<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 JUNE 30, 1996
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, 1996
- ------------------------------------ -----------------------------
COMMON STOCK, $.01 PAR VALUE 9,905,789
CLASS B COMMON STOCK, $.01 PAR VALUE 5,677,005
<PAGE>
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION PAGE
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 AND DECEMBER 31, 1995.............................. 1
CONSOLIDATED STATEMENTS OF OPERATIONS THREE
AND SIX MONTHS ENDED JUNE 30, 1996 AND
JUNE 30, 1995.................................................... 2
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996
AND JUNE 30, 1995................................................ 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, 1996 AND DECEMBER 31, 1995
June 30, December 31,
1996 1995
------------ -------------
ASSETS (In thousands)
Current assets:
Cash and cash equivalents $ 5,059 $ 6,421
Accounts receivable, net of allowance for
doubtful accounts of $1,393,000 in 1996
and $1,163,000 in 1995 41,263 43,590
Current portion of broadcast rights 3,443 5,779
Other current assets 10,326 9,423
Total current assets 60,091 65,213
--------- ---------
Property and equipment, net 85,810 81,368
Intangibles, net 39,350 31,412
Other assets 15,227 11,889
--------- ---------
Total assets $ 200,478 $ 189,882
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Accounts payable $ 5,351 $ 4,284
Accrued interest 3,612 3,628
Other accrued liabilities 18,711 12,958
Deferred revenue 4,610 18,269
Current portion of long-term debt 14,149 10,964
--------- ---------
Total current liabilities 46,433 50,103
Long-term debt - noncurrent portion 222,539 218,797
Litigation accrual 14,053 14,200
Other long-term liabilities 4,796 5,875
--------- ---------
Total liabilities 287,821 288,975
Stockholders' deficiency:
Common stock, $.01 par value; 50,000,000 shares authorized,
11,280,735 shares issued at June 30, 1996 (11,075,979
at December 31, 1995) and 9,905,789 shares outstanding at
June 30, 1996 (9,701,033 at December 31, 1995). 111 111
Class B common stock, $.01 par value; 6,972,230 shares
authorized, 5,677,005 shares issued and outstanding at
June 30, 1996 (5,865,761 at December 31, 1995). 59 59
Capital in excess of par value 3,351 3,248
Deficit (80,775) (92,422)
Less common stock in treasury, at cost (10,089) (10,089)
--------- ---------
Total stockholders' deficiency (87,343) (99,093)
--------- ---------
Total liabilities and stockholders' deficiency $ 200,478 $ 189,882
--------- ---------
--------- ---------
1
<PAGE>
ACKERLEY COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the periods ended June 30, 1996 and 1995
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
----------- ------------ ------------ ----------
(In thousands except (In thousands except
per share amounts) per share amounts)
Revenue $ 76,971 $ 56,528 $ 146,823 $ 119,794
Less agency commissions
and discounts (8,736) (7,124) (15,661) (13,599)
--------- --------- --------- ---------
Net revenue 68,235 49,404 131,162 106,195
Expenses and other income:
Operating expenses (48,455) (35,559) (98,771) (82,723)
Amortization (1,451) (930) (2,800) (1,949)
Depreciation (2,325) (1,713) (4,507) (3,389)
Interest expense (6,333) (6,789) (12,220) (13,115)
Other income(expense), net 206 102 269 (45)
--------- --------- --------- ---------
Total expenses and
other income (58,358) (44,889) (118,029) (101,221)
--------- --------- --------- ---------
Income before income tax 9,877 4,515 13,133 4,974
Income tax expense (730) (826) (863) (851)
--------- --------- --------- ---------
Net income $ 9,147 $ 3,689 $ 12,270 $ 4,123
--------- --------- --------- ---------
--------- --------- --------- ---------
Net income
per common share $ 0.58 $ 0.23 $ 0.77 $ 0.26
--------- --------- --------- ---------
