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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
Commission File No. 0-25969
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,
7th 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 8, 2002
----- -----------------------------
Class A Common Stock, $.001 Par Value 22,395,043
Class B Common Stock, $.001 Par Value 3,132,458
Class C Common Stock, $.001 Par Value 2,867,463
Class D Common Stock, $.001 Par Value 76,141,483
RADIO ONE, INC. AND SUBSIDIARIES
Form 10-Q
For the Quarter Ended June 30, 2002
TABLE OF CONTENTS
-----------------
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements .......................................................................................... 3
Consolidated Balance Sheets as of December 31, 2001 and June 30, 2002 (Unaudited) ............................. 4
Consolidated Statements of Operations for the Three Months and Six Months Ended June 30, 2001 and 2002
(Unaudited) .............................................................................................. 5
Consolidated Statements of Changes in Stockholders' Equity for the Year Ended December 31, 2001
and for the Six Months Ended June 30, 2002 (Unaudited) ................................................... 6
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2001 and 2002
(Unaudited) .............................................................................................. 7
Notes to Consolidated Financial Statements .................................................................... 8
Consolidating Financial Statements ............................................................................ 11
Consolidating Balance Sheet as of December 31, 2001 ........................................................... 12
Consolidating Balance Sheet as of June 30, 2002 (Unaudited) .................................................. 14
Consolidating Statement of Operations for the Three Months Ended June 30, 2001 (Unaudited) .................... 16
Consolidating Statement of Operations for the Three Months Ended June 30, 2002 (Unaudited) .................... 17
Consolidating Statement of Operations for the Six Months Ended June 30, 2001 (Unaudited) ...................... 18
Consolidating Statement of Operations for the Six Months Ended June 30, 2002 (Unaudited) ...................... 19
Consolidating Statement of Cash Flows for the Six Months Ended June 30, 2001 (Unaudited) ...................... 20
Consolidating Statement of Cash Flows for the Six Months Ended June 30, 2002 (Unaudited) ...................... 22
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ......................... 24
PART II. OTHER INFORMATION
Item 1. Legal Proceedings ............................................................................................. 33
Item 2. Changes in Securities and Use of Proceeds ..................................................................... 33
Item 3. Defaults Upon Senior Securities ............................................................................... 33
Item 4. Submission of Matters to a Vote of Security Holders ........................................................... 33
Item 5. Other Information ............................................................................................. 34
Item 6. Exhibits and Reports on Form 8-K .............................................................................. 34
SIGNATURE ............................................................................................................... 36
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
(See pages 4-23 -- This page intentionally left blank.)
3
RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2001, AND JUNE 30, 2002
December 31, June 30,
2001 2002
-------------- --------------
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 32,115,000 $ 50,851,000
Trade accounts receivable, net of allowance for doubtful accounts of $6,668,000
and $5,907,000, respectively 56,682,000 65,487,000
Prepaid expenses and other 2,441,000 2,127,000
Income tax receivable 3,200,000 3,089,000
Deferred income tax asset 3,465,000 3,465,000
-------------- --------------
Total current assets 97,903,000 125,019,000
PROPERTY AND EQUIPMENT, NET 39,446,000 41,340,000
INTANGIBLE ASSETS, NET 1,776,201,000 1,788,548,000
OTHER ASSETS 10,365,000 8,730,000
-------------- --------------
Total assets $1,923,915,000 $1,963,637,000
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 7,782,000 $ 7,249,000
Accrued expenses 38,370,000 35,061,000
Fair value of derivative instruments 13,439,000 7,382,000
Other current liabilities 2,491,000 2,399,000
Current portion of long-term debt -- 26,250,000
-------------- --------------
Total current liabilities 62,082,000 78,341,000
LONG-TERM DEBT AND DEFERRED INTEREST, net of current portion 780,022,000 623,751,000
DEFERRED INCOME TAX LIABILITY 28,864,000 25,278,000
-------------- --------------
Total liabilities 870,968,000 727,370,000
-------------- --------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
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 6.5% per year, unpaid dividends were
$4,198,000 as of December 31, 2001 and June 30, 2002 -- --
Common stock - Class A, $.001 par value, 30,000,000 shares authorized, 22,389,000
and 22,395,000 shares issued and outstanding 23,000 23,000
Common stock - Class B, $.001 par value, 150,000,000 shares authorized, 2,867,000
shares issued and outstanding 3,000 3,000
Common stock - Class C, $.001 par value, 150,000,000 shares authorized, 3,132,000
shares issued and outstanding 3,000 3,000
Common stock - Class D, $.001 par value, 150,000,000 shares authorized,
65,826,000 and 76,139,000 shares issued and outstanding 66,000 76,000
Accumulated other comprehensive income (9,053,000) (5,298,000)
Stock subscriptions receivable (31,666,000) (32,533,000)
Additional paid-in capital 1,208,652,000 1,407,870,000
Accumulated deficit (115,081,000) (133,877,000)
-------------- --------------
Total stockholders' equity 1,052,947,000 1,236,267,000
-------------- --------------
Total liabilities and stockholders' equity $1,923,915,000 $1,963,637,000
============== ==============
The accompanying notes are an integral part of these consolidated balance
sheets.
4
RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2001 AND 2002
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------- ------------------------------
2001 2002 2001 2002
------------- --------------- ------------- ------------
(Unaudited) (Unaudited)
REVENUE:
Broadcast revenue, including barter revenue of
$559,000, $920,000, $1,204,000 and $1,706,000,
respectively $ 70,930,000 $ 91,035,000 $ 125,203,000 $ 156,972,000
Less: agency commissions 8,645,000 10,870,000 14,993,000 18,496,000
------------- ------------- ------------- -------------
Net broadcast revenue 62,285,000 80,165,000 110,210,000 138,476,000
------------- ------------- ------------- -------------
OPERATING EXPENSES:
Program and technical, exclusive of depreciation and
amortization, shown separately below 9,151,000 12,604,000 18,007,000 24,106,000
Selling, general and administrative 19,090,000 24,126,000 36,206,000 45,122,000
Corporate expenses 1,683,000 3,142,000 3,523,000 5,757,000
Non-cash compensation 237,000 342,000 475,000 642,000
Depreciation and amortization 30,851,000 4,351,000 62,375,000 8,773,000
------------- ------------- ------------- -------------
Total operating expenses 61,012,000 44,565,000 120,586,000 84,400,000
------------- ------------- ------------- -------------
Operating income (loss) 1,273,000 35,600,000 (10,376,000) 54,076,000
INTEREST EXPENSE, including amortization of
deferred financing costs 14,717,000 14,810,000 30,418,000 31,727,000
GAIN ON SALE OF ASSETS, net -- -- 4,272,000 --
OTHER EXPENSE (INCOME), net 596,000 (547,000) -- (1,065,000)
------------- ------------- ------------- -------------
(Loss) income before (benefit) provision for
income taxes, extraordinary item, and cumulative
effect of accounting change (14,040,000) 21,337,000 (36,522,000) 23,414,000
(BENEFIT) PROVISION FOR INCOME TAXES (4,633,000) 8,095,000 (11,942,000) 8,911,000
------------- ------------- ------------- -------------
(LOSS) INCOME BEFORE EXTRAORDINARY
LOSS AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE (9,407,000) 13,242,000 (24,580,000) 14,503,000
EXTRAORDINARY LOSS ON DEBT
RETIREMENT, net of taxes of $2,564,000 5,207,000 -- 5,207,000 --
CUMULATIVE EFFECT OF ACCOUNTING CHANGE, net of taxes of
$14,542,000 -- -- -- 23,229,000
------------- ------------- ------------- -------------
NET (LOSS) INCOME $ (14,614,000) $ 13,242,000 $ (29,787,000) $ (8,726,000)
============= ============= ============= =============
NET (LOSS) INCOME APPLICABLE TO
COMMON STOCKHOLDERS $ (19,646,000) $ 8,207,000 $ (39,857,000) $ (18,796,000)
============= ============= ============= =============
BASIC AND DILUTED (LOSS) INCOME PER COMMON SHARE:
(Loss) income before extraordinary loss and
cumulative effect of accounting change $ (0.16) $ 0.08 $ (0.40) $ 0.04
Extraordinary loss $ (0.06) $ -- $ (0.06) $ --
Cumulative Effect of Accounting Change $ -- $ -- $ -- $ (0.23)
------------- ------------- ------------- -------------
Net (loss) income per common share $ (0.22) $ 0.08 $ (0.46) $ (0.19)
WEIGHTED AVERAGE SHARES ============= ============= ============= =============
OUTSTANDING:
Basic 88,252,000 103,497,000 87,532,000 98,863,000
============= ============= ============= =============
Diluted 88,252,000 104,353,000 87,532,000 98,863,000
============= ============= ============= =============
The accompanying notes are an integral part of these consolidated statements.
