<PAGE> 1
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) May 13, 1997
-------------------
TICKETMASTER GROUP, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
ILLINOIS 0-21631 36-3597489
- ------------------- ------------- -------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
8800 Sunset Boulevard, West Hollywood, CA 90069
---------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (310) 360-6000
--------------------
N/A
- ------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Item 2 is hereby amended and restated in its entirety as follows to
accurately reflect the cash portion of the purchase price in the second
paragraph:
Pursuant to an Agreement of Purchase and Sale of Stock dated as
of May 13, 1997, Ticketmaster Group, Inc. (the "Registrant"), through
its wholly-owned subsidiary, Ticketmaster Canada Acquisition Limited,
a Canada corporation (the "Acquisition Subsidiary"), acquired all of
the issued and outstanding shares of capital stock (the "Acquisition")
of Ticketmaster Canada Holdings Ltd., a British Columbia, Canada
corporation ("TCH"), from the then existing shareholders of TCH (the
"Selling Shareholders"). TCH is engaged, through its operating
subsidiaries, in the automated ticket selling business for sports and
other entertainment events taking place in the Canadian Provinces of
British Columbia, Ontario, Alberta and Manitoba using the Registrant's
software system and marks pursuant to licenses previously granted by
the Registrant.
The aggregate purchase price paid by the Registrant to the
Selling Shareholders in connection with the Acquisition was Cdn.
$44,650,000 (approximately U.S. $32,350,000) consisting of (i)
approximately Cdn. $22,325,000 in cash and (ii) 1,115,531 Class B
Shares of the Acquisition Subsidiary (which, for purposes of the
Acquisition, were valued at U.S. $14.50 per share), of which
approximately Cdn. $2,000,000 and 99,935 Class B Shares were deposited
in escrow to secure certain indemnification obligations of the Selling
Shareholders. Upon the occurrence and satisfaction, as applicable, of
certain specified events and conditions relating to the operations of
TCH, the purchase price will be increased by approximately 12.3%,
payable on May 1, 1998 one-half in cash and one-half in Class B Shares
of the Canadian Subsidiary, 10% of which may be subject to deposit in
the aforesaid escrow under certain circumstances.
The Class B Shares of the Acquisition Subsidiary are non-voting,
non-participating shares of the Acquisition Subsidiary which track the
shares of Common Stock of the Registrant, and the Selling Shareholders
have the right, at any time, to exchange their Class B Shares for
shares of Common Stock of the Registrant on a one-for-one basis,
subject to adjustment. The Registrant has the right to require the
Selling Shareholders to exchange their Class B Shares for shares of
Common Stock of the Registrant at any time on or after January 1,
2001, or earlier if certain specified events occur. The purchase
price was determined, pursuant to arms' length negotiations, as a
multiple of average earnings from the ticketing and ticketing related
businesses of TCH's operating subsidiaries before interest, taxes,
depreciation and amortization for the fiscal years ended February 29,
1996 and February 28, 1997, with agreed upon adjustments. Of the cash
portion of the purchase price paid at closing, U.S. $10,000,000 was
borrowed under the Registrant's existing credit facility.
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Set forth on the following pages are the financial statements and
related pro forma financial information required by this Item 7 pertaining to
the acquisition by Ticketmaster Group, Inc., through its wholly-owned
subsidiary, Ticketmaster Canada Acquisition Limited, a Canada corporation, of
all of the issued and outstanding shares of capital stock of Ticketmaster
Canada Holdings Ltd., a British Columbia, Canada corporation.
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.
TICKETMASTER GROUP, INC.
June 12, 1997 By: /s/ Peter B. Knepper
---------------------------------------
Peter B. Knepper, Senior Vice President
and Chief Financial Officer
2
<PAGE> 4
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
TICKETMASTER CANADA HOLDINGS LTD.
(Expressed in Canadian dollars)
Independent Auditors' Report........................................................ F-2
Consolidated Balance Sheets -- February 28, 1997 and February 29, 1996.............. F-3
Consolidated Statements of Income and Retained Earnings -- Years ended February 28,
1997, February 29, 1996 and February 28, 1995.................................... F-4
Consolidated Statements of Changes in Financial Position -- Years ended February 28,
1997, February 29, 1996 and February 28, 1995.................................... F-5
Notes to Consolidated Financial Statements.......................................... F-6
TICKETMASTER GROUP, INC.