--------- --------- --------- ---------
Weighted average number
of common shares 15,897 15,775 15,897 15,775
2
<PAGE>
ACKERLEY COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the periods ended June 30, 1996 and 1995
Six Months Ended
June 30, June 30,
1996 1995
---------- ----------
(In thousands)
Cash flows from operating activities:
Cash received from customers $ 114,587 $ 107,335
Cash paid to suppliers and employees (91,635) (81,271)
Interest paid (10,978) (11,730)
-------- --------
Net cash provided by (used by) operating activities 11,974 14,334
Cash flows from investing activities:
Proceeds from sale of property 14 46
Capital expenditures (4,633) (7,886)
Acquisitions:
Property and Equipment (3,389) -
Intangible Assets (4,482) -
Other, net (8,188) (1,234)
-------- --------
Net cash provided by (used by) investing activities (20,678) (9,074)
Cash flows from financing activities:
Borrowings under credit agreements 22,000 55,908
Payments under credit agreements (12,825) (56,945)
Dividends paid (623) (464)
Other, net (1,210) (415)
-------- --------
Net cash provided by (used by) financing activities (7,342) (1,916)
-------- --------
Net increase (decrease) in cash and cash equivalents (1,362) 3,344
Cash and cash equivalents at beginning of year 6,421 2,288
-------- --------
Cash and cash equivalents at end of period $ 5,059 $ 5,632
-------- --------
-------- --------
Reconciliation of net income to net cash provided
by operating activities:
Net income $ 12,270 $ 4,123
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 7,307 5,338
Gain on the sale of property, plant and equipmen - (114)
NBA expansion proceeds (2,077) -
Change in current assets and liabilities:
Decrease (increase) in accounts receivable 2,327 3,997
Decrease (increase) in other current assets (903) 831
Increase (decrease) in accounts payable
and accruals 6,820 507
Increase (decrease) in accrued interest (16) 214
Increase (decrease) in deferred revenue (13,659) (2,819)
Other, net (95) 2,257
-------- --------
Net cash provided by operating activities $ 11,974 $ 14,334
-------- --------
-------- --------
Supplemental disclosure of noncash transactions:
Broadcast rights acquired and broadcast obligations $ 1,539 $ 842
assumed
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, 1995.
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. In addition, the
Company will incur state income tax expense in certain states in which it
operates.
4
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
The Company reported record net income of $12.3 million for the first six months
of 1996. Net revenues for the six months increased over the same period last
year by $25.0 million or 23.5%, while the Company's Operating Cash Flow, as
defined below, increased $9.2 million or 39.4%. Net income reflected a $8.1
million or 197.6% 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.
On April 2, 1996, the Company purchased for approximately $7.8 million
television station KFTY, licensed to the market of Santa Rosa, California. On
April 24, 1996, the Company entered into a local marketing agreement with Harron
Television of Monterey, owners of television station KCCN licensed to the market
of Monterey, California. The Company will provide programming and sales
services to KCCN and will make a monthly payment to Harron in exchange for the
right of the Company to receive all revenues from network compensation and
advertising sold on the station. In conjunction with the transaction, the
Company paid Harron Television approximately $5.6 million dollars for an option
to purchase the station. All of the above transactions were financed through
existing credit facilities.
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,
1996 and June 30, 1995, respectively. Certain prior years' data have been
reclassified to conform to the 1996 presentation.
STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------------------- --------------------------------------
1996 1995 1996 1995
----------------- ------------------ ------------------ ------------------
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................... $ 68,235 $ 49,404 $ 131,162 $ 106,195
OPERATING EXPENSES AND
OTHER INCOME:
OPERATING EXPENSES.......... (48,455) (71.0)% (35,559) (72.0)% (98,771) (75.3)% (82,723) 77.9 %
OTHER INCOME (EXPENSE),NET 206 0.3 102 0.2 269 0.2 (45) 0.0
--------- --------- --------- ---------
TOTAL OPERATING EXPENSES
AND OTHER INCOME....... (48,249) (70.7) (35,457) (71.8) (98,502) (75.1) (82,768) (77.9)
--------- --------- --------- ---------
OPERATING CASH FLOW........... 19,986 29.3 13,947 28.2 32,660 24.9 23,427 22.1
OTHER EXPENSES:
DEPRECIATION AND
AMORTIZATION.............. (3,776) (5.5) (2,643) (5.3) (7,307) (5.6) (5,338) (5.0)
INTEREST EXPENSE............ (6,333) (9.3) (6,789) (13.7) (12,220) (9.3) (13,115) (12.3)
--------- --------- --------- ---------
TOTAL OTHER EXPENSES...... (10,109) (14.8) (9,432) (19.0) (19,527) (14.9) (18,453) (17.3)
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES. 9,877 14.5 4,515 9.2 13,133 10.0 4,974 4.8
INCOME TAX EXPENSE............ (730) (1.1) (826) (1.7) (863) (0.7) (851) (0.8)
--------- --------- --------- ---------
NET INCOME.................... $ 9,147 13.4 % $ 3,689 7.5 % $ 12,270 9.3 % $ 4,123 4.0 %
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
6
<PAGE>
OPERATING INFORMATION BY BUSINESS SEGMENT
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
--------------------------- -------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET REVENUE:
OUT-OF-HOME MEDIA ............... $ 26,467 $ 24,293 $ 47,685 $ 45,079
BROADCASTING .................... 30,469 21,155 62,327 47,474
OTHER ........................... 11,299 3,956 21,150 13,642
---------- ---------- ---------- ----------
TOTAL NET REVENUE.............. $ 68,235 $ 49,404 $ 131,162 $ 106,195
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
OPER EXP AND OTHER INCOME:
OUT-OF-HOME MEDIA................ $ 15,899 $ 15,006 $ 31,327 $ 29,921
BROADCASTING..................... 18,242 12,582 34,038 28,574
OTHER............................ 14,108 7,869 33,137 24,273
---------- ---------- ---------- ----------
TOTAL OPER EXP AND OTHER INC... $ 48,249 $ 35,457 $ 98,502 $ 82,768
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
OPERATING CASH FLOW:
OUT-OF-HOME MEDIA................ $ 10,568 $ 9,287 $ 16,358 $ 15,158
BROADCASTING..................... 12,227 8,573 28,289 18,900
OTHER............................ (2,809) (3,913) (11,987) (10,631)
---------- ---------- ---------- ----------
TOTAL OPERATING CASH FLOW...... $ 19,986 $ 13,947 $ 32,660 $ 23,427
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
CHANGE IN NET REVENUE FROM
PRIOR PERIODS:
OUT-OF-HOME MEDIA................ 8.9 % 12.9 % 5.8 % 14.2 %
BROADCASTING..................... 44.0 19.3 31.3 17.0
OTHER............................ 185.6 (0.1) 55.0 21.3
CHANGE IN TOTAL NET REVENUE.... 38.1 14.4 23.5 16.3
OPERATING DATA AS A PERCENT OF
NET REVENUE:
OPER EXP AND OTHER INCOME:
OUT-OF-HOME MEDIA.............. 60.1 % 61.8 % 65.7 % 66.4 %
BROADCASTING................... 59.9 59.5 54.6 60.2
OTHER.......................... 124.9 198.9 156.7 177.9
TOTAL OPER EXP AND OTHER INC. 70.7 71.8 75.1 77.9
OPERATING CASH FLOW:
OUT-OF-HOME MEDIA.............. 39.9 % 38.2 % 34.3 % 33.6 %
BROADCASTING................... 40.1 40.5 45.4 39.8
OTHER.......................... (24.9) (98.9) (56.7) (77.9)
TOTAL OPERATING CASH FLOW... 29.3 28.2 24.9 22.1
</TABLE>
7
<PAGE>
THREE MONTHS ENDED JUNE 30, 1996 COMPARED WITH THREE MONTHS ENDED JUNE 30, 1995
NET REVENUE. Net revenue for the quarter ended June 30, 1996, increased $18.8
million or 38.1% to $68.2 million from $49.4 million in 1995. The Company's
out-of-home media segment's net revenue increased $2.2 million or 8.9% mainly
due to increased national advertising sales. The net revenue of the Company's
broadcasting segment showed an increase of $9.3 million or 44.0% resulting from
local broadcast revenue related to sports operations, the addition of television
station KFTY, and increased rates and sales volumes. The Company's other
businesses segment's net revenue increased $7.3 million or 185.6% to $11.3
million from $4.0 million mainly due to the Sonics participating in 21 games of
the 1996 NBA playoffs compared to 4 games in 1995.
