Delaware | 52-1166660 |
(State or other jurisdiction of | (I.R.S. Employer |
incorporation or organization) | Identification No.) |
Class | | Outstanding at November 1, 2013 |
Class A Common Stock, $.001 Par Value | | 2,677,191 |
Class B Common Stock, $.001 Par Value | | 2,861,843 |
Class C Common Stock, $.001 Par Value | | 3,121,048 |
Class D Common Stock, $.001 Par Value | | 38,910,738 |
| | Page |
| PART I. FINANCIAL INFORMATION | |
| | |
Item 1. | Consolidated Statements of Operations for the Three Months and Nine Months Ended September 30, 2013 and 2012 (Unaudited) | 4 |
| Consolidated Statements of Comprehensive Income (Loss) for the Three Months and Nine Months Ended September 30, 2013 and 2012 (Unaudited) | 5 |
| Consolidated Balance Sheets as of September 30, 2013 (Unaudited) and December 31, 2012 | 6 |
| Consolidated Statement of Changes in Equity for the Nine Months Ended September 30, 2013 (Unaudited) | 7 |
| Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2013 and 2012 (Unaudited) | 8 |
| Notes to Consolidated Financial Statements (Unaudited) | 9 |
| Consolidating Financial Statements | |
| Consolidating Statement of Operations for the Three Months Ended September 30, 2013 (Unaudited) | 36 |
| Consolidating Statement of Operations for the Three Months Ended September 30, 2012 (Unaudited) | 37 |
| Consolidating Statement of Operations for the Nine Months Ended September 30, 2013 (Unaudited) | 38 |
| Consolidating Statement of Operations for the Nine Months Ended September 30, 2012 (Unaudited) | 39 |
| Consolidating Statement of Comprehensive Income (Loss) for the Three Months Ended September 30, 2013 (Unaudited) | 40 |
| Consolidating Statement of Comprehensive Income (Loss) for the Three Months Ended September 30, 2012 (Unaudited) | 41 |
| Consolidating Statement of Comprehensive Income (Loss) for the Nine Months Ended September 30, 2013 (Unaudited) | 42 |
| Consolidating Statement of Comprehensive Income (Loss) for the Nine Months Ended September 30, 2012 (Unaudited) | 43 |
| Consolidating Balance Sheet as of September 30, 2013 (Unaudited) | 44 |
| Consolidating Balance Sheet as of December 31, 2012 | 45 |
| Consolidating Statement of Cash Flows for the Nine Months Ended September 30, 2013 (Unaudited) | 46 |
| Consolidating Statement of Cash Flows for the Nine Months Ended September 30, 2012 (Unaudited) | 47 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 49 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 69 |
Item 4. | Controls and Procedures | 69 |
| | |
| PART II. OTHER INFORMATION | |
| | |
Item 1. | Legal Proceedings | 71 |
Item 1A. | Risk Factors | 71 |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 71 |
Item 3. | Defaults Upon Senior Securities | 71 |
Item 4. | Submission of Matters to a Vote of Security Holders | 71 |
Item 5. | Other Information | 71 |
Item 6. | Exhibits | 72 |
| SIGNATURES | 73 |
| | |
| Non-Wholly Owned Guarantor Subsidiary Financial Statements Reach Media, Inc. | F-1 |
2 | ||
• | the effects of continued and prolonged global economic weakness, credit and equity market volatility, high unemployment and continued fluctuations in the U.S. and other world economies may have on our business and financial condition and the business and financial conditions of our advertisers; |
• | our high degree of leverage and potential inability to refinance certain portions of our debt or finance other strategic transactions given fluctuations in market conditions; |
• | continued fluctuations in the U.S. economy and the local economies of the markets in which we operate could negatively impact our ability to meet our cash needs and our ability to maintain compliance with our debt covenants; |
• | fluctuations in the demand for advertising across our various media given the current economic environment; |
• | risks associated with the implementation and execution of our business diversification strategy; |
• | increased competition in our markets and in the radio broadcasting and media industries; |
• | regulation by the Federal Communications Commission (“FCC”) relative to maintaining our broadcasting licenses, enacting media ownership rules and enforcing of indecency rules; |
• | changes in our key personnel and on-air talent; |
• | increases in the costs of our programming, including on-air talent and content acquisitions costs; |
• | financial losses that may be incurred due to impairment charges against our broadcasting licenses, goodwill and other intangible assets, particularly in light of the current economic environment; |
• | increased competition from new media and technologies; |
• | the impact of our acquisitions, dispositions and similar transactions; and |
• | other factors mentioned in our filings with the Securities and Exchange Commission (“SEC”) including the factors discussed in detail in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K, as amended on Form 10-K/A, for the year ended December 31, 2012. |
3 | ||
| | Three Months Ended September 30, | | Nine Months Ended September 30, | | ||||||||
| | 2013 | | 2012 | | 2013 | | 2012 | | ||||
| | (Unaudited) | | ||||||||||
| | | | | (As Adjusted See Note 1) | | | | | (As Adjusted See Note 1) | | ||
| | (In thousands, except share data) | | ||||||||||
| | | | | | | | | | | | | |
NET REVENUE | | $ | 118,391 | | $ | 109,894 | | $ | 337,105 | | $ | 318,688 | |
OPERATING EXPENSES: | | | | | | | | | | | | | |
Programming and technical | | | 37,176 | | | 32,454 | | | 100,649 | | | 96,582 | |
Selling, general and administrative, including stock-based compensation of $14 and $20, and $38 and $52, respectively | | | 36,414 | | | 36,613 | | | 110,181 | | | 106,946 | |
Corporate selling, general and administrative, including stock-based compensation of $41 and $17, and $107 and $75, respectively | | | 9,725 | | | 9,630 | | | 27,214 | | | 29,078 | |
Depreciation and amortization | | | 9,571 | | | 9,699 | | | 28,600 | | | 29,161 | |
Impairment of long-lived assets | | | 3,710 | | | | | | 14,880 | | | 313 | |
Total operating expenses | | | 96,596 | | | 88,396 | | | 281,524 | | | 262,080 | |
Operating income | | | 21,795 | | | 21,498 | | | 55,581 | | | 56,608 | |
INTEREST INCOME | | | 23 | | | 108 | | | 165 | | | 155 | |
INTEREST EXPENSE | | | 22,336 | | | 22,089 | | | 66,811 | | | 68,584 | |
OTHER (INCOME) EXPENSE, net | | | (29) | | | 681 | | | (99) | | | 1,284 | |
Loss before provision for income taxes, noncontrolling interests in income of subsidiaries and income (loss) from discontinued operations | | | (489) | | | (1,164) | | | (10,966) | | | (13,105) | |
PROVISION FOR INCOME TAXES | | | 8,415 | | | 9,051 | | | 19,798 | | | 25,814 | |
Net loss from continuing operations | | | (8,904) | | | (10,215) | | | (30,764) | | | (38,919) | |
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax | | | | | | (40) | | | 893 | | | (56) | |
CONSOLIDATED NET LOSS | | | (8,904) | | | (10,255) | | | (29,871) | | | (38,975) | |
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | | | 4,317 | | | 2,809 | | | 15,670 | | | 10,663 | |
CONSOLIDATED NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | | $ | (13,221) | | $ | (13,064) | | $ | (45,541) | | $ | (49,638) | |
| | | | | | | | | | | | | |
BASIC AND DILUTED NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | | | | | | | | | | | | | |
Continuing operations | | $ | (0.28) | | $ | (0.26) | | $ | (0.95) | | $ | (0.99) | |
Discontinued operations, net of tax | | | | | | (0.00) | | | 0.02 | | | (0.00) | |
Net loss attributable to common stockholders | | $ | (0.28) | | $ | (0.26) | | $ | (0.94) | * | $ | (0.99) | |
| | | | | | | | | | | | | |
WEIGHTED AVERAGE SHARES OUTSTANDING: | | | | | | | | | | | | | |
Basic | | | 47,443,031 | | | 50,019,048 | | | 48,680,979 | | | 50,010,406 | |
Diluted | | | 47,443,031 | | | 50,019,048 | | | 48,680,979 | | | 50,010,406 | |
4 | ||
| | Three Months Ended September 30, | | Nine Months Ended September 30, | | ||||||||
| | 2013 | | | 2012 | | 2013 | | 2012 | | |||
| | (Unaudited) | | ||||||||||
| | | | | (As Adjusted See Note 1) | | | | | (As Adjusted See Note 1) | | ||
| | (In thousands) | | ||||||||||
| | | | | | | | | | | | | |
CONSOLIDATED NET LOSS | | $ | (8,904) | | $ | (10,255) | | $ | (29,871) | | $ | (38,975) | |
NET CHANGE IN UNREALIZED (LOSS) GAIN ON INVESTMENT ACTIVITIES, NET OF TAX | | | (11) | | | 27 | | | (113) | | | 147 | |
COMPREHENSIVE LOSS, NET OF TAX | | | (8,915) | | | (10,228) | | | (29,984) | | | (38,828) | |
LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | | | 4,317 | | | 2,809 | | | 15,670 | | | 10,663 | |
COMPREHENSIVE LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | | $ | (13,232) | | $ | (13,037) | | $ | (45,654) | | $ | (49,491) | |
5 | ||
| | As of | | ||||
| | September 30, 2013 | | December 31, 2012 | | ||
| | (Unaudited) | | | | | |
| | | | | (As Adjusted See Note 1) | | |
| | (In thousands, except share data) | | ||||
ASSETS | | | | | | | |
CURRENT ASSETS: | | | | | | | |
Cash and cash equivalents | | $ | 48,317 | | $ | 57,255 | |
Short-term investments | | | 3,193 | | | 1,597 | |
Trade accounts receivable, net of allowance for doubtful accounts of $4,302 and $3,631, respectively | | | 97,543 | | | 81,983 | |
Prepaid expenses | | | 4,694 | | | 5,059 | |
Current portion of content assets | | | 28,057 | | | 27,723 | |
Other current assets | | | 2,577 | | | 2,034 | |
Current assets from discontinued operations | | | 41 | | | 73 | |
Total current assets | | | 184,422 | | | 175,724 | |
CONTENT ASSETS, net | | | 39,981 | | | 38,981 | |
PROPERTY AND EQUIPMENT, net | | | 34,845 | | | 35,282 | |
GOODWILL | | | 272,037 | | | 272,037 | |
RADIO BROADCASTING LICENSES | | | 659,824 | | | 673,994 | |
LAUNCH ASSETS, net | | | 15,055 | | | 22,530 | |
OTHER INTANGIBLE ASSETS, net | | | 210,210 | | | 234,001 | |
OTHER ASSETS | | | 3,633 | | | 4,470 | |
NON-CURRENT ASSETS FROM DISCONTINUED OPERATIONS | | | 24 | | | 3,176 | |
Total assets | | $ | 1,420,031 | | $ | 1,460,195 | |
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY | | | | | | | |
CURRENT LIABILITIES: | | | | | | | |
Accounts payable | | $ | 8,111 | | $ | 5,431 | |
Accrued interest | | | 5,831 | | | 5,849 | |
Accrued compensation and related benefits | | | 10,784 | | | 11,165 | |
Current portion of content payables | | | 15,823 | | | 17,694 | |
Other current liabilities | | | 14,278 | | | 16,167 | |
Current portion of long-term debt | | | 3,840 | | | 4,587 | |
Current liabilities from discontinued operations | | | 103 | | | 82 | |
Total current liabilities | | | 58,770 | | | 60,975 | |
LONG-TERM DEBT, net of current portion and original issue discount | | | 812,368 | | | 814,131 | |
CONTENT PAYABLES, net of current portion | | | 8,473 | | | 11,163 | |
OTHER LONG-TERM LIABILITIES | | | 19,230 | | | 18,322 | |
DEFERRED TAX LIABILITIES | | | 206,874 | | | 188,249 | |
NON-CURRENT LIABILITIES FROM DISCONTINUED OPERATIONS | | | | | | 4 | |
Total liabilities | | | 1,105,715 | | | 1,092,844 | |
| | | | | | | |
REDEEMABLE NONCONTROLLING INTEREST | | | 12,646 | | | 12,853 | |
| | | | | | | |
STOCKHOLDERS’ EQUITY: | | | | | | | |
Convertible preferred stock, $.001 par value, 1,000,000 shares authorized; no shares outstanding at September 30, 2013 and December 31, 2012, respectively | | | | | | | |
Common stock Class A, $.001 par value, 30,000,000 shares authorized; 2,687,191 and 2,719,860 shares issued and outstanding as of September 30, 2013 and December 31, 2012, respectively | | | 3 | | | 3 | |
Common stock Class B, $.001 par value, 150,000,000 shares authorized; 2,861,843 shares issued and outstanding as of September 30, 2013 and December 31, 2012, respectively | | | 3 | | | 3 | |
Common stock Class C, $.001 par value, 150,000,000 shares authorized; 3,121,048 shares issued and outstanding as of September 30, 2013 and December 31, 2012, respectively | | | 3 | | | 3 | |
Common stock Class D, $.001 par value, 150,000,000 shares authorized; 38,900,738 and 41,421,667 shares issued and outstanding as of September 30, 2013 and December 31, 2012, respectively | | | 39 | | | 41 | |
Accumulated other comprehensive loss | | | (215) | | | (102) | |
Additional paid-in capital | | | 1,002,211 | | | 1,006,873 | |
Accumulated deficit | | | (908,562) | | | (863,021) | |
Total stockholders’ equity | | | 93,482 | | | 143,800 | |
Noncontrolling interest | | | 208,188 | | | 210,698 | |
Total equity | | | 301,670 | | | 354,498 | |
Total liabilities, redeemable noncontrolling interest and equity | | $ | 1,420,031 | | $ | 1,460,195 | |
6 | ||
| | Convertible Preferred Stock | | Common Stock Class A | | Common Stock Class B | | Common Stock Class C | | Common Stock Class D | | Accumulated Other Comprehensive Loss | | Additional Paid-In Capital | | Accumulated Deficit | | Noncontrolling Interest | | Total Equity | | ||||||||||
| | (In Thousands) | | ||||||||||||||||||||||||||||
BALANCE, as of December 31, 2012 | | $ | | | $ | 3 | | $ | 3 | | $ | 3 | | $ | 41 | | $ | (102) | | $ | 1,006,873 | | $ | (863,021) | | $ | 210,698 | | $ | 354,498 | |
Consolidated net (loss) income | | | | | | | | | | | | | | | | | | | | | | | | (45,541) | | | 15,218 | | | (30,323) | |
Net change in unrealized loss on investment activities, net of tax | | | | | | | | | | | | | | | | | | (113) | | | | | | | | | | | | (113) | |
Repurchase of 32,669 shares of Class A common stock | | | | | | | | | | | | | | | | | | | | | (71) | | | | | | | | | (71) | |
Repurchase of 2,630,574 shares of Class D common stock | | | | | | | | | | | | | | | (2) | | | | | | (5,396) | | | | | | | | | (5,398) | |
Dividends paid to noncontrolling interest | | | | | | | | | | | | | | | | | | | | | | | | | | | (17,728) | | | (17,728) | |
Adjustment of redeemable noncontrolling interests to estimated redemption value | | | | | | | | | | | | | | | | | | | | | 660 | | | | | | | | | 660 | |
Stock-based compensation expense | | | | | | | | | | | | | | | | | | | | | 145 | | | | | | | | | 145 | |
BALANCE, as of September 30, 2013 | | $ | | | $ | 3 | | $ | 3 | | $ | 3 | | $ | 39 | | $ | (215) | | $ | 1,002,211 | | $ | (908,562) | | $ | 208,188 | | $ | 301,670 | |
7 | ||
| | Nine Months Ended September 30, | | ||||
| | 2013 | | 2012 | | ||
| | (Unaudited) | | ||||
| | | | | (As Adjusted See Note 1) | | |
| | (In thousands) | | ||||
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | |
Consolidated net loss | | $ | (29,871) | | $ | (38,975) | |
Adjustments to reconcile net loss to net cash from operating activities: | | | | | | | |
Depreciation and amortization | | | 28,600 | | | 29,161 | |
Amortization of debt financing costs | | | 3,993 | | | 2,281 | |
Amortization of content assets | | | 34,633 | | | 28,569 | |
