##### Table of Contents



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 JUNE 30, 2010.
 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
    
    36-4159663(State or Other Jurisdiction of 
Incorporation or Organization)
    
    (I.R.S. Employer
Identification No.)3280 Peachtree Road, NW Suite 2300, Atlanta, GA
    
    30305(Address of Principal Executive Offices)
    
    (ZIP Code)
 (404) 949-0700
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(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)
    
    
    3Condensed Consolidated Balance Sheets as of June 30, 2010 and December 31, 2009
    
    
    3Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2010 and June 30, 2009
    
    
    4Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2010 and June 30, 2009
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    30Item 4. Controls and Procedures
    
    
    31PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    31Item 1A. Risk Factors
    
    
    31Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    31Item 3. Defaults Upon Senior Securities
    
    
    31Item 5. Other Information
    
    
    31Item 6. Exhibits
    
    
    32Signatures
    
    
    33Exhibit Index
    
    
    34EX-31.1EX-31.2EX-32.1
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 CUMULUS MEDIA INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (Dollars in thousands, except for share data)
 (Unaudited)
 June 30,
    
    
    December 31,2010
    
    
    2009AssetsCurrent assets:Cash and cash equivalents
    
    $
    12,028
    
    
    $
    16,224Restricted cash
    
    
    629
    
    
    
    789Accounts receivable, less allowance for doubtful accounts
of $1,039 and $1,166, in 2010 and 2009, respectively
    
    
    39,072
    
    
    
    37,504Trade receivable
    
    
    5,657
    
    
    
    5,488Prepaid expenses and other current assets
    
    
    3,136
    
    
    
    4,709Total current assets
    
    
    60,522
    
    
    
    64,714Property and equipment, net
    
    
    43,005
    
    
    
    46,981Intangible assets, net
    
    
    161,632
    
    
    
    161,380Goodwill
    
    
    56,121
    
    
    
    56,121Other assets
    
    
    2,885
    
    
    
    4,868Total assets
    
    $
    324,165
    
    
    $
    334,064Liabilities and Stockholders DeficitCurrent liabilities:Accounts payable and accrued expenses
    
    $
    14,775
    
    
    $
    13,635Trade payable
    
    
    5,607
    
    
    
    5,534Current portion of derivative instrument
    
    
    10,272
    
    
    
    Current portion of long-term debt
    
    
    45,357
    
    
    
    49,026Total current liabilities
    
    
    76,011
    
    
    
    68,195Long-term debt
    
    
    567,390
    
    
    
    584,482Other liabilities
    
    
    17,771
    
    
    
    32,598Deferred income taxes
    
    
    22,526
    
    
    
    21,301Total liabilities
    
    
    683,698
    
    
    
    706,576Stockholders Deficit: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, shares designated at stated value $1,000 per share; 0 shares
issued and outstanding in both 2010 and 2009 and 12,000 12% Series B Cumulative
Preferred Stock, stated value $10,000 per share; 0 shares issued and outstanding in
both 2010 and 2009
    
    
    
    
    
    
    Class A common stock, par value $0.01 per share; 200,000,000 shares authorized;
59,572,592 shares issued, 35,565,826 and 35,162,511 shares outstanding in 2010 and
2009, respectively
    
    
    596
    
    
    
    596Class B common stock, par value $0.01 per share; 20,000,000 shares authorized;
5,809,191 shares issued and outstanding in both 2010 and 2009
    
    
    58
    
    
    
    58Class C common stock, par value $0.01 per share; 30,000,000 shares authorized;
644,871 shares issued and outstanding in both 2010 and 2009
    
    
    6
    
    
    
    6Treasury stock, at cost, 24,015,407 and 24,410,081 shares in 2010 and 2009, respectively
    
    
    (256,516
    )
    
    
    (261,382
    )Additional paid-in-capital
    
    
    962,898
    
    
    
    966,945Accumulated deficit
    
    
    (1,066,575
    )
    
    
    (1,078,735
    )Total stockholders deficit
    
    
    (359,533
    )
    
    
    (372,512
    )Total liabilities and stockholders deficit
    
    $
    324,165
    
    
    $
    334,064
 See accompanying notes to unaudited condensed consolidated financial statements.
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##### Table of Contents



CUMULUS MEDIA INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (Dollars in thousands, except for share and per share data)
 (Unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Broadcast revenues
    
