-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QWU9gf7iHzV/9gEWq3UgZcjZA92OR+aFs3PGfmSLeNw8DQKNEqNc/3cb7mvVwCGD fewxxajjFpJc1bH1hqMW2Q== 0000950134-97-006323.txt : 19970820 0000950134-97-006323.hdr.sgml : 19970820 ACCESSION NUMBER: 0000950134-97-006323 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970708 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970819 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAPSTAR BROADCASTING PARTNERS INC CENTRAL INDEX KEY: 0001026516 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 752672663 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-25263 FILM NUMBER: 97666218 BUSINESS ADDRESS: STREET 1: 600 CONGRESS AVE STREET 2: SUITE 1400 CITY: AUSTIN STATE: TX ZIP: 78701 BUSINESS PHONE: 5124046380 MAIL ADDRESS: STREET 1: 600 CONGRESS AVE STREET 2: SUITE 1400 CITY: AUSTIN STATE: TX ZIP: 78701 8-K/A 1 AMENDMENT TO FORM 8-K 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------- FORM 8-K/A 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 8, 1997 --------------------- CAPSTAR BROADCASTING PARTNERS, INC. (Exact Name of Registrant as Specified in Its Charter) DELAWARE 333-25683 75-2672663 (State or Other (Commission File Number) (I.R.S. Employer Jurisdiction of Incorporation) Identification Number) 600 CONGRESS AVENUE 78701 SUITE 1400 (Zip code) AUSTIN, TEXAS (Address of principal executive offices)
Registrant's telephone number, including area code: (512) 404-6840 NOT APPLICABLE (former address if changed since last report) ================================================================================ 2 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (B) PRO FORMA FINANCIAL INFORMATION. The following unaudited pro forma financial information (the "Pro Forma Financial Information") is based on the audited historical financial statements of the Company and its predecessor (Commodore Media, Inc.), Osborn Communications, Inc. ("Osborn"), GulfStar Communications, Inc. ("GulfStar"), Benchmark Communications Radio Limited Partnership ("Benchmark"), Madison Radio Group ("Madison"), Community Pacific Broadcasting Company L.P. ("Community Pacific"), Patterson Broadcasting, Inc. and subsidiaries ("Patterson"), Ameron Broadcasting, Inc. ("Ameron"), Knight Quality Stations ("Knight Quality"), Quass Broadcasting Company ("Quass") and Mountain Lakes Broadcasting, L.L.C. ("Mountain Lakes") and, in each case, their related notes. Certain capitalized terms used in this Current Report are defined herein under the caption "Glossary of Certain Terms." The pro forma statement of operations for the year ended December 31, 1996, and for the three months ended March 31, 1997 and 1996 have been prepared to illustrate the effects of: (i) the Commodore Acquisition; (ii) the Completed Transactions, including the Financing; and (iii) the Pending Transactions and the anticipated financing thereof, as if each had occurred on January 1, 1996. The pro forma balance sheet as of March 31, 1997, has been prepared as if any such transaction not yet consummated on that date had occurred on that date. The Pro Forma Financial Information and accompanying notes should be read in conjunction with the financial statements and other financial information pertaining to the Company, Commodore, Osborn, GulfStar, Benchmark, Madison, Community Pacific, Patterson, Ameron, Knight Quality, Quass and Mountain Lakes. The unaudited pro forma adjustments are based upon available information and certain assumptions that the Company believes are reasonable. The Company anticipates that it will fund the Pending Acquisitions with indebtedness, rather than capital stock, to the fullest extent then permitted under the debt incurrence covenants contained, or to be contained, in (i) the Certificate of Designation, (ii) the Notes Indenture, (iii) the New Capstar Radio Indenture, (iv) the indenture to which the Company will be a party if the Senior Exchangeable Preferred Stock is exchanged for debentures of the Company pursuant to the terms of the Certificate of Designation (the "Exchange Indenture"), (v) the Existing Capstar Radio Indenture (the Existing Capstar Radio Indenture, the Notes Indenture, the New Capstar Radio Indenture, and the Exchange Indenture, the "Indentures"), and (vi) the Credit Facility. As a result, the Company expects the actual amount of indebtedness incurred in connection with the Pending Transactions to exceed the amount in the Pro Forma Financial Information. The Pro Forma Financial Information is not necessarily indicative of either future results of operations or the results that might have been achieved if such transactions had been consummated on the indicated dates. All acquisitions, except for the GulfStar Transaction, given effect in the Pro Forma Financial Information are accounted for using the purchase method of accounting. The aggregate purchase price of each such transaction is allocated to the tangible and intangible assets and liabilities acquired based upon their respective fair values. The allocation of the aggregate purchase price reflected in the Pro Forma Financial Information is preliminary for transactions closed or to be closed after April 1, 1997. The final allocation of the purchase price is contingent upon the receipt of final appraisals of the acquired assets and the revision of other estimates; however, the allocation is not expected to differ materially from the preliminary allocation. The GulfStar Transaction is accounted for at historical cost, on a basis similar to a pooling of interests, as the Company and GulfStar were under common control prior to the GulfStar Transaction. For the purpose of the pro forma statement of operations for the year ended December 31, 1996 and for the three months ended March 31, 1997 and 1996, (i) "Completed Transactions Combined" collectively refers to the historical results of operations of the entities and stations acquired or sold in the Completed Transactions, excluding the Commodore Acquisition, and (ii) "Pending Transactions Combined" collectively refers to the results of operations of the entities and stations to be acquired or sold in the Pending Transactions. 1 3 For the purpose of the pro forma balance sheet as of March 31, 1997, (i) "Completed Transactions Combined" collectively refers to the historical balance sheets of the entities and stations acquired or sold in the Completed Transactions, excluding the Commodore Acquisition and the Osborn Acquisition, and (ii) "Pending Transactions Combined" collectively refers to the historical balance sheets of the entities and stations to be acquired or sold in the Pending Transactions. As used in the Pro Forma Financial Information, (i) "Company Combined" presents unaudited pro forma financial data for the Company, including its predecessor, Commodore, (ii) "Pro Forma for Completed Transactions and the Financing" gives effect to the Completed Transactions and the financing thereof, including the Financing and (iii) "Pro Forma" gives effect to each of the foregoing transactions, the Pending Transactions, and the anticipated financing thereof. The following tables present a summary of the Pro Forma Financial Information included on the following pages.
PRO FORMA FOR COMPLETED TRANSACTIONS AND THE FINANCING ---------------------------------------------------------------- THREE MONTHS ENDED MARCH 31, YEAR ENDED ------------------ TWELVE MONTHS ENDED DECEMBER 31, 1996 1996 1997 MARCH 31, 1997 ----------------- ------- ------- ------------------- (DOLLARS IN THOUSANDS) OPERATING DATA: Net revenue....................... $189,840 $38,852 $39,487 $190,475 Station operating expenses........ 137,665 30,512 30,606 137,759 Depreciation and amortization..... 25,745 6,435 6,435 25,745 Corporate expenses................ 8,269 2,087 2,680 8,862 Other operating expenses.......... 9,800 2,454 2,469 9,815 Operating income (loss)........... 8,361 (2,636) (2,703) 8,294 Interest expense.................. 50,252 12,565 12,565 50,252 Net income (loss)................. (22,040) (8,450) (9,633) (23,223) OTHER DATA: Broadcast cash flow(1)............ $ 52,175 $ 8,340 $ 8,881 $ 52,716 Broadcast cash flow margin(1)..... 27.5% 21.5% 22.5% 27.7% EBITDA(2)......................... $ 43,906 $ 6,253 $ 6,201 $ 43,854
PRO FORMA ---------------------------------------------------------------- THREE MONTHS ENDED MARCH 31, YEAR ENDED -------------------- TWELVE MONTHS ENDED DECEMBER 31, 1996 1996 1997 MARCH 31, 1997 ----------------- -------- -------- ------------------- (DOLLARS IN THOUSANDS) OPERATING DATA: Net revenue....................... $294,531 $ 61,144 $ 63,172 $296,559 Station operating expenses........ 214,098 48,760 49,100 214,438 Depreciation and amortization..... 40,469 10,116 10,116 40,469 Corporate expenses................ 13,430 3,134 4,285 14,581 Other operating expenses.......... 9,912 2,451 2,704 10,165 Operating income (loss)........... 16,622 (3,317) (3,033) 16,906 Interest expense.................. 65,128 16,284 16,284 65,128 Net income (loss)................. (27,877) (12,179) (13,610) (29,308) OTHER DATA: Broadcast cash flow(1)............ $ 80,433 $ 12,384 $ 14,072 $ 82,121(3) Broadcast cash flow margin(1)..... 27.3% 20.3% 22.3% 27.7% EBITDA(2)......................... $ 67,003 $ 9,250 $ 9,787 $ 67,540(3) Deficiency of earnings to fixed charges(4)..................... 46,711 17,252 19,311 48,770
