<PAGE> 1
FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
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 No. 0-9334
TURNER BROADCASTING SYSTEM, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-0950695
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
One CNN Center
Atlanta, Georgia 30303
---------------------- ----------
(Address of principal (Zip Code)
executive offices)
(404) 827-1700
----------------------------------------------------
(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 X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Outstanding at
Class June 30, 1994
- ------------------------- -----------------
Class A Common Stock, par
value $0.0625 68,330,388
Class B Common Stock, par
value $0.0625 137,306,567
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TURNER BROADCASTING SYSTEM, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
UNAUDITED
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1994 1993
---------- ----------
<S> <C> <C>
ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . $ 124,469 $ 162,858
Accounts receivable, less allowance of
$26,860 and $23,083
Unaffiliated . . . . . . . . . . . . . . . . . . . . . . . . . . . . 468,949 378,228
Affiliated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,606 94,011
Film costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 490,399 314,637
Installment contracts receivable, less
allowance of $12,359 and $11,915 . . . . . . . . . . . . . . . . . . . 41,219 56,563
Prepaid expense and other current assets . . . . . . . . . . . . . . . . . 75,420 68,196
---------- ----------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . 1,264,062 1,074,493
Film costs, less current portion . . . . . . . . . . . . . . . . . . . . . 1,696,627 1,633,731
Property and equipment, less accumulated
depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270,523 225,228
Installment contracts receivable, less
discount of $586 and $1,123 . . . . . . . . . . . . . . . . . . . . . 8,419 15,077
Goodwill and other intangible assets . . . . . . . . . . . . . . . . . . . 394,796 111,202
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199,041 185,131
---------- ----------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,833,468 $3,244,862
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . $ 235,827 $ 168,975
Deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113,825 106,496
Participants' share and royalties payable . . . . . . . . . . . . . . . . . 47,610 33,922
Interest payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,912 32,128
Film contracts payable . . . . . . . . . . . . . . . . . . . . . . . . . . 27,861 28,096
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . 1,965 2,051
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 108,901 42,240
---------- ----------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . 582,901 413,908
Long-term debt, less current portion . . . . . . . . . . . . . . . . . . . 2,357,160 2,294,557
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 399,005 395,668
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . 164,770 141,832
---------- ----------
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . 3,503,836 3,245,965
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) . . . . . . . . . . . . . . . . . 329,632 (1,103)
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) . . . . . . . . . . . . . . . . . . . . . . . . . . $3,833,468 $3,244,862
========== ==========
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
2
<PAGE> 3
TURNER BROADCASTING SYSTEM, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
------------------------ -----------------------
1994 1993 1994 1993
--------- -------- ---------- ---------
<S> <C> <C> <C> <C>
Revenue
Unaffiliated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 579,640 $387,955 $1,048,744 $ 696,864
Affiliated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98,007 98,906 196,207 188,421
--------- -------- ---------- ---------
677,647 486,861 1,244,951 885,285
--------- -------- ---------- ---------
Cost of operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 432,811 235,989 799,073 428,034
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . 175,815 139,339 331,446 258,372
Gain on sale of equity investment . . . . . . . . . . . . . . . . . . . . . . (21,746) - (21,746) -
Depreciation of property and equipment and
amortization of goodwill and other
intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,815 9,082 27,109 17,765
Interest expense, net of interest income . . . . . . . . . . . . . . . . . . 53,633 44,830 105,376 89,934
Equity in loss of unconsolidated entities . . . . . . . . . . . . . . . . . . 1,710 5,284 4,878 3,697
---------- -------- ---------- ---------
657,038 434,524 1,246,136 797,802
----------- -------- ---------- ---------
Income (loss) before provision for income
taxes and the cumulative effect of a change in
accounting for income taxes . . . . . . . . . . . . . . . . . . . . . . 20,609 52,337 (1,185) 87,483
Provision (benefit) for income taxes . . . . . . . . . . . . . . . . . . . . 7,690 21,266 (480) 36,277
----------- -------- ----------- ---------
Income (loss) before the cumulative effect of
a change in accounting for income taxes . . . . . . . . . . . . . . . . 12,919 31,071 (705) 51,206
Cumulative effect of a change in accounting for
income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - (306,000)
----------- -------- ---------- ---------
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,919 $ 31,071 $ (705) (254,794)
=========== ======== ========== =========
Earnings (loss) per common share and common stock
equivalents
Income before the cumulative effect of a
change in accounting for income taxes . . . . . . . . . . . . . . . . . . $ 0.05 $ 0.12 $ 0.00 $ 0.20
Cumulative effect of a change in accounting
for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - (1.16)
----------- -------- ---------- ---------
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.05 $ 0.12 $ 0.00 $ (0.96)
=========== ======== ========== =========
Weighted average number of common shares
outstanding, including conversion of common
stock equivalents, when diluted . . . . . . . . . . . . . . . . . . . . 282,626 264,360 202,847 264,302
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
3
<PAGE> 4
TURNER BROADCASTING SYSTEM, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
UNAUDITED
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------------------
1994 1993
------------- ---------
<S> <C> <C>
Cash provided by operations before changes
in film costs and liabilities, net, interest
payments and debt issue costs . . . . . . . . . . . . . . . . . . . . . . . . $ 117,591 $ 236,491
Change in film costs and liabilities, net
Purchased program rights . . . . . . . . . . . . . . . . . . . . . . . . . 40,390 33,327
Produced programming . . . . . . . . . . . . . . . . . . . . . . . . . . . (36,412) (3,996)
Licensed program rights . . . . . . . . . . . . . . . . . . . . . . . . . . (366) (12,356)
