We consider FCC broadcast licenses to have indefinite lives. Factors that we considered in evaluating that the radio and television FCC licenses are indefinite-lived intangible assets under SFAS 142 include the following:
Based on the above, we believe cash flows from our radio and television licenses are expected to continue indefinitely.
5. AcquisitionsSAGA COMMUNICATIONS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
We actively seek and explore opportunities for expansion through the acquisition of additional broadcast properties. The condensed consolidated statements of income include the operating results of the acquired stations from their respective dates of acquisition. All acquisitions were accounted for as purchases and, accordingly, the total costs were allocated to the acquired assets and assumed liabilities based on their estimated fair values as of the acquisition dates. The excess of the consideration paid over the estimated fair value of net assets acquired have been recorded as goodwill, which is deductible for tax purposes.
Pending2008 Acquisitions
On January 21, 2004, we entered into agreements to acquire an FM radio station(WOXL-FM) serving the Asheville, North Carolina market. On November 1, 2002 we began providing programming under aSub-Time Brokerage Agreement toWOXL-FM, and on January 31, 2008 we closed on the acquisition for approximately $9,463,000 of which approximately $9,354,000 was paid in 2008 and $109,000 was paid in prior years.
On January 31, 2008, in connection with the 2006 acquisition of one FM radio station(WTMT-FM) serving the Tazewell, Tennessee market for approximately $8,000,000.$4,186,000, we paid the seller $1,350,000, which had been recorded as a note payable at December 31, 2007. We are currently providing programmingrelocated the tower to WOXL-FM under a Sub-Time Brokerage Agreement. This transaction is subject toWeaverville, North Carolina (serving the approval ofAsheville, North Carolina market) and started broadcasting in Asheville on June 8, 2007.
2007 Acquisitions
On November 1, 2007, we acquired an FM radio station(WCLZ-FM) serving the FCC and has been contested. We expect to close on the acquisition when all required approvals are obtained.Portland, Maine market for approximately $3,555,000.
On October 5, 2006,August 31, 2007, we entered into an agreement to acquire one AM and one FM (WKRT-AM and WIII-FM)acquired two radio stations(WKRT-AM andWIII-FM licensed to Cortland, New York, and an FM translator station that rebroadcasts WIII) serving the Ithaca, New York market for approximately $4,000,000. This transaction is subject$3,843,000. Due to FCC approval. The Officeownership rules we were not permitted to ownWKRT-AM and as part of the Attorney General of the State of New York has issuedtransaction we donatedWKRT-AM to a subpoena to the Company requesting certain documents and information it needs to determine whether the proposed acquisition violates federal anti-trust laws. The Company expects to close the acquisition when the matters have been satisfactorily resolved.non-profit organization.
2007 Acquisitions
On January 2, 2007 we acquired one FM radio station(WCNR-FM) serving the Charlottesville, Virginia market for $3,330,000. On September 1, 2006 we began providing programming under an LMA toWCNR-FM. We funded this acquisition on December 31, 2006.
On January 16, 2007, we agreed to pay $50,000 to cancel a clause in our 2003 purchase agreement ofWSNI-FM in the Winchendon, Massachusetts market that would requirehave required us to pay the seller an additional $500,000 if within five years of closing we obtained approval from the FCC for a city of license change.
On January 2, 2007, in connection with the 2003 acquisition of one FM radio station(WJZA-FM) serving the Columbus, Ohio market, we paid an additional $850,000 to the seller upon obtaining approval from the FCC for a city of license change.
2006 Acquisitions
On August 7, 2006, we acquired one FM radio station (WTMT-FM) serving the Tazwell, Tennessee market for approximately $814,000. This station has received conditional FCC approval to relocate its tower to Weaverville, North Carolina (serving the Asheville, North Carolina market). When this relocation occurs, we will owe an additional $3,350,000, of which approximately $2,000,000 was paid in March 2007, and the remaining will be paid once the relocation is complete.
9
| |
| Item 2. | Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
Results of Operations
Results of Operations
The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto of Saga Communications, Inc. and its subsidiaries contained elsewhere herein and the audited financial statements and Management Discussion and Analysis contained in our Annual Report onForm 10-K for the year ended December 31, 2006.2007. The following discussion is presented on both a consolidated and segment basis. Corporate general and administrative expenses, interest expense, other (income) expense, and income tax expense are managed on a consolidated basis and are therefore, reflected only in our discussion of consolidated results.
Our discussion of the results of operations of our operating segments focuses on their operating income because we manage our operating segments primarily on their operating income. We evaluate the operating performance of our markets individually. For purposes of business segment reporting, we have aligned operations with similar characteristics into two business segments: Radio and Television. The Radio segment includes twenty-three markets, which includes all eighty-nineninety-one of our radio stations and five radio information networks. The Television segment includes three markets and consists of five television stations and four LPTV stations.
General
We are a broadcast company primarily engaged in acquiring, developing and operating radio and television stations. We actively seek and explore opportunities for expansion through the acquisition of additional broadcast properties. We review acquisition opportunities on an ongoing basis.
For additional information with respect to acquisitions, see “Liquidity and Capital Resources” below.
Radio Segment
In our
Our radio segment oursegment’s primary source of revenue is from the sale of advertising for broadcast on our stations. Depending on the format of a particular radio station, there are a predetermined number of advertisements available to be broadcast each hour.
Most advertising contracts are short-term, and generally run only for a few weeks. Most of our revenue is generated from local advertising, which is sold primarily by each radio markets’ sales staff. For the three months ended March 31, 2008 and 2007, approximately 86% and 2006, approximately 87% and 86%, respectively, of our gross radio segment revenue was from local advertising. To generate national advertising sales, we engage an independent advertising sales representative firm that specializes in national sales for each of our broadcast markets.
Our revenue varies throughout the year. Advertising expenditures, our primary source of revenue, generally have been lowest during the winter months, which includesinclude the first quarter of each year.
Our net operating revenue, and the resulting station operating expenses,expense and operating income varies from market to market based upon the related market’s rank or size which is based upon population and the available radio advertising revenue in that particular market.
