Cumulus Reports Fourth Quarter 2005 Results.ATLANTA Atlanta (ətlăn`tə, ăt–), city (1990 pop. 394,017), state capital and seat of Fulton co., NW Ga., on the Chattahoochee R. and Peachtree Creek, near the Appalachian foothills; inc. 1847. -- Cumulus Media Cumulus Media, Inc. (also known as Cumulus Broadcasting) NASDAQ: CMLS is a large owner of radio stations in markets in the United States with 307 stations in 61 markets as of December 31, 2005. Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CMLS CMLS Central Minnesota Legal Services CMLS Chemical Movement in Layered Soils CMLS Centralized Mail List Services (GSA) CMLS Contractor Maintenance & Logistics Support ) today reported financial results for the three and twelve month periods ended December December: see month. 31, 2005. Historical results are attached. Historical or "as reported" financial data of the Company may not be comparable from year to year because of the acquisition of radio stations by the Company during certain of the periods covered. Financial highlights (in thousands, except per share data and percentages) are as follows:
Three Months Ended
December 31, %
2005 2004 Change
------------- ------------- -------------
As Reported:
Net revenues $82,866 $84,391 (1.8)%
Station operating expenses
(including non-cash
contract termination costs) 54,267 51,938 4.5 %
Station operating income (1) 28,599 32,453 (11.9)%
Station operating income
margin (2) 34.5% 38.5%
Adjusted EBITDA (3) 23,740 28,184 (15.8)%
Free cash flow (4) 16,040 20,906 (23.3)%
Same Station Results: (5)
Net revenue $76,131 $77,331 (1.6)%
Station operating income (1) 26,043 29,588 (12.0)%
Station operating income
margin (2) 34.2% 38.3%
Pro Forma Results: (6)
Net revenue $82,414 $83,920 (1.8)%
Station operating income (1) 28,531 32,339 (11.8)%
Station operating income
margin (2) 34.6% 38.5%
Adjusted EBITDA (3) 23,672 28,070 (15.7)%
Adjusted EBITDA margin (7) 28.7% 33.4%
Twelve months ended
December 31, %
2005 2004 Change
------------- ------------- -------------
As Reported:
Net revenues $327,756 $320,132 2.4 %
Station operating expenses
(including non-cash
contract termination costs) 225,963 202,441 11.6 %
Station operating income (1) 115,364 117,691 (2.0)%
Station operating income
margin (2) 35.2% 36.8%
Adjusted EBITDA (3) 99,296 102,056 (2.7)%
Free cash flow (4) 71,268 74,859 (4.8)%
Same Station Results: (5)
Net revenue $301,332 $297,669 1.2 %
Station operating income (1) 106,001 109,532 (3.2)%
Station operating income
margin (2) 35.2% 36.8%
Pro Forma Results: (6)
Net revenue $325,907 $322,828 1.0 %
Station operating income (1) 115,169 118,124 (2.5)%
Station operating income
margin (2) 35.3% 36.6%
Adjusted EBITDA (3) 99,101 102,489 (3.3)%
Adjusted EBITDA margin (7) 30.4% 31.7%
(1) Station operating income is defined as operating income before
impairment charges, non cash contract termination costs,
depreciation and amortization, LMA fees, corporate general and
administrative expenses, non-cash stock compensation and
restructuring charges (credits). Station operating income is not a
measure of performance calculated in accordance with accounting
principles generally accepted in the United States ("GAAP").
Please see the attached table for a reconciliation of station
operating income to the most directly comparable GAAP financial
measure.
(2) Station operating income margin is defined as station operating
income as a percentage of net revenues.
(3) Adjusted EBITDA is defined as operating income before impairment
charges, non cash contract termination costs, depreciation and
amortization, LMA fees, non-cash stock compensation and
restructuring charges (credits). Adjusted EBITDA is not a measure
of performance calculated in accordance with GAAP. Please see the
attached table for a reconciliation of Adjusted EBITDA to the most
directly comparable GAAP financial measure.
(4) Free cash flow is defined as Adjusted EBITDA less LMA fee expense,
net interest expense, income taxes paid and maintenance capital
expenditures. Free cash flow is not a measure of performance
calculated in accordance with GAAP. Please see the attached table
for a reconciliation of free cash flow to the most directly
comparable GAAP financial measure.
(5) Same station results include the 275 stations in 56 markets owned
and operated since January 1, 2004.
(6) Pro forma results include the results of i) all acquisitions
entered into during the period that were operated under the terms
of local marketing agreements; and ii) all acquisitions and
dispositions consummated during the period, as if such
acquisitions and dispositions were completed at the beginning of
each period presented and exclude the results of Broadcast
Software International. As of December 31, 2005, the pro forma
totals include the results of 310 stations in 61 markets.
(7) Adjusted EBITDA margin is defined as Adjusted EBITDA as a
percentage of net revenues.
