<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM 8-K/A
Amendment No. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): NOVEMBER 19, 1999
-----------------------
AMFM OPERATING INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 000-22486 13-3649750
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of incorporation) Identification Number)
600 CONGRESS AVENUE
SUITE 1400 78701
AUSTIN, TEXAS (Zip code)
(Address of principal
executive offices)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (512) 340-7800
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 and filed on December 1,
1999 by AMFM Operating Inc., an indirect subsidiary of AMFM Inc., is submitted
to provide pro forma financial information for the November 19, 1999 completion
of the combination of the outstanding bonds, bank indebtedness and preferred
stock of AMFM Inc.'s direct and indirect subsidiaries into fewer entities
through a series of related transactions, including contributions of stock and
mergers of its direct and indirect subsidiaries.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) PRO FORMA FINANCIAL INFORMATION.
Pro forma information required pursuant to Article 11 of Regulation
S-X as of September 30, 1999 and for the year ended December 31, 1998 and the
nine months ended September 30, 1999 is filed herewith beginning on page P-1.
<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 OPERATING INC.
(Registrant)
By: /s/ W. Schuyler Hansen
---------------------------------------------
W. Schuyler Hansen
Senior Vice President and
Chief Accounting Officer
Date: December 17, 1999
<PAGE> 4
AMFM OPERATING INC.
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The unaudited pro forma combined condensed financial statements of AMFM
Operating Inc. ("AMFM Operating" or the "Company") reflect the November 19, 1999
combination of the outstanding bonds, bank indebtedness and preferred stock of
AMFM Inc.'s direct and indirect subsidiaries into fewer entities through a
series of related transactions, including contributions of stock and mergers of
its direct and indirect subsidiaries (the "Reorganization") and each of the
significant radio transactions completed by the Company or its predecessor
during 1998 and 1999 and the disposition of the Company's outdoor advertising
business. The Reorganization was completed by entities under common control.
Accordingly, the unaudited pro forma combined condensed financial statements
have been prepared as if the transactions subject to the Reorganization were
accounted for at historical cost in a manner similar to that in pooling of
interests accounting from the date of common control. The entities subject to
the Reorganization entered common control on July 13, 1999 with AMFM Inc.'s
acquisition of Capstar Broadcasting Corporation. The purchase method of
accounting has been used with respect to the other acquisitions reflected in the
unaudited pro forma combined condensed financial statements; accordingly the net
assets of the acquired companies have been adjusted to their estimated fair
values based upon a preliminary purchase price allocation.
The unaudited pro forma combined condensed balance sheet at September
30, 1999 was prepared based upon the historical balance sheet of Chancellor
Media Corporation of Los Angeles, predecessor to AMFM Operating ("CMCLA"),
adjusted for the Reorganization and certain related financing transactions, as
if such transactions had occurred on September 30, 1999. The unaudited pro forma
combined condensed statements of operations for the year ended December 31, 1998
and for the nine months ended September 30, 1999 give effect to the
Reorganization as if it occurred on January 1, 1998 and were prepared based upon
the historical statement of operations of CMCLA, adjusted to reflect the
operations of Capstar Radio Broadcasting Partners, Inc. ("Capstar Radio"), the
acquisition of KKFR-FM and KFYI-AM from The Broadcast Group, Inc., the
disposition of WMVP-AM to ABC, Inc., the disposition of CMCLA's outdoor
advertising business to Lamar Advertising Company and certain financing
transactions, as if such transactions had also occurred on January 1, 1998. Pro
forma adjustments relating to the 1998 acquisitions of Martin Media L.P., Martin
& MacFarlane, Inc. and certain affiliated companies and the outdoor
advertising division of Whiteco Industries, Inc. have not been included in the
pro forma financial statements due to the sale of the Company's outdoor
advertising business.
The unaudited pro forma combined condensed financial statements should be
read in conjunction with the historical financial statements of CMCLA and
Capstar Radio.
The unaudited pro forma combined condensed financial statements are not
necessarily indicative of the actual results of operations or financial position
that would have occurred had the Reorganization and the above described
acquisitions, dispositions, financing and other transactions of the Company or
its predecessor occurred on the dates indicated nor are they necessarily
indicative of future operating results or financial position.
P-1
<PAGE> 5
AMFM OPERATING INC.
