<PAGE> 1
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 2
CURRENT REPORT
--------------------
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JULY 1, 1999
--------------------
AMFM INC.
(Exact name of Registrant as specified in its charter)
- --------------------------------------------------------------------------------
DELAWARE 001-15145 75-2247099
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of incorporation) Identification Number)
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1845 WOODALL RODGERS FREEWAY, SUITE
1300 75201
DALLAS, TEXAS (Zip code)
(Address of principal
executive offices)
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Registrant's telephone number, including area code: (214) 922-8700
NOT APPLICABLE
(Former name or former address, if changed since last report)
- --------------------------------------------------------------------------------
================================================================================
<PAGE> 2
This amendment to the Current Report on Form 8-K dated July 1, 1999 and filed on
July 15, 1999, as amended on August 3, 1999, by AMFM Inc. is submitted 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 statements for
KFYI-AM and KKFR-FM as of June 30, 1999 and for the six months ended June 30,
1998 and 1999.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
The 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 are filed herewith
beginning on page F-1.
The historical combined financial statements for KFYI-AM and KKFR-FM as
of June 30, 1999 and for the six months ended June 30, 1998 and 1999
are filed herewith beginning on page F-10.
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMFM INC.
(Registrant)
By: /s/ W. Schuyler Hansen
-------------------------------------
W. Schuyler Hansen
Senior Vice President and
Chief Accounting Officer
Date: March 10, 2000
<PAGE> 4
CAPSTAR BROADCASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(THOUSANDS, EXCEPT PER SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1998 1999
------------ ------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 17,117 $ 10,466
Accounts receivable, net of allowance for doubtful
accounts of $8,352 and $7,942, respectively............. 112,846 118,195
Prepaid expenses and other current assets................. 20,121 29,246
---------- ----------
Total current assets............................... 150,084 157,907
Property and equipment, net................................. 248,920 266,480
Intangibles and other, net.................................. 4,240,378 4,438,811
Other non-current assets.................................... 23,620 43,261
---------- ----------
Total assets....................................... $4,663,002 $4,906,459
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt......................... $ 29,834 $ 66,883
Accounts payable.......................................... 15,387 11,523
Accrued liabilities....................................... 68,269 75,985
Income taxes payable...................................... 30,471 4,212
---------- ----------
Total current liabilities.......................... 143,961 158,603
Long-term debt, net of current portion.................... 1,748,755 1,956,398
Deferred income taxes..................................... 1,163,156 1,215,538
---------- ----------
Total liabilities.................................. 3,055,872 3,330,539
Commitments and contingencies
Redeemable preferred stock of subsidiaries:
Capstar Broadcasting Partners, Inc., $.01 par value,
10,000 shares authorized, 1,196 shares issued and
outstanding, aggregate liquidation preference of
$119,624 and $126,800, respectively..................... 113,699 122,183
Capstar Communications, Inc., Series E Cumulative
Exchangeable Preferred Stock, $.01 par value, 4,150
shares authorized, 1,266 and 1,346 shares issued and
outstanding, respectively, aggregate liquidation
preference of $133,944 and $142,398, respectively....... 148,669 156,444
Stockholders' equity:
Preferred stock, $.10 par value, 1,000 shares authorized,
none issued............................................. -- --
Common stock, Class A, voting $.01 par value, 750,000
shares authorized, 33,986 and 34,249 shares issued and
outstanding, respectively............................... 340 342
Common stock, Class B, nonvoting, $.01 par value, 150,000
shares authorized, 6,082 shares issued and
outstanding............................................. 61 61
Common stock, Class C, voting, $.01 par value, 150,000
shares authorized, 67,538 shares issued and
outstanding............................................. 675 675
Additional paid-in capital................................ 1,503,201 1,510,271
Stock subscriptions receivable............................ (2,694) (2,826)
Unearned compensation..................................... (4,893) (3,900)
Accumulated deficit....................................... (151,928) (207,330)
---------- ----------
Total stockholders' equity......................... 1,344,762 1,297,293
---------- ----------
Total liabilities and stockholders' equity......... $4,663,002 $4,906,459
========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-1
<PAGE> 5
CAPSTAR BROADCASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
