-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QQvv4TR6QkvtFmcJ5Pku0+OJ2jUvzivGSUXq78iK+rLAWRTyurOsJFyg7BaB9/8n +ukHYA2g6j1SHq1VXf5zug== 0001047469-98-030993.txt : 19980814 0001047469-98-030993.hdr.sgml : 19980814 ACCESSION NUMBER: 0001047469-98-030993 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980602 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980813 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CUMULUS MEDIA INC CENTRAL INDEX KEY: 0001058623 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 364159663 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-24525 FILM NUMBER: 98685078 BUSINESS ADDRESS: STREET 1: 111 KILBOURNE AVE STREET 2: SUITE 2700 CITY: MILWAUKEE STATE: WI ZIP: 53202 BUSINESS PHONE: 4146152800 MAIL ADDRESS: STREET 1: 111 EAST KILBOURN AVE STREET 2: SUITE 2700 CITY: MILWAUKEE STATE: WI ZIP: 53202 8-K/A 1 8-K/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No. 1 to Form 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): July 2, 1998 -------------------- CUMULUS MEDIA INC. - ------------------------------------------------------------------------------- (Exact Name of Registrant as specified in its charter) Illinois 000-24525 36-4159663 - ------------------------------------------------------------------------------- (State or other jurisdiction (Commission File (IRS Employer of incorporation) Number) Identification Number 111 E. Kilbourn Ave., Suite 2700, Milwaukee, WI 53202 - ------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (414) 615-2800 -------------------- None - ------------------------------------------------------------------------------ (Former name or former address, if changed since last report) Item 2. Acquisition or Disposition of Assets As previously reported on Form 8-K dated July 17, 1998, on July 2, 1998, pursuant to the terms of a Stock Purchase Agreement dated January 9, 1998, Cumulus Media Inc. ("Cumulus" or the "Company") acquired the stock of Republic Corporation, which owned all of the stock of Colonial Broadcasting, Inc. ( now known as CBA Broadcasting, Inc., the "CBA acquisition" or "CBA"), from Robert Lowder for approximately $40 million in cash. The Company financed the acquisition with available cash from its recently completed Offerings (as defined below). In Chattanooga, TN, CBA owns and operates WUSY(FM), a 100 kW country music station. Together with a previously announced agreement to acquire WLMX-AM/FM and WZST(FM) from the Wicks Broadcasting Group, which is pending FCC approval, Cumulus will own 3 FM stations and 1 AM station in the Chattanooga market. Chattanooga is the 102nd largest out of 267 Arbitron rated radio markets in the country. The CBA acquisition also provided Cumulus with 2 FM and 2 AM stations -- WMXS(FM), WLWI(FM), WMSP(AM), and WNZZ(AM) in Montgomery, AL. The FM stations both broadcast at 100 kW of power. Montgomery, the 143rd largest out of 267 Arbitron rated radio markets, is the state capital of Alabama. Cumulus Media Inc. is a radio broadcasting company focused on the acquisition, operation and development of radio stations in mid-sized and smaller radio markets in the U.S. The Company currently owns or operates 111 radio stations in 22 U.S. radio markets. Including all stations owned and those operated subject to pending acquisitions, Cumulus controls 176 stations in 34 markets, making it the nation's 4th largest radio broadcaster in terms of stations. Cumulus recently completed an initial public offering of its Class A Common Stock, 13 3/4 % Series A Cumulative Exchangeable Redeemable Preferred Stock due 2009, and 10 3/8% Senior Subordinated Notes due 2008 (collectively, the "Offerings") for total gross proceeds of $391 million. The financial statements required by this Current Report on Form 8-K concerning the acquisition of Colonial Broadcasting Inc. were previously reported in the Company's Registration Statement on Form S-1 (333-48849) as amended and declared effective by the Securities and Exchange Commission on June 26, 1998 (the "Registration Statement"). These financial statements are incorporated by reference herein. The financial statements required by this Current Report on Form 8-K concerning the pro forma balance sheet of Cumulus Media Inc. as of March 31, 1998, and the pro forma statement of operations for the three months ending March 31, 1998 and the twelve months ending December 31, 1997 are included in this Amendment No. 1 to Form 8-K as Exhibit 7.3. Item 7. Financial Statements and Exhibits. (A) Financial Statements of Businesses Acquired The audited financial statements of Republic Corporation (radio broadcast operations only) as of December 31, 1997 and 1996 and for each of the three years in the period ended December 31, 1997, and the unaudited financial statements of Republic Corporation (radio broadcast operations only) as of March 31, 1998 and 1997 and for the three month periods then ended are incorporated by reference to the Company's Registration Statement on Form S-1 (333-48849). 