Amortization of launch assets | | | 7,475 | | | 7,468 | |
Deferred income taxes | | | 18,625 | | | 25,840 | |
Impairment of long-lived assets | | | 14,880 | | | 313 | |
Stock-based compensation | | | 145 | | | 127 | |
Non-cash interest | | | | | | 15,069 | |
Effect of change in operating assets and liabilities, net of assets acquired: | | | | | | | |
Trade accounts receivable | | | (15,560) | | | (5,344) | |
Prepaid expenses and other assets | | | (178) | | | 2,358 | |
Other assets | | | (53) | | | (393) | |
Accounts payable | | | 2,680 | | | 4,561 | |
Accrued interest | | | (18) | | | (709) | |
Accrued compensation and related benefits | | | (381) | | | 315 | |
Income taxes payable | | | | | | (757) | |
Other liabilities | | | (1,298) | | | 2,651 | |
Payments for content assets | | | (40,389) | | | (43,618) | |
Net cash flows used in operating activities of discontinued operations | | | (808) | | | 270 | |
Net cash flows provided by operating activities | | | 22,475 | | | 29,187 | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | |
Purchases of property and equipment | | | (7,169) | | | (9,535) | |
Proceeds from sales of investment securities | | | 1,053 | | | 6,286 | |
Purchases of investment securities | | | (2,439) | | | (629) | |
Proceeds from sale of discontinued operations | | | 4,000 | | | | |
Net cash flows used in investing activities | | | (4,555) | | | (3,878) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | |
Repayment of senior subordinated notes | | | (747) | | | | |
Repayment of credit facility | | | (2,881) | | | (4,829) | |
Debt refinancing and modification costs | | | (33) | | | (18) | |
Repurchase of common stock | | | (5,469) | | | | |
Payment of dividends to noncontrolling interest members of TV One | | | (17,728) | | | (7,741) | |
Net cash flows used in financing activities | | | (26,858) | | | (12,588) | |
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | | | (8,938) | | | 12,721 | |
CASH AND CASH EQUIVALENTS, beginning of period | | | 57,255 | | | 35,939 | |
CASH AND CASH EQUIVALENTS, end of period | | $ | 48,317 | | $ | 48,660 | |
| | | | | | | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | | | | |
Cash paid for: | | | | | | | |
Interest | | $ | 62,644 | | $ | 52,017 | |
Income taxes, net | | $ | 303 | | $ | 618 | |
8 | ||
| (a) | Organization |
9 | ||
10 | ||
| | Three Months Ended September 30, | | Nine Months Ended September 30, | | ||||||||
| | 2013 | | 2012 | | 2013 | | 2012 | | ||||
| | (Unaudited) | | ||||||||||
| | (In Thousands) | | ||||||||||
Numerator: | | | | | | | | | | | | | |
Net loss attributable to common stockholders | | $ | (13,221) | | $ | (13,024) | | $ | (46,434) | | $ | (49,582) | |
Denominator: | | | | | | | | | | | | | |
Denominator for basic net loss per share - weighted average outstanding shares | | | 47,443,031 | | | 50,019,048 | | | 48,680,979 | | | 50,010,406 | |
Effect of dilutive securities: | | | | | | | | | | | | | |
Stock options and restricted stock | | | | | | | | | | | | | |
Denominator for diluted net loss per share - weighted-average outstanding shares | | | 47,443,031 | | | 50,019,048 | | | 48,680,979 | | | 50,010,406 | |
| | | | | | | | | | | | | |
Net loss attributable to common stockholders per share - basic | | $ | (0.28) | | $ | (0.26) | | $ | (0.95) | | $ | (0.99) | |
Net loss attributable to common stockholders per share - diluted | | $ | (0.28) | | $ | (0.26) | | $ | (0.95) | | $ | (0.99) | |
| | Three Months Ended | | Three Months Ended | | Nine Months Ended | | Nine Months Ended | |
| | September 30, 2013 | | September 30, 2012 | | September 30, 2013 | | September 30, 2012 | |
| (In Thousands) | | |||||||
| | | | | | | | | |
Stock options | | 4,575 | | 4,831 | | 4,575 | | 4,831 | |
Restricted stock | | 156 | | 105 | | 169 | | 114 | |
| (h) Fair Value Measurements |
11 | ||
| Level 1: Inputs are unadjusted quoted prices in active markets for identical assets and liabilities that can be accessed at measurement date. |
| Level 2: Observable inputs other than those included in Level 1 (i.e., quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets). |
| |
| Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability. |
| | Total | | Level 1 | | Level 2 | | Level 3 | | ||||
| | (Unaudited) | | ||||||||||
| | (In thousands) | | ||||||||||
As of September 30, 2013 | | | | | | | | | | | | | |
Assets subject to fair value measurement: | | | | | | | | | | | | | |
Corporate debt securities (a) | | $ | 1,036 | | $ | 1,036 | | $ | | | $ | | |
Mutual funds (a) | | | 2,229 | | | 2,229 | | | | | | | |
Total | | $ | 3,265 | | $ | 3,265 | | $ | | | $ | | |
| | | | | | | | | | | | | |
Liabilities subject to fair value measurement: | | | | | | | | | | | | | |
Incentive award plan (b) | | $ | 2,135 | | $ | | | $ | | | $ | 2,135 | |
Employment agreement award (c) | | | 13,163 | | | | | | | | | 13,163 | |
Total | | $ | 15,298 | | $ | | | $ | | | $ | 15,298 | |
| | | | | | | | | | | | | |
Mezzanine equity subject to fair value measurement: | | | | | | | | | | | | | |
Redeemable noncontrolling interests (d) | | $ | 12,646 | | $ | | | $ | | | $ | 12,646 | |
| | | | | | | | | | | | | |
As of December 31, 2012 | | | | | | | | | | | | | |
Assets subject to fair value measurement: | | | | | | | | | | | | | |
Corporate debt securities (a) | | $ | 192 | | $ | 192 | | $ | | | $ | | |
Mutual funds (a) | | | 1,502 | | | 1,502 | | | | | | | |
Total | | $ | 1,694 | | $ | 1,694 | | $ | | | $ | | |
| | | | | | | | | | | | | |
Liabilities subject to fair value measurement: | | | | | | | | | | | | | |
Incentive award plan (b) | | $ | 5,345 | | $ | | | $ | | | $ | 5,345 | |
Employment agreement award (c) | | | 11,374 | | | | | | | | | 11,374 | |
Total | | $ | 16,719 | | $ | | | $ | | | $ | 16,719 | |
| | | | | | | | | | | | | |
Mezzanine equity subject to fair value measurement: | | | | | | | | | | | | | |
Redeemable noncontrolling interests (d) | | $ | 12,853 | | $ | | | $ | | | $ | 12,853 | |
12 | ||
| | Incentive Award Plan | | Employment Agreement Award | | Redeemable Noncontrolling Interests | | |||
| | (In thousands) | | |||||||
| | | | | | | | | | |
Balance at December 31, 2012 | | $ | 5,345 | | $ | 11,374 | | $ | 12,853 | |
Distribution | | | (3,198) | | | | | | | |
Net income attributable to noncontrolling interests | | | | | | | | | 453 | |
Change in fair value | | | (12) | | | 1,789 | | | (660) | |
Balance at September 30, 2013 | | $ | 2,135 | | $ | 13,163 | | $ | 12,646 | |
| | | | | | | | | | |
The amount of total losses for the period included in earnings attributable to the change in unrealized losses relating to assets and liabilities still held at the reporting date | | $ | (12) | | $ | (1,789) | | $ | | |
| | Incentive Award Plan | | Employment Agreement Award | | Redeemable Noncontrolling Interests | | |||
| | (In thousands) | | |||||||
| | | | | | | | | | |
Balance at December 31, 2011 | | $ | 5,096 | | $ | 10,346 | | $ | 20,343 | |
Net loss attributable to noncontrolling interests | | | | | | | | | (362) | |
Change in fair value | | | | | | 740 | | | 1,599 | |
Balance at September 30, 2012 | | $ | 5,096 | | $ | 11,086 | | $ | 21,580 | |
| | | | | | | | | | |
The amount of total losses for the period included in earnings attributable to the change in unrealized losses relating to assets and liabilities still held at the reporting date | | $ | | | $ | (740) | | $ | | |
For Level 3 assets and liabilities measured at fair value on a recurring basis, the significant unobservable inputs used in the fair value measurements were as follows: |
13 | ||
| | | | Significant | | As of September 30, 2013 | | | As of December 31, 2012 | | | As of September 30, 2012 | | | |
Level 3 liabilities | | Valuation Technique | | Unobservable Inputs | | Significant Unobservable Input Value | | | |||||||
| | | | | | | | | | | | | | | |
Incentive award plan | | Discounted Cash Flow | | Discount Rate | | 10.8 | % | | | 10.8 | % | | 11.5 | % | |
Incentive award plan | | Discounted Cash Flow | | Long-term Growth Rate | | 3.0 | % | | | 3.0 | % | | 3.0 | % | |
Employment agreement award | | Discounted Cash Flow | | Discount Rate | | 10.8 | % | | | 10.8 | % | | 11.5 | % | |
Employment agreement award | | Discounted Cash Flow | | Long-term Growth Rate | | 3.0 | % | | | 3.0 | % | | 3.0 | % | |
Redeemable noncontrolling interest | | Discounted Cash Flow | | Discount Rate | | 13.0 | % | | | 11.5 | % | | 12.0 | % | |
Redeemable noncontrolling interest | | Discounted Cash Flow | | Long-term Growth Rate | | 1.5 | % | | | 2.0 | % | | 2.0 | % | |
| (i) Impact of Recently Issued Accounting Pronouncements |
14 | ||
15 | ||
16 | ||
| | Liability Derivatives | | ||||||||
| | As of September 30, 2013 | | As of December 31, 2012 | | ||||||
| | (Unaudited) | | | | | | | |||
| | (In thousands) | | ||||||||
| | Balance Sheet Location | | Fair Value | | Balance Sheet Location | | Fair Value | | ||
Derivatives not designated as hedging instruments: | | | | | | | | | | | |
Employment agreement award | | Other Long-Term Liabilities | | $ | 13,163 | | Other Long-Term Liabilities | | $ | 11,374 | |
Total derivatives | | | | $ | 13,163 | | | | $ | 11,374 | |
Derivatives Not Designated as Hedging Instruments | | Location of Gain (Loss) in Income of Derivative | | Amount of Gain (Loss) in Income of Derivative | | ||||
| | | | Three Months Ended September 30, | | ||||
| | | | 2013 | | 2012 | | ||
| | | | (Unaudited) | | ||||
| | | | (In thousands) | | ||||
| | | | | | | | | |
Employment agreement award | | Corporate selling, general and administrative expense | | $ | (553) | | $ | (46) | |
Derivatives Not Designated as Hedging Instruments | | Location of Gain (Loss) in Income of Derivative | | Amount of Gain (Loss) in Income of Derivative | | ||||
| | | | Nine Months Ended September 30, | | ||||
| | | | 2013 | | 2012 | | ||
| | | | (Unaudited) | | ||||
| | | | (In thousands) | | ||||
| | | | | | | | | |
Employment agreement award | | Corporate selling, general and administrative expense | | $ | (1,789) | | $ | (740) | |
17 | ||
18 | ||
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | | ||||||||
| | | 2013 | | 2012 | | 2013 | | 2012 | | ||||
| | | (Unaudited) | |||||||||||
| | | (In thousands) | |||||||||||
| | | | | | | | | | | | | | |
Net revenue | | | $ | | | $ | 57 | | $ | | | $ | 222 | |
Station operating expenses | | | | | | | 48 | | | | | | 143 | |
Depreciation and amortization | | | | | | | 49 | | | | | | 135 | |
Gain on sale of assets | | | | | | | | | | 893 | | | | |
Income (loss) from discontinued operations, net of tax | | | $ | | | $ | (40) | | $ | 893 | | $ | (56) | |
| | As of | | ||||
| | September 30, | | December 31, | | ||
| | 2013 | | 2012 | | ||
| | (Unaudited) | | | | | |
| | (In thousands) | | ||||
Currents assets: | | | | | | | |
Accounts receivable, net of allowance for doubtful accounts | | $ | 41 | | $ | 73 | |
Total current assets | | | 41 | | | 73 | |
Intangible assets, net | | | | | | 3,100 | |
Property and equipment, net | | | 24 | | | 76 | |
Total assets | | $ | 65 | | $ | 3,249 | |
Current liabilities: | | | | | | | |
Other current liabilities | | $ | 103 | | $ | 82 | |
Total current liabilities | | | 103 | | | 82 | |
Long-term liabilities | | | | | | 4 | |
Total liabilities | | $ | 103 | | $ | 86 | |
19 | ||
| | June 30, | | | October 1, | | | March 31, | | | June 30, | | | September 30, | | |||||
Radio Broadcasting Licenses | | 2012 (a) | | | 2012 | | | 2013 (a) | | | 2013 (a) | | | 2013 (a) | | |||||
| | | | | | | | | | | | | | | | | | | | |
Pre-tax impairment charge (in millions) | | $ | 0.3 | | | $ | | | | $ | 1.4 | | | $ | 9.8 | | | $ | 3.7 | |
| | | | | | | | | | | | | | | | | | | | |
Discount Rate | | | 10.0 | % | | | 10.0 | % | | | 10.0 | % | | | 10.5 | % | | | 10.5 | % |
Year 1 Market Revenue Growth Rate Range | | | 1.0% -3.0 | % | | | 1.0% -2.0 | % | | | 1.0 | % | | | 2.0 | % | | | (0.5%) 2.0 | % |
Long-term Market Revenue Growth Rate Range (Years 6 10) | | | 1.0% - 2.0 | % | | | 1.0% -2.0 | % | | | 1.5 | % | | | 1.5% -2.0 | % | | | 1.0% -2.0 | % |
Mature Market Share Range | | | 5.8% - 15.6 | % | | | 0.7% - 27.4 | % | | | 8.6 | % | | | 8.6% - 15.1 | % | | | 6.7% - 27.4 | % |
Operating Profit Margin Range | | | 29.1% - 48.0 | % | | | 19.6% - 47.7 | % | | | 31.4 | % | | | 32.6% - 34.4 | % | | | 30.3% - 40.1 | % |
(a) | Reflects only key assumptions used in the interim testing for certain units of accounting. |
20 | ||
| | Amortized Cost Basis | | Gross Unrealized Losses | | Gross Unrealized Gains | | Fair Value | | ||||
| | (In thousands) | | ||||||||||
September 30, 2013 | | | | | | | | | | | | | |
Corporate debt securities | | $ | 1,049 | | $ | (21) | | $ | 8 | | $ | 1,036 | |
Mutual funds | | | 2,329 | | | (100) | | | | | | 2,229 | |
Total investments | | $ | 3,378 | | $ | (121) | | $ | 8 | | $ | 3,265 | |
| | Amortized Cost Basis | | Gross Unrealized Losses | | Gross Unrealized Gains | | Fair Value | | ||||
| | (In thousands) | | ||||||||||
December 31, 2012 | | | | | | | | | | | | | |
Corporate debt securities | | $ | 85 | | $ | | | $ | 107 | | $ | 192 | |
Mutual funds | | | 1,512 | | | (11) | | | 1 | | | 1,502 | |
Total investments | | $ | 1,597 | | $ | (11) | | $ | 108 | | $ | 1,694 | |
| | Fair Value < 1 Year | | Unrealized Losses < 1 Year | | Fair Value > 1 Year | | Unrealized Losses > 1 Year | | Total Unrealized Losses | | |||||
| | (In thousands) | | |||||||||||||
September 30, 2013 | | | | | | | | | | | | | | | | |
Corporate debt securities | | $ | 912 | | $ | (21) | | $ | | | $ | | | $ | (21) | |
Mutual funds | | | 2,228 | | | (100) | | | | | | | | | (100) | |
Total investments | | $ | 3,140 | | $ | (121) | | $ | | | $ | | | $ | (121) | |
21 | ||
| | Fair Value < 1 Year | | Unrealized Losses < 1 Year | | Fair Value > 1 Year | | Unrealized Losses > 1 Year | | Total Unrealized Losses | | |||||
| | (In thousands) | | |||||||||||||
December 31, 2012 | | | | | | | | | | | | | | | | |
Mutual funds | | $ | 1,235 | | $ | (11) | | $ | | | $ | | | $ | (11) | |
Total investments | | $ | 1,235 | | $ | (11) | | $ | | | $ | | | $ | (11) | |
| | Amortized Cost Basis | | Fair Value | | ||
| | (In thousands) | | ||||
Within 1 year | | $ | 1,031 | | $ | 1,016 | |
After 1 year through 5 years | | | 18 | | | 20 | |
Total debt securities | | $ | 1,049 | | $ | 1,036 | |
| | Three Months Ended September 30, 2013 | | Nine Months Ended September 30, 2013 | | Three Months Ended September 30, 2012 | | Nine Months Ended September 30, 2012 | | ||||
| | (In thousands) | | ||||||||||
Proceeds from sales | | $ | 300 | | $ | 1,053 | | $ | 719 | | $ | 6,286 | |
Gross realized gains | | | | | | | | | 11 | | | 30 | |
