1
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
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): February 2, 2001
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CUMULUS MEDIA INC.
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(Exact Name of Registrant as specified in its character)
ILLINOIS 000-24525 36-4159663
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
3535 Piedmont Road, Building 14, 14th Floor, Atlanta, GA 30305
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (404) 949-0700
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NONE
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(Former name or former address, if changed since last report)
2
Item 2. Acquisition or Disposition of Assets
On January 18, 2001, Cumulus Broadcasting, Inc. and Cumulus Wireless
Services, Inc., wholly owned subsidiaries of Cumulus Media Inc., and Cumulus
Licensing Corp., a wholly owned subsidiary of Cumulus Broadcasting
(collectively, "Cumulus Media, Inc." or the "Company") completed substantially
all of the third and final phase of an asset exchange and sale transaction with
Clear Channel Communications (NYSE:CCU) and its subsidiaries ("Clear Channel").
Pursuant to the terms of the third phase, the Company would transfer 44 stations
in 8 markets to Clear Channel in exchange for 4 stations in 1 market plus $51.2
million of initial cash proceeds. Upon receipt of regulatory approval for 1 of
the stations being sold pursuant to the third phase, and satisfaction of certain
other post-closing conditions, the Company will receive $1.0 million of
additional cash proceeds. On October 2, 2000, the Company received $15.0 million
of cash proceeds in connection with the third phase, and on January 18, 2001,
the Company received $36.2 million of cash proceeds from the third phase. The
series of asset exchange and sale agreements between the Company and Clear
Channel are described in chronological order below.
On March 5,2000 Cumulus Media Inc. entered into a Asset Purchase
Agreement (the "Phase 1 Purchase Agreement") with Capstar Radio Operating
Company ("Capstar ROC") and Capstar TX Limited Partnership ("Capstar TX"),
entities controlled by Clear Channel to facilitate the acquisition and
disposition of certain radio station assets. Also on March 5, 2000 Cumulus Media
Inc. entered into an Asset Exchange Agreement (the "Phase 1 Exchange Agreement")
with Capstar ROC and Capstar TX pursuant to which the parties agreed to exchange
the Clear Channel Station Assets (defined therein) and the Exchange Party
Station Assets (defined therein). The parties intended the transaction
contemplated by this Exchange Agreement to be a like-kind exchange in accordance
with the provisions of Section 1031 of the Internal Revenue Code of 1986, as
amended (the "Code").
3
On June 5, 2000 the parties to the Phase 1 Purchase Agreement and the
Phase 1 Exchange Agreement entered into an Amendment (the "First Amendment") in
which the Exchange Agreement and the Phase 1 Purchase Agreement were amended to,
among other things, 1) modify the radio station assets to be included in the
Phase 1 Exchange Agreement; and 2) modify the purchase price under the Phase 1
Purchase Agreement and the cash amount under the Phase 1 Exchange Agreement.
On July 17, 2000 the parties to the Phase 1 Purchase Agreement and the
Phase 1 Exchange Agreement entered into a Second Amendment (the "Second
Amendment") whereby the Phase 1 Exchange Agreement and the Phase 1 Purchase
Agreement were amended to, among other things, 1) further modify the radio
station assets to be included in the Phase 1 Exchange Agreement; and 2) further
modify the purchase price under the Phase 1 Purchase Agreement and the cash
amount under the Phase 1 Exchange Agreement.
The Phase 1 Purchase Agreement and the Phase I Exchange Agreement, as
amended, will hereafter be referred to as the "Phase 1 Clear Channel
Agreements". The transactions contemplated by the Phase 1 Clear Channel
Agreements were consummated on August 25, 2000, whereby the Company transferred
25 stations in 5 markets to Clear Channel in exchange for 8 stations in 3
markets plus $91.5 million of cash proceeds.
On September 6, 2000, Cumulus Media Inc. entered into an Asset Purchase
Agreement (the "Phase 2 Asset Purchase Agreement") with Clear Channel
Broadcasting, Inc. ("Clear Channel Broadcasting") and Clear Channel Broadcasting
Licenses, Inc. ("Clear Channel Licenses"), entities controlled by Clear Channel.
On September 30, 2000, Cumulus Media Inc. entered into an amendment to
the Phase 2 Asset Purchase Agreement (the "Phase 2 Amendment") with Clear
Channel. Among other things, the Phase 2 Amendment i) specified the transfer of
the Station Assets were as part of a like-kind exchange under Section 1031 of
the Internal Revenue Code, and ii) set the closing date for October 2, 2000.
