##### 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, 2009.
 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
    
    (I.R.S. EmployerIncorporation or Organization)
    
    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 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 INFORMATION

3Item 1. Financial Statements (Unaudited)

3Condensed Consolidated Balance Sheets as of June 30, 2009 and December 31, 2008

3Condensed Consolidated Statements of Operations for the Three and Six Months Ended June
30, 2009 and June 30, 2008, respectively.

4Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2009
and June 30, 2008, respectively.

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

36Item 4. Controls and Procedures

36PART II. OTHER INFORMATION

37Item 1. Legal Proceedings

37Item 1A. Risk Factors

37Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

37Item 3. Defaults Upon Senior Securities

38Item 4. Submission of Matters to a Vote of Security Holders

38Item 5. Other Information

38Item 6. Exhibits

39Signatures

40Exhibit Index

41EX-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 and per share data)
 (Unaudited)
 June 30,
    
    December 31,2009
    
    2008AssetsCurrent assets:Cash and cash equivalents
    
    $
    12,382
    
    
    $
    53,003Restricted cash
    
    
    789
    
    
    
    Accounts receivable, less allowance for doubtful accounts of $1,316 and $1,771, in
2009 and 2008, respectively
    
    
    40,218
    
    
    
    44,199Prepaid expenses and other current assets
    
    
    3,520
    
    
    
    3,287Total current assets
    
    
    56,909
    
    
    
    100,489Property and equipment, net
    
    
    50,353
    
    
    
    55,124Intangible assets, net
    
    
    334,332
    
    
    
    325,134Goodwill
    
    
    59,584
    
    
    
    58,891Other assets
    
    
    3,281
    
    
    
    3,881Total assets
    
    $
    504,459
    
    
    $
    543,519Liabilities and Stockholders EquityCurrent liabilities:Accounts payable and accrued expenses
    
    $
    15,644
    
    
    $
    20,644Current portion of long-term debt
    
    
    46,456
    
    
    
    7,400Total current liabilities
    
    
    62,100
    
    
    
    28,044Long-term debt
    
    
    597,625
    
    
    
    688,600Other liabilities
    
    
    31,507
    
    
    
    30,543Deferred income taxes
    
    
    49,545
    
    
    
    44,479Total liabilities
    
    
    740,777
    
    
    
    791,666Stockholders equity:Preferred stock, 20,262,000 shares authorized, par value $.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 2009 and 2008 and 12,000 shares `
    
    
    
    
    
    
    Class A common stock, par value $.01 per share; 200,000,000 shares authorized;
59,572,592 and 59,572,592 shares issued, 35,260,978 and 34,945,290 shares
outstanding, in 2009 and 2008, respectively
    
    
    596
    
    
    
    596Class B common stock, par value $.01 per share; 20,000,000 shares authorized;
5,809,191 shares issued and outstanding in both 2009 and 2008
    
    
    58
    
    
    
    58Class C common stock, par value $.01 per share; 30,000,000 shares authorized;
644,871 shares issued and outstanding in both 2009 and 2008
    
    
    6
    
    
    
    6Class A Treasury stock, at cost, 24,311,614 and 24,627,302 shares in 2009 and 2008,
respectively
    
    
    (260,407
    )
    
    
    (265,278
    )Accumulated other comprehensive income
    
    
    
    
    
    
    828Additional paid-in-capital
    
    
    964,683
    
    
    
    967,676Accumulated deficit
    
    
    (941,254
    )
    
    
    (952,033
    )Total stockholders deficit
    
    
    (236,318
    )
    
    
    (248,147
    )Total liabilities and stockholders deficit
    
    $
    504,459
    
    
    $
    543,519
 See accompanying notes to condensed consolidated financial statements.
 3




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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 Ended
    
    Six Months EndedJune 30,
    
    June 30,2009
    
    2008
    
    2009
    
    2008Broadcast revenues
    
    $
    64,962
    
    
    $
    82,628
    
    
    $
    119,316
    
    
    $
    154,527Management fee from affiliate
    
    
    1,000
    
    
    
    1,000
    
    
    
    2,000
    
    
    
    2,000Net revenues
    
    
    65,962
    
    
    
    83,628
    
    
    
    121,316
    
    
    
    156,527Operating expenses:Station operating expenses (excluding depreciation,
amortization and LMA fees)
    
    
    39,232
    
    
    
    52,975
    
    
    
    81,530
    
    
    
    104,124Depreciation and amortization
    
    
    2,817
    
    
    
    3,311
    
    
    
    5,715
    
    
    
    6,421LMA fees
    
    
    728
    
    
    
    320
    
    
    
    1,196
    
    
    
    500Corporate general and administrative (including
non-cash stock compensation
of $611, $845, $1,203, and $2,867, respectively)
    
    
    3,958
    
    
    
    4,094
    
    
    
    10,067
    
    
    
    9,555(Gain) on exchange of stations
    
    
    (7,204
    )
    
    
    
    
    
    
    (7,204
    )
    
    
    Cost associated with terminated transaction
    
    
    