5
RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2001, AND FOR THE SIX MONTHS ENDED JUNE 30,
2002 (UNAUDITED)
Accumulated
Convertible Common Common Common Common other
preferred stock stock stock stock Comprehensive comprehensive
stock Class A Class B Class C Class D income income
----- ------- ------- ------- ------- ------ ------
BALANCE, as of December 31, 2000 $ - $ 23,000 $ 3,000 $ 3,000 $ 58,000 $ -
Comprehensive income:
Net loss - - - - - $(55,247,000) -
Unrealized loss on
derivative and hedging
activities from
cumulative effect of
accounting change, net
of taxes - - - - - (2,630,000) (2,630,000)
Change in unrealized net
loss on derivative and
hedging activities, net
of taxes - - - - - (6,423,000) (6,423,000)
------------
Comprehensive income $(64,300,000)
============
Preferred stock dividends - - - - - -
Issuance of stock for
acquisition - - - - 6,000 -
Stock sold to officers - - - - 2,000 -
Employee exercise of
options - - - - - -
Preferred stock issuance
costs - - - - - -
------- -------- -------- -------- -------- -----------
BALANCE, as of December 31, 2001 - 23,000 3,000 3,000 66,000 (9,053,000)
Comprehensive income:
Net loss - - - - - $ (8,726,000) -
Change in unrealized net
loss on derivative and
hedging activities, net
of taxes - - - - - 3,755,000 3,755,000
------------
Comprehensive income $ (5,182,000)
============
Preferred stock dividends - - - - - -
Issuance of common stock - - - - 10,000 -
Repurchase of stock - - - - - -
Interest income on
subscriptions receivable - - - - - -
Employee exercise of
options - - - - - -
------- -------- -------- -------- -------- -----------
BALANCE, as of June 30, 2002 $ - $ 23,000 $ 3,000 $ 3,000 $ 76,000 $(5,298,000)
======= ======== ======== ======== ======== ===========
Stock Additional Total
subscriptions paid-in Accumulated stockholders'
receivable capital deficit equity
---------- ------- ------- ------
BALANCE, as of December 31, 2000 $ (9,005,000) $1,105,681,000 $ (39,694,000) $1,057,069,000
Comprehensive income:
Net loss - - (55,247,000) (55,247,000)
Unrealized loss on
derivative and hedging
activities from
cumulative effect of
accounting change, net
of taxes - - - (2,630,000)
Change in unrealized net
loss on derivative and
hedging activities, net
of taxes - - - (6,423,000)
Comprehensive income
Preferred stock dividends - - (20,140,000) (20,140,000)
Issuance of stock for
acquisition - 81,327,000 - 81,333,000
Stock sold to officers (22,661,000) 21,103,000 - (1,556,000)
Employee exercise of
options - 550,000 - 550,000
Preferred stock issuance
costs - (9,000) - (9,000)
------------ -------------- ------------- --------------
BALANCE, as of December 31, 2001 (31,666,000) 1,208,652,000 (115,081,000) 1,052,947,000
Comprehensive income:
Net loss - - (8,726,000) (8,726,000)
Change in unrealized net
loss on derivative and
hedging activities, net
of taxes - - - 3,755,000
Comprehensive income
Preferred stock dividends - - (10,070,000) (10,070,000)
Issuance of common stock - 198,766,000 - 198,776,000
Repurchase of stock - (75,000) - (75,000)
Interest income on
subscriptions receivable (867,000) - - (867,000)
Employee exercise of
options - 527,000 - 527,000
------------ -------------- ------------- --------------
BALANCE, as of June 30, 2002 $(32,533,000) $1,407,870,000 $(133,877,000) $1,236,267,000
============ ============== ============= ==============
6
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 30, 2001 AND 2002
Six Months Ended
June 30,
----------------------------------
2001 2002
--------------- ---------------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (29,787,000) $ (8,726,000)
Adjustments to reconcile net loss to net cash flows from operating activities:
Depreciation and amortization 62,375,000 8,773,000
Amortization of debt financing costs, unamortized discount and deferred interest 1,016,000 1,089,000
Deferred income taxes (13,521,000) (5,887,000)
Non-cash compensation to officers 475,000 642,000
Cumulative effect of accounting change -- 37,771,000
Loss on write-down of investments 1,206,000 --
Loss on retirement of assets -- 150,000
Gain on sale of assets, net (4,272,000) --
Extraordinary loss on debt retirement 7,771,000 --
Effect of change in operating assets and liabilities-
Trade accounts receivable (3,155,000) (8,805,000)
Income tax receivable 476,000 --
Prepaid expenses and other (225,000) (180,000)
Stock subscription receivable (546,000) (867,000)
Other assets (656,000) (719,000)
Accounts payable (9,722,000) (608,000)
Accrued expenses and other 2,635,000 (4,585,000)
---------------- --------------
Net cash flows from operating activities 14,070,000 18,048,000
---------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (2,840,000) (5,115,000)
Equity investments (210,000) (392,000)
Proceeds from sale of assets 69,254,000 --
Deposits and payments for station purchases (70,286,000) (53,040,000)
---------------- --------------
Net cash flows from investing activities (4,082,000) (58,547,000)
---------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt (303,648,000) (130,021,000)
Proceeds from debt issuances 300,000,000 --
Payment of preferred stock issuance costs (9,000) --
Proceeds from exercise of stock options 240,000 526,000
Payment for retirement of stock -- (75,000)
Deferred financing costs (7,861,000) --
Proceeds from issuance of common stock, net of issuance costs -- 198,875,000
Payment of preferred stock dividends (10,070,000) (10,070,000)
---------------- --------------
Net cash flows from financing activities (21,348,000) 59,235,000
---------------- --------------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (11,360,000) 18,736,000
CASH AND CASH EQUIVALENTS, beginning of period 20,879,000 32,115,000
---------------- --------------
CASH AND CASH EQUIVALENTS, end of period $ 9,519,000 $ 50,851,000
================ ==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for-
Interest $ 24,788,000 $ 34,812,000
================ ==============
Income taxes $ 787,000 $ 380,000
================ ==============
The accompanying notes are an integral part of these consolidated statements.
7
RADIO ONE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization and Business
Radio One, Inc. (a Delaware corporation referred to as Radio One) and
subsidiaries (collectively referred to as the Company) were organized to
acquire, operate and maintain radio broadcasting stations. The Company owns
and/or operates 65 radio stations in 22 markets throughout the United States.
The Company has made and may continue to make significant acquisitions of radio
stations, which may require it to incur new debt. The Company's operating
results are significantly affected by its share of the audience in markets where
it has stations.
Basis of Presentation
The accompanying consolidated financial statements include the accounts of Radio
One and its subsidiaries. All significant intercompany accounts and transactions
have been eliminated in consolidation.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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 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 accounting principles
generally accepted in the United States 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, 2001 financial
statements and notes thereto included in the Company's annual report on Form
10-K.
2. ACQUISITION:
In April 2002, the Company completed the acquisition of the assets of WHTA-FM
(formerly WPEZ-FM), licensed to Hampton, Georgia (formerly licensed to Macon,
Georgia), from U.S. Broadcasting Limited
8
Partnership for $56.0 million. The Company had been operating the station under
a local marketing agreement since the fourth quarter of 2001.
3. STOCK OFFERING:
In April 2002, the Company and certain selling stockholders completed an
offering of 11,500,000 shares of class D common stock at an offering price of
$20.25 per share. Through this offering, the Company issued and sold 10,252,696
shares and received net proceeds of approximately $198.8 million.
