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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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|X| Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended June 30, 2007
or
|_| Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
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Commission file number: 333-02302
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ALLBRITTON COMMUNICATIONS COMPANY
(Exact name of registrant as specified in its charter)
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Delaware 74-1803105
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification no.)
1000 Wilson Boulevard
Suite 2700
Arlington, VA 22209
(Address of principal executive offices)
(703) 647-8700
(Registrant's telephone number,
including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes |_| No |X| (1)
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):
Large accelerated filer |_| Accelerated filer |_| Non-accelerated filer |X|
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
Yes |_| No |X|
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Number of shares of Common Stock outstanding as of August 9, 2007: 20,000
shares.
(1) Although the Company has not been subject to such filing requirements for
the past 90 days, it has filed all reports required to be filed by Section
15(d) of the Securities Exchange Act of 1934 during the preceding 12
months. Pursuant to Section 15(d) of the Securities Exchange Act of 1934,
the Company's duty to file reports is automatically suspended as a result
of having fewer than 300 holders of record of each class of its debt
securities outstanding as of October 1, 2006, but the Company has agreed
under the terms of certain long-term debt to continue these filings in the
future.
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CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
THIS QUARTERLY REPORT ON FORM 10-Q, INCLUDING ITEM 2 "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS," CONTAINS
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, THAT ARE NOT HISTORICAL FACTS AND INVOLVE A
NUMBER OF RISKS AND UNCERTAINTIES. THERE ARE A NUMBER OF FACTORS THAT COULD
CAUSE OUR ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED IN SUCH
FORWARD-LOOKING STATEMENTS. THESE FACTORS INCLUDE, WITHOUT LIMITATION, OUR
OUTSTANDING INDEBTEDNESS AND OUR HIGH DEGREE OF LEVERAGE; THE RESTRICTIONS
IMPOSED ON US BY THE TERMS OF OUR INDEBTEDNESS; THE HIGH DEGREE OF COMPETITION
FROM BOTH OVER-THE-AIR BROADCAST STATIONS AND PROGRAMMING ALTERNATIVES SUCH AS
CABLE TELEVISION, WIRELESS CABLE, IN-HOME SATELLITE DISTRIBUTION SERVICE,
PAY-PER-VIEW SERVICES AND HOME VIDEO AND ENTERTAINMENT SERVICES; THE IMPACT OF
NEW TECHNOLOGIES; CHANGES IN FEDERAL COMMUNICATIONS COMMISSION ("FCC")
REGULATIONS; FCC LICENSE RENEWAL REQUIREMENTS; DECREASES IN THE DEMAND FOR
ADVERTISING DUE TO WEAKNESS IN THE ECONOMY; AND THE VARIABILITY OF OUR QUARTERLY
RESULTS AND OUR SEASONALITY.
ALL WRITTEN OR ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE COMPANY ARE
EXPRESSLY QUALIFIED BY THE FOREGOING CAUTIONARY STATEMENTS. READERS ARE
CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS WHICH
REFLECT MANAGEMENT'S VIEW ONLY AS OF THE DATE HEREOF.
ALLBRITTON COMMUNICATIONS COMPANY
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2007
TABLE OF CONTENTS
PAGE
PART I FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Statements of Operations and Retained Earnings
for the Three and Nine Months Ended June 30, 2006 and 2007.... 1
Consolidated Balance Sheets as of September 30, 2006 and
June 30, 2007................................................. 2
Consolidated Statements of Cash Flows for the Nine Months
Ended June 30, 2006 and 2007.................................. 3
Notes to Interim Consolidated Financial Statements............ 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..................................... 7
Item 3. Quantitative and Qualitative Disclosures About Market Risk.... 15
Item 4. Controls and Procedures....................................... 15
PART II OTHER INFORMATION
Item 1. Legal Proceedings............................................. 16
Item 6. Exhibits...................................................... 16
Signatures.............................................................. 17
Exhibit Index........................................................... 18
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
ALLBRITTON COMMUNICATIONS COMPANY
(an indirectly wholly-owned subsidiary of Perpetual Corporation)
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(Dollars in thousands)
(unaudited)
Three Months Ended Nine Months Ended
June 30, June 30,
---------------------- -----------------------
2006 2007 2006 2007
---- ---- ---- ----
Operating revenues, net ....................... $ 59,460 $ 58,026 $ 171,646 $ 174,615
--------- --------- --------- ---------
Television operating expenses, excluding
depreciation and amortization ............ 31,029 35,160 94,229 104,234
Depreciation and amortization ................. 2,029 2,089 6,226 6,042
Corporate expenses ............................ 1,286 1,352 3,416 4,183
--------- --------- --------- ---------
34,344 38,601 103,871 114,459
--------- --------- --------- ---------
Operating income .............................. 25,116 19,425 67,775 60,156
--------- --------- --------- ---------
Nonoperating income (expense)
Interest income
Related party ........................ -- 65 226 365
Other ................................ 39 32 107 174
Interest expense ......................... (9,025) (9,411) (27,191) (27,648)
Other, net ............................... (274) (54) 1,157 (156)
--------- --------- --------- ---------
(9,260) (9,368) (25,701) (27,265)
--------- --------- --------- ---------
Income before income taxes and cumulative
effect of change in accounting principle.. 15,856 10,057 42,074 32,891
Provision for income taxes .................... 6,128 3,897 16,227 12,693
--------- --------- --------- ---------
Income before cumulative effect of change
in accounting principle .................. 9,728 6,160 25,847 20,198
Cumulative effect of change in accounting
principle, net of income tax benefit
of $31,272 (Note 2) ...................... -- -- 48,728 --
--------- --------- --------- ---------
Net income (loss) ............................. 9,728 6,160 (22,881) 20,198
Retained earnings, beginning of period ........ (10,350) 19,078 22,259 5,040
--------- --------- --------- ---------
Retained earnings, end of period .............. $ (622) $ 25,238 $ (622) $ 25,238
========= ========= ========= =========
See accompanying notes to interim consolidated financial statements.
