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-----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, Q8xgFr1Od3Z7ML4Dze8xnNbhC6X/rYlYWvnHr1GMy9JOisJmlO3sge8tf/pbNHOn FrOC8bZvVYM53znPQcnHLQ== 0001193125-08-166078.txt : 20080805 0001193125-08-166078.hdr.sgml : 20080805 20080805113650 ACCESSION NUMBER: 0001193125-08-166078 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20080630 FILED AS OF DATE: 20080805 DATE AS OF CHANGE: 20080805 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: 08990198 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 June 30, 2008

¨	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 a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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 – 26,988,308 shares outstanding as of June 30, 2008

Class B common stock, par value of $0.33 – 58,733,016 shares outstanding as of June 30, 2008

COX RADIO, INC.

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2008

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	13

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	18

Item 4.	Controls and Procedures	19

Part II - Other Information

Item 1.	Legal Proceedings	19

Item 1A.	Risk Factors	19

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19

Item 3.	Defaults Upon Senior Securities	20

Item 4.	Submission of Matters to a Vote of Security Holders	20

Item 5.	Other Information	20

Item 6.	Exhibits	21

Signatures		22

Preliminary Note

This Quarterly Report on Form 10-Q is for the three-month period ended June 30, 2008. 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)


	June 30, 2008			December 31, 2007
	(Amounts in thousands, except share data)
ASSETS
Current assets:
Cash	$	1,595		$	2,009
Accounts and notes receivable, less allowance for doubtful accounts of $2,860 and $2,948, respectively		85,378			85,555
Prepaid expenses and other current assets		6,906			5,650

Total current assets		93,879			93,214
Property and equipment, net		70,765			72,528
FCC licenses and other intangible assets, net		1,460,683			1,592,542
Goodwill		195,844			211,608
Other assets		31,487			27,472

Total assets	$	1,852,658		$	1,997,364


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	20,718		$	29,340
Accrued salaries and wages		2,826			2,920
Accrued interest		531			833
Income taxes payable		(1,873	)		1,338
Amounts due to Cox Enterprises		3,910			16,602
Other current liabilities		8,848			5,150

Total current liabilities		34,960			56,183
Long-term debt		355,000			320,000
Deferred income taxes		402,986			442,990
Other long-term liabilities		21,605			23,951

Total liabilities		814,551			843,124


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; 43,363,277 and 43,191,705 shares issued and 26,988,308 and 31,735,087 shares outstanding at June 30, 2008 and December 31, 2007, respectively		14,310			14,253
Class B common stock, $0.33 par value; 135,000,000 shares authorized; 58,733,016 shares issued and outstanding at June 30, 2008 and December 31, 2007		19,382			19,382
Additional paid-in capital		646,565			642,626
Retained earnings		569,840			632,388

		1,250,097			1,308,649
Less: Class A common stock held in treasury (16,374,969 and 11,456,618 shares at cost at June 30, 2008 and December 31, 2007, respectively)		(211,990	)		(154,409	)

Total shareholders’ equity		1,038,107			1,154,240

Total liabilities and shareholders’ equity	$	1,852,658		$	1,997,364

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 June 30,						Six Months Ended June 30,
	2008			2007			2008			2007
Net revenues:
Local	$	78,975		$	84,111		$	147,779		$	156,035
National		20,116			24,378			40,705			45,732
Other		9,137			9,513			17,546			16,988

Total revenues		108,228			118,002			206,030			218,755

Operating expenses:
Cost of services (exclusive of depreciation and amortization shown below)		22,485			22,715			46,103			45,583
Selling, general and administrative		41,670			49,115			81,999			90,397
Corporate general and administrative		2,920			5,402			8,887			10,709
Depreciation and amortization		2,637			2,701			5,338			5,726
Impairment of intangible assets		147,633			—			147,633			—
Other operating expenses (income), net		18			(135	)		61			85


Operating (loss) income		(109,135	)		38,204			(83,991	)		66,255

Other income (expense):
Interest expense		(3,039	)		(5,346	)		(6,900	)		(11,075	)
Other items, net		—			320			27			320

(Loss) income before income taxes		(112,174	)		33,178			(90,864	)		55,500

Current income tax expense		7,040			8,128			11,928			13,655
Deferred income tax (benefit) expense		(43,857	)		4,796			(40,244	)		8,058

Total income tax (benefit) expense		(36,817	)		12,924			(28,316	)		21,713

Net (loss) income	$	(75,357	)	$	20,254		$	(62,548	)	$	33,787


Basic net (loss) income per share
Net (loss) income per common share	$	(0.88	)	$	0.21		$	(0.72	)	$	0.36


Diluted net (loss) income per share
Net (loss) income per common share	$	(0.88	)	$	0.21		$	(0.72	)	$	0.35


Weighted average basic common shares outstanding		85,624			95,091			86,664			95,096

Weighted average diluted common shares outstanding		85,624			95,606			86,664			95,616

See notes to unaudited consolidated financial statements.

COX RADIO, INC.

