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UNITED STATES 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
or the Quarterly period ended March 31, 1994
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the transition period from to
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Commission file number 0-12743
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PARK COMMUNICATIONS, INC.
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(Exact name of the registrant as specified in its charter)
Delaware 16-0986694
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(State or other jurisdiction of (IRS Employer Identi-
incorporation of organization) fication No.)
Terrace Hill, Ithaca, NY 14850
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(Address of principal executive Offices) (Zip Code)
Registrant's telephone number, including area code (607) 272-9020
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Indicate by checkmark 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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As of April 28, 1994, 20,714,849 shares of common stock, $.16 2/3 par
value, were outstanding.<PAGE>
FORM 10-Q QUARTERLY REPORT - MARCH 31, 1994
PARK COMMUNICATIONS, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.................................2-5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................6-7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K..................... 8
Signatures................................................... 9<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
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PARK COMMUNICATIONS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in Thousands Except Share and Per Share Amounts)
March 31, December 31,
1994 1993
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Assets (unaudited)
Current Assets:
Cash, cash equivalents and short-term investments $124,181 $116,552
Accounts receivable, less allowance for doubtful
accounts of $ 1,227 in 1994 and $1,399 in 1993 18,507 21,006
Inventory......................................... 1,111 1,201
Film contracts.................................... 2,286 2,485
Consulting/non-compete contracts.................. 902 915
Other............................................. 3,222 3,807
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Total current assets............................ 150,209 145,966
Property, Plant & Equipment......................... 137,280 136,209
Less accumulated depreciation and amortization.... (66,339) (64,346)
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70,941 71,863
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Intangible assets, less amortization of $72,178 in
1994 and $70,599 in 1993.......................... 114,520 116,096
-------- --------
Film contracts...................................... 2,219 2,431
Consulting/non-compete contracts.................... 4,278 4,503
Other assets........................................ 1,636 1,762
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$343,803 $342,621
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Liabilities and Shareholders' Equity
Current Liabilities:
Current maturities of long-term debt.............. $ 2,701 $ 2,762
Current maturities of film contracts.............. 2,280 2,410
Accounts payable.................................. 1,501 3,052
Consulting/non-compete contracts.................. 937 936
Interest.......................................... 228 1,066
Income taxes...................................... 4,572 4,347
Accrued liabilities............................... 4,180 3,964
Deferred income................................... 2,906 2,781
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Total current liabilities....................... 19,305 21,318
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Long-term debt...................................... 53,852 54,368
Consulting/non-compete contracts.................... 4,351 4,591
Deferred income taxes............................... 8,913 8,738
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Total liabilities............................... 86,421 89,015
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Shareholders' Equity:
Common stock-par value $.16 2/3 per share:
Authorized 32,000,000 shares
Issued and outstanding 20,714,814 shares
in 1994 and 20,708,977 in 1993............... 3,453 3,452
Paid in capital................................... 14,035 13,924
Retained earnings................................. 239,894 236,230
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Total shareholders' equity.......................... 257,382 253,606
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$343,803 $342,621
See notes to consolidated financial statements. ======== ========
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PARK COMMUNICATIONS, INC. & SUBSIDIARIES
Consolidated Statements of Income and Retained Earnings
(Dollars in Thousands Except Per Share Amounts)
Three months ended March 31
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1994 1993
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(Unaudited)
Revenue:
Broadcasting.................................... $ 22,637 $ 18,376
Newspapers...................................... 17,456 19,513
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Gross revenue................................. 40,093 37,889
Less agency and national
representative commissions.................... 3,290 2,622
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Net revenue................................... 36,803 35,267
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Operating expenses:
Cost of sales................................... 14,154 14,977
Selling, general and administrative............. 11,916 12,093
Depreciation.................................... 2,037 1,943
Amortization.................................... 939 1,038
Amortization of excess of cost over net
assets required............................... 639 670
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29,685 30,721
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Operating income.............................. 7,118 4,546
Interest expense.................................. (942) (931)
Interest income................................... 1,160 1,321
Other income (expense)............................ (796) (328)
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Income before income taxes.................... 6,540 4,608
Provision for income taxes........................ 2,876 2,006
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NET INCOME.................................... 3,664 2,602
Retained earnings, beginning of period............ 236,230 217,450
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RETAINED EARNINGS, end of period............ $239,894 $220,052
======== ========
Earnings per share................................ $ .18 $ .13
======== ========
See notes to consolidated financial statements.
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Park Communications, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in Thousands)
Three months ended March 31
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1994 1993
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(unaudited)
Operating Activities:
Net Income......................................... $ 3,664 $ 2,602
Adjustment to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization.................. 3,615 3,651
Amortization of film contract rights and
consulting/non-compete contracts included in
operating expenses........................... 980 965
Payments on film contract liabilities.......... (714) (644)
Payments on consulting/non-compete contracts... (239) (322)
Provision for losses on accounts receivable.... (53) (35)
Provision for deferred income taxes............ 175 6
Loss on sale of property, plant and equipment.. 198 36
Changes in operating assets and liabilities:
Accounts receivable........................ 2,552 2,326
Inventory and other assets................. 799 (1,102)
Accounts payable and accrued liabilities... (1,948) (1,909)
Deferred income............................ 125 96
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Net cash provided by operating
activities............................... 9,154 5,670
Investing Activities:
Purchase of short-term investments................. (41,188) (15,653)
Proceeds from short-term investments............... 59,645 15,157
Purchases of property, plant and equipment......... (1,333) (1,971)
Proceeds from sale of property, plant and
equipment........................................ 20 1
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Net cash (used) in investing activities.. 17,144 (2,466)
Financing Activities:
Principal payments on long-term debt............... (263) (1,072)
Proceeds from issuance of Common Stock............. 51 -----
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Net cash (used) by financing activities.. (212) (1,072)
Increase in cash and cash equivalents......... 26,086 2,132
Cash and cash equivalents, beginning of period....... 21,232 5,684
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Cash and cash equivalents, end of period...... $ 47,318 $ 7,816
======== ========
Summary:
Cash and Cash equivalents as above................. $ 47,318 $ 7,816
Short-term investments............................. 76,863 100,159
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$124,181 $107,975
======== ========
See notes to consolidated financial statements.
