<PAGE>
AMENDMENT #1 TO FORM 8-K, DATED MARCH 12, 1999
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): December 28, 1998
Radio One, Inc.
(Exact name of registrant as specified in its charter)
Delaware 333-30795 52-1166660
(State or other Jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
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 January 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>
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
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of
Allur-Detroit, Inc.:
We have audited the accompanying balance sheet of Allur-Detroit, Inc. (a
wholly owned subsidiary of Syndicated Communications Venture Partners II, LP)
for the year ended December 31, 1997, and the related statements of operations,
changes in stockholders' equity and cash flows for the year then ended. These
financial statements are the responsibility of Allur-Detroit, Inc.'s
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated 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 audit provides 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 Allur-Detroit, Inc. for the
year ended December 31, 1997, and the results of its operations and its cash
flows for the year then ended, in conformity with generally accepted accounting
principles.
/s/ MITCHELL & TITUS LLP
Washington, D.C.,
March 25, 1998
<PAGE>
ALLUR-DETROIT, INC.
BALANCE SHEETS
As of December 31, 1997 and September 30, 1998
<TABLE>
<CAPTION>
December 31, September 30,
1997 1998
------------ -------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash.............................................. $ 86,000 $ 172,000
Trade accounts receivable, net of allowance of
$77,000.......................................... 410,000 805,000
Prepaid expenses and other........................ 55,000 42,000
---------- ----------
Total current assets............................ 551,000 1,019,000
PROPERTY AND EQUIPMENT, net......................... 75,000 82,000
INTANGIBLE ASSETS, net.............................. 7,563,000 7,429,000
---------- ----------
Total assets.................................... $8,189,000 $8,530,000
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable an accrued expenses.............. $ 829,000 $1,056,000
---------- ----------
NOTES PAYABLE AND DEFERRED INTEREST................. 3,229,000 3,892,000
---------- ----------
Total liabilities............................... 4,058,000 4,948,000
---------- ----------
COMMITMENTS
CUMULATIVE REDEEMABLE PREFERRED STOCK,
$2,000 par value, 1,050 shares authorized, 1,050
and 975 shares issued and outstanding,
respectively....................................... 2,100,000 1,950,000
STOCKHOLDERS' EQUITY:
Common stock, $1.00 par value, 1,000 shares
authorized and 975 shares issued and
outstanding...................................... 1,000 1,000
Additional paid-in capital........................ 2,463,000 2,463,000
Accumulated deficit............................... (433,000) (832,000)
---------- ----------
Total stockholders' equity...................... 2,031,000 1,632,000
---------- ----------
Total liabilities and stockholders' equity...... $8,189,000 $8,530,000
========== ==========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
<PAGE>
ALLUR-DETROIT, INC.
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1997
and for the Nine Months Ended September 30, 1997 and 1998
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
December 31, ------------------------
1997 1997 1998
------------ ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
REVENUE:
Broadcast revenue....................... $2,473,000 $1,884,000 $2,509,000
Less: Agency commissions................ 259,000 207,000 379,000
---------- ---------- ----------
Net broadcast revenue................. 2,214,000 1,677,000 2,130,000
---------- ---------- ----------
OPERATING EXPENSES:
Programming and technical............... 894,000 477,000 592,000
Selling, general and administrative..... 1,467,000 1,247,000 1,412,000
Corporate expenses...................... 36,000 27,000 27,000
Depreciation and amortization........... 245,000 183,000 167,000
---------- ---------- ----------
Total operating expenses.............. 2,642,000 1,934,000 2,198,000
---------- ---------- ----------
Operating loss........................ (428,000) (257,000) (68,000)
---------- ---------- ----------
INTEREST EXPENSE.......................... 222,000 147,000 281,000
OTHER INCOME (EXPENSE), net............... 217,000 126,000 (50,000)
---------- ---------- ----------
Loss before provision for income
taxes................................ (433,000) (278,000) (399,000)
PROVISION FOR INCOME TAXES................ -- -- --
---------- ---------- ----------
Net loss.............................. $ (433,000) $ (278,000) $ (399,000)
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
ALLUR-DETROIT, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Year Ended December 31, 1997
and for the Nine Months Ended September 30, 1998
<TABLE>
<CAPTION>
Additional Total
Common Paid-In Accumulated Stockholders'
Stock Capital Deficit Equity
------ ---------- ----------- -------------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1996........ $1,000 $2,463,000 $ -- $2,464,000
Net loss........................ -- -- (433,000) (433,000)
------ ---------- --------- ----------
BALANCE, December 31, 1997........ 1,000 2,463,000 (433,000) 2,031,000
Net loss........................ -- -- (399,000) (399,000)
------ ---------- --------- ----------
BALANCE, September 30, 1998
(unaudited)...................... $1,000 $2,463,000 $(832,000) $1,632,000
====== ========== ========= ==========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
ALLUR-DETROIT, INC.