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

(Unaudited)


	Class A			Class B			Additional
	Common Stock			Common Stock			Paid-in
	Shares	Amount		Shares	Amount		Capital
	(Amounts in thousands)
Balance at December 31, 2007	43,192	$	14,253	58,733	$	19,382	$	642,626


Net loss	—		—	—		—		—
Stock-based compensation expense	—		—	—		—		2,759
Repurchase of Class A common stock	—		—	—		—		—
Issuance of Class A common stock related to incentive plans	171		57	—		—		1,244
Tax benefit of stock options exercised	—		—	—		—		(64	)

Balance at June 30, 2008	43,363	$	14,310	58,733	$	19,382	$	646,565


	Retained Earnings			Treasury Stock				Total
	Retained Earnings			Shares	Amount			Total
	(Amounts in thousands)
Balance at December 31, 2007	$	632,388		11,457	$	(154,409	)	$	1,154,240


Net loss		(62,548	)	—		—			(62,548	)
Stock-based compensation expense		—		—		—			2,759
Repurchase of Class A common stock		—		4,918		(57,581	)		(57,581	)
Issuance of Class A common stock related to incentive plans		—		—		—			1,301
Tax benefit of stock options exercised		—		—		—			(64	)

Balance at June 30, 2008	$	569,840		16,375	$	(211,990	)	$	1,038,107

See notes to unaudited consolidated financial statements.

COX RADIO, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
	2008			2007
	(Amounts in thousands)
Cash flows from operating activities:
Net (loss) income	$	(62,548	)	$	33,787
Items not requiring cash:
Depreciation and amortization		5,338			5,726
Deferred income taxes		(40,244	)		8,058
Compensation expense related to long-term incentive compensation plans		(469	)		4,126
Other		118			(395	)
Impairment of intangible assets		147,633			—
Changes in assets and liabilities:
Increase in accounts receivable		(1,473	)		(6,548	)
Decrease in accounts payable and accrued expenses		(8,929	)		(797	)
(Decrease) increase in accrued salaries and wages		(94	)		734
Decrease in accrued interest		(302	)		(235	)
Decrease in income taxes payable		(3,176	)		(1,673	)
Other, net		3,421			2,491

Net cash provided by operating activities		39,275			45,274


Cash flows from investing activities:
Capital expenditures		(3,522	)		(4,008	)
Investment in signal upgrades		(3,286	)		(1,379	)
Proceeds from insurance recovery		1,650			1,950
Other, net		(802	)		(183	)

Net cash used in investing activities		(5,960	)		(3,620	)


Cash flows from financing activities:
Net borrowings under (repayments of) revolving credit facility		35,000			(45,000	)
Repurchase of Class A common stock		(57,581	)		(2,288	)
Proceeds from issuances of stock related to stock-based compensation plans		1,301			279
Tax (expense) benefit of stock options exercised		(64	)		18
Increase (decrease) in book overdrafts		307			(395	)
(Decrease) increase in amounts due to Cox Enterprises		(12,692	)		4,158

Net cash used in financing activities		(33,729	)		(43,228	)

Net decrease in cash and cash equivalents		(414	)		(1,574	)
Cash and cash equivalents at beginning of period		2,009			4,381

Cash and cash equivalents at end of period	$	1,595		$	2,807


Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	7,395		$	11,310
Income taxes		15,168			15,310

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 73% of the common stock of Cox Radio and has approximately 96% 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, 2007 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 June 30, 2008 are not necessarily indicative of the results to be expected for the year ending December 31, 2008 or any other period.

2.	Summary of Significant Accounting Policies

Revenue Recognition

Cox Radio’s revenues are comprised primarily of local and national advertising revenue. 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 or agencies that are purchasing advertising for multiple markets; these sales are typically facilitated by a national representation firm that serves as Cox Radio’s 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.

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.

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 their 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 its implied value, 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 the process of enhancing a selected station’s signal strength, allowing it to reach a greater listening audience with a higher quality signal and thereby potentially improving ratings, future cash flows, and ultimately the value of the related FCC license. 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 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.

Cox Radio adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. (FIN) 48, “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109, Accounting for Income Taxes,” on January 1, 2007. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest benefit that is greater than 50 percent likely of being realized upon settlement.

For the six months ended June 30, 2008, there were no material changes in unrecognized tax benefits. While it is reasonably possible that the amount of unrecognized tax benefits will increase or decrease within the next 12 months due to the settlement of ongoing audits or the lapse of statutes of limitations, Cox Radio does not expect any change in the amount of unrecognized tax benefits to be material to its financial statements.

As of June 30, 2008, Cox Radio’s federal income tax return examinations and significant state tax return examinations were completed through tax years ended 2003.

Cox Radio classifies interest and penalties associated with its unrecognized tax benefits as a component of income tax expense.

Incentive Compensation Plans

Cox Radio’s Long-Term Incentive Plan (LTIP) provides for the grant of various equity-based awards. In 2007, awards issued under the LTIP consisted of a mix of restricted stock and performance awards to selected officers and senior executives. In 2008, awards issued under the LTIP consisted of a mix of restricted stock units and performance awards to selected officers and senior executives. 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 vest 60% in the third year, 80% in the fourth year and 100% in the fifth year from the date of grant. Cox Radio recognizes compensation expense related to the performance awards over the appropriate vesting period based on the amount that is expected to be paid upon vesting of the awards. Performance awards will be paid out in cash or, for certain employees, in a combination of cash and Cox Radio stock, which will remain subject to restrictions on resale or transfer as long as the recipient is employed by Cox Radio or its affiliates.

