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 Salem Media Group, Inc. Announces Second Quarter 2017 Total Revenue of $66.1 Million
   Monday, August 07, 2017 4:05:04 PM ET

Salem Media Group, Inc. (SALM ) released its results for the three and six months ended June 30, 2017.

Second Quarter 2017 Results

For the quarter ended June 30, 2017 compared to the quarter ended June 30, 2016:

Consolidated

-- Total revenue decreased 2.5% to $66.1 million from $67.8 million;

-- Total operating expenses decreased 1.0% to $57.5 million from $58.1 million;

-- Operating expenses, excluding gains or losses on the sale or disposal of assets, stock-based compensation expense, changes in the estimated fair value of contingent earn-out consideration, impairment losses, depreciation expense and amortization expense (1) decreased 2.1% to $53.8 million from $54.9 million;



-- Operating income decreased 11.2% to $8.6 million from $9.7 million;

-- Net income decreased to $1.3 million, or $0.05 net income per diluted share from $3.4 million, or $0.13 net income per diluted share;

-- EBITDA (1) decreased 24.6% to $10.1 million from $13.4 million;

-- Adjusted EBITDA (1) decreased 3.9% to $12.4 million from $12.9 million; and

-- Net cash provided by operating activities decreased to $7.5 million from $8.6 million.

Broadcast

-- Net broadcast revenue decreased 1.4% to $49.3 million from $50.0 million;

-- Station Operating Income ("SOI") (1) decreased 5.5% to $13.3 million from $14.1 million;

-- Same Station (1) net broadcast revenue decreased 1.2% to $49.0 million from $49.5 million; and

-- Same Station SOI (1) decreased 5.3% to $13.4 million from $14.1 million.

Digital Media

-- Digital media revenue decreased 1.6% to $10.9 million from $11.0 million; and

-- Digital Media Operating Income (1) increased 2.8% to $2.5 million from $2.4 million.

Publishing

-- Publishing revenue decreased 11.3% to $6.0 million from $6.8 million; and

-- Publishing Operating Income (Loss) (1) increased to income of $0.3 million from a $0.2 million loss.

Included in the results for the quarter ended June 30, 2017 are:

-- A $0.5 million ($0.3 million, net of tax, or $0.01 per share) net gain on the sale or disposal of assets including the sale of a former transmitter site in the Dallas, Texas market and the sale of two magazines that were partially offset by other insignificant fixed asset disposals; and

-- A $2.7 million loss ($1.6 million, net of tax, or $0.06 per share) on the early redemption of long-term debt due to the repayment and termination of the senior credit facilities consisting of a term loan ("Term Loan B") and Revolver.

Included in the results for the quarter ended June 30, 2016 are:

-- A $0.7 million impairment loss ($0.4 million, net of tax, or $0.02 per share) on land held for sale in Covina, California;

-- A $1.7 million ($1.0 million, net of tax, or $0.04 per share) net gain on the sale or disposal of assets primarily associated with the $1.9 million gain on the sale of a Miami tower site offset by a $0.2 million charge for leasehold improvements incurred upon the relocation of the offices in Washington D.C. market in addition to other insignificant fixed asset disposals;

-- A $0.1 million net decrease in the estimated fair value of the contingent earn-out consideration associated with the Eagle, Bryan Perry Newsletters and Daily Devotional acquisitions; and

-- A $0.1 million non-cash compensation charge related to the expensing of stock options primarily consisting of corporate expenses.

Per share numbers are calculated based on 26,593,366 diluted weighted average shares for the quarter ended June 30, 2017, and 26,052,649 diluted weighted average shares for the quarter ended June 30, 2016.

Year to Date 2017 Results

For the six months ended June 30, 2017 compared to the six months ended June 30, 2016:

Consolidated

-- Total revenue decreased 1.0% to $131.1 million from $132.4 million;

-- Total operating expenses increased 0.9% to $117.7 million from $116.6 million;

-- Operating expenses, excluding gains or losses on the sale or disposal of assets, stock-based compensation expense, changes in the estimated fair value of contingent earn-out consideration, impairment losses, depreciation expense and amortization expense (1) decreased 0.6% to $108.4 million from $109.1 million;

-- Operating income decreased 14.9% to $13.4 million from $15.8 million;

-- Net income decreased to $2.3 million, or $0.09 net income per diluted share from $3.7 million, or $0.14 net income per diluted share;

-- EBITDA (1) decreased 11.4% to $19.4 million from $21.9 million;

-- Adjusted EBITDA (1) decreased 2.5% to $22.7 million from $23.3 million; and

-- Net cash provided by operating activities decreased to $16.6 million from $19.7 million.

Broadcast

-- Net broadcast revenue decreased 1.7% to $97.1 million from $98.7 million;

-- SOI (1) decreased 5.3% to $25.3 million from $26.7 million;

-- Same station (1) net broadcast revenue decreased 1.4% to $96.5 million from $97.9 million; and

-- Same station SOI (1) decreased 4.6% to $25.5 million from $26.7 million.

Digital media

-- Digital media revenue decreased 2.3% to $21.6 million from $22.1 million; and

-- Digital media operating income (1) increased 1.5% to $4.5 million from $4.4 million.

Publishing

-- Publishing revenue increased 7.8% to $12.5 million from $11.6 million; and

-- Publishing Operating Income (Loss) (1) increased to income of $0.5 million from a loss of $0.4 million.

Included in the results for the six months ended June 30, 2017 are:

-- A $0.5 million ($0.3 million, net of tax, or $0.01 per share) net gain on the sale or disposal of assets including the sale of a former transmitter site in the Dallas, Texas market and the sale of two magazines that were partially offset by other insignificant fixed asset disposals;

-- A $2.8 million loss ($1.7 million, net of tax, or $0.06 per share) on the early redemption of long-term debt due to the repayment and termination of the senior credit facilities consisting of a term loan ("Term Loan B") and Revolver; and

-- A $1.4 million non-cash compensation charge ($0.9 million, net of tax, or $0.03 per share) related to the expensing of stock options and restricted stock consisting of: -- $1.0 million non-cash compensation charge included in corporate expenses;

-- $0.3 million non-cash compensation charge included in broadcast operating expenses;

-- $0.1 million non-cash compensation charge included in digital media operating expenses; and

-- the remaining $0.1 million non-cash compensation charge included in publishing operating expenses.

