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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MARCH 31, 1998
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Commission File No. 0-21570 Commission File No. 333-32259
CHANCELLOR MEDIA CORPORATION CHANCELLOR MEDIA CORPORATION
(Exact Name of Registrant OF LOS ANGELES
as Specified in its Charter) (Exact Name of Registrant
as Specified in its Charter)
DELAWARE DELAWARE
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
75-2247099 75-2451687
(I.R.S. Employer Identification Number) (I.R.S. Employer Identification Number)
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433 EAST LAS COLINAS BOULEVARD, SUITE 1130, IRVING, TEXAS 75039
(Address of principal executive offices, including zip code)
(972) 869-9020
(Registrants' telephone number, including area code)
Indicate by check mark whether Chancellor Media Corporation and Chancellor Media
Corporation of Los Angeles (1) have filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrants were required to file
such reports), and (2) have been subject to such filing requirements for the
past 90 days.
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Chancellor Media Corporation................................ Yes X No
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Chancellor Media Corporation of Los Angeles................. Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: As of April 30, 1998,
142,205,132 shares of Common Stock of Chancellor Media Corporation were
outstanding and 1,040 shares of Common Stock of Chancellor Media Corporation of
Los Angeles were outstanding.
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INDEX
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PAGE NO.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements........................................ 2
CHANCELLOR MEDIA CORPORATION
Consolidated Balance Sheets (unaudited)..................... 2
Consolidated Statements of Operations (unaudited)........... 3
Consolidated Statements of Cash Flows (unaudited)........... 4
Notes to Consolidated Financial Statements (unaudited)...... 5
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
Consolidated Balance Sheets (unaudited)..................... 13
Consolidated Statements of Operations (unaudited)........... 14
Consolidated Statements of Cash Flows (unaudited)........... 15
Notes to Consolidated Financial Statements (unaudited)...... 16
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 23
PART II. OTHER INFORMATION
Item 1. Legal Proceedings........................................... 27
Item 5. Other Information........................................... 28
Item 6. Exhibits and Reports on Form 8-K............................ 29
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PART I
ITEM 1 FINANCIAL STATEMENTS
CHANCELLOR MEDIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT FOR SHARE DATA)
ASSETS
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(UNAUDITED)
-----------
DECEMBER 31, MARCH 31,
1997 1998
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Current assets:
Cash and cash equivalents................................. $ 16,584 $ 306,305
Accounts receivable, less allowance for doubtful accounts
of $12,651 in 1997 and $13,522 in 1998................. 239,869 227,939
Other current assets...................................... 27,208 30,886
---------- ----------
Total current assets.............................. 283,661 565,130
Property and equipment, net................................. 159,797 161,373
Intangible assets, net...................................... 4,404,443 4,351,021
Other assets, net........................................... 113,576 117,898
---------- ----------
$4,961,477 $5,195,422
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses..................... $ 171,017 $ 164,463
Long-term debt.............................................. 2,573,000 1,900,000
Deferred tax liabilities.................................... 361,640 353,683
Other liabilities........................................... 44,405 43,182
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Total liabilities................................. 3,150,062 2,461,328
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Redeemable preferred stock:
Redeemable senior cumulative exchangeable preferred stock
of subsidiary, par value $.01 per share; 1,000,000
shares authorized, issued and outstanding; liquidation
preference of $121,274 in 1997 and 1998................ 119,445 119,445
Redeemable cumulative exchangeable preferred stock of
subsidiary, par value $.01 per share; 3,600,000 shares
authorized and 2,117,629 shares issued and outstanding;
liquidation preference of $223,519 in 1997 and $217,057
in 1998................................................ 211,763 211,763
Stockholders' equity:
Preferred stock, $.01 par value. 2,200,000 shares of 7%
convertible preferred stock authorized, issued and
outstanding............................................ 110,000 110,000
Preferred stock, $.01 par value. 6,000,000 shares
authorized; 5,990,000 shares of $3.00 convertible
exchangeable preferred stock issued and outstanding.... 299,500 299,500
Common stock, $.01 par value. Authorized 200,000,000
shares; issued and outstanding 119,921,814 shares in
1997 and 142,180,801 in 1998........................... 1,199 1,422
Paid-in capital........................................... 1,226,930 2,224,374
Accumulated deficit....................................... (157,422) (232,410)
---------- ----------
Total stockholders' equity........................ 1,480,207 2,402,886
---------- ----------
$4,961,477 $5,195,422
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</TABLE>
See accompanying notes to consolidated financial statements
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CHANCELLOR MEDIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
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THREE MONTHS ENDED
----------------------
MARCH 31, MARCH 31,
1997 1998
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Gross revenues.............................................. $93,812 $262,421
Less agency commissions................................... 11,915 28,864
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Net revenues...................................... 81,897 233,557
Operating expenses:
Operating expenses excluding depreciation and
amortization........................................... 52,984 148,019
Depreciation and amortization............................. 26,015 91,936
Corporate general and administrative...................... 2,330 6,803
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Operating expenses................................ 81,329 246,758
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Operating income (loss)........................... 568 (13,201)
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Nonoperating expenses:
Interest expense, net..................................... 7,888 48,300
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Loss before income taxes.......................... (7,320) (61,501)
Income tax benefit.......................................... 1,309 2,941
Dividends on preferred stock of subsidiary.................. -- 10,011
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Net loss.......................................... (6,011) (68,571)
Preferred stock dividends................................... -- 6,417
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Net loss attributable to common stockholders...... $(6,011) $(74,988)
======= ========
Basic and diluted loss per common share..................... $ (0.07) $ (0.60)
======= ========
Weighted average common shares outstanding.................. 84,376 124,718
======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
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CHANCELLOR MEDIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
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THREE MONTHS ENDED
----------------------
MARCH 31, MARCH 31,
1997 1998
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Cash flows from operating activities:
Net loss.................................................. $ (6,011) $ (68,571)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation........................................... 2,419 6,058
Amortization of goodwill, intangible assets and other
assets................................................ 23,596 85,878
Provisions for doubtful accounts....................... 1,254 1,625
Deferred income tax benefit............................ (1,309) (2,941)
Dividends on preferred stock of subsidiary............. -- 10,011
Other.................................................. -- (449)
Changes in certain assets and liabilities, net of
effects of acquisitions:
Accounts receivable.................................. 4,766 9,901
Other current assets................................. 433 (3,308)
Accounts payable and accrued expenses................ (5,911) (6,962)
Other assets......................................... (19) (25)
Other liabilities.................................... 23 (577)
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Net cash provided by operating activities......... 19,241 30,640
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Cash flows from investing activities:
Acquisitions, net of cash acquired........................ (83,500) (24,350)
Assets held for sale...................................... (50,000) --
Escrow deposits on pending acquisitions................... (53,750) (4,000)
Payments made on purchases of representation contracts.... -- (7,422)
Payments received on sales of representation contracts.... -- 4,164
Capital expenditures...................................... (672) (6,224)
Other..................................................... (6,461) (4,844)
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Net cash used by investing activities............. (194,383) (42,676)
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Cash flows from financing activities:
Proceeds from issuance of long-term debt.................. 192,250 56,000
Principal payments on long-term debt...................... (14,875) (729,000)
Payments on other liabilities............................. (132) --
Proceeds from issuance of common stock and preferred
stock.................................................. 124 997,667
Dividends on preferred stock.............................. -- (22,887)
Payments for debt issuance costs.......................... (16) (23)
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Net cash provided by financing activities......... 177,351 301,757
--------- ---------
Increase in cash and cash equivalents....................... 2,209 289,721
Cash and cash equivalents at beginning of period............ 3,060 16,584
--------- ---------
Cash and cash equivalents at end of period.................. $ 5,269 $ 306,305
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
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CHANCELLOR MEDIA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited interim financial
statements contain all adjustments (consisting of normal recurring accruals)
necessary to present fairly the financial position, results of operations and
cash flows of Chancellor Media Corporation (formerly known as Evergreen Media
Corporation ("Evergreen") and its subsidiaries (collectively, the "Company" or
"Chancellor Media") for the periods presented.
Interim periods are not necessarily indicative of results to be expected
for the year. It is suggested that these financial statements be read in
conjunction with the consolidated financial statements and the notes thereto
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1997.
The consolidated financial statements include the accounts of the Company
and its subsidiaries, all of which are wholly-owned. All significant
intercompany balances and transactions have been eliminated in consolidation.
On December 18, 1997, the Company declared a two-for-one stock split
effected in the form of a stock dividend payable on January 12, 1998 to
shareholders of record at the close of business on December 29, 1997. All share
and per share data (other than authorized share data) contained in the
accompanying financial statements have been retroactively adjusted to give
effect to the stock dividend.
Loss per common share is based on the weighted average number of common
shares outstanding during the periods after giving retroactive effect to the
stock split. Stock options, the $3.00 Convertible Exchangeable Preferred Stock
(the "$3.00 Convertible Preferred Stock") and the 7% Convertible Preferred Stock
(the "7% Convertible Preferred Stock") are not included in the calculation as
their effect would be antidilutive.
The Company adopted the provisions of SFAS No. 128, Earnings Per Share,
effective for the year ended December 31, 1997. This Statement establishes new
standards for computing and presenting earnings per share and requires
restatement of all prior period earnings per share data. The adoption of this
Statement resulted in the dual presentation of basic and diluted earnings per
share on the Company's income statement. In accordance with this Statement, the
Company has applied these provisions on a retroactive basis. Basic and diluted
loss per common share does not differ from previously reported primary loss per
share information for the three months ended March 31, 1997 due to the Company's
loss position.
The Company adopted SFAS No. 130, Reporting Comprehensive Income, effective
January 1, 1998. This statement requires that all items that are required to be
recognized under accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the same prominence as
other financial statements. The Company has no items of comprehensive income for
any period presented and therefore is not required to report comprehensive
income.
2. ACQUISITIONS AND DISPOSITIONS
1997 COMPLETED TRANSACTIONS
On January 31, 1997, the Company acquired WWWW-FM and WDFN-AM in Detroit
from affiliates of Chancellor Broadcasting Company ("Chancellor") for $30,000 in
cash plus various other direct acquisition costs. The Company had previously
provided certain sales and promotional functions to WWWW-FM and WDFN-AM under a
joint sales agreement since February 14, 1996 and subsequently operated the
stations under a time brokerage agreement since April 1, 1996.
On January 31, 1997, the Company acquired KKSF-FM and KDFC-FM/AM in San
Francisco from affiliates of the Brown Organization for $115,000 in cash plus
various other direct acquisition costs. The
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Company had previously been operating KKSF-FM and KDFC-FM/AM under a time
brokerage agreement since November 1, 1996. On July 21, 1997, the Company sold
KDFC-FM to Bonneville International Corporation ("Bonneville") for $50,000 in
cash. The assets of KDFC-FM were classified as assets held for sale in
connection with the purchase price allocation of the acquisition of KKSF-FM and
KDFC-FM/AM and no gain or loss was recognized by the Company upon consummation
of the sale.
On April 1, 1997, the Company acquired WJLB-FM and WMXD-FM in Detroit from
Secret Communications, L.P. ("Secret") for $168,000 in cash plus various other
direct acquisition costs. The Company had previously been operating WJLB-FM and
WMXD-FM under time brokerage agreements since September 1, 1996.
On April 3, 1997, the Company exchanged WQRS-FM in Detroit (which the
Company acquired on April 3, 1997 from Secret for $32,000 in cash plus various
other direct acquisition costs), to affiliates of Greater Media Radio, Inc.
("Greater Media") in return for WWRC-AM in Washington, D.C. and $9,500 in cash.
The exchange was accounted for as a like-kind exchange and no gain or loss was
recognized upon consummation of the transaction. The net purchase price to the
Company of WWRC-AM was therefore $22,500. The Company had previously been
operating WWRC-AM under a time brokerage agreement since June 17, 1996.
On May 1, 1997, the Company acquired WDAS-FM/AM in Philadelphia from
affiliates of Beasley FM Acquisition Corporation for $103,000 in cash plus
various other direct acquisition costs.
On May 15, 1997, the Company exchanged five of its six stations in
Charlotte, North Carolina (WPEG-FM, WBAV-FM/AM, WRFX-FM and WFNZ-AM) for two FM
stations in Philadelphia (WIOQ-FM and WUSL-FM) owned by EZ Communications, Inc.
("EZ") in Philadelphia (the "Charlotte Exchange"), and also sold the Company's
sixth radio station in Charlotte, WNKS-FM, to EZ for $10,000 in cash and
recognized a gain of $3,536. The Charlotte Exchange was accounted for as a
like-kind exchange and no gain or loss was recognized upon consummation of the
transaction.
On May 30, 1997, the Company acquired WPNT-FM in Chicago from affiliates of
Century Broadcasting Company for $75,740 in cash (including $1,990 for the
purchase of the station's accounts receivable) plus various other direct
acquisition costs. On June 19, 1997, the Company sold WPNT-FM in Chicago to
Bonneville for $75,000 in cash and recognized a gain of $529.
On June 3, 1997, the Company sold WEJM-FM in Chicago to affiliates of
Crawford Broadcasting for $14,750 in cash and recognized a gain of $9,258.
On July 2, 1997, the Company acquired WLTW-FM and WAXQ-FM in New York and
WMZQ-FM, WJZW-FM, WZHF-AM and WBZS-AM in Washington, D.C. from Viacom
International, Inc. ("Viacom") for approximately $612,388 in cash including
various other direct acquisition costs (the "Viacom Acquisition"). The Viacom
Acquisition was financed with (i) bank borrowings under the Senior Credit
Facility (as defined) of $552,559; (ii) $53,750 in escrow funds paid by the
Company on February 19, 1997 and (iii) $6,079 financed through working capital.
In June 1997, the Company issued 5,990,000 shares of $3.00 Convertible Preferred
Stock for net proceeds of $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 Viacom Acquisition. On July 7, 1997, the Company sold
WJZW-FM in Washington, D.C. to affiliates of Capital Cities/ABC Radio for
$68,000 in cash. The assets of WJZW-FM, as well as the assets of WZHF-AM and
WBZS-AM, which were also sold on August 13, 1997, were accounted for as assets
held for sale in connection with the purchase price allocation of the Viacom
Acquisition and no gain or loss was recognized by the Company upon consummation
of the sales.
On July 7, 1997, the Company sold the Federal Communications Commission
("FCC") authorizations and certain transmission equipment previously used in the
operation of KYLD-FM in San Francisco to Susquehanna Radio Corporation
("Susquehanna") for $44,000 in cash and recognized a gain of $1,726.
Simultaneously therewith, Chancellor sold the call letters "KSAN-FM" (which
Chancellor previously used in San Francisco) to Susquehanna. On July 7, 1997,
the Company and Chancellor entered into a time brokerage agreement to enable the
Company to operate KYLD-FM on the frequency previously assigned to KSAN-FM,
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and on July 7, 1997, Chancellor changed the call letters of KSAN-FM to KYLD-FM.
Upon the consummation of the Chancellor Merger (as defined herein), the Company
changed the format of the new KYLD-FM to the format previously operated on the
old KYLD-FM.
On July 14, 1997, the Company completed the disposition of WLUP-FM in
Chicago to Bonneville for net proceeds of $80,000 which were held by a qualified
intermediary pending the completion of the deferred exchange of WLUP-FM for
KZPS-FM and KDGE-FM in Dallas. On October 7, 1997, the Company applied the net
proceeds from the disposition of WLUP-FM of $80,000 in cash, plus an additional
$3,500 and various other direct acquisition costs, in a deferred exchange of
WLUP-FM for KZPS-FM and KDGE-FM in Dallas. The exchange was accounted for as a
like-kind exchange and no gain or loss was recognized upon consummation of the
transaction. The Company had previously operated KZPS-FM and KDGE-FM under time
brokerage agreements effective August 1, 1997.
On July 21, 1997, the Company entered into a time brokerage agreement with
Chancellor whereby the Company began managing certain limited functions of
Chancellor's stations KBGG-FM, KNEW-AM and KABL-FM in San Francisco pending the
consummation of the Chancellor Merger (as defined herein), which occurred on
September 5, 1997.
On August 13, 1997, the Company sold WBZS-AM and WZHF-AM in Washington,
D.C. (acquired as part of the Viacom Acquisition) and KDFC-AM in San Francisco
to affiliates of Douglas Broadcasting ("Douglas") for $18,000 in the form of a
promissory note. The promissory note, as amended on May 1, 1998, bears interest
at 7 3/4% from the closing date through February 28, 1998 and at 10.0% from
March 1, 1998 through the remainder of the term of the note, with a balloon
principal payment due four years after closing. At closing, Douglas posted a
$1,000 letter of credit for the benefit of the Company that will remain
outstanding until all amounts due under the promissory note are paid.
On August 27, 1997, the Company sold WEJM-AM in Chicago to Douglas for
$7,500 in cash and recognized a gain of $3,331.
On September 5, 1997, pursuant to an Amended and Restated Agreement and
Plan of Merger, dated as of February 19, 1997 and amended and restated on July
31, 1997 (the "Chancellor Merger Agreement"), among Chancellor, Chancellor Radio
Broadcasting Company ("CRBC"), Evergreen, Evergreen Mezzanine Holdings
Corporation ("EMHC") and Evergreen Media Corporation of Los Angeles ("EMCLA"),
(i) Chancellor was merged (the "Parent Merger") with and into EMHC, a direct,
wholly-owned subsidiary of Evergreen, with EMHC remaining as the surviving
corporation and (ii) CRBC was merged (the "Subsidiary Merger") with and into
EMCLA, a direct, wholly-owned subsidiary of EMHC, with EMCLA remaining as the
surviving corporation (collectively, the "Chancellor Merger"). Upon consummation
of the Parent Merger, the Company was renamed Chancellor Media Corporation and
EMHC was renamed Chancellor Mezzanine Holdings Corporation ("CMHC"). Upon
consummation of the Subsidiary Merger, EMCLA was renamed Chancellor Media
Corporation of Los Angeles ("CMCLA"). Consummation of the Chancellor Merger
added 52 radio stations (36 FM and 16 AM) to the Company's portfolio of
stations, including 13 stations in markets in which the Company previously
operated. The total purchase price allocated to net assets acquired was
approximately $1,998,383 which included (i) the conversion of each outstanding
share of Chancellor Common Stock into 0.9091 shares of the Company's Common
Stock, resulting in the issuance of 34,617,460 shares of the Company's Common
Stock at $15.50 per share, (ii) the assumption of long-term debt of CRBC of
$949,000 which included $549,000 of borrowings outstanding under the CRBC senior
credit facility, $200,000 of CRBC's 9 3/8% Senior Subordinated Notes due 2004
and $200,000 of CRBC's 8 3/4% Senior Subordinated Notes due 2007, (iii) the
issuance of 2,117,629 shares of CMCLA's 12% Exchangeable Preferred Stock in
exchange for CRBC's substantially identical securities with a fair value of
$215,570 including accrued and unpaid dividends of $3,807, (iv) the issuance of
1,000,000 shares of CMCLA's 12 1/4% Series A Senior Cumulative Exchangeable
Preferred Stock in exchange for CRBC's substantially identical securities with a
fair value of $120,217 including accrued and unpaid dividends of $772, (v) the
issuance of 2,200,000 shares of the Company's 7% Convertible Preferred Stock in
exchange for Chancellor's substantially identical securities with a fair value
of $111,048 including accrued and unpaid dividends of $1,048, (vi) the
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assumption of stock options issued to Chancellor stock option holders with a
fair value of $34,977 and (vii) estimated acquisition costs of $31,000.
