<PAGE> 1
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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 QUARTERLY PERIOD ENDED MARCH 31, 2000
COMMISSION FILE NUMBER 001-15145
AMFM INC.
(Exact name of Registrant as Specified in its Charter)
DELAWARE
(State or other jurisdiction of
incorporation or organization)
75-2247099
(I.R.S. Employer Identification Number)
1845 WOODALL RODGERS FREEWAY, SUITE 1300, DALLAS, TEXAS 75201
(Address of principal executive offices, including zip code)
(214) 922-8700
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: As of April 30, 2000,
216,882,824 shares of common stock of AMFM Inc. were outstanding.
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<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements........................................ 3
Condensed Consolidated Balance Sheets (unaudited)........... 3
Condensed Consolidated Statements of Operations
(unaudited)............................................... 4
Condensed Consolidated Statements of Cash Flows
(unaudited)............................................... 5
Notes to Condensed Consolidated Financial Statements
(unaudited)............................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 12
Item 3. Quantitative and Qualitative Disclosures About Market
Risk...................................................... 19
PART II. OTHER INFORMATION
Item 1. Legal Proceedings........................................... 20
Item 4. Submission of Matters to a Vote of Security Holders......... 21
Item 6. Exhibits and Reports on Form 8-K............................ 21
Signature................................................... 23
</TABLE>
2
<PAGE> 3
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMFM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT FOR SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1999 2000
------------ -----------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 59,277 $ 68,804
Accounts receivable, less allowance for doubtful accounts
of $21,428 in 1999 and $27,385 in 2000................. 531,818 455,380
Other current assets...................................... 92,324 60,920
----------- -----------
Total current assets.............................. 683,419 585,104
Property and equipment, net................................. 471,508 459,693
Intangible assets, net...................................... 10,346,005 10,079,653
Investments in non-consolidated affiliates.................. 1,103,442 1,081,115
Other assets, net........................................... 261,434 252,031
----------- -----------
$12,865,808 $12,457,596
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses..................... $ 293,155 $ 310,970
Long-term debt.............................................. 5,890,217 5,783,388
Deferred tax liabilities.................................... 1,707,023 1,663,262
Other liabilities........................................... 60,154 52,023
----------- -----------
Total liabilities................................. 7,950,549 7,809,643
----------- -----------
Commitments and contingencies
Minority interest in consolidated subsidiary................ 3,694 3,435
Redeemable senior exchangeable preferred stock of
subsidiary, par value $.01 per share; 10,000,000 shares
authorized in 1999; 1,254,616 shares issued and
outstanding in 1999; liquidation preference of $132,989... 151,982 --
Stockholders' equity:
Preferred stock, $.01 par value 2,200,000 shares of 7%
convertible preferred stock authorized, issued and
outstanding in 1999.................................... 110,000 --
Common stock, $.01 par value 750,000,000 shares
authorized; 210,158,922 shares and 216,613,724 shares
issued and outstanding in 1999 and 2000,
respectively........................................... 2,102 2,166
Paid-in capital........................................... 5,115,785 5,272,597
Accumulated deficit....................................... (468,304) (630,245)
----------- -----------
Total stockholders' equity........................ 4,759,583 4,644,518
----------- -----------
$12,865,808 $12,457,596
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
AMFM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------
MARCH 31, MARCH 31,
1999 2000
--------- ---------
<S> <C> <C>
Gross revenues.............................................. $ 394,123 $ 588,884
Less agency commissions................................... 43,858 67,614
--------- ---------
Net revenues...................................... 350,265 521,270
Operating expenses.......................................... 208,510 308,088
Depreciation and amortization............................... 147,744 212,491
Corporate general and administrative........................ 17,814 15,302
Non-cash compensation....................................... -- 34,878
Merger and non-recurring costs.............................. 28,979 11,115
--------- ---------
Operating loss............................................ (52,782) (60,604)
Interest expense, net....................................... 84,392 123,645
Loss (gain) on disposition of assets........................ 82 (22,819)
Gain on disposition of representation contracts............. (3,685) (16,217)
--------- ---------
Loss before income taxes.................................. (133,571) (145,213)
Income tax benefit.......................................... 30,126 10,749
Credit on exchange of preferred stock of subsidiary......... -- 3,310
--------- ---------
Loss before equity in net loss of affiliates and minority
interest and extraordinary item........................ (103,445) (131,154)
Equity in net loss of affiliates and minority interest...... -- 24,372
--------- ---------
Loss before extraordinary item............................ (103,445) (155,526)
Extraordinary loss, net of income tax benefit............... -- 6,094
--------- ---------
Net loss.......................................... (103,445) (161,620)
Preferred stock dividends................................... 6,417 321
--------- ---------
Net loss attributable to common stockholders.............. $(109,862) $(161,941)
========= =========
Basic and diluted loss per common share:
Before extraordinary item................................. $ (0.77) $ (0.72)
Extraordinary item........................................ -- (0.03)
--------- ---------
Net loss.......................................... $ (0.77) $ (0.75)
========= =========
Weighted average common shares outstanding.................. 142,960 215,116
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
AMFM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------
MARCH 31, MARCH 31,
1999 2000
--------- ---------
<S> <C> <C>
Net cash provided by operating activities................... $ 91,236 $ 189,569
--------- ---------
Cash flows from investing activities:
Acquisitions, net of cash acquired........................ (349,542) (5,255)
Proceeds from sale of assets.............................. -- 93,711
Purchases of property and equipment....................... (9,771) (9,544)
Construction of advertising structures.................... (5,157) --
Payments made for purchases of representation contracts... (8,676) (8,277)
Payments received from sales of representation
contracts.............................................. 6,187 5,624
Other..................................................... (8,383) 9,787
--------- ---------
Net cash provided by (used by) investing
activities...................................... (375,342) 86,046
--------- ---------
Cash flows from financing activities:
Proceeds of long-term debt................................ 329,000 212,500
Payments on long-term debt................................ (47,000) (475,327)
Net proceeds from issuance of equity instruments.......... 3,336 6,192
Dividends on preferred stock.............................. (6,417) (9,453)
--------- ---------
Net cash provided by (used by) financing
activities...................................... 278,919 (266,088)
--------- ---------
Increase (decrease) in cash and cash equivalents............ (5,187) 9,527
Cash and cash equivalents at beginning of period............ 12,256 59,277
--------- ---------
Cash and cash equivalents at end of period.................. $ 7,069 $ 68,804
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE> 6
AMFM INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
1. BASIS OF PRESENTATION
The accompanying unaudited interim financial statements include the
accounts of AMFM Inc. and its wholly-owned and majority-owned subsidiaries
(collectively, the "Company" or "AMFM"). All significant intercompany balances
and transactions have been eliminated in consolidation and, in the opinion of
management, all adjustments (consisting of normal recurring accruals) necessary
to present fairly the financial position, results of operations and cash flows
have been recorded. Investments in which the Company owns 20 percent to 50
percent of the voting common stock or otherwise exercises significant influence
over operating and financial policies of the investee are accounted for using
the equity method. Interim period results are not necessarily indicative of
results to be expected for the year.
These financial statements should 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, 1999. The
year-end consolidated balance sheet data was derived from the audited financial
statements, but does not include all disclosures required by generally accepted
accounting principles.
Loss per common share is based on the weighted average shares of common
stock outstanding during the period. Weighted average shares excluded from the
calculation that related to potentially dilutive securities amounted to
approximately 24.9 million and 10.1 million for the three months ended March 31,
1999 and 2000, respectively. Such shares have been excluded as their inclusion
would have been antidilutive.
Certain reclassifications have been made to prior period condensed
consolidated financial statements to conform to the current period presentation.
2. CLEAR CHANNEL MERGER AGREEMENT
On October 2, 1999, AMFM and Clear Channel Communications, Inc. ("Clear
Channel") entered into a definitive merger agreement. Under the terms of the
merger agreement, AMFM stockholders will receive 0.94 shares of Clear Channel
common stock, on a fixed exchange basis, for each share of the Company's common
stock held on the closing date of the transaction and AMFM will become a
wholly-owned subsidiary of Clear Channel. Pursuant to the Telecommunications Act
of 1996, the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other
regulatory guidelines, it is expected that, collectively, Clear Channel and the
Company will need to divest between 110 and 115 radio stations in the aggregate
in approximately 37 markets or geographical areas to obtain antitrust and
Federal Communications Commission (the "FCC") approval for the merger. At March
31, 2000, AMFM and Clear Channel have signed definitive agreements to sell 110
of these stations for an aggregate cash sales price of approximately $4.3
billion. Of these stations, 66 are owned and operated by AMFM. Completion of
these sales is subject to the completion of the Clear Channel merger, obtaining
regulatory approvals and other closing conditions. In addition, the Company may
need to make further divestitures of radio stations or other assets or interests
in order to gain the approval of the federal and state antitrust authorities for
the merger. On April 26, 2000 and April 27, 2000, stockholders of both companies
approved the merger. Although there can be no assurance, the Company expects
that the Clear Channel merger will be consummated by September 30, 2000.
3. ACQUISITIONS AND DISPOSITIONS
(a) Completed Transactions
On January 14, 2000, the Company sold the capital stock of its Puerto Rico
subsidiaries to Spanish Broadcasting System of Puerto Rico, Inc. for $90,860 in
cash and recognized a pre-tax gain of approximately $22,800. The Company owned
and operated eight radio stations in Puerto Rico.
6
<PAGE> 7
AMFM INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
On January 31, 2000, the Company sold radio stations KIOK-FM, KALE-AM and
KEGX-FM in Richland, Washington and KTCR-AM in Kennewick, Washington to New
Northwest Broadcasters II, Inc. for $3,781 in cash.
On January 31, 2000, the Company acquired radio station KQOD-FM in
Stockton, California from Carson Group, Inc. for a purchase price of $5,255 in
cash, including direct acquisition costs. The Company had previously been
operating KQOD-FM under a local marketing agreement effective September 20,
1999.
The foregoing acquisitions were accounted for as purchases. Accordingly,
the accompanying consolidated financial statements include the results of
operations of the acquired entities from their respective dates of acquisition.
A summary of the net assets acquired in the three-month period ended March
31, 2000 follows:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31,
2000
------------
<S> <C>
Property and equipment................................. $ 566
Intangible assets...................................... 4,689
------
Total net assets acquired.................... $5,255
======
</TABLE>
The unaudited pro forma condensed consolidated results of operations data
for the three months ended March 31, 1999 and 2000, as if the acquisitions and
dispositions through March 31, 2000 occurred at January 1, 1999, follow:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------
MARCH 31, MARCH 31,
1999 2000
--------- ---------
<S> <C> <C>
Net revenues.......................................... $ 427,293 $ 520,796
Loss before extraordinary item........................ (174,901) (154,920)
Net loss.............................................. (174,901) (161,014)
Basic and diluted loss per common share -- before
extraordinary item.................................. (0.92) (0.72)
Basic and diluted loss per common share............... (0.92) (0.75)
</TABLE>
The pro forma results are not necessarily indicative of the financial
results which would have occurred if the transactions had been in effect for the
entire periods presented.
(b) Pending Transactions
On August 30, 1999, the Company entered into an agreement with Cox Radio,
Inc. ("Cox") to acquire KOST-FM and KFI-AM in Los Angeles plus $3,000 in cash
payable by Cox in exchange for 13 of its radio stations including WEDR-FM in
Miami, WFOX-FM in Atlanta, WEFX-FM, WNLK-AM, WKHL-FM and WSTC-AM in
Stamford/Norwalk, WFYV-FM, WAPE-FM, WBWL-AM, WKQL-FM, WMXQ-FM and WOKV-AM in
Jacksonville and WPLR-FM and the local sales rights of a 14th station, WYBC-FM,
in New Haven. The Company began programming KOST-FM and KFI-AM in Los Angeles
and Cox began programming the 13 Company stations under time brokerage
agreements effective October 1, 1999. Although there can be no assurance, the
Company expects that the Cox exchange will be consummated in the second quarter
of 2000.
On January 19, 2000, the Company entered into an agreement to exchange
radio station KSKY-AM in Dallas for radio station KPRZ-FM in Colorado Springs
owned by Bison Media, Inc., plus $7,500 in cash
7
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AMFM INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
payable by Bison Media. Although there can be no assurance, the Company expects
to complete the asset exchange in the second quarter of 2000.
4. PREFERRED STOCK CONVERSIONS AND REDEMPTION OF DEBT
On December 8, 1999, the Company gave notice to the holders of its 7%
Convertible Preferred Stock of its election to redeem all of the outstanding
shares of 7% Convertible Preferred Stock at a per share redemption price of
$52.45, plus accrued and unpaid dividends. Each holder had the right to convert
each share of the 7% Convertible Preferred Stock held by it into approximately
2.76 shares of the Company's common stock in lieu of being redeemed. On January
19, 2000, preferred holders converted all 2,200,000 shares of 7% Convertible
Preferred Stock into 6,078,995 shares of the Company's common stock.
