<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-----------------
FORM 10-Q/A
AMENDMENT NO. 1
[x]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 1, 1995
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-4278
CAPITAL CITIES/ABC, INC.
(Exact name of registrant as specified in its charter)
NEW YORK 14-1284013
(State of incorporation) (I.R.S. Employer
Identification No.)
77 WEST 66TH STREET, NEW YORK, NEW YORK 10023
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including
area code (212) 456-7777
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
--- ---
The number of shares outstanding of the issuer's common stock as of October 31,
1995: 153,891,980 shares, excluding 30,042,980 treasury shares.
<PAGE>
PART I FINANCIAL INFORMATION
CAPITAL CITIES/ABC, INC.
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
(Thousands of Dollars)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -------------------
Oct 1, Oct 2, Oct 1, Oct 2,
------ ------ ------ ------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenues $1,566,528 $1,461,932 $4,822,032 $4,404,973
---------- ---------- ---------- ---------
Costs and expenses
Direct operating expenses 943,583 858,370 2,825,733 2,580,180
Selling, general and
administrative 302,186 316,837 949,917 896,873
Depreciation 29,135 27,792 85,576 81,285
Amortization of intangible
assets 16,391 15,830 48,506 47,444
Merger costs and litigation
settlement 47,347 - 47,347 -
----------- ---------- ---------- ----------
1,338,642 1,218,829 3,957,079 3,605,782
----------- ---------- ---------- ----------
Operating income 227,886 243,103 864,953 799,191
Other income (expense)
Interest expense (14,983) (14,129) (44,031) (40,566)
Interest income 21,252 8,346 53,911 15,711
Other, net (6,118) (1,345) 2,947 2,408
---------- ---------- ---------- ----------
151 (7,128) 12,827 (22,447)
---------- ---------- ---------- ----------
Income before income taxes 228,037 235,975 877,780 776,744
Income taxes 101,000 102,300 384,100 337,500
---------- ---------- ---------- ----------
Net income $ 127,037 $ 133,675 $ 493,680 $ 439,244
========== ========== ========== ==========
Net income per share $0.83 $0.87 $3.21 $2.86
========== ========== ========== ==========
Dividends per common share $0.05 $0.05 $0.15 $0.105
========== ========== ========== ==========
Average shares outstanding 153,860 154,035 153,985 153,840
(000's) ========== ========== ========== ==========
</TABLE>
-2-
<PAGE>
CAPITAL CITIES/ABC, INC.
CONSOLIDATED BALANCE SHEET
(Thousands of Dollars)
<TABLE>
<CAPTION>
October 1, December 31,
---------- ------------
1995 1994
---- ----
(Unaudited) (Audited)
<S> <C> <C>
Assets
Current assets
Cash and short-term cash investments $ 1,038,800 $ 781,371
Short-term investments 272,421 238,029
Accounts and notes receivable, net 961,859 1,056,280
Program licenses and rights 444,769 440,443
Other current assets 244,584 200,064
----------- -----------
Total current assets 2,962,433 2,716,187
----------- -----------
Property, plant and equipment, at cost 2,191,205 2,122,494
Less accumulated depreciation (893,461) (831,838)
----------- -----------
Property, plant and equipment, net 1,297,744 1,290,656
----------- -----------
Intangible assets, net 2,121,395 1,999,305
Program licenses and rights, noncurrent 197,978 195,563
Investment in unconsolidated equity
affiliates 357,078 334,460
Other assets 312,829 232,041
----------- -----------
$ 7,249,457 $ 6,768,212
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 140,738 $ 163,566
Accrued compensation 301,501 131,370
Accrued expenses and other current
liabilities 328,095 273,254
Program licenses and rights 340,619 281,923
Taxes on income 84,936 189,267
Long-term debt due within one year 93,786 4,176
----------- -----------
Total current liabilities 1,289,675 1,043,556
Deferred compensation 71,571 188,492
Deferred income taxes 228,624 247,532
Program licenses and rights, noncurrent 49,160 39,259
Other liabilities 241,902 233,987
Long-term debt due after one year 514,098 610,666
----------- -----------
Total liabilities 2,395,030 2,363,492
----------- -----------
Minority interest 119,403 116,163
----------- -----------
Stockholders' equity
Preferred stock, no par value - -
Common stock, $0.10 par value