2 (B) Cumulus Media Inc. Pro Forma Financial Information In accordance with Item 7 (b) of Form 8-K, pro forma financial information related to the acquisition are included as Exhibit 7.3 to this Amendment No. 1 to Form 8-K. (C) Exhibits. 7.1 Stock Purchase Agreement between Cumulus Media Inc. (f/k/a/ Cumulus Holdings, Inc.) and Robert Lowder dated as of January 9, 1998, as amended on January 23, 1998 and May 5, 1998 (incorporated by reference to the Registration Statement). 7.2 Press release dated July 6, 1998 (previously filed with the current report on Form 8-K dated July 17, 1998). 7.3 Cumulus Media Inc. Pro Forma Financial Information A. Unaudited Pro Forma Combined Balance Sheet as of March 31, 1998. B. Unaudited Pro Forma Combined Statements of Operations for the three months ended March 31, 1998, and for the year ended December 31, 1997. 3 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CUMULUS MEDIA INC. By: /s/ Richard W. Weening ------------------------ Richard W. Weening Executive Chairman Date: August 12, 1998 EXHIBIT INDEX
Exhibit No. 7.1 Stock Purchase Agreement between Cumulus Media Inc. (f/k/a Cumulus Holdings, Inc.) and Robert Lowder dated as of January 9, 1998, as amended on January 23, 1998 and May 5, 1998 (incorporated by reference as an exhibit to the Registration Statement filed on Form S-1 (333-48849). 7.2 Press release dated July 6, 1998 (previously filed with the Current Report on Form 8-K dated July 17, 1998). 7.3 Cumulus Media Inc. Pro Forma Financial Information A. Unaudited Pro Forma Combined Balance Sheet as of March 31, 1998. B. Unaudited Pro Forma Combined Statements of Operations for the three months ended March 31, 1998, and for the year ended December 31, 1997. 7.4 The audited financial statements of Republic Corporation (radio broadcast operations only) as of December 31, 1997 and 1996 and for each of the three years in the period ended December 31, 1997, and the unaudited financial statements of Republic Corporation (radio broadcast operations only) as of March 31, 1998 and 1997 and for the three month periods then ended are incorporated by reference to the Company's Registration Statement on Form S-1 (333-48849).
EX-7.3 2 EXHIBIT 7.3 Exhibit 7.3 UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS ------------------------------------------------- On July 1, 1998, the Company completed its initial public offering of common and preferred stock and debt totaling $391 million. The common stock offering was for 7,598,572 shares of Class A Common Stock (the "Class A Common Stock"), including 6,428,572 shares sold by the Company and 1,170,000 shares sold by State of Wisconsin Board. Of the 7,598,572 shares of Class A Common Stock sold, 1,519,714 shares were sold in an offering outside the U.S. and Canada and 6,078,858 shares were sold in a concurrent offering in the U.S. and Canada. In addition, on July 31, 1998, the underwriters exercised a portion of the over-allotment and sold an additional 800,000 shares of Class A Common Stock for net proceeds to the Company of $10.4 million. These offerings are collectively referred to as the "Stock Offerings." Concurrently with the Stock Offerings, the Company sold in a preferred stock offering (the "Preferred Stock Offering") $125.0 million of 13 3/4% Series A Cumulative Exchangeable Redeemable Preferred Stock Due 2009 (the "Series A Preferred Stock") approximately $34.5 million of which was sold directly by the Company to The Northwestern Mutual Life Insurance Company at a purchase price equal to the price to the public and $160.0 million of 10 3/8% Senior Subordinated Notes Due 2008 (the "Notes") (the "Debt Offering" and, together with the Stock Offerings and the Preferred Stock Offering, the "Offerings"). In March 1998, the Company amended its articles of incorporation to change its name from Cumulus Holdings, Inc. to Cumulus Media Inc. Until immediately prior to the closing of the Offerings, all of the outstanding common stock of the Company was held by Cumulus Media, LLC ("Media LLC"). Immediately prior to the completion of the Offerings, (i) all shares of the Company's 12% Class A Cumulative Preferred Stock which were held by The Northwestern Mutual Life Insurance Company (the "NML Preferred Stock") plus all accrued and unpaid dividends thereon as of the exchange date were exchanged for shares of Series A Preferred Stock having an equivalent aggregate liquidation value; and (ii) Media LLC was liquidated and the Shares of Class A Common Stock, Class B Common Stock and Class C Common Stock held by Media LLC was distributed by Media LLC to its members in liquidation (the "Reorganization"). Prior to the completion of the Offerings, the Company financed its acquisitions primarily through private equity financings and borrowings under a credit agreement (the "Old Credit Agreement"). In March 1988, the Company entered into a $190.0 million senior credit facility (the "Credit Facility"). The Credit Facility was amended as of May 1, 1998, as of June 24, 1998 and as of June 26, 1998, to provide