<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 to Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 2, 1998
--------------------
CUMULUS MEDIA INC.
- -------------------------------------------------------------------------------
(Exact Name of Registrant as specified in its charter)
Illinois 000-24525 36-4159663
- -------------------------------------------------------------------------------
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification Number
111 E. Kilbourn Ave., Suite 2700, Milwaukee, WI 53202
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (414) 615-2800
--------------------
None
- ------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
As previously reported on Form 8-K dated July 17, 1998, on July 2,
1998, pursuant to the terms of a Stock Purchase Agreement dated January 9,
1998, Cumulus Media Inc. ("Cumulus" or the "Company") acquired the stock of
Republic Corporation, which owned all of the stock of Colonial Broadcasting,
Inc. ( now known as CBA Broadcasting, Inc., the "CBA acquisition" or "CBA"),
from Robert Lowder for approximately $40 million in cash. The Company
financed the acquisition with available cash from its recently completed
Offerings (as defined below).
In Chattanooga, TN, CBA owns and operates WUSY(FM), a 100 kW country music
station. Together with a previously announced agreement to acquire WLMX-AM/FM
and WZST(FM) from the Wicks Broadcasting Group, which is pending FCC
approval, Cumulus will own 3 FM stations and 1 AM station in the Chattanooga
market. Chattanooga is the 102nd largest out of 267 Arbitron rated radio
markets in the country. The CBA acquisition also provided Cumulus with 2 FM
and 2 AM stations -- WMXS(FM), WLWI(FM), WMSP(AM), and WNZZ(AM) in
Montgomery, AL. The FM stations both broadcast at 100 kW of power.
Montgomery, the 143rd largest out of 267 Arbitron rated radio markets, is the
state capital of Alabama.
Cumulus Media Inc. is a radio broadcasting company focused on the
acquisition, operation and development of radio stations in mid-sized and
smaller radio markets in the U.S. The Company currently owns or operates
111 radio stations in 22 U.S. radio markets. Including all stations owned
and those operated subject to pending acquisitions, Cumulus controls 176
stations in 34 markets, making it the nation's 4th largest radio broadcaster
in terms of stations. Cumulus recently completed an initial public offering
of its Class A Common Stock, 13 3/4 % Series A Cumulative Exchangeable
Redeemable Preferred Stock due 2009, and 10 3/8% Senior Subordinated Notes
due 2008 (collectively, the "Offerings") for total gross proceeds of $391
million.
The financial statements required by this Current Report on Form 8-K
concerning the acquisition of Colonial Broadcasting Inc. were previously
reported in the Company's Registration Statement on Form S-1 (333-48849) as
amended and declared effective by the Securities and Exchange Commission on
June 26, 1998 (the "Registration Statement"). These financial statements are
incorporated by reference herein.
The financial statements required by this Current Report on Form 8-K
concerning the pro forma balance sheet of Cumulus Media Inc. as of March 31,
1998, and the pro forma statement of operations for the three months ending
March 31, 1998 and the twelve months ending December 31, 1997 are included in
this Amendment No. 1 to Form 8-K as Exhibit 7.3.
Item 7. Financial Statements and Exhibits.
(A) Financial Statements of Businesses Acquired
The audited financial statements of Republic Corporation (radio
broadcast operations only) as of December 31, 1997 and 1996 and for each
of the three years in the period ended December 31, 1997, and the
unaudited financial statements of Republic Corporation (radio broadcast
operations only) as of March 31, 1998 and 1997 and for the three month
periods then ended are incorporated by reference to the Company's
Registration Statement on Form S-1 (333-48849).
2
<PAGE>
(B) Cumulus Media Inc. Pro Forma Financial Information
In accordance with Item 7 (b) of Form 8-K, pro forma financial
information related to the acquisition are included as Exhibit 7.3 to
this Amendment No. 1 to Form 8-K.
(C) Exhibits.
7.1 Stock Purchase Agreement between Cumulus Media Inc. (f/k/a/ Cumulus
Holdings, Inc.) and Robert Lowder dated as of January 9, 1998, as
amended on January 23, 1998 and May 5, 1998 (incorporated by
reference to the Registration Statement).
7.2 Press release dated July 6, 1998 (previously filed with the current
report on Form 8-K dated July 17, 1998).
7.3 Cumulus Media Inc. Pro Forma Financial Information
A. Unaudited Pro Forma Combined Balance Sheet as of March 31,
1998.
B. Unaudited Pro Forma Combined Statements of Operations for the
three months ended March 31, 1998, and for the year ended
December 31, 1997.
3
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CUMULUS MEDIA INC.
By: /s/ Richard W. Weening
------------------------
Richard W. Weening
Executive Chairman
Date: August 12, 1998
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No.