    
    
    
    1,753
    
    
    
    
    
    
    
    1,893Total operating expenses
    
    
    39,531
    
    
    
    62,453
    
    
    
    91,304
    
    
    
    122,493Operating income
    
    
    26,431
    
    
    
    21,175
    
    
    
    30,012
    
    
    
    34,034Non-operating income (expense):Interest expense
    
    
    (6,213
    )
    
    
    298
    
    
    
    (13,996
    )
    
    
    (20,562
    )Interest income
    
    
    9
    
    
    
    283
    
    
    
    55
    
    
    
    611Terminated transaction fee
    
    
    
    
    
    
    15,000
    
    
    
    
    
    
    
    15,000Other income (expense), net
    
    
    (38
    )
    
    
    (25
    )
    
    
    (35
    )
    
    
    (7
    )Total non-operating (income) expense, net
    
    
    (6,242
    )
    
    
    15,556
    
    
    
    (13,976
    )
    
    
    (4,958
    )Income before income taxes and equity in net losses of affiliate
    
    
    20,189
    
    
    
    36,731
    
    
    
    16,036
    
    
    
    29,076Income tax expense
    
    
    (6,115
    )
    
    
    (8,094
    )
    
    
    (5,257
    )
    
    
    (4,431
    )Equity in net income of affiliate
    
    
    
    
    
    
    1,652
    
    
    
    
    
    
    
    1,404Net income
    
    $
    14,074
    
    
    $
    30,289
    
    
    $
    10,779
    
    
    $
    26,049Basic and diluted earnings per common share:Basic
earnings per common share (See Note 8)
    
    $
    0.34
    
    
    $
    0.69
    
    
    $
    0.26
    
    
    $
    0.59Diluted
earnings per common share (See Note 8)
    
    $
    0.34
    
    
    $
    0.69
    
    
    $
    0.26
    
    
    $
    0.59Weighted
average basic common shares outstanding (See Note 8)
    
    
    40,469,485
    
    
    
    43,076,642
    
    
    
    40,445,003
    
    
    
    43,061,682Weighted
average diluted common shares outstanding (See Note 8)
    
    
    40,469,485
    
    
    
    43,095,223
    
    
    
    40,447,273
    
    
    
    43,083,770
 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)
 Six Months EndedJune 30,2009
    
    2008Cash flows from operating activities:Net income
    
    $
    10,779
    
    
    $
    26,049Adjustments to reconcile net loss to net cash provided by
operating activities:Depreciation and amortization
    
    
    5,715
    
    
    
    6,421Amortization of debt issuance costs/discount
    
    
    478
    
    
    
    209Amortization of derivative gain
    
    
    (828
    )
    
    
    (1,986
    )Provision for doubtful accounts
    
    
    1,159
    
    
    
    1,801Loss (gain) on sale of assets or stations
    
    
    35
    
    
    
    (5
    )(Gain) on
exchange of stations
    
    
    (7,204
    )
    
    
    Adjustment of the fair value of derivative instruments
    
    
    (835
    )
    
    
    2,388Deferred income taxes
    
    
    5,066
    
    
    
    4,367Non-cash stock compensation
    
    
    1,203
    
    
    
    2,867Equity in
net income of affiliate
    
    
    
    
    
    
    (1,404
    )Changes in assets and liabilities:Restricted cash
    
    
    (789
    )
    
    
    Accounts receivable
    
    
    2,821
    
    
    
    (2,878
    )Prepaid expenses and other current assets
    
    
    (233
    )
    
    
    604Accounts payable and accrued expenses
    
    
    (5,001
    )
    
    
    (1,000
    )Other assets
    
    
    82
    
    
    
    (494
    )Other liabilities
    
    
    (488
    )
    
    
    (748
    )Net cash provided by operating activities
    
    
    11,960
    
    
    
    36,191Cash flows from investing activities:Proceeds from the sale of assets
    
    
    14
    
    
    
    Purchase of intangible assets
    
    
    
    
    
    
    (975
    )Capital expenditures
    
    
    (1,206
    )
    
    
    (3,971
    )Other
    
    
    
    
    
    
    12Net cash used in investing activities
    
    
    (1,192
    )
    
    
    (4,934
    )Cash flows from financing activities:Repayments of borrowings from bank credit facility
    
    
    (48,106
    )
    
    
    (7,940
    )Tax withholding paid on behalf of employees
    
    
    (90
    )
    
    
    (2,241
    )Proceeds from issuance of common stock
    
    
    
    
    
    
    52Payments
made to creditors pursuant to debt amendment
    
    
    (3,000
    )
    
    
    Payments related to the repurchase of common stock
    
    
    (193
    )
    
    
    (1,219
    )Net cash used in financing activities
    
    
    (51,389
    )
    
    
    (11,348
    )Decrease in cash and cash equivalents
    
    
    (40,621
    )
    
    
    19,909Cash and cash equivalents at beginning of period
    
    
    53,003
    
    
    