Interest payments, net of interest received . . . . . . . . . . . . . . . . (80,389) (66,967)
Debt issue costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,675) (526)
---------- ----------
Net cash provided by operations . . . . . . . . . . . . . . . . . . . . . . . . . 34,139 185,973
Cash provided by (used for) investing activities
Sale of equity investment . . . . . . . . . . . . . . . . . . . . . . . . . 107,978 -
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (144,882) (19,205)
Additions to property and equipment . . . . . . . . . . . . . . . . . . . . (55,578) (22,471)
---------- ----------
Net cash used for investing activities . . . . . . . . . . . . . . . . . . . . . (92,482) (41,676)
Cash provided by (used for) financing activities
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 599,610 -
Payments of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (575,623) (72,618)
Payments of cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . (4,901) (9,193)
Proceeds from exercise of stock options . . . . . . . . . . . . . . . . . . 868 865
--------- ---------
Net cash provided by (used for) financing activities . . . . . . . . . . . . . . 19,954 (80,946)
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . (38,389) 63,351
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . 162,858 126,256
--------- ---------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . $ 124,469 $ 189,607
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION AND NON-CASH INVESTING AND
FINANCING ACTIVITIES:
Cash paid for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,506 $ 9,152
Dividends declared but unpaid . . . . . . . . . . . . . . . . . . . . . . . . . . 4,901 -
The Company acquired New Line Cinema Corporation and assumed and incurred
liabilities as of January 28, 1994 (in thousands) as follows:
Fair value of assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . $ 667,600 -
Less: common stock issued or issuable . . . . . . . . . . . . . . . . . . . . . . 416,700 -
Less: cash paid for debt and other acquisition costs . . . . . . . . . . . . . . 139,600 -
---------
Liabilities assumed and incurred . . . . . . . . . . . . . . . . . . . . . . . . $ 111,300 -
=========
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
4
<PAGE> 5
TURNER BROADCASTING SYSTEM, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
UNAUDITED
NOTE 1. PREPARATION OF INTERIM CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The consolidated condensed financial statements included herein have
been prepared by Turner Broadcasting System, Inc. (the "Company" or "Turner")
pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of management, the accompanying consolidated
condensed financial statements contain all adjustments, which are of a normal
recurring nature, necessary for a fair presentation of such financial
statements. Although certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, management believes that the disclosures are adequate to make the
information presented not misleading. For further information, reference is
made to the consolidated financial statements and the notes thereto in the
Company's Form 10-K for the year ended December 31, 1993.
Certain prior year amounts have been reclassified to conform to the
current year presentation.
NOTE 2. FILM COSTS
The following table sets forth the components of unamortized film
costs (in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
1994 1993
----------------- -----------
<S> <C> <C>
Purchased program rights . . . . . . . . . . . . . . . . . . . . . . . $ 1,142,296 $ 1,172,921
Produced programming
Released . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259,424 166,768
Completed and not released . . . . . . . . . . . . . . . . . . . . . 53,768 17,654
In process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271,483 153,630
Episodic television . . . . . . . . . . . . . . . . . . . . . . . . 101,848 89,077
Licensed program and distribution rights . . . . . . . . . . . . . . . 241,039 231,385
Prepaid licensed program rights . . . . . . . . . . . . . . . . . . . 117,168 116,933
---------------- ------------
2,187,026 1,948,368
Less current portion . . . . . . . . . . . . . . . . . . . . . . . . . 490,399 314,637
---------------- ------------
$ 1,696,627 $ 1,633,731
================ ============
</TABLE>
Episodic television includes serial television episode program costs.
Prepaid licensed program rights represent licensed program rights for which
payments have been made but the films are not currently available for use. As
these programs become available for use they are reclassified to licensed
program rights.
On the basis of the Company's anticipated total gross revenue
estimates, over 82% of released and episodic television produced programming
costs at June 30, 1994 will be amortized within the three-year period ending
June 30, 1997.
Amortization of film costs included in Cost of Operations is composed
of the following (in thousands):
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
-------------------------- -----------------------
1994 1993 1994 1993
--------- --------- -------- --------
<S> <C> <C> <C> <C>
Purchased program rights . . . . . . . . . . . . . . . . $ 21,962 $ 18,942 $ 44,339 $ 37,859
Produced programming . . . . . . . . . . . . . . . . . . 210,739 68,565 377,515 124,403
Licensed program and distribution
rights . . . . . . . . . . . . . . . . . . . . . . . 19,468 17,313 39,181 34,696
Participants' share and royalties . . . . . . . . . . . . 8,060 7,049 23,399 15,011
--------- --------- -------- --------
$ 260,229 $ 111,869 $484,434 $211,969
========= ========= ======== ========
</TABLE>
5
<PAGE> 6
NOTE 3. EARNINGS (LOSS) PER COMMON SHARE AND COMMON STOCK EQUIVALENT
Net income (loss) per common share and common stock equivalent is
computed by dividing net income (loss) applicable to common stock by the
weighted average number of outstanding shares of common stock and common stock
equivalents, when dilutive, during the applicable periods in 1994 and 1993. In
1993 and for the three months ended June 30, 1994 common stock equivalents are
principally the incremental shares associated with the Class C Convertible
Preferred Stock (the "Class C Preferred Stock") and the outstanding stock
options. Fully-diluted income (loss) per share amounts are similarly computed,
but include the effect, when dilutive, of the Company's other potentially
dilutive securities. For the six-month period ended June 30, 1994, no common
stock equivalents are included in the calculation of primary earnings per
share, due to their anti-dilutive effect. The Company's zero coupon
subordinated convertible notes due 2007 and 2004 and the convertible
subordinated debentures of a wholly-owned subsidiary are excluded from the
fully-diluted calculations of net income (loss) per common share for the
three-month and six-month periods ended June 30, 1994 and 1993 (when
applicable) due to their anti-dilutive effect. The difference between the
primary and fully-diluted earnings per share is not significant.
