2013 Assets Current assets: Cash and cash equivalents Restricted cash Accounts receivable, less allowance for doubtful accounts of $4,504 and $2,765 at September 30, 2012 and December 31, 2011, respectively Trade receivable Compensation held in trust Prepaid expenses and other current assets Total current assets Property and equipment, net Broadcast licenses Other intangible assets, net Goodwill Other assets Total assets Liabilities, Redeemable Preferred Stock and Stockholders’ Equity Current liabilities: Accounts payable and accrued expenses Trade payable Current portion of long-term debt Other current liabilities Total current liabilities Long-term debt, excluding 7.75% senior notes 7.75% senior notes Other liabilities Deferred income taxes Total liabilities Redeemable preferred stock: Series A cumulative redeemable preferred stock, par value $0.01 per share; stated value of $1,000 per share; 100,000,000 shares authorized; 75,767 and 125,000 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively Total redeemable preferred stock Stockholders’ equity: Class A common stock, par value $0.01 per share; 750,000,000 shares authorized; 182,053,736 and 160,783,484 shares issued and 157,908,633 and 137,085,813 shares outstanding at September 30, 2012 and December 31, 2011, respectively Class B common stock, par value $0.01 per share; 600,000,000 shares authorized; 15,424,944 and 12,439,667 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively Class C common stock, par value $0.01 per share; 644,871 shares authorized, issued and outstanding at both September 30, 2012 and December 31, 2011 Treasury stock, at cost, 24,145,103 and 23,697,671 shares at September 30, 2012 and December 31, 2011, respectively Additional paid-in-capital Accumulated deficit Total stockholders’ equity Total liabilities, redeemable preferred stock and stockholders’ equity Broadcast revenues Management fees Net revenues Operating expenses: Direct operating expenses (excluding depreciation, amortization and LMA fees) Depreciation and amortization LMA fees Corporate general and administrative expenses (including stock-based compensation expense of $2,764, $1,601, $15,671 and $2,788, respectively) Gain on exchange of assets or stations Realized (gain) loss on derivative instrument Impairment of intangible assets Total operating expenses Operating income (loss) Non-operating (expense) income: Interest expense, net Loss on early extinguishment of debt Other (expense) income, net Gain on equity investment in Cumulus Media Partners, LLC Total non-operating expense, net Income (loss) from continuing operations before income taxes Income tax benefit Income from continuing operations Income from discontinued operations, net of taxes Net income Less: dividends declared and accretion of redeemable preferred stock Income attributable to common shareholders Basic and diluted income (loss) per common share (see Note 12, “Earnings Per Share”): Basic: Income (loss) from continuing operations per share Income from discontinued operations per share Income per share Diluted: Income (loss) from continuing operations per share Income from discontinued operations per share Income per share Weighted average basic common shares outstanding Weighted average diluted common shares outstanding Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Amortization of debt issuance costs/discounts Provision for doubtful accounts (Gain) loss on sale of assets or stations Gain on exchange of assets or stations Impairment of intangible assets Fair value adjustment of derivative instruments Deferred income taxes Stock-based compensation expense Loss on early extinguishment of debt Other Gain on equity investment in Cumulus Media Partners, LLC Changes in assets and liabilities: Accounts receivable Trade receivable Prepaid expenses and other current assets Other assets Accounts payable and accrued expenses Trade payable Other liabilities Net cash provided by operating activities Cash flows from investing activities: Restricted cash Proceeds from sale of assets or stations Capital expenditures Proceeds from exchange of assets or stations Acquisition less cash acquired Net cash provided by (used in) investing activities Cash flows from financing activities: Repayment of borrowings under term loans and revolving credit facilities Tax withholding payments on behalf of employees Preferred stock dividends Proceeds from exercise of warrants Redemption of preferred stock Proceeds from borrowings under term loans and revolving credit facilities, net of $25.1 million debt discount Proceeds from issuance of senior notes Proceeds from sale of equity securities Redemption of CMP preferred stock Deferred financing costs Net cash (used in) provided by financing activities Increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Supplemental disclosures of cash flow information: Interest paid Income taxes paid Supplemental disclosures of non-cash flow information: Compensation held in trust Trade revenue Trade expense 2013. estimates. use. $40.0 million in cash for Family Stations’ WFME station in Newark, New Jersey. The total purchase price is subject to increase of up to $10 million payable to the sellers if certain future conditions are met as detailed in the purchase agreement. The Company has estimated the fair value of the contingent consideration to be less than $0.1 million as of June 30, 2013. Any future change in the estimated fair value of the contingent consideration will be recorded in the Company’s results of operations in the period of such change. This acquisition provided Cumulus with a radio station in the United States’ largest media market, for the national NASH entertainment brand based on the country music lifestyle. Allocation Current assets Property and equipment Broadcast licenses Goodwill Other intangibles Current liabilities Total purchase price Less: Carrying value of stations transferred Add: Cash received Gain on asset exchange geographically strategic regional clusters. On 2013, respectively. Allocation Property and equipment Broadcast licenses Goodwill Other intangibles Total purchase price Less: Carrying value of Canton station Gain on asset exchange Fair Value of Consideration Transferred Fair value of equity consideration to CMP Sellers (1) Fair value of equity consideration to holders of CMP Restated Warrants (2) Preferred stock of CMP (3) Fair value of assumed debt Total purchase price Existing equity interest in CMP (4) Total fair value for allocation Allocation Current assets Property and equipment Broadcast licenses Other intangibles Goodwill Other assets Current liabilities Other long-term liabilities Deferred income taxes Total purchase price Description Advertising relationships Fair Value of Consideration Transferred Cash consideration to Citadel stockholders Common stock issued to Citadel stockholders (1) Stock-based compensation value Cash consideration to Citadel to settle Citadel obligations Total fair value for allocation Allocation Current assets Property and equipment Broadcast licenses Other intangibles Goodwill Other assets Current liabilities Other long-term liabilities Deferred income taxes Total purchase price Description Broadcast advertising relationships Affiliate relationships Network advertising relationships Other contracts and agreements Contents Description Net revenue Net income Company's financial statements. 2013 or 2012. operations for the three and six months ended June 30, 2012. Discontinued operations: Net revenues Operating income Non-operating income (expense) Income from discontinued operations before taxes Income tax (expense) benefit Income from discontinued operations those periods. At June 30, 2013 and December 31, 2012, Intangible Assets: Balance as of January 1, 2011 Acquisition Disposition Amortization Balance as of September 30, 2011 Balance as of January 1, 2012 Purchase price allocation adjustments Acquisition Impairment Disposition Amortization Balance as of September 30, 2012 Balance as of January 1: Goodwill Accumulated impairment losses Subtotal Acquisitions Purchase price allocation adjustments Disposal Balance as of September 30: Goodwill Accumulated impairment losses Total respective measurement periods. Any such changes could be material and could result in significantly different allocations from those contained in the tables above. consist of the following: 2015 Fair Value Derivative Instrument Balance Sheet Location Derivatives not designated as hedging instruments: Interest rate cap Green Bay Option Green Bay Option Derivative Instrument Statement of Operations Location Interest rate cap Green Bay Option May 2005 Option Term loan and revolving credit facilities: First Lien Term Loan Second Lien Term Loan Revolving Credit Facility Less: Term loan discount Total term loan and revolving credit facilities 7.75% Senior Notes Less: Current portion of long-term debt Long-term debt, net established from time to time, and (iii) 2019 2019 Financial asset: Interest rate cap (1) Financial liabilities: Other current liabilities Green Bay Option (2) Description Fair value balance at January 1, 2012 Add: Mark to market fair value adjustment Fair value balance at September 30, 2012 Fair Value Valuation Technique Unobservable Inputs First Lien Term Loan: Carrying value Fair value Second Lien Term Loan: Carrying value Fair value Revolving Credit Facility: Carrying value Fair value 7.75% Senior Notes: Carrying value Fair value 2012. 2012. 2013. voting on certain matters. allocated to each participating security and common Basic Earnings Per Share Numerator: Undistributed net income from continuing operations Less: Preferred stock dividends declared Accretion of redeemable preferred stock Participation rights of Company Warrants in undistributed earnings Participation rights of unvested restricted stock in undistributed earnings Basic undistributed net income (loss) from continuing operations - attributable to common shares Denominator: Basic weighted average shares outstanding Basic income (loss) from continuing operations per share - attributable to common shares Diluted Earnings Per Share: Numerator: Undistributed net income from continuing operations Less: Preferred stock dividends declared Accretion of redeemable preferred stock Participation rights of the Company Warrants in undistributed net income Participation rights of unvested restricted stock in undistributed earnings Basic undistributed net income (loss) from continuing operations - attributable to common shares Denominator: Basic weighted average shares outstanding Effect of dilutive options and warrants Diluted weighted average shares outstanding Diluted income (loss) from continuing operations per share - attributable to common shares Basic income per common share Diluted income per common share Basic income per common share Diluted income per common share December 2017. Facilities. June 30, 2012 and will revise the interim condensed consolidating information in future quarterly filings. 2013 Broadcast revenues Management fees Net revenues Operating expenses: Direct operating expenses (excluding depreciation, amortization and LMA fees) Depreciation and amortization LMA fees Corporate general and administrative expenses (including stock-based compensation expense of $2,764) Gain on exchange of assets or stations Realized gain on derivative instrument Total operating expenses Non-operating (expense) income: Operating (loss) income Interest expense, net Other expense, net Total non-operating expense, net (Loss) income from continuing operations before income taxes Income tax benefit (Loss) income from continuing operations Income from discontinued operations, net of taxes Earnings (loss) from consolidated subsidiaries Net income (loss) 2013 Broadcast revenues Management fees Net revenues Operating expenses: Direct operating expenses (excluding depreciation, amortization and LMA fees) Depreciation and amortization LMA fees Corporate general and administrative expenses (including stock-based compensation expense of $1,601) Realized loss on derivative instrument Total operating expenses Operating (loss) income Non-operating (expense) income: Interest expense, net Other expense, net Gain on equity investment in Cumulus Media Partners, LLC Total non-operating expense, net (Loss) income from continuing operations before income taxes Income tax expense (Loss) income from continuing operations Income from discontinued operations, net of taxes Earnings (loss) from consolidated subsidiaries Net income (loss) Cumulus Media Broadcast revenues Management fees Net revenues Operating expenses: Direct operating expenses (excluding depreciation, amortization and LMA fees) Depreciation and amortization LMA fees Corporate general and administrative expenses (including stock-based compensation expense of $15,671) Gain on exchange of assets or stations Realized loss on derivative instrument Impairment of intangible assets Total operating expenses Operating (loss) income Non-operating (expense) income: Interest (expense) income, net Other expense, net Total non-operating (expense) income, net (Loss) income from continuing operations before income taxes Income tax benefit (Loss) income from continuing operations Income from discontinued operations, net of taxes Earnings (loss) from consolidated subsidiaries Net income (loss) 2012 Cumulus Media Broadcast revenues Management fees Net revenues Operating expenses: Direct operating expenses (excluding depreciation, amortization and LMA fees) Depreciation and amortization LMA fees Corporate general and administrative expenses (including stock-based compensation expense of $2,788) Gain on exchange of assets or stations Realized loss on derivative instrument Total operating expenses Operating (loss) income Non-operating (expense) income: Interest (expense) income, net Loss on early extinguishment of debt Other expense, net Gain on equity investment in Cumulus Media Partners, LLC Total non-operating expense, net (Loss) income from continuing operations before income taxes Income tax expense (Loss) income from continuing operations Income from discontinued operations, net of taxes Earnings (loss) from consolidated subsidiaries Net income (loss) 2013 Assets Current assets: Cash and cash equivalents Restricted cash Accounts receivable, less allowance for doubtful accounts of $4,504 Trade receivable Prepaid expenses and other current assets Total current assets Property and equipment, net Broadcast licenses Other intangible assets, net Goodwill Investment in consolidated subsidiaries Other assets Total assets Liabilities, Redeemable Preferred Stock and Stockholders’ Equity (Deficit) Current liabilities: Accounts payable and accrued expenses Trade payable Current portion of long-term debt Other current liabilities Total current liabilities Long-term debt, excluding 7.75% senior notes 7.75% senior notes Other liabilities Deferred income taxes Total liabilities Redeemable preferred stock: Series A cumulative redeemable preferred stock, par value $0.01 per share; stated value of $1,000 per share; 100,000,000 shares authorized; 75,767 shares issued and outstanding Total redeemable preferred stock Stockholders’ equity (deficit): Class A common stock, par value $0.01 per share; 750,000,000 shares authorized; 182,053,736 shares issued and 157,908,633 outstanding Class B common stock, par value $0.01 per share; 600,000,000 shares authorized; 15,424,944 shares issued and outstanding Class C common stock, par value $0.01 per share; 644,871 shares authorized, issued and outstanding Treasury stock, at cost, 24,145,103 shares Additional paid-in-capital Accumulated (deficit) equity Total stockholders’ equity (deficit) Total liabilities, redeemable preferred stock and stockholders’ equity (deficit) 2012 Assets Current assets: Cash and cash equivalents Restricted cash Accounts receivable, less allowance for doubtful accounts of $2,765 Trade receivable Compensation held in trust Prepaid expenses and other current assets Total current assets Property and equipment, net Broadcast licenses Other intangible assets, net Goodwill Investment in consolidated subsidiaries Other assets Total assets Liabilities, Redeemable Preferred Stockand Stockholders’ Equity (Deficit) Current liabilities: Accounts payable and accrued expenses Trade payable Current portion of long-term debt Total current liabilities Long-term debt, excluding 7.75% senior notes 7.75% senior notes Other liabilities Deferred income taxes Total liabilities Redeemable preferred stock: Series A cumulative redeemable preferred stock, par value $0.01 per share; stated value of $1,000 per share; 100,000,000 shares authorized; 125,000 shares issued and outstanding Total redeemable preferred stock Stockholders’ equity (deficit): Class A common stock, par value $0.01 per share; 750,000,000 shares authorized; 160,783,484 shares issued and 137,085,813 shares outstanding Class B common stock, par value $0.01 per share; 600,000,000 shares authorized; 12,439,667 shares issued and outstanding Class C common stock, par value $0.01 per share; 644,871 shares authorized; 644,871shares issued and outstanding Treasury stock, at cost, 23,697,671 shares Additional paid-in-capital Accumulated (deficit) equity Total stockholders’ equity (deficit) Total liabilities, redeemable preferred stock and stockholders’ equity (deficit) 2013 Cash flows from operating activities: Net income Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization Amortization of debt issuance costs/discounts Provision for doubtful accounts Gain on sale of assets or stations Gain on exchange of assets or stations Impairment of intangible assets Fair value adjustment of derivative instruments Deferred income taxes Stock-based compensation expense Earnings from consolidated subsidiaries Changes in assets and liabilities Net cash provided by (used in) operating activities Cash flows from investing activities: Restricted cash Proceeds from sale of assets or stations Capital expenditures Proceeds from exchange of assets or stations Net cash (used in) provided by investing activities Cash flows from financing activities: Repayments of borrowings under revolving credit facilities Tax withholding payments on behalf of employees Preferred stock dividends Proceeds from exercise of warrants Repayment of preferred stock Net cash used in financing activities Increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 2012 Cash flows from operating activities: Net income (loss) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization Amortization of debt issuance costs/discounts Provision for doubtful accounts Loss on sale of assets or stations Gain on exchange of assets or stations Fair value adjustment of derivative instruments Deferred income taxes Stock-based compensation expense Other Loss on early extinguishment of debt Gain on equity investment in Cumulus Media Partners, LLC Earnings from consolidated subsidiaries Changes in assets and liabilities Net cash provided by (used in) operating activities Cash flows from investing activities: Restricted Cash Acquisitions less cash acquired Capital expenditures Net cash used in investing activities Cash flows from financing activities: Repayment of borrowings under term loans and revolving credit facilities Tax withholding payments on behalf of employees Proceeds from issuance of 7.75% senior notes due 2019 Proceeds from borrowings under term loans and revolving credit facilities, net of $25.1 million debt discount Proceeds from sale of equity securities Redemption of CMP preferred stock Deferred financing costs Net cash (used in) provided by financing activities Increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period future. matters. to the First Lien Facility. Pursuant to the $150.0 million. 2014. network sales marketplaces using our national platform. To effectively deliver our network advertising for our customers, we distribute content and programming through third party affiliates in order to achieve a broader national audience. Typically, in exchange for the right to broadcast radio network programming, third party affiliates remit a portion of their advertising time, which is then aggregated into packages focused on specific demographic groups and sold by us to our advertiser clients that want to reach the listeners who comprise those demographic groups on a national basis. Revenues derived from third party affiliates represented less than 10% of consolidated revenues in all periods presented. First Lien Facility. STATEMENT OF OPERATIONS DATA: Net revenues Direct operating expenses (excluding depreciation, amortization and LMA fees) Depreciation and amortization LMA fees Corporate, general and administrative expenses (including stock-based compensation expense) Gain on exchange of assets or stations Realized (gain) loss on derivative instrument Impairment of intangible assets Operating income Interest expense, net Loss on early extinguishment of debt Other (expense) income, net Gain on equity investment in CMP Income (loss) from continuing operations before income taxes Income tax benefit Income from continuing operations Income from discontinued operations, net of taxes Net income OTHER DATA: Adjusted EBITDA 2012 expense and a $1.1 million decrease in other overhead costs. 7.75% Senior Notes Bank borrowings – term loans and revolving credit facilities Other interest expense (income) Change in fair value of interest rate cap Interest income Interest expense, net 2012 $0.8 million loss recorded for the six months ended June 30, 2012. 7.75% Senior Notes Bank borrowings – term loans and revolving credit facilities Bank borrowings yield adjustment—interest rate swap Other interest expense Change in fair value of interest rate cap and option agreement Interest income Interest expense, net Net income Depreciation and amortization LMA fees Stock-based compensation expense Gain on exchange or sale of assets or stations Realized (gain) loss on derivative instrument Impairment of intangible assets Acquisition-related costs Franchise taxes Interest expense, net Other expense (income), net Loss on early extinguishment of debt Gain on equity investment in CMP Income tax benefit Depreciation and amortization from discontinued operations Non-operating (income) expense from discontinued operations Income tax expense (benefit) from discontinued operations Adjusted EBITDA Net cash provided by operating activities payments. Net cash provided by (used in) investing activities Net cash (used in) provided by financing activities Item 3.Quantitative and Qualitative Disclosures about Market Risk 2013. In addition to these risks, other risks that we presently do not consider material, or other unknown risks, could materially adversely impact our business, financial condition and results of operations in a future period. Date: Certification of the Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the xý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 SeptemberJune 30, 2012¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. Delaware 36-4159663 30305 (Address of Principal Executive Offices) (ZIP Code) xý No ¨xý No ¨Large accelerated filer ¨ Accelerated filer ¨ýNon-accelerated filer Smaller reporting company x¨xýOctober 26, 2012,July 23, 2013, the registrant had 174,392,288178,396,041 outstanding shares of common stock consisting of (i) 158,322,473162,326,226 shares of Class A common stock; (ii) 15,424,944 shares of Class B common stock; and (iii) 644,871 shares of Class C common stock. 334242 43 4344 September 30,
2012 December 31,