    $
    68,739
    
    
    $
    64,962
    
    
    $
    124,097
    
    
    $
    119,316Management fee from affiliate
    
    
    1,000
    
    
    
    1,000
    
    
    
    2,000
    
    
    
    2,000Net revenues
    
    
    69,739
    
    
    
    65,962
    
    
    
    126,097
    
    
    
    121,316Operating expenses:Station operating expenses (excluding depreciation, amortization
and LMA fees)
    
    
    40,416
    
    
    
    39,232
    
    
    
    80,343
    
    
    
    81,530Depreciation and amortization
    
    
    2,391
    
    
    
    2,817
    
    
    
    4,908
    
    
    
    5,715LMA fees
    
    
    364
    
    
    
    728
    
    
    
    893
    
    
    
    1,196Corporate general and administrative (including non-cash stock
compensation of $561, $611, $460, and $1,203 respectively)
    
    
    5,079
    
    
    
    3,958
    
    
    
    9,144
    
    
    
    10,067Gain on exchange of assets or stations
    
    
    
    
    
    
    (7,204
    )
    
    
    
    
    
    
    (7,204
    )Realized loss on derivative instrument
    
    
    480
    
    
    
    
    
    
    
    1,064
    
    
    
    Total operating expenses
    
    
    48,730
    
    
    
    39,531
    
    
    
    96,352
    
    
    
    91,304Operating income
    
    
    21,009
    
    
    
    26,431
    
    
    
    29,745
    
    
    
    30,012Non-operating income (expense):Interest expense
    
    
    (7,315
    )
    
    
    (6,213
    )
    
    
    (16,146
    )
    
    
    (13,996
    )Interest income
    
    
    2
    
    
    
    9
    
    
    
    4
    
    
    
    55Other expense, net
    
    
    (28
    )
    
    
    (38
    )
    
    
    (81
    )
    
    
    (35
    )Total non-operating expense, net
    
    
    (7,341
    )
    
    
    (6,242
    )
    
    
    (16,223
    )
    
    
    (13,976
    )Income before income taxes
    
    
    13,668
    
    
    
    20,189
    
    
    
    13,522
    
    
    
    16,036Income tax expense
    
    
    (1,364
    )
    
    
    (6,115
    )
    
    
    (1,362
    )
    
    
    (5,257
    )Net income
    
    $
    12,304
    
    
    $
    14,074
    
    
    $
    12,160
    
    
    $
    10,779Basic and diluted income per common share:Basic income per common share (See Note 8, Earnings Per Share)
    
    $
    0.29
    
    
    $
    0.34
    
    
    $
    0.29
    
    
    $
    0.26Diluted income per common share (See Note 8, Earnings Per Share)
    
    $
    0.29
    
    
    $
    0.34
    
    
    $
    0.28
    
    
    $
    0.26Weighted average basic common shares outstanding
(See Note 8, Earnings Per Share)
    
    
    40,327,406
    
    
    
    40,469,485
    
    
    
    40,296,878
    
    
    
    40,445,003Weighted average diluted common shares outstanding
(See Note 8, Earnings Per Share)
    
    
    41,468,250
    
    
    
    40,469,485
    
    
    
    41,254,316
    
    
    
    40,447,273
 See accompanying notes to unaudited condensed consolidated financial statements.
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CUMULUS MEDIA INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Dollars in thousands)
 (Unaudited)
 Six Months Ended June 30,2010
    
    
    2009Cash flows from operating activities:Net income
    
    $
    12,160
    
    
    $
    10,779Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    4,908
    
    
    
    5,715Amortization of debt issuance costs/discounts
    
    
    603
    
    
    
    478Amortization of derivative gain
    
    
    
    
    
    
    (828
    )Provision for doubtful accounts
    
    
    654
    
    
    
    1,159Loss on sale of assets or stations
    
    
    81
    
    
    
    35Gain on exchange of assets or stations
    
    
    
    
    
    
    (7,204
    )Fair value adjustment of derivative instruments
    
    
    (4,302
    )
    
    
    (835
    )Deferred income taxes
    
    
    1,225
    
    
    
    5,066Non-cash stock compensation
    
    
    460
    
    
    
    1,203Changes in assets and liabilities:Restricted cash
    
    
    160
    
    
    
    (789
    )Accounts receivable
    
    
    (2,223
    )
    
    
    2,638Trade receivable
    
    
    (169
    )
    
    
    183Prepaid expenses and other current assets
    
    
    1,573
    
    
    
