EXHIBIT 99.1
For Release 4:05 PM Eastern Time, Tuesday, May 6, 2003
CUMULUS MEDIA INC.
CUMULUS REPORTS FIRST QUARTER 2003 RESULTS
Q1 PRO FORMA EBITDA GROWS 7%
Q1 PRO FORMA REVENUE GROWS 1%; Q1 SAME STATION
REVENUE GROWS 3% Q1 EPS $(0.06) VS. $(0.37) PRIOR YEAR
(BEFORE DEBT EXTINGUISHMENT LOSSES,
PREFERRED STOCK REDEMPTION PREMIUMS AND CERTAIN 2002 ONE-TIME CHARGES)
ATLANTA, GA, May 6, 2003 - Cumulus Media Inc. (NASDAQ: CMLS) today
reported financial results for the three months ended March 31, 2003.
Lew Dickey, Chairman, President and Chief Executive Officer, commented,
"This quarter was marked by key accomplishments including: an optimization of
our capital structure, important strategic acquisitions, and strong operating
performance in a difficult environment. We are building a strong platform that
generates tremendous free cash flow and are well-positioned to continue to
consolidate our space."
Historical results are attached. Historical or "as reported" financial
data of Cumulus Media Inc. are not comparable from year to year because of the
acquisition of radio stations by the Company during the periods covered.
Financial highlights (in thousands, except per share data and percentages) are
as follows:
<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31, %
2003 2002 CHANGE
--------- --------- ---------
AS REPORTED:
Net revenue $ 57,975 $ 45,116 28.5%
Station operating expenses 41,067 33,607 22.2%
Station operating income (1) 16,908 11,509 46.9%
Station operating income margin (2) 29.2% 25.5%
EBITDA (3) 13,513 7,961 69.7%
Free cash flow (4) $ 5,385 $ (5,160) --
SAME STATION RESULTS: (5)
Net revenue $ 45,549 $ 44,262 2.9%
Station operating income (1) 11,937 11,449 4.3%
Station operating income margin (2) 26.2% 25.9%
PRO FORMA RESULTS: (6)
Net revenue $ 57,554 $ 56,955 1.1%
Station operating income (1) 16,885 16,164 4.5%
Station operating income margin (2) 29.3% 28.4%
EBITDA (3) 13,490 12,616 6.9%
EBITDA margin (7) 23.4% 22.2%
</Table>
(1) Station operating income is defined as operating income before
depreciation and amortization, LMA fees, corporate general and
administrative expenses, non-cash stock compensation and restructuring
charges. Station operating income is not a measure of performance
calculated in accordance with accounting principles generally accepted
in the United States ("GAAP"). Please see the attached table for a
reconciliation of station operating income to operating income, the
most directly comparable GAAP financial measure.
(2) Station operating income margin is defined as station operating income
as a percentage of net revenues.
(3) EBITDA is defined as operating income before depreciation and
amortization, LMA fees, non-cash stock compensation and restructuring
charges. EBITDA is not a measure of performance calculated in
accordance with GAAP. Please see the attached table for a
reconciliation of EBITDA to operating income, the most directly
comparable GAAP financial measure.
(4) Free cash flow is defined as EBITDA less LMA fee expense, net interest
expense, dividends on the Series A Preferred Stock, income taxes paid
and maintenance/investment capital expenditures. Free cash flow is not
a measure of performance calculated
in accordance with GAAP. Please see the attached table for a
reconciliation of free cash flow to operating income, the most directly
comparable GAAP financial measure.
(5) Same station results include the 220 stations in 46 markets operated
since January 1, 2002.
(6) Pro forma results include the results of i) all acquisitions entered
into during the period which were operated under the terms of a local
marketing agreement; ii) all acquisitions and dispositions consummated
during the period as if completed at the beginning of each period
presented and exclude the results of Broadcast Software International.
As of December 31, 2002, the pro forma totals include the results of
260 stations in 54 markets.
(7) EBITDA margin is defined as EBITDA as a percentage of net revenues.
