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 For the transition period from___to___
March 31, 1995 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 of each of the issuer's classes of common
stock, as of March 31, 1995:
Common Stock, $.10 par value
37,823,078 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 March 31, 1995.
Consolidated Statements of Earnings, three months ended March 31, 1995 and
1994.
Consolidated Balance Sheets as of March 31, 1995 and December 31, 1994.
Consolidated Statements of Cash Flows, three months ended March 31, 1995
and 1994.
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 March 31, 1995 is included in the Report to Shareholders
attached hereto as an exhibit and incorporated herein by reference.
Multimedia reported net earnings of $14.8 million and earnings per share of $.39
for the first quarter that ended March 31, 1995. Excluding the after-tax loss
related to the Company's investment in its NEWSTALK TELEVISION cable network,
earnings per share were $.46 for the quarter, a 15% increase over the $.40
earned from ongoing operations in the comparable quarter last year. Net
earnings of $17.3 million, or $.45 per share, in 1994's first quarter included
an after-tax gain of $2.1 million, or $.05 per share, from the sale of two radio
stations.
Consolidated operating revenues totaled $156.4 million for the quarter, a 7%
increase over the $146.4 million posted in the same period last year. Operating
profit of $40.8 million was flat with last year, but excluding costs associated
with the launch of NEWSTALK TELEVISION, Multimedia's operating profit increased
11%.
The Multimedia newspapers' revenue increase was due to advertising revenue
increases primarily due to volume growth in classified and local advertising.
The Broadcasting division's revenue increase of 14% primarily reflects local
advertising growth as a result of continued strong ratings at the Company's
television stations.
Multimedia cable revenues were flat with last year primarily due to the rate
freeze mandated by the Federal Communications Commission (FCC) which has been in
effect since July 1994.
The decline in operating profit for the Entertainment division reflects both the
increased competition among new talk shows and the investment in NewsTalk
Television. Excluding the investment in NewsTalk Television, Entertainment
division operating profits would have declined 16%.
The Security revenue and operating profit increases are primarily due to
increases in the number of customers to approximately 67,000 at the end of the
first quarter of 1995 from approximately 57,000 customers at March 31, 1994.
<PAGE>
There have been no material adverse changes in the Registrant's financial
condition during the quarter ended March 31, 1995 and reference is made to
management's discussion and analysis relating to liquidity and capital resources
which appeared on page 21 of the Company's 1994 Annual Report.
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders.
The following summarizes the votes at the Annual meeting of the Company's
shareholders held on April 19, 1995:
Matter For Withheld
Election of Directors:
George H. V. Cecil 27,171,006 90,500
Rhea T. Eskew 27,161,300 100,206
David L. Freeman 27,167,443 94,063
Douglas J. Greenlaw 27,171,268 90,238
M. Dexter Hagy 27,169,881 91,625
Robert E. Hamby, Jr. 27,165,288 96,218
John T. LaMacchia 27,170,018 91,488
Leslie G. McCraw 27,172,421 89,085
Dorothy P. Ramsaur 27,170,472 91,034
Donald D. Sbarra 27,171,807 89,699
Elizabeth P. Stall 27,168,868 92,638
William C. Stutt 27,169,583 91,923
For Agains Abstentions
Ratification of appointment of KPMG
Peat Marwick as independent auditors 27,224,934 13,492 23,080
for 1995
<PAGE>
Item 6 - Exhibits and Reports on Form 8-K:
(a) Exhibits:
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 March 31, 1995.
27. Financial Data Schedule.
(b) Reports on Form 8-K.
Items reported on Form 8-K dated February 23, 1995.
Item 5. Other Events.
<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)
May 10, 1995 [SIGNATURE APPEARS HERE]
- --------------------- ---------------------------------
(Date) Robert E. Hamby, Jr.
Senior Vice President
Finance & Administration
Chief Financial Officer
May 10, 1995 [SIGNATURE APPEARS HERE]
- --------------------- ---------------------------------
(Date) Frederick G. Lohman
Vice President/Controller
<PAGE>
Exhibit 11
MULTIMEDIA, INC.