for a revolving credit line of $25.0 million until March 2, 2006 and an eight-year term loan facility of $125.0 million. Under the terms of the Credit Facility, the Company drew down $62.5 million of the term facility upon the closing of the Offerings. The Company has entered into definitive purchase agreements to acquire 81 stations in 17 markets for an aggregate purchase price of approximately $108.9 million in transactions which have not yet been consummated (the "Pending Acquisitions"). The Reorganization, borrowings under the Credit Facility and the application of proceeds therefrom, acquisitions completed as of the date hereof (the "Completed Acquisitions"), the Pending Acquisitions, and the Offerings and the applications of proceeds therefrom are collectively referred to as the "Transactions." The following unaudited pro forma combined financial statements reflects the results of operations for the three months ended March 31, 1998 and the year ended December 31, 1997 and the combined balance sheet as of March 31, 1998 of the Company after giving effect to the Transactions. The information set forth under the heading "The Company Historical" in the pro forma combined statement of operations for the three months ended March 31, 1998 and the year ended December 31, 1997 includes results relating to local marketing agreements. The information set forth under the heading "Pending Acquisitions" in the pro forma combined statement of operations for the three months ended March 31, 1998 and the year ended December 31, 1997 excludes results relating to local marketing agreements. The information set forth under the heading "1998 Completed Acquisitions" reflects all acquisitions consummated by the Company after March 31, 1998, including the acquisition of Republic Corporation. The companies acquired subsequent to March 31, 1998 and the related purchase prices are as follows: Republic Corporation.......................................... $ 40,500 New Frontier Communications, Inc.............................. 14,000 Clearly Superior Radio Properties............................. 12,500 Ninety-Four Point One, Inc. .................................. 10,770 Savannah Valley Broadcasting Radio Properties................. 10,200 WWFG-FM and WOSC-FM........................................... 7,500 WJCL-FM....................................................... 7,250 Castle Broadcasting Limited Partnership....................... 6,400 Jan-Di Broadcasting, Inc. .................................... 5,000 Louisiana Media Interests, Inc. and Subsidiaries.............. 16,200 Crystal Radio Group, Inc. .................................... 14,000 Chattanooga Broadcast Group................................... 6,000 Lesnick Communications, Inc. ................................. 3,300 Beaumont Skywave, Inc. ....................................... 3,600 Wiskes-Abaris Communications.................................. 3,150 Big Country Broadcasting...................................... 1,812 Savannah Communications, L.P. ................................ 5,250 KIKR, Inc. ................................................... 1,350 Heritage Communications....................................... 1,000 Westwind Broadcasting......................................... 820 GHB Broadcasting.............................................. 700 West Jewell Management........................................ 675 IQ Radio, Inc. ............................................... 390 -------- Total $172,367 -------- --------
Upon consummation of the Pending Acquisitions, the Company will be one of the five largest radio broadcasting companies based on number of stations, and among the fifteen largest based on net revenues in the U.S. and will own and operate 176 radio stations (124 FM and 52 AM) clustered in 34 U.S. markets. The companies to be acquired as part of the Pending Acquisitions, including the estimated purchase prices, are as follows: JKJ Broadcasting, Inc., Missouri River Broadcasting, Inc., Ingstad Mankato, Inc., James Ingstad Broadcasting, Inc., and Hometown Wireless, Inc. ................................................. $ 40,200 Midland Broadcasters, Inc. ....................................... 10,425 Radio Ingstad Minnesota, Inc., Radio Albert Lea, Inc. and KRCH of Minnesota, Inc. ................................................ 9,300 Communications Properties, Inc. ................................. 6,000 Ocmulgee Broadcasting............................................ 5,250 Tallahassee Broadcasting, Inc. .................................. 4,000 Tyron-Seacoast Communications, Inc. ............................. 4,000 Savannah Valley Broadcasting Radio Properties.................... 3,800 Pamplico Broadcasting, L.P. ..................................... 3,650 Phoenix Broadcast Partners, Inc. ................................ 3,500 K-Country, Inc. ................................................. 3,300 Clarendon County Broadcasting.................................... 3,250 American Communications Company Inc. ............................ 2,500 Albany Broadcasting Co. ......................................... 2,250 Mountain Wireless................................................ 2,200 Brillion Radio Company........................................... 2,065 Mustang Broadcasting Company..................................... 2,000 Esprit' Communication Corporation................................ 1,700 Nautical Broadcasting............................................ 525 WLOV(P&T Broadcasting............................................ 500 Less: Sale of WIMX-FM........................................... (1,500) -------- Total $108,915 -------- --------