2011 $ 46,976 $ 30,592 3,254 3,854 222,096 236,804 7,073 5,967 — 24,807 33,155 22,315 312,554 324,339 261,967 278,070 1,610,128 1,625,415 287,667 390,509 1,296,348 1,334,512 79,554 87,746 $ 3,848,218 $ 4,040,591 $ 124,805 $ 160,186 5,623 4,999 13,250 13,250 12,022 — 155,700 178,435 2,068,705 2,227,287 610,000 610,000 48,129 63,938 562,811 556,771 3,445,345 3,636,431 70,854 113,447 70,854 113,447 1,821 1,608 154 124 6 6 (251,957 ) (251,666 ) 1,515,407 1,526,114 (933,412 ) (985,473 ) 332,019 290,713 $ 3,848,218 $ 4,040,591 Assets Current assets: Cash and cash equivalents $ 46,216 $ 88,050 Restricted cash 3,729 5,921 Accounts receivable, less allowance for doubtful accounts of $3,779 and $4,131 at June 30, 2013 and December 31, 2012, respectively 203,469 207,563 Trade receivable 7,344 6,104 Deferred income taxes 29,658 25,145 Prepaid expenses and other current assets 21,952 20,336 Total current assets 312,368 353,119 Property and equipment, net 246,528 255,903 Broadcast licenses 1,640,882 1,602,373 Other intangible assets, net 215,386 258,761 Goodwill 1,204,953 1,195,594 Other assets 70,067 77,825 Total assets $ 3,690,184 $ 3,743,575 Liabilities, Redeemable Preferred Stock and Stockholders’ Equity Current liabilities: Accounts payable and accrued expenses $ 75,872 $ 102,586 Trade payable 6,620 4,803 Current portion of long-term debt 13,250 76,468 Other current liabilities 8,542 11,386 Total current liabilities 104,284 195,243 Long-term debt, excluding 7.75% senior notes 2,040,359 2,014,599 7.75% senior notes 610,000 610,000 Other liabilities 41,122 45,313 Deferred income taxes 558,621 559,918 Total liabilities 3,354,386 3,425,073 Redeemable preferred stock: Series A cumulative redeemable preferred stock, par value $0.01 per share; stated value of $1,000 per share; 100,000,000 shares authorized; 75,767 shares issued and outstanding at both June 30, 2013 and December 31, 2012 72,871 71,869 Total redeemable preferred stock 72,871 71,869 Stockholders’ equity: Class A common stock, par value $0.01 per share; 750,000,000 shares authorized; 186,456,601 and 182,682,073 shares issued, and 162,326,226 and 158,519,394 shares outstanding, at June 30, 2013 and December 31, 2012, respectively 1,864 1,827 Class B common stock, par value $0.01 per share; 600,000,000 shares authorized; 15,424,944 shares issued and outstanding at both June 30, 2013 and December 31, 2012 154 154 Class C common stock, par value $0.01 per share; 644,871 shares authorized, issued and outstanding at both June 30, 2013 and December 31, 2012 6 6 Treasury stock, at cost, 24,130,375 and 24,162,676 shares at June 30, 2013 and December 31, 2012, respectively (250,697 ) (252,001 ) Additional paid-in-capital 1,511,689 1,514,849 Accumulated deficit (1,000,089 ) (1,018,202 ) Total stockholders’ equity 262,927 246,633 Total liabilities, redeemable preferred stock and stockholders’ equity $ 3,690,184 $ 3,743,575 Three Months Ended
September 30, Nine Months Ended
September 30, 2012 2011 2012 2011 $ 274,160 $ 124,332 $ 790,870 $ 235,989 1,190 458 1,516 2,708 275,350 124,790 792,386 238,697 161,740 73,710 484,106 142,690 35,239 11,025 106,321 14,702 928 530 2,652 1,670 12,979 44,654 46,473 61,924 — — — (15,278 ) (129 ) 1,436 624 2,681 — — 12,435 — 210,757 131,355 652,611 208,389 64,593 (6,565 ) 139,775 30,308 (49,757 ) (19,503 ) (150,179 ) (34,999 ) — — — (4,366 ) (224 ) 182 (34 ) 88 — 11,636 — 11,636 (49,981 ) (7,685 ) (150,213 ) (27,641 ) 14,612 (14,250 ) (10,438 ) 2,667 12,175 69,206 22,862 65,723 26,787 54,956 12,424 68,390 29,258 4,582 39,635 8,608 56,045 59,538 52,059 76,998 5,274 382 17,765 382 $ 50,771 $ 59,156 $ 34,294 $ 76,616 $ 0.10 $ 0.72 $ (0.03 ) $ 1.26 $ 0.14 $ 0.06 $ 0.25 $ 0.16 $ 0.24 $ 0.78 $ 0.22 $ 1.42 $ 0.10 $ 0.66 $ (0.03 ) $ 1.20 $ 0.14 $ 0.06 $ 0.25 $ 0.15 $ 0.24 $ 0.72 $ 0.22 $ 1.35 169,510,007 60,295,163 158,902,196 47,282,132 176,352,267 66,740,660 158,902,196 50,016,375 Three Months Ended June 30, Six Months Ended June 30, 2013 2012 2013 2012 Broadcast revenues $ 289,676 $ 280,745 522,548 $ 516,710 Management fees — 296 — 326 Net revenues 289,676 281,041 522,548 517,036 Operating expenses: Direct operating expenses (excluding depreciation, amortization and LMA fees) 171,762 168,746 335,934 322,442 Depreciation and amortization 28,935 36,200 57,866 71,007 LMA fees 759 885 1,728 1,724 Corporate, general and administrative expenses (including stock-based compensation expense of $2,470, $5,928, $5,134 and $12,906, respectively) 7,760 16,802 21,626 33,494 Loss on sale of stations 91 — 1,400 — (Gain) loss on derivative instrument (2,106 ) 841 (2,844 ) 753 Impairment of intangible assets — 12,435 — 12,435 Total operating expenses 207,201 235,909 415,710 441,855 Operating income 82,475 45,132 106,838 75,181 Non-operating (expense) income: Interest expense, net (43,833 ) (49,619 ) (88,085 ) (100,422 ) Loss on early extinguishment of debt (4,539 ) — (4,539 ) — Other (expense) income, net (511 ) (74 ) (378 ) 190 Total non-operating expense, net (48,883 ) (49,693 ) (93,002 ) (100,232 ) Income (loss) from continuing operations before income taxes 33,592 (4,561 ) 13,836 (25,051 ) Income tax (expense) benefit (6,491 ) 2,798 4,276 10,689 Income (loss) from continuing operations 27,101 (1,763 ) 18,112 (14,362 ) Income from discontinued operations, net of taxes — 9,906 — 10,375 Net income (loss) 27,101 8,143 18,112 (3,987 ) Less: dividends declared and accretion of redeemable preferred stock 3,155 6,791 6,307 12,491 Income (loss) attributable to common shareholders $ 23,946 $ 1,352 $ 11,805 $ (16,478 ) Basic and diluted income (loss) per common share (see Note 12, “Earnings Per Share”): Basic: Income (loss) from continuing operations per share $ 0.11 $ (0.05 ) $ 0.05 $ (0.17 ) Income from discontinued operations per share $ — $ 0.06 $ — $ 0.07 Income (loss) per share $ 0.11 $ 0.01 $ 0.05 $ (0.11 ) Diluted: Income (loss) from continuing operations per share $ 0.11 $ (0.05 ) $ 0.05 $ (0.17 ) Income from discontinued operations per share $ — $ 0.06 $ — $ 0.07 Income (loss) per share $ 0.11 $ 0.01 $ 0.05 $ (0.11 ) Weighted average basic common shares outstanding 176,481,592 157,710,861 175,619,586 153,540,006 Weighted average diluted common shares outstanding 179,553,341 157,710,861 178,678,090 153,540,006 Nine Months Ended
September 30, 2012 2011 $ 52,059 $ 76,998 107,481 15,231 7,581 1,699 2,892 920 (163 ) 33 (63,228 ) (15,278 ) 12,435 — 935 (1,002 ) 6,043 (68,443 ) 15,671 2,788 — 4,366 — (1,318 ) — (11,636 ) 15,174 (1,259 ) (1,106 ) (555 ) (8,130 ) 2,118 1,451 (1,087 ) (4,421 ) 24,860 624 345 (16,598 ) 3,571 128,700 32,351 600 (17 ) 426 — (4,655 ) (2,885 ) 114,918 — — (2,024,153 ) 111,289 (2,027,055 ) (161,000 ) (1,214,676 ) (1,909 ) (666 ) (11,599 ) — 136 — (49,233 ) — — 2,289,900 — 610,000 — 444,513 — (41,565 ) — (58,540 ) (223,605 ) 2,028,966 16,384 34,262 30,592 12,814 $ 46,976 $ 47,076 $ 133,975 $ 16,365 3,956 5,141 24,807 — 20,396 12,752 19,114 12,184 Six Months Ended June 30, 2013 2012 Cash flows from operating activities: Net income (loss) $ 18,112 $ (3,987 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 57,866 72,242 Amortization of debt issuance costs/discounts 5,164 5,061 Provision for doubtful accounts 1,046 1,598 Loss (gain) on sale of assets or stations 1,537 (183 ) Impairment of intangible assets — 12,435 Loss on early extinguishment of debt 4,539 — Fair value adjustment of derivative instruments (2,871 ) 1,003 Deferred income taxes (5,809 ) (14,302 ) Stock-based compensation expense 5,134 12,906 Changes in assets and liabilities: Accounts receivable 3,045 4,789 Trade receivable (1,240 ) (1,211 ) Prepaid expenses and other current assets (1,664 ) (1,217 ) Other assets 1,044 (715 ) Accounts payable and accrued expenses (26,724 ) (31,407 ) Trade payable 1,817 393 Other liabilities (4,222 ) (2,215 ) Net cash provided by operating activities 56,774 55,190 Cash flows from investing activities: Proceeds from sale of assets or stations 692 426 Acquisitions less cash acquired (52,066 ) — Restricted cash 2,192 — Capital expenditures (4,830 ) (1,919 ) Net cash used in investing activities (54,012 ) (1,493 ) Cash flows from financing activities: Repayment of borrowings under term loans and revolving credit facilities (38,931 ) (57,000 ) Tax withholding payments on behalf of employees for stock based compensation (337 ) (1,909 ) Preferred stock dividends (5,304 ) (6,458 ) Proceeds from exercise of warrants 34 161 Deferred financing costs (58 ) — Net cash used in financing activities (44,596 ) (65,206 ) Decrease in cash and cash equivalents (41,834 ) (11,509 ) Cash and cash equivalents at beginning of period 88,050 30,592 Cash and cash equivalents at end of period $ 46,216 $ 19,083 Supplemental disclosures of cash flow information: Interest paid $ 82,208 $ 97,441 Income taxes paid $ 1,561 $ 2,909 Supplemental disclosures of non-cash flow information: Compensation held in trust $ — $ 24,807 Trade revenue $ 12,458 $ 13,642 Trade expense $ 12,577 $ 12,705 CUMULUS MEDIA INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)SeptemberJune 30, 2012,2013, Cumulus Media owned or operated more than 525approximately 520 radio stations (including under local marketing agreements, or “LMAs”) in 110108 United States media markets and a nationwide radio network serving over 4,0005,000 stations.2011.2012. The accompanying unaudited interim condensed consolidated financial statements include the condensed consolidated accounts of Cumulus and its wholly-owned subsidiaries, with all significant intercompany balances and transactions eliminated in consolidation. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) 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 notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal, recurring adjustments) necessary for a fair presentation of results of operations for, and financial condition as of the end of, the interim periods have been made. The results of operations for the three months and ninesix months ended SeptemberJune 30, 2012,2013, the cash flows for the ninesix months ended SeptemberJune 30, 20122013 and the Company’s financial condition as of SeptemberJune 30, 2012,2013, are not necessarily indicative of the results of operations or cash flows that can be expected for, or the Company’s financial condition as of, any other interim period or for the fiscal year ending December 31, 2012.estimates under different assumptions or conditions.reclassifications have been made to prior year amounts2012 balances were reclassified to conform to the current year presentation. Certain assets were sold on July 31, 2012 (see Note 2, “Acquisitions and Dispositions”). The results of operations associated with these assets were separately reported, net of the related tax impact, for all periods presentedclassifications currently in the accompanying unaudited condensed consolidated statements of operations because the operations and cash flows generated by these assets have been eliminated from the Company’s consolidated results of operations as a result of the sale and the Company no longer has continuing involvement in the operations of the stations after their disposal (see Note 3, “Discontinued Operations”).2011-042012-02. In May 2011,July 2012, the Financial Accounting StandardsStandard Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-04, which amends Accounting Standards Codification (“ASC”) Topic 820,Fair Value Measurements and Disclosures, to achieve common fair value measurement and disclosure requirements under GAAP and International Financial Reporting Standards (“IFRS”). This standard gives clarification for the highest and best use valuation concepts. The ASU also provides guidance on fair value measurements relating to instruments classified in stockholders’ equity and instruments managed within a portfolio. Further, ASU 2011-04 clarifies disclosures for financial instruments categorized within level 3 of the fair value hierarchy that require companies to provide quantitative information about unobservable inputs used, the sensitivity of the measurement to changes in those inputs, and the valuation processes used by the reporting entity. The Company adopted the prescribed disclosures which became effective January 1, 2012, for its condensed consolidated financial statements as of such date. See Note 8, “Fair Value Measurements.”ASU 2011-05.In June 2011, the FASB issued ASU 2011-05, which amends the guidance in ASC Topic 220, “Comprehensive Income,” by eliminating the option to present components of other comprehensive income (“OCI”) in the statement of stockholders’ equity. This ASU requires entities to present all non-owner changes in stockholders’ equity either as a single continuous statement of comprehensive income or as two separate but consecutive statements of income and comprehensive income. The components of OCI have not changed nor has the guidance on when OCI items are reclassified to net income. Similarly, ASU 2011-05 does not change the guidance to disclose OCI components gross or net of the effect of income taxes, provided that the tax effects are presented on the face of the statement in which OCI is presented, or disclosed in the notes to the financial statements. The Company adopted this guidance effective January 1, 2012. Since the Company has no transactions classified as OCI, the adoption of this guidance did not have an impact on the Company’s condensed consolidated financial statements.ASU 2011-08. In September 2011, the FASB issued ASU 2011-8, which amends ASC Topic 350,Intangibles-Goodwill and Other. The amendments in this ASU give companies the option to first perform a qualitative assessment to determine whether it is more likely than not (a likelihood of more than 50.0%) that the fair value of a reporting unit is less than its carrying amount. If a company concludes that this is the case, it must perform the two-step goodwill impairment test. Otherwise, a company is not required to perform this two-step test. Under the amendments in this ASU, an entity has the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the first step of the two-step goodwill impairment test. The Company adopted this guidance effective January 1, 2012. The adoption of this guidance did not have an impact on the Company’s unaudited condensed consolidated financial statements.ASU 2011-11. In December 2011, the FASB issued ASU 2011-11. The amendments in this ASU require companies to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The ASU is required to be applied retrospectively for all prior periods presented and is effective for annual periods for fiscal years beginning on or after January 1, 2013, and interim periods within those annual fiscal years. The adoption of this guidance is not expected to have an impact on the Company’s consolidated financial statements.ASU 2012-02. In July 2012, the FASB issued ASU 2012-02. The amendments in this ASU give companies the option to perform a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired rather than calculating the fair value of the indefinite-lived intangible asset. It is effective prospectively for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. The Company adopted this guidance effective January 1, 2013. The adoption of this guidance isdid not expected to have an impact on the Company’s interim financial statements.Allocation Amount Other assets $ 1,460 Goodwill 11,461 Broadcast licenses 27,100 Plant, property, and equipment, net 62 Total purchase price 40,083 Less: Cash consideration (40,000 ) Less: Carrying value of station transferred (52 ) Less: Contingent consideration (31 ) Gain on asset exchange $ — Allocation Amount Plant, property, and equipment, net $ 783 Broadcast licenses 5,700 Total purchase price $ 6,483 Townsquare’sTownsquare's radio stations in Bloomington, IL and Peoria, IL, plus approximately $114.9$114.9 million in cash. The transaction was part of the Company’sCompany's ongoing efforts to focus on radio stations in larger markets and geographically strategic regional clusters. The stations sold by the Company operated in the following markets: Augusta, ME; Bangor, ME; Binghamton, NY; Bismarck, ND; Grand Junction, CO; Killeen-Temple, TX; New Bedford, MA; Odessa-Midland, TX; Presque Isle, ME; Sioux Falls, SD and Tuscaloosa, AL. Additional information regarding discontinued operations is provided in Note 3, “Discontinued Operations” in the accompanying consolidated financial statements.In conjunction with this Asset Exchange, the Company recorded a gainpreliminaryfinal purchase price allocation for the Townsquare Asset Exchange based on management’s estimates of the fair values of the assets acquired and liabilities assumed as of the date of the Townsquare Asset Exchange (dollars in thousands): Amount $ 149 4,690 11,900 3,014 200 (207 ) 19,746 (71,436 ) 114,918 $ 63,228 Allocation Amount Current assets $ 149 Property and equipment 4,690 Broadcast licenses 11,900 Goodwill 3,014 Other intangibles 200 Current liabilities (207 ) Total purchase price 19,746 Less: Carrying value of stations transferred (71,697 ) Add: Cash received 114,918 Gain on asset exchange $ 62,967 liabilities.The indefinite-lived intangible assetsliabilities assumed. in the Townsquare Asset Exchange consist of broadcast licenses and goodwill. goodwill is deductible for tax purposes.Description Fair Value Advertising relationships 6 $ 200 use of different assumptions could result in materially different amounts. In addition, the above allocation is preliminary only and based on information available to management to date. Managementtransaction was part of the Company isCompany’s ongoing efforts to focus on radio stations in the process of finalizing the purchase price allocation,larger markets and such final allocation may be materially different from the related preliminary allocation.For additional information regarding the discontinued operations associated with this transaction, see Note 3, “Discontinued Operations.”2011 AcquisitionsAnn Arbor, Battle Creek and Canton Asset ExchangeFebruary 18, 2011,December 6, 2012, the Company completed an asset exchange with Clear Channel Communications, Inc. (“Clear Channel”). As partthe acquisition of this asset exchange, Cumulus acquired eightKCHZ-FM for a purchase price of Clear Channel’s radio stations located in Ann Arbor and Battle Creek, Michigan in exchange for its radio station in Canton, Ohio.$11.2 million. The Company disposed of two ofpaid $10.0 million in cash at closing with the Battle Creek stations simultaneously withremaining $1.2 million paid in January 2013 upon the closing of the transactionacquisition of KMJK-FM.comply with Federal Communications Commission (“FCC”) broadcast ownership limits. This asset exchange was accounted for as a business combinationthe AR Broadcasting Asset Purchase were included in accordance with FASB’s guidance. The fair value of the assets acquired in this asset exchange was $17.4 million. The Company incurred approximately $0.3 million in acquisition costs related to this transaction and expensed them as incurred through earnings within corporate, general and administrative expenses. The $4.3 million allocated to goodwill is deductible for tax purposes. The resultsCompany’s condensed consolidated statement of operations for the Ann Arborthree and Battle Creek stations acquired, which were not material, have been included in our statements of operations since 2007 when the Company entered into a LMA with Clear Channel to manage these stations. Prior to this asset exchange, the Company did not have any relationship with Clear Channel with regard to the Canton, Ohio market.In conjunction with this asset exchange, the Company recorded a net gain of $15.3 million, which is included in gain on exchange of assets or stations in the accompanying unaudited condensed consolidated statements of operations for the ninesix months ended SeptemberJune 30, 2011.final purchase price allocation from this asset exchange (dollars in thousands): Amount $ 1,790 11,190 4,342 72 17,394 (2,116 ) $ 15,278 CMP AcquisitionOn August 1, 2011, the Company completed its previously announced acquisition of the remaining 75.0% of the equity interests of Cumulus Media Partners LLC (“CMP”) that it did not already own (the “CMP Acquisition”). The Company had owned 25.0% of CMP’s equity interests since it, together with Bain Capital Partners, LLC (“Bain”), The Blackstone Group L.P. (“Blackstone”) and Thomas H. Lee Partners, L.P. (“THL,” and together with Bain and Blackstone, the “CMP Sellers”), formed CMP in 2005. Pursuant to a management agreement, the Company had been operating CMP’s business since 2006. This management agreement was terminated in connection with the completion of the CMP Acquisition. In connection with the CMP Acquisition, the Company issued 9.9 million shares of its common stock to affiliates of the CMP Sellers. Blackstone received 3.3 million shares of the Company’s Class A common stock and, in accordance with FCC broadcast ownership rules, Bain and THL each received 3.3 million shares of a newly authorized Class D non-voting common stock, par value $0.01 per share (the “Class D common stock”). This Class D common stock was subsequently converted into an equivalent number of shares of the Company’s Class B common stock, par value $0.01 per share (the “Class B common stock”), with substantially identical terms, pursuant to the terms of the Company’s third amended and restated certificate of incorporation (the “Third Amended and Restated Charter”) which became effective upon the effectiveness of the Citadel Acquisition (defined below). Also in connection with the CMP Acquisition, outstanding warrants to purchase 3.7 million shares of common stock of CMP Susquehanna Radio Holdings Corp., an indirect wholly owned subsidiary of CMP (“Radio Holdings”), were amended to instead become exercisable for up to 8.3 million shares of the Company’s common stock. CMP’s operating results have been included in Cumulus’ consolidated financial statements since the date of the completion of the CMP Acquisition.As a component of the CMP Acquisition, the Company acquired an interest in the San Francisco Baseball Associates L.P., the owner of the San Francisco Giants Major League Baseball Franchise. The fair value of this interest as of the date of the CMP Acquisition was $9.8 million. This interest is included in other long-term assets on the Company’s accompanying unaudited condensed consolidated balance sheet and is carried under the cost method.Under the acquisition method of accounting for business combinations, the purchase price paid in the CMP Acquisition has been allocated among the tangible and intangible assets acquired and liabilities assumed based on their fair values as of the acquisition date. Goodwill as of the acquisition date was measured as the excess of the consideration paid over the net acquisition date fair values of the assets acquired and the liabilities assumed. The Company fair valued its historical 25.0% equity interest in CMP and recorded a gain of $11.6 million, the difference between the fair value at the date of completion of the CMP Acquisition and the carrying value, which was zero, given CMP’s historical losses. With respect to certain outstanding preferred stock of CMP, the Company recorded $0.5 million in dividends for the period from August 1, 2011, the acquisition date, to September 16, 2011. This preferred stock was redeemed on September 16, 2011 for approximately $41.6 million.The table below summarizes the fair value of consideration transferred in the CMP Acquisition (dollars in thousands): Amount $ 34,909 29,021 41,069 619,234 724,233 11,636 $ 735,869 (1)Fair value, equal to the closing price of the Company’s Class A common stock on the NASDAQ Global Select Market (“NASDAQ”) on August 1, 2011, of the 9.9 million shares of our common stock issued to affiliates of the CMP Sellers.(2)Fair value, equal to the closing price of the Company’s Class A common stock on the NASDAQ on August 1, 2011, of the CMP Restated Warrants, which, prior to their expiration on July 31, 2012, were exercisable for 8.3 million shares of our common stock.(3)Fair value of preferred stock is the par value of $32.8 million plus cumulative undeclared dividends of $8.3 million.(4)Equal to the closing price of our Class A common stock on the NASDAQ on August 1, 2011, multiplied by the estimated 3.3 million shares of common stock that we would have received in exchange for the equity interests in CMP that the Company owned immediately prior to the CMP Acquisition.Acquisition related costs attributable to the CMP Acquisition included in income, general and administrative expenses totaled $1.9 million.The table below summarizes the finalpreliminary purchase price allocation among the tangible and intangible assets acquired and liabilities assumed in the CMP AcquisitionAR Broadcasting Asset Purchase (dollars in thousands): Amount $ 61,598 29,092 317,917 94,422 403,130 11,014 (12,869 ) (5,730 ) (162,705 ) $ 735,869 The material assumptions utilized in the valuationAllocation Amount Current assets $ 93 Plant, property, and equipment, net 1,256 Other assets 23 Broadcast licenses 16,850 Current liabilities (152 ) Total purchase price $ 18,070 intangible assets included overall future market revenue growth rates for the residual year of approximately 2.0% and a weighted average cost of capital of 10.5%. Goodwill is equal to the difference between the purchase price and the value assigned to tangible and intangible assets and liabilities. $402.6 million of the acquired goodwill balance is non-deductible for tax purposes. Among the factors considered by management that contributed to the purchase price allocation resulting in the recognition of goodwill were CMP’s high operating margins, strong sales force and employee base, and its overall market presence.The indefinite-lived intangible assets acquired in the CMP Acquisition consist of broadcast licenses and goodwill. The definite-lived intangible assets acquired in the CMP Acquisition are being amortized in relation to the expected economic benefits of such assets over their estimated useful lives and consist of the following (dollars in thousands): Estimated Useful
