##### 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 SEPTEMBER 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 
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 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)
    
    
    3Condensed Consolidated Balance Sheets as of September 30, 2009 and December 31, 2008
    
    
    3Condensed Consolidated Statements of Operations for the Three and Nine Months Ended
September 30, 2009 and September 30, 2008, respectively
    
    
    4Condensed Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 2009 and September 30, 2008.
    
    
    5Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    27Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    45Item 4. Controls and Procedures
    
    
    46PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    46Item 1A. Risk Factors
    
    
    46Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    47Item 3. Defaults Upon Senior Securities
    
    
    47Item 4. Submission of Matters to a Vote of Security Holders
    
    
    47Item 5. Other Information
    
    
    47Item 6. Exhibits
    
    
    48Signatures
    
    
    49Exhibit Index
    
    
    50EX-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)
 September 30,
    
    December 31,2009
    
    2008AssetsCurrent assets:Cash and cash equivalents
    
    $
    19,192
    
    
    $
    53,003Restricted cash
    
    
    789
    
    
    
    Accounts receivable, less allowance for doubtful accounts of $1,354 and $1,771, in
2009 and 2008, respectively
    
    
    39,505
    
    
    
    44,199Prepaid expenses and other current assets
    
    
    6,326
    
    
    
    3,287Total current assets
    
    
    65,812
    
    
    
    100,489Property and equipment, net
    
    
    48,377
    
    
    
    55,124Intangible assets, net
    
    
    162,995
    
    
    
    325,134Goodwill
    
    
    57,827
    
    
    
    58,891Other assets
    
    
    3,182
    
    
    
    3,881Total assets
    
    $
    338,193
    
    
    $
    543,519Liabilities and Stockholders DeficitCurrent liabilities:Accounts payable and accrued expenses
    
    $
    19,041
    
    
    $
    20,644Current portion of long-term debt
    
    
    38,383
    
    
    
    7,400Total current liabilities
    
    
    57,424
    
    
    
    28,044Long-term debt
    
    
    604,062
    
    
    
    688,600Other liabilities
    
    
    34,235
    
    
    
    30,543Deferred income taxes
    
    
    22,128
    
    
    
    44,479Total liabilities
    
    $
    717,849
    
    
    $
    791,666Stockholders Deficit: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 designated as
12% Series B Cumulative Preferred Stock, stated value $10,000 per share, 0 shares
issued and outstanding in both 2009 and 2008
    
    
    
    
    
    
    Class A common stock, par value $.01 per share; 200,000,000 shares authorized;
59,572,592 and 59,572,592 shares issued, 35,177,803 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, 24,394,789 and 24,627,302 shares in 2009 and 2008,
respectively
    
    
    (261,279
    )
    
    
    (265,278
    )Accumulated other comprehensive income
    
    
    
    
    
    
    828Additional paid-in-capital
    
    
    966,208
    
    
    
    967,676Accumulated deficit
    
    
    (1,085,245
    )
    
    
    (952,033
    )Total stockholders deficit
    
    
    (379,656
    )
    
    
    (248,147
    )Total liabilities and stockholders deficit
    
    $
    338,193
    
    
    $
    543,519
 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 data)
 (Unaudited)
 Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2009
    
    2008
    
    2009
    
    2008Broadcast revenues
    
    $
    64,127
    
    
    $
    78,950
    
    
    $
    183,443
    
    
    $
    233,478Management fee from affiliate
    
    
    1,000
    
    
    
    1,000
    
    
    
    3,000
    
    
    
    3,000Net revenues
    
    
    65,127
    
    
    
    79,950
    
    
    
    186,443
    
    
    
    236,478Operating expenses:Station operating expenses (excluding depreciation, amortization and LMA fees)
    
    
    40,159
    
    
    
    50,795
    
    
    
    121,690
    
    
    
    154,920Depreciation and amortization
    
    
    2,650
    
    
    
    2,965
    
    
    
    8,365
    
    
    
    9,386LMA fees
    
    
    595
    
    
    
    71
    
    
    
    1,792
    
    
    
    571Corporate general and administrative (including non-cash stock compensation
of $850, $1,015, $2,053, and $3,882, respectively)
    
    
    5,676
    
    
    
    5,006
    
    
    
    15,741
    
    
    
    14,562Gain on exchange of assets or stations
    
    
    
    
    
    
    
    
    
    
    (7,204
    )
    
    
    Realized loss on derivative instrument
    
    
    3,016
    
    
    
    
    
    
    
    3,016
    
    
    
    Impairment of goodwill and intangible assets
    
    
    173,085
    
    
    
    
    
    
    
    173,085
    
    
    
    Cost associated with terminated transaction
    
    
    
    
    
    
    82
    
    
    
    
    
