AMENDMENT #1 TO FORM 8-K, DATED SEPTEMBER 11, 1998
SECURITIES AND EXHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
Date of Report (Date of Earliest event reported): June 30, 1998
Radio One, Inc.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 333-30795 52-1166660
(State or other jurisdiction of (Commission File Number) (IRS Employer Identification
incorporation) Number)
</TABLE>
5900 Princess Garden Parkway, 8th Floor, Lanham, Maryland 20706
(address of principal executive offices)
Registrant's telephone number, including area code: (301) 306-1111
NONE
(Former name or former address, if changed since last report)
The Current Report on Form 8-K/A1 amends the Current Report on Form 8-K filed by
Radio One, Inc. on July 13, 1998 solely to add the financial statements of the
business acquired required by Item 7(a) and the pro forma financial information
required by Item 7(b).
<PAGE>
-2-
Item 7. Financial Statements, Pro Forma Financial Information
(a) Financial Statements of Business Acquired.
The required financial statements of the Business acquired are
set forth below
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of Radio One, Inc.:
We have audited the accompanying balance sheets of Bell Broadcasting Company (a
Michigan Corporation) (the Company) as of December 31, 1996 and 1997, and the
related statements of operations, changes in stockholders' equity and cash flows
for the years then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bell Broadcasting Company as of
December 31, 1996 and 1997, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
/S/ARTHUR ANDERSEN LLP
Baltimore, Maryland,
August 28, 1998
<PAGE>
BELL BROADCASTING COMPANY
-------------------------
BALANCE SHEETS
--------------
AS OF DECEMBER 31, 1996 AND 1997
--------------------------------
AND JUNE 30, 1998
-----------------
ASSETS
------
<TABLE>
<CAPTION>
December 31,
-------------------------------------- June 30,
1996 1997 1998
----------------- ------------- ------------
(unaudited)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash $ 288,000 $ 226,000 $ 186,000
Trade accounts receivable, net of allowance for doubtful
accounts of $17,000, $28,000 and $69,000,
respectively 795,000 951,000 918,000
Current portion of notes receivable - 13,000 14,000
Prepaid expenses and other 155,000 34,000 6,000
-------------- -------------- --------------
Total current assets 1,238,000 1,224,000 1,124,000
PROPERTY AND EQUIPMENT, net 904,000 859,000 1,139,000
NOTES RECEIVABLE, net of current portion 300,000 491,000 184,000
OTHER ASSETS 135,000 38,000 20,000
-------------- -------------- --------------
Total assets $ 2,577,000 $ 2,612,000 $ 2,467,000
============== ============== ==============
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 345,000 $ 251,000 $ 92,000
Accrued expenses 157,000 198,000 61,000
Current portion of long-term debt 82,000 149,000 -
-------------- -------------- --------------
Total current liabilities 584,000 598,000 153,000
LONG-TERM DEBT, net of current portion 650,000 592,000 -
-------------- -------------- --------------
Total liabilities 1,234,000 1,190,000 153,000
-------------- -------------- --------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock - Class A, $2.00 par value, 800
shares authorized, issued and outstanding 2,000 2,000 2,000
Common stock - Class B, $2.00 par value, 24,000
shares authorized, 19,671, 20,071 and 20,071 shares
issued and outstanding, respectively 39,000 40,000 40,000
Additional paid-in capital 132,000 198,000 1,308,000
Retained earnings 1,170,000 1,182,000 964,000
-------------- -------------- --------------
Total stockholders' equity 1,343,000 1,422,000 2,314,000
-------------- -------------- --------------
Total liabilities and stockholders' equity $ 2,577,000 $ 2,612,000 $ 2,467,000
============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these balance sheets.