NOTE 4. LONG-TERM DEBT
Long-term debt is summarized as follows (in thousands):
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1994 1993
-------------------- ---------------
<S> <C> <C>
Bank credit facilities . . . . . . . . . . . . . . . . . . . $ 800,000 $ 1,225,000
12% senior subordinated debentures . . . . . . . . . . . . . 536,886 536,732
8 3/8% Senior Notes . . . . . . . . . . . . . . . . . . . . . 297,352 297,325
Zero coupon subordinated convertible notes . . . . . . . . . 236,978 228,688
7.4% Senior Notes . . . . . . . . . . . . . . . . . . . . . . 249,624 -
8.4% Senior Debentures . . . . . . . . . . . . . . . . . . . 199,844 -
Convertible subordinated debentures of
a wholly-owned subsidiary . . . . . . . . . . . . . . . . . 29,125 -
Obligations under capital leases . . . . . . . . . . . . . . 7,260 6,353
Other long-term debt . . . . . . . . . . . . . . . . . . . . 2,056 2,510
---------------- -----------
2,359,125 2,296,608
Less current portion . . . . . . . . . . . . . . . . . . . . 1,965 2,051
---------------- -----------
$ 2,357,160 $ 2,294,557
================ ===========
</TABLE>
On May 6, 1993, the Company filed a shelf registration statement with the
Securities and Exchange Commission (the "Shelf Registration") to allow the
Company to offer, from time to time, for sale up to $1,100,000,000 of
unsecured senior debt or unsecured senior subordinated debt securities,
consisting of notes, debentures or other evidences of indebtedness.
On February 3, 1994, the Company sold $250,000,000 of 7.4% Senior Notes
due 2004 (the "Senior Notes") and $200,000,000 of 8.4% Senior Debentures due
2024 (the "Senior Debentures" and, together with the Senior Notes, the
"Securities") under the Shelf Registration. The net proceeds to the Company
were approximately $246,282,000 and $196,680,000, respectively, after market
and underwriting discounts. The Senior Notes and Senior Debentures bear
interest at the rate of 7.4% and 8.4% per annum, respectively, payable
semi-annually on February 1 and August 1 of each year, commencing on August 1,
1994. The Senior Notes are not redeemable at the option of the Company. The
Senior Debentures are redeemable, at the Company's option, at any time after
February 1, 2004, at a redemption price of 104.161% of the principal amount,
plus accrued and unpaid interest to the date of redemption, which redemption
price reduces over 10 years to a redemption price of 100% of the principal
amount in 2014 and thereafter. Each holder has the right to require the
Company to repurchase such holder's Securities in whole, but not in part, at a
redemption price, payable in cash, equal to 101% of the principal amount, plus
accrued and unpaid interest to the date fixed for redemption, upon the
occurrence of certain triggering events, including, a change in control,
certain restricted payments or certain consolidations, mergers, conveyances or
transfers of assets, each as defined in the indenture relating to the
Securities. The Company is not required to make
6
<PAGE> 7
mandatory redemption or sinking fund payments with respect to the Securities
prior to maturity.
The Company has received firm commitments from banks participating in
its unsecured revolving credit facility (the "1993 Credit Agreement") to
provide a new $500 million unsecured revolving credit facility. The terms and
convenants that govern the new facility are identical to those associated with
the 1993 Credit Agreement. The new facility will be finalized in the third
quarter of 1994.
NOTE 5. STOCKHOLDERS' EQUITY (DEFICIT)
Stockholders' equity (deficit) consists of the following components (in
thousands, except share data):
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1994 1993
--------------- --------------
<S> <C> <C>
Class C Convertible Preferred Stock, par
value $0.125; authorized 12,600,000 shares;
issued and outstanding 12,396,976 shares . . . . . . . . . . $ 260,438 $ 260,438
Class A Common Stock, par value $0.0625;
authorized 75,000,000 shares; issued and
outstanding 68,330,388 shares . . . . . . . . . . . . . . . . 4,271 4,271
Class B Common Stock, par value $0.0625;
authorized 300,000,000 shares; issued and
outstanding 137,306,567 and 120,887,672
shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,582 7,555
Capital in excess of par value . . . . . . . . . . . . . . . . 1,071,126 731,042
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . (1,014,785) (1,004,409)
--------------- --------------
Total stockholders' equity (deficit) . . . . . . . . . . . $ 329,632 $ (1,103)
=============== ==============
</TABLE>
See Note 6 of the Notes to Consolidated Condensed Financial Statements
for a discussion of the increase of approximately 16,000,000 shares of
outstanding Class B Common Stock in connection with the merger of New Line
Cinema Corporation with a wholly-owned subsidiary of the Company in the first
quarter of 1994, which increased Class B Common Stock and Capital in excess of
par value by approximately $1,000,000 and $340,000,000, respectively.
On March 15, 1994, and June 15, 1994, the Board of Directors declared a
cash dividend on the Company's outstanding shares of Class A Common Stock and
Class B Common Stock, payable at the rate of $0.0175 for each share held on the
record date. In addition, holders of the Company's outstanding Class C
Convertible Preferred Stock were entitled to an equivalent cash dividend of
$0.105 for each share held on the record date based on the number of shares of
Class B Common Stock which would be receivable upon conversion of each share of
Class C Convertible Preferred Stock. Cash dividends of $4,901,000 and
$4,901,000 were paid on April 15, 1994 and July 15, 1994 to shareholders of
record at the close of business on March 30, 1994 and June 30, 1994,
respectively.
The Company's ability to pay cash dividends to holders of shares of the
Class A and Class B common stock and the Class C Convertible Preferred Stock is
subject to certain covenants in the Company's outstanding debt instruments,
currently the most restrictive of which limits the maximum aggregate amount of
dividends permitted to be paid annually to such holders to $30,000,000.
