<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------
FORM 8-K
CURRENT REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): September 15, 1999
------------------------
AMFM Inc.
----------------------------
(Exact Name of Registrant as
Specified in Charter)
001-15145
---------
(Commission File No.)
75-2247099
----------
(IRS Employer
Identification No.)
Delaware
--------
(State or Other Jurisdiction
of Incorporation)
1845 Woodall Rodgers Freeway
Suite 1300
Dallas, Texas 75201
-------------------
(Address of Principal
Executive Offices)
(214) 922-8700
--------------
(Registrant's telephone
number, including area code)
<PAGE> 2
ITEM 2. Acquisition or Disposition of Assets.
On September 15, 1999, Chancellor Media Corporation of Los Angeles ("CMCLA"), an
indirect wholly-owned subsidiary of AMFM Inc. (formerly Chancellor Media
Corporation) consummated the sale of all of the outstanding common stock of
Chancellor Media Outdoor Corporation and Chancellor Media Whiteco Outdoor
Corporation, which together held all of AMFM Inc.'s assets used in its outdoor
advertising business, to Lamar Advertising Company ("Lamar"). Under the terms of
the stock purchase agreement and related agreements, CMCLA received cash
proceeds of $700.0 million, subject to a net working capital adjustment, and
26,227,273 shares of Lamar Class A common stock, par value $.01 per share. The
sales price was determined by AMFM through arms-length negotiations with Lamar.
2
<PAGE> 3
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits.
7(b) Unaudited Pro Forma Financial Information
Unaudited pro forma financial information required pursuant to Article
11 of Regulation S-X as of June 30, 1999 and for the year ended
December 31, 1998 and the six months ended June 30, 1999 is filed
herewith beginning on page P-1.
7(c) Exhibits
2.57(a) -- Stock Purchase Agreement, dated as of June 1, 1999, by
and between Lamar Advertising Company and Chancellor
Media Corporation of Los Angeles.
2.58(a) -- Subscription Agreement, dated as of June 1, 1999,
by and between Lamar Advertising Company and
Chancellor Media Corporation of Los Angeles.
2.59(a) -- Voting Agreement, dated as of June 1, 1999, by and
among Lamar Advertising Company, Chancellor Media
Corporation of Los Angeles and Reilly Family
Limited Partnership.
2.61(b) -- Second Amended and Restated Stock Purchase Agreement
dated as of August 11, 1999 by and among Lamar
Advertising Company, Lamar Media Corp., Chancellor
Mezzanine Holdings Corporation and Chancellor Media
Corporation of Los Angeles.
2.62(b) -- Registration Rights Agreement dated as of
August 11, 1999 among Lamar Advertising Company,
Chancellor Media Corporation of Los Angeles and
Chancellor Mezzanine Holdings Corporation.
2.63(b) -- Stockholders Agreement dated as of August 11, 1999
among Lamar Advertising Company and certain of its
stockholders.
2.64(b) -- Second Amended and Restated Voting Agreement, dated as
of August 11, 1999, among Lamar Advertising Company,
Chancellor Media Corporation of Los Angeles, Chancellor
Mezzanine Holdings Corporation and Reilly Family
Limited Partnership.
- ---------------------------
(a) Incorporated by reference to Exhibits 2.1, 2.2 and 2.3 to the Current
Report on Form 8-K of Chancellor Media Corporation, filed on
June 8, 1999.
(b) Incorporated by reference to the Quarterly Report on Form 10-Q of AMFM
Inc. for the quarterly period ending June 30, 1999.
3
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, AMFM
Inc. has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
AMFM INC.
By: /s/ W. Schuyler Hansen
--------------------------
W. Schuyler Hansen
Senior Vice President and
Chief Accounting Officer
Date: September 29, 1999
4
<PAGE> 5
AMFM INC.
PRO FORMA FINANCIAL INFORMATION
The unaudited pro forma financial information of AMFM Inc. (together with
its subsidiaries, the "Company") reflects the combination of consolidated
historical financial data of the Company and each of the significant radio
transactions completed by the Company during 1998 and 1999 and the disposition
of the Company's outdoor advertising division. The outdoor advertising division
commenced operations in July 1998 with the acquisition of Martin Media L.P.,
Martin & MacFarlane, Inc. and certain affiliated companies ("Martin") and
further expanded its outdoor presence with the acquisition of the outdoor
advertising division of Whiteco Industries, Inc. ("Whiteco") in December 1998
and other outdoor acquisitions. The unaudited pro forma balance sheet data at
June 30, 1999 presents adjustments for the significant transactions completed
subsequent to June 30, 1999 as if each such transaction had occurred at June 30,
1999. The unaudited pro forma statement of operations data for the year ended
December 31, 1998 and for the six months ended June 30, 1999 excludes
extraordinary items and presents adjustments for (a) the sale of the Company's
outdoor advertising division to Lamar Advertising Company (the "Lamar
Transaction"), (b) the merger between the Company and Capstar Broadcasting
Corporation (the "Capstar Merger"), including the effect of significant
transactions completed by Capstar Broadcasting Corporation ("Capstar") during
1998 and 1999, (c) the acquisition of KKFR-FM and KFYI-AM in Phoenix from The
Broadcast Group, Inc. (the "Phoenix Acquisition") and (d) the disposition of
WMVP-AM in Chicago to ABC, Inc., as if each such transaction occurred on
January 1, 1998. Pro forma adjustments relating to the acquisitions of Martin
and Whiteco have not been included in the pro forma financial statements due to
the sale of the Company's outdoor advertising division.
The purchase method of accounting has been used in the preparation of the
unaudited pro forma financial information. Under this method of accounting, the
aggregate purchase price is allocated to assets acquired and liabilities assumed
based on their estimated fair values. For purposes of the unaudited pro forma
financial information, the purchase prices of the assets acquired have been
allocated based primarily on publicly available information or information
furnished by management of the acquired assets. The final allocation of the
respective purchase prices of the assets acquired are determined a reasonable
time after consummation of such transactions and are based on a complete
evaluation of the assets acquired and liabilities assumed. Accordingly, the
information presented herein may differ from the final purchase price
allocation; however, such allocations are not expected to differ materially from
the preliminary amounts.
In the opinion of the Company's management, all adjustments have been made
that are necessary to present fairly the pro forma data.
The unaudited pro forma financial information should be read in conjunction
with the respective financial statements and related notes thereto of the
Company which have previously been reported. The unaudited pro forma financial
information is presented for illustrative purposes only and is not necessarily
indicative of the results of operations or financial position that would have
been achieved had the transactions reflected therein been consummated as of the
dates indicated, or of the results of operations or financial positions for any
future periods or dates.
P-1
<PAGE> 6
AMFM INC.