(300,000,000 shares authorized) 18,394 18,394
Additional paid-in capital 1,046,838 1,036,068
Unrealized net gains on investments 70,060 57,008
Retained earnings 5,219,215 4,748,624
----------- -----------
6,354,507 5,860,094
Less common stock in treasury, at cost (1,619,483) (1,571,537)
----------- -----------
Total stockholders' equity 4,735,024 4,288,557
----------- -----------
$ 7,249,457 $ 6,768,212
=========== ===========
</TABLE>
-3-
<PAGE>
CAPITAL CITIES/ABC, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(Thousands of Dollars)
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
Oct. 1, Oct. 2,
------- -------
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities
Net income $ 493,680 $ 439,244
Adjustments to reconcile net income to net cash
Noncash and nonoperating items
Depreciation 85,576 81,285
Amortization of intangible assets 48,506 47,444
(Decrease) increase in deferred liabilities (144,861) 49,959
Other noncash and nonoperating items, net 43,942 30,201
Changes in operating assets and liabilities,
net of effects of acquisitions and dispositions
Decrease in program assets and liabilities, net 61,899 34,125
Decrease (increase) in accounts receivable 99,559 (2,765)
Increase (decrease) in accounts payable,
accrued expenses and other current liabilities 102,050 (14,351)
(Increase) in other operating assets, net (38,486) (31,260)
---------- ---------
Net cash provided by operating activities 751,865 633,882
---------- ---------
Cash flows from investing activities
Capital expenditures (91,130) (87,630)
Acquisitions of operating companies and
equity investments (194,229) (213,486)
Purchases of short-term investments (845,003) (356,501)
Sales and maturities of short-term investments 810,670 326,802
Proceeds from dispositions of operating companies 39,323 -
Proceeds from dispositions of real estate - 22,000
Other investing activities, net (136,844) (30,738)
---------- ---------
Net cash used in investing activities (417,213) (339,553)
---------- ---------
Cash flows from financing activities
Reduction of long-term debt (16,958) (5,661)
Common stock purchased for treasury (78,124) (27,444)
Common stock issued under Employee Stock Plans 40,948 29,899
Dividends (23,089) (16,170)
---------- ---------
Net cash used in financing activities (77,223) (19,376)
---------- ---------
Net increase in cash and short-term
cash investments 257,429 274,953
Cash and short-term cash investments
Beginning of period 781,371 264,283
---------- ---------
End of period $1,038,800 $ 539,236
========== =========
</TABLE>
* * * * * * *
Cash and short-term cash investments at October 1, 1995 and October 2, 1994
excludes $272,421,000 and $202,368,000, respectively, of highly liquid U.S.
Government instruments with original maturities in excess of three months, to
conform to the definition of a cash investment prescribed by the Financial
Accounting Standards Board.
-4-
<PAGE>
CAPITAL CITIES/ABC, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited)
Nine Months Ended October 1, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
Unreal-
Additional ized net
Common paid-in gains on Retained Treasury
stock capital investments earnings stock Total
------ ------- ------------ -------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Balance at December
31, 1994 $18,394 $1,036,068 $57,008 $4,748,624 $(1,571,537) $4,288,557
Net income for
nine months - - - 493,680 - 493,680
704,489 shares issued
under Employee
Stock Purchase Plan - 11,166 - - 29,328 40,494
20,258 shares issued
from exercise of
employee stock
options - (396) - - 850 454
910,270 shares
purchased for
treasury - - - - (78,124) (78,124)
Dividends - - - (23,089) - (23,089)
Change in
unrealized net
gains, net of
income taxes of
$9,032 - - 13,052 - - 13,052
Balance at October 1, _______ __________ _______ __________ __________ __________
1995 $18,394 $1,046,838 $70,060 $5,219,215 $(1,619,483) $4,735,024
======= ========== ======= ========== ========== ==========
</TABLE>
-5-
<PAGE>
CAPITAL CITIES/ABC, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(1) The results presented in the financial statements are
unaudited, but in the opinion of management contain all
adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the results of
operations.