NOTE 6. ACQUISITION
The Company and New Line Cinema Corporation ("New Line"), a motion
picture production company, completed a merger of New Line with a wholly-owned
subsidiary of the Company on January 28, 1994 (the "Merger"). As a result of
the Merger, each share of New Line Common Stock has been converted into the
right to receive 0.96386 of a share of the Company's Class B Common Stock. The
valuations used by New Line and the Company for purposes of arriving at the
exchange ratio were $20 per share of New Line Common Stock and $20.75 per share
of the Company's Class B Common Stock. The maximum number of shares of Class B
Common Stock issuable pursuant to the Merger is approximately 21,300,000 valued
at approximately $442,000,000. Cash will be distributed in lieu of any
fractional shares. At June 30, 1994
7
<PAGE> 8
approximately 16,200,000 shares of the Company's Class B Common Stock had been
issued in connection with the Merger. The remaining shares are issuable upon
the exercise of New Line stock options and warrants and the conversion of the
New Line convertible subordinated debentures discussed below. Additionally, the
Company assumed and incurred liabilities of approximately $111,000,000 and paid
debt and certain other acquisition costs of approximately $140,000,000 in
connection with the Merger. Liabilities assumed in the Merger included
$29,125,000 of convertible subordinated debentures (the "Convertible
Debentures") which bear interest at the rate of 6 1/2% per annum. The
Convertible Debentures are convertible at the option of the holders into a total
of approximately 1,700,000 shares of Class B Common Stock.
At the time of the Merger, New Line owned a 37.4% equity interest in
RHI Entertainment, Inc. ("RHI"). In April 1994, New Line entered into an
agreement to tender for cash its equity interest in RHI which totaled
approximately 3,000,000 shares, to an unaffiliated entity for $36 per share.
In June 1994, the Company received approximately $108,000,000 in cash in
connection with the transaction and recognized a pre-tax gain of
approximately $22,000,000.
The Merger was accounted for by the purchase method of accounting.
Goodwill and other intangible assets in the amount of approximately
$290,000,000 was recognized in the transaction, and is amortized using a
straight-line basis over 40 years. The Company has not yet received appraisals
or valuations from independent third parties of the assets or properties of New
Line. Therefore, goodwill and other intangible asset amounts may be adjusted
once complete information on the fair value of all of New Line's assets and
liabilities is developed and once a more thorough review of New Line's
operating and accounting policies and procedures has been completed.
The following unaudited pro forma condensed combined results of
operations for the three and six months ended June 30, 1993 are not intended to
reflect results of operations which would have actually resulted had the Merger
been effective on the date indicated. Moreover, this information is not
intended to be indicative of results of operations which may be obtained in the
future. The pro forma condensed combined results of operations for the three
and six months ended June 30, 1993 include the Merger and the December 1993
acquisitions of Castle Rock Entertainment ("Castle Rock") and the remaining 50%
interest in Hanna-Barbera Holding Co. ("Hanna-Barbera") assuming the Company
acquired all of the outstanding stock of New Line pursuant to the Merger and
completed the acquisitions at January 1, 1993. The pro forma effect of the
Merger for the three and six months ended June 30, 1994 is not considered
significant.
8
<PAGE> 9
The unaudited pro forma condensed combined results of operations for
the three and six months ended June 30, 1993 are as follows (in thousands):
<TABLE>
<CAPTION>
Three months Six months
ended ended
June 30, June 30,
1993 1993
---------------- --------------
<S> <C> <C>
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 595,326 $ 1,137,609
================ ==============
Income before the cumulative effect of a change
in accounting for income taxes . . . . . . . . . . . . . . . . . . . $ 26,867 $ 37,100
Cumulative effect of a change in accounting
for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . - (306,000)
---------------- --------------
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . $ 26,867 $ (268,900)
================ ==============
Earnings (loss) per common share and common stock
equivalents
Income before the cumulative effect of a
change in accounting for income taxes . . . . . . . . . . . . . $ 0.09 $ 0.13
Cumulative effect of a change in
accounting for income taxes . . . . . . . . . . . . . . . . . . - (1.09)
---------------- --------------
Net income (loss) . . . . . . . . . . . . . . . . . . . . $ 0.09 $ (0.96)
================ ==============
</TABLE>
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
SOURCES AND USES OF CASH
Cash provided by operations for the six months ended June 30, 1994
aggregated $34 million, net of interest payments and debt issue costs of $87
million and a net change in film costs and liabilities of $4 million. Primary
sources of cash included proceeds of $108 million from the sale of an equity
investment, borrowings under the unsecured revolving credit facility of $150
million, and approximately $250 million and $200 million of gross proceeds from
the Senior Notes and Senior Debentures, respectively. Primary uses of cash
during the period were payments of indebtedness of $576 million, payments of
debt and certain other acquisition costs in connection with the Merger of $140
million and additions to property and equipment of $56 million.
See the Consolidated Condensed Statements of Cash Flows for additional
details regarding sources and uses of cash and Note 4 of Notes to Consolidated
Condensed Financial Statements for additional information about the Company's
indebtedness.
CREDIT FACILITIES AND FINANCING ACTIVITIES
The Company had approximately $2.4 billion of outstanding indebtedness
at June 30, 1994, of which $800 million was outstanding under an unsecured
revolving credit facility with banks. The Company has received firm
commitments from banks participating in its unsecured revolving credit facility
(the "1993 Credit Agreement") to provide a new $500 million unsecured revolving
credit facility. The terms and convenants that govern the new facility are
identical to those associated with the 1993 Credit Agreement. The new facility
will be finalized in the third quarter of 1994.
Approximately $800 million of the Company's indebtedness bears
interest on a floating basis tied to short-term market indices. The Company
has interest rate swap agreements having a total notional principal amount of
$530 million with commercial banks to mitigate possible rising interest rates.