On October 28, 1997, the Company acquired Katz Media Group, Inc. ("KMG"), a
full-service media representation firm, in a tender offer transaction for a
total purchase price of approximately $379,101 (the "Katz Acquisition") which
included (i) the conversion of each outstanding share of KMG Common Stock into
the right to receive $11.00 in cash, resulting in total cash payments of
$149,601, (ii) the assumption of long-term debt of KMG and its subsidiaries of
$222,000 which included $122,000 of borrowings outstanding under the KMG senior
credit facility and $100,000 of 10 1/2% Senior Subordinated Notes due 2007 of
Katz Media Corporation (a subsidiary of KMG) and (iii) estimated acquisition
costs of $7,500.
On December 29, 1997, the Company acquired five radio stations from Pacific
and Southern Company, Inc., a subsidiary of Gannett Co., Inc. consisting of
WGCI-FM/AM in Chicago for $140,000, KKBQ-FM/AM in Houston for $110,000 and
KHKS-FM in Dallas for $90,000, for an aggregate purchase price of $340,000 in
cash plus various other direct acquisition costs.
1998 COMPLETED TRANSACTIONS
On January 30, 1998, the Company acquired KXPK-FM in Denver from Ever Green
Wireless LLC (which is unrelated to the Company) for $26,000 in cash plus
various other direct acquisition costs, of which $1,650 was previously paid by
Chancellor as escrow funds and are classified as other assets at December 31,
1997. The Company had previously operated KXPK-FM under a time brokerage
agreement since September 1, 1997.
On April 3, 1998, the Company exchanged WTOP-AM in Washington, KZLA-FM in
Los Angeles and WGMS-FM in Washington plus $63,000 in cash (including $3,000
paid by the Company in escrow and classified as other assets at December 31,
1997 and March 31, 1998) to Bonneville in return for WBIX-FM in New York,
KLDE-FM in Houston and KBIG-FM in Los Angeles (the "Bonneville Exchange"). The
Company had previously operated KLDE-FM and KBIG-FM under time brokerage
agreements since October 1, 1997 and WBIX-FM since October 10, 1997, and had
sold substantially all of the broadcast time of WTOP-AM, KZLA-FM and WGMS-FM to
Bonneville since October 1, 1997.
On April 13, 1998, the Company and Secret entered into a settlement
agreement regarding WFLN-FM in Philadelphia. Previously in August 1996, the
Company and Secret had entered into an agreement under which the Company would
acquire WFLN-FM from Secret for $37,750 in cash. The Company in April 1997 had
entered into an agreement to sell WFLN-FM to Greater Media for $41,800 in cash.
On July 16, 1997, Secret purported to terminate the sale of WFLN-FM to the
Company. The Company subsequently brought suit against Secret to enforce its
rights to acquire WFLN-FM. Pursuant to a court settlement entered in August 1997
and the settlement agreement between the Company and Secret entered on April 13,
1998, (i) Secret sold WFLN-FM directly to Greater Media for $37,750, (ii)
Greater Media deposited $4,050 (the difference between the Company's proposed
acquisition price for WFLN-FM from Secret and the Company's proposed sale price
for WFLN-FM to Greater Media) with the court and (iii) the Company received
$3,500 of such amount deposited by Greater Media with the court, plus interest
earned during the period which the court held such amounts, and Secret received
the balance of such amounts.
PENDING TRANSACTIONS
On February 17, 1998, the Company entered into an agreement to acquire
WWDC-FM/AM in Washington, D.C. from Capitol Broadcasting Company and its
affiliates for $72,000 in cash (including $4,000 paid by the Company in escrow
and classified as other assets at March 31, 1998), plus an amount equal to the
value assigned to certain accounts receivable for the stations (the "Capitol
Broadcasting Acquisition"). Although there can be no assurance, the Company
expects that the Capitol Broadcasting Acquisition will be consummated in the
second quarter of 1998.
On February 20, 1998, the Company entered into an agreement to acquire from
Capstar Broadcasting Corporation (together with its subsidiaries, "Capstar")
KTXQ-FM and KBFB-FM in Dallas/Ft. Worth,
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KODA-FM, KKRW-FM and KQUE-AM in Houston, KPLN-FM and KYXY-FM in San Diego and
WVTY-FM, WJJJ-FM, WXDX-FM and WDVE-FM in Pittsburgh (collectively, the
"Capstar/SFX Stations") for an aggregate purchase price of approximately
$637,500 (the "Capstar Transaction"). The Capstar/SFX Stations are presently
owned by SFX Broadcasting, Inc. ("SFX"), and are expected to be acquired by
Capstar as part of Capstar's pending acquisition of SFX (the "Capstar/SFX
Acquisition"). The Capstar/SFX Stations would be acquired by the Company in a
series of purchases and exchanges over a period of three years, and would be
operated by the Company under time brokerage agreements immediately upon the
consummation of the Capstar/SFX Acquisition until acquired by the Company. As
part of the Capstar Transaction, the Company would exchange WAPE-FM and WFYV-FM
in Jacksonville (valued for purposes of the Capstar Transaction at $53,000) plus
$90,250 in cash for Capstar/SFX Station KODA-FM in Houston. The Company would
pay approximately $494,250 for the remaining ten Capstar/SFX Stations. As part
of the Capstar Transaction, the Company would, at the consummation of the
Capstar/SFX Acquisition, provide a loan to Capstar in the principal amount of up
to $250,000 (the "Capstar Loan"). The Capstar Loan would bear interest at the
rate of 12% per annum (subject to increase in certain circumstances), and would
be secured by a senior pledge of common stock of Capstar's direct subsidiary. A
portion of the Capstar Loan would be prepaid by Capstar in connection with the
Company's acquisition of, and the proceeds of such prepayment would be used by
the Company as a portion of the purchase price for, each Capstar/SFX Station.
The Company's obligation to provide the Capstar Loan is conditioned, among other
things, on Capstar's receipt of at least $650,000 in equity investments that are
subordinate to the Capstar Loan between January 1, 1998 and the consummation of
the Capstar/SFX Acquisition. Hicks, Muse, Tate & Furst, Incorporated ("Hicks
Muse"), which is a substantial shareholder of the Company, controls Capstar, and
certain directors of the Company are directors and/or executive officers of
Capstar and/or Hicks Muse. The Capstar Transaction was approved by the
disinterested directors of the Company's Board of Directors. Capstar has
informed the Company that the Capstar/SFX Acquisition will be consummated in the
second quarter of 1998.
On April 8, 1998, the Company entered into an agreement to acquire Petry
Media Corporation, a leading independent television representation firm, for
approximately $150,000 in cash (the "Petry Acquisition"). Although there can be
no assurance, the Company expects that the Petry Acquisition will be consummated
in the third or fourth quarter of 1998.
Consummation of each of the transactions discussed above is subject to
various conditions, including approval from the FCC and the expiration or early
termination of any waiting period required under the HSR Act. The Company
believes that such conditions will be satisfied in the ordinary course, but
there can be no assurance that this will be the case.
Escrow funds of $4,650 and $7,000 paid by the Company in connection with
the Bonneville Exchange and the Capitol Broadcasting Acquisition have been
classified as other assets in the accompanying balance sheet at December 31,
1997 and March 31, 1998, respectively.
SUMMARY OF NET ASSETS ACQUIRED
The acquisitions discussed above were accounted for as purchases.
Accordingly, the accompanying consolidated financial statements include the
results of operations of the acquired entities from the dates of acquisition.
9
<PAGE> 11
A summary of the net assets acquired follows:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, MARCH 31,
1997 1998
------------ ------------
<S> <C> <C>
Working capital, including cash of $9,724 in 1997........... $ 66,805 $ --
Property and equipment...................................... 118,371 1,411
Assets held for sale........................................ 131,000 --
Intangible assets........................................... 3,823,746 24,589
Other assets................................................ 26,742 --
Deferred tax liability...................................... (279,371) --
Other liabilities........................................... (39,681) --
---------- -------
$3,847,612 $26,000
========== =======
</TABLE>
The pro forma consolidated condensed results of operations data for the
three months ended March 31, 1997 and 1998, as if the 1997 Completed
Transactions and the 1998 Completed Transactions discussed above, the offering
in December 1997 by CMCLA of its 8 1/8% Notes (as defined herein), the amendment
and restatement of the Senior Credit Facility and the 1998 Equity Offering (as
defined herein) occurred at January 1, 1997, follow:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------
MARCH 31, MARCH 31,
1997 1998
--------- ---------
<S> <C> <C>
Net revenues................................................ $207,374 $233,557
Net loss.................................................... (77,569) (65,635)
Basic and diluted loss per common share..................... $ (0.55) $ (0.46)
</TABLE>
The pro forma results are not necessarily indicative of what would have
occurred if the acquisitions had been in effect for the entire periods
presented.
3. FINANCING TRANSACTIONS
1998 COMPLETED FINANCING TRANSACTIONS
On March 13, 1998, the Company completed a secondary offering of 21,850,000
shares of its Common Stock (the "1998 Equity Offering"). The net proceeds from
the 1998 Equity Offering of approximately $994,642 were used to reduce bank
borrowings under the revolving credit portion of the Senior Credit Facility (as
defined) and the excess proceeds were invested in short-term investment grade
securities. The Company has used a portion of the excess proceeds from the 1998
Equity Offering to finance the Bonneville Exchange, and intends to use the
remaining excess proceeds from the 1998 Equity Offering to finance the proposed
repurchase of CMCLA's 12% Debentures (as defined below). In addition, the
Company anticipates that it will attempt to repurchase any and all shares of
CMCLA's 12 1/4% Series A Senior Cumulative Exchangeable Preferred Stock (the
"12 1/4% Preferred Stock") in the near future.
PENDING FINANCING TRANSACTIONS
On April 29, 1998, CMCLA commenced a consent solicitation (the "12%
Preferred Stock Consent Solicitation") to modify certain timing restrictions on
CMCLA's ability to exchange all shares of its 12% Preferred Stock for its 12%
Subordinated Exchange Debentures due 2009 (the "12% Debentures"). The 12%
Preferred Stock Consent Solicitation was successful, and on May 13, 1998, CMCLA
exchanged the shares of 12% Preferred Stock for 12% Debentures. In this regard,
CMCLA also commenced a cash tender offer (the "Tender Offer") for CMCLA's 12%
Debentures. The purchase price for each $1,000 principal amount of 12%
Debentures validly tendered and accepted for purchase in the Tender Offer shall
be the greater of (i) $1,201.27 or (ii) an amount based on an 85-basis point
spread over the yield of the 6 1/4% U.S. Treasury
10
<PAGE> 12
Note due January 31, 2002 as of 2:00 p.m., New York City time, on the tenth
business day immediately preceding the expiration date of the Tender Offer. The
Tender Offer will expire at 11:59 p.m. on June 10, 1998, unless extended. There
can be no assurance that the Tender Offer will be successful.
4. LONG-TERM DEBT
Long-term debt consists of the following at December 31, 1997 and March 31,
1998:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1997 1998
------------ ----------
<S> <C> <C>
Senior Credit Facility(a)................................. $1,573,000 $ 900,000
9 3/8% Notes(b)........................................... 200,000 200,000
8 3/4% Notes(b)........................................... 200,000 200,000
10 1/2% Notes(b).......................................... 100,000 100,000
8 1/8% Notes(b)........................................... 500,000 500,000
---------- ----------
Total long-term debt............................ $2,573,000 $1,900,000
========== ==========
</TABLE>
(a) Senior Credit Facility
On April 25, 1997, the Company entered into a loan agreement which amended
and restated its prior senior credit facility. Under the amended and restated
agreement, as amended on June 26, 1997, August 7, 1997, October 28, 1997,
February 10, 1998 and May 1, 1998 (as amended, the "Senior Credit Facility"),
the Company established a $1,250,000 revolving facility (the "Revolving Loan
Facility") and a $500,000 term loan facility (the "Term Loan Facility"). Upon
consummation of the Chancellor Merger, the aggregate commitments under the
Revolving Loan Facility and the Term Loan Facility were increased to $1,600,000
and $900,000, respectively. In connection with the amendment and restatement of
the Senior Credit Facility, the Company wrote off the unamortized balance of
deferred debt issuance costs of $4,350 (net of a tax benefit of $2,343) as an
extraordinary charge.
Borrowings under the Senior Credit Facility bear interest at a rate based,
at the option of the Company, on the participating banks' prime rate or
Eurodollar rate, plus an incremental rate. Without giving effect to the interest
rate swap and cap agreements described below, the interest rate on the $900,000
outstanding under the Term Loan at March 31, 1998 was 7.06% on a blended basis,
based on Eurodollar rates. The Company pays fees ranging from 0.25% to 0.375%
per annum on the aggregate unused portion of the loan commitment based upon the
leverage ratio for the most recent quarter end, in addition to an annual agent's
fee. Pursuant to the Senior Credit Facility, the Company is required to enter
into interest hedging agreements that result in the fixing or placing a cap on
the Company's floating rate debt so that not less than 50% of the principal
amount of total debt outstanding has a fixed or capped rate.
The Term Loan Facility is payable in quarterly installments commencing on
September 30, 2000 and ending June 20, 2005. The Revolving Loan Facility
requires scheduled annual reductions of the commitment amount, payable in
quarterly installments commencing on September 30, 2000 and ending on June 30,
2005. At April 30, 1998, the Company had drawn $900,000 of the Term Loan
Facility. Upon consummation of the 1998 Equity Offering, on March 13, 1998, all
amounts outstanding under the Revolving Loan Facility on such date were repaid.
The aggregate commitment under the Revolving Loan Facility remains available for
reborrowing, subject to compliance with the conditions contained in the Senior
Credit Facility. The capital stock of the Company's subsidiaries is pledged to
secure the performance of the Company's obligations under the Senior Credit
Facility, and each of the Company's subsidiaries have guaranteed those
obligations.
(b) Senior Subordinated Notes
Upon consummation of the Chancellor Merger, on September 5, 1997, the
Company assumed all of the obligations under CRBC's $200,000 aggregate principal
amount 9 3/8% Senior Subordinated Notes due 2004 (the "9 3/8% Notes") and the
indenture governing such securities, and assumed all of the obligations under
CRBC's $200,000 aggregate principal amount 8 3/4% Senior Subordinated Notes due
2007 (the "8 3/4% Notes")
11
<PAGE> 13
and the indenture governing such securities. Upon consummation of the Katz
Acquisition, on October 28, 1997, the Company assumed all of the obligations
under Katz Media Corporation's $100,000 aggregate principal amount of 10 1/2%
Senior Subordinated Notes due 2007 (the "10 1/2% Notes") and the amended and
restated indenture governing such securities. On December 22, 1997, the Company
issued $500,000 aggregate principal amount of 8 1/8% Senior Subordinated Notes
due 2007 (the "8 1/8% Notes") for estimated net proceeds of $485,000.
(c) Other
The 9 3/8% Notes, the 8 3/4% Notes, the 10 1/2% Notes and the 8 1/8% Notes
(collectively, the "Notes") are unsecured obligations of the Company,
subordinated in right of payment to all existing and any future senior
indebtedness of the Company. The Notes are fully and unconditionally guaranteed,
on a joint and several basis, by all of the Company's direct and indirect
subsidiaries other than certain inconsequential subsidiaries (the "Subsidiary
Guarantors"). The Subsidiary Guarantors are wholly-owned subsidiaries of the
Company.
The Senior Credit Facility and the indentures governing the Notes contain
customary restrictive covenants, which, among other things and with certain
exceptions, limit the ability of the Company and its subsidiaries to incur
additional indebtedness and liens in connection therewith, enter into certain
transactions with affiliates, pay dividends, consolidate, merge or effect
certain asset sales, issue additional stock, effect an asset swap and make
acquisitions. The Company is required under the Senior Credit Facility to
maintain specified financial rations, including leverage, cash flow and debt
service coverage ratios (as defined).
5. CONTINGENCIES
The Company is involved in several lawsuits that are incidental to its
business. A discussion of certain of these lawsuits is contained in Part II,
Item 1, "Legal Proceedings", of this Form 10-Q. The Company believes that the
ultimate resolution of the lawsuits will not have a material effect on its
financial position or results of operations.
6. SUBSEQUENT EVENTS
On April 14, 1998, Scott K. Ginsburg resigned as President and Chief
Executive Officer of the Company, CMHC and CMCLA, and on April 20, 1998, Mr.
Ginsburg resigned as a director of the Company, CMHC and CMCLA and from all
positions held with their respective subsidiaries. On April 20, 1998, the
Company entered into a separation and consulting agreement with Mr. Ginsburg
which provides, among other things, for (i) a lump sum severance payment of
$20,000; (ii) a grant of 800,000 stock options at an exercise price of $23.25
per share and (iii) consulting fees of $2,500 per year through April 13, 2003.
It is expected that the Company will incur a significant one-time charge in the
second quarter related to Mr. Ginsburg's separation and consulting agreement and
new employment agreements to be entered into with certain members of executive
management. On April 29, 1998, Jeffrey A. Marcus was named President and Chief
Executive Officer of the Company, CMHC and CMCLA, to be effective on June 1,
1998. Thomas O. Hicks, Chairman of the Board of the Company, CMHC and CMCLA, is
serving as Chief Executive Officer of the Company, CMHC and CMCLA on an interim
basis until June 1, 1998.
12
<PAGE> 14
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT FOR SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
(UNAUDITED)
DECEMBER 31, MARCH 31,
1997 1998
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 16,584 $ 306,305
Accounts receivable, less allowance for doubtful accounts
of $12,651 in 1997 and $13,522 in 1998................. 239,869 227,939
Other current assets...................................... 27,208 30,886
---------- ----------
Total current assets.............................. 283,661 565,130
Property and equipment, net................................. 159,797 161,373
Intangible assets, net...................................... 4,404,443 4,351,021
Other assets................................................ 113,576 117,898
---------- ----------
$4,961,477 $5,195,422
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable and accrued expenses..................... $ 171,017 $ 164,463
Long-term debt.............................................. 2,573,000 1,900,000
Deferred tax liabilities.................................... 361,640 353,683
Other liabilities........................................... 44,405 43,182
---------- ----------
Total liabilities................................. 3,150,062 2,461,328
---------- ----------
Redeemable preferred stock:
Redeemable senior cumulative exchangeable preferred stock,
par value $.01 per share; 1,000,000 shares authorized,
issued and outstanding; liquidation preference of
$121,274 in 1997 and 1998.............................. 119,445 119,445
Redeemable cumulative exchangeable preferred stock, par
value $.01 per share; 3,600,000 shares authorized and
2,117,629 shares issued and outstanding; liquidation
preference of $223,519 in 1997 and $217,057 in 1998.... 211,763 211,763
Stockholder's equity:
Common stock, $.01 par value. 1,040 shares authorized,
issued and outstanding................................. 1 1
Paid-in capital........................................... 1,637,628 2,635,295
Accumulated deficit....................................... (157,422) (232,410)
---------- ----------
Total stockholder's equity........................ 1,480,207 2,402,886
---------- ----------
$4,961,477 $5,195,422
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
13
<PAGE> 15
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------
MARCH 31, MARCH 31,
1997 1998
--------- ---------
<S> <C> <C>
Gross revenues.............................................. $93,812 $262,421
Less agency commissions................................... 11,915 28,864
------- --------
Net revenues...................................... 81,897 233,557
Operating expenses:
Operating expenses excluding depreciation and
amortization........................................... 52,984 148,019
Depreciation and amortization............................. 26,015 91,936
Corporate general and administrative...................... 2,330 6,803
------- --------
Operating expenses................................ 81,329 246,758
------- --------
Operating income (loss)........................... 568 (13,201)
------- --------
Nonoperating expenses:
Interest expense, net..................................... 7,888 48,300
------- --------
Loss before income taxes.......................... (7,320) (61,501)
Income tax benefit.......................................... 1,309 2,941
------- --------
Net loss.......................................... (6,011) (58,560)
Preferred stock dividends................................... -- 10,011
------- --------
Net loss attributable to common stock............. $(6,011) $(68,571)
======= ========
</TABLE>
See accompanying notes to consolidated financial statement.
