SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 28, 1997
Commission File No. 333-30795
RADIO ONE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 52-1166660
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5900 PRINCESS GARDEN PARKWAY,
8TH FLOOR
LANHAM, MARYLAND 20706
(Address of principal executive offices)
(301) 306-1111
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at November 5, 1997
----- -------------------------------
Class A Common Stock, $.01 Par Value 138.45
Class B Common Stock, $.01 Par Value 0
RADIO ONE, INC. AND SUBSIDIARY
------------------------------
Form 10-Q
For the Quarter Ended September 28, 1997
TABLE OF CONTENTS
-----------------
Page
----
PART I FINANCIAL INFORMATION
ITEM 1 Consolidated Financial Statements 3
Consolidated Balance Sheets 4
December 31, 1996 and September 28, 1997 (Unaudited)
Consolidated Statements of Operations 5
Three months and nine months ended September 29, 1996 and September 28, 1997
(Unaudited)
Consolidated Statements of Stockholders' Equity 6
Nine months ended September 28, 1997 (Unaudited)
Consolidated Statements of Cash Flows 7
Nine months ended September 29, 1996 and September 28, 1997 (Unaudited)
Notes to Unaudited Consolidated Financial Statements 8
ITEM 2 Management's Discussion and Analysis of Financial 11
Condition and Results of Operations
PART II OTHER INFORMATION
ITEM 1 Legal Proceedings 15
ITEM 2 Changes in Securities 15
ITEM 3 Defaults upon Senior Securities 15
ITEM 4 Submission of Matters to a Vote of Security Holders 15
ITEM 5 Other Information 15
ITEM 6 Exhibits and Reports on Form 8-K 15
SIGNATURES 16
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
(See pages 4-7 -- This page intentionally left blank.)
3
RADIO ONE, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
---------------------------
AS OF DECEMBER 31, 1996, AND SEPTEMBER 28, 1997
-----------------------------------------------
ASSETS
------
December 31, September 28,
1996 1997
---------------- ----------------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 1,708,295 $ 10,432,250
Trade accounts receivable, net of allowance for doubtful
accounts of $765,200 and $1,002,615, respectively 6,419,468 9,274,215
Prepaid expenses and other 117,025 434,669
---------------- ----------------
Total current assets 8,244,788 20,141,134
PROPERTY AND EQUIPMENT, net 3,007,004 4,000,272
INTANGIBLE ASSETS, net 39,358,127 55,973,079
OTHER ASSETS 1,166,861 38,556
---------------- ----------------
Total assets $ 51,776,780 $ 80,153,041
================ ================
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 388,581 $ 1,031,915
Accrued expenses 1,452,444 3,957,567
Current portion of long-term debt 5,633,286 -
---------------- ----------------
Total current liabilities 7,474,311 4,989,482
LONG-TERM DEBT AND DEFERRED INTEREST, net of current
portion 59,305,225 74,108,238
---------------- ----------------
Total liabilities 66,779,536 79,097,720
---------------- ----------------
COMMITMENTS AND CONTINGENCIES
PREFERRED STOCK - 22,066,449
---------------- ----------------
STOCKHOLDERS' DEFICIT:
Preferred stock, $9,490 par value, 100 shares authorized, no shares
issued and outstanding - -
Common stock - Class A, $.01 par value, 1,000 shares authorized,
138.45 shares issued and outstanding 1 1
Common stock - Class B, $.01 par value, 1,000 shares authorized,
no shares issued and outstanding - -
Additional paid-in capital 1,205,189 -
Accumulated deficit (16,207,946) (21,011,129)
---------------- ----------------
Total stockholders' deficit (15,002,756) (21,011,128)
---------------- ----------------
Total liabilities and stockholders' deficit $ 51,776,780 $ 80,153,041
================ ===============
4
RADIO ONE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
Three Months Ended Nine Months Ended
-------------------------------- ----------------------------------
September 29, September 28, September 29, September 28,
1996 1997 1996 1997
--------------- --------------- --------------- ----------------
(Unaudited) (Unaudited)
REVENUES:
Broadcast revenues, including barter
revenues of $293,653, $270,792,
