Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly 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 0-15367
OUTLET COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 05-0425681
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
23 Kenney Drive 02920
Cranston, Rhode Island (Zip Code)
(Address of principal executive offices)
(401) 455-9200
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report)
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
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding at
Class of Common Stock June 30, 1995
----------------------- ------------------
Class A Common Stock, par value $.01 per share 6,579,631 shares
<PAGE>
OUTLET COMMUNICATIONS, INC. AND SUBSIDIARIES
INDEX
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets --
June 30, 1995 and December 31, 1994
Condensed Consolidated Statements of Operations --
Three Months and Six Months Ended
June 30, 1995 and June 30, 1994
Condensed Consolidated Statements of Cash Flows --
Six Months Ended June 30, 1995 and
June 30, 1994
Notes to Condensed Consolidated Financial
Statements
Item 2. Management's Discussion and Analysis
Part II. Other Information
Item 1. Legal Proceedings
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
<PAGE>
PART I. FINANCIAL INFORMATION
OUTLET COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, June 30,
1994 1995
------------ ------------
(Note) (Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 7,840,000 $ 6,804,000
Trade accounts receivable, less allowance
for doubtful accounts (December--$321,000;
June--$352,000) 13,640,000 14,205,000
Film contract rights 3,350,000 1,792,000
Other current assets 1,171,000 1,104,000
------------ ------------
TOTAL CURRENT ASSETS 26,001,000 23,905,000
OTHER ASSETS
Film contract rights 1,012,000 856,000
Deferred financing costs 3,019,000 2,820,000
Other 380,000 556,000
------------ ------------
4,411,000 4,232,000
PROPERTY AND EQUIPMENT 49,632,000 55,540,000
Less accumulated depreciation 27,115,000 28,980,000
------------ ------------
22,517,000 26,560,000
INTANGIBLE ASSETS, less accumulated amortization
(December--$20,149,000; June--$21,411,000) 76,999,000 75,737,000
------------ ------------
$129,928,000 $130,434,000
============ ============
<PAGE>
OUTLET COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS-Continued
December 31, June 30,
1994 1995
------------ ------------
(Note) (Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 801,000 $ 1,254,000
Accrued expenses 10,394,000 10,247,000
Film contracts payable 4,174,000 1,891,000
Deferred revenue 833,000 833,000
Federal and state income taxes 2,724,000 2,015,000
Current portion of long-term debt 4,500,000 4,750,000
------------ ------------
TOTAL CURRENT LIABILITIES 23,426,000 20,990,000
LONG-TERM DEBT
Senior bank loan 15,000,000 12,500,000
10 7/8% Senior Subordinated Notes 60,000,000 60,000,000
------------ ------------
75,000,000 72,500,000
OTHER LIABILITIES
Film contracts payable 1,019,000 859,000
Unfunded pensions 2,355,000 2,337,000
Deferred revenue 3,889,000 3,472,000
Deferred income taxes 4,403,000 6,970,000
Other 3,432,000 3,432,000
------------ ------------
15,098,000 17,070,000
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common Stock 66,000 66,000
Capital Surplus 32,476,000 32,481,000
Accumulated deficit (16,138,000) (12,673,000)
------------ ------------
16,404,000 19,874,000
------------ ------------
$129,928,000 $130,434,000
============ ============
Note: The balance sheet at December 31, 1994 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
See accompanying notes.
<PAGE>
<TABLE>
OUTLET COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1994 1995 1994 1995
<S> <C> <C> <C> <C>
Net revenue $ 14,828,000 $ 17,857,000 $ 26,286,000 $ 31,327,000
Expenses:
Technical, programming and news 4,749,000 4,956,000 9,095,000 10,062,000
Selling, general and administrative 2,784,000 3,431,000 5,059,000 6,467,000
Corporate expenses 576,000 581,000 1,071,000 1,115,000
Depreciation 694,000 1,036,000 1,382,000 1,950,000
Amortization of intangible assets 620,000 631,000 1,210,000 1,262,000
------------ ------------ ------------ ------------
9,423,000 10,635,000 17,817,000 20,856,000
------------ ------------ ------------ ------------
Operating income 5,405,000 7,222,000 8,469,000 10,471,000
Other income (expense):
Interest expense (2,101,000) (2,145,000) (4,199,000) (4,264,000)
Interest income 19,000 103,000 29,000 192,000
Other income 62,000 102,000 132,000 148,000
Other expense (105,000) (282,000) (203,000) (515,000)
------------ ------------ ------------ ------------
Income before income taxes 3,280,000 5,000,000 4,228,000 6,032,000
Income taxes 1,438,000 2,127,000 1,829,000 2,567,000
------------ ------------ ------------ ------------
Net income $ 1,842,000 $ 2,873,000 $ 2,399,000 $ 3,465,000
============ ============ ============ ============
Income per common and common equivalent share $ 0.29 $ 0.42 $ 0.37 $ 0.51
============ ============ ============ ============
Weighted average number of shares of common stock
and common stock equivalents 6,564,973 6,790,246 6,564,744 6,790,079
============ ============ ============ ============
See accompanying notes.
