Form 10-Q

-----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, SRGcv38mQVsRB38xxSLTXv7h8ZbeVX5J30yt3g04/PalNV/hEsi2gMiXwzNQlFED 57py7x0+jGoFRufi99FurQ== 0001193125-05-216618.txt : 20051104 0001193125-05-216618.hdr.sgml : 20051104 20051104123628 ACCESSION NUMBER: 0001193125-05-216618 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20050930 FILED AS OF DATE: 20051104 DATE AS OF CHANGE: 20051104 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: 051179276 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 Form 10-Q

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 September 30, 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 Rule 12b-2 of the Exchange Act). Yes x No ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

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 – 41,467,069 shares outstanding as of September 30, 2005.

Class B common stock, par value of $0.33 – 58,733,016 shares outstanding as of September 30, 2005.

COX RADIO, INC.

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 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	15

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	21

Item 4.	Controls and Procedur es	21

	Part II - Other Information

Item 1.	Legal Proceedings	22

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22

Item 6.	Exhibits	23

Signatures		24

Preliminary Note

This Quarterly Report on Form 10-Q is for the three-month and nine-month periods ended September 30, 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)


	September 30, 2005			December 31, 2004
	(Amounts in thousands, except share data)
ASSETS
Current assets:
Cash	$	3,758		$	3,230
Accounts and notes receivable, less allowance for doubtful accounts of $3,728 and $3,843, respectively		86,594			84,066
Prepaid expenses and other current assets		7,299			7,698
Amounts due from Cox Enterprises.		9,872			6,573

Total current assets		107,523			101,567
Property and equipment, net		74,258			74,322
FCC licenses and other intangible assets, net		1,659,557			1,650,108
Goodwill		441,458			441,453
Other assets		12,407			14,425

Total assets	$	2,295,203		$	2,281,875

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	24,650		$	26,849
Accrued salaries and wages		2,926			2,509
Accrued interest		2,787			7,568
Income taxes payable		6,006			4,142
Current portion of long-term debt		20,000			20,000
Other current liabilities		4,932			3,709

Total current liabilities		61,301			64,777
Long-term debt, less current portion		404,970			454,877
Deferred income taxes		515,533			500,304
Other long term liabilities		7,832			4,244

Total liabilities		989,636			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; 42,189,540 and 42,105,928 shares issued and 41,467,069 and 41,977,657 shares outstanding at September 30, 2005 and December 31, 2004, respectively		13,923			13,895
Class B common stock, $0.33 par value; 135,000,000 shares authorized; 58,733,016 shares issued and outstanding at September 30, 2005 and December 31, 2004		19,382			19,382
Additional paid-in capital		635,651			635,385
Unearned stock-based compensation		(2,178	)		(2,303	)
Accumulated other comprehensive loss, net of tax		80			(535	)
Retained earnings		649,511			593,695

		1,316,369			1,259,519
Less: Class A common stock held in treasury (722,471 and 128,271 shares at cost at September 30, 2005 and December 31, 2004, respectively)		(10,802	)		(1,846	)

Total shareholders’ equity		1,305,567			1,257,673

Total liabilities and shareholders’ equity	$	2,295,203		$	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 September 30,						Nine Months Ended September 30,
	2005			2004			2005			2004
Net revenues:
Local	$	79,383		$	81,273		$	233,819		$	232,370
National		25,753			27,678			72,805			72,635
Other		8,099			8,049			22,433			21,961

Total revenues		113,235			117,000			329,057			326,966
Operating expenses:
Cost of services (exclusive of depreciation and amortization shown below)		21,331			27,878			64,218			74,588
Selling, general and administrative		41,415			40,596			127,355			120,566
Corporate general and administrative		5,124			4,485			14,874			13,664
Depreciation and amortization		2,811			3,142			8,512			9,025
Loss on loan guarantee		9			3,064			(122	)		3,064
Other operating expenses, net		47			48			52			117

Operating income		42,498			37,787			114,168			105,942

Other income (expense):
Interest expense		(6,567	)		(7,496	)		(20,802	)		(23,095	)
Other items, net		(1	)		(99	)		(25	)		(287	)

Income before income taxes		35,930			30,192			93,341			82,560

Current income tax expense		8,369			8,745			21,570			38,737
Deferred income tax expense (benefit)		6,104			3,086			15,955			(5,878	)

Total income tax expense		14,473			11,831			37,525			32,859

Net income	$	21,457		$	18,361		$	55,816		$	49,701

Basic net income per share
Net income per common share	$	0.21		$	0.18		$	0.56		$	0.49

Diluted net income per share
Net income per common share	$	0.21		$	0.18		$	0.55		$	0.49

Weighted average basic common shares outstanding		100,486			100,557			100,555			100,544

Weighted average diluted common shares outstanding		100,714			100,686			100,799			100,714

See notes to unaudited consolidated financial statements.

COX RADIO, INC.

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

(Unaudited)


	Class A Common Stock			Class B Common Stock			Additional Paid-in Capital
	Shares	Amount		Shares	Amount		Additional Paid-in Capital
	(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	84		28	—		—		266

Balance at September 30, 2005	42,190	$	13,923	58,733	$	19,382	$	635,651


	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		—			—			55,816	—		—			55,816
Unrealized gain on interest rate swaps		—			573			—	—		—			573
Reclassification to earnings of derivative transition adjustments		—			42			—	—		—			42

Comprehensive income		—			—			—	—		—			56,431

Unearned stock based compensation		(149	)		—			—	—		—			(149	)
Amortization of unearned stock-based compensation		274			—			—	—		—			274
Class A common stock repurchased		—			—			—	594		(8,956	)		(8,956	)
Issuance of Class A common stock related to incentive plans including tax benefit of less than $0.1 million		—			—			—	—		—			294

Balance at September 30, 2005	$	(2,178	)	$	80		$	649,511	722	$	(10,802	)	$	1,305,567

See notes to unaudited consolidated financial statements.

