Cumulus Reports Second 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 six months ended June June: see month. 30, 2005. Historical results are attached. Historical or "as reported" financial data of Cumulus Media Inc. 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
June 30, %
2005 2004 Change
---------------------------------
As Reported:
Net revenues $ 87,440 $ 86,314 1.3%
Station operating expenses 54,506 52,620 3.6%
Station operating income (1) 32,934 33,694 (2.3)%
Station operating income margin (2) 37.7% 39.0%
Adjusted EBITDA (3) 29,084 29,824 (2.5)%
Free cash flow (4) 20,823 24,119 (13.7)%
Same Station Results: (5)
Net revenue $ 80,357 $ 79,288 1.3%
Station operating income (1) 30,516 31,231 (2.3)%
Station operating income margin (2) 38.0% 39.4%
Pro Forma Results: (6)
Net revenue $ 86,827 $ 85,850 1.1%
Station operating income (1) 32,909 33,604 (2.1)%
Station operating income margin (2) 37.9% 39.1%
Adjusted EBITDA (3) 29,059 29,734 (2.3)%
Adjusted EBITDA margin (7) 33.5% 34.6%
Six Months Ended
June 30, %
2005 2004 Change
---------------------------------
As Reported:
Net revenues $ 159,563 $ 151,764 5.1%
Station operating expenses 105,024 98,915 6.2%
Station operating income (1) 54,539 52,849 3.2%
Station operating income margin (2) 34.2% 34.8%
Adjusted EBITDA (3) 46,944 45,423 3.3%
Free cash flow (4) 31,894 32,567 (2.1)%
Same Station Results: (5)
Net revenue $ 146,776 $ 143,198 2.5%
Station operating income (1) 50,581 50,191 0.8%
Station operating income margin (2) 34.5% 35.1%
Pro Forma Results: (6)
Net revenue $ 158,536 $ 155,335 2.1%
Station operating income (1) 54,459 53,481 1.8%
Station operating income margin (2) 34.4% 34.4%
Adjusted EBITDA (3) 46,864 46,055 1.8%
Adjusted EBITDA margin (7) 29.6% 29.6%
(1) Station operating income is defined as operating income before
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 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 June 30, 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 June 30, 2005 Compared to Three Months Ended June 30, 2004 Net revenues for the second quarter of 2005 increased $1.1 million to $87.4 million, a 1.3% increase from the second quarter of 2004, primarily as a result of a 5.2% increase in local advertising revenue, offset by a 17.7% decrease in national advertising revenue. For the quarter, revenue grew in 33 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 $1.9 million to $54.5 million, an increase of 3.6% over the second 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 first quarter launch of the Company's rock station in Houston, were significant drivers of the second 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, Texas market, station operating expenses would have increased by $1.1 million or 2.2% 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 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)) decreased $0.8 million to $32.9 million, a decrease of 2.3% from the second 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 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 second quarter of 2005 increased $1.0 million to $86.8 million, an increase of 1.1% from the second 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. 5.2%, offset by a 17.7% decrease in pro forma national advertising revenues. Pro forma station operating expenses increased $1.7 million to $53.9 million, an increase of 3.2% over the second quarter of 2004. This increase was primarily due to 1) expenses incurred associated with the second quarter launch of the Company's new station in Houston, Texas, 2) promotional expenses incurred in the second quarter associated with the first quarter 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 second quarter, pro forma station operating expenses would have increased by $0.9 million or 1.8% for the second quarter. Pro forma station operating income (defined as operating income (loss) before depreciation, amortization, LMA fees, corporate general and administrative expenses, non-cash stock compensation and restructuring charges (credits); and excluding the results of Broadcast Software International) decreased $0.7 million to $32.9 million, a decrease of 2.1% from the second quarter of 2004. Non-cash stock compensation expense increased to $1.7 million for the second quarter of 2005, as compared with a $0.1 million non-cash stock compensation credit in the prior year. Non-cash stock compensation recorded in the current period is primarily comprised of 1) expense associated with 250,000 restricted shares of Class A Common Stock awarded to Lewis W. Dickey, Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , in April 2005, pursuant to his employment agreement dated October October: see month. 