FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 2001 Commission file number 000-22486
AMFM OPERATING INC.
(AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF
CLEAR CHANNEL COMMUNICATIONS, INC.)
(Exact name of registrant as specified in its charter)
DELAWARE 13-3649750
(State of Incorporation) (I.R.S. Employer Identification No.)
200 EAST BASSE ROAD
SAN ANTONIO, TEXAS 78209
(210) 822-2828
(Address and telephone number
of principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No[ ]
Indicate the number of shares outstanding of each class of the issuer's
classes of common stock, as of the latest practicable date: As of November 13,
2001, 1,040 shares of common stock of the Registrant's common stock were
outstanding.
The registrant meets the conditions set forth in General Instruction
H(1)(a) and (b) of Form 10-Q and is therefore filing this report with the
reduced disclosure format.
Page 1 of 21
AMFM OPERATING INC.
INDEX
<Table>
<Caption>
Page No.
--------
Part I -- Financial Information
Item 1. Unaudited Financial Statements
Consolidated Balance Sheets at September 30, 2001 and December 31, 2000 3
Consolidated Statements of Operations for the nine months ended September 30, 2001 and 2000 5
Consolidated Statements of Operations for the three months ended September 30, 2001 and 2000 6
Consolidated Statements of Cash Flows for the nine and three months ended September 30, 2001 and 2000 7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 14
Part II -- Other Information
Item 6. Exhibits and reports on Form 8-K 17
(a) Exhibits
(b) Reports on Form 8-K
Signatures 17
Index to Exhibits 18
</Table>
Page 2 of 21
PART I
ITEM 1. UNAUDITED FINANCIAL STATEMENTS
AMFM OPERATING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(IN THOUSANDS)
<Table>
<Caption>
September 30, December 31,
2001 2000
(Unaudited) (Audited)
------------- ------------
CURRENT ASSETS
Cash and cash equivalents $ 16,388 $ 18,502
Restricted cash -- 131,562
Accounts receivable, less allowance of $18,216 at 425,253 494,033
September 30, 2001 and $19,714 at December 31, 2000
Other current assets 38,959 67,944
------------ ------------
Total Current Assets 480,600 712,041
PROPERTY, PLANT AND EQUIPMENT
Land, buildings and improvements 168,797 147,713
Transmitter and studio equipment 231,822 244,306
Furniture and other equipment 63,699 65,041
Construction in progress 27,879 11,496
------------ ------------
492,197 468,556
Less accumulated depreciation (42,173) (15,477)
------------ ------------
450,024 453,079
INTANGIBLE ASSETS
Contracts 174,687 126,054
Licenses and goodwill 24,174,891 23,914,326
------------ ------------
24,349,578 24,040,380
Less accumulated amortization (1,060,142) (324,463)
------------ ------------
23,289,436 23,715,917
OTHER ASSETS
Restricted cash -- 189,466
Notes receivable -- 4,575
Assets held in trust -- 79,251
Other assets 29,248 32,617
Other investments 360,834 1,015,567
------------ ------------
TOTAL ASSETS $ 24,610,142 $ 26,202,513
------------ ------------
</Table>
See Notes to Consolidated Financial Statements
Page 3 of 21
AMFM OPERATING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDER'S EQUITY
(IN THOUSANDS)
<Table>
<Caption>
September 30, December 31,
2001 2000
(Unaudited) (Audited)
------------- ------------
CURRENT LIABILITIES
Accounts payable $ 54,032 $ 73,766
Accrued interest 39,281 19,015
Accrued expenses 167,986 261,228
Accrued income taxes 142,232 492,842
Deferred income 2,054 2,191
------------ ------------
Total Current Liabilities 405,585 849,042
Long-term debt 1,431,915 1,438,396
Clear Channel promissory note 917,413 1,567,634
Deferred income taxes 4,998,019 5,180,044
Other long-term liabilities 40,255 36,985
SHAREHOLDER'S EQUITY
Common stock 1 1
Additional paid-in capital 17,346,238 17,346,238
Retained deficit (420,143) (89,246)
Accumulated other comprehensive income (loss) (109,141) (126,581)
------------ ------------
Total shareholder's equity 16,816,955 17,130,412
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $ 24,610,142 $ 26,202,513
------------ ------------
</Table>
See Notes to Consolidated Financial Statements
Page 4 of 21
AMFM OPERATING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
<Table>
<Caption>
Nine Months Ended
September 30, 2000
------------------------------
Post-Merger Pre-Merger Post-Merger
------------- ------------ ------------
Nine Months Period From Period From
Ended January 1 to August 31 to
September 30, August 30, September 30,
2001 2000 2000
------------- ------------ ------------
Gross revenue $ 1,598,737 $ 1,747,968 $ 194,343
Less: agency commissions 163,291 202,557 21,483
----------- ----------- -----------
Net revenue 1,435,446 1,545,411 172,860
Operating expenses 793,573 819,924 86,954
Non-cash compensation expense 10,623 36,137 3,151
Depreciation and amortization 775,443 578,913 86,763
Corporate expenses 34,729 43,559 4,489
Merger and non-recurring costs -- 111,357 --
----------- ----------- -----------
Operating loss (178,922) (44,479) (8,497)
Interest expense 139,439 293,133 19,743
Gain (loss) on sale of assets -- 1,574,738 (509)
Gain (loss) on marketable securities (86,359) -- --
Equity in earnings (loss) of nonconsolidated affiliates -- (62,790) --
Other income - net 5,424 30,400 2,972
----------- ----------- -----------
Income (loss) before income taxes and extraordinary item (399,296) 1,204,736 (25,777)
Income tax (expense) benefit 68,399 (545,746) (1,744)
----------- ----------- -----------
Income (loss) before extraordinary item (330,897) 658,990 (27,521)
Extraordinary loss, net of income tax benefit -- 21,602 --
----------- ----------- -----------
Net income (loss) (330,897) 637,388 (27,521)
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on securities:
Unrealized holding gain (loss) arising during period (37,139) -- (146,031)
Reclassification adjustment for (gains)
losses included in net income (loss) 54,579 -- --
----------- ----------- -----------
Comprehensive income (loss) $ (313,457) $ 637,388 $ (173,552)
----------- ----------- -----------
</Table>
See Notes to Consolidated Financial Statements
Page 5 of 21
