UNITED STATES
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 September 30, 2002. |
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 333-96619
| Block Communications, Inc. |
| (Exact name of registrant as specified in its charter) |
| Ohio | 34-4374555 | |||
| (State or other jurisdiction of | (I.R.S. Employer | |||
| incorporation or organization) | Identification Number) | |||
| 541 N. Superior Street, Toledo, Ohio 43660 |
| (Address of principal executive offices) (Zip code) |
| (419) 724-6257 |
| (Registrant’s telephone number, including area code) |
| 541 N. Superior Street, P.O. Box 921, Toledo, Ohio 43697-0921 |
| (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 shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for past 90 days. YES [ ] NO [X]
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.
| Voting Common Stock,
(par value $.10) |
Non-voting Common
Stock, (par value $.10) |
|||
| 29,400 shares as of November 13, 2002 | 427,786 shares as of November 13, 2002 |
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
|
Item 1. Financial Statements
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
Management’s Discussion and Analysis of Financial Condition
and Results of Operations
|
Item 4. Controls and procedures
|
PART II. OTHER INFORMATION
|
Item 6. Exhibits and reports on Form 8-K
|
SIGNATURES
|
Certification of the Managing Director
|
Certification of the Chief Financial Officer
|
PART I. FINANCIAL INFORMATION
Block Communications, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
| September 30 | December 31 | |||||
| 2002 | 2001 | |||||
| (unaudited) | (note 1) | |||||
Assets
|
||||||
Current assets:
|
||||||
Cash and cash equivalents
|
$ | 13,639,504 | $ | 5,882,732 | ||
Receivables, less allowances for doubtful accounts and
discounts of $4,327,416 and $4,861,094, respectively
|
39,044,573 | 45,892,946 | ||||
Recoverable income taxes
|
8,546,646 | 4,483,300 | ||||
Inventories
|
7,275,714 | 5,548,784 | ||||
Prepaid expenses
|
2,024,643 | 3,703,756 | ||||
Broadcast rights
|
6,861,966 | 6,083,782 | ||||
Deferred income taxes
|
6,657,225 | 9,803,800 | ||||
Total current assets
|
84,050,271 | 81,399,100 | ||||
Property, plant and equipment:
|
||||||
Land and land improvements
|
12,208,365 | 12,194,446 | ||||
Buildings and leasehold improvements
|
41,483,269 | 41,186,933 | ||||
Machinery and equipment
|
212,182,037 | 209,196,143 | ||||
Cable television distribution systems and equipment
|
188,187,544 | 187,804,505 | ||||
Security alarm and video systems installation costs
|
6,427,522 | 5,923,280 | ||||
Construction in progress
|
16,240,442 | 11,495,916 | ||||
| 476,729,179 | 467,801,223 | |||||
Less allowances for depreciation and amortization
|
227,005,281 | 204,605,517 | ||||
| 249,723,898 | 263,195,706 | |||||
Other assets:
|
||||||
Goodwill
|
53,656,362 | 52,461,687 | ||||
Other intangibles, net of accumulated amortization
|
38,384,439 | 31,451,414 | ||||
Deferred income taxes
|
9,668,567 | 12,946,900 | ||||
Prepaid pension costs
|
12,783,347 | 11,145,446 | ||||
Cash value of life insurance, net of policy loans of $0 and $12,735,560, respectively
|
25,076,312 | 10,691,105 | ||||
Pension intangibles
|
7,230,030 | 7,230,030 | ||||
Broadcast rights, less current portion
|
7,656,104 | 6,217,880 | ||||
Deferred financing costs
|
12,590,560 | 5,676,725 | ||||
Other
|
2,921,804 | 3,138,246 | ||||
| 169,967,525 | 140,959,433 | |||||
| $ | 503,741,694 | $ | 485,554,239 | |||
PART I. FINANCIAL INFORMATION
Financial Statements
| September 30 2002 |
December 31 2001 |
|||||||
| (unaudited) | (note 1) | |||||||
Liabilities and stockholders’ equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 11,529,060 | $ | 12,355,122 | ||||
Salaries, wages and payroll taxes
|
15,691,972 | 16,321,468 | ||||||
Workers’ compensation and medical reserves
|
8,588,765 | 9,184,074 | ||||||
Other accrued liabilities
|
35,935,444 | 33,946,679 | ||||||
Current maturities of long-term debt
|
1,045,200 | 9,908,334 | ||||||
Total current liabilities
|
72,790,441 | 81,715,677 | ||||||
Long-term debt, less current maturities
|
260,361,550 | 227,355,513 | ||||||
Other long-term obligations
|
118,171,686 | 126,635,551 | ||||||
Minority interest
|
12,486,453 | 12,264,398 | ||||||
Stockholders’ equity:
|
||||||||
5% Non-cumulative, non-voting Class A Stock, par value $100 a share
(entitled in liquidation to $100 per share in priority over Common Stock)--15,680 shares authorized; 12,620
shares issued and outstanding
|
1,262,000 | 1,262,000 | ||||||
Common Stock, par value $.10 a share:
|
||||||||
Voting Common Stock--29,400 shares authorized,
issued and outstanding
|
2,940 | 2,940 | ||||||
Non-voting Common Stock--588,000 shares authorized; 427,786
shares issued and outstanding
|
42,779 | 42,779 | ||||||
Accumulated other comprehensive loss
|
(4,386,486 | ) | (4,725,589 | ) | ||||
Additional paid-in capital
|
771,274 | 771,274 | ||||||
Retained earnings
|
42,239,057 | 40,229,696 | ||||||
| 39,931,564 | 37,583,100 | |||||||
| $ | 503,741,694 | $ | 485,554,239 | |||||
See accompanying notes.