Effective January 1, 2000, the Company exchanged all of the outstanding
shares of its 12% Senior Exchangeable Preferred Stock for $125,462 in aggregate
principal amount of its 12% Subordinated Exchange Debentures due 2009. The 12%
Subordinated Exchange Debentures due 2009 were revalued at fair market value
upon the exchange, and the excess of the carrying value of the preferred stock
over the fair value of the subordinated debentures of $3,310 has been reflected
in the financial statements as a credit on exchange of preferred stock of
subsidiary.
On February 1, 2000, the Company completed the redemption of all of its
outstanding 9 3/8% Senior Subordinated Notes due 2004 for an aggregate
repurchase cost of $216,355, which included the principal amount of the notes of
$200,000, premiums on the repurchase of the notes of $9,376 and accrued and
unpaid interest on the notes from October 1, 1999 through February 14, 2000 of
$6,979. An extraordinary charge of $6,094 (net of a tax benefit of $3,282) was
recorded in connection with the redemption.
5. CONTINGENCIES
On July 24, 1998, in connection with Capstar Broadcasting Corporation's
then pending acquisition of Triathlon Broadcasting Company, Capstar Broadcasting
was notified of an action filed on behalf of all holders of depository shares of
Triathlon against Triathlon, Triathlon's directors, and Capstar Broadcasting.
The action was filed in the Court of Chancery of the State of Delaware (Civil
Action No. 16560) in and for New Castle County, Delaware by Herbert Behrens. The
complaint alleges that Triathlon and its directors breached their fiduciary
duties to the class of depository stockholders by agreeing to a transaction with
Capstar Broadcasting that allegedly favored the class A common stockholders at
the expense of the depository stockholders. Capstar Broadcasting is accused of
knowingly aiding and abetting the breaches of fiduciary duties allegedly
committed by the other defendants. The complaint sought to have the action
certified as a class action and sought to enjoin the Triathlon acquisition, or
in the alternative, sought monetary damages in an unspecified amount. On
February 12, 1999, the parties signed a memorandum of understanding that
provided for the settlement of the lawsuit. The amount of the settlement will
equal $0.11 in additional consideration for each depositary share owned by any
class member at the effective time of the Triathlon acquisition. At the time of
the acquisition, there were approximately 5.8 million depositary shares
outstanding. Capstar Broadcasting also agreed not to oppose plaintiff's
counsel's application for attorney fees and expenses in the aggregate amount of
$150. The proposed settlement is contingent upon confirmatory discovery by the
plaintiff, execution of a definitive settlement agreement, and court approval.
On November 19, 1999, Capstar Broadcasting merged into Chancellor Mezzanine
Holdings Corporation and the surviving corporation was renamed AMFM Holdings
Inc.
In September 1998, a stockholder class action complaint was filed in the
Delaware Court of Chancery by a stockholder purporting to act individually and
on behalf of all other persons, other than defendants, who own securities of the
Company and are similarly situated. The defendants named in the case are the
Company, Hicks Muse, Thomas O. Hicks, Jeffrey A. Marcus, James E. de Castro,
Eric C. Neuman, Lawrence D. Stuart, Jr., Steven Dinetz, Thomas J. Hodson, Perry
Lewis, John H. Massey and Vernon E. Jordan, Jr. The
8
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AMFM INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
plaintiff alleges breach of fiduciary duties, gross mismanagement, gross
negligence or recklessness, and other matters relating to the defendants'
actions in connection with the Capstar merger. The plaintiff sought to certify
the complaint as a class action, enjoin consummation of the Capstar merger,
order defendants to account to plaintiff and other alleged class members for
damages, and award attorneys' fees and other costs. The Company believes that
the lawsuit is without merit and intends to vigorously defend the action.
On April 11, 2000 an action was commenced in New York Supreme Court, New
York County, by Interep National Radio Sales, Inc. seeking $47,118 in damages
from Clear Channel Communications, Inc. Also named as a defendant is Katz
Communications, Inc., an indirect wholly-owned subsidiary of the Company. The
complaint alleges, among other things, that Clear Channel wrongfully terminated
a February 3, 1996 agreement between Clear Channel and Interep under which
Interep agreed to act as Clear Channel's exclusive advertising representative by
procuring advertising time on Clear Channel's radio stations and also under
which Interep, Clear Channel and Katz executed certain "triparty agreements" in
which Interep agreed to buy out the existing representation agreement of Clear
Channel's then current representative, Katz, for $23,000. The complaint also
alleges that Interep's representation agreement, by its terms, could not be
terminated by Clear Channel until February 1, 2005 and that Clear Channel's
November 30, 1999 termination of Interep constituted a breach of the
representation agreement. The complaint alleges further that Clear Channel and
Katz continue to demand that Interep make all buy out payments to Katz as set
forth in the various triparty agreements. $5,188 of the requested damages
correspond to buyouts in excess of the pro rata amount attributable to the time
Interep had the right to represent the bought out stations and $280 of the
requested damages correspond to a refund of a portion of a "signing bonus" paid
by Interep to Clear Channel upon the execution of Interep's representation
agreement. The complaint does not specify the basis for the remaining damages
sought by Interep.
The Company is also involved in various other claims and lawsuits which are
generally incidental to its business. The Company is also vigorously contesting
all of these matters and believes that the ultimate resolution of these matters
and those mentioned above will not have a material adverse effect on its
consolidated financial position, results of operations or cash flows.
6. NON-CASH COMPENSATION
The Company recorded non-cash compensation of $34,878 during the three
months ended March 31, 2000 primarily related to amendments made to the stock
option agreements of certain operating personnel terminated upon implementation
of the Company's market strategy.
7. MERGER AND NON-RECURRING COSTS
Merger and non-recurring costs consist of the following for the three
months ended March 31, 1999 and 2000:
<TABLE>
<CAPTION>
1999 2000
------- -------
<S> <C> <C>
Severance(a).............................................. $12,196 $ 8,399
Merger and other(b)....................................... 16,783 2,716
------- -------
$28,979 $11,115
======= =======
</TABLE>
- ---------------
(a) 1999
On March 15, 1999, the Company announced an executive realignment and
recorded a charge of $12,196 for executive severance and other costs.
2000
On February 16, 2000, the Company announced the retirement of James E. de
Castro as Vice-Chairman of AMFM Inc., President and Chief Executive
Officer of AMFM Radio Group and
9
<PAGE> 10
AMFM INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Chairman and Chief Executive Officer of AMFM Interactive, Inc., effective
February 18, 2000. In connection with Mr. de Castro's retirement, the
Company recorded a charge of $5,340 for severance costs.
In 1999, the Company announced its market strategy, whereby each cluster
of stations in a market will be managed as a single business unit. In
connection with this strategy, certain personnel, consisting primarily of
operating personnel, have been terminated and other personnel-related
costs have been incurred to align formats within a market to target
certain demographics. During the three months ended March 31, 2000, the
Company incurred costs of $3,059, of which $2,637 related to personnel
costs. At March 31, 2000, $8,978 of the total costs incurred to date were
accrued and are expected to be paid during the remainder of 2000.
(b) 1999
Effective March 15, 1999, the Company and LIN Television Corporation
("LIN") agreed to terminate the LIN merger agreement. The Company
subsequently assigned to LIN its contract to acquire Petry Media
Corporation ("Petry"). The Company recorded a charge of $16,783 to write
off transaction costs incurred in connection with the LIN merger agreement
and Petry transaction.
2000
The Company incurred costs of $1,663 for the three months ended March 31,
2000 related to the Clear Channel merger and developmental costs of $1,053
related to the Galaxy(TM) system, AMFM's proprietary traffic system.
8. SEGMENT DATA
During the three months ended March 31, 1999, the Company conducted
business in three distinct operating segments consisting of radio broadcasting,
new media and outdoor advertising. Following the sale of the Company's outdoor
advertising business to Lamar Advertising Company on September 15, 1999, the
Company operates in only the radio broadcasting and new media segments. Separate
financial data for each of the Company's operating segments is provided below.
The Company evaluates the performance of its segments based on the following:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------
MARCH 31, MARCH 31,
1999 2000
--------- ---------
<S> <C> <C>
AMFM Radio Group -- radio broadcasting:
Net revenues.............................................. $261,779 $480,706
Operating expenses........................................ 154,121 279,662
Depreciation and amortization............................. 104,682 192,327
Merger and non-recurring costs............................ -- 8,387
Operating loss............................................ (298) (2,742)
AMFM New Media Group -- media representation and Internet:
Net revenues.............................................. 39,695 49,784
Operating expenses........................................ 30,748 37,646
Depreciation and amortization............................. 7,783 14,132
Merger and non-recurring costs............................ -- 1,053
Operating loss............................................ (344) (5,875)
Chancellor Outdoor Group -- outdoor advertising:
Net revenues.............................................. 53,601 --
Operating expenses........................................ 28,451 --
Depreciation and amortization............................. 31,396 --
Merger and non-recurring costs............................ -- --
Operating loss............................................ (9,071) --
</TABLE>
10
<PAGE> 11
AMFM INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The segment financial data includes intersegment revenues and expenses
which must be excluded to reconcile to the Company's consolidated financial
statements. In addition, certain depreciation and amortization expenses,
corporate general and administrative expenses, non-cash compensation and merger
and non-recurring costs were not allocated to operating segments and must be
included to reconcile to the Company's consolidated financial statements.
Reconciling financial data is provided below:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------
MARCH 31, MARCH 31,
1999 2000
--------- ---------
<S> <C> <C>
Intersegment net revenues................................... $ 4,810 $ 9,220
Intersegment operating expenses............................. 4,810 9,220
Unallocated depreciation and amortization................... 3,883 6,032
Unallocated corporate general and administrative expenses... 10,207 9,402
Unallocated non-cash compensation........................... -- 34,878
Unallocated merger and non-recurring costs.................. 28,979 1,675
</TABLE>
9. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities. This statement
establishes accounting and reporting standards for derivative instruments and
hedging activities. SFAS No. 133, as amended by SFAS No. 137, is effective for
all fiscal quarters of all fiscal years beginning after June 15, 2000.
Management does not anticipate that this statement will have a material impact
on the Company's consolidated financial statements.
In March 2000, the Financial Accounting Standards Board issued
Interpretation No. 44, Accounting for Certain Transactions Involving Stock
Compensation, an interpretation of APB No. 25, Accounting for Stock Issued to
Employees. The provisions of this Interpretation will be effective July 1, 2000.
If the Clear Channel merger is completed prior to July 1, 2000, the effective
date of the Interpretation, the Company would be required to record a
significant non-cash charge related to certain amendments to the Company's stock
option plans that are expected to be implemented prior to the consummation of
the merger. Due to the terms of certain options previously granted, the Company
will record a non-cash charge upon consummation of the merger regardless of the
new Interpretation. The size of such charge is not presently determinable since
it will be based on, among other things, the fair value of AMFM's common stock
on the day of the merger.
11
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
AMFM Inc. together with its subsidiaries ("AMFM") is a large national
pure-play radio broadcasting and related media company with operations in radio
broadcasting and media representation and growing Internet operations, which
focus on developing AMFM's Internet web sites, streaming online broadcasts of
AMFM's on-air programming and other media, and promoting emerging Internet and
new media concerns. In addition, AMFM owns an approximate 30% equity (11%
voting) interest in Lamar Advertising Company ("Lamar"), one of the largest
owners and operators of outdoor advertising structures in the United States. As
of March 31, 2000, AMFM owned and operated, programmed or sold air time for 442
radio stations (318 FM and 124 AM) in 100 markets in the United States,
including nine radio stations programmed under time brokerage or joint sales
agreements. AMFM also operates a national radio network, The AMFM Radio
Networks, which broadcasts advertising and syndicated programming shows to a
national audience of approximately 68 million listeners in the United States
(including approximately 59 million listeners from AMFM's portfolio of stations)
and the Chancellor Marketing Group, a full-service sales promotion firm
developing integrated marketing programs for Fortune 1000 companies. The media
representation business consists of Katz Media Group, Inc. ("Katz"), a
full-service media representation firm that sells national spot advertising time
for its clients in the radio and television industries throughout the United
States and for AMFM's portfolio of stations.
See Note 8 to the Condensed Consolidated Financial Statements included
elsewhere in this Form 10-Q for additional information on AMFM's operating
segments as of March 31, 2000.
AMFM's results of operations for the three months ended March 31, 2000 are
not comparable to the results of operations for the three months ended March 31,
1999 due to the impact of AMFM's various acquisitions and dispositions. AMFM
completed the following transactions from April 1, 1999 through March 31, 2000:
- the July 13, 1999 merger with Capstar Broadcasting Corporation ("Capstar
Broadcasting"), which at consummation of the merger operated 338 radio
stations (239 FM and 99 AM);
- the sale of AMFM's entire outdoor advertising business to Lamar on
September 15, 1999;
- the acquisition of eight radio stations (seven FM and one AM) for
approximately $115.5 million in cash; and
- the disposition of 14 radio stations (ten FM and four AM) for
approximately $116.1 million in cash.
Seasonal revenue fluctuations are common in the radio broadcasting and
outdoor advertising industries and are due primarily to fluctuations in
advertising expenditures by local and national advertisers. Advertising
expenditures are typically lower in the first and third calendar quarters and
higher in the second and fourth calendar quarters of each year. AMFM's operating
results in any period may be affected by the occurrence of advertising and
promotion expenses that do not produce commensurate revenues in the period in
which the expenditures are made.
