-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BklbBiA2CtthqH6xyzltz2RfkBJaEmK3ycMgOC4/HdHltXksZgXKdd5uldhooog2 SLOh2GFkR2V40bgJqKHIQg== 0001005150-98-000489.txt : 19980515 0001005150-98-000489.hdr.sgml : 19980515 ACCESSION NUMBER: 0001005150-98-000489 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970101 FILED AS OF DATE: 19980514 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: RADIO ONE INC CENTRAL INDEX KEY: 0001041657 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 521166660 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-30795 FILM NUMBER: 98619685 BUSINESS ADDRESS: STREET 1: 5900 PRINCESS GARDEN PARKWAY STREET 2: 7TH FL CITY: LANHAM STATE: MD ZIP: 20706 BUSINESS PHONE: 3013061111 MAIL ADDRESS: STREET 1: 5900 PRINCESS GARDEN PARKWAY STREET 2: 7TH FL CITY: LANHAM STATE: MD ZIP: 20706 10-Q 1 FORM 10-Q - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1998 Commission File No. 333-30795 RADIO ONE, INC. (Exact name of registrant as specified in its charter) DELAWARE 52-1166660 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 5900 PRINCESS GARDEN PARKWAY, 8TH FLOOR LANHAM, MARYLAND 20706 (Address of principal executive offices) (301) 306-1111 Registrant's telephone number, including area code Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at May 13, 1998 ------------------------------------ --------------------------- Class A Common Stock, $.01 Par Value 138.45 Class B Common Stock, $.01 Par Value 0 - -------------------------------------------------------------------------------- RADIO ONE, INC. AND SUBSIDIARIES Form 10-Q For the Quarter Ended March 31, 1998 TABLE OF CONTENTS Page PART I FINANCIAL INFORMATION ITEM 1 Consolidated Financial Statements 3 Consolidated Balance Sheets as of December 31, 1997 and March 31, 1998 (Unaudited) 4 Consolidated Statements of Operations for the three months ended March 30, 1997 and March 31, 1998 (Unaudited) 5 Consolidated Statements of Changes in Stockholders' Deficit for the year ended December 31, 1997 and for the three months ended March 31, 1998 (Unaudited) 6 Consolidated Statements of Cash Flows for the three months ended March 30, 1997 and March 31, 1998 (Unaudited) 7 Notes to Consolidated Financial Statements 8 ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 10 PART II OTHER INFORMATION ITEM 1 Legal Proceedings 13 ITEM 2 Changes in Securities 13 ITEM 3 Defaults upon Senior Securities 13 ITEM 4 Submission of Matters to a Vote of Security Holders 13 ITEM 5 Other Information 13 ITEM 6 Exhibits and Reports on Form 8-K 13 SIGNATURES 14 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (See pages 4-7 -- This page intentionally left blank.) 3 RADIO ONE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 1997, AND MARCH 31, 1998
ASSETS December 31, March 31, 1997 1998 ---------------- ---------------- (Unaudited) CURRENT ASSETS: Cash and cash equivalents $ 8,500,000 $ 12,288,000 Trade accounts receivable, net of allowance for doubtful accounts of $904,000 and $735,000, respectively 8,722,000 7,110,000 Prepaid expenses and other 315,000 345,000 ---------------- ---------------- Total current assets 17,537,000 19,743,000 PROPERTY AND EQUIPMENT, net 4,432,000 4,687,000 INTANGIBLE ASSETS, net 54,942,000 57,221,000 OTHER ASSETS 2,314,000 2,266,000 ---------------- ---------------- Total assets $ 79,225,000 $ 83,917,000 ================ ================ LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT LIABILITIES: Accounts payable $ 258,000 $ 550,000 Accrued expenses 3,029,000 4,539,000 ---------------- ---------------- Total current liabilities 3,287,000 5,089,000 LONG-TERM DEBT AND DEFERRED INTEREST 74,954,000 79,547,000 ---------------- ---------------- Total liabilities 78,241,000 84,636,000 ---------------- ---------------- COMMITMENTS AND CONTINGENCIES SENIOR CUMULATIVE REDEEMABLE PREFERRED STOCK: Series A, $.01 par value, 100,000 shares authorized, 84,843 shares issued and outstanding 9,310,000 9,661,000 Series B, $.01 par value, 150,000 shares authorized, 124,467 shares issued and outstanding 13,658,000 14,172,000 STOCKHOLDERS' DEFICIT: Common stock - Class A, $.01 par value, 1,000 shares authorized, 138.45 shares issued and outstanding - - Common stock - Class B, $.01 par value, 1,000 shares authorized, no shares issued and outstanding - - Additional paid-in capital - - Accumulated deficit (21,984,000) (24,552,000) ---------------- ---------------- Total stockholders' deficit (21,984,000) (24,552,000) ---------------- ---------------- Total liabilities and stockholders' deficit $ 79,225,000 $ 83,917,000 =============== ================