Gross realized losses | | | | | | | | | | | | (98) | |
| | September 30, 2013 | | December 31, 2012 | | ||
| | (Unaudited) | | | | | |
| | (In thousands) | | ||||
| | | | | | | |
Senior bank term debt | | $ | 374,416 | | $ | 377,297 | |
63/8% Senior Subordinated Notes due February 2013 | | | | | | 747 | |
121/2%/15% Senior Subordinated Notes due May 2016 | | | 327,034 | | | 327,034 | |
10% Senior Secured TV One Notes due March 2016 | | | 119,000 | | | 119,000 | |
Total debt | | | 820,450 | | | 824,078 | |
Less: current portion | | | 3,840 | | | 4,587 | |
Less: original issue discount | | | 4,242 | | | 5,360 | |
Long-term debt, net | | $ | 812,368 | | $ | 814,131 | |
22 | ||
§ | | 1.10 to 1.00 on December 31, 2012, and the last day of each fiscal quarter through December 31, 2013; |
§ | | 1.20 to 1.00 on March 31, 2014, and the last day of each fiscal quarter through September 30, 2014; |
§ | | 1.25 to 1.00 on December 31, 2014, and the last day of each fiscal quarter through September 30, 2015; and |
§ | | 1.50 to 1.00 on December 31, 2015, and the last day of each fiscal quarter thereafter. |
§ | | 4.50 to 1.00 on September 30, 2012, and the last day of each fiscal quarter through December 31, 2013; |
§ | | 4.25 to 1.00 on March 31, 2014, and the last day of each fiscal quarter through June 30, 2014; |
§ | | 4.00 to 1.00 on September 30, 2014; |
§ | | 3.75 to 1.00 on December 31, 2014; |
§ | | 3.25 to 1.00 on March 31, 2015, and the last day of each fiscal quarter through September 30, 2015; and |
§ | | 2.75 to 1.00 on December 31, 2015, and the last day of each fiscal quarter thereafter. |
§ | | 8.50 to 1.00 on December 31, 2012, and the last day of each fiscal quarter through December 31, 2013; |
§ | | 8.25 to 1.00 on March 31, 2014, and June 30, 2014; |
§ | | 8.00 to 1.00 on September 30, 2014; |
§ | | 7.50 to 1.00 on December 31, 2014; |
§ | | 6.50 to 1.00 on March 31, 2015, and the last day of each fiscal quarter through September 30, 2015; and |
§ | | 6.00 to 1.00 on December 31, 2015, and the last day of each fiscal quarter thereafter. |
§ | | liens; |
§ | | sale of assets; |
§ | | payment of dividends; and |
§ | | mergers. |
23 | ||
| As of September 30, 2013 | | | Covenant Limit | | | Excess Coverage | | |
| | | | | | | | | |
Pro Forma Last Twelve Months Covenant EBITDA (In millions) | $ | 97.5 | | | | | | | |
| | | | | | | | | |
Pro Forma Last Twelve Months Interest Expense (In millions) | $ | 71.4 | | | | | | | |
| | | | | | | | | |
Senior Debt (In millions) | $ | 346.3 | | | | | | | |
Total Debt (In millions) | $ | 673.3 | | | | | | | |
| | | | | | | | | |
Interest Coverage | | | | | | | | | |
Covenant EBITDA / Interest Expense | | 1.36 | x | | 1.10 | x | | 0.26 | x |
| | | | | | | | | |
Senior Secured Leverage | | | | | | | | | |
Senior Secured Debt / Covenant EBITDA | | 3.55 | x | | 4.50 | x | | 0.95 | x |
| | | | | | | | | |
Total Leverage | | | | | | | | | |
Total Debt / Covenant EBITDA | | 6.91 | x | | 8.50 | x | | 1.59 | x |
| | | | | | | | | |
EBITDA - Earnings before interest, taxes, depreciation and amortization | | | | | | | | | |
24 | ||
| | Credit Facility | | Senior Subordinated Notes | | TV One Senior Secured Notes | | Total | | ||||
| | | | | | | | | | | | | |
October December 2013 | | $ | 960 | | $ | | | $ | | | $ | 960 | |
2014 | | | 3,840 | | | | | | | | | 3,840 | |
2015 | | | 3,840 | | | | | | | | | 3,840 | |
2016 | | | 365,776 | | | 327,034 | | | 119,000 | | | 811,810 | |
Total Debt | | $ | 374,416 | | $ | 327,034 | | $ | 119,000 | | $ | 820,450 | |
25 | ||
26 | ||
| | Number of Options | | Weighted-Average Exercise Price | | Weighted-Average Remaining Contractual Term (In Years) | | Aggregate Intrinsic Value | | ||||
Outstanding at December 31, 2012 | | | 4,630,000 | | $ | 8.17 | | | | | | | |
Grants | | | | | $ | | | | | | | | |
Exercised | | | | | $ | | | | | | | | |
Forfeited/cancelled/expired | | | 55,000 | | $ | 15.30 | | | | | | | |
Balance as of September 30, 2013 | | | 4,575,000 | | $ | 8.08 | | | 3.06 | | $ | 2,908,491 | |
Vested and expected to vest at September 30, 2013 | | | 4,566,000 | | $ | 8.10 | | | 3.05 | | $ | 2,891,422 | |
Unvested at September 30, 2013 | | | 75,000 | | $ | 0.83 | | | 8.68 | | $ | 140,058 | |
Exercisable at September 30, 2013 | | | 4,500,000 | | $ | 8.21 | | | 2.97 | | $ | 2,768,433 | |
27 | ||
| | Shares | | Average Fair Value at Grant Date | | ||
Unvested at December 31, 2012 | | | 82,000 | | $ | 1.11 | |
Grants | | | 110,000 | | $ | 2.28 | |
Vested | | | (62,000) | | $ | 1.09 | |
Forfeited/cancelled/expired | | | | | $ | | |
Unvested at September 30, 2013 | | | 130,000 | | $ | 2.11 | |
28 | ||
| | Three Months Ended September 30, | | ||||
| | 2013 | | 2012 | | ||
| | (Unaudited) | | ||||
| | (In thousands) | | ||||
Net Revenue: | | | | | | | |
Radio Broadcasting | | $ | 59,281 | | $ | 61,765 | |
Reach Media | | | 16,872 | | | 11,909 | |
Internet | | | 6,125 | | | 4,452 | |
Cable Television | | | 37,786 | | | 33,232 | |
Corporate/Eliminations/Other | | | (1,673) | | | (1,464) | |
Consolidated | | $ | 118,391 | | $ | 109,894 | |
| | | | | | | |
Operating Expenses (excluding depreciation, amortization and impairment charges and including stock-based compensation): | | | | | | | |
Radio Broadcasting | | $ | 32,034 | | $ | 33,626 | |
Reach Media | | | 13,701 | | | 11,324 | |
Internet | | | 6,108 | | | 4,888 | |
Cable Television | | | 26,470 | | | 24,983 | |
Corporate/Eliminations/Other | | | 5,002 | | | 3,876 | |
Consolidated | | $ | 83,315 | | $ | 78,697 | |
| | | | | | | |
Depreciation and Amortization: | | | | | | | |
Radio Broadcasting | | $ | 1,645 | | $ | 1,605 | |
Reach Media | | | 310 | | | 292 | |
Internet | | | 588 | | | 795 | |
Cable Television | | | 6,555 | | | 6,707 | |
Corporate/Eliminations/Other | | | 473 | | | 300 | |
Consolidated | | $ | 9,571 | | $ | 9,699 | |
| | | | | | | |
Impairment of Long-Lived Assets: | | | | | | | |
Radio Broadcasting | | $ | 3,710 | | $ | | |
Reach Media | | | | | | | |
Internet | | | | | | | |
Cable Television | | | | | | | |
Corporate/Eliminations/Other | | | | | | | |
Consolidated | | $ | 3,710 | | $ | | |
| | | | | | | |
Operating income (loss): | | | | | | | |
Radio Broadcasting | | $ | 21,892 | | $ | 26,534 | |
Reach Media | | | 2,861 | | | 293 | |
Internet | | | (571) | | | (1,231) | |
Cable Television | | | 4,761 | | | 1,542 | |
Corporate/Eliminations/Other | | | (7,148) | | | (5,640) | |
Consolidated | | $ | 21,795 | | $ | 21,498 | |
| | September 30, 2013 | | December 31, 2012 | | ||
| | (Unaudited) | | | | | |
| | (In thousands) | | ||||
Total Assets: | | | | | | | |
Radio Broadcasting | | $ | 778,332 | | $ | 801,340 | |
Reach Media | | | 37,066 | | | 29,492 | |
Internet | | | 32,227 | | | 32,076 | |
Cable Television | | | 505,107 | | | 535,344 | |
Corporate/Eliminations/Other | | | 67,299 | | | 61,943 | |
Consolidated | | $ | 1,420,031 | | $ | 1,460,195 | |
29 | ||
| | Nine Months Ended September 30, | | ||||
| | 2013 | | 2012 | | ||
| | (Unaudited) | | ||||
| | (In thousands) | | ||||
Net Revenue: | | | | | | | |
Radio Broadcasting | | $ | 167,898 | | $ | 176,094 | |
Reach Media | | | 44,428 | | | 34,008 | |
Internet | | | 17,612 | | | 14,659 | |
Cable Television | | | 111,506 | | | 97,722 | |
Corporate/Eliminations/Other | | | (4,339) | | | (3,795) | |
Consolidated | | $ | 337,105 | | $ | 318,688 | |
| | | | | | | |
Operating Expenses (excluding depreciation, amortization and impairment charges and including stock-based compensation): | | | | | | | |
Radio Broadcasting | | $ | 96,666 | | $ | 103,974 | |
Reach Media | | | 40,147 | | | 34,632 | |
Internet | | | 17,587 | | | 15,250 | |
Cable Television | | | 70,699 | | | 65,893 | |
Corporate/Eliminations/Other | | | 12,945 | | | 12,857 | |
Consolidated | | $ | 238,044 | | $ | 232,606 | |
| | | | | | | |
Depreciation and Amortization: | | | | | | | |
Radio Broadcasting | | $ | 4,720 | | $ | 4,867 | |
Reach Media | | | 950 | | | 886 | |
Internet | | | 1,902 | | | 2,432 | |
Cable Television | | | 19,773 | | | 20,219 | |
Corporate/Eliminations/Other | | | 1,255 | | | 757 | |
Consolidated | | $ | 28,600 | | $ | 29,161 | |
| | | | | | | |
Impairment of Long-Lived Assets: | | | | | | | |
Radio Broadcasting | | $ | 14,880 | | $ | 313 | |
Reach Media | | | | | | | |
Internet | | | | | | | |
Cable Television | | | | | | | |
Corporate/Eliminations/Other | | | | | | | |
Consolidated | | $ | 14,880 | | $ | 313 | |
| | | | | | | |
Operating income (loss): | | | | | | | |
Radio Broadcasting | | $ | 51,632 | | $ | 66,940 | |
Reach Media | | | 3,331 | | | (1,510) | |
Internet | | | (1,877) | | | (3,023) | |
Cable Television | | | 21,034 | | | 11,610 | |
Corporate/Eliminations/Other | | | (18,539) | | | (17,409) | |
Consolidated | | $ | 55,581 | | $ | 56,608 | |
30 | ||
31 | ||
| | As Previously Reported | | Change from Combined Subsidiary Guarantor to Non-Guarantor | | Change from Radio One, Inc. to Combined Subsidiary Guarantor | | Change from Radio One, Inc. to Non-Wholly Owned Subsidiary Guarantor | | Change from Radio One, Inc. to Non- Guarantor | | Consolidation Adjustments | | As Adjusted | | |||||||
Revenues | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Radio One, Inc. | | | 73,595 | | | - | | | 1,889 | | | (11,909) | | | (33,232) | | | 2,272 | | | 32,615 | |
Combined Subsidiary Guarantors | | | 36,357 | | | - | | | (1,947) | | | - | | | - | | | - | | | 34,410 | |
Non-Wholly Owned Guarantor Subsidiaries | | | - | | | - | | | - | | | 11,909 | | | - | | | - | | | 11,909 | |
Non-Guarantor Subsidiaries | | | - | | | - | | | - | | | - | | | 33,232 | | | - | | | 33,232 | |
Consolidation Adjustments | | | - | | | - | | | - | | | - | | | - | | | (2,272) | | | (2,272) | |
| | | | | | | | | | | | | | | | | | | | | | |
Total Revenues | | | 109,952 | | | - | | | (58) | | | - | | | - | | | - | | | 109,894 | |
| | | | | | | | | | | | | | | | | | | | | | |
Operating Income | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Radio One, Inc. | | | 9,944 | | | - | | | (42) | | | (293) | | | (8,066) | | | 6,524 | | | 8,067 | |
Combined Subsidiary Guarantors | | | 11,589 | | | - | | | 7 | | | - | | | - | | | - | | | 11,596 | |
Non-Wholly Owned Guarantor Subsidiaries | | | - | | | - | | | - | | | 293 | | | - | | | - | | | 293 | |
Non-Guarantor Subsidiaries | | | - | | | - | | | - | | | - | | | 8,066 | | | - | | | 8,066 | |
Consolidation Adjustments | | | - | | | - | | | - | | | - | | | - | | | (6,524) | | | (6,524) | |
| | | | | | | | | | | | | | | | | | | | | | |
Total Operating Income | | | 21,533 | | | - | | | (35) | | | - | | | - | | | - | | | 21,498 | |
| | | | | | | | | | | | | | | | | | | | | | |
Consolidated Net Income (Loss) | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Radio One, Inc. | | | (10,255) | | | - | | | 4,595 | | | (52) | | | (5,311) | | | (2,041) | | | (13,064) | |
Combined Subsidiary Guarantors | | | 11,296 | | | - | | | (4,595) | | | - | | | - | | | - | | | 6,701 | |
Non-Wholly Owned Guarantor Subsidiaries | | | - | | | - | | | - | | | 52 | | | - | | | - | | | 52 | |
Non-Guarantor Subsidiaries | | | - | | | - | | | - | | | - | | | 5,311 | | | - | | | 5,311 | |
Consolidation Adjustments | | | (11,296) | | | - | | | - | | | - | | | - | | | 2,041 | | | (9,255) | |
| | | | | | | | | | | | | | | | | | | | | | |
Total Consolidated Net Income (Loss) | | | (10,255) | | | - | | | - | | | - | | | - | | | - | | | (10,255) | |
| | | | | | | | | | | | | | | | | | | | | | |
Net Income Attributable to Non-Controlling Interests | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Radio One, Inc. | | | 2,809 | | | - | | | - | | | - | | | - | | | (2,809) | | | - | |
Consolidation Adjustments | | | - | | | - | | | - | | | - | | | - | | | 2,809 | | | 2,809 | |
| | | | | | | | | | | | | | | | | | | | | | |
Total Net Income Attributable to Non-Controlling Interests | | | 2,809 | | | - | | | - | | | - | | | - | | | - | | | 2,809 | |
| | | | | | | | | | | | | | | | | | | | | | |
Consolidated Net Income (Loss) Attributable to Common Stockholders | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Radio One, Inc. | | | (13,064) | | | - | | | 4,595 | | | (52) | | | (5,311) | | | 768 | | | (13,064) | |
Combined Subsidiary Guarantors | | | 11,296 | | | - | | | (4,595) | | | - | | | - | | | - | | | 6,701 | |
Non-Wholly Owned Guarantor Subsidiaries | | | - | | | - | | | - | | | 52 | | | - | | | - | | | 52 | |
Non-Guarantor Subsidiaries | | | - | | | - | | | - | | | - | | | 5,311 | | | - | | | 5,311 | |
Consolidation Adjustments | | | (11,296) | | | - | | | - | | | - | | | - | | | (768) | | | (12,064) | |
| | | | | | | | | | | | | | | | | | | | | | |
Total Consolidated Net Income (Loss) Attributable to Common Stockholders | | | (13,064) | | | - | | | - | | | - | | | - | | | - | | | (13,064) | |
32 | ||
| | As Previously Reported | | Change from Combined Subsidiary Guarantor to Non-Guarantor | | Change from Radio One, Inc. to Combined Subsidiary Guarantor | | Change from Radio One, Inc. to Non-Wholly Owned Subsidiary Guarantor | | Change from Radio One, Inc. to Non- Guarantor | | Consolidation Adjustments | | As Adjusted | | |||||||
Revenues | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Radio One, Inc. | | | 215,874 | | | - | | | 5,861 | | | (34,008) | | | (97,722) | | | 6,081 | | | 96,086 | |
Combined Subsidiary Guarantors | | | 103,036 | | | - | | | (6,083) | | | - | | | - | | | - | | | 96,953 | |
Non-Wholly Owned Guarantor Subsidiaries | | | - | | | - | | | - | | | 34,008 | | | - | | | - | | | 34,008 | |
Non-Guarantor Subsidiaries | | | - | | | - | | | - | | | - | | | 97,722 | | | - | | | 97,722 | |
Consolidation Adjustments | | | - | | | - | | | - | | | - | | | - | | | (6,081) | | | (6,081) | |
| | | | | | | | | | | | | | | | | | | | | | |
Total Revenues | | | 318,910 | | | - | | | (222) | | | - | | | - | | | - | | | 318,688 | |
| | | | | | | | | | | | | | | | | | | | | | |
Operating Income | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Radio One, Inc. | | | 28,337 | | | - | | | 195 | | | 1,510 | | | (31,335) | | | 19,725 | | | 18,432 | |
Combined Subsidiary Guarantors | | | 28,449 | | | - | | | (373) | | | - | | | - | | | - | | | 28,076 | |
Non-Wholly Owned Guarantor Subsidiaries | | | - | | | - | | | - | | | (1,510) | | | - | | | - | | | (1,510) | |
Non-Guarantor Subsidiaries | | | - | | | - | | | - | | | - | | | 31,335 | | | - | | | 31,335 | |
Consolidation Adjustments | | | - | | | - | | | - | | | - | | | - | | | (19,725) | | | (19,725) | |
| | | | | | | | | | | | | | | | | | | | | | |
Total Operating Income | | | 56,786 | | | - | | | (178) | | | - | | | - | | | - | | | 56,608 | |
