.............. $(1,342) $ (930) $(65,782) $(67,285)
======= ======= ======== ========
Income (loss) per common share..... $ (1.60)
========
Weighted average common shares
outstanding (w).................. 11,948 42,155
======== ========
Broadcast Cash Flow................ $(2,195) $(1,274) $ -- $166,295
======= ======= ======== ========
</TABLE>
A-14
<PAGE> 18
<TABLE>
<CAPTION>
ACQUISITIONS DISPOSITIONS
---------------------------------------------------- ----------------------------------------
WPEG-FM
EVERGREEN WBAV-FM/AM
WUSL-FM VIACOM WRFX-FM
WDAS-FM/AM WIOQ-FM ACQUISITION WFNZ-FM WNKS-FM WPNT-FM
EVERGREEN HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL
SIX MONTHS ENDED JUNE 30, 1997 HISTORICAL 1/1-4/30(H) 1/1-5/15(I) 1/1-6/30(J) 1/1-5/15(I) 1/1-5/15(K) 5/30-6/19(Q)
- ------------------------------ ---------- ----------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gross revenues................ $216,177 $5,028 $7,088 $38,972 $(7,788) $(1,332) $(567)
Less: agency commissions...... (27,916) (680) (829) (5,470) 1,029 142 93
-------- ------ ------ ------- ------- ------- -----
Net revenues.................. 188,261 4,348 6,259 33,502 (6,759) (1,190) (474)
Station operating expenses
excluding depreciation and
amortization................ 111,162 2,533 3,649 14,936 (3,569) (994) (285)
Depreciation and
amortization................ 53,912 875 -- 2,279 -- (212) (279)
Corporate general and
administrative expenses..... 5,651 172 141 682 -- -- --
-------- ------ ------ ------- ------- ------- -----
Operating income (loss)....... 17,536 768 2,469 15,605 (3,190) 16 90
Interest expense.............. 22,741 19 990 -- -- -- --
Other (income) expense........ (13,323) 863 -- -- -- -- --
-------- ------ ------ ------- ------- ------- -----
Income (loss) before income
taxes....................... 8,118 (114) 1,479 15,605 (3,190) 16 90
Income tax expense (benefit).. 4,259 -- -- 5,892 -- -- --
-------- ------ ------ ------- ------- ------- -----
Net income (loss)............. 3,859 (114) 1,479 9,713 (3,190) 16 90
Preferred stock dividends..... 699 -- -- -- -- -- --
-------- ------ ------ ------- ------- ------- -----
Income (loss) attributable to
common stockholders......... $ 3,160 $ (114) $1,479 $ 9,713 $(3,190) $ 16 $ 90
======== ====== ====== ======= ======= ======= =====
Income (loss) per common
share....................... $ 0.07
========
Weighted average common shares
outstanding(w).............. 42,208
========
Broadcast cash flow........... $ 77,099 $1,815 $2,610 $18,566 $(3,190) $ (196) $(189)
======== ====== ====== ======= ======= ======= =====
<CAPTION>
DISPOSITIONS
-------------------------------------------------------------------
SAN WBZS-AM EVERGREEN AS
WEJM- FRANCISCO WZHF-AM ADJUSTED FOR
FM/AM WJZW-FM FREQUENCY KDFC-FM KDFC-AM COMPLETED
HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL PRO FORMA EVERGREEN
SIX MONTHS ENDED JUNE 30, 1/1-6/30(L) 1/1-6/30(M) 1/1-6/30(N) 1/1-1/31(O) 1/1-6/30(P) ADJUSTMENTS TRANSACTIONS
- -------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gross revenues............ $(1,153) $(4,137) $(1,341) $(278) $(1,091) $ -- $249,578
Less: agency commissions.. 119 567 174 26 23 -- (32,722)
------- ------- ------- ----- ------- -------- --------
Net revenues.............. (1,034) (3,570) (1,167) (252) (1,068) -- 216,856
Station operating expenses
excluding depreciation a
amortization............ (1,001) (2,161) (1,614) (224) (665) -- 121,767
Depreciation and
amortization............ (289) (315) (214) -- (54) 21,358(r) 77,061
Corporate general and
administrative expenses. -- (70) -- -- (18) (777)(s) 5,781
------- ------- ------- ----- ------- -------- --------
Operating income (loss)... 256 (1,024) 661 (28) (331) (20,581) 12,247
Interest expense.......... -- -- -- -- -- 10,196(t) 33,946
Other (income) expense.... -- -- -- -- -- -- (12,460)
------- ------- ------- ----- ------- -------- --------
Income (loss) before incom
taxes................... 256 (1,024) 661 (28) (331) (30,777) (9,239)
Income tax expense (benefi -- (260) -- -- (98) (10,224)(u) (431)
------- ------- ------- ----- ------- -------- --------
Net income (loss)......... 256 (764) 661 (28) (233) (20,553) (8,808)
Preferred stock dividends. -- -- -- -- -- 8,287(v) 8,986
------- ------- ------- ----- ------- -------- --------
Income (loss) attributable
common stockholders..... $ 256 $ (764) $ 661 $ (28) $ (233) $(28,840) $(17,794)
======= ======= ======= ===== ======= ======== ========
Income (loss) per common
share................... $ (0.42)
========
Weighted average common sh
outstanding(w).......... 42,208
========
Broadcast cash flow....... $ (33) $(1,409) $ 447 $ (28) $ (403) $ -- $ 95,089
======= ======= ======= ===== ======= ======== ========
</TABLE>
A-15
<PAGE> 19
(a) On January 17, 1996, Evergreen 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
$315,500 was financed through additional borrowings under Evergreen'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, Evergreen acquired KYLD-FM in San Francisco for $44,000
in cash. Evergreen had previously been operating KYLD-FM under a time
brokerage agreement since May 1, 1996.
(c) On November 26, 1996, Evergreen exchanged WKLB-FM in Boston (which Evergreen
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 Evergreen acquired on April 3, 1997 for $32,000 in
cash) for WWRC-AM in Washington, D.C. and $9,500 in cash. The net purchase
price to Evergreen of WWRC-AM was therefore $22,500. Evergreen had
previously been operating WGAY-FM and WWRC-AM under time brokerage
agreements since June 17, 1996.
(d) On October 18, 1996, Evergreen acquired WEDR-FM in Miami for $65,000 in
cash.
(e) On January 31, 1997, Evergreen 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). Evergreen 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, Evergreen 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). Evergreen had previously
been operating the stations under a time brokerage agreement since November
1, 1996.
(g) On April 1, 1997, Evergreen acquired, in the Secret/Detroit Acquisition,
WJLB-FM and WMXD-FM in Detroit for $168,000 in cash. Evergreen had
previously been operating the stations under a time brokerage agreement
since September 1, 1996.
(h) On May 1, 1997, Evergreen acquired, in the Beasley Acquisition, WDAS-FM/AM
in Philadelphia for $103,000 in cash.
(i) On May 15, 1997, Evergreen 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 July 2, 1997, Evergreen acquired, in the Evergreen Viacom Acquisition,
WLTW-FM and WAXQ-FM in New York and WMZQ-FM, WJZW-FM, WZHF-AM, and WBZS-AM
in Washington, D.C. for approximately $612,388 in cash including various
other direct acquisition costs. The Evergreen Viacom Acquisition was
financed with (i) bank borrowings under the EMCLA Senior Credit Facility of
$552,559; (ii) $53,750 in escrow funds paid by Evergreen on February 19,
1997 and classified as other assets at June 30, 1997 and (iii) $6,079
financed through working capital. In June 1997, Evergreen issued 5,990,000
shares of $3.00 Convertible Exchangeable Preferred Stock for net proceeds of
approximately $287,808 which were used to repay borrowings under the EMCLA
Senior Credit Facility and subsequently were reborrowed on July 2, 1997 as
part of the financing of the Evergreen Viacom Acquisition. The assets of
WJZW-FM, WZHF-AM, and WBZS-AM in Washington, D.C. are classified as assets
held for sale in connection with the purchase price allocation of the
Evergreen Viacom Acquisition. The Viacom results of operations for the year
ended December 31, 1996 reflect the financial performance of WAXQ-FM for six
months of the year that the station was operated by Viacom (July 1,
A-16
<PAGE> 20
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.
(k) On May 15, 1997, Evergreen sold, in the EZ Sale, WNKS-FM in Charlotte for
$10,000 in cash.
(l) On June 3, 1997, Evergreen sold, in the Crawford Disposition, WEJM-FM in
Chicago for $14,750 in cash. On August 26, 1997, Evergreen sold, in the
Douglas Chicago Disposition, WEJM-AM in Chicago for $7,500 in cash.
(m) On July 7, 1997, Evergreen sold, in the ABC/Washington Disposition, WJZW-FM
in Washington (acquired as part of the Evergreen Viacom Acquisition) for
$68,000 in cash.
(n) On July 7, 1997, Evergreen sold, 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.
(o) On January 31, 1997, Evergreen acquired, in the KKSF/KDFC Acquisition,
KKSF-FM and KDFC-FM/AM in San Francisco for $115,000 in cash. Evergreen had
previously been operating KKSF-FM and KDFC-FM/AM under a time brokerage
agreement since November 1, 1996. On July 21, 1997, Evergreen sold, in the
Bonneville/KDFC Disposition, 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 $791 for the period
February 1, 1997 through June 30, 1997 has been excluded from Evergreen's
historical condensed statement of operations. Therefore, the KDFC-FM
condensed statement of operations includes the results of operations for
January 1, 1997 through January 31, 1997 (the time brokerage agreement
holding period in 1997) for the six months ended June 30, 1997.
(p) On August 13, 1997, Evergreen sold, in the Douglas AM Dispositions, WBZS-AM
and WZHF-AM in Washington (acquired as part of the Evergreen Viacom
Acquisition) and KDFC-AM in San Francisco for $5,500, $7,500 and $5,000,
respectively, payable in the form of a promissory note.
(q) On May 30, 1997, Evergreen acquired, in the Century Acquisition, WPNT-FM in
Chicago for $75,750 in cash (including $2,000 for the purchase of the
station's accounts receivable) of which $5,500 was paid as escrow funds in
July 1996. On June 19, 1997, Evergreen sold, in the Bonneville/WPNT
Disposition, WPNT-FM in Chicago for $75,000 in cash and recognized a gain of
$500.
(r) 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 (iii)................... 1/1-12/31 58,698 3,913 868 3,045
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 98,185 6,546 2,470 4,076
Evergreen Viacom Acquisition.... 1/1-12/31 518,093 34,540 5,606 28,934
---------- ------- ------- -------
Total........................... $1,349,758 $67,131 $12,145 $54,986
========== ======= ======= =======
</TABLE>
A-17
<PAGE> 21
<TABLE>
<CAPTION>
INCREMENTAL INTANGIBLE HISTORICAL ADJUSTMENT
COMPLETED EVERGREEN TRANSACTIONS AMORTIZATION ASSETS, AMORTIZATION AMORTIZATION FOR NET
SIX MONTHS ENDED JUNE 30, 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 (iii)..................... 1/1-1/31 58,698 326 -- 326
WJLB-FM/WMXD-FM................... 1/1-3/31 165,559 2,759 -- 2,759
WWRC-AM........................... 1/1-4/2 16,808 286 -- 286
WDAS-FM/AM........................ 1/1-4/30 98,185 2,182 820 1,362
Evergreen Viacom Acquisition...... 1/1-6/30 518,093 17,270 793 16,477
-------- ------- ------ -------
Total............................. $883,933 $22,971 $1,613 $21,358
======== ======= ====== =======
</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
Evergreen.
(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 excludes (1) $50,000 of the purchase
price allocated to KDFC-FM which has been classified as assets held
for sale, (2) $1,500 to be reimbursed by the buyers of KDFC-FM for
costs incurred in connection with relocating KKSF and (3) $4,802 of
the purchase price allocated to KDFC-AM which was sold, in the
Douglas AM Dispositions, on August 13, 1997.
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.
(s) Reflects the elimination of duplicate corporate expenses of $5,515 for the
year ended December 31, 1996 and $777 for the six months ended June 30, 1997
related to the Completed Evergreen Transactions.
(t) Reflects the adjustment to interest expense in connection with the
consummation of the Completed Evergreen Transactions, the 1996 Evergreen
Offering and the amendment and restatement of Evergreen's senior credit
agreement:
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1996 JUNE 30, 1997
----------------- ----------------
<S> <C> <C>
Additional bank borrowings related to:
Completed Acquisitions.......................... $1,577,559 $1,103,559
Completed Dispositions.......................... (301,250) (269,250)
New Loan Fees................................... 10,473 10,473
---------- ----------
Total additional bank borrowings.................. $1,286,782 $ 844,782
========== ==========
Interest expense at 7.0%.......................... $ 67,096 $ 20,160
Less: historical interest expense................. (5,596) (674)
---------- ----------
Net increase in interest expense.................. 61,500 19,486
Reduction in interest expense on bank debt related
to the application of net proceeds of the
following at 7.0%:
1996 Evergreen Offering of $264,236 for the
period January 1, 1996 to October 22, 1996... (15,003) --
Convertible Preferred Stock Offering of $287,808
for the year ended December 31, 1996 and for
the period January 1, 1997 to June 16,
1997......................................... (20,147) (9,290)
---------- ----------
Total adjustment for net increase in interest
expense......................................... $ 26,350 $ 10,196
========== ==========
</TABLE>
A-18
<PAGE> 22
(u) 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.
(v) Reflects the (i) 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 Evergreen's formerly outstanding $3.00 convertible
preferred stock into 5,025,916 shares of Evergreen's Class A Common Stock
(the "1996 Preferred Stock Conversion") and the redemption of the remaining
1,703 shares of formerly outstanding $3.00 convertible preferred stock
occurred January 1, 1996 and (ii) incremental dividends on the $3.00
Convertible Preferred Stock (issued on June 16, 1997) of $17,970 for the
year ended December 31, 1996 and $8,287 for the six months ended June 30,
1997.