AMFM OPERATING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
<Table>
<Caption>
Three Months Ended
September 30, 2000
------------------------------
Post-Merger Pre-Merger Post-Merger
------------- ------------ -------------
Three Months Period From Period From
Ended July 1 to August 31 to
September 30, August 30, September 30,
2001 2000 2000
------------- ------------ -------------
Gross revenue $ 537,967 $ 436,259 $ 194,343
Less: agency commissions 54,811 50,019 21,483
----------- ----------- -----------
Net revenue 483,156 386,240 172,860
Operating expenses 267,795 193,351 86,954
Non-cash compensation expense 2,359 302 3,151
Depreciation and amortization 255,467 149,087 86,763
Corporate expenses 11,665 14,247 4,489
Merger and non-recurring costs -- 92,411 --
----------- ----------- -----------
Operating loss (54,130) (63,158) (8,497)
Interest expense 42,950 69,254 19,743
Gain (loss) on sale of assets 1,491 1,543,634 (509)
Gain (loss) on marketable securities -- -- --
Equity in earnings (loss) of nonconsolidated affiliates -- (15,199) --
Other income - net 4,624 12,418 2,972
----------- ----------- -----------
Income (loss) before income taxes and extraordinary item (90,965) 1,408,441 (25,777)
Income tax (expense) benefit 7,081 (557,355) (1,744)
----------- ----------- -----------
Income (loss) before extraordinary item (83,884) 851,086 (27,521)
Extraordinary loss, net of income tax benefit -- 9,253 --
----------- ----------- -----------
Net income (loss) (83,884) 841,833 (27,521)
Other comprehensive income (loss), net of tax: Unrealized gain (loss) on
securities:
Unrealized holding gain (loss) arising during period (89,752) -- (146,031)
Reclassification adjustment for (gains)
losses included in net income (loss) -- -- --
----------- ----------- -----------
Comprehensive income (loss) $ (173,636) $ 841,833 $ (173,552)
----------- ----------- -----------
</Table>
See Notes to Consolidated Financial Statements
Page 6 of 21
AMFM OPERATING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<Table>
<Caption>
Nine Months Ended
September 30, 2000
-----------------------------
Post-Merger Pre-Merger Post-Merger
------------ ------------ -------------
Nine Months Period From Period From
Ended January 1 to August 31 to
September 30, August 30, September 30,
2001 2000 2000
------------ ------------ -------------
NET CASH (USED BY) PROVIDED BY OPERATING ACTIVITIES $ (50,328) $ 354,266 $ 15,400
CASH FLOWS FROM INVESTING ACTIVITIES:
(Investment in) liquidation of restricted cash, net 320,485 (439,896) --
(Increase) decrease in notes receivable, net 4,575 -- --
Proceeds from divestitures placed in restricted cash 3,000 439,896 --
Proceeds from sale of marketable securities 595,634 -- --
Purchases of property, plant and equipment (41,557) (28,752) (5,866)
Proceeds from disposal of assets 14,242 2,325,502 --
Acquisition of operating assets (5,541) (5,255) --
Acquisition of radio stations with restricted cash (191,929) -- --
Increase in other-net (299) (17,099) (4,763)
----------- ----------- -----------
Net cash provided by (used in) investing activities 698,610 2,274,396 (10,629)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Clear Channel promissory note -- 540,000 862,388
Payments on Clear Channel promissory note (650,221) -- (65,878)
Proceeds of long-term debt -- 412,500 --
Payments on long-term debt (175) (3,582,478) (829,013)
Contributions from AMFM -- 65,338 --
Distributions to AMFM -- (12,062) --
Dividends to AMFM -- (9,453) --
----------- ----------- -----------
Net cash (used in) provided by financing activities (650,396) (2,586,155) (32,503)
Net increase (decrease) in cash and cash equivalents (2,114) 42,507 (27,732)
Cash and cash equivalents at beginning of period 18,502 14,634 57,141
----------- ----------- -----------
Cash and cash equivalents at end of period $ 16,388 $ 57,141 $ 29,409
----------- ----------- -----------
</Table>
See Notes to Consolidated Financial Statements
Page 7 of 21
AMFM OPERATING INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1: PREPARATION OF INTERIM FINANCIAL STATEMENTS
AMFM Operating Inc., (the "Company") together with its subsidiaries, is an
indirect, wholly-owned subsidiary of Clear Channel Communications, Inc., ("Clear
Channel") a diversified media company with operations in radio broadcasting,
outdoor advertising and live entertainment. Prior to Clear Channel's acquisition
of AMFM Inc. ("AMFM"), in August 2000, the Company was an indirect, wholly-owned
subsidiary of AMFM.
The consolidated financial statements have been prepared by the Company pursuant
to the rules and regulations of the Securities and Exchange Commission ("SEC")
and, in the opinion of management, include all adjustments (consisting of normal
recurring accruals and adjustments necessary for adoption of new accounting
standards) necessary to present fairly the results of the interim periods shown.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such SEC rules and regulations.
Management believes that the disclosures made are adequate to make the
information presented not misleading. Due to seasonality and other factors, the
results for the interim periods are not necessarily indicative of results for
the full year. The financial statements contained herein should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's 2000 Annual Report on Form 10-K.
Clear Channel accounted for its acquisition of AMFM as a purchase and purchase
accounting adjustments, including goodwill, have been pushed down and are
reflected in the financial statements of the Company and its subsidiaries for
the periods subsequent to August 30, 2000. The financial statements for the
Company for the periods ended prior to August 30, 2000 were prepared using the
Company's historical pre-merger basis of accounting and are designated
"Pre-Merger." The comparability of the operating results for the Pre-Merger
periods and the periods reflecting push-down accounting are affected by the
purchase accounting adjustments, including the amortization of intangibles over
a period of 25 years. Prior to the merger, intangible assets were generally
amortized over a period of 15 years.