UNAUDITED PRO FORMA BALANCE SHEET
AT JUNE 30, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA COMPANY AS PRO FORMA ADJUSTMENTS
ADJUSTMENTS ADJUSTED ADJUSTMENTS FOR THE
COMPANY FOR THE FOR THE CAPSTAR FOR THE OTHER
HISTORICAL LAMAR LAMAR HISTORICAL CAPSTAR COMPLETED
AT 6/30/99 TRANSACTION(1) TRANSACTION AT 6/30/99 MERGER TRANSACTION(6)
---------- -------------- ------------ ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Current assets.............................. $ 481,304 $ (54,411) $ 426,893 $ 157,907 $ -- $ --
Property and equipment, net................. 1,365,438 (1,173,743) 191,695 266,480 -- 4,840
Intangible assets, net...................... 5,206,972 (504,426) 4,702,546 4,438,811 1,604,026 (2) 85,160
Equity investment in affiliate.............. -- 1,127,389 1,127,389 -- -- --
Other assets................................ 361,218 (6,410) 354,808 43,261 (150,000)(3) --
---------- ----------- ----------- ----------- ----------- --------
Total assets........................ $7,414,932 $ (611,601) $ 6,803,331 $ 4,906,459 $ 1,454,026 $ 90,000
========== =========== =========== =========== =========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and accrued expenses....... $ 221,902 $ (20,119) $ 201,783 $ 91,720 $ -- $ --
Current portion of long-term debt........... -- -- -- 66,883 -- --
---------- ----------- ----------- ----------- ----------- --------
Total current liabilities........... 221,902 (20,119) 201,783 158,603 -- --
Long-term debt, excluding current portion... 4,420,000 (680,000) 3,740,000 1,956,398 72,039 (2) 90,000
(150,000)(3)
20,000 (4)
Deferred tax liabilities.................... 443,701 (32,132) 411,569 1,215,538 282,075 (2) --
Other liabilities........................... 49,402 (1,753) 47,649 -- -- --
---------- ----------- ----------- ----------- ----------- --------
Total liabilities................... 5,135,005 (734,004) 4,401,001 3,330,539 224,114 90,000
Redeemable preferred stock.................. -- -- -- 278,627 34,210 (2) --
STOCKHOLDERS' EQUITY:
Preferred stock............................. 409,500 -- 409,500 -- -- --
Common stock................................ 1,436 -- 1,436 1,078 (542)(2) --
Additional paid-in capital.................. 2,280,041 -- 2,280,041 1,510,271 975,693 (2) --
13,221 (5)
Stock subscriptions receivable.............. -- -- -- (2,826) -- --
Unearned compensation....................... -- -- -- (3,900) -- --
Accumulated deficit......................... (411,050) 122,403 (288,647) (207,330) 240,551 (2) --
(20,000)(4)
(13,221)(5)
---------- ----------- ----------- ----------- ----------- --------
Total stockholders' equity.......... 2,279,927 122,403 2,402,330 1,297,293 1,195,702 --
---------- ----------- ----------- ----------- ----------- --------
Total liabilities and stockholders'
equity............................ $7,414,932 $ (611,601) $ 6,803,331 $ 4,906,459 $ 1,454,026 $ 90,000
========== =========== =========== =========== =========== ========
<CAPTION>
COMPANY
PRO FORMA
-----------
<S> <C>
ASSETS:
Current assets.............................. $ 584,800
Property and equipment, net................. 463,015
Intangible assets, net...................... 10,830,543
Equity investment in affiliate.............. 1,127,389
Other assets................................ 248,069
-----------
Total assets........................ $13,253,816
===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and accrued expenses....... $ 293,503
Current portion of long-term debt........... 66,883
-----------
Total current liabilities........... 360,386
Long-term debt, excluding current portion... 5,728,437
Deferred tax liabilities.................... 1,909,182
Other liabilities........................... 47,649
-----------
Total liabilities................... 8,045,654
Redeemable preferred stock.................. 312,837
STOCKHOLDERS' EQUITY:
Preferred stock............................. 409,500
Common stock................................ 1,972
Additional paid-in capital.................. 4,779,226
Stock subscriptions receivable.............. (2,826)
Unearned compensation....................... (3,900)
Accumulated deficit......................... (288,647)
-----------
Total stockholders' equity.......... 4,895,325
-----------
Total liabilities and stockholders'
equity............................ $13,253,816
===========
</TABLE>
See accompanying notes to Unaudited Pro Forma Financial Information
P-2
<PAGE> 7
AMFM INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<TABLE>
<CAPTION>
COMPANY CAPSTAR AS
PRO FORMA AS ADJUSTED ADJUSTED FOR
LAMAR ADJUSTMENTS FOR FOR THE THE COMPLETED
YEAR ENDED COMPANY TRANSACTION THE LAMAR LAMAR CAPSTAR
DECEMBER 31, 1998 HISTORICAL(7) HISTORICAL(8) TRANSACTION TRANSACTION TRANSACTIONS(12)
- ----------------- ------------ ------------- ---------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Gross revenues ...................... $ 1,440,357 $ (52,750) $ -- $ 1,387,607 $ 688,815
Less: agency commissions ............ (166,501) 5,145 -- (161,356) (62,195)
------------ ---------- ---------- ----------- -----------
Net revenues ........................ 1,273,856 (47,605) -- 1,226,251 626,620
Operating expenses excluding
depreciation and amortization ...... 682,061 (23,505) -- 658,556 359,014
Depreciation and amortization ....... 446,338 (25,990) -- 420,348 133,223
Corporate general and
administrative ..................... 36,722 (1,981) -- 34,741 26,918
Stock option compensation............ -- -- -- -- 21,260
Merger, nonrecurring and systems
development expense ................ 63,661 -- -- 63,661 20,433
------------ ---------- ---------- ----------- -----------
Operating income (loss) ............. 45,074 3,871 -- 48,945 65,772
Interest expense .................... 217,136 (105) 45,819 (9) 262,850 160,186
Interest income ..................... (15,650) -- -- (15,650) (3,775)
Gain on disposition of assets ....... (123,845) -- -- (123,845) --
Gain on disposition of
representation contracts ........... (32,198) -- -- (32,198) --
Loss on investment in limited
liability companies................. -- -- -- -- 28,565
Other (income) expense .............. (3,221) 156 -- (3,065) 328
------------ ---------- ---------- ----------- -----------
Other (income) expense, net ......... 42,222 51 45,819 88,092 185,304
------------ ---------- ---------- ----------- -----------
Income (loss) before income
taxes .............................. 2,852 3,820 (45,819) (39,147) (119,532)
Income tax expense (benefit) ........ 33,751 (345) (16,037) (10) 17,369 (34,028)
Dividends and accretion on
preferred stock of subsidiary ...... 17,601 -- -- 17,601 25,586
------------ ---------- ---------- ----------- -----------
Income (loss) before equity in
net loss of affiliate............... (48,500) 4,165 (29,782) (74,117) (111,090)
Equity in net loss of affiliate...... -- -- (82,797) (11) (82,797) --
------------ ---------- ---------- ----------- -----------
Income (loss)........................ (48,500) 4,165 (112,579) (156,914) (111,090)
Preferred stock dividends ........... 25,670 -- -- 25,670 --
------------ ---------- ---------- ----------- -----------
Income (loss) attributable to common
stockholders ....................... $ (74,170) $ 4,165 $ (112,579) $ (182,584) $ (111,090)
============ ========== ========== =========== ===========
Basic and diluted loss per common
share .............................. $ (0.54) $ (1.32)
============ ===========
Weighted average common shares
outstanding(19)..................... 137,979 137,979
============ ===========
<CAPTION>
PRO FORMA PRO FORMA
ADJUSTMENTS ADJUSTMENTS
FOR THE FOR THE
YEAR ENDED CAPSTAR OTHER COMPLETED COMPANY
DECEMBER 31, 1998 MERGER TRANSACTIONS (18) PRO FORMA
