UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 20549
Form 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 28, 2004
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: 1-6383
MEDIA GENERAL, INC.
(Exact name of registrant as specified in its charter)
| Commonwealth of Virginia | 54-0850433 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| 333 E. Franklin St., Richmond, VA | 23219 | |
| (Address of principal executive offices) | (Zip Code) | |
(804) 649-6000
(Registrant’s telephone number, including area code)
N/A
(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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of May 2, 2004.
| Class A Common shares: |
23,153,280 | |
| Class B Common shares: |
555,992 |
TABLE OF CONTENTS
FORM 10-Q REPORT
March 28, 2004
| Page | ||||
| Part I. Financial Information |
||||
| Item 1. |
||||
| Consolidated Condensed Balance Sheets - March 28, 2004, and December 28, 2003 |
1 | |||
| 3 | ||||
| 4 | ||||
| 5 | ||||
| Item 1. |
15 | |||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
15 | ||
| Item 4. |
20 | |||
| Part II. Other Information |
||||
| Item 6. |
20 | |||
| 21 | ||||
PART I - FINANCIAL INFORMATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(000’s except shares)
| (Unaudited) March 28, 2004 |
December 28, 2003 | |||||
| ASSETS |
||||||
| Current assets: |
||||||
| Cash and cash equivalents |
$ | 8,083 | $ | 10,575 | ||
| Accounts receivable - net |
101,160 | 113,226 | ||||
| Inventories |
7,326 | 6,171 | ||||
| Other |
34,492 | 32,649 | ||||
| Total current assets |
151,061 | 162,621 | ||||
| Investments in unconsolidated affiliates |
89,828 | 89,994 | ||||
| Other assets |
62,140 | 60,277 | ||||
| Property, plant and equipment - net |
428,936 | 434,088 | ||||
| Excess of cost over fair value of net identifiable assets of acquired businesses - net |
832,004 | 832,004 | ||||
| FCC licenses and other intangibles - net |
803,662 | 807,771 | ||||
| $ | 2,367,631 | $ | 2,386,755 | |||
See accompanying notes.
1
MEDIA GENERAL, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(000’s except shares)
| (Unaudited) March 28, |
December 28, 2003 |
|||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 18,927 | $ | 22,210 | ||||
| Accrued expenses and other liabilities |
75,019 | 83,424 | ||||||
| Income taxes payable |
— | 8,769 | ||||||
| Total current liabilities |
93,946 | 114,403 | ||||||
| Long-term debt |
547,455 | 531,969 | ||||||
| Borrowings of consolidated variable interest entities |
95,320 | 95,320 | ||||||
| Deferred income taxes |
373,485 | 362,769 | ||||||
| Other liabilities and deferred credits |
141,728 | 174,833 | ||||||
| Stockholders’ equity: |
||||||||
| Preferred stock ($5 cumulative convertible), par value $5 per share, authorized 5,000,000 shares; none outstanding |
||||||||
| Common stock, par value $5 per share: |
||||||||
| Class A, authorized 75,000,000 shares; issued 23,058,338 and 22,989,506 shares |
115,292 | 114,947 | ||||||
| Class B, authorized 600,000 shares; issued 555,992 shares |
2,780 | 2,780 | ||||||
| Additional paid-in capital |
37,933 | 34,595 | ||||||
| Accumulated other comprehensive loss |
(51,332 | ) | (50,984 | ) | ||||
| Unearned compensation |
(11,105 | ) | (11,670 | ) | ||||
| Retained earnings |
1,022,129 | 1,017,793 | ||||||
| Total stockholders’ equity |
1,115,697 | 1,107,461 | ||||||
| $ | 2,367,631 | $ | 2,386,755 | |||||
See accompanying notes.
2
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(000’s except for per share data)
| Three Months Ended |
||||||||
| March 28, 2004 |
March 30, 2003 |
|||||||
| Revenues |
$ | 208,156 | $ | 196,088 | ||||
| Operating costs: |
||||||||
| Production |
93,096 | 90,065 | ||||||
| Selling, general and administrative |
75,267 | 73,416 | ||||||
| Depreciation and amortization |
17,268 | 17,073 | ||||||
| Total operating costs |
185,631 | 180,554 | ||||||
| Operating income |
22,525 | 15,534 | ||||||
| Other income (expense): |
||||||||
| Interest expense |
(7,971 | ) | (9,868 | ) | ||||
| Investment loss - unconsolidated affiliates |
(169 | ) | (2,216 | ) | ||||
| Other, net |
59 | 6,980 | ||||||
| Total other expense |
(8,081 | ) | (5,104 | ) | ||||
| Income from continuing operations before income taxes |
14,444 | 10,430 | ||||||
| Income taxes |
5,344 | 3,808 | ||||||
| Income from continuing operations |
9,100 | 6,622 | ||||||
| Income from discontinued operations (net of tax) |
— | 389 | ||||||
| Net income |
$ | 9,100 | $ | 7,011 | ||||
| Earnings per common share: |
||||||||
| Income from continuing operations |
$ | 0.39 | $ | 0.28 | ||||
| Discontinued operations |
— | 0.02 | ||||||
| Net income |
$ | 0.39 | $ | 0.30 | ||||
| Earnings per common share – assuming dilution: |
||||||||
| Income from continuing operations |
$ | 0.38 | $ | 0.28 | ||||
| Discontinued operations |
— | 0.02 | ||||||
| Net income |
$ | 0.38 | $ | 0.30 | ||||
| Dividends paid per common share |
$ | 0.20 | $ | 0.19 | ||||
See accompanying notes.