14
<PAGE> 16
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------
MARCH 31, MARCH 31,
1997 1998
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $ (6,011) $ (58,560)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation........................................... 2,419 6,058
Amortization of goodwill, intangible assets and other
assets............................................... 23,596 85,878
Provisions for doubtful accounts....................... 1,254 1,625
Deferred income tax benefit............................ (1,309) (2,941)
Other.................................................. -- (449)
Changes in certain assets and liabilities, net of
effects of acquisitions:
Accounts receivable.................................. 4,766 9,901
Other current assets................................. 433 (3,308)
Accounts payable and accrued expenses ............... (5,911) (6,962)
Other assets......................................... (19) (25)
Other liabilities.................................... 23 (577)
--------- ---------
Net cash provided by operating activities......... 19,241 30,640
--------- ---------
Cash flows from investing activities:
Acquisitions, net of cash acquired........................ (83,500) (24,350)
Assets held for sale...................................... (50,000) --
Escrow deposits on pending acquisitions................... (53,750) (4,000)
Payments made on purchases of representation contracts.... -- (7,422)
Payments received on sales of representation contracts.... -- 4,164
Capital expenditures...................................... (672) (6,224)
Other..................................................... (6,461) (4,844)
--------- ---------
Net cash used by investing activities............. (194,383) (42,676)
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of long-term debt.................. 192,250 56,000
Principal payments on long-term debt...................... (14,875) (729,000)
Payments on other liabilities............................. (132) --
Cash contributed by parent................................ 124 997,667
Dividend to parent........................................ -- (22,887)
Payments for debt issuance costs.......................... (16) (23)
--------- ---------
Net cash provided by financing activities......... 177,351 301,757
--------- ---------
Increase in cash and cash equivalents....................... 2,209 289,721
Cash and cash equivalents at beginning of period............ 3,060 16,584
--------- ---------
Cash and cash equivalents at end of period.................. $ 5,269 $ 306,305
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
15
<PAGE> 17
CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited interim financial
statements contain all adjustments (consisting of normal recurring accruals)
necessary to present fairly the financial position, results of operations and
cash flows of Chancellor Media Corporation of Los Angeles (formerly known as
Evergreen Media Corporation of Los Angeles ("EMCLA")) and its subsidiaries
(collectively, "CMCLA") for the periods presented. Chancellor Media Corporation
of Los Angeles is an indirect, wholly owned subsidiary of Chancellor Media
Corporation ("Chancellor Media").
Interim periods are not necessarily indicative of results to be expected
for the year. It is suggested that these financial statements be read in
conjunction with the consolidated financial statements and the notes thereto
included in CMCLA's Annual Report on Form 10-K for the year ended December 31,
1997.
The consolidated financial statements include the accounts of CMCLA and its
subsidiaries, all of which are wholly-owned. All significant intercompany
balances and transactions have been eliminated in consolidation.
2. ACQUISITIONS AND DISPOSITIONS
1997 COMPLETED TRANSACTIONS
On January 31, 1997, CMCLA acquired WWWW-FM and WDFN-AM in Detroit from
affiliates of Chancellor Radio Broadcasting Company ("CRBC") for $30,000 in cash
plus various other direct acquisition costs. CMCLA had previously provided
certain sales and promotional functions to WWWW-FM and WDFN-AM under a joint
sales agreement since February 14, 1996 and subsequently operated the stations
under a time brokerage agreement since April 1, 1996.
On January 31, 1997, CMCLA acquired KKSF-FM and KDFC-FM/AM in San Francisco
from affiliates of the Brown Organization for $115,000 in cash plus various
other direct acquisition costs. CMCLA had previously been operating KKSF-FM and
KDFC-FM/AM under a time brokerage agreement since November 1, 1996. On July 21,
1997, CMCLA sold KDFC-FM to Bonneville International Corporation ("Bonneville")
for $50,000 in cash. The assets of KDFC-FM were classified as assets held for
sale in connection with the purchase price allocation of the acquisition of
KKSF-FM and KDFC-FM/AM and no gain or loss was recognized by CMCLA upon
consummation of the sale.
On April 1, 1997, CMCLA acquired WJLB-FM and WMXD-FM in Detroit from Secret
Communications, L.P. ("Secret") for $168,000 in cash plus various other direct
acquisition costs. CMCLA had previously been operating WJLB-FM and WMXD-FM under
time brokerage agreements since September 1, 1996.
On April 3, 1997, CMCLA exchanged WQRS-FM in Detroit (which CMCLA acquired
on April 3, 1997 from Secret for $32,000 in cash plus various other direct
acquisition costs), to affiliates of Greater Media Radio, Inc. ("Greater Media")
in return for WWRC-AM in Washington, D.C. and $9,500 in cash. The exchange was
accounted for as a like-kind exchange and no gain or loss was recognized upon
consummation of the transaction. The net purchase price to CMCLA of WWRC-AM was
therefore $22,500. CMCLA had previously been operating WWRC-AM under a time
brokerage agreement since June 17, 1996.
On May 1, 1997, CMCLA acquired WDAS-FM/AM in Philadelphia from affiliates
of Beasley FM Acquisition Corporation for $103,000 in cash plus various other
direct acquisition costs.
On May 15, 1997, CMCLA exchanged five of its six stations in Charlotte,
North Carolina (WPEG-FM, WBAV-FM/AM, WRFX-FM and WFNZ-AM) for two FM stations in
Philadelphia (WIOQ-FM and WUSL-FM) owned by EZ Communications, Inc. ("EZ") in
Philadelphia (the "Charlotte Exchange"), and also sold the CMCLA's sixth radio
station in Charlotte, WNKS-FM, to EZ for $10,000 in cash and
16
<PAGE> 18
recognized a gain of $3,536. The Charlotte Exchange was accounted for as a
like-kind exchange and no gain or loss was recognized upon consummation of the
transaction.
On May 30, 1997, CMCLA acquired WPNT-FM in Chicago from affiliates of
Century Broadcasting Company for $75,740 in cash (including $1,990 for the
purchase of the station's accounts receivable) plus various other direct
acquisition costs. On June 19, 1997, CMCLA sold WPNT-FM in Chicago to Bonneville
for $75,000 in cash and recognized a gain of $529.
On June 3, 1997, CMCLA sold WEJM-FM in Chicago to affiliates of Crawford
Broadcasting for $14,750 in cash and recognized a gain of $9,258.
On July 2, 1997, CMCLA acquired WLTW-FM and WAXQ-FM in New York and
WMZQ-FM, WJZW-FM, WZHF-AM and WBZS-AM in Washington, D.C. from Viacom
International, Inc. ("Viacom") for approximately $612,388 in cash including
various other direct acquisition costs (the "Viacom Acquisition"). The Viacom
Acquisition was financed with (i) bank borrowings under the Senior Credit
Facility (as defined) of $552,559; (ii) $53,750 in escrow funds paid by CMCLA on
February 19, 1997 and (iii) $6,079 financed through working capital. In June
1997, Chancellor Media issued 5,990,000 shares of $3.00 Convertible Exchangeable
Preferred Stock for net proceeds of $287,808 which were contributed to CMCLA and
used to repay borrowings under the Senior Credit Facility and subsequently were
reborrowed on July 2, 1997 as part of the financing of the Viacom Acquisition.
On July 7, 1997, CMCLA sold WJZW-FM in Washington, D.C. to affiliates of Capital
Cities/ABC Radio for $68,000 in cash. The assets of WJZW-FM, as well as the
assets of WZHF-AM and WBZS-AM, which were also sold on August 13, 1997, were
accounted for as assets held for sale in connection with the purchase price
allocation of the Viacom Acquisition and no gain or loss was recognized by CMCLA
upon consummation of the sales.
On July 7, 1997, CMCLA sold the Federal Communications Commission ("FCC")
authorizations and certain transmission equipment previously used in the
operation of KYLD-FM in San Francisco to Susquehanna Radio Corporation
("Susquehanna") for $44,000 in cash and recognized a gain of $1,726.
Simultaneously therewith, CRBC sold the call letters "KSAN-FM" (which CRBC
previously used in San Francisco) to Susquehanna. On July 7, 1997, CMCLA and
CRBC entered into a time brokerage agreement to enable CMCLA to operate KYLD-FM
on the frequency previously assigned to KSAN-FM, and on July 7, 1997, CRBC
changed the call letters of KSAN-FM to KYLD-FM. Upon the consummation of the
Chancellor Merger (as defined herein), CMCLA changed the format of the new
KYLD-FM to the format previously operated on the old KYLD-FM.
On July 14, 1997, CMCLA completed the disposition of WLUP-FM in Chicago to
Bonneville for net proceeds of $80,000 which were held by a qualified
intermediary pending the completion of the deferred exchange of WLUP-FM for
KZPS-FM and KDGE-FM in Dallas. On October 7, 1997, CMCLA applied the net
proceeds from the disposition of WLUP-FM of $80,000 in cash, plus an additional
$3,500 and various other direct acquisition costs, in a deferred exchange of
WLUP-FM for KZPS-FM and KDGE-FM in Dallas. The exchange was accounted for as a
like-kind exchange and no gain or loss was recognized upon consummation of the
transaction. CMCLA had previously operated KZPS-FM and KDGE-FM under time
brokerage agreements effective August 1, 1997.
On July 21, 1997, CMCLA entered into a time brokerage agreement with CRBC
whereby CMCLA began managing certain limited functions of CRBC's stations
KBGG-FM, KNEW-AM and KABL-FM in San Francisco pending the consummation of the
Chancellor Merger (as defined herein), which occurred on September 5, 1997.
On August 13, 1997, CMCLA sold WBZS-AM and WZHF-AM in Washington, D.C.
(acquired as part of the Viacom Acquisition) and KDFC-AM in San Francisco to
affiliates of Douglas Broadcasting ("Douglas") for $18,000 in the form of a
promissory note. The promissory note, as amended on May 1, 1998, bears interest
at 7 3/4% from the closing date through February 28, 1998 and at 10.0% from
March 1, 1998 through the remainder of the term of the note, with a balloon
principal payment due four years after closing. At closing, Douglas posted a
$1,000 letter of credit for the benefit of CMCLA that will remain outstanding
until all amounts due under the promissory note are paid.
17
<PAGE> 19
On August 27, 1997, CMCLA sold WEJM-AM in Chicago to Douglas for $7,500 in
cash and recognized a gain of $3,331.
On September 5, 1997, pursuant to an Amended and Restated Agreement and
Plan of Merger, dated as of February 19, 1997 and amended and restated on July
31, 1997 (the "Chancellor Merger Agreement"), among Chancellor Broadcasting
Company ("Chancellor"), CRBC, Evergreen Media Corporation ("Evergreen"),
Evergreen Mezzanine Holdings Corporation ("EMHC") and EMCLA, (i) Chancellor was
merged (the "Parent Merger") with and into EMHC, a direct, wholly-owned
subsidiary of Evergreen, with EMHC remaining as the surviving corporation and
(ii) CRBC was merged (the "Subsidiary Merger") with and into EMCLA, a direct,
wholly-owned subsidiary of EMHC, with EMCLA remaining as the surviving
corporation (collectively, the "Chancellor Merger"). Upon consummation of the
Parent Merger, Evergreen was renamed Chancellor Media Corporation and EMHC was
renamed Chancellor Mezzanine Holdings Corporation ("CMHC"). Upon consummation of
the Subsidiary Merger, EMCLA was renamed Chancellor Media Corporation of Los
Angeles. Consummation of the Chancellor Merger added 52 radio stations (36 FM
and 16 AM) to CMCLA's portfolio of stations, including 13 stations in markets in
which CMCLA previously operated. The total purchase price allocated to net
assets acquired was approximately $1,998,383 which included (i) the conversion
of each outstanding share of Chancellor Common Stock into 0.9091 shares of
Chancellor Media's Common Stock, resulting in the issuance of 34,617,460 shares
of Chancellor Media's Common Stock at $15.50 per share, (ii) the assumption of
long-term debt of CRBC of $949,000 which included $549,000 of borrowings
outstanding under the CRBC senior credit facility, $200,000 of CRBC's 9 3/8%
Senior Subordinated Notes due 2004 and $200,000 of CRBC's 8 3/4% Senior
Subordinated Notes due 2007, (iii) the issuance of 2,117,629 shares of CMCLA's
12% Exchangeable Preferred Stock in exchange for CRBC's substantially identical
securities with a fair value of $215,570 including accrued and unpaid dividends
of $3,807, (iv) the issuance of 1,000,000 shares of CMCLA's 12 1/4% Series A
Senior Cumulative Exchangeable Preferred Stock in exchange for CRBC's
substantially identical securities with a fair value of $120,217 including
accrued and unpaid dividends of $772, (v) the issuance of 2,200,000 shares of
Chancellor Media's 7% Convertible Preferred Stock in exchange for Chancellor's
substantially identical securities with a fair value of $111,048 including
accrued and unpaid dividends of $1,048, (vi) the assumption of stock options
issued to Chancellor stock option holders with a fair value of $34,977 and (vii)
estimated acquisition costs of $31,000.
On October 28, 1997, Chancellor Media and CMCLA acquired Katz Media Group,
Inc. ("KMG"), a full-service media representation firm, in a tender offer
transaction for a total purchase price of approximately $379,101 (the "Katz
Acquisition") which included (i) the conversion of each outstanding share of KMG
Common Stock into the right to receive $11.00 in cash, resulting in total cash
payments of $149,601, (ii) the assumption of long-term debt of KMG and its
subsidiaries of $222,000 which included $122,000 of borrowings outstanding under
the KMG senior credit facility and $100,000 of 10 1/2% Senior Subordinated Notes
due 2007 of Katz Media Corporation (a subsidiary of KMG) and (iii) estimated
acquisition costs of $7,500.
On December 29, 1997, CMCLA acquired five radio stations from Pacific and
Southern Company, Inc., a subsidiary of Gannett Co., Inc. consisting of
WGCI-FM/AM in Chicago for $140,000, KKBQ-FM/AM in Houston for $110,000 and
KHKS-FM in Dallas for $90,000, for an aggregate purchase price of $340,000 in
cash plus various other direct acquisition costs.
1998 COMPLETED TRANSACTIONS
On January 30, 1998, CMCLA acquired KXPK-FM in Denver from Ever Green
Wireless LLC (which is unrelated to CMCLA) for $26,000 in cash plus various
other direct acquisition costs, of which $1,650 was previously paid by CRBC as
escrow funds and are classified as other assets at December 31, 1997. CMCLA had
previously operated KXPK-FM under a time brokerage agreement since September 1,
1997.
On April 3, 1998, CMCLA exchanged WTOP-AM in Washington, KZLA-FM in Los
Angeles and WGMS-FM in Washington plus $63,000 in cash (including $3,000 paid by
CMCLA in escrow and classified as other assets at December 31, 1997 and March
31, 1998) to Bonneville in return for WBIX-FM in New York, KLDE-FM in Houston
and KBIG-FM in Los Angeles (the "Bonneville Exchange"). CMCLA had previously
operated KLDE-FM and KBIG-FM under time brokerage agreements since October 1,
1997 and
18
<PAGE> 20
WBIX-FM since October 10, 1997, and had sold substantially all of the broadcast
time of WTOP-AM, KZLA-FM and WGMS-FM to Bonneville since October 1, 1997.
On April 13, 1998, the Company and Secret entered into a settlement
agreement regarding WFLN-FM in Philadelphia. Previously in August 1996, the
Company and Secret had entered into an agreement under which the Company would
acquire WFLN-FM from Secret for $37,750 in cash. The Company in April 1997 had
entered into an agreement to sell WFLN-FM to Greater Media for $41,800 in cash.
On July 16, 1997, Secret purported to terminate the sale of WFLN-FM to the
Company. The Company subsequently brought suit against Secret to enforce its
rights to acquire WFLN-FM. Pursuant to a court settlement entered in August 1997
and the settlement agreement between the Company and Secret entered on April 13,
1998, (i) Secret sold WFLN-FM directly to Greater Media for $37,750, (ii)
Greater Media deposited $4,050 (the difference between the Company's proposed
acquisition price for WFLN-FM from Secret and the Company's proposed sale price
for WFLN-FM to Greater Media) with the court and (iii) the Company received
$3,500 of such amount deposited by Greater Media with the court, plus interest
earned during the period which the court held such amounts, and Secret received
the balance of such amounts.
PENDING TRANSACTIONS
On February 17, 1998, CMCLA entered into an agreement to acquire WWDC-FM/AM
in Washington, D.C. from Capitol Broadcasting Company and its affiliates for
$72,000 in cash (including $4,000 paid by CMCLA in escrow and classified as
other assets at March 31, 1998), plus an amount equal to the value assigned to
certain accounts receivable for the stations (the "Capitol Broadcasting
Acquisition"). Although there can be no assurance, CMCLA expects that the
Capitol Broadcasting Acquisition will be consummated in the second quarter of
1998.
On February 20, 1998, CMCLA entered into an agreement to acquire from
Capstar Broadcasting Corporation (together with its subsidiaries, "Capstar")
KTXQ-FM and KBFB-FM in Dallas/Ft. Worth, KODA-FM, KKRW-FM and KQUE-AM in
Houston, KPLN-FM and KYXY-FM in San Diego and WVTY-FM, WJJJ-FM, WXDX-FM and
WDVE-FM in Pittsburgh (collectively, the "Capstar/SFX Stations") for an
aggregate purchase price of approximately $637,500 (the "Capstar Transaction").
The Capstar/SFX Stations are presently owned by SFX Broadcasting, Inc. ("SFX"),
and are expected to be acquired by Capstar as part of Capstar's pending
acquisition of SFX (the "Capstar/SFX Acquisition"). The Capstar/SFX Stations
would be acquired by CMCLA in a series of purchases and exchanges over a period
of three years, and would be operated by CMCLA under time brokerage agreements
immediately upon the consummation of the Capstar/SFX Acquisition until acquired
by CMCLA. As part of the Capstar Transaction, CMCLA would exchange WAPE-FM and
WFYV-FM in Jacksonville (valued for purposes of the Capstar Transaction at
$53,000) plus $90,250 in cash for Capstar/SFX Station KODA-FM in Houston. CMCLA
would pay approximately $494,250 for the remaining ten Capstar/SFX Stations. As
part of the Capstar Transaction, CMCLA would, at the consummation of the
Capstar/SFX Acquisition, provide a loan to Capstar in the principal amount of up
to $250,000 (the "Capstar Loan"). The Capstar Loan would bear interest at the
rate of 12% per annum (subject to increase in certain circumstances), and would
be secured by a senior pledge of common stock of Capstar's direct subsidiary. A
portion of the Capstar Loan would be prepaid by Capstar in connection with
CMCLA's acquisition of, and the proceeds of such prepayment would be used by
CMCLA as a portion of the purchase price for, each Capstar/SFX Station. CMCLA's
obligation to provide the Capstar Loan is conditioned, among other things, on
Capstar's receipt of at least $650,000 in equity investments that are
subordinate to the Capstar Loan between January 1, 1998 and the consummation of
the Capstar/SFX Acquisition. Hicks, Muse, Tate & Furst, Incorporated ("Hicks
Muse"), which is a substantial shareholder of Chancellor Media, controls
Capstar, and certain directors of CMCLA are directors and/or executive officers
of Capstar and/or Hicks Muse. The Capstar Transaction was approved by the
disinterested directors of CMCLA's Board of Directors. Capstar has informed
CMCLA that the Capstar/ SFX Acquisition will be consummated in the second
quarter of 1998.