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
AT SEPTEMBER 30, 1999
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
PRO FORMA
CMCLA CAPSTAR ADJUSTMENTS
HISTORICAL RADIO FOR OTHER AMFM
AT 9/30/99 HISTORICAL CAPSTAR PRO FORMA OPERATING
(PREDECESSOR) AT 9/30/99 RADIO(1) ADJUSTMENTS PRO FORMA
------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................... $ 24,781 $ 17,365 $ -- $ -- $ 42,146
Accounts receivable, net............................ 524,245 117,970 (153,872) -- 488,343
Other current assets................................ 85,136 20,541 -- -- 105,677
----------- ----------- ----------- --------- -----------
Total current assets........................ 634,162 155,876 (153,872) -- 636,166
Property and equipment, net........................... 196,247 268,622 -- -- 464,869
Intangible assets, net................................ 4,705,922 5,814,795 (10,629) -- 10,510,088
Other assets:
Investment in nonconsolidated affiliates............ 1,115,617 -- -- -- 1,115,617
Other assets........................................ 223,260 14,921 -- (12,747)(2) 225,434
----------- ----------- ----------- --------- -----------
TOTAL ASSETS................................ $ 6,875,208 $ 6,254,214 $ (164,501) $ (12,747) $12,952,174
=========== =========== =========== ========= ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable and accrued expenses................. $ 276,786 $ 88,780 $ 15,000 $ -- $ 380,566
Current portion of long-term debt..................... -- 54,625 -- -- 54,625
----------- ----------- ----------- --------- -----------
Total current liabilities................... 276,786 143,405 15,000 -- 435,191
Long-term debt, excluding current portion............. 3,782,500 1,623,764 -- 169,281 (3) 5,586,227
10,682 (4)
Deferred tax liabilities.............................. 410,467 1,336,813 -- (4,461)(2) 1,739,080
(3,739)(4)
Other liabilities..................................... 46,472 4,702 -- -- 51,174
Redeemable preferred stock............................ -- 169,281 -- (169,281)(3) --
Stockholder's equity:
Common stock........................................ 1 -- -- -- 1
Additional paid-in capital.......................... 2,638,791 3,024,020 (168,872) -- 5,493,939
Accumulated deficit................................. (279,809) (47,771) (10,629) (8,286)(2) (353,438)
(6,943)(4)
----------- ----------- ----------- --------- -----------
Total stockholder's equity.................. 2,358,983 2,976,249 (179,501) (15,229) 5,140,502
----------- ----------- ----------- --------- -----------
TOTAL LIABILITIES AND STOCKHOLDER'S
EQUITY.................................... $ 6,875,208 $ 6,254,214 $ (164,501) $ (12,747) $12,952,174
=========== =========== =========== ========= ===========
</TABLE>
See accompanying notes to Unaudited Pro Forma Financial Information
P-2
<PAGE> 6
AMFM OPERATING INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA ADJUSTMENTS
CMCLA LAMAR ADJUSTMENTS FOR FOR THE CMCLA AS ADJUSTED
HISTORICAL TRANSACTION THE LAMAR OTHER COMPLETED FOR THE COMPLETED
(PREDECESSOR)(5) HISTORICAL(8) TRANSACTION CMCLA TRANSACTIONS(13) CMCLA TRANSACTIONS
---------------- ------------- --------------- ---------------------- ------------------
<S> <C> <C> <C> <C> <C>
Net revenues..................... $1,273,856 $(47,605) $ -- $ 414 $1,226,665
Operating expenses excluding
depreciation and
amortization................... 682,061 (23,505) -- (7,122) 651,434
Depreciation and amortization.... 446,338 (25,990) -- 5,170 425,518
Corporate general and
administrative................. 36,722 (1,981) -- -- 34,741
Noncash compensation expense..... -- -- -- -- --
Merger and non-recurring costs... 63,661 -- -- -- 63,661
---------- -------- --------- ------- ----------
Operating income (loss).......... 45,074 3,871 -- 2,366 51,311
Interest expense................. 217,136 (105) 45,819(9) 4,830 267,680
Interest income.................. (15,650) -- -- -- (15,650)
Gain on disposition of assets.... (123,845) -- -- -- (123,845)
Gain on disposition of
representation contracts....... (32,198) -- -- -- (32,198)
Other (income) expense........... (3,221) 156 -- -- (3,065)
---------- -------- --------- ------- ----------
Income (loss) before income
taxes.......................... 2,852 3,820 (45,819) (2,464) (41,611)
Income tax expense (benefit)..... 33,751 (345) (16,037)(11) (862) 16,507
Dividends and accretion on
preferred stock of
subsidiary..................... -- -- -- -- --
---------- -------- --------- ------- ----------
Income (loss) before equity in
net loss of nonconsolidated
affiliates..................... (30,899) 4,165 (29,782) (1,602) (58,118)
Equity in net loss of
nonconsolidated affiliates..... -- -- (82,674)(12) -- (82,674)
---------- -------- --------- ------- ----------
Net income (loss)................ (30,899) 4,165 (112,456) (1,602) (140,792)
Preferred stock dividends........ 17,601 -- -- -- 17,601
---------- -------- --------- ------- ----------
Income (loss) attributable to
common stock................... $ (48,500) $ 4,165 $(112,456) $(1,602) $ (158,393)
========== ======== ========= ======= ==========
<CAPTION>
CAPSTAR RADIO AS PRO FORMA
ADJUSTED FOR ADJUSTMENTS 1998
THE COMPLETED FOR THE OTHER AMFM
CAPSTAR RADIO CAPSTAR RADIO PRO FORMA OPERATING
TRANSACTIONS(14) MERGER ADJUSTMENTS PRO FORMA
---------------- -------------- ----------- ----------
<S> <C> <C> <C> <C>
Net revenues..................... $ 606,026 $ (35,667)(15) $ -- $1,797,024
Operating expenses excluding
depreciation and
amortization................... 359,014 (4,400)(15) -- 1,006,048
Depreciation and amortization.... 132,964 (28,831)(15) -- 810,254
280,603 (16)
Corporate general and
administrative................. 26,432 -- -- 61,173
Noncash compensation expense..... 21,260 -- -- 21,260
Merger and non-recurring costs... 20,433 (8,000)(17) -- 76,094
--------- --------- -------- ----------
Operating income (loss).......... 45,923 (275,039) -- (177,805)
Interest expense................. 146,991 4,018 (18) (30,222)(20) 388,467
Interest income.................. (3,515) 10,600 (15) -- (8,565)
Gain on disposition of assets.... -- -- -- (123,845)
Gain on disposition of
representation contracts....... -- -- -- (32,198)
Other (income) expense........... 328 -- -- (2,737)
