1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 1O-Q
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
FOR THE QUARTERLY PERIOD ENDED JUNESEPTEMBER 30, 2001.
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 000-24525
CUMULUS MEDIA INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ILLINOIS 36-4159663
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
3535 Piedmont Road, Building 14, Fl 14, Atlanta, GA 30305
(Address of Principal Executive Offices) (ZIP CODE)
(404) 949-0700
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
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 [ ]
As of JulyOctober 31, 2001, the registrant had outstanding 35,217,79135,219,416 shares of
common stock consisting of (i) 28,431,17129,210,796 shares of Class A Common Stock; (ii)
4,479,343 shares of Class B Common Stock; and (iii) 2,307,2771,529,277 shares of Class C
Common Stock.
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CUMULUS MEDIA INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets as of June 30, 2001 and December
31, 2000
Consolidated Statements of Operations for the Three and Six
Months Ended June 30, 2001 and 2000
Consolidated Statements of Cash Flows for the Six Months Ended
June
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets as of September 30, 2001 and December 31, 2000
Consolidated Statements of Operations for the Three and Nine Months Ended
September 30, 2001 and 2000
Consolidated Statements of Cash Flows for the Nine Months Ended September
30, 2001 and 2000
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Item 3 Quantitative and Qualitative Disclosures About Market Risk.
PART II. OTHER INFORMATION
Item 1 Legal Proceedings
Item 2 Changes in Securities and Use of Proceeds
Item 3 Defaults Upon Senior Securities
Item 4 Submission of Matters to a Vote of Security Holders
Item 5 Other Information
Item 6 Exhibits and Reports on Form 8-K
Signatures
Exhibit Index
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PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
CUMULUS MEDIA INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except for share and per share data)
(UNAUDITED)
JuneSeptember 30, December 31,
2001 2000
---- ----
Assets
Current assets:
Cash and cash equivalents.........................................equivalents ................................................................... $ 8,6026,223 $ 10,979
Accounts receivable, less allowance for doubtful accounts
of $3,288$3,441 and $17,348 respectively............................. 41,627respectively ....................................................... 38,646 43,498
Prepaid expenses and other current assets......................... 11,313assets ................................................... 11,756 9,536
-------- ----------------- ---------
Total current assets......................................... 61,542assets ................................................................... 56,625 64,013
Property and equipment, net.......................................... 87,269net .................................................................... 86,589 79,829
Intangible assets, net............................................... 818,010net ......................................................................... 812,797 762,996
Other assets......................................................... 27,791assets ................................................................................... 23,268 48,097
-------- ----------------- ---------
Total assets................................................ $994,612 $954,935
======== ========assets .......................................................................... $ 979,279 $ 954,935
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses.............................expenses ....................................................... $ 59,00851,650 $ 45,858
Current portion of long-term debt................................. 583debt ........................................................... 770 208
Other current liabilities......................................... 626liabilities ................................................................... 514 679
-------- ----------------- ---------
Total current liabilities.................................... 60,217liabilities .............................................................. 52,934 46,745
Long-term debt....................................................... 324,634debt ................................................................................. 324,440 285,020
Other liabilities.................................................... 1,551liabilities .............................................................................. 1,262 1,924
Deferred income taxes................................................ 27,930taxes .......................................................................... 27,322 29,666
-------- ----------------- ---------
Total liabilities............................................ 414,332liabilities ...................................................................... 405,958 363,355
-------- ----------------- ---------
Series A Cumulative Exchangeable Redeemable Preferred Stock due
2009, stated value $1,000 per share, 121,544125,712 and 113,643 shares
issued and outstanding, respectively 125,722........................................................ 130,141 117,530
-------- ----------------- ---------
Series B Cumulative Exchangeable Redeemable Preferred Stock due
2009, stated value $10,000 per share, 265273 and 250 shares
issued and outstanding, respectively 2,363........................................................ 2,445 2,178
-------- ----------------- ---------
Commitments and contingencies (Note 8)
Stockholders' equity:
Class A common stock, par value $.01 per share; 50,000,000100,000,000
shares authorized; 28,429,42129,210,796 and 28,378,976 shares issued and outstanding.................................................... 284outstanding ............... 292 284
Class B common stock, convertible, par value $.01 per share; 20,000,000 ..................... 45 45
shares authorized; 4,479,343 and 4,479,343 shares issued and outstanding......................................... 45 45outstanding
Class C common stock, convertible, par value $.01 per share; 30,000,000 ..................... 15 23
shares authorized; 2,307,2771,529,277 and 2,307,277 shares issued and outstanding......................................... 23 23outstanding
Additional paid-in-capital........................................ 504,062paid-in-capital .................................................................. 499,583 512,284
Loan to officers.................................................officers ........................................................................... (9,984) (9,984)
Accumulated deficit............................................... (42,235)deficit ......................................................................... (49,216) (30,780)
----------------- ---------
Total stockholders' equity................................... 452,195equity ............................................................. 440,735 471,872
-------- ----------------- ---------
Total liabilities and stockholders' equity................... $994,612 $954,935
======== ========equity ............................................. $ 979,279 $ 954,935
========= =========
See Accompanying Notes to Consolidated Financial Statements
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CUMULUS MEDIA INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except for share and per share data)
(UNAUDITED)
-----------
THREE MONTHS THREE MONTHS SIXNINE MONTHS SIXNINE MONTHS
ENDED ENDED ENDED ENDED
JUNESEPTEMBER 30, 2001 JUNESEPTEMBER 30, 2000 JUNESEPTEMBER 30, 2001 JUNESEPTEMBER 30, 2000
Revenues................................Revenues ............................................. $ 60,96656,293 $ 68,095 $109,931 $119,95063,307 $ 166,224 $ 183,257
Less: agency commissions................ (5,894) (5,468) (10,271) (9,606)
-------- -------- -------- --------commissions ............................. (5,478) (5,180) (15,749) (14,787)
------------ ------------ ------------ ------------
Net revenues.................... 55,072 62,627 99,660 110,344revenues ................................. 50,815 58,127 150,475 168,470
Operating expenses:
Station operating expenses, excluding depreciation,
amortization and LMA fees (including provision 35,260 62,649 107,391 151,137
for doubtful accounts of $1,698, $1,190,
$2,649$1,488, $20,483, $4,137
and $2,169$22,652 respectively) 36,719 46,186 72,131 88,489
Depreciation and amortization......... 12,081 10,408 24,365 20,304amortization ..................... 12,643 10,173 37,008 30,477
LMA fees.............................. 1,154 1,663 2,168 2,842fees .......................................... 391 897 2,560 3,739
Corporate general and administrative.... 3,669 4,014 7,503 8,698administrative .............. 4,117 3,762 11,620 12,460
Restructuring and other charges.........charges ................... -- -- (33) 9,296
(33) 9,296
--------- -------- --------- -------------------- ------------ ------------ ------------
Total operating expenses......... 53,590 71,567 106,134 129,629
-------- -------- -------- --------expenses ...................... 52,411 77,481 158,546 207,109
------------ ------------ ------------ ------------
Operating income (loss).......... 1,482 (8,940) (6,474) (19,285)
-------- -------- -------- --------loss ................................ (1,596) (19,354) (8,071) (38,639)
------------ ------------ ------------ ------------
Nonoperating income (expense):
Interest expense..................... (7,754) (7,779) (15,721) (15,415)expense .................................. (7,949) (8,656) (23,670) (24,071)
Interest income...................... 1,121 2,521 1,698 4,613income ................................... 298 1,481 1,997 6,094
Other income, (expense), net.......... (8,850) (13) 7,398 (12)
--------- --------- -------- ---------net ................................. 1,672 68,085 9,070 68,073
------------ ------------ ------------ ------------
Total nonoperating expenses, net. (15,483) (5,271) (6,625) (10,814)
--------- --------- --------- ---------
Lossincome (expense), net ...... (5,979) 60,910 (12,603) 50,096
------------ ------------ ------------ ------------
Income (loss) before income taxes......... (14,001) (14,211) (13,099) (30,099)taxes ............. (7,575) 41,556 (20,674) 11,457
Income tax (expense) benefit 1,932 5,128 1,644 10,897
-------- -------- -------- --------......................... 594 (17,258) 2,238 (6,361)
------------ ------------ ------------ ------------
Net loss......................... (12,069) (9,083) (11,455) (19,202)income (loss) ............................. (6,981) 24,298 (18,436) 5,096
Preferred stock dividends, deemed dividends and
accretion of discount........................ 4,387 3,642 8,476 7,173
-------- -------- -------- --------discount ......................... 4,501 3,809 12,977 10,982
------------ ------------ ------------ ------------
Net lossincome (loss) attributable to common
stockholders......................... $(16,456) $(12,725) $(19,931) $(26,375)
======== ======== ======== ========stockholders ............................... $ (11,482) $ 20,489 $ (31,413) $ (5,886)
============ ============ ============ ============
Basic and diluted lossincome (loss) per common share.share ..... $ (0.47)(0.33) $ (0.36)0.58 $ (0.57)(0.89) $ (0.75)
--------- --------- --------- ---------(0.17)
============ ============ ============ ============
Weighted average common shares outstanding 35,215,048........... 35,218,238 35,165,596 35,210,236 35,111,407
========== ========== ========== ==========35,212,933 35,129,602
============ ============ ============ ============
See Accompanying Notes to Consolidated Financial Statements
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CUMULUS MEDIA INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(UNAUDITED)
SIXNINE MONTHS SIXNINE MONTHS
ENDED ENDED
JUNESEPTEMBER 30, 2001 JUNESEPTEMBER 30, 2000
Cash flows from operating activities:
Net loss.......................................................... $(11,455) $(19,202)income (loss) .......................................................................... $ (18,436) $ 5,096
Adjustments to reconcile net lossincome (loss) to net cash provided by (used in) operating
activities:
Depreciation................................................ 7,274 6,250Depreciation ......................................................................... 11,020 9,460
Amortization of goodwill, intangible assets and other assets 18,145 14,924......................... 27,601 22,301
Provision for doubtful accounts............................. 2,649 2,169accounts ...................................................... 4,137 22,652
Gain on sale of stations.................................... (16,304)stations ............................................................. (16,246) (68,066)
Stock issuance portion of litigation settlement ...................................... 1,618 --
Deferred taxes.............................................. (1,644) (10,897)taxes ....................................................................... (2,238) 5,991
Asset write-down for restructuring and other charges........charges ................................. -- 4,530
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable............................................ 633 (9,987)receivable ..................................................................... 3,123 (9,185)
Prepaid expenses and other current assets...................... 5,662 203assets ............................................... 5,339 (957)
Accounts payable and accrued expenses.......................... 3,741 3,092expenses ................................................... (4,888) 959
Other assets................................................... (1,571) (2,629)assets ............................................................................ (1,572) (3,287)
Other liabilities.............................................. (225) (261)
-------- --------liabilities ....................................................................... (732) (558)
--------- ---------
Net cash provided by (used in) operating activities......... 6,905 (11,808)
--------activities .................................. 8,726 (11,064)
--------- ---------
Cash flows from investing activities:
Acquisitions................................................... (81,251) (34,561)
Dispositions...................................................Acquisitions ............................................................................ (82,001) (97,065)
Dispositions ............................................................................ 38,186 --
Escrow deposits on pending acquisitions........................ (827) (86,160)acquisitions ................................................. (1,169) (56,084)
Capital expenditures........................................... (4,021) (7,431)
Other.......................................................... (673) (2,313)
-------- --------expenditures .................................................................... (7,689) (9,132)
Other ................................................................................... (3) (166)
--------- ---------
Net cash (used in)used in investing activities................... (48,586) (130,465)activities .............................................. (52,676) (162,447)
--------- ---------
Cash flows from financing activities:
Proceeds from revolving line of credit......................... 42,500credit .................................................. 46,500 --
Payments on revolving line of credit........................... (2,500)credit .................................................... (6,500) --
Payments for debt issuance costs............................... (686) (58)costs ........................................................ (811) (57)
Payments on promissory notes................................... (11) (10)notes ............................................................ (18) (16)
Payment of dividend on Series A Preferred Stock................Stock ......................................... -- (3,530)
Proceeds from issuance of common stock......................... 1stock .................................................. 23 --
-------- ----------------- ---------
Net cash provided by (used in) financing activities......... 39,304 (3,598)
--------activities .................................. 39,194 (3,603)
--------- ---------
Decrease in cash and cash equivalents............................ (2,377) (145,871)equivalents ..................................................... (4,756) (177,114)
Cash and cash equivalents at beginning of period.................. $period ........................................... 10,979 $219,581219,581
--------- ---------
Cash and cash equivalents at end of period........................period ................................................. $ 8,6026,223 $ 73,71042,467
========= =========
Non-cash operating and financing activities:
Trade revenue..................................................revenue ........................................................................... $ 6,1399,368 $ 6,0689,168
Trade expense.................................................. 5,905 6,058expense ........................................................................... 9,134 9,156
Assets acquired through notes payable..........................payable ................................................... -- 1292,340
Proceeds on sale of stations remitted directly into restricted cash account ............. -- 91,467
Preferred stock dividends paid in kind, deemed dividends and accretion of discount....................................... 8,476 7,173discount ...... 12,977 10,982
See Accompanying Notes to Consolidated Financial Statements
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CUMULUS MEDIA INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. INTERIM FINANCIAL DATA
The consolidated financial statements should be read in conjunction
with the consolidated financial statements of Cumulus Media Inc. ("Cumulus" or
the "Company") and the notes thereto included in the Company's Annual Report on
Form 10-K for the year ended December 31, 2000. The accompanying unaudited
financial statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and notesfootnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments necessary for a fair presentation of results of the
interim periods have been made and such adjustments were of a normal and
recurring nature. The results of operations and cash flows for the sixnine months
ended JuneSeptember 30, 2001 are not necessarily indicative of the results that can
be expected for the entire fiscal year ending December 31, 2001.
