##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED September 30, 2008.
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934.
 For or the transition period from            to
 Commission file number 333-143558
 CMP SUSQUEHANNA RADIO HOLDINGS CORP.
 (Exact Name of Registrant as Specified in Its Charter)
 Delaware(State or Other Jurisdiction of 
Incorporation or Organization)
    
    20-4530834(I.R.S. Employer
Identification No.)3280 Peachtree Road, NW, Suite 2300, Atlanta, GA(Address of Principal Executive Offices)
    
    30305(ZIP Code)
 (404) 949-0700
  þ o
  Large accelerated filer oAccelerated filer oNon-accelerated filer þ(Do not check if a smaller reporting company)Smaller reporting company o o þ




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##### 



CMP SUSQUEHANNA RADIO HOLDINGS CORP. AND SUBSIDIARIES
 INDEX
 PART I. FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)
    
    
    3Condensed Consolidated Balance Sheets as of September 30, 2008 and December 31, 2007
    
    
    3Condensed Consolidated Statements of Operations For the Three and Nine Months Ended September 30, 2008 and 2007
    
    
    4Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2008 and 2007
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    18Item 4. Controls and Procedures
    
    
    18PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    19Item 1A. Risk Factors
    
    
    19Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    19Item 3. Defaults Upon Senior Securities
    
    
    19Item 4. Submission of Matters to a Vote of Security Holders
    
    
    19Item 5. Other Information
    
    
    19Item 6. Exhibits
    
    
    20Signatures
    
    
    21Exhibit Index
    
    
    22EX-31.1 SECTION 302 CERTIFICATION FOR CEOEX-31.2 SECTION 302 CERTIFICATION FOR CFOEX-32.1 SECTION 906 CERTIFICATION OF CEO AND CFO
  2




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PART I. FINANCIAL INFORMATION
 Item 1. Financial Statements
 CMP SUSQUEHANNA RADIO HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
 September 30,
    
    
    December 31,2008
    
    
    2007ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    1,882
    
    
    $
    1,895Accounts receivable, less allowance for doubtful
accounts of $639 in 2008 and $1,050 in 2007
    
    
    43,890
    
    
    
    47,270Prepaid expenses and other current assets
    
    
    3,800
    
    
    
    2,174Total current assets
    
    
    49,572
    
    
    
    51,339Property, plant and equipment, net
    
    
    32,525
    
    
    
    36,503Intangible assets
    
    
    750,190
    
    
    
    751,135Goodwill
    
    
    411,010
    
    
    
    412,795Deferred financing costs, net
    
    
    15,205
    
    
    
    18,929Long-term investments
    
    
    6,991
    
    
    
    6,991Total assets
    
    $
    1,265,493
    
    
    $
    1,277,692LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESAccounts payable
    
    $
    321
    
    
    $
    483Current portion of long-term debt
    
    
    7,000
    
    
    
    25,160Accrued interest
    
    
    8,205
    
    
    
    4,574Accrued income taxes
    
    
    500
    
    
    
    1,211Other current liabilities
    
    
    9,831
    
    
    
    9,337Total current liabilities
    
    
    25,857
    
    
    
    40,765Long-term debt
    
    
    870,744
    
    
    
    884,999Other liabilities
    
    
    9,485
    
    
    
    9,196Deferred income taxes
    
    
    249,216
    
    
    
    246,700Total liabilities
    
    
    1,155,302
    
    
    
    1,181,660STOCKHOLDERS EQUITY:Common Stock  Voting $.01 par value, authorized
1000 shares & issued 100 shares
    
    $
    
    
    
    $
    Additional paid-in capital
    
    
    299,928
    
    
    
    299,928Accumulated deficit
    
    
    (189,737
    )
    
    
    (203,896
    )Total Stockholders Equity
    
    
    110,191
    
    
    
    96,032Total liabilities and stockholders equity
    
    $
    1,265,493
    
    
    $
    1,277,692
 See accompanying notes to condensed consolidated financial statements.
 3




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CMP SUSQUEHANNA RADIO HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)
(Unaudited)
 For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Broadcast revenues, net
    
    $
    53,572
    
    
    $
    59,814
    
    
    $
    154,858
    
    
    $
    165,992Operating expenses:Station operating expense excluding depreciation and
amortization (including provision for doubtful accounts
of $611, $192, $929 and $653, respectively)
    
    
    32,721
    
    
    
    33,154
    
    
    
    91,511
    
    
    
    92,924Corporate general and administrative expenses
    
    
    1,572
    
    
    
    1,511
    
    
    
    5,428
    
    
    
    5,270Depreciation and amortization
    
    
    1,824
    
    
    
    2,149
    
    
    
    5,523
    
    
    
    7,525Total operating expenses
    
    
    36,117
    
    
    
