10-Q 1 d10q.txt FORM 10-Q 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 Commission file number September 30, 2002 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 14, 2002, 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. AMFM OPERATING INC. INDEX Page No. -------- Part I -- Financial Information Item 1. Unaudited Financial Statements Consolidated Balance Sheets at September 30, 2002 and December 31, 2001 3 Consolidated Statements of Operations for the nine and three months ended September 30, 2002 and 2001 5 Consolidated Statements of Cash Flows for the nine months ended September 30, 2002 and 2001 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 13 Item 4. Controls and Procedures 15 Part II -- Other Information Item 6. Exhibits and Reports on Form 8-K 16 (a) Exhibits (b) Reports on Form 8-K Signatures 16 Certification 17 Index to Exhibits 19 PART I Item 1. UNAUDITED FINANCIAL STATEMENTS AMFM OPERATING INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS (In thousands)

~~Page~~September ~~No.~~30, December 31, 2002 2001 (Unaudited) (Audited) ----------------- ~~Part I~~ ----------------- ~~Financial~~Current ~~Information~~Assets ~~Item~~Cash 1.and ~~Unaudited~~cash ~~Financial~~equivalents ~~Statements~~$ ~~Consolidated~~-- ~~Balance~~$ ~~Sheets~~11,352 Accounts receivable, less allowance of $15,710 at ~~June~~September 30, 2002 and $12,883 at December 31, 2001 3426,844 ~~Consolidated~~404,778 ~~Statements~~Prepaid ofexpense ~~Operations~~16,876 ~~for~~15,124 ~~the~~Other ~~six~~current ~~and~~assets ~~three~~19,391 ~~months~~28,017 ~~ended~~----------------- ~~June~~----------------- 30Total Current Assets 463,111 ~~2002~~459,271 ~~and~~Property, ~~2001~~Plant 5and ~~Consolidated~~Equipment ~~Statements~~Land, ofbuildings ~~Cash~~and ~~Flows~~improvements ~~for~~179,955 ~~the~~175,814 ~~six~~Transmitter ~~months~~and ~~ended~~studio ~~June~~equipment 30252,973 ~~2002~~240,525 Furniture and ~~2001~~other 6equipment ~~Notes~~103,137 to97,510 ~~Consolidated~~Construction ~~Financial~~in ~~Statements~~progress 719,360 ~~Item~~19,109 2.----------------- ~~Management's~~----------------- ~~Discussion~~555,425 ~~and~~532,958 ~~Analysis~~Less ofaccumulated ~~Financial~~depreciation ~~Condition~~(91,736) ~~and~~(54,636) ~~Results~~----------------- of----------------- ~~Operations~~463,689 13478,322 ~~Part~~Intangible IIAssets Definite-lived intangibles, net 161,098 166,662 Indefinite-lived ~~Other~~intangibles ~~Information~~- ~~Item~~licenses 6.7,285,007 ~~Exhibits~~16,146,201 ~~and~~Goodwill ~~reports~~2,794,642 on6,744,779 ~~Form~~Other ~~8-K~~Assets 16Other ~~(a)~~assets ~~Exhibits~~43,039 ~~(b)~~50,712 ~~Reports~~Other oninvestments ~~Form~~39,884 849,256 -K---------------- ~~Signatures~~----------------- 16Total ~~Index~~Assets to$ ~~Exhibits~~11,250,470 17$ 24,095,203 ----------------- -----------------

See Notes to Consolidated Financial Statements -3- AMFM OPERATING INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS LIABILITIES AND SHAREHOLDER'S EQUITY (In thousands)

~~June~~September 30, December 31, 2002 2001 (Unaudited) (Audited) ----------------- ----------------- Current ~~Assets~~Liabilities ~~Cash~~Accounts ~~and~~payable ~~cash equivalents~~ $ --31,299 $ 1134,~~352~~569 ~~Accounts~~Accrued ~~receivable~~interest 35,593 ~~less~~18,890 ~~allowance~~Accrued ofexpenses ~~$17~~96,~~130~~517 ~~at June 30~~178,540 ~~2002~~Accrued ~~and~~income ~~$12,883~~taxes atpayable ~~December~~to ~~31,~~Clear ~~2001~~Channel ~~439~~229,~~625~~197 ~~404~~94,~~778~~615 ~~Prepaid~~Deferred ~~expense~~income 131,~~252~~670 ~~15,124~~-- ~~Other~~Current ~~current~~portion ~~assets~~of ~~24,688~~long-term 28debt -- 157,~~017~~595 ----------------- ----------------- Total Current ~~Assets~~Liabilities ~~477~~394,~~565~~276 ~~459~~484,~~271~~209 ~~Property,~~Long-term ~~Plant~~debt ~~and~~1,267,230 ~~Equipment Land~~1,272,133 ~~buildings~~Clear ~~and~~Channel ~~improvements~~promissory ~~173~~note 60,~~815~~719 ~~175~~487,~~814~~190 ~~Transmitter~~Deferred ~~and~~income ~~studio~~taxes ~~equipment 247~~1,~~190~~728,518 ~~240~~4,~~525~~994,595 ~~Furniture~~Other ~~and~~long-term ~~other~~liabilities ~~equipment 100~~135,~~678~~335 97133,~~510~~255 ~~Construction~~Shareholder's inEquity ~~progress~~Common ~~23,615~~stock ~~19,109~~1 ~~--------------~~1 Additional paid-~~-------------~~in ~~545~~capital 17,~~298~~346,238 ~~532~~17,~~958~~346,238 ~~Less~~Retained ~~accumulated~~deficit ~~depreciation~~ (799,~~013~~681,847) (54623,~~636~~423) Accumulated other comprehensive income -- 1,005 ----------------- -------------- ~~466,285 478,322 Intangible Assets Definite~~-~~lived intangibles, net 163,974 166,662 Indefinite~~-~~lived~~- ~~intangibles~~Total -shareholder's ~~licenses~~equity 7,~~285~~664,~~903~~392 16,~~146~~723,~~201~~821 ~~Goodwill 2,796,775 6,744,779 Other Assets Other assets 50,294 50,712 Other investments 39,884 49,256~~ ----------------- ----------------- Total ~~Assets~~Liabilities and Shareholder's Equity $ 11,~~280~~250,~~680~~470 $ 24,095,203 ----------------- -----------------