On April 8, 1998, CMCLA entered into an agreement to acquire Petry Media
Corporation, a leading independent television representation firm, for
approximately $150,000 in cash (the "Petry Acquisition").
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<PAGE> 21
Although there can be no assurance, CMCLA expects that the Petry Acquisition
will be consummated in the third or fourth quarter of 1998.
Consummation of each of the transactions discussed above is subject to
various conditions, including approval from the FCC and the expiration or early
termination of any waiting period required under the HSR Act. CMCLA believes
that such conditions will be satisfied in the ordinary course, but there can be
no assurance that this will be the case.
Escrow funds of $4,650 and $7,000 paid by CMCLA in connection with the
Bonneville Exchange and the Capitol Broadcasting Acquisition have been
classified as other assets in the accompanying balance sheet at December 31,
1997 and March 31, 1998, respectively.
SUMMARY OF NET ASSETS ACQUIRED
The acquisitions discussed above were accounted for as purchases.
Accordingly, the accompanying consolidated financial statements include the
results of operations of the acquired entities from the dates of acquisition.
A summary of the net assets acquired follows:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, MARCH 31,
1997 1998
------------ ------------
<S> <C> <C>
Working capital, including cash of $9,724 in 1997.......... $ 66,805 $ --
Property and equipment..................................... 118,371 1,411
Assets held for sale....................................... 131,000 --
Intangible assets.......................................... 3,823,746 24,589
Other assets............................................... 26,742 --
Deferred tax liability..................................... (279,371) --
Other liabilities.......................................... (39,681) --
---------- -------
$3,847,612 $26,000
========== =======
</TABLE>
The pro forma consolidated condensed results of operations data for the
three months ended March 31, 1997 and 1998, as if the 1997 Completed
Transactions and the 1998 Completed Transactions discussed above, the offering
in December 1997 by CMCLA of its 8 1/8% Notes (as defined herein), the amendment
and restatement of the Senior Credit Facility and Chancellor Media's 1998 Equity
Offering (as defined herein) occurred at January 1, 1997, follow:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------
MARCH 31, MARCH 31,
1997 1998
--------- ---------
<S> <C> <C>
Net revenues................................................ $207,374 $233,557
Net loss.................................................... (71,152) (59,218)
</TABLE>
The pro forma results are not necessarily indicative of what would have
occurred if the acquisitions had been in effect for the entire periods
presented.
3. FINANCING TRANSACTIONS
1998 COMPLETED FINANCING TRANSACTIONS
On March 13, 1998, Chancellor Media completed a secondary offering of
21,850,000 shares of its Common Stock (the "1998 Equity Offering"). The net
proceeds from the 1998 Equity Offering of approximately $994,642 were
contributed to CMCLA and were used to reduce bank borrowings under the revolving
credit portion of the Senior Credit Facility (as defined) and the excess
proceeds were invested in short-term investment grade securities. CMCLA has used
a portion of the excess proceeds from the 1998
20
<PAGE> 22
Equity Offering to finance the Bonneville Exchange, and intends to use the
remaining excess proceeds from the 1998 Equity Offering to finance the proposed
repurchase of CMCLA's 12% Debentures (as defined below). In addition, CMCLA
anticipates that it will attempt to repurchase any and all shares of its 12 1/4%
Series A Senior Cumulative Exchangeable Preferred Stock (the "12 1/4% Preferred
Stock") in the near future.
PENDING FINANCING TRANSACTIONS
On April 29, 1998, CMCLA commenced a consent solicitation (the "12%
Preferred Stock Consent Solicitation") to modify certain timing restrictions on
CMCLA's ability to exchange all shares of its 12% Preferred Stock for its 12%
Subordinated Exchange Debentures due 2009 (the "12% Debentures"). The 12%
Preferred Stock Consent Solicitation was successful, and on May 13, 1998, CMCLA
exchanged the shares of 12% Preferred Stock for 12% Debentures. In this regard,
CMCLA also commenced a cash tender offer (the "Tender Offer") for CMCLA's 12%
Debentures. The purchase price for each $1,000 principal amount of 12%
Debentures validly tendered and accepted for purchase in the Tender Offer shall
be the greater of (i) $1,201.27 or (ii) an amount based on an 85-basis point
spread over the yield of the 6 1/4% U.S. Treasury Note due January 31, 2002 as
of 2:00 p.m., New York City time, on the tenth business day immediately
preceding the expiration date of the Tender Offer. The Tender Offer will expire
at 11:59 p.m. on June 10, 1998, unless extended. There can be no assurance that
the Tender Offer will be successful.
4. LONG-TERM DEBT
Long-term debt consists of the following at December 31, 1997 and March 31,
1998:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1997 1998
------------ ----------
<S> <C> <C>
Senior Credit Facility(a).................................. $1,573,000 $ 900,000
9 3/8% Notes(b)............................................ 200,000 200,000
8 3/4% Notes(b)............................................ 200,000 200,000
10 1/2% Notes(b)........................................... 100,000 100,000
8 1/8% Notes(b)............................................ 500,000 500,000
---------- ----------
Total long-term debt............................. $2,573,000 $1,900,000
========== ==========
</TABLE>
(a) Senior Credit Facility
On April 25, 1997, CMCLA entered into a loan agreement which amended and
restated its prior senior credit facility. Under the amended and restated
agreement, as amended on June 26, 1997, August 7, 1997, October 28, 1997,
February 10, 1998 and May 1, 1998 (as amended, the "Senior Credit Facility"),
CMCLA established a $1,250,000 revolving facility (the "Revolving Loan
Facility") and a $500,000 term loan facility (the "Term Loan Facility"). Upon
consummation of the Chancellor Merger, the aggregate commitments under the
Revolving Loan Facility and the Term Loan Facility were increased to $1,600,000
and $900,000, respectively. In connection with the amendment and restatement of
the Senior Credit Facility, CMCLA wrote off the unamortized balance of deferred
debt issuance costs of $4,350 (net of a tax benefit of $2,343) as an
extraordinary charge.
Borrowings under the Senior Credit Facility bear interest at a rate based,
at the option of CMCLA, on the participating banks' prime rate or Eurodollar
rate, plus an incremental rate. Without giving effect to the interest rate swap
and cap agreements described below, the interest rate on the $900,000
outstanding under the Term Loan at March 31, 1998 was 7.06% on a blended basis,
based on Eurodollar rates. CMCLA pays fees ranging from 0.25% to 0.375% per
annum on the aggregate unused portion of the loan commitment based upon the
leverage ratio for the most recent quarter end, in addition to an annual agent's
fee. Pursuant to the Senior Credit Facility, CMCLA is required to enter into
interest hedging agreements that result in the fixing or placing a cap on
CMCLA's floating rate debt so that not less than 50% of the principal amount of
total debt outstanding has a fixed or capped rate.
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<PAGE> 23
The Term Loan Facility is payable in quarterly installments commencing on
September 30, 2000 and ending June 20, 2005. The Revolving Loan Facility
requires scheduled annual reductions of the commitment amount, payable in
quarterly installments commencing on September 30, 2000 and ending on June 30,
2005. At April 30, 1998, CMCLA had drawn $900,000 of the Term Loan Facility.
Upon consummation of the 1998 Equity Offering, on March 13, 1998, all amounts
outstanding under the Revolving Loan Facility on such date were repaid. The
aggregate commitment under the Revolving Loan Facility remains available for
reborrowing, subject to compliance with the conditions contained in the Senior
Credit Facility. The capital stock of CMHC, CMCLA and CMCLA's subsidiaries is
pledged to secure the performance of CMCLA's obligations under the Senior Credit
Facility, and CMHC and each of CMCLA's subsidiaries have guaranteed those
obligations.
(b) Senior Subordinated Notes
Upon consummation of the Chancellor Merger, on September 5, 1997, CMCLA
assumed all of the obligations under CRBC's $200,000 aggregate principal amount
9 3/8% Senior Subordinated Notes due 2004 (the "9 3/8% Notes") and the indenture
governing such securities, and assumed all of the obligations under CRBC's
$200,000 aggregate principal amount 8 3/4% Senior Subordinated Notes due 2007
(the "8 3/4% Notes") and the indenture governing such securities. Upon
consummation of the Katz Acquisition, on October 28, 1997, CMCLA assumed all of
the obligations under Katz Media Corporation's $100,000 aggregate principal
amount of 10 1/2% Senior Subordinated Notes due 2007 (the "10 1/2% Notes") and
the amended and restated indenture governing such securities. On December 22,
1997, CMCLA issued $500,000 aggregate principal amount of 8 1/8% Senior
Subordinated Notes due 2007 (the "8 1/8% Notes") for estimated net proceeds of
$485,000.
(c) Summarized Financial Information of Subsidiary Guarantors
The 9 3/8% Notes, the 8 3/4% Notes, the 10 1/2% Notes and the 8 1/8% Notes
(collectively, the "Notes") are unsecured obligations of CMCLA, subordinated in
right of payment to all existing and any future senior indebtedness of CMCLA.
The Notes are fully and unconditionally guaranteed, on a joint and several
basis, by all of CMCLA's direct and indirect subsidiaries other than certain
inconsequential subsidiaries (the "Subsidiary Guarantors"). The Subsidiary
Guarantors are wholly-owned subsidiaries of CMCLA. Summarized financial
information of the Subsidiary Guarantors as of December 31, 1997 and March 31,
1998 and for the three months ended March 31, 1998 is presented below. Separate
financial statements and other disclosures concerning the Subsidiary Guarantors
are not presented because management has determined that they are not material
to investors. There are no significant restrictions on distributions from each
of the Subsidiary Guarantors to CMCLA.
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1997 1998
------------ ----------
<S> <C> <C>
Current assets............................................. $ 223,913 $ 212,037
Noncurrent assets.......................................... 987,028 956,538
Current liabilities........................................ 89,362 89,170
Noncurrent liabilities..................................... 1,130,105 1,218,052
</TABLE>
<TABLE>
<CAPTION>
MARCH 31,
1998
------------
<S> <C> <C>
Net revenues............................................... $ 188,970
Operating income........................................... (5,289)
Net loss................................................... (42,010)
</TABLE>
(d) Other
The Senior Credit Facility and the indentures governing the Notes contain
customary restrictive covenants, which, among other things and with certain
exceptions, limit the ability of CMCLA and its subsidiaries to incur additional
indebtedness and liens in connection therewith, enter into certain transactions
22
<PAGE> 24
with affiliates, pay dividends, consolidate, merge or effect certain asset
sales, issue additional stock, effect an asset swap and make acquisitions. CMCLA
is required under the Senior Credit Facility to maintain specified financial
rations, including leverage, cash flow and debt service coverage ratios (as
defined).
5. CONTINGENCIES
CMCLA is involved in several lawsuits that are incidental to its business.
A discussion of certain of these lawsuits is contained in Part II, Item 1,
"Legal Proceedings", of this Form 10-Q. CMCLA believes that the ultimate
resolution of the lawsuits will not have a material effect on its financial
position or results of operations.
6. SUBSEQUENT EVENTS
On April 14, 1998, Scott K. Ginsburg resigned as President and Chief
Executive Officer of Chancellor Media, CMHC and CMCLA, and on April 20, 1998,
Mr. Ginsburg resigned as a director of Chancellor Media, CMHC and CMCLA and from
all positions held with their respective subsidiaries. On April 20, 1998,
Chancellor Media and CMCLA entered into a separation and consulting agreement
with Mr. Ginsburg which provides, among other things, for (i) a lump sum
severance payment of $20,000; (ii) a grant of 800,000 stock options at an
exercise price of $23.25 per share and (iii) consulting fees of $2,500 per year
through April 13, 2003. It is expected that CMCLA will incur a significant
one-time charge in the second quarter related to Mr. Ginsburg's separation and
consulting agreement and new employment agreements to be entered into with
certain members of executive management. On April 29, 1998, Jeffrey A. Marcus
was named President and Chief Executive Officer of Chancellor Media, CMHC and
CMCLA, to be effective on June 1, 1998. Thomas O. Hicks, Chairman of the Board
of Chancellor Media, CMHC and CMCLA, is serving as Chief Executive Officer of
Chancellor Media, CMHC and CMCLA on an interim basis until June 1, 1998.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
Since 1995, Chancellor Media Corporation ("Chancellor Media"), Chancellor
Media Corporation of Los Angeles ("CMCLA"), an indirect, wholly-owned subsidiary
of Chancellor Media, and their respective subsidiaries (collectively, the
"Company") have engaged in an acquisition strategy concentrating on expanding
the Company's presence in the nation's largest radio markets. Implementation of
this acquisition strategy was significantly accelerated in 1996 and to date in
1998 due to passage of the Telecommunications Act of 1996 and the associated
relaxation of national and local ownership limits. For a discussion of the
various transactions completed and agreements entered into since January 1, 1997
as part of the Company's acquisition strategy, see the Notes to the Consolidated
Financial Statements of Chancellor Media and CMCLA and their respective
subsidiaries contained in this Quarterly Report on Form 10-Q. The Company also
anticipates that it will attempt to leverage its radio expertise and expand into
industries related to the operation of radio stations. In this regard, the
Company formed a national radio network, The AMFM Radio Networks, in September
1997 and acquired Katz, a full-service media representation firm in October
1997. The Company has also recently begun exploring the acquisition of
additional complementary media businesses, including radio stations in
medium-sized markets, television, outdoor advertising, and similar international
media opportunities.
At May 1, 1998, the Company's station portfolio consisted of 97 stations
(70 FM and 27 AM), including a total of 11 radio station clusters of four or
five FM stations ("superduopolies") in nine of the nation's 15 largest radio
markets -- Los Angeles, New York, Chicago, San Francisco, Philadelphia,
Washington, D.C., Detroit, Denver and Minneapolis-St. Paul -- and in two other
large markets -- Phoenix and Orlando. Consummation of the Pending Transactions
will result in a net increase of nine FM stations and two AM stations and will
add the San Diego market to the Company's portfolio. In addition, consummation
of the Pending Transactions will increase the number of superduopolies in the
Company's station portfolio to 14, including two new superduopolies in the
nation's 10 largest radio markets -- Dallas/Ft. Worth and Houston -- and one
other large market -- Pittsburgh.
23
<PAGE> 25
The Company's results of operations from period to period have not
historically been comparable because of the impact of the various station
acquisitions and dispositions that the Company has completed. For a description
of the transactions completed by the Company during 1997 and to date in 1998,
see the Notes to the Consolidated Financial Statements contained in this
Quarterly Report on Form 10-Q.
In the following analysis, management discusses the Company's broadcast
cash flow. The performance of a radio station group is customarily measured by
its ability to generate broadcast cash flow. The two components of broadcast
cash flow are gross revenues (net of agency commissions) and operating expenses
(excluding depreciation and amortization, corporate general and administrative
expense and non-cash and non-recurring charges). The primary source of revenues
is the sale of broadcasting time for advertising. The Company's most significant
operating expenses for purposes of the computation of broadcast cash flow are
employee salaries and commissions, programming expenses, and advertising and
promotion expenses. The Company strives to control these expenses by working
closely with local station management. The Company's revenues vary throughout
the year. As is typical in the radio broadcasting industry, the Company's first
calendar quarter generally produces the lowest revenues, and the fourth quarter
generally produces the highest revenues.
Although broadcast cash flow is not calculated in accordance with generally
accepted accounting principles, the Company believes that it is widely used as a
measure of operating performance. Nevertheless, this measure should not be
considered in isolation or as a substitute for operating income, cash flows from
operating activities or any other measure for determining the Company's
operating performance or liquidity that is calculated in accordance with
generally accepted accounting principles. Broadcast cash flow does not take into
account the Company's debt service requirements and other commitments and,
accordingly, broadcast cash flow is not necessarily indicative of amounts that
may be available for dividends, reinvestment in the Company's business or other
discretionary uses.
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997
The Company's results of operations for the three months ended March 31,
1998 are not comparable to the results of operations for the three months ended
March 31, 1997 due to the impact of the Chancellor Merger, the Viacom
Acquisition, the Katz Acquisition and various other station acquisitions and
dispositions discussed in the Notes to the Consolidated Financial Statements
contained in this Quarterly Report on Form 10-Q.
Net revenues for the three months ended March 31, 1998 increased 185.2% to
$233.6 million compared to $81.9 million for the first quarter of 1997.
Operating expenses excluding depreciation and amortization for the three months
ended March 31, 1998 increased 179.4% to $148.0 million compared to $53.0
million for the three months ended March 31, 1997. Operating income excluding
depreciation and amortization and corporate general and administrative expense
(broadcast cash flow) for the three months ended March 31, 1998 increased 195.8%
to $85.5 million compared to $28.9 million for the first quarter of 1997. The
increase in net revenues, operating expenses, and broadcast cash flow for the
three months ended March 31, 1998 was primarily attributable to the net impact
of the Chancellor Merger, the Viacom Acquisition, the Katz Acquisition and the
various station acquisitions and dispositions discussed elsewhere herein, in
addition to the overall net operational improvements realized by the Company.
Depreciation and amortization for the three months ended March 31, 1998
increased 253.4% to $91.9 million compared to $26.0 million for the first
quarter of 1997. The increase is primarily due to the impact of the Viacom
Acquisition, the Chancellor Merger and the Katz Acquisition, as well as other
acquisitions completed during 1997 and to date in 1998.
Corporate general and administrative expenses for the three months ended
March 31, 1998 increased 192.0% to $6.8 million compared to $2.3 million for the
first quarter of 1997. The increase is due to the growth of the Company, and the
related increase in properties and staff, primarily due to recent acquisitions.
As a result of the above factors, the Company realized $13.2 million of
operating loss for the three months ended March 31, 1998 compared to $0.6
million of operating income for the first quarter of 1997.
24
<PAGE> 26
Interest expense, net for the three months ended March 31, 1998 increased
512.3% to $48.3 million compared to $7.9 million for the same period in 1997.
The net increase in interest expense was primarily due to (i) additional bank
borrowings under the Senior Credit Facility required to finance the various
acquisitions discussed elsewhere herein offset by repayment of borrowings from
the net proceeds of the Company's various radio station dispositions and the
1998 Equity Offering, (ii) the assumption of CRBC's 9 3/8% Notes and 8 3/4%
Notes upon consummation of the Chancellor Merger on September 5, 1997, (iii) the
assumption of Katz' 10 1/2% Notes upon consummation of the Katz Acquisition on
October 28, 1997 and (iv) the issuance of the 8 1/8% Notes by the Company on
December 22, 1997.
The income tax benefit for the three months ended March 31, 1998 is
comprised of current federal and state tax expense and a deferred federal income
tax benefit.
Dividends on preferred stock of CMCLA were $10.0 million for the three
months ended March 31, 1998, representing dividends on CMCLA's 12% Exchangeable
Preferred Stock (the "12% Preferred Stock") and CMCLA's 12 1/4% Series A Senior
Cumulative Exchangeable Preferred Stock (the "12 1/4% Preferred Stock"), each
issued in September 1997 as part of the Chancellor Merger.
Dividends on Chancellor Media's preferred stock were $6.4 million for the
three months ended March 31, 1998, representing dividends on Chancellor Media's
$3.00 Convertible Exchangeable Preferred Stock (the "$3.00 Convertible Preferred
Stock") issued in June 1997 and dividends on Chancellor Media's 7% Convertible
Preferred Stock (the "7% Convertible Preferred Stock") issued in September 1997
as part of the Chancellor Merger.
As a result of the above factors, the Company incurred a $75.0 million net
loss attributable to common stockholders for the three months ended March 31,
1998 compared to a $6.0 million net loss for the first quarter of 1997.
The basic and diluted loss per common share for the three months ended
March 31, 1998 was $0.60 compared to a $0.07 basic and diluted loss per common
share for the first quarter of 1997.