--------- --------- -------- ----------
Income (loss) before income
taxes.......................... (97,881) (289,657) 30,222 (398,927)
Income tax expense (benefit)..... (24,770) (101,380)(19) 10,578 (21) (99,065)
Dividends and accretion on
preferred stock of
subsidiary..................... 13,378 -- (13,378)(22) --
--------- --------- -------- ----------
Income (loss) before equity in
net loss of nonconsolidated
affiliates..................... (86,489) (188,277) 33,022 (299,862)
Equity in net loss of
nonconsolidated affiliates..... -- -- -- (82,674)
--------- --------- -------- ----------
Net income (loss)................ (86,489) (188,277) 33,022 (382,536)
Preferred stock dividends........ -- -- -- 17,601
--------- --------- -------- ----------
Income (loss) attributable to
common stock................... $ (86,489) (188,277) $ 33,022 $ (400,137)
========= ========= ======== ==========
</TABLE>
See accompanying notes to Unaudited Pro Forma Financial Information
P-3
<PAGE> 7
AMFM OPERATING INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
CAPSTAR PRO FORMA PRO FORMA
RADIO PRO FORMA ADJUSTMENTS ADJUSTMENTS
CMCLA HISTORICAL ADJUSTMENTS RESTATED LAMAR FOR THE FOR THE OTHER
HISTORICAL 7/14/99 - FOR CAPSTAR CMCLA TRANSACTION LAMAR COMPLETED CMCLA
(PREDECESSOR)(5) 9/30/99(6) RADIO(7) HISTORICAL HISTORICAL(8) TRANSACTION TRANSACTIONS(13)
---------------- ----------- ----------- ---------- ------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenues................. $1,224,485 $ 165,240 $(12,889) $1,376,836 $(156,627) $ -- $ (705)
Operating expenses excluding
depreciation and
amortization............... 640,039 89,220 (2,260) 726,999 (84,583) -- (116)
Depreciation and
amortization............... 432,495 91,135 -- 523,630 (94,062) -- 2,839
Corporate general and
administrative............. 41,187 8,958 -- 50,145 (6,835) -- --
Noncash compensation
expense.................... 3,692 2,456 -- 6,148 -- -- --
Merger and non-recurring
costs...................... 45,925 1,182 -- 47,107 (2,154) -- --
---------- --------- -------- ---------- --------- --------- -------
Operating income (loss)...... 61,147 (27,711) (10,629) 22,807 31,007 -- (3,428)
Interest expense............. 272,317 29,168 -- 301,485 (171) (35,874)(9) 2,717
Interest income.............. (14,263) (51) 3,870 (10,444) -- -- --
Gain on disposition of
assets..................... (221,306) -- -- (221,306) (947) 209,970(10) --
Gain on disposition of
representation contracts... (18,284) -- -- (18,284) -- -- --
Other (income) expense....... -- 144 -- 144 -- -- --
---------- --------- -------- ---------- --------- --------- -------
Income (loss) before income
taxes...................... 42,683 (56,972) (14,499) (28,788) 32,125 (174,096) (6,145)
Income tax expense
(benefit).................. 29,028 (13,457) (5,075) 10,496 8,867 (60,934)(11) (2,151)
Dividends and accretion on
preferred stock of
subsidiary................. -- 4,256 -- 4,256 -- -- --
---------- --------- -------- ---------- --------- --------- -------
Income (loss) before equity
in net loss of
nonconsolidated
affiliates................. 13,655 (47,771) (9,424) (43,540) 23,258 (113,162) (3,994)
Equity in net loss of
nonconsolidated
affiliates................. (772) -- -- (772) -- (59,736)(12) --
---------- --------- -------- ---------- --------- --------- -------
Income (loss) attributable to
common stock............... $ 12,883 $ (47,771) $ (9,424) $ (44,312) $ 23,258 $(172,898) $(3,994)
========== ========= ======== ========== ========= ========= =======
<CAPTION>
RESTATED CMCLA AS CAPSTAR RADIO AS PRO FORMA
ADJUSTED FOR ADJUSTED FOR ADJUSTMENTS
THE COMPLETED THE COMPLETED FOR THE OTHER 1999
CMCLA CAPSTAR RADIO CAPSTAR RADIO PRO FORMA AMFM OPERATING
TRANSACTIONS TRANSACTIONS(14) MERGER ADJUSTMENTS PRO FORMA
----------------- ---------------- ------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Net revenues................. $1,219,504 $ 347,237 $ (31,397)(15) $ -- $1,535,344
Operating expenses excluding
depreciation and
amortization............... 642,300 206,771 (4,221)(15) -- 844,850
Depreciation and
amortization............... 432,407 78,192 (26,832)(15) -- 630,217
146,450(16)
Corporate general and
administrative............. 43,310 13,874 -- -- 57,184
Noncash compensation
expense.................... 6,148 20,284 -- -- 26,432
Merger and non-recurring
costs...................... 44,953 51,288 (47,510)(17) -- 48,731
--------- --------- --------- -------- ----------
Operating income (loss)...... 50,386 (23,172) (99,284) -- (72,070)
Interest expense............. 268,157 67,385 1,464(18) (9,975)(20) 327,031
Interest income.............. (10,444) (100) 9,650(15) -- (894)
Gain on disposition of
assets..................... (12,283) -- -- -- (12,283)
Gain on disposition of
representation contracts... (18,284) -- -- -- (18,284)
Other (income) expense....... 144 46 -- -- 190
--------- --------- --------- -------- ----------
Income (loss) before income
taxes...................... (176,904) (90,503) (110,398) 9,975 (367,830)
Income tax expense
(benefit).................. (43,722) (17,105) (38,639)(19) 3,491(21) (95,975)
Dividends and accretion on
preferred stock of
subsidiary................. 4,256 8,365 -- (12,621)(22) --
--------- --------- --------- -------- ----------
Income (loss) before equity
in net loss of
nonconsolidated
affiliates................. (137,438) (81,763) (71,759) 19,105 (271,855)
Equity in net loss of
nonconsolidated
affiliates................. (60,508) -- -- -- (60,508)
--------- --------- --------- -------- ----------
Income (loss) attributable to
common stock............... $ (197,946) $ (81,763) $ (71,759) $ 19,105 $ (332,363)
========== ========= ========= ======== ==========
</TABLE>
See accompanying notes to Unaudited Pro Forma Financial Information
P-4
<PAGE> 8
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL INFORMATION
(IN THOUSANDS OF DOLLARS)
ADJUSTMENTS TO THE UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
(1) Reflects CMCLA's contribution to AMFM Holdings Inc., a direct
subsidiary of AMFM Inc. and an indirect parent of the Company, of its
$150,000 note receivable from Capstar Broadcasting Corporation and the
elimination of intercompany balances between CMCLA and Capstar Radio.