CLEAR CHANNEL MERGER
On October 2, 1999, AMFM and Clear Channel agreed to a merger that will
create one of the largest out-of-home media companies reaching local, national
and international consumers through a complementary portfolio of radio stations,
radio broadcast networks, outdoor advertising displays and television stations
and a growing presence in the Internet and media representation business. If the
merger is completed, AMFM stockholders will receive 0.94 shares of Clear Channel
common stock, on a fixed exchange basis, for each share of AMFM common stock
held on the record date of the transaction and AMFM will become a wholly-owned
subsidiary of Clear Channel. On April 26, 2000 and April 27, 2000, stockholders
of AMFM and Clear Channel approved the merger.
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<PAGE> 13
Completion of the Clear Channel merger is subject to the satisfaction or
waiver of numerous conditions including regulatory approval by the Federal
Communications Commission and the U.S. Department of Justice. Pursuant to the
Telecommunications Act of 1996, the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 and other regulatory guidelines, it is expected that, collectively,
Clear Channel and AMFM will need to divest between 110 and 115 radio stations in
the aggregate in approximately 37 markets or geographical areas to obtain
antitrust and Federal Communications Commission (the "FCC") approval for the
merger. At March 31, 2000, AMFM and Clear Channel have signed definitive
agreements to sell 110 of these stations for an aggregate cash sales price of
approximately $4.3 billion. Of these stations, 66 are owned and operated by
AMFM. Completion of these sales is subject to the completion of the Clear
Channel merger, obtaining regulatory approvals and other closing conditions. In
addition, AMFM may need to make further divestitures of radio stations or other
assets or interests in order to gain the approval of the federal and state
antitrust authorities for the merger. AMFM expects that the Clear Channel merger
will be completed by September 30, 2000 if all conditions to the merger are
satisfied. AMFM cannot give any assurance that the merger will be completed on
the terms agreed to on October 2, 1999 or at all because there are many
conditions to the merger that are not within AMFM's control.
RESULTS OF OPERATIONS
Three Months Ended March 31, 2000 Compared To Three Months Ended March 31,
1999
AMFM Radio Group net revenues for the three months ended March 31, 2000
increased 83.6% to $480.7 million compared to $261.8 million for the three
months ended March 31, 1999. AMFM Radio Group operating expenses for the three
months ended March 31, 2000 increased 81.5% to $279.7 million compared to $154.1
million for the first quarter of 1999. The increase in net revenues and
operating expenses was primarily attributable to the net impact of the various
acquisitions and dispositions discussed elsewhere herein and overall net
operational improvements, as evidenced by the increase in AMFM Radio Group's
direct operating margin from 41.1% for the three months ended March 31, 1999 to
41.8% for the first quarter of 2000. Additional factors contributing to the
increase included higher revenues from dot-com clients, the positive effects of
the market strategy implemented in many major markets at the end of the third
quarter of 1999 and improved results for stations which were re-programmed with
Jammin' Oldies. On a pro forma basis for all stations owned and operated as of
March 31, 2000, net revenues increased 23.0% during the three months ended March
31, 2000 compared to the three months ended March 31, 1999 and pro forma net
operating expenses increased 13.6%.
AMFM New Media Group net revenues for the three months ended March 31, 2000
increased 25.4% to $49.8 million compared to $39.7 million for the three months
ended March 31, 1999. AMFM New Media Group operating expenses for the three
months ended March 31, 2000 increased 22.4% to $37.6 million compared to $30.7
million for the first quarter of 1999. This increase is primarily attributable
to Katz, which experienced an increase in net revenues for the three months
ended March 31, 2000 of 17.7% to $46.7 million compared to $39.7 million for the
first quarter of 1999 due to a growth in new business and an overall growth in
both radio and television advertising spending. Additionally, Prophet Systems,
which was acquired in 1999 in conjunction with the Capstar merger and provides
the hardware necessary for the utilization of StarSystem(TM), generated $3.1
million in revenues during the first quarter of 2000 from the sale of hardware
to third parties.
AMFM's outdoor advertising business was formed on July 31, 1998 with the
acquisition of Martin Media and Martin & MacFarlane, Inc. and also included the
assets of the outdoor advertising division of Whiteco Industries, Inc., which
was acquired on December 1, 1998. On September 15, 1999, AMFM completed the sale
of its outdoor advertising business to Lamar. AMFM's outdoor advertising
business had net revenues of $53.6 million and operating expenses of $28.5
million for the three months ended March 31, 1999.
Depreciation and amortization for the three months ended March 31, 2000
increased 43.8% to $212.5 million compared to $147.7 million for the first
quarter of 1999. The increase is due to the impact of the acquisitions completed
during 1999 and through March 31, 2000.
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<PAGE> 14
Corporate general and administrative expenses for the three months ended
March 31, 2000 decreased 14.1% to $15.3 million compared to $17.8 million for
the first quarter of 1999 primarily due to a reduction in personnel.
The non-cash compensation expense of $34.9 million for the three months
ended March 31, 2000 primarily related to amendments made to the stock option
agreements of certain operating personnel terminated upon implementation of
AMFM's market strategy.
During the three months ended March 31, 2000, AMFM recorded merger and
non-recurring costs of $5.3 million related to severance costs in connection
with the retirement of James E. de Castro, $3.1 million related to the costs to
terminate employees and close certain facilities in connection with the
implementation of AMFM's market strategy, $1.7 million related to the Clear
Channel merger, and other costs of $1.1 million including developmental costs
associated with the Galaxy(TM) system, AMFM's proprietary traffic system. The
merger and non-recurring costs of $29.0 million for the first quarter of 1999
million related to the write-off of LIN Television Corporation and Petry Media
Corporation transaction costs and executive severance and other costs related to
the executive management realignment.
As a result of the above factors, AMFM incurred an operating loss of $60.6
million for the three months ended March 31, 2000 compared to an operating loss
of $52.8 million for the first quarter of 1999.
Net interest expense for the three months ended March 31, 2000 increased
46.5% to $123.6 million compared to $84.4 million for the same period in 1999.
The net increase was primarily due to (i) additional bank borrowings under the
senior credit facility required to finance the various acquisitions discussed
elsewhere herein offset by cash proceeds of approximately $720.0 million
received upon the sale of AMFM's outdoor advertising business to Lamar on
September 15, 1999 and cash proceeds from other various dispositions discussed
elsewhere herein; (ii) additional debt recorded in connection with the Capstar
merger on July 13, 1999; (iii) the exchange of the 12 5/8% Series E cumulative
exchangeable preferred stock of AMFM Operating Inc. ("AMFM Operating") for
12 5/8% Senior Subordinated Exchange Debentures due 2006 on November 23, 1999;
and (iv) the exchange of the 12% Senior Exchangeable Preferred Stock of Capstar
Broadcasting Partners, Inc. ("Capstar Partners") for 12% Subordinated Exchange
Debentures due 2009 effective on January 1, 2000.
The gain on disposition of assets of $22.8 million for the three months
ended March 31, 2000 primarily related to the January 14, 2000 sale of the
capital stock of AMFM's Puerto Rico subsidiaries to Spanish Broadcasting System
of Puerto Rico, Inc.
AMFM recorded a gain on disposition of representation contracts of $16.2
million for the three months ended March 31, 2000 and $3.7 million for the first
quarter of 1999 related to its media representation operations. The gain
represents the sales proceeds received from successor representation firms for
the buyout of existing media representation contracts, net of any remaining
deferred costs associated with obtaining the original representation contract.
While the consolidation of the radio broadcasting industry has resulted in an
increase in buyout activity, the impact on future periods cannot be predicted.
AMFM recorded an income tax benefit of $10.7 million for the three months
ended March 31, 2000 compared with an income tax benefit of $30.1 million for
the three months ended March 31, 1999 primarily due to an increase in
non-deductible amortization for the first quarter of 2000.
AMFM recorded a credit on exchange of preferred stock of subsidiary of $3.3
million during the three months ended March 31, 2000 related to the January 1,
2000 exchange of all of the outstanding shares of Capstar Partners' 12% Senior
Exchangeable Preferred Stock for 12% Subordinated Exchange Debentures due 2009.
The 12% Subordinated Exchange Debentures due 2009 were revalued at fair market
value upon the exchange, and the $3.3 million is the excess of the carrying
value of the preferred stock over the fair value of the subordinated debentures.
During the first quarter of 2000, AMFM recorded equity in net loss of
affiliates and minority interest of $24.4 million, which consisted of $24.6
million related to AMFM's investments accounted for using the equity
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<PAGE> 15
method offset by $0.2 million related to the approximate 8.5% interest in AMFM
Interactive, Inc. owned by third parties.
During the first quarter of 2000, AMFM recorded an extraordinary charge of
$6.1 million, net of a tax benefit of $3.3 million, consisting of the premiums
paid in connection with the redemption of AMFM Operating's 9 3/8% Subordinated
Exchange Debentures due 2004.
Dividends on AMFM's preferred stock were $0.3 million for the three months
ended March 31, 2000 and included dividends on AMFM's 7% Convertible Preferred
Stock issued in September 1997. On January 19, 2000, preferred holders converted
all 2,200,000 shares of 7% Convertible Preferred Stock into 6,078,995 shares of
AMFM common stock. Dividends on AMFM's preferred stock were $6.4 million for the
first quarter of 1999 and included dividends on AMFM's 7% Convertible Preferred
Stock and AMFM's $3.00 Convertible Exchangeable Preferred Stock issued in June
1997. On August 24, 1999, preferred holders converted 5,989,900 shares of $3.00
Convertible Exchangeable Preferred Stock into 11,979,800 shares of AMFM common
stock, and AMFM redeemed the remaining 100 shares of $3.00 Convertible
Exchangeable Preferred Stock for $5,298 in the aggregate.
As a result of the above factors, AMFM incurred a net loss attributable to
common stockholders of $161.9 million for the three months ended March 31, 2000
compared to a $109.9 million net loss attributable to common stockholders for
the first quarter of 1999.
LIQUIDITY AND CAPITAL RESOURCES
Overview
AMFM historically has generated sufficient cash flow from operations to
finance its existing operational requirements and debt service requirements, and
AMFM anticipates that this will continue to be the case. Operating activities
provided net cash of $189.6 million and $91.2 million for the three months ended
March 31, 2000 and 1999, respectively. AMFM 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 AMFM's acquisition strategy.
AMFM Inc. is a holding company with no significant assets other than the
capital stock of its direct and indirect subsidiaries. Consequently, its sole
source of cash from which to service indebtedness is through dividends
distributed or other payments made to it by its operating subsidiaries. The
instruments governing AMFM's indebtedness contain certain covenants that
restrict or, in some cases, prohibit the ability of subsidiaries to pay
dividends and make other distributions. These restrictions are not anticipated
to have an impact on AMFM Inc.'s ability to meet its cash obligations.
Financing Transactions
Effective January 1, 2000, AMFM exchanged all of the outstanding shares of
its 12% Senior Exchangeable Preferred Stock for $125.5 million in aggregate
principal amount of its 12% Subordinated Exchange Debentures due 2009.
On January 11, 2000, AMFM completed a change of control offer to purchase
all of its outstanding 12 5/8% Senior Subordinated Exchange Debentures due 2006
at an offer price in cash equal to 101% of the aggregate principal amount, plus
accrued and unpaid interest. AMFM repurchased $1.2 million, or 0.9%, of the
aggregate outstanding principal amount of the debentures for an aggregate
repurchase cost of $1.3 million.
On December 8, 1999, AMFM gave notice to the holders of AMFM's 7%
convertible preferred stock of AMFM's election to redeem all of the outstanding
shares of 7% convertible preferred stock at a per share redemption price of
$52.45, plus accrued and unpaid dividends. Each holder had the right to convert
each share of the 7% convertible preferred stock held by it into approximately
2.76 shares of AMFM common stock in lieu of being redeemed. On January 19, 2000,
preferred holders converted all 2.2 million shares of 7% convertible preferred
stock into 6,078,995 shares of AMFM common stock.
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<PAGE> 16
On February 1, 2000, AMFM repurchased $5.0 million, or 1.8%, of the
aggregate outstanding principal amount of its 12 3/4% Senior Discount Notes due
2009.
On February 15, 2000, AMFM completed the redemption of all of its
outstanding 9 3/8% Senior Subordinated Notes due 2004 for an aggregate
repurchase cost of $216.4 million, which included:
- the principal amount of the notes of $200.0 million;
- premiums on the repurchase of the notes of $9.4 million; and
- accrued and unpaid interest on the notes from October 1, 1999 through
February 14, 2000 of $7.0 million.
On April 28, 2000, AMFM commenced a tender offer to purchase all of its
outstanding 10 1/2% Senior Subordinated Notes due 2007 at a purchase price equal
to $1,096.50 per $1,000 principal amount tendered, plus accrued and unpaid
interest. The principal balance as of April 30, 2000 was $100.0 million. Prior
to the initiation of the offer, AMFM received the irrevocable consent of the
holder of the majority in aggregate principal amount of the notes to certain
amendments which will eliminate most of the restrictive covenants and certain
other provisions of the indenture pursuant to which the notes were issued.
