1
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 Quarter period ended March 31, 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 0-13834
American City Business Journals, Inc.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 43-1366184
- ------------------------------------------- ----------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
128 S. Tryon St., St. 2300, Charlotte, N.C. 28202
- ------------------------------------------- ----------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone no., including area code: (704) 375-7404
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 and
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:
6,883,263 shares of common stock, $.01 par value per share, at April 25, 1995.
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN CITY BUSINESS JOURNALS, INC. AND SUBSIDIARIES
----------
CONSOLIDATED BALANCE SHEET
ASSETS
March 31, December 31,
1995 1994
------------ ------------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $18,529,000 $17,815,000
Accounts receivable, net of allowance for
uncollectible accounts of $509,000 in 1995
and $462,000 in 1994 11,789,000 13,205,000
Prepaid expenses 1,709,000 668,000
Deferred income taxes 476,000 476,000
------------ ------------
Total current assets 32,503,000 32,164,000
FURNITURE AND EQUIPMENT 14,237,000 12,487,000
Less - Accumulated depreciation (8,413,000) (8,015,000)
------------ ------------
5,824,000 4,472,000
DEFERRED INCOME TAXES 2,094,000 2,094,000
INTANGIBLES AND OTHER ASSETS, principally cost in
excess of assets acquired - net 53,025,000 53,400,000
------------ ------------
Total assets $93,446,000 $92,130,000
============ ============
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AMERICAN CITY BUSINESS JOURNALS, INC. AND SUBS
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CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' INVESTMENT
March 31, December 31,
1995 1994
------------ ------------
(Unaudited)
CURRENT LIABILITIES:
Current portion of long-term debt $ 954,000 $ 934,000
Accounts payable 2,729,000 2,738,000
Accrued payroll and payroll taxes 1,672,000 2,211,000
Other accrued liabilities 2,159,000 1,335,000
Deferred subscription revenue 13,595,000 12,867,000
Accrued income taxes 3,368,000 3,163,000
------------ ------------
Total current liabilities 24,477,000 23,248,000
LONG-TERM DEBT 35,588,000 35,788,000
DEFERRED SUBSCRIPTION REVENUE 2,763,000 2,677,000
CONVERTIBLE SUBORDINATED DEBENTURES 31,878,000 31,878,000
STOCKHOLDERS' INVESTMENT:
Serial Preferred Stock, $.01 par value
- 2,500,000 shares authorized; No shares
issued --- ---
Common stock, $.01 par value - 30,000,000
shares authorized; 7,584,000 and 7,216,000
shares issued; 6,874,000 and 6,539,000
shares outstanding 76,000 72,000
Paid-in capital 7,759,000 7,691,000
Accumulated deficit (1,412,000) (1,856,000)
------------ ------------
6,423,000 5,907,000
Treasury stock - 709,000 and 677,000 common
shares at cost (7,683,000) (7,368,000)
------------ ------------
Total stockholders' investment (1,260,000) (1,461,000)
------------ ------------
Total liabilities and stockholders'
investment $93,446,000 $92,130,000
============ ============
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AMERICAN CITY BUSINESS JOURNALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' INVESTMENT
FOR THE YEAR ENDED DECEMBER 31, 1994 AND
THE THREE MONTHS ENDED MARCH 31, 1995
Common Paid-In Accumulated Treasury
Stock Capital Deficit Stock
---------- ------------ ------------ -------------
BALANCE AT DECEMBER 31, 1993 $51,000 $43,550,000 ($7,152,000) ($42,698,000)
Issuance of common stock, 185,295 shares 604,000 931,000
Retirement of treasury stock, 3,110,646 shares (15,000) (36,427,000) 36,442,000
Split of common stock (2 for 1) - par value of
shares issued 36,000 (36,000)
Purchase of treasury stock, 131,279 common shares
at cost (2,043,000)
Net income 5,296,000
---------- ------------ ------------ -------------
BALANCE AT DECEMBER 31, 1994 72,000 7,691,000 (1,856,000) (7,368,000)
Issuance of common stock, 6,090 shares 72,000 331,000
Common stock dividend (5%) - par value of shares
issued 4,000 (4,000)
Purchase of treasury stock, 33,400 common shares
at cost (646,000)
Net income 444,000
---------- ------------ ------------ -------------
BALANCE AT MARCH 31, 1995 (UNAUDITED) $76,000 $7,759,000 ($1,412,000) ($7,683,000)