    
    
    1,975Total operating expenses
    
    
    225,181
    
    
    
    58,919
    
    
    
    316,485
    
    
    
    181,414Operating (loss)/income
    
    
    (160,054
    )
    
    
    21,031
    
    
    
    (130,042
    )
    
    
    55,064Non-operating income (expense):Interest expense
    
    
    (11,052
    )
    
    
    (8,234
    )
    
    
    (25,048
    )
    
    
    (28,796
    )Interest income
    
    
    3
    
    
    
    262
    
    
    
    58
    
    
    
    873Terminated transaction fee
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000Other
(expense) income, net
    
    
    (121
    )
    
    
    6
    
    
    
    (156
    )
    
    
    Total
non-operating expense, net
    
    
    (11,170
    )
    
    
    (7,966
    )
    
    
    (25,146
    )
    
    
    (12,923
    )(Loss)
income before income taxes and equity in net losses of affiliate
    
    
    (171,224
    )
    
    
    13,065
    
    
    
    (155,188
    )
    
    
    42,141Income tax benefit (expense)
    
    
    27,233
    
    
    
    (7,349
    )
    
    
    21,976
    
    
    
    (11,780
    )Equity in net income of affiliate
    
    
    
    
    
    
    284
    
    
    
    
    
    
    
    1,687Net (loss)/income
    
    $
    (143,991
    )
    
    $
    6,000
    
    
    $
    (133,212
    )
    
    $
    32,048Basic and diluted earnings (loss) per common share:Basic earnings (loss) per common share (See Note 8)
    
    $
    (3.56
    )
    
    $
    0.14
    
    
    $
    (3.29
    )
    
    $
    0.74Diluted earnings (loss) per common share (See Note 8)
    
    $
    (3.56
    )
    
    $
    0.14
    
    
    $
    (3.29
    )
    
    $
    0.74Weighted average basic common shares outstanding (See Note 8)
    
    
    40,406
    
    
    
    41,910
    
    
    
    40,432
    
    
    
    42,675Weighted average diluted common shares outstanding (See Note 8)
    
    
    40,406
    
    
    
    41,910
    
    
    
    40,432
    
    
    
    42,690
 See accompanying notes to unaudited condensed consolidated financial statements.
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CUMULUS MEDIA INC.
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Dollars in thousands)
 (Unaudited)
 Nine Months EndedSeptember 30,2009
    
    2008Cash flows from operating activities:Net (loss) income
    
    $
    (133,212
    )
    
    $
    32,048Adjustments to reconcile net (loss) income to net cash provided by
operating activities:Depreciation and amortization
    
    
    8,365
    
    
    
    9,386Amortization of debt issuance costs/discount
    
    
    775
    
    
    
    314Amortization of derivative gain
    
    
    (828
    )
    
    
    (2,979
    )Provision for doubtful accounts
    
    
    1,856
    
    
    
    2,525Loss on sale of assets or stations
    
    
    (29
    )
    
    
    (12
    )Gain on exchange of assets or stations
    
    
    (7,204
    )
    
    
    Fair value
adjustment of derivative instruments
    
    
    2,151
    
    
    
    2,034Impairment of goodwill and intangible assets
    
    
    173,085
    
    
    
    Deferred income taxes
    
    
    (22,351
    )
    
    
    11,466Non-cash stock compensation
    
    
    2,053
    
    
    
    3,882Equity (gain) on investment in unconsolidated affiliate
    
    
    
    
    
    
    (1,687
    )Changes in assets and liabilities:Restricted cash
    
    
    (789
    )
    
    
    Accounts receivable
    
    
    2,837
    
    
    
    (511
    )Prepaid expenses and other current assets
    
    
    (3,038
    )
    
    
    989Accounts payable and accrued expenses
    
    
    (1,603
    )
    
    
    (1,602
    )Other assets
    
    
    84
    
    
    
    (460
    )Other liabilities
    
    
    (938
    )
    
    
    (1,147
    )Net cash provided by operating activities
    
    
    21,214
    
    
    
    54,246Cash flows from investing activities:Proceeds from the sale of assets
    
    
    91
    
    
    
    Purchases of intangible assets
    
    
    
    
    
    
    (1,027
    )Capital expenditures
    
    
    (1,872
    )
    
    
    (5,203
    )Net cash used in investing activities
    
    
    (1,781
    )
    
    
    (6,230
    )Cash flows from financing activities:Repayments of borrowings from bank credit facility
    
    
    (49,956
    )
    
    
    (11,640
    )Tax withholding paid on behalf of employees
    
    
    (95
    )
    
    
    (2,401
    )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
    )
    
    
    (5,022
    )Net cash used in financing activities
    
    
    (53,244
    )
    
