<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-----------
FORM 10-Q
QUARTERLY REPORT
UNDER
SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934.
FOR THE QUARTER ENDED JUNE 30, 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 1-10321
ACKERLEY COMMUNICATIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 91-1043807
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
800 FIFTH AVENUE,
SUITE 3770
SEATTLE, WA 98104
(206) 624-2888
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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 1, 1995
---------------------- -----------------------------
COMMON STOCK, $.01 PAR VALUE 9,618,533 SHARES
CLASS B COMMON STOCK, $.01 PAR VALUE 5,865,761 SHARES
<PAGE>
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION PAGE
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1995 AND DECEMBER 31, 1994. . . . . . . . . . . . . 1
CONSOLIDATED STATEMENTS OF OPERATIONS THREE
AND SIX MONTHS ENDED JUNE 30, 1995 AND
JUNE 30, 1994. . . . . . . . . . . . . . . . . . . . . . . . 2
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1995
AND JUNE 30, 1994. . . . . . . . . . . . . . . . . . . . . . 3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . 4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS. . . . . . . . 5
PART II - OTHER INFORMATION
ITEM 4 SUBMISSION OF MATTERS OF VOTE OF SECURITY HOLDERS. . . . . . 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . 11
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . 11
<PAGE>
ACKERLEY COMMUNICATIONS, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1995 AND DECEMBER 31, 1994
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
-------------------------
-------------------------
ASSETS (IN THOUSANDS)
<S> <C> <C>
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 5,632 $ 2,288
ACCOUNTS RECEIVABLE, NET OF ALLOWANCE FOR
DOUBTFUL ACCOUNTS OF $1,009,000 IN 1995
AND $1,160,000 IN 1994 38,164 42,553
CURRENT PORTION OF BROADCAST RIGHTS 1,928 4,266
OTHER CURRENT ASSETS 6,479 7,310
-------- --------
TOTAL CURRENT ASSETS 52,203 56,417
PROPERTY AND EQUIPMENT, NET 70,336 64,489
INTANGIBLES, NET 33,738 36,716
OTHER ASSETS 12,237 13,161
-------- --------
TOTAL ASSETS $ 168,514 $ 170,783
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES:
ACCOUNTS PAYABLE $ 3,763 $ 5,788
ACCRUED INTEREST 5,013 4,799
OTHER ACCRUED LIABILITIES 10,107 7,575
DEFERRED REVENUE 9,148 13,695
CURRENT PORTION OF LONG-TERM DEBT 7,012 7,777
-------- --------
TOTAL CURRENT LIABILITIES 35,043 39,634
LONG-TERM DEBT - NONCURRENT PORTION 225,527 227,107
-------- --------
TOTAL LIABILITIES 260,570 266,741
STOCKHOLDERS' DEFICIENCY:
COMMON STOCK, $.01 PAR VALUE; 50,000,000 SHARES AUTHORIZED,
10,993,479 SHARES ISSUED AT JUNE 30, 1995 (10,937,379
AT DECEMBER 31, 1994) AND 9,618,533 SHARES OUTSTANDING AT
JUNE 30, 1995 (9,562,433 AT DECEMBER 31, 1994). 109 109
CLASS B COMMON STOCK, $.01 PAR VALUE; 6,972,230 SHARES
AUTHORIZED, 5,865,761 SHARES ISSUED AND OUTSTANDING AT
JUNE 30, 1995 (5,901,861 AT DECEMBER 31, 1994). 59 59
CAPITAL IN EXCESS OF PAR VALUE 3,250 3,007
DEFICIT (85,385) (89,044)
LESS COMMON STOCK IN TREASURY, AT COST (10,089) (10,089)
-------- --------
TOTAL STOCKHOLDERS' DEFICIENCY (92,056) (95,958)
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 168,514 $ 170,783
-------- --------
-------- --------
</TABLE>
1
<PAGE>
ACKERLEY COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIODS ENDED JUNE 30, 1995 AND 1994
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1995 1994 1995 1994
-------- -------- -------- --------
(IN THOUSANDS EXCEPT (IN THOUSANDS EXCEPT
PER SHARE AMOUNTS) PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
REVENUE $ 56,528 $ 49,265 $ 119,794 $ 102,778
LESS AGENCY COMMISSIONS
