<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: January 12, 2001
----------------
Liberty Group Publishing, Inc.
--------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 333-46957 36-4197635
---------------------------- ------------- ------------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
3000 Dundee Road, Northbrook, Illinois 60062
-------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (847) 272-2244
-------------
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
(a) On November 1, 2000, Registrant, through Liberty Group Illinois
Holdings, Inc., a Delaware corporation and an indirect wholly-owned
subsidiary of Registrant (the "Registrant's Illinois Subsidiary"),
purchased from Mid-Illinois Newspapers, Inc., an Illinois corporation
(the "Seller") certain assets, including the real property, mastheads,
trade names, trademarks, service marks and other marks (and the
goodwill associated therewith), subscriber lists, inventory, accounts
receivable and equipment of or relating to certain newspapers
published, marketed and distributed by Seller in the State of Illinois
(the "Newspapers").
Prior to this transaction, no material relationship existed between
Registrant and Seller, or between any affiliates of such entities.
On November 1, 2000, Registrant paid to Seller $9,000,000 in cash (the
"Purchase Price").
In determining the Purchase Price and for purposes of the closing of
the transaction, the parties assumed that the net working capital (that
is, accounts receivable, certain prepaid expenses and other deposits
and certain other current assets net of current liabilities) of Seller
with respect to the business of operating the Newspapers as of November
1, 2000 was zero, subject to a post-closing adjustment, as set forth in
that certain Asset Purchase Agreement, dated as of October 31, 2000, by
and between Seller and Registrant's Illinois Subsidiary.
The Purchase Price was funded via Registrant's credit facility, which
is led by Citicorp USA, Inc., as administrative agent.
(b) Registrant acquired the purchased assets, constituting substantially
all of the assets owned by Seller in its business of publishing,
marketing and distributing the Newspapers. Registrant will use these
assets for the same purposes as previously used by Seller.
The foregoing summary of the terms of this transaction is qualified in
its entirety by reference to the provisions of that certain Asset
Purchase Agreement, dated as of October 31, 2000, by and between Seller
and Registrant's Illinois Subsidiary, a copy of which is filed as an
exhibit to this Report and is hereby incorporated herein by reference.
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Mid-Illinois Newspapers, Inc. - Pekin Division
Independent Auditor's Report
Balance Sheets at April 30, 2000 and 1999
Statements of Operations for the years ended April 30, 2000 and 1999
Statements of Stockholders' Equity for the years ended April 30, 2000
and 1999
Statements of Cash Flows for the years ended April 30, 2000 and 1999
Summary of Significant Accounting Policies
Notes to Financial Statements
Supplemental Information
(b) Financial Statements of Mid-Illinois Newspapers, Inc. - Pekin Division
Accountant's Report
Balance Sheets at October 31, 2000 and 1999 (unaudited)
Statements of Operations for the six months ended October 31, 2000 and
1999 (unaudited)
Statements of Stockholders' Equity for the six months ended October 31,
2000 and 1999 (unaudited)
Statements of Cash Flows for the six months ended October 31, 2000 and
1999 (unaudited)
Summary of Significant Accounting Policies
Notes to Financial Statements
Supplemental Information
(c) Pro Forma Financial Information
Pro Forma Consolidated Balance Sheet as of September 30, 2000
(unaudited)
Pro Forma Consolidated Statements of Operations for the year ended
December 31, 1999 (unaudited) and the nine months ended September 30,
2000 (unaudited)
Notes to Pro Forma Consolidated Financial Statements
(d) Exhibits (incorporated by reference from exhibits included in the
Registrant's Form 8-K filed November 16, 2000)
2.1 Asset Purchase Agreement, dated as of October 31, 2000, by and
between Mid-Illinois Newspapers, Inc. and Liberty Group
Illinois Holdings, Inc.
<PAGE> 4
MID-ILLINOIS NEWSPAPERS, INC. - PEKIN DIVISION
Pekin, Illinois
FINANCIAL STATEMENTS
April 30, 2000 and 1999
<PAGE> 5
MID-ILLINOIS NEWSPAPERS, INC. - PEKIN DIVISION
TABLE OF CONTENTS
PAGE
Independent Auditor's Report........................................... 1
Financial Statements
Statement 1 - Balance Sheets....................................... 2
Statement 2 - Statements of Operations............................. 3
Statement 3 - Statements of Stockholders' Equity................... 4
Statement 4 - Statements of Cash Flows............................. 5
Summary of Significant Accounting Polices.......................... 6
Notes to Financial Statements...................................... 7
Supplemental Information
Schedule A - Schedules of Operating Costs and Expenses............. 8
<PAGE> 6
Independent Auditor's Report
Board of Directors
Mid-Illinois Newspapers, Inc. - Pekin Division
Pekin, Illinois
I have audited the accompanying balance sheets of Mid-Illinois Newspapers,
Inc. - Pekin Division as of April 30, 2000 and 1999, and the related statements
of operations, stockholders' equity, and cash flows for the years then ended.
