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: February 18, 2009
(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
February 18, 2009, Radio One, Inc. issued a press release setting forth the
results for its fourth quarter ended December 31, 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 February 18, 2009: Radio One, Inc. Reports Fourth 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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February
24, 2009
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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
February
18,
2009
Contact: Peter D. Thompson, EVP and CFO
FOR IMMEDIATE
RELEASE
(301) 429-4638
Washington,
DC
RADIO
ONE, INC. REPORTS
FOURTH
QUARTER RESULTS
Washington,
DC: Radio One, Inc.
(NASDAQ: ROIAK and ROIA) today reported its results for the quarter ended
December 31, 2008. Net revenue was approximately $74.3 million, a
decrease of 0.6% from the same period in 2007. Station operating
income1 was
approximately $31.1 million, an increase of 6.6% from the same period in 2007.
The Company recorded a non-cash impairment charge against its FCC licenses,
goodwill and other intangible assets of approximately $85.3 million, which led
to a net operating loss of approximately $64.2 million. Net loss was
approximately $6.3 million or a loss of $0.07 per basic share, a decrease from
the reported net loss of approximately $388.1 million or $3.93 per basic share
for the same period in 2007.
Alfred
C. Liggins, III, Radio One’s CEO and President stated, “The market for radio
advertising continues to deteriorate sharply. While we outperformed our markets
by 540 bps, our core radio revenues were down by 7.1% in the fourth quarter,
despite a strong showing from political advertising. In this difficult
environment, we continued to focus on cost cutting and de-leveraging the balance
sheet. Our fourth quarter core radio EBITDA6 was up
by 1.3%, and our consolidated EBITDA increased by 19.8% to approximately $26.5
million, driven mainly by savings in corporate expenses and reduced losses in
our internet division. We finished the year with total debt of approximately
$675.2 million, down from approximately $815.5 million a year ago. During the
year we re-purchased approximately $196.0 million of our 87/8% notes at
an average discount of 38.4%. This has substantially increased the amount of
capacity that we have under our bank covenants. Business conditions in the first
quarter of 2009 are worse than we previously anticipated, with radio pacings
down approximately 30% year to year. Our focus for 2009 is to improve our market
share, save costs where possible and continue to de-lever the
Company.”
The
Company also announced that effective with today’s call, it was moving to an
annual conference call schedule as opposed to a quarterly conference call
schedule.
-MORE-
PAGE
2 -- RADIO ONE, INC. REPORTS FOURTH QUARTER RESULTS
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RESULTS OF
OPERATIONS
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||||||||||||||||
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Three Months Ended December
31,
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Year Ended December
31,
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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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(audited)
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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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$ | 74,330 | $ | 74,779 | $ | 316,416 | $ | 319,552 | ||||||||
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OPERATING
EXPENSES
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||||||||||||||||
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Programming and
technical
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20,659 | 19,113 | 81,934 | 73,574 | ||||||||||||
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Selling, general and
administrative
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22,547 | 26,478 | 104,524 | 101,522 | ||||||||||||
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Corporate selling, general and
administrative
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4,593 | 7,035 | 35,280 | 27,328 | ||||||||||||
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Stock-based
compensation
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404 | 486 | 1,777 | 2,991 | ||||||||||||
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Depreciation and
amortization
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5,067 | 3,721 | 19,124 | 14,768 | ||||||||||||
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Impairment of long-lived
assets
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85,284 | 205,545 | 423,220 | 211,051 | ||||||||||||
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Total operating
expenses
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138,554 | 262,378 | 665,859 | 431,234 | ||||||||||||
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Operating
Loss
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(64,224 | ) | (187,599 | ) | (349,443 | ) | (111,682 | ) | ||||||||
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INTEREST
INCOME
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(49 | ) | (390 | ) | (491 | ) | (1,242 | ) | ||||||||
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INTEREST
EXPENSE
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13,139 | 17,722 | 59,689 | 72,770 | ||||||||||||
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GAIN ON RETIREMENT OF
DEBT
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(67,323 | ) | - | (74,017 | ) | - | ||||||||||
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EQUITY IN (INCOME) LOSS OF
AFFILIATED COMPANY3
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(267 | ) | 5,628 | 3,652 | 15,837 | |||||||||||
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OTHER EXPENSE,
net
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270 | 325 | 361 | 347 | ||||||||||||
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Loss before (benefit from)
provision for income taxes, minority interest in income of subsidiaries
and discontinued operations
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(9,994 | ) | (210,884 | ) | (338,637 | ) | (199,394 | ) | ||||||||
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(BENEFIT FROM) PROVISION FOR
INCOME TAXES
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(4,207 | ) | 47,919 | (45,200 | ) | 54,083 | ||||||||||
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MINORITY INTEREST IN INCOME OF
SUBSIDIARIES
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856 | 810 | 3,997 | 3,910 | ||||||||||||
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Net Loss from continuing
operations
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(6,643 | ) | (259,613 | ) | (297,434 | ) | (257,387 | ) | ||||||||
| INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax | 339 | (128,525 | ) | (5,510 | ) | (134,114 | ) | |||||||||
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Net
Loss