Results of Operations Three Months Ended December 31, 2005 Compared to Three Months Ended December 31, 2004 Net revenues for the fourth quarter of 2005 decreased $1.5 million to $82.9 million, a 1.8% decrease from the fourth quarter of 2004, primarily as a result of a 19.4% decrease in national advertising revenue, offset by a 3.9% increase in local advertising revenue. For the quarter, revenue grew in 27 of the Company's 61 markets. Station operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. increased $2.3 million to $54.3 million, an increase of 4.5% over the fourth quarter of 2004. During the second quarter of 2005, the Company launched its second station in Houston, Texas “Houston” redirects here. For other uses, see Houston (disambiguation). Houston (pronounced /'hjuːstən/) is the largest city in the state of Texas and the (acquired on March 31, 2005). The increased expenses associated with the new Houston Houston, city (1990 pop. 1,630,553), seat of Harris co., SE Tex., a deepwater port on the Houston Ship Channel; inc. 1837. Economy The fourth largest city in the nation and the largest in the entire South and Southwest, Houston is a port of entry; station, coupled with promotional expenses Noun 1. promotional expense - the cost of promoting a product business expense, trade expense - ordinary and necessary expenses incurred in a taxpayer's business or trade associated with the launch of the Company's rock station in Houston, were significant drivers of the fourth quarter station operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. increase. Excluding the effect of expenses attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the Houston market, station operating expenses would have increased by $1.3 million or 2.5% for the quarter. Station operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. (defined as operating income before impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charges, non cash contract termination Defense procurement: the cessation or cancellation, in whole or in part, of work under a prime contract or a subcontract thereunder for the convenience of, or at the option of, the government, or due to failure of the contractor to perform in accordance with the terms of the contract (default). costs, depreciation and amortization, LMA LMA left mentoanterior (position of fetus). fees, corporate general and administrative expenses, non-cash stock compensation and restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. (credits)) was $28.6 million, a decrease of 11.9% from the fourth quarter of 2004, for the reasons discussed above. On a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma basis, which includes the results of all stations operated during the period under the terms of local marketing agreements and gives effect to station acquisitions completed during the period as if each were consummated con·sum·mate tr.v. con·sum·mat·ed, con·sum·mat·ing, con·sum·mates 1. a. To bring to completion or fruition; conclude: consummate a business transaction. b. at the beginning of the periods presented and excludes the results of Broadcast Software International, net revenues for the fourth quarter of 2005 decreased $1.5 million to $82.4 million, a decrease of 1.8% from the fourth quarter of 2004. In terms of revenue composition, pro forma local advertising revenues increased approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 3.9%, offset by a 19.4% decrease in pro forma national advertising revenues. Pro forma station operating expenses increased $2.3 million to $53.9 million, an increase of 4.5% over the fourth quarter of 2004. This increase was primarily due to (1) increased expenses incurred during the period associated with the launch of the Company's second station in Houston, Texas, (2) promotional expenses incurred during the period associated with the launch of the Company's rock station in Houston and (3) general expense increases associated with operating the Company's station portfolio. Excluding the effect of expenses attributable to the Houston, Texas market during the fourth quarter, pro forma station operating expenses would have increased by $1.3 million or 2.5% for the fourth quarter. Pro forma station operating income decreased $3.8 million to $28.5 million, a decrease of 11.8% from the fourth quarter of 2004. Corporate general and administrative expenses increased $0.6 million to $4.9 million, an increase of 13.8% over the fourth quarter of 2004. This increase was primarily attributable to increased legal costs incurred in the fourth quarter of 2005. In connection with the Company's annual impairment evaluation of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. , which was completed in the fourth quarter, the Company recorded an impairment charge of $264.1 million in order to reduce the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of certain broadcast licenses and goodwill to their respective fair values. Interest expense increased by $1.4 million or 29.8% to $6.1 million for the three months ended December 31, 2005 as compared with $4.7 million in the prior year's period. This increase was primarily due to a higher average cost of bank debt and increased levels of bank debt outstanding during the current quarter, offset by a $0.4 million gain recorded in the current quarter as a decrease to interest expense related to the adjustment of the fair value of certain derivative instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. . For the three months ended December 31, 2005, the Company recorded an income tax benefit of $34.5 million, as compared with income tax expense of $6.3 million in the prior year's period. The income tax benefit in the current period is primarily due to the reversal reversal n. the decision of a court of appeal ruling that the judgment of a lower court was incorrect and is reversed. The result is that the lower court which tried the case is instructed to dismiss the original action, retry the case, or is ordered to change its of deferred tax liabilities associated with intangible assets whose carrying value was reduced as a result of the Company's impairment evaluation discussed above. Excluding the effects of the non-cash impairment charge and related income tax benefit mentioned above, basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. income per common share was $0.07 for the three months ended December 31, 2005. As-reported basic and diluted loss per common share was $(3.45) for the three months ended December 31, 2005 as compared with basic and diluted income per common share of $0.14 during the prior year. Twelve Months Ended December 31, 2005 Compared to Twelve Months Ended December31, 2004 Net revenues for the twelve months ended December 31, 2005 increased $7.6 million to $327.8 million, a 2.4% increase from the same period in 2004, primarily as a result of revenues associated with station acquisitions completed in March 2004 in the Rochester Rochester (rŏch`ĕstər, –ĭstər). 