STATEMENTS OF CASH FLOWS
For the Year Ended December 31, 1997
and for the Nine Months Ended September 30, 1997 and 1998
<TABLE>
<CAPTION>
September 30,
December 31, ------------------------
1997 1997 1998
------------ ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss............................... $ (433,000) $ (278,000) $(399,000)
Adjustments to reconcile net loss to
net cash from operating activities:
Depreciation and amortization........ 245,000 183,000 167,000
Effect of change in operating assets
and liabilities--
Trade accounts receivable.......... 32,000 (95,000) (395,000)
Prepaid expenses and other......... (45,000) (59,000) 13,000
Accounts payable and accrued
expenses.......................... (172,000) (60,000) 227,000
----------- ----------- ---------
Net cash flows from operating
activities...................... (373,000) (309,000) (387,000)
----------- ----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment.................. (39,000) -- (40,000)
----------- ----------- ---------
Net cash flows from investing
activities...................... (39,000) -- (40,000)
----------- ----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of preferred stock.......... -- -- (150,000)
Repayment of debt...................... (1,676,000) (1,257,000) --
Proceeds from notes payable............ 2,152,000 1,614,000 663,000
----------- ----------- ---------
Net cash flows from financing
activities...................... 476,000 357,000 513,000
----------- ----------- ---------
NET INCREASE IN CASH..................... 64,000 48,000 86,000
CASH, beginning of period................ 22,000 22,000 86,000
----------- ----------- ---------
CASH, end of period...................... $ 86,000 $ 70,000 $ 172,000
=========== =========== =========
SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING AND FINANCING INFORMATION:
Interest paid.......................... $ 81,000 $ -- $ --
=========== =========== =========
Income taxes paid...................... $ -- $ -- $ --
=========== =========== =========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
ALLUR-DETROIT, INC.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION:
Allur-Detroit, Inc. (the Company) is a subsidiary of Syndicated
Communications Ventures Partners II, LP (SYNCOM II). The Company's sole
activity is to operate WWBR-FM, a radio station that broadcasts from Detroit,
Michigan.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation
The accompanying 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 revenue and expenses during the reporting period.
Actual results could differ from those estimates.
Interim Financial Statements
The financial statements for the nine months ended September 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.
Property and Equipment
Property and equipment are stated at cost. Depreciation is computed using
the straight-line method.
The components of property and equipment as of December 31, 1997 and
September 30, 1998, are as follows:
<TABLE>
<CAPTION>
December 31, September 30, Period of
1997 1998 Depreciation
------------ ------------- ------------
(Unaudited)
<S> <C> <C> <C>
Leasehold improvements........... $ 7,000 $ 8,000 10 years
Transmitter equipment............ 17,000 17,000 5 years
Studio and other technical
equipment....................... 46,000 59,000 7 years
Office furniture and equipment... 45,000 54,000 5 years
Automobiles...................... -- 17,000 5 years
-------- --------
115,000 155,000
Less: Accumulated depreciation
and
amortization.................... 40,000 73,000
-------- --------
Property and equipment, net...... $ 75,000 $ 82,000
======== ========
</TABLE>
Intangible Assets
Management periodically reviews its unamortized intangible asset balances to
ensure that those assets have not been impaired in accordance with the
definition of Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived assets and for Long-Lived assets to be
disposed of." As of
<PAGE>
ALLUR-DETROIT, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
September 30, 1998, management has made such evaluations and believes that the
net intangible asset is realizable. In any period which management believes an
impairment has occurred, management will write down the asset in accordance
with this standard.