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$ | (6,304 | ) | $ | (388,138 | ) | $ | (302,944 | ) | $ | (391,501 | ) | ||||
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Weighted average shares
outstanding - basic4
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85,093,359 | 98,710,633 | 94,118,699 | 98,710,633 | ||||||||||||
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Weighted average shares
outstanding - diluted5
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85,093,359 | 98,710,633 | 94,118,699 | 98,710,633 | ||||||||||||
-MORE-
PAGE
3 -- RADIO ONE, INC. REPORTS FOURTH QUARTER RESULTS
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Three Months Ended December
31,
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Year Ended December
31,
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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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(audited)
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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 from
continuing operations per share (basic)
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$ | (0.08 | ) * | $ | (2.63 | ) | $ | (3.16 | ) | $ | (2.61 | ) | ||||
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Loss from
discontinued operations per share (basic)
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$ | 0.00 | * | $ | (1.30 | ) | $ | (0.06 | ) | $ | (1.36 | ) | ||||
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Net loss
per share (basic)
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$ | (0.07 | ) * | $ | (3.93 | ) | $ | (3.22 | ) | $ | (3.97 | ) | ||||
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Loss from
continuing operations per share (diluted)
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$ | (0.08 | ) * | $ | (2.63 | ) | $ | (3.16 | ) | $ | (2.61 | ) | ||||
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Loss from
discontinued operations per
share (diluted)
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$ | 0.00 | * | $ | (1.30 | ) | $ | (0.06 | ) | $ | (1.36 | ) | ||||
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Net loss
per share (diluted)
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$ | (0.07 | ) * | $ | (3.93 | ) | $ | (3.22 | ) | $ | (3.97 | ) | ||||
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SELECTED OTHER
DATA
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||||||||||||||||
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Station
operating income 1
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$ | 31,124 | $ | 29,188 | $ | 129,958 | $ | 144,456 | ||||||||
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Station
operating income margin (% of net revenue)
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41.9 | % | 39.0 | % | 41.1 | % | 45.2 | % | ||||||||
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Station operating income
reconciliation:
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||||||||||||||||
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Net
loss
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$ | (6,304 | ) | $ | (388,138 | ) | $ | (302,944 | ) | $ | (391,501 | ) | ||||
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Plus:
Depreciation and amortization
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5,067 | 3,721 | 19,124 | 14,768 | ||||||||||||
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Plus: Corporate
selling, general and administrative expenses
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4,593 | 7,035 | 35,280 | 27,328 | ||||||||||||
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Plus:
Stock-based compensation
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404 | 486 | 1,777 | 2,991 | ||||||||||||
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Plus: Equity in
(income) loss of affiliated company3
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(267 | ) | 5,628 | 3,652 | 15,837 | |||||||||||
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Plus: (Benefit
from) provision for income taxes
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(4,207 | ) | 47,919 | (45,200 | ) | 54,083 | ||||||||||
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Plus: Minority
interest in income of subsidiaries
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856 | 810 | 3,997 | 3,910 | ||||||||||||
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Plus: Interest
expense
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13,139 | 17,722 | 59,689 | 72,770 | ||||||||||||
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Plus:
Impairment of long-lived assets
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85,284 | 205,545 | 423,220 | 211,051 | ||||||||||||
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Plus: Other
expense, net
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270 | 325 | 361 | 347 | ||||||||||||
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Less: Gain on
retirement of debt
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(67,323 | ) | - | (74,017 | ) | - | ||||||||||
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Less: (Income)
loss from discontinued operations, net of tax
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(339 | ) | 128,525 | 5,510 | 134,114 | |||||||||||
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Less: Interest
income
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(49 | ) | (390 | ) | (491 | ) | (1,242 | ) | ||||||||
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Station
operating income
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$ | 31,124 | $ | 29,188 | $ | 129,958 | $ | 144,456 | ||||||||
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Adjusted EBITDA6
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$ | 26,531 | $ | 22,153 | $ | 94,678 | $ | 117,128 | ||||||||
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Adjusted EBITDA
reconciliation:
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||||||||||||||||
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Net
loss
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$ | (6,304 | ) | $ | (388,138 | ) | $ | (302,944 | ) | $ | (391,501 | ) | ||||
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Plus:
Depreciation and amortization
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5,067 | 3,721 | 19,124 | 14,768 | ||||||||||||
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Plus: (Benefit
from) provision for income taxes
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(4,207 | ) | 47,919 | (45,200 | ) | 54,083 | ||||||||||
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Plus: Interest
expense
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13,139 | 17,722 | 59,689 | 72,770 | ||||||||||||
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Less: Interest
income
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(49 | ) | (390 | ) | (491 | ) | (1,242 | ) | ||||||||
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EBITDA
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$ | 7,646 | $ | (319,166 | ) | $ | (269,822 | ) | $ | (251,122 | ) | |||||
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Plus: Equity in
(income) loss of affiliated company3
