Form 10-Q for the quarterly period ended March 31, 2005

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, E2KjDmncMq6ldrkskNbzizAVhkAoqLMXADgFifRceoSs0sTDODIrxi87HjL8nz7h 4UhhlTQhhO1HcvFnZ+w62Q== 0001193125-05-098731.txt : 20050506 0001193125-05-098731.hdr.sgml : 20050506 20050506112946 ACCESSION NUMBER: 0001193125-05-098731 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20050331 FILED AS OF DATE: 20050506 DATE AS OF CHANGE: 20050506 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COX RADIO INC CENTRAL INDEX KEY: 0001018522 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 581620022 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-12187 FILM NUMBER: 05806067 BUSINESS ADDRESS: STREET 1: C/O COX ENTERPRISES INC STREET 2: 6205 PEACHTREE DUNWOODY ROAD CITY: ATLANTA STATE: GA ZIP: 30328 BUSINESS PHONE: 678-645-0000 MAIL ADDRESS: STREET 1: C/O COX ENTERPRISES INC STREET 2: 6205 PEACHTREE DUNWOODY ROAD CITY: ATLANTA STATE: GA ZIP: 30328 10-Q 1 d10q.htm FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005 Form 10-Q for the quarterly period ended March 31, 2005

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2005

¨	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number 1-12187

LOGO

(Exact name of registrant as specified in its charter)

Delaware

58-1620022

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

6205 Peachtree Dunwoody Road

Atlanta, Georgia 30328

(Address of principal executive offices and zip code)

(678) 645-0000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes x No ¨

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class A common stock, par value of $0.33 – 42,057,427 shares outstanding as of March 31, 2005.

Class B common stock, par value of $0.33 – 58,733,016 shares outstanding as of March 31, 2005.

COX RADIO, INC.

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2005

TABLE OF CONTENTS


		Page
	Part I – Financial Information

Item 1.	Consolidated Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	20

Item 4.	Controls and Procedures	20

	Part II - Other Information

Item 1.	Legal Proceedings	21

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21

Item 3.	Defaults Upon Senior Securities	21

Item 4.	Submission of Matters to a Vote of Security Holders	21

Item 5.	Other Information	22

Item 6.	Exhibits	24

Signatures		26

Preliminary Note

This Quarterly Report on Form 10-Q is for the three-month period ended March 31, 2005. This Quarterly Report modifies and supersedes documents filed prior to this Quarterly Report. The SEC allows us to “incorporate by reference” information that we file with them, which means that we can disclose important information to you by referring you directly to those documents. Information incorporated by reference is considered to be part of this Quarterly Report. In addition, information that we file with the SEC in the future will automatically update and supersede information contained in this Quarterly Report. In this Quarterly Report, “Cox Radio,” “we,” “us” and “our” refer to Cox Radio, Inc. and its subsidiaries.

Part I – FINANCIAL INFORMATION

ITEM 1. Consolidated Financial Statements

COX RADIO, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	March 31, 2005			December 31, 2004
	(Amounts in thousands, except share data)
ASSETS
Current assets:
Cash	$	2,830		$	3,230
Accounts and notes receivable, less allowance for doubtful accounts of $3,851 and $3,843, respectively		76,612			84,066
Prepaid expenses and other current assets		8,930			7,698
Amounts due from Cox Enterprises.		—			6,573

Total current assets		88,372			101,567
Property and equipment, net		73,983			74,322
FCC licenses and other intangible assets, net		1,653,750			1,650,108
Goodwill		441,540			441,453
Other assets		17,023			14,425

Total assets	$	2,274,668		$	2,281,875

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	21,518		$	26,849
Accrued salaries and wages		2,795			2,509
Accrued interest		4,992			7,568
Income taxes payable		3,313			4,142
Amounts due to Cox Enterprises.		2,448			—
Current portion of long-term debt		5,000			20,000
Other current liabilities		5,136			3,709

Total current liabilities		45,202			64,777
Long-term debt, less current portion		449,911			454,877
Deferred income taxes		503,284			500,304
Other long term liabilities		4,195			4,244

Total liabilities		1,002,592			1,024,202

Commitments and contingencies (Note 4)

Shareholders’ equity:
Preferred stock, $0.33 par value: 15,000,000 shares authorized, none outstanding		—			—
Class A common stock, $0.33 par value; 210,000,000 shares authorized; 42,185,698 and 42,105,928 shares issued and 42,057,427 and 41,977,657 shares outstanding at March 31, 2005 and December 31, 2004, respectively		13,922			13,895
Class B common stock, $0.33 par value; 135,000,000 shares authorized; 58,733,016 shares issued and outstanding March 31, 2005 and December 31, 2004		19,382			19,382
Additional paid-in capital		636,699			635,385
Unearned stock-based compensation		(3,361	)		(2,303	)
Accumulated other comprehensive loss, net of tax		(180	)		(535	)
Retained earnings		607,460			593,695

		1,273,922			1,259,519

Less: Class A common stock held in treasury (128,271 shares at cost at March 31, 2005 and December 31, 2004)		(1,846	)		(1,846	)

Total shareholders’ equity		1,272,076			1,257,673

Total liabilities and shareholders’ equity	$	2,274,668		$	2,281,875

See notes to unaudited consolidated financial statements.

COX RADIO, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Amounts in thousands, except per share data)


	Three Months Ended March 31,
	2005			2004
Net revenues:
Local	$	71,279		$	66,845
National		21,033			19,802
Other		6,257			6,444

Total revenues		98,569			93,091
Expenses:
Cost of services (exclusive of depreciation and amortization shown separately below)		22,341			21,717
Selling, general and administrative		39,292			37,358
Corporate general and administrative		4,707			4,545
Depreciation and amortization		2,848			2,978
Other operating expenses, net		(140	)		—

Operating income		29,521			26,493
Interest income		2			1
Interest expense		(7,287	)		(7,892	)
Other items, net		(15	)		(99	)

Income before income taxes		22,221			18,503

Current income tax expense		4,541			4,259
Deferred income tax expense		3,915			3,148

Total income tax expense		8,456			7,407

Net income	$	13,765		$	11,096

Basic net income per share
Net income per common share	$	0.14		$	0.11

Diluted net income per share
Net income per common share	$	0.14		$	0.11

Weighted average basic common shares outstanding		100,589			100,530

Weighted average diluted common shares outstanding		100,718			100,908

See notes to unaudited consolidated financial statements.

COX RADIO, INC.

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

(Unaudited)


	Class A			Class B			Additional Paid-in Capital
	Common Stock			Common Stock
	Shares	Amount		Shares	Amount
	(Amounts in thousands)
Balance at December 31, 2004	42,106	$	13,895	58,733	$	19,382	$	635,385

Comprehensive income:
Net income	—		—	—		—		—
Unrealized gain on interest rate swaps	—		—	—		—		—
Reclassification to earnings of derivative transition adjustments	—		—	—		—		—
Comprehensive income	—		—	—		—		—
Unearned stock based compensation	—		—	—		—		—
Amortization of unearned stock-based compensation	—		—	—		—		—
Issuance of Class A common stock related to incentive plans including tax benefit of less than $0.1 million	80		27	—		—		1,314

Balance at March 31, 2005	42,186	$	13,922	58,733	$	19,382	$	636,699


	Unearned Compensation			Accumulated Other Comprehensive Loss			Retained Earnings		Treasury Stock				Total
	Unearned Compensation			Accumulated Other Comprehensive Loss			Retained Earnings		Shares	Amount			Total
	(Amounts in thousands)
Balance at December 31, 2004	$	(2,303	)	$	(535	)	$	593,695	128	$	(1,846	)	$	1,257,673

Comprehensive income:
Net income		—			—			13,765	—		—			13,765
Unrealized gain on interest rate swaps		—			341			—	—		—			341
Reclassification to earnings of derivative transition adjustments		—			14			—	—		—			14

Comprehensive income		—			—			—	—		—			14,120

Unearned stock based compensation		(1,205	)		—			—	—		—			(1,205	)
Amortization of unearned stock-based compensation		147			—			—	—		—			147
Issuance of Class A common stock related to incentive plans including tax benefit of less than $0.1 million		—			—			—	—		—			1,341

Balance at March 31, 2005	$	(3,361	)	$	(180	)	$	607,460	128	$	(1,846	)	$	1,272,076

See notes to unaudited consolidated financial statements.

COX RADIO, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
	2005			2004
	(Amounts in thousands)
Cash flows from operating activities:
Net income	$	13,765		$	11,096
Items not requiring cash:
Depreciation and amortization		2,848			2,978
Deferred income taxes		3,915			3,148
Tax benefit of stock options exercised		9			86
Compensation expense related to long-term incentive compensation plans		315			—
Other		(9	)		281
Changes in assets and liabilities:
Decrease in accounts receivable		7,454			11,414
Decrease in accounts payable and accrued expenses		(2,004	)		(5,960	)
Increase (decrease) in accrued salaries and wages		286			(982	)
Decrease in accrued interest		(2,576	)		(2,313	)
(Decrease) increase in income taxes payable		(829	)		51
Other, net		(432	)		(2,924	)

Net cash provided by operating activities		22,742			16,875

Cash flows from investing activities:
Capital expenditures		(2,280	)		(2,095	)
Acquisitions and related expenses, net of cash acquired		(4,000	)		—
Option to purchase radio stations		(2,000	)		—
Investment in signal upgrades		(836	)		(230	)
Proceeds from sales of assets		87			28
Other, net		103			157

Net cash used in investing activities		(8,926	)		(2,140	)

Cash flows from financing activities:
Net repayments of revolving credit facilities		(20,000	)		(28,000	)
Loss on loan guarantee		(2,933	)		—
Proceeds from issuances of stock related to stock-based compensation plans		127			3,919
(Decrease) increase in book overdrafts		(431	)		669
Increase in amounts due from/to Cox Enterprises, Inc.		9,021			8,259

Net cash used in financing activities		(14,216	)		(15,153	)

Net decrease in cash and cash equivalents		(400	)		(418	)
Cash and cash equivalents at beginning of period		3,230			4,202

Cash and cash equivalents at end of period	$	2,830		$	3,784

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	9,863		$	10,204
Income taxes		5,370			4,121

See notes to unaudited consolidated financial statements.

COX RADIO, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation and Other Information

Cox Radio is a leading national radio broadcasting company whose business, which constitutes one reportable segment for accounting purposes, is devoted to acquiring, developing and operating radio stations located throughout the United States. Cox Enterprises, Inc. indirectly owns approximately 62% of the common stock of Cox Radio and has approximately 94% of the voting power of Cox Radio.

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnote disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, the financial statements reflect all adjustments considered necessary for a fair statement of the results of operations and financial position for the interim periods presented. All such adjustments are of a normal, recurring nature. These unaudited consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2004 and notes thereto contained in Cox Radio’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (SEC).

The results of operations for the three-month period ended March 31, 2005 are not necessarily indicative of the results to be expected for the year ending December 31, 2005 or any other period.

2. Summary of Significant Accounting Policies

Revenue Recognition

Cox Radio recognizes revenues when the following conditions are met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; the price is fixed or determinable; and collectibility is reasonably assured. These criteria are generally met for advertising revenue at the time an advertisement is broadcast. Advertising revenue is recorded net of advertising agency commissions. Agency commissions, when applicable, are calculated based on a stated percentage applied to gross revenues. Cox Radio records an allowance for doubtful accounts based on historical information, analysis of credit memo data and any other relevant factors.

Internet revenue is recognized as ads are run over the Internet. Non-traditional event revenue is recognized when the event occurs.

Barter Arrangements

Barter transactions are recorded at the estimated fair value of the products or services received. Revenue from barter transactions is recognized when commercials are broadcast. Products or services are recorded when the products or services are received. If commercials are broadcast before the receipt of products or services, a barter receivable is recorded. If products or services are received before the broadcast of commercials, a barter payable is recorded.

Property and Equipment

Property and equipment is stated at cost less accumulated depreciation. Depreciation is computed principally using the straight-line method at rates based upon estimated useful lives of 5 to 40 years for buildings and building improvements, 5 to 25 years for broadcast equipment, 7 to 10 years for furniture and fixtures and 2 to 5 years for computers, software and other equipment.

Expenditures for maintenance and repairs are charged to operating expense as incurred. At the time of retirements, sales or other dispositions of property, the original cost and related accumulated depreciation are written off.

Intangible Assets

Intangible assets consist primarily of Federal Communications Commission (FCC) broadcast licenses, but also include goodwill and certain other intangible assets acquired in purchase business combinations. In accordance with Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible Assets,” Cox Radio does not amortize goodwill and FCC licenses, which are indefinite-lived intangible assets. Other intangible assets are amortized on a straight-line basis over the contractual lives of the assets.

Cox Radio evaluates its FCC licenses for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. FCC licenses are evaluated for impairment at the market level using the direct method. If the carrying amount of FCC licenses is greater than their estimated fair value in a given market, the carrying amount of FCC licenses in that market is reduced to its estimated fair value. Cox Radio also evaluates goodwill in each of its reporting units (markets) for impairment annually, or more frequently if certain circumstances are present, using the residual method. If the carrying amount of goodwill in a reporting unit is greater than the implied value of goodwill for that reporting unit determined from the estimated fair value of the reporting units, the carrying amount of goodwill in that reporting unit is reduced to its estimated fair value.