(w) The pro forma combined loss per common share data is computed by dividing
pro forma loss attributable to common stockholders by the weighted average
common shares assumed to be outstanding. A summary of shares used in the
pro forma combined loss per common share calculation follows:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1996 JUNE 30, 1997
----------------- ----------------
<S> <C> <C>
Historical weighted average shares outstanding..... 30,207 42,208
Incremental weighted average shares relating to:
Issuance of 9,000,000 shares of Class A Common
Stock on October 17, 1996..................... 7,325 --
Conversion of 1,608,297 shares of preferred stock
in 1996....................................... 4,623 --
------- -------
Total incremental weighted average shares.......... 11,948 --
------- -------
Shares used in the pro forma combined earnings per
share calculation................................ 42,155 42,208
======= =======
</TABLE>
A-19
<PAGE> 23
ADJUSTMENTS TO CHANCELLOR'S HISTORICAL CONDENSED COMBINED STATEMENT OF
OPERATIONS RELATED TO THE COMPLETED CHANCELLOR TRANSACTIONS
(8) Chancellor's historical condensed combined statement of operations for the
year ended December 31, 1996 and the six months ended June 30, 1997 and pro
forma adjustments related to the Completed Chancellor Transactions is
summarized below:
<TABLE>
<CAPTION>
ACQUISITIONS
-----------------------------------------------------------------------------------------------
KIMN-FM/
SHAMROCK KALC-FM COLFAX KOOL-FM SUNDANCE OMNI
CHANCELLOR HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL
YEAR ENDED DECEMBER 31, 1996(A) HISTORICAL 1/1-2/14(B) 1/1-3/31(C) 1/1-12/31(D) 1/1-3/31(D) 1/1-9/12(D) 1/1-6/30(E)
- ------------------------------- ---------- ----------- ----------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Gross revenues................. $203,188 $ 9,698 $2,010 $51,745 $1,665 $13,844 $ 8,710
Less: agency commissions....... (24,787) (1,234) (259) (6,626) (234) (1,740) (1,211)
-------- ------- ------ ------- ------ ------- -------
Net revenues................... 178,401 8,464 1,751 45,119 1,431 12,104 7,499
Station operating expenses
excluding depreciation and
amortization.................. 111,210 7,762 1,523 28,584 852 7,678 4,985
Depreciation and
amortization.................. 20,877 595 511 4,494 229 1,242 1,458
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 1,056
Interest expense............... 35,704 1,380 -- 4,369 299 -- --
Other (income) expense......... 68 49 312 (179) -- 25 (404)
-------- ------- ------ ------- ------ ------- -------
Income (loss) before income
taxes......................... 1,897 (3,537) (595) 7,851 51 3,159 1,460
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 1,460
Preferred stock dividends...... -- -- -- -- -- -- --
-------- ------- ------ ------- ------ ------- -------
Income (loss) attributable to
common stockholders........... $(14,272) $(3,537) $ (595) $ 7,851 $ 51 $ 3,159 $ 1,460
======== ======= ====== ======= ====== ======= =======
Broadcast Cash Flow............ $ 67,191 $ 702 $ 228 $16,535 $ 579 $ 4,426 $ 2,514
======== ======= ====== ======= ====== ======= =======
<CAPTION>
ACQUISITIONS DISPOSITIONS
--------------------------- ------------------------------------------------------- PRO FORMA
CHANCELLOR ADJUSTMENTS
VIACOM WWWW-FM/ WMIL-FM/ FOR THE
KSTE-FM ACQUISITION WDFN-AM KTBZ-FM WOKY-AM WDRQ-FM COMPLETED
HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL CHANCELLOR
YEAR ENDED DECEMBER 31, 1996 1/1-7/31(F) 1/1-12/31(G) 1/1-2/14(H) 1/1-2/14(C) 1/1-12/31(I) 1/1-12/31(J) TRANSACTIONS
- ---------------------------- ------------ ------------ ----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gross revenues.............. $1,411 $58,806 $(839) $(399) $(9,552) $(6,743) $ (5,022)(k)
Less: agency commissions.... (149) (9,588) 102...... 48 1,070 1,055 --
------ ------- ----- ----- ------- ------- --------
Net revenues................ 1,262 49,218 (737) (351) (8,482) (5,688) (5,022)
Station operating expenses
excluding depreciation and
amortization............... 1,244 25,416 (815) (521) (4,896) (4,530) (5,763)(k)
Depreciation and
amortization............... 375 4,640 (45) (42) (539) (354) 15,022(l)
(1,554)(m)
Corporate general and
administrative expenses.... -- 1,501 -- -- -- (178) (2,726)(n)
Stock option compensation... -- -- -- -- -- -- --
------ ------- ----- ----- ------- ------- --------
Operating income (loss)..... (357) 17,661 123 212 (3,047) (626) (10,001)
Interest expense............ -- 6,374 -- -- -- -- 34,529(o)
Other (income) expense...... -- -- -- -- (19) -- --
------ ------- ----- ----- ------- ------- --------
Income (loss) before income
taxes...................... (357) 11,287 123 212 (3,028) (626) (44,530)
Income tax expense (benefit) -- 4,748 -- -- -- (326) (15,687)(p)
Dividends and accretion on
preferred stock of
subsidiary................. -- -- -- -- -- -- 26,843(q)
------ ------- ----- ----- ------- ------- --------
Net income (loss)........... (357) 6,539 123 212 (3,028) (300) (55,686)
Preferred stock dividends... -- -- -- -- -- -- 7,700(r)
------ ------- ----- ----- ------- ------- --------
Income (loss) attributable t
common stockholders........ $ (357) $ 6,539 $ 123 $ 212 $(3,028) $ (300) $(63,386)
====== ======= ===== ===== ======= ======= ========
Broadcast Cash Flow......... $ 18 $23,802 $ 78 $ 170 $(3,586) $(1,158) $ 741
====== ======= ===== ===== ======= ======= ========
<CAPTION>
CHANCELLOR AS
ADJUSTED FOR
COMPLETED
CHANCELLOR
YEAR ENDED DECEMBER 31, 1996 TRANSACTIONS
- ---------------------------- -------------
<S> <C>
Gross revenues.............. $328,522
Less: agency commissions.... (43,553)
--------
Net revenues................ 284,969
Station operating expenses
excluding depreciation and
amortization............... 172,729
Depreciation and
amortization............... 46,909
Corporate general and
administrative expenses.... 5,657
Stock option compensation... 3,800
--------
Operating income (loss)..... 55,874
Interest expense............ 82,655
Other (income) expense...... (148)
--------
Income (loss) before income
taxes...................... (26,633)
Income tax expense (benefit) (6,653)
Dividends and accretion on
preferred stock of
subsidiary................. 38,400
--------
Net income (loss)........... (58,380)
Preferred stock dividends... 7,700
--------
Income (loss) attributable t
common stockholders........ $(66,080)
========
Broadcast Cash Flow......... $112,240
========
</TABLE>
A-20
<PAGE> 24
<TABLE>
<CAPTION>
ACQUISITIONS DISPOSITIONS
------------------------- ------------ PRO FORMA
CHANCELLOR ADJUSTMENTS CHANCELLOR AS
VIACOM FOR THE ADJUSTED FOR
COLFAX ACQUISITION WDRQ-FM COMPLETED COMPLETED
SIX MONTHS ENDED CHANCELLOR HISTORICAL HISTORICAL HISTORICAL CHANCELLOR CHANCELLOR
JUNE 30, 1997(A) HISTORICAL 1/1-1/23(D) 1/1-6/30(G) 1/1-6/30(J) TRANSACTIONS TRANSACTIONS
---------------- ---------- ----------- ----------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Gross revenues............................ $147,015 $3,183 $29,214 $(2,395) $ (828)(k) $176,189
Less: agency commissions.................. (18,073) (384) (4,046) 251 -- (22,252)
-------- ------ ------- ------- -------- --------
Net revenues.............................. 128,942 2,799 25,168 (2,144) (828) 153,937
Station operating expenses excluding
depreciation and amortization........... 79,852 1,872 13,326 (1,986) (1,231)(k) 91,833
Depreciation and amortization............. 16,714 -- 2,370 (186) 4,421(l) 23,237
(82)(m)
Corporate general and administrative
expenses................................ 3,934 -- 520 (42) (354)(n) 4,058
Merger expense............................ 2,515 -- -- -- -- 2,515
Stock option compensation................. 1,900 -- -- -- -- 1,900
-------- ------ ------- ------- -------- --------
Operating income (loss)................... 24,027 927 8,952 70 (3,582) 30,394
Interest expense.......................... 23,908 -- 3,178 -- 13,528(o) 40,614
Other (income) expense.................... (1,607) -- -- -- -- (1,607)
-------- ------ ------- ------- -------- --------
Income (loss) before income taxes......... 1,726 927 5,774 70 (17,110) (8,613)
Income tax expense (benefit).............. 3,327 -- 1,558 18 (6,348)(p) (1,445)
Dividends and accretion on preferred stock
of subsidiary........................... 18,122 -- -- -- 1,504(q) 19,626
-------- ------ ------- ------- -------- --------
Net income (loss)......................... (19,723) 927 4,216 52 (12,266) (26,794)
Preferred stock dividends................. 3,379 -- -- -- 471(r) 3,850
-------- ------ ------- ------- -------- --------
Income (loss) attributable to common
stockholders............................ $(23,102) $ 927 $ 4,216 $ 52 $(12,737) $(30,644)
======== ====== ======= ======= ======== ========
Broadcast Cash Flow....................... $ 49,090 $ 927 $11,842 $ (158) $ 403 $ 62,104
======== ====== ======= ======= ======== ========
</TABLE>
A-21
<PAGE> 25
(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 six months ended June 30, 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 the CRBC 12% Junior
Exchangeable 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 CRBC's
previous senior 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 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 six months ended June 30, 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 CRBC's
previous senior credit agreement of $166,046 and (ii) the issuance of
555,556 shares of the Chancellor 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 14(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.
A-22
<PAGE> 26
(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 July 2, 1997, Chancellor acquired, in the Chancellor Viacom Acquisition,
KIBB-FM and KYSR-FM in Los Angeles, WLIT-FM in Chicago and WDRQ-FM in
Detroit for approximately $500,789 in cash including various other direct
acquisition costs. The Chancellor Viacom Acquisition was financed with (i)
bank borrowings of $273,159 under the CRBC Restated Credit Agreement; (ii)
borrowings under the Chancellor Interim Financing of $168,300; (iii) escrow
funds of $53,750 paid by Chancellor on February 19, 1997 and classified as
other assets at June 30, 1997 and (iv) $5,580 financed through working
capital. The assets of WDRQ-FM in Detroit are classified as assets held for
sale in connection with the purchase price allocation of the Chancellor
Viacom Acquisition.
(h) 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 Evergreen 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 Evergreen pending the completion of the sale.
(i) 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 in cash.
(j) On August 11, 1997, Chancellor sold, in the ABC/Detroit Disposition, WDRQ-FM
in Detroit (acquired as part of the Chancellor Viacom Acquisition) for
$37,000 in cash.
(k) Reflects the elimination of time brokerage agreement fees received and paid
by Chancellor as follows:
<TABLE>
<CAPTION>
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>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 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.
(l) Reflects incremental amortization related to the Completed Chancellor
Transactions and is based on the following allocation to intangible assets:
A-23
<PAGE> 27
<TABLE>
<CAPTION>
INCREMENTAL HISTORICAL ADJUSTMENT
COMPLETED CHANCELLOR TRANSACTIONS AMORTIZATION INTANGIBLE AMORTIZATION AMORTIZATION FOR NET
YEAR ENDED DECEMBER 31, 1996 PERIOD ASSETS, NET EXPENSE (1) 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)
Chancellor Viacom Acquisition.... 1/1 - 12/31 451,690 11,292 4,101 7,191
---------- ------- ------ -------
Total.................. $1,278,656 $23,879 $8,857 $15,022
---------- ------- ------ -------
</TABLE>
<TABLE>
<CAPTION>
INCREMENTAL HISTORICAL ADJUSTMENT
COMPLETED CHANCELLOR TRANSACTIONS AMORTIZATION INTANGIBLE AMORTIZATION AMORTIZATION FOR NET
SIX MONTHS ENDED JUNE 30, 1997 PERIOD ASSETS, NET EXPENSE (1) 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)
Chancellor Viacom Acquisition.... 1/1 - 6/30 451,690 5,646 2,060 3,586
---------- ------- ------ -------
Total.................. $ 908,946 $ 6,481 $2,060 $ 4,421
---------- ------- ------ -------
</TABLE>
- ---------------
(1) 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 Evergreen'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.
(m) 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 six months ended June 30, 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.
(n) Reflects the elimination of duplicate corporate expenses of $2,726 for the
year ended December 31, 1996 and $354 for the six months ended June 30, 1997
related to the Completed Chancellor Transactions.
A-24
<PAGE> 28
(o) 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 "Chancellor Offerings"), the
issuance of the CRBC 12 1/4% Series A Senior Cumulative Exchangeable
Preferred Stock, the refinancing of CRBC's previous senior credit agreement
on January 23, 1997 and the offering by CRBC of the 8 3/4% Senior
Subordinated Notes due 2007:
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1996 JUNE 30, 1997
----------------- -------------
<S> <C> <C>
Additional bank borrowings related to:
Completed Acquisitions.................................... $1,162,592 $ 727,192
Completed Dispositions.................................... (141,253) (141,253)
New Loan Fees............................................. 8,573 8,573
---------- ---------
Total additional bank borrowings............................ $1,029,912 $ 594,512
========== =========
Interest expense on additional bank borrowings at 7.5%...... $ 49,626 $ 16,248
Less: historical interest expense of the stations acquired
in the Completed Chancellor Transactions.................. (12,422) (3,178)
---------- ---------
Net increase in interest expense............................ 37,204 13,070
Reduction in interest expense on bank debt related to the
application of net proceeds of the following at 7.5%:
February 1996 Offering proceeds of $155,475 for the period
January 1, 1996 to February 14, 1996................... (1,425) --
August 1996 Offering proceeds of $23,050 for the period
January 1, 1996 to August 9, 1996......................... (1,052) --
CRBC 12 1/4% Series A Senior Cumulative Exchangeable
Preferred Stock proceeds of $96,171 for the period
January 1, 1996 to February 14, 1996................... (902) --
CRBC 8 3/4% Senior Subordinated Notes Offering proceeds of
$194,083 for the year ended December 31, 1996 and for
the period January 1, 1997 to June 24, 1997............ (14,556) (7,036)
Reduction in interest expense resulting from the redemption
of CRBC's 12.5% Senior Subordinated Notes of $60,000...... (7,500) (3,229)
Interest expense on $70,133 additional bank borrowings at
7.5% related to the redemption of CRBC's 12.5% Senior
Subordinated Notes on June 5, 1997........................ 5,260 2,265
Interest expense on $200,000 8 3/4% Senior Subordinated
Notes issued June 24, 1997................................ 17,500 8,458
---------- ---------
Total adjustment for net increase in interest expense....... $ 34,529 $ 13,528
========== =========
</TABLE>
(p) 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.
(q) Reflects incremental dividends and accretion on preferred stock of
subsidiaries as follows:
<TABLE>
<CAPTION>
SIX MONTHS
DATE OF YEAR ENDED ENDED
ISSUANCE DECEMBER 31, 1996 JUNE 30, 1997
----------------- ----------------- -------------
<S> <C> <C> <C>
12 1/4% Series A Senior Cumulative
Exchangeable Preferred Stock.............. February 26, 1996 $ 1,441 $ --
12% Junior Exchangeable Preferred Stock..... January 23, 1997 25,402 1,504
------- ------
Total dividends and accretion............... $26,843 $1,504
======= ======
</TABLE>
(r) Reflects incremental dividends on Chancellor's 7% Convertible Preferred
Stock (issued on January 23, 1997) of $7,700 for the year ended December 31,
1996 and $471 for the six months ended June 30, 1997.
A-25
<PAGE> 29
ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
RELATED
TO THE CHANCELLOR MERGER
(9) Reflects incremental amortization related to the Chancellor Merger and is
based on the allocation of the total consideration as follows:
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1996 JUNE 30, 1997
----------------- -------------
<S> <C> <C>
Amortization expense on $2,137,583 additional
intangible assets, which includes $1,854,138 of
intangible assets and $283,445 resulting from the
recognition of deferred tax liabilities, amortized on
a straight-line basis over a period of 15 years...... $142,505 $ 71,253
Less: Historical amortization expense.................. (37,816) (18,340)
-------- --------
Adjustment for net increase in amortization expense.... $104,689 $ 52,913
======== ========
</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.
(10) Reflects the elimination of duplicate corporate expenses of $832 for the
year ended December 31, 1996 and $675 for the six months ended June 30,
1997 related to the Chancellor Merger.
(11) Reflects the elimination of merger expenses of $2,515 for the six months
ended June 30, 1997 incurred by Chancellor in connection with the
Chancellor Merger.
(12) Reflects the adjustment to interest expense in connection with the
consummation of the Merger:
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1996 JUNE 30, 1997
----------------- -------------
<S> <C> <C>
Interest expense on additional bank borrowings related
to estimated financial advisors, legal, accounting
and
other professional fees of $29,000 at 7.0%........... $ 2,030 $ 1,015
Reduction in interest expense related to the
application of the
7.0% interest rate to EMCLA'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............................................... (14,056) (5,146)
-------- --------
Net increase in interest expense....................... $(12,026) $ (4,131)
======== ========
</TABLE>
(13) 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.