    
    (19,011
    )Decrease in cash and cash equivalents
    
    
    (33,811
    )
    
    
    29,005Cash and cash equivalents at beginning of period
    
    
    53,003
    
    
    
    32,286Cash and cash equivalents at end of period
    
    $
    19,192
    
    
    $
    61,291
 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
 ASC 105. The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting
Principles  a replacement of FASB Statement No. 162. Generally Accepted Accounting Principles
 ASC 805 Business Combinations Business Combinations Income Taxes
 ASC 805 Update Accounting for Assets Acquired
and Liabilities Assumed in a Business Combination That Arise from Contingencies,
 7




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##### Table of Contents



ASC 810. Noncontrolling Interests in
Consolidated Financial Statements  an amendment of ARB No. 51, Consolidation
 ASC 815. Disclosures about Derivative
Instruments and Hedging Activities Derivatives and Hedging
 ASC 855 Subsequent Events Subsequent Events
 SFAS No. 167. (not part of the codification yet). Amendments to FASB Interpretation No. 46 (R)
 ASC 275 and ASC 350. Determination of the Useful Lives of Intangible Assets, Risks and Uncertainties Intangibles  Goodwill and Other
 ASC 860 and ASC 810. FSP FAS 140-4 and FIN 46R-8 Transfers and Servicing Consolidations
 ASC 820. Effective Date of FASB Statement No.
157 Fair Value Measurements, Fair Value Measurements and Disclosures
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##### Table of Contents



ASC 820. FSP 157-4, FSP FAS 115-2 and FAS 124-2, and FSP FAS 107-1 and APB 28-1 Determining Whether a Market is Not Active and a Transaction is Not Distressed
 Recognition and Presentation of
Other-Than-Temporary Impairments (FSP 115-2 and FSP 124-2) .
 Interim Disclosures about Fair
Value of Financial Instruments (FSP FAS 107-1 and APB 28-1)
 ASC 260. Determining Whether Instruments Granted in
Share-Based Payment Transactions Are Participating Securities (FSP EITF 03-6-1). (ASC 260
 ASU
2009-05
 2. Stock Based Compensation
   9




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##### Table of Contents



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
  10




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##### Table of Contents



WZBN-FM Swap
  4. Derivative Financial Instruments
  May 2005 Swap
    May 2005 Option
    11




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##### Table of Contents



Green Bay Option
    Information on the Location and Amounts of Derivatives Fair Values in the
Unaudited Condensed Consolidated Balance Sheet (in thousands)
 Liability DerivativesBalance Sheet
    
    September 30, 2009Location
    
    Fair ValueDerivative
not designated as hedging instruments:Interest rate swap
    
    Other long-term liabilities
    
    $
    (17,642
    )Green Bay Option:
    
    Other long-term liabilities
    
    
    (5,449
    )Total
    
    $
    (23,091
    )
  12




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##### Table of Contents



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 Months
    
    Derivatives for the Nine MonthsInstruments
    
    Location
    
    Ended September 30, 2009
    
    Ended September 30, 2009Green Bay Option
    
    Realized loss on derivative instrument
    
    $
    (3,016
    )
    
    $
    (3,016
    )Interest rate contracts
    
    Interest income/(expense)
    
    
    
    
    
    
    3,043Interest income/(expense)
    
    
    30
    
    
    
    (2,178
    )Total
    
    $
    (2,986
    )
    
    $
    (2,151
    )
 5. Long-Term Debt
  September 30,
    
    
    December 31,2009
    
    
    2008Term loan
    
    $
    646,044
    
    
    $
    696,000Less:     Current portion of long-term debt
    
    
    38,383
    
    
    
    7,400Debt-discount
    
    
    3,599
    
    
    
    $
    604,062
    
    
    $
    688,600
 Senior Secured Credit Facilities
 2009 Amendment
      13




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##### Table of Contents



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 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;
    
    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 of $60 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 8.00:1; and
    
    a minimum fixed charge coverage ratio of 1.20:1.
  14




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##### Table of Contents



.
 Warrants
  Accounting for the Modification of the Credit Agreement
    6. Fair Value Measurements
      15




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Quoted
    
    SignificantPrices in
    
    Other
    
    SignificantSeptember 30, 2009
    
    Active
    
    Observable
    
    UnobservableTotal Fair
    
    Markets
    
    Inputs
    
    InputsValue
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Financial assets:Cash equivalents:Money market funds
    
    $
    4,382
    
    
    $
    4,382
    
    
    $
    
    
    
    $
    Total assets
    
    $
    4,382
    
    
    $
    4,382
    
    
    $
    
    
    
    $
    Financial liabilities:Other long-term liabilities:Green Bay Option
    
    $
    (5,449
    )
    
