<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 JUNE 30, 1997
--------------
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 7/31/97
-------------------- -------------------
COMMON STOCK 6,711,950
CLASS B COMMON STOCK 15,446,742
================================================================================
<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>
Second Quarter Ended Two Quarters Ended
June 30, June 30,
-------------------------------- --------------------------------
OPERATING REVENUES - NET: 1997 1996 1997 1996
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Publishing: (Unaudited) (Unaudited)
Advertising $ 58,446 $ 42,541 $112,373 $ 82,454
Circulation 21,755 18,755 44,189 37,794
Other 10,104 7,225 19,578 14,462
Broadcasting 61,093 59,053 111,264 108,570
-------- -------- -------- --------
Total operating revenues 151,398 127,574 287,404 243,280
-------- -------- -------- --------
OPERATING EXPENSES:
Publishing operations 35,511 33,093 70,044 66,031
Broadcasting operations 16,995 16,472 33,989 32,743
Selling, general and administrative 47,821 40,724 93,603 80,216
St. Louis Agency adjustment 5,500 2,873 10,429 4,631
Depreciation and amortization 9,237 6,745 18,420 13,486
-------- -------- -------- --------
Total operating expenses 115,064 99,907 226,485 197,107
-------- -------- -------- --------
Operating income 36,334 27,667 60,919 46,173
Interest income 1,051 1,347 2,646 2,775
Interest expense (4,174) (2,154) (8,699) (4,543)
Net other expense (240) (290) (705) (998)
-------- -------- -------- --------
INCOME BEFORE PROVISION FOR
INCOME TAXES 32,971 26,570 54,161 43,407
PROVISION FOR INCOME TAXES 13,290 10,385 21,985 16,981
-------- -------- -------- --------
NET INCOME $ 19,681 $ 16,185 $ 32,176 $ 26,426
======== ======== ======== ========
EARNINGS PER SHARE OF STOCK
(COMMON AND CLASS B COMMON) $ 0.89 $ 0.74 $ 1.46 $ 1.21
======== ======== ======== ========
WEIGHTED AVERAGE NUMBER OF
SHARES (COMMON AND CLASS B
COMMON STOCK OUTSTANDING) 22,081 21,912 22,054 21,890
======== ======== ======== ========
</TABLE>
See notes to consolidated financial statements.
2
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PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
(IN THOUSANDS)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $77,173 $73,052
Trade accounts receivable (less allowance for
doubtful accounts of $2,755 and $2,576) 81,135 80,010
Inventory 5,721 4,976
Prepaid expenses and other 9,438 5,650
Program rights 2,958 8,452
-------- --------
Total current assets 176,425 172,140
-------- --------
PROPERTIES:
Land 15,457 14,692
Buildings 79,857 78,733
Machinery and equipment 213,701 209,854
Construction in progress 7,939 2,071
-------- --------
Total 316,954 305,350
Less accumulated depreciation 161,048 149,418
-------- --------
Properties - net 155,906 155,932
-------- --------
INTANGIBLE AND OTHER ASSETS:
Intangible assets - net of applicable amortization 292,957 298,305
Receivable from The Herald Company 39,608 39,955
Other 14,760 17,519
-------- --------
Total intangible and other assets 347,325 355,779
-------- --------
TOTAL $679,656 $683,851
======== ========
(Continued)
</TABLE>
3
<PAGE> 4
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
-------------- --------------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable $14,466 $13,355
Current portion of long-term debt 205 14,705
Salaries, wages and commissions 12,849 14,897
Income taxes payable 1,166 1,267
Program contracts payable 3,213 8,916
Interest payable 6,253 7,177
Pension obligations 2,123 2,123
Acquisition payable 9,804 9,804
Other 7,228 4,566
------------ ------------
Total current liabilities 57,307 76,810
------------ ------------
LONG-TERM DEBT 223,205 235,410
------------ ------------
PENSION OBLIGATIONS 25,731 23,415
------------ ------------
POSTRETIREMENT AND POSTEMPLOYMENT
BENEFIT OBLIGATIONS 92,317 92,252
------------ ------------
OTHER LONG-TERM LIABILITIES 5,583 6,027
------------ ------------
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 - 6,678,876 in 1997 and 6,498,215 in 1996 66 65
Class B common stock, convertible, $.01 par value; 50,000,000
shares authorized; issued - 27,150,592 in 1997 and
27,214,842 in 1996 272 272
Additional paid-in capital 131,205 129,173
Retained earnings 331,854 308,283
------------ ------------
Total 463,397 437,793
Treasury stock - at cost; 23,400 and 22,811 shares of common
stock in 1997 and 1996, respectively, and 11,700,850 shares
of Class B common stock in 1997 and 1996 (187,884) (187,856)
------------ ------------
Total stockholders' equity 275,513 249,937
------------ ------------
TOTAL $679,656 $683,851
============ ============
</TABLE>
(Concluded)
See notes to consolidated financial statements.
