<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 SEPTEMBER 30, 1997
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
THE ACKERLEY GROUP, INC.
(formerly Ackerley Communications, Inc.)
(Exact name of registrant as specified in its charter)
DELAWARE 91-1043807
(State or other jurisdiction (IRS Employer Identification No.)
incorporation or organization)
1301 FIFTH AVENUE,
SUITE 4000
SEATTLE, WA 98101
(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 NO X
___ ___
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, 1997
- --------------------------------------------------------------------------------
COMMON STOCK, $.01 PAR VALUE 20,159,591 SHARES
CLASS B COMMON STOCK, $.01 PAR VALUE 11,353,510 SHARES
<PAGE>
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION PAGE
----
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996. . . . . . . . . . . . 1
CONSOLIDATED STATEMENTS OF OPERATIONS THREE
AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND
SEPTEMBER 30, 1996. . . . . . . . . . . . . . . . . . . . . . . 2
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1997
AND SEPTEMBER 30, 1996. . . . . . . . . . . . . . . . . . . . . 3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. . . . . . . . . . . 4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . 6
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. . . . . . . . . . . . . . . . 12
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
<PAGE>
THE ACKERLEY GROUP, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(UNAUDITED)
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
ASSETS (IN THOUSANDS)
<S> <C> <C>
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 3,997 $ 2,910
ACCOUNTS RECEIVABLE, NET 42,134 43,754
CURRENT PORTION OF BROADCAST RIGHTS 8,254 5,656
PREPAID CONTRACTS 8,063 7,080
OTHER CURRENT ASSETS 18,483 9,765
-------- --------
TOTAL CURRENT ASSETS 80,931 69,165
PROPERTY AND EQUIPMENT, NET 93,803 88,136
INTANGIBLES, NET 40,915 41,856
OTHER ASSETS 27,960 25,755
-------- --------
TOTAL ASSETS $243,609 $224,912
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES:
ACCOUNTS PAYABLE $ 5,718 $ 5,019
ACCRUED INTEREST 7,288 3,959
OTHER ACCRUED LIABILITIES 16,330 16,160
DEFERRED REVENUE 27,257 20,050
CURRENT PORTION OF BROADCAST OBLIGATIONS 9,551 7,032
CURRENT PORTION OF LONG-TERM DEBT 5,698 5,791
-------- --------
TOTAL CURRENT LIABILITIES 71,842 58,011
LONG-TERM DEBT - NONCURRENT PORTION 221,243 229,350
LITIGATION ACCRUAL 8,072 13,248
OTHER LONG-TERM LIABILITIES 7,391 8,142
-------- --------
TOTAL LIABILITIES 308,548 308,751
STOCKHOLDERS' DEFICIENCY:
COMMON STOCK, $.01 PAR VALUE: AUTHORIZED 50,000,000
SHARES, ISSUED 21,525,137 SHARES AT SEPTEMBER 30, 1997
AND 21,186,724 SHARES AT DECEMBER 31, 1996; AND
OUTSTANDING 20,150,191 SHARES AT SEPTEMBER 30, 1997
AND 19,811,778 SHARES AT DECEMBER 31, 1996. 215 212
CLASS B COMMON STOCK, $.01 PAR VALUE: AUTHORIZED
11,406,510 SHARES; AND ISSUED AND OUTSTANDING
11,353,510 SHARES AT SEPTEMBER 30, 1997 AND
11,353,810 SHARES AT DECEMBER 31, 1996. 114 114
CAPITAL IN EXCESS OF PAR VALUE 8,113 3,195
DEFICIT (63,292) (77,271)
LESS COMMON STOCK IN TREASURY, AT COST (10,089) (10,089)
-------- --------
TOTAL STOCKHOLDERS' DEFICIENCY (64,939) (83,839)
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $243,609 $224,912
-------- --------
-------- --------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1
<PAGE>
THE ACKERLEY GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
------------- ------------- ------------- -------------
(IN THOUSANDS EXCEPT (IN THOUSANDS EXCEPT
PER SHARE AMOUNTS) PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
REVENUE $ 60,818 $ 53,335 $ 217,372 $ 200,158
LESS AGENCY COMMISSIONS
AND DISCOUNTS (8,213) (7,493) (25,106) (23,154)
-------- -------- --------- ---------
NET REVENUE 52,605 45,842 192,266 177,004
EXPENSES:
OPERATING EXPENSES (42,423) (34,587) (151,154) (133,089)
STOCK COMPENSATION EXPENSE (4,743) 0 (4,743) 0
LITIGATION EXPENSE ADJUSTMENT 5,000 0 5,000 0
DEPRECIATION AND AMORTIZATION (3,336) (4,108) (9,858) (11,415)
INTEREST EXPENSE (6,722) (5,959) (19,131) (18,179)
-------- -------- --------- ---------
TOTAL EXPENSES (52,224) (44,654) (179,886) (162,683)
-------- -------- --------- ---------
INCOME BEFORE INCOME TAX 381 1,188 12,380 14,321
INCOME TAX BENEFIT (EXPENSE) 559 (809) 2,223 (1,672)
-------- -------- --------- ---------
NET INCOME $ 940 $ 379 $ 14,603 $ 12,649
-------- -------- --------- ---------
-------- -------- --------- ---------
NET INCOME PER COMMON SHARE $ 0.03 $ 0.01 $ 0.46 $ 0.40
-------- -------- --------- ---------
-------- -------- --------- ---------
CASH DIVIDENDS PER COMMON SHARE $ 0.02 $ 0.02 $ 0.02 $ 0.02
-------- -------- --------- ---------
-------- -------- --------- ---------
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES 31,536 31,818 31,536 31,818
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2
<PAGE>
THE ACKERLEY GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
FOR THE NINE MONTH PERIODS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996
------------- --------------
(IN THOUSANDS)
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES: 26,061 17,877
CASH FLOWS FROM INVESTING ACTIVITIES:
PROCEEDS FROM SALE OF PROPERTY 275 959
CAPITAL EXPENDITURES (13,192) (9,145)
ACQUISITIONS:
PROPERTY AND EQUIPMENT 0 (3,389)
INTANGIBLE ASSETS 0 (4,482)
OTHER, NET (2,362) (6,350)
-------- --------
NET CASH USED BY INVESTING ACTIVITIES (15,279) (22,407)
CASH FLOWS FROM FINANCING ACTIVITIES:
BORROWINGS UNDER CREDIT AGREEMENTS 12,500 22,000
PAYMENTS UNDER CREDIT AGREEMENTS (19,440) (14,757)
DIVIDENDS PAID (623) (623)
OTHER, NET (2,132) (2,292)
-------- --------
NET CASH PROVIDED BY (USED BY) FINANCING ACTIVITIES (9,695) 4,328
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,087 (202)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 2,910 6,421
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,997 $ 6,219
-------- --------
-------- --------
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS:
BROADCAST RIGHTS ACQUIRED AND BROADCAST OBLIGATIONS ASSUMED $ 11,031 $ 7,304
STOCK ISSUED AS COMPENSATION $ 4,743 $ 0
REDUCTION OF LITIGATION ACCRUAL $ 5,000 $ 0
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE>
THE ACKERLEY GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. BASIS OF PREPARATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. The balance sheet at December 31, 1996 has
been derived from the audited financial statements at that date. The
accompanying financial statements do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all normal and recurring
adjustments necessary for a fair presentation of the financial position and
the results of operations for such periods have been included. 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, 1996.
