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: November 6, 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
November 6, 2008, Radio One, Inc. issued a press release setting forth the
results for its third quarter ended Sepetmber 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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|
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99.1
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Press
release dated November 6, 2008: Radio One, Inc. Reports Third 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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November
07, 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
November
6,
2008
Contact: Peter D. Thompson, EVP and CFO
FOR
IMMEDIATE
RELEASE (301)
429-4638
Washington,
DC
RADIO
ONE, INC. REPORTS
THIRD
QUARTER RESULTS
Washington,
DC: - Radio One,
Inc. (NASDAQ: ROIAK and ROIA) today reported its results for the quarter ended
September 30, 2008. Net revenue was approximately $86.2 million, a
decrease of 2% from the same period in 2007. Station operating
income1
was
approximately $34.7 million, a decrease of 17% from the same period in
2007. The Company recorded a non-cash impairment charge against the
Company’s FCC licenses of approximately $337.9 million which lead to a net
operating loss of approximately $315.6 million. Net loss was approximately
$266.1 million or a loss of $2.81 per basic share, a decrease from the reported
net income of approximately $4.7 million or $.05 per basic share for the same
period in 2007.
Alfred
C. Liggins, III, Radio One’s CEO and President stated, “Clearly all advertising
based companies, including radio are experiencing extremely
challenging times given the slowdown in consumer spending, and I expect this
to
continue through all of 2009. Our focus remains on increasing our radio market
share, cutting costs and diversifying into TV and online revenues. We continue
to make progress on each of these goals, by outperforming our radio markets
by
170 bps year to date, restructuring our radio workforce, and generating solid
revenue growth in TV One and Interactive One.
National
revenues continue to be a drag on our radio business (down 17% YTY), mitigated
somewhat by increased political revenues (up 319% YTY). The automotive category
continues to show sharp declines, down 37% YTY, which accounts for over 10%
of
our business. After adjusting for asset impairments and other one-time items,
we
reduced our operating expenses by 3% for the quarter compared to previous third
quarter.
The
integration of Community Connect Inc. has been achieved as planned, and we
now
have in excess of eight million monthly unique visitors to our online
properties, viewing over 500 million pages each month. Our ability to provide
advertising clients with access to 82% of all African Americans across a
platform of radio, TV, online and print gives us a unique niche in the market,
and puts us in a strong position for the long term.”
-MORE-
PAGE
2 -- RADIO ONE, INC. REPORTS THIRD QUARTER RESULTS
|
RESULTS
OF
OPERATIONS
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||||||||||||||||
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Three
Months Ended September
30,
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Nine
Months Ended September
30,
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|||||||||||||||
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2008
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2007
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2008
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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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STATEMENT
OF
OPERATIONS
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(unaudited)
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(unaudited)
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||||||||||||||
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(in
thousands)
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(in
thousands)
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|||||||||||||||
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NET
REVENUE
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$ | 86,156 | $ | 88,214 | $ | 242,086 | $ | 244,874 | ||||||||
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:OPERATING
EXPENSES
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||||||||||||||||
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Programming
and
technical
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21,477 | 18,547 | 61,273 | 54,461 | ||||||||||||
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Selling,
general and
administrative
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30,012 | 27,760 | 82,019 | 75,094 | ||||||||||||
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Corporate
selling, general and
administrative
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6,729 | 4,633 | 30,687 | 20,293 | ||||||||||||
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Stock-based
compensation
|
415 | 913 | 1,372 | 2,505 | ||||||||||||
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Depreciation
and
amortization
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5,222 | 3,664 | 14,057 | 11,047 | ||||||||||||
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Impairment
of long-lived
assets
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337,936 | - | 337,936 | 5,506 | ||||||||||||
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Total
operating
expenses
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401,791 | 55,517 | 527,344 | 168,906 | ||||||||||||
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Operating
(Loss) Income
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(315,635 | ) | 32,697 | (285,258 | ) | 75,968 | ||||||||||
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INTEREST
INCOME
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(111 | ) | (292 | ) | (442 | ) | (853 | ) | ||||||||