RESULTS OF OPERATIONS
Three Months Ended March 31, 2003 Compared to the Three Months Ended
March 31, 2002
Net revenues for the first quarter of 2003 increased from $45.1 million to
$58.0 million, a 28.5% increase from the first quarter of 2002, primarily as a
result of acquisitions completed in the first quarter of 2002 combined with
increases in local and national revenues over the prior year period. Station
operating expenses increased from $33.6 million to $41.1 million, an increase of
22.2% over the first quarter of 2002, primarily as a result of acquisitions
completed in the first quarter of 2002. Station operating income (defined as
operating income before depreciation and amortization, LMA fees, corporate
general and administrative expenses, non-cash stock compensation and
restructuring charges) increased from $11.5 million to $16.9 million, an
increase of 46.9% from the first quarter of 2002, for the reasons discussed
above.
On a pro forma basis, which includes the results of all transactions
completed during the three month period as if each were consummated at the
beginning of the earliest periods presented, net revenues for the first quarter
of 2003 increased from $57.0 million to $57.6 million, an increase of 1.1% from
the first quarter of 2002. Pro forma station operating income (defined as
operating income (loss) before depreciation, amortization, LMA fees, corporate
general and administrative expense, non-cash stock compensation, restructuring
charges; and excluding the results of Broadcast Software International)
increased from $16.2 million to $16.9 million, an increase of 4.5% from the
first quarter of 2002. Pro forma station operating income margin (defined as pro
forma station operating income as a percentage of pro forma net revenues)
increased to 29.3% for the first quarter of 2003 from 28.4% for the first
quarter of 2002.
Interest expense decreased by $0.7 million to $6.3 million as compared
with $7.0 million during the prior year. This decrease was primarily due to
lower interest expense associated with lower outstanding levels of the Company's
10 3/8% Senior Subordinated Notes (the "Notes") and a gain realized in
connection with adjusting the fair market value of certain derivative
instruments.
Losses on early extinguishments of debt were $3.1 million for the quarter
as compared with $6.3 million during the prior year. Losses during the current
year were the result of premiums paid in connection with the repurchase of $30.1
million in aggregate principal of the Notes. Losses during the prior year were
the result of the retirement of the Company's then existing credit facility and
the write-off of previously capitalized debt issuance costs.
Income tax expense decreased $56.6 million to $5.8 million compared to
$62.4 million during the first quarter of 2002. Tax expense incurred in the
current year, comprised entirely of deferred tax expense, was recorded to
establish valuation allowances against net operating loss carry-forwards
generated during the quarter. We expect tax expense for the second quarter of
2003 to be consistent with the first quarter. Tax expense in the prior year was
comprised primarily of a non cash charge recognized to establish a valuation
allowance against the Company's deferred tax assets upon the adoption of SFAS
No. 142, "Goodwill and Other Intangible Assets."
Net loss for the quarter decreased to $(6.3) million for the quarter for
the reasons discussed above and due to a $41.7 million after-tax loss incurred
in the prior year related to the cumulative effect of a change in accounting
principle as a result of adopting SFAS No. 142.
Preferred stock dividends and redemption premiums for the first quarter of
2003 decreased $3.7 million to $0.9 million compared to $4.6 million in the
prior year, primarily as a result of lower accrued dividends in the current
quarter attributable to fewer outstanding shares of its 13 3/4% Series A
Cumulative Exchangeable Redeemable Preferred Stock due 2009 ("Series A Preferred
Stock"). During the third and fourth quarters of 2002, the Company repurchased
120,321 shares of the Series A Preferred Stock. This decrease was partially
offset by $0.6 million in redemption premiums paid during the first quarter of
2003 associated with the repurchase of 4,900 shares of the issue. As of March
31, 2003, there were 9,268 shares of Series A Preferred Stock outstanding,
valued at $9.3 million.
2
Basic and diluted loss per share was $(0.12) per common share for the
first quarter as compared with $(3.28) in the prior year. Excluding losses on
early extinguishments of debt, premiums paid on the redemption of Series A
Preferred Stock, the $41.7 million cumulative effect of a change in accounting
principle, net of tax (incurred in 2002) and the $57.9 million non cash deferred
tax charge (incurred in 2002), the Company's basic and diluted loss per share
would have been $(0.06) versus $(0.37) in the prior year.
