##### Table of Contents

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549



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FORM 10-Q



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(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, 2005



OR



| ̈ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ----------------------------------------------------------------------------------------



For the transition period from
 to



Commission file number: 333-84416



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NEXTMEDIA OPERATING, INC.

(Exact name of registrant as specified in its charter)



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|                                                                     |  |                                 
|-------------------------------------------------------------------- |  | --------------------------------
|Delaware                                                             |  | 84-154397                       
|(State or other jurisdiction ofincorporation or organization)        |  | (IRS EmployerIdentification No.)
|                                                                     | 
|6312 S. Fiddlers Green Circle Suite 360E Greenwood Village, Colorado |  | 80111                           
|(Address of principal executive offices)                             |  | (Zip Code)                      



(303) 694-9118

(Registrants telephone number, including area code)



Not Applicable

(Former name, former address and former fiscal 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) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.    Yes  x    No ̈



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



The total number of shares of common stock, par value $.01 per share, outstanding as of May 10, 2005 was 3,000. The Registrant has no other class of common stock outstanding.



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##### Table of Contents

TABLE OF CONTENTS



|        |  |                                                                                          |  |   
|------- |  | ---------------------------------------------------------------------------------------- |  | --
|PART I  |  |                                                                                         
|        |  |                                                                                         
|Item 1. |  | Unaudited Financial Statements                                                           |  |   
|        |  |                                                                                         
|        |  | Consolidated Balance Sheets as of December 31, 2004 and March 31, 2005                   |  | 3 
|        |  |                                                                                         
|        |  | Consolidated Statements of Operations for the three months ended March 31, 2004 and 2005 |  | 4 
|        |  |                                                                                         
|        |  | Consolidated Statements of Cash Flows for the three months ended March 31, 2004 and 2005 |  | 5 
|        |  |                                                                                         
|        |  | Notes to Consolidated Financial Statements                                               |  | 6 
|        |  |                                                                                         
|Item 2. |  | Managements Discussion and Analysis of Financial Condition and Results of Operations    |  | 16
|        |  |                                                                                         
|Item 3. |  | Quantitative and Qualitative Disclosure About Market Risk                                |  | 20
|        |  |                                                                                         
|Item 4. |  | Controls and Procedures                                                                  |  | 20
|        | 
|PART II |  |                                                                                         
|        |  |                                                                                         
|Item 1. |  | Legal Proceedings                                                                        |  | 21
|        |  |                                                                                         
|Item 2. |  | Unregistered Sales of Equity Securities and Use of Proceeds                              |  | 21
|        |  |                                                                                         
|Item 3. |  | Defaults Upon Senior Securities                                                          |  | 21
|        |  |                                                                                         
|Item 4. |  | Submission of Matters of a Vote of Security Holders                                      |  | 21
|        |  |                                                                                         
|Item 5. |  | Other Information                                                                        |  | 21
|        |  |                                                                                         
|Item 6. |  | Exhibits and Reports on Form 8-K                                                         |  | 21



2



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##### Table of Contents



NEXTMEDIA OPERATING, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)



|                                                                                               |  |                  |         |   |               |   |         |  
|---------------------------------------------------------------------------------------------- |  | ---------------- | ------- | - | ------------- | - | ------- | -
|                                                                                               |  | December 31,2004 |         |   | March 31,2005 |  
|Assets                                                                                         |  |                  |         |   |               |   |         |  
|Current assets:                                                                                |  |                  |         |   |               |   |         |  
|Cash and cash equivalents                                                                      |  | $                | 12,260  |   |               | $ | 1,771   |  
|Accounts receivable, net of allowance for doubtful accounts of $1,335 and $1,217, respectively |  |                  | 16,287  |   |               |   | 14,931  |  
|Prepaid expenses and other current assets                                                      |  |                  | 3,193   |   |               |   | 3,606   |  
|                                                                                               |  |                  |         |   |               |   |         |  
|Total current assets                                                                           |  |                  | 31,740  |   |               |   | 20,308  |  
|Property and equipment, net                                                                    |  |                  | 87,574  |   |               |   | 86,060  |  
|Definite-lived intangibles, net                                                                |  |                  | 23,879  |   |               |   | 22,269  |  
|Indefinite-lived intangibles, net                                                              |  |                  | 369,044 |   |               |   | 369,525 |  
|Goodwill, net                                                                                  |  |                  | 45,057  |   |               |   | 45,225  |  
|Other assets                                                                                   |  |                  | 8,566   |   |               |   | 8,783   |  
|                                                                                               |  |                  |         |   |               |   |         |  
|Total assets                                                                                   |  | $                | 565,860 |   |               | $ | 552,170 |  
|                                                                                               |  |                  |         |   |               |   |         |  
|Liabilities and Stockholders Equity                                                           |  |                  |         |   |               |   |         |  
|Current liabilities:                                                                           |  |                  |         |   |               |   |         |  
|Accounts payable                                                                               |  | $                | 1,725   |   |               | $ | 1,355   |  
|Accrued expenses                                                                               |  |                  | 16,472  |   |               |   | 11,146  |  
|Deferred revenue                                                                               |  |                  | 917     |   |               |   | 867     |  
|Other                                                                                          |  |                  | 1,162   |   |               |   | 1,109   |  
|                                                                                               |  |                  |         |   |               |   |         |  
|Total current liabilities                                                                      |  |                  | 20,276  |   |               |   | 14,477  |  
|Long-term debt                                                                                 |  |                  | 232,449 |   |               |   | 254,028 |  
|Deferred tax liability                                                                         |  |                  | 28,590  |   |               |   | 31,072  |  
|Other long-term liabilities                                                                    |  |                  | 860     |   |               |   | 920     |  
|                                                                                               |  |                  |         |   |               |   |         |  
|Total liabilities                                                                              |  |                  | 282,175 |   |               |   | 300,497 |  
|                                                                                               |  |                  |         |   |               |   |         |  
|Commitments and contingencies (Note 8)                                                         |  |                  |         |   |               |   |         |  
|Minority interest  variable interest entities (Note 3)                                        |  |                  | 24,500  |   |               |   |        |  
|Stockholders equity:                                                                          |  |                  |         |   |               |   |         |  
|Common stock, par value $0.01 per share, 3,000 shares authorized, issued and outstanding       |  |                  | 1       |   |               |   | 1       |  
|Additional paid-in capital                                                                     |  |                  | 350,561 |   |               |   | 350,280 |  
|Accumulated deficit                                                                            |  |                  | (91,377 | ) |               |   | (98,607 | )
|                                                                                               |  |                  |         |   |               |   |         |  
|Total stockholders equity                                                                     |  |                  | 259,185 |   |               |   | 251,673 |  
|                                                                                               |  |                  |         |   |               |   |         |  
|Total liabilities and stockholders equity                                                     |  | $                | 565,860 |   |               | $ | 552,170 |  
|                                                                                               |  |                  |         |   |               |   |         |  



The accompanying
notes are an integral part of these consolidated financial statements.



3



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##### Table of Contents



NEXTMEDIA OPERATING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands)

(Unaudited)



|                                                                                         |  |                             |        |   |      |   |        |  
|---------------------------------------------------------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------ | -
|                                                                                         |  | Three months endedMarch 31, |       
|                                                                                         |  | 2004                        |        |   | 2005 |  
|Net revenue                                                                              |  | $                           | 24,391 |   |      | $ | 25,833 |  
|                                                                                         |  |                            
|Market level expenses, exclusive of depreciation and amortization shown separately below |  |                             | 16,473 |   |      |   | 17,096 |  
|Corporate expenses                                                                       |  |                             | 1,929  |   |      |   | 2,618  |  
|Depreciation and amortization                                                            |  |                             | 3,387  |   |      |   | 3,794  |  
|Local marketing agreement fees                                                           |  |                             | 30     |   |      |   | 128    |  
|                                                                                         |  |                             |        |   |      |   |        |  
|Total operating expenses                                                                 |  |                             | 21,819 |   |      |   | 23,636 |  
|                                                                                         |  |                             |        |   |      |   |        |  
|Operating income                                                                         |  |                             | 2,572  |   |      |   | 2,197  |  
|Other (income) expense:                                                                  |  |                             |        |   |      |   |        |  
|Interest expense, net                                                                    |  |                             | 6,063  |   |      |   | 6,430  |  
|Other (income) expense                                                                   |  |                             | (3,822 | ) |      |   | 516    |  
|                                                                                         |  |                             |        |   |      |   |        |  
|Income (loss) before income taxes                                                        |  |                             | 331    |   |      |   | (4,749 | )
|Provision for income taxes                                                               |  |                             | 17     |   |      |   | 2,483  |  
|                                                                                         |  |                             |        |   |      |   |        |  
|Net income (loss)                                                                        |  | $                           | 314    |   |      | $ | (7,232 | )
|                                                                                         |  |                             |        |   |      |   |        |  



The accompanying
notes are an integral part of these consolidated financial statements.