4
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PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Two Quarters Ended
June 30,
-------------------------------
1997 1996
-------------- ---------------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $32,176 $ 26,426
Adjustments to reconcile net income to net cash provided by
operating activities:
Non-cash items:
Depreciation 11,631 9,558
Amortization of intangibles 6,789 3,928
Increase in postretirement and postemployment
benefit obligations 65 960
Changes in assets and liabilities which provided (used) cash:
Trade accounts receivable (1,125) (3,930)
Inventory (745) 1,319
Other assets (4,306) 2,473
Trade accounts payable and other liabilities 143 2,280
Income taxes payable (101) 357
------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 44,527 43,371
------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (10,927) (10,141)
Purchase of broadcast assets (1,849)
Investment in limited partnerships (2,175) (2,477)
Decrease (increase) in notes receivable 4,972 (5,099)
------- --------
NET CASH USED IN INVESTING ACTIVITIES (9,979) (17,717)
------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments on long-term debt (26,705) (14,250)
Dividends paid (5,727) (4,919)
Proceeds from exercise of stock options 2,033 1,489
Purchase of treasury stock (28)
------- --------
NET CASH USED IN FINANCING ACTIVITIES (30,427) (17,680)
------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 4,121 7,974
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 73,052 100,380
------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $77,173 $108,354
======= ========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE> 6
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, necessary to present
fairly Pulitzer Publishing Company's financial position as of June 30, 1997
and the results of operations and cash flows for the six-month periods
ended June 30, 1997 and 1996. 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 second
fiscal quarter end on the Sunday coincident with or prior to December 31
and June 30, respectively. For ease of presentation, the Company has used
December 31 as the year end and June 30 as the second 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.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, Earnings per Share ("SFAS 128").
This statement simplifies the standards for computing earnings per share
("EPS"), making them comparable to international standards, and supersedes
Accounting Principles Board Opinion No. 15, Earnings Per Share ("APB 15").
SFAS 128 replaces the presentation of primary EPS with a presentation of
basic EPS. The statement also requires dual presentation of basic and
diluted EPS on the face of the income statement for all entities with
complex capital structures and requires a reconciliation of the numerator
and denominator of the basic EPS computation to the numerator and
denominator of the diluted EPS computation. This statement is effective
for the Company's financial statements to be issued for the year ending
December 31, 1997. After the effective date, all prior period EPS data
presented must be restated to conform to the provisions of SFAS 128. The
adoption of SFAS 128 is not expected to have a significant impact on the
Company's earnings per share.
2. DIVIDENDS
In the first quarter of 1997, two dividends of $0.13 per share were
declared, payable on February 3, 1997 and May 1, 1997. In the second
quarter of 1997, a dividend of $0.13 per share was declared, payable on
August 1, 1997.
In the first quarter of 1996, two dividends of $0.1125 per share were
declared, payable on February 1, 1996 and May 1, 1996. In the second
quarter of 1996, a dividend of $0.1125 per share was declared, payable on
August 1, 1996. In the third
6
<PAGE> 7
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
quarter of 1996, a dividend of $0.12 per share was declared, payable on
November 1, 1996.