The results of operations for any interim period are not necessarily
indicative of anticipated results for the full year. The Company's results of
operations may vary from quarter to quarter due in part to the timing of
acquisitions and to seasonal variations in the Company's operations. In
particular, the Company's net revenue and operating cash flow historically
have been affected positively during the NBA basketball season (the first,
second, and fourth quarters) and by increased advertising activity in the
out-of-home media and broadcasting segments during the second and fourth
quarters.
In 1997, the Company began presenting the Consolidated Statement of Cash
Flows using the indirect method instead of the direct method which was used
in prior years.
NOTE 2. INCOME TAXES
During the first nine months of 1997, the Company reduced the valuation
allowance for deferred tax assets which resulted in the recording of a
deferred tax asset of $7.2 million. The recognized deferred tax asset is
based on the Company's expected utilization of net operating loss
carryforwards and reversal of certain temporary differences between financial
statement carrying amounts and the tax bases of existing assets and
liabilities.
The Company has no significant 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.
NOTE 3. EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings Per Share, which is required to be adopted on December 31,
1997. At that time, the Company will be required to change the method
currently used to compute earnings per share and to restate all prior
periods. Under the new requirements for calculating primary earnings per
share, the dilutive effect of stock options will be excluded. The impact of
Statement 128 on the calculation of primary earnings per share and of fully
diluted earnings per share for these quarters is not expected to be material.
4
<PAGE>
NOTE 4. STOCK COMPENSATION EXPENSE
In 1997, the Company amended certain employees' stock option agreements,
converting their incentive stock options to nonqualified options. In the
third quarter, 338,000 nonqualified options were exercised. The Company
recognized non-cash compensation expense of $4.7 million representing the
difference between the exercise price of the converted options and the fair
value of the Company's common stock on the exercise date of the options.
NOTE 5. LITIGATION ACCRUAL
The Company and two of its executive officers were defendants in a wrongful
termination suit brought by former employees. On February 29, 1996, a jury
issued a verdict awarding the plaintiffs compensatory and punitive damages.
The Company recorded an accrual of $14.2 million related to the verdict which
also included an estimate for additional legal costs. Following post-trial
motions, the punitive damages award was reduced. The Company is currently
appealing the verdict. Based on the Company's progress to date with respect
to the appeal, the Company's management decided the final verdict, plus legal
costs, will not exceed $8.1 million. Consequently, the Company reduced its
litigation accrual by $5.0 million.
5
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
The Company reported net income of $14.6 million for the first nine months of
1997, a $2.0 million or 15.9% improvement over last year's first nine months.
Net revenues for the nine months increased over the same period last year by
$15.3 million or 8.6%, while the Company's Operating Cash Flow, as defined
below, decreased $2.8 million or 6.4%.
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 and corporate
overhead, before amortization, depreciation, interest, stock compensation,
and litigation expense) is also an appropriate measure of the Company's
financial performance. This measure excludes expenses consisting of
depreciation, amortization, interest, stock compensation, and litigation
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.
In 1997, the Company amended certain employees' stock option agreements,
converting their incentive stock options to nonqualified options. In the
third quarter, 338,000 nonqualified options were exercised. The Company
recognized non-cash compensation expense of $4.7 million representing the
difference between the exercise price of the converted options and the fair
value of the Company's common stock on the exercise date of the options.
The Company and two of its executive officers were defendants in a wrongful
termination suit brought by former employees. On February 29, 1996, a jury
issued a verdict awarding the plaintiffs compensatory and punitive damages.
The Company recorded an accrual of $14.2 million related to the verdict which
also included an estimate for additional legal costs. Following post-trial
motions, the punitive damages award was reduced. The Company is currently
appealing the verdict. Based on the Company's progress to date with respect
to the appeal, the Company's management decided the final verdict, plus legal
costs, will not exceed $8.1 million. Consequently, the Company reduced its
litigation accrual by $5.0 million.
6
<PAGE>
RESULTS OF OPERATIONS
The following two tables set forth certain historical financial and operating
data of the Company for the three months and nine months ended September 30,
1997 and 1996, respectively. In 1997, the Company began presenting its
operations as three business segments: Out-Of-Home Media, Broadcasting, and
Sports & Entertainment. Certain prior years' data have been apportioned
among the segments to conform to this presentation.
RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------------------- ----------------------------------------------
1997 1996 1997 1996
-------------------- -------------------- --------------------- ---------------------
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..................... $ 52,605 $ 45,842 $ 192,266 $ 177,004
SEGMENT OPERATING EXPENSES...... (39,809) (75.7)% (32,992) (72.0)% (143,469) (74.6)% (127,178) (71.9)%
CORPORATE OVERHEAD.............. (2,614) (5.0) (1,595) (3.5) (7,685) (4.0) (5,911) (3.3)
-------- -------- --------- ---------
TOTAL OPERATING EXPENSES.... (42,423) (80.6) (34,587) (75.4) (151,154) (78.6) (133,089) (75.2)
-------- -------- --------- ---------
OPERATING CASH FLOW............. 10,182 19.4 11,255 24.6 41,112 21.4 43,915 24.8
OTHER EXPENSES:
STOCK COMPENSATION............ (4,743) (9.0) 0 0.0 (4,743) (2.5) 0 0.0
LITIGATION EXPENSE............ 5,000 9.5 0 0.0 5,000 2.6 0 0.0
DEPRECIATION AND
AMORTIZATION................ (3,336) (6.3) (4,108) (9.0) (9,858) (5.1) (11,415) (6.4)
INTEREST EXPENSE.............. (6,722) (12.8) (5,959) (13.0) (19,131) (10.0) (18,179) (10.3)
-------- -------- --------- ---------
TOTAL OTHER EXPENSES........ (9,801) 18.6 (10,067) (22.0) (28,732) 14.9 (29,594) (16.7)
-------- -------- --------- ---------
INCOME BEFORE INCOME TAXES...... 381 0.7 1,188 2.6 12,380 6.4 14,321 8.1
INCOME TAX BENEFIT (EXPENSE).... 559 1.1 (809) (1.8) 2,223 1.2 (1,672) (0.9)
-------- -------- --------- ---------
NET INCOME...................... $ 940 1.8 % $ 379 0.8 % $ 14,603 7.6 % $ 12,649 7.2 %
-------- -------- --------- ---------
-------- -------- --------- ---------
</TABLE>
7
<PAGE>
OPERATING INFORMATION BY BUSINESS SEGMENT
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- ----------------------
1997 1996 1997 1996
------- ------- -------- --------
<S> <C> <C> <C> <C>
NET REVENUE:
OUT-OF-HOME MEDIA................ $29,138 $26,424 $ 83,071 $ 74,109
BROADCASTING..................... 21,358 18,282 66,759 59,598
SPORTS & ENTERTAINMENT........... 2,109 1,136 42,436 43,297
------- ------- -------- --------
TOTAL NET REVENUE.............. $52,605 $45,842 $192,266 $177,004
------- ------- -------- --------
------- ------- -------- --------
SEGMENT OPERATING EXPENSES:
OUT-OF-HOME MEDIA................ $18,303 $15,948 $ 53,271 $ 47,275
BROADCASTING..................... 15,759 13,352 44,173 38,204
SPORTS & ENTERTAINMENT........... 5,747 3,692 46,025 41,699
------- ------- -------- --------
TOTAL SEGMENT OPERATING
EXPENSE...................... $39,809 $32,992 $143,469 $127,178
------- ------- -------- --------
------- ------- -------- --------
OPERATING CASH FLOW:
OUT-OF-HOME MEDIA................ $10,835 $10,476 $ 29,800 $ 26,834
BROADCASTING..................... 5,599 4,930 22,586 21,394
SPORTS & ENTERTAINMENT........... (3,638) (2,556) (3,589) 1,598
------- ------- -------- --------
TOTAL SEGMENT OPERATING
CASH FLOW.................... 12,796 12,850 48,797 49,826
CORPORATE OVERHEAD............... (2,614) (1,595) (7,685) (5,911)
------- ------- -------- --------
TOTAL OPERATING CASH FLOW...... $10,182 $11,255 $ 41,112 $ 43,915
------- ------- -------- --------
------- ------- -------- --------
CHANGE IN NET REVENUE FROM
PRIOR PERIODS:
OUT-OF-HOME MEDIA................ 10.3 % 8.5 % 12.1 % 6.7 %
BROADCASTING..................... 16.8 23.1 12.0 17.7
SPORTS & ENTERTAINMENT........... 85.7 (15.7) (2.0) 62.4
CHANGE IN TOTAL NET REVENUE.... 14.8 13.1 8.6 20.6
OPERATING DATA AS A PERCENT OF
NET REVENUE:
SEGMENT OPERATING EXPENSES:
OUT-OF-HOME MEDIA.............. 62.8 % 60.4 % 64.1 % 63.8 %
BROADCASTING................... 73.8 73.0 66.2 64.1
SPORTS & ENTERTAINMENT......... 272.5 325.0 108.5 96.3
TOTAL SEGMENT OPERATING
EXPENSES..................... 75.7 72.0 74.6 71.9
OPERATING CASH FLOW:
OUT-OF-HOME MEDIA.............. 37.2 % 39.6 % 35.9 % 36.2 %
BROADCASTING................... 26.2 27.0 33.8 35.9
SPORTS & ENTERTAINMENT......... (172.5) (225.0) (8.5) 3.7
CORPORATE OVERHEAD............. NA NA NA NA
TOTAL OPERATING CASH FLOW.... 19.4 24.6 21.4 24.8
</TABLE>
8
<PAGE>
THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED WITH THREE MONTHS ENDED
SEPTEMBER 30, 1996
NET REVENUE. Net revenue of $52.6 million for the quarter ended September 30,
1997 increased $6.8 million or 14.8% from the comparable quarter in 1996. The
Company's out-of-home media segment's net revenue increased $2.7 million or
10.3% mainly due to increased national advertising sales. The net revenue of
the Company's broadcasting segment showed an increase of $3.1 million or
16.8% resulting from the effects of increased rates and sales volumes and the
addition of local marketing agreements with the television stations WMGC and
WUTR. The Company's sports & entertainment segment's net revenue increased
$1.0 million or 85.7% due to increased advertising and ticket sales for the
Seattle SeaDogs regular season and the addition of a Seattle SuperSonics
retail location.
OPERATING EXPENSES EXCLUDING CORPORATE OVERHEAD. Operating expenses
increased $6.8 million or 20.7% to $39.8 million in 1997 compared to
$33.0 million in 1996. In the Company's out-of-home media segment, operating
expenses increased by $2.4 million or 14.8% to $18.3 million from a
combination of expenses related to increased sales and from the effects of
inflation on operating expenses. Operating expenses in the Company's
broadcasting segment increased by $2.4 million or 18.0% to $15.8 million due
to the effects of higher programming, promotion, and production expenses and
the addition of local marketing agreements with the television stations WMGC
and WUTR. Operating expenses from the Company's sports & entertainment
segment increased $2.0 million or 55.7% to $5.7 million primarily due to the
addition of a Seattle SuperSonics retail location and increased team
compensation costs.
CORPORATE OVERHEAD. Corporate overhead expenses increased by $1.0 million or
63.9% to $2.6 million mainly due to increased utilization of outside
services, insurance expenses, and travel and entertainment costs in the third
quarter 1997.
