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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from__________________to_________________
COMMISSION FILE NUMBER 1-9329
PULITZER PUBLISHING COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 430496290
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
900 NORTH TUCKER BOULEVARD, ST. LOUIS, MISSOURI 63101
(Address of principal executive offices)
(314) 340-8000
(Registrant's telephone number, including area code)
NO CHANGES
(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
YES /X/ NO / /
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
CLASS OUTSTANDING 7/31/95
COMMON STOCK 4,602,439
CLASS B COMMON STOCK 11,774,207
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE DATA)
Second Quarter Ended Two Quarters Ended
June 30, June 30,
--------------------- -------------------
1995 1994 1995 1994
---- ---- ---- ----
OPERATING REVENUES - NET: (Unaudited) (Unaudited)
Publishing:
Advertising $ 40,357 $ 45,691 $ 78,311 $ 87,300
Circulation 18,813 19,509 37,589 39,469
Other 7,687 11,238 14,758 21,905
Broadcasting 53,769 46,292 98,491 85,447
-------- -------- -------- --------
Total operating revenues 120,626 122,730 229,149 234,121
-------- -------- -------- --------
OPERATING EXPENSES:
Publishing operations 31,016 31,529 59,592 62,967
Broadcasting operations 15,636 15,109 31,249 30,368
Selling, general and administrative 38,349 43,448 76,220 86,381
St. Louis Agency adjustment 3,402 4,233 6,690 6,952
Depreciation and amortization 6,722 7,580 13,431 15,142
-------- -------- -------- --------
Total operating expenses 95,125 101,899 187,182 201,810
-------- -------- -------- --------
Operating income 25,501 20,831 41,967 32,311
-------- -------- -------- --------
Interest income 1,212 430 2,471 807
Interest expense (2,493) (3,084) (5,205) (6,400)
Equity in net loss of joint ventures (485) (206) (673) (202)
Net other expense (222) (239) (491) (491)
-------- -------- -------- --------
INCOME BEFORE PROVISION FOR INCOME
TAXES AND CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE 23,513 17,732 38,069 26,025
PROVISION FOR INCOME TAXES 9,197 7,232 14,900 10,642
-------- -------- -------- --------
INCOME BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE 14,316 10,500 23,169 15,383
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE, NET OF
APPLICABLE INCOME TAXES (719)
-------- -------- -------- --------
NET INCOME $ 14,316 $ 10,500 $ 23,169 $ 14,664
======== ======== ======== ========
See notes to consolidated financial statements.
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PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME (CONTINUED)
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE DATA)
Second Quarter Ended Two Quarters Ended
June 30, June 30,
--------------------- ------------------
1995 1994 1995 1994
---- ---- ---- ----
(Unaudited) (Unaudited)
EARNINGS PER SHARE OF STOCK
(COMMON AND CLASS B COMMON):
Income before cumulative effect of
change in accounting principle $ .88 $ .65 $ 1.42 $ .95
Cumulative effect of change in
accounting principle (.04)
------ ------ ------ ------
Total $ .88 $ .65 $ 1.42 $ .91
====== ====== ====== ======
WEIGHTED AVERAGE NUMBER OF SHARES
(COMMON AND CLASS B COMMON
STOCK) OUTSTANDING 16,363 16,238 16,322 16,229
====== ====== ====== ======
See notes to consolidated financial statements.
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PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
(IN THOUSANDS)
JUNE 30, DEC. 31,
1995 1994
----------- --------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 79,875 $ 77,084
Trade accounts receivable (less allowance for doubtful
accounts of $2,320 and $2,135) 66,418 62,943
Inventory 960 3,069
Prepaid expenses and other 7,159 6,783
Program rights 4,012 9,263
-------- --------
Total current assets 158,424 159,142
-------- --------
PROPERTIES:
Land 11,261 11,261
Buildings 59,229 58,795
Machinery and equipment 166,075 161,305
Construction in progress 9,384 4,444
-------- --------
Total 245,949 235,805
Less accumulated depreciation 129,160 119,911
-------- --------
Properties - net 116,789 115,894
-------- --------
INTANGIBLE AND OTHER ASSETS:
Intangible assets - net of applicable amortization 121,563 125,415
Receivable from The Herald Company 44,306 44,059
Program rights, long-term portion 1,930 1,997
Other 23,516 21,805
-------- --------
Total intangible and other assets 191,315 193,276
-------- --------
TOTAL $466,528 $468,312
======== ========
See notes to consolidated financial statements.
