<PAGE> 1
As filed with the Securities and Exchange Commission on August 14, 1996
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 1996.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
for the transition period from _________ to __________
Commission File Number: 0-25206
-------
LIN TELEVISION CORPORATION
--------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-3581627
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
FOUR RICHMOND SQUARE, SUITE 200, PROVIDENCE, RI 02906
- ----------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(401) 454-2880
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports 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.
[X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at August 5, 1996
----- -----------------------------
Common Stock, $0.01 par value 29,666,336
<PAGE> 2
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
LIN TELEVISION CORPORATION
Consolidated Balance Sheets
(Dollars in thousands)
(unaudited)
<CAPTION>
June 30, December 31,
ASSETS 1996 1995
-----------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 29,425 $ 18,025
Accounts receivable, less allowance for
doubtful accounts (1996-$2,296; 1995-$1,964) 59,627 50,732
Program rights 5,128 10,218
Other current assets 6,106 7,076
-----------------------------
Total current assets 100,286 86,051
Property and equipment, less accumulated depreciation 106,084 95,570
Program rights and other noncurrent assets 12,185 12,933
Intangible assets, less accumulated amortization
(1996-$53,569; 1995-$47,791) 386,923 392,702
-----------------------------
Total assets $ 605,478 $ 587,256
=============================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 8,094 $ 9,198
Program obligations 5,792 12,651
Accrued income taxes 9,892 8,461
Other accruals 23,217 21,725
-----------------------------
Total current liabilities 46,995 52,035
Long-term debt 387,000 387,000
Deferred income taxes 58,454 57,811
Other noncurrent liabilities 3,324 3,976
Stockholders' equity:
Preferred stock, $.01 par value:
Authorized shares 15,000,000 - Issued and
outstanding shares - none - -
Common stock, $.01 par value:
Authorized shares 90,000,000 - Issued and
outstanding shares - 29,658,000 (29,489,000 in 1995) 297 295
Additional paid-in capital 274,922 271,446
Accumulated deficit (165,514) (185,307)
-----------------------------
Total stockholders' equity 109,705 86,434
-----------------------------
Total liabilities and stockholders' equity $ 605,478 $ 587,256
=============================
</TABLE>
The December 31, 1995 information was derived from the audited financial
statements at that date.
See accompanying notes.
1
<PAGE> 3
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
LIN TELEVISION CORPORATION
Consolidated Statements of Income
(Amounts in thousands, except per share data)
(unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ -------------------------
1996 1995 1996 1995
-------- -------- ---------- ---------
<S> <C> <C> <C> <C>
Net revenues $75,576 $55,861 $133,115 $104,278
Operating costs and expenses:
Direct operating 19,830 11,815 34,661 24,180
Selling, general, and administrative 15,924 11,471 30,848 23,434
Corporate 1,663 1,303 3,308 2,876
Amortization of program rights 3,559 2,499 7,410 5,991
Depreciation and amortization of
intangible assets 6,326 4,172 12,624 8,284
---------------------------------------------------------
Total operating costs and expenses 47,302 31,260 88,851 64,765
---------------------------------------------------------
Operating income 28,274 24,601 44,264 39,513
Other (income) expense:
Interest expense 6,824 6,442 13,723 13,034
Investment income (279) (301) (532) (619)
Other expense - 320 - 320
---------------------------------------------------------
Total other expense 6,545 6,461 13,191 12,735
---------------------------------------------------------
Income before provision for income
taxes 21,729 18,140 31,073 26,778
Provision for income taxes 7,888 6,983 11,280 10,309
---------------------------------------------------------
Net Income $13,841 $11,157 $ 19,793 $ 16,469
=========================================================
Net income per share $ 0.46 $ 0.37 $ 0.66 $ 0.55
======= ======= ======== ========
Weighted average shares outstanding 30,050 29,775 29,988 29,714
======= ======= ======== ========
</TABLE>
See accompanying notes.
