<PAGE>
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, 2000
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.
<TABLE>
<CAPTION>
Class Outstanding at September 30, 2000
----- ---------------------------------
<S> <C>
Class A Common Stock, $.001 Par Value 22,788,933
Class B Common Stock, $.001 Par Value 2,867,463
Class C Common Stock, $.001 Par Value 3,132,458
Class D Common Stock, $.001 Par Value 56,695,484
</TABLE>
1
<PAGE>
RADIO ONE, INC. AND SUBSIDIARIES
--------------------------------
Form 10-Q
For the Quarter Ended September 30, 2000
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I FINANCIAL INFORMATION
Item 1 Financial Statements 3
Consolidated Balance Sheets as of 4
December 31, 1999 (Audited) and September 30, 2000 (Unaudited)
Consolidated Statements of Operations for the Three Months and 5
Nine Months ended September 30, 1999 and 2000 (Unaudited)
Consolidated Statements of Changes in Stockholders' Equity for the 6
Nine Months ended September 30, 2000 (Unaudited)
Consolidated Statements of Cash Flows for the 7
Nine Months ended September 30, 1999 and 2000 (Unaudited)
Notes to Consolidated Financial Statements September 30, 1999 and 2000 8
Item 2 Management's Discussion and Analysis of Financial 11
Condition and Results of Operations
PART II OTHER INFORMATION
Item 1 Legal Proceedings 16
Item 2 Acquisition or Disposition of Assets 16
Item 3 Defaults upon Senior Securities 16
Item 4 Submission of Matters to a Vote of Security Holders 16
Item 5 Exhibits and Reports on Form 8-K 16
Signature 19
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
(See pages 4-9 -- This page intentionally left blank.)
3
<PAGE>
RADIO ONE, INC. AND SUBSIDIARIES
--------------------------------
Consolidated Balance Sheets
---------------------------
As of December 31, 1999, and September 30, 2000
-----------------------------------------------
<TABLE>
<CAPTION>
December 31, September 30,
1999 2000
------------ --------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 6,221,000 $ 35,151,000
Investments, available for sale 256,390,000 10,373,000
Trade accounts receivable, net of allowance for doubtful accounts
of $3,465,000 and $4,529,000, respectively 19,833,000 34,657,000
Prepaid expenses and other 1,035,000 9,015,000
Deferred income taxes 984,000 984,000
------------ --------------
Total current assets 284,463,000 90,180,000
PROPERTY AND EQUIPMENT, NET 15,512,000 117,216,000
INTANGIBLE ASSETS, NET 218,460,000 1,571,701,000
OTHER ASSETS 9,101,000 11,977,000
------------ --------------
Total assets $527,536,000 $1,791,074,000
============ ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,663,000 $ 8,790,000
Accrued expenses 6,941,000 15,498,000
Income taxes payable 1,532,000 2,248,000
Other current liabilities -- 4,723,000
------------ --------------
Total current liabilities 10,136,000 31,259,000
LONG-TERM DEBT AND DEFERRED INTEREST, NET OF CURRENT PORTION 82,626,000 654,407,000
DEFERRED INCOME TAX LIABILITY 14,518,000 31,208,000
------------ --------------
Total liabilities 107,280,000 716,874,000
------------ --------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock - Class A, $.001 par value, 30,000,000 shares authorized,
17,221,000 and 22,789,000 shares issued and outstanding 17,000 23,000
Common stock - Class B, $.001 par value, 150,000,000 shares authorized,
2,867,000 and 2,867,000 shares issued and outstanding 3,000 3,000
Common stock - Class C, $.001 par value, 150,000,000 shares authorized,
3,184,000 and 3,132,000 shares issued and outstanding 3,000 3,000
Common stock - Class D, $.001 par value, 150,000,000 shares authorized,
46,546,000 and 56,695,000 shares issued and outstanding 46,000 57,000
Convertible preferred stock, $.001 par value, 1,000,000 shares authorized and
310,000 shares issued and outstanding; liquidation preference of $1,000 per
share plus cumulative dividends at 6-1/2% per year or $4,198,000 as of
September 30, 2000 -- --
Accumulated comprehensive income adjustments 40,000 --
Additional paid-in capital 446,354,000 1,096,704,000
Accumulated deficit (26,207,000) (22,590,000)
------------ --------------
Total stockholders' equity 420,256,000 1,074,200,000
------------ --------------
Total liabilities and stockholders' equity $527,536,000 $1,791,074,000
============ ==============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
4
<PAGE>
RADIO ONE, INC. AND SUBSIDIARIES
--------------------------------
Consolidated Statements of Operations
-------------------------------------
For the Three Months and Nine Months Ended September 30, 1999 and 2000
----------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine months Ended September 30,
-------------------------------- -------------------------------
1999 2000 1999 2000
----------- ----------- ----------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
REVENUE:
Broadcast revenue, including barter revenue of
$410,000, $670,000, $982,000 and $1,952,000,
respectively $27,589,000 $48,914,000 $65,062,000 $111,269,000
Less: agency commissions 3,468,000 6,028,000 8,087,000 13,588,000
----------- ----------- ----------- ------------
Net broadcast revenue 24,121,000 42,886,000 56,975,000 97,681,000
----------- ----------- ----------- ------------
OPERATING EXPENSES:
Program and technical 3,864,000 6,404,000 9,741,000 15,341,000