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NEXTMEDIA OPERATING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)



|                                                                                     |  |                             |         |   |      |   |         |  
|------------------------------------------------------------------------------------ |  | --------------------------- | ------- | - | ---- | - | ------- | -
|                                                                                     |  | Three months endedMarch 31, |        
|                                                                                     |  | 2004                        |         |   | 2005 |  
|Cash Flows From Operating Activities                                                 |  |                             |         |   |      |   |         |  
|Net income (loss)                                                                    |  | $                           | 314     |   |      | $ | (7,232  | )
|Adjustments to reconcile net income (loss) to net cash used in operating activities: |  |                             |         |   |      |   |         |  
|Depreciation and amortization                                                        |  |                             | 3,387   |   |      |   | 3,794   |  
|Non-cash interest expense                                                            |  |                             | 328     |   |      |   | 325     |  
|Provision for bad debt expense                                                       |  |                             | 215     |   |      |   | 219     |  
|Non-cash compensation expense                                                        |  |                             | 20      |   |      |   | 20      |  
|Loss on interest rate swap                                                           |  |                             | 135     |   |      |   | 138     |  
|Provision for deferred income taxes                                                  |  |                             | 17      |   |      |   | 2,483   |  
|(Gain)/loss on asset dispositions                                                    |  |                             | (4,938  | ) |      |   | 194     |  
|Changes in assets and liabilities, net of effect of acquisitions:                    |  |                             |         |   |      |   |         |  
|Accounts receivable                                                                  |  |                             | 2,268   |   |      |   | 1,138   |  
|Prepaid expenses and other assets                                                    |  |                             | 802     |   |      |   | (348    | )
|Accounts payable and accrued expenses                                                |  |                             | (6,389  | ) |      |   | (5,846  | )
|Deferred revenue                                                                     |  |                             | 368     |   |      |   | (50     | )
|Other current liabilities                                                            |  |                             | 1       |   |      |   | (53     | )
|                                                                                     |  |                             |         |   |      |   |         |  
|Net cash used in operating activities                                                |  |                             | (3,472  | ) |      |   | (5,218  | )
|                                                                                     |  |                             |         |   |      |   |         |  
|Cash Flows From Investing Activities                                                 |  |                             |         |   |      |   |         |  
|Purchase of property and equipment                                                   |  |                             | (2,064  | ) |      |   | (1,076  | )
|Payments for acquisitions, net of cash acquired                                      |  |                             | (16,526 | ) |      |   | (24,666 | )
|Proceeds from sale of assets                                                         |  |                             | 217     |   |      |   | 30      |  
|Proceeds from termination of interest rate swaps                                     |  |                             | 1,600   |   |      |   |        |  
|                                                                                     |  |                             |         |   |      |   |         |  
|Net cash used in investing activities                                                |  |                             | (16,773 | ) |      |   | (25,712 | )
|                                                                                     |  |                             |         |   |      |   |         |  
|Cash Flows From Financing Activities                                                 |  |                             |         |   |      |   |         |  
|Proceeds from revolving credit facilities                                            |  |                             | 25,000  |   |      |   | 23,000  |  
|Repayment of revolving credit facilities                                             |  |                             | (4,000  | ) |      |   | (1,500  | )
|Distribution to Parent                                                               |  |                             |        |   |      |   | (300    | )
|Payments of financing related costs                                                  |  |                             | (143    | ) |      |   | (750    | )
|Other                                                                                |  |                             | (328    | ) |      |   | (9      | )
|                                                                                     |  |                             |         |   |      |   |         |  
|Net cash provided by financing activities                                            |  |                             | 20,529  |   |      |   | 20,441  |  
|                                                                                     |  |                             |         |   |      |   |         |  
|Increase (decrease) in cash and cash equivalents                                     |  |                             | 284     |   |      |   | (10,489 | )
|Cash and cash equivalents at beginning of period                                     |  |                             | 707     |   |      |   | 12,260  |  
|                                                                                     |  |                             |         |   |      |   |         |  
|Cash and cash equivalents at end of period                                           |  | $                           | 991     |   |      |   | 1,771   |  
|                                                                                     |  |                             |         |   |      |   |         |  
|Supplemental Cash Flow Information                                                   |  |                             |         |   |      |   |         |  
|Cash payments during the period for:                                                 |  |                             |         |   |      |   |         |  
|Interest                                                                             |  | $                           | 11,073  |   |      |   | 11,249  |  
|                                                                                     |  |                             |         |   |      |   |         |  
|Taxes                                                                                |  | $                           |        |   |      | $ |        |  
|                                                                                     |  |                             |         |   |      |   |         |  



The accompanying
notes are an integral part of these consolidated financial statements.



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##### Table of Contents

NEXTMEDIA OPERATING, INC. AND SUBSIDIARIES

(Dollars in thousands)

(Unaudited)



1. Interim Financial Data and Significant Accounting Policies



The accompanying consolidated unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the
United States for interim financial information. Management believes that the Company has made all adjustments necessary for a fair presentation of results of the interim periods and that these adjustments were of a normal and recurring nature.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. The interim results of operations and
cash flows are not necessarily indicative of the results that can be expected for the fiscal year ending December 31, 2005, due to seasonality and other factors. You should read the consolidated financial statements in conjunction with the
consolidated financial statements of NextMedia Operating, Inc. and the notes thereto included in our annual report on Form 10-K, as filed with the Securities and Exchange Commission on March 31, 2005. In this quarterly report on Form 10-Q,
references to the Company, we, our and us refer to NextMedia Operating, Inc. and its subsidiaries, and the term NextMedia refers only to NextMedia Operating, Inc.



2. Recent Accounting Pronouncements



The SEC staff issued Staff Announcement No. D-108, Use of the Residual
Method to Value Acquired Assets Other Than Goodwill (D-108), at the September 2004 meeting of the Emerging Issues Task Force (EITF). D-108 states that the residual method should no longer be used to value intangible
assets other than goodwill. Rather, a direct method should be used to determine the fair value of all intangible assets required to be recognized under Statement of Financial Accounting Standards No. 141, Business Combinations. Registrants
who have applied the residual method to the valuation of intangible assets for purposes of impairment testing under Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, shall perform an impairment test
using a direct value method on all intangible assets that were previously valued using the residual method by no later than the beginning of their first fiscal year beginning after December 15, 2004. The adoption of Staff Announcement No. D-108 did
not have a material impact on the Companys financial position or results of operation.



3. Acquisitions and Dispositions



Part of the Companys operating strategy is to expand through prudent acquisition of broadcasting, outdoor and indoor advertising properties. In seeking acquisition opportunities, the Company generally seeks: (i)
assets in markets with a demographic propensity for growth (i.e., population growth above average, above average growth in retail sales, etc.), (ii) markets where the Company believes it can assemble a group of assets generating over $1,000 in
annual cash flow from operations, and (iii) assets in markets where the Company believes it can become a leader in terms of ratings, revenue share, or number of advertising faces. Each of the Companys acquisitions meets at least one of these
criteria.



In 2004, simultaneous with entering into purchase
agreements to acquire five radio stations in Wilmington, North Carolina for a total of $24,500, the Company entered into local marketing agreements, or LMAs, with respect to those stations and determined that it is the primary beneficiary with
respect to certain assets of two entities that are small, closely held organizations engaged in radio broadcasting activities. As a result, the Company consolidated the fair value of the assets to be acquired at December 31, 2004 in the accompanying
financial statements pursuant to FIN-46R Consolidation ofVariable Interest Entities.The effect of this consolidation at December 31, 2004 was the inclusion of $995 of property and equipment, $19,620 of indefinite-lived intangible
assets and $3,885 of goodwill, with a corresponding inclusion of $24,500 in minority interest, representing the deferred purchase price of $24,500 under the fixed price purchase agreements. As a result of the LMAs, the Companys financial
statements include the broadcast revenues and operating expenses of the stations to be acquired since the date on which the Company entered into the LMAs.



In February 2005, the acquisition of these five radio stations was closed at purchase price of $24,500 with cash funded through the Companys senior
secured revolving credit facility (the Revolving Credit Facility), eliminating the $24,500 of minority interest. The final purchase allocation is consistent with the FIN-46R consolidation at December 31, 2004.



The following unaudited pro forma income statement information has been
prepared as if the acquisitions made during the year ended December 31, 2004 and the three months ended March 31, 2005 had occurred on January 1, 2004. The pro



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NEXTMEDIA OPERATING, INC. AND SUBSIDIARIES

(Dollars in thousands)

(Unaudited)



forma income statement information is not necessarily indicative of the results that actually would have been achieved if these acquisitions had been
consummated on January 1, 2004.



|                  |  |                             |        |      |   |        |  
|----------------- |  | --------------------------- | ------ | ---- | - | ------ | -
|                  |  | Three months endedMarch 31, |       
|                  |  | 2004                        |        | 2005 |  
|Net revenues      |  | $                           | 25,226 |      | $ | 25,833 |  
|Total expenses    |  |                             | 25,165 |      |   | 33,080 |  
|                  |  |                             |        |      |   |        |  
|Net (loss) income |  | $                           | 61     |      | $ | (7,247 | )
|                  |  |                             |        |      |   |        |  



