<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
Amendment No. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) October 24, 1995
Media General, Inc.
(Exact name of registrant as specified in its charter)
Virginia 1-6383 54-0850433
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
333 E. Grace St., Richmond, Virginia 23219
(Address of principal executive offices) (Zip Code)
(804) 649-6000
(Registrant's telephone number, including area code)
N/A
-----------
(Former name or former address, if changed since last report.)
<PAGE> 2
Item 7. Financial Statements and Exhibits
The following financial statements and pro forma financial information omitted
from the Form 8-K dated November 7, 1995, (October 24, 1995, date of earliest
event reported) in reliance upon Item 7(a)(4) and 7(b)(2) of Form 8-K are filed
herewith.
(a) (1) Financial Statements of the Virginia Newspaper Operations of Worrell
Enterprises, Inc., as of and for the years ended December 31, 1994 and 1993.
Report of Independent Certified Public Accountants
Combined Balance Sheet
Combined Statement of Operations and Divisional Equity
Combined Statement of Cash Flows
Notes to Combined Financial Statements
(2) Unaudited Combined Condensed Balance Sheet of the Virginia Newspaper
Operations of Worrell Enterprises, Inc., as of September 30, 1995, and Unaudited
Combined Condensed Statements of Operations and Cash Flows for the nine months
ended September 30, 1995 and 1994.
(b) Pro Forma Combined Condensed Financial Statements of Media General,
Inc.
Pro Forma Combined Condensed Balance Sheet as of September 24, 1995
Pro Forma Combined Condensed Statement of Operations for the year
ended December 25, 1994
Pro Forma Combined Condensed Statement of Operations for the nine
months ended September 24, 1995
Notes to Pro Forma Combined Condensed Financial Statements
(c) Exhibits
23. Consent of Price Waterhouse LLP
<PAGE> 3
Report of Independent Certified Public Accountants
To the Stockholders and
Board of Directors of
Worrell Enterprises, Inc.
In our opinion, the accompanying combined balance sheet and the related combined
statements of operations and divisional equity and of cash flows present fairly,
in all material respects, the financial position of the Virginia Newspaper
Operations of Worrell Enterprises, Inc. at December 31, 1994 and 1993, and the
results of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
Price Waterhouse LLP
Fort Lauderdale, Florida
November 3, 1995
<PAGE> 4
The Virginia Newspaper Operations of Worrell Enterprises, Inc.
Combined Balance Sheet
(In thousands)
<TABLE>
<CAPTION>
December 31,
1994 1993
------ ------
<S> <C> <C>
Assets
- ------
Current assets:
Cash and cash equivalents $ 95 $ 136
Receivables:
Trade accounts, less allowance for doubtful
accounts of $175 and $226, respectively 3,817 3,791
Other 216 115
Inventories 455 333
Prepaid expenses and other current assets 246 202
------------ ------------
Total current assets 4,829 4,577
Property, plant and equipment, net 4,913 4,974
Intangible assets, net 8,895 9,336
Other assets 60 40
------------ ------------
Total assets $ 18,697 $ 18,927
============ ============
Liabilities and Divisional Equity
- ---------------------------------
Current liabilities:
Accounts payable:
Trade $ 292 $ 228
Affiliates 624 516
Accrued expenses:
Salaries and related expenses 548 558
Profit sharing plan 138 140
Other 145 155
Current portion of capitalized lease obligations 13 9
Deferred subscription revenue 1,174 1,153
Carrier bond liability 149 155
------------ ------------
Total current liabilities 3,083 2,914
Capitalized lease obligations 3,085 3,098
Other noncurrent liabilities 106 148
Commitments and contingencies --- ---
Divisional equity 12,423 12,767
------------ ------------
Total liabilities and divisional equity $ 18,697 $ 18,927
============ ============
The accompanying notes are an integral part of these combined financial statements.
</TABLE>
<PAGE> 5
The Virginia Newspaper Operations of Worrell Enterprises, Inc.