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(267 | ) | 5,628 | 3,652 | 15,837 | |||||||||||
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Plus: Minority
interest in income of subsidiaries
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856 | 810 | 3,997 | 3,910 | ||||||||||||
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Plus:
Impairment of long-lived assets
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85,284 | 205,545 | 423,220 | 211,051 | ||||||||||||
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Plus:
Stock-based compensation
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404 | 486 | 1,777 | 2,991 | ||||||||||||
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Plus: Other
expense, net
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270 | 325 | 361 | 347 | ||||||||||||
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Less: Gain on
retirement of debt
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(67,323 | ) | - | (74,017 | ) | - | ||||||||||
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Less: (Income)
loss from discontinued operations, net of tax
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(339 | ) | 128,525 | 5,510 | 134,114 | |||||||||||
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Adjusted
EBITDA
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$ | 26,531 | $ | 22,153 | $ | 94,678 | $ | 117,128 | ||||||||
| * Per share amounts may not add due to rounding | ||||||||||||||||
-MORE-
PAGE
4 -- RADIO ONE, INC. REPORTS FOURTH QUARTER RESULTS
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December 31,
2008
|
December 31,
2007
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(audited)
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||||||||
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(as adjusted)2
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SELECTED BALANCE SHEET
DATA:
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(in
thousands)
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|||||||
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Cash and cash
equivalents
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$ | 22,289 | $ | 24,247 | ||||
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Intangible assets,
net
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944,969 | 1,310,321 | ||||||
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Total
assets
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1,126,005 | 1,648,353 | ||||||
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Total debt (including current
portion)
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675,152 | 815,504 | ||||||
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Total
liabilities
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810,529 | 1,030,736 | ||||||
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Total stockholders'
equity
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313,495 | 628,717 | ||||||
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Minority interest in
subsidiaries
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1,981 | 3,889 | ||||||
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Current Amount
Outstanding
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Applicable Interest
Rate
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(in
thousands)
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||||||||
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SELECTED LEVERAGE AND SWAP
DATA:
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||||||||
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Senior bank term debt (swap
matures 6/16/2010) (a)
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$ | 25,000 | 6.27 | % | ||||
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Senior bank term debt (swap
matures 6/16/2012) (a)
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25,000 | 6.47 | % | |||||
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Senior bank term debt (at variable
rates) (b)
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114,701 | 4.13 | % | |||||
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Senior bank revolving debt (at
variable rates) (b)
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206,500 | 5.03 | % | |||||
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8-7/8% senior subordinated notes (fixed
rate)
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103,951 | 8.88 | % | |||||
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6-3/8% senior subordinated notes (fixed
rate)
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200,000 | 6.38 | % | |||||
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Capital lease
obligation
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214 | 6.24 | % | |||||
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(a)
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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.
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(b)
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Subject
to rolling three month and six month LIBOR plus a spread currently at
2.25% and, Prime rate plus a spread currently at 1.25% incorporated into
the applicable interest rate set forth above. This tranche is not
covered by swap agreements described in footnote
(a).
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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 FOURTH QUARTER RESULTS
Net
revenue decreased to approximately $74.3 million for the quarter ended December
31, 2008, from approximately $74.8 million for the same period in 2007, a
decrease of 0.6%. In April 2008, we acquired Community Connect Inc. (“CCI”), an
online social networking company, which resulted in the consolidation of
approximately $3.9 million in net revenue from CCI’s operations during the
quarter. However, declines in our radio revenues more than offset the additional
revenue from CCI. While the radio markets in which we operate declined 14.2%, we
experienced an 8.8% decline in our stations with a drop in local revenue driving
most of the decline. Our Atlanta and Washington, DC markets experienced
considerable net revenue declines, while we experienced more modest declines in
our Cleveland, Dallas, Houston and Raleigh-Durham markets. These declines were
offset in part by net revenue growth in our Indianapolis and Philadelphia radio
markets, as well as increased net revenue from new syndicated programs and
internet revenue from radio station websites, additional revenue from new
websites recently launched by our internet segment, and increased revenue from
Giant Magazine. Reach Media experienced a decline in revenue due to less revenue
from the internet and radio syndication, and due to the absence of TV licensing
revenue, which ended in 2007. Net revenue is reported net of agency and outside
sales representative commissions of approximately $8.0 million and $8.9 million
for the quarters ended December 31, 2008 and 2007, respectively. Excluding the
approximately $3.9 million in net revenue generated by CCI, net revenue declined
5.8% for the quarter ended December 31, 2008, compared to the same period in
2007.