</TABLE>
<PAGE>
OUTLET COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30, June 30,
1994 1995
------------ ------------
Cash from operations $ 5,559,000 $ 7,745,000
Investing activities:
Capital expenditures-net of disposals (1,341,000) (5,994,000)
Investment in time brokerage agreements (1,058,000) (542,000)
Investment in station acquisition (315,000)
------------ ------------
(2,714,000) (6,536,000)
Financing activities:
Payment of term loan (1,750,000) (2,250,000)
Other 8,000 5,000
------------ ------------
(1,742,000) (2,245,000)
------------ ------------
Net increase (decrease) in cash and cash $ 1,103,000 $ (1,036,000)
equivalents ============ ============
See accompanying notes.
<PAGE>
OUTLET COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
June 30, 1995
Note 1 - Basis of Presentation
-------------------------------
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the six month
period ended June 30, 1995 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1995. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's annual report on Form 10-K for the year
ended December 31, 1994.
Note 2 - Income (Loss) Per Share
---------------------------------
Income (loss) per share has been computed by dividing net income (loss)
by the weighted average number of shares of common stock and common stock
equivalents outstanding (when dilutive).
Note 3 - Contingent Liabilities and Commitments
------------------------------------------------
The Company has commitments to acquire approximately $11,652,000 of film
contract rights at June 30, 1995.
At June 30, 1995, the Company remains contingently liable on
approximately $12,016,000 of store leases associated with its retail division
which was sold as of the fiscal year ended January 31, 1983. All of the
leases have been assumed by others and management believes that future
payments, if any, would not be material to the Company's financial statements.
The Company also remains contingently liable on approximately $4,322,000
of building and tower leases related to radio and television stations sold in
March 1990.
The Company may be subject to litigation arising from its normal business
operations. Any liability which may result therefrom, to the extent not
provided by insurance or accruals, would not have a material effect on the
Company's financial position.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OUTLET COMMUNICATIONS, INC. AND SUBSIDIARIES
The Company's operations consist of three owned television stations and
one television station operated under a time brokerage agreement. The owned
stations include two NBC network-affiliated VHF television stations and one
UHF television station affiliated with The WB Television Network. The two VHF
television stations are WJAR, which serves the Providence, Rhode Island-New
Bedford, Massachusetts area and WCMH, which serves the Columbus, Ohio area.
The UHF television station, acquired by the Company on August 10, 1994, is
WNCN which serves the Raleigh-Durham (Fayetteville, Goldsboro and Rocky
Mount), North Carolina market area. WNCN is scheduled to become an NBC
affiliate on or before October 2, 1995.
Since April 18, 1994, the Company has also operated UHF television
station WWHO, Chillicothe, Ohio, under a time brokerage agreement with that
station's licensee. The Company serves as a broker for the sale of WWHO's
advertising time and provides it with certain programming and operating
capabilities. In return, the Company retains a substantial percentage of
WWHO's net operating income to the extent that it exceeds cumulative net
operating losses. WWHO is affiliated with The WB Television Network.
Three Months Ended June 30, 1995 and June 30, 1994
The following table sets forth a comparison of total Company operating
results for the second quarters of 1994 and 1995.