1
ALLBRITTON COMMUNICATIONS COMPANY
(an indirectly wholly-owned subsidiary of Perpetual Corporation)
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
June 30,
September 30, 2007
2006 (unaudited)
------------ -----------
Assets
Current assets
Cash and cash equivalents ............................. $ 7,600 $ 2,122
Accounts receivable, net .............................. 41,293 48,632
Program rights ........................................ 10,113 2,201
Deferred income taxes ................................. 1,319 1,319
Other ................................................. 1,602 2,761
--------- ---------
Total current assets ............................. 61,927 57,035
Property, plant and equipment, net .......................... 45,145 44,258
Intangible assets, net ...................................... 42,486 42,365
Cash surrender value of life insurance ...................... 12,224 12,508
Program rights .............................................. 1,469 1,007
Deferred income taxes ....................................... 5,925 2,727
Deferred financing costs and other .......................... 6,845 5,994
--------- ---------
$ 176,021 $ 165,894
========= =========
Liabilities and Stockholder's Investment
Current liabilities
Current portion of long-term debt ..................... $ 30 $ --
Accounts payable ...................................... 3,040 2,810
Accrued interest payable .............................. 10,383 1,799
Program rights payable ................................ 12,154 4,484
Accrued employee benefit expenses ..................... 5,593 5,572
Other accrued expenses ................................ 7,570 6,149
--------- ---------
Total current liabilities ........................ 38,770 20,814
Long-term debt .............................................. 452,816 492,527
Program rights payable ...................................... 1,125 816
Accrued employee benefit expenses ........................... 1,801 1,770
Deferred rent and other ..................................... 9,279 9,323
--------- ---------
Total liabilities ................................ 503,791 525,250
--------- ---------
Stockholder's investment
Preferred stock, $1 par value, 1,000 shares authorized,
none issued ........................................ -- --
Common stock, $.05 par value, 20,000 shares authorized,
issued and outstanding ............................. 1 1
Capital in excess of par value ........................ 49,631 49,631
Retained earnings ..................................... 5,040 25,238
Distributions to owners, net .......................... (382,442) (434,226)
--------- ---------
Total stockholder's investment ..................... (327,770) (359,356)
--------- ---------
$ 176,021 $ 165,894
========= =========
See accompanying notes to interim consolidated financial statements.
2
ALLBRITTON COMMUNICATIONS COMPANY
(an indirectly wholly-owned subsidiary of Perpetual Corporation)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
Nine Months Ended
June 30,
----------------------
2006 2007
-------- --------
Cash flows from operating activities:
Net (loss) income ...................................... $(22,881) $ 20,198
-------- --------
Adjustments to reconcile net (loss) income to
net cash provided by operating activities:
Depreciation and amortization ....................... 6,226 6,042
Cumulative effect of change in accounting principle.. 48,728 --
Other noncash charges ............................... 976 992
Provision for doubtful accounts ..................... 431 819
Gain on disposal of assets .......................... (1,991) (680)
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable ........................... (10,017) (8,158)
Program rights ................................ 7,404 8,374
Other current assets .......................... (284) (1,159)
Deferred income taxes ......................... 1,772 3,198
Other noncurrent assets ....................... (266) (214)
Increase (decrease) in liabilities:
Accounts payable .............................. 1,379 (230)
Accrued interest payable ...................... (8,862) (8,584)
Program rights payable ........................ (8,633) (7,979)
Accrued employee benefit expenses ............. (890) (52)
Other accrued expenses ........................ 1,036 (1,421)
Deferred rent and other liabilities ........... 3,337 44
-------- --------
40,346 (9,008)
-------- --------
Net cash provided by operating activities ..... 17,465 11,190
-------- --------
Cash flows from investing activities:
Capital expenditures ................................... (6,437) (4,514)
Proceeds from disposal of assets ....................... 2,162 160
-------- --------
Net cash used in investing activities ......... (4,275) (4,354)
-------- --------
Cash flows from financing activities:
Principal payments on capital lease obligations ........ (128) (30)
Draws under line of credit, net ........................ 6,000 39,500
Distributions to owners, net of certain charges ........ (25,946) (62,769)
Repayments of distributions to owners .................. 6,521 10,985
-------- --------
Net cash used in financing activities ......... (13,553) (12,314)
-------- --------
Net decrease in cash and cash equivalents .................... (363) (5,478)
Cash and cash equivalents, beginning of period ............... 4,205 7,600
-------- --------
Cash and cash equivalents, end of period ..................... $ 3,842 $ 2,122
======== ========
See accompanying notes to interim consolidated financial statements.
3
ALLBRITTON COMMUNICATIONS COMPANY
(an indirectly wholly-owned subsidiary of Perpetual Corporation)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(unaudited)
NOTE 1 - The accompanying unaudited interim consolidated financial statements of
Allbritton Communications Company (an indirectly wholly-owned subsidiary of
Perpetual Corporation ("Perpetual")) and its subsidiaries (collectively, the
"Company") have been prepared pursuant to instructions for Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, certain information and footnote
disclosures normally included in financial statements prepared in conformity
with generally accepted accounting principles have been omitted or condensed
where permitted by regulation. In management's opinion, the accompanying
financial statements reflect all adjustments, which were of a normal recurring
nature, and disclosures necessary for a fair presentation of the consolidated
financial statements for the interim periods presented. The results of
operations for the three and nine months ended June 30, 2007 are not necessarily
indicative of the results that can be expected for the entire fiscal year ending
September 30, 2007. The interim consolidated financial statements should be read
in conjunction with the audited consolidated financial statements and notes
thereto for the year ended September 30, 2006, which are contained in the
Company's Form 10-K.
NOTE 2 - In September 2004, the Securities and Exchange Commission ("SEC")
announced, in conjunction with the issuance of Emerging Issues Task Force
("EITF") Topic No. D-108, "Use of the Residual Method to Value Acquired Assets
Other than Goodwill," that the "residual method" should no longer be used to
value intangible assets other than goodwill. Rather, a "direct value method" is
required to be used to determine the fair value of all intangible assets for
purposes of impairment testing, including those assets previously valued using
the residual method. Any impairment resulting from application of a direct value
method should be reported as a cumulative effect of a change in accounting
principle. Application of EITF Topic No. D-108 was effective as of the beginning
of the Company's fiscal year ended September 30, 2006.