See Notes to Consolidated Financial Statements -4- AMFM OPERATING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In thousands)

~~June~~Nine Months Ended Three Months Ended September 30, ~~December~~September 3130, ~~2002~~------------------------------ ~~2001~~ ----------------------------- 2002 2001 2002 2001 ---- ---- ---- ---- ~~Current~~Revenue ~~Liabilities~~$ ~~Accounts~~1,490,231 ~~payable~~$ 1,435,446 $ 38520,~~179~~795 $ 34483,~~569~~156 ~~Accrued~~Operating ~~interest~~expenses: Divisional operating expenses (excludes non-cash compensation expenses of $3,681, $10,~~712~~623, 18$904 and $2,~~890~~359 ~~Accrued~~for ~~expenses~~the ~~104~~nine months ended and three months ended September 30,~~197~~ ~~178~~2002 and 2001,~~540~~ ~~Accrued~~respectively) ~~income~~790,288 ~~taxes~~793,573 ~~payable~~265,981 to267,795 ~~Clear~~Non-cash ~~Channel~~compensation ~~186~~expense 3,~~805~~681 9410,~~615~~623 ~~Deferred~~904 ~~income~~ 2,~~205~~359 --Depreciation ~~Current~~and ~~portion~~amortization of53,709 ~~long-term~~775,443 ~~debt~~19,762 --255,467 ~~157~~Corporate expenses 39,~~595~~772 34,729 14,660 11,665 -------------- ------------- -------------- ~~Total~~------------- ~~Current~~Operating ~~Liabilities~~income ~~342~~(loss) 602,~~098~~781 ~~484~~(178,~~209~~922) ~~Long-term~~219,488 ~~debt~~(54,130) 1Interest expense 88,~~268~~113 139,~~894~~439 126,~~272~~338 42,~~133~~950 ~~Clear~~Gain ~~Channel~~(loss) ~~promissory~~on ~~note~~sale ~~295,027~~of ~~487,190~~assets ~~Deferred~~-- ~~income~~-- ~~taxes~~-- 1,~~692~~491 Gain (loss) on marketable securities 3,~~021~~991 4(86,~~994,595~~359) -- -- Other ~~long~~income (expense) -~~term~~ ~~liabilities~~net ~~134~~20,~~158~~571 ~~133~~5,~~255~~424 ~~Shareholder's~~1,658 ~~Equity~~4,624 ~~Common~~-------------- ~~stock~~------------- 1-------------- 1------------- ~~Additional~~Income ~~paid-~~(loss) before income taxes and cumulative effect of a change in ~~capital~~accounting 17principle 539,~~346~~230 (399,~~238~~296) 17194,~~346~~808 (90,~~238~~965) ~~Retained~~Income ~~deficit~~tax (9expense) benefit (218,~~797,757~~389) 68,399 (~~623~~78,~~423~~898) ~~Accumulated~~7,081 ~~other~~-------------- ~~comprehensive~~------------- ~~income~~-------------- ------------- Income (loss) before cumulative effect of a change in accounting 320,841 (330,897) 115,910 (83,884) principle Cumulative effect of a change in accounting principle (9,379,265) -- ~~1,005~~-- -- -------------- ------------- -------------- ~~Total~~------------- ~~shareholder's~~Net ~~equity~~income 7(loss) (9,~~548~~058,~~482~~424) 16(330,~~723~~897) 115,~~821~~910 (83,884) Other comprehensive income (loss), net of tax: Unrealized gain (loss) on securities: Unrealized holding gain (loss) arising during period 1,470 (37,139) -- (89,752) Reclassification adjustment for (gains) losses included in net income (loss) (2,475) 54,579 -- -- -------------- ------------- -------------- ~~Total~~------------- ~~Liabilities~~Comprehensive ~~and~~income ~~Shareholder's~~(loss) ~~Equity~~ $ 11(9,~~280~~059,~~680~~429) $ 24(313,~~095~~457) $ 115,~~203~~910 $ (173,636) -------------- ------------- -------------- -------------

See Notes to Consolidated Financial Statements -5- AMFM OPERATING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF cash flows (UNAUDITED) (In thousands)

