<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
(X) Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Quarter period ended June 30, 1995 or
( ) Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______________ to ______________
Commission File number 0-13834
American City Business Journals, Inc.
...............................................................................
(Exact name of registrant as specified in its charter)
Delaware 43-1366184
........................................... ..................................
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
128 S. Tryon St., St. 2300, Charlotte, N.C. 28202
........................................... ..................................
(Address of principal executive offices) (Zip Code)
Registrant's telephone no., including area code: (704) 375-7404
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 and Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
6,913,541 shares of common stock, $.01 par value per share, at July 28, 1995.
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
AMERICAN CITY BUSINESS JOURNALS, INC. AND SUBSIDIARIES
----------
CONSOLIDATED BALANCE SHEET
ASSETS
<CAPTION>
June 30, December 31,
1995 1994
------------ ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $19,264,000 $17,815,000
Accounts receivable, net of allowance for
uncollectible accounts of $569,000 in 1995
and $462,000 in 1994 13,287,000 13,205,000
Prepaid expenses 1,511,000 668,000
Deferred income taxes 476,000 476,000
------------ ------------
Total current assets 34,538,000 32,164,000
FURNITURE AND EQUIPMENT 14,307,000 12,487,000
Less - Accumulated depreciation (8,513,000) (8,015,000)
------------ ------------
5,794,000 4,472,000
DEFERRED INCOME TAXES 2,094,000 2,094,000
INTANGIBLES AND OTHER ASSETS, principally cost in
excess of assets acquired - net 52,054,000 53,400,000
------------ ------------
Total assets $94,480,000 $92,130,000
============ ============
</TABLE>
<PAGE> 3
<TABLE>
AMERICAN CITY BUSINESS JOURNALS, INC. AND SUBSIDIARIES
----------
CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' INVESTMENT
<CAPTION
June 30, December 31,
1995 1994
------------- -------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long-term debt $ 943,000 $ 934,000
Accounts payable 3,118,000 2,738,000
Accrued payroll and payroll taxes 1,739,000 2,211,000
Other accrued liabilities 1,674,000 1,335,000
Deferred subscription revenue 13,400,000 12,867,000
Accrued income taxes 2,276,000 3,163,000
------------- -------------
Total current liabilities 23,150,000 23,248,000
LONG-TERM DEBT 35,403,000 35,788,000
DEFERRED SUBSCRIPTION REVENUE 2,842,000 2,677,000
CONVERTIBLE SUBORDINATED DEBENTURES 31,826,000 31,878,000
STOCKHOLDERS' INVESTMENT:
Serial Preferred Stock, $.01 par value -
2,500,000 shares authorized; No shares issued --- ---
Common stock, $.01 par value - 30,000,000
shares authorized; 7,625,000 and 7,216,000
shares issued; 6,913,000 and 6,539,000 shares
outstanding 76,000 72,000
Paid-in capital 8,299,000 7,691,000
Retained earnings (deficit) 677,000 (1,856,000)
------------- -------------
9,052,000 5,907,000
Treasury stock - 712,000 and 677,000 common
shares at cost (7,793,000) (7,368,000)
------------- -------------
Total stockholders' investment 1,259,000 (1,461,000)
------------- -------------
Total liabilities and stockholders'
investment $94,480,000 $92,130,000
============= =============
</TABLE>
<PAGE> 4
<TABLE>
AMERICAN CITY BUSINESS JOURNALS, INC. AND SUBSIDIARIES
---------------
CONSOLIDATED STATEMENT OF STOCKHOLDERS' INVESTMENT
FOR THE YEAR ENDED DECEMBER 31, 1994 AND
THE SIX MONTHS ENDED JUNE 30, 1995
<CAPTION>
Common Paid-In Retained Treasury
Stock Capital Earnings Stock
(Deficit)
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1993 $51,000 $43,550,000 ($7,152,000) ($42,698,000)
Issuance of common stock, 185,295 shares 604,000 931,000
Retirement of treasury stock, 3,110,646 shares (15,000) (36,427,000) 36,442,000
Split of common stock (2 for 1)-
par value of shares issued 36,000 (36,000)
Purchase of treasury stock,
131,279 common shares at cost (2,043,000)
Net income 5,296,000
------------ ------------ ------------ -------------
BALANCE AT DECEMBER 31, 1994 72,000 7,691,000 (1,856,000) (7,368,000)
Issuance of common stock, 44,545 shares 560,000 395,000
Common stock dividend (5%) -
par value of shares issued 4,000 (4,000)
Purchase of treasury stock,
42,700 common shares at cost (820,000)
Conversion of Convertible Subordinated
Debentures, 3,308 common shares issued 52,000
Net income 2,533,000
------------ ------------ ------------ -------------
