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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 30, 1998
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 12, 1998
----- --------------------------------
Class A Common Stock, $.01 Par Value 138.45
Class B Common Stock, $.01 Par Value 0
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<PAGE>
RADIO ONE, INC. AND SUBSIDIARIES
Form 10-Q
For the Quarter Ended September 30, 1998
TABLE OF CONTENTS
Page
PART I FINANCIAL INFORMATION
ITEM 1 Consolidated Financial Statements 3
Consolidated Balance Sheets as of 4
December 31, 1997 and September 30, 1998 (Unaudited)
Consolidated Statements of Operations for the 5
Three months and nine months ended September 28, 1997 (Unaudited)
and September 30, 1998 (Unaudited)
Consolidated Statement of Changes in Stockholders' Deficit for the 6
Nine months ended September 30, 1998 (Unaudited)
Consolidated Statements of Cash Flows for the 7
Nine months ended September 28, 1997 (Unaudited)
and September 30, 1998 (Unaudited)
Notes to Consolidated Financial Statements 8
ITEM 2 Management's Discussion and Analysis of Financial 10
Condition and Results of Operations
PART II OTHER INFORMATION
ITEM 1 Legal Proceedings 14
ITEM 2 Changes in Securities 14
ITEM 3 Defaults upon Senior Securities 14
ITEM 4 Submission of Matters to a Vote of Security Holders 14
ITEM 5 Other Information 14
ITEM 6 Exhibits and Reports on Form 8-K 14
SIGNATURES 15
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
(See pages 4-7 -- This page intentionally left blank.)
3
<PAGE>
RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1997 AND SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
December 31, September 30,
1997 1998
---------------- ----------------
ASSETS (Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 8,500,000 $ 7,863,000
Trade accounts receivable, net of allowance for doubtful
accounts of $904,000 and $1,398,000, respectively 8,722,000 11,842,000
Prepaid expenses and other 315,000 309,000
---------------- ----------------
Total current assets 17,537,000 20,014,000
PROPERTY AND EQUIPMENT, net 4,432,000 6,066,000
INTANGIBLE ASSETS, net 54,942,000 87,234,000
OTHER ASSETS 2,314,000 979,000
---------------- ----------------
Total assets $ 79,225,000 $ 114,293,000
================ ================
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 258,000 $ 662,000
Accrued expenses 3,029,000 5,950,000
---------------- ----------------
Total current liabilities 3,287,000 6,612,000
LONG-TERM DEBT AND DEFERRED INTEREST:
Senior subordinated notes (net of $10,640,000 and $7,969,000
unamortized discount, respectively) 74,838,000 77,509,000
Line of credit - 25,350,000
Note payable and deferred interest - 3,812,000
Other long-term liabilities 116,000 94,000
---------------- ----------------
Total liabilities 78,241,000 113,377,000
---------------- ----------------
COMMITMENTS AND CONTINGENCIES
SENIOR CUMULATIVE REDEEMABLE PREFERRED STOCK:
Series A, $.01 par value, 100,000 shares authorized, 84,843 shares
issued and outstanding 9,310,000 10,415,000
Series B, $.01 par value, 150,000 shares authorized, 124,467 shares
issued and outstanding 13,658,000 15,279,000
STOCKHOLDERS' DEFICIT:
Common stock - Class A, $.01 par value, 1,000 shares authorized,
138.45 shares issued and outstanding - -
Common stock - Class B, $.01 par value, 1,000 shares authorized,
no shares issued and outstanding - -
Additional paid-in capital - -
Accumulated deficit (21,984,000) (24,778,000)
---------------- ----------------
Total stockholders' deficit (21,984,000) (24,778,000)
---------------- ----------------
Total liabilities and stockholders' deficit $ 79,225,000 $ 114,293,000
=============== ================
</TABLE>
The accompanying notes are an integral part of these consolidated
balance sheets.