Operating
expenses, excluding depreciation and amortization, stock-based compensation and
impairment of long-lived assets decreased to approximately $47.8 million from
approximately $52.6 million for the quarters ended December 31, 2008 and 2007,
respectively, a decrease of 9.2%. Approximately $3.6 million of operating
expenses resulted from consolidating the operating results of CCI.
More than offsetting the additional operating expenses from CCI was savings from
our various cost cutting initiatives, primarily a significant reduction in
employee bonuses, reduced compensation from our August 2008 radio workforce
reduction, and 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. Partially offsetting these spending declines were increases
in expenses for research associated with Arbitron’s new portable people meter
methodology (“PPM”), higher on-air talent expenses, mainly for new syndicated
shows, and additional bad debts expense due to general economic conditions.
Excluding CCI’s spending of approximately $3.6 million, operating expenses
declined 15.9% for the three months ended December 31, 2008, compared to the
same period in 2007.
Stock-based
compensation decreased to $404,000 from $486,000 for the quarters ended December
31, 2008 and 2007, respectively, a decline of 16.9%. 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 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 $5.1 million compared to
approximately $3.7 million for the quarters ended December 31, 2008 and 2007,
respectively, an increase of 36.2%. The consolidation of CCI’s operating results
accounted for $709,000 of the increase, including $480,000 in amortization
expense associated with certain assets acquired as part of that acquisition,
mainly brand assets, advertiser relationships and a favorable office lease.
Increased depreciation and amortization also resulted from expense associated
with the acquisition of the assets of WPRS-FM (formerly WXGG-FM) in June 2008.
Additional depreciation and amortization for capital expenditures made
subsequent to December 31, 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 FOURTH QUARTER RESULTS
Impairment
of long-lived assets was approximately $85.3 million for the quarter ended
December 31, 2008, compared to approximately $205.5 million for the same period
in 2007. The amount relates to non-cash impairment charges recorded to reduce
the carrying value of radio broadcasting licenses, goodwill and other intangible
assets to their estimated fair values. The impairments occurred in 11 of our 16
markets, namely in Charlotte, Cincinnati, Cleveland, Columbus, Dallas, Detroit,
Houston, Indianapolis, Raleigh-Durham, Richmond and St. Louis. The impairments
are driven in large part by slower revenue growth at the industry and market
levels and resulting deteriorating cash flows, 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 as well.
Interest
expense decreased to approximately $13.1 million for the quarter ended December
31, 2008, from approximately $17.7 million for the same period in 2007, a
decline of 25.9%. 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 $67.3 million for the quarter ended
December 31, 2008, compared to no activity for the same period in 2007. The gain
on retirement of debt was due to the redemption of $145.0 million of the
Company’s 87/8% senior
subordinated notes due July 2011 during the quarter, at an average discount of
47.0%. An amount of $104.0 million remained outstanding as of December 31,
2008.
Equity
in income of affiliated company was $267,000 for the quarter ended December 31,
2008, compared to an equity in loss of affiliated company of approximately $5.6
million for the same period in 2007. The amounts are attributable to our share
of income or losses generated by
TV One, LLC (“TV One”) for the quarters ended December 31, 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 December 31, 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 quarter and year ended December 31, 2007 by approximately $1.7 million and $4.4 million,
respectively.
Benefit
from income taxes was approximately $4.2 million for the quarter ended December
31, 2008, compared to a tax provision of approximately $47.9 million for the
quarter ended December 31, 2007. The decrease in the benefit for income taxes is
primarily due to the tax effect of the sizeable decrease in pre-tax losses, the
amortization of indefinite-lived assets that are deducted for tax purposes, but
not deducted for book purposes, and the generation of deferred tax assets
(“DTAs”), mainly federal and state net operating loss (“NOLs”) carryforwards.