4. RECENT ACCOUNTING PRONOUNCEMENTS:
In June 2001, FASB issued Statement of Financial Accounting Standard No. 142
(SFAS 142) "Goodwill and Other Intangible Assets." This pronouncement requires a
non-amortization approach to account for purchased goodwill and certain other
intangible assets. Under a non-amortization approach, goodwill and certain
intangibles will not be amortized into results of operations but, instead, would
be reviewed for impairment and written down and charged to results of operations
only in the periods in which the recorded value of goodwill and certain
intangibles is more than their fair value. The provisions of this statement,
which apply to goodwill and intangible assets acquired prior to June 30, 2001,
were adopted by the Company effective January 1, 2002. The provisions of this
statement that apply to goodwill and other indefinite life intangible assets
acquired after June 30, 2001, were adopted by the Company effective July 1,
2001. The adoption of these accounting standards has eliminated the amortization
of goodwill and FCC broadcast licenses commencing January 1, 2002. SFAS 142 will
have a material impact on the Company's financial statements, as the amounts
previously recorded for the amortization of goodwill and FCC broadcast licenses
were significant. The Company recorded amortization expense of approximately
$55.7 million for the six months ended June 30, 2001, but did not record a
similar amortization expense for the six months ended June 30, 2002 as a result
of the adoption of SFAS 142. Upon adoption of SFAS 142, the Company recorded an
impairment charge of approximately $23.2 million, net of an income tax benefit
of $14.6 million, as the carrying value of certain of the Company's FCC licenses
exceeded their appraised fair values. The Company has reflected this charge as a
cumulative effect of an accounting change, effective January 1, 2002, in its
statement of operations.
The Company began its adoption of the final provision of SFAS 142 in the second
quarter of 2002 by reviewing the fair value of its reporting units and comparing
that fair value to the net book value of the reporting unit. This process may
result in the impairment of goodwill. In completing the transitional assessment
of goodwill, the Company (1) identified the reporting units; (2) determined the
carrying value of each reporting unit; and (3) determined the fair value of each
reporting unit. The Company had up to six months from the date of the adoption
to determine the reporting units in which the carrying value exceeded the fair
value of those assets. To the extent a reporting unit's carrying amount exceeds
its fair value, an indication would exist that the reporting unit's goodwill was
impaired, and the Company would then be required to perform the second step of
the transitional impairment test. In the second step, the Company must compare
the implied fair value of the reporting unit's goodwill, determined by
allocating the reporting unit's fair value to all of its assets and liabilities
in a manner similar to a purchase price allocation in accordance with SFAS 141,
"Business Combinations", to its carrying amount, both of which would be measured
as of the date of adoption. This second step is required to be completed as soon
as possible, but no later than the end of the year of adoption. Any transitional
impairment loss will be recognized as a cumulative effect of a change in
accounting principle in the Company's consolidated statement of operations
9
retroactive to January 1, 2002. The Company has not yet determined what the
effect of the impairment tests on goodwill will be on the Company's financial
position or results of operations, but does expect to record some impairment for
goodwill in its Augusta, Georgia market.
10
CONSOLIDATING FINANCIAL STATEMENTS
The Company conducts a portion of its business through its subsidiaries. All of
the Company's direct subsidiaries (Subsidiary Guarantors) have fully and
unconditionally guaranteed the Company's 8-7/8% Senior Subordinated Notes due
2011.
Set forth below are consolidating financial statements for the Company and the
Subsidiary Guarantors as of December 31, 2001 and June 30, 2002, and for the
three months and six months ended June 30, 2001 and 2002. The equity method of
accounting has been used by the Company to report its investments in
subsidiaries. Separate financial statements for the Subsidiary Guarantors are
not presented based on management's determination that they do not provide
additional information that is material to investors.
11
RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 2001
Combined
Guarantor
Subsidiaries Radio One, Inc. Eliminations Consolidated
------------ --------------- ------------ ------------
(Unaudited) (Unaudited) (Unaudited)
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ (447,000) $ 32,562,000 $ - $ 32,115,000
Trade accounts receivable, net of allowance
for doubtful accounts 11,552,000 45,130,000 - 56,682,000
Due from Combined Guarantor Subsidiaries - 1,699,420,000 (1,699,420,000) -
Prepaid expenses and other 463,000 1,978,000 - 2,441,000
Income tax receivable - 3,200,000 - 3,200,000
Deferred income tax asset 1,882,000 1,583,000 - 3,465,000
----------------- ----------------- ----------------- -----------------
Total current assets 13,450,000 1,783,873,000 (1,699,420,000) 97,903,000
PROPERTY AND EQUIPMENT, net 12,715,000 26,731,000 - 39,446,000
INTANGIBLE ASSETS, net 1,534,807,000 241,394,000 - 1,776,201,000
OTHER ASSETS 1,276,000 9,089,000 - 10,365,000
----------------- ----------------- ----------------- -----------------
Total assets $ 1,562,248,000 $ 2,061,087,000 $ (1,699,420,000) $ 1,923,915,000
================= ================= ================= =================
The accompanying notes are an integral part of this
consolidating balance sheet.
12
RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 2001
Combined
Guarantor
Subsidiaries Radio One, Inc. Eliminations Consolidated
------------ --------------- ------------ -------------
(Unaudited) (Unaudited) (Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 794,000 $ 6,988,000 $ - $ 7,782,000
Accrued expenses 3,257,000 35,113,000 - 38,370,000
Fair value of derivative investments - 13,439,000 - 3,439,000
Other current liabilities 316,000 2,175,000 - 2,491,000
Due to the Company 1,699,420,000 - (1,699,420,000) -
---------------- ----------------- ----------------- -----------------
Total current liabilities 1,703,787,000 57,715,000 (1,699,420,000) 62,082,000
INVESTMENT IN SUBSIDIARIES - 163,951,000 (163,951,000) -
LONG-TERM DEBT AND DEFERRED INTEREST 2,000 780,020,000 - 780,022,000
DEFERRED INCOME TAX LIABILITY 22,410,000 6,454,000 - 28,864,000
---------------- ----------------- ----------------- -----------------
Total liabilities 1,726,199,000 1,008,140,000 (1,863,371,000) 870,968,000
---------------- ----------------- ----------------- -----------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock - 95,000 - 95,000
Accumulated comprehensive income adjustments - (9,053,000) - (9,053,000)
Stock subscriptions receivable - (31,666,000) - (31,666,000)
Additional paid-in capital - 1,208,652,000 - 1,208,652,000
Accumulated deficit (163,951,000) (115,081,000) 163,951,000 (115,081,000)
---------------- ----------------- ----------------- -----------------
Total stockholders' equity (163,951,000) 1,052,947,000 163,951,000 1,052,947,000
---------------- ----------------- ----------------- -----------------
Total liabilities and stockholders' equity $ 1,562,248,000 $ 2,061,087,000 $ (1,699,420,000) $ 1,923,915,000
================ ================= ================= =================
The accompanying notes are an integral part of this
consolidating balance sheet.
13
RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
AS OF JUNE 30, 2002
(Unaudited)
Combined
Guarantor
Subsidiaries Radio One, Inc. Eliminations Consolidated
-------------- ----------------- -------------- --------------
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 996,000 $ 49,855,000 $ - $ 50,851,000
Trade accounts receivable, net of allowance
for doubtful accounts 27,701,000 37,786,000 - 65,487,000
Due from Combined Guarantor Subsidiaries - 1,371,290,000 (1,371,290,000) -
Prepaid expenses and other 784,000 1,343,000 - 2,127,000
Income tax receivable - 3,089,000 - 3,089,000
Deferred tax asset 2,282,000 1,183,000 - 3,465,000
--------------- --------------- --------------- ---------------
Total current assets 31,763,000 1,464,546,000 (1,371,290,000) 125,019,000
PROPERTY AND EQUIPMENT, net 20,970,000 20,370,000 - 41,340,000
INTANGIBLE ASSETS, net 1,765,095,000 23,453,000 - 1,788,548,000
OTHER ASSETS 847,000 7,883,000 - 8,730,000
--------------- --------------- --------------- ---------------
Total assets $ 1,818,675,000 $ 1,516,252,000 $(1,371,290,000) $ 1,963,637,000
=============== =============== =============== ===============
The accompanying notes are an integral part of this consolidating balance sheet.