2
<PAGE> 4
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
LIN TELEVISION CORPORATION
Consolidated Statements of Cash Flows
(Amounts in thousands)
(unaudited)
<CAPTION>
Six Months Ended June 30,
1996 1995
-------------------------
OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 19,793 $ 16,469
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization (includes amortization
of financing costs) 13,150 8,868
Deferred income taxes 643 (3,817)
Amortization of program rights 7,410 5,991
Program payments (8,747) (5,759)
LIN Broadcasting corporate service charges forgiven - (365)
Changes in operating assets and liabilities:
Accounts receivable (8,895) (2,591)
Other assets 120 2,844
Liabilities 1,807 6,742
-------------------------
Total adjustments 5,488 11,913
-------------------------
Net cash provided by operating activities 25,281 28,382
-------------------------
INVESTING ACTIVITIES:
Capital expenditures (17,359) (8,008)
Acquisitions - (4,753)
Local Marketing Agreement expenditures - (750)
-------------------------
Net cash used in investing activities (17,359) (13,511)
-------------------------
FINANCING ACTIVITIES:
Proceeds from exercises of stock options and
Employee Stock Purchase Plan shares 3,478 3,439
Principal payments on long-term debt - (12,500)
Purchase of interest rate caps - (319)
-------------------------
Net cash provided by (used in) financing activities 3,478 (9,380)
-------------------------
Net increase in cash and cash equivalents 11,400 5,491
-------------------------
Cash and cash equivalents at the beginning of the period 18,025 17,907
-------------------------
Cash and cash equivalents at the end of the period $ 29,425 $ 23,398
=========================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for:
Interest $ 13,549 $ 10,125
Income taxes $ 9,217 $ 6,877
</TABLE>
See accompanying notes.
3
<PAGE> 5
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
LIN TELEVISION CORPORATION
Notes to Consolidated Financial Statements
June 30, 1996
(unaudited)
NOTE 1 - BASIS OF PRESENTATION
These financial statements have been prepared without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. These condensed
consolidated financial statements should be read in conjunction with the audited
financial statements and the notes thereto included in the Company's Form 10-K
for the year ended December 31, 1995.
The financial information included herein reflects all adjustments
(consisting of normal recurring adjustments) which are, in the opinion of
management, necessary to a fair presentation of the results for interim periods.
The results of operations for the three and six months ended June 30, 1996 are
not necessarily indicative of the results to be expected for the full year.
NOTE 2 - ACQUISITIONS
On October 2, 1995, the Company acquired television station WIVB-TV, the
CBS affiliate in Buffalo, New York, for approximately $100.7 million in cash
(the "WIVB-TV Acquisition"), subject to adjustments as set forth in the stock
purchase agreement. the WIVB-TV Acquisition was accounted for as a purchase and
was funded with cash from operations and the incurrence of an additional $77
million in debt.
<TABLE>
The summarized unaudited pro forma results of operations set forth
below for the three and six month periods ended June 30, 1996 and 1995 assume
the WIVB-TV Acquisition had taken place on January 1, 1995 (in thousands, except
per share amounts).