COX RADIO, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Nine Months Ended September 30,
	2005			2004
	(Amounts in thousands)
Cash flows from operating activities:
Net income	$	55,816		$	49,701
Items not requiring cash:
Depreciation and amortization		8,512			9,025
Deferred income taxes		15,955			(5,878	)
Tax benefit of stock options exercised		9			227
Compensation expense related to long-term incentive compensation plans		2,523			294
Loss on loan guarantee		—			3,064
Other		338			1,066
Changes in assets and liabilities:
Increase in accounts receivable		(2,528	)		(7,105	)
Increase (decrease) in accounts payable and accrued expenses		85			(3,414	)
Increase (decrease) in accrued salaries and wages		417			(1,437	)
Decrease in accrued interest		(4,781	)		(2,287	)
Increase in income taxes payable		1,864			22,334
Other, net		2,640			1,722

Net cash provided by operating activities		80,850			67,312

Cash flows from investing activities:
Capital expenditures		(8,397	)		(6,342	)
Acquisitions and related expenses, net of cash acquired		(4,000	)		(352	)
Option to purchase radio stations		(2,000	)		—
Investment in signal upgrades		(1,982	)		(7,406	)
Proceeds from sales of assets		177			89
Other, net		161			(718	)

Net cash used in investing activities		(16,041	)		(14,729	)

Cash flows from financing activities:
Net borrowings (repayments) of revolving credit facilities		50,000			(50,000	)
Repayment of 6.375% notes		(100,000	)		—
Cash paid for loss on loan guarantee		(2,933	)		—
Proceeds from issuances of stock related to stock-based compensation plans		134			4,228
Increase (decrease) in book overdrafts		773			(199	)
Share repurchases		(8,956	)		—
Payment of debt issuance costs		—			(716	)
Increase in amounts due from Cox Enterprises, Inc.		(3,299	)		(4,860	)

Net cash used in financing activities		(64,281	)		(51,547	)

Net increase in cash and cash equivalents		528			1,036
Cash and cash equivalents at beginning of period		3,230			4,202

Cash and cash equivalents at end of period	$	3,758		$	5,238


Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	25,587		$	25,384
Income taxes		19,706			16,175

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 and nine-month periods ended September 30, 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 such 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 such reporting unit, 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.

Had compensation cost for the Long-Term Incentive Plan (LTIP) 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 would have been changed to the pro forma amounts indicated below.


	Three Months Ended September 30,						Nine Months Ended September 30,
	2005			2004			2005			2004
	(Amounts in thousands, except per share data)
Net income, as reported	$	21,457		$	18,361		$	55,816		$	49,701
Add: Amortization of unearned compensation related to stock-based compensation plans, net of tax		87			—			168			—
Deduct: stock-based employee compensation expense determined under fair value based method for all awards, net of tax		(1,393	)		(2,453	)		(4,583	)		(6,871	)

Pro forma net income	$	20,151		$	15,908		$	51,401		$	42,830

Earnings per share:
Basic – as reported	$	0.21		$	0.18		$	0.56		$	0.49

Basic – pro forma	$	0.20		$	0.16		$	0.51		$	0.43

Diluted – as reported	$	0.21		$	0.18		$	0.55		$	0.49

Diluted – pro forma	$	0.20		$	0.16		$	0.51		$	0.43

On October 31, 2005, the Compensation Committee of the Board of Directors approved the acceleration of the vesting of all unvested stock options granted under Cox Radio’s LTIP from January 2001 through October 31, 2005. Unvested stock option awards with respect to approximately 4.7 million shares of Class A Common Stock were subject to this vesting acceleration. However, the Compensation Committee left the exercise date of these options, and all other terms of the awards, unchanged. The purpose of accelerating the vesting of these options is to allow Cox Radio to avoid recognition of compensation expense associated with these options in future periods as the exercise prices exceeded the market value of the underlying stock on October 31, 2005. Incremental pre-tax expense of $12.1 million associated with the acceleration will be included in the pro forma disclosure included in Cox Radio’s Annual Report on Form 10-K for the year ending December 31, 2005.

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 and nine-month periods ended September 30, 2005, and 26% and 25% of total revenues for the three-month and nine-month periods, respectively, ended September 30, 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 also 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. Cox Radio must 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 expects that the implementation of SFAS No. 123R will have a material non-cash impact on its consolidated 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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2005		2004		2005		2004
	(Amounts in thousands, except per share data)
Net income	$	21,457	$	18,361	$	55,816	$	49,701

Earnings per share – basic
Weighted average common shares outstanding		100,486		100,557		100,555		100,544

Net income per common share – basic	$	0.21	$	0.18	$	0. 56	$	0. 49

Earnings per share – diluted
Weighted average common shares outstanding		100,486		100,557		100,555		100,544
Effect of dilutive securities:
Options		103		128		110		165
Restricted stock		38		—		41		3
Performance awards		60		—		60		—
Employee Stock Purchase Plan		27		1		33		2

Shares applicable to earnings per share – diluted		100,714		100,686		100,799		100,714

Net income per common share – diluted	$	0.21	$	0.18	$	0.55	$	0.49

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 and nine-month periods ended September 30, 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 and nine-month periods ended September 30, 2005 and 2004.


	Three Months ended September 30,		Nine Months Ended September 30,
	2005	2004	2005	2004
	(Amounts in thousands)
Weighted average options and restricted stock outstanding	6,865	5,876	6,580	6,090

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:


	September 30, 2005			December 31, 2004
	(Amounts in thousands)
6.375% notes payable, due in May 2005 (1)	$	—		$	99,980
6.625% notes payable, due in February 2006 (2)		249,970			249,897
Revolving credit facility		175,000			125,000

Total outstanding debt		424,970			474,877
Less current portion		(20,000	)		(20,000	)

Total long-term debt	$	404,970		$	454,877

(1)	At December 31, 2004, the estimated aggregate fair value of the 6.375% notes was approximately $101.3 million based on quoted market prices. In May 2005, Cox Radio repaid the $100.0 million principal amount of the 6.375% notes at maturity using funds from the revolving credit facility.