(2) On November 19, 1999, AMFM Operating entered into a new credit
agreement and refinanced the outstanding indebtedness under CMCLA's
credit facility and Capstar Radio's credit facility. Reflects an
extraordinary loss of $12,747 to write off the debt issuance costs
related to CMCLA's credit facility, net of a tax benefit of $4,461.
(3) Reflects the exchange of Capstar Communications Inc.'s ("Capstar
Communications") 12 5/8% Series E Cumulative Exchangeable Preferred
Stock for 12 5/8% Senior Subordinated Exchange Debentures due 2006
completed on November 23, 1999.
(4) Reflects the purchase of $293,641 of aggregate principal amount of
Capstar Communications' 10 3/4% Senior Subordinated Notes due 2006 and
estimated fees and expenses pursuant to a tender offer which was
completed on November 12, 1999, funded with borrowings under the credit
agreement. The adjustment to accumulated deficit represents the related
extraordinary loss on the early extinguishment of debt of $10,682, net
of a tax benefit of $3,739.
ADJUSTMENTS TO THE UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF
OPERATIONS
(5) CMCLA began operating KKFR-FM and KFYI-AM in Phoenix under a time
brokerage agreement effective November 5, 1998. Therefore, the results
of operations of KKFR-FM and KFYI-AM are included in CMCLA's historical
operations subsequent to this date during 1998 and for the nine months
ended September 30, 1999.
CMCLA entered into a time brokerage agreement to sell substantially all
of the broadcast time of WMVP-AM in Chicago effective September 10,
1998. Therefore, substantially all of the results of operations of
WMVP-AM are excluded from CMCLA's historical operations subsequent to
this date during 1998 and for the nine months ended September 30, 1999.
(6) Reflects Capstar Radio's historical statement of operations for July
14, 1999 to September 30, 1999, the period subsequent to AMFM Inc.'s
acquisition of Capstar Broadcasting.
(7) Reflects the elimination of intercompany transactions between CMCLA and
Capstar Radio for CMCLA's media representation services provided to
Capstar Radio, Capstar Radio's participation in The AMFM Radio
Networks, fees paid by CMCLA to Capstar Radio under time brokerage
(LMA) agreements and CMCLA's interest income on the note receivable
from Capstar Broadcasting for the period July 14, 1999 to September 30,
1999.
(8) On September 15, 1999, CMCLA consummated the sale of its outdoor
advertising business to Lamar in exchange for net proceeds of $680,000
in cash, subject to a working capital adjustment, and 26,227,273 shares
of Lamar's class A common stock. This adjustment removes the historical
results of operations of CMCLA's outdoor advertising business.
(9) Reflects the increase in interest expense of $45,819 for the year ended
December 31, 1998 and the net decrease in interest expense of $35,874
for the nine months ended September 30, 1999 in connection with the
additional bank borrowings related to the outdoor advertising
acquisitions completed during 1998 and 1999 and the paydown of debt
resulting from the net proceeds of $680,000 received from Lamar.
(10) Reflects the elimination of the nonrecurring gain of $209,970 incurred
in connection with CMCLA's sale of its outdoor advertising business.
(11) Reflects the tax effect of the pro forma adjustments.
P-5
<PAGE> 9
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL INFORMATION -- (CONTINUED)
(12) The adjustment to reflect CMCLA's 30% equity interest in Lamar and
amortization of the investment basis in excess of underlying equity in
the net assets of Lamar over an estimated life of 15 years is as
follows:
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1998 SEPTEMBER 30, 1999
----------------- ------------------
<S> <C> <C>
Lamar historical net loss applicable to common
stock............................................. $ (12,255) $(19,533)
Pro forma adjustments for significant acquisitions
completed by Lamar during 1998 and 1999, including
the acquisition by Lamar of CMCLA's outdoor
business.......................................... (88,744) (49,383)
--------- --------
Lamar pro forma net loss applicable to common
stockholders...................................... (100,999) (68,916)
CMCLA equity interest............................... 30% 30%
--------- --------
Equity in pro forma net loss of Lamar............... (30,300) (20,675)
Less historical equity in net loss of Lamar......... -- (219)
--------- --------
Pro forma adjustment for equity in net loss of
Lamar............................................. (30,300) (20,456)
Amortization of investment basis in excess of
underlying equity in the net assets of Lamar...... (52,374) (39,280)
--------- --------
Total equity in net loss of affiliate..... $ (82,674) $(59,736)
========= ========
</TABLE>
The Lamar pro forma net loss applicable to common stockholders was
estimated by CMCLA based on information obtained from publicly filed
financial statements. These estimates, including the allocation of
purchase price, are preliminary and subject to change.
