**Table of Contents**

** **

 

** **

**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C.  20549**

 

**FORM 10-Q**

 

**(Mark One)**

 
| x | **QUARTERLY REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|---|--------------------------------------------------------------------------------------------------------|

 

**For the quarterly period ended March 31,2010**

 

**or**

 
| o | **TRANSITION REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|---|---------------------------------------------------------------------------------------------------------|

 

**For thetransition periodfrom              to              **

 

**Commission File Number:****001-14461**

 

**Entercom Communications Corp.**

(Exact name of registrant as specified in itscharter)

 
| **Pennsylvania**                                               | **23-1701044**                       |
|----------------------------------------------------------------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) | (I.R.S. employer identification no.) |

 

**401 City Avenue, Suite 809**

**Bala Cynwyd, Pennsylvania 19004**

(Address of principal executive offices andzip code)

 

**(610) 660-5610**

(Registrant’s telephone number, includingarea code)

 

 

(Former name, former address and formerfiscal year, if changed since last report)

 

Indicate by check mark whether the registrant(1) has filed all reports required to be filed by Section 13 or 15(d) ofthe Securities Exchange Act of 1934 during the preceding 12 months (or for suchshorter period that the registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days.  Yes x  Noo

 

Indicate by checkmark whether the registranthas submitted electronically and posted on its corporate Web site, if any,every Interactive Data File required to be submitted and posted pursuant to Rule 405of Regulation S-T (section 232.405 of this chapter) during the preceding 12months (or for such shorter period that the registrant was required to submitand post such files.)  Yes oNo o

 

Indicate by check mark whether the registrantis a large accelerated filer, an accelerated filer, a non-accelerated filer, ora smaller reporting company.  See thedefinitions of “large accelerated filer,” “accelerated filer” and “smallerreporting company” in Rule 12b-2 of the Exchange Act.

 
| Large accelerated filer o | Accelerated filer o         |
|---------------------------|-----------------------------|
|                      |                        |
| Non-accelerated filer x   | Smaller reporting company o |

 

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

 

Indicate the number of shares outstanding ofeach of the issuer’s classes of common stock, as of the latest practicabledate.

 

Class A common stock, $0.01 par value29,699,875 Shares Outstanding as of April 30, 2010

(Class A Shares Outstanding include1,483,873 unvested and vested but deferred restricted stock units)

Class B common stock, $0.01 par value —7,457,532 Shares Outstanding as of April 30, 2010

 

 

 

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**ENTERCOM COMMUNICATIONSCORP.**

 

**INDEX**

 
| **Part I**        | **Financial Information**                                                                   |   |
|------------------------|---------------------------------------------------------------------------------------------|--------|
|                   |                                                                                        |   |
| Item  1.               | Financial Statements                                                                        | 1      |
| Item 2.                | Management’s  Discussion and Analysis of Financial Condition and Results of Operations | 22     |
| Item 3.                | Quantitative  and Qualitative Disclosures About Market Risk                                 | 29     |
| Item 4.                | Controls and  Procedures                                                                    | 30     |
|                   |                                                                                        |   |
| **Part II**       | **Other Information**                                                                       |   |
|                   |                                                                                        |   |
| Item 1.                | Legal Proceedings                                                                           | 30     |
| Item 1A.               | Risk Factors                                                                                | 31     |
| Item 2.                | Unregistered  Sales of Equity Securities and Use of Proceeds                                | 31     |
| Item 3.                | Defaults  Upon Senior Securities                                                            | 31     |
| Item  4.               | Reserved                                                                                    | 31     |
| Item 5.                | Other Information                                                                           | 31     |
| Item  6.               | Exhibits                                                                                    | 32     |
|                   |                                                                                        |   |
| **Signatures**         | 33                                                                                          |
|                   |                                                                                        |   |
| **Exhibit Index** | 34                                                                                          |

 

**Private Securities Litigation Reform Act SafeHarbor Statement**

 

In addition to historical information, this report contains statementsby us with regard to our expectations as to financial results and other aspectsof our business that involve risks and uncertainties and may constituteforward- looking statements within the meaning of Section 27A of theSecurities Act of 1933 and Section 21E of the Securities Exchange Act of1934.

 

Forward-looking statements are presented for illustrative purposes onlyand reflect our current expectations concerning future results and events.  All statements other than statements ofhistorical fact are “forward-looking statements” for purposes of federal andstate securities laws, including, without limitation, any projections ofearnings, revenues or other financial items; any statements of the plans,strategies and objectives of management for future operations; any statementsconcerning proposed new services or developments; any statements regardingfuture economic conditions or performance; any statements of belief; and anystatements of assumptions underlying any of the foregoing.

 

You can identify forward-looking statements by our use of words such as“anticipates,” “believes,” “continues,” “expects,” “intends,” “likely,” “may,” “opportunity,”“plans,” “potential,” “project,” “will,” and similar expressions which identifyforward-looking statements, whether in the negative or the affirmative.  We cannot guarantee that we actually willachieve these plans, intentions or expectations.  These forward-looking statements are subjectto risks, uncertainties and other factors, some of which are beyond ourcontrol, which could cause actual results to differ materially from thoseforecasted or anticipated in such forward-looking statements.  You should not place undue reliance on theseforward-looking statements, which reflect our view only as of the date of thisreport.  We undertake no obligation toupdate these statements or publicly release the result of any revision(s) tothese statements to reflect events or circumstances after the date of thisreport or to reflect the occurrence of unanticipated events.

 

Key risks to our company are described in our Annual Report on Form 10-Kfiled with the Securities and Exchange Commission on March 15, 2010 and asmay be supplemented by the risks described under Part II, Item 1A, of ourquarterly reports on Form 10-Q and in our Current Reports on Form 8-K.

 

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**PART I**

 

**FINANCIAL INFORMATION**

 

**ITEM 1.  Financial Statements**

** **

**ENTERCOM COMMUNICATIONS CORP.**

**CONDENSED CONSOLIDATED BALANCE SHEETS**

**(amounts in thousands)**

**(unaudited)**

** **

 
| ** **                                                          | ** ** | **MARCH 31,** | ** ** | **DECEMBER 31,** | ** ** |
|---------------------------------------------------------------------|------------|--------------------|------------|------------------|------------|
| ** **                                                          | ** ** | **2010**           | ** ** | **2009**         | ** ** |
| **ASSETS:**                                                         | ** ** | ** **         | ** ** | ** **       | ** ** |
| Cash and cash equivalents                                           |       | $                  | 2,583      |             | $          | 10,751 |   |
| Accounts receivable, net of allowance for doubtful  accounts        |       | 58,413             |       | 68,319           |       |
| Prepaid expenses and deposits, other                                |       | 7,371              |       | 4,701            |       |
| Prepaid and refundable federal and state income  taxes              |       | 7,539              |       | 7,628            |       |
| Insurance claim receivable                                          |       | —             |       | 16,500           |       |
| Total current assets                                                |       | 75,906             |       | 107,899          |       |
| Investments                                                         |       | 391                |       | 391              |       |
| Net property and equipment                                          |       | 69,369             |       | 71,740           |       |
| Radio broadcasting licenses                                         |       | 707,852            |       | 707,852          |       |
| Goodwill                                                            |       | 38,168             |       | 38,168           |       |
| Deferred charges and other assets, net of  accumulated amortization |       | 12,434             |       | 8,486            |       |
|                                                                |       |                    |       |             |       |
| **TOTAL ASSETS**                                                    |       | $                  | 904,120    |             | $          | 934,536 |   |
| ** **                                                          | ** ** | ** **         | ** ** | ** **       | ** ** |
| **LIABILITIES:**                                                    | ** ** | ** **         | ** ** | ** **       | ** ** |
| Accounts payable                                                    |       | $                  | 2,094      |             | $          | 477 |   |
| Accrued expenses                                                    |       | 12,664             |       | 13,152           |       |
| Accrued compensation and other current liabilities                  |       | 16,293             |       | 12,678           |       |
| Insurance claim payable                                             |       | —             |       | 16,500           |       |
| Long-term debt, current portion                                     |       | 90,025             |       | 80,024           |       |
| Total current liabilities                                           |       | 121,076            |       | 122,831          |       |
| Long-term debt, net of current portion                              |       | 626,142            |       | 655,728          |       |
| Financing method lease obligations                                  |       | 12,610             |       | 12,610           |       |
| Deferred tax liabilities                                            |       | 1,643              |       | —           |       |
| Other long-term liabilities                                         |       | 24,016             |       | 29,415           |       |
| Total long-term liabilities                                         |       | 664,411            |       | 697,753          |       |
| Total liabilities                                                   |       | 785,487            |       | 820,584          |       |
|                                                                |       |               |       |             |       |
| **CONTINGENCIES AND COMMITMENTS**                                   |       |               |       |             |       |
|                                                                |       |                    |       |             |       |
| **SHAREHOLDERS’ EQUITY:**                                      |       |               |       |             |       |
| Preferred stock                                                     |       | —             |       | —           |       |
| Class A, B and C common stock                                  |       | 372                |       | 372              |       |
| Additional paid-in capital                                          |       | 589,068            |       | 588,622          |       |
| Accumulated deficit                                                 |       | (457,398           | )          | (461,610         | )          |
| Accumulated other comprehensive loss                                |       | (13,409            | )          | (13,432          | )          |
| Total shareholders’ equity                                     |       | 118,633            |       | 113,952          |       |
|                                                                |       |               |       |             |       |
| **TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY**                 |       | $                  | 904,120    |             | $          | 934,536 |   |

 

**See notes to condensed consolidated financialstatements.**

 

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**ENTERCOM COMMUNICATIONS CORP.**

**CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**

**(amounts in thousands, except share and per sharedata)**

**(unaudited)**

 
| ** **                                                                                                                   | ** ** | **THREE MONTHS ENDED** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------|------------|------------------------|------------|
| ** **                                                                                                                   | ** ** | **MARCH 31,**     | ** ** |
| ** **                                                                                                                   | ** ** | **2010**               | ** ** | **2009** | ** ** |
| ** **                                                                                                                   |       |                        |       |   |   |
| **NET REVENUES**                                                                                                             |       | $                      | 80,834     |   | $ | 75,371 |   |
|                                                                                                                         |       |                   |       |   |   |
| **OPERATING (INCOME) EXPENSE:**                                                                                              |       |                   |       |   |   |
| Station operating expenses, including non-cash  compensation expense of $178 in 2010 and $90 in 2009                         |       | 59,388                 |       | 58,569 |   |
| Depreciation and amortization expense                                                                                        |       | 3,381                  |       | 4,316 |   |
| Corporate general and administrative expenses,  including non-cash compensation expense of $1,572 in 2010 and $1,702 in 2009 |       | 5,875                  |       | 5,687 |   |
| Net time brokerage agreement income                                                                                          |       | —                 |       | (2 | ) |
| Net loss on sale or disposal of assets                                                                                       |       | 29                     |       | 7 |   |
| Total operating expense                                                                                                      |       | 68,673                 |       | 68,577 |   |
| **OPERATING INCOME**                                                                                                         |       | 12,161                 |       | 6,794 |   |
|                                                                                                                         |       |                        |       |   |   |
| **OTHER (INCOME) EXPENSE:**                                                                                                  |       |                   |       |   |   |
| Interest expense, including amortization of deferred  financing expense of $549 in 2010 and $394 in 2009                     |       | 6,980                  |       | 8,113 |   |
| Interest and dividend income                                                                                                 |       | (7                     | )          | (8 | ) |
| Net (gain) loss on extinguishment of debt                                                                                    |       | 62                     |       | (7,755 | ) |
| Other income                                                                                                                 |       | (22                    | )          | (380 | ) |
| **TOTAL OTHER (INCOME) EXPENSE**                                                                                             |       | 7,013                  |       | (30 | ) |
|                                                                                                                         |       |                   |       |   |   |
| **INCOME BEFORE INCOME TAXES**                                                                                               |       | 5,148                  |       | 6,824 |   |
| **INCOME TAXES**                                                                                                             |       | 948                    |       | 1,488 |   |
| **NET INCOME**                                                                                                               |       | $                      | 4,200      |   | $ | 5,336 |   |
|                                                                                                                         |       |                        |       |   |   |
| **NET INCOME PER SHARE - BASIC**                                                                                             |       | $                      | 0.12       |   | $ | 0.15 |   |
| **NET INCOME PER SHARE - DILUTED**                                                                                           |       | $                      | 0.11       |   | $ | 0.15 |   |
|                                                                                                                         |       |                        |       |   |   |
| **WEIGHTED AVERAGE SHARES:**                                                                                                 |       |                   |       |   |   |
| Basic                                                                                                                        |       | 35,622,615             |       | 35,393,660 |   |
| Diluted                                                                                                                      |       | 37,571,384             |       | 35,482,330 |   |

 

**See notes to condensed consolidated financialstatements.**

 

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**ENTERCOM COMMUNICATIONS CORP.**

**CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVEINCOME**

**(amounts in thousands)**

**(unaudited)**

 
| ** **                                                                                      | ** ** | **THREE MONTHS ENDED** | ** ** |
|-------------------------------------------------------------------------------------------------|------------|------------------------|------------|
| ** **                                                                                      | ** ** | **MARCH 31,**     | ** ** |
| ** **                                                                                      | ** ** | **2010**               | ** ** | **2009** | ** ** |
| ** **                                                                                      |       |                        |       |   |   |
| **NET INCOME**                                                                                  |       | $                      | 4,200      |   | $ | 5,336 |   |
|                                                                                            |       |                   |       |   |   |
| **OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES  (BENEFIT):**                                 |       |                   |       |   |   |
|                                                                                            |       |                   |       |   |   |
| Net unrealized gain (loss) on derivatives, net of  taxes (benefit) of $0 in 2010 and $0 in 2009 |       | 23                     |       | (985 | ) |
|                                                                                            |       |                   |       |   |   |
| **COMPREHENSIVE INCOME**                                                                        |       | $                      | 4,223      |   | $ | 4,351 |   |

 

**See notes to condensed consolidated financialstatements.**

 

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**CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’EQUITY**