- ----------------- ----------- ---------------- ------------
<S> <C> <C> <C>
Gross revenues ...................... $ (56,261) (13) $ 522 $ 2,020,683
Less: agency commissions ............ -- (108) (223,659)
----------- --------------- ------------
Net revenues ........................ (56,261) 414 1,797,024
Operating expenses excluding
depreciation and amortization ...... (4,400)(13) (7,122) 1,006,048
Depreciation and amortization ....... (49,425)(13) 5,170 789,239
279,923 (14)
Corporate general and
administrative ..................... -- -- 61,659
Stock option compensation............ -- -- 21,260
Merger, nonrecurring and systems
development expense ................ (8,000)(15) -- 76,094
----------- --------------- ------------
Operating income (loss) ............. (274,359) 2,366 (157,276)
Interest expense .................... (10,600)(13) 4,830 420,337
3,071 (16)
Interest income ..................... 10,600 (13) -- (8,825)
Gain on disposition of assets ....... -- -- (123,845)
Gain on disposition of
representation contracts ........... -- -- (32,198)
Loss on investment in limited
liability companies................. -- -- 28,565
Other (income) expense .............. -- -- (2,737)
----------- --------------- ------------
Other (income) expense, net ......... 3,071 4,830 281,297
----------- --------------- ------------
Income (loss) before income
taxes .............................. (277,430) (2,464) (438,573)
Income tax expense (benefit) ........ (97,101)(17) (862) (114,622)
Dividends and accretion on
preferred stock of subsidiary ...... -- -- 43,187
----------- --------------- ------------
Income (loss) before equity in
net loss of affiliate............... (180,329) (1,602) (367,138)
Equity in net loss of affiliate...... -- -- (82,797)
----------- --------------- ------------
Income (loss)........................ (180,329) (1,602) (449,935)
Preferred stock dividends ........... -- -- 25,670
----------- --------------- ------------
Income (loss) attributable to common
stockholders ....................... $ (180,329) $ (1,602) $ (475,605)
=========== =============== ============
Basic and diluted loss per common
share .............................. $ (2.48)
============
Weighted average common shares
outstanding(19)..................... 53,554 191,533
=========== ============
</TABLE>
See accompanying notes to Unaudited Pro Forma Financial Information
P-3
<PAGE> 8
AMFM INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA COMPANY CAPSTAR AS
ADJUSTMENTS AS ADJUSTED ADJUSTED FOR
LAMAR FOR THE FOR THE THE COMPLETED
SIX MONTHS ENDED COMPANY TRANSACTION LAMAR LAMAR CAPSTAR
JUNE 30, 1999 HISTORICAL(7) HISTORICAL(8) TRANSACTION TRANSACTION TRANSACTIONS(12)
- ------------------ ------------ ------------ ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Gross revenues .............................. $ 884,843 $ (120,107) $ -- $ 764,736 $ 357,435
Less: agency commissions .................... (100,432) 9,218 -- (91,214) (32,920)
------------ ------------ ------------ ------------ ------------
Net revenues ................................ 784,411 (110,889) -- 673,522 324,515
Operating expenses excluding
depreciation and amortization .............. 427,768 (58,734) -- 369,034 193,696
Depreciation and amortization ............... 292,883 (63,527) -- 229,356 73,651
Corporate general and
administrative ............................. 30,612 (5,884) -- 24,728 13,036
Stock option compensation.................... -- -- -- -- 6,912
Merger, nonrecurring and systems
development expense ........................ 28,979 -- -- 28,979 10,373
------------ ------------ ------------ ------------ ------------
Operating income (loss) ..................... 4,169 17,256 -- 21,425 26,847
Interest expense ............................ 181,379 (126) (23,974) (9) 157,279 84,110
Interest income ............................. (9,268) -- -- (9,268) (291)
Gain on disposition of assets ............... (12,406) -- -- (12,406) --
Gain on disposition of
representation contracts ................... (8,853) -- -- (8,853) --
Loss on investment in limited liability
companies .................................. -- -- -- -- 2,144
Other (income) expense....................... 200 (69) -- 131 67
------------ ------------ ------------ ------------ ------------
Other (income) expense net .................. 151,052 (195) (23,974) 126,883 86,030
------------ ------------ ------------ ------------ ------------
Income (loss) before income
taxes ...................................... (146,883) 17,451 23,974 (105,458) (59,183)
Income tax expense (benefit) ................ (27,349) 4,823 8,391 (10) (14,135) (20,273)
Dividends and accretion on preferred
stock of subsidiary......................... -- -- -- -- 16,261
------------ ------------ ------------ ------------ ------------
Income (loss) before equity in net loss of
affiliate .................................. (119,534) 12,628 15,583 (91,323) (55,171)
Equity in net loss of affiliate ............. -- -- (42,058) (11) (42,058) --
------------ ------------ ------------ ------------ ------------
Income (loss) ............................... (119,534) 12,628 (26,475) (133,381) (55,171)
Preferred stock dividends ................... 12,835 -- -- 12,835 --
------------ ------------ ------------ ------------ ------------
Income (loss) attributable to
common stockholders ........................ $ (132,369) $ 12,628 $ (26,475) $ (146,216) $ (55,171)
============ ============ ============ ============ ============
Basic and diluted loss per common
share ...................................... $ (0.93) $ (1.03)
============ ============
Weighted average common shares
outstanding(19)............................. 142,349 142,349
============ ============
<CAPTION>
PRO FORMA PRO FORMA
ADJUSTMENTS ADJUSTMENTS
FOR THE FOR THE
SIX MONTHS ENDED CAPSTAR OTHER COMPLETED COMPANY
JUNE 30, 1999 MERGER TRANSACTIONS(18) PRO FORMA
- ----------------- ------------ --------------- -----------
<S> <C> <C>
Gross revenues .............................. $ (28,963)(13) $ (705) $ 1,092,503
Less: agency commissions .................... -- -- (124,134)
----------- ------------ -----------
Net revenues ................................ (28,963) (705) 968,369
Operating expenses excluding
depreciation and amortization .............. (3,921)(13) (116) 558,693
Depreciation and amortization ............... (24,713)(13) 2,839 422,705
141,572 (14)
Corporate general and
administrative ............................. -- -- 37,764
Stock option compensation.................... -- -- 6,912
Merger, nonrecurring and systems
development expense ........................ (7,616)(15) -- 31,736
----------- ------------ -----------
Operating income (loss) ..................... (134,285) (3,428) (89,441)
Interest expense ............................ (9,000)(13) 2,717 236,388
1,282 (16)
Interest income ............................. 9,000 (13) -- (559)
Gain on disposition of assets ............... -- -- (12,406)
Gain on disposition of
representation contracts ................... -- -- (8,853)
Loss on investment in limited liability
companies .................................. -- -- 2,144
Other (income) expense....................... -- -- 198
----------- ------------ -----------
Other (income) expense net .................. 1,282 2,717 216,912
------------ ------------ -----------
Income (loss) before income
taxes ...................................... (135,567) (6,145) (306,353)
Income tax expense (benefit) ................ (47,448)(17) (2,151) (84,007)
Dividends and accretion on preferred
stock of subsidiary......................... -- -- 16,261
------------ ------------ -----------
Income (loss) before equity in net loss of