ADJUSTMENTS TO UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
RELATED TO THE OTHER COMPLETED CMCLA TRANSACTIONS
(13) The combined condensed statement of operations for the other completed
CMCLA transactions for the year ended December 31, 1998 and for the
nine months ended September 30, 1999 are summarized below:
<TABLE>
<CAPTION>
THE
CHICAGO BROADCAST PRO FORMA
DISPOSITION GROUP, INC. ADJUSTMENTS FOR OTHER
YEAR ENDED HISTORICAL HISTORICAL THE OTHER COMPLETED CMCLA COMPLETED CMCLA
DECEMBER 31, 1998 1/1-12/31(a) 1/1-12/31(b) TRANSACTIONS TRANSACTIONS
----------------- ------------ ------------- ------------------------- ----------------
<S> <C> <C> <C> <C>
Net revenues.................... $(10,309) $11,772 $ (1,049)(c) $ 414
Operating expenses excluding
depreciation and
amortization.................. (13,271) 6,149 -- (7,122)
Depreciation and amortization... (592) 188 5,574 (d) 5,170
-------- ------- ---------- -------
Operating income (loss)......... 3,554 5,435 (6,623) 2,366
Interest expense................ -- 332 4,498 (e) 4,830
-------- ------- ---------- -------
Income (loss) before income
taxes......................... 3,554 5,103 (11,121) (2,464)
Income tax expense (benefit).... -- 1,850 (2,712)(f) (862)
-------- ------- ---------- -------
Income (loss)................... $ 3,554 $ 3,253 $ (8,409) $(1,602)
======== ======= ========== =======
</TABLE>
<TABLE>
<CAPTION>
CHICAGO PRO FORMA
DISPOSITION ADJUSTMENTS FOR OTHER
NINE MONTHS ENDED HISTORICAL THE OTHER COMPLETED CMCLA COMPLETED CMCLA
SEPTEMBER 30, 1999 1/1-4/16(a) TRANSACTIONS TRANSACTIONS
------------------ ----------- ------------------------- ---------------
<S> <C> <C> <C>
Net revenues................................ $(705) $ -- $ (705)
Operating expenses excluding depreciation
and amortization.......................... (116) -- (116)
Depreciation and amortization............... -- 2,839 (d) 2,839
----- ------- -------
Operating income (loss)..................... (589) (2,839) (3,428)
Interest expense............................ -- 2,717 (e) 2,717
----- ------- -------
Income (loss) before income taxes........... (589) (5,556) (6,145)
Income tax expense (benefit)................ -- (2,151)(f) (2,151)
----- ------- -------
Income (loss)............................... $(589) $(3,405) $(3,994)
===== ======= =======
</TABLE>
P-6
<PAGE> 10
- ---------------
(a) On April 16, 1999, CMCLA sold WMVP-AM in Chicago to ABC, Inc. for $21,000
in cash. CMCLA entered into a time brokerage agreement to sell
substantially all of the broadcast time of WMVP-AM effective September 10,
1998.
(b) On July 1, 1999, CMCLA acquired KKFR-FM and KFYI-AM in Phoenix from The
Broadcast Group, Inc. for $90,000 in cash. CMCLA began operating KKFR-FM
and KFYI-AM under a time brokerage agreement effective November 5, 1998.
(c) Reflects the elimination of revenue related to the time brokerage
agreement between The Broadcast Group Inc. and CMCLA. CMCLA began
operating KKFR-FM and KFYI-AM in Phoenix under the time brokerage
agreement effective November 5, 1998.
(d) Reflects incremental amortization related to the assets acquired in the
Phoenix acquisition and is based on the allocation of the total
consideration as follows:
<TABLE>
<CAPTION>
INCREMENTAL INTANGIBLE HISTORICAL ADJUSTMENT
YEAR ENDED AMORTIZATION ASSETS, AMORTIZATION AMORTIZATION FOR NET
DECEMBER 31, 1998 PERIOD(i) NET EXPENSE(i) EXPENSE INCREASE
----------------- ------------ ---------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Phoenix acquisition......... 1/1-12/31 $85,160 $5,677 $103 $5,574
======= ====== ==== ======
</TABLE>
<TABLE>
<CAPTION>
INCREMENTAL INTANGIBLE HISTORICAL ADJUSTMENT
NINE MONTHS ENDED AMORTIZATION ASSETS, AMORTIZATION AMORTIZATION FOR NET
SEPTEMBER 30, 1999 PERIOD(i) NET EXPENSE(i) EXPENSE INCREASE
------------------ ------------ ---------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Phoenix acquisition......... 1/1-7/1 $85,160 $2,839 $ -- $2,839
======= ====== ==== ======
</TABLE>
- ---------------
(i) Intangible assets are amortized on a straight-line basis over an
estimated average 15 year life. The incremental amortization period
represents the period of the year that the acquisition was not
completed.
Historical depreciation expense for the Phoenix acquisition is
assumed to approximate depreciation expense on a pro forma basis.
Actual depreciation and amortization may differ based upon final
purchase price allocations.