Cox Radio utilizes independent appraisals in testing FCC licenses and goodwill for impairment. These appraisals principally use the discounted cash flow methodology. This income approach consists of a quantitative model, which incorporates variables such as market advertising revenues, market revenue share projections, anticipated operating profit margins and various discount rates. The variables used in the analysis reflect historical station and advertising market growth trends, as well as anticipated performance and market conditions. Multiples of operating cash flow are also considered. Cox Radio evaluates amortizing intangible assets for recoverability when circumstances indicate an impairment may have occurred, using an undiscounted cash flow methodology. If the future undiscounted cash flows for the intangible asset are less than net book value, net book value is reduced to the estimated fair value.

Other Assets

Other assets consist primarily of investments in signal upgrades. Signal upgrades represent Cox Radio’s process of enhancing selected stations’ signal strength. Upon completion of each signal upgrade, Cox Radio reclassifies the costs incurred for the upgrade to FCC licenses. The amount reclassified is validated based upon an independent appraisal of the FCC license after the upgrade is completed.

Impairment of Long-Lived Assets

Cox Radio accounts for long-lived assets in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.”. Long-lived assets are required to be reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, with any impairment losses being reported in the period in which the recognition criteria are first applied based on the fair value of the asset. Cox Radio assesses the recoverability based on a review of estimated undiscounted cash flows. Long-lived assets to be disposed of are required to be reported at the lower of carrying amount or fair value less cost to sell.

Income Taxes

Cox Radio provides for income taxes using the liability method in accordance with SFAS No. 109, “Accounting for Income Taxes.” SFAS No. 109 requires an asset and liability based approach in accounting for income taxes. Deferred income taxes reflect the net tax effect on future years of temporary differences between the carrying amount of assets and liabilities for financial statement and income tax purposes. Cox Radio evaluates its effective tax rates regularly and adjusts rates when appropriate based on currently available information relative to statutory rates, apportionment factors and the applicable taxable income in the jurisdictions in which Cox Radio operates, among other factors.

Incentive Compensation Plans

Cox Radio accounts for stock compensation in accordance with the requirements of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25) and related interpretations. SFAS No. 123, “Accounting for Stock-Based Compensation” as amended by SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure,” requires disclosure of the pro forma effects on net income and earnings per share as if Cox Radio had adopted the fair value recognition provisions of SFAS No. 123, as amended. If compensation cost for the Long-Term Incentive Plan and the Employee Stock Purchase Plans (ESPP) been determined based on the fair value at the grant or enrollment dates in accordance with the fair value provisions of SFAS No. 123, as amended, Cox Radio’s net income and net income per share for the three-month periods ended March 31, 2005 and 2004 would have been changed to the pro forma amounts indicated below.


	Three Months Ended March 31,
	2005			2004
	(Amounts in thousands, except per share data)
Net income, as reported	$	13,765		$	11,096
Add: Amortization of unearned compensation related to stock-based compensation plans, net of tax		91			—
Deduct: stock-based employee compensation expense determined under fair value based method for all stock-based compensation awards, net of tax		(1,426	)		(1,974	)

Pro forma net income	$	12,430		$	9,122

Earnings per share:
Basic – as reported	$	0.14		$	0.11

Basic – pro forma	$	0.12		$	0.09

Diluted – as reported	$	0.14		$	0.11

Diluted – pro forma	$	0.12		$	0.09

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Concentration of Risk

A significant portion of Cox Radio’s business historically has been conducted in the Atlanta market. Net revenues earned from radio stations located in Atlanta represented 23% of total revenues for the three-month periods ended March 31, 2005 and 2004.

Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 123 (revised 2004), “Share-Based Payment” (SFAS No. 123R). SFAS No. 123R requires that the compensation cost resulting from all share-based payment transactions (e.g. stock options and restricted stock) be recognized in the financial statements. SFAS No. 123R requires all entities to apply a fair-value-based measurement method in accounting for share-based payment transactions with employees and non-employees except for equity instruments held by employee share ownership plans. SFAS No. 123R replaces SFAS No. 123 and supersedes APB 25. On April 14, 2005, the SEC announced the adoption of a new rule that amends the effective dates for SFAS No. 123R. Under SFAS No. 123R as originally issued, Cox Radio would have applied the provisions of SFAS No. 123R for the first interim reporting period beginning after June 15, 2005. The SEC’s new rule allows Cox Radio to implement SFAS No. 123R at the beginning of its next fiscal year. Accordingly, Cox Radio will implement the revised standard for the first interim reporting period beginning after December 31, 2005. Cox Radio currently accounts for employee share-based payment awards under the provisions of ABP 25. Cox Radio is currently evaluating the impact that the implementation of SFAS No. 123R will have on its consolidated financial position and results of operations.

In March 2005, the FASB issued FASB Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations (FIN 47). FIN 47 clarifies that the term “conditional asset retirement obligation” as used in FASB Statement No. 143, Accounting for Asset Retirement Obligations, refers to a legal obligation of an entity to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. Such an obligation to perform the asset retirement activity is unconditional even though uncertainty exists about the timing and/or method of settlement. Accordingly, an entity is required to recognize a liability for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated. FIN 47 is effective no later than the end of fiscal years ending after December 15, 2005. Cox Radio is currently assessing the impact of FIN 47 on its consolidated financial statements.

Reclassifications

Certain prior year amounts have been reclassified for comparative purposes.

3. Earnings Per Common Share and Capital Structure


	Three Months Ended March 31,
	2005		2004
	(Amounts in thousands, except per share data)
Earnings per share – basic
Net income	$	13,765	$	11,096

Weighted average common shares outstanding		100,589		100,530

Net income per common share – basic	$	0.14	$	0.11

Earnings per share – diluted
Net income	$	13,765	$	11,096

Weighted average common shares outstanding		100,589		100,530
Effect of dilutive securities:
Options		114		365
Employee Stock Purchase Plan		15		13

Shares applicable to earnings per share – diluted		100,718		100,908

Net income per common share - diluted	$	0.14	$	0.11

The options, restricted stock, ESPP purchase rights and performance awards excluded from the computation of net income per common share - diluted for the three-month periods ended March 31, 2005 and 2004 are summarized below on a weighted average shares outstanding basis. The exercise price of these options and the subscription price of these purchase rights were greater than the average market price of the Class A common stock during the three-month periods ended March 31, 2005 and 2004.


	Three Months Ended March 31,
	2005	2004
	(Amounts in thousands)
Weighted average options and restricted stock outstanding	6,154	2,109

In 2004, Cox Radio’s long-term incentive awards to selected officers and senior executives consisted of a mix of stock options and performance-based restricted stock awards. Awards of performance-based restricted stock are dependent on the achievement of pre-established performance criteria, and will fully vest five years after the date of grant. Cox Radio recognizes compensation expense related to the restricted stock awards over the five year vesting period. As long as the recipient is employed by Cox Radio or its affiliates, 60% of the shares obtained through restricted stock awards will remain restricted from resale or transfer.

In 2005, Cox Radio implemented a new long-term incentive award format that consists of a mix of stock options and performance awards. Performance awards are designed to increase in value based on Cox Radio’s operating performance, and are denominated as a number of units which are multiplied by the percentage increase in certain pre-established financial metrics over a five-year period. Performance awards will vest 60% after three years, 80% after four years and 100% after five years from the date of grant. Cox Radio recognizes compensation expense related to the performance awards over the appropriate vesting period. Performance awards will be paid out in cash or, for certain employees, in Cox Radio stock.

4. Long-Term Debt, Commitments and Contingencies

Cox Radio’s outstanding debt for the periods presented consists of the following:


	March 31, 2005		December 31, 2004
	(Amounts in thousands)
6.375% notes payable, due in May 2005 (1)	$	99,990	$	99,980
6.625% notes payable, due in February 2006 (2)		249,921		249,897
Revolving credit facility		105,000		125,000

Total long-term debt	$	454,911	$	474,877

(1)

At March 31, 2005 and December 31, 2004, the estimated aggregate fair value of the 6.375% notes was approximately $100.4 million and $101.3 million, respectively, based on quoted market prices. The 6.375% notes due on May 15, 2005 were excluded from current liabilities because Cox Radio intends to refinance this obligation on a long-term basis under its credit facility, which had unused capacity of $395 million as of March 31, 2005.

(2)

At March 31, 2005 and December 31, 2004, the estimated aggregate fair value of these notes was approximately $256.2 million and $258.4 million, respectively, based on quoted market prices. The 6.625% notes due February 15, 2006 were excluded from current liabilities because Cox Radio intends to refinance this obligation on a long-term basis under its credit facility, which had unused capacity of $395 million as of March 31, 2005.

On June 4, 2004, Cox Radio replaced its existing $350 million, five-year senior unsecured revolving credit facility and $150 million 364-day senior unsecured revolving credit facility with a $500 million, five-year senior unsecured revolving credit facility. The interest rate for the new five-year facility is, at Cox Radio’s option:

•

the greater of the prime rate or the federal funds borrowing rate plus 0.5%;

•

the London Interbank Offered Rate plus a spread based on the credit ratings of Cox Radio’s senior long-term debt;

•

the bid rate for the purchase of certificates of deposit of equal principal amount and maturity plus a spread based on the credit ratings of Cox Radio’s senior long-term debt; or

•

the federal funds borrowing rate plus a spread based on the credit ratings of Cox Radio’s senior long-term debt.

The credit facility includes commitment fees on the unused portion of the total amount available, which fees range from 0.10% to 0.25% depending on the credit rating of Cox Radio’s senior long-term debt. The credit facility contains, among other provisions, specified leverage and interest coverage requirements, the terms of which are defined within the credit facility. At March 31, 2005, Cox Radio was in compliance with these covenants. Cox Radio’s credit facility contains events of default based on (i) the failure to pay when due other debt, the outstanding amount of which exceeds $25 million, after the expiration of applicable grace periods and (ii) the acceleration of other debt, the outstanding amount of which exceeds $25 million. Cox Radio is not in default under its credit facility. As a result of its business operations, Cox Radio may generate excess cash which could from time to time be used to repay amounts outstanding under the revolving credit facility. At March 31, 2005, Cox Radio had $105 million of outstanding indebtedness under the credit facility with $395 million available. The interest rate applied to amounts due under the bank credit facility was 3.5% at March 31, 2005. At December 31, 2004, Cox Radio had approximately $125 million of outstanding indebtedness under the credit facility with $375 million available. The interest rate applied to amounts due under the credit facility was 2.9% at December 31, 2004. Since the interest rate is variable, the recorded balance of the credit facilities approximates fair value. See Note 5 for a discussion of Cox Radio’s interest rate swap agreement.

In August 2004, Cox Radio entered into an agreement with Salem Communications to acquire KRTR-AM (formerly KHNR-AM) and KKNE-AM (formerly KHCM-AM) serving the Honolulu, Hawaii market. As part of this transaction, Cox Radio exercised its option to acquire KGMZ-FM from Honolulu Broadcasting and exchanged the assets of KGMZ-FM for the two AM stations. This transaction closed in January 2005, and the loan guarantee of $6.6 million was terminated. Cox Radio recognized an aggregate loss on loan guarantee of $2.9 million related to this transaction.

In January 2005, Cox Radio paid $2 million for an option to purchase certain radio stations. This option is exercisable at any time and expires in December 2007. If Cox Radio has not exercised its option to acquire the stations before July 2007 and certain other conditions are met, Cox Radio may be required to pay additional fees of up to $10 million. If Cox Radio exercises the option, the $2 million option price and any additional fees paid to the seller will be applied to the purchase price for the stations. Under certain circumstances specified in the option agreement, Cox Radio may assign its option for value to a third party.

In February 2005, Cox Radio agreed to guarantee the borrowings of a third party of up to $5 million to enable that party to purchase two stations and assist Cox Radio in a signal upgrade project for one of its stations. This guarantee expires in February 2008. If the Cox Radio signal upgrade is approved by the FCC, then Cox Radio is likely to purchase the stations and performance under the guarantee will not be necessary. If the signal upgrade is not approved, Cox Radio’s guarantee will be extinguished either through sale of the stations or through new financing arranged by the owner of the stations. Cox Radio believes that while the value of the stations currently may be insufficient to repay the outstanding debt in full, any shortfall would be immaterial.

On April 15, 2005, Cox Radio filed a new universal shelf registration statement under which Cox Radio may from time to time offer and issue debentures, notes, bonds and other evidence of indebtedness and forward contracts in respect of any such indebtedness, shares of preferred stock, shares of Class A common stock, warrants, stock purchase contracts, stock purchase units and stock purchase rights, and two financing trusts sponsored by Cox Radio may also offer and issue preferred securities of the trusts for an original maximum aggregate offering amount of $300 million. The SEC declared Cox Radio’s new shelf registration statement effective on May 2, 2005. This new shelf registration statement supersedes and replaces Cox Radio’s universal shelf registration, which had available capacity to offer and issue securities for an original maximum aggregate offering amount up to $244.8 million at March 31, 2005 and December 31, 2004. Unless otherwise described in future prospectus supplements, Cox Radio intends to use the net proceeds from the sale of securities registered under this universal shelf registration statement for general corporate purposes, which may include additions to working capital, the repayment or redemption of existing indebtedness and the financing of capital expenditures and acquisitions.

