SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2004
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 incorporation or organization) |
(I.R.S. Employer Identification No.) |
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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). 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 October 28, 2004 | |
| Class A Common Stock, $.001 Par Value |
22,404,228 | |
| Class B Common Stock, $.001 Par Value |
2,867,463 | |
| Class C Common Stock, $.001 Par Value |
3,132,458 | |
| Class D Common Stock, $.001 Par Value |
76,592,833 |
RADIO ONE, INC. AND SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2004
TABLE OF CONTENTS
(See pages 4-28 — This page intentionally left blank.)
3
RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||
| (In Thousands, Except Shares Outstanding and Per Share Amounts) | ||||||||||||||
| NET BROADCAST REVENUE |
$ | 84,366 | $ | 81,456 | $ | 240,238 | $ | 225,798 | ||||||
| OPERATING EXPENSES: |
||||||||||||||
| Program and technical |
13,272 | 12,404 | 41,005 | 38,576 | ||||||||||
| Selling, general and administrative |
23,988 | 23,450 | 70,691 | 69,468 | ||||||||||
| Corporate expenses |
4,138 | 3,557 | 12,016 | 10,469 | ||||||||||
| Depreciation and amortization |
4,368 | 4,555 | 13,359 | 13,586 | ||||||||||
| Total operating expenses |
45,766 | 43,966 | 137,071 | 132,099 | ||||||||||
| Operating income |
38,600 | 37,490 | 103,167 | 93,699 | ||||||||||
| INTEREST INCOME |
630 | 594 | 1,937 | 1,957 | ||||||||||
| INTEREST EXPENSE, including amortization of deferred financing costs |
9,749 | 10,255 | 29,472 | 31,392 | ||||||||||
| EQUITY IN NET LOSS OF AFFILIATED COMPANY |
2,144 | 939 | 5,942 | 939 | ||||||||||
| OTHER INCOME (EXPENSE), net |
(123 | ) | — | 21 | (2 | ) | ||||||||
| Income before provision for income taxes |
27,214 | 26,890 | 69,711 | 63,323 | ||||||||||
| PROVISION FOR INCOME TAXES |
10,446 | 10,174 | 26,693 | 24,019 | ||||||||||
| Net income |
$ | 16,768 | $ | 16,716 | $ | 43,018 | $ | 39,304 | ||||||
| PREFERRED STOCK DIVIDEND |
$ | 5,035 | $ | 5,035 | $ | 15,105 | $ | 15,105 | ||||||
| NET INCOME APPLICABLE TO COMMON STOCKHOLDERS |
$ | 11,733 | $ | 11,681 | $ | 27,913 | $ | 24,199 | ||||||
| BASIC AND DILUTED NET INCOME PER COMMON SHARE |
$ | 0.11 | $ | 0.11 | $ | 0.26 | $ | 0.23 | ||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING: |
||||||||||||||
| Basic |
104,986,638 | 104,649,190 | 104,935,362 | 104,611,105 | ||||||||||
| Diluted |
105,303,330 | 105,185,167 | 105,478,109 | 105,049,480 | ||||||||||
The accompanying notes are an integral part of these consolidated statements.
