Radio One, Inc. Reports Record Results
Achieves Highest Quarterly Revenue, BCF, EBITDA and Net Income in its History
Radio One, Inc. (Nasdaq: ROIAK; ROIA) today reported record results for the quarter ended June 30, 2002. Net broadcast revenue was $80.2 million, up 29% from the same period in 2001. Broadcast cash flow ("BCF") was $43.4 million, an increase of 28% from the same period in 2001. EBITDA was $40.3 million, an increase of 24% from the same period in 2001. Net income was $13.2 million, or $0.13 cents per share, up from a net loss of $14.6 million, or $0.16 cents per share, from the same period in 2001. After-tax cash flow ("ATCF") was $21.4 million, or $0.21 cents per share, up 53% from the same period in 2001. Free cash flow ("FCF") was $18.3 million, or $0.18 cents per share, an increase of 43% from the same period in 2001. On a same station basis, the Company's net broadcast revenue and BCF increased 12% and 15%, respectively, from last year. On a pro forma basis (see footnote (a)), the Company's net broadcast revenue and BCF increased 12% and 18%, respectively, from last year.Alfred C. Liggins, III, the Company's CEO and President stated, "I am not sure we could have asked for much more from our management team in Q2. The reality is that they over-delivered across almost every measurable metric. This is a very competitive business in an uncertain economic environment but Radio One continues, consistently, to outperform relative to the industry, in a meaningful way. We believe our second quarter results perfectly reflect the earnings potential and free cash flow generation power of a focused radio business model. So while stock market valuation volatility persists, the approximately 1,800 employees of Radio One will continue to spend 100% of their time focused on enhancing the fundamental worth of the extremely valuable assets we can and do control; our national platform of 65 well- regarded, strongly-positioned radio stations."
Scott R. Royster, the Company's Executive Vice President and CFO stated, "There has never been a time in the 22-year history of this Company when it was more sound and better positioned for the future than it is today. Our leverage level is generally in-line with the radio industry average and is declining as our cash flow grows. Our cost of debt is lower, we believe, than that of many of our peers and is also declining, as our leverage ratio declines. Our growth rates are strong as is our free cash flow generation. Note that we ended the quarter with more than $50.0 million of cash on hand. The Company's management team is among the best in the industry and we are, every day, finding new ways to generate revenue and cash flow and to enhance further shareholder value. Our current outlook for Q3 is remarkably similar to what our outlook for Q2 was when we released earnings for this year's first quarter. For Q3 we are seeing growth patterns that are similar to those we saw in Q2 and our optimism is only mitigated by uncertainty in the capital markets that could, potentially, lead to a disruption in the economic engine of the American economy. Without that disruption, we believe the second half of the year will be particularly strong for the radio industry."
RESULTS OF OPERATIONS
Comparison of the periods ended June 30, 2002 to the periods
ended June 30, 2001
(all periods are unaudited -- all numbers in 000s
except per share data).
Three Three Six Six
months months months months
ended ended ended ended
June 30, June 30, June 30, June 30,
2002 2001 2002 2001
STATEMENT OF OPERATIONS
DATA:
REVENUE:
Broadcast revenue $91,035 $70,930 $156,972 $125,203
Less: Agency
commissions 10,870 8,645 18,496 14,993
Net broadcast
revenue 80,165 62,285 138,476 110,210
OPERATING EXPENSES:
Programming and
technical 12,604 9,151 24,106 18,007
Selling, G&A 24,126 19,090 45,122 36,206
Corporate expenses 3,142 1,683 5,757 3,523
Non-cash
compensation 342 237 642 475
Depreciation &
amortization 4,351 30,851 8,773 62,375
Total operating
expenses 44,565 61,012 84,400 120,586
Operating
income (loss) 35,600 1,273 54,076 (10,376)
INTEREST EXPENSE, net 14,810 14,717 31,727 30,418
GAIN ON SALE OF ASSETS - - - 4,272
OTHER INCOME (EXPENSE),
net 547 (596) 1,065 -
Income (loss)
before
provision
(benefit) for
income taxes,
extraordinary
item and
cumulative
effect of
accounting
change 21,337 (14,040) 23,414 (36,522)
PROVISION (BENEFIT) FOR
INCOME TAXES 8,095 (4,633) 8,911 (11,942)
Income (loss)
before
extraordinary
item and
cumulative
effect of
accounting
change 13,242 (9,407) 14,503 (24,580)
EXTRAORDINARY LOSS ON
DEBT RETIREMENT, net
of tax - 5,207 - 5,207
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE, net
of tax - - 23,229 -
Net income
(loss) $13,242 $(14,614) $(8,726) $(29,787)
Net income
(loss)
applicable
to common
stockholders
(b) $8,207 $(19,646) $(18,796) $(39,857)
Three Three Six Six
months months months months
ended ended ended ended
June 30, June 30, June 30, June 30,
2002 2001 2002 2001
DILUTED PER SHARE
DATA (h):
Net income (loss)
per share before
extraordinary loss
and cumulative
effect of
accounting change $0.13 $(0.11) $0.15 $(0.28)
Net income (loss)
per share 0.13 (0.16) (0.09) (0.34)
Preferred dividends
per share 0.05 0.06 0.10 0.11
Net income (loss)
per share
applicable to common
shareholders 0.08 (0.22) (0.19) (0.45)
After-tax cash flow
per share 0.21 0.16 0.24 0.18
OTHER DATA:
Broadcast cash
