Securities and Exchange Commission
WASHINGTON, D.C. 20549
FORM 10-Q
__X__QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
_____TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
For the transition period from to
Commission file number 0-6265
MULTIMEDIA, INC.
(Exact name of registrant as specified in its charter)
South Carolina 57-0173540
------------------------------ -----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
305 South Main Street, Greenville, South Carolina 29601
- - - ------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (803) 298-4373
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
The number of shares outstanding for each of the issuer's classes of common
stock, as of September 30, 1994:
Common Stock, $.10 par value
37,581,928 shares outstanding
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS.
The following consolidated financial statements are incorporated by reference
from the Report to Shareholders for the quarter ended September 30, 1994.
Consolidated Statements of Earnings, three months and nine months ended
September 30, 1994 and 1993.
Consolidated Balance Sheets as of September 30, 1994 and December 31, 1993.
Consolidated Statements of Cash Flows, nine months ended September 30, 1994
and 1993.
The information furnished reflects all adjustments consisting of normally
recurring accruals which are, in the opinion of management, necessary to a fair
statement of the results for the interim period.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Discussion regarding the Company's financial condition and results of operations
for the quarter ended September 30, 1994 is included in the Report to Share-
holders attached hereto as an exhibit and incorporated herein by reference.
The year-to-date net earnings of $67.2 million and earnings per share of $1.76
include an after tax gain on the sale of the Company's wireless cable operations
of $13.4 million or $.35 per share; an after tax gain on the sale of three
radio properties of approximately $2.1 million or $.05 per share; and a loss
from the closing of its made-for-television movie production business of $1.8
million or $.05 per share. Last year's nine-month net earnings of $50.3
million or $1.32 per share exclude a net benefit of $14.3 million or $.37 per
share for the cumulative effect of changes in accounting principles and an
after tax gain of $1.4 million or $.04 per share on the sales of properties
and a reduction in income tax expense of approximately $12.0 million or $.31
per share due to the resolution of IRS examinations. Excluding the results of
the above mentioned items in 1994 and 1993, the 1994 year-to-date earnings from
ongoing operations increased 6.6% over 1993 earnings.
The newspaper revenue increase was due to advertising revenue increases
principally due to volume growth in classified and retail advertising.
The broadcasting division revenues were 3% ahead of last year's results for
the quarter and year-to-date. Excluding the results of radio properties sold
in 1994 and the Company's video production unit sold in 1993, the division's
revenues increased approximately 6.5% for the quarter and 6.8% year-to-date.
The division's operating profit excluding the sold properties increased 28.7%
for the quarter and 28.8% year-to-date.
Year-to-date and quarterly cable revenues were flat to last year primarily due
to the rate regulation by the Federal Communications Commission (FCC) which has
been in effect since September 1993. In addition, as mentioned above, the
Company sold its wireless cable operations in August 1994.
In February, the Company announced a $150 million technological upgrade of its
cable operations over the next five years. The first stage of the upgrade
involves a capital investment of approximately $45 million in each of 1994 and
1995 to replace coaxial wire with fiber.
The Entertainment division's revenues decreased 5% for the quarter and year-
to-date due to revenues from the made-for-television movie operation included
in the 1993 results and a decline in its talk show ratings in 1994. Excluding
the movie company, entertainment's third quarter revenues increased .5%, and
revenues for the year increased 5.2%. Operating profit increased .3% for the
year and decreased 6.7% for the quarter excluding the movie operation.
Security revenue and operating profit increases are primarily due to increases
in the number of customers from approximately 48,000 at the end of the third
quarter of 1993 to approximately 63,000 customers at September 30, 1994.
In October 1994, the Company announced that it expected 1994 earnings from
ongoing operations to be in the range of $1.95 to $1.97 per share, up about 4%
from $1.88 earned in 1993. The earnings projections from ongoing operations
are in line with what the Company announced that it expected for the year on
February 15, 1994.
The projections for earnings from ongoing operations exclude pre-launch and
first year expenses from the Company's Talk Channel, a cable service that
premiered on October 1, 1994. Those expenses are expected to be $9 million for
1994, based on 100% ownership. The projected earnings also exclude the gains
on the sale of properties in 1994 and 1993, the loss on the closing of the
made-for-television movie operations and the changes in accounting principles
and IRS adjustments in 1993.
