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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2008.
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
 For or the transition period from  to
 Commission file number 000-24525
 CUMULUS MEDIA INC.
 (Exact Name of Registrant as Specified in Its Charter)
 Delaware(State or Other Jurisdiction of 
Incorporation or Organization
    
    36-4159663(I.R.S. Employer
Identification No.)3280 Peachtree Road N.W., Suite 2300, Atlanta, GA(Address of Principal Executive Offices)
    
    30305(ZIP Code)
 (404) 949-0700
  þ o
  Large accelerated filer
o
    
    Accelerated filer
þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ




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CUMULUS MEDIA INC.
  
 INDEX
 PART I. FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)Condensed Consolidated Balance Sheets as of March 31, 2008 and December 31, 2007Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2008 and 2007Condensed Consolidated Statements of Cash Flows for the Three Months Ended March
31, 2008 and 2007Notes
to Condensed Consolidated Financial StatementsItem 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPART II. OTHER INFORMATIONItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales of Equity Securities and Use of ProceedsItem 3. Defaults Upon Senior SecuritiesItem 4. Submission of Matters to a Vote of Security HoldersItem 5. Other InformationItem 6. ExhibitsSignaturesExhibit IndexEX-10.1 AMENDMENT NUMBER TWO TO CREDIT AGREEMENTEX-31.1 SECTION 302 CERTIFICATION OF THE PEOEX-31.2 SECTION 302 CERTIFICATION OF THE PFOEX-32.1 SECTION 906 CERTIFICATION OF THE PEO AND PFO
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PART I. FINANCIAL INFORMATION
 Item 1. Financial Statements
 CUMULUS
MEDIA INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except for share and per share data)
(Unaudited)
 March 31,
    
    
    December 31,2008
    
    
    2007AssetsCurrent assets:Cash and cash equivalents
    
    $
    30,037
    
    
    $
    32,286Accounts receivable, less allowance for doubtful accounts of $1,762 and
$1,839, in 2008 and 2007, respectively
    
    
    46,874
    
    
    
    52,496Prepaid expenses and other current assets
    
    
    5,752
    
    
    
    5,835Total current assets
    
    
    82,663
    
    
    
    90,617Property and equipment, net
    
    
    61,436
    
    
    
    61,735Intangible assets, net
    
    
    783,683
    
    
    
    783,638Goodwill
    
    
    98,300
    
    
    
    98,300Investment in affiliate
    
    
    22,003
    
    
    
    22,252Other assets
    
    
    4,589
    
    
    
    4,000Total assets
    
    $
    1,052,674
    
    
    $
    1,060,542Liabilities and Stockholders EquityCurrent liabilities:Accounts payable and accrued expenses
    
    $
    19,049
    
    
    $
    23,916Current portion of long-term debt
    
    
    7,400
    
    
    
    13,490Total current liabilities
    
    
    26,449
    
    
    
    37,406Long-term debt
    
    
    720,960
    
    
    
    722,810Other liabilities
    
    
    29,673
    
    
    
    18,158Deferred income taxes
    
    
    159,333
    
    
    
    162,890Total liabilities
    
    
    936,415
    
    
    
    941,264Stockholders equity:Preferred stock, 20,262,000 shares authorized, par value $0.01 per share,
including: 250,000 shares designated as 13 3/4% Series A Cumulative
Exchangeable Redeemable Preferred Stock due 2009, stated value $1,000
per share, 0 shares issued and outstanding in both 2008 and 2007; and
12,000 shares designated as 12% Series B Cumulative Preferred Stock,
stated value $10,000 per share, 0 shares issued and outstanding in both
2008 and 2007
    
    
    
    
    
    
    Class A common stock, par value $.01 per share; 100,000,000 shares
authorized; 59,572,592 and 59,468,086 shares issued, 37,505,565 and
37,101,154 shares outstanding, in 2008 and 2007, respectively
    
    
    596
    
    
    
    595Class B common stock, par value $.01 per share; 20,000,000 shares
authorized; 5,809,191 shares issued and outstanding in both
2008 and 2007
    
    
    58
    
    
    
    58Class C common stock, par value $.01 per share; 30,000,000 shares
authorized; 644,871 shares issued and outstanding in both 2008 and 2007
    
    
    6
    
    
    
    6Class A Treasury stock, at cost, 22,067,027 and 22,366,932 shares in
2008 and 2007, respectively
    
    
    (263,377
    )
    
    
    (267,084
    )Accumulated other comprehensive income
    
    
    3,807
    
    
    
    4,800Additional paid-in-capital
    
    
    969,773
    
    
    