<PAGE>
BELL BROADCASTING COMPANY
-------------------------
STATEMENTS OF OPERATIONS
------------------------
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
----------------------------------------------
AND THE SIX MONTHS ENDED JUNE 30, 1997 AND 1998
-----------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31, Six Months Ended June 30,
-------------------------------- -----------------------------
1996 1997 1997 1998
--------------- --------------- --------------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
REVENUES:
Broadcast revenues, including barter
revenues of $121,000, $151,000,
$14,000 and $73,000, respectively $ 3,917,000 $ 4,571,000 $ 1,916,000 $ 2,326,000
Less: Agency commissions 537,000 537,000 229,000 301,000
-------------- -------------- -------------- --------------
Net broadcast revenues 3,380,000 4,034,000 1,687,000 2,025,000
-------------- -------------- -------------- --------------
OPERATING EXPENSES:
Programming and technical 1,154,000 1,335,000 723,000 675,000
Selling, general and administrative 1,520,000 1,544,000 715,000 748,000
Corporate expenses 849,000 816,000 301,000 663,000
Depreciation and amortization 130,000 148,000 68,000 63,000
-------------- -------------- -------------- --------------
Total operating expenses 3,653,000 3,843,000 1,807,000 2,149,000
-------------- -------------- -------------- --------------
Operating (loss) income (273,000) 191,000 (120,000) (124,000)
-------------- -------------- -------------- --------------
INTEREST EXPENSE 75,000 81,000 38,000 52,000
OTHER (INCOME) EXPENSE, net (5,000) 54,000 59,000 28,000
-------------- -------------- -------------- --------------
(Loss) income before (benefit)
provision for income taxes (343,000) 56,000 (217,000) (204,000)
(BENEFIT) PROVISION FOR INCOME
TAXES (78,000) 44,000 (164,000) 14,000
-------------- -------------- -------------- --------------
Net (loss) income $ (265,000) $ 12,000 $ (53,000) $ (218,000)
============== ============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
BELL BROADCASTING COMPANY
-------------------------
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
---------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
----------------------------------------------
AND THE SIX MONTHS ENDED JUNE 30, 1998
--------------------------------------
<TABLE>
<CAPTION>
Common Stock Common Stock Additional Total
Paid-In Retained Stockholders'
Class A Class B Capital Earnings Equity
------- ------- ------- -------- ------
<S> <C> <C> <C> <C> <C>
BALANCE, January 1, 1996 $ 2,000 $ 39,000 $ 98,000 $ 1,435,000 $ 1,574,000
Net loss - - - (265,000) (265,000)
Stock options granted
below market - - 9,000 - 9,000
Stock bonus
compensation - - 16,000 - 16,000
Issuance of common
stock - - 9,000 - 9,000
-------------- -------------- -------------- ---------------- ---------------
BALANCE, December 31,
1996 2,000 39,000 132,000 1,170,000 1,343,000
Net income - - - 12,000 12,000
Stock options granted
below market - - 17,000 - 17,000
Stock bonus
compensation - 1,000 32,000 - 33,000
Issuance of common
stock - - 17,000 - 17,000
-------------- -------------- -------------- ---------------- --------------
BALANCE, December 31,
1997 2,000 40,000 198,000 1,182,000 1,422,000
Net Loss - - - (218,000) (218,000)
Capital contributed from
former owners - - 672,000 - 672,000
Capital contributed from
owners - - 438,000 - 438,000
-------------- -------------- -------------- ----------------- -------------
BALANCE, June 30,
1998 (Unaudited) $ 2,000 $ 40,000 $ 1,308,000 $ 964,000 $ 2,314,000
============== ============== ============== ================ ==============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
BELL BROADCASTING COMPANY
-------------------------
STATEMENTS OF CASH FLOWS
------------------------
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
----------------------------------------------
AND THE SIX MONTHS ENDED JUNE 30, 1997 AND 1998
-----------------------------------------------
<TABLE>
<CAPTION>
December 31, June 30,
----------------------------------------------------------------
1996 1997 1997 1998
-------------- -------------- -------------- ---------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (265,000) $ 12,000 $ (53,000) $ (218,000)
Adjustments to reconcile net (loss) income
to net cash from operating activities:
Depreciation and amortization 130,000 148,000 68,000 63,000
Compensation expense related to stock
bonus plan and stock granted below
market price 25,000 50,000 - -