There have been no material adverse changes in the Registrant's financial
condition during the quarter ended September 30, 1994 and reference is made to
management's discussion and analysis relating to liquidity and capital
resources which appeared on pages 16-23 of the Company's 1993 Annual Report.
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
10.6.4 1994 Amendment to Contract for Services. Portions of this
exhibit have been omitted and are the subject of a request made
to the United States Securities and Exchange Commission for
confidential treatment.
11. Computation of Primary and Fully Diluted Earnings per Share
15. Independent accountants' report re unaudited interim financial
information.
19. Report to Shareholders for the quarter ended September 30, 1994.
27. Financial Data Schedule
(b) Reports on Form 8-K.
Items reported on Form 8-K dated July 21, 1994:
Item 5. Other Events.
Item 7. Financial Statements and Exhibits
<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.
Multimedia, Inc.
--------------------------------
(Registrant)
November 10, 1994 SIGNATURE APPEARS HERE
- - - -------------------------- ---------------------------------
(Date) Robert E. Hamby, Jr.
Senior Vice President
Finance & Administration
Chief Financial Officer
November 10, 1994 SIGNATURE APPEARS HERE
- - - --------------------------- ---------------------------------
(Date) Frederick G. Lohman
Vice President - Controller
<PAGE>
<TABLE>
EXHIBIT 11
<CAPTION>
MULTIMEDIA, INC.
Computation of Primary and Fully Diluted Earnings per Share
Three Months Ended Nine Months Ended
9/30/94 9/30/93 9/30/94 9/30/93
<S> <C> <C> <C> <C>
Primary
Earnings before cumulative effects of changes
in accounting principles $30,469,000 30,241,000 $67,246,000 63,706,000
Cumulative effect of changes in accounting principles --- --- --- 14,332,000
Net earnings applicable to
common and common equivalent shares $30,469,000 30,241,000 $67,246,000 78,038,000
Shares:
Weighted average number of
common and common equivalent
shares outstanding 38,285,000 38,369,000 38,282,000 38,330,000
Earnings before cumulative effect of changes in
accounting principles $ .80 .79 $ 1.76 1.67
Cumulative effect of changes in accounting principles --- --- --- .37
Net earnings per share $ .80 .79 $ 1.76 2.04
Fully Diluted
Earnings before cumulative effect of changes
in accounting principles $30,469,000 30,241,000 $67,246,000 63,706,000
Cumulative effect of changes in accounting principles --- --- --- 14,332,000
Net earnings applicable to
common and common equivalent shares $30,469,000 30,241,000 $67,246,000 78,038,000
Shares:
Weighted average number of
common and common equivalent
shares assuming ending
market price 38,288,000 38,310,000 38,281,000 38,393,000
Earnings before cumulative effect of changes in
accounting principles $ .80 .79 $ 1.76 1.66
Cumulative effect of changes in accounting principles --- --- --- .37
Net earnings per share $ .80 .79 $ 1.76 2.03
</TABLE>
<PAGE>
1994 AMENDMENT TO
CONTRACT FOR SERVICES
This 1994 Amendment to Contract for Services made as of the _____ day of
October, 1994, by and between Multimedia Entertainment, Inc. (f/k/a Multimedia
Program Productions, Inc.), a South Carolina corporation, 45 Rockefeller Plaza,
35th Floor, New York, NY 10111 ("Multimedia"), and Phillip J. Donahue, 45
Rockefeller Plaza, 35th Floor, New York, NY 10111 ("Donahue").
WITNESSETH
WHEREAS, Multimedia and Donahue executed a certain Contract for Services
dated April 15, 1982 (as heretofore amended, the "Contract"), and
WHEREAS, the parties have modified and extended the Contract, and
WHEREAS, the parties now wish to further extend the Contract,
NOW, THEREFORE, the parties hereto agree as follows:
1. All terms and definitions in the Contract shall have the same
meanings in this Amendment.
2. Extended Term: The Term of the Contract shall be extended so that,
as extended, it shall expire at midnight August 31, 1996. Multimedia and
Donahue shall, [DELETION]* , enter into discussions concerning the
continuation of programming by Multimedia and Donahue with a view toward an
agreement being entered into [DELETION]* .