(2) On July 31, 1995, Capital Cities/ABC announced that it was
merging with The Walt Disney Company. The merger, which is
subject to regulatory review and approval of the shareholders
of each company, is expected to be completed during early
1996.
-6-
<PAGE>
CAPITAL CITIES/ABC, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
A summary of the Company's operations by business segment for the third quarter
and nine month periods is as follows (in thousands of dollars):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------- ------------------
Oct 1, Oct 2, Oct 1, Oct 2,
------ ----- ----- ------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Broadcasting
Net revenues $1,282,604 $1,184,537 $3,967,745 $3,586,602
---------- ---------- ---------- ----------
Direct operating costs 1,056,856 959,795 3,128,844 2,833,786
Amortization of
intangible assets 12,601 11,878 36,893 35,402
---------- ---------- ---------- ----------
Costs and expenses 1,069,457 971,673 3,165,737 2,869,188
---------- ---------- ---------- ----------
Income from operations $ 213,147 $ 212,864 $ 802,008 $ 717,414
========== ========== ========== ==========
Publishing
Net revenues $ 283,924 $ 277,395 $ 854,287 $ 818,371
---------- ---------- ---------- ----------
Direct operating costs 244,636 231,659 733,928 693,471
Amortization of
intangible assets 3,790 3,952 11,613 12,042
---------- ---------- ---------- ----------
Costs and expenses 248,426 235,611 745,541 705,513
---------- ---------- ---------- ----------
Income from operations $ 35,498 $ 41,784 $ 108,746 $ 112,858
========== ========== ========== ==========
Consolidated
Net revenues $1,566,528 $1,461,932 $4,822,032 $4,404,973
========== ========== ========== ==========
Income from operations $ 248,645 $ 254,648 $ 910,754 $ 830,272
General corporate
expense 20,759 11,545 45,801 31,081
---------- ---------- ---------- ----------
Operating income $ 227,886 $ 243,103 $ 864,953 $ 799,191
========== ========== ========== ==========
</TABLE>
Third Quarter 1995 Compared with Third Quarter 1994
Results of Operations
On July 31, 1995, Capital Cities/ABC, Inc. announced that it was
merging with The Walt Disney Company. The transaction, which is subject to
regulatory review and approval of the shareholders of each company, is expected
to be completed during early 1996.
Consolidated net revenues for the third quarter of 1995 were
$1,566,528,000, up 7% from the $1,461,932,000 reported in 1994. Broadcasting net
revenues for the third quarter of 1995 were $1,282,604,000, compared with
$1,184,537,000 in 1994, an 8% increase. Net revenues for the ABC Television
Network increased moderately. Television station net revenues were essentially
flat with the prior year, reflecting softer advertising demand and the absence
of 1994 political advertising. ESPN continued to
-7-
<PAGE>
report significant gains, while the radio operations increased moderately.
Publishing Group revenues, excluding the effect of dispositions and start-ups,
increased 6%, with the newspaper operations reporting higher gains than the
specialized publications.