Awards of restricted stock and restricted stock units fully vest five years after the date of grant and are subject to a risk of forfeiture until the vesting date. Both types of awards are accounted for in accordance with SFAS No. 123 (revised 2004), “Share Based Payment” (SFAS No. 123R), which requires the measurement and recognition of compensation expense for all share-based payment awards based on estimated fair values. Cox Radio recognizes compensation expense for all restricted stock and restricted stock unit awards over the five-year vesting period.

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 as of 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% and 24% of total revenues for the three-month periods ended June 30, 2008 and 2007, respectively, and 24% of total revenues for each of the six-month periods ended June 30, 2008 and 2007.

3.	Earnings Per Common Share and Capital Structure


	Three Months Ended June 30,					Six Months Ended June 30,
	2008			2007		2008			2007
	(Amounts in thousands, except per share data)
Net (loss) income	$	(75,357	)	$	20,254	$	(62,548	)	$	33,787


Earnings per share – basic
Weighted average common shares outstanding		85,624			95,091		86,664			95,096

Net (loss) income per common share – basic	$	(0.88	)	$	0.21	$	(0.72	)	$	0.36


Earnings per share – diluted
Weighted average common shares outstanding		85,624			95,091		86,664			95,096
Effect of dilutive securities:
Employee Stock Purchase Plan		—			39		—			40
Long-Term Incentive Plan		—			476		—			480

Shares applicable to earnings per share – diluted		85,624			95,606		86,664			95,616

Net (loss) income per common share – diluted	$	(0.88	)	$	0.21	$	(0.72	)	$	0.35

Options to purchase 5.8 million and 6.1 million shares of Class A common stock were excluded from the computation of net income per common share – diluted for the three-month periods ended June 30, 2008 and 2007, respectively, because the exercise price of these options was greater than the average market price of the common stock during the respective periods. Options to purchase 5.7 million and 6.1 million shares of Class A common stock were excluded from the computation of net income per common share – diluted for the six-month periods ended June 30, 2008 and 2007, respectively, because the exercise price of these options was greater than the average market price of the common stock during the respective periods.

4.	Long-Term Debt, Commitments and Contingencies

At June 30, 2008 and December 31, 2007, outstanding long-term debt consisted only of amounts borrowed under the revolving credit facility described below.

In July 2006, Cox Radio entered into a $600 million five-year unsecured revolving credit facility. The interest rate for the 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 (LIBOR) plus a spread based on the credit ratings of Cox Radio’s senior unsecured long-term debt; or

•

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

The credit facility includes commitment fees on the unused portion of the total amount available, which fees range from 0.070% to 0.225% depending on the credit rating of Cox Radio’s senior secured 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 June 30, 2008, Cox Radio was in compliance with these covenants. The credit facility also contains customary events of default, including, but not limited to, failure to pay principal or interest, failure to pay or acceleration of other material debt, misrepresentation or breach of warranty, violation of certain covenants and change of control.

At June 30, 2008, Cox Radio had $355 million of outstanding indebtedness under the credit facility with $245 million available for borrowing. The interest rate applied to amounts due under the credit facility was 3.1% at June 30, 2008. At December 31, 2007, Cox Radio had $320 million of outstanding indebtedness under the credit facility with $280 million available for borrowing. The interest rate applied to amounts due under the facility was 5.7% at December 31, 2007. Since the interest rate under the credit facility is variable, the recorded balance of the credit facility approximates fair value. See Note 5 for a discussion of Cox Radio’s interest rate swap agreement.

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. In August 2007, Cox Radio amended this agreement to increase the guarantee to up to $6 million and to extend the expiration to June 2009. 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. At June 30, 2008 and December 31, 2007, the carrying value of this guarantee was $0.7 million and $0.6 million, respectively.

In January 2005, Cox Radio paid $2 million for an option to purchase five radio stations serving the Athens, Georgia market for $60 million. Under the terms of the option agreement, Cox Radio paid the sellers $5 million in each of July 2006 and July 2007. In January 2008, Cox Radio exercised its option, and in February 2008, Cox Radio entered into a definitive asset purchase agreement to acquire the original five radio stations subject to the option and an additional station in Washington, Georgia, for $60 million, less amounts previously paid of $12 million. The station in Washington, Georgia has been relocated to Athens, Georgia. Cox Radio consummated this acquisition on August 1, 2008.

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.

Each of Cox Radio’s radio stations operates pursuant to one or more licenses issued by the FCC that have a maximum term of eight years, subject to renewal. Cox Radio’s FCC broadcast licenses expire at various times from 2011 to 2014. Although Cox Radio may apply to renew its FCC broadcast licenses, third parties may challenge Cox Radio’s renewal applications. Cox Radio is not aware of any facts or circumstances that would prevent it from having its current licenses renewed. Since becoming a public company in 1996, the FCC has not denied any of Cox Radio’s license renewal applications.

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 currently pending legal proceedings 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, primarily attributable to borrowings under its revolving credit facility. 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 a single interest rate swap agreement with a $25 million notional principal amount and an annual fixed rate of 6.4%, which expired in September 2007. The interest rate swap agreement qualified as a cash flow hedge, and was accounted for under SFAS No. 133, “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.”