1 City (1990 pop. 70,745), seat of Olmsted co., SE Minn.; inc. 1858. , Minnesota Minnesota, state, United States Minnesota (mĭn'ĭsō`tə), upper midwestern state of the United States. It is bordered by Lake Superior and Wisconsin (E), Iowa (S), South Dakota and North Dakota (W), and the Canadian provinces and Sioux Falls, South Dakota Sioux Falls (IPA: [su fɑlz]) is the largest city in the U.S. state of South Dakota, and the county seat of Minnehaha County.GR6 The 2007 city population is 148,000. markets. Station operating expenses increased $23.5 million to $226.0 million, an increase of 11.6% over the same period in 2004. For the twelve months ended December 31, 2005 the Company recorded a non-cash contract termination cost charge totaling $13.6 million related to the second quarter termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. of the Company's national sales representation contract with Interep National Radio Sales, Inc. This non cash charge, coupled with increased expenses associated with the station acquisitions completed in March 2004, are the primary drivers of the increase for the twelve months ended December 31, 2005. Station operating income (defined as operating income before impairment charges, non cash termination costs, depreciation and amortization, LMA fees, corporate general and administrative expenses, non-cash stock compensation and restructuring charges (credits)) decreased $2.3 million to $115.4 million, a decrease of 2.0% from the same period in 2004, for the reasons discussed above. On a pro forma basis, which includes the results of all stations operated during the period under the terms of local marketing agreements and gives effect to station acquisitions completed during the twelve month period as if each were consummated at the beginning of the periods presented and excludes the results of Broadcast Software International, net revenues for the twelve months ended December 31, 2005 increased $3.1 million to $325.9 million, an increase of 1.0% from the same period in 2004. In terms of revenue composition, pro forma local advertising revenues increased approximately 4.5% for the period, offset by a 13.5% decrease in pro forma national advertising revenues. Pro forma station operating expenses increased $6.0 million to $210.7 million, an increase of 2.9% over the same period in 2004. This increase was primarily due to (1) expenses incurred associated with the launch of the Company's second station in Houston, Texas, (2) promotional expenses incurred associated with the launch of the Company's rock station in Houston and (3) general expense increases associated with operating the Company's station portfolio. Excluding the effect of expenses attributable to the Houston market, pro forma station operating expenses would have increased by $3.4 million or 1.7% for the twelve months ended December 31, 2005. Pro forma station operating income decreased $3.0 million to $115.2 million, a decrease of 2.5% from the same period in 2004. Corporate general and administrative expenses increased $0.4 million to $16.1 million, an increase of 2.8% over the same period in 2004. This increase was primarily attributable to increased legal costs incurred in 2005. Non-cash stock compensation expense increased to $3.1 million for the twelve months ended December 31, 2005, as compared with a $0.4 million non-cash stock compensation credit in the prior year. In connection with the Company's annual impairment evaluation of intangible assets, which was completed in the fourth quarter, the Company recorded an impairment charge of $264.1 million in order to reduce the carrying value of certain broadcast licenses and goodwill to their respective fair values. Interest expense increased by $3.7 million or 18.7% to $23.6 million for the twelve months ended December 31, 2005 as compared with $19.9 million in the prior year. This increase was primarily due to a higher average cost of bank debt and increased levels of bank debt outstanding during 2005. Losses on early extinguishments of debt were $1.2 million for the twelve months ended December 31, 2005 as compared with $2.6 million during the prior year. Losses in 2005 relate to the retirement of the Company's prior term and revolving loan facilities in connection with the execution of a new $800 million credit agreement in July July: see month. 2005. Losses in the prior year related to the completion of an amendment and restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of the Company's then existing credit agreement and the related retirement and replacement of our term loans. For the twelve months ended December 31, 2005, the Company recorded an income tax benefit of $14.0 million, as compared with income tax expense of $25.5 million in the prior period. Excluding the effects of the non-cash impairment charge and related income tax benefit mentioned above, basic and diluted income per common share was $0.14 for the twelve months ended December 31, 2005. As-reported basic income per common share was $(3.19) for the twelve months ended December 31, 2005 as compared with basic income per common share of $0.44 for the prior year. As-reported diluted income per common share was $(3.19) for the twelve months ended December 31, 2005 as compared with diluted income per common share of $0.43 for the prior year. Share Repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. Program On September September: see month. 