|
|
|
|
|
|
|
|
|
|
|
|
|
|
Previous: IMPERIAL HOLLY CORP, 10-Q, 1994-11-07 |
Next: RYMAC MORTGAGE INVESTMENT CORP, 10-Q, 1994-11-07 |
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission File Number 1-16914
THE E.W. SCRIPPS COMPANY
(Exact name of registrant as specified in its charter)
Delaware 51-0304972
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1105 N. Market Street
Wilmington, Delaware 19801
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (302) 478-4141
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
and Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the Registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date. As of
October 15, 1994 the registrant had outstanding 59,620,618 shares of
Class A Common stock and 20,174,833 shares of Common Voting stock.
<PAGE>
INDEX TO THE E.W. SCRIPPS COMPANY
REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1994
Item No. Page
PART I - FINANCIAL INFORMATION
1 Financial Statements 3
2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 3
PART II - OTHER INFORMATION
1 Legal Proceedings 3
2 Changes in Securities 3
3 Defaults Upon Senior Securities 3
4 Submission of Matters to a Vote of Security Holders 4
5 Other Information 4
6 Exhibits and Reports on Form 8-K 4
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
The information required by this item is filed as part of this Form 10-
Q. See Index to Financial Information at page F-1 of this Form 10-Q.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The information required by this item is filed as part of this Form 10-
Q. See Index to Financial Information at page F-1 of this Form 10-Q.
PART II
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in litigation arising in the ordinary course
of business, such as defamation actions. In addition, the Company is
involved from time to time in various governmental and administrative
proceedings relating to, among other things, renewal of broadcast
licenses, none of which is expected to result in material loss.
ITEM 2. CHANGES IN SECURITIES
There were no changes in the rights of security holders during the
quarter for which this report is filed.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There were no defaults upon senior securities during the quarter for
which this report is filed.
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during
the quarter for which this report is filed.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
The information required by this item is filed as part of this Form 10-
Q. See Index to Exhibits at page E-1 of this
Form 10-Q.
Reports on Form 8-K
A report on Form 8-K as of September 15, 1994 was filed upon
completion of the acquisition of the remaining minority interest in
Scripps Howard Broadcasting Company.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
THE E.W. SCRIPPS COMPANY
Dated: November 7, 1994 BY:/s/ Daniel J. Castellini
D. J. Castellini
Senior Vice President, Finance & Administration
<PAGE>
THE E.W. SCRIPPS COMPANY
Index to Financial Information
Item Page
Consolidated Balance Sheets F-2
Consolidated Statements of Income F-4
Consolidated Statements of Cash Flows F-5
Consolidated Statements of Stockholders' Equity F-6
Notes to Consolidated Financial Statements F-7
Management's Discussion and Analysis of Financial
Condition and Results of Operations F-11
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
( in thousands ) As of
September 30, December 31, September 30,
1994 1993 1993
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 12,705 $ 18,606 $ 12,047
Accounts and notes receivable (less
allowances - $5,741, $6,995, $6,874) 136,726 150,671 137,689
Program rights and production costs 51,899 42,823 50,167
Inventories 25,110 23,748 24,537
Deferred income taxes 19,650 18,097 11,589
Miscellaneous 26,892 19,050 24,695
Total current assets 272,982 272,995 260,724
Investments 51,164 79,870 35,383
Property, Plant, and Equipment 710,658 712,726 728,988
Goodwill and Other Intangible Assets 637,046 552,989 577,063
Other Assets:
Program rights and production costs (less current portion) 38,118 43,257 52,683
Miscellaneous 20,308 21,228 18,741
Total other assets 58,426 64,485 71,424
TOTAL ASSETS $ 1,730,276 $ 1,683,065 $ 1,673,582
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
( in thousands, except share data ) As of
September 30, December 31, September 30,
1994 1993 1993
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 26,884 $ 96,383 $ 217,400
Accounts payable 79,312 79,334 91,297
Customer deposits and unearned revenue 18,277 17,480 17,111
Accrued liabilities:
Employee compensation and benefits 31,578 31,599 30,552
Artist and author royalties 9,723 10,985 11,195
Copyright and programming costs 6,780 6,986 7,370
Interest 2,182 2,834 3,176
Income taxes 2,339 7,763 903
Miscellaneous 38,744 41,859 37,269
Total current liabilities 215,819 295,223 416,273
Deferred Income Taxes 178,708 175,308 127,875
Long-Term Debt (less current portion) 110,358 151,535 159,882
Other Long-Term Obligations and Minority Interests 151,706 201,364 191,367
Stockholders' Equity:
Preferred stock, $.01 par - authorized: 25,000,000 shares;
none outstanding
Common stock, $.01 par:
Class A - authorized: 120,000,000 shares; issued and
outstanding: 59,620,618, 54,586,495,
and 54,471,733 shares 596 546 545
Voting - authorized: 30,000,000 shares; issued and
outstanding: 20,174,833 shares 202 202 202
Total 798 748 747
Additional paid-in capital 246,656 97,945 94,943
Retained earnings 808,325 733,978 682,265