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, or more frequently if events or changes in circumstances indicate the asset might be impaired. Cox Radio’s annual impairment testing date is December 31st. However, based on deteriorating macro-economic factors, including declining radio industry revenues during the first half of 2008 and a weakening in prevailing radio station transaction multiples, Cox Radio concluded that, in connection with preparing its financial statements for the period ended June 30, 2008, an interim valuation pursuant to SFAS No. 142 was appropriate.

During the second quarter of 2008, Cox Radio performed a test for impairment and recorded an impairment charge of $131.9 million to reduce the carrying value of FCC licenses at the Greenville, Honolulu, Houston, Jacksonville, Louisville, Richmond, San Antonio and Southern Connecticut markets to their estimated fair value. Additionally, as a result of the impairment test, Cox Radio recorded a goodwill impairment charge of $15.7 million to reduce the carrying value of goodwill at the Miami, San Antonio and Tulsa markets to their estimated fair values. These impairments were necessary due to slowing radio market revenues and declining radio station transaction multiples.

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


	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
	(Amounts in thousands)
June 30, 2008
FCC licenses and other intangible assets	$	1,461,262	$	579	$	1,460,683
Goodwill		195,844		—		195,844
December 31, 2007
FCC licenses and other intangible assets	$	1,593,120	$	578	$	1,592,542
Goodwill		211,608		—		211,608

Amortization was less than $0.1 million for each of the three-month periods ended June 30, 2008 and 2007.

7.	Shareholders’ Equity

In August 2005, Cox Radio’s Board of Directors authorized a share repurchase program pursuant to which Cox Radio was authorized to repurchase up to $100 million of its outstanding shares of Class A common stock. Final purchases under this program were made in August 2007.

In May 2007, the Board of Directors authorized a second share repurchase program pursuant to which Cox Radio was authorized to repurchase up to $100 million of its outstanding shares of Class A common stock. Final purchases under this program were made in April 2008.

In March 2008, the Executive Committee of Cox Radio’s Board of Directors authorized a third $100 million share repurchase program. The amount and timing of repurchases will be determined by management and repurchased shares will be held in treasury. The plan has no expiration date, and Cox Radio may commence, suspend or terminate repurchases at any time without prior notice.

As of June 30, 2008, Cox Radio had purchased a combined total of 16.2 million shares of Class A common stock for an aggregate purchase price of approximately $210.0 million, including commissions and fees, at an average price of $12.93 per share. As of June 30, 2008, $90.0 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.

8.	Stock-Based Compensation and Long-Term Incentive Plans

During the six-month periods ended June 30, 2008 and 2007, Cox Radio accounted for two stock-based employee compensation plans, restricted stock and restricted stock units issued under the LTIP and the Employee Stock Purchase Plan (ESPP). Cox Radio accounted for these plans in accordance with SFAS No. 123R, which requires the measurement and recognition of compensation expense for all share-based payment awards based on estimated fair values. Awards of restricted stock and restricted stock units fully vest five years after the date of grant and are subject to a risk of forfeiture until the vesting date. Unlike standard restricted stock awards, no shares of common stock are issued upon the date of grant of restricted stock units. Instead, restricted stock units represent an agreement to issue Class A common stock upon vesting. The ESPP terminated during the second quarter of 2008, and 118,150 shares of Class A common stock were issued under the plan effective June 30, 2008.

For the three-month and six-month periods ended June 30, 2008, compensation cost recognized in the income statement for stock-based compensation arrangements was $0.7 million and $2.8 million, respectively. The related income tax benefit for the three-month and six-month periods ended June 30, 2008 was $0.2 million and $1.0 million, respectively. For the three-month and six-month periods ended June 30, 2007, compensation cost recognized in the income statement for stock-based compensation arrangements was $0.6 million and $1.2 million, respectively. The related income tax benefit for the three-month and six-month periods ended June 30, 2007 was $0.2 million and $0.4 million, respectively.

As of June 30, 2008, there was $5.6 million of total unrecognized compensation expense related to awards of restricted stock and restricted stock units. This expense is expected to be recognized over a weighted-average period of 3.5 years, as the awards vest. During the three-month periods ended June 30, 2008 and 2007, respectively, an aggregate of 6,176 and 6,125 shares of restricted stock were awarded under the LTIP. During the three-month periods ended June 30, 2008 and 2007, 1,516 and 676 shares of restricted stock vested, respectively.

There were no options exercised during the three-month period ended June 30, 2008. Total cash received from options exercised during the three-month period ended June 30, 2007 was $0.2 million. There were no options granted during the three-month periods ended June 30, 2008 and 2007.

During the six-month periods ended June 30, 2008 and 2007, Cox Radio also accounted for awards of performance units, which are not a form of stock-based compensation under SFAS No. 123R. Compensation expense related to performance units is recognized over the vesting period based on the amount that is expected to be paid upon vesting of the awards. Performance units are issued

under the LTIP and payouts, if any, are based on Cox Radio’s financial performance over a five-year period. During the second quarter of 2008, Cox Radio revalued its performance unit awards to reflect amounts ultimately expected to be paid out upon vesting, which resulted in a reversal of previously-accrued compensation expense to reflect updated expectations. For the three-month and six-month periods ended June 30, 2008, compensation expense recognized in the income statement for performance units was $(4.9) million and $(3.5) million, respectively, which includes the impact of this revaluation. For the three-month and six-month periods ended June 30, 2007, compensation expense recognized in the income statement for performance units was $1.7 million and $2.8 million, respectively.