Certain 2000 balances have been reclassified to conform to the 2001
presentation.
2. RECENT ACCOUNTING PRONOUNCEMENTS
In July 2001, theStatement of Financial Accounting Standards Board issued Statement("SFAS") No.
141, "Business Combinations", and StatementSFAS No. 142, "Goodwill and Other
Intangible Assets". Statement
were issued. In October 2001, SFAS No. 144 "Accounting for the Impairment or
Disposal of Long-Lived Assets" was issued. SFAS No. 141 requires that the purchase method of
accounting be used for all
business combinations initiated after June 30, 2001, as well as allbe accounted for using the
purchase method business combinations completed after June 30,
2001. Statementof accounting, and prohibits the use of the pooling-of-interests
method for such transactions. SFAS No. 141 also specifies criteriarequires identified intangible
assets acquired in a purchase method business combination must meet to be recognized and reportedas an asset apart
from goodwill noting that any purchase price allocableif they meet certain criteria.
SFAS No. 142 applies to an assembled
workforce may not be accounted for separately. Statement 142 will require thatall goodwill and identified intangible assets
with indefinite useful lives no longeracquired in a business combination. Under the new standard, all goodwill,
including that acquired before initial application of the standard, should not
be amortized but insteadshould be tested for impairment at least annually in accordance
with the provisions of Statement 142. Statement 142 will also require thatannually. Identified
intangible assets with estimable useful livesshould be amortized over their respective
estimated useful lives to their estimated residual values, and reviewed for
impairment in accordance with FAS StatementSFAS No. 144. Within six months of initial
application of the new standard, a transitional impairment test must be
performed on all goodwill. Any impairment loss recognized as a result of the
transitional impairment test should be reported as a change in accounting
principle. In addition to the transitional impairment test, the required annual
impairment test should be performed in the year of adoption of SFAS No. 142.
SFAS No. 142 is effective for fiscal years beginning after December 15, 2001,
(although early adoption would be permitted in certain circumstances) and must
be adopted as of the beginning of a fiscal year. Retroactive application is not
permitted. The Company is in the process of evaluating the impact that adoption
of SFAS No. 142 may have on the financial statements; however, such impact, if
any, is not known or reasonably estimable at this time.
SFAS No. 144 addresses financial accounting and reporting for the
impairment or disposal of long-lived assets. While SFAS No. 144 supercedes SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of". it retains many of the fundamental provisions of that
Statement. SFAS No. 144 also supersedes the accounting and reporting provisions
of APB Opinion No. 30, "Reporting the Results of Operations-Reporting the
Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions" for the disposal of a segment of
a business. However, it retains the requirement in Opinion 30 to report
separately discontinued operations and extends that reporting to a component of
an entity that either has been disposed of (by sale, abandonment, or in a
distribution to owners) or is classified as held for sale. SFAS No. 144 is
effective for fiscal years beginning after December 15, 2001 and interim periods
within those fiscal years. The Company is required to adoptin the provisionsprocess of Statement 141
immediately and Statement 142 effective January 1, 2002. Furthermore, goodwill
and intangible assets determined to have an indefinite useful life acquired in a
purchase business combination completed after June 30, 2001, but before
Statement 142 is adopted in full will not be amortized, but will continue to be
evaluated for impairment in accordance withevaluating the
appropriate pre-Statement 142
accounting literature. Goodwill and intangible assets acquired in business
combinations completed before July 1, 2001 will continue to be amortized and
tested for impairment in accordance with the appropriate pre-Statement 142
accounting requirements prior to theimpact that adoption of Statement 142.
Statement 141 will require upon adoption of Statement 142, thatSFAS No. 144 may have on the Company
evaluate its existing intangible assets and goodwill that were acquired in a
prior purchase business combination, and to makefinancial statements;
however, such impact, if any, necessary reclassifications
in order to conform with the new criteria in Statement 141 for recognition apart
from goodwill. Upon adoption of Statement 142, the Company will be required to
reassess the useful lives and residual values of all intangible assets acquired,
and make any necessary amortization period adjustments by the end of the first
interim period after adoption. In addition, to the extent an intangible asset is
identified as having an indefinite useful life, the Company will be required to
test the intangible asset for impairment in accordance with the provisions of
Statement 142 within the first interim period. Any impairment loss will be
measured as of the date of adoption and recognized as the cumulative effect of a
change in accounting principle in the first interim period.
In connection with Statement 142's transitional goodwill impairment
evaluation, the Statement will require the Company to perform an assessment of
whether there is an indication that goodwill (and equity-method goodwill) is
impaired as of the date of adoption. To accomplish this, the Company must
identify its reporting units and determine the carrying value of each reporting
unit by assigning the assets and liabilities, including the existing goodwill
and intangible assets, to those reporting units as of the date of adoption. The
Company will then have up to six months from the date of adoption to determine
the fair value of each reporting unit and compare it to the reporting unit's
carrying amount. To the extent a reporting unit's carrying amount exceeds its
fair value, an indication exists that the reporting unit's goodwill may be
impaired and the Company must perform the second step of the transitional
impairment test. In the second step, the Company must compare the implied fair
value of the reporting unit's goodwill, determined by allocating the reporting
unit's fair value to all of its assets (recognized and unrecognized) and
liabilities in a manner similar to a purchase price allocation in accordance
with Statement 141, to its carrying amount, both of which would be measured as
of the date of adoption. This second step is required to be completed as soon as
possible, but no later than the end of the year of adoption. Any transitional
impairment loss will be recognized as the cumulative effect of a change in
accounting principle in the Company's statement of earnings.
Finally, any unamortized negative goodwill (and equity-method negative
goodwill) existing at the date Statement 142 is adopted must be written off as
the cumulative effect of a change in accounting principle.
Because of the extensive effort needed to comply with adopting Statements
141 and 142, it is not practicable toknown or reasonably estimate the impact of adopting
these Statements on the Company's financial statementsestimable at the date of this report, including whether it will be required to recognize any transitional
impairment losses as the cumulative effect of a change in accounting principle.time.
3. ACQUISITIONS:ACQUISITIONS AND DISPOSITIONS
During the quarter ended JuneSeptember 30, 2001, the Company completed
acquisitions of 193 radio stations for $77.1$5.3 million in purchase price. Of the $77.1$5.3
million required to fund the acquisitions, $1.0 million was provided through the
exchange of stations, $66.9$0.8 million was funded in cash and
$9.2$4.5 million had beenwas funded with previously funded asdeposited cash escrow deposits onrelating
to the pending acquisitions. These
aggregate acquisition amounts include the assets acquired pursuant to the asset
exchange and sales transaction described below.
All of the Company's acquisitions werehave been accounted for by the
purchase method of accounting. As such, the accompanying consolidated balance
sheet includes the acquired assets and liabilities and the statement of
operations includes the results of operations of the acquired entities from
their respective dates of acquisition.
The accompanying consolidated statements of operations include the
results of operations of the divested entities through the date of disposition.6
An allocation of the aggregate purchase prices to the estimated fair
values of the assets acquired and liabilities assumed is presented below
(dollars in thousands).
Property and equipment..... $ 5,592351
Intangible assets.......... 71,504
------4,904
--------
$ 77,096
========5,255
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NEXT MEDIA ASSET EXCHANGE
On May 2, 2001, the Company completed an asset exchange and sale with Next
Media Group and certain of its subsidiaries. Upon the closing, the Company
transferred two stations in Jacksonville, North Carolina for one station in
Myrtle Beach, South Carolina and approximately $2.0 million in cash. In
connection with the transaction, the Company recorded a $0.4 million gain on
sale during the three months ended June 30, 2001.
PRO FORMA
The unaudited consolidated condensed pro forma results of operations
data for the three and sixnine months ended JuneSeptember 30, 2001 and 2000, as if all
acquisitions and dispositions completed during 2000 and during the first, second
and secondthird quarter of 2001 occurred at January 1, 2000, follow (dollars in
thousands, except per share data):
THREE MONTHS ENDED SIXNINE MONTHS ENDED
JUNESEPTEMBER 30, JUNESEPTEMBER 30, JUNESEPTEMBER 30, JUNESEPTEMBER 30,
2001 2000 2001 2000
---- ---- ---- ----
Net revenues..................................revenues ............................................... $54,584 $56,885 $98,483 $101,878 50,614 $ 53,533 $ 149,097 $ 155,411
Operating income (loss).........................2,780 (8,902) (5,349) (19,528)loss ............................................. (514) (983) (5,863) (21,707)
Net loss.......................................(8,065) (15,191) (17,936) (26,585)loss ................................................... (4,981) (5,267) (12,003) (21,668)
Net loss attributable to common stockholders..(12,321) (19,447) (26,280) (34,929)
======= ======= ======= =======stockholders ............... (9,482) (9,768) (24,980) (34,645)
========= ========= ========= =========
Basic and diluted loss per common share......share .................... $ (0.35)(0.27) $ (0.55)(0.28) $ (0.75)(0.71) $ (0.99)(0.98)
During the three months ended September 30, 2001, the Company entered
into various asset purchase agreements to sell 8 radio stations (6 FM and 2 AM)
in 6 markets for an aggregate sale price of approximately $11.0 million in cash.
As of November 9, 2001 the Company had completed the sale of 2 stations for $6.8
million. The Company expects to consummate the pending dispositions in the 4th
quarter of 2001 and the 1st quarter of 2002. Proceeds from dispositions will be
used to fund pending acquisitions and other general corporate purposes.
Escrow funds of approximately $10.5$6.4 million paid by the Company in
connection with pending acquisitions have been classified as Other Assets at
JuneSeptember 30, 2001 in the accompanying consolidated balance sheet.
At JuneSeptember 30, 2001 the Company operated 1614 stations under local
marketing agreements ("LMA"). The statement of operations for the three and sixnine
months ended JuneSeptember 30, 2001 includes the revenue and broadcast operating
expenses of these radio stations and any related fees associated with the LMA
from the effective date of the LMA through the earlier of the acquisition date
or JuneSeptember 30, 2001.
4. RESTRUCTURING CHARGE
During June 2000 the Company implemented two separate Board-approved
restructuring programs. During the quarter ended June 30, 2000, the Company
recorded a $9.3 million charge to operating expenses related to restructuring
costs.
The June, 2000 restructuring programs were the result of Board-approved
mandates to discontinue the operations of Cumulus Internet Services and to
centralize the Company's corporate administrative organization and employees in
Atlanta. The programs included severance and related costs, and costs for
vacated leased facilities, impaired leasehold improvements at vacated leased
facilities, and impaired assets related to the Internet businesses.