Unrealized gains on securities available for sale 18,205 27,381
Unvested restricted stock awards (1,195) (1,009) (489)
Foreign currency translation adjustment 896 592 719
Total stockholders' equity 1,073,685 859,635 778,185
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,730,276 $ 1,683,065 $ 1,673,582
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
( in thousands, except share data ) Three Nine
months months
ended ended
September September
30, 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Operating Revenues:
Advertising $ 105,809 $ 96,915 $ 315,301 $ 291,468
Circulation 28,853 28,332 87,598 87,494
Other newspaper revenue 12,483 12,167 38,048 36,547
Total newspapers 147,145 137,414 440,947 415,509
Broadcasting 68,200 67,178 202,445 206,424
Cable television 63,944 62,624 189,595 189,529
Entertainment 16,689 24,964 56,343 63,233
Other 8,126
Total operating revenues 295,978 292,180 889,330 882,821
Operating Expenses:
Employee compensation and benefits 87,550 93,461 265,855 280,291
Program rights and production costs 28,047 35,140 84,228 91,019
Newsprint and ink 23,586 22,176 66,374 66,780
Other operating expenses 74,676 73,483 215,725 219,479
Depreciation 20,870 22,533 65,436 65,425
Amortization of intangible assets 7,443 8,039 22,562 24,820
Total operating expenses 242,172 254,832 720,180 747,814
Operating Income 53,806 37,348 169,150 135,007
Other Credits (Charges):
Interest expense (3,919) (6,119) (13,191) (21,178)
Net gains and unusual items (734) (2,922) 30,887 22,014
Miscellaneous, net 539 (863) 287 (1,422)
Net other credits (charges) (4,114) (9,904) 17,983 (586)
Income Before Income Taxes and Minority Interests 49,692 27,444 187,133 134,421
Provision for Income Taxes 21,358 11,521 80,884 59,178
Income Before Minority Interests 28,334 15,923 106,249 75,243
Minority Interests 2,229 1,856 7,223 6,491
Net Income $ 26,105 $ 14,067 $ 99,026 $ 68,752
Per Share of Common Stock:
Net income $0.35 $0.19 $1.32 $0.92
Dividends declared $0.11 $0.11 $0.33 $0.33
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
( in thousands ) Nine
months
ended
September
30,
1994 1993
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 99,026 $ 68,752
Adjustments to reconcile net income
to net cash flows from operating activities:
Depreciation and amortization 87,998 90,245
Deferred income taxes 6,788 11,042
Minority interests in income of subsidiary companies 7,223 6,491
Net gains and unusual items (31,407) (19,514)
Changes in certain working capital accounts, net of effects
from subsidiary companies purchased and sold (10,337) (312)
Miscellaneous, net 7,805 246
Net operating activities 167,096 156,950
Cash Flows from Investing Activities:
Additions to property, plant, and equipment (57,904) (80,715)
Purchase of subsidiary companies and investments (27,968) (36,725)
Sale of subsidiary companies, investments, and copyrights 47,591 41,177
Miscellaneous, net 3,417 3,945
Net investing activities (34,864) (72,318)
Cash Flows from Financing Activities:
Payments on long-term debt (111,038) (64,685)
Dividends paid (24,679) (24,626)
Dividends paid to minority interests (2,655) (2,666)
Miscellaneous, net 239 416
Net financing activities (138,133) (91,561)
Increase (Decrease) in Cash and Cash Equivalents (5,901) (6,929)
Cash and Cash Equivalents:
Beginning of year 18,606 18,976
End of period $ 12,705 $ 12,047
Supplemental Cash Flow Disclosures:
Acquisition of remaining minority interest in Scripps Howard Broadcasting
Company in exchange for 4,952,659 shares of Class A Common stock $ 146,723
Interest paid, excluding amounts capitalized 13,592 $ 26,524
Income taxes paid 82,251 58,597
Increase in program rights and related liabilities 32,746 51,366
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION>
( in thousands, except share data )
Unrealized
Gains on Unvested Foreign
Additional Securities Restricted Currency
Common Paid-in Retained Available Stock Translation
Stock Capital Earnings for Sale Awards Adjustment
<S> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1992 $ 746 $ 94,366 $ 638,139 $ (516) $ 369
Net income 68,752
Dividends: declared
and paid - $.33 per share (24,626)
Class A Common shares issued pursuant to
compensation plans, net:
49,025 shares issued,
19,353 shares repurchased 1 577 (211)
Amortization of restricted stock awards 238
Foreign currency translation adjustment 350
Balances at September 30, 1993 $ 747 $ 94,943 $ 682,265 $ (489) $ 719
Balances at December 31, 1993 $ 748 $ 97,945 $ 733,978 $ 27,381 $ (1,009) $ 592
Net income 99,026
Dividends: declared and
paid - $.33 per share (24,679)
Acquisition of minority interest in
Scripps Howard Broadcasting Company
in exchange for 4,952,659 shares of
Class A Common stock 49 146,674
Class A Common shares issued pursuant to
compensation plans, net:
88,525 shares issued,
2,810 shares forfeited, and
4,251 shares repurchased 1 1,839 (517)
Tax benefits on compensation plans 198
Amortization of restricted stock awards 331
Foreign currency translation adjustment 304
Increase (decrease) in unrealized gains
on securities available for sale, net
of deferred income taxes of $4,941 (9,176)
Balances at September 30, 1994 $ 798 $ 246,656 $ 808,325 $ 18,205 $ (1,195) $ 896
See notes to consolidated financial
statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
_____________________________________________________________________________
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation - The 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 Rule 10-01 of Regulation S-X.