Combined Statement of Operations and Divisional Equity
(In thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
1994 1993
------ ------
<S> <C> <C>
Revenues:
Advertising $ 29,287 $ 28,238
Circulation 8,727 8,552
Other 1,766 1,778
------------ ------------
39,780 38,568
------------ ------------
Costs and expenses:
Production 16,735 16,797
General and administrative 2,925 2,818
Depreciation and amortization 1,222 1,189
------------ ------------
20,882 20,804
------------ ------------
Operating income 18,898 17,764
------------ ------------
Other income (expense):
Interest income 438 349
Interest expense (417) (434)
Other, net (341) (313)
------------ ------------
(320) (398)
------------ ------------
Net income 18,578 17,366
------------ ------------
Divisional equity at beginning of year 12,767 13,526
Contributions from WEI --- 942
Dividends to WEI (18,922) (19,067)
------------ ------------
Divisional equity at end of year $ 12,423 $ 12,767
============ ============
Unaudited pro forma data (Note 10):
Income before provision for income taxes 18,578 17,366
Pro forma provision for income taxes 7,378 6,908
------------ ------------
Pro forma net income $ 11,200 $ 10,458
============ ============
The accompanying notes are an integral part of these combined financial statements.
</TABLE>
<PAGE> 6
The Virginia Newspaper Operations of Worrell Enterprises, Inc.
Combined Statement of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
1994 1993
------ ------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 18,578 $ 17,366
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 1,222 1,189
Loss on sale of property, plant and equipment 44 18
Changes in assets and liabilities
Increase in receivables (127) (29)
(Increase) decrease in inventories (122) 60
Increase in prepaid expenses and other
current assets (44) (32)
Increase in other assets (20) (1)
Increase in accounts payable 172 495
Decrease in accrued expenses (22) (84)
(Decrease) increase in other liabilities (27) 77
------------ ------------
Net cash provided by operating activities 19,654 19,059
------------ ------------
Cash flows from investing activities:
Acquisition of intangible assets --- (406)
Capital expenditures (808) (415)
Proceeds from sale of property, plant
and equipment 44 ---
------------ ------------
Net cash used in investing activities (764) (821)
------------ ------------
Cash flows from financing activities:
Reduction of capitalized lease obligations (9) (20)
Dividends to WEI (18,922) (19,067)
Contributions from WEI --- 942
------------ ------------
Net cash used in financing activities (18,931) (18,145)
------------ ------------
Net (decrease) increase in cash and cash equivalents (41) 93
Cash and cash equivalents at beginning of year 136 43
------------ ------------
Cash and cash equivalents at end of year $ 95 $ 136
============ ============
Cash paid for interest $ 418 $ 430
============ ============
The accompanying notes are an integral part of these combined financial statements.
</TABLE>
<PAGE> 7
The Virginia Newspaper Operations of Worrell Enterprises, Inc.
Notes to Combined Financial Statements
December 31, 1994 and 1993
1. Organization, Principal Business Activities and Basis of
Presentation:
Organization and Principal Business Activities
The Virginia Newspaper Operations of Worrell Enterprises, Inc. (the
Virginia Newspapers) primary business is the management of daily,
weekly, semi-monthly and monthly newspapers in Virginia. The
Virginia Newspapers consist of the Charlottesville, Culpeper,
Lynchburg, Richlands and Suffolk, Virginia branches which are
majority owned by Worrell Enterprises, Inc. (WEI) and the Orange
branch which is owned by a trust affiliated with the majority
stockholder of WEI. All significant intercompany balances of the
Virginia Newspapers have been eliminated in the accompanying
combined financial statements.
Basis of Presentation
The accompanying combined financial statements have been prepared as
if the Virginia Newspapers had operated as an independent stand
alone entity for all the periods presented, except the Virginia
Newspapers generally have not had borrowings other than amounts due
to WEI and there was no allocation of WEI's consolidated borrowings
and interest expense. Because the accompanying combined financial
statements do not include an allocation of WEI's borrowings and
related interest expense and the divisional nature of the combined
financial statements, certain costs and expenses represent
allocations of the Virginia Newspapers' share of the total cost of
WEI and, accordingly, the financial information included herein is
not necessarily indicative of the financial position, results of
operations and cash flows of the Virginia Newspapers in the future
or indicative of the results that would have been reported if the
Virginia Newspapers had operated as an unaffiliated enterprise.