affiliate ................................. (88,119) (3,994) (238,607)
Equity in net loss of affiliate ............. -- -- (42,058)
------------ ------------ -----------
Income (loss) ............................... (88,119) (3,994) (280,665)
Preferred stock dividends ................... -- -- 12,835
------------ ------------ -----------
Income (loss) attributable to
common stockholders ........................ $ (88,119) $ (3,994) $ (293,500)
============ ============ ===========
Basic and diluted loss per common
share ...................................... $ (1.50)
===========
Weighted average common shares
outstanding(19)............................. 53,554 195,903
============ ===========
</TABLE>
See accompanying notes to Unaudited Pro Forma Financial Information
P-4
<PAGE> 9
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
ADJUSTMENTS TO THE UNAUDITED PRO FORMA BALANCE SHEET RELATED TO THE LAMAR
TRANSACTION
(1) Reflects the Lamar Transaction as follows:
<TABLE>
<CAPTION>
SALES PRICE ALLOCATION
-----------------------------------------------------------------------------------------------------------
PROPERTY
NET AND INTANGIBLE DEFERRED
CASH CURRENT EQUIPMENT, ASSETS, INVESTMENT OTHER CURRENT TAX OTHER
PROCEEDS ASSETS NET NET IN AFFILIATE ASSETS LIABILITIES LIABILITIES LIABILITIES
--------- -------- ----------- ---------- ------------ ------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lamar
Transaction(a)... $(680,000) $(54,411) $(1,173,743) $(504,426) $1,127,389 $(6,410) $20,119 $32,132 $1,753
<CAPTION>
SALES FINANCING
PRICE ------------
ALLOCATION DECREASE
----------- IN
ACCUMULATED LONG-TERM
DEFICIT DEBT
----------- ------------
<S> <C> <C>
Lamar
Transaction(a)... $(122,403) $(680,000)
</TABLE>
(a) On September 15, 1999, the Company consummated the sale of its outdoor
advertising business to Lamar Advertising Company ("Lamar") in exchange for
$700,000 in cash and 26,227,273 shares of Lamar's class A common stock,
subject to a working capital adjustment. For purposes of the unaudited pro
forma condensed combined financial statements, the fair market value of the
Lamar common stock to be received is calculated by using $46.063 per share
which is based on the closing market price of Lamar common stock on
September 15, 1999. The aggregate sales price is summarized below:
<TABLE>
<S> <C>
Cash to be received............................................. $ 700,000
Less estimated transaction costs................................ (20,000)
----------
Net cash proceeds............................................... 680,000
Estimated fair value of common stock to be issued by Lamar to
AMFM (26,227,273 shares @ $46.063 per share)................. 1,208,094
----------
Aggregate sales price........................................... $1,888,094
==========
</TABLE>
The amount allocated to accumulated deficit represents the estimated gain
on the disposition of $269,017 net of deferred portion of the gain of
$80,705 and taxes of $65,909. The Company's interest in Lamar will be
accounted for under the equity method of accounting and is valued for
purposes of the unaudited pro forma condensed combined financial statements
at $1,127,389. The Company's estimated cost basis of the investment in
Lamar of $1,208,094 exceeded the Company's underlying equity in the net
assets of Lamar by $787,457, which the Company will amortize on a
straight-line basis over a period of 15 years.
P-5
<PAGE> 10
ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET RELATED TO
THE CAPSTAR MERGER
(2) Merger Purchase Price Information. In connection with the Capstar
merger, each outstanding share of Capstar common stock was converted
into the right to receive 0.4955 shares of the combined entity. For
purposes of the unaudited pro forma condensed combined financial
statements, the fair market value of common stock is calculated by
using $44.75 per share which is based on the market price of AMFM Inc.
(formerly Chancellor Media Corporation) common stock on the
announcement date of the Capstar merger on August 26, 1998. The
aggregate purchase price is summarized below:
<TABLE>
<S> <C> <C>
EXCHANGE OF CAPSTAR COMMON STOCK:
Shares of Capstar common stock outstanding
at July 13, 1999.......................................... 108,080,657
Exchange ratio.............................................. 0.4955
-----------
Shares of AMFM Inc. common stock issued in connection
with the Capstar merger................................... 53,553,966
===========
AGGREGATE PURCHASE PRICE:
Estimated fair value of common stock to be issued in
connection with the Capstar merger (53,553,966 shares @
$44.75 per share)......................................... $2,396,540
Capstar debt and equity assumed at fair values:
Long-term debt outstanding:
Capstar Credit Facility................................ 1,160,000
12 3/4% Senior Discount Notes due 2009................. 238,420
9 1/4% Senior Subordinated Notes due 2007.............. 205,963
10 3/4% Senior Subordinated Notes due 2006............. 318,955
11 3/8% Senior Subordinated Notes due 2000............. 566
Note payable to affiliate.............................. 150,000
Capital lease obligation and other notes payable....... 19,416
-----------
Total long-term debt outstanding.......................... 2,093,320
12% senior exchangeable preferred stock................... 146,988
12 5/8% Series E cumulative exchangeable preferred
stock.................................................. 165,849
Stock options and warrants issued by Capstar.............. 81,481
Financial advisors, legal, accounting and other transaction
costs..................................................... 22,000
Estimated fair value of stock options issued to Hicks
Muse for financial advisory and other transaction costs... 21,700
----------
Aggregate purchase price.................................... $4,927,878
==========
</TABLE>
P-6
<PAGE> 11
To record the aggregate purchase price of the Capstar merger and eliminate
certain Capstar historical balances as follows:
<TABLE>
<CAPTION>
ELIMINATION
OF CAPSTAR
HISTORICAL
BALANCES
AS ADJUSTED
FOR THE
PURCHASE COMPLETED CAPSTAR
PRICE CAPSTAR MERGER NET
ALLOCATION TRANSACTIONS FINANCING ADJUSTMENT
----------- ------------ ----------- ----------
<S> <C> <C> <C> <C>
Current assets......................... $ 157,907 $ (157,907) $ -- $ --
Property and equipment, net(a)......... 266,480 (266,480) -- --
Intangible assets(a)................... 6,042,837 (4,438,811) -- 1,604,026
Other assets........................... 43,261 (43,261) -- --
Current liabilities.................... (91,720) 91,720 -- --
Long-term debt(b)...................... -- 2,043,281 (2,115,320) (72,039)
Deferred tax liability(c).............. (1,497,613) 1,215,538 -- (282,075)
Redeemable preferred stock(d).......... -- 278,627 (312,837) (34,210)
Common stock(e)........................ -- 1,078 (536) 542
Additional paid-in capital(f).......... -- 1,523,492 (2,499,185) (975,693)
Stock subscription receivable.......... 2,826 (2,826) -- --
Unearned compensation.................. 3,900 (3,900) -- --
Accumulated deficit.................... -- (240,551) -- (240,551)
----------- ----------- ----------- ----------
Aggregate purchase price............... $ 4,927,878 $ -- $(4,927,878) $ --
=========== =========== =========== ==========
</TABLE>
- -------------------------
(a) The Company has assumed that historical balances of net property and
equipment acquired approximate fair value for the preliminary allocation
of the purchase price. The Company, on a preliminary basis, has
allocated $4,545,224 of intangible assets to broadcast licenses and
$1,497,613 to goodwill, each with an estimated average life of 15 years.
