In preparing the discussion and analysis contained in this Item 2, we presume
that readers have read or have access to the discussion and analysis contained
in our Annual Report on Form 10-K filed with the Securities and Exchange
Commission (the "SEC") on March 1, 2021. In addition, you should read the
following discussion and analysis of our financial condition and results of
operations in conjunction with our consolidated financial statements and related
notes included elsewhere in this report. The following results of operations
include a discussion of the nine and three months ended September 30, 2021 as
compared to the comparable periods in the prior year. Our results of operations
during the relevant periods represent the operations of the radio stations owned
or operated by us.
The following discussion and analysis contains forward-looking statements about
our business, operations and financial performance based on current expectations
that involve risks, uncertainties and assumptions. You should not place undue
reliance on any of these forward-looking statements. In addition, any
forward-looking statement speaks only as of the date on which it is made, and we
undertake no obligation to update any forward-looking statement or statements to
reflect events or circumstances after the date on which the statement is made,
to reflect the occurrence of unanticipated events or otherwise, except as
required by law. New factors emerge from time to time, and it is not possible
for us to predict which will arise or to assess with any precision the impact of
each factor on our business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in
any forward-looking statements.
Results of Operations for the Year-To-Date
The following significant factors affected our results of operations for the
nine and three months ended September 30, 2021, as compared to the nine and
three months ended September 30, 2020:
COVID-19 Pandemic
In December 2019, a novel strain of coronavirus ("COVID-19") surfaced which
resulted in an outbreak of infections throughout the world, which has affected
operations and global supply chains. On March 11, 2020, the World Health
Organization declared COVID-19 a pandemic. While the full impact of this
pandemic is not yet known, we have taken proactive actions in an effort to
mitigate its effects and are continually assessing its effects on our business,
including how it has and will continue to impact advertisers, professional
sports and live events.
We experienced strong revenue growth in January and February 2020. In March
2020, we began to experience adverse effects due to the pandemic. During the
second quarter of 2020, we experienced significant declines in revenue
performance. April revenues were most significantly impacted and we began to
experience sequential month over month improvement in our revenue performance in
May through December of 2020.
Due to the seasonality of the business, the month over month improvement in net
revenues did not continue into the first quarter of 2021. However, net revenues
in each month from March 2021 to September 2021 exceeded net revenues in each
month from March 2020 to September 2020.
We are currently unable to predict the extent of the impact that the COVID-19
pandemic will have on our financial condition, results of operations and cash
flows in future periods due to numerous uncertainties, but to date, it has been
material and we believe the impact will continue to be material throughout 2021.
However, we believe we are well positioned to fully participate in the recovery
and the attractive growth opportunities in the audio space.
We presently believe that the COVID-19 pandemic and its related economic impact
has and will continue to:
•cause a decline in national and local advertising revenues;
•adversely affect our event revenues due to the cancellation of many of our
events scheduled for 2021, mitigated by the ability to eliminate the associated
event costs;
•increase bad debt expense due to an inability of some of our clients to meet
their payment terms; and
•cause elevated employee medical claims costs.
The following proactive actions were taken by management in an effort to
partially offset the above:
•temporary salary reductions in 2020 implemented across senior management and
the broader organization;
•temporary freezing of contractual salary increases in 2020;
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•temporary suspension of the employee stock purchase program;
•furlough and termination of select employees;
•temporary suspension of new employee hiring, travel and entertainment, and
401(k) matching program,
•suspension of quarterly dividend program; and
•reduction of sales and promotions spend as well as consulting and other
discretionary expenses.
The extent to which the COVID-19 pandemic impacts our business, operations and
financial results is inherently uncertain and will depend on numerous evolving
factors that we may not be able to accurately predict. Therefore, the results
for the nine and three months ended September 30, 2021, may not be indicative of
the results for the year ending December 31, 2021.
Urban One Exchange
In April 2021, we completed a transaction with Urban One, Inc. ("Urban One")
under which we exchanged our four station cluster in Charlotte, North Carolina
for one station in St. Louis, Missouri, one station in Washington, D.C., and one
station in Philadelphia, Pennsylvania (the "Urban One Exchange"). We began
programming the respective stations under local marketing agreements ("LMAs") on
November 23, 2020. Based on the timing of this transaction, our condensed
consolidated financial statements for the nine and three months ended
September 30, 2021: (i) reflect the results of the acquired stations for the
portion of the period in which the LMAs were in effect and after the completion
of the Urban One Exchange; and (ii) do not reflect the results of the divested
stations. Our condensed consolidated financial statements for the nine and three
months ended September 30, 2020: (i) do not reflect the results of the acquired
stations; and (ii) reflect the results of the divested stations.
Podcorn Acquisition
In March 2021, we completed an acquisition of podcast influencers marketplace,
Podcorn Media, Inc. ("Podcorn") for $14.6 million in cash and a
performance-based earn out which is based upon the achievement of certain annual
performance benchmarks over a two year period (the "Podcorn Acquisition"). Based
on the timing of this transaction, our condensed consolidated financial
statements for the three months ended September 30, 2021, reflect the results of
Podcorn. Our condensed consolidated financial statements for the nine months
ended September 30, 2021, reflect the results of Podcorn for the portion of the
period after the completion of the Podcorn Acquisition. Our condensed
consolidated financial statements for the nine and three months ended
September 30, 2020, do not reflect the results of Podcorn.
QL Gaming Group Acquisition
In November 2020, we completed the acquisition of sports data and iGaming
affiliate platform QL Gaming Group ("QLGG") in an all cash deal for
approximately $32 million (the "QLGG Acquisition"). Based upon the timing of
this transaction, our condensed consolidated financial statements for the nine
and three months ended September 30, 2021 reflect the results of QLGG. Our
condensed consolidated financial statements for the nine and three months ended
September 30, 2020 do not reflect the results of QLGG.
Integration Costs and Restructuring Charges
In connection with the CBS Radio business acquisition in November 2017 (the
"Merger"), we incurred integration costs, including transition services,
consulting services and professional fees of $0.5 million during the nine months
ended September 30, 2020. Amounts were expensed as incurred and are included in
Integration costs.
In connection with the Merger and the COVID-19 pandemic, we incurred
restructuring charges, including workforce reductions and other restructuring
costs of $4.2 million and $10.3 million during the nine months ended
September 30, 2021 and September 30, 2020, respectively. We incurred
restructuring charges, including workforce reductions and other restructuring
costs of $2.3 million and $1.2 million during the three months ended
September 30, 2021 and September 30, 2020, respectively. Amounts were expensed
as incurred and are included in Restructuring charges.
Note Issuance
During the first quarter of 2021, we issued $540.0 million in aggregate
principal amount of senior secured second-lien notes due March 31, 2029 (the
"2029 Notes"). Interest on the 2029 Notes accrues at the rate of 6.750% per
annum and is payable semi-annually in arrears on March 31 and September 30 of
each year.
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We used net proceeds of the offering, along with cash on hand, to: (i) repay
$77.0 million of existing indebtedness under our term b-2 loan (the "Term B-2
Loan"); (ii) repay $40.0 million of drawings under our revolving credit facility
(the "Revolver"); and (iii) fully redeem all of our $400.0 million aggregate
principal amount of 7.250% senior notes due 2024 (the "Senior Notes") and to pay
fees and expenses in connection with the redemption.
In connection with this activity, during the first quarter of 2021, we: (i)
recorded $6.6 million of new debt issuance costs attributable to the 2029 Notes
which will be amortized over the term of the 2029 Notes under the effective
interest method; and (ii) $0.4 million of debt issuance costs attributable to
the Revolver which will be amortized over the remaining term of the Revolver on
a straight line basis. We also incurred $0.5 million of costs which were
classified within refinancing expenses.
In connection with the redemption of the Senior Notes during the first quarter
of 2021, we wrote off the following amounts to gain/loss on extinguishment of
debt: (i) $14.5 million in prepayment premiums for the early retirement of the
Senior Notes; (ii) $8.7 million of unamortized premium attributable to the
Senior Notes; (iii) $1.0 million of unamortized debt issuance costs attributable
to the Senior Notes; and (iv) $1.3 million of unamortized debt issuance costs
attributable to the Term B-2 Loan.
 Nine Months Ended September 30, 2021 As Compared To The Nine Months Ended September 30,
                                           2020