Total operating costs and expenses for the third quarter of 1995 were
$1,338,642,000 compared with $1,218,829,000 reported in 1994. Excluding costs
incurred in connection with the pending merger with The Walt Disney Company and
a one-time charge to reflect the settlement of an outstanding litigation matter,
total operating costs and expenses increased 6% from the prior year. The
merger-related costs consisted principally of long-term incentive compensation
expense resulting from the merger-related increase in the Company's share price
through the end of the quarter, as well as from costs for legal, printing and
other similar expenses. Broadcasting costs in the third quarter of 1995
increased 10% from 1994. Excluding the merger-related costs and the litigation
settlement, broadcasting costs increased 7%. Costs and expenses for the ABC
Television Network increased moderately, primarily due to higher affiliate
compensation and increased activity in the production group. Television station
expenses rose moderately in the third quarter of 1995, due primarily to an
increase in programming expense and higher news coverage costs. ESPN expenses
increased significantly in the third quarter of 1995 as a result of increased
programming and production costs. Costs at the Company's radio operations
increased moderately, mainly due to higher selling and programming expense, and
the inclusion of recently acquired stations. Publishing Group costs in the third
quarter of 1995 increased 5% from 1994. Excluding the effect of dispositions,
start-ups and merger-related costs, Publishing costs increased 7% from 1994,
mainly due to substantially higher newsprint expense.
Operating income for the third quarter of 1995 was $227,886,000
compared with $243,103,000 reported in 1994. Excluding the merger-related costs
and the litigation settlement, operating income increased 13% from the prior
year. Broadcasting operating income was flat with 1994. Excluding the
merger-related costs and the litigation settlement, broadcasting operating
income rose 16% from the prior year. Operating income for the ABC Television
Network and for ESPN increased significantly. Operating income at the television
stations declined slightly from the third quarter of 1994, while the radio
operations were flat with the prior year. Publishing earnings, excluding the
effect of dispositions, start-ups and merger-related expenses, decreased 3%.
Substantially higher newsprint expense at the newspapers, combined with soft
revenue demand at the specialized publications, resulted in modest declines in
both groups.
Net interest income (interest income less interest expense) for the
third quarter of 1995 increased $12,052,000 from 1994. Interest income was
$12,906,000 higher in the third quarter of 1995 due to a greater level of
invested cash at higher rates. Interest expense increased $854,000, primarily as
a result of higher interest expense on miscellaneous debt. Interest of
$1,201,000 and $680,000 was capitalized in the third quarter of 1995 and 1994,
respectively.
The Company's income tax provision for the third quarter of 1995 has
been computed by applying the estimated 1995 annual effective income tax rate to
income before taxes. For the full year 1994, the effective tax rate was 43.6%.
-8-
<PAGE>
Consolidated net income for the third quarter of 1995 was $127,037,000
(after merger costs and the litigation settlement) compared with $133,675,000
reported for the same period of 1994. Earnings per share for the third quarter
of 1995 were $0.83 (after merger costs and the litigation settlement), compared
with the $0.87 reported for the third quarter of 1994. Average shares
outstanding for the third quarter of 1995 and 1994 were 153,860,000 and
154,035,000, respectively.
Consolidated net income, excluding costs incurred in connection with
the pending merger with The Walt Disney Company and a one-time charge to reflect
the settlement of an outstanding litigation matter, rose 17% for the third
quarter of 1995, compared with the prior year's comparable quarter. Consolidated
net income per share (excluding merger costs and the litigation settlement) was
$1.02 in the third quarter of 1995 compared with $0.87 in 1994, also an increase
of 17%.
First Nine Months of 1995 Compared with First Nine Months of 1994
Results of Operations
Consolidated net revenues for the first nine months of 1995 were
$4,822,032,000, up 9% from the $4,404,973,000 reported in 1994. Broadcasting net
revenues for the first nine months of 1995 were $3,967,745,000, compared with
$3,586,602,000 in 1994, an 11% increase. The ABC Television Network reported a
moderate increase in net revenues for the first nine months of 1995. This gain
was due to greater advertiser demand and the broadcast of Super Bowl XXIX in
1995, and in part to the absence of the Winter Olympics, which were broadcast on
another network in 1994. In addition, net revenues at the network increased due
to a higher level of activity in the production group. Television station net
revenues rose moderately in the first nine months of 1995 because of higher
advertising demand, mainly in the first six months of the year, and the telecast
of Super Bowl XXIX. ESPN continued to report significant revenue increases,
while radio revenues increased moderately as a result of greater advertiser
demand and recent radio station acquisitions. Publishing Group revenues,
excluding the effect of dispositions and start-ups, increased 7%, with the
newspaper operations reporting higher gains than the specialized publications.