These financial statements are the responsibility of the Company's management.
My responsibility is to express an opinion on these financial statements based
on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about 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.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Mid-Illinois Newspapers, Inc. -
Pekin Division as of April 30, 2000 and 1999, and the results of its operations
and cash flows for the years then ended, in conformity with generally accepted
accounting principles.
My audit was made for the purpose of forming an opinion on the basic financial
statements taken as whole. The accompanying supplemental information is
presented for purposes of additional analysis and is not a required part of the
basic financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements, and in my
opinion is fairly stated, in all material respects in relation to the basic
financial statements taken as a whole.
/s/ ALLAN P. REUSCH
---------------------------
Certified Public Accountant
December 14, 2000
<PAGE> 7
Statement 1
Mid-Illinois Newspapers, Inc. - Pekin Division
Balance Sheets
April 30, 2000 and 1999
ASSETS
2000 1999
---------- ----------
Current Assets
Cash and Cash Equivalents (Note 1) $ 15,966 $ 24,609
Accounts Receivable, net of allowance
for doubtful accounts of $19,000
and $19,000 336,131 335,112
Inventories 40,683 54,849
Other Assets 6,905 7,218
---------- ----------
Total Current Assets 399,685 421,788
---------- ----------
Property, Plant & Equipment,
at cost (Note 2) 3,487,046 3,436,416
Less Accumulated Deprecation (2,305,932) (2,177,333)
---------- ----------
Net Property, Plant & Equipment 1,181,114 1,259,083
---------- ----------
Other Assets
Goodwill 474,667 496,917
---------- ----------
Total Assets $2,055,466 $2,177,788
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 44,237 $ 59,251
Accrued Wages 33,489 31,657
Accrued Vacation 27,350 29,215
Accrued Payroll Taxes 15,776 29,440
Subscriptions Paid in Advance 290,605 258,269
Due to Affiliates 1,230,926 1,352,239
Accrued Income Taxes 41,723 42,506
---------- ----------
Total Current Liabilities 1,684,106 1,802,577
---------- ----------
Stockholders' Equity
Retained Earnings 371,360 375,211
---------- ----------
Total Stockholders' Equity 371,360 375,211
---------- ----------
Total Liabilities & Stockholders' Equity $2,055,466 $2,177,788
========== ==========
These financial statements should be read only in connection with the
accompanying accountant's report, summary of significant accounting policies,
and notes to financial statements.
<PAGE> 8
Statement 2
Mid-Illinois Newspapers, Inc. - Pekin Division
Statements of Operations
Years Ended April 30, 2000 and 1999
2000 1999
----------- ----------
Revenues:
Advertising Sales $ 3,111,525 $3,083,028
Circulation Sales 831,427 915,916
Other 5,950 --
----------- ----------
Total Revenues 3,948,902 3,998,944
Operating Costs and Expenses:
Operating Costs 1,781,326 1,857,507
Selling, General &
Administrative Expenses 1,356,280 1,342,965
Depreciation 218,152 196,319
Amortization 22,250 22,250
----------- ----------
Total Operating Costs and Expenses 3,378,008 3,419,041
Income From Operations
Before Income Taxes 570,894 579,903
----------- ----------
Federal and State Taxes (199,534) (204,692)
----------- ----------
Net Income $ 371,360 $ 375,211
=========== ==========
These financial statements should be read only in connection with the
accompanying accountant's report, summary of significant accounting policies,
and notes to financial statements.
<PAGE> 9
Statement 3
Mid-Illinois Newspapers, Inc. - Pekin Division
Statements of Stockholders' Equity
Years Ended April 30, 2000 and 1999
Total
Retained Stockholders'
Earnings Equity
----------- ------------
Balances at May 1, 1998 $ -- $ --
Net Income 375,211 375,211
Balances at April 30, 1999 375,211 375,211
Net Income 371,360 371,360
Distribution to Affiliates (375,211) (375,211)
----------- ----------
Balances at April 30, 2000 $ 371,360 $ 371,360
=========== ==========
These financial statements should be read only in connection with the
accompanying accountant's report, summary of significant accounting policies,
and notes to financial statements.