A-26
<PAGE> 30
ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
RELATED TO THE PENDING
CHANCELLOR MEDIA TRANSACTIONS
(14) The detail of the historical financial data of the stations to be acquired
or disposed of in the Pending Chancellor Media Transactions for the year
ended December 31, 1996 and the six months ended June 30, 1997 has been
obtained from the historical financial statements of the respective
stations and is summarized below:
<TABLE>
<CAPTION>
ACQUISITIONS DISPOSITIONS
--------------------------------------------------------------------------- ------------
WBAB-FM
WBLI-FM
WBGG-AM KZPS-FM BONNEVILLE
WHFM-FM GANNETT KDGE-FM KXPK-FM OPTION WFLN-FM
HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL
YEAR ENDED DECEMBER 31, 1996 1/1-6/30(A) 1/1-12/31(B) 1/1-12/31(C) 1/1-12/31(D) 1/1-12/31(E) 9/1-12/31(F)
- ------------------------------- ------------- ------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Gross revenues................. $ 5,726 $ 52,028 $12,174 $5,624 $55,482 $(1,455)
Less: agency commissions....... (619) (6,819) (1,758) (780) (8,683) 159
------- -------- ------- ------ ------- -------
Net revenues................... 5,107 45,209 10,416 4,844 46,799 (1,296)
Station operating expenses
excluding depreciation and
amortization.................. 3,676 25,031 8,585 3,947 25,678 (725)
Depreciation and
amortization.................. 2,141 1,760 475 477 -- (800)
Corporate general and
administrative................ 1,024 -- -- -- -- --
------- -------- ------- ------ ------- -------
Operating income (loss)........ (1,734) 18,418 1,356 420 21,121 229
Interest expense............... -- -- -- 195 -- --
Other (income) expense......... -- -- 408 (49) (8) --
------- -------- ------- ------ ------- -------
Income (loss) before income
taxes......................... (1,734) 18,418 948 274 21,129 229
Income tax expense (benefit)... -- -- -- -- -- --
------- -------- ------- ------ ------- -------
Net income (loss).............. $(1,734) $ 18,418 $ 948 $ 274 $21,129 $ 229
======= ======== ======= ====== ======= =======
Broadcast Cash Flow............ $ 1,431 $ 20,178 $ 1,831 $ 897 $21,121 $ (571)
======= ======== ======= ====== ======= =======
<CAPTION>
DISPOSITIONS
---------------------------
BONNEVILLE
WLUP-FM OPTION PENDING
HISTORICAL HISTORICAL TRANSACTIONS
YEAR ENDED DECEMBER 31, 1996 1/1-12/31(C) 1/1-12/31(E) HISTORICAL
- ------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
Gross revenues................. $(17,024) $(35,355) $ 77,200
Less: agency commissions....... 2,332 4,528 (11,640)
-------- -------- --------
Net revenues................... (14,692) (30,827) 65,560
Station operating expenses
excluding depreciation and
amortization.................. (11,697) (18,858) 35,637
Depreciation and
amortization.................. (1,585) -- 2,468
Corporate general and
administrative................ -- -- 1,024
-------- -------- --------
Operating income (loss)........ (1,410) (11,969) 26,431
Interest expense............... -- (562) (367)
Other (income) expense......... -- 9 360
-------- -------- --------
Income (loss) before income
taxes......................... (1,410) (11,416) 26,438
Income tax expense (benefit)... -- -- --
-------- -------- --------
Net income (loss).............. $ (1,410) $(11,416) $ 26,438
======== ======== ========
Broadcast Cash Flow............ $ (2,995) $(11,969) $ 29,923
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
ACQUISITIONS DISPOSITIONS
--------------------------------------------------------- ------------
KZPS-FM BONNEVILLE
GANNETT KDGE-FM KXPK-FM OPTION WFLN-FM
HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL
SIX MONTHS ENDED JUNE 30, 1997 1/1-3/30(B) 1/1-6/30(C) 1/1-6/30(D) 1/1-6/30(E) 1/1-4/30(F)
- --------------------------------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Gross revenues............................... $28,594 $6,613 $2,454 $22,226 $(1,298)
Less: agency commissions..................... (3,683) (952) (336) (3,377) 134
------- ------ ------ ------- -------
Net revenues................................. 24,911 5,661 2,118 18,849 (1,164)
Station operating expenses excluding
depreciation and amortization............... 13,904 4,474 2,041 13,570 (728)
Depreciation and amortization................ 254 236 198 -- (800)
Corporate general and administrative......... -- -- -- -- --
------- ------ ------ ------- -------
Operating income (loss)...................... 10,753 951 (121) 5,279 364
Interest expense............................. -- -- -- -- --
Other (income) expense....................... -- 4 (81) 4 --
------- ------ ------ ------- -------
Income (loss) before income taxes............ 10,753 947 (40) 5,275 364
Income tax expense (benefit)................. -- -- -- -- --
------- ------ ------ ------- -------
Net income (loss)............................ $10,753 $ 947 $ (40) $ 5,275 $ 364
======= ====== ====== ======= =======
Broadcast Cash Flow.......................... $11,007 $1,187 $ 77 $ 5,279 $ (436)
======= ====== ====== ======= =======
<CAPTION>
DISPOSITIONS
---------------------------
BONNEVILLE
WLUP-FM OPTION PENDING
HISTORICAL HISTORICAL TRANSACTIONS
SIX MONTHS ENDED JUNE 30, 1997 1/1-6/30(C) 1/1-6/30(E) HISTORICAL
- --------------------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
Gross revenues............................... $(6,613) $(20,095) $31,881
Less: agency commissions..................... 890 2,619 (4,705)
------- -------- -------
Net revenues................................. (5,723) (17,476) 27,176
Station operating expenses excluding
depreciation and amortization............... (5,249) (9,740) 18,272
Depreciation and amortization................ (258) -- (370)
Corporate general and administrative......... -- -- --
------- -------- -------
Operating income (loss)...................... (216) (7,736) 9,274
Interest expense............................. -- -- --
Other (income) expense....................... -- 8 (65)
------- -------- -------
Income (loss) before income taxes............ (216) (7,744) 9,339
Income tax expense (benefit)................. -- -- --
------- -------- -------
Net income (loss)............................ $ (216) $ (7,744) $ 9,339
======= ======== =======
Broadcast Cash Flow.......................... $ (474) $ (7,736) $ 8,904
======= ======== =======
</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 8(e)), and $11,000 in cash
for WBAB-FM, WBLI-FM, WGBB-AM, and WHFM-FM in Long Island.
(b) On April 4, 1997, Evergreen 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.
A-27
<PAGE> 31
(c) On June 24, 1997, Evergreen entered into an agreement to acquire, in the
Bonneville Acquisition, KZPS-FM and KDGE-FM in Dallas for $83,500 in cash.
On June 29, 1997, Evergreen paid $8,350 in escrow funds which are
classified as other assets at June 30, 1997. It is expected that this
transaction will result in an exchange for WLUP-FM in Chicago. On July 14,
1997, Evergreen completed the disposition of WLUP-FM in Chicago to
Bonneville and placed $80,000 in a trust pending the completion of the
deferred exchange of the WLUP-FM in Chicago and $3,500 in cash for KZPS-FM
and KDGE-FM in Dallas (the "Chicago/Dallas Exchange"). The Chicago/Dallas
Exchange will be accounted for as a like-kind exchange and no gain or loss
will be recognized upon the consummation of the exchange. Evergreen began
operating KZPS-FM and KDGE-FM under a time brokerage agreement on August 1,
1997.
(d) On July 30, 1997, Chancellor entered into an agreement to acquire, in the
Denver Acquisition, KXPK-FM in Denver from Evergreen Wireless LLC (which is
unrelated to Evergreen) for $26,000 in cash (including $1,650 paid by
Chancellor in escrow). Chancellor began operating KXPK-FM under a time
brokerage agreement on September 1, 1997.
(e) On August 6, 1997, Evergreen and Chancellor announced that they had paid
$3,000 to Bonneville for an option to exchange Evergreen's station WTOP-AM
in Washington and Chancellor's stations KZLA-FM in Los Angeles and WGMS-FM
in Washington plus an additional $57,000 in cash for Bonneville's stations
WDBZ-FM in New York, KLDE-FM in Houston and KBIG-FM in Los Angeles (the
"Bonneville Option"). As of September 10, 1997, the Bonneville Option had
not been exercised. The Bonneville Option expires on December 31, 1997.
(f) On August 12, 1996, Evergreen entered into an agreement to acquire WFLN-FM
in Philadelphia from Secret for $37,750 in cash. Evergreen also entered
into an agreement to operate WFLN-FM under a time brokerage agreement
effective September 1, 1996. Evergreen subsequently entered into an
agreement to sell WFLN-FM to Greater Media for $41,800 in cash. On May 1,
1997, Evergreen assigned its time brokerage agreement to operate WFLN-FM to
Greater Media. On July 16, 1997, Secret purported to terminate the sale of
WFLN-FM to Evergreen. Evergreen subsequently brought suit against Secret to
enforce its right to acquire WFLN-FM. In August 1997, pursuant to a court
settlement, Evergreen, Secret and Greater Media agreed that (i) Secret
would sell WFLN-FM directly to Greater Media for $37,750, (ii) Greater
Media would deposit $4,050 (the difference between Evergreen's proposed
acquisition price for WFLN-FM from Secret and Evergreen's proposed sale
price for WFLN-FM to Greater Media) with the court and (iii) Evergreen and
Secret would litigate each party's entitlement to the amount deposited with
the court. As of the date hereof, no further resolution to this dispute has
occurred.
(15) Reflects the elimination of time brokerage agreement fees received and paid
by Chancellor as follows:
<TABLE>
<CAPTION>
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>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1997 MARKET PERIOD REVENUE EXPENSE
------------------------------ ----------- --------- ------- -------
<S> <C> <C> <C> <C>
WAPE-FM, WFYV-FM................................ Jacksonville 1/1-3/31 $(2,000) $ (476)
WBAB-FM, WBLI-FM, WGBB-AM, WHFM-FM.............. Long Island 1/1-3/31 -- (2,000)
------- -------
Total adjustment for decrease in gross revenues and expenses............ $(2,000) $(2,476)
======= =======
</TABLE>
A-28
<PAGE> 32
(16) Reflects incremental amortization related to the Pending Chancellor Media
Transactions and is based on the allocation of the total consideration as
follows:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1996 JUNE 30, 1997
----------------- ----------------
<S> <C> <C>
Amortization expense on $429,043 additional intangible
assets amortized on a straight-line basis over a 15
year period.......................................... $28,603 $14,301
Less: historical amortization expense.................. (3,186) (1,414)
------- -------
Adjustment for net increase in amortization expense.... $25,417 $12,887
======= =======
</TABLE>
Historical depreciation expense, of the Pending Chancellor Media
Transactions, is assumed to approximate depreciation expense on a pro forma
basis. Actual depreciation and amortization may differ based upon final
purchase price allocations.
(17) Reflects the adjustment to interest expense in connection with the
consummation of the Pending Transactions:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1996 JUNE 30, 1997
----------------- ----------------
<S> <C> <C>
Additional bank borrowings related to:
Pending Acquisitions................................. $440,500 $440,500
======== ========
Interest expense on additional bank borrowings at
7.0%................................................. $ 30,835 $ 15,418
======== ========
</TABLE>
(18) 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.
A-29
<PAGE> 33
PRO FORMA FINANCIAL INFORMATION
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
The unaudited pro forma condensed combined financial statements of
Chancellor Media Corporation of Los Angeles presented herein are presented using
the purchase method of accounting for all acquisitions and reflect (i) the
combination of consolidated historical financial data of Evergreen, Chancellor,
each of the stations acquired in the completed transactions of each of EMCLA and
CRBC and each of the stations to be acquired by Chancellor Media in the pending
transactions of Chancellor Media and (ii) the elimination of the consolidated
historical data of the stations sold in the completed transactions of each of
EMCLA and CRBC and stations to be sold or swapped by Chancellor Media in its
pending transactions. The unaudited pro forma condensed combined balance sheet
data at June 30, 1997 presents adjustments for those completed transactions of
each of EMCLA and CRBC consummated since such date, the pending transactions of
Chancellor Media and the financing transactions of Chancellor and Evergreen and
their subsidiaries as if each such transaction had occurred at June 30, 1997.
The unaudited pro forma condensed combined statement of operations data for the
twelve months ended December 31, 1996 and the six months ended June 30, 1997
present adjustments for the following transactions as if each had occurred on
January 1, 1996: (i) the completed transactions of each of EMCLA and CRBC, (ii)
the 1996 Evergreen Offering (as defined), (iii) the 1996 Preferred Stock
Conversion (as defined), (iv) the Chancellor Offerings (as defined), (v) the
pending transactions of Chancellor Media and (vi) the financing transactions of
Chancellor and Evergreen and their subsidiaries. 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
proposed acquisition by Chancellor Media of Katz Media Group, Inc. ("Katz")
because it is presently contemplated that the operations of Katz will not be
combined with CMCLA upon consummation, and that Chancellor Media will operate
Katz as a separate, stand-alone subsidiary. Certain capitalized terms used
herein without definition shall have the meanings given to such terms in the
Prospectus contained in EMCLA's Registration Statement on Form S-4 (Reg. No.
333-32259), filed July 29, 1997, as amended.
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 transactions and
the pending 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 transactions and the Chancellor Merger 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 CMCLA's management, all adjustments have been made that
are necessary to present fairly the pro forma data.
The unaudited pro forma condensed combined financial statements should be
read in conjunction with the respective financial statements and related notes
thereto of CRBC and EMCLA which have been previously reported. The unaudited pro
forma condensed combined financial statements are presented for illustrative
purposes only and are not necessarily indicative of the results of operations or
financial position that would have been achieved had the transactions reflected
therein been consummated as of the dates indicated, or of the results of
operations or financial positions for any future periods or dates.
