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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 to Form 10-Q on
FORM 10-Q/A
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 29, 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 August 11, 1997
----- ------------------------------
Class A Common Stock, $.01 Par Value 138.45
Class B Common Stock, $.01 Par Value 0
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RADIO ONE, INC. AND SUBSIDIARY
------------------------------
Amendment No. 1 to Form 10-Q on
Form 10-Q/A
For the Quarter Ended June 29, 1997
TABLE OF CONTENTS
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Page
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PART I FINANCIAL INFORMATION
ITEM 1 Consolidated Financial Statements 3
Consolidated Balance Sheets 4
December 31, 1996 and June 29, 1997 (Unaudited)
Consolidated Statements of Operations 5
Three months and six months ended June 30, 1996 and
June 29, 1997(Unaudited)
Consolidated Statements of Stockholders' Equity 6
Six months ended June 29, 1997 (Unaudited)
Consolidated Statements of Cash Flows 7
Six months ended June 30, 1996 and June 29, 1997
(Unaudited)
Notes to Unaudited Consolidated Financial Statements 8
SIGNATURE 10
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 JUNE 29, 1997
December 31, June 29,
1996 1997
(Unaudited)
----------- -----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,708,295 $ 8,782,042
Trade accounts receivable, net of allowance
for doubtful accounts of $765,200 and
$953,042,respectively 6,419,468 7,474,895
Prepaid expenses and other 117,025 331,280
------------- -------------
Total Current Assets 8,244,788 16,588,217
PROPERTY AND EQUIPMENT, net 3,007,004 3,521,700
INTANGIBLE ASSETS, net 39,358,127 57,182,814
OTHER ASSETS 1,166,861 3,556
------------- -------------
Total Assets $ 51,776,780 $ 77,296,287
============= =============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 388,581 $ 955,657
Accrued expenses 1,452,444 2,035,210
Current portion of long-term debt 5,633,286 --
------------- -------------
Total Current Liabilities 7,474,311 2,990,867
LONG-TERM DEBT AND DEFERRED INTEREST,
net of current portion 59,305,225 73,251,615
------------- -------------
Total Liabilities 66,779,536 76,242,482
COMMITMENTS AND CONTINGENCIES -- --
SENIOR CUMULATIVE REDEEMABLE PREFERRED STOCK -- 20,931,013
------------- -------------
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) (19,877,209)
------------- -------------
Total stockholders' deficit (15,002,756) (19,877,208)
------------- -------------
Total Liabilities and Stockholders' Deficit $ 51,776,780 $ 77,296,287
============= =============
4
RADIO ONE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
June 30, June 29, June 30, June 29,
1996 1997 1996 1997
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
---------- ---------- ----------- -------------
REVENUES:
Broadcast revenues, including
barter revenues of $252,182,
$262,721, $602,890 and
$505,358, respectively $ 7,084,742 $ 8,827,680 $12,359,503 $ 15,126,031
Less: Agency commissions 908,083 1,124,225 1,512,885 1,890,029
------------ ------------ ------------ ------------
Net broadcast revenues 6,176,659 7,703,455 10,846,618 13,236,002
------------ ------------ ------------ ------------
OPERATING EXPENSES:
Program and technical 1,052,952 1,537,031 1,904,021 2,733,242
Selling, general and administrative 2,477,422 3,080,216 4,900,873 5,858,243
Corporate expenses 274,003 385,168 619,960 1,080,281
Depreciation and amortization 1,041,437 1,286,610 2,224,697 2,365,888
------------ ------------ ------------ ------------
Total operating expenses 4,845,814 6,289,025 9,649,551 12,037,654
------------ ------------ ------------ ------------
Broadcast operating income 1,330,845 1,414,430 1,197,067 1,198,348
INTEREST EXPENSE,
Including amortization of
deferred financing costs 1,822,038 2,429,628 3,613,872 4,194,956
OTHER (INCOME) EXPENSE,
NET (53,726) (87,021) (53,726) (107,385)
------------ ------------ ------------ ------------
Loss before provision
for income taxes and
extraordinary item (437,467) (928,177) (2,363,079) (2,889,223)
PROVISION FOR INCOME
TAXES -- -- -- --
------------ ------------ ------------ ------------
Loss before extraordinary item (437,467) (928,177) (2,363,079) (2,889,223)
EXTRAORDINARY ITEM:
Loss on early retirement of debt -- 1,985,229 -- 1,985,229
------------ ------------ ------------ ------------
Net loss $ (437,467) $ (2,913,406) $(2,363,079) $ (4,874,452)
============ ============ ============ ============
5
