Cox Radio (CXR) 10-Q 2004 Q2 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, 2004

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

Commission File Number 1-12187

(Exact name of registrant as specified in its charter)

Delaware	58-1620022
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

6205 Peachtree Dunwoody Road

Atlanta, Georgia 30328

(Address of principal executive offices and zip code)

(678) 645-0000

(Registrant’s telephone number, including area code)

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

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

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

Class A common stock, par value of $0.33 – 41,944,571 shares outstanding as of June 30, 2004.

Class B common stock, par value of $0.33 – 58,733,016 shares outstanding as of June 30, 2004.

COX RADIO, INC.

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2004

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	15
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	22
Item 4.	Controls and Procedures	22
	Part II - Other Information
Item 1.	Legal Proceedings	23
Item 2.	Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities Equity Securities	23
Item 3.	Defaults Upon Senior Securities	23
Item 4.	Submission of Matters to a Vote of Security Holders	24
Item 5.	Other Information	24
Item 6.	Exhibits and Reports on Form 8-K	24
Signatures		26

Preliminary Note

This Quarterly Report on Form 10-Q is for the three-month and six-month periods ended June 30, 2004. 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.

2

Part I – FINANCIAL INFORMATION

ITEM 1. Financial Statements

COX RADIO, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	June 30, 2004			December 31, 2003
	(Amounts in thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents	$	5,158		$	4,202
Accounts and notes receivable, less allowance for doubtful accounts of $4,210 and $4,229, respectively		89,609			82,750
Prepaid expenses and other current assets		11,282			7,194
Amounts due from Cox Enterprises.		—			6,284
Total current assets		106,049			100,430
Property and equipment, net		76,348			78,333
FCC licenses and other intangible assets, net		2,031,200			2,028,798
Goodwill		46,033			46,033
Other assets		22,972			23,432
Total assets	$	2,282,602		$	2,277,026
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	21,060		$	28,602
Accrued salaries and wages		3,153			4,139
Accrued interest		7,353			7,230
Income taxes payable		29,791			10,937
Amounts due to Cox Enterprises.		5,268			—
Other current liabilities		4,800			2,924
Total current liabilities		71,425			53,832
Notes payable		494,810			534,744
Deferred income taxes		493,698			502,015
Other long term liabilities		4,399			4,767
Total liabilities		1,064,332			1,095,358
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; 42,072,842 and 41,718,469 shares issued and 41,944,571 and 41,590,198 shares outstanding at June 30, 2004 and December 31, 2003, respectively		13,884			13,767
Class B common stock, $0.33 par value; 135,000,000 shares authorized; 58,733,016 shares issued and outstanding at June 30, 2004 and December 31, 2003		19,382			19,382
Additional paid-in capital		633,270			626,499
Unearned stock-based compensation		(2,576	)		—
Accumulated other comprehensive loss, net of tax		(913	)		(1,863	)
Retained earnings		557,069			525,729
		1,220,116			1,183,514
Less: Class A common stock held in treasury (128,271 shares at cost at June 30, 2004 and December 31, 2003)		(1,846	)		(1,846	)
Total shareholders’ equity		1,218,270			1,181,668
Total liabilities and shareholders’ equity	$	2,282,602		$	2,277,026

See notes to unaudited consolidated financial statements.

3

COX RADIO, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2004			2003			2004			2003
Net revenues:
Local	$	84,252		$	83,020		$	151,097		$	149,959
National		25,155			26,010			44,957			45,268
Other		7,468			6,216			13,912			11,588
Total revenues		116,875			115,246			209,966			206,815
Operating expenses:
Cost of services (exclusive of depreciation and amortization shown separately below)		24,993			25,434			46,710			46,654
Selling, general and administrative		42,612			43,296			79,970			81,506
Corporate general and administrative		4,634			4,400			9,179			8,635
Depreciation		2,892			2,977			5,852			5,921
Amortization		13			29			31			59
Other operating expenses, net		69			29			69			28
Operating income		41,662			39,081			68,155			64,012
Other income (expense):
Interest income		1			1			2			2
Interest expense		(7,710	)		(8,877	)		(15,601	)		(18,053	)
Other - net		(88	)		(115	)		(188	)		(239	)
Income before income taxes		33,865			30,090			52,368			45,722
Current income tax expense		25,733			6,143			29,992			9,487
Deferred income tax (benefit) expense		(12,112	)		5,879			(8,964	)		8,790
Total income tax expense		13,621			12,022			21,028			18,277
Net income	$	20,244		$	18,068		$	31,340		$	27,445
Basic net income per share
Net income per common share	$	0.20		$	0.18		$	0.31		$	0.27
Diluted net income per share
Net income per common share	$	0.20		$	0.18		$	0.31		$	0.27
Weighted average basic common shares outstanding		100,544			100,217			100,537			100,208
Weighted average diluted common shares outstanding		100,708			100,622			100,744			100,598

See notes to unaudited consolidated financial statements.