-------------------
1998 1999
-------- --------
<S> <C> <C>
Gross broadcast revenue..................................... $194,349 $357,435
Less agency commissions..................................... (18,352) (32,920)
-------- --------
Net broadcast revenue....................................... 175,997 324,515
-------- --------
Operating expenses:
Programming, technical and news........................... 35,710 59,266
Sales and promotion....................................... 48,985 88,724
General and administrative................................ 30,801 45,706
Corporate expenses.......................................... 7,815 13,036
Corporate expenses -- noncash compensation.................. 22,469 6,912
LMA fees.................................................... 3,321 355
Depreciation and amortization............................... 30,401 73,651
Merger, nonrecurring and systems development expense........ -- 10,373
-------- --------
Operating income (loss)..................................... (3,505) 26,492
Other income (expense):
Interest expense.......................................... (38,444) (84,110)
Interest income........................................... 1,410 291
Equity in losses in Muzak Holdings LLC.................... -- (2,144)
Other..................................................... 68 (67)
-------- --------
Loss before benefit for income taxes, dividends and
accretion on preferred stock of subsidiaries and
extraordinary item........................................ (40,471) (59,538)
Benefit for income taxes.................................... 5,581 20,397
Dividends and accretion on preferred stock of
subsidiaries.............................................. 8,505 16,261
-------- --------
Loss before extraordinary item.............................. (43,395) (55,402)
Extraordinary item, loss on early extinguishment of debt.... 7,305 --
-------- --------
Net loss.................................................... $(50,700) $(55,402)
======== ========
Basic and diluted loss per common share:
Before extraordinary loss................................... $ (0.64) $ (0.51)
--------
Extraordinary loss.......................................... (0.11) --
-------- --------
Net loss.................................................... $ (0.75) $ (0.51)
======== ========
Weighted average common shares outstanding.................. 67,432 107,738
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-2
<PAGE> 6
CAPSTAR BROADCASTING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
-----------------------
1998 1999
----------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net cash provided by (used in) operating
activities...................................... $ 21,196 $ (2,473)
----------- ---------
Cash flows from investing activities:
Proceeds from sale of broadcasting property............... 221,429 11,297
Purchase of property and equipment........................ (15,508) (20,759)
Payments for acquisitions, net of cash acquired........... (1,613,133) (156,474)
Payments for pending acquisitions......................... (10,244) (2,428)
Other investing activities, net........................... (12,162) 6,258
----------- ---------
Net cash used in investing activities............. (1,429,618) (162,106)
----------- ---------
Cash flows from financing activities:
Proceeds from long-term debt and credit facilities........ 846,200 280,500
Repayment of long-term debt and credit facilities......... (650,870) (122,535)
Payments of financing related costs....................... (8,887) (1,932)
Net proceeds from issuance of common stock................ 1,186,815 1,895
Payments on subscribed stock.............................. 1,607 --
Purchase of common stock.................................. (484) --
Dividends paid on preferred stock......................... (2,429) --
----------- ---------
Net cash provided by financing activities......... 1,371,952 157,928
----------- ---------
Net increase (decrease) in cash and cash equivalents........ (36,470) (6,651)
Cash and cash equivalents at beginning of period............ 70,059 17,117
----------- ---------
Cash and cash equivalents at end of period.................. $ 33,589 $ 10,466
=========== =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-3
<PAGE> 7
CAPSTAR BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
NOTE 1 -- BASIS OF PRESENTATION
Information with respect to the six month periods ended June 30, 1998 and
1999 is unaudited. The accompanying unaudited consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
("GAAP") for interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by GAAP for complete financial
statements. In the opinion of management, the unaudited interim consolidated
financial statements contain all adjustments considered necessary for a fair
presentation. Operating results for the six month period ended June 30, 1999 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 1999, or for any other interim period. For further
information, refer to the consolidated financial statements and footnotes
thereto for the year ended December 31, 1998 for Capstar Broadcasting included
in the Form 10-K of Capstar Broadcasting (Commission File No. 001-14107).