Included in the results for the six months ended June 30, 2016 are:

-- A $0.7 million impairment loss ($0.4 million, net of tax, or $0.02 per share) on land held for sale in Covina, California;

-- A $1.6 million ($0.9 million, net of tax, or $0.04 per share) net gain on the sale or disposal of assets primarily associated with the $1.9 million gain on the sale of a Miami tower site offset by a $0.4 million charge for leasehold improvements incurred upon the relocation of the offices in Washington D.C. market in addition to insignificant fixed asset disposals;

-- A $0.5 million ($0.3 million, net of tax, or $0.01 per share) reserve for a litigation matter;

-- A $0.3 million ($0.2 million, net of tax, or $0.01 per share) net decrease in the estimated fair value of the contingent earn-out consideration associated with the Eagle entities, Bryan Perry Newsletters and Daily Devotional acquisitions; and

-- A $0.3 million non-cash compensation charge ($0.2 million, net of tax, or $0.01 per share) related to the expensing of stock options primarily consisting of corporate expenses.

Per share numbers are calculated based on 26,442,146 diluted weighted average shares for the six months ended June 30, 2017, and 25,927,804 diluted weighted average shares for the six months ended June 30, 2016.

Balance Sheet

On May 19, 2017, the company closed on a private offering of $255 million in Senior Secured 6.75 % Notes due 2024 (the "Notes") and a $30 million asset-based revolving credit facility ("ABL Facility") due May 19, 2022. The net proceeds of the offering of the Notes, together with borrowings under the ABL Facility, were used to repay outstanding borrowings, including accrued and unpaid interest, on its previously existing senior credit facilities consisting of a term loan ("Term Loan B") and a revolving credit facility of $25.0 million ("Revolver"), and to pay fees and expenses incurred in connection with the Notes offering and the ABL Facility. The company recorded a $2.7 million pre-tax loss on the early retirement of long-term debt consisting of: $1.5 million related to unamortized debt issue costs associated with the Term Loan B, $0.6 million related to the unamortized discount, $0.6 million to exit and terminate the interest rate swap and a $56,000 related to unamortized bank loan fees associated with the Revolver.

As of June 30, 2017, the company had $255.0 million outstanding on the Notes and $10.0 million outstanding under the ABL Facility.

Acquisitions and Divestitures

The following transactions were completed since April 1, 2017:

-- On July 24, 2017, the company closed on the acquisition of an FM translator construction permit in Eaglemount, Washington, for $40,000 in cash. The FM translator will be relocated to the Portland, Oregon market for use by its KDZR-AM radio station.

-- On July 6, 2017, the company acquired TradersCrux.com for $0.3 million in cash. In addition, the company may pay the seller a one-time contingent payment of up to $0.1 million if certain income goals are met during the one-year following the closing.

-- On June 28, 2017, the company closed on the acquisition of an FM translator construction permit in Festus, Missouri for $40,000 in cash. The FM translator will be relocated to the St. Louis, Missouri market for use by its KXFN-FM radio station.

-- On June 8, 2017, the company acquired Portuguese Bible mobile applications for $65,000 in cash. As part of the purchase agreement, the company may pay up to an additional $20,000 in contingent earn-out consideration over the next twelve months based on the achievement of certain revenue benchmarks.

-- On May 30, 2017, the company received $10,000 for Preaching Magazine(TM) and YouthWorker Journal(TM). The purchaser assumed all deferred subscription liabilities for these publications resulting in a pre-tax gain on the sale or disposal of assets of approximately $56,000.

Conference Call Information

Salem will host a teleconference to discuss its results on August 7, 2017 at 2:00 P.M. Pacific Time. To access the teleconference, please dial (877) 524-8416, and then ask to be joined into the Salem Media Group Second Quarter 2017 call or listen via the investor relations portion of the company’s website, located at investor.salemmedia.com. A replay of the teleconference will be available through August 17, 2017 and can be heard by dialing (877) 660-6853, passcode 13665194 or on the investor relations portion of the company’s website, located at investor.salemmedia.com.

Third Quarter 2017 Outlook

For the third quarter of 2017, the company is projecting total revenue to decline 6% to 8% from third quarter 2016 total revenue of $71.3 million. Much of this revenue decline is due to the lack of political revenue and the elimination of four loss-making magazines, continued softness in Dallas and a reduced book release schedule in the third quarter of 2017. Excluding the impact of these items, the company would be projecting revenue declines of 1% to 3%. The company is also projecting operating expenses before gains or losses on the sale or disposal of assets, stock-based compensation expense, changes in the estimated fair value of contingent earn-out consideration, impairments, depreciation expense and amortization expense to decline 2% to 5% compared to the third quarter of 2016 non-GAAP operating expenses of $58.6 million.

A reconciliation of non-GAAP operating expenses, excluding gains or losses on the sale or disposal of assets, stock-based compensation expense, changes in the estimated fair value of contingent earn-out consideration, impairments, depreciation expense and amortization expense to the most directly comparable GAAP measure is not available without unreasonable efforts on a forward-looking basis due to the potential high variability, complexity and low visibility with respect to the charges excluded from this non-GAAP financial measure, in particular, the change in the estimated fair value of earn-out consideration, impairments and gains or losses from the sale or disposal of fixed assets. The company expects the variability of the above charges may have a significant, and potentially unpredictable, impact on its future GAAP financial results.

About Salem Media Group, Inc.

Salem Media Group is America’s leading multimedia company specializing in Christian and conservative content, with media properties comprising radio, digital media and book and newsletter publishing. Each day Salem serves a loyal and dedicated audience of listeners and readers numbering in the millions nationally. With its unique programming focus, Salem provides compelling content, fresh commentary and relevant information from some of the most respected figures across the Christian and conservative media landscape.

The company is the largest commercial U.S. radio broadcasting company providing Christian and conservative programming. Salem owns and/or operates 118 radio stations, with 73 stations in the top 25 media markets. Salem Radio Network ("SRN") is a full-service national radio network, with nationally syndicated programs comprising Christian teaching and talk, conservative talk, news, and music. SRN is home to many industry-leading hosts including: Hugh Hewitt, Mike Gallagher, Dennis Prager, Michael Medved, Larry Elder, Joe Walsh and Eric Metaxas.

Salem’s digital media is a leading source of Christian and conservative themed news, analysis, and commentary. Salem’s Christian sites include: Christianity.com(R), BibleStudyTools.com, GodTube.com, GodVine.com, Crosswalk.com, ibelieve.com, churchstaffing.com, WorshipHouseMedia.com and OnePlace.com. Salem’s conservative sites include Townhall.com(R), RedState.com, HotAir.com, Twitchy.com, and BearingArms.com.