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PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
(IN THOUSANDS, EXCEPT SHARE DATA)
JUNE 30, DEC. 31,
1995 1994
----------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited)
CURRENT LIABILITIES:
Trade accounts payable $ 12,794 $ 14,458
Current portion of long-term debt 14,250 14,250
Salaries, wages and commissions 10,136 11,541
Income taxes payable 2,777 6,331
Program contracts payable 4,078 8,864
Interest payable 3,246 3,480
Pension obligations 2,941 2,827
Other 4,139 662
-------- --------
Total current liabilities 54,361 62,413
-------- --------
LONG-TERM DEBT 114,500 128,750
-------- --------
PROGRAM CONTRACTS PAYABLE 1,653 2,109
-------- --------
PENSION OBLIGATIONS 25,444 23,593
-------- --------
POSTRETIREMENT AND POSTEMPLOYMENT
BENEFIT OBLIGATIONS 92,741 91,966
-------- --------
OTHER LONG-TERM LIABILITIES 4,126 4,462
-------- --------
STOCKHOLDERS' EQUITY :
Preferred stock, $.01 par value; 25,000,000 shares
authorized; issued and outstanding - none
Common stock, $.01 par value; 100,000,000 shares authorized;
issued - 4,563,484 in 1995 and 4,444,099 in 1994 44 44
Class B common stock, convertible, $.01 par value; 50,000,000
shares authorized; issued - 20,604,832 in 1995 and
20,608,832 in 1994 182 182
Additional paid-in capital 124,430 122,094
Retained earnings 236,877 220,322
-------- --------
Total 361,533 342,642
Treasury stock - at cost; 16,591 and 11,462 shares of common
stock in 1995 and 1994, respectively, and 8,775,638 shares of
Class B common stock in 1995 and 1994 (187,830) (187,623)
-------- --------
Total stockholders' equity 173,703 155,019
-------- --------
TOTAL $466,528 $468,312
======== ========
See notes to consolidated financial statements.
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PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(IN THOUSANDS)
TWO QUARTERS ENDED
JUNE 30,
-------------------------
1995 1994
--------- --------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $23,169 $14,664
Adjustments to reconcile net income to net cash provided by
operating activities:
Non-cash items:
Cumulative effect of change in accounting principle, net of
applicable income taxes 719
Equity in net loss of joint ventures 673 202
Depreciation 9,496 10,196
Amortization of intangibles 3,935 4,946
Incremental increase in postretirement and postemployment
benefit obligations 775 1,537
Changes in assets and liabilities which provided (used) cash:
Trade accounts receivable (3,475) (1,269)
Inventory 2,109 1,292
Other assets (2,125) 2,636
Trade accounts payable and other liabilities (408) 4,253
Income taxes payable (3,554) (2,451)
Program rights - net of contracts payable 76 120
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 30,671 36,845
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (10,692) (5,052)
Investment in joint venture (2,000)
Investment in limited partnerships (2,512)
Increase in notes receivable 1,852 17
------- -------
NET CASH USED IN INVESTING ACTIVITIES (11,352) (7,035)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments on long-term debt (14,250) (20,284)
Dividends paid (4,407) (3,764)
Proceeds from exercise of stock options 2,129 484
------- -------
NET CASH USED IN FINANCING ACTIVITIES (16,528) (23,564)
------- -------
NET INCREASE IN CASH AND CASH EQUIVALENTS 2,791 6,246
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 77,084 34,970
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $79,875 $41,216
======= =======
See notes to consolidated financial statements.
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PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. ACCOUNTING POLICIES
Interim Adjustments - In the opinion of management, the accompanying
unaudited consolidated financial statements contain all adjustments,
consisting only of normal recurring adjustments except for the cumulative
effect adjustment discussed in Note 3, necessary to present fairly Pulitzer
Publishing Company's financial position as of June 30, 1995 and the results
of operations and cash flows for the six-month periods ended June 30, 1995
and 1994. Results of operations for interim periods are not necessarily
indicative of the results to be expected for the full year.
Fiscal Year and Fiscal Quarters - The Company's fiscal year and second
quarter end on the Sunday coincident with or prior to December 31 and June
30, respectively. For ease of presentation, the Company has used December
31 as the year end and June 30 as the second quarter end.
Earnings Per Share of Stock - Earnings per share of stock have been computed
using the weighted average number of common and Class B common shares
outstanding during the applicable period.