Outstanding Debt
Senior Credit Facility. AMFM Operating's senior credit facility includes
commitments for a revolving loan facility of $600.0 million and a term loan
facility of $2.6 billion. The proceeds of such facilities were used to repay
AMFM's previously existing senior credit facilities, to repay, repurchase or
redeem other debt and equity securities of AMFM and its subsidiaries and for
other general corporate purposes. Both the revolving loan facility and the term
loan facility of AMFM Operating will mature on November 19, 2001. No scheduled
amortization of principal is required prior to maturity. Both the revolving loan
facility and the term loan facility of AMFM Operating bear interest at
fluctuating rates based upon the prime rate and the eurodollar rate. The margin
above the applicable prime rate or the eurodollar rate is determined by
reference to AMFM Operating's ratio of consolidated debt to consolidated
earnings before interest, taxes, depreciation and amortization, provided that
such margins are fixed at .50% and 1.50%, respectively, until delivery of AMFM
Operating's financial statements for the fiscal quarter ending March 31, 2000,
and capped at .50% and 1.50%, respectively, thereafter so long as the Clear
Channel merger agreement has not been terminated. The merger of AMFM and Clear
Channel would constitute an event of default under AMFM Operating's senior
credit facility and will require refinancing at the effective time of the
merger. As of April 30, 2000, the total outstanding principal balance on the
senior credit facility was $2.8 billion, including $0.2 billion under the
revolving loan facility and $2.6 billion under the term loan facility.
AMFM Operating 8% Senior Notes. AMFM Operating's 8% Senior Notes due 2008
are senior unsecured obligations of AMFM Operating and rank equal in right of
payment to the obligations of AMFM Operating under AMFM Operating's senior
credit facility and existing and all other indebtedness of AMFM Operating not
expressly subordinated to the 8% Senior Notes due 2008. However, because the 8%
Senior Notes due 2008 are unsecured, the 8% Senior Notes due 2008 are
effectively subordinated in right of payment to AMFM Operating's senior credit
facility. The 8% Senior Notes due 2008 are fully and unconditionally guaranteed,
on a joint and several basis, by all of AMFM Operating's direct and indirect
wholly owned subsidiaries other than certain inconsequential subsidiaries (the
"Subsidiary Guarantors"). As of April 30, 2000, the outstanding principal
balance was $750.0 million. Interest payment requirements on the 8% Senior Notes
due 2008 are approximately $60.0 million per year.
AMFM Operating Senior Subordinated Notes. AMFM Operating's 8 3/4% Senior
Subordinated Notes due 2007, 10 1/2% Senior Subordinated Notes due 2007, 8 1/8%
Senior Subordinated Notes due 2007, 9 1/4% Senior Subordinated Notes due 2007,
9% Senior Subordinated Notes due 2008 and 12 5/8% Senior Subordinated Exchange
Debentures due 2006 (collectively, the "Subordinated Notes") are unsecured
obligations of AMFM Operating. The Subordinated Notes are subordinated in right
of payment to all existing and any future senior indebtedness of AMFM Operating.
Except for the 9 1/4% Senior Subordinated Notes due
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<PAGE> 17
2007, the Subordinated Notes are fully and unconditionally guaranteed, on a
joint and several basis, by the Subsidiary Guarantors. As of April 30, 2000, the
total outstanding principal balance on the Subordinated Notes was approximately
$1.8 billion. Interest payment requirements on the Subordinated Notes are
approximately $165.7 million per year, payable in semi-annual payments.
Capstar Partners 12 3/4% Senior Discount Notes. Capstar Partners' 12 3/4%
Senior Discount Notes due 2009 are senior unsecured obligations of Capstar
Partners and rank equal to all other indebtedness of Capstar Partners not
expressly subordinated to the 12 3/4% Senior Discount Notes due 2009. The
12 3/4% Senior Discount Notes due 2009 are carried at a discount from their
aggregate principal amount at maturity of $273.4 million. The carrying value of
the 12 3/4% Capstar Partners Senior Discount Notes due 2009 will increase
through accretion until February 1, 2002. As of April 30, 2000, the carrying
value was approximately $249.7 million. Beginning on August 1, 2002, Capstar
Partners will pay interest of approximately $17.1 million semi-annually on
February 1 and August 1 of each year until maturity.
Capstar Partners 12% Subordinated Exchange Debentures. Capstar Partners'
12% Senior Subordinated Exchange Debentures due 2009 are unsecured obligations
of Capstar Partners and subordinate in right of payment to Capstar Partners'
12 3/4% Senior Discount Notes due 2009 and any future senior indebtedness of
Capstar Partners. As of April 30, 2000, the aggregate outstanding principal
balance was approximately $125.5 million. Capstar Partners pays interest of
approximately $7.5 million on the debentures semi-annually on January 1 and July
1 of each year.
AMFM Operating's senior credit facility and the indentures governing AMFM
Operating's 8% Senior Notes due 2008, the Subordinated Notes and Capstar
Partners' 12 3/4% Senior Discount Notes due 2009 and 12% Subordinated Exchange
Debentures due 2009 contain customary restrictive covenants, which, among other
things and with certain exceptions, limit the ability of Capstar Partners and
its subsidiaries, including AMFM Operating, 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. AMFM Operating is
required under its senior credit facility to maintain specified financial
ratios, including leverage, cash flow and debt service coverage ratios. As of
April 30, 2000, AMFM remains in compliance with these covenants.
Pending Transactions
On August 30, 1999, AMFM entered into an agreement with Cox Radio, Inc. to
acquire KOST-FM and KFI-AM in Los Angeles plus $3.0 million in cash payable by
Cox Radio, Inc. in exchange for 13 of its radio stations, including WEDR-FM in
Miami, WFOX-FM in Atlanta, WEFX-FM, WNLK-AM, WKHL-FM and WSTC-AM in
Stamford/Norwalk, WFYV-FM, WAPE-FM, WBWL-AM, WKQL-FM, WMXQ-FM and WOKV-AM in
Jacksonville and WPLR-FM and the local sales rights of a 14th station, WYBC-FM,
in New Haven. AMFM began programming KOST-FM and KFI-AM in Los Angeles and Cox
Radio, Inc. began programming the 13 AMFM stations under time brokerage
agreements effective October 1, 1999. Although there can be no assurance, AMFM
expects that the exchange will be consummated in the second quarter of 2000.
On January 19, 2000, AMFM entered into an agreement to exchange radio
station KSKY-AM in Dallas for radio station KPRZ-FM in Colorado Springs owned by
Bison Media, Inc., plus $7.5 million in cash payable by Bison Media. Although
there can be no assurance, AMFM expects to complete the asset exchange in the
second quarter of 2000.
Consummation of each of the transactions discussed above is subject to
various conditions, including approval from the Federal Communications
Commission, in the case of radio broadcast station transactions, and the
expiration or early termination of any waiting period required under the HSR Act
or any approval required by the DOJ pursuant to a consent decree. AMFM believes
that such conditions will be satisfied in the ordinary course, but there can be
no assurance that this will be the case.
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Principal Liquidity Requirements
The principal liquidity requirements of AMFM (in addition to debt service
and tax liabilities) will be for working capital, general corporate purposes,
capital expenditures and pending acquisitions, and as opportunities arise and
subject to the terms of the Clear Channel merger agreement, to acquire
additional radio stations or complementary broadcast-related businesses. AMFM
believes that disposition of certain assets and cash from operating activities,
together with available revolving credit borrowings under its senior credit
facility, should be sufficient to permit AMFM to meet its obligations. As of
April 30, 2000, AMFM had $397.4 million available under its senior credit
facility, subject to financial covenants contained in the senior credit facility
and the indentures that govern the indebtedness of AMFM.
In the future, AMFM may require additional financing, either in the form of
additional debt or equity securities. AMFM evaluates potential acquisition
opportunities on an ongoing basis and has had, and continues to have,
preliminary discussions concerning the purchase of additional stations and other
assets. AMFM expects that in connection with the financing of future
acquisitions, it may consider disposing of stations in its current markets.
FORWARD-LOOKING STATEMENTS
Certain statements used in the preceding and following discussion and
elsewhere in this Quarterly Report on Form 10-Q are forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These forward-
looking statements about the financial condition, prospects, operations and
business of AMFM are generally accompanied by words such as "believes,"
"expects," "plans," "anticipates," "intends," "likely," "estimates," or similar
expressions. These forward-looking statements are subject to numerous risks,
uncertainties and other factors, some of which are beyond the control of AMFM,
that could cause actual results to differ materially from those forecasted or
anticipated in such forward-looking statements.
These risks, uncertainties and other factors include, but are not limited
to: the restrictions imposed on AMFM by Clear Channel pending completion of the
Clear Channel merger; the potential negative consequences of the substantial
indebtedness of AMFM; the restrictions imposed on AMFM by the agreements
governing its debt instruments; the competitive nature of the radio broadcasting
and new media businesses; the potential adverse effects of the recent volatility
of internet related stocks; the potential adverse effects on station licenses
and ownership of regulation of the radio broadcasting industry; the difficulty
of integrating substantial acquisitions and entering new lines of business; and
the control of AMFM by affiliates of Hicks, Muse, Tate & Furst Incorporated and
potential conflicts of interest relating thereto.
Because such forward-looking statements are subject to risks and
uncertainties, readers are cautioned not to place undue reliance on these
forward-looking statements, which reflect management's view only as of the date
of this Quarterly Report on Form 10-Q. AMFM undertakes no obligation to update
such statements or publicly release the result of any revisions to these
forward-looking statements which it may make to reflect events or circumstances
after the date of this report or to reflect the occurrence of unanticipated or
unforeseen events.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities. This statement establishes accounting and reporting
standards for derivative instruments and hedging activities. SFAS No. 133, as
amended by SFAS No. 137, is effective for all fiscal quarters of all fiscal
years beginning after June 15, 2000. Management does not anticipate that this
statement will have a material impact on AMFM's consolidated financial
statements.
In March 2000, the Financial Accounting Standards Board issued
Interpretation No. 44, Accounting for Certain Transactions Involving Stock
Compensation, an interpretation of APB No. 25, Accounting for Stock Issued to
Employees. The provisions of this Interpretation will be effective July 1, 2000.
If the Clear Channel
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merger is completed prior to July 1, 2000, the effective date of the
Interpretation, AMFM would be required to record a significant non-cash charge
related to certain amendments to AMFM's stock option plans that are expected to
be implemented prior to the consummation of the merger. Due to the terms of
certain options previously granted, AMFM will record a non-cash charge upon
consummation of the merger regardless of the new Interpretation. The size of
such charge is not presently determinable since it will be based on, among other
things, the fair value of AMFM's common stock on the day of the merger.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
INTEREST RATE RISK MANAGEMENT
AMFM's exposure to market risk associated with changes in interest rates
relates primarily to its debt obligations. AMFM manages its interest rate risk
through a combination of fixed and floating rate debt and swap agreements.
The following table presents descriptions of the financial instruments and
derivative instruments that were held by AMFM at March 31, 2000 which are
sensitive to interest rate fluctuation. For the outstanding debt, the table
presents required principal cash flows by maturity date and the related average
interest rate. For the interest rate swaps, the table presents the notional
amounts and expected interest rates that exist by contractual dates, and the
notional amount is used to calculate the contractual payments to be exchanged
under the contract. The variable rates are estimated based on implied forward
rates in the yield curve at the reporting date.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2000 2001 2002 2003 2004 THEREAFTER
------------ ------------ ------------ ------------ ------------ ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Fixed rate debt
(U.S. $)............... $ -- $ -- $-- $-- $-- $2,980,888
Average interest
rate................. -- -- -- -- -- 8.82%
Variable rate debt
(U.S. $)............... $ -- $2,802,500 $-- $-- $-- $ --
Average interest
rate................. -- 8.48% -- -- -- --
Interest rate swaps
(variable to fixed):
Notional amount........ $300,000 $ 400,000 $-- $-- $-- $ --
Unrecorded gain -- fair
value................ -- -- -- -- -- --
Average pay rate....... 5.89% 5.17% -- -- -- --
Average receive rate... 6.30% 6.99% -- -- -- --
<CAPTION>
TOTAL FAIR VALUE
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Fixed rate debt
(U.S. $)............... $2,980,888 $2,967,785
Average interest
rate................. 8.82%
Variable rate debt
(U.S. $)............... $2,802,500 $2,802,500
Average interest
rate................. 8.48%
Interest rate swaps
(variable to fixed):
Notional amount........ $ 700,000
Unrecorded gain -- fair
value................ -- $ 9,734
Average pay rate....... 5.48%
Average receive rate... 6.70%
</TABLE>
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<PAGE> 20
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On July 24, 1998, in connection with Capstar Broadcasting's then pending
acquisition of Triathlon Broadcasting Company, Capstar Broadcasting was notified
of an action filed on behalf of all holders of depository shares of Triathlon
against Triathlon, Triathlon's directors, and Capstar Broadcasting. The action
was filed in the Court of Chancery of the State of Delaware (Civil Action No.