$902,651 and $776,150, respectively $ 6,940,242 $ 10,825,767 $ 19,299,745 $ 25,951,798
Less: Agency commissions 776,087 1,356,571 2,288,972 3,246,600
--------------- --------------- --------------- ---------------
Net broadcast revenues 6,164,155 9,469,196 17,010,773 22,705,198
--------------- --------------- --------------- ---------------
OPERATING EXPENSES:
Program and technical 962,895 1,493,453 2,866,916 4,226,695
Selling, general and administrative 2,255,650 3,554,455 7,156,523 9,412,698
Corporate expenses 358,705 508,437 978,665 1,588,718
Depreciation and amortization 1,061,671 1,666,187 3,286,368 4,032,075
--------------- --------------- --------------- ---------------
Total operating expenses 4,638,921 7,222,532 14,288,472 19,260,186
--------------- --------------- --------------- ---------------
Operating income 1,525,234 2,246,664 2,722,301 3,445,012
INTEREST EXPENSE, including
amortization of deferred financing costs 1,884,409 2,415,697 5,498,281 6,610,653
OTHER (INCOME) EXPENSE, NET 84,775 (170,549) 31,049 (277,934)
--------------- --------------- --------------- ---------------
Income (loss) before provision for
income taxes and extraordinary
item (443,950) 1,516 (2,807,029) (2,887,707)
PROVISION FOR INCOME TAXES - - - -
--------------- --------------- --------------- ---------------
Income (loss) before extraordinary
item (443,950) 1,516 (2,807,029) (2,887,707)
EXTRAORDINARY ITEM:
Loss on early retirement of debt - - - (1,985,229)
--------------- --------------- --------------- ---------------
Net income (loss) $ (443,950) $ 1,516 $ (2,807,029) $ (4,872,936)
=============== =============== =============== ===============
5
RADIO ONE, INC. AND SUBSIDIARY
------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
----------------------------------------------------------
FOR THE NINE MONTHS ENDED SEPTEMBER 28, 1997
--------------------------------------------
Common Common Additional Total
Preferred Stock Stock Paid-In Accumulated Stockholders'
Stock Class A Class B Capital Deficit Deficit
----------- ---------- ----------- ------------ --------------- --------------
BALANCE, as of
December 31, 1996 $ - $ 1 $ - $ 1,205,189 $ (16,207,946) $(15,002,756)
Net loss - - - - (4,872,936) (4,872,936)
Effect of conversion
to C corporation - - - (1,205,189) 1,205,189 -
Preferred stock
dividends - - - - (1,135,436) (1,135,436)
---------- ---------- ---------- ------------ -------------- --------------
BALANCE, as of September
28, 1997
(unaudited) $ - $ 1 $ - $ - $ (21,011,129) $(21,011,128)
========== ========== ========== ============ ============== =============
6
RADIO ONE, INC. AND SUBSIDIARY
------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
Nine Months Ended
------------------------------------
September 29, September 28,
1996 1997
---------------- ----------------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (2,807,029) $ (4,872,936)
Adjustments to reconcile net loss to net cash from
operating activities:
Depreciation and amortization 3,286,368 4,032,075
Amortization of debt financing costs and
unamortized discount 317,635 1,372,256
Loss on extinguishment of debt - 1,985,229
Deferred interest 1,779,956 1,087,148
Effect of change in operating assets and liabilities-
Increase in trade accounts receivable (388,990) (2,854,747)
Increase in prepaid expenses and other (119,175) (317,644)
Decrease in other assets 113,902 128,305
(Decrease) increase in accounts payable (620,865) 643,334
(Decrease) increase in accrued expenses (121,089) 2,505,123
---------------- ----------------
Net cash flows from operating activities 1,440,713 3,708,143
---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (115,022) (1,310,652)
Payments for station purchase - (19,107,084)
---------------- ----------------
Net cash flows from investing activities (115,002) (20,417,736)
---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt (2,103,264) (45,599,162)
Proceeds from new debt - 72,750,000
Deferred debt financing cost - (1,717,290)
---------------- ----------------
Net cash flows from financing activities (2,103,264) 25,433,548