Loss on disposal of assets - (8,000) (8,000) -
Effect of change in operating assets and
liabilities-
Trade accounts receivable 190,000 (156,000) (35,000) 33,000
Prepaid expenses and other (101,000) 119,000 19,000 19,000
Other assets (1,000) (17,000) - 18,000
Accounts payable 56,000 (94,000) (108,000) (159,000)
Accrued expenses (125,000) 41,000 (68,000) (137,000)
------------- ------------- ------------- -------------
Net cash flows from operating
activities (91,000) 95,000 (185,000) (381,000)
------------- ------------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of assets - 22,000 22,000 -
Principal payments received on notes - 6,000 - 306,000
Acquisition of property and equipment (140,000) (211,000) (109,000) (403,000)
------------- ------------- ------------- -------------
Net cash flows from investing
activities (140,000) (183,000) (87,000) (97,000)
------------- ------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of debt 739,000 220,000 103,000 438,000
Repayment of debt (642,000) (211,000) - (438,000)
Issuance of common stock 9,000 17,000 - -
Contributed capital - - - 438,000
------------- ------------- ------------- -------------
Net cash flows from financing
activities 106,000 26,000 103,000 438,000
------------- ------------- ------------- -------------
DECREASE IN CASH (125,000) (62,000) (169,000) (40,000)
CASH, beginning of period 413,000 288,000 288,000 226,000
------------- ------------- ------------- -------------
CASH, end of period $ 288,000 $ 226,000 $ 119,000 $ 186,000
============= ============= ============= =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 73,000 $ 81,000 $ 38,000 $ 55,000
============= ============= ============= =============
Income taxes paid $ 117,000 $ - $ - $ 7,000
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
-8-
BELL BROADCASTING COMPANY
-------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 1996 AND 1997
--------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization
- ------------
Bell Broadcasting Company (the Company), a Michigan corporation, is a radio
broadcaster, broadcasting on two stations, WCHB-AM and WDTJ-FM (formerly
WCHB-FM), both located in the Detroit metropolitan area. During 1996, the
Federal Communications Commission (FCC) approved the construction permit to
increase WCHB-AM's signal from 25 kilowatts to 50 kilowatts. In addition, in
September 1997, the Canadian government approved WCHB-AM's proposal for a
nighttime increase to 15 kilowatts, and the FCC granted a construction permit
for the nighttime increase. The Company also owns one station in Kingsley,
Michigan; WJZZ-AM.
The financial statements for the six months ended June 30, 1997 and 1998, are
unaudited, but, in the opinion of management, such financial statements have
been presented on the same basis as the audited financial statements for the
year ended December 31, 1997, 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.
Financial Instruments
- ---------------------
Financial instruments as of December 31, 1996 and 1997, consist of cash, trade
accounts receivables, notes receivables, accounts payable, accrued expenses and
long-term debt, all of which the carrying amounts approximate fair value.
Use of Estimates
- ----------------
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 disclosures of
contingent assets and liabilities as of the date of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
Property and Equipment
- ----------------------
Property and equipment are stated at cost. Depreciation is computed using
accelerated and straight-line methods over the estimated useful lives of the
related assets.
<PAGE>
-9-
The components of the Company's property and equipment as of December 31, 1996
and 1997, are as follows:
<TABLE>
<CAPTION>
Period of
December Depreciation
-------------------------------- ----------------
1996 1997
--------------- --------------
<S> <C> <C>
Construction in progress $ 62,000 $ 122,000 -
Land 604,000 581,000 -
Buildings and improvements 148,000 149,000 10 to 31 years
Transmitter towers 754,000 754,000 7 to 15 years
Equipment 615,000 555,000 5 to 15 years
Leasehold improvements 12,000 12,000 7 to 19 years
-------------- --------------
Total property and equipment 2,195,000 2,173,000
Less: Accumulated depreciation 1,291,000 1,314,000
-------------- --------------
Property and equipment, net $ 904,000 $ 859,000
============== ==============
</TABLE>
Depreciation expense for the fiscal years ended December 31, 1996 and 1997, were
$120,000 and $141,000, respectively.