4. Property and Equipment



Property and equipment consist of the following:



|                              |  |                 |  |                       |         |   |                    |   |         |  
|----------------------------- |  | --------------- |  | --------------------- | ------- | - | ------------------ | - | ------- | -
|                              |  | DepreciableLife |  | As ofDecember 31,2004 |         |   | As ofMarch 31,2005 |  
|Land and improvements         |  |                |  | $                     | 7,102   |   |                    | $ | 7,116   |  
|Buildings and improvements    |  | 20              |  |                       | 10,811  |   |                    |   | 11,294  |  
|Leasehold improvements        |  | 10              |  |                       | 1,732   |   |                    |   | 1,745   |  
|Broadcast equipment           |  | 5  20          |  |                       | 9,874   |   |                    |   | 10,062  |  
|Office equipment              |  | 7               |  |                       | 2,019   |   |                    |   | 2,133   |  
|Computer software and systems |  | 3  5           |  |                       | 2,413   |   |                    |   | 2,601   |  
|Tower and antennae            |  | 5  20          |  |                       | 6,586   |   |                    |   | 6,511   |  
|Vehicles                      |  | 3               |  |                       | 2,403   |   |                    |   | 2,478   |  
|Furniture and fixtures        |  | 7               |  |                       | 1,484   |   |                    |   | 1,572   |  
|Advertising displays          |  | 3  15          |  |                       | 62,899  |   |                    |   | 62,962  |  
|Construction in progress      |  |                |  |                       | 1,148   |   |                    |   | 554     |  
|                              |  |                 |  |                       |         |   |                    |   |         |  
|                              |  |                 |  |                       | 108,471 |   |                    |   | 109,028 |  
|Less accumulated depreciation |  |                 |  |                       | (20,897 | ) |                    |   | (22,968 | )
|                              |  |                 |  |                       |         |   |                    |   |         |  
|                              |  |                 |  | $                     | 87,574  |   |                    | $ | 86,060  |  
|                              |  |                 |  |                       |         |   |                    |   |         |  



5. Intangible Assets



Intangible assets consist of the following:



|                                                                               |  |                      |  |                       |         |   |                    |   |         |  
|------------------------------------------------------------------------------ |  | -------------------- |  | --------------------- | ------- | - | ------------------ | - | ------- | -
|                                                                               |  | EstimatedUseful Life |  | As ofDecember 31,2004 |         |   | As ofMarch 31,2005 |  
|Gross:                                                                         |  |                      |  |                       |         |   |                    |   |         |  
|FCC licenses                                                                   |  |                     |  | $                     | 309,134 |   |                    | $ | 309,614 |  
|Goodwill                                                                       |  |                     |  |                       | 45,057  |   |                    |   | 45,225  |  
|Advertising permits                                                            |  |                      |  |                       | 67,310  |   |                    |   | 67,310  |  
|Easements                                                                      |  |                      |  |                       | 1,358   |   |                    |   | 1,359   |  
|Definite-lived intangibles, primarily customer base and non-compete agreements |  | 1 - 15               |  |                       | 36,117  |   |                    |   | 36,117  |  
|                                                                               |  |                      |  |                       |         |   |                    |   |         |  
|                                                                               |  |                      |  | $                     | 458,976 |   |                    | $ | 459,625 |  
|                                                                               |  |                      |  |                       |         |   |                    |   |         |  
|Less, accumulated amortization:                                                |  |                      |  |                       |         |   |                    |   |         |  
|FCC licenses                                                                   |  |                     |  | $                     | (8,758  | ) |                    | $ | (8,758  | )
|Goodwill                                                                       |  |                     |  |                       |        |   |                    |   |        |  
|Advertising permits                                                            |  |                      |  |                       |        |   |                    |   |        |  
|Easements                                                                      |  |                      |  |                       |        |   |                    |   |        |  
|Definite-lived intangibles, primarily customer base and non-compete agreements |  |                      |  |                       | (12,238 | ) |                    |   | (13,848 | )
|                                                                               |  |                      |  |                       |         |   |                    |   |         |  
|                                                                               |  |                      |  | $                     | (20,996 | ) |                    | $ | (22,606 | )
|                                                                               |  |                      |  |                       |         |   |                    |   |         |  
|Net:                                                                           |  |                      |  |                       |         |   |                    |   |         |  
|FCC licenses                                                                   |  |                      |  | $                     | 300,376 |   |                    | $ | 300,856 |  
|Goodwill                                                                       |  |                      |  |                       | 45,057  |   |                    |   | 45,225  |  
|Advertising permits                                                            |  |                      |  |                       | 67,310  |   |                    |   | 67,310  |  
|Easements                                                                      |  |                      |  |                       | 1,358   |   |                    |   | 1,359   |  
|Definite-lived intangibles, primarily customer base and non-compete agreements |  |                      |  |                       | 23,879  |   |                    |   | 22,269  |  
|                                                                               |  |                      |  |                       |         |   |                    |   |         |  
|                                                                               |  |                      |  | $                     | 437,980 |   |                    | $ | 437,019 |  
|                                                                               |  |                      |  |                       |         |   |                    |   |         |  



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NEXTMEDIA OPERATING, INC. AND SUBSIDIARIES

(Dollars in thousands)

(Unaudited)



The aggregate change in goodwill, advertising permits and FCC licenses in the period from December
31, 2004 to March 31, 2005 resulted entirely from the Companys acquisition of radio assets. There were no impairment losses recognized during the period and no reporting units were disposed of.



Definite-lived Intangibles



The Company has definite-lived intangible assets that continue to be
amortized in accordance with SFAS 142. These assets consist primarily of customer relationships and non-compete agreements which are amortized over their lives.



Total amortization expense from definite-lived intangible assets for the three months ended March 31, 2005 was approximately $1,610. The following
table presents the Companys estimate of amortization expense for each of the five succeeding fiscal years for definite-lived intangibles as of December 31, 2004:



|     |  |   |      
|---- |  | - | -----
|2005 |  | $ | 6,794
|2006 |  |   | 4,335
|2007 |  |   | 2,939
|2008 |  |   | 2,095
|2009 |  |   | 1,561



6. Accrued Expenses



Accrued expenses consist of the following:



|                                 |  |                       |        |                    |   |       
|-------------------------------- |  | --------------------- | ------ | ------------------ | - | ------
|                                 |  | As ofDecember 31,2004 |        | As ofMarch 31,2005
|Accrued compensation and bonuses |  | $                     | 1,346  |                    | $ | 1,016 
|Accrued commissions              |  |                       | 828    |                    |   | 748   
|Accrued interest                 |  |                       | 10,866 |                    |   | 5,717 
|Accrued property taxes           |  |                       | 609    |                    |   | 713   
|Accrued rents                    |  |                       | 605    |                    |   | 604   
|Unfavorable leases               |  |                       | 214    |                    |   | 261   
|Accrued franchise taxes          |  |                       | 170    |                    |   | 99    
|Accrued legal and professional   |  |                       | 383    |                    |   | 490   
|Accrued insurance costs          |  |                       | 214    |                    |   | 340   
|Accrued music license fees       |  |                       | 120    |                    |   | 148   
|Other                            |  |                       | 1,117  |                    |   | 1,010 
|                                 |  |                       |        |                    |   |       
|                                 |  | $                     | 16,472 |                    | $ | 11,146
|                                 |  |                       |        |                    |   |       



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(Dollars in thousands)

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7. Long-Term Debt



Long-term debt consists of the following:



|                          |  |                       |         |   |                     |   |         |  
|------------------------- |  | --------------------- | ------- | - | ------------------- | - | ------- | -
|                          |  | As ofDecember 31,2004 |         |   | As ofMarch 31, 2005 |  
|Revolving Credit Facility |  | $                     | 34,500  |   |                     | $ | 56,000  |  
|Senior Subordinated Notes |  |                       | 200,000 |   |                     |   | 200,000 |  
|Unamortized discount      |  |                       | (2,051  | ) |                     |   | (1,972  | )
|                          |  |                       |         |   |                     |   |         |  
|Total long-term debt      |  | $                     | 232,449 |   |                     | $ | 254,028 |  
|                          |  |                       |         |   |                     |   |         |  



The Companys
Revolving Credit Facility contains customary restrictive covenants that, among other things, limit the Companys ability to incur additional indebtedness and liens in connection therewith, pay dividends and make capital expenditures above
specified limits. Under the Revolving Credit Facility, the Company must satisfy specified financial covenants, such as a maximum total leverage ratio, a maximum senior leverage ratio and a minimum ratio of consolidated EBITDA to consolidated net
cash interest expense. As of March 31, 2005, the Company was in compliance with all of these covenants. After taking into account these restrictive covenants, as of March 31, 2005, the Company had approximately $18,936 of borrowing capacity under
its Revolving Credit Facility.



The Companys 10.75%
Senior Subordinated Notes due 2011 (the Senior Subordinated Notes) require the Company to make semi-annual interest payments of approximately $10,750 on January 1 and July 1 of each year. The indenture governing the notes contains
certain restrictive covenants that, among other things, limit the Companys ability to incur additional indebtedness and pay dividends. As of March 31, 2005, the Company was in compliance with these covenants.



8. Commitments and Contingencies



From time to time, the Company is subject to routine litigation incident to
its business. Management does not expect these matters to have a material adverse effect upon the Companys liquidity, results of operations or financial position.



The Company has no direct or indirect guarantees of indebtedness of others.



9. Segment Data



Based on information provided to the Chief Operating Decision Maker, principally the Executive Chairman of the Board of
Directors and Chief Executive Officer and President, the Company has determined that two reportable operating segmentsradio broadcasting and outdoor advertisingbest reflect the Companys current management and operations.



The radio broadcasting segment is comprised of radio stations
and networks for which the Company is the licensee or for which the Company programs and sells on-air advertising time under local marketing agreements. At March 31, 2005, the radio broadcasting segment included 66 radio stations owned and operated
by the Company. All of these stations operate in domestic markets. The radio broadcasting segment also operates various radio networks.