Life in Years Fair Value 6 $ 94,422 Citadel AcquisitionThe Company completed the Citadel Acquisition on September 16, 2011 for an aggregate purchase price of approximately $2.3 billion, consisting of approximately $1.4 billion in cash, the issuance of 23.6 million shares of the Company’s Class A common stock, including 0.9 million restricted shares, warrants to purchase 47.6 million shares of Class A common stock, 2.4 million warrants held in reserve for potential future issuance related to the pending final settlement of certain outstanding unsecured claims arising from Citadel’s emergence from bankruptcy, and the consideration to repay the outstanding debt of Citadel. As a result of the Citadel Acquisition, Citadel became an indirect wholly owned subsidiary of the Company. Citadel’s operating results have been included in Cumulus’ consolidated financial statements since the date of the completion of the Citadel Acquisition.Also on September 16, 2011 and in connection with the Citadel Acquisition, the Company issued and sold 51.8 million shares of Class A common stock and warrants to purchase 7.8 million shares of Class A common stock to an affiliate of Crestview Partners II, L.P. (“Crestview”), 125,000 shares of Series A Preferred Stock to an affiliate of Macquarie Capital (USA) Inc. (“Macquarie”), and 4.7 million shares of Class A common stock and immediately exercisable warrants to purchase 24.1 million shares of Class A common stock to UBS Securities LLC (“UBS”) and certain other entities.In connection with the closing of the Citadel Acquisition and the completion of the Company’s previously announced related refinancing (the “Refinancing”), on September 16, 2011, the Company repaid approximately $1.4 billion in outstanding senior or subordinated indebtedness and other obligations of (a) the Company, (b) certain of the Company’s wholly-owned subsidiaries, and (c) Citadel. This Refinancing, and the cash portion of the purchase price paid in the Citadel Acquisition, were funded with (i) $1.325 billion in borrowings under a new first lien term loan, $200.0 million in borrowings under a new first lien revolving credit facility and $790.0 million in borrowings under a new second lien term loan, all as described in more detail in Note 7, “Long-Term Debt,” and (ii) proceeds from the sale of $475.0 million of the Company’s common stock, preferred stock and warrants to purchase common stock to certain investors (see Note 10, “Stockholders’ Equity”). The $610.0 million of 7.75% Senior Notes due 2019 (the “7.75% Senior Notes”) issued by the Company in May 2011 remained outstanding.In connection with the Citadel Acquisition, the Company completed its previously announced internal restructuring into a holding company structure, which included transferring the remaining assets and operations held directly or indirectly by the Company, other than the equity interests of its direct wholly-owned subsidiary Cumulus Media Holdings Inc. (“Cumulus Holdings”), to Cumulus Holdings (the “Internal Restructuring”).Also, in connection with the Citadel Acquisition, the Company agreed that it would divest certain stations to comply with FCC ownership limits. These stations were assigned to a trustee under divestiture trusts that comply with FCC rules. The trust agreements stipulate that the Company must fund any operating shortfalls of the activities of the stations in the trusts, and any excess cash flow generated by such stations will be distributed to the Company. The Company has determined that it is the primary beneficiary of the trusts and, accordingly, consolidates the trusts.Under the acquisition method of accounting for business combinations, the purchase price in the Citadel Acquisition has been allocated among the tangible and intangible assets acquired and liabilities assumed based on their fair values as of the acquisition date. Goodwill as of the acquisition date was measured as the excess of the consideration paid over the net acquisition date fair values of the assets acquired and the liabilities assumed.The table below summarizes the fair value of consideration transferred in the Citadel Acquisition (dollars in thousands): Amount $ 1,405,471 178,122 576 736,072 $ 2,320,241 (1)Fair value of the 22.7 million shares of the Company’s common stock and warrants to purchase 47.6 million shares of the Company’s common stock issued in the Citadel Acquisition and 2.4 million warrants held in reserve for potential future issuance related to the pending final settlement of certain outstanding unsecured claims arising from Citadel’s emergence from bankruptcy, based on the closing price of the Company’s Class A common stock on the NASDAQ on September 15, 2011.Acquisition related costs attributable to the Citadel Acquisition included in corporate, general and administrative expenses totaled $57.7 million.Certain termination-related compensation amounts resulting from the Citadel Acquisition were funded prior to closing and were classified as compensation held in trust on the condensed consolidated balance sheet as of December 31, 2011. These amounts were settled during the first quarter of 2012.The table below summarizes the final purchase price allocation among the tangible and intangible assets acquired and liabilities assumed in the Citadel Acquisition (dollars in thousands): Amount $ 328,306 221,697 1,135,669 333,480 861,305 18,794 (106,799 ) (38,660 ) (433,551 ) $ 2,320,241 The material assumptions utilized in the valuation of intangible assets included expected overall future market revenue growth rates for the residual year of approximately 2.0% and a weighted average cost of capital of 10.0%. Goodwill is equal to the difference between the purchase price and the value assigned to tangible and intangible assets and liabilities. $756.6 million of the acquired goodwill balance is non-deductible for income tax purposes. Among the factors considered by management that contributed to the purchase price allocation resulting in the recognition of goodwill were Citadel’s station platform throughout prominent national markets and its overall employee base, including its experienced sales force. During the nine months ended September 30, 2012, the Company recorded goodwill purchase accounting adjustments primarily related to fair value adjustments of assets and liabilities totaling approximately $9.1 million and $8.3 million, respectively. These adjustments are reflected in the table above.The indefinite-lived intangible assets acquired in the Citadel Acquisition consist of broadcast licenses and goodwill.The definite-lived intangible assets acquired in the Citadel Acquisition are being amortized in relation to the expected economic benefits of such assets over their estimated useful lives and consist of the following (dollars in thousands): Estimated Useful
Life in Years Fair Value 6 $ 235,800 5 40,700 5 18,300 2-4 38,680 the CMP Acquisition and the Citadel Acquisition occurred as of January 1, 2010 and the Townsquare Asset Exchange occurred as of January 1, 2011. The pro forma financial information also includes the business combination accounting effects of the CMP Acquisition, the Citadel Acquisition and the Townsquare Asset Exchange, including Cumulus’s amortization expense resulting from acquired intangible assets, the elimination of certain intangible asset amortization expense incurred by CMP and Citadel, adjustments to interest expense for certain borrowings, adjustments for transaction-related expenses and the related tax effects. This pro forma financial information has been prepared based on estimates and assumptions, which management believes are reasonable, and is not necessarily indicative of the consolidated financial position or results of operations that Cumulus would have achieved had either the CMP Acquisition or the Citadel Acquisition actually occurred on January 1, 2010 or the Townsquare Asset Exchange actually occurred on January 1, 2011 or on any other historical dates, nor is it reflective of the Company’s expected actual financial position or results of operations for any future period.period (dollars in thousands): Supplemental Pro Forma Data Three Months Ended Nine Months Ended September 30, September 30, 2012 2011 2012 2011 $ 276,166 $ 289,050 $ 798,681 $ 827,539 17,684 (19,122 ) 13,512 (22,063 ) Description 2012 2012 Net revenue $ 283,988 $ 522,515 Net income (loss) 8,582 (4,172 ) ninesix months ended SeptemberJune 30, 2012 and 2011 includes adjustments to reflect: (i) depreciation and amortization expense based on the fair value of long-lived assets acquired in the CMP Acquisition, the Citadel Acquisition and the Townsquare Asset Exchange; (ii) interest expense assuming the 7.75% Senior Notes were issued andoutstanding and replaced the Company’s historical debt for all periods; (iii) the completion of the Refinancing undertaken in connection with the completion of the Citadel Acquisition for all periods; and (iv) certain other pro forma adjustments that would be required to be made to prepare pro forma financial information under ASC Topic 805,Business Combinations.Pending AcquisitionOn September 25, 2012,Company, through its subsidiaries entered into an asset purchase agreement (the “ARBWFME Asset Purchase”) withExchange, AR Broadcasting LLC, AR Licensing, LLC, CMP KC Corp. and CMP Houston-KC, LLC to acquire certain radio stations operated in the Kansas City Market for an aggregate purchase price of $16.8 million. The pending acquisition is subject to customary regulatory and other closings conditions. The Company currently anticipates the ARB Asset Purchase will be completed priorand the Pamal Broadcasting Purchase is not required, as such information is not material to the end of 2012.For dispositions completed during the three and nine months ended September 30, 2012, see “2012 Acquisitions” above. ninesix months ended SeptemberJune 30, 2011.transaction is part of the Company’s ongoing efforts to focus on radio stations in larger markets and geographically strategic regional clusters. The results of operations associated with thesethe stations werehave been or are separately reported within discontinued operations, net of the related tax impact, for all periods presented in the accompanying condensed consolidated statements of operations.ninesix months ended SeptemberJune 30, 2012, and 2011, income from discontinued operations was as follows (dollars in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2012 2011 2012 2011 $ 3,534 $ 7,513 $ 23,855 $ 20,643 1,458 3,156 8,227 8,218 63,226 (1 ) 63,219 (1 ) 64,684 3,155 71,446 8,217 (35,426 ) 1,427 (31,811 ) 391 $ 29,258 $ 4,582 $ 39,635 $ 8,608 2012 2012 Discontinued operations: Net revenue $ 11,000 $ 20,321 Operating income 4,382 6,769 Non-operating expenses (5 ) (7 ) Income from discontinued operations before taxes 4,377 6,762 Income tax benefit 5,529 3,613 Income from discontinued operations $ 9,906 $ 10,375 ninethree and six months ended SeptemberJune 30, 2012 the Company recognized a $7.2$7.2 million deferred tax benefit related to the release of a valuation allowance resulting from the consumption of NOL carryovers associated with the settlement of deferred tax liabilities related to intangible assets classified asassociated with the sale of indefinite lived intangibles prior to their sale in the Townsquare Asset Exchange.intangibles. The deferred tax benefit is reflected in income tax expense for discontinued operations. In conjunction with Townsquare Asset Exchange, the Company recorded a gain of $63.2 million, which is included within discontinued operations in the accompanying unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2012.SeptemberJune 30, 20122013 and December 31, 2011,2012, the Company’s balance sheet included approximately $3.3$3.7 million and $3.8$5.9 million in restricted cash, of which $2.3$2.3 million related to a cash reserve from the Company’s previously completed acquisitionAcquisition.Broadcasting Company (“Citadel”) (the “Citadel Merger”). The reserve is expected to be used to satisfy the remaining allowed, disputed or unreconcilednot reconciled unsecured claims related to Citadel’s prior bankruptcy proceedings. $1.0At June 30, 2013 and December 31, 2012, $0.6 million of the restricted cash balance relates to securing the maximum exposure generated by automated clearing house transactions in the Company’s operating bank accounts and as dictated by the Company’s bank’s internal policies with respect to cash.20112012 to September 30, 2011December 31, 2012 and January 1, 20122013 to SeptemberJune 30, 2012,2013, and balances as of such dates (dollars in thousands): Indefinite-Lived Definite-Lived Total $ 160,418 $ 552 $ 160,970 1,465,924 450,707 1,916,631 (1,533 ) (83 ) (1,616 ) — (8,613 ) (8,613 ) $ 1,624,809 $ 442,563 $ 2,067,372 1,625,415 390,509 2,015,924 (1,581 ) 957 (624 ) 11,900 200 12,100 — (12,435 ) (12,435 ) (25,606 ) (6,884 ) (32,490 ) — (84,680 ) (84,680 ) $ 1,610,128 $ 287,667 $ 1,897,795 Indefinite-Lived Definite-Lived Total Intangible Assets: Balance as of January 1, 2012 $ 1,625,415 $ 390,509 $ 2,015,924 Purchase price allocation adjustments — (1,027 ) (1,027 ) Acquisition 22,253 376 22,629 Impairment (14,706 ) (12,435 ) (27,141 ) Disposition (30,589 ) (6,880 ) (37,469 ) Amortization — (112,240 ) (112,240 ) Balance as of December 31, 2012 1,602,373 258,303 1,860,676 Acquisition 44,038 — 44,038 Disposition (5,529 ) — (5,529 ) Amortization — (42,917 ) (42,917 ) Balance as of June 30, 2013 $ 1,640,882 $ 215,386 $ 1,856,268 20122013 to SeptemberJune 30, 20122013 and January 1, 20112012 to SeptemberJune 30, 2011,2012, and balances as of such dates (dollars in thousands): 2012 2011 $ 1,564,253 $ 285,820 (229,741 ) (229,741 ) 1,334,512 56,079 3,014 1,257,118 (9,550 ) — (31,628 ) — 1,526,089 1,542,938 (229,741 ) (229,741 ) $ 1,296,348 $ 1,313,197 In connection with each of the CMP Acquisition, the Citadel Acquisition and the Townsquare Asset Exchange, the Company made certain allocations of the purchase price paid therein among each of the tangible and intangible assets and liabilities acquired, including goodwill. Adjustments to these allocations are reflected as purchase price allocation adjustments. Purchase price allocation adjustments during the nine months ended September 30, 2012 related to the CMP Acquisition and the Citadel Acquisition were primarily related to fair value adjustments of certain acquired broadcast licenses, property and equipment, current assets and current liabilities.Goodwill: 2013 2012 Balance as of January 1: Goodwill $ 1,525,335 $ 1,564,253 Accumulated impairment losses (329,741 ) (229,741 ) Subtotal 1,195,594 1,334,512 Acquisition 11,461 — Current assets held for sale — (32,132 ) Purchase price allocation adjustments — (9,550 ) Finalization of purchase accounting for fourth quarter 2012 acquisitions (1,889 ) — Disposition (213 ) (105 ) Balance as of June 30: Goodwill 1,534,694 1,522,466 Accumulated impairment losses (329,741 ) (229,741 ) Total $ 1,204,953 $ 1,292,725 indefinite-lived broadcast licenses definite-lived advertiser relationships and goodwill acquired through the acquisition of radio stations. The Company reviews the carrying value of its indefinite-livedindefinite lived intangible assets and goodwill at least annually for impairment and on an interim basis if events or circumstances indicate that such assets may be impaired.impairment. If the carrying value exceeds the estimate of fair value, the Company calculates the impairment as the excess of the carrying value of goodwill over its estimated implied fair value and charges the impairment to results of operations.operations in the period in which the impairment occurred. The Company reviews the carrying value of its definite-lived intangible assets for recoverability whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Duringnine months ended September 30, 2012,WFME Asset Exchange, the Pamal Broadcasting Asset Purchase, and the AR Broadcasting Asset Purchase, the Company recognized an impairmentmade certain allocations of $12.4 million on one contract definite-livedthe purchase price paid therein among each of the tangible and intangible asset relatedassets and liabilities assumed, including goodwill. Such purchase price allocations are preliminary and subject to change during the cancellation of an underlying contract.are as follows:$71.3 million.$71.3 million. The agreement caps the LIBOR-based variable interest rate component of the Company’s long-term debt at a maximum of 3.0% on an equivalent amount of the Company’s term loans. The unaudited condensed consolidated balance sheets as of SeptemberJune 30, 20122013 and December 31, 20112012 include long-term assetslong term-assets of $0.1less than $0.1 million and $0.4 million, respectively, dollars attributable to the fair value of the interest rate cap. The Company reported interest income of less than $0.1 million during each of the three months and six months ended June 30, 2013, and interest expense of $0.1$0.2 million and $0.3$0.3 million during for the three and ninesix months ended SeptemberJune 30, 2012, respectively, attributed to the change in fair value adjustment. The interest rate cap matures on December 8, 2015.$0.2$0.2 million over a five year term (expiring December 31, 2013), in exchange for the Company retaining the operating profits from managing the radio stations. Clear Channel also has a put option (the “Green Bay Option”) that allows it to require the Company to purchase the five Green Bay radio stations at any time during the two-month period commencing July 1, 2013 (or earlier if the LMA is terminated before this date) for $17.6$17.6 million (the fair value of the radio stations as of April 10, 2009)., as discussed further below. The Company accounts for the Green Bay Option as a derivative contract. Accordingly, the fair value of the Green Bay Option wasis recorded as a liability with subsequent changes in the fair value recorded through earnings. The fair value of the Green Bay Option was determined using inputs that are supported by little or no market activity (a “Level 3” measurement). The fair value represents an estimate of the amount that the Company would pay if the option was transferred to another party as of the date of the valuation.SeptemberJune 30, 20122013 and December 31, 20112012 reflect other current liabilities of $12.0$8.5 million and other long-term liabilities of $11.4$11.4 million respectively, to include the fair value of the Green Bay Option. The Company recorded a $0.1$2.1 million realized and $2.8 million in gain and a $0.6 million realized loss on derivative instrumentsinstrument associated with marking to market the Green Bay Option to reflect the fair value of the option during each of the three and ninesix months ended SeptemberJune 30, 2012 and $1.4 million and $2.7 million of expense in realized losses on derivative instruments for the three and nine months ended September 30, 2011, respectively.May 2005 Option2013.In May 2005, the Company entered into an interest rate option agreement (the “May 2005 Option”), that provided Bank of America, N.A. the right to enter into an underlying swap agreement with the Company during certain periods.The May 2005 Option was exercised on March 11, 2009. This instrument was not highly effective in mitigating the risks in the Company’s cash flows, and therefore the Company deemed it speculative and accounted for the changes in the May 2005 Option’s value as a current element of interest expense. The May 2005 Option expired on March 13, 2011 in accordance with its terms. The Company reported interest income related to this option of $0.0 million and $3.7 million, inclusive of the fair value adjustment during the three and nine months ended September 30, 2011, respectively. accompanying unaudited condensed consolidated balance sheets are shown in the following table (dollars in thousands): September 30, December 31, 2012 2011 Other long-term assets $ 65 $ 376 Other current liabilities (12,022 ) — Other long-term liabilities — (11,398 ) Total $ (11,957 ) $ (11,022 ) Fair Value Derivative Instruments Balance Sheet Location Derivatives not designated as hedging instruments: Interest rate cap Other long-term assets $ 72 $ 44 Green Bay Option Other current liabilities (8,542 ) (11,386 ) Total $ (8,470 ) $ (11,342 ) of income or expense recognized due to adjustments to the fair valuesand effect of derivatives in the accompanying unaudited condensed consolidated statements of operations are shown in the following table (dollars in thousands): Amount of Expense (Income)
Recognized on Derivatives For the Three Months Ended For the Nine Months Ended September 30, September 30, 2012 2011 2012 2011 Interest expense $ 61 $ — $ 311 $ — Realized (gain) losses on derivative instrument (129 ) 1,436 624 2,681 Interest income — — — (3,683 ) Total $ (68 ) $ 1,436 $ 935 $ (1,002 ) Recognized on Derivatives Derivative Instruments Statement of Operations Location 2013 2012 2013 2012 Interest rate cap Interest (income) expense $ (32 ) $ 165 $ (27 ) $ 250 Green Bay Option (Gain) loss on derivative instrument (2,106 ) 841 (2,844 ) 753 Total $ (2,138 ) $ 1,006 $ (2,871 ) $ 1,003 SeptemberJune 30, 20122013 and December 31, 20112012 (dollars in thousands): September 30, 2012 December 31, 2011 $ 1,314,000 $ 1,325,000 790,000 790,000 — 150,000 (22,045 ) (24,463 ) 2,081,955 2,240,537 610,000 610,000 (13,250 ) (13,250 ) $ 2,678,705 $ 2,837,287 June 30,
2013 December 31,
