þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For or the transition period from to |
Delaware (State or Other Jurisdiction of Incorporation or Organization) |
36-4159663 (I.R.S. Employer Identification No.) |
|
3280 Peachtree Road, NW Suite 2300, Atlanta, GA (Address of Principal Executive Offices) |
30305 (ZIP Code) |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer o | Smaller reporting company þ | |||
(Do not check if a smaller reporting company) |
2
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 29,553 | $ | 12,814 | ||||
Restricted cash |
600 | 604 | ||||||
Accounts receivable, less allowance for
doubtful accounts of $1,191 and $1,115 in 2011 and
2010, respectively |
40,603 | 38,267 | ||||||
Trade receivable |
4,149 | 3,605 | ||||||
Prepaid expenses and other current assets |
4,243 | 4,403 | ||||||
Total current assets |
79,148 | 59,693 | ||||||
Property and equipment, net |
37,981 | 39,684 | ||||||
Intangible assets, net |
170,745 | 160,970 | ||||||
Goodwill |
60,422 | 56,079 | ||||||
Other assets |
18,905 | 3,210 | ||||||
Total assets |
$ | 367,201 | $ | 319,636 | ||||
Liabilities and Stockholders Deficit |
||||||||
Current liabilities: |
||||||||
Accounts payable and accrued expenses |
$ | 28,687 | $ | 20,365 | ||||
Trade payable |
4,074 | 3,569 | ||||||
Derivative instrument |
| 3,683 | ||||||
Current portion of long-term debt |
| 15,165 | ||||||
Total current liabilities |
32,761 | 42,782 | ||||||
Long-term debt |
| 575,843 | ||||||
Senior notes |
610,000 | | ||||||
Other liabilities |
17,887 | 17,590 | ||||||
Deferred income taxes |
29,029 | 24,730 | ||||||
Total liabilities |
689,677 | 660,945 | ||||||
Stockholders Deficit: |
||||||||
Preferred stock, 20,262,000 shares authorized,
par value $0.01 per share, including: 250,000 shares
designated as 13 3/4% Series A Cumulative Exchangeable
Redeemable Preferred Stock due 2009,
stated value $1,000 per share; 0 shares issued and outstanding
in both 2011 and 2010; and 12,000
shares designated as 12% Series B Cumulative Preferred Stock,
stated value $10,000 per share;
0 shares issued and outstanding in both
2011 and 2010 |
| | ||||||
Class A common stock, par value $0.01 per share; 200,000,000
shares authorized; 59,622,249 and
59,599,857 shares issued, and 36,098,371 and 35,538,530 shares
outstanding in 2011 and 2010,respectively |
596 | 596 | ||||||
Class B common stock, par value $0.01 per share; 20,000,000 shares
authorized; 5,809,191 shares
issued and outstanding in both 2011 and
2010 |
58 | 58 | ||||||
Class C common stock, par value $0.01 per share; 30,000,000 shares
authorized; 644,871 shares
issued and outstanding in both 2011 and
2010 |
6 | 6 | ||||||
Treasury stock, at cost, 23,523,878 and 24,061,327 shares in 2011
and 2010, respectively |
(251,148 | ) | (256,792 | ) | ||||
Additional paid-in-capital |
959,885 | 964,156 | ||||||
Accumulated deficit |
(1,031,873 | ) | (1,049,333 | ) | ||||
Total stockholders deficit |
(322,476 | ) | (341,309 | ) | ||||
Total liabilities and stockholders deficit |
$ | 367,201 | $ | 319,636 | ||||
3
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Broadcast revenues |
$ | 68,053 | $ | 68,739 | $ | 124,787 | $ | 124,097 | ||||||||
Management fees |
1,125 | 1,000 | 2,250 | 2,000 | ||||||||||||
Net revenues |
69,178 | 69,739 | 127,037 | 126,097 | ||||||||||||
Operating expenses: |
||||||||||||||||
Station operating expenses
(excluding depreciation,
amortization and
LMA fees) |
39,158 | 40,416 | 76,713 | 80,343 | ||||||||||||
Depreciation and amortization |
1,889 | 2,391 | 4,012 | 4,908 | ||||||||||||
LMA fees |
560 | 364 | 1,141 | 893 | ||||||||||||
Corporate, general and
administrative expenses (including
non-cash
stock compensation of $598,
$561, $1,187 and $460,
respectively) |
9,139 | 5,079 | 17,271 | 9,144 | ||||||||||||
Gain on exchange of assets or
stations |
(120 | ) | | (15,278 | ) | | ||||||||||
Realized loss on derivative
instrument |
1,205 | 480 | 1,244 | 1,064 | ||||||||||||
Total operating expenses |
51,831 | 48,730 | 85,103 | 96,352 | ||||||||||||
Operating income |
17,347 | 21,009 | 41,934 | 29,745 | ||||||||||||
Non-operating (expense) income: |
||||||||||||||||
Interest expense |
(9,182 | ) | (7,315 | ) | (15,502 | ) | (16,146 | ) | ||||||||
Interest income |
4 | 2 | 6 | 4 | ||||||||||||
Loss on early extinguishment of debt |
(4,366 | ) | | (4,366 | ) | | ||||||||||
Other expense, net |
(92 | ) | (28 | ) | (93 | ) | (81 | ) | ||||||||
Total non-operating expense, net |
(13,636 | ) | (7,341 | ) | (19,955 | ) | (16,223 | ) | ||||||||
Income before income taxes |
3,711 | 13,668 | 21,979 | 13,522 | ||||||||||||
Income tax expense |
(2,370 | ) | (1,364 | ) | (4,519 | ) | (1,362 | ) | ||||||||
Net income |
$ | 1,341 | $ | 12,304 | $ | 17,460 | $ | 12,160 | ||||||||
Basic and diluted income per common
share (see Note 8,
Earnings Per Share): |
||||||||||||||||
Basic income per common share |
$ | 0.03 | $ | 0.29 | $ | 0.41 | $ | 0.29 | ||||||||
Diluted income per common share |
$ | 0.03 | $ | 0.29 | $ | 0.40 | $ | 0.28 | ||||||||
Weighted average basic common shares
outstanding |
40,762,233 | 40,327,406 | 40,667,773 | 40,296,878 | ||||||||||||
Weighted average diluted common shares
outstanding |
41,784,558 | 41,468,250 | 41,725,933 | 41,254,316 | ||||||||||||
4
Six Months Ended June 30, | ||||||||
2011 | 2010 | |||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | 17,460 | $ | 12,160 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
4,012 | 4,908 | ||||||
Amortization of debt issuance costs/discounts |
733 | 603 | ||||||
Loss on early extinguishment of debt |
4,366 | | ||||||
Provision for doubtful accounts |
644 | 654 | ||||||
Loss on sale of assets or stations |
93 | 81 | ||||||
Gain on exchange of assets or stations |
(15,278 | ) | | |||||
Fair value adjustment of derivative instruments |
(2,439 | ) | (4,302 | ) | ||||
Deferred income taxes |
4,299 | 1,225 | ||||||
Non-cash stock compensation |
1,187 | 460 | ||||||
Changes in assets and liabilities: |
||||||||
Restricted cash |
4 | 160 | ||||||
Accounts receivable |
(2,979 | ) | (2,223 | ) | ||||
Trade receivable |
(544 | ) | (169 | ) | ||||
Prepaid expenses and other current assets |
487 | 1,573 | ||||||
Other assets |
710 | 1,769 | ||||||
Accounts payable and accrued expenses |
8,011 | 1,140 | ||||||
Trade payable |
504 | 73 | ||||||
Other liabilities |
(948 | ) | 290 | |||||
Net cash provided by operating activities |
20,322 | 18,402 | ||||||
Cash flows from investing activities: |
||||||||
Capital expenditures |
(1,505 | ) | (1,190 | ) | ||||
Purchase of intangible assets |
(170 | ) | (230 | ) | ||||
Proceeds from sale of assets or stations |
| 196 | ||||||
Net cash used in investing activities |
(1,675 | ) | (1,224 | ) | ||||
Cash flows from financing activities: |
||||||||
Proceeds from issuance of senior notes |
610,000 | | ||||||
Repayments of borrowings from bank credit facility |
(593,754 | ) | (21,190 | ) | ||||
Tax withholding payments on behalf of employees |
(666 | ) | (184 | ) | ||||
Proceeds from exercise of warrants |
19 | | ||||||
Deferred financing costs |
(17,507 | ) | | |||||
Net cash used in financing activities |
(1,908 | ) | (21,374 | ) | ||||
Increase (decrease) in cash and cash equivalents |
16,739 | (4,196 | ) | |||||
Cash and cash equivalents at beginning of period |
12,814 | 16,224 | ||||||
Cash and cash equivalents at end of period |
$ | 29,553 | $ | 12,028 | ||||
Supplemental disclosures of cash flow information: |
||||||||
Interest paid |
$ | 12,214 | $ | 21,213 | ||||
Income taxes paid |
144 | 259 | ||||||
Trade revenue |
7,611 | 8,375 | ||||||
Trade expense |
7,326 | 8,251 |
5
6
Allocation | Amount | |||
Fixed assets |
$ | 1,790 | ||
Broadcast licenses |
11,190 | |||
Goodwill |
4,342 | |||
Other intangibles |
72 | |||
Total purchase price |
$ | 17,394 | ||