LEVERAGE AND FINANCIAL POSITION
Capital expenditures for the first quarter of 2003 totaled $1.6 million.
Leverage, defined under the terms of the Company's credit facility as
total indebtedness divided by trailing 12-month EBITDA as adjusted for certain
non-recurring expenses, was 4.9x at March 31, 2003.
In March 2003, the Company entered into a fixed-rate swap agreement to
reduce interest rate fluctuations on the interest rate payment stream of its
floating rate bank borrowings. The interest rate swap agreement, which has a
notional amount of $300.0 million and a fixed rate of 2.0%, expires in March
2006. This swap is accounted for as a qualifying cash flow hedge of the interest
payments on the Company's term loan borrowings in accordance with SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." In securing the
fixed-rate swap agreement, the Company also sold an option to the counter party
to the swap which allows the counter party to extend the terms of the swap
agreement for an additional two years beyond the three year term of the swap
agreement.
On April 30, 2003, the Company announced the successful completion of a
tender offer and consent solicitation relating to its outstanding Notes. In the
tender, $88.8 million in principal amount of the Notes were repurchased by the
Company and canceled, leaving $13.7 million of the Notes outstanding. Pursuant
to the consent solicitation, substantially all of the restrictive covenants in
the indenture governing the Notes were eliminated. The outstanding Notes may be
called for redemption by the Company at any time after July 1, 2003.
Concurrently with the completion of the tender offer and consent solicitation,
the Company received financing in the form of a new $325.0 million Tranche C
term loan under its existing credit agreement. Cumulus used the proceeds from
the Tranche C term loan to pay the consideration for the tendered Notes and the
consents that were delivered, and to repay the $175.0 million Tranche B term
loan outstanding, and $30 million in outstanding revolving loan borrowings,
under its existing credit agreement. For the second quarter of 2003, the Company
will record losses on the early extinguishment of debt of approximately $11.1
million related to the refinancing and Notes repurchases.
Including the results of all pending acquisitions operated as of March 31,
2003, the ratio of net long-term debt and preferred stock (pro forma for the
April repurchases of the Notes pursuant to the tender offer and related
refinancing) to trailing 12-month pro forma EBITDA as of March 31, 2003 is
approximately 5.2x.
ACQUISITIONS AND DISPOSITIONS
On January 31, 2003, the Company completed the acquisition of WDDO-AM,
WDEN-AM, WAYS-FM, WMAC-AM, WDEN-FM, WPEZ-FM, WMKS-FM and WMGB-FM serving the
Macon, Georgia market (Arbitron market rank #154) from U.S. Broadcasting Limited
Partnership, for approximately $35.5 million in cash. This eight-station cluster
has been operated by the Company under the terms of a local marketing agreement
since October 1, 2002.
On January 10, 2003, the Company completed the acquisition of WKSM-FM,
WNCV-FM, WYZB-FM, WZNS-FM and WFTW-AM serving the Ft. Walton Beach, Florida
market (Arbitron market rank #217) from East Mississippi Broadcasters, Inc. In
connection with the acquisition the Company paid approximately $28.5 million in
cash and 95,938 shares of Class A Common Stock. This five-station cluster has
been operated by the Company under the terms of a local marketing agreement
since October 1, 2002.
NON-GAAP FINANCIAL MEASURES
Cumulus Media Inc. utilizes certain financial measures that are not
calculated in accordance with GAAP to assess financial performance and
profitability. The non-GAAP financial measures used in this release are Station
Operating Income, EBITDA and Free Cash Flow. Station operating income is defined
as operating income before depreciation and amortization, LMA fees, corporate
general and administrative expenses, non-cash stock compensation and
restructuring charges. EBITDA is defined as operating income before depreciation
and amortization, LMA fees, non-cash stock compensation and restructuring
charges. Free Cash Flow is defined as EBITDA less LMA fee expense, net interest
expense, dividends on the Series A Preferred Stock, income taxes paid and
maintenance/investment capital expenditures.