(Expressed in U.S. dollars)
Pro Forma Combined Income Statement (unaudited)..................................... F-12
Notes to Unaudited Pro Forma Financial Statements................................... F-13
</TABLE>
F-1
<PAGE> 5
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Ticketmaster Canada Holdings Ltd.
We have audited the consolidated balance sheets of Ticketmaster Canada
Holdings Ltd. as at February 28, 1997 and February 29, 1996 and the consolidated
statements of income and retained earnings and changes in financial position for
the years ended February 28, 1997, February 29, 1996 and February 28, 1995.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these consolidated balance sheets present fairly, in all
material respects, the financial position of the Company as at February 28, 1997
and February 29, 1996 and the statements of income and retained earnings and
changes in financial position present fairly, in all material respects, the
results of its operations and the changes in its financial position for the
years ended February 28, 1997, February 29, 1996 and February 28, 1995 in
accordance with generally accepted accounting principles.
KPMG
Chartered Accountants
Vancouver, Canada
May 13, 1997
F-2
<PAGE> 6
TICKETMASTER CANADA HOLDINGS LTD.
CONSOLIDATED BALANCE SHEETS
(EXPRESSED IN CANADIAN DOLLARS)
ASSETS
<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 29,
1997 1996
------------ ------------
<S> <C> <C>
Current assets:
Cash and short-term investments................................. $ 21,974,432 $ 16,689,784
Accounts receivable:
Ticket sales................................................. 2,239,844 2,759,034
Other........................................................ 2,041,405 1,454,506
Receivable from affiliates...................................... -- 386,887
Receivable from shareholders.................................... -- 8,512
Inventory....................................................... -- 16,101
Prepaid expenses and deposits................................... 1,055,395 1,052,624
------------ ------------
Current assets.......................................... 27,311,076 22,367,448
Property and equipment............................................ 4,248,278 4,742,574
Rental property and equipment..................................... -- 292,274
Intangible and other assets, net.................................. 2,564,683 2,202,068
Deferred income taxes............................................. 160,500 157,500
------------ ------------
$ 34,284,537 $ 29,761,864
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of debt......................................... $ 533,324 $ 744,347
Accounts payable:
Trade........................................................ 1,788,749 823,906
Clients...................................................... 20,135,591 17,209,956
Accrued liabilities............................................. 1,978,516 1,865,505
Shareholder bonuses payable..................................... 262,886 700,000
Income taxes payable............................................ 932,220 66,063
Deferred revenue................................................ 585,170 1,048,993
------------ ------------
Current liabilities..................................... 26,216,456 22,458,770
Long-term debt.................................................... 1,257,073 1,050,621
Payable to shareholders........................................... -- 927,121
------------ ------------
Shareholders' equity:
Share capital................................................... 6,587,528 2,531,577
Retained earnings............................................... 223,480 2,793,775
------------ ------------
Total shareholders' equity.............................. 6,811,008 5,325,352
Commitments and contingencies.....................................
------------ ------------
$ 34,284,537 $ 29,761,864
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 7
TICKETMASTER CANADA HOLDINGS LTD.