---------------- ----------------
(DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS (777,573) 8,723,955
CASH AND CASH EQUIVALENTS, beginning of year 2,702,868 1,708,295
---------------- ----------------
CASH AND CASH EQUIVALENTS, end of year $ 1,925,295 $ 10,432,250
================ ================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for-
Interest $ 3,605,194 $ 1,479,564
================ ================
Income taxes $ - $ -
================ ===============
7
RADIO ONE, INC. AND SUBSIDIARY
------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SEPTEMBER 28, 1997
------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization and Business
Radio One, Inc. (a Delaware corporation) and its subsidiary, Radio One License,
Inc. (a Delaware corporation) (collectively referred to as the Company) were
organized to acquire, operate and maintain radio broadcasting stations. The
Company owns and operates three radio stations in Washington, D.C.: WOL (AM),
WMMJ-FM and WKYS-FM, four radio stations in Maryland: WWIN (AM), WWIN-FM, WOLB
(AM) and WERQ-FM and one radio station in Pennsylvania: WPHI-FM. Effective
January 1, 1996, Radio One, Inc. converted to an S corporation until May, 1997,
when it converted back to a C corporation.
Basis of Presentation
The accompanying consolidated financial statements include the accounts of Radio
One, Inc. and its wholly owned subsidiary, Radio One License, Inc. All
significant intercompany accounts and transactions have been eliminated in
consolidation. The accompanying consolidated financial statements are presented
on the accrual basis of accounting in accordance with generally accepted
accounting principles. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities as of the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. While actual results could differ from those
estimates, management believes that actual results will not be materially
different from amounts provided in the accompanying consolidated financial
statements.
Interim Financial Statements
The consolidated financial statements for the nine months ended September 29,
1996, and September 28, 1997, are unaudited, but in the opinion of management,
such financial statements have been presented on the same basis as the audited
consolidated financial statements and include all adjustments, consisting only
of normal recurring adjustments necessary for a fair presentation of the
financial position, and results of operations and cash flows for these periods.
As permitted under the applicable rules and regulations of the Securities and
Exchange Commission, these financial statements do not include all disclosures
normally included with audited consolidated financial statements, and,
accordingly, should be read in conjunction with the consolidated financial
statements and notes thereto as of December 31, 1996 and 1995, and for the years
then ended. The results of operations presented in the accompanying financial
statements are not necessarily representative of operations for an entire year.
New Pronouncements
During June 1997, the Financial Accounting Standards Board (FASB) issued SFAS
No. 130, "Reporting Comprehensive Income" and SFAS No. 131 "Disclosures about
Segments of an Enterprise and Related Information". The Company has not analyzed
the impact of these new pronouncements on the financial statements; however,
management does not expect these pronouncements to have a significant impact, if
any, on the financial
8
statements. Once management has analyzed these pronouncements, they will be
implemented, if necessary, within the required timeframe.
2. SENIOR SUBORDINATED NOTES OFFERING:
On May 19, 1997, the Company purchased certain assets of Jarad Broadcasting
Company of Pennsylvania, Inc., owner of radio station WDRE-FM, located in
Jenkintown, Pennsylvania, for approximately $16 million. In connection with the
purchase, the Company entered into a three-year noncompete agreement totaling
$4.0 million with the former owners. Following this acquisition, the Company
converted the call letters of the radio station from WDRE-FM to WPHI-FM.