    (233
    )Accounts payable and accrued expenses
    
    
    1,140
    
    
    
    (4,890
    )Trade payable
    
    
    73
    
    
    
    (111
    )Other assets
    
    
    1,769
    
    
    
    82Other liabilities
    
    
    290
    
    
    
    (488
    )Net cash provided by operating activities
    
    
    18,402
    
    
    
    11,960Cash flows from investing activities:Proceeds from sale of assets or radio stations
    
    
    196
    
    
    
    14Purchase of intangible assets
    
    
    (230
    )
    
    
    Capital expenditures
    
    
    (1,190
    )
    
    
    (1,206
    )Net cash used in investing activities
    
    
    (1,224
    )
    
    
    (1,192
    )Cash flows from financing activities:Repayments of borrowings from bank credit facility
    
    
    (21,190
    )
    
    
    (48,106
    )Tax withholding paid on behalf of employees
    
    
    (184
    )
    
    
    (90
    )Payments made to creditors pursuant to debt amendment
    
    
    
    
    
    
    (3,000
    )Payments for repurchase of common stock
    
    
    
    
    
    
    (193
    )Net cash used in financing activities
    
    
    (21,374
    )
    
    
    (51,389
    )Decrease in cash and cash equivalents
    
    
    (4,196
    )
    
    
    (40,621
    )Cash and cash equivalents at beginning of period
    
    
    16,224
    
    
    
    53,003Cash and cash equivalents at end of period
    
    $
    12,028
    
    
    $
    12,382Supplemental disclosures of cash flow information:Interest paid
    
    $
    13,737
    
    
    $
    10,877Income taxes paid
    
    
    259
    
    
    
    304Trade revenue
    
    
    8,375
    
    
    
    5,461Trade expense
    
    
    8,251
    
    
    
    5,383
 See accompanying notes to unaudited condensed consolidated financial statements.
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##### Table of Contents



CUMULUS MEDIA INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 1. Interim Financial Data and Basis of Presentation
 Interim Financial Data
   Liquidity Considerations
      6




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Recent Accounting Pronouncements
 Consolidations (Topic 810)  Improvements to Financial Reporting by Enterprises Involved with
Variable Interest Entities
 ASU 2010-06.
 ASU 2010-09.
 2. Acquisitions and Dispositions
 2010 Acquisitions
  2009 Acquisitions
 Green Bay and Cincinnati Asset Exchange
  7




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##### Table of Contents



Allocation
    
    AmountFixed Assets
    
    $
    458Broadcast Licenses
    
    
    15,353Goodwill
    
    
    874Other Intangibles
    
    
    951Total Purchase Price
    
    $
    17,636Less: Carrying value of Green Bay Stations
    
    
    (7,999
    )Gain on asset exchange
    
    $
    9,637Less: Fair value of Green Bay Option  April 10, 2009
    
    
    (2,433
    )Net Gain
    
    $
    7,204
 3. Derivative Financial Instruments
  May 2005 Swap
   8




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May 2005 Option
     Green Bay Option
  9




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##### Table of Contents



Information on the Location and Amounts of Derivatives Fair Values in the
Unaudited Consolidated Balance Sheets (dollars in thousands)
 Liability DerivativesBalance Sheet
    
    Fair ValueLocation
    
    June 30, 2010
    
    
    December 31, 2009Derivative not designated as hedging instruments:Green Bay Option
    
    Other long-term liabilities
    
    $
    7,137
    
    
    $
    6,073Interest rate swap -option
    
    Other current liabilities
    
    
    10,272
    
    
    
    Interest rate swap -option
    
    Other long-term liabilities
    
    
    
    
    
    
    15,639Total
    
    $
    17,409
    
    
    $
    21,712
  Liability DerivativesAmount of Income (Expense)Recognized on DerivativesDerivative
    
    Financial Statement
    
    For the Three Months
    
    
    For the Six MonthsInstruments
    
    Location
    
    Ended June 30, 2010
    
    
    Ended June 30, 2010Green Bay Option
    
    Realized loss on derivative instrument
    
    $
    (480
    )
    
    $
    (1,064
    )Interest rate swap
    
    Interest income
    
    
    3,454
    
    
    
    5,367Total
    
    $
    2,974
    
    
    $
    4,303
 4. Fair Value Measurements
       10




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Fair Value Measurements at Reporting Date UsingQuoted
    