B-1
<PAGE> 34
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AT JUNE 30, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
EMCLA AS CRBC AS PRO FORMA COMPANY AS PRO FORMA
ADJUSTED FOR ADJUSTED FOR ADJUSTMENTS ADJUSTED FOR ADJUSTMENTS
1997 COMPLETED 1997 COMPLETED FOR THE THE FOR THE
EVERGREEN CHANCELLOR CHANCELLOR COMPLETED PENDING
TRANSACTIONS(1) TRANSACTIONS(2) MERGER TRANSACTIONS TRANSACTIONS
--------------- --------------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Current assets...................... $ 125,837 $ 83,334 $ -- $ 209,171 $ --
Property and equipment, net......... 67,239 74,321 -- 141,560 11,457(5)
Intangible assets, net.............. 1,652,404 1,421,770 434,068(3) 3,791,687 429,043(5)
283,445(4)
Other assets........................ 37,038 20,824 (1,183)(3) 56,679 (8,350)(5)
---------- ---------- -------- ---------- --------
Total assets...................... $1,882,518 $1,600,249 $716,330 $4,199,097 $432,150
========== ========== ======== ========== ========
LIABILITIES AND STOCKHOLDER'S
EQUITY:
Liabilities
Other current liabilities........... $ 42,883 $ 36,142 $ -- $ 79,025 $ --
Long-term debt, excluding current
portion........................... 908,059 824,344 162,000(3) 1,894,403 432,150(5)
Deferred tax liabilities (assets)... 90,134 (443) 283,445(4) 373,136 --
Other liabilities................... 902 997 -- 1,899 --
---------- ---------- -------- ---------- --------
Total liabilities................. 1,041,978 861,040 445,445 2,348,463 432,150
Redeemable preferred stock.......... -- 317,162 11,282(3) 328,444 --
STOCKHOLDER'S EQUITY:
Common stock........................ 1 1 (1)(3) 1 --
Additional paid in capital.......... 951,304 453,516 228,134(3) 1,632,954 --
Accumulated deficit................. (110,765) (31,470) 31,470(3) (110,765) --
---------- ---------- -------- ---------- --------
Total stockholder's equity........ 840,540 422,047 259,603 1,522,190 --
---------- ---------- -------- ---------- --------
Total liabilities and
stockholder's equity........... $1,882,518 $1,600,249 $716,330 $4,199,097 $432,150
========== ========== ======== ========== ========
<CAPTION>
COMPANY
PRO FORMA
COMBINED
----------
<S> <C>
ASSETS:
Current assets...................... $ 209,171
Property and equipment, net......... 153,017
Intangible assets, net.............. 4,220,730(6)
Other assets........................ 48,329
----------
Total assets...................... $4,631,247
==========
LIABILITIES AND STOCKHOLDER'S
EQUITY:
Liabilities
Other current liabilities........... $ 79,025
Long-term debt, excluding current
portion........................... 2,326,553
Deferred tax liabilities (assets)... 373,136
Other liabilities................... 1,899
----------
Total liabilities................. 2,780,613
Redeemable preferred stock.......... 328,444
STOCKHOLDER'S EQUITY:
Common stock........................ 1
Additional paid in capital.......... 1,632,954
Accumulated deficit................. (110,765)
----------
Total stockholder's equity........ 1,522,190
----------
Total liabilities and
stockholder's equity........... $4,631,247
==========
</TABLE>
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial
Statements
B-2
<PAGE> 35
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
EMCLA AS CRBC AS PRO FORMA COMPANY
ADJUSTED FOR ADJUSTED FOR ADJUSTMENTS AS ADJUSTED
COMPLETED COMPLETED FOR THE FOR THE
EVERGREEN CHANCELLOR CHANCELLOR COMPLETED
YEAR ENDED DECEMBER 31, 1996 TRANSACTIONS(7) TRANSACTIONS(8) MERGER TRANSACTIONS
---------------------------- --------------- --------------- ----------- ---------------
<S> <C> <C> <C> <C>
Gross revenues.................................... $441,266 $328,522 $ -- $ 769,788
Less: agency commissions.......................... (58,631) (43,553) -- (102,184)
-------- -------- --------- ---------
Net revenues...................................... 382,635 284,969 -- 667,604
Station operating expenses excluding depreciation
and amortization................................ 216,340 172,729 -- 389,069
Depreciation and amortization..................... 156,605 46,909 104,803(9) 308,317
Corporate general and administrative expenses..... 8,065 5,657 (832)(10) 12,890
Stock option compensation......................... -- 3,800 -- 3,800
-------- -------- --------- ---------
Operating income (loss)........................... 1,625 55,874 (103,971) (46,472)
Interest expense.................................. 70,229 72,680 (2,051)(12) 140,858
Other (income) expense............................ (1,359) (148) -- (1,507)
-------- -------- --------- ---------
Income (loss) before income taxes................. (67,245) (16,658) (101,920) (185,823)
Income tax expense (benefit)...................... (17,930) (2,663) (30,738)(13) (51,331)
-------- -------- --------- ---------
Net income (loss)................................. (49,315) (13,995) (71,182) (134,492)
Preferred stock dividends......................... -- 38,400 -- 38,400
-------- -------- --------- ---------
Income (loss) attributable to common stock........ $(49,315) $(52,395) $ (71,182) $(172,892)
======== ======== ========= =========
Broadcast cash flow............................... $166,295 $112,240 $ -- $ 278,535
======== ======== ========= =========
<CAPTION>
PRO FORMA
ADJUSTMENTS
PENDING FOR THE COMPANY
TRANSACTIONS PENDING PRO FORMA
YEAR ENDED DECEMBER 31, 1996 HISTORICAL(14) TRANSACTIONS COMBINED
---------------------------- -------------- ------------ ---------
<S> <C> <C> <C>
Gross revenues.................................... $ 77,200 $ (1,963)(15) $ 845,025
Less: agency commissions.......................... (11,640) -- (113,824)
-------- -------- ---------
Net revenues...................................... 65,560 (1,963) 731,201
Station operating expenses excluding depreciation
and amortization................................ 35,637 (4,000)(15) 420,706
Depreciation and amortization..................... 2,468 25,417(16) 336,202
Corporate general and administrative expenses..... 1,024 -- 13,914
Stock option compensation......................... -- -- 3,800
-------- -------- ---------
Operating income (loss)........................... 26,431 (23,380) (43,421)
Interest expense.................................. (367) 30,835(17) 171,326
Other (income) expense............................ 360 -- (1,147)
-------- -------- ---------
Income (loss) before income taxes................. 26,438 (54,215) (213,600)
Income tax expense (benefit)...................... -- (9,722)(18) (61,053)
-------- -------- ---------
Net income (loss)................................. 26,438 (44,493) (152,547)
Preferred stock dividends......................... -- -- 38,400
-------- -------- ---------
Income (loss) attributable to common stock........ $ 26,438 $(44,493) $(190,947)
======== ======== =========
Broadcast cash flow............................... $ 29,923 $ 2,037 $ 310,495
======== ======== =========
</TABLE>
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial
Statements
B-3
<PAGE> 36
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
EMCLA AS CRBC AS PRO FORMA COMPANY
ADJUSTED FOR ADJUSTED FOR ADJUSTMENTS AS ADJUSTED
COMPLETED COMPLETED FOR THE FOR THE
EVERGREEN CHANCELLOR CHANCELLOR COMPLETED
SIX MONTHS ENDED JUNE 30, 1997 TRANSACTIONS(7) TRANSACTIONS(8) MERGER TRANSACTIONS
- ------------------------------ --------------- --------------- ----------- ------------
<S> <C> <C> <C> <C>
Gross revenues.................................... $249,578 $176,189 $ -- $425,767
Less: agency commissions.......................... (32,722) (22,252) -- (54,974)
-------- -------- -------- --------
Net revenues...................................... 216,856 153,937 -- 370,793
Station operating expenses excluding depreciation
and amortization................................ 121,767 91,833 -- 213,600
Depreciation and amortization..................... 77,061 23,237 52,969(9) 153,267
Corporate general and administrative expenses..... 5,781 4,058 (675)(10) 9,164
Merger expense.................................... -- 2,515 (2,515)(11) --
Stock option compensation......................... -- 1,900 -- 1,900
-------- -------- -------- --------
Operating income (loss)........................... 12,247 30,394 (49,779) (7,138)
Interest expense.................................. 33,946 35,626 857(12) 70,429
Other (income) expense............................ (12,460) (1,607) -- (14,067)
-------- -------- -------- --------
Income (loss) before income taxes................. (9,239) (3,625) (50,636) (63,500)
Income tax expense (benefit)...................... (431) 550 (15,490)(13) (15,371)
-------- -------- -------- --------
Net income (loss)................................. (8,808) (4,175) (35,146) (48,129)
Preferred stock dividends......................... -- 19,626 -- 19,626
-------- -------- -------- --------
Income (loss) attributable to common stock........ $ (8,808) $(23,801) $(35,146) $(67,755)
======== ======== ======== ========
Broadcast cash flow............................... $ 95,089 $ 62,104 $ -- $157,193
======== ======== ======== ========
<CAPTION>
PRO FORMA
ADJUSTMENTS
PENDING FOR THE COMPANY
TRANSACTIONS PENDING PRO FORMA
SIX MONTHS ENDED JUNE 30, 1997 HISTORICAL(14) TRANSACTIONS COMBINED
- ------------------------------ -------------- ------------ ---------
<S> <C> <C> <C>
Gross revenues..................... $31,881 $ (2,000)(15) $455,648
Less: agency commissions........... (4,705) -- (59,679)
------- -------- --------
Net revenues....................... 27,176 (2,000) 395,969
Station operating expenses excludin
and amortization................. 18,272 (2,476)(15) 229,396
Depreciation and amortization...... (370) 12,887(16) 165,784
Corporate general and administrativ -- -- 9,164
Merger expense..................... -- -- --
Stock option compensation.......... -- -- 1,900
------- -------- --------
Operating income (loss)............ 9,274 (12,411) (10,275)
Interest expense................... -- 15,418(17) 85,847
Other (income) expense............. (65) -- (14,132)
------- -------- --------
Income (loss) before income taxes.. 9,339 (27,829) (81,990)
Income tax expense (benefit)....... -- (6,472)(18) (21,843)
------- -------- --------
Net income (loss).................. 9,339 (21,357) (60,147)
Preferred stock dividends.......... -- -- 19,626
------- -------- --------
Income (loss) attributable to commo $ 9,339 $(21,357) $(79,773)
======= ======== ========
Broadcast cash flow................ $ 8,904 $ 476 $166,573
======= ======== ========
</TABLE>
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial
Statements
B-4
<PAGE> 37
ADJUSTMENTS TO EMCLA'S HISTORICAL CONDENSED COMBINED BALANCE SHEET RELATED TO
THE 1997 COMPLETED EVERGREEN TRANSACTIONS COMPLETED AFTER JUNE 30, 1997
(1) The historical balance sheet of EMCLA at June 30, 1997 and the pro forma
adjustments related to the 1997 Completed Evergreen Transactions that were
completed after June 30, 1997 is summarized below:
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS EMCLA AS
FOR ADJUSTED FOR
EMCLA 1997 COMPLETED 1997 COMPLETED
HISTORICAL EVERGREEN EVERGREEN
AT 6/30/97 TRANSACTIONS TRANSACTIONS
---------- -------------- --------------
<S> <C> <C> <C>
ASSETS:
Current assets............................... $ 112,339 $ 13,498(a) $ 125,837
Property and equipment, net.................. 64,817 2,422(a) 67,239
Intangible assets, net....................... 1,183,569 468,835(a) 1,652,404
Assets held for sale......................... 50,000 (50,000)(a) --
Other assets................................. 72,788 (35,750)(a) 37,038
---------- -------- ----------
Total assets.............................. $1,483,513 $399,005 $1,882,518
========== ======== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY:
Liabilities:
Other current liabilities.................... $ 32,994 $ 9,889(a) $ 42,883
Long-term debt, excluding current portion.... 525,000 383,059(a) 908,059
Deferred tax liability....................... 88,014 2,120(a) 90,134
Other liabilities............................ 902 -- 902
---------- -------- ----------
Total liabilities......................... 646,910 395,068 1,041,978
Stockholder's equity:
Common stock................................. 1 -- 1
Additional paid-in capital................... 951,304 -- 951,304
Accumulated deficit.......................... (114,702) 3,937(a) (110,765)
---------- -------- ----------
Total stockholder's equity................ 836,603 3,937 840,540
---------- -------- ----------
Total liabilities and stockholder's
equity.................................. $1,483,513 $399,005 $1,882,518
========== ======== ==========
</TABLE>
B-5
<PAGE> 38
(a) Reflects the 1997 Completed Evergreen Transactions that were completed after
June 30, 1997 as follows:
<TABLE>
<CAPTION>
PURCHASE PRICE ALLOCATION
--------------------------------------------------------------------------------------------------------
PROPERTY AND ASSETS DEFERRED
1997 COMPLETED PURCHASE CURRENT EQUIPMENT, HELD INTANGIBLE CURRENT TAX ACCUMULATED
EVERGREEN TRANSACTIONS PRICE ASSETS NET(i) FOR SALE ASSETS, NET(i) LIABILITIES LIABILITIES DEFICIT
- ---------------------- -------- ------- ------------ -------- --------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Evergreen Viacom
Acquisition(ii)...... $612,388 $13,498 $3,607 $ 81,000 $518,093 $(3,810) $ -- $ --
WJZW-FM(iii)........... (68,000) -- -- (68,000) -- -- -- --
San Francisco
Frequency(iv)........ (44,000) -- (262) -- (41,012) -- (954) (1,772)
KDFC-FM(v)............. (50,000) -- -- (50,000) -- -- -- --
WBZS-AM, WZHF-AM,
KDFC-AM(vi).......... (18,000) -- (198) (13,000) (4,802) -- -- --
WEJM-AM(vii)........... (7,500) -- (725) -- (3,444) -- (1,166) (2,165)
-------- ------- ------ -------- -------- ------- ------- -------
Total........... $424,888 $13,498 $2,422 $(50,000) $468,835 $(3,810) $(2,120) $(3,937)
======== ======= ====== ======== ======== ======= ======= =======
<CAPTION>
FINANCING
----------------------------------------
(INCREASE) INCREASE INCREASE
DECREASE IN (DECREASE) IN
1997 COMPLETED IN OTHER CURRENT LONG-TERM
EVERGREEN TRANSACTIONS ASSETS LIABILITIES DEBT
- ---------------------- ---------- ----------- -------------
<S> <C> <C> <C>
Evergreen Viacom
Acquisition(ii)...... $ 53,750 $ 6,079 $552,559
WJZW-FM(iii)........... -- -- (68,000)
San Francisco
Frequency(iv)........ -- -- (44,000)
KDFC-FM(v)............. -- -- (50,000)
WBZS-AM, WZHF-AM,
KDFC-AM(vi).......... (18,000) -- --
WEJM-AM(vii)........... -- -- (7,500)
-------- ------- --------
Total........... $ 35,750 $ 6,079 $383,059
======== ======= ========
</TABLE>
B-6
<PAGE> 39
- ---------------
(i) EMCLA has assumed that historical balances of net property and
equipment acquired approximate fair value for the preliminary
allocation of the purchase price. Such amounts are based primarily
on information provided by the management of Viacom. EMCLA, on a
preliminary basis, has allocated the $518,093 of intangible assets
related to the Evergreen Viacom Acquisition to broadcast licenses.
This preliminary allocation is based on historical information
from prior acquisitions.
(ii) On July 2, 1997, EMCLA acquired, in the Evergreen Viacom
Acquisition, WLTW-FM and WAXQ-FM in New York and WMZQ-FM, WJZW-FM,
WZHF-AM, and WBZS-AM in Washington, D.C. for approximately
$612,388 in cash including various other direct acquisition costs.
The Evergreen Viacom Acquisition was financed with (i) bank
borrowings under the Senior Credit Facility of $552,559; (ii)
$53,750 in escrow funds paid by Evergreen on February 19, 1997 and
classified as other assets at June 30, 1997 and (iii) $6,079
financed through working capital. In June 1997, Evergreen issued
5,990,000 shares of $3.00 Convertible Exchangeable Preferred Stock
for net proceeds of approximately $287,808 which were used to
repay borrowings under the Senior Credit Facility and subsequently
were reborrowed on July 2, 1997 and contributed to EMCLA by
Evergreen as part of the financing of the Evergreen Viacom
Acquisition. The assets of WJZW-FM, WZHF-AM, and WBZS-AM in
Washington, D.C. are classified as assets held for sale in
connection with the purchase price allocation of the Evergreen
Viacom Acquisition (see (iii) and (vi) below).
(iii) On July 7, 1997, EMCLA sold, in the ABC/Washington Disposition,
WJZW-FM in Washington (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 was recognized by EMCLA upon consummation of the sale.
(iv) On July 7, 1997, EMCLA sold, in the San Francisco Frequency
Disposition, the San Francisco 107.7 MHz FM dial position and
transmission facility and the call letters from CRBC's KSAN-FM in
San Francisco for $44,000 in cash and recognized a gain of $1,772,
net of taxes of $954.
(v) On July 21, 1997, EMCLA sold, in the Bonneville/KDFC Disposition,
KDFC-FM in San Francisco for $50,000 in cash. The assets of KDFC-FM
are classified as assets held for sale at June 30, 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 was
recognized by EMCLA upon consummation of the KDFC-FM sale.
(vi) On August 13, 1997, EMCLA sold, in the Douglas AM Dispositions,
WBZS-AM and WZHF-AM in Washington (acquired as part of the
Evergreen Viacom Acquisition) and KDFC-AM in San Francisco for
$5,500, $7,500 and $5,000, respectively, payable in the form of a
promissory note in the aggregate amount of $18,000. The assets of
WBZS-AM and WZHF-AM are classified as assets held for sale in
connection with the purchase price allocation of the Evergreen
Viacom Acquisition and no gain or loss was recognized by EMCLA upon
consummation of the sale.
(vii) On August 26, 1997, EMCLA sold, in the Douglas Chicago
Disposition, WEJM-AM in Chicago for $7,500 in cash and recognized
a gain of $2,165, net of taxes of $1,166.