Except as disclosed herein, there has been no material change
in the information disclosed in the notes to consolidated
financial statements included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1993. In
management's opinion all adjustments (consisting of normal
recurring accruals) necessary for a fair presentation of the
interim periods have been made.
Results of operations for the three- and nine-month periods
ended September 30, 1994 are not necessarily indicative of
the results that may be expected for future interim periods
or for the year ended December 31, 1994.
Net Income Per Share - Net income per share computations are
based upon the weighted average common shares outstanding.
The weighted average common shares outstanding were as
follows:
<TABLE>
<CAPTION>
( in thousands ) Three Nine
months months
ended ended
September September
30, 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Weighted average shares outstanding 75,638 74,639 75,059 74,626
</TABLE>
The sum of the quarterly net income per share amounts may not
equal the reported year-to-date amounts because each is
computed independently based upon the weighted average number
of shares outstanding for that period.
Reclassification - For comparison purposes certain 1993 items
have been reclassified to conform with 1994 classifications.
2. ACQUISITIONS AND DIVESTITURES
A. Acquisitions
1994 - In September the Company acquired the 14% minority
interest in Scripps Howard Broadcasting Company ("SHB") in
exchange for 4,952,659 shares of Class A Common stock.
The Company acquired Cinetel Productions (an independent
producer of programs for cable television).
1993 - The Company acquired the 2.7% minority interest in the
Knoxville News-Sentinel Company for $2,800,000. The Company
purchased 589,000 shares of SHB common stock for $28,900,000.
The Company also purchased a cable television system.
<PAGE>
The following table presents additional information about the
acquisitions:
<TABLE>
<CAPTION>
( in thousands ) Nine months
ended
September 30,
1994 1993
<S> <C> <C>
Goodwill and other intangible assets acquired $ 105,701 $ 19,553
Other assets acquired 14,683 58
Reduction in minority interests 45,468 12,287
Total 165,852 31,898
Class A Common stock issued (146,723)
Liabilities assumed (899)
Cash paid $ 18,230 $ 31,898
</TABLE>
The acquisitions have been accounted for as purchases, and
accordingly purchase prices were allocated to assets and
liabilities based on the estimated fair value as of the dates
of acquisition. The acquired operations have been included in
the consolidated statements of income from the dates of
acquisition. Pro forma results are not presented because the
combined results of operations would not be significantly
different from the reported amounts.
B. Divestitures
1993 - The Company sold its book publishing operations and a
newspaper in the first nine months of 1993. In the subsequent
quarter a newspaper, a television station, and radio stations in
three markets were sold.
The following table presents additional information about the
divestitures which occurred in the nine-month period ended
September 30:
<TABLE>
<CAPTION>
( in thousands ) Nine
months
ended
September 30,
1993
<S> <C>
Cash received $ 41,177
Net assets disposed 21,663
Gain recognized, before income taxes $ 19,514
</TABLE>
Included in the consolidated financial statements are the
following results of divested operations (excluding gains on
sale):
<TABLE>
<CAPTION>
( in thousands ) Three Nine
months months
ended ended
September 30, September 30,
1993 1993
<S> <C> <C>
Operating revenues $ 11,700 $ 43,500
Operating income 2,500 5,800
</TABLE>
<PAGE>
3. UNUSUAL ITEMS
1994 - In the second quarter the Company sold its worldwide
Garfield and U.S. Acres copyrights. The sale resulted in a pre-
tax gain of $31,600,000, $17,400,000 after tax, $.23 per share.
1993 - The Company's third quarter operating results include
adjustments to certain previously reported gains on
divestitures (see Note 2B) to reflect changes in accounting
estimates, including the change in the federal income tax rate.
The adjustments reduced pre-tax income $2,900,000, $1,900,000
after tax, $.03 per share. Year-to-date operating results
include net pre-tax gains of $19,500,000, $10,500,000 after
tax, $.14 per share.
Management changed the estimate of the additional amount of
copyright fees the Company would owe when a dispute between the
television industry and the American Society of Composers,
Authors and Publishers ("ASCAP") was resolved. The adjustment
increased first quarter and year-to-date operating income
$4,300,000 and net income $2,300,000, $.03 per share.
4. LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
( in thousands ) As of
September 30, December 31, September 30,
1994 1993 1993
<C> <C> <C> <C>
Variable Rate Credit Facilities $ 18,500 $ 88,000 $ 189,000
7.375% notes, due in 1998 61,125 99,264 99,227
9.0% notes, due in 1996 47,000 50,000 50,000
8.5% notes, payable through 1994 8,334 8,334 36,667
Other notes 2,283 2,320 2,388
Total long-term debt 137,242 247,918 377,282
Current portion of long-term debt 26,884 96,383 217,400
Long-term debt (less current portion) $ 110,358 $ 151,535 $ 159,882
Weighted average interest rate on Variable Rate
Credit Facilities at balance sheet date 5.5% 3.4% 3.3%
</TABLE>
The Company has a Competitive Advance/Revolving Credit Agreement
which expires in September 1995 and permits maximum borrowings up
to $50,000,000, and additional lines of credit totaling $20,000,000
which expire at various dates through June 1995 (collectively
"Variable Rate Credit Facilities"). Maximum borrowings under the
Variable Rate Credit Facilities are changed as the Company's
anticipated needs change and are not indicative of the Company's
short-term borrowing capacity. The Variable Rate Credit Facilities
may be extended upon mutual agreement.
Certain long-term debt agreements contain maintenance requirements
on net worth and coverage of interest expense and restrictions on
dividends and incurrence of additional indebtedness.
<PAGE>
5. INVESTMENTS
Investments consisted of the following:
<TABLE>
<CAPTION>
( in thousands, except share data ) As of
September 30, December 31, September 30,
1994 1993 1993
<S> <C> <C> <C>
Securities available for sale: *
Pittsburgh Post-Gazette preferred stock,
$25 million face value, 8% cumulative dividend $ 14,000 $ 14,000
Turner Broadcasting:
Class B common stock (589,165 shares) $ 11,783 15,907 7,985
Class C preferred stock (convertible into
1,309,092 shares of Class B common stock) 26,182 35,345 3,285
Other 2,485 4,043 1,899
Total securities available for sale 40,450 69,295 27,169
Investments accounted for under the equity method 10,714 10,575 8,214
Total investments $ 51,164 $ 79,870 $ 35,383
Unrealized gains on securities available for sale $ 28,008 $ 42,125 $ 39,920
* Effective December 31, 1993 the Company adopted FAS No. 115. Investments classified as available for sale are carried at
market value at September 30, 1994 and December 31, 1993. At September 30, 1993 such securities were carried at the lower
of cost or market. There were no unrealized losses at September 30, 1994, December 31, 1993, or September 30, 1993.
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Consolidated results of operations were as follows:
<TABLE>
<CAPTION>
( in thousands, except per share data ) Quarterly Year-to-
Period Date
1994 Change 1993 1994 Change 1993
<S> <C> <C> <C> <C> <C> <C>
Operating revenues:
Newspapers $ 147,145 7.1 % $ 137,414 $ 440,947 6.1 % $ 415,509
Broadcasting 68,200 1.5 % 67,178 202,445 (1.9)% 206,424
Cable television 63,944 2.1 % 62,624 189,595 0.0 % 189,529
Entertainment 16,689 (33.1)% 24,964 56,343 (10.9)% 63,233
Other 8,126
Total operating revenues $ 295,978 1.3 % $ 292,180 $ 889,330 0.7 % $ 882,821
Operating income:
Newspapers $ 28,587 98.3 % $ 14,413 $ 90,712 78.8 % $ 50,741
Broadcasting 20,504 36.0 % 15,074 62,455 14.3 % 54,645
Cable television 10,510 8.5 % 9,684 27,414 (22.4)% 35,318
Entertainment (1,752) 1,046 (752) (119.8)% 3,799
Other (201)
Corporate (4,043) (40.9)% (2,869) (10,679) (14.9)% (9,295)
Total operating income 53,806 44.1 % 37,348 169,150 25.3 % 135,007
Interest expense (3,919) (6,119) (13,191) (21,178)
Net gains and unusual items (734) (2,922) 30,887 22,014
Miscellaneous, net 539 (863) 287 (1,422)
Income taxes (21,358) (11,521) (80,884) (59,178)
Minority interest (2,229) (1,856) (7,223) (6,491)
Net income $ 26,105 85.6 % $ 14,067 $ 99,026 44.0 % $ 68,752
Net income per share of common stock $.35 84.2 % $.19 $1.32 43.5 % $.92
Weighted average shares outstanding 75,638 1.3 % 74,639 75,059 0.6 % 74,626
Effective income tax rate 43.0 % 42.0 % 43.2 % 44.0 %
</TABLE>
For comparison purposes certain 1993 operating revenues, operating
expenses, and equity in income of certain joint ventures (see below)
have been reclassified to conform with 1994 classifications.
