##### 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 SECURITIES EXCHANGE ACT OF 1934FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2008.o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE 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 o
    
    Accelerated filer o
    
    Non-accelerated
filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



CMP SUSQUEHANNA RADIO HOLDINGS CORP. AND SUBSIDIARIES
 INDEX
  
 PART I. FINANCIAL INFORMATION
    
    
    3Item 1. Financial Statements (Unaudited)
    
    
    3Condensed Consolidated Balance Sheets as of June 30, 2008 and December 31, 2007
    
    
    3Condensed Consolidated Statements of Operations For the Three and Six Months Ended June 30, 2008 and 2007
    
    
    4Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 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
    
    
    17Item 4. Controls and Procedures
    
    
    17PART II. OTHER INFORMATION
    
    
    17Item 1. Legal Proceedings
    
    
    17Item 1A. Risk Factors
    
    
    17Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    17Item 3. Defaults Upon Senior Securities
    
    
    17Item 4. Submission of Matters to a Vote of Security Holders
    
    
    17Item 5. Other Information
    
    
    17Item 6. Exhibits
    
    
    17Signatures
    
    
    18Exhibit Index
    
    
    19EX-31.1 SECTION 302 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICEREX-31.2 SECTION 302 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICEREX-32.1 OFFICER CERTIFICATION PURSUANT TO SECTION 906
  
  
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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 
 CMP SUSQUEHANNA RADIO HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
 June 30,
    
    
    December 31,2008
    
    
    2007ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    
    
    
    $
    1,895Accounts receivable, less allowance for doubtful
accounts of $689 in 2008 and $1,050 in 2007
    
    
    45,925
    
    
    
    47,270Prepaid expenses and other current assets
    
    
    3,702
    
    
    
    2,174Total current assets
    
    
    49,627
    
    
    
    51,339Property, plant and equipment, net
    
    
    35,383
    
    
    
    36,503Intangible assets, net
    
    
    750,498
    
    
    
    751,135Goodwill
    
    
    411,010
    
    
    
    412,795Deferred financing costs, net
    
    
    16,124
    
    
    
    18,929Long-term investments
    
    
    6,991
    
    
    
    6,991Other assets
    
    
    935
    
    
    
    Total assets
    
    $
    1,270,568
    
    
    $
    1,277,692LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESAccounts payable
    
    $
    539
    
    
    $
    483Current portion of long-term debt
    
    
    7,000
    
    
    
    25,160Accrued interest
    
    
    3,233
    
    
    
    4,574Accrued taxes
    
    
    446
    
    
    
    1,211Other current liabilities
    
    
    8,696
    
    
    
    9,337Total Current Liabilities
    
    
    19,914
    
    
    
    40,765Long-term debt
    
    
    884,614
    
    
    
    884,999Other liabilities
    
    
    9,202
    
    
    
    9,196Deferred income taxes
    
    
    249,088
    
    
    
    246,700Total liabilities
    
    
    1,162,818
    
    
    
    1,181,660STOCKHOLDERS EQUITY:Common Stock  Voting $.01 par value,
authorized 1,000 shares and issued 100 shares
    
    
    
    
    
    
    Additional paid-in capital
    
    
    299,928
    
    
    
    299,928Accumulated deficit
    
    
    (192,178
    )
    
    
    (203,896
    )Total Stockholders Equity
    
    
    107,750
    
    
    
    96,032Total Liabilities and Stockholders Equity
    
    $
    1,270,568
    
    
    $
    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 MonthsEnded June 30,
    
    
    For the Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Broadcast revenues, net
    
    $
    56,350
    
    
    $
    60,051
    
    
    $
    101,286
    
    
    $
    106,178Operating expenses:Station operating expense excluding
depreciation and amortization (including
provision for doubtful accounts of $(30),
$(254), $318 and $461, respectively)
    
    
    32,796
    
    
    
    33,216
    
    
    
    58,791
    
    
    