3. Number of Programs: Donahue agrees that, during the period from
September 1, 1995 to August 31, 1996, he will perform Services for the Program
for a minimum of thirty-eight (38) weeks of first-run, daily, Monday through
Friday, Shows. This will result in a total of at least one hundred and ninety
(190) first-run episodes of the Program being produced during that period.
4. Additional Cash Compensation: In addition to other compensation
payable to Donahue under the Contract, Multimedia agrees that it will make the
following cash payments to Donahue:
* The deleted material is deemed confidential commercial or financial
information by Multimedia, Inc. and has been filed separately with
the United States Securities and Exchange Commission.
10
10
94 Page 1
<PAGE>
[DELETION]*
5.
[DELETION]*
6. Stock Options: In addition to any other compensation, including the
compensation described above for Donahue's services under the Contract,
Multimedia agrees that it will undertake to seek approval of its parent company,
Multimedia, Inc., (the "Parent") to grant to Donahue an option to acquire an
aggregate of 50,000 shares of the Parent's Common Stock, par value $0.10 per
share, at the fair market value of such shares as of the date of the execution
of this Agreement, on the terms and conditions set forth in that certain letter
attached hereto as Exhibit "A".
7. Indemnities:
Multimedia shall at all times indemnify and hold harmless Donahue,
his employees, agents, heirs or assigns against and from any and all claims,
damages, liabilities, costs and expenses, including reasonable counsel fees,
arising out of the preparation, production, rehearsal, existence, advertising,
promotion, sale or broadcast of the Program or any commercial announcement (or
in-show trailer, promotional announcement, courtesy announcement, billboard or
lead-in) in any way related to the Program. This indemnity shall survive
* The deleted material is deemed confidential commercial or financial
information by Multimedia, Inc. and has been filed separately with
the United States Securities and Exchange Commission.
10
10
94 Page 2
<PAGE>
expiration or termination of this agreement for any reason and shall cover all
occurrences and claims made that are related to the Program in any way and are
asserted at any time. This indemnity shall apply regardless of the negligence
of the parties hereto. Multimedia shall obtain and maintain insurance naming
Donahue as an additional insured that provides coverage for all risks associated
with the preparation, rehearsal, production, advertising, promotion, sale and
broadcast of the Program and the risks assumed in this indemnity by Multimedia
in the amounts carried by Multimedia
[DELETION]*
with the present carriers, or
with such substitute carriers as are acceptable to the parties. This indemnity
shall not apply to any negligent or malicious act in the Program done pursuant
to a script furnished by Donahue, that is performed by Donahue after Multimedia
has disapproved and objected to the use of such material in a writing delivered
to Donahue and signed by an officer of Multimedia.
8. E&O Insurance: Multimedia agrees that it will add Donahue as an
additional insured to its Errors & Omissions ("E&O") insurance policy covering
the Program and will provide Donahue with a certificate evidencing same.
9. In all other particulars and respects, the Contract, as previously
amended and extended, shall remain in full force and effect and be fully binding
upon inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this 1994 Amendment to
Contract for Services to be executed as of the day and year first above written.
WITNESSES: MULTIMEDIA ENTERTAINMENT, INC.
/s/ Paula Rosaforte By: /s/ Robert L. Turner
- - - ------------------------------------ ------------------------------
Title: President
- - - ------------------------------------ ------------------------------
WITNESSES:
/s/ Sally Pomeroy /s/ Phillip J. Donahue
- - - ------------------------------------ ------------------------------------
Phillip J. Donahue
- - - ------------------------------------
* The deleted material is deemed confidential commercial or financial
information by Multimedia, Inc. and has been filed separately with
the United States Securities and Exchange Commission.
10
10
94 Page 3
<PAGE>
EXHIBIT "A"
[NOTE: STOCK OPTION LETTER TO BE ISSUED BY GREENVILLE]
October 11, 1994
Mr. Phillip J. Donahue
300 Central Park West, Apt. 22G
New York, New York 10024
Dear Mr. Donahue:
In accordance with the action of the Board of Directors of Multimedia, Inc., a
South Carolina corporation (the "Company"), because you are an independent
contractor essential to the growth and success of the Phil Donahue show and in
order to encourage your continued interest in the success of the Company, to
which the Phil Donahue show has made and will continue to make a significant
contribution, the Company hereby grants you an option to purchase an aggregate
of 50,000 shares of the common stock of the Company, par value $0.10 per share,
upon the following terms and conditions:
1. The purchase price shall be $29.50 per share.
2. This option is exercisable pursuant to the following schedule:
136.6120218 shares shall become exercisable on each calendar day
between September 1, 1995, and August 31, 1996 (inclusive).
