SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): October 10, 1996
ASCENT ENTERTAINMENT GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-27192 52-1930707
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File No.) Identification No.)
One Tabor Center
1200 Seventeenth Street, Suite 2800
Denver, Colorado 80202
(Address of principal executive offices)
(303) 626-7000
(Registrant's telephone number, including area code)
Page 1 of 12 pages.
<PAGE>
Item 7. Financial Statements and Exhibits
(b) Pro Forma Financial Information
(1) As of the filing of the Form 8-K dated October 10, 1996, it was
impracticable to provide the additional required pro forma financial
statements for Ascent Entertainment Group, Inc. Listed below are the pro
forma financial statements filed as part of this report on Form 8-K/A:
Unaudited Pro Forma Consolidated Balance Sheet at June 30,
1996
Unaudited Pro Forma Consolidated Statement of Operations
for the Six Months Ended June 30, 1996
Unaudited Pro Forma Consolidated Statement of Operations
for the Year Ended December 31, 1995
Notes to Unaudited Pro Forma Consolidated Financial
Statements
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Ascent Entertainment Group, Inc.
By:
/s/David A. Holden
Controller
Date:
November 14, 1996
<PAGE>
Item 7.b.
INDEX TO PRO FORMA FINANCIAL STATEMENTS OF ASCENT ENTERTAINMENT GROUP, INC.
Page(s)
Introduction and Background to Pro Forma Financial Statements. 5-6
Unaudited Pro Forma Consolidated Balance Sheet at June 30, 1996
7
Unaudited Pro Forma Consolidated Statement of Operations
for the Six Months Ended June 30, 1996.......................... 8
Unaudited Pro Forma Consolidated Statement of Operations
for the Year Ended December 31, 1995............................ 9
Notes to Unaudited Pro Forma Consolidated Financial Statements 10-13
<PAGE>
Introduction and Background to Pro Forma Financial Statements
The following unaudited pro forma consolidated financial information for
Ascent Entertainment Group, Inc. ("Ascent" or "the Company") consists of the
Unaudited Pro Forma consolidated statements of operations for the six months
ended June 30, 1996 and for the year ended December 31, 1995 and the Unaudited
Pro Forma consolidated balance sheet as of June 30, 1996 (collectively, the "Pro
Forma Statements"). The Pro Forma Statements give effect to the October 10, 1996
business combination whereby Ascent, through its newly formed subsidiary, On
Command Corporation ("OCC"), consummated the previously announced acquisition
(the "Acquisition") of the assets and properties (including, but not limited to,
copyrights, patents, personal property, real property, equipment and records)
and certain liabilities of SpectraVision, Inc. ("SpectraVision"), with an
effective date of October 8, 1996 (the "Closing Date"). The Acquisition was
consummated pursuant to an Acquisition Agreement dated August 13, 1996, among
Ascent, OCC, SpectraVision and the other parties named therein (the "Acquisition
Agreement"). Pursuant to the Acquisition Agreement, OCC acquired all of the
outstanding capital stock of SpectraDyne, Inc. the primary operating subsidiary
of SpectraVision, together with certain other assets of SpectraVision and its
affiliates. Prior to the Closing Date, OCV, formerly an 83% owned subsidiary of
Ascent (approximately 79% owned on a fully diluted basis), was merged (the
"Merger") into a subsidiary of OCC and became a wholly owned subsidiary of OCC
pursuant to an Agreement and Plan of Merger (the "Merger Agreement") by and
among OCC, OCV and On Command Merger Corporation dated August 13, 1996.
The unaudited pro forma consolidated statement of operations for the year
ended December 31, 1995 and the six months ended June 30, 1996 reflects the
Acquisition and the Merger as if they had taken place on January 1, 1995. The
unaudited pro forma consolidated balance sheet gives effect to the formation of
OCC, the Acquisition and the Merger as if they had taken place on June 30, 1996.
The net assets and operations of OCV for the periods included in the
accompanying pro forma financial statements were previously reported in Ascent's
Form 10-Q for the period ended June 30, 1996 and Form 10-K for the year ended
December 31, 1995. The SpectraVision financial information included in the Pro
Forma Statements was previously reported in SpectraVision's Form 10-Q for the
period ended June 30, 1996 and Form 10-K for the year ended December 31, 1995.
