<PAGE>
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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 SEPTEMBER 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 NOVEMBER 1, 1995
- --------------------------- -------------------------------
COMMON STOCK, $.01 PAR VALUE 9,701,033 SHARES
CLASS B COMMON STOCK, $.01 PAR VALUE 5,865,761 SHARES
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<PAGE>
TABLE OF CONTENTS
PART I -- FINANCIAL INFORMATION PAGE
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994 . . . . . . . 1
CONSOLIDATED STATEMENTS OF OPERATIONS THREE
AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND
SEPTEMBER 30, 1994 . . . . . . . . . . . . . . . . . . 2
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1995
AND SEPTEMBER 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
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------- ------------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 3,122 $ 2,288
ACCOUNTS RECEIVABLE, NET OF ALLOWANCE FOR
DOUBTFUL ACCOUNTS OF $963,000 IN 1995
AND $1,160,000 IN 1994 36,492 42,553
CURRENT PORTION OF BROADCAST RIGHTS 6,983 4,266
OTHER CURRENT ASSETS 9,627 7,310
-------- --------
TOTAL CURRENT ASSETS 56,224 56,417
PROPERTY AND EQUIPMENT, NET 76,936 64,489
INTANGIBLES, NET 32,609 36,716
OTHER ASSETS 12,715 13,161
-------- --------
TOTAL ASSETS $178,484 $170,783
======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES:
ACCOUNTS PAYABLE $ 6,168 $ 5,788
ACCRUED INTEREST 7,328 4,799
OTHER ACCRUED LIABILITIES 7,601 7,575
DEFERRED REVENUE 18,812 13,695
CURRENT PORTION OF LONG-TERM DEBT 10,680 7,777
-------- --------
TOTAL CURRENT LIABILITIES 50,589 39,634
LONG-TERM DEBT - NONCURRENT PORTION 219,129 227,107
-------- --------
TOTAL LIABILITIES 269,718 266,741
STOCKHOLDERS' DEFICIENCY:
COMMON STOCK, $.01 PAR VALUE; 50,000,000 SHARES AUTHORIZED,
11,075,979 SHARES ISSUED AT SEPTEMBER 30, 1995 (10,937,379
AT DECEMBER 31, 1994) AND 9,701,033 SHARES OUTSTANDING AT
SEPTEMBER 30, 1995 (9,562,433 AT DECEMBER 31, 1994). 111 109
CLASS B COMMON STOCK, $.01 PAR VALUE; 6,972,230 SHARES
AUTHORIZED, 5,865,761 SHARES ISSUED AND OUTSTANDING AT
SEPTEMBER 30, 1995 (5,901,861 AT DECEMBER 31, 1994). 59 59
CAPITAL IN EXCESS OF PAR VALUE 3,248 3,007
DEFICIT (84,563) (89,044)
LESS COMMON STOCK IN TREASURY, AT COST (10,089) (10,089)
-------- --------
TOTAL STOCKHOLDERS' DEFICIENCY (91,234) (95,958)
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $178,484 $170,783
======== ========
</TABLE>
1
<PAGE>
ACKERLEY COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1994
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1995 1994 1995 1994
------------- ------------- ------------- -------------
(IN THOUSANDS EXCEPT (IN THOUSANDS EXCEPT
PER SHARE AMOUNTS) PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
REVENUE $ 47,089 $ 44,125 $ 166,883 $ 146,903
LESS AGENCY COMMISSIONS
AND DISCOUNTS (6,541) (6,143) (20,140) (17,627)
--------- --------- ---------- ----------
NET REVENUE 40,548 37,982 146,743 129,276
EXPENSES AND OTHER INCOME:
OPERATING EXPENSES (30,505) (28,289) (113,228) (101,049)
DISPOSITION OF ASSETS -- -- -- 2,543
AMORTIZATION (1,351) (844) (3,300) (2,309)
DEPRECIATION (1,676) (1,615) (5,065) (4,926)
INTEREST EXPENSE (5,782) (6,675) (18,897) (19,428)
OTHER INCOME (EXPENSE), NET 156 (16) 111 326
--------- --------- ---------- ----------
TOTAL EXPENSES AND
OTHER INCOME (39,158) (37,439) (140,379) (124,843)
--------- --------- ---------- ----------
INCOME BEFORE INCOME TAX 1,390 543 6,364 4,433
INCOME TAX EXPENSE (311) -- (1,162) (33)
--------- --------- ---------- ----------
NET INCOME $ 1,079 $ 543 $ 5,202 $ 4,400
========= ========= ========== ==========
NET INCOME