(2)

At September 30, 2005 and December 31, 2004, the estimated aggregate fair value of these notes was approximately $251.7 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 $325 million as of September 30, 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 September 30, 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. In May 2005, Cox Radio repaid the $100.0 million principal amount of its 6.375% notes at maturity using funds from the revolving credit facility. At September 30, 2005, Cox Radio had $175 million of outstanding indebtedness under the credit facility with $325 million available. The interest rate applied to amounts due under the bank credit facility was 4.4% at September 30, 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 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.

Cox Radio has an effective 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 up to $300 million. 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.

Cox Radio is a party to various 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 September 30, 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 September 30, 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 two years. The estimated fair value of the swap agreement, based on current market rates, approximated a net payable of $0.9 million at September 30, 2005 and $1.9 million at December 31, 2004. The fair value of the swap agreement at September 30, 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 and nine-month periods ended September 30, 2005 and 2004, 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 nine-month period ended September 30, 2005, less than $0.1 million, before related income tax effects, was reclassified into earnings as interest expense. The balance of $0.1 million recorded in accumulated other comprehensive income at September 30, 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 September 30, 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)
September 30, 2005
FCC licenses and other intangible assets, net	$	1,660,113	$	556	$	1,659,557

Goodwill		441,458		-		441,458

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 September 30, 2005 and 2004.

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 $3.8 million into FCC licenses and less than $0.1 million into goodwill.

During the second quarter of 2005, Cox Radio completed a signal upgrade for WBHJ-FM in Birmingham, Alabama and reclassified $5.5 million from other assets to FCC licenses.

7. Shareholders’ Equity

On August 24, 2005, Cox Radio’s Board of Directors authorized a share repurchase program pursuant to which Cox Radio is authorized to repurchase up to $100 million of its outstanding shares of Class A common stock. As of September 30, 2005, Cox Radio had purchased 0.6 million shares for an aggregate purchase price of approximately $9 million, including commissions and fees, at an average price of $15.07 per share. As of September 30, 2005, $91 million remained authorized as available to repurchase outstanding shares. Depending on market conditions and other factors, these purchases may be commenced or suspended at any time or from time to time without prior notice.

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, 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 October 31, 2005 are discussed below.

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, valued at $4.0 million. 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.

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 September 30, 2005 compared to three months ended September 30, 2004:


	September 30, 2005		September 30, 2004		$ Change			% Change
	(Amounts in thousands)
Net revenues:
Local	$	79,383	$	81,273	$	(1,890	)	(2.3	)%
National		25,753		27,678		(1,925	)	(7.0	)%
Other		8,099		8,049		50		0.6	%

Total net revenues	$	113,235	$	117,000	$	(3,765	)	(3.2	)%

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 third quarter of 2005 decreased $3.8 million to $113.2 million, a 3.2% decrease compared to the third quarter of 2004. Local revenues decreased 2.3% and national revenues decreased 7.0% as compared to the third quarter of 2004. Our stations in Miami, Tampa, Houston, and San Antonio delivered solid growth during the third quarter of 2005. Those increases were partially offset by results for our stations in Orlando, Jacksonville, Southern Connecticut, Louisville, and Richmond where revenues were down for the quarter. In Atlanta, net revenues were down 11.3% for the third quarter primarily as a result of the discontinuation of the Atlanta Braves broadcasting agreement.


	September 30, 2005		September 30, 2004		$ Change			% Change
	(Amounts in thousands)
Cost of services (exclusive of depreciation and amortization shown below)	$	21,331	$	27,878	$	(6,547	)	(23.5	)%

Cost of services is comprised of expenses incurred by our technical, news and programming departments. Cost of services decreased $6.5 million, or 23.5%, to $21.3 million, primarily due to the discontinuation of the Atlanta Braves broadcasting agreement which included costs of approximately $6.3 million in the third quarter of 2004.


	September 30, 2005		September 30, 2004		$ Change		% Change
	(Amounts in thousands)
Selling, general and administrative expenses	$	41,415	$	40,596	$	819	2.0	%

Selling, general and administrative expenses are comprised of our sales, promotion and general and administrative departments. Selling, general and administrative expenses increased $0.8 million to $41.4 million, or 2.0% compared to the third quarter of 2004. This increase was a result of expenses related to restricted stock and performance units awarded under our LTIP in the first quarter of 2005. This increase was partially offset by a decrease in promotions expense.


	September 30, 2005		September 30, 2004		$ Change			% Change
	(Amounts in thousands)
Corporate general and administrative expenses	$	5,124	$	4,485	$	639		14.2	%
Depreciation and amortization		2,811		3,142		(331	)	(10.5	)%
Loss on loan guarantee		9		3,064		(3,055	)	(99.7	)%
Other operating expenses, net		47		48		(1	)	(2.1	)%

Corporate general and administrative expenses increased $0.6 million to $5.1 million, or 14.2% compared to the third quarter of 2004 primarily as a result of additional compensation expense related to the issuance of restricted stock and performance units awarded under our LTIP in the first quarter of 2005. The changes in depreciation and amortization and other operating expenses, net were not material to Cox Radio’s overall operating results or financial condition.


	September 30, 2005		September 30, 2004		$ Change		% Change
	(Amounts in thousands)
Operating income	$	42,498	$	37,787	$	4,711	12.5	%

Operating income for the third quarter of 2005 was $42.5 million, a $4.7 million increase over the third quarter of 2004, primarily as a result of a $3.1 million loss on loan guarantee recorded in the third quarter of 2004 and for the reasons discussed above.


