SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Amendment No. 1)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the period ended March 31, 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: 0-2481
LIN Broadcasting Corporation
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(Exact name of registrant as specified in its charter)
Delaware 62-0673800
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5295 Carillon Point, Kirkland, WA 98033
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(Address of principal executive offices) (Zip Code)
(206) 828-1902
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(Registrant's telephone number, including area code)
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 April 30, 1995
--------------------- -----------------------------
Common Stock, $0.01 par value 51,714,736<PAGE>
<PAGE> 1
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
March 31, December 31,
1995 1994
------------ -----------
ASSETS
--------------------------
Current Assets:
Cash and cash equivalents $35,183 $47,467
Accounts receivable, less
allowance for doubtful
accounts 135,852 136,279
Inventories 16,123 16,848
Prepaid expenses and
other current assets 8,643 9,907
--------- ---------
Total current assets 195,801 210,501
Property and equipment, at cost,
less accumulated depreciation 465,762 450,698
Other noncurrent assets 45,662 47,150
Investments in and advances to
unconsolidated affiliates 293,998 274,830
Intangible assets, less accumulated
amortization 1,923,462 1,940,694
--------- ---------
Total assets $2,924,685 $2,923,873
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Current portion of long-term
bank debt $167,563 $151,875
Accounts payable, accrued expenses
and other current liabilities 186,645 230,574
--------- ---------
Total current liabilities 354,208 382,449
(continued)<PAGE>
<PAGE> 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
(Dollars in thousands)
(Unaudited)
March 31, December 31,
1995 1994
------------ -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
(Continued)
------------------------------------
Long-term bank debt 1,453,688 1,443,125
Deferred income taxes 735,185 735,313
Other noncurrent liabilities 7,303 6,741
--------- ---------
Total liabilities 2,550,384 2,567,628
--------- ---------
Minority interests in equity of
consolidated subsidiaries 61,185 58,507
--------- ---------
Stockholders' Equity:
Common stock (55,329,000
shares issued) 553 553
Paid-in capital 1,055,893 1,055,169
Deficit (573,354) (586,055)
--------- ---------
483,092 469,667
Less common stock in treasury,
at cost (3,633,000 and
3,678,000 shares, respectively) 169,976 171,929
--------- ---------
Total stockholders' equity 313,116 297,738
--------- ---------
Total liabilities and
stockholders' equity $2,924,685 $2,923,873
========== ==========
See notes to condensed consolidated financial statements.<PAGE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended March 31,
---------------------------
1995 1994
----------- ----------
Revenues:
Service $199,035 $192,253
Equipment sales 32,240 23,718
--------- ---------
Total revenue 231,275 215,971
Cost of equipment sales 32,048 24,344
--------- ---------
Net Revenues 199,227 191,627
---------- ----------
Operating Costs and Expenses:
Direct costs and expenses 136,309 128,516
Corporate expenses 2,966 2,613
Depreciation 14,687 13,081
Amortization of intangible assets 17,232 19,701
---------- ----------
171,194 163,911
---------- ----------
Operating Income 28,033 27,716
---------- ----------
Other Income (Expense):
Equity in income of
unconsolidated affiliates 30,191 31,848
Investment and other income 1,031 1,237
Interest expense (32,264) (22,520)
---------- ----------
(1,042) 10,565
---------- ----------
Income Before Income Tax Expense
and Minority Interests 26,991 38,281
Income Tax Expense 6,894 12,914
---------- ----------
Income Before Minority Interests 20,097 25,367
(continued)<PAGE>
<PAGE> 4
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (continued)
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended March 31,
---------------------------
1995 1994
----------- ----------
Minority Interests:
In net income of consolidated
subsidiaries 7,396 6,887
Provision for preferred stock
dividends of a subsidiary -- 33,575
---------- ----------
Net Income (Loss) $12,701 $(15,095)
========== ==========
Net Income (Loss) Per Share $0.24 $ (0.29)
Average Common and Equivalent
Shares Outstanding 52,231 51,511
See notes to condensed consolidated financial statements.