The Company had used the residual method to value its FCC licenses in
conjunction with acquisitions made in 1996 and 2000. Upon its implementation of
EITF Topic No. D-108 during the first quarter of the fiscal year ended September
30, 2006, the Company performed an impairment test using a direct value method
on its FCC licenses previously valued using the residual method. The direct
value method, which differs markedly from the residual value method, requires
the Company to value its FCC licenses using an average market participant
concept. This concept assumes that cash flows associated with FCC licenses are
limited to those cash flows that could be expected by an average market
participant. In contrast, the residual value method formerly used by the Company
included other elements of cash flows which contributed to station value.
As a result of the implementation of EITF Topic No. D-108, the Company recorded
a non-cash, pre-tax impairment charge related to the carrying value of certain
of its FCC licenses of $80,000. This charge was recorded, net of the related tax
benefit of $31,272, as a cumulative effect of a change in accounting principle
during the quarter ended December 31, 2005.
4
The carrying value of the Company's indefinite lived intangible assets,
consisting of its broadcast licenses, at September 30, 2006 and June 30, 2007
was $42,290.
The carrying value of the Company's other intangible assets, consisting of
favorable terms on contracts and leases, was as follows:
September 30, June 30,
2006 2007
------------ -------
Gross carrying amount ........... $ 6,174 $ 6,174
Less accumulated amortization ... (5,978) (6,099)
------- -------
Net carrying amount ............. $ 196 $ 75
======= =======
Amortization expense was $123 and $121 for the nine-month periods ended June 30,
2006 and 2007, respectively.
NOTE 3 - For the nine months ended June 30, 2006 and 2007, distributions to
owners and related activity consisted of the following:
Federal
and
Virginia state
Distributions Income Tax Net
to Owners (Payable) Distributions
and Dividends Receivable to Owners
------------- ---------- ---------
Balance as of September 30, 2005................ $ 359,305 $ -- $ 359,305
Cash advances to Perpetual...................... 31,002 31,002
Repayment of cash advances to Perpetual......... (6,521) (6,521)
Charge for federal and state income taxes....... (13,126) (13,126)
Payment of income taxes......................... 8,070 8,070
--------- -------- ---------
Balance as of June 30, 2006..................... $ 383,786 $ (5,056) $ 378,730
========= ======== =========
Balance as of September 30, 2006................ $ 382,442 $ -- $ 382,442
Cash advances to Perpetual...................... 59,610 59,610
Repayment of cash advances to Perpetual......... (10,985) (10,985)
Charge for federal and state income taxes....... (8,476) (8,476)
Payment of income taxes......................... 11,635 11,635
--------- -------- ---------
Balance as of June 30, 2007..................... $ 431,067 $ 3,159 $ 434,226
========= ======== =========
The average amount of non-interest bearing advances outstanding was $362,230 and
$401,363 during the nine months ended June 30, 2006 and 2007, respectively.
5
NOTE 4 - During the quarter ended March 31, 2007, Perpetual acquired from the
Robert Lewis Allbritton Revocable Trust its 20% ownership interests in TV
Alabama, Inc. and Harrisburg Television, Inc., the Company's subsidiaries which
operate its television stations in the Birmingham and Harrisburg markets,
respectively. The 20% ownership interests were then contributed into the
Company. As a result, the Company now owns 100% of these and all other of its
subsidiaries.
As the entities involved in these transactions are considered to be under common
control, the Company was required to account for this contribution at its book
value. Since the book value of the 20% ownership interests acquired by Perpetual
and then contributed to the Company was zero, no amount has been recorded in the
accompanying consolidated financial statements related to the contribution.
NOTE 5 - The FCC has granted to Sprint Nextel Corporation ("Nextel") the right
to reclaim a portion of the spectrum in the 2 GHz band from broadcasters across
the country. In order to claim this spectrum, Nextel must replace all of the
broadcasters' electronic newsgathering equipment currently using this spectrum
with digital equipment capable of operating in the reformatted portion of the 2
GHz band retained by the broadcasters. This exchange of equipment will be
completed on a market by market basis. As the equipment is exchanged and placed
into service in each of the Company's markets, a gain will be recorded to the
extent that the fair market value of the equipment received exceeds the book
value of the analog equipment exchanged.
During the nine months ended June 30, 2007, two of the Company's markets have
commenced the exchange of equipment with Nextel. The fair market value of the
equipment received and placed into service during the nine months ended June 30,
2007 was $533. This amount has been recorded as an addition to property, plant
and equipment, but is not included in capital expenditures in the accompanying
consolidated statement of cash flows as no cash was involved in the exchange.
The excess of fair market value as compared to the book value of equipment
exchanged and placed into service of $529 was recorded as a non-cash gain in
other, net nonoperating income in the accompanying consolidated financial
statements.
NOTE 6 - In June 2006, the Financial Accounting Standards Board ("FASB") issued
FASB Interpretation ("FIN") No. 48, "Accounting for Uncertainty in Income
Taxes." FIN 48 clarifies the accounting for uncertainty in income taxes by
prescribing a recognition threshold and measurement attribute for the financial
statement recognition and measurement of tax positions taken or expected to be
taken in a tax return. FIN 48 is effective for the Company's fiscal year ending
September 30, 2008. The Company is currently evaluating the impact, if any, that
FIN 48 may have on its financial position or results of operations.
6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
(dollars in thousands)
Overview
As used herein, the terms the "Company," "our," "us," or "we" refer to
Allbritton Communications Company and its subsidiaries and "ACC" refers solely
to Allbritton Communications Company.
We own ABC network-affiliated television stations serving seven geographic
markets: WJLA-TV in Washington, D.C.; WCFT-TV in Tuscaloosa, Alabama, WJSU-TV in
Anniston, Alabama and WBMA-LP, a low power television station licensed to
Birmingham, Alabama (we operate WCFT-TV and WJSU-TV in tandem with WBMA-LP
serving the viewers of the Birmingham, Tuscaloosa and Anniston market as a
single programming source); WHTM-TV in Harrisburg, Pennsylvania; KATV in Little
Rock, Arkansas; KTUL in Tulsa, Oklahoma; WSET-TV in Lynchburg, Virginia; and
WCIV in Charleston, South Carolina. We also provide 24-hour per day basic cable
television programming to the Washington, D.C. market, through NewsChannel 8,
primarily focused on regional and local news for the Washington, D.C.
metropolitan area. Additionally, in January 2007 we launched The Politico, a
specialized newspaper and Internet site (politico.com) that serves Congress,
congressional staffers and those interested in the actions of our national
legislature and political electoral process. The operations of NewsChannel 8 and
The Politico are integrated with WJLA.