AND DISCOUNTS (7,124) (6,066) (13,599) (11,484)
-------- -------- -------- --------
NET REVENUE 49,404 43,199 106,195 91,294
EXPENSES AND OTHER INCOME:
OPERATING EXPENSES (35,559) (32,368) (82,723) (72,760)
DISPOSITION OF ASSETS - 21 - 2,543
AMORTIZATION (930) (606) (1,949) (1,465)
DEPRECIATION (1,713) (1,635) (3,389) (3,311)
INTEREST EXPENSE (6,789) (6,608) (13,115) (12,753)
OTHER INCOME(EXPENSE), NET 102 289 (45) 342
-------- -------- -------- --------
TOTAL EXPENSES AND
OTHER INCOME (44,889) (40,907) (101,221) (87,404)
-------- -------- -------- --------
INCOME BEFORE INCOME TAX 4,515 2,292 4,974 3,890
INCOME TAX EXPENSE (826) - (851) (33)
-------- -------- -------- --------
NET INCOME $ 3,689 $ 2,292 $ 4,123 $ 3,857
-------- -------- -------- --------
-------- -------- -------- --------
NET INCOME
PER COMMON SHARE $ 0.23 $ 0.15 $ 0.26 $ 0.24
-------- -------- -------- --------
-------- -------- -------- --------
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES 15,775 15,744 15,775 15,744
</TABLE>
2
<PAGE>
ACKERLEY COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIODS ENDED JUNE 30, 1995 AND 1994
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, JUNE 30,
1995 1994
------------ -----------
(IN THOUSANDS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
CASH RECEIVED FROM CUSTOMERS $ 107,335 $ 82,685
CASH PAID TO SUPPLIERS AND EMPLOYEES (81,271) (69,136)
INTEREST PAID (11,730) (11,684)
--------- --------
NET CASH PROVIDED BY (USED BY) OPERATING ACTIVITIES 14,334 1,865
CASH FLOWS FROM INVESTING ACTIVITIES:
PROCEEDS FROM SALE OF PROPERTY 46 13,214
CAPITAL EXPENDITURES (7,886) (3,050)
OTHER, NET (1,234) (391)
--------- --------
NET CASH PROVIDED BY (USED BY) INVESTING ACTIVITIES (9,074) 9,773
CASH FLOWS FROM FINANCING ACTIVITIES:
BORROWINGS UNDER CREDIT AGREEMENTS 55,908 6,000
PAYMENTS UNDER CREDIT AGREEMENTS (56,945) (18,480)
DIVIDENDS PAID (464) -
OTHER, NET (415) (474)
--------- --------
NET CASH PROVIDED BY (USED BY) FINANCING ACTIVITIES (1,916) (12,954)
--------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,344 (1,316)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 2,288 6,732
--------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,632 $ 5,416
--------- --------
--------- --------
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED
BY OPERATING ACTIVITIES:
NET INCOME $ 4,123 $ 3,857
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
DISPOSITION OF ASSETS - (2,543)
DEPRECIATION AND AMORTIZATION 5,338 4,776
GAIN ON THE SALE OF PROPERTY, PLANT AND EQUIPMENT (114) (180)
CHANGE IN ASSETS AND LIABILITIES:
DECREASE (INCREASE) IN ACCOUNTS RECEIVABLE 3,997 (3,554)
DECREASE (INCREASE) IN OTHER CURRENT ASSETS 831 2,835
INCREASE (DECREASE) IN ACCOUNTS PAYABLE
AND ACCRUALS 507 (464)
INCREASE (DECREASE) IN ACCRUED INTEREST 214 37
INCREASE (DECREASE) IN DEFERRED REVENUE (2,819) (4,880)
OTHER, NET 2,257 1,981
--------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 14,334 $ 1,865
--------- --------
--------- --------
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS:
BROADCAST RIGHTS ACQUIRED AND BROADCAST
OBLIGATIONS ASSUMED $ 842 $ 695
--------- --------
--------- --------
</TABLE>
3
<PAGE>
ACKERLEY COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PREPARATION
The interim financial statements are unaudited but, in the opinion of
management, reflect all normal and recurring adjustments necessary for a fair
presentation of results for such periods. The results of operations for any
interim period are not necessarily indicative of anticipated results for the
full year. These financial statements should be read in conjunction with the
financial statements and notes thereto contained in the Company's Annual Report
on Form 10-K for the year ended December 31, 1994.