<PAGE> 10
Statement 4
Mid-Illinois Newspapers, Inc. - Pekin Division
Statements of Cash Flows
Years Ended April 30, 2000 and 1999
2000 1999
---------- ----------
Cash Flows From Operating Activities:
Net Income $ 371,360 $ 375,211
Adjustments to Reconcile Net Income
Net Cash Provided by Operating
Activities:
Depreciation 218,152 196,319
Amortization 22,250 22,250
Effects of Changes in Operating Assets
& Liabilities:
(Increase) Decrease in Accts Receivable (1,019) (49,336)
(Increase) Decrease in Inventories 14,166 1,532
(Increase) Decrease in Other Assets 313 106
Increase (Decrease) in Accounts Payable (15,014) 4,757
Increase (Decrease) in Accrued Expenses (14,480) 1,168
Increase (Decrease) in Subs. Pd. Adv. 32,336 10,333
Increase (Decrease) in Due to Affil. (121,313) (143,509)
---------- ----------
Net Cash Provided by Operating
Activities 506,751 418,831
---------- ----------
Cash Flows From Investing Activities:
Capital Expenditures (140,183) (86,568)
---------- ----------
Net Cash Used in Investing Activities (140,183) (86,568)
---------- ----------
Cash Flows From Financing Activities:
Distribution of Earnings (375,211) (335,189)
---------- ----------
Net Cash Used in Financing Activities (375,211) (335,189)
---------- ----------
Net Increase (Decrease) in
Cash & Cash Equivalents (8,643) (2,926)
Cash & Cash Equivalents at Beginning
of Year 24,609 27,535
---------- ----------
Cash & Cash Equivalents at End of Year $ 15,966 $ 24,609
========== ==========
Supplemental Disclosures of Cash Flow
Information
Cash Paid During Year for:
Federal and State Income Taxes $ 200,317 $ 203,315
========== ==========
These financial statements should be read only in connection with the
accompanying accountant's report, summary of significant accounting policies,
and notes to financial statements.
<PAGE> 11
Mid-Illinois Newspapers, Inc. - Pekin Division
Summary of Significant Accounting Policies
April 30, 2000 and 1999
The Mid-Illinois Newspapers, Inc. - Pekin Division is engaged in the business of
publishing, marketing and distributing the "Pekin Daily Times", a daily
newspaper in Pekin, Illinois, and "The Review", a weekly total market coverage
publication distributed to all non-subscribers to the "Pekin Daily Times", in
the Pekin, Illinois area.
Basis of Accounting
The Company presents its financial statements on the accrual basis of accounting
in accordance with generally accepted accounting principles.
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to be
cash equivalents.
Inventories
Inventories are stated at the lower of cost (first-in, first-out) or market (net
realizable value).
Property and Equipment
Property and equipment is stated at cost. Maintenance and repairs are charged to
operations. Depreciation is computed over the estimated useful lives of assets
using accelerated and straight-line methods.
Income Taxes
Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due.
Use of Estimates in Preparing Financial Statements
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 revenue and expenses during the reporting period. Actual
results could differ from those estimates.
This information should be read only in connection with
the accompanying accountant's report.
<PAGE> 12
Mid-Illinois Newspapers, Inc. - Pekin Division
Notes to Financial Statements
April 30, 2000 and 1999
Note 1 - Cash and Cash Equivalents
At year ends, the carrying amounts of the Company's deposits were
$15,966 and $24,609 and the bank balances were $74,616 and $48,144. Of
the bank balances, $74,616 and $48,144 were covered by federal
depository insurance.
Note 2 - Property, Plant and Equipment
A summary of property, plant and equipment at April 30, 2000 and 1999
follows:
2000 1999
----------- -----------
Land & Improvements $ 244,578 $ 244,578
Bldg & Leasehold Improvements 2,473,706 2,468,011
Machinery & Equipment 736,711 691,776
Automobiles 32,051 32,051
----------- -----------
Sub-Total 3,487,046 3,436,416
Accumulated Depreciation (2,305,932) (2,177,333)
----------- -----------
Total $ 1,181,114 $ 1,259,083
=========== ===========
Depreciation expense for the year ended April 30, 2000 and 1999 was
$218,152 and $196,319.
Note 3 - Subsequent Events
On October 31, 2000, the Company's stockholders agreed to sell
substantially all of the assets. The selling price was $9,000,000. The
assets sold did not include cash and cash equivalents on hand or on
deposit in bank accounts.
This information should be read only in connection with
the accompanying accountant's report.
