Cumulus Reports Third Quarter 2006 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 nine months ended September September: see month. 30, 2006. Financial highlights (in thousands, except per share data and percentages) are as follows: [TABLE OMITTED] [TABLE OMITTED] Results of Operations Three Months Ended September 30, 2006 Compared to the Three Months Ended September 30, 2005 Net revenues for the third quarter decreased slightly from $85.3 million in 2005 to $84.0 million in 2006, a 1.6% decrease. This decrease was primarily the result of the contribution of the Company's 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; 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). stations to its affiliate, 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 ") on May 3, 2006, and the resulting loss of the revenue streams from those stations, offset by $1.0 million in management fees from CMP and organic growth over the Company's existing station platform. 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. decreased from $52.9 million to $51.9 million, a decrease of 1.9% from the third quarter of 2005. This decrease was attributable to the contribution of the Company's Houston and Kansas City stations to CMP (relieving the Company of the expenses associated with operating those stations), partially offset by general expense increases across the Company's station platform. 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 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, gain on assets transferred to affiliate, depreciation and amortization, LMA LMA left mentoanterior (position of fetus). fees, corporate general and administrative expenses, non-cash stock compensation, 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). credits 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) decreased from $32.4 million to $32.1 million, a decrease of 1.1% from the third quarter of 2005, 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 excludes the July-September 2005 results of the stations contributed to CMP, net revenues for the three months ended September 30, 2006 increased $1.2 million to $84.0 million, an increase of 1.3% from the same period in 2005, due to organic growth across the station platform. Pro forma station operating income was down slightly at 0.9% from the same period in 2005. Corporate expenses for the three months ended September 30, 2006 have decreased over the comparative period in 2005 primarily due to reduced professional fees partially offset by increased personnel costs associated with the management of CMP. Non-cash stock compensation expense increased to $3.7 million for the three months ended September 30, 2006, as compared with $0.8 million non-cash stock compensation expense in the prior three month period. This increase is due to the effect of adopting SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 123(R) effective January January: see month. 1, 2006, as required under GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). . Interest expense, net of interest income, increased by $8.7 million, or 158.2% to $14.2 million for the three months ended September 30, 2006 as compared with $5.5 million in the prior year's period. The increase in interest expense is primarily due to higher effective interest rates on the portion of debt subject to variable rates. There was also an increase in the average level of borrowing over the prior year. Income tax expense decreased $3.3 million to $3.7 million compared to $7.0 million during the third quarter of 2005. This decrease is primarily due to recording a benefit of approximately $2.5 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the overall reduction of the Company's effective state tax rate. Tax expense incurred during both periods, which is comprised primarily of deferred tax expense, was recorded to establish 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. Commencing January 1, 2006, the Company is using the annual effective rate method in determining its quarterly income tax expense; previously it utilized the discrete method. Basic income per common share was $0.03 for the three months ended September 30, 2006 as compared with a basic income per common share of $0.14 during the prior year. 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 $0.03 for the three months ended September 30, 2006 as compared with diluted income per common share of $0.13 in the prior year. Nine Months Ended September 30, 2006 Compared to the Nine Months Ended September 30, 2005 Net revenues for the nine months ended September 30, 2006 increased $1.7 million to $246.6 million, a 0.7% increase from the same period in 2005, primarily as a result of organic growth over the Company's existing station platform and $1.6 million in management fees from CMP partially offset by the contribution of the Company's Houston and Kansas City stations to CMP on May 3, 2006. Station operating expenses increased $2.5 million to $160.6 million, an increase of 1.6% over the same period in 2005. Excluding the $13.6 million non-cash contract termination charge included in 2005, this increase is attributable to general expense increases across the Company's station platform offset by the contribution of the Company's Houston and Kansas City stations to CMP. Station operating income (defined as operating income before non-cash contract termination costs, gain on assets transferred to affiliate, depreciation and amortization, LMA fees, corporate general and administrative expenses, non-cash stock compensation, restructuring credits and impairment charges) decreased $0.8 million to $86.0 million, a decrease of 0.9% from the same period in 2005, for the reasons discussed above. On a pro forma basis, which excludes the results of the stations contributed to CMP, for the period May through September, 2005, net revenues for the nine months ended September 30, 2006 increased $5.7 million to $246.6 million, an increase of 2.4% from the same period in 2005, due to organic growth