| | | | | | | | | | | | | | | | | | | | | | |
Consolidated Net Income (Loss) | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Radio One, Inc. | | | (38,975) | | | - | | | 9,875 | | | 1,123 | | | (22,515) | | | 854 | | | (49,638) | |
Combined Subsidiary Guarantors | | | 27,678 | | | - | | | (9,875) | | | - | | | - | | | - | | | 17,803 | |
Non-Wholly Owned Guarantor Subsidiaries | | | - | | | - | | | - | | | (1,123) | | | - | | | - | | | (1,123) | |
Non-Guarantor Subsidiaries | | | - | | | - | | | - | | | - | | | 22,515 | | | - | | | 22,515 | |
Consolidation Adjustments | | | (27,678) | | | - | | | - | | | - | | | - | | | (854) | | | (28,532) | |
| | | | | | | | | | | | | | | | | | | | | | |
Total Consolidated Net Income (Loss) | | | (38,975) | | | - | | | - | | | - | | | - | | | - | | | (38,975) | |
| | | | | | | | | | | | | | | | | | | | | | |
Net Income Attributable to Non-Controlling Interests | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Radio One, Inc. | | | 10,663 | | | - | | | - | | | - | | | - | | | (10,663) | | | - | |
Combined Subsidiary Guarantors | | | - | | | - | | | - | | | - | | | - | | | - | | | - | |
Non-Wholly Owned Guarantor Subsidiaries | | | - | | | - | | | - | | | - | | | - | | | - | | | - | |
Non-Guarantor Subsidiaries | | | - | | | - | | | - | | | - | | | - | | | - | | | - | |
Consolidation Adjustments | | | - | | | - | | | - | | | - | | | - | | | 10,663 | | | 10,663 | |
| | | | | | | | | | | | | | | | | | | | | | |
Total Net Income Attributable to Non-Controlling Interests | | | 10,663 | | | - | | | - | | | - | | | - | | | - | | | 10,663 | |
| | | | | | | | | | | | | | | | | | | | | | |
Consolidated Net Income (Loss) Attributable to Common Stockholders | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Radio One, Inc. | | | (49,638) | | | - | | | 9,875 | | | 1,123 | | | (22,515) | | | 11,517 | | | (49,638) | |
Combined Subsidiary Guarantors | | | 27,678 | | | - | | | (9,875) | | | - | | | - | | | - | | | 17,803 | |
Non-Wholly Owned Guarantor Subsidiaries | | | - | | | - | | | - | | | (1,123) | | | - | | | - | | | (1,123) | |
Non-Guarantor Subsidiaries | | | - | | | - | | | - | | | - | | | 22,515 | | | - | | | 22,515 | |
Consolidation Adjustments | | | (27,678) | | | - | | | - | | | - | | | - | | | (11,517) | | | (39,195) | |
| | | | | | | | | | | | | | | | | | | | | | |
Total Consolidated Net Income (Loss) Attributable to Common Stockholders | | | (49,638) | | | - | | | - | | | - | | | - | | | - | | | (49,638) | |
33 | ||
| | As Previously Reported | | Change from Combined Subsidiary Guarantor to Non- Guarantor | | Change from Radio One, Inc. to Combined Subsidiary Guarantor | | Change from Radio One, Inc. to Non- Wholly Owned Subsidiary Guarantor | | Change from Radio One, Inc. to Non- Guarantor | | Consolidation Adjustments | | As Adjusted | |
Comprehensive Income Attributable to Non-Controlling Interests | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Radio One, Inc. | | 2,809 | | - | | - | | - | | - | | (2,809) | | - | |
Combined Subsidiary Guarantors | | - | | - | | - | | - | | - | | - | | - | |
Non-Wholly Owned Guarantor Subsidiaries | | - | | - | | - | | - | | - | | - | | - | |
Non-Guarantor Subsidiaries | | - | | - | | - | | - | | - | | - | | - | |
Consolidation Adjustments | | - | | - | | - | | - | | - | | 2,809 | | 2,809 | |
| | | | | | | | | | | | | | | |
Total Comprehensive Income Attributable to Non-Controlling Interests | | 2,809 | | - | | - | | - | | - | | - | | 2,809 | |
| | As Previously Reported | | Change from Combined Subsidiary Guarantor to Non- Guarantor | | Change from Radio One, Inc. to Combined Subsidiary Guarantor | | Change from Radio One, Inc. to Non- Wholly Owned Subsidiary Guarantor | | Change from Radio One, Inc. to Non- Guarantor | | Consolidation Adjustments | | As Adjusted | |
Comprehensive Income Attributable to Non-Controlling Interests | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Radio One, Inc. | | 10,663 | | - | | - | | - | | - | | (10,663) | | - | |
Combined Subsidiary Guarantors | | - | | - | | - | | - | | - | | - | | - | |
Non-Wholly Owned Guarantor Subsidiaries | | - | | - | | - | | - | | - | | - | | - | |
Non-Guarantor Subsidiaries | | - | | - | | - | | - | | - | | - | | - | |
Consolidation Adjustments | | - | | - | | - | | - | | - | | 10,663 | | 10,663 | |
| | | | | | | | | | | | | | | |
Total Comprehensive Income Attributable to Non-Controlling Interests | | 10,663 | | - | | - | | - | | - | | - | | 10,663 | |
34 | ||
| | As Previously Reported | | Change from Combined Subsidiary Guarantor to Non- Guarantor | | Change from Radio One, Inc. to Combined Subsidiary Guarantor | | Change from Radio One, Inc. to Non- Wholly Owned Subsidiary Guarantor | | Change from Radio One, Inc. to Non- Guarantor | | Consolidation Adjustments | | As Adjusted | |
Net Cash Flows from Operating Activities | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Radio One, Inc. | | 55,459 | | - | | (1,510) | | (297) | | (18,806) | | (19,619) | | 15,227 | |
Combined Subsidiary Guarantors | | 1,406 | | - | | 1,510 | | - | | - | | - | | 2,916 | |
Non-Wholly Owned Guarantor Subsidiaries | | - | | - | | - | | 297 | | - | | - | | 297 | |
Non-Guarantor Subsidiaries | | - | | - | | - | | - | | 18,806 | | - | | 18,806 | |
Consolidation Adjustments | | (27,678) | | - | | - | | - | | - | | 19,619 | | (8,059) | |
| | | | | | | | | | | | | | | |
Total Net Cash Flows from Operating Activities | | 29,187 | | - | | - | | - | | - | | - | | 29,187 | |
| | | | | | | | | | | | | | | |
Net Cash Flows from Investing Activities | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Radio One, Inc. | | (31,556) | | - | | 1,512 | | 106 | | (4,328) | | 27,678 | | (6,588) | |
Combined Subsidiary Guarantors | | - | | - | | (1,512) | | - | | - | | - | | (1,512) | |
Non-Wholly Owned Guarantor Subsidiaries | | - | | - | | - | | (106) | | - | | - | | (106) | |
Non-Guarantor Subsidiaries | | - | | - | | - | | - | | 4,328 | | - | | 4,328 | |
Consolidation Adjustments | | 27,678 | | - | | - | | - | | - | | (27,678) | | - | |
| | | | | | | | | | | | | | | |
Total Net Cash Flows from Investing Activities | | (3,878) | | - | | - | | - | | - | | - | | (3,878) | |
| | | | | | | | | | | | | | | |
Net Cash Flows from Financing Activities | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Radio One, Inc. | | (12,588) | | - | | - | | - | | 15,800 | | (8,059) | | (4,847) | |
Combined Subsidiary Guarantors | | - | | - | | - | | - | | - | | - | | - | |
Non-Wholly Owned Guarantor Subsidiaries | | - | | - | | - | | - | | - | | - | | - | |
Non-Guarantor Subsidiaries | | - | | - | | - | | - | | (15,800) | | - | | (15,800) | |
Consolidation Adjustments | | - | | - | | - | | - | | - | | 8,059 | | 8,059 | |
| | | | | | | | | | | | | | | |
Total Net Cash Flows from Financing Activities | | (12,588) | | - | | - | | - | | - | | - | | (12,588) | |
35 | ||
| | | | | Wholly-Owned | | Non Wholly- Owned | | | | | | | | | | | ||
| | Radio One, Inc. | | Guarantor Subsidiaries | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Consolidation Adjustments | | Consolidated | | ||||||
| | Unaudited | | ||||||||||||||||
| | (In thousands) | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | |
NET REVENUE | | $ | 28,668 | | $ | 36,950 | | $ | 16,872 | | $ | 37,786 | | $ | (1,885) | | $ | 118,391 | |
OPERATING EXPENSES: | | | | | | | | | | | | | | | | | | | |
Programming and technical | | | 5,442 | | | 7,664 | | | 8,088 | | | 17,541 | | | (1,559) | | | 37,176 | |
Selling, general and administrative, including stock-based compensation | | | 9,871 | | | 15,164 | | | 4,445 | | | 7,260 | | | (326) | | | 36,414 | |
Corporate selling, general and administrative, including stock-based compensation | | | 6,888 | | | - | | | 1,168 | | | 1,669 | | | - | | | 9,725 | |
Depreciation and amortization | | | 1,177 | | | 1,529 | | | 310 | | | 168 | | | 6,387 | | | 9,571 | |
Impairment of long-lived assets | | | - | | | 3,710 | | | - | | | - | | | - | | | 3,710 | |
Total operating expenses | | | 23,378 | | | 28,067 | | | 14,011 | | | 26,638 | | | 4,502 | | | 96,596 | |
Operating income (loss) | | | 5,290 | | | 8,883 | | | 2,861 | | | 11,148 | | | (6,387) | | | 21,795 | |
INTEREST INCOME | | | 6 | | | - | | | - | | | 17 | | | - | | | 23 | |
INTEREST EXPENSE | | | 18,996 | | | 301 | | | - | | | 3,039 | | | - | | | 22,336 | |
EQUITY IN INCOME (LOSS) OF SUBSIDIARIES | | | 7,837 | | | (782) | | | - | | | - | | | (7,055) | | | - | |
OTHER INCOME, net | | | 29 | | | - | | | - | | | - | | | - | | | 29 | |
(Loss) income before provision for income taxes, noncontrolling interests in income of subsidiaries and discontinued operations | | | (5,834) | | | 7,800 | | | 2,861 | | | 8,126 | | | (13,442) | | | (489) | |
PROVISION FOR INCOME TAXES | | | 7,387 | | | - | | | 1,028 | | | - | | | - | | | 8,415 | |
Net (loss) income from continuing operations | | | (13,221) | | | 7,800 | | | 1,833 | | | 8,126 | | | (13,442) | | | (8,904) | |
INCOME FROM DISCONTINUED OPERATIONS, net of tax | | | - | | | - | | | - | | | - | | | - | | | - | |
CONSOLIDATED NET (LOSS) INCOME | | | (13,221) | | | 7,800 | | | 1,833 | | | 8,126 | | | (13,442) | | | (8,904) | |
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | | | - | | | - | | | - | | | - | | | 4,317 | | | 4,317 | |
CONSOLIDATED NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | | $ | (13,221) | | $ | 7,800 | | $ | 1,833 | | $ | 8,126 | | $ | (17,759) | | $ | (13,221) | |
36 | ||
| | | | | Wholly-Owned | | Non Wholly- Owned | | | | | | | | | | | ||
| | Radio One, Inc. | | Guarantor Subsidiaries | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Consolidation Adjustments | | Consolidated | | ||||||
| | Unaudited | | ||||||||||||||||
| | (As Adjusted See Note 1) | | ||||||||||||||||
| | (In thousands) | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | |
NET REVENUE | | $ | 32,615 | | $ | 34,410 | | $ | 11,909 | | $ | 33,232 | | $ | (2,272) | | $ | 109,894 | |
OPERATING EXPENSES: | | | | | | | | | | | | | | | | | | | |
Programming and technical | | | 6,898 | | | 7,438 | | | 5,961 | | | 13,168 | | | (1,011) | | | 32,454 | |
Selling, general and administrative, including stock-based compensation | | | 10,407 | | | 13,771 | | | 3,898 | | | 9,263 | | | (726) | | | 36,613 | |
Corporate selling, general and administrative, including stock-based compensation | | | 6,148 | | | - | | | 1,465 | | | 2,552 | | | (535) | | | 9,630 | |
Depreciation and amortization | | | 1,095 | | | 1,605 | | | 292 | | | 183 | | | 6,524 | | | 9,699 | |
Impairment of long-lived assets | | | - | | | - | | | - | | | - | | | - | | | - | |
Total operating expenses | | | 24,548 | | | 22,814 | | | 11,616 | | | 25,166 | | | 4,252 | | | 88,396 | |
Operating income (loss) | | | 8,067 | | | 11,596 | | | 293 | | | 8,066 | | | (6,524) | | | 21,498 | |
INTEREST INCOME | | | 73 | | | - | | | 1 | | | 34 | | | - | | | 108 | |
INTEREST EXPENSE | | | 18,832 | | | 218 | | | - | | | 3,039 | | | - | | | 22,089 | |
EQUITY IN INCOME (LOSS) OF SUBSIDIARIES | | | 6,514 | | | (4,637) | | | - | | | - | | | (1,877) | | | - | |
OTHER (EXPENSE) INCOME, net | | | (77) | | | - | | | - | | | 250 | | | (854) | | | (681) | |
(Loss) income before provision for income taxes, noncontrolling interests in income of subsidiaries and discontinued operations | | | (4,255) | | | 6,741 | | | 294 | | | 5,311 | | | (9,255) | | | (1,164) | |
PROVISION FOR INCOME TAXES | | | 8,809 | | | - | | | 242 | | | - | | | - | | | 9,051 | |
Net (loss) income from continuing operations | | | (13,064) | | | 6,741 | | | 52 | | | 5,311 | | | (9,255) | | | (10,215) | |
LOSS FROM DISCONTINUED OPERATIONS, net of tax | | | - | | | 40 | | | - | | | - | | | - | | | 40 | |
CONSOLIDATED NET (LOSS) INCOME | | | (13,064) | | | 6,701 | | | 52 | | | 5,311 | | | (9,255) | | | (10,255) | |
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | | | - | | | - | | | - | | | - | | | 2,809 | | | 2,809 | |
CONSOLIDATED NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | | $ | (13,064) | | $ | 6,701 | | $ | 52 | | $ | 5,311 | | $ | (12,064) | | $ | (13,064) | |
37 | ||
| | | | | Wholly-Owned | | Non Wholly- Owned | | | | | | | | | | | ||
| | Radio One, Inc. | | Guarantor Subsidiaries | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Consolidation Adjustments | | Consolidated | | ||||||
| | Unaudited | | ||||||||||||||||
| | (In thousands) | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | |
NET REVENUE | | $ | 82,832 | | $ | 103,328 | | $ | 44,428 | | $ | 111,506 | | $ | (4,989) | | $ | 337,105 | |
OPERATING EXPENSES: | | | | | | | | | | | | | | | | | | | |
Programming and technical | | | 15,992 | | | 22,841 | | | 23,003 | | | 42,873 | | | (4,060) | | | 100,649 | |
Selling, general and administrative, including stock-based compensation | | | 30,923 | | | 44,498 | | | 13,762 | | | 21,927 | | | (929) | | | 110,181 | |
Corporate selling, general and administrative, including stock-based compensation | | | 17,933 | | | - | | | 3,382 | | | 5,899 | | | - | | | 27,214 | |
Depreciation and amortization | | | 3,439 | | | 4,438 | | | 950 | | | 526 | | | 19,247 | | | 28,600 | |
Impairment of long-lived assets | | | 8,600 | | | 6,280 | | | - | | | - | | | - | | | 14,880 | |
Total operating expenses | | | 76,887 | | | 78,057 | | | 41,097 | | | 71,225 | | | 14,258 | | | 281,524 | |
Operating income (loss) | | | 5,945 | | | 25,271 | | | 3,331 | | | 40,281 | | | (19,247) | | | 55,581 | |
INTEREST INCOME | | | 121 | | | - | | | - | | | 44 | | | - | | | 165 | |
INTEREST EXPENSE | | | 56,808 | | | 886 | | | - | | | 9,117 | | | - | | | 66,811 | |
EQUITY IN INCOME (LOSS) OF SUBSIDIARIES | | | 23,410 | | | (1,791) | | | - | | | - | | | (21,619) | | | - | |
OTHER INCOME, net | | | 89 | | | 10 | | | - | | | - | | | - | | | 99 | |
(Loss) income before provision for income taxes, noncontrolling interests in income of subsidiaries and discontinued operations | | | (27,243) | | | 22,604 | | | 3,331 | | | 31,208 | | | (40,866) | | | (10,966) | |
PROVISION FOR INCOME TAXES | | | 18,298 | | | - | | | 1,500 | | | - | | | - | | | 19,798 | |
Net (loss) income from continuing operations | | | (45,541) | | | 22,604 | | | 1,831 | | | 31,208 | | | (40,866) | | | (30,764) | |
INCOME FROM DISCONTINUED OPERATIONS, net of tax | | | - | | | 893 | | | - | | | - | | | - | | | 893 | |
CONSOLIDATED NET (LOSS) INCOME | | | (45,541) | | | 23,497 | | | 1,831 | | | 31,208 | | | (40,866) | | | (29,871) | |
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | | | - | | | - | | | - | | | - | | | 15,670 | | | 15,670 | |