    32,286Cash and cash equivalents at end of period
    
    $
    12,382
    
    
    $
    52,195
 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
   Liquidity Considerations
     6




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Recent Accounting Pronouncements
 SFAS No. 141(R) Business Combinations
 Accounting for Assets
Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies,
 SFAS 160. Noncontrolling Interests in Consolidated Financial Statements  an amendment of ARB No. 51,
 SFAS 161. Disclosures about Derivative
Instruments and Hedging Activities Accounting for Derivative Instruments and Hedging Activities
 SFAS 165 Subsequent Events
 SFAS 167. Amendments to FASB Interpretation
No. 46 (R)
 SFAS 168. The FASB Accounting
Standards Codification and the Hierarchy of Generally Accepted Accounting Principlesa replacement
of FASB Statement No. 162
 7




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FSP No. 142-3. Determination
of the Useful Lives of Intangible Assets,
 FSP FAS 140-4 and FIN 46R-8.
 FSP
157-2. Effective Date of FASB Statement
No. 157
 FSP
157-4, FSP FAS 115-2 and FAS 124-2, and FSP FAS 107-1 and APB
28-1
 Recognition and Presentation of
Other-Than-Temporary Impairments .
 Interim Disclosures about Fair Value of
Financial Instruments
 FSP EITF 03-6-1.
 2. Stock Based Compensation
   8




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3. Acquisitions and Dispositions
 Green Bay and Cincinnati Swap
     Allocation
    
    AmountFixed assets
    
    $
    458Broadcast Licenses
    
    
    15,353Goodwill
    
    
    1,600Other Intangibles
    
    
    225Total 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
  WZBN-FM Swap
  4. Derivative Financial Instruments
  May 2005 Swap
    May 2005 Option
    Green Bay Option
  9




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Information on the Location and Amounts of Derivatives Fair Values in
the Condensed Consolidated Balance Sheet (in Thousands)
 Liability
Derivatives
 Balance Sheet
    
    June 30, 2009Location
    
    Fair ValueDerivative not designated as
hedging instruments under
Statement 133
    
    Other long-term liabilities
    
    $
    (17,672
    )Green Bay Option
    
    Other long-term liabilities
    
    
    (2,433
    )Total
    
    $
    (20,105
    )
  Liability Derivatives (in Thousands)
 Amount of Income (Expense)
    
    Amount of Income (Expense)Recognized in Income on
    
    Recognized in Income onDerivative
    
    Financial Statement
    
    Derivatives for the Three
    
    Derivatives for the Six MonthsInstruments
    
    Location
    
    Months Ended June 30, 2009
    
    Ended June 30, 2009Derivative not designated as
hedging instruments under
Statement 133

    
    Interest expense
    
    $
    (1,837
    )
    
    $
    2,208Green Bay Option
    
    Corporate G&A
    
    
    
    
    
    
    Total
    
    $
    (1,837
    )
    
    $
    2,208
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5. Long Term Debt
  June 30,
    
    December 31,2009
    
    2008Term loan,
net of discount
    
    $
    644,081
    
    
    $
    696,000Less: Current portion of long-term debt
    
    
    46,456
    
    
    
    7,400$
    597,625
    
    
    $
    688,600
 Senior Secured Credit Facilities
 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;
    
    during the Covenant Suspension Period, the Company must: (1) maintain minimum trailing
twelve month consolidated EBITDA (as defined in the Credit Agreement) of $60 million for
fiscal quarters ended June 30, 2009 through March 31, 2010, increasing incrementally to $66
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;
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
    
    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, 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;
    
    a $7.5 million minimum cash on hand and;
    
    a limit on annual capital expenditures of $15.0 million
annually.
  .
 Warrants
  Accounting for the Modification of the Credit Agreement
   12




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6. Fair Value Measurements
 Disclosures about Fair Value of Financial
Instruments
     QuotedPrices in
    
    OtherActive
    
    Observable
    
    UnobservableTotal Fair
    
    Markets
    
    Inputs
    
    InputsValue
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Financial assets:Cash equivalents:Money market funds
    
    $
    4,381
    
    
    $
    4,381
    
    
    $
    
    
    
    $
    Total assets
    
    $
    4,381
    
    
    $
    4,381
    
    
    $
    
    
    
    $
    Financial liabilities:Other long-term, liabilities:Green Bay Option
    
    $
    (2,433
    )
    
    $
    
    
    
    $
    
    
    
    $
    (2,433
    )Interest rate swap
    
    
    (17,672
    )
    
    
    
    
    
    
    (17,672
    )
    
    
    Total liabilities
    
    $
    (20,105
    )
    
    $
    
    
    
    $
    (17,672
    )
    
    $
    (2,433
    )
 13




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Cash Equivalents.
 Green Bay Option.
 Description
    