14
RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
AS OF JUNE 30, 2002
(Unaudited)
Combined
Guarantor
Subsidiaries Radio One, Inc. Eliminations Consolidated
-------------- ----------------- --------------- --------------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 1,253,000 $ 5,996,000 $ - $ 7,249,000
Accrued expenses 6,144,000 28,917,000 - 35,061,000
Fair value of derivative instruments - 7,382,000 - 7,382,000
Other current liabilities - 2,399,000 - 2,399,000
Current portion of long-term debt - 26,250,000 - 26,250,000
Due to the Company 1,371,290,000 - (1,371,290,000) -
-------------- ----------------- --------------- --------------
Total current liabilities 1,378,687,000 70,944,000 (1,371,290,000) 78,341,000
INVESTMENT IN SUBSIDIARIES - (415,757,000) 415,757,000 -
LONG-TERM DEBT AND DEFERRED INTEREST - 623,751,000 - 623,751,000
DEFERRED INCOME TAX LIABILITY 24,231,000 1,047,000 - 25,278,000
-------------- ----------------- --------------- --------------
Total liabilities 1,402,918,000 279,985,000 (955,533,000) 727,370,000
-------------- ----------------- --------------- --------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock - 105,000 - 105,000
Accumulated other comprehensive income - (5,298,000) - (5,298,000)
Stock subscriptions receivable - (32,533,000) - (32,533,000)
Additional paid-in capital - 1,407,870,000 - 1,407,870,000
Accumulated deficit 415,757,000 (133,877,000) (415,757,000) (133,877,000)
-------------- ----------------- --------------- --------------
Total stockholders' equity 415,757,000 1,236,267,000 (415,757,000) 1,236,267,000
-------------- ----------------- --------------- --------------
Total liabilities and stockholders' equity $1,818,675,000 $ 1,516,252,000 $(1,371,290,000) $1,963,637,000
============== ================= =============== ==============
The accompanying notes are an integral part of this consolidating balance sheet.
15
RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2001
(Unaudited)
Combined
Guarantor Radio One,
Subsidiaries Inc. Eliminations Consolidated
-------------- ------------ -------------- --------------
REVENUE:
Broadcast revenue, including barter revenue $ 9,572,000 $ 61,358,000 $ - $ 70,930,000
Less: agency commissions 1,054,000 7,591,000 - 8,645,000
-------------- ------------ -------------- --------------
Net broadcast revenue 8,518,000 53,767,000 - 62,285,000
-------------- ------------ -------------- --------------
OPERATING EXPENSES:
Program and technical 1,299,000 7,852,000 - 9,151,000
Selling, general and administrative 3,479,000 15,611,000 - 19,090,000
Corporate expenses - 1,683,000 - 1,683,000
Non-cash compensation - 237,000 - 237,000
Depreciation and amortization 28,015,000 2,836,000 - 30,851,000
-------------- ------------ -------------- --------------
Total operating expenses 32,793,000 28,219,000 - 61,012,000
-------------- ------------ -------------- --------------
Operating (loss) income (24,275,000) 25,548,000 - 1,273,000
INTEREST EXPENSE, INCLUDING AMORTIZATION OF DEFERRED
FINANCING COSTS - 14,717,000 - 14,717,000
GAIN ON SALE OF ASSETS - - - -
OTHER INCOME (EXPENSE), net 3,000 (599,000) - (596,000)
-------------- ------------ -------------- --------------
(Loss) income before provision for income taxes (24,272,000) 10,232,000 - (14,040,000)
BENEFIT FOR INCOME TAXES - 4,633,000 - 4,633,000
EXTRAORDINARY LOSS ON DEBT RETIREMENT, net of taxes - (5,207,000) - (5,207,000)
EQUITY IN LOSSES OF SUBSIDIARIES - (24,272,000) 24,272,000 -
-------------- ------------ -------------- --------------
NET LOSS $ (24,272,000) $(14,614,000) $ 24,272,000 $ (14,614,000)
============== ============ ============== ==============
The accompanying notes are an integral part of this consolidating statement.
16
RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2002
(Unaudited)
Combined
Guarantor Radio One,
Subsidiaries Inc. Eliminations Consolidated
------------ ------------ ------------- ------------
REVENUE:
Broadcast revenue, including barter revenue $ 40,737,000 $ 50,299,000 $ - $ 91,035,000
Less: agency commissions 4,748,000 6,123,000 - 10,870,000
------------ ------------ ------------- ------------
Net broadcast revenue 35,989,000 44,176,000 - 80,165,000
------------ ------------ ------------- ------------
OPERATING EXPENSES:
Program and technical 5,487,000 7,117,000 - 12,604,000
Selling, general and administrative 12,532,000 11,594,000 - 24,126,000
Corporate expenses - 3,142,000 - 3,142,000
Non-cash compensation - 342,000 - 342,000
Depreciation and amortization 2,734,000 1,617,000 - 4,351,000
------------ ------------ ------------- ------------
Total operating expenses 20,753,000 23,812,000 -- 44,565,000
------------ ------------ ------------- ------------
Operating (loss) income 15,236,000 20,364,000 - 35,600,000
INTEREST EXPENSE, INCLUDING AMORTIZATION OF DEFERRED
FINANCING COSTS 465,000 14,345,000 - 14,810,000
OTHER INCOME, net (118,000) 665,000 - 547,000
------------ ------------ ------------- ------------
Income before provision for income taxes 14,653,000 6,684,000 - 21,337,000
PROVISION FOR INCOME TAXES - 8,095,000 - 8,095,000
EQUITY IN LOSSES OF SUBSIDIARIES - 14,653,000 (14,653,000) -
------------ ------------ ------------- ------------
NET (LOSS) INCOME $ 14,653,000 $ 13,242,000 $(14,653,000) $ 13,242,000
============ ============ ============= ============
The accompanying notes are an integral part of this consolidating statement.
17
RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2001
(Unaudited)
Combined
Guarantor Radio One,
Subsidiaries Inc. Eliminations Consolidated
------------ ---------- ------------ ------------
REVENUE:
Broadcast revenue, including barter revenue $ 16,440,000 $ 108,763,000 $ - $ 125,203,000
Less: agency commissions 1,822,000 13,171,000 - 14,993,000
------------- ------------- ------------- -------------
Net broadcast revenue 14,618,000 95,592,000 - 110,210,000
------------- ------------- ------------- -------------
OPERATING EXPENSES: -
Program and technical 2,534,000 15,473,000 - 18,007,000
Selling, general and administrative 6,639,000 29,567,000 - 36,206,000
Corporate expenses - 3,523,000 - 3,523,000
Non-cash compensation - 475,000 - 475,000
Depreciation and amortization 53,777,000 8,598,000 - 62,375,000
------------- ------------- ------------- -------------
Total operating expenses 62,950,00 57,636,000 - 120,586,000
------------- ------------- ------------- -------------
Operating (loss) income (48,332,000) 37,956,000 - (10,376,000)
INTEREST EXPENSE, including amortization of
deferred financing costs 40,000 30,378,000 - 30,418,000
GAIN ON SALE OF ASSETS, net - 4,272,000 - 4,272,000
OTHER INCOME, net 7,000 (7,000) - -
------------- ------------- ------------- -------------
(Loss) income before provision for income
taxes and extraordinary loss (48,365,000) 11,843,000 - (36,522,000)
BENEFIT FOR INCOME TAXES - 11,942,000 - 11,942,000
------------- ------------- ------------- -------------
(Loss) income before extraordinary loss (48,365,000) 23,785,000 - (24,580,000)
EXTRAORDINARY LOSS ON DEBT RETIREMENT, net of taxes - (5,207,000) - (5,207,000)
EQUITY IN LOSSES OF SUBSIDIARIES - (48,365,000) 48,365,000 -
------------- ------------- ------------- -------------
Net loss $ (48,365,000) $ (29,787,000) $ 48,365,000 $ (29,787,000)
============= ============= ============= =============
The accompanying notes are an integral part of this consolidating statement.
18
RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2002
(Unaudited)
Combined
Guarantor
Subsidiaries Radio One, Inc. Eliminations Consolidated
------------ --------------- ------------ ------------
REVENUE:
Broadcast revenue, including barter revenue $ 70,130,000 $ 86,842,000 $ - $ 156,972,000
Less: Agency commissions 8,029,000 10,467,000 - 18,496,000
------------- ------------- ------------- -------------
Net broadcast revenue 62,101,000 76,375,000 - 138,476,000
------------- ------------- ------------- -------------
OPERATING EXPENSES:
Program and technical 10,591,000 13,515,000 - 24,106,000
Selling, general and administrative 23,197,000 21,925,000 - 45,122,000
Corporate expenses - 5,757,000 - 5,757,000
Non-cash compensation - 642,000 - 642,000
Depreciation and amortization 4,152,000 4,621,000 - 8,773,000
------------- ------------- ------------- -------------
Total operating expenses 37,940,000 46,460,000 - 84,400,000
------------- ------------- ------------- -------------
Operating income 24,161,000 29,915,000 - 54,076,000
INTEREST EXPENSE, including amortization of deferred
financing costs 1,581,000 30,146,000 - 31,727,000
OTHER INCOME (EXPENSE), net (115,000) 1,180,000 - 1,065,000
------------- ------------- ------------- -------------
Income before provision for income taxes and
cumulative effect of accounting change 22,465,000 949,000 - 23,414,000
PROVISION FOR INCOME TAXES - 8,911,000 - 8,911,000
------------- ------------- ------------- -------------
Income before cumulative effect of accounting change 22,465,000 (7,962,000) - 14,503,000
CUMULATIVE EFFECT OF ACCOUNTING CHANGE, net of tax 23,229,000 - - 23,229,000
EQUITY IN LOSSES OF SUBSIDIARIES - (764,000) 764,000 -
------------- ------------- ------------- -------------
Net loss $ (764,000) $ (8,726,000) $ 764,000 $ (8,726,000)
============= ============= ============= =============
The accompanying notes are an integral part of this consolidating statement.