In addition, a four-for-three stock split (payable in the form of a 33.3
percent common and Class B common stock dividend) was declared by the
Company's Board of Directors on September 12, 1996. The dividend was
distributed on November 1, 1996 to stockholders of record on October 10,
1996. The Company's capital balances and share amounts have been adjusted
to reflect the split
3. 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>
Second Quarter Ended Two Quarters Ended
June 30, June 30,
---------------------------------- ----------------------------------
1997 1996 1997 1996
---------------- ---------------- ---------------- ----------------
Operating revenues: (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Publishing (a) $ 90,305 $ 68,521 $176,140 $134,710
Broadcasting 61,093 59,053 111,264 108,570
-------- -------- -------- --------
Total $151,398 $127,574 $287,404 $243,280
======== ======== ======== ========
Operating income (loss):
Publishing (a) $ 12,888 $ 5,666 $ 24,038 $ 10,464
Broadcasting 24,818 23,391 39,637 38,386
Corporate (1,372) (1,390) (2,756) (2,677)
-------- -------- -------- --------
Total $ 36,334 $ 27,667 $ 60,919 $ 46,173
======== ======== ======== ========
Depreciation and amortization:
Publishing (a) $ 3,387 $ 1,125 $ 6,736 $ 2,247
Broadcasting 5,850 5,620 11,684 11,239
-------- -------- -------- --------
Total $ 9,237 $ 6,745 $ 18,420 $ 13,486
======== ======== ======== ========
Operating margins
(Operating income to revenues):
Publishing (a) (b) 20.4% 12.5% 19.6% 11.2%
Broadcasting 40.6% 39.6% 35.6% 35.4%
</TABLE>
(a) Publishing operations for 1997 include the results of
Scripps League Newspapers, Inc.(subsequently renamed Pulitzer
Community Newspapers, Inc.), which was acquired on July 1,
1996. See Note 4.
(b) Operating margins for publishing stated with St. Louis
Agency adjustment added back to publishing operating income.
7
<PAGE> 8
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
4. ACQUISITION OF PROPERTIES
On July 1, 1996, the Company acquired in a purchase transaction all of the
stock of Scripps League Newspapers, Inc. ("Scripps League"), a privately
owned company that publishes a group of community newspapers, including 14
dailies, which serve smaller markets, primarily in the West and Midwest.
The purchase price of approximately $216 million (including acquisition
costs) includes all of the operating assets of the newspapers, working
capital of approximately $6 million and intangibles. The acquisition was
financed by long-term borrowings of $135 million and cash of approximately
$81 million (approximately $69 million net of cash acquired). The
Company's Statement of Consolidated Income for the six-month period ended
June 30, 1997 includes the operating results of Scripps League
(subsequently renamed Pulitzer Community Newspapers, Inc.).
The following supplemental unaudited pro forma information shows the
results of operations of the Company for the six-month period ended June
30, 1996 adjusted for the acquisition of Scripps League, assuming such
transaction and the related debt financing had been consummated at the
beginning of the period presented. The unaudited pro forma financial
information is not necessarily indicative either of results of operations
that would have occurred had the transaction occurred at the beginning of
the period presented or of future results of operations (in thousands,
except per share amounts).
Two Quarters Ended June 30, 1996 (Unaudited):
Operating revenues - net $276,107
========
Operating income $ 49,542
========
Net income $ 23,445
========
Earnings per share of stock (common
and Class B common) $ 1.07
========
Weighted average number of shares (common
and Class B common stock outstanding) 21,890
========
8
<PAGE> 9
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
5. STOCK PURCHASE PLAN
On April 24, 1997, the Company's stockholders approved the adoption of the
Pulitzer Publishing Company 1997 Employee Stock Purchase Plan (the "Plan").
The Plan allows eligible employees to authorize payroll deductions for the
quarterly purchase of the Company's Common Stock ("Common Stock") at a price
generally equal to 85 percent of the Common Stock's fair market value at
the end of each quarter. The Plan began operations as of July 1, 1997.
In general, other than Michael E. Pulitzer, all employees of the Company
and its subsidiaries are eligible to participate in the Plan after
completing at least one year of service. Subject to appropriate adjustment
for stock splits and other capital changes, the Company may sell a total of
500,000 shares of its Common Stock under the Plan. Shares sold under the
Plan may be authorized and unissued or held by the Company in its treasury.
The Company may purchase shares for resale under the Plan.
6. LITIGATION
The Company and its subsidiaries are defendants in a number of lawsuits,
some of which claim substantial amounts. While the results of litigation
cannot be predicted, management believes the ultimate outcome of such
litigation will not have a material adverse effect on the consolidated
financial statements of the Company and its subsidiaries.
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Statements in this Quarterly Report on Form 10-Q concerning the Company's
business outlook or future economic performance, anticipated profitability,
revenues, expenses or other financial items, together with other statements
that are not historical facts, are "forward-looking statements" as that term is
defined under the Federal Securities Laws. Forward-looking statements are
subject to risks, uncertainties and other factors which could cause actual
results to differ materially from those stated in such statements. Such risks,
uncertainties and factors include, but are not limited to, industry
cyclicality, the seasonal nature of the business, changes in pricing or other
actions by competitors or suppliers, and general economic conditions, as well
as other risks detailed in the Company's filings with the Securities and
Exchange Commission including this Quarterly Report on Form 10-Q.