4

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
	(Amounts in thousands)
Balance at December 31, 2003	41,718	$	13,767	58,733	$	19,382	$	626,499
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 $0.1 million	355		117	—		—		6,771
Balance at June 30, 2004	42,073	$	13,884	58,733	$	19,382	$	633,270

	Unearned Compensation			Accumulated Other Comprehensive Loss			Retained Earnings		Treasury Stock				Total
									Shares	Amount
	(Amounts in thousands)
Balance at December 31, 2003	$	—		$	(1,863	)	$	525,729	128	$	(1,846	)	$	1,181,668
Comprehensive income:
Net income		—			—			31,340	—		—			31,340
Unrealized gain on interest rate swaps		—			892			—	—		—			892
Reclassification to earnings of derivative transition adjustments		—			58			—	—		—			58
Comprehensive income		—			—			—	—		—			32,290
Unearned stock based compensation		(2,733	)		—			—	—		—			(2,733	)
Amortization of unearned stock-based compensation		157			—			—	—		—			157
Issuance of Class A common stock related to incentive plans including tax benefit of $0.1 million		—			—			—	—		—			6,888
Balance at June 30, 2004	$	(2,576	)	$	(913	)	$	557,069	128	$	(1,846	)	$	1,218,270

See notes to unaudited consolidated financial statements.

5

COX RADIO, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
	2004			2003
	(Amounts in thousands)
Cash flows from operating activities:
Net income	$	31,340		$	27,445
Items not requiring cash:
Depreciation		5,852			5,921
Amortization		31			59
Deferred income taxes		(8,964	)		8,790
Tax benefit from exercise of stock options		121			396
Amortization of unearned compensation		157			—
Other		189			28
Changes in assets and liabilities:
Increase in accounts receivable		(6,859	)		(1,320	)
Decrease in accounts payable and accrued expenses		(7,547	)		(1,998	)
Decrease in accrued salaries and wages		(986	)		(1,439	)
Increase (decrease) in accrued interest		123			(745	)
Increase in income taxes payable		18,854			2,226
Other, net		(1,190	)		(2,400	)
Net cash provided by operating activities		31,121			36,963
Cash flows from investing activities:
Capital expenditures		(3,970	)		(5,940	)
Acquisitions and related expenses, net of cash acquired		—			(116	)
Decrease in other long-term assets		184			371
Proceeds from sales of property and equipment		45			12
Investment in signal upgrades		(1,877	)		(4,703	)
Net cash used in investing activities		(5,618	)		(10,376	)
Cash flows from financing activities:
Net payments (borrowings) of revolving credit facilities		(40,000	)		60,075
Repayment of 6.25% notes		—			(100,000	)
Proceeds from issuances of stock related to stock-based compensation plans		4,034			671
Increase in book overdrafts		6			820
Repurchase of Class A common stock		—			(163	)
Payment of debt issuance costs		(139	)		(210	)
Increase in amounts due from/to Cox Enterprises, Inc.		11,552			13,624
Net cash used in financing activities		(24,547	)		(25,183	)
Net increase in cash and cash equivalents		956			1,404
Cash and cash equivalents at beginning of period		4,202			4,681
Cash and cash equivalents at end of period	$	5,158		$	6,085
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	15,478		$	18,798
Income taxes		11,016			6,866

See notes to unaudited consolidated financial statements.

6

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, 2003 and notes thereto contained in Cox Radio’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission.

The results of operations for the three-month and six-month periods ended June 30, 2004 are not necessarily indicative of the results to be expected for the year ending December 31, 2004 or any other period.

2. Summary of Significant Accounting Policies

Cash Equivalents

Cox Radio considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The carrying value of these investments approximates fair value.

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 and 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. Cox Radio records an allowance for doubtful accounts based on historical information, analysis of credit memo data and any other relevant factors.

Corporate General and Administrative Expenses

Corporate general and administrative expenses consist of corporate overhead costs not specifically allocable to any of Cox Radio’s individual stations.

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.

7

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. Upon the adoption of Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible Assets,” on January 1, 2002, Cox Radio ceased amortization of goodwill and FCC licenses, which are indefinite-lived intangible assets. Other intangible assets are amortized on a straight-line basis over the contractual lives of the assets.

Cox Radio evaluates its FCC licenses for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. FCC licenses are evaluated for impairment at the market level. 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 evaluates goodwill in each of its reporting units (markets) for impairment annually, or more frequently if certain circumstances are present. If the carrying amount of goodwill in a reporting unit is greater than the implied value of goodwill for that reporting unit determined from the estimated fair value of the reporting 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 external costs incurred to facilitate signal upgrades, which enhance the value of Cox Radio’s FCC licenses. Upon completion of each signal upgrade, Cox Radio reclassifies the applicable amount to FCC licenses. During the first quarter of 2003, Cox Radio completed a signal upgrade at WBHK-FM in Birmingham, Alabama, and reclassified $5.4 million from other assets to FCC licenses. During the second quarter of 2004, Cox Radio completed a signal upgrade for WPYO-FM in Orlando, Florida and reclassified $2.4 million from other assets to FCC licenses

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 and certain intangibles 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 and certain intangibles to be disposed of are required to be reported at the lower of carrying amount or fair value less cost to sell.

