Radio One, Inc. Reports Record Fourth Quarter Results; Final Quarter Caps a Record Year in which Revenue Growth Consistently Exceeded that of the Industry
WASHINGTON--(BUSINESS WIRE)--Feb. 11, 2003--Radio One, Inc. (NASDAQ: ROIAK and ROIA) today reported record results for its fourth quarter ended December 31, 2002. Net broadcast revenue was $76.9 million, up 14% from the same period in 2001. Broadcast cash flow ("BCF") was $39.0 million, an increase of 19% from the same period in 2001. EBITDA was $35.7 million, an increase of 20% from the same period in 2001. Net income before preferred stock dividends and cumulative effect of accounting change was $9.6 million, or $0.09 per share, up from a net loss before preferred stock dividends of $15.4 million, or $0.16 loss per share, for the same period in 2001. After-tax cash flow ("ATCF") was $18.6 million, or $0.18 per share, up 107% from the same period in 2001. Free cash flow ("FCF") was $15.2 million, an increase of 230% from the same period in 2001. For the quarter, same station results were the same as reported results.
Alfred C. Liggins, III, the Company's CEO and President stated, "This quarter showed yet again that Radio One's business model and strategy allow us to grow faster than the radio industry in general, post one of the industry's highest BCF margins and to generate a tremendous amount of free cash flow. This strategy is long-term in its focus, provides consistent results and is, we believe, highly sustainable. Overall, 2002 was the best year in the Company's history. We fully integrated the acquired Blue Chip radio stations, saw significant ratings improvements across the portfolio, grew considerably faster than the industry and significantly de-leveraged our balance sheet. 2003 is off to a great start for us and we are optimistic that, barring world events outside of our control, we should have another record-setting year."
RESULTS OF OPERATIONS
Comparison of the periods ended December 31, 2002 to the periods ended December 31, 2001 (all 2002 and quarterly 2001 periods are unaudited, fiscal year-end 2001 results are audited - all numbers in 000s except per share data).
Three Three Twelve Twelve
months months months months
ended ended ended ended
December December December December
31, 2002 31, 2001 31, 2002 31, 2001
----------- ----------- ----------- -----------
STATEMENT OF OPERATIONS
DATA:
REVENUE:
Broadcast revenue $87,501 $76,683 $335,752 $276,919
Less: Agency
commissions 10,595 9,295 39,901 33,115
----------- ----------- ----------- -----------
Net broadcast
revenue 76,906 67,388 295,851 243,804
----------- ----------- ----------- -----------
OPERATING EXPENSES:
Programming and
technical 12,777 12,253 49,582 40,791
Selling, G&A 25,097 22,228 94,884 79,672
Corporate expenses 3,349 3,238 12,351 9,114
Non-cash compensation 420 238 1,414 951
Depreciation &
amortization 4,711 35,686 17,640 129,723
----------- ----------- ----------- -----------
Total operating
expenses 46,354 73,643 175,871 260,251
----------- ----------- ----------- -----------
Operating income
(loss) 30,552 (6,255) 119,980 (16,447)
INTEREST EXPENSE, net 13,085 16,947 59,143 63,358
GAIN (LOSS) ON SALE OF
ASSETS, net 248 (4) 133 4,224
OTHER INCOME, net 85 361 1,213 991
----------- ----------- ----------- -----------
Income (loss) before
provision (benefit)
for income taxes,
extraordinary item and
cumulative effect of
accounting change 17,800 (22,845) 62,183 (74,590)
PROVISION (BENEFIT) FOR
INCOME TAXES 8,193 (7,474) 25,282 (24,550)
----------- ----------- ----------- -----------
Income (loss) before
extraordinary item and
cumulative effect of
accounting change 9,607 (15,371) 36,901 (50,040)
EXTRAORDINARY LOSS ON
DEBT RETIREMENT, net of
tax - - - 5,207
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE,
net of tax 6,618 - 29,847 -
----------- ----------- ----------- -----------
Net income (loss) $2,989 $(15,371) $7,054 $(55,247)
=========== =========== =========== ===========
Net loss applicable
to common
stockholders (a) $ (2,046) $ (20,406) $ (13,086) $(75,387)
=========== =========== =========== ===========
Three months Three months Twelve months Twelve months
ended ended ended ended
December 31, December 31, December 31, December 31,
2002 2001 2002 2001
------------- ------------ ------------ -------------
PER SHARE DATA
(g):
Net income
(loss) per
share before
extraordinary
loss and
cumulative
effect of
accounting