19
RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2001
(Unaudited)
Combined
Guarantor
Subsidiaries Radio One, Inc. Eliminations Consolidated
------------ --------------- ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(48,365,000) $(29,787,000) $ 48, 365,00 $(29,787,000)
Adjustments to reconcile net loss to net cash from operating
activities:
Depreciation and amortization 53,777,000 8,598,000 - 62,375,000
Amortization of debt financing costs, unamortized discount
and deferred interest - 1,016,000 - 1,016,000
Deferred income taxes and reduction in valuation reserve on
deferred income taxes 940,000 (14,461,000) - (13,521,000)
Non-cash compensation to officers - 475,000 - 475,000
Loss on write-off of investments - 1,206,000 1,206,000
Gain on sale of assets, net - (4,272,000) - (4,272,000)
Extraordinary loss on debt retirement, net of taxes - 7,771,000 7,771,000
Effect of change in operating assets and liabilities-
Trade accounts receivable, net (109,000) (3,046,000) - (3,155,000)
Due to Corporate/from Subsidiaries (5,530,000) 5,530,000 - -
Income tax receivable - 476,000 - 476,000
Prepaid expenses and other (297,000) 72,000 - (225,000)
Other assets 60,000 (1,262,000) - (1,202,000)
Accounts payable (221,000) (9,501,000) - (9,722,000)
Accrued expenses and other 184,000 2,451,000 - 2,635,000
------------ ------------ ------------ ------------
Net cash flows from operating activities 439,000 (34,734,000) 48,365,000 14,070,000
------------ ------------ ------------ ------------
The accompanying notes are an integral part of this consolidating statement.
20
RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2001
(Unaudited)
Combined
Guarantor
Subsidiaries Radio One, Inc. Eliminations Consolidated
------------ --------------- ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment $ (226,000) $ (2,614,000) $ - $ (2,840,000)
Investment in Subsidiaries - 48,365,000 (48,365,000) -
Equity investments - (210,000) - (210,000)
Proceeds from sale of assets - 69,254,000 - 69,254,000
Deposits and payments for station purchases - (70,286,000) - (70,286,000)
------------- ------------- --------------- -------------
Net cash flows from investing activities (226,000) 44,509,000 (48,365,000) (4,082,000)
------------- ------------- --------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt - (303,648,000) - (303,648,000)
Proceeds from debt issuances - 300,000,000 - 300,000,000
Deferred financing costs - (9,000) - (9,000)
Payment of preferred stock dividends - (10,070,000) - (10,070,000)
Payment of preferred stock issuance costs - (7,861,000) - (7,861,000)
Payment of preferred stock dividends - 240,000 - 240,000
------------- ------------- --------------- -------------
Net cash flows from financing activities - (21,348,000) - (21,348,000)
------------- ------------- --------------- -------------
INCREASE IN CASH AND CASH EQUIVALENTS 213,000 (11,573,000) - (11,360,000)
CASH AND CASH EQUIVALENTS, beginning of period 105,000 20,774,000 - 20,879,000
------------- ------------- --------------- -------------
CASH AND CASH EQUIVALENTS, end of period $ 318,000 $ 9,201,000 $ - $ 9,519,000
============= ============= =============== =============
The accompanying notes are an integral part of this consolidating statement.
21
RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2002
(Unaudited)
Combined
Guarantor
Subsidiaries Radio One, Inc. Eliminations Consolidated
------------ --------------- ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (7,962,000) $ (8,726,000) $ 7,962,000 $ (8,726,000)
Adjustments to reconcile loss to net cash from operating
activities:
Depreciation and amortization 4,152,000 4,621,000 - 8,773,000
Amortization of debt financing costs, unamortized discount
and deferred interest - 1,089,000 - 1,089,000
Deferred income taxes and reduction in valuation reserve
on deferred income taxes (1,575,000) (4,312,000) - (5,887,000)
Cumulative effect of accounting change 37,771,000 - - 37,771,000
Non-cash compensation to officers - 642,000 - 642,000
Loss on retirement of assets - 150,000 - 150,000
Effect of change in operating assets and liabilities-
Trade accounts receivable, net 5,668,000 (14,473,000) - (8,805,000)
Due to Corporate/from Subsidiaries 16,218,000 (16,218,000) - -
Prepaid expenses and other 179,000 (359,000) - (180,000)
Stock subscriptions receivable - (867,000) - (867,000)
Other assets 2,699,000 (3,418,000) - (719,000)
Accounts payable (260,000) (348,000) - (608,000)
Accrued expenses and other 414,000 (4,999,000) - (4,585,000)
------------ ------------ ------------ ------------
Net cash flows from operating activities 57,304,000 (47,218,000) 7,962,000 18,048,000
------------ ------------ ------------ ------------
The accompanying notes are an integral part of this consolidating statement.
22
RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2002
(Unaudited)
Combined
Guarantor
Subsidiaries Radio One, Inc. Eliminations Consolidated
-------------- ----------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment $ (2,825,000) $ (2,290,000) $ - $ (5,115,000)
Investment in Subsidiaries - 7,962,000 (7,962,000) -
Equity investments - (392,000) - (392,000)
Deposits and payments for station purchases (53,040,000) - - (53,040,000)
------------- ------------- ------------- -------------
Net cash flows from investing activities (55,865,000) 5,280,000 (7,962,000) (58,547,000)
------------- ------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt - (130,021,000) - (130,021,000)
Proceeds from issuance of debt - 198,875,000 - 198,875,000
Payment of preferred stock dividends - (10,070,000) - (10,070,000)
Payment for retirement of stock - (75,000) - (75,000)
Proceeds from exercise of stock options - 526,000 - 526,000
------------- ------------- ------------- -------------
Net cash flows from financing activities - 59,235,000 - 59,235,000
------------- ------------- ------------- -------------
INCREASE IN CASH AND CASH EQUIVALENTS 1,439,000 17,297,000 - 18,736,000
CASH AND CASH EQUIVALENTS, beginning of period (447,000) 32,562,000 - 32,115,000
------------- ------------- ------------- -------------
CASH AND CASH EQUIVALENTS, end of period $ 992,000 $ 49,859,000 $ - $ 50,851,000
============= ============= ============= =============
The accompanying notes are an integral part of this consolidating statement.
23
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, 2001.
General
The Company's net broadcast revenue is derived primarily from local and
national advertisers and, to a much lesser extent, tower rental income, ticket
and other revenue related to special events sponsored throughout the year. The
Company's net broadcast revenue is affected primarily by the advertising rates
our radio stations are able to charge as well as the overall demand for radio
advertising time in a market.
Advertising rates are based primarily on:
. a radio station's audience share in the demographic groups
targeted by advertisers, as measured principally by quarterly
reports issued by Arbitron;
. the number of radio stations in the market competing for the same
demographic groups; and
. the supply of and demand for radio advertising time.
The Company's significant broadcast expenses are (i) employee salaries
and commissions, (ii) programming expenses, (iii) advertising and promotion
expenses, (iv) rental of premises for studios, (v) rental of transmission tower
space and (vi) music license royalty fees. The Company strives to control these
expenses by centralizing certain functions such as finance, accounting, legal,
human resources and management information systems and the overall programming
management function. The Company also uses its multiple stations, market
presence and purchasing power to negotiate favorable rates with certain vendors
and national representative selling agencies.
The Company generally incurs advertising and promotional expenses to
increase its audiences. However, because Arbitron reports ratings on a quarterly
basis, any changed ratings and the corresponding effect on advertising revenues
tends to lag behind the incurrence of advertising and promotional expenditures.
Depreciation and amortization of costs associated with the acquisition
of radio stations and interest carrying charges have historically been
significant factors in determining the Company's overall profitability. However,
with the adoption of SFAS 141 and SFAS 142, amortization will be greatly reduced
in 2002 and future periods (see "Recent Accounting Pronouncements" below).