The transactions contemplated by the Phase 2 Asset Purchase Agreement
were consummated on October 2, 2000, whereby the Company sold 28 stations in 5
markets for $68.9 million of initial cash proceeds. Upon receipt of regulatory
approval for 6 of the stations being sold, the Company will receive an
additional $6.0 million of cash proceeds.
On October 2, 2000, Cumulus Media Inc. entered into a Tangible Property
Purchase Agreement (the "Phase 3 Tangible Property Purchase Agreement") with
Capstar ROC. The transactions contemplated by the Phase 3 Tangible Property
Purchase Agreement were consummated on October 2, 2000, whereby the Company sold
the tangible assets associated with 44 stations in 8 markets to Clear Channel in
exchange for cash proceeds of $15.0 million.
On October 2, 2000, Cumulus Media Inc. entered into an Asset Exchange
Agreement (the "Phase 3 Asset Exchange Agreement") with Capstar ROC and
Capstar TX.
On January 12, 2001 Cumulus Media Inc. entered into an Amendment to the
Asset Exchange Agreement (the "Phase 3 Amendment") with Capstar ROC and Capstar
TX. The Phase 3 Amendment provides, among other things that Clear Channel may
elect to consummate the exchange and replacement property purchase of the assets
relating to WMHG-AM, Muskegon, Michigan in a closing separate from the Closing
of the other Muskegon Stations.
The transactions contemplated by the Phase 3 Asset Exchange Agreement
were consummated on January 18, 2001, whereby the Company transferred 44
stations in 8 markets to Clear Channel in exchange for 4 stations and
approximately $36.2 million of additional cash proceeds. Upon receipt of
regulatory approval for 1 of the stations being sold, and satisfaction of
certain other post-closing conditions, the Company will receive an additional
$1.0 million of cash proceeds.
As of January 18, 2001, the Company had completed substantially all of
the acquisitions and divestitures pursuant to the above-described agreements
with Clear Channel. Pursuant to the terms of those agreements, Cumulus
Broadcasting acquired 12 stations (the "Acquired Stations") in 4 markets.
Additionally, pursuant to the terms of those agreements, Cumulus Broadcasting
divested 97 stations (the "Divested Stations") in 18 markets.
4
The acquired and divested markets and stations are as follows:
Phase 1 (completed August 25, 2000):
Assets Acquired
MELBOURNE-TITUSVILLE-COCOA, FLORIDA - WHKR-FM.
SHREVEPORT, LOUISIANA- KRMD-FM, KRMD-AM, KMJJ-FM, KBED-FM
(FCC construction permit).
CEDAR RAPIDS, IOWA- KHAK-FM, KRNA-FM, KDAT-FM.
Assets Divested:
CHATTANOOGA, TENNESSEE - WUSY-FM, WKXJ-FM, WLMX-FM, WIIS-AM, WLOV-FM.
MCALLEN, TEXAS - KTEX-FM, KBFM-FM.
ANN ARBOR, MICHIGAN - WIQB-FM, WQKL-FM, WTKA-AM, WYBN-AM.
SALISBURY, MARYLAND - WLVW-FM, WQHQ-FM, WTGM-AM, WSBY-FM, WJDY-AM, WWFG-FM,
WLBW-FM, WOSC-FM.
EAU CLAIRE, WISCONSIN - WATQ-FM, WBIZ-AM, WBIZ-FM, WMEQ-AM, WMEQ-FM, WQRB-FM.
Phase 2 (completed October 2, 2000, with exception of Columbus, GA divestitures
which remains pending)
Assets Divested:
MANKATO-NEW ULM-ST. PETER, MINNESOTA- KXLP-FM, KYSM-AM, KYSM-FM, KNSG-FM,
KNUJ-FM, KNUJ-AM.
ROCHESTER, MINNESOTA- KMFX-AM, KMFX-FM, KRCH-FM, KWEB-FM, KNFX-AM.
MASON CITY, IOWA - KCHA-AM, KCHA-FM, KCZE-FM, KGLO-AM, KIAI-FM, KLKK-FM,
KWMM-FM.
EVANSVILLE, INDIANA- WGBF-FM, WTRI-FM, WYNG-FM, WGBF-AM.
COLUMBUS, GEORGIA - WVRK-FM, WGSY-FM, WBFA-FM, WAGH-FM, WMLF-AM, WPNX-AM.