The accompanying notes are an integral part of these consolidated balance sheets. 4 RADIO ONE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 30, 1997 AND MARCH 31, 1998
Three Months Ended ------------------------------------- March 30, March 31, 1997 1998 ---------------- ---------------- (Unaudited) REVENUES: Broadcast revenues, including barter revenues of $187,000 and $173,000, respectively $ 6,298,000 $ 9,097,000 Less: Agency commissions 766,000 1,074,000 ---------------- ---------------- Net broadcast revenues 5,532,000 8,023,000 ---------------- ---------------- OPERATING EXPENSES: Program and technical 1,196,000 1,635,000 Selling, general and administrative 2,778,000 3,429,000 Corporate expenses 695,000 641,000 Depreciation and amortization 1,079,000 1,773,000 ---------------- ---------------- Total operating expenses 5,748,000 7,478,000 ---------------- ---------------- Broadcast operating (loss) income (216,000) 545,000 INTEREST EXPENSE, including amortization of deferred financing costs 1,765,000 2,378,000 OTHER INCOME, net 21,000 130,000 ---------------- ---------------- Loss before provision for income taxes (1,960,000) (1,703,000) PROVISION FOR INCOME TAXES - - ---------------- --------------- Net loss $ (1,960,000) $ (1,703,000) ================ ==============
The accompanying notes are an integral part of these consolidated statements. 5 RADIO ONE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT FOR THE YEAR ENDED DECEMBER 31, 1997 AND FOR THE THREE MONTHS ENDED MARCH 31, 1998
Common Common Additional Total Stock Stock Paid-In Accumulated Stockholders' Class A Class B Capital Deficit Deficit ----------- ----------- ----------- -------------- -------------- BALANCE, as of December 31, 1996 $ - $ - $ 1,205,000 $ (16,208,000) $ (15,003,000) Net loss - - - (4,944,000) (4,944,000) Effect of conversion to C corporation - - (1,205,000) 1,205,000 - Preferred stock dividends earned - - - (2,037,000) (2,037,000) ----------- ----------- ----------- -------------- -------------- BALANCE, as of December 31, 1997 - - - (21,984,000) (21,984,000) Net loss - - - (1,703,000) (1,703,000) Preferred stock dividends earned - - - (865,000) (865,000) ----------- ----------- ----------- -------------- -------------- BALANCE, as of March 31,1998 (Unaudited) $ - $ - $ - $ (24,552,000) $ (24,552,000) =========== =========== =========== ============== ==============
The accompanying notes are an integral part of these consolidated statements. 6 RADIO ONE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 30, 1997 AND MARCH 31, 1998
Three Months Ended -------------------------------------- March 30, March 31, 1997 1998 -------------- -------------- (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (1,960,000) $ (1,703,000) Adjustments to reconcile net loss to net cash from operating activities: Depreciation and amortization 1,079,000 1,773,000 Amortization of debt financing costs and unamortized discount 66,000 55,000 Deferred interest 643,000 843,000 Effect of change in operating assets and liabilities- Trade accounts receivable 950,000 1,612,000 Prepaid expenses and other (218,000) (30,000) Other assets - 48,000 Accounts payable 759,000 292,000 Accrued expenses 385,000 1,510,000 -------------- -------------- Net cash flows from operating activities 1,704,000 4,400,000 -------------- -------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (119,000) (612,000) -------------- -------------- Net cash flows from investing activities (119,000) (612,000) -------------- -------------- INCREASE IN CASH AND CASH EQUIVALENTS 1,585,000 3,788,000 CASH AND CASH EQUIVALENTS, beginning of period 1,708,000 8,500,000 -------------- -------------- CASH AND CASH EQUIVALENTS, end of period $ 3,293,000 $ 12,288,000 ============== ============== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for- Interest $ 695,000 $ - ============== ============= Income taxes $ - $ - ============== =============