Less: Carrying value of Canton station |
(2,116 | ) | ||
Gain on asset exchange |
$ | 15,278 | ||
7
8
Fair Value | ||||||||||||
Balance Sheet Location | June 30, 2011 | December 31, 2010 | ||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||
Green Bay Option |
Other long-term liabilities | $ | 9,274 | $ | 8,030 | |||||||
May 2005 Option |
Other current liabilities | | 3,683 | |||||||||
Total | $ | 9,274 | $ | 11,713 | ||||||||
Amount of (Expense) Income | ||||||||||||
Recognized on Derivatives | ||||||||||||
Statement of | For the Three Months | For the Six Months | ||||||||||
Derivative Instruments | Operations Location | Ended June 30, 2011 | Ended June 30, 2011 | |||||||||
Green Bay Option |
Realized loss on derivative instrument | $ | (1,204 | ) | $ | (1,244 | ) | |||||
May 2005 Option |
Interest expense | | 3,683 | |||||||||
Total | $ | (1,204 | ) | $ | 2,439 | |||||||
- |
Fair Value Measurements at Reporting Date Using | ||||||||||||||||
Quoted | Significant | |||||||||||||||
Prices in | Other | Significant | ||||||||||||||
Active | Observable | Unobservable | ||||||||||||||
Total Fair | Markets | Inputs | Inputs | |||||||||||||
Value | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Financial Liabilities: |
||||||||||||||||
Other current liabilities |
||||||||||||||||
Green Bay Option (1) |
$ | 9,274 | $ | | $ | | $ | 9,274 | ||||||||
Total liabilities |
$ | 9,274 | $ | | $ | | $ | 9,274 | ||||||||
(1) | The fair value of the Green Bay Option was determined using inputs that are supported by little or no market activity (a Level 3 fair value measurement). The fair value represents an estimate of the net amount that the Company would pay if the option was transferred to another party as of the date of the valuation. The option valuation incorporates a credit risk adjustment to reflect the probability of default by the Company. |
9
Description | Green Bay Option | |||
Fair value balance at December 31, 2010 |
$ | 8,030 | ||
Add: Mark to market fair value adjustment |
1,244 | |||
Fair value balance at June 30, 2011 |
$ | 9,274 | ||
| total term of 2.2 years; |
| volatility rate of 35.7%; |
| annual dividend rate of 0.0%; |
| discount rate of 0.5%; and |
| market value of Green Bay station of $7.0 million. |
June 30, 2011 | December 31, 2010 | |||||||
Carrying value of senior notes |
$ | 610,000 | $ | | ||||
Carrying value of term loan |
$ | | $ | 593,755 | ||||
Fair value of total debt |
$ | 588,650 | $ | 547,850 |
10
Six Months Ended June 30, | ||||||||
2011 | 2010 | |||||||
Income Statement Data: |
||||||||
Revenues |
$ | 88,007 | $ | 90,624 | ||||
Operating expenses |
50,132 | 59,322 | ||||||
Net income |
8,349 | 9,741 | ||||||
Balance Sheet Data: |
||||||||
Assets |
414,063 | 459,414 | ||||||
Liabilities |
822,755 | 885,999 | ||||||
Shareholders deficit |
(408,692 | ) | (426,585 | ) |
June 30, 2011 | December 31, 2010 | |||||||
Senior notes due 2019 |
$ | 610,000 | $ | | ||||
Term loan |
| 593,754 | ||||||
Less: Debt discount |
| (2,746 | ) | |||||
Less: Current portion of long-term debt |
| (15,165 | ) | |||||
Long-term debt, net of debt discount |
$ | 610,000 | $ | 575,843 | ||||
11
12
Three Months Ended | Six Months Ended | |||||||||||||||||
June 30, | June 30, | |||||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||||
Basic Earnings Per Share |
||||||||||||||||||
Numerator: |
||||||||||||||||||
Undistributed net income |
$ | 1,341 | $ | 12,304 | $ | 17,460 | $ | 12,160 | ||||||||||
Participation rights of unvested restricted stock in undistributed
earnings |
56 | 495 | 704 | 444 | ||||||||||||||
Basic undistributed net income attributable to common shares |
$ | 1,285 | $ | 11,809 | $ | 16,756 | $ | 11,716 | ||||||||||
Denominator: |
||||||||||||||||||
Basic weighted average common shares outstanding |
40,762 | 40,327 | 40,668 | 40,297 | ||||||||||||||
Basic Earnings Per Share attributable to common shares |
$ | 0.03 | $ | 0.29 | $ | 0.41 | $ | 0.29 | ||||||||||
Diluted Earnings Per Share: |
||||||||||||||||||
Numerator: |
||||||||||||||||||
Undistributed net income |
$ | 1,341 | $ | 12,304 | $ | 17,460 | $ | 12,160 | ||||||||||
Participation rights of unvested restricted stock in undistributed earnings |
55 | 482 | 687 | 434 | ||||||||||||||
Basic undistributed net income attributable to common shares |
$ | 1,286 | $ | 11,822 | $ | 16,773 | $ | 11,726 | ||||||||||
Denominator: |
||||||||||||||||||
Basic weighted average shares outstanding |
40,762 | 40,327 | 40,668 | 40,297 | ||||||||||||||
Effect of dilutive options and warrants (1) |
1,022 | 1,141 | 1,058 | 957 | ||||||||||||||
Diluted weighted average shares outstanding |
41,784 | 41,468 | 41,726 | 41,254 | ||||||||||||||
Diluted Earnings Per Share attributable to common shares |
$ | 0.03 | $ | 0.29 | $ | 0.40 | $ | 0.28 | ||||||||||
(1) | For the three and six months ended June 30, 2011, options to purchase 184,995 shares and 206,520 shares, respectively, of common stock, were outstanding but excluded from the EPS calculation because the exercise prices of the options were equal to or exceeded the average share price for the period and, as a result, the inclusion of such options would have been antidilutive. For each of the three and six months ended June 30, 2010, options to purchase 1,955,024 shares of common stock were outstanding but excluded from the EPS calculation because the exercise prices of the options were equal to or exceeded the average share price for the period and, as a result, the inclusion of such options would have been antidilutive. Additionally, for the three and six months ended June 30, 2011 and 2010, the Company excluded from the EPS calculation certain warrants because including the warrants would have been antidilutive. |
13
June 30, 2011 | ||||
Restricted shares of Class A Common Stock |
1,776,226 | |||
Options to purchase Class A Common Stock |
785,009 |
14
15
Indefinite Lived | Definite Lived | Total | ||||||||||||
Intangible Assets: |
||||||||||||||
Balance as of December 31, 2009 |
$ | 160,801 | $ | 579 | $ | 161,380 | ||||||||
Acquisition |
230 | | 230 | |||||||||||
Amortization |
| (201 | ) | (201 | ) | |||||||||
Impairment |
(629 | ) | | (629 | ) | |||||||||
Reclassifications |
16 | 174 | 190 | |||||||||||
Balance as of December 31, 2010 |
$ | 160,418 | $ | 552 | $ | 160,970 | ||||||||
Acquisition |
11,355 | 77 | 11,432 | |||||||||||
Disposition |
(1,533 | ) | (83 | ) | (1,616 | ) | ||||||||
Amortization |
| (41 | ) | (41 | ) | |||||||||
Balance as of June 30, 2011 |
$ | 170,240 | $ | 505 | $ | 170,745 | ||||||||
2011 | 2010 | |||||||
Balance as of January 1: |
||||||||
Goodwill |
$ | 285,820 | $ | 285,820 | ||||
Accumulated impairment losses |
(229,741 | ) | (229,699 | ) | ||||
Subtotal |
56,079 | 56,121 | ||||||
Goodwill acquired during the year |
4,343 | | ||||||
Balance as of June 30: |
||||||||
Goodwill |
290,163 | 285,820 | ||||||
Accumulated impairment losses |
(229,741 | ) | (229,699 | ) | ||||
Total |
$ | 60,422 | $ | 56,121 | ||||
16
17
Six Months Ended June 30, | ||||||||
2011 | 2010 | |||||||
Income Statement Data: |
||||||||
Revenues |
$ | 88,007 | $ | 90,624 | ||||
Operating expenses |
50,132 | 59,322 | ||||||
Net income |
8,349 | 9,741 | ||||||
Balance Sheet Data: |
||||||||
Assets |
414,063 | 459,414 | ||||||
Liabilities |
822,755 | 885,999 | ||||||
Shareholders deficit |
(408,692 | ) | (426,585 | ) |
18
19
20
For the Three Months | ||||||||||||||||
Ended June 30, | 2011 vs 2010 | |||||||||||||||
2011 | 2010 | $ Change | % Change | |||||||||||||
STATEMENT OF OPERATIONS DATA: |
||||||||||||||||
Net revenues |
$ | 69,178 | $ | 69,739 | $ | (561 | ) | -0.8 | % | |||||||
Station operating expenses (excluding depreciation,
amortization and LMA fees) |
39,158 | 40,416 | (1,258 | ) | -3.1 | % | ||||||||||
Depreciation and amortization |