A contract with a total notional principal amount of $250 million expired in
March 1994, and the remaining contracts have expiration dates ranging from
November 1994 to March 1995. These agreements are designated as hedges of
interest rates, and the differential to be paid or received on interest rate
swaps is accrued as an adjustment to interest expense as interest rates change.
On May 6, 1993, the Company filed a registration statement with the
Securities and Exchange Commission (the "Shelf Registration") to allow the
Company to offer, from time to time, for sale up to $1.1 billion of
unsecured senior debt or unsecured senior subordinated debt securities,
consisting of notes, debentures or other evidences of indebtedness.
On February 3, 1994, the Company sold $250 million of Senior Notes and
$200 million of Senior Debentures under the Shelf Registration. The net
proceeds to the Company were approximately $246 million and $197 million,
respectively, after market and underwriting discounts. The Senior Notes and
Senior Debentures bear interest at the rate of 7.4% and 8.4% per annum,
respectively, payable semi-annually on February 1 and August 1 of each year,
commencing on August 1, 1994. The Senior Notes are not redeemable at the
option of the Company. The Senior Debentures are redeemable, at the Company's
option, at any time after February 1, 2004, at a redemption price of 104.161%
of the principal amount, plus accrued and unpaid interest to the date of
redemption, which redemption price reduces over 10 years to a redemption price
of 100% of the principal amount in 2014 and thereafter. Each holder has the
right to require the Company to repurchase such
10
<PAGE> 11
holder's Securities in whole, but not in part, at a redemption price,
payable in cash, equal to 101% of the principal amount, plus accrued and unpaid
interest to the date fixed for redemption, upon the occurrence of certain
triggering events, including a change in control, certain restricted payments
or certain consolidations, mergers, conveyances or transfers of assets, each as
defined in the indenture relating to the Securities. The Company is not
required to make mandatory or sinking fund payments with respect to the
Securities prior to maturity.
CAPITAL RESOURCES AND COMMITMENTS
During the next 12 months, the Company anticipates making cash
expenditures of approximately $260 million for sports programming, primarily
rights fees, approximately $730 million for original entertainment programming
(excluding promotional and advertising costs) and approximately $100 million
for licensed programming. Also, during the next 12 months, the Company expects
to make total expenditures of approximately $105 million for additional or
replacement property and equipment. Of the anticipated programming and capital
expenditures described above, firm commitments exist for approximately $530
million. Other capital resource commitments consist primarily of lease
obligations, some of which are contingent on revenues derived from usage.
Management expects to continue to lease satellite facilities, sports facilities
and office facilities not already owned by the Company.
Management expects to finance these commitments from working capital
provided by operations and financing arrangements with lessors, vendors, film
suppliers and additional borrowings.
OTHER
On July 28, 1994, members of the Major League Baseball Players
Association, which includes the Atlanta Braves players, announced that a strike
of major league baseball games would begin on August 12, 1994, unless players
and club owners resolve certain collective bargaining agreement issues. The
financial impact on the Company is difficult to predict due to the uncertainty
as to the length of the strike. However, in the event the strike lasts the
remainder of the 1994 season, it could adversely impact anticipated 1994
operating profit by as much as $14 million.
RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 1994 VS. THREE MONTHS ENDED
JUNE 30, 1993
ENTERTAINMENT SEGMENT
Entertainment Segment revenue increased $178 million to $459 million,
of which $132 million was contributed by New Line, Castle Rock and the
consolidated operations of Hanna-Barbera which were not owned as of June 30,
1993. Advertising revenue rose $24 million, or 15%, due primarily to increased
rates for Turner Network Television ("TNT") and TBS SuperStation, and an
increase in sports revenue associated with coverage of the National Basketball
Association (the "NBA") on TNT and the number of Atlanta Braves telecasts
aired on TBS SuperStation. The remaining $22 million increase was related to
higher subscription, home video and licensing and merchandising revenue.
Operating profit for the Entertainment Segment decreased $46 million,
principally due to lower than anticipated results from theatrical film releases
and $26 million in losses this quarter related to the 1994 Goodwill Games.
Total losses for the 1994 Goodwill Games, upon their completion, were $39
million, including amounts expensed in prior periods. In addition, increased
combined operating losses of $4 million during the quarter on new networks
were offset by operating profit increases in core businesses.
11
<PAGE> 12
NEWS SEGMENT
News Segment revenue increased $10 million, or 7%, primarily related
to increased subscription revenue from the home satellite market and increases
associated with CNN International, where advertising and broadcast licensing
fees contributed to a 20%, or $5 million, revenue increase for the service.
Domestic advertising revenue was essentially flat, due to lower viewership for
CNN and Headline News early in the quarter, offset by higher viewership late in
the quarter.
Revenue increases were offset by increases in operating expenses
related to higher newsgathering costs and the expansion of CNN International.
As a result, operating profit for the News Segment was unchanged compared to
the same period in 1993.
OTHER SEGMENT
Revenue increased $5 million, or 8%, primarily due to increased
home-game revenue for the Atlanta Braves. Operating losses increased
$3 million as a result of increased Braves' player salaries and planned
investment in the Company's information technology systems.
EQUITY IN INCOME (LOSS) OF UNCONSOLIDATED ENTITIES/OTHER CONSOLIDATED
INFORMATION
Operating losses decreased $4 million, primarily due to increased
playoff revenues and the expensing in the prior year of a guaranteed contract
for an injured player associated with the Atlanta Hawks.
In June 1994, the Company sold its 37.4% equity investment in RHI
Entertainment, Inc. for approximately $108 million in cash and recognized a
pre-tax gain of approximately $22 million on the transaction.
Consolidated depreciation and amortization increased approximately
$6 million primarily due to the inclusion of New Line and Castle Rock in 1994.