Similar to 2007, except for DTAs in historically profitable filing
jurisdictions, and DTAs associated with definite-lived assets, the Company
recorded a full valuation allowance for additional generated 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 recording
a full valuation against DTAs created by the indefinite-lived asset impairment
charges recorded in the current quarter. The current quarter tax benefit and
offsetting valuation allowance resulted in an effective tax rate for the
quarter ended December 31, 2008 of 42.1%, and an estimated annual effective tax
rate of 13.4%.
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PAGE
7 -- RADIO ONE, INC. REPORTS FOURTH QUARTER RESULTS
Income
from discontinued operations, net of tax, was $339,000 for the quarter ended
December 31, 2008, compared to a loss of approximately $128.5 million for the
same period in 2007. Included in the income or loss from discontinued operations, net
of tax, are the results of operations
and gains or losses on the
sales of certain stations,
namely one of our
Louisville stations, our Los Angeles and Miami stations and all of our Augusta stations. The loss from discontinued
operations, net of tax, for the quarter ended December 31, 2007 was driven
primarily by an impairment charge recorded for our Los Angeles station. Due to the effect of the
valuation allowance recorded for DTAs as part of the tax provision,
the income or loss from discontinued operations, net
of tax, includes a tax benefit of $364,000 for the three months ended December 31, 2008, compared to a tax benefit of approximately $72.5 million for the same period
in
2007.
Other pertinent financial
information includes capital expenditures of approximately $1.1 million and $4.6
million for the quarters ended December 31, 2008 and 2007, respectively. In
addition, as of December 31, 2008, Radio One had total debt (net of cash
balances) of approximately $652.9 million.
Throughout
the quarter ended December 31, 2008, the Company redeemed $145.0 million of its
outstanding 87/8% senior
subordinated notes due July 2011 at an average discount of 47.0%. For the
quarter ended December 31, 2008, the redemption resulted in an approximately
$67.3 million gain on the retirement of debt, and an amount of $104.0 million
remained outstanding as of December 31, 2008. For the year ended December 31,
2008, the Company redeemed $196.0 million of the 87/8% senior subordinated notes at an
average discount of 38.4%. For the year ended December 31, 2008, the redemption resulted in an
approximately $74.0 million gain on the retirement of debt.
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 quarter ended December 31, 2008, the Company repurchased
11.3 million shares of Class D common stock for approximately $2.9 million
at an average price of
$0.26. For the year ended December 31,
2008, a total of 20.5 million shares were repurchased for approximately $12.1
million, at an average price of $0.59. As of December 31, 2008, the Company had $59.9 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 months and year ended December 31, 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 quarter and year ended
December 31, 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 quarter and year ended December 31, 2007 by approximately $1.7 million and $4.4 million,
respectively.
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PAGE
8 -- RADIO ONE, INC. REPORTS FOURTH QUARTER RESULTS
|
Three Months Ended December 31,
2008
|
||||||||||||||||||||
|
(in thousands,
unaudited)
|
||||||||||||||||||||
|
|
|
Reach
|
Internet/
|
Corporate/
|
||||||||||||||||
|
Consolidated
|
Radio
One
|
Media
|
Publishing
|
Eliminations/Other
|
||||||||||||||||
|
STATEMENT OF
OPERATIONS:
|
||||||||||||||||||||
|
NET REVENUE
|
$ | 74,330 | $ | 60,202 | $ | 10,171 | $ | 4,685 | $ | (728 | ) | |||||||||
|
OPERATING
EXPENSES:
|
||||||||||||||||||||