- --------------- (1) Broadcast cash flow consists of operating income before depreciation, amortization, corporate expenses and other operating expenses. Although broadcast cash flow is not a measure of performance calculated in accordance with GAAP, management believes that it is useful to an investor in evaluating the Company because it is a measure widely used in the broadcasting industry to evaluate a radio company's operating performance. See "Glossary of Certain Terms." (2) EBITDA consists of operating income before depreciation, amortization and other operating expenses. Although EBITDA is not a measure of performance calculated in accordance with GAAP, management believes that it is useful to an investor in evaluating the Company because it is a measure widely used in the broadcasting industry to evaluate a radio company's operating performance. See "Glossary of Certain Terms." 2 4 (3) The pro forma financial results exclude the effects of estimated cost savings resulting from the Completed Transactions and the Pending Acquisitions. On a pro forma basis, assuming the consummation of the aforementioned transactions, including related cost savings as if they had occurred on January 1, 1996, broadcast cash flow and EBITDA would have been $93.9 million and $85.0 million, respectively, for the twelve-month period ended March 31, 1997. The Company expects to realize approximately $11.8 million of estimated cost savings resulting from the elimination of redundant operating expenses arising from such transactions, including elimination of certain management positions, the consolidation of facilities and new rates associated with revised vendor contracts and savings related to automation of certain station operations. In addition, the Company expects to realize approximately $5.7 million of cost savings, on a pro forma basis, resulting from the elimination of certain corporate overhead functions, net of increased costs associated with the implementation of the Company's corporate management structure. Corporate cost savings reflect the expected level of annual corporate expenditures arising from such transactions. The Company anticipates that corporate expenses will increase upon consummation of additional acquisitions. There can be no assurances that any operating or corporate cost savings will be achieved. (4) For purposes of this calculation, "earnings" consist of income (loss) before income taxes and fixed charges, and "fixed charges" consist of interest, amortization of deferred financing costs and the component of rental expense believed by management to be representative of the interest factor thereon. Preferred stock dividends and accretion are included in fixed charges where appropriate. 3 5 CAPSTAR BROADCASTING PARTNERS, INC. UNAUDITED PRO FORMA STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1997 (DOLLARS IN THOUSANDS)
ADJUSTMENTS ADJUSTMENTS PRO FORMA FOR THE FOR THE FOR THE PENDING COMPLETED COMPLETED TRANSACTIONS COMPLETED TRANSACTIONS TRANSACTIONS PENDING AND THE THE COMPANY TRANSACTIONS AND THE AND THE TRANSACTIONS RELATED COMBINED(A) COMBINED(B) FINANCING FINANCING COMBINED(F) FINANCING PRO FORMA ----------- ------------ ------------ ------------- ------------ ------------ --------- Net revenue............... $13,847 25,640 $ -- $ 39,487 $23,685 $ -- $ 63,172 Station operating expenses................ 10,356 20,250 -- 30,606 18,494 -- 49,100 Depreciation and amortization............ 2,389 2,888 1,158(C) 6,435 2,580 1,101(C) 10,116 Corporate expenses........ 1,424 1,256 -- 2,680 1,605 -- 4,285 Other operating expenses................ -- 2,469 -- 2,469 235 -- 2,704 ------- ------- -------- -------- ------- -------- -------- Operating income (loss)............... (322) (1,223) (1,158) (2,703) 771 (1,101) (3,033) Interest expense.......... 6,532 3,268 2,765(D) 12,565 3,028 691(G) 16,284 Gain (loss) on sale of assets.................. -- 5,348 -- 5,348 6 -- 5,354 Increase in fair value of redeemable warrants..... -- -- -- -- 5,882 (5,882)(H) -- Other (income) expense.... (27) (260) -- (287) (66) -- (353) ------- ------- -------- -------- ------- -------- -------- Income (loss) before provision for income taxes................ (6,827) 1,117 (3,923) (9,633) (8,067) 4,090 (13,610) Provision (benefit) for income taxes............ 46 (68) 22(E) -- (2,807) 2,807(E) -- ------- ------- -------- -------- ------- -------- -------- Net income (loss)......... $(6,873) $ 1,185 $ (3,945) $ (9,633) $(5,260) $ 1,283 (13,610) ======= ======= ======== ======== ======= ======== Dividends and accretion on preferred stock(I)................ 3,450 -------- Loss applicable to common shares.................. $(17,060) ======== Deficiency of earnings to fixed charges and preferred stock dividends and accretion(J)............ $ 19,311
See Accompanying Notes to Pro Forma Financial Information. 4 6 CAPSTAR BROADCASTING PARTNERS, INC. UNAUDITED PRO FORMA STATEMENT OF OPERATIONS -- (CONTINUED) FOR THE THREE MONTHS ENDED MARCH 31, 1996 (DOLLARS IN THOUSANDS)
ADJUSTMENTS ADJUSTMENTS FOR THE FOR THE PRO FORMA COMMODORE COMPLETED FOR ACQUISITION TRANSACTIONS COMPLETED AND THE COMPLETED COMBINATION TRANSACTIONS PENDING THE COMPANY RELATED TRANSACTIONS AND THE AND THE TRANSACTIONS COMBINED(K) FINANCING COMBINED(M) FINANCING FINANCING COMBINED(O) ----------- ----------- ------------ ------------ ------------ ------------ Net revenue............................. $ 9,103 $ -- $29,749 $ -- 38,852 $22,292 Station operating expenses.............. 6,862 -- 23,650 -- 30,512 18,248 Depreciation and amortization........... 480 1,336(C) 3,372 1,247(C) 6,435 2,039 Corporate expenses...................... 466 -- 1,621 -- 2,087 1,047 Other operating (income) expenses....... -- -- 273 2,181(N) 2,454 (3) ------- ------- ------- ------- ------- ------- Operating income (loss)............... 1,295 (1,336) 833 (3,428) (2,636) 961 Interest expense........................ 2,452 5,052(L) 2,273 2,788(D) 12,565 2,080 Gain (loss) on sale of assets........... -- -- 6,876 -- 6,876 530 Other (income) expense.................. 52 -- 73 -- 125 (141) ------- ------- ------- ------- ------- ------- Income (loss) before provision for income taxes....................... (1,209) (6,388) 5,363 (6,216) (8,450) (448) Provision (benefit) for income taxes.... 27 (27)(E) 660 (660)(E) -- 29 ------- ------- ------- ------- ------- ------- Net income (loss)....................... $(1,236) $(6,361) $ 4,703 $(5,556) $(8,450) $ (477) ======= ======= ======= ======= ======= ======= Dividends and accretion on preferred stock(I).............................. Loss applicable to common shares........ Deficiency of earnings to fixed charges and preferred stock dividends and accretion(J).......................... ADJUSTMENTS FOR THE PENDING TRANSACTIONS AND THE RELATED FINANCING PRO FORMA ------------ --------- Net revenue............................. $ -- $ 61,144 Station operating expenses.............. -- 48,760 Depreciation and amortization........... 1,642(C) 10,116 Corporate expenses...................... -- 3,134 Other operating (income) expenses....... -- 2,451 -------- -------- Operating income (loss)............... (1,642) (3,317) Interest expense........................ 1,639(G) 16,284 Gain (loss) on sale of assets........... -- 7,406 Other (income) expense.................. -- (16) -------- -------- Income (loss) before provision for income taxes....................... (3,281) (12,179) Provision (benefit) for income taxes.... (29)(E) -- -------- -------- Net income (loss)....................... $ (3,252) (12,179) ======== Dividends and accretion on preferred stock(I).............................. 3,073 -------- Loss applicable to common shares........ $(15,252) ======== Deficiency of earnings to fixed charges and preferred stock dividends and accretion(J).......................... $ 17,252
See Accompanying Notes to Pro Forma Financial Information. 5 7 CAPSTAR BROADCASTING PARTNERS, INC. UNAUDITED PRO FORMA STATEMENT OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 1996 (DOLLARS IN THOUSANDS)
ADJUSTMENTS FOR THE ADJUSTMENTS PRO FORMA COMMODORE FOR THE FOR ACQUISITION COMPLETED COMPLETED AND THE COMPLETED TRANSACTIONS TRANSACTIONS PENDING THE COMPANY RELATED TRANSACTIONS AND THE AND THE TRANSACTIONS COMBINED(P) FINANCING COMBINED(R) FINANCING FINANCING COMBINED(S) ----------- ----------- ------------ ------------ ------------ ------------ Net revenue................................. $ 44,473 $ -- $145,367 $ -- $189,840 $104,691 Station operating expenses.................. 29,798 -- 107,867 -- 137,665 76,433 Depreciation and amortization............... 3,489 3,774(C) 13,610 4,872(C) 25,745 9,654 Corporate expenses.......................... 2,358 -- 5,911 -- 8,269 5,161 Other operating expenses.................... 14,578 (13,834)(Q) 6,875 2,181(N) 9,800 112 -------- -------- -------- -------- -------- -------- Operating income (loss)................... (5,750) 10,060 11,104 (7,053) 8,361 13,331 Interest expense............................ 13,896 16,115(L) 10,639 9,602(D) 50,252 10,169 Gain (loss) on sale of assets............... -- -- 23,155 -- 23,155 496 Increase in fair value of redeemable warrants.................................. -- -- -- -- -- 5,499 Other (income) expense...................... 1,824 -- 292 -- 2,116 (282) -------- -------- -------- -------- -------- -------- Income (loss) before provision for income taxes................................... (21,470) (6,055) 23,328 (16,655) (20,852) (1,559) Provision (benefit) for income taxes........ 133 (133)(E) 2,059 (2,059)(E) -- (2,039) -------- -------- -------- -------- -------- -------- Income (loss) before extraordinary item... (21,603) (5,922) 21,269 (14,596) (20,852) 480 Extraordinary item, loss on early extinguishment of debt.................... -- -- 1,188 -- 1,188 -- -------- -------- -------- -------- -------- -------- Net income (loss)........................... $(21,603) $ (5,922) $ 20,081 $(14,596) $(22,040) $ 480 ======== ======== ======== ======== ======== ======== Dividends and accretion on preferred stock(I).................................. Loss applicable to common shares............ Deficiency of earnings to fixed charges and preferred stock dividends and accretion (J)............................. ADJUSTMENTS FOR THE PENDING TRANSACTIONS AND THE RELATED FINANCING PRO FORMA ------------ --------- Net revenue................................. $ -- $294,531 Station operating expenses.................. -- 214,098 Depreciation and amortization............... 5,070(C) 40,469 Corporate expenses.......................... -- 13,430 Other operating expenses.................... -- 9,912 ------- -------- Operating income (loss)................... (5,070) 16,622 Interest expense............................ 4,707(G) 65,128 Gain (loss) on sale of assets............... -- 23,651 Increase in fair value of redeemable warrants.................................. (5,499)(H) -- Other (income) expense...................... -- 1,834 ------- -------- Income (loss) before provision for income taxes................................... (4,278) (26,689) Provision (benefit) for income taxes........ 2,039(E) -- ------- -------- Income (loss) before extraordinary item... (6,317) (26,689) Extraordinary item, loss on early extinguishment of debt.................... -- 1,188 ------- -------- Net income (loss)........................... $(6,317) (27,877) ======= Dividends and accretion on preferred stock(I).................................. 12,843 -------- Loss applicable to common shares............ $(40,720) ======== Deficiency of earnings to fixed charges and preferred stock dividends and accretion (J)............................. $ 46,711
See Accompanying Notes to Pro Forma Financial Information. 6 8 CAPSTAR BROADCASTING PARTNERS, INC. UNAUDITED PRO FORMA BALANCE SHEET AS OF MARCH 31, 1997 (DOLLARS IN THOUSANDS)