The following table depicts the amounts associated with and activity related to
the June 2000 restructuring programs through JuneSeptember 30, 2001: (dollars in
thousands)
Restructuring Paid Through Unpaid Balance
Liability JuneSeptember 30, as of
Expense Category December 31, 2000 2001 JuneSeptember 30, 2001
- ---------------- ----------------- ---- -------------------------------
7
Employee severance and related costs $ 528 $ 347431 $ 18197
Lease termination costs 2,379 284 2,095
----- --- -----409 1,970
------ ------ ------
Office relocation subtotal 2,907 631 2,276
----- --- -----840 2,067
------ ------ ------
Accrued internet contractual obligations 375 -- 37535 340
Internet lease termination costs 434 39 395
--- -- ---80 354
------ ------ ------
Internet services subtotal 809 39 770
--- -- ---115 694
------ ------ ------
Restructure liability totals $3,716 $ 3,716 $ 670 $ 3,046
======== ======= =======955 $2,761
====== ====== ======
7
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As of JuneSeptember 30, 2001, approximately $3.0$2.8 million in accrued
restructuring costs remain related to the Company's June, 2000 restructuring
programs. This balance is comprised of $0.2$0.1 million in employee severance and
related charges, $2.1$2.0 million in lease termination costs, $0.4$0.3 million related
to amounts owed for software development and asset acquisitions related to
capitalized Internet system and infrastructure assets, and $0.4 in internet
lease termination charges. As of June 30, 2001, the Company'sCompany had completed the
restructuring programs were completed.programs. The remaining portion of the unpaid balance,
representing lease obligations, certain contractual severance obligations and
various contractual obligations for services related to the internet business
will be paid consistent with the contracted terms.
5. LONG-TERM DEBT
The Company's long-term debt consists of the following at JuneSeptember 30,
2001 and December 31, 2000 (dollars in thousands):
JUNESEPTEMBER 30, DECEMBER 31,
2001 2000
---- ----
Term loan facility at 7.19%6.1% and 10.07%, respectivelyrespectively............................ 125,000 $125,000$ 125,000
Revolving credit facility at 6.63%5.42%............................................. 40,000 --
Senior Subordinated Notes, 10 3/8%, due 20082008................................... 160,000 160,000
Other 217Other.......................................................................... 210 228
-------- --------
325,217------------ ------------
325,210 285,228
Less: Current portion of long-term debt (583)debt........................................ (770) (208)
-------- --------
$324,634 $285,020
======== ========------------ ------------
$ 324,440 $ 285,020
============ ============
Our senior credit facility provides for aggregate principal borrowings
of $175.0 million and consists of a seven-year revolving credit facility of
$50.0 million, an eight-year term loan facility of $75.0 million and an eight
and one-half year term loan facility of $50.0 million. The amount available
under the seven-year revolving credit facility will be automatically reduced by
5% of the initial aggregate principal amount in each of the third and fourth
years following closing (August 31, 1999), 10% of the initial aggregate
principal amount in the fifth year following the closing, 20% of the initial
aggregate principal amount in the sixth year following the closing and the
remaining 60% of the initial aggregate principal amount in the seventh year
following the closing. As of JuneSeptember 30, 2001 and JulyOctober 31, 2001 $165.0
million and $169.0$160.0 million was outstanding, respectively, under our senior
credit facility. On October 29, 2001, the Company repaid $5.0 million of
principal towards its revolving credit facility.
On May 11, 2001, the Company and its lenders under the Credit Facilitycredit facility
entered into the Fourth Amendment to the Amended and Restated Credit Agreement
dated as of August 31, 1999 (the "Fourth Amendment"). The Fourth Amendment
modified certain financial covenant requirements, including the consolidated
leverage ratio, the consolidated senior debt ratio and the consolidated interest
coverage ratio. In consideration for entering into the Fourth Amendment, the
Company agreed to pay the administrative agent a fee in the amount of $0.5
million, 50% of which was paid as of the effective date of the amendment. TheOf the
remaining portion of the administrative agent fee, 25% was paid in September
2001 and the final 25% will be paid prior to December 31, 2001. The Company also
paid the lenders a fee in the amount of $0.4 million.
On May 21, 2001, the Company borrowed $40.0 million under its
seven-year $50$50.0 million revolving credit facility. Proceeds from this borrowing
were used to purchase stations during the quarter and to satisfy operating cash
needs.
The Company's obligations under its current credit facility are
collateralized by substantially all of its assets in which a security interest
may lawfully be granted (including FCC licenses held by its subsidiaries),
including, without limitation, intellectual property; real
8
property, and all of the capital stock of the Company's direct and indirect
domestic subsidiaries, except the capital stock of Broadcast Software
International, Inc., Cumulus Internet Services Inc. and Cumulus
Telecommunications, Inc., and 65% of the capital stock of any first-tier foreign
subsidiary. The obligations under the credit facility are also guaranteed by
each of the direct and indirect domestic subsidiaries, except Broadcast
Software, Cumulus Internet Services and Cumulus Telecommunications, and are
required to be guaranteed by any additional subsidiaries acquired by Cumulus.
Both the revolving credit and term loan borrowings under the credit
facility bear interest, at the Company's option, at a rate equal to the Base
Rate (as defined under the terms of our credit facility, 6.75%6.0% as of JuneSeptember
30, 2001), plus a margin ranging between 0.75% to 2.50%, or the Eurodollar Rate
(as defined under the terms of the credit facility, 3.76%2.67% as of JuneSeptember 30,
2001) plus a margin ranging between 1.75% to 3.50% (in each case dependent upon
the leverage ratio of the Company). At JuneSeptember 30, 2001 the Company's
effective interest rate on term loan and revolving loan amounts outstanding
under the credit facility was 7.05%5.93%.
A commitment fee calculated at a rate ranging from 0.375% to 0.75% per
annum (depending upon the Company's utilization
8
9 rate) of the average daily
amount available under the revolving lines of credit is payable quarterly in
arrears, and fees in respect of letters of credit issued under the Credit Facilitycredit
facility equal to the interest rate margin then applicable to Eurodollar Rate
loans under the seven-year revolving credit facility also will be payable
quarterly in arrears. In addition, a fronting fee of 0.125% per annum is payable
quarterly in arrears to the issuing bank.
The eight-year term loan borrowings are repayable in quarterly
installments beginning in December 2001. The scheduled annual amortization is
$0.75 million for each of the third, fourth, fifth, sixth and seventh years
following closing and $71.25 million in the eighth year following closing. The
eight and a half year term loan is repayable in two equal installments on
November 30, 2007 and February 28, 2008. The amount available under the 7-year
revolving credit facility will be automatically reduced in quarterly
installments as described in the first paragraph above. Certain mandatory
prepayments of the term loan facility and the revolving credit line and
reductions in the availability of the revolving credit line are required to be
made including: (i) 100% of the net proceeds from any issuance of capital stock
or incurrence of indebtedness; (ii) 100% of the net proceeds from certain asset
sales; and (iii) between 50% and 75% (dependent on our leverage ratio) of our
excess cash flow.
Under the terms of the amended and restated credit facility, the
Company is subject to certain restrictive financial and operating covenants,
including but not limited to maximum leverage covenants, minimum interest and
fixed charge coverage covenants, limitations on asset dispositions and the
payment of dividends. The failure to comply with the covenants would result in
an event of default, which in turn would permit acceleration of debt under those
instruments. At JuneSeptember 30, 2001, the Company was in compliance with such
financial and operating covenants.
The terms of the facility contain events of default after expiration of
applicable grace periods, including failure to make payments on the credit
facility, breach of covenants, breach of representations and warranties,
invalidity of the agreement governing the credit facility and related documents,
cross default under other agreements or conditions relating to indebtedness of
Cumulus or the Company's restricted subsidiaries, certain events of liquidation,
moratorium, insolvency, bankruptcy or similar events, enforcement of security,
certain litigation or other proceedings, and certain events relating to changes
in control. Upon the occurrence of an event of default under the terms of the
credit facility, the majority of the lenders are able to declare all amounts
under our credit facility to be due and payable and take certain other actions,
including enforcement of rights in respect of the collateral. The majority of
the banks extending credit under each term loan facility and the majority of the
banks under each revolving credit facility may terminate such term loan facility
and such revolving credit facility, respectively.
As defined by the indenture and the certificates of designation
governing the Senior Subordinated Notes and Series A Cumulative Exchangeable
Redeemable Preferred Stock due 2009, respectively, the amount we may borrow
under the senior credit facility is limited to $175.0 million as of JuneSeptember
30, 2001. As of JuneSeptember 30, 2001, we would be permitted to incur approximately
$10.0 million of additional indebtedness under our credit facility without
regard to the debt ratios included in our indenture.
We have issued $160.0 million in aggregate principal amount of our 10
3/8% Senior Subordinated Notes which have a maturity date of July 1, 2008. The
notes are our general unsecured obligations and are subordinated in right of
payment to all our existing and future senior debt (including obligations under
our credit facility). Interest on the notes is payable semi-annually in arrears.
6. GUARANTOR'S FINANCIAL INFORMATION
Certain of the Company's direct and indirect subsidiaries (all such
subsidiaries are directly or indirectly wholly owned by the Company) will
provide full and unconditional guarantees for the Company's senior subordinated
notes on a joint and several basis.
9
There are no significant restrictions on the ability of the guarantor
subsidiaries to pay dividends or make loans to the Company.
The following tables provide consolidated condensed financial
information pertaining to the Company's subsidiary guarantors. The Company has
not presented separate financial statements for the subsidiary guarantors and
non-guarantors because management does not believe that such information is
material to investors (dollars in thousands).
JUNESEPTEMBER 30, 2001 DECEMBER 31, 2000
------------------ -----------------
Current assets..........assets.................. $ 154,296 $127,95945,628 $ 58,770
Noncurrent assets....... 883,942 821,455assets............... 876,058 821,074
Current liabilities..... 15,288liabilities............. 14,276 14,885
Noncurrent liabilities.. 19,874liabilities ......... 19,910 20,032
9
10
THREE MONTHS THREE MONTHS SIXNINE MONTHS SIXNINE MONTHS
ENDED ENDED ENDED ENDED
JUNESEPTEMBER 30, 2001 JUNESEPTEMBER 30, 2000 JUNESEPTEMBER 30, 2001 JUNE2000 SEPTEMBER 30, 2000
------------------ ------------------ ------------------ ------------------
Net revenue........ $ 54,83050,618 $ 62,05157,518 $ 98,797149,414 $ 109,282166,801
Operating expenses. 36,356 44,602 71,226 86,16534,909 61,824 106,135 147,989
Net income (loss).. 4,750 3,432 1,129 3452,819 (8,928) 3,874 (6,550)
7. EARNINGS PER SHARE
The following table sets forth the computation of basic loss per share
for the three and sixnine month periods ended JuneSeptember 30, 2001 and 2000 (dollars in
thousands, except per share data).2000.
THREE MONTHS ENDED THREE MONTHS SIXENDED NINE MONTHS SIXNINE MONTHS
ENDED ENDED ENDED ENDED
JUNESEPTEMBER 30, 2001 JUNESEPTEMBER 30, 2000 JUNESEPTEMBER 30, 2001 JUNESEPTEMBER 30, 2000
------------- ------------- ------------- ------------------------------- ------------------ ------------------ ------------------
Numerator:
Net loss $(12,069) $(9,083) $(11,455) $(19,202)income (loss) $ (6,981) $ 24,298 $(18,436) $ 5,096
Preferred stock dividends and accretion of
discount (4,387) (3,642) (8,476) (7,173)(4,501) (3,809) (12,977) (10,982)
-------- -------- -------- --------
Numerator for basic earnings per share-
net loss attributable toshare - income
available for common stockholders $(16,456) $(12,725) $(19,931) $(26,375)$(11,482) $ 20,489 $(31,413) $ (5,886)
Denominator:
Denominator for basic earnings per share -
weighted average common shares 35,21535,218 35,166 35,210 35,11135,213 35,130
-------- -------- -------- --------
Basic and diluted loss per common share $ (0.47)(0.33) $ (0.36)0.58 $ (0.57)(0.89) $ (0..75)
========= ========= ========= ==========(0.17)
======== ======== ======== ========
During fiscal 1998, 1999 2000 and 20012000 the Company issued options to key
executives and employees to purchase shares of common stock as part of the
Company's stock option plans. At JuneSeptember 30, 2001 and 2000 there were options
issued to purchase the following classes of common stock:
JuneSeptember 30, JuneSeptember 30,
2001 2000
Options to purchase class A common stock 4,947,711stock..... 4,595,562 2,114,309
Options to purchase class C common stock 3,001,380stock..... 2,657,352 3,001,380
The Series B Preferred Stock was convertible into 217,928392,806 Shares of
Class B Common Stock at JuneSeptember 30, 2001. Earnings per share assuming dilution
has not been presented as the effect of the options and the Series B Preferred
Stock would be antidilutive for the three and sixnine month periods ended JuneSeptember
30, 2001 and the nine month period ended September, 30, 2000. The exercise
prices of all stock options exceeded the market price of the underlying common
stock for the three month period ended September 30, 2000.