|
Programming and
technical
|
20,659 | 14,234 | 4,836 | 2,540 | (951 | ) | ||||||||||||||
|
Selling, general and
administrative
|
22,547 | 18,688 | 1,238 | 3,204 | (583 | ) | ||||||||||||||
|
Corporate selling, general and
administrative
|
4,593 | - | 1,402 | - | 3,191 | |||||||||||||||
|
Stock-based
compensation
|
404 | 121 | - | (64 | ) | 347 | ||||||||||||||
|
Depreciation and
amortization
|
5,067 | 2,465 | 1,000 | 1,300 | 302 | |||||||||||||||
|
Impairment of long-lived
assets
|
85,284 | 85,284 | - | - | - | |||||||||||||||
|
Total operating
expenses
|
138,554 | 120,792 | 8,476 | 6,980 | 2,306 | |||||||||||||||
|
Operating
(loss) income
|
(64,224 | ) | (60,590 | ) | 1,695 | (2,295 | ) | (3,034 | ) | |||||||||||
|
INTEREST
INCOME
|
(49 | ) | - | (11 | ) | (2 | ) | (36 | ) | |||||||||||
|
INTEREST
EXPENSE
|
13,139 | - | 1 | 7 | 13,131 | |||||||||||||||
|
GAIN ON RETIREMENT OF
DEBT
|
(67,323 | ) | - | - | - | (67,323 | ) | |||||||||||||
|
EQUITY IN GAIN OF AFFILIATED
COMPANY
|
(267 | ) | - | - | - | (267 | ) | |||||||||||||
|
OTHER EXPENSE,
net
|
270 | - | 7 | - | 263 | |||||||||||||||
|
(Loss) Income before (benefit
from) provision for income taxes, minority interest in income of
subsidiaries and discontinued operations
|
(9,994 | ) | (60,590 | ) | 1,698 | (2,300 | ) | 51,198 | ||||||||||||
|
(BENEFIT FROM) PROVISION FOR
INCOME TAXES
|
(4,207 | ) | (6,563 | ) | 2,356 | - | - | |||||||||||||
|
MINORITY INTEREST IN INCOME OF
SUBSIDIARIES
|
856 | - | - | - | 856 | |||||||||||||||
|
Net (Loss) Income from continuing
operations
|
(6,643 | ) | (54,027 | ) | (658 | ) | (2,300 | ) | 50,342 | |||||||||||
|
INCOME FROM DISCONTINUED
OPERATIONS, net of tax
|
339 | 339 | - | - | - | |||||||||||||||
|
Net (Loss)
Income
|
$ | (6,304 | ) | $ | (53,688 | ) | $ | (658 | ) | $ | (2,300 | ) | $ | 50,342 | ||||||
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PAGE
9 -- RADIO ONE, INC. REPORTS FOURTH QUARTER RESULTS
|
Three Months Ended December 31,
2007
|
||||||||||||||||||||
|
(in thousands, unaudited, as
adjusted)
|
||||||||||||||||||||
|
|
|
Reach
|
Internet/
|
Corporate/
|
||||||||||||||||
|
Consolidated
|
Radio
One
|
Media
|
Publishing
|
Eliminations/Other
|
||||||||||||||||
|
STATEMENT OF
OPERATIONS:
|
||||||||||||||||||||
|
NET REVENUE
|
$ | 74,779 | $ | 64,794 | $ | 10,936 | $ | 385 | $ | (1,336 | ) | |||||||||
|
OPERATING
EXPENSES:
|
||||||||||||||||||||
|
Programming and
technical
|
19,113 | 13,857 | 4,984 | 1,207 | (935 | ) | ||||||||||||||
|
Selling, general and
administrative
|
26,478 | 24,014 | 1,244 | 2,034 | (814 | ) | ||||||||||||||
|
Corporate selling, general and
administrative
|
7,035 | - | 1,715 | - | 5,320 | |||||||||||||||
|
Stock-based
compensation
|
486 | 331 | - | 33 | 122 | |||||||||||||||
|
Depreciation and
amortization
|
3,721 | 2,257 | 1,147 | 34 | 283 | |||||||||||||||
|
Impairment of long-lived
assets
|
205,545 | 205,545 | - | - | - | |||||||||||||||
|
Total operating
expenses
|
262,378 | 246,004 | 9,090 | 3,308 | 3,976 | |||||||||||||||
|
Operating
(loss) income
|
(187,599 | ) | (181,210 | ) | 1,846 | (2,923 | ) | (5,312 | ) | |||||||||||
|
INTEREST
INCOME
|
(390 | ) | - | (81 | ) | - | (309 | ) | ||||||||||||
|
INTEREST
EXPENSE
|
17,722 | 600 | 5 | - | 17,117 | |||||||||||||||
|
EQUITY IN LOSS OF AFFILIATED
COMPANY3
|
5,628 | 136 | 137 | - | 5,355 | |||||||||||||||
|
OTHER EXPENSE,
net
|
325 | - | 43 | 43 | 239 | |||||||||||||||
|
(Loss) Income before provision for
income taxes, minority interest in income of subsidiaries and discontinued
operations
|
(210,884 | ) | (181,946 | ) | 1,742 | (2,966 | ) | (27,714 | ) | |||||||||||
|
PROVISION FOR INCOME
TAXES
|
47,919 | 47,882 | 37 | - | - | |||||||||||||||
|
MINORITY INTEREST IN INCOME OF
SUBSIDIARIES
|
810 | - | - | - | 810 | |||||||||||||||
|
Net (Loss) Income from continuing
operations
|
(259,613 | ) | (229,828 | ) | 1,705 | (2,966 | ) | (28,524 | ) | |||||||||||
