COX RADIO INC - 10-Q Quarterly Report

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, 2003

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

Commission File Number 1-12187

COX RADIO, INC.
(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 o

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

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 — 41,623,659 shares outstanding as of July 31, 2003.
		Class B common stock, par value of $0.33 — 58,733,016 shares outstanding as of July 31, 2003.

COX RADIO, INC.
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2003

TABLE OF CONTENTS


		Page

	PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements		3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		23
Item 4.	Controls and Procedures		23
	PART II — OTHER INFORMATION
Item 1.	Legal Proceedings		24
Item 4.	Submission of Matters to a Vote of Security Holders		24
Item 6.	Exhibits and Reports on Form 8-K		25
Signatures			27

Preliminary Note

This Quarterly Report on Form 10-Q is for the three-month and six-month periods ended June 30, 2003. 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. Financial Statements

COX RADIO, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)


		June 30, 2003			December 31, 2002

		(Amounts in thousands,
		except share data)
ASSETS
Current assets:
Cash and cash equivalents		$	6,085		$	4,681
Accounts and notes receivable, less allowance for doubtful accounts of $4,691 and $4,791, respectively			88,196			86,876
Prepaid expenses and other current assets			11,012			7,567
Amounts due from Cox Enterprises			—			3,059

	Total current assets		105,293			102,183
Property and equipment, net			79,277			79,304
FCC licenses and other intangible assets, net			2,028,857			2,023,525
Goodwill			46,514			46,514
Other assets			18,729			20,186

	Total assets	$	2,278,670		$	2,271,712

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses		$	26,573		$	27,821
Accrued salaries and wages			5,010			6,449
Accrued interest			7,221			7,966
Income taxes payable			14,335			12,109
Amounts due to Cox Enterprises			10,565			—
Other current liabilities			2,430			2,083

	Total current liabilities		66,134			56,428
Notes payable			574,677			614,602
Deferred income taxes			491,160			482,286
Other long term liabilities			6,744			6,907

	Total liabilities		1,138,715			1,160,223


Commitments and contingencies (Note 5)

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; 41,621,085 and 41,571,789 shares issued and 41,492,814 and 41,450,595 shares outstanding at June 30, 2003 and December 31, 2002, respectively			13,736			13,719
Class B common stock, $0.33 par value; 135,000,000 shares authorized; 58,733,016 shares issued and outstanding at June 30, 2003 and December 31, 2002			19,382			19,382
Additional paid-in capital			625,099			624,049
Accumulated other comprehensive loss, net of tax			(2,965	)		(3,082	)
Retained earnings			486,549			459,104

			1,141,801			1,113,172
Less: Class A common stock held in treasury (128,271 and 121,194 shares at cost, at June 30, 2003 and December 31, 2002, respectively)			(1,846	)		(1,683	)

	Total shareholders’ equity		1,139,955			1,111,489

	Total liabilities and shareholders’ equity	$	2,278,670		$	2,271,712

See notes to unaudited consolidated financial statements.

COX RADIO, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)


					Three Months Ended						Six Months Ended
					June 30,						June 30,

					2003			2002			2003			2002

Net revenues:
		Local			$	83,020		$	84,396		$	149,959		$	147,295
		National				26,010			24,109			45,268			42,118
		Other				6,216			5,405			11,588			10,527

				Total revenues		115,246			113,910			206,815			199,940
Operating expenses:
		Cost of services (exclusive of depreciation shown separately below)				25,434			25,092			46,654			44,958
		Selling, general and administrative				43,296			42,630			81,506			78,745
		Corporate general and administrative				4,400			4,365			8,635			8,466
		Depreciation				2,977			3,028			5,921			6,030
		Amortization				29			29			59			59
		Loss (gain) on sales of assets				29			18			28			375
		Loss (gain) on sales of radio stations				—			(49	)		—			102

Operating income						39,081			38,797			64,012			61,205

Other income (expense):
	Interest income					1			1			2			9
	Interest expense					(8,877	)		(10,049	)		(18,053	)		(20,238	)
	Other — net					(115	)		(119	)		(239	)		(237	)