Salem’s Regnery Publishing unit, with a history dating back to 1948, is the nation’s leading independent publisher of conservative books. Having published many of the seminal works of the early conservative movement, Regnery today continues as a major publisher in the conservative space, with leading authors including: Ann Coulter, Dinesh D’Souza, Newt Gingrich, David Limbaugh, Ed Klein and Mark Steyn. Salem’s book publishing business also includes Xulon Press(TM), a leading provider of self-publishing services for Christian authors and Mill City Press, a general market self-publisher.

Salem’s Eagle Financial Publications provides general market analysis and non-individualized investment strategies from financial commentators Mark Skousen, Nicholas Vardy, Bryan Perry, Bob Carlson, Mike Turner and Jim Woods, as well as a stock screening website for dividend investors (DividendInvestor.com). The business unit’s other investing websites include StockInvestor.com and RetirementWatch.com.

Eagle Wellness, through its website newportnaturalhealth.com, provides insightful health advice and is a trusted source of high quality nutritional supplements from leading health expert, Leigh Erin Connealy MD. Dr. Connealy is the medical director of one of the largest medical practices in the country where she practices integrative medicine.

Forward-Looking Statements

Statements used in this press release that relate to future plans, events, financial results, prospects or performance are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those anticipated as a result of certain risks and uncertainties, including but not limited to the ability of Salem to close and integrate announced transactions, market acceptance of Salem’s radio station formats, competition from new technologies, adverse economic conditions, and other risks and uncertainties detailed from time to time in Salem’s reports on Forms 10-K, 10-Q, 8-K and other filings filed with or furnished to the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Salem undertakes no obligation to update or revise any forward-looking statements to reflect new information, changed circumstances or unanticipated events.

Regulation G

Management uses certain non-GAAP financial measures defined below in communications with investors, analysts, rating agencies, banks and others to assist such parties in understanding the impact of various items on its financial statements. The company uses these non-GAAP financial measures to evaluate financial results, develop budgets, manage expenditures and as a measure of performance under compensation programs.

The company’s presentation of these non-GAAP financial measures should not be considered as a substitute for or superior to the most directly comparable financial measures as reported in accordance with GAAP.

Regulation G defines and prescribes the conditions under which certain non-GAAP financial information may be presented in this earnings release. The company closely monitors EBITDA, Adjusted EBITDA, Station Operating Income ("SOI"), Same Station net broadcast revenue, Same Station broadcast operating expenses, Same Station Operating Income, Digital Media Operating Income, Publishing Operating Income (Loss), and operating expenses excluding gains or losses on the sale or disposal of assets, stock-based compensation, changes in the estimated fair value of contingent earn-out consideration, impairments, depreciation and amortization, all of which are non-GAAP financial measures. The company believes that these non-GAAP financial measures provide useful information about its core operating results, and thus, are appropriate to enhance the overall understanding of its financial performance. These non-GAAP financial measures are intended to provide management and investors a more complete understanding of its underlying operational results, trends and performance.

The company defines Station Operating Income ("SOI") as net broadcast revenue minus broadcast operating expenses. The company defines Digital Media Operating Income as net Digital Media Revenue minus Digital Media Operating Expenses. The company defines Publishing Operating Income (Loss) as net Publishing Revenue minus Publishing Operating Expenses. The company defines EBITDA as net income before interest, taxes, depreciation, and amortization. The company defines Adjusted EBITDA as EBITDA before gains or losses on the sale or disposal of assets, before changes in the estimated fair value of contingent earn-out consideration, before changes in the fair value of interest rate swap, before impairments, before net miscellaneous income and expenses, before gain on bargain purchase, before (gain) loss on early retirement of long-term debt and before non-cash compensation expense. SOI, Digital Media Operating Income, Publishing Operating Income (Loss), EBITDA and Adjusted EBITDA are commonly used by the broadcast and media industry as important measures of performance and are used by investors and analysts who report on the industry to provide meaningful comparisons between broadcasters. SOI, Digital Media Operating Income, Publishing Operating Income (Loss), EBITDA and Adjusted EBITDA are not measures of liquidity or of performance in accordance with GAAP and should be viewed as a supplement to and not a substitute for or superior to its results of operations and financial condition presented in accordance with GAAP. The company’s definitions of SOI, Digital Media Operating Income, Publishing Operating Income (Loss), EBITDA and Adjusted EBITDA are not necessarily comparable to similarly titled measures reported by other companies.

The company defines Adjusted Free Cash Flow as Adjusted EBITDA less cash paid for capital expenditures, less cash paid for income taxes, and less cash paid for interest. The company considers Adjusted Free Cash Flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by its operations after cash paid for capital expenditures, cash paid for income taxes and cash paid for interest. A limitation of Adjusted Free Cash Flow as a measure of liquidity is that it does not represent the total increase or decrease in its cash balance for the period. The company uses Adjusted Free Cash Flow, a non-GAAP liquidity measure, both in presenting its results to stockholders and the investment community, and in its internal evaluation and management of the business. The company’s presentation of Adjusted Free Cash Flow is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. The company’s definition of Adjusted Free Cash Flow is not necessarily comparable to similarly titled measures reported by other companies.

The company defines Same Station net broadcast revenue as broadcast revenue from its radio stations and networks that the company owns or operates in the same format on the first and last day of each quarter, as well as the corresponding quarter of the prior year. The company defines Same Station broadcast operating expenses as broadcast operating expenses from its radio stations and networks that the company owns or operates in the same format on the first and last day of each quarter, as well as the corresponding quarter of the prior year. The company defines Same Station SOI as Same Station net broadcast revenue less Same Station broadcast operating expenses. Same Station operating results include those stations that the company owns or operates in the same format on the first and last day of each quarter, as well as the corresponding quarter of the prior year. Same Station operating results for a full calendar year are calculated as the sum of the Same Station-results for each of the four quarters of that year. The company uses Same Station operating results, a non-GAAP financial measure, both in presenting its results to stockholders and the investment community, and in its internal evaluations and management of the business. The company believes that Same Station operating results provide a meaningful comparison of period over period performance of its core broadcast operations as this measure excludes the impact of new stations, the impact of stations the company no longer owns or operates, and the impact of stations operating under a new programming format. The company’s presentation of Same Station operating results are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. The company’s definition of Same Station operating results is not necessarily comparable to similarly titled measures reported by other companies.

For all non-GAAP financial measures, investors should consider the limitations associated with these metrics, including the potential lack of comparability of these measures from one company to another.

