Cox Radio Inc.

Cox Radio Reports Fourth Quarter 2007 Financial Results

ATLANTA, March 5 /PRNewswire-FirstCall/ -- Cox Radio, Inc. (NYSE:CXR) today reported financial results for the three-month and twelve-month periods ended December 31, 2007.

Financial highlights (in thousands, except per share data and percentages) are as follows:

                          Three Months Ended      Twelve Months Ended
                             December 31,              December 31,
                     2007       2006              2007       2006

  Net revenues     $114,332   $113,048   1.1%   $444,852   $440,468    1.0%

  Station operating
   income (1)        46,427     47,577  (2.4%)   178,922    185,739   (3.7%)

  Station operating
   income margin (2)   40.6%      42.1%    -        40.2%      42.2%     -

  Operating (loss)
   income          $(77,806) $(135,992)    *     $25,587   $(25,529)     *

  Net (loss)
   income           (52,116)   (88,049)    *       1,867    (24,447)     *

  Net (loss)
   income per
   common share
   - diluted         $(0.57)    $(0.93)    *       $0.02     $(0.25)     *

  Free cash
   flow (3)          27,661     25,371   9.0%    103,658    104,994   (1.3%)

   *  Results are not statistically meaningful.
  (1) Station operating income is not a measure of performance calculated in
      accordance with accounting principles generally accepted in the United
      States (GAAP).  Please see the attached table for a reconciliation to
      operating income, the most directly comparable GAAP financial measure.
  (2) Station operating income margin is station operating income as a
      percentage of net revenues.
  (3) Free cash flow is not a measure of performance calculated in
      accordance with GAAP.  Please see the attached table for a
      reconciliation to net income, the most directly comparable GAAP
      financial measure.

Robert F. Neil, President and CEO, commented, "2007 marked another year of solid operating performance from our stations. Our growth in net revenues of 1% once again outpaced the markets in which we operate and the industry as a whole. I'm especially pleased with our stations in Atlanta, Birmingham and Greenville which led our company this year in revenue growth, generating substantial increases over 2006 and dramatically outperforming their respective markets in revenue growth." Neil continued, "While the outlook for the overall economy remains uncertain, our focus remains balanced between operating our business as efficiently as possible and making the investments necessary to sustain and improve our powerful local brands."

Operating Results - Fourth Quarter 2007

Net revenues for the fourth quarter of 2007 were $114.3 million, up 1.1% from the fourth quarter of 2006. Local revenues increased 2.9% over 2006 due to solid revenue growth at our stations in Atlanta, Houston, Birmingham and Greenville. Local revenues in Atlanta, our largest market, were up 14.9% in the fourth quarter of 2007, as compared to the same period in 2006. Growth in these markets was partially offset by comparable period revenue declines in our Orlando, Miami, Tampa, Jacksonville and Richmond markets. National revenues were down 8.9% compared to the fourth quarter of 2006 due to continued overall weakness in national advertising. Other revenues increased 14.2% as compared to the fourth quarter of 2006, primarily due to a 15.4% increase in non-traditional revenues and an 11.3% increase in Internet revenues during the comparable period. Non-traditional revenues include revenues from community events and sponsorships.

Cost of services is comprised of expenses incurred by our technical, news and programming departments. Cost of services increased $1.8 million, or 8.2% as compared to the fourth quarter of 2006. This increase was the result of $0.4 million of additional pension expense, primarily related to expanded employee participation in Cox Enterprises' defined benefit pension plan, as well as additional costs associated with programming talent and programming rights.

Selling, general and administrative expenses are comprised of expenses incurred by our sales, promotion and general and administrative departments. These expenses increased $1.2 million, or 2.9% as compared to the fourth quarter of 2006. This increase was the result of $0.5 million of additional pension expense, primarily related to expanded employee participation in Cox Enterprises' defined benefit pension plan. Additionally, expenses increased $0.5 million over the prior year quarter due to additional performance units and stock-based compensation awarded in the first quarter of 2007.

Corporate general and administrative expenses increased $0.1 million, or 2.1% as compared to the fourth quarter of 2006. This change, as well as changes in depreciation and amortization and other operating expenses, net, were not material to our overall operating results or financial condition.

Our operating loss for the fourth quarter of 2007 was $77.8 million compared to an operating loss of $136.0 million for the fourth quarter of 2006. Both quarters were adversely affected by non-cash write-downs of impaired intangible assets. During the fourth quarter of 2007, we recorded a $117.1 million non-cash impairment charge to reduce the carrying value of intangible assets in our Birmingham, Greenville, Honolulu, Houston, Jacksonville, Louisville, Richmond, Southern Connecticut and Tulsa markets to their estimated fair values. During the fourth quarter of 2006, we recorded a $176.3 million non-cash impairment charge in order to reduce the carrying value of intangible assets in our Birmingham, Greenville, Houston, Louisville and Richmond markets to their estimated fair values.

Interest expense during the fourth quarter of 2007 decreased 17.6% from the fourth quarter of 2006. This decrease was the result of lower overall outstanding debt and a slightly lower borrowing rate. The average interest rate on our credit facility was 5.7% and 6.0% during the fourth quarter of 2007 and 2006, respectively.