14, 2004 ; 2) expense associated with the additional 250,000 restricted shares of Class A Common Stock to be awarded to Mr. Dickey in each of 2006 and 2007, again pursuant to his employment agreement dated October 14, 2004; and 3) expense associated with 145,000 restricted shares of Class A Common Stock issued to certain other officers of the Company during the second quarter of 2005. Interest expense increased by $2.0 million or 43.2% to $6.6 million for the three months ended June 30, 2005 as compared with $4.6 million in the prior period. This increase was primarily due to 1) a $0.8 million loss recorded in the current quarter as an increase 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. and 2) a higher average cost of bank debt and increased levels of bank debt outstanding during the current quarter. The current quarter interest expense increase is also amplified by the effect of a $0.8 million gain recorded in the prior year as a reduction of interest expense related to the adjustment of the fair value of certain derivative instruments during that period. Income tax expense increased by $0.5 million or 6.9% to $7.0 million for the three months ended June 30, 2005 as compared with $6.6 million in the prior period. Tax expense in the current and prior year is comprised entirely of deferred tax expense and relates primarily to the establishment of valuation allowances against net operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. carry-forwards generated during the periods. Excluding the effects of non-cash stock compensation expense, basic income per common share was $0.15 for the three months ended June 30, 2005. 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, excluding the effect of non-cash stock compensation, was also $0.15. As-reported basic income per common share was $0.13 for the three months ended June 30, 2005 as compared with basic income per common share of $0.19 during the prior year. As-reported diluted income per common share was $0.12 for the three months ended June 30, 2005 as compared with diluted income per common share of $0.18 in the prior year. Six Months Ended June 30, 2005 Compared to Six Months Ended June 30, 2004 Net revenues for the six months ended June 30, 2005 increased $7.8 million to $159.6 million, a 5.1% increase from the same period in 2004, primarily as a result of revenues associated with station acquisitions completed in March 2004 (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. ). Station operating expenses increased $6.1 million to $105.0 million, an increase of 6.2% over the same period in 2004, primarily as a result of expenses associated with station acquisitions completed in March 2004. Station operating expenses also increased due to 1) expenses incurred associated with the second quarter launch of the Company's new station in Houston, Texas, 2) promotional expenses incurred in the second quarter associated with launch of the Company's rock station in Houston, Texas and 3) general expense increases associated with operating the Company's station portfolio. Excluding the effect of expenses attributable to the Houston, Texas market, station operating expenses would have increased by $5.4 million or 5.6% for the six months ended June 30, 2005. Station operating income (defined as operating income before depreciation and amortization, LMA fees, corporate general and administrative expenses, non-cash stock compensation and restructuring charges (credits)) increased $1.7 million to $54.5 million, an increase of 3.2% 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 station acquisitions completed during the six 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 six months ended June 30, 2005 increased $3.2 million to $158.5 million, an increase of 2.1% from the same period in 2004. In terms of revenue composition, pro forma local advertising revenues increased approximately 5.4% for the period, offset by a 11.3% decrease in pro forma national advertising revenues. Pro forma station operating expenses increased $2.2 million to $104.1 million, an increase of 2.2% over the same period in 2004. This increase was primarily due to 1) expenses incurred associated with the second quarter launch of the Company's new station in Houston, Texas, 2) promotional expenses incurred in the second quarter associated with the first quarter launch of the Company's rock station in Houston, Texas and 3) general expense increases associated with operating the Company's station portfolio. Excluding the effect of expenses attributable to the Houston, Texas market, pro forma station operating expenses would have increased by $1.6 million or 1.6% for the six months ended June 30, 2005. Pro forma station operating income (defined as operating income (loss) before depreciation, amortization, LMA fees, corporate general and administrative expenses, non-cash stock compensation and restructuring charges (credits); and excluding Broadcast Software International) increased $1.0 million to $54.5 million, an increase of 1.8% from the same period in 2004. Non-cash stock compensation expense increased to $1.7 million for the six months ended June 30, 2005, as compared with a $0.2 million non-cash stock compensation credit in the prior year. Non-cash stock compensation recorded in the current period is primarily comprised of 1) expense associated with 250,000 restricted shares of Class A Common Stock awarded to Lewis W. Dickey, Chairman and CEO, in April 2005, pursuant to his employment agreement dated October 14, 2004; 2) expense associated with the additional 250,000 restricted shares of Class A Common Stock to be awarded to Mr. Dickey in each of 2006 and 2007, again pursuant to his employment agreement dated October 14, 2004; and 3) expense associated with 145,000 restricted shares of Class A Common Stock issued to certain other officers of the Company during the second quarter of 2005. Interest expense increased by $1.7 million or 16.4% to $11.8 million for the six months ended June 30, 2005 as compared with $10.1 million in the prior period. This increase was primarily due to 1) a higher average cost of bank debt and increased levels of bank debt outstanding during the current year and 2) a $0.7 million loss recorded in the current year as an increase to interest expense related to the