                                                                       NINE MONTHS ENDED SEPTEMBER 30,
                                                              2021                   2020                % Change
                                                               (dollars in millions)
NET REVENUES                                           $          874.6          $   741.4                       18  %

OPERATING EXPENSE:
Station operating expenses                                        718.9              668.2                        8  %
Depreciation and amortization expense                              38.7               37.7                        3  %
Corporate general and administrative expenses                      71.5               42.0                       70  %
Integration costs                                                     -                0.5                     (100) %
Restructuring charges                                               4.2               10.3                      (59) %
Impairment loss                                                     1.4               17.0                      (92) %

Refinancing expenses                                                0.5                  -                      100  %
Other expenses                                                      0.5               (0.2)                    (350) %
Total operating expense                                           835.7              775.5                        8  %
OPERATING INCOME (LOSS)                                            38.9              (34.1)                    (214) %

INTEREST EXPENSE                                                   66.4               66.1                        -  %
Net (gain) loss on extinguishment of debt                           8.2                  -                      100  %
Net (gain) loss on sale or disposal of assets                      (3.7)                 -                      100  %
Other (income) expense                                             (0.5)                 -                      100  %

(LOSS) BEFORE INCOME TAXES (BENEFIT)                              (31.5)            (100.2)                     (69) %

INCOME TAXES (BENEFIT)                                             (6.5)             (20.4)                     (68) %

NET INCOME (LOSS)                                      $          (25.0)         $   (79.8)                     (69) %


Net Revenues
Revenues increased compared to prior year primarily due to economic recovery and
improvements across all segments of our business from the depressed levels of
the prior year. Prior year revenues were negatively impacted from the economic
slowdown triggered by the COVID-19 pandemic.
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Net revenues were also positively impacted by: (i) growth in our spot revenues;
(ii) growth in our digital revenues; (iii) the operations of QLGG for the full
period; and (iv) the operations of Podcorn for a portion of the period.
Net revenues increased the most for our stations located in the Los Angeles and
New York City markets. Net revenues decreased the most for our stations located
in the Charlotte and Phoenix markets. We exited the Charlotte market in
connection with the Urban One Exchange.
Station Operating Expenses
Station operating expenses increased compared to prior year primarily due to:
(i) an increase in payroll and related expenses in the current year due to the
reversal of payroll reduction measures taken in 2020; and (ii) an increase in
2021 revenues which resulted in a corresponding increase in variable
sales-related expenses.
Station operating expenses include non-cash compensation expense of $3.1 million
and $1.6 million for the nine months ended September 30, 2021 and September 30,
2020, respectively.
Depreciation and Amortization Expense
Depreciation and amortization expense increased primarily due to an increase in
amortization of intangible assets in 2021 relative to 2020. The increase in
amortization is due to the addition of amortizable intangible assets in the QLGG
Acquisition and the Podcorn Acquisition. Additionally, depreciation and
amortization expense increased due to an increase in capital expenditures in
2021 relative to 2020. The decrease in capital expenditures in 2020 was planned
in order to mitigate the adverse financial impact of the COVID-19 pandemic. This
reduction was part of a comprehensive set of measures to significantly reduce
expenses and cash expenditures.
Corporate General and Administrative Expenses
Corporate general and administrative expenses increased primarily as a result
of: (i) an increase in payroll and related expenses in the current year; and
(ii) an increase in corporate rebranding costs in connection with our corporate
name change. In 2020, we implemented certain measures to reduce expenses, and
offset reduction in revenue due to COVID-19, including: (i) temporary salary
reductions; and (ii) temporary freezing of contractual salary increases. Upon
the reversal of these measures, we incurred increased costs in the current year.
Corporate general and administrative expenses include non-cash compensation
expense of $6.7 million and $4.6 million for the nine months ended September 30,
2021 and September 30, 2020, respectively.
Integration Costs
Integration costs were incurred during the nine months ended September 30, 2020
as a result of the Merger. These costs primarily consisted of ongoing costs
related to effectively combining and incorporating CBS Radio into our
operations. Based on the timing of the Merger, integration activities primarily
occurred in 2017 and 2018 and were reduced significantly in 2019 and 2020.
Restructuring Charges
We incurred restructuring charges in 2021 and 2020 primarily in response to the
COVID-19 pandemic. These costs primarily included workforce reduction charges.
Impairment Loss
The impairment loss incurred during the nine months ended September 30, 2021
includes a $0.8 million write down of property and equipment and $0.5 million
related to an early termination of certain leases. During the nine months ended
September 30, 2020, we conducted interim impairment assessments on our
broadcasting licenses. As a result of the interim impairment assessments, we
determined that the carrying value of our broadcasting licenses was greater than
their fair value in certain markets and we recorded a cumulative non-cash
impairment charge on our broadcasting licenses of $16.0 million.
Refinancing Expenses
We incurred $0.5 million of costs in connection with the issuance of the 2029
Notes.
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Interest Expense
During the nine months ended September 30, 2021, we incurred an additional $0.3
million in interest expense as compared to the nine months ended September 30,
2020.
As discussed above, we issued the $540.0 million 2029 Notes in March 2021 and
used net proceeds and cash on hand to partially repay $517.0 million of existing
indebtedness under our Term B-2 Loan, Revolver, and Senior Notes.
This increase in interest expense was primarily attributable to an increase in
the outstanding indebtedness upon which interest is computed. This increase was
partially offset by: (i) a reduction in outstanding variable-rate indebtedness
upon which interest is computed; and (ii) the replacement of a portion of our
fixed-rate debt with fixed-rate debt at a lower interest rate.
Net (Gain) Loss on Extinguishment of Debt
As discussed above, in connection with the redemption of the Senior Notes during
the first quarter of 2021, we wrote off: (i) $14.5 million in prepayment
premiums for the early retirement of the Senior Notes; (ii) $1.0 million of
unamortized debt issuance costs attributable to the Senior Notes; and (iii) $1.3
million of unamortized debt issuance costs attributable to the Term B-2 Loan.
These losses on the extinguishment of debt were partially offset by the write
off of $8.7 million of unamortized premium attributable to the Senior Notes.
Net (Gain) Loss on Sale or Disposal of Assets
During the nine months ended September 30, 2021, we recognized:(i) a gain of
$4.0 million from the Urban One Exchange; and (ii) a gain of $0.8 million from
the liquidation of one of our investments. These gains were partially offset by
a $1.1 million loss on disposal of property, plant and equipment.
Income Taxes (Benefit)
Tax Rate for the Nine Months Ended September 30, 2021
We recognized an income tax benefit at an effective income tax rate of 20.7% for
the nine months ended September 30, 2021. We have historically calculated the
provision for income taxes during interim reporting periods by applying an
estimate of the annual effective tax rate for the full fiscal year to "ordinary"
income or loss (pretax income or loss excluding unusual or infrequently
occurring discrete items) for the reporting period. We used a discrete effective
tax rate method to calculate taxes for the fiscal three- and nine-month periods
ended September 30, 2021. We determined that since small changes in estimated
"ordinary" income would result in significant changes in the estimated annual
effective tax rate, the historical method would not provide a reliable estimate
for the fiscal three- and nine-month periods ended September 30, 2021.
On March 27, 2020, the United States enacted the Coronavirus Aid, Relief, and
Economic Security Act (the "CARES Act"). The CARES Act is an emergency economic
stimulus package that includes spending and tax breaks to strengthen the United
States economy and fund a nationwide effort to curtail the effects of the
COVID-19 pandemic. The CARES Act includes significant business tax provisions
that, among other things, includes the removal of certain limitations on
utilization of NOLs, increases the loss carry back period for certain losses to
five years, and increases the ability to deduct interest expense, as well as
amending certain provisions of the previously enacted Tax Cuts and Jobs Act. We
are continuing to assess the impact that the CARES Act may have on our tax
obligations.
On December 27, 2020, the United States enacted the Consolidated Appropriations
Act, 2021 (the "Appropriations Act"), an additional stimulus package providing
financial relief for individuals and small businesses. The Appropriations Act
contains a variety of tax provisions, including full expensing of business meals
in 2021 and 2022, and expansion of the employee retention tax credit. We do not
currently expect the Appropriations Act to have a material tax impact.
Tax Rate for the Nine Months Ended September 30, 2020
The estimated annual effective income tax rate was 20.4%, which was determined
using a forecasted rate based upon projected taxable income for the year. The
effective income tax rate was impacted by a discrete income tax expense item
related to the shortfall associated with share-based awards.
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Three Months Ended September 30, 2021 As Compared To The Three Months Ended September 30,
                                           2020


                                                                    THREE MONTHS ENDED SEPTEMBER 30,
                                                             2021               2020               % Change
                                                              (dollars in millions)
NET REVENUES                                             $    329.4          $  268.5                      23  %

OPERATING EXPENSE:
Station operating expenses                                    261.0             228.7                      14  %
Depreciation and amortization expense                          12.5              12.6                      (1) %
Corporate general and administrative expenses                  24.2              14.5                      67  %

Restructuring charges                                           2.3               1.2                      92  %
Impairment loss                                                   -              11.8                    (100) %

Other expenses                                                  0.2                 -                     100  %
Total operating expense                                       300.2             268.8                      12  %
OPERATING INCOME (LOSS)                                        29.2              (0.3)                 (9,833) %
INTEREST EXPENSE                                               22.8              20.8                      10  %

INCOME (LOSS) BEFORE INCOME TAXES (BENEFIT)                     6.4             (21.1)                   (130) %

INCOME TAXES (BENEFIT)                                         11.2              (4.2)                   (367) %

NET INCOME (LOSS)                                        $     (4.8)         $  (16.9)                    (72) %


Net Revenues
Revenues increased compared to prior year primarily due to economic recovery and
improvements across all segments of our business from the depressed levels of
the prior year. Prior year revenues were negatively impacted from the economic
slowdown triggered by the COVID-19 pandemic.
Net revenues were also positively impacted by: (i) growth in our spot revenues;
(ii) growth in our digital revenues; (iii) the operations of QLGG for the full
period; and (iv) the operations of Podcorn for the full period.
Net revenues increased the most for our stations located in the Los Angeles and
New York City markets. Net revenues decreased the most for our stations located
in the Charlotte and Greensboro markets. We exited the Charlotte market in
connection with the Urban One Exchange.
Station Operating Expenses
Station operating expenses increased compared to prior year primarily due to:
(i) an increase in payroll and related expenses in the current year due to the
reversal of payroll reduction measures taken in 2020; and (ii) an increase in
2021 revenues which resulted in a corresponding increase in variable
sales-related expenses.
Station operating expenses include non-cash compensation expense of $0.9 million
and $0.5 million for the three months ended September 30, 2021 and September 30,
2020, respectively.
Depreciation and Amortization Expense
Depreciation expense for the three months ended September 30, 2021 as compared
to depreciation expense for the three months ended September 30, 2020 remained
generally consistent period over period.