To finance the WDRE-FM acquisition and to refinance certain other debt, the
Company issued approximately $85.5 million of 12% Senior Subordinated Notes due
2004. The notes were sold at a discount, with the net proceeds to the Company of
approximately $72.8 million. The notes pay cash interest at 7% per annum through
May 15, 2000, and at 12% thereafter. In connection with this debt offering, the
Company retired approximately $45.7 million of debt outstanding with the
proceeds from the offering. The Company also exchanged approximately $20.9
million 15% Senior Cumulative Redeemable Preferred Stock, which must be redeemed
by May 24, 2005, for an equal amount of the Company's then outstanding
subordinated notes. In connection with these refinancings, the Company
recognized an extraordinary loss of approximately $2.0 million during the
quarter ended June 29, 1997. Also in connection with the conversion of the
subordinated debt to preferred stock, the Company was converted back to a C
corporation for federal income tax purposes. In connection with the conversion
to a C corporation, in accordance with SEC Staff Accounting Bulletin 4.B, the
Company transferred the amount of the undistributed losses at the date of
conversion, up to the amount of additional paid-in capital at that date, to
additional paid-in capital. The Company recorded a 100% valuation allowance on
the income tax benefit generated from the losses after the conversion, as the
realization of the net operating loss carryforward it created is not assured.
3. ACQUISITIONS:
On May 19, 1997, the Company acquired the broadcast assets of WDRE-FM in
Jenkintown, Pennsylvania, for approximately $20 million. The Company financed
this purchase with a portion of the proceeds from the issuance of approximately
$85.5 million of 12% Senior Subordinated Notes Due 2004. The Company assumed
operational responsibility of WDRE-FM on February 8, 1997, under a local
marketing agreement with Jarad Broadcasting Company of Pennsylvania, Inc. at
which time the company changed the musical format of WDRE-FM from modern rock to
urban and subsequently changed the call letters of the radio station to WPHI-FM.
A portion of the proceeds from the 12% Senior Subordinated Notes discussed above
was also used to repay all indebtedness under the NationsBank Credit Agreement.
Concurrent with the issuance, the Company converted its subordinated notes,
consisting of approximately $17 million in principal and $3,931,000 in accrued
and unpaid interest, into Senior Cumulative Exchangeable Redeemable Preferred
Stock.
4. LONG-TERM DEBT:
On May 19, 1997, all amounts outstanding under the NationsBank Credit Agreement
were paid in full.
5. SUBSEQUENT EVENTS:
On October 8, 1997, the Company filed with the Securities and Exchange
Commission to exchange its bonds outstanding for Series B 12% Senior
Subordinated Notes due 2004 (the "Exchange Notes"), which have an aggregate
original principal amount equal to the aggregate principal amount of the bonds
exchanged and have the same terms as the exchanged bonds, except that the
Exchange Notes will not be subject to certain restrictions on transfer. Thus,
interest on the Exchange Notes will accrue at a rate of 7% per annum on the
principal amount of the Exchange Notes through and including May 15, 2000, and
at a rate of 12% per annum on the principal amount of the Exchange Notes after
such date. Cash interest will be payable semi-annually on May 15 and November 15
of each year, commencing November 15, 1997. The Exchange Notes are fully and
unconditionally guaranteed to the maximum extent permitted by law, jointly and
9
severally, and on an unsecured senior subordinated basis, by Radio One Licenses,
Inc., a wholly-owned and, as of the date hereof, the sole subsidiary of the
Company.
Companies owned by a majority stockholder of the Company recently entered into
letters of intent with respect to the acquisition of certain radio stations.
These companies may become wholly-owned subsidiaries of the Company or assign
their rights under these letters of intent to the Company. There can be no
assurance that these companies will assign their rights of these letters of
intent to the Company or that these companies will become subsidiaries of the
Company.
10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following information should be read in conjunction with the unaudited
consolidated financial statements and notes thereto included in this Quarterly
Report and the audited financial statements and Management Discussion and
Analysis combined in the Company's Prospectus dated October 10, 1997.
RESULTS OF OPERATIONS
Comparison of periods ended September 28, 1997 to the periods ended
September 29, 1996.