Income Taxes

Deferred income taxes are provided based on the liability method of accounting pursuant to SFAS No. 109, “Accounting for Income Taxes.” The liability method measures the expected tax impact of future taxable income or deductions resulting from differences in the tax and financial reporting bases of assets and liabilities reflected in the consolidated balance sheets and the expected tax impact of carryforwards for 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.

8

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,” 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 and the Employee Stock Purchase Plans (ESPP) been determined based on the fair value at the grant or enrollment dates in accordance with the fair value provisions of SFAS No. 123, as amended, Cox Radio’s net income and net income per share for the three months ended June 30, 2004 and 2003 would have been changed to the pro forma amounts indicated below.

	Three Months Ended June 30,						Six Months Ended June 30,
	2004			2003			2004			2003
	(Amounts in thousands, except per share data)
Net income, as reported	$	20,244		$	18,068		$	31,340		$	27,445
Deduct: stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		(2,443	)		(2,525	)		(4,411	)		(4,458	)
Pro forma net income	$	17,801		$	15,543		$	26,929		$	22,987
Earnings per share:
Basic – as reported	$	0.20		$	0.18		$	0.31		$	0.27
Basic – pro forma	$	0.18		$	0.16		$	0.27		$	0.23
Diluted – as reported	$	0.20		$	0.18		$	0.31		$	0.27
Diluted – pro forma	$	0.18		$	0.15		$	0.27		$	0.23

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 26% and 25% of total revenues for the three-month and six-month periods, respectively, ended June 30, 2004, and 26% and 25% of total revenues for the three-month and six-month periods, respectively, ended June 30, 2003.

Recent Accounting Pronouncements

In March 2004, the Emerging Issues Task Force (“EITF”) reached a consensus on Issue No. 03-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments.” This consensus clarifies the meaning of other-than-temporary impairment and its application to investments classified as either available-for-sale or held-to-maturity under SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” and investments accounted for under the cost method or the equity method. The application of this guidance should be used to determine when an investment is considered impaired, whether an impairment is other than temporary, and the measurement of an impairment loss. The guidance also includes accounting considerations subsequent to the recognition of an other-than-temporary impairment and requires certain disclosures about unrealized losses that have not been recognized as other-than-temporary impairments. The guidance for evaluating whether an investment is other-than-temporarily impaired is effective for evaluations made in reporting periods beginning after June 15, 2004. Cox Radio does not believe that the application of this consensus will have a material impact on Cox Radio’s results of operations or financial position.

9

Reclassifications

Certain prior year amounts have been reclassified for comparative purposes.

3. Earnings Per Common Share and Capital Structure

	Three Months Ended June 30,						Six Months Ended June 30,
	2004			2003			2004			2003
	(Amounts in thousands, except per share data)
Net income	$	20,244		$	18,068		$	31,340		$	27,445
Earnings per share – basic
Weighted average common shares outstanding		100,544			100,217			100,537			100,208
Net income per common share – basic	$	0.20		$	0.18		$	0.31		$	0.27
Earnings per share – diluted
Weighted average common shares outstanding		100,544			100,217			100,537			100,208
Shares issuable on exercise of dilutive options		574			3,548			3,495			3,548
Shares assumed to be purchased with proceeds of options		(410	)		(3,184	)		(3,296	)		(3,198	)
Shares issuable on exercise of restricted stock		—			—			128			—
Shares assumed to be purchased with proceeds of restricted stock		—			—			(124	)		—
Shares issuable pursuant to Employee Stock Purchase Plan		—			209			149			209
Shares assumed to be purchased with proceeds from Employee Stock Purchase Plan		—			(168	)		(145	)		(169	)
Shares applicable to earnings per share – diluted		100,708			100,622			100,744			100,598
Net income per common share - diluted	$	0.20		$	0.18		$	0.31		$	0.27

The options and ESPP purchase rights excluded from the computation of net income per common share - diluted for the three-month and six-month periods ended June 30, 2004 and 2003 are summarized below. 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 six-month periods ended June 30, 2004 and 2003.

	Three Months Ended June 30,		Six Months Ended June 30,
	2004	2003	2004	2003
	(Amounts in thousands)
Options and ESPP purchase rights outstanding	6,115	2,287	3,065	2,287

In 2004, Cox Radio implemented a new long-term incentive award format for selected officers and senior executives that will consist of a mix of stock options and performance-based restricted stock awards. Awards of performance-based restricted stock are dependent upon the achievement of pre-established performance criteria. Once granted, performance-based restricted stock awards normally become 100% vested five years after the date of grant. As long as the recipient is employed by Cox Radio or its affiliates, 60% of the shares obtained through performance-based restricted stock awards will remain restricted from resale or transfer. Cox Radio recognizes compensation cost related to restricted stock awards, as the exercise price of the awards is less than the market value of the underlying common stock on the grant date.