**THREE MONTHS ENDED MARCH 31, 2010 AND YEARENDED DECEMBER 31, 2009**

**(amounts in thousands, except share data)**

**(unaudited)**

 
| ** **                                                                            | ** ** | **Common Stock** | ** ** | **Additional**   | ** ** | ** **  | ** ** | **Other**    | ** ** | ** **        | ** ** |
|---------------------------------------------------------------------------------------|------------|------------------|------------|------------------|------------|-------------|------------|--------------|------------|-------------------|------------|
| ** **                                                                            | ** ** | **Class A** | ** ** | **Class B** | ** ** | **Paid-in** | ** ** | **Retained** | ** ** | **Comprehensive** | ** ** | ** ** | ** ** |
| ** **                                                                            | ** ** | **Shares**       | ** ** | **Amount**       | ** ** | **Shares**  | ** ** | **Amount**   | ** ** | **Capital**       | ** ** | **Earnings** | ** ** | **Income (Loss)** | ** ** | **Total** | ** ** |
| ** **                                                                            |       |                  |       |             |       |        |       |         |       |              |       |   |   |   |   |   |   |
| Balance, December 31, 2008                                                       |       | 29,479,188       |       | $                | 295        |        | 7,607,532  |         | $          | 76                |       | $ | 582,325 |   | $ | (467,177 | ) | $ | (15,262 | ) | $ | 100,257 |   |
| Net income                                                                            |       | —           |       | —           |       | —      |       | —       |       | —            |       | 5,398 |   | — |   | 5,398 |   |
| Conversion of Class B common stock to  Class A common stock                 |       | 150,000          |       | 1                |       | (150,000    | )          | (1           | )          | —            |       | — |   | — |   | — |   |
| Compensation expense related to granting of stock  options                            |       | —           |       | —           |       | —      |       | —       |       | 485               |       | — |   | — |   | 485 |   |
| Compensation expense related to granting of  restricted stock units                   |       | 796,824          |       | 8                |       | —      |       | —       |       | 6,380             |       | — |   | — |   | 6,388 |   |
| Issuance of common stock related to an incentive  plan                                |       | 74,369           |       | —           |       | —      |       | —       |       | 97                |       | — |   | — |   | 97 |   |
| Common stock repurchase                                                               |       | (662,664         | )          | (7               | )          | —      |       | —       |       | (882              | )          | — |   | — |   | (889 | ) |
| Purchase of vested employee restricted stock units                                    |       | (82,556          | )          | —           |       | —      |       | —       |       | (104              | )          | — |   | — |   | (104 | ) |
| Net dividend equivalents on restricted stock units  (net of forfeitures and payments) |       | —           |       | —           |       | —      |       | —       |       | —            |       | 169 |   | — |   | 169 |   |
| Realization of tax benefit for dividend equivalent  payments                          |       | —           |       | —           |       | —      |       | —       |       | 321               |       | — |   | — |   | 321 |   |
| Net unrealized gain on derivatives                                                    |       | —           |       | —           |       | —      |       | —       |       | —            |       | — |   | 1,830 |   | 1,830 |   |
| Balance, December 31, 2009                                                       |       | 29,755,161       |       | 297              |       | 7,457,532   |       | 75           |       | 588,622           |       | (461,610 | ) | (13,432 | ) | 113,952 |   |
| Net income                                                                            |       | —           |       | —           |       | —      |       | —       |       | —            |       | 4,200 |   | — |   | 4,200 |   |
| Compensation expense related to granting of stock  options                            |       | —           |       | —           |       | —      |       | —       |       | 132               |       | — |   | — |   | 132 |   |
| Compensation expense related to granting of  restricted stock units                   |       | 29,781           |       | —           |       | —      |       | —       |       | 1,618             |       | — |   | — |   | 1,618 |   |
| Exercise of stock options                                                             |       | 69,725           |       | —           |       | —      |       | —       |       | 92                |       | — |   | — |   | 92 |   |
| Purchase of vested employee restricted stock units                                    |       | (157,181         | )          | —           |       | —      |       | —       |       | (1,396            | )          | — |   | — |   | (1,396 | ) |
| Net dividend equivalents on restricted stock units  (net of forfeitures and payments) |       | —           |       | —           |       | —      |       | —       |       | —            |       | 12 |   | — |   | 12 |   |
| Net unrealized gain on derivatives                                                    |       | —           |       | —           |       | —      |       | —       |       | —            |       | — |   | 23 |   | 23 |   |
| Balance, March 31, 2010                                                          |       | 29,697,486       |       | $                | 297        |        | 7,457,532  |         | $          | 75                |       | $ | 589,068 |   | $ | (457,398 | ) | $ | (13,409 | ) | $ | 118,633 |   |

 

**See notes to condensed consolidated financialstatements.**

 

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**ENTERCOM COMMUNICATIONS CORP.**

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(amounts in thousands)**

**(unaudited)**

 
| ** **                                                                        | ** ** | **THREE MONTHS ENDED** | ** ** |
|-----------------------------------------------------------------------------------|------------|------------------------|------------|
| ** **                                                                        | ** ** | **MARCH 31,**     | ** ** |
| ** **                                                                        | ** ** | **2010**               | ** ** | **2009** | ** ** |
| **OPERATING ACTIVITIES:**                                                         |       |                   |       |   |   |
| Net income                                                                        |       | $                      | 4,200      |   | $ | 5,336 |   |
|                                                                              |       |                   |       |   |   |
| Adjustments to reconcile net income to net cash  provided by operating activities |       |                   |       |   |   |
| Depreciation and amortization                                                     |       | 3,381                  |       | 4,316 |   |
| Amortization of deferred financing costs                                          |       | 549                    |       | 394 |   |
| Deferred tax benefit and other                                                    |       | 1,643                  |       | 1,488 |   |
| Provision for bad debts                                                           |       | 65                     |       | 691 |   |
| Net loss on sale or disposal of assets                                            |       | 29                     |       | 7 |   |
| Non-cash stock-based compensation expense                                         |       | 1,750                  |       | 1,792 |   |
| Deferred rent                                                                     |       | 10                     |       | 20 |   |
| Unearned revenue - long-term                                                      |       | —                 |       | (210 | ) |
| Net (gain) loss on extinguishment of debt                                         |       | 62                     |       | (7,755 | ) |
| Deferred compensation                                                             |       | 579                    |       | 41 |   |
| Other income                                                                      |       | (22                    | )          | (380 | ) |
|                                                                              |       |                   |       |   |   |
| Changes in assets and liabilities:                                                |       |                   |       |   |   |
| Accounts receivable                                                               |       | 9,851                  |       | 17,188 |   |
| Prepaid expenses and deposits                                                     |       | 13,822                 |       | (2,237 | ) |
| Prepaid and refundable income taxes                                               |       | 90                     |       | 77 |   |
| Accounts payable and accrued liabilities                                          |       | (15,960                | )          | (2,696 | ) |
| Accrued interest expense                                                          |       | (192                   | )          | (1,798 | ) |
| Accrued liabilities - long-term                                                   |       | (763                   | )          | (577 | ) |
| Prepaid expenses - long-term                                                      |       | 250                    |       | 200 |   |
| **Net cash provided by operating activities**                                     |       | 19,344                 |       | 15,897 |   |
|                                                                              |       |                   |       |   |   |
| **INVESTING ACTIVITIES:**                                                         |       |                   |       |   |   |
| Additions to property and equipment                                               |       | (793                   | )          | (823 | ) |
| Proceeds from sale of property, equipment,  intangibles and other assets          |       | 106                    |       | 16 |   |
| Deferred charges and other assets                                                 |       | (11                    | )          | (33 | ) |
| Proceeds from investments                                                         |       | 22                     |       | 7 |   |
| Proceeds from insurance recovery                                                  |       | —                 |       | 380 |   |
| **Net cash used in investing activities**                                         |       | (676                   | )          | (453 | ) |
|                                                                                   |            |                        |            |  |  |  |  |

 

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**ENTERCOM COMMUNICATIONS CORP.**

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(amounts in thousands)**

**(unaudited)**

 
| ** **                                                        | ** ** | **THREE MONTHS ENDED** | ** ** |
|-------------------------------------------------------------------|------------|------------------------|------------|
| ** **                                                        | ** ** | **MARCH 31,**     | ** ** |
| ** **                                                        | ** ** | **2010**               | ** ** | **2009** | ** ** |
| **FINANCING ACTIVITIES:**                                         |       |                   |       |   |   |
| Deferred expenses related to bank facility                        |       | (5,155                 | )          | — |   |
| Proceeds from issuance of long-term debt                          |       | 21,000                 |       | 18,000 |   |
| Payments of long-term debt                                        |       | (34,006                | )          | (14,006 | ) |
| Retirement of senior subordinated notes                           |       | (6,579                 | )          | (13,030 | ) |
| Purchase of the Company’s common stock                       |       | —                 |       | (888 | ) |
| Proceeds from issuance of employee stock plan                     |       | —                 |       | 82 |   |
| Proceeds from the exercise of stock options                       |       | 92                     |       | — |   |
| Purchase of vested restricted stock units                         |       | (1,396                 | )          | (87 | ) |
| Payment of dividend equivalents on vested restricted  stock units |       | (792                   | )          | (736 | ) |
| **Net cash used in financing activities**                         |       | (26,836                | )          | (10,665 | ) |
|                                                              |       |                        |       |   |   |
| **NET INCREASE (DECREASE) IN CASH AND CASH  EQUIVALENTS**         |       | (8,168                 | )          | 4,779 |   |
| **CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR**                  |       | 10,751                 |       | 4,284 |   |
| **CASH AND CASH EQUIVALENTS, END OF PERIOD**                      |       | $                      | 2,583      |   | $ | 9,063 |   |
|                                                              |       |                        |       |   |   |
| **SUPPLEMENTAL DISCLOSURES OF CASH FLOW  INFORMATION:**           |       |                   |       |   |   |
| Cash paid during the period for:                                  |       |                   |       |   |   |
| Interest                                                          |       | $                      | 6,617      |   | $ | 9,499 |   |
| Income taxes                                                      |       | $                      | 1          |   | $ | 73 |   |

 

**SUPPLEMENTAL DISCLOSURES ON NON-CASH INVESTING AND FINANCINGACTIVITIES:**

 

During the three months ended March 31, 2010, the Company issuedless than 0.1 million restricted stock units (net of forfeitures) that willdecrease its paid-in capital by less than $0.1 million over the vesting periodof the restricted stock units, as the fair value of the restricted stock unitsforfeited exceeded the fair value of the restricted stock units granted.

 

During the three months ended March 31, 2009, the Company issued0.1 million restricted stock units (net of forfeitures) and will increase itspaid-in capital by $0.3 million over the vesting period of the restricted stockunits.

 

**See notes to condensed consolidated financialstatements.**

 

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**ENTERCOM COMMUNICATIONS CORP.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIALSTATEMENTS**

**THREE MONTHS ENDED MARCH 31, 2010 AND2009**

 

**1.****                                      BASISOF PRESENTATION**

 

The condensedconsolidated interim unaudited financial statements included herein have beenprepared by Entercom Communications Corp. and its subsidiaries (collectively,the “Company”) in accordance with: (i) generally accepted accountingprinciples (“U.S. GAAP”) for interim financial information; and (ii) theinstructions of the Securities and Exchange Commission (the “SEC”) for Form 10-Qand Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotesrequired by generally accepted accounting principles for annual financialstatements.  In the opinion ofmanagement, the financial statements reflect all adjustments considerednecessary for a fair statement of the results of operations and financialposition for the interim periods presented. All such adjustments are of a normal and recurring nature. The Company’sresults are subject to seasonal fluctuations and, therefore, the results shownon an interim basis are not necessarily indicative of results for a full year.

 

This Form 10-Qshould be read in conjunction with the financial statements and related notesincluded in the Company’s audited financial statements as of and for the yearended December 31, 2009 and filed with the SEC on March 15, 2010, aspart of the Company’s Annual Report on Form 10-K.  Certain information and footnote disclosuresnormally included in financial statements prepared in accordance with generallyaccepted accounting principles have been condensed or omitted pursuant to such rules andregulations.

 

***Recent AccountingPronouncements***

 

In June, 2009, the accounting standards were amended for determiningwhether to consolidate a variable interest entity. These amended standardseliminate a mandatory quantitative approach to determine whether a variableinterest provides the entity with a controlling financial interest in avariable interest entity in favor of a qualitatively focused analysis, andrequire an ongoing reassessment of whether an entity is the primarybeneficiary. These amended standards were effective January 1, 2010.  The adoption of the amended standards did nothave any effect on our results of operations, cash flows or financial position.

 

**2.**                                      SHARE-BASEDCOMPENSATION

** **

***RestrictedStock Units (“RSUs”)***

** **

Asummary of the Company’s outstanding RSUs as of March 31, 2010, and changesin RSUs during the three months ended March 31, 2010, is as follows:

 
| ** **                                              | ** ** | ** **             | ** ** | ** **    | ** ** | ** **   | ** ** | **Weighted**    | ** ** | ** **         | ** ** |
|---------------------------------------------------------|------------|------------------------|------------|---------------|------------|--------------|------------|-----------------|------------|--------------------|------------|
| ** **                                              | ** ** | ** **             | ** ** | ** **    | ** ** | ** **   | ** ** | **Average**     | ** ** | **Aggregate**      | ** ** |
| ** **                                              | ** ** | ** **             | ** ** | ** **    | ** ** | **Weighted** | ** ** | **Remaining**   | ** ** | **Intrinsic**      | ** ** |
| ** **                                              | ** ** | ** **             | ** ** | ** **    | ** ** | **Average**  | ** ** | **Contractual** | ** ** | **Value As Of**    | ** ** |
| ** **                                              | ** ** | ** **             | ** ** | **Number of** | ** ** | **Purchase** | ** ** | **Term**        | ** ** | **March 31,** | ** ** |
| ** **                                              | ** ** | **Period Ended**       | ** ** | **RSUs**      | ** ** | **Price**    | ** ** | **In Years**    | ** ** | **2010**           | ** ** |
| ** **                                              | ** ** | ** **             | ** ** | ** **    | ** ** | ** **   | ** ** | ** **      | ** ** | ** **         | ** ** |
| RSUs outstanding as of:                                 |       | December 31, 2009 |       | 1,917,533     |       |         |       |            |       |               |       |
| RSUs awarded                                            |       |                   |       | 48,842        |       |         |       |            |       |               |       |
| RSUs released                                           |       |                   |       | (464,705      | )          |         |       |            |       |               |       |
| RSUs forfeited                                          |       |                   |       | (19,436       | )          |         |       |            |       |               |       |
| RSUs outstanding as of:                                 |       | March 31, 2010    |       | 1,482,234     |       | $            | —     |            | 1.5        |               | $          | 17,623,762 |   |
|                                                    |       |                   |       |          |       |         |       |            |       |               |       |
| RSUs vested and expected  to vest                       |       |                   |       | 1,338,273     |       | $            | —     |            | 1.5        |               | $          | 14,914,837 |   |
| RSUs exercisable (vested  and deferred)                 |       |                   |       | 83,871        |       | $            | —     |            |       |               | $          | 997,226 |   |
| Weighted average remaining  recognition period in years |       |                   |       | 2.4           |       |         |       |            |       |               |       |

 

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As of March 31, 2010, there was $5.4 million of unamortizedcompensation expense, net of estimated forfeitures, related to unvested RSUs,which is expected to be recognized over a remaining weighted averagerecognition period of 2.4 years.