LIQUIDITY AND CAPITAL RESOURCES
Overview. The Company historically has generated sufficient cash flow from
operations to finance its existing operational requirements and debt service
requirements, and the Company anticipates that this will continue to be the
case. The Company historically has used the proceeds of bank debt and private
and public debt and equity offerings, supplemented by cash flow from operations
not required to fund operational requirements and debt service, to fund
implementation of the Company's acquisition strategy.
On March 13, 1998, Chancellor Media completed a secondary public offering
of 21,850,000 shares of its Common Stock (the "1998 Equity Offering"). The net
proceeds from the 1998 Equity Offering of approximately $994.6 million were
contributed by Chancellor Media to CMCLA, of which $696.0 million was used to
repay all amounts outstanding under the Revolving Loan Facility at March 13,
1998 and the remaining $298.6 million was invested in short-term investment
grade securities. On April 3, 1998, the Company used $57.0 million of the excess
net proceeds to finance the Bonneville Exchange. The remaining excess net
proceeds will be used for general corporate purposes, including the proposed
repurchase of CMCLA's 12% Debentures (see the Notes to the Consolidated
Financial Statements contained in this Quarterly Report on Form 10-Q).
Commitments under the Revolving Loan Facility, including amounts repaid in
connection with the 1998 Equity Offering, are available, subject to satisfaction
of certain conditions, for re-borrowing by the Company.
The total cash financing required to consummate the Pending Transactions is
expected to be $806.5 million. Of this amount, approximately $4.0 million has
already been advanced by the Company in the form of escrow deposits or other
upfront payments. Accordingly, the Company will require approximately $802.5
million in additional financing to consummate the Pending Transactions. Of such
amount, a total of $584.5 million in cash will be required to finance the
Capstar Transaction. The Company expects that $340.3 million will be required
for the Capstar Transaction immediately upon consummation of the Capstar/SFX
Acquisition and $244.2 million will be required for the Capstar Transaction over
the three year period in which the
25
<PAGE> 27
Capstar/SFX Stations will be acquired. The Company anticipates that it will
obtain any additional financing needed to complete the Pending Transactions
through borrowings under the Senior Credit Facility. The Company from time to
time may explore other financing alternatives to supplement the financing
available under the Senior Credit Facility, including the public or private
issuance of debt, common equity or preferred equity securities.
In addition to debt service requirements under the Senior Credit Facility,
the Company is required to pay interest on the Notes. Interest payment
requirements of the Company on the Notes are $87.4 million per year. The 12 1/4%
Preferred Stock and the 12% Debentures of CMCLA do not require the payment of
cash dividends or cash interest through February 14, 2001 and January 14, 2002,
respectively, although CMCLA may incur accretion or issue additional 12%
Debentures, respectively, in lieu of cash dividends or cash interest until such
times. Cash dividend requirements of Chancellor Media on its $3.00 Convertible
Preferred Stock and its 7% Convertible Preferred Stock are $25.7 million per
year. Because Chancellor Media is a holding company with no significant assets
other than the common stock of CMHC, Chancellor Media will rely solely on
dividends from CMHC, which in turn is expected to distribute dividends paid to
it by CMCLA and KMG to Chancellor Media, to permit Chancellor Media to pay cash
dividends on the $3.00 Convertible Preferred Stock and the 7% Convertible
Preferred Stock. The Senior Credit Facility, the indentures governing the Notes
and the 12% Debentures and the certificate of designation for the 12 1/4%
Preferred Stock limit, but do not prohibit, CMCLA from paying such dividends to
CMHC.
FORWARD LOOKING STATEMENTS
When used in the preceding and following discussion, the words "believes,"
"expects," "anticipates," "intends" and similar expressions are intended to
identify forward looking statements. Such statements are subject to a number of
known and unknown risks and uncertainties. Actual results in the future could
differ materially from those described in the forward looking statements. Such
risks and uncertainties include, but are not limited to, industry-wide market
factors and regulatory developments affecting the Company's operations and the
acquisitions and dispositions described elsewhere herein.
RECENTLY-ISSUED ACCOUNTING PRINCIPLES
The Company adopted the provisions of SFAS No. 128, Earnings Per Share,
effective for the year ended December 31, 1997. This Statement establishes new
standards for computing and presenting earnings per share and requires
restatement of all prior period earnings per share data. The adoption of this
Statement resulted in the dual presentation of basic and diluted earnings per
share on the Company's income statement. In accordance with this statement, the
Company has applied the provisions on a retroactive basis. Basic and diluted
loss per common share does not differ from previously reported primary loss per
share information for the year ended December 31, 1997 and for the three months
ended March 31, 1998 due to the Company's loss position.
The Company adopted the provisions of SFAS No. 129, Disclosures of
Information about Capital Structure, effective for the year ended December 31,
1997. This Statement consolidates existing pronouncements on required
disclosures about a company's capital structure including a brief discussion of
rights and privileges for securities outstanding. The adoption of this Statement
had no material effect on the Company's consolidated financial statements.
The Company adopted SFAS No. 130, Reporting Comprehensive Income, effective
January 1, 1998. This Statement requires that all items that are required to be
recognized under accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the same prominence as
other financial statements. The Company has no items of comprehensive income for
any period presented and therefore is not required to report comprehensive
income.
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information. This
Statement establishes standards for reporting information about operating
segments in annual financial statements and requires reporting of selected
information about operating segments in interim financial reports issued to
stockholders. It also establishes
26
<PAGE> 28
standards for related disclosures about products and services, geographic areas
and major customers. SFAS No. 131 is effective for fiscal years beginning after
December 15, 1997. Management does not anticipate that this Statement will have
a significant effect on the Company's consolidated financial statements.
In February 1998, the Financial Accounting Standards Board issued SFAS No.
132, Employers' Disclosure about Pensions and Other Postretirement Benefits.
This statement revises employers' disclosures about pensions and other
postretirement benefit plans. It does not change the measurement or recognition
of those plans. SFAS No. 132 is effective for fiscal years beginning after
December 15, 1997. Management does not anticipate that this statement will have
a significant effect on the Company's consolidated financial statements.
In April 1998, Accounting Standards Executive Committee ("AcSEC") issued
Statement of Position ("SOP") No. 98-5, "Reporting on the Costs of Start-Up
Activities" ("SOP 98-5") effective for fiscal years beginning after December 15,
1998. This SOP provides guidance on the financial reporting of start-up costs
and organization costs. It requires costs of start-up activities and
organization costs to be expensed as incurred. Initial application of SOP 98-5
should be reported as the cumulative effect of a change in accounting principle,
as described in Accounting Principles Board (APB) Opinion No. 20, "Accounting
Changes." When adopting this SOP, entities are not required to report the pro
forma effects of retroactive application. Management does not believe the
implementation of SOP 98-5 will have a material impact on its consolidated
financial statements.
YEAR 2000 ISSUE
The Company has conducted a comprehensive review of its computer systems to
identify the systems that could be affected by the Year 2000 Issue (as defined)
and has developed an implementation plan. The "Year 2000 Issue" is whether the
Company's computer systems will properly recognize date sensitive information
when the year changes to 2000, or "00." Systems that do not properly recognize
such information could generate erroneous data or cause a system to fail. The
Company uses purchased software programs for a variety of functions, including
general ledger, accounts payable and accounts receivable accounting packages.
The companies providing these software programs are Year 2000 compliant, and the
Company has received Year 2000 compliance certificates from these software
vendors. The Company's Year 2000 implementation plan also includes ensuring that
all individual work stations are Year 2000 compliant. Costs associated with
ensuring the Company's systems are Year 2000 compliant are expected to be
minimal. The Company believes that the Year 2000 Issue will not pose significant
operational problems for the Company's computer systems and, therefore will not
have an impact on the operations of the Company.
PART II
ITEM 1. LEGAL PROCEEDINGS
In August 1993, the Company terminated an agreement with Sagittarius
Broadcasting Company (an affiliate of Infinity Broadcasting Corporation) and One
Twelve, Inc. (collectively, the "Claimants" or the "Plaintiffs") pursuant to
which programming featuring radio personality Howard Stern was broadcast on
radio station WLUP-AM (now WMVP-AM) in Chicago. The Claimants allege that
termination of the agreement was wrongful and have sued the Company in the
Supreme Court of the State of New York, County of New York (the "Court"). The
agreement required payments to the Claimants in the amount of $2.6 million plus
five percent of advertising revenues generated by the programming over the
three-year term of the agreement. A total of approximately $680,000 was paid to
the Claimants pursuant to the agreement prior to termination. Claimants'
complaint alleged claims for breach of contract, indemnification, breach of
fiduciary duty and fraud. Plaintiffs' aggregate prayer for relief totaled $45.0
million. On July 12, 1994, the Court granted motion to dismiss Plaintiffs'
claims for fraud and breach of fiduciary duty. On June 6, 1995, the Court denied
the Plaintiff's motion for summary judgment on their contract and
indemnification claims and this order has been affirmed on appeal. On May 17,
1996, after the close of discovery, the Company filed a motion for summary
judgment, seeking the dismissal of the remaining claims in the original
complaint. On July 1, 1996, Plaintiffs
27
<PAGE> 29
moved for leave to amend their complaint in order to add claims for breach of
the covenant of good faith and fair dealing, tortious interference with business
advantage and prima facia tort. In the proposed amended complaint, Plaintiffs
seek compensatory and punitive damages in excess of $25.0 million. On March 13,
1997, the Court denied the Company's motion for summary judgment, allowed
Plaintiffs' request to amend the complaint to add a claim for breach of the
covenant of good faith and fair dealing and denied Plaintiffs' request to amend
the complaint to add claims for tortious interference with business advantage
and prima facia tort. On April 25, 1997, the Company filed a notice of appeal of
the denial of the motion for summary judgment. In October 1997, the N.Y. State
Supreme Court, Appellate Division, granted a portion of the appeal seeking to
strike certain damages sought, but otherwise affirmed the denial of the motion
for summary judgment and sent the case back to the trial court for trial. The
Company believes that it acted within its rights in terminating the agreement.
The Company is also involved in various other claims and lawsuits which are
generally incidental to its business. The Company is vigorously contesting all
such matters and believes that their ultimate resolution will not have a
material adverse effect on its consolidated financial position or results of
operations.
ITEM 5. OTHER INFORMATION
CHANGES IN EXECUTIVE MANAGEMENT
On April 14, 1998, Scott K. Ginsburg resigned as President and Chief
Executive Officer of Chancellor Media, CMHC and CMCLA, and on April 20, 1998,
Mr. Ginsburg resigned as a director of Chancellor Media, CMHC and CMCLA and from
all positions held with their respective subsidiaries. On April 29, 1998,
Jeffrey A. Marcus was named President and Chief Executive Officer of Chancellor
Media, CMHC and CMCLA, to be effective on June 1, 1998. Thomas O. Hicks,
Chairman of the Board of Chancellor Media, CMHC and CMCLA, is serving as Chief
Executive Officer of Chancellor Media, CMHC and CMCLA on an interim basis until
June 1, 1998.
28
<PAGE> 30
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.11(h) -- Agreement and Plan of Merger by and among Pyramid
Communications, Inc., Evergreen Media Corporation and
Evergreen Media/Pyramid Corporation dated as of July 14,
1995 (see table of contents for list of omitted exhibits
and schedules).
2.11A(i) -- Amendment to Plan and Agreement of Merger by and among
Pyramid Communications, Inc., Evergreen Media Corporation
and Evergreen Media/Pyramid Corporation dated September
7, 1995.
2.11B(i) -- Amendment to Plan and Agreement of Merger by and among
Pyramid Communications, Inc., Evergreen Media Corporation
and Evergreen Media/Pyramid Corporation dated January 11,
1996.
2.12(j) -- Purchase Agreement between Fairbanks Communications, Inc.
and Evergreen Media Corporation dated October 12, 1995
(see table of contents for list of omitted exhibits and
schedules).
2.13(n) -- Option Agreement dated as of January 9, 1996 between
Chancellor Broadcasting Company and Evergreen Media
Corporation (including Form of Advertising Brokerage
Agreement and Form of Asset Purchase Agreement).
2.14(o) -- Asset Purchase Agreement dated April 4, 1996 between
American Radio Systems Corporation and Evergreen Media
Corporation of Buffalo (see table of contents for list of
omitted exhibits and schedules).
2.15(o) -- Asset Purchase Agreement dated April 11, 1996 between
Mercury Radio Communications, L.P. and Evergreen Media
Corporation of Los Angeles, Evergreen Media/Pyramid
Holdings Corporation, WHTT (AM) License Corp. and WHTT
(FM) License Corp. (see table of contents for list of
omitted exhibits and schedules).
2.16(o) -- Asset Purchase Agreement dated April 19, 1996 between
Crescent Communications L.P. and Evergreen Media
Corporation of Los Angeles (see table of contents for
list of omitted exhibits and schedules).
2.17(p) -- Asset Purchase Agreement dated June 13, 1996 between
Evergreen Media Corporation of Los Angeles and Greater
Washington Radio, Inc. (see table of contents for list of
omitted exhibits and schedules).
2.18(p) -- Asset Exchange Agreement dated June 13, 1996 among
Evergreen Media Corporation of Los Angeles, Evergreen
Media Corporation of the Bay State, WKLB License Corp.,
Greater Media Radio, Inc. and Greater Washington Radio,
Inc. (see table of contents for list of omitted exhibits
and schedules).
2.19(p) -- Purchase Agreement dated June 27, 1996 between WEDR,
Inc., and Evergreen Media Corporation of Los Angeles.
(See table of contents for list of omitted schedules)
2.20(p) -- Time Brokerage Agreement dated July 10, 1996 by and
between Evergreen Media Corporation of Detroit, as
Licensee, and Kidstar Interactive Media Incorporated, as
Time Broker.
2.21(p) -- Asset Purchase Agreement dated July 15, 1996 by and among
Century Chicago Broadcasting L.P., Century Broadcasting
Corporation, Evergreen Media Corporation of Los Angeles,
and Evergreen Media Corporation of Chicago.
2.22(p) -- Asset Purchase Agreement dated August 12, 1996 by and
among Chancellor Broadcasting Company, Shamrock
Broadcasting, Inc. and Evergreen Media Corporation of the
Great Lakes.
</TABLE>
29
<PAGE> 31
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.23(p) -- Asset Purchase Agreement dated as of August 12, 1996
between Secret Communications Limited Partnership and
Evergreen Media Corporation of Los Angeles (WQRS-FM).
(See table of contents for list of omitted exhibits and
schedules)
2.24(p) -- Asset Purchase Agreement dated as of August 12, 1996
between Secret Communications Limited Partnership and
Evergreen Media Corporation of Los Angeles. (See table of
contents for list of omitted schedules)
2.25(q) -- Letter of intent dated August 27, 1996 between EZ
Communications, Inc. and Evergreen Media Corporation.
2.26(q) -- Asset Purchase Agreement dated September 19, 1996 between
Beasley-FM Acquisition Corp., WDAS License Limited
Partnership and Evergreen Media Corporation of Los
Angeles.
2.27(q) -- Asset Purchase Agreement dated September 19, 1996 between
The Brown Organization and Evergreen Media Corporation of
Los Angeles.
2.28(r) -- Stock Purchase Agreement by and between Viacom
International Inc. and Evergreen Media Corporation of Los
Angeles, dated February 16, 1997 (See table of contents
for omitted schedules and exhibits).
2.29(r) -- Agreement and Plan of Merger, by and among Evergreen
Media Corporation, Chancellor Broadcasting Company and
Chancellor Radio Broadcasting Company, dated as of
February 19, 1997.
2.30(r) -- Stockholders Agreement, by and among Chancellor
Broadcasting Company, Evergreen Media Corporation, Scott
K. Ginsburg (individually and as custodian for certain
shares held by his children), HM2/Chancellor, L.P.,
Hicks, Muse, Tate & First Equity Fund II, L.P., HM2/HMW,
L.P., The Chancellor Business Trust, HM2/HMD Sacramento
GP, L.P., Thomas O. Hicks, as Trustee of the William Cree
Hicks 1992 Irrevocable Trust, Thomas O. Hicks, as Trustee
of the Catherine Forgave Hicks 1993 Irrevocable Trust,
Thomas O. Hicks, as Trustee of the John Alexander Hicks
1984 Trust, Thomas O. Hicks, as Trustee of the Mack
Hardin Hicks 1984 Trust, Thomas O. Hicks, as Trustee of
Robert Bradley Hicks 1984 Trust, Thomas O. Hicks, as
Trustee of the Thomas O. Hicks, Jr. 1984 Trust, Thomas O.
Hicks and H. Rand Reynolds, as Trustees for the Muse
Children's GS Trust, and Thomas O. Hicks, dated as of
February 19, 1997.
2.31(r) -- Joint Purchase Agreement, by and among Chancellor Radio
Broadcasting Company, Chancellor Broadcasting Company,
Evergreen Media Corporation of Los Angeles, and Evergreen
Media Corporation, dated as of February 19, 1997.
2.32(s) -- Asset Exchange Agreement, by and among EZ Communications,
Inc., Professional Broadcasting Incorporated, EZ
Philadelphia, Inc., Evergreen Media Corporation of Los
Angeles, Evergreen Media Corporation of Charlotte,
Evergreen Media Corporation of the East, Evergreen Media
Corporation of Carolinaland, WBAV/WBAV-FM/WPEG License
Corp. and WRFX License Corp., dated as of December 5,
1996 (See table of contents for list of omitted
schedules).
2.33(s) -- Asset Purchase Agreement, by and among EZ Communications,
Inc., Professional Broadcasting Incorporated, EZ
Charlotte, Inc., Evergreen Media Corporation of Los
Angeles, Evergreen Media Corporation of the East and
Evergreen Media Corporation of Carolinaland, dated as of
December 5, 1996 (See table of contents for list of
omitted schedules).
2.34(t) -- Asset Purchase Agreement by and between Pacific and
Southern Company, Inc. and Evergreen Media Corporation of
Los Angeles (re: WGCI-AM and WGCI-FM), dated as of April
4, 1997 (see table of contents for list of omitted
schedules and exhibits).
</TABLE>
30
<PAGE> 32
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.35(t) -- Asset Purchase Agreement by and between Pacific and
Southern Company, Inc. and Evergreen Media Corporation of
Los Angeles (re: KKBQ-AM and KKBQ-FM), dated as of April
4, 1997 (see table of contents for list of omitted
schedules and exhibits)
2.36(t) -- Asset Purchase Agreement by and between Pacific and
Southern Company, Inc. and Evergreen Media Corporation of
Los Angeles (re: KHKS-FM), dated as of April 4, 1997 (see
table of contents for list of omitted schedules and
exhibits).
2.41(y) -- Amended and Restated Agreement and Plan of Merger among
Chancellor Broadcasting Company, Chancellor Radio
Broadcasting Company, Evergreen Media Corporation,
Evergreen Mezzanine Holdings Corporation and Evergreen
Media Corporation of Los Angeles, dated as of February
19, 1997, amended and restated as of July 31, 1997.
2.42(gg) -- Option Agreement, by and among Evergreen Media
Corporation, Chancellor Broadcasting Company, Bonneville
International Corporation and Bonneville Holding Company,
dated as of August 6, 1997.
2.43(ss) -- Letter Agreement, dated February 20, 1998, between the
Company and Capstar Broadcasting Corporation.
3.1C(ss) -- Amended and Restated Certificate of Incorporation of
Chancellor Media.
3.2B(ss) -- Amended and Restated Bylaws of Chancellor Media.
3.3(ff) -- Certificate of Incorporation of Chancellor Media
Corporation of Los Angeles formerly known as Evergreen
Media Corporation of Los Angeles.