    
    SignificantPrices in
    
    
    Other
    
    
    SignificantActive
    
    
    Observable
    
    
    UnobservableTotal Fair
    
    
    Markets
    
    
    Inputs
    
    
    InputsValue
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Financial assets:Cash equivalents:Money market funds (1)
    
    $
    5,000
    
    
    $
    5,000
    
    
    $
    
    
    
    $
    Total assets
    
    $
    5,000
    
    
    $
    5,000
    
    
    $
    
    
    
    $
    Financial Liabilities:Other current liabilitiesInterest rate swap (2)
    
    $
    (10,272
    )
    
    $
    
    
    
    $
    (10,272
    )
    
    $
    Other long-term liabilitiesGreen Bay option (3)
    
    
    (7,137
    )
    
    
    
    
    
    
    
    
    
    
    (7,137
    )Total liabilities
    
    $
    (17,409
    )
    
    $
    
    
    
    $
    (10,272
    )
    
    $
    (7,137
    )
 
 (1)
    
    This balance is invested in an institutional money market fund. The Companys Level 1 cash
equivalents are valued using quoted prices in active markets for identical investments.(2)
    
    The Companys derivative financial instruments consist solely of an interest rate swap in
which the Company pays a fixed rate and receives a variable interest rate. The fair value of
the Companys interest rate swap is determined based on the present value of future cash flows
using observable inputs, including interest rates and yield curves. Derivative valuations
incorporate adjustments that are necessary to reflect the Companys own credit risk.(3)
    
    The fair value of the Green Bay Option was determined using inputs that are supported by
little or no market activity (a Level 3 measurement). The fair value represents an estimate of
the net amount that the Company would pay if the option was transferred to another party as of
the date of the valuation. The option valuation incorporates a credit risk adjustment to
reflect the probability of default by the Company.  Fixed
    
    
    
    Floating
    
    discount cash flow range of 0.99%  1.00%;
    
    
    
    discount cash flow range of 0.99%  1.00%;
    
    interest rate of 3.93%; and
    
    
    
    interest rate range of 0.35%  0.63%; and
    
    credit spread of 4.37%.
    
    
    
    credit spread of 4.37%.
   11




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##### Table of Contents



Description
    
    Green Bay OptionFair value balance at December 31, 2009
    
    $
    6,073Add: Mark to market fair value adjustment
    
    
    1,064Fair value balance at June 30, 2010
    
    $
    7,137
  
    
    total term of 3.2 years;
    
    volatility rate of 31.7%;
    
    dividend annual rate of 0.0%;
    
    discount rate of 1.1%; and
    
    market value of Green Bay of $9.4 million.
   June 30, 2010
    
    
    December 31, 2009Carrying value of term loan
    
    $
    615,700
    
    
    $
    636,890Fair value of term loan
    
    $
    566,253
    
    
    $
    538,604
  
    
    discount cash flow rate of 7.1%;
    
    interest rate of 0.3%; and
    
    credit spread of 4.4%.
 5. Investment in Affiliate
    12




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Six Months Ended June 30,2010
    
    
    2009Income Statement Data:Revenues
    
    $
    90,624
    
    
    $
    82,409Operating expenses
    
    
    59,322
    
    
    
    56,193Net income
    
    
    9,741
    
    
    
    58,087Balance Sheet Data:Assets
    
    
    459,414
    
    
    
    687,135Liabilities
    
    
    885,999
    
    
    
    1,014,119Shareholders deficit
    
    
    (426,585
    )
    
    
    (326,984
    )
   6. Long-Term Debt
  June 30,
    
    
    December 31,2010
    
    
    2009Term loan
    
    $
    615,700
    
    
    $
    637,321Less: Debt discount
    
    
    (2,953
    )
    
    
    (3,813
    )Less: Current portion
of long-term debt
    
    
    (45,357
    )
    