PART I. FINANCIAL INFORMATION
Financial Statements
Block Communications, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (unaudited)
| Three months ended | Nine months ended | ||||||||||||||
| September 30 | September 30 | ||||||||||||||
| 2002 | 2001 | 2002 | 2001 | ||||||||||||
Revenue:
|
|||||||||||||||
Publishing
|
$ | 62,100,899 | $ | 65,896,144 | $ | 188,310,327 | $ | 195,610,215 | |||||||
Cable
|
25,204,115 | 22,567,781 | 75,541,372 | 65,952,776 | |||||||||||
Broadcasting
|
9,439,506 | 8,083,412 | 28,126,969 | 25,676,117 | |||||||||||
Other Communications
|
6,634,754 | 5,310,748 | 19,639,946 | 16,840,764 | |||||||||||
| 103,379,274 | 101,858,085 | 311,618,614 | 304,079,872 | ||||||||||||
Expense:
|
|||||||||||||||
Publishing
|
60,888,697 | 66,160,637 | 183,635,801 | 196,943,958 | |||||||||||
Cable
|
22,425,860 | 19,147,290 | 67,631,965 | 56,232,854 | |||||||||||
Broadcasting
|
8,589,109 | 8,898,327 | 26,598,294 | 27,499,396 | |||||||||||
Other Communications
|
6,193,733 | 6,538,829 | 19,073,047 | 20,075,914 | |||||||||||
Corporate general and administrative
|
1,512,473 | 96,965 | 2,969,548 | 1,047,224 | |||||||||||
| 99,609,872 | 100,842,048 | 299,908,655 | 301,799,346 | ||||||||||||
Operating income
|
3,769,402 | 1,016,037 | 11,709,959 | 2,280,526 | |||||||||||
Nonoperating income (expense):
|
|||||||||||||||
Interest expense
|
(6,037,895 | ) | (4,757,348 | ) | (16,680,122 | ) | (14,179,801 | ) | |||||||
Gain (loss) on disposition of Monroe Cablevision
|
(459,360 | ) | — | 21,140,829 | — | ||||||||||
Loss on early extinguishment of debt
|
— | — | (8,989,786 | ) | — | ||||||||||
Change in fair value of interest rate swaps
|
(2,472,043 | ) | (5,296,326 | ) | (2,193,986 | ) | (6,201,349 | ) | |||||||
Interest income
|
115,573 | 35,639 | 146,520 | 64,221 | |||||||||||
| (8,853,725 | ) | (10,018,035 | ) | (6,576,545 | ) | (20,316,929 | ) | ||||||||
Income (loss) before income taxes and minority interest
|
(5,084,323 | ) | (9,001,998 | ) | 5,133,414 | (18,036,403 | ) | ||||||||
Provision (credit) for income taxes
|
(1,846,026 | ) | (2,497,162 | ) | 2,230,387 | (5,093,461 | ) | ||||||||
Income (loss) before minority interest
|
(3,238,297 | ) | (6,504,836 | ) | 2,903,027 | (12,942,942 | ) | ||||||||
Minority interest
|
(134,934 | ) | 145,339 | (222,055 | ) | 185,777 | |||||||||
Net income (loss)
|
$ | (3,373,231 | ) | $ | (6,359,497 | ) | $ | 2,680,972 | $ | (12,757,165 | ) | ||||
See accompanying notes.
PART I. FINANCIAL INFORMATION
Financial Statements
Block Communications, Inc. and Subsidiaries
Condensed Consolidated Statement of Stockholders’ Equity (unaudited)
| Common Stock | |||||||||||||||||||||||||||||||||||||||
| Accumulated | |||||||||||||||||||||||||||||||||||||||
| Class A Stock | Voting | Non-Voting | Other | Additional | |||||||||||||||||||||||||||||||||||
| Comprehensive | Paid-in | Retained | |||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Loss | Capital | Earnings | Total | ||||||||||||||||||||||||||||||
Balances at January 1, 2002
|
12,620 | $ | 1,262,000 | 29,400 | $ | 2,940 | 427,786 | $ | 42,779 | $ | (4,725,589 | ) | $ | 771,274 | $ | 40,229,696 | $ | 37,583,100 | |||||||||||||||||||||
Net income
|
2,680,972 | 2,680,972 | |||||||||||||||||||||||||||||||||||||
Amortization of fair value of interest rate swaps at January 1,
2001 (net of deferred tax of $190,875)
|
339,103 | 339,103 | |||||||||||||||||||||||||||||||||||||