Revenue Recognition
Revenue for advertising is recognized when the commercial is broadcasted.
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 revenue. 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.
Financial Instruments
Financial instruments as of December 31, 1997, and September 30, 1998,
consist of cash, trade accounts receivable, accounts payable, accrued expenses,
preferred stock, and notes payable all of which the carrying amounts
approximate fair value.
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 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 issues 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 adopted this statement during the
nine months ended September 30, 1998 and concluded that it had only one
segment.
3. INTANGIBLE ASSETS:
Intangible asset balances and periods of amortization as of December 31,
1997, and September 30, 1998, are as follows:
<TABLE>
<CAPTION>
December 31, September 30, Period of
1997 1998 Amortization
------------ ------------- ------------
(Unaudited)
<S> <C> <C> <C>
Goodwill and FCC license.......... $7,768,000 $7,768,000 40 years
Less: Accumulated amortization.... 205,000 339,000
---------- ----------
$7,563,000 $7,429,000
========== ==========
</TABLE>
<PAGE>
ALLUR-DETROIT, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
Depreciation and amortization expense for the year ended December 31, 1997,
and for the nine months ended September 30, 1997 and 1998, was $245,000,
$183,000 and $167,000, respectively.
4. RELATED PARTY TRANSACTIONS:
Notes Payable
Notes payable consist of the following:
<TABLE>
<CAPTION>
December 31, September 30,
1997 1998
------------ -------------
(Unaudited)
<S> <C> <C>
SYNCOM II--long-term debt--10% annually......... $1,676,000 $1,676,000
SYNCOM III--long-term debt--10% annually........ 1,362,000 1,362,000
SYNCOM II--line of credit--8% annually.......... 191,000 854,000
---------- ----------
Total......................................... $3,229,000 $3,892,000
========== ==========
</TABLE>
The debt owed to SYNCOM II and SYNCOM III are due and payable in lump-sum
the earlier of a sale of the license of Allur-Detroit, a sale of substantially
all of the assets of Allur-Detroit, a sale of a controlling interest in the
common stock shares of Allur-Detroit, or at December 31, 1999 (see Note 7). The
debt is secured by the FCC license and assets of the Company.
Management Fee
The Company entered into an agreement with Syncom Management, Inc. whereby
it pays $36,000 per year for accounting services. Syncom Management, Inc. also
provides management and financial services to SYNCOM II, the owner of the
Company.
5. COMMITMENTS:
Operating Leases
The Company rents office space and transmittal sites under several operating
leases. These leases expire at various dates through 2002, with most containing
renewal options.
Future minimum rental payments under such noncancellable operating leases as
of September 30, 1998, are as follows:
<TABLE>
<CAPTION>
Year
----
<S> <C>
1998 (remaining)................................................ $37,000
1999............................................................ 148,000
2000............................................................ 148,000
2001............................................................ 91,000
2002............................................................ 98,000
</TABLE>
<PAGE>
ALLUR-DETROIT, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
6. CUMULATIVE REDEEMABLE PREFERRED STOCK:
On December 4, 1992, the Company issued 1,050 shares of cumulative
redeemable preferred stock to PNC Bank, formerly Continental Bank. The
preferred stock earns cumulative annual dividends of eight percent (8%) of par
value.