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 second quarter and first six months of 1997
increased 18.7 percent and 18.1 percent, respectively, compared to the
corresponding periods in the prior year. Revenue comparisons were affected by
the acquisition of Scripps League Newspapers, Inc. (subsequently renamed
Pulitzer Community Newspapers, Inc. ("PCN")) on July 1, 1996. Excluding PCN
from 1997, consolidated revenues would have increased 5 percent and 4.3
percent, respectively, for the second quarter and first six months. The
increases reflected gains in both publishing and broadcasting revenues.
Operating expenses, excluding the St. Louis Agency adjustment, for the
second quarter and first six months of 1997 increased 12.9 percent and 12.3
percent, respectively, compared to the corresponding periods in the prior year.
Excluding PCN from 1997, consolidated expenses would have decreased 1.9
percent and 2.5 percent, respectively, for the second quarter and first six
months. The current year declines were attributable to lower newsprint costs
($3.9 million - second quarter and $7.8 million - year to date) and decreases
in purchased supplements ($608,000 - second quarter and $1.5 million - year to
10
<PAGE> 11
date), partially offset by increases in overall personnel costs ($1.4 million -
second quarter and $2.5 million - year to date).
Operating income for the second quarter and first six months of 1997
increased to $36.3 million (31.3 percent) and $60.9 million (31.9 percent),
respectively. Excluding PCN from 1997, consolidated operating income would
have increased 20 percent for the second quarter and 20.4 percent for the first
six months of 1997. The 1997 increases reflected higher operating income in
both the publishing and the broadcasting segments, resulting from increased
advertising revenues and lower newsprint costs.
Interest expense increased $2 million in the 1997 second quarter and $4.2
million in the first six months due to higher debt levels. Interest expense on
new long-term borrowings related to the acquisition of Scripps League amounted
to approximately $2.3 million for the second quarter and $4.7 million for the
first six months of 1997. The Company's average debt level for the second
quarter and first six months of 1997 increased to $227.7 million and $238.9
million from $117.8 million and $123.3 million in the respective periods of the
prior year. The Company's average interest rate for the second quarter was
unchanged from the prior year at 7.3 percent and for the six-month period
decreased slightly to 7.3 percent from 7.4 percent in the prior year period.
Interest income for the second quarter and first six months of 1997 decreased
$296,000 and $129,000, respectively, due to lower average balances of invested
funds.
The effective income tax rate for the second quarter and first six months
of 1997 increased to 40.3 percent and 40.6 percent, respectively, from 39.1
percent in both prior year periods. The higher rates in 1997 reflect the
nondeductible goodwill amortization (approximately $1.1 million - second
quarter and $2.1 million - year to date) related to the Scripps League
acquisition. It is expected that, on an annual basis, the effective tax rate
for 1997 will be in the 41 percent range.
Net income in the 1997 second quarter increased 21.6 percent to $19.7
million, or $0.89 per share, compared with $16.2 million, or $0.74 per share,
in the second quarter of 1996. Net income for the first six months of 1997
increased 21.8 percent to $32.2 million, or $1.46 per share, compared with
$26.4 million, or $1.21 per share, a year ago. The gains in net income
reflected increases in both publishing and broadcasting operating profits,
primarily as a result of higher advertising revenues and lower newsprint costs.
PUBLISHING
Operating revenues from the Company's publishing segment for the second
quarter and first six months of 1997 increased 31.8 percent and 30.8 percent,
respectively, compared to the corresponding periods in the prior year.
Excluding PCN from 1997, publishing revenues would have increased 6.3 percent
and 5.8 percent, respectively, for the second quarter and first six months.
The gains reflected increases in classified and retail advertising revenues at
both the St. Louis Post-Dispatch ("Post-Dispatch") and The Arizona Daily Star
("Star").