Previously reported 1993 segment information has been restated to
conform with 1994 segment classifications. The Entertainment segment
includes United Media licensing and syndication (previously included
in the Publishing segment), Scripps Howard Productions (a producer of
television programming), The Home & Garden Television Network (a 24-
hour cable television channel scheduled for launch in late 1994), and
the Company's equity interest in The Food Network and SportSouth cable
television networks (previously reported in Miscellaneous, net). On
March 31, 1994 the Company completed the acquisition of Cinetel
Productions (an independent producer of programs for cable
television). Cinetel operating results from the date of acquisition
are included in the Entertainment segment.
<PAGE>
In the third quarter of 1994 the Company acquired the 14% minority
interest in Scripps Howard Broadcasting Company ("SHB") in exchange
for 4,952,659 shares of Class A Common stock.
The Other segment includes book publishing operations which were sold
in 1993 (see (ii) below).
The following items affected the comparability of the Company's
reported results of operations:
(i) The Company sold its worldwide Garfield and U.S. Acres
copyrights in the second quarter of 1994. The sale resulted
in a pre-tax gain of $31,600,000, $17,400,000 after-tax, $.23
per share. See Note 3 to the Consolidated Financial
Statements.
(ii) The Company sold its book publishing operations and a
newspaper in the first nine months of 1993. In the third quarter
of 1993 certain previously reported gains were adjusted to reflect
changes in accounting estimates, including the change in the
federal income tax rate. In the subsequent quarter a newspaper, a
television station, and radio stations in three markets were sold.
The aforementioned businesses, and any related gains on the sales
of the businesses, are hereinafter referred to as the "Divested
Operations." See Note 2B to the Consolidated Financial
Statements.
The following items related to Divested Operations affected the
comparability of the Company's reported results of operations:
<TABLE>
<CAPTION>
( in thousands, except per share data ) Quarterly Period Year-to-Date
1993 1993
<S> <C> <C>
Operating revenues $ 11,700 $ 43,500
Operating income 2,500 5,800
Gains recognized (before income
taxes and minority interests) (2,900) 19,500
Gains recognized (after income
taxes and minority interests) (1,900) 10,500
Gains recognized per share
(after income taxes and
minority interests) (.03) .14
</TABLE>
(iii) In the first quarter of 1993 management changed the
estimate of the additional amount of copyright fees the
Company would owe when a dispute between the television
industry and the American Society of Composers, Authors and
Publishers was resolved ("ASCAP Adjustment"). The adjustment
increased broadcasting operating income $4,300,000 and net
income $2,300,000, $.03 per share. See Note 3 to the
Consolidated Financial Statements.
The items above are excluded from the consolidated and
segment operating results presented in the following pages of
this Management's Discussion and Analysis. Management
believes they are not relevant to understanding the Company's
ongoing operations.
Net income per share, excluding net gains and unusual items, was as follows:
<TABLE>
<CAPTION>
Quarterly Year-to-
Period Date
1994 Change 1993 1994 Change 1993
<S> <C> <C> <C> <C> <C> <C>
Adjusted net income per share
(excluding net gains and unusual items) $ .35 84.2 % $ .19 $ 1.09 58.0 % $ .69
</TABLE>
Year-to-date interest expense decreased $8,000,000 as average long-
term debt in 1994 was $219,000,000 less than in 1993.
<PAGE>
RESULTS OF OPERATIONS
CONSOLIDATED - Operating results, excluding the Divested Operations
and ASCAP Adjustment, were as follows:
<TABLE>
<CAPTION>
( in thousands ) Quarterly Period Year-to-Date
1994 Change 1993 1994 Change 1993
<S> <C> <C> <C> <C> <C> <C>
Operating revenues:
Newspapers $ 147,145 10.2 % $ 133,584 $ 440,947 9.3 % $ 403,306
Broadcast television 68,200 15.0 % 59,321 202,445 10.5 % 183,280
Cable television 63,944 2.1 % 62,624 189,595 0.0 % 189,529
Entertainment 16,689 (33.1)% 24,964 56,343 (10.9)% 63,233
Total operating revenues $ 295,978 5.5 % $ 280,493 $ 889,330 6.0 % $ 839,348
Operating income:
Newspapers $ 28,587 98.5 % $ 14,398 $ 90,712 79.9 % $ 50,415
Broadcast television 20,504 63.4 % 12,552 62,455 43.3 % 43,582
Cable television 10,510 8.5 % 9,684 27,414 (22.4)% 35,318
Entertainment (1,752) 1,046 (752) (119.8)% 3,799
Corporate (4,043) (40.9)% (2,869) (10,679) (14.9)% (9,295)
Total operating income $ 53,806 54.6 % $ 34,811 $ 169,150 36.6 % $ 123,819
Other Financial and Statistical Data:
Total advertising revenues $ 177,075 13.5 % $ 155,995 $ 525,671 11.0 % $ 473,406
Advertising revenues as a
percentage of total revenues 59.8 % 55.6 % 59.1 % 56.4 %
Total capital expenditures $ 18,808 (31.4)% $ 27,406 $ 57,904 (27.7)% $ 80,101
</TABLE>
SEGMENTS - Operating results, excluding the Divested Operations and
the ASCAP Adjustment, for each of the Company's business segments are
presented on the following pages.