ADJUSTMENTS PRO FORMA FOR THE FOR COMPLETED COMPLETED TRANSACTIONS TRANSACTIONS PENDING COMPLETED AND THE AND THE TRANSACTIONS THE COMPANY TRANSACTIONS(T) FINANCING FINANCING COMBINED(FF) ----------- --------------- ------------ ------------ ------------ ASSETS Current Assets: Cash and cash equivalents............. $ 13,025 $ 11,123 $ (571)(U) $ 9,137 $ 5,128 (14,440)(V) Accounts receivable, net.............. 13,051 16,253 (2,648)(U) 26,656 18,202 Prepaid expenses and other............ 17,142 3,250 (699)(U) 19,363 3,213 (330)(W) -------- -------- -------- -------- -------- Total current assets............ 43,218 30,626 (18,688) 55,156 26,543 Property and equipment, net............. 41,991 38,514 13,478(U) 93,983 33,489 Intangible and other assets, net........ 358,891 152,695 165,434(U) 685,552 160,623 (550)(X) (396)(U) 11,750(Y) (2,272)(Z) -------- -------- -------- -------- -------- Total assets.................... $444,100 $221,835 $168,756 $834,691 $220,655 ======== ======== ======== ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable and other accrued expenses............................ $ 15,490 $ 11,096 $ (1,300)(U) $ 25,286 $ 9,856 Current portion of long-term debt..... -- 16,272 (16,272)(U) -- 9,476 -------- -------- -------- -------- -------- Total current liabilities....... 15,490 27,368 (17,572) 25,286 19,332 Long-term debt, less current portion(PP)........................... 229,955 125,732 (43,172)(U) 429,167 111,375 (82,560)(Z) 199,212(AA) 60,000(BB) (60,000)(BB) Other long-term liabilities............. 57,757 6,047 2,340(U) 66,144 290 -------- -------- -------- -------- -------- Total liabilities............... 303,202 159,147 58,248 520,597 130,997 Senior exchangeable preferred stock(PP)............................. -- -- 94,750(CC) 94,750 -- Redeemable preferred stock.............. -- 23,081 (23,081)(DD) -- 20,747 Redeemable warrants..................... -- -- -- -- 17,803 Stockholders' equity (deficit).......... 140,898 39,607 (37,970)(U) 219,344 51,108 750(BB) (750)(BB) 84,500(EE) (2,272)(Z) (5,419)(DD) -------- -------- -------- -------- -------- Total liabilities and stockholders' equity.......... $444,100 $221,835 $168,756 $834,691 $220,655 ======== ======== ======== ======== ======== ADJUSTMENTS FOR THE PENDING TRANSACTIONS AND THE RELATED FINANCING PRO FORMA ------------ ---------- ASSETS Current Assets: Cash and cash equivalents............. $ (3,896)(GG) $ 1,837 (8,532)(HH) Accounts receivable, net.............. (5,724)(GG) 38,810 (324)(II) Prepaid expenses and other............ (1,918)(GG) 7,152 (6)(II) (13,500)(JJ) --------- ---------- Total current assets............ (33,900) 47,799 Property and equipment, net............. 18,785(GG) 145,917 (340)(II) Intangible and other assets, net........ 244,669(GG) 1,085,959 (435)(II) (4,375)(GG) (75)(KK) --------- ---------- Total assets.................... $ 224,329 $1,279,675 ========= ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable and other accrued expenses............................ $ (5,945)(GG) $ 28,975 (222)(II) Current portion of long-term debt..... (9,476)(LL) -- --------- ---------- Total current liabilities....... (15,643) 28,975 Long-term debt, less current portion(PP)........................... (111,375)(LL) 615,113 185,946(MM) Other long-term liabilities............. 43,116(GG) 109,549 (1)(II) --------- ---------- Total liabilities............... 102,043 753,637 Senior exchangeable preferred stock(PP)............................. 94,750 Redeemable preferred stock.............. (20,747)(NN) -- Redeemable warrants..................... (17,803)(NN) -- Stockholders' equity (deficit).......... (51,108)(OO) 431,288 (882)(II) 221,217(MM) (8,391)(NN) --------- ---------- Total liabilities and stockholders' equity.......... $ 224,329 $1,279,675 ========= ==========
See Accompanying Notes to Pro Forma Financial Information. 7 9 NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION (DOLLARS IN THOUSANDS) (A) The schedule below gives effect to the historical acquisitions of the Company consummated prior to March 31, 1997 for the period from January 1, 1997 through March 31, 1997. THE COMPANY
ADJUSTMENTS FOR THE HISTORICAL ACQUISITIONS THE THE BY THE COMPANY COMPANY COMPANY(2) COMBINED ------- ------------ -------- Net revenue.......................................... $14,107 $(260) $13,847 Station operating expenses........................... 10,356 -- 10,356 Depreciation and amortization........................ 2,389 -- 2,389 Corporate expenses................................... 1,424 -- 1,424 Other operating expenses............................. -- -- -- ------- ----- ------- Operating income.................................. (62) (260) (322) Interest expense..................................... 6,792 (260) 6,532 Gain (loss) on sale of assets........................ -- -- -- Other (income) expense............................... (27) -- (27) ------- ----- ------- Income (loss) before provision for income taxes... (6,827) -- (6,827) Provision (benefit) for income taxes................. 46 -- 46 ------- ----- ------- Income (loss) before extraordinary loss........... (6,873) -- (6,873) Extraordinary loss on early extinguishment of debt... 598 (598)(3) -- ------- ----- ------- Net income (loss)................................. $(7,471) $ 598 $(6,873) ======= ===== ======= Deficiency of earnings to fixed charges(1)........... $ 6,827
- --------------- (1) For purposes of this calculation, "earnings" consist of income (loss) before income taxes and fixed charges, and "fixed charges" consist of interest, amortization of deferred financing costs and the component of rental expense believed by management to be representative of the interest factor thereon. (2) The column gives effect to the LMA fees related to the Community Pacific Acquisition. (3) The adjustment reflects the elimination of an extraordinary loss related to the extinguishment of the Company's former credit facility in connection with the Osborn Acquisition during the pro forma period. 8 10 NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED) (DOLLARS IN THOUSANDS) (B) The schedule below gives effect to the following for the period from January 1, 1997 through March 31, 1997: (i) the historical acquisitions and dispositions of the indicated entities consummated prior to March 31, 1997 and (ii) the acquisitions and dispositions of the indicated entities which were pending at March 31, 1997 and were consummated prior to the date of this current report. COMPLETED TRANSACTIONS COMBINED
OTHER HISTORICAL COMPLETED HISTORICAL HISTORICAL HISTORICAL COMMUNITY TRANSACTIONS OSBORN(1) GULFSTAR BENCHMARK PACIFIC COMBINED(2) ---------- ---------- ---------- ---------- --------------- Net revenue..................................... $3,577 $10,995 $ 6,444 $1,681 $2,098 Station operating expenses...................... 2,937 7,948 5,338 1,311 1,974 Depreciation and amortization................... 418 1,001 1,336 350 (217) Corporate expenses.............................. 268 518 265 197 8 Other operating expenses........................ -- 2,469 -- -- -- ------ ------- ------- ------ ------ Operating income (loss)....................... (46) (941) (495) (177) 333 Interest expense................................ 385 1,846 937 238 (138) Gain (loss) on sale of assets................... 5,348 -- -- -- -- Other (income) expense.......................... (212) (36) (61) 2 47 ------ ------- ------- ------ ------ Income (loss) before provision for income taxes...................................... 5,129 (2,751) (1,371) (417) 424 Provision (benefit) for income taxes............ 32 (102) -- -- 2 ------ ------- ------- ------ ------ Net income (loss)............................. $5,097 $(2,649) $(1,371) $ (417) $ 422 ====== ======= ======= ====== ====== ADJUSTMENTS FOR COMPLETED HISTORICAL TRANSACTIONS TRANSACTIONS(3) COMBINED --------------- ------------ Net revenue..................................... $845 $25,640 Station operating expenses...................... 742 20,250 Depreciation and amortization................... -- 2,888 Corporate expenses.............................. -- 1,256 Other operating expenses........................ -- 2,469 ---- ------- Operating income (loss)....................... 103 (1,223) Interest expense................................ -- 3,268 Gain (loss) on sale of assets................... -- 5,348 Other (income) expense.......................... -- (260) ---- ------- Income (loss) before provision for income taxes...................................... 103 1,117 Provision (benefit) for income taxes............ -- (68) ---- ------- Net income (loss)............................. $103 $ 1,185 ==== =======
- --------------- (1) The column represents the consolidated results of operations of Osborn from January 1, 1997 through February 20, 1997, the date of the Osborn Acquisition. (2) The column represents the historical combined operating results of the following entities and stations which were acquired or sold prior to the date of this current report: (i) Stephens Radio, acquired by GulfStar prior to the GulfStar Transaction; (ii) Space Coast, Cavalier, McForhun and Livingston, all acquired by the Company; (iii) WESC-AM/FM and WFNQ-FM, all sold by Benchmark prior to the Benchmark Acquisition; (iv) WMCZ-FM, WMHS-FM and WZHT-FM, all acquired by Benchmark prior to the Benchmark Acquisition; (v) the stations acquired in the Osborn Add-on Acquisitions; and (vi) the stations sold in the Osborn Ft. Myers Disposition. (3) The adjustments give effect to the historical operating results and/or LMA or JSA expense and/or revenue of the following stations which were acquired prior to March 31, 1997: (i) WYNU-FM and WTXT-FM, both acquired by Osborn; (ii) WSCQ-FM, WFMX-FM and WSIC-AM, all acquired by Benchmark; (iii) KTRA-FM, KKFG-FM, KDAG-FM and KCQL-AM, all acquired by GulfStar; and (iv) the stations acquired in the Osborn Add-on Acquisitions. 9 11 NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED) (DOLLARS IN THOUSANDS) (C) The adjustment reflects (i) a change in depreciation and amortization resulting from conforming the estimated useful lives of the acquired stations and (ii) the additional depreciation and amortization expense resulting from the allocation of the purchase price of the acquired stations including an increase in property and equipment, FCC licenses, and intangible assets to their estimated fair market value and the recording of goodwill associated with the acquisitions. Goodwill and FCC licenses are being amortized over 40 years. (D) The adjustment reflects interest expense associated with (i) the Existing Capstar Radio Notes, (ii) the Notes, (iii) the New Capstar Radio Notes, (iv) the Credit Facility, and (v) the amortization of deferred financing fees associated with the Notes, the New Capstar Radio Notes and the Credit Facility, net of interest expense related to the existing indebtedness of the companies included within the Completed Transactions Combined and the Company. Deferred financing fees are amortized over the term of the related debt.
