<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended Commission file number:
March 31, 1997 333-02302
ALLBRITTON COMMUNICATIONS COMPANY
[Exact name of registrant as specified in its charter]
Delaware 78-180-3105
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
808 Seventeenth Street, N.W.
Suite 300
Washington, DC 20006-3903
(Address of principal executive offices)
Registrant's telephone number, including area code: 202-789-2130
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 [ ]
Number of shares of Common Stock outstanding as of May 15, 1997: 20,000 Shares.
<PAGE>
<PAGE>
This Form 10-Q, including the section entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations" contains certain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended, that are not historical facts. Such forward-looking
information may include, without limitation, statements that the Company does
not expect that lawsuits, environmental costs, commitments, contingent
liabilities, labor negotiations or other matters will have a material adverse
effect on its consolidated financial condition, results of operations or
liquidity and other similar expressions concerning matters that are not
historical facts, and projections as to the Company's financial results. Such
statements are subject to certain risks and uncertainties which could cause
actual results to differ materially from those anticipated in the
forward-looking statements. Important factors that could cause such
differences include but are not limited to contractual relationships, industry
competition, regulatory developments, the effects of adverse general economic
conditions, and the ultimate outcome of environmental investigations or
proceedings and other types of claims and litigation.
As a result of these and other factors, the Company may experience material
fluctuations in future operating results on a quarterly or annual basis, which
could materially and adversely affect its business, financial condition, and
operating results. An investment in the Company involves various risks,
including those mentioned above and elsewhere in this report and those which
are detailed from time-to-time in the Company's other filings with the
Securities and Exchange Commission.
Readers should not place undue reliance on forward-looking statements, which
reflect management's view only as of the date hereof. The Company undertakes
no obligation to publicly release the result of any revisions to these
forward-looking statements which may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
<PAGE>
<PAGE>
ALLBRITTON COMMUNICATIONS COMPANY
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION PAGE
Item 1. Financial Statements:
Consolidated Statements of Operations and Retained
Earnings for the Three and Six Months Ended March 31,
1996 and 1997 1
Consolidated Balance Sheets as of September 30, 1996
and March 31, 1997 2
Consolidated Statements of Cash Flows for the Six
Months Ended March 31, 1996 and 1997 3
Notes to Interim Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
PART II OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
Exhibit Index 15
<PAGE>
<PAGE>
PART I FINANCIAL INFORMATION
Item 1.Financial Statements
<TABLE>
<CAPTION>
ALLBRITTON COMMUNICATIONS COMPANY
(an indirectly wholly-owned subsidiary of Perpetual Corporation)
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(Dollars in thousands)
(unaudited)
Three Months Ended Six Months Ended
March 31, March 31,
------------------ ----------------
1996 1997 1996 1997
---- ---- ---- ----
</CAPTION>
<S> <C> <C> <C> <C>
Operating revenues, net $ 33,812 $ 37,024 $ 72,194 $ 84,816
Television operating expenses, excluding
depreciation and amortization 21,263 27,183 42,455 53,587
Depreciation and amortization 2,293 4,755 3,567 9,049
Corporate expenses 1,358 1,217 2,187 2,191
-------- ------- -------- --------
24,914 33,155 48,209 64,827
-------- ------- -------- --------
Operating income 8,898 3,869 23,985 19,989
-------- ------- -------- --------
Nonoperating income (expense)
Interest income
Related party 553 553 1,106 1,106
Other 673 66 705 124
Interest expense (8,674) (10,479) (14,341) (21,138)
Other, net (161) (191) (252) (582)
-------- ------- ------- -------
(7,609) (10,051) (12,782) (20,490)
-------- ------- ------- -------
Income (loss) before income taxes and
extraordinary item 1,289 (6,182) 11,203 (501)
Provision for (benefit from) income taxes 681 (1,561) 4,495 926
-------- ------- ------- -------
Income (loss) before extraordinary item 608 (4,621) 6,708 (1,427)
Extraordinary loss on early repayment of debt,
net of related income tax benefit of $5,387 (7,750) (7,750)
-------- ------- ------- -------
Net loss (7,142) (4,621) (1,042) (1,427)
Retained earnings, beginning of period 69,040 48,296 62,940 45,102
Dividend from WSET and WCIV to Westfield (18,371) (18,371)
Tax benefit distributed (10) (10)
-------- ------- ------- -------
Retained earnings, end of period $ 43,517 $ 43,675 $ 43,517 $ 43,675
========= ========= ========= ========
</TABLE>
* See accompanying notes to interim consolidated financial statements.
<PAGE> 1
<PAGE>
<TABLE>
<CAPTION>
ALLBRITTON COMMUNICATIONS COMPANY
(an indirectly wholly-owned subsidiary of Perpetual Corporation)
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
September 30, March 31,
1996 1997
(unaudited)
------------- -------------
</CAPTION>
<S> <C> <C>
Current assets
Cash and cash equivalents $ 12,108 $ 6,145
Accounts receivable, net 29,219 30,496
Program rights 16,298 7,751
Deferred income taxes 1,473 2,582
Receivable from related party 1,578 186
Interest receivable from related party 492 492
Other 1,795 2,894
----------- ----------
Total current assets 62,963 50,546
Property, plant and equipment, net 52,333 54,201
Intangible assets, net 150,187 152,705
Deferred financing costs and other 11,856 10,491
Cash surrender value of life insurance 3,787 4,086
Program rights 652 468
----------- ----------
$ 281,778 $ 272,497
=========== ==========
Liabilities and Stockholder's Investment
Current liabilities
Current portion of long-term debt $ 806 $ 1,204
Accounts payable 6,091 2,290
Accrued interest payable 10,724 10,789
Program rights payable 20,199 11,044
Accrued employee benefit expenses 3,043 2,366
Other accrued expenses 4,822 7,056
----------- ----------
Total current liabilities 45,685 34,749
Long-term debt 402,187 416,133
Program rights payable 1,391 1,893
Deferred rent and other 3,201 2,720
Accrued employee benefit expenses 1,706 1,766
Deferred income taxes -- 1,585
----------- ----------
454,170 458,846
Stockholder's investment
Preferred stock, $1 par value, 800 shares authorized,
none issued -- --
Common stock, $.05 par value, 20,000 shares
authorized, issued and outstanding 1 1
Capital in excess of par value 6,955 6,955
Retained earnings 45,102 43,675
Distributions to owners, net (224,450) (236,980)
----------- ----------
Total stockholder's investment (172,392) (186,349)
----------- ----------
$ 281,778 $ 272,497
=========== ==========
</TABLE>
See accompanying notes to interim consolidated financial statements.
<PAGE> 2
<PAGE>
<TABLE>
<CAPTION>
ALLBRITTON COMMUNICATIONS COMPANY
(an indirectly wholly-owned subsidiary of Perpetual Corporation)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited) Six Months Ended
March 31,
----------------
1996 1997
------------ ------------
</CAPTION>
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (1,042) $ (1,427)
------------ ---------
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 3,567 9,049
Other noncash charges 377 589
Extraordinary loss on early repayment of debt 7,750 --
Provision for doubtful accounts 231 247
(Gain) loss on disposal of assets (93) 54
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable (445) (1,524)
Program rights 7,358 8,731
State income taxes receivable (1,264) --
Other current assets (1,684) (817)
Other noncurrent assets 259 536
Increase (decrease) in liabilities:
Accounts payable (290) (3,801)
Accrued interest payable 1,494 65
Program rights payable (8,086) (8,653)
Accrued employee benefit expenses (85) (616)
Other accrued expenses 1,207 2,234
Deferred rent and other liabilities 206 1,180
---------- --------
Total adjustments (10,502) 7,274
---------- --------
Net cash provided by operating activities 9,460 5,847
---------- --------
Cash flows form investing activities:
Capital expenditures (3,023) (7,629)
Purchase of option (10,000) (5,348)
Proceeds from disposal of assets 194 19
Acquisitions, net of cash acquired (134,303) --
---------- -------
Net cash used in investing activities (147,132) (12,958)
---------- -------
Cash flows from financing activities:
Proceeds from issuance of debt 283,625 --
Deferred financing costs (7,016) --
Extraordinary loss on early repayment of debt (7,750) --
(Repayments) draws under lines of credit, net (5,000) 13,800
Principal payments on long-term debt and capital lease obligations (78,256) (122)
Distributions to owners, net of certain charges (34,032) (27,469)
Repayments of distribution to owners 8,280 14,939
Other (5) --
--------- --------
Net cash provided by financing activities 159,846 1,148
--------- --------
Net increase (decrease) in cash and cash equivalents 22,174 (5,963)
Cash and cash equivalents, beginning of period 3,816 12,108
--------- --------
Cash and cash equivalents, end of period $ 25,990 $ 6,145
========= ==========
</TABLE>
* See accompanying notes to interim consolidated financial statements.
<PAGE> 3
<PAGE>
ALLBRITTON COMMUNICATIONS COMPANY
(an indirectly wholly-owned subsidiary of Perpetual Corporation)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(unaudited)
NOTE 1 - The accompanying unaudited interim consolidated financial statements
of Allbritton Communications Company (an indirectly wholly-owned subsidiary of
Perpetual Corporation) and its subsidiaries (collectively, the "Company") have
been prepared pursuant to instructions for Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, certain information and footnote disclosures
normally included in financial statements prepared in conformity with
generally accepted accounting principles have been omitted or condensed where
permitted by regulation. In management's opinion, the accompanying financial
statements reflect all adjustments, which were of a normal recurring nature,
and disclosures necessary for a fair presentation of the consolidated
financial statements for the interim periods presented. The results of
operations for the three and six months ended March 31, 1997 are not
necessarily indicative of the results that can be expected for the entire
fiscal year ending September 30, 1997. The interim consolidated financial
statements should be read in conjunction with the audited consolidated
financial statements and notes thereto for the year ended September 30, 1996
which are contained in the Company's Form 10-K.
NOTE 2 - On December 29, 1995, the Company, through an 80% owned subsidiary,
entered into a ten-year local marketing agreement ("LMA") with RKZ, Inc.,
which owns WJSU, an ABC affiliated television station serving Anniston,
Alabama. In connection with the LMA, the Company also entered into an option
("Option") to acquire WJSU. The cost of the Option totalled $15,348, of which
$10,000 was paid in December 1995 and $5,348 was paid in January 1997. The
Option is exercisable over a ten-year period for additional consideration of
$3,337. The consolidated results of operations includes operating revenues
and operating expenses of WJSU since December 29, 1995, pursuant to the terms
of the LMA.
In March 1996, the Company acquired an 80% interest in the assets and certain
liabilities of WHTM, an ABC affiliated television station serving
Harrisburg-York-Lancaster-Lebanon, Pennsylvania, and WCFT, an ABC affiliated
television station serving Tuscaloosa, Alabama, for approximately $135,657
(collectively, the "Acquisitions"). The Acquisitions were accounted for as
purchases and, accordingly, the cost of the entities was assigned to the
identifiable tangible and intangible assets and liabilities assumed based on
their fair market values at the respective dates of the purchases. The
results of operations of WHTM and WCFT are included for the periods subsequent
to the acquisitions.
The acquisitions of WHTM and WCFT and the purchase of the Option were financed
using a portion of the proceeds of an offering of $275,000 9.75% Senior
<PAGE> 4
<PAGE>
Subordinated Debentures due 2007 (the "Debentures") which were issued in
February 1996 at a discount of $1,375. The Company also used a portion of the
proceeds of the offering to repay approximately $74,704 of debt and to pay a
related prepayment penalty of $12,934, which resulted in an extraordinary
loss, net of income tax benefit, of $7,750 on the early repayment of debt.
The following pro forma summary presents the unaudited consolidated results of
operations of the Company for the six months ended March 31, 1996 as if the
offering of the Debentures and the application of the net proceeds thereof
(including the Acquisitions and LMA) had occurred at the beginning of the six
month period. The results presented in the pro forma summary do not
necessarily reflect the results that would have been obtained if the offering,
Acquisitions and LMA had occurred at the beginning of the six month period.
Six Months Ended
March 31, 1996
----------------
Operating revenues, net $81,554
Income before extraordinary items 3,944
Net loss (3,806)
NOTE 3 - For the six months ended March 31, 1996 and 1997, distributions to
owners were as follows:
Six Months Ended
March 31,
1996 1997
------- -------
Distributions to owners, beginning of period $203,775 $224,450
Cash advances 34,042 27,469
Repayment of cash advances (8,280) (14,939)
Other, net (15)
Dividends declared by WSET and WCIV (18,371)
------- -------
Distributions to owners, end of period $211,151 $236,980
======= =======
Weighted average amount of non-interest bearing
advances outstanding during the period $192,318 $214,061
======= =======
Included in distributions to owners is the principal amount of a $20,000 loan
made by the Company in 1991 to ALLNEWSCO, Inc. (Allnewsco), an affiliate of
the Company, which is owned by Mr. Joe L. Allbritton. This amount has been
included in the consolidated financial statements on a consistent basis with
other cash advances to related parties. The $20,000 note receivable from
Allnewsco is payable in annual principal installments of $2,225 commencing
January 11, 1997 through January 11, 2004 with a final payment of $2,200 on
January 11, 2005. The note has a stated interest rate of 11.06% and interest
is payable semi-annually. Allnewsco is current on its interest payments.
During the three months ended March 31, 1997, the Company deferred the January
11, 1997 payment and will amend the note to defer this principal payment to
January 11, 2005.
<PAGE> 5
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Dollars in Thousands)
Overview
Allbritton Communications Company and its subsidiaries (on a consolidated
basis, the "Company") own and operate seven network-affiliated television
stations: WJLA in Washington, D.C.; WHTM in Harrisburg, Pennsylvania; KATV in
Little Rock, Arkansas; KTUL in Tulsa, Oklahoma; WSET in Lynchburg, Virginia;
WCIV in Charleston, South Carolina; and WCFT in Tuscaloosa, Alabama. The
consolidated financial information included herein includes the amounts for
the television stations listed above, with the amounts for WHTM and WCFT
included only since March 1, 1996 and March 15, 1996, respectively, the dates
on which the acquisitions of those entities were completed. The consolidated
financial information also includes operating revenues and certain operating
expenses of WJSU since December 29, 1995, pursuant to the terms of the local
marketing agreement ("LMA"). WHTM, WCFT and WJSU, collectively, are referred
to throughout as the "New Stations."
The Company's advertising revenues are generally highest in the first and
third quarters of each fiscal year, due in part to increases in retail
advertising in the period leading up to and including the holiday season and
active advertising in the spring. The Company's operating expenses are spread
evenly throughout the year so that the fluctuation in operating results is
generally related to fluctuations in the revenue cycle. In addition,
advertising revenues are generally higher during election years due to
spending by political candidates, which is typically heaviest during the
Company's first fiscal quarter. Years in which Olympic Games are held also
cause cyclical fluctuations in operating results depending on which television
network is carrying Olympic coverage.
In addition to the seasonal decrease in advertising revenues which occurred in
the second fiscal quarter, the results in the quarter were adversely impacted
by a non-recurring program expense and the start-up nature of the Birmingham
operations.
Results of Operations
Set forth below are selected consolidated financial data for the three and six
months ended March 31, 1996 and 1997 in actual dollars (in thousands) and the
percentage change between the periods:
<TABLE>
<CAPTION>
Three Months Ended March 31, Six Months Ended March 31,
---------------------------- --------------------------
1996 1997 %Change 1996 1997 %Change
---- ---- ------- ---- ---- -------
</CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Operating revenues, net $ 33,812 $ 37,024 9.5% $ 72,194 $ 84,816 17.5%
Total operating expenses 24,914 33,155 33.1% 48,209 64,827 34.5%
Operating Income 8,898 3,869 (56.5)% 23,985 19,989 (16.7)%
Nonoperating expenses, net 7,609 10,051 32.1% 12,782 20,490 60.3%
Income tax provision (benefit) 681 (1,561) (329.2)% 4,495 926 (79.4)%
Income (loss) before
extraordinary item 608 (4,621) (860.0)% 6,708 (1,427) (121.3)%
Extraordinary loss, net
of income tax benefit (7,750) -- (100.0)% (7,750) -- (100.0)%
Net loss (7,142) (4,621) (35.3)% (1,042) (1,427) (36.9)%
</TABLE>
<PAGE> 6
<PAGE>
Net Operating Revenues
The following table depicts the principal types of operating revenues, net of
agency commissions, earned by the Company for each of the three and six months
ended March 31, 1996 and 1997, and the percentage contribution of each to the
total broadcast revenues earned by the Company, before fees:
<TABLE>
<CAPTION>
Three Months Ended March 31, Six Months Ended March 31,
---------------------------- --------------------------
1996 1997 1996 1997
------- ----- ------- ----- ------- ----- -------- -----
Dollars % Dollars % Dollars % Dollars %
------- ----- ------- ----- ------- ----- -------- -----
(Dollars in thousands)
</CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Local/regional <1> $16,279 46.6 $19,011 49.8 $35,323 47.4 $41,536 47.5
National <2> 13,797 39.5 14,784 38.7 30,200 40.5 33,423 38.2
Network compensation <3> 1,979 5.7 1,619 4.2 2,572 3.5 3,039 3.5
Political <4> 316 .9 69 .2 720 1.0 3,445 3.9
Trade & barter <5> 1,691 4.8 1,907 5.0 3,310 4.4 3,822 4.4
Other revenue <6> 898 2.5 814 2.1 2,400 3.2 2,190 2.5
------- ----- ------- ----- -------- ----- ------- -----
Broadcast revenues 34,960 100.0 38,204 100.0 74,525 100.0 87,455 100.0
===== ===== ===== =====
Fees <7> (1,244) (1,290) (2,561) (2,870)
------- ------- ------- -------
Broadcast revenue,
net of fees 33,716 36,914 71,964 84,585
Non-Broadcast revenue <8> 96 110 230 231
------- ------- ------- -------
Total net operating revenues $33,812 $37,024 $72,194 $84,816
======= ======= ======= =======
<FN>
<F1> Represents sale of advertising time to local and regional advertisers or
agencies representing such advertisers.
<F2> Represents sale of advertising time to agencies representing national advertisers.
<F3> Represents payment by networks for broadcasting or promoting network programming.
<F4> Represents sale of advertising time to political advertisers.
<F5> Represents value of commercial time exchanged for goods and services
(trade) or syndicated programs (barter).
<F6> Represents miscellaneous revenue, principally receipts from tower rental,
production of commercials and revenue from the sales of University of Arkansas
sports programming to advertisers and radio stations.
<F7> Represents fees paid to national sales representatives and fees paid for
music licenses.
<F8> Represents revenues from program syndication sales and other miscellaneous
non-broadcast revenues.
</FN>
</TABLE>
Net operating revenues for the three months ended March 31, 1997 totaled
$37,024, an increase of $3,212, or 9.5% when compared to net operating
revenues of $33,812 for the three months ended March 31, 1996. This increase
includes a $2,732 increase in local/regional advertising, a $987 increase in
national advertising, a $360 decrease in network compensation and a $247
decrease in political advertising. Of the $3,212 increase in net operating
revenues, approximately $2,948 is attributable to the New Stations. The
revenue contribution of the New Stations was adversely impacted by the
start-up nature of the Birmingham operation.
Net operating revenues increased $12,622, or 17.5%, to $84,816 for the six
months ended March 31, 1997 as compared to $72,194 for the same period in the
prior year. The increase is attributable principally to $10,256 in net
operating revenue contributed by the New Stations.
<PAGE> 7
<PAGE>
Local/regional advertising revenues increased 16.8% and 17.6% during the three
and six months ended March 31, 1997, respectively, versus the comparable
periods in fiscal 1996. The increase for the three months ended March 31,
1997 of $2,732 over the three months ended March 31, 1996 is largely
attributable to $1,598 of local/regional advertising revenue generated by the
New Stations, an improvement in the Washington, D.C. local/regional
advertising market and market share gains by the Company's Little Rock,
Arkansas station. The $6,213 increase in local/regional advertising revenues
for the six month period ended March 31, 1997 over the comparable period in
the prior year is attributable to $5,307 in revenues generated by the New
Stations and revenue increases generated by the Company's stations located in
the Washington, D.C. and Little Rock, Arkansas markets as previously
discussed. Local/regional advertising revenue in the Company's remaining
markets remained relatively consistent with the amounts in the prior three and
six month periods.
National advertising revenues increased $987 and $3,223, or 7.2% and 10.7%,
for the three and six months ended March 31, 1997, respectively, over the
comparable periods in the prior year. The increase for the three months ended
March 31, 1997 is a result of $992 in national advertising revenues generated
by the New Stations, offset by a weakening of the Washington, D.C. and
Charleston, South Carolina markets for national advertisers. National
advertising revenue for the six months ended March 31, 1997 increased $3,223,
or 10.7%, over the same period in the prior year principally from the New
Stations, offsetting declines in the Washington, D.C. and Charleston,
South Carolina markets.
Political revenue during the six months ended March 31, 1997 increased by
$2,725 versus the same period in the prior year due primarily to the national
presidential election and several high profile political races in the
Washington, D.C. metropolitan area as well as in Little Rock and Tulsa in
November 1996 with no comparable political elections occurring in November
1995.
The increase in network compensation for the six months ended March 31, 1997
is primarily attributable to network compensation contributed by the New
Stations and new ABC long-term affiliation agreements at higher compensation
levels for certain of the remaining stations which were completed during
fiscal 1996.
No individual advertiser accounted for more than 5% of the Company's broadcast
revenues during the three or six months ended March 31, 1996 or 1997.
Total Operating Expenses
Total operating expenses for the three months ended March 31, 1997 totaled
$33,155, an increase of $8,241, or 33.1%, compared to total operating expenses
of $24,914 for the three month period ended March 31, 1996. The New Stations
accounted for 74.4% of the increase in total operating expenses which
principally represents the effects of the New Stations being owned and
operated for the entire three months in the quarterly period ended March 31,
1997. The New Stations accounted for approximately 57.2% of the increase in
television operating expense (before depreciation, amortization and corporate
expenses) and 100% of the increase in depreciation and amortization expense.
The remaining total operating expense
<PAGE> 8
<PAGE>
increase is largely attributable to an approximately $2,000
non-recurring programming expense resulting from the
Company's early termination of a program contract.
Total operating expenses for the six months ended March 31, 1997 totaled
$64,827, an increase of $16,618, or 34.5%, compared to $48,209 for the six
months ended March 31, 1996. The New Stations accounted for 90.2% of the
increase in total operating expenses. The New Stations accounted for
approximately 81.7% of the increase in television operating expense (before
depreciation, amortization and corporate expenses) and 100% of the increase in
depreciation and amortization expense. The remaining increase in total
operating expense is largely attributable to the non-recurring program expense
previously discussed.
Operating Income
For the three months ended March 31, 1997, operating income of $3,869
decreased $5,029, or 56.5%, when compared to operating income of $8,898 for
the three months ended March 31, 1996. For the three months ended March 31,
1997, the operating margin decreased to 10.4% from 26.3% for the comparable
period in the prior year. Operating income of $19,989 for the six months
ended March 31, 1997 decreased $3,996, or 16.7%, when compared to operating
income of $23,985 for the same period in the prior year. For the six months
ended March 31, 1997 the operating margin decreased to 23.5% from 33.2% for
the comparable period in the prior year. The decrease was due primarily to
operating expenses increasing at a greater rate than operating revenue as
discussed above.
The operating results of the New Stations have impacted the Company's
consolidated performance trends for the three and six month periods ended
March 31, 1997 as compared to the same periods in the prior year. This impact
is largely attributable to the fact that the results of the New Stations are
included for the entire period this fiscal year. As a result, the operating
margins generated by the Company in the aggregate were adversely impacted
primarily due to the Company's continuing investment in the start-up
operations in Birmingham, (e.g., programming and staffing changes, marketing
and promotion activities, etc.) as well as the impact of
the intangible amortization expense arising from the acquisitions
and increased depreciation expense from capital improvements made
to the New Stations.
Nonoperating Expenses, Net
Interest expense of $10,479 for three months ended March 31, 1997 increased
$1,805, or 20.8%, as compared to $8,674 for the three month period ended March
31, 1996. This increase is due to the incremental interest expense associated
with the issuance of the Company's $275,000 9.75% Senior Subordinated
Debentures due 2007 (the "Debentures") on February 6, 1996 and additional
borrowings under the Company's revolving credit facility.
Interest expense for the six months ended March 31, 1997 was $21,138, an
increase of $6,797, or 47.4%, as compared to $14,341 for the six month period
ended March 31, 1996. The increase is attributable to increased interest
expense from the issuance of the Debentures as discussed above, together with
higher average debt balances in the
<PAGE> 9
<PAGE>
first two quarters of fiscal 1997 compared to the same period in the
prior year. The weighted average balance of debt was $260,316 and
$408,657 for the six months ended March 31, 1996 and 1997,
respectively, and the weighted average interest rate on debt was 10.8% and
10.2% for the six months ended March 31, 1996 and 1997, respectively.
Interest income of $619 for the three months ended March 31, 1997 decreased
$607, or 49.5%, as compared to interest income of $1,226 for the three months
ended March 31, 1996. Interest income for the six months ended March 31, 1997
was $1,230, a decrease of $581, or 32.1%, as compared to $1,811 for the six
month period ended March 31, 1996. The interest income for the three and six
months ended March 31, 1996 includes investment interest earned from
temporarily investing certain proceeds from the sale of the Debentures.
Income Taxes
For the three months ended March 31, 1997, the Company had a tax benefit, net
of state and deferred tax expense, of $1,561 compared to a tax provision of
$681 for the three months ended March 31, 1996. The tax benefit is directly
attributable to the $6,182 loss before income taxes for the three months ended
March 31, 1997.
For the six months ended March 31, 1997, the provision for income taxes
decreased $3,569, due to a $11,704 decrease in income before income taxes and
extraordinary item. The Company's provision for income taxes for the period
ended March 31, 1997 is primarily due to the effect of state level income tax
considerations.
Income Before Extraordinary Item
For the three month and six month periods ended March 31, 1997 the Company had
a loss before extraordinary item of $4,621 and $1,427, respectively, compared
to a positive income before extraordinary item of $608 and $6,708 for the same
periods in the prior year. As discussed previously, the losses during fiscal
1997 resulted principally from the non-recurring program expense, the start-up
nature of the Birmingham operations and increased interest expense.
Net Income
The net loss for the three months ended March 31, 1997 was $4,621, compared to
a net loss of $7,142 for the three months ended March 31, 1996. The decline
of $2,521 in the net loss results primarily from the $7,750 in extraordinary
loss on early repayment of debt in the prior year offset by a decrease in
operating income of $5,029, an increase in interest expense of $1,805, a
decrease in interest income of $607 and a decrease in the provision for income
taxes of $2,242.
For the six months ended March 31, 1997, the Company incurred a net loss of
$1,427 compared to a net loss of $1,042 for the six month period ended March
31, 1996. This decrease in net loss is attributed primarily to the $7,750
extraordinary loss on early repayment of debt in the prior year offset by a
decrease in operating income of $3,996, an increase in interest expense of
$6,797, a decrease in interest income of $581, and a decrease in the provision
for income taxes of $3,569.
<PAGE> 10
<PAGE>
Liquidity and Capital Resources
As of March 31, 1997, the Company's cash and cash equivalents aggregated
$6,145, and the Company had an excess of current assets over current
liabilities of $15,797.
Cash Provided by Operations. The Company's principal source of working
capital is cash flow from operations and borrowings under its revolving credit
facility. As reported in the consolidated statements of cash flows, the
Company generated net cash from operations of $9,460 and $5,847 during the six
months ended March 31, 1996 and 1997, respectively. The decrease is primarily
due to a $385 increase in net loss, offset by an increase in depreciation and
amortization of $5,482 and a decrease in accounts payable of $3,511 and the
$7,750 extraordinary loss incurred during the six months ended March 31, 1996.
Transactions with Owners. For the six months ended March 31, 1997 and 1996
the Company made cash advances to owners net of repayments and certain charges
totaling $12,530 and $25,747, respectively. The Company periodically makes
advances in the form of distributions to its parent. At present, the primary
source of repayment of the net advances is through the ability of the Company
to pay dividends or make other distributions to its parent, and there is no
immediate intent for the advances to be repaid. Accordingly, these advances
have been treated as a reduction of Stockholder's Investment and described as
"distributions" in the Company's consolidated financial statements.
Stockholder's deficit amounted to $186,349 at March 31, 1997, an increase of
$13,957, or 8.1%, from the September 30, 1996 deficit of $172,392. The
increase is due to a net increase in distributions to owners of $12,530 and a
net loss for the period of $1,427.
Indebtedness. The Company's total debt, including the current portion of
long-term debt, increased from $402,993 at September 30, 1996 to $417,337 at
March 31, 1997. This debt, net of applicable discounts, consists of $273,753
of 9.75% Debentures, $122,749 of 11.5% Debentures, $4,935 of capital lease
obligations and $15,900 under a revolving credit facility. The increase of
$14,344 in total debt from September 30, 1996 to March 31, 1997 is primarily
due a $13,800 increase in amounts outstanding under the revolving credit
facility to fund working capital. The Company's revolving credit facility is
secured by the pledge of stock of the Company and its subsidiaries and matures
April 16, 2001.
Under the existing borrowing agreements, the Company agrees to abide by
restrictive covenants that place limitations upon payments of cash dividends,
issuance of capital stock, investment transactions, incurrence of additional
obligations and transactions with affiliates. In addition, the Company must
maintain specified levels of operating cash flow and working capital and
comply with other financial covenants.
Effective January 1, 1997, the Company amended financial covenants in the
$40,000 revolving credit facility relating to total debt, senior debt leverage
and interest coverage. The operating performance of the Company, particularly
as a result of the non-recurring program expense and the start-up nature of
the Birmingham operation,
<PAGE> 11
<PAGE>
resulted in the need to amend the financial covenants. If the revolving
credit facility had not been amended, the Company would have been in
non-compliance with certain financial covenants at March 31, 1997.
Management believes that the revised financial covenants allow the Company
sufficient operational flexibility to avoid future compliance issues on
financial covenants.
Other Uses of Cash. Management estimates that capital expenditures for fiscal
year 1997 will approximate $10,000, of which approximately 65% will be funded
by cash generated from operations and the remaining amount is expected to be
financed under existing credit facilities. Capital expenditures during the
six months ended March 31, 1997 totaled $7,629 which included $4,538 of
expenditures funded by cash provided by operating activities. Fiscal 1997
planned capital expenditures include facility construction and equipment
additions to complete the consolidation of the operations of WCFT and WJSU and
technical equipment improvements and capital additions at the other stations.
The Company anticipates that its existing cash position, together with cash
flows generated by operating activities and amounts available under its
revolving credit facility will be sufficient to finance the operating cash
flow requirements of its stations, debt service requirements and anticipated
capital expenditures.
Other Developments. On January 10, 1997, WJLA reached agreement with the
Directors Guild of America for a new contract effective July 16, 1996 expiring
January 16, 2000. Additionally, the American Federation of Television and
Radio Artists ratified a new labor contract with WJLA on April 17, 1997. The
agreement is effective June 1, 1996 and expires on September 30, 1999.
Management does not anticipate that the new contracts will have any
significant impact on the financial operations of the Company. Employees
represented by the National Association of Broadcast Employees and
Technicians/Communications Workers of America (NABET/CWA) continue to work
without a contract, which expired June 1, 1995. WJLA's management continues
to negotiate toward a new contract with NABET/CWA and anticipates resolving
the outstanding issues without any material adverse impact to WJLA.
<PAGE> 12
<PAGE>
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company currently and from time to time is involved in litigation
incidental to the conduct of its business. The Company is not currently a
party to any lawsuit or proceeding which, in the opinion of management, if
decided adverse to the Company, would be likely to have a materially adverse
effect on the Company's consolidated financial condition, results of
operations or cash flows.
The lawsuit of a former employee of WJLA reported in the Company's Quarterly
Report on Form 10-Q for the quarterly period ended December 31, 1996 has been
settled. As a result, the appeal of the summary judgment decision in favor of
WJLA was dismissed on April 4, 1997 with no material financial impact to the
Company.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
4.5 Modification No. 1 dated as of June 19, 1996 to Revolving Credit Agreement
4.6 Modification No. 2 dated as of December 20, 1996 to Revolving Credit
Agreement
4.7 Modification No. 3 dated as of May 14, 1997 to Revolving Credit Agreement
27. Financial Data Schedule (Electronic Filing Only)
b. Reports on Form 8-K
No reports on Form 8-K were filed during the quarter.
<PAGE> 13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALLBRITTON COMMUNICATIONS COMPANY
(Registrant)
May 15, 1997 /s/ Lawrence I. Hebert
------------ -------------------------
Date Name: Lawrence I. Hebert
Title: President
May 15, 1997 /s/ Henry D. Morneault
------------ -------------------------
Date Name: Henry D. Morneault
Title: Chief Financial Officer
<PAGE> 14
<PAGE>
EXHIBIT INDEX
Exhibit No. Description of Exhibit Page No.
3.1 Certificate of Incorporation of ACC. *
(Incorporated by reference to Exhibit 3.1
of Company's Registration Statement on
Form S-4, No. 333-02302, dated March 12,
1996.)
3.2 Bylaws of ACC. (Incorporated by reference *
to Exhibit 3.2 of Registrant's
Registration Statement on Form S-4, No.
333-02302, dated March 12, 1996.)
4.1 Indenture dated as of February 6, 1996 *
between ACC and State Street Bank and
Trust Company, as Trustee, relating to
the Debentures. (Incorporated by
reference to Exhibit 4.1 of Company's
Registration Statement on Form S-4, No.
333-02302, dated March 12, 1996.)
4.2 Indenture dated as of August 26, 1992 *
between ACC and the First National Bank of
Boston, as Trustee, relating to 11½%
Senior Subordinated Debentures due 2004.
(Incorporated by reference to Exhibit 4.2
of Company's Registration Statement on
Form S-4, No. 333-02302, dated March 12,
1996.)
4.3 Form of 9.75% Series B Senior Subordinated *
Debentures due 2007. (Incorporated by
reference to Exhibit 4.3 of Company's
Registration Statement on Form S-4, No.
333-02302, dated March 12, 1996.)
4.4 Revolving Credit Agreement dated as of *
April 16, 1996 by and among Allbritton
Communications Company certain Banks, and
The First National Bank of Boston, as
agent. (Incorporated by reference to
Exhibit 4.4 of Company's Quarterly Report
on Form 10-Q, No. 333-02302, dated August
14, 1996.)
4.5 Modification No. 1 dated as of June 19,
1996 to Revolving Credit Agreement
4.6 Modification No. 2 dated as of December
20, 1996 to Revolving Credit Agreement
4.7 Modification No. 3 dated as of May 14,
1997 to Revolving Credit Agreement
<PAGE> 15
<PAGE>
EXHIBIT INDEX
Exhibit No. Description of Exhibit Page No.
10.1 Registration Rights Agreement by and among *
ACC, Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated and
Salomon Brothers, Inc., dated February 6,
1996. (Incorporated by reference to
Exhibit 10.1 of Company's Registration
Statement on Form S-4, No. 333-02302,
dated March 12, 1996.)
10.2 Network Affiliation Agreement (Harrisburg *
Television, Inc.). (Incorporated by
reference to Exhibit 10.3 of Company's
Pre-effective Amendment No. 1 to
Registration Statement on Form S-4, dated
April 22, 1996.)
10.3 Network Affiliation Agreement (First *
Charleston Corp.). (Incorporated by
reference to Exhibit 10.4 of Company's
Pre-effective Amendment No. 1 to
Registration Statement on Form S-4, dated
April 22, 1996.)
10.4 Network Affiliation Agreement (WSET, *
Incorporated). (Incorporated by reference
to Exhibit 10.5 of Company's Pre-effective
Amendment No. 1 to Registration Statement
on Form S-4, dated April 22, 1996.)
10.5 Network Affiliation Agreement (WJLA-TV). *
(Incorporated by reference to Exhibit 10.6
of Company's Pre-effective Amendment No. 1
to Registration Statement on Form S-4,
dated April 22, 1996.)
10.6 Network Affiliation Agreement (KATV *
Television, Inc.). (Incorporated by
reference to Exhibit 10.7 of Company's
Pre-effective Amendment No. 1 to
Registration Statement on Form S-4, dated
April 22, 1996.)
10.7 Network Affiliation Agreement (KTUL *
Television, Inc.). (Incorporated by
reference to Exhibit 10.8 of Company's
Pre-effective Amendment No. 1 to
Registration Statement on Form S-4, dated
April 22, 1996.)
10.8 Network Affiliation Agreement (TV Alabama, *
Inc.). (Incorporated by reference to
Exhibit 10.9 of Company's Pre-effective
Amendment No. 1 to Registration Statement
on Form S-4, dated April 22, 1996.)
10.9 Tax Sharing Agreement effective as of *
September 30, 1991 by and among Perpetual
Corporation, Inc., ACC and Allnewsco,
Inc., as amended. (Incorporated by
reference to Exhibit 10.11 of Company's
Registration Statement on Form S-4, No.
333-02302, dated March 12, 1996.)
<PAGE> 16
<PAGE>
EXHIBIT INDEX
Exhibit No. Description of Exhibit Page No.
10.10 Time Brokerage Agreement dated as of *
December 21, 1995 by and between RKZ
Television, Inc. and ACC. (Incorporated
by reference to Exhibit 10.11 of Company's
Registration Statement on Form S-4, No.
333-02302, dated March 12, 1996.)
10.11 Option Agreement dated December 21, 1995 *
by and between ACC and RKZ Television,
Inc. (Incorporated by reference to
Exhibit 10.12 of Company's Registration
Statement on Form S-4, No. 333-02302,
dated March 12, 1996.)
10.12 Amendment dated May 2, 1996 by and among *
TV Alabama, Inc., RKZ Television, Inc. and
Osborn Communications Corporation to
Option Agreement dated December 21, 1995
by and between ACC and RKZ Television,
Inc. (Incorporated by reference to
exhibit 10.13 of Company's Form 10-K, No.
333-02302, dated December 30, 1996.)
10.13 Master Lease Finance Agreement dated as of *
August 10, 1994 between BancBoston
Leasing, Inc. and ACC, as amended.
(Incorporated by reference to Exhibit
10.16 of Company's Registration Statement
on Form S-4, No. 333-02302, dated March
12, 1996.)
10.14 Representation Agreement dated as of July *
1, 1995 by and between 78 inc. and
WJLA-TV. (Incorporated by reference to
Exhibit 10.17 of Company's Registration
Statement on Form S-4, No. 333-02302,
dated March 12, 1996.)
10.15 Amendment to Network Affiliation Agreement *
(TV Alabama, Inc.) dated January 23, 1997
(Incorporated by reference to Exhibit
10.15 to the Company's Form 10-Q, No.
333-02302, dated February 14, 1997).
27. Financial Data Schedule (Electronic Filing Only)
*Previously filed
<PAGE> 17
ALLBRITTON COMMUNICATIONS COMPANY
808 17th Street, N.W.
Suite 300
Washington, D.C. 20006
Dated as of: June 19, 1996
The First National Bank of Boston, Bank of Montreal
individually and as Agent Mellon Bank, N.A.
Re: Modification No. 1 to Revolving Credit Agreement
Ladies and Gentlemen:
Reference is made to the Revolving Credit Agreement, dated as of April 16,
1996 (as amended, modified or supplemented from time to time and in effect, the
"Credit Agreement"), by and among Allbritton Communications Company (the
"Borrower"), the financial institutions party thereto (the "Banks") and The
First National Bank of Boston, as agent for the Banks (the "Agent"). All
capitalized terms used herein and not defined herein shall have the meanings
specified for such terms in the Credit Agreement.
The Borrower has requested the Agent and the Banks to amend the Credit
Agreement in certain respects.
The Agent and the undersigned Majority Banks are willing to amend the
Credit Agreement on the terms and subject to the conditions set forth in this
letter agreement ("this Modification").
Accordingly, the parties hereto hereby agree as follows:
ARTICLE I
MODIFICATION TO CREDIT AGREEMENT
SECTION 1.1. Restrictions on Indebtedness. Section 7.1(h) of the Credit
Agreement is amended and restated in its entirety to read as follows:
(h) obligations under Capitalized Leases not exceeding $10,000,000
in aggregate amount at any time outstanding;
<PAGE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants to the Agent and each of the
Banks as of the date of this Modification as follows:
SECTION 2.1. Binding Effect of Documents, etc. This Modification has been
duly executed and delivered by the Borrower. The agreements and obligations of
the Borrower contained in this Modification constitutes the legal, valid and
binding obligation of the Borrower and are enforceable against the Borrower in
accordance with their respective terms, except that (a) such enforceability may
be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights and (b)
the remedy of specific performance and injunction and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
SECTION 2.2. Corporate Authority, etc. The execution and delivery by the
Borrower of this Modification has been duly and properly authorized by all
necessary corporate or other action on the part of the Borrower and does not and
will not (a) contravene any provision of its certificate of incorporation, by-
laws or other comparable governing documents, (b) conflict with, result in a
breach of the terms, conditions or provisions of, constitute a default under or
result in the creation of any lien upon any of the property of the Borrower
under, any agreement or instrument to which it is a party or by which the
Borrower or its property is bound or affected, (c) violate or contravene any
provision of any requirement of law or any decree, order or judgment of any
Governmental Authority binding on the Borrower, (d) result in or permit the
acceleration of any Indebtedness of the Borrower, or (e) require any consents or
approvals from any shareholders of the Borrower.
SECTION 2.3. No Defaults. After giving effect to this Modification, no
Defaults or Events of Default are continuing.
ARTICLE III
EFFECTIVENESS
This Modification shall be effective, as of June 19, 1996, upon receipt by
the Agent of counterparts of this Agreement duly executed and delivered by each
of the Majority Banks and the Borrower.
<PAGE> 2
<PAGE>
ARTICLE IV
PROVISIONS OF GENERAL APPLICATION
Except as otherwise expressly provided by this Modification, all of the
terms, conditions and provisions of the Credit Agreement and each of the other
Loan Documents remain unaltered. All of the Obligations of the Borrower to the
Agent and the Banks under the Credit Agreement and the other Loan Documents are,
by the execution and delivery by the Borrower of this Modification, ratified and
confirmed by the Borrower in all respects. This Modification and the rights and
obligations hereunder of each of the parties hereto shall be governed by and
interpreted and determined in accordance with the laws of The Commonwealth of
Massachusetts. This Modification shall be a Loan Document. This Modification
shall be binding upon and inure to the benefit of each of the parties hereto and
their respective successors in title and assigns. This Modification may be
executed in any number of counterparts, but all of such counterparts shall
together constitute but one and the same agreement. In making proof of this
Modification, it shall not be necessary to produce or account for more than one
counterpart hereof signed by each of the parties hereto.
If you are in agreement with the foregoing, please sign the enclosed
counterparts of this Modification and return such counterparts to the
undersigned, whereupon this Modification shall become a binding agreement
between the undersigned, the Agent and the Banks on and as of the date first
above written.
Very truly yours,
ALLBRITTON COMMUNICATIONS
COMPANY
By: /s/ Henry D. Morneault
Title: Chief Financial Officer
<PAGE> 3
<PAGE>
The foregoing Modification is hereby accepted by the undersigned Agent and
Majority Banks on and as of the date first above written.
THE FIRST NATIONAL BANK OF BOSTON,
individually and as Agent
By: /s/ Reginald T. Dawson
Title: Director
MELLON BANK, N.A.
By: /s/ John T. Kranefuss
Title: Assistant Vice President
BANK OF MONTREAL
By: /s/ Rene Encarnacion
Title: Director
<PAGE> 4
ALLBRITTON COMMUNICATIONS COMPANY
808 17th Street, N.W.
Suite 300
Washington, D.C. 20006
Dated as of: December 20, 1996
The First National Bank of Boston, Bank of Montreal
individually and as Agent Mellon Bank, N.A.
Re: Modification No. 2 to Revolving Credit Agreement
Ladies and Gentlemen:
Reference is made to the Revolving Credit Agreement, dated as of April 16,
1996 (as amended, modified or supplemented from time to time and in effect, the
"Credit Agreement"), by and among Allbritton Communications Company (the
"Borrower"), the financial institutions party thereto (the "Banks") and The
First National Bank of Boston, as agent for the Banks (the "Agent"). All
capitalized terms used herein and not defined herein shall have the meanings
specified for such terms in the Credit Agreement.
The Borrower has requested the Agent and the Banks to amend the Credit
Agreement in certain respects.
The Agent and the undersigned Majority Banks are willing to amend the
Credit Agreement on the terms and subject to the conditions set forth in this
letter agreement (this "Modification").
Accordingly, the parties hereto hereby agree as follows:
ARTICLE I
MODIFICATION TO CREDIT AGREEMENT
SECTION 1.1. Restrictions on Investments. Schedule 7.3 of the Credit
Agreement is amended and restated in its entirety by substituting the Schedule
7.3 attached hereto for the Schedule 7.3 presently attached to the Credit
Agreement.
<PAGE>
<PAGE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants to the Agent and each of the
Banks as of the date of this Modification as follows:
SECTION 2.1. Binding Effect of Documents, etc. This Modification has been
duly executed and delivered by the Borrower. The agreements and obligations of
the Borrower contained in this Modification constitutes the legal, valid and
binding obligation of the Borrower and are enforceable against the Borrower in
accordance with their respective terms, except that (a) such enforceability may
be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights and (b)
the remedy of specific performance and injunction and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
SECTION 2.2. Corporate Authority, etc. The execution and delivery by the
Borrower of this Modification has been duly and properly authorized by all
necessary corporate or other action on the part of the Borrower and does not and
will not (a) contravene any provision of its certificate of incorporation,
bylaws or other comparable governing documents, (b) conflict with, result in a
breach of the terms, conditions or provisions of, constitute a default under or
result in the creation of any lien upon any of the property of the Borrower
under, any agreement or instrument to which it is a party or by which the
Borrower or its property is bound or affected, (c) violate or contravene any
provision of any requirement of law or any decree, order or judgment of any
Governmental Authority binding on the Borrower, (d) result in or permit the
acceleration of any Indebtedness of the Borrower, or (e) require any consents or
approvals from any shareholders of the Borrower.
SECTION 2.3. No Defaults. After giving effect to this Modification, no
Defaults or Events of Default are continuing.
ARTICLE III
EFFECTIVENESS
This Modification shall be effective, as of the date set forth above, upon
receipt by the Agent of counterparts of this Agreement duly executed and
delivered by each of the Majority Banks and the Borrower.
<PAGE> 2
<PAGE>
ARTICLE IV
PROVISIONS OF GENERAL APPLICATION
Except as otherwise expressly provided by this Modification, all of the
terms, conditions and provisions of the Credit Agreement and each of the other
Loan Documents remain unaltered. All of the Obligations of the Borrower to the
Agent and the Banks under the Credit Agreement and the other Loan Documents are,
by the execution and delivery by the Borrower of this Modification, ratified and
confirmed by the Borrower in all respects. This Modification and the rights and
obligations hereunder of each of the parties hereto shall be governed by and
interpreted and determined in accordance with the laws of The Commonwealth of
Massachusetts. This Modification shall be a Loan Document. This Modification
shall be binding upon and inure to the benefit of each of the parties hereto and
their respective successors in title and assigns. This Modification may be
executed in any number of counterparts, but all of such counterparts shall
together constitute but one and the same agreement. In making proof of this
Modification, it shall not be necessary to produce or account for more than one
counterpart hereof signed by each of the parties hereto.
If you are in agreement with the foregoing, please sign the enclosed
counterparts of this Modification and return such counterparts to the
undersigned, whereupon this Modification shall become a binding agreement
between the undersigned, the Agent and the Banks on and as of the date first
above written.
Very truly yours,
ALLBRITTON COMMUNICATIONS
COMPANY
By: /s/ Henry D. Morneault
Title: Chief Financial Officer
<PAGE>
The foregoing Modification is hereby accepted by the undersigned Agent and
Majority Banks on and as of the date first above written.
THE FIRST NATIONAL BANK OF BOSTON,
individually and as Agent
By: /s/ David B. Herter
Title: Managing Director
MELLON BANK, N.A.
By: /s/ John T. Kranefuss
Title: Assistant Vice President
BANK OF MONTREAL
By: /s/ Rene Encarnacion
Title: Director
<PAGE> 4
ALLBRITTON COMMUNICATIONS COMPANY
808 17th Street, N.W.
Suite 300
Washington, D.C. 20006
Dated as of: May 14, 1997
BankBoston, N.A. Bank of Montreal
(f/k/a The First National Bank of Boston), Mellon Bank,
N.A.
individually and as Agent
Re: Modification No. 3 to Revolving Credit Agreement
Ladies and Gentlemen:
Reference is made to the Revolving Credit Agreement, dated as of April 16,
1996 (as amended, modified or supplemented from time to time and in effect, the
"Credit Agreement"), by and among Allbritton Communications Company (the
"Borrower"), the financial institutions party thereto (the "Banks") and
BankBoston, N.A. (f/k/a The First National Bank of Boston), as agent for the
Banks (the "Agent"). All capitalized terms used herein and not defined herein
shall have the meanings specified for such terms in the Credit Agreement.
The Borrower has requested the Agent and the Banks to amend the Credit
Agreement in certain respects.
The Agent and the undersigned Majority Banks are willing to amend the
Credit Agreement on the terms and subject to the conditions set forth in this
letter agreement (this "Modification").
Accordingly, the parties hereto hereby agree as follows:
ARTICLE I
MODIFICATION TO CREDIT AGREEMENT
SECTION 1.1. The Credit Agreement is hereby amended as follows:
(a) The following definition is hereby amended and restated in their
entirety to read as follows:
<PAGE>
<PAGE>
"Applicable Margin. With respect to any fiscal quarter of the
Borrower, the applicable percentage set forth below opposite the Leverage Ratio
determined for the most recently ended fiscal quarter for which the Borrower has
delivered financial statements pursuant to 6.4(a) or (b):
Eurodollar
Rate Base Rate
Applicable Applicable
Leverage Ratio Margin Margin
- ------------ ---------- ----------
Greater than or
equal to 6.5:1.0 2.50% 1.25%
Less than 6.5:1.0
but greater than or
equal to 6.0:1.0 2.25% 1.00%
Less than 6.0:1.0
but greater than or
equal to 5.5:1.0 2.00% 0.75%
Less than 5.5:1.0
but greater than
or equal to 5.0:1.0 1.75% 0.50%
Less than 5.0:1.0
but greater than
or equal to 4.5:1.0 1.50% 0.25%
Less than 4.5:1.0
but greater than
or equal to 4.0:1.0 1.25% 0.00%
Less than 4.0:1.0 1.00% 0.00%
provided, that if the Borrower's financial statements are not furnished to the
Banks pursuant to 6.4(a) or (b) hereof within five (5) Business Days after the
relevant period
<PAGE> 2
<PAGE>
of time specified in 6.4, the Applicable Margin with respect to
all Loans shall be 2.50% (or 1.25%, for Base Rate Loans) during the period
commencing on the date such statements are due and (provided that such financial
statements are subsequently furnished to the Banks) ending on the date two (2)
days following the delivery to the Agent of the financial statements to be
furnished pursuant to 6.4(a) or (b) for the appropriate period."
(b) The following definitions are hereby added to Section 1.1 of the
Credit Agreement to read as follows:
"Senior Debt. In relation to any Person at any time, the aggregate amount
of Consolidated Funded Debt less Indebtedness outstanding under the Subordinated
Debt Documents."
"Senior Leverage Ratio. As of any date of determination, the ratio of (i)
Consolidated Senior Debt of the Borrower and its Subsidiaries as at such date to
(ii) Consolidated EBITDA for the period of four consecutive fiscal quarters
ending on such date."
(c) Section 8.1 of the Credit Agreement is hereby amended by substituting
the following for the table contained in 8.1:
Period Ratio
Prior to 1/1/97 1.60:1
1/1/97 through 9/30/98 1.40:1
10/1/98 through 9/30/99 1.50:1
10/1/99 and thereafter 1.60:1
(d) Section 8.2 of the Credit Agreement is hereby amended by substituting
the following for the table contained in 8.2:
Period Ratio
Prior to 1/1/97 6.00:1
1/1/97 through 9/30/97 7.00:1
10/1/97 through 9/30/98 6.50:1
10/1/98 through 9/30/99 6.25:1
10/1/99 through 9/30/00 6.00:1
10/1/00 and thereafter 5.75:1
(e) Section 8 is hereby amended by inserting the following 8.4 at the
end thereof:
<PAGE> 3
<PAGE>
8.4 Senior Leverage Ratio. The Borrower will not permit the Senior
Leverage Ratio as at the end of any fiscal quarter to exceed 1.00 to 1.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants to the Agent and each of the
Banks as of the date of this Modification as follows:
SECTION 2.1. Binding Effect of Documents, etc. This modification has been
duly executed and delivered by the Borrower. The agreements and obligations of
the Borrower contained in this Modification constitutes the legal, valid and
binding obligation of the Borrower and are enforceable against the Borrower in
accordance with their respective terms, except that (a) such enforceability may
be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights and (b)
the remedy of specific performance and injunction and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
SECTION 2.2. Corporate Authority, etc. The execution and delivery by the
Borrower of this Modification has been duly and properly authorized by all
necessary corporate or other action on the part of the Borrower and does not (a)
contravene any provision of its certificate of incorporation, by-laws or other
comparable governing documents, (b) conflict with, result in a breach of the
terms, conditions or provisions of, constitute a default under or result in the
creation of any lien upon any of the property of the Borrower under, any
agreement or instrument to which it is a party or by which the Borrower or its
property is bound, (c) violate or contravene any provision of any requirement of
law or any decree, license, order or judgment of any Governmental Authority
binding on the Borrower or its subsidiaries, in any of the foregoing cases in a
manner that is reasonably likely to result in the imposition of substantial
penalties or materially and adversely affect the financial condition, properties
or business of the Borrower and its subsidiaries, taken as a whole or the
Borrower's ability to perform the Obligations, (d) result in or permit the
acceleration of any Indebtedness of the Borrower, or (e) require any consents or
approvals from any shareholders of the Borrower.
SECTION 2.3. No Defaults. After giving effect to this Modification, no
Defaults or Events of Default are continuing.
<PAGE> 4
<PAGE>
ARTICLE III
EFFECTIVENESS
This Modification shall be effective, as of the date set forth above, upon
receipt by the Agent of (a) counterparts of this Agreement duly executed and
delivered by each of the Majority Banks and the Borrower and (b) payment by the
Borrower of an amendment fee of .125% on each Banks pro rata Commitment. Upon
effectiveness of this Modification, Sections 8.1 and 8.2 of the Credit Agreement
will be deemed to have retroactive effect to January 1, 1997.
ARTICLE IV
PROVISIONS OF GENERAL APPLICATION
Except as otherwise expressly provided by this Modification, all of the
terms, conditions and provisions of the Credit Agreement and each of the other
Loan Documents remain unaltered. All of the Obligations of the Borrower to the
Agent and the Banks under the Credit Agreement and the other Loan Documents are,
by the execution and delivery by the Borrower of this Modification, ratified and
confirmed by the Borrower in all respects. This Modification and the rights and
obligations hereunder of each of the parties hereto shall be governed by and
interpreted and determined in accordance with the laws of The Commonwealth of
Massachusetts. This Modification shall be a Loan Document. This Modification
shall be binding upon and inure to the benefit of each of the parties hereto and
their respective successors in title and assigns. This Modification may be
executed in any number of counterparts, but all of such counterparts shall
together constitute but one and the same agreement. In making proof of this
Modification, it shall not be necessary to produce or account for more than one
counterpart hereof signed by each of the parties hereto.
If you are in agreement with the foregoing, please sign the enclosed
counterparts of this Modification and return such counterparts to the
undersigned, whereupon this Modification shall become a binding agreement
between the undersigned, the Agent and the Banks on and as of the date first
above written.
Very truly yours,
ALLBRITTON COMMUNICATIONS
COMPANY
By: Henry D. Morneault
Title: Chief Financial Officer
<PAGE> 5
<PAGE>
The foregoing Modification is hereby accepted by the undersigned Agent and
Majority Banks on and as of the date first above written.
BANKBOSTON, N.A.
(f/k/a The First National Bank of Boston),
individually and as Agent
By: /s/ David B. Herter
Tile: Managing Director
MELLON BANK, N.A.
By: /s/ John T. Kranefuss
Title: Assistant Vice President
BANK OF MONTREAL
By: /s/ Allegra Griffiths
Title: Director
<PAGE> 6
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
ALLBRITTON COMMUNICATIONS COMPANY
FINANCIAL DATA SCHEDULE
IN ACCORDANCE WITH ITEM 601(C)
OR REGULATIONS S-K AND S-B
(In thousands)
This schedule contains summary financial information extracted from the
consolidated Statement of Operations and Retained Earnings for the six months
ended March 31, 1997 and the Consolidated Balance Sheet as of March 31, 1997
and is qualified in its entirety by reference to such consolidated financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 6,145
<SECURITIES> 0
<RECEIVABLES> 32,166
<ALLOWANCES> (1,670)
<INVENTORY> 0
<CURRENT-ASSETS> 50,546
<PP&E> 125,197
<DEPRECIATION> (70,996)
<TOTAL-ASSETS> 272,497
<CURRENT-LIABILITIES> 34,749
<BONDS> 396,503
<COMMON> 1
0
0
<OTHER-SE> (236,980)
<TOTAL-LIABILITY-AND-EQUITY> 272,497
<SALES> 0
<TOTAL-REVENUES> 84,816
<CGS> 0
<TOTAL-COSTS> 64,827
<OTHER-EXPENSES> 582
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,138
<INCOME-PRETAX> (501)
<INCOME-TAX> 926
<INCOME-CONTINUING> (1,427)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,427)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