    59,770Corporate general and administrative expenses
    
    
    2,178
    
    
    
    2,208
    
    
    
    3,855
    
    
    
    3,751Depreciation and amortization
    
    
    1,941
    
    
    
    2,582
    
    
    
    3,699
    
    
    
    5,377Total operating expenses
    
    
    36,915
    
    
    
    38,006
    
    
    
    66,345
    
    
    
    68,898Operating income
    
    
    19,435
    
    
    
    22,045
    
    
    
    34,941
    
    
    
    37,280Non-operating income (expense):Gain on early extinguishment of debt
    
    
    5,468
    
    
    
    
    
    
    
    9,151
    
    
    
    Interest expense, net
    
    
    (13,214
    )
    
    
    (19,924
    )
    
    
    (29,624
    )
    
    
    (39,433
    )Other income (expense)
    
    
    176
    
    
    
    74
    
    
    
    157
    
    
    
    (74
    )Total non operating expense
    
    
    (7,570
    )
    
    
    (19,850
    )
    
    
    (20,316
    )
    
    
    (39,507
    )Income (loss) before income taxes
    
    
    11,865
    
    
    
    2,195
    
    
    
    14,625
    
    
    
    (2,227
    )Income tax (expense) benefit
    
    
    (2,356
    )
    
    
    2,715
    
    
    
    (2,906
    )
    
    
    4,809Net income
    
    $
    9,509
    
    
    $
    4,910
    
    
    $
    11,719
    
    
    $
    2,582
 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 Six Months EndedJune 30,2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIESNet income
    
    $
    11,719
    
    
    $
    2,582Adjustments to reconcile net income to net cash provided
(used in) by operating activities:Depreciation
    
    
    3,083
    
    
    
    5,069Amortization of intangible assets
    
    
    616
    
    
    
    308Amortization
of deferred financing costs
    
    
    1,636
    
    
    
    2,135Adjustment of fair value of derivative instruments
    
    
    (935
    )
    
    
    Provision for doubtful accounts
    
    
    318
    
    
    
    461Gain on extinguishment of debt
    
    
    (9,151
    )
    
    
    Deferred income taxes
    
    
    2,388
    
    
    
    (4,809
    )Gain on sale of fixed assets
    
    
    (9
    )
    
    
    Changes in assets and liabilities:Decrease (increase) in accounts receivable, net
    
    
    1,027
    
    
    
    (1,212
    )Decrease (increase) in prepaid and other current assets
    
    
    (1,529
    )
    
    
    (3,289
    )Decrease (increase) in other assets
    
    
    
    
    
    
    77Increase(decrease) in accounts payable and other accrued
expenses
    
    
    (3,804
    )
    
    
    (5,511
    )Increase (decrease) in other liabilities
    
    
    1,118
    
    
    
    1,028Net cash provided by (used in) operating activities
    
    
    6,477
    
    
    
    (3,161
    )CASH FLOWS FROM INVESTING ACTIVITIESCapital expenditures
    
    
    (722
    )
    
    
    (576
    )Proceeds from the sale of a radio station and fixed assets
    
    
    574
    
    
    
    Purchase price adjustments
    
    
    
    
    
    
    352Net cash used in investing activities
    
    
    (148
    )
    
    
    (224
    )CASH FLOWS FROM FINANCING ACTIVITIESProceeds from revolving line of credit
    
    
    27,000
    
    
    
    11,000Repurchase of senior subordinated notes
    
    
    (27,724
    )
    
    
    Repayment of credit facilities
    
    
    (7,500
    )
    
    
    (15,500
    )Net cash used in financing activities
    
    
    (8,224
    )
    
    
    (4,500
    )Decrease in cash and cash equivalents
    
    
    (1,895
    )
    
    
    (7,885
    )Cash and cash equivalents at beginning of period
    
    
    1,895
    
    
    
    7,898Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    13Supplemental disclosures:Trade revenue
    