Phase 3 (completed January 18, 2001, with exception of WMHG-AM Muskegon, MI
divestiture which remains pending):
Assets Acquired:
HARRISBURG, PENNSYLVANIA- WNCE-FM, WNNK-FM, WTCY-AM, WTPA-FM.
Assets Divested:
JONESBORO, ARKANSAS- KIYS-FM, KBTM-AM, KFIN-FM.
MUSKEGON, MICHIGAN- WMUS-FM, WMUS-AM, WMRR-FM, WMHG-AM, WSHZ-FM.
AUGUSTA, GEORGIA- WZNY-FM, WEKL-FM, WBBQ-FM, WBBQ-AM, WGUS-AM, WKSP-FM WPRW-FM.
AUGUSTA-WATERVILLE, MAINE- WIGY-FM, WFAU-AM, WABK-FM, WTOS-FM, WKCG-FM, WCME-FM.
FLORENCE/MUSCLE SHOALS, ALABAMA- WLAY-AM, WLAY-FM, WKGL-FM, WVNA-FM, WVNA-AM.
TUPELO, MISSISSIPPI-WKMQ-AM, WTUP-AM, WWKZ-FM, WWZD-FM, WESE-FM.
MARION-CARBONDALE, ILLINOIS- WVZA-FM, WFRX-AM, WTAO-FM, WDDD-AM, WDDD-FM,
WQUL-FM.
LAUREL-HATTIESBURG, MISSISSIPPI- WEEZ-AM, WJKX-FM, WHER-FM, WUSW-FM, WMFM-FM,
WFOR-AM, WNSL-FM.
5
The completion of substantially all of the transactions pursuant to the
Clear Channel Agreements described herein requires the inclusion, under Article
11 of Regulation S-X, of the pro forma financial statements included herein.
Item 7.
(a) None
(b) Pro Forma Financial Information.
Cumulus Media Inc. Unaudited Pro Forma Statement of Operations for
the Year Ended December 31, 1999.
Cumulus Media Inc. Unaudited Pro Forma Statement of Operations
for the Nine Months Ended September 30, 2000.
Cumulus Media Inc. Unaudited Pro Forma Balance Sheet as of
September 30, 2000.
(c) Exhibits:
2.1 Asset Purchase Agreement (the "Phase 1 Purchase Agreement") by and
between Cumulus Broadcasting, Inc. ("Cumulus Broadcasting") and Cumulus
Wireless Services, Inc. ("Cumulus Wireless"), wholly owned subsidiaries
of Cumulus Media Inc. (the "Company"), and Cumulus Licensing Corp.
("Cumulus Licensing"), a wholly owned subsidiary of Cumulus Broadcasting
and Capstar Radio Operating Company ("Capstar ROC") and Capstar TX
Limited Partnership ("Capstar TX") dated March 5, 2000.
2.2 Asset Exchange Agreement (the "Phase 1 Exchange Agreement") by and
between Cumulus Broadcasting, and Cumulus Wireless and Cumulus Licensing
Corp. and Capstar Radio Operating Company ("Capstar ROC") and Capstar TX
Limited Partnership ("Capstar TX") dated March 5, 2000.
2.3 Amendment Agreement (the "First Amendment") by and between Cumulus
Broadcasting, and Cumulus Wireless and Cumulus Licensing Corp. and
Capstar Radio Operating Company ("Capstar ROC") and Capstar TX Limited
Partnership ("Capstar TX") dated June 5, 2000.
2.4 Second Amendment Agreement (the "Second Amendment") by and between
Cumulus Broadcasting, and Cumulus Wireless and Cumulus Licensing Corp.
and Capstar Radio Operating Company ("Capstar ROC") and Capstar TX
Limited Partnership ("Capstar TX") dated July 17, 2000.
2.5 Asset Purchase Agreement (the "Phase 2 Asset Purchase Agreement") by and
between Cumulus Broadcasting, Cumulus Wireless and Cumulus Licensing and
Clear Channel Broadcasting, Inc. ("Clear Channel Broadcasting") and Clear
Channel Broadcasting Licenses, Inc. ("Clear Channel Licenses") dated
September 6, 2000.
2.6 Amendment Agreement (the "Phase 2 Amendment Agreement") by and between
Cumulus Broadcasting, Cumulus Wireless and Cumulus Licensing and Clear
Channel Broadcasting, Inc. ("Clear Channel Broadcasting") and Clear
Channel Broadcasting Licenses, Inc. ("Clear Channel Licenses") dated
September 30, 2000.