Excluding PCN from 1997, newspaper advertising revenues would have
increased $4.2 million (9.8 percent) in the second quarter and $7.9 million
(9.5 percent) in the first six months of 1997. The significant portion of the
current year increases resulted from higher classified and retail advertising
revenue at both the Post-Dispatch and Star. Full
11
<PAGE> 12
run advertising volume (linage in inches) increased 0.2 percent at the
Post-Dispatch and 8.9 percent at Star for the second quarter of 1997. For the
first six months of 1997, full run advertising volume increased 1.4 percent at
the Post-Dispatch and 6.8 percent at Star. In the fourth quarter of 1996 and
the first quarter of 1997, varying rate increases were implemented at the
Post-Dispatch, Star and most of the Company's new community newspaper
properties.
Excluding PCN from 1997, circulation revenues for both the second
quarter and first six months of 1997 would have declined approximately $170,000
(0.9 percent - second quarter and 0.5 percent - year to date). The decreases
resulted from declines in circulation in both St. Louis and Tucson.
Operating expenses (including selling, general and administrative expenses
and depreciation and amortization) for the publishing segment, excluding the
St. Louis Agency adjustment, increased 19.9 percent and 18.4 percent,
respectively, for the second quarter and first six months of 1997. Excluding
PCN from 1997, operating expenses would have declined 4.1 percent and 5.2
percent, respectively, for the second quarter and first six months. The
decreases reflected the impact of lower newsprint prices, which reduced
newsprint costs ($3.9 million - second quarter and $7.8 million - year to
date), and of declines in purchased supplements ($608,000 - second quarter and
$1.5 million - year to date). Partially offsetting these declines were
increases in overall personnel costs ($853,000 - second quarter and $1.1
million - year to date).
Operating income for the second quarter and first six months of 1997
increased to $12.9 million (127.5 percent) and $24 million (129.7 percent),
respectively. Excluding PCN from 1997, operating income would have increased
72.3 percent for the second quarter and 79 percent for the first six months of
1997. The 1997 increases reflect the combination of increased advertising
revenues and lower newsprint costs.
Fluctuations in the price of newsprint significantly impact the results of
the Company's publishing segment, where newsprint expense accounts for
approximately 20 percent of the segment's total operating costs. For the first
half of 1997, excluding PCN, the Company's average cost for newsprint was
approximately $535 per metric ton, compared to $740 per metric ton in the first
six months of 1996 and $645 per metric ton for the full year of 1996. The
Company's average cost per ton for the third quarter of 1997 will increase over
the first half of the year due to supplier price increases in the second
quarter of 1997. Following the price increases, the significant portion of the
Company's newsprint supply has been purchased at approximately $575 per metric
ton. On an annual basis, the Company's 1996 newsprint cost and metric tons
consumed, after giving effect to the St. Louis Agency adjustment and excluding
PCN, were approximately $30.7 million and 47,751 metric tons, respectively.
BROADCASTING
Broadcasting operating revenues for the second quarter and first six
months of 1997 increased 3.5 percent and 2.5 percent, respectively, over the
comparable 1996 periods. Local spot advertising increased 2.7 percent and 3.9
percent, respectively, for the second quarter and first six months of 1997, and
national spot advertising increased 4.6 percent and 0.9 percent, respectively,
for the second quarter and six-month period. The current year comparisons
reflect the impact of decreased political advertising of
12
<PAGE> 13
approximately $1.5 million and $2.6 million, respectively, in the second
quarter and first six months of 1997.
Broadcasting operating expenses (including selling, general and
administrative expenses and depreciation and amortization) for the second
quarter and first six months of 1997 increased 1.7 percent and 2.1 percent,
respectively, compared to the prior year periods. The increases were primarily
attributable to higher overall personnel costs of $580,000 and $1.3 million for
the second quarter and first six months of 1997, respectively.
Operating income from the broadcasting segment in the 1997 second quarter
increased 6.1 percent to $24.8 million from $23.4 million and in the first six
months increased 3.3 percent to $39.6 million from $38.4 million. The
increases for both periods resulted primarily from higher advertising revenues.
LIQUIDITY AND CAPITAL RESOURCES
Outstanding debt, inclusive of the short-term portion of long-term debt,
as of June 30, 1997, was $223.4 million, consisting primarily of fixed-rate
senior notes with The Prudential Insurance Company of America ("Prudential")
and $38 million of variable rate borrowings under a credit agreement with The
First National Bank of Chicago, as Agent, for a group of lenders ("FNBC").
Compared to December 31, 1996, outstanding debt as of June 30, 1997 declined
approximately $26.7 million due to current year repayments. On April 8, 1997,
the Company repaid $12 million of variable rate FNBC borrowings. In addition,
on April 22, 1997, the Company made the final scheduled repayment of $14.5
million under its 8.8 percent Senior Note Agreement with Prudential.