B-7
<PAGE> 40
ADJUSTMENTS TO CRBC'S HISTORICAL CONDENSED COMBINED BALANCE SHEET RELATED TO THE
1997 COMPLETED CHANCELLOR TRANSACTIONS COMPLETED AFTER JUNE 30, 1997
(2) The historical balance sheet of CRBC at June 30, 1997 and the pro forma
adjustments related to the 1997 Completed Chancellor Transactions that were
completed after June 30, 1997 are summarized below:
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS CRBC AS
FOR ADJUSTED FOR
CRBC 1997 COMPLETED 1997 COMPLETED
HISTORICAL CHANCELLOR CHANCELLOR
AT 6/30/97 TRANSACTIONS TRANSACTIONS
---------- -------------- --------------
<S> <C> <C> <C>
ASSETS:
Current assets............................... $ 72,352 $ 10,982(a) $ 83,334
Property and equipment, net.................. 69,581 4,740(a) 74,321
Intangible assets, net....................... 970,080 451,690(a) 1,421,770
Other assets................................. 71,760 (53,750)(a) 20,824
2,814(c)
---------- -------- ----------
Total assets............................... $1,183,773 $416,476 $1,600,249
========== ======== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY:
Liabilities:
Current portion of long-term debt............ $ 1,928 $ (1,928)(b) $ --
Other current liabilities.................... 26,939 9,203(a) 36,142
---------- -------- ----------
Total current liabilities.................. 28,867 7,275 36,142
Long-term debt, excluding current portion.... 545,335 273,159(a) 824,344
3,922(c)
1,928(b)
Deferred tax liability....................... -- (443)(c) (443)
Other liabilities............................ 997 -- 997
---------- -------- ----------
Total liabilities.......................... 575,199 285,841 861,040
Redeemable preferred stock................... 317,162 -- 317,162
STOCKHOLDER'S EQUITY:
Common stock................................. 1 -- 1
Additional paid-in capital................... 322,216 131,300(a) 453,516
Accumulated deficit.......................... (30,805) (665)(c) (31,470)
---------- -------- ----------
Total stockholder's equity................. 291,412 130,635 422,047
---------- -------- ----------
Total liabilities and stockholder's
equity.................................. $1,183,773 $416,476 $1,600,249
========== ======== ==========
</TABLE>
(a) Reflects the 1997 Completed Chancellor Transactions that were completed
after June 30, 1997 as follows:
<TABLE>
<CAPTION>
FINANCING
PURCHASE PRICE ALLOCATION ----------------------
----------------------------------------------------------
PROPERTY INCREASE
PURCHASE/ AND ASSETS INTANGIBLE DECREASE IN
1997 COMPLETED (SALES) CURRENT EQUIPMENT, HELD ASSETS, CURRENT IN OTHER CURRENT
CHANCELLOR TRANSACTIONS PRICE ASSETS NET FOR SALE NET LIABILITIES ASSETS LIABILITIES
----------------------- --------- ------- ---------- -------- ---------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Chancellor Viacom
Acquisition(i)......... $500,789 $10,982 $4,740 $ 37,000 $451,690 $(3,623) $53,750 $5,580
WDRQ-FM(ii).............. (37,000) -- -- (37,000) -- -- -- --
-------- ------- ------ -------- -------- ------- ------- ------
Total............ $463,789 $10,982 $4,740 $ -- $451,690 $(3,623) $53,750 $5,580
======== ======= ====== ======== ======== ======= ======= ======
<CAPTION>
FINANCING
-----------------------------
INCREASE
INCREASE (DECREASE) IN
(DECREASE) IN ADDITIONAL
1997 COMPLETED LONG-TERM PAID-IN
CHANCELLOR TRANSACTIONS DEBT CAPITAL
----------------------- ------------- -------------
<S> <C> <C>
Chancellor Viacom
Acquisition(i)......... $273,159 $168,300
WDRQ-FM(ii).............. -- (37,000)
-------- --------
Total............ $273,159 $131,300
======== ========
</TABLE>
- ---------------
(i) On July 2, 1997, CRBC acquired, in the Chancellor Viacom Acquisition,
KIBB-FM and KYSR-FM in Los Angeles, WLIT-FM in Chicago and WDRQ-FM in
Detroit for approximately $500,789 in cash including various other
direct acquisition costs. The Chancellor Viacom Acquisition was
financed with (i) bank borrowings of $273,159 under the CRBC Restated
Credit Agreement; (ii) borrowings under the Chancellor Interim
Financing of $168,300 which was contributed to CRBC by Chancellor;
(iii) escrow funds of $53,750 paid by CRBC on February 19, 1997 and
classified as other assets at June 30, 1997 and
B-8
<PAGE> 41
(iv) $5,580 financed through working capital. The assets of WDRQ-FM in
Detroit are classified as assets held for sale in connection with the
purchase price allocation of the Chancellor Viacom Acquisition (see
(ii) below). CRBC 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. The intangible assets of $451,690
have been allocated to broadcast licenses on a preliminary basis. This
preliminary allocation is based on historical information from prior
acquisitions.
(ii) On August 11, 1997, CRBC sold, in the ABC/Detroit Disposition, WDRQ-FM
in Detroit (acquired as part of the Chancellor Viacom Acquisition) for
$37,000 in cash. The net proceeds from the sale of WDRQ-FM were
distributed by CRBC to Chancellor to repay borrowings under the
Chancellor Interim Financing. 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 was
recognized by CRBC upon consummation of the sale.
(b) On July 2, 1997, CRBC refinanced its senior credit agreement (the "CRBC
Restated Credit Agreement") in connection with the Chancellor Viacom
Acquisition. The CRBC Restated Credit Agreement consists of a $400,000 term
loan facility and a $350,000 revolving loan facility. Reflects the $1,928
adjustment to decrease current maturities of long-term debt under the CRBC
Restated Credit Agreement to $0.
(c) Reflects (i) the adjustment to write-off the unamortized balance of deferred
loan fees of $665 (net of a tax benefit of $443) at June 30, 1997 related to
CRBC's previous senior credit agreement as an extraordinary item and (ii)
the adjustment to record new loan fees of $3,922 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
(3) Merger Purchase Price Information. In connection with the Chancellor Merger,
each outstanding share of Chancellor Common Stock was converted into the
right to receive 0.9091 shares of Chancellor Media Common Stock. For
purposes of the unaudited pro forma condensed combined financial statements,
the fair market value of Chancellor Media Common Stock is calculated by
using $31.00 per share which is based on the market price of Evergreen Class
A Common Stock on or 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............... 18,991,513
Exchange ratio.............................................. .9091
----------
Shares of Chancellor Media Common Stock issued in connection
with the Chancellor Merger................................ 17,265,184
==========
</TABLE>
B-9
<PAGE> 42
<TABLE>
<S> <C> <C>
AGGREGATE PURCHASE PRICE:
Chancellor debt and equity assumed at fair values:
Estimated fair value of Chancellor Media Common Stock issued in
connection with the Chancellor Merger (17,265,184 shares @ $31.00
per share)......................................................... $ 535,221
7% Convertible Preferred Stock....................................... 111,604
Stock options issued by Chancellor................................... 34,825
Chancellor Interim Financing......................................... 133,000
CRBC debt and equity assumed at fair values:
Long-term debt outstanding:
Term Loan.............................................. 424,344
9 3/8% Senior Subordinated Notes due 2004.............. 200,000
8 3/4% Senior Subordinated Notes due 2007.............. 200,000
-------
Total long-term debt outstanding................................... 824,344
12 1/4% Series A Senior Cumulative Exchangeable Preferred Stock.... 117,670
12% Junior Exchangeable Preferred Stock............................ 210,774
Financial advisors, legal, accounting and other professional
fees............................................................ 29,000
----------
Aggregate purchase price........................................... $1,996,438
==========
</TABLE>
To record the aggregate purchase price of the Chancellor Merger and
eliminate certain CRBC historical balances as follows:
<TABLE>
<CAPTION>
ELIMINATION
OF CRBC
PURCHASE HISTORICAL CHANCELLOR
PRICE BALANCES MERGER NET
ALLOCATION AS ADJUSTED FINANCING ADJUSTMENT
---------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Current assets........................ $ 83,334 $ (83,334) $ -- $ --
Property and equipment, net(a)........ 74,321 (74,321) -- --
Intangible assets(a).................. 1,855,838 (1,421,770) -- 434,068
Other assets(b)....................... 19,641 (20,824) -- (1,183)
Current liabilities................... (36,142) 36,142 -- --
Long-term debt........................ -- 824,344 (986,344)(c) (162,000)
Deferred tax liability................ 443 (443) -- --
Other liabilities..................... (997) 997 -- --
Redeemable preferred stock............ -- 317,162 (328,444)(d) (11,282)
Common stock.......................... -- 1 -- 1
Additional paid-in capital............ -- 453,516 (681,650)(e) (228,134)
Accumulated deficit................... -- (31,470) -- (31,470)
---------- ----------- ----------- ---------
Aggregate Purchase Price.............. $1,996,438 $ -- $(1,996,438) $ --
========== =========== =========== =========
</TABLE>
- ---------------
(a) EMCLA has assumed that historical balances of net property and equipment
acquired approximate fair value for the preliminary allocation of the
purchase price. EMCLA, on a preliminary basis, has allocated the $1,855,838
of intangible assets to broadcast licenses. This preliminary allocation is
based upon historical information from prior acquisitions and appraisals
provided by the management of CRBC.
(b) The difference in the estimated fair value of other assets and the
historical balance of other assets represents CRBC's historical deferred tax
asset balance of $1,183 at June 30, 1997. The deferred tax liability will be
revalued to reflect the difference between the financial statement carrying
amount and the tax basis of CRBC acquired assets (see (4)).
(c) Reflects the adjustment to record debt assumed or incurred by Chancellor
Media including (i) CRBC's long-term debt of $824,344; (ii) the Chancellor
Interim Financing of $133,000 retired by EMHC through bank borrowings under
the Senior Credit Facility distributed by EMCLA to EMHC and (iii) additional
bank
B-10
<PAGE> 43
borrowings of $29,000 required to finance estimated financial advisors,
legal, accounting and other professional fees.
(d) Reflects the adjustment to record the estimated fair value of redeemable
preferred stock to be issued (a) by CMCLA in exchange for (i) CRBC's 12 1/4%
Series A Senior Cumulative Exchangable Preferred Stock of $117,670
(including accrued and unpaid dividends of $17,670) and (ii) CRBC's 12%
Junior Exchangable Preferred Stock of $210,774 (including accrued and unpaid
dividends of $10,774).
(e) Reflects the portion of the Aggregate Purchase Price contributed by
Evergreen on behalf of EMCLA to consummate the Merger, including (i)
additional paid-in capital of $535,221 related to 17,265,184 shares of the
Chancellor Media Common Stock issued in connection with the Chancellor
Merger, (ii) Chancellor's 7% Convertible Preferred Stock of $111,604
(including accrued and unpaid dividends of $1,604) and (iii) the fair value
of stock options assumed by Chancellor Media of $34,825. The $34,825 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 June 30,
1997, Chancellor had 1,990,259 options outstanding with exercise prices
ranging from $7.50 to $36.75.
(4) To record a $283,445 deferred tax liability related to the difference
between the financial statement carrying amount and the tax basis of CRBC
acquired assets.
ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET RELATED TO
THE PENDING CHANCELLOR MEDIA TRANSACTIONS
(5) Reflects the Pending Chancellor Media Transactions as follows:
<TABLE>
<CAPTION>
DECREASE
PROPERTY AND IN INCREASE IN
PURCHASE EQUIPMENT, INTANGIBLE OTHER LONG-TERM
PENDING CHANCELLOR MEDIA TRANSACTIONS PRICE NET(A) ASSETS, NET(A) ASSETS DEBT
------------------------------------- -------- ------------ --------------- -------- -----------
<S> <C> <C> <C> <C> <C>
WBAB-FM, WBLI-FM, WBGG-AM,
WHFM-FM(b)......................................... $11,000 $ 1,494 $ 9,506 $ -- $ 11,000
Gannett(c)........................................... 340,000 5,376 334,624 -- 340,000
Chicago/Dallas Exchange(d)........................... 3,500 3,255 245 8,350 (4,850)
KXPK-FM(e)........................................... 26,000 477 25,523 -- 26,000
Bonneville Option(f)................................. 60,000 855 59,145 -- 60,000
-------- ------- -------- ------ --------
Total........................................ $440,500 $11,457 $429,043 $8,350 $432,150
======== ======= ======== ====== ========
</TABLE>
- ---------------
(a) Chancellor Media has assumed that historical balances of net property and
equipment 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 Chancellor
Media Pending Transactions. Chancellor Media, on a preliminary basis, has
allocated the $429,043 of intangible assets related to the Chancellor Media
Pending Transactions to broadcast licenses. This preliminary allocation is
based on historical information from prior acquisitions.
(b) On July 1, 1996, CRBC 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 8 (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 (consisting of broadcast licenses) are based upon preliminary
appraisals of the assets to be acquired.
(c) On April 4, 1997, EMCLA 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 for
$340,000 in cash. 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.
(d) On June 24, 1997, EMCLA entered into an agreement to acquire, in the
Bonneville Acquisition, KZPS-FM and KDGE-FM in Dallas for $83,500 in cash.
On June 29, 1997, EMCLA paid $8,350 in escrow funds which are classified as
other assets at June 30, 1997. On July 14, 1997, EMCLA completed the
disposition of
B-11
<PAGE> 44
WLUP-FM in Chicago to Bonneville and placed $80,000 in a trust pending the
completion of the deferred exchange of the WLUP-FM in Chicago and an
additional $3,500 in cash for KZPS-FM and KDGE-FM in Dallas (the
"Chicago/Dallas Exchange"). The Chicago/Dallas Exchange will be accounted
for as a like-kind exchange and no gain or loss will be recognized upon the
consummation of the exchange. The decrease in long-term debt of $4,850
represents the refund of $8,350 in escrow funds previously paid by EMCLA
less $3,500 in cash boot owed to Bonneville.
(e) On July 30, 1997, CRBC entered into an agreement to acquire, in the Denver
Acquisition, KXPK-FM in Denver from Evergreen Wireless LLC (which is
unrelated to Evergreen) for $26,000 in cash and paid $1,650 in escrow funds
which were classified as other assets.
(f) On August 6, 1997, Evergreen and Chancellor announced that they had paid
$3,000 to Bonneville for an option to exchange EMCLA's station WTOP-AM in
Washington and CRBC's stations KZLA-FM in Los Angeles and WGMS-FM in
Washington plus an additional $57,000 in cash for Bonneville's stations
WDBZ-FM in New York, KLDE-FM in Houston and KBIG-FM in Los Angeles (the
"Bonneville Option"). As of September 10, 1997, the Bonneville Option had
not been exercised. The Bonneville Option expires on December 31, 1997.
(6) The Company Pro Forma Combined intangible assets of $4,220,730 consists of
the following at June 30, 1997:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIFE
-----------
<S> <C> <C>
Broadcast licenses.......................................... 15-40 $3,663,914
Goodwill.................................................... 15-40 413,612
Other intangibles........................................... 1-40 382,179
----------
$4,459,705
Less: accumulated amortization.............................. (238,975)
----------
Net intangible assets....................................... $4,220,730
==========
</TABLE>
EMCLA discloses broadcast license value separately from goodwill and
amortizes such intangible assets over an estimated average life of 15 years,
whereas, CRBC groups all broadcast license value with goodwill and amortizes
such intangibles assets over an estimated average life of 40 years. In
connection with the application of purchase accounting for the Chancellor
Merger, broadcast license value and goodwill have been separately identified and
disclosed and amortized over an estimated average life of 15 years in accordance
with EMCLA's policies and procedures. The intangible assets have been treated in
a consistent manner for the Combined Company in the Unaudited Combined Condensed
Pro Forma Financial Statements and, following the consummation of the Chancellor
Merger, will be accounted for similarly in the Chancellor Media's financial
statements.
EMCLA amortizes such intangible assets using the straight-line method over
estimated useful lives ranging from 1 to 40 years. EMCLA continually evaluates
the propriety of the carrying amount of goodwill and other intangible assets as
well as the amortization period to determine whether current events or
circumstances warrant adjustments to the carrying value and/or revised estimates
of useful lives. This evaluation consists of the projection of undiscounted
operating income before depreciation, amortization, nonrecurring charges and
interest for each of EMCLA's radio stations over the remaining amortization
periods of the related intangible assets. The projections are based on a
historical trend line of actual results since the acquisitions of the respective
stations adjusted for expected changes in operating results. To the extent such
projections indicate that undiscounted operating income is not expected to be
adequate to recover the carrying amounts of the related intangible assets, such
carrying amounts are written down by charges to expense.