 

***Options***

 

The following table presents the option activity for the three monthsended March 31, 2010:

 
| ** **                                              | ** ** | ** **             | ** ** | ** **    | ** ** | ** **   | ** ** | **Weighted**    | ** ** | **Aggregate**      | ** ** |
|---------------------------------------------------------|------------|------------------------|------------|---------------|------------|--------------|------------|-----------------|------------|--------------------|------------|
| ** **                                              | ** ** | ** **             | ** ** | ** **    | ** ** | ** **   | ** ** | **Average**     | ** ** | **Intrinsic**      | ** ** |
| ** **                                              | ** ** | ** **             | ** ** | ** **    | ** ** | **Weighted** | ** ** | **Remaining**   | ** ** | **Value**          | ** ** |
| ** **                                              | ** ** | ** **             | ** ** | ** **    | ** ** | **Average**  | ** ** | **Contractual** | ** ** | **As of**          | ** ** |
| ** **                                              | ** ** | ** **             | ** ** | **Number of** | ** ** | **Exercise** | ** ** | **Term**        | ** ** | **March 31,** | ** ** |
| ** **                                              | ** ** | **Period Ended**       | ** ** | **Options**   | ** ** | **Price**    | ** ** | **In Years**    | ** ** | **2010**           | ** ** |
|                                                    |       |                   |       |          |       |         |       |            |       |               |       |
| Options outstanding as of:                              |       | December 31, 2009 |       | 1,148,032     |       | $            | 3.13       |            |       |               |       |   |
| Options exercised                                       |       |                   |       | (69,725       | )          | $            | 1.34       |            |       |               |       |   |
| Options forfeited                                       |       |                   |       | (29,280       | )          | $            | 1.84       |            |       |               |       |   |
| Options expired                                         |       |                   |       | (6,782        | )          | $            | 41.58      |            |       |               |       |   |
| Outstanding as of:                                      |       | March 31, 2010    |       | 1,042,245     |       | $            | 3.03       |            | 8.6        |               | $          | 10,232,111 |   |
|                                                    |       |                   |       |          |       |         |       |            |       |               |       |
| Options vested and  expected to vest as of:             |       | March 31, 2010    |       | 941,905       |       | $            | 3.19       |            | 8.6        |               | $          | 9,199,745 |   |
| Options vested and  exercisable as of:                  |       | March 31, 2010    |       | 237,265       |       | $            | 7.74       |            | 7.8        |               | $          | 1,986,267 |   |
| Weighted average remaining  recognition period in years |       |                   |       | 2.9           |       |         |       |            |       |               |       |

 

As of March 31, 2010, $0.9 million ofunrecognized compensation costs related to unvested stock options, net ofestimated forfeitures, is expected to be recognized in future periods over aweighted average period of 2.9 years.

 

The fair value of each option grant was estimated onthe date of grant using the following weighted average assumptions:

 
| ** **                     | ** ** | **Three Months**   | ** ** |
|--------------------------------|------------|--------------------|------------|
| ** **                     | ** ** | **Ended**          | ** ** |
| ** **                     | ** ** | **March 31,** | ** ** |
| ** **                     | ** ** | **2009**           | ** ** |
| Expected life (years)          |       | 6.3                |       |
| Expected volatility factor (%) |       | 54.9% to 57.3%     |       |
| Risk-free interest rate (%)    |       | 2.2% to 2.4%       |       |
| Expected dividend yield (%)    |       | 0.0%               |       |

 

Thefollowing table summarizes significant ranges of outstanding and exercisableoptions as of March 31, 2010:

 

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| ** **          | ** **  | ** ** | ** ** | **Options  Outstanding** | ** ** | **Options  Exercisable** | ** ** |
|---------------------|-------------|------------|------------|--------------------------|------------|--------------------------|------------|
| ** **          | ** **  | ** ** | ** ** | ** **               | ** ** | **Weighted**             | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **          | ** **  | ** ** | ** ** | **Number  Of**           | ** ** | **Average**              | ** ** | ** ** | ** ** | **Number  Of** | ** ** | ** ** | ** ** |
| ** **          | ** **  | ** ** | ** ** | **Options**              | ** ** | **Remaining**            | ** ** | **Weighted** | ** ** | **Options** | ** ** | **Weighted** | ** ** |
| ** **          | ** **  | ** ** | ** ** | **Outstanding**          | ** ** | **Contractual**          | ** ** | **Average** | ** ** | **Exercisable** | ** ** | **Average** | ** ** |
| ** **          | ** **  | ** ** | ** ** | **March 31,**       | ** ** | **Term**                 | ** ** | **Exercise** | ** ** | **March 31,** | ** ** | **Exercise** | ** ** |
| **Exercise Prices** | ** **  | **2010**   | ** ** | **In  Years**            | ** ** | **Price**                | ** ** | **2010** | ** ** | **Price** | ** ** |
| $                   |  1.34  |       | $          | 1.34                     |       | 948,025                  |       | 8.9 |   | $ | 1.34 |   | 186,214 |   | $ | 1.34 |   |
| $                   |  1.57  |       | $          | 11.69                    |       | 52,220                   |       | 8.4 |   | $ | 7.49 |   | 13,051 |   | $ | 10.26 |   |
| $                   |  11.78 |       | $          | 11.78                    |       | 8,000                    |       | 7.9 |   | $ | 11.78 |   | 4,000 |   | $ | 11.78 |   |
| $                   |  27.75 |       | $          | 40.00                    |       | 17,000                   |       | 2.3 |   | $ | 34.78 |   | 17,000 |   | $ | 34.78 |   |
| $                   |  45.03 |       | $          | 48.21                    |       | 17,000                   |       | 2.1 |   | $ | 47.90 |   | 17,000 |   | $ | 47.90 |   |
| $                   |  1.34  |       | $          | 48.21                    |       | 1,042,245                |       | 8.6 |   | $ | 3.03 |   | 237,265 |   | $ | 7.74 |   |

 

***Recognized Non-Cash Compensation Expense***

 

The following table summarizes stock-basedcompensation expense related to awards of RSUs, employee stock options andpurchases under the employee stock purchase plan for the three months ended March 31,2010 and 2009:

 
| ** **                                                        | ** ** | **Three Months Ended**     | ** ** |
|-------------------------------------------------------------------|------------|----------------------------|------------|
| ** **                                                        | ** ** | **March 31,**         | ** ** |
| ** **                                                        | ** ** | **2010**                   | ** ** | **2009** | ** ** |
| ** **                                                        | ** ** | **(amounts in thousands)** | ** ** |
| Station operating expenses                                        |       | $                          | 178        |   | $ | 90 |   |
| Corporate general and administrative expenses                     |       | 1,572                      |       | 1,702 |   |
| Stock-based compensation expense included in  operating expenses  |       | 1,750                      |       | 1,792 |   |
| Income tax benefit (net of a fully reserved  valuation allowance) |       | —                     |       | — |   |
| Total                                                             |       | $                          | 1,750      |   | $ | 1,792 |   |

 

***2009 Option ExchangeProgram***

 

In February 2009, the Company’s Board of Directors approved anamendment to the Entercom Equity Compensation Plan (“Plan”) to permit aone-time 2009 Option Exchange Program (“2009 OEP”), which amendment wasapproved at the May 2009 shareholders’ meeting. On April 13, 2009,the Company commenced the 2009 OEP, which was subject to shareholder approval,by making an offer to exchange to the Company’s eligible employees andnon-employee directors. The Company offered such persons the opportunity tomake an election to exchange all of their outstanding stock options withexercise prices equal to or greater than $11.80 per share for a lesser numberof RSUs. The exchange ratios were as follows:

 
| **Option**                             | ** ** | **Exchange Ratio**     | ** ** |
|----------------------------------------|------------|------------------------|------------|
| **Strike Price**                       | ** ** | **(Options For RSUs)** | ** ** |
| At  least $11.80, but less than $30.00 |       | 2.25  for 1            |       |
| $30.00 or more                         |       | 4.5  for 1             |       |

 

On May 15, 2009, following the May 14, 2009 expiration of theCompany’s 2009 OEP, the Company granted 0.7 million RSUs in exchange for 2.1million options. As a result of the 2009 OEP, the number of RSUs that can beissued under the Plan was effectively increased by 0.7 million as all RSUsgranted did not count against the restricted stock sublimit in the Plan.  In addition, the number of awards that can beissued under the Plan was effectively reduced by 2.1 million as all optionsthat were exchanged will not be available for re-grant under the Plan.

 

The Company applied modification accounting for the 2009 OEP and willrecognize share-based compensation expense of $1.2 million on a straight-linebasis over the four-year vesting period of the RSUs. Under modificationaccounting, the fair value of the new shares immediately prior to the exchangewas greater by $1.2 million than the fair value of the surrendered options. Inaddition, under the bifurcated method, share-based

 

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compensationexpense of $0.9 million associated with any unvested options exchanged andcancelled as of the modification date will be recognized over the remainingoriginal option term, and the expense will only be reversed if the originalservice period is not met.

 

**3.**                                      INTANGIBLE ASSETS AND GOODWILL

** **

***(A) Indefinite-LivedIntangibles***

 

Goodwill and certain intangible assets arenot amortized.  The Company has concludedthat its acquired broadcasting licenses are treated as an indefinite-livedintangible asset and, similar to goodwill, these assets are reviewed at leastannually for impairment. At the time of each review, if the recorded value ofgoodwill and certain intangibles (such as broadcasting licenses) is more thantheir fair value, then a charge is recorded to the results of operations.

 

The Company may only write down the carryingvalue of its indefinite-lived intangibles, but is not permitted to increase thecarrying value if the fair value of these assets subsequently increases.

 

***Change In AnnualTesting Period For Broadcasting Licenses***

 

In 2009, the Company changed the period when it performs its annualimpairment test for broadcasting licenses from the first quarter to the secondquarter of each year, in line with its annual impairment test for goodwill.

 

**Broadcasting Licenses**

 

The Company performs its broadcasting licenseimpairment test by evaluating its broadcasting licenses for impairment at themarket level using the direct method. Separately recorded indefinite-lived intangible assets are combined intoa single unit of accounting for purposes of testing impairment if they areoperated as a single asset.  The Companydetermines the fair value of the broadcasting licenses in each of its marketsby relying on a discounted cash flow approach (a 10-year income model) assuminga start-up scenario in which the only assets held by an investor arebroadcasting licenses. The Company’s fair value analysis contains assumptionsincorporating variables that are based on past experiences and judgments aboutfuture performance using industry normalized information for an average stationwithin a certain market. These variables include, but are not limited to: (1) theforecast growth rate of each radio market, including assumptions regarding eachmarket’s population, household income, retail sales and other factors thatwould influence advertising expenditures; (2) market share and profitmargin of an average station based upon market size and station type; (3) estimatedcapital start-up costs and losses incurred during the early years; (4) risk-adjusteddiscount rate; (5) the likely media competition within the market area; (6) aneffective tax rate assumption; and (7) future terminal values.

 

The amount of broadcasting licenses reflected in the Company’s balancesheets was: (1) $707.9 million as of March 31, 2010 and as of December 31,2009; and (2) $768.6 million as of March 31, 2009 and as of December 31,2008. There were no events or circumstances during the first quarter of 2010that indicated an interim review of broadcast licenses was required. If actualmarket conditions are less favorable than those projected by the industry orthe Company, or if events occur or circumstances change that would reduce thefair value of the Company’s broadcasting licenses below the amount reflected inthe balance sheet, the Company may be required to recognize impairment charges,which may be material, in future periods.

 

**Goodwill**

 

The Company performs its annual impairmenttest on its goodwill during the second quarter of each year by comparing thefair value for each reporting unit with the amount reflected on the balancesheet. The Company has determined that a radio market is a reporting unit andin total, the Company assesses goodwill at 19 separate reporting units (threeof the Company’s 22 reporting units have no goodwill recorded as of March 31,2010). If the fair value for any reporting unit is less than the amountreflected in the balance sheet, an indication exists that the amount ofgoodwill attributed to a reporting unit may be impaired, and the Company isrequired to perform a second step of the impairment test. In the second step,the Company compares the amount reflected in the balance sheet to the impliedfair value of the reporting unit’s goodwill, determined by allocating thereporting unit’s fair value to all of its assets and liabilities in a mannersimilar to a purchase price allocation.

 

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To determine the fair value, the Company uses an income and marketapproach for each reporting unit. The market approach compares recent sales andoffering prices of similar properties. The income approach uses the subjectproperty’s income generated over a specified time and capitalized at anappropriate market rate to arrive at an indication of the most probable sellingprice.

 

The amount of goodwill reflected in the Company’s balance sheets was: (1) $38.2million as of March 31, 2010 and as of December 31, 2009; and (2) $45.1million as of March 31, 2009 and as of December 31, 2008. If actualmarket conditions are less favorable than those projected by the industry orthe Company, or if events occur or circumstances change that would reduce thefair value of the Company’s goodwill below the amount reflected in the balancesheet, the Company may be required to recognize impairment charges, which maybe material, in future periods.

 

***(B) Definite-LivedIntangibles***

 

The Company has definite-lived intangible assets that consist ofadvertiser lists and customer relationships, acquired advertising contracts andincome leases. These assets are amortized over the period for which the assetsare expected to contribute to the Company’s future cash flows and are reviewedfor impairment whenever events or changes in circumstances indicate that thecarrying amount of an asset may not be recoverable. The amount of theamortization expense for definite-lived intangible assets was less than $0.1million for each of the three months ended March 31, 2010 and 2009. As of March 31,2010, the Company reflected $0.8 million in unamortized definite-lived assets,which is included in deferred charges and other assets on the balance sheet.

 

The following is an estimate of the amortization expense fordefinite-lived assets, in thousands, for each of the succeeding years ending December 31:

 
| ** **                                                                     | ** ** | **Definite-** | ** ** |
|--------------------------------------------------------------------------------|------------|---------------|------------|
| ** **                                                                     | ** ** | **Lived**     | ** ** |
| ** **                                                                     | ** ** | **Assets**    | ** ** |
| Year ending  December 31,:                                                |       |          |       |
| 2010    (Excludes  year-to-date ended March 31, 2010) |       | $             | 90         |   |
| 2011                                                                           |       | 84            |       |
| 2012                                                                           |       | 81            |       |
| 2013                                                                           |       | 53            |       |
| 2014                                                                           |       | 49            |       |
| Thereafter                                                                     |       | 396           |       |
| Total                                                                          |       | $             | 753        |   |

 

**4.****                                      SENIORDEBT**

 

***Bank Facility***

 

The Company has a creditagreement (“Bank Facility”) with a syndicate of lenders for a $1,050 millionsenior secured credit facility that matures on June 30, 2012. The BankFacility was originally comprised of $650 million in revolving credit (the “Revolver”)and a $400 million term loan (“Term Loan”). The Company is required to makepayments of the Term Loan (from and after September 30, 2009) in quarterlyamounts starting at $15 million and ultimately increasing to $60 million.

 

As of March 31, 2010, the Company had: (1) $716.0 millionoutstanding under the Bank Facility, including: (i) $355.0 million in TermLoan; and (ii) $361.0 million in drawn Revolver; and (2) a $0.7million letter of credit.  As of March 31,2010, the Company had $2.6 million in cash and cash equivalents.

 

On March 11, 2010, the Companyamended its Bank Facility (the “Amendment”). The Bank Facility, as amended,requires the Company to comply with certain financial covenants such as amaximum Consolidated Leverage Ratio and a minimum Consolidated InterestCoverage Ratio (defined terms within the agreement). In connection with theAmendment, certain key terms, as defined within the Bank Facility, were revisedas follows:

 

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·                  Depending on the ConsolidatedLeverage Ratio (Consolidated Funded Indebtedness to Consolidated Operating CashFlow), the Company may elect an interest rate equal to: (1) the EurodollarRate plus fees that can range from 0.5% to 2.5%; or (2) the Base Rate plusfees that can range from 0.0% to 1.5%, where the Base Rate is the highest of: (a) theFederal Funds Rate plus 0.5%; (b) the Eurodollar Rate plus 1.0%; and (c) thePrime Rate;

·                  During periods when the ConsolidatedLeverage Ratio exceeds six times, the Company is: (a) restricted in itsability to take certain actions, including but not limited to, the payment ofdividends, the repurchase of its stock; and (b) subject to additionallimitations on acquisitions and investments.

 

Under the Amendment, theConsolidated Leverage Ratio cannot exceed seven times in 2010.This covenantratio decreases quarterly in increments in 2011 to a ratio of six times as of December 31,2011.

 

The Company’s ability tomaintain compliance with its covenants will be highly dependent on theCompany’s results of operations as the economy recovers from the recenteconomic downturn and, to the extent necessary, the Company’s ability toimplement remedial measures such as further reductions in operating costs.  If the Company were to enter into anagreement with its lenders for covenant compliance relief, such relief couldresult in higher interest expense.