THREE MONTHS YEAR ENDED ENDED MARCH 31, DECEMBER 31, ----------------- 1996 1996 1997 ------------ ------- ------- Existing Capstar Radio Notes........................... $ 8,878 $ 2,220 $ 2,220 Notes.................................................. 20,261 5,065 5,065 New Capstar Radio Notes................................ 18,427 4,607 4,607 -------- ------- ------- Interest expense before amortization of deferred financing fees....................................... 47,566 11,892 11,892 Amortization of deferred financing fees................ 2,686 673 673 -------- ------- ------- Pro forma interest expense........................... 50,252 12,565 12,565 Pro forma interest expense for the Company and Commodore............................................ (30,011) (7,504) -- Historical interest expense for the Company............ -- -- (6,532) Historical interest expense for the Completed Transactions Combined................................ (10,639) (2,273) (3,268) -------- ------- ------- Net adjustment....................................... $ 9,602 $ 2,788 $ 2,765 ======== ======= =======
(E) The adjustment reflects the elimination of historical income tax expense (benefit) as the Company would have generated a taxable loss during the pro forma period. 10 12 NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED) (DOLLARS IN THOUSANDS) (F) The columns represent the combined income statements for the period from January 1, 1997 through March 31, 1997 of the acquisitions and dispositions of the Company which were pending at March 31, 1997 and have not been consummated as of the date of this current report. PENDING TRANSACTIONS COMBINED
OTHER HISTORICAL PENDING PENDING HISTORICAL HISTORICAL KNIGHT HISTORICAL HISTORICAL TRANSACTIONS TRANSACTIONS MADISON PATTERSON QUALITY AMERON QUASS COMBINED(1) COMBINED ---------- ---------- ---------- ---------- ---------- --------------- ------------ Net revenue.................. $2,028 $10,727 $3,663 $1,856 $921 $4,490 $23,685 Station operating expenses... 1,246 8,319 2,965 1,616 689 3,659 18,494 Depreciation and amortization............... 376 1,162 206 167 73 596 2,580 Corporate expenses........... 47 1,151 371 -- -- 36 1,605 Other operating expenses..... -- 233 -- -- 2 -- 235 ------ ------- ------ ------ ---- ------ ------- Operating income (loss).... 359 (138) 121 73 157 199 771 Interest expense............. 348 1,716 165 218 86 495 3,028 Gain (loss) on sale of assets..................... -- -- 6 -- -- -- 6 Increase in fair value of redeemable warrants........ -- 5,882 -- -- -- -- 5,882 Other (income) expense....... -- (3) (36) 5 -- (32) (66) ------ ------- ------ ------ ---- ------ ------- Income (loss) before provision for income taxes................... 11 (7,733) (2) (150) 71 (264) (8,067) Provision (benefit) for income taxes............... -- (2,861) 24 -- 30 -- (2,807) ------ ------- ------ ------ ---- ------ ------- Net income (loss).......... $ 11 $(4,872) $ (26) $ (150) $ 41 $ (264) $(5,260) ====== ======= ====== ====== ==== ====== =======
--------------------- (1) The column represents the historical combined operating results of the following entities and stations to be acquired or sold subsequent to the date of this current report: (i) WMEZ-FM, KRDU-AM, KJOI-FM, and WQFN-FM, all pending acquisitions of Patterson; (ii) Emerald City, COMCO, Commonwealth, WRIS, Griffith, Grant, the stations to be acquired in the SFX Exchange, American General, KLAW, KJEM, and Booneville, all pending acquisitions of the Company; and (iii) WTAW-FM, KTSR-FM, and KAGG-FM, all pending dispositions of the Company. 11 13 NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED) (DOLLARS IN THOUSANDS) (G) The adjustment reflects interest expense associated with (i) the Existing Capstar Radio Notes, (ii) the Notes, (iii) the New Capstar Radio Notes, (iv) the Credit Facility and (v) the amortization of deferred financing fees associated with the Notes, the New Capstar Radio Notes and the Credit Facility, all net of interest expense related to the existing indebtedness of the companies included within the Pending Transactions Combined and the Company. Deferred financing fees are amortized over the term of the related debt.
THREE MONTHS YEAR ENDED ENDED MARCH 31, DECEMBER 31, -------------------- 1996 1996 1997 ------------ -------- -------- Existing Capstar Radio Notes........................ $ 8,878 $ 2,220 $ 2,220 Notes............................................... 20,261 5,065 5,065 New Capstar Radio Notes............................. 18,427 4,607 4,607 The Credit Facility at 8.0%......................... 14,876 3,719 3,719 -------- -------- -------- Interest expense before amortization of deferred financing fees.............................................. 62,442 15,611 15,611 Amortization of deferred financing fees............. 2,686 673 673 -------- -------- -------- Pro forma interest expense........................ 65,128 16,284 16,284 Pro forma interest expense for the Completed Transactions...................................... (50,252) (12,565) (12,565) Historical interest expense for the Pending Transactions Combined............................. (10,169) (2,080) (3,028) -------- -------- -------- Net adjustment.................................... $ 4,707 $ 1,639 $ 691 ======== ======== ========
(H) The adjustment reflects the elimination of the increase in fair value of the redeemable warrants as the warrants will be repurchased in connection with the Patterson Acquisition. (I) The adjustment reflects the dividends and accretion on the Senior Exchangeable Preferred Stock. (J) For purposes of this calculation, "earnings" consist of income (loss) before income taxes and fixed charges, and "fixed charges" consist of interest, amortization of deferred financing costs and the component of rental expense believed by management to be representative of the interest factor thereon. Preferred stock dividends and accretion are included in fixed charges where appropriate. 12 14 NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED) (DOLLARS IN THOUSANDS) (K) The schedule below gives effect to the historical acquisitions of the Company's predecessor, Commodore, consummated prior to March 31, 1997 for the period from January 1, 1996 through March 31, 1996. THE COMPANY
ADJUSTMENTS FOR THE HISTORICAL THE ACQUISITIONS BY THE COMPANY COMPANY(1) COMMODORE(3) COMBINED ---------- --------------- ----------- Net revenue................................... $ 7,416 $1,687 $ 9,103 Station operating expenses.................... 5,375 1,487 6,862 Depreciation and amortization................. 480 -- 480 Corporate expenses............................ 466 -- 466 Other operating expenses...................... -- -- -- ------- ------ ------- Operating income (loss)..................... 1,095 200 1,295 Interest expense.............................. 2,452 -- 2,452 Gain (loss) on sale of assets................. -- -- -- Other (income) expense........................ 52 -- 52 ------- ------ ------- Income (loss) before provision for income taxes.................................... (1,409) 200 (1,209) Provision (benefit) for income taxes.......... 27 -- 27 ------- ------ ------- Net income (loss)........................... $(1,436) $ 200 $(1,236) ======= ====== ======= Deficiency of earnings to fixed charges(2).... $ 1,409
- --------------- (1) The column represents the results of operations of the Company's predecessor, Commodore, from January 1, 1996 through March 31, 1996. (2) For purposes of this calculation, "earnings" consist of income (loss) before income taxes and fixed charges, and "fixed charges" consist of interest, amortization of deferred financing costs and the component of rental expense believed by management to be representative of the interest factor thereon. (3) The column gives effect to the historical operating results and LMA and JSA revenue and expense of the following stations acquired by the Commodore: the stations acquired in the Huntington Acquisition (as defined), WKHL-FM, WSTC-AM, WAVW-FM, WBBE-FM, WAXE-AM, WAXB-FM, WZZN-FM and WPUT-AM. (L) The adjustment reflects interest expense associated with (i) the Existing Capstar Radio Notes, (ii) the Notes, and (iii) the amortization of deferred financing fees associated with the Notes, net of interest expense related to the existing indebtedness of the Company and Commodore. Deferred financing fees are amortized over the term of the related debt.