B-12
<PAGE> 45
EMCLA'S HISTORICAL CONDENSED COMBINED STATEMENTS OF OPERATIONS AND ADJUSTMENTS
RELATED TO THE COMPLETED EVERGREEN TRANSACTIONS
(7) EMCLA's historical condensed combined statement of operations for the year
ended December 31, 1996 and the six months ended June 30, 1997 and pro forma
adjustments related to the Completed Evergreen Transactions are summarized
below:
<TABLE>
<CAPTION>
ACQUISITIONS
-----------------------------------------------------------------------------------
WWRC-AM WWWW-FM/ KKSF-FM/
PYRAMID KYLD-FM WGAY-FM WEDR-FM WDFN-AM KDFC-FM/AM
EMCLA HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL
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) 1/1-10/31(F)
---------- ----------- ----------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996
Gross revenues................ $337,405 $2,144 $ 2,308 $ 3,264 $ 7,933 $ 839 $13,646
Less: agency commissions...... (43,555) (216) (363) (409) (1,066) (102) (1,746)
-------- ------ ------- ------- ------- ----- -------
Net revenues.................. 293,850 1,928 1,945 2,855 6,867 737 11,900
Station operating expenses
excluding depreciation and
amortization................ 174,344 1,489 1,885 3,493 2,933 815 6,358
Depreciation and
amortization................ 93,749 502 749 314 29 45 2,351
Corporate general and
administrative expenses..... 7,797 123 256 477 1,401 -- --
-------- ------ ------- ------- ------- ----- -------
Operating income (loss)....... 17,960 (186) (945) (1,429) 2,504 (123) 3,191
Interest expense.............. 37,527 343 1,094 -- -- -- 429
Other (income) expense........ (477) (5) (97) 5 (15) -- (48)
-------- ------ ------- ------- ------- ----- -------
Income (loss) before income
taxes....................... (19,090) (524) (1,942) (1,434) 2,519 (123) 2,810
Income tax expense
(benefit)................... (2,896) -- -- (453) -- -- --
-------- ------ ------- ------- ------- ----- -------
Income (loss) attributable to
common stock................ $(16,194) $ (524) $(1,942) $ (981) $ 2,519 $(123) $ 2,810
======== ====== ======= ======= ======= ===== =======
Broadcast Cash Flow........... $119,506 $ 439 $ 60 $ (638) $ 3,934 $ (78) $ 5,542
======== ====== ======= ======= ======= ===== =======
<CAPTION>
ACQUISITIONS
--------------------------------------------------------
EVERGREEN
WJLB-FM/ WUSL-FM VIACOM
WMXD-FM WDAS-FM/AM WIOQ-FM ACQUISITION
HISTORICAL HISTORICAL HISTORICAL HISTORICAL
1/1-8/31(G) 1/1-12/31(H) 1/1-12/31(I) 1/1-12/31(J)
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996
Gross revenues................ $15,408 $16,809 $20,152 $66,726
Less: agency commissions...... (1,881) (2,142) (2,369) (10,493)
------- ------- ------- -------
Net revenues.................. 13,527 14,667 17,783 56,233
Station operating expenses
excluding depreciation and
amortization................ 5,721 7,759 9,519 26,598
Depreciation and
amortization................ 2,415 2,763 -- 6,267
Corporate general and
administrative expenses..... 1,005 620 533 1,617
------- ------- ------- -------
Operating income (loss)....... 4,386 3,525 7,731 21,751
Interest expense.............. 1,406 79 3,001 --
Other (income) expense........ -- (39) 58 (741)
------- ------- ------- -------
Income (loss) before income
taxes....................... 2,980 3,485 4,672 22,492
Income tax expense
(benefit)................... 180 -- -- 10,612
------- ------- ------- -------
Income (loss) attributable to
common stock................ $2,800 $ 3,485 $ 4,672 $11,880
======= ======= ======= =======
Broadcast Cash Flow........... $7,806 $ 6,908 $ 8,264 $29,635
======= ======= ======= =======
</TABLE>
B-13
<PAGE> 46
<TABLE>
<CAPTION>
DISPOSITIONS
-------------------------------------------------------------------------
WPEG-FM
WBAV-FM/AM
WRFX-FM SAN FRANCISCO
WFNZ-FM WNKS-FM WEJM-FM/AM WJZW-FM FREQUENCY
HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL
1/1-12/31(I) 1/1-12/31(K) 1/1-12/31(L) 1/1-12/31(M) 1/1-12/31(N)
------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996
Gross revenues..................... $(20,818) $ (3,303) $(2,690) $(8,443) $(2,736)
Less: agency commissions........... 2,733 337 293 1,311 358
-------- -------- ------- ------- -------
Net revenues....................... (18,085) (2,966) (2,397) (7,132) (2,378)
Station operating expenses
excluding depreciation and
amortization..................... (9,509) (2,461) (2,217) (3,998) (3,159)
Depreciation and amortization...... -- (548) (1,719) (589) (3,826)
Corporate general and
administrative expenses.......... -- -- -- (206) --
-------- -------- ------- ------- -------
Operating income (loss)............ (8,576) 43 1,539 (2,339) 4,607
Interest expense................... -- -- -- -- --
Other (income) expense............. -- -- -- -- --
-------- -------- ------- ------- -------
Income (loss) before income
taxes............................ (8,576) 43 1,539 (2,339) 4,607
Income tax expense (benefit)....... -- -- -- (913) --
-------- -------- ------- ------- -------
Income (loss) attributable to
common stock..................... $ (8,576) $ 43 1,5$39..... $(1,426) $ 4,607
======== ======== ======= ======= =======
Broadcast Cash Flow................ $ (8,576) $ (505) $ (180) $(3,134) $ 781
======== ======== ======= ======= =======
<CAPTION>
DISPOSITIONS
---------------------------
WBZS-AM EMCLA AS
WZHF-AM ADJUSTED FOR
KDFC-FM KDFC-AM COMPLETED
HISTORICAL HISTORICAL PRO FORMA EVERGREEN
1/1-12/31(O) 1/1-12/31(P) ADJUSTMENTS TRANSACTIONS
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996
Gross revenues..................... $(5,138) $(2,240) $ -- $441,266
Less: agency commissions........... 643 36 -- (58,631)
------- ------- -------- --------
Net revenues....................... (4,495) (2,204) -- 382,635
Station operating expenses
excluding depreciation and
amortization..................... (2,300) (930) -- 216,340
Depreciation and amortization...... (853) (30) 54,986(r) 156,605
Corporate general and
administrative expenses.......... -- (43) (5,515)(s) 8,065
------- ------- -------- --------
Operating income (loss)............ (1,342) (1,201) (49,471) 1,625
Interest expense................... -- -- 26,350(t) 70,229
Other (income) expense............. -- -- (1,359)
------- ------- -------- --------
Income (loss) before income
taxes............................ (1,342) (1,201) (75,821) (67,245)
Income tax expense (benefit)....... -- (271) (24,189)(u) (17,930)
------- ------- -------- --------
Income (loss) attributable to
common stock..................... $(1,342) $ (930) $(51,632) $(49,315)
======= ======= ======== ========
Broadcast Cash Flow................ $(2,195) $(1,274) $ -- $166,295
======= ======= ======== ========
</TABLE>
B-14
<PAGE> 47
<TABLE>
<CAPTION>
ACQUISITIONS DISPOSITIONS
---------------------------------------------------- ----------------------------------------
WPEG-FM
EVERGREEN WBAV-FM/AM
WUSL-FM VIACOM WRFX-FM
WDAS-FM/AM WIOQ-FM ACQUISITION WFNZ-FM WNKS-FM WPNT-FM
EMCLA HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL
SIX MONTHS ENDED JUNE 30, 1997 HISTORICAL 1/1-4/30(h) 1/1-5/15(i) 1/1-6/30(j) 1/1-5/15(i) 1/1-5/15(k) 5/30-6/19(q)
- ------------------------------ ---------- ----------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gross revenues................ $216,177 $5,028 $7,088 $38,972 $(7,788) $(1,332) $(567)
Less: agency commissions...... (27,916) (680) (829) (5,470) 1,029 142 93
-------- ------ ------ ------- ------- ------- -----
Net revenues.................. 188,261 4,348 6,259 33,502 (6,759) (1,190) (474)
Station operating expenses
excluding depreciation and
amortization................ 111,162 2,533 3,649 14,936 (3,569) (994) (285)
Depreciation and
amortization................ 53,912 875 -- 2,279 -- (212) (279)
Corporate general and
administrative expenses..... 5,651 172 141 682 -- -- --
-------- ------ ------ ------- ------- ------- -----
Operating income (loss)....... 17,536 768 2,469 15,605 (3,190) 16 90
Interest expense.............. 22,741 19 990 -- -- -- --
Other (income) expense........ (13,323) 863 -- -- -- -- --
-------- ------ ------ ------- ------- ------- -----
Income (loss) before income
taxes....................... 8,118 (114) 1,479 15,605 (3,190) 16 90
Income tax expense (benefit).. 4,259 -- -- 5,892 -- -- --
-------- ------ ------ ------- ------- ------- -----
Income (loss) attributable to
common stock................ $ 3,859 $ (114) $1,479 $ 9,713 $(3,190) $ 16 $ 90
======== ====== ====== ======= ======= ======= =====
Broadcast cash flow........... $ 77,099 $1,815 $2,610 $18,566 $(3,190) $ (196) $(189)
======== ====== ====== ======= ======= ======= =====
<CAPTION>
DISPOSITIONS
-------------------------------------------------------------------
SAN WBZS-AM EMCLA AS
WEJM- FRANCISCO WZHF-AM ADJUSTED FOR
FM/AM WJZW-FM FREQUENCY KDFC-FM KDFC-AM COMPLETED
HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL PRO FORMA EVERGREEN
SIX MONTHS ENDED JUNE 30, 1/1-6/30(l) 1/1-6/30(m) 1/1-6/30(n) 1/1-1/31(o) 1/1-6/30(p) ADJUSTMENTS TRANSACTIONS
- -------------------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gross revenues............ $(1,153) $(4,137) $(1,341) $(278) $(1,091) $ -- $249,578
Less: agency commissions.. 119 567 174 26 23 -- (32,722)
------- ------- ------- ----- ------- -------- --------
Net revenues.............. (1,034) (3,570) (1,167) (252) (1,068) -- 216,856
Station operating expenses
excluding depreciation a
amortization............ (1,001) (2,161) (1,614) (224) (665) -- 121,767
Depreciation and
amortization............ (289) (315) (214) -- (54) 21,358(r) 77,061
Corporate general and
administrative expenses. -- (70) -- -- (18) (777)(s) 5,781
------- ------- ------- ----- ------- -------- --------
Operating income (loss)... 256 (1,024) 661 (28) (331) (20,581) 12,247
Interest expense.......... -- -- -- -- -- 10,196(t) 33,946
Other (income) expense.... -- -- -- -- -- -- (12,460)
------- ------- ------- ----- ------- -------- --------
Income (loss) before incom
taxes................... 256 (1,024) 661 (28) (331) (30,777) (9,239)
Income tax expense (benefi -- (260) -- -- (98) (10,224)(u) (431)
------- ------- ------- ----- ------- -------- --------
Income (loss) attributable
common stock............ $ 256 $ (764) $ 661 $ (28) $ (233) $(20,553) $ (8,808)
======= ======= ======= ===== ======= ======== ========
Broadcast cash flow....... $ (33) $(1,409) $ 447 $ (28) $ (403) $ -- $ 95,089
======= ======= ======= ===== ======= ======== ========
</TABLE>
B-15
<PAGE> 48
(a) On January 17, 1996, EMCLA 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
$315,500 was financed through additional borrowings under EMCLA'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, EMCLA acquired KYLD-FM in San Francisco for $44,000 in
cash. EMCLA had previously been operating KYLD-FM under a time brokerage
agreement since May 1, 1996.
(c) On November 26, 1996, EMCLA exchanged WKLB-FM in Boston (which EMCLA
acquired on May 3, 1996 for $34,000 in cash) for WGAY-FM in Washington, D.C.
On April 3, 1997, EMCLA exchanged, in the Greater Media Exchange, WQRS-FM in
Detroit (which EMCLA acquired on April 3, 1997 for $32,000 in cash) for
WWRC-AM in Washington, D.C. and $9,500 in cash. The net purchase price to
EMCLA of WWRC-AM was therefore $22,500. EMCLA had previously been operating
WGAY-FM and WWRC-AM under time brokerage agreements since June 17, 1996.
(d) On October 18, 1996, EMCLA acquired WEDR-FM in Miami for $65,000 in cash.
(e) On January 31, 1997, EMCLA acquired, in the WWWW/WDFN Acquisition, WWWW-FM
and WDFN-AM in Detroit from CRBC for $30,000 in cash (of which $1,500 was
paid as escrow funds in January 1996). EMCLA 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, EMCLA 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). EMCLA had previously been operating
the stations under a time brokerage agreement since November 1, 1996.
(g) On April 1, 1997, EMCLA acquired, in the Secret/Detroit Acquisition, WJLB-FM
and WMXD-FM in Detroit for $168,000 in cash. EMCLA had previously been
operating the stations under a time brokerage agreement since September 1,
1996.
(h) On May 1, 1997, EMCLA acquired, in the Beasley Acquisition, WDAS-FM/AM in
Philadelphia for $103,000 in cash.
(i) On May 15, 1997, EMCLA 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 July 2, 1997, EMCLA acquired, in the Evergreen Viacom Acquisition,
WLTW-FM and WAXQ-FM in New York and WMZQ-FM, WJZW-FM, WZHF-AM, and WBZS-AM
in Washington, D.C. for approximately $612,388 in cash including various
other direct acquisition costs. The Evergreen Viacom Acquisition was
financed with (i) bank borrowings under the EMCLA Senior Credit Facility of
$552,559; (ii) $53,750 in escrow funds paid by Evergreen on February 19,
1997 and classified as other assets at June 30, 1997 and (iii) $6,079
financed through working capital. In June 1997, Evergreen issued 5,990,000
shares of $3.00 Convertible Exchangeable Preferred Stock for net proceeds of
approximately $287,808 which were used to repay borrowings under the EMCLA
Senior Credit Facility and subsequently were reborrowed on July 2, 1997 and
contributed to EMCLA by Evergreen as part of the financing of the Evergreen
Viacom Acquisition. The assets of WJZW-FM, WZHF-AM, and WBZS-AM in
Washington, D.C. are classified as assets held for sale in connection with
the purchase price allocation of the Evergreen Viacom Acquisition. The
Viacom results of operations for the year ended December 31, 1996 reflect
the financial performance of WAXQ-FM for six months of the year that the
station was
B-16
<PAGE> 49
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.
(k) On May 15, 1997, EMCLA sold, in the EZ Sale, WNKS-FM in Charlotte for
$10,000 in cash.
(l) On June 3, 1997, EMCLA sold, in the Crawford Disposition, WEJM-FM in Chicago
for $14,750 in cash. On August 26, 1997, EMCLA sold, in the Douglas Chicago
Disposition, WEJM-AM in Chicago for $7,500 in cash.
(m) On July 7, 1997, EMCLA sold, in the ABC/Washington Disposition, WJZW-FM in
Washington (acquired as part of the Evergreen Viacom Acquisition) for
$68,000 in cash.
(n) On July 7, 1997, EMCLA sold, in the San Francisco Frequency Disposition, the
San Francisco 107.7 MHz FM dial position and transmission facility and the
call letters from CRBC's KSAN-FM in San Francisco for $44,000 in cash.
(o) On January 31, 1997, EMCLA acquired, in the KKSF/KDFC Acquisition, KKSF-FM
and KDFC-FM/AM in San Francisco for $115,000 in cash. EMCLA had previously
been operating KKSF-FM and KDFC-FM/AM under a time brokerage agreement since
November 1, 1996. On July 21, 1997, EMCLA sold, in the Bonneville/KDFC
Disposition, 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 $791 for the period
February 1, 1997 through June 30, 1997 has been excluded from EMCLA's
historical condensed statement of operations. Therefore, the KDFC-FM
condensed statement of operations includes the results of operations for
January 1, 1997 through January 31, 1997 (the time brokerage agreement
holding period in 1997) for the six months ended June 30, 1997.
(p) On August 13, 1997, EMCLA sold, in the Douglas AM Dispositions, WBZS-AM and
WZHF-AM in Washington (acquired as part of the Evergreen Viacom Acquisition)
and KDFC-AM in San Francisco for $5,500, $7,500 and $5,000, respectively,
payable in the form of a promissory note.
(q) On May 30, 1997, EMCLA acquired, in the Century Acquisition, WPNT-FM in
Chicago for $75,750 in cash (including $2,000 for the purchase of the
station's accounts receivable) of which $5,500 was paid as escrow funds in
July 1996. On June 19, 1997, EMCLA sold, in the Bonneville/WPNT Disposition,
WPNT-FM in Chicago for $75,000 in cash and recognized a gain of $500.