The consolidated financial statements include the accounts of the Company and
its subsidiaries, the majority of which are wholly-owned. Investments in
companies in which the Company owns 20 percent to 50 percent of the voting
common stock or otherwise exercises significant influence over operating and
financial policies of the company are accounted for under the equity method. All
significant intercompany transactions are eliminated in the consolidation
process. Certain reclassifications have been made to the 2000 consolidated
financial statements, including segment data, to conform to the 2001
presentation.
Note 2: RECENT ACCOUNTING PRONOUNCEMENTS
On January 1, 2001, the Company adopted Financial Accounting Standards No. 133,
Accounting for Derivative Instruments and Hedging Activities ("Statement 133"),
as amended. As of the effective date of Statement 133 and as of September 30,
2001, the Company has no derivative instruments. Adoption of this statement had
no impact on the Company's consolidated financial statements.
On July 1, 2001, the Company adopted Statement of Financial Accounting Standards
No. 141, Business Combinations ("Statement 141"). Statement 141 addresses
financial accounting and reporting for business combinations and supersedes APB
Opinion No. 16, Business Combinations, and FASB Statement 38, Accounting for
Preacquisition Contingencies of Purchased Enterprises. Statement 141 is
effective for all business combinations initiated after June 30, 2001. Statement
141 eliminates the pooling-of-interest method of accounting for business
combinations except for qualifying business combinations that were initiated
prior to July 1, 2001. Statement 141 also changes the criteria to recognize
intangible assets apart from goodwill. As the Company has historically used the
purchase method to account for all business combinations, adoption of this
statement did not materially impact the Company's financial position or results
of operations.
Page 8 of 21
In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets
("Statement 142"). Statement 142 addresses financial accounting and reporting
for acquired goodwill and other intangible assets and supersedes APB Opinion No.
17, Intangible Assets. Statement 142 is effective for fiscal years beginning
after December 15, 2001. This statement establishes new accounting for goodwill
and other intangible assets recorded in business combinations. Under the new
rules, goodwill and intangible assets deemed to have indefinite lives will no
longer be amortized but will be subject to annual impairment tests in accordance
with the statement. Other intangible assets will continue to be amortized over
their useful lives. As the Company's amortization of goodwill and certain other
indefinite lived intangibles is a significant non-cash expense that the Company
currently records, Statement 142 will have a material impact on the Company's
financial statements. For the three and nine months ended September 30, 2001,
amortization expense related to goodwill and indefinite lived intangibles was
approximately $222.1 million and $682.6 million, respectively. In addition, upon
adoption, the Company will perform the first of the required impairment tests of
goodwill and indefinite lived intangibles. The Company is currently evaluating
valuation techniques as well as other implementation issues. The Company's
preliminary assessment is that an impairment charge under the new requirements
of Statement 142 may possibly be recorded upon the adoption of Statement 142.
In August 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets ("Statement 144"). Statement 144 addresses
financial accounting and reporting for the impairment or disposal of long-lived
assets. This statement supersedes Financial Accounting Standards No. 121,
Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to Be
Disposed Of ("Statement 121"). Statement 144 is effective for fiscal years
beginning after December 15, 2001. Statement 144 removes goodwill from its scope
and retains the requirements of Statement 121 regarding the recognition of
impairment losses on long-lived assets held for use. The Statement modifies the
accounting for long-lived assets to be disposed of by sale and long-lived assets
to be disposed of by other than by sale. Management does not believe adoption of
this statement will materially impact the Company's financial position or
results of operations.
Note 3: ACQUISITIONS AND DISPOSITIONS
In connection with the completion of the Company's merger with Clear Channel in
August 2000, the Company and Clear Channel entered into a Consent Decree with
the Department of Justice regarding the Company's investment in Lamar
Advertising Company ("Lamar"). The Consent Decree, among other things, required
the Company to sell all of its 26.2 million shares of Lamar by December 31, 2002
and relinquish all shareholder rights during the disposition period. The Company
accounts for the investment under the cost method of accounting post-merger. As
of September 30, 2001, the Company held 10.4 million shares of Lamar common
stock. Subsequent to September 30, 2001, the Company sold all of its remaining
shares of Lamar common stock.
Restructuring
The combined company has formalized plans to restructure the former AMFM
operations. To date, the following decisions have been communicated to affected
employees:
o The Dallas and Austin, Texas, corporate offices closed on March 31,
2001;
o Chancellor Marketing Group ("CMG"), the Company's full-service sales
promotion firm, which developed integrated marketing programs, was
discontinued as a separate entity. Operations of CMG are now performed
by the local radio markets, resulting in the December 31, 2000 closure
of the Richmond, Virginia, corporate office and most of the separate
CMG sales offices;
o The Company's full-service media representation firm restructured its
radio operations into five separate business units;
o StarSystem(TM), the Company's programming distribution network, was
consolidated into current operations; and
o The operations of The AMFM Radio Networks, which broadcasts advertising
and syndicated programming, was operationally integrated into Premiere
Radio Networks, Clear Channel's radio syndication business.
To date, the restructuring has resulted in the actual or pending termination of
approximately 430 employees. A liability for the restructuring of approximately
$56.9 million has been recorded in the post-merger opening balance
Page 9 of 21
sheet of the Company to account for these costs as well as costs associated with
various contracts, primarily leases, which the Company has or will exit as a
result of the restructuring. During the nine months ended September 30, 2001,
approximately $27.3 million has been charged against the restructuring
liability, primarily relating to severance. During the three months ended
September 30, 2001, Clear Channel made adjustments to finalize the purchase
price allocation for the merger with the Company. As a result, an adjustment of
$11.2 million was recorded within goodwill primarily related to additional
severance. As of September 30, 2001, the restructuring reserve balance was $40.8
million.