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(EXPRESSED IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------------
FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Revenue:
Ticketing operations.............................. $ 34,868,202 $ 29,162,739 $ 31,188,405
Other revenue..................................... 1,138,565 1,521,984 557,362
----------- ----------- -----------
36,006,767 30,684,723 31,745,767
Expenses:
Ticketing operations.............................. 19,158,296 17,191,817 17,319,678
Ticketing, selling, general and administrative.... 9,304,008 8,472,548 8,054,097
Shareholder bonuses............................... 1,410,859 775,778 2,019,949
Depreciation and amortization..................... 1,414,790 1,380,166 1,202,757
Interest.......................................... 186,541 220,533 214,821
----------- ----------- -----------
31,474,494 28,040,842 28,811,302
----------- ----------- -----------
4,532,273 2,643,881 2,934,465
Other expenses (income)............................. 471,390 (55,154) (132,283)
----------- ----------- -----------
Income before income taxes.......................... 4,060,883 2,699,035 3,066,748
Income taxes:
Current........................................... 1,927,808 1,009,954 985,266
Deferred.......................................... (3,000) 120,803 313,881
----------- ----------- -----------
1,924,808 1,130,757 1,299,147
----------- ----------- -----------
Net income.......................................... 2,136,075 1,568,278 1,767,601
Retained earnings (deficit), beginning of year...... 2,793,775 1,654,732 (15,046)
----------- ----------- -----------
4,929,850 3,223,010 1,752,555
Dividends........................................... 650,419 429,235 97,823
Reclassification of retained earnings into share
capital........................................... 4,055,951 -- --
----------- ----------- -----------
Retained earnings, end of year...................... $ 223,480 $ 2,793,775 $ 1,654,732
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 8
TICKETMASTER CANADA HOLDINGS LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
(EXPRESSED IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------
FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Cash provided by (used in):
Operations:
Net income............................................ $ 2,136,075 $ 1,568,278 $ 1,767,601
Items not involving cash:
Depreciation and amortization...................... 1,414,790 1,380,166 1,202,757
Equity (loss) of an affiliate...................... 1,173 (82,293) (173,368)
Write-off of receivable from an affiliate.......... 333,360 -- --
Depreciation and amortization of rental property
and equipment.................................... 13,969 14,439 17,000
Deferred income taxes.............................. (3,000) 120,803 313,881
Loss (gain) on disposal of property and
equipment........................................ 102,828 (6,037) --
Net change in non-cash operating working capital...... 4,564,330 (6,629,878) 10,188,585
------------ ------------ ------------
8,563,525 (3,634,522) 13,316,456
Financing:
Advances (repayments) from affiliated companies....... 53,527 (35,019) (59,385)
Repayment of long-term debt........................... (711,958) (1,176,288) (217,680)
Advances to shareholders.............................. (918,609) 110,918 (508,398)
Dividends............................................. (650,419) (429,235) (97,823)
Proceeds from long-term debt.......................... 872,557 -- 690,000
Increase (decrease) of obligations under capital
lease.............................................. (165,170) 71,966 563,390
------------ ------------ ------------
(1,520,072) (1,457,658) 370,104
Investments:
Proceeds from sale of rental property and equipment... 279,377 -- --
Purchase of property and equipment.................... (745,063) (841,985) (2,201,605)
Proceeds from sale of property and equipment.......... 44,376 23,483 18,728
Advances of convenience charge participations......... (1,675,000) -- --
Repayment of advance convenience charge
participation...................................... 543,577 -- --
Dividends received from an affiliate.................. -- 96,075 236,741
Proceeds (purchase) of rental property equipment...... (1,072) 1,397 --
Advance note receivable............................... (250,000) -- (437,500)
Reduction note receivable............................. 45,000 -- --
Acquisition of ticketing rights....................... -- -- (500,000)
------------ ------------ ------------
(1,758,805) (721,030) (2,883,636)
------------ ------------ ------------
Increase (decrease) in cash and short-term
investments........................................... 5,284,648 (5,813,210) 10,802,924
Cash and short-term investments, beginning of year...... 16,689,784 22,502,994 11,700,070
------------ ------------ ------------
Cash and short-term investments, end of year............ $ 21,974,432 $ 16,689,784 $ 22,502,994
============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 9
TICKETMASTER CANADA HOLDINGS LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL
Ticketmaster Canada Holdings Ltd. (the "Company") is the leading provider
of automated ticketing services in Canada with clients including the country's
foremost entertainment facilities promoters and professional sports franchises.
The Company provides automated ticketing services to organizations that sponsor
events which enable patrons alternatives to purchasing tickets through
operator-staffed call centers, the Internet and independent sales outlets remote
to the facility box office.
PRINCIPLES OF CONSOLIDATION AND PRESENTATION
The Company was formed by the amalgamation of certain companies principally
Vancouver Ticket Center Ltd. and Ticketmaster Canada Inc. (the "Companies"),
which amalgamation took place in contemplation of the acquisition of the
Companies by Ticketmaster Group, Inc. in a transaction pursuant to an agreement
dated May 13, 1997 (See Note 7). The amalgamation has been accounted for under
the pooling-of-interest method whereby the assets and liabilities of the
Companies are carried forward in the accounts of the Company at their carrying
values in the records of the predecessor companies and the operations are the
combined operations of the Companies. All intercompany balances and transactions
have been eliminated.