Our financial results are dependent on a number of factors, the most significant of which is our ability to generate advertising revenue through rates charged to advertisers. The rates a station is able to charge are, in large part, based on a station’s ability to attract audiences in the demographic groups targeted by its advertisers. In a number of our markets this is measured by periodic reports generated by independent national rating services. In the remainder of our markets it is measured by the results advertisers obtain through the actual running of an advertising schedule. Advertisers measure these results based on increased demand for their goods or servicesand/or actual revenues generated from such demand. Various factors affect the rate a station can charge, including the general strength of the local and national economies, population growth, ability to provide popular programming, local market competition, target marketing capability of radio compared to other advertising media and signal strength. Because reaching a large and demographically attractive audience is crucial to a station’s financial success, we endeavor to develop strong listener loyalty.
17
When we acquireand/or begin to operate a station or group of stations we generally increase programming and advertising and promotion expenses to increase our share of our target demographic audience. Our strategy sometimes requires levels of spending commensurate with the revenue levels we plan on achieving in two to five years. During periods of economic downturns, or when the level of advertising spending is flat or down across the industry, this strategy may result in the appearance that our cost of operations are increasing at a faster rate than our growth in revenues, until such time as we achieve our targeted levels of revenue for the acquired station or group of stations.
16
The number of advertisements that can be broadcast without jeopardizing listening levels (and the resulting ratings) is limited in part by the format of a particular radio station. Our stations strive to maximize revenue by constantly managing the number of commercials available for sale and adjusting prices based upon local market conditions and ratings. While there may be shifts from time to time in the number of advertisements broadcast during a particular time of the day, the total number of advertisements broadcast on a particular station generally does not vary significantly from year to year. Any change in our revenue, with the exception of those instances where stations are acquired or sold, is generally the result of inventory sell out ratios and pricing adjustments, which are made to ensure that the station efficiently utilizes available inventory.
Our radio stations employ a variety of programming formats. We periodically perform market research, including music evaluations, focus groups and strategic vulnerability studies. Our stations also employ audience promotions to further develop and secure a loyal following. We believe that the diversification of formats on our radio stations helps to insulate us from the effects of changes in musical tastes of the public on any particular format.
The primary operating expenses involved in owning and operating radio stations are employee salaries including commissions, depreciation, programming expenses, solicitation ofand advertising and promotion expenses.
Historically,
Similar to the fluctuations in the current general economic climate, radio revenue growth has been declining or stagnant over the last several years primarily in major markets that are dependent on national advertising. We believe this decline in major market radio advertising revenue is the result of a lack of pricing discipline by radio operators and new technologies and media (such as the Internet, satellite radio, and MP3 players.) These new technologies and media are gaining advertising share against radio and other traditional media. Conversely, radio revenue in the small to mid markets has been trending upward in recent months.
We have begun several initiatives to offset the declines. We are continuing to expand our interactive initiative to provide a seamless audio experience across numerous platforms to connect with our listeners where and when they want, and are adding online components including streaming our stations over the internet and on-demand options. We are seeing solid development potential in this area and believe that revenues from interactive will continue to increase.
We also continue the rollout of HD Radiotm. HD Radio utilizes digital technology that provides improved sound quality over standard analog broadcasts and also allows for the delivery of additional channels of diversified programming or data streams in each radio market. It is unclear what impact HD Radio will have on the industry and our revenue as the availability of HD receivers, particularly in automobiles, is not widely available.
During the three months ended March 31, 2008 and 2007 and the years ended December 31, 2007 and 2006, our Columbus, Ohio; Manchester, New Hampshire; Milwaukee, Wisconsin; and Norfolk, Virginia markets, have each represented 15% or more of our consolidated operating income. During the three month periods ended March 31, 2007 and 2006 and the years ended December 31, 2006 and 2005, these markets when combined, represented approximately 78%, 88%, 80%, 64%60% and 75%64%, respectively, of our consolidated operating income. An adverse change in any of these radio markets or our relative market position in those markets could have a significant impact on our operating results as a whole.
A decreasesignificant decline in the total available radio advertising dollars in the Columbus, Ohio and Norfolk, Virginia markets has resulted in a significant decline in our net revenue, for the three months ended March 31, 2008 as compared to the corresponding period of 2007, of 23% and 18%, respectively and the related operating income in our radio stations there. Weat these markets. Additionally, we are also experiencing ratings softness in each of
18
these markets. None of our television markets represented more than 15% or more of our consolidated operating income. which has also affected revenue. We do not expect any significant improvements in the Columbus and Norfolk markets in the foreseeable future.
The following tables describe the percentage of our consolidated operating income represented by each of these markets:
| | | | | | | | | | |
| | | | Percentage of
| | |
| | | | Consolidated
| | Percentage of
|
| | | | Operating
| | Consolidated
|
| | | | | | | | | | | | | | | | | | | Income for
| | Operating
|
| | | Percentage of | | Percentage of | | the Three
| | Income for
|
| | | Consolidated Operating | | Consolidated Operating | | Months
| | the Years
|
| | | Income For the | | Income For the | | Ended
| | Ended
|
| | | Three Months Ended | | Years Ended | | March 31, | | December 31, |
| | | March 31, | | December 31, | | 2008 | | 2007 | | 2007 | | 2006 |
| | | 2007 | | 2006 | | 2006 | | 2005 |
Market: | | | | | | | | | |
| Columbus, Ohio | | | 13 | % | | | 11 | % | | | 10 | % | | | 13 | % | | 2% | | 13% | | 7% | | 10% |
| Manchester, New Hampshire | | | 19 | % | | | 17 | % | | | 14 | % | | | 15 | % | | 27% | | 19% | | 15% | | 14% |
| Milwaukee, Wisconsin | | | 48 | % | | | 38 | % | | | 30 | % | | | 33 | % | | 47% | | 48% | | 31% | | 30% |
| Norfolk, Virginia | | | 8 | % | | | 14 | % | | | 10 | % | | | 14 | % | | 2% | | 8% | | 7% | | 10% |
We utilizeuse certain financial measures that are not calculated in accordance with generally accepted accounting principles in the United States of America (GAAP) to assess our financial performance. For example, we evaluate the performance of our markets based on “station operating income” (operating income plus corporate general and administrative expenses, depreciation and amortization). Station operating income is generally recognized by the broadcasting industry as a measure of performance, is used by analysts who report on the performance of the broadcasting industry and it serves as an indicator of the market value of a group of stations. In addition, we use it to evaluate individual stations, market-level performance, overall operations and as a primary measure for incentive based compensation of executives and other members of management. Station operating income is not necessarily indicative of amounts that may be available to us for debt service requirements, other commitments, reinvestment or other discretionary uses. Station operating income is not a measure of liquidity or of performance in accordance with GAAP, and should be viewed as a supplement to, and not a substitute for our results of operations presented on a GAAP basis.