2012Term Loan and Revolving Credit Facilities: First Lien Term Loan $ 1,287,260 $ 1,321,687 Second Lien Term Loan 785,496 790,000 Revolving Credit Facility — — Less: Term Loan discount (19,147 ) (20,620 ) Total Term Loan and Revolving Credit Facilities 2,053,609 2,091,067 7.75% Senior Notes 610,000 610,000 Less: Current portion of long-term debt (13,250 ) (76,468 ) Long-term debt, net $ 2,650,359 $ 2,624,599 to complete the Refinancing, the Company entered into a (i) First Lien Credit Agreement (the(as amended and restated the “First Lien Facility”), among the Company, Cumulus Holdings, as Borrower, certain lenders, JPMorgan as Administrative Agent, UBS, Macquarie, Royal Bank of Canada and ING Capital LLC, as Co-Syndication Agents, and U.S. Bank National Association and Fifth Third Bank, as Co-Documentation Agents; and (ii) Second Lien Credit Agreement (the “Second Lien Facility” and, together with the First Lien Facility, the “2011 Credit Facilities”), among the Company, Cumulus Holdings, as Borrower, certain lenders, JPMorgan, as Administrative Agent, and UBS, Macquarie, Royal Bank of Canada and ING Capital LLC, as Co-Syndication Agents.$1.325$1.325 billion first lien term loan facility, net of an original issue discount of $13.5$13.5 million, maturing in September 2018 (the “First Lien Term Loan”), and a $300.0$150.0 million revolving credit facility, maturing in September 2016 (the “Revolving Credit Facility”). Under the Revolving Credit Facility, up to $30.0$15.0 million of availability may be drawn in the form of letters of credit and up to $30.0$15.0 million is available for swingline borrowings. The Second Lien Facility consists of a $790.0$790.0 million second lien term loan facility, net of an original issue discount of $12.0$12.0 million, maturing in September 2019 (the “Second Lien Term Loan”).At September 30, 2012, there was $1.314 billion outstanding under the First Lien Term Loan and $790.0 million outstanding under the Second Lien Term Loan. During the quarter ended September 30, 2012, the Company repaid all outstanding borrowings under the Revolving Credit Facility.Acquisition;Merger; (ii) repay in full amounts outstanding under the revolving credit facility under the Company’s pre-existing credit agreement (the “Terminated Credit Agreement”); (iii) repay all amounts outstanding under the credit facilities of CMP Susquehanna Corporation (“CMPSC”), an indirect wholly-owned subsidiary of CMP; (iv) redeem CMPSC’s outstanding 9.875% senior subordinated notes due 2014 and variable rate senior secured notes due 2014; (v) redeem in accordance with their terms all outstanding shares of preferred stock of Radio Holdings and the direct parent of CMPSC; and (vi) repay all amounts outstanding, including any accrued interest and the premiums thereon, under Citadel’s pre-existing credit agreement and to redeem its 7.75% Senior Notes.4.5%3.5% on LIBOR-based borrowings and 3.5%2.5% on Base Rate-based borrowings. LIBOR-based borrowings are subject to a LIBOR floor of 1.25%1.0% for the First Lien Term Loan and 1.0% for the Revolving Credit Facility. Base Rate-based borrowings are subject to a Base Rate Floor of 2.25% for the First Lien Term Loan and 2.0% for the Revolving Credit Facility. Base Rate is defined, for any day, as the fluctuating rate per annum equal to the highest of (i) the Federal Funds Rate, as published by the Federal Reserve Bank of New York, plus 1/2 of 1.0%, (ii) the prime commercial lending rate of JPMorgan, as2019.SeptemberJune 30, 2012,2013, borrowings under the First Lien Term Loan bore interest at 5.75%4.5% per annum and borrowings under the Second Lien Term Loan bore interest at 7.50%7.5% per annum. There were no outstanding borrowings underEffective December 8, 2011, the Revolving Credit Facility at September 30, 2012. The Company’s interest rate capCompany entered into the Interest Rate Cap with an aggregate notional amount of $71.3 million, which agreement with JPMorgan caps the interest rate on an equivalent amount of the Company’s LIBOR-basedLIBOR based term loans at a maximum of 3.0% per annum. The Interest Rate Cap matures on December 8, 2015. See Note 6, “Derivative Financial Instruments” for additional information.totalfirst lien net leverage ratio.ratio covenant. At SeptemberJune 30, 2012,2013, this ratio would have been 7.04.5 to 1.0.1.0. Such ratio will be reduced in future periods if amounts are outstanding under the Revolving Credit Facility at an applicable date. At June 30, 2013, the Company would have been in compliance with the covenant if the Company had amounts outstanding under the Revolving Credit Facility. The Second Lien Facility does not contain any financial covenants.At September 30, 2012, the Company was in compliance with all of the required covenants under the First Lien Facility.$610.0$610.0 million aggregate principal amount of the 7.75% Senior Notes. Proceeds from the sale of the 7.75% Senior Notes were used to, among other things, repay the $575.8$575.8 million outstanding under the term loan facility under the Terminated Credit Agreement.In connection with the Internal Restructuring, oncommencing November 1, 2011.of each year. The 7.75% Senior Notes mature on May 1, 2019.also redeem up to 35.0% of the 7.75% Senior Notes using the proceeds from certain equity offerings. At any time prior to May 1, 2015, Cumulus Holdings may redeem some or all of the 7.75% Senior Notes at a price equal to 100% of the principal amount, plus a “make-whole” premium. If Cumulus Holdings sells certain assets or experiences specific kinds of changes in control, it will be required to make an offer to purchase the 7.75% Senior Notes.ninesix months ended SeptemberJune 30, 2012,2013, the Company recorded an aggregate of $2.5$2.5 million and $7.6$5.1 million, respectively, of amortization of debt discount and debt issuance costs related to its First Lien and Second Lien Credit Facilities and 7.75% Senior Notes.basis. Financialbasis and non-financial assets and liabilities are measured at fair value on a recurring basisnon-recurring basis. Fair values as of SeptemberJune 30, 2013 and December 31, 2012 were as follows (dollars in thousands): Fair Value Measurements at Reporting Date Using Total Fair
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(Level 3) $ 65 $ — $ 65 $ — $ (12,022 ) $ — $ — $ (12,022 ) Fair Value Measurements at June 30, 2013 Using Financial assets: Interest Rate Cap (1) $ 72 $ — $ 72 $ — Total assets $ 72 $ — $ 72 $ — Financial liabilities: Other current liabilities Green Bay Option (2) $ (8,542 ) $ — $ — $ (8,542 ) Contingent consideration (3) (31 ) — — (31 ) Total liabilities $ (8,573 ) $ — $ — $ (8,573 ) Fair Value Measurements at December 31, 2012 Using Financial assets: Interest Rate Cap (1) $ 44 $ — $ 44 $ — Total assets $ 44 $ — $ 44 $ — Financial liabilities: Other current liabilities Green Bay Option (2) $ (11,386 ) $ — $ — $ (11,386 ) Total liabilities $ (11,386 ) $ — $ — $ (11,386 ) (1) The Company is party to an interest rate cap pursuant to which$71.3$71.3 million notional amount of its term loans. The fair value of the Company’s interest rate capInterest Rate Cap is determined based on a discounted cash flow analysis on the expected future cash flows using observable inputs, including interest rates and yield curves. Derivative valuations incorporate adjustments that are necessary to reflect the credit risk.(2) The fair value of the Green Bay Option was determined using certain significant unobservable inputs that are supported by little or no market activity (a Level 3 measurement). The fair value represents an estimate of the net amount that the Company would pay if the option werewas transferred to another party as of the date of the valuation. The option valuation incorporates a credit risk adjustment to reflect the probability of default by the Company.(3) The fair value of the contingent consideration was determined using inputs that are supported by little or no market activity (a Level 3 measurement). Contingent consideration represents the fair value of the additional cash consideration to be paid to the sellers of the assets purchased as part of the WFME Asset Exchange if certain future conditions are met as detailed in the purchase agreement. See Note 2 “Acquisitions and Dispositions”. interest rate capInterest Rate Cap are measured within Level 2 on the fair value hierarchy. To estimate the fair value of the interest rate cap,Interest Rate Cap, the Company used an industry standard cash valuation model, which utilizes a discounted cash flow approach, with all significant inputs derived from or corroborated by observable market data. See Note 6, “Derivative Financial Instruments.”20122013 to SeptemberJune 30, 20122013 (dollars in thousands): Green Bay Option $ (11,398 ) (624 ) $ (12,022 ) Description Green Bay Option Fair value balance at January 1, 2013 $ (11,386 ) Add: Mark to market fair value adjustment 2,844 Fair value balance at June 30, 2013 $ (8,542 ) Description Contingent Consideration Fair value balance at January 1, 2013 $ — Add: Acquisition of WFME (31 ) Fair value balance at June 30, 2013 $ (31 ) SeptemberJune 30, 2012 were2013 was as follows (dollars in thousands): $ (12,022) Black-Scholes Model Risk adjusted discount rate 7.4 % Total term less than 1 year Volatility rate 75.0 % Annual dividend rate 0.0 % Bond equivalent yield discount rate 0.2 % Fair Value Valuation Technique Unobservable Inputs $ (8,542 ) Black-Scholes Model Risk adjusted discount rate 6.6 % Total term less than 1 year Volatility rate 25 % Annual dividend rate — % Bond equivalent yield discount rate — % The carrying values of receivables, payables, and accrued expenses approximate their respective fair values dueshort maturitycontingent consideration as of these instruments.The Company’s long-term debt is classified within Level 2June 30, 2013 was as follows (dollars in thousands):Fair Value Valuation Technique Unobservable Inputs $ 31 Income Approach Total term 5 years Conditions 3 Bond equivalent yield discount rate 0.1 % hierarchy. measurement.amountsamount and fair value of the Company’s First Lien Term Loan, Second Lien Term Loan, Revolving Credit Facilityterm loans and 7.75% Senior Notes (dollars in thousands): September 30, 2012 December 31, 2011 $ 1,314,000 $ 1,325,000 1,323,855 1,305,125 $ 790,000 $ 790,000 797,900 770,250 $ — $ 150,000 — 150,000 $ 610,000 $ 610,000 590,938 541,680 First Lien Term Loan: Carrying value $ 1,287,260 $ 1,321,687 Fair value - Level 2 1,287,260 1,331,600 Second Lien Term Loan: Carrying value $ 785,497 $ 790,000 Fair value - Level 2 801,207 811,725 7.75% Senior Notes: Carrying value $ 610,000 $ 610,000 Fair value - Level 2 596,275 599,325 SeptemberJune 30, 2012,2013, the Company used the trading prices of 100.8%100.0% and 101.0%102.0% to calculate the fair value of the First Lien Term Loan and Second Lien Term Loan, respectively, and 96.9%97.75% to calculate the fair value of the 7.75% Senior Notes.2011,2012, the Company used the trading prices of 98.5%100.75% and 97.5%102.75% to calculate the fair value of the First Lien Term Loan and Second Lien Term Loan, respectively, and 88.8%98.3% to calculate the fair value of the 7.75% Senior Notes.In connection with the Citadel Acquisition on September 15, 2011, the$0.01$0.01 per share, with a liquidation preference of $1,000$1,000 per share (“Series A Preferred Stock”). In connection with the Equity Investment, the Company, and has issued 125,000 shares of Series A Preferred Stock for an aggregate amount of $125.0 million. Net proceeds to the Company were $110.7$125.0 million after deducting $14.3 million in fees.. No other shares of Series A Preferred Stock are issuable in the future, except for such shares as may be issued as dividends in lieu of any cash dividends in accordance with the terms thereof, and the Series A Preferred Stock ranks senior to all common stock and each series of stock the Company may subsequently designate with respect to dividends, redemption and distributions upon liquidation, winding-up and dissolution of the Company.Third Amended and Restated Chartercertificate of incorporation that would adversely affect the rights, privileges or preferences of the Series A Preferred Stock. Although the shares of Series A Preferred Stock include a mandatory redemption feature, there is no stated or probable date of redemption.The dividendsDividends are payable in arrears in cash, except that, at the option of the Company, up to 50.0% of the dividends for any period may be paid through the issuance of additional shares of Series A Preferred Stock. Payment of dividends on the Series A Preferred Stock is in preference and prior to any dividends payable on any class of the Company’s common stock.Duringthree and nine months ended September 30, 2012,event of the liquidation, dissolution or winding-up of the affairs of the Company, redeemed 49,233 shareswhether voluntary or involuntary, the holders of itsSeries A preferred stock at the time shall be entitled to receive liquidating distributions with respect to each share of Series A Preferred Stock for $49.2 million and $0.8 million ofin an amount equal to the amount invested therein plus any accrued but unpaid dividends, and dividend rights to the fullest extent permitted by law, before any distribution of assets is made to the holders of our common stock.through the redemption date. but unpaid dividends.SeptemberJune 30, 20122013 were $3.4$2.7 million and $5.1$5.4 million respectively, including $0.8 million of dividends paid on the redeemed shares through the redemption date., respectively. Total dividends accrued and paid on the Series A Preferred Stock during the ninethree and six months ended SeptemberJune 30, 2012 were $11.1$3.3 million and $11.6$6.5 million respectively, including $0.8 million of dividends paid on the redeemed shares through the redemption date., respectively. During the three and ninesix months ended SeptemberJune 30, 2013, the Company accreted $0.5 million and $1.0 million, respectively, on the Series A Preferred Stock. During the three and six months ended June 30, 2012, the Company accreted $1.9$2.4 million and $6.6$4.8 million, respectively, on the Series A Preferred Stock. At SeptemberJune 30, 2013 and December 31, 2012, 75,767 shares of Series A Preferred Stock remained outstanding. During each of the three and nine months ended September 30, 2011, the Company accrued $0.5 million in dividends and accreted $0.2 million on the Series A Preferred Stock. No cash dividends were paid during the three or nine months ended September 30, 2011 related to the Series A Preferred Stock. The accretion of Series A Preferred Stock resulted in an equivalent reduction in additional paid-in capital on the accompanying unaudited condensed consolidated balance sheetssheet at SeptemberJune 30, 20122013 and December 31, 2011.$0.01$0.01 per share (see Note 9, “Redeemable Preferred Stock”). Effective September 16, 2011, upon the filing of the Third Amended and Restated Charter, each then-outstanding share of Class D common stock was converted to one share of Class B common stock.As discussed in Note 2, “Acquisitions and Dispositions,” the Company completed the CMP Acquisition on August 1, 2011. In connection with the CMP Acquisition, the Company issued approximately 3.3 million shares of Class A common stock and 6.6 million shares of Class B common stock to affiliates of the three private equity firms that had collectively owned the 75.0% of CMP not then-owned by the Company. Also in connection with the CMP Acquisition, the 3.7 million outstanding CMP Restated Warrants were amended to become exercisable for up to 8.3 million shares of Class B common stock.As also discussed in Note 2, “Acquisitions and Dispositions,” the Company completed the Citadel Acquisition on September 16, 2011. In connection with the Citadel Acquisition, the Company issued 23.6 million shares of Class A common stock, including 0.9 million restricted shares, and warrants to purchase 47.6 million shares of Class A common stock (the “Citadel Warrants”) to holders of Citadel’s common stock and warrants. Additionally, 2.4 million warrants to purchase shares of the Company’s common stock related to the pending final settlement of certain outstanding unsecured claims arising from Citadel’s emergence from bankruptcy in June 2010 are held in reserve for potential future issuance by the Company.On September 16, 2011, pursuant to the Equity Investment, the Company issued and sold (i) 51.8 million shares of Class A common stock and warrants to purchase 7.8 million shares of Class A common stock with an exercise price of $4.34 per share (the “Crestview Warrants”) to an affiliate of Crestview; (ii) 125,000 shares of Series A Preferred Stock to an affiliate of Macquarie (see Note 9, “Redeemable Preferred Stock”); and (iii) 4.7 million shares of Class A common stock and warrants to purchase 24.1 million shares of Class A common stock (the “UBS Warrants,” and, together with the Citadel Warrants, the “Company Warrants”) to UBS and certain other investors to whom UBS syndicated a portion of its investment commitment.•Voting Rights. The holders of shares of Class A common stock are entitled to one vote per share on any matter submitted to a vote of the stockholders of the Company, and the holders of shares of Class C common stock are entitled to ten votes for each share of Class C common stock held. Generally, the holders of shares of Class B common stock are not entitled to vote on any matter. However, holders of Class B common stock and Class C common stock are entitled to a separate class vote on any amendment or modification of any specific rights or obligations of the holders of Class B common stock or Class C common stock, respectively, that does not similarly affect the rights or obligations of the holders of Class A common stock. The holders of Class A common stock and of Class C common stock vote together, as a single class, on all matters submitted to a vote to the stockholders of the Company.•Conversion. Each holder of Class B common stock and Class C common stock is entitled to convert at any time all or any part of such holder’s shares into an equal number of shares of Class A common stock; provided, however, that to the extent that such conversion would result in the holder holding more than 4.99% of Class A common stock following such conversion, the holder shall first deliver to the Company an ownership certification to enable the Company (a) to determine that such holder does not have an attributable interest in another entity that would cause the Company to violate applicable FCC rules and regulations and (b) to obtain any necessary approvals from the FCC or the Department of Justice.Common Stockall classes of common stock share ratably in any dividends that may be declared by the board of directors of the Company.$1.17$1.17 per share (the “2009 Warrants”). The 2009 Warrants expire on June 29, 2019. The number of shares of Class A common stock issuable upon exercise of the 2009 Warrants is subject to adjustment in certain circumstances, including upon the payment of a dividend in shares of Class A common stock. At SeptemberJune 30, 2012, 1.02013, 0.9 million 2009 Warrants remained outstanding.As described above and inRadio Holdingsa subsidiary of the Company, entered into an amended and restated warrant agreement, dated as of August 1, 2011 (the “Restated Warrant Agreement”). Pursuant to the Restated Warrant Agreement, and subject to the terms and conditions thereof, the previously outstanding 3.7 million Radio Holdings warrants to acquire shares of this subsidiary were amended and restated to no longer be exercisable for shares of common stock of Radio Holdingsthis subsidiary but instead be exercisable, commencing on May 2, 2012 (the “Exercise Date”) at an exercise price of $0.01 per share, for an aggregate of approximately 8.3 million shares of Class B common stock (the “CMP Restated Warrants”). The CMP Restated Warrants expired by their terms on July 31, 2012. Prior to the termination thereof, approximately 3.7 million CMP Restated Warrants were converted into approximately 8.2 million shares of Class B common stock.Citadel emerged from bankruptcy effective June 3, 2010 and, as of September 16, 2011, certain bankruptcy-related claims against Citadel remained open for final resolution. AcquisitionMerger and as of SeptemberJune 30, 2012,2013, warrants to purchase 2.4 million shares of the Company’s common stock were reserved for potential future issuance in connection with the settlement of thesecertain remaining allowed, disputed or unreconciled unsecured claims.not reconciled claims related to Citadel's bankruptcy. If excess shares remain in reserve after resolution of all remaining allowed, disputed or unreconciled unsecured claims, such shares will be distributed to the claimants with allowed unsecured claims pro-rata, based on the number of shares they received pursuant to the plan under which Citadel emerged from bankruptcy. This equity held in reserve is included in additional paid-in-capital on the accompanying unaudited condensed consolidated balance sheets at SeptemberJune 30, 20122013 and December 31, 2011.At the effective timeAcquisition,Merger, and the related financing transactions, the Company issued the Company Warrants. The Company Warrants were issued under a warrant agreement (the “Warrant Agreement”), dated September 16, 2011, and the Company Warrants entitle the holders thereofwarrants to purchase an equivalent numberaggregate of71.7 million shares of Class A common stock.stock (the "Company Warrants") under a warrant agreement dated September 16, 2011 (the "Warrant Agreement"). The Company Warrants are exercisable at any time prior to June 3, 2030 at an exercise price of $0.01$0.01 per share. The exercise price of the Company Warrants is not subject to any anti-dilution protection, other than standard adjustments in the case of stock splits, dividends and the like. Pursuant to the terms and conditions of the Warrant Agreement, upon the request of a holder, the Company has the discretion to issue, upon exercise of the Company Warrants, shares of Class B common stock in lieu of an equal number of shares of Class A common stock and, upon request of a holder and at the Company’s discretion, the Company has the right to exchange such warrants to purchase an equivalent number of shares of Class B common stock for outstanding warrants to purchase shares of Class A common stock.ninethree and six months ended SeptemberJune 30, 2012,2013, approximately 16.02.6 million and 3.7 million, respectively, Company Warrants were converted into shares of Class A common stock with an aggregate total of 33.637.9 million being having been converted since issuance through SeptemberJune 30, 2012.2013. At SeptemberJune 30, 2012, 38.02013, 33.8 million Company Warrants remained outstanding.Pursuant to the Equity Investment, butthe Crestview Warrants. The warrants to purchase 7.8 million shares of Class A common stock with an exercise price of $4.34 per share (the "Crestview Warrants"). The Crestview Warrants are exercisable until September 16, 2021 and the $4.34 per share exercise price is subject to standard weighted average adjustments in the event that the Company issues additional shares of common stock or common stock derivatives for less than the fair market value per share as of the date of such issuance. In addition, the number of shares of Class A common stockSeptemberJune 30, 2012, 2013, all 7.8 million Crestview Warrants remained outstanding.an aggregate of 161,724 shares of time-vesting restricted Class A common stock, with an aggregate grant date fair value of $0.6$0.6 million, to the non-employee directors of the Company with a cliff vesting term of one year. In addition, on February 16, 2012, the Company granted time-vesting stock options to purchase 1,357,500 shares of Class A common stock to certain Company employees under the Cumulus Media Inc. 2011 Equity Incentive Plan, with an aggregate grant date fair value of $3.0 million.$3.3 million. The options have an exercise price of $4.34$4.34 per share, and provide for with 30% vesting of the awards having vested on each of September 16, 2012 and February 16, 2013, and with 20% vesting on each of February 16, 2014 and 2015.haspreviously had certain liability-basedliability classified awards related to the cash consideration portion of the Citadel AcquisitionMerger (“Liability Awards”). These Liability Awards were fully expensed during the second of quarter of 2012 and as such, the Company had no stock based compensation expense related to the Liability Awards in any period in 2013. For the three and ninesix months ended SeptemberJune 30, 2012, the Company recognized $2.8approximately $2.7 million and $15.7$6.9 million, respectively, in stock-based compensation expense related to equity awards and $6.9 million in stock-based compensation expense related to Liability Awards for the nine months ended September 30, 2012. There was no stock-based compensation expense related to Liability Awards recognized during the three months ended September 30, 2012. For the three and nine months ended September 30, 2011, the Company recognized approximately $1.0 million and $2.1 million, respectively, in stock-based compensation expense related to equity awards and $0.6 million for each of the three and nine months ended September 30, 2011 in stock-based compensation expense related to Liability Awards.SeptemberJune 30, 2012,2013, unrecognized stock-based compensation expense of approximately $20.4$14.6 million related to equity awards is expected to be recognized over a weighted average remaining life of 2.52.2 years. There is no unrecognizedUnrecognized stock-based compensation expense related to Liability Awards as of September 30, 2012. Unrecognized stock-based compensation expensefor the equity awards will be adjusted for future changes in estimated forfeitures.ninesix months ended SeptemberJune 30, 20122013 was $19.1$1.6 million of which $13.2 million related to the Company’s Liability Awards and was paid in cash.. The total fair value of restricted stock awards that vested during the ninesix months ended SeptemberJune 30, 20112012 was $2.1 million. $19.1 million, of which $13.2 million related to the Liability Awards and was paid in cash. No options were exercised during either of the ninesix months ended SeptemberJune 30, 2012 or 2011.required pursuantthe Company's certificate of incorporation provides that the holders of each class of common stock have equal rights and privileges, except with respect to the Company’s Third Amended and Restated Charter.(untilprior to their expiration) areexpiration were considered participating securities for purposes of calculating basic weighted average common shares outstanding in periods in which the Company records net income available to common shareholders.income. Diluted earnings per share is computed in the same manner as basic earnings per share after assuming issuance of common stock for all potentially dilutive equivalent shares, which includes stock options and certain other warrants to purchase common stock. Antidilutive instruments are not considered in this calculation. Under the two-class method, net income is allocated to common stock and participating securities to the extent that each security may share in earnings, as if all of the earnings for the period had been distributed. Because the Company has not historically paid dividends to common stockholders, earningsEarnings areshareshares equally, after deducting dividends declared or accretion on the Series A Preferred Stock.preferred stock. The following table sets forth the computation of basic and diluted earnings per common share for the three and ninesix months ended SeptemberJune 30, 20122013 and 20112012 (amounts in thousands, except per share data): Three Months Ended