NOTE 2. INCOME TAXES
The Company has no significant federal income tax liabilities primarily as a
result of operating losses incurred in prior years. However, the Company will
continue to pay federal income taxes under the alternative minimum tax until the
operating loss carryforwards are substantially reduced. The Company will incur
state income tax expense in certain states in which it operates. Tax expense in
the current quarter and year-to-date includes $674,000 related to a pending
settlement of certain prior year state tax returns.
4
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
The Company reported record net income of $4.1 million for the first six months
of 1995. Net revenues for the six months increased over the same period last
year by $14.9 million or 16.3%, while the Company's Operating Cash Flow, as
defined below, increased $4.5 million or 24.1%. Net income reflected a $0.3
million or 6.9% improvement over last year's first six months.
As with many media companies that have grown through acquisitions, the Company's
acquisitions and dispositions of television and radio stations have resulted in
significant non-cash and non-recurring charges to income. For this reason, in
addition to net income, management believes that Operating Cash Flow (defined as
net revenue less operating expenses plus other income before amortization,
depreciation, interest expense and disposition of assets) is an appropriate
measure of the Company's financial performance. This measure excludes expenses
consisting of depreciation, amortization, interest and disposition of assets
because these are not considered by the Company to be costs of ongoing
operations. The Company uses Operating Cash Flow to pay interest and principal
on its long-term debt as well as to finance capital expenditures. Operating Cash
Flow, however, is not to be considered an alternative to net income as an
indicator of the Company's operating performance or to cash flows as a measure
of the Company's liquidity.
5
<PAGE>
RESULTS OF OPERATIONS STATEMENT
The following two tables set forth certain historical financial and operating
data of the Company for the three month and six month periods ended June 30,
1995 and June 30, 1994, respectively, including separate net revenue, operating
expenses and other income, and Operating Cash Flow information by segment. In
1995, the Company re-apportioned some of its operations among its business
segments. Prior years' data have been reclassified to conform with the current
apportionment method.
STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------------------------- --------------------------------------------
1995 1994 1995 1994
------------------- ---------------------- ---------------------- ------------------------
AS % AS % AS % AS %
OF NET OF NET OF NET OF NET
AMOUNT REVENUE AMOUNT REVENUE AMOUNT REVENUE AMOUNT REVENUE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET REVENUE................. $ 49,404 $ 43,199 $ 106,195 $ 91,294
OPERATING EXPENSES AND
OTHER INCOME:
OPERATING EXPENSES........ 35,559 72.0 % 32,368 74.9 % 82,723 77.9 % 72,760 79.7 %
OTHER (INCOME) EXPENSE,NET (102) (0.2) (289) (0.7) 45 0.0 (342) (0.4)
-------- --------- ---------- ---------
TOTAL OPERATING EXPENSES
AND OTHER INCOME..... 35,457 71.8 32,079 74.2 82,768 77.9 72,418 79.3
-------- --------- ---------- ---------
OPERATING CASH FLOW......... 13,947 28.2 11,120 25.8 23,427 22.1 18,876 20.7
OTHER EXPENSES:
DEPRECIATION AND