Pro Forma
The results of operations for the "pre-merger" eight-month period ending August
30, 2000 include the operations of 58 radio stations that were divested in
conjunction with governmental directives relating to the merger with Clear
Channel. Assuming the divestitures had all occurred at January 1, 2000,
unaudited pro forma consolidated results of operations for the eight months
ended August 30, 2000 would have been as follows:
<Table>
<Caption>
(In thousands)
Net revenue $ 1,365,572
Net loss before extraordinary loss $ (170,291)
Net loss $ (191,893)
</Table>
The pro forma information above is presented in response to applicable
accounting rules relating to business acquisitions and dispositions and is not
necessarily indicative of the actual results that would have been achieved had
the divestitures occurred at the beginning of 2000, nor is it indicative of
future results of operations.
Note 4: CLEAR CHANNEL PROMISSORY NOTE AND LONG-TERM DEBT
Long-term debt consists of the following:
<Table>
<Caption>
(In millions)
September 30, December 31,
2001 2000
---------------- ----------------
Clear Channel Promissory Note........................ $ 917.4 $ 1,567.6
---------------- ----------------
Long-Term Debt:
8% Senior Notes.................................... 694.1 695.8
8.125% Notes....................................... 383.4 385.1
8.75% Notes........................................ 196.3 197.3
12.625% Notes...................................... 157.7 159.5
Other.............................................. .4 .7
---------------- ----------------
Total long-term debt....................... $ 1,431.9(a) $ 1,438.4
---------------- ----------------
</Table>
(a) Includes $68.7 million in unamortized fair value purchase accounting
adjustments related to the merger with Clear Channel.
Clear Channel Promissory Note
The promissory note bears interest at 7% per annum and matures on August 30,
2010 or upon demand. The Company is entitled to borrow additional funds and to
repay outstanding borrowings, subject to the terms of the promissory note.
Page 10 of 21
8% Senior Note
On November 17, 1998, the Company issued $750.0 million aggregate principal
amount of 8% Senior Notes due 2008 (the "8% Senior Notes"). Interest on the 8%
Senior Notes is payable semiannually, commencing on May 1, 1999. The 8% Senior
Notes mature on November 1, 2008 and are redeemable, in whole or in part, at the
option of the Company at a redemption price equal to 100% plus the Applicable
Premium (as defined in the indenture governing the 8% Senior Notes) plus accrued
and unpaid interest.
8.125% Note
On December 22, 1997, the Company issued $500.0 million aggregate principal
amount of 8.125% Senior Subordinated Notes due 2007 (the "8.125% Notes").
Interest on the 8.125% Notes is payable semiannually, commencing on June 15,
1998. The 8.125% Notes mature on December 15, 2007 and are redeemable, in whole
or in part, at the option of the Company on or after December 15, 2002, at
redemption prices ranging from 104.063% at December 15, 2002 and declining to
100% on or after December 15, 2005, plus in each case accrued and unpaid
interest.
8.75% Note
Upon consummation of the merger with Chancellor Broadcasting Company on
September 5, 1997, the Company assumed Chancellor Radio Broadcasting Company's
$200.0 million aggregate principal amount of 8.75% Senior Subordinated Notes due
2007 (the "8.75% Notes"). Interest on the 8.75% Notes is payable semiannually,
commencing on December 15, 1997. The 8.75% Notes mature on June 15, 2007 and are
redeemable, in whole or in part, at the option of the Company on or after June
15, 2002, at redemption prices ranging from 104.375% at June 15, 2002 and
declining to 100% on or after June 15, 2005, plus in each case accrued and
unpaid interest. In addition, prior to June 15, 2000, the Company may redeem up
to 25% of the original aggregate principal amount of the 8.75% Notes at a
redemption price of 108.75% plus accrued and unpaid interest with the net
proceeds of one or more public equity offerings.
12.625% Note
On November 12, 1999, AMFM Operating completed a consent solicitation to modify
certain timing restrictions on its ability to exchange all shares of its 12.625%
Series E cumulative exchangeable preferred stock for its 12.625% Senior
Subordinated Exchange Debentures due 2006. Consenting holders of 12.625% Series
E cumulative exchangeable preferred stock received payments of $0.25 per share
of 12.625% Series E cumulative exchangeable preferred stock. On November 23,
1999, the Company exchanged all of the shares of its 12.625% Series E cumulative
exchangeable preferred stock for $143.1 million in aggregate principal amount of
its 12.625% Senior Subordinated Exchange Debentures due 2006 (the "12.625%
Notes"). Interest on the 12.625% Notes is payable semiannually, commencing on
January 15, 2000. The 12.625% Notes mature on October 31, 2006 and are
redeemable, in whole or in part, at the option of the Company on or after
January 15, 2002, at redemption prices ranging from 106.313% at January 15, 2002
and declining to 100% on or after January 15, 2006, plus in each case accrued
and unpaid interest.
Other
Upon the occurrence of a change in control (as defined in the indenture
governing the 8.0%, 8.125%, 8.75% and 12.625% Notes (the "Notes"), the holders
of the Notes have the right to require the Company to repurchase all or any part
of the Notes at a purchase price equal to 101% plus accrued and unpaid interest.
Although the Clear Channel merger resulted in a change of control with respect
to the Notes, as of September 30, 2001 the repurchase option has expired.
AMFM Operating's 8.75% Notes, 8.125% Notes and 12.625% Notes (collectively, the
"Subordinated Notes") are unsecured obligations of AMFM Operating. The
Subordinated Notes are subordinated in right of payment to all existing and any
future senior indebtedness of AMFM Operating. The Subordinated Notes are fully
and unconditionally guaranteed, on a joint and several basis, by all of AMFM
Operating's direct and indirect subsidiaries (the "Subsidiary Guarantors").
Page 11 of 21
The 8% Senior Notes are senior unsecured obligations of AMFM Operating and rank
equal in right of payment to the obligations of AMFM Operating and all other
indebtedness of AMFM Operating not expressly subordinated to the 8% Senior
Notes. The 8% Senior Notes are fully and unconditionally guaranteed, on a joint
and several basis, by the Subsidiary Guarantors.