3
Although Station Operating Income, EBITDA and Free Cash Flow are not
measures calculated in accordance with GAAP, management believes that they are
useful to an investor in evaluating the Company because they are widely used in
the broadcasting industry to evaluate a radio company's operating performance.
Further, we use these measures as the key measurements of operating efficiency,
overall financial performance and profitability. More specifically, Station
Operating Income measures the amount of income generated each period solely from
the operations of the Company's stations to be used to service debt, pay taxes,
fund capital expenditures and fund acquisitions. EBITDA measures the amount of
income generated each period that could be used to service debt, pay taxes, fund
capital expenditures and fund acquisitions after the incurrence of corporate
general and administrative expenses. Free Cash Flow measures the amount of
income generated each period that could be used to fund acquisitions or repay
debt, after the incurrence of station and corporate expenses, funding of capital
expenditures, payment of LMA fees and debt service. Nevertheless, these measures
should not be considered in isolation or as substitutes for net income (loss),
operating income, cash flows from operating activities or any other measure for
determining the Company's operating performance or liquidity that is calculated
in accordance with GAAP. As these measures are not calculated in accordance with
GAAP, they may not be comparable to similarly titled measures employed by other
companies.
FORWARD-LOOKING STATEMENTS
Statements in this release, including statements relating to the
integration of acquisitions and any earnings or revenue projections, are
"forward-looking" statements, which are statements that relate to Cumulus Media
Inc.'s future plans, revenues, station operating income, earnings, objectives,
expectations, performance, and similar projections, as well as any facts or
assumptions underlying these statements or projections. Actual results may
differ materially from the results expressed or implied in these forward-looking
statements, due to various risks, uncertainties or other factors. These factors
include competition within the radio broadcasting industry, advertising demand
in our markets, the possibility that advertisers may cancel or postpone
schedules in response to political events, competition for audience share, our
success in executing and integrating acquisitions, our ability to generate
sufficient cash flow to meet our debt service obligations and finance
operations, and other risk factors described from time to time in Cumulus Media
Inc.'s filings with the Securities and Exchange Commission, including Cumulus
Media Inc.'s Form 10-K for the year ended December 31, 2002. Cumulus Media Inc.
assumes no responsibility to update the forward-looking statements contained in
this release as a result of new information, future events or otherwise.
Cumulus Media Inc. is the second largest radio company in the United
States based on station count. Giving effect to the completion of all announced
pending acquisitions and divestitures, Cumulus Media Inc. will own and operate
268 radio stations in 55 mid-size and smaller U.S. media markets. The Company's
headquarters are in Atlanta, Georgia, and its web site is www.cumulus.com.
Cumulus Media Inc. shares are traded on the NASDAQ National Market under the
symbol CMLS.
Cumulus Media Inc. will host a teleconference later today at 5 p.m.
Eastern Time to discuss first quarter results. To access this teleconference
live, please visit the Company's web site at www.cumulus.com or dial (630)
395-0022 for both domestic and international callers. The pass code for the call
is CUMULUS. Approximately an hour after completion of the call, a replay can be
accessed until 11:59 PM EST May 13, 2003. Domestic callers can access the replay
by dialing (888) 568-0722. International callers may access the replay by
dialing (402) 998-1492.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Marty Gausvik (404) 949-0700
4
CUMULUS MEDIA INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share data)
<Table>
<Caption>
Three Months Three Months
Ended Ended
March 31, March 31,
2003 2002
--------------- ---------------
Revenues $ 63,638 $ 49,515
Less: agency commissions (5,663) (4,399)
--------------- ---------------
Net revenues 57,975 45,116
Operating expenses:
Station operating expenses, excluding depreciation,
amortization and LMA fees 41,067 33,607
Depreciation and amortization 4,717 4,173