On June 13, 2001, Cox Radio was named as defendant in a putative class action suit filed in an amended complaint in the state court in Fulton County, Georgia, alleging violations of the Federal Telephone Consumer Protection Act (TCPA). The complaint seeks statutory damages in the amount of $1,500, plus attorneys’ fees, on behalf of each person “throughout the State of Georgia” who received an unsolicited pre-recorded telephone message delivering an “unsolicited advertisement” from a Cox Radio radio station. Cox Radio filed an answer to the complaint denying liability and asserting numerous defenses. Thereafter, proceedings in this case were stayed pending rulings by the Georgia Court of Appeals in a similar action pending against another radio broadcast company. This stay was lifted on August 13, 2003 following rulings by the Court of Appeals in the second case directing the trial court to consider certain constitutional defenses raised by the defendant. On July 3, 2003, the FCC issued a Report and Order holding, among other things, that pre-recorded telephone messages by broadcasters made for the purpose of inviting consumers to listen to a free broadcast are not “unsolicited advertisements” prohibited by the TCPA. On July 28, 2003, Cox Radio requested that the plaintiffs voluntarily dismiss their claims in light of the FCC’s Report and Order. Plaintiffs subsequently refused this request, and on October 24, 2003, Cox Radio filed a motion for judgment on the pleadings seeking the dismissal of plaintiffs’ claims on grounds that the calls in question were permissible under the TCPA and the FCC’s implementing rules and, alternatively, that the application of the TCPA to the facts of this case would violate Cox Radio’s constitutional rights to free speech, equal protection and due process. On February 3, 2004, plaintiffs filed a second amended complaint in support of their contention that the messages at issue were not exempted by the terms of the FCC Report and Order. On March 25, 2004, the court entered an order ruling that the calls at issue were not prohibited by the TCPA and its implementing regulations, granting Cox Radio’s motion for judgment on the pleadings, and dismissing the plaintiffs’ claims. Plaintiffs filed a notice of appeal from these rulings on April 21, 2004. Cox Radio intends to continue to defend this action vigorously. At the present time, Cox Radio cannot reasonably estimate the possible loss or range of loss with respect to this lawsuit. The outcome of this matter cannot be predicted at this time.

Cox Radio is a party to various other legal proceedings that are ordinary and incidental to its business. Management does not expect that any of these legal proceedings currently pending will have a material adverse impact on Cox Radio’s consolidated financial position, consolidated results of operations or cash flows.

5. Derivative Instruments and Hedging Activities

Cox Radio is exposed to fluctuations in interest rates. Cox Radio actively monitors these fluctuations and uses derivative instruments from time to time to manage such risk. In accordance with its risk management strategy, Cox Radio uses derivative instruments only for the purpose of managing risk associated with an asset, liability, committed transaction or probable forecasted transaction that is identified by management. Cox Radio’s use of derivative instruments may result in short-term gains or losses and may increase volatility in its earnings.

Cox Radio had one interest rate swap agreement outstanding at March 31, 2005, which is used to manage its exposure to the variability of future cash flows related to certain of its floating rate interest obligations that may result due to changes in interest rates. The counterparty to this interest rate swap agreement is a major financial institution. Cox Radio is exposed to credit loss in the event of nonperformance by this counterparty. However, Cox Radio does not anticipate nonperformance by this counterparty.

At March 31, 2005, $25 million notional principal amount under the interest rate swap agreement was outstanding at an annual fixed rate of 6.4% and a remaining maturity of 2.5 years. The estimated fair value of the swap agreement, based on current market rates, approximated a net payable of $1.3 million at March 31, 2005 and $1.9 million at December 31, 2004. The fair value of the swap agreement at March 31, 2005 is included in other long-term liabilities according to the maturity date of the swap.

Under SFAS No. 133, as amended, “Accounting for Derivative Instruments and Hedging Activities,” as amended by SFAS No. 137, “Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of SFAS No. 133,” SFAS No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities,” and SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities,” the accounting for changes in the fair values of derivative instruments at each new measurement date is dependent upon their intended use. The effective portion of changes in the fair values of derivative instruments designated as hedges of forecasted transactions, referred to as cash flow hedges, are deferred and recorded as a component of accumulated other comprehensive income until the hedged forecasted transactions occur and are recognized in earnings. The ineffective portion of changes in the fair values of derivative instruments designated as cash flow hedges are immediately reclassified to earnings. The differential paid or received on the interest rate swap agreement is recognized as an adjustment to interest expense. Cox Radio’s interest rate swap agreement qualifies as a cash flow hedge.

During the three-month period ended March 31, 2005, there was no ineffective portion related to the changes in fair values of the interest rate swap agreement and there were no amounts excluded from the measure of effectiveness. For the three-month period ended March 31, 2005, less than $0.1 million, before related income tax effects, were reclassified into earnings as interest expense. The balance of $0.2 million recorded in accumulated other comprehensive loss at March 31, 2005 is expected to be reclassified into future earnings, contemporaneously with and offsetting changes in interest expense on certain of Cox Radio’s floating rate interest obligations. The estimated amount to be reclassified into future earnings as interest expense over the twelve months ending March 31, 2006 is approximately $0.1 million, before related income tax effects. The actual amount that will be reclassified to future earnings over the next twelve months may vary from this amount as a result of changes in market conditions related to interest rates.

6. Goodwill and Other Intangible Assets

Cox Radio accounts for goodwill and intangible assets in accordance with SFAS No. 142, which requires that goodwill and certain intangible assets, including FCC licenses, not be amortized but instead be tested for impairment at least annually. Cox Radio’s annual impairment testing date is January 1st.

During the first quarter of 2005, Cox Radio performed its annual tests for impairment, and no impairment of either FCC licenses or goodwill was indicated.

The following table reflects the components of intangible assets for the periods indicated:


	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
	(Amounts in thousands)
March 31, 2005
FCC licenses and other intangible assets, net	$	1,654,296	$	546	$	1,653,750
Goodwill		441,540		—		441,540

December 31, 2004
FCC licenses and other intangible assets, net		1,650,649		541		1,650,108
Goodwill		441,453		—		441,453

Amortization of amortizable intangible assets was less than $0.1 million for each of the periods ended March 31, 2005 and 2004.

During the second quarter of 2004, Cox Radio completed a signal upgrade for WPYO-FM in Orlando, Florida and reclassified $2.4 million from other assets to FCC licenses.

During the third quarter of 2004, Cox Radio completed signal upgrades for WALR-FM in Atlanta, Georgia and reclassified $6.6 million from other assets to FCC licenses, and WODL-FM in Birmingham, Alabama and reclassified $7.8 million from other assets to FCC licenses.

During the first quarter of 2005, Cox Radio completed the acquisition of KRTR-AM (formerly KHNR-AM) and KKNE-AM (formerly KHCM-AM) in Honolulu, Hawaii and classified less than $0.1 million into goodwill and $3.6 million into FCC licenses. For more information about this transaction, see Note 4.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This report contains “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, among others, statements that relate to Cox Radio’s future plans, earnings, objectives, expectations, performance, and similar projections, as well as any facts or assumptions underlying these statements or projections. Actual results may differ materially from the results expressed or implied in these forward-looking statements, due to various risks, uncertainties or other factors. These factors include competition within the radio broadcasting industry, advertising demand in our markets, the possibility that advertisers may cancel or postpone schedules in response to political events, competition for audience share, our success in executing and integrating acquisitions, and our ability to generate sufficient cash flow to meet our debt service obligations and finance operations. For a more detailed discussion of these and other risk factors, see the Risk Factors section of Cox Radio’s Annual Report on Form 10-K for the year ended December 31, 2004. Cox Radio assumes no responsibility to update any forward-looking statements as a result of new information, future events or otherwise.

General

Cox Radio is a leading national radio broadcast company whose business, which constitutes one reportable segment for accounting purposes, is devoted to acquiring, developing and operating radio stations located throughout the United States. Cox Enterprises indirectly owns approximately 62% of the common stock of Cox Radio and has approximately 94% of the voting power of Cox Radio.

The primary source of Cox Radio’s revenues is the sale of local and national advertising to be broadcast on its radio stations. Historically, approximately 72% and 22% of Cox Radio’s net revenues have been generated from local and national advertising, respectively. Cox Radio’s most significant station operating expenses are employees’ salaries and benefits, commissions, programming expenses and advertising and promotional expenditures.

Cox Radio’s revenues vary throughout the year. As is typical in the radio broadcasting industry, Cox Radio’s revenues and operating income are generally lowest in the first quarter. Cox Radio’s operating results in any period may be affected by the incurrence of advertising and promotional expenses that do not necessarily produce commensurate revenues until the impact of the advertising and promotion is realized in future periods.

Acquisitions and Dispositions

Historically, Cox Radio has actively managed its portfolio of radio stations through selected acquisitions, dispositions and exchanges, as well as through the use of local marketing agreements, or LMAs, and joint sales agreements, or JSAs. Under an LMA or a JSA, the company operating a station provides programming or sales and marketing or a combination of such services on behalf of the owner of a station. The broadcast revenues and operating expenses of stations operated by us under LMAs and JSAs have been included in Cox Radio’s operations since the respective effective dates of such agreements. All acquisitions discussed below have been accounted for using the purchase method. As such, the results of operations of the acquired stations have been included in the results of operations from the date of acquisition. Specific transactions entered into by Cox Radio during the past two years through April 30, 2005 are discussed below.

Results of Operations

Cox Radio’s results of operations represent the operations of the radio stations owned or operated by Cox Radio, or for which it provides sales and marketing services, during the applicable periods. The following discussion should be read in conjunction with the accompanying consolidated financial statements and the related notes included in this report.

Three months ended March 31, 2005 compared to three months ended March 31, 2004:


	March 31, 2005		March 31, 2004		$ Change			% Change
	(Amounts in thousands)
Net revenues:
Local	$	71,279	$	66,845	$	4,434		6.6	%
National		21,033		19,802		1,231		6.2	%
Other		6,257		6,444		(187	)	(2.9	)%

Total net revenues	$	98,569	$	93,091	$	5,478		5.9	%

Net revenues are gross revenues less agency commissions. Local revenues are comprised of advertising sales made within a station’s local market or region either directly with the advertiser or through the advertiser’s agency. National revenues represent sales made to advertisers/agencies who are purchasing advertising for multiple markets; these sales are typically facilitated by our national representation firm, which serves as our sales agent in these transactions. Other revenues are comprised of Internet revenues, syndicated radio program revenues, network revenues and revenues from community events and sponsorships.

Net revenues for the first quarter of 2005 increased $5.5 million to $98.6 million, a 5.9% increase compared to the first quarter of 2004. Local revenues increased 6.6% and national revenues increased 6.2% as compared to the first quarter of 2004. Our stations in Orlando, Miami, Tampa, San Antonio, Jacksonville, Southern Connecticut, Long Island and Dayton delivered solid growth during the first quarter of 2005. Those increases were partially offset by results for our stations in Birmingham and Louisville, where revenues were down for the quarter.


	March 31, 2005		March 31, 2004		$ Change		% Change
	(Amounts in thousands)
Cost of services (exclusive of depreciation and amortization shown separately below)	$	22,341	$	21,717	$	624	2.9	%

Cost of services is comprised of expenses incurred by our technical, news and programming departments. Cost of services increased $0.6 million, or 2.9%, to $22.3 million compared to the first quarter of 2004 primarily due to higher programming expenses.


	March 31, 2005		March 31, 2004		$ Change		% Change
	(Amounts in thousands)
Selling, general and administrative expenses	$	39,292	$	37,358	$	1,934	5.2	%

Selling, general and administrative expenses are comprised of our sales, promotion and general and administrative departments. Selling, general and administrative expenses increased $1.9 million, or 5.2%, to $39.3 million compared to the first quarter of 2004. This was primarily as a result of increased sales commissions and national rep commissions due to higher revenues in the first quarter of 2005, as compared to the first quarter of 2004, and slightly higher general and administrative expenses.


	March 31, 2005		March 31, 2004	$ Change		% Change
	(Amounts in thousands)
Corporate general and administrative expenses	4,707		4,545	162		3.6	%
Depreciation and amortization	2,848		2,978	(130	)	(4.4	)%
Other operating expenses, net	(140	)	—	(140	)	—

Corporate general and administrative expenses increased $0.2 million, or 3.6%, to $4.7 million compared to the first quarter of 2004 primarily as a result of additional incentive compensation accruals based on improving company performance. The changes in depreciation and amortization or other operating expenses, net were not material to Cox Radio’s overall operating results or financial condition.


	March 31, 2005		March 31, 2004		$ Change		% Change
	(Amounts in thousands)
Operating income	$	29,521	$	26,493	$	3,028	11.4	%

Operating income for the first quarter of 2005 was $29.5 million, a $3.0 million increase over the first quarter of 2004 for the reasons discussed above.