 

The Amendment was treated as amodification to a debt instrument.  As aresult, in the first quarter of 2010 the Company recorded deferred financingcosts of $5.2 million related to the Amendment that will be amortized under theeffective interest rate method over the remaining life of the Bank Facility. Inaddition, unamortized deferred financing costs of $3.1 million as of theAmendment date will continue to be amortized over the remaining life of theBank Facility.

 

As of March 31, 2010, the undrawn amount of the Revolver was$288.3 million. The amount of the Revolver available to the Company, however,is a function of covenant compliance at the time of borrowing. Based on theCompany’s financial covenant analysis as of March 31, 2010, the Companywould be limited to borrowings significantly less than the undrawn limit unlesssuch borrowings were used to repay indebtedness or for transactions thatincrease cash flow for purposes of covenant calculation. The Company plans tofund the amortization of the Term Loan with its available Revolver capacity andcash flow from operations.

 

The Bank Facility is secured bya pledge of 100% of the capital stock and other equity interest in all of theCompany’s wholly owned subsidiaries. In addition, the Bank Facility as amended,is secured by a lien on all of the Company’s assets, other than real property.

 

The interest rate, which isbased upon the Consolidated Leverage Ratio, was revised under theAmendment.  Prior to the Amendment theinterest rate was: (i) the Eurodollar rate plus a rate that ranges from0.50% to 1.13%; or (ii) the greater of prime rate plus a rate that rangesfrom 0.0% to 0.13% or the federal funds rate plus a rate that ranges from 0.50%to 0.63%. The Company also pays a commitment fee that varies, depending on theCompany’s Leverage Ratio and the amount of the unused commitment, to a maximumof 0.50% per year (prior to the Amendment, it was a maximum of 0.35% per year)on the average unused balance of the Revolver.

 

Management believes that overthe next 12 months the Company can continue to maintain its compliance withthese covenants. Management also believes that cash on hand and cash fromoperating activities, together with available borrowings under the Revolver,will be sufficient to permit the Company to meet its liquidity requirementsover the next 12 months, including the Company’s scheduled debt repayments. Whilethe Company’s operating cash flow has been reduced from prior periods duringthe recent economic downturn, it has remained positive and adequate to fund theCompany’s operating needs. As a result, the Company has not been required torely upon, and the Company does not anticipate having to rely upon, theRevolver to fund the Company’s operations.

 

Amending the Company’s BankFacility or obtaining other funding or additional financing prior to theexpiration of the current agreement will be essential as the Revolver balanceoutstanding will be due in full upon the expiration of the Bank Facility on June 30,2012.

 

**5.****                                      7.625%SENIOR SUBORDINATED NOTES**

 

On March 8,2010, the Company redeemed at par all of its remaining outstanding seniorsubordinated notes (“Notes”) of $6.6 million that were due March 1, 2014and recorded in the statement of operations a loss on the extinguishment ofdebt of $0.1 million due to the write-off of deferred financing costs.

 

During the three months ended2009, the Company repurchased $21.0 million of its Notes and recorded in thestatement of operations a gain on the extinguishment of debt of $7.8 million,net of the write-off of deferred financing costs of $0.2 million.

 

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**6.****                                      FINANCINGMETHOD LEASE OBLIGATIONS**

 

During the fourth quarter of 2009, the Company completed the sale ofcertain tower facilities for $12.6 million in cash.  At the same time, the Company entered intoleases for space on the towers at most of these sites for use by the Company’s radio stations. TheCompany classified this transaction under the finance method as the agreementprovides for an earn-out whereby the Company can receive additional cashconsideration of up to $2.0 million after 42 months, depending if the buyermeets certain revenue targets.

 

The amount of depreciation and amortization expenseattributable to assets held under the financing method was $0.1 million for thethree months ended March 31, 2010 and the amount of interest expense forthe cash consideration received of $12.6 million was $0.2 million for the threemonths ended March 31, 2010.

 

**7.**                                      DERIVATIVESAND HEDGING ACTIVITIES

** **

The Company from time to time enters into derivative financialinstruments, including interest rate exchange agreements (“Swaps”) and interestrate collar agreements (“Collars”), to manage its exposure to fluctuations ininterest rates. Under a fixed rate Swap, the Company pays a fixed rate on anotional amount to a bank, and the bank pays to the Company a variable rate onthe notional amount equal to the Company’s Eurodollar borrowing rate. A Collarestablishes two separate agreements: an upper limit or “Cap” and a lower limitor “Floor” for the Company’s Eurodollar borrowing rate.

 

During the three months ended March 31,2010 and 2009, the Company had outstanding the aggregate notional amounts of$475.0 million and $550.0 million, respectively, of cash flow interest ratetransactions that were hedged against the Company’s variable rate seniordebt.  In accordance with the terms of aSwap agreement dated January 28, 2008, the notional amount decreased from$225.0 million to $150.0 million on January 28, 2010 thereby eliminating anotional amount of $75.0 million with a fixed Eurodollar London interbankoffered rate (“LIBOR”) of 3.03%.

 

As of March 31, 2010, the Company hadthe following derivatives outstanding:

 
| **Type**   | ** ** | ** **        | ** ** | ** **             | ** **            | ** ** | ** ** | ** ** | **Fixed**  | ** ** | ** ** | ** **              | ** **            |
|------------|------------|-------------------|------------|------------------------|-----------------------|------------|------------|------------|------------|------------|------------|-------------------------|-----------------------|
| **Of**     | ** ** | **Notional**      | ** ** | **Effective**          | ** **            | ** ** | ** ** | ** ** | **LIBOR**  | ** ** | ** ** | **Expiration**          | ** **            |
| **Hedge**  | ** ** | **Amount**        | ** ** | **Date**               | ** **            | ** ** | **Collar** | ** ** | **Rate**   | ** ** | ** ** | **Date**                | ** **            |
| ** ** | ** ** | **(amounts**      | ** ** | ** **             | ** **            | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **              | ** **            |
| ** ** | ** ** | **(in millions)** | ** ** | ** **             | ** **            | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **              | ** **            |
|       |       |                   |       |                   |                  |       |       |       |       |       |       |                    |                  |
| Swap       |       | $                 | 150.0      |                   | January 28, 2008 |       |       | n/a        |       | 3.03       | %          |                    | January 28, 2011 |   |
| Collar     |       | 100.0             |       | February 28, 2008 |                  | [          | Cap        |       | 4.00       | %          | ]          | February 28, 2011  |                  |
| Floor      |       | 2.14              | %          |                   |
| Swap       |       | 125.0             |       | March 28, 2008    |                  |       | n/a        |       | 2.91       | %          |       | September 28, 2011 |                  |
| Swap       |       | 100.0             |       | May 28, 2008      |                  |       | n/a        |       | 3.62       | %          |       | May 28, 2012       |                  |
| Total      |       | $                 | 475.0      |                   |                  |       |       |       |       |       |       |                    |                  |   |

 

Thefollowing is a summary of the fair value of the derivatives outstanding as of March 31,2010 and December 31, 2009:

 
| ** **                        | ** ** | ** **                   | ** ** | **Fair Value**             | ** ** |
|-----------------------------------|------------|------------------------------|------------|----------------------------|------------|
| ** **                        | ** ** | ** **                   | ** ** | **March 31,**         | ** ** | **December 31,** | ** ** |
| ** **                        | ** ** | **Balance Sheet**            | ** ** | **2010**                   | ** ** | **2009** | ** ** |
| ** **                        | ** ** | **Location**                 | ** ** | **Asset (Liability)**      | ** ** |
| ** **                        | ** ** | ** **                   | ** ** | **(amounts in thousands)** | ** ** |
| **Designated Derivatives**        |       |                         |       |                       |       |   |   |
| Interest rate hedge  transactions |       | Current Liabilities          |       | $                          | (4,729     | ) | $ | — |   |
| Interest rate hedge  transactions |       | Other Long-Term  Liabilities |       | $                          | (8,680     | ) | $ | (13,432 | ) |

 

The Company does not expect to reclassify tothe statement of operations within the next 12 months any

 

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portion of the amount outstanding as of March 31, 2010.

 

The following is a summary (amounts in thousands) of the gains (losses)related to the Company’s cash flow hedges for the three months ended March 31,2010 and 2009:

 
| ** **                                                                        | ** ** | **Three Months Ended** | ** ** |
|-----------------------------------------------------------------------------------|------------|------------------------|------------|
| ** **                                                                        | ** ** | **March 31,**     | ** ** |
| **Description**                                                                   | ** ** | **2010**               | ** ** | **2009** | ** ** |
| ** **                                                                        |       |                   |       |   |   |
| Type Of Derivative Designated As A Cash Flow  Hedge                               |       | Interest Rate          |       | Interest Rate |   |
| Amount of Gain (Loss) Recognized In Other Comprehensive  Income (“OCI”) |       | $                      | 23         |   | $ | (985 | ) |
| Location Of Gain (Loss) Reclassified From OCI To Statement  Of Operations         |       | Interest Expense       |       | Interest Expense |   |
| Amount of Gain (Loss) Reclassified From OCI To Statement  Of Operations           |       | $                      | —     |   | $ | — |   |
| Location Of Gain (Loss) In Statement Of  Operations                               |       | Interest Expense       |       | Interest Expense |   |
| Amount Of Gain (Loss) In Statement Of Operations Due  To Ineffectiveness          |       | $                      | —     |   | $ | — |   |

 

The following table presents the accumulated derivative gains (losses)recorded in the statements of other comprehensive income (loss) as of March 31,2010 and December 31, 2009:

 
| ** **                             | ** ** | **March 31,**         | ** ** | **December 31,** | ** ** |
|----------------------------------------|------------|----------------------------|------------|-----------------------|------------|
| ** **                             | ** ** | **2010**                   | ** ** | **2009**              | ** ** |
| ** **                             | ** ** | **Assets (Liabilities)**   | ** ** |
| ** **                             | ** ** | **(amounts in thousands)** | ** ** |
|                                   |       |                       |       |                  |       |
| Accumulated derivative unrealized loss |       | $                          | (13,409    | )                     | $          | (13,432 | ) |
|                                        |            |                            |            |                       |            |  |  |

 

**8.****                                      CONTINGENCIESAND GUARANTOR ARRANGEMENTS**

 

***Contingencies***

 

The Company is subject to various outstanding claims which arise in theordinary course of business and to other legal proceedings.  In the opinion of management, any potentialliability of the Company which may arise out of, or with respect to, thesematters will not materially affect the Company’s financial position, results ofoperations or cash flows.

 

The Company uses a combination of insuranceand self-insurance mechanisms to provide for the potential liabilities forworkers’ compensation, general liability, property, director and officers’liability, vehicle liability and employee health care benefits. Liabilitiesassociated with the risks that are retained by the Company are estimated, inpart, by considering claims experience, demographic factors, severity factors,outside expertise and other actuarial assumptions. Under one of these policies,the Company is required to maintain a letter of credit in the amount of $0.7million.

 

In January 2010, a plaintiff acknowledged full satisfaction by theCompany’s insurance carrier of a judgment against the Company. In connectionwith the settled claim, as of December 31, 2009, the Company recorded aninsurance claim receivable from its insurance company of $16.5 million alongwith a claim payable to the plaintiff of $16.5 million.

 

The Company could face increased costs in the form of fines and a greaterrisk that the Company could lose any one or more of its broadcastinglicenses if the FCC concludes that programming broadcast by a Company stationwas obscene, indecent or profane and such conduct warrants licenserevocation.  The FCC’s authority to impose a fine for the broadcastof such material is $325,000 for a single incident, with a maximum fine of upto $3.0 million for a continuing violation. In the past, the FCC has issuedNotices of Apparent Liability and a Forfeiture Order with 

 

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respect to several of the Company’s stationsproposing fines for certain programming which the FCC deemed to have been indecent.These cases are the subject of pending administrative appeals. The FCC has alsoinvestigated other complaints from the public that some of the Company’s stationsbroadcast indecent programming.  These investigations remainpending.  The FCC has also initiated an investigation into the suitrelated to the on-air contest as noted above.

 

The Company has filed on a timely basis renewal applications for thoseradio stations with radio broadcasting licenses that are subject to renewalwith the FCC. The Company’s costs to renew its licenses with the FCC areminimal and are expensed as incurred rather than capitalized.  Certain licenses were not renewed prior tothe renewal date, which is not unusual. The Company continues to operate theseradio stations under their existing licenses until the licenses arerenewed.  The FCC may delay the renewalpending the resolution of open inquiries. The affected stations are, however,authorized to continue operations until the FCC acts upon the renewalapplication.

 

The Company’s agreements with Broadcast Music, Inc. (“BMI”) andAmerican Society of Composers, Authors and Publishers (“ASCAP”) each expired asof December 31, 2009. In January 2010, the Radio Music LicensingCommittee, of which the Company is a participant, has filed motions in the NewYork courts against BMI and ASCAP on behalf of the radio industry, seekinginterim fees and a determination of fair and reasonable industry-wide licensefees.  The final fees as determined bythe courts may be different than the fees estimated by the Company.

 

***Guarantor Arrangements***

 

The Company enters into indemnificationagreements in the ordinary course of business and other agreements whichinclude indemnification provisions.  TheCompany believes the estimated fair value of these agreements is minimal andhas not recorded liabilities for these agreements as of March 31, 2010.

 

**9.****                                      SHAREHOLDERS’EQUITY**

 

***Dividend Equivalents***

 

The Company’s grants of RSUs include the right, upon vesting, toreceive a cash payment equal to the aggregate amount of dividends, if any, thata holder would have received on the shares of common stock underlying theirRSUs if such RSUs had been vested during the period. For the three months endedMarch 31, 2010 and 2009, the Company paid $0.8 million and $0.7 million,respectively, to the holders of RSUs that vested during these periods. Thelong-term dividend equivalent amount, accrued and unpaid on unvested RSUs, was$0.3 million and $0.8 million as of March 31, 2010 and December 31,2009, respectively, and is included under other long-term liabilities in thebalance sheet. The short-term dividend equivalent amount, accrued and unpaid onunvested RSUs, was $.07 million and $1.0 million as of March 31, 2010 and December 31,2009, respectively, and is included under other current liabilities in thebalance sheet. The amount paid is considered a windfall tax benefit that willbe recorded to paid-in capital when realized.

 

***Repurchases OfVested RSUs***

 

Upon vesting, unless an employee elects topay the tax withholding obligation in cash, the Company withholds shares ofstock in an amount sufficient to cover the employee’s tax withholdingobligations.  As a result, during thethree months ended March 31, 2010 and 2009, the Company was deemed to haverepurchased 0.2 million and 0.1 million shares of stock, respectively.

 

**10.****                               DEFERREDCOMPENSATION PLANS**

 

The Company provides certain of its employeesand the Board of Directors with an opportunity to defer a portion of theircompensation on a tax-favored basis. The obligations by the Company to paythese benefits under these plans represent unsecured general obligations thatrank equally with the Company’s other unsecured indebtedness. Deferredcompensation expense is allocated to corporate general and administrativeexpenses and station operating expenses.

 

As of March 31, 2010 and December 31,2009, $5.7 million and $5.2 million, respectively, were deferred under theseplans and were included in other long-term liabilities. For the three monthsended March 31, 2010 and

 

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2009, the Company recorded $0.2 million as an increase in deferredcompensation expense and $0.3 million as a reduction to deferred compensationexpense, respectively.