Adjustments have been made to the SpectraVision financial information to
eliminate the net assets of SpectraVision and SPI Newco, Inc., the principal
holding companies of Spectradyne, as their assets are not being acquired.
The pro forma financial information reflects management's estimate of the
fair value of the SpectraVision assets to be acquired and liabilities to be
assumed by OCC. The final purchase price allocation for the SpectraVision assets
will be determined at a future date (no later than one year from the Closing
Date), which may result in adjustments to the preliminary allocation. However,
in the opinion of management, the preliminary allocation of the purchase price
reflects OCC's best estimate and all adjustments necessary to state fairly such
pro forma financial information have been made.
The Pro Forma Statements should be read in conjunction with the notes to
the financial statements. The pro forma financial information is not necessarily
indicative of what the actual financial results would have been had the
Acquisition and the Merger taken place on January 1, 1995 or June 30, 1996 or
what the future financial results will be. As a result of the transaction,
Ascent and its subsidiary, OCC, expect both OCV and SpectraVision to achieve
substantial operating cost savings through the consolidation of certain
operations and the elimination of redundant costs. These operating cost savings
are expected primarily through reductions in personnel and related benefit costs
and consolidation and elimination of support operations, including
administration, marketing, data processing, and centralized support functions.
There can be no assurance that the operating cost savings will be realized. The
extent to which the operating cost savings will be achieved depends, among other
things, on the regulatory environment and economic conditions and may be
affected by unanticipated changes in business activities, inflation, and
operating costs. No adjustments have been included in the unaudited Pro Forma
Statements for the possible operating cost savings, except for the expected
reduction in payments due to EDS (in the approximate amount of $700,000 monthly)
that result from the amended agreements with EDS.
<PAGE>
<TABLE>
ASCENT ENTERTAINMENT GROUP, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AT JUNE 30, 1996
(Dollars in thousands)
<CAPTION>
Ascent SpectraVision Pro Forma Pro Forma
Actual Actual Adjustments Note Ascent
------ ------ ----------- ---- ------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash $ 2,873 $ 4,918 $ (1) (1) $ 7,790
equivalents..........
Accounts 29,626 13,763 95 (2) 43,484
receivable, net......
Other current 21,031 6,323 (246) (1) 25,280
assets...............
(1,250) (5)
(578) (2)
Total current 53,530 25,004 (1,980) 76,554
------- ------- --------- -------
assets...............
Property and 245,108 107,441 (14,191) (5) 338,358
equipment, net.......
Hotel contracts, net -- 46,104 (39,354) (5) 6,750
Debt issuance costs -- 5,662 (5,344) (1) --
(318) (4) --
Other assets, net.. 55,934 10,426 (10,426) (5) 55,934
Franchise rights and 104,595 -- 10,000 (5) 114,595
other intangibles....
Investments........ 10,104 -- -- 10,104
Goodwill, net...... 47,485 -- 25,400 (5) 72,885
------- ------- -------- -------
Total assets..... $516,756 $194,637 $(36,213) $675,180
======== ========
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable $40,440 $24,544 $ 6,000 (5) $69,161
and accrued liabilities
(74) (1)
(1,749) (3)
Payable to Comsat 4,354 -- -- 4,354
Short-term debt.. 52,536 37,919 22,000 (9) 112,455
Deferred Income.. 1,825 -- -- 1,825
Capitalized lease -- 3,379 (3,379) (3) --
------- ------- --------- -------
obligations..........
Total current 99,155 65,842 22,798 187,795
------- ------- -------- -------
liabilities..........
Other liabilities 14,800 -- -- 14,800
Liabilities subject -- 576,040 (494,875) (1) --
to settlement under (81,165) (6)
reorganization...
Long-term debt.... 72,000 -- (22,000) (9) 50,000
Deferred income taxes 7,443 4,920 (4,920) (8) 7,443
------- ------- --------- -------
Total liabilities.. 193,398 646,802 (580,162) 260,038
------- ------- --------- -------
Contingent value -- 20,000 (20,000) (1) --
rights...............
Minority interest.. 28,144 -- 90,968 119,112
Stockholders' equity:
Common stock..... 297 24 (24) (1) 297
Additional paid-in 303,771 392,185 (392,185) (1)
capital..............
816 (3)(7)304,587
Accumulated (11,898) (863,075) 863,075 (7)(1)(11,898)
deficit..............................