Consolidated interest expense increased approximately $9 million
primarily due to the increase in debt associated with the purchase of Castle
Rock and Hanna-Barbera as well as assumed debt associated with the New Line
acquisition. The increase was somewhat offset by a lower effective interest
rate resulting from new debt incurred in 1993 and 1994.
As a result of the information discussed above, the Company reported
net income of $13 million in the second quarter of 1994 ($0.05 net income per
common share and common share equivalent). This compares to net income of
$31 million in the second quarter of 1993 ($0.12 net income per common share
and common share equivalent).
RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 1994 VS. SIX MONTHS ENDED
JUNE 30, 1993
ENTERTAINMENT SEGMENT
Entertainment Segment revenue increased $337 million to $852 million,
of which $263 million was contributed by New Line, Castle Rock and the
consolidated operations of Hanna-Barbera which were not owned as of June 30,
1993. Advertising revenue rose $37 million, or 13%, due primarily to increased
rates for TNT and TBS SuperStation, and an increase in sports revenue
associated with the coverage of the NBA on TNT and in the number of Atlanta
Braves telecasts aired on TBS SuperStation. The remaining $37 million
increase was related to higher subscription, home video and licensing and
merchandising revenue.
Operating profit for the Entertainment Segment decreased $84 million,
principally due to lower than anticipated results from theatrical film
releases, $32 million related to TNT's telecast of the Winter Olympics in
February,
12
<PAGE> 13
$31 million in losses related to the 1994 Goodwill Games and increased combined
operating losses of $9 million on new networks.
NEWS SEGMENT
News Segment revenue increased $18 million, or 6%, primarily related to
increased subscription revenue from the home satellite market and increases
associated with CNN International, where advertising and broadcast licensing
fees contributed to a 16%, or $7 million, revenue increase for the service.
Domestic advertising revenue was essentially unchanged, due to lower viewership
for CNN and Headline News in the first quarter, offset by higher viewership
late in the second quarter.
Revenue increases were primarily offset by increases in operating
expenses related to higher newsgathering costs and the expansion of CNN
International. As a result, operating profit for the News Segment was
relatively unchanged compared to the same period in 1993.
OTHER SEGMENT
Revenue increased $7 million, or 8%, primarily due to increased
home-game revenue for the Atlanta Braves. Operating losses increased $7
million as a result of increased Braves' player salaries and planned investment
in the Company's information technology systems.
EQUITY IN INCOME (LOSS) OF UNCONSOLIDATED ENTITIES/OTHER CONSOLIDATED
INFORMATION
Operating losses remained flat at $4 million, primarily due to the
improved financial performance of the Atlanta Hawks, offset by the Company's
investment in a German news network which was acquired on March 31, 1993 and
the effect of moving Hanna-Barbera to the Entertainment Segment following
Turner's purchase of the remaining portion of the company at the end of 1993.
In June 1994, the Company sold its 37.4% equity investment in RHI
Entertainment, Inc. for approximately $108 million in cash and recognized a
pre-tax gain of approximately $22 million on the transaction.
Consolidated depreciation and amortization increased approximately
$9 million primarily due to the inclusion of New Line and Castle Rock in 1994.
Consolidated interest expense increased approximately $15 million
primarily due to the increase in debt associated with the purchase of Castle
Rock and Hanna-Barbera as well as assumed debt associated with the New Line
acquisition. The increase was somewhat offset by a lower effective interest
rate resulting from new debt incurred in 1993 and 1994.
As a result of the information discussed above, the Company reported a
net loss of $705 thousand in the first six months of 1994 ($0.00 net loss per
common share). This compares to a net loss of $255 million in the first six
months of 1993 ($0.96 net loss per common share and common share equivalent),
which included a non-recurring charge for the cumulative effect of adopting
Statement of Financial Accounting Standards No. 109 in the amount of $306
million ($1.16 per share).
13
<PAGE> 14
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Turner Broadcasting System, Inc. v. Federal Communications Commission and The
United States of America
As last updated in the Company's Form 10-Q for the quarter ended March
31, 1994, on October 5, 1992, the Company filed a lawsuit in the United
States District Court for the District of Columbia challenging the provisions
of the Cable Television Consumer Protection and Competition Act of 1992 (the
"1992 Act") that would require cable television operators to devote up to
one-third of their channel capacity to the carriage of local broadcast
stations and provide certain channel positioning rights to local broadcast
stations. The Company's complaint alleges that these provisions violate the
First Amendment of the United States Constitution. Under a provision of the
1992 Act, the case was heard by a three-judge court. On April 8, 1993, the
Court upheld the constitutionality of these provisions by a 2-1 vote. On May
3, 1993, the Company filed its Notice of Appeal of that decision to the
United States Supreme Court. On September 28, 1993, the United States
Supreme Court noted probable jurisdiction and heard oral argument on this
case on January 12, 1994. On June 27, 1994, the United States Supreme Court
vacated the District Court's ruling and remanded the case for further
proceedings. The Company intends to press its claims.
United States of America v. Cable News Network, Inc. and Turner Broadcasting
System, Inc.
