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 June 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 August 14, 1998
----- ------------------------------
Class A Common Stock, $.01 Par Value 138.45
Class B Common Stock, $.01 Par Value 0
RADIO ONE, INC. AND SUBSIDIARIES
Form 10-Q
For the Quarter Ended June 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 June 30, 1998 (Unaudited)
Consolidated Statements of Operations for the 5
Three months and six months ended June 29, 1997 and June 30, 1998
(Unaudited)
Consolidated Statements of Changes in Stockholders' Deficit for the 6
Six months ended June 30, 1998 (Unaudited)
Consolidated Statements of Cash Flows for the 7
Six months ended June 29, 1997 and June 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
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1997 AND JUNE 30, 1998
December 31, June 30,
1997 1998
---- ----
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 8,500,000 $ 3,431,000
Trade accounts receivable, net of allowance for doubtful
accounts of $904,000 and $699,000, respectively 8,722,000 10,870,000
Prepaid expenses and other 315,000 312,000
---------------- ----------------
Total current assets 17,537,000 14,613,000
PROPERTY AND EQUIPMENT, net 4,432,000 6,159,000
INTANGIBLE ASSETS, net 54,942,000 89,236,000
OTHER ASSETS 2,314,000 868,000
---------------- ----------------
Total assets $ 79,225,000 $ 110,876,000
================ ================
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 258,000 $ 473,000
Accrued expenses 3,029,000 4,169,000
---------------- ----------------
Total current liabilities 3,287,000 4,642,000
LONG-TERM DEBT AND DEFERRED INTEREST 74,954,000 105,821,000
---------------- ----------------
Total liabilities 78,241,000 110,463,000
---------------- ----------------
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 10,029,000
Series B, $.01 par value, 150,000 shares authorized, 124,467 shares
issued and outstanding 13,658,000 14,712,000
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) (24,328,000)
---------------- ----------------
Total stockholders' deficit (21,984,000) (24,328,000)
---------------- ----------------
Total liabilities and stockholders' deficit $ 79,225,000 $ 110,876,000
=============== ================
The accompanying notes are an integral part
of these consolidated balance sheets.
RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 29, 1997 AND JUNE 30, 1998
(Unaudited)
Three Months Ended Six Months Ended
-------------------------------------------------------------------------
June 29, June 30, June 29, June 30,
1997 1998 1997 1998
---- ---- ---- ----
REVENUES:
Broadcast revenues $ 8,827,000 $ 13,231,000 $ 15,126,000 $ 22,328,000
Less: Agency commissions 1,124,000 1,726,000 1,890,000 2,800,000
--------------- --------------- --------------- ---------------
Net broadcast revenues 7,703,000 11,505,000 13,236,000 19,528,000
--------------- --------------- --------------- ---------------
OPERATING EXPENSES:
Program and technical 1,537,000 1,868,000 2,734,000 3,503,000
Selling, general and administrative 3,080,000 3,578,000 5,858,000 7,007,000
Corporate expenses 385,000 678,000 1,080,000 1,319,000
Depreciation and amortization 1,287,000 1,859,000 2,366,000 3,632,000
--------------- --------------- --------------- ---------------
Total operating expenses 6,289,000 7,983,000 12,038,000 15,461,000
--------------- --------------- --------------- ---------------
Broadcast operating income 1,414,000 3,522,000 1,198,000 4,067,000
INTEREST EXPENSE, including
amortization of deferred financing costs 2,430,000 2,547,000 4,195,000 4,925,000
OTHER INCOME, net (87,000) (156,000) (107,000) (286,000)
--------------- --------------- --------------- ---------------
(Loss) income before provision for
income taxes and extraordinary (929,000) 1,131,000 (2,890,000) (572,000)
item
PROVISION FOR INCOME TAXES - - - -
--------------- --------------- --------------- --------------
(Loss) income before
extraordinary item (929,000) 1,131,000 (2,890,000) (572,000)
EXTRAORDINARY ITEM:
Loss on early retirement of debt 1,985,000 - 1,985,000 -
--------------- --------------- --------------- --------------
Net (loss) income $ (2,914,000) $ 1,131,000 $ (4,875,000) $ (572,000)
=============== ============= =============== =============
The accompanying notes are an integral part
of these consolidated statements.
RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 1997
AND THE SIX MONTHS ENDED JUNE 30, 1998
Common Common Additional Total
Stock Stock Paid-In Accumulated Stockholders'
Class A Class B Capital Deficit Deficit
------- ------- ------- ------- -------
BALANCE, as of December 31, 1996 $ - $ - $ 1,205,000 $ (16,208,000) $ (15,003,000)
Net loss - - - (4,944,000) (4,944,000)
Effect of conversion to
C corporation - - (1,205,000) 1,205,000 -
Preferred stock dividends
earned - - - (2,037,000) (2,037,000)
----------- ----------- ----------- -------------- --------------
BALANCE, as of December 31, 1997 - - - (21,984,000) (21,984,000)
Net loss - - - (572,000) (572,000)
Preferred stock dividends
earned - - - (1,772,000) (1,772,000)
----------- ----------- ----------- -------------- --------------
BALANCE, as of June 30, 1998
(Unaudited) $ - $ - $ - $( 24,328,000) $ (24,328,000)
=========== =========== =========== ============== ==============
The accompanying notes are an integral part
of these consolidated statements.
RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 29, 1997 AND JUNE 30, 1998
(Unaudited)
Six Months Ended,
-------------------------------------------
June 29, June 30,
1997 1998
---------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (4,874,000) $ (572,000)
Adjustments to reconcile net loss to net cash from
operating activities:
Depreciation and amortization 2,366,000 3,632,000
Amortization of debt financing costs, unamortized
discount and deferred interest 1,572,000 1,804,000
Loss on extinguishment of debt 1,985,000 -
Effect of change in operating assets and liabilities-
Trade accounts receivable (1,055,000) (1,319,000)
Prepaid expenses and other (214,000) 166,000
Other assets 163,000 (485,000)
Decrease in due from affiliates - 43,000
Accounts payable 567,000 223,000
Accrued expenses 583,000 804,000
---------------- ----------------
Net cash flows from operating activities 1,093,000 4,296,000
---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (664,000) (1,103,000)
Deposits and payments for station purchases (19,107,000) (32,529,000)
---------------- ----------------
Net cash flows from investing activities (19,771,000) (33,632,000)
---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt (45,599,000) (453,000)
Proceeds from new debt 72,750,000 25,350,000
Deferred debt financing costs (1,399,000) (630,000)
---------------- ----------------
Net cash flows from financing activities 25,752,000 24,267,000
---------------- ----------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 7,074,000 (5,069,000)
CASH AND CASH EQUIVALENTS, beginning of period 1,708,000 8,500,000
---------------- ----------------
CASH AND CASH EQUIVALENTS, end of period $ 8,782,000 $ 3,431,000
============== ==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for-
Interest $ 1,480,000 $ 3,104,000
============== ==============
Income taxes $ - $ -
============== =============
The accompanying notes are an integral part
of these consolidated statements.
RADIO ONE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997, AND JUNE 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 LCC), WYCB Acquisition Corporation (Delaware corporations) and Bell
Broadcasting Company (a Michigan 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, WCHB-FM, and one radio station in Kingsley, Michigan; WJZZ-AM. The
Company is highly leveraged, which requires substantial semi-annual 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 Radio One 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, 1997 financial statements and notes thereto included in the
Company's annual report on Form 10-K.
2. ACQUISITIONS:
Bell Broadcasting Acquisition
On June 30, 1998, Radio One purchased all of the outstanding stock of Bell
Broadcasting Company (Bell), which owns three radio stations in Michigan for
approximately $34.2 million plus the costs of additional assets acquired in the
transaction. 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. On June 30, 1998 the interest rate on
this facility was LIBOR plus 2.25%. The acquisition of Bell resulted in the
recording of approximately $33.1 million of intangible assets 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 six months ended June 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.
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.
RESULTS OF OPERATIONS
Comparison of periods ended June 29, 1997 to the periods ended June 30,
1998.