    36,814
    
    
    
    102,462
    
    
    
    105,719Operating income
    
    
    17,455
    
    
    
    23,000
    
    
    
    52,396
    
    
    
    60,273Non-operating income (expense):Gain on early extinguishment of debt
    
    
    1,050
    
    
    
    
    
    
    
    10,201
    
    
    
    Interest expense, net
    
    
    (15,677
    )
    
    
    (19,583
    )
    
    
    (45,302
    )
    
    
    (59,016
    )Other income (expense)
    
    
    69
    
    
    
    (41
    )
    
    
    227
    
    
    
    (108
    )Total non operating expense
    
    
    (14,558
    )
    
    
    (19,624
    )
    
    
    (34,874
    )
    
    
    (59,124
    )Income before income taxes
    
    
    2,897
    
    
    
    3,376
    
    
    
    17,522
    
    
    
    1,149Income tax (expense)
    
    
    (456
    )
    
    
    (5,490
    )
    
    
    (3,362
    )
    
    
    (682
    )Net income (loss)
    
    $
    2,441
    
    
    $
    (2,114
    )
    
    $
    14,160
    
    
    $
    467
 See accompanying notes to condensed consolidated financial statements.
 4




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CMP SUSQUEHANNA RADIO HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
 For the Nine MonthsEnded September 30,2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIESNet income
    
    $
    14,160
    
    
    $
    467Adjustments to reconcile net income to net cash provided (used in) by operating activities:Depreciation
    
    
    4,599
    
    
    
    4,303Amortization of intangible assets
    
    
    924
    
    
    
    3,222Amortization of deferred financing costs
    
    
    2,466
    
    
    
    3,004Adjustment of fair value of derivative instruments
    
    
    236
    
    
    
    Provision for doubtful accounts
    
    
    929
    
    
    
    653Gain on extinguishment of debt
    
    
    (10,201
    )
    
    
    Deferred income taxes
    
    
    2,516
    
    
    
    682Gain on sale of fixed assets
    
    
    (124
    )
    
    
    Changes in assets and liabilities:Decrease (increase) in accounts receivable, net
    
    
    2,451
    
    
    
    (3,106
    )Decrease (increase) in prepaid and other current assets
    
    
    (1,627
    )
    
    
    (2,753
    )Decrease (increase) in other assets
    
    
    
    
    
    
    80Increase(decrease) in accounts payable and other accrued expenses
    
    
    3,252
    
    
    
    2,541Increase (decrease) in other liabilities
    
    
    53
    
    
    
    1,323Net cash provided by operating activities
    
    
    19,634
    
    
    
    10,416CASH FLOWS FROM INVESTING ACTIVITIESCapital expenditures
    
    
    (1,169
    )
    
    
    (1,140
    )Proceeds from the sale of a radio station and other fixed assets
    
    
    2,478
    
    
    
    Purchase price adjustments
    
    
    
    
    
    
    322Net cash provided by (used in) investing activities
    
    
    1,309
    
    
    
    (818
    )CASH FLOWS FROM FINANCING ACTIVITIESProceeds from revolving line of credit
    
    
    29,000
    
    
    
    11,000Repurchase of senior subordinated notes
    
    
    (29,706
    )
    
    
    Repayment of credit facilities
    
    
    (20,250
    )
    
    
    (22,250
    )Net cash (used in) financing activities
    
    
    (20,956
    )
    
    
    (11,250
    )Decrease in cash and cash equivalents
    
    
    (13
    )
    
    
    (1,652
    )Cash and cash equivalents at beginning of period
    
    
    1,895
    
    
    
    7,898Cash and cash equivalents at end of period
    
    $
    1,882
    
    
    $
    6,246Supplemental disclosures:Trade revenue
    
    $
    1,915
    
    
    $
    2,080Trade expense
    
    $
    1,844
    
    
    $
    1,732Cash paid for taxes
    
    $
    1,709
    
    
    $
    1,845Interest paid
    
    $
    40,229
    
    
    $
    50,803
 See accompanying notes to condensed consolidated financial statements.
 5




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CMP Susquehanna Radio Holdings Corp. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
 1. Interim Financial Data and Basis of Presentation
 Interim Financial Data
    Recent Accounting Pronouncements
 SFAS No. 141(R). Business Combinations
 SFAS 157
 6




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FSP No. 157-3 Determining the
Fair Value of a Financial Asset When The Market for That Asset Is Not Active,
 SFAS 159. The Fair Value Option for Financial
Assets and Financial Liabilities  Including an Amendment of FASB Statement No. 115
 SFAS 161. Disclosures about Derivative
Instruments and Hedging Activities Accounting for Derivative Instruments and Hedging Activities
 FSP No. 142-3. Determination of the
Useful Lives of Intangible Assets
 2.  Derivative Financial Instruments
    7