In no event, however, shall any portion of this option be exercisable subsequent
to September 30, 2004, or for fractional shares. Once an installment becomes
exercisable, it may be exercised at any time in whole or in part until the
expiration or termination of this option.
This option is non-assignable and non-transferable, except by will or the laws
of descent and distribution. It may be exercised during your life only by you,
and within one year after your death it may be exercised by your personal
representative. At the time of each exercise of this option you or the person
or persons exercising the option will, if requested by the Company, give
assurances that the shares are being purchased for investment and not with a
view to resale or distribution and such other assurances as may be desirable,
and/or the certificate(s) for the shares so acquired shall bear a legend, to
assure compliance with all applicable legal requirements, all such assurances
and any such legend to be satisfactory to the Company's counsel.
3. In the event that you cease to be affiliated with the Phil Donahue
show while produced by the Company or one of its subsidiaries or a comparable
consistent major production produced by the Company or one of its subsidiaries
for any reason (including without limitation retirement, termination or non-
renewal of the contract in effect immediately prior to such event between you
and the Company or any of its subsidiaries, death or permanent and total disa-
bility), any portion of this option which, on the date of such cessation, was
not exercisable shall immediately terminate and be of no further force and
effect.
4. In the event that during your lifetime you cease to be affiliated
with the Phil Donahue show while produced by the Company or one of its
subsidiaries or a comparable consistent major production produced by the
Company or one of its subsidiaries for any reason, including retirement or
termination or non-renewal of the contract in effect immediately prior to such
event between you and the Company or any of its subsidiaries (but not including
death or permanent and total disability within the meaning of the first sentence
of Section 22(e)(3) of the Internal Revenue Code), this option may be exercised
within a period of two years from the date on which you cease to be so
affiliated, but in no event after the expiration of the fixed term of this
option and only for up to the number of whole shares for which this option could
have been exercised at the time you ceased to be so affiliated. If you shall
die while affiliated with the Phil Donahue show while produced by the Company
or one of its subsidiaries or a comparable consistent major production produced
by the Company or one of its subsidiaries or if you shall have ceased your
affiliation by reason of having become permanently and totally disabled within
the meaning of the first sentence of Section 22(e)(3) of the Internal Revenue
Code, this option may be exercised by you or your personal representative during
a period not exceeding one year after the date of termination of your affilia-
tion (but no later than the end of the fixed term of this option) for up to the
number of whole shares for which this option could have been exercised at the
time you ceased to be so affiliated.
5. This option may be exercised only by delivering written notice of
such exercise to the Company and tendering to the Company payment in full in
cash for the shares for which this option is exercised. The Company will not
be under obligation to issue or deliver any stock unless and until all legal
matters in connection with the issuance and delivery of the stock have been
approved by the Company's counsel, including, if applicable, a notation on your
stock certificate that such shares are not registered and may be sold only in
compliance with applicable federal and state securities law. You shall have
the rights of a stockholder only as to stock the certificates for which have
been actually issued to you.
6. In the event of a stock dividend, recapitalization, merger,
reorganization, consolidation, stock split-up, stock consolidation or any other
change in the characteristics of the shares of common stock of the Company, the
shares subject to this option and the per share exercise price shall be
correspondingly increased, diminished or changed, so that by exercise of this
option you shall receive, without change in aggregate purchase price,
securities, as so increased, diminished or changed, comparable to the
securities which you would have received if you had exercised this option prior
to such event and had continued to hold the common stock so purchased until
affected by such event. Adjustments under this paragraph shall be made by the
board of directors of the Company, whose determination as to what adjustments
shall be made, and the extent thereof, shall be final, binding and conclusive.
7. Notwithstanding the first sentence of Section 2 hereof to the
contrary, upon the occurrence of a change in control, this option, to the
extent it has not terminated, shall become immediately exercisable in full.