Subsequent to the end of the second quarter, on July 7, 1997, the Company
repaid an additional $10 million of FNBC borrowings.
The Company's Senior Note Agreements with Prudential and FNBC Credit
Agreement require it to maintain certain financial ratios, place restrictions
on the payment of dividends and prohibit new borrowings, except as permitted
thereunder.
As of June 30, 1997, commitments for capital expenditures were
approximately $19.8 million, relating to normal capital equipment replacements
and the cost of building projects for the Flagstaff, Arizona newspaper property
and the Louisville, Kentucky broadcasting property. Capital expenditures to
be made in fiscal 1997 are estimated to be in the range of $25 to $30 million.
Commitments for film contracts and license fees as of June 30, 1997 were
approximately $29.3 million. In addition, as of June 30, 1997, the Company had
a limited partnership capital contribution commitment of approximately $1.2
million and a purchase agreement to acquire the assets of a radio station in
Winston-Salem, North Carolina for approximately $1.1 million.
At June 30, 1997, the Company had working capital of $119.1 million and a
current ratio of 3.08 to 1. This compares to working capital of $95.3 million
and a current ratio of 2.24 to 1 at December 31, 1996.
The Company from time to time considers acquisitions of broadcasting,
newspaper and other properties when favorable investment opportunities are
identified. Except for the radio acquisition discussed above, the Company has
no agreements to acquire additional properties. In the event an investment
opportunity is identified, management expects that it would be able to arrange
financing on terms and conditions satisfactory to the Company.
13
<PAGE> 14
The Company generally expects to generate sufficient cash from operations
to cover ordinary capital expenditures, film contract and license fees, working
capital requirements, debt installments and dividend payments.
14
<PAGE> 15
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
(a) The Annual Meeting of Stockholders was held on April 24, 1997.
(b) The following directors were elected at the Annual Meeting of
Stockholders:
Michael E. Pulitzer
Ronald H. Ridgway
William Bush
The following directors continued their term of office after the
Annual Meeting of Stockholders:
David E. Moore
Ken J. Elkins
Nicholas G. Penniman IV
Emily Rauh Pulitzer
Alice B. Hayes
James M. Snowden, Jr.
(c) The following nominees for election as director received the votes
indicated:
For Withheld Abstain
----------- -------- -------
Michael E. Pulitzer 160,464,308 410,177 0
Ronald H. Ridgway 160,463,642 410,843 0
William Bush 160,462,850 411,635 0
The proposal to adopt the Pulitzer Publishing Company 1997
Employee Stock Purchase Plan was approved by the vote indicated:
For: 160,085,217
Against: 18,902
Broker non-votes: 747,520
Abstain: 22,846
The selection of Deloitte & Touche as the Company's independent
auditors was approved by the vote indicated:
For: 160,862,725
Against: 3,928
Broker non-votes: 0
Abstain: 7,832
15
<PAGE> 16
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibit is filed as part of this report:
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.
All other items of this report are not applicable for the current quarter.
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: August 12, 1997 /s/ Ronald H. Ridgway
---------------------------------------
(Ronald H. Ridgway)
Director; Senior Vice-President-Finance
(on behalf of the Registrant and
as principal financial officer)
16
<PAGE> 17
EXHIBIT INDEX
EXHIBIT NUMBER TITLE OR DESCRIPTION
27 Financial Data Schedule
17
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 77,173
<SECURITIES> 0
<RECEIVABLES> 83,890
<ALLOWANCES> 2,755
<INVENTORY> 5,721
<CURRENT-ASSETS> 176,425
<PP&E> 316,954
<DEPRECIATION> 161,048
<TOTAL-ASSETS> 679,656
<CURRENT-LIABILITIES> 57,307
<BONDS> 223,205
0
0
<COMMON> 338
<OTHER-SE> 463,059
<TOTAL-LIABILITY-AND-EQUITY> 679,656
<SALES> 287,404
<TOTAL-REVENUES> 287,404
<CGS> 104,033
<TOTAL-COSTS> 104,033
<OTHER-EXPENSES> 18,420
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,699
<INCOME-PRETAX> 54,161
<INCOME-TAX> 21,985
<INCOME-CONTINUING> 32,176
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,176
<EPS-PRIMARY> 1.46
<EPS-DILUTED> 0
</TABLE>