During the quarter ended March 31, 2007, Perpetual Corporation ("Perpetual"),
our ultimate parent company, acquired from the Robert Lewis Allbritton Revocable
Trust its 20% ownership interests in TV Alabama, Inc. and Harrisburg Television,
Inc., our subsidiaries which operate our television stations in the Birmingham
and Harrisburg markets, respectively. The 20% ownership interests were then
contributed to us. As a result, we now own 100% of these and all other of our
subsidiaries.
As the entities involved in these transactions are considered to be under common
control, we were required to account for this contribution at its book value.
Since the book value of the 20% ownership interests acquired by Perpetual and
then contributed to us was zero, no amount has been recorded in the accompanying
consolidated financial statements related to the contribution.
Our advertising revenues are generally highest in the first and third quarters
of each fiscal year, due in part to increases in retail advertising in the
period leading up to and including the holiday season and active advertising in
the spring. The fluctuation in our operating results is generally related to
fluctuations in the revenue cycle. In addition, advertising revenues are
generally higher during election years due to spending by political candidates,
which is typically heaviest during our first and fourth fiscal quarters. During
years in which Olympic Games are held, there is additional demand for
advertising time and, as a result, increased advertising revenue associated with
Olympic broadcasts. The 2006 Winter Olympic Games were broadcast by NBC in
February 2006 in connection with NBC's United States television rights to the
Olympic Games, which extend through 2012.
7
Results of Operations
Set forth below are selected consolidated financial data for the three and nine
months ended June 30, 2006 and 2007 and the percentage change between the
periods:
Three Months Ended Nine Months Ended
June 30, June 30,
------------------ Percent ------------------- Percent
2006 2007 Change 2006 2007 Change
------- ------- ------- -------- -------- -------
Operating revenues, net ............ $59,460 $58,026 -2.4% $171,646 $174,615 1.7%
Total operating expenses............ 34,344 38,601 12.4% 103,871 114,459 10.2%
------- ------- -------- --------
Operating income.................... 25,116 19,425 -22.7% 67,775 60,156 -11.2%
Nonoperating expenses, net.......... 9,260 9,368 1.2% 25,701 27,265 6.1%
Income tax provision................ 6,128 3,897 -36.4% 16,227 12,693 -21.8%
------- ------- -------- --------
Income before cumulative effect of
change in accounting principle... 9,728 6,160 -36.7% 25,847 20,198 -21.9%
------- -------
Cumulative effect of change in
accounting principle, net of
income tax benefit............... -- -- -- 48,728 -- --
------- ------- -------- --------
Net income (loss)................... $ 9,728 $ 6,160 -36.7% $(22,881) $ 20,198 --
======= ======= ======== ========
Net Operating Revenues
The following table depicts the principal types of operating revenues, net of
agency commissions, earned by us for each of the three and nine months ended
June 30, 2006 and 2007, and the percentage contribution of each to our total
broadcast revenues, before fees:
Three Months Ended June 30, Nine Months Ended June 30,
-------------------------------------- -------------------------------------
2006 2007 2006 2007
----------------- ----------------- ---------------- ----------------
Dollars Percent Dollars Percent Dollars Percent Dollars Percent
------- ------- ------- ------- ------- ------- ------- -------
Local and national<F1>........ $53,887 88.7 $52,949 89.5 $154,285 88.0 $148,732 83.4
Political<F2>................. 2,114 3.5 60 0.1 4,311 2.5 9,501 5.3
Network compensation<F3>...... 580 1.0 872 1.5 1,841 1.1 2,891 1.6
Trade and barter<F4>.......... 1,429 2.3 1,532 2.6 4,250 2.4 4,562 2.6
Other revenue<F5>............. 2,765 4.5 3,751 6.3 10,599 6.0 12,579 7.1
------- ----- ------- ----- -------- ----- -------- -----
Broadcast revenues............ 60,775 100.0 59,164 100.0 175,286 100.0 178,265 100.0
===== ===== ===== =====
Fees<F6>...................... (1,315) (1,138) (3,640) (3,650)
------- ------- -------- --------
Operating revenues, net ...... $59,460 $58,026 $171,646 $174,615
======= ======= ======== ========
<FN>
- ----------
<F1> Represents sale of advertising to local and national advertisers, either
directly or through agencies representing such advertisers, net of agency
commission.
<F2> Represents sale of advertising to political advertisers.
<F3> Represents payment by networks for broadcasting or promoting network
programming.
<F4> Represents value of commercial time exchanged for goods and services
(trade) or syndicated programs (barter).
<F5> Represents other revenue, principally from cable and direct broadcast
satellite subscriber fees, the sales of University of Arkansas sports
programming to advertisers and radio stations as well as receipts from
tower rental and production of commercials.
<F6> Represents fees paid to national sales representatives and fees paid for
music licenses.
</FN>
8
Net operating revenues for the three months ended June 30, 2007 totaled $58,026,
a decrease of $1,434, or 2.4%, when compared to net operating revenues of
$59,460 for the three months ended June 30, 2006. Net operating revenues
increased $2,969, or 1.7%, to $174,615 for the nine months ended June 30, 2007
as compared to $171,646 for the same period in the prior year.
Local and national advertising revenues decreased $938, or 1.7%, and $5,553, or
3.6%, during the three and nine months ended June 30, 2007, respectively, versus
the comparable periods in Fiscal 2006. The decrease for the three months ended
June 30, 2007 primarily reflected decreased demand for local and national
advertising in our Washington, D.C. market, partially offset by increased local
and national advertising revenues in a majority of our other markets as well as
local and national advertising revenues from The Politico which launched on
January 23, 2007. The decreased local and national advertising revenues for the
nine months ended June 30, 2007 was also impacted by displacement of local and
national advertisers during the peak political advertising period leading up to
the November 7, 2006 elections as well as incremental revenue generated in the
prior year associated with the February 2006 broadcast of the Super Bowl by the
ABC network (broadcast by the CBS network in 2007).