	March 31, 2005		March 31, 2004		$ Change			% Change
	(Amounts in thousands)
Interest expense	$	7,287	$	7,892	$	(605	)	(7.7	)%

Interest expense during the first quarter of 2005 totaled $7.3 million, as compared to $7.9 million for the first quarter of 2004. This decrease was the result of lower overall outstanding debt offset partially by a higher interest rate on our floating rate debt. The average rate on our credit facility was 3.3% during the first quarter of 2005 and 1.8% during the first quarter of 2004.


	March 31, 2005		March 31, 2004		$ Change		% Change
	(Amounts in thousands)
Income tax expense:
Current	$	4,541	$	4,259	$	282	6.6	%
Deferred		3,915		3,148		767	24.4	%

Total income tax expense	$	8,456	$	7,407	$	1,049	14.2	%

Income tax expense increased approximately $1.0 million to $8.5 million in the first quarter of 2005 compared to $7.4 million in the first quarter of 2004. This net increase is due to an increase in operating income and a decrease in interest expense, as discussed above. This increase was also partially offset by a favorable change in the Kentucky state tax rate. The effective tax rate for the first quarter of 2005 was 38.1% as compared to 40.0% for the first quarter of 2004.


	March 31, 2005		March 31, 2004		$ Change		% Change
	(Amounts in thousands)
Net income	$	13,765	$	11,096	$	2,669	24.1	%

Net income for the first quarter of 2005 was $13.8 million, as compared to $11.1 million for the first quarter of 2004, for the reasons discussed above.

Liquidity and Capital Resources

Sources and Uses of Liquidity

Cox Radio’s primary sources of liquidity are cash provided by operations and cash borrowed under our bank credit facility. Net cash from operations results primarily from net income adjusted for non-cash items, including depreciation and amortization, deferred income taxes, gains or losses on sales of radio stations, goodwill impairment and changes in working capital accounts. In comparing the three months ended March 31, 2005 to the three months ended March 31, 2004, net cash provided by operating activities increased $5.9 million due to changes in working capital and increased net income. Primary uses of liquidity include debt service, acquisitions, capital expenditures and investment in signal upgrades.

In addition, daily cash management needs have been funded through intercompany advances from Cox Enterprises. Our borrowings from Cox Enterprises are due on demand, but typically repaid within 30 days. Cox Enterprises continues to perform day-to-day cash management services for us. Amounts due to and from Cox Enterprises accrue interest at Cox Enterprises’ current commercial paper borrowing rate or a LIBOR based rate dependent upon our credit rating (2.9% and 1.2% at March 31, 2005 and 2004, respectively). Cox Radio owed Cox Enterprises approximately $2.4 million at March 31, 2005, and Cox Enterprises owed Cox Radio approximately $6.6 million at December 31, 2004.

Future cash requirements are expected to include capital expenditures, principal and interest payments on indebtedness and funds for acquisitions. Cox Radio expects its operations to generate sufficient cash to meet its capital expenditures and debt service requirements. Additional cash requirements, including funds for acquisitions, will be funded from various sources, including the proceeds from bank financing, intercompany advances from Cox Enterprises and, if or when appropriate, other issuances of securities.

Debt Service

•

the greater of the prime rate or the federal funds borrowing rate plus 0.5%;

•

the London Interbank Offered Rate plus a spread based on the credit ratings of Cox Radio’s senior long-term debt;

•

the bid rate for the purchase of certificates of deposit of equal principal amount and maturity plus a spread based on the credit ratings of Cox Radio’s senior long-term debt; or

•

the federal funds borrowing rate plus a spread based on the credit ratings of Cox Radio’s senior long-term debt.

Cox Radio currently has $350 million in outstanding debt securities, as described below (dollar amounts in thousands):


Principal Amount	Interest Rate	Maturity
$100,000 (1)	6.375%	May 2005
$250,000 (2)	6.625%	February 2006

(1)

(2)

Off-Balance Sheet Arrangements

Cox Radio’s off-balance sheet arrangements consist primarily of lease commitments and contracts for sports programming and on-air personalities and the guarantee discussed below. Cox Radio does not have any majority-owned subsidiaries that are not included in its consolidated financial statements, nor does Cox Radio have any interests in or relationships with any variable interest entities.

guarantee will not be necessary. If the signal upgrade is not approved, Cox Radio’s guarantee will be extinguished either through sale of the stations or through new financing arranged by the owner of the stations. Cox Radio believes that while the value of the stations currently may be insufficient to repay the outstanding debt in full, any shortfall would be immaterial.

Impact of Inflation

The impact of inflation on our operations has not been significant to date. However, there can be no assurance that a high rate of inflation in the future would not have an adverse impact on our operating results.

ITEM 3. Quantitative and Qualitative Disclosure About Market Risk

Cox Radio is exposed to a number of financial market risks in the ordinary course of business. Cox Radio’s primary financial market risk exposure pertains to changes in interest rates.

Cox Radio has examined exposures to these risks and concluded that none of the exposures are material to cash flows or earnings. Cox Radio has engaged in several strategies to manage these market risks. Cox Radio’s indebtedness under its various financing arrangements creates interest rate risk. In connection with each debt issuance and as a result of continual monitoring of interest rates, Cox Radio has entered into an interest rate swap agreement for purposes of managing borrowing costs.

Pursuant to the interest rate swap agreement, Cox Radio has exchanged its floating rate interest obligations on $25 million in notional principal amount of debt for a fixed interest rate. This agreement has an annual fixed rate of 6.4% and an average remaining maturity of 2.5 years. Concurrently with the adoption of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” in January 2001, Cox Radio formally designated this agreement as a cash flow hedge as discussed in Note 5 to the consolidated financial statements included herein. Cox Radio is exposed to a credit loss in the event of nonperformance by the counterparty to the interest rate swap agreement. However, Cox Radio does not anticipate nonperformance by such counterparty, and no material loss would be expected in the event of the counterparty’s nonperformance. The estimated fair value of the swap agreement, based on current market rates, approximated a net payable of $1.3 million at March 31, 2005 and $1.9 million at December 31, 2004. The fair value of the swap agreement at March 31, 2005 is included in other long-term liabilities according to the maturity date of the swap. The market risk for the interest rate swap is mitigated as the variable rate received is hedged to the variable rate paid on the credit facility.

The determination of the estimated fair value of Cox Radio’s fixed-rate debt is subject to the effects of interest rate risk. The estimated fair value of the fixed-rate debt instruments at March 31, 2005 was $356.6 million, compared to a carrying amount of $349.9 million. The estimated fair value of Cox Radio’s fixed-rate debt instruments at December 31, 2004 was $359.7 million, compared to a carrying amount of $349.9 million. The effect of a hypothetical one percentage point decrease in interest rates would be to increase the estimated fair value of the fixed-rate debt instruments from $356.6 million to $358.9 million at March 31, 2005, and from $359.7 million to $362.8 million at December 31, 2004.

The estimated fair values of debt instruments are based on discounted cash flow analyses using Cox Radio’s borrowing rates for similar types of borrowing arrangements and dealer quotations. The revolving credit facilities and Cox Enterprises’ borrowings bear interest based on current market rates and, thus, approximate fair value. Cox Radio is exposed to interest rate volatility with respect to the foregoing variable rate debt instruments.

With respect to financial instruments, Cox Radio has estimated the fair values of such instruments using available market information and valuation methodologies that it believes to be appropriate. Considerable judgment, however, is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that Cox Radio would realize or pay in a current market exchange.

ITEM 4. Controls and Procedures

Evaluation of Controls and Procedures

The Chief Executive Officer and the Chief Financial Officer of Cox Radio (its principal executive officer and principal financial officer, respectively) have concluded, based on their evaluation as of March 31, 2005, the end of the fiscal quarter to which this report relates, that Cox Radio’s disclosure controls and procedures: are effective to ensure that information required to be disclosed by Cox Radio in the reports filed or submitted by it under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and include controls and procedures designed to ensure that information required to be disclosed by Cox Radio in such reports is accumulated and communicated to Cox Radio’s management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Cox Radio’s disclosure controls and procedures are designed to provide a reasonable level of assurance of reaching Cox Radio’s desired disclosure objectives and are effective in reaching that level of reasonable assurance.

Changes in Internal Controls

There were no changes in Cox Radio’s internal control over financial reporting during the period covered by this report that materially affected, or were reasonably likely to materially affect, Cox Radio’s internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings

ITEM 2. Unregistered Sales of Equity Proceeds and Use of Proceeds

None.

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Submission of Matters to a Vote of Security Holders

None.

ITEM 5. Other Information

Introduction.

On May 3, 2005, Cox Radio’s stockholders approved the Third Amended and Restated Long-Term Incentive Plan, which we refer to as the Long-Term Incentive Plan. The summary of the material terms of the Long-Term Incentive Plan that follows is qualified in its entirety by reference to the complete text of the Long-Term Incentive Plan, which is filed as an exhibit to this report.

Material Terms of the Performance Goals.

The material terms of the performance goals are: (i) the employees eligible to participate; (ii) the business criteria on which the performance goal is based; and (iii) the maximum amount of compensation that could be paid to any employee or the formula used to calculate the amount of compensation.

Eligibility. The Compensation Committee or the management committee, as appropriate, is authorized to grant awards, including “performance-based” awards, under the Long-Term Incentive Plan to any officer or other employee of Cox Radio and its subsidiaries who is selected to receive an award. This group of eligible participants consists of approximately 1,000 individuals.

Performance-Based Criteria. The Compensation Committee or the management committee, as appropriate, may grant awards that are based on pre-established performance criteria, or that specify performance criteria to be achieved as a condition to vesting or payment, including awards of performance-based restricted stock. For purposes of the Long-Term Incentive Plan, “performance criteria” mean pre-established objective performance goals consisting of one or more of the following: revenue, income (operating income, income before depreciation and amortization, or net income), cash flow (operating cash flow or free cash flow), EBITDA (earnings before interest, taxes, depreciation or amortization), debt, profit, earnings per share, return on assets, return on equity, return on investment, or total shareholder return. The Compensation Committee or the management committee, as appropriate, may utilize other criteria for the purpose of reducing, but not increasing, any performance-based award.

Types and Number of Awards Under the Plan. There are 13,200,000 shares of Cox Radio’s Class A Common Stock reserved for issuance under the Long-Term Incentive Plan. Of this total, as of December 31, 2004, 2,811,378 shares have been issued previously pursuant to awards under the Long-Term Incentive Plan, 6,428,394 shares are subject to outstanding options or other awards, and 3,960,228 shares are available for future issuance. If any shares to be awarded under the Long-Term Incentive Plan are forfeited, those shares may be added to the remaining share total and re-granted.

No participant may be granted more than a combination of 250,000 shares and/or units subject to any combination of performance-based awards, restricted stock, or other stock-based awards that are subject to performance criteria in any given year. The maximum payout for any participant for a performance-based award paid in cash is 300 percent of the participant’s earnings for the year of the payment. No participant may receive more than 500,000 options in any given year.

All of the share totals described above will be adjusted by the Compensation Committee in its discretion to reflect any change in the number of shares of Class A Common Stock due to any stock dividend, stock split, combination, recapitalization, merger, spin-off, or similar corporate transaction.

Other Material Terms of the Plan.

Plan Administration. The purpose of the Long-Term Incentive Plan is to advance the interests of Cox Radio by providing incentives to certain employees of Cox Radio and its subsidiaries through awards of various forms of equity-based compensation. The Long-Term Incentive Plan is administered by the Compensation Committee. The Compensation Committee has sole discretion, subject to the terms of the Long-Term Incentive Plan, to determine the amounts and types of awards to be made, set the terms, conditions and limitations applicable to each award, and prescribe the form of the instruments embodying any award. Certain functions under the Long-Term Incentive Plan may be delegated by the Compensation Committee to any person or persons, and pursuant to this authority, the Compensation Committee has delegated certain administrative and other functions to a management committee. The Board of Directors has the right to amend, modify, suspend or terminate the Long-Term Incentive Plan at any time without notice, provided that no participant’s rights in an existing award may be adversely affected without his or her consent. Any amendment or similar action will be submitted for stockholder approval if required by law, regulation, or rule of any stock exchange on which Cox Radio’s Class A Common Stock is traded.

Duration of Options. No stock option may be exercised more than 10 years after the date of grant, and all stock appreciation rights will expire not later than 10 years after the date of grant.

Vesting and Exercise of Options. Options become exercisable when they have vested. Vesting schedules are set forth in an agreement or notice of award. Awards typically provide that a participant who terminates employment for reasons other than for cause, retirement, death, permanent disability or transfer to an affiliated company will have 90 days to exercise any vested stock options, and any unvested stock options will be forfeited. A participant who is terminated for cause will forfeit all benefits under the Long-Term Incentive Plan, and all options (both vested and unvested) will be cancelled.

Payment for Options. The exercise price of any stock option awarded under the Long-Term Incentive Plan will be determined by the Compensation Committee. Except for certain awards substituted for or granted in tandem with previously issued awards, the exercise price will not be less than the fair market value of Cox Radio’s Class A Common Stock on the date of grant. Participants may exercise an option by making payment in any manner specified by the Compensation Committee, including without limitation by tendering previously owned shares of Class A Common Stock or by “cashless exercise.”