6
2.7 Tangible Property Purchase Agreement (the "Phase 3 Tangible Property
Purchase Agreement") by and between Cumulus Broadcasting, Cumulus
Wireless and Cumulus Licensing and Capstar Radio Operating Company
("Capstar ROC") dated October 2, 2000.
2.8 Asset Exchange Agreement (the "Phase 3 Asset Exchange Agreement") by and
between Cumulus Broadcasting, Cumulus Wireless and Cumulus Licensing and
Capstar Radio Operating Company ("Capstar ROC") and Capstar TX Limited
Partnership ("Capstar TX") dated October 2, 2000.
2.9 Amendment Agreement (the "Phase 3 Amendment Agreement") by and between
Cumulus Broadcasting, Cumulus Wireless and Cumulus Licensing and Capstar
Radio Operating Company ("Capstar ROC") and Capstar TX Limited
Partnership ("Capstar TX") dated January 12, 2001.
All Exhibits are filed herewith.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be singed on its behalf by the
undersigned hereunto duly authorized.
CUMULUS MEDIA
By: /s/ Martin R. Gausvik
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Martin R. Gausvik
Executive Vice President
Chief Financial Officer
and Treasurer
Date: February 2, 2001
7
EXHIBIT INDEX
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
----------- ----------- ------------
2.1 Asset Purchase Agreement (the "Phase 1 Purchase Agreement")
by and between Cumulus Broadcasting, Inc. ("Cumulus
Broadcasting") and Cumulus Wireless Services, Inc. ("Cumulus
Wireless"), wholly owned subsidiaries of Cumulus Media Inc.
(the "Company"), and Cumulus Licensing Corp. ("Cumulus
Licensing"), a wholly owned subsidiary of Cumulus
Broadcasting and Capstar Radio Operating Company ("Capstar
ROC") and Capstar TX Limited Partnership ("Capstar TX") dated
March 5, 2000.
2.2 Asset Exchange Agreement (the "Phase 1 Exchange Agreement")
by and between Cumulus Broadcasting, and Cumulus Wireless
and Cumulus Licensing Corp. and Capstar Radio Operating
Company ("Capstar ROC") and Capstar TX Limited Partnership
("Capstar TX") dated March 5, 2000.
2.3 Amendment Agreement (the "First Amendment") by and between
Cumulus Broadcasting, and Cumulus Wireless and Cumulus
Licensing Corp. and Capstar ROC and Capstar TX dated June 5,
2000.
2.4 Second Amendment Agreement (the "Second Amendment") by and
between Cumulus Broadcasting, and Cumulus Wireless and
Cumulus Licensing Corp. and Capstar ROC and Capstar TX dated
July 17, 2000.
2.5 Asset Purchase Agreement (the "Phase 2 Asset Purchase
Agreement") by and between Cumulus Broadcasting, Cumulus
Wireless and Cumulus Licensing and Clear Channel
Broadcasting, Inc. ("Clear Channel Broadcasting") and Clear
Channel Broadcasting Licenses, Inc. ("Clear Channel
Licenses") dated September 6, 2000.
2.6 Amendment Agreement (the "Phase 2 Amendment Agreement") by
and between Cumulus Broadcasting, Cumulus Wireless and
Cumulus Licensing and Clear Channel Broadcasting and Clear
Channel Licenses dated September 30, 2000.
2.7 Tangible Property Purchase Agreement (the "Phase 3 Tangible
Property Purchase Agreement") by and between Cumulus
Broadcasting, Cumulus Wireless and Cumulus Licensing and
Capstar ROC dated October 2, 2000.
2.8 Asset Exchange Agreement (the "Phase 3 Asset Exchange
Agreement") by and between Cumulus Broadcasting, Cumulus
Wireless and Cumulus Licensing and Capstar ROC and Capstar
TX dated October 2, 2000.
2.9 Amendment Agreement (the "Phase 3 Amendment Agreement") by
and between Cumulus Broadcasting, Cumulus Wireless and
Cumulus Licensing and Capstar ROC and Capstar TX dated
January 12, 2001.
All exhibits are filed herewith.