    $
    
    
    
    $
    
    
    
    $
    (5,449
    )Interest rate swap
    
    
    (17,642
    )
    
    
    
    
    
    
    (17,642
    )
    
    
    Total liabilities
    
    $
    (23,091
    )
    
    $
    
    
    
    $
    (17,642
    )
    
    $
    (5,449
    )
 Cash Equivalents.
 Green Bay Option.
 Description
    
    Green Bay OptionApril 10, 2009 - fair value origination date
    
    $
    2,433Add: Mark to market fair value adjustment
    
    
    3,016Fair value balance as of September 30, 2009
    
    $
    5,449
 Interest Rate Swap.
   Quoted
    
    
    SignificantPrices in
    
    
    Other
    
    
    SignificantSeptember 30, 2009
    
    
    Active
    
    
    Observable
    
    
    UnobservableTotal Fair
    
    
    Markets
    
    
    Inputs
    
    
    InputsValue
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Non  financial assets:Goodwill
    
    $
    57,827
    
    
    $
    
    
    
    $
    
    
    
    $
    57,827Other intangible assets
    
    
    162,995
    
    
    
    
    
    
    
    
    
    
    
    162,995Total
    
    $
    220,822
    
    
    $
    
    
    
    $
    
    
    
    $
    220,822
  16




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##### Table of Contents



September 30, 2009
    
    December 31, 2008Carrying value of term loan
    
    $
    646,044
    
    
    $
    688,600Fair value of term loan
    
    $
    511,891
    
    
    $
    515,700
  7. Share Repurchase
   8. Earnings per Share
   17




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##### Table of Contents



Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2009
    
    2008
    
    2009
    
    2008Basic Earnings Per ShareNumerator:Undistributed net loss
    
    $
    (143,991
    )
    
    $
    6,000
    
    
    $
    (133,212
    )
    
    $
    32,048Participation rights of unvested restricted stock in
undistributed earnings
    
    
    
    
    
    
    132
    
    
    
    
    
    
    
    641Basic undistributed net loss  attributable to common
shares
    
    $
    (143,991
    )
    
    $
    5,868
    
    
    $
    (133,212
    )
    
    $
    31,407Denominator:Denominator for basic income per common share:Basic weighted average common shares outstanding
    
    
    40,406
    
    
    
    41,910
    
    
    
    40,432
    
    
    
    42,675Basic EPS  attributable to common shares
    
    $
    (3.56
    )
    
    $
    0.14
    
    
    $
    (3.29
    )
    
    $
    0.74Diluted Earnings Per Share:Numerator:Undistributed net loss
    
    $
    (143,991
    )
    
    $
    6,000
    
    
    $
    (133,212
    )
    
    $
    32,048Participation rights of unvested restricted stock in
undistributed earnings
    
    
    
    
    
    
    132
    
    
    
    
    
    
    
    641Basic undistributed net loss  attributable to common
shares
    
    $
    (143,991
    )
    
    $
    5,868
    
    
    $
    (133,212
    )
    
    $
    31,407Denominator:Basic weighted average shares outstanding
    
    
    40,406
    
    
    
    41,910
    
    
    
    40,432
    
    
    
    42,675Effect of dilutive options warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15Diluted weighted average shares outstanding
    
    
    40,406
    
    
    
    41,910
    
    
    
    40,432
    
    
    
    42,690Diluted EPS  attributable to common shares
    
    $
    (3.56
    )
    
    $
    0.14
    
    
    $
    (3.29
    )
    
    $
    0.74
   18




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##### Table of Contents



September 30,2009Restricted shares of Class A Common Stock
    
    
    1,425,278Options to purchase Class A Common Stock
    
    
    925,504Options to purchase Class C Common Stock
    
    
    
 9. Comprehensive Income
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2009
    
    2008
    
    2009
    
    2008Net (loss)/income
    
    $
    (143,991
    )
    
    $
    6,000
    
    
    $
    (133,212
    )
    
    $
    32,048Yield adjustment -
interest rate swap
arrangement, net of tax
    
    
    
    
    
    
    (993
    )
    
    
    
    
    
    
    (2,979
    )Comprehensive
(loss)/income
    
    $
    (143,991
    )
    
    $
    5,007
    
    
    $
    (133,212
    )
    
    $
    29,069
  10. Commitments and Contingencies
    19




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##### Table of Contents



11. Restricted Cash
  12. Investment in Affiliate
    20




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##### Table of Contents



13. Intangible Assets and Goodwill
  Indefinite Lived
    
    Definite Lived
    
    TotalIntangible Assets:Balance as of December 31, 2008
    
    $
    325,131
    
    
    $
    3
    
    
    $
    325,134Acquisition
    
    
    15,353
    
    
    