Other Assets
- ------------
Other assets include FCC broadcast licenses and goodwill arising from the
acquisition of the assets and rights of WKNX-AM. These assets were written off
when the station was sold in 1997. Prior to the sale, such assets were amortized
on a straight-line basis over a 15-year period. Amortization expense for the
years ended December 31, 1996 and 1997, was $10,000 and $7,000, respectively.
Revenue Recognition
- -------------------
In accordance with industry practice, revenue for broadcast advertising is
recognized when the commercial is broadcast.
Barter Arrangements
- -------------------
Certain program contracts provide for the exchange of advertising air time in
lieu of cash payments for the rights to such programming. These contracts are
recorded as the programs are aired at the estimated fair value of the
advertising air time given in exchange for the program rights.
The Company broadcasts certain customers' advertising in exchange for equipment,
merchandise and services. The estimated fair value of the equipment, merchandise
or services received is recorded as deferred barter costs and the corresponding
obligation to broadcast advertising is recorded as deferred barter revenues. The
deferred barter costs are expensed or capitalized as they are used, consumed or
received. Deferred barter revenue is recognized as the related advertising is
aired.
<PAGE>
-10-
Sale of WKNX
- ------------
In June 1997, the Company sold the assets and rights of WKNX-AM for
approximately $210,000 and recognized a loss of approximately $22,000. In
connection with the sale, the Company obtained a note receivable from the
purchasers of the station. The terms of the sale call for a note receivable
bearing interest at 10% per annum, requiring monthly payments of approximately
$3,000 through June 2007. The note is secured by certain real estate and
personal property and the pledge of the stock of Frankenmuth Broadcasting, Inc.
Supplemental Cash Flow Information
- ----------------------------------
The Company issued 400 and 200 shares each of Class B common stock to two former
officers of the Company during 1997 and 1996, respectively, at a price below the
stock's estimated fair market value. Compensation expense of $50,000 and $25,000
was recorded in 1997 and 1996, respectively, in connection with the issuance
(Note 6). In June 1997, the Company sold the assets and rights to WKNX-AM for a
note receivable in the amount of $210,000. (Also see Note 7.)
New Accounting Standards
- ------------------------
During 1997, the Financial Accounting Standards Board (FASB) issued SFAS No.
130, "Reporting Comprehensive Income" (SFAS No. 130), which is effective for
fiscal years beginning after December 15, 1997. This statement establishes
standards for reporting and display of comprehensive income and its components.
The Company believes the adoption of SFAS No. 130 will have no impact on the
financial statements as the Company has no comprehensive income adjustments.
During 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information" (SFAS No. 131), which is effective for
fiscal years beginning after December 15, 1997. This statement establishes a new
approach for determining segments within a company and reporting information on
those segments. The Company has performed a preliminary assessment of this
statement and believes that no disclosure is necessary as the Company has only
one segment.
2. NOTES RECEIVABLE - RELATED PARTY:
---------------------------------
In 1995, the Company loaned the trust of a deceased shareholder $300,000 and
received a note receivable. The note bears interest at the mid-term applicable
federal rate (6.31% and 5.63% as of December 31, 1996 and 1997, respectively),
with principal and interest due December 2000. The principal and all interest
due were paid on June 30, 1998.