flow (c) $43,435 $34,044 $69,248 $55,997
Broadcast cash flow
margin 54.2% 54.7% 50.0% 50.8%
EBITDA (d) $40,293 $32,361 $63,491 $52,474
After-tax cash
flow (e) 21,446 13,963 24,236 16,078
Capital expenditures 3,131 1,189 5,115 2,840
Free cash flow (f) 18,315 12,774 19,121 13,238
SAME STATION RESULTS:
Net revenue $69,634 $62,285 $120,323 $110,210
Broadcast cash flow 39,186 34,044 62,980 55,997
Broadcast cash flow
margin 56.3% 54.7% 52.3% 50.8%
Weighted average
shares
outstanding --
basic (g) 103,497 88,252 98,863 87,532
Weighted average
shares
outstanding --
diluted (h) 104,353 88,917 99,632 88,036
June 30, 2002 December 31, 2001
(unaudited) (audited)
SELECTED BALANCE SHEET DATA:
Cash and cash equivalents $50,851 $32,115
Current assets 125,019 97,903
Total assets 1,963,637 1,923,915
Senior debt 350,000 480,022
Subordinated debt 300,000 300,000
Preferred stock (liquidation value) 310,000 310,000
Total shareholders' equity 1,236,267 1,052,947
AFTER-TAX CASH FLOW: Q2 - 2002
Pre-tax income $21,337
Plus: Depreciation and amortization 4,351
Plus: Loss on asset sale, net of
gain/loss 140
Plus: Non-cash interest expense &
non-cash compensation 886
Less: Cash taxes (233)
Less: Preferred Dividends (5,035)
TOTAL $21,446
Net broadcast revenue increased to approximately $80.2 million for the quarter
ended June 30, 2002 from approximately $62.3 million for the quarter ended June
30, 2001 or 29%. Net broadcast revenue increased to approximately $138.5 million
for the six months ended June 30, 2002 from approximately $110.2 million for the
six months ended June 30, 2001 or 26%. These increases in net broadcast revenue
were the result of continuing broadcast revenue growth in some of the Company's
existing markets, as the Company benefited from historical ratings increases at
certain of its radio stations. Additional revenue gains were derived primarily
from the Company's August 2001 acquisition of Blue Chip Broadcasting, Inc.
Operating expenses excluding depreciation, amortization and stock-based compensation increased to approximately $39.9 million for the quarter ended June 30, 2002 from approximately $29.9 million for the quarter ended June 30, 2001 or 33%. Operating expenses excluding depreciation, amortization and stock-based compensation increased to approximately $75.0 million for the six months ended June 30, 2002 from approximately $57.7 million for the six months ended June 30, 2001 or 30%. 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 over the past year and (4) higher corporate expenses due to the Company's rapid expansion and the escalating costs associated with operating a national, publicly-traded company, especially insurance costs, health care costs and legal and regulatory fees and expenses.
Interest expense increased to approximately $14.8 million for the quarter ended June 30, 2002 from approximately $14.7 million for the quarter ended June 30, 2001 or 1%. Interest expense increased to approximately $31.7 million for the six months ended June 30, 2002 from approximately $30.4 million for the six months ended June 30, 2001 or 4%. These increases related primarily to bank borrowings associated with the acquisition of Blue Chip Broadcasting, Inc. in August 2001. Those bank borrowings, plus additional outstanding bank debt, were paid down in mid-April 2002 with proceeds from the Company's April 2002 equity offering. As a result, the increases in interest expense due to higher average debt levels for a portion of the second quarter and the six month period were modestly offset by lower interest rates on the Company's bank debt due to lower leverage during most of the second quarter of 2002.
Other income increased to approximately $0.5 million for the quarter ended June 30, 2002 compared to an expense of approximately $0.6 million for the quarter ended June 30, 2001. During the second quarter of 2001, the Company took an approximately $1.2 million writedown in its investment in NetNoir, Inc. which was partially offset by interest income. Other income increased to approximately $1.1 million for the six months ended June 30, 2002 compared to zero for the six months ended June 30, 2001. This reflects the fact that the Company had no writedown in 2002 similar to the one taken in 2001 for NetNoir, Inc.
Income before provision for income taxes, extraordinary item and cumulative effect of an accounting change increased to approximately $21.3 million for the quarter ended June 30, 2002 compared to a loss before benefit for income taxes, extraordinary item and cumulative effect of an accounting change of approximately $14.0 million for the quarter ended June 30, 2001. Income before provision for income taxes, extraordinary item and cumulative effect of an accounting change increased to approximately $23.4 million for the six months ended June 30, 2002 compared to a loss before benefit for income taxes, extraordinary item and cumulative effect of an accounting change of approximately $36.5 million for the six months ended June 30, 2001. These increases were due primarily to higher operating income due to higher revenue and lower amortization charges due to the adoption of SFAS No. 142 during the first quarter of 2002. Particularly, for the six months ended June 30, 2002, the Company incurred depreciation and amortization expense of approximately $8.8 million compared to approximately $62.4 million for the six months ended June 30, 2001.