(e) Reflects the adjustment to interest expense as follows:
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1998 SEPTEMBER 30, 1999
----------------- ------------------
<S> <C> <C>
Additional bank borrowings related to other
completed transactions.................... $69,000 $69,000
------- -------
Interest expense at 7.0%.................... 4,830 2,415
Less: historical interest expense recognized
subsequent to the completed transaction... -- 302
------- -------
Incremental interest expense................ 4,830 2,717
Less: historical interest expense recognized
by the acquired company................... (332) --
------- -------
Net increase in interest expense............ $ 4,498 $ 2,717
======= =======
</TABLE>
(f) Reflects the tax effect of the pro forma adjustments.
P-7
<PAGE> 11
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL INFORMATION -- (CONTINUED)
ADJUSTMENTS TO CAPSTAR RADIO'S HISTORICAL CONDENSED STATEMENT OF OPERATIONS
RELATED TO THE COMPLETED CAPSTAR RADIO TRANSACTIONS
(14) Capstar Radio's historical condensed statement of operations for the
year ended December 31, 1998 and the period from January 1 to July 13,
1999 and pro forma adjustments related to the completed Capstar Radio
transactions is summarized below:
<TABLE>
<CAPTION>
PRO FORMA CAPSTAR RADIO
ADJUSTMENTS AS ADJUSTED
COMPLETED FOR THE FOR THE
CAPSTAR RADIO COMPLETED COMPLETED
YEAR ENDED CAPSTAR RADIO TRANSACTIONS CAPSTAR RADIO CAPSTAR RADIO
DECEMBER 31, 1998 HISTORICAL HISTORICAL(A) TRANSACTIONS TRANSACTIONS
----------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net revenues........................ $517,467 $ 88,559 $ -- $ 606,026
Operating expenses excluding
depreciation and amortization..... 304,565 54,449 -- 359,014
Depreciation and amortization....... 95,948 13,290 23,726(B) 132,964
Corporate general and
administrative.................... 23,192 3,240 -- 26,432
Noncash compensation expense........ 21,260 74,199 (74,199)(C) 21,260
LMA fees............................ 4,103 697 (4,800)(D) --
Merger and non-recurring costs...... 12,970 35,318 (11,255)(E) 20,433
(16,600)(F)
-------- --------- -------- ---------
Operating income (loss)............. 55,429 (92,634) 83,128 45,923
Interest expense.................... 87,794 31,508 27,689(G) 146,991
Interest income..................... (3,163) (352) -- (3,515)
Other (income) expense.............. 183 3,308 (3,163)(H) 328
-------- --------- -------- ---------
Income (loss) before income taxes... (29,385) (127,098) 58,602 (97,881)
Income tax expense (benefit)........ (796) 210 (24,184)(I) (24,770)
Dividends and accretion on preferred
stock of subsidiary............... 9,779 -- 17,264(J) 13,378
(13,665)(K)
-------- --------- -------- ---------
Net income (loss)................... (38,368) (127,308) 79,187 (86,489)
Preferred stock dividends........... -- 17,264 (17,264)(J) --
-------- --------- -------- ---------
Income (loss) attributable to common
stock............................. $(38,368) $(144,572) $ 96,451 $ (86,489)
======== ========= ======== =========
</TABLE>
P-8
<PAGE> 12
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL INFORMATION -- (CONTINUED)
<TABLE>
<CAPTION>
PRO FORMA CAPSTAR RADIO
ADJUSTMENTS AS ADJUSTED
FOR THE FOR THE
COMPLETED COMPLETED
PERIOD FROM JANUARY 1 CAPSTAR RADIO CAPSTAR RADIO CAPSTAR RADIO
TO JULY 13, 1999 HISTORICAL TRANSACTIONS TRANSACTIONS
--------------------- ------------- ------------ -------------
<S> <C> <C> <C>
Net revenues..................................... $ 347,237 $ -- $ 347,237
Operating expenses excluding depreciation and
amortization................................... 206,771 -- 206,771
Depreciation and amortization.................... 78,192 -- 78,192
Corporate general and administrative............. 13,874 -- 13,874
Noncash compensation expense..................... 20,284 -- 20,284
LMA fees......................................... 387 (387)(D) --
Merger and non-recurring costs................... 51,288 -- 51,288
--------- ----- ---------
Operating income................................. (23,559) 387 (23,172)
Interest expense................................. 67,385 -- 67,385
Interest income.................................. (100) -- (100)
Other (income) expense........................... 46 -- 46
--------- ----- ---------
Income (loss) before income taxes................ (90,890) 387 (90,503)
Income tax expense (benefit)..................... (17,240) 135(I) (17,105)
Dividends and accretion on preferred stock of
subsidiary..................................... 8,365 -- 8,365
--------- ----- ---------
Income (loss) attributable to common stock....... $ (82,015) $ 252 $ (81,763)
========= ===== =========
</TABLE>
P-9
<PAGE> 13
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL INFORMATION -- (CONTINUED)
- ---------------
(A) The detail of the historical financial data of significant stations
acquired or disposed of in the completed transactions by Capstar Radio for
the year ended December 31, 1998 has been obtained from the historical
financial statements of the respective stations and is summarized below:
<TABLE>
<CAPTION>
PATTERSON SFX OTHER SFX COMPLETED
ACQUISITION ACQUISITION TRANSACTIONS CAPSTAR RADIO
YEAR ENDED HISTORICAL HISTORICAL HISTORICAL TRANSACTIONS
DECEMBER 31, 1998 1/1-1/29(I) 1/1-5/29(II) 1/1-5/29(III) HISTORICAL
----------------- ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Net revenues.................................. $ 3,503 $ 124,677 $(39,621) $ 88,559
Operating expenses excluding depreciation and
amortization................................ 2,523 78,235 (26,309) 54,449
Depreciation and amortization................. 497 17,668 (4,875) 13,290
Corporate general and administrative.......... 171 3,069 -- 3,240
Noncash compensation expense.................. -- 74,199 -- 74,199
LMA fees...................................... -- 697 -- 697
Merger and non-recurring costs................ -- 35,318 -- 35,318
------- --------- -------- ---------
Operating income (loss)....................... 312 (84,509) (8,437) (92,634)
Interest expense.............................. 645 30,867 (4) 31,508
Interest income............................... -- (352) -- (352)
Other expense................................. 3,163 -- 145 3,308
------- --------- -------- ---------
Income (loss) before income taxes............. (3,496) (115,024) (8,578) (127,098)
Income tax expense............................ -- 210 -- 210
------- --------- -------- ---------
Net income (loss)............................. (3,496) (115,234) (8,578) (127,308)
Preferred stock dividends..................... -- 17,264 -- 17,264
------- --------- -------- ---------
Income (loss) attributable to common
stockholders................................ $(3,496) $(132,498) $ (8,578) $(144,572)
======= ========= ======== =========
</TABLE>
- ---------------
(i) In January 1998, Capstar Radio acquired 39 radio stations (25 FM and 14
AM) from Patterson Broadcasting, Inc. for approximately $227,186 in cash.