<PAGE> 13
SUPPLEMENTAL INFORMATION
<PAGE> 14
Schedule A
Mid-Illinois Newspapers, Inc. - Pekin Division
Schedules of Operating Costs and Expenses
Years Ended April 30, 2000 and 1999
2000 1999
---------- ----------
Operating Costs:
Salaries & Wages $ 840,695 $ 824,457
Payroll Taxes 72,477 71,340
Newsprint Consumed 319,355 411,741
Other Departmental Expenses:
Editorial 132,597 134,520
Photo 26,802 30,232
Composing 98,336 81,369
Press 32,899 47,968
Ink 20,417 26,573
Wire Service 56,609 57,472
Features 25,011 23,786
Circulation 135,917 133,024
Mailroom 20,211 15,025
---------- ----------
Total Operating Costs 1,781,326 1,857,507
Selling, General & Administrative Expenses:
Salaries & Wages 634,208 621,959
Payroll Taxes 54,675 53,818
Other Taxes 88 452
Property Taxes 7,253 7,964
Maintenance 40,148 40,525
Utilities 37,081 33,636
Repairs 799 12,371
Administrative & Other:
Office 49,975 53,873
Dues & Donations 6,707 8,184
Telephone 20,261 19,533
Legal -- 562
Administration 81,432 53,026
Insurance 16,805 16,125
Other Departmental Expenses:
Retail 39,858 38,527
TMC 127,714 149,860
Group - Other 10,788 7,767
Other - Dept. 5,220 9,283
Pension & Group Insurance 223,268 215,500
---------- ----------
Total Selling, General & Administrative 1,356,280 1,342,965
Depreciation 218,152 196,319
Amortization 22,250 22,250
---------- ----------
Total Operating Costs and
Expenses (Statement 2) $3,378,008 $3,419,041
========== ==========
This information should be read only in connection with the accompanying
accountant's report.
<PAGE> 15
MID-ILLINOIS NEWSPAPERS, INC. - PEKIN DIVISION
Pekin, Illinois
FINANCIAL STATEMENTS
Six Months Ended October 31, 2000 and 1999
<PAGE> 16
MID-ILLINOIS NEWSPAPERS, INC. - PEKIN DIVISION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Accountant's Report .................................................. 1
Financial Statements
Statement 1 - Balance Sheets ................................ 2
Statement 2 - Statements of Operations ...................... 3
Statement 3 - Statements of Stockholders' Equity ............ 4
Statement 4 - Statements of Cash Flows ...................... 5
Summary of Significant Accounting Polices ................... 6
Notes to Financial Statements ............................... 7
Supplemental Information
Schedule A - Schedules of Operating Costs and Expenses ...... 8
</TABLE>
<PAGE> 17
Accountant's Report
Board of Directors
Mid-Illinois Newspapers, Inc. - Pekin Division
Pekin, Illinois
I have compiled the accompanying balance sheets of Mid-Illinois Newspapers, Inc.
- Pekin Division as of October 31, 2000 and 1999, and the related statements of
operations, stockholders' equity, and cash flows for the six months then ended,
and the accompanying supplementary information contained in Schedule A, which is
presented only for supplementary analysis purposes, in accordance with
Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements and
supplementary schedule information that is the representation of management. I
have not audited or reviewed the accompanying financial statements and
supplementary schedule and, accordingly, do not express an opinion or any other
form of assurance on them.
/s/ ALLAN P. REUSCH
--------------------------------
Certified Public Accountant
December 14, 2000
<PAGE> 18
Statement 1
Mid-Illinois Newspapers, Inc. - Pekin Division
Balance Sheets
October 31, 2000 and 1999
(See Accountants' Compilation Report)
ASSETS
<TABLE>
<CAPTION>
2000 1999
----------- -----------
<S> <C> <C>
Current Assets
Cash and Cash Equivalents (Note 1) $ 10,684 $ 18,312
Accounts Receivable, net of allowance
for doubtful accounts of $20,000
and $21,000 355,981 381,447
Inventories 91,890 45,998
Other Assets 22,456 6,006
----------- -----------
Total Current Assets 481,011 451,763
----------- -----------
Property, Plant & Equipment,
at cost (Note 2) 3,528,703 3,446,556
Less Accumulated Deprecation (2,388,438) (2,186,779)
----------- -----------
Net Property, Plant & Equipment 1,140,265 1,259,777
----------- -----------
Other Assets
Goodwill 463,542 485,792
----------- -----------
Total Assets $ 2,084,818 $ 2,197,332
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 108,360 $ 78,753
Accrued Wages -- 34,817
Accrued Vacation -- 8,006
Accrued Payroll Taxes 25,295 15,975
Subscriptions Paid in Advance 246,567 239,497
Due to Affiliates 1,520,958 1,526,919
Accrued Income Taxes -- 50,022
----------- -----------
Total Current Liabilities 1,901,180 1,953,989
----------- -----------
Stockholders' Equity
Retained Earnings 183,638 243,343
----------- -----------
Total Stockholders' Equity 183,638 243,343
----------- -----------
Total Liabilities & Stockholders' Equity $ 2,084,818 $ 2,197,332
=========== ===========
</TABLE>
See accompanying accountant's report, summary of significant accounting
policies, and notes to financial statements.