2. DIVIDENDS
In the first quarter of 1994, two dividends of $0.115 per share were
declared, payable on February 1, 1994 and May 2, 1994. In the second
quarter of 1994, a dividend of $0.115 per share was declared, payable on
August 1, 1994. In the third quarter of 1994, a dividend of $0.115 per
share was declared, payable on November 1, 1994. In the first quarter of
1995, two dividends of $0.135 per share were declared, payable on February
1, 1995 and May 1, 1995. In the second quarter of 1995, a dividend of
$0.135 per share was declared, payable on August 1, 1995.
In addition, a five-for-four stock split (payable in the form of a 25
percent common and Class B common stock dividend) was declared by the
Company's Board of Directors on January 4, 1995. The dividend was
distributed on January 24, 1995 to stockholders of record on January 13,
1995. Shares outstanding, dividends per share and earnings per share have
been restated for 1994 to reflect the stock split.
3. POSTEMPLOYMENT BENEFITS
Effective January 1, 1994, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 112, Employers' Accounting for
Postemployment Benefits ("SFAS 112"), to account for certain disability
benefits at the St. Louis Post-Dispatch. SFAS 112 requires that the cost of
these benefits provided to former employees prior to retirement be
recognized on the accrual basis of accounting. Previously, the Company
recognized its postemployment benefit costs when paid. The cumulative
effect of adopting SFAS 112 was a reduction of 1994 first quarter net income
by approximately $719,000 or $0.04 per share.
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PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
After recording the cumulative effect adjustment, the Company's ongoing
expense under the new standard does not differ significantly from the prior
pay-as-you-go basis.
4. BUSINESS SEGMENTS
The Company's operations are divided into two business segments, publishing
and broadcasting. The following is a summary of operating data by segment
(in thousands):
Second Quarter Ended Two Quarters Ended
June 30, June 30,
--------------------- ------------------------
1995 1994 1995 1994
---- ---- ---- ----
(Unaudited) (Unaudited)
Operating revenues:
Publishing (a) $66,857 $76,438 $130,658 $148,674
Broadcasting 53,769 46,292 98,491 85,447
-------- -------- -------- --------
Total $120,626 $122,730 $229,149 $234,121
======== ======== ======== ========
Operating income (loss):
Publishing (a) $6,814 $8,552 $12,968 $14,240
Broadcasting 19,759 13,290 31,131 20,029
Corporate (1,072) (1,011) (2,132) (1,958)
-------- -------- -------- --------
Total $25,501 $20,831 $41,967 $32,311
======== ======== ======== ========
Depreciation and amortization:
Publishing (a) $1,041 $1,538 $2,058 $3,065
Broadcasting 5,681 6,042 11,373 12,077
-------- -------- -------- --------
Total $6,722 $7,580 $13,431 $15,142
======== ======== ======== ========
Operating margins
(Operating income to revenues):
Publishing (a) (b) 15.3% 16.7% 15.0% 14.3%
Broadcasting 36.7% 28.7% 31.6% 23.4%
(a) Publishing operations for 1994 include the results of Pulitzer
Community Newspapers, Inc., which was sold on December 22, 1994.
(b) Operating margins for publishing stated with St. Louis Agency
adjustment added back to publishing operating income.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company's operating revenues are significantly influenced by a number of
factors, including overall advertising expenditures, the appeal of newspapers,
television and radio in comparison to other forms of advertising, the
performance of the Company in comparison to its competitors in specific
markets, the strength of the national economy and general economic conditions
and population growth in the markets served by the Company.
The Company's business tends to be seasonal, with peak revenues and profits
generally occurring in the fourth and, to a lesser extent, second quarters of
each year as a result of increased advertising activity during the Christmas
and spring holiday periods. The first quarter is historically the weakest
quarter for revenues and profits.
CONSOLIDATED
Operating revenues for the second quarter and first six months of 1995
decreased 1.7 percent and 2.1 percent, respectively, compared with the
corresponding periods in the preceding year. Revenue comparisons were affected
by the sale of Pulitzer Community Newspapers, Inc. ("PCN") on December 22,
1994. The 1994 second quarter and first six months included the results of
PCN, but due to the sale in December 1994, no amounts for PCN were included in
the 1995 periods. On a comparable basis (i.e., excluding PCN from 1994),
consolidated revenues increased 9.5 percent and 9 percent for the second
quarter and first six months of 1995, respectively. The increases reflected
gains in both broadcasting and publishing revenues.