4
<PAGE>
RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED
SEPTEMBER 28, 1997 AND SEPTEMBER 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------------------------------------------------------
September 28, September 30, September 28, September 30,
1997 1998 1997 1998
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Broadcast revenues $ 10,826,000 $ 15,729,000 $ 25,952,000 $ 38,057,000
Less: Agency commissions 1,357,000 1,953,000 3,247,000 4,753,000
--------------- --------------- --------------- ---------------
Net broadcast revenues 9,469,000 13,776,000 22,705,000 33,304,000
--------------- --------------- --------------- ---------------
OPERATING EXPENSES:
Program and technical 1,493,000 2,324,000 4,227,000 5,827,000
Selling, general and
administrative 3,555,000 4,716,000 9,412,000 11,723,000
Corporate expenses 508,000 732,000 1,589,000 2,051,000
Depreciation and amortization 1,666,000 2,410,000 4,032,000 6,042,000
--------------- --------------- --------------- ---------------
Total operating expenses 7,222,000 10,182,000 19,260,000 25,643,000
--------------- --------------- --------------- ---------------
Operating income 2,247,000 3,594,000 3,445,000 7,661,000
INTEREST EXPENSE 2,416,000 3,071,000 6,611,000 7,996,000
OTHER (INCOME) EXPENSE, net (171,000) 19,000 (278,000) (267,000)
--------------- --------------- --------------- ---------------
Income (loss) before
provision for income
taxes and extraordinary
item 2,000 504,000 (2,888,000) (68,000)
PROVISION FOR INCOME TAXES - - - -
--------------- --------------- --------------- --------------
Income (loss) before
extraordinary item 2,000 504,000 (2,888,000) (68,000)
EXTRAORDINARY ITEM:
Loss on early retirement of debt - - 1,985,000 -
--------------- --------------- --------------- --------------
Net income (loss) $ 2,000 $ 504,000 $ (4,873,000) $ (68,000)
=============== ============= =============== =============
</TABLE>
The accompanying notes are an integral part of these
consolidated statements.
5
<PAGE>
RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Common Common Additional
Stock Stock Paid-In Accumulated
Class A Class B Capital Deficit
----------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
BALANCE, as of December 31, 1997 $ - $ - $ - $ (21,984,000)
Net loss - - - (68,000)
Preferred stock dividends
earned - - - (2,726,000)
----------- ----------- ----------- --------------
BALANCE, as of
September 30,1998 (Unaudited)
$ - $ - $ - $ (24,778,000)
=========== =========== =========== ==============
</TABLE>
The accompanying notes are an integral part of this
consolidated statement.
6
<PAGE>
RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 28, 1997 AND SEPTEMBER 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended,
--------------------------------------
September 28, September 30,
1997 1998
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (4,873,000) $ (68,000)
Adjustments to reconcile net loss to net cash from
operating activities:
Depreciation and amortization 4,032,000 6,042,000
Amortization of debt financing costs, unamortized
discount and deferred interest 2,461,000 2,733,000
Loss on extinguishment of debt 1,985,000 -
Effect of change in operating assets and liabilities-
Trade accounts receivable (2,855,000) (2,276,000)
Prepaid expenses and other (318,000) 12,000
Other assets 128,000 (461,000)
Accounts payable 643,000 311,000
Accrued expenses 2,505,000 2,758,000
-------------- --------------
Net cash flows from operating activities 3,708,000 9,051,000
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (1,311,000) (1,357,000)
Deposits and payments for station purchases (19,107,000) (32,529,000)
-------------- --------------
Net cash flows from investing activities (20,418,000) (33,886,000)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt (45,599,000) (459,000)
Proceeds from new debt 72,750,000 25,350,000
Deferred financing costs (1,717,000) (693,000)
-------------- --------------
Net cash flows from financing activities 25,434,000 24,198,000
-------------- --------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 8,724,000 (637,000)
CASH AND CASH EQUIVALENTS, beginning of period 1,708,000 8,500,000
-------------- --------------
CASH AND CASH EQUIVALENTS, end of period $ 10,432,000 $ 7,863,000
============== ==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for-
Interest $ 1,480,000 $ 3,495,000
============== ==============
Income taxes $ - $ -
============== =============
</TABLE>
The accompanying notes are an integral part of these
consolidated statements.
7
<PAGE>
RADIO ONE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization and Business
Radio One, Inc. (a Delaware corporation referred to as Radio One) and its
subsidiaries, Radio One Licenses, Inc. (successor by merger to Radio One
Licenses LLC), WYCB Acquisition Corporation, Radio One of Detroit, Inc.