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Corporate General and Administrative Expenses
Corporate general and administrative expenses increased primarily as a result
of: (i) an increase in payroll and related expenses in the current year; and
(ii) an increase in corporate rebranding costs in connection with our corporate
name change. In 2020, we implemented certain measures to reduce expenses, and
offset reduction in revenue due to COVID-19, including: (i) temporary salary
reductions; and (ii) temporary freezing of contractual salary increases. Upon
the reversal of these measures, we incurred increased costs in the current year.
Corporate general and administrative expenses include non-cash compensation
expense of $3.5 million and $1.4 million for the three months ended
September 30, 2021 and September 30, 2020, respectively.
Restructuring Charges
We incurred restructuring charges in 2021 and 2020 primarily in response to the
COVID-19 pandemic. These costs primarily included workforce reduction charges
and were expensed as incurred.
Impairment Loss
During the three months ended September 30, 2020, we conducted an interim
impairment assessment on our broadcasting licenses. As a result of the interim
impairment assessment, we determined that the carrying value of our broadcasting
licenses was greater than their fair value in certain markets and we recorded a
non-cash impairment charge on our broadcasting licenses of $11.8 million.
Interest Expense
During the three months ended September 30, 2021, we incurred an additional $2.0
million in interest expense as compared to the three months ended September 30,
2020. As discussed above, we issued the $540.0 million 2029 Notes in March 2021
and used net proceeds and cash on hand to partially repay $517.0 million of
existing indebtedness under our Term B-2 Loan, Revolver, and Senior Notes.
This increase in interest expense was primarily attributable to an increase in
the outstanding indebtedness upon which interest is computed. This increase was
partially offset by: (i) a reduction in outstanding variable-rate indebtedness
upon which interest is computed; and (ii) the replacement of a portion of our
fixed-rate debt with fixed-rate debt at a lower interest rate.
Income Taxes (Benefit)
As discussed above, we used a discrete effective tax rate method to calculate
taxes for the three months ended September 30, 2021.
For the three months ended September 30, 2021, the effective income tax rate was
173.5%. The effective income tax rate for the quarter was impacted by a decrease
in the estimated annualized effective tax rate.
For the three months ended September 30, 2020, the effective income tax rate was
20.0%, which was determined using a forecasted rate based upon projected taxable
income for the full year along with the impact of discrete items for the
quarter.
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Liquidity and Capital Resources
Liquidity
Although we have been, and expect to continue to be, negatively impacted by the
COVID-19 pandemic, we anticipate that our business will continue to generate
sufficient cash flow from operating activities and we believe that these cash
flows, together with our existing cash and cash equivalents and our ability to
draw on current credit facilities, will be sufficient for us to meet our current
and long-term liquidity and capital requirements. However, our ability to
maintain adequate liquidity is dependent upon a number of factors, including our
revenue, macroeconomic conditions, the length and severity of business
disruptions caused by the COVID-19 pandemic, our ability to contain costs and to
collect accounts receivable, and various other factors, many of which are beyond
our control. Moreover, if the COVID-19 pandemic continues to create significant
disruptions in the credit or financial markets, or impacts our credit ratings,
it could adversely affect our ability to access capital on attractive terms, if
at all. We also expect the timing of certain priorities to be impacted, such as
the pace of our debt reduction efforts and the delay of certain capital
projects.
The Credit Facility as amended, is comprised of the $250.0 million Revolver and
the Term B-2 Loan with $677.0 million outstanding at September 30, 2021. During
the nine months ended September 30, 2021, and in connection with the issuance of
the 2029 Notes we: (i) repaid $40.0 million outstanding under our Revolver; and
(ii) repaid $77.0 million outstanding under the Term B-2 Loan. We subsequently
made additional borrowings and payments against our Revolver.
As of September 30, 2021, we had $677.0 million outstanding under the Term B-2
Loan and $42.7 million outstanding under the Revolver. In addition, we had $6.1
million in outstanding letters of credit.
As of September 30, 2021, total liquidity was $264.1 million, which was
comprised of $201.3 million available under the Revolver and $62.8 million in
cash and cash equivalents. For the nine months ended September 30, 2021, we
increased our outstanding debt by $51.5 million due to: (i) the previously
discussed debt refinancing activities; (ii) additional draw down and repayment
activity under our Revolver; and (iii) the addition of our $75.0 million
accounts receivable facility, discussed below.
As of September 30, 2021, our Consolidated Net First Lien Leverage Ratio was 3.0
times as calculated in accordance with the terms of our Credit Facility, which
place restrictions on the amount of cash, cash equivalents and restricted cash
that can be subtracted in determining consolidated first lien net debt.
Accounts Receivable Facility
On July 15, 2021, we and certain of our subsidiaries entered into a
$75.0 million accounts receivable securitization facility (the "Receivables
Facility") to provide additional liquidity, to reduce our cost of funds and to
repay outstanding indebtedness under the Credit Facility.
The documentation for the Receivables Facility includes (i) a Receivables
Purchase Agreement (the "Receivables Purchase Agreement") entered into by and
among Audacy Operations, Inc., a Delaware corporation and our wholly-owned
subsidiary ("Audacy Operations"), Audacy Receivables, LLC, a Delaware limited
liability company and our wholly-owned subsidiary, as seller ("Audacy
Receivables"), the investors party thereto (the "Investors"), and DZ BANK AG
Deutsche Zentral-Genossenschaftsbank, Frankfurt AM Main, as agent ("DZ BANK");
(ii) a Sale and Contribution Agreement (the "Sale and Contribution Agreement"),
by and among Audacy Operations, Audacy New York, LLC, a Delaware limited
liability company and our wholly-owned subsidiary ("Audacy NY"), and Audacy
Receivables; and (iii) a Purchase and Sale Agreement (the "Purchase and Sale
Agreement," and together with the Receivables Purchase Agreement and the Sale
and Contribution Agreement, the "Agreements") by and among certain of our
wholly-owned subsidiaries (together with Audacy NY, the "Originators"), Audacy
Operations and Audacy NY.
Yield is payable to Investors under the Receivables Purchase Agreement at a
variable rate based on either one-month LIBOR or commercial paper rates plus a
margin. Collections on the accounts receivable: (x) will be used to: (i) satisfy
the obligations of Audacy Receivables under the Receivables Facility; or (ii)
purchase additional accounts receivable from the Originators; or (y) may be
distributed to Audacy NY, the sole member of Audacy Receivables. Audacy
Operations acts as the servicer under the Agreements.