10

4. Long-Term Debt, Commitments and Contingencies

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

	June 30, 2004		December 31, 2003
	(Amounts in thousands)
6.375% notes payable, due in May 2005 (1)	$	99,962	$	99,942
6.625% notes payable, due in February 2006 (2)		249,848		249,802
Revolving credit facility		145,000		185,000
Total long-term debt	$	494,810	$	534,744

(1) At June 30, 2004 and December 31, 2003, the estimated aggregate fair value of the 6.375% notes was approximately $103.1 million and $106.2 million, respectively, based on quoted market prices. The 6.375% notes due on May 15, 2005 were excluded from current liabilities because Cox Radio intends to refinance this obligation on a long-term basis and currently has the ability to do so under its new five-year credit facility. This credit facility had unused capacity of $355 million as of June 30, 2004. Cox Radio may also refinance this obligation through the issuance of debt or equity securities depending on market conditions and other factors.

(2) At June 30, 2004 and December 31, 2003, the estimated aggregate fair value of these notes was approximately $262.8 million and $269.9 million, respectively, based on quoted market prices.

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 new five-year 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 five-year facility contains, among other provisions, specified leverage and interest coverage requirements, the terms of which are defined within the credit facility. At June 30, 2004, Cox Radio was in compliance with these covenants. Cox Radio’s credit facility contains events of default based on (i) the failure to pay when due other debt, the outstanding amount of which exceeds $25 million, after the expiration of applicable grace periods and (ii) the acceleration of other debt, the outstanding amount of which exceeds $25 million. Cox Radio is not in default under its credit facility. As a result of its business operations, Cox Radio may generate excess cash which could from time to time be used to repay amounts outstanding under the revolving credit facility. At June 30, 2004, Cox Radio had $145 million of outstanding indebtedness under the five-year facility with $355 million available. The interest rate applied to amounts due under the bank credit facility was 1.8% at June 30, 2004. At December 31, 2003, Cox Radio had approximately $185 million of outstanding indebtedness under the old five-year facility with $165 million available, and no amounts outstanding under the old 364-day facility with $150 million available. The interest rate applied to amounts due under the bank credit facilities was 1.8% at December 31, 2003. 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 agreements.

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 offer and issue preferred securities of the trusts for an original maximum aggregate offering amount of $750 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. At June 30, 2004 and December 31, 2003, $244.8 million was available under the universal shelf registration statement.

In April 2000, Cox Radio entered into a JSA for KGMZ-FM serving Honolulu, Hawaii and simultaneously guaranteed Honolulu Broadcasting, Inc.’s financing for the acquisition of this station in the amount of $6.6 million. In February 2001, Cox radio entered

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into another JSA agreement with Honolulu Broadcasting to provide sales and marketing services for WARV-FM, serving Richmond, Virginia, and simultaneously guaranteed Honolulu Broadcasting’s financing for the acquisition of this station in the amount of $1.0 million. The total guarantee at December 31, 2002 was $7.6 million.

During February 2003, Honolulu Broadcasting sold WARV-FM, terminating the related JSA and repaid the indebtedness of $1.0 million. This reduced the amount of Cox Radio’s guarantee from $7.6 million to $6.6 million.

At June 30, 2004, the guarantee of certain senior debt of Honolulu Broadcasting totaled $6.6 million. This debt consists of a one-year renewable term loan secured by the assets of KGMZ-FM, the proceeds of which were used by Honolulu Broadcasting to finance the purchase of this station. Cox Radio provides sales and marketing services under a JSA to this station pursuant to which Cox Radio sells advertising on the station, which it records as revenues, provides marketing services for the station, and pays a JSA fee to Honolulu Broadcasting in an amount sufficient to service this debt.

Cox Radio is subject to various federal and state income tax audits. Cox Radio anticipates reaching a conclusion with the IRS related to the audit of its 1998-2001 federal income tax returns. While the final outcome of this audit is not certain, management expects to pay a net amount of approximately $25 million for adjustments arising during the audit related to certain radio station transactions consummated during the audit period. Cox Radio has previously provided for the possibility of this outcome. In addition, given the nature of these adjustments as temporary differences, Cox Radio has recognized current income tax expense of approximately $18 million, which has been offset by a deferred income tax benefit of approximately $18 million, during the quarter ended June 30, 2004, to reclassify the portion of the anticipated payment from deferred income taxes payable to current income taxes payable. Cox Radio anticipates the audit will be concluded during the second half of 2004 and, as such, has classified the anticipated net payment as current income taxes payable on its Consolidated Balance Sheet at June 30, 2004.

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

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

5. Derivative Instruments and Hedging Activities

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

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Cox Radio had two interest rate swap agreements outstanding as of June 30, 2004, each of 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 counterparties to these interest rate swap agreements are major financial institutions. Cox Radio is exposed to credit loss in the event of nonperformance by these counterparties. However, Cox Radio does not anticipate nonperformance by these counterparties.

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 agreements is recognized as an adjustment to interest expense. Cox Radio’s two interest rate swap agreements qualify as cash flow hedges.