Earnings before interest, income taxes, depreciation, and amortization
("EBITDA") is included in the discussion of segment results because:
Acquisitions of communications media businesses are based on
multiples of EBITDA.
Financial analysts use EBITDA to value communications media
companies.
Changes in depreciation and amortization are often unrelated to
current performance. Management believes the year-over-year
change in EBITDA is a more useful measure of year-over-year
performance than the change in operating income because, combined
with information on capital spending plans, it is a more reliable
indicator of results that may be expected in future periods.
Banks and other lenders use EBITDA to determine the Company's
borrowing capacity.
EBITDA should not, however, be construed as an alternative measure of
the amount of the Company's income or cash flows from operating
activities.
<PAGE>
NEWSPAPERS - Operating results for the newspaper segment, excluding
the Divested Operations, were as follows:
<TABLE>
<CAPTION>
( in thousands, except newsprint information ) Quarterly Year-to-
Period Date
1994 Change 1993 1994 Change 1993
<S> <C> <C> <C> <C> <C> <C>
Operating revenues:
Local $ 44,277 7.8 % $ 41,085 $ 136,157 7.2 % $ 127,019
Classified 43,212 14.7 % 37,660 123,252 14.1 % 108,056
National 3,590 29.9 % 2,764 11,684 30.3 % 8,964
Preprint 14,730 13.0 % 13,039 44,208 11.0 % 39,821
Newspaper advertising 105,809 11.9 % 94,548 315,301 11.1 % 283,860
Circulation 28,853 4.9 % 27,516 87,598 3.3 % 84,838
Joint operating agency distributions 10,618 13.6 % 9,343 32,064 14.4 % 28,024
Other 1,865 (14.3)% 2,177 5,984 (9.1)% 6,584
Total operating revenues 147,145 10.2 % 133,584 440,947 9.3 % 403,306
Operating expenses:
Employee compensation and benefits 53,614 (4.5)% 56,138 163,722 (1.7)% 166,588
Newsprint and ink 23,586 10.0 % 21,446 66,374 2.8 % 64,537
Other 32,534 0.5 % 32,369 93,483 (0.6)% 94,072
Depreciation and amortization 8,824 (4.4)% 9,233 26,656 (3.7)% 27,694
Total operating expenses 118,558 (0.5)% 119,186 350,235 (0.8)% 352,891
Operating income $ 28,587 98.5 % $ 14,398 $ 90,712 79.9 % $ 50,415
Other Financial and Statistical Data:
Earnings before interest,
income taxes, depreciation,
and amortization ("EBITDA") $ 37,411 58.3 % $ 23,631 $ 117,368 50.3 % $ 78,109
Percent of operating revenues:
Operating income 19.4 % 10.8 % 20.6 % 12.5 %
EBITDA 25.4 % 17.7 % 26.6 % 19.4 %
Capital expenditures $ 2,956 (65.2)% $ 8,501 $ 13,215 (40.9)% $ 22,350
Advertising inches:
Local 1,849 2.7 % 1,800 5,780 2.0 % 5,664
Classified 3,061 6.0 % 2,888 8,804 6.2 % 8,287
National 91 8.3 % 84 296 11.3 % 266
Total full run ROP 5,001 4.8 % 4,772 14,880 4.7 % 14,217
Newsprint information:
Consumption (in tonnes) 50,957 6.7 % 47,744 147,950 5.1 % 140,793
Weighted average price per tonne $ 445 3.2 % $ 431 $ 430 (2.5)% $ 441
</TABLE>
Demand for advertising continued to improve in the first nine months
of 1994. Advertising revenues increased for nearly all of the
Company's daily newspapers.
The average price of newsprint in 1995 is expected to be substantially
higher than 1994's average.
<PAGE>
BROADCAST TELEVISION - Operating results for the broadcast television
segment, excluding the Divested Operations and ASCAP Adjustment, were
as follows:
<TABLE>
<CAPTION>
( in thousands ) Quarterly Year-to-
Period Date
1994 Change 1993 1994 Change 1993
<S> <C> <C> <C> <C> <C> <C>
Operating revenues:
Local $ 32,607 10.3 % $ 29,562 $ 103,124 9.7 % $ 94,008
National 29,936 8.8 % 27,506 87,768 6.5 % 82,400
Political 3,520 214 5,121 423
Other 2,137 4.8 % 2,039 6,432 (0.3)% 6,449
Total operating revenues 68,200 15.0 % 59,321 202,445 10.5 % 183,280
Operating expenses:
Employee compensation and benefits 18,532 7.4 % 17,263 55,015 5.8 % 51,975
Program rights 12,518 (12.8)% 14,358 37,603 (8.6)% 41,135
Other 11,490 15.3 % 9,967 32,033 3.2 % 31,054
Depreciation and amortization 5,156 (0.5)% 5,181 15,339 (1.3)% 15,534
Total operating expenses 47,696 2.0 % 46,769 139,990 0.2 % 139,698
Operating income $ 20,504 63.4 % $ 12,552 $ 62,455 43.3 % $ 43,582
Other Financial and Statistical Data:
Earnings before interest,
income taxes, depreciation,
and amortization ("EBITDA") $ 25,660 44.7 % $ 17,733 $ 77,794 31.6 % $ 59,116
Percent of operating revenues:
Operating income 30.1 % 21.2 % 30.9 % 23.8 %
EBITDA 37.6 % 29.9 % 38.4 % 32.3 %
Capital expenditures $ 7,063 $ 1,310 $ 12,940 97.1 % $ 6,564
</TABLE>
Improved demand for advertising time led to the increase in revenues
and EBITDA. EBITDA improved sharply at the Company's Baltimore
television station following termination of an agreement to broadcast
Oriole baseball games. The loss of baseball advertising revenue was
more than offset by the switch to lower-cost programming. Excluding
the Baltimore station, revenues increased 21% percent in the third
quarter.