BALANCE AT JUNE 30, 1995 (UNAUDITED) $76,000 $8,299,000 $ 677,000 ($ 7,793,000)
============ ============ ============ =============
</TABLE>
<PAGE> 5
<TABLE>
AMERICAN CITY BUSINESS JOURNALS, INC. AND SUBSIDIARIES
-----------------
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,089,000 $ 1,597,000 $ 2,533,000 $ 1,627,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,396,000 1,357,000 2,760,000 2,682,000
Provision for bad debts 158,000 130,000 358,000 298,000
Loss on sale of assets -- 4,000 2,000 4,000
Net activity from trades (28,000) (51,000) (29,000) (52,000)
Recognized imputed interest 73,000 65,000 144,000 129,000
Changes in assets and liabilities, net of
assets acquired:
Increase in accounts receivable and other
current assets (1,430,000) (1,900,000) (1,254,000) (1,355,000)
Decrease in intangibles and other assets 3,000 16,000 38,000 53,000
Increase (decrease) in accounts payable and
accrued expenses (1,166,000) 35,000 (760,000) (51,000)
Increase (decrease) in deferred subscription
revenue (116,000) (96,000) 698,000 715,000
------------ ------------ ------------ ------------
Net cash provided by operating activities 979,000 1,157,000 4,490,000 4,050,000
------------ ------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 552,000 732,000 955,000 1,204,000
Repayment of long-term debt (224,000) (188,000) (400,000) (372,000)
Purchase of treasury stock (174,000) (304,000) (820,000) (304,000)
------------ ------------ ------------ ------------
Net cash provided by (used for) financing
activities 154,000 240,000 (265,000) 528,000
------------ ------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase price of companies acquired -- -- (1,924,000) --
Capital expenditures (398,000) (652,000) (852,000) (1,163,000)
------------ ------------ ------------ ------------
Net cash used for investing activities (398,000) (652,000) (2,776,000) (1,163,000)
------------ ------------ ------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 735,000 745,000 1,449,000 3,415,000
<PAGE> 6
CASH AND CASH EQUIVALENTS, beginning of period 18,529,000 16,662,000 17,815,000 13,992,000
------------ ------------ ------------ ------------
CASH AND CASH EQUIVALENTS, end of period $19,264,000 $17,407,000 $19,264,000 $17,407,000
============ ============ ============ ============
</TABLE>
<PAGE> 7
<TABLE>
AMERICAN CITY BUSINESS JOURNALS, INC. AND SUBSIDIARIES
--------------
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------- ----------------------------
1995 1994 1995 1994
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Revenues $29,518,000 $24,099,000 $54,389,000 $44,677,000
Operating expenses 24,835,000 20,177,000 47,803,000 39,476,000
------------ ------------ ------------ -------------
Operating income 4,683,000 3,922,000 6,586,000 5,201,000
Interest expense - net (1,152,000) (1,170,000) (2,302,000) (2,399,000)
Other income 10,000 2,000 10,000 3,000
------------ ------------ ------------ -------------
Income before income taxes 3,541,000 2,754,000 4,294,000 2,805,000
Provision for income taxes 1,452,000 1,157,000 1,761,000 1,178,000
------------ ------------ ------------ -------------
Net income $2,089,000 $1,597,000 $2,533,000 $1,627,000
============ ============ ============ =============
Income per common share <F1> (a):
Primary $.29 $.22 $.35 $.23
Fully diluted $.26 $.21 $.34 <F2> (b)
Weighted average shares
outstanding <F1> (a):
Primary 7,217 7,116 7,211 7,106
Fully diluted 9,215 9,128 9,209 ---
- ---------------
<FN>
<F1> (a) Adjusted to reflect 2 for 1 stock split effective April 29, 1994 and
5% stock dividend paid on January 16, 1995.
<F2> (b) Anti-dilutive.
<PAGE> 8
AMERICAN CITY BUSINESS JOURNALS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
1. The 1995 consolidated financial statements have been prepared by the
Company, without audit, and reflect all adjustments which are, in the
opinion of management, necessary to fairly present the financial position
and results of operations for the interim periods. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted, although the Company believes that the disclosures
are adequate to make the information presented not misleading. It is
suggested that these condensed financial statements be read in conjunction
with the consolidated financial statements and notes thereto for the year
ended December 31, 1994 included in the Company's Form 10-K filed March 29,
1995.
2. The consolidated financial statements include the accounts of American City
Business Journals, Inc., and its wholly owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated in
the consolidated statements.