Three Months Ended Six Months Ended
------------------ ----------------
June 29, 1997 June 30, 1998 June 29, 1997 June 30, 1998
--------------- ---------------- ---------------- ---------------
STATEMENT OF OPERATIONS DATA:
Net broadcast revenues $ 7,703,000 $ 11,505,000 $ 13,236,000 $ 19,528,000
--------------- ---------------- ---------------- ---------------
Operating expenses
excluding 5,002,000 6,124,000 9,672,000 11,829,000
depreciation and amortization
Depreciation and amortization 1,287,000 1,859,000 2,366,000 3,632,000
--------------- ---------------- ---------------- ---------------
Broadcast operating income 1,414,000 3,522,000 1,198,000 4,067,000
Interest expense 2,430,000 2,547,000 4,195,000 4,925,000
Other income 87,000 156,000 107,000 286,000
--------------- ---------------- ---------------- ---------------
Income (loss) before provision
for income taxes (929,000) 1,131,000 (2,890,000) (572,000)
Provision for income taxes - - - -
--------------- ---------------- ---------------- ---------------
Income (loss) before
extraordinary item (929,000) 1,131,000 (2,890,000) (572,000)
Extraordinary item 1,985,000 - 1,985,000 -
--------------- ---------------- ---------------- ---------------
Net Income (loss) $ (2,914,000) $ 1,131,000 $ (4,875,000) $ (572,000)
=============== ================ ================ ===============
OTHER DATA:
Broadcast cash flow (a) $3,086,000 $6,059,000 $4,644,000 $9,018,000
Broadcast cash flow margin 40.1% 52.7% 35.1% 46.2%
Operating cash flow (b) $2,701,000 $5,381,000 $3,564,000 $7,699,000
Operating cash flow margin 35.1% 46.8% 26.9% 39.4%
Corporate Expenses $ 385,000 $ 678,000 $1,080,000 $1,319,000
Net broadcast revenues increased to approximately $11.5 million for the
three months ended June 30, 1998 from approximately $7.7 million for the three
months ended June 29, 1997 or 49.4%. Net broadcast revenues increased to
approximately $19.5 million for the six months ended June 30, 1998 from
approximately $13.2 million for the six months ended June 29, 1997 or 47.7%.
These increases in net broadcast revenues were the result of significant
broadcast revenue growth in both the Company's Washington, DC and Baltimore, MD
markets as the Company benefited from recent ratings increases at its larger
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 acquisition of radio station WPHI-FM in Philadelphia, PA in
early-1997.
Operating expenses excluding depreciation and amortization increased to
approximately $6.1 million for the three months ended June 30, 1998 from
approximately $5.0 million for the three months ended June 29, 1997 or 22.0%.
Operating expenses excluding depreciation and amortization increased to
approximately $11.8 million for the six months ended June 30, 1998 from
approximately $9.7 million for the six months ended June 29, 1997 or 21.6%.
These increases in expenses were primarily related to increases in sales
commissions and license fees due to significant revenue growth, and additional
programming costs related to ratings gains experienced by the Company's overall
growth.
Broadcast operating income increased to approximately $3.5 million for
the three months ended June 30, 1998 from approximately $1.4 million for the
three months ended June 29, 1997 or 150%. Broadcast operating income increased
to approximately $4.1 million for the six months ended June 30, 1998 from
approximately $1.2 million for the six months ended June 29, 1997 or 241.7%.
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 WPHI-FM acquisition.
Interest expense increased to approximately $2.5 million for the three
months ended June 30, 1998 from approximately $2.4 million for the three months
ended June 29, 1997 or 4.2%. Interest expense increased to approximately $4.9
million for the six months ended June 30, 1998 from approximately $4.2 million
for the six months ended June 29, 1997 or 16.7%. 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 and the exchange of approximately $20.9 million of 15% Senior
Cumulative Redeemable Preferred Stock for an equal amount of the Company's then
outstanding subordinated notes and accrued interest.
Other income increased to $156,000 for the three months ended June 30,
1998 from $87,000 for the three months ended June 29, 1997 or 79.3%. Other
income increased to $286,000 for the six months ended June 30, 1998 from
$107,000 for the six months ended June 29, 1997 or 167.3%. These increases were
primarily attributable to higher interest income due to higher cash balances
associated with the Company's cash flow growth and capital raised in the
Company's 1997 Notes Offering.
Income (loss) before provision for income taxes increased to
approximately $1.1 million for the three months ended June 30, 1998 from
($929,000) for the three months ended June 29, 1997. Loss before provision for
income taxes decreased to $572,000 for the six months ended June 30, 1998 from
approximately $2.9 million for the six months ended June 29, 1997 or 80.3%. This
decrease was due to higher operating income and other income partially offset by
higher interest expense associated with the Company's 1997 Notes Offering.
Net income (loss) increased to approximately $1.1 million for the three
months ended June 30, 1998 from approximately ($2.9 million) for the three
months ended June 29, 1997. Net loss decreased to $572,000 for the six months
ended June 30, 1998 from approximately $4.9 million for the six months ended
June 29, 1997 or 88.3%. This decrease was due to higher operating income and
other income partially offset by higher interest expense associated with the
Company's 1997 Notes Offering.
Broadcast cash flow increased to approximately $6.1 million for the
three months ended June 30, 1998 from approximately $3.1 million for the three
months ended June 29, 1997 or 96.8%. Broadcast cash flow increased to
approximately $9.0 million for the six months ended June 30, 1998 from
approximately $4.6 million for the six months ended June 29, 1997 or 95.7%.