<S> <C>
7.1 Stock Purchase Agreement between Cumulus Media Inc. (f/k/a Cumulus
Holdings, Inc.) and Robert Lowder dated as of January 9, 1998, as
amended on January 23, 1998 and May 5, 1998 (incorporated by
reference as an exhibit to the Registration Statement filed on Form
S-1 (333-48849).
7.2 Press release dated July 6, 1998 (previously filed with the Current
Report on Form 8-K dated July 17, 1998).
7.3 Cumulus Media Inc. Pro Forma Financial Information
A. Unaudited Pro Forma Combined Balance Sheet as of March 31, 1998.
B. Unaudited Pro Forma Combined Statements of Operations for the
three months ended March 31, 1998, and for the year ended December 31,
1997.
7.4 The audited financial statements of Republic Corporation (radio
broadcast operations only) as of December 31, 1997 and 1996 and for
each of the three years in the period ended December 31, 1997, and
the unaudited financial statements of Republic Corporation (radio
broadcast operations only) as of March 31, 1998 and 1997 and for
the three month periods then ended are incorporated by reference to
the Company's Registration Statement on Form S-1 (333-48849).
</TABLE>
<PAGE>
Exhibit 7.3
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
-------------------------------------------------
On July 1, 1998, the Company completed its initial public offering of common
and preferred stock and debt totaling $391 million. The common stock
offering was for 7,598,572 shares of Class A Common Stock (the "Class A
Common Stock"), including 6,428,572 shares sold by the Company and 1,170,000
shares sold by State of Wisconsin Board. Of the 7,598,572 shares of Class A
Common Stock sold, 1,519,714 shares were sold in an offering outside the U.S.
and Canada and 6,078,858 shares were sold in a concurrent offering in the
U.S. and Canada. In addition, on July 31, 1998, the underwriters exercised a
portion of the over-allotment and sold an additional 800,000 shares of Class
A Common Stock for net proceeds to the Company of $10.4 million. These
offerings are collectively referred to as the "Stock Offerings."
Concurrently with the Stock Offerings, the Company sold in a preferred stock
offering (the "Preferred Stock Offering") $125.0 million of 13 3/4% Series A
Cumulative Exchangeable Redeemable Preferred Stock Due 2009 (the "Series A
Preferred Stock") approximately $34.5 million of which was sold directly by
the Company to The Northwestern Mutual Life Insurance Company at a purchase
price equal to the price to the public and $160.0 million of 10 3/8% Senior
Subordinated Notes Due 2008 (the "Notes") (the "Debt Offering" and, together
with the Stock Offerings and the Preferred Stock Offering, the "Offerings").
In March 1998, the Company amended its articles of incorporation to change
its name from Cumulus Holdings, Inc. to Cumulus Media Inc. Until immediately
prior to the closing of the Offerings, all of the outstanding common stock of
the Company was held by Cumulus Media, LLC ("Media LLC"). Immediately prior
to the completion of the Offerings, (i) all shares of the Company's 12% Class
A Cumulative Preferred Stock which were held by The Northwestern Mutual Life
Insurance Company (the "NML Preferred Stock") plus all accrued and unpaid
dividends thereon as of the exchange date were exchanged for shares of Series
A Preferred Stock having an equivalent aggregate liquidation value; and (ii)
Media LLC was liquidated and the Shares of Class A Common Stock, Class B
Common Stock and Class C Common Stock held by Media LLC was distributed by
Media LLC to its members in liquidation (the "Reorganization").
Prior to the completion of the Offerings, the Company financed its
acquisitions primarily through private equity financings and borrowings under
a credit agreement (the "Old Credit Agreement"). In March 1988, the Company
entered into a $190.0 million senior credit facility (the "Credit Facility").
The Credit Facility was amended as of May 1, 1998, as of June 24, 1998 and
as of June 26, 1998, to provide for a revolving credit line of $25.0 million
until March 2, 2006 and an eight-year term loan facility of $125.0 million.
Under the terms of the Credit Facility, the Company drew down $62.5 million
of the term facility upon the closing of the Offerings.
The Company has entered into definitive purchase agreements to acquire 81
stations in 17 markets for an aggregate purchase price of approximately
$108.9 million in transactions which have not yet been consummated (the
"Pending Acquisitions").
The Reorganization, borrowings under the Credit Facility and the application
of proceeds therefrom, acquisitions completed as of the date hereof (the
"Completed Acquisitions"), the Pending Acquisitions, and the Offerings and
the applications of proceeds therefrom are collectively referred to as the
"Transactions."
