<PAGE>   1

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K

(Mark One)

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1997

                                       OR

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

             For the transition period from __________ to __________

                        Commission file number: 333-36771

                          CITADEL BROADCASTING COMPANY
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

           Nevada                                                86-0703641
-------------------------------                              -------------------
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                               Identification No.)

1256 E. Dines Point Road, Greenbank, Washington                    98253
------------------------------------------------             -----------------
         (Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code:       (360) 678-1212
                                                   -----------------------------

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  None

         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 such 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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

         The aggregate market value of the registrant's common stock held by
non-affiliates is zero.

         As of March 15, 1998, there were 40,000 shares of common stock, $.001
par value per share, outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None



<PAGE>   2


                          Citadel Broadcasting Company

                                    Form 10-K
                                December 31, 1997

                                      Index
<TABLE>
<CAPTION>
<S>     <C>                <C>                                                                                 <C>
Part I                                                                                                         Page
                                                                                                               ----
         Item 1 -          Business.............................................................................I-1

         Item 2 -          Properties..........................................................................I-32

         Item 3 -          Legal Proceedings...................................................................I-32

         Item 4 -          Submission of Matters to a Vote of Security Holders.................................I-33

Part II

         Item 5 -          Market For Registrant's Common Equity and Related Stockholder Matters...............II-1

         Item 6 -          Selected Financial Data.............................................................II-1

         Item 7 -          Management's Discussion and Analysis of Financial
                            Condition and Results of Operations................................................II-3

         Item 7A -         Quantitative and Qualitative Disclosures About Market Risk..........................II-9

         Item 8 -          Financial Statements and Supplementary Data........................................II-10

         Item 9 -          Changes In and Disagreements With Accountants on Accounting
                            and Financial Disclosure..........................................................II-35

Part III

         Item 10 -         Directors and Executive Officers of the Registrant.................................III-1

         Item 11 -         Executive Compensation.............................................................III-4

         Item 12 -         Security Ownership of Certain Beneficial Owners and Management....................III-10

         Item 13 -         Certain Relationships and Related Transactions....................................III-14

Part IV

         Item 14 -         Exhibits, Financial Statement Schedules and Reports on Form 8-K.....................IV-1
</TABLE>



<PAGE>   3

PART I

ITEM 1.  BUSINESS

GENERAL

    Citadel Broadcasting Company (the "Company") is a radio broadcasting company
that focuses on acquiring, developing and operating radio stations in mid-sized
markets. Upon completion of the Pending Transactions (as defined), the Company
will own or operate 68 FM and 31 AM radio stations in 18 markets and will have
the right to construct one additional FM station, and the Company's stations
will comprise the leading radio station group in terms of revenue share in ten
of those markets. Unless the context otherwise requires, the term "operate," as
used in connection with the Company's radio station activities, includes the
provision of programming and the sale of advertising pursuant to local marketing
agreements ("LMA") or the sale of advertising pursuant to joint sales agreements
("JSA").

    The Company's primary strategy is to secure and maintain a leadership
position in the markets it serves and to expand into additional mid-sized
markets where it believes a leadership position can be obtained. Upon entering a
market, the Company seeks to acquire additional stations which, when integrated
with its existing operations, allow it to reach a wider range of demographic
groups that appeal to advertisers, enhance operating performance and achieve
substantial cost savings.

    The Company chooses programming formats for its stations that are intended
to maximize each station's cash flow. The Company's stations broadcast a number
of formats including country, news/talk, adult contemporary, rock and oldies,
each of which is designed to appeal to a specific audience in each local market.
The Company's portfolio of stations is diversified in terms of format, target
demographics and geographic location. Because of the size of its portfolio and
its individual radio station groups, the Company believes it is not unduly
reliant upon the performance of any single station. The Company also believes
that the diversity of its portfolio of radio stations helps insulate the Company
from downturns in specific markets and changes in format preferences.

    The Company believes that mid-sized markets represent attractive
opportunities because, as compared to the 50 largest markets in the United
States, they are generally characterized by (i) lower radio station purchase
prices as a multiple of broadcast cash flow, (ii) fewer sophisticated and
well-capitalized competitors, including both radio and competing advertising
media such as newspapers and television, and (iii) less direct format
competition due to the smaller number of stations in any given market. The
Company believes that the attractive operating characteristics of mid-sized
markets coupled with the opportunity to establish or expand in-market radio
station groups create the potential for substantial revenue growth and cost
efficiencies.

CORPORATE HISTORY AND RECENTLY COMPLETED TRANSACTIONS

    The Company was incorporated in Nevada in 1991, and in 1992 it acquired all
of the radio stations then owned or operated by Citadel Associates Limited
Partnership and Citadel Associates Montana Limited Partnership (collectively,
"Predecessor") and certain other radio stations. In 1993, Citadel Communications
Corporation ("Citadel Communications") was incorporated and the Company was
reorganized as a wholly owned subsidiary of Citadel Communications. Lawrence R.
Wilson, Chief Executive Officer of the Company, was a co-founder and one of the
two general partners of Predecessor. The Company acquired ownership of
additional radio stations in each of 1993, 1994, 1996, 1997 and 1998.

    On July 3, 1997, the Company purchased all of the issued and outstanding
capital stock of Tele-Media Broadcasting Company ("Tele-Media") which owned or
operated 16 FM and ten AM radio stations in Pennsylvania, Rhode Island and
Illinois (the "Tele-Media Acquisition"). The purchase price, following
post-closing adjustments, for the Tele-Media Acquisition was approximately
$115.8 million, which included the repayment of certain indebtedness of
Tele-Media and the redemption of certain corporate bonds and warrants of


                                      I - 1

<PAGE>   4



Tele-Media. Upon consummation of the Tele-Media Acquisition, Tele-Media was
merged with and into the Company.

    Effective as of January 1, 1997, Citadel Communications acquired Deschutes
River Broadcasting, Inc. ("Deschutes") which owned 18 radio stations in Montana,
Oregon and Washington. The total consideration paid was approximately $26.0
million. Following the acquisition, Deschutes was operated as a sister company
to the Company until June 20, 1997 when Deschutes was merged with and into the
Company (the "Subsidiary Merger").

    The Company also acquired (i) three FM radio stations and one AM radio
station in Albuquerque, New Mexico in several separate transactions in June 1996
and October 1996, (ii) one FM radio station in Modesto, California in June 1996;
(iii) one FM radio station in Colorado Springs, Colorado in October 1996; (iv)
three FM radio stations and one AM radio station in Salt Lake City, Utah in
three separate transactions in February 1997, April 1997 and October 1997; (v)
one FM radio station in Reno, Nevada in July 1997; (vi) one FM radio station in
Tri-Cities, Washington in September 1997; (vii) two FM radio stations in
Providence, Rhode Island in two separate transactions in September 1997 and
November 1997; (viii) seven FM and three AM radio stations and the right to
construct one additional FM radio station in Little Rock, Arkansas in several
separate transactions in October 1997 and November 1997 (collectively, the
"Little Rock Acquisitions"); (ix) one FM radio station in Allentown/Bethlehem,
Pennsylvania in October 1997; (x) three FM and two AM radio stations in
Wilkes-Barre/Scranton, Pennsylvania in two separate transactions in January 1998
and March 1998, and (xi) two FM radio stations and one AM radio station in
Boise, Idaho in February 1998. Prior to their acquisition by the Company, 25 of
these stations had been operated by the Company under an LMA or JSA. The
aggregate purchase price paid for these stations and related assets, including
an Internet access service provider, was approximately $147.9 million,
consisting of approximately $133.7 million in cash and the balance in shares of
preferred stock of Citadel Communications.

    The Company's principal executive offices are located at 1256 E. Dines Point
Road, Greenbank, Washington 98253, and its telephone number is (360) 678-1212.

THE PENDING TRANSACTIONS

    The Company has entered into an agreement to purchase two FM radio stations
(the "Pending Acquisitions") and to sell an aggregate of four FM and three AM
radio stations (the "Pending Dispositions" and collectively with the Pending
Acquisitions, the "Pending Transactions").

    KIZN-FM and KZMG-FM, Boise, Idaho. On September 29, 1997, the Company
entered into an Asset Purchase Agreement with Wilson Group, LLC ("Wilson Group")
pursuant to which the Company has agreed to acquire from Wilson Group
substantially all of the assets of radio stations KIZN-FM and KZMG-FM for the
aggregate purchase price of approximately $14.1 million in cash. The Company has
delivered a letter of credit in the amount of $500,000 to secure its obligations
under the acquisition agreement. Pending the acquisition, on November 1, 1997,
the Company began operating KIZN-FM and KZMG-FM pursuant to an LMA. The Company
has also entered into a five-year consulting agreement with the principal of
Wilson Group. Wilson Group is not affiliated with Lawrence R. Wilson, a director
and executive officer of the Company.

    The asset purchase agreement contains customary representations and
warranties of the parties, and consummation of the acquisition of KIZN-FM and
KZMG-FM is subject to certain conditions including (i) the receipt of FCC
consent to the assignment of the KIZN-FM and KZMG-FM licenses to the Company and
(ii) certain other customary conditions for the type of transaction involved. An
application seeking FCC approval was filed with the FCC on October 20, 1997. The
Company received a grant of the application on December 24, 1997, and it
anticipates that the acquisition of KIZN-FM and KZMG-FM will close in April
1998. Upon consummation of the acquisition, the Company will own four FM radio
stations and one AM radio station in Boise.


                                      I - 2

<PAGE>   5




    WQKK-FM and WGLU-FM, Johnstown, Pennsylvania and WRSC-AM, WQWK-FM, WBLF-AM
and WIKN- FM, State College, Pennsylvania. On September 29, 1997, the Company
entered into an Asset Purchase Agreement with Talleyrand Broadcasting, Inc.
("Talleyrand") pursuant to which Talleyrand has agreed to purchase substantially
all of the assets of radio stations WQKK-FM and WGLU-FM in Johnstown,
Pennsylvania and radio stations WRSC-AM, WQWK-FM, WBLF-AM and WIKN-FM in State
College, Pennsylvania for the aggregate purchase price of approximately $8.5
million in cash. In addition to the stations it owns in Johnstown and State
College, the Company will also sell to Talleyrand its right of first refusal to
purchase two additional radio stations in Johnstown.

    The asset purchase agreement contains customary representations and
warranties of the parties, and consummation of the sale of WQKK-FM, WGLU-FM,
WRSC-AM, WQWK-FM, WBLF-AM and WIKN-FM is subject to certain conditions including
(i) the receipt of FCC consent to the assignment of the station licenses to
Talleyrand and (ii) the receipt of consents to the assignment to Talleyrand of
certain contracts relating to the stations. An application seeking FCC approval
was filed with the FCC on October 10, 1997. The Company anticipates that the
sale of WQKK-FM, WGLU-FM, WRSC-AM, WQWK-FM, WBLF-AM and WIKN-FM will close in
the second or third quarter of 1998. The Company does not own any other radio
stations in either Johnstown or State College.

    WEST-AM, Allentown/Bethlehem, Pennsylvania. On July 15, 1997, the Company
entered into an Asset Purchase Agreement with Maranatha Broadcasting Company,
Inc. ("Maranatha") pursuant to which Maranatha has agreed to acquire from the
Company certain of the assets used in the operation of radio station WEST-AM in
Allentown/Bethlehem. In October 1997, the Company acquired radio station WLEV-FM
from Maranatha, and the assets of WEST-AM constitute a portion of the purchase
price for WLEV-FM.

    The asset purchase agreement contains customary representations and
warranties of the parties, and consummation of the sale of WEST-AM is subject to
certain conditions including (i) the receipt of FCC consent to the assignment of
the WEST-AM license to Maranatha and (ii) the receipt of consents to the
assignment to Maranatha of certain contracts relating to WEST-AM. An application
seeking FCC approval was filed on August 21, 1997. A grant of such application
was received on February 6, 1998. The Company anticipates that the sale of
WEST-AM will close in June 1998. Upon consummation of such sale, the Company
will own two FM radio stations in Allentown/Bethlehem.

MARKET AND STATION DATA

Unless otherwise indicated herein, (i) all metropolitan statistical area ("MSA")
rank information and information concerning the number of stations in a market
have been obtained from Investing in Radio 1998 Market Report (1st ed.) (the
"1998 BIA Report") published by BIA Publications, Inc. ("BIA"); (ii) all
audience share and primary demographic share and rank information have been
obtained from the Fall 1997 Radio Market Report (the "Arbitron Reports")
published by The Arbitron Company ("Arbitron"); (iii) station and station group
market revenue share and rank information for the Albuquerque, Colorado Springs,
Eugene, Little Rock, Modesto, Reno, Salt Lake City, Spokane and
Wilkes-Barre/Scranton markets are given for 1997 and have been obtained from the
December 1997 Miller, Kaplan Market Revenue Report, a publication of Miller,
Kaplan, Arase & Co., Certified Public Accountants; (iv) station and station
group market revenue share and rank information for the Allentown/Bethlehem,
Billings, Boise, Harrisburg, Medford, Tri-Cities and York markets are given for
1997 and have been obtained from the 1998 BIA Report; (v) station and station
group market revenue share and rank information for the Providence market is
given for 1997 and has been obtained from the December 1997 Radio Revenue
Report, a publication of Hungerford, Aldrin, Nichols & Carter, P.C., Certified
Public Accountants ("Hungerford"); (vi) market revenue is given for the period
indicated and, with respect to a particular market, has been obtained from the
same source from which station group market revenue share and rank information
have been obtained for such market; and (vii) unless otherwise noted,
information concerning the number of viable stations in a market has been
obtained from Duncan's Radio Market Guide (1997 ed.) ("Duncan's") compiled by


                                      I - 3

<PAGE>   6



Duncan's American Radio, Inc. Duncan's defines "viable stations" as stations
which are active and viable competitors for advertising dollars in the market.
If the total number of viable AM or viable FM stations within a market was not a
whole number, that number was rounded up to the nearest whole number. A viable
AM/FM combination has been counted as one viable FM station.

    A radio station's designated market may be different from its community of
license. If a radio station's call letters have changed during the time the
Company has owned or operated the station, the station is described herein by
its call letters currently in use, unless otherwise indicated.

"Broadcast cash flow" consists of operating income (loss) before depreciation,
amortization and corporate expenses. Although broadcast cash flow is not a
measure of performance calculated in accordance with generally accepted
accounting principles ("GAAP"), management believes that it is useful in
evaluating the Company because it is a measure widely used in the broadcast
industry to evaluate a radio company's operating performance. However, broadcast
cash flow should not be considered in isolation or as substitutes for net
income, cash flows from operating activities and other income or cash flow data
prepared in accordance with GAAP as a measure of liquidity or profitability.

STATION PORTFOLIO

The Company currently owns 64 FM and 29 AM radio stations, has the right to
construct one additional FM radio station, sells advertising on behalf of four
FM and five AM radio stations pursuant to JSAs and provides programming and
sells advertising on behalf of four FM radio stations pursuant to LMAs, two of
which stations are pending acquisition by the Company. The Company has entered
into an agreement to purchase two FM radio stations. In addition, the Company
has entered into agreements to sell four FM and three AM radio stations. Upon
completion of the Pending Transactions, the Company will own 62 FM and 26 AM
radio stations in 18 mid-sized markets, operate six FM and five AM additional
radio stations in its markets pursuant to LMAs or JSAs and have the right to
construct one additional FM radio station.



                                      I - 4

<PAGE>   7



    The following table sets forth certain information about stations owned by
or operated by the Company after giving effect to the Pending Transactions.

<TABLE>
<CAPTION>
                                                                                                STATION
                                                                                STATION        AUDIENCE        RADIO
                                                                                RANK IN        SHARE IN        GROUP     RADIO GROUP
       RADIO GROUP/                       STATION               PRIMARY         PRIMARY         PRIMARY       MARKET        RANK IN
       STATION CALL       MSA           PROGRAMMING           DEMOGRAPHIC     DEMOGRAPHIC     DEMOGRAPHIC     REVENUE       MARKET
        LETTERS(1)       RANK             FORMAT               TARGET(2)       TARGET(3)       TARGET(3)     SHARE(4)     REVENUE(4)
----------------------  -----    ------------------------    ------------    ------------    ------------    --------    -----------
<S>                        <C>   <C>                         <C>                 <C>                <C>         <C>            <C>
ALBUQUERQUE, NM.......      70                                                                                  55.9%            1
  Owned
  KKOB-AM.............           News/Talk                   A 25-54                2               6.9%
  KKOB-FM.............           Adult Contemporary          W 25-54                6               5.2
  KMGA-FM.............           Adult Contemporary          W 25-54                4               6.0
  KHTL-AM.............           News/Talk                   A 35-64              20t               1.1
  KTBL-FM.............           Country                     A 25-54              10t               3.6
  KHFM-FM.............           Classical                   A 25-54              13t               3.3
  KNML-AM.............           Sports                      M 25-54               16               2.2
  KRST-FM.............           Country                     A 25-54                1              12.6

COLORADO SPRINGS, CO..      94                                                                                  63.5%            1
  Owned
  KKFM-FM.............           Classic Rock                M 25-54                 1             15.3%
  KKMG-FM.............           Contemporary Hits           W 18-34                 1             20.5
  KKLI-FM.............           Soft Adult Contemporary     W 25-54                5t              7.1
  Operated
  KVUU-FM(5)..........           Adult Contemporary          W 18-49                5t              7.2
  KSPZ-FM(5)..........           Oldies                      A 25-54                6t              5.6
  KVOR-AM(5)..........           News/Talk                   A 25-54                 9              4.7
  KTWK-AM(5)..........           Nostalgia                   A 25-54                17              0.8

MODESTO, CA(6)........     121                                                                                  64.3%            1
  Owned
  KATM-FM.............           Country                     A 25-54                 1             13.9%
  KHKK-FM/KDJF-FM(7)..           Rock Oldies                 A 25-54                 6              5.5
  KBUL-AM.............           Sports                      M 25-54               14t              1.2
  KHOP-FM.............           Album Oriented Rock         A 18-34                 4              8.9


RENO, NV..............     130                                                                                  48.5%            1
  Owned
  KBUL-FM.............           Country                     A 25-54                 1             10.2%
  KKOH-AM.............           News/Talk                   A 25-54                 2              9.9
  KNEV-FM.............           Adult Contemporary          W 18-49                 2              9.7
  KNHK-FM.............           Rock Oldies                 A 25-54                10              3.8

SALT LAKE CITY, UT....      35                                                                                  22.5%            2
  Owned
  KFNZ-AM.............           Sports                      M 25-54                 5              5.7%
  KUBL-FM.............           Country                     A 25-54                 5              5.6
  KBEE-FM.............           Adult Contemporary          W 18-49                 2              8.5
  KCNR-AM.............           Children's                  C  4-11                --               --
  KBER-FM.............           Album Oriented Rock         A 18-34                 1              9.7
  KENZ-FM.............           Rock Alternative            A 18-34                 2              7.6
</TABLE>




                                      I - 5

<PAGE>   8
<TABLE>
<S>                         <C>   <C>                         <C>                 <C>                <C>         <C>            <C>
SPOKANE, WA...........       87                                                                                  52.7%            1
  Owned
  KDRK-FM.............            Country                     A 25-54                2               9.3%
  KAEP-FM.............            Rock Alternative            A 18-34                3t             10.7
  KJRB-AM.............            Talk                        A 35-64               17t              0.6
  KGA-AM..............            News/Talk                   A 25-54                10              4.0
  Operated
  KKZX-FM(5)..........            Classic Rock                M 25-54                 1             23.7
  KEYF-AM/FM(5)(7)                Oldies                      A 25-54                7t              5.9
  KUDY-AM(5)..........            Talk/Religion               A 25-54                --               --

BILLINGS, MT..........      242                                                                                  50.5%            1
  Owned
  KCTR-FM/
    KDWG-AM(7)........            Country                     A 25-54                 1             23.5%
  KKBR-FM.............            Oldies                      A 25-54                 3             11.3
  KBBB-FM.............            Adult Contemporary          W 25-54                3t              9.1
  KMHK-FM.............            Rock Oldies                 A 25-54                 8              4.7

EUGENE, OR............      144                                                                                  31.5%            1
  Owned
  KUGN-AM.............            News/Talk                   A 35-64                 3              9.2%
  KUGN-FM.............            Country                     A 25-54                6t              6.3
  KEHK-FM.............            Rock Oldies                 A 25-54                 4              7.2

MEDFORD, OR...........      204                                                                                  40.8%            1
  Owned
  KAKT-FM.............            Country                     A 25-54                9t              3.3%
  KBOY-FM.............            Classic Rock                M 25-54                 3              9.2
  KCMX-AM.............            News/Talk                   A 35-64                8t              4.8
  KCMX-FM.............            Adult Contemporary          W 25-54                 2             14.3
  KTMT-AM.............            Sports                      M 25-54               11t              1.5
  KTMT-FM.............            Contemporary Hits           W 18-34                1t             16.0

TRI-CITIES, WA........      202                                                                                  42.2%            1
  Owned
  KEYW-FM.............            Adult Contemporary          A 25-54               6t               6.2%
  KFLD-AM.............            Sports                      M 25-54               9t               4.3
  KORD-FM.............            Country                     A 25-54               4t               7.0
  KXRX-FM.............            Album Oriented Rock         M 18-34                1              20.0
  KTHK-FM.............            Rock Oldies                 A 25-54               10               4.7

PROVIDENCE, RI........       31                                                                                  36.7%            1
  Owned
  WPRO-AM.............            News/Talk                   A 25-54                10              2.5%
  WPRO-FM.............            Contemporary Hits           A 18-49                 3              6.8
  WWLI-FM.............            Adult Contemporary          W 25-54                 1             12.2
  WSKO-AM.............            Sports                      M 25-54               26t              0.8
  WXEX-FM.............            Rock                        A 18-34                 8              4.6
  WHKK-FM.............            Rock Oldies                 A 25-54               12t              1.7

ALLENTOWN/
  BETHLEHEM, PA.......       66                                                                                  26.5%            2
  Owned
  WCTO-FM.............            Country                     A 25-54                 2             14.2%
  WLEV-FM.............            Adult Contemporary          W 25-54                 4             11.6

HARRISBURG, PA........       73                                                                                  13.5%            3
  Owned
  WRKZ-FM.............            Country                     A 25-54                 8              4.9%

YORK, PA..............      103                                                                                  10.2%            4
  Owned
  WQXA-FM.............            Rock                        M 18-34                 1             21.6%
  WQXA-AM.............            Nostalgia                   A 35-64               25t              0.6

WILKES-BARRE/
  SCRANTON, PA........       63                                                                                  31.6%            2
  Owned
  WMGS-FM.............            Adult Contemporary          W 25-54                1t             16.4%
  WARM-AM(8)..........            News/Talk                   A 25-54                10              2.1
  WZMT-FM(8)..........            Album Oriented Rock         M 18-34                 1             20.1
  WAZL-AM.............            Nostalgia                   A 35-64               31t              0.4
  WEMR-FM(8)(9)(10)...            Contemporary Hits           W 18-34                4t              8.4
</TABLE>



                                     I - 6

<PAGE>   9

<TABLE>
<S>                          <C>   <C>                         <C>                 <C>                <C>         <C>            <C>
  WSGD-FM/
   WDLS-FM(7).........             Oldies                      A 25-54                 6             4.7
  WCDL-AM.............             Country                     A 35-64                --              --
  WEMR-AM.............             Country                     A 35-64                 8             3.0
  Operated
  WKQV-AM(8)(11)......             Simulcast with WARM-AM
  WKQV-FM(8)(11)......             Simulcast with WZMT-FM
  WBHT-FM(8)(11)......             Simulcast with WEMR-FM

QUINCY, IL............        NA                                                                                   NA             NA
  Owned
  WQCY-FM.............             Country                     A 25-54                NA              NA
  WMOS-FM.............             Album Oriented Rock         M 18-34                NA              NA
  WTAD-AM.............             News/Talk                   A 25-54                NA              NA
  WBRJ-FM.............             News/Talk                   A 25-54                NA              NA

LITTLE ROCK,
  AR(12)..............        82                                                                                  41.1%            2
  Owned
  KARN-AM/ KARN-FM/
    KKRN-FM/
    KRNN-AM(7)........             News/Talk/Sports            A 25-54                11              3.9%
  KIPR-FM.............             Urban                       A 18-49                 3              9.9
  KOKY-FM.............             Contemporary Hits           A 18-34                11              3.0
  KLAL-FM.............             Modern Adult                A 18-49                7t              4.4
                                   Contemporary
  KAFN-FM(12).........             NA                          NA                     NA                  NA
  KLIH-AM.............             Gospel                      A 25-54                 17             1.3
  KURB-FM.............             Adult Contemporary          A 25-54                 3              7.9
  KVLO-FM.............             Soft Adult Contemporary     W 25-54                 6              6.7

BOISE, ID.............       126                                                                                  42.0%            2
  Owned
  KIZN-FM(9)(10)......             Country                     A 25-54                 4              7.4%
  KZMG-FM(9)(10)......             Contemporary Hits           W 18-34                1t             15.2
  KKGL-FM.............             Classic Rock                M 25-54                 1              9.2
  KQFC-FM.............             Country                     A 25-54                 1             10.0
  KBOI-AM.............             News/Talk                   A 35-64                 3              7.9
</TABLE>

----------

t-- Tied with one or more other radio stations.

NA -- Information not available.

(1) Does not include information for stations under contract to be sold by the
    Company or for a market if the Company has entered into an agreement to
    sell all of its stations in such market.

(2) The letter "A" designates adults, the letter "W" designates women, the
    letter "M" designates men and the letter "C" designates children. The
    numbers following each letter designate the range of ages included within
    the demographic group.

(3) The generally accepted method of measuring the relative size of a radio
    station's audience is by reference to total persons, within specific
    demographic groups, Monday - Sunday, 6:00 a.m. - 12:00 midnight Average
    Quarter Hour ("AQH") shares, as published by Arbitron. Arbitron periodically
    samples radio listeners in defined market areas, principally through the use
    of diaries returned by selected listeners. A station's AQH share is a
    percentage computed by dividing the average number of persons listening to a
    particular station for at least five minutes during an average quarter hour
    in a given time period by the average number of such persons for all
    stations in the market area. Station Rank by Primary Demographic Target is
    the ranking of a station among all stations in its target demographic group
    based upon the station's AQH shares. Arbitron compiles ratings data for
    various demographic groups. All information concerning ratings and audience
    listening information used in this filing is given pursuant to the method
    described above and derived from the Arbitron Reports.

(4) Radio Group Market Revenue Share was derived for each radio group by summing
    the market share of revenue of each station included within the group. Radio
    Group Rank in Market Revenue is the ranking, by radio group market revenue,
    of each of the Company's radio groups in its market among all other radio
    groups in such market.

(5) The Company sells advertising on behalf of the listed stations under a JSA.

(6) KHKK-FM/KDJK-FM, KHOP-FM and KATM-FM also broadcast in the adjacent
    Stockton, California market where, in the Fall 1997 Arbitron Report, they
    ranked 2, 8t and 1 in their primary demographic targets, respectively.

(7) Combined stations are simulcast. Rank and audience share information is
    given on a combined basis.

(8) WARM-AM is simulcast with WKQV-AM. WZMT-FM is simulcast with WKQV-FM.
    WEMR-FM is simulcast with WBHT-FM. Rank and audience share information is
    given on a combined basis.




                                      I - 7

<PAGE>   10



(9)  Pending their acquisition by the Company, the Company currently operates
     the listed stations under an LMA.

(10) The consummation of the Pending Acquisitions is subject to certain
     conditions, including FCC approval. Although the Company believes these
     closing conditions are customary for transactions of this type and will be
     satisfied, there can be no assurance that such closing conditions will be
     satisfied.

(11) WKQV-FM, WKQV-AM and WBHT-FM in Wilkes-Barre/Scranton are operated pursuant
     to an LMA or a JSA, and the Company has the option to purchase these
     stations.

(12) KAFN-FM is not yet operational. Three of the stations serve the surrounding
     communities outside of Little Rock.

OPERATING STRATEGY

    In order to maximize its radio stations' appeal to advertisers, and thus the
revenue and cash flow of its stations, the Company has implemented the following
strategies:

    Ownership of Strong Station Groups. The Company seeks to secure and maintain
a leadership position in the markets it serves through ownership of multiple
stations in a market. By strategically coordinating programming, promotional and
selling strategies among a group of local stations, the Company attempts to
capture a wide range of demographic groups which appeal to advertisers. The
Company believes that the diversification of its programming formats and its
collective inventory of available advertising time strengthen relationships with
advertisers and increase the Company's ability to maximize the value of its
inventory.

    The Company believes that its ability to leverage the existing programming
and sales resources of its strong station groups enables it to enhance the
growth potential of both new and underperforming stations while reducing the
risks associated with undertaking means of improving station performance,
including launching new formats. The Company also believes that operating
leading station groups allows it to attract and retain talented local management
teams, on-air personalities and sales personnel, which it believes are essential
to operating success. Furthermore, the Company seeks to achieve substantial cost
savings through the consolidation in each of its markets of facilities,
management, sales and administrative personnel and operating resources (such as
on-air talent, programming and music research) and through the reduction of
other redundant expenses. The Company believes that having multiple stations in
a market also enhances its ability to sell the advantages of radio advertising
versus other advertising media.

    Aggressive Sales and Marketing. The Company seeks to maximize its share of
local advertising revenue in each of its markets by implementing and maintaining
strong sales and marketing programs. The Company provides extensive training for
its sales personnel through in-house sales and time management programs, and it
retains various independent consultants who hold frequent seminars for and are
available for consultation with the Company's sales personnel. The Company also
emphasizes regular, informal exchanges of ideas among its management and sales
personnel across its various markets. Because advertising time is perishable,
the Company seeks to maximize its revenue through the utilization of
sophisticated inventory management techniques that allow it to provide its sales
personnel with frequent price adjustments based on regional and local market
conditions. To further strengthen its relationship with advertisers, the Company
also offers and markets its ability to create customer traffic through on-site
events staged at, and broadcast from, an advertiser's business.

    Targeted Programming. To maintain or improve its position in each market,
the Company combines extensive market research with an assessment of its
competitors' vulnerabilities in order to identify significant and sustainable
target audiences. The Company then tailors the programming, marketing and
promotion of each station to maximize its appeal to its target audience. Within
each market, the Company attempts to build strong franchises through (i) the
creation of distinct, highly visible profiles for its on-air personalities,
particularly those broadcasting during morning "drive time" traditionally
between 6:00 a.m. and 10:00 a.m., (ii) the formulation of recognizable "brand
names" for select stations such as the "Bull" and "Cat Country" and (iii) active
involvement in community events and charities. The Company has achieved
particular success in programming country formats and currently operates the
leading country station in 9 of its 14 markets where it programs country music.

    Decentralized Operations. The Company believes that radio is primarily a
local business and that much of its success is the result of the efforts of
regional and local management and staff. Accordingly, the Company decentralizes
much of its operations to those levels. Each of the Company's regional and local
station groups is


                                      I - 8

<PAGE>   11



managed by a team of experienced broadcasters who understand the musical tastes,
demographics and competitive opportunities of the particular market. Regional
and local managers are responsible for preparing annual operating budgets, and a
portion of their compensation is linked to meeting or surpassing operating
targets. Corporate management approves each station group's annual operating
budget and imposes strict financial reporting requirements to track station
performance. Corporate management is responsible for long range planning,
establishing Company policies and serving as a resource to local management. The
Company has implemented local sales reporting systems at each station to provide
local and corporate management with daily sales information.

    The Company intends to continue to develop methods to enhance revenue and
reduce costs. Certain risks and uncertainties concerning the Company's operating
strategy are discussed below under the captions "Federal Regulation of Radio
Broadcasting" and "Forward-Looking Information."

ACQUISITION STRATEGY

    In February 1996, as a result of the passage of the Telecommunications Act
of 1996 (the "Telecommunications Act"), radio broadcasting companies were
permitted to increase their ownership of stations within a single market from
four to a maximum of between five and eight stations, depending on market size.
The Telecommunications Act also eliminated the national ownership restriction
that generally had limited companies to the ownership of no more than 40
stations (20 AM and 20 FM) throughout the United States. As the Company has
achieved a leading position in most of the markets it currently serves, the
Company expects that, in addition to acquiring additional radio stations in
existing markets as permitted by the Telecommunications Act, it will emphasize
the acquisition of additional radio stations in new markets which present
opportunities for the Company to apply its operating strategies. The Company
believes that such acquisitions will enable it to achieve, among other things,
greater size and geographic diversification. The Company anticipates that it
will continue to focus on mid-sized markets rather than attempt to expand into
larger markets. Although competition among potential purchasers for suitable
radio station acquisitions is intense throughout the United States, the Company
believes that less competition exists, particularly from the larger radio
operators, in mid-sized markets as compared to larger markets, affording the
Company relatively more attractive acquisition opportunities in these markets.
There can be no assurance, however, that the Company will be able to identify
suitable and available acquisition opportunities or that it will be able to
consummate any such acquisition opportunities. Additional risks and
uncertainties attendant to the Company's acquisition strategy are discussed
below under the captions "Federal Regulation of Radio Broadcasting" and
"Forward-Looking Information."

    In evaluating acquisition opportunities in new markets, the Company assesses
its potential, over time, to build leading radio station groups in those
markets. The Company believes that the creation of strong station groups in
local markets is essential to operating success and generally will not consider
entering a new market unless it believes it can acquire multiple stations in the
market. The Company also analyzes a number of additional factors which it
believes are important to its success, including the number and quality of
commercial radio signals broadcasting in the market, the nature of the
competition in the market, the Company's ability to improve the operating
performance of the radio station or stations under consideration and the general
economic conditions of the market.

    The Company believes that its acquisition strategy, if properly implemented,
could have a number of benefits, including (i) diversification of revenue and
broadcast cash flow across a greater number of stations and markets, (ii)
improved broadcast cash flow margins through the consolidation of facilities and
the elimination of redundant expenses, (iii) enhanced utilization of its senior
management team, (iv) improved leverage in various key vendor negotiations, (v)
greater appeal to top industry management talent and (vi) increased overall
scale which should facilitate the Company's capital raising activities.

RADIO INDUSTRY OVERVIEW

    Radio stations generate the majority of their revenue from the sale of
advertising time to local and national spot advertisers and national network
advertisers. Radio serves primarily as a medium for local advertising. The
growth in total radio advertising revenue tends to be fairly stable and has
generally grown at a rate faster than


                                      I - 9

<PAGE>   12



the Gross Domestic Product (the "GDP"). Total radio advertising revenue in 1996
of $12.4 billion represented an 8.2% increase over 1995, as reported by the
Radio Advertising Bureau ("RAB").

    Radio is considered an efficient means of reaching specifically identified
demographic groups. Stations are typically classified by their on-air format,
such as country, adult contemporary, oldies or news/talk. A station's format and
style of presentation enable it to target certain demographic and psychographic
groups. By capturing a specific listening audience share of a market's radio
audience, with particular concentration in a targeted demographic group, a
station is able to market its broadcasting time to advertisers seeking to reach
a specific audience. Advertisers and stations utilize data published by audience
measuring services, such as Arbitron, to estimate how many people within
particular geographical markets and demographic groups listen to specific
stations.