|
LOSS FROM DISCONTINUED OPERATIONS,
net of tax
|
(128,525 | ) | (128,525 | ) | - | - | - | |||||||||||||
|
Net (Loss)
Income
|
$ | (388,138 | ) | $ | (358,353 | ) | $ | 1,705 | $ | (2,966 | ) | $ | (28,524 | ) | ||||||
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PAGE
10 -- RADIO ONE, INC. REPORTS FOURTH QUARTER RESULTS
|
Year Ended December 31,
2008
|
||||||||||||||||||||
|
(in thousands,
unaudited)
|
||||||||||||||||||||
|
|
|
Reach
|
Internet/
|
Corporate/
|
||||||||||||||||
|
Consolidated
|
Radio
One
|
Media
|
Publishing
|
Eliminations/Other
|
||||||||||||||||
|
STATEMENT OF
OPERATIONS:
|
||||||||||||||||||||
|
NET REVENUE
|
$ | 316,416 | $ | 258,011 | $ | 46,965 | $ | 15,298 | $ | (3,858 | ) | |||||||||
|
OPERATING
EXPENSES:
|
||||||||||||||||||||
|
Programming and
technical
|
81,934 | 56,368 | 19,398 | 9,957 | (3,789 | ) | ||||||||||||||
|
Selling, general and
administrative
|
104,524 | 84,666 | 7,588 | 15,099 | (2,829 | ) | ||||||||||||||
|
Corporate selling, general and
administrative
|
35,280 | - | 7,050 | - | 28,230 | |||||||||||||||
|
Stock-based
compensation
|
1,777 | 636 | - | 64 | 1,077 | |||||||||||||||
|
Depreciation and
amortization
|
19,124 | 9,484 | 3,999 | 4,261 | 1,380 | |||||||||||||||
|
Impairment of long-lived
assets
|
423,220 | 423,220 | - | - | - | |||||||||||||||
|
Total operating
expenses
|
665,859 | 574,374 | 38,035 | 29,381 | 24,069 | |||||||||||||||
|
Operating
(loss) income
|
(349,443 | ) | (316,363 | ) | 8,930 | (14,083 | ) | (27,927 | ) | |||||||||||
|
INTEREST
INCOME
|
(491 | ) | - | (95 | ) | (4 | ) | (392 | ) | |||||||||||
|
INTEREST
EXPENSE
|
59,689 | 711 | 2 | 24 | 58,952 | |||||||||||||||
|
GAIN ON RETIREMENT OF
DEBT
|
(74,017 | ) | - | - | - | (74,017 | ) | |||||||||||||
|
EQUITY IN LOSS OF AFFILIATED
COMPANY
|
3,652 | - | - | - | 3,652 | |||||||||||||||
|
OTHER EXPENSE,
net
|
361 | 48 | 7 | 46 | 260 | |||||||||||||||
|
(Loss) Income before (benefit
from) provision for income taxes, minority interest in income of
subsidiaries and discontinued operations
|
(338,637 | ) | (317,122 | ) | 9,016 | (14,149 | ) | (16,382 | ) | |||||||||||
|
(BENEFIT FROM) PROVISION FOR
INCOME TAXES
|
(45,200 | ) | (48,440 | ) | 3,240 | - | - | |||||||||||||
|
MINORITY INTEREST IN INCOME OF
SUBSIDIARIES
|
3,997 | - | - | - | 3,997 | |||||||||||||||
|
Net (Loss) Income from continuing
operations
|
(297,434 | ) | (268,682 | ) | 5,776 | (14,149 | ) | (20,379 | ) | |||||||||||
|
LOSS FROM DISCONTINUED OPERATIONS,
net of tax
|
(5,510 | ) | (5,510 | ) | - | - | - | |||||||||||||
|
Net (Loss)
Income
|
$ | (302,944 | ) | $ | (274,192 | ) | $ | 5,776 | $ | (14,149 | ) | $ | (20,379 | ) | ||||||
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PAGE
11 -- RADIO ONE, INC. REPORTS FOURTH QUARTER RESULTS
|
Year Ended December 31,
2007
|
||||||||||||||||||||
|
(in thousands, unaudited, as
adjusted)
|
||||||||||||||||||||
|
|
|
Reach
|
Internet/
|
Corporate/
|
||||||||||||||||
|
Consolidated
|
Radio
One
|
Media
|
Publishing
|
Eliminations/Other
|
||||||||||||||||
|
STATEMENT OF
OPERATIONS:
|
||||||||||||||||||||
|
NET REVENUE
|
$ | 319,552 | $ | 269,825 | $ | 49,822 | $ | 3,153 | $ | (3,248 | ) | |||||||||
|
OPERATING
EXPENSES:
|
||||||||||||||||||||
|
Programming and
technical
|
73,574 | 53,466 | 19,909 | 3,839 | (3,640 | ) | ||||||||||||||
|
Selling, general and
administrative
|
101,522 | 89,811 | 8,564 | 4,409 | (1,262 | ) | ||||||||||||||
|
Corporate selling, general and
administrative
|
27,328 | - | 7,585 | - | 19,743 | |||||||||||||||
|
Stock-based
compensation
|
2,991 | 1,820 | - | 103 | 1,068 | |||||||||||||||
|
Depreciation and
amortization
|
14,768 | 9,006 | 4,545 | 87 | 1,130 | |||||||||||||||
|
Impairment of long-lived
assets
|
211,051 | 211,051 | - | - | - | |||||||||||||||
|
Total operating
expenses
|
431,234 | 365,154 | 40,603 | 8,438 | 17,039 | |||||||||||||||
|
Operating
(loss) income
|
