<PAGE> 1
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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 quarterly period ended SEPTEMBER 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 1-9329
------------------------------
PULITZER PUBLISHING COMPANY
(Exact name of registrant as specified in its charter)
------------------------------
DELAWARE 430496290
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
900 NORTH TUCKER BOULEVARD, ST. LOUIS, MISSOURI 63101
(Address of principal executive offices)
(314) 340-8000
(Registrant's telephone number, including area code)
NO CHANGES
(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.
CLASS OUTSTANDING 10/31/95
---------------------- ----------------------
COMMON STOCK 4,609,073
CLASS B COMMON STOCK 11,774,207
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<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE DATA)
<TABLE>
<CAPTION>
Third Quarter Ended Three Quarters Ended
September 30, September 30,
------------------ --------------------
1995 1994 1995 1994
-------- --------- -------- ---------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
OPERATING REVENUES - NET:
Publishing:
Advertising $39,629 $44,152 $117,940 $131,452
Circulation 18,468 19,131 56,057 58,600
Other 7,223 11,016 21,981 32,921
Broadcasting 46,287 42,645 144,778 128,092
------- ------- -------- --------
Total operating revenues 111,607 116,944 340,756 351,065
------- ------- -------- --------
OPERATING EXPENSES:
Publishing operations 31,380 31,651 90,972 94,618
Broadcasting operations 15,709 15,219 46,958 45,587
Selling, general and administrative 38,228 42,378 114,448 128,759
St. Louis Agency adjustment 2,079 3,452 8,769 10,404
Depreciation and amortization 6,803 7,604 20,234 22,746
------- ------- -------- --------
Total operating expenses 94,199 100,304 281,381 302,114
------- ------- -------- --------
Operating income 17,408 16,640 59,375 48,951
------- ------- -------- --------
Interest income 1,253 514 3,724 1,321
Interest expense (2,400) (2,682) (7,605) (9,082)
Equity in net loss of joint ventures (408) (128) (1,081) (330)
Net other expense (83) (219) (574) (710)
------- ------- -------- --------
INCOME BEFORE PROVISION FOR INCOME
TAXES AND CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE 15,770 14,125 53,839 40,150
PROVISION FOR INCOME TAXES 6,073 5,771 20,973 16,413
------- ------- -------- --------
INCOME BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING PRINCIPLE 9,697 8,354 32,866 23,737
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE, NET OF
APPLICABLE INCOME TAXES (719)
------- ------- -------- --------
NET INCOME $9,697 $8,354 $32,866 $23,018
======= ======= ======== ========
</TABLE>
See notes to consolidated financial statements.
2
<PAGE> 3
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME (CONTINUED)
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE DATA)
<TABLE>
<CAPTION>
Third Quarter Ended Three Quarters Ended
September 30, September 30,
--------------------- ----------------------
1995 1994 1995 1994
--------- ---------- ---------- ---------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
EARNINGS PER SHARE OF STOCK
(COMMON AND CLASS B COMMON):
Income before cumulative effect of
change in accounting principle $0.59 $0.51 $2.01 $1.46
Cumulative effect of change in
accounting principle (0.04)
------ ------ ------ ------
Total $0.59 $0.51 $2.01 $1.42
====== ====== ====== ======
WEIGHTED AVERAGE NUMBER OF
SHARES (COMMON AND CLASS B
COMMON STOCK OUTSTANDING) 16,378 16,249 16,339 16,235
====== ====== ====== ======
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 4
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
(IN THOUSANDS)
<TABLE>
<CAPTION>
Sept. 30, Dec. 31,
1995 1994
------------- --------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $85,760 $77,084
Trade accounts receivable (less allowance for doubtful
accounts of $2,365 and $2,135) 62,186 62,943
Inventory 3,271 3,069
Prepaid expenses and other 6,370 6,783
Program rights 11,063 9,263
------------- --------------
Total current assets 168,650 159,142
------------- --------------
PROPERTIES:
Land 11,603 11,261
Buildings 60,158 58,795
Machinery and equipment 168,484 161,305
Construction in progress 10,909 4,444