    225
    
    
    
    15,578Disposition
    
    
    (6,272
    )
    
    
    
    
    
    
    (6,272
    )Amortization
    
    
    
    
    
    
    (116
    )
    
    
    (116
    )Impairment
    
    
    (171,329
    )
    
    
    
    
    
    
    (171,329
    )Balance as of September 30, 2009
    
    $
    162,883
    
    
    $
    112
    
    
    $
    162,995
 AmountBalance, January 1, 2009:Goodwill
    
    
    287,609Accumulated impairment losses
    
    
    (228,719
    )Subtotal
    
    
    58,890Goodwill acquired during the year
    
    
    1,600Goodwill disposals during the year
    
    
    (906
    )Impairment
    
    
    (1,757
    )Balance, September 30, 2009:Goodwill
    
    
    288,303Accumulated impairment losses
    
    
    (230,476
    )Total
    
    
    57,827
  21




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##### Table of Contents



Goodwill
    Step 1 Goodwill Test
    Step 2 Goodwill Test
  Reporting Unit
    
    
    Implied Goodwill
    
    
    August 31, 2009, GoodwillMarket ID
    
    Fair Value
    
    
    Value
    
    
    Carrying Value
    
    
    ImpairmentMarket 37
    
    $
    15,006
    
    
    $
    9,754
    
    
    $
    11,511
    
    
    $
    1,757
 22




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##### Table of Contents




    
    conducted an overall reasonableness check of the Companys fair value calculations by
comparing the aggregate, calculated fair value of the Companys markets to its market
capitalization as of August 31, 2009;
    
    prepared a market fair value calculation using a multiple of Adjusted EBITDA as a
comparative data point to validate the fair values calculated using the discounted cash-flow
approach;
    
    reviewed the historical operating performance of each market with impairment;
    
    reviewed the facts surrounding the 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.
    23




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##### Table of Contents




    
    shares outstanding as of August 31, 2009: 41.6 million;
    
    average closing price of the Companys Class A Common Stock over 30 days: $1.40 per
share; and
    
    debt discounted by 26% (gross $647.9 million, net $479.4 million).
   Indefinite Lived Intangibles (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.
    
    Each markets strategy provides evidence that the licenses are complementary.
  i.e.
  24




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##### Table of Contents



i.e.
        
    
    the stations gross revenues through 2017;
    
    the projected operating expenses and profits over the same period of time (the Company
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 (the Company
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 (the Company calculated
amortization on a straight line basis over 15 years).
 25




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##### Table of Contents



Impact of Current Economic Environment on the Analysis
  26




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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
  27




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##### Table of Contents



Advertising Revenue and Station Operating Income
       Results of Operations
 Analysis of Condensed Consolidated Statements of Operations.
 28




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##### Table of Contents



For the Three MonthsEnded September 30,
    
    Dollar Change
    
    Percent Change2009
    
    2008
    
    2009 vs. 2008
    
    2009 vs. 2008STATEMENT OF OPERATIONS DATA:Net revenues
    
    $
    65,127
    
    
    $
    79,950
    
    
    $
    (14,823
    )
    
    
    -18.5
    %Station operating expenses (excluding
depreciation, amortization and LMA fees)
    
    
    40,159
    
    
    
    50,795
    
    
    
    (10,636
    )
    
    
    -20.9
    %Depreciation and amortization
    
    
    2,650
    
    
    
    2,965
    
    
    
    (315
    )
    
    
    -10.6
    %LMA fees
    
    
    595
    
    
    
    71
    
    
    
    524
    
    
    
    738.0
    %Corporate general and administrative (including
non-cash stock compensation expense)
    
    
    5,676
    
    
    
    5,006
    
    
    
    670
    
    
    
    13.4
    %Realized loss on derivative instrument
    
    
    3,016
    
    
    
    
    
    
    
    3,016
    
    
    
    100.0
    %Impairment of goodwill and intangible assets
    
    
    173,085
    
    
    
    
    
    
    
    173,085
    
    
    
    100.0
    %Costs associated with terminated transaction
    
    
    
    
    
    
    82
    
    
    
    (82
    )
    
    
    -100.0
    %Operating
(loss)/income
    
    
    (160,054
    )
    
    
    21,031
    
    
    
    (181,085
    )
    
    
    -861.0
    %Interest expense, net
    
    
    (11,049
    )
    
    
    (7,972
    )
    
    
    (3,077
    )
    
    
    38.6
    %Other (expense) income, net
    
    
    (121
    )
    
    
    6
    
    
    
    (127
    )
    
    
    -2116.7
    %Income tax benefit (expense)
    
    
    27,233
    
    
    
    (7,349
    )
    
    
    34,582
    
    
    