Computation of Primary and Fully Diluted Earnings per Share
Three Months Ended
3/31/95 3/31/94
Primary
Net earnings applicable to common and
common equivalent shares $ 14,846,000 17,334,000
Shares:
Weighted average number of common and
common equivalent shares outstanding 38,465,000 38,362,000
Net earnings per share $ .39 .45
Fully Diluted
Net earnings applicable to common and
common equivalent shares $ 14,846,000 17,334,000
Shares:
Weighted average number of common and
common equivalent shares assuming
ending market price 38,620,000 38,361,000
Net earnings per share $ .38 .45
<PAGE>
EXHIBIT 15
The Board of Directors
Multimedia, Inc.:
We have reviewed the condensed consolidated balance sheet of Multimedia,
Inc. and subsidiaries as of March 31, 1995, and the related condensed
consolidated statements of earnings and cash flows for the three-month
periods ended March 31, 1995 and 1994. 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, 1994, 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 10, 1995, 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, 1994, 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 LLP appears here]
April 28, 1995
<PAGE>
MULTIMEDIA, INC.
1995
FIRST QUARTER REPORT
<PAGE>
A LETTER TO OUR
SHAREHOLDERS
Multimedia reported net earnings of $14.8 million and earnings per share of
$.39 for the first quarter that ended March 31, 1995. Excluding the after-tax
loss related to the Company's investment in NEWSTALK TELEVISION, its cable
network, earnings per share were $.46 for the quarter, a 15% increase over the
$.40 earned from ongoing operations in the comparable quarter last year.Net
earnings of $17.3 million, or $.45 per share, in 1994's first quarter included
an after-tax gain of $2.1 million, or $.05 per share, from the sale of two
radio stations.
Consolidated operating revenues totaled $156.4 million for the quarter, a 7%
increase over the $146.4 million posted in the same period last year. Operating
profit of $40.8 million was flat with last year, but excluding costs associated
with the launch of NEWSTALK TELEVISION, Multimedia's operating profit increased
11%.
Newspaper revenues rose 10% to $37.1 million for the first quarter compared
with $33.7 million last year on the basis of significant increases in
advertising revenues. Local advertising revenues rose 11%, and classified
advertising revenues increased 22%. Circulation declined slightly, but
circulation revenue was up 7% as a result of selective pricing increases.
Multimedia Broadcasting recorded its strongest first quarter ever in 1995.
The strength of the division's television news operations and the resurgence of
the NBC primetime programming (four of the five stations are NBC affiliates)
combined with robust advertising business in each of the division's five markets
to produce revenues of $33.5 million, an increase of 14% over the first quarter
of 1994. All five television stations showed ratings gains in the February
sweeps.
Multimedia Cablevision had a 2% revenue increase for the quarter. At the end
of March 1995, the division had more than 447,000 basic subscribers, which is 6%
more than the same quarter in 1994. In January, Multimedia completed the trade
of certain of its cable systems in Illinois and Oklahoma with 40,500 subscribers
for TeleCommunications, Inc.'s cable systems in Wichita, Kansas, with 50,400
subscribers. The Company paid $12.4 million in cash as part of this transaction.
Multimedia now serves 95% of the cable households in the Wichita market.
Approximately 40% of the division's cable customers are presently served by
systems upgraded with fiber optic technology with at least 80 channel capacity.
Multimedia Entertainment posted revenues of $37.5 million, a 2% increase
over last year's first quarter revenues of $36.7 million. The increase in the
number of programs competing for daytime audience shares continues to decrease
ratings for the long-running shows. DONAHUE'S ratings declined 13% in the
February sweeps compared with last season, but, in his 27th year, he remains a
strong competitor. SALLY JESSY RAPHAEL was the second highest-rated daytime
talk show in the February sweeps, despite a 4% ratings decline compared with
last year. JERRY SPRINGER was the fastest-growing talk show, with ratings up
45% over the 1994 February sweeps, and RUSH LIMBAUGH, THE TELEVISION SHOW
remained the top-rated late night syndicated show. Excluding the costs
associated with the launch of NEWSTALK TELEVISION, operating profit for the
Entertainment division was down 16%, principally reflective of increased
competition.
Multimedia Security Service had first quarter revenues of $6.6 million, an
increase of 18% over the first quarter of 1994. The division now serves more
than 67,000 customers, placing it among the 20 largest home security providers
in the country.
On February 22, Multimedia announced that its board of directors had
authorized management, together with Goldman, Sachs & Co., to explore strategic
alter-
<PAGE>
natives to enhance shareholder value, including the sale of Multimedia,
Inc., the spin-off of one or more of its businesses, a business combination or
any similar transaction. The decision to initiate this process was reached after
a thorough review of the Company's assets, the technological and competitive
environment in today's media world and the capital requirements for the future.
