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Cumulus Reports Second Quarter 2004 Results ATLANTA --(Business Wire)-- Aug. 3, 2004 -- Cumulus Media Inc. (NASDAQ: CMLS) today reported financial results for the three and six months ended June 30, 2004.Lew Dickey, Chairman, President and Chief Executive Officer, commented, "We are pleased to announce strong results for the second quarter of 2004. For the quarter, pro forma net revenues grew 5.5% versus the prior year. Same station net revenues grew 6.3% for the quarter. Pro forma Adjusted EBITDA grew 8.3% versus the prior year and free cash flow grew 40.2% for the quarter." Historical results are attached. Historical or "as reported" financial data of Cumulus Media Inc. are not comparable from year to year because of the acquisition of radio stations by the Company during the periods covered. Financial highlights (in thousands, except per share data and percentages) are as follows: -0- *T Three Months Ended June 30, % 2004 2003 Change ---- ---- ------ As Reported: Net revenues $ 86,314 $ 74,520 15.8% Station operating expenses 52,620 44,053 19.4% Station operating income (1) 33,694 30,467 10.6% Station operating income margin (2) 39.0% 40.9% Adjusted EBITDA (3) 29,824 27,012 10.4% Income (loss) per common share: Basic income (loss) per common share $ 0.19 $ (0.02) Diluted income (loss) per common share $ 0.18 $ (0.02) Free cash flow (4) 24,119 17,210 40.2% Same Station Results: (5) Net revenue $ 73,174 $ 68,818 6.3% Station operating income (1) 29,405 27,171 8.2% Station operating income margin (2) 40.2% 39.5% Pro Forma Results: (6) Net revenue $ 85,850 $ 81,344 5.5% Station operating income (1) 33,603 30,900 8.7% Station operating income margin (2) 39.1% 38.0% Adjusted EBITDA (3) 29,733 27,445 8.3% Adjusted EBITDA margin (7) 34.6% 33.7% Six Months Ended June 30, % 2004 2003 Change ---- ---- ------ As Reported: Net revenues $ 151,764 $132,495 14.5% Station operating expenses 98,915 85,121 16.2% Station operating income (1) 52,849 47,374 11.6% Station operating income margin (2) 34.8% 35.8% Adjusted EBITDA (3) 45,423 40,525 12.1% Income (loss) per common share: Basic income (loss) per common share $ 0.16 $ (0.14) Diluted income (loss) per common share $ 0.16 $ (0.14) Free cash flow (4) 32,567 22,596 44.1% Same Station Results: (5) Net revenue $ 132,100 $124,831 5.8% Station operating income (1) 47,423 43,442 9.2% Station operating income margin (2) 35.9% 34.8% Pro Forma Results: (6) Net revenue $ 155,335 $147,778 5.1% Station operating income (1) 53,481 48,795 9.6% Station operating income margin (2) 34.4% 33.0% Adjusted EBITDA (3) 46,055 41,946 9.8% Adjusted EBITDA margin (7) 29.6% 28.4% (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 operating income, 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 operating income, the most directly comparable GAAP financial measure. (4) Free cash flow is defined as Adjusted EBITDA less LMA fee expense, net interest expense, dividends on the Series A Preferred Stock, 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 operating income, the most directly comparable GAAP financial measure. (5) Same station results include the 260 stations in 53 markets owned and operated since January 1, 2003. (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, 2004, the pro forma totals include the results of 303 stations in 61 markets. (7) Adjusted EBITDA margin is defined as Adjusted EBITDA as a percentage of net revenues. *T Results of Operations Three Months Ended June 30, 2004 Compared to Three Months Ended June 30, 2003 Net revenues for the second quarter of 2004 increased $11.8 million to $86.3 million, a 15.8% increase from the second quarter of 2003, primarily as a result of revenues associated with station acquisitions completed subsequent to June 30, 2003 and stations operated under the terms of local marketing agreements during periods subsequent to June 30, 2003. Station operating expenses increased $8.6 million to $52.6 million, an increase of 19.4% over the second quarter of 2003, primarily as a result of expenses associated with station acquisitions completed subsequent to June 30, 2003 and stations operated under the terms of local marketing agreements during periods subsequent to June 30, 2003. 