8. COMMITMENTS AND CONTINGENCIES
As of JuneSeptember 30, 2001 the Company has entered into various asset
purchase agreements to acquire radio stations. In general,
10
the transactions are structured such that if the Company cannot consummate these
acquisitions because of a breach of contract, the Company may be liable for a
percentage of the purchase price, as defined by the agreements. We intend to
finance the pending acquisitions with cash on hand, the proceeds from pending
asset divestitures, cash flow from operations, the proceeds of borrowings under
our credit facility or future credit facilities, and other sources to be
identified. There can be no
assurance the Company will be able to obtain such financing beyond cash
reserves. In the event that the Company cannot consummate these acquisitions
because of breach of contract, the Company may be liable for approximately $10.5$6.4
million in purchase price.
The Company had been named as a defendant in the following eleven class
action complaints: (1) Wolfe v. Weening, et al.; (2) Klar v. Cumulus Media Inc.,
et al.; (3) Atlas v. Cumulus Media Inc., et al.; (4) Steinberg and Steinberg v.
Cumulus Media Inc., et al.; (5) Wong v. Weening, et al.; (6) Pleatman v. Cumulus
Media Inc., et al.; (7) Kincer v. Weening, et al.; (8) Krim v. Cumulus Media
Inc., et al.; (9) Baldwin v. Cumulus Media, Inc., et al.; (10) Pabian v.
Weening, et al.; and (11) Demers v. Cumulus Media Inc., et al. Certain present
and former directors and officers of the Company, and certain underwriters of
the Company's stock, had also been named as defendants. On December 8, 2000,
plaintiffs served a Second Amended Consolidated Class Action Complaint, which
alleges, among other things, violations of Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, and
Sections 11 and 12(a) of the Securities Act of 1933, and seeks unspecified
damages. In June 2001, the 10
11
Company reached an agreement in principle to settle
the lawsuits. Pursuant to the terms of the agreement, which is subject to
negotiation of a final Stipulation of Settlement and court approval, the
lawsuits will be dismissed in exchange for $13.0 million in cash and 240,000
shares of common stock. Of the cash portion of the settlement, $7.3 million will
be provided by the Company's preexisting insurance. The balance of the cash
portion is expected to be paid from cash from operations and proceeds from
borrowings under the Company's senior credit facility. A settlement liability of
$16.3$14.7 million and related insurance claim receivable of $7.3 million have been
included in accrued expenses and other current assets, respectively, in the
accompanying consolidated balance sheet as of JuneSeptember 30, 2001. During the
quarter ended June 30, 2001, the Company has recorded aan initial settlement charge of $9.0 million settlement charge which iswas
recorded and included as a component of Other Income(Expense)Income (Expense) in the
accompanying statementsconsolidated statement of operations. As the settlement is contingent upon
document negotiation and court approval, the Company has initially measured the
stock issuance portion of the settlement, based on the closing stock price as of
June 30, 2001 to be $3.3 million. During the quarter ended September 30, 2001,
the Company recorded a remeasurement adjustment to the settlement charge of $1.5
million to reflect the decrease in the Company's liability as a result of the
decrease in the Company's stock price from June 30, 2001 to September 30, 2001.
The remeasurement adjustment is included as a component of Other Income(Expense)
in the accompanying consolidated statements of operations. In future periods,
the Company will continue to remeasure the stock issuance portion of the
liability and adjust the expense until such time as the liability becomes fixed.
The Company is also a defendant from time to time in various other
lawsuits, which are generally incidental to its business. The Company is
vigorously contesting all such matters and believes that their ultimate
resolution will not have a material adverse effect on its consolidated financial
position, results of operations or cash flows.
9. SUBSEQUENT EVENTS
Subsequent to June 30,RELATED PARTY TRANSACTIONS
Effective July 1, 2001 the Company completedentered into an Amended and Restated
Employment Agreement (the "New Agreement") with its Executive Vice Chairman and
CEO, Lewis W. Dickey, Jr. The New Agreement supercedes a previous employment
agreement dated May 1998. As set forth in the acquisitionNew Agreement, terms of 2 radio
stations forMr.
Dickey's revised compensation, including salary, bonus and fringe benefits along
with equity incentives are defined. In addition, the New Agreement amended
certain terms and conditions related to a promissory note with an aggregate purchase priceoriginal
principal amount of approximately $3.0 million. This
transaction will be accounted for by the purchase method of accounting.
In July 2001, the Company borrowed $4.0$5.0 million, under its seven-year
revolving credit facility. Proceeds from this borrowing were usedissued to satisfy
operating cash needs.Mr. Dickey in February 2000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion of the consolidated financial condition and results of
operations of Cumulus Media Inc. ("Cumulus" or the "Company") should be read in
conjunction with the consolidated financial statements and related notes thereto
of the Company included elsewhere in this quarterly report. This discussion
contains certain forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those discussed
herein. This quarterly report contains statements that constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements appear in a number of places in
this quarterly report and include statements regarding the intent, belief or
current expectations of the Company, its directors or its officers primarily
with respect to the future operating performance of the Company. Any such
forward-looking statements are not guarantees of future performance and may
involve risks and uncertainties. Actual results may differ from those in the
forward-looking statements as a result of various factors. Risks and
uncertainties that may effect forward looking statements in this document
include, without limitation, risks and uncertainties relating to leverage, the
need for additional funds, FCC and government approval of pending acquisitions,
the inability of the Company to renew one or more of its broadcast licenses,
changes in interest rates, consummation of the Company's pending acquisitions,
integration of the pending acquisitions, the ability of the
11
Company to eliminate certain costs, the management of rapid growth, the
popularity of radio as a broadcasting and advertising medium and changing
consumer tastes. Many of these risks and uncertainties are beyond the control of
the Company. This discussion identifies important factors that could cause such
differences. The occurrence of any such factors not currently expected by the
Company would significantly alter the results set forth in these statements.
OVERVIEW
The following is a discussion of the key factors that have affectedaffect our business
since its inception on May 22, 1997.business. The
following information should be read in conjunction with the consolidated
financial statements and related notes thereto included elsewhere in this
report.
The following discussion of our financial condition and results of
operations includes the results of acquisitions and local marketing, management
and consulting agreements. We currently own and operate 210212 stations in 4544 U.S.
markets and provide sales and marketing services under local marketing,
management and consulting agreements (pending FCC approval of the respective
acquisition) to 1614 stations in 76 U.S. markets. We are the second largest radio
broadcasting company in the U.S. based on number of stations. We believe we are
the eleventh largest radio broadcasting company in the U.S. based on 2000 pro
forma net revenues. We will own and operate a total of 226224 radio stations (165(163
FM and 61 AM) in 45 U.S. markets upon consummation of our pending acquisitions and dispositions.acquisitions.
ADVERTISING REVENUE AND BROADCAST CASH FLOW
11
12
Our primary source of revenues is the sale of advertising time on our
radio stations. Our sales of advertising time are primarily affected by the
demand for advertising time from local, regional and national advertisers and
the advertising rates charged by our radio stations. Advertising demand and
rates are based primarily on a station's ability to attract audiences in the
demographic groups targeted by its advertisers, as measured principally by
Arbitron on a periodic basis, generally once, twice or four times per year.
Because audience ratings in local markets are crucial to a station's financial
success, we endeavor to develop strong listener loyalty. We believe that the
diversification of formats on our stations helps to insulate them from the
effects of changes in the musical tastes of the public with respect to any
particular format. The number of advertisements that can be broadcast without
jeopardizing listening levels and the resulting rating is limited in part by the
format of a particular station. Our stations strive to maximize revenue by
continually managing the number of commercials available for sale and adjusting
prices based upon local market conditions. In the broadcasting industry, radio
stations sometimes utilize trade or barter agreements whichthat exchange advertising
time for goods or services such as travel or lodging, instead of for cash.
During the sixnine months ended JuneSeptember 30, 2001 and 2000, our use of trade
agreements accounted for 6.2% and 5.5%5.4% of net revenues, respectively. We will
seek to continue to minimize our use of trade agreements.
Our advertising contracts are generally short-term. We generate most of
our revenue from local advertising, which is sold primarily by a station's sales
staff. During the sixnine months ended JuneSeptember 30, 2001 and 2000 approximately
87% and 89%, respectively, of our revenues were from local advertising. To
generate national advertising sales, we engage Interep National Radio Sales,
Inc., a national representative company. Our revenues vary throughout the year.
As is typical in the radio broadcasting industry, we expect our first calendar
quarter will produce the lowest revenues for the year, and the second and fourth calendar
quarter will generally produce the highest revenues for the year, with the
exception of certain of our stations such as those in Myrtle Beach, South
Carolina, where the stations generally earn higher revenues in the second and
third quarters of the year because of the higher seasonal population in those
communities.
Our operating results in any period may be affected by the incurrence
of advertising and promotion expenses that typically do not have an effect on
revenue generation until future periods, if at all. StationOur most significant station
operating expenses are comprised of employee salaries and commissions, programming expenses,
advertising and promotional expenditures, technical expenses, and general and
administrative expenses. We strive to control these expenses by working closely
with local station management. The performance of radio station groups, such as
ours, is customarily measured by the ability to generate broadcast cash flow and
EBITDA. Broadcast cash flow consists of operating income (loss) before
depreciation and amortization, LMA fees, corporate general and administrative
expenses and restructuring and other charges. EBITDA consists of operating
income (loss) before depreciation and amortization, LMA fees and restructuring
and other charges. Broadcast cash flow and EBITDA, as defined by us, may not be
comparable to similarly titled measures used by other companies. Although
broadcast cash flow and EBITDA are not measures of performance calculated in
accordance with GAAP, management believes that they are useful to an investor in
evaluating us 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, or as measures of liquidity or
profitability. The Company's
12
results from operations from period to period are not historically comparable
due to the impact of the various acquisitions and dispositions that the Company
has completed.
RESULTS OF OPERATIONS
The following table presents summary historical consolidated financial
information and other supplementary data of Cumulus for the three and sixnine
months ended JuneSeptember 30, 2001 and 2000.
FOR THE THREE FOR THE THREE FOR THE SIXNINE FOR THE SIXNINE
MONTHS ENDED MONTHS ENDED MONTHS ENDED MONTHS ENDED
JUNESEPTEMBER 30, 2001 JUNESEPTEMBER 30, 2000 JUNESEPTEMBER 30, 2001 JUNESEPTEMBER 30, 2000
------------------ ------------------ ------------------ ----------------------------------
STATEMENT OF OPERATIONS DATA:
Net broadcast revenue................... $ 55,07250,815 $ 62,627 $ 99,660 $110,344
Stations58,127 $150,475 $168,470
Station operating expenses excluding
depreciation, & amortization. 36,719 46,186 72,131 88,489amortization and.... 35,260 62,649 107,391 151,137
LMA fees..........................