3.3A(pp) -- Amendment to Certificate of Incorporation of Chancellor
Media Corporation of Los Angeles, filed September 5,
1997.
3.3B(uu) -- Amendment to the Certificate of Incorporation of
Chancellor Media Corporation of Los Angeles, filed
October 28, 1997.
3.4(ff) -- Bylaws of Chancellor Media Corporation of Los Angeles.
4.10(t) -- Second Amended and Restated Loan Agreement dated as of
April 25 1997 among Evergreen Media Corporation of Los
Angeles, the financial institutions whose names appear as
Lenders on the signature pages thereof (the "Lenders"),
Toronto Dominion Securities, Inc., as Arranging Agent,
The Bank of New York and Bankers Trust Company, as
Co-Syndication Agents, NationsBank of Texas, N.A. and
Union Bank of California, as Co-Documentation Agents, and
Toronto Dominion (Texas), Inc., as Administrative Agent
for the Lenders, together with certain collateral
documents attached thereto as exhibits, including
Assignment of Partnership Interests, Assignment of Trust
Interests, Borrower's Pledge Agreement, Parent Company
Guaranty, Stock Pledge Agreement, Subsidiary Guaranty and
Subsidiary Pledge Agreement (see table of contents for
list of omitted schedules and exhibits).
4.11(z) -- First Amendment to Second Amended and Restated Loan
Agreement, dated June 26, 1997, among Evergreen Media
Corporation of Los Angeles, the Lenders, the Agents and
the Administrative Agent.
4.12(y) -- Specimen Common Stock Certificate of Chancellor Media.
4.13(y) -- Specimen 7% Convertible Preferred Stock Certificate of
Chancellor Media.
4.14(y) -- Form of Certificate of Designation for 7% Convertible
Preferred Stock of Chancellor Media.
4.15(aa) -- Indenture, dated as of February 14, 1996, governing the
9 3/8% Senior Subordinated Notes due 2004 of CMCLA.
4.16(bb) -- First Supplemental Indenture, dated as of February 14,
1996, to the Indenture dated February 14, 1996, governing
the 9 3/8% Senior Subordinated Notes due 2004 of CMCLA.
</TABLE>
31
<PAGE> 33
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
4.17(cc) -- Indenture, dated as of February 26, 1996, governing the
12 1/4% Subordinated Exchange Debentures due 2008 of
CMCLA.
4.18(dd) -- Indenture, dated as of January 23, 1997, governing the
12% Subordinated Exchange Debentures due 2009 of CMCLA.
4.19(ee) -- Indenture, dated as of June 24, 1997, governing the
8 3/4% Senior Subordinated Notes due 2007 of CMCLA.
4.21(ff) -- Specimen of the 12 1/4% Series A Senior Cumulative
Exchangeable Preferred Stock Certificate of CMCLA.
4.22(ff) -- Specimen of the 12% Exchangeable Preferred Stock
Certificate of CMCLA.
4.23(ff) -- Form of Certificate of Designation for the 12 1/4% Series
A Senior Cumulative Exchangeable Preferred Stock of
CMCLA.
4.24(ff) -- Form of Certificate of Designation for the 12%
Exchangeable Preferred Stock of CMCLA.
4.25(pp) -- Second Amendment to Second Amended and Restated Loan
Agreement, dated August 7, 1997, among Evergreen Media
Corporation of Los Angeles, the Lenders, the Agents and
the Administrative Agent.
4.26(hh) -- Second Supplemental Indenture, dated as of April 15,
1997, to the Indenture dated February 14, 1996, governing
the 9 3/8% Senior Subordinated Notes due 2004 of CMCLA.
4.27(pp) -- Third Supplemental Indenture, dated as of September 5,
1997, to the Indenture dated February 14, 1996, governing
the 9 3/8% Senior Subordinated Notes due 2004 of CMCLA.
4.28(pp) -- First Supplemental Indenture, dated as of September 5,
1997, to the Indenture dated June 24, 1997, governing the
8 3/4% Senior Subordinated Notes due 2007 of CMCLA.
4.29(pp) -- First Supplemental Indenture, dated as of September 5,
1997, to the Indenture dated February 26, 1997, governing
the 12 1/4% Subordinated Exchange Debentures due 2008 of
CMCLA.
4.30(pp) -- First Supplemental Indenture, dated as of September 5,
1997, to the Indenture dated January 23, 1997, governing
the 12% Subordinated Exchange Debentures due 2009 of
CMCLA.
4.31(qq) -- Specimen $3.00 Convertible Exchangeable Preferred Stock
Certificate of Chancellor Media.
4.32(qq) -- Certificate of Designation for $3.00 Convertible
Exchangeable Preferred Stock of Chancellor Media.
4.33(qq) -- Convertible Subordinated Exchange Indenture (including
form of 6% Convertible Subordinated Exchange Debentures
attached thereto), dated June 16, 1997, between Evergreen
Media Corporation and The Bank of New York.
4.34(uu) -- Amended and Restated Indenture, dated as of October 28,
1997, governing the 10 1/2% Senior Subordinated Notes due
2007 of CMCLA.
4.35(uu) -- Second Supplemental Indenture, dated as of October 28,
1997, to the Amended and Restated Indenture dated October
28, 1997 governing the 10 1/2% Senior Subordinated Notes
due 2007 of CMCLA.
4.36(uu) -- Third Amendment to Second Amended and Restated Loan
Agreement dated October 28, 1997, among CMCLA, the
Lenders, the Agents and the Administrative Agent.
4.37(uu) -- Fourth Amendment to Second Amended and Restated Loan
Agreement, dated February 10, 1998, among CMCLA, the
Lenders, the Agents and the Administrative Agent.
</TABLE>
32
<PAGE> 34
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
4.38(vv) -- Indenture, dated as of December 22, 1997, governing the
8 1/8% Senior Subordinated Notes due 2007 of CMCLA.
4.39* -- Fifth Amendment to Second Amended and Restated Loan
Agreement, dated May 1, 1998, among CMCLA, the Lenders,
the Agents and the Administrative Agent.
10.23(f) -- Evergreen Media Corporation Stock Option Plan for
Non-employee Directors.
10.26(n)** -- Employment Agreement dated February 9, 1996 by and
between Evergreen Media Corporation and Kenneth J.
O'Keefe.
10.28(o) -- 1995 Stock Option Plan for executive officers and key
employees of Evergreen Media Corporation.
10.30(pp)** -- First Amendment to Employment Agreement dated March 1,
1997 by and between Evergreen Media Corporation and
Kenneth J. O'Keefe.
10.31(pp)** -- Employment Agreement dated September 4, 1997 by and among
Evergreen Media Corporation, Evergreen Media Corporation
of Los Angeles and Scott K. Ginsburg.
10.32(pp)** -- Employment Agreement dated September 4, 1997 by and among
Evergreen Media Corporation, Evergreen Media Corporation
of Los Angeles and James de Castro.
10.33(pp)** -- Employment Agreement dated September 4, 1997 by and among
Evergreen Media Corporation, Evergreen Media Corporation
of Los Angeles and Matthew E. Devine.
10.34(pp)** -- Second Amendment to Employment Agreement dated September
4, 1997 by and among Evergreen Media Corporation,
Evergreen Media Corporation of Los Angeles and Kenneth J.
O'Keefe.
10.35(ii)** -- Employment Agreement dated February 14, 1996 by and among
Chancellor Broadcasting Company, Chancellor Radio
Broadcasting Company and Steven Dinetz.
10.36(jj) -- Chancellor Broadcasting Company 1996 Stock Award Plan.
10.37(kk) -- Chancellor Holdings Corp. 1994 Director Stock Option
Plan.
10.38(ll) -- Stock Option Grant Letter dated September 30, 1995 from
Chancellor Corporation to Steven Dinetz.
10.39(mm) -- Stock Option Grant Letter dated September 30, 1995 from
Chancellor Corporation to Eric W. Neumann.
10.40(nn) -- Stock Option Grant Letter dated September 30, 1995 from
Chancellor Corporation to Marvin Dinetz.
10.41(oo) -- Stock Option Grant Letter dated February 14, 1997 from
Chancellor Broadcasting Company to Carl M. Hirsch.
10.44(vv)** -- Agreement dated April 20, 1998 by and among Chancellor
Media Corporation, Chancellor Media Corporation of Los
Angeles and Scott K. Ginsburg.
10.45(vv)** -- Employment Agreement dated April 29, 1998 by and among
Chancellor Media Corporation, Chancellor Media
Corporation of Los Angeles and Jeffrey A. Marcus.
27.1* -- Financial Data Schedule of Chancellor Media Corporation.
27.2* -- Financial Data Schedule of Chancellor Media Corporation
of Los Angeles.
</TABLE>
- ---------------
* Filed herewith.
** Management contract or compensatory agreement.
(a) Incorporated by reference to the identically numbered exhibit to
Evergreen's Registration Statement on Form S-1, as amended (Reg. No.
33-60036).
(f) Incorporated by reference to the identically numbered exhibit to
Evergreen's Registration Statement on Form S-4, as amended (Reg. No.
33-89838).
(h) Incorporated by reference to the identically numbered exhibit to
Evergreen's Current Report on Form 8-K dated July 14, 1995.
33
<PAGE> 35
(i) Incorporated by reference to the identically numbered exhibit to
Evergreen's Current Report on Form 8-K dated January 17, 1996.
(j) Incorporated by reference to the identically numbered exhibit to
Evergreen's Quarterly Report on Form 10-Q for the quarterly period ending
September 30, 1995.
(k) Incorporated by reference to the identically numbered exhibit to
Evergreen's Registration Statement on Form S-1, as amended (Reg. No.
33-69752).
(n) Incorporated by reference to the identically numbered exhibit to
Evergreen's Annual Report on Form 10-K for the fiscal year ended December
31, 1995.
(o) Incorporated by reference to the identically numbered exhibit to
Evergreen's Quarterly Report on Form 10-Q for the quarterly period ending
March 31, 1996.
(p) Incorporated by reference to the identically numbered exhibit to
Evergreen's Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1996.
(q) Incorporated by reference to the identically numbered exhibit to
Evergreen's Registration Statement on Form S-3, as amended (Reg. No.
333-12453).
(r) Incorporated by reference to the identically numbered exhibit to
Evergreen's Current Report on Form 8-K dated February 16, 1997 and filed
March 9, 1997.
(s) Incorporated by reference to the identically numbered exhibit to
Evergreen's Annual Report on Form 10-K for the fiscal year ended December
31, 1996.
(t) Incorporated by reference to the identically numbered exhibit to
Evergreen's Current Report on Form 8-K dated April 1, 1997 and filed May
9, 1997.
(y) Incorporated by reference to the identically numbered exhibit of
Evergreen's Registration Statement on Form S-4, filed August 1, 1997.
(z) Incorporated by reference to the identically numbered exhibit to
Evergreen's Current Report on Form 8-K dated July 7, 1997 and filed July
31, 1997.
(aa) Incorporated by reference to Exhibit 4.4 to the Current Report on Form 8-K
of Chancellor Broadcasting Company and Chancellor Radio Broadcasting
Company, as filed on February 29, 1996.
(bb) Incorporated by reference to Exhibit 4.5 to the Annual Report on Form 10-K
of Chancellor Broadcasting Company, Chancellor Radio Broadcasting Company
and Chancellor Broadcasting Licensee Company for the fiscal year ended
December 31, 1995.
(cc) Incorporated by reference to Exhibit 4.6 to the Current Report on Form 8-K
of Chancellor Broadcasting Company and Chancellor Radio Broadcasting
Company, as filed on February 29, 1996.
(dd) Incorporated by reference to Exhibit 4.7 to the Current Report on Form 8-K
of Chancellor Radio Broadcasting Company, as filed on February 6, 1997.
(ee) Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K
of Chancellor Broadcasting Company and Chancellor Radio Broadcasting
Company as filed on July 17, 1997.
(ff) Incorporated by reference to the identically-numbered exhibit to EMCLA's
Registration Statement on Form S-4 (Reg. No. 333-32259), dated July 29,
1997, as amended.
(gg) Incorporated by reference to the identically-numbered exhibit to the
Quarterly Report on Form 10-Q of Evergreen and EMCLA for the quarterly
period ending June 30, 1997.
(hh) Incorporated by reference to Exhibit 4.8 to the Quarterly Report on Form
10-Q of Chancellor and CRBC for the quarterly period ending March 31,
1997.
(ii) Incorporated by reference to Exhibit 10.6 to Chancellor's Registration
Statement on Form S-1 (Reg. No. 333-02782) filed February 9, 1996.
(jj) Incorporated by reference to Exhibit 4.22 to Chancellor Media's
Registration Statement on Form S-8 (Reg. No. 333-35039), dated September
5, 1997.
(kk) Incorporated by reference to Exhibit 4.23 to Chancellor Media's
Registration Statement on Form S-8 (Reg. No. 333-35039), dated September
5, 1997.
(ll) Incorporated by reference to Exhibit 4.24 to Chancellor Media's
Registration Statement on Form S-8 (Reg. No. 333-35039), dated September
5, 1997.
(mm) Incorporated by reference to Exhibit 4.25 to Chancellor Media's
Registration Statement on Form S-8 (Reg. No. 333-35039), dated September
5, 1997.
34
<PAGE> 36
(nn) Incorporated by reference to Exhibit 4.26 to Chancellor Media's
Registration Statement on Form S-8 (Reg. No. 333-35039), dated September
5, 1997.
(oo) Incorporated by reference to Exhibit 4.27 to Chancellor Media's
Registration Statement on Form S-8 (Reg. No. 333-35039), dated September
5, 1997.
(pp) Incorporated by reference to the identically numbered exhibit to CMCLA's
Registration Statement on Form S-4 (Reg. No. 333-36451), dated September
26, 1997, as amended.
(ss) Incorporated by reference to the identically numbered exhibit to the
Quarterly Report on Form 10-Q of Chancellor Media and CMCLA for the fiscal
quarter ended September 30, 1997.
(tt) Incorporated by reference to the identically numbered exhibit to the
Current Report on Form 8-K of Chancellor Media and CMCLA, dated as of
February 23, 1998 and filed as of February 27, 1998.
(uu) Incorporated by reference to the identically numbered exhibit to the
Annual Report on Form 10-K of Chancellor Media and CMCLA for the fiscal
year ended December 31, 1997.
(vv) Incorporated by reference to the identically numbered exhibit to CMCLA's
Registration Statement on Form S-4 (Reg. No. 333-50739), dated April 22,
1998, as amended.
(b) Current Reports on Form 8-K
1. Current Report on Form 8-K, dated January 13, 1998 and filed January
13, 1998, of Chancellor Media and CMCLA, as amended on Form 8-K/A dated
February 10, 1998, reporting certain pro forma financial information.
2. Current Report on Form 8-K, dated February 23, 1998 and filed February
27, 1998, of Chancellor Media, reporting certain transactions related
to the 1998 Equity Offering described herein.
3. Current Report on Form 8-K, dated March 10, 1998 and filed March 12,
1998, of Chancellor Media and CMCLA, reporting the execution of the
underwriting agreement for the 1998 Equity Offering described herein.
35
<PAGE> 37
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
<TABLE>
<S> <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
Senior Vice-President and Senior Vice-President and
Chief Financial Officer Chief Financial Officer
</TABLE>
Date: May 14, 1998
36
<PAGE> 38
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.11(h) -- Agreement and Plan of Merger by and among Pyramid
Communications, Inc., Evergreen Media Corporation and
Evergreen Media/Pyramid Corporation dated as of July 14,
1995 (see table of contents for list of omitted exhibits
and schedules).
2.11A(i) -- Amendment to Plan and Agreement of Merger by and among
Pyramid Communications, Inc., Evergreen Media Corporation
and Evergreen Media/Pyramid Corporation dated September
7, 1995.
2.11B(i) -- Amendment to Plan and Agreement of Merger by and among
Pyramid Communications, Inc., Evergreen Media Corporation
and Evergreen Media/Pyramid Corporation dated January 11,
1996.
2.12(j) -- Purchase Agreement between Fairbanks Communications, Inc.
and Evergreen Media Corporation dated October 12, 1995
(see table of contents for list of omitted exhibits and
schedules).
2.13(n) -- Option Agreement dated as of January 9, 1996 between
Chancellor Broadcasting Company and Evergreen Media
Corporation (including Form of Advertising Brokerage
Agreement and Form of Asset Purchase Agreement).
2.14(o) -- Asset Purchase Agreement dated April 4, 1996 between
American Radio Systems Corporation and Evergreen Media
Corporation of Buffalo (see table of contents for list of
omitted exhibits and schedules).
2.15(o) -- Asset Purchase Agreement dated April 11, 1996 between
Mercury Radio Communications, L.P. and Evergreen Media
Corporation of Los Angeles, Evergreen Media/Pyramid
Holdings Corporation, WHTT (AM) License Corp. and WHTT
(FM) License Corp. (see table of contents for list of
omitted exhibits and schedules).
2.16(o) -- Asset Purchase Agreement dated April 19, 1996 between
Crescent Communications L.P. and Evergreen Media
Corporation of Los Angeles (see table of contents for
list of omitted exhibits and schedules).
2.17(p) -- Asset Purchase Agreement dated June 13, 1996 between
Evergreen Media Corporation of Los Angeles and Greater
Washington Radio, Inc. (see table of contents for list of
omitted exhibits and schedules).
2.18(p) -- Asset Exchange Agreement dated June 13, 1996 among
Evergreen Media Corporation of Los Angeles, Evergreen
Media Corporation of the Bay State, WKLB License Corp.,
Greater Media Radio, Inc. and Greater Washington Radio,
Inc. (see table of contents for list of omitted exhibits
and schedules).
2.19(p) -- Purchase Agreement dated June 27, 1996 between WEDR,
Inc., and Evergreen Media Corporation of Los Angeles.
(See table of contents for list of omitted schedules)
2.20(p) -- Time Brokerage Agreement dated July 10, 1996 by and
between Evergreen Media Corporation of Detroit, as
Licensee, and Kidstar Interactive Media Incorporated, as
Time Broker.
2.21(p) -- Asset Purchase Agreement dated July 15, 1996 by and among
Century Chicago Broadcasting L.P., Century Broadcasting
Corporation, Evergreen Media Corporation of Los Angeles,
and Evergreen Media Corporation of Chicago.
2.22(p) -- Asset Purchase Agreement dated August 12, 1996 by and
among Chancellor Broadcasting Company, Shamrock
Broadcasting, Inc. and Evergreen Media Corporation of the
Great Lakes.
</TABLE>
<PAGE> 39
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.23(p) -- Asset Purchase Agreement dated as of August 12, 1996
between Secret Communications Limited Partnership and
Evergreen Media Corporation of Los Angeles (WQRS-FM).
(See table of contents for list of omitted exhibits and
schedules)
2.24(p) -- Asset Purchase Agreement dated as of August 12, 1996
between Secret Communications Limited Partnership and
Evergreen Media Corporation of Los Angeles. (See table of
contents for list of omitted schedules)
2.25(q) -- Letter of intent dated August 27, 1996 between EZ
Communications, Inc. and Evergreen Media Corporation.
2.26(q) -- Asset Purchase Agreement dated September 19, 1996 between
Beasley-FM Acquisition Corp., WDAS License Limited
Partnership and Evergreen Media Corporation of Los
Angeles.
2.27(q) -- Asset Purchase Agreement dated September 19, 1996 between
The Brown Organization and Evergreen Media Corporation of
Los Angeles.
2.28(r) -- Stock Purchase Agreement by and between Viacom
International Inc. and Evergreen Media Corporation of Los
Angeles, dated February 16, 1997 (See table of contents
for omitted schedules and exhibits).
2.29(r) -- Agreement and Plan of Merger, by and among Evergreen
Media Corporation, Chancellor Broadcasting Company and
Chancellor Radio Broadcasting Company, dated as of
February 19, 1997.