 

**11.****                               NETINCOME PER SHARE**

 

***Three Months Ended March 31, 2010 and2009***

 

The effect of stock options and RSUs in the calculation of net incomeper share, using the treasury stock method, was dilutive for the three monthsended March 31, 2010 and March 31, 2009.

 

The followingtable sets forth the computations of basic and diluted net income per share forthe three months ended March 31, 2010 and 2009:

 
| ** **                            | ** ** | **Three Months Ended**                                       | ** ** |
|---------------------------------------|------------|--------------------------------------------------------------|------------|
| ** **                            | ** ** | **March 31, 2010**                                      | ** ** | **March 31, 2009** | ** ** |
| ** **                            | ** ** | **(amounts in thousands,  except share and per share data)** | ** ** |
| ** **                            | ** ** | ** **                                                   | ** ** | ** ** | ** ** | **Net Income** | ** ** | ** ** | ** ** | ** ** | ** ** | **Net Income** | ** ** |
| ** **                            | ** ** | **Net Income**                                               | ** ** | **Shares** | ** ** | **Per Share** | ** ** | **Net Income** | ** ** | **Shares** | ** ** | **Per Share** | ** ** |
| Basic net income per  common share:   |       |                                                         |       |   |   |   |   |   |   |   |   |   |   |
| Net income                            |       | $                                                            | 4,200      |   | 35,622,615 |   | $ | 0.12 |   | $ | 5,336 |   | 35,393,660 |   | $ | 0.15 |   |
| Impact of equity awards               |       |                                                         |       | 1,948,769 |   |   |   |   |   | 88,670 |   |   |   |
| Diluted net income per  common share: |       |                                                         |       |   |   |   |   |   |   |   |   |   |   |
| Net income                            |       | $                                                            | 4,200      |   | 37,571,384 |   | $ | 0.11 |   | $ | 5,336 |   | 35,482,330 |   | $ | 0.15 |   |

 

In computing the incremental shares under the treasurystock method for the three months ended March 31, 2010, 0.2 millionrestricted stock units (including 0.1 million restricted stock units withmarket and service conditions as the market conditions were not satisfied as ofMarch 31, 2010) and options to purchase 0.1 million shares of common stockat a range of $9.48 to $48.21 were excluded from the computation as they wereanti-dilutive.

 

In computing the incremental shares under the treasurystock method for the three months ended March 31, 2009, 1.2 millionrestricted stock units (including 0.1 million restricted stock units withmarket and service conditions as the market conditions were not satisfied as ofMarch 31, 2009) and options to purchase 2.9 million shares of common stockat a range of $1.34 to $52.05 were excluded from the computation as they wereanti-dilutive.

 

**12.****                               INCOMETAXES**

 

***Effective Tax Rate -Overview***

 

The Company’s income tax rate for the threemonths ended March 31, 2010 was based on the estimatedannual effective tax rate for 2010 (excluding the impact of a valuationallowance for deferred tax assets as described below), and includes: (1) theeffect of permanent differences between income subject to income tax for bookand tax purposes; and (2) any discrete items of tax. The Company’s effective tax rate, which canfluctuate from quarter to quarter, can be higher than the federal statutoryrate of 35% primarily as a result of the provision for state taxes (net of afederal tax deduction).

 

The Company’s effective income tax rate maybe impacted by: (1) changes in the level of income in any of the Company’staxing jurisdictions; (2) changes in the statutes and rules applicableto taxable income in the jurisdictions in which the Company operates; (3) changesin the expected outcome of income tax audits; (4) changes in the estimateof expenses that are not deductible for tax purposes; (5) income taxes incertain states where the states’ current taxable income is dependent on factorsother than the Company’s consolidated net income; and (6) the effect ofrecording changes in the Company’s liabilities for uncertain tax positions.

 

An impairment loss will result in an incometax benefit during the period incurred (before any adjustment for a deferredtax asset valuation allowance) as the amortization of broadcasting licenses andgoodwill is deductible for income tax purposes.

 

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**Tax Rate For The ThreeMonths Ended March 31, 2010**

** **

The effective income tax rate was 18.4% forthe three months ended March 31, 2010, which reflects an increase in thedeferred tax asset valuation allowance for the reasons as described below underValuation Allowance For Deferred Tax Assets (after excluding net deferred taxliabilities associated with non amortizable assets such as broadcastinglicenses and goodwill).  The increase inthe valuation allowance was offset by certain discrete items of tax.

 

**Tax Rate For The ThreeMonths Ended March 31, 2009**

** **

The effective income tax rate was 21.8% forthe three months ended March 31, 2009, which was negatively impacted bycertain discrete items of tax.

 

***Deferred TaxLiabilities***

 

As of March 31,2010 deferred tax liabilities were $1.6 million and as of December 31,2009, there were no deferred taxliabilities, as the deferred tax liabilities were fully offset by deferred taxassets. The income tax accounting process to determine the deferred taxliabilities involves estimating all temporary differences between the tax andfinancial reporting bases of the Company’s assets and liabilities, based onenacted tax laws and statutory tax rates applicable to the period in which thedifferences are expected to affect taxable income. The Company estimated thecurrent exposure by assessing the temporary differences and computing theprovision for income taxes by applying the estimated effective tax rate toincome.

 

***Valuation AllowanceFor Deferred Tax Assets***

 

The Company increased its valuation allowance by $5.8 million to $56.7million as of March 31, 2010 from $50.9 million as of December 31,2009, primarily as a result of an increase in its deferred tax assets as of March 31,2010 as compared to December 31, 2009. As a result of cumulative lossesincurred by the Company since 2006, a deferred tax asset valuation allowancewas established due to the uncertainty that the deferred tax assets would berealized in future years (after excluding net deferred tax liabilitiesassociated with non-amortizable assets such as broadcasting licenses andgoodwill). The valuation allowance as of March 31, 2010 and December 31,2009 includes an income tax benefit recorded in other comprehensive income(loss) of $5.3 million as of each period.

 

The Company has also considered future taxable income and ongoingprudent and feasible tax-planning strategies in assessing the need for thevaluation allowance.  On a quarterly basis, management assesseswhether it remains more likely than not that the deferred tax assets will notbe realized.  In the event theCompany determines at a future time that it could realize its deferred taxassets in excess of the net amount recorded, the Company will reduce itsdeferred tax asset valuation allowance and decrease income tax expense in theperiod when the Company makes such determination.

 

***Income Tax PaymentsAnd Refunds***

 

The Company made income tax payments of less than $0.1 million and $0.1million for the three months ended March 31, 2010 and 2009, respectively.

 

As a result of federal tax legislation during the fourth quarter of2009 that allowed the Company to carryback its 2008 net operating loss for fiveyears rather than for two years, the Company recorded $7.0 million underprepaid and refundable income taxes.  On April 2,2010, the Company received $6.8 million in income tax refunds and expects toreceive the balance of $0.2 million during the second quarter of 2010.

 

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***Liabilities ForUncertain Tax Positions***

 

For the three months ended March 31,2010, the Company recorded a decrease of $0.7 million to income tax expense,which amount consisted primarily of tax liabilities reduced due to theexpiration of statutes of limitation for certain tax liabilities (includinginterest and principal).  For the threemonths ended March 31, 2009, the Company recorded an increase to incometax expense of less than $0.1 million, which amount consisted primarily ofinterest and penalties.

 

The Company’s liabilities for uncertain taxpositions as of March 31, 2010 and December 31, 2009 were $4.5million and $5.3 million, respectively, which were recorded in the balancesheets as long-term tax liabilities. The Company reviews its estimates on aquarterly basis, and any change in its liabilities for uncertain tax positionswill result in an adjustment to its income tax expense in the statement ofoperations in each period measured.

 

***Federal And StateIncome Tax Audits***

 

The Company is subject to federal and state income tax audits from timeto time that could result in proposed assessments. The Company cannot predictwith certainty how these audits will be resolved and whether the Company willbe required to make additional tax payments, which may or may not includepenalties and interest. The Company is currently under audit by the InternalRevenue Service for the tax years of 2004 through 2008. For most states wherethe Company conducts business, the Company is subject to examination for thepreceding three to six years. In certain states, the period could be longer.

 

**13.****                               ACCOUNTSRECEIVABLE AND RELATED ALLOWANCE FOR DOUBTFUL ACCOUNTS**

 

Accountsreceivable are primarily attributable to advertising that has aired on theCompany’s radio stations, but for which payment has not been collected, net ofagency commissions and an estimated allowance for doubtful accounts. Estimatesof the allowance for doubtful accounts are recorded based on management’sjudgment of the collectability of the accounts receivable based on historicalinformation, relative improvements or deteriorations in the age of the accountsreceivable and changes in current economic conditions.

 

The accounts receivable balances and reservefor doubtful accounts as of March 31, 2010 and December 31, 2009 arepresented in the following table:

 
| ** **                                                   | ** ** | **March 31,**          | ** ** | **December 31,** | ** ** |
|--------------------------------------------------------------|------------|-----------------------------|------------|-----------------------|------------|
| ** **                                                   | ** ** | **2010**                    | ** ** | **2009**              | ** ** |
| ** **                                                   | ** ** | **(amounts  in thousands)** | ** ** |
| ** **                                                   |       |                        |       |                  |       |
| Accounts  receivable                                         |       | $                           | 61,382     |                  | $          | 71,618 |   |
| Allowance  for doubtful accounts                             |       | (2,969                      | )          | (3,299                | )          |
| Accounts  receivable, net of allowance for doubtful accounts |       | $                           | 58,413     |                  | $          | 68,319 |   |

 

As of March 31,2010 and December 31, 2009, the Company recorded accounts receivablecredits in the amounts of $2.5 million and $1.8 million, respectively, which amountsare included in the balance sheets under other current liabilities.  Accounts receivable credits can result fromadvertiser prepayments or overpayments.

 

As of March 31,2010 and December 31, 2009, the Company recorded current unearned revenuesof $0.5 million and $0.8 million, respectively, which amounts are included inthe balance sheets under other current liabilities.

 

**14.****                               FAIRVALUE MEASUREMENTS**

 

The fair value is the price that would be received to sell an asset orpaid to transfer a liability in an orderly transaction between marketparticipants at the measurement date (exit price). The Company utilizes marketdata or assumptions that market participants would use in pricing the asset orliability, including assumptions about risk and the risks inherent in theinputs to the valuation technique. These inputs can be readily observable,market corroborated, or generally unobservable. The Company utilizes valuationtechniques that maximize the use of observable inputs and minimize the use ofunobservable inputs. The fair value hierarchy prioritizes the inputs used tomeasure fair value. The hierarchy gives the highest priority to unadjustedquoted prices in active markets for identical assets or liabilities (level 1measurement) and the lowest priority to unobservable inputs (level 3measurement).

 

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***Recurring Fair Value Measurements***

 

The following tables set forth, by level within the fair valuehierarchy, the Company’s financial assets and liabilities that were accountedfor at fair value on a recurring basis as of March 31, 2010 and December 31,2009. The financial assets and liabilities are classified in their entiretybased on the lowest level of input that is significant to the fair valuemeasurement. The Company’s assessment of the significance of a particular inputto the fair value measurement requires judgment and may affect the valuation offair value assets and liabilities and their placement within the fair valuehierarchy levels.

 
| ** **                      | ** ** | **As Of March 31,  2010**                  | ** ** |
|---------------------------------|------------|-------------------------------------------------|------------|
| ** **                      | ** ** | **Value Measurements At  Reporting Date Using** | ** ** |
| ** **                      | ** ** | ** **                                      | ** ** | **Quoted Prices** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                      | ** ** | ** **                                      | ** ** | **In Active** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                      | ** ** | ** **                                      | ** ** | **Markets For** | ** ** | **Significant** | ** ** | ** ** | ** ** |
| ** **                      | ** ** | ** **                                      | ** ** | **Identical** | ** ** | **Other** | ** ** | **Significant** | ** ** |
| ** **                      | ** ** | ** **                                      | ** ** | **Assets Or** | ** ** | **Observable** | ** ** | **Unobservable** | ** ** |
| ** **                      | ** ** | ** **                                      | ** ** | **Liabilities** | ** ** | **Inputs** | ** ** | **Inputs** | ** ** |
| ** **                      | ** ** | **Total**                                       | ** ** | **(Level 1)** | ** ** | **(Level 2)** | ** ** | **(Level 3)** | ** ** |
| **Description**                 | ** ** | **Assets (Liabilities)**                        | ** ** |
| ** **                      | ** ** | **(amounts in thousands)**                      | ** ** |
| ** **                      | ** ** | ** **                                      | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Assets**                      | ** ** | ** **                                      | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Available For Sale  Securities  |       | $                                               | 391        |   | $ | — |   | $ | — |   | $ | 391 |   |
|                            |       |                                            |       |   |   |   |   |   |   |
| **Liabilities**                 |       |                                            |       |   |   |   |   |   |   |
| Interest Rate Cash Flow  Hedges |       | $                                               | (13,409    | ) | $ |   |   | $ | (13,409 | ) | $ | — |   |
|                                 |            |                                                 |            |  |  |  |  |  |  |  |  |  |  |  |

 
| ** **                      | ** ** | **As Of December 31,  2009**               | ** ** |
|---------------------------------|------------|-------------------------------------------------|------------|
| ** **                      | ** ** | **Value Measurements At  Reporting Date Using** | ** ** |
| ** **                      | ** ** | ** **                                      | ** ** | **Quoted Prices** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                      | ** ** | ** **                                      | ** ** | **In Active** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                      | ** ** | ** **                                      | ** ** | **Markets For** | ** ** | **Significant** | ** ** | ** ** | ** ** |
| ** **                      | ** ** | ** **                                      | ** ** | **Identical** | ** ** | **Other** | ** ** | **Significant** | ** ** |
| ** **                      | ** ** | ** **                                      | ** ** | **Assets Or** | ** ** | **Observable** | ** ** | **Unobservable** | ** ** |
| ** **                      | ** ** | ** **                                      | ** ** | **Liabilities** | ** ** | **Inputs** | ** ** | **Inputs** | ** ** |
| ** **                      | ** ** | **Total**                                       | ** ** | **(Level 1)** | ** ** | **(Level 2)** | ** ** | **(Level 3)** | ** ** |
| **Description**                 | ** ** | **Assets (Liabilities)**                        | ** ** |
| ** **                      | ** ** | **(amounts in thousands)**                      | ** ** |
| ** **                      | ** ** | ** **                                      | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Assets**                      | ** ** | ** **                                      | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Available For Sale  Securities  |       | $                                               | 391        |   | $ | — |   | $ | — |   | $ | 391 |   |
|                            |       |                                            |       |   |   |   |   |   |   |
| **Liabilities**                 |       |                                            |       |   |   |   |   |   |   |
| Interest Rate Cash Flow  Hedges |       | $                                               | (13,432    | ) | $ |   |   | $ | (13,432 | ) | $ | — |   |

 

Forthe Company’s interest rate hedges, the Company pays a fixed rate and receivesa variable interest rate that is observable based upon a forward interest ratecurve and is therefore considered a level 2 item (based on the Eurodollarrate).