========== ============ ============ =============
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AMERICAN CITY BUSINESS JOURNALS, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
---------------------------
1995 1994
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $444,000 $30,000
Adjustments to reconcile net income to net cash
provided by operating activities-
Depreciation and amortization 1,364,000 1,325,000
Provision for bad debts 200,000 168,000
(Gain)loss on sale of assets 2,000 (1,000)
Net activity from trades (1,000) (1,000)
Recognized imputed interest 71,000 64,000
Changes in assets and liabilities, net of assets acquired
Decrease in accounts receivable and other current assets 176,000 545,000
Decrease in intangibles and other assets 35,000 37,000
Increase (decrease) in accounts payable
and accrued expenses 406,000 (86,000)
Increase in deferred subscription revenue 814,000 811,000
------------ -------------
Net cash provided by operating activities 3,511,000 2,892,000
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CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 403,000 472,000
Payment of long-term debt (176,000) (184,000)
Purchase of treasury stock (646,000) ---
------------ -------------
Net cash provided by (used for) financing activities (419,000) 288,000
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase price of companies acquired (1,924,000) ---
Capital expenditures (454,000) (510,000)
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Net cash used for investing activities (2,378,000) (510,000)
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NET INCREASE IN CASH AND CASH EQUIVALENTS 714,000 2,670,000
CASH AND CASH EQUIVALENTS, beginning of period 17,815,000 13,992,000
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CASH AND CASH EQUIVALENTS, end of period $18,529,000 $16,662,000
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AMERICAN CITY BUSINESS JOURNALS, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Three Months Ended
March 31,
--------------------------
1995 1994
------------ ------------
Revenues $24,871,000 $20,578,000
Operating expenses 22,968,000 19,299,000
------------ ------------
Operating income 1,903,000 1,279,000
Interest expense - net (1,150,000) (1,229,000)
Other income --- 1,000
------------ ------------
Income before income taxes 753,000 51,000
Provision for income taxes 309,000 21,000
------------ ------------
Net income $444,000 $30,000
============ ============
Income per common share <F1> $ .06 ---
Weighted average shares outstanding <F1> 7,153,000 7,096,000
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<FN>
<F1> Adjusted to reflect 2 for 1 stock split distributed April 29, 1994
and 5% stock dividend paid on January 16, 1995.
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AMERICAN CITY BUSINESS JOURNALS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
1. The 1995 consolidated financial statements have been prepared by the
Company, without audit, and reflect all adjustments which are, in the
opinion of management, necessary to fairly present the financial
position and results of operations for the interim periods. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted, although the Company
believes that the disclosures are adequate to make the information
presented not misleading. It is suggested that these condensed
financial statements be read in conjunction with the consolidated
financial statements and notes thereto for the year ended December 31,
1994 included in the Company's Form 10-K filed March 29, 1995.
2. The consolidated financial statements include the accounts of American
City Business Journals, Inc., and its wholly owned subsidiaries. All
significant intercompany accounts and transactions have been
eliminated in the consolidated statements.
3. Earnings per share are based on the weighted average number of common
and common equivalent shares outstanding during the respective periods
adjusted retroactively for a 2-for-1 common stock split distributed as
a common stock dividend April 29, 1994 to shareholders of record April
18, 1994, and a 5% common stock dividend paid on January 16, 1995 to
shareholders of record December 15, 1994. Fully diluted computations
have been omitted because they are anti-dilutive.