AMFM Operating's 8% Senior Notes and the Subordinated Notes contain customary
restrictive covenants, which, among other things and with certain exceptions,
limit the ability of the Company to incur additional indebtedness and liens in
connection therewith, enter into certain transactions with affiliates, pay
dividends, consolidate, merge or effect certain asset sales, issue additional
stock, effect an asset swap and make acquisitions.
AMFM Operating has guaranteed certain Clear Channel debt obligations, including
a $1.8 billion reducing revolving long-term line of credit facility, a $1.5
billion five-year multi-currency revolving credit facility and a $1.5 billion
364-day revolving credit facility with outstanding balances at September 30,
2001 of $1.6 billion, $1.1 billion and $0, respectively. At September 30, 2001,
the Company's contingent liability under these guarantees is limited to $1.0
billion.
The Company has no scheduled maturities of long-term debt until 2006.
Note 5: SEGMENT DATA
The Company has one reportable operating segment - radio broadcasting. The
Company's media representation firm and corporate expenses are reported in
"other". Revenue and expenses earned and charged between segments are recorded
at fair value.
<Table>
<Caption>
(In thousands) Nine Months Ended Three Months Ended
September 30, 2000 September 30, 2000
Post-Merger ------------------------------- Post-Merger -------------------------------
------------- Pre-Merger Post-Merger ------------- Pre-Merger Post-Merger
Nine Months ------------ ------------ Three Months ----------- ------------
Ended Period From Period From Ended Period From Period From
September 30, January 1 to August 31 to September 30, July 1 to August 31 to
2001 August 30 September 30 2001 August 30 September 30
------------- ------------ ------------ ------------- ----------- ------------
Net Revenue
Radio Broadcasting $ 1,305,079 $ 1,432,562 $ 155,306 $ 437,534 $ 358,375 $ 155,306
Other 146,779 145,266 19,061 50,003 35,506 19,061
Eliminations (16,412) (32,417) (1,507) (4,381) (7,641) (1,507)
----------- ----------- ----------- ----------- ----------- -----------
Consolidated $ 1,435,446 $ 1,545,411 $ 172,860 $ 483,156 $ 386,240 $ 172,860
Operating expenses
Radio Broadcasting $ 685,917 $ 749,172 $ 74,004 $ 229,835 $ 174,269 $ 74,004
Other 124,068 103,169 14,457 42,341 26,723 14,457
Eliminations (16,412) (32,417) (1,507) (4,381) (7,641) (1,507)
----------- ----------- ----------- ----------- ----------- -----------
Consolidated $ 793,573 $ 819,924 $ 86,954 $ 267,795 $ 193,351 $ 86,954
Depreciation and
Amortization
Radio Broadcasting $ 759,279 $ 532,623 $ 58,137 $ 248,895 $ 134,565 $ 58,137
Other 16,164 46,290 28,626 6,572 14,522 28,626
----------- ----------- ----------- ----------- ----------- -----------
Consolidated $ 775,443 $ 578,913 $ 86,763 $ 255,467 $ 149,087 $ 86,763
Operating income (loss)
Radio Broadcasting $ (140,117) $ 133,569 $ 22,175 $ (41,196) $ 47,038 $ 22,175
Other (38,805) (178,048) (30,672) (12,934) (110,196) (30,672)
----------- ----------- ----------- ----------- ----------- -----------
Consolidated $ (178,922) $ (44,479) $ (8,497) $ (54,130) $ (63,158) $ (8,497)
</Table>
Page 12 of 21
SEGMENT DATA (Continued)
<Table>
<Caption>
(In thousands) As of September 30,
2001 2000
--------------- ---------------
Total identifiable assets
Radio Broadcasting $ 23,964,283 $ 24,649,631
Other 645,859 1,982,097
--------------- ---------------
Consolidated $ 24,610,142 $ 26,631,728
</Table>
Note 6: COMMITMENTS AND CONTINGENCIES
There are various lawsuits and claims pending against the Company. The Company
believes that any ultimate liability resulting from those actions or claims will
not have a material adverse effect on the results of operations, financial
position or liquidity of the Company.
Note 7: MARKETABLE SECURITIES
During the nine months ended September 30, 2001, the Company recorded a loss on
marketable securities of a $78.7 million related to the sale of 14.5 million
shares of Lamar Advertising Company ("Lamar") and $7.7 million related to a
write-down of an investment. On October 22, 2001 and November 13, 2001, the
Company sold 5.0 million shares and 5.4 million shares, respectively, of Lamar.
As a result of these sales, the Company received proceeds of $324.4 million and
will recognize a loss of approximately $156.3 million.
Page 13 of 21
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(Abbreviated pursuant to General Instruction H(2)(a) of Form 10-Q)
RESULTS OF OPERATIONS
Comparison of Three and Nine Months Ended September 30, 2001 to Three
and Nine Months Ended September 30, 2000.
Clear Channel accounted for its acquisition of AMFM as a purchase and
purchase accounting adjustments, including goodwill, have been pushed down and
are reflected in the financial statements for the period subsequent to August
30, 2000. The financial statements for the periods ended prior to August 30,
2000 were prepared using our historical pre-merger basis of accounting. The
comparability of the operating results for the Pre-Merger periods and the
periods reflecting push-down accounting are affected by the purchase accounting
adjustments. The three and nine months ended September 30, 2000 presented below
includes two and eight months, respectively, prepared under the Pre-Merger basis
of accounting and one month prepared under the Post-Merger basis of accounting.
The three and nine months ended September 30, 2001 are prepared under the
Post-Merger basis of accounting.