    971,267Accumulated deficit
    
    
    (594,604
    )
    
    
    (590,364
    )Total stockholders equity
    
    
    116,259
    
    
    
    119,278Total liabilities and stockholders equity
    
    $
    1,052,674
    
    
    $
    1,060,542
 See accompanying notes to condensed consolidated financial statements.
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CUMULUS MEDIA INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except for share and per share data)
(Unaudited)
 Three Months
    
    
    Three MonthsEnded March 31,
    
    
    Ended March 31,2008
    
    
    2007Broadcast revenues
    
    $
    71,900
    
    
    $
    71,401Management fee revenues from affiliate
    
    
    1,000
    
    
    
    1,000Net revenues
    
    
    72,900
    
    
    
    72,401Operating expenses:Station operating expenses, excluding depreciation,
amortization
and LMA fees (including provision for
doubtful accounts of $738
and $645 in 2008 and 2007, respectively)
    
    
    51,149
    
    
    
    51,646Depreciation and amortization
    
    
    3,111
    
    
    
    3,871LMA fees
    
    
    180
    
    
    
    165Corporate general and administrative (including
non-cash stock
compensation of $2,021 and $2,341, in
2008 and 2007,
respectively)
    
    
    5,461
    
    
    
    6,728Costs associated with proposed merger
    
    
    140
    
    
    
    Total operating expenses
    
    
    60,041
    
    
    
    62,410Operating income
    
    
    12,859
    
    
    
    9,991Nonoperating income (expense):Interest expense
    
    
    (20,860
    )
    
    
    (14,627
    )Interest income
    
    
    328
    
    
    
    84Other income (expense), net
    
    
    18
    
    
    
    (29
    )Total nonoperating expenses net
    
    
    (20,514
    )
    
    
    (14,572
    )Loss before income taxes
    
    
    (7,655
    )
    
    
    (4,581
    )Income tax benefit
    
    
    (3,663
    )
    
    
    (3,587
    )Equity loss in affiliate
    
    
    (248
    )
    
    
    (819
    )Net loss
    
    $
    (4,240
    )
    
    $
    (1,813
    )Basic and diluted loss per common share:Basic and diluted loss per common share
    
    $
    (0.10
    )
    
    $
    (0.04
    )Weighted average basic and diluted
common shares outstanding
    
    
    43,046,722
    
    
    
    43,206,683
 See accompanying notes to condensed consolidated financial statements.
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CUMULUS MEDIA INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
 Three months
    
    
    Three MonthsEnded March 31,
    
    
    Ended March 31,2008
    
    
    2007Cash flows from operating activities:Net (loss)
    
    $
    (4,240
    )
    
    $
    (1,813
    )Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Depreciation and amortization
    
    
    3,111
    
    
    
    3,871Amortization of debt issuance costs
    
    
    104
    
    
    
    111Amortization of derivative gain
    
    
    (993
    )
    
    
    Provision for doubtful accounts
    
    
    738
    
    
    
    645(Gain)/loss on sale of assets or stations
    
    
    (6
    )
    
    
    16Change in the fair value of derivative instruments
    
    
    11,285
    
    
    
    1,994Deferred income taxes
    
    
    (3,557
    )
    
    
    (3,587
    )Non-cash stock compensation
    
    
    2,021
    
    
    
    2,341Equity loss in affiliate
    
    
    248
    
    
    
    819Changes in assets and liabilities, net of effects of
acquisitions:Accounts receivable
    
    
    4,884
    
    
    
    8,132Prepaid expenses and other current assets
    
    
    83
    
    
    
    (2,657
    )Accounts payable and accrued expenses
    
    
    (2,096
    )
    
    
    (1,458
    )Other assets
    
    
    (698
    )
    
    
    131Other liabilities
    
    
    (159
    )
    
    
    147Net cash provided by operating activities
    
    
    10,725
    
    
    
    8,692Cash flows from investing activities:Purchase of intangible assets
    
    
    (42
    )
    
    
    Capital expenditures
    
    
    (2,811
    )
    
    
    (1,104
    )Other
    
    
    8
    
    
    
    (13
    )Net cash used in investing activities
    
    
    (2,845
    )
    
    
    (1,117
    )Cash flows from financing activities:Repayments of borrowings from bank credit facility
    
    
    (7,940
    )
    
    
    (5,000
    )Tax withholding paid on behalf of employees
    
    
    (2,242
    )
    
    
    Proceeds from issuance of common stock
    
    
    53
    
    
    
    30Net cash used in financing activities
    
    
    (10,129
    )
    