OPERATING CASH FLOW. As a result of the above, the Company's Operating Cash
Flow decreased $1.0 million or 8.9% for the third quarter 1997 from the same
period in 1996 mainly due to a $1.0 million increase in corporate overhead.
Operating Cash Flow as a percentage of net revenue decreased to 19.4% for the
third quarter 1997 from 24.6% for the comparable period in 1996.
STOCK COMPENSATION EXPENSE. The Company recognized $4.7 million of stock
compensation expense for the three months ended September 30, 1997. There
was no stock compensation expense during the comparable period of 1996.
LITIGATION EXPENSE. In the third quarter of 1997, the Company reduced an
accrual for a litigation expense by $5.0 million. No such adjustment was
made in the third quarter of 1996.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses
decreased $0.8 million or 19.5% to $3.3 million in 1997 as compared to $4.1
million in 1996 mainly due to certain intangible assets becoming fully
amortized in 1997.
INTEREST EXPENSE. Interest expense for the quarter ended September 30, 1997
increased $0.7 million or 11.6% to $6.7 million from $6.0 million in 1996
mainly due to higher interest rates and higher average debt balances during
the quarter.
9
<PAGE>
INCOME TAX EXPENSE. For the third quarter 1997, the Company incurred a $0.5
million income tax benefit compared to an income tax expense of $0.8 million
for the comparable period in 1996. The benefit resulted from the recognition
of a $0.9 million deferred tax asset during the period.
NET INCOME. Net income of $0.9 million for the three months ended September 30,
1997 increased $0.5 million or 125.0% from $0.4 million for the comparable
period in 1996 mainly due to the recognition of a deferred tax asset in 1997.
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED WITH NINE MONTHS ENDED
SEPTEMBER 30, 1996
NET REVENUE. Net revenue increased $15.3 million or 8.6% to $192.3 million
in 1997 compared to $177.0 million in 1996. The Company's out-of-home media
segment's net revenue increased $9.0 million or 12.1% mainly due to increased
national advertising sales. The net revenue of the Company's broadcasting
segment increased $7.2 million or 12.0% resulting from the effects of
increased rates and sales volumes and the additions of KFTY and local
management agreements with television stations KION, WMGC, and WUTR. The
Company's sports & entertainment segment's net revenue decreased $0.9 million
or 2.0% mainly due to the Sonics participating in 12 games of the 1997 NBA
playoffs compared to 21 games in 1996.
OPERATING EXPENSES EXCLUDING CORPORATE OVERHEAD. Operating expenses
increased $16.3 million or 12.8% to $143.5 million in 1997 compared to $127.2
million in 1996. In the Company's out-of-home media segment, operating
expenses increased by $6.0 million or 12.7% to $53.3 million from a
combination of expenses related to increased sales and from the effects of
inflation on operating expenses. Operating expenses in the Company's
broadcasting segment increased by $6.0 million or 15.6% to $44.2 million due
to the effects of higher programming, promotion, and production expenses and
the additions of KFTY and local management agreements with KION, WMGC, and
WUTR. Operating expenses from the Company's sports & entertainment segment
increased $4.3 million or 10.4% to $46.0 million from higher basketball
operating expenses related to players' salaries and transportation costs
during the regular season offset by lower costs associated with the Sonics
participating in 12 games of the 1997 NBA playoffs compared to 21 games in
1996.
CORPORATE OVERHEAD. Corporate overhead expenses increased by $1.8 million or
30.0% to $7.7 million mainly due to increased utilization of outside services
and higher lease costs for facilities and equipment in 1997 as compared to
1996.
OPERATING CASH FLOW. As a result of the above, the Company's Operating Cash
Flow decreased $2.8 million or 6.4% for the nine months ended September 30,
1997 from the same period in 1996 due to a combination of a $1.0 million
decrease in Operating Cash Flow before corporate overhead and an $1.8 million
increase in corporate overhead. Operating Cash Flow as a percentage of net
revenue decreased to 21.4% for the nine months ended September 30, 1997 from
24.8% for the comparable period in 1996.
STOCK COMPENSATION EXPENSE. The Company recognized $4.7 million of stock
compensation expense for the nine months ended September 30, 1997. There was
no stock compensation expense during the comparable period of 1996.
10
<PAGE>
LITIGATION EXPENSE. For the nine months ended September 30, 1997, the
Company reduced an accrual for a litigation expense by $5.0 million. No such
adjustment to the litigation accrual was made in the comparable period of
1996.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses
decreased $1.5 million or 13.2% to $9.9 million in 1997 as compared to $11.4
million in 1996 mainly due to certain intangible assets becoming fully
amortized in 1997.
INTEREST EXPENSE. Interest expense for the nine months ended September 30,
1997 increased $0.9 million or 4.9% to $19.1 million from $18.2 million in
1996 mainly due to higher average debt balances during 1997.
INCOME TAX EXPENSE. For the first nine months of 1997, the Company incurred
a $2.2 income tax benefit compared to an income tax expense of $1.7 million
for the comparable period in 1996. The benefit resulted from the recognition
of a $7.2 million deferred tax asset during the period.
NET INCOME. Net income of $14.6 million for the nine months ended September 30,
1997 increased $2.0 million or 15.9% from $12.6 million for the comparable
period in 1996 mainly due to the recognition of a deferred tax asset in 1997.
LIQUIDITY AND CAPITAL RESOURCES
As of November 1, 1997, the Company had approximately $16.7 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 September 30, 1997, 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 $2.1 million to $9.1 million at
September 30, 1997 from $11.2 million at December 31, 1996 primarily due to
the increase in current assets from the recognition of the deferred tax asset
being offset by increases in accrued interest and deferred revenue. 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 nine months of
1997 increased to $26.1 million from $17.9 million in 1996.
11
<PAGE>
At September 30, 1997, the Company's capital resources consisted of
$4.0 million in cash and cash equivalents and approximately $24.2 million
available under the Credit Agreement.
Capital expenditures for new property and equipment of $13.2 million in the
first nine months of 1997 were financed with a combination of cash provided
by operating activities and borrowings under the Credit Agreement. These
capital expenditures were primarily for advertising signs, displays, vehicles
and equipment, broadcasting equipment, and building facilities.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
3. AMENDED AND RESTATED BYLAWS
27. FINANCIAL DATA SCHEDULE.
(b) REPORTS ON FORM 8-K:
NONE.