------------- --------------
Total 251,154 235,805
Less accumulated depreciation 133,913 119,911
------------- --------------
Properties - net 117,241 115,894
------------- --------------
INTANGIBLE AND OTHER ASSETS:
Intangible assets - net of applicable amortization 119,636 125,415
Receivable from The Herald Company 44,205 44,059
Program rights, long-term portion 3,134 1,997
Other 26,183 21,805
------------- --------------
Total intangible and other assets 193,158 193,276
------------- --------------
TOTAL $479,049 $468,312
============= ==============
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 5
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Sept. 30, Dec. 31,
1995 1994
------------- --------------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable $13,669 $14,458
Current portion of long-term debt 14,250 14,250
Salaries, wages and commissions 11,297 11,541
Income taxes payable 1,621 6,331
Program contracts payable 11,956 8,864
Interest payable 2,124 3,480
Pension obligations 2,975 2,827
Other 4,417 662
------------- --------------
Total current liabilities 62,309 62,413
------------- --------------
LONG-TERM DEBT 114,500 128,750
------------- --------------
PROGRAM CONTRACTS PAYABLE 2,039 2,109
------------- --------------
PENSION OBLIGATIONS 21,861 23,593
------------- --------------
POSTRETIREMENT AND POSTEMPLOYMENT
BENEFIT OBLIGATIONS 93,031 91,966
------------- --------------
OTHER LONG-TERM LIABILITIES 4,044 4,462
------------- --------------
STOCKHOLDERS' EQUITY :
Preferred stock, $.01 par value; 25,000,000 shares
authorized; issued and outstanding - none
Common stock, $.01 par value; 100,000,000 shares authorized;
issued - 4,620,771 in 1995 and 4,444,099 in 1994 46 44
Class B common stock, convertible, $.01 par value; 50,000,000
shares authorized; issued - 20,549,845 in 1995 and
20,608,832 in 1994 206 182
Additional paid-in capital 124,484 122,094
Retained earnings 244,359 220,322
------------- --------------
Total 369,095 342,642
Treasury stock - at cost; 16,591 and 11,462 shares of common
stock in 1995 and 1994, respectively, and 8,775,638 shares of
Class B common stock in 1995 and 1994 (187,830) (187,623)
------------- --------------
Total stockholders' equity 181,265 155,019
------------- --------------
TOTAL $479,049 $468,312
============= ==============
</TABLE>
See notes to consolidated financial statements.
5
<PAGE> 6
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Quarters Ended
September 30,
-------------------------
1995 1994
------------ ---------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $32,866 $23,018
Adjustments to reconcile net income to net cash provided by
operating activities:
Non-cash items:
Cumulative effect of change in accounting principle, net of
applicable income taxes 719
Equity in net loss of joint ventures 1,081 330
Depreciation 14,340 15,298
Amortization of intangibles 5,894 7,448
Incremental increase in postretirement and postemployment
benefit obligations 1,065 2,304
Changes in assets and liabilities which provided (used) cash:
Trade accounts receivable 757 1,514
Inventory (202) 2,093
Other assets (4,358) 63
Trade accounts payable and other liabilities (2,849) 3,221
Income taxes payable (4,710) (3,746)
Program rights - net of contracts payable 85 149
------------ ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 43,969 52,411
------------ ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (15,986) (8,976)
Investment in joint venture (3,000)
Investment in limited partnerships (2,512)
Decrease in notes receivable 1,862 18
------------ ---------
NET CASH USED IN INVESTING ACTIVITIES (16,636) (11,958)
------------ ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments on long-term debt (14,250) (30,306)
Dividends paid (6,614) (5,648)
Proceeds from exercise of stock options 2,414 602
Purchase of treasury stock (207)
------------ ---------
NET CASH USED IN FINANCING ACTIVITIES (18,657) (35,352)
------------ ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 8,676 5,101
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 77,084 34,970
------------ ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $85,760 $40,071
============ =========
</TABLE>
See notes to consolidated financial statements.