(r) 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 (iii)................... 1/1-12/31 58,698 3,913 868 3,045
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 98,185 6,546 2,470 4,076
Evergreen Viacom Acquisition.... 1/1-12/31 518,093 34,540 5,606 28,934
---------- ------- ------- -------
Total........................... $1,349,758 $67,131 $12,145 $54,986
========== ======= ======= =======
</TABLE>
B-17
<PAGE> 50
<TABLE>
<CAPTION>
INCREMENTAL INTANGIBLE HISTORICAL ADJUSTMENT
COMPLETED EVERGREEN TRANSACTIONS AMORTIZATION ASSETS, AMORTIZATION AMORTIZATION FOR NET
SIX MONTHS ENDED JUNE 30, 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 (iii)..................... 1/1-1/31 58,698 326 -- 326
WJLB-FM/WMXD-FM................... 1/1-3/31 165,559 2,759 -- 2,759
WWRC-AM........................... 1/1-4/2 16,808 286 -- 286
WDAS-FM/AM........................ 1/1-4/30 98,185 2,182 820 1,362
Evergreen Viacom Acquisition...... 1/1-6/30 518,093 17,270 793 16,477
-------- ------- ------ -------
Total............................. $883,933 $22,971 $1,613 $21,358
======== ======= ====== =======
</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
Evergreen.
(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 excludes (1) $50,000 of the purchase
price allocated to KDFC-FM which has been classified as assets held
for sale, (2) $1,500 to be reimbursed by the buyers of KDFC-FM for
costs incurred in connection with relocating KKSF and (3) $4,802 of
the purchase price allocated to KDFC-AM which was sold, in the
Douglas AM Dispositions, on August 13, 1997.
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.
(s) Reflects the elimination of duplicate corporate expenses of $5,515 for the
year ended December 31, 1996 and $777 for the six months ended June 30, 1997
related to the Completed Evergreen Transactions.
(t) Reflects the adjustment to interest expense in connection with the
consummation of the Completed Evergreen Transactions, the 1996 Evergreen
Offering and the amendment and restatement of EMCLA's senior credit
agreement:
B-18
<PAGE> 51
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1996 JUNE 30, 1997
----------------- ----------------
<S> <C> <C>
Additional bank borrowings related to:
Completed Acquisitions.......................... $1,577,559 $1,103,559
Completed Dispositions.......................... (301,250) (269,250)
New Loan Fees................................... 10,473 10,473
---------- ----------
Total additional bank borrowings.................. $1,286,782 $ 844,782
========== ==========
Interest expense at 7.0%.......................... $ 67,096 $ 20,160
Less: historical interest expense................. (5,596) (674)
---------- ----------
Net increase in interest expense.................. 61,500 19,486
Reduction in interest expense on bank debt related
to the application of net proceeds of the
following at 7.0%:
1996 Evergreen Offering contributed to EMCLA of
$264,236 for the period January 1, 1996 to
October 22, 1996............................. (15,003) --
Convertible Preferred Stock Offering contributed
to EMCLA of $287,808 for the year ended
December 31, 1996 and for the period January
1, 1997 to June 16, 1997..................... (20,147) (9,290)
---------- ----------
Total adjustment for net increase in interest
expense......................................... $ 26,350 $ 10,196
========== ==========
</TABLE>
(u) 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.
B-19
<PAGE> 52
ADJUSTMENTS TO CRBC'S HISTORICAL CONDENSED COMBINED STATEMENT OF OPERATIONS
RELATED TO THE COMPLETED CHANCELLOR TRANSACTIONS
(8) CRBC's historical condensed combined statement of operations for the year
ended December 31, 1996 and the six months ended June 30, 1997 and pro forma
adjustments related to the Completed Chancellor Transactions is summarized
below:
<TABLE>
<CAPTION>
ACQUISITIONS
-----------------------------------------------------------------------------------------------
KIMN-FM/
SHAMROCK KALC-FM COLFAX KOOL-FM SUNDANCE OMNI
CRBC HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL
YEAR ENDED DECEMBER 31, 1996(A) HISTORICAL 1/1-2/14(B) 1/1-3/31(C) 1/1-12/31(D) 1/1-3/31(D) 1/1-9/12(D) 1/1-6/30(E)
- ------------------------------- ---------- ----------- ----------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Gross revenues................. $203,188 $ 9,698 $2,010 $51,745 $1,665 $13,844 $ 8,710
Less: agency commissions....... (24,787) (1,234) (259) (6,626) (234) (1,740) (1,211)
-------- ------- ------ ------- ------ ------- -------
Net revenues................... 178,401 8,464 1,751 45,119 1,431 12,104 7,499
Station operating expenses
excluding depreciation and
amortization.................. 111,210 7,762 1,523 28,584 852 7,678 4,985
Depreciation and
amortization.................. 20,877 595 511 4,494 229 1,242 1,458
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 1,056
Interest expense............... 35,704 1,380 -- 4,369 299 -- --
Other (income) expense......... 68 49 312 (179) -- 25 (404)
-------- ------- ------ ------- ------ ------- -------
Income (loss) before income
taxes......................... 1,897 (3,537) (595) 7,851 51 3,159 1,460
Income tax expense (benefit)... 4,612 -- -- -- -- -- --
-------- ------- ------ ------- ------ ------- -------
Net income (loss).............. (2,715) (3,537) (595) 7,851 51 3,159 1,460
Preferred stock dividends...... 11,557 -- -- -- -- -- --
-------- ------- ------ ------- ------ ------- -------
Income (loss) attributable to
common stock.................. $(14,272) $(3,537) $ (595) $ 7,851 $ 51 $ 3,159 $ 1,460
======== ======= ====== ======= ====== ======= =======
Broadcast Cash Flow............ $ 67,191 $ 702 $ 228 $16,535 $ 579 $ 4,426 $ 2,514
======== ======= ====== ======= ====== ======= =======
<CAPTION>
ACQUISITIONS DISPOSITIONS
--------------------------- -------------------------------------------------------
CHANCELLOR
VIACOM WWWW-FM/ WMIL-FM/
KSTE-FM ACQUISITION WDFN-AM KTBZ-FM WOKY-AM WDRQ-FM
HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL
YEAR ENDED DECEMBER 31, 1996(A 1/1-7/31(F) 1/1-12/31(G) 1/1-2/14(H) 1/1-2/14(C) 1/1-12/31(I) 1/1-12/31(J)
- ------------------------------ ------------ ------------ ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Gross revenues................ $1,411 $58,806 $(839) $(399) $(9,552) $(6,743)
Less: agency commissions...... (149) (9,588) 102 48 1,070 1,055
------ ------- ----- ----- ------- -------
Net revenues.................. 1,262 49,218 (737) (351) (8,482) (5,688)
Station operating expenses
excluding depreciation and
amortization................. 1,244 25,416 (815) (521) (4,896) (4,530)
Depreciation and
amortization................. 375 4,640 (45) (42) (539) (354)
Corporate general and
administrative expenses...... -- 1,501 -- -- -- (178)
Stock option compensation..... -- -- -- -- -- --
------ ------- ----- ----- ------- -------
Operating income (loss)....... (357) 17,661 123 212 (3,047) (626)
Interest expense.............. -- 6,374 -- -- -- --
Other (income) expense........ -- -- -- -- (19) --
------ ------- ----- ----- ------- -------
Income (loss) before income
taxes........................ (357) 11,287 123 212 (3,028) (626)
Income tax expense (benefit).. -- 4,748 -- -- -- (326)
------ ------- ----- ----- ------- -------
Net income (loss)............. (357) 6,539 123 212 (3,028) (300)
Preferred stock dividends..... -- -- -- -- -- --
------ ------- ----- ----- ------- -------
Income (loss) attributable to
common stock................. $ (357) $ 6,539 $ 123 $ 212 $(3,028) $ (300)
====== ======= ===== ===== ======= =======
Broadcast Cash Flow........... $ 18 $23,802 $ 78 $ 170 $(3,586) $(1,158)
====== ======= ===== ===== ======= =======
<CAPTION>
PRO FORMA
ADJUSTMENTS CRBC AS
FOR THE ADJUSTED FOR
COMPLETED COMPLETED
CHANCELLOR CHANCELLOR
YEAR ENDED DECEMBER 31, 1996(A TRANSACTIONS TRANSACTIONS
- ------------------------------ ------------ ------------
<S> <C> <C>
Gross revenues................ $ (5,022)(k) $328,522
Less: agency commissions...... -- (43,553)
-------- --------
Net revenues.................. (5,022) 284,969
Station operating expenses
excluding depreciation and
amortization................. (5,763)(k) 172,729
Depreciation and
amortization................. 15,022(l) 46,909
(1,554)(m)
Corporate general and
administrative expenses...... (2,726)(n) 5,657
Stock option compensation..... -- 3,800
-------- --------
Operating income (loss)....... (10,001) 55,874
Interest expense.............. 24,554(o) 72,680
Other (income) expense........ -- (148)
-------- --------
Income (loss) before income
taxes........................ (34,555) (16,658)
Income tax expense (benefit).. (11,697)(p) (2,663)
-------- --------
Net income (loss)............. (22,858) (13,995)
Preferred stock dividends..... 26,843(q) 38,400
-------- --------
Income (loss) attributable to
common stock................. $(49,701) $(52,395)
======== ========
Broadcast Cash Flow........... $ 741 $112,240
======== ========
</TABLE>
B-20
<PAGE> 53
<TABLE>
<CAPTION>
ACQUISITIONS DISPOSITIONS
------------------------- ------------ PRO FORMA
CHANCELLOR ADJUSTMENTS CRBC AS
VIACOM FOR THE ADJUSTED FOR
COLFAX ACQUISITION WDRQ-FM COMPLETED COMPLETED
SIX MONTHS ENDED CRBC HISTORICAL HISTORICAL HISTORICAL CHANCELLOR CHANCELLOR
JUNE 30, 1997(A) HISTORICAL 1/1-1/23(D) 1/1-6/30(G) 1/1-6/30(J) TRANSACTIONS TRANSACTIONS
---------------- ---------- ----------- ----------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Gross revenues............................ $147,015 $3,183 $29,214 $(2,395) $ (828)(k) $176,189
Less: agency commissions.................. (18,073) (384) (4,046) 251 -- (22,252)
-------- ------ ------- ------- -------- --------
Net revenues.............................. 128,942 2,799 25,168 (2,144) (828) 153,937
Station operating expenses excluding
depreciation and amortization........... 79,852 1,872 13,326 (1,986) (1,231)(k) 91,833
Depreciation and amortization............. 16,714 -- 2,370 (186) 4,421(l) 23,237
(82)(m)
Corporate general and administrative
expenses................................ 3,934 -- 520 (42) (354)(n) 4,058
Merger expense............................ 2,515 -- -- -- -- 2,515
Stock option compensation................. 1,900 -- -- -- -- 1,900
-------- ------ ------- ------- -------- --------
Operating income (loss)................... 24,027 927 8,952 70 (3,582) 30,394
Interest expense.......................... 23,908 -- 3,178 -- 8,540(o) 35,626
Other (income) expense.................... (1,607) -- -- -- -- (1,607)
-------- ------ ------- ------- -------- --------
Income (loss) before income taxes......... 1,726 927 5,774 70 (12,122) (3,625)
Income tax expense (benefit).............. 3,327 -- 1,558 18 (4,353) 550
-------- ------ ------- ------- -------- --------
Net income (loss)......................... (1,601) 927 4,216 52 (7,769) (4,175)
Preferred stock dividends................. 18,122 -- -- -- 1,504(q) 19,626
-------- ------ ------- ------- -------- --------
Income (loss) attributable to common
stock................................... $(19,723) $ 927 $ 4,216 $ 52 $ (9,273) $(23,801)
======== ====== ======= ======= ======== ========
Broadcast Cash Flow....................... $ 49,090 $ 927 $11,842 $ (158) $ 403 $ 62,104
======== ====== ======= ======= ======== ========
</TABLE>
B-21
<PAGE> 54
(a) On November 22, 1996, CRBC acquired WKYN-AM in Cincinnati for $1,400 in
cash. CRBC had been previously operating WKYN-AM under a time brokerage
agreement since January 1, 1996. Therefore, CRBC's historical results of
operations for the year ended December 31, 1996 and the six months ended
June 30, 1997 include the results of operations of WKYN-AM.
(b) On February 14, 1996, CRBC 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, CRBC 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. CRBC 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, CRBC had been previously
operating KIMN-FM and KALC-FM under a time brokerage agreement since April
1, 1996.
(d) On January 23, 1997, CRBC 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 the CRBC 12% Junior
Exchangeable 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 CRBC's
previous senior 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 KIDO-AM in Boise, Idaho which CRBC 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, CRBC 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 six months ended June 30, 1997.
(e) On February 13, 1997, CRBC 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 CRBC's
previous senior credit agreement of $166,046 and (ii) the issuance of
555,556 shares of the Chancellor Class A Common Stock valued at $15,000 or
$27.00 per share which was contributed by CRBC by Chancellor. Prior to the
consummation of the Omni Acquisition, CRBC 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 14(a)),
CRBC 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.
B-22
<PAGE> 55
(f) On March 28, 1997, CRBC 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.
CRBC had previously been operating KSTE-FM under a time brokerage agreement
since August 1, 1996.
(g) On July 2, 1997, CRBC acquired, in the Chancellor Viacom Acquisition,
KIBB-FM and KYSR-FM in Los Angeles, WLIT-FM in Chicago and WDRQ-FM in
Detroit for approximately $500,789 in cash including various other direct
acquisition costs. The Chancellor Viacom Acquisition was financed with (i)
bank borrowings of $273,159 under the CRBC Restated Credit Agreement; (ii)
borrowings under the Chancellor Interim Financing of $168,300 which was
contributed to CRBC by Chancellor; (iii) escrow funds of $53,750 paid by
CRBC on February 19, 1997 and classified as other assets at June 30, 1997
and (iv) $5,580 financed through working capital. The assets of WDRQ-FM in
Detroit are classified as assets held for sale in connection with the
purchase price allocation of the Chancellor Viacom Acquisition.
(h) On January 31, 1997, CRBC 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 EMCLA for $30,000 in cash. Prior to the completion
of the sale, CRBC 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 EMCLA
pending the completion of the sale.
(i) On March 31, 1997, CRBC 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 in cash.
(j) On August 11, 1997, CRBC sold, in the ABC/Detroit Disposition, WDRQ-FM in
Detroit (acquired as part of the Chancellor Viacom Acquisition) for $37,000
in cash.
(k) Reflects the elimination of time brokerage agreement fees received and paid
by CRBC as follows:
<TABLE>
<CAPTION>
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>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 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 CRBC.
(l) Reflects incremental amortization related to the Completed Chancellor
Transactions and is based on the following allocation to intangible assets:
B-23
<PAGE> 56
<TABLE>
<CAPTION>
INCREMENTAL HISTORICAL ADJUSTMENT
COMPLETED CHANCELLOR TRANSACTIONS AMORTIZATION INTANGIBLE AMORTIZATION AMORTIZATION FOR NET
YEAR ENDED DECEMBER 31, 1996 PERIOD ASSETS, NET EXPENSE (1) 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)
Chancellor Viacom Acquisition.... 1/1 - 12/31 451,690 11,292 4,101 7,191
---------- ------- ------ -------
Total.................. $1,278,656 $23,879 $8,857 $15,022
---------- ------- ------ -------
</TABLE>
<TABLE>
<CAPTION>
INCREMENTAL HISTORICAL ADJUSTMENT
COMPLETED CHANCELLOR TRANSACTIONS AMORTIZATION INTANGIBLE AMORTIZATION AMORTIZATION FOR NET
SIX MONTHS ENDED JUNE 30, 1997 PERIOD ASSETS, NET EXPENSE (1) 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)
Chancellor Viacom Acquisition.... 1/1 - 6/30 451,690 5,646 2,060 3,586
---------- ------- ------ -------
Total.................. $ 908,946 $ 6,481 $2,060 $ 4,421
---------- ------- ------ -------
</TABLE>
- ---------------
(1) Intangible assets are amortized on a straight-line basis over an
estimated average 40 year life by CRBC. 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
EMCLA'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.
(m) 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 six months ended June 30, 1997
(WWWW-FM/WDFN-AM for the period of January 1, 1997 to January 31, 1997)
recognized by CRBC during the time brokerage agreement holding period.
(n) Reflects the elimination of duplicate corporate expenses of $2,726 for the
year ended December 31, 1996 and $354 for the six months ended June 30, 1997
related to the Completed Chancellor Transactions.