1,889 | 2,391 | (502 | ) | -21.0 | % | ||||||||||
LMA fees |
560 | 364 | 196 | 53.8 | % | |||||||||||
Corporate general and administrative expenses (including
non-cash stock compensation expense) |
9,139 | 5,079 | 4,060 | 79.9 | % | |||||||||||
Gain on exchange of assets or stations |
(120 | ) | | (120 | ) | ** | ||||||||||
Realized loss on derivative instrument |
1,205 | 480 | 725 | 151.0 | % | |||||||||||
Operating income |
17,347 | 21,009 | (3,662 | ) | -17.4 | % | ||||||||||
Interest expense, net |
(9,178 | ) | (7,313 | ) | (1,865 | ) | 25.5 | % | ||||||||
Losses on early extinguishment of debt |
(4,366 | ) | | (4,366 | ) | ** | ||||||||||
Other expense, net |
(92 | ) | (28 | ) | (64 | ) | 228.6 | % | ||||||||
Income tax expense |
(2,370 | ) | (1,364 | ) | (1,006 | ) | 73.8 | % | ||||||||
Net income |
$ | 1,341 | $ | 12,304 | $ | (10,963 | ) | -89.1 | % | |||||||
OTHER DATA: |
||||||||||||||||
Station Operating Income (1) |
$ | 30,020 | $ | 29,323 | $ | 697 | 2.4 | % | ||||||||
Station Operating Income margin (2) |
43.4 | % | 42.0 | % | ** | 1.4 | % |
For the Six Months | ||||||||||||||||
Ended June 30, | 2011 vs 2010 | |||||||||||||||
2011 | 2010 | $ Change | % Change | |||||||||||||
STATEMENT OF OPERATIONS DATA: |
||||||||||||||||
Net revenues |
$ | 127,037 | $ | 126,097 | $ | 940 | 0.7 | % | ||||||||
Station operating expenses (excluding depreciation,
amortization and LMA fees) |
76,713 | 80,343 | (3,630 | ) | -4.5 | % | ||||||||||
Depreciation and amortization |
4,012 | 4,908 | (896 | ) | -18.3 | % | ||||||||||
LMA fees |
1,141 | 893 | 248 | 27.8 | % | |||||||||||
Corporate general and administrative expenses (including
non-cash stock compensation expense) |
17,271 | 9,144 | 8,127 | 88.9 | % | |||||||||||
Gain on exchange of assets or stations |
(15,278 | ) | | (15,278 | ) | ** | ||||||||||
Realized loss on derivative instrument |
1,244 | 1,064 | 180 | 16.9 | % | |||||||||||
Operating income |
41,934 | 29,745 | 12,189 | 41.0 | % | |||||||||||
Interest expense, net |
(15,496 | ) | (16,142 | ) | 646 | -4.0 | % | |||||||||
Losses on early extinguishment of debt |
(4,366 | ) | | (4,366 | ) | ** | ||||||||||
Other expense, net |
(93 | ) | (81 | ) | (12 | ) | 14.8 | % | ||||||||
Income tax expense |
(4,519 | ) | (1,362 | ) | (3,157 | ) | 231.8 | % | ||||||||
Net income |
$ | 17,460 | $ | 12,160 | $ | 5,300 | 43.6 | % | ||||||||
OTHER DATA: |
||||||||||||||||
Station Operating Income (1) |
$ | 50,324 | $ | 45,754 | $ | 4,570 | 10.0 | % | ||||||||
Station Operating Income margin (2) |
39.6 | % | 36.3 | % | ** | 3.3 | % |
** | Calculation is not meaningful. | |
(1) | Station Operating Income consists of operating income before depreciation and amortization, LMA fees, non-cash stock compensation expense, corporate, general and administrative expenses, any gain on exchange of assets or stations, and any realized loss on derivative instruments. Station Operating Income is not a measure of performance calculated in accordance with GAAP. Station Operating Income should not be considered in isolation or as a substitute for net income (loss), operating income, cash flows from operating activities or any other measure for determining our operating performance or liquidity that is calculated in |
21
accordance with GAAP. See managements explanation of this measure and the reasons for its use and presentation, along with a quantitative reconciliation of Station Operating Income to its most directly comparable financial measure calculated and presented in accordance with GAAP, below under Station Operating Income. | ||
(2) | Station Operating Income margin is defined as Station Operating Income as a percentage of net revenues. |
For the Three Months | ||||||||||||||||
Ended June 30, | 2011 vs 2010 | |||||||||||||||
2011 | 2010 | $ Change | % Change | |||||||||||||
Senior notes due 2019 |
$ | 6,435 | $ | | $ | 6,435 | * | * | ||||||||
Bank Borrowings term loan and revolving credit facilities |
2,350 | 6,755 | (4,405 | ) | -65.2 | % | ||||||||||
Bank Borrowings yield adjustment interest rate swap |
| 3,695 | (3,695 | ) | * | * | ||||||||||
Change in fair value of interest rate option agreement |
| (3,454 | ) | 3,454 | * | * | ||||||||||
Other interest expense |
395 | 319 | 76 | 23.8 | % | |||||||||||
Interest income |
(2 | ) | (2 | ) | | 0.0 | % | |||||||||
Interest expense, net |
$ | 9,178 | $ | 7,313 | $ | 1,865 | 25.5 | % | ||||||||
** | Calculation is not meaningful. |
22
23
For the Three Months | ||||||||||||||||
Ended June 30, | 2011 vs 2010 | |||||||||||||||
2011 | 2010 | $ Change | % Change | |||||||||||||
Operating income |
$ | 17,347 | $ | 21,009 | $ | (3,662 | ) | -17.4 | % | |||||||
Depreciation and amortization |
1,889 | 2,391 | (502 | ) | -21.0 | % | ||||||||||
LMA fees |
560 | 364 | 196 | 53.8 | % | |||||||||||
Non-cash stock compensation |
598 | 561 | 37 | 6.6 | % | |||||||||||
Corporate general and administrative |
8,541 | 4,518 | 4,023 | 89.0 | % | |||||||||||
Gain on exchange of assets or stations |
(120 | ) | | (120 | ) | * | * | |||||||||
Realized loss on derivative instrument |
1,205 | 480 | 725 | 151.0 | % | |||||||||||
Station Operating Income |
$ | 30,020 | $ | 29,323 | $ | 697 | 2.4 | % | ||||||||
** | Calculation is not meaningful. |
24
For the Six Months | ||||||||||||||||
Ended June 30, | 2011 vs 2010 | |||||||||||||||
2011 | 2010 | $ Change | % Change | |||||||||||||
Senior notes due 2019 |
$ | 6,435 | $ | | $ | 6,435 | * | * | ||||||||
Bank Borrowings term loan and revolving credit facilities |
8,306 | 13,433 | (5,127 | ) | -38.2 | % | ||||||||||
Bank Borrowings yield adjustment interest rate swap |
3,708 | 7,434 | (3,726 | ) | -50.1 | % | ||||||||||
Change in fair value of interest rate option agreement |
(3,680 | ) | (5,367 | ) | 1,687 | -31.4 | % | |||||||||
Other interest expense |
731 | 646 | 85 | 13.2 | % | |||||||||||
Interest income |
(4 | ) | (4 | ) | | 0.0 | % | |||||||||
Interest expense, net |
$ | 15,496 | $ | 16,142 | $ | (646 | ) | -4.0 | % | |||||||
** | Calculation is not meaningful. |
For the Six Months | ||||||||||||||||
Ended June 30, | 2011 vs 2010 | |||||||||||||||
2011 | 2010 | $ Change | % Change | |||||||||||||
Operating income |
$ | 41,934 | $ | 29,745 | $ | 12,189 | 41.0 | % | ||||||||
Depreciation and amortization |
4,012 | 4,908 | (896 | ) | -18.3 | % | ||||||||||
LMA fees |
1,141 | 893 | 248 | 27.8 | % | |||||||||||
Non-cash stock compensation |
1,187 | 460 | 727 | 158.0 | % | |||||||||||
Corporate general and administrative |
16,084 | 8,684 | 7,400 | 85.2 | % | |||||||||||
Gain on exchange of assets or stations |
(15,278 | ) | | (15,278 | ) | * | * | |||||||||
Realized loss on derivative instrument |
1,244 | 1,064 | 180 | 16.9 | % | |||||||||||
Station Operating Income |
$ | 50,324 | $ | 45,754 | $ | 4,570 | 10.0 | % | ||||||||
** | Calculation is not meaningful. |
25
Six Months Ended | ||||||||
June 30, | ||||||||
(Dollars in thousands) | 2011 | 2010 | ||||||
Net cash provided by operating activities |
$ | 20,322 | $ | 18,402 |
Six Months Ended | ||||||||
June 30, | ||||||||
(Dollars in thousands) | 2011 | 2010 | ||||||
Net cash used in investing activities |
$ | (1,675 | ) | $ | (1,224 | ) |
Six Months Ended | ||||||||
June 30, | ||||||||
(Dollars in thousands) | 2011 | 2010 | ||||||
Net cash used in financing activities |
$ | (1,908 | ) | $ | (21,374 | ) |
26
Allocation | Amount | |||
Fixed assets |
$ | 1,790 | ||
Broadcast licenses |
11,190 | |||
Goodwill |
4,342 | |||
Other intangibles |
72 | |||
Total purchase price |
$ | 17,394 | ||
Less: Carrying value of Canton station |
(2,116 | ) | ||
Gain on asset exchange |
$ | 15,278 | ||
27
| a $1.325 billion first lien term loan facility (the First Lien Term Loan), with a maturity date that is seven years from the closing of the Citadel Acquisition; | ||