The outdoor advertising segment includes traditional outdoor advertising displays, such as roadside bulletins, posters and transit displays that the
Company owns or operates under lease arrangements, as well as advertising displays that the Company installs in public locations, including restaurants, health clubs, retail stores and entertainment venues. At March 31, 2005, the outdoor advertising
segment owned or operated over 5,100 outdoor displays and indoor advertising display faces in more than 2,400 retail locations across the United States. All of these displays are located in domestic markets.



The accounting policies of the segments are the same as those described in
the summary of significant accounting policies in Note 1 to the Companys audited consolidated financial statements contained in the Companys annual report on



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Form 10-K as filed with the SEC on March 31, 2005. There are no intersegment sales or transfers. There are no customers that comprise greater than 10% of the
consolidated revenues of the Company for the periods presented.



|                                                                                          |  |                             |         |   |                     |   |         |  
|----------------------------------------------------------------------------------------- |  | --------------------------- | ------- | - | ------------------- | - | ------- | -
|                                                                                          |  | Three months endedMarch 31, |        
|                                                                                          |  | 2004                        |         |   | 2005                |  
|Net revenue:                                                                              |  |                             |         |   |                     |   |         |  
|Radio Broadcasting                                                                        |  | $                           | 16,401  |   |                     | $ | 17,635  |  
|Outdoor Advertising                                                                       |  |                             | 7,990   |   |                     |   | 8,198   |  
|                                                                                          |  |                             |         |   |                     |   |         |  
|Consolidated                                                                              |  |                             | 24,391  |   |                     |   | 25,833  |  
|                                                                                          |  |                             |         |   |                     |   |         |  
|Market level expenses, exclusive of depreciation and amortization shown separately below: |  |                             |         |   |                     |   |         |  
|Radio Broadcasting                                                                        |  |                             | 10,826  |   |                     |   | 11,766  |  
|Outdoor Advertising                                                                       |  |                             | 5,647   |   |                     |   | 5,330   |  
|                                                                                          |  |                             |         |   |                     |   |         |  
|Consolidated                                                                              |  |                             | 16,473  |   |                     |   | 17,096  |  
|                                                                                          |  |                             |         |   |                     |   |         |  
|Depreciation and amortization:                                                            |  |                             |         |   |                     |   |         |  
|Radio Broadcasting                                                                        |  |                             | 1,191   |   |                     |   | 1,401   |  
|Outdoor Advertising                                                                       |  |                             | 2,196   |   |                     |   | 2,393   |  
|                                                                                          |  |                             |         |   |                     |   |         |  
|Consolidated                                                                              |  |                             | 3,387   |   |                     |   | 3,794   |  
|                                                                                          |  |                             |         |   |                     |   |         |  
|Other segment costs:                                                                      |  |                             |         |   |                     |   |         |  
|Local marketing agreement fees-radio broadcasting                                         |  |                             | 30      |   |                     |   | 128     |  
|                                                                                          |  |                            
|Segment profit:                                                                           |  |                             |         |   |                     |   |         |  
|Radio Broadcasting                                                                        |  |                             | 4,354   |   |                     |   | 4,340   |  
|Outdoor Advertising                                                                       |  |                             | 147     |   |                     |   | 475     |  
|                                                                                          |  |                             |         |   |                     |   |         |  
|                                                                                          |  |                             | 4,501   |   |                     |   | 4,815   |  
|Corporate expenses                                                                        |  |                             | 1,929   |   |                     |   | 2,618   |  
|                                                                                          |  |                             |         |   |                     |   |         |  
|Operating income (loss)                                                                   |  |                             | 2,572   |   |                     |   | 2,197   |  
|Interest expense, net                                                                     |  |                             | 6,063   |   |                     |   | 6,430   |  
|Other (income) expense                                                                    |  |                             | (3,822  | ) |                     |   | 516     |  
|                                                                                          |  |                             |         |   |                     |   |         |  
|Income (loss) from continuing operations before income taxes                              |  | $                           | 331     |   |                     | $ | (4,749  | )
|                                                                                          |  |                             |         |   |                     |   |         |  
|Additions to long lived assets                                                            |  |                             |         |   |                     |   |         |  
|Radio Broadcasting                                                                        |  | $                           | 16,077  |   |                     | $ | 1,814   |  
|Outdoor Advertising                                                                       |  |                             | 47,086  |   |                     |   | 257     |  
|                                                                                          |  |                             |         |   |                     |   |         |  
|Consolidated                                                                              |  | $                           | 63,163  |   |                     | $ | 2,071   |  
|                                                                                          |  |                             |         |   |                     |   |         |  
|                                                                                          |  |                            
|                                                                                          |  | As ofDecember 31, 2004      |         |   | As ofMarch 31, 2005 |  
|Total identifiable assets:                                                                |  |                             |         |   |                     |   |         |  
|Radio Broadcasting                                                                        |  | $                           | 400,566 |   |                     | $ | 389,290 |  
|Outdoor Advertising                                                                       |  |                             | 165,294 |   |                     |   | 162,880 |  
|                                                                                          |  |                             |         |   |                     |   |         |  
|Consolidated                                                                              |  | $                           | 565,860 |   |                     | $ | 552,170 |  
|                                                                                          |  |                             |         |   |                     |   |         |  
|Goodwill, net:                                                                            |  |                             |         |   |                     |   |         |  
|Radio Broadcasting                                                                        |  | $                           | 32,317  |   |                     | $ | 32,485  |  
|Outdoor Advertising                                                                       |  |                             | 12,740  |   |                     | $ | 12,740  |  
|                                                                                          |  |                             |         |   |                     |   |         |  
|Consolidated                                                                              |  | $                           | 45,057  |   |                     | $ | 45,225  |  
|                                                                                          |  |                             |         |   |                     |   |         |  



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10. Supplemental Guarantor Information



The Companys Senior Subordinated Notes are guaranteed on a senior subordinated basis, jointly and severally, by all of
the Companys subsidiaries (the Guarantor Subsidiaries). The Company has collateralized its Revolving Credit Facility by granting a first priority-perfected pledge of its assets including, without limitation, the capital stock of
the Company and its subsidiaries.



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(Unaudited)



NextMedia Operating, Inc.

Supplemental Combining Balance Sheet

December 31, 2004



|                                                                 |  |                          |         |                       |   |         |                     |  |   |          |   |  |   |        
|---------------------------------------------------------------- |  | ------------------------ | ------- | --------------------- | - | ------- | ------------------- |  | - | -------- | - |  | - | -------
|                                                                 |  | NextMedia Operating,Inc. |         | GuarantorSubsidiaries |   |         | Eliminating Entries |  |   | Total   
|Assets                                                           |  |                          |         |                       |   |         |                     |  |   |          |   |  |   |        
|Current assets:                                                  |  |                          |         |                       |   |         |                     |  |   |          |   |  |   |        
|Cash and cash equivalents                                        |  | $                        | 13,006  |                       | $ | (746    | )                   |  | $ |         |   |  | $ | 12,260 
|Accounts receivable, net                                         |  |                          | 11,984  |                       |   | 4,303   |                     |  |   |         |   |  |   | 16,287 
|Prepaid and other current assets                                 |  |                          | 497     |                       |   | 2,696   |                     |  |   |         |   |  |   | 3,193  
|                                                                 |  |                          |         |                       |   |         |                     |  |   |          |   |  |   |        
|Total current assets                                             |  |                          | 25,487  |                       |   | 6,253   |                     |  |   |         |   |  |   | 31,740 
|Property and equipment, net                                      |  |                          | 27,860  |                       |   | 59,714  |                     |  |   |         |   |  |   | 87,574 
|Intangibles, net                                                 |  |                          | 38,360  |                       |   | 399,620 |                     |  |   |         |   |  |   | 437,980
|Other assets                                                     |  |                          | 8,482   |                       |   | 12,168  |                     |  |   | (12,084  | ) |  |   | 8,566  
|Investment in subsidiaries                                       |  |                          | 455,423 |                       |   |        |                     |  |   | (455,423 | ) |  |   |       
|                                                                 |  |                          |         |                       |   |         |                     |  |   |          |   |  |   |        
|Total assets                                                     |  | $                        | 555,612 |                       | $ | 477,755 |                     |  | $ | (467,507 | ) |  | $ | 565,860
|                                                                 |  |                          |         |                       |   |         |                     |  |   |          |   |  |   |        
|Liabilities and Stockholders Equity                             |  |                          |         |                       |   |         |                     |  |   |          |   |  |   |        
|Current liabilities:                                             |  |                          |         |                       |   |         |                     |  |   |          |   |  |   |        
|Accounts payable, accrued expenses and other current liabilities |  | $                        | 25,842  |                       | $ | 6,518   |                     |  | $ | (12,084  | ) |  | $ | 20,276 
|                                                                 |  |                          |         |                       |   |         |                     |  |   |          |   |  |   |        
|Total current liabilities                                        |  |                          | 25,842  |                       |   | 6,518   |                     |  |   | (12,084  | ) |  |   | 20,276 
|Long-term debt                                                   |  |                          | 232,449 |                       |   |        |                     |  |   |         |   |  |   | 232,449
|Other long-term liabilities                                      |  |                          | 13,636  |                       |   | 15,814  |                     |  |   |         |   |  |   | 29,450 
|                                                                 |  |                          |         |                       |   |         |                     |  |   |          |   |  |   |        
|Total liabilities                                                |  |                          | 271,927 |                       |   | 22,332  |                     |  |   | (12,084  | ) |  |   | 282,175
|Minority interest                                                |  |                          | 24,500  |                       |   |         |                     |  |   |          |   |  |   | 24,500 
|Stockholders equity                                             |  |                          | 259,185 |                       |   | 455,423 |                     |  |   | (455,423 | ) |  |   | 259,185
|                                                                 |  |                          |         |                       |   |         |                     |  |   |          |   |  |   |        
|Total liabilities and stockholders equity                       |  | $                        | 555,612 |                       | $ | 477,755 |                     |  | $ | (467,507 | ) |  | $ | 565,860
|                                                                 |  |                          |         |                       |   |         |                     |  |   |          |   |  |   |        



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NEXTMEDIA OPERATING, INC. AND SUBSIDIARIES

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NextMedia Operating, Inc.