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.
THE ACKERLEY GROUP, INC.
DATED: NOVEMBER 12, 1997 BY _____________________________
DENIS M. CURLEY
CO-PRESIDENT AND
CHIEF FINANCIAL OFFICER,
TREASURER AND SECRETARY
(PRINCIPAL FINANCIAL OFFICER)
12
<PAGE>
RESTATED BYLAWS
OF
THE ACKERLEY GROUP, INC.
(A CORPORATION INCORPORATED UNDER
THE LAWS OF THE STATE OF DELAWARE)
SECTION 1.
SHAREHOLDERS AND SHAREHOLDERS' MEETINGS
1.1. ANNUAL MEETING. The annual meeting of the shareholders of the
Corporation for the election of directors and for the transaction of such
other business as may properly come before the meeting shall be held each
year in the City of Seattle, Washington, or at some other place, either
within or without the State of Delaware, as designated by the Board of
Directors. The meeting shall be held at 8: 00 p.m. on May 1 of each year,
provided such day is not a legal holiday and if a legal holiday then on the
next business day, or on such other day or at such other time as designated
by the Board of Directors.
1.2. SPECIAL MEETINGS. Special meetings of the shareholders for any
purpose or purposes may be called at any time by the Board of Directors to be
held at such time and place as the Board of Directors may prescribe.
Business transacted at any special meeting of shareholders shall be limited
to the purposes specified in the Notice.
Upon the request of the Chairman of the Board, the President, the Board
of Directors or of any shareholder or shareholders holding in the aggregate
one-third (1/3) of the voting power of all shareholders, it shall be the duty
of the Secretary to call a special meeting of the shareholders to be held at
the registered office of the corporation at such time as the Secretary may
fix, not less than ten (10) nor more than sixty (60) days after the receipt of
said request, and if said Secretary shall neglect or refuse to issue such
call, those making the request may do so.
1.3. NOTICE OF MEETINGS. Written notice of the place, day and hour of
the annual shareholders I meeting and written notice of the day, place, hour
and purpose or purposes of special shareholders' meetings shall be delivered
not less than ten (10) nor more than sixty (60) days before the date of the
meeting, either personally or by mail, by or at the direction of the Chairman
of the Board, the President, the Secretary or the officer or persons calling
the meeting, to each shareholder of record entitled to vote at such meeting.
If mailed, such notice shall be deemed to be delivered when deposited in the
United States mail addressed to the shareholder at his address as it appears
on the stock transfer books of the Corporation, with postage thereon prepaid.
Except where expressly prohibited by law or the Certificate of
Incorporation, notice of the day, place, hour and purpose or purposes of any
shareholders' meeting may be waived in writing by any shareholder at any
time, either before or after the meeting, and attendance at the meeting in
person or by proxy shall constitute a waiver of such notice of the meeting
unless prior
1
<PAGE>
to or upon commencement of such meeting such person in attendance asserts
that proper notice was not given.
1.4. LIST OF SHAREHOLDERS. At least ten (10) days before any
shareholders' meeting, the Secretary of the Corporation shall compile a
complete list of the shareholders entitled to vote at any meeting or
adjournment thereof, arranged in alphabetical order, with the address of each
shareholder and the number of shares owned by each shareholder. Such list
shall be open for examination by any shareholder during usual business hours
at a place within the city where the voting is to be held, which place shall
be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held, for a period of at least ten days
prior to any such meeting. Such list shall also be produced and kept open
for examination at the time and place and during the course of any such
meeting.
1.5. QUORUM. The holders of a simple majority of the shares entitled to
vote at a meeting, present in person or by proxy, shall constitute a quorum
of shareholders for the transaction of business and the act of a simple
majority of the shares present in person or by proxy at a meeting at which
there is a quorum, shall be the act of the Corporation, except as otherwise
provided herein, by law or by the Certificate of Incorporation.
1.6. ADJOURNED MEETINGS. Whether for failure to obtain a quorum or
otherwise, an adjournment or adjournments of any shareholders' meeting may be
taken to such time and place as the majority of those present may determine
without any other notice than announcement at such meeting being given. Any
meeting at which directors are to be elected shall be adjourned only from day
to day until such directors are elected.
1.7. PROXIES. The holder of any proxy for a shareholder shall present
evidence of his appointment by an instrument in writing signed by the
shareholder or by his duly authorized attorney-in-fact. No proxy shall be
valid after three (3) years from the date of its execution, unless the proxy
provided for a longer period, which in no case shall exceed the maximum
period permitted by law. Revocation of a shareholder's proxy shall not be
effective until written notice thereof has actually been received by the
Secretary of the Corporation.
1.8. SHAREHOLDERS' ACTION WITHOUT A MEETING. Any action required or
permitted to be taken at any annual or special meeting of shareholders may be
taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted. Prompt
notice of the taking of corporate action without a meeting by less than
unanimous written consent shall be given to those shareholders who have not
consented in writing to such action.
1.9. RESTRICTIONS ON ISSUANCE AND TRANSFER. No shares may be issued or
transferred to any person where such issuance or transfer will result in a
violation of the Communications Act of 1934 or any regulations promulgated
thereunder as the same shall be in effect at the time of any such issuance or
transfer. Any person subscribing to the capital stock of the Corporation and
any person wishing to have capital stock of the Corporation transferred to
such person shall
2
<PAGE>
provide the Corporation or its transfer agent with such information as they
may reasonably require to enforce the provisions of this Section 1.9 prior to
such issuance or transfer. Any purported transfer in violation of this
Section 1.9 shall be void.
SECTION 2.
BOARD OF DIRECTORS
2.1. NUMBER AND QUALIFICATION. The business affairs and property of the
Corporation shall be managed by a Board of Directors. The number of
directors which shall constitute the whole Board shall be not less than one
nor more than eight. The first Board shall consist of three directors.
Thereafter, the number of directors shall be two or such other number, within
the limits above specified, as may be established from time to time by
resolution of the Board of Directors. Directors need not be shareholders.