4. In 1994 the Company acquired Winston Cup Illustrated magazine
(September 1), The Austin Business Journal (October 1) and On Track
magazine (October 21) for an aggregate purchase price of $3,525,000
comprised of $3,100,000 in cash, $300,000 in notes and $125,000 in
non-competition agreements. The excess ($2,100,000) of the purchase
price plus the liabilities assumed ($1,100,000) over the appraised
value of the assets acquired was charged to goodwill. On February 1,
1995 the Company acquired Performance Printing Co. for $1,300,000 in
cash. The purchase price was allocated to the assets acquired as
determined by an independent appraisal. Also, on January 20, 1995 the
Company purchased a minority interest in Sunbelt Video, Inc., for
$624,000 in cash and obtained an option to acquire the remaining
shares in three years at appraised value.
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PART 1. FINANCIAL INFORMATION
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Financial Condition and Liquidity:
At March 31, 1995 the Company had a current ratio of 1.3:1 and over $18.5
million in cash and cash equivalents. The level of liquidity increased
slightly from December 31, 1994 from internally generated funds.
The Company believes its existing liquidity and cash flow from operations is
sufficient in 1995 to fund (a) interest ($5 million) and principal ($1 million)
on long-term debt and convertible subordinated debentures; ( b) capital
additions of approximately $1.2 million for new production systems, computer
software and hardware upgrades and miscellaneous items of furniture and
equipment; (c) working capital requirements which are not expected to be
significant; and (d) the $2,488,000 of federal income taxes relating to years
prior to 1994 under the settlement initiative with the Internal Revenue Service
as described in Note 5 to the consolidated financial statements for the year
ended December 31, 1994.
The Company has no agreements in place for the extension of credit because no
such arrangements are deemed necessary.
Three Months Ended March 31, 1995 Compared to 1994:
The comparative operating results are impacted by acquisitions as described in
Note 4 to the Consolidated Financial Statements.
Total revenues increased 20.9% for the quarter (11.2% excluding acquisitions).
Advertising revenue increased 13.6% (11.2% excluding acquisitions) from
increases in local and national advertising in the business journals and a
84.6% (50.0% excluding acquisitions) increase in advertising in the motorsports
publications. 22 of the 27 business journals operated throughout both periods
increased advertising revenue. Advertising revenue, which comprised 69.6% of
total revenue in the first quarter of 1995, is sensitive to change in economic
conditions and a slowdown in the economy could adversely impact this revenue.
Circulation revenue increased 21.3% (10.5% excluding acquisitions) from an 8.9%
increase in the business journals on a 2.9% increase in paid circulation and a
63.0% increase (16.3% excluding acquisitions) in the motorsports publications.
Paid circulation of the business journals was 328,203 at March 31, 1995.
Other revenue increased 142.5% during the quarter primarily from the inclusion
of Performance Printing Co. For publications operated throughout both periods,
other revenue increased 16.3%.
Operating expenses increased 19.0% (7.7% at publications operated throughout
both periods.) The increase consisted of normal compensation increases,
increased commissions on the increase in advertising sales, and some increase
in printing and distribution expenses.
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Operating income increased $624,000 or 48.8% to $1,903,000 for the quarter
from increases in advertising and circulation revenue. Operating income as a
percent of total revenue increased from 6.2% in 1994 to 7.7% in 1995.
Net interest expense decreased $79,000 from the first quarter of 1994 primarily
from an increased level of invested funds. There were modest changes in debt
outstanding and a 1% increase in the interest rate on the Company's $20 series
promissory notes.
The Company recorded income tax expense in the first quarter of 1995 at an
estimated effective rate of 41%, compared to an effective rate of 42% in the
first quarter of 1994.
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PART II OTHER INFORMATION
Item 1. Legal Proceedings
NOT APPLICABLE
Item 2. Changes in Securities
NOT APPLICABLE
Item 3. Defaults Upon Senior Securities
NOT APPLICABLE
Item 4. Submission of Matters to a Vote of Security-Holders
NOT APPLICABLE
Item 5. Other Matters
NOT APPLICABLE
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) The following Reports on Form 8-K were filed during the
quarter for which this report is filed.
None
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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 hereunto duly authorized.
American City Business Journals, Inc.
(Registrant)
Date: April 27, 1995 By: /s/ Ray Shaw
-----------------------------
Ray Shaw
Chairman and
Chief Executive Officer
By: /s/ Grant Hamrick
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Grant Hamrick
Senior Vice President and
Chief Financial Officer