Supplemental Combining Balance Sheet

March 31, 2005



|                                                                 |  |                          |         |                       |   |         |                     |  |   |          |   |  |   |        
|---------------------------------------------------------------- |  | ------------------------ | ------- | --------------------- | - | ------- | ------------------- |  | - | -------- | - |  | - | -------
|                                                                 |  | NextMedia Operating,Inc. |         | GuarantorSubsidiaries |   |         | Eliminating Entries |  |   | Total   
|Assets                                                           |  |                          |         |                       |   |         |                     |  |   |          |   |  |   |        
|Current assets:                                                  |  |                          |         |                       |   |         |                     |  |   |          |   |  |   |        
|Cash and cash equivalents                                        |  | $                        | 2,542   |                       | $ | (771    | )                   |  | $ |         |   |  | $ | 1,771  
|Accounts receivable, net                                         |  |                          | 10,853  |                       |   | 4,078   |                     |  |   |         |   |  |   | 14,931 
|Prepaid and other current assets                                 |  |                          | 738     |                       |   | 2,868   |                     |  |   |         |   |  |   | 3,606  
|                                                                 |  |                          |         |                       |   |         |                     |  |   |          |   |  |   |        
|Total current assets                                             |  |                          | 14,133  |                       |   | 6,175   |                     |  |   |         |   |  |   | 20,308 
|Property and equipment, net                                      |  |                          | 27,500  |                       |   | 58,560  |                     |  |   |         |   |  |   | 86,060 
|Intangibles, net                                                 |  |                          | 38,118  |                       |   | 398,901 |                     |  |   |         |   |  |   | 437,019
|Other                                                            |  |                          | 8,682   |                       |   | 13,310  |                     |  |   | (13,209  | ) |  |   | 8,783  
|Investment in subsidiaries                                       |  |                          | 455,069 |                       |   |        |                     |  |   | (455,069 | ) |  |   |       
|                                                                 |  |                          |         |                       |   |         |                     |  |   |          |   |  |   |        
|Total assets                                                     |  | $                        | 543,502 |                       | $ | 476,946 |                     |  | $ | (468,278 | ) |  | $ | 552,170
|                                                                 |  |                          |         |                       |   |         |                     |  |   |          |   |  |   |        
|Liabilities and Stockholders Equity                             |  |                          |         |                       |   |         |                     |  |   |          |   |  |   |        
|Current liabilities:                                             |  |                          |         |                       |   |         |                     |  |   |          |   |  |   |        
|Accounts payable, accrued expenses and other current liabilities |  | $                        | 21,552  |                       | $ | 6,134   |                     |  | $ | (13,209  | ) |  | $ | 14,477 
|                                                                 |  |                          |         |                       |   |         |                     |  |   |          |   |  |   |        
|Total current liabilities                                        |  |                          | 21,552  |                       |   | 6,134   |                     |  |   | (13,209  | ) |  |   | 14,477 
|Long-term debt                                                   |  |                          | 254,028 |                       |   |        |                     |  |   |         |   |  |   | 254,028
|Other long-term liabilities                                      |  |                          | 16,249  |                       |   | 15,743  |                     |  |   |         |   |  |   | 31,992 
|                                                                 |  |                          |         |                       |   |         |                     |  |   |          |   |  |   |        
|Total liabilities                                                |  |                          | 291,829 |                       |   | 21,877  |                     |  |   | (13,209  | ) |  |   | 300,497
|Stockholders equity                                             |  |                          | 251,673 |                       |   | 455,069 |                     |  |   | (455,069 | ) |  |   | 251,673
|                                                                 |  |                          |         |                       |   |         |                     |  |   |          |   |  |   |        
|Total liabilities and stockholders equity                       |  | $                        | 543,502 |                       | $ | 476,946 |                     |  | $ | (468,278 | ) |  | $ | 552,170
|                                                                 |  |                          |         |                       |   |         |                     |  |   |          |   |  |   |        



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NEXTMEDIA OPERATING, INC. AND SUBSIDIARIES

(Dollars in thousands)

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NextMedia Operating, Inc.

Supplemental Combining Statement of Operations

For the Three Months Ended
March 31, 2004



|                                                                                         |  |                          |        |   |                       |   |        |                     |  |   |        |   |  |   |        |  
|---------------------------------------------------------------------------------------- |  | ------------------------ | ------ | - | --------------------- | - | ------ | ------------------- |  | - | ------ | - |  | - | ------ | -
|                                                                                         |  | NextMedia Operating,Inc. |        |   | GuarantorSubsidiaries |   |        | Eliminating Entries |  |   | Total  |  
|Net revenue                                                                              |  | $                        | 16,401 |   |                       | $ | 7,990  |                     |  | $ |       |   |  | $ | 24,391 |  
|Market level expenses, exclusive of depreciation and amortization shown separately below |  |                          | 10,826 |   |                       |   | 5,647  |                     |  |   |       |   |  |   | 16,473 |  
|Corporate expenses                                                                       |  |                          | 1,331  |   |                       |   | 598    |                     |  |   |       |   |  |   | 1,929  |  
|Depreciation and amortization                                                            |  |                          | 1,191  |   |                       |   | 2,196  |                     |  |   |       |   |  |   | 3,387  |  
|Local marketing agreement fees                                                           |  |                          | 30     |   |                       |   |       |                     |  |   |       |   |  |   | 30     |  
|                                                                                         |  |                          |        |   |                       |   |        |                     |  |   |        |   |  |   |        |  
|Operating income (loss)                                                                  |  |                          | 3,023  |   |                       |   | (451   | )                   |  |   |       |   |  |   | 2,572  |  
|Interest expense, net                                                                    |  |                          | 6,063  |   |                       |   |       |                     |  |   |       |   |  |   | 6,063  |  
|Other (income) expense                                                                   |  |                          | 197    |   |                       |   | (4,019 | )                   |  |   |       |   |  |   | (3,822 | )
|Equity in income (loss) of subsidiaries                                                  |  |                          | (3,568 | ) |                       |   |       |                     |  |   | 3,568  |   |  |   |       |  
|                                                                                         |  |                          |        |   |                       |   |        |                     |  |   |        |   |  |   |        |  
|Income (loss) before provision for income taxes                                          |  |                          | 331    |   |                       |   | 3,568  |                     |  |   | (3,568 | ) |  |   | 331    |  
|Provision for income taxes                                                               |  |                          | 17     |   |                       |   |       |                     |  |   |       |   |  |   | 17     |  
|                                                                                         |  |                          |        |   |                       |   |        |                     |  |   |        |   |  |   |        |  
|Net income (loss)                                                                        |  | $                        | 314    |   |                       | $ | 3,568  |                     |  | $ | (3,568 | ) |  | $ | 314    |  
|                                                                                         |  |                          |        |   |                       |   |        |                     |  |   |        |   |  |   |        |  



NextMedia Operating,
Inc.

Supplemental Combining Statement of Operations

For the Three Months Ended March 31, 2005



|                                                                                         |  |                          |        |   |                       |   |       |                     |  |   |       |   |  |   |        |  
|---------------------------------------------------------------------------------------- |  | ------------------------ | ------ | - | --------------------- | - | ----- | ------------------- |  | - | ----- | - |  | - | ------ | -
|                                                                                         |  | NextMedia Operating,Inc. |        |   | GuarantorSubsidiaries |   |       | Eliminating Entries |  |   | Total |  
|Net revenue                                                                              |  | $                        | 17,635 |   |                       | $ | 8,198 |                     |  | $ |      |   |  | $ | 25,833 |  
|Market level expenses, exclusive of depreciation and amortization shown separately below |  |                          | 11,766 |   |                       |   | 5,330 |                     |  |   |      |   |  |   | 17,096 |  
|Corporate expenses                                                                       |  |                          | 1,497  |   |                       |   | 1,121 |                     |  |   |      |   |  |   | 2,618  |  
|Depreciation and amortization                                                            |  |                          | 1,401  |   |                       |   | 2,393 |                     |  |   |      |   |  |   | 3,794  |  
|Local marketing agreement fees                                                           |  |                          | 128    |   |                       |   |      |                     |  |   |      |   |  |   | 128    |  
|                                                                                         |  |                          |        |   |                       |   |       |                     |  |   |       |   |  |   |        |  
|Operating income (loss)                                                                  |  |                          | 2,843  |   |                       |   | (646  | )                   |  |   |      |   |  |   | 2,197  |  
|Interest expense, net                                                                    |  |                          | 6,430  |   |                       |   |      |                     |  |   |      |   |  |   | 6,430  |  
|Other (income) expense                                                                   |  |                          | 307    |   |                       |   | 209   |                     |  |   |      |   |  |   | 516    |  
|Equity in income (loss) of subsidiaries                                                  |  |                          | 855    |   |                       |   |      |                     |  |   | (855  | ) |  |   |       |  
|                                                                                         |  |                          |        |   |                       |   |       |                     |  |   |       |   |  |   |        |  
|Income (loss) before provision for income taxes                                          |  |                          | (4,749 | ) |                       |   | (855  | )                   |  |   | 855   |   |  |   | (4,749 | )
|Provision for income taxes                                                               |  |                          | 2,483  |   |                       |   |      |                     |  |   |      |   |  |   | 2,483  |  
|                                                                                         |  |                          |        |   |                       |   |       |                     |  |   |       |   |  |   |        |  
|Net income (loss)                                                                        |  | $                        | (7,232 | ) |                       | $ | (855  | )                   |  | $ | 855   |   |  | $ | (7,232 | )
|                                                                                         |  |                          |        |   |                       |   |       |                     |  |   |       |   |  |   |        |  



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(Dollars in thousands)

(Unaudited)



NextMedia Operating, Inc.