17
During the three month periodsmonths ended March 31, 20072008 and 20062007 and the years ended December 31, 20062007 and 2005,2006, the radio stations in our four largest markets when combined, represented approximately 38%, 44%, 47%,40% and 45% and 48%, respectively, of our consolidated station operating income. The following tables describe the percentage of our consolidated station operating income represented by each of these markets:
| | | | | | | | | | |
| | | | Percentage of
| | |
| | | | Consolidated
| | Percentage of
|
| | | | Station
| | Consolidated
|
| | | | Operating
| | Station
|
| | | | | | | | | | | | | | | | | | | Income (*)
| | Operating
|
| | | Percentage of | | Percentage of | | for the Three
| | Income (*)
|
| | | Consolidated Station | | Consolidated Station | | Months
| | for the Years
|
| | | Operating Income (*) | | Operating Income (*) | | Ended
| | Ended
|
| | | For the Three Months | | For the Years Ended | | March 31, | | December 31, |
| | | Ended March 31, | | December 31, | | 2008 | | 2007 | | 2007 | | 2006 |
| | | 2007 | | 2006 | | 2006 | | 2005 |
Market: | | | | | | | | | |
| Columbus, Ohio | | | 7 | % | | | 7 | % | | | 8 | % | | | 9 | % | | 2% | | 7% | | 6% | | 8% |
| Manchester, New Hampshire | | | 9 | % | | | 9 | % | | | 9 | % | | | 9 | % | | 12% | | 9% | | 10% | | 9% |
| Milwaukee, Wisconsin | | | 23 | % | | | 22 | % | | | 21 | % | | | 21 | % | | 22% | | 23% | | 20% | | 21% |
| Norfolk, Virginia | | | 5 | % | | | 9 | % | | | 7 | % | | | 9 | % | | 2% | | 5% | | 4% | | 7% |
| | |
| * | | Operating income plus corporate general and administrative, depreciation and amortization |
19
Television Segment
In our
Our television segment, oursegment’s primary source of revenue is from the sale of advertising for broadcast on our stations. The number of advertisements available for broadcast on our television stations is limited by certain network affiliation and syndicated programming agreements and, with respect to children’s programs, federal regulation. Our television broadcasting segmentstations’ local market managers determine only determine the number of advertisements to be broadcast hourly in locally produced programs, which are comprised mainly ofprimarily news programming and the occasional locally producedoccasionally local sports or information show.shows.
Our net operating revenue, and the resulting station operating expenses,expense and operating income vary from market to market based upon the related market’s rank or size which is based upon population, the available television advertising revenue in that particular market, and the popularity of programming being broadcast.
Our financial results are dependent on a number of factors, the most significant of which is our ability to generate advertising revenue through rates charged to advertisers. The rates a station is able to charge are, in large part, based on a station’s ability to attract audiences in the demographic groups targeted by its advertisers, as measured principally by periodic reports by independent national rating services. Various factors affect the raterates a station can charge, including the general strength of the local and national economies, population growth, ability to provide popular programming through locally produced news, sports and weather and as a result of syndication and network affiliation agreements, local market competition, the ability of television broadcasting to reach a mass appeal market compared to other advertising media, and signal strength including cable/satellite coverage, and government regulation and policies.
When we acquireand/or begin operating a station or group of stations we generally increase programming expenses including local news, sports and weather programming, new syndicated programming, and advertising and promotion expenses to increase our viewership. Our strategy sometimes requires levels of spending commensurate with the revenue levels we plan on achieving in two to five years. During periods of economic downturns, or when the level of advertising spending is flat or down across the industry, this strategy may result in the appearance that our cost of operations are increasing at a faster rate than our growth in revenues, until such time as we achieve our targeted levels of revenue for the acquired/operated station or group of stations.
Our stations strive to maximize revenue by constantly adjusting prices for our commercial spots based upon local market conditions, demand for advertising and ratings. While there may be shifts from time to time in the number of advertisements broadcast during a particular time of the day, the total number of advertisements broadcast on a particular station generally does not vary significantly from year to year. Any change in our revenue, with the exception of those instances where stations are acquired or sold, is generally the result of pricing adjustments, which are made to ensure that the station efficiently utilizes available inventory.
Because audience ratings in the local market are crucial to a station’s financial success, we endeavor to develop strong viewer loyalty by providing locally produced news, weather and sports programming. We believe that this emphasis on the local market provides us with the viewer loyalty we are trying to achieve.
18
Most of our revenue is generated from local advertising, which is sold primarily by each television markets’ sales staff. For the three months ended March 31, 2008 and 2007, approximately 82% and 2006, approximately 83% and 81%, respectively, of our gross television revenue was from local advertising. To generate national advertising sales, we engage independent advertising sales representatives that specialize in national sales for each of our television markets.
Our revenue varies throughout the year. Advertising expenditures, our primary source of revenue, generally have been lowest during the winter months, which includesinclude the first quarter of each year.
The primary operating expenses involved in owning and operating television stations are employee salaries including commissions, depreciation, programming expenses, including news production and the cost of acquiring certain syndicated programming, solicitation ofand advertising and promotion expenses.