28, 2004, the Company announced that its Board of Directors had authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: the purchase, from time to time, of up to $100 million of its Class A Common Stock. Subsequently, on December 7, 2005, the Company announced that is Board of Directors had authorized the purchase of up to an additional $100 million of its Class A Common stock. Through December 31, 2005, the Company completed the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of 8,770,652 shares of its Class A Common Stock for $110.4 million, at an average repurchase price per share of $12.57. Subsequent to December 31, 2005, the Company has repurchased an additional 2,011,500 shares of its Class A Common Stock for $25.7 million, at an average repurchase price per share of $12.77. Cumulatively, the Company has repurchased a total of 10,782,152 shares of its Class A Common Stock for $136.1 million under the Board authorized programs. As of February February: see month. 28, 2006, 59,925,324 shares of common stock were outstanding. Susquehanna Susquehanna (səskwĭhăn`ə), river, 444 mi (715 km) long, rising in Otsego Lake, at Cooperstown, N.Y., and zigzagging SE and SW through E central Pa. to Chesapeake Bay near Havre de Grace, Md. Radio Acquisition On October October: see month. 31, 2005 the Company announced that, together with three private equity firms, it has formed Cumulus Media Partners, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control ("CMP CMP (cytidine monophosphate): see cytosine. (1) (CMP Media LLC, Manhasset, NY, www.cmp.com) Part of United Business Media, CMP is a leading integrated media company that offers a wide variety of publications and services in the information "), which has entered into agreements to acquire the radio broadcasting The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. business of Susquehanna Pfaltzgraff The Susquehanna Pfaltzgraff Company is a conglomerate of companies that started in the 19th century with Johann George Pfaltzgraff's emigration from Germany to York, Pennsylvania (in the Susquehanna Valley). Co. ("Susquehanna"). The acquisition, which includes 33 radio stations in 8 markets, is expected to close in the first half of 2006 and is subject to regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. approvals, as well as other closing conditions. Pursuant to a capital contribution agreement, the Company will contribute its Kansas City, Missouri Kansas City is the largest city in the state of Missouri. It encompasses parts of Jackson, Clay, Cass, and Platte counties and is the anchor city of the Kansas City Metropolitan Area, the second largest in Missouri, which includes counties in both Missouri and Kansas. and Houston, Texas radio operations and assets to CMP, in exchange for an equity stake initially valued at approximately 25% of the equity of CMP. Capital Expenditures, Leverage and Financial Position Capital expenditures for the three months ended December 31, 2005 totaled $2.4 million and were comprised approximately of $1.7 million of maintenance related capital expenditures. Capital expenditures for the full year of 2005 totaled $9.3 million and were comprised approximately of $4.8 million of maintenance related capital expenditures. For 2006, we expect to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. maintenance related capital expenditures and capital expenditures associated with the implementation of HD Radio technology radio rollout of approximately $5.0 million. Leverage, defined under the terms of the Company's credit facility as total indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. divided by trailing 12-month Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become as adjusted for certain non-recurring expenses, was 5.7x at December 31, 2005. The ratio of net long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. to trailing 12-month pro forma Adjusted EBITDA as of December 31, 2005 is approximately 5.7x. Outlook The following statements and data are based on current expectations. These statements are forward looking and actual results may differ materially. Cumulus cumulus: see cloud. expects first quarter 2006 pro forma net revenue to grow 3% versus the prior year's period. For the full year 2006, we expect our pro forma station operating expenses to grow by approximately 2.5%. However, for the first quarter of 2006, we expect pro forma station operating expenses to grow more significantly as we continue to promote our newly launched brands in Houston and Kansas City Kansas City, two adjacent cities of the same name, one (1990 pop. 149,767), seat of Wyandotte co., NE Kansas (inc. 1859), the other (1990 pop. 435,146), Clay, Jackson, and Platte counties, NW Mo. (inc. 1850). (note that the Company has agreed to contribute its Houston and Kansas City stations to CMP in connection with the Susquehanna acquisition, which is expected to be consummated in the second quarter of 2005). Further, the following table summarizes selected projected financial results for the first quarter of 2006 (dollars in thousands):
Estimated
Q1 2006
-------------
Depreciation and amortization 5,275
LMA fees 210
Non cash stock compensation 3,500
Interest expense 7,790
Interest income 100
Income tax expense (non cash) 7,200