    
    (49,026
    )$
    567,390
    
    
    $
    584,482
 Senior Secured Credit Facilities
     13




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Covenants
  
    
    the total leverage ratio and fixed charge coverage ratio covenants for the fiscal
quarters ending June 30, 2009 through and including December 31, 2010 the Covenant
Suspension Period have been suspended;
    
    during the Covenant Suspension Period, the Company must: (1) maintain minimum trailing
twelve month consolidated EBITDA (as defined in the Credit Agreement) of $60.0 million for
fiscal quarters through March 31, 2010, increasing incrementally to $66.0 million for the
fiscal quarter ended December 31, 2010, subject to certain adjustments; and (2) maintain
minimum cash on hand (defined as unencumbered consolidated cash and cash equivalents) of at
least $7.5 million;
    
    the Company is restricted from incurring additional intercompany debt or making any
intercompany investments other than to the parties to the Credit Agreement;
    
    the Company may not incur additional indebtedness or liens, or make permitted
acquisitions or restricted payments (except under certain circumstances, pursuant to the
July 2010 amendment to the Credit Agreement, as described in Note 12, Subsequent Event),
during the Covenant Suspension Period (after the Covenant Suspension Period, the Credit
Agreement will permit indebtedness, liens, permitted acquisitions and restricted payments,
subject to certain leverage ratio and liquidity measurements); and
    
    the Company must provide monthly unaudited financial statements to the lenders within 30
days after each calendar-month end.
   
    
    a minimum trailing twelve month consolidated EBITDA of $60.0 million;
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
    
    a $7.5 million minimum cash on hand; and
    
    a limit on annual capital expenditures of $15.0 million annually.
   
    
    a maximum total leverage ratio of 6.50:1; and
    
    a minimum fixed charge coverage ratio of 1.20:1.
   Warrants
  Accounting for the Modification of the Credit Agreement
   July 2010 Amendment
  7. Stock Based Compensation
   15




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##### Table of Contents



8. Earnings per Share
   16




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##### Table of Contents



Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Basic Earning Per ShareNumerator:Undistributed net income
    
    $
    12,304
    
    
    $
    14,074
    
    
    $
    12,160
    
    
    $
    10,779Participation rights of unvested restricted stock in
undistributed earnings
    
    
    495
    
    
    
    512
    
    
    
    444
    
    
    
    369Basic undistributed net income  attributable to
common shares
    
    $
    11,809
    
    
    $
    13,562
    
    
    $
    11,716
    
    
    $
    10,410Denominator:Denominator for basic income per common share:Basic weighted average common shares outstanding
    
    
    40,327
    
    
    
    40,469
    
    
    
    40,297
    
    
    
    40,445Basic EPS  attributable to common shares
    
    $
    0.29
    
    
    $
    0.34
    
    
    $
    0.29
    
    
    $
    0.26Diluted Earnings Per Share:Numerator:Undistributed net income
    
    $
    12,304
    
    
    $
    14,074
    
    
    $
    12,160
    
    
    $
    10,779Participation rights of unvested restricted stock in
undistributed earnings
    
    
    482
    
    
    
    512
    
    
    
    434
    
    
    
    369Basic undistributed net income  attributable to
common shares
    
    $
    11,822
    
    
    $
    13,562
    
    
    $
    11,726
    
    
    $
    10,410Denominator:Basic weighted average shares outstanding
    
    
    40,327
    
    
    
    40,469
    
    
    
    40,297
    
    
    
    40,445Effect of dilutive options and warrants (1)
    
    
    1,141
    
    
    
    
    
    
    
    957
    
    
    
    2Diluted weighted average shares outstanding
    
    
    41,468
    
    
    
    40,469
    
    
    
    41,254
    
    
    
    40,447Diluted EPS  attributable to common shares
    
    $
    0.29
    
    
    $
    0.34
    
    
    $
    0.28
    
    
    $
    0.26
 
 (1)
    
    For the three and six months ended June 30, 2009, options to purchase 1,955,024 shares of
common stock were outstanding but excluded from the EPS calculation because their effect would
have been antidilutive. Additionally, for the three months ended June 30, 2009 the Company
excluded warrants from the EPS calculations because including the warrants would be
antidilutive.  June 30,2010Restricted shares of Class A Common Stock
    
    
    1,667,158Options to purchase Class A Common Stock
    
    
    899,296
 9. Commitments and Contingencies
   17




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18




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##### Table of Contents



10. Restricted Cash
  11. Variable Interest Entities
   12. Subsequent Event
   19




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 General
  Overview
  Liquidity Considerations
    Advertising Revenue and Station Operating Income
  20




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##### Table of Contents



Cumulus Radio Investors, L.P. (CRI)
   Results of Operations
 Analysis of the Condensed Consolidated Statements of Operations.
 21




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##### Table of Contents



For the Three MonthsEnded June 30,
    
    
    2010 vs 20092010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeSTATEMENT OF OPERATIONS DATA:Net revenues
    
    $
    69,739
    
    
    $
    65,962
    
    
    $
    3,777
    
    
    