    $ AmountApril 10, 2009  fair value origination date
    
    $
    2,433Less:SFAS 157 fair value expense
    
    
    Fair
value balance as of June 30, 2009
    
    $
    2,433
 Interest Rate Swap.
   June 30, 2009
    
    December 31, 2008Gross carrying value of term loan
    
    $
    647,894
    
    
    $
    688,600Fair value of term loan
    
    $
    447,143
    
    
    $
    515,700
  7. Share Repurchase
   8. Earnings per Share
 Earnings per Share Participating Securities
and the Two Class Method under FASB Statement No. 128, Earnings per Share
  14




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Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2009
    
    2008
    
    2009
    
    2008Basic Earnings Per ShareNumerator:Undistributed net income
    
    $
    14,074
    
    
    $
    30,289
    
    
    $
    10,779
    
    
    $
    26,049Participation rights of unvested restricted stock in undistributed earnings
    
    
    512
    
    
    
    619
    
    
    
    369
    
    
    
    491Basic undistributed net income  attributable to common shares
    
    
    13,562
    
    
    
    29,670
    
    
    
    10,410
    
    
    
    25,558Denominator:Denominator for basic income per common share:Basic weighted average common shares outstanding
    
    
    40,469
    
    
    
    43,077
    
    
    
    40,445
    
    
    
    43,062Basic EPS  attributable to common shares
    
    $
    0.34
    
    
    $
    0.69
    
    
    $
    0.26
    
    
    $
    0.59Diluted Earnings Per Share:Numerator:Undistributed net income
    
    
    14,074
    
    
    
    30,289
    
    
    
    10,779
    
    
    
    26,049Participation rights of unvested restricted stock in
undistributed earnings
    
    
    512
    
    
    
    619
    
    
    
    369
    
    
    
    491Basic undistributed net income  attributable to
common shares
    
    $
    13,562
    
    
    $
    29,670
    
    
    $
    10,410
    
    
    $
    25,558Denominator:Basic weighted average shares outstanding
    
    
    40,469
    
    
    
    43,077
    
    
    
    40,445
    
    
    
    43,062Effect of dilutive options and warrants
    
    
    
    
    
    
    18
    
    
    
    2
    
    
    
    22Diluted weighted average shares outstanding
    
    
    40,469
    
    
    
    43,095
    
    
    
    40,447
    
    
    
    43,084Diluted EPS  attributable to common shares
    
    $
    0.34
    
    
    $
    0.69
    
    
    $
    0.26
    
    
    $
    0.59
   15




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June 30,2009Restricted shares of Class A Common Stock
    
    
    1,519,586Options to purchase Class A Common Stock
    
    
    1,455,024Options to purchase Class C Common Stock
    
    
    500,000
 9. Comprehensive Income
 Reporting Comprehensive Income,
 Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2009
    
    2008
    
    2009
    
    2008Net income
    
    $
    14,074
    
    
    $
    30,289
    
    
    $
    10,779
    
    
    $
    26,049Yield adjustment  interest rate swap arrangement, net of tax
    
    
    
    
    
    
    (993
    )
    
    
    
    
    
    
    (1,986
    )Comprehensive income
    
    $
    14,074
    
    
    $
    29,296
    
    
    $
    10,779
    
    
    $
    24,063
  10. Commitments and Contingencies
      16




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17




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11. Restricted Cash
  12. Investment in affiliate
    18




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13. Intangible Assets and Goodwill
  Intangible Assets:
 Indefinite Lived
    
    
    Definite Lived
    
    
    TotalBalance as of December 31, 2008
    
    $
    325,132
    
    
    $
    2
    
    
    $
    325,134Acquisition  Cincinnati Stations
    
    
    15,353
    
    
    
    225
    
    
    
    15,578Disposition  Green Bay Stations
    
    
    (6,272
    )
    
    
    
    
    
    
    (6,272
    )Amortization
    
    
    
    
    
    
    (108
    )
    
    
    (108
    )Balance as of June, 30, 2009
    
    $
    334,213
    
    
    $
    119
    
    
    $
    334,332
 AmountGoodwill:Balance as
of December 31, 2008
    
    $
    58,891Acquisition
 Cincinnati Stations
    
    
    1,600Disposition
 Green Bay Stations
    
    
    (907
    )Balance as
of June 30, 2009
    
    $
    59,584
 Goodwill and other Intangible Assets
 Goodwill
   Indefinite
Lived Intangibles (FCC Licenses)
  Accounting for the Impairment or Disposal of Long-Lived Assets
 14. Subsequent Events
    19




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##### Table of Contents



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




---



##### Table of Contents



Results of Operations
 Analysis of Condensed Consolidated Statements of Operations.
 21




---



##### Table of Contents



For the Three MonthsEnded June 30,
    
    Dollar Change
    
    Percent Change2009
    
    2008
    
    2009 vs. 2008
    
    2009 vs. 2008STATEMENT OF OPERATIONS DATA:Net revenues
    
    $
    65,962
    
    
    $
    83,628
    
    
    $
    (17,666
    )
    
    
    -21.1
    %Station operating expenses (excluding
depreciation, amortization and LMA fees)
    
    
    39,232
    
    
    
    52,975
    
    
    
    (13,743
    )
    
    
    -25.9
    %Depreciation and amortization
    
    
    2,817
    
    
    
