<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly 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 1-6430
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TRIBUNE/SWAB-FOX COMPANIES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 73-0757116
- ----------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
2407 East Skelly Drive, Tulsa, Oklahoma 74105
- ---------------------------------------- ---------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (918) 747-2600
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N/A
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(Former Name of Registrant)
Securities registered pursuant to Section 12(g) of the Act: Class A Common
Stock, $0.10 Par Value Per Share.
At May 11, 1995, 27,988,593 shares of the registrant's Class A Common Stock,
$0.10 par value per share and 3,703,704 shares of Class B Common Stock, $0.10
par value per share, were outstanding.
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
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TRIBUNE/SWAB-FOX COMPANIES, INC.
INDEX
Page No.
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PART I Financial Information
Item 1 Financial Statements
------
Consolidated Balance Sheets -March 31, 1995
(unaudited) and December 31, 1994 4-5
Consolidated Statements of Operations -
Three Months Ended March 31, 1995 and 1994
(unaudited) 6
Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1995 and 1994
(unaudited) 7-8
Notes to Consolidated Financial Statements 9-10
Item 2 Management's Discussion and Analysis of Financial
------
Condition and Results of Operations 10-11
PART II Other Information
Item 6 Exhibits and Reports on Form 8-K 12
------
2
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PART I
Item 1. Financial Information
3
<PAGE>
TRIBUNE/SWAB-FOX COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
-------- --------
(Unaudited)
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 4,945 $ 4,585
Short-term investments 1,000 2,000
Accounts receivable, less reserve for doubtful accounts
of $565 in 1995 and $506 in 1994 11,393 8,847
Inventories 449 596
Current contract receivable and other current assets 6,557 7,481
Refundable income taxes 167 167
Assets held for sale 8,204 8,529
-------- --------
Total current assets 32,715 32,205
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Investments 233 233
-------- --------
Contract and Notes Receivable 1,769 2,786
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Property, Plant and Equipment, at cost:
Exposition equipment 3,017 2,712
Other 5,216 4,707
-------- --------
8,233 7,419
Less - accumulated depreciation 3,198 2,834
-------- --------
5,035 4,585
-------- --------
Deferred Tax Assets 1,144 732
-------- --------
Intangibles and Other Assets, net 13,357 13,040
-------- --------
$ 54,253 $ 53,581
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
TRIBUNE/SWAB-FOX COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
------ ------
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities:
Accounts payable $ 4,802 $ 5,905
Accrued liabilities 8,754 7,163
Deferred tax liabilities 1,063 823
Current portion of long-term debt 1,292 1,251
------ ------
Total current liabilities 15,911 15,142
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Long-Term Debt 4,842 4,905
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Deferred Contract Liabilities 2,286 2,456
------ ------
Minority Interests in Consolidated Subsidiaries 6,830 6,698
------ ------
Common Stock Subject to Put 525 525
------ ------
Stockholders' Equity:
Preferred stocks, $10 par value - -
Common stock, Class A, $.10 par value, 50,000 shares
authorized, 27,289 shares issued and outstanding 2,729 2,729
Common stock, Class B, $.10 par value, 10,000 shares
authorized, 3,704 shares issued and outstanding 370 370
Additional paid-in capital 17,417 17,417
Retained earnings 4,200 3,904
------ ------
24,716 24,420
Less stock of parent company held by subsidiary (857) (565)
------ ------
Total stockholders' equity 23,859 23,855
------ ------
$54,253 $53,581
====== ======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
TRIBUNE/SWAB-FOX COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------
1995 1994
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(Unaudited)
<S> <C> <C>
Revenues:
Publishing $ 3,700 $ 3,198
Exposition services 5,827 3,904
Information services 4,246 4,071
Other operating income and interest 240 658
------- -------
14,013 11,831
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Costs and Expenses:
Publishing 2,441 2,313
Exposition services 3,964 2,705
Information services 2,703 2,436
General and administrative 2,932 2,234
Interest 192 202
Depreciation and amortization 911 601
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13,143 10,491
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Income before income taxes 870 1,340
Income tax provision (420) (637)
Minority interest in consolidated subsidiaries (132) (244)
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Income from continuing operations 318 459
Discontinued operations, net (22) 297