The Agreements contain representations, warranties and covenants that are
customary for bankruptcy-remote securitization transactions, including covenants
requiring Audacy Receivables to be treated at all times as an entity separate
from the Originators, Audacy Operations, the Company or any of its other
affiliates and that transactions entered into between Audacy Receivables and any
of its affiliates shall be on arm's-length terms. The Receivables Purchase
Agreement also contains
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customary default and termination provisions which provide for acceleration of
amounts owed under the Receivables Purchase Agreement upon the occurrence of
certain specified events with respect to Audacy Receivables, Audacy Operations,
the Originators, or the Company, including, but not limited to: (i) Audacy
Receivables's failure to pay yield and other amounts due; (ii) certain
insolvency events; (iii) certain judgments entered against the parties; (iv)
certain liens filed with respect to assets; and (v) breach of certain financial
covenants and ratios.

We have agreed to guarantee the performance obligations of Audacy Operations and
the Originators under the Receivables Facility documents. We have not agreed to
guarantee any obligations of Audacy Receivables or the collection of any of the
receivables and will not be responsible for any obligations to the extent the
failure to perform such obligations by Audacy Operations or any Originator
results from receivables being uncollectible on account of the insolvency,
bankruptcy or lack of creditworthiness or other financial inability to pay of
the related obligor.

In general, the proceeds from the sale of the accounts receivable are used by
the SPV to pay the purchase price for accounts receivables it acquires from
Audacy NY and may be used to fund capital expenditures, repay borrowings on the
Credit Facility, satisfy maturing debt obligations, as well as fund working
capital needs and other approved uses.