Stock Appreciation Rights. A stock appreciation right gives the participant the right to receive upon exercise the excess of the fair market value of a share of stock on a specified date over the grant price. Except for certain awards substituted for or granted in tandem with previously issued awards, the grant price will be not less than the fair market value of Cox Radio’s Class A Common Stock on the date of grant. The Compensation Committee has the discretion to determine the manner in which stock appreciation rights may be paid, including in cash, shares or a combination thereof.

Restricted Stock. The Compensation Committee or the management committee, as appropriate, may authorize awards of restricted stock, including performance-based restricted stock. Restricted stock is common stock that is non-transferable and subject to other restrictions for a specified period. Unless the Compensation Committee or the management committee, as appropriate, determines otherwise, or specifies otherwise in an award agreement, if the participant terminates employment during the restricted period, then the restricted stock will be forfeited. Performance-based restricted stock may be subject to additional risk of forfeiture during the restricted period until and unless certain conditions are met. These conditions are established by the Compensation Committee or the management committee, as appropriate, and may include the performance criteria described above.

Deferred Stock. The Compensation Committee or the management committee, as appropriate, may authorize grants of rights to receive shares of common stock at the end of a specified deferral period. Awards of deferred stock may be made for no consideration or for an amount that is less than the fair market value on the date of grant. Unless the Compensation Committee or the management committee, as appropriate, determines otherwise, or specifies otherwise in an award agreement, if the participant terminates employment during the deferral period, then the award will be forfeited.

Assignment and Transfer. Unless otherwise determined by the Compensation Committee or the management committee, as appropriate, awards generally are not assignable or transferable, except by will or by the laws of descent and distribution, provided that a participant may designate a beneficiary to exercise the participant’s rights, and receive any distribution, in the event of death. No right or interest of a participant in any award may be pledged or encumbered, or made subject to any lien, obligation or liability of the participant.

Federal Income Tax Consequences to Cox Radio and the Participants. Some of the options granted under the Long-Term Incentive Plan may be incentive stock options (called ISOs) within the meaning of Section 422 of the Internal Revenue Code. Under present federal tax laws, there are no federal income tax consequences to either Cox Radio or the participant upon the grant or exercise of an ISO. If the participant does not dispose of the stock acquired through the ISO for two years from the date of grant or one year from the date of exercise, then any gain realized from a subsequent disposition would constitute long-term capital gain to the participant. If the participant does dispose of the stock prior to the expiration of either holding period, any gain equal to the excess of the fair market value of the stock on the date of exercise (or, if less, the amount realized on the disposition of the stock if a sale or exchange) over the option price would constitute ordinary income to the participant. Any additional gain realized upon the disposition would be taxable either as a short-term capital gain or a long-term capital gain, depending on how long the participant held the stock.

Cox Radio generally is not entitled to an income tax deduction for the grant of an ISO or as a result of either the participant’s exercise of an ISO or the participant’s sale of the stock acquired upon the exercise of an ISO. However, if the participant sells the stock either within two years from the date of grant or within one year from the date of exercise, then the ISO is treated for federal income tax purposes as if it were a nonqualified stock option and Cox Radio will be entitled to a federal income tax deduction equal to the amount of income recognized by the participant.

Stock options that do not constitute ISOs (called nonqualified options) may also be granted under the Long-Term Incentive Plan. Under present federal tax laws, there are no federal income tax consequences to either Cox Radio or the participant upon the grant of a nonqualified option. However, the participant will recognize ordinary income upon the exercise of a nonqualified option in an amount equal to the excess of the fair market value of the stock at the time of exercise over the option price, and Cox Radio will receive a corresponding deduction. Any gain realized upon a subsequent disposition of the stock will constitute either a short-term or long-term capital gain to the participant, depending on how long it is held.

Unless the participant makes a special tax election, restricted stock awards are not taxable to the participant as long as the shares remain nontransferable and subject to a substantial risk of forfeiture. When these transferability restrictions and forfeiture risks lapse or are removed, the participant at the time of such lapse or removal generally will recognize as ordinary income the fair market value of the stock, less any amounts that were paid to acquire the stock. Cox Radio will receive a federal income tax deduction equal to the amount of ordinary income recognized by the participant.

No taxable income is recognized upon the grant of a stock appreciation right. Upon the exercise of a stock appreciation right, the participant will recognize as ordinary income the amount of any cash received, plus the fair market value of any stock acquired (less any amount required to be paid by the participant). Cox Radio will receive a federal income tax deduction equal to the amount of ordinary income recognized by the participant.

Payment of cash and outright grants of stock will be taxed as ordinary income at the time the cash or stock is received, and Cox Radio will be entitled to a corresponding deduction equal to the amount of income recognized by the participant.

ITEM 6. Exhibits

Listed below are the exhibits, which are filed as part of this Report (according to the number assigned to them in Item 601 of Regulation S-K):


Exhibit Number		Description
⁽¹⁾3.1	—	Amended and Restated Certificate of Incorporation of Cox Radio, Inc.

⁽²⁾3.2	—	Certificate of Amendment to Certificate of Incorporation of Cox Radio, Inc.

⁽³⁾3.3	—	Amended and Restated Bylaws of Cox Radio, Inc.

⁽⁴⁾4.1	—	Indenture dated as of May 26, 1998 by and among Cox Radio, Inc. The Bank of New York, WSB, Inc. and WHIO, Inc.

⁽⁵⁾4.2	—	First Supplemental Indenture dated as of February 1, 1999 by and among The Bank of New York, Cox Radio, Inc. and CXR Holdings, Inc.

⁽⁶⁾4.3	—	Agreement of Resignation, Appointment and Acceptance, effective March 1, 2005, by and among Cox Radio, Inc., The Bank of New York and The Bank of New York Trust Company, N.A.

⁽⁷⁾4.4	—	Form of Specimen Class A common stock certificate.

⁽⁸⁾10.1		Five Year Credit Agreement, dated as of June 4, 2004, among Cox Radio, Inc., the Lenders party thereto, JPMorgan Chase Bank, as Administrative Agent for the Lenders, Wachovia Bank, National Association, as Co-Syndication Agent, Bank of America, N.A., as Co-Syndication Agent, J.P. Morgan Securities Inc., as Co-Lead Arranger and Joint Bookrunner, and Wachovia Capital Markets, LLC, as Co-Lead Arranger and Joint Bookrunner.

10.2	—	Cox Radio, Inc. Third Amended and Restated Long-Term Incentive Plan



10.3	—	Forms of Award Agreements under the Third Amended and Restated Long-Term Incentive Plan

31.1	—	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.

31.2	—	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.

32.1	—	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934.

(1)	Incorporated by reference to the corresponding exhibit of Cox Radio’s Registration Statement on Form S-1 (SEC File No. 333-08737).

(2)	Incorporated by reference to Exhibit 3.2 of Cox Radio’s Form 8-A/A filed February 15, 2002.

(3)	Incorporated by reference to Exhibit 3.2 of Cox Radio’s Registration Statement on Form S-1 (SEC File No. 333-08737).

(4)	Incorporated by reference to Exhibit 4.1 of Cox Radio’s Report on Form 10-Q for the period ended June 30, 2004.

(5)	Incorporated by reference to Exhibit 4.2 of Cox Radio’s Report on Form 10-Q for the period ended March 31, 1999.

(6)	Incorporated by reference to Exhibit 4.3 of Cox Radio’s Registration Statement on Form S-3 (SEC File No. 333-124114).

(7)	Incorporated by reference to Exhibit 4.1 of Cox Radio’s Report on Form 8-A/A filed February 15, 2002.

(8)	Incorporated by reference to Exhibit 10.1 of Cox Radio’s Report on Form 10-Q for the period ended June 30, 2004.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		Cox Radio, Inc.

May 6, 2005		/s/ Neil O. Johnston
		Neil O. Johnston
		Vice President and Chief Financial
		Officer (Principal Financial Officer,
		Principal Accounting Officer and
		duly authorized officer)

EX-10.2 2 dex102.htm THIRD AMENDED AND RESTATED LONG-TERM INCENTIVE PLAN Third Amended and Restated Long-Term Incentive Plan

Exhibit 10.2

COX RADIO, INC.

THIRD AMENDED AND RESTATED LONG-TERM INCENTIVE PLAN

SECTION 1. Purpose. The purpose of this Third Amended and Restated Long-Term Incentive Plan (the “Plan”) of Cox Radio, Inc. (the “Corporation”) is (a) to promote the identity of interests between shareholders and employees of the Corporation by encouraging and creating significant ownership of Common Stock of the Corporation by officers and other employees of the Corporation and its subsidiaries; (b) to enable the Corporation to attract and retain qualified officers and employees who contribute to the Corporation’s success by their ability, ingenuity and industry; and (c) to provide meaningful long-term incentive opportunities for officers and other employees who are responsible for the success of the Corporation and who are in a position to make significant contributions toward its objectives.

SECTION 2. Definitions. In addition to the terms defined elsewhere in the Plan, the following shall be defined terms under the Plan:

2.01. “Award” means any Performance Award, Option, Stock Appreciation Right, Restricted Stock, Deferred Stock, Dividend Equivalent, or Other Stock-Based Award, or any other right or interest relating to Shares or cash, granted to a Participant under the Plan.

2.02. “Award Agreement” means any written agreement, contract or other instrument or document evidencing the terms and conditions of an individual Award. Each Award Agreement shall be subject to the terms and conditions of the Plan.

2.03. “Board” means the Board of Directors of the Corporation.

2.04. “Code” means the Internal Revenue Code of 1986, as amended from time to time. References to any provision of the Code shall be deemed to include successor provisions thereto and regulations thereunder.

2.05. “Committee” means the committee designated by the Board to administer the Plan, or another committee to which certain administrative or other functions have been delegated consistent with the terms of the Plan.

2.06. “Corporation” is defined as Cox Radio, Inc. or any successor to it in ownership of substantially all of its assets, whether by merger, consolidation or otherwise.

2.07. “Covered Employee” means the chief executive officer and the officers of the Corporation for whom total compensation is required to be reported to shareholders under the Exchange Act, as determined for purposes of Section 162(m) of the Code, and successor provisions.

2.08. “Deferred Stock” means a right, granted to a Participant under Section 6.05, to receive Shares at the end of a specified deferral period.

2.09. “Dividend Equivalent” means a right, granted to a Participant under Section 6.03, to receive cash, Shares, other Awards, or other property equal in value to dividends paid with respect to a specified number of Shares.

2.10. “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time. References to any provision of the Exchange Act shall be deemed to include successor provisions thereto and regulations thereunder.

2.11. “Fair Market Value” means, with respect to Shares, Awards or other property, the fair market value of such Shares, Awards or other property determined by such methods or procedures as shall be established from time to time by the Committee. Unless otherwise determined by the Committee, the Fair Market Value of Shares as of any date shall be the average of the high and the low sales price on that date of a Share as reported in the New York Stock Exchange Composite Transaction Report; provided, that if there were no sales on the valuation date but there were sales on dates within a reasonable period both before and after the valuation date, the Fair Market Value is the weighted average of the high and low sale prices on the nearest date before and the nearest date after the valuation date. The average is to be weighted inversely by the respective numbers of trading days between the selling dates and the valuation date.

2.12. “Incentive Stock Option” means an Option that is intended to meet the requirements of Section 422 of the Code.

2.13. “Non-Qualified Stock Option” means an Option that is not intended to be an Incentive Stock Option.

2.14. “Option” means a right, granted to a Participant under Section 6.06, to purchase Shares, other Awards, or other property at a specified price during specified time periods. An Option may be either an Incentive Stock Option or a Non-Qualified Stock Option.

2.15. “Other Stock-Based Award” means a right, granted to a Participant under Section 6.08, that relates to or is valued by reference to Shares.

2.16. “Participant” means a person who, as an officer or employee of the Corporation or any Subsidiary, has been granted an Award under the Plan.

2.17. “Performance Award” means a right, granted to a Participant under Section 6.02, to receive cash, Shares, other Awards, or other property the payment of which is contingent upon achievement of performance goals specified by the Committee.

2.18. “Performance-Based Restricted Stock” means Restricted Stock that is (a) awarded based on preestablished performance criteria, or (b) subject to a risk of forfeiture if preestablished performance criteria are not met within the restriction period.

2.19. “Plan” is the Cox Radio, Inc. Third Amended and Restated Long-Term Incentive Plan.

2.20. “Restricted Stock” means Shares granted to a Participant under Section 6.04, that are subject to certain restrictions and to a risk of forfeiture.

2.21. “Rule 16b-3” means Rule 16b-3, as from time to time amended, promulgated by the Securities and Exchange Commission under Section 16 of the Exchange Act.

2.22. “Shares” means the Class A Common Stock of the Corporation and such other securities of the Corporation as may be substituted for Shares or such other securities pursuant to Section 10.

2.23. “Stock Appreciation Right” means a right, granted to a Participant under Section 6.07, to be paid an amount measured by the appreciation in the Fair Market Value of Shares from the date of grant to the date of exercise of the right, with payment to be made in cash, Shares, other Awards, or other property as specified in the Award or determined by the Committee.