6
<PAGE> 7
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. ACCOUNTING POLICIES
Interim Adjustments - In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments, consisting only of
normal recurring adjustments except for the cumulative effect adjustment
discussed in Note 3, necessary to present fairly Pulitzer Publishing Company's
financial position as of September 30, 1995 and the results of operations and
cash flows for the nine-month periods ended September 30, 1995 and 1994.
Results of operations for interim periods are not necessarily indicative of the
results to be expected for the full year.
Fiscal Year and Fiscal Quarters - The Company's fiscal year and third quarter
end on the Sunday coincident with or prior to December 31 and September 30,
respectively. For ease of presentation, the Company has used December 31 as
the year end and September 30 as the third quarter end.
Earnings Per Share of Stock - Earnings per share of stock have been computed
using the weighted average number of common and Class B common shares
outstanding during the applicable period.
2. DIVIDENDS
In the first quarter of 1994, two dividends of $0.115 per share were declared,
payable on February 1, 1994 and May 2, 1994. In the second quarter of 1994, a
dividend of $0.115 per share was declared, payable on August 1, 1994. In the
third quarter of 1994, a dividend of $0.115 per share was declared, payable on
November 1, 1994. In the first quarter of 1995, two dividends of $0.135 per
share were declared, payable on February 1, 1995 and May 1, 1995. In the
second quarter of 1995, a dividend of $0.135 per share was declared, payable on
August 1, 1995. In the third quarter of 1995, a dividend of $0.135 per share
was declared, payable on November 1, 1995.
In addition, a five-for-four stock split (payable in the form of a 25 percent
common and Class B common stock dividend) was declared by the Company's Board
of Directors on January 4, 1995. The dividend was distributed on January 24,
1995 to stockholders of record on January 13, 1995. Shares outstanding,
dividends per share and earnings per share have been restated for 1994 to
reflect the stock split.
3. POSTEMPLOYMENT BENEFITS
Effective January 1, 1994, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 112, Employers' Accounting for
Postemployment Benefits ("SFAS 112"), to account for certain disability
benefits at the St. Louis Post-Dispatch. SFAS 112 requires that the cost of
these benefits provided to former employees prior to retirement be recognized
on the accrual basis
7
<PAGE> 8
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
of accounting. Previously, the Company recognized its postemployment benefit
costs when paid. The cumulative effect of adopting SFAS 112 was a reduction of
1994 first quarter net income by approximately $719,000 or $0.04 per share.
After recording the cumulative effect adjustment, the Company's ongoing expense
under the new standard does not differ significantly from the prior
pay-as-you-go basis.
4. BUSINESS SEGMENTS
The Company's operations are divided into two business segments, publishing and
broadcasting. The following is a summary of operating data by segment (in
thousands):
<TABLE>
<CAPTION>
Third Quarter Ended Three Quarters Ended
September 30, September 30,
------------------- --------------------
1995 1994 1995 1994
-------- --------- -------- ---------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Operating revenues:
Publishing (a) $65,320 $74,299 $195,978 $222,973
Broadcasting 46,287 42,645 144,778 128,092
-------- --------- -------- ---------
Total $111,607 $116,944 $340,756 $351,065
======== ========= ======== =========
Operating income (loss):
Publishing (a) $5,485 $7,308 $18,453 $21,548
Broadcasting 13,079 10,298 44,210 30,327
Corporate (1,156) (966) (3,288) (2,924)
-------- --------- -------- ---------
Total $17,408 $16,640 $59,375 $48,951
======== ========= ======== =========
Depreciation and amortization:
Publishing (a) $1,052 $1,541 $3,110 $4,606
Broadcasting 5,751 6,063 17,124 18,140
-------- --------- -------- ---------
Total $6,803 $7,604 $20,234 $22,746
======== ========= ======== =========
Operating margins
(Operating income to revenues):
Publishing (a) (b) 11.6% 14.5% 13.9% 14.3%
Broadcasting 28.3% 24.1% 30.5% 23.7%
</TABLE>
(a) Publishing operations for 1994 include the results of Pulitzer
Community Newspapers, Inc., which was sold on December 22, 1994.