Political advertising revenues decreased by $2,054 to $60 for the three months
ended June 30, 2007 as compared to the three months ended June 30, 2006 due to
local primary elections in several of our markets during the prior year with no
comparable activity during the same period of the current year. Political
advertising revenues increased $5,190, or 120.4%, during the nine months ended
June 30, 2007 as compared to the same period in Fiscal 2006. Political
advertising revenue increased in a majority of our markets due to various
high-profile local political elections in November 2006, which generated
substantial revenue in the first quarter of Fiscal 2007. This increase was
partially offset by advertising generated during the first quarter of Fiscal
2006 related to the November 2005 Virginia Governor's election as well as
advertising during the second and third quarters of Fiscal 2006 related to local
primary elections as discussed above.
Network compensation revenue increased $292, or 50.3%, and $1,050, or 57.0%,
during the three and nine months ended June 30, 2007, respectively, versus the
comparable periods in Fiscal 2006. These increases were due primarily to the
July 31, 2006 expiration of certain provisions of ABC's National Football League
("NFL") programming rights arrangement with its affiliates, which principally
involved the exchange of additional primetime inventory for reduced network
compensation, in conjunction with ABC's non-renewal of NFL programming rights
beyond the 2005 NFL season. These increases were partially offset by decreased
rates of compensation pursuant to our long-term affiliation agreement with ABC.
No individual advertiser accounted for more than 5% of our broadcast revenues
during the three or nine months ended June 30, 2006 or 2007.
Total Operating Expenses
Total operating expenses for the three months ended June 30, 2007 totaled
$38,601, an increase of $4,257, or 12.4%, compared to total operating expenses
of $34,344 for the three-month period ended June 30, 2006. This net increase
consisted of an increase in television operating expenses, excluding
depreciation and amortization, of $4,131, an increase in depreciation and
amortization of $60 and an increase in corporate expenses of $66.
9
Total operating expenses for the nine months ended June 30, 2007 totaled
$114,459, an increase of $10,588, or 10.2%, compared to total operating expenses
of $103,871 for the nine-month period ended June 30, 2006. This net increase
consisted of an increase in television operating expenses, excluding
depreciation and amortization, of $10,005, a decrease in depreciation and
amortization of $184 and an increase in corporate expenses of $767.
Television operating expenses, excluding depreciation and amortization,
increased $4,131 and $10,005, or 13.3% and 10.6%, for the three and nine months
ended June 30, 2007, respectively, as compared to the comparable periods in
Fiscal 2006. These increases were primarily due to an overall increase in our
employee compensation and benefits as well as increased programming expense.
Employee compensation and benefits increased 11.7% and 10.6% for the three and
nine months ended June 30, 2007, respectively, as compared to the same periods
in the prior year principally due to the hiring of additional personnel leading
up to and associated with the January 2007 launch of The Politico. The increase
in programming expense of 8.9% and 10.7% for the three and nine months ended
June 30, 2007, respectively, resulted primarily from renewals of several
existing programs as well as the replacement of certain programming with new
programming at higher rates.
Corporate expenses increased $66 and $767, or 5.1% and 22.5%, respectively, for
the three and nine months ended June 30, 2007 versus the comparable periods in
Fiscal 2006 due to a variety of increased expenses primarily including executive
compensation and related costs.
Operating Income
For the three months ended June 30, 2007, operating income of $19,425 decreased
$5,691, or 22.7%, when compared to operating income of $25,116 for the three
months ended June 30, 2006. For the three months ended June 30, 2007, the
operating margin decreased to 33.5% from 42.2% for the comparable period in
Fiscal 2006. The decreases in operating income and margin during the three
months ended June 30, 2007 were primarily the result of decreased net operating
revenues and increased total operating expenses as discussed above.
Operating income of $60,156 for the nine months ended June 30, 2007 decreased
$7,619, or 11.2%, when compared to operating income of $67,775 for the same
period in the prior fiscal year. For the nine months ended June 30, 2007, the
operating margin decreased to 34.5% from 39.5% for the comparable period in the
prior fiscal year. The decreases in operating income and margin were primarily
the result of total operating expenses increasing by a greater amount than net
operating revenues as discussed above.
Nonoperating Expenses, Net
Interest Expense. Interest expense of $9,411 for the three months ended June 30,
2007 increased $386, or 4.3%, as compared to $9,025 for the three-month period
ended June 30, 2006. The average balance of debt outstanding, including capital
lease obligations, for the three months ended June 30, 2006 and 2007 was
$458,425 and $482,846, respectively, and the weighted average interest rate on
debt was 7.7% for each of the three month periods ended June 30, 2006 and 2007.
The increase in interest expense during the three months ended June 30, 2007 as
compared to the same period in the prior year was due primarily to the higher
average balance of debt outstanding during the third quarter of Fiscal 2007.
10
Interest expense of $27,648 for the nine months ended June 30, 2007 increased
$457, or 1.7%, as compared to $27,191 for the comparable period of Fiscal 2006.
The average balance of debt outstanding, including capital lease obligations,
for the nine months ended June 30, 2006 and 2007 was $461,165 and $470,725,
respectively, and the weighted average interest rate on debt was 7.7% for each
of the nine month periods ended June 30, 2006 and 2007. The increase in interest
expense during the nine months ended June 30, 2007 as compared to the same
period in the prior year was due primarily to the higher average balance of debt
outstanding during the third quarter of Fiscal 2007.
Other, Net. Other, net nonoperating expense was $54 for the three months ended
June 30, 2007, as compared to $274 for the same period in the prior year. The
difference of $220 primarily resulted from a $224 non-cash gain on the exchange
of equipment with Sprint Nextel Corporation ("Nextel").