Management believes the combined statement of operations and
divisional equity includes a reasonable allocation of costs incurred
by WEI which benefit the Virginia Newspapers. Such expenses relate
primarily to executive management, general liability and property
insurance, legal and accounting services, and other support
services.
2. Accounting Principles:
Cash and Cash Equivalents
For purposes of the balance sheet and the statement of cash flows,
all highly liquid instruments with an original maturity at issuance
of three months or less are considered to be cash equivalents.
Inventories
Inventories are stated at the lower of cost or market value, cost
being determined using the first-in, first-out method. Inventories
consist primarily of newsprint and other supplies utilized in the
printing of newspapers.
<PAGE> 8
The Virginia Newspaper Operations of Worrell Enterprises, Inc.
Notes to Combined Financial Statements
December 31, 1994 and 1993
Property, Plant and Equipment
Property, plant and equipment is stated at cost and depreciated using
the straight-line method over estimated useful lives ranging from
three to forty years. Capitalized lease properties are amortized
over the shorter of the life of the lease term or the estimated
useful life of the asset underlying the lease, generally eleven to
twenty-five years. Amortization of capitalized lease properties is
included in depreciation and amortization expense.
Intangible Assets
The excess of the aggregate purchase price over the fair value of the
net assets of entities acquired is generally being amortized on a
straight-line basis over 40 years.
Other intangible assets primarily represent a covenant not to compete
agreement which is being amortized on the straight-line basis over
the term of the agreement, which is ten years.
Reserve for Self-Insurance
WEI is self-insured for employee medical insurance and workers'
compensation claims, and has paid premium policies in force to limit
its total exposure. WEI charges the Virginia Newspapers a premium
for their insurance coverage. Management considers this premium to
be representative of the insurance costs that would have been
incurred by the Virginia Newspapers if they had been operating as a
stand-alone entity.
Income Taxes
Beginning March 1987, WEI elected to be taxed under the provisions of
Subchapter S of the Internal Revenue Code. Under those provisions
and analogous provisions of certain state laws, WEI does not pay
federal or state corporate income taxes on its taxable income.
Instead, the shareholders are liable for individual federal and
state income taxes for their respective shares of WEI's taxable
income (see Note 10).
<PAGE> 9
The Virginia Newspaper Operations of Worrell Enterprises, Inc.
Notes to Combined Financial Statements
December 31, 1994 and 1993
3. Trade Accounts Receivable:
<TABLE>
Trade accounts receivable are comprised of the following:
(In thousands)
<CAPTION>
December 31,
1994 1993
------ ------
<S> <C> <C>
Retail advertising $ 3,286 $ 3,213
Classified advertising 234 295
Job printing 250 260
Circulation 129 166
Other current receivables 93 83
Less - allowance for doubtful accounts (175) (226)
------------ ------------
$ 3,817 $ 3,791
============ ============
4. Property, Plant and Equipment:
The components of property, plant and equipment are as follows:
(In thousands)
December 31,
1994 1993
------ ------
Machinery and equipment $ 6,900 $ 6,466
Buildings and improvements 3,303 3,295
Office furniture and fixtures 1,542 1,564
Capitalized lease properties 4,423 4,423
Land 6 2
Motor vehicles 292 257
Construction in progress 35 1
------------ ------------
16,501 16,008
Less - accumulated depreciation (11,588) (11,034)
------------ ------------
$ 4,913 $ 4,974
============ ============
</TABLE>
Depreciation expense on property, plant and equipment, excluding
capitalized lease amortization, amounted to $736,000 and $661,000
for 1994 and 1993, respectively.
<PAGE> 10
The Virginia Newspaper Operations of Worrell Enterprises, Inc.