(b) Operating margins for publishing stated with St. Louis Agency
adjustment added back to publishing operating income.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
- -------------------------------------------------------------------------------
GENERAL
The Company's operating revenues are significantly influenced by a
number of factors, including overall advertising expenditures, the appeal of
newspapers, television and radio in comparison to other forms of advertising,
the performance of the Company in comparison to its competitors in specific
markets, the strength of the national economy and general economic conditions
and population growth in the markets served by the Company.
The Company's business tends to be seasonal, with peak revenues and
profits generally occurring in the fourth and, to a lesser extent, second
quarters of each year as a result of increased advertising activity during the
Christmas and spring holiday periods. The first quarter is historically the
weakest quarter for revenues and profits.
CONSOLIDATED
Operating revenues for the third quarter and first nine months of 1995
decreased 4.6 percent and 2.9 percent, respectively, compared with the
corresponding periods in the preceding year. Revenue comparisons were affected
by the sale of Pulitzer Community Newspapers, Inc. ("PCN") on December 22,
1994. The 1994 third quarter and first nine months included the results of
PCN, but due to the sale in December 1994, no amounts for PCN were included in
the 1995 periods. On a comparable basis (i.e., excluding PCN from 1994),
consolidated revenues increased 6.7 percent and 8.2 percent for the third
quarter and first nine months of 1995, respectively. The increases reflected
gains in both broadcasting and publishing revenues.
Operating expenses, excluding the St. Louis Agency adjustment, for the
third quarter and first nine months of 1995 decreased 4.9 percent and 6.5
percent, respectively, compared with the corresponding periods in the prior
year. On a comparable basis, excluding PCN from 1994, operating expenses
increased 8.1 percent and 6.2 percent for
9
<PAGE> 10
the third quarter and first nine months of 1995, respectively. These increases
were primarily attributable to increased newsprint costs ($4.4 million - third
quarter and $11.7 million - year to date), higher overall personnel costs ($1.6
million - year to date), increased promotion expense ($905,000 - third quarter
and $2 million - year to date) and the reversal in the prior year period of an
accrual due to the settlement of a sales tax issue ($437,000 - third quarter
and year to date). Expense increases were partially offset by lower
depreciation and amortization ($304,000 - third quarter and $1 million - year
to date), lower programming rights expense ($367,000 - third quarter and $1
million - year to date) and lower overall personnel costs ($358,000 - third
quarter).
Operating income in the 1995 third quarter and first nine months
increased to $17.4 million (4.6 percent) and $59.4 million (21.3 percent),
respectively. On a comparable basis, excluding PCN from 1994, operating income
increased 8.9 percent and 24.1 percent for the third quarter and first nine
months of 1995, respectively. The 1995 increases reflected improvements in the
broadcasting segment's operating income, resulting from increased revenues.
Interest expense decreased $282,000 in the 1995 third quarter and $1.5
million in the first nine months due to lower debt levels. The Company's
average debt level for the third quarter and the first nine months of 1995
decreased to $128.8 million and $134.9 million from $153.7 million and $164.8
million in the respective periods of the prior year. The Company's average
interest rate for the 1995 third quarter was unchanged from the prior year
quarter at 7.5 percent while the average rate for the first nine months of 1995
increased slightly to 7.5 percent from 7.4 percent in the prior year nine-month
period. The increase in the 1995 year to date average interest rate resulted
from the repayment and elimination of lower variable rate borrowings in the
fourth quarter of 1994. Interest income for the third quarter and first nine
months of 1995 increased $739,000 and $2.4 million, respectively, due to both a
higher average balance of invested funds and higher short-term interest rates.