CONSOLIDATED
(In thousands)
<Table>
<Caption>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- % --------------------------------- %
2001 2000 Change 2001 2000 Change
----------- ----------- ------ -------------- -------------- ------
Net Revenue $ 483,156 $ 559,100 (14)% $ 1,435,446 $ 1,718,271 (16)%
Operating Expenses 267,795 280,305 (4)% 793,573 906,878 (12)%
Corporate Expenses 11,665 18,736 (38)% 34,729 48,048 (28)%
----------- ----------- -------------- --------------
EBITDA $ 203,696 $ 260,059 (22)% $ 607,144 $ 763,345 (20)%
----------- ----------- -------------- --------------
</Table>
Net revenue decreased due to the 2000 divestitures required to comply
with governmental directives regarding the merger with Clear Channel as well as
higher inventory demands experienced during the nine months ended September 30,
2000 resulting in higher advertising rates than in the nine months ended
September 30, 2001. Operating expenses decreased due to our 2000 divestitures
and various cost control measures. In addition, as discussed below, the
terrorist attacks on September 11, 2001 negatively impacted the overall
operating results for the three and nine months ended September 30, 2001.
Corporate expenses decreased due to savings associated with the merger with
Clear Channel.
The September 11, 2001 Terrorist Attacks
We have been affected by the events of September 11, 2001, in New York,
Washington, D.C., and Pennsylvania, as well as by the actions taken by the
United States in response to such events. At this time, it is not known how
significant the ongoing affect of these events will be on the radio
broadcasting, outdoor advertising or live entertainment industries. However, as
a result of expanded news coverage following the attacks and subsequent military
action, we experienced a loss in advertising revenues and increased incremental
operating expenses. The events of September 11 have further depressed economic
activity in the United States and globally, including the markets in which we
operate. As of the date of this report, we cannot determine whether the
September 11 events or their aftermath will have a material impact on our
financial position or our results of operations.
Other Income and Expense Information
Non-cash compensation expense of $2.4 million and $10.6 million was
recorded during the three and nine months ended September 30, 2001,
respectively, due to unvested stock options granted to AMFM employees that have
been assumed by Clear Channel and that are now convertible into Clear Channel
stock. To the extent that
Page 14 of 21
these employees' options continue to vest post-merger, we recognize non-cash
compensation expense over the remaining vesting period. Vesting dates range from
January 2001 to April 2005. If no employees forfeit their unvested options by
leaving the company, we expect to recognize non-cash compensation expense of
approximately $10.8 million during the remaining vesting period.
For the three and nine months ended September 30, 2001 and 2000,
depreciation and amortization expense increased from $235.9 million to $239.9
million and $665.7 million to $759.9 million, respectively. The increase is due
primarily to the addition of goodwill as well as the revaluation of fixed and
intangible assets related to the Clear Channel merger. This increase was
partially offset by the divestitures and the change in the amortization period
for intangible assets to 25 years as a result of the Clear Channel merger versus
15 years prior to the merger.
Interest expense was $139.4 million and $312.9 million for the nine
months ended September 30, 2001 and 2000, respectively. For the three months
ended September 30, 2001 and 2000, interest expense decreased $46.0 million from
$89.0 million, a 52% decrease. The decrease is due to cash proceeds from the
divestitures and the sale of 15.8 million shares of Lamar Advertising Company,
which were used to pay off the credit facility and various Senior Subordinated
Notes. This decrease was partially offset by the interest incurred on the Clear
Channel Promissory Note.
The loss on sale of marketable securities for the nine months ended
September 30, 2001 of $86.4 million is comprised of a $78.7 million loss related
to the sale of 14.5 million shares of Lamar Advertising Company and a loss of
$7.7 million related to a write-down of an investment. On October 22, 2001 and
November 13, 2001, we sold 5.0 million shares and 5.4 million shares,
respectively, of Lamar. As a result of these sales, we will recognize a loss of
approximately $156.3 million.
Equity in earnings (loss) of nonconsolidated affiliates represents our
pre-merger investment in Lamar Advertising Company. As a result of a Consent
Decree requiring us to relinquish all shareholder rights with regard to our
Lamar shares, this investment has been accounted for under the cost method
post-merger.
RISKS REGARDING FORWARD LOOKING STATEMENTS
Except for the historical information, this report contains various
forward-looking statements that represent our expectations or beliefs concerning
future events, including the future levels of cash flow from operations.
Management believes that all statements that express expectations and
projections with respect to future matters, including the strategic fit of radio
assets; are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act. We caution that these forward-looking
statements involve a number of risks and uncertainties and are subject to many
variables that could have an adverse effect upon our financial performance.
These statements are made on the basis of management's views and assumptions, as
of the time the statements are made, regarding future events and business
performance. There can be no assurance, however, that management's expectations
will necessarily come to pass.
A wide range of factors could materially affect future developments and
performance, including:
o the impact of general economic conditions and political developments in the
U.S. and in other countries in which we currently do business, including
the effects of the September 11, 2001 terrorist attacks and their
aftermath;
o competition and general conditions in the radio broadcasting industry;
o shifts in population and other demographics;
o fluctuations in operating costs;
o technological changes and innovations;
o changes in labor conditions;
o capital expenditure requirements;
o legislative or regulatory requirements, including the policies of the FCC,
DOJ and FTC with respect to the conduct of our business and, the
consummation of future or pending acquisitions;
o interest rates;
Page 15 of 21
o the effect of leverage on our financial position and earnings;
o taxes; and
o certain other factors set forth in our SEC filings.
This list of factors that may affect future performance and the
accuracy of forward-looking statements is illustrative, but by no means
exhaustive. Accordingly, all forward-looking statements should be evaluated with
the understanding of their inherent uncertainty.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Omitted pursuant to General Instruction H(2)(c) of Form 10-Q.
Page 16 of 21
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. See Exhibit Index on Page 18
(b) Reports on Form 8-K
NONE
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.
Date November 13, 2001 /s/ Randall T. Mays
Randall T. Mays
Executive Vice President and
Chief Financial Officer
Date November 13, 2001 /s/ Herbert W. Hill, Jr.
Herbert W. Hill, Jr.
Senior Vice President and
Chief Accounting Officer
Page 17 of 21
INDEX TO EXHIBITS
<Table>
<Caption>
EXHIBIT
NO. DESCRIPTION
------- -----------
2.1(1) -- Agreement and Plan of Merger, dated as of August 26,
1998, among Chancellor Media Corporation, Capstar
Broadcasting Corporation and CBC Acquisition Company,
Inc., (see table of contents for list of omitted
schedules and exhibits).