The Company has entered into 10-year affiliation agreements with the
ABC television network in five of the Company's television markets.
The agreements with ABC extend existing affiliation agreements in the
Detroit and Cleveland markets, and will replace the current NBC
affiliation in Baltimore and Fox affiliations in Phoenix and Tampa.
The Baltimore, Phoenix, and Tampa agreements become effective in
January 1995. The Company also reached agreement to affiliate its
Kansas City television station with NBC and to extend its existing NBC
affiliations in Tulsa and West Palm Beach. The Kansas City station
became an NBC affiliate in September 1994. The Company had previously
been notified of Fox's plans to move its programming to other stations
in the Kansas City, Phoenix, and Tampa markets.
<PAGE>
CABLE TELEVISION - Operating results for the cable television segment
were as follows:
<TABLE>
<CAPTION>
( in thousands, except per subscriber information ) Quarterly Year-to-
Period Date
1994 Change 1993 1994 Change 1993
<S> <C> <C> <C> <C> <C> <C>
Operating revenues:
Basic services $ 41,378 (3.9)% $ 43,035 $ 123,730 (5.4)% $ 130,826
Premium programming services 12,261 5.4 % 11,636 36,447 5.9 % 34,405
Other monthly service 4,249 17.0 % 3,632 12,720 21.4 % 10,477
Advertising 3,066 44.2 % 2,126 7,925 26.5 % 6,266
Installation and miscellaneous 2,990 36.2 % 2,195 8,773 16.1 % 7,555
Total operating revenues 63,944 2.1 % 62,624 189,595 0.0 % 189,529
Operating expenses:
Employee compensation and benefits 9,852 (3.2)% 10,173 30,673 3.6 % 29,606
Program rights 15,337 10.0 % 13,945 45,529 10.6 % 41,161
Other 14,480 6.6 % 13,588 41,715 8.0 % 38,635
Depreciation and amortization 13,765 (9.6)% 15,234 44,264 (1.2)% 44,809
Total operating expenses 53,434 0.9 % 52,940 162,181 5.2 % 154,211
Operating income $ 10,510 8.5 % $ 9,684 $ 27,414 (22.4)% $ 35,318
Other Financial and Statistical Data:
Earnings before interest,
income taxes, depreciation,
and amortization ("EBITDA") $ 24,275 (2.6)% $ 24,918 $ 71,678 (10.5)% $ 80,127
Percent of operating revenues:
Operating income 16.4 % 15.5 % 14.5 % 18.6 %
EBITDA 38.0 % 39.8 % 37.8 % 42.3 %
Capital expenditures $ 6,582 (61.3)% $ 17,012 $ 28,753 (41.3)% $ 49,010
Average number of basic subscribers 719.4 5.1 % 684.8 712.5 4.7 % 680.4
Average monthly revenue
per basic subscriber $ 29.63 (2.8)% $ 30.48 $ 29.57 (4.5)% $ 30.95
Homes passed at end of period 1,163.0 1.6 % 1,145.0
Basic subscribers at end of period 724.1 5.0 % 689.6
Penetration rate 62.3 % 60.2 %
</TABLE>
Re-regulation of the cable television industry has significantly
affected the Company's cable television operations in 1994.
Year-to-date other operating expenses includes a $1,500,000 charge for
special rebates to the Company's Sacramento system customers and
related legal costs. The rebate was awarded by a federal court in
connection with litigation concerning the system's pricing policies in
the late 1980s.