    3,311
    
    
    
    (494
    )
    
    
    -14.9
    %LMA fees
    
    
    728
    
    
    
    320
    
    
    
    408
    
    
    
    127.5
    %Corporate general and administrative (including
non-cash stock compensation expense)
    
    
    3,958
    
    
    
    4,094
    
    
    
    (136
    )
    
    
    -3.3
    %(Gain) on exchange of assets or stations
    
    
    (7,204
    )
    
    
    
    
    
    
    (7,204
    )
    
    
    -100.0
    %Costs associated with terminated transaction
    
    
    
    
    
    
    1,753
    
    
    
    (1,753
    )
    
    
    -100.0
    %Operating income
    
    
    26,431
    
    
    
    21,175
    
    
    
    5,256
    
    
    
    24.8
    %Interest (expense) income, net
    
    
    (6,204
    )
    
    
    581
    
    
    
    (6,785
    )
    
    
    -1167.8
    %Terminated transaction fee
    
    
    
    
    
    
    15,000
    
    
    
    (15,000
    )
    
    
    -100.0
    %Other income (expense), net
    
    
    (38
    )
    
    
    (25
    )
    
    
    (13
    )
    
    
    52.0
    %Income tax (expense)
    
    
    (6,115
    )
    
    
    (8,094
    )
    
    
    1,979
    
    
    
    -24.5
    %Equity in net income of affiliate
    
    
    
    
    
    
    1,652
    
    
    
    (1,652
    )
    
    
    -100.0
    %Net income
    
    $
    14,074
    
    
    $
    30,289
    
    
    $
    (16,215
    )
    
    
    -53.5
    %OTHER DATA:Station Operating Income (1)
    
    $
    26,730
    
    
    $
    30,653
    
    
    $
    (3,923
    )
    
    
    -12.8
    %Station Operating Income Margin (2)
    
    
    40.5
    %
    
    
    36.7
    %
    
    
    *
    *
    
    
    *
    *
 22




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##### Table of Contents



For the Six MonthsEnded June 30,
    
    Dollar Change
    
    Percent Change2009
    
    2008
    
    2009 vs. 2008
    
    2009 vs. 2008STATEMENT OF OPERATIONS DATA:Net revenues
    
    $
    121,316
    
    
    $
    156,527
    
    
    $
    (35,211
    )
    
    
    -22.5
    %Station operating expenses (excluding
depreciation, amortization and LMA fees)
    
    
    81,530
    
    
    
    104,124
    
    
    
    (22,594
    )
    
    
    -21.7
    %Depreciation and amortization
    
    
    5,715
    
    
    
    6,421
    
    
    
    (706
    )
    
    
    -11.0
    %LMA fees
    
    
    1,196
    
    
    
    500
    
    
    
    696
    
    
    
    139.2
    %Corporate general and administrative (including
non-cash stock compensation expense)
    
    
    10,067
    
    
    
    9,555
    
    
    
    512
    
    
    
    5.4
    %(Gain) on exchange of assets or stations
    
    
    (7,204
    )
    
    
    
    
    
    
    (7,204
    )
    
    
    -100.0
    %Costs associated with terminated transaction
    
    
    
    
    
    
    1,893
    
    
    
    (1,893
    )
    
    
    -100.0
    %Operating income
    
    
    30,012
    
    
    
    34,034
    
    
    
    (4,022
    )
    
    
    -11.8
    %Interest expense, net
    
    
    (13,941
    )
    
    
    (19,951
    )
    
    
    6,010
    
    
    
    -30.1
    %Terminated transaction fee
    
    
    
    
    
    
    15,000
    
    
    
    (15,000
    )
    
    
    -100.0
    %Other income (expense), net
    
    
    (35
    )
    
    
    (7
    )
    
    
    (28
    )
    
    
    400.0
    %Income tax expense
    
    
    (5,257
    )
    
    
    (4,431
    )
    
    
    (826
    )
    
    
    18.6
    %Equity in net income of affiliate
    
    
    
    
    
    
    1,404
    
    
    
    (1,404
    )
    
    
    -100.0
    %Net income
    
    $
    10,779
    
    
    $
    26,049
    
    
    $
    (15,270
    )
    
    
    -58.6
    %OTHER DATA:Station operating income (1)
    
    $
    39,786
    
    
    $
    52,403
    
    
    $
    (12,617
    )
    
    
    -24.1
    %Station operating income margin (2)
    
    
    32.8
    %
    
    
    33.5
    %
    
    
    *
    *
    
    
    *
    *Cash flows related to:Operating activities
    
    
    11,960
    
    
    
    36,191
    
    
    
    (24,231
    )
    
    
    -67.0
    %Investing activities
    
    
    (1,192
    )
    
    
    (4,934
    )
    
    
    3,742
    
    
    
    -75.8
    %Financing activities
    
    
    (51,389
    )
    
    
    (11,348
    )
    
    
    (40,041
    )
    
    
    352.8
    %Capital
expenditures
    
    
    (1,206
    )
    
