SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): April 25, 1999
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.)
1225 Seventeenth Street, Suite 1800
Denver, Colorado 80202
(Address of principal executive offices)
(303) 308-7000
(Registrant's telephone number, including area code)
Item 5. OTHER EVENTS
On April 25, 1999, Ascent Entertainment Group, Inc. ("Ascent") entered
into an agreement to sell its sports-related businesses, including the Denver
Nuggets, Colorado Avalanche and Ascent Arena Company, to two (2) partnerships
controlled by William J. and Nancy Walton Laurie of Columbia, Missouri.
Charlie Lyons, currently CEO of Ascent Entertainment Group, Inc., will become
President and will own an interest in the Partnership. Attached as Exhibit
99.1, and incorporated herein by reference, is a press release issued by Ascent
on April 26, 1999 describing the transaction.
On April 28, 1999, Ascent announced its first quarter financial results
and provided certain additional information regarding the sale of its sports-
related businesses in a press release attached hereto as Exhibit 99.2 and
incorporated herein by reference.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits:
99.1 Press Release by Ascent dated April 26, 1999.
99.2 Press Release by Ascent dated April 28, 1999.
SOME OF THE STATEMENTS IN THIS FORM 8-K ARE FORWARD-LOOKING AND RELATE TO
ANTICIPATED FUTURE OPERATING RESULTS. FORWARD-LOOKING STATEMENTS ARE BASED
UPON ASCENT'S MANAGEMENT'S CURRENT ASSUMPTIONS, WHICH MAY BE AFFECTED BY
SUBSEQUENT DEVELOPMENTS AND BUSINESS CONDITIONS, AND NECESSARILY INVOLVE
RISKS AND UNCERTAINTIES. THEREFORE, THERE CAN BE NO ASSURANCE THAT ACTUAL
FUTURE RESULTS WILL NOT DIFFER MATERIALLY FROM ANTICIPATED RESULTS. READERS
SHOULD REFER TO ASCENT'S OTHER DISCLOSURE DOCUMENTS FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION, INCLUDING THE COMPANY'S ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998, FOR SPECIFIC DETAILS ON SOME OF
THE FACTORS THAT MAY AFFECT OPERATING RESULTS.
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/ Arthur M. Aaron
-------------------
Arthur M. Aaron
Vice President, Business and Legal Affairs
Date: May 4, 1999
EXHIBIT 99.1
Ascent Entertainment Group, Inc. To Sell Nuggets, Avalanche and The Pepsi Center
For Immediate Release
Monday, April 26, 1999
Contact:Kasmah Kremmel
Ascent Entertainment Group, Inc.
(303) 308-7061
DENVER, COLO. - Ascent Entertainment Group, Inc. (Nasdaq: GOAL) announced
today that it has entered into a definitive agreement to sell its sports-
related businesses, including the Denver Nuggets, Colorado Avalanche and the
teams' future home, The Pepsi Center.
Ascent is selling the business to a partnership controlled by William J.
and Nancy Walton Laurie of Columbia, Missouri. Charlie Lyons, currently CEO
of Ascent Entertainment Group, Inc., will become President and will own an
interest in the Partnership. The property is being sold for an enterprise
value of $400 million, consisting of $260 million in cash and approximately
$140 million in arena backed financing obligations for the Pepsi Center.
Closing on the transaction will occur on or around June 30, 1999. Lyons
will continue as the CEO of Ascent Entertainment Group, Inc. until the
closing, and then will become President of the new sports company.
"We are absolutely thrilled to have been able to purchase the Denver
Nuggets, the Colorado Avalanche and the Pepsi Center," said Bill Laurie. "We
look forward to bringing more championships to the Rocky Mountain West and to
becoming valued friends of the Colorado community."
"Our goal over the past year has been to rationalize the structure of
Ascent Entertainment Group," said Ascent CEO Charlie Lyons. "With the sale of
Beacon Communications and our sports assets, we have greatly strenghtened
Ascent's balance sheet, and made it a stronger and more tightly focused
company."
"Speaking personally," Lyons said, "it's an honor to have the chance to
work with the Lauries and to continue my association with professional sports
in Colorado. At the same time, I know I will be leaving Ascent Entertainment
Group, Inc. in the best shape it's ever been."
As a result of entering into this agreement, Ascent will begin
accounting for the Nuggets, Avalanche and Pepsi Center as discontinued
operations beginning in the first quarter of 1999. Ascent also expects to
record a gain on the transaction in the quarter it closes.