The Consolidated Balance Sheet at February 28, 1997 has been adjusted to
give effect to certain transactions that occurred subsequent to that date
relating to the acquisition of the Company by Ticketmaster Group, Inc. The
adjustment gives affect to the settlement of all amounts due to or from
shareholders along with a dividend and sale of non-ticketing assets to the
former shareholders aggregating $260,000 and $157,422 respectively. Accordingly,
the accompanying balance sheet at February 28, 1997 includes the assets acquired
and liabilities assumed by Ticketmaster Group, Inc. in its acquisition of the
amalgamated Companies.
ACCOUNTING PRINCIPLES
These financial statements have been prepared based on accounting
principles generally accepted in Canada. These accounting principles are not
materially different from accounting principles generally accepted in the U.S.
for the Company.
REVENUE RECOGNITION
The Company recognizes convenience charge revenue as tickets are sold, and
user fee revenue upon completion of the event.
RENTAL PROPERTY
Rental property is recorded at the lower of cost or net recoverable amount.
Depreciation is calculated using a declining-balance method at a rate of 4%.
F-6
<PAGE> 10
TICKETMASTER CANADA HOLDINGS LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(EXPRESSED IN CANADIAN DOLLARS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Depreciation is computed using
the following methods and annual rates:
<TABLE>
<CAPTION>
ASSET BASIS RATE
---------------------------------- --------------------------------- --------
<S> <C> <C>
Building straight-line 20 years
Computer equipment declining-balance 20% - 30%
Furniture, fixtures and equipment declining-balance 20% - 30%
Automobiles declining-balance 30%
Equipment under capital lease straight-line over term of lease
Leasehold improvements straight-line over term of lease
</TABLE>
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
2. PROPERTY AND EQUIPMENT
Property and Equipment consisted of the following:
<TABLE>
<CAPTION>
1997 1996
ACCUMULATED NET BOOK NET BOOK
COST DEPRECIATION VALUE VALUE
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Land................................ $ 600,000 $ -- $ 600,000 $ 600,000
Buildings and leaseholds............ 1,245,881 589,981 655,900 748,815
Computer equipment.................. 7,117,427 5,196,784 1,920,643 2,098,064
Furniture and equipment............. 1,593,524 961,218 632,306 667,791
Equipment under capital leases...... 871,448 432,019 439,429 627,904
----------- ----------- ---------- ----------
$11,428,280 $ 7,180,002 $4,248,278 $4,742,574
=========== =========== ========== ==========
</TABLE>
3. INTANGIBLE AND OTHER ASSETS, NET
Intangible and other long term assets consisted of the following:
<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 29,
1997 1996
------------ ------------
<S> <C> <C>
Acquired ticketing rights.................................... $ 250,000 $ 350,000
Advances of participations in convenience charges............ 731,423 --
Cost in excess of assets acquired............................ 1,190,760 1,413,395
Note receivable.............................................. 392,500 437,500
Other........................................................ -- 1,173
----------- -----------
$ 2,564,683 $ 2,202,068
=========== ===========
</TABLE>
F-7
<PAGE> 11
TICKETMASTER CANADA HOLDINGS LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(EXPRESSED IN CANADIAN DOLLARS)
3. INTANGIBLE AND OTHER ASSETS, NET (CONTINUED)
Acquired ticketing rights are recorded at cost and are being amortized over
the lesser of the life of the contract or five years. Cost in excess of net
assets acquired is recorded at cost and is being amortized on a straight-line
basis over ten years.
Advances of participations in convenience charges bear interest at bank
prime plus 1.5% except at February 28, 1997 $171,776 is non-interest bearing.
The advances will be repaid by applying certain ticket convenience charge
participations payable by the Company to the promoters in 1998 through 2006.
The Note Receivable is non-interest bearing and is being repaid through
quarterly installments of $62,500 and by the application of certain fees payable
by the Company to a ticketing services client in 1997, 1998 and 1999.
4. LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Western Economic Diversification unsecured loan:
Payable in monthly installments of $6,000 including
interest at 7.34% per annum to July 1, 1997............ $ 30,000 $ 90,000
Non interest bearing, payable in monthly installments of
$6,000 commencing August 1, 1997....................... 268,217 270,000
---------- ----------
298,217 360,000
Term demand loan, payable in monthly installments of
$3,333 plus interest at prime plus 1% per annum,
secured by a general securities agreement with a fixed
charge on certain equipment............................ 106,667 146,667
Term demand loan, payable in quarterly installments of
$62,500 plus interest at prime plus 1% per annum,
secured by a floating charge on all Company assets..... 872,557 217,234
Term demand loan, payable in monthly installments of
$20,883 plus interest at prime plus 1.25% secured by a
registered general security agreement with a floating
charge on all assets................................... -- 250,001
Term demand loan, payable in monthly installments of
$1,022 including interest at 7.75% per annum, secured
by a mortgage on rental property (note 2).............. -- 141,317
Capitalized lease obligations, plus interest at rates
ranging from 6% to 10%................................. 511,313 676,483
Other..................................................... 1,643 3,266
---------- ----------
1,790,397 1,794,968
Less: Current portion....................................... 533,324 744,347
---------- ----------
$1,257,073 $1,050,621
========== ==========
</TABLE>
F-8
<PAGE> 12
TICKETMASTER CANADA HOLDINGS LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(EXPRESSED IN CANADIAN DOLLARS)
4. LONG-TERM DEBT (CONTINUED)
Principal repayments on long-term debt due in each of the next five years
as follows:
<TABLE>
<S> <C>
1998............................................. $ 533,324
1999............................................. 558,485
2000............................................. 492,031
2001............................................. 194,557
2002............................................. 12,000
----------
$1,790,397
==========
</TABLE>
5. SHARE CAPITAL
The share capital of the Company is as follows:
Authorized:
50,000,000 class A voting common shares without par value
50,000,000 class B voting common shares with a par value of $0.001 per
share
50,000,000 class C non-voting common shares with a par value of $0.001
per share
50,000,000 class A non-voting preferred shares with a par value of
$0.01 per share, redeemable at $100 per share
50,000,000 class B non-voting preferred shares without par value,
redeemable at $1 per share
Issued:
<TABLE>
<CAPTION>
FEBRUARY 28,
1997
------------
<S> <C>
293,530 class A common shares................................. $ 47,422
1,000 class B common shares................................. 1
12,887,761 class C common shares................................. 12,888
15,642,802 class B preferred shares.............................. 6,527,217
-----------
$ 6,587,528
===========
</TABLE>
6. COMMITMENTS AND CONTINGENCY
The Company has entered into operating leases for office premises,
equipment and automobiles. Minimum annual lease payments required are
approximately as follows:
<TABLE>
<S> <C>
1998.............................................. $332,453
1999.............................................. 171,139
2000.............................................. 86,275
2001.............................................. 30,480
2002.............................................. 14,280
--------
$634,627
========
</TABLE>
The Company is also committed to pay its share of operating costs related
to the premises leases.
F-9
<PAGE> 13
TICKETMASTER CANADA HOLDINGS LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(EXPRESSED IN CANADIAN DOLLARS)
6. COMMITMENTS AND CONTINGENCY (CONTINUED)
The Company has guaranteed certain obligations of a related company by
virtue of common directors, in the amount of $207,000 which during 1997 filed
for bankruptcy. The Company has not provided for the guarantee as the outcome is
not determinable at this time.
7. SUBSEQUENT EVENT
Pursuant to an agreement dated May 13, 1997, all the outstanding share
capital of the Company was purchased by Ticketmaster Group Inc.
F-10
<PAGE> 14
PRO FORMA FINANCIAL INFORMATION
(EXPRESSED IN U.S. DOLLARS)
As described in Note 4 of the January 31, 1997 Consolidated Financial
Statements (included in the Company's Annual Report on Form 10-K, File No.
