Radio One, Inc. Reports Record Fourth Quarter Results
Company Achieves Highest Quarterly Revenue and BCF of Any Fourth Quarter in its History
Radio One, Inc. (Nasdaq: ROIAK; ROIA) today reported record fourth quarter results for the quarter ended December 31, 2001. Net broadcast revenue was $67.4 million, up 16% from the same period in 2000. Broadcast cash flow ("BCF") was $32.9 million, an increase of 10% from the same period in 2000. After-tax cash flow ("ATCF") was $9.0 million or $0.10 cents per share. On a same station basis, the Company's net broadcast revenue and BCF increased 4% and 5%, respectively, from last year, and the same station BCF margin improved to 52.0% from 51.6%.Alfred C. Liggins, III, the Company's CEO and President stated, "The fourth quarter of 2001 was exceptionally difficult due to fundamental economic weakness brought about by the recession which began in March 2001, compounded by the tragedies of September 11. Through it all, we managed to persevere and grow. Further, we successfully integrated the Blue Chip stations acquired in August 2001 and continued to develop various strategic opportunities that should provide near and long-term benefits for our shareholders. While we are heartened by some early signs of growth in the radio industry thus far in 2002, we are taking nothing for granted. Nonetheless, we think we are positioned particularly well to grow strongly our revenue and cash flow when the inevitable turn occurs."
Scott R. Royster, the Company's Executive Vice President and CFO stated, "In absolute terms this was a disappointing quarter but, on a relative basis, we managed to continue to post growth rates well in excess of the industry and above our previously-issued guidance. A few variances from that guidance include a somewhat higher capital expenditure number for the year than our previously lowered guidance. This was due to our late fourth quarter realization that the quarter would not be as bad as anticipated, as well as the feeling that 2002 might turn out to be somewhat better than previously expected. Thus, we continue to move ahead on various critical capital projects that had been put on hold after September 11. Additionally, the Company continues to build on its corporate infrastructure. Much of this near-term expansion is complete for now, however, the fourth quarter results include some modest one time corporate charges. Elsewhere in this press release we outline guidance for 2002 for both capital expenditures and corporate expenses. We feel that both are in line with or below relative levels incurred by comparably sized companies within our industry."
"Lastly, in the fourth quarter, we began the operational aspect of our programming partnership with XM Satellite Radio, certain start-up costs for which were expensed during the quarter. Now that this part of our business is fully functional, we have high hopes for the future of this part of our business as we believe that these operations complement our core terrestrial radio operations."
For the fiscal year period ending December 31, 2001, net broadcast revenue was $243.8 million, up 57% from the same period in 2000. BCF was $123.3 million, an increase of 57% from the same period in 2000 while the BCF margin improved to 50.6% from 50.4%. ATCF was $37.3 million or $0.41 cents per share.
RESULTS OF OPERATIONS
Comparison of periods ended December 31, 2001 to the periods ended December 31, 2000 (All 2001 and quarterly 2000 results are unaudited, fiscal year-end 2000 results are audited -- all numbers in 000s except per share data).