As last updated in the Company's Form 10-Q for the quarter ended March
31, 1994, in October and November of 1990, CNN was involved in investigating
and reporting a story concerning the potential government audio taping of
telephone calls made by General Manuel Noriega from his cell in the Miami
Correctional Center, including the taping of conversations with his attorneys
and defense team. CNN obtained copies of some of the alleged tapings and
telecast segments thereof. Judge William M. Hoeveler, United States District
Court for the Southern District of Florida, entered orders on November
8, 1990 and November 9, 1990 which temporarily prohibited the telecast of
Noriega's privileged attorney-client conversations. Judge Hoeveler appointed
a special prosecutor, Robert F. Dunlap, to investigate whether CNN violated
his Orders in a telecast on November 9, 1990, and to prepare an application
for an Order to Show Cause "why those entities and individuals responsible
for" the telecast should not be held in contempt of the Court's Orders. On
January 15, 1993 CNN was advised by Special Prosecutor Dunlap that it was a
target of a grand jury investigation into these alleged contempts. CNN
responded to grand jury subpoenas issued at that time. On March 30, 1994 CNN
was charged with criminal contempt by Special Prosecutor Dunlap and pleaded
innocent at an arraignment before Judge Hoeveler. A non-jury trial has been
scheduled on the charge for September 12, 1994. Fines and/or penalties of an
undetermined amount could be imposed against CNN as a result of these
contempt proceedings. CNN denies it telecast any privileged conversations
and therefore denies that it violated or intended to violate the Court
Orders. CNN intends to vigorously defend the contempt proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At a special shareholders' meeting held June 14, 1994, the holders of
each class of the Company's outstanding stock, voting separately, approved an
increase in the voting power of the Company's Class A Common Stock from one
vote per share to two votes per share.
14
<PAGE> 15
ITEM 5. OTHER INFORMATION
REGULATION
On October 5, 1992, the 1992 Act became law. The Federal
Communications Commission (the "FCC" or the "Commission") is charged with
implementation of the 1992 Act.
RATE REGULATION
Section 623 of the Communications Act of 1934, as amended by the 1992
Act, establishes a two-tier rate structure applicable to systems not found to
be subject to "effective competition" as defined by the statute. Rates for a
required "basic service tier" are subject to regulation by practically every
community. Rates for cable programming services other than those carried on
the basic tier are subject to regulation if, upon complaint, the FCC finds
that such rates are "unreasonable." Programming offered by a cable operator
on a per-channel or per-program basis, however, is exempt from rate
regulation.
On April 1, 1993, the FCC adopted implementing regulations for Section
623. The text of its Report and Order was released on May 3, 1993. The FCC
has adopted a benchmark approach to rate regulation. Rates above the
benchmark would be presumed to be unreasonable. Once established, cable
operators could adjust their rates based on appropriate factors and could
pass through certain costs to customers, including increased programming
costs.
On February 22, 1994, the Commission adopted further regulations.
Among other things, the additional regulations will govern the offering of
bona fide "a la carte" channels that are exempted from rate regulation. The
Commission also adopted a methodology for determining rates when channels are
added to or deleted from regulated tiers. These regulations may adversely
affect the Company's ability to sell its existing or new networks to cable
customers and/or may adversely affect the prices the Company may charge for
its services, although at this time the Company cannot predict their full
effect on its operations.
On March 30, 1994, the Commission adopted further regulations and
solicited additional comments with respect to the methodology for determining
rates when channels are added to regulated tiers. The Company cannot predict
the outcome or effect of these proceedings.
On April 5, 1993, the FCC also froze rates for cable services subject
to regulation under the 1992 Act for 120 days. On June 11, 1993, the FCC
deferred the implementation of rate regulation from June 21, 1993 until
October 1, 1993, and extended the freeze on rates for cable services subject
to regulation from August 4, 1993 to November 15, 1993. On November 10,
1993, the Commission further extended the freeze until February 15, 1994, and
on February 8, 1994, extended the expiration date of the freeze until May 15,
1994. On July 27, 1993, the FCC moved the effective date of rate regulation
back to September 1, 1993. Additionally, among other things, the FCC
permitted cable operators to structure rates and service offerings up until
September 1, 1993, without prior notice to subscribers.
On July 16, 1993, the FCC issued a Notice of Proposed Rulemaking to
add the regulatory requirements to govern cost-of-service showings that
cable operators may submit under this provision to justify rates above the
benchmarks. On February 22, 1994, the Commission adopted interim rules to
govern the cost of service proceedings.
On March 30, 1994, the Commission released a Further Notice of
Proposed Rulemaking in connection with its cost of service regulations. In
that Notice, the Commission proposed to limit the price a cable operator may
recover in transactions with its affiliates. The proposal, if adopted, could
adversely affect the Company's transactions with certain cable operators,
including Tele-Communications, Inc. and Time Warner, Inc., which are
affiliates of the Company.
15
<PAGE> 16
On July 1, 1994, the Company filed comments opposing this proposal. The
Company cannot predict the ultimate outcome of the proceeding.
The constitutionality of these provisions has been challenged in
litigation filed in the United States District Court for the District of
Columbia. On September 27, 1993, the district court upheld the
constitutionality of these provisions. An appeal of that decision is pending
in the U.S. Court of Appeals for the District of Columbia. Appeals of the
Commission's implementing regulations have also been taken to the United
States Court of Appeals for the District of Columbia Circuit. The Company
cannot predict the ultimate outcome of the litigation.
MUST CARRY AND RETRANSMISSION CONSENT
The 1992 Act contains provisions that would require cable television
operators to devote up to one-third of their channel capacity to the carriage
of local broadcast stations and provide certain channel position rights to
local broadcast stations. The 1992 Act also includes provisions governing
retransmission of broadcast signals by cable systems, whereby retransmission
of broadcast signals would require the broadcaster's consent and provides
each local broadcaster the right to make an election between must carry or
retransmission consent. The retransmission consent provisions of the 1992
Act became effective on October 5, 1993.
On March 11, 1993, the FCC adopted a Report and Order implementing
these provisions. The provisions could affect the ability and willingness of
cable systems to carry cable programming services. The Company has filed
litigation challenging the provision as unconstitutional (see "Legal
Proceedings - Turner Broadcasting System, Inc. v. Federal Communications
Commission and The United States of America"). The case was remanded by the
United States Supreme Court for further proceedings. The Company cannot
predict the ultimate outcome of the litigation.