Although the SPV is a wholly owned consolidated subsidiary of Audacy NY, the SPV
is legally separate from Audacy NY. The assets of the SPV (including the
accounts receivables) are not available to creditors of Audacy NY, Audacy
Operations or the Company, and the accounts receivables are not legally assets
of Audacy NY, Audacy Operations or the Company. The Receivables Facility is
accounted for as a secured financing. The pledged receivables and the
corresponding debt are included in Accounts receivable and Long-term debt,
respectively, on the Consolidated Balance Sheets.
The Receivables Facility will expire on July 15, 2024, unless earlier terminated
or subsequently extended pursuant to the terms of the Receivables Purchase
Agreement. The pledged receivables and the corresponding debt are included in
Accounts receivable, net and Long-term debt, net of current portion,
respectively, on the Condensed Consolidated Balance Sheet. At September 30,
2021, we had outstanding borrowings of $75.0 million under the Receivables
Facility.
Amendment and Repricing - CBS Radio (Now Audacy Capital Corp.) Indebtedness
In connection with the Merger, we assumed CBS Radio's (now Audacy Capital
Corp.'s) indebtedness outstanding under: (i) a credit agreement (the "Credit
Facility") among CBS Radio (now Audacy Capital Corp.), the guarantors named
therein, the lenders named therein, and JPMorgan Chase Bank, N.A., as
administrative agent; and (ii) the Senior Notes (described below).
The 2027 Notes
During 2019, we and our finance subsidiary, Audacy Capital Corp. (formerly,
Entercom Media Corp.), issued $425.0 million in aggregate principal amount of
senior secured second-lien notes due May 1, 2027 (the "2027 Notes"). Interest on
the 2027 Notes accrues at the rate of 6.500% per annum and is payable
semi-annually in arrears on May 1 and November 1 of each year.
A portion of the 2027 Notes was issued at a premium. The premium on the 2027
Notes will be amortized over the term under the effective interest rate method.
As of any reporting period, the unamortized premium on the Notes is reflected on
the balance sheet as an addition to the 2027 Notes.
We used net proceeds of the offering, along with cash on hand and amounts
borrowed under our Revolver, to repay $521.7 million of existing indebtedness
under our term loan component previously outstanding (the "Term B-1 Loan").
Contemporaneous with this partial pay-down of the Term B-1 Loan, we replaced the
remaining amount outstanding under the Term B-1 Loan with the Term B-2 Loan.
The 2027 Notes are fully and unconditionally guaranteed on a senior secured
second-lien basis by most of the direct and indirect subsidiaries of Audacy
Capital Corp. (formerly, Entercom Media Corp.). The 2027 Notes and the related
guarantees are secured on a second-lien priority basis by liens on substantially
all of the assets of Audacy Capital Corp. (formerly, Entercom Media Corp.) and
the guarantors.
A default under the 2027 Notes could cause a default under the Credit Facility
and/or the 2029 Notes. Any event of default, therefore, could have a material
adverse effect on our business and financial condition.
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The 2027 Notes are not a registered security and there are no plans to register
the 2027 Notes as a security in the future. As a result, Rule 3-10 of Regulation
S-X promulgated by the SEC is not applicable and no separate financial
statements are required for the guarantor subsidiaries.
The Credit Facility
The Term B-2 Loan requires mandatory prepayments equal to a percentage of Excess
Cash Flow, subject to incremental step-downs, depending on the Consolidated Net
Secured Leverage Ratio. The Excess Cash Flow payment is based on the Excess Cash
Flow and the Consolidated Net Secured Leverage Ratio for the prior year. We made
our first Excess Cash Flow payment in the first quarter of 2020.
As of September 30, 2021, we were in compliance with the financial covenant then
applicable and all other terms of the Credit Facility in all material respects.
Our ability to maintain compliance with our financial covenant under the Credit
Facility is highly dependent on our results of operations. Currently, given the
impact of COVID-19, the outlook is highly uncertain.
Failure to comply with our financial covenant or other terms of our Credit
Facility and any subsequent failure to negotiate and obtain any required relief
from our lenders could result in a default under the Credit Facility. We will
continue to monitor our liquidity position and covenant obligations and assess
the impact of the COVID-19 pandemic on our ability to comply with the covenants
under the Credit Facility.
Any event of default could have a material adverse effect on our business and
financial condition. We may seek from time to time to amend our Credit Facility
or obtain other funding or additional funding, which may result in higher
interest rates on our debt. However, we may not be able to do so on terms that
are acceptable or to the extent necessary to avoid a default, depending upon
conditions in the credit markets, the length and depth of the market reaction to
the COVID-19 pandemic and our ability to compete in this environment.
The Credit Facility - Amendment No. 5
On July 20, 2020, Audacy Capital Corp. (formerly, Entercom Media Corp.), our
wholly-owned subsidiary, entered into an amendment ("Amendment No. 5") to the
Credit Agreement, dated October 17, 2016 (as previously amended, the "Existing
Credit Agreement" and, as amended by Amendment No. 5, the "Credit Agreement"),
with the guarantors party thereto, the lenders party thereto and JPMorgan Chase
Bank, N.A., as administrative agent and collateral agent. Amendment No. 5, among
other things:
(a) amended our financial covenants under the Credit Agreement by: (i)
suspending the testing of the Consolidated Net First Lien Leverage Ratio (as
defined in the Credit Agreement) through the Test Period (as defined in the
Credit Agreement) ending December 31, 2020; (ii) adding a new minimum liquidity
covenant of $75.0 million until December 31, 2021, or such earlier date as we
may elect (the "Covenant Relief Period"); and (iii) imposing certain
restrictions during the Covenant Relief Period, including among other things,
certain limitations on incurring additional indebtedness and liens, making
restricted payments or investments, redeeming notes and entering into certain
sale and lease-back transactions;
(b) increased the interest rate and/or fees under the Credit Agreement during
the Covenant Relief Period applicable to: (i) 2024 Revolving Credit Loans (as
defined in the Credit Agreement) to (x) in the case of Eurodollar Rate Loans (as
defined in the Credit Agreement), a customary Eurodollar rate formula plus a
margin of 2.50% per annum, and (y) in the case of Base Rate Loans (as defined in
the Credit Agreement), a customary base rate formula plus a margin of 1.50% per
annum, and (ii) Letter of Credit (as defined in the Credit Agreement) fees to
2.50% times the daily maximum amount available to be drawn under any such Letter
of Credit; and
(c) modified the definition of Consolidated EBITDA by setting fixed amounts for
the fiscal quarters ending June 30, 2020, September 30, 2020, and December 31,
2020, for purposes of testing compliance with the Consolidated Net First Lien
Leverage Ratio financial covenant during the Covenant Relief Period, which fixed
amounts correspond to the Borrower's Consolidated EBITDA as reported under the
Existing Credit Agreement for the Test Period ended March 31, 2020, for the
fiscal quarters ending June 30, 2019, September 30, 2019, and December 31, 2019,
respectively.
The Credit Facility - Amendment No. 6
On March 5, 2021, Audacy Capital Corp. (formerly, Entercom Media Corp.) our
wholly owned subsidiary, entered into an amendment ("Amendment No. 6") to the
Credit Agreement, dated October 17, 2016 (as previously amended, the "Existing
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Credit Agreement" and, as amended by Amendment No. 6, the "Credit Agreement"),
with the guarantors party thereto, the lenders party thereto and JPMorgan Chase
Bank, N.A., as administrative agent and collateral agent.
Under the Existing Credit Agreement, during the Covenant Relief Period the
Company is subject to a $75.0 million limitation on investments in joint