<PAGE> 19
Statement 2
Mid-Illinois Newspapers, Inc. - Pekin Division
Statements of Operations
Six Months Ended October 31, 2000 and 1999
(See Accountants' Compilation Report)
<TABLE>
<CAPTION>
2000 1999
----------- -----------
<S> <C> <C>
Revenues:
Advertising Sales $ 1,521,708 $ 1,629,304
Circulation Sales 454,565 423,461
Other -- 3,552
----------- -----------
Total Revenues 1,976,273 2,056,317
Operating Costs and Expenses:
Operating Costs 887,363 901,428
Selling, General &
Administrative Expenses 687,461 685,142
Depreciation 129,708 99,000
Amortization 11,125 11,125
----------- -----------
Total Operating Costs and Expenses 1,715,657 1,696,695
Income From Operations
Before Income Taxes 260,616 359,622
----------- -----------
Federal and State Taxes (76,978) (116,279)
----------- -----------
Net Income $ 183,638 $ 243,343
=========== ===========
</TABLE>
See accompanying accountant's report, summary of significant accounting
policies, and notes to financial statements.
<PAGE> 20
Statement 3
Mid-Illinois Newspapers, Inc. - Pekin Division
Statements of Stockholders' Equity
Six Months Ended October 31, 2000 and 1999
(See Accountants' Compilation Report)
Total
Retained Stockholders'
Earnings Equity
--------- -------------
Balances at May 1, 1999 $ -- $ --
Net Income 243,343 243,343
--------- ---------
Balances at October 31, 1999 $ 243,343 $ 243,343
========= =========
Balances at May 1, 2000 $ 371,360 371,360
Net Income 183,638 183,638
Distributions to Affiliates (371,360) (371,360)
--------- ---------
Balances at October 31, 2000 $ 183,638 $ 183,638
========= =========
See accompanying accountant's report, summary of significant accounting
policies, and notes to financial statements.
<PAGE> 21
Statement 4
Mid-Illinois Newspapers, Inc. - Pekin Division
Statements of Cash Flows
Six Months Ended October 31, 2000 and 1999
(See Accountants' Compilation Report)
<TABLE>
<CAPTION>
2000 1999
--------- ---------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income $ 183,638 $ 243,343
Adjustments to Reconcile Net Income
Net Cash Provided by Operating
Activities:
Depreciation 129,708 99,000
Amortization 11,125 11,125
Effects of Changes in Operating Assets & Liabilities:
(Increase) Decrease in Accts Receivable (19,850) (46,335)
(Increase) Decrease in Inventories (51,207) 8,851
(Increase) Decrease in Other Assets (15,551) 1,212
Increase (Decrease) in Accounts Payable 64,123 19,502
Increase (Decrease) in Accrued Expenses (93,043) (23,998)
Increase (Decrease) in Subs. Pd. Adv. (44,038) (18,772)
Increase (Decrease) in Due to Affil. 290,032 174,680
--------- ---------
Net Cash Provided by Operating Activities 454,937 468,608
--------- ---------
Cash Flows From Investing Activities:
Capital Expenditures (88,859) (99,694)
--------- ---------
Net Cash Used in Investing Activities (88,859) (99,694)
--------- ---------
Cash Flows From Financing Activities:
Distribution of Earnings (371,360) (375,211)
--------- ---------
Net Cash Used in Financing Activities (371,360) (375,211)
--------- ---------
Net Increase (Decrease) in
Cash & Cash Equivalents (5,282) (6,297)
Cash & Cash Equivalents at May 1, 15,966 24,609
--------- ---------
Cash & Cash Equivalents at October 31, $ 10,684 $ 18,312
========= =========
Supplemental Disclosures of Cash Flow
Information
Cash Paid During Year for:
Federal and State Income Taxes $ 118,701 $ 108,763
========= =========
</TABLE>
See accompanying accountant's report, summary of significant accounting
policies, and notes to financial statements.
<PAGE> 22
Mid-Illinois Newspapers, Inc. - Pekin Division
Summary of Significant Accounting Policies
October 31, 2000 and 1999
The Mid-Illinois Newspapers, Inc. - Pekin Division is engaged in the
business of publishing, marketing and distributing the "Pekin Daily Times", a
daily newspaper in Pekin, Illinois, and "The Review", a weekly total market
coverage publication distributed to all non-subscribers to the "Pekin Daily
Times", in the Pekin, Illinois area.
Basis of Accounting
The Company presents its financial statements on the accrual basis of
accounting in accordance with generally accepted accounting principles.
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents.
Inventories
Inventories are stated at the lower of cost (first-in, first-out) or market
(net realizable value).