| a $790.0 million second lien term loan facility (the Second Lien Term Loan), with a maturity date that is seven and one-half years from the closing of the Citadel Acquisition; and | ||
| a $300.0 million revolving credit facility, with a maturity date that is five years from the closing of the Citadel Acquisition. |
28
29
3.1
|
Amended and Restated Certificate of Incorporation of Cumulus Media Inc., as amended through July 29, 2011 (incorporated herein by reference to Exhibit 3.1 to our current report on Form 8-K, filed on August 4, 2011). | |
4.1
|
Indenture, dated as of May 13, 2011, by and among Cumulus Media Inc., each of the guarantors named therein and The Bank of New York Mellon, as Trustee (incorporated herein by reference to Exhibit 4.1 to our current report on Form 8-K, filed on May 16, 2011). | |
4.2
|
Form of 7.75% Senior Note due 2019 (included in Exhibit 4.1) (incorporated herein by reference to Exhibit 4.2 to our current report on Form 8-K, filed on May 16, 2011). | |
30
4.3
|
Registration Rights Agreement, dated May 13, 2011, by and among Cumulus Media Inc. and the Guarantors party hereto and J.P. Morgan Securities LLC (incorporated herein by reference to Exhibit 4.3 to our current report on Form 8-K, filed on May 16, 2011). | |
10.1
|
Amended and Restated Investment Agreement, dated as of April 22, 2011 (incorporated herein by reference to Exhibit 10.1 to our current report on Form 8-K, filed on April 25, 2011). | |
10.2
|
Amendment No. 5, dated April 29, 2011, to the Credit Agreement, dated as of June 7, 2006, by and among, Cumulus Media Inc., the Lenders party thereto, and General Electric Capital Corporation, as Administrative Agent (incorporated herein by reference to Exhibit 10.1 to our current report on Form 8-K, filed on May 16, 2011). | |
31.1
|
Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2
|
Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1
|
Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101
|
The following materials from Cumulus Media Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2011 and 2010, (ii) Condensed Consolidated Balance Sheets as of June 30, 2011 and December 31, 2010, (iii) Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2011 and 2010, and (iv) Notes to Condensed Consolidated Financial Statements***. |
*** | Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files submitted as Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under those sections. |
31
CUMULUS MEDIA INC. |
||||
Date: August 15, 2011 | By: | /s/ Joseph P. Hannan | ||
Joseph P. Hannan | ||||
Senior Vice President, Treasurer and Chief Financial Officer |
32
3.1
|
Amended and Restated Certificate of Incorporation of Cumulus Media Inc., as amended through July 29, 2011 (incorporated herein by reference to Exhibit 3.1 to our current report on Form 8-K, filed on August 4, 2011). | |
4.1
|
Indenture, dated as of May 13, 2011, by and among Cumulus Media Inc., each of the guarantors named therein and The Bank of New York Mellon, as Trustee (incorporated herein by reference to Exhibit 4.1 to our current report on Form 8-K, filed on May 16, 2011). | |
4.2
|
Form of 7.75% Senior Note due 2019 (included in Exhibit 4.1) (incorporated herein by reference to Exhibit 4.2 to our current report on Form 8-K, filed on May 16, 2011). | |
4.3
|
Registration Rights Agreement, dated May 13, 2011, by and among Cumulus Media Inc. and the Guarantors party hereto and J.P. Morgan Securities LLC (incorporated herein by reference to Exhibit 4.3 to our current report on Form 8-K, filed on May 16, 2011). | |
10.1
|
Amended and Restated Investment Agreement, dated as of April 22, 2011 (incorporated herein by reference to Exhibit 10.1 to our current report on Form 8-K, filed on April 25, 2011). | |
10.2
|
Amendment No. 5, dated April 29, 2011, to the Credit Agreement, dated as of June 7, 2006, by and among, Cumulus Media Inc., the Lenders party thereto, and General Electric Capital Corporation, as Administrative Agent (incorporated herein by reference to Exhibit 10.1 to our current report on Form 8-K, filed on May 16, 2011). | |
31.1
|
Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2
|
Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1
|
Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101
|
The following materials from Cumulus Media Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2011 and 2010, (ii) Condensed Consolidated Balance Sheets as of June 30, 2011 and December 31, 2010, (iii) Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2011 and 2010, and (iv) Notes to Condensed Consolidated Financial Statements***. |
*** | Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files submitted as Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under those sections. |
33
1. | I have reviewed this quarterly report on Form 10-Q of Cumulus Media Inc.; |
a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
c. | evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
d. | disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
a. | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: August 15, 2011 | By: | /s/ Lewis W. Dickey, Jr. | ||
Lewis W. Dickey, Jr. | ||||
Chairman, President and Chief Executive Officer |
34
1. | I have reviewed this quarterly report on Form 10-Q of Cumulus Media Inc.; |
a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
c. | evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
d. | disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
a. | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: August 15, 2011 | By: | /s/ Joseph P. Hannan | ||
Joseph P. Hannan | ||||
Senior Vice President, Treasurer and Chief Financial Officer |
35
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | ||
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report. |
/s/ Lewis W. Dickey, Jr. | ||||
Name: | Lewis W. Dickey, Jr. | |||
Title: | Chairman, President and Chief Executive Officer |
|||
/s/ Joseph P. Hannan | ||||
Name: | Joseph P. Hannan | |||
Title: | Senior Vice President, Treasurer and Chief Financial Officer | |||
36
Document and Entity Information (USD $)
In Millions, except Share data |
6 Months Ended | |
---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Entity Registrant Name | CUMULUS MEDIA INC | Â |
Entity Central Index Key | 0001058623 | Â |
Document Type | 10-Q | Â |
Document Period End Date | Jun. 30, 2011 | Â |
Amendment Flag | false | Â |
Document Fiscal Year Focus | 2011 | Â |
Document Fiscal Period Focus | Q2 | Â |
Current Fiscal Year End Date | --12-31 | Â |
Entity Well-known Seasoned Issuer | No | Â |
Entity Voluntary Filers | No | Â |
Entity Current Reporting Status | Yes | Â |
Entity Filer Category | Smaller Reporting Company | Â |
Entity Public Float | Â | $ 49.5 |
Entity Common Stock, Shares Outstanding | 52,505,196 | Â |
Common Class A
|
 |  |
Entity Common Stock, Shares Outstanding | 39,420,658 | Â |
Common Class B
|
 |  |
Entity Common Stock, Shares Outstanding | 5,809,191 | Â |
Common Class C
|
 |  |
Entity Common Stock, Shares Outstanding | 644,871 | Â |
Common Class D
|
 |  |
Entity Common Stock, Shares Outstanding | 6,630,476 | Â |
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Long-Term Debt
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt |
6. Long-Term Debt
The Company’s long-term debt consisted of the following as of June 30, 2011 and December 31,
2010 (dollars in thousands):
2011 Refinancing
As a part of its refinancing transactions in connection with its pending acquisitions of CMP
and Citadel, on May 13, 2011, the Company completed its offering of the Notes. Proceeds from the
sale of the Notes were used, among other things, to repay the $575.8 million outstanding under the
term loan facility under the credit agreement governing the Company’s senior secured credit
facilities (the “2006 Credit Agreement”).