	September 30, 2005		September 30, 2004		$ Change			% Change
	(Amounts in thousands)
Interest expense	$	6,567	$	7,496	$	(929	)	(12.4	)%

Interest expense during the third quarter of 2005 totaled $6.6 million, as compared to $7.5 million for the third quarter of 2004. This decrease was the result of lower overall outstanding debt, as well as a lower overall average borrowing rate due to the repayment at maturity of the $100.0 million principal amount of our 6.375% notes in May 2005 with proceeds from our five-year revolving credit facility. The average rate on our credit facility was 4.3% during the third quarter of 2005 and 2.2% during the third quarter of 2004.


	September 30, 2005		September 30, 2004		$ Change		% Change
	(Amounts in thousands)
Income tax expense:
Current	$	8,369	$	8,745	$	(376)	(4.3)	%
Deferred		6,104		3,086		3,018	97.8	%

Total income tax expense $	$	14,473	$	11,831	$	2,642	22.3	%

Income tax expense increased approximately $2.6 million to $14.5 million in the third quarter of 2005 compared to $11.8 million in the third quarter of 2004. This increase was due primarily to an increase in operating income and a decrease in interest expense, as described above. The effective tax rate for the third quarter of 2005 was 40.3% as compared to 39.2% for the third quarter of 2004.


	September 30, 2005		September 30, 2004		$ Change		% Change
	(Amounts in thousands)
Net income	$	21,457	$	18,361	$	3,096	16.9	%

Net income for the third quarter of 2005 was $21.5 million, as compared to $18.4 million for the third quarter of 2004, for the reasons discussed above.

Nine months ended September 30, 2005 compared to nine months ended September 30, 2004:


	September 30, 2005		September 30, 2004		$ Change		% Change
	(Amounts in thousands)
Net revenues:
Local	$	233,819	$	232,370	$	1,449	0.6	%
National		72,805		72,635		170	0.2	%
Other		22,433		21,961		472	2.1	%

Total net revenues	$	329,057	$	326,966	$	2,091	0.6	%

Net revenues for the first nine months of 2005 increased $2.1 million to $329.1 million, a 0.6% increase compared to the first nine months of 2004. Local revenues increased 0.6% and national revenues increased 0.2% as compared to the first nine months of 2004. Our stations in Miami, Tampa, San Antonio, and Dayton delivered solid growth during the first nine months of 2005. Those increases were partially offset by results for our stations in Richmond, Birmingham, and Louisville where revenues were down for the first nine months of 2005. In Atlanta, net revenues were down 7.7% primarily as a result of the discontinuation of the Atlanta Braves broadcasting agreement.


	September 30, 2005		September 30, 2004		$ Change			% Change
	(Amounts in thousands)
Cost of services (exclusive of depreciation and amortization shown below)	$	64,218	$	74,588	$	(10,370	)	(13.9	)%

Cost of services is comprised of expenses incurred by our technical, news and programming departments. Cost of services decreased $10.4 million to $64.2 million, a 13.9% decrease compared to the first nine months of 2004 primarily due to the discontinuation of the Atlanta Braves broadcasting agreement, which included costs of $12.5 million in the first nine months of 2004. This decrease was partially offset by increased music license fees and higher programming expenses in the first quarter of 2005.


	September 30, 2005		September 30, 2004		$ Change		% Change
	(Amounts in thousands)
Selling, general and administrative expenses	$	127,355	$	120,566	$	6,789	5.6	%

Selling, general and administrative expenses are comprised of our sales, promotion and general and administrative departments. Selling, general and administrative expenses increased $6.8 million to $127.4 million, or 5.6%, compared to the first nine months of 2004. This was primarily as a result of higher sales commissions due to higher revenues in the first nine months of 2005, as compared to the first nine months of 2004, and expenses related to restricted stock and performance units awarded under our LTIP in the first quarter of 2005.


	September 30, 2005			September 30, 2004		$ Change			% Change
	(Amounts in thousands)
Corporate general and administrative expenses	$	14,874		$	13,664	$	1,210		8.9	%
Depreciation and amortization		8,512			9,025		(513	)	(5.7	)%
Loss on loan guarantee		(122	)		3,064		(3,186	)	(104.0	)%
Other operating expenses, net		52			117		(65	)	(55.6	)%

Corporate general and administrative expenses increased $1.2 million to $14.9 million, an 8.9% increase compared to the first nine months of 2004 as a result of additional compensation expense related to the issuance of restricted stock and performance units awarded under our LTIP in the first quarter of 2005. The changes in depreciation and amortization and other operating expenses, net were not material to Cox Radio’s overall operating results or financial condition.


	September 30, 2005		September 30, 2004		$ Change		% Change
	(Amounts in thousands)
Operating income	$	114,168	$	105,942	$	8,226	7.8	%

Operating income for the first nine months of 2005 was $114.2 million, an $8.2 million increase over the first nine months of 2004 for the reasons discussed above and as a result of a $3.1 million loss on loan guarantee in the third quarter of 2004.


	September 30, 2005		September 30, 2004		$ Change			% Change
	(Amounts in thousands)
Interest expense	$	20,802	$	23,095	$	(2,293	)	(9.9	)%

Interest expense during the first nine months totaled $20.8 million, as compared to $23.1 million for the first nine months of 2004. This decrease was the result of lower overall outstanding debt, as well as a lower overall average borrowing rate due to the repayment at maturity of the $100.0 million principal amount of our 6.375% notes in May 2005 with proceeds from our five-year revolving credit facility. The average rate on our credit facility was 3.8% during the first nine months of 2005 and 1.9% during the first nine months of 2004.


	September 30, 2005		September 30, 2004			$ Change			% Change
	(Amounts in thousands)
Income tax expense:
Current	$	21,570	$	38,737		$	(17,167	)	(44.3	)%
Deferred		15,955		(5,878	)		21,833		371.4	%

Total income tax expense	$	37,525	$	32,859		$	4,666		14.2	%

Income tax expense during the first nine months of 2005 totaled $37.5 million, a $4.7 million increase over the first nine months of 2004. This increase was due primarily to the increase in operating income and decrease in interest expense described above. The effective tax rates for the first nine months of 2005 and 2004 were 40.2% and 39.8%, respectively.