3. Earnings per share are based on the weighted average number of common and
common equivalent shares outstanding during the respective periods adjusted
retroactively for a 2-for-1 common stock split distributed as a common
stock dividend April 29, 1994 to shareholders of record April 18, 1994, and
a 5% common stock dividend paid on January 16, 1995 to shareholders of
record December 15, 1994. Fully diluted computations assume conversion of
the convertible subordinated debentures at the beginning of the period.
4. In 1994 the Company acquired Winston Cup Illustrated magazine (September
1), The Austin Business Journal (October 1) and On Track magazine (October
21) for an aggregate purchase price of $3,525,000 comprised of $3,100,000
in cash, $300,000 in notes and $125,000 in non-competition agreements. The
excess ($2,100,000) of the purchase price plus the liabilities assumed
($1,100,000) over the appraised value of the assets acquired was charged to
goodwill. On February 1, 1995 the Company acquired Performance Printing,
Inc. for $1,300,000 in cash. The purchase price was allocated to the
assets acquired as determined by an independent appraisal. Also, on
January 20, 1995 the Company purchased a minority interest in Sunbelt
Video, Inc., for $624,000 in cash and obtained an option to acquire the
remaining shares in three years at appraised value.
<PAGE> 9
PART 1. FINANCIAL INFORMATION
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
---------------------------------------------------------------
Financial Condition and Liquidity:
- ----------------------------------
At June 30, 1995 the Company had a current ratio of 1.5:1 and over $19 million
in cash and cash equivalents. The level of liquidity increased from
December 31, 1994 from internally generated funds.
The Company believes its existing liquidity and cash flow from operations is
sufficient in 1995 to fund (a) interest ($5 million) and principal ($1 million)
on long-term debt and convertible subordinated debentures; (b) capital
additions of approximately $1.2 million for new production systems, computer
software and hardware upgrades and miscellaneous items of furniture and
equipment; (c) working capital requirements which are not expected to be
significant; and (d) the $2,488,000 of federal income taxes relating to years
prior to 1994 under the settlement initiative with the Internal Revenue Service
as described in Note 5 to the consolidated financial statements for the year
ended December 31, 1994.
The Company has no agreements in place for the extension of credit because no
such arrangements are deemed necessary.
Three Months Ended June 30, 1995 Compared to 1994:
- --------------------------------------------------
The comparative operating results are impacted by acquisitions as described in
Note 4 to the Consolidated Financial Statements.
Total revenue increased 22.5% for the quarter (12.2% excluding acquisitions).
Advertising revenue increased 15.5% (12.7% excluding acquisitions) from
increases in local and national advertising in the business journals and a
65.0% (29.2% excluding acquisitions) increase in advertising in the motorsports
publications. Advertising revenue, which comprised 72.9% of total revenue in
the second quarter of 1995, is sensitive to change in economic conditions and a
slowdown in the economy could adversely impact this revenue source.
Circulation revenue increased 20.0% (8.1% excluding acquisitions) from a 5.3%
increase in the business journals on a 2.1% increase in paid circulation and a
64.5% increase (17.2% excluding acquisitions) in the motorsports publications.
Paid circulation of the business journals was 329,310 at June 30, 1995 and paid
circulation of Winston Cup Scene increased 15.4% to 122,826 at June 30, 1995.
Other revenue increased 205.7% during the quarter primarily from the inclusion
of Performance Printing, Inc. For publications operated throughout both
periods, other revenue increased 26.9%.
Operating expenses increased 23.1% (10.4% at publications operated throughout
both periods). The increase consisted of normal compensation increases,
increased commissions on the increase in advertising sales, and increases in
printing and distribution expenses.
<PAGE> 10
Operating income increased $761,000 or 19.4% to $4,683,000 for the quarter from
increases in advertising and circulation revenue. Operating income as a
percent of total revenue was 15.9% (17.6% excluding acquisitions) for the
second quarter of 1995 compared to 16.3% in the second quarter of 1994.
Net interest expense decreased $18,000 from the second quarter of 1994
primarily from an increased level of invested funds. There were modest changes
in debt outstanding and a 1% increase in the interest rate on the Company's $20
series promissory notes.
The Company recorded income tax expense in the second quarter of 1995 at an
estimated effective rate of 41%, compared to an effective rate of 42% in the
second quarter of 1994.
Six Months Ended June 30, 1995 Compared to 1994:
- ------------------------------------------------
The comparative operating results are impacted by acquisitions as described in
Note 4 to the Consolidated Financial Statements.
Total revenue for the six months ended June 30, 1995 increased 21.7% over the
same period in 1994. Revenue of publications operated in both 1995 and 1994
increased 11.8%.