PROGRAM ACCESS
On April 1, 1993, the Commission issued regulations implementing a
provision that, among other things, makes it unlawful for a cable network, in
which a cable operator has an attributable interest, to engage in certain
unfair methods of competition or unfair or deceptive acts or practices, the
purpose and effect of which is to hinder significantly or prevent any
multichannel video programming distributor from providing satellite cable
programming or satellite broadcast programming to cable subscribers or
consumers. The provisions contain an exemption for any contract that grants
exclusive distribution rights to a person with respect to satellite cable
programming or that was entered into on or before June 1, 1990. While the
Company cannot predict the regulations' full effect on its operations, they
may affect the rates charged by the Company's cable programming services to
its customers and could affect the terms and conditions of contracts between
the Company and its customers.
The constitutionality of this provision has been challenged in
litigation filed in the United States District Court for the District of
Columbia. On September 27, 1993, the district court upheld this provision.
An appeal of that decision is pending in the United States Court of Appeals
for the District of Columbia Circuit. Appeals of the Commission's
implementing regulations have also been taken to the United States Court of
Appeals for the District of Columbia Circuit. The Company cannot predict the
ultimate outcome of the litigation.
REGULATION OF CARRIAGE AGREEMENTS
The 1992 Act contains a provision that requires the FCC to establish
regulations governing program carriage agreements and related practices
between cable operators and video programming vendors, including provisions
to prevent the cable operator from requiring a financial interest in a
program service as a condition of carriage and provisions designed to
prohibit a cable operator from coercing a video programming vendor to provide
exclusive rights as a condition of carriage. On October 22, 1993, the
Commission issued regulations implementing this provision. The Company
cannot at this time predict the effect of this provision on its operations.
16
<PAGE> 17
The constitutionality of this provision has been challenged in
litigation filed in the United States District Court for the District of
Columbia. On September 27, 1993, the district court upheld the
constitutionality of this provision. An appeal of that decision is pending
in the United States Court of Appeals for the District of Columbia Circuit.
The Company cannot predict the outcome of the litigation.
OWNERSHIP LIMITATIONS
Section 11 of the 1992 Act directed the Commission to prescribe rules
and regulations establishing limits on the number of cable subscribers a
person is authorized to reach through cable systems owned by such person and
the number of channels that can be occupied by video programmers in which a
cable operator has an attributable interest. The Commission must also
consider the necessity of imposing limitations on the degree to which
multichannel video programming distributors may engage in the creation or
production of video programming.
On December 28, 1992, the FCC issued a Notice of Proposed Rulemaking
and Notice of Inquiry with respect to these provisions. On October 22, 1993,
the FCC adopted a Second Report and Order that established a 40% limit on the
number of channels that may be occupied by programming services in which the
particular cable operator has an attributable interest. The Company is
subject to this provision. The FCC also established a national limit of 30%
on the number of homes passed that any one person can reach through cable
systems owned by such person, but stayed implementation of that provision
pending judicial review of its constitutionality. Petitions for
reconsideration are pending. The Company cannot at this time predict the
effect of this provision or of these proposals on its operations.
The constitutionality of these provisions has been challenged in
litigation filed in the United States District Court for the District of
Columbia. On September 27, 1993, the district court found the national limit
on homes passed unconstitutional, but upheld the constitutionality of the
channel capacity limits. An appeal of that decision is currently pending in
the United States Court of Appeals for the District of Columbia Circuit.
Appeals of the Commission's implementing regulations have also been taken to
the United States Court of Appeals for the District of Columbia Circuit. The
Company cannot predict the ultimate outcome of the litigation.
SPORTS MIGRATION
The 1992 Act directs the FCC to submit an interim report by July 1,
1993, and a final report by July 1, 1994, to Congress on the migration of
sports programming from broadcast networks to cable networks and cable
pay-per-view. The interim report was submitted on June 24, 1993. On June
30, 1994, the FCC issued its final report in which it recommended that no
action by Congress was necessary.
17
<PAGE> 18
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Restated Articles of Incorporation of the Company+
10.38 Turner Broadcasting System, Inc. 1993 Stock Option and Equity-Based
Award Plan (replacing the 1993 Stock Option Plan filed as Exhibit
10.38 to the Company's Form 10-K for the fiscal year ended
December 31, 1993)+
10.42 Amendment No. 1 to Turner Broadcasting System, Inc.
1988 Stock Option Plan*+
10.43 Amendment No. 2 to Turner Broadcasting System, Inc.
1988 Stock Option Plan*+
10.44 Turner Broadcasting System, Inc. Long-Term Incentive Plan*+
11 Computation of Earnings per Common and Common Equivalent Share+
*Management contract or compensatory plan or arrangement.
+Previously Filed
(b) Reports on Form 8-K
No reports have been filed on Form 8-K during the quarter for which
this report is filed.
18
<PAGE> 19
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.
TURNER BROADCASTING SYSTEM, INC.
By: /s/ William S. Ghegan
-------------------------------------
William S. Ghegan
Vice President, Controller and
Chief Accounting Officer
Date: August 12, 1994
19
<PAGE> 20
INDEX TO EXHIBITS
3.1 Restated Articles of Incorporation of the Company+
10.38 Turner Broadcasting System, Inc. 1993 Stock Option and
Equity-Based Award Plan (replacing the 1993 Stock Option Plan
filed as Exhibit 10.38 to the Company's Form 10-K for the fiscal
year ended December 31, 1993)+
10.42 Amendment No. 1 to Turner Broadcasting System, Inc. 1988 Stock
Option Plan.+
10.43 Amendment No. 2 to Turner Broadcasting System, Inc. 1988 Stock
Option Plan.+
10.44 Turner Broadcasting System, Inc. Long-Term Incentive Plan.+
11 Computation of Earnings per Common and Common Equivalent Share+
+Previously Filed