	September 30, 2005		September 30, 2004		$ Change		% Change
	(Amounts in thousands)
Net income	$	55,816	$	49,701	$	6,115	12.3	%

Net income for the first nine months of 2005 was $55.8 million, as compared to $49.7 million for the first nine months 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. In comparing the nine months ended September 30, 2005 to the nine months ended September 30, 2004, net cash provided by operating activities increased $13.5 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 may be funded through intercompany advances from Cox Enterprises. Any 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 Cox Radio. Amounts due to and from Cox Enterprises accrue interest at Cox Enterprises’ current commercial paper borrowing rate or a LIBOR based rate (4.0% and 1.8% at September 30, 2005 and 2004, respectively), dependent upon our credit rating. Cox Enterprises owed Cox Radio approximately $9.9 million and $6.6 million at September 30, 2005 and December 31, 2004, respectively.

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 one series of outstanding debt securities, as described below (dollar amount in thousands):


Principal Amount	Interest Rate	Maturity
$250,000 (1)	6.625%	February 2006

(1)

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.

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 a remaining maturity of 2 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 $0.9 million at September 30, 2005 and $1.9 million at December 31, 2004. The fair value of the swap agreement at September 30, 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 September 30, 2005 was $251.7 million, compared to a carrying amount of $250.0 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 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. If the borrowing rates under LIBOR were to increase 1% above the current rates at September 30, 2005, Cox Radio’s interest expense on the revolving credit facility would increase approximately $1.5 million on an annual basis, including any interest expense associated with the use of derivative rate hedging instruments as described above.

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 September 30, 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 Securities and Use of Proceeds

(a)

None

(b)

None

(c)	The following table sets forth certain information concerning the repurchase of Cox Radio’s Class A common stock during the three month period ended September 30, 2005.


Period	(a) Total Number of Shares Purchased	(b) Average Price Paid Per Share	(c) Total Number of Shares Purchased as Part of Publicly announced Plans of Programs	(d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
September 1, 2005 to September 30, 2005	594,200	15.07	594,200	$	91 million

(1)

On August 29, 2005, Cox Radio announced that its Board of Directors had authorized a repurchase program for the purchase of up to $100.0 million of Cox Radio’s Class A common stock. Repurchased shares are held in treasury, and the program does not have an expiration date. Although Cox Radio intends to make further purchases pursuant to this repurchase program, Cox Radio may suspend the repurchase program at any time, without prior notice, depending upon market conditions and various other factors.

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.

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

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

10.4	—	Form of notice of amendment to stock option award agreements accelerating vesting*

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.

*	Management contract or compensation plan

(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.

(9)	Incorporated by reference to Exhibit 10.2 of Cox Radio’s Report on Form 10-Q for the period ended March 31, 2005.

(10)	Incorporated by reference to Exhibit 10.3 of Cox Radio’s Report on Form 10-Q for the period ended March 31, 2005.

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.

November 4, 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-10.4 2 dex104.htm FORM OF NOTICE OF AMENDMENT TO STOCK OPTION AWARD AGREEMENTS Form of notice of amendment to stock option award agreements

Exhibit 10.4

November 2, 2005

Dear Cox Radio Long-Term Incentive Plan Participant:

On October 31, the Compensation Committee of the Board of Directors approved a change to the stock option portion of your Long-Term Incentive Plan (LTIP). The change accelerates the vesting date of your outstanding stock option awards granted from January 2001 through October 31, 2005. All these stock option awards are 100% vested as of October 31, 2005.

The company decided to change the vesting date to more efficiently manage stock options under new accounting rules. This change only affects your vesting date and does not change the date on which you may exercise your options (exercise period). As a result, it will have no impact on you if you remain with Cox Radio through the fifth anniversary of your grant date.

You do not need to take any action to make this change effective. This letter is intended only to inform you of this change, which applies to you only if you are employed through October 31, 2005.

How Your Vesting Has Changed

Vesting refers to your right to receive an award. Once you are vested, you cannot forfeit your award (except for termination of employment for cause).

Before October 31, 2005:

At grant, your stock options had the following vesting and exercise schedule:


Grant Date Anniversary	Your Vesting Percentage	Your Exercisable Options
3^rd	60%	60%
4^th	80%	80%
5^th	100%	100%

Therefore, you became 100% vested five years from the grant date. If you left the company prior to these dates, you would forfeit your right to exercise your unvested awards.

For Example: If you received a grant of 500 options on March 15, 2005, your grant had the following vesting and exercise schedule:


Date	Your Vesting Percentage	Your Exercisable Options

3/15/2008	300 options (60)%	300 options (60)%

3/15/2009	400 options (80)%	400 options (80)%

3/15/2010	500 options (100)%	500 options (100)%

On or After October 31, 2005:

With the change to the vesting date of your stock options, your new vesting and exercise schedule is:


Grant Date Anniversary	Your Vesting Percentage	Your Exercisable Options
3^rd	100%	60%
4^th	100%	80%
5^th	100%	100%

Your outstanding options are 100% vested as of October 31, 2005. This means that you cannot forfeit your right to exercise them, even if you terminate employment with the company (except for termination of employment for cause), though you may not exercise your options until the time they would have become exercisable prior to this change.

For Example: If you received a grant of 500 options on March 15, 2005, your grant has the following new vesting and exercise schedule:


Date	Your Vesting Percentage	Your Exercisable Options

3/15/2008	500 options (100)%	300 options (60)%

3/15/2009	500 options (100)%	400 options (80)%

3/15/2010	500 options (100)%	500 options (100)%

This change separates the vesting date and exercise period of your outstanding stock option awards. All other provisions of your outstanding stock options remain the same. In addition, this modification does not apply to stock option awards granted in the future, unless specifically mentioned in future award agreements.