adjustment of the fair value of certain derivative instruments. The current year interest expense increase is also amplified by a $0.4 million gain recorded in the prior year as a reduction of interest expense related to the adjustment of the fair value of certain derivative instruments during the period. Income tax expense increased $0.7 million to $13.5 million during the six months ended June 30, 2005, as compared with $12.8 million during the prior year. Tax expense incurred in the current and prior year, comprised entirely of deferred tax expense, was recorded to establish valuation allowances against net operating loss carry-forwards generated during the periods. Excluding the effects of non-cash stock compensation expense, basic and diluted income per common share was $0.16 for the six months ended June 30, 2005. As-reported basic and diluted income per common share was $0.14 for the six months ended June 30, 2005 as compared with as-reported basic and diluted loss per common share of $0.16 during 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. Since March 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 2,452,159 shares of Class A Common Stock for $30.0 million, at an average repurchase price per share of $12.21. Including repurchases completed in prior periods, the Company has cumulatively repurchased a total of 3,456,588 shares of Class A Common Stock for $44.6 million under the Board authorized program. New $800 Million Credit Facility On July July: see month. 14, 2005, the Company completed the arrangement and syndication See syndication format. of a new $800.0 million credit facility with J.P. Morgan Morgan, American family of financiers and philanthropists. Junius Spencer Morgan, 1813–90, b. West Springfield, Mass., prospered at investment banking. Securities Inc. and Bank of America
Bank of America (NYSE: BAC TYO: 8648 ) is the largest commercial bank in the United States in terms of deposits, and the largest company of its kind in the world. Securities LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control as joint arrangers. The new credit facility provides for a revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. commitment of $400.0 million and a $400.0 million term loan. The proceeds of the term loan facility, fully funded on July 14, 2005, and drawings on that date of approximately $123.0 million on the revolving credit facility, were used primarily to refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. amounts outstanding under the Company's pre-existing Adj. 1. pre-existing - existing previously or before something; "variations on pre-existent musical themes" pre-existent, preexistent, preexisting antecedent - preceding in time or order credit facility. Leverage and Financial Position Capital expenditures for the three months ended June 30, 2005 totaled $1.9 million and were comprised entirely of maintenance related capital expenditures. For the full year of 2005, we continue to expect capital expenditures to total approximately $7.0 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 4.9x at June 30, 2005. Including borrowings to fund the share repurchases completed in July and August 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 June 30, 2005 is approximately 5.2x. 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 third quarter 2005 pro forma net revenue to grow 2% versus the prior year. We also expect third quarter 2005 pro forma station operating expenses to grow by 2%. Further, the following table summarizes selected projected financial results for the third quarter of 2005 (dollars in thousands):
Estimated
Q3 2005
-----------
Depreciation and amortization $5,600
LMA fees $150
Non-cash stock compensation $850
Interest expense $6,100
Interest income $(100)
Loss on early extinguishments of debt $1,300
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 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 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 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 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. 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 and restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and 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 (credits) 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 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 and restructuring and impairment charges (credits) 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 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. 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 Inc.'s filings with the Securities and Exchange Commission, including its 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. for the year ended December December: see month. 31, 2004. Cumulus Media Inc. 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 announced pending acquisitions and divestitures, Cumulus Media Inc. will own and operate 310 radio stations in 61 mid-size and smaller 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 Inc. will host a teleconference later today at 11:00 a.m. Eastern Time to discuss second quarter results. To access this teleconference live, please visit the company's web site at www.cumulus.com or dial (800) 819-9193 for domestic and international callers. Approximately one hour after completion of the call, a replay can be accessed until 11:59 PM August 18, 2005. Domestic and international callers can access the replay by dialing (719) 457-0820, pass code 4210747.