For the purposes hereof, a change in control shall be deemed to have occurred
if: (i) a tender offer shall have been made and consummated for the ownership
of more than 50% of the outstanding voting securities of the Company; (ii) the
Company shall have been merged or consolidated with another corporation and as
a result of such merger or consolidation less than 50% of the outstanding
voting securities of the surviving or resulting corporation shall be benefi-
cially owned in the aggregate by the former shareholders of the Company as the
same shall have existed immediately prior to such merger or consolidation;
(iii) the Company shall have sold all or substantially all of its assets to
another corporation which is not a wholly-owned subsidiary of the Company and
less than 50% of the outstanding voting stock of such corporation is benefi-
cially owned in the aggregate by the persons who were the stockholders of the
Company immediately prior to such sale; or (iv) a person within the meaning of
Section 13(d) or 14(d)(2) (as in effect on the date hereof) of the Securities
Exchange Act of 1934, as amended, shall have acquired, subsequent to the date
hereof, beneficial ownership of more than 50% of the outstanding voting
securities of the Company (whether directly, indirectly, beneficially or of
record). For purposes of this paragraph, beneficial ownership of voting
securities shall mean beneficial ownership as determined by applying the
provisions of Rule 13d-3, as in effect on the date hereof, pursuant to the
Securities Exchange Act of 1934, as amended.
8. In the case of the exercise of this option by a person or estate
acquiring the right to exercise this option by bequest or inheritance, the board
of directors of the Company may require reasonable evidence as to the ownership
of this option and may require such consents and releases of taxing authorities
as it may deem advisable.
Very truly yours,
MULTIMEDIA, INC.
By:SIGNATURE OF DONALD D. SBARRA APPEARS HERE
------------------------------------------
I hereby accept the within stock option.
Dated at _________________________, ________ as of the ______ day of
_______________________, 1994.
__________________________________
Phillip J. Donahue
<PAGE>
M U L T I M E D I A, I N C.
T H I R D Q U A R T E R
R E P O R T
1 9 9 4
3
NEWSPAPERS
BROADCASTING
ENTERTAINMENT
CABLE TELEVISION
SECURITY
<PAGE>
A LETTER TO OUR SHAREHOLDERS
Multimedia reported net earnings of $30.5 million and earnings per
share of $.80 for the third quarter that ended September 30,
1994. The results include an after-tax gain of $13.4 million or $.35 per share
on the sale of the Company's wireless cable systems in August, as well as an
after-tax loss of $1.8 million or $.05 per share on the closing of its
made-for-television movie business. Earnings from ongoing opera-
tions of $19.0 million or $.50 per share represented increases of 4.0% and 4.2%,
respectively, over the prior-year period.
Third quarter revenues increased 3.3% to $152.7 million compared with $147.8
million in last year's third quarter. Excluding the effect of divested
operations, revenues for the third quarter rose 5.8% to $151.0 million.
Operating profit for the quarter was up 4.3% to $47.7 million.
Net earnings totaled $67.2 million for the first nine months of the year,
and earnings per share were $1.76. Excluding the gain on the sales of the radio
properties and the wireless cable operations, and the loss from the television
movie business, net earnings for the first three quarters were $53.6 million,
and earnings per share were $1.41. For the same period in 1993, net earnings
were $50.3 million, and earnings per share were $1.32. These 1993 results
exclude a gain of $27.7 million and $.72 per share on the sale of assets,
accounting changes and a decrease in income tax resulting from the resolution of
an IRS examination.
Our newspaper and broadcasting operations continued to perform well during
the third quarter. Excluding the effect of divested properties, Broadcasting
Division revenues increased 6.5%, and operating profit increased 28.7%.
Newspaper Division revenues and operating profit again posted double-digit
gains. However, the division's profit growth was slower than the pace of the
first six months.
Multimedia Cablevision's reported revenues were flat compared with last
year's third quarter due to the effect of the second round of cable rate
reductions, which began on July 15. Excluding the results of the wireless cable
operations sold in August, Cablevision revenues rose 1.2% this quarter.
The Entertainment Division's third quarter revenues, excluding the
discontinued movie operation, were $33.9 million, a slight increase over the
prior-year period.
During the quarter the Company announced two major contract renewals. Phil
Donahue, host of television's longest-running talk show, signed a new contract
to continue to host DONAHUE through August 1996. His former contract would have
expired in August 1995.