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Net income 296 756
Dividends on preferred shares - (29)
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Income applicable to common shares $ 296 $ 727
======= =======
Earnings per common and
common equivalent share
Primary -
Continuing operations $ 0.01 $ 0.01
Discontinued operations - 0.01
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$ 0.01 $ 0.02
======= =======
Fully Diluted -
Continuing operations $ N/A $ 0.01
Discontinued operations N/A 0.01
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$ N/A $ 0.02
======= =======
Cash dividends per common share $ - $ -
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE>
TRIBUNE/SWAB-FOX COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1995 1994
---- ----
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 296 $ 756
-------- -------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 911 615
Accretion of interest expense 14 8
(Gain) loss on sale of property,
plant and equipment, investments
and marketable securities 19 (448)
Changes in assets and liabilities:
Accounts receivable and refundable
income taxes (2,553) (2,105)
Inventories 147 16
Current contract receivable and
other current assets (576) (304)
Intangibles and other assets (396) 184
Accounts payable and accrued liabilities 397 1,293
Deferred income taxes (36) --
Minority interests 132 244
-------- -------
Total adjustments (1,941) (497)
-------- -------
Net cash provided by (used in) operating activities (1,645) 259
-------- -------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
7
<PAGE>
TRIBUNE/SWAB-FOX COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Continued
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1995 1994
---- ----
(Unaudited)
<S> <C> <C>
Cash flows from investing activities:
Net sales of short-term investments 1,000 --
Net receipt on notes receivable 1,095 --
Capital expenditures (1,125) (492)
Proceeds from the sale of property,
plant and equipment, investments
and marketable securities 141 2,634
Collections on contract receivable 1,438 760
Payments for acquisitions, net of cash acquired -- (1,114)
Payments on deferred contract liabilities (231) (152)
------ ------
Net cash provided by investing activities 2,318 1,636
------ ------
Cash flows from financing activities:
Principal payments of long-term debt (240) (1,308)
Borrowings under bank lines-of-credit -- 500
Issuance of common stock -- 347
Common stock repurchased by subsidiary (73) --
Dividends paid -- (29)
------ ------
Net cash used in financing activities (313) (490)
------ ------
Net increase in cash
and cash equivalents 360 1,405
Cash and cash equivalents at beginning of period 4,585 2,808
------ ------
Cash and cash equivalents at end of period $ 4,945 $ 4,213
====== ======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
8
<PAGE>
TRIBUNE/SWAB-FOX COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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For the three months ended March 31, 1995 and 1994
1. Basis of Presentation
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
Regulation S-X of the Securities and Exchange Commission. Accordingly, the
financial statements do not include all of the information and notes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of only normal recurring
accruals) considered necessary for a fair presentation have been included.
Results of operations for the three months ended March 31, 1995, are not
necessarily indicative of the results to be expected for the year ending
December 31, 1995. For further information, refer to the consolidated financial
statements and related notes thereto included in the Company's annual report on
Form 10-K for the year ended December 31, 1994.
2. Common Stock and Earnings Per Share.
Weighted average shares of common stock issued and outstanding during the
three months ended March 31, 1995 and 1994 were 30,809,000 and 29,797,000,
respectively.
3. Income Taxes
The income tax provision for the three months ended March 31,1995 and
1994, does not bear a normal relationship to the statutory federal income tax
rate of 34% mainly as a result of amortization of goodwill related to
acquisitions, state income taxes and because the Company is a tax filing entity
separate and apart from T/SF Communications Corporation, its 78% owned
subsidiary ("T/SF").
4. Proposed Merger with T/SF
On January 25, 1995, the Company entered into an Agreement and Plan of
Merger, as amended, with T/SF, whereby, subject to the approval of each
company's stockholders, the Company will be merged with and into T/SF. The
Company's stockholders, other than T/SF, will receive 0.1255 of a share of
T/SF's common stock or, if elected, and subject to certain limitations, $0.88 in
cash, for each share of Company's common stock owned. A Special Meeting of
Stockholders of both the Company and T/SF is scheduled for May 24, 1995, to vote
on the proposed merger.
9
<PAGE>
5. Assets Held for Sale
T/SF's Board of Directors has approved for sale and T/SF has engaged an
investment banker to sell three of BMT Communications, Inc.'s trade journals.