Multimedia has received a number of inquiries about its businesses and has
begun providing detailed information to potentially interested parties who have
signed a confidentiality agreement. This process will take several months to
complete. No decision has been made to pursue any particular course of action,
and as stated in the February 22 announcement, there can be no assurance that
any transaction will result from this process. We ask for your patience and
understanding at this critical juncture in our Company's history.
Sincerely,
(Signature of Donald D. Sbarra appears here)
Donald D. Sbarra
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
MAY 8, 1995
MULTIMEDIA'S BOARD
OF DIRECTORS AND
MANAGEMENT TEAM
WILL MAKE THEIR
BEST EFFORTS TO
THOROUGHLY
INVESTIGATE THE
VARIOUS ALTERNA-
TIVES THAT MAY BE
AVAILABLE TO
ENHANCE SHARE-
HOLDER VALUE.
THREE MONTHS HIGHLIGHTS
(Unaudited) (In thousands) 1995 1994
REVENUES:
Newspapers $ 37,051 33,654
Broadcasting 33,450 29,320
Cable 41,900 41,223
Entertainment 37,474 36,667
Security 6,572 5,555
$ 156,447 146,419
OPERATING PROFITS:
Newspapers $ 10,258 8,903
Broadcasting 13,195 8,600
Cable 12,648 12,448
Entertainment 6,996 14,126
Security 506 456
Corporate (2,849) (3,615)
$ 40,754 40,918
<PAGE>
CONSOLIDATED STATEMENTS OF EARNINGS
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
<TABLE>
<CAPTION>
(Unaudited) (In thousands except per-share data) 1995 1994
<S> <C> <C>
Operating revenues:
Newspapers $ 37,051 33,654
Broadcasting 33,450 29,320
Cable 41,900 41,223
Entertainment 37,474 36,667
Security 6,572 5,555
Total operating revenues 156,447 146,419
Operating costs and expenses:
Production 61,675 53,179
Selling, general and administrative 39,891 37,643
Depreciation 10,550 10,820
Amortization 3,577 3,859
Total operating costs and expenses 115,693 105,501
Operating profit 40,754 40,918
Interest expense 14,463 14,873
Other income (expense), net (43) 3,277
Earnings before income taxes and minority
interest 26,248 29,322
Income taxes 10,893 12,169
Minority interest in subsidiaries'losses (income), net (509) 181
Net earnings $ 14,846 17,334
Per share of common stock:
Net earnings .39 .45
Cash dividends - -
Weighted average shares 38,465 38,362
</TABLE>
MULTIMEDIA, INC. AND SUBSIDIARIES
<PAGE>
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1995 AND DECEMBER 31, 1994
March 31, December 31,
(Unaudited) (In thousands) 1995 1994
ASSETS
Current assets:
Cash and cash equivalents $ 9,951 6,202
Net trade accounts receivable 86,416 93,426
Inventories 6,545 4,643
Deferred income tax benefits 9,761 9,581
Program rights 5,682 7,570
Deferred program costs 8,556 10,923
Prepaid expenses and other 7,680 6,795
Total current assets 134,591 139,140
Property, plant and equipment, at cost 583,758 558,749
Less accumulated depreciation 292,874 283,522
Net property, plant and equipment 290,884 275,227
Intangible assets, net 251,736 242,078
Other assets 27,467 27,533
$ 704,678 683,978
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current installments of long-term debt $ 30,254 30,254
Accounts payable 25,501 24,512
Accrued interest 12,045 2,671
Accrued payroll 5,868 8,386
Accrued expenses 38,067 38,148
Income taxes payable 17,713 10,202
Program rights payable 6,046 7,793
Unearned income 22,303 20,556
Total current liabilities 157,797 142,522
Long-term debt 529,969 542,303
Deferred income taxes 53,832 54,090
Other liabilities 3,424 3,294
Minority interest 19,193 18,684
Stockholders'equity (Deficit):
Common stock 3,782 3,762
Additional paid-in capital 190,736 188,224