In addition, Rush Limbaugh signed a new contract to continue RUSH LIMBAUGH,
THE TELEVISION SHOW, through August 1998. The program, now in its third year, is
the highest-rated late-night syndicated talk show.
Entertainment introduced two new daily talk shows in September: DENNIS
PRAGER and SUSAN POWTER.
The Talk Channel, Multimedia's news-talk cable network, was launched on
October 1, and we are pleased with the initial response to the channel. Our goal
is to create an asset with high intrinsic value.
Multimedia Security Service moved into its new headquarters in Wichita in
August. Security now serves more than 62,000 subscribers, and the new building
will accommodate growth to a quarter of a million subscribers.
James M. Hart was named president of Multimedia's Broadcasting Division on
September 1. Hart had most recently served as vice president and general manager
of Multimedia's WBIR-TV in Knoxville, where he maintained one of the
highest-ranking news operations in the top 100 markets. In addition, Thomas L.
Magaha, formerly vice president -- finance and development, will now devote his
full attention to the analysis of joint ventures, strategic alliances and new
products in our five divisions, and will report directly to me. Frederick G.
Lohman, former controller of our broadcasting operations, was named vice
president -- controller of the Company. These changes were made so that we can
more effectively refine and execute our strategic plan and pursue new business
opportunities.
November 4, 1994
(Signature of Donald D. Sbarra)
Donald D. Sbarra
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
<PAGE>
THREE MONTHS HIGHLIGHTS
(UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C> <C>
1994 1993
REVENUES:
Newspapers.............................. $ 37,196 33,463
Broadcasting............................ 33,216 32,124
Cable................................... 40,912 41,023
Entertainment........................... 34,883 36,618
Security 6,443 4,588
$152,650 147,816
OPERATING PROFITS:
Newspapers.............................. $ 10,283 9,051
Broadcasting............................ 10,043 7,729
Cable................................... 12,965 14,169
Entertainment........................... 17,151 17,928
Security................................ 885 469
Corporate (3,614) (3,609)
$ 47,713 45,737
</TABLE>
<PAGE>
Multimedia, Inc. and Subsidiaries
Consolidated Statements of Earnings
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(UNAUDITED)
(IN THOUSANDS EXCEPT PER-SHARE DATA)
<TABLE>
<CAPTION>
Three Months Nine Months
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Operating revenues:
Newspapers....................................... $ 37,196 33,463 108,297 98,441
Broadcasting (Note 1)............................ 33,216 32,124 100,071 96,998
Cable............................................ 40,912 41,023 124,114 123,509
Entertainment.................................... 34,883 36,618 107,738 113,733
Security 6,443 4,588 18,080 11,718
Total operating revenues 152,650 147,816 458,300 444,399
Operating costs and expenses:
Production....................................... 53,242 53,208 162,121 165,714
Selling, general and administrative.............. 39,040 36,367 115,719 110,652
Depreciation..................................... 9,082 9,075 30,713 26,522
Amortization 3,573 3,429 11,265 11,039
Total operating costs and expenses 104,937 102,079 319,818 313,927
Operating profit................................... 47,713 45,737 138,482 130,472
Interest expense................................... 14,829 15,485 44,604 46,667
Other income (expense), net 19,115 (644) 21,292 1,886
Earnings before income taxes, minority
interest and cumulative effect of changes
in accounting principles................... 51,999 29,608 115,170 85,691
Income taxes....................................... 21,580 68 47,796 23,062
Minority interest 50 701 (128) 1,077
Earnings before cumulative effect of changes in
accounting principles............................ 30,469 30,241 67,246 63,706
Cumulative effect of changes in accounting
principles (Note 2) -- -- -- 14,332
Net earnings $ 30,469 30,241 67,246 78,038
Per share of common stock:
Earnings before cumulative effect of changes in
accounting principles.......................... $ .80 .79 1.76 1.67
Cumulative effect of changes in accounting
principles..................................... -- -- -- .37
Net earnings..................................... $ .80 .79 1.76 2.04
Cash dividends................................... -- -- -- --
Weighted average shares............................ 38,285 38,369 38,282 38,330
</TABLE>
Note 1: Beginning January 1, 1994, Multimedia Broadcasting began reporting
operating revenues net of agency commissions and national representative fees.
The 1993 amounts have been restated to reflect this change.