Operating expenses, excluding the St. Louis Agency adjustment, for the second
quarter and first six months of 1995 decreased 6.1 percent and 7.4 percent,
respectively, compared with the corresponding periods in the prior year. On a
comparable basis, excluding PCN from 1994, operating expenses increased 6.9
percent and 5.3 percent for
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the second quarter and first six months of 1995, respectively. These increases
were primarily attributable to increased newsprint costs ($4.8 million - second
quarter and $7.3 million - year to date), higher overall personnel costs
($867,000 - second quarter and $1.9 million - year to date) and increased
promotion expense ($624,000 - second quarter and $1.1 million - year to date).
Expense increases were partially offset by lower depreciation and amortization
($359,000 - second quarter and $716,000 - year to date) and lower programming
rights expense ($344,000 - second quarter and $653,000 - year to date).
Operating income in the 1995 second quarter and first six months increased to
$25.5 million (22.4 percent) and $42 million (29.9 percent), respectively. On
a comparable basis, excluding PCN from 1994, operating income increased 26.3
percent and 31.8 percent for the second quarter and first six months of 1995,
respectively. The 1995 increases reflected improvements in the broadcasting
segment's operating income, resulting from increased revenues.
Interest expense decreased $591,000 in the 1995 second quarter and $1.2
million in the first six months due to lower debt levels. The Company's
average debt level for the second quarter and the first six months of 1995
decreased to $132.8 million and $137.9 million from $164.5 million and $170.4
million in the respective periods of the prior year. The Company's average
interest rate for the second quarter and the first six months of 1995 increased
slightly to 7.5 percent and 7.6 percent, respectively, from 7.4 percent in both
prior year periods. The increase in the 1995 average interest rates resulted
from the repayment and elimination of lower variable rate borrowings in the
fourth quarter of 1994. Interest income for the second quarter and first six
months of 1995 increased $782,000 and $1.7 million, respectively, due to both a
higher average balance of invested funds and higher short-term interest rates.
The effective income tax rate for both the second quarter and the first six
months of 1995 decreased to 39.1 percent, from 40.8 percent and 40.9 percent in
the respective periods of the prior year. The lower rates in 1995 reflected
the Company's reduced exposure to further tax adjustments for open tax years,
following the settlement of the 1990-1992 federal tax examinations during 1994,
and the impact of the 1993 tax law changes in the deductibility of the
amortization of intangibles. It is expected that, on an
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annual basis, the effective tax rate for 1995 will be in the 39 percent range,
approximately the same as the effective rate for the full year of 1994.
As discussed in Note 3 to the interim financial statements, effective January
1, 1994 the Company adopted the provisions of Statement of Financial Accounting
Standards No. 112, Employers' Accounting for Postemployment Benefits ("SFAS
112"), and recorded its initial liability thereunder resulting in a one-time
after-tax charge of $719,000. After recording the one-time charge, the
Company's on-going expense under SFAS 112 does not differ significantly from
the prior pay-as-you-go basis.
Net income in the 1995 second quarter increased 36.3 percent to $14.3
million, or $0.88 per share, from $10.5 million, or $0.65 per share, in the
second quarter of 1994. Net income for the first six months of 1995 increased
58 percent to $23.2 million, or $1.42 per share, from $14.7 million, or $0.91
per share, a year ago. The first six months of 1994 included the non-recurring
SFAS 112 charge of $719,000, or $0.04 per share. Excluding the non-recurring
charge from 1994, net income for the first six months of 1995 increased 50.6
percent. The gain in net income reflected an improvement in the broadcasting
segment's operating profits and a reduction in interest expense. The sale of
PCN had no effect on the net income comparisons because earnings provided by
PCN in 1994 were offset in 1995 by the after-tax investment income generated by
the sale proceeds.
PUBLISHING
Operating revenues from the Company's publishing segment for the second
quarter and first six months of 1995 decreased 12.5 percent and 12.1 percent,
respectively, compared with the corresponding periods of the prior year. On a
comparable basis, excluding PCN from 1994, publishing revenues increased 4.6
percent and 4.7 percent, respectively, for the 1995 second quarter and first
six months. These increases reflected higher advertising revenues,
particularly classified, at both newspaper properties.
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Newspaper advertising revenues, on a comparable basis, increased $1.8 million
(4.6 percent) in the 1995 second quarter and $4.3 million (5.8 percent) in the
first six months of 1995. The second quarter increase resulted from higher
average rates which generated additional revenue of $1.9 million, offset
slightly by the effect of lower advertising volume ($100,000). The year to
date increase reflected a combination of $4 million generated by higher average
rates and $300,000 generated by slightly higher advertising volume. In the
first quarter of 1995, both the St. Louis Post-Dispatch ("Post-Dispatch") and
The Arizona Daily Star ("Star") implemented rate increases for most
advertising categories, ranging from 4 percent to 6 percent and 6 percent to 8
percent, respectively.