(Delaware corporations), Bell Broadcasting Company (a Michigan corporation) and
Broadcast Holdings, Inc. (a District of Columbia corporation) (collectively
referred to as the Company) were organized to acquire, operate and maintain
radio broadcasting stations. The Company owns and operates four radio stations
in Washington, D.C.; WOL-AM, WMMJ-FM, WKYS-FM and WYCB-AM, four radio stations
in Baltimore, Maryland; WWIN-AM, WWIN-FM, WOLB-AM and WERQ-FM, one radio station
in Philadelphia, Pennsylvania; WPHI-FM, two radio stations in Detroit, Michigan;
WCHB-AM, WDTJ-FM, and one radio station in Kingsley, Michigan; WJZZ-AM. The
Company is highly leveraged, which requires substantial semi-annual and other
periodic interest payments and may impair the Company's ability to obtain
additional working capital financing. The Company's operating results are
significantly affected by its market share in the markets that it has stations.
Basis of Presentation
The accompanying consolidated financial statements include the accounts of Radio
One and its wholly-owned subsidiaries. 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.
Actual results could differ from those estimates.
Interim Financial Statements
The interim consolidated financial statements included herein for the Company
have been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. In management's opinion,
the interim financial data presented herein include all adjustments (which
include only normal recurring adjustments) necessary for a fair presentation.
Certain information and footnote disclosures normally included in the financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. Results
for interim periods are not necessarily indicative of results to be expected for
the full year. It is suggested that these consolidated financial statements be
read in conjunction with the Company's December 31, 1997, financial statements
and notes thereto included in the Company's annual report on Form 10-K.
8
<PAGE>
2. ACQUISITIONS:
BELL BROADCASTING ACQUISITION
On June 30, 1998, Radio One purchased all of the outstanding stock of Bell
Broadcasting Company (Bell), which owned three radio stations in Michigan for
approximately $34.2 million. Radio One financed this acquisition through a
combination of cash and $25.4 million borrowed under a $32.5 million line of
credit with Credit Suisse First Boston and NationsBank, N.A., which bore
interest at an annual rate of LIBOR plus 1.875% at September 30, 1998. The
acquisition of Bell resulted in the recording of approximately $33.1 million of
intangible assets resulting from the Bell purchase price being in excess of the
net book value of Bell.
WYCB-AM ACQUISITION
On March 16, 1998, WYCB Acquisition Corporation, an unrestricted subsidiary of
Radio One, acquired all the stock of Broadcast Holdings, Inc. for $3,750,000.
The acquisition was financed with a promissory note for $3,750,000 at 13% due
2001, which pays quarterly cash interest payments at an annual rate of 10%
through 2001, with the remaining interest being added to the principal.
3. NEW AUTHORITATIVE 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 adopted SFAS No. 130 during the nine months ended September 30,
1998, and has determined that the adoption of this statement has 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.
4. SUBSEQUENT EVENT:
In October 1998, the Company signed an agreement to purchase all of the
outstanding stock of Allur-Detroit, Inc., owner of radio station WWBR-FM,
located in Detroit, Michigan, for approximately $27.0 million cash.
9
<PAGE>
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 Form 10-K filed for the year ended December
31, 1997.
<TABLE>
<CAPTION>
Three months Three months Nine months Nine months
ended ended ended ended
September 28, September 30, September 28, September 30,
1997 1998 1997 1998
--------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net broadcast revenues $ 9,469,000 $ 13,776,000 $ 22,705,000 $ 33,304,000
--------------- ---------------- ---------------- ---------------
Operating expenses excluding
depreciation and amortization 5,556,000 7,772,000 15,228,000 19,601,000
Depreciation and amortization 1,666,000 2,410,000 4,032,000 6,042,000
--------------- ---------------- ---------------- ---------------
Broadcast operating income 2,247,000 3,594,000 3,445,000 7,661,000
Interest expense 2,416,000 3,071,000 6,611,000 7,996,000
Other income (expense) 171,000 (19,000) 278,000 267,000
--------------- ---------------- ---------------- ---------------
Income (loss) before provision
for income taxes 2,000 504,000 (2,888,000) (68,000)
Provision for income taxes - - - -
--------------- ---------------- ---------------- ---------------
Income (loss) before
extraordinary item 2,000 504,000 (2,888,000) (68,000)
Extraordinary item - - (1,985,000) -
=============== ================ ================ ===============
Net Income (loss) $ 2,000 $ 504,000 $ (4,873,000) $ (68,000)
=============== ================ ================ ===============
OTHER DATA:
Broadcast cash flow (a) $4,421,000 $6,736,000 $9,066,000 $15,754,000
Broadcast cash flow margin 46.7% 48.9% 39.9% 47.3%
Operating cash flow (b) $3,913,000 $6,004,000 $7,477,000 $13,703,000
Operating cash flow margin 41.3% 43.6% 32.9% 41.1%
Corporate Expenses $ 508,000 $ 732,000 $1,589,000 $2,051,000
</TABLE>
Net broadcast revenues increased to approximately $13.8 million for the
three months ended September 30, 1998 from approximately $9.5 million for the
three months ended September 28, 1997 or 45.3%. Net broadcast revenues increased
to approximately $33.3 million for the nine months ended September 30, 1998 from
approximately $22.7 million for the nine months ended September 28, 1997 or
46.7%. These increases in net broadcast revenues were the result of continuing
broadcast revenue growth in the Company's Washington, DC, Baltimore, MD and
Philadelphia, Pennsylvania markets as the Company benefited from historical
ratings increases at certain of its radio stations, improved power ratios at
these stations as well as industry growth in each of these markets. Additional
revenue gains were derived from the Company's June 30, 1998 acquisition of Bell
Broadcasting Company.