Retained earnings (deficit) (254,055) (268,901)
Total stockholders'equity (deficit) (59,537) (76,915)
$ 704,678 683,978
MULTIMEDIA, INC. AND SUBSIDIARIES
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
<TABLE>
<CAPTION>
(Unaudited) (In thousands) 1995 1994
<S> <C> <C>
Net cash provided by operating activities $ 55,499 60,950
Additions to property, plant and equipment (25,753) (14,767)
Acquisitions of properties (14,205) (2,243)
Other 1,045 3,663
Net cash used for investing activities (38,913) (13,347)
Reduction in revolving credit, net (6,340) (44,992)
Long-term debt retired (5,994) (6,055)
Other (503) (2,027)
Net cash used for financing activities (12,837) (53,074)
Increase (decrease) in cash and cash equivalents 3,749 (5,471)
Cash and cash equivalents, beginning of year 6,202 11,034
Cash and cash equivalents, end of period $ 9,951 5,563
NOTE: NET CASH PROVIDED BY OPERATING ACTIVITIES IS FURTHER
ANALYZED AS FOLLOWS:
Operating profit plus depreciation and amortization
and amortization of stock options:
Newspapers $ 11,938 10,455
Broadcasting 15,382 10,826
Cable 20,829 21,289
Entertainment 7,177 14,600
Security 2,361 2,006
Corporate (2,732) (2,689)
54,955 56,487
Interest expense less amoritzation of debt
issue costs (14,191) (14,594)
Change in current assets and liabilities 23,432 24,015
Other (8,697) (4,958)
Net cash provided by operating activities $ 55,499 60,950
</TABLE>
MULTIMEDIA, INC. AND SUBSIDIARIES
<PAGE>
MULTIMEDIA, INC. AND SUBSIDIARIES
MULTIMEDIA
NEWSPAPER COMPANY
305 S. MAIN ST.
P.O.BOX 1688
GREENVILLE,S.C. 29602
ALABAMA
Daily and Sunday:
The Montgomery
Advertiser
ARKANSAS
Daily:
The Baxter Bulletin
(Mountain Home)
GEORGIA
Daily:
The Observer (Moultrie)
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 also publishes
49 non-daily products.
MULTIMEDIA
BROADCASTING COMPANY
RIVERVIEW TOWER,
SUITE 1401
900 S. GAY ST.
KNOXVILLE,TENN. 37902
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
MULTIMEDIA
CABLEVISION COMPANY
701 E. DOUGLAS AVE.
P.O.BOX 3027
WICHITA, KS. 67202
Multimedia operates more
than 125 cable television
franchises In Kansas,
Illinois, Indiana, North
Carolina and Oklahoma
and serves approximately
447,000 basic subscribers.
MULTIMEDIA
ENTERTAINMENT COMPANY
45 ROCKEFELLER PLAZA
35TH FLOOR
NEW YORK, N.Y.10111
Donahue / Sally Jessy
Raphael / Pozner &
Donahue / Jerry Springer /
Rush Limbaugh, The
Television Show/ Susan
Powter / Dennis Prager
NewsTalk Television
MULTIMEDIA SECURITY
SERVICE
800 E.WATERMAN
WICHITA, KS. 67202
Multimedia serves more
than 67,000 security alarm
customers.
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, South Carolina 29602
(803) 298-4373
<PAGE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEC
FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 9,951
<SECURITIES> 0
<RECEIVABLES> 91,191
<ALLOWANCES> 4,775
<INVENTORY> 6,545
<CURRENT-ASSETS> 134,591
<PP&E> 583,758
<DEPRECIATION> 292,874
<TOTAL-ASSETS> 704,678
<CURRENT-LIABILITIES> 157,797
<BONDS> 529,969<F1>
<COMMON> 3,782
0
0
<OTHER-SE> (63,319)<F2>
<TOTAL-LIABILITY-AND-EQUITY> 704,678
<SALES> 0
<TOTAL-REVENUES> 156,447
<CGS> 0
<TOTAL-COSTS> 115,693
<OTHER-EXPENSES> 43<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,463
<INCOME-PRETAX> 26,248
<INCOME-TAX> 10,893
<INCOME-CONTINUING> 14,846
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,846
<EPS-PRIMARY> .39
<EPS-DILUTED> .38
<FN>
<F1>Bonds - Represents total long term debt.
<F2>Other SE - Represents total paid-in-capital and retained earnings.
<F3>Other Expenses - Represents other (income)/expense, net.
</FN>
</TABLE>