change $ 0.09 $ (0.16) $ 0.36 $ (0.55)
Net income
(loss) per
share 0.03 (0.16) 0.07 (0.61)
Preferred
dividends per
share 0.05 0.05 0.20 0.22
Net (loss) per
share
applicable to
common
stockholders (0.02) (0.22) (0.13) (0.83)
After-tax cash
flow per
share 0.18 0.10 0.63 0.41
OTHER DATA:
Broadcast cash
flow (b) $39,032 $32,907 $151,385 $123,341
Broadcast cash
flow margin 50.8% 48.8% 51.2% 50.6%
EBITDA (c) $35,683 $29,669 $139,034 $114,227
After-tax cash
flow (d) 18,591 9,045 64,389 37,330
Capital
expenditures 3,352 4,473 10,971 9,283
Free cash flow (e) 15,239 4,572 53,418 28,047
Weighted
average
shares
outstanding -
basic (f) 104,560 94,120 101,821 90,295
Weighted
average
shares
outstanding -
diluted (g) 104,972 94,598 102,357 90,751
AFTER-TAX CASH FLOW: Q4 - 2002 FREE CASH FLOW: Q4 - 2002
---------- ----------
Pre-tax income before cumulative After-tax
effect of accounting change $ 17,800 cash flow $ 18,591
Plus: Depreciation and Capital
amortization 4,711 expenditures 3,352
Plus: Loss on asset
sale/investment and one-time
items, net 377
Plus: Non-cash interest expense &
non-cash compensation 845
Less: Cash taxes (107)
Less: Preferred Dividends (5,035)
---------- ----------
TOTAL $18,591 TOTAL $15,239
========== ==========
December December
31, 2002 31, 2001
(unaudited) (audited)
----------- ----------
SELECTED BALANCE SHEET DATA:
Cash and cash equivalents $86,115 $32,115
Current assets 159,312 97,903
Total assets 1,984,360 1,923,915
Senior debt 350,000 480,022
Subordinated debt 300,000 300,000
Preferred stock (liquidation value) 310,000 310,000
Total stockholders' equity 1,244,023 1,052,947
Current Applicable Total 2003 Total 2004
Amount Interest Principal Principal
Outstanding Rates (2) Payments (3) Payments (3)
------------ ----------- ------------- -------------
SELECTED LEVERAGE
DATA:
Senior bank term
debt (matures
October 5, 2006) $100,000 4.39%
Senior bank term
debt (matures
December 5, 2005) 50,000 4.01%
Senior bank term
debt (matures
December 5, 2004) 50,000 3.55%
Senior bank term
debt (matures
June 3, 2004) 25,000 4.51%
Senior bank term
debt (variable
rate) (1) 125,000 2.50% $52,500 $52,500
8-7/8% senior
subordinated
notes (fixed
rate) 300,000 8.88%
(1) Subject to rolling 90-day LIBOR plus a spread currently at 1.00%
and incorporated into the rate outlined above. (2) Under its swap agreements, the Company pays a fixed rate plus a
spread based on the Company's leverage, as defined in its credit
agreement. That spread is currently 1.00% and is incorporated into
the applicable interest rates outlined above. (3) Principal payments are due in equal quarterly installments,
commencing on March 31, 2003.
Net broadcast revenue increased to approximately $76.9 million for the quarter ended December 31, 2002 from approximately $67.4 million for the quarter ended December 31, 2001 or 14%. Net broadcast revenue increased to approximately $295.9 million for the twelve months ended December 31, 2002 from approximately $243.8 million for the twelve months ended December 31, 2001 or 21%. These increases were the result of broadcast revenue growth in most of the Company's markets, as the Company benefited from historical ratings increases and overall radio industry growth. Additional revenue gains were derived from the Company's August 2001 acquisition of Blue Chip Broadcasting, Inc. and two new stations launched in the Atlanta market within the past 18 months and from the Company's XM Satellite Radio programming operations.
Operating expenses excluding depreciation, amortization and non-cash compensation increased to approximately $41.2 million for the quarter ended December 31, 2002 from approximately $37.7 million for the quarter ended December 31, 2001 or 9%. Operating expenses excluding depreciation, amortization and non-cash compensation increased to approximately $156.8 million for the twelve months ended December 31, 2002 from approximately $129.6 million for the twelve months ended December 31, 2001 or 21%. These increases in expenses were related to (1) the Company's expansion within the markets in which it operates, including increased variable costs associated with increased revenue, (2) start-up and expansion expenses in certain markets with new radio stations or new radio station formats, (3) expenses associated with the radio stations the Company has acquired within the past 18 months and (4) higher corporate expenses due to the Company's rapid expansion.