<PAGE>
<PAGE> 5
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Three Months Ended March 31,
---------------------------
1995 1994
----------- ----------
Net cash provided (used) by
operating activities $(15,475) $58,573
--------- ---------
Investing Activities:
Proceeds from sale of
marketable securities -- 3,092
Capital expenditures (30,562) (33,684)
Cellular acquisitions -- (1,500)
Net advances from unconsolidated
affiliates 3,324 8,913
--------- ---------
Net cash used in
investing activities (27,238) (23,179)
--------- ---------
Financing Activities:
Proceeds from borrowings 60,000 --
Repayment of bank debt (33,750) (28,285)
Proceeds from common stock
issued for stock purchase
plan and stock options 4,179 1,292
Purchase of common stock
for treasury -- (484)
--------- ---------
Net cash provided by (used
in) financing activities 30,429 (27,477)
--------- ---------
(continued)<PAGE>
<PAGE> 6
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Three Months Ended March 31,
---------------------------
1995 1994
----------- ----------
Increase (decrease) in Cash
and Cash Equivalents (12,284) 7,917
Cash and Cash Equivalents at
Beginning of Period 47,467 86,366
--------- ---------
Cash and Cash Equivalents
at End of Period $35,183 $94,283
======== ========
Supplemental Disclosures Of Cash Flow Information
Interest payments were $30,024 and $16,866 for the three months
ended March 31, 1995 and 1994, respectively. Net tax payments
were $6,390 and $12,121 for the three months ended March 31, 1995
and 1994, respectively.
See notes to condensed consolidated financial statements.
<PAGE>
<PAGE> 7
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
LIN BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)
1. Basis Of Presentation:
The condensed consolidated financial statements include the
accounts of LIN Broadcasting Corporation (LIN), its wholly-owned
subsidiaries and cellular partnerships (principally
New York and Dallas) in which LIN has voting control (the
Company). The Company's investments in cellular
partnerships in which it has voting interests of 50% or less
but more than 20% (principally Los Angeles and Houston) are
accounted for on the equity method.
These financial statements have been prepared without audit,
pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote
disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such
rules and regulations. These condensed consolidated
financial statements should be read in conjunction with the
audited consolidated financial statements and notes thereto
included in the Company's Form 10-K, as amended, for the
year ended December 31, 1994.
The financial information included herein reflects all
adjustments (consisting of normal recurring adjustments)
which are, in the opinion of management, necessary to a fair
presentation of the results for interim periods. Certain
reclassifications have been made to the financial statements
for the previous periods to conform with the current
period's presentation. The results of operations for the
three month period ended March 31, 1995 are not necessarily
indicative of the results to be expected for the full year.
2. Summarized Financial Data
The table below provides summarized income statement
information for the cellular ventures accounted for on the
equity method for the three months ended March 31, 1995 and
1994. The information for the two periods is not directly
comparable due to the disposition of the Company's equity
investment in the Philadelphia cellular operation in June
1994.
<PAGE>
<PAGE> 8
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Three Months Ended March 31,
---------------------------
At 100% 1995 1994
------------- ------ ------
Total revenue $226,256 $245,904
Net income 70,800 75,624
LIN's equity in net income 30,191 31,848
<PAGE>
<PAGE> 9
PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS
THREE MONTHS 1995 v. THREE MONTHS 1994
The results for the two periods are not directly comparable
due to the previously reported spin-off of the LIN Television
Corporation ("LIN Television") operations and the divestiture of
the Philadelphia cellular equity investment and the
GuestInformant publishing operations. See Note 3 to the
Consolidated Financial Statements in the Company's 1994 Form
10-K, as amended.
The Company's total revenue for the first quarter of 1995
was $231.3 million, a 7% increase over first quarter 1994
revenue. The revenue increase was the result of a 29% increase
in service revenues attributable to consolidated cellular
operations, offset by a decrease in service revenues attributable
to media operations due to the divestiture of LIN Television and
GuestInformant. The increase in cellular service revenue was
primarily due to a 45% increase in the consolidated subscriber
base since March 31, 1994, offset in part by a 10% decrease in
average monthly revenue per subscriber. Average monthly revenue
per subscriber continues to trend downward as market penetration
increases, reflecting the continuation of a change in the mix of
customers toward more casual users as a percentage of the total
customer base. Average monthly minutes of usage declined
approximately 6%. In addition, pricing changes and promotional
activities have resulted in a lower average revenue per minute of
usage.
Direct costs and expenses increased 6% due to increased
costs at the cellular operations offset by the absence of costs
from the divested LIN Television and GuestInformant operations.
Operating expenses of the consolidated cellular operations
increased 26% due to increased system operations costs, customer
support and other administrative expenses related to increases in
the subscriber base. Marketing expenses of the consolidated
cellular operations increased 37% due to a 51% increase in gross
subscriber additions offset by a 9% decrease in cost per
additional subscriber.
Depreciation expense increased 12% principally due to higher
levels of cellular property and equipment in service.
Amortization of intangibles decreased 13% due to the effect of
certain intangible assets becoming fully amortized in December
1994, offset in part by additional amortization resulting from
cellular acquisitions completed in May 1994. <PAGE>
<PAGE> 10
PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS (Continued)
Equity in the income of unconsolidated cellular affiliates
decreased 5% due primarily to a slight decrease in net income at
the Los Angeles and Houston operations. Total revenues of the
unconsolidated affiliates (Los Angeles, Houston and Galveston)
rose 16% due to a 30% increase in subscribers offset by a
decrease in monthly revenue per subscriber. Operating costs and
expenses increased 36% largely from higher marketing costs
resulting primarily from a 36% increase in gross subscribers
added for the quarter.