The FCC has granted to Nextel the right to reclaim a portion of the spectrum in
the 2 GHz band from broadcasters across the country. In order to claim this
spectrum, Nextel must replace all of the broadcasters' electronic newsgathering
equipment currently using this spectrum with digital equipment capable of
operating in the reformatted portion of the 2 GHz band retained by the
broadcasters. This exchange of equipment will be completed on a market by market
basis. As the equipment is exchanged and placed into service in each of our
markets, a gain will be recorded to the extent that the fair market value of the
equipment received exceeds the book value of the analog equipment exchanged. Two
of our markets have commenced the exchange of equipment with Nextel. During the
three and nine months ended June 30, 2007, the excess of fair market value as
compared to book value of the equipment exchanged and placed into service of
$224 and $529, respectively, was recorded as a non-cash gain in other, net
nonoperating expense.
Other, net nonoperating expense was $156 for the nine months ended June 30,
2007, as compared to other, net nonoperating income of $1,157 for the same
period in the prior year. The difference of $1,313 primarily resulted from a
gain on the sale of our corporate aircraft during the quarter ended December 31,
2005, partially offset by the recorded gain of $529 on the exchange of equipment
with Nextel during the nine months ended June 30, 2007 as discussed above.
Income Taxes
The provision for income taxes for the three months ended June 30, 2007 totaled
$3,897 as compared to the provision for income taxes of $6,128 for the three
months ended June 30, 2006. The decrease in the provision for income taxes of
$2,231, or 36.4%, during the three months ended June 30, 2007 was primarily due
to the $5,799, or 36.6%, decrease in pre-tax income.
The provision for income taxes for the nine months ended June 30, 2007 totaled
$12,693, a decrease of $3,534, or 21.8%, when compared to the provision for
income taxes of $16,227 for the nine months ended June 30, 2006. The decrease in
the provision for income taxes during the nine months ended June 30, 2007 was
primarily due to the $9,183, or 21.8%, decrease in pre-tax income.
11
Cumulative Effect of Change in Accounting Principle
In September 2004, the Securities and Exchange Commission ("SEC") announced, in
conjunction with the issuance of Emerging Issues Task Force ("EITF") Topic No.
D-108, "Use of the Residual Method to Value Acquired Assets Other than
Goodwill," that the "residual method" should no longer be used to value
intangible assets other than goodwill. Rather, a "direct value method" is
required to be used to determine the fair value of all intangible assets for
purposes of impairment testing, including those assets previously valued using
the residual method. Any impairment resulting from application of a direct value
method should be reported as a cumulative effect of a change in accounting
principle. Application of EITF Topic No. D-108 was effective as of the beginning
of our fiscal year ended September 30, 2006.
We used the residual method to value our FCC licenses in conjunction with
acquisitions made in 1996 and 2000. Upon our implementation of EITF Topic No.
D-108 during the first quarter of the fiscal year ended September 30, 2006, we
performed an impairment test using a direct value method on our FCC licenses
previously valued using the residual method. The direct value method, which
differs markedly from the residual value method, requires us to value our FCC
licenses using an average market participant concept. This concept assumes that
cash flows associated with FCC licenses are limited to those cash flows that
could be expected by an average market participant. In contrast, the residual
value method formerly used by us included other elements of cash flows which
contributed to station value.
As a result of the implementation of EITF Topic No. D-108, we recorded a
non-cash, pre-tax impairment charge related to the carrying value of certain of
our FCC licenses of $80,000. This charge was recorded, net of the related tax
benefit of $31,272, as a cumulative effect of a change in accounting principle
during the quarter ended December 31, 2005.
Net Income
For the three months ended June 30, 2007, the Company recorded net income of
$6,160 as compared to $9,728 for the three months ended June 30, 2006. The
decrease of $3,568 during the three months ended June 30, 2007 was primarily due
to decreased operating income as discussed above.
For the nine months ended June 30, 2007, the Company recorded net income of
$20,198 as compared to a net loss of $22,881 for the nine months ended June 30,
2006. This increase in net income during the nine months ended June 30, 2007 was
primarily due to the cumulative effect of change in accounting principle during
the prior year, partially offset by decreased operating income, as discussed
above.
Balance Sheet
Accounts receivable increased from September 30, 2006 to June 30, 2007 while
program rights, program rights payable and accrued interest payable decreased
during the same period. The increase in accounts receivable was the result of
the seasonal increase in net operating revenues during the third fiscal quarter
of the year. The decrease in program rights and program rights payable reflects
the annual cycle of the underlying program contracts which generally begins in
September of each year. The decrease in accrued interest payable reflects the
timing of scheduled interest payments on our long-term fixed interest rate debt.
See also "Liquidity and Capital Resources."
12
Liquidity and Capital Resources
As of June 30, 2007, our cash and cash equivalents aggregated $2,122, and we had
an excess of current assets over current liabilities of $36,221.
Cash Provided by Operations. Our principal sources of working capital are cash
flow from operations and borrowings under our senior credit facility. As
discussed above, our operating results are cyclical in nature primarily as a
result of seasonal fluctuations in advertising revenues, which are generally
highest in the first and third quarters of each fiscal year. Our cash flow from
operations is also impacted on a quarterly basis by the timing of cash
collections and interest payments on debt. Cash receipts are usually greater
during the second and fourth fiscal quarters as the collection of advertising
revenue typically lags the period in which such revenue is recorded. Scheduled
semi-annual interest payments on our long-term fixed interest rate debt occur
during the first and third fiscal quarters. As a result, our cash flows from
operating activities as reflected in our consolidated financial statements are
generally significantly higher during our second and fourth fiscal quarters, and
such quarters comprise a substantial majority of our cash flows from operating
activities for the full fiscal year.
As reported in the consolidated statements of cash flows, our net cash provided
by operating activities was $17,465 and $11,190 for the nine months ended June
30, 2006 and 2007, respectively. The $6,275 decrease in cash flows from
operating activities was the result of decreased income before cumulative effect
of change in accounting principle during the nine months ended June 30, 2007.
Transactions with Owners. We have periodically made advances in the form of
distributions to Perpetual. During the nine months ended June 30, 2006 and 2007,
we made cash advances, net of repayments, to Perpetual of $24,481 and $48,625,
respectively. The advances to Perpetual are non-interest bearing and, as such,
do not reflect market rates of interest-bearing loans to unaffiliated third
parties.