The pro forma combined statement of operations for the three months ended March 31, 1998 gives effect to the Transactions (other than acquisitions completed in 1997) as if they occurred on January 1, 1998. For pro forma purposes, the pro forma combined statement of operations for the year ended December 31, 1997 gives effect to the Transactions as if they had occurred on January 1, 1997. For pro forma purposes, the Company's pro forma combined balance sheet as of March 31, 1998 gives effect to the Transactions (except for Completed Acquisitions consummated prior to March 31, 1998, in which case the pro forma combined balance sheet gives effect to such transactions as of the date of their consummation) as if they had occurred on March 31, 1998. The pro forma combined financial statements are based on the historical consolidated financial statements of the Company and the financial statements of those entities acquired, or from which assets were acquired, in conjunction with the Completed Acquisitions and the Pending Acquisitions. The unaudited combined pro forma financial information reflects the use of the purchase method of accounting for all acquisitions. For purposes of the unaudited pro forma combined financial statements, the purchase prices of the Completed Acquisitions and the Pending Acquisitions have been allocated based primarily on information furnished by management of the acquired stations. The final allocation of the relative purchase prices of the Completed Acquisitions and the Pending Acquisitions are determined a reasonable time after consummation of such transactions and are based on complete evaluations of the assets acquired and liabilities assumed. Accordingly, the information presented herein may differ from the final purchase price allocation; however, in the opinion of the Company's management, the final purchase price allocation will not differ significantly from the information presented herein. In the opinion of the Company's management, all adjustments have been made that are necessary presented herein. In the opinion of the Company's management, all adjustments have been made that are necessary to present fairly the pro forma data. The unaudited pro forma information is presented for illustrative purposes only and is not indicative of the operating results or financial position that would have occurred if the Transactions had been consummated on the dates indicated, nor is it indicative of future operating results or financial positions if the aforementioned transactions are completed. The failure of the aforementioned transactions to be completed would significantly alter the unaudited pro forma information. All pro forma financial information should be read in conjunction with the Company's Consolidated Financial Statements and the financial statements of certain of the other acquired companies included in the Company's Registration Statement on Form S-1 (No. 333-48849). CUMULUS MEDIA INC. UNAUDITED PRO FORMA COMBINED BALANCE SHEET AS OF MARCH 31, 1998 (Dollars in thousands)
PRO FORMA PRO FORMA PRO FORMA ADJUSTMENTS FOR ADJUSTMENTS FOR THE COMPANY ADJUSTMENTS THE SUBSEQUENT THE PENDING PRO FORMA HISTORICAL FOR THE OFFERINGS ACQUISITIONS ACQUISITIONS (4) COMBINED ---------- ----------------- ------------ ---------------- -------- ASSETS: Current assets: Cash and cash equivalents $ 23,416 $ 274,923 (1) $ (160,668)(3) $ (108,092) $ 29,579 Accounts receivable 10,238 - - - 10,238 Prepaid expenses and other current assets 1,587 - - - 1,587 ---------- ---------- ---------- ----------- ----------- Total current assets 35,241 274,923 (160,668) (108,092) 41,404 Property and equipment, net 14,146 - 12,204 (3) 15,627 41,977 Intangible assets, net 150,973 - 172,828 (3) 94,079 417,880 Other assets 19,766 6,338 (1) (11,699)(3) (823) 13,582 ---------- ---------- ---------- ----------- ----------- Total assets $ 220,126 $ 281,261 $ 12,665 $ 791 $ 514,843 ========== ========== ========== =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities: Accounts payable and other liabilities $ 8,619 $ - $ - $ - $ 8,619 Current portion of long-term debt 12 - - - 12 ---------- ---------- ---------- ----------- ----------- Total current liabilities 8,631 - - - 8,631 Long-term debt: Notes - 160,000 (1) - - 160,000 Credit facility 120,252 (57,752)(1) - - 62,500 Other long-term liabilities: Deferred