The Supplemental Information tables that follow the condensed consolidated financial statements provide reconciliations of the non-GAAP financial measures that the company uses in this earnings release to the most directly comparable measures calculated in accordance with GAAP. The company uses non-GAAP financial measures to evaluate financial performance, develop budgets, manage expenditures, and determine employee compensation. The company’s presentation of this additional information is not to be considered as a substitute for or superior to the directly comparable measures as reported in accordance with GAAP.

 
                                                                                                                                                                     Salem Media Group, Inc.
                                                                                                                                                         Condensed Consolidated Statements of Operations
                                                                                                                                                         (in thousands, except share and per share data)
                                                                         
                                                                                                                                                                 Three Months Ended                                                                                               Six Months Ended
                                                                                                                                                                      June 30,                                                                                                                           June 30,
                                                                                                                ---------------------------------------------------------------------------------------------------------------------                     ------------------------------------------------------------------------------------------------------
                                                                                                                                2016                                                       2017                                                        2016                                     2017
                                                                                                                ------------------------------------                                          ------------------------------------                        ------------------------------------                        ------------------------------------
                                                                                                                                                                                                                                   (Unaudited)
Net broadcast revenue                                                                                                              $         49,971                                                              $         49,251                                            $         98,716                                            $         97,055
Net digital media revenue                                                                                                                    11,047                                                                        10,866                                                      22,057                                                      21,552
Net publishing revenue                                                                                                     6,761                                                      5,995                                   11,581                                   12,485
                                                                                                                -------------------- --------------                                           -------------------- --------------                         -------------------- --------------                         -------------------- --------------
Total revenue                                                                                                             67,779                                  66,112                                  132,354                                  131,092
                                                                                                                -------------------- -------------- --------------------                      -------------------- --------------                         -------------------- --------------                         -------------------- --------------
Operating expenses:
  Broadcast operating expenses                                                                                                               35,871                                                                        35,931                                                      72,021                                                      71,767
  Digital media operating expenses                                                                                                            8,619                                                                         8,370                                                      17,643                                                      17,072
  Publishing operating expenses                                                                                                               6,983                                                                         5,668                                                      11,931                                                      12,019
  Unallocated corporate expenses                                                                                                              3,568                                                                         3,825                                                       7,781                                                       8,950
  Change in the estimated fair value of contingent earn-out                                                                                    (134 )                                                                         (43 )                                                      (262 )                                                       (42 )
  consideration
  Impairment of long-lived assets                                                                                                               700                                                                --                                                         700                                              --
  Impairment of indefinite-lived long-term assets other than goodwill                                                                --                                                                --                                              --                                                          19
  Depreciation and amortization                                                                                                               4,171                                                                         4,252                                                       8,306                                                       8,374
  Net gain on the sale or disposal of assets                                                                              (1,701 )                                                     (510 )                                 (1,551 )                                   (505 )
                                                                                                                -------------------- -------------- --------------------                      -------------------- -------------- --                      -------------------- -------------- --                      -------------------- -------------- -----
Total operating expenses                                                                                                  58,077                                                     57,493                                  116,569                                  117,654
                                                                                                                -------------------- --------------                                           -------------------- --------------                         -------------------- --------------                         -------------------- --------------
Operating income                                                                                                                              9,702                                                                         8,619                                                      15,785                                                      13,438
Other income (expense):
Interest income                                                                                                                                   2                                                                             1                                                           3                                                           2
Interest expense                                                                                                                             (3,730 )                                                                      (3,924 )                                                    (7,526 )                                                    (7,354 )
Change in the fair value of interest rate swap                                                                                                 (423 )                                                              --                                                      (2,181 )                                                       357
Loss on early retirement of long-term debt                                                                                    (5 )                                                   (2,734 )                                    (14 )                                 (2,775 )
                                                                                                                -------------------- -------------- --------------------                      -------------------- -------------- --                      -------------------- -------------- --                      -------------------- -------------- -----
Net income before income taxes                                                                                                                5,546                                                                         1,962                                                       6,067                                                       3,668
Provision for income taxes                                                                                                 2,190                                                        690                                    2,358                                    1,336
                                                                                                                -------------------- --------------                                           -------------------- --------------                         -------------------- --------------                         -------------------- --------------
Net income                                                                                                                         $          3,356                                                              $          1,272                                            $          3,709                                            $          2,332
                                                                                                                ==================== ==============                                           ==================== ==============                         ==================== ==============                         ==================== ==============
                                                                                                                                                                                                                                                                                                                                            
Basic earnings per share Class A and Class B common stock                                                                          $           0.13                                                              $           0.05                                            $           0.14                                            $           0.09
Diluted earnings per share Class A and Class B common stock                                                                        $           0.13                                                              $           0.05                                            $           0.14                                            $           0.09
                                                                                                                                                                                                                                                                                                                                            
Distributions per share Class A and Class B common stock                                                                           $           0.13                                                              $           0.07                                            $           0.13                                            $           0.13
                                                                                                                                                                                                                                                                                                                                            
Basic weighted average Class A and Class B common stock shares                                                        25,551,445                                                 26,062,403                               25,518,339                               25,982,102
outstanding
                                                                                                                ==================== ==============                                           ==================== ==============                         ==================== ==============                         ==================== ==============
Diluted weighted average Class A and Class B common stock shares                                                      26,052,649                                                 26,593,366                               25,927,804                               26,442,146
outstanding
                                                                                                                ==================== ==============                                           ==================== ==============                         ==================== ==============                         ==================== ==============
                                                                                                                                                                                                                                                                                                                                            
 
                                                                                                 Salem Media Group, Inc.
                                                                                          Condensed Consolidated Balance Sheets
                                                                                                     (in thousands)
                                                                                                                         
                                                                                                                                     --------------------                                           --------------------
                                                                                                                                       December 31, 2016                                                June 30, 2017
                                                                                                                                     --------------------                                           --------------------
                                                                                                                                                                                                         (Unaudited)
Assets
Cash                                                                                                                               $                  130                                         $                   19
Trade accounts receivable, net                                                                                                                     37,260                                                         33,552
Deferred income taxes - current                                                                                                        9,411                                                 --
Other current assets                                                                                                                                8,708                                                          9,940
Property and equipment, net                                                                                                                       102,790                                                        101,617
Intangible assets, net                                                                                                                            428,870                                                        426,823
Deferred financing costs                                                                                                                               82                                                            506
Deferred income taxes - non-current                                                                                           --                                                          1,877
Other assets                                                                                                                     3,017                                       3,475
                                                                                                                -------------------- --------------------                      -------------------- --------------------
Total assets                                                                                                                       $              590,268                                         $              577,809
                                                                                                                ==================== ====================                      ==================== ====================
                                                                                                                                                                                                     