across the station platform. Pro forma station operating income decreased 0.9% from the same period in 2005. Corporate expenses for the nine months ended September 30, 2006 have increased over the comparative period in 2005 due primarily to increased personnel costs associated with the management of CMP. Non-cash stock compensation expense increased to $10.8 million for the nine months ended September 30, 2006, as compared with $2.4 million non-cash stock compensation expense in the prior year. This increase is primarily due to the effect of adopting SFAS No. 123(R) effective January 1, 2006, as required under GAAP. Interest expense, net of interest income increased by $13.2 million or 79.6% to $29.7 million for the nine months ended September 30, 2006 as compared to $16.5 million in the prior period. This increase was primarily due to a higher average cost of bank debt and increased levels of bank debt outstanding during the current year, principally the result of the stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program, offset by benefit attributable to the Company's interest rate swap Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. arrangement. Income tax expense decreased $11.5 million to $9.0 million during the nine months ended September 30, 2006, as compared with $20.5 million during the prior year. This decrease includes a benefit of approximately $3.2 million relating to the overall reduction of the Company's effective state tax rate. Tax expense in the current and prior year is comprised primarily of deferred tax expense and relates to the establishment of valuation allowances against net operating loss carry-forwards generated during the periods. Basic income per common share was $0.13 for the nine months ended September 30, 2006 as compared with a basic income per common share of $0.07 during the prior year. Diluted income per common share was $0.12 for the nine months ended September 30, 2006 as compared with diluted income per common share of $0.07 in 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 From time to time the Company repurchases shares on the open market. During the third quarter the Company purchased 749,500 shares of Class A Common Stock at an average price of $9.25, or approximately $6.9 million. Cumulus Media Partners For the three and nine months ended September 30, 2006, the Company recorded approximately $1.0 million and $3.5 million, respectively, as equity in losses of affiliate. For the three and nine months ended September 30, 2006, the Company recorded as net revenues approximately $1.0 million and $1.6 million in management fees from CMP. Leverage and Financial Position Capital expenditures for the three and nine months ended September 30, 2006 totaled $2.2 million and $8.2 million, respectively. Capital expenditures during the quarter were comprised of $2.0 million of expenditures related to the consolidation of or purchase of studio facilities and tower structures and $.2 million of maintenance capital expenditures. For the full year of 2006, the Company expects capital expenditures to total $8.5 million. Net leverage was 7.80 times at September 30, 2006. Outlook The following statements and data are based on current expectations. These statements are forward looking and actual results may differ materially. The following table summarizes selected projected financial data for the fourth quarter of 2006 (dollars in thousands):
Estimated
Q4 2006
Depreciation and amortization $4,300
LMA fees 40
Non-cash stock compensation 3,700
Interest expense 14,500
Interest income 200
Equity loss (CMP) (2,000)
Effective Tax Rate 79.0%
As of October October: see month. 31, 2006, there are 42,729,857 outstanding shares of common stock. 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 to assess financial performance and profitability. The non-GAAP financial measures used in this release are station operating income, 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 and free cash flow. Station operating income consists of operating income before non-cash contract termination costs, gain on assets transferred to affiliate, depreciation and amortization, LMA fees, corporate general and administrative expenses, non-cash stock compensation, restructuring credits and impairment charges. 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 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 isolates the amount of income generated solely by the Company's stations and assists management in evaluating the earnings potential of the Company's station portfolio. In deriving this measure, management excludes non-cash contract termination costs as the charge will never represent a cash obligation to the Company's station operations. Management excludes 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 the 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. Management excludes 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 the Company's stations exclusive of the corporate resources employed. Management believes this is important to its investors because it highlights the gross margin generated by its station portfolio. Finally, management excludes non-cash stock compensation, restructuring credits and impairment charges from the measure as they do not represent cash payments related to the operation of the stations. Management believes that station operating income is the most frequently used financial measure in determining the market value of a radio station or group of stations. Management has observed that station operating income is commonly employed by firms that provide appraisal services to the broadcasting industry in valuing radio stations. Further, in each of the more than 140 radio station acquisitions the Company has completed since its inception, it has used station operating income as the primary metric to evaluate and negotiate the purchase price to be paid. Given its relevance to the estimated value of a radio station, management believes, and its experience indicates, that