Note 2: Effective January 1, 1993, the Company adopted Statements of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes," and No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions."
The cumulative effect of the adoption of SFAS No. 109 was to increase 1993 first
quarter earnings by $15.4 million ($.40 per share). The cumulative effect of the
adoption of SFAS No. 106 was a decrease in 1993 first quarter earnings, net of
tax benefit, of $1.1 million ($.03 per share).
<PAGE>
Multimedia, Inc. and Subsidiaries
Consolidated Balance Sheets
SEPTEMBER 30, 1994 AND DECEMBER 31, 1993
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, December 31,
1994 1993
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................. $ 7,000 11,034
Net trade accounts receivable......................... 79,498 85,756
Inventories........................................... 4,194 4,408
Deferred income tax benefits.......................... 9,414 8,856
Film contract rights.................................. 10,442 8,476
Deferred program costs................................ 16,190 9,670
Prepaid expenses 5,491 5,516
Total current assets 132,229 133,716
Property, plant and equipment, at cost.................. 538,366 500,133
Less accumulated depreciation (280,793) (259,371)
Net property, plant and equipment 257,573 240,762
Intangible assets, net.................................. 245,877 251,356
Other assets 28,453 29,340
$ 664,132 655,174
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current installments of long-term debt................ $ 43,725 393
Accounts payable...................................... 22,186 20,557
Accrued interest...................................... 12,711 2,999
Accrued payroll....................................... 7,256 5,884
Accrued expenses...................................... 33,822 30,465
Income taxes payable.................................. 17,479 15,432
Film contracts payable................................ 10,626 8,540
Unearned income 20,638 19,416
Total current liabilities 168,443 103,686
Long-term debt.......................................... 531,935 664,604
Deferred income taxes................................... 46,013 44,046
Other liabilities....................................... 3,958 2,837
Minority interest 17,649 17,521
Stockholders' equity (deficit):
Common stock.......................................... 3,758 3,721
Additional paid-in capital............................ 184,060 177,689
Retained earnings (deficit) (291,684) (358,930)
Total stockholders' equity (deficit) (103,866) (177,520)
$ 664,132 655,174
</TABLE>
<PAGE>
Multimedia, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Net cash provided by operating activities $139,583 116,804
Additions to property, plant and equipment......................... (58,379) (32,752)
Acquisitions of properties......................................... (10,713) (10,410)
Other 20,067 (2,822)
Net cash provided by (used for) investing activities (49,025) (45,984)
Long-term debt retired............................................. (89,337) (63,332)
Other (5,255) (7,142)
Net cash provided by (used for) financing activities (94,592) (70,474)
Increase (decrease) in cash and cash equivalents................... (4,034) 346
Cash and cash equivalents, beginning of year 11,034 4,598
Cash and cash equivalents, end of period $ 7,000 4,944
</TABLE>
Note 1. Net cash provided by operating activities is further analyzed as
follows:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Operating profit plus depreciation and amortization and
amortization of stock options:
Newspapers....................................................... $ 35,362 30,446
Broadcasting..................................................... 38,957 31,776
Cable............................................................ 62,972 63,831
Entertainment.................................................... 47,832 48,457
Security......................................................... 6,753 4,212
Corporate (8,789) (7,366)
183,087 171,356
Interest expense less amortization of debt
issue costs...................................................... (43,767) (45,830)