Non-GAAP Financial Measures Cumulus Media Inc. utilizes certain financial measures that are not calculated in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). to assess financial performance and profitability. The non-GAAP financial measures used in this release are station operating income, Adjusted EBITDA and free cash flow. Station operating income is defined as operating income before impairment charges, non cash contract termination costs, depreciation and amortization, LMA fees, corporate general and administrative expenses, non-cash stock compensation and restructuring charges (credits). Adjusted EBITDA is defined as operating income before impairment charges, non cash contract termination costs, depreciation and amortization, LMA fees, non-cash stock compensation and restructuring charges (credits). Free cash flow is defined as Adjusted EBITDA less LMA fee expense, net interest expense, income taxes paid and maintenance capital expenditures. Station Operating Income Station operating income serves as a starting point Noun 1. starting point - earliest limiting point terminus a quo commencement, get-go, offset, outset, showtime, starting time, beginning, start, kickoff, first - the time at which something is supposed to begin; "they got an early start"; "she knew from the for our management to analyze an·a·lyze v. 1. To examine methodically by separating into parts and studying their interrelations. 2. To separate a chemical substance into its constituent elements to determine their nature or proportions. 3. the cash flow generated by our business by measuring the profitability of our station portfolio and its contribution to the funding of our other operating expenses and to the funding of debt service and acquisitions. Station operating income isolates the amount of income generated solely by our stations and assists our management in evaluating the earnings potential of our station portfolio. In deriving de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. this measure, we exclude non cash contract termination costs as the charge will never represent a cash obligation to our station operations. We exclude depreciation and amortization due to the insignificant investment in tangible assets Tangible Asset An asset that has a physical form such as machinery, buildings and land. Notes: This is the opposite of an intangible asset such as a patent or trademark. Whether an asset is tangible or intangible isn't inherently good or bad. required to operate our stations and the relatively insignificant amount of intangible assets subject to amortization. We exclude LMA fees from this measure, even though it requires a cash commitment, due to the insignificance in·sig·nif·i·cance n. The quality or state of being insignificant. Noun 1. insignificance - the quality of having little or no significance unimportance - the quality of not being important or worthy of note and temporary nature of such fees. Corporate expenses, despite representing an additional significant cash commitment, are excluded in an effort to present the operating performance of our stations exclusive of the corporate resources employed. We believe this is important to our investors because it highlights the gross margin generated by our station portfolio. Finally, we exclude non cash stock compensation, restructuring charges (credits) and impairment charges from the measure as they do not represent cash payments related to the operation of the stations. We believe that station operating income, although not a measure that is calculated in accordance with GAAP, nevertheless is the most frequently used financial measure in determining the market value of a radio station or group of stations. We have observed ob·serve v. ob·served, ob·serv·ing, ob·serves v.tr. 1. To be or become aware of, especially through careful and directed attention; notice. 2. that station operating income is commonly employed by firms that provide appraisal services to the broadcast industry in valuing radio stations. Further, in each of the more than 140 radio station acquisitions we have completed since our inception INCEPTION. The commencement; the beginning. In making a will, for example, the writing is its inception. 3 Co. 31 b; Plowd. 343. Vide Consummation; Progression. , we have used station operating income as our primary metric to evaluate and negotiate the purchase price to be paid. Given its relevance to the estimated value of a radio station, we believe, and our experience indicates, that investors consider the metric to be extremely useful in order to determine the value of our portfolio of stations. We believe that station operating income is the most commonly used financial measure employed by the investment community to compare the performance of radio station operators. Finally, station operating income is the primary metric that our management uses to evaluate the performance and results of our stations. Our management uses the measure to assess the performance of our station managers and our board of directors uses it to determine the relative performance of our executive management. As a result, in disclosing station operating income, we are providing our stockholders, and the public, with an analysis of our performance that is consistent with that utilized by our management. Station operating income should not be considered in isolation or as a substitute for net income, operating income (loss), cash flows from operating activities or any other measure for determining our operating performance or liquidity that is calculated in accordance with GAAP. Adjusted EBITDA Adjusted EBITDA is also utilized by our management to analyze the cash flow generated by our business. This measure isolates the amount of income generated by our stations after the incurrence In`cur´rence n. 1. The act of incurring, bringing on, or subjecting one's self to (something troublesome or burdensome); as, the incurrence of guilt, debt, responsibility, etc. s> Noun 1. of corporate general and administrative expenses. Management uses this measure to determine the contribution of our station portfolio, including the corporate resources employed to manage the portfolio, to the funding of our other operating expenses and to the funding of debt service and acquisitions. In deriving this measure, we exclude non cash contract termination costs as the charge will never represent a cash obligation to our Company. We exclude depreciation and amortization due to the insignificant investment in tangible assets required to operate our stations and corporate office and the relatively insignificant amount of intangible assets subject to amortization. We exclude LMA fees from this measure, even though