AMORTIZATION............ 2,643 5.3 2,241 5.2 5,338 5.0 4,776 5.2
INTEREST EXPENSE.......... 6,789 13.7 6,608 15.3 13,115 12.3 12,753 14.0
-------- --------- --------- --------
TOTAL OTHER EXPENSES.... 9,432 19.0 8,849 20.5 18,453 17.3 17,529 19.2
INCOME BEFORE DISPOSITION OF
ASSETS AND INCOME TAXES... 4,515 9.2 2,271 5.3 4,974 4.8 1,347 1.5
(GAIN) LOSS ON DISPOSITION OF
ASSETS.................... 0 0.0 (21) 0.0 0 0.0 (2,543) (2.8)
INCOME TAX EXPENSE.......... 826 1.7 0 -- 851 0.8 33 0.0
-------- --------- --------- --------
NET INCOME.................. $ 3,689 7.5 % $ 2,292 5.3 % $ 4,123 4.0 % $ 3,857 4.3 %
-------- --------- --------- ---------
</TABLE>
6
<PAGE>
OPERATING INFORMATION BY BUSINESS SEGMENT
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------------- ----------------------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET REVENUE:
OUT-OF-HOME MEDIA ............... $ 24,293 $ 21,513 $ 45,079 $ 39,483
BROADCASTING .................... 21,155 17,726 47,474 40,564
OTHER ........................... 3,956 3,960 13,642 11,247
----------- ----------- ----------- -----------
TOTAL NET REVENUE.............. $ 49,404 $ 43,199 $ 106,195 $ 91,294
----------- ----------- ----------- -----------
OPER EXP AND OTHER INCOME:
OUT-OF-HOME MEDIA................ $ 15,006 $ 14,368 $ 29,921 $ 28,436
BROADCASTING..................... 12,846 11,888 28,838 24,352
OTHER............................ 7,605 5,823 24,009 19,630
---------- ----------- ----------- -----------
TOTAL OPER EXP AND OTHER INC $ 35,457 $ 32,079 $ 82,768 $ 72,418
----------- ----------- ----------- -----------
OPERATING CASH FLOW:
OUT-OF-HOME MEDIA................ $ 9,287 $ 7,145 $ 15,158 $ 11,047
BROADCASTING..................... 8,309 5,838 18,636 16,212
OTHER............................ (3,649) (1,863) (10,367) (8,383)
----------- ----------- ----------- -----------
CHANGE IN TOTAL NET REVENUE $ 13,947 $ 11,120 $ 23,427 $ 18,876
----------- ----------- ----------- -----------
CHANGE IN NET REVENUE FROM
PRIOR PERIODS:
OUT-OF-HOME MEDIA................ 12.9 % 34.7 % 14.2 % 11.1 %
BROADCASTING..................... 19.3 (13.0) 17.0 1.9
OTHER............................ (0.1) (43.6) 21.3 (16.8)
CHANGE IN TOTAL NET REVENUE 14.4 (0.4) 16.3 2.7
OPERATING DATA AS A PERCENT OF
NET REVENUE:
OPER EXP AND OTHER INCOME:
OUT-OF-HOME MEDIA.............. 61.8 % 66.8 % 66.4 % 72.0 %
BROADCASTING................... 60.7 67.1 60.7 60.0
OTHER.......................... 192.2 147.0 176.0 174.5
TOTAL OPER EXP AND OTHER INC 71.8 74.2 77.9 79.3
OPERATING CASH FLOW:
OUT-OF-HOME MEDIA.............. 38.2 % 33.2 % 33.6 % 28.0 %
BROADCASTING................... 39.3 32.9 39.3 40.0
OTHER.......................... (92.2) (47.0) (76.0) (74.5)
TOTAL OPERATING CASH FLOW 28.2 25.8 22.1 20.7
</TABLE>
7
<PAGE>
THREE MONTHS ENDED JUNE 30, 1995 COMPARED WITH THREE MONTHS ENDED JUNE 30, 1994
NET REVENUE. Net revenue for the quarter ended June 30, 1995, increased $6.2
million or 14.4% to $49.4 million from $43.2 million in 1994. The Company's
out-of-home media segment's net revenue increased $2.8 million or 12.9% mainly
due to increased national advertising sales. The Company's broadcasting segment
showed an increase of $3.4 million or 19.3% due to the addition of radio station
KUBE(FM) and increased rates and sales volume. For the second quarter 1995, the
Company's other businesses segment achieved approximately the same level of net
revenue as in the second quarter 1994.