Liabilities and Stockholders’ Equity
Current liabilities                                                                                                                $               39,140                                         $               44,568
Long-term debt and capital lease obligations less unamortized debt                                                                                261,084                                                        249,206
issuance costs, net of current portion
Fair value of interest rate swap                                                                                                                      514                                                 --
Deferred income taxes                                                                                                                              60,769                                                         54,507
Other liabilities                                                                                                                                  14,915                                                         14,858
Stockholders’ Equity                                                                                213,846                                     214,670
                                                                                                                -------------------- --------------------                      -------------------- --------------------
Total liabilities and stockholders’ equity                                                              $              590,268                                         $              577,809
                                                                                                                ==================== ====================                      ==================== ====================
 
 
                                                                                                                 SALEM MEDIA GROUP, INC.
                                                                                                     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                                                 (Dollars in thousands)
                                                                                                                       (Unaudited)
                                                                                                                   
                                                                                                                                   Six Months Ended June 30,
                                                                                                                  ---------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                  2016                                    2017                 
                                                                                                                  --------------------------------------------------------                      --------------------------------------------------------
OPERATING ACTIVITIES
Net income                                                                                                                           $          3,709                                                              $          2,332
Adjustments to reconcile net income to net cash provided by
operating activities:
    Non-cash stock-based compensation                                                                                                             324                                                                         1,425
    Tax benefit related to stock options exercised                                                                                                 67                                                                --
    Depreciation and amortization                                                                                                               8,306                                                                         8,374
    Amortization of deferred financing costs                                                                                                      318                                                                           357
    Accretion of financing items                                                                                                                  103                                                                            74
    Accretion of acquisition-related deferred payments and contingent                                                                              38                                                                            24
    consideration
    Provision for bad debts                                                                                                                       268                                                                           796
    Deferred income taxes                                                                                                                       2,176                                                                         1,272
    Change in the fair value of interest rate swap                                                                                              2,181                                                                          (357 )
    Change in the estimated fair value of contingent earn-out                                                                                    (262 )                                                                         (42 )
    consideration
    Impairment of long-lived assets                                                                                                               700                                                                --
    Impairment of indefinite-lived long-term assets other than goodwill                                                                --                                                                            19
    Loss on early retirement of long-term debt                                                                                                     14                                                                         2,775
    Net gain on the sale or disposal of assets                                                                                                 (1,551 )                                                                        (505 )
Changes in operating assets and liabilities:
      Accounts receivable                                                                                                                       7,421                                                                         2,669
      Inventories                                                                                                                                 (10 )                                                                        (197 )
      Prepaid expenses and other current assets                                                                                                   (30 )                                                                        (804 )
      Accounts payable and accrued expenses                                                                                                     1,234                                                                        (1,143 )
      Deferred rent                                                                                                                            (6,429 )                                                                          49
      Deferred revenue                                                                                                                          1,086                                                                          (360 )
      Other liabilities                                                                                                                --                                                                           (15 )
      Income taxes payable                                                                                                      55                                    (164 )
                                                                                                                  -------------------- -------------- --------------------                      -------------------- -------------- --------------------
  Net cash provided by operating activities                                                                                 19,718                                  16,579  
                                                                                                                  -------------------- -------------- --------------------                      -------------------- -------------- --------------------
INVESTING ACTIVITIES
  Cash paid for capital expenditures net of tenant improvement                                                                                 (5,055 )                                                                      (4,768 )
  allowances
                                                                                                                                                 (448 )                                                                         (52 )
  Capital expenditures reimbursable under tenant improvement
  allowances and trade agreements
   
  Escrow deposits related to acquisitions                                                                                                         (19 )                                                                         (42 )
  Purchases of broadcast assets and radio stations                                                                                               (718 )                                                                        (130 )
  Purchases of digital media businesses and assets                                                                                             (2,803 )                                                                        (310 )
  Purchases of publishing businesses assets                                                                                                        (3 )                                                              --
  Proceeds from sale of broadcast assets                                                                                                        2,471                                                                           600
  Other                                                                                                                       (547 )                                                     (289 )
                                                                                                                  -------------------- -------------- --------------------                      -------------------- -------------- --------------------
    Net cash used in investing activities                                                                                   (7,122 )                                                   (4,991 )
                                                                                                                  -------------------- -------------- --------------------                      -------------------- -------------- --------------------
FINANCING ACTIVITIES
  Payments under Term Loan B                                                                                                                   (2,750 )                                                                    (263,000 )
  Proceeds from borrowings under Revolver and ABL Facility                                                                                     32,898                                                                        34,107
  Payments on Revolver and ABL Facility                                                                                                       (34,433 )                                                                     (24,583 )
  Payments on interest rate swap                                                                                                       --                                                                          (783 )
  Proceeds from bond offering                                                                                                          --                                                                       255,000
  Payment of debt issuance costs                                                                                                       --                                                                        (6,368 )
  Payments of acquisition-related contingent earn-out consideration                                                                               (88 )                                                                         (14 )
  Payments of deferred installments due from acquisition activity                                                                              (3,071 )                                                                        (225 )
  Proceeds from the exercise of stock options                                                                                                     336                                                                           455
  Payments of capital lease obligations                                                                                                           (53 )                                                                         (62 )
  Payment of cash distributions on common stock                                                                                                (3,321 )                                                                      (3,388 )
  Book overdraft                                                                                                            (2,168 )                                                   (2,838 )
                                                                                                                  -------------------- -------------- --------------------                      -------------------- -------------- --------------------
    Net cash used in financing activities                                                                                  (12,650 )                                                  (11,699 )
                                                                                                                  -------------------- -------------- --------------------                      -------------------- -------------- --------------------
  Net decrease in cash and cash equivalents                                                                                                       (54 )                                                                        (111 )
    Cash and cash equivalents at beginning of year                                                                              98                                     130  
                                                                                                                  -------------------- -------------- --------------------                      -------------------- -------------- --------------------
    Cash and cash equivalents at end of period                                                                                       $             44                                           $             19  
                                                                                                                  ==================== ============== ====================                      ==================== ============== ====================
                                                                                                                                                                                                                      
 
                                                                                                                                                                                                      Salem Media Group, Inc.
                                                                                                                                                                                                     Supplemental Information
                                                                                                                                                                                                          (in thousands)
 