Other, net....... 3,044 (1,299) 1,299 (7) 3,044
------- -------- -------- -------
Total 295,214 (472,165) 472,981 296,030
-------------------
stockholders' equity.
Total $516,756 $194,637 $(36,213) $675,180
======== ======== ========= ========
liabilities &
stockholders' equity.
See Notes to Pro Forma Financial Statements.
</TABLE>
<PAGE>
<TABLE>
ASCENT ENTERTAINMENT GROUP, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(Dollars in thousands)
<CAPTION>
Ascent SpectraVision Pro Forma Pro Forma
Actual Actual Adjustments Note Ascent
<S> <C> <C> <C> <C> <C>
Revenues................ $ 118,643 $58,012 $ 6,387 (14) $183,042
Costs and expenses:
Cost of services..... 92,606 47,104 (4,200) (13)
6,387 (14) 141,897
Depreciation and 31,904 20,519 (4,105) (10) 48,318
amortization............
Marketing, general 5,124 8,174 13,298
------ ------- ------- -------
and administrative......
Total costs and 129,634 75,797 (1,918) 203,513
------- ------- -------- -------
expenses................
Loss from operations.... (10,991) (17,785) 8,305 (20,471)
-------- -------- ------- --------
Interest and other (237) (234) -- (471)
income (loss)...........
Interest expense........ (3,622) (3,062) 1,164 (12)
(1,310) (12) (6,830)
Reorganization items.... -- (1,827) 1,827 (11) --
------ -------- ------- -------
Loss before taxes and (14,850) (22,908) 9,986 (27,772)
minority interest.......
Provision (benefit) for (4,448) (122) (1,263) (15) (5,833)
------- -------- -------- --------
income taxes............
Losses before minority (10,402) (22,786) 11,249 (21,939)
interest................
Minority interest....... (264) -- 4,526 (16) 4,262
------- ------- ------- -------
Net loss.............. $(10,666) $(22,786) $15,715 $(17,677)
========= ========= ====== =========
Losses per common and
equivalent share...... $(.36) $(0.95) $ (.59)
====== ======= =======
Shares used in per 29,752 23,984 29,752
====== ======= =======
share calculation.......
EBITDA(1)............... $20,913 $ 2,734 $27,847
======= ======= =======
(1) EBITDA is presented because it is a widely accepted financial indicator
used by certain investors and analysts to analyze and compare companies on
the basis of operating performance. EBITDA is not intended to represent
cash flows for the period, nor has it been presented as an alternative to
operating income as an indicator of operating performance and should not
be considered in isolation or as a substitute for measures of performance
prepared in accordance with generally accepted accounting principles.
See Notes to Pro Forma Financial Statements.
</TABLE>
<PAGE>
<TABLE>
ASCENT ENTERTAINMENT GROUP, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(Dollars in thousands)
<CAPTION>
Ascent SpectraVision Pro Forma Pro Forma
Actual Actual Adjustments Note Ascent
<S> <C> <C> <C> <C> <C>
Revenues................ $191,477 $123,986 $ 8,373 (21) $323,836
Costs and expenses:
Cost of services...... 140,693 99,656 (8,400) (22) 240,322
8,373 (21)
Depreciation and 54,907 39,364 (6,536) (17) 87,735
amortization............
Marketing, general 10,002 24,219 -- 34,221
and administrative......
Provision for 10,866 -- -- 10,866
------- ------- ------- -------
restructuring...........
Total costs and 216,468 163,239 (6,563) 373,144
------- ------- -------- -------
expenses................
Loss from operations.... (24,991) (39,253) 14,936 (49,308)
-------- -------- ------- --------
Interest and other (2,829) 508 -- (2,321)
income (loss)...........
Interest expense........ -- (28,177) 1,217 (19) (931)
26,029 (20)
Reorganization items.... -- (7,563) 1,552 (18) (6,011)
------- -------- ------- --------
Loss before taxes and (27,820) (74,485) 43,734 (58,571)
minority interest.......
Provision (benefit) for (8,992) (840) (2,149) (21) (11,981)
-------- -------- -------- --------
income taxes............
Loss before (18,828) (73,645) 45,883 (46,590)
extraordinary item and
minority interest
Extraordinary loss from -- (915) -- (915)
debt extinguishment.....
Minority interest....... (628) -- 11,267 (24) 10,639
-------- ------- ------- -------
Net loss................ $(19,456) $(74,560) $57,150 $(36,866)
========= ========= ======= =========
Net loss per common
and common $ (.80) $(3.11) $(1.52)
======= ======= =======
equivalent share......