Interest expense (which includes the amortization of the
financing and commitment fees) increased $9.7 million, due to
higher interest rates, offset in part by the absence of the
divested LIN Television Corporation debt.
The provision for preferred stock dividends of a subsidiary
is no longer required due to the redemption of the LCH
Communications preferred stock in the second quarter of 1994.
See note 7 to the Consolidated Financial Statements in the
Company's 1994 Form 10-K, as amended.
Recently issued accounting standards
In October 1994, the Company adopted Statement of Financial
Accounting Standards No. 119, Disclosures about Derivative
Financial Instruments and Fair Value of Financial Instruments,
(SFAS 119) which requires additional disclosure regarding the
nature and purpose of derivative financial instruments. The
Company utilizes interest rate caps to comply with certain debt
covenants and to provide protection against rising interest rates.
In March 1995, the Financial Accounting Standards Board issued
Statement No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of, (SFAS 121)
effective for fiscal years beginning after December 15, 1995. This
Statement requires the separation of long-lived assets and certain
identifiable intangible assets into two categories for purposes of
accounting for an impairment of assets: those to be held and used
and those to be disposed of. An impairment loss is indicated if the
sum of the expected cash flows, undiscounted and without interest
charges, is less than the carrying amount of the assets. The carrying
<PAGE>
<PAGE> 11
PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS (Continued)
value of intangible assets will be reviewed if the facts and circumstances
indicate they may be impaired. If this review indicates that that the
intangible assets will not be recoverable based on the sum of expected
cash flows, undiscounted and without interest charges, the Company's
carrying value of the intangible assets will be reduced by an impairment
loss equal to the excess of the carrying amount over the fair value of the
assets. Management believes the adoption of SFAS 121 will not have a
material impact on the financial position or the results of operations of
the Company.
REGULATION AND COMPETITION
Governmental regulation of the Company's cellular interests
is described in the Company's Annual Report on Form 10-K, as
amended. Since the filing of that report, the Federal
Communications Commission has announced that it has denied all
petitions from state utility commissions requesting authority to
continue regulating cellular rates. Utility Commissions in three
states where the Company owns cellular interests - California,
Connecticut and New York - had filed petitions to retain rate
regulation authority. The states where petitions have been
denied will have the right to request the FCC to reconsider its
decision. If they do so, they will be able to continue
regulating cellular rates until the FCC acts on their
reconsideration requests, or until August 10, 1995 if no FCC
action has been taken by that date.
<PAGE>
<PAGE> 12
PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
LIQUIDITY AND CAPITAL RESOURCES
The Company utilizes capital primarily to expand and improve
its cellular systems, to make acquisitions of cellular interests
and to make interest and principal payments on its indebtedness.
The Company's cellular operations continue to require substantial
capital to increase system capacity and coverage areas, to enable
provision of new services, and to expand and improve
administrative support systems.
The Company's principal sources of funds are its operations
and two bank credit facilities, a senior secured facility and a
senior unsecured facility (together the "Bank Credit
Facilities"). Under its Bank Credit Facilities, the Company had
$1.6 billion outstanding on March 31, 1995. The Company had an
additional $160 million available on its Bank Credit Facilities
as of March 31, 1995.
Under its Bank Credit Facilities, the Company must remain in
compliance with a series of financial covenants which compare the
levels of the Company's cellular indebtedness to its cellular
cash flows as of the end of each quarter. As of March 31, 1995,
the Company was in compliance with or had obtained appropriate
waivers from all covenants under the Bank Credit Facilities.
Further discussion of the Company's Bank Credit Facilities,
including restrictions on certain activities by the Company, is
set forth in the Company's Form 10-K, as amended, for the year
ended December 31, 1994.
Net cash used in operating activities totaled $15.5 million
for the quarter ended March 31, 1995, compared to cash provided
by operating activities of $58.6 million for the same period in
1994. The decrease was primarily due to the increase in the
reduction of accounts payable and accrued expenses during the
first quarter of 1995 as compared to 1994, a switch from advance
billing to arrears billing for cellular access charges in the New
York market, as well as a decrease in cash received from equity
affiliates during the period compared to the prior year.
Cash used by investing activities increased 18%, primarily
due to a decrease in net advances from unconsolidated affiliates
offset by a decrease in capital expenditures due to the
divestiture of LIN Television and GuestInformant operations.
Cash generated from financing activities increased significantly
during the first quarter of 1995 due to additional borrowings of
$60 million needed for increased operating capital related to
accelerated subscriber growth, capital expenditures and the <PAGE>
<PAGE> 13
PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
LIQUIDITY AND CAPITAL RESOURCES (continued)
billing change in the New York market offset by scheduled
principal payments of $33.8 million during the quarter.