Three Months Ended June 30
1994 1995 Increase(Decrease)
Percent Percent 1995 vs. 1994
of Net of Net Percentage
Dollars in thousands Amount Revenue Amount Revenue Amount Change
--------------------- ------ -------- ------ -------- ------ ----------
Net revenue $14,828 100.0% $17,857 100.0% $3,029 20.4%
Expenses:
Technical, programming
and news 4,749 32.0 4,956 27.8 207 4.4
Selling, general and
administrative 2,784 18.7 3,431 19.2 647 23.2
Corporate expenses 576 3.9 581 3.3 5 .9
Depreciation and
amortization 1,314 8.9 1,667 9.3 353 26.9
Operating income $ 5,405 36.5% $ 7,222 40.4% $1,817 33.6
====== ====== ====== ====== =====
Net cash provided
by operations (a) $ 3,745 25.3% $ 5,429 30.4% $1,684 45.0%
====== ====== ====== ====== ===== =====
Operating cash
flow (a) $ 6,719 45.3% $ 8,889 49.8% $2,170 32.3%
====== ====== ====== ====== ===== =====
(a) "Net cash provided by operations" includes all cash flows
(including working capital changes) other than cash flows
associated with investing or financing activities.
"Operating cash flow" means operating income plus depreciation
and amortization.
<PAGE>
Net revenue of $17,857,000 in the second quarter of 1995 increased by
$3,029,000 or 20.4% compared with net revenue of $14,828,000 in the second
quarter of 1994. WJAR and WCMH increased their second quarter revenue by
22.1% and 8.7%, respectively, in comparison with the prior year period. Both
of these stations set second quarter revenue records. The 1994 station
additions, WNCN and WWHO, provided an aggregate revenue increase in the
current quarter of 7%.
Benefiting from strong viewer ratings, advertising rates continued to
trend upward, particularly at WJAR. WJAR's revenue from local and national
advertising sources increased by more than 13% and 22%, respectively. The
station accounted for approximately 40% of the Company's total second quarter
revenue gain. At WCMH, local revenue was only slightly ahead of the prior
year. The station's improvement in second quarter revenue principally
resulted from an increase of approximately 17% in national revenue. Both VHF
television stations more than doubled their network compensation for the 1994
second quarter.
Technical, programming and news expenses of $4,956,000 in the 1995 second
quarter increased by $207,000 or 4.4% from $4,749,000 in the prior year
period. All of the increase was attributable to the inclusion of operating
expenses for WNCN and WWHO in the current year's quarter. Due primarily to
continued reductions in film syndication costs, the Company's VHF television
stations experienced an 8.2% decrease in technical, programming and news
expenses. Also contributing to the favorable expense comparison with the
prior year was the elimination of added news costs incurred by WJAR in May
1994 upon President Clinton's visit to the station. At that time, WJAR hosted
and telecast a President's town meeting program. As a percent to revenue,
technical, programming and news expenses were reduced to 27.8% in the current
quarter from 32% a year ago.
Selling, general and administrative expenses of $3,431,000 in the second
quarter of 1995 increased by $647,000 or 23.2% compared with $2,784,000 in the
1994 second quarter. The increase reflected the 1994 additions of WNCN and
WWHO. There was also an increase in sales commissions expense resulting from
the revenue improvement provided by stations WJAR and WCMH. This expense
increase, however, was offset by reductions in pension costs. As a percentage
of revenue, selling, general and administrative expenses increased to 19.2% in
the 1995 second quarter from 18.7% a year ago.
Corporate expenses had a minor increase of $5,000 or .9% compared with
the prior year period. As a percent to revenue, such expenses decreased to
3.3% in the current quarter from 3.9% a year ago. Depreciation expense and
amortization of intangibles both increased in the 1995 second quarter due to
the Company's 1994 investments in television stations WNCN and WWHO.
Total expenses of $10,635,000 in the second quarter of 1995 increased by
$1,212,000 or 12.9% from $9,423,000 in the prior year. The increase was
virtually all attributable to the 1994 station additions described above. As
a percentage of revenue, total 1995 second quarter expenses were 59.6%, down
from 63.5% in the prior year period.
<PAGE>
Operating income of $7,222,000 in the 1995 second quarter increased by
$1,817,000 or 33.6% compared with $5,405,000 in the prior year. Operating
income also increased as a percentage of revenue, from 36.5% in the second
quarter of 1994 to 40.4% in the second quarter of 1995. The improvement in
operating income was the result of a 20.4% increase in revenue reduced by a
12.9% increase in total expenses.