2.24. “Subsidiary” means any corporation (other than the Corporation) with respect to which the Corporation owns, directly or indirectly, 50% or more of the total combined voting power of all classes of stock.

2.25. “Year” means a calendar year.

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SECTION 3. Administration.

3.01. Authority of the Committee. The Plan shall be administered by the Committee. Each Award shall be evidenced by an Award Agreement, executed by the Corporation and the Participant, in a form satisfactory to the Committee. The Committee shall have full and final authority to take the following actions, in each case subject to and consistent with the provisions of the Plan:

(i) to select and designate Participants;

(ii) to determine the type or types of Awards to be granted to each Participant;

(iii) to determine the number of Awards to be granted, the number of Shares to which an Award will relate, the terms and conditions of any Award granted under the Plan (including, but not limited to, any exercise price, grant price, or purchase price, any restriction or condition, any schedule for lapse of restrictions or conditions relating to transferability or forfeiture, exercisability, or settlement of an Award, and waivers or accelerations thereof, and waiver of performance conditions relating to an Award, based in each case on such considerations as the Committee shall determine), and all other matters to be determined in connection with an Award;

(iv) to determine whether, to what extent, and under what circumstances an Award may be settled, or the exercise price of an Award may be paid, in cash, Shares, other Awards, or other property, or an Award may be cancelled, forfeited or surrendered;

(v) to determine whether, to what extent, and under what circumstances cash, Shares, other Awards, or other property payable with respect to an Award will be deferred either automatically, at the election of the Committee or at the election of the Participant;

(vi) to prescribe the form of each Award Agreement, which need not be identical for each Participant;

(vii) to adopt, amend, suspend, waive and rescind such rules and regulations and appoint such agents as the Committee may deem necessary or advisable to administer the Plan;

(viii) to correct any defect or supply any omission or reconcile any inconsistency in the Plan and to construe and interpret the Plan and any Award, rules and regulations, Award Agreement or other instrument hereunder; and

(ix) to make all other decisions and determinations as may be required under the terms of the Plan or as the Committee may deem necessary or advisable for the administration of the Plan.

3.02. Manner of Exercise of Committee Authority. Except to the extent specifically reserved to another entity under the terms of the Plan or applicable law, the Committee shall have sole discretion in exercising its authority under the Plan. Any action of the Committee with respect to the Plan shall be final, conclusive and binding on all persons, including the Corporation, Subsidiaries, Participants and any person claiming any rights under the Plan from or through any Participant. The express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or authority of the Committee. A memorandum signed by all members of the Committee shall constitute the act of the Committee without the necessity, in such event, to hold a meeting. The Committee may delegate to officers or managers of the Corporation or any Subsidiary the authority to perform administrative functions under the Plan, subject to such terms as the Committee shall determine. Notwithstanding any provisions of the Plan to the contrary, the Committee may delegate any or all of its authority under the terms of the Plan to any person or persons the Committee shall from time to time designate.

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3.03. Limitation of Liability. Each member of the Committee shall be entitled to, in good faith, rely or act upon any report or other information furnished to him by any officer or other employee of the Corporation or any Subsidiary, the Corporation’s independent certified public accountants, legal counsel or any executive compensation consultant or other professional retained by the Corporation to assist in the administration of the Plan. No member of the Committee, nor any officer or employee of the Corporation acting on behalf of the Committee, shall be personally liable for any action, determination, or interpretation taken or made in good faith with respect to the Plan, and all members of the Committee and any officer or employee of the Corporation acting on their behalf, shall, to the extent permitted by law, be fully indemnified and protected by the Corporation with respect to any such action, determination, or interpretation.

SECTION 4. Shares Subject to the Plan. Subject to adjustment as provided in Section 10, the total number of Shares reserved and available for Awards under the Plan shall be 13,200,000. For purposes of this Section 4, the number of and time at which Shares shall be deemed to be subject to Awards and therefore counted against the number of Shares reserved and available under the Plan shall be the earliest date at which the Committee can reasonably estimate the number of Shares to be distributed in settlement of an Award or with respect to which payments will be made; provided that, subject to the requirements of Rule 16b-3, the Committee may adopt procedures for the counting of Shares relating to any Award for which the number of Shares to be distributed or with respect to which payment will be made cannot be fixed at the date of grant to ensure appropriate counting, avoid double counting (in the case of tandem or substitute awards), and provide for adjustments in any case in which the number of Shares actually distributed or with respect to which payments are actually made differs from the number of Shares previously counted in connection with such Award.

The Shares subject to the Plan may be unissued Shares or reacquired Shares, bought on the open market or otherwise. If any Shares to which an Award relates are forfeited or the Award is settled or terminates without a distribution of Shares (whether or not cash, other Awards, or other property is distributed with respect to such Award), any Shares counted against the number of Shares reserved and available under the Plan with respect to such Award shall, to the extent of any such forfeiture, settlement or termination, again be available for Awards under the Plan; provided that in the event Rule 16b-3 applies to the issuance of an Award, such Shares shall be available for issuance only to the extent the issuance of such Shares would be exempted under Rule 16b-3.

SECTION 5. Eligibility. Awards may be granted only to individuals who are officers or other employees (including employees who are also directors) of the Corporation or a Subsidiary.

SECTION 6. Specific Terms of Awards.

6.01. General. Awards may be granted on the terms and conditions set forth in this Section 6. In addition, the Committee may impose on any Award or the exercise thereof, at the date of grant or thereafter (subject to Section 11.02), such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine, including without limitation the acceleration of vesting of any Awards or terms requiring forfeiture of Awards in the event of termination of employment by the Participant. Except as provided in Sections 7.03 or 7.04, only services may be required as consideration for the grant of any Award.

6.02. Performance Awards. Subject to the provisions of Sections 7.01 and 7.02, the Committee is authorized to grant Performance Awards to Participants on the following terms and conditions:

(i) Awards and Conditions. A Performance Award shall confer upon the Participant rights, valued as determined by the Committee, and payable to, or exercisable by, the Participant to whom the Performance Award is granted, in whole or in part, as determined by the Committee, conditioned upon the achievement of performance criteria determined by the Committee.

(ii) Other Terms. A Performance Award shall be denominated in Shares or in units, and may be payable in cash, Shares, other Awards, or other property, and have such other terms as shall be determined by the Committee.

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6.03. Dividend Equivalents. The Committee is authorized to grant Dividend Equivalents to Participants. The Committee may provide that Dividend Equivalents shall be paid or distributed when accrued or shall be deemed to have been reinvested in additional Shares or Awards, or otherwise reinvested.

6.04. Restricted Stock. The Committee is authorized to grant Restricted Stock to Participants on the following terms and conditions:

(i) Issuance and Restrictions. Restricted Stock shall be subject to such restrictions on transferability and other restrictions as the Committee may impose (including, without limitation, limitations on the right to vote Restricted Stock or the right to receive dividends thereon), which restrictions may lapse separately or in combination at such times, under such circumstances, in such installments or otherwise as the Committee shall determine.

(ii) Forfeiture. Performance-Based Restricted Stock shall be (a) based on preestablished performance criteria, or (b) forfeited unless preestablished performance criteria specified by the Committee are met during the applicable restriction period. Except as otherwise determined by the Committee, upon termination of employment (as determined under criteria established by the Committee) during the applicable restriction period, Restricted Stock that is at that time subject to restrictions shall be forfeited and reacquired by the Corporation; provided, that the Committee may provide, by rule or regulation or in any Award Agreement, or may determine in any individual case, that restrictions or forfeiture conditions relating to Restricted Stock will be waived in whole or in part in the event of terminations resulting from specified causes.

(iii) Certificates of Shares. Restricted Stock granted under the Plan may be evidenced in such manner as the Committee shall determine. If certificates representing Restricted Stock are registered in the name of the Participant, such certificates shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock, the Corporation shall retain physical possession of the certificates, and the Participant shall deliver a stock power to the Corporation, endorsed in blank, relating to the Restricted Stock.

(iv) Dividends. Unless otherwise determined by the Committee, cash dividends paid on Performance-Based Restricted Stock shall be automatically reinvested in additional shares of Performance-Based Restricted Stock and cash dividends paid on other Restricted Stock shall be paid to the Participant. Dividends reinvested in Performance-Based Restricted Stock and Shares distributed in connection with a stock split or stock dividend, and other property distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Stock with respect to which such stock or other property has been distributed.

6.05. Deferred Stock. The Committee is authorized to grant Deferred Stock to Participants, on the following terms and conditions:

(i) Award and Restrictions. Delivery of Shares will occur upon expiration of the deferral period specified for Deferred Stock by the Committee (or, if permitted by the Committee, as elected by the Participant). In addition, Deferred Stock shall be subject to such restrictions as the Committee may impose, which restrictions may lapse at the expiration of the deferral period or at earlier specified times, separately or in combination, in installments, or otherwise, as the Committee shall determine.

(ii) Forfeiture. Except as otherwise determined by the Committee, upon termination of employment (as determined under criteria established by the Committee) during the applicable deferral period or portion thereof (as provided in the Award Agreement evidencing the Deferred Stock), all Deferred Stock that is at that time subject to deferral (other than a deferral at the election of the Participant) shall be forfeited; provided, that the Committee may provide, by rule or regulation or in any Award Agreement, or may determine in any individual case, that restrictions or forfeiture conditions relating to Deferred Stock will be waived in whole or in part in the event of terminations resulting from specified causes, and the Committee may in other cases waive in whole or in part the forfeiture of Deferred Stock.

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6.06. Options. The Committee is authorized to grant Options to Participants on the following terms and conditions:

(i) Exercise Price. The exercise price per Share purchasable under an Option shall be determined by the Committee; provided, that, except as provided in Section 7.03, such exercise price shall be not less than the Fair Market Value of a Share on the date of grant of such Option.

(ii) Time and Method of Exercise. The Committee shall determine the time or times at which an Option may be exercised in whole or in part, the methods by which such exercise price may be paid or deemed to be paid, the form of such payment, including, without limitation, cash, Shares, other Awards or awards issued under other Corporation plans, or other property (including notes or other contractual obligations of Participants to make payment on a deferred basis, such as through “cashless exercise” arrangements), and the methods by which Shares will be delivered or deemed to be delivered to Participants. Options shall expire not later than ten years after the date of grant.

(iii) Incentive Stock Options. The terms of any Incentive Stock Option granted under the Plan shall comply in all respects with the provisions of Section 422 of the Code, including but not limited to the requirement that no Incentive Stock Option shall be granted more than ten years after the effective date of the Plan. Anything in the Plan to the contrary notwithstanding, no term of the Plan relating to Incentive Stock Options shall be interpreted, amended, or altered, nor shall any discretion or authority granted under the Plan be exercised, so as to disqualify either the Plan or any Incentive Stock Option under Section 422 of the Code. In the event a Participant voluntarily disqualifies an Option as an Incentive Stock Option, the Committee may, but shall not be obligated to, make such additional Awards or pay bonuses as the Committee shall deem appropriate to reflect the tax savings to the Corporation which result from such disqualification.

6.07. Stock Appreciation Rights. The Committee is authorized to grant Stock Appreciation Rights to Participants on the following terms and conditions:

(i) Right to Payment. A Stock Appreciation Right shall confer on the Participant to whom it is granted a right to receive, upon exercise thereof, the excess of (A) the Fair Market Value of one Share on the date of exercise (or, if the Committee shall so determine in the case of any such right, other than one related to an Incentive Stock Option, the Fair Market Value of one Share at any time during a specified period before or after the date of exercise or Change in Control, as defined in Section 9.02) over (B) the grant price of the Stock Appreciation Right as determined by the Committee as of the date of grant of the Stock Appreciation Right, which, except as provided in Section 7.03, shall be not less than the Fair Market Value of one Share on the date of grant.

(ii) Other Terms. The Committee shall determine the time or times at which a Stock Appreciation Right may be exercised in whole or in part, the method of exercise, method of settlement, form of consideration payable in settlement, method by which Shares will be delivered or deemed to be delivered to Participants, and any other terms and conditions of any Stock Appreciation Right. Limited Stock Appreciation Rights that may be exercised only upon the occurrence of a Change in Control (as such term is defined in Section 9.02) or as otherwise defined by the Committee) may be granted under this Section 6.07. Stock Appreciation Rights shall expire not later than ten years after the date of grant.

6.08. Other Stock-Based Awards. The Committee is authorized to grant to Participants other Awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares, as deemed by the Committee to be consistent with the purposes of the Plan, including without limitation, Shares awarded purely as a “bonus” and not subject to any restrictions or conditions, convertible or exchangeable debt securities, other rights convertible or exchangeable into Shares, purchase rights, and Awards valued by reference to book value of Shares or the value of securities of or the performance of specified Subsidiaries. The Committee shall determine the terms and conditions of such Awards, which may include performance criteria. Shares delivered pursuant to an Award in the nature of a purchase right granted under this Section 6.08 shall be purchased for such consideration, paid for at such times, by such methods, and in such forms, including, without limitation, cash, Shares, other Awards, or other property, as the Committee shall determine.