    
    (3,971
    )
    
    
    2,765
    
    
    
    -69.6
    %
 
 **
    
    Not a meaningful calculation to present.(1)
    
    Station Operating Income consists of operating income before depreciation and
amortization, LMA fees, corporate general and administrative expenses, non-cash stock compensation,
impairment of goodwill and intangible assets, gain on exchange of assets or stations sold and costs
associated with the terminated transaction. 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 (loss), 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, 2009 versus the Three Months Ended June 30, 2008.
 Net Revenues.
 23




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##### Table of Contents



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 Stations Swap.
 Costs
Associated With Terminated Transaction.
 Non-operating (Income) Expense.
 For the Three MonthsEnded June 30,
    
    Dollar Change
    
    Percent Change2009
    
    2008
    
    2009 vs. 2008
    
    2009 vs. 2008Bank Borrowings  term loan and revolving credit
facilities
    
    $
    3,805
    
    
    $
    8,069
    
    
    $
    (4,264
    )
    
    
    -52.8
    %Bank Borrowings yield adjustment  interest rate
swap arrangement
    
    
    3,629
    
    
    
    326
    
    
    
    3,303
    
    
    
    1013.2
    %Change in fair value of interest rate swap agreement
    
    
    
    
    
    
    (3,308
    )
    
    
    3,308
    
    
    
    -100.0
    %Change in fair value of interest rate option agreement
    
    
    (1,837
    )
    
    
    (5,589
    )
    
    
    3,752
    
    
    
    -67.1
    %Other interest expense
    
    
    616
    
    
    
    204
    
    
    
    412
    
    
    
    202.0
    %Interest income
    
    
    (9
    )
    
    
    (283
    )
    
    
    274
    
    
    
    -96.8
    %Interest income (expense), net
    
    $
    6,204
    
    
    $
    (581
    )
    
    $
    6,785
    
    
    
    -1167.8
    %
 Income
Taxes.
 Station Operating Income .
  24




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##### Table of Contents



Reconciliation of Non-GAAP Financial Measure.
 For the Three MonthsEnded June 30,
    
    Dollar Change
    
    Percent Change2009
    
    2008
    
    2009 vs. 2008
    
    2009 vs. 2008Operating income
    
    $
    26,431
    
    
    $
    21,175
    
    
    $
    5,256
    
    
    
    24.8
    %Depreciation and amortization
    
    
    2,817
    
    
    
    3,311
    
    
    
    (494
    )
    
    
    -14.9
    %LMA fees
    
    
    728
    
    
    
    320
    
    
    
    408
    
    
    
    127.5
    %Corporate general and administrative (including
non-cash stock compensation)
    
    
    3,958
    
    
    
    4,094
    
    
    
    (136
    )
    
    
    -3.3
    %(Gain) on exchange of assets or stations
    
    
    (7,204
    )
    
    
    
    
    
    
    (7,204
    )
    
    
    -100.0
    %Cost associated with terminated transaction
    
    
    
    
    
    
    1,753
    
    
    
    (1,753
    )
    
    
    -100.0
    %Station operating income
    
    $
    26,730
    
    
    $
    30,653
    
    
    $
    (3,923
    )
    
    
    -12.8
    %
 Six Months Ended June 30, 2009 Versus the Six Months Ended June 30, 2008
 Net Revenues.
 25




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##### Table of Contents



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 Stations Swap.
 Costs
Associated With Terminated Transaction.
 Non-operating (Income) Expense.
 For the Six MonthsEnded June 30,
    
    Dollar Change
    
    Percent Change2009
    
    2008
    
    2009 vs. 2008
    
    2009 vs. 2008Bank Borrowings  term loan and revolving credit
facilities
    
    $
    7,920
    
    
    $
    18,326
    
    
    $
    (10,406
    )
    
    
    -56.8
    %Bank Borrowings yield adjustment  interest rate
swap arrangement
    
    
    5,992
    
    
    
    (560
    )
    
    
    6,552
    
    
    
    -1170.0
    %Change in fair value of interest rate swap agreement
    
    
    (3,043
    )
    
    
    3,081
    
    
    
    (6,124
    )
    
    
    -198.8
    %Change in fair value of interest rate option agreement
    
    
    2,208
    
    
    
    (693
    )
    
    
    2,901
    
    
    
    -418.6
    %Other interest expense
    
    
    919
    
    
    
    407
    
    
    
    512
    
    
    
    125.8
    %Interest income
    
    
    (55
    )
    
    
    (610
    )
    
    
    555
    
    
    
    -91.0
    %Interest expense, net
    
    $
    13,941
    
    
    $
    19,951
    
    
    $
    (6,010
    )
    
    
    -30.1
    %
 Income
Taxes.
 26




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##### Table of Contents



Station Operating Income .
 Reconciliation of Non-GAAP Financial Measure.
 For the Six MonthsEnded June 30,
    