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PARK COMMUNICATIONS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
1. Earnings Per Share
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Earnings per share of common stock is computed on the weighted average
number of common shares outstanding during each period. The number of
shares used was 20,711,805 for the three months ended March 31, 1994, and
20,700,167 for the three months ended March 31, 1993.
2. Shareholders' Equity
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On January 11, 1994, the Company issued 3,182 shares of its Common Stock
relative to the conversion of $61,000 of its convertible debentures. On
March 31, 1994, the Company issued 2,655 shares of its Common Stock under
the terms of its Employee Stock Purchase Plan. The issuances increased the
value of Common Stock, by $973 and increased paid-in-capital by $110,848.
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Item 2. Management's Discussion and Analysis of Financial Condition and
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Results of Operations
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1994 Compared to 1993
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For the first quarter of 1994, the Company's gross revenue increased $2,200,000
(6%) compared to the first quarter of 1993. The television division's gross
revenue increased $3,400,000 (26%) due first, to the acquisition in November,
1993 of KALB-TV in Alexandria, Louisiana and second, to strong improvement in
local/regional and national advertising. The radio division's gross revenue
increased $900,000 (16%) due to strong improvement in local/regional and
national advertising. The newspaper division's gross revenue decreased
$2,100,000 (11%), because the operating results of the Company's smaller
newspapers sold in December, 1993 are not included in 1994.
Operating income increased $2,600,000 (57%) compared to the first quarter of
1993. The television division's operating income increased $1,200,000 (43%),
due to the reasons discussed above. The newspaper division's operating income
increased $1,100,000 (64%), primarily due to both increases in advertising
revenues at the Company's newspapers and the sale in December, 1993 of certain
of the Company's smaller newspapers (discussed above), which were not
profitable in 1993. The radio division's operating income increased $200,000
due to the reasons discussed above.
The net income for the first quarter of 1994 increased $1,100,000 (41%)
compared to the first quarter of 1993.
Operating cash flow (net income plus depreciation and amortization) increased
$1,000,000 (16%) in the first quarter of 1994 from the first quarter of 1993.
As previously reported, the Company's Board of Directors voted on March 25,
1994 to seek a sale of the Company. At this time, it is intended that such a
sale be accomplished through a sale of the Company's outstanding Common Stock
to a third party. However, there is no guarantee that such a sale will be
achieved. An alternative method for selling the Company would be selling the
Company's assets to one or more purchasers (e.g., selling one or more divisions
or particular properties). Depending on how such a transaction were structured,
the Company's revenues, income and cash flows could be significantly affected.
Liquidity
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For the first quarter of 1994, the net cash provided by operating activities
was $9,200,000. In addition, the net cash flow from investing and financing
activities was $17,000,000 during the first quarter of 1994. As of March 31,
1994, the Company had $124,000,000 in cash, cash equivalents, and short-term
investments. The Company's current ratio (comparison of current assets to
current liabilities), a key indicator of liquidity, was a strong 7.8 to 1 as of
March 31.
The Company expects that in calendar 1994, net cash provided by operating
activities will enable it to fund known investing and financing activity
requirements.
In view of the decision to sell the Company (discussed above), and depending
upon how such a transaction were structured, the Company's liquidity could be
significantly altered from current levels.
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Previously, the Company's dividend policy has been to retain its earnings for
use in its business and not to pay cash dividends. In view of the decision to
sell the Company (discussed above) and depending upon how such a transaction
were structured, it is unclear whether this policy will continue.
Over the last three calendar years inflation affected the Company's performance
in terms of higher costs for wages and salaries, equipment, and newsprint. The
Company, however, was able to offset these rising costs in part increasing
advertising and circulation rates at most newspapers and by raising the
effective advertising rates in most television and radio broadcasting stations.
Management does not anticipate that inflation will have a material effect on
the Company's operations during the calendar year 1994.
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits - Not Applicable
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(b) Reports on Form 8-K
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A report on Form 8-K was filed March 29, 1994 reflecting the decision
by the Board of Directors to seek the sale of the Company.
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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.
PARK COMMUNICATIONS, INC.
Date April 28, 1994 /s/ Dorothy D. Park
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Dorothy D. Park
Chairman of the Board of Directors
and Secretary
Date April 28, 1994 /s/ Wright M. Thomas
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Wright M. Thomas
President, Chief Operating Officer,
Treasurer, Assistant Secretary and
Director (Principal Financial Officer)
Date April 28, 1994 /s/Randel N. Stair
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Randel N. Stair
Vice President - Controller and
Assistant Secretary (Principal
Accounting Officer)
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