<PAGE>
-11-
3. DEBT:
----
Debt consists of the following:
<TABLE>
<CAPTION>
December 31,
---------------------------------
1996 1997
--------------- ---------------
<S> <C> <C>
Note payable to bank, payable in monthly installments of
$12,000, including interest at 9.35% per annum, secured
by land, equipment and the Company's AM broadcast
license. $ 719,000 $ 641,000
Note payable to bank, payable in monthly installments of
$7,000, including interest at 9.35% per annum, secured
by land, equipment and the Company's FM broadcast
license. - 51,000
Note payable to bank, payable in monthly installments of
$1,000, including interest at 8.99% per annum, secured
by vehicles. - 40,000
Note payable in monthly installments of $400, including
interest at 11% per annum, secured by transportation
equipment. 13,000 9,000
-------------- -------------
Total 732,000 741,000
Less: Current portion 82,000 149,000
-------------- -------------
Total long-term debt $ 650,000 $ 592,000
============== =============
</TABLE>
This outstanding debt was repaid as of June 30, 1998.
4. COMMITMENTS AND CONTINGENCIES:
------------------------------
Leases
- ------
During 1996 and 1997, the Company leased the facilities under three separate
operating leases, one of which was with a related party (the former owners of
the Company). The related party lease was on a month-to-month basis for the FM
station building, at a rate of $800 per month. The second lease covers the FM
tower and transmitter space and expires in May 1999, with one optional renewal
of five years. Monthly rent under this lease is currently $4,000. In addition,
the Company leases equipment under two operating leases expiring in 1999.
Monthly rent under the equipment leases is $450.
Rental expense for the years ended December 31, 1996 and 1997, was $70,000 and
$60,000, respectively.
<PAGE>
-12-
Litigation
- ----------
The Company has been named as defendant in various legal proceedings arising out
of the normal course of business. It is the opinion of management, after
consultation with legal counsel, that the amount, if any, of the Company's
ultimate liability under all current legal proceedings will not have a material
adverse effect on the financial position or results of operations of the
Company.
5. STOCK OPTION AND BONUS PLANS:
-----------------------------
The Company had an Incentive Stock Option Plan (the Stock Option Plan). The
Company granted options to two employees of the Company to purchase up to 200
shares each of Class B Common Stock at a price equal to 50% of the fair market
value of the stock on the exercise date. In 1996, the Stock Option Plan was
extended for two years (January 1, 1996 to December 31, 1997). During 1996 and
1997, the Company granted options under the plan and recognized compensation
expense because the option price was below the estimated market price of the
stock.
The Company also had a Stock Bonus Plan (the Bonus Plan). Under provisions of
the Bonus Plan, the Company could, at its discretion, award two employees of the
Company up to an aggregate of 200 shares each of Class B Common Stock. The Bonus
Plan was extended in 1996 for two years. During 1996, the Company awarded 50
shares to each employee under the Bonus Plan. During 1997, the Company awarded
100 shares to each employee for services performed. Compensation expense equal
to the fair market value of the Class B Common Stock awarded has been recorded
for 1996 and 1997 to reflect such awards.
Agreements between the Company and three of its former stockholders generally
provide that none of their shares (as specifically defined) may be sold,
transferred or exchanged without the prior written consent of the Company.
In addition, the agreements specify the rights of the stockholders and the
obligations of the Company in the event of death, termination of employment or
change in control of the Company. The agreements state that if a change in
control of the Company occurs, the employees' right to exercise their options
will cease. If the Company is required to repurchase any of the shares, the
purchase price shall be the fair market value of such shares (as specifically
defined). As of June 30, 1998, all options terminated.
The Company accounts for its stock option plans in accordance with Accounting
Principles Board Opinion No. 25. Had compensation cost for the plans been
determined consistent with Statement of Financial Accounting Standards No. 123,
"Accounting for Stock Based Compensation", the difference in the Company's pro
forma net income would have been immaterial.