16560) in and for New Castle County, Delaware by Herbert Behrens. The complaint
alleges that Triathlon and its directors breached their fiduciary duties to the
class of depository stockholders by agreeing to a transaction with Capstar
Broadcasting that allegedly favored the class A common stockholders at the
expense of the depository stockholders. Capstar Broadcasting is accused of
knowingly aiding and abetting the breaches of fiduciary duties allegedly
committed by the other defendants. The complaint sought to have the action
certified as a class action and sought to enjoin the Triathlon acquisition, or
in the alternative, sought monetary damages in an unspecified amount. On
February 12, 1999, the parties signed a memorandum of understanding that
provided for the settlement of the lawsuit. The amount of the settlement will
equal $0.11 in additional consideration for each depositary share owned by any
class member at the effective time of the Triathlon acquisition. At the time of
the acquisition, there were approximately 5.8 million depositary shares
outstanding. Capstar Broadcasting also agreed not to oppose plaintiff's
counsel's application for attorney fees and expenses in the aggregate amount of
approximately $0.2 million. The proposed settlement is contingent upon
confirmatory discovery by the plaintiff, execution of a definitive settlement
agreement, and court approval. On November 19, 1999, Capstar Broadcasting merged
into Chancellor Mezzanine Holdings Corporation and the surviving corporation was
renamed AMFM Holdings Inc.
In September 1998, a stockholder class action complaint was filed in the
Delaware Court of Chancery by a stockholder purporting to act individually and
on behalf of all other persons, other than defendants, who own securities of
AMFM and are similarly situated. The defendants named in the case are AMFM,
Hicks Muse, Thomas O. Hicks, Jeffrey A. Marcus, James E. de Castro, Eric C.
Neuman, Lawrence D. Stuart, Jr., Steven Dinetz, Thomas J. Hodson, Perry Lewis,
John H. Massey and Vernon E. Jordan, Jr. The plaintiff alleges breach of
fiduciary duties, gross mismanagement, gross negligence or recklessness, and
other matters relating to the defendants' actions in connection with the Capstar
merger. The plaintiff sought to certify the complaint as a class action, enjoin
consummation of the Capstar merger, order defendants to account to plaintiff and
other alleged class members for damages, and award attorneys' fees and other
costs. AMFM believes that the lawsuit is without merit and intends to vigorously
defend the action.
On April 11, 2000 an action was commenced in New York Supreme Court, New
York County, by Interep National Radio Sales, Inc. seeking $47.1 million in
damages from Clear Channel Communications, Inc. Also named as a defendant is
Katz Communications, Inc., an indirect wholly-owned subsidiary of AMFM. The
complaint alleges, among other things, that Clear Channel wrongfully terminated
a February 3, 1996 agreement between Clear Channel and Interep under which
Interep agreed to act as Clear Channel's exclusive advertising representative by
procuring advertising time on Clear Channel's radio stations and also under
which Interep, Clear Channel and Katz executed certain "triparty agreements" in
which Interep agreed to buy out the existing representation agreement of Clear
Channel's then current representative, Katz, for $23.0 million. The complaint
also alleges that Interep's representation agreement, by its terms, could not be
terminated by Clear Channel until February 1, 2005 and that Clear Channel's
November 30, 1999 termination of Interep constituted a breach of the
representation agreement. The complaint alleges further that Clear Channel and
Katz continue to demand that Interep make all buy out payments to Katz as set
forth in the various triparty agreements. $5.2 million of the requested damages
correspond to buyouts in excess of the pro rata amount attributable to the time
Interep had the right to represent the bought out stations and $0.3 million of
the requested damages correspond to a refund of a portion of a "signing bonus"
paid by Interep to Clear Channel upon the execution of Interep's representation
agreement. The complaint does not specify the basis for the remaining damages
sought by Interep.
20
<PAGE> 21
AMFM is also involved in various other claims and lawsuits which are
generally incidental to its business. AMFM is also vigorously contesting all of
these matters and believes that the ultimate resolution of these matters and
those mentioned above will not have a material adverse effect on its
consolidated financial position, results of operations or cash flows.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
AMFM held a special meeting of stockholders on April 26, 2000 in Dallas,
Texas. At the special meeting, the stockholders of AMFM voted to approve and
adopt the Agreement and Plan of Merger, dated as of October 2, 1999, among Clear
Channel Communications, Inc., CCU Merger Sub, Inc. and AMFM Inc. as follows:
<TABLE>
<CAPTION>
FOR AGAINST ABSTENTIONS
- ----------- ------- -----------
<S> <C> <C>
168,909,281 87,367 19,517
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
4.7.8(1) -- Seventh Supplemental Indenture, dated as of January 18,
2000, to the Indenture, dated as of February 14, 1996,
governing the 9 3/8% Senior Subordinated Notes due 2004
of AMFM Operating Inc.
4.8.6(1) -- Fifth Supplemental Indenture, dated as of January 18,
2000, to the Indenture, dated as of June 24, 1997,
governing the 8 3/4% Senior Subordinated Notes due 2007
of AMFM Operating Inc.
4.9.5(1) -- Fifth Supplemental Indenture, dated as of January 18,
2000, to the Indenture, dated as of October 28, 1997,
governing the 10 1/2% Senior Subordinated Notes due 2007
of AMFM Operating Inc.
4.10.4(1) -- Third Supplemental Indenture, dated as of January 18,
2000, to the Indenture, dated as of December 22, 1997,
governing the 8 1/8% Senior Subordinated Notes due 2007
of AMFM Operating Inc.
4.11.4(1) -- Third Supplemental Indenture, dated as of January 18,
2000, to the Indenture, dated as of September 30, 1998,
governing the 9% Senior Subordinated Notes due 2008 of
AMFM Operating Inc.
4.12.4(1) -- Third Supplemental Indenture, dated as of January 18,
2000, to the Indenture, dated as of November 17, 1998,
governing the 8% Senior Subordinated Notes due 2008 of
AMFM Operating Inc.
10.4.2* -- First Amendment to Chancellor Holdings Corp. 1994
Director Stock Option Plan.
10.5.2* -- First Amendment to 1995 Stock Option Plan for executive
officers and key employees of Evergreen Media
Corporation.
10.6.2* -- First Amendment to Chancellor Broadcasting Company 1996
Stock Award Plan.
10.7.2* -- First Amendment to Amended and Restated Chancellor Media
Corporation Stock Option Plan for Non-Employee Directors.
10.7.3* -- Second Amendment to Amended and Restated Chancellor Media
Corporation Stock Option Plan for Non-Employee Directors.
10.8.3* -- Second Amendment to Capstar Broadcasting Corporation 1998
Stock Option Plan.
10.9.2* -- First Amendment to Chancellor Media Corporation 1998
Stock Option Plan.
10.9.3* -- Second Amendment to Chancellor Media Corporation 1998
Stock Option Plan.
10.10.3* -- Second Amendment to AMFM Inc. 1999 Stock Option Plan.
</TABLE>
21
<PAGE> 22
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
10.12.3(1) -- Separation Agreement, dated as of February 16, 2000,
among AMFM Inc., AMFM Operating Inc. and James E. de
Castro.
27.1* -- Financial Data Schedule of AMFM Inc.
</TABLE>
- ---------------
* Filed herewith.
(1) Incorporated by reference to Exhibits to AMFM Inc.'s Annual Report on Form
10-K for the year ended December 31, 1999.
(b) Reports on Form 8-K
1. Current Report on Form 8-K (Items 5 and 7), dated January 1, 2000 and
filed January 4, 2000, announcing the exchange of the 12% Senior Exchangeable
Preferred Stock for 12% Subordinated Exchange Debentures due 2009.
2. Current Report on Form 8-K (Items 5 and 7), dated January 6, 2000 and
filed January 11, 2000, announcing the completion of the change of control offer
to purchase for cash all of the outstanding 12 5/8% Senior Subordinated Exchange
Debentures due 2006.
3. Current Report on Form 8-K (Items 5 and 7), dated February 16, 2000 and
filed February 17, 2000, as amended on February 18, 2000, announcing the
retirement of James E. de Castro from his positions as Director and
Vice-Chairman of AMFM Inc., President and Chief Executive Officer of AMFM Radio
Group, and Chairman and Chief Executive Officer of AMFM Interactive, Inc.
4. Current Report on Form 8-K/A (Item 7), dated July 1, 1999 and filed
March 10, 2000 to provide historical financial statements for Capstar
Broadcasting Corporation and Subsidiaries as of December 31, 1998 and June 30,
1999 and for the six months ended June 30, 1998 and 1999 and historical combined
financial statement for KFYI-AM and KKFR-FM as of June 30, 1999 and for the six
months ended June 30, 1998 and 1999.
22
<PAGE> 23
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: May 11, 2000
23
<PAGE> 24
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
4.7.8(1) -- Seventh Supplemental Indenture, dated as of January 18,
2000, to the Indenture, dated as of February 14, 1996,
governing the 9 3/8% Senior Subordinated Notes due 2004
of AMFM Operating Inc.
4.8.6(1) -- Fifth Supplemental Indenture, dated as of January 18,
2000, to the Indenture, dated as of June 24, 1997,
governing the 8 3/4% Senior Subordinated Notes due 2007
of AMFM Operating Inc.
4.9.5(1) -- Fifth Supplemental Indenture, dated as of January 18,
2000, to the Indenture, dated as of October 28, 1997,
governing the 10 1/2% Senior Subordinated Notes due 2007
of AMFM Operating Inc.
4.10.4(1) -- Third Supplemental Indenture, dated as of January 18,
2000, to the Indenture, dated as of December 22, 1997,
governing the 8 1/8% Senior Subordinated Notes due 2007
of AMFM Operating Inc.
4.11.4(1) -- Third Supplemental Indenture, dated as of January 18,
2000, to the Indenture, dated as of September 30, 1998,
governing the 9% Senior Subordinated Notes due 2008 of
AMFM Operating Inc.
4.12.4(1) -- Third Supplemental Indenture, dated as of January 18,
2000, to the Indenture, dated as of November 17, 1998,
governing the 8% Senior Subordinated Notes due 2008 of
AMFM Operating Inc.
10.4.2* -- First Amendment to Chancellor Holdings Corp. 1994
Director Stock Option Plan.
10.5.2* -- First Amendment to 1995 Stock Option Plan for executive
officers and key employees of Evergreen Media
Corporation.
10.6.2* -- First Amendment to Chancellor Broadcasting Company 1996
Stock Award Plan.
10.7.2* -- First Amendment to Amended and Restated Chancellor Media
Corporation Stock Option Plan for Non-Employee Directors.
10.7.3* -- Second Amendment to Amended and Restated Chancellor Media
Corporation Stock Option Plan for Non-Employee Directors.
10.8.3* -- Second Amendment to Capstar Broadcasting Corporation 1998
Stock Option Plan.
10.9.2* -- First Amendment to Chancellor Media Corporation 1998
Stock Option Plan.
10.9.3* -- Second Amendment to Chancellor Media Corporation 1998
Stock Option Plan.
10.10.3* -- Second Amendment to AMFM Inc. 1999 Stock Option Plan.
10.12.3(1) -- Separation Agreement, dated as of February 16, 2000,
among AMFM Inc., AMFM Operating Inc. and James E. de
Castro.
27.1* -- Financial Data Schedule of AMFM Inc.
</TABLE>
- ---------------
* Filed herewith.
(1) Incorporated by reference to Exhibits to AMFM Inc.'s Annual Report on Form
10-K for the year ended December 31, 1999.
<PAGE> 1
EXHIBIT 10.4.2
AMFM INC.
FIRST AMENDMENT TO
CHANCELLOR HOLDINGS CORP.
1994 DIRECTOR STOCK OPTION PLAN
THIS FIRST AMENDMENT TO THE CHANCELLOR HOLDINGS CORP. 1994 DIRECTOR
STOCK OPTION PLAN (this "Amendment") is made and adopted by AMFM Inc., a
Delaware corporation (the "Company"), effective as of March 31, 2000.
RECITALS
WHEREAS, the Company is the successor in interest to the obligations of
Chancellor Holdings Corp. under the Chancellor Holdings Corp. 1994 Director
Stock Option Plan (the "Plan");
WHEREAS, in contemplation of the consummation of the merger (the "Clear
Channel Merger") of CCU Merger Sub, Inc., a wholly-owned subsidiary of Clear
Channel Communications, Inc., a Texas corporation, with and into the Company,
the Board of Directors of the Company approved this Amendment to amend the terms
and provisions of the Plan; and
WHEREAS, any capitalized term used herein, and not otherwise defined
herein, shall have the meaning set forth in the Plan.