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INTEREST
EXPENSE
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14,130 | 18,400 | 46,549 | 55,047 | ||||||||||||
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GAIN
ON RETIREMENT OF
DEBT
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(5,679 | ) | - | (6,694 | ) | - | ||||||||||
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EQUITY
IN LOSS OF AFFILIATED
COMPANY3
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1,119 | 2,903 | 3,918 | 10,209 | ||||||||||||
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OTHER
EXPENSE,
net
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49 | 15 | 93 | 23 | ||||||||||||
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(Loss)
income before (benefit)
provision from income taxes, minority interest in income of subsidiaries
and discontinued operations
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(325,143 | ) | 11,671 | (328,682 | ) | 11,542 | ||||||||||
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(BENEFIT)
PROVISION FROM INCOME
TAXES
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(59,651 | ) | 5,513 | (40,992 | ) | 6,164 | ||||||||||
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MINORITY
INTEREST IN INCOME OF
SUBSIDIARIES
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1,260 | 1,274 | 3,141 | 3,099 | ||||||||||||
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Net
(Loss) Income from continuing
operations
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(266,752 | ) | 4,884 | (290,831 | ) | 2,279 | ||||||||||
| INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax | 639 | (194 | ) | (5,808 | ) | (5,642 | ) | |||||||||
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Net
(Loss) Income
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$ | (266,113 | ) | $ | 4,690 | $ | (296,639 | ) | $ | (3,363 | ) | |||||
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Weighted
average shares
outstanding - basic4
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94,537,081 | 98,710,633 | 97,219,115 | 98,710,633 | ||||||||||||
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Weighted
average shares
outstanding - diluted5
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94,537,081 | 98,725,387 | 97,219,115 | 98,710,633 | ||||||||||||
-MORE-
PAGE
3 -- RADIO ONE, INC. REPORTS THIRD QUARTER RESULTS
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Three
Months Ended September
30,
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Nine
Months Ended September
30,
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|||||||||||||||
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2008
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2007
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2008
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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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|||||||||||||||
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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)
income from continuing operations per share (basic)
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$ | (2.82 | ) | $ | 0.05 | $ | (2.99 | ) | $ | 0.02 | * | |||||
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Income
(loss) from discontinued operations per share
(basic)
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$ | 0.01 | $ | (0.00 | ) | $ | (0.06 | ) | $ | (0.06 | ) * | |||||
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Net
(loss)
income per share (basic)
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$ | (2.81 | ) | $ | 0.05 | $ | (3.05 | ) | $ | (0.03 | ) * | |||||
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Income
from continuing operations per share (diluted)
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N/A | $ | 0.05 | N/A | N/A | |||||||||||
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Loss
from
discontinued operations per
share (diluted)
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N/A | $ | (0.00 | ) | N/A | N/A | ||||||||||
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Net
income
per share (diluted)
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N/A | $ | 0.05 | N/A | N/A | |||||||||||
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SELECTED
OTHER
DATA
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||||||||||||||||
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Station
operating income
1
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$ | 34,667 | $ | 41,907 | $ | 98,794 | $ | 115,319 | ||||||||
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Station
operating income margin (%
of net revenue)
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40.2 | % | 47.5 | % | 40.8 | % | 47.1 | % | ||||||||
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Station
operating income
reconciliation:
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||||||||||||||||
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Net
(loss)
income
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$ | (266,113 | ) | $ | 4,690 | $ | (296,639 | ) | $ | (3,363 | ) | |||||
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Plus:
Depreciation and
amortization
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5,222 | 3,664 | 14,057 | 11,047 | ||||||||||||
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Plus:
Corporate selling, general
and administrative expenses
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6,729 | 4,633 | 30,687 | 20,293 | ||||||||||||
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Plus:
Stock-based
compensation
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415 | 913 | 1,372 | 2,505 | ||||||||||||
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Plus:
Equity in loss of affiliated
company3
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1,119 | 2,903 | 3,918 | 10,209 | ||||||||||||