Three Three Twelve Twelve
months months months months
ended ended ended ended
December 31, December 31, December 31, December 31,
2001 2000 2001 2000
STATEMENT OF
OPERATIONS DATA:
REVENUE:
Broadcast revenue $76,683 $65,950 $276,919 $177,219
Less: Agency
commissions 9,295 7,965 33,115 21,533
Net broadcast
revenue 67,388 57,985 243,804 155,666
OPERATING EXPENSES:
Programming and
technical 12,253 8,630 40,791 23,971
Selling, G&A 22,228 19,351 79,672 53,309
Corporate expenses 3,238 1,890 9,114 6,115
Non-cash compensation 238 188 951 188
Depreciation &
amortization 35,686 32,810 129,723 63,207
Total operating
expenses 73,643 62,869 260,251 146,790
Operating (loss)
income (6,255) (4,884) (16,447) 8,876
INTEREST EXPENSE, net 16,947 16,190 63,358 32,407
LOSS ON SALE OF
INVESTMENT 417 - 1,623 -
(LOSS) GAIN ON SALE
OF ASSETS (4) - 4,224 -
OTHER INCOME, net 778 642 2,614 20,084
Loss before (benefit)
provision for
income taxes (22,845) (20,432) (74,590) (3,447)
(BENEFIT) PROVISION
FOR INCOME TAXES (7,474) (12,564) (24,550) 804
Loss before
extraordinary
item (15,371) (7,868) (50,040) (4,251)
EXTRAORDINARY LOSS
ON DEBT RETIREMENT,
net of tax - - 5,207 -
Net loss $(15,371) $(7,868) $(55,247) $(4,251)
Net loss
applicable to
common
stockholders $(20,406) $(12,906) $(75,387) $(13,487)
BASIC PER SHARE DATA (d):
Net loss per share
before
extraordinary loss
applicable to
common
shareholders $(0.22) $(0.15) $(0.78) $(0.16)
Net loss per share
applicable to
common
shareholders (0.22) (0.15) (0.83) (0.16)
After-tax cash flow
per share 0.10 0.14 0.41 0.58
DILUTED PER
SHARE DATA (e):
Net loss per share $(0.16) $ (0.09) $(0.61) $(0.05)
Preferred dividends
per share 0.05 0.06 0.22 0.11
Net loss per share
applicable to
common
shareholders (0.22) (0.15) (0.83) (0.16)
After-tax cash
flow per share 0.10 0.14 0.41 0.57
OTHER DATA:
Broadcast cash
flow (a) $32,907 $30,004 $123,341 $78,386
Broadcast cash
flow margin (a) 48.8% 51.7% 50.6% 50.4%
EBITDA (b) $29,669 $28,114 $114,227 $72,271
EBITDA margin (b) 44.0% 48.5% 46.9% 46.4%
After-tax
cash flow (c) $9,045 $11,928 $37,330 $48,712
Capital expenditures 3,555 1,349 8,365 3,665
SAME STATION RESULTS:
Net revenue $58,786 $56,370 $159,052 $151,370
Broadcast cash flow 30,557 29,108 81,304 75,669
Broadcast cash
flow margin 52.0% 51.6% 51.1% 50.0%
Weighted average
shares
outstanding --
basic (d) 94,200 86,525 90,295 84,540
Weighted average
shares
outstanding --
diluted (e) 94,598 86,664 90,751 84,890
December 31, December 31,
2001 2000
(unaudited) (audited)
SELECTED BALANCE SHEET DATA:
Cash and cash equivalents $32,115 $20,879
Current assets 97,903 78,982
Total assets 1,923,915 1,765,218
Senior debt 480,022 562,588
Subordinated debt 300,000 84,368
Preferred stock (liquidation value) 310,000 310,000
Total shareholders' equity 1,052,947 1,057,069
AFTER-TAX CASH FLOW (c): Q4 - 2001 FY - 2001
Pre-tax loss, before extraordinary item $(22,845) $(74,590)
Plus: Depreciation and amortization 35,686 129,723
Plus: Loss (gain) on
investment/asset sale, net of gain/loss 421 (2,601)
Plus: Tax benefit - 2,000
Plus: Non-cash interest and
non-cash compensation 815 2,938
Less: Preferred Dividends (5,035) (20,140)
TOTAL $9,045 $37,330
Net broadcast revenue increased to approximately $67.4 million for the quarter
ended December 31, 2001 from approximately $58.0 million for the quarter ended
December 31, 2000 or 16%. Net broadcast revenue increased to approximately
$243.8 million for the twelve months ended December 31, 2001 from approximately
$155.7 million for the twelve months ended December 31, 2000 or 57%. These
increases in net broadcast revenue were the result of continuing broadcast
revenue growth in some of the Company's markets in which it has operated for at
least one year, as the Company benefited from historical ratings increases at
certain of its radio stations. Additional revenue gains were derived from the
Company's August 2000 acquisition of radio stations from Clear Channel
Communications and AMFM and the August 2001 acquisition of Blue Chip
Broadcasting, Inc., in addition to several other smaller acquisitions made
during 2000 and 2001.