Total costs and expenses for the first nine months of 1995 were
$3,957,079,000 compared with $3,605,782,000 reported in 1994. Excluding third
quarter costs incurred in connection with the pending merger with The Walt
Disney Company and the one-time charge to reflect the settlement of an
outstanding litigation matter, total operating costs and expenses increased 8%
from the prior year. Broadcasting costs in the first nine months of 1995
increased 10% from 1994. Excluding the merger-related costs and the litigation
settlement, broadcasting costs increased 9% from the prior year. Costs and
expenses for the ABC Television Network increased moderately, primarily due to
higher affiliate compensation, programming and production, and general and
administrative expenses. Programming at the Network included higher expenses due
to the telecast of the 1995 Super Bowl and Pro Bowl in 1995 versus the final
1993 NFL regular season game and Wildcard playoff games in 1994. Television
station expenses rose significantly in the first nine months of 1995 due
primarily to the absence of a comparable favorable adjustment made to 1994
expenses to reflect the resolution of a long-standing music license fee dispute.
-9-
<PAGE>
Excluding the effect of this 1994 adjustment, television station expenses rose
moderately, primarily due to an increase in syndicated programming, news and
general and administrative expenses. ESPN expenses increased significantly in
the first nine months of 1995 as a result of increased programming and
production costs. Costs at the Company's radio operations increased slightly,
mainly due to higher programming and general and administrative expenses and the
inclusion of recently acquired stations. Publishing Group costs in the first
nine months of 1995 increased 6% from 1994. Excluding the effect of
dispositions, start-ups and merger-related costs, Publishing costs increased 8%
from 1994, due to substantially higher newsprint expense and modestly higher
advertising, circulation and general and administrative expenses.
Operating income for the first nine months of 1995 was $864,953,000
compared with $799,191,000 reported in 1994. Excluding the merger-related costs
and the litigation settlement, operating income increased 14% from the prior
year. Broadcasting operating income rose 12% from 1994. Excluding the
merger-related costs and the litigation settlement, broadcasting operating
income rose 16% from the prior year. The ABC Television Network and ESPN
reported significant increases in operating income. Operating income at the
television stations increased slightly from the first nine months of 1994, due
partially to the absence of the one-time credit recorded in 1994 to reflect the
resolution of a long-standing music license fee dispute. Excluding the effect of
this 1994 reduction in expense, operating income for the television stations
rose moderately. The radio operations also reported moderate earnings gains.
Publishing earnings, excluding the effect of dispositions, start-ups and
merger-related expenses, decreased 1% from 1994. Substantially higher newsprint
expense produced a slight decline in earnings in the newspaper group. Earnings
at the specialized publications were flat with the prior year.
Net interest income (interest income less interest expense) for the
first nine months of 1995 increased $34,735,000 from 1994. Interest income was
$38,200,000 higher in the first nine months of 1995 due to a greater level of
invested cash at higher rates. Interest expense increased $3,465,000, primarily
as a result of higher interest expense on miscellaneous debt. Interest of
$3,053,000 and $3,283,000 was capitalized in the first nine months of 1995 and
1994, respectively.
The Company's income tax provision for the first nine months of 1995
has been computed by applying the estimated 1995 annual effective income tax
rate to income before taxes. For the full year 1994, the effective tax rate was
43.6%.
During the third quarter of 1995, the Company incurred merger-related
expenses as a result of the impact on certain long-term incentive compensation
plans of the increase in the Company's stock price as well as costs for legal,
printing and other merger-related factors.
Consolidated net income for the first nine months of 1995 was
$493,680,000 (after merger costs and the litigation settlement) compared with
$439,244,000 reported for the same period of 1994. Earnings per share for the
first nine months of 1995 were $3.21 (after merger costs and the litigation
settlement), compared with the $2.86 reported in 1994. Average shares
outstanding for the first nine months of 1995 and 1994 were 153,985,000 and
153,840,000, respectively.