Accordingly, the net assets related to these trade journals are reflected as
"Assets held for sale" in the balance sheets. Publishing revenues include
approximately $2,930,000 and $2,615,000, related to the trade journals held for
sale for the three months ended March 31, 1995 and 1994, respectively.
Also, included in "Assets held for sale" are the remaining discontinued
real estate assets which are in process of being liquidated.
6. Company Stock Purchased by T/SF
In March, 1995, upon exercise of an option, T/SF acquired 389,000 shares
of the Company's Class A common stock from the Profit Sharing Plan and Trust of
Tribune/Swab-Fox for $291,750 with a cash payment of $72,937 and a note payable
for $218,813. T/SF now owns 1,142,729 shares of the Company.
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
------------------------------------------------
Results of Operations
- ---------------------
Operations for the three months ended March 31, 1995, has the operations
of Galaxy Registration, Inc. ("Galaxy") for three months whereas its operations
are included in exposition services for only the one month in 1994 after the
effective acquisition date of March 1, 1994.
Revenues of $14,013,000 for the three months ended March 31, 1995, were
$2,182,000 higher than for the same period ended March 31, 1994. The revenue
increase consists of $1,640,000 related to Galaxy as noted above, and a $510,000
increase in trade publishing advertising revenues of which $316,000 is
attributable to the three trade journals being held for sale and $194,000 is
attributable to International Gaming and Wagering Business. The information
services revenue increase of $175,000 for the three months ended March 31, 1995,
consists of increases in employment histories revenue, both higher volume and an
increase in the price of employment histories in early 1994, volume increase in
the criminal records product introduced in 1993, and an increase in MVR revenues
(due mainly to higher average revenue per MVR resulting from a change in the MVR
customer mix), offset by a $555,000 decrease during the three months ended March
31, 1995, in long distance telephone resale revenue as a result of the Company
exiting this business during the latter part of the first quarter of 1994 due to
competitive and regulatory considerations.
10
<PAGE>
Other operating income for the three months ended March 31, 1995, is
lower than 1994 since a co-sponsored trade show for the convenience store
industry occurred in April, 1995, whereas this trade show was held in March,
1994.
Publishing costs and expenses were $128,000 higher for the three months
ended March 31, 1995, as compared with the same period in 1994, which is related
to the increase in advertising pages in 1995. Exposition services costs and
expenses increased during the three months ended March 31, 1995, mainly related
to Galaxy. Information services costs and expenses were $267,000 higher for the
three months ended March 31, 1995, as compared with 1994. The increase in costs
related to new employment screening services, which were commenced in mid-1994,
and the increase in personnel and communications costs related to higher volumes
were partially offset by the decrease of approximately $470,000 for the three
months ended March 31, 1995, related to long distance telephone resale costs
because of exiting this business in the latter part of the first quarter of
1994.
General and administrative expenses were $698,000 higher for the three
months ended March 31, 1995, as compared with the same period in 1994. Galaxy
general and administrative expenses were $703,000 higher in 1995 and each of the
other divisions had small increases related to continued growth, whereas
corporate expenses (combined Company and T/SF) were approximately $150,000 lower
for the three months in 1995.
Interest expense did not significantly change for the three months ended
March 31, 1995, as compared with the same period in 1994, because higher
interest rates on debt tied to the prime rate offset the reduction in interest
related to principal payments on debt during the past year. In addition, the
reduction in interest expense related to the pay off of real estate debt is
included in discontinued operations.
Depreciation and amortization increased $310,000 for the three months
ended March 31, 1995, as compared with the same period in 1994, substantially
all related to Galaxy (both the number of months Galaxy was included in each
year and depreciation related to Galaxy's 1994 and 1995 capital expenditures,
which have a short depreciable life, to handle Galaxy's growth in 1994 and
1995).
Provision for income taxes as a percent of income before income taxes is
higher than the statutory federal income tax rate since goodwill amortization
related to acquisitions is not deductible for income tax purposes.
Financial Condition
-------------------
The changes in the Company's financial condition during the three months
ended March 31, 1995, are mainly seasonal changes related to the Company's
exposition services and trade publishing operations.
11
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11 Computation of earnings per share for the three months ended
March 31, 1995 and 1994.