    
    (4,970
    )Increase (decrease) in cash and cash equivalents
    
    
    (2,249
    )
    
    
    2,605Cash and cash equivalents at beginning of period
    
    
    32,286
    
    
    
    2,392Cash and cash equivalents at end of period
    
    $
    30,037
    
    
    $
    4,997Non-cash operating, investing and financing activities:Trade revenue
    
    $
    3,232
    
    
    $
    3,629Trade expense
    
    $
    3,152
    
    
    $
    3,642Interest paid
    
    $
    11,444
    
    
    $
    13,302
 See accompanying notes to condensed consolidated financial statements.
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CUMULUS MEDIA INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 1. Interim Financial Data and Basis of Presentation
 Interim Financial Data
   Recent Accounting Pronouncement
 FAS 161. Disclosures about Derivative Instruments and Hedging Activities
  2. Share-Based Compensation
  3. Derivative Financial Instruments
 Accounting for Derivative Instruments and Hedging Activities
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4. Acquisitions and Dispositions
 Acquisitions
  5. Investment in Affiliate
   6. Long-Term Debt
  March 31,
    
    December 31,2008
    
    2007Term loan
    
    $
    728,360
    
    
    $
    736,300Less: Current portion of long-term debt
    
    
    7,400
    
    
    
    13,490$
    720,960
    
    
    $
    722,810
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7. Share Repurchases
  8. Earnings per Share
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Three Months Ended March 31,2008
    
    2007Numerator:Net loss
    
    $
    (4,240
    )
    
    $
    (1,813
    )Denominator:Denominator for basic loss per common share:Weighted average common shares outstanding
    
    
    43,047
    
    
    
    43,207Effect of dilutive securities:Options
    
    
    
    
    
    
    Restricted Shares
    
    
    
    
    
    
    Shares applicable to basic and diluted loss per common share
    
    
    43,047
    
    
    
    43,207Basic and diluted loss per common share
    
    $
    (0.10
    )
    
    $
    (0.04
    )
  2008Restricted shares of Class A Common Stock
    
    
    850,313Options to purchase Class A Common Stock
    
    
    7,096,399Options to purchase Class C Common Stock
    
    
    1,500,690
 9. Comprehensive Income
 Reporting Comprehensive Income,
 Three Months Ended March 31,2008
    
    2007Net loss
    
    $
    (4,240
    )
    
    $
    (1,813
    )Yield adjustment  interest rate swap arrangement
    
    
    (993
    )
    
    
    Comprehensive loss
    
    $
    (5,233
    )
    
    $
    (1,813
    )
 10. Commitments and Contingencies
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11. Merger
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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
   Advertising Revenue and Station Operating Income
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Results of Operations
 Analysis of Consolidated Statements of Operations.
 Three Months
    
    Three MonthsEnded March 31,
    
    Ended March 31,
    
    Dollar Change
    
    Percent Change2008
    
    2007
    
    2008 vs. 2007
    
    2008 vs. 2007STATEMENT OF OPERATIONS DATA:Net revenues
    
    $
    72,900
    
    
    $
    72,401
    
    
    $
    499
    
    
    
    0.7
    %Station operating expenses excluding
depreciation, amortization and LMA fees
    
    
    51,149
    
    
    
    51,646
    
    
    
    (497
    )
    
    
    -1.0
    %Corporate general and administrative
(including non-cash stock compensation
expense)
    
    
    5,461
    
    
    
    6,728
    
    
    
    (1,267
    )
    
    
    -18.8
    %Depreciation and amortization
    
    
    3,111
    
    
    
    3,871
    
    
    
    (760
    )
    
    
    -19.6
    %LMA fees
    
    
    180
    
    
    
    165
    
    
    
    15
    
    
    
    9.1
    %Costs associated with proposed merger
    
    
    140
    
    
    
    
    
    
    
    140
    
    
    
    100.0
    %Operating income
    
    
    12,859
    
    
    
    9,991
    
    
    
    2,868
    
    
    
    28.7
    %Interest expense, net
    
    
    20,532
    
    
    
    14,543
    
    
    
    5,989
    
    
    
    41.2
    %Other income
(expense), net
    
    
    18
    
    
    
    (29
    )
    
    
    (47
    )
    
    
    -162.1
    %Income tax
benefit
    
    
    (3,663
    )
    
    
    (3,587
    )
    
    
    76
    
    
    
    2.1
    %Equity in loss of affiliate
    
    
    (248
    )
    
    
    (819
    )
    
    
    (571
    )
    
    
    -69.7
    %Net loss
    
    
    (4,240
    )
    