 

Forthe Company’s assets measured at fair value on a recurring basis usingsignificant unobservable inputs (level 3), the following amounts in thousandsare a reconciliation of the activity during the three months ended March 31,2010 and 2009:

 

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| ** **                                                    | ** ** | **Available**  | ** ** |
|---------------------------------------------------------------|------------|----------------|------------|
| ** **                                                    | ** ** | **For Sale**   | ** ** |
| ** **                                                    | ** ** | **Securities** | ** ** |
| **Assets**                                                    | ** ** | ** **     | ** ** |
| Balance  as of December 31, 2009 and March 31, 2010 |       | $              | 391        |   |
|                                                          |       |           |       |
|                                                          | ** ** | **Available**  | ** ** |
| ** **                                                    | ** ** | **For Sale**   | ** ** |
| ** **                                                    | ** ** | **Securities** | ** ** |
| **Assets**                                                    | ** ** | ** **     | ** ** |
| Balance  as of December 31, 2008                         |       | $              | 1,399      |   |
| Recovery  of investment                                       |       | (7             | )          |
| Balance  as of March 31, 2009                            |       | $              | 1,392      |   |

 

***Non-Recurring Fair Value Measurements***

 

The Company has certain assets that are measured at fair value on anon-recurring basis under the circumstances and events described in Note 3,Intangible Assets And Goodwill, and are adjusted to fair value only when thecarrying values are more than the fair values. The categorization of the framework used to price the assets is considereda level 3, due to the subjective nature of the unobservable inputs used todetermine the fair value.

 

During the three months ended March 31, 2010 and 2009, there wereno adjustments to fair value as there were no indicators that would haverequired interim testing.  The Companyperforms its annual testing of indefinite-lived intangible assets during thesecond quarter of each year.

 

***Fair Value Of Financial Instruments SubjectTo Disclosure***

 

The estimated fair value of financial instruments is determined usingthe best available market information and appropriate valuationmethodologies.  Considerable judgment isnecessary, however, in interpreting market data to develop the estimates offair value.  Accordingly, the estimatespresented are not necessarily indicative of the amounts that the Company couldrealize in a current market exchange, or the value that ultimately will berealized upon maturity or disposition. The use of different market assumptions may have a material effect onthe estimated fair value amounts.

 

The following methods and assumptions were used to estimate the fairvalue of financial instruments:

 

(1) Cash and cash equivalents, accounts receivable and accountspayable, including accrued liabilities: The carrying amount of these assets andliabilities approximates fair value because of the short maturity of theseinstruments.

 

(2) Senior debt (see Note 4, Senior Debt): As of March 31,2010 and December 31, 2009, the fair value of the Company’s senior debtunder the Company’s Bank Facility was $667.9 million and $675.8 million,respectively, while the carrying value was $716.0 million and $729.0 million,respectively. The Company’s determination of the fair value was based on a riskadjusted rate.

 

(3) 7.625% Senior Subordinated Notes (see Note 5): As of December 31,2009, the fair value of the Company’s Notes was $6.0 million, while thecarrying value was $6.6 million. The fair value was based on available marketprices.  On March 8, 2010, theCompany redeemed at par all of the remaining $6.6 million Notes outstanding.

 

(4) Outstanding Letters of Credit: The Company had a letter ofcredit outstanding in the amount of $0.7 million as of March 31, 2010 and$1.5 million as of December 31, 2009. The Company does not believe it ispracticable to estimate the fair value of this financial instrument and doesnot expect any material loss from the resolution since performance is notlikely to be required.

** **

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** **

**15.**                               DEFERRED CHARGES AND OTHER ASSETS AND OTHERLONG-TERM LIABILITIES

** **

**Deferred charges and otherassets, including definite-lived intangible assets, consist of the following:**

** **
| ** **                                       | ** ** | **March 31,**          | ** ** | **December 31,** | ** ** |
|--------------------------------------------------|------------|-----------------------------|------------|-----------------------|------------|
| ** **                                       | ** ** | **2010**                    | ** ** | **2009**              | ** ** |
| ** **                                       | ** ** | **(amounts  in thousands)** | ** ** |
| ** **                                       |       |                        | ** ** | ** **            | ** ** |
| Debt issuance costs, net                         |       | $                           | 8,299      |                  | $          | 3,756 |   |
| Software costs, net                              |       | 1,001                       |       | 1,280                 |       |
| Prepaid assets - long term                       |       | 1,236                       |       | 1,421                 |       |
| Deferred contracts and other agreements, net     |       | 719                         |       | 743                   |       |
| Leasehold premium, net                           |       | 683                         |       | 706                   |       |
| Deposits - long term                             |       | 327                         |       | 393                   |       |
| Advertiser lists and customer relationships, net |       | 31                          |       | 41                    |       |
| Other                                            |       | 138                         |       | 146                   |       |
|                                             |       | $                           | 12,434     |                  | $          | 8,486 |   |

 

As of March 31, 2010 and December 31, 2009, the deferred rentliabilities were $3.4 million and are included in other under long-termliabilities.

 

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**ITEM 2.****     Management’s Discussion AndAnalysis Of Financial Condition And Results Of Operations**

 

In preparing the discussion and analysiscontained in this Item 2, we presume that readers have read or have access tothe discussion and analysis contained in our Annual Report on Form 10-Kfiled with the Securities and Exchange Commission (the “SEC”) on March 15,2010. In addition, you should read the following discussion and analysis of ourfinancial condition and results of operations in conjunction with ourconsolidated financial statements and related notes included elsewhere in thisreport. The following results of operations include a discussion of the threemonths ended March 31, 2010 as compared to the three months ended March 31,2009.  Our results of operations duringthe relevant periods represent the operations of the radio stations owned andoperated by us.

 

Under the heading “Same StationConsiderations,” we evaluate net revenues, station operating expenses andoperating income by comparing the performance of stations owned or operated byus throughout a relevant period to the performance of those same stations inthe prior period whether or not owned or operated by us. During the fourthquarter of 2009, another party commenced the operation of certain of our towersites, which impacted same station considerations for the periods presented.The operation of these tower sites by another party is part of our plan to exit the operation of non-strategic towersites. We use these comparisons to assess the effect of acquisitions anddispositions on our operations throughout the periods measured.

 

**Results of Operations**

 

The following significant factors affected our results of operationsfor the three months ended March 31, 2010 as compared to the three monthsended March 31, 2009:

 

·                  During March 2010, we amended (the “Amendment”) our senior creditagreement (“Bank Facility”) that increased our interest expense due to anincrease in deferred financing expense of $5.2 million, which will be amortizedover the remaining term of the Bank Facility.

 

·                  During the three months ended March 31,2010, we repurchased the remaining $6.6 million of our then outstanding 7.625%senior subordinated notes (“Notes”) at par and recognized a net loss onextinguishment of debt of $(0.1) million due to the write-off of deferredfinancing expenses. During the three months ended March 31, 2009, werepurchased $21.0 million of our Notes and recognized a net gain onextinguishment of debt of $7.8 million.

 

**ThreeMonths Ended March 31, 2010 As Compared To The Three Months Ended March 31,2009**

 

***Net Revenues***

 

| ** **         | ** ** | **Three  Months Ended**    | ** ** |
|--------------------|------------|----------------------------|------------|
| ** **         | ** ** | **March 31,  2010**   | ** ** | **March 31,  2009** | ** ** |
| ** **         | ** ** | **(dollars  in millions)** | ** ** |
| Net  Revenues      |       | $                          | 80.8       |   | $ | 75.4 |   |
| Amount  of Change  |       | $                          | 5.4        |   |   |   |
| Percentage  Change |       | 7.2                        | %          |   |   |
|                    |            |                            |            |  |  |  |  |

 

At this time, we expect revenues to grow for the remainder of 2010. In2009, poor economic conditions led to lower demand for radio advertising. Thisnegative trend reversed in the first quarter of 2010 as the economystrengthened and business conditions improved.

 

Net revenues in the quarter increased in most of our markets.  Our net revenues were impacted the most byincreases for those radio stations located in our Boston, Denver, New Orleans,San Francisco and Rochester markets.

 

*Same Station Considerations*:

 

·                                          Netrevenues (tower rental income) in 2010 were not impacted for the transfer oftower operations to a third party as of the beginning of the period.

 

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·                                          Netrevenues (tower rental income) in 2009 would have been lower by $0.2 million ifwe had adjusted net revenues for the transfer of tower operations to a thirdparty as of the beginning of the period.

 

***Station Operating Expenses***

 

| ** **                 | ** ** | **Three Months Ended**    | ** ** |
|----------------------------|------------|---------------------------|------------|
| ** **                 | ** ** | **March 31, 2010**   | ** ** | **March 31, 2009** | ** ** |
| ** **                 | ** ** | **(dollars in millions)** | ** ** |
| Station Operating Expenses |       | $                         | 59.4       |   | $ | 58.6 |   |
| Amount of Change           |       | $                         | 0.8        |   |   |   |
| Percentage Change          |       | 1.4                       | %          |   |   |
|                            |            |                           |            |  |  |  |  |

 

The increase in station operating expenses was primarily due to anincrease in net revenues as described above as certain variable expensesincrease with a corresponding increase in net revenues. Management expectsthat, due to an anticipated increase in net revenues in 2010 for the reasons asdescribed above under Net Revenues, the correlating trend of increased stationoperating expenses (primarily from increased variable expenses) will continuefor the balance of the year.

 

*Same Station Considerations*:

 

·                                          Stationoperating expenses in 2010 would not have been impacted if we had adjustedstation operating expenses for the transfer of tower operations to a thirdparty as of the beginning of the period.

 

·                                          Stationoperating expenses in 2009 would have been lower by an amount less than $0.1million if we had adjusted station operating expenses for the transfer of toweroperations to a third party as of the beginning of the period.

 

***Depreciation And Amortization Expense***

 

| ** **                             | ** ** | **Three Months Ended**    | ** ** |
|----------------------------------------|------------|---------------------------|------------|
| ** **                             | ** ** | **March 31, 2010**   | ** ** | **March 31, 2009** | ** ** |
| ** **                             | ** ** | **(dollars in millions)** | ** ** |
| Depreciation And  Amortization Expense |       | $                         | 3.4        |   | $ | 4.3 |   |
| Amount of Change                       |       | $                         | (0.9       | ) |   |   |
| Percentage Change                      |       | (20.9                     | )%         |   |   |
|                                        |            |                           |            |  |  |  |  |

 

Depreciation and amortization expense decreased in 2010 primarily dueto the decrease over the past several years in: (i) capital expenditures; (ii) deferredcharges and other assets; and (iii) acquisitions.

 

***Corporate General And Administrative Expenses***

 

| ** **                                     | ** ** | **Three Months Ended**    | ** ** |
|------------------------------------------------|------------|---------------------------|------------|
| ** **                                     | ** ** | **March 31, 2010**   | ** ** | **March 31, 2009** | ** ** |
| ** **                                     | ** ** | **(dollars in millions)** | ** ** |
| Corporate General And  Administrative Expenses |       | $                         | 5.9        |   | $ | 5.7 |   |
| Amount of Change                               |       | $                         | 0.2        |   |   |   |
| Percentage Change                              |       | 3.5                       | %          |   |   |
|                                                |            |                           |            |  |  |  |  |

 

Corporate general and administrative expenses increased primarily dueto the addition of several new employee positions over the past year.

 

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***Operating Income***

 

| ** **        | ** ** | **Three Months Ended**    | ** ** |
|-------------------|------------|---------------------------|------------|
| ** **        | ** ** | **March 31, 2010**   | ** ** | **March 31, 2009** | ** ** |
| ** **        | ** ** | **(dollars in millions)** | ** ** |
| Operating Income  |       | $                         | 12.2       |   | $ | 6.8 |   |
| Amount of Change  |       | $                         | 5.4        |   |   |   |
| Percentage Change |       | 79.4                      | %          |   |   |
|                   |            |                           |            |  |  |  |  |

 

The increase in operating income was primarily due to an increase innet revenues for the reasons described above under Net Revenues, net of anincrease in station operating expenses for the reasons described under StationOperating Expenses.

 

*Same Station Considerations*:

 

·                                          Operatingincome in 2010 would not have been impacted if we had adjusted operating incomefor the transfer of tower operations to a third party as of the beginning ofthe period.

 

·                                          Operatingincome in 2009 would have been lower by $0.2 million if we had adjustedoperating income for the transfer of tower operations to a third party as ofthe beginning of the period.

 

***Interest Expense***

 

| ** **        | ** ** | **Three Months Ended**    | ** ** |
|-------------------|------------|---------------------------|------------|
| ** **        | ** ** | **March 31, 2010**   | ** ** | **March 31, 2009** | ** ** |
| ** **        | ** ** | **(dollars in millions)** | ** ** |
| Interest Expense  |       | $                         | 7.0        |   | $ | 8.1 |   |
| Amount of Change  |       | $                         | (1.1       | ) |   |   |
| Percentage Change |       | (13.6                     | )%         |   |   |
|                   |            |                           |            |  |  |  |  |

 

The decrease in interest expense was primarily due to: (1) adecrease in interest rates on outstanding debt during the three months ended March 31,2010 as compared to the three months ended March 31, 2009; (2) therepurchase of our Notes, which have a higher interest rate than the replacementdebt; (3) a reduction in January 2010 of $75.0 million in notionalvalue of an existing 3.03% fixed interest rate swap agreement; and (4) adecline in outstanding debt upon which interest is computed.

 

***Income Before Income Taxes***

 

| ** **                 | ** ** | **Three Months Ended**    | ** ** |
|----------------------------|------------|---------------------------|------------|
| ** **                 | ** ** | **March 31, 2010**   | ** ** | **March 31, 2009** | ** ** |
| ** **                 | ** ** | **(dollars in millions)** | ** ** |
| Income Before Income Taxes |       | $                         | 5.1        |   | $ | 6.8 |   |
| Amount of Change           |       | $                         | (1.7       | ) |   |   |
| Percentage Change          |       | (25.0                     | )%         |   |   |
|                            |            |                           |            |  |  |  |  |

 

The decrease was primarily attributable to a prior year’s gain of $7.8million on the retirement of our Notes as we repurchased debt at a discount ascompared to the purchase of our Notes at par in the current period.  The decrease was offset by: (1) anincrease in operating income for the reasons as described above under OperatingIncome; and (2) a decrease in our interest expense of $1.1 million for thereasons described above under Interest Expense.

 

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***Income Taxes***

 

| ** **        | ** ** | **Three Months Ended**    | ** ** |
|-------------------|------------|---------------------------|------------|
| ** **        | ** ** | **March 31, 2010**   | ** ** | **March 31, 2009** | ** ** |
| ** **        | ** ** | **(dollars in millions)** | ** ** |
| Income Taxes      |       | $                         | 0.9        |   | $ | 1.5 |   |
| Amount of Change  |       | $                         | (0.6       | ) |   |   |
| Percentage Change |       | (40.0                     | )%         |   |   |
|                   |            |                           |            |  |  |  |  |

 

Income tax expense for each period was primarily due to the recordingof net deferred tax liabilities associated with non-amortizable assets such asbroadcasting licenses and goodwill.  As aresult of cumulative losses incurred by the Company since 2006, a deferred taxasset valuation allowance was established due to the uncertainty that thedeferred tax assets would be realized in future years (after excluding deferredtax liabilities associated with non-amortizable assets).  For the three months ended March 31,2010, our income tax expense was reduced as a result of the expiration ofstatutes of limitations from liabilities for uncertain tax positions.