    $
    1,140
    
    
    $
    1,360Trade expense
    
    $
    1,045
    
    
    $
    1,171Cash paid for taxes
    
    $
    
    
    
    $
    1,845Interest paid
    
    $
    32,055
    
    
    $
    37,791
 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 Fair Value Measurements
 Goodwill and Other
Intangible Assets Accounting for the Impairment and Disposal of
Long-Lived Assets
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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)AssetsInterest Rate Swap
    
    $
    935
    
    
    $
    
    
    
    $
    935
    
    
    $
    
  4. Long-term Debt
  June 30, 2008
    
    
    December 31, 20079.875% Senior subordinated notes
    
    $
    204,614
    
    
    $
    242,659Term loan
    
    
    661,000
    
    
    
    664,500Revolver
    
    
    26,000
    
    
    
    3,000Total
    
    
    891,614
    
    
    
    910,159Less amounts payable within one year
    
    
    (7,000
    )
    
    
    (25,160
    )$
    884,614
    
    
    $
    884,999
  8




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5. Related Party
  6. Dispositions
  7. Contingencies
    9




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8. 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 Months Ended June 30,2008
    
    
    2007
    
    
    Dollar Change
    
    
    % Percent ChangeSTATEMENT OF OPERATIONS DATA:Net revenues
    
    $
    56,350
    
    
    $
    60,051
    
    
    $
    (3,701
    )
    
    
    -6.2
    %Station operating expenses
excluding depreciation and
amortization
    
    
    32,796
    
    
    
    33,216
    
    
    
    (420
    )
    
    
    -1.3
    %Corporate general and administrative
    
    
    2,178
    
    
    
    2,208
    
    
    
    (30
    )
    
    
    -1.4
    %Depreciation and amortization
    
    
    1,941
    
    
    
    2,582
    
    
    
    (641
    )
    
    
    -24.8
    %Operating income
    
    $
    19,435
    
    
    $
    22,045
    
    
    $
    (2,610
    )
    
    
    -11.8
    %Gain on early extinguishment of debt
    
    
    5,468
    
    
    
    
    
    
    
    5,468
    
    
    
    100.0
    %Interest expense, net
    
    
    (13,214
    )
    
    
    (19,924
    )
    
    
    6,710
    
    
    
    33.7
    %Other income, net
    
    
    176
    
    
    
    74
    
    
    
    102
    
    
    
    137.8
    %Income tax (expense) benefit
    
    
    (2,356
    )
    
    
    2,715
    
    
    
    (5,071
    )
    
    
    -186.8
    %Net Income
    
    $
    9,509
    
    
    $
    4,910
    
    
    $
    4,599
    
    
    
    93.7
    %OTHER DATA:Station operating income (1)
    
    $
    23,554
    
    
    $
    26,835
    
    
    $
    (3,281
    )
    
    
    -12.2
    %Station operating income margin (2)
    
    
    41.8
    %
    
    
    44.7
    %
    
    
    *
    *
    
    
    *
    *
 12




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For the Six Months Ended June 30,2008
    
    
    2007
    
    
    Dollar Change
    
    
    % Percent ChangeSTATEMENT OF OPERATIONS DATA:Net revenues
    
    $
    101,286
    
    
    $
    106,178
    
    
    $
    (4,892
    )
    
    
    -4.6
    %Station operating expenses
excluding depreciation and
amortization
    
    
    58,791
    
    
    
    59,770
    
    
    
    (979
    )
    
    
    -1.6
    %Corporate general and administrative
    
    
    3,855
    
    
    
    3,751
    
    
    
    104
    
    
    
    2.8
    %Depreciation and amortization
    
    
    3,699
    
    
    
    5,377
    
    
    
    (1,678
    )
    
    
    -31.2
    %Operating income
    
    $
    34,941
    
    
    $
    37,280
    
    
    $
    (2,339
    )
    