The transaction is subject to the approval of the NBA, NHL and the City
and County of Denver, receipt of all required governmental approvals and
compliance with other customary conditions. The transaction is not subject
to the receipt of financing.
Ascent acquired its ownership in the Nuggets through a series of
transactions from 1989 to 1992 at a total cost of $60.2 million and acquired
the Avalanche in 1995 at a cost of $75.8 million. Ascent's equity investment
in the Pepsi Center and related development property is approximately
$25,000,000, not including the arena indebtedness, which is non-recourse to
Ascent. In 1997, Liberty Media Corporation, through an indirect subsidiary,
invested $15,000,000 in the Pepsi Center project with participation rights in
proceeds from team-related transactions. Upon the consummation of this
transaction, Ascent expects that Liberty would recover its investment out of
sale proceeds.
Ascent Entertainment Group's principle business is providing pay-per-view
entertainment and information services through its majority-owned On Command
Corporation. In addition, Ascent provides satellite service and maintenance
to the NBC television network in connection with its distribution of its
national television feed to its local affiliates.
##
EXHIBIT 99.2
ASCENT ENTERTAINMENT GROUP REPORTS FIRST QUARTER
RESULTS
Contact:
Media Analysts
Kasmah Kremmel Jim Cronin
Ascent Entertainment Ascent Entertainment
Phone (303) 308-7061 (303) 308-7010
DENVER, APRIL 28, 1999 - Ascent Entertainment Group, Inc.(Nasdaq:GOAL) today
reported first quarter revenues from continuing operations of $66.3 million,
up 9.2 percent from 1998 first quarter revenues of $60.7 million. Earnings
before interest, taxes, depreciation and amortization from continuing operations
(EBITDA) for the first quarter of 1999 were $18.1 million, up 9.7 percent from
1998 first quarter EBITDA of $16.5 million in the first quarter of 1998. The
Company reported a net loss from continuing operations for the first quarter of
1999 of $9.9 million, or $.34 per common share, compared with a net loss from
continuing operations of $9.0 million, or $.30 per common share, for the first
quarter of 1998.
As previously announced, Ascent has entered into a definitive agreement to
sell its sports-related businesses, including the Denver Nuggets, Colorado
Avalanche, and the teams' future home, the Pepsi Center. The closing is
currently expected to occur on or about June 30, 1999. As a result, the
operating results of these entities that were previously classified as the
Company's entertainment segment have been classified as discontinued operations
as of March 31, 1999. The accompanying 1998 financial information has been
restated to conform to the discontinued oeprations presentation of the
entertainment segment.
"We are pleased with the performance of both On Command and Ascent
Network Services," said Charlie Lyons, chairman and CEO of Ascent. "With the
Beacon transaction last quarter and the announcement of the Ascent Sports
transaction earlier this week, the key point is that we have made remarkable
advances in transforming this company into a highly focused enterprise with
tremendous opportunities to benefit from the telecommunications and internet
revolutions. On Command has the market leadership, outstanding customers such
as Marriot International, Hilton Hotels and Starwood, the best technology,
and a stellar board with the vision and experience to make On Command much
more valuable in the future. This is especially true as the rollout of On
Command's new interactive multimedia digital platform, OCX, accelerates in
the year ahead."
The increase in first quarter revenues from continuing operations is
attributable to operating improvements at both On Command Corporation
(Nasdaq:ONCO), Ascent's 57 percent-owned subsidiary, and Ascent Network
Services. The quarter-to-quarter improvement in EBITDA is primarily
attributable to the increase in revenues combined with cost containment
efforts at On Command.
MULTIMEDIA DISTRIBUTION
First quarter 1999 revenues for this segment, which includes On Command,
were $61.2 million, up 9.5 percent from $55.9 million in the comparable 1998
quarter. First quarter EBITDA for this segment was $18.2 million, up 14.5
percent from $15.9 million in the first quarter of 1998. The segment reported
an operating loss for the 1999 first quarter of $5.1 million compared to an
operating loss of $6.2 million in the first quarter of 1998.
The improvement in On Command's 1999 first quarter revenues as compared
to the 1998 first quarter was primarily attributable to new hotel
installations and continued conversions of SpectraVision properties to the
superior performing On Command Video systems. Improvements in EBITDA and
operating loss were primarily attributable to the increased revenues and
effective control of operating expenses. Movie buy rates were generally
consistent with the 1998 first quarter.