Circulation revenues, on a comparable basis, increased $631,000 (3.5 percent)
for the 1995 second quarter and $808,000 (2.2 percent) for the first six months
of 1995. The second quarter increase resulted from the benefit ($1.2 million)
of circulation price increases which were partially offset by revenue declines
($554,000) due to average circulation decreases at the Post-Dispatch.
Similarly, the year to date increase reflected a $1.9 million revenue increase
generated by higher average prices partially offset by a $1.1 million decline
due to circulation decreases. Average daily and Sunday circulation of the
Post-Dispatch for the second quarter of 1995 was 325,249 and 543,778 compared
to 339,413 and 552,913 for the corresponding 1994 period, decreases of 4.2
percent and 1.7 percent, respectively. Effective February 5, 1995, the
home-delivered price of the Sunday Post-Dispatch was increased $1.00 per month.
In addition, the home-delivered price of the daily Star was increased $0.80 per
month, effective March 27, 1995.
Operating expenses (including selling, general and administrative expenses
and depreciation and amortization) for the publishing segment, excluding the
St. Louis Agency adjustment, decreased 11 percent and 12.9 percent,
respectively, for the second quarter and first six months of 1995. On a
comparable basis, excluding PCN from 1994, operating expenses increased 9.4
percent and 6.7 percent, respectively, for the second quarter and first six
months of 1995. The higher expenses, on a comparable basis, resulted primarily
from increased newsprint cost ($4.8 million - second quarter and $7.3 million -
year to date), reflecting the impact of significant newsprint price increases.
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Operating income from the Company's publishing activities in the 1995 second
quarter decreased 20.3 percent to $6.8 million from $8.6 million and in the
first six months decreased 8.9 percent to $13 million from $14.2 million. On a
comparable basis, excluding PCN from 1994, operating income from the publishing
segment decreased 13.8 percent and 5.9 percent, respectively, for the second
quarter and first six months of 1995. The declines resulted from the
significant increase in newsprint costs which exceeded revenue gains on a
comparable basis.
Increasing newsprint prices added approximately $7.3 million to newsprint
expense ($4.1 million after giving effect to the St. Louis Agency adjustment
and excluding PCN from 1994) for the first six months of 1995. Further, the
Company has been notified by its newsprint suppliers of their intention to
implement an additional newsprint price increase on September 1, 1995. If this
additional announced price increase becomes effective, the Company estimates
that its average newsprint cost per metric ton for the second half of 1995 will
be approximately $735 (assuming no further price increases) compared to $470
for the second half of 1994. Based on an estimated usage of approximately
46,000 metric tons, newsprint expense is expected to increase in the second
half of 1995 by approximately $12.2 million ($6.8 million after giving effect
to the St. Louis Agency adjustment and excluding PCN from 1994). No assurance,
however, can be given that the estimated newsprint cost increase for second
half of 1995 will be as projected, and the actual cost increase may be higher
or lower. For the full year of 1994, the Company's newsprint cost, after
giving effect to the St. Louis Agency adjustment and excluding PCN, was
approximately $22.8 million.
BROADCASTING
Broadcasting operating revenues for the second quarter and first six months
of 1995 increased 16.2 percent and 15.3 percent over the comparable 1994
periods. Local spot advertising increased 11.8 percent and 9 percent,
respectively, for the second quarter
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and first six months of 1995, and national spot advertising increased 9.9
percent and 10.7 percent, respectively, for the second quarter and six-month
period. In addition, network compensation revenue increased $2.6 million and
$5 million, respectively, for the second quarter and first six months of 1995.
The significant gains in network compensation reflect the impact of new
ten-year network affiliation agreements executed in early 1995. For the full
year of 1995, the new agreements are expected to add approximately $10.5
million to the Company's annual network compensation revenue. The Company
anticipates, however, that approximately $2 million of this revenue increase
will be invested back into its stations to strengthen their local news
operations. These costs will be reflected in the ongoing annual expenses of
the broadcasting operations.
Broadcasting operating expenses (including selling, general and
administrative expenses and depreciation and amortization) for the second
quarter and first six months of 1995 increased 3.1 percent and 3 percent,
respectively, compared to the prior year periods. Major increases in
comparable expenses were overall personnel costs ($1.1 million - second quarter
and $1.6 million - year to date) and promotion expense ($208,000 - second
quarter and $605,000 - year to date). Partially offsetting these increases
were declines in depreciation and amortization ($361,000 - second quarter and
$704,000 - year to date) and programming rights expense ($344,000 - second
quarter and $653,000 - year to date).