    
    -6.3
    %Gain on early extinguishment of debt
    
    
    9,151
    
    
    
    
    
    
    
    9,151
    
    
    
    100.0
    %Interest expense, net
    
    
    (29,624
    )
    
    
    (39,433
    )
    
    
    9,809
    
    
    
    24.9
    %Other income (expense), net
    
    
    157
    
    
    
    (74
    )
    
    
    231
    
    
    
    312.2
    %Income tax (expense) benefit
    
    
    (2,906
    )
    
    
    4,809
    
    
    
    (7,715
    )
    
    
    -160.4
    %Net Income
    
    $
    11,719
    
    
    $
    2,582
    
    
    $
    9,137
    
    
    
    353.9
    %OTHER DATA:Station operating income (1)
    
    $
    42,495
    
    
    $
    46,408
    
    
    $
    (3,913
    )
    
    
    -8.4
    %Station operating income margin (2)
    
    
    42.0
    %
    
    
    43.7
    %
    
    
    *
    *
    
    
    *
    *Cash flows related to:Operating activities
    
    
    6,477
    
    
    
    (3,161
    )
    
    
    9,638
    
    
    
    *
    *Investing activities
    
    
    (148
    )
    
    
    (224
    )
    
    
    76
    
    
    
    33.9
    %Financing activities
    
    
    (8,224
    )
    
    
    (4,500
    )
    
    
    (3,724
    )
    
    
    -82.8
    %Capital expenditures
    
    
    (722
    )
    
    
    (576
    )
    
    
    (146
    )
    
    
    -25.3
    %
 
 **
    
    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 June 30, 2008 Compared to the Three Months Ended June 30, 2007.
 Net Revenues.
 Station Operating Expenses excluding Depreciation and Amortization.
 Corporate, General and Administrative Expenses.
 13




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Depreciation and Amortization.
 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 Months Ended June 30,2008
    
    
    2007
    
    
    Dollar Change
    
    
    % Percent ChangeOperating income
    
    $
    19,435
    
    
    $
    22,045
    
    
    $
    (2,610
    )
    
    
    -11.8
    %Corporate general and administrative
    
    
    2,178
    
    
    
    2,208
    
    
    
    (30
    )
    
    
    -1.4
    %Depreciation and amortization
    
    
    1,941
    
    
    
    2,582
    
    
    
    (641
    )
    
    
    -24.8
    %Station operating income
    
    $
    23,554
    
    
    $
    26,835
    
    
    $
    (3,281
    )
    
    
    -12.2
    %
 Six Months Ended June 30, 2008 Compared to the Six Months Ended June 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.
 Reconciliation of Non-GAAP Financial Measure.
 For the Six Months Ended June 30,2008
    
    
    2007
    
    
    Dollar Change
    
    
    % Percent ChangeOperating income
    
    $
    34,941
    
    
    $
    37,280
    
    
    $
    (2,339
    )
    
    
    -6.3
    %Corporate general and administrative
    
    
    3,855
    
    
    
    3,751
    
    
    
    104
    
    
    
    2.8
    %Depreciation and amortization
    
    
    3,699
    
    
    
    5,377
    
    
    
    (1,678
    )
    
    
    -31.2
    %Station operating income
    
    $
    42,495
    
    
    $
    46,408
    
    
    $
    (3,913
    )
    
    
    -8.4
    %
 15




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Intangible
Assets and Goodwill.
 Liquidity and Capital Resources
     Sources of Liquidity
          Future Needs for Liquidity
   16




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Item 3.
Quantitative and Qualitative Disclosures about Market Risk
   
 Item 4. Controls and Procedures
   
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 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
  
 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.
 17




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##### Table of Contents



SIGNATURE
  CMP SUSQUEHANNA RADIO HOLDINGS CORP.Date: August 14, 2008
    By:
    /s/ Martin R. GausvikMartin R. GausvikExecutive Vice President,
Treasurer and Chief Financial Officer 18




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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.
 19