YEAR ENDED THREE MONTHS ENDED DECEMBER 31, 1996 MARCH 31, 1996 ----------------- -------------------- Existing Capstar Radio Notes....................... $ 8,878 $ 2,220 Notes.............................................. 20,261 5,065 ------- ------- Interest expense before amortization of deferred financing fees................................... 29,139 7,285 Amortization of deferred financing fees............ 872 219 ------- ------- Pro forma interest expense....................... 30,011 7,504 Historical interest expense for the Company........ (5,035) -- Historical interest expense for Commodore.......... (8,861) (2,452) ------- ------- Net adjustment..................................... $16,115 $ 5,052 ======= =======
13 15 NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED) (DOLLARS IN THOUSANDS) (M) The schedule below gives effect to the following for the period from January 1, 1996 through March 31, 1996: (i) the historical acquisitions and dispositions of the indicated entities consummated prior to March 31, 1997; and (ii) the acquisitions and dispositions of the indicated entities which were pending at March 31, 1997 and were consummated prior to the date of this current report. COMPLETED TRANSACTIONS COMBINED
OTHER ADJUSTMENTS HISTORICAL COMPLETED FOR COMPLETED HISTORICAL HISTORICAL HISTORICAL COMMUNITY TRANSACTIONS HISTORICAL TRANSACTIONS OSBORN GULFSTAR BENCHMARK PACIFIC COMBINED(1) TRANSACTIONS(2) COMBINED ---------- ---------- ---------- ---------- ------------ --------------- ------------ Net revenue......... $6,852 $4,595 $ 6,217 $2,403 $3,046 $6,636 $29,749 Station operating expenses.......... 5,868 3,604 4,964 2,025 2,285 4,904 23,650 Depreciation and amortization...... 1,211 677 1,330 329 (175) -- 3,372 Corporate expenses.......... 457 171 819 166 8 -- 1,621 Other operating expenses.......... -- 273 -- -- -- -- 273 ------ ------ ------- ------ ------ ------ ------- Operating income (loss).......... (684) (130) (896) (117) 928 1,732 833 Interest expense.... 635 851 646 216 (75) -- 2,273 Gain (loss) on sale of assets......... 6,874 -- -- -- 2 -- 6,876 Other (income) expense........... 93 (4) (58) 50 (8) -- 73 ------ ------ ------- ------ ------ ------ ------- Income (loss) before provision for income taxes........... 5,462 (977) (1,484) (383) 1,013 1,732 5,363 Provision (benefit) for income taxes............. 851 (191) -- -- -- -- 660 ------ ------ ------- ------ ------ ------ ------- Net income (loss).......... $4,611 $ (786) $(1,484) $ (383) $1,013 $1,732 $ 4,703 ====== ====== ======= ====== ====== ====== =======
- --------------- (1) The column represents the historical combined operating results of the following entities and stations which were acquired or sold prior to the date of this current report: (i) Stephens Radio, KWHN-AM, KMAG-FM, KLLI-FM and KYGL-FM, all acquired by GulfStar prior to the GulfStar Transaction; (ii) Space Coast, Cavalier, McForhun and Livingston, all acquired by the Company; (iii) the stations acquired in the Osborn Add-on Acquisitions; (iv) WESC-AM/FM and WFNQ-FM, all sold by Benchmark prior to the Benchmark Acquisition; (iv) WMCZ-FM, WMHS-FM and WZHT-FM, all acquired by Benchmark prior to the Benchmark Acquisition; and (v) the stations sold in the Osborn Ft. Myers Disposition. (2) The adjustments give effect to the historical operating results and/or LMA or JSA expense and/or revenue of the following stations which were acquired or sold prior to March 31, 1997: (i) WKWK-FM, WRIR-FM, WGEW-FM, WEEL-FM, WBBD-AM, WYNU-FM and WTXT-FM, all acquired by Osborn prior to the Osborn Acquisition; (ii) WWRD-FM, WNDR-AM, WNTQ-FM, WFXK-FM, WAYV-FM, and WFKS-FM, all sold by Osborn prior to the Osborn Acquisition; (iii) KRYS-AM/FM, KMXR-FM, KNCN-FM, KEZA-FM, KKIX-FM, KKZQ-FM, KIIZ-FM, KLFX-FM, KFMX-FM, KKAM-AM, KRLB-FM, KZII-FM, KFYO-AM, KBRQ-FM, KKTK-AM, WACO-FM, KCKR-FM, KWTX-AM/FM, KTRA-FM, KKFG-FM, KDAG-FM, and KCQL-AM, all acquired by GulfStar; (iv) KLTX-AM, sold by GulfStar; (v) WJMI-FM, WOAD-FM, WKXI-FM/AM, WSCQ-FM, WFMX-FM, WSIC-AM, KRMD-AM/FM and WJMZ-FM, all acquired by Benchmark; and (vi) WLTY-FM, WTAR-AM and WKOC-FM, all sold by Benchmark. (N) The adjustment collectively gives effect to the warrants issued to R. Steven Hicks in connection with the financing of the Commodore Acquisition, the Osborn Acquisition and the GulfStar Transaction. 14 16 NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED) (DOLLARS IN THOUSANDS) (O) The column represents the combined income statements for the period from January 1, 1996 through March 31, 1996 of the acquisitions and dispositions of the Company which were pending at March 31, 1997 and have not been consummated as of the date of this current report. PENDING TRANSACTIONS COMBINED
HISTORICAL HISTORICAL HISTORICAL POINT HISTORICAL KNIGHT HISTORICAL HISTORICAL MIDCONTINENT COMMUNICATIONS PATTERSON QUALITY AMERON QUASS ------------ -------------- ---------- ---------- ---------- ---------- Net revenue..................... $ 735 $ 950 $6,097 $3,757 $1,602 $894 Station operating expenses...... 794 684 5,144 2,949 1,461 708 Depreciation and amortization... 108 382 522 259 165 69 Corporate expenses.............. -- 52 576 371 -- -- Other operating income.......... -- -- -- -- -- (3) ----- ----- ------ ------ ------ ---- Operating income (loss)....... (167) (168) (145) 178 (24) 120 Interest expense................ -- 260 821 174 221 103 Gain (loss) on sale of assets... -- -- -- 530 -- -- Other (income) expense.......... (17) -- (55) (19) (11) (7) ----- ----- ------ ------ ------ ---- Income (loss) before provision for income taxes........... (150) (428) (911) 553 (234) 24 Provision (benefit) for income taxes......................... (51) -- -- 69 -- 11 ----- ----- ------ ------ ------ ---- Net income (loss)............. $ (99) $(428) $ (911) $ 484 $ (234) $ 13 ===== ===== ====== ====== ====== ==== OTHER PENDING ADJUSTMENTS FOR PENDING TRANSACTIONS HISTORICAL TRANSACTIONS COMBINED(1) TRANSACTIONS(2) COMBINED ------------ --------------- ------------ Net revenue..................... $4,396 $3,861 $22,292 Station operating expenses...... 3,665 2,843 18,248 Depreciation and amortization... 534 -- 2,039 Corporate expenses.............. 48 1,047 Other operating income.......... -- (3) ------ ------ ------- Operating income (loss)....... 149 1,018 961 Interest expense................ 501 2,080 Gain (loss) on sale of assets... -- -- 530 Other (income) expense.......... (32) -- (141) ------ ------ ------- Income (loss) before provision for income taxes........... (320) 1,018 (448) Provision (benefit) for income taxes......................... -- -- 29 ------ ------ ------- Net income (loss)............. $ (320) $1,018 $ (477) ====== ====== =======
- --------------- (1) The column represents the historical combined operating results of the following entities and stations to be acquired or sold subsequent to the date of this current report: (i) WMEZ-FM, KRDU-AM, KJOI-FM, and WQFN-FM, all pending acquisitions of Patterson; and (ii) Emerald City, COMCO, Commonwealth, WRIS, Griffith, Grant, the stations to be acquired in the SFX Exchange, Noalmark, American General, KLAW, KJEM and Booneville, all pending acquisitions of the Company. (2) The adjustments give effect to the historical operating results and/or LMA or JSA expense and/or revenue of the following stations: WNNK-FM, WTCY-AM, WXBM-FM, WWSF-FM, WSOK-AM, WLVH-FM, WAEV-FM, KIKI-FM/AM, KKLV-FM, KHVH-AM, WFMB-FM/AM, WCVS-FM, KCBL-AM, KBOS-FM and KTHT-FM, all purchased by Patterson prior to March 31, 1997. 15 17 NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED) (DOLLARS IN THOUSANDS) (P) The schedule below gives effect to the historical acquisitions of the Company's predecessor, Commodore, consummated prior to March 31, 1997 for the period from January 1, 1996 through December 31, 1996. THE COMPANY
ADJUSTMENTS FOR THE HISTORICAL THE HISTORICAL ACQUISITIONS BY THE COMPANY COMPANY(1) COMMODORE(3) COMMODORE(4) COMBINED ---------- ------------ --------------- ----------- Net revenue......................... $10,303 $ 31,957 $2,213 $ 44,473 Station operating expenses.......... 6,283 21,291 2,224 29,798 Depreciation and amortization....... 1,331 2,158 -- 3,489 Corporate expenses.................. 601 1,757 -- 2,358 Other operating expenses............ 744 13,834 -- 14,578 ------- -------- ------ -------- Operating income (loss)........... 1,344 (7,083) (11) (5,750) Interest expense.................... 5,035 8,861 -- 13,896 Gain (loss) on sale of assets....... -- -- -- -- Other (income) expense.............. 65 1,759 -- 1,824 ------- -------- ------ -------- Income (loss) before provision for income taxes................... (3,756) (17,703) (11) (21,470) Provision (benefit) for income taxes............................. -- 133 -- 133 ------- -------- ------ -------- Net income (loss)................. $(3,756) $(17,836) $ (11) $(21,603) ======= ======== ====== ======== Deficiency of earnings to fixed charges(2)........................ $ 3,756
- --------------- (1) The column represents the consolidated result of operations of the Company and its predecessor, Commodore, from October 17, 1996 through December 31, 1996. (2) For purposes of this calculation, "earnings" consist of income (loss) before income taxes and fixed charges, and "fixed charges" consist of interest, amortization of deferred financing costs and the component of rental expense believed by management to be representative of the interest factor thereon. (3) The column represents the consolidated results of operations of Commodore from January 1, 1996 through October 16, 1996, the date of the Commodore Acquisition. (4) The column gives effect to the historical operating results and LMA or JSA revenue and expense of the following stations acquired by Commodore: the stations acquired in the Huntington Acquisition, WKHL-FM, WSTC-AM, WAVW-FM, WBBE-FM, WAXE-AM, WAXB-FM, WZZN-FM and WPUT-AM. (Q) The adjustment reflects the elimination of (i) merger related compensation expenses and (ii) other expenses related to the acquisition of Commodore by the Company, including costs related to the abandoned initial public offering of Commodore. These expenses were recognized by Commodore in connection with the acquisition. 16 18 NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED) (DOLLARS IN THOUSANDS) (R) The schedule below gives effect to the following for the period from January 1, 1996 through December 31, 1996: (i) the historical acquisitions and dispositions of the indicated entities consummated prior to March 31, 1997, and (ii) the acquisitions and dispositions of the indicated entities which were pending at March 31, 1997 and were consummated prior to the date of this current report. COMPLETED TRANSACTIONS COMBINED