This preliminary allocation is based upon historical information from
prior radio acquisitions.
(b) Reflects the adjustment to record debt assumed or incurred by the
Company including (i) the fair value of Capstar's long-term debt of
$2,093,320 and (ii) additional bank borrowings of $22,000 required to
finance estimated financial advisors, legal, accounting and other
transaction costs.
(c) Reflects the adjustment to record a $1,497,613 deferred tax liability
related to the difference between the financial statement carrying
amount and the tax basis of Capstar acquired assets.
(d) Reflects the adjustment to record the estimated fair value of redeemable
preferred stock to be assumed by the Company including (i) Capstar's 12%
senior exchangeable preferred stock of $146,988 and (ii) Capstar's
12 5/8% series E cumulative exchangeable preferred stock of $165,849.
(e) Reflects 53,553,966 shares of AMFM Inc. common stock at a par value of
$0.01 to be issued in connection with the Capstar merger.
(f) Reflects additional paid-in capital of $2,396,004 related to 53,553,966
shares of AMFM Inc. common stock issued in connection with the Capstar
merger, the fair value of stock options and warrants assumed by AMFM
Inc. of $81,481 and the fair value of stock options issued to Hicks Muse
of $21,700. The fair value of the Capstar stock options and warrants was
estimated using the Black-Scholes option pricing model and the Capstar
merger exchange ratio of 0.4955 applied to Capstar's outstanding options
and warrants and exercise prices.
P-7
<PAGE> 12
At July 13, 1999, Capstar had 3,803,640 options outstanding with
exercise prices ranging from $7.10 to $21.63 and 2,696,406 warrants
outstanding with exercise prices ranging from $14.00 to $18.10.
(3) Reflects the elimination of the $150,000 Capstar loan in connection
with the Capstar merger. The Company made this loan to Capstar on May
29, 1998.
(4) Reflects additional bank borrowings of $20,000 required to finance
estimated financial advisory and other expenses to be incurred by
Capstar in connection with the Capstar merger. This amount includes
$10,000 that was paid in cash to Hicks, Muse, Tate & Furst Incorporated
("Hicks Muse") at the closing of the merger. Hicks Muse also received
options to purchase 969,616 shares of AMFM Inc. common stock at an
exercise price of $52.00 per share, with the exercisability of the
options generally conditioned upon the average fair market value of
AMFM Inc. common stock, calculated on a daily basis, being equal to or
exceeding $100.00 per share for a period of 30 consecutive trading days
during the five year period following the merger.
(5) Reflects the adjustment to record estimated stock option compensation
expense of $13,221 relating to the vesting of certain executive
warrants in connection with the Capstar merger.
ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET RELATED TO
THE OTHER COMPLETED TRANSACTION
(6) On July 1, 1999, the Company acquired KKFR-FM and KFYI-AM in Phoenix
from The Broadcast Group, Inc. for $90,000 in cash plus various other
direct acquisition costs. Reflects the Phoenix Acquisition as follows:
<TABLE>
<CAPTION>
PURCHASE PRICE ALLOCATION FINANCING
------------------------------------ ----------
PROPERTY INCREASE
AND INTANGIBLE IN
PURCHASE EQUIPMENT, ASSETS, LONG-TERM
PRICE NET NET(a) DEBT
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Phoenix Acquisition... $90,000 $4,840 $85,160 $90,000
</TABLE>
- -------------------------
(a) The Company has allocated the intangible assets to broadcast licenses with
an estimated average life of 15 years.
P-8
<PAGE> 13
(7) The Company began operating KKFR-FM and KFYI-AM in Phoenix under a time
brokerage agreement effective November 5, 1998. Therefore, the results of
operations of KKFR-FM and KFYI-AM are included in the Company's historical
operations subsequent to this date during 1998 and for the six months ended
June 30, 1999.
The Company entered into a time brokerage agreement to sell substantially
all of the broadcast time of WMVP-AM in Chicago effective September 10,
1998. Therefore, substantially all of the results of operations of WMVP-AM
are excluded from the Company's historical operations subsequent to this
date during 1998 and for the six months ended June 30, 1999.
(8) On September 15, 1999, the Company consummated the sale of its outdoor
advertising business to Lamar in exchange for net proceeds of $680,000 in
cash, subject to a working capital adjustment, and 26,227,273 shares of
Lamar's class A common stock. This adjustment removes the historical
results of operations of the Company's outdoor advertising business.
(9) Reflects the increase to interest expense of $45,819 for the year ended
December 31, 1998 and the decrease to interest expense of $23,974 for the
six months ended June 30, 1999 in connection with the additional bank
borrowings related to the outdoor advertising acquisitions completed during
1998 and 1999 and the elimination of debt related to the proceeds of
$680,000 from the Lamar Transaction.
(10) Reflects the tax effect of the pro forma adjustment.
(11) The adjustment to reflect the Company's 30.0% equity interest in Lamar and
amortization of the investment basis in excess of underlying equity in the
net assets of Lamar over an estimated life of 15 years is as follows:
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1998 JUNE 30, 1999
------------------ ---------------
<S> <C> <C>
Lamar historical net loss applicable to common stock..................... $ (12,255) $ (15,958)
Pro forma adjustments for significant acquisitions completed by Lamar
during 1998 ........................................................ (19,640) --
Pro forma adjustments to reflect the pending acquisition by
Lamar of the Company's outdoor business............................. (69,104) (36,740)
--------- ---------
Lamar pro forma net loss applicable to common stockholders............... (100,999) (52,698)
AMFM equity interest..................................................... 30.0% 30.0%
--------- ---------
Equity in pro forma net loss of Lamar.................................... (30,300) (15,809)
Amortization of investment basis in excess of underlying
equity in the net assets of Lamar................................... (52,497) (26,249)
--------- ---------
Total equity in net loss of affiliate.................................... $ (82,797) $ (42,058)
========= =========
</TABLE>
The Lamar pro forma net loss applicable to common stockholders was
estimated by the Company based on information obtained from publicly
filed financial statements. These estimates including the allocation of
purchase price are preliminary and subject to change.
