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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 28, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-11112
AMERICAN MEDIA OPERATIONS, INC.
(EXACT NAME OF THE REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 59-2094424
(State or other jurisdiction of (IRS Employee Identification No.)
incorporation or organization)
600 East Coast Avenue, Lantana, Florida 33464-0002
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (561) 540-1000
American Media, Inc. (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, and (2) HAS BEEN subject to such filing requirements for the past 90
days.
As of November 9, 1998 there were 7,507 shares of common stock outstanding.
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AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
SEPTEMBER 28, 1998
<TABLE>
<CAPTION>
PAGE(S)
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PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements -
Consolidated Balance Sheets......................................... 3
Consolidated Statements of Income................................... 4
Consolidated Statements of Cash Flows............................... 5
Notes to Consolidated Financial Statements.......................... 6 - 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................... 8 - 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K............................ 11
Signature........................................................... 12
</TABLE>
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AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 28 AND MARCH 30, 1998
(IN 000'S, EXCEPT PER SHARE INFORMATION)
<TABLE>
<CAPTION>
SEPTEMBER 28 MARCH 30
------------ --------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 5,249 $ 7,405
Receivables, net 9,660 7,852
Inventories 9,987 10,390
Prepaid expenses and other 2,922 6,551
--------- ---------
Total current assets 27,818 32,198
--------- ---------
PROPERTY AND EQUIPMENT, at cost:
Land and buildings 4,039 4,039
Machinery, fixtures and equipment 20,932 18,447
Display racks 22,328 21,662
--------- ---------
47,299 44,148
Less - accumulated depreciation (18,881) (18,149)
--------- ---------
28,418 25,999
--------- ---------
DEFERRED DEBT COSTS, net 6,403 8,688
--------- ---------
GOODWILL, net of accumulated amortization of $134,018 and $126,440 471,233 478,811
--------- ---------
OTHER INTANGIBLES, net of accumulated amortization of $48,726 and $45,766 99,274 102,234
--------- ---------
$ 633,146 $ 647,930
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Current portion of term loan $ 12,500 $ --
Accounts payable 12,247 15,587
Accrued expenses 15,098 14,915
Accrued interest 10,024 12,249
Accrued and current deferred income taxes 6,130 9,775
Deferred revenues 27,104 31,749
--------- ---------
Total current liabilities 83,103 84,275
--------- ---------
PAYABLE TO PARENT COMPANY 3,602 3,728
--------- ---------
LONG TERM DEBT:
Term Loan and Revolving Credit Commitment, net of current portion 284,500 297,401
11.63% Senior Subordinated Notes Due 2004 200,000 200,000
10.38% Senior Subordinated Notes Due 2002 134 134
--------- ---------
484,634 497,535
--------- ---------
DEFERRED INCOME TAXES 7,755 7,919
--------- ---------
CONTINGENCIES (NOTE 6)
STOCKHOLDER'S EQUITY:
Common stock, $.20 par value; 7,507 shares issued and outstanding 2 2
Additional paid-in capital 26,039 26,039
Retained earnings 28,011 28,432
--------- ---------
TOTAL STOCKHOLDER'S EQUITY 54,052 54,473
--------- ---------
$ 633,146 $ 647,930
========= =========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these consolidated balance sheets.