Depreciation and amortization........... 12,081 10,408 24,365 20,30412,643 10,173 37,008 30,477
LMA fees................................ 1,154 1,663 2,168 2,842391 897 2,560 3,739
Corporate expenses...................... 3,669 4,014 7,503 8,698general and administrative.... 4,117 3,762 11,620 12,460
Restructuring and other charges......... (33) 9,296-- -- (33) 9,296
Operating (loss).................. 1,482 (8,940) (6,474) (19,285)loss.................... (1,596) (19,354) (8,071) (38,639)
Interest expense, (net).................. (6,633) (5,258) (14,023) (10,802)net................... (7,651) (7,175) (21,673) (17,977)
Other income, (expense), net (8,850) (13) 7,398 (12)1,672 68,085 9,070 68,073
Net income (loss) (12,069) (9,083) (11,455) (19,202)(6,981) 24,298 (18,436) 5,096
Net lossincome (loss) attributable to common
(16,456) (12,725) (19,931) (26,375)
stockholders..........................Stockholders...................... (11,482) 20,489 (31,413) (5,886)
OTHER DATA:
Broadcast cash flow(1).................. 18,353 16,441 27,529 21,855flow (1)................. 15,555 (4,522) 43,084 17,333
Broadcast cash flow margin.............. 33.3% 26.3% 27.6% 19.8%
EBITDA(2)............................... 14,684 12,427 20,026 13,15730.6% (7.8)% 28.6% 10.3%
EBITDA (2).............................. 11,438 (8,284) 31,464 4,873
Cash flows related to:
Operating activities............ 6,905 (11,808)8,726 (11,064)
Investing activities............ (48,586) (130,465)(52,676) (162,447)
Financing activities............ 39,304 (3,598)39,194 (3,603)
Capital expenditures.................... $ 4,0217,689 $ 7,4319,132
12
13
(1) Broadcast cash flow consists of operating loss before depreciation,
amortization, LMA fees, corporate expenses, LMA fees and restructuring and other charges.
Although broadcast cash flow is not a measure of performance calculated in
accordance with GAAP, management believes that it is useful to an investor in
evaluating the Company because it is a measure widely used in the broadcasting
industry to evaluate a radio Company's operating performance. Nevertheless, it
should not be considered in isolation or as a substitute for net income (loss),
operating income (loss), cash flows from operating activities or any other
measure for determining the Company's operating performance or liquidity that is
calculated in accordance with GAAP. As broadcast cash flow is not a measure
calculated in accordance with GAAP, this measure may not be compared to
similarly titled measures employed by other companies.
(2) EBITDA consists of operating loss before depreciation, amortization, LMA
fees and restructuring and other charges. Although EBITDA is not a measure of
performance calculated in accordance with GAAP, management believes that it is
useful to an investor in evaluating the Company because it is a measure widely
used in the broadcasting industry to evaluate a radio company's operating
performance. Nevertheless, it should not be considered in isolation or as a
substitute for net income (loss), operating income (loss), cash flows from
operating activities or any other measure for determining the Company's
operating performance or liquidity that is calculated in accordance with GAAP.
As EBITDA, is not a measure calculated in accordance with GAAP, this measure may
not be compared to similarly titled measures employed by other companies.
THREE MONTHS ENDED JUNESEPTEMBER 30, 2001 VERSUS THE THREE MONTHS ENDED JUNESEPTEMBER
30, 2000.
NET REVENUES. Net revenues decreased $7.6$7.3 million, or 12.1%12.6%, to $55.1$50.8
million for the three months ended JuneSeptember 30, 2001 from $62.6$58.1 million for the
three months ended JuneSeptember 30, 2000. This decrease was primarily attributable
to the disposition of radio stations during fiscal 2000 and the first quarter of
2001 ($5.74.9 million), lower sales volume associated with the Company's
implementation of stringent credit and collections policies and the current
economic slowdown and tightening corporate advertising budgets ($1.92.4 million),
which has impacted the entire broadcast industry.
In addition, on a same station basis, net revenue for the 167 stations
in 32 markets operated for at least a full year decreased $1.7$1.5 million or 4.4%4.3%
to $35.9$33.9 million for the three months ended JuneSeptember 30, 2001, compared to same
station net revenues of $37.5$35.4
13
million for the three month period ended JuneSeptember 30, 2000. The decrease in
same station net revenue was primarily attributable to lower sales volume
associated with the Company's implementation of stringent credit and collectioncollections
policies and the current economic slowdown and tightening corporate advertising
budgets, which has impacted the entire broadcast industry.
STATION OPERATING EXPENSES, EXCLUDING DEPRECIATION, AMORTIZATION AND
LMA FEES. Station operating expenses excluding depreciation, amortization and
LMA fees decreased $9.5$27.4 million, or 20.5%43.7%, to $36.7$35.3 million for the three
months ended JuneSeptember 30, 2001 from $46.2$62.6 million for the three months ended
JuneSeptember 30, 2000. This decrease was primarily attributable to 1) a decrease in
the station portfolio as a result of the disposition of radio stations during
fiscal 2000 and 2001 ($4.13.3 million) and, 2) expense reductions achieved as a result
of improved management control of cost of sales and other operating expense
saving initiatives ($5.45.1 million). and 3) a $19.0 million decrease in the amount
of bad debt expense recognized in the current period versus the prior year. The
provision for doubtful accounts was $1.7$1.5 million for the three months ended
JuneSeptember 30, 2001 as compared to $1.2with $20.5 million duringfor the three months ended
JuneSeptember 30, 2000. As a percentage of net revenues, the provision for doubtful
accounts increased by 1.1%decreased to 3.0%2.9% for the three months ended JuneSeptember 30, 2001, as
compared with 1.9%35.2% for the comparable period in the prior year. The nominal increasedecrease in
the provision for doubtful accounts as a percentage of revenue was the direct
result of management's reviewimplementation of stringent credit and collection
policies that have yielded significantly lower levels of bad debt expense and
accounts receivable write-off experience. The unusually high bad debt expense
recorded in the prior year was primarily the result of the adequacyfollowing factors:
(1) the completion of its reserves
based on historical write-off experience.the first and second phases of the asset exchange and
sales transactions with Clear Channel Communications, and the coincidental loss
of local employee incentive to enforce the collection of receivables in divested
markets, (2) the detrimental effects of certain pre-existing credit and
collection policies and sale employee compensation policies, (3) significant
turnover of management and sales force, including representatives who maintained
relationships with trade debtors and had responsibility for ensuring collection
of outstanding invoices, and (4) overall declines in the U.S. economy.
On a same station basis, for the 167 stations in 32 markets operated
for at least a full year, station operating expenses excluding depreciation,
amortization and LMA fees decreased $4.1$2.9 million, or 14.3%11.0%, to $24.4$23.8 million for
the three months ended JuneSeptember 30, 2001 compared to $28.5$26.8 million for the
three months ended JuneSeptember 30, 2000. For comparative purposes, the unusually
high bad debt charge ($20.2 million) has been excluded from same station
operating expenses for the three months ended September 30, 2000. The decrease
in same station operating expenses excluding depreciation, amortization and LMA
fees is attributable to improved management control of costs of sales and other
expense saving initiatives.
13
14
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased
$1.7$2.5 million, or 16.1%24.3%, to $12.1$12.6 million for the three months ended JuneSeptember
30, 2001 compared to $10.4$10.2 million for the three months ended JuneSeptember 30,
2000. This increase was primarily attributable to depreciation and amortization
relating to radio station acquisitions consummated subsequent to the three
months ended JuneSeptember 30, 2000 and a full quarter of depreciation and
amortization on radio station acquisitions consummated during the three month periodmonths
ended JuneSeptember 30, 2000, offset by a decrease in depreciation and amortization
associated with station dispositions.
LMA FEES. LMA fees decreased $0.5 million, or 30.6%56.3%, to $1.2$0.4 million
for the three months ended JuneSeptember 30, 2001 from $1.7$0.9 million for the three
months ended JuneSeptember 30, 2000. This decrease was primarily attributable to the
purchase of stations subsequent to JuneSeptember 30, 2000 whichthat were formerly
operated under local marketing, management and consulting agreements and the
related discontinuance of fees associated with such agreements.
CORPORATE, GENERAL AND ADMINISTRATIVE EXPENSES. Corporate, general and
administrative expenses decreased $0.3increased $0.4 million, or 8.6%9.4%, to $3.7$4.1 million for the
three months ended JuneSeptember 30, 2001 compared to $4.0$3.8 million for the three
months ended JuneSeptember 30, 2000. Certain reorganization, severance, travellegal and professional fee expenses
incurred during the quarterthree months ended JuneSeptember 30, 20002001 primarily contributed
to the increased corporate expenses in the priorcurrent year. The decrease in corporate
general and administrative expense was also attributable to the successful
consolidation of the Company's corporate offices, formerly located in Chicago,
Illinois and Milwaukee, Wisconsin, to Atlanta, Georgia and the related cost
savings associated with the elimination of duplicative corporate resources.
OTHER EXPENSE (INCOME). Interest expense, net of interest income,
increased by $1.4$0.5 million, or 26.2%6.6%, to $6.6$7.7 million for the three months ended
JuneSeptember 30, 2001 compared to $5.3$7.2 million for the three months ended JuneSeptember
30, 2000. This increase was primarily attributable to lower cash reserves and
related decreases in interest income earned. The increase in the Company's debt
levels under its senior credit facility ($165.0 million as of JuneSeptember 30, 2001 versus
$125.0 million as of JuneSeptember 30, 2000) did not materially increase interest
expense during the comparable periods due to decreasing interest rates on the
respective outstanding debt amounts (7.19%(5.93% effective interest rate as of
JuneSeptember 30, 2001 versus 9.77%9.71% as of JuneSeptember 30, 2000).
Other Expense,Income, net, increaseddecreased to $8.9$1.7 million for the three months ended
JuneSeptember 30, 2001 compared to $0.0$68.1 million in the prior year. This increaseThe Other
Income, net, realized in the prior year, was primarily attributable to a $9.0 million charge recorded by the Company in
connection with a proposed settlement of certain class action lawsuits, offset
by gains
realized on the sale of assets duringassets. Other Income, net realized in the quarter ($0.1 million).current year
is primarily the result of the remeasurement of the stock issuance portion of
the Company's
14
liability under a proposed agreement to settle certain class action lawsuits.
INCOME TAXES. Income tax benefitexpense decreased by $3.2$17.9 million, to $1.9a
current income tax benefit of $0.6 million for the three months ended JuneSeptember
30, 2001 compared to an income tax benefitexpense of $5.1$17.3 million for the three months
ended JuneSeptember 30, 2000. This decreaseIncome tax expense recognized in the prior year was
primarily attributable to deferred tax expense recognized on the gain on sale of
stations incurred as a result of the completion of certain asset sales. In the
current year, the projected effective tax rate was significantly lower than in
the prior year due primarily to a $15.0 million book versus tax gain difference
related to the sale of certain assets in January of 2001.
This difference
yielded a lower projected effective tax rate in the current year versus the
prior year.
PREFERRED STOCK DIVIDENDS, DEEMED DIVIDENDS AND ACCRETION OF DISCOUNT.
Preferred stock dividends, deemed dividends and accretion of discount of
preferred stock increased $0.7 million, or 20.5%18.2%, to $4.4$4.5 million for the three
months ended JuneSeptember 30, 2001 compared to $3.6$3.8 million for the three months
ended JuneSeptember 30, 2000. This increase was primarily attributable to increased dividends
resulting from increasing levels of the Company's Series A Preferred Stock and
dividends associated with the Company's issuance of Series B Preferred Stock. The fair value of common
stock purchase warrants was also recognized during the quarter ended June 30,
2001 as a deemed dividend on the Series B Preferred Stock increasing the net
loss attributable to commons stockholders' by $0.1 million.in
October 2000.
NET LOSS ATTRIBUTABLE TO COMMON STOCK.STOCKHOLDERS. As a result of the
factors described above, net loss attributable to common stockstockholders increased
$3.7$32.0 million, or 29.3%156.0%, to $16.5$11.5 million for the three months ended JuneSeptember
30, 2001 compared to $12.7net income attributable to common stockholders of $20.5
million for the three months ended JuneSeptember 30, 2000.
BROADCAST CASH FLOW. As a result of the factors described above,
Broadcast
Cash Flow,broadcast cash flow, consisting of operating income (loss) before depreciation,
amortization, LMA fees, corporate general and administrative expense and
restructuring and other charges, increased $1.9$20.1 million or 11.6%, to $18.4$15.6 million for
the three months ended JuneSeptember 30, 2001 compared to $16.4a broadcast cash flow loss
of $4.5 million for the three months ended JuneSeptember 30, 2000. Although
broadcast cash flow is not a measure of performance calculated in accordance
with GAAP, management believes that it is useful to an investor in evaluating
the Company because it is a measure widely used in the broadcasting industry to
evaluate a radio Company's operating performance. Nevertheless, it should not be
considered in isolation or as a substitute for net income, operating income
(loss), cash flows from operating activities or any other measure for
determining the Company's operating performance or liquidity that is calculated
in accordance with GAAP. As broadcast cash flow is not a measure calculated in
accordance with GAAP, this measure may not be compared to similarly titled
measures employed by other companies.