tax liability 853 - 12,665 (3) 791 14,309 Other long-term liabilities 1,083 - - - 1,083 ---------- ---------- ---------- ----------- ----------- Total liabilities 130,819 102,248 12,665 791 246,523 90,474 (1) Preferred stock subject to mandatory redemption 30,518 4,008 (2) - - 125,000 ---------- ---------- ---------- ----------- ----------- Stockholders' equity: Class A Common Stock - 86 (1) - - 86 Class B Common Stock - 88 (1) - - 88 Class C Common Stock - 24 (1) - - 24 Additional paid in capital 67,692 84,333 (1) - - 152,025 Accumulated other comprehensive income 5 - - - 5 Retained earnings (deficit) (8,908) - - - (8,908) ---------- ---------- ---------- ----------- ----------- Total stockholders' equity 58,789 84,531 - - 143,320 Total liabilities and stockholders' equity $ 220,126 $ 281,261 $ 12,665 $ 791 $ 514,843 ========== ========== ========== =========== ===========
See accompanying notes to the unaudited combined pro forma balance sheet. Notes to the Unaudited Pro Forma Balance Sheet As of March 31, 1998 (Dollars in Thousands) (1) To reflect the net cash proceeds, after repayment of the Credit Facility, from the Offerings as follows: Issuance of Notes ($160,000 net of fees of $6,338) $153,662 Preferred Stock Offering to the public ($90,474 net of fees of $4,262) 86,212 Stock Offerings ($101,200 to the Company net of fees of $8,399) 92,801 Credit Facility - Term loan 62,500 Less: Repayment of Credit Facility - Revolving line of credit (120,252) --------- $274,923 --------- ---------
(2) An amount of $4,008 has been recorded for the accretion of the dividends and discount on the NML Preferred Stock when exchanged into Series A Preferred Stock. (3) To record the acquisitions of Republic Corporation and the other Completed Acquisitions for $172,367 ($160,668 in cash and the use of escrow deposits of $11,699) and the allocations of the related purchase prices as follows:
Other Subsequent Republic Completed Allocation of Corporation Acquisitions Pro Forma Purchase Historical Historical Adjustments Price ---------- ---------- ----------- ----- Assets: Current assets: Cash and cash equivalents $ 313 $ 1,243 $(173,923) $(172,367) Accounts receivable 159 4,303 (4,462) - Prepaid expenses and other current assets 752 467 (1,219) - --------- ----------- ---------- --------- Total current assets 1,224 6,013 (179,604) (172,367) Property and equipment, net 2,997 8,752 455 12,204 Intangible assets, net 11,912 27,000 133,916 172,828 Other assets 621 165 (786) - --------- ----------- ---------- --------- Total assets $ 16,754 $ 41,930 $ (46,019) $ 12,665 --------- ----------- ---------- --------- --------- ----------- ---------- --------- Liabilities and stockholders' equity: Current liabilities: Accounts payable and other liabilities $ 707 $ 7,545 $ (8,252) - Current portion of long-term debt - 8,910 (8,910) - --------- ----------- ---------- --------- Total current liabilities 707 16,455 (17,162) - Long-term debt - 17,379 (17,379) - Deferred tax liability 272 68 12,325 12,665 Other long-term liabilities - 775 (775) - --------- ----------- ---------- --------- Total liabilities 979 34,677 (22,991) 12,665 --------- ----------- ---------- --------- Stockholders' equity 15,775 7,253 (23,028) - --------- ----------- ---------- --------- Total liabilities and stockholders' equity $ 16,754 $ 41,930 $ (46,019) $ 12,665 --------- ----------- ---------- --------- --------- ----------- ---------- ---------
(4) To record the allocation of the $108,915 in purchase price paid for the Pending Acquisitions and the recording of the related deferred income taxes of $791. CUMULUS MEDIA INC. UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1998 (Dollars in thousands, except per share data)
Pro Forma Adjustments for Pro Forma The Company the Company Adjustments 1998 Completed Historical Historical(1) for the Offerings Acquisitions(4) ---------- ------------- ----------------- --------------- Statement of Operations Data: Revenues $ 13,787 $ 1,083 $ - $ 7,723 Less: agency commissions (1,287) (99) - (565) -------- -------- -------- -------- Net revenues 12,500 984 - 7,158 Station operating expenses 10,904 973 - 6,232 excluding depreciation and amortization Depreciation and amortization 2,748 175 - 1,302 Corporate general and administrative expenses 961 - - - Non-cash stock compensation expense - - - - -------- -------- -------- -------- Operating income (loss) (2,113) (164) - (376) Interest expense 1,374 78 4,278 (2) 931 Other (income) expense 6 (56) - 68 -------- -------- -------- -------- Income (loss) before income taxes (3,493) (186) (4,278) (1,375) Income tax (expense) benefit - - - (7) -------- -------- -------- -------- Net income (loss) (3,493) (186) (4,278) (1,382) Preferred stock dividends 842 - 3,529 (3) - -------- -------- -------- -------- Net income (loss) attributable to common stockholders $ (4,335) $ (186) $ (7,807) $ (1,382) ======== ======== ======== ======== Basic and diluted earnings (loss) per share $ (4,335) Average shares outstanding (in thousands) 1 Pro