At present, the primary source of repayment of the net advances is through our
ability to pay dividends or make other distributions, and there is no immediate
intent for the amounts to be repaid. Accordingly, these advances have been
treated as a reduction of stockholder's investment and are described as
"distributions" in our consolidated financial statements.
Under the terms of the agreements relating to our indebtedness, future advances,
distributions and dividends to related parties are subject to certain
restrictions. We anticipate that, subject to such restrictions, applicable law
and payment obligations with respect to our indebtedness, we will make advances,
distributions or dividends to related parties in the future.
During the nine months ended June 30, 2006 and 2007, we made tax payments to
Perpetual of $8,070 and $11,635, respectively, of which $6,222 and $11,635,
respectively, represented interest-bearing advances of tax payments made in
accordance with the terms of the tax sharing agreement between Perpetual and us.
We were charged by Perpetual for federal and state income taxes totaling $13,126
and $8,476 during the nine months ended June 30, 2006 and 2007, respectively.
13
Stockholder's deficit amounted to $359,356 at June 30, 2007, an increase of
$31,586, or 9.6%, from the September 30, 2006 deficit of $327,770. The increase
was due to a net increase in distributions to owners of $51,784, partially
offset by net income for the nine-month period of $20,198.
Indebtedness. Our total debt, including the current portion of long-term debt,
increased from $452,846 at September 30, 2006 to $492,527 at June 30, 2007. This
debt, net of applicable discounts, consisted of $453,027 of 7 3/4% senior
subordinated notes due December 15, 2012 and $39,500 of draws under our senior
credit facility at June 30, 2007. The increase of $39,681 in total debt from
September 30, 2006 to June 30, 2007 was primarily due to $39,500 in net draws
under the senior credit facility.
Our $70,000 senior credit facility is secured by the pledge of stock of ACC and
its subsidiaries and matures August 23, 2011. Interest is payable quarterly at
various rates from prime or from LIBOR plus 0.75% depending on certain financial
operating tests.
Under the existing borrowing agreements, we are subject to restrictive covenants
that place limitations upon payments of cash dividends, issuance of capital
stock, investment transactions, incurrence of additional obligations and
transactions with affiliates. In addition, under the senior credit facility, we
must maintain compliance with certain financial covenants. Compliance with the
financial covenants is measured at the end of each quarter, and as of June 30,
2007, we were in compliance with those financial covenants. We are also required
to pay a commitment fee ranging from 0.25% to 0.375% per annum based on the
amount of any unused portion of the senior credit facility.
The indenture for our long-term debt provides that, whether or not required by
the rules and regulations of the SEC, so long as any senior notes are
outstanding, we, at our expense, will furnish to each holder (i) all quarterly
and annual financial information that would be required to be contained in a
filing with the SEC on Forms 10-Q and 10-K, if we were required to file such
forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and, with respect to the annual financial information
only, a report thereon by our certified independent accountants and (ii) all
current reports that would be required to be filed with the SEC on Form 8-K if
we were required to file such reports. In addition, the indenture also provides
that, whether or not required by the rules and regulations of the SEC, we will
file a copy of all such information and reports with the SEC for public
availability (unless the SEC will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request. Although our duty to file such reports with the SEC has been
automatically suspended pursuant to Section 15(d) of the Securities Exchange Act
of 1934 since October 1, 2003, we will continue to file such reports in
accordance with the indenture.
Other Uses of Cash. We anticipate that capital expenditures for Fiscal 2007 will
approximate $6,000 and will be primarily for the acquisition of technical
equipment and vehicles to support ongoing operations across our stations. We
expect that the source of funds for these anticipated capital expenditures will
be cash provided by operations and borrowings under the senior credit facility.
Capital expenditures during the nine months ended June 30, 2007 totaled $4,514.
14
Based upon our current level of operations, we believe that available cash,
together with cash flows generated by operating activities and amounts available
under the senior credit facility, will be adequate to meet our anticipated
future requirements for working capital, capital expenditures and scheduled
payments of interest on our debt.
New Accounting Standards
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation ("FIN") No. 48, "Accounting for Uncertainty in Income Taxes." FIN
48 clarifies the accounting for uncertainty in income taxes by prescribing a
recognition threshold and measurement attribute for the financial statement
recognition and measurement of tax positions taken or expected to be taken in a
tax return. FIN 48 is effective for our fiscal year ending September 30, 2008.
We are currently evaluating the impact, if any, that FIN 48 may have on our
financial position or results of operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
At June 30, 2007, we had other financial instruments consisting primarily of
long-term fixed interest rate debt. Such debt, with future principal payments of
$455,000, matures December 15, 2012. At June 30, 2007, the carrying value of
such debt was $453,027, the fair value was approximately $457,000 and the
interest rate was 7 3/4%. The fair market value of long-term fixed interest rate
debt is subject to interest rate risk. Generally, the fair market value of fixed
interest rate debt will increase as interest rates fall and decrease as interest
rates rise. We estimate the fair value of our long-term debt by using quoted
market prices, as available, or by discounting the required future cash flows
under our debt using borrowing rates currently available to us. We actively
monitor the capital markets in analyzing our capital raising decisions.
Item 4. Controls and Procedures
The Company has performed an evaluation of its disclosure controls and
procedures (as defined by Exchange Act rule 15d-15(e)) as of June 30, 2007.
Based on this evaluation, the Company's Chief Executive Officer and Chief
Financial Officer have concluded that the disclosure controls and procedures are
effective within the meaning of the rule.
There were no changes in the Company's internal control over financial reporting
during the quarter ended June 30, 2007 that have materially affected, or are
reasonably likely to materially affect, the Company's internal control over
financial reporting.
15
PART II OTHER INFORMATION
Item 1. Legal Proceedings
We currently and from time to time are involved in litigation incidental to the
conduct of our business, including suits based on defamation and employment
activity. We are not currently a party to any lawsuit or proceeding which, in
our opinion, could reasonably be expected to have a material adverse effect on
our consolidated financial condition, results of operations or cash flows.
Item 6. Exhibits
See Exhibit Index on pages 18-20.