    -470.6
    %Equity in net income of affiliate
    
    
    
    
    
    
    284
    
    
    
    (284
    )
    
    
    -100.0
    %Net (loss)/income
    
    $
    (143,991
    )
    
    $
    6,000
    
    
    $
    (149,991
    )
    
    
    -2499.9
    %OTHER DATA:Station Operating Income (1)
    
    $
    24,968
    
    
    $
    29,155
    
    
    $
    (4,187
    )
    
    
    -14.4
    %Station Operating Income Margin (2)
    
    
    38.3
    %
    
    
    36.5
    %
    
    
    **
    
    
    
    **
 29




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##### Table of Contents



For the Nine MonthsEnded September 30,
    
    Dollar Change
    
    Percent Change2009
    
    2008
    
    2009 vs. 2008
    
    2009 vs. 2008STATEMENT OF OPERATIONS DATA:Net revenues
    
    $
    186,443
    
    
    $
    236,478
    
    
    $
    (50,035
    )
    
    
    -21.2
    %Station operating expenses (excluding
depreciation, amortization and LMA fees)
    
    
    121,690
    
    
    
    154,920
    
    
    
    (33,230
    )
    
    
    -21.4
    %Depreciation and amortization
    
    
    8,365
    
    
    
    9,386
    
    
    
    (1,021
    )
    
    
    -10.9
    %LMA fees
    
    
    1,792
    
    
    
    571
    
    
    
    1,221
    
    
    
    213.8
    %Corporate general and administrative (including
non-cash stock compensation expense)
    
    
    15,741
    
    
    
    14,562
    
    
    
    1,179
    
    
    
    8.1
    %Gain on exchange of assets or stations
    
    
    (7,204
    )
    
    
    
    
    
    
    (7,204
    )
    
    
    -100.0
    %Realized loss on derivative instrument
    
    
    3,016
    
    
    
    
    
    
    
    3,016
    
    
    
    100.0
    %Impairment of goodwill and intangible assets
    
    
    173,085
    
    
    
    
    
    
    
    173,085
    
    
    
    100.0
    %Costs associated with terminated transaction
    
    
    
    
    
    
    1,975
    
    
    
    (1,975
    )
    
    
    -100.0
    %Operating
(loss)/income
    
    
    (130,042
    )
    
    
    55,064
    
    
    
    (185,106
    )
    
    
    -336.2
    %Interest expense, net
    
    
    (24,990
    )
    
    
    (27,923
    )
    
    
    2,933
    
    
    
    -10.5
    %Terminated transaction fee
    
    
    
    
    
    
    15,000
    
    
    
    (15,000
    )
    
    
    -100.0
    %Other expense, net
    
    
    (156
    )
    
    
    
    
    
    
    (156
    )
    
    
    -100.0
    %Income tax benefit (expense)
    
    
    21,976
    
    
    
    (11,780
    )
    
    
    33,756
    
    
    
    -286.6
    %Equity in net income of affiliate
    
    
    
    
    
    
    1,687
    
    
    
    (1,687
    )
    
    
    -100.0
    %Net (loss)/income
    
    $
    (133,212
    )
    
    $
    32,048
    
    
    $
    (165,260
    )
    
    
    -515.7
    %OTHER DATA:Station operating income (1)
    
    $
    64,753
    
    
    $
    81,558
    
    
    $
    (16,805
    )
    
    
    -20.6
    %Station operating income margin (2)
    
    
    34.7
    %
    
    
    34.5
    %
    
    
    **
    
    
    
    **Cash flows related to:Operating activities
    
    
    21,214
    
    
    
    54,246
    
    
    
    (33,032
    )
    
    
    -60.9
    %Investing activities
    
    
    (1,781
    )
    
    
    (6,230
    )
    
    
    4,449
    
    
    
    -71.4
    %Financing activities
    
    
    (53,244
    )
    
    
    (19,011
    )
    
    
    (34,233
    )
    
    
    180.1
    %Capital expenditures
    
    $
    (1,872
    )
    
    $
    (5,203
    )
    
    
    3,331
    
    
    
    -64.0
    %
 
 **
    
    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, gain on exchange of assets
or stations sold, impairment of goodwill and intangible assets and costs associated with the
terminated transaction. Station Operating Income is not a measure of performance calculated in
accordance with U.S. 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
U.S. 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 U.S. GAAP, below under  Station
Operating Income.(2)
    
    Station Operating Income margin is defined as Station Operating Income as a percentage of net revenues. 30




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##### Table of Contents



Three Months Ended September 30, 2009 versus the Three Months Ended September 30, 2008.
 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.
 Realized Loss on Derivative Instrument.
 Impairment
of Goodwill and Intangible Assets.
 Cost Associated With Terminated Transaction.
 Non-operating
Income (Expense).
 31