The Company's indebtedness is due and payable over several
years, with the amortization increasing significantly during the
next few years. While the Company expects to have sufficient
funds from operations and available under the Bank Credit
Facilities to fund its operations and repay its indebtedness when
due, there can be no assurance that this will occur as the
Company continues to have substantial debt service and other
operating and capital requirements. If cash generated from
operations is not sufficient to fund those requirements, the
Company will have to modify its operations or borrow additional
amounts under its Bank Credit Facilities. There are conditions
which must be satisfied before the banks will be required to lend
those additional amounts. If these conditions are not satisfied,
the banks may conclude it is not in their best interest to lend
additional amounts to the Company. If the Company were unable to
borrow the required amounts from the banks, it may seek to
refinance the Bank Credit Facilities, issue additional debt
through a private or public offering, sell equity or sell certain
cellular interests or other assets. There can be no assurance
that the Company will be able to obtain such refinancings,
additional financing or asset sales when needed, or if carried
out, that the terms will be favorable to the Company or its
stockholders.
It is the Company's policy to carefully monitor the state of
its business, cash requirements and capital structure. From time
to time, the Company may enter into transactions pursuant to
which debt is extinguished, including sales of assets or equity,
joint ventures, reorganizations or recapitalizations. There can
be no assurance that any further such transactions will be
undertaken or, if undertaken, will be favorable to stockholders.
AGREEMENT AND PLAN OF MERGER
On April 28, 1995, an Agreement and Plan of Merger was
executed and delivered by and among McCaw Cellular
Communications, Inc. ("McCaw"), a wholly owned subsidiary of AT&T
Corp., MMM Holdings, Inc. ("MMM"), a wholly owned subsidiary of
McCaw, MMM Acquisition Corp., a wholly owned subsidiary of MMM
and the Company (the "Merger Agreement"). A more complete
description of the Merger Agreement and the transactions
contemplated therein is contained in the Report on Form 8-K dated
April 28, 1995 filed by the Company.<PAGE>
<PAGE> 14
LIN BROADCASTING CORPORATION
SUPPLEMENTAL FINANCIAL DATA
(Dollars in thousands)
(Unaudited)
The following table sets forth unaudited supplemental financial
data for the Company's cellular operations reflecting
proportionate consolidation of entities in which the Company has
an interest. This presentation differs from the consolidation
methodology used to prepare the Company's principal financial
statements in accordance with generally accepted accounting
principles (see Note 1 to the consolidated financial statements).
Three Months Ended March 31,
---------------------------
1995 1994
------ ------
Cellular:
Revenues:
Service $263,002 $223,558
Equipment sales 37,555 34,595
--------- ---------
Total revenue 300,557 258,153
Cost of equipment sales 38,726 35,758
--------- ---------
261,831 222,395
-------- --------
Direct costs and expenses 84,682 69,803
Marketing 86,226 67,775
Depreciation 20,441 17,424
Amortization 17,265 18,977
-------- --------
Total operating costs 208,614 173,979
-------- --------
Operating income -
proportionate basis $53,217 $48,416
======== ========
Proportionate subscribers(1) 1,199,000 958,000
(1) Calculated by multiplying (i) the total subscribers of a
licensee in which, as of the date specified, the Company
owned an interest, by (ii) the percentage ownership interest
in that licensee which the Company owned on such date.<PAGE>
<PAGE> 15
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this amendment to be signed
on its behalf by the undersigned thereunto duly authorized.
LIN Broadcasting Corporation
(Registrant)
DONALD GUTHRIE
---------------------------------
Donald Guthrie
Senior Vice President - Finance
Date: August 16, 1995
<TABLE> <S> <C>
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<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> MAR-31-1995
<CASH> 35183
<SECURITIES> 0
<RECEIVABLES> 156518
<ALLOWANCES> (20666)
<INVENTORY> 16123
<CURRENT-ASSETS> 195801
<PP&E> 622105
<DEPRECIATION> (156343)
<TOTAL-ASSETS> 2924685
<CURRENT-LIABILITIES> 354208
<BONDS> 1453688
<COMMON> 553
0
0
<OTHER-SE> 312563
<TOTAL-LIABILITY-AND-EQUITY> 2924685
<SALES> 32240
<TOTAL-REVENUES> 23275
<CGS> 32048
<TOTAL-COSTS> 30050
<OTHER-EXPENSES> 101141
<LOSS-PROVISION> 5118
<INTEREST-EXPENSE> 32264
<INCOME-PRETAX> 26991
<INCOME-TAX> 6894
<INCOME-CONTINUING> 12701
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<EPS-PRIMARY> 0.24
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</TABLE>