16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALLBRITTON COMMUNICATIONS COMPANY
(Registrant)
August 9, 2007 /s/ Robert L. Allbritton
- ----------------------- ------------------------------------
Date Name: Robert L. Allbritton
Title: Chairman and Chief
Executive Officer
August 9, 2007 /s/ Stephen P. Gibson
- ----------------------- ------------------------------------
Date Name: Stephen P. Gibson
Title: Senior Vice President
and Chief Financial Officer
17
EXHIBIT INDEX
Exhibit No. Description of Exhibit Page No.
- ----------- ---------------------- --------
1.1 Purchase Agreement dated December 6, 2002 by and among *
ACC, Deutsche Bank Securities Inc. and Fleet Securities,
Inc. (Incorporated by reference to Exhibit 1 of the
Company's Form 10-K, No. 333-02302, dated December 17,
2002)
1.2 Purchase Agreement dated January 28, 2003 by and among *
ACC, Deutsche Bank Securities Inc. and Fleet Securities,
Inc. (Incorporated by reference to Exhibit 1.2 of the
Company's Quarterly Report on Form 10-Q, No. 333-02302,
dated February 3, 2003)
3.1 Certificate of Incorporation of ACC. (Incorporated by *
reference to Exhibit 3.1 of Company's Registration
Statement on Form S-4, No. 333-02302, dated March 12,
1996)
3.2 Bylaws of ACC. (Incorporated by reference to Exhibit 3.2 *
of Registrant's Registration Statement on Form S-4, No.
333-02302, dated March 12, 1996)
4.1 Indenture dated as of December 20, 2002 between ACC and *
State Street Bank and Trust Company, as Trustee, relating
to the 7 3/4% Senior Subordinated Notes due 2012.
(Incorporated by reference to Exhibit 4.1 of the
Company's Report on Form 8-K, No. 333-02302, dated
December 23, 2002)
4.2 Supplemental Indenture dated as of February 6, 2003 *
between ACC and U.S. Bank National Association
(successor-in-interest to State Street Bank and Trust
Company), as Trustee, to the Indenture dated as of
December 20, 2002 between ACC and State Street Bank and
Trust Company, as Trustee, relating to the 7 3/4% Senior
Subordinated Notes due 2012. (Incorporated by reference
to Exhibit 4.1 of the Company's Report on Form 8-K, No.
333-02302, dated February 6, 2003)
4.3 Form of 7 3/4% Series B Senior Subordinated Notes due *
2012. (Incorporated by reference to Exhibit 4.7 of the
Company's Quarterly Report on Form 10-Q, No. 333-02302,
dated February 3, 2003)
4.4 Credit Agreement dated as of August 23, 2005 by and among *
ACC, certain financial institutions, and Bank of America,
N.A., as the Administrative Agent, and Deutsche Bank
Securities Inc., as the Syndication Agent. (Incorporated
by reference to Exhibit 4.1 of the Company's Report on
Form 8-K, No. 333-02302, dated August 23, 2005)
18
Exhibit No. Description of Exhibit Page No.
- ----------- ---------------------- --------
10.1 Registration Rights Agreement by and among ACC, Deutsche *
Bank Securities Inc. and Fleet Securities Inc. dated
December 20, 2002. (Incorporated by reference to Exhibit
10.1 of the Company's Quarterly Report on Form 10-Q, No.
333-02302, dated February 3, 2003)
10.2 Registration Rights Agreement by and among ACC, Deutsche *
Bank Securities Inc. and Fleet Securities Inc. dated
February 6, 2003. (Incorporated by reference to Exhibit
10.2 of the Company's Registration Statement on Form S-4,
No. 333-02302, dated April 11, 2003)
10.3 Primary Television Affiliation Agreement (WSET, *
Incorporated) (with a schedule attached for other
stations' substantially identical affiliation
agreements). (Incorporated by reference to Exhibit 10.3
of the Company's Quarterly Report on Form 10-Q, No.
333-02302, dated May 13, 2004)**
10.4 Tax Sharing Agreement effective as of September 30, 1991 *
by and among Perpetual Corporation, ACC and ALLNEWSCO,
Inc., amended as of October 29, 1993. (Incorporated by
reference to Exhibit 10.11 of Company's Registration
Statement on Form S-4, No. 333-02302, dated March 12,
1996)
10.5 Second Amendment to Tax Sharing Agreement effective as of *
October 1, 1995 by and among Perpetual Corporation, ACC
and ALLNEWSCO, Inc. (Incorporated by reference to Exhibit
10.9 of the Company's Form 10-K, No. 333-02302, dated
December 22, 1998)
10.6 Pledge Agreement dated as of August 23, 2005 by and among *
ACC, Allbritton Group, Inc., Allfinco, Inc., and Bank of
America, N.A., as Agent. (Incorporated by reference to
Exhibit 10.1 of the Company's Report on Form 8-K, No.
333-02302, dated August 23, 2005)
10.7 Unlimited Guaranty dated as of August 23, 2005 by each of *
the subsidiaries of ACC in favor of Bank of America,
N.A., as Administrative Agent. (Incorporated by reference
to Exhibit 10.2 of the Company's Report on Form 8-K, No.
333-02302, dated August 23, 2005)
10.8 Collateral Assignment of Proceeds and Security Agreement *
dated as of August 23, 2005 by and among certain
subsidiaries of ACC and Bank of America, N.A., as Agent.
(Incorporated by reference to Exhibit 10.3 of the
Company's Report on Form 8-K, No. 333-02302, dated August
23, 2005)
14. Code of Ethics for Senior Financial Officers. *
(Incorporated by reference to Exhibit 14 of the Company's
Form 10-K, No. 333-02302, dated December 12, 2003)
19
Exhibit No. Description of Exhibit Page No.
- ----------- ---------------------- --------
31.1 Certification of Chairman and Chief Executive Officer
pursuant to Rule 15d-14(a) of the Securities Exchange Act
of 1934, as amended.
31.2 Certification of Senior Vice President and Chief
Financial Officer pursuant to Rule 15d-14(a) of the
Securities Exchange Act of 1934, as amended.
- -----------------
*Previously filed
**Portions have been omitted pursuant to confidential treatment
20