During the three-month and six-month periods ended June 30, 2004 and 2003, there was no ineffective portion related to the changes in fair values of the interest rate swap agreements and there were no amounts excluded from the measure of effectiveness. For the six-month period ended June 30, 2004, approximately $103,000, before related income tax effects of approximately $44,000, were reclassified into earnings as interest expense. The balance of $0.9 million recorded in accumulated other comprehensive loss at June 30, 2004 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 June 30, 2005 is approximately $0.1 million, before related income tax effects of approximately $0.1 million. 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.

At June 30, 2004, $50 million notional principal amount of interest rate swap agreements was outstanding at an average annual fixed rate of 6.3% and an average remaining maturity of two years. The estimated fair value of these swap agreements, based on current market rates, approximated a net payable $2.4 million at June 30, 2004 and $3.9 million at December 31, 2003. The fair value of the swap agreements at June 30, 2004 is included in other current liabilities and other long-term liabilities according to the respective maturity dates of the swaps.

6. Goodwill and Other Intangible Assets

On January 1, 2002, Cox Radio adopted SFAS No. 142, which requires that goodwill and certain intangible assets, including FCC licenses, no longer 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 2004, Cox Radio performed its annual tests for impairment, and based on independent appraisals, no impairment of either FCC licenses or goodwill was indicated.

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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, 2004
FCC licenses and other intangible assets, net	$	2,031,729	$	529	$	2,031,200
Goodwill		46,033		—		46,033
December 31, 2003
FCC licenses and other intangible assets, net		2,029,298		500		2,028,798
Goodwill		46,033		—		46,033

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

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

This report contains “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, among others, statements that relate to Cox Radio’s future plans, earnings, objectives, expectations, performance, and similar projections, as well as any facts or assumptions underlying these statements or projections. Actual results may differ materially from the results expressed or implied in these forward-looking statements, due to various risks, uncertainties or other factors. These factors include competition within the radio broadcasting industry, advertising demand in our markets, the possibility that advertisers may cancel or postpone schedules in response to political events, competition for audience share, our success in executing and integrating acquisitions, and our ability to generate sufficient cash flow to meet our debt service obligations and finance operations. For a more detailed discussion of these and other risk factors, see the Risk Factors section of Cox Radio’s Annual Report on Form 10-K for the year ended December 31, 2003. 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 is 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 73% 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.

During the six months ended June 30, 2004 and 2003, Cox Radio did not enter into or consummate any acquisitions or dispositions.

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.

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Three months ended June 30, 2004 compared to three months ended June 30, 2003:

	June 30, 2004		June 30, 2003		$ Change			% Change
	(Amounts in thousands)
Net revenues:
Local	$	84,252	$	83,020	$	1,232		1.5	%
National		25,155		26,010		(855	)	(3.3	)%
Other		7,468		6,216		1,252		20.1	%
Total net revenues	$	116,875	$	115,246	$	1,629		1.4	%

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 second quarter of 2004 increased $1.6 million to $116.9 million, a 1.4% increase compared to the second quarter of 2003. Local revenues improved in the second quarter of 2004, increasing 1.5% over the second quarter of 2003, while national revenues were down 3.3% compared to the second quarter of 2003. Our stations in Atlanta, Orlando, Tampa, Richmond, Southern Connecticut and Greenville-Spartanburg delivered solid growth during the second quarter of 2004, while our stations in Miami, Houston, San Antonio and Louisville were down for the quarter.

	June 30, 2004		June 30, 2003		$ Change			% Change
	(Amounts in thousands)
Cost of services (exclusive of depreciation and amortization shown separately below)	$	24,993	$	25,434	$	(441	)	(1.7	)%

Cost of services is comprised of expenses incurred by our technical, news and programming departments. Cost of services for the second quarter of 2004 decreased $0.5 million to $25.0 million compared to the second quarter of 2003 primarily as a result of a decrease in music license fees and research costs.

	June 30, 2004		June 30, 2003		$ Change			% Change
	(Amounts in thousands)
Selling, general and administrative expenses	$	42,612	$	43,296	$	(684	)	(1.6	)%

Selling, general and administrative expenses are comprised of our sales, promotion and general and administrative departments. Selling, general and administrative expenses decreased approximately $0.7 million in the second quarter of 2004 compared to the second quarter of 2003 primarily as a result of a decrease in promotional spending, specifically in Miami and Honolulu.

	June 30, 2004		June 30, 2003		$ Change			% Change
	(Amounts in thousands)
Corporate general and administrative expenses	$	4,634	$	4,400	$	234		5.3	%
Depreciation		2,892		2,977		(85	)	(2.9	)%
Amortization		13		29		(16	)	(55.2	)%
Other operating expenses, net		69		29		40		137.9	%

The increase in corporate general and administrative expenses can be attributed to the reversal of an accrual as a result of the settlement of the Force Communications litigation during second quarter of 2003. The changes in depreciation, amortization or other operating expenses were not material to Cox Radio’s overall operating results or financial condition.