Please call Stacy Hisman in the CEI Compensation Department at (678) 645-0083 if you have questions about this amendment. Enclosed is a personalized statement of your outstanding stock options. You may contact Wachovia, the company’s stock option administrator toll-free at (877) 828-0483 if you have questions about your statement.

Sincerely,

LOGO

Bob Neil

EX-31.1 3 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: November 4, 2005

/s/ Robert F. Neil

Robert F. Neil

Chief Executive Officer

EX-31.2 4 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: November 4, 2005

/s/ Neil O. Johnston

Neil O. Johnston

Chief Financial Officer

EX-32.1 5 dex321.htm SECTION 906 CEO & CFO CERTIFICATION Section 906 CEO & 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 September 30, 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:		November 4, 2005

/s/ Neil O. Johnston

Name:		Neil O. Johnston

Title:		Chief Financial Officer

Date:		November 4, 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).

GRAPHIC 6 g10839image001.jpg GRAPHIC begin 644 g10839image001.jpg M_]C_X``02D9)1@`!`@``9`!D``#_[``11'5C:WD``0`$````9```_^X`#D%D M;V)E`&3``````?_;`(0``0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$! M`0$!`0$!`0$!`0$!`0("`@("`@("`@("`P,#`P,#`P,#`P$!`0$!`0$"`0$" M`@(!`@(#`P,#`P,#`P,#`P,#`P,#`P,#`P,#`P,#`P,#`P,#`P,#`P,#`P,# M`P,#`P,#`P,#_\``$0@`10"6`P$1``(1`0,1`?_$`'@```(#``(#`0`````` M``````D*``@+!04_[%VJO'?9W^"<< M0+S:W:YNNG'/\54&;:LZIC^776]!.*R9>6S::&-LP&'N$%'LWTJ!@`K@C4#D M.(#*INTOVQM^6#>;PY@/".C>.)P@+L+7>Z9'U.2^-8>@E5?G$5%3HK'LU" MLFO5YL:2*@E5?5&W1(V'%-D*!4SB!F4:HW5``['(`"(@WOQC\GV`.5#!N3EQNEB@ZC4JS&.YJQVBS2K&#K\!#QZ)G#Z5F9B37;1\;' MLT""=5990B9"@(B(!T"I>QGVF*9/Y2>:^<6FIF3M_,HG.Z81=PC65BA<=2+] M$P(%?5>NPD%+9`NE>1='`%7JJ4$R,4HF3<&3,57H.`CLN_;TSPW1F8#7W2_5 M:)DB>HW96Y6JNYF/3$I721W#"6O^3Y5NLH!/0$CAH4Y3''R(3L!RAQ4GGG[= M>MXN9JZZRZH[=UQ@N9TZ;T%&J#,O&3<@JK-8R-J-XQW9E#.$Q$$@+$N%_4(` M>)O(`,%B-,_LUX-R%E5'67D,PA>..;8XCQM#'0RQ\DEBM]-N%!;HM9&?L4-6 MK%CL\@X$I6QYEE\88!_]B/N, M14I#)*27H.E8NM6J39RD*24=Q!E%F!5""D]7*FB"A/5!0H+7:M0,E$R,W:61(;LLHF M9M(.$R*$_$?$&MN@G0=![1[(XQU"U]RQLGF.7+#8[Q%4)*USJI3I@]DE&Q2H M1%=ATU3%*ZG[/,N&\>P1[]UG;E,O]O0"]XB>8^>Y8G&19:$TJRE@?%^/F1$# MY=M-\KELITU=%'3,IL=QWLX2OOW-F:Q;H7KD6R;ENT1*4JYTE%D2G`WW03H% MI/LJ7=2* M45!KB0PHK&=.T_ZC(.@ZW^O+PD435S$M)W?V>JJ%\W,S3#H9"@7%X)^XG.$Z MS<$1F(U9C\V@N]3R_:F,D+N>EUE#OD!<^S3,F)7)G`-1]^_Y]!.@Z=SMKYA# M9[',SB/83%E+R_C>>)VD:G>81K,Q_K@FHDE(1ZBQ0>0LRT*J;V[YFJW>-S#Y M)*D'\>@H=QA<6U`XN2[.4K#UODI_#V:5JPD4<6?'3%I3V*KUB_Y2BO![D[)5W-&H$/(T7!L<+QH@S.LLT4=L'*_XK*MP2!U'0GC MUUGXY\*06&]=Z+$PZJ$;'DOF1W,>U-D#*ED;MTRO[/=+`(*OW9W;L#J-V)5? M8QR9_1;)IIAV$+P]!.@&YR5\7.LG)WA67QQFFI13'(D=$2`8CSA&Q30<@8LL MQT55(UXPE"@@\F*HI(B09.