    Stations determine the number of advertisements broadcast hourly that will
maximize available revenue dollars without jeopardizing listening levels.
Although the number of advertisements broadcast during a given time period may
vary, the total number of advertisements broadcast on a particular station
generally does not vary significantly from year to year.

    A station's local sales staff generates the majority of its local and
regional advertising sales through direct solicitations of local advertising
agencies and businesses. To generate national advertising sales, a station will
engage a firm that specializes in soliciting radio advertising sales on a
national level. National sales representatives obtain advertising principally
from advertising agencies located outside the station's market and receive
commissions based on the revenue from the advertising obtained.

    According to the RAB's Radio Marketing Guide and Fact Book for Advertisers,
1997, radio reaches approximately 95% of all Americans over the age of 12 each
week. More than one-half of all radio listening is done outside the home, in
contrast to other advertising mediums, and three out of four adults are reached
by car radio each week. The average listener spends approximately three hours
and 20 minutes per day listening to radio. The highest portion of radio
listenership occurs during the morning, particularly between the time a listener
wakes up and the time the listener reaches work. This morning "drive time"
period reaches more than 80% of people over 12 years of age and, as a result,
radio advertising sold during this period achieves premium advertising rates.
Radio listeners have gradually shifted over the years from AM (amplitude
modulation) to FM (frequency modulation) stations. FM reception, as compared to
AM, is generally clearer and provides greater tonal range and higher fidelity.
FM's listener share is now in excess of 75%, despite the fact that the number of
AM and FM commercial stations in the United States is approximately equal.

STATION PORTFOLIO

    The following is a description of each of the radio stations currently owned
or operated by the Company, the stations which the Company has entered into an
agreement to acquire and the markets they serve. The stations owned by the
Company include those acquired in January 1997 when Deschutes was acquired by
Citadel Communications and those acquired in July 1997 when Tele-Media was
acquired by the Company. Information is not given for stations under contract to
be sold by the Company or for a market if the Company has entered into an
agreement to sell all of its stations in such market.



                                     I - 10

<PAGE>   13



    Albuquerque, New Mexico. The Company owns five FM and three AM radio
stations in Albuquerque.

<TABLE>
<CAPTION>
                                                                                     STATION RANK IN
                          STATION                                   PRIMARY               PRIMARY
                       PROGRAMMING                YEAR            DEMOGRAPHIC           DEMOGRAPHIC
STATION CALL LETTERS       FORMAT             ACQUIRED/LMA          TARGET                 TARGET
--------------------       ------             ------------          ------                 ------
<S>                    <C>                       <C>               <C>                     <C>
KKOB-AM............    News/Talk                 1994               A 25-54                   2
KKOB-FM............    Adult                     1994               W 25-54                   6
                       Contemporary
                       ("A/C")
KMGA-FM............    A/C                       1994               W 25-54                   4
KHTL-AM............    News/Talk                 1994               A 35-64                20(tie)
KHFM-FM............    Classical                 1996               A 25-54                13(tie)
KNML-AM............    Sports                    1996               M 25-54                   16
KRST-FM............    Country                1996/1996             A 25-54                   1
KTBL-FM............    Country             1996/1995 (JSA)          A 25-54                10(tie)
</TABLE>

    Albuquerque has an MSA rank of 70, and had market revenue of approximately
$33.3 million in 1997, an approximate 11.4% increase over 1996. There are 37
stations in the Albuquerque market, including 17 viable FM and three viable AM
stations. The eight stations owned by the Company rank first in the market in
terms of their combined gross revenue, with approximately 55.9% of the market
revenue in 1997.

    Colorado Springs, Colorado. The Company owns three FM radio stations and
sells advertising on behalf of two FM and two AM radio stations under a JSA in
Colorado Springs.

<TABLE>
<CAPTION>
                                                                           STATION RANK IN
                           STATION                           PRIMARY           PRIMARY
                         PROGRAMMING         YEAR          DEMOGRAPHIC       DEMOGRAPHIC
STATION CALL LETTERS        FORMAT       ACQUIRED/LMA        TARGET            TARGET
--------------------        ------      -------------        ------            ------
<S>                      <C>                  <C>              <C>             <C>
KKFM-FM............      Classic Rock         1992           M 25-54              1
KKMG-FM............      Contemporary      1994/1992         W 18-34              1
                          Hit Radio
                           ("CHR")
KKLI-FM............        Soft A/C           1996           W 25-54           5(tie)
KVUU-FM............          A/C           1996 (JSA)        W 18-49           5(tie)
KSPZ-FM............         Oldies         1996 (JSA)        A 25-54           6(tie)
KVOR-AM............       News/Talk        1996 (JSA)        A 25-54              9
KTWK-AM............       Nostalgia        1996 (JSA)        A 25-54             17
</TABLE>

    Colorado Springs has an MSA rank of 94, and had market revenue of
approximately $17.0 million in 1997, an approximate 14.5% increase over 1996.
There are 21 stations in the Colorado Springs market, including 11 viable FM and
two viable AM stations. The three stations owned by the Company plus the four
stations marketed under a JSA, rank first in the market in terms of their
combined gross revenue, with approximately 63.5% of the market revenue 1997.

    Modesto, California. The Company owns four FM radio stations and one AM
radio station in Modesto.

<TABLE>
<CAPTION>
                                                                            STATION RANK IN
                            STATION                          PRIMARY            PRIMARY
                          PROGRAMMING        YEAR          DEMOGRAPHIC        DEMOGRAPHIC
STATION CALL LETTERS        FORMAT       ACQUIRED/LMA        TARGET             TARGET
--------------------        ------      -------------         -----             ------
<S>                      <C>                  <C>              <C>           <C>
KATM-FM............        Country            1992           A 25-54               1
KBUL-AM............         Sports            1992           M 25-54            14(tie)
KDJK-FM............      Rock Oldies          1993           A 25-54         Simulcast with
                                                                                KHKK-FM
KHKK-FM............      Rock Oldies       1993/1993         A 25-54               6
KHOP-FM............         Album             1996           A 18-34               4
                        Oriented Rock
                           ("AOR")
</TABLE>




                                     I - 11

<PAGE>   14




    Modesto has an MSA rank of 121, and had market revenue of approximately
$13.8 million in 1997, an approximate 0.9% increase over 1996. There are 22
stations in the Modesto market, including nine viable FM and two viable AM
stations. The five stations owned by the Company rank first in the market in
terms of their combined gross revenue, with approximately 64.3% of the market
revenue in 1997.

    The Company owns three stations serving the Modesto market (KATM-FM, KHKK-FM
and KHOP-FM) with sufficiently strong signals to attract additional advertising
revenue from advertisers that desire coverage of other markets in California's
central valley region. To further increase the operating performance of such
stations, the Company changed several formats and call letters during 1996 in an
effort to place the most popular formats on its strongest signals.

    Reno, Nevada. The Company owns three FM radio stations and one AM radio
station in Reno.

<TABLE>
<CAPTION>
                                                                           STATION RANK IN
                            STATION                          PRIMARY           PRIMARY
                          PROGRAMMING        YEAR          DEMOGRAPHIC       DEMOGRAPHIC
STATION CALL LETTERS        FORMAT       ACQUIRED/LMA        TARGET            TARGET
--------------------        ------       ------------        ------            ------
<S>                       <C>                 <C>              <C>                <C>
KBUL-FM............        Country            1992           A 25-54              1
KKOH-AM............       News/Talk           1992           A 25-54              2
KNEV-FM............          A/C           1993/1993         W 18-49              2
KNHK-FM............      Rock Oldies       1997/1997         A 25-54             10
</TABLE>

    Reno has an MSA rank of 130, and had market revenue of approximately $15.2
million in 1997, an approximate 8.5% increase over 1996. There are 26 stations
in the Reno market, including 13 viable FM and two viable AM stations. The four
stations owned by the Company rank first in the market in terms of their
combined gross revenue, with approximately 48.5% of the market revenue in 1997.

    Salt Lake City, Utah. The Company owns four FM and two AM radio stations in
Salt Lake City.

<TABLE>
<CAPTION>
                                                                               STATION RANK IN
                            STATION                              PRIMARY            PRIMARY
                          PROGRAMMING            YEAR          DEMOGRAPHIC        DEMOGRAPHIC
STATION CALL LETTERS        FORMAT           ACQUIRED/LMA        TARGET             TARGET
--------------------        ------           ------------        ------             ------
<S>                        <C>                   <C>                <C>               <C>
KCNR-AM............        Children's            1992             C 4-11              --
KUBL-FM............         Country              1992            A 25-54              5
KBEE-FM............           A/C             1997/1992          W 18-49              2
KFNZ-AM............          Sports           1997/1992          M 25-54              5
KBER-FM............           AOR             1997/1996          A 18-34              1
KENZ-FM............     Rock Alternative   1997/1996 (JSA)       A 18-34              2
</TABLE>

    Salt Lake City has an MSA rank of 35, and had market revenue of
approximately $59.3 million in 1997, an approximate 13.3% increase over 1996.
There are 43 stations in the Salt Lake City market, including 16 viable FM and
four viable AM stations. The six stations owned by the Company rank second in
the market in terms of their combined gross revenue, with approximately 22.5% of
the market revenue in 1997.



                                     I - 12

<PAGE>   15



    Spokane, Washington. The Company owns two FM and two AM radio stations and
sells advertising on behalf of two FM and two AM radio stations under a JSA in
Spokane.

<TABLE>
<CAPTION>
                                                                             STATION RANK IN
                            STATION                            PRIMARY           PRIMARY
                          PROGRAMMING         YEAR           DEMOGRAPHIC       DEMOGRAPHIC
STATION CALL LETTERS        FORMAT        ACQUIRED/LMA         TARGET            TARGET
--------------------        ------        ------------         ------            ------
<S>                       <C>                  <C>               <C>               <C>
KDRK-FM............        Country             1992            A 25-54             2
KGA-AM.............       News/Talk            1992            A 25-54             10
KAEP-FM............          Rock              1993            A 18-34           3(tie)
                         Alternative
KJRB-AM............          Talk           1993/1993          A 35-64          17(tie)
KKZX-FM............      Classic Rock       1996 (JSA)         M 25-54             1
KEYF-FM............         Oldies          1996 (JSA)         A 25-54           7(tie)
KEYF-AM............         Oldies          1996 (JSA)         A 25-54       Simulcast with
                                                                                KEYF-FM
KUDY-AM............     Talk/Religion       1996 (JSA)         A 25-54             --
</TABLE>

    Spokane has an MSA rank of 87, and had market revenue of approximately $14.6
million in 1997, an approximate 8.7% increase over 1996. There are 26 stations
in the Spokane market, including 12 viable FM and four viable AM stations. The
four stations owned by the Company plus the four stations marketed under a JSA
rank first in the market in terms of their combined gross revenue, with
approximately 52.7% of the market revenue in 1997.

    Billings, Montana. As a result of the acquisition of Deschutes and the
Subsidiary Merger, the Company owns four FM radio stations and one AM radio
station in Billings.

<TABLE>
<CAPTION>
                                                                       STATION RANK IN
                            STATION                     PRIMARY            PRIMARY
                          PROGRAMMING      YEAR       DEMOGRAPHIC        DEMOGRAPHIC
STATION CALL LETTERS        FORMAT       ACQUIRED       TARGET             TARGET
--------------------        ------       --------       ------             ------
<S>                        <C>             <C>            <C>                 <C>
KCTR-FM............        Country         1997         A 25-54               1
KDWG-AM............        Country         1997         A 25-54         Simulcast with
                                                                           KCTR-FM
KKBR-FM............         Oldies         1997         A 25-54               3
KBBB-FM............          A/C           1997         W 25-54             3(tie)
KMHK-FM............      Rock Oldies       1997         A 25-54               8
</TABLE>

    Billings has an MSA rank of 242, and had market revenue of approximately
$6.0 million in 1997, an approximate 5.3% increase over 1996. There are 14
stations in the Billings market, including seven viable FM and three viable AM
stations. The five stations owned by the Company rank first in the market in
terms of their combined gross revenue, with approximately 50.5% of the market
revenue in 1997.

    Eugene, Oregon. As a result of the acquisition of Deschutes and the
Subsidiary Merger, the Company owns two FM radio stations and one AM radio
station in Eugene.

<TABLE>
<CAPTION>
                                                                      STATION RANK IN
                            STATION                     PRIMARY           PRIMARY
                          PROGRAMMING      YEAR       DEMOGRAPHIC       DEMOGRAPHIC
STATION CALL LETTERS        FORMAT       ACQUIRED       TARGET            TARGET
--------------------        ------       --------       ------            ------
<S>                       <C>              <C>            <C>               <C>
KEHK-FM............      Rock Oldies       1997         A 25-54             4
KUGN-AM............       News/Talk        1997         A 35-64             3
KUGN-FM............        Country         1997         A 25-54           6(tie)
</TABLE>

    Eugene has an MSA rank of 144, and had market revenue of approximately $9.2
million in 1997, an approximate 9.5% decrease from 1996. There are 19 stations
in the Eugene market, including eight viable FM and three viable AM stations.
The three stations owned by the Company rank first in the market in terms of
their combined gross revenue, with approximately 31.5% of the market revenue in
1997.


                                     I - 13

<PAGE>   16




    Medford, Oregon. As a result of the acquisition of Deschutes and the
Subsidiary Merger, the Company owns four FM and two AM radio stations in
Medford.

<TABLE>
<CAPTION>
                                                                      STATION RANK IN
                            STATION                     PRIMARY           PRIMARY
                          PROGRAMMING      YEAR       DEMOGRAPHIC       DEMOGRAPHIC
STATION CALL LETTERS        FORMAT       ACQUIRED       TARGET            TARGET
--------------------        ------       --------       ------            ------
<S>                        <C>             <C>            <C>             <C>
KAKT-FM............        Country         1997         A 25-54           9(tie)
KBOY-FM............      Classic Rock      1997         M 25-54             3
KCMX-AM............       News/Talk        1997         A 35-64           8(tie)
KCMX-FM............          A/C           1997         W 25-54             2
KTMT-AM............         Sports         1997         M 25-54          11(tie)
KTMT-FM............          CHR           1997         W 18-34           1(tie)
</TABLE>

    Medford has an MSA rank of 204, and had market revenue of approximately $6.0
million in 1997, an approximate 9.1% increase over 1996. There are 17 stations
in the Medford market, including, according to the 1998 BIA Report, six viable
FM stations. The six stations owned by the Company rank first in the market in
terms of their combined gross revenue, with approximately 40.8% of the market
revenue in 1997.

    Tri-Cities, Washington. As a result of the acquisition of Deschutes, the
Subsidiary Merger and the September 1997 acquisition of KTHK-FM, the Company
owns four FM radio stations and one AM radio station in Tri-Cities.

<TABLE>
<CAPTION>
                                                                           STATION RANK IN
                            STATION                          PRIMARY           PRIMARY
                          PROGRAMMING        YEAR          DEMOGRAPHIC       DEMOGRAPHIC
STATION CALL LETTERS        FORMAT       ACQUIRED/LMA        TARGET            TARGET
--------------------        ------       ------------        ------            ------
<S>                        <C>             <C>            <C>             <C>
KFLD-AM............         Sports            1997           M 25-54           9(tie)
KORD-FM............        Country            1997           A 25-54           4(tie)
KXRX-FM............          AOR              1997           M 18-34              1
KEYW-FM............          A/C              1997           A 25-54           6(tie)
KTHK-FM............      Rock Oldies       1997/1997         A 25-54             10
</TABLE>

    Tri-Cities (includes the communities of Richland, Kennewick and Pasco,
Washington) has an MSA rank of 202, and had market revenue of approximately $5.8
million in 1997, an approximate 5.5% increase over 1996. There are 18 stations
in the Tri-Cities market, including, according to the 1998 BIA Report, six
viable FM stations. The five stations owned by the Company rank first in the
market in terms of their combined gross revenue, with approximately 42.2% of the
market revenue in 1997.

    Providence, Rhode Island. As a result of the Tele-Media Acquisition, the
September 1997 acquisition of WXEX-FM and the November 1997 acquisition of
WHKK-FM, the Company owns four FM and two AM radio stations in Providence.

<TABLE>
<CAPTION>
                                                                          STATION RANK IN
                            STATION                          PRIMARY           PRIMARY
                          PROGRAMMING        YEAR          DEMOGRAPHIC       DEMOGRAPHIC
STATION CALL LETTERS        FORMAT       ACQUIRED/LMA        TARGET            TARGET
--------------------        ------       ------------        ------            ------
<S>                        <C>             <C>            <C>             <C>
WSKO-AM............         Sports            1997           M 25-54           26(tie)
WWLI-FM............          A/C              1997           W 25-54              1
WPRO-AM............       News/Talk           1997           A 25-54             10
WPRO-FM............          CHR              1997           A 18-49              3
WXEX-FM............          Rock             1997           A 18-34              8
WHKK-FM............      Rock Oldies       1997/1997         A 25-54           12(tie)
</TABLE>

    Providence has an MSA rank of 31, and had market revenue of approximately
$38.8 million in 1997, an approximate 1.6% increase over 1996. There are 37
stations in the Providence market, including ten viable FM and three viable AM
stations. The six stations owned by the Company in this market rank first in the
market in terms of their combined gross revenue, with approximately 36.7% of the
market revenue in 1997.



                                     I - 14

<PAGE>   17



    Allentown/Bethlehem, Pennsylvania. As a result of the Tele-Media Acquisition
and the October 1997 acquisition of WLEV-FM, the Company owns two FM radio
stations and one AM radio station in Allentown. The Company has entered into an
agreement to sell WEST-AM, which is not included in the chart below.

<TABLE>
<CAPTION>
                                                                        STATION RANK IN
                            STATION                       PRIMARY           PRIMARY
                          PROGRAMMING       YEAR        DEMOGRAPHIC       DEMOGRAPHIC
STATION CALL LETTERS        FORMAT        ACQUIRED        TARGET            TARGET
--------------------        ------        --------        ------            ------
<S>                        <C>             <C>            <C>             <C>
WCTO-FM............        Country          1997          A 25-54              2
WLEV-FM............        Lite A/C       1997/1997       W 25-54              4
</TABLE>


    Allentown/Bethlehem has an MSA rank of 66, and had market revenue of
approximately $24.3 million in 1997, an approximate 7.5% increase over 1996.
There are 19 stations in the Allentown market, including six viable FM and three
viable AM stations. WLEV-FM and WCTO-FM rank second in the market in terms of
their combined gross revenue, with approximately 26.5% of market revenue in
1997.

    Harrisburg, Pennsylvania and York, Pennsylvania. As a result of the
Tele-Media Acquisition, the Company owns one FM radio station in Harrisburg and
one FM radio station and one AM radio station in York. Harrisburg and York are
adjacent markets with numerous overlapping radio signals. The Company intends to
operate these stations as a single station group.

<TABLE>
<CAPTION>
                                                                         STATION RANK IN
                              STATION                     PRIMARY            PRIMARY
                            PROGRAMMING       YEAR      DEMOGRAPHIC        DEMOGRAPHIC
 STATION CALL LETTERS         FORMAT        ACQUIRED      TARGET             TARGET
 --------------------         ------        --------      ------             ------
<S>                        <C>             <C>            <C>             <C>
WRKZ-FM (Harrisburg)..        Country         1997        A 25-54              8
WQXA-FM (York)........         Rock           1997        M 18-34              1
WQXA-AM (York)........       Nostalgia        1997        A 35-64           25(tie)
</TABLE>

    Harrisburg has an MSA rank of 73, and had market revenue of approximately
$24.4 million in 1997, an approximate 0.4% decrease from 1996. There are 23
stations in the Harrisburg market, including eight viable FM and three viable AM
stations. WRKZ-FM ranks third in the market in terms of gross revenue, with
approximately 13.5% of the market revenue in 1997.

    York has an MSA rank of 103, and had market revenue of approximately $16.6
million in 1997, an approximate 7.8% increase over 1996. There are 15 stations
in the York market, including seven viable FM stations and one viable AM
station. The two stations owned by the Company rank fourth in the market in
terms of their combined gross revenue, with approximately 10.2% of the market
revenue in 1997.

    Wilkes-Barre/Scranton, Pennsylvania. As a result of the Tele-Media
Acquisition, the acquisition of WEMR-FM and WEMR-AM in January 1998 and the
acquisition of WSGD-FM, WDLS-FM and WCDL-AM in March 1998, the Company owns five
FM and four AM radio stations and operates two FM radio stations and one AM
radio station under an LMA and a JSA, respectively, in Wilkes-Barre/Scranton.


                                     I - 15

<PAGE>   18
<TABLE>
<CAPTION>
                                                                           STATION RANK IN
                            STATION                          PRIMARY           PRIMARY
                          PROGRAMMING        YEAR          DEMOGRAPHIC       DEMOGRAPHIC
STATION CALL LETTERS        FORMAT       ACQUIRED/LMA        TARGET            TARGET
--------------------        ------       ------------        ------            ------
<S>                        <C>             <C>            <C>             <C>
WMGS-FM............          A/C              1997           W 25-54           1(tie)
WARM-AM............       News/Talk           1997           A 25-54             10
WZMT-FM............          AOR              1997           M 18-34              1
WAZL-AM............       Nostalgia           1997           A 35-64           31(tie)
WBHT-FM............          CHR           1997(LMA)         W 18-34           4(tie)
WKQV-FM............          AOR           1997(LMA)         M 18-34       Simulcast with
                                                                               WZMT-FM
WKQV-AM............       News/Talk        1997(JSA)         A 25-54       Simulcast with
                                                                               WARM-AM
WSGD-FM............         Oldies         1998/1997         A 25-54              6
WDLS-FM............         Oldies         1998/1997         A 25-54       Simulcast with
                                                                               WSGD-FM
WCDL-AM............        Country         1998/1997         A 35-64             --
WEMR-FM............          CHR           1998/1997         W 18-34       Simulcast with
                                                                               WBHT-FM
WEMR-AM............        Country         1998/1997         A 35-64              8
</TABLE>

    Wilkes-Barre/Scranton has an MSA rank of 63, and had market revenue of
approximately $18.2 million in 1997, an approximate 18.0% increase over 1996.
There are 40 stations in the Wilkes-Barre/Scranton market, including ten viable
FM and four viable AM stations. The twelve stations owned or operated by the
Company in this market rank second in the market in terms of their combined
gross revenue, with approximately 31.6% of market revenue in 1997.

    Quincy, Illinois. As a result of the Tele-Media Acquisition, the Company
owns three FM radio stations and one AM radio station in Quincy.

<TABLE>
<CAPTION>
                                                                      STATION RANK IN
                            STATION                     PRIMARY           PRIMARY
                          PROGRAMMING      YEAR       DEMOGRAPHIC       DEMOGRAPHIC
STATION CALL LETTERS        FORMAT       ACQUIRED       TARGET            TARGET
--------------------        ------       --------       ------            ------
<S>                        <C>             <C>            <C>             <C>
WQCY-FM............        Country         1997         A 25-54             NA
WTAD-AM............       News/Talk        1997         A 25-54             NA
WMOS-FM............          AOR           1997         M 18-34             NA
WBRJ-FM............       News/Talk        1997         A 25-54             NA
</TABLE>

    MSA rank, market revenue, station ownership and viable station data are not
available for the Quincy market.

    Little Rock, Arkansas. As a result of the Little Rock Acquisitions, the
Company owns seven FM and three AM radio stations in Little Rock and has the
right to construct and operate one additional FM radio station in Little Rock.



                                     I - 16

<PAGE>   19
<TABLE>
<CAPTION>
                                                                              STATION RANK IN
                             STATION                            PRIMARY           PRIMARY
                           PROGRAMMING         YEAR           DEMOGRAPHIC       DEMOGRAPHIC
STATION CALL LETTERS         FORMAT        ACQUIRED/LMA         TARGET            TARGET
--------------------         ------        ------------         ------            ------
<S>                      <C>                 <C>             <C>               <C>
KARN-AM............     News/Talk/Sports     1997/1997          A 25-54             11
KARN-FM............     News/Talk/Sports     1997/1997          A 25-54       Simulcast with
                                                                                 KARN-AM
KKRN-FM............     News/Talk/Sports     1997/1997          A 25-54       Simulcast with
                                                                                 KARN-AM
KRNN-AM............     News/Talk/Sports     1997/1997          A 25-54       Simulcast with
                                                                                 KARN-AM
KIPR-FM............          Urban           1997/1997          A 18-49             3
KOKY-FM............           CHR            1997/1997          A 18-34             11
KLAL-FM............        Modern A/C           1997            A 18-49           7(tie)
KLIH-AM............          Gospel             1997            A 25-54             17
KURB-FM............           A/C               1997            A 25-54             3
KVLO-FM............         Soft A/C            1997            W 25-54             6
KAFN-FM............      Not Applicable         1997        Not Applicable    Not Applicable
</TABLE>

    Little Rock has an MSA rank of 82, and had market revenue of approximately
$19.7 million in 1997, an approximate 10.9% increase over 1996. There are 31
stations in the Little Rock market, including 13 viable FM stations and one
viable AM station. The ten operating stations owned by the Company in this
market rank second in the market in terms of their combined gross revenue, with
approximately 41.1% of market revenue in 1997.

    KAFN-FM has not yet commenced broadcasting. The Company holds a permit to
construct such station.

    The Company also owns the Arkansas Radio Network, which was established in
1968 and is a state-wide news network with affiliates in nearly every county in
Arkansas. The Arkansas Radio Network feeds hourly newscasts in addition to
agricultural programs, market reports, weather and special events.

    Boise, Idaho. The Company owns two FM radio stations and one AM radio
station in Boise. Pending their acquisition by the Company, the Company also
operates two FM stations pursuant to LMAs.

<TABLE>
<CAPTION>
                                                                          STATION RANK IN
                            STATION                          PRIMARY           PRIMARY
                          PROGRAMMING        YEAR          DEMOGRAPHIC       DEMOGRAPHIC
STATION CALL LETTERS        FORMAT       ACQUIRED/LMA        TARGET            TARGET
--------------------        ------       ------------        ------            ------
<S>                        <C>             <C>              <C>                <C>
KIZN-FM............        Country        Pending/1997      A 25 - 54             4
KZMG-FM............          CHR          Pending/1997      W 18 - 34          1(tie)
KKGL-FM............      Classic Rock      1998/1997        M 25 - 54             1
KQFC-FM............        Country         1998/1997        A 25 - 54             1
KBOI-AM............       News/Talk        1998/1997        A 35 - 64             3
</TABLE>

    Boise has an MSA rank of 126, and had market revenue of approximately $15.7
million in 1997, an approximate 5.4% increase over 1996. There are 24 stations
in the Boise market, including 11 viable FM and three viable AM stations. The
three stations owned by the Company combined with the two stations pending
acquisition in this market rank second in the market in terms of their combined
gross revenue, with approximately 42.0% of market revenue in 1997.

ADVERTISING SALES

    Virtually all of the Company's revenue is generated from the sale of local,
regional and national advertising for broadcast on its radio stations. In 1997,
approximately 83.3% of the Company's net broadcasting revenue was generated from
the sale of local and regional advertising. Additional broadcasting revenue is
generated from the sale of national advertising, network compensation payments
and other miscellaneous transactions. See Item 7, Management's Discussion and
Analysis of Financial Condition and Results of Operations. The major categories
of the Company's advertisers include telephone companies, restaurants, fast
food, automotive and grocery. Each station's local sales staff solicits
advertising either directly from the local advertiser or indirectly through an


                                     I - 17

<PAGE>   20



advertising agency. The Company pays a higher commission rate to the sales staff
for generating direct sales because the Company believes that through direct
advertiser relationships it can better understand the advertiser's business
needs and more effectively design an advertising campaign to help the advertiser
sell its product. The Company employs personnel in each of its markets to
produce commercials for the advertisers. National sales are made by a firm
specializing in radio advertising sales on the national level in exchange for a
commission from the Company that is based on the Company's gross revenue from
the advertising obtained. Regional sales, which the Company defines as sales in
regions surrounding the Company's markets to companies that advertise in the
Company's markets, are generally made by the Company's local sales staff.

    Depending on the programming format of a particular station, the Company
estimates the optimum number of advertisements available for sale. The number of
advertisements that can be broadcast without jeopardizing listening levels (and
the resulting ratings) is limited in part by the format of a particular station.
The Company's stations strive to maximize revenue by managing their on-air
inventory of advertising time and adjusting prices based on local market
conditions and on the Company's ability, through its marketing efforts, to
provide advertisers with an effective means of reaching a targeted demographic
group. Each of the Company's stations has a general target level of on-air
inventory that it makes available for advertising. This target level of
inventory for sale may be different at different times of the day but tends to
remain stable over time. Much of the Company's selling activity is based on
demand for its radio stations' on-air inventory and, in general, the Company
responds to this demand by varying prices rather than by varying its target
inventory level for a particular station. Therefore, most changes in revenue are
explained by demand-driven pricing changes rather than by changes in the
available inventory.

    The Company believes that radio is one of the most efficient and
cost-effective means for advertisers to reach specific demographic groups.
Advertising rates charged by radio stations are based primarily on (i) a
station's share of audiences in the demographic groups targeted by advertisers
(as measured by ratings surveys estimating the number of listeners tuned to the
station at various times), (ii) the number of stations in the market competing
for the same demographic groups, (iii) the supply of and demand for radio
advertising time and (iv) certain qualitative factors. Rates are generally
highest during morning and afternoon commuting hours.

    A station's listenership is reflected in ratings surveys that estimate the
number of listeners tuned to the station and the time they spend listening. Each
station's ratings are used by its advertisers and advertising representatives to
consider advertising with the station and are used by the Company to chart
audience growth, set advertising rates and adjust programming. The radio
broadcast industry's principal ratings service is Arbitron, which publishes
periodic ratings surveys for significant domestic radio markets. These surveys
are the Company's primary source of ratings data.

COMPETITION

    The radio broadcasting industry is highly competitive. The success of each
of the Company's stations depends largely upon its audience ratings and its
share of the overall advertising revenue within its market. The Company's
audience ratings and advertising revenue are subject to change, and any adverse
change in a particular market affecting advertising expenditures or an adverse
change in the relative market positions of the stations located in a particular
market could have a material adverse effect on the revenue of the Company's
radio stations located in that market and on the Company's operating results as
a whole. There can be no assurance that any one of the Company's radio stations
will be able to maintain or increase its current audience ratings or advertising
revenue market share.

    The Company's stations compete for listeners and advertising revenue
directly with other radio stations within their respective markets. Radio
stations compete for listeners primarily on the basis of program content that
appeals to a particular demographic group. By building a strong listener base
consisting of a specific demographic group in each of its markets, the Company
is able to attract advertisers seeking to reach those listeners. Companies that
operate radio stations must be alert to the possibility of another station
changing its format to compete directly for listeners and advertisers. Another
station's decision to convert to a format similar to that of


                                     I - 18

<PAGE>   21



one of the Company's radio stations in the same geographic area may result in
lower ratings and advertising revenue, increased promotion and other expenses
and, consequently, lower broadcast cash flow for the Company.

    Factors that are material to a radio station's competitive position include
management experience, the station's local audience rank in its market,
transmitter power, assigned frequency, audience characteristics, local program
acceptance and the number and characteristics of other radio stations in the
market area. The Company attempts to improve its competitive position in each
market by extensively researching its stations' programming, by implementing
advertising campaigns aimed at the demographic groups for which its stations
program and by managing its sales efforts to attract a larger share of
advertising dollars. However, the Company competes with some organizations that
have greater financial resources than the Company.

    Recent changes in the FCC's policies and rules permit increased ownership
and operation of multiple local radio stations. Management believes that radio
stations that elect to take advantage of joint arrangements such as LMAs or JSAs
may in certain circumstances have lower operating costs and may be able to offer
advertisers more attractive rates and services. Although the Company currently
operates multiple stations in each of its markets and intends to pursue the
creation of additional multiple station groups, the Company's competitors in
certain markets include operators of multiple stations or operators who already
have entered into LMAs or JSAs. The Company also competes with other radio
station groups to purchase additional stations. Some of these groups are owned
or operated by companies that have substantially greater financial and other
resources than the Company.

    Although the radio broadcasting industry is highly competitive, some
barriers to entry exist (which can be mitigated to some extent by changing
existing radio station formats and upgrading power, among other actions). The
operation of a radio broadcast station requires a license from the FCC, and the
number of radio stations that can operate in a given market is limited by the
availability of FM and AM radio frequencies allotted by the FCC to communities
in that market, as well as by the FCC's multiple ownership rules regulating the
number of stations that may be owned and controlled by a single entity. The
FCC's multiple ownership rules have changed significantly as a result of the
Telecommunications Act. For a discussion of FCC regulation and the provisions of
the Telecommunications Act, see " -- Federal Regulation of Radio Broadcasting."

    The Company's stations also compete for advertising revenue with other
media, including newspapers, broadcast television, cable television, magazines,
direct mail, coupons and outdoor advertising. In addition, the radio
broadcasting industry is subject to competition from new media technologies that
are being developed or introduced, such as the delivery of audio programming by
cable television systems, by satellite and by digital audio broadcasting
("DAB"). DAB may deliver by satellite to nationwide and regional audiences,
multi-channel, multi-format, digital radio services with sound quality
equivalent to compact discs. The delivery of information through the presently
unregulated Internet also could create a new form of competition. The radio
broadcasting industry historically has grown despite the introduction of new
technologies for the delivery of entertainment and information, such as
television broadcasting, cable television, audio tapes and compact disks. A
growing population and greater availability of radios, particularly car and
portable radios, have contributed to this growth. There can be no assurance,
however, that the development or introduction in the future of any new media
technology will not have an adverse effect on the radio broadcasting industry.

    The FCC has recently authorized spectrum for the use of a new technology,
satellite digital audio radio services ("DARS"), to deliver audio programming.
DARS may provide a medium for the delivery by satellite or terrestrial means of
multiple new audio programming formats to local and national audiences. It is
not known at this time whether this digital technology also may be used in the
future by existing radio broadcast stations either on existing or alternate
broadcasting frequencies.

    The Company cannot predict what other matters might be considered in the
future by the FCC, nor can it assess in advance what impact, if any, the
implementation of any of these proposals or changes might have on its business.
See "-- Federal Regulation of Radio Broadcasting."



                                     I - 19

<PAGE>   22



FEDERAL REGULATION OF RADIO BROADCASTING

    Introduction. The ownership, operation and sale of broadcast stations,
including those licensed to the Company, are subject to the jurisdiction of the
FCC, which acts under authority derived from the Communications Act of 1934, as
amended (the "Communications Act"). The Communications Act was amended in 1996
by the Telecommunications Act to make changes in several broadcast laws. Among
other things, the FCC assigns frequency bands for broadcasting; determines
whether to approve changes in ownership or control of station licenses;
regulates equipment used by stations; adopts and implements regulations and
policies that directly or indirectly affect the ownership, operation and
employment practices of stations; and has the power to impose penalties for
violations of its rules under the Communications Act.

    The following is a brief summary of certain provisions of the Communications
Act and of specific FCC regulations and policies. Failure to observe these or
other rules and policies can result in the imposition of various sanctions,
including fines, the grant of "short" (less than the maximum) license renewal
terms or, for particularly egregious violations, the denial of a license renewal
application, the revocation of a license or the denial of FCC consent to acquire
additional broadcast properties. Reference should be made to the Communications
Act, FCC rules and the public notices and rulings of the FCC for further
information concerning the nature and extent of federal regulation of broadcast
stations.