20
Our television market in Joplin, Missouri represented approximately 16%, 12%, 9% and 9%, respectively, of our consolidated operating income for the three months ended March 31, 2008 and 2007 and the years ended December 31, 2007 and 2006.
Three Months Ended March 31, 20072008 Compared to Three Months Ended March 31, 20062007
Results of Operations
The following tables summarize our results of operations for the three months ended March 31, 20072008 and 2006.2007.
Consolidated Results of Operations
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | | | | | Three Months Ended
| | | | | |
| | | March 31, | | $ Increase | | % Increase | | | March 31, | | $ Increase
| | % Increase
| |
| | | 2007 | | 2006 | | (Decrease) | | (Decrease) | | | 2008 | | 2007 | | (Decrease) | | (Decrease) | |
| | | (In thousands, except percentages | | | (In thousands, except percentages and per share information) | |
| | | and per share information) | |
| Net operating revenue | | $ | 31,883 | | $ | 31,191 | | $ | 692 | | | 2.2 | % | | $ | 31,532 | | | $ | 31,883 | | | $ | (351 | ) | | | (1.1 | )% |
| Station operating expense | | 25,995 | | 24,703 | | 1,292 | | | 5.2 | % | | | 25,421 | | | | 25,995 | | | | (574 | ) | | | (2.2 | )% |
| Corporate G&A | | 2,316 | | 1,981 | | 335 | | | 16.9 | % | | | 2,552 | | | | 2,316 | | | | 236 | | | | 10.2 | % |
| | | | | | | | | | | | | | | | | | | |
| Operating income | | 3,572 | | 4,507 | | | (935 | ) | | | (20.7 | )% | | | 3,559 | | | | 3,572 | | | | (13 | ) | | | (.4 | )% |
| Interest expense | | 2,297 | | 2,277 | | 20 | | | 0.9 | % | | | 1,995 | | | | 2,297 | | | | (302 | ) | | | (13.1 | )% |
| Other expense (income), net | | 35 | | | (355 | ) | | 390 | | N/M | | | | 20 | | | | 35 | | | | (15 | ) | | | N/M | |
| Income taxes | | 500 | | 1,060 | | | (560 | ) | | | (52.8 | )% | | | 634 | | | | 500 | | | | 134 | | | | 26.8 | % |
| | | | | | | | | | | | | | | | | | | |
| Net income | | $ | 740 | | $ | 1,525 | | $ | (785 | ) | | | (52.0 | )% | | $ | 910 | | | $ | 740 | | | $ | 170 | | | | 23.0 | % |
| | | | | | | | | | | | | | | | | | | |
| Earnings per share (basic and diluted) | | $ | .04 | | $ | .07 | | $ | (.03 | ) | | | (42.9 | )% | | $ | .05 | | | $ | .04 | | | $ | .01 | | | | 25.0 | % |
| | | | | | | | | | | | | | | | | | | |
Radio Broadcasting Segment
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | Three Months Ended
| | | | | |
| | | Three Months Ended | | | | | | | March 31, | | $ Increase
| | % Increase
| |
| | | March 31, | | $ Increase | | % Increase | | | 2008 | | 2007 | | (Decrease) | | (Decrease) | |
| | | 2007 | | 2006 | | (Decrease) | | (Decrease) | | | (In thousands, except percentages) | |
| | | (In thousands, except percentages) | |
| Net operating revenue | | $ | 27,893 | | $ | 27,280 | | $ | 613 | | | 2.2 | % | | $ | 27,381 | | | $ | 27,893 | | | $ | (512 | ) | | | (1.8 | )% |
| Station operating expense | | 22,513 | | 21,415 | | 1,098 | | | 5.1 | % | | | 21,913 | | | | 22,513 | | | | (600 | ) | | | (2.7 | )% |
| | | | | | | | | | | | | | | | | | | |
| Operating income | | $ | 5,380 | | $ | 5,865 | | $ | (485 | ) | | | (8.3 | )% | | $ | 5,468 | | | $ | 5,380 | | | $ | 88 | | | | 1.6 | % |
| | | | | | | | | | | | | | | | | | | |
Television Broadcasting Segment
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | Three Months Ended
| | | | | |
| | | Three Months Ended | | | | | | | March 31, | | $ Increase
| | % Increase
| |
| | | March 31, | | $ Increase | | % Increase | | | 2008 | | 2007 | | (Decrease) | | (Decrease) | |
| | | 2007 | | 2006 | | (Decrease) | | (Decrease) | | | (In thousands, except percentages) | |
| | | (In thousands, except percentages) | |
| Net operating revenue | | $ | 3,990 | | $ | 3,911 | | $ | 79 | | | 2.0 | % | | $ | 4,151 | | | $ | 3,990 | | | $ | 161 | | | | 4.0 | % |
| Station operating expense | | 3,482 | | 3,288 | | 194 | | | 5.9 | % | | | 3,508 | | | | 3,482 | | | | 26 | | | | 0.8 | % |
| | | | | | | | | | | | | | | | | | | |
| Operating income | | $ | 508 | | $ | 623 | | $ | (115 | ) | | | (18.5 | )% | | $ | 643 | | | $ | 508 | | | $ | 135 | | | | 26.6 | % |
| | | | | | | | | | | | | | | | | | | |
NM
N/M = Not Meaningful
19
21
Reconciliation of segment operating income to consolidated operating income:
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Corporate | | | | |
| | | Radio | | | Television | | | and Other | | | Consolidated | |
| | | (In thousands) | |
Three Months Ended March 31, 2007: | | | | | | | | | | | | | | | | |
| Net operating revenue | | $ | 27,893 | | | $ | 3,990 | | | $ | — | | | $ | 31,883 | |
| Station operating expense | | | 22,513 | | | | 3,482 | | | | — | | | | 25,995 | |
| Corporate general and administrative | | | — | | | | — | | | | 2,316 | | | | 2,316 | |
| | | | | | | | | | | | | |
| Operating income (loss) | | $ | 5,380 | | | $ | 508 | | | $ | (2,316 | ) | | $ | 3,572 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Corporate | | | | |
| | | Radio | | | Television | | | and Other | | | Consolidated | |
| | | (In thousands) | |
Three Months Ended March 31, 2006: | | | | | | | | | | | | | | | | |
| Net operating revenue | | $ | 27,280 | | | $ | 3,911 | | | $ | — | | | $ | 31,191 | |
| Station operating expense | | | 21,415 | | | | 3,288 | | | | — | | | | 24,703 | |
| Corporate general and administrative | | | — | | | | — | | | | 1,981 | | | | 1,981 | |
| | | | | | | | | | | | | |
| Operating income (loss) | | $ | 5,865 | | | $ | 623 | | | $ | (1,981 | ) | | $ | 4,507 | |
| | | | | | | | | | | | | |
Consolidated
| | | | | | | | | | | | | | | | | |
| | | | | | | | | Corporate
| | | | |
| | | Radio | | | Television | | | and Other | | | Consolidated | |
| | | (In thousands) | |
| |
Three Months Ended March 31, 2008: | | | | | | | | | | | | | | | | |
| Net operating revenue | | $ | 27,381 | | | $ | 4,151 | | | $ | — | | | $ | 31,532 | |
| Station operating expense | | | 21,913 | | | | 3,508 | | | | — | | | | 25,421 | |
| Corporate general and administrative | | | — | | | | — | | | | 2,552 | | | | 2,552 | |
| | | | | | | | | | | | | | | | | |