AMENDMENT
NOW, THEREFORE, the Plan is amended as follows:
1. Section 9 of the Plan is amended and restated in its entirety to
read as follows:
9. Assignment or Transfer
a. The Board of Directors or the
Committee may, in its sole
discretion, permit a Director
Participant to transfer all or any
portion of an Option, or authorize
all or a portion of any Option to
be granted to a Director
Participant to be on terms which
permit transfer by such Director
Participant to any individual,
firm, company, corporation,
partnership, trust or other entity
(a "Permitted Transferee"),
including pursuant to domestic
relations orders entered or
approved by a court of competent
jurisdiction upon delivery to the
Company of written notice of such
transfer and a certified copy of
such order; provided that
subsequent transfers of Options
transferred as provided above
<PAGE> 2
shall be prohibited except
subsequent transfers back to the
original Director Participant.
b. Except as expressly permitted by Section
9(a), Options requiring exercise shall not
be transferable other than by will or the
laws of descent and distribution. In the
event that a legal representative has been
appointed in connection with the disability
of an Director Participant, the Director
Participant's Options may be exercised by
the legal representative.
c. Following the transfer of any Option as
contemplated by Sections 9(a) and 9(b), (A)
such Option shall continue to be subject to
the same terms and conditions as were
applicable immediately prior to transfer,
provided that the term "Director
Participant" shall be deemed to refer to the
Permitted Transferee or the estate or heirs
of a deceased Director Participant, as
applicable, to the extent appropriate to
enable the Director Participant to exercise
the transferred Option in accordance with
the terms of this Plan and applicable law,
(B) the provisions of Sections 6(d), 6(e)
and 6(f) hereof shall continue to be applied
with respect to the original Director
Participant and, following the occurrence of
any such events described therein the
Options shall be exercisable by the
Permitted Transferee, the recipient under a
domestic relations order, or the estate or
heirs of a deceased Director Participant, as
applicable, only to the extent and for the
periods specified in Sections 6(d), 6(e) and
6(f), and (C) in the discretion of the Board
of Directors or the Committee, all voting
control in the Common Stock transferred
pursuant to the exercise of Options shall be
retained in the original Director
Participant.
d. Any Director Participant desiring to
transfer an Option as permitted under this
Section 9 shall make application therefor in
the manner and time specified by the Board
of Directors or the Committee and shall
comply with such other requirements as the
Board of Directors or the Committee may
require to assure compliance with all
applicable tax and securities laws. The
Board of Directors of the Committee shall
not give permission for such a transfer if
(i) it would give rise to short-swing
liability under Section 16(b) of the
Exchange Act, or (ii) it may not be made in
compliance with all applicable federal,
state and foreign securities laws.
2. Except as expressly set forth herein, the Plan shall remain in full
force and effect without further amendment or modification.
-2-
<PAGE> 3
IN WITNESS WHEREOF, the Company, acting by and through its officer
hereunto duly authorized, has executed this Amendment effective as of the date
first written above.
AMFM INC.
By: /s/ W. Schuyler Hansen
--------------------------------------
Name: W. Schuyler Hansen
Title: Senior Vice President and
Chief Accounting Officer
-3-
<PAGE> 1
EXHIBIT 10.5.2
AMFM INC.
FIRST AMENDMENT TO
1995 STOCK OPTION PLAN FOR
EXECUTIVE OFFICERS AND KEY EMPLOYEES OF
EVERGREEN MEDIA CORPORATION
THIS FIRST AMENDMENT TO THE 1995 STOCK OPTION PLAN FOR EXECUTIVE
OFFICERS AND KEY EMPLOYEES OF EVERGREEN MEDIA CORPORATION (this "Amendment") is
made and adopted by AMFM Inc., a Delaware corporation (the "Company"), effective
as of March 31, 2000.
RECITALS
WHEREAS, the Company is the successor in interest to the obligations of
Evergreen Media Corporation under the 1995 Stock Option Plan for Executive
Officers and Key Employees of Evergreen Media Corporation (the "Plan");
WHEREAS, in contemplation of the consummation of the merger (the "Clear
Channel Merger") of CCU Merger Sub, Inc., a wholly-owned subsidiary of Clear
Channel Communications, Inc., a Texas corporation, with and into the Company,
the Board of Directors of the Company approved this Amendment to amend the terms
and provisions of the Plan; and
WHEREAS, any capitalized term used herein, and not otherwise defined
herein, shall have the meaning set forth in the Plan.
AMENDMENT
NOW, THEREFORE, the Plan is amended as follows:
1. Section 5.1 of the Plan is amended and restated in its
entirety to read as follows:
Section 5.1 - Person Eligible to Exercise
Except as provided in Section 7.1, during the
lifetime of the Optionee, only he may exercise an Option (or
any portion thereof) granted to him. After the death of the
Optionee, any exercisable portion of an Option may, prior to
the time when such portion becomes unexercisable under the
Plan or the applicable Stock Option Agreement, be exercised by
his personal representative or by any person empowered to do
so under the deceased Optionee's will or under the then
applicable laws of descent and distribution.
2. Section 5.7 is amended and restated in its entirety to read as
follows:
<PAGE> 2
Section 5.7 - Assignment or Transfer
(a) Transfer of Incentive Stock Options. Incentive
Options are not transferrable by an Optionee other than by
will or the laws of descent and distribution.
(b) Transfer of Non-Qualified Options.
(i) Permitted Transferees. The Board or the
Committee may, in its sole discretion, permit an
Optionee to transfer all or any portion of a
Non-Qualified Option, or authorize all or a portion
of any Non-Qualified Option to be granted to an
Optionee to be on terms which permit transfer by such
Optionee to any individual, firm, company,
corporation, partnership, trust or other entity (a
"Permitted Transferee"), including pursuant to
domestic relations orders entered or approved by a
court of competent jurisdiction upon delivery to the
Company of written notice of such transfer and a
certified copy of such order; provided that
subsequent transfers of Non- Qualified Options
transferred as provided above shall be prohibited
except subsequent transfers back to the original
Optionee.
(ii) Other Transfers and Exercise Rights.
Except as expressly permitted by Section 5.7(b)(i),
Non-Qualified Options requiring exercise shall not be
transferable other than by will or the laws of
descent and distribution. In the event that a legal
representative has been appointed in connection with
the disability of an Optionee, the Optionee's options
may be exercised by the legal representative.
(iii) Effect of Transfer. Following the
transfer of any Non-Qualified Option as contemplated
by Sections 5.7(b)(i) and 5.7(b)(ii), (A) such
Non-Qualified Option shall continue to be subject to
the same terms and conditions as were applicable
immediately prior to transfer, provided that the term
"Optionee" shall be deemed to refer to the Permitted
Transferee or the estate or heirs of a deceased
Optionee, as applicable, to the extent appropriate to
enable the Optionee to exercise the transferred
Non-Qualified Option in accordance with the terms of
this Plan and applicable law and (B) the provisions
of Sections 4.3 and 4.4 hereof shall continue to be
applied with respect to the original Optionee and,
following the occurrence of any such events described
therein the Options shall be exercisable by the
Permitted Transferee, the recipient under a domestic
relations order, or the estate or heirs of a deceased
Optionee, as applicable, only to the extent and for
the periods specified in Sections 4.3 and 4.4, and
(C) in the discretion of the Board or the Committee,
all voting control in the Common Stock transferred
pursuant to the exercise of Non-Qualified Options
shall be retained in the original Optionee.
(c) Procedures and Restrictions. Any Optionee
desiring to transfer an Option as permitted under Section
5.7(a) or 5.7(b) shall make application therefor in the manner
and time specified by the Board or the Committee and shall
comply with
-2-
<PAGE> 3
such other requirements as the Board or the Committee may
require to assure compliance with all applicable tax and
securities laws. The Board or the Committee shall not give
permission for such a transfer if (i) it would give rise to
short-swing liability under Section 16(b) of the Exchange Act,
or (ii) it may not be made in compliance with all applicable
federal, state and foreign securities laws.
3. Except as expressly set forth herein, the Plan shall remain in full
force and effect without further amendment or modification.
-3-
<PAGE> 4
IN WITNESS WHEREOF, the Company, acting by and through its officer
hereunto duly authorized, has executed this Amendment effective as of the date
first written above.
AMFM INC.
By: /s/ W. Schuyler Hansen
-------------------------------
Name: W. Schuyler Hansen
Title: Senior Vice President and
Chief Accounting Officer
-4-
<PAGE> 1
EXHIBIT 10.6.2
AMFM INC.
FIRST AMENDMENT TO
CHANCELLOR BROADCASTING COMPANY
STOCK AWARD PLAN
THIS FIRST AMENDMENT TO THE CHANCELLOR BROADCASTING COMPANY STOCK AWARD
PLAN (this "Amendment") is made and adopted by AMFM Inc., a Delaware corporation
(the "Company"), effective as of March 31, 2000.
RECITALS
WHEREAS, the Company is the successor in interest to the obligations of
Chancellor Broadcasting Company under the Chancellor Broadcasting Company Stock
Award Plan (the "Plan");
WHEREAS, in contemplation of the consummation of the merger (the "Clear
Channel Merger") of CCU Merger Sub, Inc., a wholly-owned subsidiary of Clear
Channel Communications, Inc., a Texas corporation, with and into the Company,
the Board of Directors of the Company approved this Amendment to amend the terms
and provisions of the Plan; and
WHEREAS, any capitalized term used herein, and not otherwise defined
herein, shall have the meaning set forth in the Plan.
AMENDMENT
NOW, THEREFORE, the Plan is amended as follows:
1. Section 12 shall be amended and restated in its entirety to
read as follows:
12. TRANSFERABILITY
(a) General. Each Stock Award granted under the Plan that is
not a Nonqualified Stock Option shall not be transferable otherwise than by will
or the laws of descent and distribution, and shall be exercisable, during the
participant's lifetime, only by the participant. In the event of the death of a
participant, each Stock Option theretofore granted to him or her shall be
exercisable during such period after his or her death as the Committee shall in
its discretion set forth in such option or right on the date of grant and then
only by the executor or administrator of the estate of the deceased participant
or the person or persons to whom the deceased participant's rights under the
Stock Option shall pass by will or the laws of descent and distribution.
<PAGE> 2
(b) Nonqualified Stock Options
(i) Permitted Transferees. The Board or the Committee
may, in its sole discretion, permit a participant to transfer all or
any portion of a Nonqualified Stock Option, or authorize all or a
portion of any Nonqualified Stock Option to be granted to a participant
to be on terms which permit transfer by such participant to any
individual, firm, company, corporation, partnership, trust or other
entity (a "Permitted Transferee"), including pursuant to domestic
relations orders entered or approved by a court of competent
jurisdiction upon delivery to the Company of written notice of such
transfer and a certified copy of such order; provided that subsequent
transfers of Nonqualified Stock Options transferred as provided above
shall be prohibited except subsequent transfers back to the original
participant.
(ii) Other Transfers and Exercise Rights. Except as
expressly permitted by Section 12(b)(i), Nonqualified Stock Options
requiring exercise shall not be transferable other than by will or the
laws of descent and distribution. In the event that a legal
representative has been appointed in connection with the Disability of
an participant, the participant's options may be exercised by the legal
representative.
(iv) Effect of Transfer. Following the transfer of
any Nonqualified Stock Option as contemplated by Sections 12(b)(i) and
12(b)(ii), (A) such Nonqualified Stock Option shall continue to be
subject to the same terms and conditions as were applicable immediately
prior to transfer, provided that the term "participant" shall be deemed
to refer to the Permitted Transferee or the estate or heirs of a
deceased participant, as applicable, to the extent appropriate to
enable the participant to exercise the transferred Nonqualified Stock
Option in accordance with the terms of this Plan and applicable law and
(B) the provisions of Sections 7(e) and 7(g) hereof shall continue to
be applied with respect to the original participant and, following the
occurrence of any such events described therein the Nonqualified Stock
Options shall be exercisable by the Permitted Transferee, the recipient
under a domestic relations order, or the estate or heirs of a deceased
participant, as applicable, only to the extent and for the periods
specified in Sections 7(e) and 7(g), and (C) in the discretion of the
Board or the Committee, all voting control in the securities
transferred pursuant to the exercise of Nonqualified Stock Options
shall be retained in the original participant.
(c) Procedures and Restrictions. Any participant desiring to
transfer a Non-Qualified Stock Option as permitted under Section 12(b) shall
make application therefor in the manner and time specified by the Board or the
Committee and shall comply with such other requirements as the Board or the
Committee may require to assure compliance with all applicable tax and
securities laws. The Board or the Committee shall not give permission for such a
transfer if (i) it would give rise to short-swing liability under Section 16(b)
of the Exchange Act, or (ii) it may not be made in compliance with all
applicable federal, state and foreign securities laws.
2
<PAGE> 3
2. Except as expressly set forth herein, the Plan shall remain in full
force and effect without further amendment or modification.
IN WITNESS WHEREOF, the Company, acting by and through its officer
hereunto duly authorized, has executed this Amendment effective as of the date
first written above.
AMFM INC.
By: /s/ W. Schuyler Hansen
-------------------------------
Name: W. Schuyler Hansen
Title: Senior Vice President and
Chief Accounting Officer
3
<PAGE> 1
EXHIBIT 10.7.2
FIRST AMENDMENT OF THE AMENDED AND RESTATED
CHANCELLOR MEDIA CORPORATION
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
This First Amendment of the Amended and Restated Chancellor Media
Corporation Stock Option Plan for Non-Employee Directors (the "Plan") dated as
of this 13th day of July, 1999, but effective as of the original date of
adoption of the Plan, by AMFM Inc. (formerly known as Chancellor Media
Corporation), a Delaware corporation (the "Company").