OPERATING EXPENSES AND OTHER INCOME. Operating expenses and other income
increased $12.8 million or 36.1% to $48.2 million in 1996 compared to $35.4
million in 1995. In the Company's out-of-home media segment, operating expenses
and other income increased slightly by $0.9 million or 6.0% to $15.9 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 $5.7 million or 45.0% to $18.2
million due to broadcast expenses related to sports operations, the addition of
KFTY, and higher programming, promotion, and production expenses. Operating
expenses and other income from the Company's other segment increased $6.2
million or 79.3% to $14.1 million mainly from increased basketball operating
expenses related to the Sonics participating in 17 more NBA playoff games in
1996 than in 1995.
OPERATING CASH FLOW. The Company's Operating Cash Flow increased $6.0 million
or 43.3% for the three months ended June 30, 1996 from that for the same period
in 1995. All three segments showed increases from last year's performance: out-
of-home - $1.3 million, broadcast - $3.6 million, and other - $1.1 million.
Operating Cash Flow as a percentage of net revenue increased to 29.3% for the
three months ended June 30, 1996 from 28.2% for the comparable period in 1995.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses increased
$1.1 million or 42.9% to $3.7 million in 1996 as compared to $2.6 million in
1995. The increase is mainly the result of depreciation expense related to the
Key Arena leasehold improvements in October 1995 and the addition of KFTY in
April 1996.
INTEREST EXPENSE. Interest expense for the quarter ended June 30, 1996
decreased $0.5 million or 6.7% to $6.3 million from $6.8 million in 1995. The
decrease in 1996 principally reflects the absence of interest incurred in the
second quarter of 1995 in connection with a tax settlement.
INCOME TAX EXPENSE. For the second quarter 1996, the Company incurred $730,000
of income tax expense under the alternative minimum tax compared to $826,000 of
income tax expense for the second quarter of 1995. Management anticipates that
the Company will continue to incur income tax expense under the alternative
minimum tax until operating loss carryforwards are substantially reduced. The
Company will also incur income tax expense in certain states in which it
operates.
NET INCOME. Net income of $9.2 million for the three months ended June 30, 1996
increased $5.5 million or 148.0% from $3.7 million for the comparable period in
1995 reflecting the strong increase in Operating Cash Flow generated during the
second three months of 1996.
8
<PAGE>
SIX MONTHS ENDED JUNE 30, 1996 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1995
NET REVENUE. Net revenue for the six months ended June 30, 1996, increased
$25.0 million or 23.5% to $131.2 million from $106.2 million in 1995. The
Company's out-of-home media segment's net revenue increased $2.6 million or 5.8%
mainly due to increased national advertising sales. The net revenue of the
Company's broadcasting segment increased $14.9 million or 31.3% resulting from
local broadcast revenue related to sports operations, the addition of KFTY, and
increased rates and sale volumes. The Company's other businesses segment's net
revenue increased $7.5 million or 55.0% mainly due to the Sonics participating
in 21 games of the 1996 NBA playoffs compared to 4 games in 1995.
OPERATING EXPENSES AND OTHER INCOME. Operating expenses and other income
increased $15.7 million or 19.0% to $98.5 million in 1996 compared to $82.8
million in 1995. In the Company's out-of-home media segment, operating expenses
and other income increased $1.4 million or 4.7% to $31.3 million due to 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 $5.4 million or 19.1% to $34.0 million due to broadcast
expenses related to sports operations, the addition of KFTY, and higher
programming, promotion, and production expenses. Operating expenses and other
income from the Company's other segment increased $8.9 million to $33.1 million
or 36.5% mainly from increased basketball operating expenses related to the
Sonics participating in 17 more NBA playoff games in 1996 than in 1995.
OPERATING CASH FLOW. The Company's Operating Cash Flow increased $9.2 million
or 39.4% for the six months ended June 30, 1996 from the same period in 1995.