The consolidated financial statements include the accounts of Capstar
Broadcasting, and its direct and indirect wholly-owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
NOTE 2 -- INCOME (LOSS) PER SHARE
Capstar Broadcasting computes earnings per share ("EPS") under the
provisions of SFAS No. 128 which establishes standards for computing and
presenting EPS.
At June 30, 1998 and 1999, Capstar Broadcasting had 3,080 and 6,500 options
and warrants to purchase common shares outstanding, respectively. These options
and warrants were excluded from the computation of diluted earnings per share as
their inclusion would be anti-dilutive given Capstar Broadcasting's net loss.
NOTE 3 -- AMFM MERGER
On July 13, 1999, AMFM Inc. (previously known as Chancellor Media
Corporation), a Delaware corporation ("AMFM"), acquired Capstar Broadcasting.
The acquisition was effected through the merger (the "Merger") of CMC Merger
Sub, Inc., a Delaware corporation and wholly-owned subsidiary of AMFM ("Sub"),
with and into Capstar Broadcasting, with Capstar Broadcasting as the surviving
corporation. The acquisition of Capstar Broadcasting by AMFM resulted in a
change of control of Capstar Broadcasting. As a result of the Merger, Capstar
Broadcasting became an indirect subsidiary of AMFM.
As a result of the Merger, all of the then outstanding shares of Class A
common stock, par value $0.01 per share, of Capstar Broadcasting ("Class A
Common Stock"), Class B common stock, par value $0.01 per share, of Capstar
Broadcasting ("Class B Common Stock"), and Class C common stock, par value $0.01
per share, of Capstar Broadcasting ("Class C Common Stock," and collectively
with the Class A Common Stock and the Class B Common Stock, the "Common Stock"),
were converted to the right to receive 0.4955 of a validly issued, fully paid
and nonassessable share of common stock, par value $0.01 per share, of AMFM
("AMFM Common Stock"). Based upon the number of shares of common stock
outstanding on May 19, 1999, the total consideration paid by AMFM in the Merger
was approximately 53.5 million shares of AMFM Common Stock. Parent also assumed
options, warrants and other equity rights of Capstar Broadcasting which
represent up to an additional 3.3 million shares of Parent Common Stock. Since
the acquisition occurred subsequent to June 30, 1999, no adjustments have been
recorded to the financial statements herein to reflect the acquisitions.
F-4
<PAGE> 8
CAPSTAR BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(THOUSANDS, EXCEPT PER SHARE AMOUNTS)
NOTE 4 -- RECENT ACCOUNTING PRONOUNCEMENT
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes accounting and reporting
standards for derivative instruments and for hedging activities. This
pronouncement, as amended by SFAS No. 137, is effective for all fiscal quarters
of fiscal years beginning after June 15, 2000. Management does not believe the
implementation of this accounting pronouncement will have a material effect on
its consolidated financial statements.
NOTE 5 -- ACQUISITIONS AND DISPOSITIONS OF BROADCASTING PROPERTIES
During the six months ended June 30, 1999, Capstar Broadcasting acquired 35
FM and 13 AM radio stations and related broadcast equipment as well as a
software development concern through several acquisitions, all of which have
been accounted for under the purchase method of accounting. Accordingly, the
purchase price has been allocated to the assets and liabilities acquired based
upon their fair values at the date of acquisition. The excess purchase price
over the fair value of net tangible assets acquired is allocated to intangible
assets, primarily FCC licenses. The results of operations associated with the
acquired radio stations have been included in the accompanying consolidated
financial statements from the dates of acquisition.
Acquisition activity during the six months ended June 30, 1999 was as
follows. All consideration paid for the acquisitions scheduled below consisted
solely of cash.