PER COMMON SHARE $ 0.07 $ 0.03 $ 0.33 $ 0.28
========= ========= ========== ==========
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES 15,762 15,759 15,762 15,759
</TABLE>
2
<PAGE>
ACKERLEY COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1994
<TABLE>
<CAPTION> NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1994
------------- -------------
(IN THOUSANDS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
CASH RECEIVED FROM CUSTOMERS $158,964 $128,574
CASH PAID TO SUPPLIERS AND EMPLOYEES (114,857) (104,692)
INTEREST PAID (14,884) (14,235)
-------- --------
NET CASH PROVIDED BY (USED BY)
OPERATING ACTIVITIES 29,223 9,647
CASH FLOWS FROM INVESTING ACTIVITIES:
PROCEEDS FROM SALE OF PROPERTY 58 13,239
CAPITAL EXPENDITURES (15,416) (6,277)
PAYMENTS FOR ACQUISITIONS - (17,400)
OTHER, NET (970) (1,916)
-------- --------
NET CASH PROVIDED BY (USED BY)
INVESTING ACTIVITIES (16,328) (12,354)
CASH FLOWS FROM FINANCING ACTIVITIES:
BORROWINGS UNDER CREDIT AGREEMENTS 55,908 23,883
PAYMENTS UNDER CREDIT AGREEMENTS (66,320) (24,830)
DIVIDENDS PAID (464) -
OTHER, NET (1,185) 440
-------- --------
NET CASH PROVIDED BY (USED BY)
FINANCING ACTIVITIES (12,061) (507)
-------- --------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 834 (3,214)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 2,288 6,732
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,122 $ 3,518
======== ========
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
NET INCOME $ 5,202 $ 4,400
ADJUSTMENTS TO RECONCILE NET INCOME TO
NET CASH PROVIDED BY OPERATING ACTIVITIES:
DISPOSITION OF ASSETS - (2,543)
DEPRECIATION AND AMORTIZATION 8,365 7,235
GAIN ON THE SALE OF PROPERTY, PLANT
AND EQUIPMENT (144) (180)
CHANGE IN ASSETS AND LIABILITIES:
DECREASE (INCREASE) IN ACCOUNTS RECEIVABLE 6,061 (929)
DECREASE (INCREASE) IN OTHER CURRENT ASSETS (2,317) (678)
INCREASE (DECREASE) IN ACCOUNTS PAYABLE
AND ACCRUALS 406 (4,676)
INCREASE (DECREASE) IN ACCRUED INTEREST 2,529 3,393
INCREASE (DECREASE) IN DEFERRED REVENUE 5,117 3,540
OTHER, NET 4,004 85
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 29,223 $ 9,647
======== ========
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS:
BROADCAST RIGHTS ACQUIRED AND BROADCAST
OBLIGATIONS ASSUMED $ 9,489 $ 6,224
======== ========
</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 for the year includes $674,000 related to a pending
settlement of certain prior year state tax returns.
NOTE 3. SUBSEQUENT EVENT
On October 23, 1995, the Company entered into an agreement to purchase for
approximately $7.8 million the assets of television station KFTY, licensed
for the market of Santa Rosa, California. The sale is subject to the signing
of a definitive agreement and approval by the Federal Communications
Commission. The Company expects the transaction to close during the first
half of 1996.
4
<PAGE>
ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
The Company reported record net income of $5.2 million for the first nine
months of 1995. Net revenues for the nine months increased over the same
period last year by $17.5 million or 13.5%, while the Company's Operating
Cash Flow, as defined below, increased $4.9 million or 17.2%. Net income
reflected a $0.8 million or 18.2% improvement over last year's first nine
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.
On October 23, 1995, the Company entered into an agreement to purchase for
approximately $7.8 million the assets of television station KFTY, licensed
for the market of Santa Rosa, California. The sale is subject to the signing
of a definitive agreement and approval by the Federal Communications
Commission. The Company expects the transaction to close during the first
half of 1996.
