UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 1O-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. | |
| For the Quarterly Period Ended June 30, 2002. | ||
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the Transition Period from to
Commission File Number 000-24525
CUMULUS MEDIA INC.
(Exact name of registrant as specified in its charter)
| Delaware (State or other jurisdiction of incorporation or organization) |
36-4159663 (I.R.S. Employer Identification No.) |
|
| 3535 Piedmont Road, Building 14, Fl 14, Atlanta, GA (Address of principal executive offices) |
30305 (Zip code) |
(404) 949-0700
Registrant’s telephone number, including area code:
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
As of July 31, 2002, the registrant had outstanding 62,327,109 shares of common stock consisting of (i) 48,437,284 shares of Class A Common Stock; (ii) 13,244,954 shares of Class B Common Stock; and (iii) 644,871 shares of Class C Common Stock.
CUMULUS MEDIA INC.
INDEX
| PART I. | FINANCIAL INFORMATION |
|||||||
| Item 1. | Financial Statements |
2 | ||||||
Consolidated Balance Sheets as of June 30, 2002 and December 31, 2001 |
2 | |||||||
Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2002
and 2001 |
3 | |||||||
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2002 and 2001 |
4 | |||||||
Notes to Consolidated Financial Statements |
5 | |||||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
13 | ||||||
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
21 | ||||||
| PART II. | OTHER INFORMATION |
|||||||
| Item 1 | Legal Proceedings |
22 | ||||||
| Item 2 | Changes in Securities and Use of Proceeds |
22 | ||||||
| Item 3 | Defaults Upon Senior Securities |
22 | ||||||
| Item 4 | Submission of Matters to a Vote of Security Holders |
22 | ||||||
| Item 5 | Other Information |
23 | ||||||
| Item 6 | Exhibits and Reports on Form 8-K |
23 | ||||||
| Signatures | 23 | |||||||
| Exhibit Index | ||||||||
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CUMULUS MEDIA INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except for share and per share data)
| (Unaudited) | ||||||||||||
| June 30, | December 31, | |||||||||||
| 2002 | 2001 | |||||||||||
Assets |
||||||||||||
Current assets: |
||||||||||||
Cash and cash equivalents |
$ | 209,465 | $ | 5,308 | ||||||||
Restricted cash |
13,000 | 13,000 | ||||||||||
Accounts receivable, less allowance for doubtful accounts
of $2,382 and $2,633 respectively |
52,639 | 34,394 | ||||||||||
Prepaid expenses and other current assets |
5,448 | 6,656 | ||||||||||
Deferred tax assets |
673 | 6,689 | ||||||||||
Total current assets |
281,225 | 66,047 | ||||||||||
Property and equipment, net |
93,991 | 82,974 | ||||||||||
Intangible assets, net |
1,106,471 | 791,863 | ||||||||||
Other assets |
17,797 | 24,433 | ||||||||||
Total assets |
$ | 1,499,484 | $ | 965,317 | ||||||||
Liabilities and Stockholders’ Equity |
||||||||||||
Current liabilities: |
||||||||||||
Accounts payable and accrued expenses |
$ | 50,193 | $ | 50,271 | ||||||||
Current portion of long-term debt |
1,870 | 770 | ||||||||||
Other current liabilities |
814 | 808 | ||||||||||
Total current liabilities |
52,877 | 51,849 | ||||||||||
Long-term debt |
445,823 | 319,248 | ||||||||||
Other liabilities |
2,510 | 2,984 | ||||||||||
Deferred income taxes |
141,948 | 32,863 | ||||||||||
Total liabilities |
643,158 | 406,944 | ||||||||||
Series A Cumulative Exchangeable Redeemable Preferred Stock
due 2009, stated value $1,000 per share, 134,489 and 130,020 shares
issued and outstanding, respectively |
134,489 | 134,489 | ||||||||||