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##### Table of Contents



For the Three MonthsEnded September 30,
    
    Dollar Change
    
    Percent Change2009
    
    2008
    
    2009 vs. 2008
    
    2009 vs. 2008Bank Borrowings  term loan and revolving credit
facilities
    
    $
    7,088
    
    
    $
    7,898
    
    
    $
    (810
    )
    
    
    -10.3
    %Bank Borrowings yield adjustment  interest rate
swap arrangement
    
    
    3,675
    
    
    
    486
    
    
    
    3,189
    
    
    
    656.2
    %Change in fair value of interest rate swap agreement
    
    
    
    
    
    
    (2,500
    )
    
    
    2,500
    
    
    
    -100.0
    %Change in fair value of interest rate option agreement
    
    
    (30
    )
    
    
    2,146
    
    
    
    (2,176
    )
    
    
    -101.4
    %Other interest expense
    
    
    318
    
    
    
    204
    
    
    
    114
    
    
    
    55.9
    %Interest income
    
    
    (3
    )
    
    
    (263
    )
    
    
    260
    
    
    
    -98.9
    %Interest income (expense), net
    
    $
    11,048
    
    
    $
    7,971
    
    
    $
    3,077
    
    
    
    38.6
    %
 Income Taxes.
 Station Operating Income .
   32




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##### Table of Contents



Reconciliation of Non-U.S. GAAP Financial Measure.
 For the Three Months
    
    Dollar
    
    PercentEnded September 30,
    
    Change
    
    Change2009
    
    2008
    
    2009 vs. 2008
    
    2009 vs. 2008Operating
(loss)/income
    
    $
    (160,054
    )
    
    $
    21,031
    
    
    $
    (181,085
    )
    
    
    -861.0
    %Depreciation and amortization
    
    
    2,650
    
    
    
    2,965
    
    
    
    (315
    )
    
    
    -10.6
    %LMA fees
    
    
    595
    
    
    
    71
    
    
    
    524
    
    
    
    738.0
    %Corporate general and administrative (including
non-cash stock compensation)
    
    
    5,676
    
    
    
    5,006
    
    
    
    670
    
    
    
    13.4
    %Impairment of goodwill and intangible assets
    
    
    173,085
    
    
    
    
    
    
    
    173,085
    
    
    
    100.0
    %Realized loss on derivative instrument
    
    
    3,016
    
    
    
    
    
    
    
    3,016
    
    
    
    100.0
    %Costs associated with terminated transaction
    
    
    
    
    
    
    82
    
    
    
    (82
    )
    
    
    -100.0
    %Station operating income
    
    $
    24,968
    
    
    $
    29,155
    
    
    $
    (4,187
    )
    
    
    -14.4
    %
 33




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##### Table of Contents



Nine Months Ended September 30, 2009 Versus the Nine Months Ended September 30, 2008
 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.
 Realized Loss on Derivative Instrument.
  Impairment
of Goodwill and Intangible Assets.
 Gain Exchange of Stations.
 34




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##### Table of Contents



Costs Associated With Terminated Transaction.
 Non-operating (Income) Expense.
 35




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##### Table of Contents



For the Nine MonthsEnded September 30,
    
    Dollar Change
    
    Percent Change2009
    
    2008
    
    2009 vs. 2008
    
    2009 vs. 2008Bank Borrowings  term loan and revolving credit
facilities
    
    $
    15,008
    
    
    $
    26,224
    
    
    $
    (11,216
    )
    
    
    -42.8
    %Bank Borrowings yield adjustment  interest rate
swap arrangement
    
    
    9,667
    
    
    
    (74
    )
    
    
    9,741
    
    
    
    -13163.5
    %Change in fair value of interest rate swap agreement
    
    
    (3,043
    )
    
    
    581
    
    
    
    (3,624
    )
    
    
    -623.8
    %Change in fair value of interest rate option agreement
    
    
    2,178
    
    
    
    1,454
    
    
    
    724
    
    
    
    49.8
    %Other interest expense
    
    
    1,238
    
    
    
    611
    
    
    
    627
    
    
    
    102.7
    %Interest income
    
    
    (58
    )
    
    
    (873
    )
    
    
    815
    
    
    
    -93.4
    %Interest expense, net
    
    $
    24,990
    
    
    $
    27,923
    
    
    $
    (2,933
    )
    
    
    -10.5
    %
 Income
Taxes.
 Station Operating Income .
 Reconciliation of Non-U.S. GAAP Financial Measure.
 For the Nine MonthsEnded September 30,
    
    Dollar Change
    
    Percent Change2009
    
    2008
    
    2009 vs. 2008
    
    2009 vs. 2008Operating
(loss)/income
    
    $
    (130,042
    )
    