(ii) On May 29, 1998, Capstar Radio acquired SFX Broadcasting, Inc. a radio
broadcasting company which owned 81 radio stations (60 FM and 21 AM) and
operated two additional radio stations (1 FM and 1 AM) under time
brokerage or joint sales agreements. The acquisition was effected through
the merger of a wholly owned subsidiary of Capstar Radio with and into
SFX, with SFX surviving the merger as a wholly owned subsidiary of Capstar
Radio, renamed Capstar Communications, Inc. The total consideration paid
for all of the outstanding common equity interest of SFX was approximately
$1,279,656, including direct costs of the acquisition.
P-10
<PAGE> 14
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL INFORMATION -- (CONTINUED)
(iii) In connection with the acquisition of SFX, Capstar Radio was required to
dispose of certain stations acquired from SFX due to governmental
restrictions on multiple station ownership. On May 29, 1998, Capstar
Radio completed the following disposition and exchange transactions to
comply with multiple ownership rules:
- the sale of one FM station in Houston, Texas to HBC Houston, Inc.
for approximately $54,000;
- the sale of four radio stations (3 FM and 1 AM) in Long Island, New
York to Cox Radio, Inc. for approximately $46,000;
- the sale of four radio stations (3 FM and 1 AM) in Greenville,
South Carolina to Clear Channel Radio, Inc. for approximately
$35,000;
- the sale of one FM station in Daytona Beach, Florida to Clear
Channel Metroplex, Inc. for approximately $11,500;
- the assignment of four radio stations (2 FM and 2 AM) in Fairfield,
Connecticut with an aggregate fair market value of $15,000 to a
trust pending the sale to a third party; and
- the exchange of KODA-FM in Houston, Texas to AMFM for two FM
stations in Jacksonville, Florida (valued at $53,000) and $90,250
in cash, which was used by Capstar Radio to acquire three stations
(2 FM and 1 AM) in Austin, Texas through a qualified intermediary.
Reflects the adjustment to eliminate the results of operations of the SFX
stations disposed by Capstar Radio and to record the results of operations
for the stations received in the exchange transaction for the period
January 1, 1998 to May 29, 1998.
(B) Reflects incremental amortization related to the completed transactions and
is based on the following allocation to intangible assets:
<TABLE>
<CAPTION>
INCREMENTAL HISTORICAL ADJUSTMENT
COMPLETED TRANSACTIONS AMORTIZATION INTANGIBLE AMORTIZATION AMORTIZATION FOR NET
YEAR ENDED DECEMBER 31, 1998 PERIOD(i) ASSETS, NET EXPENSE EXPENSE INCREASE
- ---------------------------- ------------ ----------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Patterson acquisition............. 1/1-1/29 $ 268,219 $ 540 $ 356 $ 184
SFX acquisition................... 1/1-5/29 3,194,742 33,057 9,515 23,542
---------- ------- ------ -------
$3,462,961 $33,597 $9,871 $23,726
========== ======= ====== =======
</TABLE>
- ---------------
(i) The incremental amortization period represents the period of the year
that the acquisition was not completed. Intangible assets consist of
broadcast licenses which are amortized on a straight-line basis over
estimated average lives of 40 years. Actual amortization may differ
based upon final purchase price allocations.
(C) Reflects the elimination of non-recurring transaction-related compensation
expense of $74,199 attributable to the voluntary settlement of the
outstanding options, SARs and unit purchase options by SFX in connection
with Capstar Radio's acquisition of SFX.
(D) Reflects the elimination of $4,800 of time brokerage (LMA) fees for the
year ended December 31, 1998, of which $4,103 were paid by Capstar Radio
and $697 by SFX, and $387 of time brokerage (LMA) fees paid by Capstar
Radio for the period from January 1 to July 13, 1999 related to acquired
radio stations that were previously operated under time brokerage
agreements.
(E) Reflects the elimination of non-recurring transaction-related charges of
$11,255 recorded by SFX in connection with Capstar Radio's acquisition of
SFX and the spin-off of SFX Entertainment, Inc. These charges consist
primarily of legal, accounting and regulatory fees.