Operating expenses excluding depreciation and amortization increased to
approximately $7.8 million for the three months ended September 30, 1998 from
approximately $5.6 million for the three months ended September 28, 1997 or
39.3%. Operating expenses excluding depreciation and amortization increased to
approximately $19.6 million for the nine months ended September 30, 1998 from
approximately $15.2 million for the nine months ended September 28, 1997 or
28.9%. These increases in expenses were primarily related to increases in sales
commissions and license fees due to significant revenue growth, additional
programming costs related to ratings gains experienced by the Company's overall
growth as well as expenses associated with the June 30, 1998 acquisition of Bell
Broadcasting Company.
10
<PAGE>
Broadcast operating income increased to approximately $3.6 million for the
three months ended September 30, 1998 from approximately $2.2 million for the
three months ended September 28, 1997 or 63.6%. Broadcast operating income
increased to approximately $7.7 million for the nine months ended September 30,
1998 from approximately $3.4 million for the nine months ended September 28,
1997 or 126%. These increases were attributable to the increases in broadcast
revenues partially offset by higher operating expenses and higher depreciation
and amortization expenses associated with the Bell Broadcasting Company
acquisition as well as the 1997 acquisition of WPHI-FM in Philadelphia.
Interest expense increased to approximately $3.1 million for the three
months ended September 30, 1998 from approximately $2.4 million for the three
months ended September 28, 1997 or 29.2%. Interest expense increased to
approximately $8.0 million for the nine months ended September 30, 1998 from
approximately $6.6 million for the nine months ended September 28, 1997 or
21.2%. These increases relate primarily to the May 19, 1997 issuance of the
Company's approximately $85.5 million in 12% Senior Subordinated Notes Due 2004
and the associated retirement of the Company's approximately $45.6 million bank
credit facility which was in place prior to that time and was redeemed with the
proceeds from the Notes Offering as well as borrowings under the Company's bank
credit facility associated with the Bell Broadcasting Company acquisition.
Other income (expense) decreased to ($19,000) for the three months ended
September 30, 1998 from $171,000 for the three months ended September 28, 1997
or 111%. Other income decreased to $267,000 for the nine months ended September
30, 1998 from $278,000 for the nine months ended September 28, 1997 or 4.0%.
These decreases were primarily attributable to lower interest income due to
lower cash balances as the Company used its free cash balances to help fund the
acquisition of Bell Broadcasting Company. Additionally, for the three months
ended September 30, 1998, the Company realized a loss on an investment
associated with the pursuit and subsequent abandonment of the acquisition of two
radio stations in the San Francisco, California market.
Income before provision for income taxes increased to approximately
$504,000 for the three months ended September 30, 1998 from $2,000 for the three
months ended September 28, 1997 or 25,100%. Loss before provision for income
taxes decreased to $68,000 for the nine months ended September 30, 1998 from
approximately $2.9 million for the nine months ended September 28, 1997 or
97.7%. This decrease was due to higher operating income partially offset by
lower other income and higher interest expense.
Net income increased to approximately $504,000 for the three months ended
September 30, 1998 from approximately $2,000 for the three months ended
September 28, 1997 or 25,100%. Net loss decreased to $68,000 for the nine months
ended September 30, 1998 from approximately $4.9 million for the nine months
ended September 28, 1997 or 98.6%. This decrease was due to higher operating
income and a loss on the retirement of debt in 1997 partially offset by lower
other income and higher interest expense.