                                                                                                                                Three Months Ended                                                                                                                        Six Months Ended
                                                                                                                                                                                              June 30,                                                                                                                                                    June 30,
                                                                                                                               ---------------------------------------------------------------------------------------------------------------------------------------                     ---------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                               2016                                    2017                                                       2016                                    2017                 
                                                                                                                               --------------------------------------------------------                      --------------------------------------------------------                      --------------------------------------------------------                      --------------------------------------------------------
                                                                                                                                                                                                                                                                           (Unaudited)
Reconciliation of Total Operating Expenses to Operating
Expenses excluding Gains or Losses on the Sale or Disposal of
Assets, Stock-based Compensation Expense, Changes in the Estimated
Fair Value of Contingent Earn-out Consideration, Impairment Losses
and Depreciation and Amortization Expense (Recurring Operating
Expenses)
Operating Expenses                                                                                                                                $         58,077                                                              $         57,493                                                              $        116,569                                                              $        117,654
  Less depreciation and amortization expense                                                                                                                (4,171 )                                                                      (4,252 )                                                                      (8,306 )                                                                      (8,374 )
  Less change in the estimated fair value of                                                                                                                   134                                                                            43                                                                           262                                                                            42
  contingent earn-out consideration
  Less impairment of long-lived assets                                                                                                                        (700 )                                                              --                                                                          (700 )                                                              --
  Less impairment of indefinite-lived long-term                                                                                                     --                                                                --                                                                --                                                                           (19 )
  assets other than goodwill
  Less net gain on the sale or disposal of assets                                                                                                            1,701                                                                           510                                                                         1,551                                                                           505
  Less non-cash stock-based compensation                                                                                                   (125 )                                                      (44 )                                                     (324 )                                                   (1,425 )
  expense
                                                                                                                               -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
Total Recurring Operating Expenses                                                                                                                $         54,916                                           $         53,750                                           $        109,052                                           $        108,383  
                                                                                                                               ==================== ============== ====================                      ==================== ============== ====================                      ==================== ============== ====================                      ==================== ============== ====================
                                                                                                                                                                                                                                                                                                                                                                                               
Reconciliation of Net Broadcast Revenue to Same Station Net
Broadcast Revenue
    Net broadcast revenue                                                                                                                         $         49,971                                                              $         49,251                                                              $         98,716                                                              $         97,055
    Net broadcast revenue - acquisitions                                                                                               --                                                                          (180 )                                                              --                                                                          (340 )
    Net broadcast revenue - dispositions                                                                                                         (403 )                                                                         (44 )                                                                        (805 )                                                                         (86 )
    Net broadcast revenue - format change                                                                                      (26 )                                                      (59 )                                                      (58 )                                                     (102 )
                                                                                                                               -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
Same Station net broadcast revenue                                                                                                                $         49,542                                           $         48,968                                           $         97,853                                           $         96,527  
                                                                                                                               -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                               
Reconciliation of Broadcast Operating Expenses to Same Station
Broadcast Operating Expenses
Broadcast operating expenses                                                                                                                      $         35,871                                                              $         35,931                                                              $         72,021                                                              $         71,767
    Broadcast operating expenses - acquisitions                                                                                        --                                                                          (258 )                                                              --                                                                          (533 )
    Broadcast operating expenses - dispositions                                                                                                  (402 )                                                                         (24 )                                                                        (802 )                                                                        (102 )
    Broadcast operating expenses - format                                                                                      (43 )                                                      (53 )                                                      (88 )                                                     (106 )
    change
                                                                                                                               -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
Same Station broadcast operating expenses                                                                                                         $         35,426                                           $         35,596                                           $         71,131                                           $         71,026  
                                                                                                                               -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                               
Reconciliation of SOI to Same Station SOI
Station Operating Income                                                                                                                          $         14,100                                                              $         13,320                                                              $         26,695                                                              $         25,288
    Station operating (income) loss - acquisitions                                                                                     --                                                                            78                                                                --                                                                           193
    Station operating (income) loss -                                                                                                              (1 )                                                                         (20 )                                                                          (3 )                                                                          16
    dispositions
    Station operating (income) loss - format                                                                                    17                                      (6 )                                                       30                                       4  
    change
                                                                                                                               -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
Same Station - Station Operating Income                                                                                              $         14,116                                           $         13,372                                           $         26,722                                           $         25,501  
                                                                                                                               ==================== ============== ====================                      ==================== ============== ====================                      ==================== ============== ====================                      ==================== ============== ====================
 
 
                                                                                                                                                                  Salem Media Group, Inc.
                                                                                                                                                                 Supplemental Information
                                                                                                                                                                      (in thousands)
 
                                                                                             Three Months Ended                                                                                                            Six Months Ended
                                                                                                                                        June 30,                                                                                                                                        June 30,
                                                                                -------------------------------------------------------------------------------------------------------------------------                     ----------------------------------------------------------------------------------------------------------------------------
                                                                                            2016                             2017                                                2016                               2017               
                                                                                -------------------------------------------------                      -------------------------------------------------                      -------------------------------------------------                      ----------------------------------------------------
                                                                                                                                                                                                                (Unaudited)
Calculation of Station Operating Income, Digital Media Operating
Income and Publishing Operating Income (Loss)
Net broadcast revenue                                                                              $  49,971                                                              $  49,251                                                              $  98,716                                                              $     97,055
Less broadcast operating expenses                                                 (35,871 )                                           (35,931 )                                           (72,021 )                                              (71,767 )
                                                                                -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ---------- --------------------
Station Operating Income                                                                           $  14,100                                           $  13,320                                           $  26,695                                           $     25,288  
                                                                                -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                                           
Net digital media revenue                                                                          $  11,047                                                              $  10,866                                                              $  22,057                                                              $     21,552
Less digital media operating expenses                                              (8,619 )                                            (8,370 )                                           (17,643 )                                              (17,072 )
                                                                                -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ---------- --------------------
Digital Media Operating Income                                                                     $   2,428                                           $   2,496                                           $   4,414                                           $      4,480  
                                                                                -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                                           
Net publishing revenue                                                                             $   6,761                                                              $   5,995                                                              $  11,581                                                              $     12,485
Less publishing operating expenses                                                 (6,983 )                                            (5,668 )                                           (11,931 )                                              (12,019 )
                                                                                -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ---------- --------------------
Publishing Operating Income (Loss)                                                                 $    (222 )                                                            $     327                                           $    (350 )                                                            $        466  
                                                                                -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ---------- --------------------
 

The company defines EBITDA (1) as net income before interest, taxes, depreciation, and amortization. The table below presents a reconciliation of EBITDA (1) to Net Income, the most directly comparable GAAP measure. EBITDA (1) is a non-GAAP financial performance measure that is not to be considered a substitute for or superior to the directly comparable measures reported in accordance with GAAP.