EBITDA. As a result primarily of the increase in broadcast cash flow and decrease in
corporate, general and administrative expenses
14
15 described
above, EBITDA, consisting of operating income (loss) before depreciation,
amortization, LMA fees and restructuring and other charges, increased $2.3$19.7
million or 18.2%, to $14.7$11.4 million for the three months ended JuneSeptember 30, 2001 compared
to $12.4a EBITDA loss of $8.3 million for the three months ended JuneSeptember 30, 2000.
Although EBITDA is not a measure of performance calculated in accordance with
GAAP, management believes that it is useful to an investor in evaluating the
Company because it is a measure widely used in the broadcasting industry to
evaluate a radio company's operating performance. Nevertheless, it should not be
considered in isolation or as a substitute for net income, operating income
(loss), cash flows from operating activities or any other measure for
determining the Company's operating performance or liquidity that is calculated
in accordance with GAAP. As EBITDA, is not a measure calculated in accordance
with GAAP, this measure may not be compared to similarly titled measures
employed by other companies.
SIXNINE MONTHS ENDED JUNESEPTEMBER 30, 2001 VERSUS THE SIXNINE MONTHS ENDED JUNESEPTEMBER 30,
2000.
NET REVENUES. Net revenues decreased $10.7$18.0 million, or 9.7%10.7%, to $99.7$150.5
million for the sixnine months ended JuneSeptember 30, 2001 from $110.3$168.5 million for the
sixnine months ended JuneSeptember 30, 2000. This decrease was primarily attributable
to the disposition of radio stations during fiscal 2000 and the first quarter of
2001 ($8.013.1 million), lower sales volume associated with the Company's
implementation of stringent credit and collections policies and the current
economic slowdown and tightening corporate advertising budgets ($2.74.9 million),
which has impacted the entire broadcast industry.
In addition, on a same station basis, net revenue for the 167 stations
in 32 markets operated for at least a full year decreased $2.3$3.8 million or 3.3%3.7%
to $64.9$98.8 million for the sixnine months ended JuneSeptember 30, 2001, compared to same
station net revenues of $67.2$102.6 million for the six monthsnine month period ended JuneSeptember
30, 2000. The decrease in same station net revenue was primarily attributable to
lower sales volume associated with the Company's implementation of stringent
credit and collections policies and the current economic slowdown and tightening
corporate advertising budgets, which has impacted the entire broadcast industry.
STATION OPERATING EXPENSES, EXCLUDING DEPRECIATION, AMORTIZATION AND
LMA FEES. Station operating expenses excluding depreciation, amortization and
LMA fees decreased $16.4$43.7 million, or 18.5%28.9%, to $72.1$107.4 million for the sixnine
15
months ended JuneSeptember 30, 2001 from $88.5$151.1 million for the sixnine months ended
JuneSeptember 30, 2000. This decrease was primarily attributable to 1) a decrease in
the station portfolio as a result of the disposition of radio stations during
fiscal 2000 and 2001 ($7.811.0 million) and, 2) expense reductions achieved as a result
of improved management control of cost of sales and other operating expense
saving initiatives ($8.614.2 million). and 3) a $18.6 million decrease in the amount
of bad debt expense recognized in the current year versus the same nine month
period in the prior year. The provision for doubtful accounts was $2.6$4.1 million
for the sixnine months ended JuneSeptember 30, 2001 compared to $2.2$22.7 million during
the sixnine months ended JuneSeptember 30, 2000. As a percentage of net revenues, the
provision for doubtful accounts increased by 0.7%decreased to 2.7% for the sixnine months ended
JuneSeptember 30, 2001, as compared with 2.0%13.4% for the comparable period in the
prior year. The nominal increasedecrease in the provision for doubtful accounts as a percentage
of revenue was the direct result of management's reviewimplementation of stringent
credit and collection policies that have yielded significantly lower levels of
bad debt expense and accounts receivable write-off experience. The unusually
high bad debt expense recorded in the prior year was primarily the result of the
adequacyfollowing factors: (1) the completion of its reserves
based on historical write-off experience.the first and second phases of the
asset exchange and sales transactions with Clear Channel Communications, and the
coincidental loss of local employee incentive to enforce the collection of
receivables in divested markets, (2) the detrimental effects of certain
pre-existing credit and collection policies and sale employee compensation
policies, (3) significant turnover of management and sales force, including
representatives who maintained relationships with trade debtors and had
responsibility for ensuring collection of outstanding invoices, and (4) overall
declines in the U.S. economy.
On a same station basis, for the 167 stations in 32 markets operated
for at least a full year, station operating expenses excluding depreciation,
amortization and LMA fees decreased $7.3$10.2 million, or 13.1%12.4%, to $48.5$72.3 million
for the sixnine months ended JuneSeptember 30, 2001 compared to $55.8$82.6 million for the
sixnine months ended JuneSeptember 30, 2000. For comparative purposes, the unusually
high bad debt charge taken in third quarter of 2000 ($20.2 million) has been
excluded from same station operating expenses for the nine months ended
September 30, 2000. The decrease in same station operating expenses excluding
depreciation, amortization and LMA fees is attributable to improved management
control of costs of sales and other expense saving initiatives.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased
$4.1$6.5 million, or 20.0%21.4%, to $24.4$37.0 million for the sixnine months ended JuneSeptember 30,
2001 compared to $20.3$30.5 million for the sixnine months ended JuneSeptember 30, 2000.
This increase was primarily attributable to depreciation and amortization
relating to radio station acquisitions consummated subsequent to the sixnine months
ended JuneSeptember 30, 2000 and a full quarternine months of depreciation and amortization
on radio station acquisitions consummated during the sixnine months ended JuneSeptember
30, 2000, offset by a decrease in depreciation and amortization associated with
station dispositions.
LMA FEES. LMA fees decreased $0.7$1.2 million, or 23.7%31.5%, to $2.2$2.6 million
for the sixnine months ended JuneSeptember 30, 2001 from $2.8$3.7 million for the sixnine
months ended JuneSeptember 30, 2000. This decrease was primarily attributable to the
purchase of stations subsequent to JuneSeptember 30, 2000 thatwhich were formerly
operated under local marketing, management and consulting agreements and the
related discontinuance of fees associated with such agreements.
CORPORATE, GENERAL AND ADMINISTRATIVE EXPENSES. Corporate, general and
administrative expenses decreased $1.2$0.8 million, or 13.7%6.7%, to $7.5$11.6 million for
the sixnine months ended JuneSeptember 30, 2001 compared to $8.7$12.5 million for the sixnine
months ended JuneSeptember 30, 2000. Certain unusually high reorganization,
severance, travel and professional fee expenses incurred during the sixnine months
ended JuneSeptember 30, 2000 primarily contributed to the increased corporate
expenses in the priorthat year. The decrease in corporate general and administrative
expense for 2001 was also attributable to the successful consolidation of the
Company's corporate offices, formerly located in
15
16 Chicago, Illinois and
Milwaukee, Wisconsin, to Atlanta, Georgia and the related cost savings
associated with the elimination of duplicative corporate resources.
OTHER EXPENSE (INCOME). Interest expense, net of interest income,
increased by $3.2$3.7 million, or 29.8%20.6%, to $14.0$21.7 million for the sixnine months ended
JuneSeptember 30, 2001 compared to $10.8$18.0 million for the sixnine months ended JuneSeptember
30, 2000. This increase was primarily attributable to lower cash reserves and
related decreases in interest income earned. The increase in the Company's debt
levels under its senior credit facility ($165.0 million as of JuneSeptember 30, 2001
versus $125.0 million as of JuneSeptember 30, 2000) did not materially increase
interest expense during the comparable periods due to decreasing interest rates
on the respective outstanding debt amounts (7.19%(5.93% effective interest rate as of
JuneSeptember 30, 2001 versus 9.77%9.71% as of JuneSeptember 30, 2000).
Other Income, net, increaseddecreased to $7.4$9.1 million for the sixnine months ended
JuneSeptember 30, 2001 compared to $0.0$68.1 million in the prior year. This increaseThe Other
Income, net, realized in the prior year, was primarily attributable to gains
realized on the sale of assets ($16.4 million), includingassets. Other Income, net realized in the current year
is primarily the result of gains realized as a result of the successful completion of the third and final
phase ofon asset sales with Clear Channel Communications,completed in the first
quarter of 2001, offset by a charge recorded by the Company in connection with
the settlement of certain class action lawsuits ($9.0 million).lawsuits.
INCOME TAXES. Income tax benefitexpense decreased by $9.3$8.6 million, to $1.6 million
for the six months ended June 30, 2001 compared to an
income tax benefit of $10.9$2.2 million for the sixnine months
16
ended September 30, 2001 compared to income tax expense of $6.4 million for the
nine months ended JuneSeptember 30, 2000. This decrease was primarily attributable
to a lower lossincome (loss) before income taxes along with a $15.0 million book
versus tax gain difference realized on assetassets sold in January 2001. The book
versus tax gain difference yieldedcontributes to a significantly lower projected
effective tax rate for the current year.
PREFERRED STOCK DIVIDENDS, DEEMED DIVIDENDS AND ACCRETION OF DISCOUNT.
Preferred stock dividends, deemed dividends and accretion of discount of
preferred stock increased $1.3$2.0 million, or 18.2%, to $8.5$13.0 million for the sixnine
months ended JuneSeptember 30, 2001 compared to $7.2$11.0 million for the sixnine months
ended JuneSeptember 30, 2000. This increase was attributable to increased dividends
resulting from increasing levels of the Company's Series A Preferred Stock and
dividends associated with the Company's issuance of Series B Preferred Stock. The fair value of common stock purchase
warrants was also recognizedStock in
the second quarter of 2001 as a deemed dividend
on the Series B Preferred Stock, increasing the net loss attributable to common
stockholders' by $0.1 million.October 2000.
NET LOSS ATTRIBUTABLE TO COMMON STOCK.STOCKHOLDERS. As a result of the
factors described above, net loss attributable to common stock decreased $6.4stockholders increased
$25.5 million or 24.4%,
to $19.9$31.4 million for the sixnine months ended JuneSeptember 30, 2001
compared to $26.4$5.9 million for the sixnine months ended JuneSeptember 30, 2000.
BROADCAST CASH FLOW. As a result of the factors described above,
Broadcast
Cash Flow,broadcast cash flow, consisting of operating income (loss) before depreciation,
amortization, LMA fees, corporate general and administrative expense and
restructuring and other charges, increased $5.7$25.8 million, or 26.0%148.6%, to $27.5$43.1
million for the sixnine months ended JuneSeptember 30, 2001 compared to $21.9$17.3 million
for the sixnine months ended JuneSeptember 30, 2000. Although broadcast cash flow is
not a measure of performance calculated in accordance with GAAP, management
believes that it is useful to an investor in evaluating the Company because it
is a measure widely used in the broadcasting industry to evaluate a radio
Company's operating performance. Nevertheless, it should not be considered in
isolation or as a substitute for net income, operating income (loss), cash flows
from operating activities or any other measure for determining the Company's
operating performance or liquidity that is calculated in accordance with GAAP.
As broadcast cash flow is not a measure calculated in accordance with GAAP, this
measure may not be compared to similarly titled measures employed by other
companies.
EBITDA. As a result of the increase in broadcast cash flow and decrease
in corporate, general and administrative expenses described above, EBITDA,
consisting of operating income (loss) before depreciation, amortization, LMA
fees and restructuring and other charges, increased $6.9$26.6 million, or 52.2%545.7%, to
$20.0$31.5 million for the sixnine months ended JuneSeptember 30, 2001 compared to $13.2$4.9
million for the sixnine months ended JuneSeptember 30, 2000. Although EBITDA is not a
measure of performance calculated in accordance with GAAP, management believes
that it is useful to an investor in evaluating the Company because it is a
measure widely used in the broadcasting industry to evaluate a radio company's
operating performance. Nevertheless, it should not be considered in isolation or
as a substitute for net income, operating income (loss), cash flows from
operating activities or any other measure for determining the Company's
operating performance or liquidity that is calculated in accordance with GAAP.