8
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
On January 18, 2001, Cumulus Media, Inc. (the "Company") completed
substantially all of the third and final phase of an asset exchange and sale
transaction with Clear Channel Communications ("Clear Channel"). Pursuant to the
terms of the third phase, the Company would transfer 44 stations in 8 markets to
Clear Channel in exchange for 4 stations in 1 market plus $51.2 million of
initial cash proceeds. Upon receipt of regulatory approval for 1 of the stations
being sold pursuant to the third phase, and satisfaction of certain other
post-closing conditions, the Company will receive $1.0 million of additional
cash proceeds. On October 2, 2000, the Company received $15.0 million of cash
proceeds in connection with the third phase, and on January 18, 2001, the
Company received the remaining $36.2 million of cash proceeds from the third
phase. The Company completed substantially all of the second phase of the asset
exchange and sale transaction with Clear Channel on October 2, 2000, whereby the
Company transferred 28 stations in 5 markets for $68.9 million of initial
cash proceeds. Upon receipt of regulatory approval for 6 of the stations being
sold pursuant to the second phase, the Company will receive an additional $6.0
million of cash proceeds. The Company completed the first phase of the asset
exchange and sale transaction with Clear Channel on August 25, 2000, whereby the
Company transferred 25 stations in 5 markets to Clear Channel in exchange for 8
stations in 3 markets plus $91.5 million of cash proceeds. The cash proceeds
from the first and second phases of the asset exchange and sale transaction with
Clear Channel were used to facilitate closing of an unrelated transaction to
acquire 35 stations in 9 markets from Connoisseur Communications Partners, LP
("Connoisseur") for a total purchase price of $257.8 million in cash. The
Company's acquisition of stations from Connoisseur was completed on October 2,
2000.
The following unaudited pro forma financial statements are based on
the respective historical financial statements of the Company, giving effect to:
(i) the Company's asset exchange and sale transaction with Clear Channel, and
(ii) the Company's acquisition of stations from Connoisseur, using the
assumptions and adjustments described in the accompanying notes to the unaudited
pro forma financial statements. The unaudited pro forma financial statements
reflect the use of the purchase method of accounting for all acquisitions. The
unaudited pro forma statements of operations for the 9 months ended September
30, 2000 and the year ended December 31, 1999 reflect adjustments as if the
Clear Channel asset exchange and sale transaction and the Connoisseur
acquisition had occurred on January 1, 1999. The unaudited pro forma balance
sheet as of September 30, 2000 gives effect to the Clear Channel asset exchange
and sale transaction and the Connoisseur acquisition as if they had occurred on
September 30, 2000. The information set forth under the heading "The Company
Historical" in the pro forma statements of operations includes results relating
to local marketing agreements ("LMAs") with certain of the acquired stations.
The financial effects of the transactions presented in the unaudited pro forma
financial statements are not necessarily indicative of either the financial
position or results of operations that would have been obtained had the
acquisition actually occurred on the dates set forth above, nor are they
necessarily indicative of the results of future operations.
All pro forma financial information should be read in conjunction with
our consolidated financial statements and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" included in our Annual Report
on Form 10-K for the year ended December 31, 1999, as amended, and our Quarterly
Reports on Form 10-Q and the other information that we filed with the Securities
and Exchange Commission from time to time.
9
CUMULUS MEDIA INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(E) (A)+(B)+(C)
PRO FORMA +(D)+(E)=(F)
ADJUSTMENTS PRO FORMA
FOR THE COMPANY AS ADJUSTED
HISTORICAL, THE FOR THE
(A) (B) (C) (D) DIVESTITURES DIVESTITURES
THE COMPANY CLEAR CHANNEL CLEAR CHANNEL CONNOISSEUR AND THE AND THE
HISTORICAL ACQUISITIONS (1) DIVESTITURES (2) ACQUISITIONS (3) ACQUISITIONS ACQUISITIONS
------------ ---------------- --------------- --------------- --------------- ------------
STATEMENT OF OPERATIONS DATA:
Revenues $ 194,940 $ 23,560 $(64,252) $ 44,668 $ (1,041) (4) $ 197,875)