ADJUSTMENTS TO CAPSTAR'S HISTORICAL CONDENSED STATEMENT OF OPERATIONS RELATED TO
THE COMPLETED CAPSTAR TRANSACTIONS
(12) Capstar's historical condensed statement of operations for the year ended
December 31, 1998 and the six months ended June 30, 1999 and pro forma
adjustments related to the completed Capstar transactions is summarized
below:
<TABLE>
<CAPTION>
PRO FORMA CAPSTAR
ADJUSTMENTS AS ADJUSTED
COMPLETED FOR THE FOR THE
CAPSTAR COMPLETED COMPLETED
YEAR ENDED CAPSTAR TRANSACTIONS CAPSTAR CAPSTAR
DECEMBER 31, 1998 HISTORICAL HISTORICAL(A) TRANSACTIONS TRANSACTIONS
- ----------------- ---------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Gross revenues........................ $568,050 $ 120,765 $ -- $ 688,815
Less: agency commissions.............. (50,583) (11,612) -- (62,195)
-------- --------- -------- ---------
Net revenues.......................... 517,467 109,153 -- 626,620
Operating expenses excluding
depreciation and amortization....... 304,565 54,449 -- 359,014
Depreciation and amortization......... 96,207 13,290 23,726 (B) 133,223
Corporate general and
administrative...................... 23,678 3,240 -- 26,918
Stock option compensation............. 21,260 74,199 (74,199)(C) 21,260
LMA fees.............................. 4,103 697 (4,800)(D) --
Other nonrecurring costs.............. 12,970 35,318 (11,255)(E) 20,433
(16,600)(F)
-------- --------- -------- ---------
Operating income (loss)............... 54,684 (72,040) 83,128 65,772
Interest expense...................... 121,145 31,508 7,533 (G) 160,186
Interest income....................... (3,423) (352) -- (3,775)
Loss on investments in limited
liability companies................. 28,565 -- -- 28,565
Other (income) expense................ 183 3,308 (3,163)(H) 328
-------- --------- -------- ---------
Income (loss) before income taxes..... (91,786) (106,504) 78,758 (119,532)
Income tax expense (benefit).......... (24,317) 210 (9,921)(I) (34,028)
Dividends and accretion on preferred
stock of subsidiary................. 21,987 -- 17,264 (J) 25,586
(13,665)(K)
-------- --------- -------- ---------
Net income (loss)..................... (89,456) (106,714) 85,080 (111,090)
Preferred stock dividends............. -- 17,264 (17,264)(J) --
-------- --------- -------- ---------
Income (loss) attributable to common
stockholders........................ $(89,456) $(123,978) $102,344 $(111,090)
======== ========= ======== =========
</TABLE>
P-9
<PAGE> 14
<TABLE>
<CAPTION>
PRO FORMA CAPSTAR
ADJUSTMENTS AS ADJUSTED
FOR THE FOR THE
COMPLETED COMPLETED
SIX MONTHS ENDED CAPSTAR CAPSTAR CAPSTAR
JUNE 30, 1999 HISTORICAL TRANSACTIONS TRANSACTIONS
- ------------------ ---------- ------------ ------------
<S> <C> <C> <C>
Gross revenues........................ $357,435 $ -- $357,435
Less: agency commissions.............. (32,920) -- (32,920)
-------- ------- --------
Net revenues.......................... 324,515 -- 324,515
Operating expenses excluding
depreciation and amortization....... 193,696 -- 193,696
Depreciation and amortization......... 73,651 -- 73,651
Corporate general and
administrative...................... 13,036 -- 13,036
Stock option compensation............. 6,912 -- 6,912
LMA fees.............................. 355 (355)(D) --
Other nonrecurring costs.............. 10,373 -- 10,373
-------- ------- --------
Operating income (loss)............... 26,492 355 26,847
Interest expense...................... 84,110 84,110
Interest income....................... (291) -- (291)
Loss on investment in limited
liability companies................. 2,144 -- 2,144
Other (income) expense................ 67 -- 67
-------- ------- --------
Income (loss) before income taxes..... (59,538) 355 (59,183)
Income tax expense (benefit).......... (20,397) 124 (I) (20,273)
Dividends and accretion on preferred
stock of subsidiary................. 16,261 -- 16,261
-------- ------- --------
Net income (loss)..................... (55,402) 231 (55,171)
Preferred stock dividends............. -- -- --
-------- ------- --------
Income (loss) attributable to common
stockholders........................ $(55,402) $ 231 $(55,171)
======== ======= ========
</TABLE>
P-10
<PAGE> 15
(A) The detail of the historical financial data of significant stations
acquired or disposed of in the completed transactions by Capstar for the
year ended December 31, 1998 has been obtained from the historical financial
statements of the respective stations and is summarized below:
<TABLE>
<CAPTION>
OTHER
PATTERSON SFX SFX COMPLETED
ACQUISITION ACQUISITION TRANSACTIONS CAPSTAR
YEAR ENDED HISTORICAL HISTORICAL HISTORICAL TRANSACTIONS
DECEMBER 31, 1998 1/1-1/29(i) 1/1-5/29(ii) 1/1-5/29(iii) HISTORICAL
----------------- ----------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Gross revenues................ $ 3,853 $ 141,369 $(24,457) $ 120,765
Less: agency commissions...... (350) (16,692) 5,430 (11,612)
------- --------- -------- ---------
Net revenues.................. 3,503 124,677 (19,027) 109,153
Operating expenses excluding
depreciation and
amortization................. 2,523 78,235 (26,309) 54,449
Depreciation and
amortization................. 497 17,668 (4,875) 13,290
Corporate general and
administrative............... 171 3,069 -- 3,240
Stock option compensation..... -- 74,199 -- 74,199
LMA fees...................... -- 697 -- 697
Other nonrecurring costs...... -- 35,318 -- 35,318
------- --------- -------- ---------
Operating income (loss)....... 312 (84,509) 12,157 (72,040)
Interest expense.............. 645 30,867 (4) 31,508
Interest income............... -- (352) -- (352)
Other expense................. 3,163 -- 145 3,308
------- --------- -------- ---------
Income (loss) before income
taxes........................ (3,496) (115,024) 12,016 (106,504)
Income tax expense............ -- 210 -- 210
------- --------- -------- ---------
Net income (loss)............. (3,496) (115,234) 12,016 (106,714)
Preferred stock dividends..... -- 17,264 -- 17,264
------- --------- -------- ---------
Income (loss) attributable to
common stockholders.......... $(3,496) $(132,498) $ 12,016 $(123,978)
======= ========= ======== =========
</TABLE>
- ---------------
(i) In January 1998, Capstar acquired 39 radio stations (25 FM and 14 AM) from
Patterson Broadcasting, Inc. for approximately $227,186 in cash.
P-11
<PAGE> 16
(ii) On May 29, 1998, Capstar acquired SFX, a radio broadcasting company which
owned 81 radio stations (60 FM and 21 AM) and operated two additional
radio stations (1 FM and 1 AM) under time brokerage or joint sales
agreements (the "SFX Acquisition"). The acquisition was effected through
the merger of a wholly owned subsidiary of Capstar with and into SFX, with
SFX surviving the merger as a wholly owned subsidiary of Capstar. The
total consideration paid for all of the outstanding common equity interest
of SFX was approximately $1,279,656, including direct costs of the
acquisition.
(iii) Other SFX transactions include the following transactions related to
stations acquired by Capstar from SFX on May 29, 1998:
(a) On February 20, 1998, the Company entered into an agreement to acquire
from 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 WPHH-FM,
WJJJ-FM, WXDX-FM and WDVE-FM in Pittsburgh (collectively, the
"Capstar/SFX Stations") for an aggregate purchase price of
approximately $637,500 in a series of purchases and exchanges over a
period of three years (the "Capstar/SFX Transaction"). In connection
with the Capstar/SFX Transaction, Capstar entered into a time brokerage
agreement with the Company to sell substantially all of the
broadcasting time of ten of the Capstar/SFX Stations (9 FM and 1 AM)
effective May 29, 1998. The Company is currently assessing the effects
of the Capstar Merger on the February 20, 1998 purchase agreement.