Three months Three months Nine months Nine months
ended ended ended ended
September 29, September 28, September 29, September 28,
1996 1997 1996 1997
--------------- ---------------- ---------------- ---------------
STATEMENT OF OPERATIONS DATA:
Net broadcast revenues $ 6,164,155 $ 9,469,196 $ 17,010,773 $ 22,705,198
--------------- ---------------- ---------------- ---------------
Operating expenses
excluding 3,577,250 5,556,345 11,002,104 15,228,111
depreciation and amortization
Depreciation and amortization 1,061,671 1,666,187 3,286,368 4,032,075
--------------- ---------------- ---------------- ---------------
Broadcast operating income 1,525,234 2,246,664 2,722,301 3,445,012
Interest expense 1,884,409 2,415,697 5,498,281 6,610,653
Other (income) expense, net 84,775 (170,549) 31,049 (277,934)
--------------- ---------------- ---------------- ---------------
Income (loss) before
provision for income taxes (443,950) 1,516 (2,807,029) (2,887,707)
Provision for income taxes - - - -
--------------- ---------------- ---------------- ---------------
Income (loss) before (443,950) 1,516 (2,807,029) (2,887,707)
extraordinary item
Extraordinary item - - (1,985,229)
--------------- ---------------- ---------------- ---------------
Net income (loss) $ (443,950) $ 1,516 $ (2,807,029) $(4,872,936)
OTHER DATA:
Broadcast cash flow (a) $ 2,945,610 $ 4,421,288 $ 6,987,334 $ 9,065,805
Broadcast cash flow margin 47.8% 46.7% 41.1% 40.0%
Operating cash flow (b) $ 2,586,905 $ 3,912,851 $ 6,008,669 $ 7,477,087
Operating cash flow margin 42.0% 41.3% 35.3% 32.9%
Corporate Expenses $ 358,705 $ 508,437 $ 978,665 $ 1,588,718
Net broadcast revenues increased to approximately $9.5 million for the
three months ended September 28, 1997 from approximately $6.2 million for the
three months ended September 29, 1996 or 53.2%. Net broadcast revenues increased
to approximately $22.7 million for the nine months ended September 28, 1997 from
approximately $17.0 million for the nine months ended September 29, 1996 or
33.5%. These increases in net broadcast revenues were primarily the result of
significant broadcast revenue growth in the Company's Washington, DC and
Baltimore, MD markets as the Company benefited from ratings increases at its
larger radio stations as well as market industry growth. Additional revenue
gains were derived from the Company's acquisition of radio station WPHI-FM in
Philadelphia, PA in early-1997.
Operating expenses excluding depreciation and amortization increased to
approximately $5.6 million for the three months ended September 28, 1997 from
approximately $3.6 million for the three months ended September
11
29, 1996 or 55.6%. Operating expenses excluding depreciation and amortization
increased to approximately $15.2 million for the nine months ended September 28,
1997 from approximately $11.0 million for the nine months ended September 29,
1996 or 38.2%. These increases in expenses were due to higher sales, programming
and administrative costs associated with the significant revenue growth and
ratings gains experienced by the Company's radio stations and increased overhead
expenses related to the overall growth experienced by the Company in the last
year. Additionally, disproportionately higher expenses relative to revenues at
the recently acquired Philadelphia radio station caused the operating expenses
of the Company to be higher in 1997 relative to 1996's level.
Broadcast operating income increased to approximately $2.2 million for the
three months ended September 28, 1997 from $1.5 million for the three months
ended September 29, 1996 or 46.7%. Operating income increased to approximately
$3.4 million for the nine months ended September 28, 1997 from approximately
$2.7 million for the nine months ended September 29, 1996 or 25.9%. These
increases are attributable to the increases in broadcast revenues partially
offset by higher operating expenses and higher depreciation and amortization
expenses as well as start-up losses earlier in 1997 related to the Philadelphia
acquisition.
Interest expense increased to approximately $2.4 million for the three
months ended September 28, 1997 from approximately $1.9 million for the three
months ended September 29, 1996 or 26.3%. Interest expense increased to
approximately $6.6 million for the nine months ended September 28, 1997 from
approximately $5.5 million for the nine months ended September 29, 1996 or
20.0%. These increases relate primarily to the May 19, 1997 issuance of the
Company's $85.5 million in 12% Senior Subordinated Notes Due 2004 and the
associated retirement of the Company's $45.6 million bank credit facility at
that time.