WHEREAS, each of the Board of Directors of the Company and the
stockholders of the Company have heretofore adopted and approved the Plan;
WHEREAS, as of the date hereof, the Company has changed its name
from Chancellor Media Corporation to AMFM Inc. pursuant to that certain merger
of July 13, 1999 (the "Merger") according to the Agreement and Plan of Merger,
dated as of August 26, 1998, and amended and restated as of April 29, 1999, by
and among the Company, Capstar Broadcasting Corporation, a Delaware corporation,
CBC Acquisition Company, Inc., a Delaware corporation, and CMC Merger Sub, Inc.,
a Delaware corporation and a wholly-owned subsidiary of the Company; and
WHEREAS, the Company desires to amend the Plan to permit the
assignment of options thereunder in certain circumstances;
NOW, THEREFORE, the Plan is hereby amended as follows:
1. TITLE OF PLAN.
The title of the Plan, as set forth on the first page of the Plan,
is hereby amended to read, in its entirety, as follows:
"THE AMENDED AND RESTATED
AMFM INC. STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS"
2. SECTION 1.2.
Section 1.2 is amended and restated to read, in its entirety, as
follows:
"Company" shall mean AMFM Inc., a Delaware corporation. In
addition, "Company" shall mean any corporation assuming, or issuing new stock
options in substitution for, Options outstanding under the Plan."
<PAGE> 2
3. SECTION 1.8.
Section 1.8 is amended and restated to read, in its entirety, as
follows:
""Plan" shall mean The Amended and Restated AMFM Inc. Stock
Option Plan for Non-Employee Directors."
4. SECTION 7.1.
Section 7.1 is amended and restated to read, in its entirety, as
follows:
"Subject to the immediately following sentence, no Option or
interest or right therein or part thereof shall be liable for the debts,
contracts or engagements of the Optionee or his successors in interest or shall
be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect.
Notwithstanding the foregoing, nothing in this Section 7.1 shall prevent:
(a) transfers by will or by the applicable laws of descent and
distribution;
(b) any Optionee who is serving as a non-employee director of the
Company, at the request of the Optionee's employer (the "Employer") from having
an Option issued directly in the name of, or assigning or otherwise transferring
an Option to, the Employer or any entity affiliated with the Employer; or
(c) any Optionee from having an Option issued directly in the
name of, or assigning or otherwise transferring an Option to, a trust or limited
partnership established for the benefit of such Optionee's spouse, siblings,
parents, children and/or grandchildren, subject to the approval of the Board.
If an Option is issued, assigned or transferred pursuant to subsections
(b) or (c) above, the same terms and conditions of the Option as would have been
applicable if the Optionee held the Option shall apply to the applicable trust
or limited partnership."
In all other respects, the Plan is ratified and confirmed.
AMFM INC. (formerly known as
CHANCELLOR MEDIA CORPORATION)
By: /s/ Kathy Archer
--------------------------------------
Name: Kathy Archer
Title: Vice President
<PAGE> 1
EXHIBIT 10.7.3
AMFM INC.
SECOND AMENDMENT TO
AMENDED AND RESTATED AMFM INC.
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
THIS SECOND AMENDMENT TO THE AMENDED AND RESTATED CHANCELLOR MEDIA
CORPORATION STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS (this "Amendment") is
made and adopted by AMFM Inc., a Delaware corporation (formerly Chancellor Media
Corporation, the "Company"), effective as of March 31, 2000.
RECITALS
WHEREAS, in contemplation of the consummation of the merger (the "Clear
Channel Merger") of CCU Merger Sub, Inc., a wholly-owned subsidiary of Clear
Channel Communications, Inc., a Texas corporation, with and into the Company,
the Board of Directors of the Company approved this Amendment to amend the terms
and provisions of the Amended and Restated Chancellor Media Corporation Stock
Option Plan for Non-Employee Directors (the "Plan"); and
WHEREAS, any capitalized term used herein, and not otherwise defined
herein, shall have the meaning set forth in the Plan.
AMENDMENT
NOW, THEREFORE, the Plan is amended as follows:
1. Section 5.1 of the Plan is amended and restated in its
entirety to read as follows:
Section 5.1 - Person Eligible to Exercise
Except as provided in Section 7.1, during the
lifetime of the Optionee, only he may exercise an Option
granted to him, or any portion thereof. After the death of the
Optionee, any exercisable portion of an Option may, prior to
the time when such portion becomes unexercisable under Section
4.4 or Section 4.7, be exercised by his personal
representative or by any person empowered to do so under the
deceased Optionee's will or under the then applicable laws of
descent and distribution.
2. Section 7.1 of the Plan is amended and restated in its
entirety to read as follows:
<PAGE> 2
Section 7.1 - Assignment or Transfer
(a) No Option or interest or right therein shall be
liable for the debts, contracts or engagements of the Optionee
or his successors in interest or, subject to the remainder of
this Section 7.1, shall be transferable by the Optionee.
(b) The Board may, in its sole discretion, permit an
Optionee to transfer all or any portion of an Option, or
authorize all or a portion of any Option to be granted to an
Optionee to be on terms which permit transfer by such Optionee
to any individual, firm, company, corporation, partnership,
trust or other entity (a "Permitted Transferee"), including
pursuant to domestic relations orders entered or approved by a
court of competent jurisdiction upon delivery to the Company
of written notice of such transfer and a certified copy of
such order; provided that subsequent transfers of Options
transferred as provided above shall be prohibited except
subsequent transfers back to the original Optionee.
(c) In the Board's sole discretion, an Optionee who
is serving as a non-employee director of the Company, at the
request of the Optionee's employer (the "Employer), may direct
that an Option be issued directly in the name of, or assign or
otherwise transfer an Option to, the Employer or any person
affiliated with the Employer.
(d) Except as expressly permitted by Sections 7.1(b)
and 7.1(c), Options requiring exercise shall not be
transferable other than by will or the laws of descent and
distribution. In the event that a legal representative has
been appointed in connection with the disability of an
Optionee, the Optionee's Options may be exercised by the legal
representative.
(e) Following the transfer of any Option as
contemplated by Sections 7.1(b), 7.1(c) and 7.1(d), (A) such
Option shall continue to be subject to the same terms and
conditions as were applicable immediately prior to transfer,
provided that the term "Optionee" shall be deemed to refer to
the Permitted Transferee or the estate or heirs of a deceased
Optionee, as applicable, to the extent appropriate to enable
the Optionee to exercise the transferred Option in accordance
with the terms of this Plan and applicable law, (B) the
provisions of subsection 4.4(b) hereof shall continue to be
applied with respect to the original Optionee and, following
the occurrence of any such events described therein the
Options shall be exercisable by the Permitted Transferee, the
recipient under a domestic relations order, or the estate or
heirs of a deceased Optionee, as applicable, only to the
extent and for the period specified in subsection 4.4(b), and
(C) in the discretion of the Board, all voting control in the
Common Stock transferred pursuant to the exercise of Options
shall be retained in the original Optionee.
-2-
<PAGE> 3
(f) Any Optionee desiring to transfer an Option as
permitted under this Section 7.1 shall make application
therefor in the manner and time specified by the Board and
shall comply with such other requirements as the Board may
require to assure compliance with all applicable tax and
securities laws. The Board shall not give permission for such
a transfer if (i) it would give rise to short-swing liability
under Section 16(b) of the Exchange Act, or (ii) it may not be
made in compliance with all applicable federal, state and
foreign securities laws.
3. Except as expressly set forth herein, the Plan shall remain in full
force and effect without further amendment or modification.
IN WITNESS WHEREOF, the Company, acting by and through its officer
hereunto duly authorized, has executed this Amendment effective as of the date
first written above.
AMFM INC.
By: /s/ W. Schuyler Hansen
----------------------------
Name: W. Schuyler Hansen
Title: Senior Vice President and
Chief Accounting Officer
-3-
<PAGE> 1
EXHIBIT 10.8.3
AMFM INC.
SECOND AMENDMENT TO THE
CAPSTAR BROADCASTING CORPORATION
1998 STOCK OPTION PLAN
THIS SECOND AMENDMENT TO THE CAPSTAR BROADCASTING CORPORATION 1998
STOCK OPTION PLAN (this "Amendment") is made and adopted by AMFM Inc., a
Delaware corporation (the "Corporation"), effective as of March 31, 2000.
RECITALS
WHEREAS, the Corporation assumed all of the obligations of Capstar
Broadcasting Corporation ("CBC") under the Capstar Broadcasting Corporation 1998
Stock Option Plan, as amended (the "Plan"), upon the merger of CBC with and into
CBC Acquisition Company, Inc., a Delaware corporation and wholly-owned
subsidiary of the Corporation; and
WHEREAS, in contemplation of the consummation of the merger (the "Clear
Channel Merger") of CCU Merger Sub, Inc., a Delaware corporation and
wholly-owned subsidiary of Clear Channel Communications, Inc., a Texas
corporation, with and into the Corporation, the Board of Directors of the
Corporation approved this Amendment to amend the terms and provisions of the
Plan; and
WHEREAS, any capitalized term used herein, and not otherwise defined
herein, shall have the meaning set forth in the Plan.
AMENDMENT
NOW, THEREFORE, the Plan is hereby amended as follows:
1. Section 11 is amended and restated in its entirety to read as
follows:
11. Assignment or Transfer. Except as provided in this Section 11,
during the lifetime of an optionee, Options granted to him or her
hereunder shall be exercisable only by the optionee or by the
optionee's legal representative in the event that a legal
representative has been appointed in connection with the Disability of
the optionee.
(a) Transfer of Incentive Options. Incentive Options are not
transferrable by an optionee other than by will or the laws of
descent and distribution.
(b) Transfer of Non-Qualified Options.
<PAGE> 2
(i) Permitted Transferees. The Board of Directors or the
Committee may, in its sole discretion, permit an
optionee to transfer all or any portion of a
Non-Qualified Option, or authorize all or a portion
of any Non-Qualified Option to be granted to an
optionee to be on terms which permit transfer by such
optionee to any other Person (a "Permitted
Transferee"), including pursuant to domestic
relations orders entered or approved by a court of
competent jurisdiction upon delivery to the Company
of written notice of such transfer and a certified
copy of such order; provided that subsequent
transfers of Non-Qualified Options transferred as
provided above shall be prohibited except subsequent
transfers back to the original optionee.
(ii) Other Transfers and Exercise Rights. Except as
expressly permitted by Section 11(b)(i),
Non-Qualified Options requiring exercise shall not be
transferable other than by will or the laws of
descent and distribution. In the event that a legal
representative has been appointed in connection with
the Disability of an optionee, the optionee's options
may be exercised by the legal representative.
(iv) Effect of Transfer. Following the transfer of any
Non-Qualified Option as contemplated by Sections
11(b)(i) and 11(b)(ii), (A) such Non-Qualified Option
shall continue to be subject to the same terms and
conditions as were applicable immediately prior to
transfer, provided that the term "optionee" shall be
deemed to refer to the Permitted Transferee or the
estate or heirs of a deceased optionee, as
applicable, to the extent appropriate to enable the
optionee to exercise the transferred Non-Qualified
Option in accordance with the terms of this Plan and
applicable law, (B) the provisions of Sections 6(e)
through (h) hereof (Sections 7(a)(iv) through (vii)
with respect to Options granted to Eligible
Non-Employees) shall continue to be applied with
respect to the original optionee and, following the
occurrence of any such events described therein the
Non-Qualified Options shall be exercisable by the
Permitted Transferee, the recipient under a domestic
relations order, or the estate or heirs of a deceased
Optionee, as applicable, only to the extent and for
the periods specified in Sections 6(e) through (h)
(Sections 7(a)(iv) through (vii) with respect to
Options granted to Eligible Non-Employees), and (C)
in the discretion of the Board of Directors or the
Committee, all voting control in the Common Stock
transferred pursuant to the exercise of Non-Qualified
Options shall be retained in the original optionee.
-2-
<PAGE> 3
(c) Procedures and Restrictions. Any optionee desiring to
transfer an Option as permitted under Section 11(a)
or 11(b) shall make application therefor in the
manner and time specified by the Board of Directors
or the Committee and shall comply with such other
requirements as the Board of Directors or the
Committee may require to assure compliance with all
applicable tax and securities laws. The Board of
Directors or the Committee shall not give permission
for such a transfer if (i) it would give rise to
short-swing liability under Section 16(b) of the
Exchange Act, or (ii) it may not be made in
compliance with all applicable federal, state and
foreign securities laws.
2. Except as expressly set forth herein, the Plan shall remain in full
force and effect without further amendment or modification.
IN WITNESS WHEREOF, the Corporation, acting by and through its officer
hereunto duly authorized, has executed this Amendment effective as of the date
first written above.
AMFM INC.
By: /s/ W. Schuyler Hansen
------------------------------
Name: W. Schuyler Hansen
Title: Senior Vice President and
Chief Accounting Officer
-3-
<PAGE> 1
EXHIBIT 10.9.2
FIRST AMENDMENT OF
THE 1998 CHANCELLOR MEDIA CORPORATION
STOCK OPTION PLAN
This First Amendment of the 1998 Chancellor Media Corporation
Stock Option Plan (the "Plan") is made effective as of the 13th day of July,
1999 by AMFM Inc. (formerly known as Chancellor Media Corporation), a Delaware
corporation (the "Company").