27 Financial data schedule
(b) Reports on Form 8-K
No report on Form 8-K was filed during the quarter ended March 31,
1995.
12
<PAGE>
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.
TRIBUNE/SWAB-FOX COMPANIES, INC.
(Registrant)
Date: May 11, 1995 By: /s/ Howard G. Barnett, Jr.
-------------------------------------
Howard G. Barnett, Jr.
Chief Executive Officer and President
Date: May 11, 1995 By: /s/ J. Gary Mourton
-------------------------------------
J. Gary Mourton, Senior Vice
President-Finance and Chief
Financial Officer
13
<PAGE>
EXHIBIT INDEX
The following exhibits are included as part of this quarterly report on
Form 10-Q:
11. Computation of earnings per share for the quarter ended March 31, 1995
and 1994.
27. Financial data schedule.
14
<PAGE>
Exhibit 11
TRIBUNE/SWAB-FOX COMPANIES, INC.
Computation of Earnings per Share
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Quarter Ended March 31,
1995 1994
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(Unaudited)
<S> <C> <C>
PRIMARY EARNINGS PER SHARE:
Income from continuing operations $ 318 $ 459
Add:
After tax interest expense applicable
to 11% Convertible Debentures due 1997 - 24
Deduct:
Dividends on New Senior Preferred Stock - (25)
Dividends on Class A Preferred Stock - (4)
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Income before discontinued operations
applicable to common and
common equivalent shares 318 454
Discontinued operations, net of income tax (22) 297
------- -------
Net income applicable to common
and common equivalent shares $ 296 $ 751
======= =======
Weighted average number of common
and common equivalent shares outstanding
Common shares 30,809 29,797
Common equivalent shares:
From 6 1/2% Preferred Stock - 1,382
From 11% Convertible Debentures due in 1997 - 843
------- -------
30,809 32,022
======= =======
Income per common
and common equivalent share:
Continuing operations $ 0.01 $ 0.01
Discontinued operations - 0.01
------- -------
Net income per common share $ 0.01 $ 0.02
======= =======
FULLY DILUTED EARNINGS PER SHARE:
Income before discontinued operations $ 318 459
Add:
After tax interest expense applicable to:
11% Convertible Debentures due in 1997 - 24
11% Convertible Debentures due in 1998 - 14
Deduct:
Dividends on Class A Preferred Stock - (4)
------- -------
Income before discontinued operations
applicable to common and
common equivalent shares 318 493
Discontinued operations, net of income tax (22) 297
------- -------
Net income applicable to common
and common equivalent shares $ 296 $ 790
======= =======
</TABLE>
<PAGE>
Exhibit 11
TRIBUNE/SWAB-FOX COMPANIES, INC.
Computation of Earnings per Share -- Continued
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Quarter Ended March 31,
1995 1994
------- ------
(Unaudited)
<S> <C> <C>
FULLY DILUTED EARNINGS PER SHARE -
Continued:
Weighted average number of common
and common equivalent shares outstanding
Common shares and common equivalent shares 30,809 32,022
Assumed conversion of 11% Debentures due in 1998 - 348
Assumed conversion of New Senior Preferred Stock - 976
------- ------
30,809 33,346
====== ======
Income per common
and common equivalent share:
Continuing operations $ N/A $ 0.01
Discontinued operations N/A 0.01
------- ------
Net income per common share $ N/A $ 0.02
====== ======
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM QUARTERLY
REPORT FOR PERIOD ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 4,945
<SECURITIES> 1,000
<RECEIVABLES> 11,958
<ALLOWANCES> 565
<INVENTORY> 449
<CURRENT-ASSETS> 32,715
<PP&E> 8,233
<DEPRECIATION> 3,198
<TOTAL-ASSETS> 54,253
<CURRENT-LIABILITIES> 15,911
<BONDS> 4,842
<COMMON> 3,099
0
0
<OTHER-SE> 23,859
<TOTAL-LIABILITY-AND-EQUITY> 54,253
<SALES> 13,773
<TOTAL-REVENUES> 14,013
<CGS> 9,108
<TOTAL-COSTS> 12,951
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 192
<INCOME-PRETAX> 870
<INCOME-TAX> 420
<INCOME-CONTINUING> 318
<DISCONTINUED> 22
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 296
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