LMA fees 93 85
Corporate general and administrative (excluding non
cash stock compensation expense) 3,395 3,548
Non cash stock compensation expense 30 162
Restructuring charges (57) --
--------------- ---------------
Total operating expenses 49,245 41,575
--------------- ---------------
Operating income 8,730 3,541
--------------- ---------------
Nonoperating income (expense):
Interest expense (6,318) (7,025)
Interest income 221 250
Losses on early extinguishment of debt (3,126) (6,291)
Other expense, net (26) (1,194)
--------------- ---------------
Total nonoperating expense, net (9,249) (14,260)
--------------- ---------------
Loss before income taxes (519) (10,719)
Income tax expense 5,801 62,404
--------------- ---------------
Loss before the cumulative effect of a change in
accounting principle (6,320) (73,123)
Cumulative effect of a change in accounting principle, net of tax -- (41,700)
--------------- ---------------
Net loss (6,320) (114,823)
Preferred stock dividends and redemption premiums 931 4,623
--------------- ---------------
Net loss attributable to common stockholders $ (7,251) $ (119,446)
=============== ===============
BASIS AND DILUTED LOSS PER COMMON SHARE:
Basic and diluted loss per common share before the
cumulative effect of a change in accounting principle $ (0.12) $ (2.14)
Cumulative effect of a change in accounting principle -- (1.14)
--------------- ---------------
Basic and diluted loss per common share $ (0.12) $ (3.28)
=============== ===============
Weighted average common shares outstanding 63,008 36,380
=============== ===============
</Table>
5
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP COUNTERPARTS
The following table reconciles operating income, the most directly
comparable financial measure calculated and presented in accordance with GAAP,
to station operating income and EBITDA (dollars in thousands).
<Table>
<Caption>
Three Months Ended
March 31,
2003 2002
----------- -----------
Operating income $ 8,730 $ 3,541
Non cash compensation expense 30 162
Restructuring charges (57) --
LMA fees 93 85
Depreciation and amortization 4,717 4,173
----------- -----------
EBITDA $ 13,513 $ 7,961
Corporate general and administrative 3,395 3,548
----------- -----------
Station operating income $ 16,908 $ 11,509
=========== ===========
</Table>
The following table reconciles operating income, the most directly
comparable financial measure calculated and presented in accordance with GAAP,
to free cash flow (dollars in thousands).
<Table>
<Caption>
Three Months Ended
March 31,
2003 2002
----------- -----------
Operating income $ 8,730 $ 3,541
Add:
Non cash compensation expense 30 162
Restructuring charges (57) --
Depreciation and amortization 4,717 4,173
Less:
Interest expense, net of interest income (6,097) (6,775)
Capital expenditures (1,619) (1,638)
Preferred dividends (319) (4,623)
----------- -----------
Free cash flow $ 5,385 $ (5,160)
=========== ===========
</Table>
Reconciliation between Historical GAAP Results
And Pro Forma Results for the Three Months Ended
March 31, 2003
(dollars in thousands)
<Table>
<Caption>
Historical Pro Forma
GAAP Adjustments Results
------------ ------------ ------------
Net revenue $ 57,975 $ (421)(1) $ 57,554
Station operating expenses $ 41,067 $ (398)(2) $ 40,669
------------ ------------ ------------
Station operating income $ 16,908 $ (23) $ 16,885
Corporate overhead $ 3,395 -- $ 3,395
------------ ------------ ------------
EBITDA $ 13,513 $ (23) $ 13,490
</Table>
(1) Reflects the elimination of revenues from Broadcast Software
International.
(2) Reflects the elimination of operating expenses from Broadcast Software
International.
6
CAPITALIZATION
(DOLLARS IN THOUSANDS)
<Table>
<Caption>
MARCH 31, 2003 MARCH 31, 2003
ACTUAL PRO FORMA(1)
-------------- --------------
Cash and cash equivalents $ 4,491 $ 25,085
============== ==============
Long-term debt, including current maturities:
Bank Debt and Other Secured Debt 317,500 437,500
Senior Subordinated Notes 102,477 13,691
Other 180 180
-------------- --------------
Total long-term debt 420,157 451,371
-------------- --------------
13 3/4% Series A Redeemable Preferred Stock 9,268 9,268
Total Stockholders' equity 727,292 727,292
-------------- --------------
Total capitalization $ 1,156,717 $ 1,187,931
============== ==============
</Table>
(1) Pro forma for the completion of all pending acquisitions operated as of
March 31, 2003, the April 2003 repurchases of the 10 3/8% Notes pursuant to the
tender offer and related incremental borrowings under the Company's existing
credit facility.