The Company calculates same station growth over a particular period by
comparing performance of stations owned and/or operated under a local marketing
agreement during the current period with the performance of the same stations
for the corresponding period in the prior year. However, no station will be
included in such a comparison unless it has been owned and/or operated under a
local marketing agreement for at least one month of every quarter included in
each of the current and corresponding prior-year periods.
Performance of an individual radio station or group of radio stations
in a particular market is customarily measured by its ability to generate (a)
broadcast cash flow, (b) EBITDA, and after-tax cash flow. Broadcast cash flow,
EBITDA and after-tax cash flow are not measures of performance or liquidity
calculated in accordance with GAAP; however, the Company believes that these
measures are useful to an investor in
24
evaluating the Company because these measures are widely used in the broadcast
industry as a measure of a radio broadcasting company's performance.
Nevertheless, broadcast cash flow, EBITDA and after-tax cash flow should not be
considered in isolation from nor as substitutes for operating income, net
income, or other consolidated income or cash flow statement data computed in
accordance with GAAP, nor as a measure of the Company's profitability or
liquidity. Despite their limitations, broadcast cash flow and EBITDA are widely
used in the broadcasting industry to measure a company's operating performance
without regard to items such as depreciation and amortization, which can vary
depending upon accounting methods and the book value of assets, particularly in
the case of acquisitions. By eliminating such effects, broadcast cash flow
provides a meaningful measure of comparative radio station performance, and
EBITDA provides a meaningful measure of overall Company performance after taking
into account corporate operating expenses related to the employment of the
senior management team and other overhead costs associated with running a large,
publicly-traded broadcasting company.
Recent Events
In April 2002, the Company completed the acquisition of the assets of
WHTA-FM (formerly WPEZ-FM), licensed to Hampton, Georgia (formerly licensed to
Macon, Georgia), from U.S. Broadcasting Limited Partnership for $56.0 million.
The Company had been operating the station under a local marketing agreement
since the fourth quarter of 2001.
In April 2002, the Company and certain selling stockholders completed
an offering of 11,500,000 shares of class D common stock at an offering price of
$20.25 per share. Through this offering, the Company issued and sold 10,252,696
shares and received net proceeds of approximately $198.8 million.
25
RESULTS OF OPERATIONS
Comparison of periods ended June 30, 2001 to the periods ended June 30, 2002
(all periods are unaudited - all numbers in 000s except per share data).
Three months Three months Six months Six months
ended ended ended ended
June 30, June 30, June 30, June 30,
2001 2002 2001 2002
------------- -------------- ------------ ------------
STATEMENT OF OPERATIONS DATA:
REVENUE:
Broadcast revenue $ 70,930 $ 91,035 $ 125,203 $ 156,972
Less: Agency commissions 8,645 10,870 14,993 18,496
------------- -------------- ------------ ------------
Net broadcast revenue 62,285 80,165 110,210 138,476
------------- -------------- ------------ ------------
OPERATING EXPENSES:
Programming and technical 9,151 12,604 18,007 24,106
Selling, G&A 19,090 24,126 36,206 45,122
Corporate expenses 1,683 3,142 3,523 5,757
Non-cash compensation 237 342 475 642
Depreciation & amortization 30,851 4,351 62,375 8,773
------------- -------------- ------------ ------------
Total operating expenses 61,012 44,565 120,586 84,400
------------- -------------- ------------ ------------
Operating income (loss) 1,273 35,600 (10,376) 54,076
INTEREST EXPENSE 14,717 14,810 30,418 31,727
GAIN ON SALE OF ASSETS, net - - 4,272 -
OTHER EXPENSE (INCOME), net 596 (547) - (1,065)
------------- -------------- ------------ ------------
(Loss) Income before (benefit)
provision for income taxes,
extraordinary items, and cumulative (14,040) 21,337 (36,522) 23,414
effect of accounting change
(BENEFIT) PROVISION FOR
INCOME TAXES (4,633) 8,095 (11,942) 8,911
------------- -------------- ------------ ------------
Net (loss) income before
extraordinary item and cumulative (9,407) 13,242 (24,580) 14,503
effect of accounting change
EXTRAORDINARY LOSS ON DEBT
RETIREMENT, net of taxes 5,207 - 5,207 -
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE, net of taxes - - - (23,229)
============= ============== ============ ============
Net (loss) income $ (14,614) $ 13,242 $ (29,787) $ (8,726)
============= ============== ============ ============
Net (loss) income applicable to
common stockholders $ (19,646) $ 8,207 $ (39,857) $ (18,796)
============= ============== ============ ============
26
Three months Three months Six months Six months
ended ended ended ended
June 30, June 30, June 30, June 30,
2001 2001 2001 2001
------------ ------------ ---------- ----------
BASIC AND DILUTED DATA PER COMMON SHARE:
Net income (loss) per share before
extraordinary item and cumulative effect
of accounting change $ (0.16) $ 0.08 $ (0.40) $ 0.04
Extraordinary item per share (0.06) - (0.06) -
Cumulative effect of accounting change
per share - - - (0.23)
Net income (loss) per share applicable to
common stockholders (0.22) $ 0.08 (0.46) (0.19)
OTHER DATA:
Broadcast cash flow (a) $ 34,044 $ 43,435 $ 55,997 $ 69,248
Broadcast cash flow margin (a) 54.7% 54.2% 50.8% 50.0%
EBITDA (b) $ 32,361 $ 40,293 $ 52,474 $ 63,491
EBITDA margin (b) 52.0% 50.3% 47.6% 45.8%
After-tax cash flow (c) $ 13,963 $ 21,446 $ 16,078 $ 24,236
Capital expenditures 1,189 3,131 2,840 5,115
Weighted average shares outstanding
- basic (d) 88,252 103,497 87,532 98,863
Weighted average shares outstanding
- diluted (d) 88,917 104,353 88,036 99,632
SAME STATION RESULTS (e):
Net revenue $ 62,285 $ 69,634 $ 110,210 $ 120,323
Broadcast cash flow 34,044 39,186 55,997 62,980
Broadcast cash flow margin 54.7% 56.3% 50.8% 52.3%
Net broadcast revenue increased to approximately $80.2 million for the
quarter ended June 30, 2002 from approximately $62.3 million for the quarter
ended June 30, 2001 or 29%. Net broadcast revenue increased to approximately
$138.5 million for the six months ended June 30, 2002 from approximately $110.2
million for the six months ended June 30, 2001 or 26%. Approximately $16.7
million and $9.6 million of the increase for the quarter and six months ended
June 30, 2002, respectively, was derived from the Company's August 2001
acquisition of Blue Chip Broadcasting, Inc. Additional revenues were derived
from continuing broadcast revenue growth in most of the Company's existing
markets.
Operating expenses excluding depreciation, amortization and non-cash
compensation increased to approximately $39.9 million for the quarter ended June
30, 2002 from approximately $29.9 million for the quarter ended June 30, 2001 or
33%. Operating expenses excluding depreciation, amortization and non-cash
compensation increased to approximately $75.0 million for the six months ended
June 30, 2002 from approximately $57.7 million for the six months ended June 30,
2001 or 30%. These increases were related to (1)
27
the Company's expansion within the markets in which it operates including
increased variable costs associated with increased revenue, (2) start-up and
expansion expenses in certain markets with new radio stations or new radio
station formats, (3) expenses associated with radio stations the Company has
acquired over the past year and (4) higher corporate expenses due to the
Company's rapid expansion and the escalating costs associated with operating a
national, publicly-traded company, especially insurance costs, health care costs
and legal and regulatory fees and expenses.
Operating income was approximately $35.6 million for the quarter ended
June 30, 2002 compared to approximately $1.3 million for the quarter ended June
30, 2001. Operating income was approximately $54.1 million for the six months
ended June 30, 2002 compared to an operating loss of $10.4 million for the six
months ended June 30, 2001. These increases in operating income were
attributable to higher revenue and lower amortization in the current period than
in the corresponding period of the preceding year. Particularly, for the six
months ended June 30, 2002, the Company incurred depreciation and amortization
expense of approximately $8.8 million compared to approximately $62.4 million
for the six months ended June 30, 2001 (see "Recent Accounting Pronouncements"
below).