Broadcast cash flow increased to approximately $6.7 million for the three
months ended September 30, 1998 from approximately $4.4 million for the three
months ended September 28, 1997 or 52.3%. Broadcast cash flow increased to
approximately $15.8 million for the nine months ended September 30, 1998 from
approximately $9.1 million for the nine months ended September 28, 1997 or
73.6%. These increases were attributable to the increase in broadcast revenues
partially offset by higher operating expenses as described above.
Operating cash flow increased to approximately $6.0 million for the three
months ended September 30, 1998 from approximately $3.9 million for the three
months ended September 28, 1997 or 53.8%. Operating cash flow increased to
approximately $13.7 million for the nine months ended September 30, 1998 from
approximately $7.5 million for the nine months ended September 28, 1997 or
82.7%. These increases were 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,
11
<PAGE>
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.
(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' deficit. The stockholders'
deficit consists of common stock and accumulated deficit. The Company's balance
of cash and cash equivalents was $8.5 million as of December 31, 1997. The
Company's balance of cash and cash equivalents was approximately $7.9 million as
of September 30, 1998. The Company's decrease in cash to approximately $7.9
million as of September 30, 1998 from $8.5 million as of December 31, 1997
resulted primarily from the Company using approximately $9.5 million of its then
available cash to partially fund the acquisition of Bell Broadcasting Company
("Bell") on June 30, 1998 offset by a significant increase in cash from
operations. The balance of the purchase price and related expenses of the Bell
acquisition was funded with approximately $25.4 million drawn on a $32.5 million
bank credit facility which the Company entered into concurrent with the closing
of the acquisition of Bell. At September 30, 1998 approximately $7.1 million
remained available to be drawn down from the Company's bank credit facility. The
Company is currently negotiating with a group of banks to increase the size of
the credit facility in order to help fund additional acquisitions being
contemplated by the Company. In general, the Company's primary source of
liquidity is cash provided by operations and, to the extent necessary, on
undrawn commitments available under the Company's bank credit facility.
Net cash flow from operating activities increased to approximately $9.1
million for the nine months ended September 30, 1998 from approximately $3.7
million for the nine months ended September 28, 1997 or 145.9%. This increase
was primarily due to a lower net loss and higher non-cash expenses. Non-cash
expenses of depreciation and amortization increased to approximately $6.0
million for the nine months ended September 30, 1998 from approximately $4.0
million for the nine months ended September 28, 1997 or 50.0% due to the
acquisition of radio station WPHI-FM in the second quarter of 1997, the
acquisition, by a wholly-owned unrestricted subsidiary of the Company, of
Broadcast Holdings, Inc. ("BHI") in the first quarter of 1998, the acquisition
of Bell on June 30, 1998 as well as leasehold improvements made to the Company's
new headquarters and Washington, DC radio studios in the second half of 1997.
Non-cash expenses of amortization of debt financing costs, unamortized discount
and deferred interest increased to approximately $2.7 million for the nine
months ended September 30, 1998 from approximately $2.5 million for the nine
months ended September 28, 1997 or 8.0% due to the May 19, 1997 issuance of the
Company's approximately $85.5 million in 12% Senior Subordinated Notes Due 2004
as well as entering into a $32.5 million senior bank credit facility on June 30,
1998, of which approximately $25.4 million was drawn down at September 30, 1998
offset by interest deferred in the period ended September 28, 1997 related to
the subordinated notes outstanding for part of 1997. The Company also had a
non-cash expense during the nine months ended September 28, 1997 of
approximately $2.0 million related to the loss on extinguishment of debt.
Net cash flow used in investing activities increased to approximately $33.9
million for the nine months ended September 30, 1998 compared to approximately
$20.4 million for the nine months ended September 28, 1997 or 66.2%. During the
nine months ended September 30, 1998 the Company acquired Bell for approximately
$34.2 million plus the cost of additional assets and expenses related to the
transaction and the Company made purchases of capital equipment totaling
approximately $1.4 million. During the nine months ended September 28, 1997 the
Company paid approximately $19.1 million related to the approximately $20.1
million acquisition of radio station WPHI-FM and made purchases of capital
equipment totaling approximately $1.3 million.
12
<PAGE>
Net cash flow from financing activities was approximately $24.2 million for
the nine months ended September 30, 1998. During the nine months ended September
30, 1998, the Company entered into a $32.5 million bank credit facility, of
which, approximately $25.4 million was used to finance partially the acquisition
of Bell. Additionally, during the nine months ended September 30, 1998 a
wholly-owned unrestricted subsidiary of the Company financed the acquisition of
BHI with a promissory note due to the seller of BHI for $3.75 million. 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 approximately $72.8 million. The Company used approximately $19.1 million of
these proceeds for an acquisition and approximately $45.6 million of the
proceeds to retire the outstanding indebtedness under the Company's then
existing bank credit facility.