OTHER ADJUSTMENTS HISTORICAL COMPLETED FOR COMPLETED HISTORICAL HISTORICAL HISTORICAL COMMUNITY TRANSACTIONS HISTORICAL TRANSACTIONS OSBORN GULFSTAR BENCHMARK PACIFIC COMBINED(1) TRANSACTIONS(2) COMBINED ---------- ---------- ---------- ---------- --------------- --------------- ------------ Net revenue......... $37,215 $32,563 $27,255 $11,199 $12,742 $24,393 $145,367 Station operating expenses.......... 28,823 24,299 21,253 8,916 8,142 16,434 107,867 Depreciation and amortization...... 4,756 2,810 5,320 1,416 (692) -- 13,610 Corporate expenses.......... 1,850 1,923 1,513 760 (135) -- 5,911 Other operating expenses.......... 1,200 5,432 -- -- 243 -- 6,875 ------- ------- ------- ------- ------- ------- -------- Operating income (loss).......... 586 (1,901) (831) 107 5,184 7,959 11,104 Interest expense.... 2,202 4,604 3,384 933 (484) -- 10,639 Gain (loss) on sale of assets......... 13,522 -- 9,612 (11) 32 -- 23,155 Other (income) expense........... 291 829 (679) 8 (157) -- 292 ------- ------- ------- ------- ------- ------- -------- Income (loss) before provision for income taxes........... 11,615 (7,334) 6,076 (845) 5,857 7,959 23,328 Provision (benefit) for income taxes............. 2,379 (322) -- -- 2 -- 2,059 ------- ------- ------- ------- ------- ------- -------- Income (loss) before extraordinary item............ 9,236 (7,012) 6,076 (845) 5,855 7,959 21,269 Extraordinary item, loss on early extinguishment of debt.............. -- 1,188 -- -- -- -- 1,188 ------- ------- ------- ------- ------- ------- -------- Net income........ $ 9,236 $(8,200) $ 6,076 $ (845) $ 5,855 $ 7,959 $ 20,081 ======= ======= ======= ======= ======= ======= ========
- --------------- (1) The column represents the historical combined operating results of the following entities and stations which were acquired or sold prior to the date of this current report: (i) Stephens Radio, KWHN-AM, KMAG-FM, KLLI-FM and KYGL-FM, all acquired by GulfStar prior to the GulfStar Transaction; (ii) Space Coast, Cavalier, McForhun and Livingston, all acquired by the Company; (iii) the stations acquired in the Osborn Add-on Acquisitions; (iv) WESC-AM/FM and WFNQ-FM, all sold by Benchmark prior to the Benchmark Acquisition; (v) WMCZ-FM, WMHS-FM and WZHT-FM, all acquired by Benchmark prior to the Benchmark Acquisition; and (vi) the stations sold in the Osborn Ft. Myers Disposition. (2) The adjustments give effect to the historical operating results and/or LMA or JSA expense and/or revenue of the following stations which were acquired or sold prior to March 31, 1997: (i) WKWK-FM, WRIR-FM, WEGW-FM, WEEL-FM, WBBD-AM, WYNU-FM and WTXT-FM, all acquired by Osborn; (ii) WWRD-FM, WNDR-AM, WNTQ-FM, WFXK-FM, WAYV-FM, and WFKS-FM, all sold by Osborn; (iii) KRYS-AM/FM, KMXR-FM, KNCN-FM, KEZA-FM, KKIX-FM, KKZQ-FM, KIIZ-FM, KLFX-FM, KLTX-FM, KFMX-FM, KKAM-AM, KRLB-FM, KZII-FM, KFYO-AM, KBRQ-FM, KKTK-AM, WACO-FM, KCKR-FM, KWTX-AM/FM, KTRA-FM, KKFG-FM, KDAG-FM, and KCQL-AM, all acquired by GulfStar; (iv) KLTX-AM, sold by GulfStar; (v) WJMI-FM, WOAD-FM, WKXI-FM/AM, WSCQ-FM, WFMX-FM, WSIC-AM, KRMD-AM/FM and WJMZ-FM, all acquired by Benchmark; and (vi) WLTY-FM, WTAR-AM and WKOC-FM, all sold by Benchmark. 17 19 NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED) (DOLLARS IN THOUSANDS) (S) The column represents the combined income statements for the period from January 1, 1996 through December 31, 1996 of the acquisitions and dispositions which were pending at March 31, 1997 and have not been consummated as of the date of this current report. PENDING TRANSACTIONS COMBINED
HISTORICAL HISTORICAL HISTORICAL POINT HISTORICAL KNIGHT HISTORICAL HISTORICAL MIDCONTINENT COMMUNICATIONS PATTERSON QUALITY AMERON QUASS ------------ -------------- ---------- ---------- ---------- ---------- Net revenue................... $3,446 $5,601 $41,369 $16,597 $8,131 $4,037 Station operating expenses.... 2,555 3,430 30,225 12,812 5,858 3,273 Depreciation and amortization................ 405 1,538 3,537 1,005 663 293 Corporate expenses............ -- 179 2,624 2,084 -- -- Other operating (income) expenses.................... -- -- 143 -- -- (31) ------ ------ ------- ------- ------ ------ Operating income (loss)..... 486 454 4,840 696 1,610 502 Interest expense.............. -- 1,071 5,052 710 843 428 Gain (loss) on sale of assets...................... -- -- -- 568 -- -- Increase in fair value of redeemable warrants......... -- -- 5,499 -- -- -- Other (income) expense........ (69) (8) (37) (60) 76 (26) ------ ------ ------- ------- ------ ------ Income (loss) before provision for income taxes..................... 555 (609) (5,674) 614 691 100 Provision (benefit) for income taxes....................... 189 -- (2,344) 77 -- 39 ------ ------ ------- ------- ------ ------ Net income (loss)........... $ 366 $ (609) $(3,330) $ 537 $ 691 $ 61 ====== ====== ======= ======= ====== ====== OTHER PENDING ADJUSTMENTS FOR PENDING TRANSACTIONS HISTORICAL TRANSACTIONS COMBINED(1) TRANSACTIONS(2) COMBINED ------------ --------------- ------------ Net revenue................... $18,098 $7,412 $104,691 Station operating expenses.... 13,434 4,846 76,433 Depreciation and amortization................ 2,213 -- 9,654 Corporate expenses............ 274 -- 5,161 Other operating (income) expenses.................... -- -- 112 ------- ------ -------- Operating income (loss)..... 2,177 2,566 13,331 Interest expense.............. 2,065 -- 10,169 Gain (loss) on sale of assets...................... (72) -- 496 Increase in fair value of redeemable warrants......... -- -- 5,499 Other (income) expense........ (158) -- (282) ------- ------ -------- Income (loss) before provision for income taxes..................... 198 2,566 (1,559) Provision (benefit) for income taxes....................... -- -- (2,039) ------- ------ -------- Net income (loss)........... $ 198 $2,566 $ 480 ======= ====== ========
- --------------- (1) The column represents the historical combined operating results of the following entities and stations to be acquired or sold subsequent to the date of this current report: (i) WMEZ-FM, KRDU-AM, KJOI-FM, and WQFN-FM, all pending acquisitions of Patterson; (ii) Emerald City, COMCO, Commonwealth, WRIS, Griffith, Grant, the stations be acquired in the SFX Exchange, Noalmark, American General, KLAW, KJEM, and Booneville, all pending acquisitions of the Company; and (iii) WTAW-AM, KTSR-FM and KAGG-FM, all pending dispositions of the Company. (2) The adjustments give effect to the historical operating results and/or LMA or JSA expense and/or revenue of the following stations: WNNK-FM, WTCY-AM, WXBM-FM, WWSF-FM, WSOK-AM, WLVH-FM, WAEV-FM, KIKI-FM/AM, KKLV-FM, KHVH-AM, WFMB-FM/AM, WCVS-FM, KCBL-AM, KBOS-FM, and KTHT-FM, all purchased by Patterson prior to March 31, 1997. 18 20 NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED) (DOLLARS IN THOUSANDS) (T) The schedule below gives effect to the acquisitions and dispositions of the companies acquired in the Completed Transactions which were consummated prior to the date of this current report. COMPLETED TRANSACTIONS COMBINED
OTHER HISTORICAL COMPLETED COMPLETED HISTORICAL HISTORICAL COMMUNITY TRANSACTIONS TRANSACTIONS GULFSTAR BENCHMARK PACIFIC COMBINED(1) COMBINED ---------- ---------- ---------- ------------ ------------ ASSETS Current assets: Cash and cash equivalents........................ $ 5,979 $ 4,021 $ 331 $ 792 $ 11,123 Accounts receivable, net......................... 8,232 4,563 745 2,713 16,253 Prepaid expenses and other....................... 1,536 1,232 145 337 3,250 -------- ------- ------- ------- -------- Total current assets..................... 15,747 9,816 1,221 3,842 30,626 Property and equipment, net........................ 17,485 14,055 3,806 3,168 38,514 Intangible and other assets, net................... 84,805 46,221 12,696 8,973 152,695 -------- ------- ------- ------- -------- Total assets............................. $118,037 $70,092 $17,723 $15,983 $221,835 ======== ======= ======= ======= ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and other accrued expenses...... $ 4,819 $ 4,112 $ 330 $ 1,835 $ 11,096 Current portion of long-term debt................ 214 14,223 1,438 397 16,272 -------- ------- ------- ------- -------- Total current liabilities................ 5,033 18,335 1,768 2,232 27,368 Long-term debt, less current portion............... 82,346 29,849 8,337 5,200 125,732 Other long-term liabilities........................ 5,940 56 -- 51 6,047 -------- ------- ------- ------- -------- Total liabilities........................ 93,319 48,240 10,105 7,483 159,147 Redeemable preferred stock......................... 23,081 -- -- -- 23,081 Stockholders' equity............................... 1,637 21,852 7,618 8,500 39,607 -------- ------- ------- ------- -------- Total liabilities and stockholders' equity................................. $118,037 $70,092 $17,723 $15,983 $221,835 ======== ======= ======= ======= ========
- --------------- (1) The column represents the historical combined balance sheets of (i) the stations in the Osborn Add-On Acquisitions and the Osborn Ft. Myers Disposition; (ii) Stephens Radio, KWHN-AM, KMAG-FM, KLLI-FM and KYGL-FM, all acquired by GulfStar prior to the GulfStar Transaction; (iii) Space Coast, Cavalier, McForhun and Livingston, all acquired by the Company; and (iv) WMCZ-FM, WMHS-FM and WZHT-FM all acquired by Benchmark prior to the Benchmark Acquisition. 19 21 NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED) (DOLLARS IN THOUSANDS) (U) The adjustments reflect (i) the assumption of $2,391 in liabilities in connection with the Completed Transactions, (ii) the acquisition of GulfStar, which is accounted for at historical cost on a basis similar to a pooling of interests, and (iii) the elimination of the historical equity of the Completed Transactions, excluding the equity of GulfStar of $24,718, and the allocation of the purchase prices, net of the proceeds from the Osborn Ft. Myers Disposition, of the Completed Transactions to the assets acquired and liabilities assumed resulting in an adjustment to property and equipment and FCC licenses to their estimated fair market values and the recording of goodwill associated with the acquisitions as follows:
ALLOCATION OF PURCHASE PRICES AND CARRYING GULFSTAR AT VALUE OF HISTORICAL COMPLETED COST TRANSACTIONS ADJUSTMENTS ------------- ------------ ----------- Cash and cash equivalents........................ $ 10,552 $ 11,123 $ (571) Accounts receivable, net......................... 13,605 16,253 (2,648) Prepaid expenses and other....................... 2,551 3,250 (699) Property and equipment, net...................... 51,992 38,514 13,478 Intangible and other assets, net................. 315,461 150,027 165,434 Deferred financing............................... 2,272 2,668 (396) Accounts payable and other accrued expenses...... (9,796) (11,096) (1,300) Long-term debt, including the current portion.... (82,560) (142,004) (59,444) Other long-term liabilities...................... (8,387) (6,047) 2,340 Stockholders' equity............................. (24,718) (62,688) (37,970) -------- Total purchase prices and deferred financing charges................................... $270,972 ========