Reflects the adjustment to eliminate the results of operations of the
Capstar/SFX Stations operated by the Company under time brokerage
agreements and to record the related time brokerage (LMA) fee revenue
of $20,594 for the period January 1, 1998 to May 29, 1998.
(b) In connection with the SFX Acquisition, Capstar was required to dispose
of certain stations acquired from SFX due to governmental restrictions
on multiple station ownership. On May 29, 1998, Capstar completed the
following disposition and exchange transactions to comply with the
multiple ownership rules:
-the sale of one FM station in Houston, Texas to HBC Houston, Inc. for
approximately $54,000;
-the sale of four radio stations (3 FM and 1 AM) in Long Island, New
York to Cox Radio, Inc. for approximately $46,000;
-the sale of four radio stations (3 FM and 1 AM) in Greenville, South
Carolina to Clear Channel Radio, Inc. for approximately $35,000;
-the sale of one FM station in Daytona Beach, Florida to Clear Channel
Metroplex, Inc. for approximately $11,500;
-the assignment of four radio stations (2 FM and 2 AM) in Fairfield,
Connecticut with an aggregate fair market value of $15,000 to a trust
pending the sale to a third party; and
-the exchange of KODA-FM in Houston, Texas to the Company for two FM
stations in Jacksonville, Florida (valued at $53,000) and $90,250 in
cash, which was used by Capstar to acquire three stations (2 FM and 1
AM) in Austin, Texas through a qualified intermediary.
Reflects the adjustment to eliminate the results of operations of the SFX
stations disposed by Capstar and to record the results of operations for
the stations received in the exchange transaction for the period January
1, 1998 to May 29, 1998.
P-12
<PAGE> 17
(B) Reflects incremental amortization related to the completed transactions
and is based on the following allocation to intangible assets:
<TABLE>
<CAPTION>
INCREMENTAL HISTORICAL ADJUSTMENT
COMPLETED TRANSACTIONS AMORTIZATION INTANGIBLE AMORTIZATION AMORTIZATION FOR NET
YEAR ENDED DECEMBER 31, 1998 PERIOD(i) ASSETS, NET EXPENSE EXPENSE INCREASE
---------------------------- ------------ ----------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Patterson Acquisition............ 1/1-1/29 $ 268,219 $ 540 $ 356 $ 184
SFX Acquisition.................. 1/1-5/29 3,194,742 33,057 9,515 23,542
---------- ------- ------- -------
$3,462,961 $33,597 $ 9,871 $23,726
========== ======= ======= =======
</TABLE>
- ---------------
(i) The incremental amortization period represents the period of the year
that the acquisition was not completed. Intangible assets consist of
broadcast licenses which are amortized on a straight-line basis over
estimated average lives of 40 years. Actual amortization may differ
based upon final purchase price allocations.
(C) Reflects the elimination of non-recurring transaction-related compensation
expense of $74,199 attributable to the voluntary settlement of the
outstanding options, SARs and unit purchase options by SFX in connection
with Capstar's acquisition of SFX.
P-13
<PAGE> 18
(D) Reflects the elimination of $4,800 of time brokerage (LMA) fees for the
year ended December 31, 1998, of which $4,103 were paid by Capstar and
$697 by SFX, and $355 of time brokerage (LMA) fees paid by Capstar for the
six months ended June 30, 1999 related to acquired radio stations that
were previously operated under time brokerage agreements.
(E) Reflects the elimination of non-recurring transaction-related charges of
$11,255 recorded by SFX in connection with Capstar's acquisition of SFX
and the spin-off of SFX Entertainment, Inc. These charges consist
primarily of legal, accounting and regulatory fees.
(F) Reflects the elimination of the consent solicitation payments to the
holders of the 10 3/4% Senior Subordinated Notes due 2006 and 12 5/8%
series E cumulative exchangeable preferred stock of SFX incurred in
connection with the spin-off of SFX Entertainment of $16,600. The spin-off
of SFX Entertainment was consummated in April 1998.
(G) Reflects the adjustment to interest expense in connection with the
consummation of the completed Capstar transactions:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1998
-----------------
<S> <C>
Additional bank borrowings related to completed
acquisitions....................................... $1,362,072
Interest expense at 8.00%............................ $ 108,966
Less: historical interest expense recognized
subsequent to completed acquisition................ (69,925)
----------
Incremental interest expense......................... 39,041
Less: historical interest expense recognized by the
acquired company................................... (31,508)
----------
Net increase in interest expense..................... $ 7,533
==========
</TABLE>
(H) Adjustment represents the elimination of $3,163 of transaction expenses
recorded by Patterson in connection with Capstar's acquisition of
Patterson.
(I) Reflects the tax effect of the pro forma adjustments.
P-14
<PAGE> 19
(J) Reclassification of SFX's historical preferred stock dividends of $17,264
to Capstar's dividends on preferred stock of subsidiaries.
(K) Reflects the elimination of a portion of the redeemable preferred stock
dividends related to the SFX Acquisition and the subsequent redemption of
$119,600 and $500 liquidation preference on July 3, 1998 and July 10,
1998, respectively, of the 12 5/8% series E cumulative preferred stock of
SFX as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1998
------------
<S> <C>
Dividends on 6% series C redeemable preferred stock
redeemed as part of the SFX Merger on May 29,
1998................................................ $ (112)
Dividends on 6 1/2% series D cumulative convertible
exchangeable preferred stock redeemed as part of the
SFX Merger on May 29, 1998.......................... (5,841)
Dividends on 12 5/8% series E cumulative exchangeable
preferred stock of $119,500 and $500 for the period
January 1, 1998 to the redemption dates of July 3,
1998 and July 10, 1998, respectively................ (7,712)
--------
Total adjustment for net decrease in dividends and
accretion........................................... $(13,665)
========
</TABLE>
P-15
<PAGE> 20
ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
RELATED TO THE CAPSTAR MERGER
(13) Reflects the elimination of intercompany transactions between the Company
and Capstar for the Company's media representation services provided to
Capstar, Capstar's participation in the Company's The AMFM Radio Networks,
fees paid by the Company to Capstar under time brokerage (LMA) agreements
and interest on Capstar's note payable to the Company of $150,000 for the
year ended December 31, 1998 and the six months ended June 30, 1999.
(14) Reflects incremental amortization related to the Capstar merger and is
based on the allocation of the total consideration as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED JUNE 30,
DECEMBER 31, 1998 1999
----------------- ------------
<S> <C> <C>
Amortization expense on $6,042,837 of intangible assets..... $ 402,856 $201,427
Less: historical amortization expense....................... (122,933) (59,855)
--------- --------
Adjustment for net increase in amortization expense......... $ 279,923 $141,572
========= ========
</TABLE>
Historical depreciation expense of Capstar as adjusted for the completed
Capstar transactions is assumed to approximate depreciation expense on a
pro forma basis. Actual depreciation and amortization may differ based upon
final purchase price allocations.
(15) Reflects the elimination of financial advisory and other expenses of
Capstar in connection with the Capstar merger of $8,000 for the year ended
December 31, 1998 and $7,616 for the six months ended June 30, 1999.
(16) Reflects the adjustment to record interest expense of $3,071 for the year
ended December 31, 1998 and $1,282 for the six months ended June 30, 1999
on additional bank borrowings related to estimated financial advisors,
legal, accounting and other professional fees incurred by AMFM and Capstar.