    Dollar Change
    
    Percent Change2009
    
    2008
    
    2009 vs. 2008
    
    2009 vs. 2008Operating income
    
    $
    30,012
    
    
    $
    34,034
    
    
    $
    (4,022
    )
    
    
    -11.8
    %Depreciation and amortization
    
    
    5,715
    
    
    
    6,421
    
    
    
    (706
    )
    
    
    -11.0
    %LMA fees
    
    
    1,196
    
    
    
    500
    
    
    
    696
    
    
    
    139.2
    %Corporate general and administrative (including
non-cash stock compensation)
    
    
    10,067
    
    
    
    9,555
    
    
    
    512
    
    
    
    5.4
    %(Gain) on exchange of assets or stations
    
    
    (7,204
    )
    
    
    
    
    
    
    (7,204
    )
    
    
    -100.0
    %Cost associated with terminated transaction
    
    
    
    
    
    
    1,893
    
    
    
    (1,893
    )
    
    
    -100.0
    %Station operating income
    
    $
    39,786
    
    
    $
    52,403
    
    
    $
    (12,617
    )
    
    
    -24.1
    %
 27




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##### Table of Contents



Liquidity and Capital Resources
 TM
     Consideration of Recent Economic Developments
   28




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##### Table of Contents



Senior Secured Credit Facilities
        
    
    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, we must: (1) maintain minimum trailing twelve
month consolidated EBITDA (as defined in the Credit Agreement) of $60 million for fiscal
quarters ended June 30, 2009 through March 31, 2010, increasing incrementally to $66
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, 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.
  29




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##### Table of Contents




    
    a minimum trailing twelve month consolidated EBITDA
    
    a $7.5 million minimum cash on hand and;
    
    a limit on annual capital expenditures
     Critical Accounting Policies and Estimates
  Revenue
  Allowance
for Doubtful Accounts
  30




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##### Table of Contents



Intangible Assets
 Goodwill and other Intangible Assets
  Goodwill
       Reporting Unit
    
    
    Implied Goodwill
    
    
    12-31-08 GoodwillMarket ID
    
    Fair Value
    
    
    Value
    
    
    Carrying Value
    
    
    ImpairmentMarket 7
    
    $
    7,189
    
    
    $
    3,827
    
    
    $
    4,303
    
    
    $
    476Market 8
    
    
    11,293
    
    
    
    3,726
    
    
    
    5,295
    
    
    
    1,569Market 17
    
    
    5,640
    
    
    
    3,447
    
    
    
    2,450
    
    
    
    Market 18
    
    
    3,050
    
    
    
    1,672
    
    
    
    2,080
    
    
    
    408Market 26
    
    
    5,425
    
    
    
    2,860
    
    
    
    2,068
    
    
    
    Market 35
    
    
    10,912
    
    
    
    1,150
    
    
    
    1,715
    
    
    
    565Market 36
    
    
    8,309
    
    
    
    712
    
    
    
    5,907
    
    
    
    5,195Market 37
    
    
    21,277
    
    
    
    11,742
    
    
    
    11,512
    
    
    
    Market 48
    
    
    12,699
    
    
    
    1,478
    
    
    
    8,099
    
    
    
    6,621Market 51
    
    
    12,508
    
    
    
    4,284
    
    
    
    5,255
    
    
    
    971Market 52
    
    
    21,176
    
    
    
    
    
    
    
    21,437
    
    
    
    21,437Market 55
    
    
    11,066
    
    
    
    
    
    
    
    2,168
    
    
    
    2,168$
    39,410
  31




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##### Table of Contents



Market ID
    
    Goodwill BalanceMarket 7
    
    $
    3,827Market 8
    
    
    3,726Market 17
    
    
    2,450Market 18
    
    
    1,672Market 26
    
    
    2,068Market 35
    
    
    1,150Market 36
    
    
    712Market 37
    
    
    11,512Market 48
    
    
    1,478Market 51
    
    
    4,284Market 52
    
    
    Market 55
    
    
    Market 11
    
    
    13,847Market 27
    
    
    1,929Market 30
    
    
    5,684Market 56
    
    
    2,586Market 57
    
    
    1,966$
    58,891
  
    
    conducted an overall reasonableness check of our fair value calculations by
comparing the aggregate, calculated fair value of our markets to our market
capitalization as of December 31, 2008;
    
    prepared a market fair value calculation using a multiple of Adjusted EBITDA as a
comparative data point to validate the fair values calculated using our discounted
cash-flow approach;
    
    reviewed the historical operating performance of each market with impairment;
    
    reviewed the facts surrounding our acquisition of the impaired market, including
original, implied acquisition Station Operating Income multiple; and
    
    performed a sensitivity analysis on the overall fair value and impairment evaluation.
 i.e.
      