Operating expenses excluding depreciation, amortization and stock-based compensation increased to approximately $37.7 million for the quarter ended December 31, 2001 from approximately $29.9 million for the quarter ended December 31, 2000 or 26%. Operating expenses excluding depreciation, amortization and stock-based compensation increased to approximately $129.6 million for the twelve months ended December 31, 2001 from approximately $83.4 million for the twelve months ended December 31, 2000 or 55%. These increases in expenses were related to the Company's expansion within the markets in which it operates including increased variable costs associated with increased revenue, as well as start-up and expansion expenses in its newer markets and expenses associated with the many radio stations the Company has acquired over the past two years.
Interest expense increased to approximately $16.9 million for the quarter ended December 31, 2001 from approximately $16.2 million for the quarter ended December 31, 2000 or 4%. Interest expense increased to approximately $63.4 million for the twelve months ended December 31, 2001 from approximately $32.4 million for the twelve months ended December 31, 2000 or 96%. These increases related primarily to borrowings associated with the acquisition of radio stations from Clear Channel and AMFM and the acquisition of Blue Chip Broadcasting, Inc., somewhat offset by lower interest rates on the Company's 2001 subordinated debt issuance and on the Company's bank credit facility due to declining interest rates throughout much of 2001.
Other income (almost exclusively interest income) increased to approximately $0.8 million for the quarter ended December 31, 2001 compared to approximately $0.6 million for the quarter ended December 31, 2000 or 33%. This increase was due to higher cash balances in the fourth quarter of 2001 as compared to the fourth quarter of 2000. Other income decreased to $2.6 million for the twelve months ended December 31, 2001 from approximately $20.1 million for the twelve months ended December 31, 2000 or 87%. This decrease was due to the Company having normalized cash balance levels during 2001 as compared to high cash and investment balances resulting from its follow-on equity offerings in November 1999, March 2000 and July 2000, completed in anticipation of the acquisition of radio stations from Clear Channel and AMFM which was consummated in August 2000.
Loss before benefit for income taxes increased to approximately $22.8 million for the quarter ended December 31, 2001 compared to approximately $20.4 million for the quarter ended December 31, 2000 or 12%. Loss before (benefit) provision for income taxes increased to approximately $74.6 million for the twelve months ended December 31, 2001 compared to approximately $3.4 million for the twelve months ended December 31, 2000 or 2,094%. These increases were due to lower operating income due to higher non-cash charges and higher interest expense due to higher levels of debt outstanding as outlined above.
Net loss increased to approximately $15.4 million for the quarter ended December 31, 2001 compared to approximately $7.9 million for the quarter ended December 31, 2000 or 95%. Net loss increased to approximately $55.2 million for the twelve months ended December 31, 2001 compared to approximately $4.3 million for the twelve months ended December 31, 2000 or 1,184%. These increases were due to the higher losses before benefit (provision) for income taxes compared to the previous year's periods as well as an extraordinary charge incurred in connection with the Company's refinancing of its 12% senior subordinated notes with a new offering of 8-7/8% senior subordinated notes in May 2001.
BCF increased to approximately $32.9 million for the quarter ended December 31, 2001 from approximately $30.0 million for the quarter ended December 31, 2000 or 10%. BCF increased to approximately $123.3 million for the twelve months ended December 31, 2001 from approximately $78.4 million for the twelve months ended December 31, 2000 or 57%. These increases were attributable to the increases in broadcast revenue partially offset by higher operating expenses as described above.
Earnings before interest, taxes, depreciation, and amortization, and excluding non-cash compensation expense ("EBITDA"), increased to approximately $29.7 million for the quarter ended December 31, 2001 from approximately $28.1 million for the quarter ended December 31, 2000 or 6%. EBITDA increased to approximately $114.2 million for the twelve months ended December 31, 2001 from approximately $72.3 million for the twelve months ended December 31, 2000 or 58%. These increases were attributable to the increase in broadcast revenue partially offset by higher operating expenses and higher corporate expenses associated with the Company's overall growth.
Guidance and Company Information:
Effective July 1, 2001, the Company adopted SFAS No. 141. As such, the Company did not incur amortization expense of goodwill and FCC licenses on those properties acquired subsequent to this adoption.
Effective January 1, 2002, the Company adopted SFAS No. 142. The effect of this adoption will be to eliminate the amortization expense for goodwill and broadcast license assets. As of December 31, 2001, the Company had net unamortized goodwill and broadcast licenses in the amount of $204.1 million, and $1,536.5 million, respectively.
This change in accounting policy will decrease amortization expense beginning in 2002 by approximately $114 million annually. While this expense will no longer be reflected on future financial statements, it will continue to be deductible for tax purposes.
As a result, our annual deferred taxes will increase by approximately $43 million, which represents our effective tax rate of 38% applied to the $114 million in amortization for tax purposes.
In addition, the adoption of SFAS No. 142 will require us to complete an impairment test on the unamortized goodwill and broadcast licenses. This test will be completed during 2002 in accordance with the SFAS No. 142 transition rules and may result in writedowns.
For the first quarter of 2002, the Company expects to report net revenue of approximately $56.0 million, BCF of approximately $23.5 million, EBITDA of approximately $21.0 million and ATCF per basic share of approximately $0.01. This would represent mid-single digit growth in same station revenue for the quarter. The Company expects corporate expenses for 2002 to approximate $12.0 million and capital expenditures to approximate $10-11.0 million.
Radio One will be holding a conference call to discuss its results for the fiscal fourth quarter of 2001. This conference call is scheduled for Thursday, February 21, 2002 at 9:30 a.m. Eastern Time. Interested parties should call 706-679-7275 five minutes prior to the scheduled time of the call and ask for the "Radio One 2001 Fourth Quarter Results Teleconference." The conference call will be recorded and made available for replay from 12:30 p.m. the day of the call until midnight of the day following the call. Interested parties may listen to the recording by calling 706-645-9291 and entering conference identification number 3135180.
Radio One is the nation's seventh largest radio broadcasting company (based on 2001 pro forma revenue) and the largest primarily targeting African- American and urban listeners. Pro forma for all announced acquisitions and operating agreements, the Company owns and/or operates 65 radio stations located in 22 of the largest markets in the United States and programs five channels on the XM Satellite Radio, Inc. system.
Notes:
This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Because these statements apply to future events, they are subject to risks and uncertainties that could cause actual results to differ materially, including the absence of a combined operating history with an acquired company or radio station and the potential inability to integrate acquired businesses, need for additional financing, high degree of leverage, seasonal nature of the business, granting of rights to acquire certain portions of the acquired company's or radio station's operations, market ratings, variable economic conditions and consumer tastes, as well as restrictions imposed by existing debt and future payment obligations. Important factors that could cause actual results to differ materially are described in the Company's reports on Forms 10-K and 10-Q and other filings with the Securities and Exchange Commission.
(a) "Broadcast cash flow" is defined as broadcast operating income plus
corporate expenses (including non-cash compensation) and depreciation
and amortization of both tangible and intangible assets.
(b) "EBITDA" is defined as earnings before interest, taxes, depreciation,
amortization and non-cash compensation.
(c) "After-tax cash flow" is defined as income before income taxes and
extraordinary items plus depreciation, amortization, non-cash
compensation, non-cash interest expense and non-cash loss/(gain) on
investments, less the current income tax liability/(benefit) and
preferred stock dividends.
(d) As of December 31, 2001 the Company had 94,200,000 shares of Common
Stock outstanding on a weighted average basis for the quarter.
(e) As of December 31, 2001 the Company had 94,598,000 shares of Common
Stock outstanding on a weighted average basis for the quarter,
diluted for outstanding stock options. After-tax cash flow per share
data was calculated using the basic and diluted weighted average
shares outstanding, however, the per share amounts were the same
because there was no material difference between the two weighted
average share amounts.
The Company has presented broadcast cash flow, operating cash flow and after-tax
cash flow data, which the Company believes are comparable to the data provided
by other companies in the industry, because such data are commonly used as a
measure of performance for broadcast companies. However, broadcast cash flow,
operating cash flow and after-tax cash flow do not purport to represent cash
provided by operating activities as reflected in the Company's consolidated
statements of cash flow, are not a measure of financial performance under
generally accepted accounting principles and should not be considered in
isolation or as a substitute for measures of performance prepared in accordance
with generally accepted accounting principles.
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SOURCE Radio One, Inc.
CONTACT: Scott R. Royster, Chief Financial Officer of Radio One, Inc.,
+1-301-429-2642
(ROIA ROIAK)
http://www.prnewswire.com
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