(111,682 | ) | (95,329 | ) | 9,219 | (5,285 | ) | (20,287 | ) | |||||||||||
|
INTEREST
INCOME
|
(1,242 | ) | - | (99 | ) | - | (1,143 | ) | ||||||||||||
|
INTEREST
EXPENSE
|
72,770 | 1,201 | 5 | - | 71,564 | |||||||||||||||
|
EQUITY IN LOSS OF AFFILIATED
COMPANY3
|
15,837 | 669 | 674 | - | 14,494 | |||||||||||||||
|
OTHER EXPENSE,
net
|
347 | 8 | 43 | 56 | 240 | |||||||||||||||
|
(Loss) Income before provision for
income taxes, minority interest in income of subsidiaries and discontinued
operations
|
(199,394 | ) | (97,207 | ) | 8,596 | (5,341 | ) | (105,442 | ) | |||||||||||
|
PROVISION FOR INCOME
TAXES
|
54,083 | 51,523 | 2,560 | - | - | |||||||||||||||
|
MINORITY INTEREST IN INCOME OF
SUBSIDIARIES
|
3,910 | - | - | - | 3,910 | |||||||||||||||
|
Net (Loss) Income from continuing
operations
|
(257,387 | ) | (148,730 | ) | 6,036 | (5,341 | ) | (109,352 | ) | |||||||||||
|
LOSS FROM DISCONTINUED OPERATIONS,
net of tax
|
(134,114 | ) | (134,114 | ) | - | - | - | |||||||||||||
|
Net (Loss)
Income
|
$ | (391,501 | ) | $ | (282,844 | ) | $ | 6,036 | $ | (5,341 | ) | $ | (109,352 | ) | ||||||
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PAGE
12 -- RADIO ONE, INC. REPORTS FOURTH QUARTER RESULTS
Radio
One will hold a conference call to discuss its results for the fourth quarter of
2008. This conference call is scheduled for Thursday, February 19, 2009 at 10:00
a.m Eastern Daylight Time. To participate on this call, U.S. callers may dial
toll free 1-888-428-4480; international callers may dial direct (+1)
612-332-0637 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 February 19, 2009 until 11:59 p.m. Eastern Daylight Time
February 20, 2009. 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 981087. 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 Interactive One (www.interactiveone.com), an online platform serving
the African-American community through social content, news, information, and
entertainment, which operates a number of branded sites, including News One,
UrbanDaily, and HelloBeautiful, 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 before depreciation and
amortization, corporate expenses, stock-based compensation, equity in (income)
loss of affiliated company, benefit from income taxes, minority interest in
income of subsidiaries, interest expense, impairment of long-lived assets, other
expense, gain on retirement of debt, (income)
loss from discontinued operations, net of tax, and interest income.
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 and retirements, overhead, stock-based
compensation, impairment charges, and 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 quarter and year ended December 31, 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 quarter and year ended December 31, 2007 by approximately $1.7 million and $4.4 million,
respectively.
4
For the quarter ended December 31, 2008
and 2007, Radio One had 85,093,359 and 98,710,633 shares of common stock
outstanding on a weighted average basis, diluted for outstanding stock options,
respectively.
5
For the year ended December 31,
2008 and 2007, Radio One had 94,118,699 and 98,710,633 shares of common stock
outstanding on a weighted average basis, diluted for outstanding stock options,
respectively.
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PAGE
13 -- RADIO ONE, INC. REPORTS FOURTH QUARTER RESULTS
6
“Adjusted
EBITDA” consists of net loss plus (1) depreciation, amortization, benefit from
income taxes, interest expense, equity in (income) loss of affiliated
company, 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) interest income and gain on retirement of debt.
Net income before interest income, interest expense, benefit from 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 (income) loss
of our affiliated company, gain on retirements of debt financing, 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.