Notes to Combined Financial Statements
December 31, 1994 and 1993
<TABLE>
The following is an analysis of the capitalized lease properties reflected
above:
(In thousands)
<CAPTION>
December 31,
1994 1993
------ ------
<S> <C> <C>
Building $ 1,616 $ 1,616
Equipment 2,807 2,807
------------ ------------
4,423 4,423
Less - accumulated depreciation (3,436) (3,390)
------------ ------------
$ 987 $ 1,033
============ ============
Capitalized lease amortization expense approximated $46,000 in each
of 1994 and 1993.
5. Intangible Assets:
Intangible assets consist of the following:
(In thousands)
December 31,
1994 1993
------ ------
Goodwill, net of accumulated amortization of
$6,825 and $6,442 in 1994 and 1993,
respectively $ 8,605 $ 8,987
Paid subscribers, net of accumulated
amortization of $170 and $155 in
1994 and 1993, respectively 1 15
Covenant not to compete, net of accumulated
amortization of $25 and $0 in 1994 and 1993,
respectively 225 250
Other intangibles, net of accumulated
amortization of $358 and $338 in 1994
and 1993, respectively 64 84
------------ ------------
$ 8,895 $ 9,336
============ ============
</TABLE>
On December 29, 1993, WEI acquired 75% of the outstanding common
stock of Culpeper Communications Corporation. The Orange branch of
the Virginia Newspaper Operations acquired the remaining 25%,
resulting in an investment of $114,660. The acquisition was
accounted for as a purchase. The investment has been eliminated in
the accompanying combined financial statements. As a result of this
transaction, goodwill of $156,694 and covenants not to compete of
$250,000 were recorded on the acquisition date.
<PAGE> 11
The Virginia Newspaper Operations of Worrell Enterprises, Inc.
Notes to Combined Financial Statements
December 31, 1994 and 1993
Amortization expense on intangible assets amounted to $441,000 and
$482,000 in 1994 and 1993, respectively.
6. Deferred Subscription Revenue:
<TABLE>
Deferred subscription revenue is comprised of the following:
(In thousands)
<CAPTION>
December 31,
1994 1993
------ ------
<S> <C> <C>
Carrier subscriptions paid in advance $ 953 $ 917
Mail subscriptions paid in advance 221 236
------------ ------------
$ 1,174 $ 1,153
============ ============
7. Capitalized and Operating Lease Obligations:
(In thousands)
December 31,
1994 1993
------ ------
Capitalized lease obligations, primarily with
WEI affiliates, payable in quarterly installments
with imputed interest rates of 12.5% to 14.84% $ 3,098 $ 3,107
Less - current portion (13) (9)
------------ ------------
$ 3,085 $ 3,098
============ ============
Minimum future rentals under noncancelable leases are as follows:
(In thousands)
Year Ending Operating Capital
December 31, Leases Leases
----------- ------ ------
1995 $ 674 $ 426
1996 653 428
1997 643 431
1998 179 368
1999 18 534
Thereafter through 2013 --- 5,586
--------- ---------
2,167 7,773
Less - future interest --- (4,675)
--------- ---------
Total $ 2,167 $ 3,098
========= =========
</TABLE>
<PAGE> 12
The Virginia Newspaper Operations of Worrell Enterprises, Inc.
Notes to Combined Financial Statements
December 31, 1994 and 1993
Substantially all capital leases are with affiliates. Included in
the above minimum future rentals under operating leases are amounts
payable through 1998 to a company controlled by the principal
stockholder of WEI totalling $2,015,013.
Rent expense under operating leases, principally with affiliates,
was $690,000 and $678,000 in 1994 and 1993, respectively.
8. Related Party Transactions:
The accompanying financial statements include a corporate overhead
allocation which is based upon the estimated historical costs
incurred by WEI which benefit the Virginia Newspapers.
In addition to corporate overhead, WEI incurs workers' compensation,
property and liability and health insurance costs on behalf of the
Virginia Newspapers. The accompanying financial statements include
a premium charged by WEI for workers' compensation and property and
liability insurance based upon the related salaries and assets of
the Virginia Newspapers relative to total WEI
consolidated salaries and assets. Group health insurance is charged
directly to the Virginia Newspapers based upon headcount and elected
coverage.