B-24
<PAGE> 57
(o) 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 "Chancellor Offerings"), the
issuance of the CRBC 12 1/4% Series A Senior Cumulative Exchangeable
Preferred Stock, the refinancing of CRBC's previous senior credit agreement
on January 23, 1997 and the offering by CRBC of the 8 3/4% Senior
Subordinated Notes due 2007:
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1996 JUNE 30, 1997
----------------- -------------
<S> <C> <C>
Additional bank borrowings related to:
Completed Acquisitions.................................... $ 994,292 $ 558,892
Completed Dispositions.................................... (104,253) (104,253)
New Loan Fees............................................. 6,873 6,873
--------- ---------
Total additional bank borrowings............................ $ 896,912 $ 461,512
========= =========
Interest expense on additional bank borrowings at 7.5%...... $ 39,651 $ 11,260
Less: historical interest expense of the stations acquired
in the Completed Chancellor Transactions.................. (12,422) (3,178)
--------- ---------
Net increase in interest expense............................ 27,229 8,082
Reduction in interest expense on bank debt related to the
application of net proceeds of the following at 7.5%:
February 1996 Offering proceeds contributed to CRBC by
Chancellor of $155,475 for the period January 1, 1996 to
February 14, 1996......................................... (1,425) --
August 1996 Offering proceeds contributed to CRBC by
Chancellor of $23,050 for the period January 1, 1996 to
August 9, 1996............................................ (1,052) --
CRBC 12 1/4% Series A Senior Cumulative Exchangeable
Preferred Stock proceeds of $96,171 for the period
January 1, 1996 to February 14, 1996................... (902) --
CRBC 8 3/4% Senior Subordinated Notes Offering proceeds of
$194,083 for the year ended December 31, 1996 and for
the period January 1, 1997 to June 24, 1997............ (14,556) (7,036)
Reduction in interest expense resulting from the redemption
of CRBC's 12.5% Senior Subordinated Notes of $60,000...... (7,500) (3,229)
Interest expense on $70,133 additional bank borrowings at
7.5% related to the redemption of CRBC's 12.5% Senior
Subordinated Notes on June 5, 1997........................ 5,260 2,265
Interest expense on $200,000 8 3/4% Senior Subordinated
Notes issued June 24, 1997................................ 17,500 8,458
--------- ---------
Total adjustment for net increase in interest expense....... $ 24,554 $ 8,540
========= =========
</TABLE>
(p) 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.
(q) Reflects incremental dividends and accretion on preferred stock as follows:
<TABLE>
<CAPTION>
SIX MONTHS
DATE OF YEAR ENDED ENDED
ISSUANCE DECEMBER 31, 1996 JUNE 30, 1997
----------------- ----------------- -------------
<S> <C> <C> <C>
12 1/4% Series A Senior Cumulative
Exchangeable Preferred Stock.............. February 26, 1996 $ 1,441 $ --
12% Junior Exchangeable Preferred Stock..... January 23, 1997 25,402 1,504
------- ------
Total dividends and accretion............... $26,843 $1,504
======= ======
</TABLE>
B-25
<PAGE> 58
ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
RELATED
TO THE CHANCELLOR MERGER
(9) Reflects incremental amortization related to the Chancellor Merger and is
based on the allocation of the total consideration as follows:
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1996 JUNE 30, 1997
----------------- -------------
<S> <C> <C>
Amortization expense on $2,139,283 additional
intangible assets, which includes $1,855,838 of
intangible assets and $283,445 resulting from the
recognition of deferred tax liabilities, amortized on
a straight-line basis over a period of 15 years...... $142,619 $ 71,309
Less: Historical amortization expense.................. (37,816) (18,340)
-------- --------
Adjustment for net increase in amortization expense.... $104,803 $ 52,969
======== ========
</TABLE>
Historical depreciation expense, of CRBC, is assumed to approximate
depreciation expense on a pro forma basis. Actual depreciation and
amortization may differ based upon final purchase price allocations.
(10) Reflects the elimination of duplicate corporate expenses of $832 for the
year ended December 31, 1996 and $675 for the six months ended June 30,
1997 related to the Chancellor Merger.
(11) Reflects the elimination of merger expenses of $2,515 for the six months
ended June 30, 1997 incurred by CRBC in connection with the Chancellor
Merger.
(12) Reflects the adjustment to interest expense in connection with the
consummation of the Merger:
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1996 JUNE 30, 1997
----------------- -------------
<S> <C> <C>
Interest expense on $162,000 additional bank borrowings
related
to (i) the retirement of Chancellor Interim Financing
of $133,000 and (ii) estimated financial advisors,
legal, accounting and other professional fees of
$29,000 at 7.0%...................................... $ 11,340 $ 5,670
Reduction in interest expense related to the
application of the
7.0% interest rate to EMCLA'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............................................... (13,391) (4,813)
-------- --------
Net increase in interest expense....................... $ (2,051) $ 857
======== ========
</TABLE>
(13) 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.
B-26
<PAGE> 59
ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
RELATED TO THE PENDING
CHANCELLOR MEDIA TRANSACTIONS
(14) The detail of the historical financial data of the stations to be acquired
or disposed of in the Pending Chancellor Media Transactions for the year
ended December 31, 1996 and the six months ended June 30, 1997 has been
obtained from the historical financial statements of the respective
stations and is summarized below:
<TABLE>
<CAPTION>
ACQUISITIONS DISPOSITIONS
--------------------------------------------------------------------------- ------------
WBAB-FM
WBLI-FM
WBGG-AM KZPS-FM BONNEVILLE
WHFM-FM GANNETT KDGE-FM KXPK-FM OPTION WFLN-FM
HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL
YEAR ENDED DECEMBER 31, 1996 1/1-6/30(A) 1/1-12/31(B) 1/1-12/31(C) 1/1-12/31(D) 1/1-12/31(E) 9/1-12/31(F)
- ------------------------------- ------------- ------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Gross revenues................. $ 5,726 $ 52,028 $12,174 $5,624 $55,482 $(1,455)
Less: agency commissions....... (619) (6,819) (1,758) (780) (8,683) 159
------- -------- ------- ------ ------- -------
Net revenues................... 5,107 45,209 10,416 4,844 46,799 (1,296)
Station operating expenses
excluding depreciation and
amortization.................. 3,676 25,031 8,585 3,947 25,678 (725)
Depreciation and
amortization.................. 2,141 1,760 475 477 -- (800)
Corporate general and
administrative................ 1,024 -- -- -- -- --
------- -------- ------- ------ ------- -------
Operating income (loss)........ (1,734) 18,418 1,356 420 21,121 229
Interest expense............... -- -- -- 195 -- --
Other (income) expense......... -- -- 408 (49) (8) --
------- -------- ------- ------ ------- -------
Income (loss) before income
taxes......................... (1,734) 18,418 948 274 21,129 229
Income tax expense (benefit)... -- -- -- -- -- --
------- -------- ------- ------ ------- -------
Net income (loss).............. $(1,734) $ 18,418 $ 948 $ 274 $21,129 $ 229
======= ======== ======= ====== ======= =======
Broadcast Cash Flow............ $ 1,431 $ 20,178 $ 1,831 $ 897 $21,121 $ (571)
======= ======== ======= ====== ======= =======
<CAPTION>
DISPOSITIONS
---------------------------
BONNEVILLE
WLUP-FM OPTION PENDING
HISTORICAL HISTORICAL TRANSACTIONS
YEAR ENDED DECEMBER 31, 1996 1/1-12/31(C) 1/1-12/31(E) HISTORICAL
- ------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
Gross revenues................. $(17,024) $(35,355) $ 77,200
Less: agency commissions....... 2,332 4,528 (11,640)
-------- -------- --------
Net revenues................... (14,692) (30,827) 65,560
Station operating expenses
excluding depreciation and
amortization.................. (11,697) (18,858) 35,637
Depreciation and
amortization.................. (1,585) -- 2,468
Corporate general and
administrative................ -- -- 1,024
-------- -------- --------
Operating income (loss)........ (1,410) (11,969) 26,431
Interest expense............... -- (562) (367)
Other (income) expense......... -- 9 360
-------- -------- --------
Income (loss) before income
taxes......................... (1,410) (11,416) 26,438
Income tax expense (benefit)... -- -- --
-------- -------- --------
Net income (loss).............. $ (1,410) $(11,416) $ 26,438
======== ======== ========
Broadcast Cash Flow............ $ (2,995) $(11,969) $ 29,923
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
ACQUISITIONS DISPOSITIONS
--------------------------------------------------------- ------------
KZPS-FM BONNEVILLE
GANNETT KDGE-FM KXPK-FM OPTION WFLN-FM
HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL
SIX MONTHS ENDED JUNE 30, 1997 1/1-3/30(B) 1/1-6/30(C) 1/1-6/30(D) 1/1-6/30(E) 1/1-4/30(F)
- --------------------------------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Gross revenues............................... $28,594 $6,613 $2,454 $22,226 $(1,298)
Less: agency commissions..................... (3,683) (952) (336) (3,377) 134
------- ------ ------ ------- -------
Net revenues................................. 24,911 5,661 2,118 18,849 (1,164)
Station operating expenses excluding
depreciation and amortization............... 13,904 4,474 2,041 13,570 (728)
Depreciation and amortization................ 254 236 198 -- (800)
Corporate general and administrative......... -- -- -- -- --
------- ------ ------ ------- -------
Operating income (loss)...................... 10,753 951 (121) 5,279 364
Interest expense............................. -- -- -- -- --
Other (income) expense....................... -- 4 (81) 4 --
------- ------ ------ ------- -------
Income (loss) before income taxes............ 10,753 947 (40) 5,275 364
Income tax expense (benefit)................. -- -- -- -- --
------- ------ ------ ------- -------
Net income (loss)............................ $10,753 $ 947 $ (40) $ 5,275 $ 364
======= ====== ====== ======= =======
Broadcast Cash Flow.......................... $11,007 $1,187 $ 77 $ 5,279 $ (436)
======= ====== ====== ======= =======
<CAPTION>
DISPOSITIONS
---------------------------
BONNEVILLE
WLUP-FM OPTION PENDING
HISTORICAL HISTORICAL TRANSACTIONS
SIX MONTHS ENDED JUNE 30, 1997 1/1-6/30(C) 1/1-6/30(E) HISTORICAL
- --------------------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
Gross revenues............................... $(6,613) $(20,095) $31,881
Less: agency commissions..................... 890 2,619 (4,705)
------- -------- -------
Net revenues................................. (5,723) (17,476) 27,176
Station operating expenses excluding
depreciation and amortization............... (5,249) (9,740) 18,272
Depreciation and amortization................ (258) -- (370)
Corporate general and administrative......... -- -- --
------- -------- -------
Operating income (loss)...................... (216) (7,736) 9,274
Interest expense............................. -- -- --
Other (income) expense....................... -- 8 (65)
------- -------- -------
Income (loss) before income taxes............ (216) (7,744) 9,339
Income tax expense (benefit)................. -- -- --
------- -------- -------
Net income (loss)............................ $ (216) $ (7,744) $ 9,339
======= ======== =======
Broadcast Cash Flow.......................... $ (474) $ (7,736) $ 8,904
======= ======== =======
</TABLE>
(a) On July 1, 1996, CRBC 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 8(e)), and $11,000 in cash for
WBAB-FM, WBLI-FM, WGBB-AM, and WHFM-FM in Long Island.
(b) On April 4, 1997, EMCLA 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.
B-27
<PAGE> 60
(c) On June 24, 1997, EMCLA entered into an agreement to acquire, in the
Bonneville Acquisition, KZPS-FM and KDGE-FM in Dallas for $83,500 in cash.
On June 29, 1997, EMCLA paid $8,350 in escrow funds which are classified as
other assets at June 30, 1997. It is expected that this transaction will
result in an exchange for WLUP-FM in Chicago. On July 14, 1997, EMCLA
completed the disposition of WLUP-FM in Chicago to Bonneville and placed
$80,000 in a trust pending the completion of the deferred exchange of the
WLUP-FM in Chicago and $3,500 in cash for KZPS-FM and KDGE-FM in Dallas
(the "Chicago/Dallas Exchange"). The Chicago/Dallas Exchange will be
accounted for as a like-kind exchange and no gain or loss will be
recognized upon the consummation of the exchange. EMCLA began operating
KZPS-FM and KDGE-FM under a time brokerage agreement on August 1, 1997.
(d) On July 30, 1997, CRBC entered into an agreement to acquire, in the Denver
Acquisition, KXPK-FM in Denver from Evergreen Wireless LLC (which is
unrelated to Evergreen) for $26,000 in cash (including $1,650 paid by
Chancellor in escrow). CRBC began operating KXPK-FM under a time brokerage
agreement on September 1, 1997.
(e) On August 6, 1997, EMCLA and CRBC announced that they had paid $3,000 to
Bonneville for an option to exchange EMCLA's station WTOP-AM in Washington
and CRBC's stations KZLA-FM in Los Angeles and WGMS-FM in Washington plus
an additional $57,000 in cash for Bonneville's stations WDBZ-FM in New
York, KLDE-FM in Houston and KBIG-FM in Los Angeles (the "Bonneville
Option"). As of September 10, 1997, the Bonneville Option had not been
exercised. The Bonneville Option expires on December 31, 1997.
(f) On August 12, 1996, EMCLA entered into an agreement to acquire WFLN-FM in
Philadelphia from Secret for $37,750 in cash. EMCLA also entered into an
agreement to operate WFLN-FM under a time brokerage agreement effective
September 1, 1996. EMCLA subsequently entered into an agreement to sell
WFLN-FM to Greater Media for $41,800 in cash. On May 1, 1997, EMCLA
assigned its time brokerage agreement to operate WFLN-FM to Greater Media.
On July 16, 1997, Secret purported to terminate the sale of WFLN-FM to
EMCLA. Evergreen subsequently brought suit against Secret to enforce its
right to acquire WFLN-FM. In August 1997, pursuant to a court settlement,
EMCLA, Secret and Greater Media agreed that (i) Secret would sell WFLN-FM
directly to Greater Media for $37,750, (ii) Greater Media would deposit
$4,050 (the difference between EMCLA's proposed acquisition price for
WFLN-FM from Secret and EMCLA's proposed sale price for WFLN-FM to Greater
Media) with the court and (iii) EMCLA and Secret would litigate each
party's entitlement to the amount deposited with the court. As of the date
hereof, no further resolution to this dispute has occurred.
(15) Reflects the elimination of time brokerage agreement fees received and paid
by CRBC as follows:
<TABLE>
<CAPTION>
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>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1997 MARKET PERIOD REVENUE EXPENSE
------------------------------ ----------- --------- ------- -------
<S> <C> <C> <C> <C>
WAPE-FM, WFYV-FM................................ Jacksonville 1/1-3/31 $(2,000) $ (476)
WBAB-FM, WBLI-FM, WGBB-AM, WHFM-FM.............. Long Island 1/1-3/31 -- (2,000)
------- -------
Total adjustment for decrease in gross revenues and expenses............ $(2,000) $(2,476)
======= =======
</TABLE>
B-28
<PAGE> 61
(16) Reflects incremental amortization related to the Pending Chancellor Media
Transactions and is based on the allocation of the total consideration as
follows:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1996 JUNE 30, 1997
----------------- ----------------
<S> <C> <C>
Amortization expense on $429,043 additional intangible
assets amortized on a straight-line basis over a 15
year period.......................................... $28,603 $14,301
Less: historical amortization expense.................. (3,186) (1,414)
------- -------
Adjustment for net increase in amortization expense.... $25,417 $12,887
======= =======
</TABLE>
Historical depreciation expense, of the Pending Chancellor Media
Transactions, is assumed to approximate depreciation expense on a pro forma
basis. Actual depreciation and amortization may differ based upon final
purchase price allocations.
(17) Reflects the adjustment to interest expense in connection with the
consummation of the Pending Transactions:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1996 JUNE 30, 1997
----------------- ----------------
<S> <C> <C>
Additional bank borrowings related to:
Pending Acquisitions................................. $440,500 $440,500
======== ========
Interest expense on additional bank borrowings at
7.0%................................................. $ 30,835 $ 15,418
======== ========
</TABLE>
(18) 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.
B-29