Selling, general and administrative 8,264,000 14,167,000 21,470,000 33,958,000
Corporate expenses 1,148,000 1,825,000 3,076,000 4,225,000
Stock-based compensation -- -- 225,000 --
Depreciation and amortization 4,734,000 17,726,000 12,209,000 30,397,000
----------- ----------- ----------- ------------
Total operating expenses 18,010,000 40,122,000 46,721,000 83,921,000
----------- ----------- ----------- ------------
Broadcast operating income 6,111,000 2,764,000 10,254,000 13,760,000
INTEREST EXPENSE, including amortization of
deferred financing costs 3,990,000 8,970,000 11,479,000 16,217,000
OTHER INCOME, net 58,000 9,735,000 199,000 19,442,000
----------- ----------- ----------- ------------
Income (loss) before provision for income taxes 2,179,000 3,529,000 (1,026,000) 16,985,000
PROVISION FOR INCOME TAXES 255,000 7,550,000 731,000 13,368,000
----------- ----------- ----------- ------------
NET INCOME (LOSS) $ 1,924,000 $(4,021,000) $(1,757,000) $ 3,617,000
=========== =========== =========== ============
NET INCOME (LOSS) APPLICABLE TO
COMMON STOCKHOLDERS $ 1,924,000 $(8,219,000) $(3,233,000) $ (581,000)
=========== =========== =========== ============
BASIC AND DILUTED NET INCOME (LOSS) PER COMMON
SHARE APPLICABLE TO COMMON STOCKHOLDERS $ .04 $ (.10) $ (.07) $ (.01)
=========== =========== =========== ============
SHARES USED IN COMPUTING BASIC NET INCOME (LOSS)
PER COMMON SHARE APPLICABLE TO COMMON
STOCKHOLDERS 54,309,000 85,494,000 43,641,000 83,862,000
=========== =========== =========== ============
SHARES USED IN COMPUTING DILUTED NET INCOME
(LOSS) PER COMMON SHARE APPLICABLE TO COMMON
STOCKHOLDERS 54,585,000 85,494,000 43,641,000 83,862,000
=========== =========== =========== ============
</TABLE>
The accompanying notes are an integral part of these consolidated statements
5
<PAGE>
RADIO ONE, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
----------------------------------------------------------
For the Nine Months Ended September 30, 2000
--------------------------------------------
<TABLE>
<CAPTION>
Common Common Common Common Convertible
Stock Stock Stock Stock Preferred Comprehensive
Class A Class B Class C Class D Stock Income
------- ------- ------- ------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, as of December 31, 1998 $ -- $2,000 $3,000 $10,000 $
Comprehensive income:
Net income -- -- -- -- $ 133,000
Unrealized gain on securities -- -- -- -- 40,000
----------
Comprehensive income -- -- -- -- $ 173,000
==========
Preferred stock dividends -- -- -- --
Issuance of stock for acquisition 2,000 1,000 -- 6,000
Stock issued to an officer -- -- -- --
Conversion of warrants 5,000 -- -- 10,000
Issuance of common stock 10,000 -- -- 20,000
------- ------ ------ ------- -----
BALANCE, as of December 31, 1999 17,000 3,000 3,000 46,000
Comprehensive income:
Net income -- -- -- -- $3,617,000
Unrealized loss on securities -- -- -- -- (40,000)
----------
Comprehensive income -- -- -- -- $3,577,000
==========
Issuance of common stock 5,000 -- -- 10,000
Issuance of stock for acquisitions 1,000 -- -- 1,000
Employee exercise of options -- -- -- --
Issuance of preferred stock -- -- -- --
------- ------ ------ ------- -----
BALANCE, as of September 30, 2000
(Unaudited) $23,000 $3,000 $3,000 $57,000 $
======= ====== ====== ======= =====
<CAPTION>
Accumulated
Comprehensive Additional Total
Income Paid-in Accumulated Stockholders'
Adjustments Capital Deficit Equity
------------- -------------- ------------ --------------
<S> <C> <C> <C> <C>
BALANCE, as of December 31, 1998 $ -- $ (10,000) $(24,864,000) $ (24,859,000)
Comprehensive income:
Net income -- 133,000 133,000
Unrealized gain on securities 40,000 -- 40,000
Comprehensive income -- --
Preferred stock dividends -- (1,476,000) (1,476,000)
Issuance of stock for acquisition -- 34,185,000 -- 34,194,000
Stock issued to an officer -- 225,000 -- 225,000
Conversion of warrants -- (15,000) --
Issuance of common stock -- 411,969,000 -- 411,999,000
-------- -------------- ------------ --------------
BALANCE, as of December 31, 1999 40,000 446,354,000 (26,207,000) 420,256,000
Comprehensive income:
Net income -- 3,617,000 3,617,000
Unrealized loss on securities (40,000) -- (40,000)
Comprehensive income -- --
Issuance of common stock -- 335,967,000 -- 335,982,000
Issuance of stock for acquisitions -- 13,543,000 -- 13,545,000
Employee exercise of options -- 905,000 -- 905,000
Issuance of preferred stock -- 299,935,000 -- 299,935,000
-------- -------------- ------------ --------------
BALANCE, as of September 30, 2000
(Unaudited) $ -- $1,096,704,000 $(22,590,000) $1,074,200,000
======== ============== ============ ==============
</TABLE>
The accompanying notes are an integral part of these consolidated statements
6
<PAGE>
RADIO ONE, INC. AND SUBSIDIARIES
--------------------------------
Consolidated Statements of Cash Flows
-------------------------------------
For the Nine Months Ended September 30, 1999 and 2000
-----------------------------------------------------
<TABLE>
<CAPTION>
1999 2000
------------- ---------------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (1,757,000) $ 3,617,000
Adjustments to reconcile net (loss) income to net cash from operating
activities:
Depreciation and amortization 12,209,000 30,397,000