Interest on the Notes is payable on each May 1 and November 1, commencing November 1, 2011.
The Notes mature on May 1, 2019.
The Company may redeem all or part of the Notes at any time on or after May 1, 2015. At any
time prior to May 1, 2014, the Company may also redeem up to 35.0% of the Notes using the proceeds
from certain equity offerings. At any time prior to May 1, 2015, the Company may redeem some or all
of the Notes at a price equal to 100% of the principal amount, plus a “make-whole” premium.
Further, if the Citadel Merger Agreement is terminated without consummation of the Citadel
Acquisition and neither CMP nor any of its subsidiaries has become a restricted subsidiary under
the indenture governing the Notes, during each 12-month period commencing on the date of such
termination to the third anniversary of such termination date or such earlier time as CMP or any of
its subsidiaries becomes a restricted subsidiary under such indenture, the Company may redeem up to
10.0% of the original aggregate principal amount of the Notes at a redemption price of 103.0%. If
the Company sells certain assets or experiences specific kinds of changes in control, the Company
will be required to make an offer to purchase the Notes.
Each of the Company’s existing and future domestic restricted subsidiaries that guarantees the
Company’s indebtedness or indebtedness of the Company’s subsidiary guarantors (other than the
Company’s subsidiaries that hold the licenses for the Company’s radio stations) guarantees, and
will guarantee, the Notes. Under certain circumstances, the Notes may be assumed by a direct
wholly-owned subsidiary of the Company’s, in which case the Company will guarantee the Notes. The
Notes are the Company’s senior unsecured obligations and rank equally in right of payment to all of
the Company’s existing and future senior unsecured debt and senior in right of payment to all of
the Company’s future subordinated debt. The Notes guarantees are the Company’s guarantors’ senior
unsecured obligations and rank equally in right of payment to all of the Company’s guarantors’
existing and future senior debt
and senior in right of payment to all of the Company’s guarantors’ future subordinated debt.
The Notes and the guarantees are effectively subordinated to any of the Company’s or the
guarantors’ existing and future secured debt to the extent of the value of the assets securing such
debt. In addition, the Notes and the guarantees are structurally subordinated to all indebtedness
and other liabilities, including preferred stock, of the Company’s non-guarantor subsidiaries,
including all of the liabilities of the Company’s and the guarantors’ foreign subsidiaries and the
Company’s subsidiaries that hold the licenses for the Company’s radio stations.
In connection with the 2011 refinancing transactions the Company capitalized $17.5 million in
costs during the three months ended June 30, 2011.
2006 Credit Agreement
In connection with the completion of the offering of Notes, effective May 13, 2011 the Company
entered into the Fifth Amendment to the 2006 Credit Agreement. The Fifth Amendment provided the
Company the ability to complete the offering of Notes, provided that proceeds therefrom were used
to repay in full the term loans outstanding under the 2006 Credit Agreement. In addition, the Fifth
Amendment, among other things, (i) provides for an incremental term loan facility of up to $200.0
million, which may only be accessed to repurchase Notes under certain circumstances, (ii) replaced
the total leverage ratio in the 2006 Credit Agreement with a secured leverage ratio, and (iii)
amended certain definitions in the 2006 Credit Agreement to facilitate the Company’s ability to
complete the offering of Notes.
The 2006 Credit Agreement currently provides for a revolving credit facility of $20.0 million,
of which no amounts were outstanding as of June 30, 2011.
The Company’s obligations under the 2006 Credit Agreement are collateralized by substantially
all of its assets in which a security interest may lawfully be granted (including FCC licenses held
by its subsidiaries), including, without limitation, intellectual property and all of the capital
stock of the Company’s direct and indirect subsidiaries. At June 30, 2011, the Company’s
obligations under the 2006 Credit Agreement were guaranteed by all of its subsidiaries.
The 2006 Credit Agreement contains terms and conditions customary for financing arrangements
of this nature. The revolving credit facility will mature on June 7, 2012. As of June 30, 2011, the
Company was in compliance with all of its required covenants.
During the quarter ended March 31, 2011, the Company made an Excess Cash Flows Payment (as
defined in the 2006 Credit Agreement) under the 2006 Credit Agreement in an amount equal to $9.3
million and principal payments in an amount equal to $8.7 million.
|
Variable Interest Entities ("VIE")
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Variable Interest Entities ("VIE") [Abstract] | Â |
Variable Interest Entities ("VIE") |
11. Variable Interest Entities (“VIE”)
At June 30, 2011, the Company had an investment in CMP, which the Company accounts for using
the equity method and which the Company has determined to be a VIE that is not subject to
consolidation because the Company is not deemed to be the primary beneficiary. The Company cannot
make unilateral management decisions affecting the long-term operational results of CMP, as all
such decisions require approval by the CMP board of directors. Additionally, although the Company
operates CMP’s business pursuant to a management agreement, one of the other equity holders has the
unilateral right to remove the Company as manager of CMP with 30 days’ notice. The Company
concluded that this ability to unilaterally terminate CMP’s management agreement with the Company
resulted in a substantive “kick out” right, thereby precluding the Company from being designated as
the primary beneficiary with respect to its interest in CMP.
As of June 30, 2011, the Company’s proportionate share of its affiliate losses exceeded the
value of its investment in CMP. In addition, the Company has no contractual obligation to fund the
losses of CMP. As a result, the Company had no exposure to loss from its investment in CMP. The
Company has not provided and does not intend to provide any financial support, guarantees or
commitments for or on behalf of CMP. Additionally, the Company’s balance sheet as of June 30, 2011
does not include any assets or liabilities related to its interest in CMP (see Note 5, “Investment
in Affiliate”).
On January 31, 2011, the Company entered into an agreement to acquire the remaining 75.0% of
the equity interests in CMP that it did not own. The Company completed its previously announced
acquisition of CMP on August 1, 2011 (see Note 14, “Subsequent Event”).
|
Acquisitions and Dispositions
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions and Dispositions [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions and Dispositions |
2. Acquisitions and Dispositions
2011 Acquisitions
Ann Arbor, Battle Creek and Canton Asset Exchange
On February 18, 2011, the Company completed an asset exchange with Clear Channel
Communications, Inc. (“Clear Channel”). As part of the asset exchange, the Company acquired eight
of Clear Channel’s radio stations located in Ann Arbor and Battle Creek, Michigan in exchange for
the Company’s radio station in Canton, Ohio. The Company disposed of two of the Battle Creek
stations simultaneously with the closing of the transaction to comply with the Federal
Communications Commission’s (“FCC”) broadcast ownership limits; WBCK-AM was placed in a trust for
the sale of the station to an unrelated third party and WBFN-AM was donated to Family Life
Broadcasting System. The transaction was accounted for as a business combination in accordance with
FASB’s guidance. The fair value of the assets acquired in the exchange was $17.4 million (refer to
the table below for the purchase price allocation). The Company incurred approximately $0.2 million
in acquisition costs related to this transaction and expensed them as incurred through earnings
within corporate, general and administrative expense. The $4.3 million of goodwill identified in
the purchase price allocation below is deductible for tax purposes. The results of operations for
the Ann Arbor and Battle Creek stations acquired, which were not material, have been included in
the Company’s statements of operations since 2007 when the Company entered into a local marketing
agreement (“LMA”) with Clear Channel to manage the stations. Prior to the asset exchange, the
Company did not have any preexisting relationship with Clear Channel with regard to the Canton,
Ohio market.
In conjunction with the transactions, the Company recorded a net gain of $15.3 million, which
is included in gain on exchange of assets or stations in the accompanying statements of operations.
The table below summarizes the final purchase price allocation (dollars in thousands):
Acquisition of Cumulus Media Partners, LLC
On August 1, 2011, the Company completed its previously announced acquisition of the 75.0% of
the equity interests of Cumulus Media Partners, LLC (“CMP”) that it did not then own. For
additional information about this acquisition, see Note 14, “Subsequent Event.”
Pending Acquisition
On March 9, 2011, the Company entered into an Agreement and Plan of Merger (the “Citadel
Merger Agreement”) with Citadel Broadcasting Corporation (“Citadel”), Cumulus Media Holdings Inc.
(f/k/a Cadet Holding Corporation), a direct wholly-owned subsidiary of the Company (“Holdco”), and
Cadet Merger Corporation, an indirect wholly-owned subsidiary of the Company (“Merger Sub”).