The increased operating income contributed to the Company's improvement
of $1,684,000 in net cash provided by operations. Similarly, operating cash
flow of $8,889,000 increased by $2,170,000 or 32.3% from last year's
$6,719,000. Operating cash flow in the current year represented 49.8% of
revenue compared with 45.3% of revenue in the prior year.
In the second quarter of 1995, total interest expense of $2,145,000
increased by $44,000 or 2.1% compared to $2,101,000 a year ago. The Company
has reduced its outstanding long-term debt by making quarterly payments on a
term loan with a bank. However, rising market interest rates caused the
interest rate on such borrowing to increase. This resulted in an increase in
the current quarter's interest expense. The ratio of operating cash flow -
$8,889,000, to interest expense - $2,145,000, in the 1995 second quarter was
4.1 to 1. In the second quarter of 1994, this ratio was 3.2 to 1.
Interest income improved in 1995 because of increased cash balances
maintained during the current period and because of higher returns on invested
funds. The increase in other expense in 1995 included added costs of stock
options and other charges associated with the UHF stations.
The Company's 1995 second quarter income before income taxes totalled
$5,000,000. This was an improvement of $1,720,000 or 52.4% compared with
pretax income in the prior year period of $3,280,000. After a 1995 second
quarter provision for income taxes of $2,127,000, which increased deferred
income taxes payable, net income was $2,873,000 or $.42 per share. This
compares with 1994 second quarter net income of $1,842,000 or $.29 per share.
Net cash provided by operations in the second quarter of 1995 totalled
$5,429,000. This was an increase of $1,684,000 or 45% compared to net cash
provided by operations of $3,745,000 in the second quarter of 1994. The
increase reflects the Company's improved operating results.
During the second quarter of 1995, the Company increased its cash
investment in film contract rights by $1,454,000, primarily by making payment
on film contract obligations. After giving effect to the period's
amortization of film contract rights of $1,111,000, the increased net
investment in film contract rights was $343,000. This compares with a cash
investment in film contract rights of $1,247,000 during the second quarter of
1994 and a net increased investment in film contract rights of $241,000 for
that period.
<PAGE>
The Company's increased volume of business activity, along with
additional television properties, caused outstanding trade accounts receivable
to trend higher in the 1995 second quarter compared with the same period a
year ago.
Six Months Ended June 30, 1995 and June 30, 1994
The following table sets forth a comparison of total Company operating
results for the first six months of 1994 and 1995.
Six Months Ended June 30
1994 1995 Increase(Decrease)
Percent Percent 1995 vs. 1994
of Net of Net Percentage
Dollars in thousands Amount Revenue Amount Revenue Amount Change
--------------------- ------ -------- ------ -------- ------ ----------
Net revenue $26,286 100.0% $31,327 100.0% $5,041 19.2%
Expenses:
Technical, programming
and news 9,095 34.6 10,062 32.1 967 10.6
Selling, general and
administrative 5,059 19.2 6,467 20.6 1,408 27.8
Corporate expenses 1,071 4.1 1,115 3.6 44 4.1
Depreciation and
amortization 2,592 9.9 3,212 10.3 620 23.9
Operating income $ 8,469 32.2% $10,471 33.4% $2,002 23.6
====== ====== ====== ====== =====
Net cash provided
by operations (a) $ 5,559 21.1% $ 7,745 24.7% $2,186 39.3%
====== ====== ====== ====== ===== =====
Operating cash
flow (a) $11,061 42.1% $13,683 43.7% $2,622 23.7%
====== ====== ====== ====== ===== =====
(a) "Net cash provided by operations" includes all cash flows
(including working capital changes) other than cash flows
associated with investing or financing activities.
"Operating cash flow" means operating income plus depreciation
and amortization.
For the first half of 1995, net revenue totalled $31,327,000. This was
an increase of $5,041,000 or 19.2% compared with $26,286,000 in the prior year
period. Improved economic conditions and strong viewer ratings continued to
contribute to the increased revenue performance. Both of the Company's VHF
television stations maintained higher unit advertising rates in the first six
months of 1995 compared to 1994. The higher rates, combined with the effect
of two UHF television stations added during 1994, accounted for most of the
increased revenue.