Amortization of debt financing costs, unamortized discount and deferred
interest 3,368,000 2,361,000
Deferred income taxes and reduction in valuation reserve on deferred taxes -- 7,550,000
Non-cash compensation to officer 225,000 --
Loss on sale of investments -- 254,000
Non-cash advertising revenue in exchange for equity investments -- (683,000)
Effect of change in operating assets and liabilities-
Trade accounts receivable (5,275,000) (13,285,000)
Prepaid expenses and other (171,000) 118,000
Other assets (118,000) 180,000
Accounts payable 854,000 6,893,000
Accrued expenses and other 3,333,000 6,808,000
------------ ---------------
Net cash flows from operating activities 12,668,000 44,210,000
------------ ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (2,580,000) (2,316,000)
Equity investments (1,125,000) (934,000)
Proceeds from sale of investments, net -- 245,803,000
Deposits and payments for station purchases (55,325,000) (1,458,516,000)
------------ ---------------
Net cash flows from investing activities (59,030,000) (1,215,963,000)
------------ ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt (69,483,000) (65,000)
Proceeds from debt issuances 26,000,000 570,000,000
Repayment of Senior Cumulative Redeemable Preferred Stock (28,160,000) --
Deferred financing costs (549,000) (6,069,000)
Proceeds from issuance of common stock, net of issuance costs 118,527,000 335,982,000
Proceeds from exercise of stock options -- 900,000
Proceeds from issuance of preferred stock, net of issuance costs -- 299,935,000
------------ ---------------
Net cash flows from financing activities 46,335,000 1,200,683,000
------------ ---------------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (27,000) 28,930,000
CASH AND CASH EQUIVALENTS, beginning of period 4,455,000 6,221,000
------------ ---------------
CASH AND CASH EQUIVALENTS, end of period $ 4,428,000 $ 35,151,000
============ ===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for-
Interest $ 6,340,000 $ 5,602,000
============ ===============
Income taxes $ 374,000 $ 6,192,000
============ ===============
</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, 1999 and 2000
---------------------------
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., WYCB Acquisition Corporation, Radio One
of Detroit, Inc., Allur-Detroit, Inc. and Allur Licenses, Inc. (Delaware
corporations), Broadcast Holdings, Inc. (a Washington, D.C., corporation), Bell
Broadcasting Company (a Michigan corporation), Radio One of Atlanta, Inc. and
its wholly owned subsidiaries, ROA Licenses, Inc., and Dogwood Communications,
Inc. (Delaware corporations), and its wholly owned subsidiary, Dogwood Licenses,
Inc. (a Delaware corporation), Radio One of Charlotte, LLC (a Delaware entity)
and its wholly owned subsidiaries Davis Broadcasting of Charlotte, Inc., Radio
One of North Carolina, Inc. and Radio One of Augusta, Inc. (Delaware
corporations) (collectively referred to as the Company) were organized to
acquire, operate and maintain radio broadcasting stations. The Company owns and
operates radio stations in the Washington, D.C.; Baltimore, Maryland;
Philadelphia, Pennsylvania; Detroit, Michigan; Kingsley, Michigan; Atlanta and
Augusta, Georgia; Cleveland, Ohio; St. Louis, Missouri; Richmond, Virginia;
Boston, Massachusetts; Charlotte and Raleigh, North Carolina; Greenville, South
Carolina; Indianapolis, Indiana; Houston and Dallas, Texas; Miami, Florida; and
Los Angeles, California, markets. The Company also operates radio stations in
Richmond, Virginia and Boston, Massachusetts, through time brokerage agreements.
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, Inc. 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 revenue and expenses during the reporting period.
Actual results could differ from those estimates.
Interim Financial Statements
The interim consolidated financial statements included herein for Radio One,
Inc. and subsidiaries 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, 1999,
financial statement and notes thereto included in the Company's annual report on
Form 10-K.
8
<PAGE>
2. ACQUISITIONS:
On September 25, 2000, the Company completed the acquisition of KJOI-AM
(formerly KLUV-AM) licensed to Dallas, Texas, for approximately $16.0 million.
The acquisition resulted in recording approximately $15.3 million of intangible
assets.
On August 25, 2000, the Company completed the acquisition of twelve radio
stations (KMJQ-FM and KBXX-FM licensed to Houston, Texas, WVCG-AM, licensed to
Coral Gables, Florida, WZAK-FM, licensed to Cleveland, Ohio, WJMO-AM, licensed
to Cleveland Heights, Ohio, KKBT-FM, licensed to Los Angeles, California, KBFB-
FM, licensed to Dallas, Texas, WJMZ-FM, licensed to Anderson, South Carolina,
WFXK-FM, licensed to Tarboro, North Carolina, WFXC-FM, licensed to Durham, North
Carolina, WNNL-FM, licensed to Fuquay-Varina, North Carolina and WQOK-FM,
licensed to South Boston, Virginia) from Clear Channel Communications, Inc. and
AMFM, Inc. for approximately $1.3 billion in cash. The acquisition resulted in
the recording of approximately $1.2 billion of intangible assets. In connection
with this acquisition, the Company is obtaining an appraisal of all tangible
assets acquired. Thus, the Company estimated the value of the tangible assets
until the appraisals are complete.