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
1996 1995 1996 1995
------------------ ------------------
(Amounts in thousands, except per share data)
<S> <C> <C> <C> <C>
Net revenues $75,576 $61,987 $133,115 $115,041
Operating income 28,274 26,089 44,264 41,220
Net income 13,841 11,074 19,793 15,570
Net income per share $ 0.46 $ 0.37 $ 0.66 0.52
</TABLE>
4
<PAGE> 6
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
LIN TELEVISION CORPORATION
Notes to Consolidated Financial Statements
June 30, 1996
(unaudited)
<TABLE>
Note 3 - Net Income Per Share
Net income per share is calculated by dividing the income attributable to
common shares by the weighted average number of common shares outstanding during
each of the periods, computed under the treasury stock method. Net income per
share for the three and six month periods ending June 30, 1996 and 1995,
respectively, is computed as follows (amounts in thousands, except per share
data):
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- -------------------
1996 1995 1996 1995
-------------------- -------------------
<S> <C> <C> <C> <C>
Primary:
Average shares outstanding 29,626 29,365 29,578 29,304
Net effect of dilutive stock options-
based on the treasury stock method
using average market price 424 410 410 410
------- ------- ------- -------
Totals 30,050 29,775 29,988 29,714
======= ======= ======= =======
Net income $13,841 $11,157 $19,793 $16,469
======= ======= ======= =======
Per share amount $ 0.46 $ 0.37 $ 0.66 $ 0.55
======= ======= ======= =======
Fully diluted:
Average shares outstanding 29,626 29,365 29,578 29,304
Net effect of dilutive stock options-
based on the treasury stock method
using closing market price, if higher
than average market price 507 493 505 493
------- ------- ------- -------
Totals 30,133 29,858 30,083 29,797
======= ======= ======= =======
Net income $13,841 $11,157 $19,793 $16,469
======= ======= ======= =======
Per share amount $ 0.46 $ 0.37 $ 0.66 $ 0.55
======= ======= ======= =======
</TABLE>
5
<PAGE> 7
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
LIN TELEVISION CORPORATION
Notes to Consolidated Financial Statements
June 30, 1996
(unaudited)
Note 4 - Long-Term Debt
The Company presently has indebtedness outstanding of $387 million pursuant
to a bank credit facility (the "Bank Credit Facility") that permits the Company
to borrow up to $475 million, consisting of a $175 million term loan facility
and a $300 million revolving credit facility. The Company is required to repay
the indebtedness outstanding through quarterly installments payable under the
term and revolving facilities, commencing on September 30, 1997 through December
31, 2002, at which time the debt will be fully repaid. The Company is required
to apply cash proceeds from certain sales of assets which are not reinvested in
similar assets and excess cash flow to the prepayment of loans. The Bank Credit
Facility also permits the Company to solicit commitments for an additional
senior loan facility of up to $100 million upon the consent of lenders holding a
majority of the aggregate outstanding principal balance under the revolving loan
facilities, the term loan facilities, and any other lending facilities then in
place. The Bank Credit Facility contains covenants restricting certain
activities, including (i) acquisitions and investments, (ii) incurrence of debt,
(iii) distributions and dividends to stockholders, (iv) mergers and sales of
assets, (v) prepayments and subordinated indebtedness, (vi) creations of liens,
and (vii) issuance of preferred stock. Under the Bank Credit Facility, the
Company pledged as security the capital stock of each of its subsidiaries which
own all of the Company's television properties. Such subsidiaries are restricted
from making certain distributions or payments to the Company. Under the Bank
Credit Facility, the Company must remain in compliance with a series of
financial covenants, which compare the levels of the Company's indebtedness to
its cash flows as of the end of each quarter. As of June 30, 1996, the Company
was in compliance with all covenants. In order to comply with covenants under
the Bank Credit Facility and to provide interest rate protection, the Company
purchased interest rate caps at a cost of $346,000 in 1995. The interest rate
caps cover notional amounts totaling $190.0 million, are based on three-month
LIBOR, and have strike rates of 9%. Each of these interest rate cap agreements
terminate on December 31, 1997. The costs of the interest rate caps are
capitalized and charged to interest expense over the lives of the caps. During
1995, and for the six months ended June 30, 1996, the prevailing market rates
were below the rate caps in effect; thus, the only effect on the Company's
interest expense from such transactions was the amortization of the cost of
these caps.
6
<PAGE> 8
PART 1. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
OVERVIEW
The Company is engaged in the commercial television broadcasting business
and currently owns and operates eight network affiliated television stations,
two low power television (LPTV) networks and two LPTV stations. The Company also
provides programming and advertising services to four stations through local
marketing agreements (LMAs). LMAs provide the Company with an additional
broadcasting outlet and promote diversity in news, programming and community
service in the markets served by the Company's stations.
On October 2, 1995, the Company acquired station WIVB-TV, the CBS affiliate
in Buffalo, New York (see "Note 2-Acquisitions" of the Company's Notes to
Consolidated Financial Statements). In November 1995, the Company entered into
an affiliation agreement with Fox Broadcasting Company making available to
WVBT-TV the programming of the Fox network for a ten-year term commencing on
September 1, 1998. The Company believes that WVBT-TV's broadcast cash flow will
substantially increase after such affiliation becomes effective.