~~Six~~Nine Months Ended ~~June~~September 30, ~~Three Months Ended June 30,~~ ------------------------- -----------~~----------------~~ 2002 2001 ~~2002 2001~~ ---- ---- ~~----~~Net ~~----~~cash ~~Revenue~~provided $by ~~969,436~~(used $in) ~~952,290~~operating activities $ ~~540~~589,~~254~~012 $ ~~521~~(50,~~542~~328) ~~Operating~~Cash ~~expenses:~~flows ~~Divisional~~from ~~operating~~investing ~~expenses~~activities: (~~excludes~~Investment ~~non-cash~~in) ~~compensation~~liquidation ~~expenses~~ of ~~$2,777,~~restricted ~~$8,264,~~cash ~~$1,317~~-- ~~and $5~~320,~~870~~485 ~~for the six months ended and three months ended June 30, 2002 and 2001, respectively~~(Increase) ~~524,307~~decrease ~~525,778~~in ~~277,088~~notes ~~273~~receivable,~~842~~ ~~Non~~net -~~cash~~- ~~compensation expense 2~~4,~~777~~575 ~~8,264~~Proceeds ~~1,317~~from ~~5,870~~divestitures ~~Depreciation~~placed ~~and~~in ~~amortization~~restricted ~~33,947~~cash ~~519,976~~-- 173,~~337~~000 ~~257,899~~Proceeds ~~Corporate~~from ~~expenses~~sale ~~25,112~~of ~~23,064~~marketable ~~7,248~~securities 11,~~196~~827 ~~------------~~595,634 ~~-----------~~Purchases ~~-----------~~of ~~----------~~property ~~Operating~~and ~~income~~equipment (~~loss~~26,893) ~~383,293~~ (~~124~~41,~~792~~557) ~~237,264~~Proceeds ~~(27,265)~~from ~~Interest~~disposal ~~expense~~of ~~61,775~~assets ~~96,489~~-- 2914,~~664~~242 ~~49,363~~Acquisitions ~~Gain (loss) on sale~~ of operating assets -- (17,~~491~~432) -- (45,~~280~~541) ~~Gain~~Acquisition ~~(loss)~~of onradio ~~marketable~~stations ~~securities~~with ~~3,991~~restricted ~~(86,359)~~cash -- (51191,~~000~~929) Other ~~income~~(137) (~~expense~~299) - ~~net 18,913 800 12,526 2,679~~ ------------ -~~----------~~ ----------- ---~~-------~~ ~~Income~~Net cash (~~loss)~~used ~~before income taxes and cumulative effect of a change~~ in ~~344,422 (308,331~~) ~~220,126~~provided ~~(129,229)~~by ~~accounting~~investing ~~principle~~activities ~~Income tax~~ (~~expense) benefit (139~~22,~~491~~635) 61698,~~318~~610 ~~(89,151)~~Cash ~~23,246~~flows ~~------------~~from ~~-----------~~financing ~~-----------~~activities: ~~----------~~Payments ~~Income~~on ~~(loss)~~Clear ~~before~~Channel ~~cumulative~~promissory ~~effect~~note ~~of a change in accounting 204,931~~ (~~247~~426,~~013~~471) ~~130,975~~ (~~105~~650,~~983~~221) ~~principle~~Payments ~~Cumulative~~on ~~effect~~long-term ofdebt ~~a change in accounting principle~~ (9151,~~379,265~~258) --(175) -- -- ------------ ----------- ---~~--------~~ ~~----------~~ Net ~~income~~cash ~~(loss)~~used ~~(9,174,334)~~in ~~(247,013)~~financing ~~130,975~~activities (~~105~~577,~~983~~729) ~~Other comprehensive income~~ (~~loss)~~650,396) ~~net~~Decrease ofin ~~tax:~~cash ~~Unrealized~~and ~~gain~~cash equivalents (~~loss~~11,352) ~~on securities: Unrealized holding gain~~ (~~loss~~2,114) ~~arising~~Cash ~~during~~and ~~period~~cash ~~1,470~~equivalents ~~52,613~~at --beginning ~~63,913~~of ~~Reclassification~~period ~~adjustment for (gains) losses included in net income (loss) (2~~11,~~475)~~352 5418,~~579~~502 -- ~~31,596~~ ------------ ----------- ---~~--------~~ ~~----------~~Cash ~~Comprehensive~~and ~~income~~cash ~~(loss)~~equivalents $at ~~(9,175,339)~~end $of ~~(139,821)~~period $ ~~130,975~~-- $ ~~(10~~16,~~474)~~388 ------------ --~~---------~~ ----------- ---~~-------~~