Supplemental Combining Statement of Cash Flows

For the Three Months Ended
March 31, 2004



|                                                    |  |                          |         |   |                       |   |      |                    |  |       |   |  |   |         |  
|--------------------------------------------------- |  | ------------------------ | ------- | - | --------------------- | - | ---- | ------------------ |  | ----- | - |  | - | ------- | -
|                                                    |  | NextMedia Operating,Inc. |         |   | GuarantorSubsidiaries |   |      | EliminatingEntries |  | Total |  
|Net cash provided by (used in) operating activities |  | $                        | (4,055  | ) |                       | $ | 583  |                    |  | $     |  |  | $ | (3,472  | )
|                                                    |  |                          |         |   |                       |   |      |                    |  |       |   |  |   |         |  
|Cash Flows From Investing Activities                |  |                          |         |   |                       |   |      |                    |  |       |   |  |   |         |  
|Purchase of equipment                               |  |                          | (1,340  | ) |                       |   | (724 | )                  |  |       |  |  |   | (2,064  | )
|Payments for acquisitions, net of cash acquired     |  |                          | (16,526 | ) |                       |   |     |                    |  |       |  |  |   | (16,526 | )
|Proceeds from sale of assets                        |  |                          | 217     |   |                       |   |     |                    |  |       |  |  |   | 217     |  
|Proceeds from termination of interest rate swaps    |  |                          | 1,600   |   |                       |   |     |                    |  |       |  |  |   | 1,600   |  
|                                                    |  |                          |         |   |                       |   |      |                    |  |       |   |  |   |         |  
|Net cash used in investing activities               |  |                          | (16,049 | ) |                       |   | (724 | )                  |  |       |  |  |   | (16,773 | )
|                                                    |  |                          |         |   |                       |   |      |                    |  |       |   |  |   |         |  
|Cash Flows From Financing Activities                |  |                          |         |   |                       |   |      |                    |  |       |   |  |   |         |  
|Proceeds from revolving credit facilities           |  |                          | 25,000  |   |                       |   |     |                    |  |       |  |  |   | 25,000  |  
|Repayment of revolving credit facilities            |  |                          | (4,000  | ) |                       |   |     |                    |  |       |  |  |   | (4,000  | )
|Payments of financing related costs                 |  |                          | (143    | ) |                       |   |     |                    |  |       |  |  |   | (143    | )
|Other                                               |  |                          | (328    | ) |                       |   |     |                    |  |       |  |  |   | (328    | )
|                                                    |  |                          |         |   |                       |   |      |                    |  |       |   |  |   |         |  
|Net cash provided by financing activities           |  |                          | 20,529  |   |                       |   |     |                    |  |       |  |  |   | 20,529  |  
|                                                    |  |                          |         |   |                       |   |      |                    |  |       |   |  |   |         |  
|Net increase (decrease) in cash                     |  |                          | 425     |   |                       |   | (141 | )                  |  |       |  |  |   | 284     |  
|Cash at beginning of period                         |  |                          | 1,137   |   |                       |   | (430 | )                  |  |       |  |  |   | 707     |  
|                                                    |  |                          |         |   |                       |   |      |                    |  |       |   |  |   |         |  
|Cash at end of period                               |  | $                        | 1,562   |   |                       | $ | (571 | )                  |  | $     |  |  | $ | 991     |  
|                                                    |  |                          |         |   |                       |   |      |                    |  |       |   |  |   |         |  



NextMedia Operating,
Inc.

Supplemental Combining Statement of Cash Flows

For the Three Months Ended March 31, 2005



|                                                    |  |                          |         |   |                       |   |      |                     |  |       |   |  |   |         |  
|--------------------------------------------------- |  | ------------------------ | ------- | - | --------------------- | - | ---- | ------------------- |  | ----- | - |  | - | ------- | -
|                                                    |  | NextMedia Operating,Inc. |         |   | GuarantorSubsidiaries |   |      | Eliminating Entries |  | Total |  
|Net cash provided by (used in) operating activities |  | $                        | (5,423  | ) |                       | $ | 205  |                     |  | $     |  |  | $ | (5,218  | )
|                                                    |  |                          |         |   |                       |   |      |                     |  |       |   |  |   |         |  
|Cash Flows From Investing Activities                |  |                          |         |   |                       |   |      |                     |  |       |   |  |   |         |  
|Purchase of equipment                               |  |                          | (846    | ) |                       |   | (230 | )                   |  |       |  |  |   | (1,076  | )
|Payments for acquisitions, net of cash acquired     |  |                          | (24,666 | ) |                       |   |     |                     |  |       |  |  |   | (24,666 | )
|Proceeds from sale of assets                        |  |                          | 30      |   |                       |   |     |                     |  |       |  |  |   | 30      |  
|                                                    |  |                          |         |   |                       |   |      |                     |  |       |   |  |   |         |  
|Net cash used in investing activities               |  |                          | (25,482 | ) |                       |   | (230 | )                   |  |       |  |  |   | (25,712 | )
|                                                    |  |                          |         |   |                       |   |      |                     |  |       |   |  |   |         |  
|Cash Flows From Financing Activities                |  |                          |         |   |                       |   |      |                     |  |       |   |  |   |         |  
|Proceeds from revolving credit facilities           |  |                          | 23,000  |   |                       |   |     |                     |  |       |  |  |   | 23,000  |  
|Repayment of revolving credit facilities            |  |                          | (1,500  | ) |                       |   |     |                     |  |       |  |  |   | (1,500  | )
|Distributions to Parent                             |  |                          | (300    | ) |                       |   |     |                     |  |       |  |  |   | (300    | )
|Payments of financing related costs                 |  |                          | (750    | ) |                       |   |     |                     |  |       |  |  |   | (750    | )
|Other                                               |  |                          | (9      | ) |                       |   |     |                     |  |       |  |  |   | (9      | )
|                                                    |  |                          |         |   |                       |   |      |                     |  |       |   |  |   |         |  
|Net cash provided by financing activities           |  |                          | 20,441  |   |                       |   |     |                     |  |       |  |  |   | 20,441  |  
|                                                    |  |                          |         |   |                       |   |      |                     |  |       |   |  |   |         |  
|Net increase (decrease) in cash                     |  |                          | (10,464 | ) |                       |   | (25  | )                   |  |       |  |  |   | (10,489 | )
|Cash at beginning of period                         |  |                          | 13,006  |   |                       |   | (746 | )                   |  |       |  |  |   | 12,260  |  
|                                                    |  |                          |         |   |                       |   |      |                     |  |       |   |  |   |         |  
|Cash at end of period                               |  | $                        | 2,542   |   |                       | $ | (771 | )                   |  | $     |  |  | $ | 1,771   |  
|                                                    |  |                          |         |   |                       |   |      |                     |  |       |   |  |   |         |  



15



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##### Table of Contents

|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------



Overview



Our business consists of two out-of-home media divisions: radio broadcasting and outdoor advertising. Our radio broadcasting business consists of radio
stations for which we provide programming and sell on-air advertising time. Our outdoor advertising business includes traditional outdoor advertising displays, such as bulletins and posters, as well as alternative advertising displays that we
install in public locations, including restaurants, health clubs, retail stores and entertainment venues.



Radio Broadcasting Division



We derive our radio broadcast revenues primarily from the sale of advertising time to local and national advertisers. Our radio division operating expenses consist primarily of employee salaries and commissions, programming expenses,
advertising and promotional expenses, rental for studio premises, rental of transmission tower space and music license royalty fees. We seek to control these expenses by centralizing certain functions, such as finance, accounting, legal, human
resources and management information systems and the overall programming management function and by requiring adherence to strict cost controls at the station level.



Our radio advertising revenues generally reflect the advertising rates that our radio stations can charge and the number of
advertisements that we can broadcast without jeopardizing listener levels and resulting ratings. We typically base our advertising rates upon demand for a stations advertising inventory and its ability to attract audiences in targeted
demographic groups, as well as upon the number of stations competing in the market.



Most of our markets are small, mid-sized or suburban markets, which typically attract a larger percentage of advertising revenues from local, rather than national advertising.