    5.7
    %Station operating expenses (excluding depreciation,
amortization and LMA fees)
    
    
    40,416
    
    
    
    39,232
    
    
    
    1,184
    
    
    
    3.0
    %Depreciation and amortization
    
    
    2,391
    
    
    
    2,817
    
    
    
    (426
    )
    
    
    -15.1
    %LMA fees
    
    
    364
    
    
    
    728
    
    
    
    (364
    )
    
    
    -50.0
    %Corporate general and administrative (including
non-cash stock compensation expense)
    
    
    5,079
    
    
    
    3,958
    
    
    
    1,121
    
    
    
    28.3
    %Gain on exchange of assets or stations
    
    
    
    
    
    
    (7,204
    )
    
    
    7,204
    
    
    
    -100.0
    %Realized loss on derivative instrument
    
    
    480
    
    
    
    
    
    
    
    480
    
    
    
    100.0
    %Operating income
    
    
    21,009
    
    
    
    26,431
    
    
    
    (5,422
    )
    
    
    -20.5
    %Interest expense, net
    
    
    (7,313
    )
    
    
    (6,204
    )
    
    
    (1,109
    )
    
    
    17.9
    %Other expense, net
    
    
    (28
    )
    
    
    (38
    )
    
    
    10
    
    
    
    -26.3
    %Income tax expense
    
    
    (1,364
    )
    
    
    (6,115
    )
    
    
    4,751
    
    
    
    -77.7
    %Net income
    
    $
    12,304
    
    
    $
    14,074
    
    
    $
    (1,770
    )
    
    
    -12.6
    %OTHER DATA:Station operating income (1)
    
    $
    29,323
    
    
    $
    26,730
    
    
    $
    2,593
    
    
    
    9.7
    %Station operating income margin (2)
    
    
    42.0
    %
    
    
    40.5
    %
    
    
    
    **
    
    
    
    **
 For the Six MonthsEnded June 30,
    
    
    2010 vs 20092010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeSTATEMENT OF OPERATIONS DATA:Net revenues
    
    $
    126,097
    
    
    $
    121,316
    
    
    $
    4,781
    
    
    
    3.9
    %Station operating expenses (excluding depreciation,
amortization and LMA fees)
    
    
    80,343
    
    
    
    81,530
    
    
    
    (1,187
    )
    
    
    -1.5
    %Depreciation and amortization
    
    
    4,908
    
    
    
    5,715
    
    
    
    (807
    )
    
    
    -14.1
    %LMA fees
    
    
    893
    
    
    
    1,196
    
    
    
    (303
    )
    
    
    -25.3
    %Corporate general and administrative (including
non-cash stock compensation expense)
    
    
    9,144
    
    
    
    10,067
    
    
    
    (923
    )
    
    
    -9.2
    %Gain on exchange of assets or stations
    
    
    
    
    
    
    (7,204
    )
    
    
    7,204
    
    
    
    -100.0
    %Realized loss on derivative instrument
    
    
    1,064
    
    
    
    
    
    
    
    1,064
    
    
    
    100.0
    %Operating income
    
    
    29,745
    
    
    
    30,012
    
    
    
    (267
    )
    
    
    -0.9
    %Interest expense, net
    
    
    (16,142
    )
    
    
    (13,941
    )
    
    
    (2,201
    )
    
    
    15.8
    %Other expense, net
    
    
    (81
    )
    
    
    (35
    )
    
    
    (46
    )
    
    
    131.4
    %Income tax expense
    
    
    (1,362
    )
    
    
    (5,257
    )
    
    
    3,895
    
    
    
    -74.1
    %Net income
    
    $
    12,160
    
    
    $
    10,779
    
    
    $
    1,381
    
    
    
    12.8
    %OTHER DATA:Station operating income (1)
    
    $
    45,754
    
    
    $
    39,786
    
    
    $
    5,968
    
    
    
    15.0
    %Station operating income margin (2)
    
    
    36.3
    %
    
    
    32.8
    %
    
    
    
    **
    
    
    
    **Cash flows related to:Operating activities
    
    $
    18,402
    
    
    $
    11,960
    
    
    $
    6,442
    
    
    
    53.9
    %Investing activities
    
    
    (1,224
    )
    
    
    (1,192
    )
    
    
    (32
    )
    
    
    2.7
    %Financing activities
    
    
    (21,374
    )
    
    
    (51,389
    )
    
    
    30,015
    
    
    
