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Radio One, Inc. Reports First Quarter Results

Radio One, Inc. (NASDAQ:ROIAK and ROIA) today reported its results for the quarter ended March 31, 2008. Net revenue was approximately $72.5 million, a decrease of 2% from the same period in 2007. Station operating income1 was approximately $28.9 million, a decrease of 15% from the same period in 2007. Operating income was approximately $18.5 million, a decrease of 16% from the operating income in the same period in 2007. Net loss was approximately $18.3 million, or a loss of $0.19 per basic share, a decrease from the reported net income of $744,000 in the same period in 2007.

Alfred C. Liggins, III, Radio Ones CEO and President stated, While our radio stations outperformed their markets by almost 600 basis points, driven mainly by local advertising, the significant decline in national advertising held our overall core radio station revenue growth to 0.9%. Under the current market conditions, I believe this performance demonstrates that our management changes and leadership are having a favorable impact. When combined with reduced revenues at Reach Media and Giant Magazine, consolidated net revenue declined 2%.

In March we successfully expanded our One Love Gospel Cruise event, which generated over $2.5 million of revenue. This well branded event, when coupled with our strong portfolio of gospel stations will no doubt provide for future aggressive monetization of these assets.

During the quarter we invested in new on-air talent for our syndicated programs, notably MoNique, and these investments should deliver future ratings and revenue growth. Our internet investment and build-out continues on plan, augmented by the recent acquisition of Community Connect Inc. (CCI) and the launch of Newsone.com, which will accelerate our path to profitability in the on-line space.

The sale of KRBV-FM in Los Angeles for $137.5 million is on track to close during the second quarter and will provide the Company with additional liquidity and de-leveraging opportunities.

With weak market conditions projected for the balance of this year, the management team is focused on integrating CCI to reap revenue synergies, making our business processes more efficient and controlling our costs.

RESULTS OF OPERATIONS

 
 




 

 

Three Months Ended March 31,

  2008  
  2007  



(as adjusted)2

(unaudited)

(in thousands)
STATEMENT OF OPERATIONS:



  NET REVENUE
$ 72,498

$

74,040





 

OPERATING EXPENSES:



Programming and technical


19,032




18,070



Selling, general and administrative

24,518


21,868

Corporate selling, general and administrative

6, 407


7,550

Stock-based compensation
328


815

Depreciation and amortization   3,664  
  3,716  

Total operating expenses   53,949  
  52,019  



 

Operating income
18,549


22,021



 

INTEREST INCOME

(201

)



(267

)


INTEREST EXPENSE


17,259




18,070



EQUITY IN LOSS OF AFFILIATED COMPANY

2,285




492



OTHER EXPENSE, net
 

11

 
 

8

 

(Loss) Income before provision for income taxes, minority interest in income of subsidiaries and discontinued operations

(805 )

3,718

PROVISION FOR INCOME TAXES

8,898




1,452



MINORITY INTEREST IN INCOME OF SUBSIDIARIES
 

823

 
 

906

 




 

Net (Loss) Income from continuing operations
 

(10,526

)


  1,360  




 

LOSS FROM DISCONTINUED OPERATIONS, net of tax
 

(7,781

)


  (616 )




 




 

Net (loss) income
$ (18,307 )
$ 744  









 

Weighted average shares outstanding basic3



98,728,411




  98,710,633



Weighted average shares outstanding diluted4



98,728,411




98,710,633



  Three Months Ended March 31,

  2008         2007  


 
(as adjusted)

(unaudited)

(in thousands, except per share data)
PER SHARE DATA basic and diluted:




 






(Loss) income from continuing operations per share
$ (0.11 )

$ 0.01

Loss from discontinued operations per share
$ (0.08 )

$ (0.01 )

Net (loss) income per share
$ (0.19 )

$ 0.01  





 
SELECTED OTHER DATA:





Station operating income 1
$ 28,948


$ 34,102

Station operating income margin (% of net revenue)

39.9 %


46.1 %

Station operating income reconciliation:





Net (loss) income
$ (18,307 )

$ 744

Plus: Depreciation and amortization

3,664



3,716

Plus: Corporate selling, general and administrative expenses

6,407



7,550

Plus: Stock-based compensation

328



815

Plus: Equity in loss of affiliated company

2,285



492

Plus: Provision for income taxes

8,898



1,452

Plus: Minority interest in income of subsidiaries

823



906

Plus: Interest expense

17,259



18,070

Plus: Other expense

11



8

Plus: Loss from discontinued operations, net of tax

7,781



616

Less: Interest income
  (201 )

  (267 )

Station operating income
$ 28,948  

$ 34,102  






 

Adjusted EBITDA4
$ 22,202


$ 25,729

Adjusted EBITDA reconciliation:





Net (loss) income
$ (18,307 )

$ 744

Plus: Depreciation and amortization

3,664



3,716

Plus: Provision for income taxes

8,898



1,452

Plus: Interest expense

17,259



18,070

Less: Interest income
  (201 )

  (267 )

EBITDA
$ 11,313


$ 23,715

Plus: Equity in loss of affiliated company

2,285



492

Plus: Minority interest in income of subsidiaries

823



906

Plus: Loss from discontinued operations, net of tax
  7,781  

  616  

Adjusted EBITDA
$ 22,202  

$ 25,729  

  March 31, 2008   December 31, 2007

(unaudited)
(as adjusted)
SELECTED BALANCE SHEET DATA:
(in thousands)
  Cash and cash equivalents
$ 7,730
$ 24,247

Intangible assets, net

1,308,730

1,310,321

Total assets

1,639,389

1,667,725

Total debt (including current portion)

813,514

815,504

Total liabilities

1,026,205

1,030,736

Total stockholders' equity

611,929

633,100

Minority interest in subsidiaries



1,255

3,889




 


Current Amount

Outstanding


Applicable Interest
Rate (a)



(in thousands)

SELECTED LEVERAGE AND SWAP DATA:



Senior bank term debt (swap matures 6/16/2012) (a)
$ 25,000

6.72 %
Senior bank term debt (swap matures 6/16/2010) (a)

25,000

6.52 %
Senior bank term debt (swap matures 6/16/2008) (a)

25,000

6.38 %
Senior bank term debt (at variable rates) (b)

117,500

5.00 %
Senior bank term debt (at variable rates) (b)

120,500

5.00 %
8-7/8% senior subordinated notes (fixed rate)

300,000

8.88 %
6-3/8% senior subordinated notes (fixed rate)

200,000

6.38 %
Seller financed loan

514

5.10 %

(a)

 

A total of $75.0 million is subject to fixed rate swap agreements that became effective in June 2005. Under our fixed rate swap agreements, we pay a fixed rate plus a spread based on our leverage ratio, as defined in our Credit agreement. That spread is currently set at 2.25% and is incorporated into the applicable interest rates set forth above.

 

(b)


Subject to rolling 90-day LIBOR plus a spread currently at 2.25% and incorporated into the applicable interest rate set forth above. This tranche is not covered by swap agreements described in footnote (a).

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