See Notes to Consolidated Financial Statements -6- 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. 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 2001 Annual Report on Form 10-K. The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned. All significant intercompany transactions are eliminated in the consolidation process. Certain reclassifications have been made to the 2001 consolidated financial statements to conform to the 2002 presentation. Note 2: RECENT ACCOUNTING PRONOUNCEMENTS On January 1, 2002, the Company adopted Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets ("Statement 144"). Statement 144 supersedes Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of, and the accounting and reporting provisions of APB Opinion No. 30, Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions, for the disposal of a segment of a business. Statement 144 also amends ARB No. 51, Consolidated Financial Statements, to eliminate the exception to consolidation for a subsidiary for which control is likely to be temporary. Adoption of Statement 144 had no impact on the financial position of the Company or its results of operations. In April 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections ("Statement 145"). Statement 145 rescinds FASB Statement No. 4, Reporting Gains and Losses from Extinguishment of Debt, and an amendment of that Statement, FASB Statement No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements. Statement 145 also rescinds FASB Statement No. 44, Accounting for Leases, to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. Statement 145 also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. Early adoption of Statement 145 is encouraged and may be as of the beginning of the fiscal year or as of the beginning of the interim period in which the statement issued. The Company has elected to early adopt this statement effective January 1, 2002. Management does not believe adoption of this statement materially impacted the Company's financial position or results of operations. -7- Note 3: INTANGIBLE ASSETS AND GOODWILL On January 1, 2002, the Company adopted 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. Under the new rules, goodwill and intangible assets deemed to have indefinite lives are no longer amortized but are subject to annual impairment tests in accordance with the statement. Other intangible assets will continue to be amortized over their useful lives. The following table presents the impact of Statement 142 on earnings net (loss) as if the standard had been in effect for the nine and three months ended September 30, 2001: (In thousands)

~~Six~~Nine ~~Months~~months ~~Ended~~ended ~~June~~Three months ended September 30, 2001 September 30, 2001 ------------------ ----------- ~~2002 2001~~ ---- ---- Adjusted Net ~~cash~~Income ~~provided by~~ (~~used in~~Loss): ~~operating~~Reported ~~activities~~Net Loss $ ~~341~~(330,~~863~~897) $ (~~153~~83,~~940~~884) ~~Cash~~Add ~~flows from investing activities~~Back: ~~(Investment~~Goodwill ~~in)~~Amortization ~~liquidation of restricted cash -- 318~~212,~~811~~922 ~~Proceeds from divestitures placed in restricted cash -- 3~~71,~~000~~162 ~~Proceeds~~Add ~~from~~Back: ~~sale~~License ofAmortization ~~marketable securities 11~~511,~~827~~506 ~~595~~171,~~634~~303 ~~Purchases~~Tax ofImpact ~~property and equipment~~ (16194,~~454~~372) (1165,~~933~~095) ~~Proceeds from disposal of assets~~ -- ~~11,667 Acquisitions of operating assets (5,029) (307) Acquisition of radio stations with restricted cash~~ -- ~~(191,279) Other (139) 36,910~~ ---------- ----~~------~~ ~~Net cash (used in) provided by investing activities (9,795) 762,503 Cash flows from financing activities: Payments on Clear Channel promissory note (192,163) (609,551) Payments on long~~-~~term debt (151,257)~~ -- ---------- ------~~----~~ Adjusted Net ~~cash~~Income ~~used~~$ ~~in financing activities (343~~199,~~420)~~159 ~~(609,551)~~$ ~~Increase (decrease) in cash and cash equivalents (11~~93,~~352)~~486 ~~(988) Cash and cash equivalents at beginning of period 11,352 18,502~~ ---------- ---------- ~~Cash and cash equivalents at end of period $~~ -- ~~$ 17,514~~ ---------- -------~~---~~

Definite-lived Intangibles The Company has representation contracts for non-affiliated television and radio stations, which continue to be amortized in accordance with Statement 142. These agreements are amortized over their respective lives. In accordance with the transitional requirements of Statement 142, the Company reassessed the useful lives of these intangibles and made no material changes to their useful lives. Total amortization expense from representation contracts for the three and nine months ended September 30, 2002 and for the year ended December 31, 2001 was $4.9 million, $14.2 million and $15.4 million, respectively. The gross carrying value of the contracts at September 30, 2002 was $190.8 million and accumulated amortization was $29.7 million. The gross carrying value of the contracts at December 31, 2001 was $185.7 million and accumulated amortization was $19.0 million. The following table presents the Company's estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangible assets: (In thousands) 2003 $ 24,437 2004 22,863 2005 19,547 2006 17,226 2007 11,631 Indefinite-lived Intangibles Under the guidance in Statement 142, the Company's FCC licenses are considered indefinite-lived intangibles. These assets are not subject to amortization, but will be tested for impairment at least annually. In accordance with Statement 142, the Company tested these indefinite-lived intangible assets for impairment as of January 1, 2002 by comparing their fair value to their carrying value at that date. The Company recognized impairment on FCC licenses of approximately $5.5 billion, net of deferred tax of $3.4 billion, recorded as a component of the cumulative effect of a change in accounting principle during the three months ended March 31, 2002. The Company used the income approach to value FCC licenses, which involved estimating expected future cash flows from the licenses, discounted to their present value using a risk-adjusted discount rate. Terminal values were also estimated and discounted to their present value. In estimating future cash flows, the Company took into account the economic slow down in the radio industry at the end of 2001, coupled with the economic impact of the events of September 11th. -8- Goodwill Statement 142 requires the Company to test goodwill for impairment using a two-step process. The first step is a screen for potential impairment, while the second step measures the amount of impairment. The Company completed the two-step impairment test during the first quarter of 2002. As a result of this test, the Company recognized an impairment of approximately $3.9 billion as a component of the cumulative effect of a change in accounting principle during the three months ended March 31, 2002. Consistent with the Company's approach to fair valuing FCC licenses, the income approach was used to determine the fair value of the Company's reporting unit. Throughout 2001, unfavorable economic conditions persisted in the industries that the Company serves, which caused its customers to reduce the number of advertising dollars spent on the Company's media inventory as compared to prior periods. These conditions adversely impacted the cash flow projections used to determine the fair value of the Company's reporting unit, resulting in a write-off of a portion of goodwill. The following table presents the changes in the carrying amount of goodwill for the nine-month period ended September 30, 2002: (In thousands) Balance as of December 31, 2001 $ 6,744,779 Adjustments (63,216) Impairment loss related to the adoption of FAS 142 (3,886,921) ------------ Balance as of September 30, 2002 $ 2,794,642 ------------ Other Statement 142 does not change the requirements of Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, for recognition of deferred taxes related to FCC licenses and tax-deductible goodwill. As a result of adopting Statement 142, a deferred tax benefit for the difference between book and tax amortization on the Company's FCC licenses and tax-deductible goodwill will no longer be recognized as these assets are no longer amortized for book purposes. As the majority of the Company's deferred tax liability recorded on the balance sheet relates to the difference between book and tax basis on FCC licenses, the deferred tax liability will not reverse over time unless future impairment charges are recognized on FCC licenses or the FCC licenses are sold. Prior to adopting Statement 142, the Company recorded large amounts of non-deductible goodwill amortization, which resulted in a corresponding large permanent tax item, which adversely impacted the Company's effective tax rate. However, as a result of the Company's adoption of Statement 142, it no longer amortizes goodwill for book or tax purposes, thus its effective tax rate more closely approximates statutory tax rates. Note 4: RESTRUCTURING The combined company restructured the former AMFM operations primarily during 2001. The Company communicated to all affected employees the last date of their employment. The AMFM corporate offices in Dallas and Austin, Texas were closed on March 31, 2001 and other operations of AMFM have either been discontinued or integrated into existing similar operations of Clear Channel. As of September 30, 2002, the restructuring has resulted in the termination of 430 employees. The Company has recorded a liability in purchase accounting primarily related to severance for terminated employees and lease terminations as follows:

(In thousands) ~~Six~~Severance ~~months~~and ~~Three~~lease ~~months~~termination ~~ended~~costs: ~~ended~~Accrual ~~June~~at ~~30,~~January ~~2001 June 30~~1, ~~2001~~2002 ~~------------- ------------- Adjusted Net Income (Loss): Reported Net Loss~~ $ ~~(247~~36,~~013)~~310 $Payments ~~(105,983)~~charged ~~Add~~against ~~Back:~~restructuring ~~Goodwill~~accrual ~~Amortization 141,760 70,930 Add Back: License Amortization 340,203 171,218 Tax Impact~~ (~~129~~5,~~277~~409) ~~(65,063)~~ -------------------~~-----------~~ ~~Adjusted~~Remaining ~~Net~~severance ~~Income~~and $lease ~~105~~termination accrual at September 30,~~673~~ 2002 $ 7130,~~102~~901 -------------------~~-----------~~

The remaining severance and lease accrual is comprised of $22.9 million of severance and $8.0 million of lease termination obligations. The severance accrual will be paid over the next several years. The lease termination accrual will be paid over the next five years. During the nine months ended September 30, 2002, $4.3 million was paid and charged to the restructuring reserve related to severance. As the Company made adjustments to finalize the purchase price allocation related to the AMFM merger during 2001, any potential excess reserves will be recorded as an adjustment to the purchase price. -9- Note 5: CLEAR CHANNEL PROMISSORY NOTE AND LONG-TERM DEBT The Clear Channel promissory note and long-term debt consists of the following:

(In millions) ~~June~~September 30, December 31, 2002 2001 ---- ---- Clear Channel Promissory Note $ ~~295~~60.07 $ 487.2 --------------- ---------------- Long-Term Debt: 8% Senior Notes ~~692~~691.25 693.4 8.125% Notes ~~381~~380.58 382.7 8.75% Notes ~~195~~194.29 196.0 12.625% Notes -- 157.1 Other -- .5 --------------- ---------------- 1,~~268~~267.92 1,429.7 Less: Current portion -- 157.6 --------------- ---------------- Total long-term debt (a) $ 1,~~268~~267.92 $ 1,272.1 --------------- ----------------

(a) Includes $46.3 million and $66.5 million as of September 30, 2002 and December 31, 2001, respectively, 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. Accrued interest plus the note balance is payable 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. 8% Senior Notes On November 17, 1998, the Company issued $750.0 million aggregate principal amount of 8% Senior Notes due 2008 (the "8% Senior Notes"). 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% Notes 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"). 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% Notes 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"). 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. -10- 12.625% Notes On January 15, 2002, the Company redeemed all of the outstanding 12.625% Debentures originally issued under the Company's prior name, SFX Broadcasting, Inc. At December 31, 2001 the face value of these notes was $141.8 million and the unamortized fair value purchase accounting adjustment premium was $15.3 million. The 12.625% debentures were redeemed for $150.8 million plus accrued interest. The redemption resulted in a gain of $6.3 million recorded in other income (expense) - net. Other Upon the occurrence of a change in control (as defined in the indenture governing the 8.0%, 8.125% and 8.75% 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, the repurchase option has expired. AMFM Operating's 8.75% Notes and 8.125% 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"). In addition, AMFM Operating's independent assets and operations are insignificant, as the majority of the assets and all of the operations are at the level of the Subsidiary Guarantors. Additionally, all of the Subsidiary Guarantors are 100% owned by the Company. 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. We have guaranteed certain Clear Channel debt obligations, including a reducing revolving long-term line of credit facility, a $1.5 billion five-year multi-currency revolving credit facility and a $1.5 billion three-year term loan with outstanding balances at September 30, 2002 of $127.0 million, $19.5 million and $1.5 billion, respectively. At September 30, 2002, the contingent liability under these guarantees was limited to $1.2 billion. At September 30, 2002, the Company was in compliance with all debt covenants. The Company expects to remain in compliance throughout 2002. The Company has no scheduled maturities of long-term debt until 2007. 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. -11- Note 7: SEGMENT DATA The Company has one reportable operating segment - radio broadcasting. The Company's media representation firm is reported in "other". Revenue and expenses earned and charged between segments are recorded at fair value and eliminated in consolidation.