<PAGE>
-13-
6. INCOME TAXES:
-------------
A reconciliation of the statutory federal income taxes to the recorded income
tax (benefit) provision for the years ended December 31, 1996 and 1997 is as
follows:
<TABLE>
<CAPTION>
December 31,
--------------------------------
1996 1997
--------------- --------------
<S> <C> <C> <C>
Statutory tax (@ 34% rate) $ (117,000) $ 19,000
Effect of state taxes, net of federal 16,000 3,000
Effect of graduated tax rate - (12,000)
Other nondeductible items 20,000 28,000
Nondeductible compensation expense 3,000 6,000
-------------- --------------
(Benefit) provision for income taxes $ (78,000) $ 44,000
============== ==============
</TABLE>
The components of the (benefit) provision for income taxes for the years ended
December 31, 1996 and 1997 are as follows:
<TABLE>
<CAPTION>
December 31,
-------------------------------
1996 1997
-------------- -------------
<S> <C> <C>
Current $ (105,000) $ 20,000
Deferred 27,000 24,000
-------------- --------------
(Benefit) provision for income taxes $ (78,000) $ 44,000
============== ==============
</TABLE>
Deferred income taxes reflect the net tax effect of temporary differences
between the financial statement and tax basis of assets and liabilities. The
significant components of the Company's deferred tax assets and liability as of
December 31, 1996 and 1997, are as follows:
<TABLE>
<CAPTION>
December 31,
-------------------------------
1996 1997
-------------- -------------
<S> <C> <C>
Deferred tax assets-
Reserve for bad debts $ 7,000 $ 11,000
Other 15,000 -
Deferred tax liability-
Other - (13,000)
------------- --------------
Net deferred tax asset (liability) $ 22,000 $ (2,000)
============== ==============
</TABLE>
<PAGE>
-14-
7. SALE OF CAPITAL STOCK:
----------------------
On December 23, 1997, the stockholders of the Company entered into an Agreement
with Radio One, Inc. to sell all of the issued and outstanding shares of the
capital stock of the Company for approximately $34 million. Prior to the sale,
the stockholders of the Company assumed certain debt totaling $771,000 and
acquired certain assets of the Company totaling $99,000. The net book value of
the assets acquired and the liabilities assumed prior to the sale was recorded
as a capital contribution from the owners. The sale to Radio One, Inc. was
completed on June 30, 1998.
<PAGE>
-15-
(b) Pro Forma Consolidated Financial Statements (Unaudited) of Radio
One, Inc.
The following pro forma condensed consolidated statements of
operations for the six month period ended June 30, 1998 and the
year ended December 31, 1997 give effect to the acquisition of
Bell Broadcasting Company. The pro forma condensed consolidated
statements of operations assume the transaction was consummated
at the beginning of the periods presented. The final purchase
occurred on June 30, 1998.
These pro forma statements are not necessarily indicative of the
results that actually would have occurred if the acquisition had
been in effect as of and for the periods presented or what may be
achieved in the future.
As the acquisition occurred on June 30, 1998, the balance sheet
that Radio One, Inc. filed with the SEC on Form 10-Q as of June
30, 1998 included Bell Broadcasting Company, and a pro forma
balance sheet as of June 30, 1998 is not required.
<PAGE>
RADIO ONE, INC.
---------------
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(Unaudited, in thousands)
<TABLE>
<CAPTION>
Radio One Bell Bell
Historical (a) Historical (b) Adjustments Total
-------------- -------------- ----------- -----
<S> <C> <C> <C> <C>
Statement of Operations:
Net broadcast revenues $ 19,528 $ 2,025 $ - $ 21,553
Station operating expenses 10,510 1,423 105 (c) 12,038
Corporate expenses 1,319 663 (617)(d) 1,365
Depreciation and
amortization 3,632 63 1,102 (e) 4,797
----------- ---------- ---------- ----------
Operating income (loss) 4,067 (124) (590) 3,353
Interest expense 4,925 52 1,389 (f) 6,366
Other (income) expense, net (286) 28 (42)(g) (300)
----------- ---------- ---------- ----------
(Loss) income before
provision for income taxes (572) (204) (1,937) (2,713)
Income tax expense - 14 6 (h) 20
----------- ---------- ---------- ----------
Net loss $ (572) $ (218) $ (1,943) $ (2,733)
============ ========== =========== ==========
</TABLE>
-----------------------
(a) See the Consolidated Financial Statements of Radio One, Inc. filed on Form
10-Q with the Securities and Exchange Commission.