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, 2007. 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 broadcasting company whose business is devoted to acquiring, developing and operating radio stations located throughout the United States. Cox Enterprises indirectly owns approximately 73% of the common stock of Cox Radio and has approximately 96% 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. For the three-month periods ended June 30, 2008 and 2007, respectively, approximately 73% and 71% of Cox Radio’s net revenues were generated from local advertising. For the three-month periods ended June 30, 2008 and 2007, respectively, approximately 19% and 21% of Cox Radio’s net revenues were generated from national advertising. 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 are described below.

On August 1, 2008, we acquired six radio stations serving the Athens, Georgia market. The stations were acquired for an aggregate purchase price of approximately $60 million, of which $12 million had been previously paid to the sellers under an option agreement, and the remaining $48 million was funded with borrowings under our credit facility.

In September 2006, we acquired WOKV-FM (formerly WBGB-FM), which serves the Jacksonville, Florida market, for a purchase price of approximately $7.7 million.

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 June 30, 2008 compared to three months ended June 30, 2007:


	June 30, 2008		June 30, 2007		$ Change			% Change
	(Amounts in thousands)
Net revenues:
Local	$	78,975	$	84,111	$	(5,136	)	(6.1	)%
National		20,116		24,378		(4,262	)	(17.5	)%
Other		9,137		9,513		(376	)	(4.0	)%

Total net revenues	$	108,228	$	118,002	$	(9,774	)	(8.3	)%

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 or agencies that 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 second quarter of 2008 were $108.2 million, down 8.3% from the second quarter of 2007. Local revenues decreased 6.1% and national revenues decreased 17.5%, each as compared to the second quarter of 2007. Other revenues, which include Internet and other non-traditional revenues, decreased 4.0% during the current quarter as compared to the prior-year quarter. Our stations in Long Island, Birmingham and Tulsa delivered revenue growth during the second quarter of 2008. Revenue growth at these stations was more than offset by results of our stations in Atlanta, Orlando, Miami, Tampa, Houston and Jacksonville, where net revenues were down for the quarter.


	June 30, 2008		June 30, 2007		$ Change			% Change
	(Amounts in thousands)
Cost of services (exclusive of depreciation and amortization shown below)	$	22,485	$	22,715	$	(230	)	(1.0	)%

Cost of services is comprised of expenses incurred by our technical, news and programming departments. Cost of services decreased $0.2 million, or 1.0% compared to the second quarter of 2007. For the second quarter of 2008, increased technical costs were more than offset by a reduction in compensation expense associated with performance unit awards issued under our Long-Term Incentive Plan (LTIP). Compensation expense for these awards is recognized over the five year vesting period of the awards and is based on the amount that is ultimately expected to be paid upon vesting. For more information, see Note 8 to the unaudited consolidated financial statements included in this report.


	June 30, 2008		June 30, 2007		$ Change			% Change
	(Amounts in thousands)
Selling, general and administrative expenses	$	41,670	$	49,115	$	(7,445	)	(15.2	)%

Selling, general and administrative expenses are comprised of expenses incurred by our sales, promotion and general and administrative departments. These expenses decreased $7.4 million, or 15.2% as compared to the second quarter of 2007, due to decreased promotions expenses, decreased compensation expense associated with performance units awarded under our LTIP and a decline in sales commissions and bonuses.


	June 30, 2008		June 30, 2007			$ Change			% Change
	(Amounts in thousands)
Corporate general and administrative expenses	$	2,920	$	5,402		$	(2,482	)	(45.9	)%
Depreciation and amortization		2,637		2,701			(64	)	(2.4	)%
Impairment of intangible assets		147,633		—			147,633		100.0	%
Other operating expense, net		18		(135	)		153		113.3	%

Corporate general and administrative expenses decreased $2.5 million compared to the second quarter of 2007 due to a reduction in compensation expense associated with performance units awarded to corporate employees under our LTIP.

During the second quarter of 2008, we recorded a $147.6 million non-cash impairment charge ($96.8 million net of tax) to reduce the carrying value of intangible assets in our Greenville, Honolulu, Houston, Jacksonville, Louisville, Miami, Richmond, San Antonio, Southern Connecticut and Tulsa markets to their estimated fair values. The write-down was pursuant to Statement of Financial Accounting Standard (SFAS) No. 142, “Goodwill and Other Intangible Assets,” which requires that goodwill and certain intangible assets be tested for impairment at least annually, or more frequently if events or changes in circumstances indicate the assets might be impaired. In addition to the write-down during second quarter of 2008, we also recorded non-cash impairment charges during the years ended December 31, 2007 and 2006. Each of these impairments were necessary due to slowing radio market revenues and declining radio station transaction multiples. These trends have been experienced by other traditional media companies, including television and newspapers, as has been well documented in the financial press. Furthermore, these trends are not specific to any of our individual markets, but rather are affecting valuations in the industry as a whole, as evidenced not only by observed, industry-wide, private transaction multiples, but in public company valuations as well, both of which have undergone sustained, gradual declines in recent years. For more detail regarding the second quarter 2008 charge, see Note 6 to the unaudited consolidated financial statements included in this report.