    License Grant and Renewal. Until recently, radio broadcast licenses were
granted for maximum terms of seven years, but acting under the authority of the
Telecommunications Act, the FCC recently revised its rules to extend the maximum
term for future renewals to eight years. Licenses may be renewed through an
application to the FCC. Prior to the Telecommunications Act, during certain
periods when a renewal application was pending, competing applicants could file
for the radio frequency being used by the renewal applicant. The
Telecommunications Act prohibits the FCC from considering such competing
applications if the FCC finds that the station has served the public interest,
convenience and necessity, that there have been no serious violations by the
licensee of the Communications Act or the rules and regulations of the FCC, and
that there have been no other violations by the licensee of the Communications
Act or the rules and regulations of the FCC that, when taken together, would
constitute a pattern of abuse.

    Petitions to deny license renewals can be filed by interested parties,
including members of the public. Such petitions may raise various issues before
the FCC. The FCC is required to hold hearings on renewal applications if the FCC
is unable to determine that renewal of a license would serve the public
interest, convenience and necessity, or if a petition to deny raises a
"substantial and material question of fact" as to whether the grant of the
renewal application would be prima facie inconsistent with the public interest,
convenience and necessity. Also, during certain periods when a renewal
application is pending, the transferability of the applicant's license is
restricted. The Company is not currently aware of any facts that would prevent
the timely renewal of its licenses to operate its radio stations, although there
can be no assurance that the Company's licenses will be renewed.

    The FCC classifies each AM and FM station. An AM station operates on either
a clear channel, regional channel or local channel. A clear channel is one on
which AM stations are assigned to serve wide areas. Clear channel AM stations
are classified as either: Class A stations, which operate on an unlimited time
basis and are designated to render primary and secondary service over an
extended area; Class B stations, which operate on an unlimited time basis and
are designed to render service only over a primary service area; and Class D
stations, which operate either during daytime hours only, during limited times
only or on an unlimited time basis with low nighttime power. A regional channel
is one on which Class B and Class D AM stations may operate and serve primarily
a principal center of population and the rural areas contiguous to it. A local
channel is one on which AM stations operate on an unlimited time basis and serve
primarily a community and the suburban and rural areas immediately contiguous
thereto. Class C AM stations operate on a local channel and are designed to
render service only over a primary service area that may be reduced as a
consequence of interference.



                                     I - 20

<PAGE>   23



    The minimum and maximum facilities requirements for an FM station are
determined by its class. FM class designations depend upon the geographic zone
in which the transmitter of the FM station is located. In general, commercial FM
stations are classified as follows, in order of increasing power and antenna
height: Class A, B1, C3, B, C2, C1 and C.

    The following table sets forth the market, call letters, FCC license
classification, antenna height above average terrain (HAAT), power and frequency
of each of the stations owned or operated by the Company, assuming the
consummation of the Pending Transactions, and the date on which each station's
FCC license expires. License renewal applications have been filed for the listed
stations showing a license expiration date of October 1, 1997, February 1, 1998
or April 1, 1998, and the expiration of the licenses is stayed during the
pendency of such proceedings.

<TABLE>
<CAPTION>
                                                          HAAT                                   EXPIRATION
                                                  FCC      IN        POWER IN                      DATE OF
       MARKET(1)               STATION           CLASS   METERS    KILOWATTS(2)    FREQUENCY     FCC LICENSE
       ---------               -------           -----   ------    ------------    ---------     -----------
<S>                            <C>                <C>     <C>      <C>             <C>           <C>
Albuquerque, NM......          KKOB-AM            B         NA         50.0         770 kHz       10-01-97
                               KKOB-FM            C        1265        20.2         93.3 MHz      10-01-97
                               KHTL-AM            B         NA        1.0/0.5       920 kHz       10-01-97
                               KMGA-FM            C        1259        22.5         99.5 MHz      10-01-97
                               KTBL-FM            C        1276        20.4        103.3 MHz      10-01-97
                               KHFM-FM            C        1260        20.0         96.3 MHz      10-01-97
                               KRST-FM            C        1268        22.0         92.3 MHz      10-01-97
                               KNML-AM            B         NA        1.0/0.5       1050 kHz      10-01-05
Colorado Springs, CO.          KKFM-FM            C        698         71.0         98.1 MHz      04-01-05
                               KKMG-FM            C        695         57.0         98.9 MHz      04-01-05
                               KKLI-FM            C2       678          1.6        106.3 MHz      04-01-05
                               KVUU-FM(3)         C        610         68.0         99.9 MHz      04-01-05
                               KSPZ-FM(3)         C        649         72.0         92.9 MHz      04-01-05
                               KVOR-AM(3)         B         NA        5.0/1.0       1300 kHz      04-01-05
                               KTWK-AM(3)         B         NA        3.3/1.5       740 kHz       04-01-05
Modesto, CA..........          KBUL-AM            B         NA          1.0         970 kHz       12-01-05
                               KATM-FM            B        152         50.0        103.3 MHz      12-01-05
                               KHKK-FM            B        152         50.0        104.1 MHz      12-01-05
                               KDJK-FM            A        624         0.071       103.9 MHz      12-01-05
                               KHOP-FM            B        193         29.5         95.1 MHz      12-01-05
Reno, NV.............          KKOH-AM            B         NA         50.0         780 kHz       10-01-05
                               KNEV-FM            C        695         60.0         95.5 MHz      10-01-05
                               KBUL-FM            C        699         72.0         98.1 MHz      10-01-05
                               KNHK-FM            C        809         44.7         92.9 MHz      10-01-05
Salt Lake City, UT...          KCNR-AM            B         NA      10.0/0.195      860 kHz       10-01-97
                               KUBL-FM            C        1140        26.0         93.3 MHz      10-01-97
                               KENZ-FM            C        869         45.0        107.5 MHz      10-01-97
                               KBER-FM            C        1140        25.0        101.1 MHz      10-01-97
                               KFNZ-AM            B         NA          5.0         1320 kHz      10-01-05
                               KBEE-FM            C        894         40.0         98.7 MHz      10-01-05
Spokane, WA..........          KGA-AM             A         NA         50.0         1510 kHz      02-01-06
                               KDRK-FM            C        725         56.0         93.7 MHz      02-01-98
                               KJRB-AM            B         NA          5.0         790 kHz       02-01-06
                               KAEP-FM            C        582         100.0       105.7 MHz      02-01-06
                               KKZX-FM(3)         C        492         100.0        98.9 MHz      02-01-98
                               KEYF-AM(3)         B         NA          5.0         1050 kHz      02-01-06
                               KEYF-FM(3)         C        490         100.0       101.1 MHz      02-01-98
                               KUDY-AM(3)         B         NA          5.0         1280 kHz      02-01-06
Billings, MT.........          KDWG-AM            B         NA          5.0         970 kHz       04-01-05
                               KCTR-FM            C1       152         100.0       102.9 MHz      04-01-05
                               KKBR-FM            C2       122         28.0         97.1 MHz      04-01-05
                               KBBB-FM            C1       146         100.0       103.7 MHz      04-01-05
                               KMHK-FM            C        300         100.0        95.5 MHz      04-01-05
</TABLE>



                                     I - 21

<PAGE>   24
<TABLE>
<CAPTION>
                                                          HAAT                                   EXPIRATION
                                                  FCC      IN        POWER IN                      DATE OF
       MARKET(1)               STATION           CLASS   METERS    KILOWATTS(2)    FREQUENCY     FCC LICENSE
       ---------               -------           -----   ------    ------------    ---------     -----------
<S>                            <C>                <C>     <C>         <C>          <C>           <C>
Eugene, OR...........          KUGN-AM            B         NA        5.0/1.0       590 kHz       02-01-06
                               KUGN-FM            C        308         100.0        97.9 MHz      02-01-98
                               KEHK-FM            C1       301         95.0        102.3 MHz      02-01-98
Medford, OR..........          KTMT-AM            B         NA          1.0         880 kHz       02-01-06
                               KTMT-FM            C        994         31.0         93.7 MHz      02-01-98
                               KBOY-FM            C1       299         60.0         95.7 MHz      02-01-06
                               KCMX-AM            B         NA          1.0         580 kHz       02-01-06
                               KCMX-FM            C1       435         31.6        101.9 MHz      02-01-98
                               KAKT-FM            C1       166         51.7        105.1 MHz      02-01-98
Pasco (Tri-Cities), WA.        KFLD-AM            B         NA       10.0/0.25      870 kHz       02-01-06
                               KEYW-FM            A         59          3.0         98.3 MHz      02-01-06
                               KORD-FM            C        335         100.0       102.7 MHz      02-01-98
                               KXRX-FM            C        408         50.0         97.1 MHz      02-01-98
                               KTHK-FM            C2       339          8.0         97.9 MHz      02-01-98
Providence, RI.......          WPRO-AM            B         NA          5.0         630 kHz       04-01-98
                               WPRO-FM            B        168         39.0         92.3 MHz      04-01-98
                               WSKO-AM            B         NA          5.0         790 kHz       04-01-98
                               WWLI-FM            B        152         50.0        105.1 MHz      04-01-98
                               WXEX-FM            A        163          2.3         99.7 MHz      04-01-98
                               WHKK-FM            A         90          4.2        100.3 MHz      04-01-98
Allentown/Bethlehem, PA        WCTO-FM            B        152         50.0         96.1 MHz      08-01-98
                               WLEV-FM            B        327         10.9        100.7 MHz      08-01-98
Harrisburg/York, PA..          WRKZ-FM            B        283         14.1        106.7 MHz      08-01-98
                               WQXA-AM            B         NA          1.0         1250 kHz      08-01-98
                               WQXA-FM            B        215         25.1        105.7 MHz      08-01-98
Wilkes-Barre/ Scranton,
  PA.................          WAZL-AM            C         NA          1.0         1490 kHz      08-01-98
                               WZMT-FM            B        222         19.5         97.9 MHz      08-01-98
                               WARM-AM            B         NA          5.0         590 kHz       08-01-98
                               WMGS-FM            B        422          5.3         92.9 MHz      08-01-98
                               WBHT-FM(3)         A        336         0.50         97.1 MHz      08-01-98
                               WKQV-AM(3)         B         NA       10.0/0.5       1550 kHz      08-01-98
                               WKQV-FM(3)         A        308         0.30         95.7 kHz      08-01-98
                               WSGD-FM            A        235         0.52         94.3 MHz      08-01-98
                               WDLS-FM            A        207         1.45         93.7 MHz      08-01-98
                               WCDL-AM            B         NA       5.0/.037       1440 kHz      08-01-98
                               WEMR-AM            B         NA        5.0/1.0       1460 kHz      08-01-98
                               WEMR-FM            A        354         0.24        107.7 MHz      08-01-98
Quincy, IL...........          WTAD-AM            B         NA        5.0/1.0       930 kHz       12-01-04
                               WQCY-FM            B        229         27.0         99.5 MHz      12-01-04
                               WMOS-FM            A         88          3.0        103.9 MHz      12-01-04
                               WBRJ-FM            B1       100         25.0        106.7 MHz      12-01-04
Little Rock, AR......          KARN-FM            A        100          3.0        102.5 MHz      06-01-04
                               KARN-AM            B         NA          5.0         920 kHz       06-01-04
                               KKRN-FM            A        100          6.0        101.7 MHz      06-01-04
                               KRNN-AM            B         NA        5.0/2.5       1380 kHz      06-01-04
                               KIPR-FM            C1       286         100.0        92.3 MHz      06-01-04
                               KOKY-FM            A        118         4.10        102.1 MHz      06-01-04
                               KLAL-FM            C2        95         50.0        107.7 MHz      06-01-04
                               KAFN-FM(4)         A        100          6.0        102.5 MHz      06-01-04
                               KLIH-AM            B         NA        2.0/1.2       1250 kHz      06-01-04
                               KURB-FM            C        392         100.0        98.5 MHz      06-01-04
                               KVLO-FM            C2       150         50.0        102.9 MHz      06-01-04
Boise, ID............          KIZN-FM(3)         C        762         44.0         92.3 MHz      10-01-05
                               KZMG-FM(3)         C        802         50.0         93.1 MHz      10-01-05
                               KKGL-FM            C        768         44.0         96.9 MHz      10-01-05
                               KQFC-FM            C        762         47.0         97.9 MHz      10-01-05
                               KBOI-AM            B         NA         50.0         960 kHz       10-01-05
</TABLE>




                                     I - 22

<PAGE>   25



--------

(1)  Actual city of license may be different from the metropolitan market
     served.

(2)  Pursuant to FCC rules and regulations, many AM radio stations are licensed
     to operate at a reduced power during nighttime broadcasting hours, which
     results in reducing the radio station's coverage during those hours of
     operation. Both power ratings are shown, where applicable.

(3)  The Company provides certain sales and marketing services to stations
     KVUU-FM, KSPZ-FM, KVOR-AM and KTWK-AM in Colorado Springs, Colorado,
     stations KKZX-FM, KEYF-AM, KEYF-FM and KUDY-AM in Spokane, Washington and
     station WKQV-AM in Wilkes-Barre/Scranton, Pennsylvania, pursuant to JSAs.
     The Company provides certain sales, programming and marketing services to
     stations WBHT-FM and WKQV-FM in Wilkes Barre/Scranton, Pennsylvania, and,
     pending their acquisition by the Company, stations KIZN-FM and KZMG-FM in
     Boise Idaho, pursuant to LMAs.

(4)  KAFN-FM is under construction and has not yet commenced operations.

    Ownership Matters. The Communications Act prohibits the assignment of a
broadcast license or the transfer of control of a broadcast license without the
prior approval of the FCC. In determining whether to assign, transfer, grant or
renew a broadcast license, the FCC considers a number of factors pertaining to
the licensee, including compliance with various rules limiting common ownership
of media properties, the "character" of the licensee and those persons holding
"attributable" interests therein, and compliance with the Communications Act's
limitation on alien ownership, as well as compliance with other FCC policies,
including equal employment opportunity requirements.

    Once a station purchase agreement has been signed, an application for FCC
consent to assignment of license or transfer of control (depending upon whether
the underlying transaction is an asset purchase or stock acquisition) is filed
with the FCC. Approximately 10 to 15 days after this filing, the FCC publishes a
notice assigning a file number to the application and advising that the
application has been "accepted for filing." This notice begins a 30-day
statutory waiting period, which provides the opportunity for third parties to
file formal petitions to deny the transaction; informal objections may be filed
any time prior to grant of an application. The FCC staff will normally review
the application in this period and seek further information and amendments to
the application if it has questions.

    Once the 30-day public notice period ends, the staff will complete its
processing, assuming that no petitions or informal objections were received and
that the application is otherwise consistent with FCC rules. The staff often
grants the application by delegated authority approximately 10 days after the
public notice period ends. At this point, the parties are legally authorized to
close the purchase, although the FCC action is not legally a "final order." If
there is a backlog of applications, the 10-day period can extend to 30 days or
more.

    Public notice of the FCC staff grant is usually issued about a week after
the grant is made, stating that the grant was effective when the staff made the
grant. On the date of this notice, another 30-day period begins, within which
time interested parties can file petitions seeking either staff reconsideration
or full FCC review of the staff action. During this time the grant can still be
modified, set aside or stayed, and is not a "final order." In the absence of a
stay, however, the seller and buyer are not prevented from closing despite the
absence of a final order. Also, within 40 days after the public notice of the
grant, the full FCC can review and reconsider the staff's grant on its own
motion. Thus, during the additional 10 days beyond the 30-day period available
to third parties, the grant is still not "final." In the event that review by
the full FCC is requested and the FCC subsequently affirms the staff's grant of
the application, interested parties may thereafter seek judicial review in the
United States Court of Appeals for the District of Columbia Circuit within
thirty days of public notice of the full FCC's action. In the event the Court
affirms the FCC's action, further judicial review may be sought by seeking
rehearing en banc from the Court of Appeals or by certiorari from the United
States Supreme Court.



                                     I - 23

<PAGE>   26



    In the absence of the submission of a timely request for reconsideration,
administrative review or judicial review, the FCC staff's grant of an
application becomes final by operation of law. Upon the occurrence of that
event, counsel is able to deliver an opinion that the FCC's grant is no longer
subject to administrative or judicial review, although such action can
nevertheless be set aside in rare circumstances, such as fraud on the agency by
a party to the application.

    The pendency of a license renewal application will alter the aforementioned
timetables because the FCC will not issue an unconditional assignment grant if
the station's license renewal is pending.

    Under the Communications Act, a broadcast license may not be granted to or
held by a corporation that has more than one-fifth of its capital stock owned or
voted by aliens or their representatives, by foreign governments or their
representatives, or by non-U.S. corporations. Under the Communications Act, a
broadcast license also may not be granted to or held by any corporation that is
controlled, directly or indirectly, by any other corporation more than
one-fourth of whose capital stock is owned or voted by aliens or their
representatives, by foreign governments or their representatives, or by non-U.S.
corporations. These restrictions apply in modified form to other forms of
business organizations, including partnerships. Each of Citadel Communications,
which serves as a holding company for its direct and indirect radio station
subsidiaries, and the Company therefore may be restricted from having more than
one-fourth of its stock owned or voted by aliens, foreign governments or non-
U.S. corporations. The Certificate of Incorporation of Citadel Communications
and the Certificate of Incorporation of the Company contain provisions which
permit Citadel Communications and the Company to prohibit alien ownership and
control consistent with the prohibitions contained in the Communications Act.

    The Communications Act and FCC rules also generally restrict the common
ownership, operation or control of radio broadcast stations serving the same
local market, of a radio broadcast station and a television broadcast station
serving the same local market, and of a radio broadcast station and a daily
newspaper serving the same local market. Under these "cross-ownership" rules,
absent waivers, neither Citadel Communications nor the Company would be
permitted to acquire any daily newspaper or television broadcast station (other
than low power television) in a local market where it then owned any radio
broadcast station. The FCC's rules provide for the liberal grant of a waiver of
the rule prohibiting common ownership of radio and television stations in the
same geographic market in the top 25 television markets if certain conditions
are satisfied. The Telecommunications Act extends this waiver policy to stations
in the top 50 television markets, although the FCC has not yet implemented this
change.

    In response to the Telecommunications Act, the FCC amended its multiple
ownership rules to eliminate the national limits on ownership of AM and FM
stations. The FCC's broadcast multiple ownership rules restrict the number of
radio stations one person or entity may own, operate or control on a local
level. These limits are:

    (i) in a market with 45 or more commercial radio stations, an entity may own
up to eight commercial radio stations, not more than five of which are in the
same service (FM or AM);

    (ii) in a market with between 30 and 44 (inclusive) commercial radio
stations, an entity may own up to seven commercial radio stations, not more than
four of which are in the same service;

    (iii) in a market with between 15 and 29 (inclusive) commercial radio
stations, an entity may own up to six commercial radio stations, not more than
four of which are in the same service;

    (iv) in a market with 14 or fewer commercial radio stations, an entity may
own up to five commercial radio stations, not more than three of which are in
the same service, except that an entity may not own more than 50% of the
stations in such market.

None of these multiple ownership rules requires any change in the Company's
current ownership of radio broadcast stations or precludes consummation of the
Pending Acquisitions. However, these rules will limit the number of additional
stations which the Company may acquire in the future in certain of its markets.


                                     I - 24

<PAGE>   27




    Because of these multiple and cross-ownership rules, a purchaser of voting
stock of either Citadel Communications or the Company which acquires an
"attributable" interest in Citadel Communications or the Company may violate the
FCC's rule if it also has an attributable interest in other television or radio
stations, or in daily newspapers, depending on the number and location of those
radio or television stations or daily newspapers. Such a purchaser also may be
restricted in the companies in which it may invest, to the extent that these
investments give rise to an attributable interest. If an attributable
shareholder of Citadel Communications or the Company violates any of these
ownership rules, Citadel Communications or the Company may be unable to obtain
from the FCC one or more authorizations needed to conduct its radio station
business and may be unable to obtain FCC consents for certain future
acquisitions.

    The FCC generally applies its television/radio/newspaper cross-ownership
rules and its broadcast multiple ownership rules by considering the
"attributable," or cognizable interests held by a person or entity. A person or
entity can have an interest in a radio station, television station or daily
newspaper by being an officer, director, partner or shareholder of a company
that owns that station or newspaper. Whether that interest is cognizable under
the FCC's ownership rules is determined by the FCC's attribution rules. If an
interest is attributable, the FCC treats the person or entity who holds that
interest as the "owner" of the radio station, television station or daily
newspaper in question, and therefore subject to the FCC's ownership rules.

    With respect to a corporation, officers and directors and persons or
entities that directly or indirectly can vote 5% or more of the corporation's
stock (10% or more of such stock in the case of insurance companies, investment
companies, bank trust departments and certain other "passive investors" that
hold such stock for investment purposes only) generally are attributed with
ownership of whatever radio stations, television stations and daily newspapers
the corporation owns.

    With respect to a partnership, the interest of a general partner is
attributable, as is the interest of any limited partner who is "materially
involved" in the media-related activities of the partnership. Debt instruments,
nonvoting stock, options and warrants for voting stock that have not yet been
exercised, limited partnership interests where the limited partner is not
"materially involved" in the media-related activities of the partnership, and
minority (under 5%) voting stock, generally do not subject their holders to
attribution. However, the FCC is currently reviewing its rules on attribution of
broadcast interests, and it may adopt stricter criteria. See "-- Proposed
Changes" below.

    In addition, the FCC has a "cross-interest" policy that under certain
circumstances could prohibit a person or entity with an attributable interest in
a broadcast station or daily newspaper from having a "meaningful"
nonattributable interest in another broadcast station or daily newspaper in the
same local market. Among other things, "meaningful" interests could include
significant equity interests (including non-voting stock, voting stock and
limited partnership interests) and significant employment positions. This policy
may limit the permissible investments a purchaser of Citadel Communications' or
the Company's voting stock may make or hold.

    Programming and Operation. The Communications Act requires broadcasters to
serve the "public interest." Since 1981, the FCC gradually has relaxed or
eliminated many of the more formalized procedures it developed to promote the
broadcast of certain types of programming responsive to the needs of a station's
community of license. However, licensees continue to be required to present
programming that is responsive to community problems, needs and interests and to
maintain certain records demonstrating such responsiveness. Complaints from
listeners concerning a station's programming will be considered by the FCC when
it evaluates the licensee's renewal application, but such complaints may be
filed and considered at any time.

    Stations also must pay regulatory and application fees and follow various
FCC rules that regulate, among other things, political advertising, the
broadcast of obscene or indecent programming, sponsorship identification and
technical operations (including limits on radio frequency radiation). In
addition, licensees must develop and implement programs designed to promote
equal employment opportunities and must submit reports to the FCC on these
matters annually and in connection with a renewal application. The broadcast of
contests and lotteries is regulated by FCC rules.


                                     I - 25

<PAGE>   28




    Failure to observe these or other rules and policies can result in the
imposition of various sanctions, including monetary forfeitures, the grant of
"short" (less than the maximum) renewal terms or, for particularly egregious
violations, the denial of a license renewal application or the revocation of a
license.

    In 1985, the FCC adopted rules regarding human exposures to levels of radio
frequency ("RF") radiation. These rules require applicants for new broadcast
stations, renewals of broadcast licenses or modifications of existing licenses
to inform the FCC at the time of filing such applications whether a new or
existing broadcast facility would expose people to RF radiation in excess of
certain guidelines. In August 1996, the FCC adopted more restrictive radiation
limits. These limits became effective on September 1, 1997 and govern
applications filed after that date. The Company anticipates that such
regulations will not have a material effect on its business.

    Local Marketing Agreements. Over the past five years, a number of radio
stations, including certain of the Company's stations, have entered into what
commonly are referred to as "local marketing agreements" (LMAs) or "time
brokerage agreements." These agreements take various forms. Separately-owned and
licensed stations may agree to function cooperatively in terms of programming,
advertising sales and other matters, subject to compliance with the antitrust
laws and the FCC's rules and policies, including the requirement that the
licensee of each station maintains independent control over the programming and
other operations of its own station. For example, pursuant to the Company's LMA
with radio station WBHT-FM, the Company agreed to purchase a substantial amount
of the air time for a negotiated fee. The Company retains all revenue generated.
The owner of these stations is entitled to preempt the programming provided by
the Company. The FCC has held that such agreements do not violate the
Communications Act as long as the licensee of the station that is being
substantially programmed by another entity maintains complete responsibility
for, and control over, operations of its broadcast stations and otherwise
ensures compliance with applicable FCC rules and policies.

    A station that brokers substantial time on another station in its market or
engages in an LMA with a station in the same market will be considered to have
an attributable ownership interest in the brokered station for purposes of the
FCC's ownership rules, discussed above. As a result, a broadcast station may not
enter into an LMA that allows it to program more than 15% of the broadcast time,
on a weekly basis, of another local station that it could not own under the
FCC's local multiple ownership rules. FCC rules also prohibit the broadcast
licensee from simulcasting more than 25% of its programming on another station
in the same broadcast service (i.e., AM-AM or FM-FM) where the two stations
serve substantially the same geographic area, whether the licensee owns the
stations or owns one and programs the other through an LMA arrangement.

    Another example of a cooperative agreement between differently owned radio
stations in the same market is a joint sales agreement (JSA), whereby one
station sells advertising time in combination, both on itself and on a station
under separate ownership. In the past, the FCC has determined that issues of
joint advertising sales should be left to antitrust enforcement. The Company has
entered into several JSAs whereby it sells time on behalf of other local
stations. Currently, JSAs are not deemed by the FCC to be attributable. However,
the FCC has outstanding a notice of proposed rulemaking, which, if adopted,
would require the Company to terminate any JSA it might have with a radio
station with which the Company could not have an LMA. Currently, the only
Company group that would be so affected would be its group in Colorado Springs.
See "-- Station Portfolio."

    Proposed Changes. In December, 1994, the FCC initiated a proceeding to
solicit comment on whether it should revise its radio and television ownership
"attribution" rules by among other proposals (i) raising the basic benchmark for
attributing ownership in a corporate licensee from 5% to 10% of the licensee's
voting stock, (ii) increasing from 10% to 20% of the licensee's voting stock the
attribution benchmark for "passive investors" in corporate licensees, (iii)
restricting the availability of the attribution exemption when a single party
controls more than 50% of the voting stock; and (iv) considering LMAs, JSAs,
debt and non-voting stock interests to be attributable under certain
circumstances. No decision has been made by the FCC in these matters. At this
time, no determination can be made as to what effect, if any, this proposed
rulemaking will have on the Company.

    The Company is also aware that on November 7, 1996, the FCC issued a Further
Notice of Proposed Rulemaking, which, among other things, reviews the
regulations of the FCC governing the attribution of broadcast


                                     I - 26

<PAGE>   29



interests, including the attribution of ownership as a result of time brokerage
agreements and LMAs. One of the FCC's rule proposals is to assign an
attributable ownership interest to non-voting stock interests under certain
circumstances. If such a rule were to be adopted, it could preclude the Company
from acquiring stations in markets where one or more of its shareholders already
possesses attributable broadcast interests. At this time, no determination can
be made as to what effect, if any, this proposed rulemaking will have on the
Company.

    The Congress and the FCC from time to time have under consideration, and may
in the future consider and adopt, new laws, regulations and policies regarding a
wide variety of matters that could, directly or indirectly, affect the
operation, ownership and profitability of the Company's radio stations, result
in the loss of audience share and advertising revenues for the Company's radio
stations, and affect the ability of the Company to acquire additional radio
stations or finance such acquisitions. Such matters include: proposals to impose
spectrum use or other fees on FCC licensees; the FCC's equal employment
opportunity rules and matters relating to political broadcasting; technical and
frequency allocation matters; proposals to restrict or prohibit the advertising
of beer, wine and other alcoholic beverages on radio; changes in the FCC's
cross-interest, multiple ownership and cross-ownership policies; changes to
broadcast technical requirements; proposals to allow telephone or cable
television companies to deliver audio and video programming to the home through
existing phone or other communication lines; proposals to limit the tax
deductibility of advertising expenses by advertisers; and proposals to auction
the right to use the radio broadcast spectrum to the highest bidder, instead of
granting FCC licenses and subsequent license renewals without such bidding.

    The FCC, on April 2, 1997, awarded two licenses for the provision of
satellite digital audio radio services ("DARS"). Under rules adopted for this
service, licensees must begin construction of their space stations within one
year, begin operating within four years, and be operating their entire system
within six years. The Company cannot predict whether the service will be
subscription or advertiser supported. Digital technology also may be used in the
future by terrestrial radio broadcast stations either on existing or alternate
broadcasting frequencies, and the FCC has stated that it will consider making
changes to its rules to permit AM and FM radio stations to offer digital sound
following industry analysis of technical standards. In addition, the FCC has
authorized an additional 100 kHz of bandwidth for the AM band and on March 17,
1997, adopted an allotment plan for the expanded band which identified the 88 AM
radio stations selected to move into the band. At the end of a five-year
transition period, those licensees will be required to return to the FCC either
the license for their existing AM band station or the license for the expanded
AM band station.

    The Company cannot predict whether any proposed changes will be adopted or
what other matters might be considered in the future, nor can it judge in
advance what impact, if any, the implementation of any of these proposals or
changes might have on its business.

    The foregoing is a brief summary of certain provisions of the Communications
Act and of specific FCC rules and policies. This description does not purport to
be comprehensive and reference should be made to the Communications Act, the
FCC's rules and the public notices and rulings of the FCC for further
information concerning the nature and extent of federal regulation of radio
broadcast stations.

    Federal Antitrust Considerations. The Company is aware that the Federal
Trade Commission ("FTC") and the United States Department of Justice ("DOJ"),
which evaluate transactions to determine whether those transactions should be
challenged under the federal antitrust laws, have been increasingly active
recently in their review of radio station acquisitions, particularly where an
operator proposes to acquire additional stations in its existing markets. There
can be no assurance that the DOJ or the FTC will not require the restructuring
of future acquisitions.

    For an acquisition meeting certain size thresholds, the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and the rules
promulgated thereunder require the parties to file Notification and Report Forms
with the FTC and the DOJ and to observe specified waiting period requirements
before consummating the acquisition. During the initial 30 day period after the
filing, the agencies decide which of them will investigate the transaction. If
the investigating agency determines that the transaction does not raise


                                     I - 27

<PAGE>   30



significant antitrust issues, then it will either terminate the waiting period
or allow it to expire after the initial 30 days. On the other hand, if the
agency determines that the transaction requires a more detailed investigation,
then at the conclusion of the initial 30 day period, it will issue a formal
request for additional information ("Second Request"). The issuance of a Second
Request extends the waiting period until the twentieth calendar day after the
date of substantial compliance by all parties to the acquisition. Thereafter,
such waiting period may only be extended by court order or with the consent of
the parties. In practice, complying with a Second Request can take a significant
amount of time. In addition, if the investigating agency raises substantive
issues in connection with a proposed transaction, then the parties frequently
engage in lengthy discussions or negotiations with the investigating agency
concerning possible means of addressing those issues, including but not limited
to persuading the agency that the proposed acquisition would not violate the
antitrust laws, restructuring the proposed acquisition, divestiture of other
assets of one or more parties, or abandonment of the transaction. Such
discussions and negotiations can be time consuming, and the parties may agree to
delay consummation of the acquisition during their pendency.

    At any time before or after the consummation of a proposed acquisition, the
FTC or the DOJ could take such action under the antitrust laws as it deems
necessary or desirable in the public interest, including seeking to enjoin the
acquisition or seeking divestiture of the business acquired or other assets of
the Company. Acquisitions that are not required to be reported under the HSR Act
may be investigated by the FTC or the DOJ under the antitrust laws before or
after consummation. In addition, private parties may under certain circumstances
bring legal action to challenge an acquisition under the antitrust laws.

    The Company does not believe that any of the Pending Transactions will be
adversely affected in any material respect by review under the HSR Act. The
Company has received notification of early termination of the applicable waiting
period under the HSR Act in regard to the Pending Acquisition of radio stations
in Boise.

    As part of its increased scrutiny of radio station acquisitions, the DOJ has
stated publicly that it believes that commencement of operations under LMAs,
JSAs and other similar agreements customarily entered into in connection with
radio station transfers prior to the expiration of the waiting period under the
HSR Act could violate the HSR Act. Since then, the DOJ has stated publicly that
it will apply its new policy prohibiting operation under LMAs in connection with
purchase agreements until the expiration or termination of the HSR waiting
period prospectively only. In connection with acquisitions subject to the
waiting period under the HSR Act, the Company will not commence operation of any
affected station to be acquired under an LMA or similar agreement until the
waiting period has expired or been terminated.

    The Company has received two civil investigative demands from the Antitrust
Division of the DOJ. One CID addresses the Company's acquisition of KRST-FM in
Albuquerque, New Mexico, and the second CID addresses the Company's JSA relating
to stations in Spokane, Washington and Colorado Springs, Colorado. The Company
has provided the requested information in response to each CID, and, at present,
has been given no indication from the DOJ regarding its intended future actions.
See Item 3, Legal Proceedings.

SEASONALITY

    Seasonal revenue fluctuations are common in the radio broadcasting industry
and are primarily the result of fluctuations in advertising expenditures by
retailers. The Company's revenue is typically lowest in the first quarter and
highest in the second and fourth quarters.

TRADEMARKS

    The Company owns a number of trademarks and service marks, including the
federally registered marks "Cat Country," "KHOP," "Supertalk" and the Cat
Country logo. The Company also owns a number of marks registered in various
states. The Company considers such trademarks and service marks to be important
to its business. See "-- Operating Strategy -- Targeted Programming."



                                     I - 28

<PAGE>   31



EMPLOYEES

    At March 1, 1998, the Company employed approximately 1,540 persons. None of
such employees are covered by collective bargaining agreements, and the Company
considers its relations with its employees to be good.

    The Company employs several on-air personalities with large loyal audiences
in their respective markets. The Company generally enters into employment
agreements with these personalities to protect its interests in those
relationships that it believes to be valuable. The loss of one of these
personalities could result in a short-term loss of audience share, but the
Company does not believe that any such loss would have a material adverse effect
on the Company's financial condition or results of operations.