0-21631), the Company acquired (by purchase, redemption or otherwise) various
Joint Venture partners', minority shareholders' and licensees' interests during
fiscal 1997. Additionally, pursuant to an Agreement of Purchase and Sale of
Stock, dated as of May 13, 1997, Ticketmaster acquired all of the issued and
outstanding shares of capital stock of its Canadian licensee for a purchase
price of Canadian $44,650,000 (approximately US $32,350,000) consisting of
approximately Canadian $22,325,000 in cash and 1,115,531 non-voting,
non-participating Class B Shares of Ticketmaster's new Canadian subsidiary
(Exchangeable Common Stock). Upon the occurrence or satisfaction, as applicable,
of certain specified events and conditions relating to operations in Canada, the
purchase price will be increased by approximately 12.3%, payable on May 1, 1998,
50% in cash and 50% in additional Class B Shares for shares of the Canadian
subsidiary. Holders of the Class B Shares have the right, at any time, to
exchange such Class B Shares of Ticketmaster's new Canadian subsidiary into
shares of Common Stock of Ticketmaster Group, Inc. on a one-for-one basis,
subject to adjustment. In addition, Ticketmaster has the right to require such
exchange to occur at any time on or after January 1, 2001, or earlier if certain
specified events occur. Accordingly, the following pro forma financial
information has been prepared to illustrate the effects of these acquisitions
and the application of the proceeds of the Initial Public Offering completed on
November 22, 1996. The pro forma financial information does not purport to
represent what the Company's results of operations actually would have been if
such transactions had in fact occurred on such dates. The pro forma adjustments
are based on currently available information and upon certain assumptions that
management believes are reasonable under certain circumstances. The pro forma
financial information and accompanying notes should be read in conjunction with
the Consolidated Financial Statements and related Notes thereto included in the
Company's Annual Report on Form 10-K.
F-11
<PAGE> 15
TICKETMASTER GROUP, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FISCAL YEAR ENDED JANUARY 31, 1997
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
(EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
ACQUISITION
ACQUISITIONS DURING FYE DURING
1/31/97 FYE 1/31/98
--------------------------- --------------
TICKETMASTER ACQUIRED OTHER ACQUIRED TICKETMASTER
CONSOLIDATED TICKETING BUSINESS- CANADA PRO FORMA COMBINED
BUSINESSES BUSINESSES PACER/CATS/CCS HOLDINGS, LTD. ADJUSTMENTS PRO FORMA
------------ ---------- -------------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Ticketing operations........ $ 205,491 $ 26,878 $ 25,763 $ (633)(1) $ 257,499
Concession Control
Systems................... 12,401 $ 12,964 25,365
Publications................ 10,769 176 10,945
Merchandising............... 2,300 2,300
------------ -------- -------- -------- -----------
230,961 27,054 12,964 25,763 296,109
Operating costs, expenses and
other items:
Ticketing operations........ 122,243 15,490 13,708 (605)(2) 150,836
Ticketing selling, general
and administrative........ 35,789 4,608 7,976 (1,044)(3) 47,329
Concession Control Systems
operations................ 7,377 10,133 17,510
Concession Control Systems
selling, general and
administrative............ 5,995 3,016 9,011
Publications................ 17,965 100 18,065
Merchandising............... 2,141 2,141
Corporate general and
administrative............ 16,849 16,849
Depreciation................ 6,714 962 362 781 350(4) 9,169
Amortization of goodwill.... 2,356 30 142 159 1,903(5) 4,590
Amortization other.......... 3,474 162 72 4,161(5) 7,869
Equity in net loss(income)
of unconsolidated
affiliates................ (3,605) (365) 24 830(6) (3,116)
------------ -------- -------- -------- -----------
Operating Income..... 13,663 6,067 (689) 3,043 15,856
Other expenses:
Interest expense, net....... 11,508 (47) 484 133 (2,539)(7) 9,539
Minority interests.......... 300 (219)(8) 81
Gain on sale of
unconsolidated
affiliate................. (3,195) (3,195)
------------ -------- -------- -------- -----------
Income (loss) before
income taxes....... 5,050 6,114 (1,173) 2,910 9,431
Income tax provision........ 3,258 1,375 1,983(9) 6,616
------------ -------- -------- -------- -----------
Net (loss) income.... $ 1,792 $ 6,114 ($ 1,173) $ 1,535 $ 2,815
============ ======== ======== ======== ===========
Net income per share.......... 0.10 0.11
============ ===========
Weighted Average number of
common shares
outstanding(10)............. 17,243,626 25,876,413
============ ===========
Supplemental Financial
Information:
EBITDA(11).................. $ 22,602 $ 34,368
Attributable EBITDA(12)..... 28,299 39,211
Net cash provided by
operating activities...... 15,585 35,714
Net cash used in investing
activities................ (43,752) (46,364)
Net cash provided by
financing activities...... 55,096 54,093
</TABLE>
F-12
<PAGE> 16
TICKETMASTER GROUP, INC.