The following unaudited pro forma combined financial statements reflects the
results of operations for the three months ended March 31, 1998 and the year
ended December 31, 1997 and the combined balance sheet as of March 31, 1998
of the Company after giving effect to the Transactions. The information set
forth under the heading "The Company Historical" in the pro forma combined
statement of operations for the three months ended March 31, 1998 and the
year ended December 31, 1997 includes results relating to local marketing
agreements. The information set forth under the heading "Pending
Acquisitions" in the pro forma combined statement of operations for the three
months ended March 31, 1998 and the year ended December 31, 1997 excludes
results relating to local marketing agreements.
The information set forth under the heading "1998 Completed Acquisitions"
reflects all acquisitions consummated by the Company after March 31, 1998,
including the acquisition of Republic Corporation.
<PAGE>
The companies acquired subsequent to March 31, 1998 and the related purchase
prices are as follows:
<TABLE>
<S> <C>
Republic Corporation.......................................... $ 40,500
New Frontier Communications, Inc.............................. 14,000
Clearly Superior Radio Properties............................. 12,500
Ninety-Four Point One, Inc. .................................. 10,770
Savannah Valley Broadcasting Radio Properties................. 10,200
WWFG-FM and WOSC-FM........................................... 7,500
WJCL-FM....................................................... 7,250
Castle Broadcasting Limited Partnership....................... 6,400
Jan-Di Broadcasting, Inc. .................................... 5,000
Louisiana Media Interests, Inc. and Subsidiaries.............. 16,200
Crystal Radio Group, Inc. .................................... 14,000
Chattanooga Broadcast Group................................... 6,000
Lesnick Communications, Inc. ................................. 3,300
Beaumont Skywave, Inc. ....................................... 3,600
Wiskes-Abaris Communications.................................. 3,150
Big Country Broadcasting...................................... 1,812
Savannah Communications, L.P. ................................ 5,250
KIKR, Inc. ................................................... 1,350
Heritage Communications....................................... 1,000
Westwind Broadcasting......................................... 820
GHB Broadcasting.............................................. 700
West Jewell Management........................................ 675
IQ Radio, Inc. ............................................... 390
--------
Total $172,367
--------
--------
</TABLE>
Upon consummation of the Pending Acquisitions, the Company will be one of the
five largest radio broadcasting companies based on number of stations, and
among the fifteen largest based on net revenues in the U.S. and will own and
operate 176 radio stations (124 FM and 52 AM) clustered in 34 U.S. markets.
The companies to be acquired as part of the Pending Acquisitions, including
the estimated purchase prices, are as follows:
<TABLE>
<S> <C>
JKJ Broadcasting, Inc., Missouri River Broadcasting, Inc., Ingstad
Mankato, Inc., James Ingstad Broadcasting, Inc., and Hometown
Wireless, Inc. ................................................. $ 40,200
Midland Broadcasters, Inc. ....................................... 10,425
Radio Ingstad Minnesota, Inc., Radio Albert Lea, Inc. and KRCH of
Minnesota, Inc. ................................................ 9,300
Communications Properties, Inc. ................................. 6,000
Ocmulgee Broadcasting............................................ 5,250
Tallahassee Broadcasting, Inc. .................................. 4,000
Tyron-Seacoast Communications, Inc. ............................. 4,000
Savannah Valley Broadcasting Radio Properties.................... 3,800
Pamplico Broadcasting, L.P. ..................................... 3,650
Phoenix Broadcast Partners, Inc. ................................ 3,500
K-Country, Inc. ................................................. 3,300
Clarendon County Broadcasting.................................... 3,250
American Communications Company Inc. ............................ 2,500
Albany Broadcasting Co. ......................................... 2,250
Mountain Wireless................................................ 2,200
Brillion Radio Company........................................... 2,065
Mustang Broadcasting Company..................................... 2,000
Esprit' Communication Corporation................................ 1,700
Nautical Broadcasting............................................ 525
WLOV(P&T Broadcasting............................................ 500
Less: Sale of WIMX-FM........................................... (1,500)
--------
Total $108,915
--------
--------
</TABLE>
<PAGE>
The pro forma combined statement of operations for the three months ended
March 31, 1998 gives effect to the Transactions (other than acquisitions
completed in 1997) as if they occurred on January 1, 1998. For pro forma
purposes, the pro forma combined statement of operations for the year ended
December 31, 1997 gives effect to the Transactions as if they had occurred on
January 1, 1997. For pro forma purposes, the Company's pro forma combined
balance sheet as of March 31, 1998 gives effect to the Transactions (except
for Completed Acquisitions consummated prior to March 31, 1998, in which case
the pro forma combined balance sheet gives effect to such transactions as of
the date of their consummation) as if they had occurred on March 31, 1998.