<Table>
Net Debt and Preferred Stock to TTM Pro Forma EBITDA Ratio (2) 5.2x
(2) Ratio calculated as (dollars in thousands):
Funded debt and Preferred Stock as of March 31, 2003 $429,425
Less: April 2003 Notes redemption pursuant to tender offer (88,786)
Plus: April 2003 credit facility borrowings (net of repayments) 120,000
Plus: cash required to complete pending acquisitions 13,740
Less: pro forma cash balance (25,085)
Net Debt and Preferred Stock as of March 31, 2003 449,294
Divided by Trailing Twelve Months Pro Forma EBITDA
(includes the results of all pending acquisitions operated
as of March 31, 2003) 86,847
Ratio 5.2x
</Table>
7
CUMULUS MEDIA INC.
2003 Quarterly Results
Station Operating Income Margin Composition Analysis
(dollars in thousands)
The following analysis of our market portfolio separates each market into one of
six categories based upon trailing twelve month Station Operating Income
performance for analytical purposes only. We believe this analytical
distribution of our markets is helpful in assessing the portfolio's financial
and operational development.
PRO FORMA FOR THE TRAILING TWELVE MONTHS ENDED MARCH 31, 2003:
<Table>
<Caption>
STATION OPERATING STATION OPERATING AVG STATION
----------------- ----------------- -----------
INCOME MARGIN % # OF MARKETS REVENUE INCOME OPERATING INCOME %
--------------- ------------ -------- -------- ------------------
> 35.0% 28 $171,754 $ 79,957 46.6%
25.0% to 34.9% 13 46,757 14,233 30.4%
20.0% to 24.9% 1 4,474 1,047 23.4%
10.0% to 19.9% 8 19,194 3,189 16.6%
0.0% to 9.9% 2 4,830 405 8.4%
< 0.0% 2 3,171 (728) (23.0)%
--- -------- -------- ------
SUBTOTAL 54 $250,180 $ 98,103 39.2%
Trade, Other -- 20,204 2,301 11.4%
--- -------- -------- ------
TOTALS 54 $270,384 $100,404 37.1%
</Table>
PRO FORMA FOR THE TRAILING TWELVE MONTHS ENDED DECEMBER 31, 2002:
<Table>
<Caption>
STATION OPERATING STATION OPERATING AVG STATION
----------------- ----------------- -----------
INCOME MARGIN % # OF MARKETS REVENUE INCOME OPERATING INCOME %
--------------- ------------ -------- -------- ------------------
> 35.0% 28 $171,756 $79,375 46.2%
25.0% to 34.9% 12 43,809 13,482 30.8%
20.0% to 24.9% 4 11,560 2,682 23.2%
10.0% to 19.9% 7 17,046 2,440 14.3%
0.0% to 9.9% 2 3,880 255 6.6%
< 0.0% 1 1,674 (985) (58.8)%
--- -------- ------- ------
SUBTOTAL 54 $249,725 $97,249 38.9%
Trade, Other -- 20,060 2,434 12.1%
--- -------- ------- ------
TOTALS 54 $269,785 $99,683 36.9%
</Table>
<Table>
<Caption>
ACTIVITY FOR Q1 2003
STATION
OPERATING MARKETS MARKETS MARKETS NET CHANGE MARKETS
INCOME % AT 12/31/02 MOVING OUT MOVING IN IN CATEGORY AT 3/31/03
-------------- ----------- ---------- --------- ----------- ----------
> 35.0% 28 -- -- -- 28
25.0% to 34.9% 12 -- 1 1 13
20.0% to 24.9% 4 (3) -- (3) 1
10.0% to 19.9% 7 (1) 2 1 8
0.0% to 9.9% 2 (1) 1 -- 2
< 0.0% 1 -- 1 1 2
TOTAL 54 (5) 5 -- 54
</Table>
8