Stockholders’ equity: |
||||||||||||
Class A common stock, par value $.01 per share; 100,000,000 shares authorized;
48,435,784 and 28,505,887 shares issued; 48,435,784 and 27,735,887
shares outstanding |
484 | 285 | ||||||||||
Class B common stock, par value $.01 per share; 20,000,000 shares authorized;
13,244,954 and 5,914,343 shares issued and outstanding |
132 | 59 | ||||||||||
Class C common stock, par value $.01 per share; 30,000,000 shares authorized;
644,871 and 1,529,277 shares issued and outstanding |
6 | 15 | ||||||||||
Additional paid-in-capital |
897,313 | 504,259 | ||||||||||
Accumulated deficit |
(166,114 | ) | (61,333 | ) | ||||||||
Issued Class A Common Stock held in escrow; 0 and 770,000 shares issued |
— | (9,417 | ) | |||||||||
Loan to officers |
(9,984 | ) | (9,984 | ) | ||||||||
Total stockholders’ equity |
721,837 | 423,884 | ||||||||||
Total liabilities and stockholders’ equity |
$ | 1,499,484 | $ | 965,317 | ||||||||
See Accompanying Notes to Consolidated Financial Statements
2
CUMULUS MEDIA INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except for share and per share data)
| (Unaudited) | ||||||||||||||||||||
| Three Months | Three Months | Six Months | Six Months | |||||||||||||||||
| Ended | Ended | Ended | Ended | |||||||||||||||||
| June 30, 2002 | June 30, 2001 | June 30, 2002 | June 30, 2001 | |||||||||||||||||
Revenues |
$ | 77,244 | $ | 60,966 | $ | 126,759 | $ | 109,931 | ||||||||||||
Less: agency commissions |
(7,462 | ) | (5,894 | ) | (12,029 | ) | (10,271 | ) | ||||||||||||
Net revenues |
69,782 | 55,072 | 114,730 | 99,660 | ||||||||||||||||
Operating expenses: |
||||||||||||||||||||
Station operating expenses, excluding
depreciation, amortization
and LMA fees (including provision for doubtful
accounts of
$505, $1,698, $856 and $2,649, respectively) |
40,830 | 36,719 | 74,270 | 72,131 | ||||||||||||||||
Depreciation and amortization |
4,748 | 12,081 | 8,920 | 24,365 | ||||||||||||||||
LMA fees |
172 | 1,154 | 257 | 2,168 | ||||||||||||||||
Corporate general and administrative (excluding non-cash stock
compensation (income) expense of $(105), $0, $57 and $0,
respectively) |
3,431 | 3,669 | 6,979 | 7,503 | ||||||||||||||||
Non-cash stock compensation |
(105 | ) | — | 57 | — | |||||||||||||||
Restructuring and other charges |
— | (33 | ) | — | (33 | ) | ||||||||||||||
Total operating expenses |
49,076 | 53,590 | 90,483 | 106,134 | ||||||||||||||||
Operating income (loss) |
20,706 | 1,482 | 24,247 | (6,474 | ) | |||||||||||||||
Nonoperating income (expense): |
||||||||||||||||||||
Interest expense |
(8,325 | ) | (7,754 | ) | (15,351 | ) | (15,721 | ) | ||||||||||||
Interest income |
374 | 1,121 | 624 | 1,698 | ||||||||||||||||
Loss on early extinguishments of debt |
— | — | (6,291 | ) | — | |||||||||||||||
Other income (expense), net |
2,674 | (8,850 | ) | 1,480 | 7,398 | |||||||||||||||
Total nonoperating expenses, net |
(5,277 | ) | (15,483 | ) | (19,538 | ) | (6,625 | ) | ||||||||||||
Income (loss) before income taxes |
15,429 | (14,001 | ) | 4,709 | (13,099 | ) | ||||||||||||||
Income tax (expense) benefit |
(5,386 | ) | 1,932 | (67,790 | ) | 1,644 | ||||||||||||||
Income (loss) before the cumulative effect of a
change in accounting principle, net of tax |
10,043 | (12,069 | ) | (63,081 | ) | (11,455 | ) | |||||||||||||
Cumulative effect of a change in accounting principle, net of tax |
— | — | (41,700 | ) | — | |||||||||||||||
Net income (loss) |
10,043 | (12,069 | ) | (104,781 | ) | (11,455 | ) | |||||||||||||
Preferred stock dividends, deemed dividends and
accretion of discount |