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 $3.2 million to $33.7 million, an increase of 10.6% from the second quarter of 2003, 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 period as if each were operated from or consummated at the beginning of the periods presented and excludes the results of Broadcast Software International, net revenues for the second quarter of 2004 increased $4.5 million to $85.9 million, an increase of 5.5% from the second quarter of 2003. 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) increased $2.7 million to $33.6 million, an increase of 8.7% from the second quarter of 2003. Pro forma station operating income margin (defined as pro forma station operating income as a percentage of pro forma net revenues) increased to 39.1% for the second quarter of 2004 from 38.0% for the second quarter of 2003. Interest expense decreased by $1.8 million or 27.6% to $4.6 million for the three months ended June 30, 2004 as compared with $6.3 million in the prior period. This decrease was primarily due to lower interest expense associated with 1) the repurchase and redemption of all of the Company's outstanding 10 3/8% Senior Subordinated Notes (the "Notes"), 2) a lower average cost of debt during the current quarter related to borrowings under the Company's credit facility and 3) a $0.8 million gain recorded as a reduction of interest expense related to the adjustment of the fair value of certain derivative instruments. Income tax expense increased by $1.1 million or 21.2% to $6.6 million for the three months ended June 30, 2004 as compared with $5.4 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 carry-forwards generated during the periods. Basic income per common share was $0.19 for the three months ended June 30, 2004 as compared with a basic loss per common share of $(0.02) during the prior year. Diluted income per common share was $0.18 for the three months ended June 30, 2004. Six Months Ended June 30, 2004 Compared to Six Months Ended June 30, 2003 Net revenues for the six months ended June 30, 2004 increased $19.3 million to $151.8 million, a 14.5% increase from the same period in 2003, primarily as a result of revenues associated with station acquisitions completed subsequent to June 30, 2003 and stations operated under the terms of local marketing agreements during periods subsequent to June 30, 2003. Station operating expenses increased $13.8 million to $98.9 million, an increase of 16.2% over the same period in 2003, primarily as a result of expenses associated with station acquisitions completed subsequent to June 30, 2003 and stations operated under the terms of local marketing agreements during periods subsequent to June 30, 2003. 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 $5.5 million to $52.8 million, an increase of 11.6% from the same period in 2003, 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, 2004 increased $7.6 million to $155.3 million, an increase of 5.1% from the same period in 2003. 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 $4.7 million to $53.5 million, an increase of 9.6% from the same period in 2003. Pro forma station operating income margin (defined as pro forma station operating income as a percentage of pro forma net revenues) increased to 34.4% for the six months ended June 30, 2004 from 33.0% for the six months ended June 30, 2003. Interest expense decreased by $2.5 million or 20.0% to $10.1 million for the six months ended June 30, 2004 as compared with $12.7 million in the prior year. This decrease was primarily due to lower interest expense associated with the repurchase and redemption of all of the outstanding Notes and a lower average cost of debt during 2004 on borrowings under the Company's credit facility. Losses on early extinguishments of debt were $0.5 million for the six months ended June 30, 2004 as compared with $14.2 million during the prior year. Losses during the current year period were the result of fees paid in connection with the completion of an amendment and restatement of the Company's credit facility in January 2004. Under the amended and restated agreement, the Company secured a lower interest rate margin on its eight-year term loan facility. Losses in the prior year period relate to 1) the repurchase of $30.1 million of the