Less: agency commissions (14,921) (2,201) 5,188 (4,630) - (16,564)
----------- ---------- -------- --------- -------- ---------
Net revenues 180,019 21,359 (59,064) 40,038 (1,041) 181,311
Operating Expenses:
Station operating expenses
excluding depreciation,
amortization and LMA fees 133,328 13,071 (36,901) 27,480 (1,041) (4) 135,937
Depreciation and amortization 32,564 5,637 (10,613) 5,220 8,725 (5) 41,533
LMA Fees 4,165 - (883) - 3,282
Corporate general and
administrative expenses 8,204 - - 3,172 - 11,376
Non-cash stock compensation
expense - - - 798 798
----------- ---------- -------- --------- -------- ---------
Operating Expenses 178,261 18,708 (48,397) 36,670 7,684 192,926
----------- ---------- -------- --------- -------- ---------
Operating income (loss) 1,758 2,651 (10,667) 3,368 (8,725) (11,615)
----------- ---------- -------- --------- -------- ---------
Nonoperating income (expense):
Interest expense (27,041) - 24 (4,297) - (31,314)
Interest income 4,164 - - - (1,225) (6) 2,939
Gain (loss) on sale of asset - - - - - -
Other income (expense) 627 (86) (1) (340) - 200
----------- ---------- -------- --------- -------- ---------
Nonoperating expenses, net (22,250) (86) 23 (4,637) (1,225) (28,175)
Income (loss) before
income taxes (20,492) 2,565 (10,644) (1,269) (9,950) (39,790)
Income tax (expense) benefit 6,870 (1,095) 4,258 508 3,980 (7) 14,521
----------- ---------- -------- --------- -------- ---------
Net income (loss) (13,622) 1,470 (6,386) (761) (5,970) (25,269)
Preferred stock dividends (23,790) - - - - (23,790)
----------- ---------- -------- --------- -------- ---------
Net income (loss) attributable
to common stockholders $ (37,412) $ 1,470 $ (6,386) $ (761) $ (5,970) $ (49,059)
=========== ========== ======== ========= ======== =========
Basic and diluted income
(loss) per share ($1.50) ($1.97)
Weighted average common
shares outstanding 24,938 24,938
See accompanying notes to Unaudited Pro Forma Consolidated
Statement of Operations.
10
NOTES TO THE UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS)
The pro forma financial results exclude the effects of estimated cost
savings which management believes will result from the integration of our
completed acquisitions.
(1) Reflects historical revenues and expenses of stations acquired by us from
Clear Channel Communications on August 25, 2000 and January 18, 2001 for
the period from January 1, 1999 through December 31, 1999.
(2) Reflects the historical revenues and expenses of stations divested by us to
Clear Channel Communications on August 25, 2000, October 2, 2000 and
January 18, 2001 for the period from January 1, 1999 through
December 31, 1999.
(3) Reflects the historical revenues and expenses of stations acquired by us on
October 2, 2000 from Connoisseur Communications Partners, L.P. for the
period from January 1, 1999 through December 31, 1999.
(4) To eliminate $1,041 in management agreement revenue recorded by Cumulus in
the 1999 Company historical and the offsetting broker fee expense recorded
by Connoisseur Communications Partners, L.P. in their Consolidated
Statement of Operations for the year ended December 31, 1999.
(5) Reflects (i) the change in depreciation and amortization expense
resulting from conforming the estimated useful lives of our acquired
assets to our 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 net of assets
divested. On a pro forma basis, depreciation expense is $12,853 and
amortization expense is $28,680 after giving effect to the completed
divestitures and acquisitions. Depreciation expense has been calculated
on a straight-line basis using a weighted average life of seven years for
property and equipment. Amortization of Intangible Assets 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 one
to three years.
We allocate the purchase prices of the acquired stations based on
evaluations of the assets acquired and the liabilities assumed. We believe
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. We believe that the purchase price allocation method
described above is consistent with general practice in the radio
broadcasting industry.
(6) Adjustment to reduce historical interest income to reflect the effects of
net cash used in our completed acquisitions for the year ended
December 31, 1999.
(7) Adjustment to reflect the application of the Company's estimated tax rate of
40% to the combined pre-tax income (loss) of the entities divested and
entities acquired on a pro forma basis for the period from January 1, 1999
through December 31, 1999.