	June 30, 2008			June 30, 2007		$ Change			% Change
	(Amounts in thousands)
Operating (loss) income	$	(109,135	)	$	38,204	$	(147,339	)	*

*	Change was not statistically meaningful

Our operating loss for the second quarter of 2008 was $109.1 million, compared to operating income of $38.2 million for the second quarter of 2007, due to the non-cash impairment charge discussed above.


	June 30, 2008		June 30, 2007		$ Change			% Change
	(Amounts in thousands)
Interest expense	$	3,039	$	5,346	$	(2,307	)	(43.2	)%

Interest expense during the second quarter of 2008 decreased $2.3 million, or 43.2% when compared to the second quarter of 2007, due to a lower borrowing rate under our credit facility. The average interest rate on our credit facility was 3.3% during the second quarter of 2008 and 6.0% during the second quarter of 2007.


	June 30, 2008			June 30, 2007		$ Change			% Change
	(Amounts in thousands)
Income tax expense (benefit):
Current	$	7,040		$	8,128	$	(1,088	)	(13.4	)%
Deferred		(43,857	)		4,796		(48,653	)	*

Total income tax expense (benefit)	$	(36,817	)	$	12,924	$	(49,741	)	*

*	Change was not statistically meaningful

Income tax expense decreased to a net income tax benefit of $36.8 million in the second quarter of 2008, as compared to the second quarter of 2007, due primarily to the non-cash impairment charge discussed above. Our overall effective tax rate was 32.8% for the second quarter of 2008 and 39.0% for the second quarter of 2007.


	June 30, 2008			June 30, 2007		$ Change			% Change
	(Amounts in thousands)
Net (loss) income	$	(75,357	)	$	20,254	$	(95,611	)	*

*	Change was not statistically meaningful

Our net loss for the second quarter of 2008 was $75.4 million, compared to net income of $20.3 million in the second quarter of 2007, due to the non-cash impairment charge discussed above.

Six months ended June 30, 2008 compared to six months ended June 30, 2007:


	June 30, 2008		June 30, 2007		$ Change			% Change
	(Amounts in thousands)
Net revenues:
Local	$	147,779	$	156,035	$	(8,256	)	(5.3	)%
National		40,705		45,732		(5,027	)	(11.0	)%
Other		17,546		16,988		558		3.3	%

Total net revenues	$	206,030	$	218,755	$	(12,725	)	(5.8	)%

Net revenues for the first six months of 2008 decreased $12.7 million, a 5.8% decrease compared to the first six months of 2007. Local revenues decreased 5.3% and national revenues decreased 11.0%, each as compared to the first six months of 2007. Other revenues, which include Internet and other non-traditional revenue, increased 3.3% as compared to the first six months of 2007. Our

stations in Long Island, Birmingham and Tulsa delivered revenue growth during the first six months of 2008. Those increases were more than offset by results of our stations in Atlanta, Orlando, Miami, Tampa, Jacksonville and Richmond, where revenues were down for the first six months of 2008.


	June 30, 2008		June 30, 2007		$ Change		% Change
	(Amounts in thousands)
Cost of services (exclusive of depreciation and amortization shown below)	$	46,103	$	45,583	$	520	1.1	%

Cost of services increased $0.5 million, or 1.1% over the first six months of 2007. This increase was primarily the result of additional costs associated with programming talent.


	June 30, 2008		June 30, 2007		$ Change			% Change
	(Amounts in thousands)
Selling, general and administrative expenses	$	81,999	$	90,397	$	(8,398	)	(9.3	)%

Selling, general and administrative expenses decreased $8.4 million, or 9.3% compared to the first six months of 2007, due to decreased compensation expense associated with performance units awarded under our LTIP and a decline in sales commissions and bonuses.


	June 30, 2008		June 30, 2007		$ Change			% Change
	(Amounts in thousands)
Corporate general and administrative expenses	$	8,887	$	10,709	$	(1,822	)	(17.0	)%
Depreciation and amortization		5,338		5,726		(388	)	(6.8	)%
Impairment of intangible assets		147,633		—		147,633		100.0	%
Other operating expense, net		61		85		(24	)	(28.2	)%

Corporate general and administrative expenses decreased 17.0%, or $1.8 million compared to the second quarter of 2007, due to a reduction in compensation expense associated with performance units awarded to corporate employees under our LTIP.


	June 30, 2008			June 30, 2007		$ Change			% Change
	(Amounts in thousands)
Operating (loss) income	$	(83,991	)	$	66,255	$	(150,246	)	*

*	Change was not statistically meaningful

Our operating loss for the first six months of 2008 was $84.0 million, compared to operating income of $66.3 million for the first six months of 2007, due to the non-cash impairment charge discussed above.