<TABLE>
<CAPTION>
STATIONS
ACQUIRED
---------
TRANSACTION FM AM DATE OF ACQUISITION PURCHASE OF COST
- ----------- --- --- ------------------- ----------- --------
<S> <C> <C> <C> <C> <C>
Appalachian Broadcasting Company,
Inc.................................. 1 -- February 1999 Assets $ 1,056
Noalmark Broadcasting Corp............. 1 1 March 1999 Assets 3,395
Champion Broadcasting Corporation...... 9 2 March 1999 Assets 12,539
R. Steven Hicks........................ 1 -- April 1999 Assets 9,857
Triathlon Broadcasting Company......... 22 10 April 1999 Stock 143,249
Citadel Broadcasting Company........... 1 -- April 1999 Assets 4,248
LAN International...................... -- -- June 1999 Assets 16,325
--------
$190,669
========
</TABLE>
F-5
<PAGE> 9
CAPSTAR BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The acquisitions during the six months ended June 30, 1999 are summarized
in the aggregate as follows:
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS
ENDED
JUNE 30,
1999
----------
<S> <C>
Consideration:
Cash................................................... $177,782
Acquisition costs...................................... 8,639
Exchange of assets..................................... 4,248
--------
Total.......................................... $190,669
========
Assets acquired:
Cash................................................... $ (858)
Accounts receivable.................................... 7,575
Prepaid expenses and other............................. 980
Property and equipment................................. 18,025
Intangible assets...................................... 304,992
Accounts payable....................................... (5,400)
Long-term debt......................................... (61,892)
Deferred income taxes.................................. (72,753)
--------
Total.......................................... $190,669
========
</TABLE>
On March 18, 1999, Capstar Broadcasting contributed to Muzak Holdings LLC
("Muzak Holdings") Capstar Broadcasting's Muzak affiliate territories in
Atlanta, Albany and Macon, Georgia and Ft. Myers, Florida in exchange for voting
membership units in Muzak Holdings. On May 3, 1999, Capstar Broadcasting
contributed to Muzak Holdings its Muzak affiliate territory located in Omaha,
Nebraska that Capstar Broadcasting acquired from Triathlon Broadcasting Company
on April 30, 1999, in exchange for additional voting membership units in Muzak
Holdings. The value of the membership units in Muzak Holdings that Capstar
Broadcasting then held was approximately $20,500, subject to a working capital
adjustment to be finalized. The investment in Muzak Holdings represents the book
value of the net assets contributed, which approximates fair market value. Upon
completion of the contribution of the Omaha affiliate territory, Capstar
Broadcasting then held approximately 22.87% of the then outstanding voting power
of Muzak Holdings.
During the six months ended June 30, 1999, Capstar Broadcasting disposed of
4 FM and 7 AM radio stations and related broadcast equipment through several
dispositions for aggregate consideration of approximately $18,758, including
$10,500 in cash, $7,559 in dividends to parent and $699 in broadcast properties.
The carrying value of net assets sold related to these stations approximated the
consideration received.
The following unaudited proforma summary presents the consolidated results
of operations for the six months ended June 30, 1998 and 1999 as if all the
acquisitions and dispositions completed through June 30, 1999 had occurred at
the beginning of 1998. These pro forma results have been prepared for
comparative
F-6
<PAGE> 10
CAPSTAR BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(THOUSANDS, EXCEPT PER SHARE AMOUNTS)
purposes only and do not purport to be indicative of what would have occurred
had the acquisitions and dispositions been made as of that date or of results
which may occur in the future.
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
--------------------
1998 1999
--------- --------
<S> <C> <C>
Net revenue................................................. $ 303,248 $332,157
Net loss.................................................... (100,215) (67,015)
Basic and diluted loss per common share..................... (0.93) (0.62)
</TABLE>
Subsequent to June 30, 1999, Capstar Broadcasting acquired 3 FM radio
stations and related broadcast equipment through acquisitions for aggregate
consideration in cash of approximately $13,000. These acquisitions were funded
with cash generated from operations.