The accompanying notes are an integral part of these consolidated statements. 7 RADIO ONE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) MARCH 31, 1998 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Organization and Business Radio One, Inc. (a Delaware corporation referred to as Radio One) and its subsidiaries, Radio One Licenses, Inc. (successor by merger to Radio One Licenses LCC) and WYCB Acquisition Corporation (Delaware corporations) (collectively referred to as the Company) were organized to acquire, operate and maintain radio broadcasting stations. The Company owns and operates four radio stations in Washington, D.C.; WOL-AM, WMMJ-FM, WKYS-FM and WYCB-AM, four radio stations in Baltimore, Maryland; WWIN-AM, WWIN-FM, WOLB-AM and WERQ-FM and one radio station in Philadelphia, Pennsylvania; WPHI-FM. The Company is highly leveraged, which requires substantial semi-annual interest payments and may impair the Company's ability to obtain additional working capital financing. The Company's operating results are significantly affected by its market share in the markets that it has stations. Interim Financial Statements The consolidated financial statements for the three months ended March 30, 1997 and March 31, 1998, are unaudited, but in the opinion of management, such financial statements have been presented on the same basis as the audited consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation of the financial position, and results of operations and cash flows for these periods. As permitted under the applicable rules and regulations of the Securities and Exchange Commission, these financial statements do not include all disclosures normally included with audited consolidated financial statements, and, accordingly, should be read in conjunction with the consolidated financial statements and notes thereto as of December 31, 1996 and 1997, included in the Company's Form 10-K filed. The results of operations presented in the accompanying consolidated financial statements are not necessarily representative of operations for an entire year. Basis of Presentation The accompanying consolidated financial statements include the accounts of Radio One and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The accompanying consolidated financial statements are presented on the accrual basis of accounting in accordance with generally accepted accounting principles. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 8 WYCB-AM Acquisition On March 16, 1998, WYCB Acquisition Corporation, an unrestricted subsidiary of Radio One, acquired all the stock of Broadcast Holdings, Inc. for $3,750,000. The acquisition was financed with a promissory note for $3,750,000 at 13% due 2001, which pays quarterly cash interest payments at an annual rate of 10% through 2001, with the remaining interest being added to the principal balance. In conjunction with the issuance of the promissory note, WYCB Acquisition Corporation granted a security interest in all of the stock and assets of Broadcast Holdings, Inc. to Allied Capital Financial Corporation ("Allied"). Allied also received a Stock Purchase Warrant from Radio One which entitles it to acquire up to 40,000 shares of Series A Preferred Stock of Radio One if WYCB Acquisition Corporation defaults on the payment of the promissory note, and the stock and assets of Broadcast Holdings, Inc. are insufficient to pay the entire amount owed under the promissory note. The operations of WYCB-AM have been included in the consolidated statement of operations of Radio One since the acquisition date. The acquisition of Broadcast Holdings, Inc. is not material to the Company. 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following information should be read in conjunction with the unaudited consolidated financial statements and notes thereto included in this Quarterly Report and the audited financial statements and Management Discussion and Analysis combined in the Company's Form 10-K filed for the year ended December 31, 1997. RESULTS OF OPERATIONS Comparison of periods ended March 30, 1997 to the periods ended March 31, 1998.