Other income increased to $170,549 for the three months ended September 28,
1997 from ($84,775) for the three months ended September 29, 1996. Other income
increased to $277,934 for the nine months ended September 28, 1997 from
($31,049) for the nine months ended September 29, 1996. These increases were
primarily attributable to higher interest income due to higher cash balances
associated with the Company's cash flow growth and capital raised in the
Company's high yield debt offering.
Income before provision for income taxes increased to $1,516 for the three
months ended September 28, 1997 from ($443,950) for the three months ended
September 29, 1996. Loss before provision for income taxes decreased to
approximately ($2.9) million for the nine months ended September 28, 1997 from
approximately ($2.8) million for the nine months ended September 29, 1996 or
3.6%. The increase for the three month period was due to higher operating income
and other income partially offset by higher interest expense associated with the
Company's recent high yield debt offering. The decline for the nine month period
was due to higher operating income and other income more than offset by the
higher interest expense associated with the Company's recent high yield debt
offering.
Net income increased to $1,516 for the three months ended September 28,
1997 from ($443,950) for the three months ended September 29, 1996. Net income
decreased to approximately ($4.9) million for the nine months ended September
28, 1997 from approximately ($2.8) million for the nine months ended September
29, 1996 or 75%. The increase for the three month period was due to higher
operating income and other income partially offset by higher interest expense
associated with the Company's recent high yield debt offering. The decline for
the nine month period was due to an approximately $2.0 million loss on the early
retirement of the indebtedness under the Company's bank credit facility with the
proceeds from the Company's recent high yield debt offering as well as the
conversion of the Company's then outstanding subordinated debt into Senior
Cumulative Redeemable Preferred Stock.
Broadcast cash flow increased to approximately $4.4 million for the three
months ended September 28, 1997 from approximately $2.9 million for the three
months ended September 29, 1996 or 51.7%. Broadcast cash flow increased to
approximately $9.1 million for the nine months ended September 28, 1997 from
approximately $7.0 million for the nine months ended September 29, 1996 or
30.0%. These increases are attributable to the increases in broadcast revenues
partially offset by higher operating expenses as described above.
Operating cash flow increased to approximately $3.9 million for the three
months ended September 28, 1997 from approximately $2.6 million for the three
months ended September 29, 1996 or 50.0%. Operating cash flow increased to
approximately $7.5 million for the nine months ended September 28, 1997 from
approximately
12
$6.0 million for the nine months ended September 29, 1996 or 25.0%. These
increases are attributable to the increases in broadcast revenues partially
offset by higher operating expenses and higher corporate expenses as described
above.
(a) "Broadcast cash flow" is defined as broadcast operating income plus
corporate expenses and depreciation and amortization of both tangible and
intangible assets. The Company has presented broadcast cash flow data,
which the Company believes is comparable to the data provided by other
companies in the industry, because such data are commonly used as a measure
of performance for broadcast companies. However, broadcast cash flow does
not purport to represent cash provided by operating activities as reflected
in the Company's consolidated statements of cash flow, is not a measure of
financial performance under generally accepted accounting principles and
should not be considered in isolation or as a substitute for measure of
performance prepared in accordance with generally accepted accounting
principles. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
(b) "Operating cash flow" is defined as broadcast cash flow less corporate
expenses and is a commonly used measure of performance for broadcast
companies. Operating cash flow does not purport to represent cash provided
by operating activities as reflected in the Company's consolidated
statements of cash flow, is not a measure of financial performance under
generally accepted accounting principles and should not be considered in
isolation or as a substitute for measure of performance prepared in
accordance with generally accepted accounting principles.
LIQUIDITY AND CAPITAL RESOURCES
The capital structure of the Company consists of the Company's outstanding
long-term debt, preferred stock and stockholders' equity. The stockholders'
equity consists of common stock, additional paid-in capital and accumulated
deficit. The Company's balance of cash and cash equivalents was $1.7 million at
December 31, 1996. The Company's balance of cash and cash equivalents was $10.4
million as of September 28, 1997. The Company's primary source of liquidity is
cash provided by operations.