On June 8, 2000, the Company completed the acquisitions of WHHH-FM, licensed to
Indianapolis, Indiana; WBKS-FM, licensed to Greenwood, Indiana; WYJZ-FM,
licensed to Lebanon, Indiana; and W53AV, a low-powered television station
licensed to Indianapolis, Indiana, for approximately $30.0 million in cash and
441,000 shares of Class A common stock. The acquisitions resulted in the
recording of approximately $38.9 million of intangible assets.
On June 7, 2000, the Company completed the acquisition of the stock of Davis
Broadcasting, Inc., which owns and operates radio stations WTHB-AM and WFXA-FM,
licensed to Augusta, Georgia; WAEG-FM, licensed to Evans, Georgia; WAKB-FM,
licensed to Wrens, Georgia; WAEJ-FM, licensed to Waynesboro, Georgia; and WCCJ-
FM, licensed to Harrisburg, North Carolina, for approximately $20.0 million in
cash, 57,000 shares of Class A common stock and 115,000 shares of Class D common
stock The acquisition resulted in the recording of approximately $23.9 million
of intangible assets.
On February 28, 2000, the Company completed the acquisition of WPLY-FM, located
in the Philadelphia, Pennsylvania market, for approximately $80.0 million. The
acquisition of WPLY-FM resulted in the recording of approximately $78.7 million
of intangible assets.
3. PRIVATE PLACEMENT AND PUBLIC OFFERING:
In July 2000, the Company completed a private placement of $310.0 million of
6-1/2% Convertible Preferred Securities, at $1,000 per security, with a par
value of $.001 per share. Each of these preferred securities is convertible to
53.3832 shares of Class D common stock. Issuance costs were approximately $10.1
million, including underwriting commissions.
In March 2000, the Company completed a public offering of 5.0 million shares of
Class A common stock at $70.00 per share. The proceeds from this offering, net
of offering costs, were approximately $336.0 million.
4. STOCK SPLIT:
On May 22, 2000, the Company's Board of Directors declared a three-for-one stock
split of Class A Common Stock in the form of a stock dividend of Class D common
stock payable to shareholders of record as of May 30, 2000. All per share data
in the accompanying unaudited financial statement has been restated to reflect
this stock dividend.
5. INCOME TAX PROVISION:
The Company records its income tax provision for the interim periods based on
its estimate of the effective tax rate for the year. The Company recorded a tax
provision for the quarter ended September 30, 2000, of
9
<PAGE>
$7.6 million or a 214% effective tax rate, compared to a tax provision for the
six months ended June 30, 2000, at a 43% effective tax rate. The increase in the
effective tax rate for the quarter was to increase the cumulative effective tax
rate for the nine-month period ended September 30, 2000, to a 79% effective tax
rate. The increase in the cumulative effective tax rate relates to the
acquisitions completed during the quarter ended September 30, 2000, which
effected the year-end estimated pre-tax income causing the annual estimated
effective tax rate to increase to 79%. The actual effective tax rate for the
year may be significantly different from the estimated effective tax rate used
for the nine months ended September 30, 2000.
6. SUBSEQUENT EVENTS:
Subsequent to September 30, 2000, an officer of the Company purchased one
million shares of the Company's newly-issued stock. The stock was purchased
with the proceeds of a loan from the Company.
In October 2000, the Company's Board of Directors declared and the Company paid
a $5.0 million dividend to the holders of the convertible preferred securities.
In November 2000, the Company entered into an asset purchase agreement to
acquire a radio station formerly known as KDGE-FM licensed to Gainesville, Texas
for approximately $52.4 million. Additionally, the Company will divest two
radio stations in Richmond, Virginia and two radio stations in Greenville, South
Carolina for approximately $53.5 million.
10
<PAGE>
Item 2. 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's Discussion and
Analysis contained in the Company's Annual Report on Form 10-K for the year
ended December 31, 1999.
RESULTS OF OPERATIONS
---------------------
Comparison of periods ended September 30, 2000 to the periods ended September
30, 1999
(all periods are unaudited - all numbers in 000s except per share data).