Forma Adjustments for the Company Historical Pro Forma and the 1998 Adjustments Completed Pending for the Pending Pro Forma Acquisitions Acquisitions Acquisitions Combined ------------ ------------ ------------ -------- Statement of Operations Data: Revenues $ - $ 6,734 $ - $ 29,327 Less: agency commissions - (364) - (2,315) -------- -------- -------- -------- Net revenues - 6,370 - 27,012 Station operating expenses - 5,829 - 23,938 excluding depreciation and amortization Depreciation and amortization 211 (5) 704 627 (5) 5,767 Corporate general and administrative expenses - - - 961 Non-cash stock compensation expense - - - - -------- -------- -------- -------- Operating income (loss) (211) (163) (627) (3,654) Interest expense (620)(6) 675 (986)(6) 5,730 Other (income) expense - (78) - (60) -------- -------- -------- -------- Income (loss) before income taxes 409 (760) 359 (9,324) Income tax (expense) benefit - 27 - 20 -------- -------- -------- -------- Net income (loss) 409 (733) 359 (9,304) Preferred stock dividends - - - 4,371 -------- -------- -------- -------- Net income (loss) attributable to common stockholders $ 409 $ (733) $ 359 $(13,675) ======== ======== ======== ======== Basic and diluted earnings (loss) per share $ (0.69) Average shares outstanding (in thousands) 19,737
See accompanying notes to Unaudited Pro Forma Combined Statement of Operations. Notes to the Unaudited Pro Forma Combined Statement of Operations For the Three Months Ended March 31, 1998 (Dollars in thousands) (1) Adjustments reflect historical revenues and expenses of stations acquired by the Company in the first quarter of 1998 for the period from January 1, 1998 through the date the stations were acquired by the Company. (2) Adjustment to reflect increased interest expense resulting from: Quarterly interest expense on $160,000 Notes at 10.375%...................... $ 4,150 Quarterly interest expense on $62,500 outstanding under the Credit Facility at 8.50%.................................................................. 1,328 Quarterly amortization of $6,338 Notes debt issuance costs over 10 years..... 158 Quarterly amortization of $3,000 Credit Facility, debt issuance costs over 8 years................................................................. 94 --------- Total interest expense 5,730 Less: Historical interest recorded by the Company and recorded by the stations acquired by the Company in the first quarter of 1998 for the period from January 1, 1998 through the dates acquired by the Company..... (1,452) --------- Net adjustment............................................................... $ 4,278 --------- --------- (3) To reflect additional accretion related to the Series A Preferred Stock dividend: Accretion of Series A Preferred Stock dividend (compounded daily at 13.75%)................................................................ $ 4,371 Less: Historical dividends on NML Preferred Stock exchanged into Series A Preferred Stock......................................................... (842) --------- Net adjustment............................................................... $ 3,529 --------- ---------
(4) Adjustments reflect historical revenues and expenses of Republic Corporation and the other stations acquired subsequent to March 31, 1998 as follows:
Other Republic 1998 1998 Corporation Completed Completed Historical Historical Acquisitions Revenues $2,007 $5,716 $7,723 Less: agency commissions (155) (410) (565) -------- -------- -------- Net revenues 1,852 5,306 7,158 Station operating expenses excluding depreciation and amortization 1,429 4,803 6,232 Depreciation and amortization 321 981 1,302 -------- -------- -------- Operating income (loss) 102 (478) (376) Interest income expense, net (1) 932 931 Other (income) expense, net 15 53 68 -------- -------- -------- Income (loss) before income taxes 88 (1,463) (1,375) Income tax (expense) benefit (11) 4 (7) -------- -------- -------- Net income (loss) $77 ($1,459) ($1,382) -------- -------- -------- -------- -------- --------
(5) Adjustments reflect (i) the change in depreciation and amortization expense resulting from conforming the estimated useful lives of the Completed Acquisitions and the Pending Acquisitions' assets to the Company's policies and (ii) the additional depreciation and amortization expense resulting from the allocation of the purchase price to the estimated fair market value of the assts acquired. On a pro forma basis, depreciation expense is $1,049 and amortization expense is $4,718 after giving effect to the Completed Acquisitions and the Pending Acquisitions. Depreciation expense has been calculated on a straight line basis using a weighted average life of 10 years for property and equipment. Goodwill and other intangible assets amortization has been calculated on a straight line basis over 25 years. Non-compete agreements are being amortized over the lives of the agreements which range from 2-5 years. The Company allocates the purchase prices of the acquired stations based on complete