(b) The column represents the results of operations of Bell Broadcasting
Company from January 1, 1998 to June 30, 1998. See the financial statements
of Bell Broadcasting Company included in this filing.
(c) To eliminate certain consulting fees that were paid for services expected
to be performed by Radio One, Inc.'s existing corporate staff and record
compensation expense for a business manager and a general manager that
Radio One, Inc. will need to hire to manage the Detroit market, as these
functions were performed by Bell's corporate staff.
(d) To eliminate corporate expenses which Radio One, Inc. does not expect to
incur going forward which consist primarily of compensation to officers and
former owners of Bell Broadcasting Company which were not retained by Radio
One, Inc.
(e) To record depreciation and amortization expense of assets acquired by Radio
One, Inc. and eliminate depreciation and amortization expense recorded by
Bell Broadcasting.
(f) To record interest expense on acquisition financing related to the Bell
Broadcasting Acquisition and amortization of deferred financing costs, and
eliminate interest expense previously recorded that was related to debt
repaid prior to the acquisition.
(g) To eliminate tax penalties incurred by Bell Broadcasting Company that are
not expected to be incurred by Radio One, Inc. on a going-forward basis.
(h) To eliminate the Federal income tax benefit.
<PAGE>
RADIO ONE, INC.
---------------
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(in thousands)
<TABLE>
<CAPTION>
Radio One Bell Bell
Historical (a) Historical (b) Adjustments Total
-------------- -------------- ----------- -----
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Statement of Operations:
Net broadcast revenues $ 32,367 $ 4,034 $ (18)(c) $ 36,383
Station operating expenses 18,848 2,879 159 (d) 21,886
Corporate expenses 2,155 816 (782)(e) 2,189
Depreciation and
amortization 5,828 148 2,183 (f) 8,159
---------- ---------- ------------- ----------
Operating income (loss) 5,536 191 (1,578) 4,149
Interest expense 8,910 81 2,802 (g) 11,793
Other (income) expense, net (415) 54 (88)(h) (449)
---------- ---------- ------------- ----------
(Loss) income before
provision for income taxes (2,959) 56 (4,292) (7,195)
Income tax expense - 44 (2)(i) 42
---------- ---------- ------------- ----------
Net income (loss) $ (2,959) $ 12 $ (4,290) $ (7,237)
=========== ========== ============= ==========
</TABLE>
-----------------------
(a) See the Consolidated Financial Statements of Radio One, Inc. filed on Form
10-K with the Securities and Exchange Commission.
(b) See the audited financial statements of Bell Broadcasting Company included
in this filing.
(c) To eliminate revenue of WKNX, from January 1, 1997 to June 30, 1997, as
this station was sold by Bell Broadcasting Company on June 30, 1997.
(d) To eliminate operating expenses of WKNX from January 1, 1997 to June 30,
1997, eliminate certain consulting fees that were paid for services
expected to be performed by Radio One, Inc.'s existing corporate staff, and
record compensation expense for a business manager and general manager that
Radio One, Inc. will need to hire to manage the Detroit market, as these
functions were performed by Bell's corporate staff.
(e) To eliminate corporate expenses which Radio One, Inc. does not expect to
incur going forward which consist primarily of compensation to officers and
former owners Bell Broadcasting Company which were not retained by Radio
One, Inc.
(f) To record depreciation and amortization expense of assets acquired by Radio
One, Inc. and eliminate depreciation and amortization expense recorded by
Bell Broadcasting.
(g) To record interest expense on acquisition financing related to the Bell
Broadcasting Acquisition and amortization of deferred financing costs, and
eliminate interest expense previously recorded that was related to debt
repaid prior to the acquisition.
(h) To eliminate expenses that would not have been incurred by Radio One, Inc.
and the loss on sale of WKNX recorded on June 30,1997.
(i) To eliminate the Federal income tax provision.
<PAGE>
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.
RADIO ONE, INC.
By: /s/ Scott R. Royster
--------------------------------
Executive Vice President and Chief
Financial Officer