This Quarterly Report on Form 10-Q contains forward-looking statements that
involve a number of risks and uncertainties. When used in this Quarterly Report
on Form 10-Q the words "believes," "anticipated" and similar expressions are
intended to identify forward-looking statements. There are a number of factors
that could cause the Company's actual results to differ materially from those
forecasted or projected in such forward-looking statements. These factors
include, without limitation, those set forth under the caption "Certain Factors
That May Affect Future Results" in the Company's Annual Report on Form 10-K for
1995. Readers are cautioned not to place undue reliance on these forward-looking
statements which speak only as of the date hereof. The Company undertakes no
obligations 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.
Set forth below are the significant factors that contributed to the
operating results of the Company for the three and six month periods ending June
30, 1996 and 1995. The WIVB-TV Acquisition, and, to a lesser extent, the
operation of the Company's four LMAs, affect the year to year comparability of
the Company's financial results.
RESULTS OF OPERATIONS
- ---------------------
REVENUES
Total net revenues consist of national and local time sales, net of sales
adjustments and agency commissions, network compensation, barter revenues,
revenue from the production of local advertising spots, tower rental, Local
Weather Station revenues, and cable retransmission income. Total net revenues
increased 35.3% and 27.7% for the three and six month periods ended June 30,
1996, respectively, compared to the same periods last year. Approximately 88.1%
of the Company's total net revenues for the three and six months ended June 30,
1996 were derived from net national and net local advertising time sales. Spot
revenue increases in certain of the stations' markets were driven by the
continued steady demand for television advertising time and as a result of
strong ratings growth, especially the NBC affiliates, which led to a more
complete sale of inventory and increased advertising rates. Net revenue at LMA
station KXTX-TV also increased $3.6 million in the second quarter as a result of
ratings growth and increased advertising rates related to new sports
programming.
7
<PAGE> 9
PART 1. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (CONTINUED)
As previously reported, the Company acquired the rights to produce all Texas
Ranger's Baseball telecasts for the next five years. Political advertising
increased $1.1 million and $1.6 million for the three and six month periods
ended June 30, 1996, respectively, due substantially to the governor's race in
Indiana. The WIVB-TV Acquisition accounted for approximately 33.5% and 39.9% of
the total net revenue increase for the three and six month periods ended
June 30, 1996, respectively.
Network revenue increased $2.1 million and $1.9 million for the three and
six month periods ended June 30, 1996, respectively, compared to the same
periods last year. The increase was due to the recognition of an ABC network
compensation rate increase totaling $1.3 million retroactively effective to
September 1995. Network revenues also increased $0.5 million as a result of the
WIVB-TV Acquisition.
Revenues from the Local Weather Station remained relatively flat for the
three and six month periods ended June 30, 1996. The Company provides the Local
Weather Station to cable operators in all of its markets, except New
Haven-Hartford and Buffalo, and presently intends to expand this service to
additional markets in the future.
OPERATING EXPENSES
Direct operating expenses for the three and six month periods ended June
30, 1996 increased 67.8% and 43.3%, respectively, over the same periods in 1995,
due primarily to the amortization of sports programming for Texas Rangers
Baseball in the second quarter of 1996. The WIVB-TV Acquisition and, to a lesser
extent, increased programming expense at station WTNH-TV due to a change in the
syndicated/barter programming mix also contributed to the overall increase.
Selling, general and administrative expenses increased 38.8% and 31.6% for
the three and six month periods ended June 30, 1996, respectively, compared to
the same periods in 1995. The increase was due to the WIVB-TV Acquisition,
expenses associated with the production of sports programming, and an increase
in salesperson's compensation and representative commissions associated with
increased revenues.
Total corporate expenses, which have increased 27.6% and 15.0% for the
three and six month periods ended June 30, 1996, respectively, compared to the
same periods last year, are comprised of costs associated with the centralized
management of the stations. The increase is due primarily to new personnel and
increased costs associated with operating as a public company.