CONSOLIDATED NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | | $ | (45,541) | | $ | 23,497 | | $ | 1,831 | | $ | 31,208 | | $ | (56,536) | | $ | (45,541) | |
38 | ||
| | | | | Wholly-Owned | | Non Wholly- Owned | | | | | | | | | | | ||
| | Radio One, Inc. | | Guarantor Subsidiaries | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Consolidation Adjustments | | Consolidated | | ||||||
| | Unaudited | | ||||||||||||||||
| | (As Adjusted See Note 1) | | ||||||||||||||||
| | (In thousands) | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | |
NET REVENUE | | $ | 96,086 | | $ | 96,953 | | $ | 34,008 | | $ | 97,722 | | $ | (6,081) | | $ | 318,688 | |
OPERATING EXPENSES: | | | | | | | | | | | | | | | | | | | |
Programming and technical | | | 21,678 | | | 22,830 | | | 17,942 | | | 37,269 | | | (3,137) | | | 96,582 | |
Selling, general and administrative, including stock-based compensation | | | 33,904 | | | 40,812 | | | 11,615 | | | 21,954 | | | (1,339) | | | 106,946 | |
Corporate selling, general and administrative, including stock-based compensation | | | 18,938 | | | - | | | 5,075 | | | 6,670 | | | (1,605) | | | 29,078 | |
Depreciation and amortization | | | 3,134 | | | 4,922 | | | 886 | | | 494 | | | 19,725 | | | 29,161 | |
Impairment of long-lived assets | | | - | | | 313 | | | - | | | - | | | - | | | 313 | |
Total operating expenses | | | 77,654 | | | 68,877 | | | 35,518 | | | 66,387 | | | 13,644 | | | 262,080 | |
Operating income (loss) | | | 18,432 | | | 28,076 | | | (1,510) | | | 31,335 | | | (19,725) | | | 56,608 | |
INTEREST INCOME | | | 102 | | | - | | | 5 | | | 48 | | | - | | | 155 | |
INTEREST EXPENSE | | | 58,930 | | | 537 | | | - | | | 9,117 | | | - | | | 68,584 | |
EQUITY IN INCOME (LOSS) OF SUBSIDIARIES | | | 17,640 | | | (9,687) | | | - | | | - | | | (7,953) | | | - | |
OTHER (EXPENSE) INCOME, net | | | (686) | | | 7 | | | - | | | 249 | | | (854) | | | (1,284) | |
(Loss) income before provision for (benefit from) income taxes, noncontrolling interests in income of subsidiaries and discontinued operations | | | (23,442) | | | 17,859 | | | (1,505) | | | 22,515 | | | (28,532) | | | (13,105) | |
PROVISION FOR (BENEFIT FROM) INCOME TAXES | | | 26,196 | | | - | | | (382) | | | - | | | - | | | 25,814 | |
Net (loss) income from continuing operations | | | (49,638) | | | 17,859 | | | (1,123) | | | 22,515 | | | (28,532) | | | (38,919) | |
LOSS FROM DISCONTINUED OPERATIONS, net of tax | | | - | | | 56 | | | - | | | - | | | - | | | 56 | |
CONSOLIDATED NET (LOSS) INCOME | | | (49,638) | | | 17,803 | | | (1,123) | | | 22,515 | | | (28,532) | | | (38,975) | |
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | | | - | | | - | | | - | | | - | | | 10,663 | | | 10,663 | |
CONSOLIDATED NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | | $ | (49,638) | | $ | 17,803 | | $ | (1,123) | | $ | 22,515 | | $ | (39,195) | | $ | (49,638) | |
39 | ||
| | | | | Wholly-Owned | | Non Wholly- Owned | | | | | | | | | ||||
| | Radio One, Inc. | | Guarantor Subsidiaries | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Consolidation Adjustments | | Consolidated | | ||||||
| | Unaudited | | ||||||||||||||||
| | (In thousands) | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | |
CONSOLIDATED NET (LOSS) INCOME | | $ | (13,221) | | $ | 7,800 | | $ | 1,833 | | $ | 8,126 | | $ | (13,442) | | $ | (8,904) | |
NET CHANGE IN UNREALIZED LOSS ON INVESTMENT ACTIVITIES, NET OF TAX | | | - | | | - | | | - | | | (11) | | | - | | | (11) | |
COMPREHENSIVE (LOSS) INCOME | | | (13,221) | | | 7,800 | | | 1,833 | | | 8,115 | | | (13,442) | | | (8,915) | |
LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | | | - | | | - | | | - | | | - | | | 4,317 | | | 4,317 | |
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | | $ | (13,221) | | $ | 7,800 | | $ | 1,833 | | $ | 8,115 | | $ | (17,759) | | $ | (13,232) | |
40 | ||
| | | | | Wholly-Owned | | Non Wholly- Owned | | | | | | | | | |||||
| | Radio One, Inc. | | Guarantor Subsidiaries | | Guarantor Subsidiaries | | | Non-Guarantor Subsidiaries | | Consolidation Adjustments | | Consolidated | | ||||||
| | Unaudited | | |||||||||||||||||
| | (As Adjusted See Note 1) | | |||||||||||||||||
| | (In thousands) | | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
CONSOLIDATED NET (LOSS) INCOME | | $ | (13,064) | | $ | 6,701 | | $ | 52 | | | $ | 5,311 | | $ | (9,255) | | $ | (10,255) | |
NET CHANGE IN UNREALIZED GAIN ON INVESTMENT ACTIVITIES, NET OF TAX | | | - | | | - | | | - | | | | 27 | | | - | | | 27 | |
COMPREHENSIVE (LOSS) INCOME | | | (13,064) | | | 6,701 | | | 52 | | | | 5,338 | | | (9,255) | | | (10,228) | |
LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | | | - | | | - | | | - | | | | - | | | 2,809 | | | 2,809 | |
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | | $ | (13,064) | | $ | 6,701 | | $ | 52 | | | $ | 5,338 | | $ | (12,064) | | $ | (13,037) | |
41 | ||
| | | | Wholly-Owned | | Non Wholly- Owned | | | | | | | | | | ||||
| | Radio One, Inc. | | Guarantor Subsidiaries | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Consolidation Adjustments | | Consolidated | | ||||||
| | Unaudited | | ||||||||||||||||
| | (In thousands) | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | |
CONSOLIDATED NET (LOSS) INCOME | | $ | (45,541) | | $ | 23,497 | | $ | 1,831 | | $ | 31,208 | | $ | (40,866) | | $ | (29,871) | |
NET CHANGE IN UNREALIZED LOSS ON INVESTMENT ACTIVITIES, NET OF TAX | | | - | | | - | | | - | | | (113) | | | - | | | (113) | |
COMPREHENSIVE (LOSS) INCOME | | | (45,541) | | | 23,497 | | | 1,831 | | | 31,095 | | | (40,866) | | | (29,984) | |
LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | | | - | | | - | | | - | | | - | | | 15,670 | | | 15,670 | |
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | | $ | (45,541) | | $ | 23,497 | | $ | 1,831 | | $ | 31,095 | | $ | (56,536) | | $ | (45,654) | |
42 | ||
| | | | | Wholly-Owned | | Non Wholly- Owned | | | | | | | | | | | ||
| | Radio One, Inc. | | Guarantor Subsidiaries | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Consolidation Adjustments | | Consolidated | | ||||||
| | Unaudited | | ||||||||||||||||
| | (As Adjusted See Note 1) | | ||||||||||||||||
| | (In thousands) | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | |
CONSOLIDATED NET (LOSS) INCOME | | $ | (49,638) | | $ | 17,803 | | $ | (1,123) | | $ | 22,515 | | $ | (28,532) | | $ | (38,975) | |
NET CHANGE IN UNREALIZED GAIN ON INVESTMENT ACTIVITIES, NET OF TAX | | | - | | | - | | | - | | | 147 | | | - | | | 147 | |
COMPREHENSIVE (LOSS) INCOME | | | (49,638) | | | 17,803 | | | (1,123) | | | 22,662 | | | (28,532) | | | (38,828) | |
LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | | | - | | | - | | | - | | | - | | | 10,663 | | | 10,663 | |
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | | $ | (49,638) | | $ | 17,803 | | $ | (1,123) | | $ | 22,662 | | $ | (39,195) | | $ | (49,491) | |
43 | ||
| | | | | Wholly-Owned | | Non-Wholly Owned | | | | | | | | | | | ||
| | Radio One, | | Guarantor | | Guarantor | | Non-Guarantor | | Consolidation | | | | | |||||
| | Inc. | | Subsidiaries | | Subsidiaries | | Subsidiaries | | Adjustments | | Consolidated | | ||||||
| | (In thousands) | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | |
ASSETS | | | | | | | | | | | | | | | | | | | |
CURRENT ASSETS: | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 24,199 | | $ | 592 | | $ | 4,840 | | $ | 18,686 | | $ | - | | $ | 48,317 | |
Short-term investments | | | - | | | - | | | - | | | 3,193 | | | - | | | 3,193 | |
Trade accounts receivable, net of allowance for doubtful accounts | | | 17,127 | | | 32,561 | | | 11,776 | | | 36,079 | | | - | | | 97,543 | |
Prepaid expenses and other current assets | | | 7,166 | | | 1,190 | | | 3,600 | | | 756 | | | (5,441) | | | 7,271 | |
Current portion of content assets | | | - | | | - | | | - | | | 28,057 | | | - | | | 28,057 | |
Current assets from discontinued operations | | | 124 | | | (83) | | | - | | | - | | | - | | | 41 | |
Total current assets | | | 48,616 | | | 34,260 | | | 20,216 | | | 86,771 | | | (5,441) | | | 184,422 | |
PROPERTY AND EQUIPMENT, net | | | 17,315 | | | 15,632 | | | 382 | | | 1,495 | | | 21 | | | 34,845 | |
INTANGIBLE ASSETS, net | | | 308,867 | | | 456,263 | | | 15,564 | | | 15,033 | | | 361,399 | | | 1,157,126 | |
CONTENT ASSETS, net | | | - | | | - | | | - | | | 39,981 | | | - | | | 39,981 | |
INVESTMENT IN SUBSIDIARIES | | | 653,350 | | | 140,971 | | | - | | | - | | | (794,321) | | | - | |
OTHER ASSETS | | | 2,254 | | | 68 | | | 904 | | | 1,004 | | | (597) | | | 3,633 | |
NON-CURRENT ASSETS FROM DISCONTINUED OPERATIONS | | | - | | | 24 | | | - | | | - | | | - | | | 24 | |
Total assets | | $ | 1,030,402 | | $ | 647,218 | | $ | 37,066 | | $ | 144,284 | | $ | (438,939) | | $ | 1,420,031 | |
| | | | | | | | | | | | | | | | | | | |
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
CURRENT LIABILITIES: | | | | | | | | | | | | | | | | | | | |
Accounts payable | | $ | 867 | | $ | 3,144 | | $ | 2,082 | | $ | 2,018 | | $ | - | | $ | 8,111 | |
Accrued interest | | | 5,302 | | | - | | | - | | | 529 | | | - | | | 5,831 | |
Accrued compensation and related benefits | | | 5,057 | | | 1,739 | | | 1,152 | | | 2,836 | | | - | | | 10,784 | |
Current portion of content payables | | | - | | | - | | | - | | | 15,823 | | | - | | | 15,823 | |
Other current liabilities | | | 5,997 | | | 3,781 | | | 6,819 | | | 3,122 | | | (5,441) | | | 14,278 | |
Current portion of long-term debt | | | 3,840 | | | - | | | - | | | - | | | - | | | 3,840 | |
Current liabilities from discontinued operations | | | 37 | | | 66 | | | - | | | - | | | - | | | 103 | |
Total current liabilities | | | 21,100 | | | 8,730 | | | 10,053 | | | 24,328 | | | (5,441) | | | 58,770 | |
LONG-TERM DEBT, net of current portion and original issue discount | | | 693,368 | | | - | | | - | | | 119,000 | | | - | | | 812,368 | |
CONTENT PAYABLES, net of current portion | | | - | | | - | | | - | | | 8,473 | | | - | | | 8,473 | |
OTHER LONG-TERM LIABILITIES | | | 16,070 | | | 791 | | | 58 | | | 2,675 | | | (364) | | | 19,230 | |
DEFERRED TAX LIABILITIES | | | 206,382 | | | - | | | 492 | | | - | | | - | | | 206,874 | |
NON-CURRENT LIABILITIES FROM DISCONTINUED OPERATIONS | | | - | | | - | | | - | | | - | | | - | | | - | |
Total liabilities | | | 936,920 | | | 9,521 | | | 10,603 | | | 154,476 | | | (5,805) | | | 1,105,715 | |
| | | | | | | | | | | | | | | | | | | |
REDEEMABLE NONCONTROLLING INTERESTS | | | - | | | - | | | 12,646 | | | - | | | - | | | 12,646 | |
| | | | | | | | | | | | | | | | | | | |
STOCKHOLDERS’ EQUITY: | | | | | | | | | | | | | | | | | | | |
Preferred stock | | | - | | | - | | | - | | | 18 | | | (18) | | | - | |
Common stock | | | 48 | | | - | | | 10 | | | 18 | | | (28) | | | 48 | |
Accumulated other comprehensive income | | | (215) | | | - | | | - | | | (119) | | | 119 | | | (215) | |
Additional paid-in capital | | | 1,002,211 | | | 216,160 | | | 42,733 | | | (14,680) | | | (244,213) | | | 1,002,211 | |
Retained earnings (accumulated deficit) | | | (908,562) | | | 421,537 | | | (28,926) | | | 4,571 | | | (397,182) | | | (908,562) | |
Total stockholders’ equity | | | 93,482 | | | 637,697 | | | 13,817 | | | (10,192) | | | (641,322) | | | 93,482 | |
Noncontrolling interest | | | - | | | - | | | - | | | - | | | 208,188 | | | 208,188 | |
Total Equity | | | 93,482 | | | 637,697 | | | 13,817 | | | (10,192) | | | (433,134) | | | 301,670 | |
Total liabilities, redeemable noncontrolling interests and equity | | $ | 1,030,402 | | $ | 647,218 | | $ | 37,066 | | $ | 144,284 | | $ | (438,939) | | $ | 1,420,031 | |
44 | ||
| | | | | Wholly-Owned | | Non-Wholly Owned | | | | | | | | | | | ||
| | Radio One, | | Guarantor | | Guarantor | | Non-Guarantor | | Consolidation | | | | | |||||
| | Inc. | | Subsidiaries | | Subsidiaries | | Subsidiaries | | Adjustments | | Consolidated | | ||||||
| | (As adjusted) | | ||||||||||||||||
| | (As Adjusted See Note 1) | | ||||||||||||||||
| | (In thousands) | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | |
ASSETS | | | | | | | | | | | | | | | | | | | |
CURRENT ASSETS: | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 22,512 | | $ | 1,342 | | $ | 2,414 | | $ | 30,987 | | $ | - | | $ | 57,255 | |
Short-term investments | | | - | | | - | | | - | | | 1,597 | | | - | | | 1,597 | |
Trade accounts receivable, net of allowance for doubtful accounts | | | 18,494 | | | 27,539 | | | 6,788 | | | 29,162 | | | - | | | 81,983 | |
Prepaid expenses and other current assets | | | 1,707 | | | 817 | | | 3,593 | | | 976 | | | - | | | 7,093 | |
Current portion of content assets | | | - | | | - | | | - | | | 27,723 | | | - | | | 27,723 | |
Current assets from discontinued operations | | | 124 | | | (51) | | | - | | | - | | | - | | | 73 | |
Total current assets | | | 42,837 | | | 29,647 | | | 12,795 | | | 90,445 | | | - | | | 175,724 | |
PROPERTY AND EQUIPMENT, net | | | 18,035 | | | 14,867 | | | 469 | | | 1,807 | | | 104 | | | 35,282 | |
INTANGIBLE ASSETS, net | | | 319,481 | | | 463,600 | | | 16,225 | | | 22,501 | | | 380,755 | | | 1,202,562 | |
CONTENT ASSETS, net | | | - | | | - | | | - | | | 38,981 | | | - | | | 38,981 | |
INVESTMENT IN SUBSIDIARIES | | | 678,165 | | | 163,499 | | | - | | | - | | | (841,664) | | | - | |
OTHER ASSETS | | | 3,296 | | | 420 | | | 3 | | | 1,541 | | | (790) | | | 4,470 | |
NON-CURRENT ASSETS FROM DISCONTINUED OPERATIONS | | | - | | | 3,176 | | | - | | | - | | | - | | | 3,176 | |
Total assets | | $ | 1,061,814 | | $ | 675,209 | | $ | 29,492 | | $ | 155,275 | | $ | (461,595) | | $ | 1,460,195 | |
| | | | | | | | | | | | | | | | | | | |
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
CURRENT LIABILITIES: | | | | | | | | | | | | | | | | | | | |
Accounts payable | | $ | 1,222 | | $ | 1,846 | | $ | 314 | | $ | 2,049 | | $ | - | | $ | 5,431 | |
Accrued interest | | | 5,320 | | | - | | | - | | | 529 | | | - | | | 5,849 | |
Accrued compensation and related benefits | | | 6,708 | | | 1,760 | | | 925 | | | 1,772 | | | - | | | 11,165 | |
Current portion of content payables | | | - | | | - | | | - | | | 17,694 | | | - | | | 17,694 | |
Other current liabilities | | | 2,615 | | | 4,037 | | | 4,216 | | | 5,299 | | | - | | | 16,167 | |
Current portion of long-term debt | | | 4,587 | | | - | | | - | | | - | | | - | | | 4,587 | |
Current liabilities from discontinued operations | | | 23 | | | 59 | | | - | | | - | | | - | | | 82 | |
Total current liabilities | | | 20,475 | | | 7,702 | | | 5,455 | | | 27,343 | | | - | | | 60,975 | |
LONG-TERM DEBT, net of current portion and original issue discount | | | 695,131 | | | - | | | - | | | 119,000 | | | - | | | 814,131 | |