Pursuant to the Citadel Merger Agreement, at the closing, Merger Sub will merge with and into
Citadel, with Citadel surviving the merger as an indirect wholly-owned subsidiary of the Company
(the “Citadel Acquisition”). At the effective time of the Citadel Acquisition, each outstanding
share of common stock of Citadel will be cancelled and converted automatically into the right to
receive, at the election of the holder (subject to certain limitations set forth in the Citadel
Merger Agreement), (i) $37.00 in cash, (ii) 8.525 shares of Cumulus Media Inc. common stock, or
(iii) a combination thereof (the “Citadel Acquisition Consideration”). Additionally, in connection
with and prior to the closing of the Citadel Acquisition, (i) each outstanding unvested option to
acquire shares of Citadel common stock issued under Citadel’s equity incentive plan will
automatically vest, and all outstanding options at the effective time of this Citadel Acquisition
will be deemed exercised pursuant to a cashless exercise, with the resulting net number of Citadel
shares to be converted into the right to receive the Citadel Acquisition Consideration, and (ii)
each outstanding warrant to purchase Citadel common stock will become exercisable for the Citadel
Acquisition Consideration, subject to any applicable FCC limitations. Holders of unvested
restricted shares of Citadel common stock will be eligible to receive the Citadel Acquisition
Consideration for their shares pursuant to the original vesting schedule for such shares. Elections
by Citadel stockholders are subject
to adjustment such that the maximum number of shares of the
Company’s common stock that may be issued in the Citadel Acquisition is 151,485,282 and the maximum
amount of cash payable by us in the Citadel Acquisition is $1,408,728,600.
Consummation of the Citadel Acquisition is subject to various customary closing conditions.
These include, but are not limited to, (i) regulatory approval by the FCC (ii) requisite
stockholder approvals, (iii) the expiration or termination of the waiting period under the
Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended, and (iv) the absence of any
material adverse effect on Citadel or the Company. The Company currently anticipates that the
Citadel Acquisition will be completed prior to the end of 2011.
The actual timing of the completion of the pending Citadel Acquisition will depend upon a
number of factors, including the various conditions set forth in the transaction agreement. There
can be no assurance that the Citadel Acquisition will be consummated or that, if the transaction is
consummated, the timing or terms thereof will be as described herein and as presently contemplated.
2010 Acquisitions
The Company did not complete any material acquisitions or dispositions during the six months
ended June 30, 2010.
|
Earnings per Share ("EPS")
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Earnings per Share ("EPS") [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Share ("EPS") |
8. Earnings per Share (“EPS”)
For all periods presented, the Company has disclosed basic and diluted earnings per common
share utilizing the two-class method. Basic earnings per common share is calculated by dividing net
income available to common shareholders by the weighted average number of shares of common stock
outstanding during the period. The Company determined that it was appropriate to allocate
undistributed net income between Class A, Class B and Class C common stock on an equal basis as the
Company’s charter provided that the holders of Class A, Class B and Class C common stock have equal
rights and privileges except with respect to voting on certain matters.
Non-vested restricted shares of Class A common stock awarded contain non-forfeitable dividend
rights and are therefore considered a participating security for purposes of calculating EPS. The
two-class method of computing earnings per share is required for companies with participating
securities. Under this method, net income is allocated to common stock and participating securities
to the extent that each security may share in earnings, as if all of the earnings for the period
had been distributed. Because the Company has not historically paid dividends, earnings are
allocated to each participating security and common share equally. The following table sets forth
the computation of basic and diluted income per common share for the three and six months ended
June 30, 2011 and 2010 (amounts in thousands, except per share data).
The Company has issued to key executives and employees shares of restricted stock and options
to purchase shares of common stock as part of the Company’s stock incentive plans. At June 30,
2011, the following restricted stock and stock options to purchase the following classes of common
stock were issued and outstanding:
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Related Party
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6 Months Ended |
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Jun. 30, 2011
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Related Party [Abstract] | Â |
Related Party |
13. Related Party
During the third quarter of 2010, the Company entered into a management agreement with DM
Luxury, LLC (“DM Luxury”). DM Luxury is 50.0% owned by Dickey Publishing, Inc. and Dickey Media
Investments, LLC, each of which is partially owned by Mr. L. Dickey. Pursuant to the agreement with
DM Luxury, the Company provides back office shared services, such as finance, accounting, treasury,
internal audit, use of corporate headquarters, legal, human resources, risk management and
information technology for an annual management fee equal to the greater of $0.5 million and 5.0%
of DM Luxury’s adjusted EBITDA on an annual basis. The Company recorded $0.1 million and $0.3
million of revenues from this agreement during the three and six months ended June 30, 2011,
respectively.
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Commitments and Contingencies
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6 Months Ended |
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Jun. 30, 2011
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Commitments and Contingencies [Abstract] | Â |
Commitments and Contingencies |
9. Commitments and Contingencies
The Company engages Katz Media Group, Inc. (“Katz”) as its national advertising sales agent.
The national advertising agency contract with Katz contains termination provisions that, if
exercised by the Company during the term of the contract, would obligate the Company to pay a
termination fee to Katz, calculated based upon a formula set forth in the contract.
In December 2004, the Company purchased 240 perpetual licenses from iBiquity Digital
Corporation, which enable it to convert to and utilize digital broadcasting technology on 240 of
its stations. Under the terms of the agreement, the Company committed to convert the 240 stations
to digital technology over a seven year period. The Company negotiated an amendment to the
agreement with iBiquity to reduce the number of planned conversions commissions, extend the
build-out schedule, and increase the license fees for each converted station. The conversion to
digital technology will require an investment in certain capital equipment over the next four
years. Management estimates the Company’s investment will be between $0.1 million and $0.2 million
per station converted.
In August 2005, the Company was subpoenaed by the Office of the Attorney General of the State
of New York, as were other radio broadcasting companies, in connection with the New York Attorney
General’s investigation of promotional practices related to record companies’ dealings with radio
stations broadcasting in New York. The Company is cooperating with the Attorney General in this
investigation.
On December 11, 2008, Qantum Communications (“Qantum”) filed a counterclaim in a foreclosure
action the Company initiated in the Okaloosa County, Florida Circuit Court. The Company’s action
was designed to collect a debt owed to the Company by Star Broadcasting, Inc. (“Star”), which then
owned radio station WTKE-FM in Holt, Florida. In its counterclaim, Qantum alleged that the Company
tortiously interfered with Qantum’s contract to acquire radio station WTKE from Star by entering
into an agreement to buy WTKE after Star had represented to the Company that its contract with
Qantum had been terminated (and that Star was therefore free to enter into the new agreement with
the Company). On February 27, 2011, the Company entered into a settlement agreement with Star. In
connection with the settlement regarding the since-terminated attempt to purchase WTKE, the Company
recorded $7.8 million in costs associated with a terminated transaction in the consolidated
statement of operations for the year ended December 31, 2010, that are payable in 2011. As of June
30, 2011, the Company has made $4.0 million in payments.
In March 2011, the Company was named in a patent infringement suit brought against it as well
as other radio companies, including Beasley Broadcast Group, Inc., CBS Radio, Inc., Entercom
Communications, Greater Media, Inc. and Townsquare Media, LLC. The case, Mission Abstract Data
L.L.C, d/b/a Digimedia v. Beasley Broadcast Group, Inc., et. al., Civil Action Case No:
1:99-mc-09999, U.S. District Court for the District of Delaware (filed March 1, 2011), alleges that
the defendants are infringing or have infringed plaintiff’s patents entitled “Selection and
Retrieval of Music from a Digital Database.” Plaintiff is seeking injunctive relief and unspecified
damages. The Company intends to vigorously defend this lawsuit and has not yet determined what
effect the lawsuit will have, if any, on its financial position, results of operations or cash
flows.
On March 14, 2011, Citadel, its board of directors and Cumulus Media were named in a putative
stockholder class action complaint filed in the District Court of Clark County, Nevada, by a
purported Citadel stockholder. On March 23, 2011, these same defendants, as well as Holdco and
Merger Sub, were named in a second putative stockholder class action complaint filed in the same
court by another purported Citadel stockholder. The complaints allege that Citadel’s directors
breached their fiduciary duties by approving the merger for allegedly inadequate consideration and
following an allegedly unfair sale process. The complaint in the first action also alleges that
Citadel’s directors breached their fiduciary duties by allegedly withholding material information
relating to the merger. The two complaints further allege that Citadel and Cumulus Media aided and
abetted the Citadel directors’ alleged breaches of fiduciary duties, and the complaint filed in the
second action alleges, additionally, that Holdco and Merger Sub aided and abetted these alleged
breaches of fiduciary duties. The complaints seek, among other things, a declaration that the
action can proceed as a class action, an order enjoining the completion of the merger, rescission of the merger, attorneys’
fees, and such other relief as the court deems just and proper. The complaint filed in the second
action also seeks rescissory damages. On June 23, 2011, the court consolidated the two Nevada
actions and appointed lead counsel. On July 29, 2011, lead counsel filed a Notice of Voluntary
Dismissal dismissing the claims of one of the two Nevada plaintiffs against all the defendants
without prejudice, because the plaintiff no longer
had standing to pursue claims on his own behalf
or on behalf of the putative class. The claims of the putative class have not yet been dismissed.