Under the terms of the PNC Bank/Allur-Detroit settlement agreement of
December 31, 1996, redemption of the preferred stock shall occur at the date
when: (i) repayment is effected in full of principal and interest on lenders'
new notes, or (ii) at the maturity date of the new notes when the lenders
shall cause the Company to repay, whichever happens first. In such a
situation, all outstanding shares of preferred stock shall be redeemed at a
price equal to the par value, plus an amount equal to both accrued and
undeclared dividends payable from available funds as stipulated in Section 2.2
of the Shareholders Agreement dated December 4, 1992. As of September 30,
1998, circumstances supporting the redemption of the preferred stock did not
occur.
The Company had not declared and has not recorded an accrual for cumulative
preferred stock dividends. At September 30, 1998, cumulative unpaid preferred
dividends amounted to $958,667. Such dividends, if declared, would have been
paid out of cumulative retained earnings of the Company, if any.
On February 20, 1998, the Company paid $150,000, representing a partial
payment toward the required redemption of the preferred stock held by PNC
Bank. From this date hereof, the balance due for payment on the preferred
stock is $1,950,000. Subsequent to September 30, 1998, the $1,950,000 of
preferred stock was redeemed for the face value without the dividend being
declared.
7. INCOME TAXES:
The Company accounted for income taxes in accordance with Statement of
Financial Accounting standards No. 109, "Accounting for Income Taxes" (SFAS
109). Under SFAS 109, deferred income taxes reflect the impact of temporary
differences between the assets and liabilities recognized for financial
reporting purposes and amounts recognized for tax purposes. Deferred taxes are
based on tax laws as currently enacted.
A reconciliation of the statutory federal income taxes to the recorded
income tax provision for the year ended December 31, 1997, is as follows:
<TABLE>
<S> <C>
Statutory Tax (@ 35% rate)..................................... $(152,000)
Effect of state taxes, net of federal.......................... (18,000)
Effect of graduated tax rate................................... 5,000
Valuation reserve.............................................. 165,000
---------
Provision for income taxes................................... $ --
=========
</TABLE>
The components of the provision for income taxes for the years ended
December 31, 1997 are as follows:
<TABLE>
<S> <C>
Current......................................................... $ --
Deferred........................................................ (165,000)
Valuation reserve............................................... 165,000
---------
Provision for income taxes.................................... $ --
=========
</TABLE>
<PAGE>
ALLUR-DETROIT, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
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 liabilities as
of December 31, 1997, are as follows:
<TABLE>
<S> <C>
Deferred tax assets--
NOL carryforward............................................. $180,000
Deferred tax liabilities--
Depreciation................................................. (15,000)
Net deferred tax asset-- ...................................... 165,000
Less:Valuation reserve......................................... (165,000)
--------
Deferred taxes included in the accompanying consolidated
balance sheets................................................ $ --
========
</TABLE>
A 100% valuation reserve has been applied against the net deferred tax
asset, as its realization is not considered to be more likely than not to be
realized.
As of December 31, 1997, there was approximately $400,000 of available net
operating loss carry forwards that expire through 2011.
8. SUBSEQUENT EVENTS:
On October 26, 1998, the stockholders of the Company entered into a stock
purchase agreement with Radio One, Inc. to sell all of the issued and
outstanding shares of capital stock of the Company for approximately $27
million. The sale is expected to be completed by December 31, 1998.
<PAGE>
(b) Pro Forma Consolidated Financial Statements
(Unaudited) of Radio One, Inc.
The following pro forma consolidated balance sheet as of September 30,
1998, and the pro forma condensed consolidated statements of
operations for the year ended December 31, 1997, and for the nine
months ended September 30, 1998, give effect to the acquisition of
Allur-Detroit, Inc. 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 December 28,
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.
<PAGE>
RADIO ONE, INC.