2.2(2) -- Amended and Restated Agreement and Plan of Merger, dated
as of April 29, 1999, among Chancellor Media
Corporation, Capstar Broadcasting Corporation, CBC
Acquisition Company, Inc. and CMC Merger Sub, Inc. (see
table of contents for list of omitted schedules and
exhibits).
2.3(3) -- First Amendment to Amended and Restated Agreement and
Plan of Merger, dated as of June 30, 1999, among
Chancellor Media Corporation, Capstar Broadcasting
Corporation and CMC Merger Sub, Inc.
2.4(5) -- Stock Purchase Agreement, dated as of June 1, 1999, by
and between Lamar Advertising Company and CMCLA (see
table of contents for list of omitted schedules and
exhibits).
2.5(5) -- Subscription Agreement, dated as of June 1, 1999, by and
between Lamar Advertising Company and CMCLA.
2.6(5) -- Voting Agreement, dated as of June 1, 1999, by and among
Lamar Advertising Company, CMCLA and Reilly Family
Limited Partnership.
2.7(3) -- Second Amended and Restated Stock Purchase Agreement
dated as of August 11, 1999 by and among Lamar
Advertising Company, Lamar Media Corp., Chancellor
Mezzanine Holdings Corporation and CMCLA (see table of
contents for list of omitted schedules and exhibits).
2.8(6) -- Registration Rights Agreement dated as of September 15,
1999 among Lamar Advertising Company, CMCLA and
Chancellor Mezzanine Holdings Corporation.
2.9(6) -- Stockholders Agreement dated as of September 15, 1999
among Lamar Advertising Company and certain of its
stockholders.
2.10(3) -- Second Amended and Restated Voting Agreement, dated as
of August 11, 1999, among Lamar Advertising Company,
CMCLA, Chancellor Mezzanine Holdings Corporation and
Reilly Family Limited Partnership.
2.11(7) -- Agreement and Plan of Merger, dated October 2, 1999, by
and between Clear Channel Communications, Inc., CCU
Merger Sub, Inc. and AMFM Inc. (see table of contents
for list of omitted schedules and exhibits).
3.1(8) -- Amended and Restated Certificate of Incorporation of
AMFM Operating Inc.
3.2(9) -- Bylaws of AMFM Operating Inc.
4.1(10) -- Certificate of Designation for 12 5/8% Series E
Cumulative Exchangeable Preferred Stock of AMFM
Operating Inc.
4.2(11) -- Certificate of Amendment to Certificate of Designation
for 12 5/8% Series E Cumulative Exchangeable Preferred
Stock of AMFM Operating Inc.
4.3(12) -- Indenture, dated as of November 19, 1999, governing the
12 5/8% Senior Subordinated Exchange Debentures due
2006, of AMFM Operating Inc.
</Table>
Page 18 of 21
<Table>
4.4(13) -- Indenture, dated as of June 24, 1997, governing the 8
3/4% Senior Subordinated Notes due 2007 of AMFM
Operating Inc. (the "8 3/4% Notes Indenture").
4.5(14) -- First Supplemental Indenture, dated as of September 5,
1997, to the 8 3/4% Notes Indenture.
4.6(15) -- Second Supplemental Indenture, dated as of October 28,
1997, to the 8 3/4% Notes Indenture.
4.7(15) -- Third Supplemental Indenture, dated as of August 23,
1999, to the 8 3/4% Notes Indenture.
4.8(15) -- Fourth Supplemental Indenture, dated as of November 19,
1999, to the 8 3/4% Notes Indenture.
4.9(15) -- Fifth Supplemental Indenture, dated as of January 18,
2000, to the 8 3/4% Notes Indenture.
4.10(16) -- Amended and Restated Indenture, dated as of October 28,
1997, governing the 10 1/2% Senior Subordinated Notes
due 2007 of AMFM Operating Inc. (the "10 1/2% Notes
Indenture").
4.11(16) -- Second Supplement Indenture, dated as of October 28,
1997, to the 10 1/2% Notes Indenture.
4.12(15) -- Third Supplemental Indenture, dated as of August 23,
1999, to the 10 1/2% Notes Indenture.
4.13(15) -- Fourth Supplemental Indenture, dated as of November 19,
1999, to the 10 1/2% Notes Indenture.
4.14(15) -- Fifth Supplemental Indenture, dated as of January 18,
2000, to the 10 1/2% Notes Indenture.
4.15(17) -- Indenture, dated as of December 22, 1997, governing the
8 1/8% Senior Subordinated Notes due 2007 of AMFM
Operating Inc. (the "8 1/8% Notes Indenture").
4.16(15) -- First Supplemental Indenture, dated as of August 23,
1999, to the 8 1/8% Notes Indenture.
4.17(15) -- Second Supplemental Indenture, dated as of November 19,
1999, to the 8 1/8% Notes Indenture.
4.18(15) -- Third Supplemental Indenture, dated as of January 18,
2000, to the 8 1/8% Notes Indenture.
4.19(4) -- Indenture, dated as of November 17, 1998, governing the
8% Senior Notes due 2008 of AMFM Operating Inc. (the "8%
Notes Indenture").
4.20(15) -- First Supplemental Indenture, dated as of August 23,
1999, to the 8% Notes Indenture.
4.21(15) -- Second Supplemental Indenture, dated as of November 19,
1999, to the 8% Notes Indenture.
4.22(15) -- Third Supplemental Indenture, dated as of January 18,
2000, to the 8% Notes Indenture.
4.23(18) -- Indenture, dated as of May 31, 1996, governing the 10
3/4% Senior Subordinated Notes due 2006 of AMFM
Operating Inc. (the "10 3/4% Notes Indenture").
4.24(19) -- First Supplemental Indenture, dated as of November 25,
1996, to the 10 3/4% Notes Indenture.
4.25(19) -- Second Supplemental Indenture, dated as of January 10,
1997, to the 10 3/4% Notes Indenture.