evaluations of the assets acquired and the liabilities assumed. The Company believes that the excess of cost over the fair value of tangible net assets of an acquired radio station almost exclusively relates to the value of the FCC broadcasting license and goodwill. The Company believes that the purchase price allocation method described above is consistent with general practice in the radio broadcasting industry. (6) Adjustment to eliminate historical interest expense of the 1998 Completed Acquisitions and of the Pending Acquisitions. In July 1998, the Company recorded the accretion of dividends and the discount on the NML Preferred Stock of $4,008 when it was exchanged into Series A Preferred Stock. CUMULUS MEDIA INC. UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997 (Dollars in thousands, except per share data)
Pro Forma Adjustments for the Pro Forma Company Historical Adjustments for Pro Forma and the 1998 The Company the Company Adjustments 1998 Completed Completed Historical(1) Historical(3) for the Offerings Acquisitions(6) Acquisitions ------------- ------------- ----------------- --------------- ------------ Statement of Operations Data: Revenues $ 10,134 $ 21,363 $ - $ 60,719 $ - Less: agency commissions (971) (1,780) - (6,758) - -------- -------- -------- -------- -------- Net revenues 9,163 19,583 - 53,961 - -------- -------- -------- -------- -------- Station operating expenses 7,147 14,521 - 44,500 (956)(7) excluding depreciation and amortization Depreciation and amortization 1,671 2,988 - 6,265 6,922 (8) Corporate general and administrative expenses 1,276 - - 34 956 (7) Non-cash stock compensation expense 1,689 (2) - - - - -------- -------- -------- -------- -------- Operating income (loss) (2,620) 2,074 - 3,162 (6,922) -------- -------- -------- -------- -------- Interest expense 837 1,125 20,960 (4) 3,817 (2,696) Gain (loss) on sale of asset - 12,261 - - (12,261)(9) Other (income) expense 54 4 - 289 - -------- -------- -------- -------- -------- Income (loss) before income taxes (3,511) 13,206 (20,960) (944) (16,487) -------- -------- -------- -------- -------- Income tax (expense) benefit (67) (84) - 3,680 (3,724)(10) -------- -------- -------- -------- -------- Net income (loss) (3,578) 13,122 (20,960) 2,736 (20,211) Preferred stock dividends 274 - 18,147 (5) - - -------- -------- -------- -------- -------- Net income (loss) attributable to common stockholders $ (3,852) $ 13,122 $(39,107) $ 2,736 $(20,211) ======== ======== ======== ======== ======== Basic and diluted earnings (loss) per share $ (3,852) Average shares outstanding (in thousands) 1 Pro Forma Adjustments Pending for the Pending Pro Forma Acquisitions Acquisitions Combined(1) ------------ ------------ ----------- Statement of Operations Data: Revenues $ 30,752 $ - $122,968 Less: agency commissions (1,683) - (11,192) -------- -------- -------- Net revenues 29,069 - 111,776 -------- -------- -------- Station operating expenses 25,191 (2,494)(7) 87,909 excluding depreciation and amortization Depreciation and amortization 2,296 2,773 (8) 22,915 Corporate general and administrative expenses - 2,494 (7) 4,760 Non-cash stock compensation expense 278 - 1,967 -------- -------- -------- Operating income (loss) 1,304 (2,773) (5,775) -------- -------- -------- Interest expense 2,173 (3,294) 22,922 Gain (loss) on sale of asset 5,547 (5,547)(11) - Other (income) expense (121) (122)(12) 104 -------- -------- -------- Income (loss) before income taxes 4,799 (4,904) (28,801) -------- -------- -------- Income tax (expense) benefit - - (195) -------- -------- -------- Net income (loss) 4,799 (4,904) (28,996) Preferred stock dividends - - 18,421 -------- -------- -------- Net income (loss) attributable to common stockholders $ 4,799 $ (4,904) $(47,417) ======== ======== ======== Basic and diluted earnings (loss) per share $ (2.40) Average shares outstanding (in thousands) 19,737
See accompanying notes to Unaudited Pro Forma Combined Statement of Operations. Notes to the Unaudited Pro Forma Combined Statement of Operations For the Year Ended December 31, 1997 (Dollars in thousands) (1) The pro forma financial results exclude the effects of estimated cost savings which management believes will result from the Completed Acquisitions and the Pending Acquisitions. The Company expects to realize approximately $7,430 of cost savings resulting from the elimination of redundant station operating expenses arising from the Completed and the Pending Acquisitions, including elimination of certain management and staff positions, the consolidation of station facilities and equipment, the elimination of previous owner compensation benefits and new rates associated with revised vendor contracts. Also, the Company expects to realize approximately $2,029 of cost savings from the elimination of certain corporate overhead functions, net of increased costs associated with the implementation of the Company's corporate management structure. Corporate cost savings reflect the expected level of annual