    -58.4
    %Capital expenditures
    
    
    (1,190
    )
    
    
    (1,206
    )
    
    
    16
    
    
    
    -1.3
    %
 
 **
    
    Calculation is not meaningful. 22




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##### Table of Contents



(1)
    
    Station Operating Income consists of operating income before depreciation and amortization,
LMA fees, non-cash stock compensation corporate general and administrative expenses, gain on
exchange of assets or stations, and realized loss on derivative instruments. Station Operating
Income is not a measure of performance calculated in accordance with GAAP. 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 under Station Operating Income.(2)
    
    Station Operating Income margin is defined as Station Operating Income as a percentage of net
revenues. Three Months Ended June 30, 2010 versus the Three Months Ended June 30, 2009
 Net Revenues.
 Station Operating Expenses, Excluding Depreciation, Amortization and LMA Fees.
 Depreciation and Amortization.
 LMA Fees.
 Corporate, General and Administrative Expenses Including Non-cash Stock Compensation.
 Gain on Exchange of Assets or Stations.
 Realized Loss on Derivative Instrument.
 Interest Expense, net.
 23




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For the Three MonthsEnded June 30,
    
    
    2010 vs 20092010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeBank Borrowings  term loan and revolving credit facilities
    
    $
    6,755
    
    
    $
    3,805
    
    
    $
    2,950
    
    
    
    77.5
    %Bank Borrowings yield adjustment  interest rate swap
    
    
    3,695
    
    
    
    3,629
    
    
    
    66
    
    
    
    1.8
    %Change in fair value of interest rate swap agreement
    
    
    (3,454
    )
    
    
    
    
    
    
    (3,454
    )
    
    
    100.0
    %Change in fair value of interest rate option agreement
    
    
    
    
    
    
    (1,837
    )
    
    
    1,837
    
    
    
    -100.0
    %Other interest expense
    
    
    319
    
    
    
    616
    
    
    
    (297
    )
    
    
    -48.2
    %Interest income
    
    
    (2
    )
    
    
    (9
    )
    
    
    7
    
    
    
    -77.8
    %Interest expense, net
    
    $
    7,313
    
    
    $
    6,204
    
    
    $
    1,109
    
    
    
    17.9
    %
 Income Taxes.
 Station Operating Income.
    24




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Reconciliation of Non-GAAP Financial Measure.
 For the Three MonthsEnded June 30, 2010
    
    
    2010 vs 20092010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeOperating income
    
    $
    21,009
    
    
    $
    26,431
    
    
    $
    (5,422
    )
    
    
    -20.5
    %Depreciation and amortization
    
    
    2,391
    
    
    
    2,817
    
    
    
    (426
    )
    
    
    -15.1
    %LMA fees
    
    
    364
    
    
    
    728
    
    
    
    (364
    )
    
    
    -50.0
    %Non-cash stock compensation
    
    
    561
    
    
    
    611
    
    
    
    (50
    )
    
    
    -8.2
    %Corporate general and administrative
    
    
    4,518
    
    
    
    3,347
    
    
    
    1,171
    
    
    
    35.0
    %Gain on exchange of assets or stations
    
    
    
    
    
    
    (7,204
    )
    
    
    7,204
    
    
    
    -100.0
    %Realized loss on derivative instrument
    
    
    480
    
    
    
    
    
    
    
    480
    
    
    
    100.0
    %Station Operating Income
    
    $
    29,323
    
    
    $
    26,730
    
    
    $
    2,593
    
    
    
    9.7
    %
 Six Months Ended June 30, 2010 versus the Six Months Ended June 30, 2009
 Net Revenues.
 Station Operating Expenses, Excluding Depreciation, Amortization and LMA Fees.
 Depreciation and Amortization.
 LMA Fees.
 Corporate, General and Administrative Expenses Including Non-cash Stock Compensation.
 Gain on Exchange of Assets or Stations.
 Realized Loss on Derivative Instrument.
 25




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Interest Expense, net.
 For the Six MonthsEnded June 30,
    
    
    2010 vs 20092010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeBank Borrowings  term loan and revolving credit facilities
    
    $
    13,433
    
    
    $
    7,920
    
    
    $
    5,513
    
    
    
    69.6
    %Bank Borrowings yield adjustment  interest rate swap
    
    
    7,434
    
    
    
    5,992
    
    
    
    1,442
    
    
    
    24.1
    %Change in fair value of interest rate swap agreement
    
    
    (5,367
    )
    