11
CUMULUS MEDIA INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(A)+(B)+(C)+
(E) (D)+(E)=(F)
PRO FORMA PRO FORMA AS
ADJUSTMENTS ADJUSTED FOR
FOR THE COMPANY FOR THE 2000
(C) HISTORICAL, THE COMPLETED
(A) (B) CLEAR (D) DIVESTITURES DIVESTITURES
THE COMPANY CLEAR CHANNEL CHANNEL CONNOISSEUR AND THE AND
HISTORICAL ACQUISITIONS (1) DIVESTITURES (2) ACQUISITIONS (3) ACQUISITIONS ACQUISITIONS
------------ ---------------- -------------- --------------- --------------- ------------
Statement of Operations Data:
Revenues $ 183,257 $ 16,345 $ (53,898) $ 45,747 $ (9,968) $(4) $ 181,483
Less: agency commissions (14,787) (1,606) 4,263 (3,659) - (15,789)
--------- --------- ---------- --------- --------- ---------
Net revenues 168,470 14,739 (49,635) 42,088 (9,968) 165,694
Operating Expenses
Station operating expenses
excluding depreciation,
amortization and LMA Fees 151,137 8,414 (40,944) 31,338 (9,968) (4) 139,977
Depreciation and amortization 30,477 7,868 (10,584) 3,984 (595) (5) 31,150
LMA Fees 3,739 - (1,063) 296 - 2,972
Corporate general and
administrative expenses 12,460 - (90) 1,900 - 14,270
Restructuring and other
charges 9,296 - - - - 9,296
Non-cash stock compensation
expense - - - 201 - 201
--------- --------- ---------- --------- --------- ---------
Operating Expenses 207,109 16,282 (52,681) 37,719 (10,563) 197,866
Operating income (loss) (38,639) (1,543) 3,046 4,369 595 (32,172)
--------- --------- ---------- --------- --------- ---------
Nonoperating income (expense):
Interest expense (24,071) (2) 118 (1,906) (25,861)
Interest income 6,094 (1) - - (3,889) (6) 2,204
Gain (loss) on sale of asset - 8,632 - - (8,632) (7) -
Other income (expense) 68,073 9 (1) (697) - 67,384
--------- --------- ---------- --------- --------- ---------
Nonoperating income (expense),
net 50,096 8,638 117 (2,603) (12,521) 43,727
Income (loss) before income
taxes 11,457 7,095 3,163 1,766 (11,926) 11,555
Income tax benefit (expense) (6,361) (2,838) (1,265) (706) 4,770 (8) (6,400)
--------- --------- ---------- --------- --------- ---------
Net income (loss) 5,096 4,257 1,898 1,060 (7,156) 5,155
Preferred stock dividends
and accretion of discount (10,982) - - - - (10,982)
---------- -------- ---------- --------- --------- ---------
Net income (loss) attributable
to common stockholders (5,886) 4,257 1,898 1,060 (7,156) (5,827)
========== ======== ========== ========= ========= =========
Basic and diluted income
(loss) per share ($0.17) ($0.17)
Weighted average common shares
outstanding 35,130 35,130
See accompanying notes to Unaudited Pro Forma Consolidated
Statement of Operations.
12
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(IN THOUSANDS)
The pro forma financial results exclude the effects of estimated cost
savings which management believes will result from the integration of our
completed and pending acquisitions.
(1) Reflects historical revenues and expenses of stations acquired by us from
Clear Channel Communications on August 25, 2000 and January 18, 2001 for
the period from January 1, 2000 through the earlier of date the stations
were acquired by us or September 30, 2000.
(2) Reflects the historical revenues and expenses of stations divested by us to
Clear Channel Communications on August 25, 2000, October 2, 2000 and
January 18, 2001, for the period from January 1, 2000 through the earlier
of the date of divestiture or September 30, 2000.
(3) Reflects the historical revenues and expenses of stations acquired by us
from Connoisseur Communications Partners, L.P. on October 2, 2000 for the
period from January 1, 2000 through September 30, 2000.
(4) To eliminate $9,968 in management agreement revenues recorded by Cumulus in
the September 30, 2000 Company historical and the offsetting broker fee
expense recorded by Connoisseur Communications Partners, L.P. in their
Consolidated Statement of Operations for the nine months ended
September 30, 2000.
(5) Reflects (i) the change in depreciation and amortization expense resulting
from conforming the estimated useful lives of our acquired assets, to our
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, net of assets divested. On a pro forma
basis, depreciation expense is $9,640 and amortization expense is $21,510
after giving effect to the completed acquisitions and divestitures.
Depreciation expense has been calculated on a straight-line basis using a
weighted average life of seven years for property and equipment.
Amortization of Intangible Assets 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 one to three years.
We allocate the purchase prices of the acquired stations based on
evaluations of the assets acquired and the liabilities assumed. We believe
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. We believe that the purchase price allocation method
described above is consistent with general practice in the radio
broadcasting industry.
(6) Adjustments to reduce historical interest income to reflect the effects of
net cash used in our completed acquisitions for the nine months ended
September 30, 2000.
(7) Adjustment recorded to eliminate the non-recurring gain on sale of assets
recorded by Clear Channel Communications on the 2000 sale of radio stations
in Cedar Rapids, IA and Shreveport, LA to Cumulus.
(8) Adjustment to reflect the application of the Company's estimated tax rate
of 40% to the combined pre-tax income (loss) of the entities divested and
entities acquired on a pro forma basis for the period from January 1, 2000
through September 30, 2000.