(In thousands) Radio Broadcasting Other Corporate Eliminations Consolidated -------------- -------------- -------------- -------------- --------------- ~~Six~~Nine months ended ~~June~~September 30, 2002 ------------------------------------ Revenue $ ~~894~~1,~~003~~370,156 $ 90142,~~012~~500 $ -- $ (1422,~~579~~425) $ ~~969~~1,~~436~~490,231 Divisional operating expenses ~~459~~690,~~020~~505 79122,~~866~~208 -- (1422,~~579~~425) ~~524~~790,~~307~~288 Non-cash compensation 23,~~777~~681 -- -- -- 23,~~777~~681 Depreciation and amortization 2033,~~545~~410 1218,~~052~~273 12,~~350~~026 -- 3353,~~947~~709 Corporate expenses -- -- 2539,~~112~~772 -- 2539,~~112~~772 -------------- -------------- -------------- -------------- --------------- Operating income (loss) $ ~~411~~642,~~661~~560 $ (12,~~906)~~019 $ (2641,~~462~~798) $ -- $ ~~383~~602,~~293~~781 -------------- -------------- -------------- -------------- --------------- Identifiable assets $ 10,~~909~~888,~~161~~326 $ ~~291~~283,~~548~~843 $ 7978,~~971~~301 $ -- $ 11,~~280~~250,~~680~~470 Three months ended ~~June~~September 30, 2002 ------------------------------------- Revenue $ ~~499~~476,~~050~~154 $ 4952,~~560~~487 $ -- $ (87,~~356~~846) $ ~~540~~520,~~254~~795 Divisional operating expenses ~~244~~231,~~944~~485 4042,~~500~~342 -- (87,~~356~~846) ~~277~~265,~~088~~981 Non-cash compensation ~~1,317~~904 -- -- -- ~~1,317~~904 Depreciation and amortization 1012,~~434~~865 6,~~361~~221 ~~542~~676 -- 1719,~~337~~762 Corporate expenses -- -- 714,~~248~~660 -- 714,~~248~~660 -------------- -------------- -------------- -------------- --------------- Operating income (loss) $ ~~242~~230,~~355~~900 $ 23,~~699~~924 $ (715,~~790~~336) $ -- $ ~~237~~219,~~264~~488 -------------- -------------- -------------- -------------- --------------- ~~Six~~Nine months ended ~~June~~September 30, 2001 ------------------------------------ Revenue $ ~~867~~1,~~544~~305,079 $ 96146,~~776~~779 $ -- $ (1216,~~030~~412) $ ~~952~~1,~~290~~435,446 Divisional operating expenses ~~456~~685,~~081~~917 81124,~~727~~068 -- (1216,~~030~~412) ~~525~~793,~~778~~573 Non-cash compensation 810,~~264~~623 -- -- -- 810,~~264~~623 Depreciation and amortization ~~368~~546,~~624~~357 714,~~894~~103 ~~143~~214,~~458~~983 -- ~~519~~775,~~976~~443 Corporate expenses -- -- 2334,~~064~~729 -- 2334,~~064~~729 -------------- -------------- -------------- -------------- --------------- Operating income (loss) $ 3462,~~575~~182 $ 78,~~155~~608 $ (~~166~~249,~~522~~712) $ -- $ (~~124~~178,~~792~~922) -------------- -------------- -------------- -------------- --------------- Identifiable assets $ 2423,~~159~~964,~~144~~283 $ ~~263~~303,~~526~~881 $ ~~497~~341,~~455~~978 $ -- $ 24,~~920~~610,~~125~~142 Three months ended ~~June~~September 30, 2001 ------------------------------------- Revenue $ ~~478~~437,~~846~~535 $ 4950,~~937~~003 $ -- $ (74,~~241~~382) $ ~~521~~483,~~542~~156 Divisional operating expenses ~~241~~229,~~134~~836 3942,~~949~~341 -- (74,~~241~~382) ~~273~~267,~~842~~795 Non-cash compensation 52,~~870~~359 -- -- -- 52,~~870~~359 Depreciation and amortization ~~182~~106,~~229~~904 46,~~110~~209 71142,~~560~~354 -- ~~257~~255,~~899~~467 Corporate expenses -- -- 11,~~196~~665 -- 11,~~196~~665 -------------- -------------- -------------- -------------- --------------- Operating income (loss) $ 4998,~~613~~436 $ 51,~~878~~453 $ (82154,~~756~~019) $ -- $ (2754,~~265~~130) -------------- -------------- -------------- -------------- ---------------