 

***Net Income***

 

| ** **        | ** ** | **Three Months Ended**    | ** ** |
|-------------------|------------|---------------------------|------------|
| ** **        | ** ** | **March 31, 2010**   | ** ** | **March 31, 2009** | ** ** |
| ** **        | ** ** | **(dollars in millions)** | ** ** |
| Net Income        |       | $                         | 4.2        |   | $ | 5.3 |   |
| Amount of Change  |       | $                         | (1.1       | ) |   |   |
| Percentage Change |       | (20.8                     | )%         |   |   |
|                   |            |                           |            |  |  |  |  |

 

The net change was primarily attributable to thereasons described above under Income Before Income Taxes and Income Taxes.

 

**Future Impairments**

 

Our annual impairment test of ourbroadcasting licenses and goodwill was last performed in the second quarter of2009. As part of our annual review during the second quarter of 2010, we willtest our broadcasting licenses and goodwill for impairment. Any such impairmentcould be material. Future tests could result in impairments based on economicconditions at that time. As of March 31, 2010, no interim impairment testwas required for our broadcasting licenses and goodwill.

 

**Liquidity And Capital Resources**

 

***Liquidity***

 

Historically, we have carried significant amounts of debt. As of March 31,2010, we had outstanding under our Bank Facility $729.5 million in debt,including: (1) $716.0 million under our Bank Facility, which is comprisedof $355.0 million in a term loan (“Term Loan”) and $361.0 million in drawnrevolving credit facility (“Revolver”); (2) finance method leaseobligations of $12.6 million and (4) $0.7 million in a letter of credit.

 

As of March 31, 2010, we had $2.6 million in cash and cashequivalents. During the three months ended March 31, 2010, we decreasedour outstanding debt by $20.4 million, which includes a $0.8 million reductionin an outstanding letter of credit.

 

***Our CreditAgreement, As Amended***

 

On March 11,2010, we amended our Bank Facility (the “Amendment”). Inconnection with the Amendment, certain key terms, as defined within the BankFacility, were revised as follows:

 

·                  Depending on theConsolidated Leverage Ratio (Consolidated Funded Indebtedness to ConsolidatedOperating Cash Flow), we may elect an interest rate equal to: (1) theEurodollar Rate plus fees that can range from 0.5% to 2.5%; or (2) theBase Rate plus fees that can range from 0.0% to 1.5%, where the Base 

 

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Rate is the highest of: (a) the FederalFunds Rate plus 0.5%; (b) the Eurodollar Rate plus 1.0%; and (c) thePrime Rate;

·                  Duringperiods when the Consolidated Leverage Ratio exceeds six times, we are: (a) restrictedin our ability to take certain actions, including but not limited to, thepayment of dividends and the repurchase of our stock; and (b) subject toadditional limitations on acquisitions and investments.

 

Under the Amendment, Consolidated Leverage Ratio cannot exceed seventimes in 2010. This covenant ratio decreases quarterly in 2011 to a ratio ofsix times as of December 31, 2011.

 

Our ability to maintaincompliance with our covenants will be highly dependent on our results ofoperations as the economy recovers from the recent economic downturn and, tothe extent necessary, our ability to implement remedial measures such asfurther reductions in operating costs.  If we were to enter into an agreement with ourlenders for covenant compliance relief, such relief could result in higherinterest expense.

 

The Amendment was treated as amodification to a debt instrument.  As aresult, in the first quarter of 2010 we recorded deferred financing costs of$5.2 million related to the Amendment that will be amortized under theeffective interest rate method over the remaining life of the Bank Facility. Inaddition, unamortized deferred financing costs of $3.1 million as of theAmendment date will continue to be amortized over the remaining life of theBank Facility.

 

Our Bank Facility with a syndicate of lenders, was originally comprisedof: (i) a Revolver of $650 million; and (ii) a Term Loan of $400million. The Term Loan reduces (from and after September 30, 2009) inquarterly amounts starting at $15 million and ultimately increasing to $60million. The Revolver provides us with funds for working capital and generalcorporate purposes including capital expenditures, and, except as limited underthe Amendment, any one or more of the following: repurchases of Class Acommon stock, investments, dividends and acquisitions. The Bank Facility issecured by a pledge of 100% of the capital stock and other equity interest inall of our wholly owned subsidiaries. In addition, the Bank Facility, asamended, is secured by a lien on all of our assets, other than our realproperty.

 

The undrawn amount of the Revolver was $288.3 million as of March 31,2010. The amount available under the Revolver is a function of covenantcompliance at the time of borrowing. Based on our financial covenant analysisas of March 31, 2010, we would be limited to borrowings significantly lessthan the undrawn limit unless such borrowings were used to repay indebtednessor for transactions that increase cash flow for purposes of covenantcalculation. We plan to use the Revolver and cash flow from operations to fundthe amortization of the Term Loan.

 

The Bank Facility, as amended, requires us to comply with certainfinancial covenants which are defined terms within the agreement, including: (1) amaximum Consolidated Leverage Ratio; and (2) a minimum ratio ofConsolidated Operating Cash Flow to Consolidated Interest Charges of twotimes.  Management believes we are incompliance with all financial covenants and leverage ratios and all other termsof the Bank Facility as of March 31, 2010.

 

We believe that over the next 12 months we can continue to maintain ourcompliance with these covenants. We believe that cash on hand and cash fromoperating activities, together with available borrowings under the Revolverwill be sufficient to permit us to meet our liquidity requirements over thenext 12 months, including our debt repayments. While our operating cash flowhas been reduced from prior periods during the recent economic downturn, it hasremained positive and adequate to fund our operating needs. As a result, wehave not been required to rely upon, and we do not anticipate having to relyupon, our Revolver to fund our operations.

 

Amending our Bank Facility or obtaining other funding or additionalfinancing prior to the expiration of the current agreement will be essential asthe Revolver balance outstanding will be due in full upon the expiration of theBank Facility on June 30, 2012.

 

Based on all factors at this time, we would expect revenues to grow forthe remainder of 2010. While economic conditions had a negative impact on ourresults of operations during 2009 due to reduced demand in the advertisingsector, this negative trend reversed in the first quarter of 2010, primarilydue to the strengthening of advertiser demand.

 

***Operating Activities***

 

Net cash flows provided by operatingactivities were $19.3 million and $15.9 million for the three months ended March 31,2010 and 2009, respectively. The increase in 2010 was mainly attributable to anincrease in net revenues, net of station operating expenses, offset by anincrease in working capital requirements of $2.9 million. Working capitalrequirements increased primarily due to a decrease in accounts receivablecollections as the outstanding accounts receivable balances subject tocollections were $75.4 million as of the beginning of the prior year’s periodas compared to $68.3 million as of the beginning of the current year’s period.

 

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***Investing Activities***

 

Net cash flows used in investing activitieswere $0.7 million and $0.5 million for the three months ended March 31,2010 and 2009, respectively.

 

For the three months ended March 31,2010 and 2009, the cash used in investing activities primarily reflects $0.8million during each period for additions to property and equipment.

 

***Financing Activities***

 

Net cash flows used in financing activitieswere $26.8 million and $10.7 million for the three months ended March 31,2010 and 2009, respectively.

 

For the three months ended March 31,2010, the cash flows used in financing activities primarily reflect therepurchase at par of our Notes at $6.6 million and the reduction to our netborrowings of $13.0 million under our Revolver. For the three months ended March 31,2009, the cash flows used in financing activities primarily reflect therepurchase of our Notes at $13.0 million (after a discount of $8.0 million).

 

***Dividends***

 

Previously, we have used a portion of our capital resources to paydividends on a quarterly basis effective beginning with the first quarter of2006 and ending with and including the third quarter of 2008. Our Board ofDirectors has not declared any dividends since that time.

 

Pursuant to our Bank Facility, as amended in March 2010, duringperiods when our Consolidated Leverage Ratio exceeds six times, we will be prohibitedfrom paying dividends.

 

Any future dividends will be at the discretion of the Board ofDirectors based upon the relevant factors at the time of such consideration.

 

***2009 Option ExchangeProgram***

 

In February 2009, our Board of Directors approved an amendment tothe Entercom Equity Compensation Plan to permit a one-time Option ExchangeProgram (“2009 OEP”), which amendment was approved at the May 2009shareholders’ meeting. On April 13, 2009, we commenced the 2009 OEP(subject to shareholder approval) by making an offer to exchange to oureligible employees and non-employee directors. We offered such persons theopportunity to make an election to exchange all of their outstanding stockoptions with exercise prices equal to or greater than $11.80 per share for alesser number of restricted stock units. The exchange ratio under the 2009 OEPwas as follows:

 
| **Option**                             | ** ** | **Exchange Ratio**     | ** ** |
|----------------------------------------|------------|------------------------|------------|
| **Strike Price**                       | ** ** | **(Options For RSUs)** | ** ** |
| At  least $11.80, but less than $30.00 |       | 2.25  for 1            |       |
| $30.00  or more                        |       | 4.5  for 1             |       |

 

On May 15, 2009, following the May 14, 2009 expiration of our2009 OEP, we granted 0.7 million restricted stock units in exchange for 2.1million options. As a result of the 2009 OEP, the number of restricted stockunits that can be issued under the Plan was effectively increased by 0.7million as all restricted stock units granted did not count against therestricted stock sublimit.  In addition,the number of awards that can be issued under the Plan was effectively reducedby 2.1 million as all options that were exchanged will not be available forre-grant under the Plan.

 

***Income Taxes***

 

During the three months ended March 31, 2010, we paid less than$0.1 million in state income taxes. We anticipate that it will not be necessaryto make any quarterly estimated federal and state income tax payments for theremainder of 2010 based upon existing prepayments and expected quarterly incomesubject to tax.

 

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***Capital Expenditures***

 

Capital expenditures for the three months ended March 31, 2010were $0.8 million. We anticipate that capital expenditures in 2010 will bebetween $4.0 million and $5.0 million.

 

**Contractual Obligations**

 

The followingtable reflects a summary as of March 31, 2010 of our calendar contractualobligations for the remainder of the year 2010 and thereafter:

 
| ** **                            | ** ** | **Payments Due By Period** | ** ** |
|---------------------------------------|------------|----------------------------|------------|
| ** **                            | ** ** | ** **                 | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **More Than** | ** ** |
| ** **                            | ** ** | ** **                 | ** ** | **Less Than** | ** ** | **1 To 3** | ** ** | **3 To 5** | ** ** | **5** | ** ** |
| **Contractual Obligations:**          | ** ** | **Total**                  | ** ** | **1 Year** | ** ** | **Years** | ** ** | **Years** | ** ** | **Years** | ** ** |
| ** **                            | ** ** | **(amounts in thousands)** | ** ** |
| ** **                            | ** ** | ** **                 | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Long-term debt obligations  (1)       |       | $                          | 752,207    |   | $ | 81,778 |   | $ | 670,318 |   | $ | 68 |   | $ | 43 |   |
| Operating lease  obligations          |       | 66,334                     |       | 8,993 |   | 21,591 |   | 15,353 |   | 20,397 |   |
| Finance method lease obligations  (2) |       | 31,411                     |       | 529 |   | 1,477 |   | 14,177 |   | 15,228 |   |
| Purchase obligations (3)              |       | 229,653                    |       | 51,595 |   | 96,411 |   | 46,624 |   | 35,023 |   |
| Other long-term  liabilities (4)      |       | 25,659                     |       | 178 |   | 9,519 |   | 1,145 |   | 14,817 |   |
| Total                                 |       | $                          | 1,105,264  |   | $ | 143,073 |   | $ | 799,316 |   | $ | 77,367 |   | $ | 85,508 |   |

 

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(1)                      (a)   OurBank Facility had outstanding debt in the amount of $716.0 million as of March 31,2010. The maturity under our Bank Facility could be accelerated if we do notmaintain compliance with certain covenants.

 

(b)   Theabove table includes projected interest expense under the remaining term of ourBank Facility.

 

(2)                            Finance lease obligationsoutstanding include principal and interest expense.  When our continuing involvement in thistransaction ceases after an initial period of 42 months that ends in the year2013, we expect we will discontinue finance accounting and instead treat ourobligations under the accounting guidance for capital and operating leases.

 

Also, we will recognize additionalobligations included in the above table that cover lease payments for theperiod subsequent to the initial period of 42 months of continuing involvement.The minimum term for each of the leases is 20 years, which covers the period ofcontinuing involvement and the period subsequent to continuing involvement. Forfurther discussion, see Note 6, Financing Method Lease Obligations, in theaccompanying notes to the financial statements.

 

(3)                      (a)   Wehave purchase obligations of $229.0 million, including contracts primarily foron-air personalities, sports programming rights, ratings services, musiclicensing fees, equipment maintenance and certain other operating contracts.

 

(b)  Wehave $0.7 million in liabilities primarily related to our obligation to providea letter of credit.

 

(4)                      Includedwithin total other long-term liabilities of $25.7 million are deferred incometax liabilities of $1.6 million that are recognized for all temporarydifferences between the tax and financial reporting bases of our assets andliabilities based on enacted tax laws and statutory tax rates applicable to theperiods in which the differences are expected to affect taxable income.Deferred tax liabilities may vary according to changes in tax laws, tax ratesand our operating results. It is impractical to determine whether there will bea cash impact to an individual year. Therefore, deferred income taxliabilities, together with liabilities for uncertain tax positions, arereflected in the above table in the column labeled as “More Than 5 Years” as itis impractical to determine whether there will be a cash impact to anindividual year.  See Note 12, IncomeTaxes, in the accompanying notes to the consolidated financial statements for adiscussion of deferred tax liabilities, including liabilities for uncertain taxpositions.

 

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**Off-Balance Sheet Arrangements**

 

Variable interest entity accounting was not applicable as of March 31,2010 as we had no pending transactions to acquire or dispose of radio stationassets.  As of March 31, 2010, wehad no other off-balance sheet arrangements.

 

**Recent Accounting Pronouncements**

 

See Note 1 to the accompanying financial statements, Basis OfPresentation - New Accounting Pronouncements, for a discussion of the statusand potential impact of new accounting pronouncements.

 

**Critical Accounting Policies**

 

There have been no material changes to our critical accounting policiesfrom the information provided in Part II, Item 7, “Management’s Discussionand Analysis of Financial Condition and Results of Operations,” under theheading “Critical Accounting Policies” in our Annual Report on Form 10-Kfor the year ended December 31, 2009.

 

For a more comprehensive list of our accounting policies, please seeNote 2, Significant Accounting Policies, accompanying the consolidatedfinancial statements included in our latest annual report on Form 10-K forthe year ended December 31, 2009. Note 2 to the consolidated financial statements included with Form 10-Kcontains several other policies, including policies governing the timing ofrevenue recognition, that are important to the preparation of our consolidatedfinancial statements, but do not meet the SEC’s definition of criticalaccounting policies because they do not involve subjective or complexjudgments.  In addition, for furtherdiscussion of new accounting policies that were effective for us on January 1,2010 please refer to the new accounting pronouncements under Note 1 to theaccompanying notes to the financial statements.

 

**ITEM3.****                                                     QuantitativeAnd Qualitative Disclosures About Market Risk**

 

We are exposed to market risk from changes in interest rates on ourvariable rate senior debt.  From time totime, we may seek to limit our exposure to interest rate volatility through theuse of derivative rate hedging instruments. If the borrowing rates under LIBOR were to increase 1% above the currentrates as of March 31, 2010, our interest expense on our senior debt wouldincrease by approximately $2.5 million on an annual basis, including anyinterest benefit or interest expense associated with the use of derivative ratehedging instruments as described below.