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 $5.4 million for the
three months ended June 30, 1998 from approximately $2.7 million for the three
months ended June 29, 1997 or 100%. Operating cash flow increased to
approximately $7.7 million for the six months ended June 30, 1998 from
approximately $3.6 million for the six months ended June 29, 1997 or 113.9%.
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, 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
$3.4 million as of June 30, 1998. The Company's decrease in cash to
approximately $3.4 million as of June 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 an 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 June 30, 1998 approximately $7.1 million was available
to be drawn down from the Company's 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 flow from operating activities increased to approximately $4.3
million for the six months ended June 30, 1998 from approximately $1.1 million
for the six months ended June 29, 1997 or 291%. This increase was primarily due
to a lower net loss offset by lower non-cash charges. Non cash expenses of
depreciation and amortization increased to approximately $3.6 million for the
six months ended June 30, 1998 from approximately $2.4 million for the six
months ended June 29, 1997 or 50% 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 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 $1.8 million for the
six months ended June 30, 1998 from approximately $1.6 million for the six
months ended June 29, 1997 or 13% due to the May 19, 1997 issuance of the
Company's approximately $85.5 million in 12% Senior Subordinated Notes Due 2004
offset by interest deferred in the period ended June 29, 1997 related to the
subordinated notes. The Company also had a non-cash expense during the six
months ended June 29, 1997 of approximately $2.0 million related to the loss on
extinguishment of debt.
Net cash flow used in investing activities increased to approximately
$33.6 million for the six months ended June 30, 1998 compared to approximately
$19.8 million for the six months ended June 29, 1997 or 69.7%. During the six
months ended June 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 $1.1 million. During the six months ended June 29, 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 $664,000.
Net cash flow from financing activities was approximately $24.2 million
for the six months ended June 30, 1998. During the six months ended June 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 six months ended June 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 $25.8 million for the six months ended
June 29, 1997. During the six months ended June 29, 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 approximately $5.1 million during the six months ended June 30, 1998 compared
to an approximate $7.1 million increase during the six months ended June 29,
1997.
YEAR 2000
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 six months ended June
30, 1998.
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
3.5 Certificate of Incorporation of Radio One of Detroit, Inc.
3.6 By-laws of Radio One of Detroit, Inc.
3.7 Restated Articles of Incorporation of Bell Broadcasting Company.
3.8 Certificate of Amendment to the Articles of Incorporation of Bell Broadcasting Company.
3.9 Restated By-laws of Bell Broadcasting Company.
4.5 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.
10.31 Amended and Restated Warrant of Radio One, Inc. dated as of June 30, 1998 issued to Capital Dimensions
Venture Fund Inc.
10.32 Amended and Restated Warrant of Radio One, Inc. dated as of June 30, 1998 issued to Fulcrum Venture
Capital Corporation.
10.33 Amended and Restated Warrant of Radio One, Inc. dated as of June 30, 1998 issued to Syncom Capital
Corporation.
10.34 Amended and Restated Warrant of Radio One, Inc. dated as of June 30, 1998 issued to Alfred C.
Liggins, III.
10.35 Amended and Restated Warrant of Radio One, Inc. dated as of June 30, 1998 issued to TSG Ventures
L.P.
10.36 Amended and Restated Warrant of Radio One, Inc. dated as of June 30, 1998 issued to Alliance
Enterprise Corporation.
10.37 Amended and Restated Warrant of Radio One, Inc. dated as of June 30, 1998 issued to Opportunity
Capital Corporation.
10.38 Amended and Restated Warrant of Radio One, Inc. dated as of June 30, 1998 issued to Alta
Subordinated Debt Partners III, L.P.
10.39 Amended and Restated Warrant of Radio One, Inc. dated as of June 30, 1998 issued to BancBoston
Investments Inc.
10.40 Amended and Restated Warrant of Radio One, Inc. dated as of June 30, 1998 issued to Grant M. Wilson.
10.41 Credit Agreement dated June 30, 1998 among Radio One, Inc., as the borrower and NationsBank, N.A.,
as Documentation Agent and Credit Suisse First Boston as the Agent.
10.42 First Amendment to Preferred Stockholders' Agreement dated as of June 30, 1998 among Radio One,
Inc., Radio One Licenses, Inc., and the other parties thereto.
The Company filed a Form 8-K dated July 13, 1998 disclosing that it had
consummated the acquisition of 100% of the capital stock of Bell Broadcasting
Company ("Bell") plus other assets for approximately 35.0 million dollars in
cash, subject to certain adjustments.
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
-----------------------------------------------------
August 14, 1998 Scott R. Royster
Executive Vice President and Chief Financial Officer
(Principal Accounting Officer)