No person shall be elected or serve as a director of the Corporation whose
election or service as a director would cause the Corporation to be in
violation of the Communications Act of 1934 or any regulations promulgated
thereunder. If, while serving as a director of the Corporation, any person
becomes ineligible to so serve by operation of the preceding sentence, then,
notwithstanding any provision in these Bylaws to the contrary, such person
immediately shall be removed as a director and thereafter may be replaced as
provided in these Bylaws; provided, however, that no action by the Board of
Directors at which such director voted or was necessary to make up a quorum
shall be void by reason of the provisions of this sentence.
2.2. ELECTION--TERM OF OFFICE. The directors shall be elected by the
shareholders at each annual shareholders' meeting, to hold office until the
next annual shareholders' meeting and until their respective successors are
elected and qualified unless removed in accordance with the laws of Delaware.
In the event of failure to elect directors at any annual shareholders'
meeting, or in the event of failure to hold any annual shareholders' meeting
as provided by these Bylaws, directors may be elected at a special meeting of
the shareholders called for that purpose.
2.3. REMOVAL BY SHAREHOLDERS. At any annual or special meeting of the
shareholders called for that purpose, the shareholders may, by vote of the
holders of a majority of the shares then entitled to vote at an election of
directors, with or without notice to any of the directors, and with or
without cause, remove any director or directors and elect a successor or
successors.
2.4. VACANCIES. Except as otherwise provided by law, vacancies in the
Board of Directors, whether caused by resignation, death, retirement,
disqualification, removal or otherwise, may be filled by a simple majority of
the remaining directors attending any meeting of the Board of Directors, even
though less than a quorum is present, or by a sole remaining director. A
director thus elected to fill any vacancy shall hold office for the unexpired
term of his predecessor and until his successor is elected and qualified.
2.5. QUORUM AND VOTING. At any meeting of the Board of Directors, the
presence in person of a simple majority of the directors shall constitute a
quorum for the transaction of business. If a quorum is present, the act of a
simple majority of the directors present at such meeting shall be the act of
the Board of Directors and of the Corporation except as may be otherwise
specifically provided by statute, by the Certificate of Incorporation or by
these Bylaws.
3
<PAGE>
The directors present at a duly convened meeting may continue to do business
until adjournment, notwithstanding the withdrawal of enough directors to
leave less than a quorum. Abstention from voting on a motion by a director
present at a meeting at which there is a quorum shall be counted as a vote
against the motion. If a quorum shall not be present at any meeting of the
Board of Directors, the directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting,
until a quorum shall be present.
2.6. ANNUAL MEETING. The first meeting of each newly elected Board of
Directors shall be known as the annual meeting thereof, and shall be held
immediately after the annual shareholders' meeting or any special
shareholders' meeting at which a Board of Directors is elected. Said meeting
shall be held at the same place as such shareholders' meeting unless some
other place shall be specified by resolution of the shareholders.
2.7. REGULAR MEETINGS. Regular meetings of the Board of Directors shall
be held at such place, day and hour as shall from time to time be fixed by
resolution of the Board.
2.8. SPECIAL MEETINGS. Special meetings of the Board of Directors may be
held at any place at any time whenever called by the Chairman of the Board,
the President, the Secretary, or any two or more directors.
2.9. NOTICE OF MEETINGS. No notice of the annual meeting of the Board of
Directors shall be required. Notice of the time and place of all meetings of
the Board of Directors other than the annual meeting, shall be given by the
Secretary, or by the person calling the meeting, by mail, radio, telegram or
by personal communication over the telephone or otherwise, at least three (3)
days prior to the day upon which the meeting is to be held. However, no
notice of any regular meeting need be given, if the \ time and place
thereof shall have been fixed by resolution of the Board of Directors.
Notice of any meeting of the Board of Directors may be waived in writing by
any director at any time, either before or after such meeting, and attendance
at such meeting in person shall constitute a waiver of notice of the time,
day, place and purpose of such meeting except where a director attends for
the express purpose of objecting to the transaction of any business because
the meeting was not lawfully convened.
2.10. COMMITTEES OF THE BOARD. The Board of Directors, by resolutions
adopted by a simple majority of the entire Board of Directors, may designate
from among its members an Executive Committee and one or more other
committees. Each such committee may exercise the authority of the Board of
Directors to the extent provided in such resolution and any subsequent
resolutions pertaining thereto and adopted in like manner, but no such
committee shall have the power or authority in reference to amending the
Certificate of Incorporation, adopting an agreement of merger or
consolidation, recommending to the shareholders the sale, lease or exchange
of all or substantially all of the Corporation's property and assets,
recommending to the shareholders a dissolution of the Corporation or a
revocation of a dissolution, or amending these Bylaws; a committee, if
expressly authorized by a resolution of the Board of Directors, may declare a
dividend and authorize the issuance of stock. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously
4
<PAGE>
appoint another member of the Board of Directors to act at the meeting in the
place of any such absent or disqualified member. The committee or committees
shall have such name or names as may be determined from time to time by
resolution adopted by the Board of Directors. Such committees shall keep
regular minutes of their proceedings and report to the Board of Directors
when requested to do so.
2.11. DIRECTORS' ACTION WITHOUT A MEETING. The Board of Directors or a
committee thereof may take any action which it could properly take at a
meeting without such a meeting if a consent in writing setting forth the
action so to be taken shall be signed before such action by all the
directors, or all of the members of the committee, as the case may be. Such
consent shall have the same effect as a unanimous vote.
2.12. TELEPHONE MEETINGS. Members of the Board of Directors or any
committee appointed by the Board of Directors may participate in a meeting of
such board or committee by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation by such means shall constitute
presence in person at a meeting.
2.13. COMPENSATION. Directors as such shall receive no compensation for
their services except such fees for attending meetings as may be authorized
by a majority of the entire Board of Directors from time to time; provided,
that this does not preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor, nor does it preclude the
Board of Directors from authorizing the reimbursement of expenses incurred by
directors in attending meetings of the Board of Directors or of any committee
created by the Board of Directors.
SECTION 3.
OFFICERS
3.1. OFFICERS ENUMERATED - ELECTION. The officers of the corporation
shall be a Chairman of the Board, one or more Presidents, one or more Vice
Presidents, a Secretary, and a Treasurer (together with an Assistant
Secretary and Assistant Treasurer, if such are desired by the Board of
Directors), all of whom shall be elected by the Board of Directors, to hold
office at the pleasure of the Board of Directors.