13
CUMULUS MEDIA INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2000
(Dollars in thousands)
(B)
PRO FORMA (C)
ADJUSTMENTS PRO FORMA (A)+(B)+(C)
(A) FOR THE CLEAR ADJUSTMENTS FOR =(D)
THE COMPANY CHANNEL THE CONNOISSEUR PRO FORMA
HISTORICAL TRANSACTIONS ACQUISITIONS (3) COMBINED
----------- ------------- ---------------- ------------
ASSETS:
Current assets:
Cash and cash equivalents $ 42,467 $ 206,956 (1) $ (112,643) $ 58,780
$ (78,000) (2)
Restricted Cash $ 91,467 $ - $ (91,467) $ -
Accounts receivable, less allowance for doubtful accounts 40,159 - - $ 40,159
Prepaid expenses and other current assets 9,672 - - $ 9,672
----------- ----------- ----------- -----------
Total current assets 183,765 128,956 (204,110) 108,611
Property and equipment, net 76,535 (19,660) (1) 25,296 89,971
2,202 (2)
Intangible assets, net 569,360 (150,232) (1) 227,666 716,994
75,798 (2)
Other assets 93,714 - (48,852) 44,862
----------- ----------- ----------- -----------
Total assets $ 923,374 $ 37,064 $ - $ 960,438
=========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and accrued expenses $ 25,496 $ - $ - 25,496
Current portion of long-term debt 20 - - 20
Other Current Liabilities 848 - - 848
Total current liabilities 26,364 - - 26,364
Long-term debt 285,211 - - 285,211
Other liabilities 1,635 (47) (1) - 1,588
Deferred income taxes 11,810 14,531 (1) - 26,341
Total liabilities 325,020 14,484 (1) - 339,504
Series A Cumulative Exchangeable Redeemable Preferred
Stock due 2009, stated value $1,000 per share, 109,874
issued and outstanding 113,714 - 113,714
Stockholders' equity:
Class A Common Stock, par value $.01 per share, 50,000,000
shares authorized; 28,378,976 shares issued and outstanding 284 - - 284
Class B Common Stock, par value $.01 per share, 20,000,000
shares authorized; 4,479,343 shares issued and outstanding 45 - - 45
Class A Common Stock, par value $.01 per share, 30,000,000
shares authorized; 2,307,277 shares issued and outstanding 23 - - 23
Additional paid-in-capital 518,257 - - 518,257
- -
Loans to Officers (10,583) - - (10,583)
Retained earnings (Accumulated deficit) (23,386) 22,580 (1) - (806)
----------- ----------- ----------- -----------
Total stockholders' equity 484,640 22,580 - 507,220
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 923,374 $ 37,064 $ - $ 960,438
=========== =========== =========== ===========
See accompanying notes to the unaudited consolidated pro forma balance sheet.
14
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2000
(IN THOUSANDS)
1) To record the completion of the Clear Channel asset exchange and sale
transaction in which Cumulus sold 72 stations in 13 markets for $206.9
million in total consideration; $128.9 million in cash, and four
stations in Harrisburg, PA valued at $78.0 million. The Company did
not sell cash, accounts receivable and certain other working capital
items to Clear Channel Communications.
Upon receipt of regulatory approval for 6 of the stations being sold in
the phase 2 transactions, the Company will receive an additional $6.0
million of cash proceeds. Upon receipt of regulatory approval for 1 of
the stations being sold in the phase three transactions, and
satisfaction of certain other post-closing conditions, the Company will
receive an additional $1.0 million of cash proceeds.
2) To record the allocation of the $78.0 million in purchase price paid
for four stations in Harrisburg, PA. The Company did not purchase cash,
accounts receivable, and certain other working capital items from Clear
Channel Communications. The pro forma allocation of the purchase price
for the Harrisburg stations is as follows:
Property and equipment................................... $ 2,202
Intangible assets, principally broadcast licenses........ 75,798
--------
$ 78,000
========
The first phase of the Clear Channel transaction was completed on
August 25, 2000 and is reflected in the Company's balance sheet at
September 30, 2000.
3) To record the allocation of the $253.0 million in purchase price paid
for the Connoisseur Communications Partners, L.P. acquisition
consummated on October 2, 2000. The Company did not purchase cash,
accounts receivable, and certain other working capital items from
Connoisseur Communications Partners, L.P. The pro forma allocation of
the purchase price is as follows:
Property and equipment................................... $ 25,296
Intangible assets, principally broadcast licenses........ 227,666
--------
$252,962
========