Additionally, Capstar Broadcasting has entered into the following:
- Three agreements to acquire 3 FM stations for approximately $4,100; and
- Two agreements to dispose of 2 FM and 3 AM stations for a total of
approximately $4,450.
Upon completion of the pending transactions, Capstar Broadcasting will own
and operate 339 stations in primarily mid-sized markets located throughout the
United States. Consummation of each of the pending transactions is subject to
numerous conditions, including governmental approvals. Accordingly, the actual
date of consummation of each of the pending transactions may vary from the
anticipated closing dates. No assurances can be given that any or all of the
pending transactions will be consummated or that, if completed, they will be
successful.
NOTE 6 -- COMMITMENTS AND CONTINGENCIES
On July 13, 1998, Noddings Investment Group, Inc. and Noddings Warrant
Limited Partnership filed Civil Action No. 16538 in the Court of Chancery of the
State of Delaware in and for New Castle County against Capstar Communications.
Noddings alleges that Capstar Communications breached a warrant agreement that
Noddings contends requires Capstar Communications to permit Noddings to exercise
warrants in exchange for cash and shares of stock of SFX Entertainment, Inc.
Specifically, Noddings alleges that Capstar Communications, has violated the
warrant agreement by permitting Noddings to receive cash in exchange for its
warrants, but refusing to convey shares of stock of SFX Entertainment. In
addition to suing on its own behalf, Noddings is seeking to prosecute the action
on behalf of a putative class comprised of all persons who owned equivalent
warrants on April 21, 1998 (the date immediately following the record date of
the distribution of stock of SFX Entertainment to holders of the stock of SFX)
and their transferees and successors in interest. Noddings has requested that
the Court:
- declare that on the exercise of its warrants Capstar Communications
transmit to plaintiffs and members of the class that it seeks to
represent $22.3725 in cash per warrant and 0.2983 shares of common stock
of SFX Entertainment per warrant,
- require Capstar Communications to pay 0.2983 shares of common stock of
SFX Entertainment per warrant and, (if not previously paid) $22.3725 in
cash, to any putative class member that has exercised or exercises
warrants after April 20, 1998,
- in the alternative, award plaintiffs and members of the putative class
monetary damages in an amount to be determined at trial, and
- award costs and attorneys' fees.
F-7
<PAGE> 11
CAPSTAR BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(THOUSANDS, EXCEPT PER SHARE AMOUNTS)
In March 1999, the court issued an opinion dismissing two of Noddings' counts
and granted summary judgment in favor of Noddings on one count. The court held
that Noddings is entitled to 0.2983 shares of SFX Entertainment, Inc. stock per
warrant. Both parties have filed a notice of appeal.
On July 24, 1998 in connection with the 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, its
directors, and Capstar Broadcasting. The action was filed in the Court of
Chancery of the State of Delaware in and for New Castle County, Delaware. The
complaint alleges that Triathlon and its directors breached their fiduciary
duties to the class of depository shareholders by agreeing to a transaction with
Capstar Broadcasting that allegedly favored the Class A common shareholders of
Triathlon at the expense of the depository shareholders. Capstar Broadcasting is
accused of knowingly aiding and abetting the breaches of fiduciary duties
allegedly committed by the other defendants. The complaint seeks to have the
action certified as a class action and seeks to enjoin the Triathlon acquisition
or, in the alternative, seeks monitory damages in an unspecified amount. On
February 12, 1999, the parties signed a Memorandum of Understanding that
provides for the settlement of the lawsuit. The amount of the settlement will
equal $0.11 additional consideration for each depository share owned by any
class member at the effective time of the Triathlon acquisition. Capstar
Broadcasting also agreed not to oppose plaintiff's counsel's application for
attorney's fees and expenses in the aggregate amount of $150. The proposed
settlement is contingent upon a confirmatory discovery by the plaintiff,
executive of a definitive settlement agreement and court approval.
Capstar Broadcasting is subject to various legal proceedings and claims
that arise in the ordinary course of its business. In the opinion of management,
the amount of ultimate liability with respect to these actions will not have a
material impact on the consolidated financial position or results of operations
or cash flows of Capstar Broadcasting.
NOTE 7 -- SEGMENT INFORMATION
In 1998, the Company adopted SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." The Company is engaged principally in
one line of business-ownership and management of radio broadcast stations
("Radio") which represents more than 95% of consolidated net revenue. Radio is
the Company's only reportable segment. Operating segments categorized as "Other"
include results of insignificant operations and income and expense not allocated
to reportable segments.
The Company evaluates the performance of its operating segments and
allocates resources to them based on their net revenue and broadcast cash flow
("BCF") which consists of operating income before merger, nonrecurring and
systems development expense; depreciation, amortization, LMA fees, non-cash
compensation expense, and corporate expenses.
The Company has developed an operating structure designed to manage a large
and growing number of radio stations throughout the United States. The Radio
segment is operationally organized into five regions.
F-8
<PAGE> 12
CAPSTAR BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The table below presents information about the reportable and "Other"
operating segments. The prior period's segment information has been restated to
conform with the current period's presentation. For the six months ended June
30, 1998 and 1999, segment data includes intersegment revenues.
<TABLE>
<CAPTION>
RADIO OTHER TOTAL
-------- ------- --------
<S> <C> <C> <C>
1998:
Net revenue............................................... $168,912 $ 8,146 $177,058
BCF....................................................... 60,002 1,560 61,562
1999:
Net revenue............................................... 316,827 11,565 328,392
BCF....................................................... 133,465 (950) 132,515
</TABLE>
A reconciliation of total segment net revenue to total consolidated net
revenue and of total segment BCF to total consolidated loss before benefit for
income taxes and extraordinary item, for the six months ended June 30, 1998 and
1999 is as follows:
<TABLE>
<CAPTION>
1998 1999
-------- --------
<S> <C> <C>
NET REVENUE
Total segment net revenue................................... $177,058 $328,392
Elimination of intersegment net revenue..................... (1,061) (3,877)
-------- --------
Consolidated net revenue.................................. $175,997 $324,515
======== ========
</TABLE>
<TABLE>
<CAPTION>
1998 1999
-------- --------
<S> <C> <C>
BCF
Total BCF for reportable segments........................... $ 61,562 $132,515
Corporate Expenses.......................................... (7,815) (13,036)
Corporate expenses -- noncash compensation.................. (22,469) (6,912)
LMA fees.................................................... (3,321) (355)
Depreciation and Amortization............................... (30,401) (73,651)
Merger, nonrecurring and other expense...................... -- (10,373)
Nonoperating expenses....................................... (36,966) (86,030)
Intercompany profit......................................... (1,061) (1,696)
-------- --------
Consolidated loss before income taxes and dividends and
accretion on preferred stock of subsidiaries and
extraordinary item........................................ $(40,471) $(59,538)
======== ========
</TABLE>
F-9
<PAGE> 13
KFYI-AM AND KKFR-FM
COMBINED STATEMENT OF ASSETS ACQUIRED
<TABLE>
<CAPTION>
JUNE 30, 1999
-------------
(UNAUDITED)
<S> <C>
Broadcast licenses, net of accumulated amortization of
$901,774.................................................. $1,159,425
Property and equipment:
Land...................................................... 1,225,800
Buildings and improvements................................ 724,117
Broadcast equipment....................................... 1,092,151
Office furniture and equipment............................ 807,873
----------
3,849,941
Less accumulated depreciation............................. 2,120,969
----------
1,728,972
----------
Total assets acquired............................. $2,888,397
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-10
<PAGE> 14
KFYI-AM AND KKFR-FM
COMBINED STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
------------------------
1999 1998
---------- ----------
(UNAUDITED)
<S> <C> <C>
Total revenue............................................... $7,283,832 $6,564,144
Less agency commissions..................................... (749,692) (688,621)
---------- ----------
Net revenue....................................... 6,534,140 5,875,523
---------- ----------
Direct operating expenses:
Programming, technical and news........................... 1,307,637 1,257,865
Sales and promotion....................................... 1,373,827 1,204,585
Station general and administrative........................ 942,338 1,016,146
Depreciation and amortization............................. 67,764 67,764
---------- ----------
3,691,566 3,546,360
---------- ----------
Excess of net revenues over direct operating expenses....... $2,842,574 $2,329,163
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-11
<PAGE> 15
KFYI-AM AND KKFR-FM
NOTES TO THE COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
(1) ORGANIZATION AND BASIS OF PRESENTATION
The accompanying combined financial statements include the accounts of
KFYI-AM and KKFR-FM (collectively, the "Company"). The Company operates two
commercial radio stations, KFYI-AM and KKFR-FM in Phoenix, Arizona. The Company
is wholly owned by The Broadcast Group, Inc. ("TBG").