<TABLE>
<CAPTION>
Three months Three months Nine months Nine months
ended ended ended ended
September 30, September 30, September 30, September 30,
1999 2000 1999 2000
--------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
REVENUE:
Broadcast revenue $27,589 $48,914 $65,062 $111,269
Less: Agency commissions 3,468 6,028 8,087 13,588
--------------- ------------- --------------- ---------------
Net broadcast revenue 24,121 42,886 56,975 97,681
--------------- ------------- --------------- ---------------
OPERATING EXPENSES:
Programming and technical 3,864 6,404 9,741 15,341
Selling, G&A 8,264 14,167 21,470 33,958
Corporate expenses 1,148 1,825 3,076 4,225
Stock-based compensation - - 225 -
Depreciation & amortization 4,734 17,726 12,209 30,397
--------------- ------------- --------------- ---------------
Total operating expenses 18,010 40,122 46,721 83,921
--------------- ------------- --------------- ---------------
Operating income 6,111 2,764 10,254 13,760
INTEREST EXPENSE 3,990 8,970 11,479 16,217
OTHER INCOME, net 58 9,735 199 19,442
--------------- ------------- --------------- ---------------
Income (loss) before
provision for income taxes 2,179 3,529 (1,026) 16,985
PROVISION FOR INCOME TAXES 255 7,550 731 13,368
--------------- ------------- --------------- ---------------
Net income (loss) $ 1,924 $(4,021) $(1,757) $ 3,617
=============== ============= =============== ===============
Net income (loss) applicable to
common stockholders $ 1,924 $(8,219) $(3,233) $ (581)
=============== ============= =============== ===============
BASIC PER SHARE DATA:
Net income (loss) per share $ 0.04 $ (0.05) $ (0.04) $ 0.04
Preferred dividends per share $ - $ 0.05 $ 0.03 $ 0.05
Net income (loss) per share applicable to
common shareholders $ 0.04 $ (0.10) $ (0.07) $ (0.01)
After-tax cash flow per share $ 0.12 $ 0.20 $ 0.24 $ 0.44
DILUTED PER SHARE DATA:
Net income (loss) per share $ 0.04 $ (0.05) $ (0.04) $ 0.04
Preferred dividends per share $ - $ 0.05 $ 0.03 $ 0.05
Net income (loss) per share applicable to
common shareholders $ 0.04 $ (0.10) $ (0.07) $ (0.01)
After-tax cash flow per share $ 0.12 $ 0.20 $ 0.24 $ 0.44
OTHER DATA:
Broadcast cash flow (a) $11,993 $22,315 $25,764 $48,382
Broadcast cash flow margin 49.7% 52.0% 45.2% 49.5%
EBITDA (b) $10,845 $20,490 $22,688 $44,157
EBITDA margin (b) 45.0% 47.8% 39.8% 45.2%
After-tax cash flow (c) $ 6,713 $17,057 $10,452 $36,784
SAME STATION RESULTS(d)
Net revenue $24,120 $27,170 $58,754 $70,998
Broadcast cash flow 11,993 14,376 26,552 36,391
Broadcast cash flow margin 49.7% 52.9% 45.1% 51.3%
Weighted average shares outstanding - basic (e) 54,309 85,494 43,641 83,862
Weighted average shares outstanding - diluted (f) 54,585 85,684 43,641 84,061
Capital expenditures $ 461 $ 919 $ 2,580 $ 2,316
</TABLE>
Net broadcast revenue increased to approximately $42.9 million for the
quarter ended September 30, 2000 from approximately $24.1 million for the
quarter ended September 30, 1999 or 78%. Net broadcast revenue increased to
approximately $97.7 million for the nine months ended September 30, 2000 from
approximately $57.0 million for the nine months ended September 30, 1999 or 71%.
This increase in net broadcast revenue was the result of continuing broadcast
revenue growth in all of the Company's markets in which it has operated for at
least one year 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 mid-1999 acquisitions in Boston and in Richmond
(where the Company also operates stations under time brokerage agreements), as
well as the more recent acquisitions of radio stations in Augusta, Charlotte,
Dallas, Greenville, Houston, Indianapolis, Los Angeles, Miami, Philadelphia, and
Raleigh.
11
<PAGE>
Operating expenses excluding depreciation, amortization and stock-based
compensation increased to approximately $22.4 million for the quarter ended
September 30, 2000 from approximately $13.3 million for the quarter ended
September 30, 1999 or 68%. Operating expenses excluding depreciation,
amortization and stock-based compensation increased to approximately $53.5
million for the nine months ended September 30, 2000 from approximately $34.3
million for the nine months ended September 30, 1999 or 56%. This increase in
expenses was related to the Company's rapid expansion within all of the markets
in which it operates including increased variable costs associated with
increased revenue, as well as start-up and expansion expenses in its newer
markets and higher costs associated with operating as a public company.
Broadcast operating income was approximately $2.8 million for the quarter
ended September 30, 2000 compared to $6.1 million for the quarter ended
September 30, 1999 or a decrease of 54%. Broadcast operating income increased to
approximately $13.8 million for the nine months ended September 30, 2000 from
approximately $10.3 million for the nine months ended September 30, 1999 or 34%.
The decrease in net broadcast operating income for the quarter was attributable
to higher revenue as described above more than offset by higher depreciation and
amortization expenses associated with the Company's several acquisitions made in
1999 and 2000. The increase in net broadcast operating income for the nine month
period was due to higher revenue as described above partially offset by
increased depreciation and amortization expenses.
Interest expense increased to approximately $9.0 million for the quarter
ended September 30, 2000 from approximately $4.0 million for the quarter ended
September 30, 1999 or 125%. Interest expense increased to approximately $16.2
million for the nine months ended September 30, 2000 from approximately $11.5
million for the nine months ended September 30, 1999 or 41%. This increase
relates primarily to additional borrowings made in the third quarter of 2000 in
conjunction with the acquisition of radio stations from Clear Channel
Communications, Inc. and AMFM, Inc.
Other income (almost exclusively interest income) increased to
approximately $9.7 million for the quarter ended September 30, 2000 from
approximately $0.1 million for the quarter ended September 30, 1999 or 9,600%.
Other income (almost exclusively interest income) increased to approximately
$19.4 million for the nine months ended September 30, 2000 from approximately
$0.2 million for the nine months ended September 30, 1999 or 9,600%. This
increase was due to the Company's high cash and investment balances following
its equity offerings in November 1999, March 2000 and July 2000 as well as cash
generated from operations.