it requires a cash commitment, due to the insignificance and generally temporary nature of such fees. Finally, we exclude non cash stock compensation, restructuring charges (credits) and impairment charges from the measure as they do not represent cash payments related to the operation of the stations. We believe 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. We have also observed that Adjusted EBITDA is routinely employed to evaluate and negotiate the potential purchase price for radio broadcasting companies. Given the relevance to the overall value of the Company, we believe that investors consider the metric to be extremely useful. Adjusted EBITDA should not be considered in isolation or as a substitute for net income, operating income (loss), cash flows from operating activities or any other measure for determining our operating performance or liquidity that is calculated in accordance with GAAP. Free Cash Flow Free cash flow is also utilized by management to analyze the cash generated by our business. Free cash flow measures the amount of income generated each period that could be used to fund acquisitions or repay debt, after funding station and corporate expenses, capital expenditures and payment of LMA fees and debt service. We believe that free cash flow, although not a measure that is calculated in accordance with GAAP, is commonly employed by the investment community to evaluate a company's ability to pay down debt, pay dividends, repurchase stock and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. facilitate the further growth of a company through acquisition or internal development. We further believe that free cash flow is also utilized by investors as a measure in determining the market value of a radio company. Free cash flow should not be considered in isolation or as a substitute for net income, operating income (loss), cash flows from operating activities or any other measure for determining our operating performance or liquidity that is calculated in accordance with GAAP. As station operating income, Adjusted EBITDA and free cash flow are measures that are not calculated in accordance with GAAP, they may not be comparable to similarly titled measures employed by other companies. See the quantitative quantitative /quan·ti·ta·tive/ (kwahn´ti-ta?tiv) 1. denoting or expressing a quantity. 2. relating to the proportionate quantities or to the amount of the constituents of a compound. reconciliation of these measures to their most directly comparable financial measure calculated and presented in accordance with GAAP that follows below. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Certain statements in this release, including statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the integration of acquisitions and any earnings or revenue projections, are "forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. " statements, which are statements that relate to Cumulus Media Inc.'s future plans, revenues, station operating income, earnings, objectives, expectations, performance, and similar projections, as well as any facts or assumptions underlying these statements or projections. Actual results may differ materially from the results expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. in these forward-looking statements, due to various risks, uncertainties or other factors. These factors include competition within the radio broadcasting industry, advertising demand in our markets, the possibility that advertisers may cancel (character) Cancel - (CAN, Control-X) ASCII character 24. or postpone post·pone tr.v. post·poned, post·pon·ing, post·pones 1. To delay until a future time; put off. See Synonyms at defer1. 2. To place after in importance; subordinate. schedules in response to national or world events, competition for audience share, our success in executing and integrating acquisitions, our ability to generate sufficient cash flow to meet our debt service obligations and finance operations The execution of the joint finance mission to provide financial advice and guidance, support of the procurement process, providing pay support, and providing disbursing support.See also financial management. , and other risk factors described from time to time in Cumulus Media's filings with the Securities and Exchange Commission, including its annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. . Cumulus Media assumes no responsibility to update the forward-looking statements contained in this release as a result of new information, future events or otherwise. Cumulus Media Inc. is the second-largest radio company in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. based on station count. Giving effect to the completion of all pending acquisitions and divestitures, Cumulus Media, directly and through its investment in Cumulus Media Partners, will own or operate 345 radio stations in 67 U.S. media markets. The Company's headquarters are in Atlanta, Georgia Georgia, country, Asia Georgia (jôr`jə), Georgian Sakartvelo, Rus. Gruziya, officially Republic of Georgia, republic (2005 est. pop. 4,677,000), c.26,900 sq mi (69,700 sq km), in W Transcaucasia. , and its web site is www.cumulus.com. Cumulus Media Inc. shares are traded on the NASDAQ National Market under the symbol CMLS. Cumulus Media will host a teleconference later today at 11:00 a.m. Eastern Time to discuss fourth quarter results. To access this teleconference live, please visit the company's web site at www.cumulus.com or dial (888) 202-2422 for domestic and international callers. Approximately one hour after completion of the call, a replay can be accessed until 11:59 PM ET, March 23, 2006. Domestic and international callers can access the replay by dialing (888) 203-1112, pass code 1487552.
CUMULUS MEDIA INC.
Consolidated Statements of Operations
(Unaudited)
(in thousands, except per share data)
Three Months Three Months
Ended Ended
December 31, December 31,
2005 2004
------------- -------------
Net revenues 82,866 84,391
Operating expenses:
Station operating expenses, excluding
depreciation, amortization and LMA fees