investors consider the measure to be extremely useful in order to determine the value of its portfolio of stations. Management believes 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 measure that management uses to evaluate the performance and results of its stations. Management uses the measure to assess the performance of the Company's station managers and the Company's Board of Directors uses it to determine the relative performance of the Company's executive management. As a result, in disclosing station operating income, the Company is providing its investors with an analysis of its performance that is consistent with that which will be utilized by its management and its Board. Station operating income is not a recognized term under GAAP and does not purport To convey, imply, or profess; to have an appearance or effect. The purport of an instrument generally refers to its facial appearance or import, as distinguished from the tenor of an instrument, which means an exact copy or duplicate. PURPORT, pleading. to be an alternative to operating income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Additionally, station operating income is not intended to be a measure of free cash flow available for dividends, reinvestment Reinvestment Using dividends, interest and capital gains earned in an investment or mutual fund to purchase additional shares or units, rather than receiving the distributions in cash. 1. In terms of stocks, it is the reinvestment of dividends to purchase additional shares. in the Company's business or other management's discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Station operating income should be viewed as a supplement to, and not a substitute for, results of operations presented on the basis of GAAP. Management compensates for the limitations of using station operating income by using it only to supplement the Company's GAAP results to provide a more complete understanding of the factors and trends affecting the Company's business than GAAP results alone. Station operating income has its limitations as an analytical analytical, analytic pertaining to or emanating from analysis. analytical control control of confounding by analysis of the results of a trial or test. tool, and investors should not consider it in isolation or as a substitute for analysis of the Company's results as reported under GAAP. Adjusted EBITDA Adjusted EBITDA is also utilized by management to analyze the cash flow generated by the Company's business. This measure isolates the amount of income generated by its 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 the Company's station portfolio, including the corporate resources employed to manage the portfolio, to the funding of its other operating expenses and to the funding of debt service and acquisitions. In deriving this measure, management excludes non-cash contract termination costs as the charge will never represent a cash obligation to the Company. Management also excludes depreciation and amortization due to the insignificant investment in tangible assets required to operate its stations and corporate office and the relatively insignificant amount of intangible assets subject to amortization. Management excludes LMA fees from this measure, even though it requires a cash commitment, due to the insignificance and generally temporary nature of such fees. Finally, management excludes non-cash stock compensation, restructuring credits and impairment charges from the measure as they do not represent cash payments related to the operation of the stations. Management believes that adjusted EBITDA, although not a measure that is calculated in accordance with GAAP, nevertheless is commonly employed by the investment community as a measure for determining the market value of a radio company. Management has also observed that adjusted EBITDA is routinely employed to evaluate and negotiate the potential purchase price for radio broadcasting 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, management believes 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, cash flows from operating activities or any other measure for determining the Company's operating performance or liquidity that is calculated in accordance with GAAP. 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. Management believes 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 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. stock and/or facilitate the further growth of a company through acquisition or internal development. Management further believes 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, cash flows from operating activities or any other measure for determining the Company's operating performance or liquidity that is calculated in accordance with GAAP. As 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 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 the integration of acquisitions and any earnings or revenue projections, are "forward-looking" 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 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 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 31, 2005. 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 pending acquisitions and divestitures, Cumulus Media, directly and through its investment in Cumulus Media Partners, owns or operates 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 cumulus: see cloud. .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 AM Eastern Standard Time to discuss third quarter results. To access this teleconference live, please visit the Company's web site at www.cumulus.com or dial (800) 811-8824 for both domestic and international callers. Immediately after completion of the call, a replay can be accessed until 11:59 PM Eastern Standard Time November 22, 2006. Domestic and international callers can access the replay by dialing (888) 203-1112, pass code 2005424. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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