September 30, Nine Months Ended
September 30, 2012 2011 2012 2011 $ 26,787 $ 54,956 $ 12,424 $ 68,390 3,418 1,017 11,126 1,017 1,446 527 6,065 527 4,093 8,456 — 4,974 84 1,388 — 2245 $ 17,746 $ 43,568 $ (4,767 ) $ 59,627 169,510 60,295 158,902 47,282 $ 0.10 $ 0.72 $ (0.03 ) $ 1.26 $ 26,787 $ 54,956 $ 12,424 $ 68,390 3,418 1,017 11,126 1,017 1,446 527 6,065 527 3,962 7,778 — 4,730 81 1,276 — 2,135 $ 17,880 $ 44,358 $ (4,767 ) $ 59,981 169,510 60,295 158,902 47,282 6,842 6,445 — 2,734 176,352 66,740 158,902 50,016 $ 0.10 $ 0.66 $ (0.03 ) $ 1.20 Potentially dilutive equivalent shares outstanding for 2013 2012 2013 2012 Basic Income (Loss) Per Share Numerator: Undistributed net income (loss) from continuing operations $ 27,101 $ (1,763 ) $ 18,112 $ (14,362 ) Less: Dividends declared on redeemable preferred stock 2,652 4,375 5,304 7,708 Accretion of redeemable preferred stock 1,007 1,852 1,989 4,620 Participation rights of the Company Warrants in undistributed earnings 3,890 — 1,833 — Participation rights of unvested restricted stock in undistributed earnings 39 — 23 — Basic undistributed net income (loss) from continuing operations attributable to common shares $ 19,513 $ (7,990 ) $ 8,963 $ (26,690 ) Denominator: Basic weighted average shares outstanding 176,482 157,711 175,620 153,540 Basic undistributed net income (loss) from continuing operations per share--attributable to common shares $ 0.11 $ (0.05 ) $ 0.05 $ (0.17 ) Diluted Income (Loss) Per Share: Numerator: Undistributed net income (loss) from continuing operations $ 27,101 $ (1,763 ) $ 18,112 $ (14,362 ) Less: Dividends declared on redeemable preferred stock 2,652 4,375 5,304 7,708 Accretion of redeemable preferred stock 1,007 1,852 1,989 4,620 Participation rights of the Company Warrants in undistributed net income 3,834 — 1,807 — Participation rights of unvested restricted stock in undistributed earnings 38 — 23 — Basic undistributed net income (loss) from continuing operations attributable to common shares $ 19,570 $ (7,990 ) $ 8,989 $ (26,690 ) Denominator: Basic weighted average shares outstanding 176,482 157,711 175,620 153,540 Effect of dilutive options and warrants 3,072 — 3,059 — Diluted weighted average shares outstanding 179,554 157,711 178,679 153,540 Diluted undistributed net income (loss) from continuing operations attributable to common shares $ 0.11 $ (0.05 ) $ 0.05 $ (0.17 ) ninethree and six months ended SeptemberJune 30, 2013, the Company had 20.0 million stock options and 7.8 million warrants that were antidilutive, respectively, due to having higher exercise prices than the Company's average stock price during the period.computation of diluted income (loss) per share, consisted of approximately 53.1 million additional shares of common stock to underlying outstanding warrants. No potentially dilutive equivalent shares outstanding for the three months ended September 30, 2012, 2011 and the nine months ended September 30, 2011 were excluded from the computation of diluted EPS.Revisions to Financial StatementsEPS calculation.In connection with the preparation of the second quarter of 2012 Unaudited Condensed Consolidated Financial Statements, the Company identified an error in the manner in which earnings per share in certain prior periods was calculated. Upon completion of the Company’s evaluation of the earnings per share calculation, it was determined that the weighted average shares outstanding used in the denominator of the earnings per share calculation in certain prior periods was improperly calculated.In accordance with accounting guidance found inASC 250-10 (SEC Staff Accounting Bulletin No. 99, Materiality), the Company assessed the materiality of the errors and concluded that the errors were not material to any of the Company’s previously issued financial statements. As permitted by the accounting guidance found inASC 250-10 (SEC Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements), the Company has elected to present herein certain revised financial information for the three and nine months ended September 30, 2011, and the year ended December 31, 2011. The error had no impact on any other periods previously presented.The following tables present the effect of this revision on earnings per share for all periods affected: Three Months Ended
September 30, 2011 Nine Months Ended September 30, 2011 As Previously
Reported Adjustment As Revised As Previously
Reported Adjustment As Revised $ 0.64 $ 0.14 $ 0.78 $ 1.27 $ 0.15 $ 1.42 $ 0.60 $ 0.12 $ 0.72 $ 1.21 $ 0.14 $ 1.35 Year Ended December 31, 2011 As Previously
Reported Adjustment As Revised $ 0.48 $ 0.14 $ 0.62 $ 0.46 $ 0.13 $ 0.59 20122013 could be different from the forecasted rate.For the three and nine months ended September 30, 2012, the Company recorded tax benefits of $12.2 million and $22.9 million, respectively, on a pre-tax income (loss) from continuing operations of $14.6 million and $(10.4) million, respectively, resulting in an effective tax rate for the three and nine months ended September 30, 2012 of approximately (83.6)% and 219.0%, respectively. In the third quarter of 2012 the Company released $9.3 million of valuation allowance based upon a revised forecast of our 2012 results which will allow us to recognize certain net operating losses that can be utilized against future definitive sources of tax income related the Company’s elective deferral of cancellation of indebtedness income associated with certain events that occurred in 2009. This valuation allowance release is reported as a discrete tax benefit for continuing operations in the third quarter of 2012. For the three and nine months ended September 30, 2011, the Company recorded income tax benefits of $69.2 million and $65.7 million, respectively, on pre-tax income (loss) from continuing operations of $(14.3) million and $2.7 million, respectively, resulting in effective tax rates of 483.9% and (2,464.3)% for the three and nine months ended September, 30, 2011, respectively.the changegoodwill, and changes in the estimated amount of valuation allowance recorded on the Company’s net deferred tax assets.SeptemberJune 30, 2012,2013, the Company continues to maintain a full valuation allowance on its net deferred tax assets excluding deferred tax liabilities associated with the Company’s indefinite lived intangible assets and deferred cancellation of debt income for which no estimated amount of deferred tax assets are available to satisfy. The valuation of deferred tax assets requires judgment in assessing the likely future tax consequences of events that have been recognized in the Company’s financial statements or tax returns as well as future profitability. TheIn accordance with ASC Topic 740, Accounting for Income Taxes, the Company continually reviews the adequacy of the valuation allowance and recognizes the benefits of deferred tax assets only as the reassessment indicates that it is more likely than not that the deferred tax assets will be recognized in accordance with ASC Topic 740,Accounting for Income Taxes. As of SeptemberJune 30, 2012,2013, the Company does not believe it is more likely than not that the deferred tax assets will be recognized. In reaching this determination, the Company believes that its history of cumulative losses over the past three years outweighs other positive evidence that it is more likely than not that the Company’sremaining net deferred tax assets will be recognized. Should the Company’s experience of earning pre-tax income over the past two years continue into theassessment change in a future the Companyperiod it may release all or a portion of the valuation allowance during 2012,at such time, which would result in a deferred tax benefit in the period of adjustment.$75.0$75.0 million industry fee credit against fees previously paid in 2010 and 2011, with such fees to be credited over the remaining period of the contract. The Company began recognizing the ASCAP credits as a reduction in direct operating expenses on January 1, 2012. On August 28, 2012, the Federal District Court for the Southern District of New York approved a settlement between the RMLC and BMI concerning the fees payable covering the period January 1, 2010 through December 31, 2016. Included in the agreement is a $70.5$70.5 million industry fee credit against fees previously paid in 2010 and 2011, with such fees immediately available to the industry. The Company recognized a full credit against such fees during the quarter ended September 30, 2012 in the amount of approximately $8.3 million.was $68.4is approximately $177.1 million as of September 30, 2012 and is expected to be paid in accordance with the agreements through June 2016.IfAs of June 30, 2013, we have complied with these provisions and to the extent thatreinvested the proceeds from the Townsquare Asset Exchange areExchange; as such, we will not otherwise reinvested within the applicable time period, the Company intendsbe required to prepay amountsprincipal outstanding under the 20112012 Credit Facilities in accordance with the terms thereof.enteredfrom time to time enters into a radio network contractual obligationobligations to guarantee a minimum amount of revenue share to the contractual partycounterparties on certain programming within the contract for the year ended December 31, 2012 and in future years. This guarantee isGenerally, these guarantees are subject to decreases dependent on clearance targets achieved. As of SeptemberJune 30, 2012,2013, the Company believes that it will meet such minimum obligations.SeptemberJune 30, 2012,2013, Cumulus and certain of its wholly100% owned subsidiaries (such subsidiaries, the “Subsidiary Guarantors”) provided guarantees of the obligations of Cumulus Holdings under the 7.75% Senior Notes. These guarantees are full and unconditional (subject to customary release provisions) as well as joint and several. Certain of the Subsidiary Guarantors may be subject to restrictions on their respective ability to distribute earnings to Cumulus Holdings or Cumulus Media Inc. (the “Parent Guarantor”). Not all of the subsidiaries of Cumulus and Cumulus Holdings guarantee the 7.75% Senior Notes (such non-guaranteeing subsidiaries, collectively, the “Subsidiary Non-guarantors”).ninesix months ended SeptemberJune 30, 20122013 and 2011,2012, (ii) unaudited condensed consolidating balance sheets as of SeptemberJune 30, 20122013 and December 31, 2011,2012, and (iii) unaudited condensed consolidating statements of cash flows for the ninesix months ended SeptemberJune 30, 20122013 and 2011,2012, of each of the Parent Guarantor, Cumulus Holdings, the Subsidiary Guarantors, and the Subsidiary Non-guarantors.periods or at December 31, 2011.periods. The Company should have presented the preferred stock balance and related accrued dividends in the Cumulus Media IncInc. (Parent Guarantor) column and was inappropriately classified in the Cumulus Media Holdings Inc. (Subsidiary Issuer) column. There was no impact on the consolidated balance sheet, statement of income or statement of cash flows.Materiality)Materiality), the Company assessed the materiality of the errorerrors and concluded that the error waserrors were not material to any of the Company’s previously issued financial statements. As permitted by the accounting guidance found in ASC 250-10 (SEC Staff AccountingStatements)Statements), the Company has presented revised financial information for the yearthree and six months ended December 31, 2011.SeptemberJune 30, 2012 Cumulus Cumulus Media Media Inc. Holdings Inc. Subsidiary Subsidiary Total (Parent Guarantor) (Subsidiary Issuer) Guarantors Non-guarantors Eliminations Consolidated $ — $ — $ 274,160 $ — $ — $ 274,160 1,190 — — — — 1,190 1,190 — 274,160 — — 275,350 — — 160,282 1,458 — 161,740 543 — 34,696 — — 35,239 — — 928 — — 928 12,979 — — — — 12,979 — — — — (129 ) — — (129 ) 13,522 — 195,777 1,458 — 210,757 (12,332 ) — 78,383 (1,458 ) — 64,593 (1,361 ) (48,651 ) 255 — — (49,757 ) — — (224 ) — — (224 ) (1,361 ) (48,651 ) 31 — — (49,981 ) (13,693 ) (48,651 ) 78,414 (1,458 ) — 14,612 — — 10,010 2,165 — 12,175 (13,693 ) (48,651 ) 88,424 707 — 26,787 — — 35,275 (6,017 ) — 29,258 69,738 118,389 (5,310 ) — (182,817 ) — $ 56,045 $ 69,738 $ 118,389 $ (5,310 ) $ (182,817 ) $ 56,045 Eliminations Broadcast revenues $ — $ — $ 289,676 $ — $ — $ 289,676 Management fees — — — — — — Net revenues — — 289,676 — — 289,676 Operating expenses: Direct operating expenses (excluding depreciation, amortization and LMA fees) — — 171,143 619 — 171,762 Depreciation and amortization — 484 28,451 — — 28,935 LMA fees — — 759 — — 759 Corporate general and administrative expenses (including stock-based compensation expense of $2,470) — 7,760 — — — 7,760 Loss on sale of stations — — 91 — — 91 Gain on derivative instrument — — (2,106 ) — — (2,106 ) Total operating expenses — 8,244 198,338 619 — 207,201 Operating (loss) income — (8,244 ) 91,338 (619 ) — 82,475 Non-operating (expense) income: Interest expense, net (2,378 ) (41,532 ) 77 — — (43,833 ) Loss on early extinguishment of debt — (4,539 ) — — — (4,539 ) Other expense, net — — (511 ) — — (511 ) Total non-operating expense, net (2,378 ) (46,071 ) (434 ) — — (48,883 ) (Loss) income before income taxes (2,378 ) (54,315 ) 90,904 (619 ) — 33,592 Income tax benefit (expense) — — 11,520 (18,011 ) — (6,491 ) Earnings (loss) from consolidated subsidiaries 29,479 83,794 (18,630 ) — (94,643 ) — Net income (loss) $ 27,101 $ 29,479 $ 83,794 $ (18,630 ) $ (94,643 ) $ 27,101 ThreeSeptemberJune 30, 2011 Cumulus Cumulus Media Media Inc. Holdings Inc. Subsidiary Subsidiary Total (Parent Guarantor) (Subsidiary Issuer) Guarantors Non-guarantors Eliminations Consolidated $ — $ — $ 124,332 $ — $ — $ 124,332 458 — — — — 458 458 — 124,332 — — 124,790 — — 73,404 306 — 73,710 360 — 10,665 — — 11,025 — — 530 — — 530 44,024 — 630 — — 44,654 — — 1,436 — — 1,436 44,384 — 86,665 306 — 131,355 (43,926 ) — 37,667 (306 ) — (6,565 ) (555 ) (19,045 ) 97 — — (19,503 ) — — 182 — — 182 11,636 — — — — 11,636 11,081 (19,045 ) 279 — — (7,685 ) (32,845 ) (19,045 ) 37,946 (306 ) — (14,250 ) — — 67,199 2,007 — 69,206 (32,845 ) (19,045 ) 105,145 1,701 — 54,956 — — 8,452 (3,870 ) — 4,582 92,383 111,428 (2,169 ) — (201,642 ) — $ 59,538 $ 92,383 $ 111,428 $ (2,169 ) $ (201,642 ) $ 59,538 Eliminations Broadcast revenues $ — $ — $ 522,548 $ — $ — $ 522,548 Management fees — — — — — — Net revenues — — 522,548 — — 522,548 Operating expenses: Direct operating expenses (excluding depreciation, amortization and LMA fees) — — 334,825 1,109 — 335,934 Depreciation and amortization — 981 56,885 — — 57,866 LMA fees — — 1,728 — — 1,728 Corporate general and administrative expenses (including stock-based compensation expense of $5,134) — 21,626 — — — 21,626 Loss on sale of stations — — 1,400 — — — 1,400 Gain on derivative instrument — — (2,844 ) — — (2,844 ) Total operating expenses — 22,607 391,994 1,109 — 415,710 Operating (loss) income — (22,607 ) 130,554 (1,109 ) — 106,838 Non-operating (expense) income: Interest (expense) income, net (4,689 ) (83,474 ) 78 — — (88,085 ) Loss on early extinguishment of debt — (4,539 ) — — — (4,539 ) Other expense, net — — (378 ) — — (378 ) Total non-operating expense, net (4,689 ) (88,013 ) (300 ) — — (93,002 ) (Loss) income before income taxes (4,689 ) (110,620 ) 130,254 (1,109 ) — 13,836 Income tax benefit (expense) — — 12,715 (8,439 ) — 4,276 Earnings (loss) from consolidated subsidiaries 22,801 133,421 (9,548 ) — (146,674 ) — Net income (loss) $ 18,112 $ 22,801 $ 133,421 $ (9,548 ) $ (146,674 ) $ 18,112 NineSeptemberJune 30, 2012 Cumulus Media Inc. Holdings Inc. Subsidiary Subsidiary Total (Parent Guarantor) (Subsidiary Issuer) Guarantors Non-guarantors Eliminations Consolidated $ — $ — $ 790,870 $ — $ — $ 790,870 1,516 — — — — 1,516 1,516 — 790,870 — — 792,386 — — 481,601 2,505 — 484,106 1,109 — 105,212 — — 106,321 — — 2,652 — — 2,652 46,473 — — — — 46,473 — — — — — — — — 624 — — 624 — — 12,435 — — 12,435 47,582 — 602,524 2,505 — 652,611 (46,066 ) — 188,346 (2,505 ) — 139,775 (1,696 ) (149,336 ) 853 — — (150,179 ) — — (34 ) — — (34 ) (1,696 ) (149,336 ) 819 — — (150,213 ) (47,762 ) (149,336 ) 189,165 (2,505 ) — (10,438 ) — — 11,272 11,590 — 22,862 (47,762 ) (149,336 ) 200,437 9,085 — 12,424 — — 48,766 (9,131 ) — 39,635 99,821 249,157 (46 ) — (348,932 ) — $ 52,059 $ 99,821 $ 249,157 $ (46 ) $ (348,932 ) $ 52,059 Eliminations Broadcast revenues $ — $ — $ 280,745 $ — $ — $ 280,745 Management fees 296 — — — — 296 Net revenues 296 — 280,745 — — 281,041 Operating expenses: Direct operating expenses (excluding depreciation, amortization and LMA fees) — — 168,222 524 — 168,746 Depreciation and amortization 345 — 35,855 — — 36,200 LMA fees — — 885 — — 885 Corporate general and administrative expenses (including stock-based compensation expense of $5,928) 16,802 — — — — 16,802 Loss on derivative instrument — — 841 — — 841 Impairment of intangible assets — — 12,435 — — 12,435 Total operating expenses 17,147 — 218,238 524 — 235,909 Operating (loss) income (16,851 ) — 62,507 (524 ) — 45,132 Non-operating (expense) income: Interest (expense) income, net (227 ) (49,694 ) 302 — — (49,619 ) Other expense, net — — (74 ) — — (74 ) Total non-operating (expense) income, net (227 ) (49,694 ) 228 — — (49,693 ) (Loss) income before income taxes (17,078 ) (49,694 ) 62,735 (524 ) — (4,561 ) Income tax benefit — — 340 2,458 — 2,798 (Loss) income from continuing operations (17,078 ) (49,694 ) 63,075 1,934 — (1,763 ) Income (loss) from discontinued operations, net of taxes — — 11,341 (1,435 ) — 9,906 Earnings (loss) from consolidated subsidiaries 25,221 74,915 499 — (100,635 ) — Net income (loss) $ 8,143 $ 25,221 $ 74,915 $ 499 $ (100,635 ) 8,143 NineSeptemberJune 30, 2011 Cumulus Media Inc. Holdings Inc. Subsidiary Subsidiary Total (Parent Guarantor) (Subsidiary Issuer) Guarantors Non-guarantors Eliminations Consolidated $ — $ — $ 235,989 $ — $ — $ 235,989 2,708 — — — — 2,708 2,708 — 235,989 — — 238,697 — — 141,859 831 — 142,690 1,079 — 13,623 — — 14,702 — — 1,670 — — 1,670 61,294 — 630 — — 61,924 — — (15,278 ) — — (15,278 ) — — 2,681 — — 2,681 62,373 — 145,185 831 — 208,389 (59,665 ) — 90,804 (831 ) — 30,308 (9,276 ) (25,826 ) 103 — — (34,999 ) (4,366 ) — — — — (4,366 ) — — 88 — — 88 11,636 11,636 (2,006 ) (25,826 ) 191 — — (27,641 ) (61,671 ) (25,826 ) 90,995 (831 ) — 2,667 — — 66,779 (1,256 ) — 65,723 (61,671 ) (25,826 ) 157,974 (2,087 ) — 68,390 — — 12,478 (3,870 ) — 8,608 138,669 164,495 (5,957 ) — (297,207 ) — $ 76,998 $ 138,669 $ 164,495 $ (5,957 ) $ (297,207 ) $ 76,998 Eliminations Broadcast revenues $ — $ — $ 516,710 $ — $ — $ 516,710 Management fees 326 — — — — 326 Net revenues 326 — 516,710 — — 517,036 Operating expenses: Direct operating expenses (excluding depreciation, amortization and LMA fees) — — 321,396 1,046 — 322,442 Depreciation and amortization 566 — 70,441 — — 71,007 LMA fees — — 1,724 — — 1,724 Corporate general and administrative expenses (including stock-based compensation expense of $12,906) 33,494 — — — — 33,494 Realized loss on derivative instrument — — 753 — — 753 Impairment of intangible assets — — 12,435 — — 12,435 Total operating expenses 34,060 — 406,749 1,046 — 441,855 Operating (loss) income (33,734 ) — 109,961 (1,046 ) — 75,181 Non-operating (expense) income: Interest (expense) income, net (322 ) (100,698 ) 598 — — (100,422 ) Other income, net — — 190 — — 190 Total non-operating (expense) income, net (322 ) (100,698 ) 788 — — (100,232 ) (Loss) income before income taxes (34,056 ) (100,698 ) 110,749 (1,046 ) — (25,051 ) Income tax benefit — — 1,268 9,421 — 10,689 (Loss) income from continuing operations (34,056 ) (100,698 ) 112,017 8,375 — (14,362 ) Income (loss) from discontinued operations, net of taxes — — 13,490 (3,115 ) — 10,375 Earnings (loss) from consolidated subsidiaries 30,069 130,767 5,260 — (166,096 ) — Net (loss) income $ (3,987 ) $ 30,069 $ 130,767 $ 5,260 $ (166,096 ) $ (3,987 ) September2012 Cumulus Cumulus Media Inc. Media (Parent Holdings Inc. Subsidiary Subsidiary Total Guarantor) (Subsidiary Issuer) Guarantors Non-guarantors Eliminations Consolidated $ 38,847 $ — $ 8,129 $ — $ — $ 46,976 3,254 — — — — 3,254 — — 222,096 — — 222,096 — — 7,073 — — 7,073 8,560 — 24,595 — — 33,155 50,661 — 261,893 — — 312,554 4,217 — 257,750 — — 261,967 — — — 1,610,128 — 1,610,128 — — 287,667 — — 287,667 — — 1,296,348 — — 1,296,348 426,220 3,025,733 1,125,498 — (4,577,451 ) — 11,349 113,276 (45,071 ) — — 79,554 $ 492,447 $ 3,139,009 $ 3,184,085 $ 1,610,128 $ (4,577,451 ) $ 3,848,218 $ 13,608 $ 20,834 $ 90,363 $ — $ — $ 124,805 — — 5,623 — — 5,623 — 13,250 — — — 13,250 — — 12,022 — — 12,022 13,608 34,084 108,008 — — 155,700 — 2,068,705 — — — 2,068,705 — 610,000 — — — 610,000 75,966 — (27,837 ) — — 48,129 — — 78,181 484,630 — 562,811 89,574 2,712,789 158,352 484,630 — 3,445,345 70,854 — — — — 70,854 70,854 — — — — 70,854 1,821 — — — — 1,821 154 — — — — 154 6 — — — — 6 (251,957 ) — — — — (251,957 ) 1,515,407 173,618 3,502,648 2,099,486 (5,775,752 ) 1,515,407 (933,412 ) 252,602 (476,915 ) (973,988 ) 1,198,301 (933,412 ) 332,019 426,220 3,025,733 1,125,498 (4,577,451 ) 332,019 $ 492,447 $ 3,139,009 $ 3,184,085 $ 1,610,128 $ (4,577,451 ) $ 3,848,218 Eliminations Assets Current assets: Cash and cash equivalents $ — $ 45,724 $ 492 $ — $ — $ 46,216 Restricted cash — 3,729 — — — 3,729 Accounts receivable, less allowance for doubtful accounts of $3,779 — — 203,469 — — 203,469 Trade receivable — — 7,344 — — 7,344 Deferred income taxes — — 29,658 29,658 Prepaid expenses and other current assets — 2,036 19,916 — — 21,952 Total current assets — 51,489 260,879 — — 312,368 Property and equipment, net — 3,821 242,707 — — 246,528 Broadcast licenses — — — 1,640,882 — 1,640,882 Other intangible assets, net — — 215,386 — — 215,386 Goodwill — — 1,204,953 — — 1,204,953 Investment in consolidated subsidiaries 413,711 3,536,643 1,157,165 — (5,107,519 ) — Intercompany receivables — 77,913 617,941 — (695,854 ) — Other assets — 52,349 17,718 — — 70,067 Total assets $ 413,711 $ 3,722,215 $ 3,716,749 $ 1,640,882 $ (5,803,373 ) $ 3,690,184 Liabilities, Redeemable Preferred Stock and Stockholders’ Equity (Deficit) Current liabilities: Accounts payable and accrued expenses $ — $ 22,988 $ 52,884 $ — $ — $ 75,872 Trade payable — — 6,620 — — 6,620 Current portion of long-term debt — 13,250 — — — 13,250 Other current liabilities — — 8,542 — — 8,542 Total current liabilities — 36,238 68,046 — — 104,284 Long-term debt, excluding 7.75% Senior Notes — 2,040,359 — — — 2,040,359 7.75% Senior Notes — 610,000 — — — 610,000 Other liabilities — 3,966 37,156 — — 41,122 Intercompany payables 77,913 617,941 — (695,854 ) — Deferred income taxes — — 74,904 483,717 — 558,621 Total liabilities 77,913 3,308,504 180,106 483,717 (695,854 ) 3,354,386 Redeemable preferred stock: Series A cumulative redeemable preferred stock, par value $0.01 per share; stated value of $1,000 per share; 100,000,000 shares authorized; 75,767 shares issued and outstanding 72,871 — — — — 72,871 Total redeemable preferred stock 72,871 — — — — 72,871 Stockholders’ equity (deficit): Class A common stock, par value $0.01 per share; 750,000,000 shares authorized; 186,456,601 and 182,682,073 shares issued, and 162,326,226 and 158,519,394 shares outstanding, at June 30, 2013 and December 31, 2012, respectively 1,864 — — — — 1,864 Class B common stock, par value $0.01 per share; 600,000,000 shares authorized; 15,424,944 shares issued and outstanding at both June 30, 2013 and December 31, 2012 154 — — — — 154 Class C common stock, par value $0.01 per share; 644,871 shares authorized, issued and outstanding at both June 30, 2013 and December 31, 2012 6 — — — — 6 Treasury stock, at cost, 24,130,375 and 24,162,676 shares at June 30, 2013 and December 31, 2012, respectively (250,697 ) — — — — (250,697 ) Additional paid-in-capital 1,511,689 208,301 3,901,332 2,139,092 (6,248,725 ) 1,511,689 Accumulated (deficit) equity (1,000,089 ) 205,410 (364,689 ) (981,927 ) 1,141,206 (1,000,089 ) Total stockholders’ equity (deficit) 262,927 413,711 3,536,643 1,157,165 (5,107,519 ) 262,927 Total liabilities, redeemable preferred stock and stockholders’ equity (deficit) $ 413,711 $ 3,722,215 $ 3,716,749 $ 1,640,882 $ (5,803,373 ) $ 3,690,184 2011 Cumulus
Media Inc.