Amortization of program rights rose approximately 42.4% and 23.7% for the
three and six month periods ended June 30, 1996, respectively, due primarily to
the WIVB-TV Acquisition. The amortization of programming rights reflects the
expenses related to the acquisition of syndicated programming, features and
specials purchased to air on the Company's television stations. As independents
or Warner Brothers network affiliates, the LMAs have substantially more
syndicated programming than comparable network affiliated stations in the group.
Amortization of program rights is, therefore, proportionately higher at the LMA
stations.
Depreciation and the amortization of intangible assets increased 51.6% and
52.4% for the three and six month periods ended June 30, 1996, respectively,
compared to the same periods in 1995.
8
<PAGE> 10
PART 1. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (CONTINUED)
Substantially all of this increase is related to the acquisition of station
WIVB-TV, and, to a lesser extent, to increased capital expenditures in 1995 in
order to modernize the stations' facilities.
OPERATING INCOME
For the reasons discussed above, the Company reported an increase in
operating income of $3.7 million or 14.9% and $4.8 million or 12.0% for the
three and six month periods ended June 30, 1996, respectively, compared to the
same periods last year.
Interest expense, comprised of interest payable on funds borrowed under the
Company's Bank Credit Facility, remained relatively flat for the three and six
month periods ended June 30, 1996 compared to the same periods last year.
The Company's provision for income taxes increased 13.0% and 9.4% for the
three and six month periods ended June 30, 1996, respectively, compared to the
same period last year, due to higher income before taxes, offset slightly by a
decrease in the Company's effective tax rate.
The Company's operating margins declined as a result of the development of
the LMAs in New Haven, Norfolk, and Austin, each of which reported significant
revenue increases over last year but which have not yet reached break-even.
LIQUIDITY AND CAPITAL RESOURCES
It is the Company's policy to carefully monitor the state of its business,
cash requirements and capital structure. From time to time, the Company may
enter into transactions pursuant to which debt is extinguished, including sales
of assets or equity, joint ventures, reorganizations or recapitalizations. There
can be no assurance that any such transactions will be undertaken or, if
undertaken, will be favorable to stockholders.
The Company's principal source of funds are its operations and its Bank
Credit Facility. Net cash provided by operating activities for the six months
ended June 30, 1996 was $25.3 million compared to $28.4 million in the same
period last year. The decrease is primarily due to the timing of interest and
broadcast rights payments, and an increase in accounts receivable, offset by
increased depreciation and amortization. Net cash used in investing activities
was $17.4 million for the six months ended June 30, 1996, compared to $13.5
million in 1995 related to increased capital expenditures. The increase is a
result of the Company's continuing effort to employ state of the art technology
at the television station sites in order to maximize the quality of the on air
product. Net cash provided by financing activities for the period ended June 30,
1996 was $3.5 million compared to net cash used in financing activities of $9.4
million in the same period last year. The fluctuation is due, primarily, to the
postponement of principle payments on long-term debt as a result of the
renegotiated terms with the Bank Credit Facility.
The Company presently has indebtedness outstanding of $387 million pursuant
to the Bank Credit Facility which permits the Company to borrow up to $475
million, consisting of a $175 million term loan facility and a $300 million
revolving credit facility. The Company is required to repay the indebtedness
outstanding through quarterly installments payable under the term and revolving
facilities, commencing on September 30, 1997 through December 31, 2002, at which
time the debt will be fully repaid. On October 2, 1995 the Company acquired
station WIVB-TV. The purchase price of $100.7 million was funded with
approximately $23.7 million of cash from operations and $77.0 million in
additional debt borrowed under the terms of the Bank Credit Facility.
9
<PAGE> 11
PART 1. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (CONTINUED)
The Bank Credit Facility also permits the Company to solicit commitments for an
additional senior loan facility of up to $100 million upon the consent of
lenders holding a majority of the aggregate outstanding principal balance under
the revolving loan facilities, the term loan facilities, and any other lending
facilities then in place. As of June 30, 1996, the Company has funds available
of approximately $188 million under the Bank Credit Facility. The Bank Credit
Facility contains maintenance requirements on the coverage of a set of financial
ratios, restrictions on dividends and the incurrence of additional debt. The
Company has become more leveraged as a result of the Spin-Off and its
acquisitions and, accordingly, will experience higher interest expense in the
future.