FORWARD-LOOKING INFORMATION

    Certain items in this Form 10-K, including, without limitation, certain
matters discussed under Item 1, Business, and Item 7, Management's Discussion
and Analysis of Financial Condition and Results of Operations, constitute
"forward-looking statements" within the meaning of the Federal Private
Securities Litigation Reform Act of 1995. Those statements include statements
regarding the intent, belief or current expectations of the Company, its
directors or its officers with respect to, among other things: (i) the
realization of the Company's business strategy; (ii) the sufficiency of cash
flow to fund the Company's debt service requirements and working capital needs;
(iii) anticipated trends in the radio broadcasting industry; (iv) potential
acquisitions by the Company and the successful integration of both completed and
future acquisitions; and (v) government regulation. Forward- looking statements
are typically identified by the words "believe," "expect," "anticipate,"
"intend," "estimate," and similar expressions. Readers are cautioned that any
such forward-looking statements are not guarantees of future performance and
that matters referred to in such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause actual results,
performance or achievements of the Company to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among other things, the impact
of current or pending legislation and regulation and other risks and
uncertainties discussed in Item 1, Business, under the captions "Competition"
and "Federal Regulation of Radio Broadcasting," Item 3, Legal Proceedings, Item
7, Management's Discussion and Analysis of Financial Condition and Results of
Operations, and the following:

    SUBSTANTIAL LEVERAGE. The Company is highly leveraged. At December 31, 1997,
the Company had outstanding total debt of approximately $192.4 million excluding
the discount on its 10 1/4% Senior Subordinated Notes due 2007 (the "Notes"), 13
1/4% Exchangeable Preferred Stock (the "Exchangeable Preferred Stock"), with an
aggregate liquidation preference of $106.6 million and shareholder's equity of
approximately $16.1 million. The Company's high degree of leverage will have
important consequences, including the following: (i) the ability of the Company
to obtain additional financing in the future for working capital, capital
expenditures, acquisitions, general corporate purposes or other purposes, if
needed, may be impaired; (ii) a substantial portion of the cash flow of the
Company will be used to pay interest expense, which will reduce the funds which
would otherwise be available to fund operations and future business
opportunities; (iii) the Company may be more highly leveraged than its
competitors which may place it at a competitive disadvantage; (iv) the Company's
high degree of leverage will make it more vulnerable to a downturn in its
business or in the economy in general and (v) certain of the Company's
borrowings will be at variable rates of interest (including the borrowings under
its credit facility (the "Credit Facility")) which will expose the Company to
the risks associated with fluctuating interest rates.

    The Company's ability to satisfy its debt obligations and to pay cash
dividends on, and to satisfy the redemption obligations in respect of, the
Exchangeable Preferred Stock, will depend upon its future financial and
operating performance, which, in turn, is subject to prevailing economic
conditions and financial, business and other factors, certain of which are
beyond its control. If the Company's cash flow and capital resources are
insufficient to fund its debt service obligations, the Company may be forced to
reduce or delay planned acquisitions and capital expenditures, sell assets,
obtain additional equity capital or restructure its debt. There can be no
assurance that the Company's operating results, cash flow and capital resources
will be sufficient for payment of its debt service and other obligations in the
future. In the absence of such operating results and resources, the Company
could face substantial liquidity problems and might be required to sell material
assets or operations to meet its debt service and other obligations, and there
can be no assurance as to the timing of such


                                     I - 29

<PAGE>   32



sales or the proceeds that the Company could realize therefrom or that such
sales can be effected on terms satisfactory to the Company or at all.

    NO ASSURANCE OF CONSUMMATION OF THE PENDING TRANSACTIONS. The consummation
of each of the Pending Transactions is subject to certain conditions, including
approval of the FCC. Although the Company believes these closing conditions will
be satisfied in each case, there can be no assurance thereof.

    RESTRICTIONS IMPOSED BY TERMS OF INDEBTEDNESS. The indenture governing the
Notes (the "Notes Indenture") contains certain restrictive covenants, including
limitations which restrict the ability of the Company to incur additional debt,
incur liens, pay dividends or make certain other restricted payments, consummate
certain asset sales, enter into certain transactions with affiliates, merge or
consolidate with any other person or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of their assets. In addition, the
Credit Facility contains certain other and more restrictive covenants than those
contained in the Notes Indenture, including certain limitations on future
acquisitions and capital expenditures without lender consent. This may adversely
affect the Company's ability to pursue its acquisition strategy. The Credit
Facility also requires the Company to maintain specific financial ratios and to
satisfy certain financial condition tests. The ability of the Company to meet
those financial ratios and financial conditions can be affected by events beyond
its control, and there can be no assurance that those tests will be met. A
breach of any of these covenants could result in a default under the Credit
Facility and/or the Notes Indenture. In the event of a default under the Credit
Facility, the lenders thereunder could elect to declare all amounts outstanding
thereunder, together with accrued interest, to be immediately due and payable.
In the event of a default under the Credit Facility, if the Company were unable
to repay those amounts, the lenders thereunder could proceed against the
collateral granted to them to secure that indebtedness. If the maturity of
borrowings under the Credit Facility were to be accelerated, there can be no
assurance that the assets of the Company would be sufficient to repay in full
such indebtedness and other indebtedness of the Company, including the Notes.
Substantially all of the assets of the Company are pledged as collateral under
the Credit Facility.

    HISTORY OF NET LOSSES. The Company had a net loss of $4.7 million and $3.7
million for the years ended December 31, 1997 and December 31, 1996,
respectively. Such net losses have resulted primarily from significant charges
for depreciation and amortization relating to the acquisition of radio stations
and interest charges on outstanding debt. The Company expects to continue to
experience net losses in the foreseeable future, principally as a result of
depreciation, amortization and interest expense associated with completed and
anticipated future acquisitions, including the Pending Acquisitions. Such losses
may be greater than those experienced historically by the Company.

    LIMITATIONS ON ACQUISITION STRATEGY. Although the Company believes that its
acquisition strategies are reasonable, there can be no assurance that it will be
able to implement its plans without delay or that, when implemented, its efforts
will result in the increased broadcast cash flow or other benefits currently
anticipated by the Company's management. In addition, there can be no assurance
that the Company will not encounter unanticipated problems or liabilities in
connection with such stations. The Company's acquisition strategy involves
numerous other risks, including difficulties in the integration of operations
and systems and the management of a large and geographically diverse group of
stations, the diversion of management's attention from other business concerns
and the potential loss of key employees of acquired stations. There can be no
assurance that the Company's management will be able to manage effectively the
resulting business or that such acquisitions will benefit the Company. Depending
upon the nature, size and timing of future acquisitions, the Company may be
required to raise additional financing. There can be no assurance that the
Credit Facility, the Notes Indenture or any other loan agreements to which the
Company may become a party or subject to will permit such additional financing
or that such additional financing will be available to the Company or Citadel
Communications on terms acceptable to its management or at all.

    The Company competes and will continue to compete with many other buyers for
the acquisition of radio stations. Many of those competitors have significantly
greater financial and other resources than those of the Company. In addition,
if, as management believes may happen, the prices sought by sellers of radio
stations continue to rise, the Company may find fewer acceptable acquisition
opportunities.



                                     I - 30

<PAGE>   33



    DEPENDENCE ON KEY PERSONNEL. The Company's business is dependent upon the
performance of certain key individuals, particularly Lawrence R. Wilson, the
Chief Executive Officer. The loss of the services of Mr. Wilson would have a
material adverse effect on the Company, including causing an event of default
under the Credit Facility. The Company has entered into an employment agreement
with Mr. Wilson, expiring in June 2001. In addition, the Company and Citadel
Communications together have purchased key-man life insurance covering Mr.
Wilson in the amount of $5.0 million. Notwithstanding the foregoing, should
there be an event of default under the Credit Facility as a result of the death,
disability or termination of employment of Mr. Wilson (which the lender
thereunder could declare if, within 90 days after such death, disability or
employment termination, the Company has not replaced Mr. Wilson with a person
acceptable to the lender in its reasonable discretion), it is unlikely that the
proceeds of such policy would be sufficient to repay the outstanding
indebtedness under the Credit Facility. The Company employs three regional
presidents, nineteen general managers, a number of sales managers, sales
personnel and program directors, and several high-profile on-air announcers,
whose services are also important to the Company. The Company sometimes enters
into employment agreements, including non-competition agreements, with its
on-air announcers. However, there can be no assurance that the Company will be
able to retain any such employees or that such non-competition agreements would
be enforceable.

    IMPORTANCE OF CERTAIN MARKETS. In 1997, the Company derived 20.5% of its net
revenue and 31.3% of its broadcast cash flow from the Albuquerque market, 13.8%
of its net revenue and 11.8% of its broadcast cash flow from the Salt Lake City
market and 9.4% of its net revenue and 14.9% of its broadcast cash flow from the
Modesto market. A significant decline in net revenue from the Company's stations
in these markets, as a result of a ratings decline or otherwise, could have a
material adverse effect on the Company's financial position and results of
operations.

    REPURCHASE OF CAPITAL STOCK OF CITADEL COMMUNICATIONS. Pursuant to the terms
of a Stockholders Agreement among various shareholders of Citadel
Communications, on or after August 1, 2000, certain shareholders of Citadel
Communications have the right to require Citadel Communications to purchase all
or a portion of certain shares of capital stock of Citadel Communications owned
by them for a price determined in accordance with the Stockholders Agreement.
The source of funds for any such purchase would be dividends or other payments
from the Company or borrowings by Citadel Communications. The use of any such
available funds would diminish resources available for business operations and
could diminish Citadel Communications' ability to borrow additional funds for
other purposes. However, there can be no assurance that sufficient funds would
be available at the time of any such tender to make any required repurchases of
capital stock tendered or, if applicable, that restrictions in the Credit
Facility and/or the Notes Indenture would permit Citadel Communications to make
such required repurchases. In the event that Citadel Communications is unable to
repurchase shares tendered by or on behalf of ABRY Broadcast Partners II, L.P.
or ABRY Citadel Investment Partners, L.P., such entities are entitled, among
other things, to solicit offers and make presentations and proposals to
prospective buyers of Citadel Communications and enter into negotiations and/or
agreements regarding the potential sale of Citadel Communications. Any resulting
sale of Citadel Communications could result in a change of control and a change
in management of the Company. See Items 11 and 12.

    ABILITY TO FINANCE REPURCHASE IN THE EVENT OF CHANGE OF CONTROL. In the
event of a Change of Control (as defined in the Notes Indenture), the Company
would be required to offer to purchase all outstanding Notes and all outstanding
Exchangeable Preferred Stock or, if applicable, the 13 1/4% Subordinated
Exchange Debentures due 2009 (the "Exchange Debentures") into which the Company
may, subject to certain conditions, exchange the Exchangeable Preferred Stock,
as the case may be, at 101% of the principal amount thereof, plus accrued and
unpaid interest, if any, to the repurchase date, or 101% of the liquidation
preference, plus accumulated and unpaid dividends, if any, to the repurchase
date. The source of funds for any such purchase would be the available cash of
the Company or cash generated from other sources. However, there can be no
assurance that the Company would have available funds sufficient to pay the
purchase price or that it would be able to obtain such funds through a
refinancing of the Notes or the Exchangeable Preferred Stock or, if applicable,
the Exchange Debentures, or otherwise, or that the purchase would be permitted
under the Credit Facility. The failure of the Company to make or consummate an
offer to purchase the Notes, or, if issued, the Exchange Debentures, or to pay
the applicable Change of Control purchase price when due would result in an
event of default under the Notes Indenture and the Indenture governing the
Exchange Debentures (the "Exchange Indenture"), respectively, and would give the
Trustee under the Notes Indenture and the Trustee under the Exchange Indenture
certain rights.


                                     I - 31

<PAGE>   34



Any such failure of the Company with respect to the Exchangeable Preferred Stock
would give the holders of the Exchangeable Preferred Stock certain voting
rights.

ITEM 2.  PROPERTIES.

    The types of properties required to support each of the Company's radio
stations include offices, studios, transmitter sites and antenna sites. A
station's studios are generally housed with its offices in business districts.
The transmitter sites and antenna sites are generally located so as to provide
maximum market coverage.

    The Company currently owns certain studio facilities in Spokane, Washington;
Billings, Montana; Tri-Cities, Washington; East Providence, Rhode Island; Little
Rock, Arkansas; Boise, Idaho; and Patton Township (State College), Lower Yoder
Township (Johnstown), Williams Township (Allentown) and Tunkhannock
(Wilkes-Barre/Scranton), Pennsylvania, and it owns certain transmitter and
antenna sites in Reno, Nevada; Salt Lake City, Utah; Spokane and Tri-Cities,
Washington; Tracy (Modesto), California; Billings, Montana; Santa Fe and
Albuquerque, New Mexico; Medford, Oregon; East Providence and Johnston, Rhode
Island; Township One (Quincy), Illinois; Little Rock, Arkansas; and Patton
Township (State College), Croyle Township (Johnstown), Mt. Joy Township
(Harrisburg/York), Williams Township and Salisbury Township (Allentown) and
Hanover Township, Plymouth Township, Carbondale and Tunkhannock
(Wilkes-Barre/Scranton), Pennsylvania. The Company leases its remaining studio
and office facilities, including office space in Tempe, Arizona which is not
related to the operations of a particular station, and it leases its remaining
transmitter and antenna sites. The Company does not anticipate any difficulties
in renewing any facility leases or in leasing alternative or additional space,
if required. The Company owns substantially all of its other equipment,
consisting principally of transmitting antennae, transmitters, studio equipment
and general office equipment.

    Substantially all of the Company's properties and equipment serve as
collateral for the Company's obligations under the Credit Facility.

    No one property is material to the Company's operations. The Company
believes that its properties are generally in good condition and suitable for
its operations; however, the Company continually looks for opportunities to
upgrade its properties and intends to upgrade studios, office space and
transmission facilities in certain markets.

ITEM 3.  LEGAL PROCEEDINGS.

    The Company currently and from time to time is involved in litigation
incidental to the conduct of its business, but the Company is not a party to any
lawsuit or proceeding which, in the opinion of the Company, is likely to have a
material adverse effect on the Company.

    The Company has received two civil investigative demands ("CIDs") from the
DOJ pursuant to which the DOJ has requested information from the Company to
determine whether the Company has violated certain antitrust laws. The first CID
was issued on September 27, 1996 and concerns the Company's acquisition of all
of the assets of KRST-FM in Albuquerque, New Mexico on October 9, 1996 (the
"KRST Acquisition"). The CID requested written answers to interrogatories and
the production of certain documents concerning the radio station market in
Albuquerque, in general, and the KRST Acquisition, in particular, to enable the
DOJ to determine, among other things, whether the KRST Acquisition would result
in excessive concentration in the market. The Company has responded to the CID.
The DOJ requested supplemental information on January 27, 1997, to which the
Company also responded. There have been no communications since that time and,
at present, the Company has been given no indication from the DOJ regarding its
intended future actions. If the DOJ were to proceed with and successfully
challenge the KRST Acquisition, the Company may be required to divest one or
more radio stations in Albuquerque and/or it may be subject to the payment of
fines.

    The second CID was issued on October 9, 1996 and concerned the Company's JSA
relating to a total of eight radio stations in Spokane, Washington and Colorado
Springs, Colorado and which became effective in January 1996. Pursuant to such
CID, the DOJ has requested information to determine whether the JSAs constituted
a de facto merger, resulting in a combination or contract in restraint of trade.
The Company responded to the CID, and the DOJ is proceeding with discovery in
this matter. It is anticipated that representatives of the Company and


                                     I - 32

<PAGE>   35


representatives of the other party to the JSA will be meeting with the DOJ
concerning this matter in late March and early April 1998. If the DOJ were to
proceed with and successfully challenge the JSA, the Company may be required to
terminate the JSA and/or it may be subject to the payment of fines.

    At this time, the Company cannot predict the impact on the Company, if any,
of these proceedings or any future DOJ demands.

ITEM 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.

(a)  The sole holder of the common stock of the Company acted by written consent
     (the "Written Consent") in lieu of an Annual Meeting of the Sole
     Stockholder dated October 22, 1997.

(b)  The matter acted upon by the sole stockholder pursuant to the Written
     Consent was the election of directors. Each of Lawrence R. Wilson, Patricia
     Diaz Dennis, Scott E. Smith, John E. von Schlegell and Ted L. Snider, Sr.
     was elected to serve as a director of the Company until the next annual
     meeting of stockholders and until his or her successor is duly elected and
     qualified.

(c)  The written consent was signed by the sole holder of the 40,000 outstanding
     shares of common stock of the Company. All such 40,000 shares were voted
     for the election of each of Lawrence R. Wilson, Patricia Diaz Dennis, Scott
     E. Smith, John E. von Schlegell and Ted L. Snider, Sr. as a director of the
     Company.

(d)  Not applicable.




                               I - 33
<PAGE>   36
PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     The only authorized common equity of the Company is its common stock, par
value $.001 per share. There is no established public trading market for the
Company's common stock. All shares of such common stock which are currently
issued and outstanding are owned by Citadel Communications Corporation, the
Company's parent.

     The Company has not paid any cash dividends on its common stock in the last
two fiscal years. The Company's Credit Facility prohibits the payment of cash
dividends on the common stock. Each of the Notes Indenture, the Certificate of
Designation governing the Exchangeable Preferred Stock and the Exchange
Indenture contains certain covenants that restrict the Company from taking
various actions, including, subject to specified exceptions, the payment of cash
dividends on its common stock. Similarly, subject to specified exceptions, the
Company's Credit Facility restricts the ability of the Company's wholly-owned
subsidiary, Citadel License, Inc., to pay cash dividends or make other
distributions in respect of its capital stock owned by the Company. The Company
is not dependent in any material respect on the receipt of dividends or other
payments from Citadel License, Inc.

     On July 3, 1997, the Company sold an aggregate of 1,000,000 shares of its
13-1/4% Exchangeable Preferred Stock to Prudential Securities Incorporated,
NationsBanc Capital Markets, Inc. and BancBoston Securities Inc. (collectively,
the "Initial Purchasers"). The aggregate sale price was $100,000,000 and the
aggregate discount to the Initial Purchasers was $3,150,000. As no public
offering was involved, the issuance of such shares was exempt from registration
under Section 4(2) of the Securities Act.

ITEM 6.  SELECTED FINANCIAL DATA.

     The selected historical financial data of the Company presented below as of
and for the years ended December 31, 1993, 1994, 1995, 1996, and 1997 are
derived from the consolidated financial statements of the Company, which
consolidated financial statements have been audited by KPMG Peat Marwick LLP,
independent certified public accountants. The consolidated financial statements
of the Company as of December 31, 1996 and 1997 and for each of the years in the
three-year period ended December 31, 1997 and the independent auditors' report
thereon are included elsewhere in this filing. The financial results of the
Company are not comparable from year to year because of the acquisition and
disposition of various radio stations by the Company. The selected historical
financial data below should be read in conjunction with, and is qualified by
reference to, the Company's consolidated financial statements and related notes
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this filing.

                                      II-1
<PAGE>   37
<TABLE>
<CAPTION>
                                                                       YEAR ENDED DECEMBER 31,
                                                   ----------------------------------------------------------------
                                                      1993         1994         1995         1996         1997
                                                   ------------ ------------ ------------ ------------ ------------
                                                           (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                <C>           <C>           <C>           <C>           <C>
STATEMENT OF OPERATIONS
   DATA:
Net broadcasting revenue .....................     $ 21,376      $ 32,998      $ 34,112      $ 45,413      $ 89,803
Station operating expenses ...................       17,081        24,331        26,832        33,232        65,245
Depreciation and amortization ................        5,245         7,435         4,891         5,158        14,636
Corporate general and administrative .........          961         2,504         2,274         3,248         3,530
                                                   --------      --------      --------      --------      --------
Operating income (loss)  .....................       (1,911)       (1,272)          115         3,775         6,392
Interest expense (1)  ........................        2,637         4,866         5,242         6,155        12,304
Other income, net ............................          149           657           781           414           451
                                                   --------      --------      --------      --------      --------
Income (loss) before
   extraordinary item ........................       (4,399)       (5,481)       (4,346)       (1,966)       (5,461)
Extraordinary loss (2)  ......................           --            --            --        (1,769)           --
                                                   --------      --------      --------      --------      --------
Income (loss) before income taxes ............       (4,399)       (5,481)       (4,346)       (3,735)       (5,461
Deferred income tax benefit ..................           --            --            --            --           770
                                                   --------      --------      --------      --------      --------
Net income (loss)  ...........................     $ (4,399)     $ (5,481)     $ (4,346)     $ (3,735)     $ (4,691)
                                                   ========      ========      ========      ========      ========
Dividend requirement for Exchangeable
   Preferred Stock ...........................           --            --            --            --         6,633
Net loss applicable to common shares .........       (4,399)       (5,481)       (4,346)       (3,735)      (11,324)
Basic and diluted net loss
   per common share .........................      $   (110)     $   (137)     $   (109)          (93)     $   (283)
Weighted average common
   shares outstanding ......................         40,000        40,000        40,000        40,000        40,000
                                                   --------      --------      --------      --------      --------
Cash dividends declared per share ............     $     --      $     --      $     --      $     --      $     --
                                                   ========      ========      ========      ========      ========
</TABLE>

<TABLE>
<CAPTION>
                                                                            DECEMBER 31,
                                                   ----------------------------------------------------------------
                                                      1993          1994         1995          1996         1997
                                                   ------------ ------------ ------------ ------------ ------------
<S>                                                <C>           <C>           <C>           <C>           <C>
BALANCE SHEET DATA:
Cash and cash equivalents ....................     $    857      $  1,538      $  1,005      $  1,588      $  7,685
Working capital (deficit).....................        1,701         3,382           298        (4,195)       22,594
Intangible assets, net........................       17,454        20,080        15,093        51,802       268,690
Total assets..................................       36,120        46,397        37,372       102,244       344,172
Long-term debt (including current portion)           30,468        47,805        43,046        91,072       189,699
Exchangeable preferred stock..................           --            --            --            --       102,010
Shareholder's equity (deficit)................        3,492       (4,782)       (9,249)         5,999        16,132
</TABLE>

------------------------------------------------

(1)  Includes debt issuance costs and debt discount amortization of $139,000;
     $287,000; $132,000; $371,000 and $441,000 for the years ended December 31,
     1993, 1994, 1995, 1996 and 1997, respectively.

(2)  On October 9, 1996, the Company extinguished its long-term debt of $31.3
     million, payable to a financial institution, and its note payable to a
     related party of $7.0 million. The early retirement of the long-term debt
     resulted in a $1.8 million extraordinary loss due to prepayment premiums
     and the write-off of debt issuance costs.


                                      II-2
<PAGE>   38



ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.

GENERAL

     The following discussion and analysis of the financial condition and
results of operations of the Company should be read in conjunction with the
Company's consolidated financial statements and notes thereto included elsewhere
in this filing. This filing contains forward-looking statements, including
statements regarding, among other items, (i) the realization of the Company's
business strategy, (ii) the sufficiency of cash flow to fund the Company's debt
service requirements and working capital needs, (iii) anticipated trends in the
radio broadcasting industry, (iv) potential acquisitions by the Company and the
successful integration of both completed and future acquisitions, and (v)
government regulation. Forward-looking statements are typically identified by
the words "believe," "expect," "anticipate," "intend," "estimate," and similar
expressions. Readers are cautioned that any such forward-looking statements are
not guarantees of future performance and involve risks and uncertainties, and
that actual results may differ materially from those contained in the
forward-looking statements as a result of various factors. See Item 1 under the
caption "Forward-Looking Information."

     The principal source of the Company's revenue is the sale of broadcasting
time on its radio stations for advertising. As a result, the Company's revenue
is affected primarily by the advertising rates its radio stations charge.
Correspondingly, the rates are based upon the station's ability to attract
audiences in the demographic groups targeted by its advertisers, as measured
principally by periodic Arbitron Radio Market Reports. The number of
advertisements that can be broadcast without jeopardizing listening levels (and
the resulting ratings) is limited in part by, among other things, the format of
a particular station. Each of the Company's stations has a general
pre-determined level of on-air inventory that it makes available for
advertising, which may be different at different times of the day and tends to
remain stable over time. Much of the Company's selling activity is based on
demand for its radio stations' on-air inventory and, in general, the Company
responds to this demand by varying prices rather than by changing the available
inventory.

     In the broadcasting industry, radio stations often utilize trade (or
barter) agreements to exchange advertising time for goods or services (such as
other media advertising, travel or lodging), in lieu of cash. In order to
preserve most of its on-air inventory for cash advertising, the Company
generally enters into trade agreements only if the goods or services bartered to
the Company will be used in the Company's business. The Company has minimized
its use of trade agreements and has generally sold over 90% of its advertising
time for cash. In addition, it is the Company's general policy not to preempt
advertising spots paid for in cash with advertising spots paid for in trade.

     In 1997, the Company's radio stations derived approximately 83.3% of their
net broadcasting revenue from local and regional advertising in the markets in
which they operate, and the remainder resulted principally from the sale of
national advertising. Local and regional advertising is sold primarily by each
station's sales staff. To generate national advertising sales, the Company
engages a national advertising representative firm. The Company believes that
the volume of national advertising revenue tends to adjust to shifts in a
station's audience share position more rapidly than does the volume of local and
regional advertising revenue. During the years ended December 31, 1997 and 1996,
no single advertiser accounted for more than 6.5% of the net revenue of any of
the Company's station groups or more than 1.8% of total net revenue of the
Company.

     The Company's financial results are dependent on a number of factors,
including the general strength of the local and national economies, population
growth, ability to provide popular programming, local market and regional
competition, relative efficiency of radio broadcasting compared to other
advertising media, signal strength and governmental regulation and policies.

     The Company's quarterly revenue varies throughout the year, as is typical
in the radio broadcasting industry. The Company's first calendar quarter
typically produces the lowest revenue for the year, and the second and fourth
calendar quarters generally produce the highest revenue for the year. The
advertising


                                      II-3
<PAGE>   39

revenue of the Company is typically collected within 120 days of the date on
which the related advertising is aired and its corresponding revenue is
recognized. Most accrued expenses, however, are paid within 45 to 60 days. As a
result of this time lag, working capital requirements have increased as the
Company has grown and will likely increase further in the future.

     The primary operating expenses incurred in the ownership and operation of
radio stations include employee salaries and commissions, programming expenses
and advertising and promotion expenses. The Company also incurs and will
continue to incur significant depreciation, amortization and interest expense as
a result of completed and future acquisitions of stations, including the Pending
Acquisitions, and due to existing and future financings, including the Company's
10-1/4% Senior Subordinated Notes (the "Notes") and its 13-1/4% Exchangeable
Preferred Stock (the "Exchangeable Preferred Stock") and borrowings under the
Credit Facility. The Company's consolidated financial statements tend not to be
directly comparable from period to period due to the Company's acquisition
activity.

     "Broadcast cash flow" consists of operating income (loss) before
depreciation, amortization and corporate expenses. "EBITDA" consists of
operating income (loss) before income taxes, interest, depreciation and
amortization. Although broadcast cash flow and EBITDA are not measures of
performance calculated in accordance with generally accepted accounting
principles ("GAAP"), management believes that they are useful to an investor in
evaluating the Company because they are measures widely used in the broadcast
industry to evaluate a radio company's operating performance. However, broadcast
cash flow and EBITDA should not be considered in isolation or as substitutes for
net income, cash flows from operating activities and other income or cash flow
statement data prepared in accordance with GAAP as a measure of liquidity or
profitability.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996

     Net Revenue. Net revenue increased approximately $44.3 million or 97.7% to
$89.8 million in 1997 from $45.4 million in 1996. The inclusion of revenue from
the acquisitions of radio stations and revenue generated from LMAs and JSAs
entered into during 1997 provided approximately $41.8 million of the increase.
For stations owned and operated over the comparable period in 1997 and 1996, net
revenue improved approximately $2.5 million or 6.7% to $40.7 million in 1997
from $38.2 million in 1996 primarily due to increased ratings and improved
selling efforts.

     Station Operating Expenses. Station operating expenses increased
approximately $32.0 million or 96.3% to $65.2 million in 1997 from $33.2 million
in 1996. The increase was primarily attributable to the inclusion of station
operating expenses of the radio station acquisitions and the LMAs and JSAs
entered into during 1997.

     Broadcast Cash Flow. As a result of the factors described above, broadcast
cash flow increased approximately $12.4 million or 101.6% to $24.6 million in
1997 from $12.2 million in 1996. As a percentage of net revenue, broadcast cash
flow increased to 27.3% in 1997 from 26.8% in 1996.

     Corporate General and Administrative Expenses. Corporate general and
administrative expenses increased approximately $0.3 million or 8.7% to $3.5
million in 1997 from $3.2 million in 1996. The increase is due primarily to an
increase in staffing levels needed to support the Company's growth through
acquisitions.

     EBITDA. As a result of the factors described above, EBITDA increased
approximately $12.0 million or 135.4% to $21.0 million in 1997 from $8.9 million
in 1996.

    Net cash provided by operations increased to $5.5 million in 1997 from net
cash used in operations of $1.4 million in 1996, primarily due to an increase in
depreciation and amortization as a result of recent acquisitions. Net cash used
in investing activities, primarily for station acquisitions, was $211.6 million
in 1997, compared to


                                      II-4
<PAGE>   40
$61.2 million in 1996. Net cash provided by financing activities was $212.2
million in 1997, primarily from proceeds from senior subordinated notes payable
and exchangeable preferred stock, compared to $63.1 million in 1996.

     Depreciation and Amortization. Depreciation and amortization expense
increased approximately $9.5 million or 183.8% to $14.6 million in 1997 from
$5.2 million in 1996, primarily due to radio station acquisitions consummated
during 1997.


     Interest Expense. Interest expense increased approximately $6.1 million or
99.9% to $12.3 million in 1997 from $6.2 million in 1996, primarily due to
interest expense associated with additional borrowings to fund acquisitions
consummated during 1997.

     Net Loss Applicable to Common Shares. As a result of the factors described
above, net loss applicable to common shares increased approximately $7.6 million
or 203.1% to $11.3 million in 1997 from $3.7 million in 1996. Included in the
net loss applicable to common shares for 1997 is approximately $6.6 million of
dividends required on the Company's exchangeable preferred stock. Included in
the net loss applicable to common shares for 1996 is approximately $1.8 million
extraordinary loss related to the repayment of long-term debt.

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995.

     Net Revenue. Net revenue increased approximately $11.3 million or 33.1% to
$45.4 million in 1996 from $34.1 million in 1995. The inclusion of revenue from
acquisitions of radio stations and the revenue generated from LMAs and JSAs
entered into during 1996 provided approximately $7.8 million of the increase.
For stations owned and operated over the comparable period in 1995 and 1996, net
revenue improved approximately $3.5 million or 11.8% to $34.2 million in 1996
from $30.6 million in 1995 primarily due to increased ratings and improved
selling efforts.

     Station Operating Expenses. Station operating expenses increased
approximately $6.4 million or 23.9% to $33.2 million in 1996 from $26.8 million
in 1995. The increase was primarily attributable to the inclusion of station
operating expenses of the radio station acquisitions and the LMAs and JSAs
entered into during 1996.

     Broadcast Cash Flow. As a result of the factors described above, broadcast
cash flow increased approximately $4.9 million or 67.1% to $12.2 million in 1996
from $7.3 million in 1995. As a percentage of net revenue, broadcast cash flow
increased to 26.8% in 1996 from 21.4% in 1995.

     Corporate General and Administrative Expenses. Corporate general and
administrative expenses increased approximately $0.9 million or 39.1% to $3.2
million in 1996 from $2.3 million in 1995. Substantially all of the increase was
due to professional expenses incurred in 1996 related to the Company's capital
raising activities and a lawsuit between the Company and Tele-Media and certain
of its shareholders and officers which arose in connection with Tele-Media's
decision not to consummate a sale of its radio stations to the Company pursuant
to a 1995 agreement. In connection with the Tele-Media Acquisition, the
litigation was settled and discontinued.

     EBITDA. As a result of the factors described above, EBITDA increased
approximately $3.9 million or 78.0% to $8.9 million in 1996 from $5.0 million in
1995.

     Net cash used in operations increased to approximately $1.4 million for the
year ended December 31, 1996 from $0.4 million in 1995. This increase resulted
primarily from the reduction in the net loss before extraordinary item and gain
on sale of property in 1996, and was partially offset by an increase in accounts
receivable.

     Net cash used in investing activities for the year ended December 31, 1996,
primarily for station acquisitions and a note receivable advance, was $61.2
million, compared to net cash provided by investing activities of $4.8 million
in the prior year.


                                      II-5
<PAGE>   41

     Net cash provided by financing activities for the year ended December 31,
1996 was approximately $63.1 million, due primarily to proceeds from the
issuance of notes payable and advances and a capital contribution from the
parent company, compared to net cash used in financing activities of $4.9
million in the prior year.

     Depreciation and Amortization. Depreciation and amortization expense
increased approximately $0.3 million or 6.1% to $5.2 million in 1996 from $4.9
million in 1995, primarily due to radio station acquisitions consummated during
1996.

     Interest Expense. Interest expense increased approximately $1.0 million or
19.2% to $6.2 million in 1996 from $5.2 million in 1995, primarily due to
interest expense associated with additional borrowings to fund acquisitions
consummated during 1996.

     Net Loss Applicable to Common Shares. As a result of the factors described
above, net loss applicable to common shares decreased approximately $0.6 million
or 14.1% to $3.7 million in 1996 from $4.3 million in 1995. Included in the net
loss applicable to common shares for 1996 is approximately $0.4 million of
interest earned on loans advanced by the Company to Deschutes prior to the
acquisition of Deschutes by Citadel Communications and a $1.8 million
extraordinary loss related to the repayment of long-term debt.

LIQUIDITY AND CAPITAL RESOURCES

      Net cash provided by operations increased to $5.5 million for the year
ended December 31, 1997 compared to net cash used in operations of $1.4 million
for the year ended December 31, 1996. The change is primarily due to a $9.5
million increase in depreciation and amortization expense included in operations
in 1997, partially offset by the inclusion of an extraordinary loss of $1.8
million included in 1996. Net cash used in operations increased to $1.4 million
for the year ended December 31, 1996 from $0.4 million for the year ended
December 31, 1995. This increase resulted primarily from the reduction in the
net loss in 1996 before income taxes and extraordinary loss and an increase in
accounts receivable.

      Net cash used in investing activities, primarily for station acquisitions,
was $211.6 million in 1997 compared to $61.2 million in 1996. Net cash used in
investing activities for the year ended December 31, 1996, primarily for station
acquisitions and a note receivable advance, decreased to $61.2 million in 1996
from net cash provided by investing activities of $4.8 million in 1995.

      Net cash provided by financing activities was $212.2 million in 1997,
primarily from proceeds from notes payable and preferred stock, compared to
$63.1 million in 1996. The increase in net cash provided from financing
activities for the year ended December 31, 1996, to $63.1 million in 1996 from
net cash used in financing activities of $4.9 million in 1995, was due primarily
to proceeds from the issuance of notes payable and a capital contribution from
the parent company.

      The Company's acquisition strategy has required, and will continue in the
foreseeable future to require, a significant portion of the Company's capital
resources. The Company and its parent, Citadel Communications Corporation, have
financed the Company's past acquisitions through bank financing, private sales
of equity and debt securities and proceeds from asset sales. The Company
frequently evaluates potential acquisitions of stations and station groups,
including station swap opportunities. The Company expects that any required
financing for acquisitions will be provided through the incurrence of debt, the
sale of securities, internally generated funds or a combination of the
foregoing. There can be no assurance, however, that external financing will be
available to the Company on terms considered favorable by management or that
cash flow from operating activities will be sufficient to fund the Company's
acquisition strategy.