Income before provision for income taxes increased to approximately $3.5
million for the quarter ended September 30, 2000 from approximately $2.2 million
for the quarter ended September 30, 1999 or 59%. Income before provision for
income taxes increased to approximately $17.0 million for the nine months ended
September 30, 2000 from a loss of approximately $1.0 million for the nine months
ended September 30, 1999. This increase was due to higher operating income
enhanced by higher interest income, partially offset by higher interest expense
in the quarter, as described above.
Net loss was approximately $4.0 million for the quarter ended September 30,
2000 compared to net income of approximately $1.9 million for the quarter ended
September 30, 1999. Net income increased to approximately $3.6 million for the
nine months ended September 30, 2000 from a loss of approximately $1.8 million
for the nine months ended September 30, 1999. This decrease in net income for
the quarter was due to higher income before provision for income taxes more than
offset by a higher income tax provision associated with the change in the
estimated pre-tax income for the year as a result of the acquisition of 12 radio
stations from Clear Channel Communications, Inc. and AMFM, Inc. The increase in
net income for the nine month period was due to higher income before provision
for income taxes partially offset by an increased provision for income taxes.
Broadcast cash flow increased to approximately $22.3 million for the
quarter ended September 30, 2000 from approximately $12.0 million for the
quarter ended September 30, 1999 or 86%. Broadcast cash flow increased to
approximately $48.4 million for the nine months ended September 30, 2000 from
approximately $25.8 million for the nine months ended September 30, 1999 or 88%.
This increase was
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attributable to the increases in broadcast revenue partially offset by higher
operating expenses as described above.
Earnings before interest, taxes, depreciation, and amortization (EBITDA),
and excluding stock-based compensation expense, increased to approximately $20.5
million for the quarter ended September 30, 2000 from approximately $10.8
million for the quarter ended September 30, 1999 or 90%. Earnings before
interest, taxes, depreciation, and amortization, and excluding stock-based
compensation expense, increased to approximately $44.2 million for the nine
months ended September 30, 2000 from approximately $22.7 million for the nine
months ended September 30, 1999 or 95%. This increase was attributable to the
increase in broadcast revenue and interest income partially offset by higher
operating expenses and higher corporate expenses partially associated with the
costs of operating as a public company.
(a) "Broadcast cash flow" is defined as broadcast operating income plus
corporate expenses (including stock-based compensation) and depreciation
and amortization of both tangible and intangible assets.
(b) "EBITDA" is defined as earnings before interest, taxes, depreciation,
amortization and stock-based compensation.
(c) "After-tax cash flow" is defined as income before income taxes and
extraordinary items plus depreciation, amortization and stock-based
compensation, less the current income tax liability and preferred stock
dividends.
(d) Same station results include results only for those stations owned and/or
operated by the Company for the full one-year period in question. For
1999, same station results include results of an affiliate of the
Company's, Radio One of Atlanta, which was operated by the Company from its
inception and acquired by the Company on March 30, 1999.
(e) As of September 30, 2000 the Company had 85,494,000 shares of Common Stock
outstanding on a weighted average basis for the quarter. As of September
30, 2000, the Company had 85,684,000 shares of Common Stock outstanding on
a weighted average basis for the quarter, diluted for outstanding stock
options.
(f) As of September 30, 2000 the Company had 85,684,000 shares of Common Stock
outstanding on a weighted average basis for the quarter, diluted for
outstanding stock options. However, the per share amounts are the same as
those based on basic shares outstanding because of the anti-dilutive effect
of these options shares, other than for after-tax cash flow. After-tax
cash flow per share data was calculated using the basic and diluted
weighted average shares outstanding, however, the per share amounts were
the same because of the relatively minor differences between the two
weighted average share amounts.
LIQUIDITY AND CAPITAL RESOURCES
--------------------------------
The capital structure of the Company consists of the Company's outstanding
long-term debt and stockholders' equity. The stockholders' equity consists of
common stock, convertible preferred stock, additional paid-in capital and
accumulated deficit. The Company's balance of cash and cash equivalents was
approximately $6.2 million as of December 31, 1999. The Company's balance of
cash and cash equivalents was approximately $35.2 million as of September 30,
2000. This increase resulted primarily from the Company's stronger cash flow
from operating activities during the first nine months of 2000 as well as the
Company's follow-on public offering on March 8, 2000 from which it raised
approximately $336.0 million and the Company's convertible preferred offering
from which it raised approximately $299.9 million, partially offset by cash paid
for the acquisition of WPLY-FM on February 28, 2000 from Greater Media Radio
Company, the acquisition of Davis Broadcasting, Inc. on June 7, 2000 which
included WCCJ-FM in the Charlotte, North Carolina market and five radio stations
in the Augusta, Georgia market, the acquisition of three radio stations and one
low power television station in the Indianapolis market on June 8, 2000 from
Shirk, Inc. and IBL, L.L.C., the acquisition of 12 radio stations from Clear
Channel Communications, Inc. and AMFM, Inc. for $1.3 billion on August 25, 2000,
and the acquisition of KJOI-AM (formerly KLUV-AM) in the Dallas market from
Infinity Broadcasting Corporation on September 25, 2000. The balance of the
purchase price and related expenses for the Clear Channel acquisition was funded
with approximately $570.0 million drawn on a $750.0 million credit facility
which the Company entered into on July 17, 2000 and became effective concurrent
with the closing of the Asset Purchase Agreement with Clear Channel
Communications, Inc. and AMFM, Inc.