3
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AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(IN 000'S)
<TABLE>
<CAPTION>
FISCAL QUARTER ENDED TWO FISCAL QUARTERS ENDED
---------------------------- ------------------------------
SEPTEMBER 28, SEPTEMBER 29, SEPTEMBER 28, SEPTEMBER 29,
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Circulation $ 62,153 $ 68,236 $ 124,951 $ 139,269
Advertising 5,138 5,832 10,692 11,969
Other 5,247 5,541 10,271 10,487
--------- --------- --------- ---------
72,538 79,609 145,914 161,725
--------- --------- --------- ---------
OPERATING EXPENSES:
Editorial 7,284 7,870 14,666 15,747
Production 19,586 20,798 40,522 41,806
Distribution, circulation and other cost of sales 17,064 16,128 35,266 33,181
Selling, general and administrative expenses 6,187 6,519 12,762 13,924
Depreciation and amortization 7,966 7,489 15,808 14,939
--------- --------- --------- ---------
58,087 58,804 119,024 119,597
--------- --------- --------- ---------
Operating income 14,451 20,805 26,890 42,128
INTEREST EXPENSE (11,742) (12,712) (23,937) (25,734)
OTHER INCOME (EXPENSE), net (Note 5) (42) (561) 4,151 (859)
--------- --------- --------- ---------
Income before provision for income taxes
and extraordinary charge 2,667 7,532 7,104 15,535
PROVISION FOR INCOME TAXES 2,321 4,170 5,364 8,623
--------- --------- --------- ---------
Income before extraordinary charge 346 3,362 1,740 6,912
EXTRAORDINARY CHARGE, net of income taxes of
$1,269, related to early
extinguishment of debt (Note 4) -- -- 2,161 --
--------- --------- --------- ---------
Net income (loss) $ 346 $ 3,362 $ (421) $ 6,912
========= ========= ========= =========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these consolidated statements.
4
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AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWO FISCAL QUARTERS ENDED SEPTEMBER 28, 1998 AND SEPTEMBER 29, 1997
(IN 000'S)
<TABLE>
<CAPTION>
SEPTEMBER 28, 1998 SEPTEMBER 29, 1997
------------------ ------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income (loss) $ (421) $ 6,912
--------- ---------
Adjustments to reconcile net income (loss) to net cash provided from
operating activities -
Extraordinary charge, net of income taxes 2,161 --
Depreciation and amortization 15,808 14,939
Deferred debt cost amortization 831 1,381
Senior subordinated discount note accretion -- 190
Decrease (increase) in -
Receivables, net (1,808) 3,567
Inventories 403 2,087
Prepaid expenses and other 3,629 (736)
Increase (decrease) in -
Accounts payable (3,340) 1,972
Accrued expenses (2,180) 2,260
Accrued and current deferred income taxes (2,540) (1,289)
Deferred revenues (4,645) (4,597)
--------- ---------
Total adjustments 8,319 19,774
--------- ---------
Net cash provided from operating activities 7,898 26,686
--------- ---------
Capital expenditures representing net cash used in investing activities (7,689) (4,043)
--------- ---------
Cash Flows from Financing Activities:
Term loan and revolving credit commitment principal repayments (334,401) (73,684)
Proceeds from revolving credit commitment 334,000 66,000
Repayment of senior subordinated indebtedness -- (15,962)
Payment of deferred debt costs (1,964) --
--------- ---------
Net cash used in financing activities (2,365) (23,646)
--------- ---------
Net Decrease in Cash and Cash Equivalents (2,156) (1,003)
Cash and Cash Equivalents at Beginning of Period 7,405 8,230
--------- ---------
Cash and Cash Equivalents at End of Period $ 5,249 $ 7,227
========= =========
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for -
Income taxes $ 5,118 $ 9,636
Interest 25,331 21,699
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these consolidated statements.
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AMERICAN MEDIA OPERATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 28, 1998
(000'S OMITTED IN ALL TABLES)
(UNAUDITED)
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q. Except as
disclosed herein, there has been no material change in the information disclosed
in the notes to consolidated financial statements included in the Annual Report
on Form 10-K of American Media Operations, Inc., (together with its
subsidiaries, the "Company") for the fiscal year ended March 30, 1998. In the
opinion of management, all adjustments considered necessary for a fair
presentation have been included. Operating results for the fiscal periods ended
September 28, 1998 are not necessarily indicative of the results that may be
expected for the fiscal year ending March 29, 1999.
(2) INVENTORIES
Inventories are generally stated at the lower of cost or market. The Company
uses the last-in, first-out (LIFO) cost method of valuing its inventories. If
the first-in, first-out (FIFO) cost method of valuation, which approximates
market value, had been used, inventories would have been greater by $422,000 and
$170,000 than the amounts reported in the accompanying consolidated balance
sheets for September 28 and March 30, 1998, respectively. Inventories are
comprised of the following:
September 28 March 30
-------------- ----------
Raw materials - paper $ 5,877 $ 6,573
Finished product - paper, production
and distribution costs of future issues 4,110 3,817
------- -------
$ 9,987 $10,390
======= =======
(3) INCOME TAXES
The Company files a consolidated Federal income tax return with its parent
company, American Media, Inc., and calculates its income taxes on a separate
return basis. Income taxes have been provided based upon the Company's
anticipated effective annual income tax rate.