4,623 | 4,387 | 9,245 | 8,476 | ||||||||||||||||
Net income (loss) attributable to common stockholders |
$ | 5,420 | $ | (16,456 | ) | $ | (114,026 | ) | $ | (19,931 | ) | |||||||||
Basic income (loss) per common share |
||||||||||||||||||||
Income (loss) per common share before the
cumulative effect of a change in accounting principle |
$ | 0.10 | $ | (0.47 | ) | $ | (1.56 | ) | $ | (0.57 | ) | |||||||||
Cumulative effect of a change in accounting principle |
— | — | (0.90 | ) | — | |||||||||||||||
Income (loss) per common share |
$ | 0.10 | $ | (0.47 | ) | $ | (2.46 | ) | $ | (0.57 | ) | |||||||||
Diluted income (loss) per common share |
||||||||||||||||||||
Income (loss) per common share before the
cumulative effect of a change in accounting principle |
$ | 0.09 | $ | (0.47 | ) | $ | (1.56 | ) | $ | (0.57 | ) | |||||||||
Cumulative effect of a change in accounting principle |
— | — | (0.90 | ) | — | |||||||||||||||
Income (loss) per common share |
$ | 0.09 | $ | (0.47 | ) | $ | (2.46 | ) | $ | (0.57 | ) | |||||||||
Weighted average basic common shares outstanding |
56,066,509 | 35,215,048 | 46,277,704 | 35,210,236 | ||||||||||||||||
Weighted average diluted common shares outstanding |
59,296,615 | 35,215,048 | 46,277,704 | 35,210,236 | ||||||||||||||||
See Accompanying Notes to Consolidated Financial Statements
3
CUMULUS MEDIA INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
| (Unaudited) | ||||||||||
| Six Months | Six Months | |||||||||
| Ended | Ended | |||||||||
| June 30, 2002 | June 30, 2001 | |||||||||
Cash flows from operating activities: |
||||||||||
Net income (loss) |
$ | (104,781 | ) | $ | (11,455 | ) | ||||
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities: |
||||||||||
Cumulative effect of a change in accounting principle |
41,700 | — | ||||||||
Loss on early extinguishments of debt |
6,291 | — | ||||||||
Depreciation |
8,172 | 7,274 | ||||||||
Amortization of goodwill, intangible assets and other assets |
1,590 | 18,145 | ||||||||
Provision for doubtful accounts |
856 | 2,649 | ||||||||
Gain on sale of stations |
(4,339 | ) | (16,304 | ) | ||||||
Stock issuance portion of litigation settlement |
1,325 | — | ||||||||
Deferred taxes |
67,790 | (1,644 | ) | |||||||
Non-cash stock compensation |
57 | — | ||||||||
Changes in assets and liabilities, net of effects of acquisitions: |
||||||||||
Accounts receivable |
(12,541 | ) | 633 | |||||||
Prepaid expenses and other current assets |
1,475 | 5,662 | ||||||||
Accounts payable and accrued expenses |
11,243 | 3,741 | ||||||||
Other assets |
(425 | ) | (1,571 | ) | ||||||
Other liabilities |
(567 | ) | (225 | ) | ||||||
Net cash provided by operating activities |
17,846 | 6,905 | ||||||||
Cash flows from investing activities: |
||||||||||
Acquisitions |
(123,373 | ) | (81,251 | ) | ||||||
Dispositions |
4,149 | 38,186 | ||||||||
Escrow deposits on pending acquisitions |
(316 | ) | (827 | ) | ||||||
Capital expenditures |
(4,705 | ) | (4,021 | ) | ||||||
Acquisition costs and other |
(3,380 | ) | (673 | ) | ||||||
Net cash (used in) investing activities |
(127,625 | ) | (48,586 | ) | ||||||
Cash flows from financing activities: |
||||||||||
Proceeds from revolving line of credit |
287,500 | 42,500 | ||||||||
Payments on revolving line of credit |
(159,813 | ) | (2,500 | ) | ||||||
Payments on promissory notes |
(12 | ) | (11 | ) | ||||||
Payments for debt issuance costs |
(3,731 | ) | (686 | ) | ||||||
Payment of dividends on Series A Preferred Stock |
(9,245 | ) | — | |||||||
Net proceeds from issuance of common stock |
199,237 | 1 | ||||||||
| &nbs | ||||||||||