As EBITDA, is not a measure calculated in accordance with GAAP, this measure may
not be compared to similarly titled measures employed by other companies.
INTANGIBLE ASSETS. Intangible assets, net of amortization, were $818.0$812.8
million and $763.0 million as of JuneSeptember 30, 2001 and December 31, 2000,
respectively. These intangible asset balances primarily consist of broadcast
licenses and goodwill, although the Company possesses certain other intangible
assets obtained in connection with our acquisitions, such as non-compete
agreements. The increase in intangible assets, net during the sixnine months ended
JuneSeptember 30, 2001 is attributable to acquisitions during the six month period, less the
net dispositions in the asset exchange and sale transaction with Clear Channel.
Specifically identified intangible assets, including broadcasting licenses, are
recorded at their estimated fair value on the date of the related acquisition.
Goodwill represents the excess of purchase price over the fair value of tangible
assets and specifically identified intangible assets. Although 16
17
intangible assets
are recorded in the Company's financial statements at amortized cost, we believe
that such assets, especially broadcast licenses, can significantly appreciate in
value by successfully executing the Company's operating strategies. During the
sixnine months ended JuneSeptember 30, 2001, the Company recognized an accounting gain
of approximately $16.0 million as a result of the asset exchange and sale
transaction with Clear Channel Communications. The Company also recognized
similar gains in fiscal 2000. We believe these gains indicate that certain
internally generated intangible assets, which are not recorded for accounting
purposes, can significantly increase the value of our portfolio of stations over
time. The Company's strategic initiative to focus on its core radio business is
designed to enhance the overall value of our stations and maximize the value of
the related broadcast licenses.
LIQUIDITY AND CAPITAL RESOURCES
Our principal need for funds has been to fund the acquisition of radio
stations and to a lesser extent, working capital needs, capital expenditures and
interest and debt service payments. Our principal sources of funds for these
requirements have been cash flows from financing activities, such as the
proceeds from the offering of our debt and equity securities and borrowings
under credit agreements, and cash flowsflow from operations. Our principal need for
funds in the future are expected to include the need to fund pending and future
17
acquisitions, interest and debt service payments, working capital needs and
capital expenditures. We believe the Company's present cash positions will be
sufficient to meet our future capital needs includingthrough March 31, 2002. Beyond March 31,
2002, the fundingCompany will need to raise approximately $11.5 million through
additional equity and/or debt financing, asset sales or other to be identified
sources, to fund its pending acquisitions. We believe that availability under
our credit facility, cash generated from operations and proceeds from future
debt or equity financing will be sufficient to meet our capital needs. The
ability of the Company to complete the pending acquisitions is dependent on the
Company's ability to obtain additional equity and/or debt service and operations.financing. There can
be no assurance that the Company will be able to obtain such financing.
For the sixnine months ended JuneSeptember 30, 2001, net cash provided by
operating activities increased $18.7$19.8 million, or 158.5%178.7%, to $6.9$8.7 million from
net cash used in operating activities of $11.8$11.1 million for the sixnine months ended
JuneSeptember 30, 2000. This increase was due primarily to a reduction in net cash
utilized for working capital when compared to the sixnine months ended JuneSeptember
30, 2000.
For the sixnine months ended JuneSeptember 30, 2001, net cash used in
investing activities decreased $81.9$109.8 million, or 62.8%67.6%, to $48.6$52.7 million from
net cash used in investing activities of $130.5$162.4 million for the sixnine months
ended JuneSeptember 30, 2000. This decrease was due primarily to a reduction inlower level of
acquisition activity duringin the current year alongas compared with the completion ofprior year.
For the third and final phase
of the asset sales to Clear Channel Communications which generated approximately
$36.2 million in proceeds to the Company during the sixnine months ended June 30,
2001.
For the six months ended JuneSeptember 30, 2001, net cash provided by financing
activities increased $42.7$42.8 million, to $39.1$39.2 million compared to net cash used
in financing activities of $3.6 million during the sixnine months ended JuneSeptember
30, 2000. Net cash provided by financing activities in the current year was
primarily the result of borrowings under the Company's credit facility. Net cash
used during the prior year was the result of the payment of cash dividends on
the Company's Series A Preferred Stock. During the sixnine months ended JuneSeptember
30, 2001, such dividends were paid in kind to holders of the stock.
Historical Acquisitions. During the sixnine months ended JuneSeptember 30,
2001, the Company completed 1012 acquisitions across 1012 markets having an
aggregate purchase price of $182.4$187.7 million. Of the $182.4$187.7 million required to
fund the acquisitions, $79.0 million was provided through the exchange of
stations, $81.2$82.0 million was funded in cash and $22.2$26.7 million had been previously
funded as escrow deposits on the pending acquisitions.
An additional acquisition has been
subsequently completed in July 2001 in 1 market for an aggregate purchase price
of $3.0 million.
Pending Acquisitions.Acquisitions and Dispositions. As of JuneSeptember 30, 2001, the
Company was a party to various agreements to acquire stations across 68 markets.
The aggregate purchase price of the Company's pending acquisitions is expected
to be approximately $16.2$18.6 million. We intend to finance the pending acquisitions
with cash on hand,
cash received from possible asset divestitures, future cash flows from
operations, the proceeds of borrowings under our Credit Facility or
future credit facilities, and other sources to be identified. We expect to
consummate most of ourthe pending acquisitions during the 3rd4th quarter of 2001 and 4ththe 1st
and 2nd quarters of 2001,2002, although there can be no assurance that the
transactions will be consummated within that time frame, or at all. The ability
of the Company to complete the pending acquisitions is dependent upon the
Company's ability to obtain additional equity and/or debt financing on favorable
terms. There can be no assurance that the Company will be able to obtain such
financing on favorable terms, if at all. In two of the markets in which there
are pending acquisitions or dispositions (Columbus-Starkville, MS; and Columbus, GA), petitions
to deny have been filed against the Company's FCC assignment applications. All
such petitions and FCC staff inquiries must be resolved before FCC approval can
be obtained and the acquisitions consummated. There can be no assurance that the
pending acquisitions will be consummated. In addition, from time to time the
Company completes acquisitions following the initial grant of an assignment
application by the FCC staff but before such grant becomes a final order, and a
petition to review such a grant may be filed. There can be no assurance that
such grants may not ultimately be reversed by the FCC or an appellate court as a
result of such petitions, which could result in the Company being required to
divest the assets it has acquired.
Dispositions. On January 18, 2001, the Company completed substantially
all of the third and final phase of an asset exchange and sale transaction with
certain subsidiaries of Clear Channel Communications. Upon the closing, the
Company transferred 44 stations in 17
18
8 markets in exchange for 4 stations in 1
market and approximately $36.2 million in cash. As of the close date, the
Company also received approximately $2.7 million in proceeds previously withheld
from the second phase of Clear Channel transactions.
On May 2, 2001, the Company completed an asset exchange with Next Media
Group and certain of its subsidiaries. Upon the closing, the Company transferred
2 stations in Jacksonville, North Carolina for 1 station in Myrtle Beach, South
Carolina and approximately $2.0 million in cash. In connection with the
transaction, the Company recorded a $0.4 million gain during the 32nd quarter of
2001.
During the three months ended JuneSeptember 30, 2001.2001, the Company entered
into various asset purchase agreements to sell 8 radio stations (6 FM and 2 AM)
in 6 markets for an aggregate sale price of approximately $11.0 million in cash.
As of November 9, 2001 the Company had completed the sale of 2 stations for $6.8
million. The Company expects to consummate the pending dispositions in
18
the 4th quarter of 2001 and the 1st quarter of 2002. Proceeds from dispositions
will be used to fund pending acquisitions and other general corporate purposes.
Sources of Liquidity. We financed our 2001 cash acquisitions primarily
with
cash on hand, the proceeds of asset sales and borrowings under our credit facility.
Our senior credit facility provides for aggregate principal borrowings
of $175.0 million and consists of a seven-year revolving credit facility of
$50.0 million, an eight-year term loan facility of $75.0 million and an eight
and one-half year term loan facility of $50.0 million. The amount available
under the seven-year revolving credit facility will be automatically reduced by
5% of the initial aggregate principal amount in each of the third and fourth
years following closing (August 31, 1999), 10% of the initial aggregate
principal amount in the fifth year following the closing, 20% of the initial
aggregate principal amount in the sixth year following the closing and the
remaining 60% of the initial aggregate principal amount in the seventh year
following the closing. As of JuneSeptember 30, 2001 and JulyOctober 31, 2001 $165.0
million and $169.0$160.0 million was outstanding, respectively, under the term loan
facilities. On October 29, 2001, the Company repaid $5.0 million of principal
towards its revolving credit facility.
On May 11, 2001, the Company and its lenders under the Credit Facility
entered into the Fourth Amendment to the Amended and Restated Credit Agreement
dated as of August 31, 1999 (the "Fourth Amendment"). The Fourth Amendment
modified certain financial covenant requirements, including the consolidated
leverage ratio, the consolidated senior debt ratio and the consolidated interest
coverage ratio. In consideration for entering into the Fourth Amendment, the
Company agreed to pay the administrative agent a fee in the amount of $0.5
million, 50% of which was paid as of the effective date of the amendment. TheOf the
remaining portion of the administrative agent fee, 25% was paid in September
2001 and the final 25% will be paid prior to December 31, 2001. The Company also
paid the lenders a fee in the amount of $0.4 million.million as of the effective date of
the amendment.
On May 21, 2001, the Company borrowed $40.0 million under its
seven-year $50$50.0 million revolving credit facility. Proceeds from this borrowing
were used to purchase stations during the quarter and to satisfy operating cash
needs.
The Company's obligations under its current credit facility are
collateralized by substantially all of its assets in which a security interest
may lawfully be granted (including FCC licenses held by its subsidiaries),
including, without limitation, intellectual property; real property, and all of
the capital stock of the Company's direct and indirect domestic subsidiaries,
except the capital stock of Broadcast Software International, Inc., Cumulus
Internet Services Inc. and Cumulus Telecommunications, Inc., and 65% of the
capital stock of any first-tier foreign subsidiary. The obligations under the
credit facility are also guaranteed by each of the direct and indirect domestic
subsidiaries, except Broadcast Software, Cumulus Internet Services and Cumulus
Telecommunications, and are required to be guaranteed by any additional
subsidiaries acquired by Cumulus.
Both the revolving credit and term loan borrowings under the credit
facility bear interest, at the Company's option, at a rate equal to the Base
Rate (as defined under the terms of our credit facility, 6.75%6.0% as of JuneSeptember
30, 2001), plus a margin ranging between 0.75% to 2.50%, or the Eurodollar Rate
(as defined under the terms of the credit facility, 3.76%2.67% as of JuneSeptember 30,
2001) plus a margin ranging between 1.75% to 3.50% (in each case dependent upon
the leverage ratio of the Company). At JuneSeptember 30, 2001 the Company's
effective interest rate on term loan and revolving loan amounts outstanding
under the credit facility was 7.05%5.93%.
A commitment fee calculated at a rate ranging from 0.375% to 0.75% per
annum (depending upon the Company's utilization rate) of the average daily
amount available under the revolving lines of credit is payable quarterly in
arrears, and fees in respect of letters of credit issued under the Credit
Facility equal to the interest rate margin then applicable to Eurodollar Rate
loans under the seven-year revolving credit facility also will be payable
quarterly in arrears. In addition, a fronting fee of 0.125% per annum is payable
quarterly in arrears to the issuing bank.
The eight-year term loan borrowings are repayable in quarterly
installments beginning in December 2001. The scheduled annual amortization is
$0.75 million for each of the third, fourth, fifth, sixth and seventh years
following closing and $71.25 million in the eighth year following closing. The
eight and a half year term loan is repayable in two equal installments on
November 30, 2007 and February 28, 2008. The amount available under the 7-year
revolving credit facility will be automatically reduced in quarterly
installments as described in the first paragraph above. Certain mandatory
prepayments of the term loan facility and the revolving credit line and
reductions in the availability of the revolving credit line are required to be
made including: (i) 100% of the net proceeds 18
19
from any issuance of capital stock
or incurrence of indebtedness; (ii) 100% of the net proceeds from certain asset
sales; and (iii) between 50% and 75% (dependent on our leverage ratio) of our
excess cash flow.