Interest expense decreased to approximately $13.1 million for the quarter ended December 31, 2002 from approximately $16.9 million for the quarter ended December 31, 2001 or 22%. Interest expense decreased to approximately $59.1 million for the twelve months ended December 31, 2002 from approximately $63.4 million for the twelve months ended December 31, 2001 or 7%. These decreases related primarily to the Company having reduced outstanding bank debt as a result of proceeds received from the Company's April 2002 equity offering, as well as lower interest rates on that bank debt as a result of declining leverage and lower market interest rates for most of 2002.
Income before provision for income taxes, extraordinary item and cumulative effect of an accounting change increased to approximately $17.8 million for the quarter ended December 31, 2002 compared to a loss before benefit for income taxes, extraordinary item and cumulative effect of an accounting change of approximately $22.8 million for the quarter ended December 31, 2001. Income before provision for income taxes, extraordinary item and cumulative effect of an accounting change increased to approximately $62.2 million for the twelve months ended December 31, 2002 compared to a loss before benefit for income taxes, extraordinary item and cumulative effect of an accounting change of approximately $74.6 million for the twelve months ended December 31, 2001. These increases were due primarily to higher operating income due to higher revenue and lower amortization expense due to the adoption of SFAS 142 during the first quarter of 2002. Specifically, for the twelve months ended December 31, 2002, the Company incurred depreciation and amortization expense of approximately $17.6 million compared to approximately $129.7 million for the twelve months ended December 31, 2001.
Net income increased to approximately $3.0 million for the quarter ended December 31, 2002 compared to a loss of approximately $15.4 million for the quarter ended December 31, 2001. This increase was due to higher income before provision for income taxes, extraordinary item and cumulative effect of an accounting change, partially offset by a provision for income taxes compared to the previous year's loss before benefit for income taxes, extraordinary item and cumulative effect of accounting change, partially offset by a benefit for income taxes. Assuming the adoption of SFAS 142 "Goodwill and Other Intangibles" had occurred at the beginning of 2001, net income would have been approximately $3.7 million for the fourth quarter of 2001. Net income increased to approximately $7.1 million for the twelve months ended December 31, 2002 compared to a loss of approximately $55.2 million for the twelve months ended December 31, 2001. This increase was due to income before provision for income taxes, extraordinary item and cumulative effect of an accounting change in 2002, partially offset by a provision for income taxes compared to the previous year's loss before benefit for income taxes, extraordinary item and cumulative effect of accounting change, partially offset by a benefit for income taxes. The increase in net income for the 12-month period ending December 31, 2002 was partially offset further by the effect of the adoption of SFAS 142 during 2002 which resulted in a charge of approximately $29.8 million, net of taxes.
BCF increased to approximately $39.0 million for the quarter ended December 31, 2002 from approximately $32.9 million for the quarter ended December 31, 2001 or 19%. BCF increased to approximately $151.4 million for the twelve months ended December 31, 2002 from approximately $123.3 million for the twelve months ended December 31, 2001 or 23%. These increases were attributable primarily to the increases in net broadcast revenue partially offset by higher operating expenses as described above.
EBITDA increased to approximately $35.7 million for the quarter ended December 31, 2002 from approximately $29.7 million for the quarter ended December 31, 2001 or 20%. EBITDA increased to approximately $139.0 million for the twelve months ended December 31, 2002 from approximately $114.2 million for the twelve months ended December 31, 2001 or 22%. These increases were attributable primarily to the increase in net broadcast revenue partially offset by higher operating expenses and higher corporate expenses associated with the Company's overall growth as described above.
ATCF increased to approximately $18.6 million for the quarter ended December 31, 2002 from approximately $9.0 million for the quarter ended December 31, 2001 or 107%. ATCF increased to approximately $64.4 million for the twelve months ended December 31, 2002 from approximately $37.3 million for the twelve months ended December 31, 2001 or 73%. These increases were attributable primarily to the increases in BCF and EBITDA partially offset by higher current taxes (versus a tax benefit in 2001) in 2002 compared to 2001.
FCF increased to approximately $15.2 million for the quarter ended December 31, 2002 from approximately $4.6 million for the quarter ended December 31, 2001 or 230%. FCF increased to approximately $53.4 million for the twelve months ended December 31, 2002 from approximately $28.0 million for the twelve months ended December 31, 2001 or 91%. These increases were attributable primarily to the increases in ATCF partially offset by capital expenditures of approximately $3.4 million and $11.0 million for the three month and twelve month periods, respectively, of 2002 compared to approximately $4.5 million and $9.3 million for the three month and twelve month periods, respectively, of 2001.