The effective income tax rate for the third quarter and the first nine
months of 1995 decreased to 38.5 percent and 39 percent, respectively, from
40.9 percent in the both the prior year third quarter and nine-month periods.
The lower rates in 1995 reflected the
10
<PAGE> 11
Company's reduced exposure to further tax adjustments for open tax years,
following the settlement of the 1990-1992 federal tax examinations during 1994,
and the impact of the 1993 tax law changes in the deductibility of the
amortization of intangibles. It is expected that, on an annual basis, the
effective tax rate for 1995 will be in the 39 percent range, approximately the
same as the effective rate for the full year of 1994.
As discussed in Note 3 to the interim financial statements, effective
January 1, 1994 the Company adopted the provisions of Statement of Financial
Accounting Standards No. 112, Employers' Accounting for Postemployment Benefits
("SFAS 112"), and recorded its initial liability thereunder, resulting in a
one-time after-tax charge of $719,000. After recording the one-time charge,
the Company's ongoing expense under SFAS 112 does not differ significantly from
the prior pay-as-you-go basis.
Net income in the 1995 third quarter increased 16.1 percent to $9.7
million, or $0.59 per share, from $8.4 million, or $0.51 per share, in the
third quarter of 1994. Net income for the first nine months of 1995 increased
42.8 percent to $32.9 million, or $2.01 per share, from $23 million, or $1.42
per share, a year ago. The first nine months of 1994 included the
non-recurring SFAS 112 charge of $719,000, or $0.04 per share. Excluding the
non-recurring charge from 1994, net income for the first nine months of 1995
increased 38.5 percent. The gain in net income reflected an improvement in the
broadcasting segment's operating profits and a reduction in interest expense.
The sale of PCN had no effect on the net income comparisons because earnings
provided by PCN in 1994 were offset in 1995 by the after-tax investment income
generated by the sale proceeds.
PUBLISHING
Operating revenues from the Company's publishing segment for both the
third quarter and first nine months of 1995 decreased 12.1 percent, compared
with the corresponding periods of the prior year. On a comparable basis,
excluding PCN from 1994, publishing revenues increased 5.4 percent and 4.9
percent, respectively, for the
11
<PAGE> 12
1995 third quarter and first nine months. These increases reflected higher
advertising revenues, particularly classified, at both newspaper properties.
Newspaper advertising revenues, on a comparable basis, increased $2.3
million (6.3 percent) in the 1995 third quarter and $6.7 million (6 percent) in
the first nine months of 1995. The current year increases resulted from both
higher average rates ($1.5 million - third quarter and $5.6 million - year to
date) and higher advertising volume ($834,000 - third quarter and $1.1 million
- - year to date). In the first quarter of 1995, both the St. Louis
Post-Dispatch ("Post-Dispatch") and The Arizona Daily Star ("Star") implemented
rate increases for most advertising categories, ranging from 4 percent to 6
percent and 6 percent to 8 percent, respectively.
Circulation revenues, on a comparable basis, increased $658,000 (3.7
percent) for the 1995 third quarter and $1.5 million (2.7 percent) for the
first nine months of 1995. The current year increases resulted from
circulation price increases ($1.2 million - third quarter and $3.1
million - year to date) which were partially offset by average circulation
decreases ($590,608 - third quarter and $1.6 million - year to date). Average
daily and Sunday circulation of the Post-Dispatch for the third quarter of 1995
was 315,827 and 534,864 compared to 329,245 and 543,751 for the corresponding
1994 period, decreases of 4.1 percent and 1.6 percent, respectively. Effective
February 5, 1995, the home-delivered price of the Sunday Post-Dispatch was
increased $1.00 per month. In addition, the home-delivered price of the daily
Star was increased $0.80 per month, effective March 27, 1995.