Shares used in per 24,217 23,984 24,217
======= ======= =======
share calculations......
EBITDA(1)............... $29,916 $ 866 $38,427
======= ======= =======
(1) EBITDA is presented because it is a widely accepted financial indicator
used by certain investors and analysts to analyze and compare companies on
the basis of operating performance. EBITDA is not intended to represent
cash flows for the period, nor has it been presented as an alternative to
operating income as an indicator of operating performance and should not
be considered in isolation or as a substitute for measures of performance
prepared in accordance with generally accepted accounting principles.
See Notes to Pro Forma Financial Statements.
</TABLE>
<PAGE>
ASCENT ENTERTAINMENT GROUP, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
Unaudited Pro Forma Consolidated Balance Sheet as of June 30, 1996:
1. To eliminate the net assets and liabilities of SpectraVision
and SPI NEWCO, Inc. ("SPI NEWCO") which are not being acquired
as follows:
Other liabilities..................... $ 74
Liabilities subject to settlement 494,875
under reorganization..................
Contingent value rights............... 20,000
Common stock.......................... 24
Paid-in capital....................... 392,185
Deficit............................... $901,567
Cash.................................. 1
Debt issuance costs................... 5,344
Pre-paids and other assets............ 246
2. To adjust selected current assets and liabilities as
contemplated by the Acquisition Agreement.
3. To reflect the SpectraVision capital lease obligations as
operating leases pursuant to the amended lease agreements.
4. To write-off debt issuance costs incurred by and capitalized by
Spectradyne.
5. The purchase price for the net assets acquired from
SpectraVision was $91.7 million and was allocated as follows:
Estimated fair value of assets acquired:
Current assets, including cash of $ 23,024
$4,917...............................
Fixed assets:
Video equipment.................. 87,000
Office equipment and vehicles.... 2,750
Building......................... 1,500
Land............................. 2,000
Intangible assets, including hotel
contracts and 16,750
intellectual property............
Goodwill........................... 25,400
--------
158,424
Less the fair value of the liabilities assumed:
Current liabilities................ (28,721)
Note payable--Foothill Capital Corp. (37,919)
--------
$ 91,784
=========================================================================
Both the current assets and current liabilities acquired are recorded
at their historical cost basis, which approximates fair value. The
fair value of the non-current assets acquired was determined based on
an appraisal conducted by a nationally known firm. The note payable
to Foothill Capital Corporation has been reflected at historical
cost, as both the principal and interest amounts (which reflect
current market rates) due under this obligation were repaid at
closing. Accordingly, the fair value of the acquired assets and
liabilities, based on management's preliminary estimate of their fair
value as noted above, results in the following adjustments: (a) a
decrease in other current assets of $1.2 million; (b) a decrease in
video equipment of $11.6 million; (c) a decrease in land of $0.6
million; (d) a decrease in building and office equipment and
computers of $2.1 million; (e) a decrease in hotel contracts of $39.4
million; (f) recording goodwill relating to the Acquisition of $25.4
million; (g) a write-down of deferred contract concession costs of
$10.4 million; and (h) to record other intangible assets, including
technology, software, patents and trademarks of $10.0 million.
6. To eliminate pre-petition liabilities on Spectradyne's balance
sheet that will not be assumed by OCC.
7. To reflect the effect on Ascent's capitalization of the
allocation of the net assets acquired from of SpectraVision.
8. To reduce SpectraVision's net deferred tax liability to reflect the new
tax basis established in OCC. Fair value adjustments result in a net
deferred asset balance for OCC that is anticipated to be fully reserved
due to uncertainties regarding the recoverability of the net deferred tax
assets.
9. To reclassify the outstanding bank borrowings under the terms
of the bank credit agreements for both OCC and Ascent. OCC
obtained a $125 million credit facility with a bank (the "OCC
Credit Facility") dated as of October 8, 1996. The OCC Credit
Facility consists of (i) a 364-day revolving credit and
competitive advance facility which, subject to certain
conditions, will be renewable for four 364-day periods, and (ii)
a five year revolving credit and competitive advance facility;
provided, however, that any amounts borrowed under the five year
facility will reduce the amount available under the 364-day
facility. Pursuant to the terms of the OCC Credit Facility,
$50.0 million in borrowings were classified as long-term as of
the closing date. Ascent also entered into a new credit
agreement (the "Ascent Credit Facility") with the same bank as
OCC on October 8, 1996. The Ascent Credit Facility provides for
borrowings of up to $200 million, consisting of a 364-day
secured revolving credit facility. This facility, subject to
certain conditions, will be renewable for two 364-day periods.