CUMULUS MEDIA INC.
Consolidated Statements of Operations
(Unaudited)
(in thousands, except per share data)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
----------- ----------- --------- ---------
Net revenues 87,440 86,314 159,563 151,764
Operating expenses:
Station operating
expenses, excluding
depreciation,
amortization
and LMA fees 54,506 52,620 105,024 98,915
Depreciation and
amortization 5,455 5,065 10,812 10,059
LMA fees 198 710 546 1,297
Corporate general
and administrative
(excluding non-cash
stock compensation
expense) 3,850 3,870 7,595 7,426
Non-cash stock
compensation 1,697 (125) 1,668 (216)
Restructuring
charges (credits) (215) (21) (215) (21)
----------- ----------- --------- ---------
Total operating
expenses 65,491 62,119 125,430 117,460
----------- ----------- --------- ---------
Operating
income 21,949 24,195 34,133 34,304
----------- ----------- --------- ---------
Nonoperating income
(expense):
Interest expense (6,575) (4,593) (11,796) (10,134)
Interest income 459 188 793 296
Loss on early
extinguishments of
debt -- -- -- (462)
Other income
(expense), net (19) (14) (21) 13
----------- ----------- --------- ---------
Total
nonoperating
expenses, net (6,135) (4,419) (11,024) (10,287)
----------- ----------- --------- ---------
Income before
income taxes 15,814 19,776 23,109 24,017
Income tax expense (7,008) (6,557) (13,480) (12,782)
----------- ----------- --------- ---------
Net income $ 8,806 $ 13,219 $ 9,629 $ 11,235
=========== =========== ========= =========
Income per common
share:
Basic income per
common share $ 0.13 $ 0.19 $ 0.14 $ 0.16
=========== =========== ========= =========
Diluted income per
common share $ 0.12 $ 0.18 $ 0.14 $ 0.16
=========== =========== ========= =========
Weighted average basic
common shares
outstanding 69,128 69,877 69,108 68,122
=========== =========== ========= =========
Weighted average
diluted common shares
outstanding 70,541 72,861 70,583 71,264
=========== =========== ========= =========
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 Three Six Six
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
--------- --------- --------- --------
Net cash provided by operating
activities $15,642 $12,528 $32,534 $27,528
Cash payments for LMA fees 198 710 546 1,297
Excess of accrual based
station operating expenses to
cash payments 8,400 10,814 4,268 1,964
Cash payments/(receipts) for
Corporate general and
administrative expenses in
excess of accrual based
expense (3,756) 1,044 (2,455) 3,619
Cash payments for interest
expense 8,784 4,230 12,581 11,081
Cash interest income (459) (188) (793) (296)
Other cash
payments/adjustments 275 686 263 230
Adjusted EBITDA $29,084 $29,824 $46,944 $45,423
--------- --------- --------- --------
Add: Accrual based Corporate
general and administrative
expenses 3,850 3,870 7,595 7,426
--------- --------- --------- --------
Station Operating Income $32,934 $33,694 $54,539 $52,849
========= ========= ========= ========
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 Three Six Six
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
-------- -------- -------- --------
Operating income $21,949 $24,195 $34,133 $34,304
Add:
Non cash stock compensation 1,697 (125) 1,668 (216)
Restructuring charges (215) (21) (215) (21)
Depreciation and amortization 5,455 5,065 10,812 10,059
Less:
Interest expense, net of
interest income (6,116) (4,405) (11,003) (9,838)
Maintenance capital
expenditures (1,947) (590) (3,501) (1,721)
Free cash flow $20,823 $24,119 $31,894 $32,567
======== ======== ======== ========
Cumulus Media Inc.