#<+>RD4/(!!-8$ET@7M^O)OCG77S9G+W"%N_9' MLKD'"VQ\$B\GL=1\U)&*XE*3*4MJA8*>)O(R,:5PW*840 M;)IAZ_V:.$9YF2)FN2#4.H*$S118GY39.@5!N=O*Y,JE?337;9=K;)D*)U,B M4-D@)Y3T?\Q)Q:`*E`[IJ'K!9OZV_-FGO?BQEJ)L;:$W&W.&JDW6KEJE'0`Z MV#Q5!MFC)&U&<.5O.2R;6$^Q9Y),!4>-O"1`!\G7I`U$(@`"(B```"(B(@`` M`!W$1$?P``#H$=M\LDY-^P]R/PW&]K%:Y")T#U/LX6?8_-5;,VDJY:[A"F>1 M,I:V;H%!B;"C`OEE8&G,A.H1])G?2G8[-L51,'+<$8*Q5K/B*B8+PG4(VC8Q MQQ`M:]5J[&)@!$&K=TPYFM1]WZ!ZD/-V:CXNR0:48JJMU7]LP5>1K,Z@Y6(@JDMCW$\ADN-N5@3HY5T' M&MFN/;2.O93MI6!&Q9@R:2-"/D'CD#:0RWH/2X"EWZAO)FQ98*ALN+L4_#Y`(L);"WLA4[=U?: M@Y]QZ?\`A\_/M^/?H'*>/5Y/2&A>EKRSM$V,ZXU6P&>0:IB!BIJ?QA62I&[@ MLX[F5;@0YOUC^HP_E^70"\^Q/R08DTFTBN.'9JJ53,&<-N:S8L38OPO9&*-@ MC'$1-M@B;+D>V5\GJ.E("H)OBFCB^('?SPMD$1[E5.D"*>.Z!R+_`%Y]CM0- MQLC8E"MMLJ4Q*=CH.6=(/HB\4:PL4AR#@V]N0:BZI.4HZON&SUPT$H.(YP=N MJ4ZGIN$R!J-Z@[8X;W?UWQKLU@>=--X[R7"ED6:+OVZ,]6I=NI]LCFSA MT6(M-9E$E&KQN)S`!R`@G03H,T3D%:2G%)]EBL[$RQOB\9W/. MM'V6:R:3(R+1?&&:'@ M]KH)T$Z#H_9G"L-L?KKG3`%A334ALS8FOV-7OJF$A$RW"LR4(DX$X`(D%JX> M$4`>P]A)T"-GT^\UR.'-H-T=%LB))P5MLD$TN#6+D_4:RR=[P#99.BWB!3;+ M`0QUO86[W)P\?(",#&'\.W8-`/H)T$Z"=!FU?9!L<]OSS=89TNQ4]4M;F@0& M)-?64?#"25:QU^R=9#V_(:G:/%JVOVHU] MXL=+GF6\KRQH_'&$:-6:%2*XW43"RW^Q14*VKE#Q[5F@^9G=@L2T>FF`@4R; M5`JKE82H(*G*"L'"IJ#FCEPW0N7-SR"Q025.AK:HSU2QA(I+#6$Y2J/7?[<^ M`C'C;P>8MPLF_.A'JF,(S%H!=XL)SMU?5!K[?G1C"/(IK/?-9<[1BBE?M3=) M]6K;&(L_W7C>[QAO<5R\U!Z[07!E+Q+L/%4@=B/&:BS57NDL2#1;9^\KS9I*`:/Q[M3B5-P1)5>OOVK=:IE] M11DDLDJ3WTO3MV*%WAI5)HI<,1R\HJ!"-$K22+07BW"QO09R[9(5!(@LX/T`9>"KG[B M,'14=QJ9G0?CB@Y0N<,Q15@RJ@P<.(+ M`.,7#&Y9=GW9`,5NU<03)V5E3VBRP`!GDXXCVQ2]Q*8Y@`@A4'@;Y:LP\M*^ M[N1LATRJXTHF+&<=U_U)*5K%5L-/FY"1_=MN7!NK;)Z5?QA'"BQ&S1 MN@83)(I^`>1@#=SLZ%[%\>^\]7YSM$H%S,0,/;(>_;)5&-,\.WJ]N9-T(:RV M*PQ<,@C(N,-Y@K"!FEG7*=08^1758SF6P/Q<87GV@6&#NFW%RK/OV0VB"G>M8YK MCIPFY7.Y,BO*>'MF8',911$`!_7:X^;!0W>6.!V0G"ICVSYM^U5R@Q=; MCR6C'G&[JP\/+&0,9>.7C:!(2*R/[DET/4,@&-\@,9`S.6UKMZ+U$CF.:/)5-RI7U'!^S9Z)H\!])9F5,'U. M@G0>>PC^0#T`I>13A@T2Y-&I97/^-G4%EEA%DB8/.^,'J-0RG'L&XK*-(R5D MO9/HBXP;=98PE9S#-ZFD4Q@0%$QA-T"]D+]7SD+U@G7`Z#\OURQ;4W"RHIQ$ MNRR90%FK95-='TW$?0[I/U25=D0.4HK%CV?D(F$I"=@#H/H[CP)\\F:(EO5< MW6< M/[%:9@42^(+OG2YTR#X)^!.Q0"R;^/8R[!]%2K!G*1] M1.V>,7[-R15N[9NVZADU4E"F(H0PE,`@(AT"L6XOU<,)77*I]CN.G/5YX]8N&3<=E5E*PPK]@K-KQL1V\+ZJR$>]HLIO(!H.9<7_``>:QN7:B7.7R(@(B!NXA8W2'ZMNJV",GDV#W&RQ>M^,Y?+L[,1SDYNZB<0AD04*;W#%(%@MO]F@U; M9&8_TT4WEOKWJI-+"@F)U5#"D_`!*NJ"(,Z]`E7]M_9O8_7^[<>D/@C8[+NO ML9?$L^HW5YB_(-IHS:43836#V;"6LA:W)1WRJ-8:S#M5(%1,)"*J@7MYFZ`# MFRFSFW&E6>-:T-/N.\\;/W2N8SI5LI\J M]KMIIL-"D:WK)UCAI:/=-I2)=(P$2$41=$X*(JRQ![@/;H%G>*#?;>[2SDST MKJV\NS&8,AX6W8PU1I-K"Y/S+8<@U>%K6Q*+L<2VM^C9IM\QJ]I@;O!-6[X! M`CELU=J)F_2J'<+S_;+V>V?PEMQI;2<#[%YMPE"77"]J6GHW%V3KG1(N5EEL MGLH9M,2K"KS$6A)2#!DL)$U%0,8"?I[@'05#Y=\4\DG!