(including non-cash contract
termination costs of $0, $0, $13,571
and $0, respectively) 54,267 51,938
Depreciation and amortization 4,946 5,896
LMA fees 262 943
Corporate general and administrative
(excluding non-cash stock compensation
expense) 4,859 4,269
Non-cash stock compensation 679 63
Restructuring charges (credits) -- (67)
Impairment charge 264,099 --
------------- -------------
Total operating expenses 329,112 63,042
------------- -------------
Operating income (loss) (246,246) 21,349
------------- -------------
Nonoperating income (expense):
Interest expense (6,114) (4,709)
Interest income 145 181
Loss on early extinguishments of debt -- (21)
Other income (expense), net (668) (689)
------------- -------------
Total nonoperating expenses, net (6,637) (5,238)
------------- -------------
Income (loss) before income taxes (252,883) 16,111
Income tax benefit (expense) 34,535 (6,260)
------------- -------------
Net income (loss) $ (218,348) $ 9,851
============= =============
Income (loss) per common share:
Basic income (loss) per common share $ (3.45) $ 0.14
============= =============
Diluted income (loss) per common share $ (3.45) $ 0.14
============= =============
Weighted average basic common shares
outstanding 63,272 68,983
============= =============
Weighted average diluted common shares
outstanding 63,272 70,839
============= =============
Twelve months Twelve months
Ended Ended
December 31, December 31,
2005 2004
------------- -------------
Net revenues 327,756 320,132
Operating expenses:
Station operating expenses, excluding
depreciation, amortization and LMA fees
(including non-cash contract
termination costs of $0, $0, $13,571
and $0, respectively) 225,963 202,441
Depreciation and amortization 21,223 21,168
LMA fees 981 3,002
Corporate general and administrative
(excluding non-cash stock compensation
expense) 16,068 15,635
Non-cash stock compensation 3,121 (375)
Restructuring charges (credits) (215) (108)
Impairment charge 264,099 --
------------- -------------
Total operating expenses 531,240 241,763
------------- -------------
Operating income (loss) (203,484) 78,369
------------- -------------
Nonoperating income (expense):
Interest expense (23,588) (19,870)
Interest income 1,101 673
Loss on early extinguishments of debt (1,192) (2,557)
Other income (expense), net (239) (699)
------------- -------------
Total nonoperating expenses, net (23,918) (22,453)
------------- -------------
Income (loss) before income taxes (227,402) 55,916
Income tax benefit (expense) 14,035 (25,547)
------------- -------------
Net income (loss) $ (213,367) $ 30,369
============= =============
Income (loss) per common share:
Basic income (loss) per common share $ (3.19) $ 0.44
============= =============
Diluted income (loss) per common share $ (3.19) $ 0.43
============= =============
Weighted average basic common shares
outstanding 66,911 68,789
============= =============
Weighted average diluted common shares
outstanding 66,911 71,308
============= =============
Reconciliation of Non-GAAP Financial Measures to GAAP Counterparts
The following table reconciles net cash provided by operating
activities, the most directly comparable financial measure calculated
and presented in accordance with GAAP, to station operating income and
Adjusted EBITDA (dollars in thousands).
Three Months Three Months
Ended Ended
December 31, December 31,
2005 2004
------------- -------------
Net cash provided by operating activities $ 18,858 $ 23,488
Cash payments for LMA fees 261 943
Excess of accrual based station
operating expenses to cash payments (2,964) (2,448)
Cash payments/(receipts) for Corporate
general and administrative expenses in
excess of accrual based expense 1,345 841
Cash payments for interest expense 5,890 4,671
Cash interest income (145) (181)
Other cash payments/adjustments 495 870
Adjusted EBITDA $ 23,740 $ 28,184
------------- -------------
Add: Accrual based corporate general and
administrative expenses 4,859 4,269
------------- -------------
Station operating income $ 28,599 $ 32,453
============= =============
Twelve months Twelve months
Ended Ended
December 31, December 31,
2005 2004
------------- -------------
Net cash provided by operating activities $ 78,395 $ 75,013
Cash payments for LMA fees 981 3,002
Excess of accrual based station
operating expenses to cash payments (953) 1,893
Cash payments/(receipts) for Corporate
general and administrative expenses in
excess of accrual based expense (1,454) 1,536
Cash payments for interest expense 23,072 20,398
Cash interest income (1,101) (674)
Other cash payments/adjustments 356 888
Adjusted EBITDA $ 99,296 $ 102,056
------------- -------------
Add: Accrual based corporate general and
administrative expenses 16,068 15,635
------------- -------------
Station operating income $ 115,364 $ 117,691
============= =============
The following table reconciles operating income, the most directly
comparable financial measure calculated and presented in accordance
with GAAP, to free cash flow (dollars in thousands).
Three Months Three Months
Ended Ended
December 31, December 31,
2005 2004
------------- -------------
Operating income (loss) $ (246,246) $ 21,349
Add:
Non cash contract termination costs -- --
Impairment charge 264,099 --
Non cash stock compensation 679 63
Restructuring charges -- (67)
Depreciation and amortization 4,946 5,896
Less:
Interest expense, net of interest income (5,969) (4,528)
Maintenance capital expenditures (1,469) (1,806)
------------- -------------
Free cash flow $ 16,040 $ 20,907
============= =============
Twelve months Twelve months
Ended Ended
December 31, December 31,
2005 2004
------------- -------------
Operating income (loss) $ (203,484) $ 78,369
Add:
Non cash contract termination costs 13,571 --
Impairment charge 264,099 --
Non cash stock compensation 3,121 (375)
Restructuring charges (215) (108)
Depreciation and amortization 21,223 21,168
Less:
Interest expense, net of interest income (22,487) (19,197)
Maintenance capital expenditures (4,560) (4,998)
------------- -------------
Free cash flow $ 71,268 $ 74,859
============= =============
Cumulus Media Inc.