Company Information and Guidance:
The Company adopted the transitional rules of SFAS 142 related to the impairment of certain intangible assets during the first quarter of 2002. In accordance with SFAS 142, during the second quarter of 2002, Radio One determined that it had an impairment of goodwill (as defined in SFAS 142) in its Augusta, Georgia market. As required by SFAS 142, the Company calculated the amount of the impairment and recorded a charge (net of tax) of approximately $6.6 million during the fourth quarter of 2002.
For the first quarter of 2003, the Company expects to report net broadcast revenue of approximately $64.6 million, BCF of approximately $29.1 million, EBITDA of approximately $25.7 million, ATCF per share of approximately $0.10 and net income per share (before preferred dividends of $0.05 per share and one time and/or extraordinary items, if any) of approximately $0.05. This would represent double-digit growth in same station net revenue and BCF for the quarter. The Company expects capital expenditures for all of 2003 to be approximately $10.5-11.5 million and corporate expenses to be approximately $14-15 million.
Radio One will hold a conference call to discuss its results for the fourth quarter of 2002. This conference call is scheduled for Tuesday, February 11, 2003 at 11:00 a.m. Eastern Standard Time. Interested parties should call 630-395-0036 at least five minutes prior to the scheduled time of the call and provide the passcode "Radio One". The conference call will be recorded and made available for replay from 1:00 p.m. EST the day of the call until 11:59 p.m. EST of the day following the call. Interested parties may listen to the recording by calling 402-220-0248. Access to live audio and replay of the conference call will also be available on Radio One's corporate website at www.radio-one.com. The replay will be made available on the website for the seven day period following the call.
Radio One, Inc. (www.radio-one.com) is the nation's seventh largest radio broadcasting company (based on 2001 pro forma revenue) and the largest primarily targeting African-American and urban listeners. Pro forma for all announced acquisitions, the Company owns and/or operates 66 radio stations located in 22 urban markets in the United States and reaches approximately 12.5 million listeners every week. The Company also programs five channels on the XM Satellite Radio Inc. system.
Notes:
This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Because these statements apply to future events, they are subject to risks and uncertainties that could cause actual results to differ materially, including the absence of a combined operating history with an acquired company or radio station and the potential inability to integrate acquired businesses, need for additional financing, high degree of leverage, seasonal nature of the business, granting of rights to acquire certain portions of the acquired company's or radio station's operations, market ratings, variable economic conditions and consumer tastes, as well as restrictions imposed by existing debt and future payment obligations. Important factors that could cause actual results to differ materially are described in the Company's reports on Forms 10-K and 10-Q and other filings with the Securities and Exchange Commission. (a) Net income (loss) applicable to common stockholders is defined as
net income minus preferred stock dividends. (b) "Broadcast cash flow" is defined as operating income plus
corporate expenses, non-cash compensation and depreciation and
amortization. (c) "EBITDA" is defined as broadcast cash flow minus corporate
expenses. (d) "After-tax cash flow" is defined as income before
provision/(benefit) for income taxes, extraordinary items and
cumulative effect of accounting change plus depreciation and
amortization, non-cash compensation, non-cash interest expense and
loss/(gain) on investments and/or asset sales (if any, a component
of other income (expense)), less the current portion of the income
tax provision/(benefit) and preferred stock dividends. (e) "Free cash flow" is defined as after-tax cash flow minus capital
expenditures. (f) As of December 31, 2002 the Company had approximately 104,569,000
shares of common stock outstanding on a weighted average basis. (g) As of December 31, 2002 the Company had approximately 104,972,000
shares of common stock outstanding on a weighted average basis,
diluted for outstanding stock options. Per share data were
calculated using the basic and diluted weighted average shares
outstanding, however, the per share amounts were the same because
there was no material difference between the two weighted average
share amounts.
The Company has presented broadcast cash flow, EBITDA, after-tax cash flow and free cash flow data, which the Company believes are 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, EBITDA, after-tax cash flow and free cash flow do not purport to represent cash provided by operating activities as reflected in the Company's consolidated statements of cash flow, are not a measure of financial performance under generally accepted accounting principles and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with generally accepted accounting principles.
| CONTACT: | Radio One, Inc. |
|---|---|
| Scott R. Royster, 301/429-2642 | |