>EJMG7'O+MMAGY_E M*PW-!"%R).6;X2)DJ)!P=E5;3-9L5]OE7N=9G&TM[==J\:%$"E'\?U!X@07[ M6VQ^;X+2'C9R7CS*.0L1V/)[ZPVFW*8GOEPH)7[V6PW3[$#)RM69F,+;C%JN!LLW3&UDV5Q13Y#*>5:Q8Y&/ MR=*Q%+P70I1U!,[@50\W''M\U;?QY M4WGGZ@D(`>F(/,\4&>[SS9DA'%GIYFJ\AG M4XLR:E(T;OI@(P'+DJ)$T?<*G%,A""4@`0GH%:/MHYES!A/C^PW8\,98R3B" MPR6TE7AI*PXPO-FH,V^AU,=Y&=J1;V7JLG%2#B,.[:I*F0.H*1E$B&$HF*40 M"CW-OE_+T3]=KC7OL7EO*$=?+5(:NN;5?(N^VR)NEH7DL%VY[(N+#:(^6:3L MRK(/`!98SE=05U0!0_+K8RA*ZF\N=OEJ?/66QTY M>Z)N["LWNL*E3JFVDE$D#-8=F1-JV\E$R#XE3$'`>#?6W=75O7[)V*-RML:! MMR5*^1\MBNQU+*=IS)(4^OR<"4EGJD_;+I&,ID6"\TB#I@T.HX(D59;Q$A3` M0`58YWN,/*'$AM52.4GCZ&2Q[B"4R0TLT@VJK<1::[9LDW#IPJP4BTTU&IL* M92[KI%;+E%@V=.5HM0I6[EFF(,74;[!V)\D<.V;>2*GTYI*YBUVKU/JV7M?B MR#A$*GFR_P!OK&-J:*[Q8A'SC%]@LEL;2K=ZGY*GB4G"`']VW5`H")^Y8SH3 MJW<=0W6Q6:"`D9LI[8M>IL;:P/Z M@$'R=,^%US<-&2\2%ALT+EU.84_DQ7`U-RS9Y9Y;Q>T`,:B1OD&]U&0CKX2R M%DA1"#5='/YE`PE`B8G`DGVT&!W>X.BAMDK3D^OZQ)XL5+"HXTH,9;Y-Y+A> M8X^>%CN;-DFCQ4=D4U7&'39I$2=)E;`FH=01$Z0``OQUE;6P&8MQ2]T1-M$>^O9;A`_,/$S365*>XBG2MI`_@V M`'A4S"/][2A@;"J9-1T8Z@G#Q(``80^B^P7&Z0ON M(CC*9[(7+,58R*3'>,C:YV/%6-*?>YYR@CK]5OWXE?J7;$=R*`2GRYF3R0;,VYE/:`Z3*GY`8G MCV_GS_1!JU_JE_=P[%?PQ3/YD&^@P"Z_OWXTGSG[H",$6`37N/\`S^E^GS[] M`!/[=[*A/N/3"R60;-;:M$EVLJQV[VH4:)OKY=T&--TFK84Q$ MPKD>+'`2^/I#Y>90IKS3QV+W'UR>-%I9KE>H>L(NM4_@9Z%QK"62Q2)28)MQ M$`DZE)98JL?#%<-1]13TYM^*)R@F7U0,*A0"CRM0^C3C2'A906R'EN)V-:Z+ MULLE*UW#56L)IW7DT_8?XZ6N]??9WK#"J61&]%G1CDF4G-'5:G<@LHF4C85` M.3]8YAK\PXM^3!.1K5AI2S7HV7'B( M*(((@B(A9'C&89?C^.#=Q/FHMFRUNQ&HXFCWEWR`8]@L=OFN%PQW'EL;>&CX MG)V4#OX4TL"IVZQ'+9X$H)"-DA6!,X@D3C2I<>?[?V,6QCL!RI_Z>_@*:KLE J'0.H&N_QG\-?SSC4]$87Z:#>'XL9+^3?@$HMV=A[GY3NJBV]+W*70?_9 ` end GRAPHIC 7 g10839image002.jpg GRAPHIC begin 644 g10839image002.jpg M_]C_X``02D9)1@`!`@``9`!D``#_[``11'5C:WD``0`$````9```_^X`#D%D M;V)E`&3``````?_;`(0``0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$! M`0$!`0$!`0$!`0$!`0("`@("`@("`@("`P,#`P,#`P,#`P$!`0$!`0$"`0$" M`@(!`@(#`P,#`P,#`P,#`P,#`P,#`P,#`P,#`P,#`P,#`P,#`P,#`P,#`P,# M`P,#`P,#`P,#_\``$0@`'P`B`P$1``(1`0,1`?_$`&X```$%`0`````````` M``````D`!`<("@(!`0`````````````````````0``$$`P`!`00&"P`````` M``0#!08'`0(("0`2%!4U$2$3-C=882*C9"5EU69G&3D1`0`````````````` M``````#_V@`,`P$``A$#$0`_`-=]HBM_7EPVESW+$B]^4:+C3.+T,*.<LZ]7;WZ3AHKIX>EY&UA+>V(@XBDA,/#;R\R+C3E ME^D!3D.H`V!GX&MWR+V++$8J>1NIJXM\HZ[FTD=G%[T M2V5664WH>AUC'/`^%%,:-\1^RUWVUUUV]`7:*1ADA,6C4,C06C;'(BP,T88& MY/.UZY M/$!YR9XV.>M'G<\AH07RFH-DDK"X%XPZ;1JH&)ZI39TF=>P^N()(J^E3U*!64E-T;!7)!^4^0TR%N-KR4SB_GEE#CFDO*JZS`;+G MQL-:1-5W1Z`LZ^V"QX%"V`IICR>,GG-T;=&UN+T6SHJ<,GJLJ`]/][NOY9=_ MN[\:_%)R^Y?YP?PG_P"]PQ>MH_. MPBDH@WKRU1!S? -----END PRIVACY-ENHANCED MESSAGE-----

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents