SECURITIES
AND EXCHANGE
COMMISSION
Washington,
D.C.
20549
FORM
8-K
CURRENT
REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF
THE SECURITIES EXCHANGE ACT OF
1934
Date
of Report: August 5, 2008 (Date
of earliest event reported)
Commission
File No.:
0-25969
RADIO
ONE, INC.
(Exact
name of registrant as specified in its charter)
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Delaware
(State
or other jurisdiction of
incorporation
or organization)
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52-1166660
(I.R.S.
Employer Identification No.)
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5900
Princess Garden Parkway,
7th
Floor
Lanham,
Maryland 20706
(Address
of principal executive offices)
(301) 306-1111
Registrant’s
telephone number, including area code
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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o
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Written
communications pursuant to
Rule 425 under the Securities Act (17 CFR
230.425)
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o
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Soliciting
material pursuant to
Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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o
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Pre-commencement
communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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ITEM
2.02.
Results of Operations and Financial Condition.
On
August 5, 2008, Radio One, Inc. issued a press release setting forth the results
for its second quarter ended June 30, 2008. A copy of the press
release is attached as Exhibit 99.1.
ITEM
9.01.
Financial Statements
and
Exhibits.
(c) Exhibits
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Exhibit
Number
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Description
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99.1
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Press
release dated August 5, 2008: Radio One, Inc. Reports Second Quarter
Results.
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
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RADIO
ONE, INC.
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||||||||||
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/s/
Peter D. Thompson
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|||||||||
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August
5, 2008
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Peter
D. Thompson
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|||||||||
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Chief
Financial Officer and Principal Accounting Officer
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||||||||||
NEWS
RELEASE
August
05,
2008
Contact: Peter D. Thompson, EVP and CFO
FOR
IMMEDIATE
RELEASE
(301) 429-4638
Washington,
DC
RADIO
ONE, INC. REPORTS
SECOND
QUARTER RESULTS
Washington,
DC: - Radio One,
Inc. (NASDAQ: ROIAK and ROIA) today reported its results for the quarter ended
June 30, 2008. Net revenue was approximately $83.4 million, an
increase of 1% from the same period in 2007. Station operating
income1
was
approximately $35.2 million, a decrease of 11% from the same period in
2007. Operating income of approximately $11.8 million was adversely
impacted by one-time charges, resulting in a decrease of 44% from the operating
income in the same period in 2007. Net loss was approximately $11.7
million or $0.12 per basic share, an increase from the reported net loss of
$5.1
million in the same period in 2007. On a pro forma basis after
adjusting for the impact of one-time charges, the net loss for the three months
ended June 30, 2008 was approximately $1.3 million or $0.01 per basic share,
a
decrease from the pro forma net loss of approximately $4.0 million in the same
period in 2007.
Alfred
C. Liggins, III, Radio One’s CEO and President stated, “It was a very busy
quarter for us, complete with acquisitions, including the purchase of Community
Connect Inc. (“CCI”), asset sales, debt de-leveraging and stock buy-backs, yet I
am pleased we were focused and delivered better than market results. While
the
soft economy and continuing fall off in national revenues impacted our radio
business, we once again outperformed the markets we operate in by over 200
basis
points. Our core radio revenues declined 3%, yet our local revenue
performance significantly offset the continuing drag we experienced in our
national business. Other positives impacting the quarter for radio
were strong political spending, internet revenue growth of 36% and a doubling
of
revenue from a series of new syndicated shows.
We
continue to invest in our internet business, and generated over $3.7 million
in
revenue from our April 2008 acquisition of CCI, in addition to revenue from
other internally launched sites, which helped push our overall revenue growth
for the quarter up 1%.
Given
the backdrop of the weak economy and declining revenues in radio, we once again
focused on cutting back on operating expenses and improving our balance sheet.
Setting aside consolidation of CCI’s expenses, our internet investments and
one-time charges for a new executive employment agreement, as well as spending
on the 2007 stock options review, we under spent inflation, and almost held
expenses flat. On the balance sheet, we wrapped up the purchase WPRS-FM for
our
Washington, DC market. In addition, proceeds from our Los Angeles and Miami
asset sales positioned us to accomplish net debt pay downs and bond retirements
of $77 million, as well as the buy-back of over 2 million shares.
My
outlook for the rest of 2008 and into 2009 remains cautious, yet I am excited
about our internet growth opportunities, and I am confident our management
team
will continue to outperform the market.”
-MORE-
PAGE 2
-- RADIO ONE, INC. REPORTS SECOND QUARTER RESULTS
| RESULTS OF OPERATIONS |
|
||||||||||||||||
|
Three
Months Ended June
30,
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Six
Months Ended June
30,
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||||||||||||||||
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2008
|
2007
|
2008
|
2007
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||||||||||||||
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(as
adjusted)2
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(as
adjusted)2
|
||||||||||||||||
|
STATEMENT
OF
OPERATIONS
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(unaudited)
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(unaudited)
|
|||||||||||||||
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(in
thousands)
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(in
thousands)
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||||||||||||||||
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NET
REVENUE
|
$ | 83,432 | $ | 82,620 | $ | 155,930 | $ | 156,660 | |||||||||
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:OPERATING
EXPENSES
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|||||||||||||||||
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Programming
and
technical
|
20,764 | 17,844 | 39,796 | 35,914 | |||||||||||||
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Selling,
general and
administrative
|
27,489 | 25,466 | 52,007 | 47,334 | |||||||||||||
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Corporate
selling, general and
administrative
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17,551 | 8,110 | 23,958 | 15,660 | |||||||||||||
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Stock-based
compensation
|
629 | 777 | 957 | 1,592 | |||||||||||||
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Depreciation
and
amortization
|
5,171 | 3,667 | 8,835 | 7,383 | |||||||||||||
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Impairment
of long-lived
assets
|
- | 5,506 | - | 5,506 | |||||||||||||
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Total
operating
expenses
|
71,604 | 61,370 | 125,553 | 113,389 | |||||||||||||
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Operating
Income
|
11,828 | 21,250 | 30,377 | 43,271 | |||||||||||||
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INTEREST
INCOME
|
(130 | ) | (294 | ) | (331 | ) | (561 | ) | |||||||||
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INTEREST
EXPENSE
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15,160 | 18,577 | 32,419 | 36,647 | |||||||||||||
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GAIN
ON RETIREMENT OF
DEBT
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(1,015 | ) | - | (1,015 | ) | - | |||||||||||
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EQUITY
IN (INCOME) LOSS OF
AFFILIATED COMPANY3
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(29 | ) | 3,088 | 2,799 | 7,306 | ||||||||||||
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OTHER
EXPENSE,
net
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33 | - | 44 | 8 | |||||||||||||
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(Loss)
before provision for income
taxes, minority interest in income of subsidiaries and discontinued
operations
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(2,191 | ) | (121 | ) | (3,539 | ) | (129 | ) | |||||||||
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PROVISION
(BENEFIT) FOR INCOME
TAXES
|
9,761 | (801 | ) | 18,659 | 651 | ||||||||||||
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MINORITY
INTEREST IN INCOME OF
SUBSIDIARIES
|
1,058 | 919 | 1,881 | 1,825 | |||||||||||||
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Net
Loss from continuing
operations
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(13,010 | ) | (239 | ) | (24,079 | ) | (2,605 | ) | |||||||||
| INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax | 1,334 | (4,832 | ) | (6,447 | ) | (5,448 | ) | ||||||||||
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Net
Loss
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$ | (11,676 | ) | $ | (5,071 | ) | $ | (30,526 | ) | $ | (8,053 | ) | |||||
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Weighted
average shares
outstanding - basic4
|
98,403,298 | 98,710,633 | 98,560,790 | 98,710,633 | |||||||||||||
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Weighted
average shares
outstanding - diluted5
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98,403,298 | 98,710,633 | 98,560,790 | 98,710,633 | |||||||||||||
-MORE-
PAGE 3
-- RADIO ONE, INC. REPORTS SECOND QUARTER RESULTS
|
Three
Months Ended June
30,
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Six
Months Ended June
30,
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|||||||||||||||
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2008
|
2007
|
2008
|
2007
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|||||||||||||
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(as
adjusted)2
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(as
adjusted)2
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|||||||||||||||
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(unaudited)
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(unaudited)
|
|||||||||||||||
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(in
thousands, except per share
data)
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(in
thousands, except per share
data)
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|||||||||||||||
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PER
SHARE DATA - basic and
diluted:
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||||||||||||||||
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Loss
from
continuing operations per share
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$ | (0.13 | ) | $ | 0.00 | $ | (0.24 | ) | $ | (0.03 | ) * | |||||
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Loss
from
discontinued operations per share
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$ | 0.01 | $ | (0.05 | ) | $ | (0.07 | ) | $ | (0.06 | ) * | |||||
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Net
loss
per share
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$ | (0.12 | ) | $ | (0.05 | ) | $ | (0.31 | ) | $ | (0.08 | ) * | ||||
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SELECTED
OTHER
DATA
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||||||||||||||||
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Station
operating income 1
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$ | 35,179 | $ | 39,310 | $ | 64,127 | $ | 73,412 | ||||||||
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Station
operating income margin (% of net revenue)
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42.2 | % | 47.6 | % | 41.1 | % | 46.9 | % | ||||||||
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Station
operating income
reconciliation:
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||||||||||||||||
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Net
(loss)
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$ | (11,676 | ) | $ | (5,071 | ) | $ | (30,526 | ) | $ | (8,053 | ) | ||||
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Plus:
Depreciation and amortization
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5,171 | 3,667 | 8,835 | 7,383 | ||||||||||||
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Plus:
Corporate
selling, general and administrative expenses
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17,551 | 8,110 | 23,958 | 15,660 | ||||||||||||
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Plus:
Stock-based compensation
|
629 | 777 | 957 | 1,592 | ||||||||||||
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Plus:
Equity in
(income) loss of affiliated company3
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(29 | ) | 3,088 | 2,799 | 7,306 | |||||||||||
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Plus:
Provision
(benefit) for income taxes
|
9,761 | (801 | ) | 18,659 | 651 | |||||||||||
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Plus:
Minority
interest in income of subsidiaries
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1,058 | 919 | 1,881 | 1,825 | ||||||||||||
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Plus:
Interest
expense
|
15,160 | 18,577 | 32,419 | 36,647 | ||||||||||||
|
Plus:
Impairment of long-lived assets
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- | 5,506 | - | 5,506 | ||||||||||||
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Plus:
Other
expense
|
33 | - | 44 | 8 | ||||||||||||
|
Less:
(Gain) on
retirement of debt
|
(1,015 | ) | - | (1,015 | ) | - | ||||||||||
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Plus:
Loss
(Income) from discontinued operations, net of tax
|
(1,334 | ) | 4,832 | 6,447 | 5,448 | |||||||||||
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Less:
Interest
income
|
(130 | ) | (294 | ) | (331 | ) | (561 | ) | ||||||||
|
Station
operating income
|
$ | 35,179 | $ | 39,310 | $ | 64,127 | $ | 73,412 | ||||||||
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Adjusted
EBITDA6
|
$ | 17,628 | $ | 31,200 | $ | 40,169 | $ | 57,752 | ||||||||
|
Adjusted
EBITDA
reconciliation:
|
||||||||||||||||
|
Net
loss
|
$ | (11,676 | ) | $ | (5,071 | ) | $ | (30,526 | ) | $ | (8,053 | ) | ||||
|
Plus:
Depreciation and amortization
|
5,171 | 3,667 | 8,835 | 7,383 | ||||||||||||
|
Plus:
Provision (Benefit) for income taxes
|
9,761 | (801 | ) | 18,659 | 651 | |||||||||||
|
Plus:
Interest expense
|
15,160 | 18,577 | 32,419 | 36,647 | ||||||||||||
|
Less:
Interest income
|
(130 | ) | (294 | ) | (331 | ) | (561 | ) | ||||||||
|
EBITDA
|
$ | 18,286 | $ | 16,078 | $ | 29,056 | $ | 36,067 | ||||||||
|
Plus:
Equity in (income) loss of affiliated company3
|
(29 | ) | 3,088 | 2,799 | 7,306 | |||||||||||
|
Plus:
Minority interest in income of subsidiaries
|
1,058 | 919 | 1,881 | 1,825 | ||||||||||||
|
Plus:
Impairment of long-lived assets
|
- | 5,506 | - | 5,506 | ||||||||||||
|
Plus:
Stock-based compensation
|
629 | 777 | 957 | 1,592 | ||||||||||||
|
Plus:
Other expense
|
33 | - | 44 | 8 | ||||||||||||
|
Less:
(Gain) on retirement of debt
|
(1,015 | ) | - | (1,015 | ) | - | ||||||||||
|
Plus:
Loss
(Income) from discontinued operations, net of tax
|
(1,334 | ) | 4,832 | 6,447 | 5,448 | |||||||||||
|
Adjusted
EBITDA
|
$ | 17,628 | $ | 31,200 | $ | 40,169 | $ | 57,752 | ||||||||
|
*Per
share amounts may not add due
to rounding.
|
||||||||||||||||
-MORE-
PAGE
4 -- RADIO ONE, INC. REPORTS SECOND QUARTER RESULTS
|
June
30,
2008
|
December
31,
2007
|
|||||||
|
(unaudited)
|
(as
adjusted)2
|
|||||||
|
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(in
thousands)
|
|||||||
| SELECTED BALANCE SHEET DATA: | ||||||||
|
Cash
and cash
equivalents
|
$ | 10,681 | $ | 24,247 | ||||
|
Intangible
assets,
net
|
1,373,145 | 1,310,321 | ||||||
|
Total
assets
|
1,570,428 | 1,663,342 | ||||||
|
Total
debt (including current
portion)
|
744,122 | 815,504 | ||||||
|
Total
liabilities
|
973,269 | 1,030,736 | ||||||
|
Total
stockholders'
equity
|
594,846 | 628,717 | ||||||
|
Minority
interest in
subsidiaries
|
2,313 | 3,889 | ||||||
|
Current
Amount
Outstanding
|
Applicable
Interest Rate
(a)
|
|||||||
|
(in
thousands)
|
||||||||
|
SELECTED
LEVERAGE AND SWAP
DATA:
|
||||||||
|
Senior
bank term debt (swap
matures 6/16/2012) (a)
|
$ | 25,000 | 6.72 | % | ||||
|
Senior
bank term debt (swap
matures 6/16/2010) (a)
|
25,000 | 6.52 | % | |||||
|
Senior
bank term debt (at variable
rates) (b)
|
134,100 | 5.13 | % | |||||
|
Senior
bank revolving debt
(at variable rates) (b)
|
67,500 | 5.13 | % | |||||
|
8-7/8%
senior subordinated notes (fixed
rate)
|
292,000 | 8.88 | % | |||||
|
6-3/8%
senior subordinated notes (fixed
rate)
|
200,000 | 6.38 | % | |||||
|
Seller
financed
loan
|
17 | 5.10 | % | |||||
|
Capital
lease
obligation
|
527 | 6.24 | % | |||||
|
(a)
|
A
total of $50.0 million is subject to fixed rate swap agreements that
became effective in June 2005. Under our fixed rate swap agreements,
we
pay a fixed rate plus a spread based on our leverage ratio, as defined
in
our Credit agreement. That spread is currently set at 2.25% and is
incorporated into the applicable interest rates set forth
above.
|
|
(b)
|
Subject
to rolling 90-day LIBOR plus a spread currently at 2.25% and incorporated
into the applicable interest rate set forth above. This tranche
is not covered by swap agreements described in footnote
(a).
|
Cautionary
Note Regarding Forward-Looking Statements
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. Forward-looking statements represent management's current expectations
and are based upon information available to Radio One at the time of this
release. These forward-looking statements involve known and unknown risks,
uncertainties and other factors, some of which are beyond Radio One's control,
that may cause the actual results to differ materially from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Important factors that could cause actual results to
differ materially are described in Radio One’s reports on Forms 10-K, and 10-Q
and other filings with the Securities and Exchange Commission. Radio
One does not undertake any duty to update any forward-looking
statements.
-MORE-
PAGE
5 -- RADIO ONE, INC. REPORTS SECOND QUARTER RESULTS
Net
revenue increased to approximately $83.4 million for the quarter ended June
30,
2008, from approximately $82.6 million for the same period in 2007, an increase
of 1%. In April 2008, we acquired Community Connect Inc. (“CCI”), a
social online networking company, which resulted in the consolidation of
approximately $3.6 million in net revenue from their operations. For our radio
business, while we again outperformed from a revenue perspective that of the
markets in which we operate, we experienced a decrease in net revenue consistent
with the decline in overall radio industry revenue, with the continuing
significant fall off in national revenue driving almost all of our decline.
These circumstances drove considerable net revenue declines in two of our larger
markets, Atlanta and Houston, and more modest declines in our Cincinnati,
Detroit and Washington, DC markets. These declines were offset in part from
net
revenue growth in our Indianapolis and Raleigh-Durham markets, as well as
increased net revenue from new syndicated programs, internet revenue from
station websites and political advertising. Reach Media had a decline in revenue
due to the absence of TV licensing revenue as well the hosting of fewer and
smaller sponsored events during second quarter. Net revenue is reported net
of
agency and outside sales representative commissions of approximately $9.4
million and $9.9 million for the quarters ended June 30, 2008 and 2007,
respectively. Excluding the net revenue results from CCI, net revenue declined
3.4% for the quarter ended June 30, 2008, compared to the same period in
2007.
Operating
expenses, excluding depreciation and amortization, stock-based compensation
and
impairment of long-lived assets increased to approximately $65.8 million from
approximately $51.4 million for the quarters ended June 30, 2008 and 2007,
respectively, an increase of 28%. The increase resulted primarily
from approximately $10.4 million recorded ($5.8 million of which was paid)
for
bonus amounts associated with the Chief Executive Officer’s (“CEO”) new
employment agreement. An increase of approximately $3.5 million resulted from
consolidating the operating results of CCI. Other increases in operating
expenses resulted from approximately $2.1 million in spending on our internet
initiative, including $550,000 in costs for a major internet traffic acquisition
agreement, additional research associated with Arbitron’s new people meter
methodology (“PPM”), on-air talent expenses, mainly for new syndicated shows and
additional compensation for recent corporate and other hires. This increased
spending was offset in part by the absence of approximately $1.7 million in
legal and professional spending associated with the 2007 voluntary review of
our
past stock options practices, less expense for officer retention bonuses,
savings from reduced marketing and promotions, events, travel and entertainment
spending and savings from suspending our 401(k) match program. We also spent
less in revenue variable expenses such as commissions and national
representative fees. Excluding the approximately $2.1 million incurred on our
internet initiative, CCI’s $3.5 million in operating expenses, last year’s stock
option review expenses and the approximately $10.4 million recorded for the
CEO’s bonus amounts, operating expenses were essentially flat, increasing only
0.5% for the three months ended June 30, 2008, compared to the same period
in
2007.
Stock-based
compensation decreased to $629,000 from $777,000 for the quarters ended June
30,
2008 and 2007, respectively, a decline of 19%. Stock-based
compensation consists of expenses associated with our January 1, 2006 adoption
of Statement of Financial Accounting Standards (“SFAS”) No. 123(R), “Share-Based Payment,” and
expenses associated with restricted stock grants. The decrease in
stock-based compensation was due to forfeitures, cancellations and the
completion of the vesting period for certain stock options. The decrease was
offset in part due to expense for additional restricted stock grants associated
with new employment agreements for the CEO, the Founder and Chairperson and
the
Chief Financial Officer.
Depreciation
and amortization expense increased to approximately $5.2 million compared to
$3.7 million for the quarters ended June 30, 2008 and 2007, respectively, an
increase of 41%. The consolidation of CCI’s operating results accounted for
almost all of the increase, including an amount of $971,000 in amortization
expense associated with certain assets acquired as part of the purchase, mainly
registered membership lists, advertiser relationships and a favorable office
lease. Additional depreciation and amortization for capital expenditures made
subsequent to June 30, 2007 were equally offset with a decrease in amortization
expense associated with certain affiliate agreements acquired as part of our
purchase of 51% of Reach Media.
-MORE-
PAGE
6 -- RADIO ONE, INC. REPORTS SECOND QUARTER RESULTS
Interest
expense decreased to approximately $15.2 million for the quarter ended June
30,
2008 from approximately $18.6 million for the same period in 2007, a decline
of
18%. The decrease in interest expense resulted primarily from
interest savings associated with lower net borrowings due to debt pay downs
and
lower interest rates which impacted the variable portion of our debt. We also
incurred less fees associated with the operation of WPRS-FM (formerly WXGG-FM)
pursuant to a local marketing agreement (“LMA”) that began in April of
2007. We closed on the purchase of the assets of WPRS-FM in June 2008
for approximately $38.0 million in cash.
Gain
on retirement of debt increased to approximately $1.0 million for the quarter
ended June 30, 2008, compared to $0 for the same period in 2007. The increase
in
gain on retirement of debt was due to the redemption of $8.0 million of the
Company’s previously outstanding $300.0 million 87/8
senior
subordinated notes. An amount of $292.0 million remains outstanding as of June
30, 2008.
Equity
in income of affiliated company was $29,000 for the quarter ended June 30,
2008,
an improvement from the loss of approximately $3.1 million for the same period
in 2007. The income is attributable to our share of a small net income generated by
TV One,
LLC (“TV One”) for the quarter ended June 30, 2008, compared to our share of TV
One’s losses for the three
months ended June 30, 2007.
The Company’s share of TV One’s income or losses is driven by TV One’s current
capital structure and the Company’s ownership levels in the equity securities of
TV One that are currently absorbing its net income or losses. An adjustment
was
made to equity in loss of affiliated company for the quarter ended June
30, 2007 to correct for a change
in TV One’s capital structure. Pursuant to Staff Accounting Bulletin (“SAB”) 99,
“Materiality”
and
SAB 108 “Considering
the
Effects of Prior Year Misstatements when Quantifying Misstatements in Current
Year Financial Statements,”
we decreased the previously
reported equity in loss of affiliated
company for the three month period
ended June 30, 2007 by approximately $1.2 million and
increased the previously reported
equity in loss of affiliated company for the six month period
ended June 30,
2007 by approximately $2.5 million.
Provision
for income taxes increased to approximately $9.8 million for the quarter ended
June 30, 2008 compared to a benefit of $801,000 for the quarter ended June
30,
2007. In prior years, we recorded a deferred tax liability (“DTL”)
related to the amortization of indefinite-lived assets that are deducted for
tax
purposes, but not deducted for book purposes. Also in prior years, the Company
generated deferred tax assets (“DTAs”), mainly federal and state net operating
loss (“NOLs”) carryforwards. In the fourth quarter of 2007, except for DTAs in
its historically profitable filing jurisdictions, and DTAs associated with
definite-lived assets, the Company recorded a full valuation allowance for
all
other DTAs, including NOLs, as it was determined that more likely than not,
the
DTAs would not be realized. As a result, approximately $8.5 million
of the increase in the provision for income taxes is due primarily to recording
a full valuation allowance against the additional NOLs generated from the tax
deductible amortization of indefinite-lived assets for the three months ended
June 30, 2008.
For
the quarter ended June 30, 2008, the Company has determined that minor
fluctuations in its projected income would create significant changes to the
estimated annual effective tax rate. Pursuant to FIN No. 18, “Accounting for Income Taxes
in
Interim Periods,” the Company has provided for tax expense using an
actual calculation for certain filing jurisdictions for the three months ended
June 30, 2008.
Gain
from discontinued operations, net of tax, was approximately $1.3 million for
the
quarter ended June 30, 2008, compared to a loss of approximately $4.8 million
for the same period in 2007. The approximately $1.3 million gain from
discontinued operations, net of tax, for the three months ended June 30, 2008
primarily resulted from the gain on the closing of the sale of the assets of
radio station WMCU-AM (formerly
WTPS-AM). The loss of approximately $4.8 million for the three months ended
June
30, 2007 resulted from entering into definitive
agreements to
sell the assets of our Los Angeles, Augusta, Louisville, Dayton, Minneapolis
and
Boston WILD-FM stations, and approximately $10.4 million in impairment charges
that were recorded in the period ended June 30, 2007 based on the sale prices
of
those agreements.
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PAGE
7 -- RADIO ONE, INC. REPORTS SECOND QUARTER RESULTS
Other
pertinent financial information includes capital expenditures of approximately
$2.3 million and $2.1 million for the quarters ended June 30, 2008 and 2007,
respectively. Additionally, as of June 30, 2008, Radio One had total
debt (net of cash balances) of approximately $733.5 million.
In
June 2008, the Company closed on the
purchase of the assets of WPRS-FM (formerly WXGG-FM), a radio station located
in
the Washington,
DCmetropolitan
area, for approximately
$38.0 million in cash. The Company began operating the station under an LMA
effective April 2007, and consolidated it with its existing Washington,
DCoperations.
Since the inception of the
LMA, the station’s financial results have been included in the Company’s
consolidated financial results.
In
May 2008, the Company closed on the
sale of the assets of radio station KRBV-FM (formerly KKTB-FM),
located in the
Los Angeles
metropolitan area, to Bonneville
International Corporation (“Bonneville”) for approximately $137.5 million in
cash. Bonneville began operating the station under an LMA effective April
2008.
In
April 2008, the Company completed a merger to acquire Community Connect Inc.
for
$38.0 million in cash. CCI is an online social networking company operating
branded websites including BlackPlanet, MiGente and AsianAvenue. CCI’s financial
results of operations subsequent to being acquired by the Company are included
in the Company’s consolidated financials for the quarter ended June 30,
2008.
In
April 2008, the Company closed on the sale of the assets of radio station WMCU-AM (formerly WTPS-AM),
located in
the Miami
metropolitan area, to Salem
Communications Holding Corporation (“Salem”)
for approximately $12.3 million in
cash. Salem
began operating the station under an
LMA effective October 2007.
Throughout
the quarter ended June 30, 2008, the Company redeemed $8.0 million of its
previously outstanding $300.0 million 87/8
senior
subordinated notes. The redemption resulted in an approximate $l.0 million
gain
on the sale of retirement of debt, and an amount of $292.0 million remains
outstanding as of June 30, 2008.
In
March 2008, the Company’s board of directors authorized a repurchase of the
Company’s Class A and Class D common stock, in an amount up to $150.0 million,
through December 31, 2009. Pursuant to that authorization, the Company
repurchased 187,369 shares of Class A common stock and 1,884,860 shares of
Class
D common stock, for a total amount of repurchased shares of 2,072,229, at an
average price per share of $1.39 and $1.33, respectively. The total amount
spent
in shares repurchased was approximately $2.7 million.
Supplemental
Financial Information:
For
comparative purposes, the following more detailed, unaudited and adjusted
statements of operations for the three and six months ended June 30, 2008 and
2007 are included. These detailed, unaudited and adjusted statements of
operations include certain reclassifications associated with accounting for
discontinued operations. These reclassifications had no effect on
previously reported net income or loss, or any other previously reported
statements of operations, balance sheet or cash flow amounts. In
addition, an adjustment was made
to equity
in loss of affiliated company for the three and six months ended June 30, 2007
to correct for a change in TV
One’s capital structure. Pursuant to SAB 99, “Materiality”
and
SAB 108 “Considering
the
Effects of Prior Year Misstatements when Quantifying Misstatements in Current
Year Financial Statements,”
we decreased the previously
reported equity in loss of affiliated
company for the three month period
ended June 30, 2007 by approximately $1.2 million and
increased the previously reported
equity in loss of affiliated company for the six month period
ended June 30,
2007 by approximately $2.5 million.
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PAGE
8 -- RADIO ONE, INC. REPORTS SECOND QUARTER RESULTS
|
Three
Months Ended June 30,
2008
|
||||||||||||||||||||
|
(in
thousands, unaudited, as
adjusted)
|
||||||||||||||||||||
|
|
|
Reach
|
Internet/
|
Corporate/
|
||||||||||||||||
|
Consolidated
|
Radio
One
|
Media
|
Publishing
|
Eliminations/Other
|
||||||||||||||||
|
STATEMENT
OF
OPERATIONS:
|
||||||||||||||||||||
|
NET
REVENUE
|
$ | 83,432 | $ | 68,883 | $ | 11,399 | $ | 4,187 | $ | (1,037 | ) | |||||||||
|
OPERATING
EXPENSES:
|
||||||||||||||||||||
|
Programming
and
technical
|
20,764 | 14,163 | 4,749 | 2,796 | (944 | ) | ||||||||||||||
|
Selling,
general and
administrative
|
27,489 | 22,354 | 1,285 | 4,604 | (754 | ) | ||||||||||||||
|
Corporate
selling, general and
administrative
|
17,551 | - | 1,896 | - | 15,655 | |||||||||||||||
|
Stock-based
compensation
|
629 | 322 | - | 51 | 256 | |||||||||||||||
|
Depreciation
and
amortization
|
5,171 | 2,310 | 1,001 | 1,502 | 358 | |||||||||||||||
|
Total
operating
expenses
|
71,604 | 39,149 | 8,931 | 8,953 | 14,571 | |||||||||||||||
|
Operating
income (loss)
|
11,828 | 29,734 | 2,468 | (4,766 | ) | (15,608 | ) | |||||||||||||
|
INTEREST
INCOME
|
(130 | ) | - | (19 | ) | - | (111 | ) | ||||||||||||
|
INTEREST
EXPENSE
|
15,160 | 51 | - | 10 | 15,099 | |||||||||||||||
|
GAIN
ON RETIREMENT OF
DEBT
|
(1,015 | ) | - | - | - | (1,015 | ) | |||||||||||||
|
EQUITY
IN INCOME OF AFFILIATED
COMPANY
|
(29 | ) | - | - | - | (29 | ) | |||||||||||||
|
OTHER
EXPENSE,
net
|
33 | - | - | 32 | 1 | |||||||||||||||
|
(Loss)
Income before provision for
income taxes, minority interest in income of subsidiaries and
discontinued operations
|
(2,191 | ) | 29,683 | 2,487 | (4,808 | ) | (29,553 | ) | ||||||||||||
|
PROVISION
FOR INCOME
TAXES
|
9,761 | 8,841 | 920 | - | - | |||||||||||||||
|
MINORITY
INTEREST IN INCOME OF
SUBSIDIARIES
|
1,058 | - | - | - | 1,058 | |||||||||||||||
|
Net
(Loss) Income from continuing
operations
|
(13,010 | ) | 20,842 | 1,567 | (4,808 | ) | (30,611 | ) | ||||||||||||
|
INCOME
(LOSS) FROM DISCONTINUED
OPERATIONS, net of tax
|
1,334 | 1,334 | - | - | - | |||||||||||||||
|
Net
(loss)
income
|
$ | (11,676 | ) | $ | 22,176 | $ | 1,567 | $ | (4,808 | ) | $ | (30,611 | ) | |||||||
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PAGE
9 -- RADIO ONE, INC. REPORTS SECOND QUARTER RESULTS
|
Three
Months Ended June 30,
2007
|
||||||||||||||||||||
|
(in
thousands, unaudited, as
adjusted)
|
||||||||||||||||||||
|
|
|
Reach
|
Internet/
|
Corporate/
|
||||||||||||||||
|
Consolidated
|
Radio
One
|
Media
|
Publishing
|
Eliminations/Other
|
||||||||||||||||
|
STATEMENT
OF
OPERATIONS:
|
||||||||||||||||||||
|
NET
REVENUE
|
$ | 82,620 | $ | 71,185 | $ | 11,710 | $ | 319 | $ | (594 | ) | |||||||||
|
OPERATING
EXPENSES:
|
||||||||||||||||||||
|
Programming
and
technical
|
17,844 | 12,963 | 4,972 | 806 | (897 | ) | ||||||||||||||
|
Selling,
general and
administrative
|
25,466 | 23,404 | 1,582 | 596 | (116 | ) | ||||||||||||||
|
Corporate
selling, general and
administrative
|
8,110 | - | 1,952 | - | 6,158 | |||||||||||||||
|
Stock-based
compensation
|
777 | 484 | - | 27 | 266 | |||||||||||||||
|
Depreciation
and
amortization
|
3,667 | 2,220 | 1,135 | 22 | 290 | |||||||||||||||
|
Impairment
of long-lived
assets
|
5,506 | 5,506 | - | - | - | |||||||||||||||
|
Total
operating
expenses
|
61,370 | 44,577 | 9,641 | 1,451 | 5,701 | |||||||||||||||
|
Operating
income (loss)
|
21,250 | 26,608 | 2,069 | (1,132 | ) | (6,295 | ) | |||||||||||||
|
INTEREST
INCOME
|
(294 | ) | - | (2 | ) | - | (292 | ) | ||||||||||||
|
INTEREST
EXPENSE
|
18,577 | 301 | - | - | 18,276 | |||||||||||||||
|
EQUITY
IN LOSS OF AFFILIATED
COMPANY3
|
3,088 | 159 | 159 | - | 2,770 | |||||||||||||||
|
(Loss)
Income before provision for
income taxes, minority interest in income of subsidiaries and
discontinued
operations
|
(121 | ) | 26,148 | 1,912 | (1,132 | ) | (27,049 | ) | ||||||||||||
|
(BENEFIT)
PROVISION FOR INCOME
TAXES
|
(801 | ) | (1,498 | ) | 697 | - | - | |||||||||||||
|
MINORITY
INTEREST IN INCOME OF
SUBSIDIARIES
|
919 | - | - | - | 919 | |||||||||||||||
|
Net
(Loss) Income from continuing
operations
|
(239 | ) | 27,646 | 1,215 | (1,132 | ) | (27,968 | ) | ||||||||||||
|
LOSS
FROM DISCONTINUED OPERATIONS,
net of tax
|
(4,832 | ) | (4,832 | ) | - | - | - | |||||||||||||
|
Net
(loss)
income
|
$ | (5,071 | ) | $ | 22,814 | $ | 1,215 | $ | (1,132 | ) | $ | (27,968 | ) | |||||||
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PAGE
10 -- RADIO ONE, INC. REPORTS SECOND QUARTER RESULTS
|
Six
Months Ended June 30,
2008
|
||||||||||||||||||||
|
(in
thousands, unaudited, as
adjusted)
|
||||||||||||||||||||
|
|
|
Reach
|
Internet/
|
Corporate/
|
||||||||||||||||
|
Consolidated
|
Radio
One
|
Media
|
Publishing
|
Eliminations/Other
|
||||||||||||||||
|
STATEMENT
OF
OPERATIONS:
|
||||||||||||||||||||
|
NET
REVENUE
|
$ | 155,930 | $ | 131,059 | $ | 21,865 | $ | 5,038 | $ | (2,032 | ) | |||||||||
|
OPERATING
EXPENSES:
|
||||||||||||||||||||
|
Programming
and
technical
|
39,796 | 27,862 | 9,781 | 4,043 | (1,890 | ) | ||||||||||||||
|
Selling,
general and
administrative
|
52,007 | 44,731 | 2,139 | 6,598 | (1,461 | ) | ||||||||||||||
|
Corporate
selling, general and
administrative
|
23,958 | - | 3,829 | - | 20,129 | |||||||||||||||
|
Stock-based
compensation
|
957 | 489 | - | 89 | 379 | |||||||||||||||
|
Depreciation
and
amortization
|
8,835 | 4,545 | 1,998 | 1,527 | 765 | |||||||||||||||
|
Total
operating
expenses
|
125,553 | 77,627 | 17,747 | 12,257 | 17,922 | |||||||||||||||
|
Operating
income (loss)
|
30,377 | 53,432 | 4,118 | (7,219 | ) | (19,954 | ) | |||||||||||||
|
INTEREST
INCOME
|
(331 | ) | - | (60 | ) | - | (271 | ) | ||||||||||||
|
INTEREST
EXPENSE
|
32,419 | 711 | - | 10 | 31,698 | |||||||||||||||
|
GAIN
ON RETIREMENT OF
DEBT
|
(1,015 | ) | - | - | - | (1,015 | ) | |||||||||||||
|
EQUITY
IN LOSS OF AFFILIATED
COMPANY3
|
2,799 | - | - | - | 2,799 | |||||||||||||||
|
OTHER
EXPENSE (INCOME),
net
|
44 | - | - | 46 | (2 | ) | ||||||||||||||
|
(Loss)
Income before provision for
income taxes, minority interest in income of subsidiaries and discontinued
operations
|
(3,539 | ) | 52,721 | 4,178 | (7,275 | ) | (53,163 | ) | ||||||||||||
|
PROVISION
FOR INCOME
TAXES
|
18,659 | 17,133 | 1,526 | - | - | |||||||||||||||
|
MINORITY
INTEREST IN INCOME OF
SUBSIDIARIES
|
1,881 | - | - | - | 1,881 | |||||||||||||||
|
Net
(Loss) Income from continuing
operations
|
(24,079 | ) | 35,588 | 2,652 | (7,275 | ) | (55,044 | ) | ||||||||||||
|
(LOSS)
FROM DISCONTINUED
OPERATIONS, net of tax
|
(6,447 | ) | (6,447 | ) | - | - | - | |||||||||||||
|
Net
(loss)
income
|
$ | (30,526 | ) | $ | 29,141 | $ | 2,652 | $ | (7,275 | ) | $ | (55,044 | ) | |||||||
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PAGE
11 -- RADIO ONE, INC. REPORTS SECOND QUARTER RESULTS
|
Six
Months Ended June 30,
2007
|
||||||||||||||||||||
|
(in
thousands, unaudited, as
adjusted)
|
||||||||||||||||||||
|
|
|
Reach
|
Internet/
|
Corporate/
|
||||||||||||||||
|
Consolidated
|
Radio
One
|
Media
|
Publishing
|
Eliminations/Other
|
||||||||||||||||
|
STATEMENT
OF
OPERATIONS:
|
||||||||||||||||||||
|
NET
REVENUE
|
$ | 156,660 | $ | 133,073 | $ | 22,938 | $ | 1,686 | $ | (1,037 | ) | |||||||||
|
OPERATING
EXPENSES:
|
||||||||||||||||||||
|
Programming
and
technical
|
35,914 | 25,954 | 9,960 | 1,794 | (1,794 | ) | ||||||||||||||
|
Selling,
general and
administrative
|
47,334 | 43,767 | 2,701 | 992 | (126 | ) | ||||||||||||||
|
Corporate
selling, general and
administrative
|
15,660 | - | 3,926 | - | 11,734 | |||||||||||||||
|
Stock-based
compensation
|
1,592 | 1,007 | - | 27 | 558 | |||||||||||||||
|
Depreciation
and
amortization
|
7,383 | 4,511 | 2,263 | 44 | 565 | |||||||||||||||
|
Impairment
of long-lived
assets
|
5,506 | 5,506 | - | - | - | |||||||||||||||
|
Total
operating
expenses
|
113,389 | 80,745 | 18,850 | 2,857 | 10,937 | |||||||||||||||
|
Operating
(loss) income
|
43,271 | 52,328 | 4,088 | (1,171 | ) | (11,974 | ) | |||||||||||||
|
INTEREST
INCOME
|
(561 | ) | - | (16 | ) | - | (545 | ) | ||||||||||||
|
INTEREST
EXPENSE
|
36,647 | 301 | - | - | 36,346 | |||||||||||||||
|
EQUITY
IN LOSS OF AFFILIATED
COMPANY3
|
7,306 | 369 | 374 | - | 6,563 | |||||||||||||||
|
OTHER
EXPENSE,
net
|
8 | 6 | - | - | 2 | |||||||||||||||
|
(Loss)
Income before provision for
income taxes, minority interest in income of subsidiaries and discontinued
operations
|
(129 | ) | 51,652 | 3,730 | (1,171 | ) | (54,340 | ) | ||||||||||||
|
PROVISION
(BENEFIT) INCOME
TAXES
|
651 | (700 | ) | 1,351 | - | - | ||||||||||||||
|
MINORITY
INTEREST IN INCOME OF
SUBSIDIARIES
|
1,825 | - | - | - | 1,825 | |||||||||||||||
|
Net
(Loss) Income from continuing
operations
|
(2,605 | ) | 52,352 | 2,379 | (1,171 | ) | (56,165 | ) | ||||||||||||
|
LOSS
FROM DISCONTINUED OPERATIONS,
net of tax
|
(5,448 | ) | (5,448 | ) | - | - | - | |||||||||||||
|
Net
(loss)
income
|
$ | (8,053 | ) | $ | 46,904 | $ | 2,379 | $ | (1,171 | ) | $ | (56,165 | ) | |||||||
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PAGE
12 -- RADIO ONE, INC. REPORTS SECOND QUARTER RESULTS
Radio
One will hold a conference call to discuss its results for the second quarter
of
2008. This conference call is scheduled for Tuesday, August 5, 2008 at 10:00
a.m. Eastern Daylight Time. To participate on this call, U.S. callers may dial
toll free 1-877-209-9922; international callers may dial direct (+1)
612-332-0634 at least five minutes prior to the scheduled time of the
call.
The
conference call will be recorded and made available for replay from 12:30 p.m.
Eastern Daylight Time August 5, 2008 until midnight Eastern Time August 6,
2008.
Interested parties may listen to the replay by calling 1-800-475-6701
international callers may dial direct (+1) 320-365-3844. The replay Access
Code
is 956357. Access to live audio and replay of the conference call will also
be
available on Radio One's corporate website at www.radio-one.com. The replay
will
be made available on the website for seven calendar days following the
call.
Radio
One, Inc. (www.radio-one.com) is one of the nation's largest radio broadcasting
companies and the largest radio broadcasting company that primarily targets
African-American and urban listeners. Radio One currently owns 53 radio stations
located in 16 urban markets in the United States. Additionally, Radio One owns
Magazine One, Inc. (d/b/a Giant Magazine) (www.giantmag.com), interests in
TV
One, LLC (www.tvoneonline.com), a cable/satellite network programming primarily
to African-Americans, Reach Media, Inc. (www.blackamericaweb.com), owner of
the
Tom Joyner Morning Show and other businesses associated with Tom Joyner, and
Community Connect Inc. (www.communityconnect.com), an online social-networking
company, which operates a number of branded websites, including BlackPlanet,
MiGente, and Asian Avenue.
Notes:
1
“Station operating income” consists of net (loss) income before depreciation and
amortization, corporate expenses, stock based compensation, equity in loss
of
affiliated company, provision (benefit) for income taxes, minority interest
in
income of subsidiaries, interest expense, impairment of long-lived assets,
other
(income) expense, gain on retirement of debt, and loss (income) from
discontinued operations, net of tax. Station operating income is not a measure
of financial performance under generally accepted accounting principles.
Nevertheless we believe station operating income is often a useful measure
of a
broadcasting company’s operating performance and is a significant basis used by
our management to measure the operating performance of our stations within
the
various markets because station operating income provides helpful information
about our results of operations apart from expenses associated with our physical
plant, income taxes, investments, debt financings, overhead, stock-based
compensation, impairment of long-lived assets, results of operations and income
(losses) from asset sales. Station operating income is frequently used as one
of
the bases for comparing businesses in our industry, although our measure of
station operating income may not be comparable to similarly titled measures
of
other companies. Station operating income does not purport to represent
operating income or cash flow from operating activities, as those terms are
defined under generally accepted accounting principles, and should not be
considered as an alternative to those measurements as an indicator of our
performance. A reconciliation of operating income to station operating income
has been provided in this release.
2
Certain
reclassifications associated with accounting for discontinued operations have
been made to prior quarter balances to conform to the current presentation.
These reclassifications had no effect on any other previously reported net
income or loss or any other statement of operations, balance sheet or cash
flow
amounts. Where applicable, these financial statements have been identified
as
“as adjusted”.
3
An adjustment was made to equity
in loss of affiliated company for the three and six months ended June 30, 2007
to correct for a change in TV
One’s capital structure. Pursuant to SAB 99, “Materiality”
and
SAB 108 “Considering
the
Effects of Prior Year Misstatements when Quantifying Misstatements in Current
Year Financial Statements,”
we decreased the previously
reported equity in loss of affiliated
company for the three month period
ended June 30, 2007 by approximately $1.2 million and
increased the previously reported
equity in loss of affiliated company for the six month period
ended June 30,
2007 by approximately $2.5 million.
4
For the three months ended June
30, 2008
and 2007, Radio One had 98,403,298 and 98,710,633 shares of common stock
outstanding on a weighted average basis, diluted for outstanding stock options,
respectively.
5
For the six months ended June
30,
2008 and 2007, Radio One had 98,560,790 and 98,710,633 shares of common stock
outstanding on a weighted average basis, diluted for outstanding stock options,
respectively.
6
“Adjusted
EBITDA” consists of net (loss) income plus (1) depreciation, amortization,
provision (benefit) for income taxes, interest expense, equity in
loss of affiliated company, and minority interest in income of subsidiaries,
impairment of long-lived assets, stock-based compensation, other expense,
(income) loss from discontinued operations, net of tax, less (2) and
interest income and gain on retirement of debt. Net income before interest
income, interest expense, provision (benefit) for income taxes, depreciation
and
amortization is commonly referred to in our business as “EBITDA.” Adjusted
EBITDA and EBITDA are not measures of financial performance under generally
accepted accounting principles. We believe Adjusted EBITDA is often a useful
measure of a company’s operating performance and is a significant basis used by
our management to measure the operating performance of our business because
Adjusted EBITDA excludes charges for depreciation, amortization and interest
expense that have resulted from our acquisitions and debt financing, our taxes,
impairment charges, as well as our equity in loss of our affiliated company,
gain on retirement of debt, and any discontinued operations. Accordingly, we
believe that Adjusted EBITDA provides useful information about the operating
performance of our business, apart from the expenses associated with our
physical plant, capital structure or the results of our affiliated company.
Adjusted EBITDA is frequently used as one of the bases for comparing businesses
in our industry, although our measure of Adjusted EBITDA may not be comparable
to similarly titled measures of other companies. Adjusted EBITDA and EBITDA
do
not purport to represent operating income or cash flow from operating
activities, as those terms are defined under generally accepted accounting
principles, and should not be considered as alternatives to those measurements
as an indicator of our performance. A reconciliation of net income to EBITDA
and
Adjusted EBITDA has been provided in this release.
#
#
#