NOTES TO JANUARY 31, 1997 PRO FORMA FINANCIAL INFORMATION
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(1) Represents the elimination of license fees paid by Delaware Valley
(Philadelphia) and Ticketmaster Canada Holdings Ltd. (Ticketmaster Canada)
to Ticketmaster during the year and the elimination of the profit on
equipment sold to Ticketmaster Canada.
(2) Represents the elimination of license fees paid by Delaware Valley
(Philadelphia) and Ticketmaster Canada to Ticketmaster during the year.
(3) Represents the elimination shareholder bonuses paid under previous
employment agreements to the prior owners of Ticketmaster Canada.
(4) Represents depreciation arising from the purchase of the building which
serves as corporate headquarters.
(5) Represents amortization arising from the purchased user agreements and
excess purchase price paid for the net assets of a joint venture partner's
50% equity interest in the European Joint Venture, a licensee's 100% equity
interest in Nashville, Tennessee, a joint venture partner's 50% equity
interest in Ticketmaster-Indiana, a licensee's 100% equity interest in
Delaware Valley (Philadelphia), a minority shareholder's 20% equity
interest in the Company's Florida operating subsidiary, a minority
shareholder's 20% equity interest in the Company's Texas operating
subsidiary, a licensee's approximately 50% equity interest in its Mexico
licensee and a licensee's 100% equity interest in Canada. The purchased
user agreements are being amortized using a discounted cash flow method
through the expiration date of the underlying contracts, generally ranging
from 3 to 10 years. The cost in excess of net assets acquired is being
amortized over a 30 year period.
(6) Represents the consolidation of income earned by Ticketmaster-Indiana and
the European Joint Venture, aggregating $2,027, losses incurred by the
Pacer Joint Venture, totaling $1,173 and $24 of losses incurred by an
equity investment of Ticketmaster Canada (the equity investment was not
part of the acquired business).
(7) Represents the reduction in interest expense resulting from the repayment
of indebtedness under the Company's Credit Agreement at rates of interest
incurred by the Company during the year, approximately 7.0%, the reduction
in interest expense related to debt not acquired in the Canadian
transaction, at rates of interest of approximately 10.0%, and additional
interest associated with additional borrowings under the Company's Credit
Agreement for the Canadian acquisition at rates of interest incurred by the
Company during the first quarter of fiscal 1998, approximately 6.7%.
(8) Represents a decrease in the minority interests held by the minority
shareholders in the Company's Florida and Texas operating subsidiaries.
(9) Represents the related income tax effect of the pro forma adjustments
utilizing a statutory Federal rate of 34% and a statutory rate for state
and foreign taxes based on the rate in the applicable jurisdiction.
(10) Includes 15,310,405 weighted average common and common equivalent shares
outstanding at January 31, 1996, 7,250,000 shares of Common Stock issued by
the Company in connection with the Initial Public Offering, 21,167 of
additional common stock equivalents at January 31, 1997, 1,862,069 and
317,241 shares of Common Stock issued in connection with the acquisition,
by purchase, redemption or otherwise, of its joint venture partner's 50%
equity interest in Ticketmaster-Indiana and the minority shareholder's 20%
equity interest in the Company's Florida operating subsidiary,
respectively, and 1,115,531 shares of exchangeable non voting, non
participating common stock of a subsidiary of the Company issued in
connection with the Canadian acquisition.
(11) Defined as revenue less operating costs before interest, taxes,
depreciation and amortization. EBITDA does not represent cash flows from
operations, as defined by generally accepted accounting principles,
F-13
<PAGE> 17
NOTES TO JANUARY 31, 1997 PRO FORMA FINANCIAL INFORMATION (CONTINUED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
and should not be considered to be an alternative to net income as an
indicator of operating performance or to cash flows from operations as a
measure of liquidity. Management believes that an EBITDA presentation is an
important factor in evaluating the amount of cash available for repayment
of debt, future investments and dividends and in determining cash available
for future distributions.
(12) Defined as Ticketmaster's pro rata share of its Consolidated Businesses and
Unconsolidated Joint Ventures' revenue less operating costs before
interest, taxes, depreciation and amortization. EBITDA does not represent
cash flows from operations, as defined by generally accepted accounting
principles, and should not be considered to be an alternative to net income
as an indicator of operating performance or to cash flows from operations
as a measure of liquidity. Management believes that an EBITDA presentation
is an important factor in evaluating the amount of cash available for
repayment of debt, future investments and dividends and in determining cash
available for future distributions.
F-14