(17) Reflects the tax effect of the pro forma adjustments.
P-16
<PAGE> 21
ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
RELATED TO THE OTHER COMPLETED TRANSACTIONS
(18) The condensed combined statement of operations for the other completed
transactions for the year ended December 31, 1998 and for the six months
ended June 30, 1999 are summarized below:
<TABLE>
<CAPTION>
THE
CHICAGO BROADCAST PRO FORMA
DISPOSITION GROUP, INC. ADJUSTMENTS FOR COMPANY OTHER
YEAR ENDED HISTORICAL HISTORICAL THE OTHER COMPLETED COMPLETED
DECEMBER 31, 1998 1/1-12/31 (a) 1/1-12/31 (b) TRANSACTIONS TRANSACTIONS
- ----------------- ------------ ------------ ------------------- ------------
<S> <C> <C> <C> <C>
Gross revenues .............................. $ (11,530) $ 13,101 $ (1,049)(c) $ 522
Less: agency commissions .................... 1,221 (1,329) -- (108)
------------ ----------- ------------ ------------
Net revenues ................................ (10,309) 11,772 (1,049) 414
Operating expenses excluding
depreciation and amortization ............. (13,271) 6,149 -- (7,122)
Depreciation and amortization ............... (592) 188 5,574 (d) 5,170
Corporate general and
administrative ............................ -- -- -- --
------------ ----------- ------------ ------------
Operating income (loss) ..................... 3,554 5,435 (6,623) 2,366
Interest expense ............................ -- 332 4,498 (e) 4,830
Interest income ............................. -- -- -- --
Other (income) expense ...................... -- -- -- --
------------ ----------- ------------ ------------
Income (loss) before income
taxes ..................................... 3,554 5,103 (11,121) (2,464)
Income tax expense .......................... -- 1,850 (2,712)(f) (862)
Dividends and accretion on
preferred stock of subsidiary ............. -- -- -- --
------------ ----------- ------------ ------------
Net income (loss) ........................... 3,554 3,253 (8,409) (1,602)
Preferred stock dividends ................... -- -- -- --
------------ ----------- ------------ ------------
Income (loss) attributable to
common stockholders ....................... $ 3,554 $ 3,253 $ (8,409) $ (1,602)
============ =========== ============ ============
</TABLE>
<TABLE>
<CAPTION>
CHICAGO PRO FORMA
DISPOSITION ADJUSTMENTS
SIX MONTHS ENDED HISTORICAL FOR THE OTHER COMPANY OTHER
JUNE 30, 1999 1/1-4/16 (a) COMPLETED TRANSACTIONS COMPLETED TRANSACTIONS
- ------------------ ------------ ---------------------- ----------------------
<S> <C> <C> <C>
Gross revenues .................................. $ (705) $ -- $ (705)
Less: agency commissions ........................ -- -- --
--------- ---------- ---------
Net revenues .................................... (705) -- (705)
Operating expenses excluding depreciation and
amortization .................................. (116) -- (116)
Depreciation and amortization ................... -- 2,839 (d) 2,839
--------- ---------- ---------
Operating income (loss) ......................... (589) (2,839) (3,428)
Interest expense ................................ -- 2,717 (e) 2,717
--------- ---------- ---------
Income (loss) before income taxes ............... (589) (5,556) (6,145)
Income tax expense .............................. -- (2,151)(f) (2,151)
--------- ---------- ---------
Net income (loss) ............................... (589) (3,405) (3,994)
Preferred stock dividends ....................... -- -- --
--------- ---------- ---------
Income (loss) attributable to common
stockholders .................................. $ (589) $ (3,405) $ (3,994)
========= ========== =========
</TABLE>
- ---------------
(a) On April 16, 1999, the Company sold WMVP-AM in Chicago to ABC, Inc. for
$21,000 in cash. The Company entered into a time brokerage agreement to
sell substantially all of the broadcast time of WMVP-AM effective September
10, 1998.
(b) On July 1, 1999, the Company acquired KKFR-FM and KFYI-AM in Phoenix from
The Broadcast Group, Inc. for $90,000 in cash. The Company began operating
KKFR-FM and KFYI-AM under a time brokerage agreement effective
November 5, 1998.
(c) Reflects the elimination of revenue related to the time brokerage agreement
between The Broadcast Group Inc. and the Company. The Company began
operating KKFR-FM and KFYI-AM in Phoenix under the time brokerage agreement
effective November 5, 1998.
P-17
<PAGE> 22
(d) Reflects incremental amortization related to the assets acquired in the
Phoenix Acquisition and is based on the allocation of the total
consideration as follows:
<TABLE>
<CAPTION>
INCREMENTAL INTANGIBLE HISTORICAL ADJUSTMENT
YEAR ENDED AMORTIZATION ASSETS, AMORTIZATION AMORTIZATION FOR NET
DECEMBER 31, 1998 PERIOD(i) NET EXPENSE(i) EXPENSE INCREASE
- ------------------- ------------ ---------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Phoenix Acquisition........... 1/1-12/31 $85,160 $5,677 $103 $5,574
======= ====== ==== ======
</TABLE>
<TABLE>
<CAPTION>
INCREMENTAL INTANGIBLE HISTORICAL ADJUSTMENT
SIX MONTHS ENDED AMORTIZATION ASSETS, AMORTIZATION AMORTIZATION FOR NET
JUNE 30, 1999 PERIOD(i) NET EXPENSE(i) EXPENSE INCREASE
- ------------------- ------------ ---------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Phoenix Acquisition........... 1/1-6/30 $85,160 $2,839 $-- $2,839
======= ====== === ======
</TABLE>
- -------------------------
(i) Intangible assets are amortized on a straight-line basis over an
estimated average 15 year life. The incremental amortization period
represents the period of the year that the acquisition was not
completed.
Historical depreciation expense for the Phoenix Acquisition is assumed to
approximate depreciation expense on a pro forma basis. Actual depreciation
and amortization may differ based upon final purchase price allocations.
(e) Reflects the adjustment to interest expense as follows:
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
1998 1999
------------ ------------
<S> <C> <C>
Additional bank borrowings related to other completed
transactions............................................ $ 69,000 $ 69,000
-------- --------
Interest expense at 7.0%.................................... 4,830 2,415
Less: historical interest expense recognized
subsequent to the completed transaction................. -- 302
-------- --------
Incremental interest expense................................ 4,830 2,717
Less: historical interest expense recognized
by the acquired company................................. (332) --
-------- --------
Net increase in interest expense............................ $ 4,498 $ 2,717
======== ========
</TABLE>
(f) Reflects the tax effect of the pro forma adjustments.
(19) The pro forma combined loss per common share data is computed by dividing
pro forma loss attributable to common stockholders by the weighted average
common shares assumed to be outstanding. A summary of shares used in the
pro forma combined loss per common share calculation follows:
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1998 JUNE 30, 1999
----------------- -------------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C>
Historical weighted average shares outstanding....... 137,979 142,349
Incremental weighted average shares relating to:
53,553,966 shares of Common Stock to be issued in
connection with the Capstar merger.............. 53,554 53,554
-------- --------
Shares used in the pro forma combined earnings per
share calculation.................................. 191,533 195,903
======== ========
</TABLE>
P-18