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3.  Fair Value Measurements
 Disclosures about Fair Value of Financial
Instruments
     Value Measurements at Reporting Date UsingSignificantQuoted
    
    
    Other
    
    
    SignificantPrices in
    
    
    Observable
    
    
    UnobservableTotal
    
    
    Active Markets
    
    
    Inputs
    
    
    InputsFair Value
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)LiabilitiesInterest Rate Swap
    
    $
    236
    
    
    $
    
    
    
    $
    236
    
    
    $
    Total Liabilities
    
    $
    236
    
    
    $
    
    
    
    $
    236
    
    
    $
    
 Interest Rate Swap.
  8




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4.  Long-term Debt
  September 30,
    
    
    December 31,2008
    
    
    20079.875% Senior subordinated notes
    
    $
    201,494
    
    
    $
    242,659Term loan
    
    
    659,250
    
    
    
    664,500Revolver
    
    
    17,000
    
    
    
    3,000Total
    
    
    877,744
    
    
    
    910,159Less amounts payable within one year
    
    
    (7,000
    )
    
    
    (25,160
    )$
    870,744
    
    
    $
    884,999
      5.  Related Party
    9




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6.  Contingencies
    7 Subsequent Events
   10




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Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
  Advertising Revenue and Station Operating Income
     11




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Results of Operations
  For the Three MonthsEnded September 30,
    
    Dollar Change
    
    Percent Change2008
    
    2007
    
    2008 vs. 2007
    
    2008 vs. 2007STATEMENT OF OPERATIONS DATA:Net revenues
    
    $
    53,572
    
    
    $
    59,814
    
    
    $
    (6,242
    )
    
    
    -10.4
    %Station operating expenses
excluding depreciation and
amortization
    
    
    32,721
    
    
    
    33,154
    
    
    
    (433
    )
    
    
    -1.3
    %Corporate general and administrative
    
    
    1,572
    
    
    
    1,511
    
    
    
    61
    
    
    
    4.0
    %Depreciation and amortization
    
    
    1,824
    
    
    
    2,149
    
    
    
    (325
    )
    
    
    -15.1
    %Operating income
    
    $
    17,455
    
    
    $
    23,000
    
    
    $
    (5,545
    )
    
    
    -24.1
    %Gain on early extinguishment of debt
    
    
    1,050
    
    
    
    
    
    
    
    1,050
    
    
    
    100.0
    %Interest expense, net
    
    
    (15,677
    )
    
    
    (19,583
    )
    
    
    3,906
    
    
    
    -19.9
    %Other income, net
    
    
    69
    
    
    
    (41
    )
    
    
    110
    
    
    
    -268.3
    %Income tax (expense)
    
    
    (456
    )
    
    
    (5,490
    )
    
    
    5,034
    
    
    
    -91.7
    %Net Income (loss)
    
    $
    2,441
    
    
    $
    (2,114
    )
    
    $
    4,555
    
    
    
    -215.5
    %OTHER DATA:Station operating income (1)
    
    $
    20,851
    
    
    $
    26,660
    
    
    $
    (5,809
    )
    
    
    -21.8
    %Station operating income margin (2)
    
    
    38.9
    %
    
    
    44.6
    %
    
    
    *
    *
    
    
    *
    *
 12




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For the Nine MonthsEnded September 30,
    
    Dollar Change
    
    Percent Change2008
    
    2007
    
    2008 vs. 2007
    
    2008 vs. 2007STATEMENT OF OPERATIONS DATA:Net revenues
    
    $
    154,858
    
    
    $
    165,992
    
    
    $
    (11,134
    )
    
    
    -6.7
    %Station operating expenses
excluding depreciation and
amortization
    
    
    91,511
    
    
    
    92,924
    
    
    
    (1,413
    )
    
    
    -1.5
    %Corporate general and administrative
    
    
    5,428
    
    
    
    5,270
    
    
    
    158
    
    
    
    3.0
    %Depreciation and amortization
    
    
    5,523
    
    
    
    7,525
    
    
    
    (2,002
    )
    
    
    -26.6
    %Operating income
    
    $
    52,396
    
    
    $
    60,273
    
    
    $
    (7,877
    )
    
    
    -13.1
    %Gain on early extinguishment of debt
    
    
    10,201
    
    
    
    
    
    
    
    10,201
    
    
    
    100.0
    %Interest expense, net
    
    
    (45,302
    )
    
    
    (59,016
    )
    
    
    13,714
    
    
    
    -23.2
    %Other income (expense), net
    
    
    227
    
    
    
    (108
    )
    
    
    335
    
    
    
    -310.2
    %Income tax (expense)
    
    
    (3,362
    )
    
    
    (682
    )
    
    
    (2,680
    )
    