19
Under the terms of the amended and restated credit facility, the
Company is subject to certain restrictive financial and operating covenants,
including but not limited to maximum leverage covenants, minimum interest and
fixed charge coverage covenants, limitations on asset dispositions and the
payment of dividends. The failure to comply with the covenants would result in
an event of default, which in turn would permit acceleration of debt under those
instruments. At JuneSeptember 30, 2001, the Company was in compliance with such
financial and operating covenants.
The terms of the facility contain events of default after expiration of
applicable grace periods, including failure to make payments on the credit
facility, breach of covenants, breach of representations and warranties,
invalidity of the agreement governing the credit facility and related documents,
cross default under other agreements or conditions relating to indebtedness of
Cumulus or the Company's restricted subsidiaries, certain events of liquidation,
moratorium, insolvency, bankruptcy or similar events, enforcement of security,
certain litigation or other proceedings, and certain events relating to changes
in control. Upon the occurrence of an event of default under the terms of the
credit facility, the majority of the lenders are able to declare all amounts
under our credit facility to be due and payable and take certain other actions,
including enforcement of rights in respect of the collateral. The majority of
the banks extending credit under each term loan facility and the majority of the
banks under each revolving credit facility may terminate such term loan facility
and such revolving credit facility, respectively.
As defined by the indenture and the certificates of designation,
governing the Senior Subordinated Notes and Series A Cumulative Exchangeable
Redeemable Preferred Stock due 2009, respectively, the amount we may borrow
under the senior credit facility is limited to $175.0 million as of JuneSeptember
30, 2001. As of JuneSeptember 30, 2001, we would be permitted to incur approximately
$10.0 million of additional indebtedness under our credit facility without
regard to the debt ratios included in our indenture.
We have issued $160.0 million in aggregate principal amount of our 10
3/8% senior subordinated notes, which have a maturity date of July 1, 2008. The
notes are our general unsecured obligations and are subordinated in right of
payment to all our existing and future senior debt (including obligations under
our credit facility). Interest on the notes is payable semi-annually in arrears.
We issued $125.0 million of our Series A Preferred Stock in our initial
public offerings on July 1, 1998. The holders of the Series A Preferred Stock
are entitled to receive cumulative dividends at an annual rate equal to 13 3/4%
of the liquidation preference per share of Series A Preferred Stock, payable
quarterly, in arrears. On or before July 1, 2003, we may, at our option, pay
dividends in cash or in additional fully paid and non-assessable shares of
Series A Preferred Stock. From July 1, 1998 until JuneSeptember 30, 2001, we issued
an additional $46.1$50.5 million of shares of Series A Preferred Stock as dividends
on the Series A Preferred Stock. After July 1, 2003, dividends may only be paid
in cash. To date, all of the dividends on the Series A Preferred Stock have been
paid in shares, except for a $3.5 million cash dividend paid on January 1, 2000
to holders of record on December 15, 1999 for the period commencing October 1,
1999 and ending December 31, 1999. The shares of Series A Preferred Stock are
subject to mandatory redemption on July 1, 2009 at a price equal to 100% of the
liquidation preference plus any and all accrued and unpaid cumulative dividends.
On October 1, 1999 we used $51.3 million of the proceeds of our July 1999
offering of our Class A Common Stock to redeem a portion of our Series A
Preferred Stock, including a $ 6.0 million redemption premium and $ 1.5 million
in accrued and unpaid dividends as of the redemption date.
The shares of Series A Preferred Stock are subject to mandatory
redemption on July 1, 2009 at a price equal to 100% of the liquidation
preference plus any and all accrued and unpaid cumulative dividends.
We issued 250 shares of our Series B Preferred Stock on October 2, 2000
for $2.5 million. The holders of the Series B Preferred Stock are entitled to
receive cumulative dividends at an annual rate equal to 12% of the liquidation
preference per share of Series B Preferred Stock, payable quarterly, in arrears
commencing on January 1, 2001. The Company may, at its option, pay dividends in
cash or in additional fully paid and non-assessable shares of Series B Preferred
Stock. To date, all of the dividends on the Series B Preferred Stock have been
paid in shares.
The shares of Series B Preferred Stock may be converted, at the
holder's discretion, on or after March 30, 2002 into Class B Common Stock at the
then effective conversion rate. The number of shares of Class B Common Stock
that will be issued upon conversion can be calculated by dividing the
liquidation preference of one share of Series B Preferred Stock by the lower of
the closing sales price of the Company's Class A Common Stock as reported by the
NASDAQ Stock Market on the conversion date or the average of the closing sales
prices of the Company's Class A Common Stock as reported by the NASDAQ Stock
Market for the twenty (20) day trading period prior to the conversion date. The
shares of Series B Preferred Stock are subject to mandatory 19
20
redemption on
October 3, 2009 at a price equal to 100% of the liquidation preference plus any
and all accrued and unpaid cumulative dividends.
The shares of Series B Preferred Stock can be redeemed at any time at
the Company's discretion with notice of not less than 30 days nor more than 60
days prior to the date of redemption.
20
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
At JuneSeptember 30, 2001 approximately 50.8% of the Company's long-term debt bore
interest at variable rates. Accordingly, the Company's earnings and cash flow
are affected by changes in interest rates. Assuming the current level of
borrowings at variable rates and assuming a 1% increase in the effective rate of
the loans, it is estimated that the Company's interest expense would have
increased by $0.8$1.2 million for the sixnine months ended Juneending September 30, 2001. In the
event of an adverse change in interest rates, management would likely take
actions to further mitigate its exposure. However, due to the uncertainty of the
actions that would be taken and their possible effects, additional analysis is
not possible at this time. Further, such analysis would not consider the effects
of the change in the level of overall economic activity that could exist in such
an environment.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company had been named as a defendant in the following eleven class
action complaints: (1) Wolfe v. Weening, et al.; (2) Klar v. Cumulus Media Inc.,
et al.; (3) Atlas v. Cumulus Media Inc., et al.; (4) Steinberg and Steinberg v.
Cumulus Media Inc., et al.; (5) Wong v. Weening, et al.; (6) Pleatman v. Cumulus
Media Inc., et al.; (7) Kincer v. Weening, et al.; (8) Krim v. Cumulus Media
Inc., et al.; (9) Baldwin v. Cumulus Media, Inc., et al.; (10) Pabian v.
Weening, et al.; and (11) Demers v. Cumulus Media Inc., et al. Certain present
and former directors and officers of the Company, and certain underwriters of
the Company's stock, havehad also been named as defendants. The complaints have all
been filed in the United States District Court for the Eastern District of
Wisconsin. They were filed as class actions on behalf of persons who purchased
or acquired Cumulus Media common stock during various time periods between May
11, 1999 and April 24, 2000. On August 4, 2000, the eleven actions were
consolidated into a single action, also pending in the United States District
Court for the Eastern District of Wisconsin. On December 8, 2000,
plaintiffs served a Second Amended Consolidated Class Action Complaint, which
alleges, among other things, violations of Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, and
Sections 11 and 12(a) of the Securities Act of 1933, and seeks unspecified
damages. In June 2001, the Company reached an agreement in principle to settle
the lawsuits. Pursuant to the terms of the agreement, which is subject to
negotiation of a final Stipulation of Settlement and court approval, the
lawsuits will be dismissed in exchange for $13.0 million in cash and 240,000
shares of common stock. Of the cash portion of the settlement, $7.3 million will
be provided by the Company's preexisting insurance. The balance of the cash
portion is expected to be paid from cash from operations and proceeds from
borrowings under the Company's senior credit facility. A settlement liability of
$14.7 million and related insurance claim receivable of $7.3 million have been
included in accrued expenses and other current assets, respectively, in the
accompanying consolidated balance sheet as of September 30, 2001. During the
quarter ended June 30, 2001, the
Company has recorded aan initial settlement charge of $9.0 million settlement charge which iswas
recorded and included as a component of Other Income(Expense)Income (Expense) in the
accompanying statementsconsolidated statement of operations. As the settlement is contingent upon
document negotiation and court approval, the Company has initially measured the
stock issuance portion of the settlement, based on the closing stock price as of
June 30, 2001 to be $3.3 million. During the quarter ended September 30, 2001,
the Company recorded a remeasurement adjustment to the settlement charge of $1.5
million to reflect the decrease in the Company's liability as a result of the
decrease in the Company's stock price from June 30, 2001 to September 30, 2001.
The remeasurement adjustment is included as a component of Other Income(Expense)
in the accompanying consolidated statements of operations. In future periods,
the Company will continue to remeasure the stock issuance portion of the
liability and adjust the expense until such time as the liability becomes fixed.
In addition, we currently and from time to time are involved in
litigation incidental to the conduct of our business. Other than as discussed
above, the Company is not a party to any lawsuit or precedingproceeding which, in our
opinion, is likely to have a material adverse effect on the Company.
Item 2. Changes in Securities and Use of Proceeds
No items to report.
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security
Holders
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21
An annual meeting of shareholders of the Company was held on May 4, 2001.
Holcombe T. Green, Jr. and Ralph B. Everett were elected as Class I Directors of
the Company. Each elected Class I director will serve until the 2003 annual
meeting of shareholders or until he is succeeded by another qualified director
who has been elected. Robert H. Sheridan, III and Eric P. Robison were elected
as Class II Directors of the Company. Each elected Class II director will serve
until the 2004 annual meeting of shareholders or until he is succeeded by
another qualified director who has been elected.
The shareholders also approved the selection of KPMG LLP as independent
auditors for the year ending December 31, 2001. Finally, the shareholders
approved the Company's 2000 Stock Incentive Plan.
The results of voting at the annual meeting of the shareholders were as follows:
Proposal No. 1 (Election of Directors)
NOMINEE CLASS FOR AGAINST ABSTAIN/WITHHELD
Ralph B. Everett Class I 42,840,959 0 3,567,821
Holcombe T. Green, Jr.
Class I 43,600,522 0 2,808,228
Eric P. Robison Class II 42,841,759 0 3,567,021
Robert H. Sheridan, III
Class II 43,485,302 0 2,923,478
Proposal No. 2 (Approve the ratification of KPMG LLP as Independent Auditors for
the year ending December 31, 2001)
FOR AGAINST ABSTAIN/WITHHELD
46,171,948 229,871 6,961
Proposal No. 3 (Approve the Company's 2000 Stock Incentive Plan)
FOR AGAINST ABSTAIN/WITHHELD
31,366,829 8,346,597 19,654
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits
(a) Exhibits
10.1 Fourth Amendment, dated May 11, 2001, to the21
3.1 Amended and Restated CreditArticles of Incorporation of
Cumulus Media Inc., as amended.
3.2 Certificate of Designation with respect to Series
A Cumulative Exchangeable Redeemable Preferred Stock
Due 2009 (incorporated by reference to Exhibit 3.5
of the Form S-1 Registration Statement, declared
effective on June 26, 1998 (Commission File No.
333-48849)).
3.3 Amended and Restated Certificate of Designation
with respect to Series B Cumulative Preferred
Stock.
3.4 Amended and Restated Bylaws of Cumulus Media Inc.,
as amended.
4.1 Registration Rights Agreement, dated as of August 31, 1999June 30,
1998, by and among Cumulus Media Inc., NationsBanc
Capital Corp., Heller Equity Capital Corporation,
The State of Wisconsin Investment Board and The
Northwestern Mutual Life Insurance company.
4.2 Voting Agreement, dated as of June 30, 1998, by and
between NationsBanc Capital Corp., Cumulus Media
Inc. and the Shareholders named therein.
10.1 Amended and Restated Employment Agreement
between Cumulus Media Inc. and Lewis W.
Dickey, Jr.
10.2 Employment Agreement between Cumulus Media
Inc. and Jon Pinch
10.3 Employment Agreement between Cumulus Media
Inc. and Martin Gausvik
10.4 Employment Agreement between Cumulus Media
Inc. and John W. Dickey
(b) Reports on Form 8-K
None.
21
22None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CUMULUS MEDIA INC.
Date: August 15, 2001November 14, By: /s/ Martin R. Gausvik
_____________________________________________2001 ---------------------------------
Executive Vice
President, Treasurer
and Chief Financial
Officer
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