The radio broadcast industry typically experiences seasonal revenue
fluctuations due primarily to fluctuations in advertising expenditures by local and national advertisers, with revenues typically being the lowest in the first calendar quarter of each year. A radio stations operating results in any period
also may be affected by advertising and promotional expenditures that do not necessarily produce revenues in the period in which the expenditures are made.



Outdoor Advertising Division



We derive our outdoor advertising revenues primarily through contracts with local and national advertisers. Our outdoor division operating expenses
consist primarily of employee salaries and commissions, rental of sites for advertising displays, costs for installation of advertising frames, maintenance and shipping costs, printing of advertisements and production costs.



Our outdoor advertising revenues reflect advertising rates prevailing in the
relevant market, the location of our displays and our available inventory. We generally base our advertising rates on a particular displays exposure, or number of impressions delivered, relative to the demographics of the
particular market and its location within that market. Our outdoor advertising display contracts typically have terms ranging from one month to one year.



We estimate the number of impressions delivered by an outdoor display, for example, by estimating the number of individuals viewing the site during a
defined period. We apply a similar formula for determining advertising rates for our other display products. Because roadside bulletin displays are large and generate a higher number of impressions than other outdoor products, advertising rates for
bulletins are significantly higher than those for our other outdoor and alternative display products.



Factors Affecting Comparability



We commenced operations in late-1999. Our results of operations from period to period are not comparable because of the impact of the various acquisitions and dispositions that we have completed, as well as our rapid build-up in personnel
in connection with additional acquisitions. Moreover, our expected growth through acquisitions is likely to continue to limit the comparability of our results of operations.



16



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##### Table of Contents

Results of Operations



The following tables present certain summary historical financial data in thousands of dollars and as a percentage of net revenues for the periods indicated on a
consolidated basis and for each of our out-of-home media divisions.



|                                                                                         |  |                             |        |   |   |       |   |      |   |        |   |  |       |  
|---------------------------------------------------------------------------------------- |  | --------------------------- | ------ | - | - | ----- | - | ---- | - | ------ | - |  | ----- | -
|                                                                                         |  | Three months endedMarch 31, |       
|                                                                                         |  | 2004                        |        |   | % |       |   | 2005 |   |        | % | 
|                                                                                         |  | (dollars in thousands)      |       
|Consolidated Operating Data:                                                             |  |                             |        |   |   |       |   |      |   |        |   |  |       |  
|Net revenue                                                                              |  | $                           | 24,391 |   |   | 100.0 | % |      | $ | 25,833 |   |  | 100.0 | %
|Market level expenses, exclusive of depreciation and amortization shown separately below |  |                             | 16,473 |   |   | 67.5  |   |      |   | 17,096 |   |  | 66.2  |  
|Corporate expenses                                                                       |  |                             | 1,929  |   |   | 7.9   |   |      |   | 2,618  |   |  | 10.1  |  
|Depreciation and amortization                                                            |  |                             | 3,387  |   |   | 13.9  |   |      |   | 3,794  |   |  | 14.7  |  
|Local marketing agreement fees                                                           |  |                             | 30     |   |   | 0.1   |   |      |   | 128    |   |  | 0.5   |  
|                                                                                         |  |                             |        |   |   |       |   |      |   |        |   |  |       |  
|Operating income                                                                         |  |                             | 2,572  |   |   | 10.5  |   |      |   | 2,197  |   |  | 8.5   |  
|Interest expense, net                                                                    |  |                             | 6,063  |   |   |       |   |      |   | 6,430  |   |  |       |  
|Other (income) expense                                                                   |  |                             | (3,822 | ) |   |       |   |      |   | 516    |   |  |       |  
|Provision for income taxes                                                               |  |                             | 17     |   |   |       |   |      |   | 2,483  |   |  |       |  
|                                                                                         |  |                             |        |   |   |       |   |      |   |        |   |  |       |  
|Net income (loss)                                                                        |  | $                           | 314    |   |   |       |   |      | $ | (7,232 | ) |  |       |  
|                                                                                         |  |                             |        |   |   |       |   |      |   |        |   |  |       |  
|Radio Broadcasting Operating Data:                                                       |  |                             |        |   |   |       |   |      |   |        |   |  |       |  
|Net revenue                                                                              |  | $                           | 16,401 |   |   | 100.0 | % |      | $ | 17,635 |   |  | 100.0 | %
|Market level expenses, exclusive of depreciation and amortization shown separately below |  |                             | 10,826 |   |   | 66.0  |   |      |   | 11,766 |   |  | 66.7  |  
|Depreciation and amortization                                                            |  |                             | 1,191  |   |   | 7.3   |   |      |   | 1,401  |   |  | 7.9   |  
|Local marketing agreement fees                                                           |  |                             | 30     |   |   | 0.2   |   |      |   | 128    |   |  | 0.7   |  
|                                                                                         |  |                             |        |   |   |       |   |      |   |        |   |  |       |  
|Segment operating income                                                                 |  | $                           | 4,354  |   |   | 26.5  |   |      | $ | 4,340  |   |  | 24.6  |  
|                                                                                         |  |                             |        |   |   |       |   |      |   |        |   |  |       |  
|Outdoor Advertising Operating Data:                                                      |  |                             |        |   |   |       |   |      |   |        |   |  |       |  
|Net revenue                                                                              |  | $                           | 7,990  |   |   | 100.0 | % |      | $ | 8,198  |   |  | 100.0 | %
|Market level expenses, exclusive of depreciation and amortization shown separately below |  |                             | 5,647  |   |   | 70.7  |   |      |   | 5,330  |   |  | 65.0  |  
|Depreciation and amortization                                                            |  |                             | 2,196  |   |   | 27.5  |   |      |   | 2,393  |   |  | 29.2  |  
|                                                                                         |  |                             |        |   |   |       |   |      |   |        |   |  |       |  
|Segment operating income                                                                 |  | $                           | 147    |   |   | 1.8   |   |      | $ | 475    |   |  | 5.8   |  
|                                                                                         |  |                             |        |   |   |       |   |      |   |        |   |  |       |  



Comparison of Three Months Ended
March 31, 2005 to Three Months Ended March 31, 2004



Net Revenue. Consolidated net revenue increased $1.4 million to $25.8 million in 2005 from $24.4 million in 2004. Radio net revenue increased $1.2 million to $17.6 million in 2005 from $16.4 million in 2004. Outdoor advertising net
revenue increased $208,000 to $8.2 million in 2004 from $8.0 million in 2004. Of the consolidated net revenue increase, $447,000 was due to acquisitions, net of dispositions, with the remaining $995,000 increase attributable to organic growth in the
assets we owned and operated during the first quarter of 2005.



Market Level Expenses, exclusive of depreciation and amortization. Consolidated operating expenses increased $623,000 to $17.1 million in 2005 from $16.5 million in 2004. Radio operating expenses increased $940,000 to $11.8 million
in 2005 from $10.8 million in 2004. Radio operating expenses increased primarily due to the Wilmington, North Carolina acquisition. Outdoor advertising market level expenses decreased $317,000 to $5.3 million in 2005 from $5.6 million in 2004
primarily as a result of the lower market level expenses associated with the assets received in the outdoor advertising assets exchange.



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##### Table of Contents

Corporate Expenses. Corporate expenses increased $689,000 in 2005 from $1.9 million compared to
$2.6 million as a result of certain legal expenses incurred to enforce a non-competition agreement. As a percentage of net revenue, corporate expenses increased from 7.9% to 10.1%.



Depreciation and Amortization. Consolidated depreciation and amortization increased $407,000 to $3.8 million in 2005
from $3.4 million in 2004. Radio depreciation and amortization increased $210,000 to $1.4 million in 2005 from $1.2 million in 2004. Outdoor advertising depreciation and amortization increased $197,000 to $2.4 million in 2005 from $2.2 million in
2004. The increase in both radio and outdoor depreciation and amortization was attributable to acquisitions during 2004 which resulted in the addition of depreciable fixed assets and definite-lived intangibles which are amortized over their useful
lives.



Interest Expense and Other Income (Expense).
Interest expense, net, increased to $6.4 million in 2005 from $6.1 million in 2004 due to indebtedness incurred in connection with our acquisitions. Other income (expense), net decreased to $516,000 of expense in 2005 from $3.8 million of income in
2004 primarily as a result the absence in 2005 of a $1.8 million gain recognized on the exchange of our outdoor advertising assets in Baltimore, Maryland and New York, New York for assets in Myrtle Beach, South Carolina in 2004 and a $3.0 million
gain in connection with the settlement of our arbitration with PNE Media, LLC in 2004.



Income Tax. We expect that our deferred tax liabilities will not reverse within our net operating loss carry-forward period. Accordingly, we record deferred tax expense throughout the year to establish a
valuation allowance against net operating loss carry-forwards generated by amortization of indefinite-lived intangibles and goodwill that is deductible for tax purposes, but which is no longer subject to periodic amortization as a result of SFAS
142.



Net Income (Loss). Consolidated net loss changed
$7.5 million resulting in a $7.2 million net loss in 2005 compared to $314,000 of net income in 2004 as a result of the factors described above.



Liquidity and Capital Resources



Sources of Funds



Our cash and cash equivalents balance at March 31, 2005 was approximately $1.8 million compared to $12.3 million at December 31, 2004. The decrease
relates primarily to payment of our semi-annual interest obligation on our Senior Subordinated Notes in January 2005.