    
    393.0
    %Net Income
    
    $
    14,160
    
    
    $
    467
    
    
    $
    13,693
    
    
    
    2932.1
    %OTHER DATA:Station operating income (1)
    
    $
    63,347
    
    
    $
    73,068
    
    
    $
    (9,721
    )
    
    
    -13.3
    %Station operating income margin (2)
    
    
    40.9
    %
    
    
    44.0
    %
    
    
    *
    *
    
    
    *
    *Cash flows related to:Operating activities
    
    
    19,634
    
    
    
    10,416
    
    
    
    9,218
    
    
    
    88.5
    %Investing activities
    
    
    1,309
    
    
    
    (818
    )
    
    
    2,127
    
    
    
    -260.0
    %Financing activities
    
    
    (20,956
    )
    
    
    (11,250
    )
    
    
    (9,706
    )
    
    
    86.3
    %Capital expenditures
    
    
    (1,169
    )
    
    
    (1,140
    )
    
    
    (29
    )
    
    
    2.5
    %
 
 **
    
    Not a meaningful calculation to present.(1)
    
    Station operating income consists of operating income before corporate general and
administrative expenses and depreciation and amortization. See managements explanation of
this measure and the reasons for its use and presentation, along with a quantitative
reconciliation of station operating income to its most directly comparable financial measure
calculated and presented in accordance with GAAP, below.(2)
    
    Station operating income margin is defined as station operating income as a percentage of net
revenues. Three Months Ended September 30, 2008 Compared to the Three Months Ended September 30, 2007.
 Net Revenues.
 Station Operating Expenses excluding Depreciation and Amortization.
 Corporate, General and Administrative Expenses.
 Depreciation and Amortization.
 13




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Gain On Early Extinguishment Of Debt
 Interest Expense, Net.
 Income Taxes.
 Station Operating Income.
    14




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Reconciliation of Non-GAAP Financial Measure.
 For the Three MonthsEnded September 30,
    
    Dollar Change
    
    Percent Change2008
    
    2007
    
    2008 vs. 2007
    
    2008 vs. 2007Operating income
    
    $
    17,455
    
    
    $
    23,000
    
    
    $
    (5,545
    )
    
    
    -24.1
    %Corporate general and administrative
    
    
    1,572
    
    
    
    1,511
    
    
    
    61
    
    
    
    4.0
    %Depreciation and amortization
    
    
    1,824
    
    
    
    2,149
    
    
    
    (325
    )
    
    
    -15.1
    %Station operating income
    
    $
    20,851
    
    
    $
    26,660
    
    
    $
    (5,809
    )
    
    
    -21.8
    %
 Nine Months Ended September 30, 2008 Compared to the Nine Months Ended September 30, 2007.
 Net Revenues.
 Station Operating Expenses excluding Depreciation and Amortization.
 Corporate, General and Administrative Expenses.
 Depreciation and Amortization.
 Gain On Early Extinguishment Of Debt
 Interest Expense, Net.
 Income Taxes.
 Station Operating Income.
 15




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Reconciliation of Non-GAAP Financial Measure.
 For the Nine MonthsEnded September 30,
    
    Dollar Change
    
    Percent Change2008
    
    2007
    
    2008 vs. 2007
    
    2008 vs. 2007Operating income
    
    $
    52,396
    
    
    $
    60,273
    
    
    $
    (7,877
    )
    
    
    -13.1
    %Corporate general and administrative
    
    
    5,428
    
    
    
    5,270
    
    
    
    158
    
    
    
    3.0
    %Depreciation and amortization
    
    
    5,523
    
    
    
    7,525
    
    
    
    (2,002
    )
    
    
    -26.6
    %Station operating income
    
    $
    63,347
    
    
    $
    73,068
    
    
    $
    (9,721
    )
    
    
    -13.3
    %
 Intangible Assets and Goodwill.
  Liquidity and Capital Resources
 Sources of Liquidity
   16




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Sources of Liquidity,
     Sources of Liquidity
          17




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Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
 Item 4. Controls and Procedures
   18




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PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  Disruptions in capital markets could restrict our ability to access further financing.
  We are exposed to credit risk on our accounts receivable. This risk is heightened during periods
when economic conditions worsen.
  We are exposed to risk of counterparty performance to derivative transactions.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  19




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Item 6. Exhibits
 31.1
    
    
    
    
    Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    
    
    Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    
    
    Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 20




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SIGNATURE
  CMP SUSQUEHANNA RADIO HOLDINGS CORP.Date: November 14, 2008
    By:
    /s/ Martin R. GausvikMartin R. GausvikExecutive Vice President,
Treasurer and Chief Financial Officer 21




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EXHIBIT INDEX
 31.1
    
    
    
    
    Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    
    
    Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    
    
    Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 22