2.30(r) -- Stockholders Agreement, by and among Chancellor
Broadcasting Company, Evergreen Media Corporation, Scott
K. Ginsburg (individually and as custodian for certain
shares held by his children), HM2/Chancellor, L.P.,
Hicks, Muse, Tate & First Equity Fund II, L.P., HM2/HMW,
L.P., The Chancellor Business Trust, HM2/HMD Sacramento
GP, L.P., Thomas O. Hicks, as Trustee of the William Cree
Hicks 1992 Irrevocable Trust, Thomas O. Hicks, as Trustee
of the Catherine Forgave Hicks 1993 Irrevocable Trust,
Thomas O. Hicks, as Trustee of the John Alexander Hicks
1984 Trust, Thomas O. Hicks, as Trustee of the Mack
Hardin Hicks 1984 Trust, Thomas O. Hicks, as Trustee of
Robert Bradley Hicks 1984 Trust, Thomas O. Hicks, as
Trustee of the Thomas O. Hicks, Jr. 1984 Trust, Thomas O.
Hicks and H. Rand Reynolds, as Trustees for the Muse
Children's GS Trust, and Thomas O. Hicks, dated as of
February 19, 1997.
2.31(r) -- Joint Purchase Agreement, by and among Chancellor Radio
Broadcasting Company, Chancellor Broadcasting Company,
Evergreen Media Corporation of Los Angeles, and Evergreen
Media Corporation, dated as of February 19, 1997.
2.32(s) -- Asset Exchange Agreement, by and among EZ Communications,
Inc., Professional Broadcasting Incorporated, EZ
Philadelphia, Inc., Evergreen Media Corporation of Los
Angeles, Evergreen Media Corporation of Charlotte,
Evergreen Media Corporation of the East, Evergreen Media
Corporation of Carolinaland, WBAV/WBAV-FM/WPEG License
Corp. and WRFX License Corp., dated as of December 5,
1996 (See table of contents for list of omitted
schedules).
2.33(s) -- Asset Purchase Agreement, by and among EZ Communications,
Inc., Professional Broadcasting Incorporated, EZ
Charlotte, Inc., Evergreen Media Corporation of Los
Angeles, Evergreen Media Corporation of the East and
Evergreen Media Corporation of Carolinaland, dated as of
December 5, 1996 (See table of contents for list of
omitted schedules).
</TABLE>
<PAGE> 40
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.34(t) -- Asset Purchase Agreement by and between Pacific and
Southern Company, Inc. and Evergreen Media Corporation of
Los Angeles (re: WGCI-AM and WGCI-FM), dated as of April
4, 1997 (see table of contents for list of omitted
schedules and exhibits).
2.35(t) -- Asset Purchase Agreement by and between Pacific and
Southern Company, Inc. and Evergreen Media Corporation of
Los Angeles (re: KKBQ-AM and KKBQ-FM), dated as of April
4, 1997 (see table of contents for list of omitted
schedules and exhibits)
2.36(t) -- Asset Purchase Agreement by and between Pacific and
Southern Company, Inc. and Evergreen Media Corporation of
Los Angeles (re: KHKS-FM), dated as of April 4, 1997 (see
table of contents for list of omitted schedules and
exhibits).
2.41(y) -- Amended and Restated Agreement and Plan of Merger among
Chancellor Broadcasting Company, Chancellor Radio
Broadcasting Company, Evergreen Media Corporation,
Evergreen Mezzanine Holdings Corporation and Evergreen
Media Corporation of Los Angeles, dated as of February
19, 1997, amended and restated as of July 31, 1997.
2.42(gg) -- Option Agreement, by and among Evergreen Media
Corporation, Chancellor Broadcasting Company, Bonneville
International Corporation and Bonneville Holding Company,
dated as of August 6, 1997.
2.43(ss) -- Letter Agreement, dated February 20, 1998, between the
Company and Capstar Broadcasting Corporation.
3.1C(ss) -- Amended and Restated Certificate of Incorporation of
Chancellor Media.
3.2B(ss) -- Amended and Restated Bylaws of Chancellor Media.
3.3(ff) -- Certificate of Incorporation of Chancellor Media
Corporation of Los Angeles formerly known as Evergreen
Media Corporation of Los Angeles.
3.3A(pp) -- Amendment to Certificate of Incorporation of Chancellor
Media Corporation of Los Angeles, filed September 5,
1997.
3.3B(uu) -- Amendment to the Certificate of Incorporation of
Chancellor Media Corporation of Los Angeles, filed
October 28, 1997.
3.4(ff) -- Bylaws of Chancellor Media Corporation of Los Angeles.
4.10(t) -- Second Amended and Restated Loan Agreement dated as of
April 25 1997 among Evergreen Media Corporation of Los
Angeles, the financial institutions whose names appear as
Lenders on the signature pages thereof (the "Lenders"),
Toronto Dominion Securities, Inc., as Arranging Agent,
The Bank of New York and Bankers Trust Company, as
Co-Syndication Agents, NationsBank of Texas, N.A. and
Union Bank of California, as Co-Documentation Agents, and
Toronto Dominion (Texas), Inc., as Administrative Agent
for the Lenders, together with certain collateral
documents attached thereto as exhibits, including
Assignment of Partnership Interests, Assignment of Trust
Interests, Borrower's Pledge Agreement, Parent Company
Guaranty, Stock Pledge Agreement, Subsidiary Guaranty and
Subsidiary Pledge Agreement (see table of contents for
list of omitted schedules and exhibits).
4.11(z) -- First Amendment to Second Amended and Restated Loan
Agreement, dated June 26, 1997, among Evergreen Media
Corporation of Los Angeles, the Lenders, the Agents and
the Administrative Agent.
4.12(y) -- Specimen Common Stock Certificate of Chancellor Media.
4.13(y) -- Specimen 7% Convertible Preferred Stock Certificate of
Chancellor Media.
</TABLE>
<PAGE> 41
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
4.14(y) -- Form of Certificate of Designation for 7% Convertible
Preferred Stock of Chancellor Media.
4.15(aa) -- Indenture, dated as of February 14, 1996, governing the
9 3/8% Senior Subordinated Notes due 2004 of CMCLA.
4.16(bb) -- First Supplemental Indenture, dated as of February 14,
1996, to the Indenture dated February 14, 1996, governing
the 9 3/8% Senior Subordinated Notes due 2004 of CMCLA.
4.17(cc) -- Indenture, dated as of February 26, 1996, governing the
12 1/4% Subordinated Exchange Debentures due 2008 of
CMCLA.
4.18(dd) -- Indenture, dated as of January 23, 1997, governing the
12% Subordinated Exchange Debentures due 2009 of CMCLA.
4.19(ee) -- Indenture, dated as of June 24, 1997, governing the
8 3/4% Senior Subordinated Notes due 2007 of CMCLA.
4.21(ff) -- Specimen of the 12 1/4% Series A Senior Cumulative
Exchangeable Preferred Stock Certificate of CMCLA.
4.22(ff) -- Specimen of the 12% Exchangeable Preferred Stock
Certificate of CMCLA.
4.23(ff) -- Form of Certificate of Designation for the 12 1/4% Series
A Senior Cumulative Exchangeable Preferred Stock of
CMCLA.
4.24(ff) -- Form of Certificate of Designation for the 12%
Exchangeable Preferred Stock of CMCLA.
4.25(pp) -- Second Amendment to Second Amended and Restated Loan
Agreement, dated August 7, 1997, among Evergreen Media
Corporation of Los Angeles, the Lenders, the Agents and
the Administrative Agent.
4.26(hh) -- Second Supplemental Indenture, dated as of April 15,
1997, to the Indenture dated February 14, 1996, governing
the 9 3/8% Senior Subordinated Notes due 2004 of CMCLA.
4.27(pp) -- Third Supplemental Indenture, dated as of September 5,
1997, to the Indenture dated February 14, 1996, governing
the 9 3/8% Senior Subordinated Notes due 2004 of CMCLA.
4.28(pp) -- First Supplemental Indenture, dated as of September 5,
1997, to the Indenture dated June 24, 1997, governing the
8 3/4% Senior Subordinated Notes due 2007 of CMCLA.
4.29(pp) -- First Supplemental Indenture, dated as of September 5,
1997, to the Indenture dated February 26, 1997, governing
the 12 1/4% Subordinated Exchange Debentures due 2008 of
CMCLA.
4.30(pp) -- First Supplemental Indenture, dated as of September 5,
1997, to the Indenture dated January 23, 1997, governing
the 12% Subordinated Exchange Debentures due 2009 of
CMCLA.
4.31(qq) -- Specimen $3.00 Convertible Exchangeable Preferred Stock
Certificate of Chancellor Media.
4.32(qq) -- Certificate of Designation for $3.00 Convertible
Exchangeable Preferred Stock of Chancellor Media.
4.33(qq) -- Convertible Subordinated Exchange Indenture (including
form of 6% Convertible Subordinated Exchange Debentures
attached thereto), dated June 16, 1997, between Evergreen
Media Corporation and The Bank of New York.
</TABLE>
<PAGE> 42
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
4.34(uu) -- Amended and Restated Indenture, dated as of October 28,
1997, governing the 10 1/2% Senior Subordinated Notes due
2007 of CMCLA.
4.35(uu) -- Second Supplemental Indenture, dated as of October 28,
1997, to the Amended and Restated Indenture dated October
28, 1997 governing the 10 1/2% Senior Subordinated Notes
due 2007 of CMCLA.
4.36(uu) -- Third Amendment to Second Amended and Restated Loan
Agreement dated October 28, 1997, among CMCLA, the
Lenders, the Agents and the Administrative Agent.
4.37(uu) -- Fourth Amendment to Second Amended and Restated Loan
Agreement, dated February 10, 1998, among CMCLA, the
Lenders, the Agents and the Administrative Agent.
4.38(vv) -- Indenture, dated as of December 22, 1997, governing the
8 1/8% Senior Subordinated Notes due 2007 of CMCLA.
4.39* -- Fifth Amendment to Second Amended and Restated Loan
Agreement, dated May 1, 1998, among CMCLA, the Lenders,
the Agents and the Administrative Agent.
10.23(f) -- Evergreen Media Corporation Stock Option Plan for
Non-employee Directors.
10.26(n)** -- Employment Agreement dated February 9, 1996 by and
between Evergreen Media Corporation and Kenneth J.
O'Keefe.
10.28(o) -- 1995 Stock Option Plan for executive officers and key
employees of Evergreen Media Corporation.
10.30(pp)** -- First Amendment to Employment Agreement dated March 1,
1997 by and between Evergreen Media Corporation and
Kenneth J. O'Keefe.
10.31(pp)** -- Employment Agreement dated September 4, 1997 by and among
Evergreen Media Corporation, Evergreen Media Corporation
of Los Angeles and Scott K. Ginsburg.
10.32(pp)** -- Employment Agreement dated September 4, 1997 by and among
Evergreen Media Corporation, Evergreen Media Corporation
of Los Angeles and James de Castro.
10.33(pp)** -- Employment Agreement dated September 4, 1997 by and among
Evergreen Media Corporation, Evergreen Media Corporation
of Los Angeles and Matthew E. Devine.
10.34(pp)** -- Second Amendment to Employment Agreement dated September
4, 1997 by and among Evergreen Media Corporation,
Evergreen Media Corporation of Los Angeles and Kenneth J.
O'Keefe.
10.35(ii)** -- Employment Agreement dated February 14, 1996 by and among
Chancellor Broadcasting Company, Chancellor Radio
Broadcasting Company and Steven Dinetz.
10.36(jj) -- Chancellor Broadcasting Company 1996 Stock Award Plan.
10.37(kk) -- Chancellor Holdings Corp. 1994 Director Stock Option
Plan.
10.38(ll) -- Stock Option Grant Letter dated September 30, 1995 from
Chancellor Corporation to Steven Dinetz.
10.39(mm) -- Stock Option Grant Letter dated September 30, 1995 from
Chancellor Corporation to Eric W. Neumann.
10.40(nn) -- Stock Option Grant Letter dated September 30, 1995 from
Chancellor Corporation to Marvin Dinetz.
10.41(oo) -- Stock Option Grant Letter dated February 14, 1997 from
Chancellor Broadcasting Company to Carl M. Hirsch.
</TABLE>
<PAGE> 43
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
10.44(vv)** -- Agreement dated April 20, 1998 by and among Chancellor
Media Corporation, Chancellor Media Corporation of Los
Angeles and Scott K. Ginsburg.
10.45(vv)** -- Employment Agreement dated April 29, 1998 by and among
Chancellor Media Corporation, Chancellor Media
Corporation of Los Angeles and Jeffrey A. Marcus.
27.1* -- Financial Data Schedule of Chancellor Media Corporation.
27.2* -- Financial Data Schedule of Chancellor Media Corporation
of Los Angeles.
</TABLE>
- ---------------
* Filed herewith.
** Management contract or compensatory agreement.
(a) Incorporated by reference to the identically numbered exhibit to
Evergreen's Registration Statement on Form S-1, as amended (Reg. No.
33-60036).
(f) Incorporated by reference to the identically numbered exhibit to
Evergreen's Registration Statement on Form S-4, as amended (Reg. No.
33-89838).
(h) Incorporated by reference to the identically numbered exhibit to
Evergreen's Current Report on Form 8-K dated July 14, 1995.
(i) Incorporated by reference to the identically numbered exhibit to
Evergreen's Current Report on Form 8-K dated January 17, 1996.
(j) Incorporated by reference to the identically numbered exhibit to
Evergreen's Quarterly Report on Form 10-Q for the quarterly period ending
September 30, 1995.
(k) Incorporated by reference to the identically numbered exhibit to
Evergreen's Registration Statement on Form S-1, as amended (Reg. No.
33-69752).
(n) Incorporated by reference to the identically numbered exhibit to
Evergreen's Annual Report on Form 10-K for the fiscal year ended December
31, 1995.
(o) Incorporated by reference to the identically numbered exhibit to
Evergreen's Quarterly Report on Form 10-Q for the quarterly period ending
March 31, 1996.
(p) Incorporated by reference to the identically numbered exhibit to
Evergreen's Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1996.
(q) Incorporated by reference to the identically numbered exhibit to
Evergreen's Registration Statement on Form S-3, as amended (Reg. No.
333-12453).
(r) Incorporated by reference to the identically numbered exhibit to
Evergreen's Current Report on Form 8-K dated February 16, 1997 and filed
March 9, 1997.
(s) Incorporated by reference to the identically numbered exhibit to
Evergreen's Annual Report on Form 10-K for the fiscal year ended December
31, 1996.
(t) Incorporated by reference to the identically numbered exhibit to
Evergreen's Current Report on Form 8-K dated April 1, 1997 and filed May
9, 1997.
(y) Incorporated by reference to the identically numbered exhibit of
Evergreen's Registration Statement on Form S-4, filed August 1, 1997.
(z) Incorporated by reference to the identically numbered exhibit to
Evergreen's Current Report on Form 8-K dated July 7, 1997 and filed July
31, 1997.
(aa) Incorporated by reference to Exhibit 4.4 to the Current Report on Form 8-K
of Chancellor Broadcasting Company and Chancellor Radio Broadcasting
Company, as filed on February 29, 1996.
(bb) Incorporated by reference to Exhibit 4.5 to the Annual Report on Form 10-K
of Chancellor Broadcasting Company, Chancellor Radio Broadcasting Company
and Chancellor Broadcasting Licensee Company for the fiscal year ended
December 31, 1995.
<PAGE> 44
(cc) Incorporated by reference to Exhibit 4.6 to the Current Report on Form 8-K
of Chancellor Broadcasting Company and Chancellor Radio Broadcasting
Company, as filed on February 29, 1996.
(dd) Incorporated by reference to Exhibit 4.7 to the Current Report on Form 8-K
of Chancellor Radio Broadcasting Company, as filed on February 6, 1997.
(ee) Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K
of Chancellor Broadcasting Company and Chancellor Radio Broadcasting
Company as filed on July 17, 1997.
(ff) Incorporated by reference to the identically-numbered exhibit to EMCLA's
Registration Statement on Form S-4 (Reg. No. 333-32259), dated July 29,
1997, as amended.
(gg) Incorporated by reference to the identically-numbered exhibit to the
Quarterly Report on Form 10-Q of Evergreen and EMCLA for the quarterly
period ending June 30, 1997.
(hh) Incorporated by reference to Exhibit 4.8 to the Quarterly Report on Form
10-Q of Chancellor and CRBC for the quarterly period ending March 31,
1997.
(ii) Incorporated by reference to Exhibit 10.6 to Chancellor's Registration
Statement on Form S-1 (Reg. No. 333-02782) filed February 9, 1996.
(jj) Incorporated by reference to Exhibit 4.22 to Chancellor Media's
Registration Statement on Form S-8 (Reg. No. 333-35039), dated September
5, 1997.
(kk) Incorporated by reference to Exhibit 4.23 to Chancellor Media's
Registration Statement on Form S-8 (Reg. No. 333-35039), dated September
5, 1997.
(ll) Incorporated by reference to Exhibit 4.24 to Chancellor Media's
Registration Statement on Form S-8 (Reg. No. 333-35039), dated September
5, 1997.
(mm) Incorporated by reference to Exhibit 4.25 to Chancellor Media's
Registration Statement on Form S-8 (Reg. No. 333-35039), dated September
5, 1997.
(nn) Incorporated by reference to Exhibit 4.26 to Chancellor Media's
Registration Statement on Form S-8 (Reg. No. 333-35039), dated September
5, 1997.
(oo) Incorporated by reference to Exhibit 4.27 to Chancellor Media's
Registration Statement on Form S-8 (Reg. No. 333-35039), dated September
5, 1997.
(pp) Incorporated by reference to the identically numbered exhibit to CMCLA's
Registration Statement on Form S-4 (Reg. No. 333-36451), dated September
26, 1997, as amended.
(ss) Incorporated by reference to the identically numbered exhibit to the
Quarterly Report on Form 10-Q of Chancellor Media and CMCLA for the fiscal
quarter ended September 30, 1997
(tt) Incorporated by reference to the identically numbered exhibit to the
Current Report on Form 8-K of Chancellor Media and CMCLA, dated as of
February 23, 1998 and filed as of February 27, 1998.
(uu) Incorporated by reference to the identically numbered exhibit to the
Annual Report on Form 10-K of Chancellor Media and CMCLA for the fiscal
year ended December 31, 1997.
(vv) Incorporated by reference to the identically numbered exhibit to CMCLA's
Registration Statement on Form S-4 (Reg. No. 333-50739), dated April 22,
1998, as amended.