CONTENT PAYABLES, net of current portion | | | - | | | - | | | - | | | 11,163 | | | - | | | 11,163 | |
OTHER LONG-TERM LIABILITIES | | | 14,833 | | | 903 | | | 122 | | | 2,828 | | | (364) | | | 18,322 | |
DEFERRED TAX LIABILITIES | | | 187,575 | | | - | | | 674 | | | - | | | - | | | 188,249 | |
NON-CURRENT LIABILITIES FROM DISCONTINUED OPERATIONS | | | - | | | 4 | | | - | | | - | | | - | | | 4 | |
Total liabilities | | | 918,014 | | | 8,609 | | | 6,251 | | | 160,334 | | | (364) | | | 1,092,844 | |
| | | | | | | | | | | | | | | | | | | |
REDEEMABLE NONCONTROLLING INTERESTS | | | - | | | - | | | 12,853 | | | - | | | - | | | 12,853 | |
| | | | | | | | | | | | | | | | | | | |
STOCKHOLDERS’ EQUITY: | | | | | | | | | | | | | | | | | | | |
Preferred stock | | | - | | | - | | | - | | | 18 | | | (18) | | | - | |
Common stock | | | 50 | | | - | | | 10 | | | 18 | | | (28) | | | 50 | |
Accumulated other comprehensive income | | | (102) | | | - | | | - | | | (6) | | | 6 | | | (102) | |
Additional paid-in capital | | | 1,006,873 | | | 268,560 | | | 41,135 | | | 21,548 | | | (331,243) | | | 1,006,873 | |
Retained earnings (accumulated deficit) | | | (863,021) | | | 398,040 | | | (30,757) | | | (26,637) | | | (340,646) | | | (863,021) | |
Total stockholders’ equity | | | 143,800 | | | 666,600 | | | 10,388 | | | (5,059) | | | (671,929) | | | 143,800 | |
Noncontrolling interest | | | - | | | - | | | - | | | - | | | 210,698 | | | 210,698 | |
Total Equity | | | 143,800 | | | 666,600 | | | 10,388 | | | (5,059) | | | (461,231) | | | 354,498 | |
Total liabilities, redeemable noncontrolling interests and equity | | $ | 1,061,814 | | $ | 675,209 | | $ | 29,492 | | $ | 155,275 | | $ | (461,595) | | $ | 1,460,195 | |
45 | ||
| | | | Wholly-Owned | | Non Wholly- Owned | | | | | Consolidation Adjustments | | | | | ||||
| | Radio One, Inc. | | Guarantor Subsidiaries | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | | Consolidated | | |||||||
| | | | | | | | | | | | | | | | | | | |
| | Unaudited | | ||||||||||||||||
| | (In thousands) | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | |
NET CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES | | $ | 21,495 | | $ | (3,578) | | $ | (2,458) | | $ | 25,516 | | $ | (18,500) | | $ | 22,475 | |
| | | | | | | | | | | | | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | | | | | | | | | | |
Purchase of property and equipment | | | (5,678) | | | (1,172) | | | (116) | | | (203) | | | - | | | (7,169) | |
Proceeds from sales of investment securities | | | - | | | - | | | - | | | 1,053 | | | - | | | 1,053 | |
Purchases of investment securities | | | - | | | - | | | - | | | (2,439) | | | - | | | (2,439) | |
Proceeds from sale of discontinued operations | | | - | | | 4,000 | | | - | | | - | | | - | | | 4,000 | |
Net cash flows (used in) provided by investing activities | | | (5,678) | | | 2,828 | | | (116) | | | (1,589) | | | - | | | (4,555) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | | | | | | | | | | |
Repayment of credit facility | | | (2,881) | | | - | | | - | | | - | | | - | | | (2,881) | |
Repurchase of common stock | | | (5,469) | | | - | | | - | | | - | | | - | | | (5,469) | |
Repayment of senior subordinated notes | | | (747) | | | - | | | - | | | - | | | - | | | (747) | |
Debt refinancing and modification costs | | | (33) | | | - | | | - | | | - | | | - | | | (33) | |
Advances to/from related parties | | | (5,000) | | | - | | | 5,000 | | | - | | | - | | | - | |
Payment of dividends by TV One | | | - | | | - | | | - | | | (36,228) | | | 18,500 | | | (17,728) | |
Net cash flows (used in) provided by financing activities | | | (14,130) | | | - | | | 5,000 | | | (36,228) | | | 18,500 | | | (26,858) | |
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | | | 1,687 | | | (750) | | | 2,426 | | | (12,301) | | | - | | | (8,938) | |
CASH AND CASH EQUIVALENTS, beginning of period | | | 22,512 | | | 1,342 | | | 2,414 | | | 30,987 | | | - | | | 57,255 | |
CASH AND CASH EQUIVALENTS, end of period | | $ | 24,199 | | $ | 592 | | $ | 4,840 | | $ | 18,686 | | $ | - | | $ | 48,317 | |
46 | ||
| | | | Wholly-Owned | | Non Wholly- Owned | | | | | | | | | | | |||
| | Radio One, Inc. | | Guarantor Subsidiaries | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Consolidation Adjustments | | Consolidated | | ||||||
| | Unaudited | | ||||||||||||||||
| | (As Adjusted See Note 1) | | ||||||||||||||||
| | (In thousands) | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | |
NET CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES | | $ | 15,227 | | $ | 2,916 | | $ | 297 | | $ | 18,806 | | $ | (8,059) | | $ | 29,187 | |
| | | | | | | | | | | | | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | | | | | | | | | | |
Purchase of property and equipment | | | (6,588) | | | (1,512) | | | (106) | | | (1,329) | | | - | | | (9,535) | |
Proceeds from sales of investment securities | | | - | | | - | | | - | | | 6,286 | | | - | | | 6,286 | |
Purchases of investment securities | | | - | | | - | | | - | | | (629) | | | - | | | (629) | |
Net cash flows (used in) provided by investing activities | | | (6,588) | | | (1,512) | | | (106) | | | 4,328 | | | - | | | (3,878) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | | | | | | | | | | |
Repayment of credit facility | | | (4,829) | | | - | | | - | | | - | | | - | | | (4,829) | |
Debt refinancing and modification costs | | | (18) | | | - | | | - | | | - | | | - | | | (18) | |
Payment of dividends by TV One | | | - | | | - | | | - | | | (15,800) | | | 8,059 | | | (7,741) | |
Net cash flows (used in) provided by financing activities | | | (4,847) | | | - | | | - | | | (15,800) | | | 8,059 | | | (12,588) | |
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | | | 3,792 | | | 1,404 | | | 191 | | | 7,334 | | | - | | | 12,721 | |
CASH AND CASH EQUIVALENTS, beginning of period | | | 19,361 | | | 33 | | | 1,683 | | | 14,862 | | | - | | | 35,939 | |
CASH AND CASH EQUIVALENTS, end of period | | $ | 23,153 | | $ | 1,437 | | $ | 1,874 | | $ | 22,196 | | $ | - | | $ | 48,660 | |
47 | ||
48 | ||
49 | ||
50 | ||
| | Three Months Ended September 30, | | Nine Months Ended September 30, | | ||||||||
| | 2013 | | 2012 | | 2013 | | 2012 | | ||||
| | (In thousands, except margin data) | | ||||||||||
| | | | | (As Adjusted See Note below) | | | | | (As Adjusted See Note below) | | ||
Net revenue | | $ | 118,391 | | $ | 109,894 | | $ | 337,105 | | $ | 318,688 | |
Station operating income | | | 44,815 | | | 40,847 | | | 126,313 | | | 115,212 | |
Station operating income margin | | | 37.9 | % | | 37.2 | % | | 37.5 | % | | 36.2 | % |
Consolidated net loss attributable to common stockholders | | $ | (13,221) | | $ | (13,064) | | $ | (45,541) | | $ | (49,638) | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, | | ||||||||
| | 2013 | | 2012 | | 2013 | | 2012 | | ||||
| | (In thousands) | | ||||||||||
| | | | | (As Adjusted See Note below) | | | | | (As Adjusted See Note below) | | ||
Consolidated net loss attributable to common stockholders | | $ | (13,221) | | $ | (13,064) | | $ | (45,541) | | $ | (49,638) | |
Add back non-station operating income items included in consolidated net loss: | | | | | | | | | | | | | |
Interest income | | | (23) | | | (108) | | | (165) | | | (155) | |
Interest expense | | | 22,336 | | | 22,089 | | | 66,811 | | | 68,584 | |
Provision for income taxes | | | 8,415 | | | 9,051 | | | 19,798 | | | 25,814 | |
Corporate selling, general and administrative, excluding stock-based compensation | | | 9,684 | | | 9,613 | | | 27,107 | | | 29,003 | |
Stock-based compensation | | | 55 | | | 37 | | | 145 | | | 127 | |
Other (income) expense, net | | | (29) | | | 681 | | | (99) | | | 1,284 | |
Depreciation and amortization | | | 9,571 | | | 9,699 | | | 28,600 | | | 29,161 | |
Noncontrolling interests in income of subsidiaries | | | 4,317 | | | 2,809 | | | 15,670 | | | 10,663 | |
Impairment of long-lived assets | | | 3,710 | | | | | | 14,880 | | | 313 | |
(Income) loss from discontinued operations, net of tax | | | | | | 40 | | | (893) | | | 56 | |
Station operating income | | $ | 44,815 | | $ | 40,847 | | $ | 126,313 | | $ | 115,212 | |
51 | ||
| | Three Months Ended September 30, | | Nine Months Ended September 30, | | ||||||||
| | 2013 | | 2012 | | 2013 | | 2012 | | ||||
| | | | (As Adjusted See Note below | | | | | (As Adjusted See Note below | | |||
| | (In thousands) | | ||||||||||
Adjusted EBITDA reconciliation: | | | | | | | | | | | | | |
Consolidated net loss attributable to common stockholders, as reported | | $ | (13,221) | | $ | (13,064) | | $ | (45,541) | | $ | (49,638) | |
Add back non-station operating income items included in consolidated net loss: | | | | | | | | | | | | | |
Interest income | | | (23) | | | (108) | | | (165) | | | (155) | |
Interest expense | | | 22,336 | | | 22,089 | | | 66,811 | | | 68,584 | |
Provision for income taxes | | | 8,415 | | | 9,051 | | | 19,798 | | | 25,814 | |
Depreciation and amortization | | | 9,571 | | | 9,699 | | | 28,600 | | | 29,161 | |
EBITDA | | $ | 27,078 | | $ | 27,667 | | $ | 69,503 | | $ | 73,766 | |
Stock-based compensation | | | 55 | | | 37 | | | 145 | | | 127 | |
Other (income) expense, net | | | (29) | | | 681 | | | (99) | | | 1,284 | |
Noncontrolling interests in income of subsidiaries | | | 4,317 | | | 2,809 | | | 15,670 | | | 10,663 | |
Impairment of long-lived assets | | | 3,710 | | | | | | 14,880 | | | 313 | |
(Income) loss from discontinued operations, net of tax | | | | | | 40 | | | (893) | | | 56 | |
Adjusted EBITDA | | $ | 35,131 | | $ | 31,234 | | $ | 99,206 | | $ | 86,209 | |
52 | ||
| | Three Months Ended September 30, | | | | | | | ||||
| | 2013 | | 2012 | | Increase/(Decrease) | | |||||
| | (Unaudited) | | | | | | | ||||
| | | | | (As Adjusted See Note below) | | | | | | | |
Statements of Operations: | | | | | | | | | | | | |
Net revenue | | $ | 118,391 | | $ | 109,894 | | $ | 8,497 | | 7.7 | % |
Operating expenses: | | | | | | | | | | | | |
Programming and technical, excluding stock-based compensation | | | 37,176 | | | 32,454 | | | 4,722 | | 14.5 | |
Selling, general and administrative, excluding stock-based compensation | | | 36,400 | | | 36,593 | | | (193) | | (0.5) | |
Corporate selling, general and administrative, excluding stock-based compensation | | | 9,684 | | | 9,613 | | | 71 | | 0.7 | |
Stock-based compensation | | | 55 | | | 37 | | | 18 | | 48.6 | |
Depreciation and amortization | | | 9,571 | | | 9,699 | | | (128) | | (1.3) | |
Impairment of long-lived assets | | | 3,710 | | | | | | 3,710 | | 100.0 | |
Total operating expenses | | | 96,596 | | | 88,396 | | | 8,200 | | 9.3 | |
Operating income | | | 21,795 | | | 21,498 | | | 297 | | 1.4 | |
Interest income | | | 23 | | | 108 | | | (85) | | (78.7) | |
Interest expense | | | 22,336 | | | 22,089 | | | 247 | | 1.1 | |
Other (income) expense, net | | | (29) | | | 681 | | | 710 | | 104.3 | |
Loss before provision for income taxes, noncontrolling interests in income of subsidiaries and discontinued operations | | | (489) | | | (1,164) | | | 675 | | 58.0 | |
Provision for income taxes | | | 8,415 | | | 9,051 | | | (636) | | (7.0) | |
Net loss from continuing operations | | | (8,904) | | | (10,215) | | | 1,311 | | 12.8 | |
Loss from discontinued operations, net of tax | | | | | | (40) | | | 40 | | 100.0 | |
Consolidated net loss | | | (8,904) | | | (10,255) | | | 1,351 | | 13.2 | |
Net income attributable to noncontrolling interests | | | 4,317 | | | 2,809 | | | 1,508 | | 53.7 | |
Net loss attributable to common stockholders | | $ | (13,221) | | $ | (13,064) | | $ | (157) | | (1.2) | % |
53 | ||
Three Months Ended September 30, | | Increase/(Decrease) | | ||||||||
2013 | | 2012 | | | | | | ||||
$ | 118,391 | | $ | 109,894 | | $ | 8,497 | | | 7.7 | % |
Three Months Ended September 30, | | Increase/(Decrease) | | ||||||||
2013 | | 2012 | | | | | | ||||
$ | 37,176 | | $ | 32,454 | | $ | 4,722 | | | 14.5 | % |
Three Months Ended September 30, | | Increase/(Decrease) | | ||||||||
2013 | | 2012 | | | | | | ||||
$ | 36,400 | | $ | 36,593 | | $ | (193) | | | (0.5) | % |
54 | ||
Three Months Ended September 30, | | Increase/(Decrease) | | ||||||||
2013 | | 2012 | | | | | | ||||
$ | 9,684 | | $ | 9,613 | | $ | 71 | | | 0.7 | % |
Three Months Ended September 30, | | Increase/(Decrease) | | ||||||||
2013 | | 2012 | | | | | | ||||
$ | 9,571 | | $ | 9,699 | | $ | (128) | | | (1.3) | % |
Three Months Ended September 30, | | Increase/(Decrease) | | ||||||||
2013 | | 2012 | | | | | | ||||
$ | 3,710 | | $ | | | $ | 3,710 | | | 100.0 | % |
Three Months Ended September 30, | | Increase/(Decrease) | | ||||||||
2013 | | 2012 | | | | | | ||||
$ | 22,336 | | $ | 22,089 | | $ | 247 | | | 1.1 | % |
Three Months Ended September 30, | | Increase/(Decrease) | | ||||||||
2013 | | 2012 | | | | | | | |||
$ | 8,415 | | $ | 9,051 | | $ | (636) | | | (7.0) | % |
55 | ||
Three Months Ended September 30, | | Increase/(Decrease) | | ||||||||
2013 | | 2012 | | | | | | | |||
$ | 4,317 | | $ | 2,809 | | $ | 1,508 | | | 53.7 | % |
56 | ||
| | Nine Months Ended September 30, | | | | ||||||||
| | 2013 | | 2012 | | Increase/(Decrease) | | ||||||
| | (Unaudited) | | | | ||||||||
| | | | | (As Adjusted See Note below) | | | | | | | | |
Statements of Operations: | | | | | | | | | | | | | |
Net revenue | | $ | 337,105 | | $ | 318,688 | | $ | 18,417 | | | 5.8 | % |
Operating expenses: | | | | | | | | | | | | | |
Programming and technical, excluding stock-based compensation | | | 100,649 | | | 96,582 | | | 4,067 | | | 4.2 | |
Selling, general and administrative, excluding stock-based compensation | | | 110,143 | | | 106,894 | | | 3,249 | | | 3.0 | |
Corporate selling, general and administrative, excluding stock-based compensation | | | 27,107 | | | 29,003 | | | (1,896) | | | (6.5) | |
Stock-based compensation | | | 145 | | | 127 | | | 18 | | | 14.2 | |
Depreciation and amortization | | | 28,600 | | | 29,161 | | | (561) | | | (1.9) | |
Impairment of long-lived assets | | | 14,880 | | | 313 | | | 14,567 | | | 4,654.0 | |
Total operating expenses | | | 281,524 | | | 262,080 | | | 19,444 | | | 7.4 | |
Operating income | | | 55,581 | | | 56,608 | | | (1,027) | | | (1.8) | |
Interest income | | | 165 | | | 155 | | | 10 | | | 6.5 | |
Interest expense | | | 66,811 | | | 68,584 | | | (1,773) | | | (2.6) | |
Other (income) expense, net | | | (99) | | | 1,284 | | | 1,383 | | | 107.7 | |
Loss before provision for income taxes, noncontrolling interests in income of subsidiaries and discontinued operations | | | (10,966) | | | (13,105) | | | 2,139 | | | 16.3 | |
Provision for income taxes | | | 19,798 | | | 25,814 | | | (6,016) | | | (23.3) | |