Three months Three months ended ended March 30, March 31, 1997 1998 ---------------- --------------- STATEMENT OF OPERATIONS DATA: Net broadcast revenues $ 5,523,000 $ 8,023,000 ---------------- --------------- Operating expenses excluding depreciation and amortization 4,669,000 5,705,000 Depreciation and amortization 1,079,000 1,773,000 ---------------- --------------- Broadcast operating income (loss) (216,000) 545,000 Interest expense 1,765,000 2,378,000 Other income, net 21,000 130,000 ---------------- --------------- Loss before provision for income taxes (1,960,000) (1,703,000) Provision for income taxes - - ---------------- --------------- Net loss $ (1,960,000) $ (1,703,000) ============== ============= OTHER DATA: Broadcast cash flow (a) $ 1,558,000 $ 2,959,000 Broadcast cash flow margin 28.2% 36.9% Operating cash flow (b) $ 863,000 $ 2,318,000 Operating cash flow margin 15.6% 28.9% Corporate Expenses $ 695,000 $ 641,000
Net broadcast revenues increased to approximately $8.0 million for the three months ended March 31, 1998 from approximately $5.5 million for the three months ended March 30, 1997 or 45.5%. This increase in net broadcast revenues was the result of significant broadcast revenue growth in both the Company's Washington, DC and Baltimore, MD markets as the Company benefited from historical ratings increases at its larger radio stations, improved power ratios at these stations as well as industry growth in each of these markets. Additional revenue gains were derived from various special events held and/or sponsored by the Company in the first quarter as well as from the Company's acquisition of radio station WPHI-FM in Philadelphia, PA in early-1997. Operating expenses excluding depreciation and amortization increased to approximately $5.7 million for the three months ended March 31, 1998 from approximately $4.7 million for the three months ended March 30, 1997 or 21.3%. This increase in expenses was primarily related to increases in sales commissions and license fees due to significant revenue growth, and additional programming costs related to ratings gains experienced by the Company's overall growth. 10 Broadcast operating income increased to $545,000 for the three months ended March 31, 1998 from ($216,000) for the three months ended March 30, 1997. This increase was attributable to the increases in broadcast revenues partially offset by higher operating expenses and higher depreciation and amortization expenses associated with the WPHI-FM acquisition. Interest expense increased to approximately $2.4 million for the three months ended March 31, 1998 from approximately $1.8 million for the three months ended March 30, 1997 or 33.3%. This increase relates primarily to the May 19, 1997 issuance of the Company's approximately $85.5 million in 12% Senior Subordinated Notes Due 2004 and the associated retirement of the Company's approximately $45.6 million bank credit facility which was in place prior to that time and was redeemed with the proceeds from the Notes Offering. Other income increased to $130,000 for the three months ended March 31, 1998 from $21,000 for the three months ended March 30, 1997. This increase was primarily attributable to higher interest income due to higher cash balances associated with the Company's cash flow growth and capital raised in the Company's 1997 Notes Offering. Loss before provision for income taxes decreased to approximately $1.7 million for the three months ended March 31, 1998 from approximately $2.0 million for the three months ended March 30, 1997 or 15.0%. This decrease was due to higher operating income and other income partially offset by higher interest expense associated with the Company's 1997 Notes Offering. Net loss decreased to approximately $1.7 million for the three months ended March 31, 1998 from approximately $2.0 million for the three months ended March 30, 1997 or 15.0%. This decrease was due to higher operating income and other income partially offset by higher interest expense associated with the Company's 1997 Notes Offering. Broadcast cash flow increased to approximately $3.0 million for the three months ended March 31, 1998 from approximately $1.6 million for the three months ended March 30, 1997 or 87.5%. This increase was attributable to the increase in broadcast revenues partially offset by higher operating expenses as described above. Operating cash flow increased to approximately $2.3 million for the three months ended March 31, 1998 from $863,000 for the three months ended March 30, 1997 or 166.5%. This increase was attributable to the increases in broadcast revenues partially offset by higher operating expenses and higher corporate expenses as described above. (a) "Broadcast cash flow" is defined as broadcast operating income plus corporate expenses and depreciation and amortization of both tangible and intangible assets. The Company has presented broadcast cash flow data, which the Company believes is comparable to the data provided by other companies in the industry, because such data are commonly used as a measure of performance for broadcast companies. However, broadcast cash flow does not purport to represent cash provided by operating activities as reflected in the Company's consolidated statements of cash flow, is not a measure of financial performance under generally accepted accounting principles and should not be considered in isolation or as a substitute for measure of performance prepared in accordance with generally accepted accounting principles. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." (b) "Operating cash flow" is defined as broadcast cash flow less corporate expenses and is a commonly used measure of performance for broadcast companies. Operating cash flow does not purport to represent cash provided by operating activities as reflected in the Company's consolidated statements of cash flow, is not a measure of financial performance under generally accepted accounting principles and should not be considered in isolation or as a substitute for measure of performance prepared in accordance with generally accepted accounting principles. 11 LIQUIDITY AND CAPITAL RESOURCES The capital structure of the Company consists of the Company's outstanding long-term debt, preferred stock and stockholders' deficit. The stockholders' deficit consists of common stock and accumulated deficit. The Company's balance of cash and cash equivalents was $8.5 million as of December 31, 1997. The Company's balance of cash and cash equivalents was approximately $12.3 million as of March 31, 1998. The Company's primary source of liquidity is cash provided by operations. Net cash flow from operating activities increased to approximately $4.4 million for the three months ended March 31, 1998 from approximately $1.7 million for the three months ended March 30, 1997 or 158.8%. This increase was due to a lower net loss offset by higher non-cash charges and lower outstanding accounts receivable at the end of the first quarter, which is traditionally the slowest quarter of the year from a revenue perspective. Non cash expenses of depreciation and amortization increased to approximately $1.8 million for the three months ended March 31, 1998 from approximately $1.1 million for the three month months ended March 30, 1997 or 63.6% due to the acquisition of radio station WPHI-FM in the second quarter of 1997 as well as leasehold improvements made to the Company's new headquarters and Washington, DC radio studios in the second half of 1997. Net cash flow used in investing activities increased to $612,000 for the three months ended March 31, 1998 compared to $119,000 for the three months ended March 30, 1997 or 414.3%. During the three months ended March 31, 1998, the Company made purchases of capital equipment totaling $612,000. During the three months ended March 30, 1997 the Company made purchases of capital equipment totaling $119,000. 12 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None ITEM 2. CHANGES IN SECURITIES None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS During the first quarter of 1998, the Company's stockholders approved an increase in the number of authorized shares of 15% Series A Cumulative Redeemable Preferred Stock from 100,000 to 140,000. During the first quarter of 1998, Broadcast Holding, Inc.'s stockholders approved an amendment to the bylaws to increase the number of directors to five and elected five individuals to serve as directors. ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K None 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. RADIO ONE, INC. ---------------------------------------------------- May 13, 1998 Scott R. Royster Executive Vice President and Chief Financial Officer (Principal Accounting Officer) 14 EX-27 2 FDS --
5 The schedule contains summary financial information extracted from the consolidated financial statements of the Company for the fidcal year ended December 31, 1997 for the three months ended March 30, 19997 and March 31, 1998, and is qualified in its entirety by reference to such financial statements. 1 US DOLLARS YEAR 3-MOS 3-MOS DEC-31-1997 DEC-31-1997 DEC-31-1998 JAN-01-1997 JAN-01-1997 JAN-01-1998 DEC-31-1997 MAR-30-1997 MAR-31-1998 1 1 1 8,500,000 0 12,288,000 0 0 0 9,626,000 0 7,845,000 (904,000) 0 (735,000) 0 0 0 17,537,000 0 19,743,000 7,819,000 0 8,332,000 (3,387,000) 0 (3,645,000) 79,225,000 0 83,917,000 3,287,000 0 5,089,000 74,954,000 0 79,547,000 0 0 0 22,968,000 0 23,833,000 0 0 0 (21,984,000) 0 (24,552,000) 79,225,000 0 83,917,000 0 6,298,000 9,097,000 0 6,298,000 9,097,000 0 (766,000) (1,074,000) 0 (766,000) (1,074,000) 0 5,748,000 7,478,000 0 212,000 326,000 0 1,765,000 2,378,000 0 (1,960,000) (1,703,000) 0 0 0 0 (1,960,000) (1,703,000) 0 0 0 0 0 0 0 0 0 0 (1,960,000) (1,703,000) 0 0 0 0 0 0
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