    $
    55,064
    
    
    $
    (185,106
    )
    
    
    -336.2
    %Depreciation and amortization
    
    
    8,365
    
    
    
    9,386
    
    
    
    (1,021
    )
    
    
    -10.9
    %LMA fees
    
    
    1,792
    
    
    
    571
    
    
    
    1,221
    
    
    
    213.8
    %Corporate general and administrative (including
non-cash stock compensation)
    
    
    15,741
    
    
    
    14,562
    
    
    
    1,179
    
    
    
    8.1
    %Gain on exchange of assets or stations
    
    
    (7,204
    )
    
    
    
    
    
    
    (7,204
    )
    
    
    -100.0
    %Realized loss on derivative instrument
    
    
    3,016
    
    
    
    
    
    
    
    3,016
    
    
    
    100.0
    %Impairment of goodwill and intangible assets
    
    
    173,085
    
    
    
    
    
    
    
    173,085
    
    
    
    100.0
    %Costs associated with terminated transaction
    
    
    
    
    
    
    1,975
    
    
    
    (1,975
    )
    
    
    -100.0
    %Station operating income
    
    $
    64,753
    
    
    $
    81,558
    
    
    $
    (16,805
    )
    
    
    -20.6
    %
 Liquidity and Capital Resources
 TM
 36




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##### Table of Contents



Consideration of Recent Economic Developments
   37




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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 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.
  38




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##### Table of Contents




    
    a minimum trailing twelve month consolidated EBITDA of $60 million;
    
    a $7.5 million minimum cash on hand, and
    
    a limit on annual capital expenditures.
   
    
    a maximum total leverage ratio of 8.00:1; and
    
    a minimum fixed charge coverage ratio of 1.20:1.
     Critical Accounting Policies and Estimates
  Revenue
  39




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##### Table of Contents



Allowance for Doubtful Accounts
  Intangible Assets
     Step 1 Goodwill Test
    40




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##### Table of Contents



Step 2 Goodwill Test
  Reporting Unit
    
    
    Implied Goodwill
    
    
    08-31-09 GoodwillMarket ID
    
    Fair Value
    
    
    Value
    
    
    Carrying Value
    
    
    ImpairmentMarket 37
    
    $
    15,006
    
    
    $
    9,754
    
    
    $
    11,511
    
    
    $
    1,757
  Market ID
    
    Goodwill BalanceMarket 7
    
    $
    3,827Market 8
    
    
    3,726Market 11
    
    
    13,847Market 59
    
    
    1,600Market 17
    
    
    2,450Market 19
    
    
    1,672Market 26
    
    
    2,068Market 27
    
    
    1,022Market 30
    
    
    5,684Market 35
    
    
    1,150Market 36
    
    
    712Market 37
    
    
    9,754Market 48
    
    
    1,478Market 51
    
    
    4,284Market 56
    
    
    2,585Market 57
    
    
    1,966$
    57,827
  
    
    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 August
31, 2009;
    
    prepared a market fair value calculation using a multiple of Adjusted EBITDA as a
comparative data point to validate the fair values calculated using the discounted cash-flow
approach;
    
    reviewed the historical operating performance of each market with impairment;
 41




---



##### Table of Contents




    
    reviewed the facts surrounding the 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 August 31, 2009: 41.6 million;
    
    average closing price of our Class A Common Stock over 30 days: $1.40 per share; and
    
    debt discounted by 26% (gross $647.9 million, net $479.4 million).
   Indefinite Lived Intangibles (FCC Licenses)
  Property Plant and Equipment,
 42




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
    
    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.
    
    Each markets strategy provides evidence that the licenses are complementary.
  i.e.
  i.e.
       43




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
    
    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 growth rates
    
    Approximately $80.4 million increase in license impairment1% decline in Station Operating Income
    
    Approximately $15.8 million increase in license impairment1% increase in discount rate
    
    Approximately $32.6 million increase in license impairment
 Annual Statement Studies
  Impact of Current Economic Environment on the Analysis
  44




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Stock-based Compensation
 Compensation 
Share-Based Payment
 
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
   45




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Item 4. Controls and Procedures
    Changes in Internal Control over Financial Reporting
  
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
    
 Item 1A. Risk Factors
  We have written off, and could in the future be required to write off, a portion of the fair market
value of our FCC broadcast licenses and goodwill, which may adversely affect our financial
condition and results of operations.
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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
  47




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##### Table of Contents



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.
 48




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SIGNATURES
  CUMULUS MEDIA INC.Date: November 3, 2009
    By:
    /s/ Joseph Patrick HannanJoseph Patrick HannanVice President and Interim  Chief Financial Officer 49




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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.
 50