Net income increased to approximately $13.2 million for the quarter ended June 30, 2002 compared to a loss of approximately $14.6 million for the quarter ended June 30, 2001. This increase was due to income before provision for income taxes, extraordinary item and cumulative effect of an accounting change compared to the previous year's loss before benefit for income taxes, extraordinary item and cumulative effect of accounting change, as well as an extraordinary loss on debt retirement of approximately $5.2 million in the second quarter of 2001, partially offset by a provision for income taxes in this year's quarter versus a benefit for income taxes in last year's quarter. Net loss decreased to approximately $8.7 million for the six months ended June 30, 2002 compared to approximately $29.8 million for the six months ended June 30, 2001. This decrease was due primarily to the effect of the adoption of SFAS No. 142 during the first quarter of 2002, as well as the factors discussed above.
BCF increased to approximately $43.4 million for the quarter ended June 30, 2002 from approximately $34.0 million for the quarter ended June 30, 2001 or 28%. BCF increased to approximately $69.2 million for the six months ended June 30, 2002 from approximately $56.0 million for the six months ended June 30, 2001 or 24%. 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 $40.3 million for the quarter ended June 30, 2002 from approximately $32.4 million for the quarter ended June 30, 2001 or 24%. EBITDA increased to approximately $63.5 million for the six months ended June 30, 2002 from approximately $52.5 million for the six months ended June 30, 2001 or 21%. 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 $21.4 million for the quarter ended June 30, 2002 from approximately $14.0 million for the quarter ended June 30, 2001 or 53%. ATCF increased to approximately $24.2 million for the six months ended June 30, 2002 from approximately $16.1 million for the six months ended June 30, 2001 or 50%. 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 $18.3 million for the quarter ended June 30, 2002 from approximately $12.8 million for the quarter ended June 30, 2001 or 43%. FCF increased to approximately $19.1 million for the six months ended June 30, 2002 from approximately $13.2 million for the six months ended June 30, 2001 or 45%. These increases were attributable primarily to the increases in ATCF partially offset by higher capital expenditures in 2002 compared to 2001.
Company Information and Guidance:
On April 10, 2002, the Company and certain selling shareholders completed an offering of 11,500,000 shares of Class D Common Stock at an offering price of $20.25 per share. Through this offering, the Company received net proceeds of approximately $198.8 million after deducting offering costs.
The Company adopted a portion 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 has an impairment of goodwill (as defined in SFAS 142) in its Augusta, Georgia market. As required by SFAS 142, the Company will calculate the amount of the impairment and record it before the end of 2002.
For the third quarter of 2002, the Company expects to report net revenue of approximately $79.2 million, BCF of approximately $41.5 million, EBITDA of approximately $38.3 million, ATCF per share of approximately $0.19 and earnings per share of approximately $0.11-0.12. FCF is expected to be approximately $16.0 million. This would represent double-digit growth in same station and pro forma net revenue for the quarter. The Company expects corporate expenses for all of 2002 to be approximately $12.0 million and capital expenditures to be approximately $10.5-11.0 million.
Radio One will hold a conference call to discuss its results for the fiscal second quarter of 2002. This conference call is scheduled for Wednesday, July 31, 2002 at 10:00 a.m. Eastern Daylight Time. Interested parties should call 816-650-0742 at least five minutes prior to the scheduled time of the call and ask for the "Radio One Second Quarter Results Conference Call." The conference call will be recorded and made available for replay from 12:00 p.m. EDT the day of the call until 11:59 p.m. EDT of the day following the call. Interested parties may listen to the recording by calling 402-220-2491 and entering conference identification number 12883612.
Radio One 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. The Company owns and/or operates 65 radio stations located in 22 of the largest markets in the United States and 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) References to "pro forma basis" mean that the financial results being
discussed include the financial results for all stations owned and/or
operated as of June 30, 2002, as if they were owned for the entire
period covered by the discussion.
(b) Net income (loss) applicable to common stockholders is defined as net
income minus preferred stock dividends.
(c) "Broadcast cash flow" is defined as operating income plus corporate
expenses, non-cash compensation and depreciation and amortization.
(d) "EBITDA" is defined as broadcast cash flow minus corporate expenses.
(e) "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.
(f) "Free cash flow" is defined as after-tax cash flow minus capital
expenditures.
(g) As of June 30, 2002 the Company had approximately 103,497,000 shares
of common stock outstanding on a weighted average basis.
(h) As of June 30, 2002 the Company had approximately 104,353,000 shares
of common stock outstanding on a weighted average basis, diluted for
outstanding stock options. After-tax cash flow per share data was
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.
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SOURCE Radio One, Inc.
CONTACT: Scott R. Royster, EVP and CFO of Radio One, Inc.,
+1-301-429-2642
(ROIA ROIAK)
http://www.prnewswire.com
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