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Plus:
(Benefit) provision from
income taxes
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(59,651 | ) | 5,513 | (40,992 | ) | 6,164 | ||||||||||
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Plus:
Minority interest in income
of subsidiaries
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1,260 | 1,274 | 3,141 | 3,099 | ||||||||||||
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Plus:
Interest
expense
|
14,130 | 18,400 | 46,549 | 55,047 | ||||||||||||
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Plus:
Impairment of long-lived
assets
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337,936 | - | 337,936 | 5,506 | ||||||||||||
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Plus:
Other
expense
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49 | 15 | 93 | 23 | ||||||||||||
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Less:
Gain on retirement of
debt
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(5,679 | ) | - | (6,694 | ) | - | ||||||||||
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Less:
(Income) loss from
discontinued operations, net of tax
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(639 | ) | 194 | 5,808 | 5,642 | |||||||||||
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Less:
Interest
income
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(111 | ) | (292 | ) | (442 | ) | (853 | ) | ||||||||
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Station
operating
income
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$ | 34,667 | $ | 41,907 | $ | 98,794 | $ | 115,319 | ||||||||
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Adjusted
EBITDA6
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$ | 27,938 | $ | 37,274 | $ | 68,107 | $ | 95,026 | ||||||||
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Adjusted
EBITDA
reconciliation:
|
||||||||||||||||
|
Net
(loss)
income
|
$ | (266,113 | ) | $ | 4,690 | $ | (296,639 | ) | $ | (3,363 | ) | |||||
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Plus:
Depreciation and amortization
|
5,222 | 3,664 | 14,057 | 11,047 | ||||||||||||
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Plus:
(Benefit) Provision from income taxes
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(59,651 | ) | 5,513 | (40,992 | ) | 6,164 | ||||||||||
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Plus:
Interest expense
|
14,130 | 18,400 | 46,549 | 55,047 | ||||||||||||
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Less:
Interest income
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(111 | ) | (292 | ) | (442 | ) | (853 | ) | ||||||||
|
|
||||||||||||||||
|
EBITDA
|
$ | (306,523 | ) | $ | 31,975 | $ | (277,467 | ) | $ | 68,042 | ||||||
|
Plus: Equity in loss of affiliated company3
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1,119 | 2,903 | 3,918 | 10,209 | ||||||||||||
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Plus:
Minority interest in income of subsidiaries
|
1,260 | 1,274 | 3,141 | 3,099 | ||||||||||||
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Plus:
Impairment of long-lived assets
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337,936 | - | 337,936 | 5,506 | ||||||||||||
|
Plus: Stock-based compensation
|
415 | 913 | 1,372 | 2,505 | ||||||||||||
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Plus: Other expense
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49 | 15 | 93 | 23 | ||||||||||||
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Less:
Gain on retirement of debt
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(5,679 | ) | - | (6,694 | ) | - | ||||||||||
|
Less: (Income) loss from discontinued operations, net of
tax
|
(639 | ) | 194 | 5,808 | 5,642 | |||||||||||
|
Adjusted
EBITDA
|
$ | 27,938 | $ | 37,274 | $ | 68,107 | $ | 95,026 | ||||||||
|
*Per
share amounts do not add due
to rounding.
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||||||||||||||||
MORE-
PAGE
4 -- RADIO ONE, INC. REPORTS THIRD QUARTER RESULTS
|
September
30,
2008
|
December
31,
2007
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|||||||
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(unaudited)
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(as
adjusted)2
|
|||||||
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SELECTED
BALANCE SHEET
DATA:
|
(in
thousands)
|
|||||||
|
Cash
and cash
equivalents
|
$ | 30,393 | $ | 24,247 | ||||
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Intangible
assets,
net
|
1,032,094 | 1,310,321 | ||||||
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Total
assets
|
1,246,205 | 1,663,342 | ||||||
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Total
debt (including current
portion)
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765,149 | 815,504 | ||||||
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Total
liabilities
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920,876 | 1,030,736 | ||||||
|
Total
stockholders'
equity
|
324,204 | 628,717 | ||||||
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Minority
interest in
subsidiaries
|
1,125 | 3,889 | ||||||
|
Current
Amount
Outstanding
|
Applicable
Interest Rate
(a)
|
|||||||
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(in
thousands)
|
||||||||
|
SELECTED
LEVERAGE AND SWAP
DATA:
|
||||||||
|
Senior
bank term debt (swap
matures 6/16/2010) (a)
|
$ | 25,000 | 6.27 | % | ||||
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Senior
bank term debt (swap
matures 6/16/2012) (a)
|
25,000 | 6.47 | % | |||||
|
Senior
bank term debt (at variable
rates) (b)
|
124,400 | 4.81 | % | |||||
|
Senior
bank revolving debt (at
variable rates) (b)
|
141,500 | 5.40 | % | |||||
|
8-7/8%
senior subordinated notes (fixed
rate)
|
248,900 | 8.88 | % | |||||
|
6-3/8%
senior subordinated notes (fixed
rate)
|
200,000 | 6.38 | % | |||||
|
Capital
lease
obligation
|
361 | 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 2.00% and is
incorporated into the applicable interest rates set forth
above.
