 |
CUMULUS NEWS RELEASE MARCH 16, 2000 CUMULUS MEDIA INC.
MILWAUKEE, WI March 16, 2000 -- Cumulus Media Inc. (NASDAQ: CMLS), currently the nation’s third largest owner-and-operator of radio stations (based upon the number of stations owned or to be acquired pursuant to pending acquisition agreements), today reported fourth quarter and 1999 results. The quarterly period was marked by solid growth in total and same-store revenues, new market entries, station acquisitions and the completion of major infrastructure and sales force expansion to drive and support growth in 2000 and beyond. The Company also announced that Executive Vice Chairman Lew Dickey was named President of Cumulus Broadcasting, the company’s operating subsidiary, and takes over the reins of the rapidly growing 321 stations in 64 market group effective immediately. During the quarter, the Company entered 16 new markets and assumed operation of 60 new stations. The Company also hired 275 new sales personnel, thereby increasing the professional selling team by 44% to 900 by year end. A new customer account management system was introduced in all the same-store markets to ensure that a Cumulus professional seller is supporting each major advertiser in the communities the Company serves. Each radio station brand now has a local sales manager. The Company also added over 250 programming personnel to enhance the product quality of each station. “We had a very productive quarter with strong revenue performance and the completion of major initiatives to drive and support future revenue growth,” said Richard Weening, Executive Chairman. “Our investment in the future, however, reduced broadcast cash flow in the quarter by over $5.0 million. This investment is already beginning to pay off in Q1 of 2000.” Three months ended December 31, 1999 Consolidated net revenue on a historical basis was $55.7 million, up 56.1% from $35.7 million for the fourth quarter in 1998. Broadcast cash flow was $12.3 million, up 14.3% from $10.7 million for the fourth quarter of 1998. During the quarter, the Company incurred $8.4 million of expense associated with assuming operating control across sixteen markets and sixty radio stations. In addition, the Company invested a one-time $1.2 million to fund the costs associated with a 275-person expansion of its field sales organization over the second half of 1999, and another one-time $1.3 million to fund a similar expansion in programming and promotion personnel and resources during the same period. Despite these increased expenses due to investments in additional sales and programming staff and for other necessary reasons, Broadcast cash flow increased to $12.3 million for the quarter ended December 31, 1999, up from $10.7 million in the fourth quarter of 1998. Due to (1) non-cash depreciation and amortization expenses, (2) interest expense related to the acquisition of 215 stations from the Company’s inception on May 22, 1997 through December 31, 1999, and (3) accrued dividends on the Company’s Series A Preferred Stock, the Company reported a net loss, attributable to common stock, of $10.4 million during the fourth quarter of 1999, or $(.32) per share versus $(.37) per share in the equivalent quarter in 1998. On a same-station basis, net revenue for the 195 stations in 36 markets operated for at least a full year was $41.3 million, up 11.1% from the previous year’s net revenue of $37.2 million. After a combined $2.5 million of expenses for sales force expansion, programming personnel and management systems in Cumulus’ markets, broadcast cash flow was $ 9.1 million, which was down from the prior year by $1.8 million, or 16.6%. “Same-station revenue growth was good by industry standards but frankly we expected more,” Weening said. “The expansion of the sales force and the implementation of a comprehensive account management system positioned us for solid growth in 2000, but we paid a price in Q4 as newly hired salespeople took the quarter to ramp up to speed.” On a pro-forma basis (assuming all 305 stations owned or operated under an LMA agreement at any time during the applicable period were owned or operated under an LMA agreement for the full period), consolidated net revenues increased $4.4 million or 6.9%, to $67.9 million versus $63.5 million in the comparable period a year ago; and broadcast cash flow decreased $2.3 million or 13.1% to $15.3 million, compared to the quarter ended December 31, 1998 (when revenues and cash flow were $--63.5 million and $17.7 million respectively). As a result of the significant investment in sales force expansion, programming and infrastructure, broadcast cash flow margins decreased to 22.6% in the fourth quarter of 1999 compared to 27.8% in the fourth quarter of 1998. Twelve months ended December 31, 1999 For the twelve months ended December 31, 1999, Cumulus reported consolidated net revenue on a historical basis of $180.0 million, up 82.2% from $98.8 million for the twelve months ended December 31, 1998. Broadcast cash flow for the twelve months was $46.7 million up $20.1 million, or 75.3% over $ 26.6 million for the twelve months ended December 31, 1998. Due to non-cash depreciation and amortization expense, interest expense related to the station acquisitions and non-cash dividends on preferred stock, the Company reported a net loss attributable to the common stock of $38.6 million, or $(1.55) per share for the twelve months ended December 31, 1999 versus a net loss of $ 27.3 million, or $ (1.70) per share for the twelve months ended December 31,1998. On a same station basis, net revenue for the 195 stations in 36 markets operated for at least a full year was $152.3 million, up $21.2 million or 16.2% from the previous year’s net revenues of $131.1 million for the same period. Broadcast cash flow was $39.8 million, up $7.3 million or 22.3% from $32.5 million for the twelve-month period ending December 31, 1998. Broadcast cash flow margins increased to 26.1% in 1999 compared to 24.8% for the twelve-month period ended December 31, 1998. On a pro-forma basis (assuming all 305 stations owned or operated under an LMA agreement at any time during the applicable period were owned or operated under an LMA agreement for the full period), consolidated net revenues increased $23.1 million, or 10.0% to $253.2 million (versus $230.2 million in the twelve months ended December 31, 1998). Broadcast cash flow increased $8.1 million, or 13.7%, to $67.0 million, compared to the twelve months ended December 31, 1998, and broadcast cash flow margins increased to 26.5% in 1999 compared to 25.6% in 1998. “Overall and on a same-station basis our full-year performance was very solid,” Weening said. “In the fourth quarter we laid the foundation with people and systems to enable the Company to continue its growth in 2000 and beyond.” Restatement of Previously Issued 1999 Quarterly Results In the course of reviewing its year-end results in conjunction with
its annual audit, the company concluded that certain revenues and expenses
for the first, second, and third quarters of the year were misallocated.