The pro forma combined financial statements are based on the historical
consolidated financial statements of the Company and the financial statements
of those entities acquired, or from which assets were acquired, in
conjunction with the Completed Acquisitions and the Pending Acquisitions.
The unaudited combined pro forma financial information reflects the use of
the purchase method of accounting for all acquisitions. For purposes of the
unaudited pro forma combined financial statements, the purchase prices of the
Completed Acquisitions and the Pending Acquisitions have been allocated based
primarily on information furnished by management of the acquired stations.
The final allocation of the relative purchase prices of the Completed
Acquisitions and the Pending Acquisitions are determined a reasonable time
after consummation of such transactions and are based on complete evaluations
of the assets acquired and liabilities assumed. Accordingly, the information
presented herein may differ from the final purchase price allocation;
however, in the opinion of the Company's management, the final purchase price
allocation will not differ significantly from the information presented
herein. In the opinion of the Company's management, all adjustments have
been made that are necessary presented herein. In the opinion of the
Company's management, all adjustments have been made that are necessary to
present fairly the pro forma data.
The unaudited pro forma information is presented for illustrative purposes
only and is not indicative of the operating results or financial position
that would have occurred if the Transactions had been consummated on the
dates indicated, nor is it indicative of future operating results or
financial positions if the aforementioned transactions are completed. The
failure of the aforementioned transactions to be completed would
significantly alter the unaudited pro forma information.
All pro forma financial information should be read in conjunction with the
Company's Consolidated Financial Statements and the financial statements of
certain of the other acquired companies included in the Company's
Registration Statement on Form S-1 (No. 333-48849).
<PAGE>
CUMULUS MEDIA INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF MARCH 31, 1998
(Dollars in thousands)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
PRO FORMA ADJUSTMENTS FOR ADJUSTMENTS FOR
THE COMPANY ADJUSTMENTS THE SUBSEQUENT THE PENDING PRO FORMA
HISTORICAL FOR THE OFFERINGS ACQUISITIONS ACQUISITIONS (4) COMBINED
---------- ----------------- ------------ ---------------- --------
<S> <C> <C> <C> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 23,416 $ 274,923 (1) $ (160,668)(3) $ (108,092) $ 29,579
Accounts receivable 10,238 - - - 10,238
Prepaid expenses and other current assets 1,587 - - - 1,587
---------- ---------- ---------- ----------- -----------
Total current assets 35,241 274,923 (160,668) (108,092) 41,404
Property and equipment, net 14,146 - 12,204 (3) 15,627 41,977
Intangible assets, net 150,973 - 172,828 (3) 94,079 417,880
Other assets 19,766 6,338 (1) (11,699)(3) (823) 13,582
---------- ---------- ---------- ----------- -----------
Total assets $ 220,126 $ 281,261 $ 12,665 $ 791 $ 514,843
========== ========== ========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and other liabilities $ 8,619 $ - $ - $ - $ 8,619
Current portion of long-term debt 12 - - - 12
---------- ---------- ---------- ----------- -----------
Total current liabilities 8,631 - - - 8,631
Long-term debt:
Notes - 160,000 (1) - - 160,000
Credit facility 120,252 (57,752)(1) - - 62,500
Other long-term liabilities:
Deferred tax liability 853 - 12,665 (3) 791 14,309
Other long-term liabilities 1,083 - - - 1,083
---------- ---------- ---------- ----------- -----------
Total liabilities 130,819 102,248 12,665 791 246,523
90,474 (1)
Preferred stock subject to mandatory redemption 30,518 4,008 (2) - - 125,000
---------- ---------- ---------- ----------- -----------
Stockholders' equity:
Class A Common Stock - 86 (1) - - 86
Class B Common Stock - 88 (1) - - 88
Class C Common Stock - 24 (1) - - 24
Additional paid in capital 67,692 84,333 (1) - - 152,025
Accumulated other comprehensive income 5 - - - 5
Retained earnings (deficit) (8,908) - - - (8,908)
---------- ---------- ---------- ----------- -----------
Total stockholders' equity 58,789 84,531 - - 143,320
Total liabilities and stockholders' equity $ 220,126 $ 281,261 $ 12,665 $ 791 $ 514,843
========== ========== ========== =========== ===========
</TABLE>
See accompanying notes to the unaudited combined pro forma balance sheet.