(Parent
Guarantor) Cumulus
Media
Holdings Inc.
(Subsidiary Issuer) Subsidiary
Guarantors Subsidiary
Non-
guarantors Eliminations Total
Consolidated $ 11,714 $ — $ 18,878 $ — $ — $ 30,592 3,854 — — — — 3,854 — — 236,804 — — 236,804 — — 5,967 — — 5,967 24,807 24,807 6,542 — 14,762 1,011 — 22,315 46,917 — 276,411 1,011 — 324,339 6,555 — 271,515 — — 278,070 — — — 1,625,415 — 1,625,415 — — 390,509 — — 390,509 — — 1,334,512 — — 1,334,512 440,008 3,247,865 1,157,317 — (4,845,190 ) — 13,577 55,176 18,993 — — 87,746 $ 507,057 $ 3,303,041 $ 3,449,257 $ 1,626,426 $ (4,845,190 ) $ 4,040,591 $ 60,345 $ 12,496 $ 87,070 $ 275 $ — $ 160,186 — — 4,999 — — 4,999 — 13,250 — — — 13,250 60,345 25,746 92,069 275 — 178,435 — 2,227,287 — — — 2,227,287 — 610,000 — — — 610,000 42,552 — 21,386 — — 63,938 — — 87,937 468,834 — 556,771 102,897 2,863,033 201,392 469,109 — 3,636,431 113,447 — — — — 113,447 113,447 — — — — 113,447 1,608 — — — — 1,608 124 — — — — 124 6 — — — — 6 (251,666 ) — — — — (251,666 ) 1,526,114 285,806 3,972,850 2,131,251 (6,389,907 ) 1,526,114 (985,473 ) 154,202 (724,985 ) (973,934 ) 1,544,717 (985,473 ) 290,713 440,008 3,247,865 1,157,317 (4,845,190 ) 290,713 $ 507,057 $ 3,303,041 $ 3,449,257 $ 1,626,426 $ (4,845,190 ) $ 4,040,591 Eliminations Assets Current assets: Cash and cash equivalents $ 81,599 $ — $ 6,451 $ — $ — $ 88,050 Restricted cash 5,921 — — — — 5,921 Accounts receivable, less allowance for doubtful accounts of $4,131 — — 207,563 — — 207,563 Trade receivable — — 6,104 — — 6,104 Deferred income Tax — — 25,145 — — 25,145 Prepaid expenses and other current assets 6,928 — 13,408 — — 20,336 Total current assets 94,448 — 258,671 — — 353,119 Property and equipment, net 4,690 — 251,213 — — 255,903 Broadcast licenses — — — 1,602,373 — 1,602,373 Other intangible assets, net — — 258,761 — — 258,761 Goodwill — — 1,195,594 — — 1,195,594 Investment in consolidated subsidiaries 415,573 3,354,891 1,127,135 — (4,897,599 ) — Intercompany receivables — — 471,329 — (471,329 ) — Other assets 11,605 47,818 18,402 — — 77,825 Total assets $ 526,316 $ 3,402,709 $ 3,581,105 $ 1,602,373 $ (5,368,928 ) $ 3,743,575 Liabilities, Redeemable Preferred Stock and Stockholders’ Equity (Deficit) Current liabilities: Accounts payable and accrued expenses $ 10,690 $ 8,213 $ 83,683 $ — $ — $ 102,586 Trade payable — — 4,803 — — 4,803 Current portion of long-term debt — 76,468 — — — 76,468 Other current liabilities — — 11,386 — — 11,386 Total current liabilities 10,690 84,681 99,872 — — 195,243 Long-term debt, excluding 7.75% Senior Notes — 2,014,599 — — — 2,014,599 7.75% Senior Notes — 610,000 — — — 610,000 Other liabilities 3,651 — 41,662 — — 45,313 Intercompany payables 193,473 277,856 — — (471,329 ) — Deferred income taxes — — 84,680 475,238 — 559,918 Total liabilities 207,814 2,987,136 226,214 475,238 (471,329 ) 3,425,073 Redeemable preferred stock: Series A cumulative redeemable preferred stock, par value $0.01 per share; stated value of $1,000 per share; 100,000,000 shares authorized; 75,767 shares issued and outstanding 71,869 — — — — 71,869 Total redeemable preferred stock 71,869 — — — — 71,869 Stockholders’ equity (deficit): Class A common stock, par value $0.01 per share; 750,000,000 shares authorized; 186,456,601 and 182,682,073 shares issued, and 162,326,226 and 158,519,394 shares outstanding, at June 30, 2013 and December 31, 2012, respectively 1,827 — — — — 1,827 Class B common stock, par value $0.01 per share; 600,000,000 shares authorized; 15,424,944 shares issued and outstanding at both June 30, 2013 and December 31, 2012 154 — — — — 154 Class C common stock, par value $0.01 per share; 644,871 shares authorized, issued and outstanding at both June 30, 2013 and December 31, 2012 6 — — — — 6 Treasury stock, at cost, 24,130,375 and 24,162,676 shares at June 30, 2013 and December 31, 2012, respectively (252,001 ) — — — — (252,001 ) Additional paid-in-capital 1,514,849 232,964 3,853,001 2,099,514 (6,185,479 ) 1,514,849 Accumulated (deficit) equity (1,018,202 ) 182,609 (498,110 ) (972,379 ) 1,287,880 (1,018,202 ) Total stockholders’ equity (deficit) 246,633 415,573 3,354,891 1,127,135 (4,897,599 ) 246,633 Total liabilities, redeemable preferred stock and stockholders’ equity (deficit) $ 526,316 $ 3,402,709 $ 3,581,105 $ 1,602,373 $ (5,368,928 ) $ 3,743,575 NineSeptemberJune 30, 2012 Cumulus Cumulus Media Media Inc. Holdings Inc. Subsidiary Subsidiary Total (Parent Guarantor) (Subsidiary Issuer) Guarantors Non-guarantors Eliminations Consolidated $ 52,059 $ 99,821 $ 249,157 $ 46 $ (348,932 ) $ 52,059 1,109 — 106,372 — — 107,481 — 7,581 — — — 7,581 — — 2,892 — — 2,892 — — (163 ) — — (163 ) — — (38,251 ) (24,977 ) — (63,228 ) — 12,435 12,435 311 — 624 — — 935 — — (16,475 ) 22,518 — 6,043 15,671 — — — — 15,671 (99,821 ) (249,157 ) 46 — 348,932 — 120,105 302,755 (438,371 ) 2,505 — (13,006 ) 89,434 161,000 (121,734 ) — — 128,700 600 — — — 600 426 — — — — 426 (722 ) — (3,933 ) — — (4,655 ) — — 114,918 — — 114,918 304 — 110,985 — — 111,289 — (161,000 ) — — — (161,000 ) (1,909 ) — — — — (1,909 ) (11,599 ) — — — — (11,599 ) 136 — — — — 136 (49,233 ) — — — — (49,233 ) (62,605 ) (161,000 ) — — — (223,605 ) 27,133 — (10,749 ) — — 16,384 11,714 — 18,878 — — 30,592 $ 38,847 $ — $ 8,129 $ — $ — $ 46,976 Eliminations Cash flows from operating activities: Net income (loss) $ 18,112 $ 22,801 $ 133,421 $ (9,548 ) $ (146,674 ) $ 18,112 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization — 981 56,885 — — 57,866 Amortization of debt issuance costs/discounts — 5,164 — — — 5,164 Provision for doubtful accounts — — 1,046 — — 1,046 Loss on sale of assets or stations — — 1,537 — — 1,537 Loss on early extinguishment of debt — 4,539 — — — 4,539 Fair value adjustment of derivative instruments — (27 ) (2,844 ) — — (2,871 ) Deferred income taxes — — (14,248 ) 8,439 — (5,809 ) Stock-based compensation expense — 5,134 — — — 5,134 (Loss) earnings from consolidated subsidiaries (22,801 ) (133,421 ) 9,548 — 146,674 — Changes in assets and liabilities (81,633 ) 41,180 11,400 1,109 — (27,944 ) Net cash (used in) provided by operating activities (86,322 ) (53,649 ) 196,745 — — 56,774 Cash flows from investing activities Proceeds from sale of assets or stations — — 692 — — 692 Restricted cash — 2,192 — — — 2,192 Acquisition less cash required — — (52,066 ) — — (52,066 ) Capital expenditures — (112 ) (4,718 ) — — (4,830 ) Net cash provided by (used in) investing activities — 2,080 (56,092 ) — — (54,012 ) Cash flows from financing activities: Intercompany transactions, net 9,993 136,619 (146,612 ) — — — Repayments of borrowings under term loans and revolving credit facilities — (38,931 ) — — — (38,931 ) Tax withholding payments on behalf of employees for stock-based compensation — (337 ) — — — (337 ) Preferred stock dividends (5,304 ) — — — — (5,304 ) Proceeds from exercise of warrants 34 — — — — 34 Deferred financing costs — (58 ) — — — (58 ) Net cash provided by (used in) financing activities 4,723 97,293 (146,612 ) — — (44,596 ) (Decrease) increase in cash and cash equivalents (81,599 ) 45,724 (5,959 ) — — (41,834 ) Cash and cash equivalents at beginning of period 81,599 — 6,451 — — 88,050 Cash and cash equivalents at end of period $ — $ 45,724 $ 492 $ — $ — $ 46,216 NineSeptemberJune 30, 2011 Cumulus Cumulus Media Media Inc. Holdings Inc. Subsidiary Subsidiary Total (Parent Guarantor) (Subsidiary Issuer) Guarantors Non-guarantors Eliminations Consolidated $ 76,998 $ 138,669 $ 164,495 $ (5,957 ) $ (297,207 ) $ 76,998 1,079 — 14,152 — — 15,231 435 1,264 — — — 1,699 — — 920 — — 920 — — 33 — — 33 — — (15,278 ) — — (15,278 ) (3,683 ) — 2,681 — — (1,002 ) — — (63,317 ) (5,126 ) — (68,443 ) 2,788 — — — — 2,788 (1,318 ) (1,318 ) 4,366 — — — — 4,366 (11,636 ) — — — — (11,636 ) (138,669 ) (164,495 ) 5,957 — 297,207 — 2,924,469 (2,816,798 ) (90,761 ) 11,083 — 27,993 2,854,829 (2,841,360 ) 18,882 — — 32,351 (17 ) — — — — (17 ) (2,024,153 ) — — — — (2,024,153 ) (918 ) — (1,967 ) — — (2,885 ) (2,025,088 ) — (1,967 ) — — (2,027,055 ) (1,214,676 ) (1,214,676 ) (666 ) (666 ) — 610,000 610,000 — — 2,289,900 2,289,900 444,513 — — — — 444,513 (41,565 ) (41,565 ) — (58,540 ) — — — (58,540 ) (812,394 ) 2,841,360 — — — 2,028,966 17,347 — 16,915 — — 34,262 12,638 — 176 — — 12,814 $ 29,985 $ — $ 17,091 $ — $ — $ 47,076 16. Subsequent EventOn October 15, 2012, the Company entered into an asset exchange agreement with Family Stations, Inc. pursuant to which it agreed to exchange its WDVY station in New York plus $40 million in cash for Family Stations’ WFME station in Newark, New Jersey. The transaction is part Eliminations Cash flows from operating activities: Net (loss) income $ (3,987 ) $ 30,069 $ 130,767 $ 5,260 $ (166,096 ) $ (3,987 ) Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization 566 — 71,676 — — 72,242 Amortization of debt issuance costs/discount — 5,061 — — — 5,061 Provision for doubtful accounts — — 1,598 — — 1,598 Gain on sale of assets or stations — — (183 ) — — (183 ) Impairment of intangible assets — 12,435 12,435 Fair value adjustment of derivative instruments 250 — 753 — — 1,003 Deferred income taxes — — (7,991 ) (6,311 ) — (14,302 ) Stock-based compensation expense 12,906 — — — — 12,906 Earnings from consolidated subsidiaries 30,069 130,767 5,260 — (166,096 ) — Changes in assets and liabilities (68,243 ) (266,595 ) (29,988 ) 1,051 332,192 (31,583 ) Net cash (used in) provided by operating activities (28,439 ) (100,698 ) 184,327 — — 55,190 Cash flows from investing activities: Proceeds from sale of assets or stations 426 — — — — 426 Capital expenditures (676 ) — (1,243 ) — — (1,919 ) Net cash used in investing activities (250 ) — (1,243 ) — — (1,493 ) Cash flows from financing activities: Intercompany transactions, net 40,274 157,698 (197,972 ) — — — Repayments of borrowings under term loans and revolving credit facilities — (57,000 ) — — — (57,000 ) Tax withholding payments on behalf of employees for stock-based compensation (1,909 ) — — — — (1,909 ) Preferred stock dividends (6,458 ) — — — — (6,458 ) Proceeds from exercise of warrants 161 — — — — 161 Net cash provided by (used in) financing activities 32,068 100,698 (197,972 ) — — (65,206 ) Increase (decrease) in cash and cash equivalents 3,379 — (14,888 ) — — (11,509 ) Cash and cash equivalents at beginning of period 11,714 — 18,878 — — 30,592 Cash and cash equivalents at end of period $ 15,093 $ — $ 3,990 $ — $ — $ 19,083 Factors Affecting ComparabilityPrimarily as a result ofcompletion of the significant transactions described below during the third quarter of 2011,United States. We believe we believe that our results of operations for the three and nine months ended September 30, 2012 will provide only limited comparability to our results of operations for the three and nine months ended September 30, 2011. Investors are cautioned to not place undue reliance on any such comparison. Aggregate revenues of $43.3 million and $123.3 million for the three and nine months ended September 30, 2012, respectively, attributable to Cumulus Media Partners LLC (“CMP”) and $172.4 million and $511.8 million for the three and nine months ended September 30, 2012, respectively, attributable to Citadel are included in the accompanying unaudited condensed consolidated financial statements for such periods.On August 1, 2011, we completed our previously announced acquisition of the remaining 75.0% of the equity interests of CMP that we did not already own. CMP’s results of operations have been included in the consolidated financial statements since the date of the completion of the CMP Acquisition. Pursuant to a management agreement, we had operated CMP’s business since 2006. In connection with the CMP Acquisition, we issued 9.9 million shares of our common stock to the CMP Sellers. For additional information regarding the CMP Acquisition, see Note 1, “Basis of Presentation, Interim Financial Data and Basis of Presentation” and Note 2, “Acquisitions and Dispositions.” Also in connection with the CMP Acquisition, the CMP Restated Warrants were amended and restated to become exercisable for up to 8.3 million shares of our common stock. These warrants expired by their terms on July 31, 2012.On September 16, 2011, we completed the previously announced Citadel Acquisition, pursuant to which we acquired Citadel for an aggregate purchase price of approximately $2.3 billion, consisting of approximately $1.4 billion in cash, the issuance of 23.6 million shares of Class A common stock, warrants to purchase 47.6 million shares of Class A common stock, and the assumption of outstanding debt, which was refinanced as part of our previously announced related refinancing (the “Refinancing”). Citadel’s results of operations have been included in the consolidated financial statements since the date of the completion of the Citadel Acquisition.In connection with the closing of the Citadel Acquisition, we undertook a number of significant refinancing transactions, all as described in more detail in “—Liquidity and Capital Resources” below.Operating OverviewWe are the largest pure-play radio broadcaster in the United States based on number of stations.stations owned and operated. At SeptemberJune 30, 2012,2013, we owned or operated more than 525approximately 520 radio stations (including under LMAs) in 110108 United States media markets and operated nationwide radio networks serving over 4,000 stations. Under5,000 affiliates. At June 30, 2013, under LMAs, we provideprovided sales and marketing services for 1114 radio stations in the United States in exchange for a management or consulting fee. In addition to entering into LMAs, we have in the past, and expect that we will from time to time in the future enter into management or consulting agreements that provide us with the ability, as contractually specified, to assist current owners in the management of radio station assetsStates.contractedcreated a leading radio broadcasting company with a true national platform and an opportunity to purchase, subjectfurther leverage and expand upon our strengths, market presence and programming. Specifically we have an extensive radio station portfolio consisting of approximately 520 radio stations, including a presence in eight of the top 10 markets, and broad diversity in format, listener base, geography, advertiser base and revenue stream, all of which are designed to FCC approval. In such arrangements, we generally receive a contractually specified management feereduce our dependence on any single demographic, region or consulting feeindustry. Our increased scale allows larger, more significant investments in exchangethe local digital media marketplace enabling us to apply our local digital platforms and strategies, including our social commerce initiatives across significant additional markets. We believe our single national platform will allow us to optimize our available advertising inventory while providing holistic and comprehensive solutions for our customers.services provided.matters including, but not limited to, expenses relating to our ongoing integration of Citadel and CMP and additional expenses incurred in connection with those operations, including the operations of our acquired radio network.On September 16, 2011 In addition, we believe that our broad diversity in connection with the closingformat, listener base, geography, advertiser base and revenue stream helps us to reduce our dependence on any single demographic, region or industry.entered intohad $1.287 billion outstanding under the First Lien Facility, and$785.5 million outstanding under the Second Lien Facility (each as defined in “—Liquidity and Capital Resources – 2011 Refinancing Transactions”). The First Lien Facility consists of the $1.325 billion First Lien Term Loan and the $300.0 million Revolving Credit Facility. The Second Lien Facility consists of the $790.0 million Second Lien Term Loan. On that date and also in connection therewith, we used borrowings of $1.325 billion under the First Lien Term Loan, $200.0 millionno amounts outstanding under the Revolving Credit Facility and $790.0 million under the Second Lien Term Loan, along with proceeds from the Equity Investment, to repay approximately $1.4 billion inFacility. We also had outstanding senior or subordinated indebtedness and other obligations of (a) ours (including the repayment of amounts outstanding under, and the termination of, the Terminated Credit Facility), (b) certain of our wholly-owned subsidiaries, and (c) Citadel.Also in connection with the Citadel Acquisition and as part of the transactions included in the Refinancing, we completed the previously announced internal restructuring into a holding company structure, which included transferring the remaining assets and operations held directly or indirectly by us, other than the equity interests of our direct wholly-owned subsidiary Cumulus Media Holdings Inc. (“Cumulus Holdings”), to Cumulus Holdings (the “Internal Restructuring”) and in which, among other things, Cumulus Holdings was substituted for us as the issuer under the $610.0 million of 7.75% Senior Notes due 20192019.“7.75% Senior Notes”“Amendment”), which remain outstanding.Equity Investment, on September 16, 2011, we issued and sold (i) 51.8 million shares of Class A common stockAmendment, the consolidated total net leverage ratio covenant contained in the First Lien Facility, with which the Company was required to Crestview; (ii) 125,000 shares of Series A Preferred Stock to Macquarie; and (iii) 4.7 million shares of Class A common stock and immediately exercisable warrants to purchase 24.1 million shares of our Class A common stock to UBS and certain other investors. Also pursuant thereto, we issued the Crestview Warrants to purchase 7.8 million shares of Class A common stock, at an exercise price of $4.34 per share. Dividends on the Series A Preferred Stock accrued at a rate of 10.0% per annum from issuance until March 15, 2012, and currently accrue at 14.0% per annum through September 15, 2013, with additional increases for every two-year period thereafter. The dividends are payable in cash, except that, at our option, up to 50.0% of the dividends for any period may be paid through the issuance of additional shares of Series A Preferred Stock. Payment of dividends on the Series A Preferred Stock is in preference and prior to any dividends payable on any class of our common stock and,comply in the event of any liquidation, dissolution or winding up, holders of Series A Preferred Stock are entitledamounts were outstanding under the Revolving Credit Facility has been replaced with a consolidated first lien net leverage ratio covenant, and the total commitments under the Revolving Credit Facility were reduced from $300.0 million to the liquidation value thereof prior to, and in preference of, payment of any amounts to holders of any class of our common stock. During the three months ended September 30, 2012 we used approximately $50 million in cash to redeem a number of outstanding shares of Series A Preferred Stock.implicationsconditions of our business climate, our current and expected needs for funds and our current and expected sources of funds and determined, based on our financial condition as of SeptemberJune 30, 2012,2013, that cash on hand and cash expected to be generated from operating activities, borrowing availability under the Revolving Credit Facility and, if necessary, any further financing activities will be sufficient to satisfy our anticipated financing needs for working capital, capital expenditures, interest and debt service payments, and any repurchases of securities and other debt obligations through Septemberat least June 30, 2013. However, given the uncertainty of our markets’ cash flows, the cyclical nature of our accounts receivable and subsequent payments by our customers, uncertainties in connection with the integration of the CMP Acquisition and the Citadel Acquisition, including with respect to the timing and achievement of expected synergies therefrom, no assurances can be provided in this regard.time on our radio stations.time. Our sales of advertising time are primarily affected by the demand for advertising time from local, regional and national advertisers, andwhich impacts the advertising rates charged by our radio stations.us. 