The misallocation relates principally to revenue associated with contract
sales spanning more than one accounting period. The restatements
that result from these misallocations have, in most instances, resulted
in revenue previously recorded in one quarter shifting into the immediate
subsequent quarter. As a result, the Company today announced restated
results for the first three quarters of 1999 as follows:
Upon recently learning of the quarterly revenue timing issues, senior management of the Company conducted a detailed, comprehensive review of contracts recorded in 1999 to ensure that proper adjustments were being made. The Company, in conjunction with its Audit Committee, is undertaking
structural, process, and personnel changes to strengthen its system of
internal control over financial reporting in order to ensure that quarterly
revenue in subsequent years is accurately recorded. Said Executive
Chairman Richard Weening, "Quarterly adjustments like these, no matter
how small, are plainly unacceptable and contrary not only to Company policy
but to our culture. Under the supervision of our Audit Committee,
we are working hard to put in place improved systems, and I am taking personal
responsibility for making sure that this does not happen again."
Dickey Named President of Cumulus Broadcasting. Lew Dickey, Executive Vice Chairman of Cumulus Media Inc., today was named President of Cumulus Broadcasting, Inc, the Company’s broadcast operating subsidiary. Dickey, a co-founder of Cumulus with Executive Chairman Richard Weening, is a nationally-regarded broadcast operator and marketing strategist. “In the business of modern clustered radio, Lew Dickey is a superstar. He’s as good as it gets,” said Weening. “We have become one of the largest radio groups in the country in less than 3 years, Weening continued. “ We are very fortunate indeed that someone with Lew’s track record is willing to commit his considerable energy to take us ahead.” Mr. Dickey received his undergraduate degree from Stanford University and an MBA from Harvard Business School, and comes from a family of radio operators with existing properties in Atlanta and Nashville and previously Toledo. He has been involved for more than 20 years in all levels of the radio business – from ownership and management to selling ads on the street. “I have spent the last two years helping to build the platform of 321 stations through 110 separate acquisitions ,” Mr. Dickey said. “We have assembled a wonderful group of assets that can’t be replicated, and I will now also be able to focus on maximizing the potential of each of our stations. Given our size this is a natural shift.” Dickey was the founder of Stratford Research Company Inc., a strategy consulting firm specializing in the radio and TV broadcasting industry. For two years prior to March 1998, he served as President and CEO of Midwestern Broadcasting, Inc. He is also the author of The Franchise – Building Radio Brands, published by the National Association of Broadcasters in 1998. Dickey will also continue in his role as Executive Vice Chairman of Cumulus Media Inc. William Bungeroth, formerly President of Cumulus Broadcasting, has left the Company to pursue other interests. About Cumulus Media Inc. Cumulus Media Inc. is the parent company of Cumulus Broadcasting Inc., which, along with its other subsidiaries, owns and operates station clusters in mid-size markets. The Company commenced operations May 22, 1997. Cumulus is the third largest U.S. radio operating company in terms of stations owned. Pro forma the completion of all pending acquisitions, Cumulus Media will own and operate 321 radio stations in 64 mid-size and smaller U.S. media markets. After giving pro forma effect for the pending acquisitions, the Company will own, on average, over 5 radio stations per market. In addition, the Company owns and operates a multi-market radio network in the English-speaking Caribbean. This news announcement contains certain forward-looking statements that
are based upon current expectations and involve certain risks and uncertainties
within the meaning of the U.S. Private Securities Litigation Reform Act
of 1995. Key risks are described in the Company’s reports filed with
the U.S. Securities and Exchange Commission. Readers should note
that these statements may be impacted by several factors including changes
in the economic climate and the business of radio broadcasting. Accordingly,
the Company’s actual performance may vary from those stated or implied
herein.
Fourth Quarter Results
CAPITALIZATION
CUMULUS MEDIA INC. Fourth Quarter Results CUMULUS MEDIA INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (Unaudited)
CUMULUS MEDIA INC. First Quarter Resated Results CUMULUS MEDIA INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (Unaudited)
CUMULUS MEDIA INC. Second Quarter Restated Results CUMULUS MEDIA INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (Unaudited)
CUMULUS MEDIA INC. Third Quarter Restated Results CUMULUS MEDIA INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (Unaudited)
(1) Pro forma for the shares issued in connection with the Company’s Follow-On Public Stock Offering, which was completed on July 22, 1999, and including the exercise of the underwriter’s over allotment of 1,449,600 shares on August 10, 1999.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