OPERATING EXPENSES AND OTHER INCOME. Operating expenses and other income
increased $3.4 million or 10.5% to $35.5 million in 1995 compared to $32.1
million in 1994. In the Company's out-of-home media segment, operating expenses
and other income increased slightly by $0.6 million or 4.4% to $15.0 million
from a combination of expenses related to increased sales and from the effects
of inflation on operating expenses. Operating expenses and other income in the
Company's broadcasting segment increased by $1.0 million or 8.1% to $12.8
million mostly due to the addition of KUBE(FM) and higher programming,
promotion, and production expenses. Operating expenses and other income from the
Company's other segment increased $1.8 million or 30.6% to $7.6 million mainly
from basketball operating expenses related to players' salaries and
transportation costs.
OPERATING CASH FLOW. The Company's Operating Cash Flow increased $2.8 million
or 25.4% for the three months ended June 30, 1995 from the same period in 1994.
The $2.1 million increase in the out-of-home segment's Operating Cash Flow and
the $2.5 million increase in the broadcasting segment's Operating Cash Flow more
than offset the $1.8 million decrease in the Company's other segment's Operating
Cash Flow for the quarter. Operating Cash Flow as a percentage of net revenue
increased to 28.2% for the three months ended June 30, 1995 from 25.7% for the
comparable period in 1994.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses increased
$0.4 million or 17.9% to $2.6 million in 1995 as compared to $2.2 million in
1994. The increase is mainly the result of the addition of radio station
KUBE(FM) in July 1994.
INTEREST EXPENSE. Interest expense for the quarter ended June 30, 1995
increased $0.2 million or 2.7% to $6.8 million from $6.6 million in 1994
primarily due to an increase in long-term debt from the addition of KUBE(FM).
INCOME TAX EXPENSE. For the second quarter 1995, the Company incurred $826,000
in income tax expense: $674,000 of state income taxes related to a pending
settlement of certain prior year tax returns, and $152,000 under the federal
alternative minimum tax. The Company had no income tax expense for the second
quarter 1994. Management anticipates that the Company will continue to pay
federal income taxes under the alternative minimum tax until operating loss
carryforwards are substantially reduced.
NET INCOME. Net income of $3.7 million for the three months ended June 30, 1995
increased $1.4 million or 61.0% from $2.3 million for the comparable period in
1994 reflecting the strong increase in Operating Cash Flow generated during the
second three months of 1995.
8
<PAGE>
SIX MONTHS ENDED JUNE 30, 1995 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1994
NET REVENUE. Net revenue for the six months ended June 30, 1995, increased
$14.9 million or 16.3% to $106.2 million from $91.3 million in 1994. The
Company's out-of-home media segment's net revenue increased $5.6 million or
14.2% mainly due to increased national advertising sales. The Company's
broadcasting segment increased $6.9 million or 17.0% mainly due to the addition
of radio station KUBE(FM) and increased rates and sales volume. Net revenue in
the Company's other businesses segment increased $2.4 million or 21.3% mainly
due to increased ticket sales from Sonics home games.
OPERATING EXPENSES AND OTHER INCOME. Operating expenses and other income
increased $10.4 million or 14.3% to $82.8 million in 1995 compared to $72.4
million in 1994. In the Company's out-of-home media segment, operating expenses
and other income increased $1.5 million or 5.2% to $29.9 million from a
combination of expenses related to increased sales and from the effects of
inflation on operating expenses. Operating expenses and other income in the
Company's broadcasting segment increased by $4.5 million or 18.4% to $28.8
million mostly due to the addition of KUBE(FM) and higher programming,
promotion, and production expenses. Operating expenses and other income from
the Company's other segment increased $4.4 million to $24.0 million or 22.3%
mainly from basketball operating expenses related to players' salaries and
transportation costs.
OPERATING CASH FLOW. The Company's Operating Cash Flow increased $4.5 million
or 24.1% for the six months ended June 30, 1995 from the same period in 1994.
The $4.1 million increase in the out-of-home segment's Operating Cash Flow and
the $2.4 million increase in the broadcasting segment's Operating Cash Flow
offset the $2.0 million decrease in the Company's other segment's Operating Cash
Flow. Operating Cash Flow as a percentage of net revenue increased 1.4 % to
22.1% for the six months ended June 30, 1995 from 20.7% for the comparable 1994
period.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense for the
six months ended June 30, 1995 increased $0.6 million or 11.8% to $5.3 million
from the comparable period in 1994.