    
    Shares outstanding as of 12/31: 41.4 million;
 32




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##### Table of Contents




    
    Average closing price of our Class A Common Stock over
32 days: $2.00 per share; and
    
    Debt discounted by 26% (gross $696.0 million, net
$515.0 million).
   Changes to the Assumptions and Methodologies
   Impact of Current Economic Environment on the Analysis
  FCC Licenses
  
    
    in each market, the broadcast licenses were purchased to be used as one combined asset;
    
    the combined group of licenses in a market represents the highest and best use of the assets;
and
    
    each markets strategy provides evidence that the licenses are complementary.
   i.e.
   33




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##### Table of Contents



i.e.
         
    
    the stations gross revenues through 2016;
    
    the projected operating expenses and profits over the same period of
time (we considered operating expenses, except for sales expenses, to
be fixed, and assumed sales expenses to be a fixed percentage of
revenues);
    
    calculations of yearly net free cash flows to invested
capital;
    
    depreciation on start-up construction costs and capital expenditures
(we calculated depreciation using accelerated double declining balance
guidelines over five years for the value of the tangible assets
necessary for a radio station to go on-the-air); and
    
    amortization of the intangible assetthe FCC License (we calculated
amortization on a straight line basis over 15 years).
  Assumption Change
    
    Result1% decline in revenue
    
    Approximately $99.0 M increase in license impairment1% decline in SOI
    
    Approximately $17.1 M increase in license impairment1% increase in discount rate
    
    Approximately $48.9 M increase in license impairment
  34




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##### Table of Contents



$ Change in Excess (Deficit) Based on % Decreases in Fair Value of Broadcast
 December 31, 2008
    
    LicensesMarket ID
    
    Carrying Value
    
    Market Value
    
    Excess/(Deficit)
    
    10%
    
    15%
    
    20%Market 1
    
    
    1,473,333
    
    
    
    2,139,827
    
    
    
    666,494
    
    
    
    452,511
    
    
    
    345,520
    
    
    
    238,528Market 3
    
    
    1,810,969
    
    
    
    2,532,261
    
    
    
    721,292
    
    
    
    468,066
    
    
    
    341,453
    
    
    
    214,839Market 27
    
    
    7,268,649
    
    
    
    7,460,786
    
    
    
    192,137
    
    
    
    (553,942
    )
    
    
    (926,981
    )
    
    
    (1,300,020
    )Market 33
    
    
    5,578,997
    
    
    
    6,705,218
    
    
    
    1,126,221
    
    
    
    455,699
    
    
    
    120,438
    
    
    
    (214,823
    )Market 38
    
    
    3,016,628
    
    
    
    3,811,405
    
    
    
    794,777
    
    
    
    413,637
    
    
    
    223,067
    
    
    
    32,496Market 44
    
    
    3,343,140
    
    
    
    5,117,679
    
    
    
    1,774,539
    
    
    
    1,262,771
    
    
    
    1,006,887
    
    
    
    751,003Market 48
    
    
    7,897,423
    
    
    
    9,126,587
    
    
    
    1,229,164
    
    
    
    316,506
    
    
    
    (139,824
    )
    
    
    (596,153
    )Market 55
    
    
    21,953,907
    
    
    
    35,872,186
    
    
    
    13,918,279
    
    
    
    10,331,060
    
    
    
    8,537,451
    
    
    
    6,743,842Total Excess (Deficit) Impairment
    
    
    
    
    
    
    
    
    
    
    13,146,308
    
    
    
    9,508,010
    
    
    
    5,869,713
 Annual Statement Studies
  Stock-based Compensation
 Share-Based Payment,
 35




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk
   
 Item 4. Controls and Procedures
    Changes in Internal Control over Financial Reporting
  36




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
         
 Item 1A. Risk Factors
  If we cannot continue to comply with the financial covenants in our debt instruments, or obtain
waivers or other relief from our lenders, we may default, which could result in loss of our sources
of liquidity and acceleration of our indebtedness.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  37




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##### Table of Contents



Item 3.
Defaults upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  38




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##### Table of Contents



Item 6. Exhibits
 4.1
    
    
    
    Form of Warrant Certificate (incorporated by reference to Exhibit 4.1 of the Companys
current report on Form 8-K, filed June 30, 2009).10.1
    
    
    
    Amendment No. 3 to Credit Agreement, dated as of June 29, 2009, by and among, the Company,
Bank of America, N.A., as administrative agent, the Lenders party thereto, and the Subsidiary
Loan Parties thereto (incorporated by reference to Exhibit 10.1 of the Companys current
report on Form 8-K, filed June 30, 2009).10.2
    
    
    
    Warrant Agreement, dated as of June 29, 2009, by and among, the Company, Lewis W. Dickey,
Jr., Lewis W. Dickey, Sr., John W. Dickey, Michael W. Dickey, David W. Dickey, Lewis W.
Dickey, Sr. Revocable Trust, DBBC, LLC and the Consenting Lenders party thereto (incorporated
by reference to Exhibit 10.2 of the Companys current report on Form 8-K, filed June 30,
2009).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.
 39




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##### Table of Contents



SIGNATURES
  CUMULUS MEDIA INC.Date: August 6, 2009
    By:
    /s/ Joseph Patrick HannanJoseph Patrick HannanVice President and Interim Chief
Financial Officer 40




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##### Table of Contents



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.
 41