	June 30, 2008		June 30, 2007		$ Change			% Change
	(Amounts in thousands)
Interest expense	$	6,900	$	11,075	$	(4,175	)	(37.7	)%

Interest expense during the first six months of 2008 totaled $6.9 million, as compared to $11.1 million for the first six months of 2007. This decrease was primarily attributable to a lower borrowing rate under our credit facility. The average rate on our credit facility was 3.8% during the first six months of 2008 and 6.0% during the first six months of 2007.


	June 30, 2008			June 30, 2007		$ Change			% Change
	(Amounts in thousands)
Income tax expense (benefit):
Current	$	11,928		$	13,655	$	(1,727	)	(12.6	)%
Deferred		(40,244	)		8,058		(48,302	)	*

Total income tax expense (benefit)	$	(28,316	)	$	21,713	$	(50,029	)	*

*	Change was not statistically meaningful

Income tax expense decreased to a net income tax benefit of $28.3 million in the first six months of 2008, as compared to the first six months of 2007, due primarily to the non-cash impairment charge discussed above. Our effective tax rate for the first six months of 2008 and 2007 was 31.2% and 39.1%, respectively.


	June 30, 2008			June 30, 2007		$ Change			% Change
	(Amounts in thousands)
Net (loss) income	$	(62,548	)	$	33,787	$	(96,335	)	*

*	Change was not statistically meaningful

Our net loss for the first six months of 2008 was $62.5 million, compared to net income of $33.8 million for the first six months of 2007, due primarily to the non-cash impairment charge discussed above.

Liquidity and Capital Resources

Sources and Uses of Liquidity

Primary sources of liquidity are cash provided by operations and cash borrowed under our bank credit facility. Primary uses of liquidity include debt service, acquisitions, capital expenditures, common stock repurchases and investment in signal upgrades.

Net cash provided by operating activities for the six months ended June 30, 2008 was $39.3 million, a decrease of $6.0 million from the six months ended June 30, 2007, primarily due to an increase in working capital. Changes in working capital resulted in a $14.0 million net use of cash for the six months ended June 30, 2008, as compared to an $8.5 million net use of cash for the six months ended June 30, 2007. These working capital changes are the result of routine timing differences between the receipt and payment of cash. Cox Radio expects future net cash provided by operating activities to provide sufficient funding for operations in the foreseeable future.

Net cash used in investing activities was $6.0 million for the six months ended June 30, 2008, an increase of $2.3 million over the six months ended June 30, 2007. This increase was primarily due to additional investment in projects designed to enhance and improve signals at certain stations during the comparable 2008 period.

Net cash used in financing activities was $33.7 million for the six months ended June 30, 2008, a decrease of $9.5 million from the six months ended June 30, 2007. During the six months ended June 30, 2008, we used $57.6 million to repurchase shares of our Class A common stock, as compared to $2.3 million during the six months ended June 30, 2007. See Item 2 in Part II of this report for more information regarding our stock repurchase programs. Financing activities also included $35 million of net borrowings under our revolving credit facility for the first six months of 2008, as compared to net repayments of $45 million in the comparable 2007 period.

Cox Radio has an effective shelf registration statement under which Cox Radio may from time to time offer and issue debentures, notes, bonds and other 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.

In addition, daily cash management needs have been 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 London Interbank Offered Rate (LIBOR) based rate (3.2% at June 30, 2008 and 6.0% at December 31, 2007) dependent upon Cox Radio’s credit rating. Cox Radio owed Cox Enterprises approximately $3.9 million at June 30, 2008 and $16.6 million at December 31, 2007.

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 proceeds from bank financing, intercompany advances from Cox Enterprises and, if or when appropriate, issuances of securities.

Debt Service

In July 2006, Cox Radio entered into a $600 million five-year unsecured revolving credit facility. The interest rate for the facility is, at Cox Radio’s option:

•

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

•

LIBOR plus a spread based on the credit ratings of Cox Radio’s senior unsecured long-term debt; or

•

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

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.

In February 2005, Cox Radio agreed to guarantee the borrowings of a third party 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. In August 2007, Cox Radio amended this agreement to increase the guarantee to up to $6 million and to extend the expiration to June 2009. 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. At June 30, 2008 and December 31, 2007, the carrying value of this guarantee was $0.7 million and $0.6 million, respectively.

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 Disclosures About Market Risk

Cox Radio is exposed to a number of financial market risks in the ordinary course of business. Cox Radio has examined exposures to these risks and concluded that none of the exposures are material to cash flows or earnings; however, Cox Radio’s primary financial market risk exposure pertains to changes in interest rates. Cox Radio has historically engaged in several strategies to manage these market risks.

Cox Radio had one interest rate swap agreement for purposes of managing borrowing costs which expired in September 2007. Pursuant to that interest rate swap agreement, Cox Radio exchanged its floating rate interest obligations on $25 million in notional principal amount of debt for a fixed annual interest rate of 6.4%. See Note 5 to the unaudited consolidated financial statements included in this report for more information.

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 facility and borrowings from Cox Enterprises bear interest based on current market rates and, thus, approximate fair value. Cox Radio is exposed to interest rate volatility with respect to variable rate debt instruments. If the LIBOR borrowing rates were to increase 1% above the rates at June 30, 2008, Cox Radio’s interest expense on the revolving credit facility would increase by approximately $3.6 million on an annual basis.

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 June 30, 2008, 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

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.