Advertising revenue increased 14.6% (12.0% excluding acquisitions) from
increases in local and national advertising in the business journals and a
73.4% (38.2% excluding acquisitions) increase in advertising in the motorsports
publications. Advertising revenue, which comprised 71.4% of total revenue for
the six months ended June 30, 1995, is sensitive to change in economic
conditions and a slowdown in the economy could adversely impact this revenue
source.
Circulation revenue increased 20.7% (9.3% excluding acquisitions) from
increases in both paid circulation and subscription rates. Motorsports
publications increased circulation revenue 63.8% (16.8% excluding acquisitions)
and the business journals increased 7.1%.
Other revenue increased 171.9% for the six months ended June 30, 1995 compared
with the same period in 1994, primarily from the inclusion of Performance
Printing, Inc. For publications operated throughout both periods, other
revenue increased 21.2%.
Operating expenses increased 21.1% (9.1% at publications operated throughout
both periods). The increase consisted of normal increases in compensation,
increased commissions on the increase in advertising sales, and increases in
printing and distribution expenses.
Operating income increased $1,385,000 or 26.6% for the six month period. The
increase resulted primarily from increased advertising and circulation revenue.
Net interest expense decreased $97,000 during the six months primarily from an
increased level of invested funds. There were modest changes in debt
outstanding and a 1% increase in the interest rate on the Company's $20 series
promissory notes.
<PAGE> 11
The Company recorded income tax expense at an estimated effective rate of 41%
for the six months ended June 30, 1995 compared to an effective rate of 42% for
the six months ended June 30, 1994.
<PAGE> 12
PART II OTHER INFORMATION
Item 1. Legal Proceedings
- ------- -----------------
The "Business Journal Serving San Jose and the Silicon Valley" ("SJBJ"), a
publication of the Registrant, a reporter and other non-related companies and
individuals, including the Maxtor Corporation, Gray Cary Ware & Freidenrich, a
professional corporation, are defendants in an action filed December 12, 1994
in the Superior Court of the State of California for the County of Santa Clara
by Peter Van Beckum. The plaintiff alleges libel out of an article published by
SJBJ on May 23, 1994 and claims unspecified damages. The matter was settled by
the parties in April, 1995.
Item 2. Changes in Securities
- ------- ---------------------
NOT APPLICABLE
Item 3. Defaults Upon Senior Securities
- ------- -------------------------------
NOT APPLICABLE
Item 4. Submission of Matters to a Vote of Security-Holders
- ------- ---------------------------------------------------
(a) The Annual Meeting of Shareholders took place in Charlotte, North
Carolina on May 19, 1995 at 10:00 a.m.
(b) The voting results were:
DIRECTOR FOR AGAINST ABSTAIN
---------------------------- ------------ ------------ ------------
Ray Shaw 6,067,409 -0- 56
Grant L. Hamrick 6,067,353 -0- 56
James H. Hance, Jr. 6,066,303 -0- 1106
John P. McMeel 6,067,338 -0- 21
Glenn Stinchcomb 6,067,178 -0- 231
George A. Wiegers 6,067,338 -0- 21
Ratification of Appointment of Independent Public Accountants
FOR AGAINST ABSTAIN
------------ ------------ ------------
6,065,339 1543 527
<PAGE> 13
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 hereunto duly authorized.
American City Business Journals, Inc.
(Registrant)
Date: July 31, 1995 By: /S/ RAY SHAW
-----------------------------------------
Ray Shaw
Chairman and
Chief Executive Officer
By: /S/ GRANT HAMRICK
-----------------------------------------
Grant Hamrick
Senior Vice President and
Chief Financial Officer
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR AMERICAN CITY BUSINESS JOURNALS, INC. AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000769339
<NAME> AMERICAN CITY BUSINESS JOURNALS, INC.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 19,264,000
<SECURITIES> 0
<RECEIVABLES> 13,856,000
<ALLOWANCES> 569,000
<INVENTORY> 0
<CURRENT-ASSETS> 34,538,000
<PP&E> 14,307,000
<DEPRECIATION> 8,513,000
<TOTAL-ASSETS> 94,480,000
<CURRENT-LIABILITIES> 23,150,000
<BONDS> 67,229,000
<COMMON> 8,375,000
0
0
<OTHER-SE> (7,116,000)
<TOTAL-LIABILITY-AND-EQUITY> 94,480,000
<SALES> 29,518,000
<TOTAL-REVENUES> 29,518,000
<CGS> 0
<TOTAL-COSTS> 12,476,690
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 158,000
<INTEREST-EXPENSE> 1,297,000
<INCOME-PRETAX> 3,541,000
<INCOME-TAX> 1,452,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,089,000
<EPS-PRIMARY> .29
<EPS-DILUTED> .26
</TABLE>