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	June 30, 2004		June 30, 2003		$ Change		% Change
	(Amounts in thousands)
Operating income	$	41,662	$	39,081	$	2,581	6.6	%

Operating income for the second quarter of 2004 was $41.7 million, a $2.6 million increase over the second quarter of 2003 for the reasons discussed above.

	June 30, 2004		June 30, 2003		$ Change			% Change
	(Amounts in thousands)
Interest expense	$	7,710	$	8,877	$	(1,167	)	(13.1	)%

Interest expense during the second quarter of 2004 totaled $7.7 million, as compared to $8.9 million for the second quarter of 2003. This was as a result of lower overall outstanding debt, as well as a lower average borrowing rate due to the repayment at maturity of the $100.0 million principal amount of our 6.25% notes in the second quarter of 2003 with proceeds from our five-year revolving credit facility. The average rate on our credit facility was 1.8% during the second quarter of 2004 and, in turn, contributed to the overall decrease in interest expense.

	June 30, 2004			June 30, 2003		$ Change			% Change
	(Amounts in thousands)
Income tax expense:
Current	$	25,733		$	6,143	$	19,590		318.9	%
Deferred		(12,112	)		5,879		(17,991	)	(306.0	)%
Total income tax expense	$	13,621		$	12,022	$	1,599		13.3	%

Income tax expense increased approximately $1.6 million to $13.6 million in the second quarter of 2004 compared to $12.0 million in the second quarter of 2003, primarily as a result of the increase in operating income and a decrease in interest expense, as discussed above. In connection with the conclusion of income tax audits for the years 1998 – 2001, Cox Radio expects to pay approximately $25 million related to certain radio station transactions completed during the audit period. Cox Radio has previously provided for the possibility of this outcome. As management expects to make this payment during the second half of 2004, Cox Radio has reclassified approximately $18 million of deferred tax liabilities, the amount not already classified as current, into income taxes payable resulting in a corresponding reclassification between deferred tax expense and current tax expense. The effective tax rate for the second quarter of 2004 and 2003 was 40.2%.

	June 30, 2004		June 30, 2003		$ Change		% Change
	(Amounts in thousands)
Net income	$	20,244	$	18,068	$	2,176	12.0	%

Net income for the second quarter of 2004 was $20.2 million compared to $18.1 million for the second quarter of 2003 for the reasons discussed above.

Six months ended June 30, 2004 compared to six months ended June 30, 2003:

	June 30, 2004	June 30, 2003	$ Change	% Change
	(Amounts in thousands)
Net revenues:
Local	$151,097	$149,959	$1,138	0.8%
National	44,957	45,268	(311)	(0.7)%
Other	13,912	11,588	2,324	20.1%
Total net revenues	$209,966	$206,815	$3,151	1.5%

Net revenues for the first six months of 2004 increased $3.2 million to $210.0 million, a 1.5% increase compared to the first six months of 2003. Local revenues improved in the first six months of 2004, increasing 0.8% over the first six months of 2003, while

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national revenues were down 0.7% compared to the first six months of 2003. Our stations in Atlanta, Orlando, Tampa, Richmond, Southern Connecticut and Greenville-Spartanburg delivered solid growth during the first six months of 2004, while our stations in Miami, Houston, San Antonio and Louisville were down for the period.

	June 30, 2004		June 30, 2003		$ Change		% Change
	(Amounts in thousands)
Cost of services (exclusive of depreciation and amortization shown separately below)	$	46,710	$	46,654	$	56	0.1	%

Cost of services for the first six months of 2004 increased $0.1 million to $46.7 million compared to the first six months of 2003.

	June 30, 2004		June 30, 2003		$ Change			% Change
	(Amounts in thousands)
Selling, general and administrative expenses	$	79,970	$	81,506	$	(1,536	)	(1.9	)%

Selling, general and administrative expenses decreased approximately $1.5 million in the first six months of 2004 compared to the first six months of 2003 primarily as a result of additional expenses incurred during first six months of 2003 related to competitive situations in Atlanta, Miami and Birmingham and the related reformat of WFOX-FM in Atlanta and a decrease in promotional spending, specifically in Miami and Honolulu, during 2004.

	June 30, 2004		June 30, 2003		$ Change			% Change
	(Amounts in thousands)
Corporate general and administrative expenses	$	9,179	$	8,635	$	544		6.3	%
Depreciation		5,852		5,921		(69	)	(1.2	)%
Amortization		31		59		(28	)	(47.5	)%
Other operating expenses, net		69		28		41		146.4	%

The increase in corporate general and administrative expenses can be attributed to higher insurance rates as well as professional fees related to evaluating, testing and documenting our internal control in connection with Sarbanes-Oxley readiness and compliance. The changes in depreciation, amortization or other operating expenses were not material to Cox Radio’s overall operating results or financial condition.

	June 30, 2004		June 30, 2003		$ Change		% Change
	(Amounts in thousands)
Operating income	$	68,155	$	64,012	$	4,143	6.5	%

Operating income for the first six months of 2004 was $68.2 million, a $4.1 million increase over the first six months of 2003 for the reasons discussed above.