Notes on the open market, 2) the repurchase of $88.8 million of the Notes as part of a tender offer and consent solicitation completed in April 2003 and 3) the retirement of the Company's then existing $175.0 million eight-year term loan facility in connection with refinancing activities also completed in April 2003. Income tax expense increased $1.6 million to $12.8 million during the six months ended June 30, 2004, as compared with $11.2 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. Basic and diluted income per common share was $0.16 for the six months ended June 30, 2004 as compared with a basic and diluted loss per common share of $(0.14) during the prior year. Leverage and Financial Position Capital expenditures for the three months ended June 30, 2004 totaled $2.0 million. Leverage, defined under the terms of the Company's credit facility as total indebtedness divided by trailing 12-month Adjusted EBITDA as adjusted for certain non-recurring expenses, was 4.9x at June 30, 2004. Including the results of all pending acquisitions operated as of June 30, 2004, the ratio of net long-term debt to trailing 12-month pro forma Adjusted EBITDA as of March 31, 2004 is approximately 4.8x. Outlook The following statements and data are based on current expectations. These statements are forward looking and actual results may differ materially. Cumulus expects third quarter 2004 pro forma net revenue to grow by 3-4% based on Q3 2003 pro forma net revenues of $81.1 million. We expect third quarter 2004 pro forma station operating expenses to grow by 2% based on Q3 2003 pro forma station operating expenses of $51.7 million. Further, the following table summarizes selected projected financial results for the third quarter of 2004 (dollars in millions): -0- *T Estimated Q3 2004 --------------- Depreciation and amortization $5.2 LMA fees $0.9 Non-cash stock compensation $0.2 Interest expense $4.9 Interest income $(0.2) Loss on early extinguishments of debt $2.2 Income tax expense (non cash) $6.6 *T Non-GAAP Financial Measures Cumulus Media Inc. utilizes certain financial measures that are not calculated in accordance with 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, dividends on the Series A Preferred Stock, income taxes paid and maintenance capital expenditures. Although station operating income, Adjusted EBITDA and free cash flow are not measures calculated in accordance with GAAP, management believes that they are useful to an investor in evaluating the Company because they are measures that are widely used in the broadcasting industry to evaluate a radio company's operating performance. Further, we use these measures as the key measurements of operating efficiency, overall financial performance and profitability. More specifically, station operating income measures the amount of income generated each period solely from the operations of the Company's stations that is available to be used to service debt, pay taxes, fund capital expenditures and fund acquisitions. Adjusted EBITDA measures the amount of income generated each period that could be used to service debt, pay taxes, fund capital expenditures and fund acquisitions after the incurrence of corporate general and administrative expenses. Free cash flow measures the amount of income generated each period that is available and could be used to make future payments of contractual obligations, fund acquisitions or make discretionary repayments of debt, after the incurrence of station and corporate expenses, funding of capital expenditures, payment of LMA fees and debt service. Nevertheless, these measures should not be considered in isolation or as substitutes for net income (loss), 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 these measures are not calculated in accordance with GAAP, they may not be comparable to similarly titled measures employed by other companies. Forward-Looking Statements 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 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, and other risk factors described from time to time in Cumulus Media Inc.'s filings with the Securities and Exchange Commission, including Cumulus Media Inc.'s Form 10-K for the year ended December 31, 2003. 