At March 31, 1999, On Command's installed room base was approximately
934,000 as compared to approximately 902,000 at the end of the first quarter
of 1998. In the first quarter of 1999, On Command installed its on-demand
system in approximately 20,500 rooms, of which approximately 6,700 were
conversions of SpectraVision properties, and approximately 13,800 were new
hotel installations.
NETWORK SERVICES
First quarter 1999 revenues for the network services segment, which
includes the operations of Ascent Network Services, were $5.1 million, up
6.2 percent from $4.8 million in the comparable 1998 quarter. First quarter
EBITDA for this segment was $2.9 million, up 7.4 percent from $2.7 million in
the first quarter of 1998. The segment reported operating income for the
1999 first quarter of $1.0 million compared to an operating income of
$900,000 in the first quarter of 1998. The increase in revenues, EBITDA and
operating income for the first quarter of 1999 are primarily attributable to
an increase in service revenues from NBC and its affiliates.
DISCONTINUED OPERATIONS
Ascent's discontinued operations are comprised of the results of the
Company's former entertainment segment, which includes the Denver Nuggets,
the Colorado Avalanche and Ascent Arena Company (the Arena Company), the
owner and manager of the Pepsi Center. In addition, discontinued operations
also include the results of Beacon Communications LLC (Beacon), which was
sold on January 20, 1999. The combined loss from discontinued operations
for these entities totaled $9.2 million during the first quarter of 1999 as
compared to a loss of $3.9 million during the comparable period in 1998. The
increased loss during the first quarter of 1999 is primarily attributable to
the operations of the Denver Nuggets, which has been impacted by the recently
concluded NBA work stoppage. Specifically, while revenues for the Nuggets
decreased as the team played seven fewer home games during the first quarter
of 1999 as compared to the first quarter of 1998, operating expenses increased
due to a reserve taken on receivables due from NBA Properties, the merchandising
affiliate of the NBA, and an overall increase in player salaries over the
comparable period in 1998. Assuming the closing date of the transaction to sell
the sports-related businesses is June 30th, the Company expects to report a gain
on the sale of its interests in these assets during the second quarter of 1999.
The $3.3 million gain from sale of discontinued operations, net of
taxes, during the first quarter of 1999 reflects the gain from the sale of
the Company's 90% interest in Beacon. The Company expects to report an
additional gain from the Beacon sale during the second quarter of 1999 when
additional cash proceeds from the sale are received.
ASCENT CONSOLIDATED
General and administrative expenses at Ascent Corporate were $3.0
million for the first quarter of 1999 as compared to $2.1 million for the
first quarter of 1998. This increase is primarily attributable to an increase
in expense associated with the Company's stock appreciation rights, partially
offset by the reduction of other operating expenses.
Interest expense, net of amounts capitalized, for the first quarter of
1999 was $6.9 million as compared to $5.4 million during the first quarter of
1998. This increase is attributable to the additional borrowings incurred
during 1998 by On Command for capital expenditures combined with increased
borrowing costs at Ascent, primarily those costs related to the Company's
11.875% Senior Secured Discount Notes issued in December 1997.
Other income was $800,000 for the first quarter of 1999 as compared to
$400,000 during the first quarter of 1998. This increase is primarily
attributable to an increase in interest income recognized on the Company's
cash and cash equivalent balances.
Ascent recorded an income tax benefit from continuing operations of
$300,000 during the first quarter of 1999 as compared to no income tax
benefit or expense from continuing operations during the first quarter of
1998.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents increased by $12.4 million since December 31,
1998 to $57.0 million at March 31, 1999. The primary sources of cash during
the first quarter were cash from operating activities of $13.0 million,
proceeds of $15.9 million from the Company's sale of its interest in Beacon
and borrowings under On Command's credit facility of $8.0 million. Cash was
expended primarily for property and equipment at On Command, specifically
$21.3 million of expenditures, to support On Command's continued growth.
Included in cash and cash equivalents at March 31, 1999 is $8.8 million of
cash received by the Avalanche and the Nuggets during 1999 relating to ticket
sales and club seat deposits for both the Avalanche and the Nuggets for the
upcoming 1999/2000 playing seasons. Pursuant to the terms of the definitive
agreement to sell the Company's former entertainment segment as previously
discussed, these cash balances and other cash receipts received prior to
closing relating to the 1999/2000 playing seasons will be acquired by the
purchasers.