As a result of the aforementioned, cash and cash equivalents decreased by
$637,000 during the nine months ended September 30, 1998 compared to an
approximate $8.7 million increase during the nine months ended September 28,
1997.
YEAR 2000 COMPLIANCE
Based upon the Company's current assessment of its Year 2000 readiness,
there are no significant Year 2000 issues known that the Company anticipates
would have a material effect on its results of operations, liquidity or
financial condition. The Company also did not incur any significant cost
specifically related to the Year 2000 readiness during the nine months ended
September 30, 1998.
13
<PAGE>
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
EXHIBITS
The following exhibits are filed or incorporated by reference as a part of
this report:
27 Financial data schedule (Edgar version only)
REPORTS ON FORM 8-K
The Company filed Form 8-K on July 3, 1998, to report the closing of its
purchase of Bell Broadcasting Company.
Additionally, the Company filed Form 8-K/A1 on September 10, 1998, to
include the audited financial statements Bell Broadcasting Company as of
December 31, 1997, December 31, 1996, June 30, 1998 and June 30, 1997 and pro
forma financial information.
14
<PAGE>
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 12, 1998 Scott R. Royster
Executive Vice President and Chief Financial Officer
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
consolidated financial statements of the Company for the fiscal year ended
December 31, 1997 for the three months and the nine months ended September 28,
1997 and September 30, 1998, and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<CURRENCY> US DOLLARS
<S> <C> <C> <C> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS 3-MOS 9-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997 DEC-31-1997 DEC-31-1997 DEC-31-1997
<PERIOD-START> JAN-01-1997 JUL-01-1997 JUL-01-1998 JAN-01-1997 JAN-01-1998
<PERIOD-END> DEC-31-1997 SEP-28-1997 SEP-30-1998 SEP-28-1997 SEP-30-1998
<EXCHANGE-RATE> 1 1 1 1 1
<CASH> 8,500,000 0 0 0 7,863,000
<SECURITIES> 0 0 0 0 0
<RECEIVABLES> 9,626,000 0 0 0 13,240,000
<ALLOWANCES> (904,000) 0 0 0 (1,398,000)
<INVENTORY> 0 0 0 0 0
<CURRENT-ASSETS> 17,537,000 0 0 0 20,014,000
<PP&E> 7,819,000 0 0 0 10,306,000
<DEPRECIATION> (3,387,000) 0 0 0 (4,240,000)
<TOTAL-ASSETS> 79,225,000 0 0 0 114,293,000
<CURRENT-LIABILITIES> 3,287,000 0 0 0 6,612,000
<BONDS> 74,954,000 0 0 0 106,765,000
0 0 0 0 0
22,968,000 0 0 0 25,694,000
<COMMON> 0 0 0 0 0
<OTHER-SE> (21,984,000) 0 0 0 (24,778,000)
<TOTAL-LIABILITY-AND-EQUITY> 79,225,000 0 0 0 114,293,000
<SALES> 0 10,826,000 15,729,000 25,952,000 38,057,000
<TOTAL-REVENUES> 0 10,826,000 15,729,000 25,952,000 38,057,000
<CGS> 0 (1,357,000) (1,953,000) (3,247,000) (4,753,000)
<TOTAL-COSTS> 0 (1,357,000) (1,953,000) (3,247,000) (4,753,000)
<OTHER-EXPENSES> 0 7,222,000 10,182,000 19,260,000 25,643,000
<LOSS-PROVISION> 0 287,000 553,000 812,000 1,281,000
<INTEREST-EXPENSE> 0 2,416,000 3,071,000 6,611,000 7,996,000
<INCOME-PRETAX> 0 2,000 504,000 (2,888,000) (68,000)
<INCOME-TAX> 0 0 0 0 0
<INCOME-CONTINUING> 0 2,000 504,000 (2,888,000) (68,000)
<DISCONTINUED> 0 0 0 0 0
<EXTRAORDINARY> 0 0 0 (1,985,000) 0
<CHANGES> 0 0 0 0 0
<NET-INCOME> 0 2,000 504,000 (4,873,000) (68,000)
<EPS-PRIMARY> 0 0 0 0 0
<EPS-DILUTED> 0 0 0 0 0
</TABLE>