INTEREST EXPENSE. Interest expense for the six months ended June 30, 1995
increased $0.4 million or 2.8% to $13.1 million from $12.7 million in 1994
primarily due to an increase in long-term debt from the addition of KUBE(FM).
INCOME TAX EXPENSE. For the six months ended June 30, 1995, the Company had
$851,000 income tax expense: $674,000 of state income taxes related to a
pending settlement of certain prior year tax returns, and $177,000 under the
federal alternative minimum tax. The Company had $33,000 of income tax expense
for the first six months of 1994. Management anticipates that the Company will
continue to pay federal income taxes under the alternative minimum tax until
operating loss carryforwards are substantially reduced.
NET INCOME. As a result of the above factors, net income increased to $4.1
million for the six months ended June 30, 1995 from $3.9 million in 1994.
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company presently has approximately $7.9 million available for borrowing
under the revolving credit facility of the Credit Agreement. The Credit
Agreement and Subordinated Note Agreements require the consent of the banks and
other lenders prior to any material expansion of the Company's operations.
Presently, borrowings under the Credit Agreement bear annual interest at either
the prime rate plus 1.00% or LIBOR plus 2.25%. The Senior Notes bear annual
interest at 10.75%. The Subordinated Notes bear average annual interest at
10.58%. The borrowings and the Notes are subject to the Company's compliance
with certain financial ratios and covenants set forth in the Credit Agreement,
Senior Note Indenture and Subordinated Note Agreements. As of June 30, 1995,
the Company was in compliance with all such ratios and covenants. The
borrowings under the Credit Agreement and the Senior Notes are secured by the
pledge of stock of the Company's subsidiaries.
The Company's working capital increased slightly to $17.2 million at June 30,
1995 from $16.8 million at December 31, 1994. For the periods presented, the
Company financed its working capital needs from a combination of cash provided
by operating activities and borrowings under the Credit Agreement.
Historically, the Company's long-term liquidity needs for acquisitions have been
financed by additions to its long-term debt, principally through bank borrowings
or private placements of senior and subordinated debt. Capital expenditures for
new property and equipment have been financed with both cash provided by
operating activities and long-term debt. Cash provided by operating activities
for the first six months of 1995 increased to $14.3 million from $1.9 million in
1994.
At June 30, 1995, the Company's capital resources consisted of $5.6 million in
cash and cash equivalents and approximately $7.9 million available under the
Credit Agreement.
Capital expenditures for new property and equipment of $7.9 million in the first
six months of 1995 were financed with a combination of cash provided by
operating activities and borrowings under the Credit Agreement. These capital
expenditures were primarily for leasehold improvements at the new Key Arena -
the future home of the Sonics - as well as for advertising signs, displays,
vehicles and equipment, and broadcasting equipment.
10
<PAGE>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS OF VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Shareholders of the Company was held on May
1, 1995.
(b) The following directors were elected at the above meeting: Barry
A. Ackerley, Gail A. Ackerley
Richard P. Cooley, M. Ian G. Gilchrist, and Michel C. Thielen.
(c) The result of the vote for the directors was as follows:
DIRECTOR FOR AGAINST WITHHELD NOT VOTED
-------- --- ------- -------- ---------
Barry A. Ackerley 65,682,522 40,360 0 2,534,161
Gail A. Ackerley 65,682,522 40,360 0 2,534,161
Richard P. Cooley 65,682,522 40,360 0 2,534,161
M. Ian G. Gilchrist 65,682,522 40,360 0 2,534,161
Michel C. Thielen 65,682,522 40,360 0 2,534,161
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
27. FINANCIAL DATA SCHEDULE.
(b) NO REPORTS ON FORM 8-K WERE FILED DURING THE THREE MONTHS
ENDED JUNE 30, 1995.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
ACKERLEY COMMUNICATIONS, INC.
DATED: AUGUST 10, 1995 BY /s/ Denis M. Curley
-----------------------------
DENIS M. CURLEY
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER,
TREASURER AND SECRETARY
(PRINCIPAL FINANCIAL OFFICER)
11
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