Income tax benefit decreased approximately $23.8 million in the fourth quarter of 2007, as compared to the fourth quarter of 2006. The change in income tax benefit was primarily attributable to the increase in income during 2007. Our overall effective tax rate was 36.7% for the fourth quarter of 2007 and 38.0% for the fourth quarter of 2006.

Our net loss for the fourth quarter of 2007 was $52.1 million, compared to a net loss of $88.0 million for the fourth quarter of 2006. This change was primarily attributable to the lower non-cash impairment charge, on a net of tax basis, as described above.

Operating Results - Full Year 2007

Net revenues for 2007 increased to $444.9 million, an increase of 1.0% compared to 2006. Local revenues for 2007 increased 1.6% as compared to 2006 due to strength in our Atlanta, Birmingham and Greenville markets. Local revenues in Atlanta, our largest market, were up 11.2% in 2007 as compared to 2006. Growth in these markets was partially offset by year-over-year revenue declines in our Orlando, Tampa, San Antonio, Jacksonville and Dayton markets. National revenues decreased 4.3% from the prior year due to continued overall weakness in national advertising. However, national revenues in our Orlando and Birmingham markets were up over the prior year. Other revenues increased 10.7% compared to 2006, primarily due to a 20.4% increase in Internet revenues during that same period. Increased Internet revenues are a result of our continued focus on growing this revenue stream.

Cost of services increased 8.9%, or $7.7 million, as compared to 2006. This increase was the result of a $2.1 million increase in pension expense, primarily related to expanded employee participation in Cox Enterprises' defined benefit pension plan, as well as additional costs associated with programming talent and programming rights.

Selling, general and administrative expenses increased 2.9%, or $5.0 million as compared to 2006. This increase was partially attributable to expenses related to additional performance units and stock-based compensation awarded in the first quarter of 2007. Compensation expense for these awards is recognized as they vest. Additionally, there was a $3.2 million increase in pension expense, primarily related to expanded employee participation in Cox Enterprises' defined benefit pension plan.

Corporate general and administrative expenses increased $0.4 million as compared to 2006 due to additional compensation expense related to performance units and stock-based compensation awarded to corporate personnel in the first quarter of 2007. Changes in depreciation and amortization and other operating expenses, net, were not material to our overall operating results or financial condition.

Operating income for 2007 was $25.6 million, as compared to a $25.5 million operating loss for 2006. The increase over the prior year was due to the $117.1 million non-cash impairment charge in 2007, as compared to a similar charge of $176.3 million in 2006, each as discussed above.

Interest expense decreased 16.8% or $4.3 million over the prior year. This decrease in interest expense was the result of lower overall outstanding debt. The average rate on our credit facility was 6.0% during 2007 and 5.9% during 2006.

Income tax expense increased $30.3 million to $3.9 million in 2007. The change in income tax expense was primarily attributable to the increase in income during 2007, changes in certain effective tax rates and adjustments for the actual or expected resolution of certain income tax audits.

Our net income for 2007 was $1.9 million, compared to a net loss of $24.4 million for 2006, primarily due to a lower non-cash impairment charge in 2007.

Other Matters

In January 2005, we acquired an option to purchase five radio stations serving the Athens, Georgia market. In January 2008, we exercised this option, and in February 2008, we 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. The aggregate $60 million purchase price for the stations is reduced by the $12 million we previously paid to the sellers and is subject to other customary closing adjustments. Pending regulatory approvals, we expect to close the acquisition in the second quarter of 2008.

As of December 31, 2007, Cox Radio's Board of Directors had authorized two share repurchase programs through which Cox Radio, from time to time, may repurchase shares of its Class A common stock 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 original $100 million program was authorized on August 24, 2005, and final purchases under this program were made in August 2007. The second $100 million program was authorized on May 16, 2007. Repurchased shares are held in treasury, and we may commence, suspend or terminate repurchases at any time, without prior notice, depending on market conditions and various other factors.

During the fourth quarter of 2007, we repurchased 3.2 million shares of common stock for an aggregate purchase price of approximately $39.3 million, including commissions and fees. As of December 31, 2007, we had purchased a total of approximately 11.3 million shares under the two programs for an aggregate purchase price of approximately $152.6 million, including commissions and fees, at an average price of $13.47 per share. Approximately $47.4 million remained authorized under the second program as of December 31, 2007.

Additionally, as of March 3, 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 company's management and repurchased shares will be held in treasury. The newly authorized plan has no expiration date, and we may commence, suspend or terminate repurchases at any time without prior notice. Cox Radio does not intend to make repurchases under the new program until the current repurchase program is complete.

Cox Radio is one of the largest radio companies in the United States based on revenues. Upon the completion of all announced transactions, Cox Radio will own, operate or provide sales or marketing services for 86 stations (71 FM and 15 AM) clustered in 19 markets, including major markets such as Atlanta, Houston, Miami, Orlando, San Antonio and Tampa. Cox Radio shares are traded on the New York Stock Exchange under the symbol: CXR.