The $1.2 million increase in the out-of-home segment's Operating Cash Flow and
the $9.4 million increase in the broadcasting segment's Operating Cash Flow
offset the $1.4 million decrease in the Company's other segment's Operating Cash
Flow. Operating Cash Flow as a percentage of net revenue increased to 24.9% for
the six months ended June 30, 1996 from 22.1% for the comparable 1995 period.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense for the
six months ended June 30, 1996 increased $2.0 million or 36.9% from the
comparable period in 1995. The increase is mainly the result of depreciation
expense related to the Key Arena leasehold improvements in October 1995 and the
addition of KFTY in April 1996.
INTEREST EXPENSE. Interest expense for the six months ended June 30, 1996
decreased $0.9 million or 6.8% to $12.2 million from $13.1 million in 1995
primarily due to a combination of lower average debt balances in the first
quarter of 1996 and the absence in 1996 of interest incurred in the second
quarter of 1995 in connection with a tax settlement.
INCOME TAX EXPENSE. For the six months ended June 30, 1996, the Company incurred
$863,000 of income tax expense under the alternative minimum tax compared to
$851,000 of income tax expense for the second quarter of 1995. Management
anticipates that the Company will continue to incur income tax expense under the
alternative minimum tax until operating loss carryforwards are substantially
reduced. The Company will also incur income tax expense in certain states in
which it operates.
NET INCOME. As a result of the above factors, net income increased $8.2 million
or 197.6% to $12.3 million for the six months ended June 30, 1996 from $4.1
million in 1995.
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
As of August 1, 1996, the Company had approximately $5.7 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, 1996,
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 decreased to $13.7 million at June 30, 1996 from
$15.1 million at December 31, 1995. 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 1996 decreased to $12.0 million from $14.3 million in 1995.
At June 30, 1996, the Company's capital resources consisted of $5.1 million in
cash and cash equivalents and approximately $5.7 million available under the
Credit Agreement.
Capital expenditures for new property and equipment of $8.0 million in the first
six months of 1996 were financed with a combination of cash provided by
operating activities and borrowings under the Credit Agreement. These capital
expenditures were for the acquisition of television station KFTY as well as for
advertising signs, displays, vehicles and equipment, and broadcasting equipment.
On April 2, 1996, the Company purchased for approximately $7.8 million
television station KFTY, licensed to the market of Santa Rosa, California. On
April 24, 1996, the Company entered into a local marketing agreement with Harron
Television of Monterey, owners of television station KCCN licensed to the market
of Monterey, California. The Company will provide programming and sales
services to KCCN and will make a monthly payment to Harron in exchange for the
right of the Company to receive all revenues from network compensation and
advertising sold on the station. In conjunction with the transaction, the
Company paid Harron Television approximately $5.6 million dollars for an option
to purchase the station. All of the above transactions were financed through
existing credit facilities.
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,
1996.
(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 ABSTAINED NOT VOTED
-------- --- ------- --------- ---------
Barry A. Ackerley 63,447,050 0 65,401 3,608,468
Gail A. Ackerley 63,447,050 0 65,401 3,608,468
Richard P. Cooley 63,447,051 0 65,400 3,608,468
M. Ian G. Gilchrist 63,447,051 0 65,400 3,608,468
Michel C. Thielen 63,447,051 0 65,400 3,608,468
(d) The Nonemployee-directors' Equity Compensation Plan was approved by
the shareholders as follows:
FOR AGAINST ABSTAINED NOT VOTED
--- ------- --------- ---------
63,347,750 163,201 1,500 3,608,468
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, 1996.
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 9, 1996 BY
----------------------------------
DENIS M. CURLEY
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER,
TREASURER AND SECRETARY
(PRINCIPAL FINANCIAL OFFICER)
11
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
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<PP&E> 209,400
<DEPRECIATION> 123,590
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<BONDS> 0
0
0
<COMMON> 170
<OTHER-SE> (87,513)
<TOTAL-LIABILITY-AND-EQUITY> 200,478
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<CGS> 0
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<INCOME-PRETAX> 13,133
<INCOME-TAX> 863
<INCOME-CONTINUING> 0
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,270
<EPS-PRIMARY> .77
<EPS-DILUTED> .77
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