The Company's current and future debt service obligations could have
adverse consequences to holders of the Company's common stock, including the
following: (i) the Company's ability to obtain financing for future working
capital needs or additional acquisitions or other purposes may be limited; (ii)
a substantial portion of the Company's cash flow from operations will be
dedicated to the payment of principal and interest on its indebtedness, thereby
reducing funds available for operations; and (iii) the Company may be more
vulnerable to adverse economic conditions than less leveraged competitors and,
thus, may be limited in its ability to withstand competitive pressures.
The Company expects to be able to satisfy its future debt service
obligations and other commitments with cash flow from operations. However, there
can be no assurance that the future cash flow of the Company will be sufficient
to meet such obligations and commitments. If the Company is unable to generate
sufficient cash flow from operations in the future to service its indebtedness
and to meet its other commitments, it may be required to refinance all or a
portion of its existing indebtedness or to obtain additional financing. There
can be no assurance that any such refinancing or additional financing could be
obtained on acceptable terms. If the Company is unable to service or refinance
its indebtedness, it may be required to sell one or more of its stations to
reduce debt service obligations.
The Company has never paid dividends on its common stock and has no present
intention of paying dividends on its common stock in the foreseeable future. It
has been the Company's policy to retain earnings in order to finance its
business. In addition, the Bank Credit Facility restricts the Company from
paying cash dividends. Any future dividends will be dependent upon the Company's
financial condition, results of operations, current or anticipated cash
requirements, acquisition plans, restrictions imposed by any credit facility
then in place, and other factors which the Company's management and Board of
Directors deems relevant.
INFLATION
The Company believes that its businesses are affected by inflation to an
extent no greater than other businesses are generally affected.
10
<PAGE> 12
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 a party to any
lawsuit or proceeding that, in management's opinion, is likely to have a
material adverse effect on the Company's financial condition, results of
operations or cash flows.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its Annual Meeting of Stockholders on May 16, 1996 (the
"Annual Meeting"). At the Annual Meeting, the stockholders of the Company voted
to elect the nominees listed below for one-year terms and until their successors
are duly elected and qualified. The following table sets forth the number of
votes cast for and withheld/abstained with respect to each of the nominees:
Nominee For Withheld/Abstained
------------------- ---------- ------------------
Richard S. Bodman 28,189,629 132,941
Dennis J. Carey 28,188,723 133,847
Gary R. Chapman 28,193,516 129,054
James D. Daniell 28,187,924 134,646
William G. Herbster 28,203,522 119,048
Roy M. Huhndorf 28,201,632 120,938
Wilma H. Jordan 28,196,620 125,950
Richard W. Kislik 28,203,988 118,582
Gary A. Swenson 28,189,306 133,264
Florence L. Walsh 28,181,729 140,841
ITEM 5. OTHER INFORMATION
CONTINGENT MATTERS
The Congress and the FCC have under consideration, and in the future may
consider and adopt, new laws, regulations and policies regarding a wide variety
of matters that could affect, directly or indirectly, the operation, ownership
and profitability of the Company's broadcast stations, result in the loss of
audience share and advertising revenues for the Company's broadcast stations,
and affect the ability of the Company to acquire additional broadcast stations
or finance such acquisitions.
The Telecommunications Act of 1996 (the "Act"), signed into law on February
8, 1996, made various changes in the Communications Act that will affect the
broadcast industry. Among other things, the Act (i) directs the FCC to increase
the national audience reach cap for television from 25% to 35% and to eliminate
the 12-station numerical limit; (ii) directs the FCC to review its local
ownership restrictions; (iii) clarifies that existing LMAs which were in
compliance with FCC regulations were in the public interest and states that
existing and future LMAs are not inconsistent with the Act so long as they
comply with applicable FCC regulations; (iv) directs the FCC to extend its
liberal policy of permitting waivers of its television/radio cross-ownership
restriction to proposed combinations in the top 50 markets; (v) lifts the
statutory ban on cable-broadcast cross-ownership but does not direct the FCC to
eliminate its parallel FCC rule prohibition; (vii) repeals the statutory ban
against telephone companies providing video programming in their own service
areas; and (viii) permits but does not require the FCC to award to broadcasters
a second channel for Advanced Television ("ATV") and other digital services and
imposes a fee on subscription based services. Certain leaders in Congress have
asked the FCC to postpone issuing ATV licenses pending consideration of
possible future legislation that would require broadcasters to bid at auction
for ATV channels or return the existing conventional channels to the FCC on an
expedited basis.