Operating income from the broadcasting segment in the 1995 second quarter
increased 48.7 percent to $19.8 million from $13.3 million and in the first six
months increased 55.4 percent to $31.1 million from $20 million. The increases
for both periods resulted from a combination of increased advertising revenues
and higher network compensation.
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The Company's current indications of broadcast advertising demand for the
second half of 1995 are positive. However, year-over-year comparisons for the
second half of 1995 will be impacted by the significant political advertising
revenue in the prior year period. In the third and fourth quarters of 1994,
broadcasting revenues included $1.8 million and $4.5 million of political
advertising, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Outstanding debt, inclusive of the short-term portion of long-term debt, as
of June 30, 1995, was $128.8 million, compared with $143 million at December
31, 1994. The decrease since the prior year end reflects a scheduled repayment
of $14.3 million under the Company's Senior Note Agreement maturing in 1997.
As of June 30, 1995, the Company's long-term borrowings consisted of $128.8
million of fixed-rate senior notes with The Prudential Insurance Company of
America.
The Company's Senior Note Agreements require it to maintain certain financial
ratios, place restrictions on the payment of dividends and prohibit new
borrowings, except as permitted thereunder.
As of June 30, 1995, commitments for capital expenditures were approximately
$16.1 million, relating to normal capital equipment replacements and a portion
of the costs for new facilities for television station WDSU in New Orleans and
the radio operations in Phoenix. Capital expenditures to be made in fiscal
1995 are estimated to be approximately $27 million, of which approximately
$11.2 million represents the amount to substantially complete the building
projects in New Orleans and Phoenix. Commitments for film contracts and
license fees as of June 30, 1995 were approximately $30.6 million. In
addition, as of June 30, 1995, the Company had capital contribution commitments
of approximately $6.9 million related to investments in two limited
partnerships.
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At June 30, 1995, the Company had working capital of $104.1 million and a
current ratio of 2.91 to 1. This compares to working capital of $96.7 million
and a current ratio of 2.55 to 1 at December 31, 1994.
The Company generally expects to generate sufficient cash from operations to
cover ordinary capital expenditures, film contract and license fees, limited
partnership contribution commitments, working capital requirements, debt
installments and dividend payments.
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PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
(a) The Annual Meeting of Stockholders was held on April 20 1995.
(b) The following directors were reelected at the Annual Meeting of
Stockholders:
David E. Moore
Ken J. Elkins
Nicholas G. Penniman IV
The following directors continued their term of office after the Annual
Meeting of Stockholders:
Michael E. Pulitzer
Ronald H. Ridgway
Peter J. Repetti
Emily Rauh Pulitzer
Alice B. Hayes
James M. Snowden, Jr.
(c) The following nominees for election as director received the votes
indicated:
For Withheld Abstain
--- -------- -------
David E. Moore 122,106,912 0 187,741
Ken J. Elkins 122,272,744 0 18,909
Nicholas G. Penniman IV 122,272,230 0 19,423
The amendment to the Pulitzer Publishing Company 1994 Stock Option Plan
was approved by the vote indicated:
For: 120,799,471
Against: 1,403,809
Broker non-votes: 0
Abstain: 88,373
The selection of Deloitte & Touche as the Company's independent auditors
was approved by the vote indicated:
For: 122,280,545
Against: 3,414
Broker non-votes: 0
Abstain: 7,694
17
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibit is incorporated herein by reference to Exhibit A of
the Company's definitive Proxy Statement used in connection with the 1995
Annual Meeting of Stockholders:
10.1 Amendment to the Pulitzer Publishing Company 1994 Stock Option
Plan
The following exhibit is filed as part of this report:
27 Financial Data Schedule
(b) Reports on Form 8-K. The Company did not file any reports on Form 8-K
during the quarter for which this report was filed.
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.
PULITZER PUBLISHING COMPANY
(Registrant)
Date: August 8, 1995 /s/ Ronald H. Ridgway
----------------------------------
(Ronald H. Ridgway)
Director; Senior Vice-President-Finance
(on behalf of the Registrant and
as principal financial officer)
18
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EXHIBIT INDEX
EXHIBIT NUMBER TITLE OR DESCRIPTION LOCATION
27 Financial Data Schedule Page 20