(F) Reflects the elimination of the consent solicitation payments to the
holders of the 10 3/4% Senior Subordinated Notes due 2006 and 12 5/8%
Series E Cumulative Exchangeable Preferred Stock of SFX
P-11
<PAGE> 15
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL INFORMATION -- (CONTINUED)
incurred in connection with the spin-off of SFX Entertainment of $16,600.
The spin-off of SFX Entertainment was consummated in April 1998.
(G) Reflects the adjustment to interest expense in connection with the
consummation of the completed Capstar Radio transactions:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1998
-----------------
<S> <C>
Additional bank borrowings related to completed
acquisitions.............................................. $1,362,072
Interest expense at 8.00%................................... 108,966
Less: historical interest expense recognized subsequent to
completed acquisition..................................... (69,925)
----------
Incremental interest expense................................ 39,041
Less: historical interest expense recognized by the acquired
company................................................... (11,352)
----------
Net increase in interest expense............................ $ 27,689
==========
</TABLE>
(H) Adjustment represents the elimination of $3,163 of transaction expenses
recorded by Patterson in connection with Capstar Radio's acquisition of
Patterson.
(I) Reflects the tax effect of the pro forma adjustments.
(J) Reclassification of SFX's historical preferred stock dividends of $17,264
to Capstar Radio's dividends on preferred stock of subsidiaries.
(K) Reflects the elimination of a portion of the redeemable preferred stock
dividends related to the SFX acquisition and the subsequent redemption of
$119,600 and $500 liquidation preference on July 3, 1998 and July 10, 1998,
respectively, of the 12 5/8% Series E Cumulative Preferred Stock of SFX as
follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1998
------------
<S> <C>
Dividends on 6% Series C Redeemable Preferred Stock redeemed
as part of the acquisition of SFX on May 29, 1998......... $ (112)
Dividends on 6 1/2% Series D Cumulative Convertible
Exchangeable Preferred Stock redeemed as part of the
acquisition of SFX on May 29, 1998........................ (5,841)
Dividends on 12 5/8% Series E Cumulative Exchangeable
Preferred Stock of $119,500 and $500 for the period
January 1, 1998 to the redemption dates of July 3, 1998
and July 10, 1998, respectively........................... (7,712)
--------
Total adjustment for net decrease in dividends and
accretion................................................. $(13,665)
========
</TABLE>
ADJUSTMENTS TO UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
RELATED TO THE CAPSTAR RADIO MERGER
(15) Reflects the elimination of intercompany transactions between CMCLA
and Capstar Radio for CMCLA's media representation services provided
to Capstar Radio, Capstar Radio's participation in The AMFM Radio
Networks, fees paid by CMCLA to Capstar Radio under time brokerage
(LMA) agreements and CMCLA's interest income on the note receivable
from Capstar Broadcasting of $150,000 for the year ended December 31,
1998 and the period from January 1 to July 13, 1999.
P-12
<PAGE> 16
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL INFORMATION -- (CONTINUED)
(16) Reflects incremental amortization related to the Capstar Radio merger
and is based on the allocation of the total consideration as follows:
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED JANUARY 1 TO
DECEMBER 31, 1998 JULY 13, 1999
----------------- -------------
<S> <C> <C>
Amortization expense on $5,877,652 of intangible
assets........................................ $ 391,843 $210,072
Less: historical amortization expense........... (111,240) (63,622)
--------- --------
Adjustment for net increase in amortization
expense....................................... $ 280,603 $146,450
========= ========
</TABLE>
Historical depreciation expense of Capstar Radio as adjusted for the
completed Capstar Radio transactions is assumed to approximate
depreciation expense on a pro forma basis. Actual depreciation and
amortization may differ based upon final purchase price allocations.
(17) Reflects the elimination of financial advisory and other expenses of
Capstar Radio in connection with the Capstar Radio merger of $8,000
for the year ended December 31, 1998 and $47,510 for the period from
January 1 to July 13, 1999.
(18) Reflects the adjustment to record interest expense of $4,018 for the
year ended December 31, 1998 and $1,464 for the nine months ended
September 30, 1999 on additional bank borrowings related to estimated
financial advisors, legal, accounting and other professional fees
incurred by CMCLA and Capstar Radio.
(19) Reflects the tax effect of the pro forma adjustments.
P-13
<PAGE> 17
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL INFORMATION -- (CONTINUED)
OTHER ADJUSTMENTS TO THE UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF
OPERATIONS
(20) Reflects (i) the net decrease in interest expense resulting from the
November 19, 1999 refinancing of the existing credit agreements of
CMCLA and Capstar Radio into a single new credit agreement with an
estimated average interest rate of 6.75%, (ii) the net decrease in
interest expense related to the purchase of $293,641 of aggregate
principal amount of Capstar Communications' 10 3/4% Senior
Subordinated Notes due 2006 and estimated fees and expenses pursuant
to a tender offer which was completed on November 12, 1999, funded
with borrowings under the credit agreement and (iii) the net increase
in interest expense related to the exchange of the 12 5/8% Series E
Cumulative Exchangeable Preferred Stock of Capstar Communications for
12 5/8% Senior Subordinated Exchange Debentures due 2006 on November
23, 1999.
(21) Reflects the tax effect of the pro forma adjustments.
(22) Reflects the elimination of dividends related to the exchange of the
12 5/8% Series E Cumulative Exchangeable Preferred Stock of Capstar
Communications for 12 5/8% Senior Subordinated Exchange Debentures due
2006 completed on November 23, 1999.
P-14