    
    (1,813
    )
    
    
    (2,427
    )
    
    
    133.9
    %OTHER DATA:Station operating income (1)
    
    $
    21,751
    
    
    $
    20,755
    
    
    $
    996
    
    
    
    4.8
    %Station operating income margin (2)
    
    
    29.8
    %
    
    
    28.7
    %Cash flows related to:Operating activities
    
    
    10,725
    
    
    
    8,692
    
    
    
    2,033
    
    
    
    23.4
    %Investing activities
    
    
    (2,845
    )
    
    
    (1,117
    )
    
    
    1,728
    
    
    
    154.7
    %Financing activities
    
    
    (10,129
    )
    
    
    (4,970
    )
    
    
    5,159
    
    
    
    103.8
    %
 
 (1)
    
    Station operating income is defined as operating income before depreciation and
amortization, LMA fees, corporate general and administrative expenses, costs associated
with the proposed merger and non-cash stock compensation. Station operating income should
not be considered in isolation or as a substitute for net income, operating income, cash
flows from operating activities or any other measure for determining our operating
performance or liquidity that is calculated in accordance with GAAP. See managements
explanation of this measure and the reasons for its use and presentation, along with a
quantitative reconciliation of station operating income to its most directly comparable
financial measure calculated and presented in accordance with GAAP, below.(2)
    
    Station operating income margin is defined as station operating income as a percentage
of net revenues. Three Months Ended March 31, 2008 versus the Three Months Ended March 31, 2007
 Net Revenues.
 Station Operating Expenses, Excluding Depreciation, Amortization and LMA Fees.
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Depreciation and Amortization.
 LMA Fees.
 Corporate, General and Administrative Expenses.
 Non-operating
Income (Expense).
 Three Months
    
    Three Months
    
    Dollar
    
    PercentEnded March 31,
    
    Ended March 31,
    
    Change 2008
    
    Change 20082008
    
    2007
    
    vs. 2007
    
    vs. 2007Bank Borrowings  term loan and revolving
credit facilities
    
    $
    10,255
    
    
    $
    13,712
    
    
    $
    (3,457
    )
    
    
    -25.2
    %Bank Borrowings yield adjustment  interest
rate swap arrangement  net
    
    
    (884
    )
    
    
    (1,340
    )
    
    
    454
    
    
    
    33.9
    %Change in fair value of interest rate swap
agreement
    
    
    6,389
    
    
    
    2,020
    
    
    
    4,369
    
    
    
    -216.3
    %Change in fair value of interest rate option
agreement
    
    
    4,896
    
    
    
    (26
    )
    
    
    4,922
    
    
    
    18930.8
    %Other interest expense
    
    
    204
    
    
    
    261
    
    
    
    (57
    )
    
    
    -21.8
    %Interest income
    
    
    (328
    )
    
    
    (84
    )
    
    
    (242
    )
    
    
    -288.1
    %Interest expense, net
    
    $
    20,532
    
    
    $
    14,543
    
    
    $
    5,989
    
    
    
    41.2
    %
 Income Taxes
 Station Operating Income.
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Reconciliation of Non-GAAP Financial Measure.
 Three months ended March 31,2008
    
    2007Operating income
    
    $
    12,859
    
    
    $
    9,991Corporate general and administrative
    
    
    5,461
    
    
    
    6,728Depreciation and amortization
    
    
    3,111
    
    
    
    3,871LMA fees
    
    
    180
    
    
    
    165Costs
associated with proposed merger
    
    
    140
    
    
    
    Station operating income
    
    $
    21,751
    
    
    $
    20,755
 Intangible
Assets.
 Liquidity and Capital Resources
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Credit Agreement
          
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
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Item 4. Controls and Procedures
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PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
   
 Item 5. Other Information
  
 Item 6. Exhibits
 10.1
    
    Amendment No. 2 to Credit Agreement, dated as of March 13, 2008, among Cumulus Media Inc., the Lenders
party thereto, and Bank of America, N.A., as Administrative Agent.31.1
    
    Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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SIGNATURES
  CUMULUS MEDIA INC.Date: May 8, 2008
    By:
    /s/ Martin R. GausvikExecutive Vice President, Treasurer andChief Financial Officer - 19 -




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EXHIBIT INDEX
 10.1
    
    
    
    Amendment No. 2 to Credit Agreement, dated as of March 13, 2008, among Cumulus Media Inc., the Lenders,
Party thereto, and Bank of America, N.A., Administrative Agent.31.1
    
    
    
    Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    
    Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    
    Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 - 20 -