-12- 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, 2002 to Three and Nine Months Ended September 30, 2001 is as follows:

Consolidated (In thousands) Three Months Ended ~~June~~September 30, %Nine ~~Six~~ Months Ended ~~June~~September 30, % -------------------------------- % ------------------------------- % 2002 2001 Change 2002 2001 Change ---- ---- ------ ---- ---- ------ Revenue $ ~~540~~520,~~254~~795 $ ~~521~~483,~~542~~156 48% $ ~~969~~1,~~436~~490,231 $ ~~952~~1,~~290~~435,446 24% Divisional Operating Expenses ~~277~~265,~~088~~981 ~~273~~267,~~842~~795 (1%) ~~524~~790,~~307~~288 ~~525~~793,~~778~~573 (0%)

Revenue increased $37.6 million and $54.8 million for the three and nine months ended September 30, 2002 as compared to the same periods of 2001, respectively. We experienced broad based revenue increases for the third quarter. Growth occurred across our large and small market clusters and in national and local sales. This growth was spurred by growth in our auto, retail, telecom/utility, consumer products and entertainment advertising categories. As we have progressed through the year, we have seen more of our advertising categories contribute to the revenue gains, which have fueled the growth across our markets. Our national and local revenues grew 15% and 9% respectively, for the three months ended September 30, 2002 and 7% and 4%, respectively, for the nine months ended September 30, 2002 as compared to the same periods of 2001. Divisional operating expenses decreased $1.8 million and $3.3 million for the three and nine months ended September 30, 2002, respectively, as compared to the same periods of 2001. These decreases are primarily attributable to decreases in operating expenses associated with our digital audio software supply business. However, this decrease was partially offset by increases in radio commission and sports rights expenses as well as various operating expenses from our syndicated radio business. Other Income and Expense Information Non-cash compensation expense relates 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 these employees' options continue to vest post-merger, we recognize non-cash compensation expense over the remaining vesting period. Vesting dates vary through April 2005. If no employees forfeit their unvested options by leaving the company, we expect to recognize non-cash compensation expense of approximately $4.0 million during the remaining vesting period. Depreciation and amortization expense decreased $235.7 million and $721.7 million for the three and nine months ended September 30, 2002 as compared to the same periods of 2001, respectively. Upon our adoption of FAS 142 on January 1, 2002, we no longer amortize goodwill and FCC licenses. For the three and nine months ended September 30, 2001, goodwill and FCC license amortization was approximately $242.5 million and $724.4 million, respectively. Corporate expenses increased $5.0 million for the nine months ended September 30, 2002 from the same period of 2001, primarily resulting from additional sales force hired in late 2001. Clear Channel's methodology of allocating corporate expense is based on head count, thus increasing the corporate allocation. Interest expense was $26.3 million and $43.0 million for the three months ended September 30, 2002 and 2001 respectively, a decrease of $16.7 million, or 39%. The decrease is due to the January 15, 2002 redemption of all of the outstanding 12.625% Debentures as well as a decrease in the balance of the Clear Channel Promissory Note. The gain on sale of marketable securities for the nine months ended September 30, 2002 of $4.0 million is related to the sale of 791,000 shares of Entravision Corporation. The loss on marketable securities for the nine -13- months ended September 30, 2001 of $86.4 million is comprised of a loss of $78.7 million 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. Income tax expense was $78.9 million and $218.4 million for the three and nine months ended September 30, 2002, respectively, compared to a benefit of $7.1 million and $68.4 million for the three and nine months ended September 30, 2001, respectively. Income taxes for the nine months ended September 30, 2002 and 2001 were provided at the federal and state statutory rates adjusted for the effects of permanent tax items. During the nine months ended September 30, 2001, as a result of our large amounts of non-deductible goodwill amortization, our effective tax rate was adversely impacted. As we no longer amortize goodwill, our effective rate for the nine months ended September 30, 2002, more closely approximates our statutory tax rates. Income (loss) before cumulative effect of a change in accounting principle for the three and nine months ended September 30, 2002 was income of $115.9 million and $320.8 million, respectively, as compared to loss of $83.9 million and $330.9 million for the same periods of 2001, respectively. Income (loss) before cumulative effect of a change in accounting principle for the three and nine months ended September 30, 2001, if we had adopted Statement 142 as of January 1, 2001, would have been income of $93.5 million and $199.2 million, respectively. The loss recorded as a cumulative effect of a change in accounting principle during the first nine months of 2002 relates to our adoption of Statement 142 on January 1, 2002. Statement 142 requires us to test goodwill and indefinite-lived intangibles for impairment using a fair value approach. As a result of the goodwill test, we recorded a non-cash impairment charge of approximately $3.9 billion. Also, as a result of the indefinite-lived intangible test, we recorded a non-cash, net of tax impairment charge on our FCC licenses of approximately $5.5 billion. The non-cash impairments of our goodwill and FCC licenses were primarily caused by unfavorable economic conditions, which persisted in the industries we serve throughout 2001. This weakness contributed to our customers reducing the number of advertising dollars spent on our media inventory. These conditions adversely impacted the cash flow projections used to determine the fair value of our licenses and reporting unit. These factors resulted in the non-cash impairment charge of a portion of our licenses and goodwill. 