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 various ratings agencies on a periodic basis. We endeavor to develop strong listener loyalty and we believe that the diversification of formats in particular our strange presence in news, talk and sports radio on our stationsprograms helps to insulate themus from the effects of changes in the musical tastes of the public with respect to any particular format.format as a substantial portion of our revenue comes from non-music formats and proprietary content. In addition, we believe that the radio station portfolio that we now own and operate, including as a result of the CMP Acquisition and the Citadel Acquisition, which has increased diversity in terms of format, listener base, geography, advertiser base and revenue stream is designedas a result of our acquisitions and the development of our strategy to focus on radio stations in larger markets and geographically strategic regional clusters, will further reduce our revenue dependence on any single demographic, region or industry.Our radio stationstheirour on-air inventory of advertising.advertising time and adjusting prices up or down based on supply and demand. The optimal number of advertisements available for sale depends on the programming format of a particular station.radio program. Each of our stationssales vehicle has a general target level of on-air inventory available for advertising. This target level of advertising inventory for sale may vary at different times of the day but tends to remain stable over time. We seek to broaden our base of advertisers in each of our markets by providing a wide array of audience demographic segments across oureach cluster of stations, thereby providing each of our potential advertisers with an effective means of reaching a targeted demographic group. Our selling and pricing activity is based on demand for our radio stations’ on-air inventory. In the broadcasting industry, radio stationswe sometimes utilize trade or barter agreements that exchange advertising time for goods or services such as travel or lodging, instead of for cash. Trade revenue totaled $20.4$12.5 million and $12.8$13.6 million infor the ninesix months ended SeptemberJune 30, 20122013 and 2011,2012, respectively. Our advertising contracts are generally short-term. We generate most of our revenue from local and regional advertising, which is sold primarily by a station’s sales staff. Local advertising represented approximately 72.5%67.6% and 75.0%67.3% of our total revenues during the ninethree and six months ended SeptemberJune 30, 20122013.2011, respectively.generallytypically produces the lowest revenues of each annuala last twelve month period, as advertising generally declines following the winter holidays. The second and fourth calendar quarters typically produce the highest revenues in eachfor the year. 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. We continually evaluate opportunities to increase revenues through new platforms, including technology-based initiatives. Revenues are also typically higher in even-numbered years due to increased spending by political candidates, political parties and special interest groups in advance of elections. This political spending typically is heaviest during the fourth quarter.ourthe Company’s business. The Company presents Adjusted EBITDA including the impact of both continuing and discontinued operations. This measure isolates the amount of income generated by ourthe Company’s radio stations afterapart from the incurrence of corporate generalnon-cash and administrativenon-operating expenses. Management also uses this measure to determine the contribution of ourthe Company’s radio station portfolio, including the corporate resources employed to manage the portfolio, to the funding of ourits other operatingorof calculating and determining our compliance with certain covenants contained in our first lien credit facility.also exclude LMA fees acquisition-related costs and franchise taxes from our calculation of Adjusted EBITDA, even though such fees require a cash settlement, because they are excluded from the definition of Adjusted EBITDA contained in our First Lien Facility. Management excludes any gain or loss on the exchange or sale of radioassets or stations as it doesthey do not represent a cash transaction. Management also excludes any realized gain or loss on derivative instruments as it doesthey do not represent a cash transaction nor is itare they associated with radio station operations. Interest expense, net of interest income, discontinued operations, income tax (benefit) expense including franchise taxes, and expenses relating to acquisitions are also excluded from the calculation of Adjusted EBITDA as they are not directly related to the operation of radio stations. Management excludes any impairment of goodwill and intangible assets as it doesthey do not require a cash outlay. Management believes that Adjusted EBITDA, although not a measure that is calculated in accordance with GAAP, nevertheless is commonly employed by the investment community as a measure for determining the market value of a radio company. Management has also observed that Adjusted EBITDA is routinely employed to evaluate and negotiate the potential purchase price for radio broadcasting companies.companies, and is a key metric for purposes of calculating and determining compliance with certain covenants in our First Lien Facility. Given the relevance to ourthe overall value of the Company, management believes that investors consider the metric to be extremely useful. of, or as a substitute for net income, operating income, cash flows from operating activities or any other measure for determining ourthe Company’s operating performance or liquidity that is calculated in accordance with GAAP.includes the results of CMP and Citadel from the dates of acquisition, August 1, 2011 and September 16, 2011, respectively, and should be referred to while reading the results of operations discussion that follows (dollars in thousands): Three Months Ended
September 30, Nine Months Ended
September 30, % Change
Three Months % Change
Nine Months 2012 2011 2012 2011 Ended Ended $ 275,350 $ 124,790 $ 792,386 $ 238,697 120.7 % 232.0 % 161,740 73,710 484,106 142,690 119.4 % 239.3 % 35,239 11,025 106,321 14,702 219.6 % 623.2 % 928 530 2,652 1,670 75.1 % 58.8 % 12,979 44,654 46,473 61,924 -70.9 % -25.0 % — — — (15,278 ) * * -100.0 % (129 ) 1,436 624 2,681 -109.0 % -76.7 % — — 12,435 — * * * * 64,593 (6,565 ) 139,775 30,308 * * 361.2 % (49,757 ) (19,503 ) (150,179 ) (34,999 ) 155.1 % 329.1 % — — — (4,366 ) * * * * (224 ) 182 (34 ) 88 223.1 % 138.6 % — 11,636 — 11,636 * * * * 14,612 (14,250 ) (10,438 ) 2,667 202.5 % * * 12,175 69,206 22,862 65,723 -82.4 % -65.2 % 26,787 54,956 12,424 68,390 -51.3 % -81.8 % 29,258 4,582 39,635 8,608 538.5 % -360.4 % $ 56,045 $ 59,538 $ 52,059 $ 76,998 -5.9 % -32.4 % $ 107,856 $ 10,732 $ 295,891 $ 44,973 905.0 % 557.9 % **Calculation is not meaningful. 2013 2012 2013 2012 STATEMENT OF OPERATIONS DATA: Net revenues $ 289,676 $ 281,041 $ 522,548 $ 517,036 3.1 % 1.1 % Direct operating expenses (excluding depreciation, amortization and LMA fees) 171,762 168,746 335,934 322,442 1.8 % 4.2 % Depreciation and amortization 28,935 36,200 57,866 71,007 (20.2 )% (18.5 )% LMA fees 759 885 1,728 1,724 (14.2 )% 0.2 % Corporate, general and administrative expenses (including stock-based compensation expense) 7,760 16,802 21,626 33,494 (53.8 )% (35.5 )% Loss on sale of stations 91 — 1,400 — ** ** (Gain) loss on derivative instrument (2,106) 841 (2,844 ) 753 ** ** Impairment of intangible assets — 12,435 — 12,435 ** ** Operating income 82,475 45,132 106,838 75,181 82.7 % 42.1 % Interest expense, net (43,833 ) (49,619 ) (88,085 ) (100,422 ) (11.7 )% (12.3 )% Loss on early extinguishment of debt (4,539 ) — (4,539 ) — ** ** Other (loss) income, net (511 ) (74 ) (378 ) 190 590.5 % (298.9 )% Income (loss) from continuing operations before income taxes 33,592 (4,561) 13,836 (25,051 ) ** ** Income tax (expense) benefit (6,491 ) 2,798 4,276 10,689 ** ** Income (loss) from continuing operations 27,101 (1,763) 18,112 (14,362 ) ** ** Income from discontinued operations, net of taxes — 9,906 — 10,375 ** ** Net income (loss) $ 27,101 $ 8,143 $ 18,112 $ (3,987 ) ** ** OTHER DATA: Adjusted EBITDA $ 112,800 $ 106,129 $ 172,688 $ 179,736 6.3 % (3.9 )% SeptemberJune 30, 20122013 Compared to the Three Months Ended SeptemberJune 30, 2011SeptemberJune 30, 20122013 increased $150.6$8.7 million, or 120.7%3.1%, to $275.4$289.7 million, compared to $124.8$281.0 million for the three months ended SeptemberJune 30, 2011.2012. This increase reflects the full period impact of net revenues from CMP and Citadel, includingwas attributable to a $4.6$4.3 million increase in political advertising. Revenue growth waslocal advertising revenue, a $3.9 million increase in revenue related to digital initiatives and a $2.8 million increase in revenue due to the addition of stations in the Bloomington and Peoria markets we acquired from Townsquare Media in July 2012. These increases were partially offset by short term revenue impacts resulting from strategic format changesa decrease of $2.3 million in some markets, general downward trends in the overall macro economic environment for radio and reduced use of trade advertising on acquired stations.cyclical political revenue.SeptemberJune 30, 20122013 increased $88.0$3.1 million, or 119.4%1.8%, to $161.7$171.8 million, compared to $73.7$168.7 million for the three months ended SeptemberJune 30, 2011. This2012. The increase reflectswas primarily attributable to a $4.6 million increase in our strategic content initiatives, a $4.1 million increase related to ongoing investments in our sales infrastructure and a $1.9 million increase in expenses due to the full period impactaddition of direct operating expenses of CMPstations in the Bloomington and CitadelPeoria markets we acquired from Townsquare Media in July 2012. These increases were partially offset by a $7.1$7.5 million decrease in music licensing fees. Previously announced synergies resulted in reduced compensation costs and discretionary spending related to promotions, as well as enhanced expense controls.royalties.SeptemberJune 30, 2012 increased $24.22013 decreased $7.3 million, or 219.6%20.2%, to $35.2$28.9 million, compared to $11.0$36.2 million for the three months ended SeptemberJune 30, 2011.2012. This increase reflects the impact ofdecrease was primarily due to a full period of additional depreciation and$6.6 million decrease in amortization expense on our definite lived intangible assets, which results from the accelerated amortization methodology we have applied since acquisition of the assets acquiredbased on the expected pattern in which the CMP and Citadel Acquisitions, partially offset byunderlying assets' economic benefits are consumed. There was also a $0.2$0.7 million decrease in depreciation expense on our historical assets within our legacy markets due to a more fully depreciated asset base.expense.SeptemberJune 30, 20122013 decreased $31.7$9.0 million, or 70.9%53.8%, to $13.0$7.8 million, compared to $44.7$16.8 million for the three months ended SeptemberJune 30, 2011.2012. This decrease iscompriseddue to a decrease of $4.4 million mostly associated with the closure of the legacy Citadel corporate offices, a $35.7$3.5 million decrease in acquisition and restructuring costs primarily related to the Citadel and CMP acquisitions completed in 2011, partially offset by a $1.2 million increase in stock-based compensation expense.Realized Losses(Gain) loss on Derivative Instrument.For the three months ended SeptemberJune 30, 2012,2013, we recorded a $0.1$2.1 million gain related to the fair value adjustment of the put option on five Green Bay stations we operate under an LMA, compared to a $1.4$0.8 million loss recorded for the three months ended SeptemberJune 30, 2011.2012.SeptemberJune 30, 2012 increased $30.32013 decreased $5.8 million, or 155.1%11.7%, to $49.8$43.8 million compared to $19.5$49.6 million for the three months ended SeptemberJune 30, 2011.2012. Interest expense associated with outstanding debt increaseddecreased by $26.9$6.3 million to $46.9$41.4 million as compared to $20.0$47.7 million in the prior year period. Interest expense increasedThis decrease was due to a higherlower average amount of indebtedness outstanding asresulting from principal repayments and a resultlower weighted average cost of debt due to the CMP and Citadel acquisitions and the Company’s related refinancing (“the Refinancing”) in the third quarter of 2011.December 2012 amendment to our First Lien Facility. The following summary details the components of our interest expense, net of interest income (dollars in thousands): Three Months Ended
September 30, 2012 vs 2011 2012 2011 $ Change % Change $ 11,819 $ 12,081 $ (262 ) -2.2 % 35,057 7,871 27,186 345.4 % 3,075 (397 ) 3,472 -874.6 % 61 — 61 * * (255 ) (52 ) (203 ) 390.4 % $ 49,757 $ 19,503 $ 30,254 155.1 % **Calculation is not meaningful. 2013 vs 2012 2013 2012 $ Change % Change 7.75% Senior Notes $ 11,819 $ 11,819 $ — — % Bank borrowings – term loans and revolving credit facilities 29,534 35,848 (6,314 ) (17.6 )% Other interest expense 2,876 2,089 787 37.7 % Change in fair value of interest rate cap and swap (32 ) 165 (197 ) (119.4 )% Interest income (364 ) (302 ) (62 ) 20.5 % Interest expense, net $ 43,833 $ 49,619 $ (5,786 ) (11.7 )% Other Expense (Income), netIncome Taxes. Other expense, net, was $0.2 million for the three months ended September 30, 2012 as compared to other income, net of $0.2 million for the three months ended September 30, 2011. The change is related primarily to certain acquired asset and liability dispositions.Gain on Equity Investment in CMP.For the three months ended SeptemberJune 30, 2011 we recorded an $11.6 million gain on our equity investment in CMP due to the completion of the CMP Acquisition. There was not a similar gain during the three months ended September 30, 2012 (see Note 2, “Acquisitions and Dispositions”).Income Taxes.For the three months ended September 30, 2012,2013, the Company recorded aincome tax benefitexpense of $12.2$6.5 million, on a pre-tax income from continuing operations of $14.6$33.6 million, resulting in an effective tax rate for the three months ended June 30, 2013 of approximately (83.6)%19.3%. For the three months ended SeptemberJune 30, 2011,2012, the Company recorded an income tax benefit of $69.2$2.8 million, on a pre-tax loss from continuing operations of $(14.3)$4.6 million, resulting in an effective tax rate for the three months ended June 30, 2012 of 483.9%approximately 60.9%.changetax amortization of broadcast licenses and goodwill and changes in the estimated amount of valuation allowance recorded on the Company’s net deferred tax assets.SeptemberJune 30, 20122013 increased $97.2$6.7 million to $107.9$112.8 million from $10.7$106.1 million for the three months ended SeptemberJune 30, 2011.2012.NineReconciliation of Non-GAAP Financial Measure. The following table reconciles Adjusted EBITDA to net income (loss) (the most directly comparable financial measure calculated and presented in accordance with GAAP) as presented in the accompanying consolidated statements of operations (dollars in thousands): 2013 2012 2013 2012 Net income (loss) $ 27,101 $ 8,143 $ 18,112 $ (3,987 ) ** ** Income tax expense (benefit) 6,491 (2,798 ) (4,276 ) (10,689 ) ** ** Non-operating expenses, including net interest expense 48,883 49,693 93,002 100,232 (1.6 )% (7.2 )% LMA fees 759 885 1,728 1,724 (14.2 )% 0.2 % Depreciation and amortization 28,935 36,200 57,866 71,007 (20.1 )% (18.5 )% Stock-based compensation expense 2,470 5,928 5,134 12,906 (58.3 )% (60.2 )% Loss on sale of stations 91 — 1,400 — ** ** (Gain) loss on derivative instrument (2,106 ) 841 (2,844 ) 753 ** ** Impairment of intangible assets — 12,435 — 12,435 ** ** Acquisition-related costs — 4,443 2,214 5,465 ** (59.5 )% Franchise taxes 176 265 352 265 (33.6 )% 32.8 % Discontinued operations — (9,906 ) — (10,375 ) ** ** Adjusted EBITDA $ 112,800 $ 106,129 $ 172,688 $ 179,736 6.3 % (3.9 )% SeptemberJune 30, 20122013 Compared to the NineSix Months Ended SeptemberJune 30, 2011ninesix months ended SeptemberJune 30, 20122013 increased $553.7$5.5 million, or 232.0%1.1%, to $792.4$522.5 million, compared to $238.7$517.0 million for the ninesix months ended SeptemberJune 30, 2011.2012. This increase reflects the impact of net revenues from CMP and Citadel, as well aswas attributable to a $10.6$1.5 million increase in political advertising. Revenue growth waslocal advertising revenue, a $3.0 million increase in revenue related to digital initiatives and a $5.0 increase in revenue due to the addition of stations in the Bloomington and Peoria markets we acquired from Townsquare Media in July 2012. These increases were partially offset by short term revenue impacts resulting from strategic format changesa decrease of $4.0 million in some markets, general downward trends in the overall macro economic environment for radio and reduced use of trade advertising on acquired stations.cyclical political revenue.ninesix months ended SeptemberJune 30, 20122013 increased $341.4$13.5 million, or 239.3%4.2%, to $484.1$335.9 million, compared to $142.7$322.4 million for the ninesix months ended SeptemberJune 30, 2011. This2012. The increase reflectswas primarily attributable to an $18.7 million increase in our strategic content initiatives as well as ongoing investments in our sales infrastructure and a $3.5 million increase in expenses due to the impactaddition of direct operating expenses of Citadelstations in the Bloomington and CMPPeoria markets we acquired from Townsquare Media in July 2012. These increases were partially offset by a $7.1an $8.7 million decrease in music license fees. Previously announced synergies resulted in reduced compensation costs and discretionary spending related to promotions, as well as enhanced expense controls.royalties.ninesix months ended SeptemberJune 30, 2012 increased $91.62013 decreased $13.1 million to $106.3$57.9 million, compared to $14.7$71.0 million for the ninesix months ended SeptemberJune 30, 2011.2012. This increase reflects the impact of additional depreciation and amortization expense from assets acquired in the Citadel Acquisition and the CMP Acquisition, partially offset bydecrease was primarily due to a $0.7$13.7 million decrease in depreciationamortization expense on our definite lived intangible assets, within our legacy markets due towhich results from the accelerated amortization methodology we have applied since acquisition of the assets based on the expected pattern in which the underlying assets' economic benefits are consumed. There was also a more fully depreciated asset base.$0.6 million increase in depreciation expense.ninesix months ended SeptemberJune 30, 20122013 decreased $15.4$11.9 million, or 25.0%35.5%, to $46.5$21.6 million, compared to $61.9$33.5 million for the ninesix months ended SeptemberJune 30, 2011. This2012. The decrease is primarily comprised ofdue to a $2.6 million reduction of certain contractual obligations assumed in the Citadel acquisition, and a $35.8 million reductiondecrease in acquisition related costs since the prior year period included costsof $3.3 million mostly associated with the CMP andclosure of the legacy Citadel acquisitions. This was partially offset bycorporate offices, a $12.9$7.8 million increasedecrease in stockstock-based compensation expense attributed mainly toand a $0.8 million decrease in other overhead costs.Citadel Acquisition and additional personnel costs of $4.2 million.Gain on Exchange of Assets or Stations.During the ninesix months ended SeptemberJune 30, 2011, we completed an asset exchange with Clear Channel Communications, Inc. (“Clear Channel”) to swap our Canton, Ohio station for eight of Clear Channel’s radio stations in the Ann Arbor and Battle Creek, Michigan markets. In connection with this transaction,2013, we recorded a gain of approximately $15.3 million. There were no similar transactions during the 2012 period.Realized Losses on Derivative Instrument.For the nine months ended September 30, 2012 and 2011, we recorded losses of $0.6$2.8 million and $2.7 million, respectively,gain related to the fair value adjustment of the put option on five Green Bay stations we operate under an LMA.LMA, compared to a ninesix months ended SeptemberJune 30, 2012, we recorded a definite-lived intangible asset impairment of $12.4$12.4 million related to the cancellation of a contract. There was no similar impairment for the ninesix months ended SeptemberJune 30, 2011.2013.ninesix months ended SeptemberJune 30, 2012 increased $115.22013 decreased $12.3 million, or 329.1%12.3%, to $150.2$88.1 million compared to $35.0$100.4 million for the ninesix months ended SeptemberJune 30, 2011.2012. Interest expense associated with outstanding debt increaseddecreased by $107.4$12.8 million to $142.1$82.9 million as compared to $34.7$95.7 million in the prior year period. Interest expense increasedThis decrease was due to a higherlower average amount of indebtedness outstanding asresulting from principal repayments and a resultlowercomplete the CMP and Citadel Acquisitions and the Refinancing in the third quarter of 2011.December 2012 amendment to our First Lien Facility. The following summary details the components of our interest expense, net of interest income (dollars in thousands): 2013 vs 2012 2013 2012 $ Change % Change 7.75% Senior Notes $ 23,638 $ 23,638 $ — — % Bank borrowings – term loans and revolving credit facilities 59,214 72,067 (12,853 ) (17.8 )% Other interest expense 5,894 5,065 829 16.4 % Change in fair value of interest rate cap and swap (27 ) 250 (277 ) (110.8 )% Interest income (634 ) (598 ) (36 ) 6.0 % Interest expense, net $ 88,085 $ 100,422 $ (12,337 ) (12.3 )% Nine Months Ended
