<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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) November 8, 1996
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PEGASUS COMMUNICATIONS CORPORATION
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(Exact name of registrant as specified in charter)
Delaware 0-21389 51-0374669
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
c/o Pegasus Communications Management Company, 100 Matsonford Road,
5 Radnor Corporate Center, Suite 454, Radnor, Pennsylvania 19087
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 610-341-1801
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Not Applicable
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(Former name or former address, if changed since last report.)
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Item 2. Acquisition or Disposition of Assets.
On November 8, 1996, the Company acquired the exclusive DIRECTV
distribution rights for certain rural portions of Ohio and related assets (the
"Assets") from Horizon Infotech, Inc. ("Seller") for a purchase price of
approximately $12.0 million in cash. The purchase price is subject to
adjustment, as set forth in the acquisition agreement.
The Assets consist of properties, rights and other assets used in the
DIRECTV distribution business in 11 counties in Southern Ohio, which include
approximately 167,558 television households, and as of November 8, 1996,
approximately 4,936 DIRECTV subscribers. The rights acquired by the Company were
granted to the Seller by the National Rural Telecommunications Cooperative,
through a distribution agreement, pursuant to which the Seller obtained the
exclusive right to distribute DIRECTV programming offered by DIRECTV, Inc. in
the 11 Southern Ohio counties.
The acquisition was financed through net proceeds received by the
Company in the initial public offering of its Class A Common Stock, which was
consummated on October 8, 1996.
Item 7. Financial Statements, Pro Forma Financial
Information, and Exhibits
(a) Financial Statements of Business Acquired
Not Applicable
(b) Pro Forma Financial Information.
Pro Forma Combined Balance Sheet as of September 30, 1996 F-1
Pro Forma Combined Statements of Operations for the F-2
the nine months ended September 30, 1996
(c) Pro Forma Combined Statements of Operations for the year F-3
ended December 31, 1995
(d) Exhibits
1. Asset Purchase Agreement by and among Pegasus
Communications Corporation and Horizon Telcom, Inc.,
Horizon Infotech, Inc. and Chillicothe Telephone
Company dated as of October 23, 1996 (which is
incorporated by reference to Pegasus Communications
Corporation's Registration Statement on Form S-4
(File No. 333-14857)).
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SIGNATURE
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.
PEGASUS COMMUNICATIONS CORPORATION
By /s/ Robert N. Verdecchio
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Robert N. Verdecchio,
Senior Vice President, Chief
Financial Officer and Assistant
Secretary
November 25, 1996
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<PAGE>
PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Acquisitions Portland
-----------------------------------------------------------
Actual Portland LMA MI/TX DBS OH DBS(1)
<S> <C> <C> <C> <C> <C>
Assets:
Cash and cash equivalents $ 5,668 $ (3,550) $ -- $(17,894) $ (12,000)
Accounts receivable, net 4,468 -- -- -- --
Inventories ............. 234 -- -- -- --
Prepaid expenses and
other current assets . 3,009 -- -- -- --
Property and equipment,
net .................. 26,015 -- -- -- --
Intangibles ............. 80,781 4,100 1,000 29,824 12,000
-------- ------- ------ -------- --------
Other assets ............ 2,394 -- -- -- --
-------- ------- ------ -------- --------
Total assets .......... $122,569 $ 550 $1,000 $ 11,930 $ --
======== ======= ====== ======== ========
Liabilities and Equity:
Current liabilities ..... $ 7,166 $ (600) $ -- $ -- $ --
Notes payable ........... 52 -- -- -- --
Accrued interest ........ 3,190 -- -- -- --
Current portion of
long-term debt ....... 376 -- -- -- --
Current portion of
program liabilities .. 1,581 -- -- -- --
Long-term debt .......... 117,241 -- -- -- --
Long-term program
liabilities .......... 1,540 -- -- -- --
Other long-term
liabilities .......... 137 -- -- -- --
Total liabilities ..... 131,283 (600) -- -- --
-------- ------- ------ -------- --------
Series A Preferred Stock -- -- -- -- --
Class A Common Stock..... 2 1 1 8 --
Class B Common Stock .... -- -- -- -- --
Additional paid-in
capital .............. 7,881 1,149 999 11,922 --
Retained earnings
(deficit) ............ (3,204) -- -- -- --
Partners deficit ........ (13,393) -- -- -- --
-------- ------- ------ -------- --------
Total equity .......... (8,714) 1,150 1,000 11,930 --
-------- ------- ------ -------- --------
Total liabilities and
equity ............. $122,569 $ 550 $1,000 $ 11,930 $ --
======== ======= ====== ======== ========
</TABLE>
(1) To record the acquisition of DBS rights in certain rural parts of Ohio for
$12.0 million in cash, all of which is allocated to DBS rights.