Television stations WJAR and WCMH had year-to-date revenue gains of 21.9%
and 5.4% respectively. Revenues from local and national advertising sources
at these two television stations increased over the prior year by 4.9% and
13.8%, respectively. Network compensation increased by more than 89%. The
revenue increase provided by television stations WWHO and WNCN amounted to
approximately 7.6% of the prior year's revenue total.
<PAGE>
Technical, programming and news expenses of $10,062,000 increased by
$967,000 or 10.6% in the first six months of 1995 compared with the same
period a year ago. The increase resulted from inclusion of expenses of
stations WWHO and WNCN in the current year. In a year-to-year comparison of
technical, programming and news expenses at the VHF stations, there was a 5.1%
decrease due, primarily, to a reduction in film syndication costs.
In the first six months of 1995, selling, general and administrative
expenses increased over the prior year period by $1,408,000, or 27.8%, of
which $1,350,000 resulted from new station additions, WWHO and WNCN. The
remaining increase primarily represents additional sales commissions payable
on increased revenues. Depreciation expense and amortization of intangibles
also increased in the first six months of 1995 because of the Company's prior
year investments in WWHO and WNCN.
Total expenses of $20,856,000 in the first half of 1995 increased by
$3,039,000 or 17.1% compared to $17,817,000 in the same prior year period.
However, as a percentage of revenue, total expenses for the 1995 year-to-date
were reduced to 66.6% from 67.8% in the first half of 1994.
The Company's operating income for the first half of 1995 of $10,471,000
increased by $2,002,000 or 23.6% when compared with operating income of
$8,469,000 in the first half of 1994. The improvement in operating income
resulted from the combined effect of a 19.2% increase in revenues reduced by a
17.1% increase in total expenses.
Interest expense increased by $65,000 in the first six months of 1995
compared with the first six months of 1994. This resulted from the impact of
rising market interest rates on the borrowing rate of the Company's senior
loan with a bank. Interest income improved in 1995 because of increased cash
balances maintained during the current period and because of higher returns on
invested funds.
In the first half of 1995, the ratio of operating cash flow -
$13,683,000, to interest expense - $4,264,000, was 3.2 to 1. In the first
half of 1994, this ratio was 2.6 to 1.
The Company's 1995 first half income before income taxes amounted to
$6,032,000. This was an improvement of $1,804,000 compared to pretax income
of $4,228,000 in the prior year period. After a 1995 first half provision for
income taxes of $2,567,000, which increased deferred income taxes payable, net
income was $3,465,000 or $.51 per share. This compares with net income in the
first half of 1994 of $2,399,000 or $.37 per share.
<PAGE>
Net cash provided by operations in the first six months of 1995 totalled
$7,745,000. This was an increase of $2,186,000 or 39.3% compared with net
cash provided by operations of $5,559,000 in the first six months of 1994.
The improvement primarily represents the benefits of the Company's increased
operating income. Cash payments for 1995 first half interest installments
increased only slightly, to $4,108,000 from $4,041,000 in the prior year
period.
During the first six months of 1995, the Company increased its cash
investment in film contract rights by $3,043,000, primarily by making payment
on film contract obligations. After giving effect to the period's
amortization of film contract rights in the amount of $2,314,000, the
increased net investment in film contract rights was $729,000. This compares
with a cash investment in film contract rights of $2,688,000 during the first
half of 1994 and a net increased investment in film contract rights of
$252,000 for that period.
The Company's increased volume of business activity resulted in a higher
level of outstanding trade accounts receivable which, in the first half of
1995, increased by $565,000. In the first six months of the prior year, there
was an increase in trade accounts receivable of $1,124,000.
The Company increased its trade accounts payable by $453,000 in the first
six months of 1995. This compares with an increase of $285,000 in the first
six months of 1994. The current year's increase primarily represents unpaid
trade obligations of WNCN.
Cash required by investing activities in the first six months of 1995
amounted to $6,536,000 and included capital expenditures totalling $5,994,000.
Substantial capital expenditures were made during the period in behalf of
WNCN. Beginning in the 1995 second quarter, WNCN moved its broadcast studio
and offices to a newly leased facility in Raleigh, North Carolina. This
required capital outlays for new equipment, fixtures and studio and office
renovations.