4
RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| September 30, 2004 |
December 31, 2003 |
|||||||
| (Unaudited) | ||||||||
| (In Thousands, Except Share and Per Share Amounts) |
||||||||
| ASSETS |
||||||||
| CURRENT ASSETS: |
||||||||
| Cash and cash equivalents |
$ | 12,700 | $ | 38,010 | ||||
| Short term investments |
25,000 | 40,700 | ||||||
| Trade accounts receivable, net of allowance for doubtful accounts of $5,447 and $6,179, respectively |
62,105 | 62,331 | ||||||
| Prepaid expenses and other current assets |
3,065 | 1,580 | ||||||
| Income tax receivable |
3,650 | 3,650 | ||||||
| Deferred income tax asset |
5,794 | 5,794 | ||||||
| Total current assets |
112,314 | 152,065 | ||||||
| PROPERTY AND EQUIPMENT, net |
41,383 | 42,675 | ||||||
| RADIO BROADCASTING LICENSES |
1,755,661 | 1,648,264 | ||||||
| OTHER INTANGIBLE ASSETS, net |
14,272 | 19,478 | ||||||
| GOODWILL |
114,516 | 114,516 | ||||||
| INVESTMENT IN AFFILIATED COMPANY |
28,521 | 34,396 | ||||||
| OTHER ASSETS |
10,530 | 6,477 | ||||||
| Total assets |
$ | 2,077,197 | $ | 2,017,871 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| CURRENT LIABILITIES: |
||||||||
| Accounts payable |
$ | 7,722 | $ | 7,221 | ||||
| Accrued interest |
7,310 | 14,154 | ||||||
| Accrued compensation and related benefits |
15,375 | 14,038 | ||||||
| Income taxes payable |
2,867 | 4,389 | ||||||
| Current portion of deferred revenue |
3,421 | 3,587 | ||||||
| Other accrued expenses |
5,217 | 5,444 | ||||||
| Fair value of derivative instruments |
1,531 | 4,236 | ||||||
| Other current liabilities |
601 | 331 | ||||||
| Current portion of long-term debt |
65,625 | 52,500 | ||||||
| Total current liabilities |
109,669 | 105,900 | ||||||
| DEFERRED REVENUE, net of current portion |
11,385 | 13,009 | ||||||
| LONG-TERM DEBT, net of current portion |
542,529 | 545,035 | ||||||
| DEFERRED INCOME TAX LIABILITY |
104,164 | 75,508 | ||||||
| Total liabilities |
767,747 | 739,452 | ||||||
| STOCKHOLDERS’ EQUITY: |
||||||||
| Convertible preferred stock, $.001 par value, 1,000,000 shares authorized and 309,820 shares issued and outstanding; liquidation preference of $1,000 per share plus cumulative dividends at 6.5% per year, unpaid dividends were $4,198 as of September 30, 2004 and December 31, 2003 |
— | — | ||||||
| Common stock—Class A, $.001 par value, 30,000,000 shares authorized, 22,404,228 and 22,400,164 shares issued and outstanding at September 30, 2004 and December 31, 2003, respectively |
23 | 23 | ||||||
| Common stock—Class B, $.001 par value, 150,000,000 shares authorized, 2,867,463 shares issued and outstanding at September 30, 2004 and December 31, 2003 |
3 | 3 | ||||||
| Common stock—Class C, $.001 par value, 150,000,000 shares authorized, 3,132,458 shares issued and outstanding at September 30, 2004 and December 31, 2003 |
3 | 3 | ||||||
| Common stock—Class D, $.001 par value, 150,000,000 shares authorized, 76,590,583 and 76,340,899 shares issued and outstanding at September 30, 2004 and December 31, 2003, respectively |
76 | 76 | ||||||
| Accumulated other comprehensive loss |
(942 | ) | (2,605 | ) | ||||
| Stock subscriptions receivable |
(36,299 | ) | (35,017 | ) | ||||
| Additional paid-in capital |
1,413,198 | 1,410,460 | ||||||
| Accumulated deficit |
(66,612 | ) | (94,524 | ) | ||||
| Total stockholders’ equity |
1,309,450 | 1,278,419 | ||||||
| Total liabilities and stockholders’ equity |
$ | 2,077,197 | $ | 2,017,871 | ||||
The accompanying notes are an integral part of these consolidated balance sheets.
5
RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2003 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 (UNAUDITED)
(In Thousands, Except Share Amounts)
| Convertible preferred stock |
Common stock Class A |
Common stock Class B |
Common stock Class C |
Common stock Class D |
Comprehensive income |
Accumulated other comprehensive income |
Stock subscriptions receivable |
Additional paid-in capital |
Accumulated deficit |
Total stockholders’ equity |
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| BALANCE, as of December 31, 2002 |
— | 23 | 3 | 3 | 76 | (3,006 | ) | (33,344 | ) | 1,408,435 | (128,167 | ) | 1,244,023 | ||||||||||||||||||||||||
| Comprehensive income: |
|||||||||||||||||||||||||||||||||||||
| Net income |
— | — | — | — | — | 53,783 | — | — | — | 53,783 | 53,783 | ||||||||||||||||||||||||||
| Change in unrealized net loss on derivative and hedging activities, net of taxes |
— | — | — | — | — | 401 | 401 | — | — | — | 401 | ||||||||||||||||||||||||||
| Comprehensive income |
$ | 54,184 | |||||||||||||||||||||||||||||||||||