|
|
(b)
|
Subject
to rolling three month and six month LIBOR plus a spread currently
at
2.00% 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 THIRD QUARTER RESULTS
Net
revenue decreased to approximately $86.2 million for the quarter ended September
30, 2008, from approximately $88.2 million for the same period in 2007, a
decrease of 2%. In April 2008, we acquired Community Connect Inc. (“CCI”), an
online social networking company, which resulted in the consolidation of
approximately $4.1 million in net revenue from their operations during the
quarter. However, declines in our radio revenues more than offset the additional
revenue from CCI. Consistent with the overall declines in the markets in which
we operate, we experienced a decrease in radio net revenue, with national
revenue continuing to drive a significant portion of the decline. Our Atlanta
market experienced a considerable net revenue decline, and we experienced more
modest declines in our Raleigh-Durham, Washington, DC, Cleveland and Dallas
markets. These declines were offset in part from net revenue growth in our
Philadelphia market, as well as increased net revenue from new syndicated
programs and internet revenue from station websites. Reach Media experienced
a
decline in revenue due to TV licensing revenue which ended in 2007, and less
revenue from fewer and smaller sponsored events. Net revenue is reported net
of
agency and outside sales representative commissions of approximately $9.2
million and $10.0 million for the quarters ended September 30, 2008 and 2007,
respectively. Excluding the approximately $4.1 million in net revenue generated
by CCI, net revenue declined 6.9% for the quarter ended September 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 $58.2 million from
approximately $50.9 million for the quarters ended September 30, 2008 and 2007,
respectively, an increase of 14%. Approximately $4.1 million of the increase
resulted from consolidating the operating results of CCI. Contributing to the
increase is an approximate $2.4 million retention bonus reduction recorded
during the third quarter 2007 for the former Chief Financial Officer, given
his
early departure in December 2007. Other increases in operating expenses resulted
from approximately $1.8 million in additional spending on our internet
initiative, additional research associated with Arbitron’s new portable people
meter methodology (“PPM”), higher on-air talent expenses, mainly for new
syndicated shows, additional bad debts expense, driven in part by a client
bankruptcy and $490,000 in severance and other one-time costs associated with
a
recent reduction of the Company’s radio division workforce. Through cost
reduction efforts, we realized savings in the areas of marketing and promotions,
events spending, legal and professional, travel and entertainment, and benefits
resulting from the suspension of our 401(k) match program. In addition, we
also
spent less in revenue variable expenses such as commissions and national
representative fees. Excluding the approximately $1.8 million additional
spending on our internet initiative, CCI’s $4.1 million in operating expenses,
the $490,000 in one-time restructuring expense, and adjusting for the 2007
$2.4
million retention bonus reduction, operating expenses declined 3% for the three
months ended September 30, 2008, compared to the same period in
2007.
Stock-based
compensation decreased to $415,000 from $913,000 for the quarters ended
September 30, 2008 and 2007, respectively, a decline of
55%. 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 a significant decline in the Company’s stock price,
forfeitures and cancellations for former employees and the completion of the
vesting period for certain stock options. The decrease was offset in part due
to
expense for additional stock options and restricted stock grants associated
with
new employment agreements for the Chief Executive Officer, the Founder and
Chairperson and the Chief Financial Officer.
Depreciation
and amortization expense increased to approximately $5.2 million compared to
approximately $3.7 million for the quarters ended September 30, 2008 and 2007,
respectively, an increase of 43%. The consolidation of CCI’s operating results
accounted for approximately $1.4 million of the increase, including an amount
of
approximately $1.0 million in amortization expense associated with certain
assets acquired as part of that acquisition, mainly registered membership lists,
advertiser relationships and a favorable office lease. Additional depreciation
and amortization for capital expenditures made subsequent to September 30,
2007
were offset in part by a decrease in amortization expense associated with
certain affiliate agreements acquired as part of our February 2005 purchase
of
51% of Reach Media.
-MORE-
PAGE 6
-- RADIO ONE, INC.
REPORTS THIRD QUARTER RESULTS
Impairment of long-lived assets was approximately $337.9 million for the quarter ended September 30, 2008, compared to no charge for the same period in 2007. The amount relates to non-cash impairment charges recorded to reduce the carrying value of radio broadcasting licenses to their estimated fair values. The impairments occurred in 11 of our 16 markets, namely in Charlotte, Cincinnati, Cleveland, Columbus, Dallas, Houston, Indianapolis, Philadelphia, Raleigh-Durham, Richmond and St. Louis. The impairments are driven in large part by slower revenue growth at the industry and market levels, declining radio station transaction multiples and a higher cost of capital. The recent and gradual decline in values for long-lived assets such as licenses and other intangibles are neither unique nor specific to our individual markets. This trend has impacted the valuations of the industry as a whole and has impacted other broadcast and traditional media companies.
Interest
expense decreased to approximately $14.1 million for the quarter ended September
30, 2008, from approximately $18.4 million for the same period in 2007, a
decline of 23%. The decrease in interest expense resulted primarily
from interest savings associated with lower net borrowings due to debt paydowns
and bond redemptions and lower interest rates which impacted the variable
portion of our debt. Interest expense savings was also driven by the absence
of
fees incurred with the operation of WPRS-FM (formerly WXGG-FM) pursuant to
a
local marketing agreement (“LMA”) that began in April of 2007. LMA
fees are classified as interest expense, and we closed on the purchase of
WPRS-FM in June 2008 for approximately $38.0 million in cash.
Gain
on retirement of debt was approximately $5.7 million for the quarter ended
September 30, 2008, compared to no activity for the same period in 2007. The
gain on retirement of debt was due to the redemption of $43.1 million of the
Company’s previously outstanding $292.0 million 87/8
senior
subordinated notes due July 2011. An amount of $248.9 million remained
outstanding as of September 30, 2008.