---------------
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1998
(Unaudited, in thousands)
<TABLE>
<CAPTION>
Radio One Allur-Detroit Allur-Detroit
Historical (a) Historical (b) Adjustments Total
---------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 7,863 $ 172 $ (2,500) (c) $ 5,535
Trade accounts receivable, net 11,842 805 - 12,647
Prepaid expenses and other 309 42 - 351
-------- ------ --------- --------
Total current assets 20,014 1,019 (2,500) 18,533
Property, plant and equipment, net 6,066 82 - 6,148
Intangible assets, net 87,234 7,429 24,703 (d) 119,366
Other assets 979 - - 979
Deferred tax asset - - 400 (d) 400
-------- ------ --------- --------
Total assets $114,293 $8,530 $22,603 $145,426
======== ====== ========= ========
LIABILITIES:
Current Liabilities:
Accounts payable and accrued expenses $ 6,612 $1,056 $ - $ 7,668
-------- ------ --------- --------
Deferred taxes - - 6,077 (e) 6,077
Senior subordinated notes 77,509 - - 77,509
Line of credit 25,350 - 24,000 (c) 49,350
Note payable and deferred interest 3,812 3,892 (3,892) (f) 3,812
Other long-term liabilities 94 - - 94
-------- ------ --------- --------
Total liabilities 113,377 4,948 26,185 144,510
-------- ------ --------- --------
Senior Preferred Stock:
Series A 10,415 - - 10,415
Series B 15,279 - - 15,279
Cumulative Redeemable Preferred Stock - 1,950 (1,950) (g) -
-------- ------ --------- --------
Total senior preferred stock 25,694 1,950 (1,950) 25,694
-------- ------ --------- --------
Stockholder's Equity (Deficit):
Common stock - 1 (1) (g) -
Additional paid-in capital - 2,463 (2,463) (g) -
Accumulated (deficit) (24,778) (832) 832 (g) (24,778)
-------- ------ --------- --------
Total stockholder's equity (deficit) (24,778) 1,632 (1,632) (24,778)
-------- ------ --------- --------
Total liabilities and stockholder's
equity (deficit) $114,293 $8,530 $22,603 $145,426
======== ====== ========= ========
</TABLE>
<PAGE>
_______________________
(a) See the Consolidated Financial Statements of Radio One, Inc., filed on Form
10-Q with the Securities and Exchange Commission.
(b) See the financial statements of Allur-Detroit, Inc. included in this
filing.
(c) To reflect the purchase price of Allur-Detroit, Inc. for $26.5 million,
which was partially financed with $24.0 borrowed under Radio One, Inc. `s
line of credit.
(d) To reflect the allocation of the excess purchase price over the net assets
acquired in the Allur-Detroit, Inc. purchase, calculated as follows:
<TABLE>
<CAPTION>
<S> <C>
Purchase price $26,500
Less: Assets acquired:
Cash and cash equivalents 172
Trade accounts receivable, net 805
Prepaid expenses and other 42
Property and equipment, net 82
Deferred tax asset 400
-------
(1,501)
-------
Add: Liabilities assumed:
Accounts payable and accrued expenses 1,056
-------
1,056
-------
Total excess purchase price 26,055
Allocation of deferred taxes related to the difference in historical tax basis and
allocated book basis of FCC license as the Allur-Detroit, Inc. purchase was a stock
purchase 6,077
Less: Intangible assets already booked 7,429
-------
Pro forma adjustment $24,703
=======
</TABLE>
(e) To record deferred taxes related to the difference in historical tax basis
and allocated book basis of FCC license as the Allur-Detroit, Inc. purchase
was a stock purchase.
(f) To reflect the repayment of Allur-Detroit, Inc.'s debt by the former
owners.
(g) To record redemption of the Cumulative Redeemable Preferred Stock, and to
reflect the elimination of the equity of Allur-Detroit, Inc.
<PAGE>
RADIO ONE, INC.