Net cash used in operating activities was $5.2 million and $3.5 million for the three months ended March 31, 2005 and 2004, respectively. The increase in
net cash used in operating activities was due primarily to the increase in accounts receivable and pre-paid balances. First quarter cash from operations is generally a use due to the timing of our semi-annual interest payments on our senior
subordinated notes.



Net cash provided by financing activities
was $20.4 million for the three months ended March 31, 2005 compared to cash provided by financing activities of $20.5 million for the three months ended March 31, 2004. Net cash used in investing activities was $25.7 million and $16.8 million for
the three months ended March 31, 2005 and 2004, respectively. These cash flows primarily reflect expenditures for acquisitions and capital expenditures.



Uses of Funds



We use a significant portion of our capital resources to consummate acquisitions. Through March 31, 2005, we funded our acquisitions from: (i) equity
capital contributions of approximately $354.0 million from our indirect parent, NextMedia Investors, funded by equity investments from several private investment funds and our senior management, (ii) aggregate net borrowings of approximately $254.0
million, and (iii) cash from operations. We expect to obtain financing for future acquisitions through the incurrence of debt, additional equity contributions, internally generated funds or a combination of the foregoing. There can be no assurance,
however, that external financing will be available to us on terms we consider favorable or that cash flow from operations will be sufficient to fund our ongoing liquidity requirements.



On February 1, 2005 we closed our previously announced acquisition of five radio stations in Wilmington, North Carolina for
$24.5 million in cash funded under our Revolving Credit Facility.



18



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##### Table of Contents

Capital expenditures in the three months ended March 31, 2005 on a GAAP basis decreased to $1.2 million
from $2.1 million for the three months ended March 31, 2004. The following table sets forth our capital expenditures for the three months ended March 31, 2005. Recurring capital expenditures are related to the maintenance of our existing broadcast
facilities and outdoor structures. Non-recurring capital expenditures are related primarily to radio signal upgrades and facility consolidations. Revenue producing capital expenditures are related to the construction of new outdoor structures which
management believes will generate future revenue.



|                           |  |                                   |      
|-------------------------- |  | --------------------------------- | -----
|                           |  | Three Months Ended March 31, 2005
|                           |  | (in thousands)                   
|Recurring                  |  | $                                 | 898  
|Non-recurring              |  |                                   | 162  
|Revenue producing          |  |                                   | 94   
|                           |  |                                   |      
|Total capital expenditures |  | $                                 | 1,154
|                           |  |                                   |      



Credit Facility and
Senior Subordinated Notes



Our $75.0 million senior credit
facility contains customary restrictive covenants that, among other things, limit our ability to incur additional indebtedness and liens in connection therewith, pay dividends and make capital expenditures above specified limits. Under the Revolving
Credit Facility, we must satisfy specified financial covenants, such as a maximum total leverage ratio, a maximum senior leverage ratio and a minimum ratio of consolidated EBITDA to consolidated net cash interest expense. As of March 31, 2005, we
were in compliance with all of these covenants.



After taking
into account these restrictive covenants, as of March 31, 2005, we had approximately $18.9 million of borrowing capacity under our Revolving Credit Facility.



Borrowings under the Revolving Credit Facility bear interest (a) in the case of loans with an interest rate based on the index rate (the Index
Rate), the Index Rate plus an applicable margin or (b) in the case of loans with an interest rate based on the Libor rate (the LIBOR Rate), the LIBOR Rate plus an applicable margin. The applicable margins are based on our total
leverage ratio. On February 25, 2005 we amended the Revolving Credit Facility to reduce the applicable margins, and as a result, reduced our interest payments under the Revolving Credit Facility.



Our Senior Subordinated Notes require us to make semi-annual interest
payments of approximately $10.8 million on January 1 and July 1 of each year. The indenture governing the notes contains certain restrictive covenants that, among other things, limit our ability to incur additional indebtedness and pay dividends. As
of March 31, 2005, we were in compliance with these covenants.



We believe that cash from operations, together with available borrowings under our Revolving Credit Facility, will be sufficient to permit us to meet our financial obligations and to fund our existing operations for the foreseeable future.



Recent Accounting Pronouncements



The SEC staff issued Staff Announcement No. D-108, Use of the Residual
Method to Value Acquired Assets Other Than Goodwill (D-108), at the September 2004 meeting of the Emerging Issues Task Force (EITF). D-108 states that the residual method should no longer be used to value intangible
assets other than goodwill. Rather, a direct method should be used to determine the fair value of all intangible assets required to be recognized under Statement of Financial Accounting Standards No. 141, Business Combinations. Registrants
who have applied the residual method to the valuation of intangible assets for purposes of impairment testing under Statement of Financial Accounting Standards No 142, Goodwill and Other Intangible Assets, shall perform an impairment test
using a direct value method on all intangible assets that were previously valued using the residual method by no later than the beginning of their first fiscal year beginning after December 15, 2004. The adoption of Staff Announcement No. D-108 did
not have a material impact on our financial position or results of operation.



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##### Table of Contents

|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------



Interest Rate Risk.Our exposure to market risk is limited primarily to the fluctuating interest rates associated with variable rate indebtedness.
At March 31, 2005, we had $56.0 million of variable rate indebtedness, representing 22% of total debt outstanding, at an average interest rate during the three months ended March 31, 2005 of 5.3%. Based on the average floating rate borrowings
outstanding during the three months ended March 31, 2005, a 100 basis-point change in LIBOR would have caused our monthly interest expense to change by approximately $47,000.



From January 2002 through January 2004, we were party to various interest rate swap agreements with aggregate notional
amounts ranging from $75.0 million to $100.0 million. Pursuant to these swaps, we paid a floating rate of interest and received a fixed rate of interest on the notional amount. We recognized quarterly income or expense to record the swaps at fair
value during the periods they were outstanding. In February 2004, we terminated the existing swaps, realized a $1.6 million gain, and received proceeds of $1.6 million.



We became a party to an interest rate swap (the Swap) with an aggregate notional amount of $100.0 million in
March 2005. The Swap becomes effective June 30, 2006 and expires on December 31, 2009. Pursuant to the Swap, we will pay a fixed rate of interest on the notional amount and receive a floating rate of interest on the notional amount.



Our remaining long-term debt has a fixed interest rate. Consequently, we do
not believe we are currently exposed to any material interest rate or market risk in connection with our remaining long-term debt.



|ITEM 4. | CONTROLS AND PROCEDURES
|------- | -----------------------



Based on their evaluation of our disclosure controls and procedures conducted as of the end of the period covered by this report on Form 10-Q, our
principal executive officer and our principal financial officer have concluded that, as of the date of their evaluation, our disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) promulgated under the Securities Exchange
Act of 1934, as amended) are effective.



There has been no
change in our internal control over financial reporting that has materially affected or could materially affect our internal control over financial reporting subsequent to the date of their evaluation in connection with the preparation of this
quarterly report on Form 10-Q.



20



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##### Table of Contents



PART II



|ITEM 1. | LEGAL PROCEEDINGS
|------- | -----------------



We currently are not a party to any material lawsuit or proceeding.



|ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|------- | -----------------------------------------------------------



None.



|ITEM 3. | DEFAULTS UPON SENIOR SECURITIES
|------- | -------------------------------



None.



|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------- | ---------------------------------------------------



None.



|ITEM 5. | OTHER INFORMATION
|------- | -----------------



None.



|ITEM 6. | EXHIBITS AND REPORTS ON FORM 8-K.
|------- | ---------------------------------



(a) Exhibits



|            |   |  |                                                                                                                                                   
|----------- | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |   |  | Description                                                                                                                                       
|31.1        | * |  | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                
|            |  
|31.2        | * |  | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                               
|            |  
|32.1        | * |  | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|            |  
|32.2        | * |  | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

---

|* | Filed herewith
|- | --------------



(b) Reports on Form 8-K



On March 10, 2005, we
filed a Current Report on Form 8-K announcing earnings results for the year ended December 31, 2004.



On March 22, 2005, we filed a Current Report on Form 8-K announcing the departure of the principal accounting officer of the Company effective February 15, 2005.



On April 6, 2005, we filed a Current Report on Form 8-K announcing the execution of
employment agreements with certain officers of the Company.



On May 6, 2005, we
filed a Current Report on Form 8-K announcing earning results for the three months ended March 31, 2005.



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SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



| |  |                    |  |  |  |                                        |  |                                                                                                                          
| |  | ------------------ |  |  |  | -------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------
| |  |                    |  |  |  | NEXTMEDIA OPERATING, INC. (Registrant)
| |  |                    |  | 
| |  | DATE: May 11, 2005 |  |  |  | By:                                    |  | /s/ STEVEN DINETZ                                                                                                        
| |  |                    |  |  |  |                                        |  | Steven Dinetz, Director, President and Chief Executive Officer (Principal Executive Officer)                             
| |  |                    |  | 
| |  | DATE: May 11, 2005 |  |  |  | By:                                    |  | /s/ SEAN R. STOVER                                                                                                       
| |  |                    |  |  |  |                                        |  | Sean R. Stover, Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)



Exhibits



|            |   |  |                                                                                                                                                   
|----------- | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |   |  | Description                                                                                                                                       
|31.1        | * |  | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                
|            |  
|31.2        | * |  | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                               
|            |  
|32.1        | * |  | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|            |  
|32.2        | * |  | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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|* | Filed herewith
|- | --------------



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