Operating expenses (including selling, general and administrative
expenses and depreciation and amortization) for the publishing segment,
excluding the St. Louis Agency adjustment, decreased 9.1 percent and 11.7
percent, respectively, for the third quarter and first nine months of 1995. On
a comparable basis, excluding PCN from 1994, operating expenses increased 11.3
percent and 8.2 percent, respectively, for the third quarter and first nine
months of 1995. The higher expenses, on a comparable basis, resulted primarily
from increased newsprint cost ($4.4 million - third quarter and $11.7 million -
year to date), reflecting the impact of significant newsprint price increases,
and increased promotion expense ($891,000 - third quarter and $1.4 million -
year to date).
12
<PAGE> 13
Expense increases were partially offset by lower overall personnel costs
($790,000 - third quarter and $340,000 - year to date), primarily due to lower
postretirement benefit cost.
Operating income from the Company's publishing activities in the 1995
third quarter decreased 24.9 percent to $5.5 million from $7.3 million and in
the first nine months decreased 14.4 percent to $18.5 million from $21.5
million. On a comparable basis, excluding PCN from 1994, operating income from
the publishing segment decreased 17.6 percent and 9.7 percent, respectively,
for the third quarter and first nine months of 1995. The declines resulted
from the significant increase in newsprint costs which exceeded revenue gains
on a comparable basis.
Increasing newsprint prices added approximately $11.7 million to
newsprint expense ($6.5 million after giving effect to the St. Louis Agency
adjustment and excluding PCN from 1994) for the first nine months of 1995. The
most recent price increase on September 1, 1995 will further increase the
Company's average newsprint cost per ton in the fourth quarter of 1995.
Assuming no further price increases, the Company currently estimates that its
fourth quarter newsprint expense will increase by approximately $5.6 million
($3.3 million after giving effect to the St. Louis Agency adjustment and
excluding PCN from 1994). No assurance, however, can be given that the
estimated newsprint cost increase for the 1995 fourth quarter will be as
projected, and the actual cost increase may be higher or lower. For the full
year of 1994, the Company's newsprint cost, after giving effect to the St.
Louis Agency adjustment and excluding PCN, was approximately $22.8 million.
BROADCASTING
Broadcasting operating revenues for the third quarter and first nine
months of 1995 increased 8.5 percent and 13 percent over the comparable 1994
periods. Local spot advertising increased 3.8 percent and 7.3 percent,
respectively, for the third quarter and first nine months of 1995, and national
spot advertising increased 1.6 percent and 7.6 percent, respectively, for the
third quarter and nine-month period. In addition, network
13
<PAGE> 14
compensation revenue increased $2.6 million and $7.6 million, respectively, for
the third quarter and first nine months of 1995. The significant gains in
network compensation reflected the impact of new ten-year network affiliation
agreements executed in early 1995. For the full year of 1995, the new
agreements are expected to add approximately $10.5 million to the Company's
annual network compensation revenue. The Company anticipates, however, that
approximately $2 million of this revenue increase will be invested back into
its stations to strengthen their local news operations. These costs will be
reflected in the ongoing annual expenses of the broadcasting operations.
The lower rates of advertising revenue growth in the 1995 third
quarter (2.7 percent blended rate for local and national spot advertising)
compared to the first half of the year (9.8 percent) reflected a $1.3 million
decrease in political advertising and a slowdown in the percentage increase of
automotive advertising to 7.4 percent compared with 20.2 percent in the first
six months. The 1995 fourth quarter advertising revenue comparisons are
expected to be impacted by political advertising of $4.5 million in the prior
year period.
Broadcasting operating expenses (including selling, general and
administrative expenses and depreciation and amortization) for the third
quarter and first nine months of 1995 increased 2.7 percent and 2.9 percent,
respectively, compared to the prior year periods. Major increases in
comparable expenses were overall personnel costs ($532,000 - third quarter and
$2.2 million - year to date) and promotion expense ($619,000 - year to date).