Ascent has classified all borrowings under the Ascent credit
facility as short-term debt.
Unaudited Pro Forma Consolidated Statement of Operations for the Six months
ended June 30, 1996:
10. To adjust depreciation and amortization expense as follows:
Amortization of goodwill................ $ 620
Reduction in depreciation and other (4,725)
amortization............................
----------
Total................................. $ (4,105)
---------
- ----- ==========
Amortization of goodwill is based on amortization over 20 years and
other identifiable intangibles are amortized over 10 years. The
change in depreciation and other amortization expense results from
the decrease in depreciable basis in connection with the allocation
of purchase price offset by revisions to the estimated useful lives
of the purchased assets. The useful lives of the purchased assets is
as follows: video equipment, three years; office equipment, five
years; building, 20 years; hotel contracts, seven years.
11. To reduce restructuring costs for non-recurring bankruptcy
costs incurred by SpectraVision as a result of its bankruptcy
filing.
12. To reflect (i) the terms of the new Ascent and OCC bank credit
agreements dated as of October 8, 1996, based on (a) average
total borrowings of $20.0 million outstanding throughout the
period at an average interest rate of 6.5% and (b) the
amortization of financing costs incurred in connection with
entering into the OCC facility, and (ii), to reflect the
additional interest costs to be incurred under the Ascent credit
facility as a result of the transaction.
13. To reduce operating expenses for the cost savings attributed to the EDS
contract (estimated at $700,000 per month) which has been renegotiated.
14. To reclassify certain amounts to be consistent with the
presentation used by SpectraVision, Inc. and to conform to a
presentation more commonly used by providers of in-room
entertainment in the lodging industry.
15. No adjustment is made to reflect the income tax effects of the
foregoing adjustments as the net operating losses incurred are
significant enough to shelter any taxable earnings of OCV.
Accordingly, OCV's tax provision has been eliminated as it is
anticipated that OCC would not record tax expense on a combined
basis. No benefit is recorded as OCC will file a separate
return as the recoverability of the deferred tax asset would be
uncertain.
16. To adjust the minority interest's share of the losses
attributable to OCC.
Unaudited Pro Forma Consolidated Statement of Operations for the Year ended
December 31, 1995:
17. To adjust depreciation and amortization expense as follows:
Amortization of goodwill................ $ 1,238
Reduction in depreciation and other (7,774)
amortization............................
==========
Total............................... $ (6,536)
==========
Amortization of goodwill is based on amortization over 20 years and
other identifiable intangibles are amortized over 10 years. The
change in depreciation and other amortization expense results from
the decrease in depreciable basis in connection with the allocation
of purchase price offset by revisions to the estimated useful lives
of the purchased assets. The useful lives of the purchased assets is
as follows: video equipment, three years; office equipment, five
years; building, 20 years; hotel contracts, seven years.
18. To reduce restructuring costs for non-recurring bankruptcy
costs incurred by SpectraVision as a result of its bankruptcy
filing.
19. To reflect the terms of the new Ascent and OCC bank credit agreements
dated as of October 8, 1996, based on (a) average total borrowings of
$59.1 million and an average interest rate of 6.5% for the year ended
December 31, 1995, and (b) the amortization of financing costs incurred
in connection with entering into the OCC credit facility.
20. To eliminate non-recurring interest expense incurred by SpectraVision and
SPI NEWCO. This interest expense relates to the reorganization
indebtedness that is not being assumed by OCC.
21. To reclassify certain amounts to be consistent with the
presentation used by SpectraVision, Inc. and to conform to a
presentation more commonly used by providers of in-room
entertainment in the lodging industry.
22. To reduce operating expenses for the costs savings attributed to the new
EDS contract at $700,000 per month which has been renegotiated.
23. No adjustment is made for the income tax effects of the foregoing
adjustments (an income tax benefit) as the recoverability of a net
deferred asset would be uncertain. However, OCV's tax provision is
eliminated as OCC would not record tax expense on a combined basis.
24. To adjust the minority interest's share of the losses
attributable to OCC.