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 based on station count. Giving effect to the completion of all announced pending acquisitions and divestitures, Cumulus Media Inc. will own and operate 305 radio stations in 61 mid-size and smaller U.S. media markets. The Company's headquarters are in Atlanta, Georgia, 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 10:00 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 (484) 630-8922 for domestic and international callers. The pass code for the call is CUMULUS. Approximately one hour after completion of the call, a replay can be accessed until 11:59 PM August 17, 2004. Domestic and international callers can access the replay by dialing (402) 280-1611. -0- *T 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, 2004 2003 2004 2003 ---- ---- ---- ---- Net revenues 86,314 74,520 151,764 132,495 Operating expenses: Station operating expenses, excluding depreciation, amortization and LMA fees 52,620 44,053 98,915 85,121 Depreciation and amortization 5,065 4,760 10,059 9,477 LMA fees 710 538 1,297 631 Corporate general and administrative (excluding non-cash stock compensation expense) 3,870 3,455 7,426 6,849 Non-cash stock compensation (125) 229 (216) 258 Restructuring charges (credits) (21) (127) (21) (183) -------- -------- -------- -------- Total operating expenses 62,119 52,908 117,460 102,153 -------- -------- -------- -------- Operating income 24,195 21,612 34,304 30,342 -------- -------- -------- -------- Nonoperating income (expense): Interest expense (4,593) (6,347) (10,134) (12,664) Interest income 188 170 296 391 Loss on early extinguishments of debt -- (11,107) (462) (14,233) Other income (expense), net (14) (131) 13 (157) -------- -------- -------- -------- Total nonoperating expenses, net (4,419) (17,415) (10,287) (26,663) -------- -------- -------- -------- Income before income taxes 19,776 4,197 24,017 3,679 Income tax expense (6,557) (5,409) (12,782) (11,210) -------- -------- -------- -------- Net income (loss) 13,219 (1,212) 11,235 (7,531) Preferred stock dividends and redemption premiums -- 318 -- 1,250 -------- -------- -------- -------- Net income (loss) attributable to common stockholders $13,219 $ (1,530) $ 11,235 $ (8,781) ======== ======== ======== ======= Income (loss) per common share Basic income (loss) per common share $ 0.19 $ (0.02) $ 0.16 $ (0.14) ======== ======== ======== ======= Diluted income (loss) per common share $ 0.18 $ (0.02) $ 0.16 $ (0.14) ======== ======== ======== ======= Weighted average basic common shares outstanding 69,877 63,786 68,122 63,399 ======== ======== ======== ======= Weighted average diluted common shares outstanding 72,861 63,786 71,263 63,399 ======== ======== ======== ======= Reconciliation of Non-GAAP Financial Measures to GAAP Counterparts The following table reconciles operating income, 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 Six Months Six Months Ended Ended Ended Ended June 30, 2004 June 30, 2003 June 30, 2004 June 30, 2003 ------------- ------------- ------------- ------------- Operating income $24,195 $21,612 $34,304 $30,342 Non cash stock compensation (125) 229 (216) 258 Restructuring charges (21) (127) (21) (183) LMA fees 710 538 1,297 631 Depreciation and amortization 5,065 4,760 10,059 9,477 ------------- ------------- ------------- ------------- Adjusted EBITDA $29,824 $27,012 $45,423 $40,525 Corporate general and administrative 3,870 3,455 7,426 6,849 ------------- ------------- ------------- ------------- Station operating income $33,694 $30,467 $52,849 $47,374 ============= ============= ============= ============= 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 Six Months Six Months Ended Ended Ended Ended June 30, 2004 June 30, 2003 June 30, 2004 June 30, 2003 ------------- ------------- ------------- -------------- Operating income $24,195 $21,612 $34,304 $30,342 Add: Non cash stock compensation (125) 229 (216) 258 Restructuring charges (21) (127) (21) (183) Depreciation and amortization 5,065 4,760 10,059 9,477 Less: Interest expense, net of interest income (4,405) (6,177) (9,838) (12,273) Maintenance capital expenditures (590) (2,616) (1,721) (4,235) Income taxes paid -- (153) -- (153) Preferred stock dividends -- (318) -- (637) ------------- ------------- ------------- -------------- Free cash flow $24,119 $17,210 $32,567 $22,596 ============= ============= ============= ============== Cumulus Media Inc. Reconciliation between Historical GAAP Results And Pro Forma Results for the Three Months Ended June 30, 2004 (dollars in thousands) Historical Pro Forma GAAP Adjustments Results ---------- ------------- ------------ Net revenue $86,314 $(464) (1) $85,850 Station operating expenses $52,620 $(373) (2) $52,247 Station operating income $33,694 $(91) $33,603 Corporate overhead $3,870 -- $3,870 Adjusted EBITDA $29,824 $(91) $29,733 (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, 2004 (dollars in thousands) Historical Pro Forma GAAP Adjustments Results ---------- ----------- --------- Net revenue $151,764 $3,571 (3) $155,335 Station operating expenses $98,915 $2,939 (4) $101,854 Station operating income $52,849 $632 $53,481 Corporate overhead $7,426 -- $7,426 Adjusted EBITDA $45,423 $632 $46,055 (3) Reflects the addition of revenues from Blacksburg, Virginia and Columbia-Jefferson City, Missouri, both of which the Company commenced operation of under the terms of a local marketing agreement during Q1 2004 ($4,477), offset by the elimination of revenues from Broadcast Software International ($906). (4) Reflects the addition of expenses from Blacksburg, Virginia and Columbia-Jefferson City, Missouri, both of which the Company commenced operation of under the terms of a local marketing agreement during Q1 2004 ($3,668), offset by the elimination of operating expenses from Broadcast Software International ($729). CAPITALIZATION (dollars in thousands) June 30, 2004 June 30, 2004 Actual Pro Forma(1) -------------- --------------- Cash and cash equivalents $ 3,470 $3,470 ============== =============== Long-term debt, including current maturities: Bank Debt 459,594 464,159 Total Stockholders' equity 872,073 872,073 -------------- --------------- Total capitalization $1,331,667 $1,336,232 ============== =============== (1) Pro forma for cash borrowings needed to complete pending acquisitions operated during Q1 and Q2 2004. Net Debt to TTM Pro Forma Adjusted EBITDA (2) 4.8x (2) Ratio calculated as (dollars in thousands): Funded bank debt as of June 30, 2004 $ 459,594 Plus: Cash required to complete pending acquisitions operated at June 30, 2004 8,035 Less: Cash balance as of June 30, 2004 (3,470) ----------- Net Debt as of June 30, 2004 464,159 Divided by Trailing Twelve Months Pro Forma Adjusted EBITDA (includes the results of all pending acquisitions) 97,306 Ratio 4.8x CUMULUS MEDIA INC. 2004 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, 2004: ------------------------------------------------------------- Station Station Avg Station Operating Operating Operating Income Margin % # of Markets Revenue Income Income % ---------------- ------------ ------------ ----------- ----------- > 35.0% 28 $178,980 $81,762 45.7% 25.0% to 34.9% 14 61,816 19,076 30.9% 20.0% to 24.9% 5 19,457 4,417 22.7% 10.0% to 19.9% 9 24,083 3,835 15.9% 0.0% to 9.9% 1 1,144 76 6.6% < 0.0% 4 7,304 (1,532) -21.0% ------------ ------------ ----------- ----------- Subtotal 61 $292,784 $107,634 36.8% Trade, Other -- 24,624 3,622 14.7 % ------------ ----------- ----------- Totals 61 $317,408 $111,256 35.1% Pro Forma for the Trailing Twelve months ended March 31, 2004: -------------------------------------------------------------- Avg Station Station Station Operating Operating Operating Income Margin % # of Markets Revenue Income Income % ----------------- ------------- ----------- ----------- ---------- > 35.0% 29 $191,412 $85,335 44.6% 25.0% to 34.9% 12 41,269 12,761 30.9% 20.0% to 24.9% 2 9,570 2,251 23.5% 10.0% to 19.9% 11 33,310 5,661 17.0% 0.0% to 9.9% 3 6,442 470 7.3% < 0.0% 4 7,345 (1,457) -19.8% ------------- ----------- ----------- ---------- Subtotal 61 $289,348 $105,021 36.3% Trade, Other -- 23,546 3,511 14.9 % ----------- ----------- ---------- Totals 61 $312,894 $108,532 34.7% Activity for Q2 2004 Station Operating Markets Markets Income Margin at Markets Moving Net Change Markets % 3/31/04 Moving Out In In Category at 6/30/03 -------------- -------- ----------- -------- ----------- ------------- > 35.0% 29 2 1 (1) 28 25.0% to 34.9% 12 2 4 2 14 20.0% to 24.9% 2 1 4 3 5 10.0% to 19.9% 11 4 2 (2) 9 0.0% to 9.9% 3 2 -- (2) 1 < 0.0% 4 -- -- -- 4 Total 61 11 11 -- 61 *T |