Equity
in losses of affiliated company decreased to approximately $1.1 million for
the
quarter ended September 30, 2008, from approximately $2.9 million for the same
period in 2007, a decline of 62%. The amounts are attributable to our share
of
losses generated by TV One, LLC
(“TV One”) for the quarters
ended September 30, 2008 and
2007, respectively.
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 September 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 increased the previously
reported equity in loss of affiliated
company for the three month period
ended September 30, 2007 by $110,000
and increased the previously
reported equity in loss of affiliated company for the
nine month period ended September 30,
2007 by approximately $2.7 million.
Benefit
from income taxes was approximately $59.7 million for the quarter ended
September 30, 2008, compared to a provision for income taxes of approximately
$5.5 million for the quarter ended September 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
such, the benefit from
income taxes for the current quarter
was offset partially by recording a full valuation allowance against the
additional NOLs generated from the tax deductible amortization of
indefinite-lived assets, as well as a full valuation recorded against
DTAs created by the intangible
asset impairment charges recorded in the current quarter. The current quarter
tax benefit and offsetting valuation allowances resulted in an effective tax
rate for the three months ended September 30, 2008 of 18.4%, and an estimated
annual effective tax rate 12.5%.
-MORE-
PAGE
7 -- RADIO ONE, INC. REPORTS THIRD QUARTER RESULTS
Income
from discontinued operations, net of tax, was $639,000 for the quarter ended
September 30, 2008, compared to a loss of $194,000 for the same period in 2007.
Included in the income
or
loss
from discontinued operations, net
of tax,
are the results of operations for our
sold stations, which included our Los Angeles, Miami, Augusta, Louisville,
Dayton, Minneapolis and Boston WILD-FM stations. The income or loss
from discontinued operations, net
of tax,
includes a tax benefit of $716,000 for
the three months
ended September 30,
2008, compared
to a tax provision of
approximately $2.7 million for the same period in 2007.
Other
pertinent financial
information includes capital expenditures of approximately $2.8 million and
$1.4
million for the quarters ended September 30, 2008 and 2007, respectively.
Additionally, as of September 30, 2008, Radio One had total debt (net of cash
balances) of approximately $734.8 million.
In
September 2008, the Company’s 51% owned subsidiary, Reach Media, through its
board of directors, declared a common stock dividend of $5.0 million. The
dividend was paid in October 2008. Fifty-one percent of the dividend, or
approximately $2.5 million was paid to the Company and 49%, also approximately
$2.5 million was paid to the Reach Media minority shareholders.
Throughout
the quarter ended September 30, 2008, the Company redeemed $43.1 million of
its
previously outstanding $292.0 million 87/8
senior
subordinated notes due July 2011. The redemption resulted in an approximately
$5.7 million gain on the sale of retirement of debt, and an amount of $248.9
million remained outstanding as of September 30, 2008.
In
March 2008, the Company’s board of
directors authorized a repurchase of shares of the Company’s Class A and Class D
common stock through December 31, 2009 of up to $150.0 million, the maximum
amount allowable under the Credit Agreement. The amount and timing of such
repurchases will be based on pricing, general economic and market conditions,
and the restrictions contained in the agreements governing the Company’s credit
facilities and subordinated debt and certain other factors. While $150.0 million
is the maximum
amount allowable under the Credit Agreement, in 2005 under a prior board authorization,
the Company utilized
approximately $78.0 million to repurchase common stock leaving capacity of
$72.0
million under the Credit Agreement. During the period ended
September
30, 2008, the Company
repurchased 421,661 shares of Class A common stock at an average price of $1.32
and 8.8 million shares of Class
D common stock at an average price
of $0.99. For the nine months ended September 30, 2008, the total
amount spent in shares repurchased was approximately $9.2 million. As
of September 30, 2008, the Company
had $62.8 million in capacity available under the share repurchase program
taking into account the limitations
of the Credit Agreement and prior
repurchase activity.
Supplemental
Financial Information:
For
comparative purposes, the following more detailed, unaudited and adjusted
statements of operations for the three and nine months ended September 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 nine months ended
September 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 increased
the previously reported equity in loss of affiliated company for the three month
period ended
September 30, 2007 by $110,000
and increased the previously
reported equity in loss of affiliated company for the nine month period
ended
September 30, 2007 by approximately $2.7 million.