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SECTION 7. Certain Provisions Applicable to Awards.

7.01. Performance-Based Awards. Performance Awards, Performance-Based Restricted Stock, and certain Other Stock-Based Awards subject to performance criteria are intended to be “qualified performance-based compensation” within the meaning of Section 162(m) of the Code and shall be paid solely on account of the attainment of one or more preestablished, objective performance goals within the meaning of Section 162(m) and the regulations thereunder. As selected by the Committee, the performance goal shall be the attainment of one or more (singly or in combination) of the preestablished amounts of revenue, income (operating income, income before depreciation and amortization, or net income), cash flow (operating cash flow or free cash flow), EBITDA (earnings before interest, taxes, depreciation or amortization), debt, profit, earnings per share, return on assets, return on equity, return on investment, or total shareholder return.

The payout of any such Award to a Covered Employee may be reduced, but not increased, based on the degree of attainment of other performance criteria or otherwise at the direction of the Committee.

7.02. Maximum Individual Awards. No individual may be granted more than 250,000 shares or units subject to any combination of Performance Awards, Restricted Stock, or other Stock-Based Awards subject to performance criteria in any given year. The maximum payout for any individual for a Performance Award paid in cash is 300 percent of the participant’s earnings for the year of the Performance Award payment. No individual may receive more than 500,000 Options in any given year. The Share amounts in this Section 7.02 are subject to adjustment under Section 10 and are subject to the Plan maximum under Section 4.

7.03. Stand-Alone, Additional, Tandem, and Substitute Awards. Awards granted under the Plan may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with, or in substitution for any other Award granted under the Plan or any award granted under any other plan of the Corporation, any Subsidiary, or any business entity to be acquired by the Corporation or a Subsidiary, or any other right of a Participant to receive payment from the Corporation or any Subsidiary. If an Award is granted in substitution for another Award or award, the Committee shall require the surrender of such other Award or award in consideration for the grant of the new Award. Awards granted in addition to or in tandem with other Awards or awards may be granted either as of the same time as or a different time from the grant of such other Awards or awards. The per Share exercise price of any Option, grant price of any Stock Appreciation Right, or purchase price of any other Award conferring a right to purchase Shares:

(i) Granted in substitution for an outstanding Award or award shall be not less than the lesser of the Fair Market Value of a Share at the date such substitute award is granted or such Fair Market Value at that date reduced to reflect the Fair Market Value at that date of the Award or award required to be surrendered by the Participant as a condition to receipt of the substitute Award; or

(ii) Retroactively granted in tandem with an outstanding Award or award shall be not less than the lesser of the Fair Market Value of a Share at the date of grant of the later Award or at the date of grant of the earlier Award or award.

7.04. Exchange Provisions. The Committee may at any time offer to exchange or buy out any previously granted Award for a payment in cash, Shares, other Awards (subject to Section 7.03), or other property based on such terms and conditions as the Committee shall determine and communicate to the Participant at the time that such offer is made.

-7-

7.05. Term of Awards. The term of each Award shall be for such period as may be determined by the Committee; provided, that in no event shall the term of any Option or a Stock Appreciation Right granted in tandem therewith exceed a period of ten years from the date of its grant (or such shorter period as may be applicable under Section 422 of the Code).

7.06. Form of Payment Under Awards. Subject to the terms of the Plan and any applicable Award Agreement, payments to be made by the Corporation or a Subsidiary upon the grant or exercise of an Award may be made in such form as the Committee shall determine, including without limitation, cash, Shares, other Awards, or other property, and may be made in a single payment or transfer, in installments, or on a deferred basis. Such payments may include, without limitation, provisions for the payment or crediting of reasonable interest on installment or deferred payments or the grant or crediting of Dividend Equivalents in respect of installment or deferred payments denominated in Shares.

SECTION 8. General Restrictions Applicable to Awards.

8.01. Specific Restrictions.

8.01.1. Six-Month Holding Period. Unless a Participant could otherwise transfer an equity security, derivative security, or Shares issued upon exercise of a derivative security granted under the Plan without incurring liability under Section 16(b) of the Exchange Act, (i) an equity security issued under the Plan, other than an equity security issued upon exercise or conversion of a derivative security granted under the Plan, shall be held for at least six months from the date of acquisition; (ii) with respect to a derivative security issued under the Plan, at least six months shall elapse from the date of acquisition of the derivative security to the date of disposition of the derivative security (other than upon exercise or conversion) or its underlying equity security; and (iii) any Award in the nature of a Stock Appreciation Right must be held for six months from the date of grant to the date of cash settlement.

8.01.2. Nontransferability. Unless otherwise determined by the Committee, Awards which constitute derivative securities (including any option, stock appreciation right, or similar right) shall not be transferable by a Participant except by will or the laws of descent and distribution (except pursuant to a beneficiary designation authorized under Section 8.02) or, if then permitted under Rule 16b-3, pursuant to a qualified domestic relations order as defined under the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder, and, in the case of an Incentive Stock Option or, if then required by Rule 16b-3, any other derivative security granted under the Plan, shall be exercisable during the lifetime of a Participant only by such Participant or his guardian or legal representative.

8.01.3. Compliance with Rule 16b-3. It is the intent of the Corporation that this Plan comply in all respects with Rule 16b-3 in connection with any Award granted to a person who is subject to Section 16 of the Exchange Act.

8.02. Limits on Transfer of Awards; Beneficiaries. No right or interest of a Participant in any Award shall be pledged, encumbered, or hypothecated to or in favor of any party (other than the Corporation or a Subsidiary), or shall be subject to any lien, obligation, or liability of such Participant to any party (other than the Corporation or a Subsidiary). Unless otherwise determined by the Committee (subject to the requirements of Section 8.01.2), no Award shall be assignable or transferable by a Participant otherwise than by will or the laws of descent and distribution (except to the Corporation under the terms of the Plan); provided, that a Participant may, in the manner established by the Committee, designate a beneficiary or beneficiaries to exercise the rights of the Participant, and to receive any distribution, with respect to any Award, upon the death of the Participant. A beneficiary, guardian, legal representative, or other person claiming any rights under the Plan from or through any Participant shall be subject to all terms and conditions of the Plan and any Award Agreement applicable to such Participant or agreement applicable to such, except to the extent the Plan and such Award Agreement or agreement otherwise provide with respect to such persons, and to any additional restrictions deemed necessary or appropriate by the Committee.

8.03. Registration and Listing Compliance. The Corporation shall not be obligated to deliver any Award or distribute any Shares with respect to any Award in a transaction subject to regulatory approval, registration, or any other applicable requirement of federal or state law, or subject to a listing requirement under any listing or similar

-8-

agreement between the Corporation and any national securities exchange or market, until such laws, regulations, and contractual obligations of the Corporation have been complied with in full, although the Corporation shall be obligated to use reasonable efforts to obtain any such approval and comply with such requirements as promptly as practicable. If, after reasonable efforts, the Corporation is unable to obtain from any regulatory commission or agency or national securities exchange or market having jurisdiction over the Plan the authority which counsel for the Corporation deems necessary for the lawful issuance and sale of the Shares under the Plan, the Corporation shall be relieved from any liability for failure to issue and sell Shares upon exercise of such Awards unless and until such authority is obtained.

8.04. Share Certificates. All certificates for Shares delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop-transfer order and other restrictions as the Committee may deem advisable under applicable federal or state laws, rules and regulations thereunder, and the rules of any national securities exchange on which Shares are listed. The Committee may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions or any other restrictions that may be applicable to Shares, including under the terms of the Plan or any Award Agreement. In addition, during any period in which Awards or Shares are subject to restrictions under the terms of the Plan or any Award Agreement, or during any period during which delivery or receipt of an Award or Shares has been deferred by the Committee or a Participant, the Committee may require the Participant to enter into an agreement providing that certificates representing Shares issuable or issued pursuant to an Award shall remain in the physical custody of the Corporation or such other person as the Committee may designate.

SECTION 9. Change in Control Provisions. Notwithstanding any other provision of the Plan, the following acceleration provisions shall apply in the event of a “Change in Control” as defined in this Section 9.

9.01. Acceleration and Cash-Out Rights. In the event of a “Change in Control” and a “Qualified Termination” as defined in Sections 9.02 and 9.03, respectively, automatically in the case of Participants subject to Section 16 of the Exchange Act, and unless otherwise determined by the Board in writing at or after grant but prior to the occurrence of the Change in Control in the case of Participants not subject to Section 16 of the Exchange Act:

(i) the performance criteria of all Performance Awards, Performance-Based Restricted Stock, and Other Stock-Based Awards shall be deemed fully achieved and all such Awards shall be fully earned and vested, subject only to the restrictions on dispositions of equity securities set forth in Section 8.01.1 and legal restrictions on the issuance of Shares set forth in Section 8.04;

(ii) any Option, Stock Appreciation Right, and other Award in the nature of a right that may be exercised which was not previously exercisable and vested shall become fully exercisable and vested, subject only to the restrictions on disposition of equity securities set forth in Section 8.01.1 and legal restrictions on the issuance of Shares set forth in Section 8.04; and

(iii) the restrictions, deferral limitations, and forfeiture conditions applicable to any other Award granted under the Plan shall lapse and such Awards shall be deemed fully vested, subject only to the restrictions on dispositions of equity securities set forth in Section 8.01.1 and legal restrictions on the issuance of Shares set forth in Section 8.04.

9.02. Change in Control. For purposes of Section 9.01, a “Change in Control” shall mean any transaction that results in the voting control of the Corporation held by Cox Enterprises, Inc., its successor or any subsidiary of either falling below 50.1 percent.

9.03. Qualified Termination. For the purposes of Section 9.01, a “Qualified Termination” shall mean any termination of employment for reasons other than (i) Cause; (ii) death, Disability or Retirement, or (iii) by the Participant without Good Reason within one (1) year following a Change in Control.

(a) “Cause” shall mean (i) the willful and continued failure by the Participant to substantially perform the Participant’s duties with the Corporation or (ii) the willful engaging by the Participant in conduct which is demonstrably and materially injurious to the Corporation or its subsidiaries, monetarily or otherwise.

-9-

(b) “Disability” shall be deemed the reason for the termination by the Corporation of the Participant’s employment, if, as a result of the Participant’s incapacity due to physical or mental illness, the Participant shall have been absent from the full-time performance of the Participant’s duties with the Corporation for a period of six (6) consecutive months.

(c) “Good Reason” for termination by the Participant of the Participant’s employment shall mean the occurrence (without the Participant’s express written consent) after any Change in Control of any one of the following acts by the Corporation.

(i) a reduction by the Corporation in the Participant’s annual base salary other than for Cause or a Corporation–wide reduction in annual base salaries that generally affects similarly situated employees of the Corporation;

(ii) the relocation of the Corporation’s principal executive offices to a location more than fifty (50) miles from the location of such offices immediately prior to the Change in Control, but only in the event the Participant was employed at the Corporation’s principal executive offices immediately prior to such relocation.

(d) “Retirement” shall be deemed the reason for the termination by the Corporation or the Participant of the Participant’s employment if such employment is terminated in accordance with the Corporation’s retirement policy generally applicable to its employees, as in effect immediately prior to the Change in Control, or in accordance with any retirement arrangement established with the Participant’s consent with respect to the Participant.

SECTION 10. Adjustment Provisions. In the event that the Committee shall determine that any dividend or other distribution (whether in the form of cash, Shares, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, spin-off, combination, repurchase, or share exchange, or other similar corporate transaction or event, affects the Shares such that an adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the rights of Participants under the Plan, then the Committee may, in such manner as it may deem equitable, adjust any or all of (i) the number and kind of Shares which may thereafter be issued in connection with Awards (ii) the number and kind of Shares issued or issuable in respect of outstanding Awards, and (iii) the exercise price, grant price, or purchase price relating to any Award or, if deemed appropriate, make provision for a cash payment with respect to any outstanding Award; provided, however, in each case, that, with respect to Incentive Stock Options, no such adjustment shall be authorized to the extent that such authority would cause the Plan to violate Section 422(b)(1) of the Code. In addition, the Committee is authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, events described in the preceding sentence) affecting the Corporation or any Subsidiary or the financial statements of the Corporation or any Subsidiary, or in response to changes in applicable laws, regulations, or accounting principles.

SECTION 11. Changes to the Plan and Awards.

11.01. Changes to the Plan. The Board may amend, alter, suspend, discontinue or terminate the Plan without the consent of shareholders or Participants, except that any such amendment, alteration, suspension, discontinuation, or termination shall be subject to the approval of the Corporation’s shareholders within one year after such Board action if such shareholder approval is required by any federal or state law or regulation or the rules of any stock exchange on which the Shares may be listed, or if the Board in its discretion determines that obtaining such shareholder approval is for any reason advisable; provided, however, that, without the consent of an affected Participant, no amendment, alteration, suspension, discontinuation, or termination of the Plan may impair the rights of such Participant under any Award previously granted to him.