-10-
<PAGE>
Consolidated net income, excluding costs incurred in connection with
the pending merger with The Walt Disney Company and the one-time charge to
reflect the settlement of an outstanding litigation matter, rose 19% for the
first nine months of 1995 compared with the prior year. Consolidated net income
per share (excluding merger costs and the litigation settlement) was $3.40 in
the first nine months of 1995 compared with $2.86 in 1994, also an increase of
19%.
Liquidity and Capital Resources
Net Cash Provided By Operating Activities
For the first nine months of 1995, net cash provided by operating
activities was $751,865,000, an increase of $117,983,000 from the $633,882,000
reported in 1994. The increase was primarily attributable to higher 1995 net
income and a larger decrease in net program assets than in the prior year.
Net Cash Used In Investing Activities
For the first nine months of 1995, net cash used in investing
activities was $417,213,000, an increase of $77,660,000 from the $339,553,000
used in the prior year. The increase was primarily attributable to higher cash
investments in unconsolidated equity affiliates and an increase in long-term
notes receivable.
Net Cash Used In Financing Activities
For the first nine months of 1995, net cash used in financing
activities was $77,223,000, an increase of $57,847,000 from the $19,376,000 used
in 1994. The increase was primarily attributable to higher common stock
repurchases and higher dividends paid, and a greater reduction in long-term
debt.
At October 1, 1995, cash and short-term cash investments were
$1,038,800,000, an increase of $257,429,000 from December 31, 1994. However,
after the inclusion of short-term investments, the balance at October 1, 1995
aggregated $1,311,221,000, an increase of $291,821,000 from $1,019,400,000 at
December 31, 1994. The Company's policy is very conservative with respect to
investment of its cash. At October 1, 1995, substantially all of the Company's
cash was invested in highly liquid United States Government securities with a
weighted average life to maturity of 32 days. The Financial Accounting Standards
Board requirements arbitrarily define cash equivalents as those investments with
original maturities at the date of purchase of three months or less. At October
1, 1995, $272,421,000 of the Company's investments did not meet the definition
of a cash equivalent and are therefore classified in the consolidated financial
statements as short-term investments. The Company believes that this distinction
is not meaningful with respect to the statement of its cash and cash equivalents
position.
Interest paid during the first nine months of 1995 and 1994 was
$46,399,000 and $43,633,000, respectively. Income taxes paid, net of refunds
received, during the first nine months of 1995 and 1994 was $541,246,000 and
$426,826,000, respectively.
-11-
<PAGE>
Interest-bearing debt at October 1, 1995 and December 31, 1994 was as
follows (000's omitted):
<TABLE>
<CAPTION>
October 1, December 31,
---------- ------------
1995 1994
---- ----
<S> <C> <C>
8 7/8% notes due 2000 $250,000 $250,000
8 3/4% debentures due 2021 250,000 250,000
Commercial paper supported by
bank revolving credit agreement 85,000 100,000
Other long-term debt 22,884 14,842
------- -------
$607,884 $614,842
======= =======
</TABLE>
A subsidiary of the Company has issued commercial paper, $85,000,000
of which is outstanding at October 1, 1995, at a weighted average interest rate
of 5.6%. The commercial paper is supported by a $1,000,000,000 bank revolving
credit agreement terminating on June 30, 1999, unless otherwise extended. The
amount of commercial paper outstanding at October 1, 1995 is now classified as
short-term, since the Company intends to repay it sometime before the merger
with The Walt Disney Company is consummated. However, the amount of commercial
paper outstanding in 1995 is expected to fluctuate.
The Company has unconditionally guaranteed the commercial paper and
any borrowings which may be made by a subsidiary under the bank revolving credit
agreement.
At October 1, 1995 and at December 31, 1994, interest-bearing debt
represented 11% and 12%, respectively, of the Company's total capitalization.