corporate expenditures arising from the Completed Acquisitions and the Pending Acquisitions. There can be no assurances that any operating or corporate cost savings will be achieved. (2) Amount represents a non-recurring, non-cash stock compensation expense on common stock issued to certain employees and managers upon formation of the Company. (3) Adjustments reflect historical revenues and expenses of stations acquired by the Company in 1997 for the period from January 1, 1997 through the date the stations were acquired by the Company. (4) Adjustment to reflect increased interest expense resulting from: Interest on the Notes at 10.375% $16,600 Interest on $62,500 outstanding under the Credit Facility at 8.5% 5,313 Amortization of $6,338 debt issuance costs over 10 years 634 Amortization of $3,000 Credit Facility transaction costs over 8 years 375 -------- Total interest expense 22,922 Less: Historical interest expense recorded by the Company and recorded by the stations acquired by the Company in the year ended December 31, 1997 for the period from January 1, 1997 through the dates acquired by the Company 1,962 -------- Net adjustment $20,960 -------- -------- (5) To reflect additional accretion related to Series A Preferred Stock dividend: Accretion of Series A Preferred Stock dividend (compounded daily at 13.75%) $18,421 Less: Pro forma dividends on NML Preferred Stock exchanged into Series A Preferred Stock (274) -------- Net adjustment $18,147 -------- --------
(6) Adjustments reflect historical revenues and expenses of Republic Corporation and the other stations acquired by the Company subsequent to January 1, 1998 as follows:
Other 1998 Republic Completed 1998 Corporation Acquisitions Completed Historical Historical Acquisitions ---------- ---------- ------------ Revenues $ 11,691 $49,028 $60,719 Less: agency commissions (2,360) (4,398) (6,758) --------- --------- --------- Net revenues 9,331 44,360 53,961 Station operating expenses excluding depreciation and amortization 6,323 38,177 44,500 Depreciation and amortization 1,206 5,059 6,265 Corporate general and administrative expenses - 34 34 --------- --------- --------- Operating income 1,802 1,360 3,162 Interest expense (11) 3,828 3,817 Other (income) expense 32 257 289 --------- --------- --------- Income (loss) before income taxes 1,781 (2,725) (944) Income tax (expense) benefit 3,724 (44) 3,680 --------- --------- --------- $5,505 ($2,769) $2,736 --------- --------- --------- --------- --------- ---------
(7) Adjustments reflect the reclassification of $956 and $2,494 of expenses from station operating expenses excluding depreciation and amortization to corporate general and administrative expenses to conform with the Company's accounting practices. (8) Adjustments reflect (i) the change in depreciation and amortization expense resulting from conforming the estimated useful lives of the Completed and the Pending Acquisitions' assets to the Company's policies and (ii) the additional depreciation and amortization expense resulting from the allocation of the purchase price to the estimated fair market value of the assets acquired. On a pro forma basis, depreciation expense is $19,021 and amortization expense is $3,894 after giving effect to the Completed Acquisitions and the Pending Acquisitions. Depreciation expense has been calculated on a straight line basis using a weighted average life of 10 years for property and equipment. Goodwill and other intangible assets amortization has been calculated on a straight line basis over 25 years. Non-compete agreements are being amortized over the lives of the agreements which range from 2-5 years. The Company allocates the purchase prices of the acquired stations based on complete evaluations of the assets acquired and the liabilities assumed. The Company believes that the excess of cost over the fair value of tangible net assets of an acquired radio station almost exclusively relates to the value of the FCC broadcasting license and goodwill. The Company believes that the purchase price allocation method described above is consistent with general practice in the radio broadcasting industry. (9) Adjustment recorded to eliminate a non-recurring gain of $12,261 recognized by HVS Partners on the 1997 sales of radio stations in Salisbury, MD and Wilmington, NC to the Company prior to the acquisition by the Company of the remainder of HVS Partners' stations. (10) Elimination of historical income tax benefit of Republic Corporation. (11) Adjustment recorded to eliminate a non-recurring gain of $1,462 and $4,085 recognized by Communications Properties, Inc. and Radio Ingstad Minnesota, Inc., Radio Albert Lea, Inc. and KRCH of Minnesota, Inc., respectively, (Pending Acquisitions of the Company). The non-recurring gains were recognized by the respective Pending Acquisitions upon the sale of radio stations not acquired by the Company. (12) Elimination of interests of minority shareholders in connection with a Pending Acquisition. -----END PRIVACY-ENHANCED MESSAGE-----