On May 6, 2011, two purported common stockholders of Citadel filed a putative class action
complaint against Citadel, its board of directors, Cumulus Media, Holdco, and Merger Sub in the
Court of Chancery of the State of Delaware (“Delaware Chancery Court”). On July 19, 2011, the
plaintiffs in the Delaware action filed an amended complaint alleging that Citadel’s directors
breached their fiduciary duties to Citadel’s stockholders by approving the merger for allegedly
inadequate consideration, following an allegedly unfair sale process, and by failing to disclose
material information related to the merger. The amended complaint further alleges that Citadel,
Cumulus Media, Holdco, and Merger Sub aided and abetted these alleged fiduciary breaches. The
complaint seeks, among other things, an order enjoining the merger, a declaration that the action
is properly maintainable as a class action, and rescission of the merger agreement, as well as
attorneys’ fees and costs. Also on July 19, 2011, the plaintiffs in the Delaware action filed a
Motion for Expedited Proceedings. On July 20, 2011, the plaintiffs in the Delaware action filed a
Motion for Preliminary Injunction, seeking an order preliminarily enjoining the merger. On August
1, 2011, the plaintiffs in the Delaware action filed a Notice of Dismissal pursuant to Court of
Chancery Rule 41(a)(1)(i) dismissing their claims against all the defendants without prejudice. On
August 3, 2011, the plaintiffs in the Delaware action filed a revised notice and proposed Order of
Dismissal pursuant to Rule 41(a)(1)(i) seeking dismissal of their claims against all defendants
without prejudice. This Order of Dismissal was granted on August 5, 2011, dismissing all claims.
Each of Cumulus Media and Citadel is obliged under certain circumstances to indemnify and hold
harmless each of their respective directors and officers from and against any and all claims and
liabilities to which such director or officer shall have become subject by reason of being a
director or officer, to the full extent permitted under Delaware law. An adverse outcome in this
lawsuit could prevent or delay the consummation of the merger and result in substantial costs to
Citadel and/or Cumulus Media. It is also possible that other similar lawsuits may be filed in the
future. Neither Cumulus Media nor Citadel can reasonably estimate any possible loss from current or
future litigation.
The Company is also a defendant from time to time in various other lawsuits, which are
generally incidental to its business. The Company is vigorously contesting such lawsuits and
believes that their ultimate resolution will not have a material adverse effect on its consolidated
financial position, results of operations or cash flows.
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Stock Based Compensation
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6 Months Ended |
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Jun. 30, 2011
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Stock Based Compensation [Abstract] | Â |
Stock Based Compensation |
7. Stock Based Compensation
During the three months ended June 30, 2011, the Company granted 23,000 shares of time-vesting
restricted Class A common stock, with an aggregate fair value on the date of grant of $0.1 million,
or $4.43 per share, to the non-employee directors of the Company.
During the first quarter of 2011, the Company granted Mr. L. Dickey 160,000 shares of
performance-based vesting restricted Class A common stock and 160,000 shares of time-vesting
restricted Class A common stock. The fair value on the date of grant of both of these awards was
$1.6 million, or $4.87 per share. In addition, also during the first quarter of 2011, the Company
granted 170,000 shares of time-vesting Class A common stock, with an aggregate fair value on the
date of grant of $0.8 million, or $4.87 per share, to certain officers (other than Mr. L. Dickey)
of the Company.
For the three and six months ended June 30, 2011, the Company recognized approximately $0.6
million and $1.2 million, respectively in non-cash stock based compensation expense.
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Derivative Financial Instruments
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Jun. 30, 2011
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Derivative Financial Instruments [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments |
3. Derivative Financial Instruments
The Company’s derivative financial instruments are as follows:
May 2005 Option
In May 2005, the Company entered into an interest rate option agreement (the “May 2005
Option”), that provided Bank of America, N.A. the right to enter into an underlying swap agreement
with the Company for two years, from March 13, 2009 through March 13, 2011.
The May 2005 Option was exercised on March 11, 2009. This instrument was not highly effective
in mitigating the risks in the Company’s cash flows, and therefore the Company deemed it
speculative, and accounted for changes in the May 2005 Option’s value as a current element of
interest expense. The May 2005 Option expired on March 13, 2011. The balance sheets as of June 30,
2011 and December 31, 2010 reflect current liabilities of $0.0 million and $3.7 million,
respectively, to include the fair value of the May 2005 Option. The Company reported interest
income of $0.0 million and $3.7 million, inclusive of the fair value adjustment during the three
and six months ended June 30, 2011, respectively. Additionally for the three and six months ended
June 30, 2010, the Company reported $3.5 million and $5.4 million in interest expense,
respectively.
The Company does not utilize financial instruments for trading or other speculative purposes.
Green Bay Option
On April 10, 2009 (the “Acquisition Date”), Clear Channel and the Company entered into an LMA
whereby the Company is responsible for operating (i.e., programming, advertising, etc.) five Green
Bay radio stations and must pay Clear Channel a monthly fee of approximately $0.2 million over a
five year term (expiring December 31, 2013), in exchange for the Company retaining the operating
profits from managing the radio stations. Clear Channel also has a put option (the “Green Bay
Option”) that would allow it to require the Company to purchase the five Green Bay radio stations
at any time during the two-month period commencing July 1, 2013 (or earlier if the LMA is
terminated before this date) for $17.6 million (the fair value of the radio stations as of April
10, 2009). The Company accounted for the Green Bay Option as a derivative contract. Accordingly, the fair
value of the put was recorded as a liability offsetting the gain at the Acquisition Date with
subsequent changes in the fair value recorded through earnings. The fair value of the Green Bay
Option was determined using inputs that are supported by little or no market activity (a “Level 3”
fair value measurement). The fair value represents an estimate of the net amount that the Company
would be required to pay if the Green Bay Option was transferred to another party as of the date of
the valuation (see Note 4, “Fair Value Measurements”).
The following table sets forth the location and fair values of derivatives in the unaudited
condensed consolidated balance sheets:
Information on the Location and Amounts of Derivatives Fair Values in the
Unaudited Condensed Consolidated Balance Sheets (dollars in thousands)
The location and fair values of derivatives in the unaudited condensed consolidated statements
of operations are shown in the following table:
Information on the Location and Amounts of Derivatives Fair Values in the
Unaudited Condensed Consolidated Statements of Operations (dollars in thousands)
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Fair Value Measurements
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Jun. 30, 2011
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Fair Value Measurements [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements |
4. Fair Value Measurements
The three levels of the fair value hierarchy to be applied to financial instruments when
determining fair value are described below:
Level 1 — Valuations based on quoted prices in active markets for identical assets or
liabilities that the entity has the ability to access;
Level 2 — Valuations based on quoted prices for similar assets or liabilities, quoted prices in
markets that are not active, or other inputs that are observable or can be corroborated by
observable data for substantially the full term of the assets or liabilities; and
Level 3 — Valuations based on inputs that are supported by little or no market activity and that
are significant to the fair value of the assets or liabilities.
A financial instrument’s level within the fair value hierarchy is based on the lowest level of
any input that is significant to the fair value measurement. The Company’s financial assets and
liabilities are measured at fair value on a recurring basis.
Financial assets and liabilities measured at fair value on a recurring basis as of June 30,
2011 were as follows (dollars in thousands):
The reconciliation below contains the components of the change in fair value associated with
the Green Bay Option as of June 30, 2011 (dollars in thousands):
To estimate the fair value of the Green Bay Option, the Company used a Black-Scholes valuation
model. The significant inputs for the valuation model include the following:
The carrying values of receivables, payables, and accrued expenses approximate their
respective fair values due to the short maturity of these instruments.