Capital expenditures in the first nine months of 1995 were
$91,130,000. The Company anticipates that 1995 capital expenditures for
property, plant and equipment will be approximately $140,000,000.
As the operator of the ABC Television Network, ESPN and television and
radio stations, the Company expects to continue to enter into programming
commitments to purchase the broadcast rights for various feature film, sports
and other programming. Total commitments to purchase broadcast programming
approximated $4,094,050,000 at October 1, 1995. This amount is substantially
payable over the next five years. The Company plans to fund its operations and
commitments from internally generated funds and, if needed, from the various
external sources of funds which are available.
-12-
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. Legal Proceedings
On August 21, 1995 the Company's subsidiary American Broadcasting
Companies, Inc. ("ABC") reached out-of-court settlements with Philip
Morris Companies, Inc. and Philip Morris Incorporated, and with RJR
Nabisco Holdings Corporation and R.J. Reynolds Tobacco Company,
relating to actions brought by these parties as described in the
Company's Annual Report on Form 10-K for 1994. Under the terms of the
settlements, the plaintiffs agreed to the dismissal of their actions
and ABC agreed to pay the plaintiffs' legal expenses in these actions
and to issue a statement.
ITEM 2. Changes in Securities
Not applicable.
ITEM 3. Defaults Upon Senior Securities
Not applicable.
ITEM 4. Submission of Matters to a Vote of Security Holders
Not applicable.
ITEM 5. Other Information
Not applicable.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
Form 8-K, dated July 31, 1995 (Date of earliest event reported),
filed to report under Item 5 the execution of (i) an Agreement and
Plan of Reorganization dated as of July 31, 1995 between the
Company and The Walt Disney Company("Disney"), (ii) a Stock
Agreement dated that date among Disney,
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<PAGE>
Berkshire Hathaway, Inc. and Thomas S. Murphy and (iii) a
Programming Agreement dated that date between the Company and
Disney, and to report five purported class action suits filed
against the Company, its Board of Directors and, in four such
suits, Disney.
Form 8-K, dated October 6, 1995 (Date of earliest event reported),
filed to report under Item 5 the execution of an Amended and
Restated Agreement and Plan of Reorganization dated as of July 31,
1995 (the "Amended and Restated Agreement") between the Company and
Disney which amends and restates the original Agreement and Plan of
Reorganization.
-14-
<PAGE>
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.
CAPITAL CITIES/ABC, INC.
-----------------------
(Registrant)
Date: November 29, 1995 /S/ Ronald J. Doerfler
------------------------
Ronald J. Doerfler
Senior Vice President and
Chief Financial Officer
<PAGE>
CAPITAL CITIES/ABC, INC.
Financial Data Schedule
Article 5 of Regulations S-X
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CAPITAL
CITIES/ABC, INC. CONSOLIDATED FINANCIAL STATEMENTS FROM FORM 10-Q FOR THE PERIOD
ENDING OCTOBER 1, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> OCT-01-1995
<CASH> 1,038,800
<SECURITIES> 272,421
<RECEIVABLES> 998,353
<ALLOWANCES> 36,494
<INVENTORY> 32,436
<CURRENT-ASSETS> 2,962,433
<PP&E> 2,191,205
<DEPRECIATION> 893,461
<TOTAL-ASSETS> 7,249,457
<CURRENT-LIABILITIES> 1,289,675
<BONDS> 514,098
<COMMON> 18,394
0
0
<OTHER-SE> 4,716,630
<TOTAL-LIABILITY-AND-EQUITY> 7,249,457
<SALES> 4,822,032
<TOTAL-REVENUES> 4,822,032
<CGS> 2,814,528
<TOTAL-COSTS> 2,814,528
<OTHER-EXPENSES> 1,131,346
<LOSS-PROVISION> 11,205
<INTEREST-EXPENSE> 44,031
<INCOME-PRETAX> 877,780
<INCOME-TAX> 384,100
<INCOME-CONTINUING> 493,680
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 493,680
<EPS-PRIMARY> 3.21
<EPS-DILUTED> 0
</TABLE>