Net loss from continuing operations | | | (30,764) | | | (38,919) | | | 8,155 | | | 21.0 | |
Income (loss) from discontinued operations, net of tax | | | 893 | | | (56) | | | 949 | | | 1,694.6 | |
Consolidated net loss | | | (29,871) | | | (38,975) | | | 9,104 | | | 23.4 | |
Net income attributable to noncontrolling interests | | | 15,670 | | | 10,663 | | | 5,007 | | | 47.0 | |
Net loss attributable to common stockholders | | $ | (45,541) | | $ | (49,638) | | $ | 4,097 | | | 8.3 | % |
57 | ||
Nine Months Ended September 30, | | Increase/(Decrease) | | ||||||||
2013 | | 2012 | | | | | | | |||
$ | 337,105 | | $ | 318,688 | | $ | 18,417 | | | 5.8 | % |
Nine Months Ended September 30, | | Increase/(Decrease) | | ||||||||
2013 | | 2012 | | | | | | | |||
$ | 100,649 | | $ | 96,582 | | $ | 4,067 | | | 4.2 | % |
Nine Months Ended September 30, | | Increase/(Decrease) | | ||||||||
2013 | | 2012 | | | | | | ||||
$ | 110,143 | | $ | 106,894 | | $ | 3,249 | | | 3.0 | % |
58 | ||
Nine Months Ended September 30, | | Increase/(Decrease) | | ||||||||
2013 | | 2012 | | | | | | ||||
$ | 27,107 | | $ | 29,003 | | $ | (1,896) | | | (6.5) | % |
Nine Months Ended September 30, | | Increase/(Decrease) | | ||||||||
2013 | | 2012 | | | | | | ||||
$ | 28,600 | | $ | 29,161 | | $ | (561) | | | (1.9) | % |
The decrease in depreciation and amortization expense for the nine months ended September 30, 2013, was due to the completion of amortization for certain intangible assets and the completion of useful lives for certain assets. |
Nine Months Ended September 30, | | Increase/(Decrease) | | ||||||||
2013 | | 2012 | | | | | | ||||
$ | 14,880 | | $ | 313 | | $ | 14,567 | | | 4,654.0 | % |
The impairment of long-lived assets for the nine months ended September 30, 2013, was related to a non-cash impairment charge recorded to reduce the carrying value of our Boston, Cincinnati, Cleveland and Philadelphia radio broadcasting licenses. The impairment of long-lived assets for the nine months ended September 30, 2012, was related to a non-cash impairment charge recorded to reduce the carrying value of our Charlotte radio broadcasting licenses. |
Nine Months Ended September 30, | | Increase/(Decrease) | | ||||||||
2013 | | 2012 | | | | | | | |||
$ | 66,811 | | $ | 68,584 | | $ | (1,773) | | | (2.6) | % |
59 | ||
Nine Months Ended September 30, | | Increase/(Decrease) | | ||||||||
2013 | | 2012 | | | | | | ||||
$ | 19,798 | | $ | 25,814 | | $ | (6,016) | | | (23.3) | % |
Nine Months Ended September 30, | | Increase/(Decrease) | | ||||||||
2013 | | 2012 | | | | | | | |||
$ | 893 | | $ | (56) | | $ | 949 | | | 1,694.6 | % |
Nine Months Ended September 30, | | Increase/(Decrease) | | ||||||||
| 2013 | | 2012 | | | | | | |||
$ | 15,670 | | $ | 10,663 | | $ | 5,007 | | | 47.0 | % |
60 | ||
§ | | 1.10 to 1.00 on December 31, 2012, and the last day of each fiscal quarter through December 31, 2013; | |
§ | | 1.20 to 1.00 on March 31, 2014, and the last day of each fiscal quarter through September 30, 2014; | |
§ | | 1.25 to 1.00 on December 31, 2014, and the last day of each fiscal quarter through September 30, 2015; and | |
§ | | 1.50 to 1.00 on December 31, 2015, and the last day of each fiscal quarter thereafter. |
§ | | 4.50 to 1.00 on September 30, 2012, and the last day of each fiscal quarter through December 31, 2013; |
§ | | 4.25 to 1.00 on March 31, 2014, and the last day of each fiscal quarter through June 30, 2014; |
§ | | 4.00 to 1.00 on September 30, 2014; |
§ | | 3.75 to 1.00 on December 31, 2014; |
§ | | 3.25 to 1.00 on March 31, 2015, and the last day of each fiscal quarter through September 30, 2015; and |
§ | | 2.75 to 1.00 on December 31, 2015, and the last day of each fiscal quarter thereafter. |
§ | | 8.50 to 1.00 on December 31, 2012, and the last day of each fiscal quarter through December 31, 2013; |
§ | | 8.25 to 1.00 on March 31, 2014, and June 30, 2014; |
§ | | 8.00 to 1.00 on September 30, 2014; |
§ | | 7.50 to 1.00 on December 31, 2014; |
§ | | 6.50 to 1.00 on March 31, 2015, and the last day of each fiscal quarter through September 30, 2015; and |
§ | | 6.00 to 1.00 on December 31, 2015, and the last day of each fiscal quarter thereafter. |
§ | | liens; |
§ | | sale of assets; |
§ | | payment of dividends; and |
§ | | mergers. |
61 | ||
| | As of September 30, 2013 | | | Covenant Limit | | | Excess Coverage | | ||
| | | | | | | | | | | |
Pro Forma Last Twelve Months Covenant EBITDA (In millions) | | $ | | 97.5 | | | | | | | |
| | | | | | | | | | | |
Pro Forma Last Twelve Months Interest Expense (In millions) | | $ | | 71.4 | | | | | | | |
| | | | | | | | | | | |
Senior Debt (In millions) | | $ | | 346.3 | | | | | | | |
Total Debt (In millions) | | $ | | 673.3 | | | | | | | |
| | | | | | | | | | | |
Interest Coverage | | | | | | | | | | | |
Covenant EBITDA / Interest Expense | | | | 1.36 | x | | 1.10 | x | | 0.26 | x |
| | | | | | | | | | | |
Senior Secured Leverage | | | | | | | | | | | |
Senior Secured Debt / Covenant EBITDA | | | | 3.55 | x | | 4.50 | x | | 0.95 | x |
| | | | | | | | | | | |
Total Leverage | | | | | | | | | | | |
Total Debt / Covenant EBITDA | | | | 6.91 | x | | 8.50 | x | | 1.59 | x |
| | | | | | | | | | | |
EBITDA - Earnings before interest, taxes, depreciation and amortization | | | | | | | | | | | |
62 | ||
Type of Debt | | Amount Outstanding | | Applicable Interest Rate | | |
| | (In millions) | | | | |
| | | | | | |
Senior bank term debt, net of original issue discount (at variable rates)(1) | | $ | 370.1 | | 7.50 | % |
121/2 %/15% Senior Subordinated Notes (fixed rate) | | $ | 327.0 | | 12.50 | % |
10% Senior Secured TV One Notes due March 2016 (fixed rate) | | $ | 119.0 | | 10.00 | % |
(1) | Subject to variable Libor plus a spread that is incorporated into the applicable interest rate set forth above. |
63 | ||
| | | 2013 | | 2012 | | |
| | | (In thousands) | | |||
| | | | | | | |
Net cash flows provided by operating activities | | $ | 22,475 | | $ | 29,187 | |
Net cash flows used in investing activities | | $ | (4,555) | | $ | (3,878) | |
Net cash flows used in financing activities | | $ | (26,858) | | $ | (12,588) | |
64 | ||
65 | ||
| | June 30, | | | October 1, | | | March 31, | | | June 30, | | | September 30, | | | |||||
Radio Broadcasting Licenses | | 2012 (a) | | | 2012 | | | 2013 (a) | | | 2013 (a) | | | 2013 (a) | | | |||||
| | | | | | | | | | | | | | | | | | | | | |
Pre-tax impairment charge (in millions) | | $ | 0.3 | | | $ | | | | $ | 1.4 | | | $ | 9.8 | | | $ | 3.7 | | |
| | | | | | | | | | | | | | | | | | | | | |
Discount Rate | | | 10.0 | % | | | 10.0 | % | | | 10.0 | % | | | 10.5 | % | | | 10.5 | % | |
Year 1 Market Revenue Growth Rate Range | | | 1.0% -3.0 | % | | | 1.0% -2.0 | % | | | 1 | % | | | 2 | % | | | (0.5%) 2.0 | % | |
Long-term Market Revenue Growth Rate Range (Years 6 10) | | | 1.0% - 2.0 | % | | | 1.0% -2.0 | % | | | 1.5 | % | | | 1.5% -2.0 | % | | | 1.0% -2.0 | % | |
Mature Market Share Range | | | 5.8% - 15.6 | % | | | 0.7% - 27.4 | % | | | 8.6 | % | | | 8.6% - 15.1 | % | | | 6.7% - 27.4 | % | |
| | | | | | | | | | | | | | | | | | | | | |
Operating Profit Margin Range | | | 29.1% - 48.0 | % | | | 19.6% - 47.7 | % | | | 31.4 | % | | | 32.6% - 34.4 | % | | | 30.3% - 40.1 | % | |
| (a) | Reflects only key assumptions used in the interim testing for certain units of accounting. |
66 | ||
67 | ||
| | Payments Due by Period | | |||||||||||||||||||
Contractual Obligations | | Remainder of 2013 | | 2014 | | 2015 | | 2016 | | 2017 | | 2018 and Beyond | | Total | | |||||||
| | (In thousands) | | |||||||||||||||||||
121/2%/15% Senior Subordinated Notes(1) | | $ | 10,220 | | $ | 40,879 | | $ | 40,879 | | $ | 339,980 | | $ | | | $ | | | $ | 431,958 | |
Credit facilities(2) | | | 8,198 | | | 31,982 | | | 31,694 | | | 372,770 | | | | | | | | | 444,644 | |
Other operating contracts / agreements(3) | | | 22,821 | | | 52,963 | | | 21,143 | | | 5,791 | | | 727 | | | 426 | | | 103,871 | |
Operating lease obligations | | | 2,485 | | | 9,419 | | | 8,065 | | | 7,214 | | | 6,482 | | | 15,772 | | | 49,437 | |
Senior Secured Notes(4) | | | 2,975 | | | 11,900 | | | 11,900 | | | 121,777 | | | | | | | | | 148,552 | |
Total | | $ | 46,699 | | $ | 147,143 | | $ | 113,681 | | $ | 847,532 | | $ | 7,209 | | $ | 16,198 | | $ | 1,178,462 | |
(1) | Includes interest obligations based on current effective interest rate on senior subordinated notes outstanding as of September 30, 2013. |
68 | ||
(2) | Includes interest obligations based on current effective interest rate and projected interest expense on credit facilities outstanding as of September 30, 2013. |
| |
(3) | Includes employment contracts, severance obligations, on-air talent contracts, consulting agreements, equipment rental agreements, programming related agreements, and other general operating agreements. Also includes contracts that TV One has entered into to acquire entertainment programming rights and programs from distributors and producers. These contracts relate to their content assets as well as prepaid programming related agreements. |
| |
(4) | Represents $119.0 million issued by TV One in senior secured notes on February 25, 2011. The notes were issued in connection with the repurchase of equity interests from certain financial investors and TV One management. The notes bear interest at 10.0% per annum, which is payable monthly, and the entire principal amount is due on March 15, 2016. |
69 | ||
| ⋅ | Restructured the Finance and Accounting functions and engaged additional resources with the appropriate depth of experience for our Finance and Accounting departments; |
| | |
| ⋅ | Updated accounting policies and procedures to ensure that accounting personnel have sufficient guidance to remediate the previously communicated weakness and to appropriately evaluate all disclosure requirements; and |
| | |
| ⋅ | Implemented a required senior management, legal and accounting review to specifically address all disclosures and related financial information. |
70 | ||
71 | ||
Exhibit Number | | Description |
| | |
31.1 | | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2 | | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1 | | Certification of Chief Executive Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2 | | Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101 | | Financial information from the Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, formatted in XBRL. |
72 | ||
| RADIO ONE, INC. |
| |
| /s/ PETER D. THOMPSON |
| |
| Peter D. Thompson |
| Executive Vice President and |
| Chief Financial Officer |
| (Principal Accounting Officer) |
73 | ||
F-1 | ||
| Page |
| |
Statements of Operations for the Three Months and Nine Months Ended September 30, 2013 and 2012 (Unaudited) | F-3 |
Balance Sheets as of September 30, 2013 and December 31, 2012 (Unaudited) | F-4 |
Statement of Changes in Stockholders’ Equity for the Nine Months Ended September 30, 2013 (Unaudited) | F-5 |
Statements of Cash Flows for the Nine Months Ended September 30, 2013 and 2012 (Unaudited) | F-6 |
Notes to Consolidated Financial Statements (Unaudited) | F-7 |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | F-11 |
F-2 | ||
| | Three Months Ended September 30, | | Nine Months Ended September 30, | | ||||||||
| | 2013 | | 2012 | | 2013 | | 2012 | | ||||
| | (In thousands, except share data) | | ||||||||||
NET REVENUE (includes revenue from the Tom Joyner Fantastic Voyage See Note 4) | | $ | 16,872 | | $ | 11,909 | | $ | 44,428 | | $ | 34,008 | |
OPERATING EXPENSES: | | | | | | | | | | | | | |
Programming and technical | | | 8,088 | | | 5,961 | | | 23,003 | | | 17,942 | |
Selling, general and administrative (includes expenses from the Tom Joyner Fantastic Voyage See Note 4) | | | 4,445 | | | 3,898 | | | 13,762 | | | 11,615 | |
Corporate selling, general and administrative | | | 1,168 | | | 1,465 | | | 3,382 | | | 5,075 | |
Depreciation and amortization | | | 310 | | | 292 | | | 950 | | | 886 | |
Total operating expenses | | | 14,011 | | | 11,616 | | | 41,097 | | | 35,518 | |
Operating income (loss) | | | 2,861 | | | 293 | | | 3,331 | | | (1,510) | |
INTEREST INCOME | | | | | | 1 | | | | | | 5 | |
Income (loss) before provision for (benefit from) income taxes, | | | 2,861 | | | 294 | | | 3,331 | | | (1,505) | |
PROVISION FOR (BENEFIT FROM) INCOME TAXES | | | 1,028 | | | 242 | | | 1,500 | | | (382) | |
NET INCOME (LOSS) | | $ | 1,833 | | $ | 52 | | $ | 1,831 | | $ | (1,123) | |
| | | | | | | | | | | | | |
BASIC NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | | | | | | | | | | | | | |
Net income (loss) attributable to common stockholders | | $ | 0.02 | | $ | 0.00 | | $ | 0.02 | | $ | (0.01) | |
| | | | | | | | | | | | | |
WEIGHTED AVERAGE SHARES OUTSTANDING: | | | | | | | | | | | | | |
Basic and diluted | | | 101,882,000 | | | 101,882,000 | | | 101,882,000 | | | 101,882,000 | |
F-3 | ||
| | As of | | ||||
| | September 30, 2013 | | December 31, 2012 | | ||
| | (In thousands, except share data) | | ||||
ASSETS | | | | | | | |
CURRENT ASSETS: | | | | | | | |
Cash and cash equivalents | | $ | 4,840 | | $ | 2,414 | |
Trade accounts receivable, net of allowance for doubtful accounts of $192 and $108, respectively | | | 9,500 | | | 4,088 | |
Due from related parties | | | 2,276 | | | 2,700 | |
Prepaid expenses and other current assets | | | 3,600 | | | 3,593 | |
Total current assets | | | 20,216 | | | 12,795 | |
PROPERTY AND EQUIPMENT, net | | | 382 | | | 469 | |
GOODWILL | | | 14,354 | | | 14,354 | |
OTHER INTANGIBLE ASSETS, net | | | 1,210 | | | 1,871 | |
OTHER ASSETS | | | 904 | | | 3 | |
Total assets | | $ | 37,066 | | $ | 29,492 | |
| | | | | | | |
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY | | | | | | | |
CURRENT LIABILITIES: | | | | | | | |
Accounts payable | | $ | 2,082 | | $ | 314 | |
Accrued compensation and related benefits | | | 1,152 | | | 925 | |
Due to related parties | | | 5,441 | | | 1,279 | |
Deferred income | | | 1,214 | | | 2,864 | |
Other current liabilities | | | 164 | | | 73 | |
Total current liabilities | | | 10,053 | | | 5,455 | |
OTHER LONG-TERM LIABILITIES | | | 58 | | | 122 | |
DEFERRED TAX LIABILITIES | | | 492 | | | 674 | |
Total liabilities | | | 10,603 | | | 6,251 | |
| | | | | | | |
REDEEMABLE NONCONTROLLING INTEREST | | | 12,646 | | | 12,853 | |
| | | | | | | |
STOCKHOLDERS’ EQUITY: | | | | | | | |
Common stock $.0001 par value, 25,000,000, shares authorized; 1,018,820 shares issued and outstanding as of September 30, 2013 and December 31, 2012, respectively | | | | | | | |
Non-voting common stock $.0001 par value, 116,000,000 shares authorized; 100,863,180 shares issued and outstanding as of September 30, 2013 and December 31, 2012, respectively | | | 10 | | | 10 | |