(V) The adjustment reflects the excess cash used in connection with the Completed Transactions. (W) The adjustment reflects $330 placed in escrow as security for Benchmark's obligation to consummate the acquisition of WESC-AM/FM and WFNQ-FM located in Greenville, South Carolina, and the use of the deposit to pay a portion of the purchase price in connection with the related acquisition. (X) The adjustment reflects $550 placed in escrow as security for the Company's obligation to consummate the Osborn Huntsville Acquisition, which was subsequently used to pay a portion of the purchase price in connection with the related acquisition. (Y) The adjustment reflects the estimated deferred financing costs of $7,750 and $4,000 associated with the Capstar Radio Notes Offering and the Credit Facility, respectively. (Z) The adjustments reflect the repayment of current borrowings of GulfStar of $82,560, including repayment of indebtedness under the GulfStar credit facility, and the write-off of $2,272 of related deferred financing costs which resulted in an extraordinary charge in the period the repayment was made. (AA) The adjustment reflects proceeds of $199,212 from the Capstar Radio Notes Offering. 20 22 NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED) (DOLLARS IN THOUSANDS) (BB) As part of the Benchmark Acquisition, the Fund III Acquisition Sub entered into a senior credit agreement (the "Acquisition Sub Credit Agreement") with Bankers Trust Company to borrow up to $62,000, of which approximately $60,000 of the proceeds were loaned to Benchmark to enable Benchmark to consummate four separate acquisitions of radio station properties and for certain other purposes of Benchmark. The Company unconditionally guaranteed all of the Fund III Acquisition Sub's indebtedness under the Acquisition Sub Credit Agreement. Simultaneously with the Benchmark Acquisition, the Fund III Acquisition Sub was merged with a subsidiary of Capstar Broadcasting and the Acquisition Sub Credit Agreement was repaid (the "Repayment"). In connection with the Repayment, Capstar Broadcasting issued $750 of Class C Common Stock to HM Fund III in consideration of HM Fund III's agreement to purchase the obligations owing to Bankers Trust Company under the Acquisition Sub Credit Agreement and the Company recorded an extraordinary charge of $750. The related pro forma adjustments are as follows: Guarantee of loans to Benchmark under the Acquisition Sub Credit Agreement.......................................... $ 60,000 Repayment of indebtedness under the Acquisition Sub Credit Agreement in connection with the Benchmark Acquisition.... (60,000) Issuance of Common Stock in connection with the Company's guarantee................................................. 750 Extraordinary charge........................................ (750)
(CC) The adjustment reflects the net proceeds from the Preferred Stock Offering of $94,750, net of fees and expenses of $5,250. (DD) The adjustment reflects the elimination of the redeemable preferred stock of GulfStar which was redeemed in connection with the GulfStar Transaction. GulfStar recognized a loss on the Preferred Stock Redemption of $5,419 which represents the difference between the carrying value and the liquidation preference of the preferred stock. (EE) The adjustment reflects (i) the Hicks Muse GulfStar Equity Investment of $75,000 in connection with the GulfStar Transaction, (ii) the common equity investment of $2,100 by Joseph L. Mathias, IV, a former partner of Benchmark, in connection with the Benchmark Acquisition, (iii) the Capstar BT Equity Investment of $11,100, and (iv) the fees and expenses incurred in connection with the GulfStar Merger, which were expensed in the period in which the GulfStar Merger was consummated. 21 23 NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION -- (CONTINUED) (DOLLARS IN THOUSANDS) (FF) The column represents the combined balance sheets as of March 31, 1997 of the acquisitions which were pending as of the date of this Prospectus. PENDING TRANSACTIONS COMBINED
OTHER PENDING HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL ACQUISITIONS MADISON PATTERSON KNIGHT QUALITY AMERON QUASS COMBINED(1) ---------- ---------- -------------- ---------- ---------- ------------ ASSETS Current assets: Cash and cash equivalents............. $ 348 $ 1,177 $ 2,498 $ 90 $ 55 $ 960 Accounts receivable, net.............. 1,415 8,171 2,631 1,405 536 4,044 Prepaid expenses and other............ 132 1,889 385 206 64 537 -------- -------- ------- ------- ------ ------- Total current assets.......... 1,895 11,237 5,514 1,701 655 5,541 Property and equipment, net............. 2,739 19,114 4,784 1,917 1,182 3,753 Intangible and other assets, net........ 12,852 118,088 676 13,006 2,373 13,628 -------- -------- ------- ------- ------ ------- Total assets.................. $ 17,486 $148,439 $10,974 $16,624 $4,210 $22,922 ======== ======== ======= ======= ====== ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and other accrued expenses........................... $ 790 $ 3,742 $ 1,219 $ 761 $ 169 $ 3,175 Current portion of long-term debt..... 250 -- 848 5,200 250 2,928 -------- -------- ------- ------- ------ ------- Total current liabilities..... 1,040 3,742 2,067 5,961 419 6,103 Long-term debt, less current portion.... 13,250 66,500 7,773 4,563 3,418 15,871 Other long-term liabilities............. -- 87 -- -- 203 -- -------- -------- ------- ------- ------ ------- Total liabilities............. 14,290 70,329 9,840 10,524 4,040 21,974 Redeemable preferred stock.............. -- 20,747 -- -- -- -- Redeemable warrants..................... -- 17,803 -- -- -- -- Stockholders' equity.................... 3,196 39,560 1,134 6,100 170 948 -------- -------- ------- ------- ------ ------- Total liabilities and stockholders' equity........ $ 17,486 $148,439 $10,974 $16,624 $4,210 $22,922 ======== ======== ======= ======= ====== ======= PENDING TRANSACTIONS COMBINED ------------ ASSETS Current assets: Cash and cash equivalents............. $ 5,128 Accounts receivable, net.............. 18,202 Prepaid expenses and other............ 3,213 -------- Total current assets.......... 26,543 Property and equipment, net............. 33,489 Intangible and other assets, net........ 160,623 -------- Total assets.................. $220,655 ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and other accrued expenses........................... $ 9,856 Current portion of long-term debt..... 9,476 -------- Total current liabilities..... 19,332 Long-term debt, less current portion.... 111,375 Other long-term liabilities............. 290 -------- Total liabilities............. 130,997 Redeemable preferred stock.............. 20,747 Redeemable warrants..................... 17,803 Stockholders' equity.................... 51,108 -------- Total liabilities and stockholders' equity........ $220,655 ========
- --------------- (1) The columns represents the historical combined balance sheets of (i) WMEZ-FM, KRDU-FM, KJOI-FM and WQFN-FM, all pending acquisitions of Patterson; and (ii) Emerald City, COMCO, Commonwealth, WRIS, Griffith, Grant, American General, Booneville, Noalmark, KLAW and KJEM, all pending acquisitions of the Company. 22 24 (GG) The adjustment reflects (i) the assumption of $2,086 in liabilities in connection with the Pending Transactions and (ii) the allocation of the purchase prices of the Pending Transactions to the assets acquired and liabilities assumed resulting in an adjustment to property and equipment and FCC licenses to their estimated fair market values and the recording of goodwill associated with the acquisitions as follows:
CARRYING ALLOCATION OF VALUE OF PURCHASE PENDING PRICES TRANSACTIONS ADJUSTMENTS ------------- ------------ ----------- Cash and cash equivalents............................ $ 1,232 $ 5,128 $ (3,896) Accounts receivable, net............................. 12,478 18,202 (5,724) Prepaid expenses and other........................... 1,295 3,213 (1,918) Property and equipment, net.......................... 52,274 33,489 18,785 Intangible and other assets, net..................... 400,917 156,248 244,669 Deferred financing................................... -- 4,375 (4,375) Accounts payable and other accrued expenses.......... (3,911) (9,856) (5,945) Other long-term liabilities.......................... (43,406) (290) 43,116 -------- Total purchase prices........................... $420,879 ========
(HH) The adjustment reflects the excess cash used in connection with the Pending Transactions. (II) The adjustments reflect the disposition of WTAW-AM, KTSR-FM and KAGG-FM located in Bryan, Texas. (JJ) The adjustment reflects the elimination of the outstanding loan balance of $13,500 to Emerald City which will be repaid in connection with the Emerald City Acquisition. (KK) The adjustment reflects $75 placed in escrow as security for the Company's obligation to consummate the Emerald City Acquisition, which will be used to pay a portion of the expenses in connection with the related acquisition. (LL) The adjustment reflects the elimination of the historical debt of the entities to be acquired in the Pending Transactions of $120,851, including the current portion of $9,476. (MM) The adjustments reflect borrowings of $185,946 under the Credit Facility with an annual interest rate of 8.0% and an equity contribution of $221,217, including the commitment by HM Fund III and its affiliates to invest up to an additional $50,000, in connection with the financing of the Pending Transactions. (NN) The adjustment reflects the purchase and subsequent retirement of the redeemable preferred stock of $20,747 and redeemable warrants of $17,803 in connection with the Patterson Acquisition. As a result of the redemption, Patterson will recognize a loss of $8,391 which represents the difference between the carrying value and the liquidation preference on the preferred stock. (OO) The adjustment reflects the net effect of the elimination of the historical equity of the entities to be acquired in the Pending Transactions, based on the purchase method of accounting, of $51,108. (PP) The pro forma amounts reflect the effects of the exchange offers for the Notes, the New Capstar Radio Notes and the Senior Exchangeable Preferred Stock. 