ITEM 1A.

Risk Factors

We have included in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2007, a description of certain risks and uncertainties that could affect our business, future performance or financial condition (the Risk Factors). There have been no material changes to the Risk Factors. Investors should consider the Risk Factors prior to making an investment decision with respect to our Class A common stock.

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

(a)

None.

(b)

None.

(c)

During the second quarter of 2008, Cox Radio had two share repurchase programs pursuant to which shares of its Class A common stock could be repurchased in the open market or through privately negotiated transactions, with the amount and timing of repurchases to be determined by the company’s management. The first $100 million program was authorized in August 2005, and final purchases under this program were made in April 2008. The second program was authorized in March 2008. Repurchased shares are held in treasury, and the current program has no expiration date. Cox Radio may commence, suspend or terminate repurchases at any time, without prior notice, depending on market conditions and various other factors.

The following table sets forth certain information concerning the repurchase of Cox Radio’s Class A common stock during the three-month period ended June 30, 2008.


Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
April 1, 2008 to April 30, 2008	840,900	$	11.76	840,900	$98.7 million
May 1, 2008 to May 31, 2008	317,600	$	12.00	317,600	$94.9 million
June 1, 2008 to June 30, 2008	410,151	$	12.18	404,900	$90.0 million

ITEM 3.

Defaults Upon Senior Securities

None.

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Cox Radio held its Annual Meeting of Stockholders on April 22, 2008. Three matters were voted upon at the meeting: (a) the election of a Board of Directors of eight members to serve until the 2009 Annual Meeting of Stockholders or until their successors are duly elected and qualified; (b) approval of Cox Radio’s 2008 Employee Stock Purchase Plan; and (c) approval of Cox Radio’s Annual Incentive Plan.

The following directors were elected, and they received the votes indicated:


Nominee	Votes in Favor	Votes Withheld
James C. Kennedy	605,943,369	6,145,010
Juanita P. Baranco	611,057,074	1,031,305
G. Dennis Berry	605,973,542	6,114,837
Nick W. Evans, Jr.	610,397,677	1,690,702
Jimmy W. Hayes	605,896,573	6,191,806
Marc W. Morgan	605,894,902	6,193,477
Robert F. Neil	606,071,579	6,016,800
Nicholas D. Trigony	610,674,684	1,413,695

The 2008 Employee Stock Purchase Plan was approved, with 609,960,238 votes in favor, 455,097 votes in opposition, 5,089 abstentions, and 1,667,955 broker non-votes. The Annual Incentive Plan was approved, with 611,370,027 votes in favor, 475,543 votes in opposition, 242,809 abstentions, and 1,667,955 broker non-votes.

The 2008 Employee Stock Purchase Plan subsequently was terminated in July 2008 by the Compensation Committee of the Board of Directors in accordance with the provisions of that plan.

ITEM 5.

Other Information

None.

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⁾ 2.1	—	Asset Purchase Agreement, dated as of February 4, 2008, by and among Cox Radio, Inc., Southern Broadcasting of Athens, Inc., Southern Broadcasting of Pensacola, Inc., New Broadcast Investment Properties, Inc. and Southern Broadcasting Companies, Inc.

⁽²⁾ 3.1	—	Amended and Restated Certificate of Incorporation of Cox Radio, Inc.

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

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

⁽⁵⁾ 4.1	—	Form of Specimen Class A common stock certificate.

⁽⁶⁾ 10.1	—	Credit Agreement, dated as of July 26, 2006, by and among Cox Radio, Inc., the lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders, Lehman Brothers Inc. and Citibank, N.A., as Syndication Agents, Wachovia Capital Markets, LLC and Bank of Tokyo-Mitsubishi UFJ Trust Company, as Documentation Agents and J.P. Morgan Securities Inc., Lehman Brothers Inc. and Citigroup Global Markets Inc., as Joint Lead Arranger and Joint Bookrunners.

⁽⁷⁾ 10.2	—	Cox Radio, Inc. Annual Incentive Plan (management contract or compensation 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 Exhibit 2.1 of Cox Radio’s Form 8-K dated February 4, 2008 and filed February 6, 2008.

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

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

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

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

(6)	Incorporated by reference to Exhibit 10.1 of Cox Radio’s Form 8-K dated July 26, 2006 and filed July 31, 2006.

(7)	Incorporated by reference to Exhibit 10.1 of Cox Radio’s Form 8-K dated December 13, 2007 and filed December 14, 2007.

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.

August 5, 2008		/s/ Neil O. Johnston
		Neil O. Johnston
		Vice President and Chief Financial
		Officer (Principal Financial Officer,
		Principal Accounting Officer and duly authorized officer)

EX-31.1 2 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: August 5, 2008

/s/ Robert F. Neil

Robert F. Neil

Chief Executive Officer

EX-31.2 3 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: August 5, 2008

/s/ Neil O. Johnston

Neil O. Johnston

Chief Financial Officer

EX-32.1 4 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 June 30, 2008 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:		August 5, 2008

/s/ Neil O. Johnston
Name:		Neil O. Johnston
Title:		Chief Financial Officer
Date:		August 5, 2008

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, 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 Report, 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 Report, irrespective of an general incorporation language contained in such filing).

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