September 30, 2012 vs 2011 2012 2011 $ Change % Change $ 35,456 $ 18,516 $ 16,940 91.5 % 106,608 16,176 90,432 559.1 % — 3,708 (3,708 ) * * 8,657 337 8,320 2468.8 % 311 (3,680 ) 3,991 -108.5 % (853 ) (58 ) (795 ) 1370.7 % $ 150,179 $ 34,999 $ 115,180 329.1 % **Calculation is not meaningful.Loss on Early Extinguishment of Debt.. For the ninesix months ended SeptemberJune 30, 2011,2013, the Company recorded $4.4 million in loss on early extinguishment of debt as a result of our debt refinancing in May 2011. There was no similar extinguishment of debt during the nine months ended September 30, 2012.Other Income (Expense), net. Otheran income net, of less than $0.1 million for the nine months ended September 30, 2012 represents a gain on disposition of assets as compared to other expense, net, of $0.1 million for the nine months ended September 30, 2011, which represented a loss on disposition of assets.Gain on Equity Investment in CMP.For the nine months ended September 30, 2011 we recorded an $11.6 million gain on our equity investment in CMP due to the CMP Acquisition. There was not a similar gain during the nine months ended September 30, 2012 (see Note 2, “Acquisitions and Dispositions”).Income Taxes.For the nine months ended September 30, 2012, the Company recorded a tax benefit of $22.9$4.3 million on a pre-tax lossincome from continuing operations of $(10.4)$13.8 million, resulting in an effective tax rate of approximately 219.0%(31.2%). For the ninesix months ended SeptemberJune 30, 2011,2012, the Company recorded an income tax benefit of $65.7$10.7 million on pre-tax incomeloss from continuing operations of $2.7$25.1 million, resulting in an effective tax rate of (2,464.3)%42.6%.changetax amortization of broadcast licenses and goodwill and changes in the estimated amount of valuation allowance recorded on the Company’s net deferred tax assets.ninesix months ended SeptemberJune 30, 2012 increased $250.92013 decreased $7.0 million to $295.9$172.7 million from $45.0$179.7 million for the ninesix months ended SeptemberJune 30, 2011.2012.Reconciliation of Non-GAAP Financial Measure.The following table reconciles Adjusted EBITDA to net income (the most directly comparable financial measure calculated and presented in accordance with GAAP) as presented in the accompanying unaudited condensed consolidated statements of operations (dollars in thousands): Three Months Ended
September 30, Nine Months Ended
September 30, % Change
Three Months % Change
Nine Months 2012 2011 2012 2011 Ended Ended $ 56,045 $ 59,538 $ 52,059 $ 76,998 -5.9 % -32.4 % 35,239 11,025 106,321 14,702 219.6 % 623.2 % 928 530 2,652 1,670 75.1 % 58.8 % 2,764 956 15,671 2,143 189.1 % 631.3 % — — — (15,278 ) * * * * (129 ) 1,436 624 2,681 -109.0 % -76.7 % — — 12,435 — * * * * 2,728 — 8,194 — * * * * 275 — 832 — * * * * 49,757 19,503 150,179 34,999 155.1 % 329.1 % 224 (182 ) 34 (88 ) * * * * — — — 4,366 * * * * — (11,636 ) — (11,636 ) * * * * (12,175 ) (69,206 ) (22,862 ) (65,723 ) -82.4 % -65.2 % — 194 1,160 529 * * 119.3 % (63,226 ) 1 (63,219 ) 1 * * * * 35,426 (1,427 ) 31,811 (391 ) * * * * $ 107,856 $ 10,732 $ 295,891 $ 44,973 905.0 % 557.9 % **Calculation is not meaningful.As of September 30, 2012, we had $300.0 million in availability under the Revolving Credit Facility and an incremental term loan facility for up to $500.0 million under the 2011 Credit Facilities, subject to certain conditions (see “—Liquidity Considerations” for further discussion). Nine Months Ended
September 30, 2012 2011 (Dollars in thousands) $ 128,700 $ 32,351 2013 2012 (Dollars in thousands) Net cash provided by operating activities 56,774 $ 55,190 ninesix months ended SeptemberJune 30, 20122013 compared to the ninesix months ended SeptemberJune 30, 2011,2012, net cash provided by operating activities increased $96.3$1.6 million as compared to the ninesix months ended SeptemberJune 30, 2011.2012. The increase was primarily due to an increase in net revenuesworking capital driven by slightly better collections and timing of $553.7 million, partially offset by an aggregate decrease in cash provided by operating assets and liabilities of $41.0 million and increases in operating expenses and cash paid for interest of $313.1 million and $117.6 million, respectively.provided by (used in)used in Investing Activities Nine Months Ended
September 30, 2012 2011 (Dollars in thousands) $ 111,289 $ (2,027,055 ) (Dollars in thousands) 2013 2012 Net cash used in investing activities (54,012 ) $ (1,493 ) ninesix months ended SeptemberJune 30, 20122013 compared to the ninesix months ended SeptemberJune 30, 2011,2012, net cash provided by (used in) investing activities increased $2.1 billion, primarily due to net cash being used in investing activities of $2.0 billionincreased $52.5 million, primarily due to completecompleting $52.1 million in acquisitions during the Citadel Acquisition in the ninesix months ended SeptemberJune 30, 2011. 2013.flows provided by investing activities forFlows used in Financing Activities (Dollars in thousands) 2013 2012 Net cash used in financing activities (44,596 ) $ (65,206 ) ninesix months ended SeptemberJune 30, 2012 primarily consisted of proceeds from2013 compared to the Townsquare Asset Exchange of $114.9 million.Cash Flows (used in) provided by Financing Activities Nine Months Ended
September 30, 2012 2011 (Dollars in thousands) $ (223,605 ) $ 2,028,966 For the ninesix months ended SeptemberJune 30, 2012, net cash used in financing activities was $223.6decreased consisting, primarily of cash generated by operations and the cash proceeds from the Townsquare Asset Exchange. Net cash used in financing activities for the nine months ended September 30, 2012 primarily consisted of repaymentsattributable to repaying $18.1 million less of borrowings under ourthe Company’s term loans and revolving credit facilitiesloans.2012 Acquisitions and DispositionsDiscontinued OperationsOn July 31, 2012, the Company completed the Townsquare Asset Exchange. Additional information regarding discontinued operations is provided in Note 3, “Discontinued Operations” in the accompanying unaudited condensed consolidated financial statements.2011 Acquisitions and DispositionsFor a detailed discussion on our 2011 acquisitions, see Note 2, “Acquisitions and Dispositions” in the unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q. We did not complete any material dispositions during the three or nine months ended September 30, 2011.2011 Refinancing TransactionsFirst Lien and Second Lien Credit FacilitiesOn September 16, 2011, to complete the Refinancing, we entered into a (i) First Lien Credit Agreement (the “First Lien Facility”), dated as of September 16, 2011, among us, Cumulus Holdings, as Borrower, certain lenders, JPMorgan Chase Bank, N.A., as Administrative Agent (“JPMorgan”), UBS Securities LLC (“UBS”), MIHI LLC (“Macquarie”), Royal Bank of Canada and ING Capital LLC, as Co-Syndication Agents, and U.S. Bank National Association and Fifth Third Bank, as Co-Documentation Agents; and (ii) Second Lien Credit Agreement (the “Second Lien Facility”), dated as of September 16, 2011, among us, Cumulus Holdings, as Borrower, certain lenders, JPMorgan, as Administrative Agent, and UBS, Macquarie, Royal Bank of Canada and ING Capital LLC, as Co-Syndication Agents.The First Lien Facility consists of a $1.325 billion first lien term loan facility, maturing in September 2018 (the “First Lien Term Loan”), and a $300.0 million revolving credit facility, maturing in September 2016 (the “Revolving Credit Facility”). Under the Revolving Credit Facility, up to $30.0 million of availability may be drawn in the form of letters of credit and up to $30.0 million is available for swingline borrowings. The Second Lien Facility consists of a $790.0 million second lien term loan facility, maturing in September 2019 (the “Second Lien Term Loan”).At September 30, 2012, there was $1.314 billion outstanding under the First Lien Term Loan and $790.0 million outstanding under the Second Lien Term Loan. During the quarter ended September 30, 2012, the Company repaid all outstanding borrowings under the Revolving Credit Facility.Proceeds from borrowings under the First Lien Facility and Second Lien Facility were used, together with certain other funds, to (i) fund the cash portion of the purchase price paid in the Citadel Acquisition; (ii) repay in full amounts outstanding under the revolving credit facility under our pre-existing credit agreement (the “Terminated Credit Agreement”); (iii) repay all amounts outstanding under the creditfacilities of CMP Susquehanna Corporation (“CMPSC”), an indirect wholly-owned subsidiary of CMP; (iv) redeem CMPSC’s outstanding 9.875% senior subordinated notes due 2014 and variable rate senior secured notes due 2014; (v) redeem in accordance with their terms all outstanding shares of preferred stock of CMP Susquehanna Radio Holdings Corp., an indirect wholly-owned subsidiary of CMP (“Radio Holdings”) and the direct parent of CMPSC; and (vi) repay all amounts outstanding, including any accrued interest and the premiums thereon, under Citadel’s pre-existing credit agreement and to redeem its 7.75% senior notes due 2018.Borrowings under the First Lien Facility bear interest, at the option of Cumulus Holdings, based on the Base Rate (as defined below) or the London Interbank Offered Rate (“LIBOR”), in each case plus 4.5% on LIBOR-based borrowings and 3.5% on Base Rate-based borrowings. LIBOR-based borrowings are subject to a LIBOR floor of 1.25% for the First Lien Term Loan and 1.0% for the Revolving Credit Facility. Base Rate-based borrowings are subject to a Base Rate Floor of 2.25% for the First Lien Term Loan and 2.0% for the Revolving Credit Facility. Base Rate is defined, for any day, as the fluctuating rate per annum equal to the highest of (i) the Federal Funds Rate, as published by the Federal Reserve Bank of New York, plus 1/2 of 1.0%, (ii) the prime commercial lending rate of JPMorgan, as established from time to time, and (iii) 30 day LIBOR plus 1.0%. The First Lien Term Loan amortizes at a per annum rate of 1.0% of the original principal amount of the First Lien Term Loan, payable quarterly, which commenced on March 31, 2012, with the balance payable on the maturity date. Amounts outstanding under the Revolving Credit Facility are due and payable at maturity on September 16, 2016.Borrowings under the Second Lien Facility bear interest, at the option of Cumulus Holdings, at either the Base Rate plus 5.0%, subject to a Base Rate floor of 2.5%, or LIBOR plus 6.0%, subject to a LIBOR floor of 1.5%. The Second Lien Term Loan original principal amount is due on the maturity date, September 16, 2019.Interest on Base Rate-based borrowings is due on the last day of each calendar quarter, except with respect to swingline loans, for which interest is due on the day that such swingline loan is required to be repaid. Interest payments on loans whose interest rate is based upon LIBOR are due at maturity if the term is three months or less or every three months and at maturity if the term exceeds three months.At September 30, 2012, borrowings under the First Lien Term Loan bore interest at 5.75% per annum and borrowings under the Second Lien Term Loan bore interest at 7.50% per annum. There were no outstanding borrowings under the Revolving Credit Facility at September 30, 2012. Effective December 8, 2011, we entered into an interest rate cap agreement with JPMorgan with an aggregate notional amount of $71.3 million, which agreement caps the interest rate on an equivalent amount of our LIBOR-based term loans at a maximum of 3.0% per annum. The interest rate cap agreement matures on December 8, 2015.The representations, covenants and events of default in the 2011 Credit Facilities and the financial covenant in the First Lien Facility are customary for financing transactions of this nature. Events of default in the 2011 Credit Facilities include, among others, (a) the failure to pay when due the obligations owing under the credit facilities; (b) the failure to perform (and not timely remedy, if applicable) certain covenants; (c) certain cross defaults and cross accelerations; (d) the occurrence of bankruptcy or insolvency events; (e) certain judgments against us or any of its restricted subsidiaries; (f) the loss, revocation or suspension of, or any material impairment in the ability to use of or more of, any material Federal Communications Commission licenses; (g) any representation or warranty made, or report, certificate or financial statement delivered, to the lenders subsequently proven to have been incorrect in any material respect; and (h) the occurrence of a Change in Control (as defined in the First Lien Facility and the Second Lien Facility, as applicable). Upon the occurrence of an event of default, the lenders may terminate the loan commitments, accelerate all loans and exercise any of their rights under the First Lien Facility and the Second Lien Facility, as applicable, and the ancillary loan documents as a secured party.In the event amounts are outstanding under the Revolving Credit Facility, the First Lien Facility requires compliance with a consolidated total net leverage ratio. At September 30, 2012, this ratio would have been 7.50 to 1.0. Such ratio will be reduced in future periods if amounts are outstanding under the Revolving Credit Facility at an applicable date. The Second Lien Facility does not contain any financial covenants.The First Lien Facility also contains customary restrictive non-financial covenants, which, among other things, and with certain exceptions, limit our ability to incur or guarantee additional indebtedness; consummate asset sales, acquisitions or mergers; make investments; enter into transactions with affiliates; and pay dividends or repurchase stock.At September 30, 2012, we were in compliance with all of the required covenants under the First Lien Facility.Certain mandatory prepayments on the First Lien Term Loan and the Second Lien Term Loan are required upon the occurrence of specified events, including upon the incurrence of certain additional indebtedness, upon the sale of certain assets and upon the occurrence of certain condemnation or casualty events, and from excess cash flow.Our, Cumulus Holdings’ and our respective restricted subsidiaries’ obligations under the First Lien Facility and the Second Lien Facility are collateralized by a first priority lien and second priority lien, respectively, on substantially all of our, Cumulus Holdings’ and our respective restricted subsidiaries’ assets in which a security interest may lawfully be granted, including, without limitation, intellectual property and substantially all of the capital stock of our direct and indirect domestic subsidiaries and 66.0% of the capital stock of any future first-tier foreign subsidiaries. In addition, Cumulus Holdings’ obligations under the First Lien Facility and the Second Lien Facility are guaranteed by us and substantially all of our restricted subsidiaries, other than Cumulus Holdings.7.75% Senior NotesOn May 13, 2011, we issued $610.0 million aggregate principal amount of the 7.75% Senior Notes. Proceeds from the sale of the 7.75% Senior Notes were used to, among other things, repay the $575.8 million outstanding under the term loan facility under the Terminated Credit Agreement.In connection with the Internal Restructuring, on September 16, 2011, we and Cumulus Holdings entered into a supplemental indenture with the trustee under the indenture governing the 7.75% Senior Notes which provided for, among other things, the (i) assumption by Cumulus Holdings of all of our obligations; (ii) substitution of Cumulus Holdings for us as issuer; (iii) our release from all obligations as original issuer; and (iv) our guarantee of all of Cumulus Holdings’ obligations, in each case under the indenture and the 7.75% Senior Notes.Interest on the 7.75% Senior Notes is payable on each May 1 and November 1, commencing November 1, 2011. The 7.75% Senior Notes mature on May 1, 2019.Cumulus Holdings, as issuer of the 7.75% Senior Notes, may redeem all or part of the 7.75% Senior Notes at any time on or after May 1, 2015. At any time prior to May 1, 2014, Cumulus Holdings may also redeem up to 35.0% of the 7.75% Senior Notes using the proceeds from certain equity offerings. At any time prior to May 1, 2015, Cumulus Holdings may redeem some or all of the 7.75% Senior Notes at a price equal to 100% of the principal amount, plus a “make-whole” premium. If Cumulus Holdings sells certain assets or experiences specific kinds of changes in control, it will be required to make an offer to purchase the 7.75% Senior Notes.In connection with the substitution of Cumulus Holdings as the issuer of the 7.75% Senior Notes, we have also guaranteed the 7.75% Senior Notes. In addition, each existing and future domestic restricted subsidiary that guarantees our indebtedness, Cumulus Holdings’ indebtedness or indebtedness of our subsidiary guarantors (other than our subsidiaries that hold the licenses for our radio stations) guarantees, and will guarantee, the 7.75% Senior Notes. The 7.75% Senior Notes are senior unsecured obligations of Cumulus Holdings and rank equally in right of payment to all existing and future senior unsecured debt of Cumulus Holdings and senior in right of payment to all future subordinated debt of Cumulus Holdings. The 7.75% Senior Notes guarantees are our and the other guarantors’ senior unsecured obligations and rank equally in right of payment to all of our and the other guarantors’ existing and future senior debt and senior in right of payment to all of our and the other guarantors’ future subordinated debt. The 7.75% Senior Notes and the guarantees are effectively subordinated to any of Cumulus Holdings’, our or the guarantors’ existing and future secured debt to the extent of the value of the assets securing such debt. In addition, the 7.75% Senior Notes and the guarantees are structurally subordinated to all indebtedness and other liabilities, including preferred stock, of our non-guarantor subsidiaries, including all of our liabilities and the guarantors’ foreign subsidiaries and our subsidiaries that hold the licenses for our radio stations.For the three and nine months ended September 30, 2012, we recorded an aggregate of $2.5 million and $7.6 million, respectively, of amortization costs related to the credit facilities and 7.75% Senior Notes.2011 Annual Report on Form 10-K for the year ended December 31, 20112012 (the “2011“2012 Annual Report”).asat the reasonable assurance level as of SeptemberJune 30, 2012.SeptemberJune 30, 20122013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.20112012 Annual Report for information regarding known material risks that could affect our results of operations, financial condition and liquidity.SeptemberJune 30, 2012,2013, we did not purchase any shares of our Class A Common Stock. As10.1 — Amendment, dated May 31, 2013, to the First Lien Credit Agreement, dated as of September 16, 2011, as amended and restated as of December 20, 2012, among the Company, Cumulus Media Holdings, Inc., as borrower, and the agents and lenders thereto. 31.1 — Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 — Certification of the Principal ExecutiveFinancial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1 — Certification of the Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes- Oxley Act of 2002. 101 — The following materials from Cumulus Media Inc.’s Quarterly Report on Form 10-Q for the quarter ended SeptemberJune 30, 2012,2013, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Statement of Operations for the three months and ninesix months ended SeptemberJune 30, 20122013 and 2011,2012, (ii) Condensed Consolidated Balance Sheets as of SeptemberJune 30, 20122013 and December 31, 2011,2012, (iii) Condensed Consolidated Statement of Cash Flows for the ninesix months ended SeptemberJune 30, 20122013 and 2011,2012, and (iv) Notes to Condensed Consolidated Financial Statements***.*** Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files submitted as Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under those sections. CUMULUS MEDIA INC. November 5, 2012July 30, 2013 By: /s/ Joseph P. Hannan Joseph P. Hannan 10.1 — Amendment, dated May 31, 2013, to the First Lien Credit Agreement, dated as of September 16, 2011, as amended and restated as of December 20, 2012, among the Company, Cumulus Media Holdings, Inc., as borrower, and the agents and lenders thereto. 31.1 — Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 — Certification of the Principal ExecutiveFinancial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1 — Sarbanes-OxleySarbanes-Oxley Act of 2002.101 — The following materials from Cumulus Media Inc.’s Quarterly Report on Form 10-Q for the quarter ended SeptemberJune 30, 2012,2013, formatted in XBRL (eXtensible(extensible Business Reporting Language): (i) Condensed Consolidated Statement of Operations for the three months and ninesix months ended SeptemberJune 30, 20122013 and 2011,2012, (ii) Condensed Consolidated Balance Sheets as of SeptemberJune 30, 20122013 and December 31, 2011,2012, (iii) Condensed Consolidated Statement of Cash Flows for the ninesix months ended SeptemberJune 30, 20122013 and 2011,2012, and (iv) Notes to Condensed Consolidated Financial Statements***.*** Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files submitted as Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under those sections. Period Consolidated First Lien Net Leverage Ratio June 30, 2013 4.50 to 1.00 September 30, 2013 4.50 to 1.00 December 31, 2013 4.25 to 1.00 March 31, 2014 4.25 to 1.00 June 30, 2014 4.00 to 1.00 September 30, 2014 4.00 to 1.00 December 31, 2014 and thereafter 3.75 to 1.00 a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: July 30, 2013 By: Lewis W. Dickey, Jr. Chairman, President and Chief Executive Officer a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: July 30, 2013 By: Joseph P. Hannan Senior Vice President, Treasurer and Chief Financial Officer (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) Name: Lewis W. Dickey, Jr. Title: Chairman, President and Chief Executive Officer Name: Joseph P. Hannan Title: Senior Vice President, Treasurer and Chief Financial Officer