ventures, Affiliates, Unrestricted Subsidiaries and Non-Guarantor Subsidiaries
(each as defined in the Existing Credit Agreement) (the "Covenant Relief Period
Investment Limitation"). Amendment No. 6, among other things, excludes from the
Covenant Relief Period Investment Limitation any investments made in connection
with a permitted receivables financing facility.
2021 Debt Refinancing - The 2029 Notes
During the first quarter of 2021, we and our finance subsidiary, Audacy Capital
Corp. (formerly, Entercom Media Corp.), issued $540.0 million in aggregate
principal amount of senior secured second-lien notes due March 31, 2029 (the
"2029 Notes"). Interest on the 2029 Notes accrues at the rate of 6.750% per
annum and is payable semi-annually in arrears on March 31 and September 30 of
each year.
We used net proceeds of the offering, along with cash on hand, to: (i) repay
$77.0 million of existing indebtedness under the Term B-2 Loan; (ii) repay $40.0
million of drawings under the Revolver; and (iii) fully redeem all of our $400.0
million aggregate principal amount of 7.250% senior notes due 2024 (the "Senior
Notes") and to pay fees and expenses in connection with the redemption.
In connection with this activity, during the first quarter of 2021, the Company:
(i) recorded $6.6 million of new debt issuance costs attributable to the 2029
Notes which will be amortized over the term of the 2029 Notes under the
effective interest method; and (ii) $0.4 million of debt issuance costs
attributable to the Revolver which will be amortized over the remaining term of
the Revolver on a straight line basis. We also incurred $0.5 million of costs
which were classified within refinancing expenses.
The 2029 Notes are fully and unconditionally guaranteed on a senior secured
second priority basis by each of the direct and indirect subsidiaries of Audacy
Capital Corp. (formerly, Entercom Media Corp.).
A default under the 2029 Notes could cause a default under our Credit Facility
or the 2027 Notes. Any event of default, therefore, could have a material
adverse effect on our business and financial condition.
The 2029 Notes are not a registered security and there are no plans to register
the 2029 Notes as a security in the future. As a result, Rule 3-10 of Regulation
S-X promulgated by the SEC is not applicable and no separate financial
statements are required for the guarantor subsidiaries.
The Senior Notes
Simultaneously with entering into the Merger and assuming the Credit Facility on
November 17, 2017, we also assumed the Senior Notes that were set to mature on
November 1, 2024 in the amount of $400.0 million (the "Senior Notes"). The
Senior Notes, which were originally issued by CBS Radio (now Audacy Capital
Corp.) on October 17, 2016, were valued at a premium as part of the fair value
measurement on the date of the Merger. The premium on the Senior Notes was
amortized over the term under the effective interest rate method. As of any
reporting period, the unamortized premium on the Senior Notes was reflected on
the balance sheet as an addition to the $400.0 million liability.
As discussed above, during the nine months ended September 30, 2021, we issued a
call notice to redeem our Senior Notes with an effective date of April 10, 2021.
We incurred interest on the Senior Notes until the redemption date. In
connection with the redemption, we deposited the following funds to satisfy our
obligations under the Senior Notes and discharge the Indenture governing the
Senior Notes: (i) $400.0 million to redeem the Senior Notes in full; (ii) $14.5
million for a call premium for the early retirement of the Senior Notes; and
(iii) $12.8 million for accrued and unpaid interest through April 10, 2021. As a
result of the refinancing, we recorded an $8.2 million loss on extinguishment of
debt that included the call premium, the write off of unamortized debt issuance
costs, and the write off of unamortized premium on the Senior Notes.
Operating Activities
Net cash flows provided by operating activities were $45.6 million and $82.0
million for the nine months ended September 30, 2021 and September 30, 2020,
respectively.
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The cash flows from operating activities decreased primarily due to an increase
in net investment in working capital of $98.6 million. This decrease was
partially offset by an increase in net income, as adjusted for certain non-cash
charges and income tax benefits of $61.2 million.
The increase in investment in working capital is primarily due to the timing of:
(i) collections of accounts receivable; (ii) settlements of accounts payable and
accrued liabilities; (iii) settlements of accrued interest expense; (iv)
settlements of other long-term liabilities; and (v) settlements of prepaid
expenses.
The increase in net income, as adjusted for certain non-cash charges and income
tax benefits is primarily attributable to: (i) a reduction in net loss of $54.8
million; (ii) a reduction in deferred tax benefits of $22.0 million; and (iii) a
reduction in impairment loss of $15.7 million
Investing Activities
Net cash flows used in investing activities were $53.4 million and $11.5 million
for the nine months ended September 30, 2021 and September 30, 2020,
respectively
During 2021, net cash flows used in investing activities increased primarily due
to: (i) an increase to additions to tangible and intangible assets of $17.4
million; (ii) an increase in purchase of businesses and audio assets of $15.3
million; and (iii) a reduction in proceeds from sales of radio stations and
other assets of $9.3 million.
Financing Activities
Net cash flows provided by financing activities were $39.7 million for the nine
months ended September 30, 2021. Net cash flows used in financing activities
were $58.5 million for the nine months ended September 30, 2020.
During 2021, net cash flows provided by financing activities increased primarily
due to: (i) an increase in the proceeds from issuance of long-term debt of
$540.0 million; (ii) an increase in the proceeds from the Receivables Facility
of $75.0 million; and (iii) a reduction in payments against the Revolver of
$62.0 million. These increases in cash inflows were partially offset by: (i) an
increase in cash outflows related to the redemption of the Senior Notes of
$400.0 million; (ii) a reduction in borrowings under the Revolver of $94.7
million; (iii) an increase in payments of long-term debt of $62.4 million; (iv)
an increase in payments of call premiums and other fees of $14.5 million; and
(v) an increase in payments for debt issuance costs of $9.4 million.
Dividends
Following the payment of the quarterly dividend payment for the first quarter of
2020, we suspended our quarterly dividend program. Any future dividends will be
at the discretion of the Board based upon the relevant factors at the time of
such consideration, including, without limitation, compliance with the
restrictions set forth in our Credit Facility, the 2027 Notes and the 2029
Notes.
Share Repurchase Program
During the nine months ended September 30, 2021, we did not repurchase any
shares under our share repurchase program (the "2017 Share Repurchase Program").
As of September 30, 2021, $41.6 million is available for future share
repurchases under the 2017 Share Repurchase Program.
Income Taxes
During the nine months ended September 30, 2021, we did not pay any federal
income taxes. During the nine months ended September 30, 2021, we received a net
refund of $0.3 million in state income taxes. We do not anticipate making any
federal income tax payments in 2021 primarily as a result of the availability of
NOLs to offset federal tax due.
For federal income tax purposes, the acquisition of CBS Radio was treated as a
reverse acquisition which caused us to undergo an ownership change under Section
382 of the Internal Revenue Code ("Code"). This ownership change will limit the
utilization of our NOLs for post-acquisition tax years. We may need to make
additional state estimated tax payments during the remainder of the year.
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Capital Expenditures
Capital expenditures, including amortizable intangibles, for the nine months
ended September 30, 2021 were $39.3 million. We anticipate that total capital