WHEREAS, each of the Board of Directors of the Company and the
stockholders of the Company have heretofore adopted and approved the Plan;
WHEREAS, as of the date hereof, the Company has changed its
name from Chancellor Media Corporation to AMFM Inc. pursuant to that certain
merger of July 13, 1999 (the "Merger") according to the Agreement and Plan of
Merger, dated as of August 26, 1998, and amended and restated as of April 29,
1999, by and among the Company, Capstar Broadcasting Corporation, a Delaware
corporation, CBC Acquisition Company, Inc., a Delaware corporation, and CMC
Merger Sub, Inc. a Delaware corporation and wholly-owned subsidiary of the
Company;
WHEREAS, the Company desires to amend the Plan to permit the
assignment and transfer of Options thereunder in certain circumstances.
NOW, THEREFORE, the Plan is amended as follows:
1. TITLE OF PLAN.
The title of the Plan, as set forth on the first page of the Plan, is
hereby amended to read, in its entirety, as follows:
"THE 1998 AMFM INC.
STOCK OPTION PLAN"
2. SECTION 1.7.
Section 1.7 is amended and restated to read, in its entirety, as
follows:
"Company. "Company" shall mean AMFM Inc., a Delaware corporation."
3. SECTION 1.20.
Section 1.20 is amended and restated to read, in its entirety, as
follows:
<PAGE> 2
"Plan. "Plan" shall mean this 1998 AMFM Inc. Stock Option Plan."
4. SECTION 7.1.
Section 7.1 of the Plan is amended in its entirety as follows:
"Not Transferable. Options under this Plan may not be sold, pledged,
assigned, or transferred in any manner other than by will or the laws of descent
and distribution or pursuant to a QDRO, unless and until such Options have been
exercised, or the shares underlying such Options have been issued, and all
restrictions applicable to such shares have lapsed; provided, however, that any
Optionee may, subject to the approval of the Committee, have an Option issued
directly in the name of, or assign or otherwise transfer an Option to, a trust
or limited partnership established for the benefit of such Optionee and his
spouse, siblings, parents, children and/or grandchildren. If an assignment or
other transfer if an Option is made to a trust or limited partnership with the
approval of the Committee, the same terms and conditions of the Option as would
have been applicable if the Optionee held the Option shall apply to such trust
or limited partnership, including, but not limited to, any limitations on the
vesting and exercisability of the Option by reason of the Optionee's termination
of employment. No Option or interest or right therein shall be liable for the
debts, contracts or engagements of the Optionee or his successors in interest or
shall be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect, except to
the extent that such disposition is permitted by the preceding sentence."
In all other respects, the Plan is ratified and confirmed.
AMFM INC. (formerly known as
CHANCELLOR MEDIA CORPORATION)
By: /s/ Kathy Archer
----------------------------------------
Name: Kathy Archer
Title: Vice President
<PAGE> 1
EXHIBIT 10.9.3
AMFM INC.
SECOND AMENDMENT TO THE 1998
AMFM INC. STOCK OPTION PLAN
THIS SECOND AMENDMENT TO THE 1998 AMFM INC. STOCK OPTION PLAN (this
"Amendment") is made and adopted by AMFM Inc., a Delaware corporation (formerly
Chancellor Media Corporation, the "Company"), effective as of March 31, 2000.
RECITALS
WHEREAS, in contemplation of the consummation of the merger (the "Clear
Channel Merger") of CCU Merger Sub, Inc., a Delaware corporation and
wholly-owned subsidiary of Clear Channel Communications, Inc., a Texas
corporation, with and into the Company, the Board of Directors of the Company
approved this Amendment to amend the terms and provisions of The 1998 AMFM Inc.
Stock Option Plan (the "Plan"); and
WHEREAS, any capitalized term used herein, and not otherwise defined
herein, shall have the meaning set forth in the Plan.
AMENDMENT
NOW, THEREFORE, the Plan is hereby amended as follows:
1. Section 7.1 is amended and restated in its entirety to read as
follows:
7.1 Assignment or Transfer.
(a) Transfer of Incentive Stock Options. Incentive Stock
Options are not transferrable by an Optionee other than by will or the
laws of descent and distribution.
(b) Transfer of Non-Qualified Stock Options.
(i) Permitted Transferees. The Board or the Committee
may, in its sole discretion, permit an Optionee to transfer
all or any portion of a Non- Qualified Stock Option, or
authorize all or a portion of any Non-Qualified Stock Option
to be granted to an Optionee to be on terms which permit
transfer by such Optionee to any individual, firm, company,
corporation, partnership, trust or other entity (a "Permitted
Transferee"), including pursuant to a QDRO entered or approved
by a court of competent jurisdiction upon delivery to the
Company of written notice of such transfer and a certified
copy of such order; provided that subsequent transfers of Non-
Qualified
<PAGE> 2
Stock Options transferred as provided above shall be
prohibited except subsequent transfers back to the original
Optionee.
(ii) Other Transfers and Exercise Rights. Except as
expressly permitted by Section 7.1(b)(i), Non-Qualified Stock
Options requiring exercise shall not be transferable other
than by will or the laws of descent and distribution. In the
event that a legal representative has been appointed in
connection with the disability of an Optionee, the Optionee's
Options may be exercised by the legal representative.
(iii) Effect of Transfer. Following the transfer of
any Non-Qualified Stock Option as contemplated by Sections
7.1(b)(i) and 7.1(b)(ii), (A) such Non-Qualified Stock Option
shall continue to be subject to the same terms and conditions
as were applicable immediately prior to transfer, provided
that the term "Optionee" shall be deemed to refer to the
Permitted Transferee or the estate or heirs of a deceased
Optionee, as applicable, to the extent appropriate to enable
the Optionee to exercise the transferred Non- Qualified Stock
Option in accordance with the terms of this Plan and
applicable law, (B) the provisions of Section 4.4 hereof shall
continue to be applied with respect to the original Optionee
and, following the occurrence of any such events described
therein, the Non-Qualified Options shall be exercisable by the
Permitted Transferee, the recipient under a domestic relation
order, or the estate or heirs of a deceased Optionee, as
applicable, only to the extent and for the periods specified
in Section 4.4, and (C) in the discretion of the Board or the
Committee, all voting control in the Common Stock transferred
pursuant to the exercise of Non-Qualified Stock Options shall
be retained in the original Optionee.
(c) Procedures and Restrictions. Any Optionee
desiring to transfer an Option as permitted under Section 7(a) or
7(b) shall make application therefor in the manner and time
specified by the Board or the Committee and shall comply with such
other requirements as the Board or the Committee may require to
assure compliance with all applicable tax and securities laws. The
Board or the Committee shall not give permission for such a transfer
if (i) it would give rise to short-swing liability under Section
16(b) of the Exchange Act, or (ii) it may not be made in compliance
with all applicable federal, state and foreign securities laws.
2. Except as expressly set forth herein, the Plan shall remain in full
force and effect without further amendment or modification.
2
<PAGE> 3
IN WITNESS WHEREOF, the Company, acting by and through its officer
hereunto duly authorized, has executed this Amendment effective as of the date
first written above.
AMFM INC.
By: /s/ W. Schuyler Hansen
------------------------------
Name: W. Schuyler Hansen
Title: Senior Vice President and
Chief Accounting Officer
3
<PAGE> 1
EXHIBIT 10.10.3
AMFM INC.
SECOND AMENDMENT TO THE
AMFM INC. 1999 STOCK OPTION PLAN
THIS SECOND AMENDMENT TO THE AMFM INC. 1999 STOCK OPTION PLAN (this
"Amendment") is made and adopted by AMFM Inc., a Delaware corporation (the
"Company"), effective as of March 31, 2000.
RECITALS
WHEREAS, in contemplation of the consummation of the merger (the "Clear
Channel Merger") of CCU Merger Sub, Inc., a Delaware corporation and
wholly-owned subsidiary of Clear Channel Communications, Inc., a Texas
corporation, with and into the Company, the Board of Directors of the Company
approved this Amendment to amend the terms and provisions of the AMFM Inc. 1999
Stock Option Plan, as amended (the "Plan"); and
WHEREAS, any capitalized term used herein, and not otherwise defined
herein, shall have the meaning set forth in the Plan.
AMENDMENT
NOW, THEREFORE, the Plan is hereby amended as follows:
1. Section 11 of the Plan is amended and restated in its entirety
to read as follows:
11. Assignment or Transfer. Except as provided in this Section
11, during the lifetime of an optionee, Options granted to him or her
hereunder shall be exercisable only by the optionee or by the
optionee's legal representative in the event that a legal
representative has been appointed in connection with the Disability of
the optionee.
a. Transfer of ISOs. ISOs are not transferrable
by an optionee other than by will or the
laws of descent and distribution.
b. Transfer of Non Qualified Options.
(i) Permitted Transferees. The Committee
may, in its sole discretion, permit an
optionee to transfer all or any portion
of a Non Qualified Option, or authorize
all or a portion of any Non Qualified
Option to be granted to an optionee to
be on terms which permit transfer by
such optionee, to any other Person (a
"Permitted Transferee"), including
pursuant to domestic relations orders
entered or approved by a court of
competent jurisdiction upon delivery to
the Company of
<PAGE> 2
written notice of such transfer and a
certified copy of such order; provided
that subsequent transfers of Non
Qualified Options transferred as
provided above shall be prohibited
except subsequent transfers back to the
original optionee.
(ii) Other Transfers and Exercise Rights.
Except as expressly permitted by
Section 11(b)(i), Non Qualified Options
requiring exercise shall not be
transferable other than by will or the
laws of descent and distribution. In
the event that a legal representative
has been appointed in connection with
the Disability of an optionee, the
optionee's options may be exercised by
the legal representative.
(iv) Effect of Transfer. Following the
transfer of any Non Qualified Option as
contemplated by Sections 11(b)(i) and
11(b)(ii), (A) such Non Qualified
Option shall continue to be subject to
the same terms and conditions as were
applicable immediately prior to
transfer, provided that the term
"optionee" shall be deemed to refer to
the Permitted Transferee or the estate
or heirs of a deceased optionee, as
applicable, to the extent appropriate
to enable the optionee to exercise the
transferred Non Qualified Option in
accordance with the terms of this Plan
and applicable law, (B) the provisions
of subsections 6(e) through (h) (or, in
the case of Value Options, subsections
7(f) through (i)) hereof shall continue
to be applied with respect to the
original optionee and, following the
occurrence of any such events described
therein the Non Qualified Options shall
be exercisable by the Permitted
Transferee, the recipient under a
domestic relations order, or the estate
or heirs of a deceased optionee, as
applicable, only to the extent and for
the periods specified in subsections
6(e) through (h) (or, in the case of
Value Options, subsections 7(f) through
(i)), and (C) in the discretion of the
Committee, all voting control in the
Common Stock transferred pursuant to
the exercise of Non Qualified Options
shall be retained in the original
optionee.
c. Procedures and Restrictions. Any optionee
desiring to transfer an Option as permitted
under Section 11(a) or 11(b) shall make
application therefor in the manner and time
specified by the Committee and shall comply
with such other requirements as the
Committee may require to assure compliance
with all applicable tax and securities laws.
The Committee shall not give permission for
such a transfer if (i) it would give rise to
short-swing liability under Section 16(b) of
the Exchange Act, or (ii) it may not be made
in compliance with all applicable federal,
state and foreign securities laws.
2. Except as expressly set forth herein, the Plan shall remain in full
force and effect without further amendment or modification.
2
<PAGE> 3
IN WITNESS WHEREOF, the Company, acting by and through its officer
hereunto duly authorized, has executed this Amendment effective as of the date
first written above.
AMFM INC.
By: /s/ W. Schuyler Hansen
------------------------------
Name: W. Schuyler Hansen
Title: Senior Vice President and
Chief Accounting Officer
3
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 3/31/00
CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK>0000894972
<NAME>AMFM INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 68,804
<SECURITIES> 0
<RECEIVABLES> 482,765
<ALLOWANCES> 27,385
<INVENTORY> 0
<CURRENT-ASSETS> 585,104
<PP&E> 563,023
<DEPRECIATION> 103,330
<TOTAL-ASSETS> 12,457,596
<CURRENT-LIABILITIES> 310,970
<BONDS> 5,783,388
0
0
<COMMON> 2,166
<OTHER-SE> 4,642,352
<TOTAL-LIABILITY-AND-EQUITY> 12,457,596
<SALES> 521,270
<TOTAL-REVENUES> 521,270
<CGS> 0
<TOTAL-COSTS> 308,088
<OTHER-EXPENSES> 273,786
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 123,645
<INCOME-PRETAX> (145,213)
<INCOME-TAX> (10,749)
<INCOME-CONTINUING> (155,526)
<DISCONTINUED> 0
<EXTRAORDINARY> 6,094
<CHANGES> 0
<NET-INCOME> (161,941)
<EPS-BASIC> (0.75)
<EPS-DILUTED> (0.75)
</TABLE>