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 expansion of market share, availability of capital resources, and expected changes in radio industry advertising revenues, 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; o competition and general conditions in the radio broadcasting industry; o shifts in population and other demographics; o industry conditions, including competition; o fluctuations in operating costs; o technological changes and innovations; o changes in labor conditions; o capital expenditure requirements; o litigation settlements; -14- o legislative or regulatory requirements; o legislative proposals; o interest rates; o the effect of leverage on our financial position and earnings; o taxes; and o certain other factors set forth in our SEC filings, including our Annual Report on Form 10-K for the year ended December 31, 2001. 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. ITEM 4. CONTROLS AND PROCEDURES Our principal executive and financial officers have concluded, based on their evaluation as of a date within 90 days before the filing of this Form 10-Q, that our disclosure controls and procedures under Rule 13a-14 of the Securities Exchange Act of 1934 are effective to ensure that information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and include controls and procedures designed to ensure that information we are required to disclose in such reports is accumulated and communicated to management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure. Subsequent to our evaluation, there were no significant changes in internal controls or other factors that could significantly affect these internal controls. -15- Part II -- OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. See Exhibit Index on Page 19 (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. November 13, 2002 /s/ RANDALL T. MAYS ---------------------------- Randall T. Mays Executive Vice President and Chief Financial Officer November 13, 2002 /s/ HERBERT W. HILL, JR. ---------------------------- Herbert W. Hill, Jr. Senior Vice President and Chief Accounting Officer -16- Certification I, L. Lowry Mays, Chairman and Chief Executive Officer of AMFM Operating Inc., certify that: 1. I have reviewed this quarterly report on Form 10-Q of AMFM Operating Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 13, 2002 /s/ L. LOWRY MAYS -------------------------------------- L. Lowry Mays Chairman and Chief Executive Officer -17- Certification I, Randall T. Mays, Executive Vice President and Chief Financial Officer of AMFM Operating Inc., certify that: 1. I have reviewed this quarterly report on Form 10-Q of AMFM Operating Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 13, 2002 /s/ RANDALL T. MAYS -------------------------------------- Randall T. Mays Executive Vice President and Chief Financial Officer -18- INDEX TO EXHIBITS EXHIBIT NO. DESCRIPTION OF EXHIBIT -------------- ---------------------- 3.1(1) -- Amended and Restated Certificate of Incorporation of AMFM Operating Inc. 3.2(2) -- Bylaws of AMFM Operating Inc. 4.1(3) -- Certificate of Designation for 12 5/8% Series E Cumulative Exchangeable Preferred Stock of AMFM Operating Inc. 4.2(4) -- Certificate of Amendment to Certificate of Designation for 12 5/8% Series E Cumulative Exchangeable Preferred Stock of AMFM Operating Inc. 4.3(5) -- Indenture, dated as of November 19, 1999, governing the 12 5/8% Senior Subordinated Exchange Debentures due 2006, of AMFM Operating Inc. 4.4(6) -- 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(7) -- First Supplemental Indenture, dated as of September 5, 1997, to the 8 3/4% Notes Indenture. 4.6(8) -- Second Supplemental Indenture, dated as of October 28, 1997, to the 8 3/4% Notes Indenture. 4.7(8) -- Third Supplemental Indenture, dated as of August 23, 1999, to the 8 3/4% Notes Indenture. 4.8(8) -- Fourth Supplemental Indenture, dated as of November 19, 1999, to the 8 3/4% Notes Indenture. 4.9(8) -- Fifth Supplemental Indenture, dated as of January 18, 2000, to the 8 3/4% Notes Indenture. 4.10(9) -- 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"). 4.11(8) -- First Supplemental Indenture, dated as of August 23, 1999, to the 8 1/8% Notes Indenture. 4.12(8) -- Second Supplemental Indenture, dated as of November 19, 1999, to the 8 1/8% Notes Indenture. 4.13(8) -- Third Supplemental Indenture, dated as of January 18, 2000, to the 8 1/8% Notes Indenture. 4.14(10) -- Indenture, dated as of November 17, 1998, governing the 8% Senior Notes due 2008 of AMFM Operating Inc.(the "8% Notes Indenture"). 4.15(8) -- First Supplemental Indenture, dated as of August 23, 1999, to the 8% Notes Indenture. 4.16(8) -- Second Supplemental Indenture, dated as of November 19, 1999, to the 8% Notes Indenture. 4.17(8) -- Third Supplemental Indenture, dated as of January 18, 2000, to the 8% Notes Indenture. 4.18(11) -- Intercompany Promissory Note between AMFM Operating Inc. and Clear Channel Communications, Inc. dated August 30, 2000. 99.1 -- Certification of Chief Executive Officer of AMFM Operating Inc. 99.2 -- Certification of Chief Financial Officer of AMFM Operating Inc. ------------ (1) 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. (2) 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. -19- (3) Incorporated by reference to Exhibits to the Current Report on Form 8-K of SFX Broadcasting, Inc., filed on January 27, 1997. (4) Incorporated by reference to Exhibits to SFX Broadcasting, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1997. (5) Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of AMFM Operating Inc. filed on November 19, 1999. (6) 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. (7) 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). (8) Incorporated by reference to Exhibits to the Annual Report on Form 10-K of AMFM Inc. for the year ended December 31, 1999. (9) 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). (10) 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). (11) 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. -20-

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