<PAGE>
ENTERTAINMENT - Operating results for the entertainment segment were
as follows:
<TABLE>
<CAPTION>
( in thousands ) Quarterly Year-to-
Period Date
1994 Change 1993 1994 Change 1993
<S> <C> <C> <C> <C> <C> <C>
Operating revenues:
Licensing $ 10,650 (13.7)% $ 12,345 $ 38,054 (4.4)% $ 39,786
Syndication 4,240 (8.5)% 4,633 13,545 (4.3)% 14,149
Film and television production 1,799 (77.5)% 7,986 4,744 (49.0)% 9,298
Total operating revenues 16,689 (33.1)% 24,964 56,343 (10.9)% 63,233
Operating expenses:
Employee compensation and benefits 3,465 12.3 % 3,086 10,614 5.2 % 10,091
Artists' royalties 7,639 (14.0)% 8,879 26,360 (3.8)% 27,391
Production costs 192 (96.9)% 6,248 1,096 (84.4)% 7,008
Other 6,729 23.4 % 5,455 17,730 24.5 % 14,239
Depreciation and amortization 416 66.4 % 250 1,295 83.7 % 705
Total operating expenses 18,441 (22.9)% 23,918 57,095 (3.9)% 59,434
Operating income $ (1,752) $ 1,046 $ (752) (119.8)% $ 3,799
Other Financial and Statistical Data:
Earnings before interest,
income taxes, depreciation,
and amortization ("EBITDA") $ (1,336) $ 1,296 $ 543 (87.9)% $ 4,504
Percent of operating revenues:
Operating income (10.5)% 4.2 % (1.3)% 6.0 %
EBITDA (8.0)% 5.2 % 1.0 % 7.1 %
Capital expenditures $ 2,079 $ 120 $ 2,581 $ 502
</TABLE>
The Company acquired Cinetel Productions in Knoxville, Tennessee, on
March 31, 1994. Cinetel is one of the largest independent producers
of programs for cable television. Cinetel's results of operations are
included in the Entertainment segment from the date of acquisition.
The Company completed the sale of its Garfield and U.S. Acres
copyrights in the second quarter, resulting in the decrease in
licensing and syndication revenues. The change in the exchange rate
for the Japanese yen increased licensing revenues $1,100,000 in the
year-to-date period.
Start-up costs for The Home & Garden Television Network ("HGTV"), a 24-
hour cable channel scheduled for launch in late 1994, totaled
$2,000,000 in the third quarter and $3,500,000 in the first nine
months of 1994.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Cash flow from operating activities was $167,000,000 in 1994 compared
to $157,000,000 in 1993.
Cash flow from operating activities and from the sale of copyrights
and investments totaled $214,700,000 in 1994 and was used primarily
for capital expenditures of $57,900,000, acquisitions and investments
of $28,000,000, debt reduction of $111,000,000, and dividend payments
of $27,300,000. The debt to total capitalization ratio at September
30 was .11 in 1994 and .33 in 1993.
Consolidated capital expenditures for the remainder of 1994 are
expected to total less than $25,000,000, including HGTV. Current
maturities of long-term debt at September 30, 1994 total $26,900,000.
The Company expects to finance its capital requirements and start-up
costs for HGTV primarily through cash flow from operations.
<PAGE>
THE E.W. SCRIPPS COMPANY
Index to Exhibits
Exhibit
No. Item Page
12 Ratio of Earnings to Fixed Charges E-2
27 Financial Data Schedule E-3
<PAGE>
<TABLE>
RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12
<CAPTION>
( in thousands ) Three Nine
months months
ended ended
September September
30, 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
EARNINGS AS DEFINED:
Earnings from operations before income taxes after
eliminating undistributed earnings of 20%- to
50%-owned affiliates $ 50,274 $ 27,228 $ 190,138 $ 134,270
Fixed charges excluding capitalized interest and
preferred stock dividends of majority-owned
subsidiary companies 5,440 7,455 17,425 25,122
Earnings as defined $ 55,714 $ 34,683 $ 207,563 $ 159,392
FIXED CHARGES AS DEFINED:
Interest expense, including amortization of
debt issue costs $ 3,919 $ 6,119 $ 13,191 $ 21,178
Interest capitalized 7 60
Portion of rental expense representative
of the interest factor 1,209 1,169 3,512 3,487
Preferred stock dividends of majority-owned
subsidiary companies 20 22 60 67
Share of interest expense related to guaranteed debt
50%-owned affiliated company 312 167 722 457
Fixed charges as defined $ 5,460 $ 7,484 $ 17,485 $ 25,249
RATIO OF EARNINGS TO FIXED CHARGES 10.20 4.63 11.87 6.31
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000832428
<NAME> E.W. SCRIPPS COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 12,705
<SECURITIES> 0
<RECEIVABLES> 142,467
<ALLOWANCES> 5,741
<INVENTORY> 25,110
<CURRENT-ASSETS> 272,982
<PP&E> 1,252,058
<DEPRECIATION> 541,400
<TOTAL-ASSETS> 1,730,276
<CURRENT-LIABILITIES> 215,819
<BONDS> 110,358
<COMMON> 798
0
0
<OTHER-SE> 1,072,887
<TOTAL-LIABILITY-AND-EQUITY> 1,730,276
<SALES> 0
<TOTAL-REVENUES> 889,330
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 714,746
<LOSS-PROVISION> 5,434
<INTEREST-EXPENSE> 13,191
<INCOME-PRETAX> 187,133
<INCOME-TAX> 80,884
<INCOME-CONTINUING> 99,026
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 99,026
<EPS-PRIMARY> $1.32
<EPS-DILUTED> $1.32
</TABLE>
|
|