11.02. Changes to Awards. The Committee may waive any conditions or rights under, or amend, alter, suspend, discontinue, or terminate, any Award previously granted and any Award Agreement relating thereto; provided, however, that, without the consent of an affected Participant, no such amendment, alteration, suspension, discontinuation, or termination of any Award may materially impair the rights of such Participant under such Award. Notwithstanding any provisions of the Plan to the contrary, the Committee may not make any changes to

-10-

any Award or any Award Agreement issued under the Plan to the extent that such change would cause any Participant to immediately recognize taxable income under the provisions of Section 409A of the Code as a result of such change.

SECTION 12. General Provisions.

12.01. No Rights to Awards. No Participant or employee shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Participants and employees.

12.02. No Shareholder Rights. No Award shall confer on any Participant any of the rights of a shareholder of the Corporation unless and until Shares are duly issued or transferred to the Participant in accordance with the terms of the Award.

12.03. Tax Withholding. The Corporation or any Subsidiary is authorized to withhold from any Award granted, any payment relating to an Award under the Plan, including from a distribution of Shares, or any payroll or other payment to a Participant, amounts or withholding and other taxes due with respect thereto, its exercise, or any payment thereunder, and to take such other action as the Committee may deem necessary or advisable to enable the Corporation and Participants to satisfy obligations for the payment of withholding taxes and other tax liabilities relating to any Award, provided, that no Shares are withheld with a value exceeding the minimum amount of tax required to be withheld by law. This authority shall include authority to withhold or receive Shares or other property and to make cash payments in respect thereof in satisfaction of Participant’s tax obligations.

12.04. No Right to Employment. Nothing contained in the Plan or any Award Agreement shall confer, and no grant of an Award shall be construed as conferring, upon any employee any right to continue in the employ of the Corporation or any Subsidiary or to interfere in any way with the right of the Corporation or any Subsidiary to terminate his employment at any time or increase or decrease his compensation from the rate in existence at the time of granting of an Award.

12.05. Unfunded Status of Awards. The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award shall give any such Participant any rights that are greater than those of a general creditor of the Corporation; provided, that the Committee may authorize the creation of trusts or make other arrangements to meet the Corporation’s obligations under the Plan to deliver cash, Shares, other Awards, or other property pursuant to any award, which trusts or other arrangements shall be consistent with the “unfunded” status of the Plan unless the Committee otherwise determines.

12.06. Other Compensatory Arrangements. The Corporation or any Subsidiary shall be permitted to adopt other or additional compensation arrangements (which may include arrangements which relate to Awards), and such arrangements may be either generally applicable or applicable only in specific cases.

12.07. Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, other Awards, or other property shall be issued or paid in lieu of fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated.

12.08. Governing Law. The validity, construction, and effect of the Plan, any rules and regulations relating to the Plan, and any Award Agreement shall be determined in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of laws, and applicable Federal law.

SECTION 13. Effective Date. The Plan, as amended and restated, shall become effective on the date this amended and restated version is adopted under the provisions of Section 11.01, subject to the approval of the Corporation’s shareholders.

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EX-10.3 3 dex103.htm FORMS OF AWARD AGREEMENTS Forms of Award Agreements

Exhibit 10.3

Form of

Cox Radio, Inc.

Long-Term Incentive Plan Grant Agreement

[Name]


Grant Date	Type of Grant	Number of Options	Exercise Price
03/15/05	Non-Qualified Stock Option	[number]	$[price]

Stock Option Term

You may exercise your options from the time they become vested (see below) until 10 years after the Grant Date, March 15, 2015.

Normal Vesting Provisions

Your options become vested (i.e., exercisable) as follows:

•

60% of your option award becomes vested at the end of the 3^rd year after the Grant Date (March 15, 2008).

•

An additional 20% (for a total of 80%) of your option award becomes vested at the end of the 4^th year after the Grant Date (March 15, 2009).

•

An additional 20% (for a total of 100%) of your option award becomes vested at the end of the 5^th year after the Grant Date (March 15, 2010).

Special Vesting Provisions

You may be eligible to become 100% vested in your stock option grant if:

•

At least 6 months have passed since the grant date and

•

The closing price of Cox Radio stock reaches 140% of your exercise price ($xx.xx) at any time after the 6 month period and

•

The closing price remains at or above $xx.xx for 10 consecutive trading days.

Termination Guidelines

If you terminate employment for reasons other than cause, retirement, death, permanent disability or transferring to another Cox company, you will have 90 days from the date of termination (or until the expiration of the option term, if that date is less than 90 days from the date of termination) to exercise any vested stock options. Unvested stock options will be forfeited.

If you are terminated for cause, you will forfeit all benefits from the Plan and all options (vested and unvested) will immediately be cancelled.

If you retire, die or become totally and permanently disabled, your stock options will immediately 100% vest upon termination of employment and you (or your beneficiary) will have one year from the date of termination (or until the expiration of the option term, if that date is less than one year from the date of termination) to exercise all vested options.

If you transfer to another Cox company after a date when any portion of this award has become vested, you will retain the portion that is vested at the time of transfer, but any unvested portion will be forfeited.

If you transfer to another Cox company prior to a date when any portion of this award has become vested, then a portion of the option award will become vested upon the date of transfer, as follows:

•

None of your award will vest if the transfer date is less than 6 months after the Grant Date.

•

20% of your award will vest if the transfer date is at least 6 months but less than 18 months after the Grant Date.

•

40% of your award will vest if the transfer date is at least 18 months but less than 30 months after the Grant Date.

•

60% of your award will vest if the transfer date is at least 30 months but less than 36 months after the Grant Date.

I wish to accept this award granted under the Cox Radio, Inc. Third Amended and Restated Long-Term Incentive Plan. I acknowledge that I have received a copy of the Plan Summary, Plan Prospectus, and Legal Plan Document, and agree to all of the terms and conditions contained in this agreement and the Legal Plan Document. In the event of inconsistency between this agreement and the Legal Plan Document, the terms of the Legal Plan Document shall control.

Signature:

Date:

Return by June 1, 2005 (in the envelope provided) to Compensation Department at Cox Enterprises, Inc.

Form of

Cox Radio, Inc.

Long-Term Incentive Plan

Restricted Stock Grant Agreement

[Name]


Grant Date	Type of Grant	Number of Shares
03/15/05	Restricted Stock	[ ]

Vesting Provisions

These shares of restricted stock will become 100% vested on March 15, 2010 (the “Vesting Date”), provided that you have been continuously employed by Cox Radio, Inc. (the “Company”) through such date. Once vested, your shares will be maintained in a book entry account position on the ledger of the Company’s stock transfer agent or, in the Company’s sole discretion, in the form of a stock certificate. If issued in the form of a stock certificate, the Company shall retain physical control over such certificate(s), and you shall deliver a stock power to the Company, endorsed in blank, relating to such certificate(s).

Termination Guidelines

If you terminate employment with the Company before the Vesting Date for any reason other than for cause, retirement, death, or permanent disability, you will forfeit all of these shares.

If you are terminated for cause before the Vesting Date you will forfeit all of these shares.

If you retire, die or become totally and permanently disabled, your shares will 100% vest upon such termination of employment.

Continuing Resale Restrictions

After your shares have vested, at all times while you remain employed by the Company or its affiliates you must retain a number of shares equal to sixty percent (60%) of your original award, and you cannot resell or transfer such shares. Your book entry position or stock certificate(s) will bear a legend or stop-transfer instructions (as applicable) reflecting these restrictions.

I wish to accept this award granted under the Cox Radio, Inc. Third Amended and Restated Long-Term Incentive Plan. I acknowledge that I have received a copy of the Plan Summary, Plan Prospectus, and Legal Plan Document. I agree to all of the terms and conditions contained in this Agreement and the Legal Plan Document. In the event of inconsistency between this Agreement and the Legal Plan Document, the terms of the Legal Plan Document shall control.

Signature:

Date:


Return (in the enclosed envelope) to:
		Manager, Equity Compensation Plans
		Cox Enterprises, Inc.
		6205 Peachtree Dunwoody Road
		Atlanta, GA 30328

Form of

Cox Radio, Inc.

Long-Term Incentive Plan

Performance Award Agreement

[Name]


Grant Date	Type of Grant	Number of Units
03/15/05	Performance Units	[ ]

Unit Award and Measurement

You are awarded the number of performance units stated above. The benefit for these units will be equal to the percentage increase in Cox Radio’s financial performance over a five-year performance period, measured annually as of December 31, beginning December 31, 2004 and concluding December 31, 2009, using Cox Radio’s income before depreciation (IBD) times a multiple, minus Cox Radio’s debt. This percentage increase will be denominated in dollars, and then multiplied by the number of vested units, to determine your cash award. No award shall be effective unless and until the Third Amended and Restated Long-Term Incentive Plan (the “Plan”) is approved by the majority vote of the shareholders of Cox Radio voting with respect to the approval of the Plan in accordance with applicable rules of the Securities and Exchange Commission and the New York Stock Exchange.

Vesting Provisions

Your performance award becomes vested as follows:

•

60% of your award becomes vested on December 31, 2007.

•

An additional 20% (for a total of 80%) of your award becomes vested on December 31, 2008.

•

An additional 20% (for a total of 100%) of your award becomes vested on December 31, 2009.

Termination Provisions

•

If you terminate employment for any reason other than for cause, retirement, death, or permanent disability, you will forfeit any portion of your award that is not vested. Your vested benefit would be based on the appreciation in the performance measure achieved as of the December 31^st immediately preceding the date of such termination, provided that if such date is on December 31^st, then your vested benefit would be based on the appreciation achieved as of such date.

•

If you retire, die, or become totally and permanently disabled, your award will become 100% vested, and you will receive a benefit based on the appreciation in the performance measure achieved as of the December 31^st immediately preceding the date of your death, retirement or disability, provided that if such date is on December 31^st, then such benefit will be based on the appreciation achieved as of such date.

•

If you are terminated for cause, then both the vested and unvested portion of your performance award(s) will be forfeited.

Benefit Payment

Your vested award will be paid in cash as soon as practicable following the end of the five-year performance period, or such earlier period ending in termination as described above, provided that certain senior executives may be paid in a combination of cash and shares of Cox Radio stock, at the sole election of Cox Radio. Any such shares must be retained at all times while the executive is employed by the Company or its affiliates, and such shares cannot be resold or transferred, with any book entry position or stock certificate(s) representing such shares to bear a legend or stop-transfer instructions reflecting these restrictions. Notwithstanding the foregoing, not more than once per year a request may be made that the Company release from such restrictions a portion of such shares for resale, in an amount not to exceed in any such year twenty-five percent of the total number of such shares held as of December 31^st of the preceding year.

I wish to accept this award granted under the Cox Radio, Inc. Third Amended and Restated Long-Term Incentive Plan. I acknowledge that I have received a copy of the Plan Summary, Plan Prospectus, and Legal Plan Document. I agree to all of the terms and conditions contained in this Agreement and the Legal Plan Document. In the event of inconsistency between this Agreement and the Legal Plan Document, the terms of the Legal Plan Document shall control.

Signature:

Date:


Return (in the enclosed envelope) to:
		Manager, Equity Compensation Plans
		Cox Enterprises, Inc.
		6205 Peachtree Dunwoody Road, Atlanta, GA 30328

EX-31.1 4 dex311.htm SECTION 302 CEO CERTIFICATION Section 302 CEO Certification

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13a-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934

I, Robert F. Neil, Chief Executive Officer of Cox Radio, Inc., certify that:

I have reviewed this quarterly report on Form 10-Q of Cox Radio, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:

(a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

(d)

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 6, 2005

/s/ Robert F. Neil

Robert F. Neil

Chief Executive Officer

EX-31.2 5 dex312.htm SECTION 302 CFO CERTIFICATION Section 302 CFO Certification

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934

I, Neil O. Johnston, Chief Financial Officer of Cox Radio, Inc., certify that:

I have reviewed this quarterly report on Form 10-Q of Cox Radio, Inc.;

(a)

(b)

(c)

(d)

(a)

(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 6, 2005

/s/ Neil O. Johnston

Neil O. Johnston

Chief Financial Officer

EX-32.1 6 dex321.htm SECTION 906 CEO AND CFO CERTIFICATION Section 906 CEO and CFO Certification

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO RULE

13a-14(b) OF THE SECURITIES EXCHANGE ACT OF 1934

In connection with the quarterly report on Form 10-Q of Cox Radio, Inc. (the “Company”) for the period ended March 31, 2005 as filed with the Securities and Exchange Commission as of the date hereof, I, Robert F. Neil, Chief Executive Officer of the Company, and I, Neil O. Johnston, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. §1350, that to the best of our knowledge:

(1)

the Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and

(2)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


/s/ Robert F. Neil
Name:		Robert F. Neil
Title:		Chief Executive Officer
Date:		May 6, 2005

/s/ Neil O. Johnston
Name:		Neil O. Johnston
Title:		Chief Financial Officer
Date:		May 6, 2005

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act, or other documentation authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002, has been provided to Cox Radio and will be retained by Cox Radio and furnished to the Securities and Exchange Commission or its staff upon request.

This certification “accompanies” the quarterly report on Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission, and is not to be incorporated by reference into any filing of Cox Radio under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the quarterly report on Form 10-Q, irrespective of an general incorporation language contained in such filing).

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