Long-term debt totaled $317.7 million at March 31, 1999 as compared to
$305.5 million at December 31, 1998. The increase in long-term debt is
attributable to additional borrowings of $8.0 million under On Command's
credit facility and the accretion of interest on the Company's 11.875% Senior
Secured Discount Notes. The Arena Revenue Backed Notes of $139.8 million
(the "Arena Notes") which were issued by the Arena Company's beneficially
owned trust are classified in the Company's condensed consolidated balanche
sheet in the net assets of discontinued operations. The Arena Notes are non-
recourse to the Arena Company but the Arena Company is obligated to the
noteholders to construct and operate the Pepsi Center. In conjunction with the
agreed-upon sale transaction, the Arena Note obligation will be acquired by
purchasers. Based on borrowings outstanding on March 31, 1999, the Company
had access to $50.0 million of long-term financing under the Ascent credit
facility and On Command had access to $29.0 million of long-term financing
under its credit facility, in each case, subject to certain covenant
restrictions.
Assuming the consummation of the sale of the sports-related assets,
after payments to Liberty Media Corporation for its interest therein,
appropriate reserves for taxes and cash received to-date relating to Nuggets
and Avalanche upcoming 1999/2000 playing seasons, the Company anticipates net
cash proceeds of approximately $ 215.0 million, subject to any closing
adjustments. Under the terms of Ascent's outstanding Senior Notes, to the
extent that within 1 year of the sale of the Sports-related businesses, Ascent
does not use the net cash proceeds for certain permitted uses under the Senior
Note indenture, Ascent will be required to offer to repurchase all the Senior
Notes at 100% of their accreted value. In addition, in connection with the
sale, it is anticipated that the Ascent Credit facility will be terminated
or renegotiated.
OTHER
Ascent Entertainment Group's principal business is providing pay-per-
view entertainment and information services through its 57 percent-owned
subsidiary On Command Corporation. In addition, Ascent also provides video
distribution services to NBC and other private networks through its Ascent
Network Services division.
Some of the statements in this news release are forward-looking and
relate to anticipated future operating results. Forward-looking statements
are based on Ascent management's current expectations and assumptions, which
may be affected by subsequent developments and business conditions, and
necessarily involve risks and uncertainties. Therefore, there can be no
assurance that actual future results will not differ materially from
anticipated results.
Readers should refer to Ascent's disclosure documents filed with the
Securities and Exchange Commission, including the Company's 1998 Annual Report
on Form 10-K for specific details on some of the factors that may affect
operating results.
# # #
For a menu of Ascent Entertainment Group's news releases available by
fax 24 hours (no charge) or to retrieve a specific release, please call
1-800-758- 5804, ext. 152850, or access the address http://www.prnewswire.com
on the internet.
<PAGE>
<TABLE>
ASCENT ENTERTAINMENT GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(Dollar amounts in millions, except per share information)
<CAPTION>
Three Months Ended
March 31,
---------
1999 1998
---- ----
<S> <C> <C>
Revenues $66.3 $60.7
Operating expenses 48.2 44.2
Depreciation and amortization 25.2 23.9
---- ----
Operating loss (7.1) (7.4)
Interest expense, net (6.9) (5.4)
Other income 0.8 0.4
---- ----
Loss from continuing operations
before taxes and minority interest (13.2) (12.4)
Income tax benefit 0.3 0.0
---- ----
Loss from continuing operations
before minority interest (12.9) (12.4)
Minority interest in loss
of subsidiaries, net of tax 3.0 3.4
---- ----
Loss from continuing operations (9.9) (9.0)
Loss from discontinued
operations, net of tax (9.2) (3.9)
Gain from sale of discontinued
operations, net of tax 3.3 0.0
---- ----
Net loss ($15.8) ($12.9)
------- -------
------- -------
EBITDA (from continuing operations) $18.1 $16.5
----- -----
----- -----
Basic and Diluted Net loss
per common share:
Loss from continuing operations ($0.34) ($0.30)
Discontinued operations (0.19) (0.13)
------- -------
Net Loss ($0.53) ($0.43)
------- -------
------- -------
EBITDA per share (from continuing
operations) $0.61 $0.55
----- -----
----- -----
Weighted average number
of common shares outstanding 29.8 29.8
----- -----
----- -----
Note: The condensed consolidated statements of operations for the three
months ended March 31, 1998 have been restated to reflect Beacon
Communications Corp., Denver Nuggets Limited Partnership, Colorado
Avalanche, LLC and Ascent Arena Company LLC as discontinued operations.