3.2. QUALIFICATIONS. None of the officers of the corporation need be a
director. Any two or more corporate offices may be held by the same person.
No person shall be elected or serve as an officer of the Corporation whose
election or service as an officer would cause the Corporation to be in
violation of the Communications Act of 1934 or any regulations promulgated
thereunder. If, while serving as an officer of the Corporation, any person
becomes ineligible to so serve by operation of the preceding sentence, then,
notwithstanding any provision in these Bylaws to the contrary, such person
shall immediately be removed as an officer and thereafter may be replaced as
provided in these Bylaws.
3.3. THE CHAIRMAN OF THE BOARD. The Chairman of the Board shall be the
chief executive officer and shall be responsible for carrying out the plans
and directions of the Board
5
<PAGE>
of Directors. The Chairman of the Board shall preside at all meetings of the
Board of Directors and of the shareholders, shall report to and consult with
the Board of Directors and shall have such other powers and duties as the
Board of Directors may from time to time prescribe.
3.4. THE OFFICE OF THE PRESIDENT.
3.4.1 DUTIES. The President, or the Co-Presidents, shall be the
Chief Operating Officer of the corporation, unless (1) two or more
Co-Presidents have been elected and one or more of the Co-Presidents is
specially designated as Chief Operating Officer pursuant to Section 3.4.2, or
(2) such position is otherwise delegated to another executive officer as may
be determined by resolution of the Board of Directors. The President, or the
Co-Presidents, shall, subject to the authority granted to the Chairman of the
Board, have general and active supervision over the day-to-day operations of
the corporation. In the absence of the Chairman of the Board, the President,
or the Co-Presidents, shall preside at all meetings of the shareholders and
at meetings of the Board of Directors. The President, or the Co-Presidents,
shall perform such other duties as may be prescribed to him or her by the
Board of Directors or by the Chairman of the Board. Should the office of the
Chairman of the Board be vacated, the President, or the Co-Presidents, shall
then perform the duties of the Chairman of the Board until otherwise directed
by the Board of Directors.
3.4.2 CO-PRESIDENTS. In the event that the office of the
President is held by two or more persons, the Board of Directors or the
Chairman of the Board shall determine those areas over which each
Co-President shall have primary responsibility, including but not limited to
the designation of one or more Co-Presidents as the Corporation's Chief
Operating Officer. Any matters upon which the Co-Presidents are unable to
agree shall be referred to the Chairman of the Board for resolution, if the
Chairman of the Board is not also a Co-President, and otherwise to the Board
of Directors. If one Co-President is absent or disabled, the remaining
Co-Presidents shall exercise all of the duties of the absent or disabled
Co-President, until otherwise directed by the Board of Directors or Chairman
of the Board.
3.5. THE VICE PRESIDENTS. The Vice Presidents shall act as President in
the absence or disability of the President and shall perform such other
duties as the directors may from time to time designate.
3.6. THE SECRETARY. The Secretary, personally or with the assistance of
others, shall keep records of the proceedings of the directors and
shareholders, attest all certificates of stock, deeds, bonds, contracts and
other obligations or instruments in the name of the corporation; keep the
corporate seal, if any, and affix the same to certificates of stock and other
proper documents; keep a record of the issuance of certificates of stock and
the transfers of the same; and perform such other duties as the Board of
Directors may from time to time designate.
3.7. THE TREASURER. The Treasurer shall have the care and custody, and
be responsible for, all funds and securities of the corporation, and shall
cause to be kept regular books of account. He shall cause to be deposited
all funds and other valuable effects in the name of the corporation in such
depositories as may be designated by the Board of Directors. In general, he
6
<PAGE>
shall perform all of the duties incident to the office of Treasurer, and such
other duties as from time to time may be assigned to him by the Board of
Directors.
3.8. VACANCIES. vacancies in any office arising from any cause may be
filled by the Board of Directors at any regular or special meeting.
3.9. OTHER OFFICERS AND AGENTS. The Board of Directors may appoint such
other officers and agents as it shall deem necessary or expedient, who shall
hold their of f ice f or such terms, and shall exercise such powers and
perform such duties, as shall be determined from time to time by the Board of
Directors.
3.10. COMPENSATION. The compensation of all officers of the corporation
shall be fixed by the Board of Directors.
SECTION 4.
SHARES AND CERTIFICATES OF SHARES
4.1. SHARE CERTIFICATES. Share certificates shall be issued in
numerical order, and each shareholder shall be entitled to a certificate
signed by the Chairman of the Board, the Chief Executive Officer, the
President or a Vice President and by the Secretary, Treasurer or an Assistant
Secretary and sealed with the corporate seal. Facsimiles of the signatures
and seal may be used, as permitted by law. In case any officer, transfer
agent or registrar who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such officer, transfer
agent or registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer at the date of
issue. If the Corporation shall be authorized to issue more than one class
of stock or more than one series of any class, the powers, designations,
preferences and relative, participating optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the Corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in Section 202 of the General Corporation Law of Delaware,
in lieu of the foregoing requirements, there may be set forth on the face or
back of the certificate which the Corporation shall issue to represent such
class or series of stock, a statement that the Corporation will furnish
without charge to each shareholder who so requests the powers, designations,
preferences and relative participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preference and/or rights.
4.2. CONSIDERATION FOR SHARES. Shares of this Corporation may be issued
for such consideration expressed in dollars (not less than par, if the shares
have par value) as shall be fixed from time to time by the Board of
Directors. The consideration for the issuance of shares may be paid in whole
or in part in money, in other property, tangible or intangible, or in labor
or services actually performed for the Corporation, as permitted by the laws
of the State of Delaware. The reasonable charges and expenses of
organization or reorganization and the reasonable expenses of and
compensation for the sale or underwriting of its shares may be paid
7
<PAGE>
or allowed by the Corporation out of the consideration received by it in
payment for its shares without rendering the shares not fully paid or
assessable.
4.3. TRANSFERS. Subject to the restrictions set forth in Section 1.9 of
these Bylaws, shares may be transferred by delivery of the certificate,
accompanied either by an assignment in writing on the back of the
certificate, or by a written power of attorney to sell, assign and transfer
the same, signed by the record holder of the certificate. Except as
otherwise specifically provided in these Bylaws, no shares of stock shall be
transferred on the books of the Corporation until the outstanding certificate
therefor has been surrendered to the Corporation.
