<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:
December 31, 1997 333-02302
ALLBRITTON COMMUNICATIONS COMPANY
[Exact name of registrant as specified in its charter]
Delaware 74-180-3105
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
808 Seventeenth Street, N.W.
Suite 300
Washington, D.C. 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 February 10, 1998: 20,000
shares.
- --------------------------------------------------------------------------------
<PAGE>
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
CERTAIN OF THE MATTERS DISCUSSED IN THIS FORM 10-Q, INCLUDING DOCUMENTS
INCORPORATED BY REFERENCE, MAY CONSTITUTE FORWARD-LOOKING STATEMENTS FOR
PURPOSES OF THE SECURITIES ACT AND THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED. SUCH FORWARD-LOOKING STATEMENTS MAY INVOLVE UNCERTAINTIES AND OTHER
FACTORS THAT MAY CAUSE THE ACTUAL RESULTS AND PERFORMANCE OF THE COMPANY TO BE
MATERIALLY DIFFERENT FROM FUTURE RESULTS OR PERFORMANCE EXPRESSED OR IMPLIED BY
SUCH STATEMENTS. CAUTIONARY STATEMENTS REGARDING THE RISKS ASSOCIATED WITH SUCH
FORWARD-LOOKING STATEMENTS INCLUDE, WITHOUT LIMITATION, THOSE STATEMENTS
INCLUDED UNDER "RISK FACTORS" AND "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS." CERTAIN OF SUCH RISKS AND
UNCERTAINTIES RELATE TO THE HIGHLY LEVERAGED NATURE OF THE COMPANY, THE
RESTRICTIONS IMPOSED ON THE COMPANY BY CERTAIN INDEBTEDNESS, THE SENSITIVITY OF
THE COMPANY TO ADVERSE TRENDS IN THE GENERAL ECONOMY, THE HIGH DEGREE OF
COMPETITION IN THE COMPANY'S INDUSTRY, THE IMPACT OF NEW TECHNOLOGIES AND
CHANGES IN FEDERAL COMMUNICATIONS COMMISSION REGULATIONS, THE VARIABILITY OF THE
COMPANY'S QUARTERLY RESULTS AND THE COMPANY'S SEASONALITY, AMONG OTHERS.
ALL WRITTEN OR ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE COMPANY
ARE EXPRESSLY QUALIFIED BY THE FOREGOING CAUTIONARY STATEMENTS.
<PAGE>
ALLBRITTON COMMUNICATIONS COMPANY
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1997
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Statements of Operations and Retained
Earnings for the Three Months Ended December 31, 1996 and 1997...... 1
Consolidated Balance Sheets as of September 30, 1997 and
December 31, 1997................................................... 2
Consolidated Statements of Cash Flows for the Three Months
Ended December 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............................................... 5
Item 3. Quantitative and Qualitative Disclosures About Market Risk.......... 10
PART II OTHER INFORMATION
Item 1. Legal Proceedings................................................... 11
Item 6. Exhibits and Reports on Form 8-K.................................... 11
Signatures.................................................................. 12
Exhibit Index............................................................... 13
</TABLE>
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
ALLBRITTON COMMUNICATIONS COMPANY
(an indirectly wholly-owned subsidiary of Perpetual Corporation)
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(Dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
------------------
1996 1997
---- ----
<S> <C> <C>
Operating revenues, net $ 47,792 $ 51,320
------ ------
Television operating expenses, excluding
depreciation and amortization 26,404 27,589
Depreciation and amortization 4,294 4,802
Corporate expenses 974 1,062
------ ------
31,672 33,453
------ ------
Operating income 16,120 17,867
------ ------
Nonoperating income (expense)
Interest income
Related party 553 553
Other 58 75
Interest expense (10,659) (11,058)
Other, net (391) (297)
------ ------
(10,439) (10,727)
------ ------
Income before income taxes 5,681 7,140
Provision for income taxes 2,487 3,117
------ ------
Net income 3,194 4,023
Retained earnings, beginning of period 45,102 44,835
------ ------
Retained earnings, end of period $ 48,296 $ 48,858
====== ======
</TABLE>
See accompanying notes to interim consolidated financial statements.
- --------------------------------------------------------------------------------
1
- --------------------------------------------------------------------------------
<PAGE>
ALLBRITTON COMMUNICATIONS COMPANY
(an indirectly wholly-owned subsidiary of Perpetual Corporation)
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31,
September 30, 1997
Assets 1997 (unaudited)
------------- ------------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 7,421 $ 4,776
Accounts receivable, net 34,569 43,428
Program rights 15,244 11,360
Deferred income taxes 2,617 2,619
Interest receivable from related party 492 1,045
Other 2,405 3,074
--------- ---------
Total current assets 62,748 66,302
Property, plant and equipment, net 51,921 51,372
Intangible assets, net 150,493 149,079
Deferred financing costs and other 10,477 10,038
Cash surrender value of life insurance 4,674 4,887
Program rights 664 583
--------- ---------
$ 280,977 $ 282,261
========= =========
Liabilities and Stockholder's Investment
Current liabilities
Current portion of long-term debt $ 1,320 $ 1,282
Accounts payable 3,620 4,689
Accrued interest payable 10,765 7,706
Program rights payable 19,718 16,491
Accrued employee benefit expenses 3,728 2,537
Other accrued expenses 5,079 7,198
--------- ---------
Total current liabilities 44,230 39,903
Long-term debt 414,402 423,813
Program rights payable 966 507
Deferred rent and other 3,067 3,110
Accrued employee benefit expenses 1,836 1,870
Deferred income taxes 2,039 2,610
--------- ---------
466,540 471,813
--------- ---------
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 44,835 48,858
Distributions to owners, net (237,354) (245,366)
--------- ---------
Total stockholder's investment (185,563) (189,552)
--------- ---------
$ 280,977 $ 282,261
========= =========
</TABLE>
See accompanying notes to interim consolidated financial statements.
- --------------------------------------------------------------------------------
2
- --------------------------------------------------------------------------------
<PAGE>
ALLBRITTON COMMUNICATIONS COMPANY
(an indirectly wholly-owned subsidiary of Perpetual Corporation)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
------------------
1996 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,194 $ 4,023
------- -------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 4,294 4,802
Other noncash charges 297 298
Provision for doubtful accounts 121 147
Loss (gain) on disposal of assets 58 (4)
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable (8,940) (9,006)
Program rights 4,327 3,965
Interest receivable from related party 553 (553)
Other current assets (553) (669)
Other noncurrent assets (131) (34)
Increase (decrease) in liabilities:
Accounts payable (1,263) 1,069
Accrued interest payable (2,870) (3,059)
Program rights payable (3,155) (3,686)
Accrued employee benefit expenses (713) (1,157)
Other accrued expenses 954 2,119
Deferred rent and other liabilities (547) 43
Deferred income taxes 825 569
------- -------
Total adjustments (6,743) (5,156)
------- -------
Net cash used in operating activities (3,549) (1,133)
------- -------
Cash flows from investing activities:
Capital expenditures (1,874) (2,561)
Proceeds from disposal of assets 12 18
------- -------
Net cash used in investing activities (1,862) (2,543)
------- -------
Cash flows from financing activities:
Draws under lines of credit, net 5,500 9,300
Principal payments on long-term debt
and capital lease obligations (62) (257)
Distributions to owners, net of certain (17,420) (21,090)
charges
Repayments of distributions to owners 10,620 13,078
------- -------
Net cash (used in) provided by
financing activities (1,362) 1,031
-------- -------
Net decrease in cash and cash equivalents (6,773) (2,645)
Cash and cash equivalents, beginning of period 12,108 7,421
------- -------
Cash and cash equivalents, end of period $ 5,335 $ 4,776
======= =======
</TABLE>
See accompanying notes to interim consolidated financial statements.
- --------------------------------------------------------------------------------
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 months ended December 31, 1997 are not necessarily indicative of the
results that can be expected for the entire fiscal year ending September 30,
1998. 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, 1997 which are contained in the Company's Form
10-K.
NOTE 2 - For the three months ended December 31, 1996 and 1997, distributions to
- ------
owners were as follows:
<TABLE>
<CAPTION>
1996 1997
---- ----
<S> <C> <C>
Distributions to owners, beginning of period $224,450 $237,354
Cash advances 18,969 23,151
Repayment of cash advances (10,620) (13,078)
Charge for Federal income taxes (1,549) (2,061)
------- -------
Distributions to owners, end of period $231,250 $245,366
======= =======
Weighted average amount of non-interest bearing
advances outstanding during the period $211,465 $226,230
======= ========
</TABLE>
NOTE 3 On January 22, 1998, the Company completed a $150,000
- ------
offering of its 8 7/8% Senior Subordinated Notes due 2008. The cash proceeds
of the offering, net of offering expenses, of approximately $146,000 will be
used to redeem the Company's 11 1/2% Debentures with the balance used to repay
certain amounts outstanding under the Company's revolving credit facility. A
notice of redemption has been issued for the redemption of the 11 1/2%
Debentures on March 3, 1998. The Company will incur a loss, net of the related
income tax effect, of approximately $5,400 on the early extinguishment of the
11 1/2% Debentures.
- --------------------------------------------------------------------------------
4
- --------------------------------------------------------------------------------
<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/or operate ABC network-affiliated television stations
serving seven diverse geographic markets: WJLA-TV in Washington, D.C.; WHTM-TV
in Harrisburg, Pennsylvania; KATV in Little Rock, Arkansas; KTUL in Tulsa,
Oklahoma; WSET-TV in Lynchburg, Virginia; WCIV in Charleston, South Carolina;
and WCFT-TV in Tuscaloosa, Alabama (west of Birmingham, Alabama). The Company
also programs the ABC network affiliate WJSU-TV in Anniston, Alabama (east of
Birmingham, Alabama) pursuant to the terms of a local marketing agreement, and
owns a low power television station licensed to Birmingham, Alabama (WBMA-LP).
The Company operates WCFT-TV and programs WJSU-TV in tandem with WBMA-LP serving
the viewers of Birmingham, Tuscaloosa and Anniston.
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.
As compared to the same period in the prior fiscal year, the Company's results
of operations for the three months ended December 31, 1997 principally reflect
increased demand by advertisers in the Washington, D.C. market as well as
increased audience share and advertising revenues in the Birmingham market
together with reduced operating expenses for the Birmingham operation. These
positive results were partially offset by a significant decrease in political
advertising revenues due principally to the absence of significant elections in
the first quarter of Fiscal 1998.
- --------------------------------------------------------------------------------
5
- --------------------------------------------------------------------------------
<PAGE>
Results of Operations
Set forth below are selected consolidated financial data for the three months
ended December 31, 1996 and 1997 and the percentage change between the periods:
<TABLE>
<CAPTION>
Three Months Ended December 31,
-------------------------------
Percent
1996 1997 Change
------- ------- --------
<S> <C> <C> <C>
Operating revenues, net $47,792 $51,320 7.4%
Total operating expenses 31,672 33,453 5.6%
------- -------
Operating income 16,120 17,867 10.8%
Nonoperating expenses, net 10,439 10,727 2.8%
Income tax provision 2,487 3,117 25.3%
------- -------
Net income $ 3,194 $ 4,023 26.0%
======= =======
</TABLE>
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 months ended
December 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 December 31,
-------------------------------
1996 1997
---- ----
Dollars Percent Dollars Percent
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Local/regional (1) $22,525 45.7 $25,586 48.2
National (2) 18,639 37.8 21,619 40.7
Network compensation (3) 1,420 2.9 1,467 2.8
Political (4) 3,376 6.9 917 1.7
Trade and barter (5) 1,915 3.9 2,144 4.0
Other revenue (6) 1,376 2.8 1,350 2.6
------- ----- ------- -----
Broadcast revenues 49,251 100.0 53,083 100.0
===== =====
Fees (7) (1,580) (1,768)
------- -------
Broadcast revenue, net of fees 47,671 51,315
Non-broadcast revenue (8) 121 5
------- -------
Total net operating revenues $47,792 $51,320
======= =======
</TABLE>
(1) Represents sale of advertising time to local and regional advertisers or
agencies representing such advertisers.
(2) Represents sale of advertising time to agencies representing national
advertisers.
(3) Represents payment by networks for broadcasting or promoting network
programming.
(4) Represents sale of advertising time to political advertisers.
(5) Represents value of commercial time exchanged for goods and services (trade)
or syndicated programs (barter).
(6) 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.
(7) Represents fees paid to national sales representatives and fees paid for
music licenses.
(8) Represents revenues from program syndication sales and other miscellaneous
non-broadcast revenues.
- --------------------------------------------------------------------------------
6
- --------------------------------------------------------------------------------
<PAGE>
Net operating revenues for the three months ended December 31, 1997 totaled
$51,320, an increase of $3,528, or 7.4%, when compared to net operating revenues
of $47,792 for the three months ended December 31, 1996. This increase results
principally from increased local and national advertising demand partially
offset by decreased political advertising revenues in the majority of the
Company's markets. The most significant quarterly revenue increase was generated
by the Washington, D.C. and Birmingham markets. WJLA's revenue increase was
achieved through a combination of overall improvement in the Washington, D.C.
advertising market and increased audience share, particularly in local news. The
revenue growth in Birmingham was achieved through increased audience share. This
expansion in audience share is the result of the Company's development of the
Birmingham operation.
Local/regional advertising revenues increased 13.6% during the three months
ended December 31, 1997 versus the comparable period in Fiscal 1997. The
increase for the three months ended December 31, 1997 of $3,061 over the three
months ended December 31, 1996 is primarily attributable to an improvement in
the Washington, D.C. local/regional advertising market and market share gains by
the Company's Birmingham stations.
National advertising revenues increased $2,980, or 16.0%, for the three months
ended December 31, 1997 over the comparable period in Fiscal 1997. The increase
for the three months ended December 31, 1997 is primarily attributable to an
improvement in the Washington, D.C. national advertising market and market share
gains by the Company's Birmingham stations.
Political advertising revenues, which comprised 1.7% of the Company's total net
operating revenues for the three months ended December 31, 1997, decreased by
$2,459, or 72.8%, from the comparable period in Fiscal 1997. The decrease is due
primarily to the national presidential election as well as various high-profile
local political races in several of the Company's markets that took place during
the three months ended December 31, 1996 with no comparable political elections
occurring during the same period in Fiscal 1998.
No individual advertiser accounted for more than 5% of the Company's broadcast
revenues during the three months ended December 31, 1996 or 1997.
Total Operating Expenses
Total operating expenses for the three months ended December 31, 1997 totaled
$33,453, an increase of $1,781, or 5.6%, compared to total operating expenses of
$31,672 for the three-month period ended December 31, 1996. This increase
consists of an increase in television operating expenses, excluding depreciation
and amortization, of $1,185, an increase in depreciation and amortization of
$508 and an increase in corporate expenses of $88.
Television operating expenses, excluding depreciation and amortization,
increased $1,185, or 4.5%, to $27,589 for the three months ended December 31,
1997 as compared to $26,404 for the three months ended December 31, 1996. The
increase in Fiscal 1998 is primarily attributable to increased sales, news and
programming expenses across the majority of the Company's stations partially
offset by reduced operating expenses in Birmingham.
Depreciation and amortization expense of $4,802 for the first three months of
Fiscal 1998
7
<PAGE>
increased $508, or 11.8%, versus the comparable period in Fiscal 1997. The
increase for the three months ended December 31, 1997 is principally the result
of increased depreciation from the facility construction and equipment purchases
in Birmingham as well as from the purchase of a corporate aircraft during Fiscal
1997.
Operating Income
For the three months ended December 31, 1997, operating income of $17,867
increased $1,747, or 10.8%, when compared to operating income of $16,120 for the
three months ended December 31, 1996. For the three months ended December 31,
1997, the operating margin increased to 34.8% from 33.7% for the comparable
period in Fiscal 1997. The increases in operating income and margin were the
result of operating revenues increasing at a greater rate than operating
expenses. In addition, the Company's Fiscal 1997 operating margins were
adversely impacted due to the investment in the start-up operations in
Birmingham (e.g., programming and staffing changes, marketing and promotion
activities, and capital expenditures for facility construction and equipment
purchases to integrate the operation) during the initial phase of Birmingham's
audience share development. The increase in operating margin for the first
quarter of Fiscal 1998 as compared to the first quarter of Fiscal 1997 reflected
the increased audience share of the Birmingham stations together with a
reduction in operating expenses.
Nonoperating Expenses, Net
Interest expense of $11,058 for three months ended December 31, 1997 increased
$399, or 3.7%, as compared to $10,659 for the three-month period ended December
31, 1996. This increase is due to the incremental interest expense associated
with additional borrowings under the Company's revolving credit and capital
lease facilities. The weighted average balance of debt was $408,001 and $420,525
for the three months ended December 31, 1996 and 1997, respectively, and the
weighted average interest rate on debt was 10.4% and 10.2% for the three months
ended December 31, 1996 and 1997, respectively.
Income Taxes
The provision for income taxes for the three months ended December 31, 1997
totaled $3,117, an increase of $630, or 25.3%, when compared to the provision
for income taxes of $2,487 for the three months ended December 31, 1996. The
increase is directly related to the $1,459, or 25.7%, increase in the Company's
income before income taxes due to the factors discussed above.
Net Income
Net income for the three months ended December 31, 1997 was $4,023 as compared
to net income of $3,194 for the three months ended December 31, 1996 due to the
factors discussed above.
Balance Sheet
Significant balance sheet fluctuations from September 30, 1997 to December 31,
1997 consisted of increased accounts receivable and long-term debt, offset by
decreases in program rights, accrued interest payable and program rights
payable. In addition, distribution to owners increased as a result of net cash
advances made during the three months ended December 31, 1997. The increase in
accounts receivable reflects the Company's continued revenue growth while the
program rights and accrued interest activity are related to the timing of cash
payments. The increase in long-term debt is primarily due to additional draws
under the revolving credit facility to fund working capital.
8
<PAGE>
Liquidity and Capital Resources
As of December 31, 1997, the Company's cash and cash equivalents aggregated
$4,776, and the Company had an excess of current assets over current liabilities
of $26,399.
Cash Provided by Operations. The Company's principal source of working capital
- ---------------------------
is cash flow from operations and borrowings under its revolving credit facility.
Cash and cash equivalents decreased $2,645 from September 30, 1997 to December
31, 1997, principally resulting from net cash used in operations of $1,133, net
capital expenditures of $2,561 and net distributions to owners of $8,012, offset
by a $9,300 increase in borrowings under the revolving credit facility. Cash
used in operations was primarily a result of net income plus depreciation and
amortization, offset by other changes in assets and liabilities, primarily an
increase in accounts receivable.
Transactions with Owners. For the three months ended December 31, 1996 and 1997
- ------------------------
the Company made cash advances to owners, net of repayments and certain charges,
totaling $6,800 and $8,012, 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 $189,552 at December 31, 1997, an increase of
$3,989, or 2.1%, from the September 30, 1997 deficit of $185,563. The increase
is due to a net increase in distributions to owners of $8,012 offset by net
income for the period of $4,023.
Indebtedness. On January 22, 1998, the Company completed a $150,000 offering of
- ------------
its 8 7/8% Senior Subordinated Notes due 2008. The cash proceeds of the
offering, net of offering expenses, of approximately $146,000 will be used to
redeem the Company's 11 1/2% Debentures with the balance used to repay certain
amounts outstanding under the Company's revolving credit facility. A notice of
redemption has been issued for the redemption of the 11 1/2% Debentures on March
3, 1998.
The Company's total debt, including the current portion of long-term debt,
increased from $415,722 at September 30, 1997 to $425,095 at December 31, 1997.
This debt, net of applicable discounts, consists of $273,848 of 9 3/4%
Debentures, $122,768 of 11 1/2% Debentures, $6,479 of capital lease obligations
and $22,000 under a revolving credit facility. The increase of $9,373 in total
debt from September 30, 1997 to December 31, 1997 is primarily due to a $9,300
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. As of December 31, 1997, the Company was in
compliance with these financial covenants.
9
<PAGE>
Other Uses of Cash. The Company anticipates that capital expenditures for
- ------------------
Fiscal 1998 will approximate $12,000, including approximately $3,000 to enable
WJLA to simultaneously broadcast its programming over its second channel
authorized to transmit a digital television signal. The amount may increase or
decrease depending upon changes in channel allocation or changes to the digital
television implementation strategy. Other Fiscal 1998 capital expenditures
include facility construction and technical equipment improvements across the
Company's television stations. Capital expenditures during the three months
ended December 31, 1997 totaled $2,561.
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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
10
<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.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
See Exhibit Index on pages 13-15.
b. Reports on Form 8-K
No reports on Form 8-K were filed during the quarter.
11
<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)
February 9, 1998 /s/ Lawrence I. Hebert
------------------------------ ----------------------------------
Date Name: Lawrence I. Hebert
Title: President
February 9, 1998 /s/ Henry D. Morneault
------------------------------ ----------------------------------
Date Name: Henry D. Morneault
Title: Chief Financial Officer
12
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit Page No.
- ----------- ---------------------- --------
<S> <C> <C>
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 112% 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 (Incorporated by reference to Exhibit 4.5 of Company's
Quarterly Report on Form 10-Q, No. 333-02302, dated May 15, 1997).
4.6 Modification No. 2 dated as of December 20, 1996 to Revolving *
Credit Agreement (Incorporated by reference to Exhibit 4.6 of Company's
Quarterly Report on Form 10-Q, No. 333-02302, dated May 15, 1997).
4.7 Modification No. 3 dated as of May 14, 1997 to Revolving Credit *
Agreement (Incorporated by reference to Exhibit 4.7 of Company's
Quarterly Report on Form 10-Q, No. 333-02302, dated May 15, 1997).
4.8 Modification No. 4 dated as of September 30, 1997 to Revolving *
Credit Agreement (Incorporated by reference to Exhibit 4.8 of Company's
Form 10-K, No. 333-02302, dated December 22, 1997).
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit Page No.
- ----------- ---------------------- --------
<S> <C> <C>
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.)
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.)
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit Page No.
- ----------- ---------------------- --------
<S> <C> <C>
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.)
10.15 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).
10.16 Pledge of Membership Interests Agreement dated as of *
September 30, 1997 by and among ACC; KTUL, LLC; KATV,
LLC; WCIV, LLC; and BankBoston, N.A. as Agent (Incorporated by
reference to Exhibit 10.16 of Company's Form 10-K, No. 333-02302,
dated December 22, 1997).
27. Financial Data Schedule (Electronic Filing Only)
</TABLE>
- -----------------
*Previously filed
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Statement of Operations and Retained Earnings for the three months
ended December 31, 1997 and the Consolidated Balance Sheet as of December 31,
1997 and is qualified in its entirety by reference to such consolidated
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 4,776
<SECURITIES> 0
<RECEIVABLES> 45,112
<ALLOWANCES> 1,684
<INVENTORY> 0
<CURRENT-ASSETS> 66,302
<PP&E> 133,068
<DEPRECIATION> 81,696
<TOTAL-ASSETS> 282,261
<CURRENT-LIABILITIES> 39,903
<BONDS> 396,616
0
0
<COMMON> 1
<OTHER-SE> (189,552)
<TOTAL-LIABILITY-AND-EQUITY> 282,261
<SALES> 0
<TOTAL-REVENUES> 51,320
<CGS> 0
<TOTAL-COSTS> 33,453
<OTHER-EXPENSES> 297
<LOSS-PROVISION> 147
<INTEREST-EXPENSE> 11,058
<INCOME-PRETAX> 7,140
<INCOME-TAX> 3,117
<INCOME-CONTINUING> 4,023
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,023
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