expenditures in 2021 will be between $70 million and $75 million as we increase
our investment in the rapidly growing digital audio advertising market.
Contractual Obligations
As of September 30, 2021, there have been no net material changes in the total
amount from the contractual obligations listed in our Form 10-K for the year
ended December 31, 2020, as filed with the SEC on March 1, 2021, other than as
described below.
As discussed above in the liquidity section, during the nine months ended
September 30, 2021, we issued the $540.0 million 2029 Notes and used net
proceeds to: (i) fully redeem the $400.0 million Senior Notes due to mature in
2024; (ii) repay $77.0 million under the Term B-2 Loan; and (iii) repay $40.0
million under the Revolver. Additionally, we also entered into a $75.0 million
accounts receivable securitization facility to provide additional liquidity. As
a result of this activity and other borrowings and payments against our
Revolver, the amounts outstanding under our long-term debt obligations increased
by $51.5 million during the nine months ended September 30, 2021 and the
maturity of our debt was pushed out to later periods.
As discussed above, during the nine months ended September 30, 2021, we acquired
Podcorn. This acquisition included cash due at closing as well as contingent
consideration. The fair value of the contingent consideration, which is included
in other long-term liabilities, is $8.4 million at September 30, 2021.
Off-Balance Sheet Arrangements
As of September 30, 2021, we did not have any material off-balance sheet
transactions, arrangements or obligations, including contingent obligations.
We do not have any other relationships with unconsolidated entities or financial
partnerships, such as entities often referred to as structured finance or
special purpose entities, which would have been established for the purpose of
facilitating off-balance sheet financial arrangements or other contractually
narrow or limited purposes as of September 30, 2021. Accordingly, we are not
materially exposed to any financing, liquidity, market or credit risk that could
arise if we had engaged in such relationships.
Critical Accounting Policies
There have been no material changes to our critical accounting policies from the
information provided in Part II, Item 7, Management's Discussion and Analysis of
Financial Condition and Results of Operations - Critical Accounting Policies, in
our Annual Report on Form 10-K for the year ended December 31, 2020, as filed
with the SEC on March 1, 2021.
Goodwill Valuation Risk
We no longer have any goodwill attributable to the broadcast reporting unit.
Cadence13, Pineapple and Podcorn represent a single podcasting division one
level beneath the single operating segment. Since the operations are
economically similar, Cadence13, Pineapple and Podcorn were aggregated into a
single podcasting reporting unit. QLGG represents a separate division one level
beneath the single operating segment and its own reporting unit.
Future impairment charges may be required on our goodwill attributable to our
podcast reporting unit and the QLGG reporting unit, as the discounted cash flow
model is subject to change based upon our performance, peer company performance,
overall market conditions, and the state of the credit markets. We continue to
monitor these relevant factors to determine if an interim impairment assessment
is warranted.
A deterioration in our forecasted financial performance, an increase in discount
rates, a reduction in long-term growth rates, a sustained decline in our stock
price, or a failure to achieve analyst expectations could all be potential
indicators of an impairment to the remaining goodwill attributable to the
podcasting reporting unit and the QLGG reporting unit, which could be material,
in future periods. The COVID-19 pandemic increases the uncertainty with respect
to such market and economic conditions and, as such, increases the risk of
future impairment.
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As of September 30, 2021, we evaluated whether the facts and circumstances and
available information result in the need for an impairment assessment for any
goodwill, and concluded no assessment was required. We will continue to evaluate
the impacts of the COVID-19 pandemic on our business, including the impacts of
overall economic conditions, which could result in the recognition of an
impairment charge in the future.
Broadcasting License Risk
After the annual impairment test conducted on our broadcasting licenses in the
fourth quarter of 2020 in which 38 markets were written down to fair value, the
results indicated that there were 41 units of accounting where the fair value
exceeded their carrying value by 10% or less. In aggregate, these 41 units of
accounting had a carrying value of $2,160.6 million at December 31, 2020. As a
result of the Urban One Exchange, in which we recorded an additional $23.2
million of broadcasting licenses at fair value, this figure was increased to
$2,183.8 million at September 30, 2021.
If overall market conditions or the performance of the economy deteriorates,
advertising expenditures and radio industry results could be negatively
impacted, including expectations for future growth. This could result in future
impairment charges for these or other of our units of accounting, which could be
material. The COVID-19 pandemic increases the uncertainty with respect to such
market and economic conditions and, as such, increases the risk of future
impairment.
As of September 30, 2021, we evaluated whether the facts and circumstances and
available information result in the need for an impairment assessment for any of
our broadcasting licenses, and concluded no assessment was required. We will
continue to evaluate the impacts of the COVID-19 pandemic on our business,
including the impacts of overall economic conditions, which could result in the
recognition of an impairment charge, which could be material, in the future.
ITEM 3.  Quantitative And Qualitative Disclosures About Market Risk
We are exposed to market risk from changes in interest rates on our
variable-rate senior indebtedness (the Term B-2 Loan and Revolver). From time to
time, we may seek to limit our exposure to interest rate volatility through the
use of derivative rate hedging instruments.
As of September 30, 2021, if the borrowing rates under LIBOR were to increase 1%
above the current rates, our interest expense on: (i) our Term B-2 Loan would
increase $5.7 million on an annual basis, including any increase or decrease in
interest expense associated with the use of derivative rate hedging instruments
as described below; and (ii) our Revolver would increase by $2.5 million,
assuming our entire Revolver was outstanding as of September 30, 2021.
Assuming LIBOR remains flat, interest expense in 2021 versus 2020 is expected to
be higher primarily due to the replacement of a portion of our variable-rate
debit with fixed-rate debt at a higher interest rate. We may seek from time to
time to amend our Credit Facility or obtain additional funding, which may result
in higher interest rates on our indebtedness and could increase our exposure to
variable-rate indebtedness.
During the quarter ended June 30, 2019, we entered into the following derivative
rate hedging transaction in the notional amount of $560.0 million to hedge our
exposure to fluctuations in interest rates on our variable-rate debt. This rate
hedging transaction is tied to the one-month LIBOR interest rate.
    Type                                                                               Fixed                                       Notional                Amount
     Of                Notional              Effective                                 LIBOR              Expiration                Amount                  After
   Hedge                Amount                  Date                Collar              Rate                 Date                 Decreases               Decrease
                       (amounts                                                                                                                           (amounts
                    (in millions)                                                                                                                       (in millions)