| Operating income (loss) | | $ | 5,468 | | | $ | 643 | | | $ | (2,552 | ) | | $ | 3,559 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | Corporate
| | | | |
| | | Radio | | | Television | | | and Other | | | Consolidated | |
| | | (In thousands) | |
| |
Three Months Ended March 31, 2007: | | | | | | | | | | | | | | | | |
| Net operating revenue | | $ | 27,893 | | | $ | 3,990 | | | $ | — | | | $ | 31,883 | |
| Station operating expense | | | 22,513 | | | | 3,482 | | | | — | | | | 25,995 | |
| Corporate general and administrative | | | — | | | | — | | | | 2,316 | | | | 2,316 | |
| | | | | | | | | | | | | | | | | |
| Operating income (loss) | | $ | 5,380 | | | $ | 508 | | | $ | (2,316 | ) | | $ | 3,572 | |
| | | | | | | | | | | | | | | | | |
Consolidated
For the three months ended March 31, 2007,2008, consolidated net operating revenue was $31,883,000$31,532,000 compared with $31,191,000$31,883,000 for the three months ended March 31, 2006, an improvement2007, a decline of $692,000approximately $351,000 or 2%1%. We had an increasea decrease of approximately $623,000$650,000 in net operating revenue generated by stations that we owned or operated for the comparable period in 20062007 (“same station”), and an increase in net operating revenue of approximately $69,000$299,000 attributable to stations we did not own and operate for the entire comparable period. The majority of the increase inAlthough same station gross national revenue and gross political revenue increased approximately $150,000 and $600,000, respectively, in the current quarter, this increase was primarily attributable to an increaseoffset by a decrease in gross local revenue of approximately 3%.$1,400,000. The increase in political revenue was directly attributable to advertising for the 2008 presidential race’s early primaries and congressional, senatorial and local races as well. We expect political revenue for 2008 to continue to trend upward for the year. The decrease in local revenue was primarily the result of the significant declines in gross local revenue of our radio stations in the Norfolk (18%) and Columbus (23%) markets. These declines are attributable to the significant declines in radio advertising spending in these specific markets. We do not expect any significant improvements in these markets in the foreseeable future.
Station operating expense was $25,421,000 for the three months ended March 31, 2008, compared with $25,995,000 for the three months ended March 31, 2007, compared with $24,703,000a decrease of approximately $574,000 or 2%. Approximately $802,000 of the decrease was attributable to stations we owned and operated for the entire comparable period, offset by an increase of $228,000 from those stations that we did not own or operate for the comparable period in 2007. The decrease in same station operating expense was the direct result of the expense reductions in our radio segment we began instituting in 2007 as a result of declines in revenue, particularly in programming and advertising and promotions. We also had a decline in selling and commission expense directly attributable to the decrease in revenue.
Operating income for the three months ended March 31, 2006,2008 was $3,559,000 compared to $3,572,000 for the three months ended March 31, 2007, a decrease of approximately $13,000, or less than 1%. The decrease was the result of lower station operating expense described in detail above, offset by reduced net operating revenue and a $236,000 or 10% increase in corporate general and administrative charges, primarily attributable to an increase in officers’ life insurance expense of $115,000, an increase in stock based compensation expense of $80,000 and an increase in interactive media related expenses of $70,000. The increase in officer’s life insurance expense was attributable to a decline in the cash surrender value of the life
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insurance policies. The increase in stock based compensation was the result of stock options and restricted stock granted in May of 2007 for which there was no expense in the first quarter of 2007.
We generated net income of approximately $910,000 ($.05 per share on a fully diluted basis) during the three months ended March 31, 2008, compared with $740,000 ($.04 per share on a fully diluted basis) for the three months ended March 31, 2007, an increase of approximately $1,292,000$170,000 or 5%23%. Approximately $101,000The increase was primarily the result of reduced interest expense of $302,000, offset by higher income tax expense of $134,000. The decrease in interest expense was attributable to an average reduction in market interest rates of 0.85%. The increase in income tax expense was directly attributable to operating performance.
Radio Segment
For the three months ended March 31, 2008, net operating revenue of the radio segment was $27,381,000 compared with $27,893,000 for the three months ended March 31, 2007, a decrease of $512,000 or 2%. During 2008 we had an increase in net operating revenue of approximately $299,000 attributable to stations we did not own and operate for the entire comparable period. We had a decrease of approximately $811,000 in revenue generated by radio stations that we owned or operated for the comparable period in 2007 (“same station”). The decrease in same station revenue was primarily attributable to same station gross local revenue decreases of approximately $1,320,000, partially offset by an increase in same station gross political revenue of $400,000. The decrease in local revenue was primarily the result of the impactsignificant declines in gross local revenue of our radio stations in the Norfolk (18%) and Columbus (23%) markets. These declines are attributable to the significant declines in radio advertising spending in these specific markets. We do not expect any significant improvements in these markets in the foreseeable future. The increase in political revenue was directly attributable to advertising for the 2008 presidential race’s early primaries and congressional, senatorial and local races as well. We expect political revenue for 2008 to continue to trend upward for the year.