 
                                                                                                                                                              Salem Media Group, Inc.
                                                                                                                                                             Supplemental Information
                                                                                                                                                                  (in thousands)
 
                                                                                           Three Months Ended                                                                                                        Six Months Ended
                                                                                                                                      June 30,                                                                                                                                    June 30,
                                                                               -----------------------------------------------------------------------------------------------------------------------                     -----------------------------------------------------------------------------------------------------------------------
                                                                                           2016                            2017                                               2016                            2017             
                                                                               ------------------------------------------------                      ------------------------------------------------                      ------------------------------------------------                      ------------------------------------------------
                                                                                                                                                                                                                      (Unaudited)
Net income                                                                                        $  3,356                                                              $  1,272                                                              $  3,709                                                              $  2,332
  Plus interest expense, net of                                                                      3,730                                                                 3,924                                                                 7,526                                                                 7,354
  capitalized interest
  Plus provision for income taxes                                                                    2,190                                                                   690                                                                 2,358                                                                 1,336
  Plus depreciation and amortization                                                                 4,171                                                                 4,252                                                                 8,306                                                                 8,374
  Less interest income                                                               (2 )                                               (1 )                                               (3 )                                               (2 )
                                                                               -------------------- ------ --------------------                      -------------------- ------ --------------------                      -------------------- ------ --------------------                      -------------------- ------ --------------------
EBITDA                                                                                            $ 13,445                                           $ 10,137                                           $ 21,896                                           $ 19,394  
                                                                               -------------------- ------ --------------------                      -------------------- ------ --------------------                      -------------------- ------ --------------------                      -------------------- ------ --------------------
 

The company defines Adjusted EBITDA (1) as EBITDA (1) before gains or losses on the sale or disposal of assets, before changes in the estimated fair value of contingent earn-out consideration, before changes in the fair value of interest rate swap, before impairments, before net miscellaneous income and expenses, before (gain) loss on early retirement of long-term debt and before non-cash compensation expense. The table below presents a reconciliation of Adjusted EBITDA (1) to Net Income, the most directly comparable GAAP measure. Adjusted EBITDA (1) is a non-GAAP financial performance measure that is not to be considered a substitute for or superior to the directly comparable measures reported in accordance with GAAP.

 
                                                                                                                                                                                  Salem Media Group, Inc.
                                                                                                                                                                                 Supplemental Information
                                                                                                                                                                                      (in thousands)
 
                                                                                                           Three Months Ended                                                                                                                        Six Months Ended
                                                                                                                                                      June 30,                                                                                                                                                    June 30,
                                                                                       ---------------------------------------------------------------------------------------------------------------------------------------                     ---------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       2016                                    2017                                                       2016                                    2017                 
                                                                                       --------------------------------------------------------                      --------------------------------------------------------                      --------------------------------------------------------                      --------------------------------------------------------
                                                                                                                                                                                                                                              (Unaudited)
Net income                                                                                                $          3,356                                                              $          1,272                                                              $          3,709                                                              $          2,332
  Plus interest expense, net of                                                                                      3,730                                                                         3,924                                                                         7,526                                                                         7,354
  capitalized interest
  Plus provision for income taxes                                                                                    2,190                                                                           690                                                                         2,358                                                                         1,336
  Plus depreciation and amortization                                                                                 4,171                                                                         4,252                                                                         8,306                                                                         8,374
  Less interest income                                                                               (2 )                                                       (1 )                                                       (3 )                                                       (2 )
                                                                                       -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
EBITDA                                                                                                    $         13,445                                           $         10,137                                           $         21,896                                           $         19,394  
                                                                                       -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
  Less net gain on the sale or                                                                                      (1,701 )                                                                        (510 )                                                                      (1,551 )                                                                        (505 )
  disposal of assets
  Less change in the estimated fair                                                                                   (134 )                                                                         (43 )                                                                        (262 )                                                                         (42 )
  value of contingent earn-out
  consideration
  Plus impairment of long-lived assets                                                                                 700                                                                --                                                                           700                                                                --
  Plus impairment of indefinite-lived                                                                       --                                                                --                                                                --                                                                            19
  long-term assets other than goodwill
  Plus changes in the fair value of interest                                                                           423                                                                --                                                                         2,181                                                                          (357 )
  rate swap
  Plus loss on early retirement of long-                                                                                 5                                                                         2,734                                                                            14                                                                         2,775
  term debt
  Plus non-cash stock-based                                                                         125                                      44                                     324                                   1,425  
  compensation
                                                                                       -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
Adjusted EBITDA                                                                                           $         12,863                                           $         12,362                                           $         23,302                                           $         22,709  
                                                                                       ==================== ============== ====================                      ==================== ============== ====================                      ==================== ============== ====================                      ==================== ============== ====================
 

The company defines Adjusted Free Cash Flow (1) as Adjusted EBITDA (1) less cash paid for capital expenditures, less cash paid for income taxes, and less cash paid for interest. The company considers Adjusted Free Cash Flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by its operations after cash paid for capital expenditures, cash paid for income taxes and cash paid for interest. A limitation of Adjusted Free Cash Flow as a measure of liquidity is that it does not represent the total increase or decrease in its cash balance for the period. The company uses Adjusted Free Cash Flow, a non-GAAP liquidity measure, both in presenting its results to stockholders and the investment community, and in its internal evaluation and management of the business. The company’s presentation of Adjusted Free Cash Flow is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. The company’s definition of Adjusted Free Cash Flow is not necessarily comparable to similarly titled measures reported by other companies.

The table below presents a reconciliation of Adjusted Free Cash Flow to net cash provided by operating activities, the most directly comparable GAAP measure. Adjusted Free Cash Flow is a non-GAAP liquidity measure that is not to be considered a substitute for or superior to the directly comparable measures reported in accordance with GAAP.