Collar                  $340.0            Jun. 25, 2019          Cap                2.75%              Jun. 28, 2024           Jun. 28, 2022          $        220.0
                                                                 Floor              0.402%                                     Jun. 28, 2023          $         90.0
Total                   $560.0


The fair value (based upon current market rates) of the rate hedging transaction
is included as derivative instruments in long-term liabilities as the maturity
dates on this instrument are greater than one year. The fair value of the
hedging transaction is affected by a combination of several factors, including
the change in the one-month LIBOR rate. Any increase in the one-month LIBOR rate
results in a more favorable valuation, while any decrease in the one-month LIBOR
rate results in a less favorable valuation.
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Our credit exposure under our hedging agreement, or similar agreements we may
enter into in the future, is the cost of replacing such agreements in the event
of nonperformance by our counterparty. To minimize this risk, we select high
credit quality counterparties. We do not anticipate nonperformance by such
counterparties, but could recognize a loss in the event of nonperformance. Our
derivative instrument liability as of September 30, 2021 was $1.2 million.
From time to time, we invest all or a portion of our cash in cash equivalents,
which are money market instruments consisting of short-term government
securities and repurchase agreements that are fully collateralized by government
securities. When such investments are made, we do not believe that we have any
material credit exposure with respect to these assets. As of September 30, 2021,
we did not have any investments in money market instruments.
Our credit exposure related to our accounts receivable does not represent a
significant concentration of credit risk due to the quantity of advertisers, the
minimal reliance on any one advertiser, the multiple markets in which we operate
and the wide variety of advertising business sectors.
See also additional disclosures regarding liquidity and capital resources made
under Liquidity and Capital Resources in Part 1, Item 2, above.
ITEM 4.  Controls And Procedures
Evaluation of Controls and Procedures
We maintain "disclosure controls and procedures" (as defined in Rules 13a-15(e)
and 15d-15(e) of the Securities Exchange Act of 1934, as amended) that are
designed to ensure that: (i) information required to be disclosed in our
Exchange Act reports is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission's rules and
forms; and (ii) such information is accumulated and communicated to our
management, including our Chief Executive Officer and Chief Financial Officer,
as appropriate, to allow for timely decisions regarding required disclosure. In
designing and evaluating our disclosure controls and procedures, our management
recognizes that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control
objectives, and our management is required to apply its judgment in evaluating
the cost-benefit relationship of possible controls and procedures.
We carried out an evaluation, under the supervision and with the participation
of our management, including our Chief Executive Officer and Chief Financial
Officer, of the effectiveness of our disclosure controls and procedures as of
the end of the period covered by this report. Based on the foregoing, our
President/Chief Executive Officer and Executive Vice President/Chief Financial
Officer concluded that our disclosure controls and procedures were effective at
the reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting
during our most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.
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