	June 30, 2004		June 30, 2003		$ Change			% Change
	(Amounts in thousands)
Interest expense	$	15,601	$	18,053	$	(2,452	)	(13.6	)%

Interest expense during the first six months of 2004 totaled $15.6 million, as compared to $18.1 million for the first six months of 2003. This was as a result of lower overall outstanding debt, as well as a lower average borrowing rate due to the repayment at maturity of the $100.0 million principal amount of our 6.25% notes in the first six months of 2003 with proceeds from our five-year revolving credit facility. The average rate on our credit facility was 1.8% during the first six months of 2004 and, in turn, contributed to the overall decrease in interest expense.

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	June 30, 2004			June 30, 2003		$ Change			% Change
	(Amounts in thousands)
Income tax expense:
Current	$	29,992		$	9,487	$	20,505		216.1	%
Deferred		(8,964	)		8,790		(17,754	)	(202.0	)%
Total income tax expense	$	21,028		$	18,277	$	2,751		15.1	%

Income tax expense increased approximately $2.8 million to $21.0 million in the first six months of 2004 compared to $18.3 million in the first six months of 2003, primarily as a result of the increase in operating income and a decrease in interest expense, as discussed above. Also discussed above, in the second quarter of 2004, Cox Radio reclassified approximately $18 million of deferred tax liabilities into income taxes payable resulting in a corresponding reclassification between deferred tax expense and current tax expense. The effective tax rate for the first six months of 2004 and 2003 was 40.1%.

	June 30, 2004		June 30, 2003		$ Change		% Change
	(Amounts in thousands)
Net income	$	31,340	$	27,445	$	3,895	14.2	%

Net income for the first six months of 2004 was $31.3 million compared to $27.4 million for the first six months of 2003 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 through borrowings under its bank credit facility. Net cash from operations results primarily from net income adjusted for non-cash items, including depreciation and amortization, deferred income taxes, gains or losses on sales of radio stations and changes in working capital accounts. In comparing the six months ended June 30, 2004 to the six months ended June 30, 2003, net cash provided by operating activities decreased $5.8 million due to changes in working capital. Primary uses of liquidity include debt service, acquisitions, capital expenditures and investment in signal upgrades.

Cox Radio has an effective universal shelf registration statement under which it 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 offer and issue preferred securities of the trusts. At June 30, 2004 and December 31, 2003, $244.8 million was available under the universal shelf registration statement.

In addition, daily cash management needs have been funded through intercompany advances from Cox Enterprises. Our borrowings from Cox Enterprises are due on demand, but typically repaid within 30 days. Cox Enterprises continues to perform day-to-day cash management services for us. On December 4, 2003, we entered into a revolving promissory note with Cox Enterprises to define the intercompany borrowing rate as Cox Enterprises’ current commercial paper borrowing rate (1.2% at June 30, 2004). Prior to amending the intercompany note in December 2003, advances from Cox Enterprises accrued interest at Cox Enterprises’ commercial paper borrowing rate plus 40 basis points (1.8% at June 30, 2003). Cox Radio owed Cox Enterprises approximately $5.3 million at June 30, 2004, and Cox Enterprises owed Cox Radio approximately $6.3 million at December 31, 2003.

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.

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Debt Service

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 new five-year 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 five-year facility contains, among other provisions, specified leverage and interest coverage requirements, the terms of which are defined within the credit facility. At June 30, 2004, Cox Radio was in compliance with these covenants. Cox Radio’s credit facility contains events of default based on (i) the failure to pay when due other debt, the outstanding amount of which exceeds $25 million, after the expiration of applicable grace periods and (ii) the acceleration of other debt, the outstanding amount of which exceeds $25 million. Cox Radio is not in default under its credit facility. As a result of its business operations, Cox Radio may generate excess cash which could from time to time be used to repay amounts outstanding under the revolving credit facility. At June 30, 2004, Cox Radio had $145 million of outstanding indebtedness under the five-year facility with $355 million available. The interest rate applied to amounts due under the bank credit facility was 1.8% at June 30, 2004. At December 31, 2003, Cox Radio had approximately $185 million of outstanding indebtedness under the old five-year facility with $165 million available, and no amounts outstanding under the old 364-day facility with $150 million available. The interest rate applied to amounts due under the bank credit facilities was 1.8% at December 31, 2003. 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 agreements.

In May 2003, the $100 million principal amount of the 6.25% notes was repaid at maturity using funds from the five-year revolving credit facility. Cox Radio currently has $350 million in outstanding debt securities, as described below (dollar amounts in thousands):

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

(1) At June 30, 2004 and December 31, 2003, the estimated aggregate fair value of the 6.375% notes was approximately $103.1 million and $106.2 million, respectively, based on quoted market prices. The 6.375% notes due on May 15, 2005 were excluded from current liabilities because Cox Radio intends to refinance this obligation on a long-term basis and currently has the ability to do so under its new five-year credit facility. This credit facility had unused capacity of $355 million as of June 30, 2004. Cox Radio may also refinance this obligation through the issuance of debt or equity securities depending on market conditions and other factors.