In July 1999, TBG sold KFYI-AM and KKFR-FM to a subsidiary of AMFM Inc.
("AMFM"), formerly Chancellor Media Corporation, for $89,850,000. Additionally,
AMFM paid $150,000 for certain noncompetition agreements that were executed at
the date of purchase. The accompanying combined financial statements do not
reflect any adjustments relating to this transaction. AMFM has operated KFYI-AM
and KKFR-FM under a time brokerage agreement since November 5, 1998. Revenues
and direct operating expenses of the Company included in the combined statement
of revenues and direct operating expenses and recognized by AMFM in its
consolidated statement of operations amounted to net revenue of approximately
$6,534,000 and direct operating expenses of approximately $3,624,000 for the six
months ended June 30, 1999.
The accompanying combined statement of assets acquired and statements of
revenues and direct operating expenses have been prepared in accordance with
generally accepted accounting principles and were derived from the historical
accounting records of the Company. Significant intercompany balances and
transactions have been eliminated in combination.
The combined statement of assets acquired includes the assets of the
Company, which were acquired by AMFM in July 1999. Accordingly, this statement
excludes cash, accounts receivable, prepaid or other assets, accounts payable,
accrued expenses and other borrowings.
The combined statements of revenues and direct operating expenses include
the revenues and direct expenses directly attributable to each station. The
statements do not include corporate general and administrative expenses,
interest expense, income taxes or the fees earned by TBG pursuant to the time
brokerage agreement.
Complete financial statements, including historical balance sheets and
statements of cash flows, were not prepared as neither TBG nor AMFM has
segregated the related assets and liabilities for the stations in their
accounting records for the six months ended June 30, 1999.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Property and Equipment
Property and equipment are stated at cost less accumulated depreciation.
The Company continually evaluates the propriety of the carrying amount of
property and equipment to determine whether current events or circumstances
warrant adjustments to the carrying value. Repairs and maintenance costs are
charged to expense when incurred.
(b) Broadcast Licenses
The Company continually evaluates the propriety of the carrying amount of
broadcast licenses to determine whether current events or circumstances warrant
adjustment to the carrying value.
(c) Revenue Recognition
Revenue is derived primarily from the sale of commercial announcements to
local and national advertisers. Revenue is recognized as commercials are
broadcast.
F-12
<PAGE> 16
KFYI-AM AND KKFR-FM
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(d) Disclosure of Certain Significant Risks and Uncertainties
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
reported amounts of revenues and expenses. Actual results could differ from
those estimates.
(e) Unaudited Interim Financial Information
In the opinion of management, the unaudited interim combined statements of
revenues and direct operating expenses for the six months ended June 30, 1999
and 1998, reflect all adjustments, consisting of only normal and recurring
items, which are necessary for a fair presentation of the results for the
interim periods presented. The results for the interim periods are not
necessarily indicative of results to be expected for any other interim periods
or for the full year.
F-13