RADIO ONE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE SIX MONTHS ENDED JUNE 29, 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 -- -- -- -- (4,874,452) (4,874,452)
Effect of Conversion to
C Corporation -- -- -- (1,205,189) 1,205,189 --
BALANCE, as of ------------ ------------- ------------- -------------- --------------- ----------------
June 29 1997
(unaudited) $ -- $ 1 $ -- $ -- $ (19,877,209) $ (19,877,208)
============ ============= ============= ============== =============== ================
6
RADIO ONE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30, June 29,
1996 1997
(Unaudited) (Unaudited)
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (2,363,079) $ (4,874,452)
Adjustments to reconcile net loss to net cash from
operating activities:
Depreciation and amortization 2,224,697 2,365,888
Amortization of debt financing costs and
unamortized discount 183,095 485,186
Loss on extinguishment of debt -- 1,985,229
Deferred interest 1,125,751 1,087,148
Effect of change in operating assets and liabilities-
Decrease (increase) in trade accounts receivable 24,993 (1,055,427)
Decrease (increase) in prepaid expenses and other 79,475 (214,255)
(Increase) decrease in other assets (115,617) 163,305
Increase (decrease) in accounts payable (405,972) 567,077
Increase in accrued expenses 347,161 582,766
------------- --------------
Net cash flows from operating activities 1,100,504 1,092,465
------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (107,625) (664,129)
Payments for station purchase -- (19,107,084)
------------- --------------
Net cash flows from investing activities (107,625) (19,771,213)
------------- --------------
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 -- (1,398,343)
------------- --------------
Net cash flows from financing activities (2,103,264) 25,752,495
------------- --------------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (1,110,385) 7,073,747
CASH AND CASH EQUIVALENTS, beginning of year 2,702,868 1,708,295
------------- --------------
CASH AND CASH EQUIVALENTS, end of year $ 1,592,483 $ 8,782,042
============== ==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for-
Interest $ 1,705,877 $ 1,479,564
============== ==============
Income taxes $ -- $ --
============== ==============
7
RADIO ONE, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 29, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
-------------------------------------------
Organization and Business
Radio One, Inc. (a Delaware corporation) and its subsidiary, Radio One
Licenses, LLC (a Delaware limited liability company) (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 Baltimore,
Maryland; WWIN-AM, WWIN-FM, WOLB-AM and WERQ-FM and one radio station in
Philadelphia, 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 Licenses, LLC. 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 six months ended June 30,
1996 and June 29, 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.
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, licensed to
Jenkintown, Pennsylvania, for approximately $16.0 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 radio station 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
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exchanged approximately $20.9 million of 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, at 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
licensed to 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.
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 approximately
$3.9 million 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:
-----------------
Subsequent to the debt offering, the Company intends to exchange such
bonds for its Series B 12% Senior Subordinated Notes due 2004 (the "Exchange
Notes"), which will have an aggregate original principal amount equal to the
aggregate principal amount of such bonds, and will have the same terms as such
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 will be fully and unconditionally guaranteed to the maximum extent
permitted by law, jointly and 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. Separate financial statements of Radio One
Licenses, Inc. are not presented because management has determined that such
financial statements would not be material to investors.
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SIGNATURES
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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 10, 1997 Scott R. Royster
Executive Vice President and Chief Financial Officer
(Principal Accounting Officer)
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