Station operating expense for the radio segment was $21,913,000 for the three months ended March 31, 2008, compared with $22,513,000 for the three months ended March 31, 2007, a decrease of approximately $600,000 or 3%. The decrease resulted from a decrease of $828,000 in same station operating expense, offset by an increase of $228,000 from the operation of radio stations that we did not own or operate for the comparable period in 2006.2007. The balance of the increase, $1,191,000, was fromdecrease in radio same station operating expense $722,000was the direct result of which was relatedthe expense reductions in our radio segment we began instituting in 2007 as a result of declines in revenue, particularly in programming and advertising and promotions. We also had a decline in selling and commission expense directly attributable to our decision to continue to investthe decrease in revenue.
Operating income in the future of our business with additional advertising, promotion and selling expenses, including additional sales compensation. In addition $165,000 ofradio segment for the increasethree months ended March 31, 2008 was due$5,468,000 compared to an increase in health care costs.
Operating income$5,380,000 for the three months ended March 31, 2007, was $3,572,000 compared to $4,507,000 for the three months ended March 31, 2006, a decrease of approximately $935,000 or 21%. The decrease was directly attributable to the increase in station operating expense and an increase in corporate general and administrative charges of approximately $335,000 or 17%, primarily attributable to stock based compensation expense of $114,000 and $98,000 related to the creation of an Integrated Media department. We generated net income of approximately $740,000 ($.04 per share on a fully diluted basis) during the three months ended March 31, 2007, compared with $1,525,000 ($.07 per share on a fully diluted basis) for the three months ended March 31, 2006, a decrease of approximately $785,000 or 51%. The decrease was the result of the $935,000 decrease in operating income discussed above, a $20,000 increase in interest expense and a decrease of $390,000 in other income, offset by a $560,000 decrease in income tax expense. The decrease in income tax expense was directly attributable to operating performance. Other (income) expense in the prior year period included a $500,000 gain on the disposal of assets for slight alteration to one of our Keene, NH FM’s signal pattern, offset by a $129,000 loss relative to one of our Springfield, IL towers being destroyed by a tornado.
Radio Segment
For the three months ended March 31, 2007, net operating revenue of the radio segment was $27,893,000 compared with $27,280,000 for the three months ended March 31, 2006, an increase of $613,000approximately $88,000 or 2%. During 2007 we had anThe increase in net operating revenue of approximately $69,000was attributable to stations we did not own and operate for the entire comparable period. We had an increase
Television Segment
For the three months ended March 31, 2008, net operating revenue of approximately $544,000 in revenue generated by radio stations that we owned or operated for the comparable
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period in 2006 (“same station”). The majority of the increase in same station revenue was primarily attributable to same station local revenue increase of approximately 2%.
Station operating expense for the radioour television segment was $22,513,000$4,151,000 compared with $3,990,000 for the three months ended March 31, 2007, compared with $21,415,000 for the three months ended March 31, 2006, an increase of approximately $1,098,000. Approximately $101,000 of the increase was the result of the impact of the operation of radio stations that we did not own$161,000 or operate for the comparable period in 2006. An increase of $997,000 was from same station operating expense, $638,000 of which was attributable to higher advertising, promotion, selling and commission expense as described above and $151,000 was from increased health care costs.
Operating income in the radio segment for the three months ended March 31, 2007 was $5,380,000 compared to $5,865,000 for the three months ended March 31, 2006, a decrease of approximately $485,000 or 8%. The decrease was the result of the increase in station operating expense discussed above.
Television Segment
For the three months ended March 31, 2007, net operating revenue of our television segment was $3,990,000 compared with $3,911,000 for the three months ended March 31, 2006, an increase of $79,000 or 2%4%. The improvement in net operating revenue was attributable to an increase in localgross political revenue of $153,000, offset by a decrease in national revenue of $75,000$179,000 as compared to the prior year period. The increase in political revenue was directly attributable to advertising for the 2008 presidential race’s early primaries and congressional, senatorial and local races as well. We expect political revenue for 2008 to continue to trend upward for the year.
Station operating expense in the television segment for the three months ended March 31, 20072008 was $3,482,000,$3,508,000, compared with $3,288,000$3,482,000 for the three months ended March 31, 2006,2007, an increase of approximately $194,000.$26,000 or 1%.
Operating income in the television segment for the three months ended March 31, 20072008 was $508,000$643,000 compared to $623,000$508,000 for the three months ended March 31, 2006, a decrease2007, an increase of approximately $115,000$135,000 or 18%27%. The decreaseincrease was primarily the result of higher station operating expense.political revenue.
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Forward-Looking Statements
Statements contained in thisForm 10-Q that are not historical facts are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In addition, words such as “believes,” “anticipates,” “estimates,” “plans”, “expects,” and similar expressions are intended to identify forward-looking statements. These statements are made as of the date of this report or as otherwise indicated, based on current expectations. We undertake no obligation to update this information. A number of important factors could cause our actual results for 20072008 and beyond to differ materially from those expressed in any forward-looking statements made by or on our behalf. Forward lookingForward-looking statements are not guarantees of future performance as they involve a number of risks, uncertainties and assumptions that may prove to be incorrect and that may cause our actual results and experiences to differ materially from the anticipated results or other expectations expressed in such forward-looking statements. The risks, uncertainties and assumptions that may affect our performance include our financial leverage and debt service requirements, dependence on key personnel, dependence on key stations, U.S. and local economic conditions, our ability to successfully integrate acquired stations, regulatory requirements, new technologies, natural disasters and terrorist attacks. We cannot be sure that we will be able to anticipate or respond timely to changes in any of these factors, which could adversely affect the operating results in one or more fiscal quarters. Results of operations in any past period should not be considered, in and of itself, indicative of the results to be expected for future periods. Fluctuations in operating results may also result in fluctuations in the price of our stock.