11
<PAGE> 13
PART II. OTHER INFORMATION (CONTINUED)
ITEM 5. OTHER INFORMATION (CONTINUED)
The FCC has initiated a rulemaking looking toward issuing ATV licenses to
current broadcast licensees. The Commission has proposed in this rulemaking to
reduce the total amount of spectrum allocated to broadcasting which could have
the effect of creating additional interference to existing stations and/or
reducing the eventual service areas of ATV stations.
The FCC has initiated rulemaking proceedings to consider proposals to relax
its television ownership restrictions, including ones that would permit the
ownership, in some circumstances, of two television stations with overlapping
service areas. The FCC may also consider in these proceedings whether to adopt
new restrictions on television LMAs. The "duopoly" rules currently prevent the
Company from acquiring the FCC licenses of its LMA stations, thereby preventing
the Company from directly fulfilling its obligations under put options that such
LMA stations have with the Company. If the Company should be unable to fulfill
its obligation under a put option, it would be required to find an assignee who
could perform such obligation. There is no assurance that the Company could find
an assignee to fulfill the Company's obligations under the put options on
favorable terms. Under the Act, the Company's LMAs were "grandfathered". The
precise extent to which the FCC may nevertheless restrict existing LMAs or make
them attributable ownership interests is uncertain and the Company could be
required to modify its LMAs in ways which impair their viability, though the
Company does not believe this is likely to occur. Further if the FCC were to
find that one of the Company's LMA stations failed to maintain control over its
operations, the licensee of the LMA station and/or the Company could be subject
to FCC sanctions. The Company is unable to predict the ultimate outcome of
possible changes to these FCC rules and the impact such FCC rules may have on
its broadcasting operations.
All of the Company's LMAs allow, in accordance with FCC rules, regulations
and policies, preemptions of the Company's programming by the owner-operator and
FCC licensee of each station with which the Company has an LMA. Accordingly, the
Company cannot be assured that it will be able to air all of the programming
expected to be aired on those stations with which it has an LMA or that the
Company will receive the anticipated advertising revenue from the sale of
advertising spots in such programming. Although the Company believes that the
terms and conditions of each of its LMAs should enable the Company to air its
programming and utilize the programming and other non-broadcast license assets
acquired for use on the LMA stations, there can be no assurance that early
terminations of the LMAs or unanticipated preemptions of all or a significant
portion of the programming by the owner-operators and FCC licensees of such
stations will not occur. An early termination of one of the Company's LMAs, or
repeated and material preemptions of programming thereunder, could adversely
affect the Company's operations.
The Company cannot predict what other matters might be considered in the
future, nor can it judge in advance what impact, if any, the implementation of
any of these proposals or changes might have on its business.
The foregoing does not purport to be a complete discussion of all the
provisions of the Act, or other Congressional acts, or the regulations and
policies of the FCC promulgated thereunder.
12
<PAGE> 14
PART II. OTHER INFORMATION (CONTINUED)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
- --------
Exhibit 11.1 Statement Re: Computation of Earnings Per Share
See Note 3 to the financial statements presented on page 5 of this report.
REPORTS ON FORM 8-K
- -------------------
No reports on Form 8-K were filed during the quarter for which this report is
filed.
13
<PAGE> 15
SIGNATURES
----------
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LIN TELEVISION CORPORATION
(Registrant)
DATED: August 12, 1996 /s/ Peter E. Maloney
--------------- -----------------------------
Peter E. Maloney
Vice President of Finance/Tax
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM LIN
TELEVISION CORPORATION CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED
STATEMENTS OF INCOME AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
LIN TELEVISION CORPORATION QUARTERLY REPORT ON FORM 10-Q-JUNE 30, 1996
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