The following table shows the gross amount and fair value of the Company’s term loan and 7.75%
Senior Notes due 2019 (the “Notes”) (dollars in thousands):
The Company used the trading price of 96.5% to calculate the fair value of the Notes as of
June 30, 2011 in the above table.
|
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MU_/1*G%Q$F+*873:$2R&ZXN4"#F4+W"B>MKA<*)^L32C*S*%#"5Y[D".R&"=
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MR34'?"C11`K1)0:3$L"YSYOOX4O$0X#_"P&[E%?RDT:EI"O@5P_?#GY&MCD"
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M):9`&"%G9)H&O+%DOIL"!OGG6*CJ$U5Z8QXRE4H-)P&JESSFN-&9-)(M@4(`
MZ4P:J9Y!-J1T)H%D#SP76^9S2`XSR`6;*?(/'B`WQIPIAQ^\XY`)/%,6/WK`
MPAQ^IB3^[@&)FO@S97+L#9-"(*H]6M\;"J985#/QQSGGXE)-P`??7!*E:O@^
M>&B;$%7SL=WS&>G=9+7GHXH9VSJAMD[HN75"KU;PH.MM*^WGI2H>=MHMO7[3
M0M5<]7S6B@8#94=/W2)_/Z>R::*.?\C?.,4H2LZ7I*T$JV:"=[\2$$=(?O+>
M$=/R&BU;9@M"T8;0M&'69@73#J6,7E
MGD0_'JX7"DF?MN[2Z[K+/;&TYP_;MX8^Y%QVY7"L-LC#?"F#2<@%R.D.@A7R
M@FS#X3G@TR&)U'\7_XO15X`E.#X4YX"Q)2*3WP".3?.UI6ZS!&^A[&@42L-\
M#M6M6VEX6(8AC26L6QA""5'.\Y^@2$>>:716JKS<0NR>@0BN;U*V"BN(O-S=
M;QB<`Q1=+.9J2N?R07X6TC5IHTPLM`R2G9Y#
Intangible Assets and Goodwill
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Intangible Assets and Goodwill [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets and Goodwill |
12. Intangible Assets and Goodwill
The following tables present the changes in intangible assets and goodwill during the periods
ended December 31, 2010 and June 30, 2011 and balances as of such dates (dollars in thousands):
The Company has significant intangible assets recorded comprised primarily of broadcast
licenses and goodwill acquired through the acquisition of radio stations. Applicable accounting
guidance related to goodwill and other intangible assets requires that the carrying value of the
Company’s goodwill and certain intangible assets be reviewed at least annually, and more often if
certain circumstances are present, for impairment, with any changes charged to results of
operations in the periods in which the recorded value of those assets is more than their respective
fair market value.
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Investment in Affiliate
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Investment in Affiliate [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in Affiliate |
5. Investment in Affiliate
In connection with the October 31, 2005 formation of, and in exchange for its 25.0% ownership
interest in, CMP, the Company contributed to CMP four radio stations (including related licenses
and assets) in the Houston, Texas and Kansas City, Missouri markets with a book value of
approximately $71.6 million, and approximately $6.2 million in cash. The Company recognized a gain
of $2.5 million from the transfer of assets to CMP. In addition, upon consummation of the CMP
acquisition, the Company received a payment of approximately $3.5 million as consideration for
advisory services provided in connection with the CMP acquisition. The Company recorded the payment
as a reduction in its investment in CMP. The table below presents summarized financial statement
data related to CMP (dollars in thousands):
The Company’s investment in CMP is accounted for under the equity method of accounting. At
June 30, 2011, the Company’s proportionate share of the value of its affiliate losses exceeded the
value of its investment in CMP. In addition, the Company has no contractual obligation to fund the
losses of CMP. As a result, the Company has no exposure to loss as a result of its ownership
interest in CMP.
Concurrent with the October 31, 2005 formation of CMP, the Company entered into a management
agreement with a subsidiary of CMP pursuant to which the Company’s personnel manage the operations
of CMP’s subsidiaries. The agreement provides for the Company to receive, on a quarterly basis, a
management fee that is approximately 4.0% of the subsidiary of CMP’s annual EBITDA or $4.0 million,
whichever is greater. For each of the three and six months ended June 30, 2011 and 2010, the
Company recorded as net revenues approximately $1.0 million and $2.0 million in management fees,
respectively, from CMP.
On August 1, 2011, the Company completed its previously announced acquisition of CMP to
acquire the remaining 75.0% of the equity interests of CMP that it did not own. See Note 14,
“Subsequent Event” for further discussion.
|
Condensed Consolidated Statements of Operations (Unaudited) (Parenthetical) (USD $)
In Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Operating expenses: | Â | Â | Â | Â |
Non-cash stock compensation | $ 598 | $ 561 | $ 1,187 | $ 460 |
Interim Financial Data, Basis of Presentation:
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Interim Financial Data, Basis of Presentation: [Abstract] | Â |
Interim Financial Data, Basis of Presentation: |
1. Interim Financial Data, Basis of Presentation:
Interim Financial Data
The accompanying unaudited condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements of Cumulus Media Inc. (the “Company”) and
the notes related thereto included in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2010. These financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America (“GAAP”) for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly,
they do not include all of the information and notes required by GAAP for complete financial
statements. In the opinion of management, all adjustments necessary for a fair statement of results
of the interim periods have been made and such adjustments were of a normal and recurring nature.
The results of operations and cash flows for the six months ended June 30, 2011 are not necessarily
indicative of the results of operations or cash flows that can be expected for any other interim
period or for the fiscal year ending December 31, 2011.
The preparation of financial statements in conformity with GAAP requires management to make
estimates and judgments that affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, the
Company evaluates its estimates, including those related to bad debts, intangible assets,
derivative financial instruments, income taxes, stock-based compensation, contingencies and
litigation. The Company bases its estimates on historical experience and on various assumptions
that are believed to be reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are not readily apparent
from other sources. Actual amounts and results may differ materially from these estimates under
different assumptions or conditions.
Recent Accounting Pronouncements
ASU 2010-28. In December 2010, the Financial Accounting Standards Board (“FASB”) provided
additional guidance for performing Step 1 of the test for goodwill impairment when an entity has
reporting units with zero or negative carrying values. This Accounting Standards Update (“ASU”)
updates Accounting Standards Codification (“ASC”) 350, Intangibles — Goodwill and Other, to amend
the criteria for performing Step 2 of the goodwill impairment test for reporting units with zero or
negative carrying amounts and requires performing Step 2 if qualitative factors indicate that it is
more likely than not that a goodwill impairment exists. The Company adopted this guidance effective
on January 1, 2011. The update did not have a material impact on the Company’s consolidated
financial statements.
ASU 2010-29. In December 2010, the FASB issued clarification of the accounting guidance
related to disclosure of pro forma information for business combinations that occur in the current
reporting period. The guidance requires companies to present pro forma information in their
comparative financial statements as if the acquisition date for any business combinations taking
place in the current reporting period had occurred at the beginning of the prior year reporting
period. The Company adopted this guidance effective January 1, 2011. The guidance did not have a
material impact on the Company’s financial statements.
ASU 2011-04. In May 2011, the FASB issued an amendment for measuring fair value. The
amendment clarifies the FASB’s intent about the application of existing fair value measurement
requirements and expands the disclosures for fair value measurements. Expanded disclosures are
required for fair value measurements categorized within Level 3 of the fair value hierarchy.
Additional disclosures are also required for nonfinancial assets that differ from the asset’s
highest and best use when measured at fair value or when its fair value is measured on the basis of
its highest and best use as well as the categorization by level of the fair value hierarchy for
items that are not measured at fair value but for which the fair value is required to be disclosed.
The amendments are effective for interim and annual periods beginning after December 15, 2011 and
are not expected to have a material impact on the Company’s financial statements.
|
Restricted Cash
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Restricted Cash [Abstract] | Â |
Restricted Cash |
10. Restricted Cash
The Company is required to secure the maximum exposure generated by automated clearing house
transactions in its operating bank accounts as dictated by the Company’s bank’s internal policies
with respect to cash. As of June 30, 2011, the Company’s balance sheet included approximately $0.6
million in restricted cash related to the automated clearing house transactions.
|
Subsequent Events
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Subsequent Event [Abstract] | Â |
Subsequent Event |
14. Subsequent Event
On August 1, 2011, the Company completed the previously announced acquisition of the remaining
75.0% of the equity interests of CMP that it did not already own. In connection with this
acquisition, Cumulus issued 9,945,714 shares of its common stock to affiliates of the three private
equity firms that had collectively owned 75.0% of CMP — Bain Capital Partners, LLC (“Bain”), The
Blackstone Group L.P. (“Blackstone”) and Thomas H. Lee Partners, L.P. (“THL”). Blackstone received
3.3 million shares of Cumulus’ Class A common stock and, in accordance with Federal Communications
Commission broadcast ownership rules, Bain and THL each received 3.3 million shares of a new
authorized Class D non-voting common stock. Cumulus has owned the remaining 25.0% of CMP’s equity
interests since Cumulus, together with Bain, Blackstone and THL, formed CMP in 2005. Pursuant to a
management agreement, the Company has operated CMP’s business since 2006. Also in connection with
the acquisition, currently
outstanding warrants to purchase common stock of a subsidiary of CMP
were amended to instead become exercisable for up to 8,267,968 shares of common stock of Cumulus.
For certain financial information of CMP, see Note 5, “Investment in Affiliate.”
Due to the timing of the closing, the Company was unable to complete the purchase accounting
associated with the CMP acquisition as of the date of this report.
|