Change in current assets and liabilities........................... 15,493 12,884
Other (15,230) (21,606)
$139,583 116,804
</TABLE>
<PAGE>
MULTIMEDIA, INC. AND SUBSIDIARIES
MULTIMEDIA
NEWSPAPERS
ALABAMA
DAILY AND SUNDAY:
The Montgomery Advertiser
ARKANSAS
DAILY:
The Baxter Bulletin
(Mountain Home)
GEORGIA
DAILY:
The Moultrie Observer
NORTH CAROLINA
DAILY AND SUNDAY:
Asheville Citizen-Times
OHIO
DAILIES:
Gallipolis Daily Tribune
The Daily Sentinel
(Pomeroy)
SUNDAY:
Sunday Times-Sentinel
(Gallipolis)
SOUTH CAROLINA
DAILIES:
The Greenville News
Greenville Piedmont
SUNDAY:
The Greenville News
TENNESSEE
DAILY:
The Leaf-Chronicle
(Clarksville)
MONTHLY:
Music City News
The Gospel Voice
(Nashville)
TELEVISION PRODUCTION:
TNN Music City News
Country Awards
VIRGINIA
DAILY AND SUNDAY:
The Daily News-Leader
(Staunton)
WEST VIRGINIA
DAILY:
Point Pleasant Register
MULTIMEDIA
BROADCASTING
Television
GEORGIA
Macon: WMAZ-TV (CBS)
MISSOURI
St. Louis: KSDK (NBC)
OHIO
Cincinnati: WLWT (NBC)
Cleveland: WKYC (NBC)
TENNESSEE
Knoxville: WBIR-TV (NBC)
Radio
GEORGIA
Macon: WAYS(FM)
WMAZ-AM
SOUTH CAROLINA
Greenville: WFBC-AM/(FM)
Spartanburg: WORD-AM
MULTIMEDIA
ENTERTAINMENT
Donahue/Sally Jessy Raphael/
Pozner & Donahue/Jerry Springer/Rush Limbaugh,
The Television Show/Susan Powter/Dennis Prager
The Talk Channel
Multimedia Motion Pictures
MULTIMEDIA
CABLEVISION
Multimedia operates more than 125 cable television franchises in Kansas,
Illinois, Indiana, North Carolina and Oklahoma and serves approximately 428,000
basic subscribers.
MULTIMEDIA
SECURITY
Multimedia serves more than 62,000 security alarm subscribers.
MULTIMEDIA, INC.
P.O. Box 1688
Greenville, SC 29602
(803) 298-4373
IMPORTANT NOTICE TO SHAREHOLDERS
Wachovia Bank of North Carolina, N.A. is the transfer agent and registrar for
Multimedia, Inc. All communications regarding shareholdings or transfer of your
shares should be directed to: Wachovia Bank of North Carolina, N.A., Corporate
Trust Department, P.O. Box 3001, Winston-Salem, North Carolina 27102.
1-800-633-4236 Toll-Free Telephone Number for Shareholder Services.
<PAGE>
MULTIMEDIA, INC.
P.O. BOX 1688
GREENVILLE, SC 29602
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from SEC Form 10Q and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 7,000
<SECURITIES> 0
<RECEIVABLES> 84,404
<ALLOWANCES> 4,906
<INVENTORY> 4,194
<CURRENT-ASSETS> 132,229
<PP&E> 538,366
<DEPRECIATION> 280,793
<TOTAL-ASSETS> 664,132
<CURRENT-LIABILITIES> 168,443
<BONDS> 531,935<F1>
<COMMON> 3,758
0
0
<OTHER-SE> 107,624<F2>
<TOTAL-LIABILITY-AND-EQUITY> 664,132
<SALES> 0
<TOTAL-REVENUES> 458,300
<CGS> 0
<TOTAL-COSTS> 319,818
<OTHER-EXPENSES> (21,292)<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 44,604
<INCOME-PRETAX> 115,170
<INCOME-TAX> 47,796
<INCOME-CONTINUING> 67,246
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 67,246
<EPS-PRIMARY> 1.76
<EPS-DILUTED> 1.76
<FN>
<F1>BONDS -- represents total long-term debt.
<F2>OTHER-SE -- represents total paid-in-capital and retained earnings.
<F3>OTHER-EXPENSES -- represents net other (income)/expense.
</FN>
</TABLE>
<PAGE>
The Board of Directors
Multimedia, Inc.:
We have reviewed the condensed consolidated balance sheet of Multimedia, Inc.
and subsidiaries as of September 30, 1994, and the related condensed con-
solidated statements of earnings for the three-month and nine-month periods
ended September 30, 1994 and 1993 and the related condensed consolidated state-
ments of cash flows for the nine-month periods ended September 30, 1994 and
1993. These condensed consolidated financial statements are the responsibility
of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical review procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Multimedia, Inc. and subsidiaries
as of December 31, 1993, and the related consolidated statements of earnings,
stockholders' equity (deficit), and cash flows for the year then ended (not
presented herein); and in our report dated February 11, 1994, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying condensed consolidated balance
sheet as of December 31, 1993, is fairly presented, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
SIGNATURE OF KPMG PEAT MARWICK APPEARS HERE
October 27, 1994