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 nine month periods ended
September 30, 1995 and September 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 SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 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........................... $ 40,548 $ 37,982 $146,743 $129,276
OPERATING EXPENSES AND OTHER INCOME:
OPERATING EXPENSES.................. 30,505 75.2% 28,289 74.5% 113,228 77.2% 101,049 78.2%
OTHER (INCOME) EXPENSE, NET......... (156) (0.4) 16 (0.0) (111) (0.1) (326) (0.3)
-------- -------- -------- --------
TOTAL OPERATING EXPENSES
AND OTHER INCOME................ 30,349 74.8 28,305 74.5 113,117 77.1 100,723 77.9
-------- -------- -------- --------
OPERATING CASH FLOW.................. 10,199 25.2 9,677 25.5 33,626 22.9 28,553 22.1
OTHER EXPENSES:
DEPRECIATION AND AMORTIZATION...... 3,027 7.5 2,459 6.5 8,365 5.7 7,235 5.6
INTEREST EXPENSE................... 5,782 14.3 6,675 17.6 18,897 12.9 19,428 15.0
-------- -------- -------- --------
TOTAL OTHER EXPENSES............. 8,809 21.8 9,134 24.1 27,262 18.6 26,663 20.6
INCOME BEFORE DISPOSITION OF
ASSETS AND INCOME TAXES............ 1,390 3.4 543 1.4 6,364 4.3 1,890 1.5
(GAIN) LOSS ON DISPOSITION OF
ASSETS............................. 0 -- 0 -- 0 -- (2,543) (1.9)
INCOME TAX EXPENSE................... 311 0.8 0 -- 1,162 0.8 33 0.0
-------- -------- -------- --------
NET INCOME.......................... $ 1,079 2.6% $ 543 1.4% $ 5,202 3.5% $ 4,400 3.4%
======== ======== ======== ========
</TABLE>
6
<PAGE>
OPERATING INFORMATION BY BUSINESS SEGMENT
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------- ---------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET REVENUE:
OUT-OF-HOME MEDIA .................. $ 24,345 $ 22,922 $ 69,424 $ 62,405
BROADCASTING ....................... 16,203 15,060 63,677 55,624
OTHER .............................. 0 0 13,642 11,247
-------- -------- -------- --------
TOTAL NET REVENUE................. $ 40,548 $ 37,982 $146,743 $129,276
OPER EXP AND OTHER INCOME:
OUT-OF-HOME MEDIA................... $ 15,306 $ 14,889 $ 45,227 $ 43,325
BROADCASTING........................ 12,302 11,481 41,140 35,833
OTHER............................... 2,741 1,935 26,750 21,565
-------- -------- -------- --------
TOTAL OPER EXP AND OTHER INC...... $ 30,349 $ 28,305 $113,117 $100,723
OPERATING CASH FLOW:
OUT-OF-HOME MEDIA................... $ 9,039 $ 8,033 $ 24,197 $ 19,080
BROADCASTING........................ 3,901 3,579 22,537 19,791
OTHER............................... (2,741) (1,935) (13,108) (10,318)
-------- -------- -------- --------
TOTAL OPERATING CASH FLOW......... $ 10,199 $ 9,677 $ 33,626 $ 28,553
CHANGE IN NET REVENUE FROM
PRIOR PERIODS:
OUT-OF-HOME MEDIA................... 6.2% 43.5% 11.2% 12.0%
BROADCASTING........................ 7.6 (26.1) 14.5 4.4
OTHER............................... N/A (100.0) 21.3 (16.8)
CHANGE IN TOTAL NET REVENUE....... 6.8 (12.4) 13.5 5.5
OPERATING DATA AS A PERCENT OF
NET REVENUE:
OPER EXP AND OTHER INCOME:
OUT-OF-HOME MEDIA................. 62.9% 65.0% 65.1% 69.4%
BROADCASTING...................... 75.9 76.2 64.6 64.4
OTHER............................. N/A N/A 196.1 191.7
TOTAL OPER EXP AND OTHER INC... 74.8 74.5 77.1 77.9
OPERATING CASH FLOW:
OUT-OF-HOME MEDIA................. 37.1% 35.0% 34.9% 30.6%
BROADCASTING...................... 24.1 23.8 35.4 35.6
OTHER............................. N/A N/A (96.1) (91.7)
TOTAL OPERATING CASH FLOW...... 25.2 25.5 22.9 22.1
</TABLE>
7
<PAGE>
THREE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED WITH THREE MONTHS ENDED
SEPTEMBER 30, 1994
NET REVENUE. Net revenue for the quarter ended September 30, 1995, increased
$2.5 million or 6.8% to $40.5 million from $38.0 million in 1994. The
Company's out-of-home media segment's net revenue increased $1.4 million or
6.2% mainly due to increased national advertising sales. The Company's
broadcasting segment showed an increase of $1.1 million or 6.7% due to
increased rates and sales volume. Net revenue for the third quarter in the
Company's other segment showed no change compared to the same period last
year.
OPERATING EXPENSES AND OTHER INCOME. Operating expenses and other income
increased $2.0 million or 7.2% to $30.3 million in 1995 compared to $28.3
million in 1994. In the Company's out-of-home media segment, operating
expenses and other income increased slightly by $0.4 million or 2.8% to $15.3
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 $0.8 million or
7.2% to $12.3 million mostly due to higher programming, promotion, and
production expenses. Operating expenses and other income from the Company's
other segment increased $0.8 million or 41.7% to $2.7 million compared to the
same period last year.