<PAGE>
Notes to the Unaudited Pro Forma Balance Sheet
As of March 31, 1998
(Dollars in Thousands)
(1) To reflect the net cash proceeds, after repayment of the Credit Facility,
from the Offerings as follows:
<TABLE>
<S> <C>
Issuance of Notes ($160,000 net of fees of $6,338) $153,662
Preferred Stock Offering to the public ($90,474 net
of fees of $4,262) 86,212
Stock Offerings ($101,200 to the Company net of fees of $8,399) 92,801
Credit Facility - Term loan 62,500
Less: Repayment of Credit Facility - Revolving line of credit (120,252)
---------
$274,923
---------
---------
</TABLE>
(2) An amount of $4,008 has been recorded for the accretion of the dividends and
discount on the NML Preferred Stock when exchanged into Series A Preferred
Stock.
(3) To record the acquisitions of Republic Corporation and the other Completed
Acquisitions for $172,367 ($160,668 in cash and the use of escrow deposits
of $11,699) and the allocations of the related purchase prices as follows:
<TABLE>
<CAPTION>
Other
Subsequent
Republic Completed Allocation of
Corporation Acquisitions Pro Forma Purchase
Historical Historical Adjustments Price
---------- ---------- ----------- -----
<S> <C> <C> <C> <C>
Assets:
Current assets:
Cash and cash equivalents $ 313 $ 1,243 $(173,923) $(172,367)
Accounts receivable 159 4,303 (4,462) -
Prepaid expenses and other current assets 752 467 (1,219) -
--------- ----------- ---------- ---------
Total current assets 1,224 6,013 (179,604) (172,367)
Property and equipment, net 2,997 8,752 455 12,204
Intangible assets, net 11,912 27,000 133,916 172,828
Other assets 621 165 (786) -
--------- ----------- ---------- ---------
Total assets $ 16,754 $ 41,930 $ (46,019) $ 12,665
--------- ----------- ---------- ---------
--------- ----------- ---------- ---------
Liabilities and stockholders' equity:
Current liabilities:
Accounts payable and other liabilities $ 707 $ 7,545 $ (8,252) -
Current portion of long-term debt - 8,910 (8,910) -
--------- ----------- ---------- ---------
Total current liabilities 707 16,455 (17,162) -
Long-term debt - 17,379 (17,379) -
Deferred tax liability 272 68 12,325 12,665
Other long-term liabilities - 775 (775) -
--------- ----------- ---------- ---------
Total liabilities 979 34,677 (22,991) 12,665
--------- ----------- ---------- ---------
Stockholders' equity 15,775 7,253 (23,028) -
--------- ----------- ---------- ---------
Total liabilities and stockholders' equity $ 16,754 $ 41,930 $ (46,019) $ 12,665
--------- ----------- ---------- ---------
--------- ----------- ---------- ---------
</TABLE>
(4) To record the allocation of the $108,915 in purchase price paid for the
Pending Acquisitions and the recording of the related deferred income taxes
of $791.
<PAGE>
CUMULUS MEDIA INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Pro Forma
Adjustments for Pro Forma
The Company the Company Adjustments 1998 Completed
Historical Historical(1) for the Offerings Acquisitions(4)
---------- ------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Statement of Operations Data:
Revenues $ 13,787 $ 1,083 $ - $ 7,723
Less: agency commissions (1,287) (99) - (565)
-------- -------- -------- --------
Net revenues 12,500 984 - 7,158
Station operating expenses 10,904 973 - 6,232
excluding depreciation and
amortization
Depreciation and amortization 2,748 175 - 1,302
Corporate general and
administrative expenses 961 - - -
Non-cash stock compensation expense - - - -
-------- -------- -------- --------
Operating income (loss) (2,113) (164) - (376)
Interest expense 1,374 78 4,278 (2) 931
Other (income) expense 6 (56) - 68
-------- -------- -------- --------
Income (loss) before income taxes (3,493) (186) (4,278) (1,375)
Income tax (expense) benefit - - - (7)
-------- -------- -------- --------
Net income (loss) (3,493) (186) (4,278) (1,382)
Preferred stock dividends 842 - 3,529 (3) -
-------- -------- -------- --------
Net income (loss) attributable to
common stockholders $ (4,335) $ (186) $ (7,807) $ (1,382)
======== ======== ======== ========
Basic and diluted earnings (loss)
per share $ (4,335)
Average shares outstanding (in thousands) 1
<CAPTION>
Pro Forma
Adjustments for the
Company Historical Pro Forma
and the 1998 Adjustments
Completed Pending for the Pending Pro Forma
Acquisitions Acquisitions Acquisitions Combined
------------ ------------ ------------ --------
<S> <C> <C> <C> <C>
Statement of Operations Data:
Revenues $ - $ 6,734 $ - $ 29,327
Less: agency commissions - (364) - (2,315)
-------- -------- -------- --------
Net revenues - 6,370 - 27,012
Station operating expenses - 5,829 - 23,938
excluding depreciation and
amortization
Depreciation and amortization 211 (5) 704 627 (5) 5,767
Corporate general and
administrative expenses - - - 961
Non-cash stock compensation expense - - - -
-------- -------- -------- --------
Operating income (loss) (211) (163) (627) (3,654)
Interest expense (620)(6) 675 (986)(6) 5,730
Other (income) expense - (78) - (60)
-------- -------- -------- --------
Income (loss) before income taxes 409 (760) 359 (9,324)
Income tax (expense) benefit - 27 - 20
-------- -------- -------- --------
Net income (loss) 409 (733) 359 (9,304)
Preferred stock dividends - - - 4,371
-------- -------- -------- --------
Net income (loss) attributable to
common stockholders $ 409 $ (733) $ 359 $(13,675)
======== ======== ======== ========
Basic and diluted earnings (loss)
per share $ (0.69)
Average shares outstanding (in thousands) 19,737
</TABLE>
See accompanying notes to Unaudited Pro Forma Combined Statement of Operations.