---------------
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(in thousands)
<TABLE>
<CAPTION>
Radio One Allur-Detroit Allur-Detroit
Historical (a) Historical (b) Adjustments Total
---------------- ---------------- ----------------- ----------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Statement of Operations:
Net broadcast revenue $32,367 $2,214 $ - $34,581
Station operating expenses 18,848 2,361 (150)(c) 21,059
Corporate expenses 2,155 36 (36)(d) 2,155
Depreciation and
amortization 5,828 245 1,913 (e) 7,986
------- ------ ------- -------
Operating income (loss) 5,536 (428) (1,727) 3,381
Interest expense 8,910 222 1,957 (f) 11,089
Other income (expense), net 415 217 - 632
------- ------ ------- -------
Loss before
provision for income taxes (2,959) (433) (3,684) (7,076)
Income tax provision - - - -
------- ------ ------- -------
Net loss $(2,959) $ (433) $(3,684) $(7,076)
======= ====== ======= =======
</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 financial statements of Allur-Detroit, Inc. included in this
filing.
(c) To eliminate operating expenses which Radio One, Inc. does not expect to
incur going forward, which consists of $150 of compensation expense for the
station's general manager.
(d) To eliminate the corporate expenses which Radio One, Inc. does not expect
to incur going forward.
(e) To record amortization of goodwill and depreciation of property in
connection with the Allur-Detroit, Inc. acquisition, calculated as follows:
Amortization of goodwill of $32,132 over 15 years $2,142
Depreciation of property and equipment of $82 over five years 16
Less: Depreciation and amortization previously recorded 245
------
Pro forma adjustment $1,913
======
(f) To record the additional interest expense in connection with the Allur-
Detroit, Inc. acquisition, calculated as follows:
Interest on purchase price of $26,500 at 7.95% $2,107
Amortization of deferred financing costs of $358,000 over 5 years 72
Less: Interest recorded by Allur-Detroit, Inc. 222
------
Pro forma adjustment $1,957
======
<PAGE>
RADIO ONE, INC.
---------------
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(Unaudited, in thousands)
<TABLE>
<CAPTION>
Radio One Allur-Detroit Allur-Detroit
Historical (a) Historical (b) Adjustments Total
---------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Statement of Operations:
Net broadcast revenue $33,304 $2,130 $ - $35,434
Station operating expenses 17,550 2,004 (128)(c) 19,426
Corporate expenses 2,051 27 (27)(d) 2,051
Depreciation and
amortization 6,042 167 1,452 (e) 7,661
------- ------ ------- -------
Operating income (loss) 7,661 (68) (1,297) 6,296
Interest expense 7,996 281 1,353 (f) 9,630
Other income (expense), net 267 (50) - 217
------- ------ ------- -------
Loss before
provision for income taxes (68) (399) (2,650) (3,117)
Income tax provision - - - -
------- ------ ------- -------
Net loss $ (68) $ (399) $(2,650) $(3,117)
======= ====== ======= =======
</TABLE>
_______________________
(a) See the Consolidated Financial Statements of Radio One, Inc. filed on Form
10-Q with the Securities and Exchange Commission.
(b) See the financial statements of Allur-Detroit, Inc. included in this
filing.
(c) To eliminate operating expenses which Radio One, Inc. does not expect to
incur going forward, which consists of $128 of compensation expense for the
station's general manager.
(d) To eliminate corporate expenses which Radio One, Inc. does not expect to
incur going forward.
(e) To record amortization of goodwill and depreciation of property and
equipment in connection with the Allur-Detroit, Inc. acquisition,
calculated as follows:
<TABLE>
<CAPTION>
<S> <C>
Amortization of goodwill of $32,132 over 15 years for nine months $1,607
Depreciation of property and equipment of $82 over five years for nine months 12
Less: Depreciation and amortization recorded 167
------
Pro forma adjustment $1,452
======
</TABLE>
(f) To record the additional interest expense in connection with the Allur-
Detroit, Inc. acquisition, calculated as follows:
<TABLE>
<CAPTION>
<S> <C>
Interest on purchase price of $26,500 at 7.95% for nine months $1,580
Amortization of deferred financing costs of $358,000 over 5 years for nine months 54
Less: Interest recorded by Allur-Detroit, Inc. 281
------
Pro forma adjustment $1,353
======
</TABLE>