Property and Equipment
Property and equipment is stated at cost. Maintenance and repairs are
charged to operations. Depreciation is computed over the estimated useful lives
of assets using accelerated and straight-line methods.
Income Taxes
Income taxes are provided for the tax effects of transactions reported in
the financial statements and consist of taxes currently due.
Use of Estimates in Preparing Financial Statements
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 revenue and expenses during the reporting
period. Actual results could differ from those estimates.
This information should be read only in connection with
the accompanying accountant's report.
<PAGE> 23
Mid-Illinois Newspapers, Inc. - Pekin Division
Notes to Financial Statements
October 31, 2000 and 1999
Note 1 - Cash and Cash Equivalents
At year ends, the carrying amounts of the Company's deposits were
$10,684 and $18,312. Of the balances, $10,684 and $18,312 were covered
by federal depository insurance.
Note 2 - Property, Plant and Equipment
A summary of property, plant and equipment at October 31, 2000 and 1999
follows:
2000 1999
----------- -----------
Land & Improvements $ 244,578 $ 244,578
Bldg & Leasehold Improvements 2,473,706 2,468,012
Machinery & Equipment 778,368 701,915
Automobiles 32,051 32,051
----------- -----------
Sub-Total 3,528,703 3,446,556
Accumulated Depreciation (2,388,438) (2,186,779)
----------- -----------
Total $ 1,140,265 $ 1,259,777
=========== ===========
Depreciation expense for the six months ended October 31, 2000 and 1999
was $129,708 and $99,000.
Note 3 - Subsequent Events
On October 31, 2000, the Company's stockholders agreed to sell
substantially all of the assets. The selling price was $9,000,000. The
assets sold did not include cash and cash equivalents on hand or on
deposit in bank accounts.
This information should be read only in connection with
the accompanying accountant's report.
<PAGE> 24
SUPPLEMENTAL INFORMATION
<PAGE> 25
Schedule A
Mid-Illinois Newspapers, Inc. - Pekin Division
Schedules of Operating Costs and Expenses
Six Months Ended October 31, 2000 and 1999
(See Accountant's Compilation Report)
2000 1999
---------- ----------
Operating Costs:
Salaries & Wages $ 434,537 $ 415,258
Payroll Taxes 34,466 35,220
Newsprint Consumed 165,527 170,362
Other Departmental Expenses:
Editorial 65,570 67,464
Photo 8,026 13,079
Composing 38,074 47,267
Press 13,382 16,744
Ink 10,854 13,642
Wire Service 28,708 28,138
Features 13,517 12,797
Circulation 62,992 74,600
Mailroom 11,710 6,857
---------- ----------
Total Operating Costs 887,363 901,428
Selling, General & Administrative Expenses:
Salaries & Wages 327,809 313,264
Payroll Taxes 26,001 26,569
Other Taxes 8 17
Property Taxes 7,340 7,297
Maintenance 10,663 22,287
Utilities 17,998 17,929
Repairs 744 3,333
Administrative & Other:
Office 23,784 28,265
Dues & Donations 7,200 6,377
Telephone 9,887 10,239
Administration 48,750 41,035
Insurance 3,760 3,503
Other Departmental Expenses:
Retail 22,658 17,982
TMC 65,167 72,637
Group - Other 3,451 2,539
Pension & Group Insurance 112,241 111,869
---------- ----------
Total Selling, General & Administrative 687,461 685,142
Depreciation 129,708 99,000
Amortization 11,125 11,125
---------- ----------
Total Operating Costs and
Expenses (Statement 2) $1,715,657 $1,696,695
========== ==========
This information should be read only in connection with the accompanying
accountant's report.
<PAGE> 26
PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED) OF
LIBERTY GROUP PUBLISHING, INC. AND SUBSIDIARIES AND ACQUIRED BUSINESS
The following unaudited pro forma consolidated balance sheet as of
September 30, 2000 and the pro forma consolidated statements of operations for
the year ended December 31, 1999 and nine months ended September 30, 2000 give
effect to the Company's acquisition of the Mid-Illinois Newspapers. The pro
forma information is based on the respective historical financial statements of
Liberty Group Publishing, Inc. and subsidiaries and the Mid-Illinois Newspapers
giving effect to the acquisition under the purchase method of accounting and the
assumptions and adjustments described in the accompanying notes to the pro forma
consolidated financial statements. The unaudited pro forma consolidated
statements of operations for the year ended December 31, 1999 and the nine
months ended September 30, 2000 reflect adjustments as if the acquisition had
occurred on January 1, 1999. The unaudited pro forma balance sheet as of
September 30, 2000 gives effect to the acquisition as if it had occurred on
September 30, 2000. See "Acquisition or Disposition of Assets".