Investing activities also include payments of $542,000 made in connection
with entering into a time brokerage agreement with the licensee of a
television station to be constructed and operated in New Bedford,
Massachusetts. Subject to final regulatory approvals, it is expected that the
New Bedford station will be operational in the 1995 fourth quarter. It is
also anticipated that any further funds required in this venture will be
available from internal operations.
In the first six months of 1994, cash required by investing activities
totalled $2,714,000. This included capital expenditures of $1,341,000 and an
investment of $1,055,000 pursuant to a time brokerage agreement entered into
with the licensee of television station WWHO. Investing activities also
included a deposit payment of $315,000 made in connection with the Company's
agreement to purchase television station WNCN. This acquisition closed in
August 1994 at a total purchase cost of $5,372,500.
<PAGE>
Cash used by financing activities in the first six months of 1995
totalled $2,245,000. This included payment of quarterly installments due on a
term loan with the Company's senior bank lender in the amount of $2,250,000.
In the first half of 1994, cash used by financing activities of $1,742,000
included payment of such quarterly term loan installments totalling
$1,750,000.
As a result of improved operations, the Company increased its net working
capital (excess of current assets over current liabilities) to $2,915,000 at
June 30, 1995 from $2,575,000 at December 31, 1994. The approximate 1.1 to 1
ratio of current assets to current liabilities at December 31, 1994 remained
unchanged at June 30, 1995. However, because cash used in investing and
financing activities exceeded the net cash provided by operations, there was a
net decrease in cash on hand during the first six months of 1995 of
$1,036,000.
The Company is benefitting from growth and improved operating results.
It is expected that continuation of this favorable trend, combined with
amounts currently available under the revolving credit facility ($5,000,000),
will provide adequate liquidity for the Company to meet its ongoing operating
and capital expenditure needs.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
---------------------------
There are no pending legal proceedings or actions against the Company or
its subsidiaries which would have a material effect on the business or
financial condition of the Company except for the legal proceedings and
contingent lease and film obligations as described in Note 3 to the
consolidated condensed financial statements on page 7 of this report.
Item 5. Other Information
---------------------------
In a letter dated July 17, 1995, Mr. Victor H. Palmieri, Director,
submitted his resignation as a member of the Company's Board of Directors,
effective July 31, 1995. The resignation date coincides with the date The
Palmieri Company, of which Mr. Palmieri is Chairman, concluded its contract to
provide management services to MBL Life Assurance Corp., a 32% stockholder of
the Company.
On July 26, 1995 the Company reported that it had entered into a time
brokerage agreement with BAF Enterprises, Inc., licensee of a television
station to be constructed and operated in New Bedford, Massachusetts. Subject
to obtaining final regulatory approvals, it is expected that the New Bedford
station will be operational in the 1995 fourth quarter.
On August 2, 1995 the Company terminated its merger agreement dated June
30, 1995 entered into with Renaissance Communications Corp. and Renaissance
Communications Acquisition Corp. and executed a definitive merger agreement
with the National Broadcasting Company, Inc. ("NBC") and CO Acquisition
Corporation, a subsidiary of NBC, providing for a transaction in which NBC
would acquire the Company and the Company's stockholders would receive $47.25
per common share in cash. The merger agreement was approved by the Company's
Board of Directors and by the holders of a majority of the Company's
outstanding common stock. Closing of the transaction remains subject to
approval by the Federal Communications Commission, the expiration of the
required waiting period under the antitrust laws and other customary closing
conditions.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
------------------------------------------
(a) Exhibits -- None.
(b) Reports on Form 8-K
A report on Form 8-K dated June 30, 1995 was filed regarding the
Company entering into a merger agreement with Renaissance Communications Corp.
and Renaissance Communications Acquisition Corp. (together referred to as
"Renaissance") whereby Renaissance would acquire the Company, by way of
merger, upon Renaissance making a cash payment of $42.25 per common share to
the Company's stockholders.
<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.
OUTLET COMMUNICATIONS, INC.
-----------------------------
(Registrant)
Date August 9, 1995 /s/ James G. Babb
------------------- --------------------------------
James G. Babb
Chairman of the Board,
President and
Chief Executive Officer
Date August 9, 1995 /s/ Felix W. Oziemblewski
-------------------- ---------------------------------
Felix W. Oziemblewski
Vice President-
Chief Financial Officer
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