F-1
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
The
IPO Pro Forma
----- ---------
<S> <C> <C>
Assets:
Cash and cash equivalents $32,266 $ 4,490
Accounts receivable, net -- 4,468
Inventories ............. -- 234
Prepaid expenses and
other current assets . -- 3,009
Property and equipment,
net .................. -- 26,015
Intangibles ............. -- 127,705
Other assets ............ -- 2,394
------- --------
Total assets .......... $32,266 $168,315
======= ========
Liabilities and Equity:
Current liabilities ..... $ -- $ 6,566
Notes payable ........... -- 52
Accrued interest ........ -- 3,190
Current portion of
long-term debt ....... -- 376
Current portion of
program liabilities .. -- 1,581
Long-term debt .......... (3,000) 114,241
Long-term program
liabilities .......... -- 1,540
Other long-term
liabilities .......... -- 137
------- --------
Total liabilities ..... (3,000) 127,683
Series A Preferred Stock -- --
Class A Common Stock..... 35 47
Class B Common Stock .... 46 46
Additional paid-in
capital .............. 38,004
(1,400)
(1,419) 57,136
Retained earnings
(deficit) ............ -- (3,204)
Partners deficit ........ -- (13,393)
------- --------
Total equity .......... 35,266 40,632
------- --------
Total liabilities and
equity ............. $32,266 $168,315
======= ========
</TABLE>
<PAGE>
PRO FORMA COMBINED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996
(DOLLARS IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<TABLE>
<CAPTION>
Acquisitions
-----------------------------------------------------------------------
Actual Portland Tallahassee MI/TX DBS Cable OH DBS(1)
<S> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Net revenues
TV ............................. $18,363 $ 247 $404 $ -- $ -- $ --
DBS ............................ 2,601 -- -- 2,965 -- 1,304
Cable .......................... 9,073 -- -- -- 4,056 --
Other .......................... 83 -- -- -- -- --
------- ----- ---- ------ ------ ------
Total net revenues ............ 30,120 247 404 2,965 4,056 1,304
------- ----- ---- ------ ------ ------
Location operating expenses
TV ............................. 12,753 294 243 -- --
-- --
DBS ............................ 2,371 -- -- 2,672 -- 1,294
Cable .......................... 4,915 -- -- -- 2,448 --
Other .......................... 17 -- -- -- -- --
Incentive compensation ........... 605 -- -- -- -- --
Corporate expenses ............... 1,074 12 21 115 88 21
Depreciation and amortization .... 8,479 6 11 436 365 143
------- ----- ---- ------ ------ ------
Income (loss) from operations .... (94) (65) 129 (258) 1,155 (154)
Interest expense ................. (8,929) (565) (20) (465) (482) --
Interest income .................. 172 -- -- -- -- --
Other income (expense), net ...... (77) 20 (17) -- -- --
Provision (benefit) for income
taxes .......................... (110) -- 35 -- 20 --
------- ----- ---- ------ ------ ------
Income (loss) before extraordinary
items .......................... (8,818) (610) 57 (723) 653 (154)
------- ----- ---- ------ ------ ------
Dividends on Series A Preferred
Stock .......................... -- -- -- -- -- --
------- ----- ---- ------ ------ ------
Income (loss) applicable to
common shares before
extraordinary items ............ $(8,818) $(610) $ 57 $ (723) $ 653 $ (154)
======= ===== ==== ====== ====== ======
</TABLE>
F-2
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
The
Adjustments IPO Pro Forma
Income Statement Data:
<S> <C> <C> <C>
Net revenues
TV ............................. $ 17(2) $ -- $ 19,031
DBS ............................ -- -- 6,870
Cable .......................... -- -- 13,129
Other .......................... -- -- 83
------- ------ -------
Total net revenues ............ 17 -- 39,113
------- ------ -------
Location operating expenses
TV ............................. (28)(3)
(15)(4) -- 13,247
DBS ............................ (297)(5) -- 6,040
Cable .......................... (249)(6) -- 7,114
Other .......................... -- -- 17
Incentive compensation ........... -- -- 605
Corporate expenses ............... (148)(7) -- 1,183
Depreciation and amortization .... 3,155 (8) 96 12,691
------- ------ -------
Income (loss) from operations .... (2,401) (96) (1,784)
Interest expense ................. (1,546)(9) 2,190 (9,817)
Interest income .................. -- -- 172
Other income (expense), net ...... -- -- (74)
Provision (benefit) for income
taxes .......................... (55)(10) -- (110)
------- ------ -------
Income (loss) before extraordinary
items .......................... (3,892) 2,094 (11,393)
------- ------ -------
Dividends on Series A Preferred
Stock .......................... -- -- --
------- ------ -------
Income (loss) applicable to
common shares before
extraordinary items ............ $(3,892) $2,094 (11,393)
======= ====== ========
</TABLE>
<PAGE>
PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(DOLLARS IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<TABLE>
<CAPTION>
Acquisitions
---------------------------------------------------------------------
Actual Portland Tallahassee MI/TX DBS Cable OH DBS(1)
------ --------- ----------- --------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Net revenues
TV ............................. $19,973 $ 4,409 $2,784 $ -- $ -- $ --
DBS ............................ 1,469 -- -- 2,513 -- 942
Cable .......................... 10,606 -- -- -- 5,777 --