4.4. LOSS OR DESTRUCTION OF CERTIFICATES. In the event of the loss or
destruction of any certificate, no new certificate shall be issued in lieu
thereof except upon satisfactory proof to the Chairman of the Board, the
President of such loss or destruction, and upon the giving of security, by
bond, indemnity or otherwise, satisfactory to the President against loss to
the Corporation.
4.5. CLOSING STOCK TRANSFER BOOKS AND FIXING RECORD DATE. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or entitled to receive
payment of any dividend, or in order to make a determination of shareholders
for the payment of any distribution, the allotment of rights, the conversion
or exchange of any securities by their terms or any other proper purpose, the
Board of Directors may provide that the stock transfer books shall be closed
for a stated period but not to exceed, in any case, sixty (60) days. If the
stock transfer books shall be closed for the purpose of determining
shareholders entitled to notice of or to vote at a meeting of shareholders,
such books shall be closed for at least ten (10) days immediately preceding
such meeting. In lieu of closing the stock transfer books, the Board of
Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than
sixty (60) days and, in case of a meeting of shareholders, not less than ten
(10) days prior to the date on which the particular action, requiring such
determination of shareholders,, is to be taken. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof.
SECTION 5.
BOOKS, RECORDS AND REPORTS
5.1. RECORDS OF CORPORATE MEETINGS AND SHARE REGISTERS. The Corporation
shall keep complete records of all proceedings of the Board of Directors and
shareholders and shall keep at its registered office or principal place of
business or at the office of its transfer agent or registrar, a record of its
shareholders, giving the names and addresses of all shareholders, the number
and class of shares held by each and the dates they acquired same.
5.2. COPIES OF RESOLUTIONS. Any person dealing with the Corporation may
rely upon a copy of any of the records of the proceedings, resolutions, or
votes of the Board of Directors or shareholders, when certified by the
Chairman of the Board, the President, Vice President, Secretary or Assistant
Secretary.
8
<PAGE>
5.2. BOOKS OF ACCOUNT. The Corporation shall keep appropriate and
complete books of account.
SECTION 6.
FISCAL YEAR
The fiscal year of the Corporation shall be the calendar year.
SECTION 7.
DIVIDENDS
7.1. DECLARATION OF DIVIDENDS. Dividends upon the capital stock of the
Corporation subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the Certificate of
Incorporation.
7.2. CREATION OF RESERVES. Before payment of any dividend, there may be
set aside out of any funds of the Corporation available for dividends such
sum or sums as the Directors from time to time, in their absolute discretion,
think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the directors shall think conducive
to the interest of the Corporation, and the directors may modify or abolish
any such reserve in the manner in which it was created.
SECTION 8.
MISCELLANEOUS PROCEDURAL PROVISIONS
The rules contained in the most recent edition of Robert's Rules of
Order, Revised, shall govern all meetings of shareholders and directors where
those rules are not inconsistent with the Certificate of Incorporation, these
Bylaws or special rules of order of the Corporation.
SECTION 9.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
9.1. The Corporation shall, to the full extent permitted by law,
including, without limitation, Section 145 of the Delaware General
Corporation Law, indemnify all directors, officers, employees, agents and
other persons whom it may indemnify pursuant thereto against any liability,
and the expenses incurred in defense of such liability, that may be asserted
against or incurred by such person arising out of such person's status with
or service to or at the request of the Corporation. The Corporation shall
pay the expenses of any director or officer in defense of such liability in
advance of the final disposition of the matter upon receipt of an undertaking
by or on behalf of such director or officer to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Corporation. Nothing contained
9
<PAGE>
herein shall be deemed to require or make mandatory the purchase and
maintenance of insurance as may be permitted under Section 145(g) of the
Delaware General Corporation Law.
9.1. PAYMENT OF EXPENSES. Expenses incurred in defending a civil or
criminal action, suit or proceeding may be paid by the Corporation in advance
of the final disposition of such action, suit or proceeding as authorized by
the Board of Directors in the specific case upon receipt of an undertaking by
or on behalf of the director, officer, employee or agent to repay such amount
unless it shall ultimately be determined that he is entitled to be
indemnified by the Corporation as authorized in this section.
9.3. NON-EXCLUSIVE. The indemnification provided by this Section shall
not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any bylaw, agreement, vote of
shareholders or disinterested directors or otherwise, both as to action in
his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
9.4. INSURANCE. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this section.
9.5. AMENDMENTS TO INDEMNIFICATION. The Board of Directors is
specifically authorized, without any action on the part of the shareholders,
to alter or amend this section, and other provisions of these bylaws, to such
an extent and in such manner as the law of Delaware, or other applicable law,
relating to indemnification of the directors, officers, employees and agents
therein referred to may, at any time and from time to time, authorize or
permit.
SECTION 10.
AMENDMENTS
These bylaws may be altered, amended or repealed or new bylaws may be
adopted at any regular meeting of the shareholders or of the Board of
Directors or at any special meeting of the shareholders or of the Board of
Directors if notice of such alteration or repeal be contained in the notice
of such special meeting.
10
<PAGE>
CERTIFICATE OF SECRETARY
I, Denis M. Curley, certify that I am the duly elected Secretary of THE
ACKERLEY GROUP, INC., and that these Restated Bylaws constitute the
Corporation's Bylaws as amended through the date hereof.
SO CERTIFIED this 3rd day of November, 1997.
THE ACKERLEY GROUP, INC.
/s/ Denis M. Curley
----------------------------
Denis M. Curley, Secretary
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 3,997
<SECURITIES> 0
<RECEIVABLES> 43,509
<ALLOWANCES> 1,375
<INVENTORY> 0
<CURRENT-ASSETS> 80,931
<PP&E> 228,662
<DEPRECIATION> 134,859
<TOTAL-ASSETS> 243,609
<CURRENT-LIABILITIES> 71,842
<BONDS> 0
0
0
<COMMON> 329
<OTHER-SE> (65,268)
<TOTAL-LIABILITY-AND-EQUITY> 243,609
<SALES> 0
<TOTAL-REVENUES> 192,266
<CGS> 0
<TOTAL-COSTS> 151,154
<OTHER-EXPENSES> 28,732
<LOSS-PROVISION> 530
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0.46
<EPS-DILUTED> 0.46
</TABLE>