 
                                                                                                                                                                                       Salem Media Group, Inc.
                                                                                                                                                                                      Supplemental Information
                                                                                                                                                                                           (in thousands)
 
                                                                                                                     Three Months Ended                                                                                                                        Six Months Ended
                                                                                                                                                                June 30,                                                                                                                                                    June 30,
                                                                                                 ---------------------------------------------------------------------------------------------------------------------------------------                     ---------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                 2016                                    2017                                                       2016                                    2017                 
                                                                                                 --------------------------------------------------------                      --------------------------------------------------------                      --------------------------------------------------------                      --------------------------------------------------------
                                                                                                                                                                                                                                                        (Unaudited)
Net cash provided by operating activities                                                                           $          8,640                                                              $          7,542                                                              $         19,718                                                              $         16,579
  Non-cash stock-based compensation                                                                                             (125 )                                                                         (44 )                                                                        (324 )                                                                      (1,425 )
  Tax benefit related to stock options exercised                                                                                 (77 )                                                              --                                                                           (67 )                                                              --
  Depreciation and amortization                                                                                               (4,171 )                                                                      (4,252 )                                                                      (8,306 )                                                                      (8,374 )
  Amortization of deferred financing costs                                                                                      (158 )                                                                        (208 )                                                                        (318 )                                                                        (357 )
  Accretion of financing items                                                                                                   (51 )                                                                         (26 )                                                                        (103 )                                                                         (74 )
  Accretion of acquisition-related deferred payments                                                                              (9 )                                                                         (12 )                                                                         (38 )                                                                         (24 )
  and contingent earn-out consideration
  Provision for bad debts                                                                                                       (133 )                                                                        (408 )                                                                        (268 )                                                                        (796 )
  Deferred income taxes                                                                                                       (2,055 )                                                                        (648 )                                                                      (2,176 )                                                                      (1,272 )
  Change in the fair value of interest rate swap                                                                                (423 )                                                              --                                                                        (2,181 )                                                                         357
  Change in the estimated fair value of contingent                                                                               134                                                                            43                                                                           262                                                                            42
  earn-out consideration
  Impairment of long-lived assets                                                                                               (700 )                                                              --                                                                          (700 )                                                              --
  Impairment of indefinite-lived long-term assets                                                                     --                                                                --                                                                --                                                                           (19 )
  other than goodwill
  Net gain on the sale or disposal of assets                                                                                   1,701                                                                           510                                                                         1,551                                                                           505
  Loss on early retirement of long-term debt                                                                                      (5 )                                                                      (2,734 )                                                                         (14 )                                                                      (2,775 )
  Changes in operating assets and liabilities:
  Accounts receivable                                                                                                             63                                                                           135                                                                        (7,421 )                                                                      (2,669 )
  Inventories                                                                                                                     32                                                                            26                                                                            10                                                                           197
  Prepaid expenses and other current assets                                                                                      175                                                                           947                                                                            30                                                                           804
  Accounts payable and accrued expenses                                                                                       (3,030 )                                                                         (28 )                                                                      (1,234 )                                                                       1,143
  Deferred revenue                                                                                                             4,628                                                                           241                                                                         6,429                                                                           360
  Deferred rent                                                                                                               (1,214 )                                                                         (23 )                                                                      (1,086 )                                                                         (49 )
  Other liabilities                                                                                                   --                                                                            13                                                                --                                                                            15
  Income taxes payable                                                                                        134                                     198                                     (55 )                                                      164  
                                                                                                 -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
Net income                                                                                                          $          3,356                                           $          1,272                                           $          3,709                                           $          2,332  
                                                                                                 -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
  Plus interest expense, net of capitalized interest                                                                           3,730                                                                         3,924                                                                         7,526                                                                         7,354
  Plus provision for income taxes                                                                                              2,190                                                                           690                                                                         2,358                                                                         1,336
  Plus depreciation and amortization                                                                                           4,171                                                                         4,252                                                                         8,306                                                                         8,374
  Less interest income                                                                                         (2 )                                                       (1 )                                                       (3 )                                                       (2 )
                                                                                                 -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
EBITDA                                                                                                              $         13,445                                           $         10,137                                           $         21,896                                           $         19,394  
                                                                                                 -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
  Less net gain on the sale or disposal of assets                                                                             (1,701 )                                                                        (510 )                                                                      (1,551 )                                                                        (505 )
  Less change in the estimated fair value of                                                                                    (134 )                                                                         (43 )                                                                        (262 )                                                                         (42 )
  contingent earn-out consideration
  Plus impairment of long-lived assets                                                                                           700                                                                --                                                                           700                                                                --
  Plus impairment of indefinite-lived long-term                                                                       --                                                                --                                                                --                                                                            19
  assets other than goodwill
  Plus changes in the fair value of interest rate swap                                                                           423                                                                --                                                                         2,181                                                                          (357 )
  Plus loss on the early retirement of long-term debt                                                                              5                                                                         2,734                                                                            14                                                                         2,775
  Plus non-cash stock-based compensation                                                                      125                                      44                                     324                                   1,425  
                                                                                                 -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
Adjusted EBITDA                                                                                                     $         12,863                                           $         12,362                                           $         23,302                                           $         22,709  
                                                                                                 -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
  Less net cash paid for capital expenditures (1)                                                                             (2,628 )                                                                      (1,605 )                                                                      (5,055 )                                                                      (4,768 )
  Less cash paid for taxes                                                                                                      (191 )                                                                        (241 )                                                                         (60 )                                                                        (211 )
  Less cash paid for interest, net of capitalized                                                          (3,552 )                                                   (2,182 )                                                   (7,099 )                                                   (4,849 )
  interest
                                                                                                 -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
Adjusted Free Cash Flow                                                                                             $          6,492                                           $          8,334                                           $         11,088                                           $         12,881  
                                                                                                 -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                 
 
(1)       Net cash paid for capital expenditures reflects actual cash payments
                                                net of cash reimbursable under tenant improvement allowances and net
                                                of property and equipment acquired in trade transactions and capital
                                                leases.
 
                                                                   
            Selected Debt Data                                    Outstanding at                                                                  Applicable
                                                                                                                                                 Interest Rate
                                              June 30, 2017
----------------------------------------- --------------------                                                                                  ------------
Senior Secured Notes due 2024 (1)                               $    255,000,000                                                                  6.75 %
Asset-based revolving credit facility (2)                       $     10,000,000                                                                  2.97 %
 
(1)     $255.0 million notes with semi-annual interest payments at an annual
                                              rate of 6.75 %
(2)                                           Outstanding borrowings under the ABL Facility, with interest
                                              payments due at LIBOR plus 1.5% to 2.0% per annum.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170807005850r1&sid=cmtx6&distro=nx&

View source version on businesswire.com: http://www.businesswire.com/news/home/20170807005850/en/

SOURCE: Salem Media Group, Inc."> <Property FormalName="PrimaryTwitterHandle" Value="@SalemMediaGrp

Salem Media Group, Inc. 
Evan D. Masyr, 805-384-4512 
Executive Vice President & Chief Financial Officer 
Evan@SalemMedia.com


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