Other .......................... 100 -- -- -- -- --
------- ------- ------ ------- ------ ----
Total net revenues ............ 32,148 4,409 2,784 2,513 5,777 942
------- ------- ------ ------- ------ ----
Location operating expenses
TV ............................. 13,933 3,441 2,133 -- -- --
DBS ............................ 1,379 -- -- 3,083 -- 956
Cable .......................... 5,791 -- -- -- 3,083 --
Other .......................... 38 -- -- -- -- --
Incentive compensation ........... 528 -- -- -- -- --
Corporate expenses ............... 1,364 147 40 139 132 --
Depreciation and amortization .... 8,751 212 107 559 501 183
------- ------- ------ ------- ------ ----
Income (loss) from operations .... 364 609 504 (1,268) 1,791 (197)
Interest expense ................. (8,817) (1,138) (163) (631) (850) --
Interest income .................. 370 -- -- -- -- --
Other income (expense), net ...... (44) (542) (64) -- 50 --
Provision (benefit) for income
taxes .......................... 30 -- 105 -- (189) --
------- ------- ------ ------- ------ ----
Income (loss) before extraordinary
items .......................... (8,157) (1,071) 172 (1,899) 1,180 (197)
Dividends on Series A Preferred
Stock .......................... -- -- -- -- -- --
------- ------- ------ ------- ------ ----
Income (loss) applicable to
common shares before
extraordinary items ............ $(8,157) $(1,071) $ 172 $(1,899) $1,180 $(197)
======= ======= ====== ======= ====== =====
</TABLE>
F-3
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
The
Adjustments IPO Pro Forma
----------- --- ---------
<S> <C> <C> <C>
Income Statement Data:
Net revenues
TV ............................. $ 139(2) $ -- $ 27,305
DBS ............................ -- -- 4,924
Cable .......................... -- -- 16,383
Other .......................... -- -- 100
------- ------ --------
Total net revenues ............ 139 -- 48,712
------- ------ --------
Location operating expenses
TV ............................. (186)(3)
(111)(4) -- 19,210
DBS ............................ (341)(5) -- 5,077
Cable .......................... (332)(6) -- 8,812
Other .......................... -- -- 38
Incentive compensation ........... -- -- 528
Corporate expenses ............... (458)(7) -- 1,364
Depreciation and amortization .... 5,544(8) 129 15,986
------- ------ --------
Income (loss) from operations .... (3,977) (129) (2,303)
Interest expense ................. (2,893)(9) 2,919 (11,573)
Interest income .................. (241)(10) -- 129
Other income (expense), net ...... 542(11) -- (58)
Provision (benefit) for income
taxes .......................... 84 (12) -- 30
------- ------ --------
Income (loss) before extraordinary
items .......................... (6,653) 2,790 (13,835)
Dividends on Series A Preferred
Stock .......................... -- -- --
------- ------ --------
Income (loss) applicable to
common shares before
extraordinary items ............ $(6,653) $2,790 (13,835)
======= ====== ========
</TABLE>
<PAGE>
NOTES TO PRO FORMA COMBINED STATEMENTS OF OPERATIONS
(1) Financial results of the DBS Operations of the Chillicothe Telephone
Company.
(2) To reduce the commissions paid by WPXT and WTLH to their national
advertising sales representative to conform to the Company's contract.
(3) To eliminate payroll expense related to staff reductions implemented upon
the consummation of the acquisition of televison station WPXT.
(4) To eliminate rent expenses incurred by WTLH, Inc. for the tower site
acquired and office property to be acquired by the Company in connection
with the acquisition of television station WTLH.
(5) To eliminate rent and other overhead expenses incurred by the prior owner
that will not be incurred by the Company for certain office properties in
connection with the Michigan/Texas DBS acquisition.
(6) To eliminate expense reductions, such as redundant staff, rent,
professional fees and utilities to be implemented in connection with the
acquisition of the San German Cable system and its interconnection with
the Company's existing Mayaguez Cable system.
(7) To eliminate corporate expenses charged by prior owners.
(8) To record additional depreciation and amortization resulting from the
purchase accounting treatment of the acquisitions outlined above. Such
amounts are based on a preliminary allocation of the total consideration.
The actual depreciation and amortization may change based upon the
final allocation of the total consideration to be paid to the tangible
and intangible assets acquired.
(9) To record the increase in net interest expense associated with the
borrowings incurred in connection with the acquisitions described above.
(10) To elimninate interest income earned on funds escrowed and used for
acquisitions.
(11) To eliminate certain nonrecurring expenses, primarily comprised of legal
and professional expenses incurred by the prior owners of the businesses
in connection with the acquisitions.
(12) To eliminate net tax benefit in connection with the acquisitions.
F-5
<PAGE>
EXHIBIT INDEX
Exhibit
1. Asset Purchase Agreement by and among Pegasus Communications
Corporation and Horizon Telcom, Inc., Horizon Infotech, Inc. and
Chillicothe Telephone Company dated as of October 23, 1996 (which is
incorporated by reference to Pegasus Communications Corporation's
Registration Statement on Form S-4 (File No. 333-14857)).
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