 

The following derivative rate hedging transactions, which fix intereston our variable rate debt, are outstanding as of March 31, 2010 in theaggregate notional amount of $475.0 million. These rate hedging transactionsare tied to the one-month LIBOR interest rate.

 
| **Type**   | ** ** | ** **        | ** ** | ** **             | ** **            | ** ** | ** ** | ** ** | **Fixed**  | ** ** | ** ** | ** **              | ** **            |
|------------|------------|-------------------|------------|------------------------|-----------------------|------------|------------|------------|------------|------------|------------|-------------------------|-----------------------|
| **Of**     | ** ** | **Notional**      | ** ** | **Effective**          | ** **            | ** ** | ** ** | ** ** | **LIBOR**  | ** ** | ** ** | **Expiration**          | ** **            |
| **Hedge**  | ** ** | **Amount**        | ** ** | **Date**               | ** **            | ** ** | **Collar** | ** ** | **Rate**   | ** ** | ** ** | **Date**                | ** **            |
| ** ** | ** ** | **(amounts**      | ** ** | ** **             | ** **            | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **              | ** **            |
| ** ** | ** ** | **(in millions)** | ** ** | ** **             | ** **            | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **              | ** **            |
|       |       |                   |       |                   |                  |       |       |       |       |       |       |                    |                  |
| Swap       |       | $                 | 150.0      |                   | January 28, 2008 |       |       | n/a        |       | 3.03       | %          |                    | January 28, 2011 |   |
| Collar     |       | 100.0             |       | February 28, 2008 |                  | [          | Cap        |       | 4.00       | %          | ]          | February 28, 2011  |                  |
| Floor      |       | 2.14              | %          |                   |
| Swap       |       | 125.0             |       | March 28, 2008    |                  |       | n/a        |       | 2.91       | %          |       | September 28, 2011 |                  |
| Swap       |       | 100.0             |       | May 28, 2008      |                  |       | n/a        |       | 3.62       | %          |       | May 28, 2012       |                  |
| Total      |       | $                 | 475.0      |                   |                  |       |       |       |       |       |       |                    |                  |   |

 

The fair value (based upon current market rates) of the rate hedgingtransactions is included as derivative instruments in long-term assets and/orliabilities for those instruments with maturity dates greater than one year andshort-term assets and or liabilities for those instruments with maturity datesless than one year. The fair value of the hedging transactions is affected by acombination of several factors, including the change in the one-month LIBOR 

 

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rate and the forward interest rate tomaturity. Any increase in the one-month LIBOR rate and/or the forward interestrate to maturity results in a more favorable valuation, while any decrease inthe one-month LIBOR rate and/or forward interest rate to maturity results in aless favorable valuation. Our credit exposure under these hedging agreements,or similar agreements we may enter into in the future, is the cost of replacingan agreement in the event of non-performance by our counter-party.

 

As of March 31, 2010, the fair value of our derivative instrumentswas a liability of $13.4 million, which represented a marginal decrease inliability from the balance as of December 31, 2009.  The positive change was primarily due to theeffect of a decrease in the remaining period of each derivative instrument,offset by a decrease in the forward interest rate curve to maturity for thosederivatives with longer remaining lives. The liability as of March 31,2010 included a reduction in value for non-performance in accordance with theaccounting provisions for fair value measurement.

 

Our cash equivalents are money market instruments consisting ofshort-term government securities and repurchase agreements that are fully collateralizedby government securities.  We do notbelieve that we have any material credit exposure with respect to these assets.

 

Our credit exposure related to our accounts receivable does notrepresent a significant concentration of credit risk due to the quantity ofadvertisers, the minimal reliance on any one advertiser, the multiple marketsin which we operate and the wide variety of advertising business sectors.

 

See also additional disclosures regarding liquidity and capitalresources made under Liquidity and Capital Resources in Part 1, Item 2above.

 

**ITEM 4.****                                                     ControlsAnd Procedures**

 

**Evaluation Of Controls And Procedures**

 

We maintain “disclosure controls and procedures” (as defined in Rules 13a-15(e) and15d-15(e) of the Exchange Act) that are designed to ensure that: (i) informationrequired to be disclosed in our Exchange Act reports is recorded, processed,summarized and reported within the time periods specified in the Securities andExchange Commission’s rules and forms; and (ii) such information isaccumulated and communicated to our management, including our Chief ExecutiveOfficer and Chief Financial Officer, as appropriate, to allow for timelydecisions regarding required disclosure. In designing and evaluating ourdisclosure controls and procedures, our management recognizes that any controlsand procedures, no matter how well designed and operated, can provide onlyreasonable assurance of achieving the desired control objectives, and ourmanagement is required to apply its judgment in evaluating the cost-benefitrelationship of possible controls and procedures.

 

We carried out an evaluation, under the supervision and with theparticipation of our management, including our Chief Executive Officer andChief Financial Officer, of the effectiveness of our disclosure controls andprocedures as of the end of the period covered by this report.  Based onthe foregoing, our President/Chief Executive Officer and Executive VicePresident - Operations/Chief Financial Officer concluded that our disclosure controlsand procedures were effective at the reasonable assurance level.

 

**Changes In Internal Control Over FinancialReporting**

 

There has been no change in our internalcontrol over financial reporting during our most recent fiscal quarter that hasmaterially affected, or is reasonably likely to materially affect, our internalcontrol over financial reporting.

 

**PART II**

**OTHERINFORMATION**

 

**ITEM 1.****                                                     LegalProceedings**

 

There were no material developments relating to the legal proceedingsdescribed in our Annual Report on Form 10-K for the year ended December 31,2009, filed with the Securities and Exchange Commission on March 15, 2010.

 

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**ITEM 1A.****                                            RiskFactors**

 

There have been no material changes from the Risk Factors described inour Form 10-K, filed with the SEC on March 15, 2010.

 

**ITEM 2.****                                                     UnregisteredSales Of Equity Securities And Use Of Proceeds**

 

During thethree-month period ending March 31, 2010, we withheld shares of stock uponthe vesting of restricted stock units to cover withholding tax obligations,unless an employee elected to pay such tax in cash.  The following tableprovides information on shares withheld (which are considered repurchased)during the three-month period ended March 31, 2010:

 
| ** **                                      | ** ** | ** **    | ** ** | ** **    | ** ** | **(c)**          | ** ** | **(d)**             | ** ** |
|-------------------------------------------------|------------|---------------|------------|---------------|------------|------------------|------------|---------------------|------------|
| ** **                                      | ** ** | ** **    | ** ** | ** **    | ** ** | **Total**        | ** ** | **Maximum**         | ** ** |
| ** **                                      | ** ** | ** **    | ** ** | ** **    | ** ** | **Number Of**    | ** ** | **Approximate**     | ** ** |
| ** **                                      | ** ** | ** **    | ** ** | ** **    | ** ** | **Shares**       | ** ** | **Dollar Value**    | ** ** |
| ** **                                      | ** ** | ** **    | ** ** | ** **    | ** ** | **Purchased**    | ** ** | **Of**              | ** ** |
| ** **                                      | ** ** | ** **    | ** ** | ** **    | ** ** | **As**           | ** ** | **Shares That**     | ** ** |
| ** **                                      | ** ** | **(a)**       | ** ** | **(b)**       | ** ** | **Part Of** | ** ** | **May Yet Be** | ** ** |
| ** **                                      | ** ** | **Total**     | ** ** | **Average**   | ** ** | **Publicly**     | ** ** | **Purchased**       | ** ** |
| ** **                                      | ** ** | **Number**    | ** ** | **Price**     | ** ** | **Announced**    | ** ** | **Under**           | ** ** |
| ** **                                      | ** ** | **Of Shares** | ** ** | **Paid**      | ** ** | **Plans Or**     | ** ** | **The Plans**       | ** ** |
| **Period**                                      | ** ** | **Purchased** | ** ** | **Per Share** | ** ** | **Programs**     | ** ** | **Or Programs**     | ** ** |
| January 1,  2010 - January 31, 2010   |       | 13,497        |       | $             | 7.90       |             | —     |                | $          | — |   |
| February 1,  2010 - February 28, 2010 |       | 106,972       |       | $             | 8.56       |             | —     |                | $          | — |   |
| March 1,  2010 - March 31, 2010       |       | 36,712        |       | $             | 10.18      |             | —     |                | $          | — |   |
| Total                                           |       | 157,181       |       |          |       | —           |       |                |       |

 

In connection withemployee tax obligations related to the vesting of restricted stock unitsduring the three months ended March 31, 2010 and in accordance withelections by certain employees, we are deemed to have purchased the shareswithheld to satisfy employees’ tax obligations of 13,497 shares at an averageprice of $7.90 per share in January 2010, 106,972 shares at an averageprice of $8.56 per share in February 2010 and 36,712 shares at an averageprice of $10.18 per share in March 2010. These shares are included in theabove table.

 

**ITEM 3.****                                                     DefaultsUpon Senior Securities**

 

None.

 

**ITEM 4.****                                                    ****[Reserved]**

 

None.

 

**ITEM 5.****                                                     OtherInformation**

 

None.

 

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**ITEM 6.****     Exhibits**

 
| **Exhibit  Number** | ** ** | **Description**                                                                                                                                                                                                                                                                                    |
|---------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.01                |       | Amended and Restated Articles of Incorporation of the Entercom  Communications Corp. as further amended on December 19, 2007 and  May 15, 2009. (1)                                                                                                                                      |
|                |       |                                                                                                                                                                                                                                                                                               |
| 3.02                |       | Amended and Restated Bylaws of the Entercom Communications Corp. (2)                                                                                                                                                                                                                               |
|                |       |                                                                                                                                                                                                                                                                                               |
| 10.01               |       | First Amendment dated as of March 11, 2010 to  Credit Agreement (dated as of June 18, 2007) among Entercom Radio, LLC,  as the Borrower, Entercom Communications Corp., as the Parent, Bank of  America, N.A. as Administrative Agent and L/C Issuer and the lenders party  thereto. (3) |
|                |       |                                                                                                                                                                                                                                                                                               |
| 31.01               |       | Certification of President and Chief Executive Officer required by  Rule 13a-14(a) or Rule 15d-14(a), as created by  Section 302 of the Sarbanes-Oxley Act of 2002. (3)                                                                                                        |
|                |       |                                                                                                                                                                                                                                                                                               |
| 31.02               |       | Certification of Executive Vice President and Chief Financial Officer  required by Rule 13a-14(a) or Rule 15d-14(a), as created by  Section 302 of the Sarbanes-Oxley Act of 2002. (3)                                                                                         |
|                |       |                                                                                                                                                                                                                                                                                               |
| 32.01               |       | Certification of President and Chief Executive Officer pursuant to 18  U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of  2002. (4)                                                                                                                                  |
|                |       |                                                                                                                                                                                                                                                                                               |
| 32.02               |       | Certification of Executive Vice President and Chief Financial Officer  pursuant to 18 U.S.C. § 1350, as created by Section 906 of the  Sarbanes-Oxley Act of 2002. (4)                                                                                                                   |

 

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(1)                                  Incorporatedby reference to Exhibit 3.01 of our Amendment to Registration Statement onForm S-1, as filed on January 27, 1999 (File No. 333-61381), Exhibit 3.1of our Current Report on Form 8-K as filed on December 21, 2007 and Exhibit 3.02of our Quarterly Report on Form 10-Q for the quarter ended June 30,2009, as filed on August 5, 2009.

(2)                                  Incorporatedby reference to Exhibit 3.1 of our Current Report on Form 8-K asfiled on February 21, 2008.

(3)                                  Filedherewith.

(4)                                  Theseexhibits are submitted herewith as “accompanying” this Quarterly Report on Form 10-Qand shall not be deemed to be “filed” as part of such Quarterly Report on Form 10-Q.

 

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**SIGNATURES**

 

Pursuant to the requirements of the SecuritiesExchange Act of 1934, the registrant has duly caused this report to be signedon its behalf by the undersigned thereunto duly authorized.

 
|                   | **ENTERCOM COMMUNICATIONS CORP.**                                                                       |
|------------------------|---------------------------------------------------------------------------------------------------------|
|                   | (Registrant)                                                                                            |
|                   |                                                                                                    |
|                   |                                                                                                    |
| Date: May 7, 2010 | /S/ David J. Field                                                                                      |
|                   | Name: David J. Field                                                                                    |
|                   | Title: President and Chief Executive Officer                                                            |
|                   | (principal executive officer)                                                                           |
|                   |                                                                                                    |
|                   |                                                                                                    |
| Date: May 7, 2010 | /S/ Stephen F. Fisher                                                                                   |
|                   | Name: Stephen F. Fisher                                                                                 |
|                   | Title: Executive Vice President - Operations and Chief Financial  Officer (principal financial officer) |

 

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**EXHIBITINDEX**

 
| **Exhibit  Number** | ** ** | **Description**                                                                                                                                                                                                                                                                                    |
|---------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.01                |       | Amended and Restated Articles of Incorporation of the Entercom  Communications Corp. as further amended on December 19, 2007 and  May 15, 2009. (1)                                                                                                                                      |
|                |       |                                                                                                                                                                                                                                                                                               |
| 3.02                |       | Amended and Restated Bylaws of the Entercom Communications Corp. (2)                                                                                                                                                                                                                               |
|                |       |                                                                                                                                                                                                                                                                                               |
| 10.01               |       | First Amendment dated as of March 11, 2010 to  Credit Agreement (dated as of June 18, 2007) among Entercom Radio, LLC,  as the Borrower, Entercom Communications Corp., as the Parent, Bank of  America, N.A. as Administrative Agent and L/C Issuer and the lenders party  thereto. (3) |
|                |       |                                                                                                                                                                                                                                                                                               |
| 31.01               |       | Certification of President and Chief Executive Officer required by  Rule 13a-14(a) or Rule 15d-14(a), as created by  Section 302 of the Sarbanes-Oxley Act of 2002. (3)                                                                                                        |
|                |       |                                                                                                                                                                                                                                                                                               |
| 31.02               |       | Certification of Executive Vice President and Chief Financial Officer  required by Rule 13a-14(a) or Rule 15d-14(a), as created by  Section 302 of the Sarbanes-Oxley Act of 2002. (3)                                                                                         |
|                |       |                                                                                                                                                                                                                                                                                               |
| 32.01               |       | Certification of President and Chief Executive Officer pursuant to 18  U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of  2002. (4)                                                                                                                                  |
|                |       |                                                                                                                                                                                                                                                                                               |
| 32.02               |       | Certification of Executive Vice President and Chief Financial Officer  pursuant to 18 U.S.C. § 1350, as created by Section 906 of the  Sarbanes-Oxley Act of 2002. (4)                                                                                                                   |

 

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(1)                                  Incorporatedby reference to Exhibit 3.01 of our Amendment to Registration Statement onForm S-1, as filed on January 27, 1999 (File No. 333-61381), Exhibit 3.1of our Current Report on Form 8-K as filed on December 21, 2007 and Exhibit 3.02of our Quarterly Report on Form 10-Q for the quarter ended June 30,2009, as filed on August 5, 2009.

(2)                                  Incorporatedby reference to Exhibit 3.1 of our Current Report on Form 8-K asfiled on February 21, 2008.

(3)                                  Filedherewith.

(4)                                  Theseexhibits are submitted herewith as “accompanying” this Quarterly Report on Form 10-Qand shall not be deemed to be “filed” as part of such Quarterly Report on Form 10-Q.

 

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