Also contributing to the current year expense increases was the prior year
reversal of an accrual due to the settlement of a sales tax issue ($437,000 -
third quarter and year to date). Partially offsetting these increases were
declines in depreciation and amortization ($312,000 - third quarter and $1
million - year to date) and programming rights expense ($367,000 - third
quarter and $1 million - year to date).
14
<PAGE> 15
Operating income from the broadcasting segment in the 1995 third
quarter increased 27 percent to $13.1 million from $10.3 million and in the
first nine months increased 45.8 percent to $44.2 million from $30.3 million.
The increases for both periods resulted from a combination of increased
advertising revenues and higher network compensation.
LIQUIDITY AND CAPITAL RESOURCES
Outstanding debt, inclusive of the short-term portion of long-term
debt, as of September 30, 1995, was $128.8 million, compared with $143 million
at December 31, 1994. The decrease since the prior year end reflected a
scheduled repayment of $14.3 million under the Company's Senior Note Agreement
maturing in 1997.
As of September 30, 1995, the Company's long-term borrowings consisted
of $128.8 million of fixed-rate senior notes with The Prudential Insurance
Company of America.
The Company's Senior Note Agreements require it to maintain certain
financial ratios, place restrictions on the payment of dividends and prohibit
new borrowings, except as permitted thereunder.
As of September 30, 1995, commitments for capital expenditures were
approximately $12.2 million, relating to normal capital equipment replacements
and a portion of the costs for new facilities for television station WDSU in
New Orleans and the radio operations in Phoenix. Capital expenditures to be
made in fiscal 1995 are estimated to be approximately $25 million, of which
approximately $11.2 million represents the amount to substantially complete the
building projects in New Orleans and Phoenix. Commitments for film contracts
and license fees as of September 30, 1995 were approximately $21.9 million. In
addition, as of September 30, 1995, the Company had capital contribution
commitments of approximately $6.9 million related to investments in two limited
partnerships.
15
<PAGE> 16
At September 30, 1995, the Company had working capital of $106.3
million and a current ratio of 2.71 to 1. This compares to working capital of
$96.7 million and a current ratio of 2.55 to 1 at December 31, 1994.
The Company generally expects to generate sufficient cash from
operations to cover ordinary capital expenditures, film contract and license
fees, limited partnership contribution commitments, working capital
requirements, debt installments and dividend payments.
16
<PAGE> 17
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -------------------------------------------------------------------------------
(a) Exhibit Number 27 -- Financial Data Schedule
(b) Reports on Form 8-K. The Company did not file any reports on
Form 8-K during the quarter for which this report was filed.
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.
PULITZER PUBLISHING COMPANY
(Registrant)
Date: November 7, 1995 /s/ Ronald H. Ridgway
--------------------------------
(Ronald H. Ridgway)
Director; Senior Vice-President-Finance
(on behalf of the Registrant and
as principal financial officer)
17
<PAGE> 18
EXHIBIT INDEX
EXHIBIT NUMBER TITLE OR DESCRIPTION LOCATION
27 Financial Data Schedule Page 19
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 85,760
<SECURITIES> 0
<RECEIVABLES> 64,551
<ALLOWANCES> 2,365
<INVENTORY> 3,271
<CURRENT-ASSETS> 168,650
<PP&E> 251,154
<DEPRECIATION> 133,913
<TOTAL-ASSETS> 479,049
<CURRENT-LIABILITIES> 62,309
<BONDS> 114,500
<COMMON> 252
0
0
<OTHER-SE> 368,843
<TOTAL-LIABILITY-AND-EQUITY> 479,049
<SALES> 340,756
<TOTAL-REVENUES> 340,756
<CGS> 137,930
<TOTAL-COSTS> 137,930
<OTHER-EXPENSES> 20,234
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,605
<INCOME-PRETAX> 53,839
<INCOME-TAX> 20,973
<INCOME-CONTINUING> 32,866
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,866
<EPS-PRIMARY> 2.01
<EPS-DILUTED> 0
</TABLE>