MORE-
PAGE 8
-- RADIO ONE, INC. REPORTS THIRD QUARTER RESULTS
|
Three
Months Ended September 30,
2008
|
||||||||||||||||||||
|
(in
thousands, unaudited, as
adjusted)
|
||||||||||||||||||||
|
|
Reach
|
Internet/
|
Corporate/
|
|||||||||||||||||
|
Consolidated
|
Radio
One
|
Media
|
Publishing
|
Eliminations/Other
|
||||||||||||||||
|
STATEMENT
OF
OPERATIONS:
|
||||||||||||||||||||
|
NET
REVENUE
|
$ | 86,156 | $ | 66,750 | $ | 14,929 | $ | 5,576 | $ | (1,099 | ) | |||||||||
|
OPERATING
EXPENSES:
|
||||||||||||||||||||
|
Programming
and
technical
|
21,477 | 14,273 | 4,781 | 3,373 | (950 | ) | ||||||||||||||
|
Selling,
general and
administrative
|
30,012 | 21,248 | 4,212 | 5,297 | (745 | ) | ||||||||||||||
|
Corporate
selling, general and
administrative
|
6,729 | - | 1,819 | - | 4,910 | |||||||||||||||
|
Stock-based
compensation
|
415 | 26 | - | 39 | 350 | |||||||||||||||
|
Depreciation
and
amortization
|
5,222 | 2,474 | 1,001 | 1,433 | 314 | |||||||||||||||
|
Impairment
of long-lived
assets
|
337,936 | 337,936 | - | - | - | |||||||||||||||
|
Total
operating
expenses
|
401,791 | 375,957 | 11,813 | 10,142 | 3,879 | |||||||||||||||
|
Operating
(loss) income
|
(315,635 | ) | (309,207 | ) | 3,116 | (4,566 | ) | (4,978 | ) | |||||||||||
|
INTEREST
INCOME
|
(111 | ) | - | (23 | ) | (4 | ) | (84 | ) | |||||||||||
|
INTEREST
EXPENSE
|
14,130 | - | - | 8 | 14,122 | |||||||||||||||
|
GAIN
ON RETIREMENT OF
DEBT
|
(5,679 | ) | - | - | - | (5,679 | ) | |||||||||||||
|
EQUITY
IN LOSS OF AFFILIATED
COMPANY
|
1,119 | - | - | - | 1,119 | |||||||||||||||
|
OTHER
EXPENSE,
net
|
49 | 49 | - | - | - | |||||||||||||||
|
(Loss)
Income before benefit from
income taxes, minority interest in income of subsidiaries and discontinued
operations
|
(325,143 | ) | (309,256 | ) | 3,139 | (4,570 | ) | (14,456 | ) | |||||||||||
|
BENEFIT
FROM INCOME
TAXES
|
(59,651 | ) | (59,010 | ) | (641 | ) | - | - | ||||||||||||
|
MINORITY
INTEREST IN INCOME OF
SUBSIDIARIES
|
1,260 | 1,254 | - | - | 6 | |||||||||||||||
|
Net
(Loss) Income from continuing
operations
|
(266,752 | ) | (251,500 | ) | 3,780 | (4,570 | ) | (14,462 | ) | |||||||||||
|
INCOME
FROM DISCONTINUED
OPERATIONS, net of tax
|
639 | 639 | - | - | - | |||||||||||||||
|
Net
(Loss)
Income
|
$ | (266,113 | ) | $ | (250,861 | ) | $ | 3,780 | $ | (4,570 | ) | $ | (14,462 | ) | ||||||
-MORE-
PAGE 9
--
RADIO ONE, INC. REPORTS THIRD QUARTER RESULTS
|
Three
Months Ended September 30,
2007
|
||||||||||||||||||||
|
(in
thousands, unaudited, as
adjusted)
|
||||||||||||||||||||
|
|
Reach
|
Internet/
|
Corporate/
|
|||||||||||||||||
|
Consolidated
|
Radio
One
|
Media
|
Publishing
|
Eliminations/Other
|
||||||||||||||||
|
STATEMENT
OF
OPERATIONS:
|
||||||||||||||||||||
|
NET
REVENUE
|
$ | 88,214 | $ | 71,957 | $ | 15,948 | $ | 1,083 | $ | (774 | ) | |||||||||
|
OPERATING
EXPENSES:
|
||||||||||||||||||||
|
Programming
and
technical
|
18,547 | 13,653 | 4,965 | 838 | (909 | ) | ||||||||||||||
|
Selling,
general and
administrative
|
27,760 | 22,028 | 4,620 | 1,383 | (271 | ) | ||||||||||||||
|
Corporate
selling, general and
administrative
|
4,633 | - | 1,945 | - | 2,688 | |||||||||||||||
|
Stock-based
compensation
|
913 | 481 | - | 43 | 389 | |||||||||||||||
|
Depreciation
and
amortization
|
3,664 | 2,238 | 1,135 | 10 | 281 | |||||||||||||||
|
Total
operating
expenses
|
55,517 | 38,400 | 12,665 | 2,274 | 2,178 | |||||||||||||||
|
Operating
income (loss)
|
32,697 | 33,557 | 3,283 | (1,191 | ) | (2,952 | ) | |||||||||||||
|
INTEREST
INCOME
|
(292 | ) | - | (2 | ) | - | (290 | ) | ||||||||||||