For a more complete description of the prominent risks and uncertainties inherent in our business, see “Management’s Discussion“Forward Looking Statements” and Analysis of Financial Condition and Results of Operations — Forward Looking Statements; Risk“Risk Factors” in ourForm 10-K for the year ended December 31, 2006.2007.
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Liquidity and Capital Resources
Debt Arrangements and Debt Service Requirements
As of March 31, 2007,2008, we had $131,911,000$134,411,000 of long-term debt (including the current portion thereof) outstanding and approximately $69,150,000$60,400,000 of unused borrowing capacity under our Credit Agreement.
The Credit Agreement is a $200,000,000$193,750,000 reducing revolving line of credit maturing on July 29, 2012. Our indebtedness under the Credit Agreement is secured by a first priority lien on substantially all of our assets and of our subsidiaries, by a pledge of our subsidiaries’ stock and by a guarantee of our subsidiaries.
The Credit Agreement may be used for general corporate purposes, including working capital, capital expenditures, permitted acquisition and related transaction expenses and permitted stock buybacks. On March 31, 2008, the Revolving Commitments (as defined in the Credit Agreement) were permanently reduced by $6,250,000 and will continue to be permanently reduced at the end of each calendar quarter in quarterly amounts ranging from 3.125% to 12.5% of the total Revolving Commitments that was in effect on March 31, 2008. Any outstanding balance under the Credit Agreement will be due on the maturity date of July 29, 2012. In addition, the Revolving Commitments shall be further reduced by specified percentages of Excess Cash Flow (as defined in the Credit Agreement) based on leverage ratios. Any outstanding balance under the Credit Agreement will be due on the maturity date of July 29, 2012.
The Credit Agreement contains a number of financial covenants (all of which we were in compliance with at March 31, 2007)2008) that, among other things, requires us to maintain specified financial ratios and impose certain limitations on us with respect to (i) the incurrence of additional indebtedness; (ii) acquisitions, except under specified conditions; (iii) the incurrence of additional liens, except those relating to capital leases and purchase money indebtedness; (iv) the disposition of assets; (v) the payment of cash dividends; and (vi) mergers, changes in business and management, investments and transactions with affiliates. The financial covenants become more restrictive over the life of the Credit Agreement. The Credit Agreement allows for the payment of dividends provided certain requirements are met.
Sources and Uses of Cash
During the three months ended March 31, 20072008 and 2006,2007, we had net cash flows from operating activities of $4,268,000$4,042,000 and $5,196,000,$4,268,000, respectively. We believe that cash flow from operations will be sufficient to meet quarterly debt service requirements for interest and scheduled payments of principal under the Credit Agreement.
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However, if such cash flow is not sufficient we may be required to sell additional equity securities, refinance our obligations or dispose of one or more of our properties in order to make such scheduled payments. There can be no assurance that we would be able to effect any such transactions on favorable terms, if at all.
The following transactions were either pending at March 31, 2007 or were entered into subsequent to that date, which we expect to finance through funds generated from operations and additional borrowings under our Credit Agreement:
| • | | On January 21, 2004, we entered into agreements to acquire one FM radio station (WOXL-FM) serving the Asheville, North Carolina market, for approximately $8,000,000. We are currently providing programming to WOXL-FM under a Sub-Time Brokerage Agreement. This transaction is subject to the approval of the FCC and has been contested. We expect to close on the acquisition when all required approvals have been obtained. |
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| • | | On October 5, 2006, we entered into an agreement to acquire one AM and one FM (WKRT-AM and WIII-FM) radio stations licensed to Cortland, New York and serving the Ithaca, New York market for approximately $4,000,000. This transaction is subject to FCC approval. The Office of the Attorney General of the State of New York has issued a subpoena to the Company requesting certain documents and information it needs to determine whether the proposed acquisition violates federal anti-trust laws. The Company expects to close the acquisition when the matters have been satisfactorily resolved. |
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| • | | On August 7, 2006, we acquired one FM radio station (WTMT-FM) serving the Tazwell, Tennessee market for approximately $814,000. This station has received conditional FCC approval to relocate its tower to Weaverville, North Carolina (serving the Asheville, North Carolina market). When this relocation occurs, we will owe an additional $3,350,000, of which approximately $2,000,000 was paid in March 2007, and the remaining will be paid once the relocation is complete. |
We continue to actively seek and explore opportunities for expansion through the acquisition of additional broadcast properties.
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In May 2005,January 2008, our board of directors authorized an increase to our Stock Buy-Back Program so that we may purchase a total of $30,000,000$60,000,000 of our Class A Common Stock. From the inception of the Stock Buy-Back program in 1998 through March 31, 2007,2008, we have repurchased 1,907,2102,146,323 shares of our Class A Common Stock for approximately $26,252,000.$27,651,000. Approximately 12,800239,113 shares were repurchased during the three months ended March 31, 20072008 for $126,000.$1,399,000.
We anticipate that any future acquisitions of radio and television stations and purchases of Class A Common Stock under the Stock Buy-Back Program will be financed through funds generated from operations, borrowings under the Credit Agreement, additional debt or equity financing, or a combination thereof. However, there can be no assurances that any such financing will be available on acceptable terms, it at all.
Our capital expenditures, exclusive of acquisitions, for the three months ended March 31, 20072008 were approximately $2,414,000$2,046,000 ($1,967,0002,414,000 in 2006)2007). We anticipate capital expenditures in 20072008 to be approximately $10,000,000,$9,000,000, which we expect to finance through funds generated from operations or additional borrowings under the Credit Agreement.
Summary Disclosures About Contractual Obligations and Commercial Commitments
We have future cash obligations under various types of contracts under the terms of our Credit Agreement, operating leases, programming contracts, employment agreements, and other operating contracts. For additional information concerning our future cash obligations see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operation — Summary Disclosures About Contractual Obligations and Commercial Commitments” in our annual report onForm 10-K for the year ended December 31, 2006.2007.