<PAGE>
Notes to the Unaudited Pro Forma Combined Statement of Operations
For the Three Months Ended March 31, 1998
(Dollars in thousands)
(1) Adjustments reflect historical revenues and expenses of stations
acquired by the Company in the first quarter of 1998 for the period from
January 1, 1998 through the date the stations were acquired by the
Company.
(2) Adjustment to reflect increased interest expense resulting from:
<TABLE>
<S> <C>
Quarterly interest expense on $160,000 Notes at 10.375%...................... $ 4,150
Quarterly interest expense on $62,500 outstanding under the Credit Facility
at 8.50%.................................................................. 1,328
Quarterly amortization of $6,338 Notes debt issuance costs over 10 years..... 158
Quarterly amortization of $3,000 Credit Facility, debt issuance costs
over 8 years................................................................. 94
---------
Total interest expense 5,730
Less: Historical interest recorded by the Company and recorded by the
stations acquired by the Company in the first quarter of 1998 for the
period from January 1, 1998 through the dates acquired by the Company..... (1,452)
---------
Net adjustment............................................................... $ 4,278
---------
---------
(3) To reflect additional accretion related to the Series A Preferred Stock
dividend:
Accretion of Series A Preferred Stock dividend (compounded daily
at 13.75%)................................................................ $ 4,371
Less: Historical dividends on NML Preferred Stock exchanged into Series
A Preferred Stock......................................................... (842)
---------
Net adjustment............................................................... $ 3,529
---------
---------
</TABLE>
(4) Adjustments reflect historical revenues and expenses of Republic
Corporation and the other stations acquired subsequent to March 31, 1998
as follows:
<TABLE>
<CAPTION>
Other
Republic 1998 1998
Corporation Completed Completed
Historical Historical Acquisitions
<S> <C> <C> <C>
Revenues $2,007 $5,716 $7,723
Less: agency commissions (155) (410) (565)
-------- -------- --------
Net revenues 1,852 5,306 7,158
Station operating expenses
excluding depreciation and
amortization 1,429 4,803 6,232
Depreciation and amortization 321 981 1,302
-------- -------- --------
Operating income (loss) 102 (478) (376)
Interest income expense, net (1) 932 931
Other (income) expense, net 15 53 68
-------- -------- --------
Income (loss) before income taxes 88 (1,463) (1,375)
Income tax (expense) benefit (11) 4 (7)
-------- -------- --------
Net income (loss) $77 ($1,459) ($1,382)
-------- -------- --------
-------- -------- --------
</TABLE>
<PAGE>
(5) Adjustments reflect (i) the change in depreciation and amortization
expense resulting from conforming the estimated useful lives of the
Completed Acquisitions and the Pending Acquisitions' assets to the
Company's policies and (ii) the additional depreciation and amortization
expense resulting from the allocation of the purchase price to the
estimated fair market value of the assts acquired. On a pro forma
basis, depreciation expense is $1,049 and amortization expense is $4,718
after giving effect to the Completed Acquisitions and the Pending
Acquisitions. Depreciation expense has been calculated on a straight
line basis using a weighted average life of 10 years for property and
equipment. Goodwill and other intangible assets amortization has been
calculated on a straight line basis over 25 years. Non-compete
agreements are being amortized over the lives of the agreements which
range from 2-5 years.
The Company allocates the purchase prices of the acquired stations based
on complete evaluations of the assets acquired and the liabilities
assumed. The Company believes that the excess of cost over the fair
value of tangible net assets of an acquired radio station almost
exclusively relates to the value of the FCC broadcasting license and
goodwill. The Company believes that the purchase price allocation
method described above is consistent with general practice in the radio
broadcasting industry.