3
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(000’s)
| Three Months Ended |
||||||||
| March 28, 2004 |
March 30, 2003 |
|||||||
| Operating activities: |
||||||||
| Net income |
$ | 9,100 | $ | 7,011 | ||||
| Adjustments to reconcile net income: |
||||||||
| Depreciation and amortization |
17,268 | 17,094 | ||||||
| Deferred income taxes |
14,311 | 2,007 | ||||||
| Investment loss - unconsolidated affiliates |
169 | 2,216 | ||||||
| Gain on sale of investment |
— | (5,746 | ) | |||||
| Change in assets and liabilities: |
||||||||
| Retirement plan contribution |
(35,000 | ) | — | |||||
| Accounts receivable and inventories |
10,911 | 14,852 | ||||||
| Accounts payable, accrued expenses, and other liabilities |
(7,403 | ) | (8,327 | ) | ||||
| Taxes payable/receivable |
(12,708 | ) | (3,714 | ) | ||||
| Reduction in advance from unconsolidated newsprint affiliate |
— | (6,000 | ) | |||||
| Other |
(4,980 | ) | 1,912 | |||||
| Net cash (used) provided by operating activities |
(8,332 | ) | 21,305 | |||||
| Investing activities: |
||||||||
| Capital expenditures |
(6,942 | ) | (7,183 | ) | ||||
| Proceeds from sale of investment |
— | 16,840 | ||||||
| Other, net |
(1,608 | ) | 64 | |||||
| Net cash (used) provided by investing activities |
(8,550 | ) | 9,721 | |||||
| Financing activities: |
||||||||
| Increase in debt |
112,000 | 76,000 | ||||||
| Payment of debt |
(96,514 | ) | (104,997 | ) | ||||
| Dividends paid |
(4,720 | ) | (4,441 | ) | ||||
| Other, net |
3,624 | 379 | ||||||
| Net cash provided (used) by financing activities |
14,390 | (33,059 | ) | |||||
| Net decrease in cash and cash equivalents |
(2,492 | ) | (2,033 | ) | ||||
| Cash and cash equivalents at beginning of period |
10,575 | 11,279 | ||||||
| Cash and cash equivalents at end of period |
$ | 8,083 | $ | 9,246 | ||||
| Supplemental disclosures of cash flow information: |
||||||||
| Cash paid during the period for: |
||||||||
| Interest (net of amount capitalized) |
$ | 7,194 | $ | 9,217 | ||||
| Income taxes |
$ | 1,479 | $ | 3,551 | ||||
See accompanying notes.
4
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial reporting, and with applicable quarterly reporting regulations of the Securities and Exchange Commission. They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements and, accordingly, should be read in conjunction with the consolidated financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 28, 2003.
In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of interim financial information have been included. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the full fiscal year.
2. Inventories are principally raw materials (primarily newsprint).
3. In March 2003, the Company sold its shares of Hoover’s (a provider of business information) for $16.8 million and reported a gain of $5.7 million ($3.7 million net of income taxes) which is included in the line item Other, net. Proceeds from the sale were used to repay debt.
4. The following table provides the components of net periodic benefit cost for the Company’s benefit plans for the first quarter of 2004 and 2003:
| Pension Benefits |
Other Benefits | |||||||||||||
| (In thousands)
|
March 28, 2004 |
March 30, 2003 |
March 28, 2004 |
March 30, 2003 | ||||||||||
| Service cost |
$ | 2,987 | $ | 2,768 | $ | 117 | $ | 97 | ||||||
| Interest cost |
5,098 | 4,901 | 617 | 635 | ||||||||||
| Expected return on plan assets |
(6,256 | ) | (5,489 | ) | — | — | ||||||||
| Amortization of prior-service cost |
965 | 111 | 163 | — | ||||||||||
| Amortization of net loss |
— | — | — | |||||||||||