Interest expense increased to approximately $14.8 million for the
quarter ended June 30, 2002 from approximately $14.7 million for the quarter
ended June 30, 2001 or 1%. Interest expense increased to approximately $31.7
million for the six months ended June 30, 2002 from approximately $30.4 million
for the six months ended June 30, 2001 or 4%. These increases related primarily
to increased bank borrowings associated with the acquisition of Blue Chip
Broadcasting, Inc. in August 2001. A total of approximately $130.0 million,
which included these bank borrowings, plus additional outstanding debt were paid
down in April 2002 with the proceeds of the Company's April 2002 equity
offering. As a result, the increases in interest expense due to higher average
debt levels for a portion of the second quarter and the six month period were
modestly offset by lower interest rates on the Company's bank debt due to lower
leverage during most of the second quarter of 2002.
Other income increased to approximately $0.5 million for the quarter
ended June 30, 2002 compared to a loss of approximately $0.6 million for the
quarter ended June 30, 2001. During the second quarter of 2001, the Company took
an approximate $1.2 million write down in its investment in NetNoir, Inc. which
was partially offset by interest income. Other income increased to approximately
$1.1 million for the six months ended June 30, 2002 compared to approximately
zero for the six months ended June 30, 2001. This reflects the fact that the
Company had no write down in 2002 similar to the one taken in 2001 for NetNoir,
Inc.
Income before provision for income taxes, extraordinary item and
cumulative effect of an accounting change increased to approximately $21.3
million for the quarter ended June 30, 2002 compared to a loss before benefit
for income taxes, extraordinary item and cumulative effect of accounting change
of approximately $14.0 million for the quarter ended June 30, 2001. Income
before provision for income taxes, extraordinary item and cumulative effect of
accounting change increased to approximately $23.4 million for the six months
ended June 30, 2002 compared to a loss before benefit for income taxes,
extraordinary item and cumulative effect of accounting change of approximately
$36.5 million for the six months ended June 30, 2001. These increases were due
primarily to higher operating income due to higher revenue and lower
amortization charges resulting from the adoption of SFAS 142 during the first
quarter of 2002 (see "Recent Accounting Pronouncements" below).
Income before extraordinary item and cumulative effect of accounting
change increased to approximately $13.2 million for the quarter ended June 30,
2002 compared to a loss of approximately $9.4 million for the quarter ended June
30, 2001. Income before extraordinary item and cumulative effect of accounting
change increased to approximately $14.5 million for the six months ended June
30, 2002 compared to a loss of approximately $24.6 million for the six months
ended June 30, 2001. These increases were due to an increase in income before
provision for income taxes and cumulative effect of accounting change from the
28
adoption of SFAS 142 compared to the previous year's loss before benefit for
income taxes, partially offset by a provision for income taxes in this year's
quarter versus a benefit for income taxes in last year's quarter.
Extraordinary loss on retirement of debt was approximately $5.2 million
for the quarter and six months ended June 30, 2001, net of income tax benefit of
approximately $2.6 million, and was related to the early retirement of the
Company's 12% Senior Subordinated Notes. There was no corresponding charge for
the quarter or six months ended June 30, 2002.
Cumulative effect of accounting change was $23.2 million for the six
months ended June 30, 2002, and was due to the write down of certain of the
Company's FCC broadcast licenses, net of tax in the amount of $14.6 million,
in accordance with the broadcast adoption of SFAS 142, effective January 1,
2002.
Net income increased to $13.2 million for the quarter ended June 30,
2002 compared to a loss of approximately $14.6 million for the quarter ended
June 30, 2001. This increase was due to the income before provision for income
taxes, extraordinary item and cumulative effect of an accounting change compared
to the previous year's loss before benefit for income taxes, partially offset by
a provision for income taxes in this year's quarter versus a benefit for income
taxes in last year's quarter. Net loss decreased to $8.7 million for the six
months ended June 30, 2002 compared to approximately $29.8 million for the six
months ended June 30, 2001. This decrease was due primarily to the adoption of
SFAS 142, as well as the factors discussed above.
Broadcast cash flow increased to approximately $43.4 million for the
quarter ended June 30, 2002 from approximately $34.0 million for the quarter
ended June 30, 2001 or 28%. Broadcast cash flow increased to approximately $69.2
million for the six months ended June 30, 2002 from approximately $56.0 million
for the six months ended June 30, 2001 or 24%. These increases were attributable
primarily to the increases in net broadcast revenue partially offset by higher
operating expenses as described above.
EBITDA increased to approximately $40.3 million for the quarter ended
June 30, 2002 from approximately $32.4 million for the quarter ended June 30,
2001 or 24%. EBITDA increased to approximately $63.5 million for the six months
ended June 30, 2002 from approximately $52.5 million for the six months ended
June 30, 2001 or 21%. These increases were attributable primarily to (1) the
increase in net broadcast revenue partially offset by higher operating expenses
and (2) higher corporate expenses associated with the Company's overall growth
as described above.
(a) "Broadcast cash flow" is defined as operating income plus corporate
expenses, non-cash compensation and depreciation and amortization of
both tangible and intangible assets. Broadcast cash flow margin is
defined as broadcast cash flow divided by net broadcast revenue.
(b) "EBITDA" is defined as broadcast cash flow minus corporate expenses.
EBITDA margin is defined as EBITDA divided by net broadcast revenue.
(c) "After-tax cash flow" is defined as income before provision/(benefit)
for income taxes, extraordinary items and cumulative effect of
accounting change plus depreciation and amortization, non-cash
compensation, non-cash interest expense and loss/(gain) on investments,
less the current income tax provision/(benefit) and preferred stock
dividends.
(d) As of June 30, 2002, the Company had 103,497,000 shares of common stock
outstanding on a weighted average basis and 104,353,000 shares of
common stock outstanding for fully diluted purposes.
(e) Same station results include results only for those stations owned
and/or operated by the Company for at least one month of the
three-month period presented.
29
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary source of liquidity is cash provided by
operations and, to the extent necessary, commitments available under the
Company's bank credit facility and other debt or equity financing. The Company
has a bank credit facility under which it has borrowed $350.0 million in term
loans and may borrow up to $250.0 million on a revolving basis, and from which
the Company has historically drawn down funds as capital was required, primarily
for acquisitions. As of June 30, 2002, the Company had $250.0 million available
to be drawn, subject to the restrictive covenants described below.
The credit facility contains covenants limiting the Company's ability
to incur additional debt. Such terms also place restrictions on the Company with
respect to the sale of assets, liens, investments, dividends, debt repayments,
capital expenditures, transactions with affiliates, consolidation and mergers,
and the issuance of equity interests, among other things. The credit 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 under the credit facility or to otherwise raise
funds in the debt market.
The Company has used, and may continue to use, a significant portion of
the Company's capital resources to consummate acquisitions. These acquisitions
have been and may continue to be funded from (i) the Company's credit facility,
(ii) the proceeds of the historical offerings of the Company's common stock,
(iii) the proceeds of future equity or debt offerings, and (iv) internally
generated cash flow.
Six Months Ended June 30,
2001 2002
---- ----
Net cash flows from operating activities 14,070,000 18,048,000
Net cash flows used in investing activities (4,082,000) (58,547,000)
Net cash flows (used in) from
financing activities (21,348,000) 59,235,000
The Company's balance of cash and cash equivalents was approximately
$32.1 million as of December 31, 2001. The Company's balance of cash and cash
equivalents was approximately $50.9 million as of June 30, 2002. This increase
resulted from higher operating income and approximately $15.0 million of
proceeds from the Company's April 2002 equity offering.
Net cash flows from operating activities increased to approximately
$18.0 million for the six months ended June 30, 2002 compared to approximately
$14.1 million for the six months ended June 30, 2001 or 28%. This increase was
due primarily to higher operating income partially offset by an increase in
cash used for working capital purposes. Depreciation and amortization expense
decreased to approximately $8.8 million for the six months ended June 30, 2002
from approximately $62.4 million for the six months ended June 30, 2001 or 86%
due primarily to the adoption of SFAS 142 on January 1, 2002 (see "Recent
Accounting Pronouncements" below).
Net cash flows used in investing activities was approximately $58.5
million for the six months ended June 30, 2002 compared to approximately $4.1
million for the six months ended June 30, 2001. During the six months ended June
30, 2002, the Company completed the acquisition of the assets of WHTA-FM
(formerly WPEZ-FM), in the Atlanta, Georgia market from U.S. Broadcasting
Limited Partnership for approximately $56.0 million. During the six months ended
June 30, 2001, the Company acquired (i) Nash Communications Corporation, owner
and operator of WILD-AM in the Boston, Massachusetts market for approximately
$4.5
30
million in cash and 63,492 shares of the Company's class A common stock, (ii)
WTLC-AM and the intellectual property of WTLC-FM in the Indianapolis, Indiana
market for approximately $8.3 million in cash and (iii) KTXQ-FM (formerly
KDGE-FM) in the Dallas, Texas market for approximately $52.6 million in cash.