Additional paid-in capital | | | 42,733 | | | 41,135 | |
Accumulated deficit | | | (28,926) | | | (30,757) | |
Total stockholders’ equity | | | 13,817 | | | 10,388 | |
Total liabilities, redeemable noncontrolling interest and stockholders’ equity | | $ | 37,066 | | $ | 29,492 | |
F-4 | ||
| | Common Stock | | Non- Voting Common Stock | | Additional Paid-In Capital | | Accumulated Deficit | | Total Equity | | |||||
| | (In Thousands) | | |||||||||||||
BALANCE, as of December 31, 2012 | | $ | | | $ | 10 | | $ | 41,135 | | $ | (30,757) | | $ | 10,388 | |
Net income | | | | | | | | | | | | 1,831 | | | 1,831 | |
Contribution from parent company | | | | | | | | | 1,391 | | | | | | 1,391 | |
Adjustment of redeemable noncontrolling interest to estimated redemption value | | | | | | | | | 207 | | | | | | 207 | |
BALANCE, as of September 30, 2013 | | $ | | | $ | 10 | | $ | 42,733 | | $ | (28,926) | | $ | 13,817 | |
F-5 | ||
| | Nine Months Ended September 30, | | ||||
| | 2013 | | 2012 | | ||
| | (In thousands) | | ||||
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | |
Net income (loss) | | $ | 1,831 | | $ | (1,123) | |
Adjustments to reconcile net loss to net cash from operating activities: | | | | | | | |
Depreciation and amortization | | | 950 | | | 886 | |
Non-cash contribution from parent company related to income taxes | | | 1,391 | | | | |
Deferred income taxes | | | (182) | | | (113) | |
Effect of change in operating assets and liabilities, net of assets acquired: | | | | | | | |
Trade accounts receivable | | | (5,412) | | | (1,087) | |
Prepaid expenses and other assets | | | (7) | | | 1,642 | |
Other assets | | | (901) | | | 4 | |
Due from related parties | | | 424 | | | 559 | |
Accounts payable | | | 1,768 | | | 295 | |
Due to related parties | | | (838) | | | 1,157 | |
Accrued compensation and related benefits | | | 227 | | | 220 | |
Deferred income | | | (1,650) | | | (1,517) | |
Other liabilities | | | (59) | | | (626) | |
Net cash flows (used in) provided by operating activities | | | (2,458) | | | 297 | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | |
Purchases of property and equipment | | | (116) | | | (106) | |
Net cash flows used in investing activities | | | (116) | | | (106) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | |
Advance from parent company | | | 5,000 | | | | |
Net cash flows provided by financing activities | | | 5,000 | | | | |
INCREASE IN CASH AND CASH EQUIVALENTS | | | 2,426 | | | 191 | |
CASH AND CASH EQUIVALENTS, beginning of period | | | 2,414 | | | 1,683 | |
CASH AND CASH EQUIVALENTS, end of period | | $ | 4,840 | | $ | 1,874 | |
| | | | | | | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | | | | |
Cash (received) paid for: | | | | | | | |
Income taxes | | $ | (11) | | $ | 58 | |
F-6 | ||
| (a) | Organization |
| (b) | Interim Financial Statements |
| (c) | Revenue Recognition |
| (d) | Impact of Recently Issued Accounting Pronouncements |
F-7 | ||
| (e) | Fair Value Measurements |
| | Total | | Level 1 | | Level 2 | | Level 3 | | ||||
| | (Unaudited) | | ||||||||||
| | (In thousands) | | ||||||||||
As of September 30, 2013 | | | | | | | | | | | | | |
Mezzanine equity subject to fair value measurement: | | | | | | | | | | | | | |
Redeemable noncontrolling interests (a) | | $ | 12,646 | | $ | | | $ | | | $ | 12,646 | |
| | | | | | | | | | | | | |
As of December 31, 2012 | | | | | | | | | | | | | |
Mezzanine equity subject to fair value measurement: | | | | | | | | | | | | | |
Redeemable noncontrolling interests (a) | | $ | 12,853 | | $ | | | $ | | | $ | 12,853 | |
| | Redeemable Noncontrolling Interests | | |
| | | | |
Balance at December 31, 2012 | | $ | 12,853 | |
Change in enterprise fair value | | | (207) | |
Balance at September 30, 2013 | | $ | 12,646 | |
| | | | |
The amount of total losses for the period included in earnings attributable to the change in unrealized losses relating to assets and liabilities still held at the reporting date | | $ | | |
F-8 | ||
| | | | | | As of September 30, 2013 | | As of December 31, 2012 | | As of September 30, 2012 | | |||
Level 3 liabilities | | Valuation Technique | | Significant Unobservable Inputs | | Significant Unobservable Input Value | | |||||||
Redeemable noncontrolling interest | | Discounted Cash Flow | | Discount Rate | | | 13.0 | % | | 11.5 | % | | 12.0 | % |
Redeemable noncontrolling interest | | Discounted Cash Flow | | Long-term Growth Rate | | | 1.5 | % | | 2.0 | % | | 2.0 | % |
F-9 | ||
F-10 | ||
F-11 | ||
| | Three Months Ended September 30, | | | Nine Months Ended September 30, | | ||||||||||
| | 2013 | | | 2012 | | | 2013 | | | 2012 | | ||||
| | (In thousands, except margin data) | ||||||||||||||
| | | | | | | | | | | | | | | | |
Net revenue | | $ | 16,872 | | | $ | 11,909 | | | $ | 44,428 | | | $ | 34,008 | |
Station operating income | | | 4,339 | | | | 2,050 | | | | 7,663 | | | | 4,451 | |
Station operating income margin | | | 25.7 | % | | | 17.2 | % | | | 17.2 | % | | | 13.1 | % |
Net income (loss) | | $ | 1,833 | | | $ | 52 | | | $ | 1,831 | | | $ | (1,123) | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, | | ||||||||
| | 2013 | | 2012 | | 2013 | | 2012 | | ||||
| | (In thousands) | | ||||||||||
Net income (loss) | | $ | 1,833 | | $ | 52 | | $ | 1,831 | | $ | (1,123) | |
Add back non-station operating income items included in net income (loss): | | | | | | | | | | | | | |
Interest income | | | | | | (1) | | | | | | (5) | |
Provision for (benefit from) income taxes | | | 1,028 | | | 242 | | | 1,500 | | | (382) | |
Corporate selling, general and administrative | | | 1,168 | | | 1,465 | | | 3,382 | | | 5,075 | |
Depreciation and amortization | | | 310 | | | 292 | | | 950 | | | 886 | |
Station operating income | | $ | 4,339 | | $ | 2,050 | | $ | 7,663 | | $ | 4,451 | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, | | ||||||||
| | 2013 | | 2012 | | 2013 | | 2012 | | ||||
| | (In thousands) | | ||||||||||
EBITDA reconciliation: | | | | | | | | | | | | | |
Net income (loss) | | $ | 1,833 | | $ | 52 | | $ | 1,831 | | $ | (1,123) | |
Add back non-station operating income items included in net income (loss): | | | | | | | | | | | | | |
Interest income | | | | | | (1) | | | | | | (5) | |
Provision for (benefit from) income taxes | | | 1,028 | | | 242 | | | 1,500 | | | (382) | |
Depreciation and amortization | | | 310 | | | 292 | | | 950 | | | 886 | |
EBITDA | | $ | 3,171 | | $ | 585 | | $ | 4,281 | | $ | (624) | |
F-12 | ||
| | Three Months Ended September 30, | | | | | | | ||||
| | 2013 | | 2012 | | Increase/(Decrease) | | |||||
| | (Unaudited) | | | | | | | ||||
Statements of Operations: | | | | | | | | | | | | |
Net revenue | | $ | 16,872 | | $ | 11,909 | | $ | 4,963 | | 41.7 | % |
Operating expenses: | | | | | | | | | | | | |
Programming and technical | | | 8,088 | | | 5,961 | | | 2,127 | | 35.7 | |
Selling, general and administrative | | | 4,445 | | | 3,898 | | | 547 | | 14.0 | |
Corporate selling, general and administrative | | | 1,168 | | | 1,465 | | | (297) | | (20.3) | |
Depreciation and amortization | | | 310 | | | 292 | | | 18 | | 6.2 | |
Total operating expenses | | | 14,011 | | | 11,616 | | | 2,395 | | 20.6 | |
Operating income | | | 2,861 | | | 293 | | | 2,568 | | 876.5 | |
Interest income | | | | | | 1 | | | (1) | | (100.0) | |
Income before provision for income taxes | | | 2,861 | | | 294 | | | 2,567 | | 873.1 | |
Provision for income taxes | | | 1,028 | | | 242 | | | 786 | | 324.8 | |
Net income | | $ | 1,833 | | $ | 52 | | $ | 1,781 | | 3,425.0 | % |
F-13 | ||
Three Months Ended September 30, | | Increase/(Decrease) | | ||||||||
2013 | | 2012 | | | | | | | | ||
$ | 16,872 | | $ | 11,909 | | $ | 4,963 | | | 41.7 | % |
| Programming and technical |
Three Months Ended September 30, | | Increase/(Decrease) | | ||||||||
2013 | | 2012 | | | | | | | | ||
$ | 8,088 | | $ | 5,961 | | $ | 2,127 | | | 35.7 | % |
Three Months Ended September 30, | | Increase/(Decrease) | | ||||||||
2013 | | 2012 | | | | | | | | ||
$ | 4,445 | | $ | 3,898 | | $ | 547 | | | 14.0 | % |
Three Months Ended September 30, | | Increase/(Decrease) | | ||||||||
2013 | | 2012 | | | | | | | | ||
$ | 1,168 | | $ | 1,465 | | $ | (297) | | | (20.3) | % |
F-14 | ||
Three Months Ended September 30, | | Increase/(Decrease) | | ||||||||
2013 | | 2012 | | | | | | | | ||
$ | 310 | | $ | 292 | | $ | 18 | | | 6.2 | % |
Three Months Ended September 30, | | Increase/(Decrease) | | ||||||||
2013 | | 2012 | | | | | | | | ||
$ | 1,028 | | $ | 242 | | $ | 786 | | | 324.8 | % |
F-15 | ||
| | Nine Months Ended September 30, | | | | | | | ||||
| | 2013 | | 2012 | | Increase/(Decrease) | | |||||
| | (Unaudited) | | | | | | | ||||
Statements of Operations: | | | | | | | | | | | | |
Net revenue | | $ | 44,428 | | $ | 34,008 | | $ | 10,420 | | 30.6 | % |
Operating expenses: | | | | | | | | | | | | |
Programming and technical | | | 23,003 | | | 17,942 | | | 5,061 | | 28.2 | |
Selling, general and administrative | | | 13,762 | | | 11,615 | | | 2,147 | | 18.5 | |
Corporate selling, general and administrative | | | 3,382 | | | 5,075 | | | (1,693) | | (33.4) | |
Depreciation and amortization | | | 950 | | | 886 | | | 64 | | 7.2 | |
Total operating expenses | | | 41,097 | | | 35,518 | | | 5,579 | | 15.7 | |
Operating income (loss) | | | 3,331 | | | (1,510) | | | 4,841 | | 320.6 | |
Interest income | | | | | | 5 | | | (5) | | (100.0) | |
Income (loss) before provision for income taxes | | | 3,331 | | | (1,505) | | | 4,836 | | 321.3 | |
Provision for (benefit from) income taxes | | | 1,500 | | | (382) | | | 1,882 | | 492.7 | |
Net income (loss) | | $ | 1,831 | | $ | (1,123) | | $ | 2,954 | | 263.0 | % |
F-16 | ||
Nine Months Ended September 30, | | Increase/(Decrease) | | ||||||||
2013 | | 2012 | | | | | | | | ||
$ | 44,428 | | $ | 34,008 | | $ | 10,420 | | | 30.6 | % |
Nine Months Ended September 30, | | Increase/(Decrease) | | ||||||||
2013 | | 2012 | | | | | | | | ||
$ | 23,003 | | $ | 17,942 | | $ | 5,061 | | | 28.2 | % |
Nine Months Ended September 30, | | Increase/(Decrease) | | ||||||||
2013 | | 2012 | | | | | | | | ||
$ | 13,762 | | $ | 11,615 | | $ | 2,147 | | | 18.5 | % |
Nine Months Ended September 30, | | Increase/(Decrease) | | ||||||||
2013 | | 2012 | | | | | | | | ||
$ | 3,382 | | $ | 5,075 | | $ | (1,693) | | | (33.4) | % |
F-17 | ||
Nine Months Ended September 30, | | Increase/(Decrease) | | ||||||||
2013 | | 2012 | | | | | | | | ||
$ | 950 | | $ | 886 | | $ | 64 | | | 7.2 | % |
Nine Months Ended September 30, | | Increase/(Decrease) | | ||||||||
2013 | | 2012 | | | | | | | | ||
$ | 1,500 | | $ | (382) | | $ | 1,882 | | | 492.7 | % |
F-18 | ||
| | 2013 | | 2012 | | ||
| | (In thousands) | | ||||
| | | | | | | |
Net cash flows (used in) provided by operating activities | | $ | (2,458) | | $ | 297 | |
Net cash flows used in investing activities | | $ | (116) | | $ | (106) | |
Net cash flows provided by financing activities | | $ | 5,000 | | $ | | |
F-19 | ||
| | Payments Due by Period | | |||||||||||||||||||
Contractual Obligations | | Remainder of 2013 | | 2014 | | 2015 | | 2016 | | 2017 | | 2018 and Beyond | | Total | | |||||||
| | (In thousands) | | |||||||||||||||||||
Other operating contracts / agreements(1) | | $ | 6,519 | | $ | 20,438 | | $ | 652 | | $ | 67 | | $ | | | $ | | | $ | 27,676 | |
Operating lease obligations | | | 348 | | | 1,355 | | | 474 | | | 67 | | | 70 | | | 81 | | | 2,395 | |
Total | | $ | 6,867 | | $ | 21,793 | | $ | 1,126 | | $ | 134 | | $ | 70 | | $ | 81 | | $ | 30,071 | |
(1) | Includes employment contracts, on-air talent contracts and other general operating agreements. |
F-20 | ||
F-21 | ||
| 1. | | I have reviewed this quarterly report on Form 10-Q of Radio One, Inc.; | ||
| | | | ||
| 2. | | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | ||
| | | | ||
| 3. | | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | ||
| | | | ||
| 4. | | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: | ||
| | | | ||
| a) | | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
| | | | ||
| b) | | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
| | | | ||
| c) | | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
| | | | ||
| d) | | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s third fiscal quarter in the case of this report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | ||
| | | | ||
| 5. | | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | ||
| | | | ||
| a) | | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | ||
| | | | ||
| b) | | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| | By: | /s/ Alfred C. Liggins, III |
| | | Alfred C. Liggins, III |
| | | President and Chief Executive Officer |
| Date: November 14, 2013 | | |
| 1. | I have reviewed this quarterly report on Form 10-Q of Radio One, Inc.; | ||
| | | ||
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | ||
| | | ||
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | ||
| | | ||
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(i) for the registrant and have: | ||
| | | | |
| | a) | | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| | | | |
| | b) | | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| | | | |
| | c) | | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| | | | |
| | d) | | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s third fiscal quarter in the case of this report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| | | | |
| 5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | ||
| | | | |
| | a) | | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| | | | |
| | b) | | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| | By: | /s/ Peter D. Thompson |
| | | Peter D. Thompson |
| | | Executive Vice President, |
| | | Chief Financial Officer and Principal Accounting Officer |
| Date: November 14, 2013 | | |
| (i) | | the accompanying Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2013 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
| | | |
| (ii) | | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| | By: | /s/ Alfred C. Liggins, III |
| | | Name: Alfred C. Liggins, III |
| | | Title: President and Chief Executive Officer |
| Date: November 14, 2013 | | |
| (i) | | The accompanying Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2013 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
| | | |
| (ii) | | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| | By: | /s/ Peter D. Thompson |
| | | Name: Peter D. Thompson |
| | | Title: Executive Vice President and Chief Financial Officer |
| Date: November 14, 2013 | | |