There have been no material changes to such contracts/commitments during the three months ended March 31, 2007.2008. We anticipate that the above contractual cash obligations will be financed through funds generated from operations or additional borrowings under the Credit Agreement, or a combination thereof.
Critical Accounting Policies and Estimates
Our consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States, which require us to make estimates, judgments and assumptions that affect the reported amounts of certain assets, liabilities, revenues, expenses and related disclosures and contingencies. We evaluate estimates used in preparation of our financial statements on a continual basis. There hashave been no significant changes to our critical accounting policies that are described in Item 7. “Managements Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies” in our annual report onForm 10-K for the year ended December 31, 2006.2007.
Inflation
The impact of inflation on our operations has not been significant to date. There can be no assurance that a high rate of inflation in the future would not have an adverse effect on our operations.
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| |
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
Item 3.Quantitative and Qualitative Disclosures about Market Risk
Refer to “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Market Risk and Risk Management Policies” in our Annual Report onForm 10-K for the year ended December 31, 20062007 for a complete discussion of our market risk. There have been no material changes to the market risk information included in our 20062007 Annual Report onForm 10-K.
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Item 4.Controls and Procedures
| |
| Item 4. | Controls and Procedures |
As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a — 1513a-15 of the Securities Exchange Act of 1934. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective to cause the material information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 to be recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. There were no changes in the Company’s internal controls over financial reporting during the quarter ended March 31, 2007,2008, that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.
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PART II — OTHER INFORMATION
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
| |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
The following table summarizes our repurchases of our Class A Common Stock during the three months ended March 31, 2007.2008. All shares repurchased during the quarter were repurchased in block purchases, open market transactions on the New York Stock Exchange and 16,129 shares were from the retention of shares for the payment of withholding taxes related to the vesting of restricted stock.
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Total Number of | | | Approximate Dollar | |
| | | | | | | | | | | Shares Purchased | | | Value of Shares | |
| | | Total Number | | | | | | | as Part of Publicly | | | that May Yet be | |
| | | of Shares | | | Average Price | | | Announced | | | Purchased Under the | |
| Period | | Purchased | | | Paid per Share | | | Program | | | Program(a) | |
| January 1 — January 31, 2007 | | | — | | | $ | — | | | | | | | $ | 3,874,639 | |
| February 1 — February 28, 2007 | | | — | | | $ | — | | | | | | | $ | 3,874,639 | |
| March 1 — March 31, 2007 | | | 12,821 | | | $ | 9.860 | | | | 12,821 | | | $ | 3,748,224 | |
| | | | | | | | | | | | | | | | |
| Total | | | 12,821 | | | $ | 9.860 | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | Total Number of
| | | Approximate Dollar
| |
| | | | | | | | | Shares Purchased
| | | Value of Shares
| |
| | | Total Number
| | | | | | as Part of Publicly
| | | that May Yet be
| |
| | | of Shares
| | | Average Price
| | | Announced
| | | Purchased Under the
| |
Period | | Purchased | | | Paid per Share | | | Program | | | Program(a) | |
| |
| January 1 — January 31, 2008 | | | 2,319 | | | $ | 5.888 | | | | 2,319 | | | $ | 33,734,570 | |
| February 1 — February 29, 2008 | | | 78,137 | | | $ | 5.980 | | | | 78,137 | | | $ | 33,267,295 | |
| March 1 — March 31, 2008 | | | 158,657 | | | $ | 5.788 | | | | 158,657 | | | $ | 32,348,987 | |
| | | | | | | | | | | | | | | | | |
| Total | | | 239,113 | | | $ | 5.852 | | | | 239,113 | | | $ | 32,348,987 | |
| | | | | | | | | | | | | | | | | |
| | |
| (a) | | On August 7, 1998 our Board of Directors approved a Stock Buy-Back Program of up to $2,000,000 of our Class A Common Stock. Since August 1998, the Board of Directors has authorized several increases to the Stock Buy-Back Program, the most recent occurring on May 4, 2005,in January 2008, which increased the total amount authorized for repurchase of our Class A Common Stock to $30,000,000.$60,000,000. |
Item 6.Exhibits
| | | |
| 4(d) | | Amendment No. 1, dated as of May 24, 2005, under the Credit Agreement, dated as of July 29, 2003, among the Company, the Lenders party thereto, Union Bank of California, N.A., as Syndication Agent, Fleet National Bank, as Documentation Agent, and The Bank of New York, as Administrative Agent. |
| 4(e) | | Amendment No. 2, dated as of May 16, 2006 under the Credit Agreement, dated as of July 29, 2003, between the Company, the Lenders party thereto, Bank of America, N.A., as Documentation Agent, and The Bank of New York, as Administrative Agent. |
| 31.1 | | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| | |
| 31.2 | | Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| | |
| 32. | | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 and Rule 13-14(b) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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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.
| | | | |
| | SAGA COMMUNICATIONS, INC
| |
Date: May 10, 2007 | /s/ SAMUEL D. BUSH | |
| | Samuel D. Bush | |
| Senior Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer) | |
| SAGA COMMUNICATIONS, INC |
| | | |
Date: May 10, 2007 | /s/ CATHERINE A. BOBINSKI | |
| Catherine A. Bobinski | |
| Vice President, Corporate Controller and Chief Accounting Officer
(Principal Accounting Officer) | |
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INDEX TO EXHIBITS
| | |
Exhibit | | |
Number | | Description |
31.1 | | Certification of/s/ SAMUEL D. BUSH
Samuel D. Bush
Senior Vice President, Chief ExecutiveFinancial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.and Treasurer (Principal Financial Officer) |
| | | |
31.2Date: May 12, 2008 | | Certification of /s/ CATHERINE A. BOBINSKI
Catherine A. Bobinski
Vice President, Corporate Controller and
Chief FinancialAccounting Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| | |
32 | | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 and Rule 13-14(b) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(Principal Accounting Officer) |
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