During the six months ended June 30, 2001 the Company completed the sale of (i)
KJOI-AM (formerly KLUV-AM) in the Dallas, Texas market for approximately $16.0
million in cash, (ii) WDYL-FM in the Richmond, Virginia market, and two radio
stations, WJMZ-FM and WPEK-FM, in the Greenville, South Carolina market for
approximately $52.5 million in cash and (iii) WARV-FM in the Richmond, Virginia
market for approximately $1.0 million in cash. The Company also made escrow
deposits of $5.0 million for the acquisition of Blue Chip Broadcasting, Inc. and
$2.8 million for the acquisition of WHTA-FM, in the Atlanta, Georgia market.
Net cash flows from financing activities were approximately $59.2
million for the six months ended June 30, 2002 compared to cash flows used in
financing activities of approximately $21.3 million for the six months ended
June 30, 2001. During the six months ended June 30, 2002, the Company and
certain selling shareholders completed an offering of 11,500,000 shares of Class
D common stock at an offering price of $20.25 per share. Through this offering,
the Company received proceeds of approximately $198.8 million after deducting
offering costs. Approximately $130.0 million of the proceeds were used to
partially repay amounts outstanding under the Company's credit facility. During
the six months ended June 30, 2001, the Company completed the sale of $300.0
million of 8-7/8% Subordinated Notes due July 2011. Approximately $200.0 million
of the proceeds were used to partially repay amounts outstanding under the
Company's credit facility. Approximately $91.1 million was used to redeem the
Company's 12% Senior Subordinated Notes due 2004.
As a result of the aforementioned, cash and cash equivalents increased
by $18.7 million during the six months ended June 30, 2002 compared to a
decrease of approximately $11.4 million during the six months ended June 30,
2001.
In addition to debt service and quarterly dividend payments on its 6.5%
Convertible Preferred Securities, the Company's principal liquidity requirements
are working capital and general corporate purposes, including capital
expenditures, and, if appropriate opportunities arise, acquisitions of
additional radio stations and/or investments in other media related
opportunities. Capital expenditures for the six months ended June 30, 2002 were
approximately $5.1 million.
The Company believes that its current cash and cash investment
balances, as well as anticipated cash flows generated from operations, will be
sufficient to meet its working capital, capital expenditure and debt service
requirements through at least the next 12 months.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 142 (SFAS 142) "Goodwill and
Other Intangible Assets." SFAS 142 requires a non-amortization approach to
account for purchased goodwill and certain intangibles. Under a non-amortization
approach, goodwill and certain intangibles will not be amortized into results of
operation, but instead, would be reviewed for impairment and written down and
charged to results of operations only in the periods in which the carrying value
of goodwill and certain intangibles is more than its fair value. The Company
began adopting the provisions of this statement on July 1, 2001. The adoption of
this accounting standard has eliminated the amortization of goodwill and FCC
broadcast licenses commencing January 1, 2002. The Company recorded amortization
expense of approximately $55.7 million for the six months ended June 30, 2001,
but did not record similar amortization expense for the six months ended June
30, 2002 as a result of the adoption of SFAS 142.
31
FORWARD-LOOKING STATEMENTS
This document contains 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. These forward-looking statements are not historical facts,
but rather reflect the Company's current expectations concerning future results
and events. You can identify these forward-looking statements by the Company's
use of words such as "anticipates," "expects," "intends," "plans," "believes,"
"seeks," "likely," "may," "estimates" and similar expressions. The Company
cannot guarantee that it will achieve these plans, intentions or expectations.
Because these statements apply to future events, they are subject to risks and
uncertainties that could cause actual results to differ materially from those
forecast or anticipated in the forward-looking statement. These risks,
uncertainties and factors include, but are not limited to:
. economic conditions, both generally and relative to the radio
broadcasting industry;
. risks associated with the Company's acquisition strategy;
. the highly competitive nature of the broadcast industry;
. the Company's high degree of leverage; and
. other factors described in the Company's reports on Form 10-K and Form
10-Q.
You should not place undue reliance on these forward-looking statements, which
reflect the Company's view as of the date of this report. The Company undertakes
no obligation to publicly update or revise any forward-looking statements
because of new information, future events or otherwise.
32
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In November 2001, the Company and certain of its officers and directors
were named as defendants in a class action complaint filed in the United States
District Court for the Southern District of New York. Similar complaints were
filed in the same Court against hundreds of other public companies that
conducted initial public offerings of their common stock in the late 1990s. The
complaint alleges that the Company's offering documents filed with the SEC in
May 1999 and November 1999 contained untrue statements of material fact or
omissions of material fact related to the conduct of the underwriters conducting
the offerings. The plaintiffs claim that the Company violated Sections 11 and 12
of the Securities Act of 1933. The plaintiffs seek unspecified monetary damages
and other relief. The Company believes that these claims are without merit and
intends to vigorously defend itself. The Company also maintains directors and
officers liability insurance that it believes will be applicable to this
litigation, and the Company may also be entitled to indemnification by the
underwriters in the event of an adverse result.
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. Changes in Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
On May 14, 2002, the Company held its Annual Meeting of its holders of
common stock pursuant to a Notice of Annual Meeting of Stockholders and Proxy
Statement dated April 17, 2002, a copy of which has been previously filed with
the Securities and Exchange Commission. Stockholders were asked to vote upon the
following proposals:
(1) The election of Terry L. Jones and Brian W. McNeill as
class A directors to serve until the 2003 annual meeting
of stockholders or until their successors are duly
elected and qualified.
(2) The election of Catherine L. Hughes, Alfred C. Liggins,
III, D. Geoffrey Armstrong, L. Ross Love and Ronald E.
Blaylock as directors to serve until the 2003 annual
meeting of stockholders or until their successors are
duly elected and qualified.
(3) The ratification of the amendment and restatement of the
1999 Stock Option and Restricted Stock Grant Plan
increasing the number of shares of class D common stock
reserved for issuance under the plan from 3,816,198
shares to 5,816,198 shares.
(4) The ratification of the appointment of Arthur Andersen LLP
as independent public accountants for the Company for the
year ending December 31, 2002.
All proposals were adopted by a majority vote of the holders of common
stock. The results of the vote tabulation were as follows:
33
Number of Votes
---------------
Proposal 1 Class A Class B
---------- ------- -------
Jones For 15,269,815 N/A
Withhold Authority 406,915
McNeill For 15,245,965 N/A
Withhold Authority 430,815
Proposal 2
----------
Hughes For 12,886,386 28,674,630
Withhold Authority 2,790,394
Liggins For 12,886,386 28,674,630
Withhold Authority 2,790,394
Armstrong For 15,269,815 28,674,630
Withhold Authority 406,915
Love For 15,269,815 28,674,630
Withhold Authority 406,915
Blaylock For 15,245,965 28,674,630
Withhold Authority 430,815
Proposal 3
----------
For 6,010,352 28,674,630
Against 8,144,207
Abstain 74,898
Broker Non-Votes 1,446,923
Proposal 4
----------
For 14,907,168 28,674,630
Against 606,618
Abstain 43,487
Item 5. Other Information
None.
Item 6. 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. 0-25969; Film
No. 631638)).
3.1.1 Certificate of Amendment (dated as of September 21, 2000)
of the Amended and
34
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. 0-25969; Film No. 736375)).
3.2 Amended and Restated By-laws of Radio One, Inc., amended
as of June 5, 2001 (incorporated by reference to Radio
One's Form 10-Q filed August 14, 2001 (File No. 0-25969;
Film No. 1714323)).
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. 0-25969; Film No. 698190)).
99.1 Certification of Chief Executive Officer pursuant to 18
U.S.C. 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
99.2 Certification of Chief Financial Officer pursuant to 18
U.S.C. 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
(b) REPORTS ON FORM 8-K
The Company filed an Item 5 Form 8-K, dated May 5, 2002, for the
purpose of (i) announcing its first quarter results and (ii) announcing the
completion of its acquisition of WHTA-FM in Atlanta, GA.
The Company filed an Item 4 Form 8-K, dated May 30, 2002, to report a
change in its independent auditors from Arthur Andersen LLP to Ernst & Young
LLP.
35
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
----------------------------------------------------
August 13, 2002 Scott R. Royster
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
36