4.26(19) -- Third Supplemental Indenture, dated as of January 13,
1997, to the 10 3/4% Notes Indenture.
4.27(20) -- Fourth Supplemental Indenture, dated as of January 29,
1997, to the 10 3/4% Notes Indenture.
4.28(20) -- Fifth Supplemental Indenture, dated as of May 15, 1997,
to the 10 3/4% Notes Indenture.
</Table>
Page 19 of 21
<Table>
4.29(20) -- Sixth Supplemental Indenture, dated as of July 8, 1997,
to the 10 3/4% Notes Indenture.
4.30(20) -- Seventh Supplemental Indenture, dated as of October 9,
1997 to the 10 3/4% Notes Indenture.
4.31(20) -- Eighth Supplemental Indenture, dated as of October 10,
1997, to the 10 3/4% Notes Indenture.
4.32(20) -- Ninth Supplemental Indenture, dated as of January 23,
1998, to the 10 3/4% Notes Indenture.
4.33(21) -- Tenth Supplemental Indenture, dated as of February 2,
1998, to the 10 3/4% Notes Indenture.
4.34(15) -- Eleventh Supplemental Indenture, dated as of May 18,
1998, to the 10 3/4% Notes Indenture.
4.35(15) -- Twelfth Supplemental Indenture, dated as of May 29,
1998, to the 10 3/4% Notes Indenture.
4.36(15) -- Thirteenth Supplemental Indenture, dated as of November
12, 1999, to the 10 3/4% Notes Indenture.
4.37(22) -- Sixth Supplemental Indenture, dated June 2, 2000, to the
Indenture dated as of October 28, 1997, governing the 10
1/2% Senior Subordinated Notes due 2007 of AMFM
Operating Inc.
4.38(23) -- Intercompany Promissory Note between AMFM Operating Inc.
and Clear Channel Communications, Inc. dated August 30,
2000.
</Table>
- ----------
(1) -- Incorporated by reference to Exhibits to the Quarterly
Report on Form 10-Q of Chancellor Media Corporation and
CMCLA for the quarterly period ending September 30,
1998.
(2) -- Incorporated by reference to Exhibits to the Quarterly
Report on Form 10-Q of Chancellor Media Corporation and
CMCLA for the quarterly period ending March 31, 1999.
(3) -- Incorporated by reference to Exhibits to the Quarterly
Report on Form 10-Q of AMFM Inc. for the quarterly
period ending June 30, 1999.
(4) -- Incorporated by reference to Exhibits to CMCLA's
Registration Statement on Form S-4, initially filed on
November 9, 1998, as amended (Registration Number
333-66971).
(5) -- Incorporated by reference to Exhibits to the Current
Report on Form 8-K of Chancellor Media Corporation filed
on June 8, 1999.
(6) -- Incorporated by reference to Exhibits to AMFM Inc.'s
Amendment No. 1 to Schedule 13D filed on March 10, 2000
regarding AMFM Inc.'s ownership interest in Lamar
Advertising Company.
(7) -- Incorporated by reference to Exhibit 2.1 to the Current
Report on Form 8-K of AMFM Inc., filed on October 5,
1999.
(8) -- Incorporated by reference to Exhibit 3.1 to the
Quarterly Report on Form 10-Q of Capstar Communications,
Inc. for the quarterly period ending June 30, 1999.
(9) -- Incorporated by reference to Exhibit 3.2 to the Annual
Report on Form 10-K of Capstar Communications, Inc. for
the year ended December 31, 1998.
(10) -- Incorporated by reference to Exhibits to the Current
Report on Form 8-K of SFX Broadcasting, Inc., filed on
January 27, 1997.
Page 20 of 21
(11) -- Incorporated by reference to Exhibits to SFX
Broadcasting, Inc.'s Annual Report on Form 10-K for the
year ended December 31, 1997.
(12) -- Incorporated by reference to Exhibit 4.1 to the Current
Report on Form 8-K of AMFM Operating Inc. filed on
November 19, 1999.
(13) -- Incorporated by reference to Exhibit 4.1 to the Current
Report on Form 8-K of Chancellor Broadcasting Company
and Chancellor Radio Broadcasting Company filed on July
17, 1997.
(14) -- Incorporated by reference to Exhibits to CMCLA's
Registration Statement on Form S-4, initially filed on
September 26, 1997, as amended (Registration Number
333-36451).
(15) -- Incorporated by reference to Exhibits to the Annual
Report on Form 10-K of AMFM Inc. for the year ended
December 31, 1999.
(16) -- Incorporated by reference to U.C. Exhibits to the Annual
Report on Form 10-K of Chancellor Media Corporation and
CMCLA for the year ended December 31, 1997.
(17) -- Incorporated by reference to Exhibits to CMCLA's
Registration Statement on Form S-4, initially filed on
April 22, 1998, as amended (Registration Number
333-50739).
(18) -- Incorporated by reference to Exhibits to SFX
Broadcasting, Inc.'s Registration Statement on Form S-4,
initially filed on June 21, 1996, as amended
(Registration Number 333-06553).
(19) -- Incorporated by reference to Exhibits to the Current
Report on Form 8-K of SFX Broadcasting, Inc., filed on
January 17, 1997.
(20) -- Incorporated by reference to Exhibits to Capstar
Broadcasting Corporation's Amendment No. 2 to
Registration Statement on Form S-1, filed on May 11,
1998 (Registration Number 333-48819).
(21) -- Incorporated by reference to Exhibits to SFX
Broadcasting, Inc.'s Annual Report on Form 10-K for the
year ended December 31, 1996.
(22) -- Incorporated by reference to Exhibits to AMFM Inc.'s
Quarterly Report on Form 10-Q for the quarter ended June
30, 2000.
(23) -- The Company has not filed long-term debt instruments
where the total amount under such instruments is less
than ten percent of the total assets of the Company and
its subsidiaries on a consolidated basis. However, the
Company will furnish a copy of such instruments to the
Commission upon request.
Page 21 of 21