    
    (3,043
    )
    
    
    (2,324
    )
    
    
    76.4
    %Change in fair value of interest rate option agreement
    
    
    
    
    
    
    2,208
    
    
    
    (2,208
    )
    
    
    -100.0
    %Other interest expense
    
    
    646
    
    
    
    919
    
    
    
    (273
    )
    
    
    -29.7
    %Interest income
    
    
    (4
    )
    
    
    (55
    )
    
    
    51
    
    
    
    -92.7
    %Interest expense, net
    
    $
    16,142
    
    
    $
    13,941
    
    
    $
    2,201
    
    
    
    15.8
    %
 Income Taxes.
 Station Operating Income.
 Reconciliation of Non-GAAP Financial Measure.
 For the Six MonthsEnded June 30,
    
    
    2010 vs 20092010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeOperating income
    
    $
    29,745
    
    
    $
    30,012
    
    
    
    (267
    )
    
    
    -0.9
    %Depreciation and amortization
    
    
    4,908
    
    
    
    5,715
    
    
    
    (807
    )
    
    
    -14.1
    %LMA fees
    
    
    893
    
    
    
    1,196
    
    
    
    (303
    )
    
    
    -25.3
    %Non-cash stock compensation
    
    
    460
    
    
    
    1,203
    
    
    
    (743
    )
    
    
    -61.8
    %Corporate general and administrative
    
    
    8,684
    
    
    
    8,864
    
    
    
    (180
    )
    
    
    -2.0
    %Gain on exchange of assets or stations
    
    
    
    
    
    
    (7,204
    )
    
    
    7,204
    
    
    
    -100.0
    %Realized loss on derivative instrument
    
    
    1,064
    
    
    
    
    
    
    
    1,064
    
    
    
    100.0
    %Station Operating Income
    
    $
    45,754
    
    
    $
    39,786
    
    
    $
    5,968
    
    
    
    15.0
    %
 Liquidity and Capital Resources
  tm
 26




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tm
  Consideration of Recent Economic Developments
    Cash Flows provided by Operating Activities
  27




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Cash Flows used in Investing Activities
  Cash Flows used in Financing Activities
  Credit Agreement and the June 2009 Amendment
       Covenants
  
    
    the total leverage ratio and fixed charge coverage ratio covenants for the fiscal
quarters ending June 30, 2009 through and including December 31, 2010 (the Covenant
Suspension Period) have been suspended;
 28




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##### Table of Contents




    
    during the Covenant Suspension Period, we must: (1) maintain minimum trailing twelve
month consolidated EBITDA (as defined in the Credit Agreement) of $60.0 million for fiscal
quarters through March 31, 2010, increasing incrementally to $66.0 million for fiscal
quarter ended December 31, 2010, subject to certain adjustments; and (2) maintain minimum
cash on hand (defined as unencumbered consolidated cash and cash equivalents) of at least
$7.5 million;
    
    we are restricted from incurring additional intercompany debt or making any intercompany
investments other than to the parties to the Credit Agreement;
    
    we may not incur additional indebtedness or liens, or make permitted acquisitions or
restricted payments (except under certain circumstances, pursuant to the July 2010 amendment
to the Credit Agreement, described under the caption July 2010 Amendment), during the
Covenant Suspension Period (after the Covenant Suspension Period, the Credit Agreement will
permit indebtedness, liens, permitted acquisitions and restricted payments, subject to
certain leverage ratio and liquidity measurements); and
    
    we must provide monthly unaudited financial statements to the lenders within 30 days
after each calendar-month end.
   
    
    a minimum trailing twelve month consolidated EBITDA of $60.0 million;
    
    a $7.5 million minimum cash on hand; and
    
    a limit on annual capital expenditures of $15.0 million annually.
   
    
    a maximum total leverage ratio of 6.5:1; and
    
    a minimum fixed charge coverage ratio of 1.20:1.
    29




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July 2010 Amendment
   Warrants
  Accounting for the Modification of the Credit Agreement
   
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
  30




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Item 4. Controls and Procedures
   
 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 5. Other Information
  31




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Item 6. Exhibits
 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.
 32




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SIGNATURES
  CUMULUS MEDIA INC.Date: July 30, 2010
    By:
    /s/ Joseph P. HannanJoseph P. HannanSenior Vice President, Treasurer and 
Chief Financial Officer 33




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EXHIBIT INDEX
 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.
 34