     On October 6, 1996, the Company, Deschutes f/k/a Deschutes Acquisition
Corporation (now merged into the Company), Citadel License, Inc. and Deschutes
License, Inc. (now merged into Citadel License, Inc.) (collectively, the
"Borrowers") entered into a loan agreement (as thereafter amended, the "Credit


                                      II-6
<PAGE>   42
 Facility") with FINOVA Capital Corporation, as administrative agent (the
"Agent"), and other lending institutions party thereto. The Credit Facility
provides for a $150.0 million revolving loan (the "Revolving Loan") which
includes a $5.0 million letter of credit facility (the "L/C Facility"). As of
December 31, 1997, the outstanding principal amount of the revolving loan under
the Credit Facility was approximately $90.1 million. The Revolving Loan, which
will be due on September 30, 2003 (the "Maturity Date"), may be drawn upon,
subject to certain conditions, for certain acquisitions, working capital and
other permitted uses. On the last day of each quarter commencing with the last
quarter of 1997, the Revolving Loan commitment is reduced by an amount
increasing from $2.5 million at December 31, 1997 to approximately $8.1 million
at June 30, 2003. The Credit Facility also provides for certain additional
mandatory reductions in the Revolving Loan commitment. Prior to the Maturity
Date, the Borrowers are required to repay any amount by which the outstanding
principal balance exceeds the Revolving Loan commitment, as adjusted. The
remaining principal balance of the Revolving Loan shall be due and payable on
the Maturity Date. Voluntary prepayments of the amended Credit Facility are
permitted without premium or penalty. Mandatory prepayment of the Credit
Facility will be required if the Total Leverage Ratio (as defined in the Credit
Facility) as of the end of each year is 4.5 or greater. The amount of the
mandatory prepayment shall be the lessor of (a) (i) 66-2/3 % of the Excess Cash
Flow (as defined in the Credit Facility) if the Total Leverage Ratio as of the
end of each such year exceeds 5.5 and (ii) 50% of the Excess Cash Flow if the
Total Leverage Ratio as of the end of each such year is 4.5 to 5.5, inclusive,
or (b) an amount by which Cash Equivalents (as defined in the Credit Facility),
as of the last day of March in which the Borrowers are required to deliver
financial statements, exceeds $5.0 million. Notwithstanding the foregoing, upon
retirement of the Credit Facility, the Company will be required to pay a fee,
which was in the maximum amount of $771,000 as of December 31, 1997, and which
amount will decline quarterly based on the amount of outstanding borrowings
under the Credit Facility.

     The Credit Facility bears interest at a rate equal to the applicable Base
Rate (as defined in the Credit Facility) in effect from time to time plus the
Applicable Margin (as defined in the Credit Facility) or, at the written
election of the Borrowers, at a rate equal to the applicable LIBOR Rate (as
defined in the Credit Facility) in effect from time to time as determined by the
Agent for the respective Interest Period (as defined in the Credit Facility),
plus the Applicable Margin. The Applicable Margins for the Credit Facility are
expected to range between .50% and 1.75% for the Base Rate and 1.50% and 2.75%
for the LIBOR Rate, depending on the Total Leverage Ratio from time to time.
Except as otherwise provided with respect to voluntary and mandatory
prepayments, interest on the Credit Facility is payable quarterly in arrears on
the last business day of each quarter. At December 31, 1997, the interest rate
under the Credit Facility was 8.43%. The Credit Facility contains customary
restrictive covenants, which, among other things, and with certain exceptions,
limit the ability of the Borrowers (i) to incur additional indebtedness and
liens in connection therewith, (ii) to enter into certain transactions with
affiliates, (iii) to pay dividends, (iv) to consolidate, merge or affect certain
asset sales, (v) to issue additional stock, (vi) to make certain capital or
overhead expenditures, (vii) to make certain investments, loans or prepayments,
and (viii) to change the nature of the Borrowers' business. The Borrowers are
also required to satisfy certain financial covenants, which require the
Borrowers to maintain specified financial ratios and to comply with certain
financial tests, such as ratios for maximum leverage, minimum interest coverage
and minimum fixed charges.

     The Company issued the Notes under an indenture dated as of July 1, 1997
(the "Notes Indenture") in the aggregate principal amount of $101,000,000. The
Notes bear interest at the rate of 10-1/4%, payable semi-annually, and will
mature on July 1, 2007. The Notes are subordinate in right of payment to the
prior payment in full of all Senior Debt (as defined in the Notes Indenture).
The Notes are redeemable at the option of the Company, in whole or in part, at
any time on or after July 1, 2002, at a pre-determined redemption price, plus
accrued and unpaid interest, if any, to the date of redemption. In addition, at
any time prior to July 1, 2000, the Company may, at its option, redeem a portion
of the Notes with the net proceeds of one or more Public Equity Offerings (as
defined in the Notes Indenture), at a redemption price equal to 110.25% of the
principal amount thereof, plus accrued and unpaid interest, if any, to the date
of redemption; provided, however, that after any such redemption, there is
outstanding at least $75.0 million aggregate principal amount of the Notes. The
Notes Indenture contains certain covenants which, among other things, restrict
the ability of the Company and its subsidiaries with respect to: (i) the
incurrence of additional debt; (ii) restricted payments; (iii) dividend and
other payment restrictions affecting certain subsidiaries; (iv) asset
dispositions; (v) asset swaps (as defined in the Notes Indenture); (vi)
transactions


                                      II-7
<PAGE>   43

with affiliates (as defined in the Notes Indenture); (vii) issuances and sales
of stock of certain subsidiaries; (viii) liens; and (ix) consolidations, mergers
or sales of assets.

     The Company is authorized to issue 4,000,000 shares of Exchangeable
Preferred Stock, no par value, liquidation preference of $100 per share, and, as
of December 31, 1997, there were 1,000,000 shares of Exchangeable Preferred
Stock issued and outstanding. All dividends are cumulative, whether or not
earned or declared and are payable semi-annually. On or prior to July 1, 2002,
dividends are payable in additional shares of Exchangeable Preferred Stock
having an aggregate liquidation preference equal to the amount of such
dividends, or, at the option of the Company, in cash. Thereafter, all dividends
will be payable only in cash. The Company will be required to redeem the
Exchangeable Preferred Stock on July 1, 2009 (subject to the legal availability
of funds therefor). The Exchangeable Preferred Stock is redeemable at the option
of the Company, in whole or in part, at any time on or after July 1, 2002, at
certain specified redemption prices, plus accumulated and unpaid dividends, if
any, to the date of redemption. The Exchangeable Preferred stock ranks: (i)
senior to all common stock of the Company and to all other capital stock of the
Company, the terms of which expressly provide that it ranks junior to the
Exchangeable Preferred Stock; (ii) on a parity with any capital stock of the
Company the terms of which expressly provide that it will rank on a parity with
the Exchangeable Preferred Stock; and (iii) junior to all capital stock of the
Company the terms of which do not expressly provide that such stock will rank
junior to, or on a parity with, the Exchangeable Preferred Stock. The
Certificate of Designation for the Exchangeable Preferred Stock contains certain
covenants which, among other things, restrict the ability of the Company and its
subsidiaries with respect to: (i) the incurrence of additional debt; (ii)
restricted payments; (iii) issuances and sales of stock of certain subsidiaries;
and (iv) consolidations, mergers or sales of assets.

     Management believes that the net proceeds from the Notes and Exchangeable
Preferred Stock offerings, together with cash from operating activities and
revolving loans under the Credit Facility, should be sufficient to permit the
Company to meet its financial obligations and to fund its operations for the
next twelve months. In addition to acquisitions and debt service, the Company's
principal liquidity requirements will be for working capital and general
corporate purposes, including capital expenditures, which are not expected to be
material in amount.

     The Company has not received, nor does it anticipate receiving, from
Citadel License, Inc., its wholly owned subsidiary, any dividends or other
payments. The Company is not dependent in any material respect on the receipt of
dividends or other payments from Citadel License, Inc.

YEAR 2000 MATTERS

     Many existing computer programs use only two digits to identify a year (for
example, "98" is used to represent "1998"). Such programs may read "00" as the
year 1900, thus incorrectly recognizing dates beginning with the year 2000, or
may otherwise produce erroneous results or cease processing when dates after
1999 are encountered. Such failures could cause disruptions in normal business
operations.

     In each of its markets, the Company employs centralized accounting and
traffic (advertising scheduling) systems for all of its stations in the market.
Although not directly related to the year 2000 problem, the Company has
undertaken to replace its accounting and traffic software in each market. The
Company expects that this program will minimize or eliminate year 2000 problems
associated with the software for such systems. This software upgrade is expected
to be completed in 1998 at a cost of approximately $315,000 in 1998, which
consists primarily of the annual lease rental payment of $206,000 for software
and $109,000 in related one time costs. The operating lease for the computer
software is anticipated to be for a period of five years. In connection with
this software upgrade, the Company expects that its accounting and traffic
hardware systems will be assessed by the software vendor for both compatibility
with the new software and year 2000 compliance, and that the Company may also
engage outside consultants, as necessary and as available, for such purpose.
Much of the total cost of the hardware upgrade will be subject to trade
agreements and, as such, will be expensed in accordance with the Company's
policy of accounting for barter transactions. The Company cannot yet estimate
the costs of replacing or otherwise upgrading such computer hardware, as
required.


                                      II-8
<PAGE>   44

     The Company has recently assembled a task force consisting of the Company's
three regional Presidents, Chief Financial Officer, regional engineers and two
internal information systems employees to inventory and assess the Company's
other internal information and operating systems, including its broadcast and
related support systems which may contain embedded microprocessors, in order to
develop a strategy to address the computer software and hardware changes and
facility upgrades that may be required to remedy the year 2000-related
deficiencies of those systems. The Company recognizes that it must also conduct
an assessment of year 2000-related problems originating with third parties
outside of the Company's control, including vendors of programming software and
providers of satellite programming.

     Until the task force makes substantial progress in identifying problem
areas, it is not possible to estimate the extent of year 2000 deficiencies in
the Company's systems, the costs to the Company of correcting such deficiencies
and the time frame in which any required corrections will be made. In addition,
numerous uncertainties relating to such matters exist, including the ability to
locate, test and correct or replace relevant computer codes in software and
embedded microprocessors, the availability and cost of personnel trained in this
area, if required, and the extent to which third parties will be able to timely
correct year 2000 problems which may originate with such third parties, but
which impact the Company's operations. Given such uncertainties and the
preliminary nature of the Company's investigations to date, there can be no
assurances that year 2000-related deficiencies and required corrective measures
will not have a material adverse effect on the Company's business, financial
condition and results of operations.

Recently Issued Accounting Pronouncements

In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS No.
130, "Reporting Comprehensive Income." This statement establishes the definition
of and requirements for disclosure of comprehensive income and becomes effective
for the Company for the year ending December 31, 1998.

In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." This statement establishes standards for
disclosure about operating segments in annual financial statements and selected
information in interim financial reports. It also establishes standards for
related disclosures about products and services, geographic areas and major
customers. This statement supersedes SFAS No. 14, "Financial Reporting for
Segments of a Business Enterprise." The new standard becomes effective for the
Company for the year ending December 31, 1998, and requires that comparative
information from earlier years be restated to conform to the requirements of
this standard.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     This requirement is not applicable to the Company.



                                      II-9
<PAGE>   45
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.




                          INDEPENDENT AUDITORS' REPORT



The Board of Directors and Shareholder
Citadel Broadcasting Company:


We have audited the accompanying consolidated balance sheets of Citadel
Broadcasting Company (a wholly-owned subsidiary of Citadel Communications
Corporation) and subsidiary as of December 31, 1996 and 1997 and the related
consolidated statements of operations, shareholder's equity and cash flows for
each of the years in the three-year period ended December 31, 1997. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Citadel Broadcasting
Company and subsidiary as of December 31, 1996 and 1997 and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1997, in conformity with generally accepted accounting
principles.








Phoenix, Arizona
March 26, 1998



                                      II-10
<PAGE>   46






                          CITADEL BROADCASTING COMPANY
                                 AND SUBSIDIARY

                           Consolidated Balance Sheets



<TABLE>
<CAPTION>
                                                                                      DECEMBER 31,
                                                                          ----------------------------------
                                    ASSETS                                     1996                   1997
                                    ------                                     ----                   ----
<S>                                                                       <C>                  <C>
Current assets:
    Cash and cash equivalents                                             $  1,588,366          $  7,684,991
    Cash held in escrow                                                             --               718,561
    Accounts receivable, less allowance for doubtful accounts of
      $621,054 in 1996, and $808,942 in 1997                                12,199,973            25,744,137
    Notes receivable from related parties                                      118,646               246,455
    Prepaid expenses                                                           595,755             1,532,227
                                                                          ------------          ------------
           Total current assets                                             14,502,740            35,926,371

Property and equipment, net                                                 15,208,569            35,242,284
Note receivable                                                             18,251,402                    --
Intangible assets, net                                                      51,801,835           268,689,516
Deposits for pending acquisitions                                              300,000               650,000
Other assets                                                                 2,179,039             3,664,123
                                                                          ------------          ------------

                                                                          $102,243,585          $344,172,294
                                                                          ============          ============
</TABLE>




                                      II-11
<PAGE>   47


                          CITADEL BROADCASTING COMPANY
                                 AND SUBSIDIARY

                     Consolidated Balance Sheets, Continued


<TABLE>
<CAPTION>

                                                                                    DECEMBER 31,
                                                                       -------------------------------------
                     LIABILITIES AND SHAREHOLDER'S EQUITY                  1996                   1997
                     ------------------------------------                  ----                   ----
<S>                                                                    <C>                     <C>
Current liabilities:
    Accounts payable                                                   $   1,286,019           $   4,001,194
    Accrued liabilities                                                    2,301,716               9,060,129
    Current maturities of notes payable                                    2,500,000                      --
    Note payable to parent company                                        12,174,416                      --
    Current maturities of other long-term obligations                        435,791                 271,352
                                                                       -------------           -------------
           Total current liabilities                                      18,697,942              13,332,675

Notes payable, less current maturities                                    75,084,060              90,084,059
Senior subordinated notes payable                                                 --              98,331,117
Other long-term obligations, less current maturities                         877,600               1,012,649
Deferred tax liability                                                     1,585,333              23,270,338

Exchangeable preferred stock                                                      --             102,009,531

Commitments and contingencies

Shareholder's equity:
    Common stock, $.001 par value; authorized 136,300 shares,
      issued and outstanding 40,000 shares                                        40                      40

    Additional paid-in capital                                            27,472,380              42,296,316

    Accumulated deficit                                                  (21,473,770)            (26,164,431)
                                                                       -------------           -------------
           Total shareholder's equity                                      5,998,650              16,131,925
                                                                       -------------           -------------

                                                                       $ 102,243,585           $ 344,172,294
                                                                       =============           =============
</TABLE>


See accompanying notes to consolidated financial statements.



                                      II-12
<PAGE>   48



                          CITADEL BROADCASTING COMPANY
                                 AND SUBSIDIARY

                      Consolidated Statements of Operations


<TABLE>
<CAPTION>

                                                                    YEARS ENDED DECEMBER 31,
                                                   ----------------------------------------------------
                                                      1995                  1996               1997
                                                      ----                  ----               ----
<S>                                                <C>                 <C>                 <C>
Gross broadcasting revenue                         $ 38,047,879        $ 50,824,384        $ 99,469,550
    Less agency commissions                           3,936,169           5,411,578           9,666,280
                                                   ------------        ------------        ------------
         Net broadcasting revenue                    34,111,710          45,412,806          89,803,270
                                                   ------------        ------------        ------------

Operating expenses:
    Station operating expenses                       26,832,123          33,232,485          65,245,095
    Depreciation and amortization                     4,890,517           5,158,206          14,635,534
    Corporate general and administrative              2,273,744           3,247,579           3,530,067
                                                   ------------        ------------        ------------
         Operating expenses                          33,996,384          41,638,270          83,410,696
                                                   ------------        ------------        ------------

Operating income                                        115,326           3,774,536           6,392,574
                                                   ------------        ------------        ------------

Nonoperating expenses (income):
    Interest expense                                  5,241,760           6,155,472          12,303,981
    Interest income                                     (70,503)           (407,581)           (439,229)
    Loss (gain) on sale of property and
       equipment                                       (707,286)              1,749                  --
    Other (income) expense, net                          (3,221)             (8,124)            (11,944)
                                                   ------------        ------------        ------------
         Nonoperating expenses, net                   4,460,750           5,741,516          11,852,808
                                                   ------------        ------------        ------------

Loss before income taxes and extraordinary
       item                                          (4,345,424)         (1,966,980)         (5,460,234)

Deferred income tax (benefit)                                --                  --            (769,573)
                                                   ------------        ------------        ------------

Loss before extraordinary item                       (4,345,424)         (1,966,980)         (4,690,661)

Extraordinary loss on extinguishment of debt                 --          (1,769,000)                 --
                                                   ------------        ------------        ------------

Net loss                                             (4,345,424)         (3,735,980)         (4,690,661)

Dividend requirement for exchangeable
       preferred stock                                       --                  --           6,632,939
                                                   ------------        ------------        ------------

Net loss applicable to common shares               $ (4,345,424)       $ (3,735,980)       $(11,323,600)
                                                   ============        ============        ============

Basic and diluted net loss per common share        $       (109)       $        (93)       $       (283)
                                                   ============        ============        ============

Weighted average common shares outstanding               40,000              40,000              40,000
                                                   ============        ============        ============
</TABLE>


See accompanying notes to consolidated financial statements.




                                      II-13
<PAGE>   49

                          CITADEL BROADCASTING COMPANY
                                 AND SUBSIDIARY

                 Consolidated Statements of Shareholder's Equity


<TABLE>
<CAPTION>

                                       COMMON       ADDITIONAL         ACCUMULATED         TOTAL SHARE-
                                       STOCK      PAID-IN CAPITAL         DEFICIT         HOLDER'S EQUITY
                                       -----      ---------------         -------         ---------------
<S>                                      <C>       <C>                 <C>                 <C>
Balances, December 31, 1994              $40       $  8,569,684        $(13,392,366)       $ (4,822,642)

Net loss                                  --                 --          (4,345,424)         (4,345,424)
Capital contribution to parent (1)        --            (81,127)                 --             (81,127)
                                         ---       ------------        ------------        ------------
Balances, December 31, 1995               40          8,488,557         (17,737,790)         (9,249,193)

Net loss                                  --                 --          (3,735,980)         (3,735,980)
Capital contribution from
    parent (2)                            --         18,983,823                  --          18,983,823
                                         ---       ------------        ------------        ------------
Balances, December 31, 1996               40         27,472,380         (21,473,770)          5,998,650

Net loss                                  --                 --          (4,690,661)         (4,690,661)
Exchangeable preferred stock
    dividend requirement                  --         (6,632,939)                 --          (6,632,939)
Capital contribution from
    parent (3)                            --         21,456,875                  --          21,456,875
                                         ---       ------------        ------------        ------------
Balances, December 31, 1997              $40       $ 42,296,316        $(26,164,431)       $ 16,131,925
                                         ===       ============        ============        ============
</TABLE>


(1)  Represents the payment of preferred stock dividends on behalf of the parent
     company.

(2)  Represents the net capital contribution from the parent company for the
     issuance and redemption of preferred stock, the redemption of warrants, the
     cost of the equity issuance, as well as the payment of preferred stock
     dividends.

(3)  Represents the net capital contribution from the parent company for the
     issuance of preferred stock and the exercise of common stock options.



See accompanying notes to consolidated financial statements.




                                      II-14
<PAGE>   50



                          CITADEL BROADCASTING COMPANY
                                 AND SUBSIDIARY

                      Consolidated Statements of Cash Flows


<TABLE>
<CAPTION>

                                                                                YEARS ENDED DECEMBER 31,
                                                              ----------------------------------------------------
                                                                   1995                1996               1997
                                                                   ----                ----               ----
<S>                                                           <C>                <C>                 <C>
Cash flows from operating activities:
    Net loss                                                  $(4,345,424)       $ (3,735,980)       $  (4,690,661)
    Adjustments to reconcile net loss to net cash
      provided by (used in) operating activities:
      Extraordinary loss                                               --           1,769,000                   --
      Depreciation and amortization                             4,890,517           5,158,206           14,635,534
      Deferred tax benefit                                             --                  --             (769,573)
      Amortization of debt issuance costs and debt
        discounts                                                 131,752             370,652              441,334
      Bad debt expense                                            484,702             421,378            1,016,375
      Loss/(gain) on sale of property and equipment              (707,286)              1,749                   --
Changes in assets and liabilities, net of acquisitions:
      Increase in accounts receivable and notes
        receivable from related parties                        (1,069,681)         (5,257,849)         (10,214,907)
      (Increase) decrease in prepaid expenses                      55,531            (175,058)            (230,070)
      (Increase) decrease in other assets                          75,432              41,303             (676,946)
      Increase in accounts payable                                651,247              94,017              707,945
      Increase (decrease) in accrued liabilities                 (600,847)            (81,801)           5,323,678
                                                              -----------        ------------        -------------
         Net cash provided by (used in) operating
            activities                                           (434,057)         (1,394,383)           5,542,709

Cash flows from investing activities:
    Capital expenditures                                      $(1,690,950)       $ (2,037,840)       $  (2,070,223)
    Capitalized acquisition costs                                 (33,480)         (1,144,699)          (2,928,956)
    Cash paid to acquire stations                                      --         (38,805,036)        (205,973,171)
    Deposits for pending acquisitions                            (150,000)           (930,000)            (650,000)
    Increase in note receivable                                        --         (18,251,402)                  --
    Proceeds from sales of property and equipment               6,684,479               1,115                   --
                                                              -----------        ------------        -------------
         Net cash provided by (used in) investing
            activities                                        $ 4,810,049        $(61,167,862)       $(211,622,350)
                                                              -----------        ------------        -------------
</TABLE>




                                     II-15
<PAGE>   51




                          CITADEL BROADCASTING COMPANY
                                 AND SUBSIDIARY

                Consolidated Statements of Cash Flows, Continued



<TABLE>
<CAPTION>
                                                                        YEARS ENDED DECEMBER 31,
                                                           -----------------------------------------------------
                                                               1995                1996                 1997
                                                               ----                ----                 ----
<S>                                                        <C>                 <C>                 <C>
Cash flows from financing activities:
    Principal payments on notes payable                    $ (6,866,198)       $(50,970,385)       $ (39,000,000)
    Proceeds from notes payable                               2,400,000          86,244,059           52,499,999
    Proceeds from senior subordinated notes
      payable                                                        --                  --           97,250,000
    Proceeds from issuance of exchangeable preferred
      stock                                                          --                  --           95,376,592
    Payment of debt issuance costs                              (30,000)         (2,283,124)          (1,855,123)
    Principal payments on other long-term
      obligations                                              (412,066)           (776,107)            (735,077)
    Prepayment premium                                               --            (420,000)                  --
    Advances from (payments to) parent company                       --          12,367,070          (12,817,000)
    Capital contribution from parent company                         --          18,983,823           21,456,875
                                                           ------------        ------------        -------------
         Net cash provided by (used in) financing
            activities                                       (4,908,264)         63,145,336          212,176,266
                                                           ------------        ------------        -------------

Net increase (decrease) in cash and cash
      equivalents                                              (532,272)            583,091            6,096,625

Cash and cash equivalents, beginning of year                  1,537,547           1,005,275            1,588,366
                                                           ------------        ------------        -------------

Cash and cash equivalents, end of year                     $  1,005,275        $  1,588,366        $   7,684,991
                                                           ============        ============        =============
</TABLE>



See accompanying notes to consolidated financial statements.



                                     II-16
<PAGE>   52
                         CITADEL BROADCASTING COMPANY
                                 AND SUBSIDIARY

                   Notes to Consolidated Financial Statements



(1)    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       DESCRIPTION OF BUSINESS

       Citadel Broadcasting Company was formed August 21, 1991 as a Nevada
       corporation and is a wholly-owned subsidiary of Citadel Communications
       Corporation ("Citadel Communications"). Citadel License Inc. ("Citadel
       License") is a wholly-owned subsidiary of Citadel Broadcasting Company.
       Citadel Broadcasting Company and its subsidiary own and operate radio
       stations and hold Federal Communications Commission ("FCC") licenses in
       Arkansas, California, Colorado, Illinois, Montana, Nevada, New Mexico,
       Oregon, Pennsylvania, Rhode Island, Utah and Washington.

       PRINCIPLES OF CONSOLIDATION AND PRESENTATION

       The accompanying consolidated financial statements include Citadel
       Broadcasting Company and its wholly-owned subsidiary ("Company"). All
       significant intercompany balances and transactions have been eliminated
       in consolidation.

       USE OF ESTIMATES

       Management of the Company has made a number of estimates and assumptions
       relating to the reporting of assets and liabilities and the disclosure of
       contingent assets and liabilities to prepare these financial statements
       in conformity with generally accepted accounting principles. Actual
       results could differ from those estimates.

       CASH AND CASH EQUIVALENTS

       The Company considers all highly liquid investments with a maturity of
       three months or less at the time of purchase to be cash equivalents.

       DERIVATIVE FINANCIAL INSTRUMENTS

       The Company uses an interest rate swap agreement to hedge the effects of
       fluctuations in interest rates. Amounts receivable or payable under the
       interest rate swap agreement are recognized as interest expense or
       income.

       PROPERTY AND EQUIPMENT

       Assets acquired in business combinations accounted for using the purchase
       method of accounting are recorded at their estimated fair value upon
       acquisition as determined by management or by independent appraisal.
       Property and equipment additions are recorded at cost. Depreciation of
       property and equipment is determined using the straight-line method over
       the estimated useful lives of the related assets.



                                     II-17
<PAGE>   53
                         CITADEL BROADCASTING COMPANY
                                 AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued



       INTANGIBLE ASSETS

       Intangible assets with determinable lives have been allocated among
       various categories of customer-based or market-based intangibles at their
       estimated fair value upon acquisition as determined by management or by
       independent appraisal. Goodwill represents the excess of cost over the
       fair value of tangible assets and intangible assets with determinable
       lives. Amortization is provided on the straight-line method over the
       estimated useful lives of the related assets (see note 5). The Company's
       policy is to write-off intangible assets once they have become fully
       amortized. The useful lives and recoverability of intangible assets are
       evaluated at least annually. This evaluation encompasses the undiscounted
       historical broadcast cash flow of each station and existing broadcast
       cash flow multiples for sales of similar radio properties to estimate the
       potential selling price for the station and, therefore, recoverability of
       the assets.

       BARTER TRANSACTIONS

       Barter contracts are agreements entered into under which the Company
       provides commercial air time in exchange for goods and services used
       principally for promotional, sales and other business activities. An
       asset and liability are recorded at the fair market value of the goods or
       services received. Revenue is recorded and the liability is relieved when
       commercials are broadcast and expense is recorded and the asset is
       relieved when goods or services are used.

       INCOME TAXES

       The Company utilizes the asset and liability method of accounting for
       income taxes as if it were a separate taxpayer. Under the asset and
       liability method, deferred tax assets and liabilities are recognized for
       the future tax consequences attributable to differences between the
       financial statement carrying amounts of existing assets and liabilities
       and their respective tax bases. Deferred tax assets and liabilities are
       measured using enacted tax rates expected to apply to taxable income in
       the years in which those temporary differences are expected to be
       recovered or settled. The effect on deferred tax assets and liabilities
       of a change in tax rates is recognized in income in the period that
       includes the enactment date. The Company is included in the consolidated
       tax returns of its parent company, Citadel Communications.




                                     II-18
<PAGE>   54
                         CITADEL BROADCASTING COMPANY
                                 AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued



       INCOME (LOSS) PER SHARE OF COMMON STOCK

       In February 1997, the Financial Accounting Standards Board ("FASB")
       issued SFAS No. 128, "Earnings per Share" ("SFAS No. 128"). This
       statement establishes standards for computing and presenting earnings per
       share ("EPS"), and supersedes APB Opinion No. 15. The Statement replaces
       primary EPS with basic EPS and requires dual presentation of basic and
       diluted EPS. All prior period EPS data has been restated to conform to
       SFAS No. 128. The basic and diluted per share effect of the extraordinary
       loss on extinguishment of debt in 1996 was $(44) and $(44), respectively.

       REVENUE RECOGNITION

       Revenue is recognized as commercials are broadcast.

       LOCAL MARKETING AGREEMENTS

       Fees earned or incurred pursuant to various local marketing agreements
       ("LMA") are recognized as gross broadcasting revenue or station operating
       expenses, respectively, in the period that the services performed or
       received occur. The Company's consolidated financial statements include
       broadcasting revenues and station operating expenses of stations marketed
       under LMA's.

       JOINT SALES AGREEMENTS

       Fees earned or incurred pursuant to various joint sales agreements
       ("JSA") are recognized pursuant to the terms in the various agreements
       under one of two methods: (a) the JSA fee is recognized as a reduction to
       sales expense (included in station operating expenses in the Company's
       consolidated statement of operations), or (b) the Company is allocated a
       percentage of the JSA stations' net revenue and operating expenses and
       these amounts are recognized as broadcasting revenue and station
       operating expenses, respectively, in the period earned or incurred.

       BUSINESS AND CREDIT CONCENTRATIONS

       In the opinion of management, credit risk with respect to receivables is
       limited due to the large number of customers and the geographic
       diversification of the Company's customer base. The Company performs
       credit evaluations of its customers and believes that adequate allowances
       for any uncollectible receivables are maintained. At December 31, 1996
       and 1997, no receivable from any customer exceeded five percent of gross
       accounts receivable nor did any customer's account exceed more than ten
       percent of net broadcasting revenue for any of the periods presented.

       LONG-LIVED ASSETS

       In March 1995, the FASB issued SFAS No. 121, "Accounting for the
       Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
       Of" ("SFAS No. 121"), which requires impairment losses to be recorded on
       long-lived assets used in operations when indicators of impairment are
       present and the undiscounted cash flows estimated to be generated by
       those assets are less than the assets' carrying amount. SFAS No. 121 also
       addresses the accounting for long-lived assets that are expected to be
       disposed of. The Company adopted SFAS No. 121 in the first quarter of the
       year ended December 31, 1996 and this adoption did not have a material
       impact on the consolidated financial statements.



                                     II-19
<PAGE>   55
                         CITADEL BROADCASTING COMPANY
                                 AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued



       RECLASSIFICATIONS

       Certain 1995 and 1996 balances have been reclassified to conform to the
       1997 presentation.


(2)    ACQUISITIONS AND DISPOSITIONS

       1995 DISPOSITIONS

       On February 15, 1995, the Company sold the assets of KBOZ-AM, KBOZ-FM and
       KATH-FM, and KCTR-FM, KDWG-AM, and KKBR-FM in Bozeman and Billings,
       Montana, respectively, for $5,400,000. A gain of approximately $800,000
       was recognized on the sale.

       1996 ACQUISITIONS

       During 1996, the Company acquired the assets of five FM and one AM radio
       stations from various parties as follows:

<TABLE>
<CAPTION>
            ACQUISITION                                                          MARKET                      PURCHASE
                DATE                         STATION                             SERVED                       PRICE
                ----                         -------                             ------                       -----
       <S>                        <C>                                <C>                                  <C>
       June 28, 1996              KHFM-FM/KHFN-AM                    Albuquerque, NM                      $    5,500,000
       June 28, 1996              KASY-FM                            Albuquerque, NM                           5,000,000
       June 28, 1996              KDJK-FM                            Modesto, CA                               5,010,000
       October 1, 1996            KKLI-FM                            Colorado Springs, CO                      3,450,000
       October 9, 1996            KRST-FM                            Albuquerque, NM                          20,000,000
</TABLE>

       The acquisitions were accounted for by the purchase method of accounting
       and, accordingly, the purchase price was allocated to current assets as
       well as noncurrent tangible and intangible assets based on their fair
       values as determined by management or by independent appraisal. The
       acquisitions were funded with the proceeds from new notes payable and a
       securities purchase and exchange agreement. The purchase price, including
       acquisition costs of $782,881, was allocated as follows:

<TABLE>
<CAPTION>
           <S>                                                                                            <C>
           Property and equipment                                                                         $    2,446,594
           Intangible assets                                                                                  37,135,955
           Accounts receivable                                                                                   160,332
                                                                                                          --------------

                                                                                                          $   39,742,881
                                                                                                          ==============
</TABLE>



                                     II-20
<PAGE>   56
                         CITADEL BROADCASTING COMPANY
                                 AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued



       1997 ACQUISITIONS AND PENDING DISPOSITIONS

       ACQUISITIONS

       During 1997, the Company acquired the assets of 44 FM and 17 AM radio
       stations from various parties as follows:

<TABLE>
<CAPTION>
                ACQUISITION                                                           MARKET                   PURCHASE
                    DATE                             STATION                          SERVED                    PRICE
                    ----                             -------                          ------                    -----
        <S>                             <C>                                  <C>                             <C>
        January 1, 1997                 KCTR-FM/KDWG-AM/                     Billings, MT                    $  26,008,357
                                        KKBR-FM/KBBB-FM/
                                        KMHK-FM
                                        KUGN-AM/KUGN-FM/                     Eugene, OR
                                        KEHK-FM
                                        KAKT-FM/KBOY-FM/                     Medford, OR
                                        KCMX-AM/KCMX-FM/
                                        KTMT-AM/KTMT-FM
                                        KEYW-FM/KFLD-AM/                     Tri-Cities, WA
                                        KORD-FM/KXRX-FM
        February 14, 1997               KENZ-FM                              Salt Lake City, UT                  5,590,119
        April 10, 1997                  KBER-FM                              Salt Lake City, UT                  7,760,000
        July 3, 1997                    WPRO-AM/WPRO-FM/                     Providence, RI                    115,795,216
                                        WSKO-AM/WWLI-FM
                                        WQCY-FM/WMOS-FM/                     Quincy, IL
                                        WTAD-AM/WBRJ-FM
                                        WQWK-FM/WIKN-FM/                     State College, PA
                                        WRSC-AM/WBLF-AM
                                        WGLU-FM/WQKK-FM                      Johnstown, PA
                                        WRKZ-FM                              Harrisburg, PA
                                        WQXA-AM/WQXA-FM                      York, PA
                                        WCTO-FM/WEST-AM                      Allentown, PA
                                        WMGS-FM/WARM-AM/                     Wilkes-Barre, PA
                                        WZMT-FM/WAZL-AM
        July 17, 1997                   KNHK-FM                              Reno, NV                            1,300,000
        September 25, 1997              KTHK-FM                              Tri-Cities, WA                        600,500
        September 29, 1997              WXEX-FM, Edgenet                     Providence, RI                      4,250,000
        October 15, 1997                KARN-AM/KARN-FM/                     Little Rock, AR                     9,000,000
                                        KKRN-FM/KRNN-AM/
                                        KAFN-FM
        October 15, 1997                KIPR-FM                              Little Rock, AR                     5,544,506
        October 15, 1997                Land and Buildings                   Little Rock, AR                     3,001,537
        October 15, 1997                KOKY-FM                              Little Rock, AR                     7,354,860
        October 21, 1997                WLEV-FM                              Allentown, PA                      23,000,000
        October 24, 1997                KBEE-FM/KFNZ-AM                      Salt Lake City, UT                  2,867,092
        November 4, 1997                KLAL-FM                              Little Rock, AR                     1,500,000
        November 4, 1997                KURB-FM/KVLO-FM/                     Little Rock, AR                    12,000,000
                                        KLIH-FM
        November 18, 1997               WHKK-FM                              Providence, RI                      3,999,310
</TABLE>




                                     II-21
<PAGE>   57
                         CITADEL BROADCASTING COMPANY
                                 AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued



       The acquisitions were accounted for by the purchase method of accounting
       and, accordingly, the purchase price was allocated to current assets as
       well as noncurrent tangible and intangible assets based on their fair
       values as determined by management or by independent appraisal. The
       acquisitions were funded with the proceeds from new notes payable and a
       securities purchase and exchange agreement. The purchase price, including
       acquisition costs of $2,928,956, was allocated as follows:

<TABLE>
       <S>                                                      <C>
       Cash                                                     $     877,693
       Accounts receivable                                          4,473,441
       Prepaid expenses                                               706,402
       Property and equipment                                      21,203,071
       Intangible assets                                          208,964,226
       Other assets                                                    10,100
       Accounts payable and accrued liabilities                    (3,084,549)
       Current maturities of other long-term obligations             (649,931)
                                                                -------------

                                                                $ 232,500,453
                                                                =============
</TABLE>


       PRO FORMA

       The following summary, prepared on a pro forma basis, presents the
       results of operations as if all the above noted radio stations had been
       acquired as of January 1, 1996, after including the impact of the
       amortization of intangible assets, depreciation of fixed assets and
       increased interest expense on the acquisition debt since the date of
       acquisition.

<TABLE>
<CAPTION>
                                                     UNAUDITED
                                         ------------------------------------
                                           YEAR ENDED            YEAR ENDED
                                           DECEMBER 31,          DECEMBER 31,
                                             1996                   1997
                                             ----                   ----
       <S>                               <C>                    <C>
       Net broadcasting revenue          $ 106,683,000          $ 117,154,000
       Operating income                      2,212,000              6,988,000
       Net loss                            (13,825,000)           (12,990,000)
</TABLE>

       The pro forma results are not necessarily indicative of what actually
       would have occurred if the radio stations had been owned for the entire
       periods presented. In addition, they are not intended to be a projection
       of future results and do not reflect any synergies that might be achieved
       from combined operations.

       PENDING DISPOSITIONS

       On September 29, 1997, the Company entered into an asset purchase
       agreement to sell substantially all of the assets of radio stations
       WQKK-FM and WGLU-FM in Johnstown, Pennsylvania and radio stations
       WRSC-AM, WQWK-FM, WBLF-AM and WIKN-FM in State College, Pennsylvania. The
       disposition is pending approval by the Federal Communications Commission.



                                     II-22
<PAGE>   58
                         CITADEL BROADCASTING COMPANY
                                 AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued



(3)    NOTE RECEIVABLE

       During 1996 the Company made various advances to Deschutes, a non-related
       party, to allow Deschutes to acquire various radio stations and payoff
       existing debt, in conjunction with the acquisition of Deschutes by
       Citadel Communications. These advances were funded through borrowings the
       Company made on the Senior Credit Facility and advances from its parent
       company. As of December 31, 1996, $18,251,402 was due under these
       advances; of this amount, approximately $8,600,000 was included in note
       payable to parent company.

       During 1997 the Company acquired Deschutes in a stock-based acquisition.
       The note receivable at December 31, 1996 was included in the purchase
       price allocation during 1997, resulting in the elimination of the note
       receivable in 1997.


(4)    PROPERTY AND EQUIPMENT

       Property and equipment at December 31, 1996 and 1997 consists of the
       following:

<TABLE>
<CAPTION>

                                                                                                ESTIMATED
                                                       1996                   1997             USEFUL LIFE
                                                       ----                   ----             -----------

       <S>                                         <C>                    <C>                    <C>
       Land                                        $    569,638           $  3,269,025              --
       Buildings and improvements                     1,217,287              5,726,701           5-30 years
       Transmitters, towers and equipment            15,509,084             29,053,049           5-15 years
       Office furniture and equipment                 3,268,426              5,615,833           3-5 years
       Construction in progress                         577,289                736,620              --
                                                   ------------           ------------
                                                     21,141,724             44,401,228
       Less accumulated depreciation and
         amortization                                (5,933,155)            (9,158,944)
                                                   ------------           ------------

                                                   $ 15,208,569           $ 35,242,284
                                                   ============           ============
</TABLE>



                                     II-23
<PAGE>   59
                         CITADEL BROADCASTING COMPANY
                                 AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued



(5)    INTANGIBLE ASSETS

       Intangible assets at December 31, 1996 and 1997 consist of the following:

<TABLE>
<CAPTION>
                                                                                                     ESTIMATED
                                                         1996                   1997                USEFUL LIFE
                                                         ----                   ----                -----------

           <S>                                       <C>                    <C>                   <C>
           Goodwill                                  $  28,925,936          $ 119,226,136             15 years
           Broadcast licenses                           26,262,983            162,626,295             15 years
           Noncompetition agreements                     5,168,854              1,858,593            3-5 years
           Local marketing agreements                    1,909,998                     --              5 years
           Presold commercials                             496,380                     --         less than 1 year
           Premium lease space                             161,787                161,787           1-13 years
           On-air talent contracts                       1,383,323                     --            1-3 years
           Subcarrier antenna income                       219,162                100,878            1-4 years
           Programming contracts                           503,000                  3,000              3 years
                                                     -------------          -------------
                                                        65,031,423            283,976,689
           Less accumulated amortization               (13,229,588)           (15,287,173)
                                                     -------------          -------------

                                                     $  51,801,835          $ 268,689,516
                                                     =============          =============
</TABLE>



(6)    ACCRUED LIABILITIES

       Accrued liabilities at December 31, 1996 and 1997 consist of the
       following:

<TABLE>
<CAPTION>
                                                          1996                   1997
                                                          ----                   ----

           <S>                                        <C>                    <C>
           Interest                                   $        --            $ 5,118,735
           Music license fees                             245,715                209,734
           Compensation and commissions                 1,237,392              2,082,492
           Other                                          818,609              1,649,168
                                                      -----------            -----------

                                                      $ 2,301,716            $ 9,060,129
                                                      ===========            ===========
</TABLE>



                                     II-24
<PAGE>   60

                         CITADEL BROADCASTING COMPANY
                                 AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued



(7)    NOTES PAYABLE

       Notes payable at December 31, 1996 and 1997 consist of the following:


<TABLE>
<CAPTION>
                                                                                 1996                   1997
                                                                                 ----                   ----
           <S>                                                                <C>                     <C>
           Note payable to financial institution (Senior Credit
             Facility), interest payable at the LIBOR rate
             (5.78% at December 31, 1996 and 5.72% at
             December 31, 1997) plus 2.75%, principal due only
             when required by the loan agreement, in quarterly
             amounts through September 30, 2003, at
             which time all outstanding amounts are due in full,
             subject to optional prepayments                                  $ 77,584,060           $ 90,084,059
           Less current maturities                                               2,500,000                     --
                                                                              ------------           ------------

           Long-term portion                                                  $ 75,084,060           $ 90,084,059
                                                                              ============           ============
</TABLE>

       On July 3, 1997, the Company entered into a revised financing agreement
       (the "Senior Credit Facility") which allows for revolving loan borrowings
       up to a maximum of $150,000,000. Per the agreement, this amount is
       subject to reduction starting December 31, 1997 and continuing quarterly
       thereafter. The maximum available loan commitment at December 31, 1997
       was $147,500,000. The Company must pay, on a quarterly basis, an unused
       commitment fee equal to the maximum revolving loan commitment less the
       average of the outstanding principal balance for the preceding quarter,
       multiplied by .125% or if the total leverage ratio (as defined in the
       agreement) calculated as of the last day of the preceding quarter was
       less than 4.5, the commitment fee is .09375%. Commitment fees paid in
       1996 and 1997 were $74,931 and $380,295, respectively. The agreement
       requires that the Company enter into an interest rate swap agreement for
       a period of at least two years. See note 21 for information on the
       interest rate swap agreement. Principal payments are not scheduled to
       commence until the outstanding principal balance exceeds the maximum
       loan commitment adjusted by quarterly mandatory commitment reductions (as
       defined in the agreement).

       The Senior Credit Facility is secured by a pledge of property and
       equipment and the common stock of the Company. Various debt covenants
       place restrictions on, among other things, indebtedness, acquisitions,
       dividends, capital expenditures and the sale or transfer of assets and
       provide for certain minimum operating cash flows for the Company. The
       debt covenant provisions also include certain financial ratio covenants,
       the most restrictive in nature being; initial total debt to adjusted
       operating cash flow < 6.75 times, initial total senior debt to adjusted
       operating cash flow < 6.75 times and consolidated operating cash flow to
       interest expense and cash dividends on the Exchangeable Preferred
       Stock > 1.75 times. At December 31, 1997, the Company was in compliance
       with all debt covenant provisions.

       The required aggregate principal payments as of December 31, 1997,
       excluding the consideration of any payments required based upon annual
       excess cash flow (as defined), are as follows:

<TABLE>
                               <S>                                        <C>
                               2001                                       $ 23,209,059
                               2002                                         30,500,000
                               Thereafter                                   36,375,000
                                                                          ------------

                                                                          $ 90,084,059
                                                                          ============
</TABLE>



                                     II-25
<PAGE>   61
                         CITADEL BROADCASTING COMPANY
                                 AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued



(8)    SENIOR SUBORDINATED NOTES PAYABLE

       On July 3, 1997, the Company completed the issuance of $101 million of
       10 1/4% Senior Subordinated Notes ("Notes") due 2007. Interest is payable
       semi-annually. The Notes will be redeemable at the option of the Company,
       in whole or in part, at any time on or after July 1, 2002. In addition,
       at any time prior to July 1, 2000, subject to certain conditions, the
       Company may, at its option, redeem a portion of the Notes with the net
       proceeds of one or more Public Equity Offerings (as defined in the
       indenture governing the Notes), at a redemption price equal to 110.25% of
       the principal amount thereof, plus accrued and unpaid interest, if any,
       to the date of redemption. The Notes are shown net of unamortized
       discount of $2,668,883 at December 31, 1997.

       The indenture governing the Notes contains certain restrictive covenants,
       including limitations which restrict the ability of the Company to incur
       additional debt, incur liens, pay dividends or make certain other
       restricted payments, consummate certain asset sales, enter into certain
       transactions with affiliates, merge or consolidate with any other person
       or sell, assign, transfer, lease, convey or otherwise dispose of all or
       substantially all of its assets. At December 31, 1997, the Company was in
       compliance with all debt covenants.


(9)    OTHER LONG-TERM OBLIGATIONS

       Other long-term obligations at December 31, 1996 and 1997 consist of the
       following:

<TABLE>
<CAPTION>
                                                                                  1996                   1997
                                                                                  ----                   ----
       <S>                                                                     <C>                    <C>
       Various noncompetition and consulting agreements
           with the sellers of radio stations acquired, due at
           various dates through July 2003, face amount of
           $486,113 and $437,503 at December 31, 1996 and
           1997, respectively, non-interest bearing with
           interest imputed at 8.5% to 9.0%, net of discount
           of $54,540 and $29,640 in 1996 and 1997,
           respectively                                                        $   431,573            $   407,863

       Prepayment premium on extinguishment of debt (a)                            881,818                770,779

       Capital leases                                                                   --                105,359
                                                                               -----------            -----------
                                                                                 1,313,391              1,284,001
       Less current maturities                                                     435,791                271,352
                                                                               -----------            -----------

       Long-term portion                                                       $   877,600            $ 1,012,649
                                                                               ===========            ===========
</TABLE>



                                     II-26
<PAGE>   62
                         CITADEL BROADCASTING COMPANY
                                 AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued



       The required aggregate principal payments as of December 31, 1997,
       excluding the amortization of debt discount are as follows:

<TABLE>
           <S>                                        <C>
           1998                                       $    271,352
           1999                                            321,843
           2000                                            138,648
           2001                                            132,363
           2002                                            127,694
           Thereafter                                      292,101
                                                      ------------

                                                      $  1,284,001
                                                      ============
</TABLE>

       (a)    On October 9, 1996, the Company extinguished its long-term debt of
              $31,310,385, payable to a financial institution, and its note
              payable to a related party of $7,000,000. The early retirement of
              the long-term debt resulted in a $1,769,000 extraordinary loss due
              to prepayment premiums and the write-off of debt issuance costs.
              The prepayment premium can be reduced on a quarterly basis
              depending on the outstanding balance of the Senior Credit
              Facility. The balance of the prepayment premium is due upon the
              repayment of the Senior Credit Facility.


(10)   LEASE COMMITMENTS

       The Company leases certain tower sites, transmitters and equipment,
       automobiles, office equipment and an airplane. The following is a
       schedule by year of future minimum rental payments required under
       operating leases that have an initial or remaining noncancelable lease
       term in excess of one year as of December 31, 1997:

<TABLE>
           <S>                                        <C>
           1998                                       $  2,030,301
           1999                                          1,939,314
           2000                                          1,874,159
           2001                                          1,859,330
           2002                                          1,457,545
           Thereafter                                    5,357,157
                                                      ------------

                                                      $ 14,517,806
                                                      ============
</TABLE>


       Total rental expense was $744,395, $1,101,237 and $1,971,774 for the
       years ended December 31, 1995, 1996 and 1997, respectively.



                                     II-27
<PAGE>   63
                         CITADEL BROADCASTING COMPANY
                                 AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued



(11)   INCOME TAXES

       The Company is included in the consolidated tax returns of Citadel
       Communications and calculates its tax provision or benefit as though it
       filed a separate return. For the years ended December 31, 1995, 1996 and
       1997, the Company generated a net loss for both financial reporting and
       income tax purposes; therefore, no current tax provision has been
       recorded. The deferred income tax benefit in 1997 represents the reversal
       of deferred tax liabilities established at the date of acquisition due to
       differences in the tax basis and the financial statement carrying amounts
       of intangibles and fixed assets acquired in stock-based acquisitions. At
       December 31, 1997, Citadel Communications has net operating loss
       carryforwards for federal income tax purposes of approximately
       $18,800,000 which begin to expire in 2007.

       On June 28, 1996, Citadel Communications underwent an ownership change in
       accordance with Section 382 of the Internal Revenue Code. Due to this
       change, the net operating losses of Citadel Communications are subject to
       limitation in future years. The approximate amount of the net operating
       loss which may be used in any one year is $4,400,000.

       The reconciliation of the expected income tax benefit calculated at the
       U.S. federal statutory rate to the actual income tax benefit per the
       financial statements for the years ended December 31, 1995, 1996 and 1997
       is as follows:

<TABLE>
<CAPTION>
                                                      1995               1996              1997
                                                      ----               ----              ----
      <S>                                          <C>                <C>              <C>
      U.S. federal statutory rate applied to
        the loss before income taxes and
        extraordinary item                         $(1,487,717)       $(679,046)       $(1,856,480)
      Amortization of goodwill                          16,563          186,844            425,344
      Nondeductible meals and
        entertainment                                   19,786           31,601             51,495
      Net operating losses providing no
        current benefit for federal income
        tax purposes                                 1,467,025          458,101            680,040
      Other                                            (15,657)           2,500            (69,972)
                                                   -----------        ---------        -----------

      Deferred income tax benefit                  $        --        $      --        $  (769,573)
                                                   ===========        =========        ===========
</TABLE>



                                     II-28
<PAGE>   64

                         CITADEL BROADCASTING COMPANY
                                 AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued



       The tax effects of temporary differences that give rise to significant
       portions of the deferred tax assets, liabilities and the valuation
       allowance are as follows:

<TABLE>
<CAPTION>
                                                                                          1996                   1997
                                                                                          ----                   ----
           <S>                                                                         <C>                   <C>
           Deferred tax assets:
             Receivables, principally due to valuation allowances                      $    248,422          $     323,577
             Net operating loss carryforward                                              6,720,659              7,520,705
             Accrued liabilities not deductible                                              18,465                193,423
                                                                                       ------------          -------------
                     Total deferred tax assets                                            6,987,546              8,037,705

             Valuation allowance                                                         (4,270,206)            (5,109,187)
                                                                                       ------------          -------------
                     Net deferred tax assets                                              2,717,340              2,928,518
                                                                                       ------------          -------------

           Deferred tax liabilities:
             Property and equipment, principally due to accelerated
               depreciation                                                              (1,883,269)            (2,928,218)
             Intangible assets; differences in book and tax
               amortization                                                                (834,071)                  (300)
             Differences between the tax basis and fair value of
               intangibles and fixed assets acquired                                     (1,585,333)           (23,270,338)
                                                                                       ------------          -------------
                     Total deferred tax liabilities                                      (4,302,673)           (26,198,856)
                                                                                       ------------          -------------

           Net deferred tax liability                                                  $ (1,585,333)         $ (23,270,338)
                                                                                       ============          =============
</TABLE>

       The valuation allowance was decreased by $2,320,699 in 1996 and increased
       by $838,981 in 1997. The Company has established a valuation allowance
       for the amount of the net deferred tax asset which management has
       determined that it is more likely than not will not be realized.


(12)   EXCHANGEABLE PREFERRED STOCK

       On July 3, 1997, the Company completed the sale of 1,000,000 shares of
       Series A Exchangeable Preferred Stock (Exchangeable Preferred Stock) for
       $100 million. The Exchangeable Preferred Stock has a liquidation
       preference of $100 per share, plus accumulated and unpaid dividends.
       Dividends on the Exchangeable Preferred Stock accrue at the rate of
       13 1/4% per annum. All dividends will be payable semi-annually on January
       1 and July 1 of each year, commencing January 1, 1998. On or prior to
       July 1, 2002, dividends are payable in additional shares of Exchangeable
       Preferred Stock having an aggregate liquidation preference equal to the
       amount of such dividends, or, at the option of the Company, in cash.
       Thereafter, all dividends will be payable only in cash. The Company will
       be required to redeem the Exchangeable Preferred Stock on July 1, 2009
       (subject to the legal availability of funds therefor) at a redemption
       price equal to the liquidation preference thereof, plus accumulated and
       unpaid dividends, if any, to the date of redemption.

       The Exchangeable Preferred Stock is presented net of unamortized issuance
       costs of $4,541,858, and includes accrued dividends at December 31, 1997
       of $6,551,389, which were paid in 65,514 additional shares of
       exchangeable preferred stock on January 1, 1998.



                                     II-29
<PAGE>   65

                         CITADEL BROADCASTING COMPANY
                                 AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued



       The Certificate of Designation for the Exchangeable Preferred Stock
       contains certain covenants, which, among other things, restrict the
       ability of the Company with respect to: (i) the incurrence of additional
       debt; (ii) restricted payments; (iii) issuances and sales of stock of
       certain subsidiaries; and (iv) consolidations, mergers or sales of
       assets. The Company was in compliance with these covenants at December
       31, 1997.


(13)   CITADEL COMMUNICATIONS FINANCIAL DATA

       The operations of Citadel Communications (the parent company) include the
       issuance of convertible preferred stock and obtaining a credit facility
       including a revolving line of credit of $20 million, the proceeds of
       which were advanced to the Company. Interest was charged on these
       advances in an amount equal to the interest costs of Citadel
       Communications. In conjunction with the Company's refinancing of Notes,
       the revolving line of credit was terminated in 1997. There are no other
       costs or expenses of Citadel Communications.

       Advances from Citadel Communications, other than those representing draws
       on the revolving line of credit of Citadel Communications, are recorded
       as capital contributions from the parent company and are presented as
       additional paid-in capital in the consolidated balance sheets.

       On January 1, 1997, in a non-cash transaction, the Company transferred
       $9,123,310 of debt under the Senior Credit Facility to Deschutes which
       reduced the corresponding note receivable. In addition, on June 20, 1997,
       Citadel Communications transferred the ownership of Deschutes to the
       Company. Interest paid to Citadel Communications by the Company for the
       year ended December 31, 1997 amounted to $568,534.

       The following is summary consolidated financial data for Citadel
       Communications and its subsidiaries, including the Company:

<TABLE>
<CAPTION>
                                                                                                 DECEMBER 31,
                                                                                     ------------------------------------
                                                                                         1996                   1997
                                                                                         ----                   ----
            <S>                                                                      <C>                    <C>
            Consolidated Balance Sheets:
              Current assets                                                         $  14,502,740          $  35,926,371
              Property and equipment, net                                               15,208,569             35,242,284
              Note receivable                                                           18,251,402                     --
              Intangible assets, net                                                    51,801,835            268,689,516
              Other assets                                                               2,550,778              4,314,123
                                                                                     -------------          -------------

                      Total assets                                                   $ 102,315,324          $ 344,172,294
                                                                                     =============          =============

              Notes payable to related parties                                       $  11,817,000          $          --
              Other current liabilities                                                  6,880,942             13,332,675
                                                                                     -------------          -------------
                      Total current liabilities                                         18,697,942             13,332,675

              Notes payable, less current maturities                                    75,084,060             90,084,059
              Senior subordinated notes payable                                                 --             98,331,117
              Other liabilities                                                          2,462,933             24,282,987
              Exchangeable preferred stock                                                      --            102,009,531
              Shareholders' equity                                                       6,070,389             16,131,925
                                                                                     -------------          -------------

                      Total liabilities and shareholders' equity                     $ 102,315,324          $ 344,172,294
                                                                                     =============          =============
</TABLE>



                                     II-30
<PAGE>   66

                         CITADEL BROADCASTING COMPANY
                                 AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued


<TABLE>
<CAPTION>

                                                                                              DECEMBER 31,
                                                                                  -----------------------------------
                                                                                     1996                   1997
                                                                                     ----                   ----
            <S>                                                                   <C>                   <C>
            Consolidated Statements of Operations:
              Net broadcasting revenue                                            $ 45,412,806          $  89,803,270

              Operating income                                                    $  3,744,323          $   6,367,016
              Interest expense                                                       6,155,472             12,872,515
              Other (income) expense, net                                             (413,955)              (451,173)
                                                                                  ------------          -------------
              Loss before income taxes and extraordinary item                       (1,997,194)            (6,054,326)
              Deferred income tax (benefit)                                                 --               (769,573)
              Extraordinary loss on extinguishment of debt                          (1,769,000)                    --
                                                                                  ------------          -------------

            Net loss                                                              $ (3,766,194)         $  (5,284,753)
                                                                                  ============          =============

            Dividend requirement for exchangeable preferred stock                 $         --          $   6,632,939
                                                                                  ============          =============

</TABLE>


(14)   CITADEL LICENSE FINANCIAL DATA

       The operations of Citadel License, a wholly-owned subsidiary of the
       Company, include holding FCC licenses for all stations owned by the
       Company and the amortization of these licenses. Citadel License has
       guaranteed the Senior Subordinated Notes (see note 8). The guarantee is
       full, unconditional and joint and several. The separate financial
       statements of Citadel License have not been presented because management
       of the Company has determined they would not be material to investors.
       There are no costs or expenses of Citadel License that are borne by
       Citadel Broadcasting Company.




                                     II-31
<PAGE>   67

                         CITADEL BROADCASTING COMPANY
                                 AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued



       The following is summary financial data for Citadel License:

<TABLE>
<CAPTION>

                                                                                 DECEMBER 31,
                                                                     ------------------------------------
                                                                         1996                   1997
                                                                         ----                   ----
       <S>                                                           <C>                    <C>
       Balance Sheets:
         Intangible assets, net (broadcast licenses)                 $ 24,035,920           $ 137,073,551
         Other assets                                                       5,147                   2,048
                                                                     ------------           -------------

                 Total assets                                        $ 24,041,067           $ 137,075,599
                                                                     ============           =============

         Shareholder's equity                                          24,041,067             137,075,599
                                                                     ------------           -------------

                 Total liabilities and shareholder's equity          $ 24,041,067           $ 137,075,599
                                                                     ============           =============

       Statements of Operations:
         Amortization expense                                             991,901               5,267,872
                                                                     ------------           -------------

                 Net loss                                            $   (991,901)          $  (5,267,872)
                                                                     ============           =============
</TABLE>


       At present, Citadel License is the only subsidiary of the Company.


(15)   DEFINED CONTRIBUTION PLAN

       The Company has a defined contribution 401(k) plan for all employees who
       are at least 21 years of age and have worked at least 1,000 hours in the
       year. Under the 401(k) plan, employees can contribute up to 20% of their
       compensation, subject to the maximum contribution allowed by the Internal
       Revenue Code. Participants vest immediately in their contributions. The
       Company may make discretionary contributions as approved by the Board of
       Directors. Participants' rights to amounts contributed by the Company
       vest on a graded schedule over a five-year period. During 1995, 1996, and
       1997 the Company contributed $133,215, $143,192 and $298,623,
       respectively, which represented a two percent matching of employee
       contributions to the 401(k) plan.


(16)   TRANSACTIONS WITH RELATED PARTIES

       On December 29, 1995, the Company entered into a sale-leaseback
       transaction with the principal shareholder of Citadel Communications. The
       Company sold an airplane for its fair value of $1,275,000 to the
       shareholder resulting in a loss of $74,327. The operating lease commenced
       on December 29, 1995 with monthly payments of $17,250 due through
       December 31, 2001.




                                     II-32
<PAGE>   68

                         CITADEL BROADCASTING COMPANY
                                 AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued



(17)   LOCAL MARKETING AGREEMENTS

       At December 31, 1997, the Company has local marketing agreements to
       market stations WBHT-FM, WKQV-FM, WEMR-AM, WEMR-FM, WSGD-FM, WDLS-FM and
       WCDL-AM in Wilkes-Barre/Scranton, Pennsylvania and stations KIZN-FM,
       KZMG-FM, KKGL-FM, KQFC-FM and KBOI-AM in Boise, Idaho. The agreements
       principally provide for the Company to supply specified programming to
       the brokered stations and enable the sales staff of the Company to sell
       advertising time on the stations for fixed fees to be paid by the
       Company. The agreements also provide the Company with the option to
       purchase the stations. The Company's financial statements include the
       broadcasting revenue and station operating expenses of the brokered
       stations.

       The local marketing agreements enable the Company to extend or terminate
       the agreements at the Company's option through August 1, 2002. The fees
       paid under the local marketing agreements amounted to $350,000,
       $1,414,527 and $1,936,139 for the years ended December 31, 1995, 1996 and
       1997, respectively.


(18)   JOINT SALES AGREEMENTS

       On January 15, 1996, the Company entered into a joint sales agreement
       (JSA) to sell advertising for radio stations KEYF-AM/FM, KUDY-AM and
       KKZX-FM in Spokane, Washington and radio stations KVOR-AM, KSPZ-FM,
       KTWK-AM, and KVUU-FM in Colorado Springs, Colorado. As stated in the JSA
       agreement, JSA revenue is calculated as 60% of the broadcast cash flows
       of these radio stations and all Company owned radio stations in these
       markets, with the exception of KKLI in Colorado Springs which is not
       included in the JSA calculation.

       On April 22, 1996, the Company entered into a JSA for radio station
       KENZ-FM in Salt Lake City, Utah. The Company's financial statements
       include all sales expenses for the station as well as revenue for the JSA
       fee calculated at 30% of net revenue of the station. On February 14, 1997
       the Company acquired KENZ-FM.

       On July 3, 1997, the Company acquired all of the issued and outstanding
       capital stock of Tele-Media Broadcasting Company ("Tele-Media"). As a
       result of this acquisition, the Company assumed a Tele-Media JSA for
       radio station WKQV-AM in Wilkes-Barre/Scranton, Pennsylvania. As stated
       in the JSA agreement, JSA revenue is calculated as the sum of (i) a base
       monthly payment of $5,000, and (ii) an additional monthly fee ranging
       from 5% to 8% of revenues (as defined in the JSA agreement) based on
       monthly revenues of WKQV-AM and of its simulcast station, WARM-AM.


(19)   SUPPLEMENTAL FINANCIAL INFORMATION

       The Company paid cash of $5,237,240, $7,065,546 and $6,703,052 for
       interest for the years ended December 31, 1995, 1996 and 1997,
       respectively.

       Barter revenue included in gross broadcasting revenue and barter expenses
       included in station operating expenses amounted to $3,087,871, $3,335,024
       and $7,388,471, and $3,214,284, $3,029,665 and $7,062,822, for the years
       ended December 31, 1995, 1996 and 1997, respectively.




                                     II-33
<PAGE>   69

                         CITADEL BROADCASTING COMPANY
                                 AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued



       A summary of additions and deductions related to the allowance for
       doubtful accounts receivable for the years ended December 31, 1995, 1996
       and 1997 follows:

<TABLE>
<CAPTION>
                                                     BALANCE AT                                                 BALANCE AT
                                                    BEGINNING OF                                                  END OF
                                                       PERIOD            ADDITIONS          DEDUCTIONS            PERIOD
                                                       ------            ---------          ----------            ------
           <S>                                        <C>                <C>                 <C>                  <C>
           Year ended December 31, 1995               $ 380,531            484,702           (350,700)            514,533
           Year ended December 31, 1996                 514,533            421,378           (314,857)            621,054
           Year ended December 31, 1997                 621,054          1,016,375           (828,487)            808,942
</TABLE>


(20)   LITIGATION

       The Company is involved in certain legal actions and claims arising in
       the ordinary course of business. Management believes that such litigation
       and claims will be resolved without a material effect on the Company's
       financial position.

       The Company has received two civil investigative demands ("CIDs") from
       the Antitrust Division of the U.S. Department of Justice. One CID
       addresses the Company's acquisition of station KRST in Albuquerque, New
       Mexico and the second CID addresses the joint sales agreement for
       stations in Spokane, Washington and Colorado Springs, Colorado. The
       Company has provided the requested information in response to each CID,
       and at present has been given no indication from the Department of
       Justice regarding its intended future actions.


(21)   FAIR VALUE OF FINANCIAL INSTRUMENTS

       Statement of Financial Accounting Standards No. 107, "Disclosures about
       Fair Value of Financial Instruments," requires that the Company disclose
       estimated fair values for its financial instruments. The following
       summary presents a description of the methodologies and assumptions used
       to determine such amounts.

       LIMITATIONS

       Fair value estimates are made at a specific point in time and are based
       on relevant market information and information about the financial
       instrument; they are subjective in nature and involve uncertainties,
       matters of judgment and, therefore, cannot be determined with precision.
       These estimates do not reflect any premium or discount that could result
       from offering for sale at one time the Company's entire holdings of a
       particular instrument. Changes in assumptions could significantly affect
       these estimates.

       Since the fair value is estimated as of December 31, 1996 and 1997, the
       amounts that will actually be realized or paid at settlement or maturity
       of the instruments could be significantly different.

       CASH EQUIVALENTS AND CASH HELD IN ESCROW

       The carrying amount is assumed to be the fair value because of the
       liquidity of these instruments.



                                     II-34
<PAGE>   70

                         CITADEL BROADCASTING COMPANY
                                 AND SUBSIDIARY

              Notes to Consolidated Financial Statements, Continued



         ACCOUNTS RECEIVABLE AND NOTES RECEIVABLE

         The carrying amount is assumed to be the fair value because of the
         short-term maturity of the portfolio. The carrying amount of the
         non-current note receivable is assumed to be the fair value because the
         note receivable was converted by Citadel Communications into a portion
         of the purchase price of Deschutes on January 1, 1997 at the carrying
         value.

         ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

         The carrying amount approximates fair value because of the short-term
         maturity of these instruments.

         NOTES PAYABLE, SENIOR SUBORDINATED NOTES, EXCHANGEABLE PREFERRED STOCK,
         NOTES PAYABLE TO PARENT COMPANY AND OTHER LONG-TERM OBLIGATIONS

         The fair value of the Company's notes payable, senior subordinated
         notes, exchangeable preferred stock, notes payable to parent company
         and other long-term obligations approximate the terms in the
         marketplace at which they could be replaced. Therefore, the fair value
         approximates the carrying value of these financial instruments.

         In 1996, the Company entered into an interest rate swap agreement with
         a financial institution in accordance with the terms of its Senior
         Credit Facility. The fair value of the interest rate swap as of
         December 31, 1996 and 1997 was $190,000 and $3,700, respectively, as
         determined by the financial institution, and represents an unrealized
         gain. The fair value of the interest rate swap is the estimated amount
         that the financial institution would receive or pay to terminate the
         swap agreement at the reporting date, taking into account current
         interest rates and the current creditworthiness of the swap
         counterparties.


(22)     SUBSEQUENT EVENTS

         On January 2, 1998, the Company acquired radio stations WEMR-AM and
         WEMR-FM in Wilkes-Barre/Scranton, Pennsylvania for a purchase price of
         $815,000. The acquisition will be accounted for by the purchase method
         of accounting.

         On February 12, 1998, the Company acquired radio stations KQFC-FM,
         KKGL-FM and KBOI-AM and a parcel of land in Boise, Idaho for an
         aggregate purchase price of $14,400,000. The acquisition will be
         accounted for by the purchase method of accounting. In conjunction with
         the acquisition, the Company borrowed an additional $11,000,000 on its
         Senior Credit Facility.

         On March 26, 1998, the Company acquired radio stations WSGD-FM, WDLS-FM
         and WCDL-AM in Wilkes-Barre/Scranton, Pennsylvania for a purchase price
         of $6,000,000. The acquisition will be accounted for by the purchase
         method of accounting. In conjunction with the acquisition, the Company
         borrowed an additional $6,000,000 on its Senior Credit Facility.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

         None.



                                     II-35
<PAGE>   71
PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

    The following table sets forth the names, ages and positions of the
directors and executive officers of the Company:

<TABLE>
<CAPTION>
              NAME                         AGE                           POSITION
              ----                         ---                           --------
<S>                                         <C>          <C>
Lawrence R. Wilson...............           52           Chief Executive Officer, President and
                                                         Chairman of the Board of Directors

Donna L. Heffner.................           38           Vice President, Chief Financial Officer,
                                                         Treasurer and Secretary

Stuart R. Stanek.................           42           Vice President; President of East Region

Edward T. Hardy..................           49           Vice President; President of West Region

D. Robert Proffitt...............           45           Vice President; President of Central Region

Patricia Diaz Dennis.............           51           Director

Scott E. Smith...................           42           Director

John E. von Schlegell............           43           Director

Ted L. Snider, Sr................           69           Director
</TABLE>

----------

    Each director of the Company holds office until the next annual meeting of
shareholders and until his or her successor has been elected and qualified. See
"Board Composition and Governance Matters" below. Officers are elected by the
Board of Directors and serve at its discretion.

    Lawrence R. Wilson co-founded and was a general partner of Citadel
Associates Limited Partnership and Citadel Associates Montana Limited
Partnership (collectively, "Predecessor") from 1984 to July 1992 and has been
the Chief Executive Officer, President and Chairman of the Board of the Company
since it was incorporated in August 1991 and of Citadel Communications since it
was incorporated in May 1993. From 1974 to 1979, Mr. Wilson was Executive Vice
President and General Counsel of Combined Communications Corporation, a national
media company, where he handled all acquisitions and mergers and oversaw the
broadcast, newspaper and outdoor billboard divisions as a part of a five person
management committee. From 1979 to 1986, he was engaged in the private practice
of law.

    Donna L. Heffner joined Predecessor in 1988 as its Controller. Ms. Heffner
has served as Treasurer and Secretary of the Company since it was incorporated
in August 1991 and of Citadel Communications since it was incorporated in May
1993. She has served as Chief Financial Officer of the Company and Citadel
Communications since July 1992 and May 1993, respectively. In January 1997, Ms.
Heffner became Vice President of Citadel Communications and the Company. Ms.
Heffner also served as a director of the Company from 1992 to 1993 and as a
director of Citadel Communications for several months in 1993. From 1982 to 1985
and in 1987, she was employed by Price Waterhouse, and in 1986, she was employed
by Lowrimore, Warwick & Company as an accountant.

    Stuart R. Stanek joined Predecessor in 1986 as a General Manager of KKFM-FM
in Colorado Springs. In 1988, he became General Manager of KCNR-AM/KUBL-FM in
Salt Lake City; in 1991, he was appointed Vice President of the Company; in 1992
he was elected to the Board of Directors of the Company; and in 1993, he was
appointed Vice President and elected to the Board of Citadel Communications. He
served as a Director of Citadel Communications and the Company until August
1996. Mr. Stanek became President of East Region for the Company in June 1997.



                                     III - 1

<PAGE>   72



    Edward T. Hardy founded and was elected President and Chief Executive
Officer of Deschutes River Broadcasting, Inc. ("Deschutes") in 1994. Mr. Hardy
joined Citadel Communications in January 1997 as President of Deschutes
following Citadel Communications' acquisition of Deschutes. Mr. Hardy became
President of West Region for the Company and Vice President of Citadel
Communications and the Company in June 1997. From 1984 to 1993, Mr. Hardy was
Vice President -- General Manager of KUPL AM/FM in Portland.

    D. Robert Proffitt joined Predecessor in 1988 as Vice President -- General
Manager of KKFM-FM in Colorado Springs. In 1991, he was appointed Vice President
of the Company, and in 1993, he was appointed Vice President of Citadel
Communications. Mr. Proffitt took over as General Manager of the Company's
Albuquerque operations in 1994. Mr. Proffitt became President of Central Region
for the Company in June 1997.

    Patricia Diaz Dennis became a director of the Company and Citadel
Communications in November 1997. Since September 1995, Ms. Dennis has served as
Senior Vice President and Assistant General Counsel for regulation and public
policy of SBC Communications Inc., a company which provides telecommunications
products and services. From March 1993 until joining SBC Communications Inc.,
Ms. Dennis served as special counsel for communications matters for the law firm
of Sullivan & Cromwell. Ms. Dennis served as a commissioner of the FCC from June
1986 to September 1989 and as Assistant Secretary of State for Human Rights and
Humanitarian Affairs in the United States Department of State from August 1992
to January 1993. Ms. Dennis also serves as director for various entities,
including Massachusetts Mutual Life Insurance Company and National Public Radio.

    Scott E. Smith has served as a member of the Board of Directors of the
Company since 1992 and of Citadel Communications since 1993. He is an Executive
Vice President of Baker, Fentress & Company ("Baker Fentress"). Since 1989, Mr.
Smith has managed the private placement portfolio of Baker Fentress.

    John E. von Schlegell has served as a member of the Board of Directors of
the Company and Citadel Communications since January 1997. He co-founded and,
since 1991, has managed, Endeavour Capital Fund Limited Partnership ("Endeavour
Capital"), a firm that invests equity capital in privately held businesses
throughout the northwest. Prior to 1991, Mr. von Schlegell was a general partner
at Golder, Thoma & Cressey, a private equity firm based in Chicago.

    Ted L. Snider, Sr. became a director of the Company and Citadel
Communications in November 1997 following the Company's October 1997 acquisition
of Snider Corporation. Mr. Snider had been Chairman of Snider Corporation since
its incorporation in 1971. Snider Corporation owned two FM and two AM radio
stations, the right to construct an additional FM radio station and the Arkansas
Radio Network.

    BOARD COMPOSITION AND GOVERNANCE MATTERS

    Pursuant to the Fourth Amended and Restated Voting Agreement dated as of
October 15, 1997 (the "Voting Agreement"), by and among Citadel Communications;
Harlan Levy, as Trustee under the Amended and Restated Voting Trust Agreement
dated October 15, 1997 (the "Voting Trust Agreement"); Baker Fentress; FINOVA
Capital Corporation ("FINOVA Capital"); Oppenheimer & Co., Inc. ("Oppenheimer");
Endeavour Capital; Edward T. Hardy; Ted L. Snider, Sr.; Lawrence R. Wilson; Rio
Bravo Enterprise Associates, L.P. ("Rio Bravo") and certain other parties,
certain parties to the Voting Agreement have the right to designate the
directors of Citadel Communications and the Company as follows: Baker Fentress
has the right to designate one director, and has initially designated Scott E.
Smith; Lawrence R. Wilson and Rio Bravo have the right to designate one
director, and have initially designated Lawrence R. Wilson; Endeavour Capital
has the right to designate one director, and has initially designated John E.
von Schlegell; the Trustee under the Voting Trust Agreement has the right to
designate one director, subject to certain restrictions, and has initially
designated Patricia Diaz Dennis; and the persons who received shares of
preferred stock of Citadel Communications in connection with the Company's
acquisition of certain radio stations in Little Rock, Arkansas have the right to
designate one director, and have


                                     III - 2

<PAGE>   73



initially designated Ted L. Snider, Sr. Pursuant to the Voting Trust Agreement,
the Trustee votes the shares of ABRY Broadcast Partners II, L.P. ("ABRY II"),
and ABRY/Citadel Investment Partners, L.P. ("ABRY/CIP") in accordance with the
relevant provisions of the Voting Agreement. Mr. Wilson owns all of the capital
stock of Rio Bravo, Inc., the sole general partner of Rio Bravo.

        The rights and obligations of a shareholder or group of shareholders
under the Voting Agreement terminate in relevant part either upon consummation
of a sale of Citadel Communications' common stock, par value $0.001 per share
(the "Common Stock"), in an underwritten public offering which, among other
things, results in net cash proceeds to Citadel Communications of at least $25
million, or automatically upon the fifteenth anniversary date of the Voting
Agreement, unless extended. The Voting Trust Agreement continues in effect until
terminated upon written agreement of Citadel Communications and the holders of
voting trust certificates which represent a majority of the shares held in the
voting trust.


                                     III - 3

<PAGE>   74



ITEM 11.  EXECUTIVE COMPENSATION

The following table sets forth information with respect to the compensation paid
to the Company's Chief Executive Officer and each of the four persons who were
executive officers of the Company during 1997 (collectively, the "Named
Executives"). Information with respect to 1996 compensation is not given for
Messrs. Proffitt and Hardy, as such persons did not begin service as an
executive officer of the Company until 1997.

<TABLE>
<CAPTION>
                                                        SUMMARY COMPENSATION TABLE

                                                            ANNUAL COMPENSATION                 LONG-TERM
                                                    -------------------------------------     COMPENSATION
                                                                                OTHER         ------------
                                                                                ANNUAL         SECURITIES
              NAME AND                                                       COMPENSATION      UNDERLYING       ALL OTHER
         PRINCIPAL POSITION           YEAR          SALARY      BONUS            (1)            OPTIONS       COMPENSATION
         ------------------           ----          ------      -----        ------------      ----------     ------------
<S>                                   <C>          <C>        <C>               <C>                <C>            <C>
Lawrence R. Wilson..................  1997         $341,256   $120,000(2)       - 0 -            - 0 -          $3,278(3)
   Chief Executive Officer and        1996          325,000     81,250(4)    $412,041(5)        150,000          2,786(3)
   President

Stuart R. Stanek....................  1997         $190,007   $ 30,000(2)       - 0 -            - 0 -          $2,529(6)
   Vice President and President of    1996          165,000     35,000(4)       - 0 -            24,000          2,553(6)
   theEast Region

Donna L. Heffner....................  1997         $140,535   $ 50,000(2)       - 0 -            - 0 -          $3,086(7)
   Vice President and Chief Financial 1996          120,000     20,000(4)       - 0 -            22,000          2,505(7)
   Officer

D. Robert Proffitt..................  1997         $192,211   $ 15,000(2)       - 0 -            - 0 -          $2,541(8)
   Vice President and President of
   Central Region

Edward T. Hardy.....................  1997         $150,000   $  5,000(2)       - 0 -            - 0 -          $1,026(9)
   Vice President and President of the
   West Region
</TABLE>

----------

(1)  In accordance with applicable regulations, the amounts set forth in this
     column do not include perquisites and other personal benefits received by
     the Named Executives unless the aggregate value of such perquisites and
     other benefits exceeded the lesser of $50,000 or 10% of the total salary
     and bonus reported for the Named Executive.

(2)  Bonuses were earned in 1997, and paid in 1997 and 1998. Does not reflect
     bonuses earned in 1996, but paid in 1997.

(3)  Represents the Company's contribution of $3,200 and $2,708 in 1997 and
     1996, respectively, to the Company's 401(k) Plan, which contributions vest
     over five years, and the Company's payment of $78 in each year of premiums
     for term life insurance.

(4)  Bonuses were earned in 1996, but paid in 1997. Does not reflect bonuses
     earned in 1995, but paid in 1996.

(5)  Represents $3,404 for personal use of Company-provided vehicle and for
     goods and services received through the Company's trade agreements, and the
     forgiveness of $408,637 of indebtedness in 1996.



                                     III - 4

<PAGE>   75



(6)  Represents the Company's contribution of $2,451 and $2,475 in 1997 and
     1996, respectively, to the Company's 401(k) Plan, which contributions vest
     over five years, and the Company's payment of $78 in each year of premiums
     for term life insurance.

(7)  Represents the Company's contribution of $3,008 and $2,427 in 1997 and
     1996, respectively, to the Company's 401(k) Plan, which contributions vest
     over five years, and the Company's payment of $78 in each year of premiums
     for term life insurance.

(8)  Represents the Company's contribution of $2,463 in 1997 to the Company's
     401(k) Plan, which contribution vests over five years, and the Company's
     payment of $78 of premiums for term life insurance.

(9)  Represents the Company's contribution of $1,000 in 1997 to the Company's
     401(k) Plan, which contribution vests over five years, and the Company's
     payment of $26 of premiums for term life insurance.

Stock Options. No stock options were granted to the Named Executives during the
year ended December 31, 1997. The following table shows the number and value of
unexercised stock options to purchase shares of Class A Common Stock, par value
$0.001 per share, of Citadel Communications (the "Class A Common Stock") held by
the Named Executives as of December 31, 1997. No options were exercised by the
Named Executives in 1997.

<TABLE>
<CAPTION>
                                  FISCAL YEAR END OPTION VALUES

                         NUMBER OF SECURITIES       VALUE OF UNEXERCISED
                        UNDERLYING UNEXERCISED          IN-THE-MONEY
                                OPTIONS                  OPTIONS(1)
                                -------                  ----------
                       EXERCISABLE/UNEXERCISABLE  EXERCISABLE/UNEXERCISABLE
                       -------------------------  -------------------------
<S>                         <C>                     <C>
Lawrence R. Wilson          111,410/135,906         $2,501,753/$1,998,761
Stuart R. Stanek             32,807/37,871             778,261/731,006
Donna L. Heffner             32,611/36,407             776,588/705,890
D. Robert Proffitt           24,005/33,337             549,960/602,822
Edward T. Hardy              38,363/29,600             773,172/379,768
</TABLE>

-----------

(1)  Assumes that the fair market value of each share of Class A Common Stock
     into which the options are exercisable is $30.00 which represents Citadel
     Communications' estimate of fair market value on December 31, 1997.

    In October 1993, Mr. Wilson was granted performance options to acquire up to
an aggregate of 85,935 shares of Class A Common Stock at an exercise price per
share of $2.91, which represented Citadel Communications' estimate of the fair
market value of the shares on the date of grant. The options can be earned
(17,187 shares per year) over a five-year period following the date of grant and
expire on the earlier of ten years from the date granted or termination of
employment. Vesting is dependent upon Citadel Communications achieving certain
annual operating results. At December 31, 1997, the option was exercisable with
respect to 51,561 shares, and, on January 1, 1998, the option vested with
respect to an additional 17,187 shares. Such option has been transferred to Rio
Bravo.

EMPLOYMENT AGREEMENT

    In June 1996, the Company entered into an employment agreement with Lawrence
R. Wilson which has an initial term ending in June 2001. Mr. Wilson's current
annual base salary under the agreement is $358,313 which is to be increased by
5% in January of each year during the term of the agreement. The agreement also
provides for an annual bonus calculated as a percentage of Mr. Wilson's base
salary in effect at the end of the year and based on certain annual performance
criteria of the Company.


                                     III - 5

<PAGE>   76




    Mr. Wilson's employment with the Company will terminate upon Mr. Wilson's
becoming permanently disabled or upon (i) a liquidation or dissolution of
Citadel Communications, (ii) a sale, transfer or other disposition of all of the
assets of the Company on a consolidated basis or (iii) any transaction or series
of transactions whereby any person or entity other than ABRY II or its
affiliates or affiliates of the Company, becomes the direct or indirect
beneficial owner of securities of Citadel Communications or the Company
representing 50% or more of the combined voting power of Citadel Communications'
or the Company's then outstanding securities. In such event, Mr. Wilson or his
beneficiary will be entitled to receive Mr. Wilson's then base salary through
the end of the month in which the termination occurs. In addition, upon the
affirmative vote or written consent of not less than 66 2/3% of the members of
the Board of Directors of Citadel Communications (the "Citadel Board"), Mr.
Wilson's employment may be terminated with or without cause. If any such
termination is without cause, Mr. Wilson will be entitled to receive his then
current base salary through the end of the then term of the employment
agreement.

1996 EQUITY INCENTIVE PLAN

    Citadel Communications has adopted the 1996 Equity Incentive Plan (the
"Plan") pursuant to which all employees of the Company are eligible to receive
awards in the form of non-qualified options and incentive options to purchase
Class A Common Stock, stock appreciation rights, restricted securities and other
stock-based awards as determined by the Citadel Board. The Plan is administered
by the Citadel Board, which determines the price and type of awards granted and
the key managerial employees eligible to receive awards and the terms thereof,
including vesting, all in a manner consistent with the Plan. The Citadel Board
may delegate responsibility for administration of the Plan to a committee of the
Citadel Board. The total number of shares of Class A Common Stock reserved and
available for awards under the Plan (or which may be used to provide a basis of
measurement for an award) is 526,824 shares. Shares subject to any option which
terminates or expires unexercised will be available for subsequent grants. The
exercise price of incentive stock options granted under the Plan is to be at
least 100% of the fair market value of the Class A Common Stock on the date of
grant (110% of the fair market value of the Class A Common Stock in the case of
an incentive stock option to an individual who at the time of the grant owns
more than 10% of the combined voting power of Citadel Communications' capital
stock). The Citadel Board may provide that an optionee may pay for shares upon
exercise of an option in cash or by check or by such other medium or by any
combination of media as authorized by the Citadel Board. The grant of an option
may be accompanied by a reload option, which gives an optionee who pays the
exercise price of an option with shares of Class A Common Stock an additional
option to acquire the same number of shares that was used to pay for the
original option at an exercise price of not less than the fair market value of
Class A Common Stock as of the reload option grant date. An unexercised option
normally expires upon termination of employment, provided that the Citadel Board
may permit the holder of the option to exercise it during the 90 days following
termination. Under certain circumstances, including termination of employment
upon retirement, disability or death, the option may be exercised during an
extended period. In the event of termination of employment under certain
circumstances following certain change in control events, an option generally
may be exercised in full during the 90 days following termination. The Plan also
provides for the grant of performance units and shares of restricted stock.

401(K) PLAN

    Effective in 1993, the Company adopted a 401(k) Savings Plan ("Retirement
Plan") for the purpose of providing, at the option of the employee, retirement
benefits to full-time employees of the Company and its subsidiaries who have
been employed for a period of one year or longer. Contributions to the
Retirement Plan are made by the employee and, on a voluntary basis, by the
Company. The Company currently matches 100% of that part of the employee's
deferred compensation which does not exceed 2% of such employee's salary.

    A contribution to the Retirement Plan of $298,623 was made during the year
ended December 31, 1997.



                                     III - 6

<PAGE>   77



DIRECTOR COMPENSATION

    Members of the Board of Directors, other than Patricia Diaz Dennis, are not
currently compensated for their services as Board members. Each nonemployee
director is reimbursed for travel and related expenses for attendance at Board
and Committee meetings, and Ms. Dennis is entitled to receive an annual fee of
$20,000 for services as a Board member. In addition, on November 25, 1997, Ms.
Dennis was granted an immediately exercisable option to purchase 2,500 shares of
Class A Common Stock of Citadel Communications at an exercise price of $30.00
per share.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

    During 1997, Scott E. Smith, John E. von Schlegell and Patricia Diaz Dennis
and former directors Mark A. Leavitt, William P. Sutter, Jr. and Royce Yudkoff
were members of the Compensation Committee of the Citadel Board, which
determines compensation matters for the Company. Such persons are or were also
directors of the Company. Mr. Yudkoff is President of ABRY Holdings, Inc., the
general partner of ABRY Capital, L.P., the general partner of ABRY II and
ABRY/CIP.

    Investment Banking Relationships. Mark A. Leavitt, a director of the Company
from 1992 to November 1997, is a Managing Director of Prudential Securities
Incorporated, which has provided since 1996, and may in the future provide,
investment banking services to the Company. Such services have been provided on
terms customary in the industry. Prudential Securities Incorporated was an
Initial Purchaser in the Company's July 1997 offerings of its 10-1/4% Senior
Subordinated Notes due 2007 (the "Notes") and its 13-1/4% Exchangeable Preferred
Stock (the "Exchangeable Preferred Stock").

Registration Rights Agreement. Citadel Communications is a party to a
Registration Rights Agreement, dated June 28, 1996, as amended (the
"Registration Rights Agreement"), with Lawrence R. Wilson, Rio Bravo, ABRY II,
ABRY/CIP, Baker Fentress, Bank of America National Trust and Savings Association
("Bank of America") (and certain of its employees and its affiliates),
Oppenheimer, Edward T. Hardy, Endeavour Capital, Ted L. Snider, Sr. and others,
which requires Citadel Communications to register their shares of Common Stock
of Citadel Communications under the Securities Act of 1993, as amended (the
"Securities Act"), for offer and sale to the public (including by way of an
underwritten public offering), upon a one-time demand by such shareholders on or
after the earlier of (i) the consummation of an initial public offering of
Citadel Communications' Common Stock which is registered pursuant to the
Securities Act or (ii) August 1, 2000, and which entitles such parties to join
in any registration of equity securities of Citadel Communications.

    Securities Purchase and Exchange Agreement. Pursuant to a Securities
Purchase and Exchange Agreement dated June 28, 1996, as amended (the "Securities
Purchase and Exchange Agreement"), among Citadel Communications, the Company,
ABRY II, ABRY/CIP, Baker Fentress, Oppenheimer, Endeavor Capital, Edward T.
Hardy, Bank of America, Ted L. Snider, Sr. and certain other parties, a
commitment was established (the "Facility A Commitment") by ABRY II and ABRY/CIP
in favor of Citadel Communications for a revolving line of credit in the
aggregate principal amount of $20.0 million and against which ABRY II and
ABRY/CIP made pro rata advances (the "Facility A Advances"). At June 30, 1997,
there were four Facility A Advances outstanding, the aggregate principal balance
of which was approximately $12.8 million. Contemporaneously with the
consummation of the July 1997 offerings of the Notes and the Exchangeable
Preferred Stock, a portion of the proceeds was used to repay advances made to
the Company by Citadel Communications with the proceeds of the Facility A
Advances. Citadel Communications repaid the Facility A Advances concurrently
with the closing of the offerings of the Notes and the Exchangeable Preferred
Stock. Thereafter, the Facility A Commitment terminated and ABRY II and ABRY/CIP
have no further obligation to make Facility A Advances.

    The Securities Purchase and Exchange Agreement provides that Citadel
Communications and, to the extent applicable, its subsidiaries, including the
Company, must enter into an agreement with each of its employees who


                                     III - 7

<PAGE>   78



owns Citadel Communications equity securities providing (i) that any employee
transfer of these equity securities (except for any made by Mr. Wilson) is
subject to a Citadel Communications right of first refusal to purchase these
equity securities at a price determined by a formula and (ii) that any payment
or other consideration received by such employee in connection with any
transaction resulting in a change of control of Citadel Communications or the
Company including (a) certain employment agreements or consulting agreements,
(b) noncompetition agreements, (c) licenses or (d) forbearances of any kind,
unless such payment does not exceed the price per share of Common Stock paid to
non-employee holders of Common Stock, shall be deemed additional payment to
Citadel Communications in the case of sale of the assets of Citadel
Communications, or shall be payable to all holders of equity securities of
Citadel Communications in the case of a merger or sale of part or all of the
equity securities of Citadel Communications.

    Voting Trust Agreement. In 1997, the Company paid ABRY II (for the account
of ABRY II and ABRY/CIP) $75,000 to defray the fees and expenses associated with
the Voting Trust, including fees payable to the Trustee and the back-up
trustees. Each of Christopher P. Hall, J. Walter Corcoran and Harlan A. Levy,
former directors of the Company, served as either Trustee or a back-up trustee
in 1997. For additional information concerning the Voting Trust Agreement, see
Item 10 under the caption "Board Composition and Governance Matters."

    Management Services and Consulting Agreement. In June 1996, the Company
entered into a Management Services and Consulting Agreement with ABRY Partners,
Inc. which was terminated in March 1997. Pursuant to the agreement, ABRY
Partners, Inc. provided consultation to the Company's Board of Directors and
management on business and financial matters. The Company paid $62,500 to ABRY
Partners, Inc. under this agreement in 1997 and reimbursed ABRY Partners, Inc.
for reasonable out-of-pocket costs and expenses. ABRY Partners, Inc. is an
affiliate of ABRY II and ABRY/CIP.

        Stockholders Agreement. Citadel Communications is a party to a Second
Amended and Restated Stockholders Agreement, dated June 28, 1996, as amended
(the "Stockholders Agreement"), with ABRY II, ABRY/CIP, Baker Fentress,
Oppenheimer, Bank of America, FINOVA Capital, Endeavour Capital, Lawrence R.
Wilson, Claire Wilson, Rio Bravo, Edward T. Hardy, Ted L. Snider, Sr. and
certain other shareholders of Citadel Communications (collectively, the
"Shareholder Parties"). Pursuant to the Stockholders Agreement, the Shareholder
Parties have the right of first refusal to purchase any equity securities issued
by Citadel Communications or any of its subsidiaries, including the Company,
other than Class A Common Stock or options to purchase Class A Common Stock
issued to employees or directors pursuant to certain compensation plans, equity
securities issued upon conversion of another class of equity securities or
Common Stock issued in a registered public offering. Subject to certain
exceptions, the Shareholder Parties, other than Lawrence and Claire Wilson and
Rio Bravo, also have (i) the right of first refusal with respect to the shares
of capital stock of Citadel Communications proposed to be transferred by the
Wilsons or Rio Bravo, or (ii) the right to participate in any such transfer.
Certain of the Shareholder Parties, including ABRY II, ABRY/CIP, Bank of
America, Endeavour Capital, Mr. Hardy and Mr. Snider, have the right, under
certain circumstances, to require Citadel Communications to purchase all or a
portion of their shares of capital stock of Citadel Communications for a price
determined in accordance with the Stockholders Agreement. In the event that
Citadel Communications is unable to repurchase shares tendered by or on behalf
of ABRY II or ABRY/CIP, such entities are entitled, among other things, to
solicit offers and make presentations and proposals to prospective buyers of
Citadel Communications and enter into negotiations and/or agreements regarding
the potential sale of Citadel Communications. Citadel Communications also has
the right, at its option, at any time commencing on August 1, 2000, to
repurchase outstanding shares of its preferred stock and the warrants held by
Bank of America to purchase shares of its Class B Common Stock, and, under
certain circumstances, shares of Class A Common Stock, held by certain
Shareholder Parties, for a price determined in accordance with the Stockholders
Agreement. The foregoing provisions of the Stockholders Agreement terminate upon
the consummation of a sale of Citadel Communications' Common Stock in an
underwritten public offering which, among other things, results in receipt by
Citadel Communications of net cash proceeds of at least $25.0 million.



                                     III - 8

<PAGE>   79



    Donna L. Heffner, Stuart R. Stanek and D. Robert Proffitt, executive
officers of the Company, and Michael J. Ahearn, a former director of the
Company, have joined as parties with respect to certain provisions of the
Stockholders Agreement.

    Deschutes Transactions. In connection with the acquisition of Deschutes,
Citadel Communications entered into an Agreement Not to Compete with DVS
Management, Inc. ("DVS"), the general partner of Endeavour Capital, a
shareholder of Deschutes prior to its acquisition by Citadel Communications,
pursuant to which DVS has agreed not to compete in radio broadcasting in any
geographic area or market served or competed in by one or more of the Company's
stations. In consideration for such agreement not to compete with the Company's
stations, Citadel Communications paid DVS $100,000 in 1997 and is obligated to
pay DVS $100,000 in 1998. John E. von Schlegell, a director of the Company, is
President and a shareholder of DVS.




                                     III - 9

<PAGE>   80



ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

    Citadel Communications owns all of the currently issued and outstanding
common stock of the Company and has pledged such common stock to secure its
guaranty of indebtedness under the Credit Facility. No other capital stock of
the Company currently possesses any voting rights.

    Citadel Communications is authorized to issue up to 53,831,234 shares of
capital stock, par value $0.001 per share, consisting of 15,910,471 shares of
Class A Common Stock, 156,933 shares of Class B Common Stock, 12,000,000 shares
of Class C Common Stock (the "Class C Common Stock" and collectively with the
Class A and Class B Common Stock, the "Common Stock") and 25,763,830 shares of
preferred stock (the "Preferred Stock"), of which seven classes have been
designated. As of February 9, 1998, there were issued and outstanding 1,065,487
shares of Common Stock and the following shares of Preferred Stock: 746,412
shares of Series A Convertible Redeemable Preferred, having a liquidation value
of approximately $2.49 per share (the "Series A Preferred Stock"); 17,201 shares
of Series B Convertible Redeemable Preferred Stock, having a liquidation value
of approximately $2.91 per share (the "Series B Preferred Stock"); 2,130,587
shares of Series C Convertible Redeemable Preferred Stock, having a liquidation
value of approximately $15.61 per share (the "Series C Preferred Stock");
1,038,267 shares of Series D Convertible Redeemable Preferred Stock, having a
liquidation value of approximately $15.61 per share (the "Series D Preferred
Stock"); 482,729 shares of Series E Convertible Redeemable Preferred Stock,
having a liquidation value of approximately $15.61 per share (the "Series E
Preferred Stock"); 153,264 shares of Series F Convertible Redeemable Preferred
Stock having a liquidation value of approximately $27.73 per share (the "Series
F Preferred Stock") and 360,636 shares of Series G Convertible Redeemable
Preferred Stock having a liquidation value of $27.73 per share (the "Series G
Preferred Stock"). The Class A Common Stock, the Series A Preferred Stock, the
Series B Preferred Stock, the Series C Preferred Stock, the Series E Preferred
Stock, the Series F Preferred Stock and the Series G Preferred Stock are
presently the only voting securities of Citadel Communications.

    The following table sets forth certain information as to the beneficial
ownership of Citadel Communications' Series A, B, C, D, E, F and G Preferred
Stock, as to the actual ownership of its Class C Common Stock and as to the
actual and beneficial ownership of its Class A Common Stock, as of February 9,
1998, by (i) each person or group who is known to Citadel Communications to own
beneficially more than 5% of any class of voting security of Citadel
Communications, (ii) each director of the Company, (iii) each Named Executive
and (iv) all directors and executive officers of the Company as a group. Except
as indicated below, the persons named have sole voting and investment power with
respect to all shares shown as being beneficially owned by them. The numbers of
shares shown are rounded to the nearest whole share, and percentages are rounded
to the nearest tenth of a percent.

<TABLE>
<CAPTION>
                                                                                                                      CLASS A
                                          PREFERRED STOCK                         COMMON STOCK                     COMMON STOCK
                                       BENEFICIAL OWNERSHIP                     ACTUAL OWNERSHIP                BENEFICIAL OWNERSHIP
                                       --------------------                     ----------------                --------------------
                                SERIES OF    NO. OF      PERCENT OF  CLASS OF   NO. OF    PERCENT OF    NO. OF       PERCENT OF
             NAME               PREFERRED    SHARES         CLASS     COMMON    SHARES       CLASS     SHARES(a)      CLASS(a)
             ----               ---------    ------         -----     ------    ------       -----     ---------      --------
<S>                             <C>           <C>             <C>       <C>     <C>           <C>       <C>              <C>
Lawrence R. Wilson(b)(c)(d).       --             --          --          A     756,225       77.8%     884,822          80.4%
1256 E. Dines Point Road
Greenbank, WA 98253
Edward T. Hardy(c)(d)(e)....        E         12,029          2.5%        A         364         *        50,756           5.0%
Stuart R. Stanek(d)(f)......       --             --          --          A      21,358        2.2%      57,925           5.7%
D. Robert Proffitt(d)(g)....       --             --          --          A      23,441        2.4%      50,406           5.0%
Donna L. Heffner(d)(h)......       --             --          --          A      12,184        1.3%      48,223           4.8%
Patricia Diaz Dennis........       --             --          --         --          --         --        2,500            *
Scott E. Smith(i)...........        A        746,412         100%        --          --         --      746,412          43.4%
John E. von Schlegell(j)....        E        482,729         100%        --          --         --      482,729          33.2%
Ted L. Snider, Sr.(c)(d)(k)         G        116,417        32.3%        --          --         --      116,417          10.7%
FINOVA Capital
Corporation(c)(d)...........       --             --          --          C      74,488        100%      74,488           7.1%
</TABLE>



                                    III - 10

<PAGE>   81
<TABLE>
<CAPTION>
<S>                             <C>          <C>           <C>         <C>            <C>          <C>        <C>             <C>
Dial Tower
Dial Corporate Center
Phoenix, AZ 85077
Baker, Fentress &
  Company(c)(d).............     A          746,412        100%         --            --           --           746,412        43.4%
200 West Madison
Suite 3510
Chicago, IL 60602
Mark A. Leavitt(l)..........     B            1,505        8.7%         --            --           --             1,505          *
Oppenheimer & Co.,
Inc.(c)(d)(m)...............     B           17,201        100%         --            --           --            17,201         1.7%
Oppenheimer Tower
World Financial Center
New York, NY 10281
Harlan A. Levy(n)...........     C        2,625,255(o)     100%         --            --           --         2,625,255(p)     73.0%
                                 D        1,038,267        100%
ABRY Broadcast Partners II,
L.P.(c)(d)..................     C        2,336,477(o)      89%         --            --           --         2,336,477(p)     70.6%
18 Newbury Street                D          924,057         89%
Boston, MA 02116
ABRY/Citadel Investment
Partners, L.P.(c)(d)........     C          288,778(o)      11%         --            --           --           288,778(p)     22.9%
18 Newbury Street                D          114,209         11%
Boston, MA 02116
The Endeavour Capital Fund
Limited Partnership(c)(d)(q)     E          482,729        100%         --            --           --           482,729        33.2%
4380 SW Macadam
Suite 460
Portland, OR 97201
Joseph P. Tennant(c)(d)(r)..     E           32,700        6.8%         --            --           --            32,700         3.3%
Philip J. Urso(c)(d)(s).....     F          153,264        100%         --            --           --           153,264        13.6%
Phillip Norton(c)(d)(t).....     F           21,277       13.9%         --            --           --            21,277         2.1%
Jane J. Snider(c)(d)........     G           40,571       11.3%         --            --           --            40,571         4.0%
Ted L. Snider, Jr.(c)(d)....     G          109,370       30.3%         --            --           --           109,370        10.1%
Calvin G. Arnold(c)(d)......     G           89,257       24.7%         --            --           --            89,257         8.4%
Bank of America National Trust
  and Savings Association(d)    --               --         --          --            --           --           156,933(u)     13.9%
All directors and...........     A          746,412        100%          A       813,572         84.0%        2,428,161        94.0%
executive officers as a group,
  including                      E          482,729        100%
persons named above (9
  persons)(v)                    G          116,417       32.3%
</TABLE>

----------

*    Less than 1%

(a)  The number of shares and percentages are calculated in accordance with Rule
     13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
     Act"), on a shareholder by shareholder basis, assuming that each
     shareholder converted all securities owned by such shareholder that are
     convertible into Class A Common Stock, and that no other shareholder so
     converts. Accordingly, the number of shares and percentage figures assume
     the conversion of all Class B Common Stock and of all Series A, B, E, F and
     G Preferred Stock owned by such shareholder. This conversion is at the
     option of the holder within 60 days; provided, however, that the right of a
     holder to convert Class B Common Stock is subject to the occurrence of
     certain events. The number of shares and percentage figures also assume
     conversion of all Class C Common Stock and of all Series C and Series D
     Preferred Stock owned by such shareholder, to the full extent of such
     shareholder's right of conversion consistent with the limitations set forth
     in the Securities Purchase and Exchange Agreement. This conversion is at
     the option of the holder within 60 days, except for limitations on the
     exercise of conversion rights by certain shareholders owing to the terms of
     the Securities Purchase and Exchange Agreement. The effect of those
     limitations on the conversion rights of certain shareholders is discussed
     in footnote (o). The number of shares and percentage figures also include
     shares covered by options that are currently exercisable or that are
     exercisable within 60 days of February 9, 1998. The numbers and percentages
     of shares owned assume that such outstanding options have been exercised by
     such respective shareholders as follows (rounded to the nearest whole
     share): Patricia Diaz Dennis -- 2,500 shares; Edward T. Hardy -- 38,363
     shares; Donna L. Heffner -- 36,039 shares; D. Robert Proffitt -- 26,965
     shares; Stuart R. Stanek -- 36,567 shares; Lawrence R. Wilson -- 128,597
     shares; and all directors and executive officers as a group -- 269,031
     shares.

(b)  Includes 756,225 shares of outstanding Class A Common Stock and 122,190
     shares of Class A Common Stock which may be acquired upon exercise of
     options that are currently exercisable or that are exercisable within 60
     days of February 9, 1998, which shares and options are held by Rio Bravo
     Enterprise Associates, L.P. ("Rio Bravo"). Mr. Wilson owns all of the
     capital stock of Rio Bravo, Inc., the sole general partner of Rio Bravo.



                                    III - 11

<PAGE>   82




(c)  Represents shares subject to the Voting Agreement. See Item 10.

(d)  Represents shares subject to the Stockholders Agreement. See Item 11.

(e)  The shares of Series E Preferred Stock owned by Mr. Hardy are subject to
     the Security Holder Agreement discussed in footnote (q).

(f)  Mr. Stanek's shares are jointly owned by Mr. Stanek and his spouse.

(g)  Mr. Proffitt's shares are jointly owned by Mr. Proffitt and his spouse.

(h)  Ms. Heffner's shares are jointly owned by Ms. Heffner and her spouse.

(i)  Represents shares held by Baker Fentress, as described in the table and in
     footnotes (c) and (d). Mr. Smith is an Executive Vice President of Baker
     Fentress, and since 1989, has managed its private placement portfolio.

(j)  Represents shares held by Endeavour Capital, as described in the table and
     in footnotes (c), (d) and (q). Mr. von Schlegell is the Managing Partner of
     Endeavour Capital.

(k)  Does not include 40,571 shares of Series G Preferred Stock owned by Mr.
     Snider's spouse.

(l)  Represents shares held of record by Oppenheimer for the benefit of Mr.
     Leavitt.

(m)  Includes 1,505 shares held for the benefit of Mark A. Leavitt, as described
     in the table and footnote (l).