<PAGE> 1
EXHIBIT 4.39
FIFTH AMENDMENT
TO SECOND AMENDED AND RESTATED LOAN AGREEMENT
THIS FIFTH AMENDMENT TO SECOND AMENDED AND RESTATED LOAN
AGREEMENT (this "Amendment") made as of the 1st day of May, 1998, among
Chancellor Media Corporation of Los Angeles, a Delaware corporation (formerly
known as Evergreen Media Corporation of Los Angeles) (the "Borrower"), the
financial institutions whose names appear as Lenders on the signature pages
hereto (collectively, the "Lenders"), Toronto Dominion (Texas), Inc., Bankers
Trust Company, The Bank of New York, NationsBank of Texas, N.A. and Union Bank
of California (collectively, the "Managing Agents"), Toronto Dominion Securities
(USA), Inc. (the "Syndication Agent") and Toronto Dominion (Texas), Inc., as
administrative agent for the Lenders (the "Administrative Agent"),
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders, the Managing Agents, the
Syndication Agent and the Administrative Agent are parties to that certain
Second Amended and Restated Loan Agreement dated as of April 25, 1997, as
modified and amended by that certain First Amendment to Second Amended and
Restated Loan Agreement dated as of June 26, 1997, as further modified and
amended by that certain Second Amendment to Second Amended and Restated Loan
Agreement dated as of August 7, 1997, as further modified by that certain Third
Amendment to Second Amended and Restated Loan Agreement dated as of October 28,
1997, and as further modified and amended by that certain Fourth Amendment to
Second Amended and Restated Loan Agreement dated as of February 10, 1998 (as
amended, the "Loan Agreement"); and
WHEREAS, the Borrower has requested the Administrative Agent,
the Managing Agents, the Syndication Agent and the Lenders to agree to amend
certain covenants in the Loan Agreement as more fully set forth herein;
NOW, THEREFORE, for and in consideration of the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is acknowledged, the
parties agree that all capitalized terms used herein shall have the meanings
ascribed thereto in the Loan Agreement except as otherwise defined or limited
herein, and further agree as follows:
1. Amendment to Article 1. Article 1 of the Loan Agreement,
Definitions, is hereby modified by deleting the existing definition of
"Subordinated Indebtedness" and by substituting the following therefor:
"'Subordinated Indebtedness' shall mean (a) the CRBC
Subordinated Indebtedness assumed by the Borrower, (b) the KMC
Subordinated Notes assumed by the Borrower, and (c) any other
Indebtedness for Money Borrowed or Guaranties thereof of the
Borrower or the Parent Company or KMG or CMHC, which is
expressly subordinated to the Obligations and which, in
addition, meets each of the following criteria: (i) such
Indebtedness for Money Borrowed or Guarantees thereof shall be
unsecured; (ii) such Indebtedness for Money Borrowed shall
have no amortization of principal prior to the Maturity Date
and shall mature at least one year and one day after the
Maturity Date; (iii) the terms, provisions and covenants of
such Indebtedness for Money Borrowed and any subordinated
unsecured
<PAGE> 2
Guarantees must (A) be less restrictive than, and not in
conflict with, the terms, provisions and covenants set forth
in the Loan Documents, and (B) not be cross-defaulted to the
Loan Documents (except for the occurrence of an Event of
Default as a result of the Borrower's failure to pay the
Obligations in full on the Maturity Date or the acceleration
of the Obligations under Section 8.2(a)(ii) or Section
8.2(b)); (iv) the documentation of the subordination
provisions therefor shall prohibit the payment of principal,
interest and fees on such Indebtedness for Borrowed Money upon
the occurrence, and during the continuation, of an Event of
Default under Section 8.1(b) hereof, and shall prohibit the
payment of principal, interest and fees on such Indebtedness
for Borrowed Money for a period of 179 days after the
occurrence of any Event of Default under Section 8.1 (other
than Section 8.1(b)), and shall otherwise be acceptable to the
Administrative Agent; (v) no Default or Event of Default shall
exist either immediately prior to, and giving effect to, the
incurrence of such Indebtedness for Borrowed Money; and (vi)
such Indebtedness for Money Borrowed shall not be incurred
unless, prior to its incurrence, the Borrower shall have
delivered to each of the Lenders updated financial projections
(prepared in good faith and using assumptions reasonable under
the circumstances) demonstrating that, after giving effect to
the incurrence of such Indebtedness for Money Borrowed,
compliance with all financial covenants under this Agreement
is maintained from the date of such projections through the
Maturity Date."
2. Amendment to Article 7. (a) Section 7 of the Loan Agreement,
Negative Covenants, is hereby modified and amended by deleting subsection (vii)
of Section 7.1, "Indebtedness of the Borrower and its Subsidiaries," and by
substituting the following therefor:
"(vii) (a) On and after the Merger Date, (x) CRBC
Subordinated Indebtedness (provided that any financial
covenants set forth in the documents governing the CRBC
Subordinated Indebtedness which are more restrictive than the
financial covenants set forth in this Article 7 shall be
amended to be no more restrictive prior to such assumption of
the CRBC Subordinated Indebtedness), or (y) any Subordinated
Indebtedness issued solely to refinance the CRBC Subordinated
Indebtedness and which does not increase the principal amount
thereof, (b) the Subordinated Indebtedness evidenced by the
KMC Subordinated Notes and (c) additional Subordinated
Indebtedness (including unsecured, subordinated Guaranties
issued by the Borrower or any of its Subsidiaries of
Subordinated Indebtedness issued by the Parent Company, CMHC
or KMG) in an aggregate principal amount not exceeding
$900,000,000, any one time outstanding; provided, however,
that amounts of additional Subordinated Indebtedness in excess
of $500,000,000 under this clause (c) may be incurred or
assumed only upon conversion of the Borrower's Preferred Stock
(limited for purposes hereof to its 12 1/4% Senior PIK
Exchangeable Preferred Stock and its 12% Junior PIK
Exchangeable Preferred Stock) into Subordinated
Indebtedness;..."
- 2 -
<PAGE> 3
(b) Section 7 of the Loan Agreement shall be further modified and
amended by deleting subsection (v) of Section 7.7, "Restricted Payments and
Purchases," and by substituting the following therefor:
"(v) for the sole purpose of purchasing, redeeming, acquiring
or retiring the Borrower's Preferred Stock (limited for
purposes hereof to its 12 1/4% Senior PIK Exchangeable
Preferred Stock and to its 12% Junior PIK Exchangeable
Preferred Stock), or Subordinated Indebtedness into which such
Preferred Stock is exchanged, additional funds made available
to the Borrower through the issuance by the Parent Company
after the date of the Fourth Amendment to this Agreement of
additional equity, the proceeds of which are contributed as
equity to the Borrower. . ."
3. No Other Amendments or Waivers. Except for the amendments set
forth above, the text of the Loan Agreement and the other Loan Documents shall
remain unchanged and in full force and effect, and the Lenders and the
Administrative Agent expressly reserve the right to require strict compliance
with the terms of the Loan Agreement and the other Loan Documents.
4. Effectiveness; Conditions Precedent. Upon execution of this
Amendment by the Required Lenders, the provisions of this Amendment shall be
effective subject only to the prior fulfillment of each of the following
conditions:
(a) The representations and warranties of the Borrower
under the Loan Agreement and of other obligors under the other Loan Documents
shall be true and correct as of the date hereof, and no Default or Event of
Default shall exist as of the date hereof; and
(b) The Administrative Agent's receipt of all such other
certificates, reports, statements, or other documents as the Administrative
Agent, any Managing Agent, or any Lender may reasonably request.
5. Counterparts. This Amendment may be executed in multiple
counterparts, each of which shall be deemed to be an original and all of which,
taken together, shall constitute one and the same agreement.
6. Governing Law. This Amendment shall be deemed to be made
pursuant to the laws of the State of New York with respect to agreements made
and to be performed wholly in the State of New York and shall be construed,
interpreted, performed and enforced in accordance therewith.
7. Loan Document. This Amendment shall be deemed to be a Loan
Document for all purposes under the Loan Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
- 3 -
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused their respective
duly authorized officers or representatives to execute and deliver this
Amendment as of the day and year first above written.
BORROWER: CHANCELLOR MEDIA CORPORATION OF LOS
ANGELES, a Delaware corporation
By:
---------------------------------
Name:
---------------------------
Its: Chief Financial Officer
Attest:
------------------------
Name:
------------------
Its: Vice President
ADMINISTRATIVE AGENT: TORONTO DOMINION (TEXAS), INC., a
Delaware corporation
By:
---------------------------------
Name:
---------------------------
Its: Vice President
COLLATERAL AGENT: TORONTO DOMINION (TEXAS), INC., a
Delaware corporation
By:
---------------------------------
Name:
---------------------------
Its: Vice President
ISSUING BANK: THE TORONTO-DOMINION BANK
By:
---------------------------------
Name:
---------------------------
Its: Manager
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
FIFTH AMENDMENT TO CHANCELLOR LOAN AGREEMENT
Signature Page 1
<PAGE> 5
MANAGING AGENTS TORONTO DOMINION (TEXAS), INC., a
AND LENDERS: Delaware corporation
By:
---------------------------------
Name:
---------------------------
Its: Vice President
THE BANK OF NEW YORK
By:
---------------------------------
Name:
---------------------------
Its: Vice President
NATIONSBANK OF TEXAS, N.A.
By:
---------------------------------
Name:
---------------------------
Its: Senior Vice President
UNION BANK OF CALIFORNIA
By:
---------------------------------
Name:
---------------------------
Its: Vice President
BANKERS TRUST COMPANY
By:
---------------------------------
Name:
---------------------------
Its: Vice President
MERRILL LYNCH SENIOR FLOATING RATE FUND,
INC.
By:
---------------------------------
Name:
---------------------------
Its: Authorized Signatory
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
FIFTH AMENDMENT TO CHANCELLOR LOAN AGREEMENT
Signature Page 2
<PAGE> 6
VAN KAMPEN AMERICAN CAPITAL PRIME RATE
INCOME TRUST
By:
---------------------------------
Name:
---------------------------
Its: Senior Vice President &
Director
BANK OF AMERICA NT&SA
By:
---------------------------------
Name:
---------------------------
Its: Vice President
BANKBOSTON, N.A.
By:
---------------------------------
Name:
---------------------------
Its: Director
BANQUE PARIBAS, LOS ANGELES AGENCY
By:
---------------------------------
Name:
---------------------------
Its: Vice President
By:
---------------------------------
Name:
---------------------------
Its: Group Vice President
BARCLAYS BANK PLC
By:
---------------------------------
Name:
---------------------------
Its: Associate Director
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
FIFTH AMENDMENT TO CHANCELLOR LOAN AGREEMENT
Signature Page 3
<PAGE> 7
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE
By:
---------------------------------
Name:
---------------------------
Its: Vice President
By:
---------------------------------
Name:
---------------------------
Its: Vice President
CREDIT LYONNAIS, NEW YORK BRANCH
By:
---------------------------------
Name:
---------------------------
Its: Vice President
CREDIT SUISSE FIRST BOSTON
By:
---------------------------------
Name:
---------------------------
Its: Director
By:
---------------------------------
Name:
---------------------------
Its: Vice President
THE DAI-ICHI KANGYO BANK, LTD.
By:
---------------------------------
Name:
---------------------------
Its: Vice President
KEY CORPORATE CAPITAL INC.
By:
---------------------------------
Name:
---------------------------
Its: Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
FIFTH AMENDMENT TO CHANCELLOR LOAN AGREEMENT
Signature Page 4
<PAGE> 8
SOCIETE GENERALE
By:
---------------------------------
Name:
---------------------------
Its: Vice President
BANK OF MONTREAL
By:
---------------------------------
Name:
---------------------------
Its: Senior Vice President
CORESTATES BANK, N.A.
By:
---------------------------------
Name:
---------------------------
Its: Vice President
FLEET NATIONAL BANK
By:
---------------------------------
Name:
---------------------------
Its: Assistant Vice President
THE FUJI BANK, LIMITED, HOUSTON AGENCY
By:
---------------------------------
Name:
---------------------------
Its: Vice President & Manager
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, NEW YORK BRANCH
By:
---------------------------------
Name:
---------------------------
Its: Joint General Manager
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
FIFTH AMENDMENT TO CHANCELLOR LOAN AGREEMENT
Signature Page 5
<PAGE> 9
MELLON BANK, N.A.
By:
---------------------------------
Name:
---------------------------
Its: Vice President
PNC BANK, NATIONAL ASSOCIATION
By:
---------------------------------
Name:
---------------------------
Its: Vice President
SANWA BANK LIMITED
By:
---------------------------------
Name:
---------------------------
Its: Vice President
THE BANK OF NOVA SCOTIA
By:
---------------------------------
Name:
---------------------------
Its: Authorized Signatory
THE SUMITOMO BANK, LTD.
By:
---------------------------------
Name:
---------------------------
Its: Vice President and Manager
By:
---------------------------------
Name:
---------------------------
Its: Vice President
SUNTRUST BANK, CENTRAL FLORIDA, N.A.
By:
---------------------------------
Name:
---------------------------
Its: Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
FIFTH AMENDMENT TO CHANCELLOR LOAN AGREEMENT
Signature Page 6
<PAGE> 10
ABN-AMRO BANK, N.V. - HOUSTON AGENCY
By:
---------------------------------
Name:
---------------------------
Its: Vice President
By:
---------------------------------
Name:
---------------------------
Its: Group Vice President
DRESDNER BANK AG, NEW YORK BRANCH
By:
---------------------------------
Name:
---------------------------
Its: Assistant Treasurer
By:
---------------------------------
Name:
---------------------------
Its: Vice President
SUMMIT BANK
By:
---------------------------------
Name:
---------------------------
Its: Vice President
THE TOKAI BANK, LIMITED
By:
---------------------------------
Name:
---------------------------
Its: Assistant General Manager
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
FIFTH AMENDMENT TO CHANCELLOR LOAN AGREEMENT
Signature Page 7
<PAGE> 11
UNION BANK OF SWITZERLAND, NEW YORK
BRANCH
By:
---------------------------------
Name:
---------------------------
Its:
----------------------------
By:
---------------------------------
Name:
---------------------------
Its:
----------------------------
WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION
By:
---------------------------------
Name:
---------------------------
Its: Banking Officer
BANK OF IRELAND
By:
---------------------------------
Name:
---------------------------
Its: Account Manager
CREDIT AGRICOLE INDOSUEZ
By:
---------------------------------
Name:
---------------------------
Its: Senior Vice President/
Branch Manager
By:
---------------------------------
Name:
---------------------------
Its:
-----------------------------
CRESTAR BANK
By:
---------------------------------
Name:
---------------------------
Its: Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
FIFTH AMENDMENT TO CHANCELLOR LOAN AGREEMENT
Signature Page 8
<PAGE> 12
MERITA BANK, LTD., NEW YORK BRANCH
By:
---------------------------------
Name:
---------------------------
Its: Vice President
By:
---------------------------------
Name:
---------------------------
Its: Vice President
NATIONAL CITY BANK
By:
---------------------------------
Name:
---------------------------
Its: Vice President
THE ROYAL BANK OF SCOTLAND PLC
By:
---------------------------------
Name:
---------------------------
Its: Vice President
RIGGS BANK, N.A.
By:
---------------------------------
Name:
---------------------------
Its: Vice President
THE SUMITOMO TRUST & BANKING CO., LTD.,
NEW YORK BRANCH
By:
---------------------------------
Name:
---------------------------
Its: Senior Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
FIFTH AMENDMENT TO CHANCELLOR LOAN AGREEMENT
Signature Page 9
<PAGE> 13
NATIONAL BANK OF CANADA
By:
---------------------------------
Name:
---------------------------
Its: Vice President
By:
---------------------------------
Name:
---------------------------
Its: Assistant Vice President
CITY NATIONAL BANK
By:
---------------------------------
Name:
---------------------------
Its: Senior Vice President
SENIOR DEBT PORTFOLIO
By:
---------------------------------
Name:
---------------------------
Its:
----------------------------
BANK OF SCOTLAND
By:
---------------------------------
Name:
---------------------------
Its:
----------------------------
NATEXIS BANQUE
By:
---------------------------------
Name:
---------------------------
Its:
----------------------------
By:
---------------------------------
Name:
---------------------------
Its:
----------------------------
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
FIFTH AMENDMENT TO CHANCELLOR LOAN AGREEMENT
Signature Page 10
<PAGE> 14
HELLER FINANCIAL, INC.
By:
---------------------------------
Name:
---------------------------
Its:
----------------------------
GOLDMAN SACHS CREDIT PARTNERS, L.P.
By:
---------------------------------
Name:
---------------------------
Its:
----------------------------
BEAR STEARNS INVESTMENT PRODUCTS, INC.
By:
---------------------------------
Name:
---------------------------
Its:
----------------------------
GULF INTERNATIONAL BANK B.S.C.
By:
---------------------------------
Name:
---------------------------
Its:
----------------------------
THE CHASE MANHATTAN BANK
By:
---------------------------------
Name:
---------------------------
Its:
----------------------------
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By:
---------------------------------
Name:
---------------------------
Its:
----------------------------
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By:
---------------------------------
Name:
---------------------------
Its:
----------------------------
CITIBANK, N.A.
By:
---------------------------------
Name:
---------------------------
Its:
----------------------------
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
FIFTH AMENDMENT TO CHANCELLOR LOAN AGREEMENT
Signature Page 11
<PAGE> 15
FIRST UNION NATIONAL BANK
By:
---------------------------------
Name:
---------------------------
Its:
----------------------------
OCTAGON CREDIT INVESTORS LOAN PORTFOLIO
(a unit of The Chase Manhattan Bank)
By:
---------------------------------
Name:
---------------------------
Its:
----------------------------
KZH-ING-1 CORPORATION
By:
---------------------------------
Name:
---------------------------
Its:
----------------------------
PARIBAS CAPITAL FUNDING LLC
By:
---------------------------------
Name:
---------------------------
Its:
----------------------------
PRIME INCOME TRUST
By:
---------------------------------
Name:
---------------------------
Its:
----------------------------
CYPRESSTREE INVESTMENT MANAGEMENT, INC.
By:
---------------------------------
Name:
---------------------------
Its:
----------------------------
FIRSTRUST
By:
---------------------------------
Name:
---------------------------
Its:
----------------------------
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
FIFTH AMENDMENT TO CHANCELLOR LOAN AGREEMENT
Signature Page 12
<PAGE> 16
COMMERCIAL LOAN FUNDING TRUST I
By: Lehman Commercial Paper, Inc., not in
its individual capacity but solely as
administrative agent
By:
---------------------------------
Name:
---------------------------
Its:
----------------------------
GENERAL ELECTRIC CAPITAL CORPORATION
By:
---------------------------------
Name:
---------------------------
Its:
----------------------------
COMMERZBANK AG, NEW YORK BRANCH
By:
---------------------------------
Name:
---------------------------
Its:
----------------------------
FIFTH AMENDMENT TO CHANCELLOR LOAN AGREEMENT
Signature Page 13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 3/31/98
CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000894972
<NAME> CHANCELLOR MEDIA CORPORATION
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 306,305
<SECURITIES> 0
<RECEIVABLES> 241,461
<ALLOWANCES> 13,522
<INVENTORY> 0
<CURRENT-ASSETS> 565,130
<PP&E> 221,708
<DEPRECIATION> 60,335
<TOTAL-ASSETS> 5,195,422
<CURRENT-LIABILITIES> 164,463
<BONDS> 1,900,000
331,208
409,500
<COMMON> 1,422
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 5,195,422
<SALES> 233,557
<TOTAL-REVENUES> 233,557
<CGS> 28,864
<TOTAL-COSTS> 246,758
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 48,300
<INCOME-PRETAX> (61,501)
<INCOME-TAX> 2,941
<INCOME-CONTINUING> (68,571)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (74,988)
<EPS-PRIMARY> (0.60)
<EPS-DILUTED> (0.60)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 3/31/98
CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001043102
<NAME> CHANCELLOR MEDIA CORPORATION OF LOS ANGELES
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 306,305
<SECURITIES> 0
<RECEIVABLES> 241,461
<ALLOWANCES> 13,522
<INVENTORY> 0
<CURRENT-ASSETS> 565,130
<PP&E> 221,708
<DEPRECIATION> 60,335
<TOTAL-ASSETS> 5,195,422
<CURRENT-LIABILITIES> 164,463
<BONDS> 1,900,000
331,208
0
<COMMON> 1
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 5,195,422
<SALES> 233,557
<TOTAL-REVENUES> 233,557
<CGS> 28,864
<TOTAL-COSTS> 246,758
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 48,300
<INCOME-PRETAX> (61,501)
<INCOME-TAX> 2,941
<INCOME-CONTINUING> (58,560)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (68,571)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