Income before income taxes and cumulative effect of accounting change						30,090			28,630			45,722			40,739

Current income tax expense						6,143			5,000			9,487			7,053
Deferred income tax expense						5,879			6,152			8,790			8,888

Total income tax expense						12,022			11,152			18,277			15,941

Income before cumulative effect of accounting change						18,068			17,478			27,445			24,798
	Cumulative effect of accounting change, net of tax					—			—			—			(13,934	)

Net income					$	18,068		$	17,478		$	27,445		$	10,864

Basic net income per share
	Income before cumulative effect of accounting change				$	0.18		$	0.17		$	0.27		$	0.25
	Cumulative effect of accounting change					—			—			—			(0.14	)

			Net income per common share		$	0.18		$	0.17		$	0.27		$	0.11

Diluted net income per share
	Income before cumulative effect of accounting change				$	0.18		$	0.17		$	0.27		$	0.25
	Cumulative effect of accounting change					—			—			—			(0.14	)

			Net income per common share		$	0.18		$	0.17		$	0.27		$	0.11

Weighted average basic common shares outstanding						100,217			100,235			100,208			100,137

Weighted average diluted common shares outstanding						100,622			100,862			100,598			100,680

See notes to unaudited consolidated financial statements.

COX RADIO, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
(Unaudited)


		Class A				Class B
		Common Stock				Common Stock				Additional
										Paid-in
		Shares		Amount		Shares		Amount		Capital

		(Amounts in thousands)
Balance at December 31, 2002			41,572	$	13,719		58,733	$	19,382	$	624,049

	Comprehensive income:
	Net income		—		—		—		—		—
	Unrealized gain on interest rate swaps		—		—		—		—		—
	Reclassification to earnings of transition adjustments		—		—		—		—		—
	Comprehensive income
	Repurchase of Class A common stock		—		—		—		—		—
	Issuance of Class A common stock related to incentive plans including tax benefit of $396		51		17		—		—		1,050

Balance at June 30, 2003			41,623	$	13,736		58,733	$	19,382	$	625,099

[Additional columns below]

[Continued from above table, first column(s) repeated]

Accumulated

Other Treasury Stock

Comprehensive Retained

Loss Earnings Shares Amount Total

(Amounts in thousands)

Balance at December 31, 2002
$ (3,082 ) $ 459,104 121 $ (1,683 ) $ 1,111,489

Comprehensive income:

Net income
— 27,445 — — 27,445

Unrealized gain on interest rate swaps
58 — — — 58

Reclassification to earnings of transition adjustments
59 — — — 59

Comprehensive income
27,562

Repurchase of Class A common stock
— — 7 (163 ) (163 )

Issuance of Class A common stock related to incentive plans including tax benefit of $396
— — — — 1,067

Balance at June 30, 2003
$ (2,965 ) $ 486,549 128 $ (1,846 ) $ 1,139,955

See notes to unaudited consolidated financial statements.

COX RADIO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Six Months Ended

June 30,

2003

2002

(Amounts in thousands)

Cash flows from operating activities:


		Accumulated
		Other					Treasury Stock
		Comprehensive			Retained
		Loss			Earnings		Shares		Amount			Total

		(Amounts in thousands)
Balance at December 31, 2002		$	(3,082	)	$	459,104		121	$	(1,683	)	$	1,111,489

	Comprehensive income:
	Net income		—			27,445		—		—			27,445
	Unrealized gain on interest rate swaps		58			—		—		—			58
	Reclassification to earnings of transition adjustments		59			—		—		—			59

	Comprehensive income												27,562

	Repurchase of Class A common stock		—			—		7		(163	)		(163	)
	Issuance of Class A common stock related to incentive plans including tax benefit of $396		—			—		—		—			1,067

Balance at June 30, 2003		$	(2,965	)	$	486,549		128	$	(1,846	)	$	1,139,955