Net cash flow from operating activities increased to approximately $3.7
million for the nine months ended September 28, 1997 from approximately $1.4
million for the nine months ended September 29, 1996 or 164.3%. This increase
was due to a higher net loss more than offset by higher non-cash and
extraordinary charges including an approximately $2.0 million non-cash loss on
the extinguishment of debt related to the refinancing of its bank credit
facility with proceeds from its high yield offering during the second quarter of
1997 as well as the conversion of the Company's then outstanding subordinated
debt into Senior Cumulative Redeemable Preferred Stock. Non cash expenses of
depreciation and amortization increased to approximately $4.0 million for the
nine months ended September 28, 1997 from approximately $3.3 million for the
nine months ended September 29, 1996 or 21.2% due to the acquisition of radio
station WPHI-FM in the second quarter of 1997.
Net cash flow used in investing activities was approximately $20.4 million
for the nine months ended September 28, 1997 compared to $115,002 for the nine
months ended September 29, 1996. During the nine months ended September 28,
1997, the Company acquired radio station WPHI-FM in Philadelphia, PA for $20.1
million and made purchases of capital equipment totaling approximately $1.3
million. During the nine months ended September 29, 1996 the Company made
purchases of capital equipment totaling $115,002.
Net cash flow from financing activities was approximately $25.4 million for
the nine months ended September 28, 1997. During the nine months ended September
28, 1997, the Company completed a high yield debt offering and raised net
proceeds of $72.8 million. The Company used $20.1 million of the proceeds for an
acquisition and $45.7 million of the proceeds to retire the outstanding
indebtedness under the Company's bank credit facility during the nine months
ended September 28, 1997. Net cash flow from financing activities was
approximately ($2.1) million for the nine months ended September 29, 1996 which
was the amount of the debt repayments made by the Company during that period. As
a result of the aforementioned, cash and cash equivalents
13
increased by approximately $8.7 million during the nine months ended September
28, 1997 compared to a $777,573 decrease during the nine months ended September
29, 1996.
14
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
15
SIGNATURES
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.
RADIO ONE, INC.
/s/ SCOTT R. ROYSTER
------------------------------------------------------
November 5, 1997 Scott R. Royster
Executive Vice President and Chief Financial Officer
(Principal Accounting Officer)
5
0001041657
RADIO ONE, INC.
1
US DOLLARS
YEAR 3-MOS 3-MOS 9-MOS 9-MOS
DEC-31-1996 DEC-31-1996 DEC-31-1997 DEC-31-1996 DEC-31-1997
JAN-01-1995 JUL-01-1996 JUL-01-1997 JAN-01-1996 JAN-01-1997
DEC-31-1996 SEP-29-1996 SEP-28-1997 SEP-29-1996 SEP-28-1997
1 1 1 1 1
1,708,295 0 0 0 10,432,250
0 0 0 0 0
7,184,668 0 0 0 10,276,830
(765,200) 0 0 0 (1,002,615)
0 0 0 0 0
8,244,788 0 0 0 20,141,134
5,647,831 0 0 0 7,176,715
(2,640,827) 0 0 0 (3,176,443)
51,776,780 0 0 0 80,153,041
7,474,311 0 0 0 4,989,482
64,936,511 0 0 0 74,108,238
0 0 0 0 0
0 0 0 0 22,066,449
1 0 0 0 1
(15,002,757) 0 0 0 (21,011,129)
51,776,780 0 0 0 80,153,041
0 6,940,242 10,825,767 19,299,745 25,951,798
0 6,940,242 10,825,767 19,299,745 25,951,798
0 (776,087) (1,356,571) (2,288,972) (3,246,600)
0 (776,087) (1,356,571) (2,288,972) (3,246,600)
0 4,638,921 7,222,532 14,288,472 19,260,186
0 270,930 287,362 743,483 811,722
0 1,884,409 2,415,697 5,498,281 6,610,653
0 (443,950) 1,516 (2,807,029) (2,887,707)
0 0 0 0 0
0 (443,950) 1,516 (2,807,029) (2,887,707)
0 0 0 0 0
0 0 0 0 (1,985,229)
0 0 0 0 0
0 (443,950) 1,516 (2,807,029) (4,872,936)
0 0 0 0 0
0 0 0 0 0