Reconciliation between Historical GAAP Results
And Pro Forma Results for the Three Months Ended
December 31, 2005
(dollars in thousands)
Historical Pro Forma
GAAP Adjustments Results
------------- ------------- -------------
Net revenue $82,866 $(452)(1) $82,414
Station operating expenses $54,267 $(384)(2) $53,883
Station operating income $28,599 $(68) $28,531
Corporate overhead $4,859 -- $4,859
Adjusted EBITDA $23,740 $(68) $23,672
(1) Reflects the elimination of revenues from Broadcast Software
International.
(2) Reflects the elimination of operating expenses from Broadcast
Software International.
Cumulus Media Inc.
Reconciliation between Historical GAAP Results
And Pro Forma Results for the Twelve months ended
December 31, 2005
(dollars in thousands)
Historical Pro Forma
GAAP Adjustments Results
------------- ------------- -------------
Net revenue $327,756 $(1,849)(3) $325,907
Station operating expenses $225,963 $(15,225)(4) $210,738
Station operating income $115,364 $(195) $115,169
Corporate overhead $16,068 -- $16,068
Adjusted EBITDA $99,296 $(195) $99,101
(3) Reflects the elimination of revenues from Broadcast Software
International.
(4) Reflects the elimination of operating expenses from Broadcast
Software International $1,654 and elimination of non cash contract
termination costs of $13,571.
CAPITALIZATION
(dollars in thousands)
December 31, December 31,
2005 2005
Actual Pro Forma(1)
------------- -------------
Cash and cash equivalents $5,121 $5,121
============= =============
Long-term debt, including current
maturities:
Bank Debt 569,000 568,532
------------- -------------
Total Stockholders' equity 586,010 586,010
------------- -------------
Total capitalization $1,155,010 $1,154,542
============= =============
(1) Pro forma for cash borrowings needed to complete pending
acquisitions.
Net Debt to TTM Pro Forma Adjusted EBITDA (2) 5.7x
(2) Ratio calculated as (dollars in thousands):
Funded bank debt as of December 31, 2005 $569,000
Plus: Cash required to complete acquisitions, net
of dispositions 4,653
Less: Cash balance as of December 31, 2005 (5,121)
Net Debt as of December 31, 2005 568,532
Divided by Trailing Twelve Months Pro Forma
Adjusted EBITDA
(includes the results of all pending
acquisitions) 99,101
Ratio 5.7x
CUMULUS MEDIA INC.
2005 Quarterly Results
Station Operating Income Margin Composition Analysis
(dollars in thousands)
The following analysis of our market portfolio separates each market
into one of six categories based upon trailing twelve month station
operating income performance for analytical purposes only. We believe
this analytical distribution of our markets is helpful in assessing
the portfolio's financial and operational development.
Pro Forma for the Trailing Twelve months ended December 31, 2005:
----------------------------------------------------------------
Station Avg Station
Station Operating # of Operating Operating
Income Margin % Markets Revenue Income Income %
------------------ --------- ------------- ------------- -------------
greater than 35.0% 28 $184,942 $81,926 44.3 %
25.0% to 34.9% 14 56,074 16,681 29.7 %
20.0% to 24.9% 8 16,091 3,717 23.1 %
10.0% to 19.9% 4 26,237 4,317 16.5 %
0.0% to 9.9% 5 10,536 532 5.1 %
less than 0.0% 2 6,202 (899) (14.5)%
--------- ------------- ------------- -------------
Subtotal 61 $300,083 $106,275 35.4 %
Trade, Other -- 25,824 8,895 34.4 %
--------- ------------- ------------- -------------
Totals 61 $325,907 $115,170 35.3 %
Pro Forma for the Trailing Twelve months ended September 30, 2005:
-----------------------------------------------------------------
Station Avg Station
Station Operating # of Operating Operating
Income Margin % Markets Revenue Income Income %
------------------ --------- ------------- ------------- -------------
greater than 35.0% 28 $187,147 $85,046 45.4 %
25.0% to 34.9% 14 60,184 17,813 29.6 %
20.0% to 24.9% 8 24,900 5,589 22.4 %
10.0% to 19.9% 4 14,178 2,579 18.2 %
0.0% to 9.9% 5 10,909 856 7.8 %
less than 0.0% 2 4,927 (1,116) (22.7)%
--------- ------------- ------------- -------------
Subtotal 61 $302,245 $110,767 36.6 %
Trade, Other -- 25,168 8,209 32.6 %
--------- ------------- ------------- -------------
Totals 61 $327,413 $118,976 36.3 %
Activity for
Markets Markets Q4 2005
Station Operating at Moving Markets Net Change Markets at
Income Margin % 9/30/05 Out Moving In In Category 12/31/05
------------------ ------- ------- ------------ ----------- ----------
greater than 35.0% 28 -- -- 28
25.0% to 34.9% 14 2 1 (1) 13
20.0% to 24.9% 8 5 2 (3) 5
10.0% to 19.9% 4 -- 4 4 8
0.0% to 9.9% 5 1 1 -- 5
less than 0.0% 2 1 1 -- 2
------- ------- ------------ ----------- ----------
Total 61 9 9 -- 61
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