Reconciliation between Historical GAAP Results
And Pro Forma Results for the Three Months Ended
June 30, 2005
(dollars in thousands)
Historical Pro Forma
GAAP Adjustments Results
---------- ----------- ----------
Net revenue $87,440 $(613)(1) $86,827
Station operating expenses $54,506 $(588)(2) $53,918
Station operating income $32,934 $(25) $32,909
Corporate overhead $3,850 -- $3,850
Adjusted EBITDA $29,084 $(25) $29,059
(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 Six Months Ended
June 30, 2005
(dollars in thousands)
Historical Pro Forma
GAAP Adjustments Results
---------- ----------- ---------
Net revenue $159,563 $(1,027)(3) $158,536
Station operating expenses $105,024 $(947)(4) $104,077
Station operating income $54,539 $(80) $54,459
Corporate overhead $7,595 -- $7,595
Adjusted EBITDA $46,944 $(80) $46,864
(3) Reflects the elimination of revenues from Broadcast Software
International.
(4) Reflects the elimination of operating expenses from Broadcast
Software International.
CAPITALIZATION
(dollars in thousands)
June 30, June 30,
2005 2005
Actual Pro Forma(1)
----------- -----------
Cash and cash equivalents $2,669 $2,669
=========== ===========
Long-term debt, including current maturities:
Bank Debt 507,064 534,681
Total Stockholders' equity 887,693 887,693
----------- -----------
Total capitalization $1,394,757 $1,422,374
=========== ===========
(1) Pro forma for cash borrowings needed to complete share repurchases
completed in July and through August 3, 2005.
Net Debt to TTM Pro Forma Adjusted EBITDA (2) 5.2x
(2) Ratio calculated as (dollars in thousands):
Funded bank debt as of June 30, 2005 $507,064
Plus: Cash required to complete share
repurchases through August 3, 2005 29,986
Plus: Cash required to complete
acquisitions, net of dispositions 300
Less: Cash balance as of June 30, 2005 (2,669)
---------
Net Debt as of June 30, 2005 534,681
Divided by Trailing Twelve Months Pro
Forma Adjusted EBITDA (includes the
results of all pending acquisitions) 103,297
Ratio 5.2x
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 June 30, 2005:
Avg
Station Station
Station Operating Income # of Operating Operating
Margin % Markets Revenue Income Income %
----------------------------- -------- --------- ---------- ----------
greater than 35.0% 28 $181,008 $84,338 46.6%
25.0% to 34.9% 15 71,319 21,569 30.2%
20.0% to 24.9% 5 16,950 3,785 22.3%
10.0% to 19.9% 8 22,911 3,761 16.4%
0.0% to 9.9% 1 2,509 194 7.7%
less than 0.0% 4 6,286 (1,376) (21.9)%
-------- --------- ---------- ----------
Subtotal 61 $300,983 $112,271 37.3%
Trade, Other -- 25,047 6,832 27.3%
--------- ---------- ----------
Totals 61 $326,030 $119,103 36.5%
Pro Forma for the Trailing Twelve months ended March 31, 2005:
Avg
Station Station
Station Operating Income # of Operating Operating
Margin % Markets Revenue Income Income %
----------------------------- -------- --------- ---------- ----------
greater than 35.0% 29 $188,822 $88,331 46.8%
25.0% to 34.9% 15 68,916 21,050 30.5%
20.0% to 24.9% 5 16,221 3,517 21.7%
10.0% to 19.9% 6 14,914 2,435 16.3%
0.0% to 9.9% 2 5,742 491 8.6%
less than 0.0% 4 5,485 (1,337) (24.4)%
-------- --------- ---------- ----------
Subtotal 61 $300,100 $114,488 38.2%
Trade, Other -- 24,952 5,307 21.3%
--------- ---------- ----------
Totals 61 $325,052 $119,795 36.9%
Activity for Q2 2005
Markets Markets Markets Net Markets
Station Operating at Moving Moving Change In at
Income Margin % 3/31/05 Out In Category 6/30/05
-------------------- --------- --------- --------- ---------- --------
greater than 35.0% 29 1 (1) 28
25.0% to 34.9% 15 1 1 -- 15
20.0% to 24.9% 5 3 3 -- 5
10.0% to 19.9% 6 2 4 2 8
0.0% to 9.9% 2 1 (1) 1
less than 0.0% 4 -- -- -- 4
--------- --------
Total 61 8 8 0 61
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