(2) At June 30, 2004 and December 31, 2003, the estimated aggregate fair value of these notes was approximately $262.8 million and $269.9 million, respectively, based on quoted market prices.

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.

At June 30, 2004, the guarantee of certain senior debt of Honolulu Broadcasting totaled $6.6 million. This debt consists of a one-year renewable term loan secured by the assets of KGMZ-FM, the proceeds of which were used by Honolulu Broadcasting to finance the purchase of this station. Cox Radio provides sales and marketing services under a JSA to this station pursuant to which Cox Radio sells advertising on the station, which it records as revenues, provides marketing services for the station, and pays a JSA fee to Honolulu Broadcasting in an amount sufficient to service this debt.

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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.

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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 in these areas 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 interest rate swap agreements for purposes of managing borrowing costs.

Pursuant to the interest rate swap agreements, Cox Radio has exchanged its floating rate interest obligations on an aggregate of $50 million in notional principal amount of debt for fixed interest rates. These agreements have an average annual fixed rate of 6.3% and an average remaining maturity of two years. Concurrently with the adoption of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” in January 2001, Cox Radio formally designated these agreements as cash flow hedges 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 counterparties to the interest rate swap agreements. However, Cox Radio does not anticipate nonperformance by such counterparties, and no material loss would be expected in the event of the counterparties’ nonperformance. The estimated fair value of the swap agreements, based on current market rates, approximated a net payable of $2.4 million at June 30, 2004 and $3.9 million at December 31, 2003. The fair value of the swap agreements at June 30, 2004 is included in other current liabilities and other long-term liabilities according to the respective maturity dates of the swaps. The market risk for the interest rate swaps 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 June 30, 2004 was $365.8 million, compared to a carrying amount of $349.8 million. The estimated fair value of Cox Radio’s fixed-rate debt instruments at December 31, 2003 was $376.1 million, compared to a carrying amount of $349.7 million. The effect of a hypothetical one percentage point decrease in interest rates would be to increase the estimated fair value of the fixed-rate debt instruments from $365.8 million to $370.8 million at June 30, 2004, and from $376.1 million to $382.9 million at December 31, 2003.

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

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

ITEM 4. Controls and Procedures

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, 2004, 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.

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.

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.

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PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings

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

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

ITEM 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities

None.

ITEM 3. Defaults Upon Senior Securities

None.

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

Cox Radio held its Annual Meeting of Stockholders on May 11, 2004. Three matters were voted upon at the meeting: (a) the election of a Board of Directors of eight members to serve until the 2005 Annual Meeting or until their successors are duly elected and qualified; (b) approval of Cox Radio’s 2004 Employee Stock Purchase Plan; and (c) approval of Cox Radio’s Second Amended and Restated Long-Term Incentive Plan.

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

Nominee	Votes in Favor	Votes Withheld
James C. Kennedy	610,578,612	9,226,954
Juanita P. Baranco	616,656,111	3,149,455
G. Dennis Berry	610,424,838	9,380,728
Richard A. Ferguson	609,684,272	10,121,294
Paul M. Hughes	617,325,776	2,479,790
Marc W. Morgan	609,685,538	10,120,028
Robert F. Neil	610,523,912	9,281,654
Nicholas D. Trigony	608,893,098	10,912,468

The 2004 Employee Stock Purchase Plan was approved, with 614,087,198 votes in favor, 1,202,385 votes in opposition, 5,332 abstentions, and 4,510,651 broker non-votes.

The Second Amended and Restated Long-Term Incentive Plan was approved, with 609,624,656 votes in favor, 5,659,109 votes in opposition, 11,150 abstentions, and 4,510,651 broker non-votes.

ITEM 5. Other Information

None.

ITEM 6. Exhibits and Reports on Form 8-K

(a) 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.
4.1	—	Indenture dated as of May 26, 1998 by and among Cox Radio, Inc. The Bank of New York, WSB, Inc. and WHIO, Inc.
(4) 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.
(5) 4.3	—	Form of Specimen Class A common stock certificate.
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.

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(6)10.2		Cox Radio, Inc. Second Amended and Restated Long-Term Incentive Plan.
31.1	—	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.
31.2	—	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.
32.1	—	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934.

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

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

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

(6) Incorporated by reference to Appendix C of Cox Radio’s Definitive Proxy Statement filed April 5, 2004.

(b) Reports on Form 8-K:

Form 8-K dated May 5, 2004 (furnished May 5, 2004) announcing Cox Radio’s financial results for the quarter ended March 31, 2004, under Item 12 and furnishing a copy of Cox Radio’s earnings press release under Item 7.

Form 8-K dated June 8, 2004 announcing, under Item 5 that Cox Radio entered into a new five-year credit facility.

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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 6, 2004	/s/ Neil O. Johnston
	Neil O. Johnston Vice President and Chief Financial Officer (Principal Financial Officer, Principal Accounting Officer and duly authorized officer)

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