The pro forma consolidated financial statements have been prepared by the
management of Liberty Group Publishing, Inc. and subsidiaries based upon the
audited financial statements of Liberty Group Publishing, Inc. and subsidiaries
and the unaudited financial statements of the Mid-Illinois Newspapers for the
year ended December 31, 1999 and the unaudited financial statements of these
entities for the nine months ended September 30, 2000. The financial effects of
the acquisition as presented in the pro forma financial statements are not
necessarily indicative of either financial position or results of operations
that would have been obtained had the acquisition actually occurred on the dates
set forth above, nor are they necessarily indicative of the results of future
operations. The pro forma consolidated financial statements should be read in
conjunction with the notes thereto, which are an integral part thereof, with the
consolidated financial statements of Liberty Group Publishing, Inc. and
subsidiaries and notes thereto, and with the financial statements of the
Mid-Illinois Newspapers and notes thereto included elsewhere in this Form 8-K/A.
<PAGE> 27
LIBERTY GROUP PUBLISHING INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2000
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
LIBERTY GROUP
PUBLISHING, INC. MID-ILLINOIS PRO FORMA PRO FORMA
CONSOLIDATED NEWSPAPERS ADJUSTMENTS (A)
------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,993 11 (11)(b) 1,993
Accounts receivable, net 21,996 374 -- 22,370
Inventories 3,014 47 -- 3,061
Prepaid expenses 1,315 -- -- 1,315
Other current assets 179 7 -- 186
------------------------------------------------------------
Total current assets 28,497 439 (11) 28,925
Property, plant and
equipment, net 54,681 1,162 -- 55,843
Intangible assets, net 461,633 465 (465)(b)
7,897 (a) 469,530
Deferred financing costs, net 12,167 -- -- 12,167
Other assets 456 -- -- 456
-------------------------------------------------------------
Total assets $ 557,434 2,066 7,421 566,921
=============================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Borrowings under revolving
credit facility $ 46,000 -- 9,100 (h) 55,110
Current portion of long-term
liabilities 456 -- -- 456
Accounts payable 3,346 45 -- 3,391
Accrued expenses 13,435 93 -- 13,528
Deferred revenue 8,861 249 -- 9,110
Due to Affiliates -- 1,477 (1,477)(b) --
-------------------------------------------------------------
Total current liabilities 72,098 1,864 7,633 81,595
Term loan B 99,500 -- -- 99,500
Senior subordinated notes 180,000 -- -- 180,000
Senior discount debentures 68,378 -- -- 68,378
Long-term liabilities, less
current portion 1,730 -- -- 1,730
Deferred income taxes 21,802 -- -- 21,802
-------------------------------------------------------------
Total liabilities 443,508 1,864 7,633 453,005
Senior mandatory redeemable
preferred stock 66,307 -- -- 66,307
Junior mandatory redeemable
preferred stock 87,149 -- -- 87,149
-------------------------------------------------------------
Total mandatory redeemable
preferred stock 153,456 -- -- 153,456
Stockholders' equity
Common stock 22 -- -- 22
Additional paid-in-capital 16,015 -- -- 16,015
Notes receivable (775) -- -- (775)
Retained earnings
(accumulated deficit) (54,761) 202 (202)(c) (54,761)
Treasury stock (31) -- -- (31)
-------------------------------------------------------------
Total stockholders'
equity (39,530) 202 (202) (39,530)
-------------------------------------------------------------
Total liabilities and
stockholders' equity $ 557,434 2,066 7,421 566,921
=============================================================
</TABLE>
See accompanying notes to pro forma consolidated financial statements.
<PAGE> 28
LIBERTY GROUP PUBLISHING, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
LIBERTY GROUP
PUBLISHING, INC. MID-ILLINOIS PRO FORMA PRO FORMA
CONSOLIDATED NEWSPAPERS ADJUSTMENTS (A)
DESCRIPTION ------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES:
Advertising $ 120,573 3,138 - 123,711
Circulation 27,543 888 - 28,431
Job printing and other 13,239 - - 13,239
------------------------------------------------------------
Total revenues 161,355 4,026 - 165,381
OPERATING COSTS AND EXPENSES:
Operating costs 68,351 1,828 - 70,179
Selling, general and
administrative 51,522 1,373 - 52,895
Depreciation and (22)(d)
amortization 16,657 233 202 (e) 17,070
------------------------------------------------------------
Income from operations 24,825 592 (180) 25,237
OTHER INCOME (EXPENSE):
Interest expense (32,313) - (865)(f) (33,178)
Net gain on exchange and
disposition of properties 6,197 - - (6,197)
------------------------------------------------------------
Total other income (expense) (26,116) - (865) (26,981)
Income (loss) before income
taxes and extraordinary item (1,291) 592 (1,045) (1,744)
Income tax expense 295 221 (221)(g) 295
------------------------------------------------------------
Income (loss) before
extraordinary item (1,586) 371 (824) (2,039)
Extraordinary gain on
insurance proceeds 485 - - 485
------------------------------------------------------------
Net income (loss) $ (1,101) 371 (824) (1,554)
============================================================
</TABLE>
See accompanying notes to pro forma consolidated financial statements.