(6) Adjustment to eliminate historical interest expense of the 1998
Completed Acquisitions and of the Pending Acquisitions.
In July 1998, the Company recorded the accretion of dividends and the
discount on the NML Preferred Stock of $4,008 when it was exchanged into
Series A Preferred Stock.
<PAGE>
CUMULUS MEDIA INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(Dollars in thousands, except per share data)
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<CAPTION>
Pro Forma
Adjustments for the
Pro Forma Company Historical
Adjustments for Pro Forma and the 1998
The Company the Company Adjustments 1998 Completed Completed
Historical(1) Historical(3) for the Offerings Acquisitions(6) Acquisitions
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<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues $ 10,134 $ 21,363 $ - $ 60,719 $ -
Less: agency commissions (971) (1,780) - (6,758) -
-------- -------- -------- -------- --------
Net revenues 9,163 19,583 - 53,961 -
-------- -------- -------- -------- --------
Station operating expenses 7,147 14,521 - 44,500 (956)(7)
excluding depreciation and
amortization
Depreciation and amortization 1,671 2,988 - 6,265 6,922 (8)
Corporate general and
administrative expenses 1,276 - - 34 956 (7)
Non-cash stock compensation expense 1,689 (2) - - - -
-------- -------- -------- -------- --------
Operating income (loss) (2,620) 2,074 - 3,162 (6,922)
-------- -------- -------- -------- --------
Interest expense 837 1,125 20,960 (4) 3,817 (2,696)
Gain (loss) on sale of asset - 12,261 - - (12,261)(9)
Other (income) expense 54 4 - 289 -
-------- -------- -------- -------- --------
Income (loss) before income taxes (3,511) 13,206 (20,960) (944) (16,487)
-------- -------- -------- -------- --------
Income tax (expense) benefit (67) (84) - 3,680 (3,724)(10)
-------- -------- -------- -------- --------
Net income (loss) (3,578) 13,122 (20,960) 2,736 (20,211)
Preferred stock dividends 274 - 18,147 (5) - -
-------- -------- -------- -------- --------
Net income (loss) attributable to
common stockholders $ (3,852) $ 13,122 $(39,107) $ 2,736 $(20,211)
======== ======== ======== ======== ========
Basic and diluted earnings (loss)
per share $ (3,852)
Average shares outstanding (in thousands) 1
<CAPTION>
Pro Forma
Adjustments
Pending for the Pending Pro Forma
Acquisitions Acquisitions Combined(1)
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<S> <C> <C> <C>
Statement of Operations Data:
Revenues $ 30,752 $ - $122,968
Less: agency commissions (1,683) - (11,192)
-------- -------- --------
Net revenues 29,069 - 111,776
-------- -------- --------
Station operating expenses 25,191 (2,494)(7) 87,909
excluding depreciation and
amortization
Depreciation and amortization 2,296 2,773 (8) 22,915
Corporate general and
administrative expenses - 2,494 (7) 4,760
Non-cash stock compensation expense 278 - 1,967
-------- -------- --------
Operating income (loss) 1,304 (2,773) (5,775)
-------- -------- --------
Interest expense 2,173 (3,294) 22,922
Gain (loss) on sale of asset 5,547 (5,547)(11) -
Other (income) expense (121) (122)(12) 104
-------- -------- --------
Income (loss) before income taxes 4,799 (4,904) (28,801)
-------- -------- --------
Income tax (expense) benefit - - (195)
-------- -------- --------
Net income (loss) 4,799 (4,904) (28,996)
Preferred stock dividends - - 18,421
-------- -------- --------
Net income (loss) attributable to
common stockholders $ 4,799 $ (4,904) $(47,417)
======== ======== ========
Basic and diluted earnings (loss)
per share $ (2.40)
Average shares outstanding (in thousands) 19,737
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See accompanying notes to Unaudited Pro Forma Combined Statement of Operations.
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Notes to the Unaudited Pro Forma Combined Statement of Operations
For the Year Ended December 31, 1997
(Dollars in thousands)
(1) The pro forma financial results exclude the effects of estimated cost
savings which management believes will result from the Completed
Acquisitions and the Pending Acquisitions. The Company expects to
realize approximately $7,430 of cost savings resulting from the
elimination of redundant station operating expenses arising from the
Completed and the Pending Acquisitions, including elimination of certain
management and staff positions, the consolidation of station facilities
and equipment, the elimination of previous owner compensation benefits
and new rates associated with revised vendor contracts. Also, the
Company expects to realize approximately $2,029 of cost savings from the
elimination of certain corporate overhead functions, net of increased
costs associated with the implementation of the Company's corporate
management structure. Corporate cost savings reflect the expected level
of annual corporate expenditures arising from the Completed Acquisitions
and the Pending Acquisitions. There can be no assurances that any
operating or corporate cost savings will be achieved.