The Amended and Restated Credit Agreement dated July 17, 2000 provides for
a new bank facility
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under which the Company can borrow up to $750.0 million from a group of banking
institutions. The new bank credit facility contains covenants limiting the
Company's ability to incur additional debt and additional liens, make dividends
and other payments with respect to the Company's equity securities, make new
investments and sell assets. This new facility also requires compliance with
financial tests based on financial position and results of operations, including
a leverage ratio, an interest coverage ratio and a fixed charge coverage ratio,
all of which could effectively limit the Company's ability to borrow or
otherwise raise funds in the credit and capital markets. At September 30, 2000,
$180.0 million remained available (based on various covenant restrictions) to be
drawn down from the Company's $750.0 bank credit facility. 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 flows from operating activities increased to approximately $44.2
million for the nine months ended September 30, 2000 from approximately $12.7
million for the nine months ended September 30, 1999 or 248%. This increase was
due to higher net income resulting from increased revenue and interest income in
addition to higher non-cash expenses. Non-cash expenses of depreciation and
amortization increased to approximately $30.4 million for the nine months ended
September 30, 2000 from approximately $12.2 million for the nine months ended
September 30, 1999 or 149% due to various acquisitions made by the Company
within the past year. Other significant increases in non-cash expenses for the
nine months ended September 30, 2000 included deferred income taxes of $7.6
million compared to zero for the nine months ended September 30, 1999.
Net cash flows used in investing activities increased to approximately
$1,216.0 million for the nine months ended September 30, 2000 compared to
approximately $59.0 million for the nine months ended September 30, 1999 or
1,961%. During the nine months ended September 30, 2000 the Company acquired
radio station WPLY-FM in the Philadelphia, Pennsylvania market for approximately
$80.0 million. The Company also acquired six radio stations in the Charlotte,
North Carolina and Augusta, Georgia markets through an acquisition of the stock
of Davis Broadcasting, Inc. for approximately $20.0 million in cash and
approximately 57,000 shares of Class A Common Stock and 115,000 shares of Class
D Common Stock, and three radio stations and one low power television station in
the Indianapolis, Indiana market from Shirk, Inc. and IBL, L.L.C. for
approximately $30.0 million in cash and 441,000 shares of Class A Common Stock.
The Company acquired 12 radio stations in seven markets from Clear Channel
Communications, Inc. and AMFM, Inc. for approximately $1.3 billion and radio
station KJOI-AM (formerly KLUV-AM) in the Dallas, Texas market for approximately
$16.0 million. Also during the nine months ended September 30, 2000 the Company
made purchases of capital equipment totaling approximately $2.3 million.
Net cash flows from financing activities increased to approximately
$1,200.7 million for the nine months ended September 30, 2000 compared to
approximately $46.3 million for the nine months ended September 30, 1999 or
2,493%. In March 2000, the Company completed a public offering of common stock
that raised net proceeds of approximately $336.0 million. In July 2000, the
Company completed an offering of 6-1/2% Convertible Preferred Securities that
raised net proceeds of approximately $299.9 million. Most of the proceeds were
used to fund the acquisitions mentioned above, with the balance to be used in
part for general operating expenses and to fund future acquisitions.
As a result of the aforementioned, cash and cash equivalents increased by
$28.9 million during the nine months ended September 30, 2000 compared to a
decrease of approximately $27,000 during the nine months ended September 30,
1999.
This discussion may include forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Because these statements apply to future events, they are
subject to risks and uncertainties that could cause actual results to differ
materially, including the absence of a combined operating history with an
acquired company or radio station and the potential inability to integrate
acquired businesses, need for additional financing, high degree of leverage,
granting of rights to acquire certain portions of the acquired company's or
radio station's operations, variable economic conditions and consumer tastes, as
well as restrictions imposed by existing debt and future payment obligations.
Important factors that could cause actual results to differ
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materially are described in the Company's reports on Forms 10-K and 10-Q and
other filings with the Securities and Exchange Commission.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is from time to time engaged in legal proceedings
incidental to its business. The Company does not believe that any legal
proceedings that it is currently engaged in, either individually or in the
aggregate, will have a material adverse effect on the Company.
Item 2. Acquisition or Disposition of Assets
Information is incorporated by reference to Radio One's Current Report
on Form 8-K dated September 7, 2000, File No. 000-25969; Film No. 717885
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
Information is incorporated by reference to Radio One's Current Report
on Form 8-K/A1 dated October 6, 2000, File No. 000-25969; Film No. 736375.
Item 5. Exhibits and Reports on Form 8-K
(a) EXHIBITS
3.1 Amended and Restated Certificate of Incorporation of Radio
One, Inc. (dated as of May 4, 2000), as filed with the State
of Delaware on May 9, 2000 (incorporated by reference to
Radio One's Quarterly Report on Form 10-Q for the period
ended March 31, 2000 (File No. 000-25969; Film No. 631638)).
3.1.1 Certificate of Amendment (dated as of September 21, 2000) of
the Amended and Restated Certificate of Incorporation of
Radio One, Inc. (dated as of May 4, 2000), as filed with the
State of Delaware on September 21, 2000 (incorporated by
reference to Radio One's Current Report on Form 8-K filed
October 6, 2000 (File No. 000-25969; Film No. 736375)).