OPERATING CASH FLOW. The Company's Operating Cash Flow increased $0.5
million or 5.4% for the three months ended September 30, 1995 from the same
period in 1994. The $1.0 million increase in the out-of-home segment's
Operating Cash Flow and the $0.3 million increase in the broadcasting
segment's Operating Cash Flow offset the $0.8 million decrease in the
Company's other segment's Operating Cash Flow for the quarter. Operating
Cash Flow as a percentage of net revenue decreased slightly to 25.2% for the
three months ended September 30, 1995 from 25.5% for the comparable period in
1994.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses
increased $0.5 million or 23.1% to $3.0 million in 1995 as compared to $2.5
million in 1994 mainly due to higher film amortization costs in 1995.
INTEREST EXPENSE. Interest expense for the quarter ended September 30, 1995
decreased $0.9 million or 13.4% to $5.8 million from $6.7 million in 1994
primarily due to reduced deferred financing costs for 1995 relating to the
1994 debt restructure and to adjustments to deferred compensation in 1994.
INCOME TAX EXPENSE. For the third quarter 1995, the Company incurred $311,000
in income tax expense mainly from estimated state and federal income tax
payments. 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 $1.1 million for the three months ended September
30, 1995 increased $0.6 million or 98.7% from $0.5 million for the comparable
period in 1994 mainly from Operating Cash Flow generated during the third
quarter of 1995.
8
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED WITH NINE MONTHS ENDED
SEPTEMBER 30, 1994
NET REVENUE. Net revenue for the nine months ended September 30, 1995,
increased $17.4 million or 13.5% to $146.7 million from $129.3 million in
1994. The Company's out-of-home media segment's net revenue increased $7.0
million or 11.2% mainly due to increased national advertising sales. The
Company's broadcasting segment increased $8.0 million or 14.5% 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 $12.4 million or 12.3% to $113.1 million in 1995 compared to $100.7
million in 1994. In the Company's out-of-home media segment, operating
expenses and other income increased $1.9 million or 4.4% to $45.2 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 $5.3 million or
14.8% to $41.1 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 $5.2 million to $26.8
million or 24.0% due to a combination of basketball operating expenses
related to players' salaries and transportation costs and to a general
increase in corporate overhead expenses.
OPERATING CASH FLOW. The Company's Operating Cash Flow increased $5.0
million or 17.8% for the nine months ended September 30, 1995 from the same
period in 1994. The $5.1 million increase in the out-of-home segment's
Operating Cash Flow and the $2.7 million increase in the broadcasting
segment's Operating Cash Flow offset the $2.8 million decrease in the
Company's other segment's Operating Cash Flow. Operating Cash Flow as a
percentage of net revenue increased 0.8 % to 22.9% for the nine months ended
September 30, 1995 from 22.1% for the comparable 1994 period.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense for the
nine months ended September 30, 1995 increased $1.1 million or 15.6% to $8.4
million from the comparable period in 1994.
INTEREST EXPENSE. Interest expense for the nine months ended September 30,
1995 decreased $0.5 million or 2.7% to $18.9 million from $19.4 million in
1994 primarily due to reduced deferred financing costs for 1995 relating to
the 1994 debt restructure and to adjustments to deferred compensation in
1994.
INCOME TAX EXPENSE. For the nine months ended September 30, 1995, the Company
had $1,162,000 income tax expense of which $674,000 is state income taxes
related to a pending settlement of certain prior year tax returns. The
Company had $33,000 of income tax expense for the first nine 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. Net income for the nine months ended September 30, 1995
increased $0.8 million to $5.2 million from $4.4 million for the comparable
period in 1994. However, a $2.5 million gain from a disposition of assets
was recognized in the first quarter 1994. When adjusted for this gain, net
income for 1995 increased $3.3 million or 180.1% from the comparable period
in 1994 reflecting the strong increase in Operating Cash Flow generated
during the first nine months of 1995.
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company presently has approximately $12.0 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 2.00%. 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 September 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 $4.2 million to $5.6 million at
September 30, 1995 compared to $1.4 million at September 30, 1994. Working
capital at December 31, 1994 was $16.8 million. 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. The
Company expects to finance the acquisition of KFTY with long-term 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 nine months of 1995 increased to $29.2
million from $9.6 million in 1994.
At September 30, 1995, the Company's capital resources consisted of $3.1
million in cash and cash equivalents and approximately $17.5 million
available under the Credit Agreement.
Capital expenditures for new property and equipment of $15.4 million in the
first nine 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 home of the Sonics - as well as for advertising signs, displays,
vehicles and equipment, and broadcasting equipment.
10
<PAGE>
PART II - OTHER INFORMATION
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 SEPTEMBER 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: NOVEMBER 10, 1995 BY__________________________________
DENIS M. CURLEY
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER,
TREASURER AND SECRETARY
(PRINCIPAL FINANCIAL OFFICER)
11
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