|
INTEREST
EXPENSE
|
18,400 | 300 | - | - | 18,100 | |||||||||||||||
|
EQUITY
IN LOSS OF AFFILIATED
COMPANY3
|
2,903 | 164 | 164 | - | 2,575 | |||||||||||||||
|
OTHER
EXPENSE,
net
|
15 | 2 | - | 13 | - | |||||||||||||||
|
Income
(Loss) before provision for
income taxes, minority interest in income of subsidiaries and discontinued
operations
|
11,671 | 33,091 | 3,121 | (1,204 | ) | (23,337 | ) | |||||||||||||
|
PROVISION
FOR INCOME
TAXES
|
5,513 | 4,341 | 1,172 | - | - | |||||||||||||||
|
MINORITY
INTEREST IN INCOME OF
SUBSIDIARIES
|
1,274 | 1,282 | - | - | (8 | ) | ||||||||||||||
|
Net
Income (Loss) from continuing
operations
|
4,884 | 27,468 | 1,949 | (1,204 | ) | (23,329 | ) | |||||||||||||
|
LOSS
FROM DISCONTINUED OPERATIONS,
net of tax
|
(194 | ) | (194 | ) | - | - | - | |||||||||||||
|
Net
Income
(Loss)
|
$ | 4,690 | $ | 27,274 | $ | 1,949 | $ | (1,204 | ) | $ | (23,329 | ) | ||||||||
-MORE-
PAGE
10 -- RADIO ONE, INC. REPORTS THIRD QUARTER RESULTS
|
Nine
Months Ended September 30,
2008
|
||||||||||||||||||||
|
(in
thousands, unaudited, as
adjusted)
|
||||||||||||||||||||
|
|
|
Reach
|
Internet/
|
Corporate/
|
||||||||||||||||
|
Consolidated
|
Radio
One
|
Media
|
Publishing
|
Eliminations/Other
|
||||||||||||||||
|
STATEMENT
OF
OPERATIONS:
|
||||||||||||||||||||
|
NET
REVENUE
|
$ | 242,086 | $ | 197,809 | $ | 36,794 | $ | 10,613 | $ | (3,130 | ) | |||||||||
|
OPERATING
EXPENSES:
|
||||||||||||||||||||
|
Programming
and
technical
|
61,273 | 42,134 | 14,562 | 7,416 | (2,839 | ) | ||||||||||||||
|
Selling,
general and
administrative
|
82,019 | 65,978 | 6,350 | 11,895 | (2,204 | ) | ||||||||||||||
|
Corporate
selling, general and
administrative
|
30,687 | - | 5,648 | - | 25,039 | |||||||||||||||
|
Stock-based
compensation
|
1,372 | 515 | - | 128 | 729 | |||||||||||||||
|
Depreciation
and
amortization
|
14,057 | 7,019 | 2,999 | 2,960 | 1,079 | |||||||||||||||
|
Impairment
of long-lived
assets
|
337,936 | 337,936 | - | - | - | |||||||||||||||
|
Total
operating
expenses
|
527,344 | 453,582 | 29,559 | 22,399 | 21,804 | |||||||||||||||
|
Operating
(loss) income
|
(285,258 | ) | (255,773 | ) | 7,235 | (11,786 | ) | (24,934 | ) | |||||||||||
|
INTEREST
INCOME
|
(442 | ) | - | (84 | ) | (2 | ) | (356 | ) | |||||||||||
|
INTEREST
EXPENSE
|
46,549 | 710 | 1 | 18 | 45,820 | |||||||||||||||
|
GAIN
ON RETIREMENT OF
DEBT
|
(6,694 | ) | - | - | - | (6,694 | ) | |||||||||||||
|
EQUITY
IN LOSS OF AFFILIATED
COMPANY
|
3,918 | - | - | - | 3,918 | |||||||||||||||
|
OTHER
EXPENSE (INCOME),
net
|
93 | 49 | - | 44 | - | |||||||||||||||
|
(Loss)
Income before (benefit)
provision from income taxes, minority interest in income of subsidiaries
and discontinued operations
|
(328,682 | ) | (256,532 | ) | 7,318 | (11,846 | ) | (67,622 | ) | |||||||||||
|
(BENEFIT)
PROVISION FROM INCOME
TAXES
|
(40,992 | ) | (41,877 | ) | 885 | - | - | |||||||||||||
|
MINORITY
INTEREST IN INCOME OF
SUBSIDIARIES
|
3,141 | 3,125 | - | - | 16 | |||||||||||||||
|
Net
(Loss) Income from continuing
operations
|
(290,831 | ) | (217,780 | ) | 6,433 | (11,846 | ) | (67,638 | ) | |||||||||||
|
(LOSS)
FROM DISCONTINUED
OPERATIONS, net of tax
|
(5,808 | ) | (5,808 | ) | - | - | - | |||||||||||||
|
Net
(Loss)
Income
|
$ | (296,639 | ) | $ | (223,588 | ) | $ | 6,433 | $ | (11,846 | ) | $ | (67,638 | ) | ||||||
-MORE-
PAGE
11 -- RADIO ONE, INC. REPORTS THIRD QUARTER RESULTS
|
Nine
Months Ended September 30,
2007
|
||||||||||||||||||||
|
(in
thousands, unaudited, as
adjusted)
|
||||||||||||||||||||
|
|