23 25 GLOSSARY OF CERTAIN TERMS "Ameron Acquisition" means the Company's pending acquisition of substantially all of the assets of Ameron Broadcasting, Inc. ("Ameron"), used or useful in the operation of radio stations WMJJ-FM and WERC-AM in Birmingham, Alabama and radio station WOWC-FM in Jasper, Alabama. "Benchmark Acquisition" means the completed acquisitions of, and mergers of directly and indirectly wholly-owned subsidiaries of HM Fund III with, Benchmark Communications Radio Limited Partnership, L.P. and certain of its subsidiary partnerships (collectively, "Benchmark"). "broadcast cash flow" consists of operating income before depreciation, amortization, corporate and other compensation expenses. Although broadcast cash flow is not a measure of performance calculated in accordance with generally accepted accounting principles ("GAAP"), management believes that it is useful to an investor in evaluating the Company because it is a measure widely used in the broadcast industry to evaluate a radio company's operating performance. However, broadcast cash flow should not be considered in isolation or as a substitute for net income, cash flows from operating activities and other income or cash flow statement data prepared in accordance with GAAP as a measure of liquidity or profitability. "broadcast cash flow margin" represents the percentage of net revenue which is attributable to broadcast cash flow. "Capstar Broadcasting" means Capstar Broadcasting Corporation. "Capstar BT Equity Investment" means the purchase by Capstar BT Partners, L.P. of certain shares of Class B Common Stock for $11.1 million in cash concurrently with consummation of the GulfStar Merger. "Capstar Radio" means Capstar Radio Broadcasting Partners, Inc. "Capstar Radio Notes Offering" means Capstar Radio's private placement of the New Capstar Radio Notes. "Cavalier Acquisition" means the Company's completed acquisition of substantially all of the assets of Cavalier Communications, L.P. ("Cavalier"). "Certificate of Designation" means the Certificate of Designation that governs the Senior Exchangeable Preferred Stock. "COMCO Acquisition" means the Company's pending acquisition of substantially all of the assets of COMCO Broadcasting, Inc. ("COMCO"). "Commodore Acquisition" means the Company's completed acquisition of Commodore. "Commonwealth Acquisition" means the Company's pending acquisition of substantially all of the assets of Commonwealth Broadcasting of Arizona, L.L.C. ("Commonwealth"). "Community Pacific Acquisition" means the Company's completed acquisition of substantially all of the assets of Community Pacific Broadcasting Company L.P. ("Community Pacific"). "Company" means, unless the context otherwise requires, Capstar Broadcasting Partners, Inc. and its subsidiaries. "Completed Transactions" collectively refers to the Commodore Acquisition, the Osborn Transactions, the Space Coast Acquisitions, the GulfStar Transaction, the Community Pacific Acquisition, the Cavalier Acquisition, the Benchmark Acquisition, the GulfStar -- McForhun Acquisition, and the GulfStar -- Livingston Acquisition. "Credit Facility" means that certain amended and restated credit facility between the Company, Capstar Radio, Bankers Trust Company, as administrative agent, and the other parties thereto. "EBITDA" consists of operating income before depreciation, amortization and other expenses. Although EBITDA is not a measure of performance calculated in accordance with GAAP, management believes that it is useful to an investor in evaluating the Company because it is a measure widely used in the broadcast 24 26 industry to evaluate a radio company's operating performance. However, EBITDA should not be considered in isolation or as a substitute for net income, cash flows from operating activities and other income or cash flow statement data prepared in accordance with GAAP as a measure of liquidity or profitability. "Emerald City Acquisition" means the Company's pending acquisition of substantially all of the assets of Emerald City Radio Partners, L.P. ("Emerald City") used or held for use in connection with station WNOK-FM in the Columbia, South Carolina market. "Existing Capstar Radio Indenture" means that certain indenture, between Capstar Radio, the guarantors named therein and IBJ Schroder Bank & Trust Company in connection with the Existing Capstar Radio Notes. "Existing Capstar Radio Notes" refers to Capstar Radio's 13 1/4% Senior Subordinated Notes due 2003. "Financing" collectively refers to the Preferred Stock Offering, the Hicks Muse GulfStar Equity Investment, the Capstar BT Equity Investment and the Capstar Radio Notes Offering. "Grant Acquisition" means the Company's pending acquisition of substantially all of the assets of Grant Communications Company ("Grant") used or useful in the operation of radio station WZBQ-FM in the Tuscaloosa, Alabama market. "Griffith Acquisition" means the Company's pending acquisition of substantially all of the assets of Griffith Communications Corporation ("Griffith") used or useful in the operation of radio stations WTAK-FM, WXQW-FM and WWXQ-FM in the Huntsville, Alabama market. "GulfStar" means, prior to the GulfStar Merger, GulfStar Communications, Inc. and, from and after the GulfStar Merger, the surviving corporation in the GulfStar Merger. "GulfStar Merger" means the merger of GulfStar with and into a subsidiary of Capstar Broadcasting, pursuant to which the subsidiary was the surviving corporation and was named GulfStar Communications, Inc. "GulfStar Transaction" means the GulfStar Merger and Capstar Broadcasting's contribution of GulfStar through the Company to Capstar Radio upon completion of the GulfStar Merger. "GulfStar -- American General Acquisition" means the Company's pending acquisition of substantially all of the assets of American General Media ("American General") used or useful in the operation of radio station KKCL-FM in the Lubbock, Texas market. "GulfStar -- Booneville Acquisition" means the Company's pending acquisition of substantially all of the assets of Booneville Broadcasting Company and Oklahoma Communications Company (collectively, "Booneville") used or useful in the operation of radio station KZBB-FM in the Ft. Smith, Arkansas market. "GulfStar -- Bryan Disposition" means the Company's pending sale of Bryan Broadcasting Operating Company, a wholly owned subsidiary that owns three FM stations in Bryan, Texas. "GulfStar -- KJEM Acquisition Option" means the Company's option to acquire substantially all of the assets of KJEM-FM, Inc. ("KJEM") used or useful in the operation of radio station KJEM-FM in the Seligman, Missouri market. "GulfStar -- KLAW Acquisition" means the Company's pending acquisition of substantially all of the assets of KLAW Broadcasting, Inc. ("KLAW") used or useful in the operation of radio stations KLAW-FM and KZCD-FM, which serves the Lawton, Oklahoma market. "GulfStar -- Livingston Acquisition" means the Company's completed acquisition of substantially all of the assets Livingston Communications, Inc. ("Livingston") used or useful in the operation of radio station WBIU-AM in the Denham Springs, Louisiana market. 25 27 "GulfStar -- McForhun Acquisition" means the Company's completed acquisition of substantially all of the assets of McForhun, Inc. ("McForhun") used or useful in the operation of radio station KRVE-FM in the Brusly, Louisiana market. "GulfStar -- Noalmark Acquisition" means the Company's option to purchase substantially all of the assets of Noalmark Broadcasting Corp. ("Noalmark") used or held for use in the operation of radio stations KKTX-FM and KKTX-AM, which serve the Longview, Texas market. "Hicks Muse" means Hicks, Muse, Tate & Furst Incorporated. "Hicks Muse GulfStar Equity Investment" means the purchase by an affiliate of Hicks Muse of certain shares of Class C Common Stock for $75.0 million in cash concurrently with consummation of the GulfStar Merger. "HM Fund III" means Hicks, Muse, Tate & Furst Equity Fund III, L.P. "Huntington Acquisition" collectively refers to certain defined assets of radio stations WKEE-FM and WKEE-AM in Huntington, West Virginia; WZZW-AM and WFXN-FM in Milton, West Virginia; WBVB-FM in Coal Grove, Ohio; and WIRO-AM and WMLV-FM in Ironton, Ohio, acquired by the Company. "JSA" refers to a joint sales agreement, whereby a station licensee obtains, for a fee, the right to sell substantially all of the commercial advertising on a separately-owned and licensed station. JSAs take varying forms. A JSA, unlike an LMA, normally does not involve programming. "Knight Quality Acquisition" means the Company's pending acquisition of substantially all of the assets of Knight Radio, Inc., Knight Communications Corporation and Knight Broadcasting of New Hampshire, Inc. (collectively, "Knight Quality") used or useful in the operations of eight radio stations owned and operated by Knight Quality. "LMA" refers to a local marketing agreement, whereby a radio station outsources the management of certain limited functions of its operations. LMAs take varying forms; however, the FCC requires that, in all cases, the licensee maintain independent control over the programming and operations of the station. "Madison Acquisition" means the Company's pending acquisition of substantially all of the assets of The Madison Radio Group ("Madison") which is comprised of the stations formerly owned by Midcontinent Broadcasting Co. of Wisconsin, Inc. and Point Communication Limited Partnership. "New Capstar Radio Indenture" means that certain indenture, dated June 17, 1997, between the Company and U.S. Trust Company of Texas, N.A. in connection with the New Capstar Radio Notes. "New Capstar Radio Notes" means Capstar Radio's 9 1/4% Senior Subordinated Notes due 2007. "Notes" means the Company's 12 3/4% Senior Discount Notes due 2009. "Notes Indenture" means that certain indenture, dated February 20, 1997 between the Company and U.S. Trust Company of Texas, N.A. in connection with the Notes. "Osborn Acquisition" means the Company's completed acquisition of Osborn Communications, Inc. "Osborn Add-on Acquisitions" means the Company's completed acquisitions of (i) all of the issued and outstanding capital stock of Dixie Broadcasting, Inc. and Radio WBHP, Inc. (the "Osborn Huntsville Acquisition") and (ii) substantially all of the assets of Taylor Communications Corporation ("Taylor") utilized in the operations of Taylor's stations in the Tuscaloosa, Alabama market (the "Osborn Tuscaloosa Acquisition"). "Osborn Ft. Myers Disposition" means Osborn's completed disposition of substantially all of the assets used or held for use in connection with the business and operations of Osborn's stations in the Port Charlotte and Ft. Myers, Florida markets. 26 28 "Patterson Acquisition" means the Company's pending acquisition of all of the outstanding capital stock of Patterson Broadcasting, Inc. ("Patterson"). "Pending Acquisitions" collectively refers to the Ameron Acquisition, the COMCO Acquisition, the Commonwealth Acquisition, the Emerald City Acquisition, the Grant Acquisition, the Griffith Acquisition, the Knight Quality Acquisition, the Madison Acquisition, the Patterson Acquisition, the Quass Acquisition, the SFX Exchange, the WRIS Acquisition, the GulfStar -- American General Acquisition, the GulfStar -- Booneville Acquisition, the GulfStar -- Noalmark Acquisition, the GulfStar -- KJEM Acquisition and the GulfStar -- KLAW Acquisition. "Pending Transactions" collectively refers to the Pending Acquisitions and the GulfStar -- Bryan Disposition. "Quass Acquisition" means the Company's pending acquisition of all of the outstanding capital stock of Quass Broadcasting Company ("Quass"). "SFX Exchange" means the Company's pending exchange of substantially all of the assets used or useful in the operation of three radio stations that will be owned by the Company upon completion of the Benchmark Acquisition in the Greenville, South Carolina market for substantially all of the assets used or useful in the operation of four radio stations owned by SFX in Wichita, Kansas and Daytona Beach, Florida. "Space Coast Acquisitions" collectively refers to the Company's completed acquisitions of substantially all of the assets of EZY Com, Inc., City Broadcasting Co., Inc., and Roper Broadcasting, Inc. "WRIS Acquisition" means the Company's pending acquisition of substantially all of the assets of WRIS, Inc. ("WRIS"). 27 29 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 hereunto duly authorized. CAPSTAR BROADCASTING PARTNERS, INC. (Registrant) By:/s/ WILLIAM S. BANOWSKY, JR. ---------------------------------- Name: William S. Banowsky, Jr. Title: Executive Vice President and General Counsel Date: August 19, 1997 28 -----END PRIVACY-ENHANCED MESSAGE-----