(2) Amount represents a non-recurring, non-cash stock compensation expense
on common stock issued to certain employees and managers upon formation
of the Company.
(3) Adjustments reflect historical revenues and expenses of stations
acquired by the Company in 1997 for the period from January 1, 1997
through the date the stations were acquired by the Company.
(4) Adjustment to reflect increased interest expense resulting from:
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<S> <C>
Interest on the Notes at 10.375% $16,600
Interest on $62,500 outstanding under the Credit Facility at 8.5% 5,313
Amortization of $6,338 debt issuance costs over 10 years 634
Amortization of $3,000 Credit Facility transaction costs over 8 years 375
--------
Total interest expense 22,922
Less: Historical interest expense recorded by the Company and recorded by the
stations acquired by the Company in the year ended December 31, 1997 for the
period from January 1, 1997 through the dates acquired by the Company 1,962
--------
Net adjustment $20,960
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--------
(5) To reflect additional accretion related to Series A Preferred Stock dividend:
Accretion of Series A Preferred Stock dividend (compounded daily at
13.75%) $18,421
Less: Pro forma dividends on NML Preferred Stock exchanged into Series A
Preferred Stock (274)
--------
Net adjustment $18,147
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--------
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(6) Adjustments reflect historical revenues and expenses of Republic
Corporation and the other stations acquired by the Company subsequent to
January 1, 1998 as follows:
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<CAPTION>
Other
1998
Republic Completed 1998
Corporation Acquisitions Completed
Historical Historical Acquisitions
---------- ---------- ------------
<S> <C> <C> <C>
Revenues $ 11,691 $49,028 $60,719
Less: agency commissions (2,360) (4,398) (6,758)
--------- --------- ---------
Net revenues 9,331 44,360 53,961
Station operating expenses
excluding depreciation and
amortization 6,323 38,177 44,500
Depreciation and amortization 1,206 5,059 6,265
Corporate general and
administrative expenses - 34 34
--------- --------- ---------
Operating income 1,802 1,360 3,162
Interest expense (11) 3,828 3,817
Other (income) expense 32 257 289
--------- --------- ---------
Income (loss) before income taxes 1,781 (2,725) (944)
Income tax (expense) benefit 3,724 (44) 3,680
--------- --------- ---------
$5,505 ($2,769) $2,736
--------- --------- ---------
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(7) Adjustments reflect the reclassification of $956 and $2,494 of expenses
from station operating expenses excluding depreciation and amortization
to corporate general and administrative expenses to conform with the
Company's accounting practices.
(8) Adjustments reflect (i) the change in depreciation and amortization
expense resulting from conforming the estimated useful lives of the
Completed and the Pending Acquisitions' assets to the Company's policies
and (ii) the additional depreciation and amortization expense resulting
from the allocation of the purchase price to the estimated fair market
value of the assets acquired. On a pro forma basis, depreciation
expense is $19,021 and amortization expense is $3,894 after giving
effect to the Completed Acquisitions and the Pending Acquisitions.
Depreciation expense has been calculated on a straight line basis using
a weighted average life of 10 years for property and equipment.
Goodwill and other intangible assets amortization has been calculated on
a straight line basis over 25 years. Non-compete agreements are being
amortized over the lives of the agreements which range from 2-5 years.
The Company allocates the purchase prices of the acquired stations based
on complete evaluations of the assets acquired and the liabilities
assumed. The Company believes that the excess of cost over the fair
value of tangible net assets of an acquired radio station almost
exclusively relates to the value of the FCC broadcasting license and
goodwill. The Company believes that the purchase price allocation
method described above is consistent with general practice in the radio
broadcasting industry.
(9) Adjustment recorded to eliminate a non-recurring gain of $12,261
recognized by HVS Partners on the 1997 sales of radio stations in
Salisbury, MD and Wilmington, NC to the Company prior to the acquisition
by the Company of the remainder of HVS Partners' stations.
(10) Elimination of historical income tax benefit of Republic Corporation.
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(11) Adjustment recorded to eliminate a non-recurring gain of $1,462 and
$4,085 recognized by Communications Properties, Inc. and Radio Ingstad
Minnesota, Inc., Radio Albert Lea, Inc. and KRCH of Minnesota, Inc.,
respectively, (Pending Acquisitions of the Company). The non-recurring
gains were recognized by the respective Pending Acquisitions upon the
sale of radio stations not acquired by the Company.
(12) Elimination of interests of minority shareholders in connection with a
Pending Acquisition.