(4) CREDIT AGREEMENT
On June 5, 1998, the Company and a bank syndicate whose agent bank is The Chase
Manhattan Corporation (the "Agent Bank" and, collectively, the "Banks") entered
into an amended and restated credit agreement. The new credit agreement (the
"Credit Agreement") which is comprised of a $250 million term loan commitment
and a $120 million revolving credit commitment provides it with certain
advantages as compared to its prior credit agreement (the "Prior Credit
Agreement", together with the Credit Agreement, the "Credit Agreements")
including an extension of the loan term to March 2004, reduced annual loan
amortization payments and generally more favorable interest rate margins and
loan covenants, among others. As of September 28, 1998 the Company had $297
million in loans under the Credit Agreement of which $47 million was borrowed
under the revolving credit commitment.
As of September 28, 1998 the Company's effective interest rate on borrowings
under the Credit Agreement was 7.4%. The effective rate for borrowings under the
Credit Agreement averaged 7.4% for the fiscal quarter ended September 28, 1998
as compared to 7.8% on borrowings for the fiscal quarter ended September 29,
1997. For the two fiscal quarters ended September 28, 1998, the effective rate
was 7.5% as compared to 7.8% for the same prior year period.
In connection with the amendment and restatement of the Credit Agreement,
remaining deferred debt costs related to the Prior Credit Agreement totaling
approximately $3.4 million ($2.2 million net of income taxes) were charged
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to extraordinary loss in the fiscal quarter ended June 1998. Costs totaling
approximately $1.9 million incurred in connection with the Credit Agreement have
been deferred and are being amortized to interest expense through March 2004.
(5) OTHER INCOME (EXPENSE)
Included in Other Income (Expense), net in the accompanying consolidated
statement of income for the two fiscal quarters ended September 28, 1998 is a
net gain of $4.4 million from the settlement of certain litigation related to a
subsidiary of the Company which ceased operations in fiscal 1997.
(6) LITIGATION
Various suits and claims arising in the ordinary course of business have been
instituted against the Company. The Company has various insurance policies
available to recover potential legal costs incurred by it. The Company
periodically evaluates and assesses the risks and uncertainties associated with
litigation independent from those associated with its potential claim for
recovery from third party insurance carriers. At present, in the opinion of
management, after consultation with legal counsel, the liability resulting from
litigation, if any, will not have a material effect on the Company's
consolidated financial statements.
(7) RECENT PRONOUNCEMENTS
The Company adopted the Statement of Financial Accounting Standards ("SFAS") No.
130 "Reporting Comprehensive Income" effective with the current fiscal year.
SFAS No. 130 defines comprehensive income as a measure of all changes in equity
of an enterprise during a period that result from transactions and other
economic events of the period other than transactions with owners. The adoption
of this pronouncement did not have an impact on the Company's financial position
or results of operations for any period presented.
In June 1998, the Financial Accounting Standards Board issued SFAS No.133,
"Accounting for Derivative Instruments and Hedging Activities," which
standardizes the accounting for derivatives, requiring recognition as either
assets or liabilities on the balance sheet and measurement at fair value. The
Company plans to adopt this statement in fiscal 2001. The Company has not yet
determined the effect adoption of this statement will have on the Company's
consolidated financial position, results of operations or cash flows.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
On June 5, 1998, the Company entered into an amended and restated credit
agreement (the "Credit Agreement") with its bank syndicate consisting of a $250
million term loan and a $120 million revolving credit commitment. The advantages
over its then existing credit agreement (the "Prior Credit Agreement", together
with the Credit Agreement, the "Credit Agreements") include an extension of the
loan term to March 2004, reduced annual loan amortization payments and generally
more favorable interest rate margins and loan covenants, among others.
At September 28, 1998 the Company's outstanding indebtedness under the Credit
Agreement totaled $297 million of which term loan and revolving credit
commitment borrowings were $250 million and $47 million, respectively. For the
two fiscal quarters ended September 28, 1998 the effective interest rate on
borrowings under the Credit Agreements was 7.5%. The Company has entered into a
three-year $100 million notional amount interest rate swap agreement expiring in
November 2000 under which the Company pays a fixed rate of 5.95% and receives
interest based on the three-month LIBOR rate thereby converting $100 million of
the Company's variable rate debt to 5.95% (before considering the additional
applicable interest margin spreads charged under the Credit Agreeement).
At September 28, 1998, the Company had cash and cash equivalents of $5.2 million
and a working capital deficit of $55.3 million. The Company does not consider
its working capital deficit to be a true measure of its liquidity position as
its working capital needs typically are met by the large amounts of cash
generated by its business. The Company's primary sources of liquidity are cash
generated from operations and amounts available under the revolving credit
commitment. Any temporary shortfalls in available cash are covered by borrowings
under the Credit Agreement's revolving credit commitment which are reflected as
long-term liabilities. For the two fiscal quarters ended September 28, 1998,
cash provided from financing activities totaling $7.9 million was used primarily
to fund capital expenditures totaling $7.7 million. The relatively high levels
of capital expenditures for the current two fiscal quarters reflects recent
spending on SOAP OPERA NEWS display pockets and replacement and upgrades of the
Company's information systems.
Management believes that cash provided by operations will be adequate to meet
its operating liquidity requirements, including all required payments of
principal and interest and is not aware of any commitment which would require
unusual amounts of cash or which would change or otherwise restrict the
Company's currently available capital resources. In addition, the Company does
not intend to pay any cash dividends on its common stock in the foreseeable
future.
RESULTS OF OPERATIONS
FISCAL QUARTER ENDED SEPTEMBER 28, 1998 VS FISCAL QUARTER ENDED SEPTEMBER 29,
1997. Total revenues were $72,538,000 for the current fiscal quarter, a decrease
of $7,071,000 or 8.9% from the comparable prior year quarter. Substantially all
of the revenue decrease was the result of declines in single copy sales of
NATIONAL ENQUIRER and STAR as their sales have yet to return to the levels
experienced before the adverse publicity associated with the death of Princess
Diana.
Circulation revenues, which include single copy and subscription sales, of
$62,153,000 decreased $6,083,000 or 8.9%. Average weekly unit sales of NATIONAL
ENQUIRER and STAR declined 10.5% and 15.0%, respectively, reflecting the
continued weakness in sales experienced after the August 1997 death of Princess
Diana. While trends indicate that single copy sales continue to improve from the
lows seen in the fiscal quarter ended December 1997, management is unable to
determine when and if sales will return to the levels seen in the comparable
prior year periods. Revenue declines caused by the fall in circulation were
partially offset by $.10 cover price increases for NATIONAL ENQUIRER and STAR to
$1.49 effective with the issues dated July 7, 1998. Decreases in average weekly
circulation of 15.8% and 14.9%, respectively, for SOAP OPERA MAGAZINE and SOAP
OPERA NEWS reflect the impact of increased competition in the soap opera
category, particularly in the number of weekly publications offered for sale
during the past one to two years. SOAP OPERA NEWS increased its cover price from
$1.99 to $2.99, the same cover price charged by its major digest-size
competitors, effective with the issue dated August 18, 1998. COUNTRY
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WEEKLY saw its average weekly circulation decrease 13.1% as compared to the same
prior year period reflecting overall weakness in the category which has resulted
in the recent folding of two similar content publications. It is unknown what
impact these events will have on the future circulation levels of COUNTRY
WEEKLY.
Circulation has also been negatively impacted by the recent industry-wide
weakness in overall response rates to agency-sold subscriptions as a result of
adverse publicity and litigation relating to certain major agencies. As a
result, subscription revenues, which represented approximately 16% of total
circulation revenues in the current fiscal quarter, decreased $363,000 or 3.4%.
Advertising revenues of $5,138,000 decreased $694,000 or 11.9% reflecting both
fewer national ad pages and reduced average revenue per page in NATIONAL
ENQUIRER and STAR resulting from recent declines in circulation levels.
Operating expenses for the current fiscal quarter of $58,087,000 were down
slightly as compared to the same prior year period total of $58,084,000.
Increased distribution expenses, related primarily to higher in-store display
costs, were offset by lower production costs due to reduced press runs for the
Company's publications as compared to the prior year period. The decrease in
editorial expense is attributable largely to cost control efforts at NATIONAL
ENQUIRER and STAR. Depreciation and amortization expense increased over the
prior year period reflecting depreciation related to SOAP OPERA NEWS display
pockets and replacement and upgrades of the Company's information systems.
Operating income was $14,451,000 as compared with $20,805,000 primarily as a
result of the declines in single copy sales of NATIONAL ENQUIRER and STAR.
Interest expense decreased $970,000 in the current fiscal quarter to $11,742,000
from $12,712,000 in the comparable prior year period reflecting decreases in the
average balance of outstanding indebtedness as well as lower amounts of deferred
debt cost amortization related to the Credit Agreement.
The Company's effective income tax rates were 87.0% and 55.4% of income before
income taxes for the fiscal quarters ended September 1998 and 1997,
respectively, as compared to the federal statutory income tax rate of 35%. The
higher effective tax rates result primarily from the effect of goodwill
amortization that is not deductible for income tax reporting purposes.
TWO FISCAL QUARTERS ENDED SEPTEMBER 28, 1998 VS TWO FISCAL QUARTERS ENDED
SEPTEMBER 29, 1997. Total revenues were $145,914,000 for the current two fiscal
quarters, a decrease of $15,811,000 or 9.8% from the comparable prior year
quarter. Substantially all of the revenue decrease was the result of declines in
single copy sales of NATIONAL ENQUIRER and STAR as their sales have yet to
return to the levels experienced before the adverse publicity associated with
the death of Princess Diana.
Circulation revenues, which include single copy and subscription sales, of
$124,951,000 decreased $14,318,000 or 10.3%. Average weekly unit sales of
NATIONAL ENQUIRER and STAR declined 14.3% and 12.5%, respectively, reflecting
the continued weakness in sales of these publications experienced after the
August 1997 death of Princess Diana. While trends indicate that single copy
sales continue to improve from the lows seen in the fiscal quarter ended
December 1997, management is unable to determine when and if sales will return
to the levels seen in the comparable prior year periods. Revenue declines caused
by the fall in circulation were partially offset by $.10 cover price increases
for NATIONAL ENQUIRER and STAR to $1.49 effective with the issues dated July 7,
1998. Decreases in average weekly circulation of 17.5% and 1.8%, respectively,
for SOAP OPERA MAGAZINE and SOAP OPERA NEWS reflect the impact of increased
competition in the soap opera category, particularly in the number of weekly
publications offered for sale during the past one to two years. SOAP OPERA NEWS
increased its cover price from $1.99 to $2.99, the same cover price charged by
its major digest-size competitors, effective with the issue dated August 18,
1998. COUNTRY WEEKLY saw its average weekly circulation decrease 9.0% as
compared to the same prior year period reflecting overall weakness in the
category which has resulted in the recent folding of two similar content
publications. It is unknown what impact these events will have on the future
circulation levels of COUNTY WEEKLY.
Subscription unit sales and revenues were flat for the current two fiscal
quarters as compared to the same prior year period as subscription sales
generated by SOAP OPERA NEWS offset declines in certain of the Company's other
publications. Subscription unit sales have been negatively impacted by the
recent industry-wide weakness in overall response rates to agency-sold
subscriptions as a result of adverse publicity and litigation relating to
certain major agencies.
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Advertising revenues of $10,692,000 decreased $1,277,000 or 10.7% reflecting
both fewer national ad pages and reduced average revenue per page in NATIONAL
ENQUIRER and STAR resulting from recent declines in circulation levels.
Operating expenses for the current two fiscal quarters of $119,024,000 were down
slightly as compared to the same prior year period total of $119,597,000.
Increased distribution expenses, related primarily to higher in-store display
costs, were offset by lower production costs due to reduced press runs for the
Company's publications as compared to the prior year period. The decrease in
editorial expense is attributable largely to cost control efforts at NATIONAL
ENQUIRER and STAR. Depreciation and amortization expense increased over the
prior year period reflecting depreciation related to SOAP OPERA NEWS display
pockets and replacement and upgrades of the Company's information systems.
Operating income was $26,890,000 as compared with $42,128,000 primarily as a
result of the declines in single copy sales of NATIONAL ENQUIRER and STAR.
Interest expense decreased $1,797,000 in the current two fiscal quarters to
$23,937,000 from $25,734,000 in the comparable prior year period reflecting
decreases in the average balance of outstanding indebtedness as well as lower
amounts of deferred debt cost amortization related to the Credit Agreement.
The Company's effective income tax rates were 75.5% and 55.5% of income before
income taxes for the two fiscal quarters ended September 1998 and 1997,
respectively, as compared to the federal statutory income tax rate of 35%. The
higher effective tax rates result primarily from the effect of goodwill
amortization that is not deductible for income tax reporting purposes.
YEAR 2000
The Company uses computer technology throughout its business that could be
affected by the date change in the year 2000, commonly referred to as the "Year
2000 Issue". The Year 2000 Issue relates to the inability of certain computer
programs to properly recognize and process date-sensitive data relative to the
year 2000 and beyond. The Company is in the process of evaluating the full scope
and related costs to insure that its systems are year 2000 compliant.
Preliminary plans are to replace the Company's existing systems with new Year
2000 compliant systems within the normal course of business and, where
necessary, to appropriately modify existing systems. Costs for systems
modifications to address the Year 2000 Issue will be expensed as incurred and
are not expected to have a material adverse effect on the Company's business,
financial position or results of operations. However, the Company cannot measure
the impact that the Year 2000 Issue may have on its suppliers, customers and
other parties with which it conducts business.
INFORMATION RELATED TO FORWARD-LOOKING STATEMENTS
Certain matters discussed in this Form 10-Q may include forward-looking
statements which reflect the Company's views with respect to future events and
financial performance. These forward-looking statements are subject to certain
risks and uncertainties which could cause actual results to differ materially
from both historical or anticipated results and readers are cautioned not to
place undue reliance upon them. The Company undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. Factors that, among others, could cause
actual results to differ materially from historical results or those anticipated
include: 1) market conditions for the Company's publications 2) competition 3)
market prices for the paper used in printing the Company's publications 4) the
Company's ability to develop new publications and services and 5) changes in
economic climate, including interest rate risk.
10
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 27.......... Financial Data Schedule (for SEC use only)
During the fiscal quarter ended September 28, 1998, the Company filed no reports
on Form 8-K.
11
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed by the
undersigned, thereto duly authorized.
AMERICAN MEDIA OPERATIONS, INC.
-------------------------------
Registrant
Date: November 9, 1998 By /s/ RICHARD W. PICKERT
-------------------------
Richard W. Pickert
Senior Vice President
Chief Financial Officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF AMERICAN MEDIA OPERATIONS, INC. FOR THE TWO FISCAL
QUARTERS ENDED SEPTEMBER 28, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-29-1999
<PERIOD-START> MAR-31-1998
<PERIOD-END> SEP-28-1998
<CASH> 5,249
<SECURITIES> 0
<RECEIVABLES> 9,660
<ALLOWANCES> 269
<INVENTORY> 9,987
<CURRENT-ASSETS> 27,818
<PP&E> 47,299
<DEPRECIATION> 18,881
<TOTAL-ASSETS> 633,146
<CURRENT-LIABILITIES> 83,103
<BONDS> 484,634
0
0
<COMMON> 2
<OTHER-SE> 54,050
<TOTAL-LIABILITY-AND-EQUITY> 633,146
<SALES> 145,914
<TOTAL-REVENUES> 145,914
<CGS> 119,024
<TOTAL-COSTS> 119,024
<OTHER-EXPENSES> (4,151)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,937
<INCOME-PRETAX> 7,104
<INCOME-TAX> 5,364
<INCOME-CONTINUING> 1,740
<DISCONTINUED> 0
<EXTRAORDINARY> 2,161
<CHANGES> 0
<NET-INCOME> (421)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