<PAGE> 29
LIBERTY GROUP PUBLISHING, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2000
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
LIBERTY GROUP
PUBLISHING, INC. MID-ILLINOIS PRO FORMA PRO FORMA
DESCRIPTION CONSOLIDATED NEWSPAPERS ADJUSTMENTS (A)
---------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES:
Advertising $ 108,574 2,236 - 110,810
Circulation 23,671 631 - 24,302
Job printing and other 9,441 6 - 9,447
---------------------------------------------------------------
Total revenues 141,686 2,873 - 144,559
OPERATING COSTS AND EXPENSES:
Operating costs 59,989 1,350 - 61,339
Selling, general and
administrative 46,915 1,017 - 47,932
Depreciation and (17)(d)
amortization 14,559 175 151 (e) 14,868
---------------------------------------------------------------
Income (loss) from operations 20,223 331 (134) 20,420
OTHER INCOME (EXPENSE):
Interest expense (29,489) - (649)(f) (30,138)
---------------------------------------------------------------
Total other income (expense) (29,489) - (649) (30,138)
Income (loss) before
income taxes (9,266) 331 (783) (9,718)
Income tax expense
(benefit) 273 129 (129)(g) 273
---------------------------------------------------------------
Net income (loss) $ (9,539) 202 (654) (9,991)
===============================================================
</TABLE>
See accompanying notes to pro forma consolidated financial statements.
<PAGE> 30
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Pro Forma Consolidated Financial Statements
The unaudited pro forma consolidated financial statements combine the
unaudited consolidated balance sheets of the Company and the Mid-Illinois
Newspapers as of September 30, 2000 and the unaudited consolidated
statements of operations of the Company and the Mid-Illinois Newspapers
for the year ended December 31, 1999 and the nine months ended September
30, 2000.
Note 2 - Pro Forma Adjustments
(a) Represents recording of excess purchase price of acquisition over fair
value of net assets acquired, as follows:
Purchase price $ 9,000
Acquisition fees and expenses 100
---------------------------------------------------------
Total purchase price $ 9,100
Tangible net assets acquired (1,203)
---------
Excess purchase price $ 7,897
---------------------------------------------------------
The excess purchase price of the acquisition has been allocated to
intangible assets. Subject to the completion of management's final
valuation of these allocated amounts, the specific intangible assets and
estimated fair values to which the excess purchase price will be allocated
include: mastheads for $395, advertising lists for $3,159, subscriber
lists for $790 and the remainder representing goodwill. In the opinion of
management, completion of the final valuation will not materially impact
the unaudited pro forma consolidated balance sheet.
(b) Represents the elimination of the historical assets and liabilities of the
Mid-Illinois Newspapers that were not included as part of the purchase
agreement between the Registrant and the Mid-Illinois Newspapers.
(c) Represents the elimination of the retained earnings of the Mid-Illinois
Newspapers that would not be recorded by the Registrant as part of the
acquisition.
(d) Represents the elimination of the historical amortization expense of the
Mid-Illinois Newspapers that would not have been recorded by the
Registrant. See note (e) for the additional amortization expense that would
have been incurred by the Registrant.
(e) Represents the adjustment necessary to amortize the additional $7,897 of
intangible assets (calculated in note (a)) over their estimated useful
lives, presently estimated for mastheads, advertising lists, and goodwill
over 40 years, and subscriber lists over 33 years.
(f) Represents the adjustment necessary to reflect the additional interest
expense that the Registrant would have incurred during the year ended
December 31, 1999 and the nine months ended September 30, 2000 had the
Registrant financed the purchase of the Mid-Illinois Newspapers with its
revolving credit facility on January 1, 1999.
(g) Represents the elimination of the Mid-Illinois Newspapers income tax
expense that would not have been recorded by the Registrant had the
purchase occurred on January 1, 1999.
(h) Represents the adjustment necessary to reflect the additional borrowings
that the Registrant would incur under its revolving credit facility to
fund the purchase of the Mid-Illinois Newspapers.
<PAGE> 31
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, hereunto duly authorized.
Dated: January 12, 2001 Liberty Group Publishing, Inc.
By /s/ Kevin O'Shea
-----------------------------------------
Kevin O'Shea,
Executive Vice President,
Chief Financial Officer and Secretary