3.2 Amended and Restated By-laws of Radio One, Inc., amended as
of September 15, 2000 (incorporated by reference to Radio
One's Current Report on Form 8-K filed October 6, 2000 (File
No. 000-25969; Film No. 736375)).
3.3 Certificate Of Designations, Rights and Preferences of the 6
1/2% Convertible Preferred Securities Remarketable Term
Income Deferrable Equity Securities (HIGH TIDES) of Radio
One, Inc., as filed with the State of Delaware on July 13,
2000 (incorporated by reference to Radio One's Quarterly
Report on Form 10-Q for the period ended June 30, 2000 (File
No. 000-25969; Film No. 698190)).
4.1 Indenture dated as of May 15, 1997 among Radio One, Inc.,
Radio One Licenses, Inc. and United States Trust Company of
New York (incorporated by reference to Radio One's Annual
Report on Form 10-K for the period ended December 31, 1997
(File No. 333-30795; Film No. 98581327)).
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4.2 First Supplemental Indenture dated as of June 30, 1998, to
Indenture dated as of May 15, 1997, by and among Radio One,
Inc., as Issuer and United States Trust Company of New York, as
Trustee, by and among Radio One, Inc., Bell Broadcasting
Company, Radio One of Detroit, Inc., and United States Trust
Company of New York, as Trustee (incorporated by reference to
Radio One's Current Report on Form 8-K filed July 13, 1998 (File
No. 333-30795; Film No. 98665139)).
4.3 Second Supplemental Indenture dated as of December 23, 1998, to
Indenture dated as of May 15, 1997, by and among Radio One,
Inc., as Issuer and United States Trust Company of New York, as
Trustee, by and among Radio One, Inc., Allur-Detroit, Allur
Licenses, Inc., and United States Trust Company of New York, as
Trustee (incorporated by reference to Radio One's Current Report
on Form 8-K filed January 12, 1999 (File No. 333-30795; Film No.
99504706)).
4.7 Standstill Agreement dated as of June 30, 1998 among Radio One,
Inc., the subsidiaries of Radio One, Inc., United States Trust
Company of New York and the other parties thereto (incorporated
by reference to Radio One's Quarterly Report on Form 10-Q for
the period ended June 30, 1998 (File No. 333-30795; Film No.
98688998)).
4.9 Stockholders Agreement dated as of March 2, 1999 among
Catherine L. Hughes and Alfred C. Liggins, III (incorporated by
reference to Radio One's Quarterly Report on Form 10-Q for the
period ended June 30, 1999 (File No. 000-25969; Film No.
99686684)).
4.10 Registration Rights Agreement, dated as of July 14, 2000, by and
among Radio One, Inc., and Credit Suisse First Boston
Corporation, Deutsche Bank Securities Inc., Morgan Stanley &
Co. Incorporated, Bank of America Securities LLC, and First
Union Securities, Inc., as the Initial Purchases of Radio One,
Inc.'s 6 1/2% Convertible Preferred Securities Remarketable
Term Income Deferrable Equity Securities (HIGH TIDES)
(incorporated by reference to Radio One's Quarterly Report on
Form 10-Q for the period ended June 30, 2000 (File No. 000-
25969; Film No. 698190)).
4.11 Remarketing Agreement, dated as of July 14, 2000, by and among
Radio One, Inc., American Stock Transfer & Trust Co., as Tender
Agent and Credit Suisse First Boston Corporation, as Remarketing
Agent, for Radio One, Inc.'s 6 1/2% Convertible Preferred
Securities Remarketable Term Income Deferrable Equity Securities
(HIGH TIDES) (incorporated by reference to Radio One's Quarterly
Report on Form 10-Q for the period ended June 30, 2000 (File No.
000-25969; Film No. 698190)).
4.12 Global Security Certificate for Radio One, Inc.'s 6 1/2%
Convertible Preferred Securities Remarketable Term Income
Deferrable Equity Securities (HIGH TIDES) (incorporated by
reference to Radio One's Quarterly Report on Form 10-Q for the
period ended June 30, 2000 (File No. 000-25969; Film No.
698190)).
10.62 Second Amended and Restated Credit Agreement, dated as of July
17, 2000, by and among Radio One, Inc., Bank of America, N.A.,
Credit Suisse First Boston, First Union National Bank, Toronto
Dominion (Texas), Inc., Bankers Trust Company, and the Several
Lenders From Time to Time Parties Hereto.
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27.1 Financial data schedule (EDGAR version only).
(b) REPORTS ON FORM 8-K
The Company filed a Form 8-K dated September 7, 2000 disclosing that it
had consummated the acquisition of twelve radio stations from Clear Channel
Communications, Inc. and AMFM, Inc. for approximately $1.3 billion in cash. No
financial reports were filed at that time.
The Company filed a Form 8-K/A dated October 6, 2000 to amend its Form
8-K filed on September 7, 2000. The Company added the Financial Statements of
the Business Acquired required by Item 7(a) and the Pro Forma Financial
Information required by Item 7(b). In addition, the Company disclosed (i) the
results of its Annual Meeting of Stockholders, (ii) a pending asset acquisition
in Greenville, South Carolina, and (iii) a completed acquisition in Dallas,
Texas.
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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.
/S/ Scott R. Royster
----------------------------------------------------
November 10, 2000 Scott R. Royster
Executive Vice President and Chief Financial Officer
(Principal Accounting Officer)
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