|
Reach
|
Internet/
|
Corporate/
|
||||||||||||||||
|
Consolidated
|
Radio
One
|
Media
|
Publishing
|
Eliminations/Other
|
||||||||||||||||
|
STATEMENT
OF
OPERATIONS:
|
||||||||||||||||||||
|
NET
REVENUE
|
$ | 244,874 | $ | 205,032 | $ | 38,885 | $ | 2,769 | $ | (1,812 | ) | |||||||||
|
OPERATING
EXPENSES:
|
||||||||||||||||||||
|
Programming
and
technical
|
54,461 | 39,609 | 14,926 | 2,632 | (2,706 | ) | ||||||||||||||
|
Selling,
general and
administrative
|
75,094 | 65,796 | 7,319 | 2,374 | (395 | ) | ||||||||||||||
|
Corporate
selling, general and
administrative
|
20,293 | - | 5,870 | - | 14,423 | |||||||||||||||
|
Stock-based
compensation
|
2,505 | 1,488 | 1 | 69 | 947 | |||||||||||||||
|
Depreciation
and
amortization
|
11,047 | 6,749 | 3,399 | 53 | 846 | |||||||||||||||
|
Impairment
of long-lived
assets
|
5,506 | 5,506 | - | - | - | |||||||||||||||
|
Total
operating
expenses
|
168,906 | 119,148 | 31,515 | 5,128 | 13,115 | |||||||||||||||
|
Operating
income (loss)
|
75,968 | 85,884 | 7,370 | (2,359 | ) | (14,927 | ) | |||||||||||||
|
INTEREST
INCOME
|
(853 | ) | - | (18 | ) | - | (835 | ) | ||||||||||||
|
INTEREST
EXPENSE
|
55,047 | 601 | - | - | 54,446 | |||||||||||||||
|
EQUITY
IN LOSS OF AFFILIATED
COMPANY3
|
10,209 | 533 | 538 | - | 9,138 | |||||||||||||||
|
OTHER
EXPENSE,
net
|
23 | 8 | - | 13 | 2 | |||||||||||||||
|
Income
(loss) before provision for
income taxes, minority interest in income of subsidiaries and discontinued
operations
|
11,542 | 84,742 | 6,850 | (2,372 | ) | (77,678 | ) | |||||||||||||
|
PROVISION
FOR INCOME
TAXES
|
6,164 | 3,640 | 2,524 | - | - | |||||||||||||||
|
MINORITY
INTEREST IN INCOME OF
SUBSIDIARIES
|
3,099 | 3,067 | - | - | 32 | |||||||||||||||
|
Net
Income (Loss) from continuing
operations
|
2,279 | 78,035 | 4,326 | (2,372 | ) | (77,710 | ) | |||||||||||||
|
LOSS
FROM DISCONTINUED OPERATIONS,
net of tax
|
(5,642 | ) | (5,642 | ) | - | - | - | |||||||||||||
|
Net
(Loss)
Income
|
$ | (3,363 | ) | $ | 72,393 | $ | 4,326 | $ | (2,372 | ) | $ | (77,710 | ) | |||||||
-MORE-
PAGE
12 -- RADIO ONE, INC. REPORTS THIRD QUARTER RESULTS
Radio
One will hold a conference call to discuss its results for the third quarter
of
2008. This conference call is scheduled for Thursday, November 6, 2008 at
10:00AM Eastern Daylight Time. To participate on this call, U.S. callers may
dial toll free 1-800-553-0273; international callers may dial direct (+1)
651-291-0618 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 November 6, 2008 until 11:59PM Eastern Daylight Time
November 7, 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 965195. 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 broadcast
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, gain on retirement of debt,
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 nine months ended September
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 increased the previously
reported equity in loss of affiliated
company for the three month period
ended September 30, 2007 by $110,000 and increased the previously reported
equity in loss of affiliated company for the nine month period
ended
September 30, 2007 by approximately $2.7 million.
4
For the three months ended September
30,
2008 and 2007, Radio One had 94,537,081 and 98,725,387 shares of common stock
outstanding on a weighted average basis, diluted for outstanding stock options,
respectively.
5
For the nine months ended
September 30, 2008 and 2007, Radio One had 97,219,115 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.