</TABLE>
<PAGE>
<TABLE>
ASCENT ENTERTAINMENT GROUP, INC.
SELECTED FINANCIAL DATA
UNAUDITED
(Dollar amounts in millions, except for rooms data)
<CAPTION>
Three Months Ended
March 31,
---------
1999 1998
---- ----
<S> <C> <C>
REVENUES:
Multimedia Distribution $61.2 $55.9
Network Services 5.1 4.8
---- ----
Total $66.3 $60.7
---- ----
EBITDA (from continuing operations):
Multimedia Distribution $18.2 $15.9
Network Services 2.9 2.7
Corporate (3.0) (2.1)
---- ----
Total $18.1 $16.5
---- ----
OPERATING INCOME (LOSS):
Multimedia Distribution ($5.1) ($6.2)
Network Services 1.0 0.9
Corporate (3.0) (2.1)
---- ----
Total ($7.1) ($7.4)
---- ----
Room Data (at end of period):
Total Number of Guest-pay rooms :
On-demand 842,000 777,000
Schedule only 92,000 125,000
------- -------
934,000 902,000
------- -------
------- -------
</TABLE>
<PAGE>
<TABLE>
ASCENT ENTERTAINMENT GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollar amounts in millions except per share information)
<CAPTION>
March 31, December 31,
1999 1998
---- ----
(Unaudited) (Unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 57.0 $ 44.6
Receivables, net 37.0 36.4
Other current assets 3.2 3.4
Net assets of discontinued operations 110.5 145.1
-------- --------
Total current assets 207.7 229.5
-------- --------
Property and equipment, net 294.1 296.5
Goodwill, net 94.9 96.5
Other assets 14.4 14.1
-------- --------
Total assets $ 611.1 $ 636.6
-------- --------
-------- --------
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 29.1 $ 30.2
Deferred income 1.0 2.4
Other current liabilities 20.9 24.7
-------- --------
Total current liabilities 51.0 57.3
-------- --------
Long-term debt 317.7 305.5
Other long-term liabilities 2.2 15.4
-------- --------
Total liabilities 370.9 378.2
-------- --------
Minority Interest 79.3 81.9
Stockholders' Equity 160.9 176.5
-------- --------
Total Liabilities and Stockholders' $ 611.1 $ 636.6
-------- --------
-------- --------
Net Book Value per share $ 5.40 $ 5.92
-------- --------
-------- --------
Note: The condensed consolidated balance sheet as of December 31, 1998 has
been restated to reflect Beacon Communications Corp.,Denver Nuggets
Limited Partnership,Colorado Avalanche, LLC and Ascent Arena Company
LLC as discontinued operations.
</TABLE>
<TABLE>
ASCENT ENTERTAINMENT GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
UNAUDITED
(in millions)
<CAPTION>
Three Months Ended
March 31,
--------
1999 1998
---- ----
<S> <C> <C>
Operating activities:
Net loss $ (15.8) $ (12.9)
Adjustments to reconcile net loss to net cash
provided from continuing operations:
Loss from discontinued operations, net 7.0 3.9
Depreciation and amortization 25.2 23.9
Minority interest in losses of
subsidiary, net (3.0) (3.4)
Interest accretion on Senior Secured Notes 4.2 3.8
Changes in operating assets and liabilities (4.6) (1.3)
------- -------
Net cash provided by operating activities of 13.0 14.0
continuing operations
Net cash used by discontinued operations (3.1) (5.9)
------- -------
Net cash provided by operating activities 9.9 8.1
------- -------
Investing activities:
Proceeds from sale of discontinued operation 15.9 -
Purchase of property and equipment (21.4) (24.9)
Other - 0.9
------- -------
Net cash used in investing activities (5.5) (24.0)
------- -------
Financing activities - proceeds from borrowings
under credit facilities 8.0 12.0
------- -------
Net increase (decrease) in cash and cash
equivalents 12.4 (3.9)
Cash and cash equivalents, beginning of period 44.6 23.6
------- -------
Cash and cash equivalents, end of period $ 57.0 $ 19.7
------- -------
------- -------
Note: The condensed consolidated statements of cash flow for the three
months ended March 31, 1998 have been restated to reflect Beacon
Communications Corp., Denver Nuggets Limited Partnership, Colorado
Avalanche, LLC. and Ascent Arena Company LLC as discontinued
operations.
</TABLE>