(n)  Represents shares of Series C and Series D Preferred Stock held by Mr. Levy
     as Trustee under the Voting Trust Agreement. See footnote (o).

(o)  The number of shares of Series C Preferred Stock assumes the conversion of
     440,255 shares and 54,413 shares of Series D Preferred Stock into the same
     number of shares of Series C Preferred Stock by ABRY II and ABRY/CIP,
     respectively, such that ABRY II and ABRY/CIP collectively own 49% of the
     voting securities of Citadel Communications on an undiluted basis. The
     Securities Purchase and Exchange Agreement provides, subject to certain
     exceptions, that ABRY II and ABRY/CIP may hold in the aggregate no more
     than 49% of the voting securities of Citadel Communications on an undiluted
     basis. These shareholders currently hold an aggregate of approximately 44%
     of the voting securities of Citadel Communications on an undiluted basis,
     and 89% and 11%, respectively, of the Series C and the Series D Preferred
     Stock. The Series C and Series D Preferred Stock of these shareholders is
     held pursuant to the Voting Trust Agreement. By its terms, the Voting Trust
     Agreement shall continue in effect until terminated upon the written
     agreement of Citadel Communications and the holders of voting trust
     certificates which represent a majority of the shares held in the voting
     trust as determined in accordance with the Voting Trust Agreement.

     During the term of the Voting Trust Agreement, the Trustee has the right to
     vote the shares of stock subject to that Agreement (the "Voting Trust
     Shares"), and to take part in any shareholders' meetings, including the
     right to vote the Voting Trust Shares for the election of directors of
     Citadel Communications; provided, however, that the Trustee shall vote the
     Voting Trust Shares in the manner required by the Voting Agreement with
     respect to the matters covered by that Voting Agreement. The Trustee may
     assign his rights and delegate his obligations to a successor Trustee, who
     shall be appointed in the manner provided under the terms of the Voting
     Trust Agreement.

(p)  Represents shares issuable upon conversion of shares of Series C and Series
     D Preferred Stock, assuming a current conversion ratio of 1-to-1. Such
     conversion is limited by the terms of the Securities Purchase and Exchange
     Agreement. See footnote (o).

(q)  Includes 64,117 shares of Series E Preferred Stock held by various persons
     who, with Citadel Communications and Endeavour Capital, are parties to a
     Security Holder Agreement dated December 31, 1996. Pursuant to this
     Agreement, (i) Endeavour Capital is the sole and exclusive agent of these
     persons to act in any and all matters relating to the voting of such shares
     in any manner not inconsistent with the provisions of the Stockholders
     Agreement and the Voting Agreement, and (ii) Endeavour Capital has the sole
     and exclusive power and authority to exercise all rights and remedies on
     behalf of these persons under the Stockholders Agreement, the Voting
     Agreement, and the Registration Rights Agreement.

(r)  The shares of Series E Preferred Stock owned by Mr. Tennant are subject to
     the Security Holder Agreement discussed in footnote (q).

(s)  Includes 32,907 shares of Series F Preferred Stock held by various persons
     who, with Citadel Communications and Mr. Urso, are parties to a Security
     Holders Agreement dated September 26, 1997. Pursuant to this Agreement, (i)
     Mr. Urso


                                    III - 12

<PAGE>   83



     is the sole and exclusive agent of these persons to act in any and all
     matters relating to the voting of such shares in any manner not
     inconsistent with the provisions of the Stockholders Agreement and the
     Voting Agreement, and (ii) Mr. Urso has the sole and exclusive power and
     authority to exercise all rights and remedies on behalf of these persons
     under the Stockholders Agreement, the Voting Agreement and the Registration
     Rights Agreement. Also includes 118,103 shares of Series F Preferred Stock
     held by a trust of which Mr. Urso and his spouse are beneficiaries, and
     which shares are also subject to the Security Holders Agreement referenced
     in the preceding sentence.

(t)  The shares of Series F Preferred Stock owned by Mr. Norton are subject to
     the Security Holder Agreement discussed in footnote (s).

(u)  Represents 138,101 shares of Class B Common Stock issuable upon the
     exercise of certain warrants issued pursuant to the Senior Subordinated
     Note and Warrant Purchase Agreement dated as of October 1, 1993 among
     Citadel Communications, the Company, Bank of America and certain other
     parties. Also includes 18,832 shares of Class B Common Stock held by
     various individuals who, with Citadel Communications, the Company and Bank
     of America, are parties to a Second Amended and Restated Security Holder
     Agreement dated June 28, 1996. Pursuant to this Agreement, (i) Bank of
     America is the sole and exclusive agent of such individuals to act in any
     and all matters relating to the voting of such shares in any manner not
     inconsistent with the provisions of the Stockholders Agreement and the
     Voting Agreement and (ii) Bank of America has the sole and exclusive power
     and authority to exercise all rights and remedies on behalf of these
     individuals under the Stockholders Agreement, the Voting Agreement, and the
     Registration Rights Agreement.

(v)  Includes the shares discussed in footnotes (b), (i), (j) and (q).



                                    III - 13

<PAGE>   84



ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

SALE AND LEASEBACK OF AIRPLANE

    In December 1995, the Company sold to Wilson Aviation, L.L.C., a company
owned by Mr. Wilson and his spouse, an airplane formerly owned by the Company,
for a cash purchase price of approximately $1.3 million. Contemporaneously with
the sale of the airplane, the Company entered into an agreement to lease the
airplane from Wilson Aviation, L.L.C. from December 29, 1995 to December 31,
2001. Under the terms of the lease, the Company is required to pay monthly rent
in the amount of $17,250 and, in addition, to bear all of the costs of the
maintenance, repair and operation of the airplane during the term of the lease.
The sale and leaseback were not independently established in an arm's length
transaction; however, the transaction was reviewed and approved by the Company's
senior lender and the Company believes, based upon such review, that the terms
of the transaction are reasonable.

LITTLE ROCK AND PROVIDENCE ACQUISITIONS

    Ted L. Snider, Sr., who became a director of the Company in November 1997,
and his spouse were the shareholders of Snider Corporation and, in connection
with the Company's acquisition of Snider Corporation and certain other assets
from Mr. Snider and his spouse in October 1997, Mr. Snider and his spouse
received approximately $7.4 million in cash and approximately $4.5 million in
shares of Series G Preferred Stock of Citadel Communications. Mr. Snider's son
and nephew, Calvin Arnold, were principal shareholders of Snider Broadcasting
Corporation ("Snider Broadcasting") and of CDB Broadcasting Corporation ("CDB")
and, in connection with the Company's acquisition of Snider Broadcasting and
certain assets from CDB in October 1997, they received approximately $5.5
million in shares of a newly created series of preferred stock of Citadel
Communications. In addition, the Company repaid approximately $2.6 million of
indebtedness of Snider Broadcasting and CDB received approximately $4.9 million
in cash. Mr. Arnold is employed by the Company as General Manager of the
Company's radio stations in the Little Rock area.

    Prior to its acquisition by the Company, Snider Corporation transferred to
Mr. Snider and his spouse its rights to operate under an LMA an FM radio station
under construction. Accordingly, the cash portion of the purchase price for
Snider Corporation was reduced by $100,000. Because a designated third party did
not take an assignment and assume the Sniders' rights under the LMA, the Company
accepted an assignment of the LMA and paid the Sniders $100,000.

    Effective June 2, 1997, the Company began operating the radio stations
formerly owned by Snider Corporation, Snider Broadcasting and CDB under LMAs
under which an aggregate of approximately $823,000 was paid by the Company to
such entities.

    Philip Urso and Phillip Norton, each of whom acquired ownership of more than
5% of the outstanding shares of Series F Preferred Stock of Citadel
Communications in connection with the Company's September 1997 acquisition of
WXEX-FM and related assets in Providence, Rhode Island, are employed by the
Company as General Manager and Director of Sales, respectively, for the
Company's Providence stations. Mr. Urso and certain of his family members were
shareholders of Bear Broadcasting Company ("Bear"), which sold WHKK- FM to the
Company in November 1997 for approximately $4.0 million in cash. From September
15, 1997 until the acquisition of WHKK-FM, the Company operated WHKK-FM under an
LMA pursuant to which the Company reimbursed Bear an aggregate of approximately
$17,000 for certain costs and expenses of station operation.




                                    III - 14

<PAGE>   85


INTER-COMPANY TRANSACTIONS

     Citadel Communications owns all of the issued and outstanding common stock
of the Company. In addition to sharing certain corporate overhead expenses, the
following material inter-company transactions occurred during 1997. Citadel
Communications advanced an aggregate of approximately $12.8 million to the
Company in connection with certain radio station acquisitions. The Company
repaid this amount in July 1997 with proceeds from its offering of the Notes and
the Exchangeable Preferred Stock. As of January 1, 1997, Citadel Communications
acquired Deschutes, and in June 1997, Deschutes was merged with and into the
Company in the Subsidiary Merger. Citadel Communications issued an aggregate of
513,900 shares of its preferred stock valued at approximately $14.3 million as
part of the purchase price in connection with the Company's September 1997
acquisition of certain radio stations and related assets in Providence, Rhode
Island and the Company's October 1997 acquisition of certain radio stations and
related assets in Little Rock, Arkansas. Citadel Communications also continued
to guarantee obligations under the Company's Credit Facility.

    See also Item 11 under the caption "Compensation Committee Interlocks and
Insider Participation."



                                    III - 15

<PAGE>   86
PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a)(1)   Financial Statements -- The following Consolidated Financial Statements
         of Citadel Broadcasting Company and subsidiary are filed as part of
         this report in Item 8:
<TABLE>
<CAPTION>
                                                                                        Page
                                                                                        ----
<S>                                                                                     <C>
         Report of Independent Accountants                                              II-10

         Audited Consolidated Financial Statements:
                 Consolidated Balance Sheets as of December 31, 1996 and 1997           II-11

                 Consolidated Statement of Operations for the years ended
                  December 31, 1995, 1996 and 1997                                      II-13

                 Consolidated Statement of Shareholder's Equity for
                  the years ended December 31, 1995, 1996 and 1997                      II-14

                 Consolidated Statement of Cash Flows for the years ended
                  December 31, 1995, 1996 and 1997                                      II-15

                 Notes to Consolidated Financial Statements                             II-17
</TABLE>
(a)(2)   Financial Statement Schedules --

         Schedule II: Valuation and Qualifying Accounts. Information required
         by Schedule II is included in the Notes to the Company's Consolidated
         Financial Statements as Note 19.

(a)(3)   Exhibits -- The Exhibits listed in the accompanying Exhibit Index are
         filed as part of this report.

(b)      Reports on Form 8-K -- No Report on Form 8-K was filed by Citadel
         Broadcasting Company during the quarter ended December 31, 1997.



                                     IV - 1

<PAGE>   87



                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Citadel Broadcasting Company has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.


                                                    CITADEL BROADCASTING COMPANY

Date:  March 27, 1998                               By: /s/ LAWRENCE R. WILSON
     ----------------                                   ----------------------
                                                        Lawrence R. Wilson
                                                        Chairman of the Board
                                                        Chief Executive Officer
                                                        and President


         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of Citadel
Broadcasting Company and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
                  Signatures                                           Title                                            Date
                  ----------                                           -----                                            ----

<S>                                                  <C>                                                              <C>
  /s/ LAWRENCE R. WILSON                             Chairman of the Board, Chief Executive Officer                   March 27, 1998
--------------------------------------------         and President (Principal Executive Officer)
Lawrence R. Wilson


  /s/ DONNA L. HEFFNER                               Vice President and Chief Financial Officer                       March 27, 1998
--------------------------------------------         (Principal Financial and Accounting Officer)
Donna L. Heffner


  /s/ PATRICIA DIAZ DENNIS                           Director                                                         March 27, 1998
--------------------------------------------
Patricia Diaz Dennis

  /s/ SCOTT E. SMITH
--------------------------------------------         Director                                                         March 27, 1998
Scott E. Smith


  /s/ JOHN E. VON SCHLEGELL                          Director                                                         March 27, 1998
--------------------------------------------
John E. von Schlegell

  /s/ TED L. SNIDER, SR.
--------------------------------------------         Director                                                         March 27, 1998
Ted L. Snider, Sr.
</TABLE>



                                     IV - 2

<PAGE>   88



     SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
        SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED
                  SECURITIES PURSUANT TO SECTION 12 OF THE ACT.


No annual report to security holders covering the Company's last fiscal year,
other than this Form 10-K, and no proxy statement, form of proxy or other proxy
soliciting material relating to an annual or other meeting of security holders
has been sent or is expected to be sent to the Company's security holders.



                                     IV - 3

<PAGE>   89



                                  EXHIBIT INDEX
                                  -------------

Exhibit
Number                           Description of Exhibit
------                           ----------------------


2.1           Stock Purchase Agreement dated September 29, 1997 among Pacific
              Northwest Broadcasting Corporation, Wilson Properties, L.P. and
              Citadel Broadcasting Company (incorporated by reference to Exhibit
              2.1 to Citadel Broadcasting Company's Registration Statement No.
              333- 36771 on Form S-4).

2.2           Asset Purchase Agreement dated September 29, 1997 among Wilson
              Group, LLC, Citadel Broadcasting Company and Citadel License, Inc.
              (incorporated by reference to Exhibit 2.2 to Citadel Broadcasting
              Company's Registration Statement No. 333-36771 on Form S-4).

2.3           Asset Purchase Agreement dated as of July 15, 1997 among Maranatha
              Broadcasting Company, Inc., Citadel Broadcasting Company and
              Citadel License, Inc. (relating to WFMZ-FM) (incorporated by
              reference to Exhibit 2.3 to Citadel Broadcasting Company's
              Registration Statement No. 333-36771 on Form S-4).

2.4           Asset Purchase Agreement dated as of July 15, 1997 among Maranatha
              Broadcasting Company, Inc., Citadel Broadcasting Company and
              Citadel License, Inc. (relating to WEST-AM) (incorporated by
              reference to Exhibit 2.4 to Citadel Broadcasting Company's
              Registration Statement No. 333-36771 on Form S-4).

2.5           Merger Agreement dated as of June 2, 1997 among Snider
              Corporation, Ted L. Snider, Sr., Jane J. Snider, Citadel
              Communications Corporation and Citadel Broadcasting Company
              (incorporated by reference to Exhibit 2.5 to Citadel Broadcasting
              Company's Registration Statement No. 333-36771 on Form S-4).

2.6           Merger Agreement dated as of June 2, 1997 among Snider
              Broadcasting Corporation, Ted L. Snider, Jr., Calvin G. Arnold,
              Citadel Communications Corporation and Citadel Broadcasting
              Company (incorporated by reference to Exhibit 2.6 to Citadel
              Broadcasting Company's Registration Statement No. 333-36771 on
              Form S-4).

2.7           Asset Purchase Agreement dated as of June 2, 1997 among CDB
              Broadcasting Corporation, CDB License Corporation and Citadel
              Broadcasting Company (incorporated by reference to Exhibit 2.7 to
              Citadel Broadcasting Company's Registration Statement No.
              333-36771 on Form S-4).

2.8           Agreement of Purchase and Sale dated March 17, 1997 by and among
              Tele-Media Broadcasting Company, Tele-Media Broadcasting Company
              of Centre Region, Tele-Media Broadcasting Holding Corporation and
              their respective shareholders and Citadel Broadcasting Company and
              Citadel Communications Corporation (incorporated by reference to
              Exhibit 10.19 to Citadel Broadcasting Company's Registration
              Statement No. 333-36771 on Form S-4).

3(i)(a)       Restated Articles of Incorporation of Citadel Broadcasting Company
              (incorporated by reference to Exhibit 3(i)(a) to Citadel
              Broadcasting Company's Registration Statement No. 333-36771 on
              Form S-4).

3(i)(b)       Amendment to Certificate of the Designations, Voting Powers
              Preferences and Relative, Participating, Optional and Other
              Special Rights and Qualifications, Limitations or Restrictions



<PAGE>   90


Exhibit
Number                         Description of Exhibit
------                         ----------------------

              of the 13 1/4% Series A Exchangeable Preferred Stock and the 13
              1/4% Series B Exchangeable Preferred Stock of Citadel Broadcasting
              Company (incorporated by reference to Exhibit 3(i)(b) to Citadel
              Broadcasting Company's Registration Statement No. 333-36771 on
              Form S-4).

3(ii)         Bylaws of Citadel Broadcasting Company, as amended (incorporated
              by reference to Exhibit 3(ii)(a) to Citadel Broadcasting Company's
              Registration Statement No. 333-36771 on Form S-4).

4.1           Indenture dated as of July 1, 1997 among Citadel Broadcasting
              Company, Citadel License, Inc. and The Bank of New York, as
              Trustee, with the forms of 10 1/4% Senior Subordinated Notes due
              2007 and 10 1/4% Series B Senior Subordinated Notes due 2007
              included therein (incorporated by reference to Exhibit 4.1 to
              Citadel Broadcasting Company's Registration Statement No.
              333-36771 on Form S-4).

4.2           Indenture dated as of July 1, 1997 among Citadel Broadcasting
              Company, Citadel License, Inc. and The Bank of New York, as
              Trustee, with the forms of 13 1/4% Exchange Debentures due 2009
              and 13 1/4% Series B Exchange Debentures due 2009 included therein
              (incorporated by reference to Exhibit 4.2 to Citadel Broadcasting
              Company's Registration Statement No. 333- 36771 on Form S-4).

4.3           Amendment to Certificate of the Designations, Voting Powers
              Preferences and Relative, Participating, Optional and Other
              Special Rights and Qualifications, Limitations or Restrictions of
              the 13 1/4% Series A Exchangeable Preferred Stock and the 13 1/4%
              Series B Exchangeable Preferred Stock of Citadel Broadcasting
              Company (incorporated by reference to Exhibit 3(i)(b) to Citadel
              Broadcasting Company's Registration Statement No. 333-36771 on
              Form S-4).

9             Amended and Restated Voting Trust Agreement dated as of October
              15, 1997 among Citadel Communications Corporation, ABRY Broadcast
              Partners II, L.P., ABRY/Citadel Investment Partners, L.P., Harlan
              Levy as Trustee, and J. Walter Corcoran and Christopher Hall
              (incorporated by reference to Exhibit 9 to Citadel Broadcasting
              Company's Registration Statement No. 333-36771 on Form S-4).

10.1*         Employment Agreement dated as of June 28, 1996 among Lawrence R.
              Wilson, Citadel Broadcasting Company and Citadel Communications
              Corporation (incorporated by reference to Exhibit 10.1 to Citadel
              Broadcasting Company's Registration Statement No. 333-36771 on
              Form S-4).

10.2*         Citadel Communications Corporation 1996 Equity Incentive Plan, as
              amended (incorporated by reference to Exhibit 10.2 to Citadel
              Broadcasting Company's Registration Statement No. 333- 36771 on
              Form S-4).

10.3*         Citadel Communications Corporation Nonqualified Stock Option
              Agreement made and entered into as of June 28, 1996 between
              Citadel Communications Corporation and Lawrence R. Wilson
              (incorporated by reference to Exhibit 10.3 to Citadel Broadcasting
              Company's Registration Statement No. 333-36771 on Form S-4).

10.4*         Form of Citadel Communications Corporation Stock Option Agreement
              for grants effective as of December 21, 1994 (incorporated by
              reference to Exhibit 10.4 to Citadel Broadcasting Company's
              Registration Statement No. 333-36771 on Form S-4).




<PAGE>   91


Exhibit
Number                              Description of Exhibit
------                              ----------------------

10.5*         Form of Citadel Communications Corporation Stock Option Agreement
              for grants effective as of February 21, 1994 (incorporated by
              reference to Exhibit 10.5 to Citadel Broadcasting Company's
              Registration Statement No. 333-36771 on Form S-4).

10.6          Joint Sales Agreement dated as of December 15, 1995 among
              Pourtales Radio Partnership, Pourtales Holdings, Inc., Springs
              Radio, Inc., KVUU/KSSS, Inc. and Citadel Broadcasting Company
              (incorporated by reference to Exhibit 10.6 to Citadel Broadcasting
              Company's Registration Statement No. 333-36771 on Form S-4).

10.7          Securities Purchase and Exchange Agreement dated as of June 28,
              1996 among Citadel Communications Corporation, Citadel
              Broadcasting Company, ABRY Broadcast Partners II, L.P.,
              ABRY/Citadel Investment Partners, L.P., Baker, Fentress & Company,
              Bank of America Illinois, Oppenheimer & Co., Inc., Christopher J.
              Perry, Robert F. Perille, M. Ann O'Brien, Ford S. Bartholow,
              Jeffrey M. Mann, Matthew W. Clary, and Thomas E. Pelt, Jr.
              (incorporated by reference to Exhibit 10.7 to Citadel Broadcasting
              Company's Registration Statement No. 333-36771 on Form S-4).

10.8          First Amendment to the Securities Purchase Agreement dated as of
              December 31, 1996 among Citadel Communications Corporation,
              Citadel Broadcasting Company, Deschutes Acquisition Corporation,
              ABRY Broadcast Partners II, L.P., ABRY/Citadel Investment
              Partners, L.P., Baker, Fentress & Company, Oppenheimer & Co.,
              Inc., Bank of America Illinois, Christopher J. Perry, Robert F.
              Perille, M. Ann O'Brien, Ford S. Bartholow, Jeffrey M. Mann,
              Matthew W. Clary, Sheryl E. Bartol, Andrea P. Joselit, The
              Endeavour Capital Fund Limited Partnership, Joseph P. Tennant, The
              Schafbuch Family Trust u/a/d 2-15-94, Babson Capital Partners
              Limited Partnership, Tal Johnson, Edward T. Hardy and Ralph W.
              McKee (incorporated by reference to Exhibit 10.8 to Citadel
              Broadcasting Company's Registration Statement No. 333-36771 on
              Form S-4).

10.9          Second Amendment to the Securities Purchase and Exchange Agreement
              dated as of March 17, 1997 among Citadel Communications
              Corporation, Citadel Broadcasting Company, Deschutes Acquisition
              Corporation, ABRY Broadcast Partners II, L.P., ABRY/Citadel
              Investment Partners, L.P., Baker, Fentress & Company, Oppenheimer
              & Co., Inc., Bank of America Illinois, Christopher J. Perry,
              Robert F. Perille, M. Ann O'Brien, Ford S. Bartholow, Jeffrey M.
              Mann, Matthew W. Clary, Sheryl E. Bartol, Andrea P. Joselit, The
              Endeavour Capital Fund Limited Partnership, Joseph P. Tennant, The
              Schafbuch Family Trust u/a/d 2-15-94, Babson Capital Partners
              Limited Partnership, Tal Johnson, Edward T. Hardy and Ralph W.
              McKee (incorporated by reference to Exhibit 10.9 to Citadel
              Broadcasting Company's Registration Statement No. 333-36771 on
              Form S-4).

10.10         Third Amendment to the Securities Purchase and Exchange Agreement
              dated as of September 26, 1997 among Citadel Communications
              Corporation, Citadel Broadcasting Company, Deschutes Acquisition
              Corporation, ABRY Broadcast Partners II, L.P., ABRY/Citadel
              Investment Partners, L.P., Baker, Fentress & Company, Oppenheimer
              & Co., Inc., Bank of America National Trust and Savings
              Association, Christopher J. Perry, Robert F. Perille, M. Ann
              O'Brien, Ford S. Bartholow, Jeffrey M. Mann, Matthew W. Clary,
              Sheryl E. Bartol, Andrea P. Joselit, The Endeavor Capital Fund
              Limited Partnership, Joseph P. Tennant, The Schafbuch Family Trust
              u/a/d 2-15-94, Babson Capital Partners Limited Partnership, Tal
              Johnson, Edward T. Hardy, Ralph W. McKee, Philip J. Urso, Phillip
              Norton, Richard Poholek, Karen Kutniewski, Thomas Jenkins, Jeff
              Thompson, Pat Bowen, Mark Urso, M. Linda Urso



<PAGE>   92


Exhibit
Number                              Description of Exhibit
------                              ----------------------

              and Juliet Rice (incorporated by reference to Exhibit 10.10 to
              Citadel Broadcasting Company's Registration Statement No.
              333-36771 on Form S-4).

10.11         Second Amended and Restated Stockholders Agreement dated as of
              June 28, 1996, among Citadel Communications Corporation, Baker,
              Fentress & Company, Bank of America Illinois, Christopher J.
              Perry, Robert F. Perille, M. Ann O'Brien, Ford S. Bartholow,
              Jeffrey M. Mann, Matthew W. Clary, Thomas E. Van Pelt, Jr., ABRY
              Broadcast Partners II, L.P., ABRY Citadel Investment Partners,
              L.P., Oppenheimer & Co., Inc., Finova Capital Corporation,
              Lawrence R. Wilson, Claire Wilson, Donna L. Heffner and Stuart
              Stanek (incorporated by reference to Exhibit 10.11 to Citadel
              Broadcasting Company's Registration Statement No. 333-36771 on
              Form S-4).

10.12         First Amendment to the Second Amended Stockholders Agreement dated
              as of December 31, 1996 among Citadel Communications Corporation,
              ABRY Broadcast Partners II, L.P., ABRY/Citadel Investment
              Partners, L.P., Baker, Fentress & Company, Oppenheimer & Co.,
              Inc., Bank of America Illinois, Christopher J. Perry, Robert F.
              Perille, M. Ann O'Brien, Ford S. Bartholow, Jeffrey M. Mann,
              Matthew W. Clary, Sheryl E. Bartol, Andrea P. Joselit, Finova
              Capital Corporation, The Endeavour Capital Fund Limited
              Partnership, Joseph P. Tennant, The Schafbuch Family Trust u/a/d
              2-15-94, Babson Capital Partners Limited Partnership, Tal Johnson,
              Edward T. Hardy, Ralph W. McKee, Lawrence R. Wilson and Claire
              Wilson (incorporated by reference to Exhibit 10.12 to Citadel
              Broadcasting Company's Registration Statement No. 333-36771 on
              Form S-4).

10.13         Second Amendment to the Second Amended and Restated Stockholders
              Agreement dated as of March 17, 1997 among Citadel Communications
              Corporation, ABRY Broadcast Partners II, L.P., ABRY/Citadel
              Investment Partners, L.P., Baker, Fentress & Company, Oppenheimer
              & Co., Inc., Bank of America Illinois, Christopher J. Perry,
              Robert F. Perille, M. Ann O'Brien, Ford S. Bartholow, Jeffrey M.
              Mann, Matthew W. Clary, Sheryl E. Bartol, Andrea P. Joselit,
              Finova Capital Corporation, The Endeavour Capital Fund Limited
              Partnership, Joseph P. Tennant, The Schafbuch Family Trust, Babson
              Capital Partners Limited Partnership, Tal Johnson, Edward T.
              Hardy, Ralph W. McKee, Lawrence R. Wilson and Claire Wilson
              (incorporated by reference to Exhibit 10.13 to Citadel
              Broadcasting Company's Registration Statement No. 333-36771 on
              Form S-4).

10.14         Third Amendment to the Second Amended and Restated Stockholders
              Agreement dated as of September 26, 1997 among Citadel
              Communications Corporation, ABRY Broadcast Partners II, L.P.,
              ABRY/Citadel Investment Partners, L.P., Baker, Fentress & Company,
              Oppenheimer & Co., Inc., Bank of America National Trust and
              Savings Association, Christopher J. Perry, Robert F. Perille, M.
              Ann O'Brien, Ford S. Bartholow, Jeffrey M. Mann, Matthew W. Clary,
              Sheryl E. Bartol, Andrea P. Joselit, Finova Capital Corporation,
              The Endeavour Capital Fund Limited Partnership, Joseph P. Tennant,
              The Schafbuch Family Trust, Babson Capital Partners Limited
              Partnership, Tal Johnson, Edward T. Hardy, Ralph W. McKee, Philip
              J. Urso, Phillip Norton, Richard Poholek, Karen Kutniewski, Thomas
              Jenkins, Jeff Thompson, Pat Bowen, Mark Urso, M. Linda Urso,
              Juliet Rice, Lawrence R. Wilson and Claire Wilson (incorporated by
              reference to Exhibit 10.14 to Citadel Broadcasting Company's
              Registration Statement No.
              333-36771 on Form S-4).

10.15         Fourth Amended and Restated Voting Agreement dated as of October
              15, 1997 among Citadel Communications Corporation, ABRY Broadcast
              Partners II, L.P., Baker Fentress & Company,



<PAGE>   93


Exhibit
Number                              Description of Exhibit
------                              ----------------------

              Finova Capital Corporation, Oppenheimer & Co., Inc., The Endeavour
              Capital Fund Limited Partnership, Joseph P. Tennant, The Schafbuch
              Family Trust, Babson Capital Partners Limited Partnership, Tal
              Johnson, Edward T. Hardy, Ralph W. McKee, Philip J. Urso, Phillip
              Norton, Richard Poholek, Karen Kutniewski, Thomas Jenkins, Jeff
              Thompson, Pat Bowen, Mark Urso, M. Linda Urso, Juliet Rice, Ted L.
              Snider, Sr., Jane L. Snider, Ted L. Snider, Jr., Calvin Arnold,
              Lawrence R. Wilson and Claire Wilson (incorporated by reference to
              Exhibit 10.15 to Citadel Broadcasting Company's Registration
              Statement No. 333-36771 on Form S-4).

10.16         Fourth Amendment to the Securities Purchase and Exchange Agreement
              dated as of October 15, 1997 among Citadel Communications
              Corporation, Citadel Broadcasting Company, Deschutes Acquisition
              Corporation, ABRY Broadcast Partners II, L.P., ABRY/Citadel
              Investment Partners, L.P., Baker Fentress & Company, Oppenheimer &
              Co., Inc., Bank of America National Trust and Savings Association,
              Christopher J. Perry, Robert F. Perille, M. Ann O'Brien, Ford S.
              Bartholow, Jeffrey M. Mann, Matthew W. Clary, Sheryl E. Bartol,
              Andrea P. Joselit, The Endeavour Capital Fund Limited Partnership,
              Joseph P. Tennant, The Schafbuch Family Trust u/a/d 2-15-94,
              Babson Capital Partners Limited Partnership, Tal Johnson, Edward
              T. Hardy, Ralph W. McKee, Philip J. Urso, Phillip Norton, Richard
              Poholek, Karen Kutniewski, Thomas Jenkins, Jeff Thompson, Pat
              Bowen, Mark Urso, M. Linda Urso, Juliet Rice, Ted L. Snider, Sr.,
              Jane J. Snider, Ted L. Snider, Jr., and Calvin G. Arnold
              (incorporated by reference to Exhibit 10.16 to Citadel
              Broadcasting Company's Registration Statement No. 333-36771 on
              Form S-4).

10.17         Fourth Amendment to the Second Amended and Restated Stockholders
              Agreement dated as of October 15, 1997 among Citadel
              Communications Corporation, ABRY Broadcast Partners II, L.P.,
              ABRY/Citadel Investment Partners, L.P., Baker Fentress & Company,
              Oppenheimer & Co., Inc., Bank of America National Trust and
              Savings Association, Christopher J. Perry, Robert F. Perille, M.
              Ann O'Brien, Ford S. Bartholow, Jeffrey M. Mann, Matthew W. Clary,
              Sheryl E. Bartol, Andrea P. Joselit, The Endeavour Capital Fund
              Limited Partnership, Joseph P. Tennant, The Schafbuch Family
              Trust, Finova Capital Corporation, Babson Capital Partners Limited
              Partnership, Tal Johnson, Edward T. Hardy, Ralph W. McKee, Philip
              J. Urso, Phillip Norton, Richard Poholek, Karen Kutniewski, Thomas
              Jenkins, Jeff Thompson, Pat Bowen, Mark Urso, M. Linda Urso,
              Juliet Rice, Ted L. Snider, Sr., Jane J. Snider, Ted L. Snider,
              Jr., Calvin G. Arnold, Lawrence R. Wilson and Claire Wilson
              (incorporated by reference to Exhibit 10.17 to Citadel
              Broadcasting Company's Registration Statement No. 333-36771 on
              Form S-4).

10.18         Amended and Restated Loan Agreement dated as of July 3, 1997 among
              Citadel Broadcasting Company, Citadel License, Inc., FINOVA
              Capital Corporation and the Lenders party thereto (incorporated by
              reference to Exhibit 10.18 to Citadel Broadcasting Company's
              Registration Statement No. 333-36771 on Form S-4).

10.19         Agreement of Purchase and Sale dated March 17, 1997 by and among
              Tele-Media Broadcasting Company, Tele-Media Broadcasting Company
              of Centre Region, Tele-Media Broadcasting Holding Corporation and
              their respective shareholders and Citadel Broadcasting Company and
              Citadel Communications Corporation (incorporated by reference to
              Exhibit 10.19 to Citadel Broadcasting Company's Registration
              Statement No. 333-36771 on Form S-4).

10.20         Agreement Not to Compete made as of December 31, 1996 between DVS
              Management Inc. and Citadel Communications Corporation
              (incorporated by reference to Exhibit 10.20 to Citadel
              Broadcasting Company's Registration Statement No. 333-36771 on
              Form S-4).



<PAGE>   94


Exhibit
Number                              Description of Exhibit
------                              ----------------------

10.21         Purchase Agreement dated June 30, 1997 by and among Citadel
              Broadcasting Company, Citadel Communications Corporation,
              Prudential Securities Incorporated, NationsBanc Capital Markets,
              Inc., and BancBoston Securities Inc. (incorporated by reference to
              Exhibit 10.21 to Citadel Broadcasting Company's Registration
              Statement No. 333-36771 on Form S-4).

10.22         Notes Registration Rights Agreement dated as of July 3, 1997 among
              Citadel Broadcasting Company, Citadel License, Inc., Prudential
              Securities Incorporated, NationsBanc Capital Markets, Inc. and
              BancBoston Securities, Inc. (incorporated by reference to Exhibit
              10.22 to Citadel Broadcasting Company's Registration Statement No.
              333-36771 on Form S-4).

10.23         Preferred Stock Registration Rights Agreement dated as of July 3,
              1997 among Citadel Broadcasting Company, Citadel License, Inc.,
              Prudential Securities Incorporated, NationsBanc Capital Markets,
              Inc. and BancBoston Securities, Inc. (incorporated by reference to
              Exhibit 10.23 to Citadel Broadcasting Company's Registration
              Statement No. 333-36771 on Form S-4).

10.24*        Deschutes Option Exchange Agreement dated as of December 31, 1996
              by and between Citadel Communications Corporation and Edward T.
              Hardy (incorporated by reference to Exhibit 10.24 to Citadel
              Broadcasting Company's Registration Statement No. 333-36771 on
              Form S-4).

10.25*        Deschutes Option Exchange Agreement dated as of December 31, 1996
              by and between Citadel Communications Corporation and Edward T.
              Hardy (incorporated by reference to Exhibit 10.25 to Citadel
              Broadcasting Company's Registration Statement No. 333-36771 on
              Form S-4).

10.26*        Form of Citadel Communications Corporation Stock Option Agreement
              for grants effective as of January 1, 1996.

21            Subsidiaries of Citadel Broadcasting Company (incorporated by
              reference to Exhibit 21 to Citadel Broadcasting Company's
              Registration Statement No. 333-36771 on Form S-4).

27            Financial Data Schedule

--------------------------------
*             Management contract or management compensatory plan or arrangement