WEI provides the Virginia Newspapers with certain software support,
accounting, tax and legal services. In addition, the Virginia
Newspaper employees participate in the Worrell Profit Sharing
Savings Plan which is sponsored and administered by WEI. All direct
charges relating to these services and participation in the plan are
charged to the Virginia Newspapers and are included in the
accompanying financial statements. The allocation for software
support, accounting, legal and tax services is based upon the costs
incurred by WEI which benefit the Virginia Newspapers. The
allocated amount included in the statement of operations and
divisional equity approximated $444,000 in 1993 and 1994.
WEI provides centralized cash management functions for the Virginia
Newspapers. As part of this practice, surplus cash is remitted to
WEI and WEI makes certain cash advances to the Virginia Newspapers.
Interest is charged or paid on the net WEI investment amount. Net
interest income earned on the net WEI investment by the Virginia
Newspapers was $387,400 and $241,300 in 1994 and 1993, respectively.
Periodically, WEI makes contributions to or receives dividends from
the branches on an as needed basis. Total dividends of $18,921,588
and $19,066,744 were paid to WEI by the Virginia Newspapers in 1994
and 1993, respectively. Total contributions of $941,941 were
received by the Culpeper and Suffolk branches from WEI, including a
$340,340 net capital contribution to Culpeper in conjunction with
the purchase of the outstanding stock of Culpeper Communications
Corporation on December 29, 1993. No contributions were received in
1994.
<PAGE> 13
The Virginia Newspaper Operations of Worrell Enterprises, Inc.
Notes to Combined Financial Statements
December 31, 1994 and 1993
9. Employee Benefits:
Profit Sharing Plan
The Virginia Newspapers participate in the Worrell Profit Sharing
Savings Plan and make a discretionary contribution to such plan for
all eligible employees who elect salary deferrals. An employee
vests in his portion of employer contributions to the extent of 10%
after two years of service, 20% after three years and an additional
20% each year thereafter, reaching 100% vesting after seven years.
Total employer contributions, which are included in general and
administrative expense, were $127,602 and $125,514 for the years
ended December 31, 1994 and 1993, respectively.
Postretirement Health Insurance Benefits
In conjunction with the acquisition of the Lynchburg, Virginia
newspapers, WEI agreed to provide health insurance to six retirees
for the remainder of their lifetime. At December 31, 1994 and 1993
the liability for these benefits totalled $52,706 and $63,949,
respectively. This liability is included in other noncurrent
liabilities in the accompanying combined financial statements.
10. Pro Forma Provision for Income Taxes (Unaudited):
The consolidated income statement includes a pro forma adjustment for
income taxes which would have been recorded if the Company had been
a C corporation, based on tax rates in effect during those periods,
as calculated under FAS 109.
<TABLE>
The pro forma provisions for income taxes are as follows:
(In thousands)
<CAPTION>
December 31,
1994 1993
------ ------
<S> <C> <C>
Current:
Federal $ 6,215 $ 5,770
State 1,133 1,052
------------ ------------
$ 7,348 $ 6,822
============ ============
Deferred:
Federal $ 25 $ 74
State 5 12
------------ ------------
30 86
------------ ------------
$ 7,378 $ 6,908
============ ============
</TABLE>
<PAGE> 14
The Virginia Newspaper Operations of Worrell Enterprises, Inc.
Notes to Combined Financial Statements
December 31, 1994 and 1993
<TABLE>
Deferred tax assets (liabilities) on a pro forma basis would be
comprised of the following components:
(In thousands)
<CAPTION>
December 31,
1994 1993
------ ------
<S> <C> <C>
Vacation liability $ 133 $ 133
Self-insurance reserve 21 26
Allowance for doubtful accounts 93 72
Tax depreciation in excess of book depreciation (501) (455)
------------ ------------
$ (254) $ (224)
============ ============
The pro forma effective tax rates of 39.7% in 1994 and 39.8% in 1993
differ from the U.S. statutory federal tax rate because of state
taxes.
</TABLE>
11. Subsequent Events:
On October 26, 1995, WEI sold the net assets and related publications
of the Virginia Newspaper Operations to Media General, Inc.
<PAGE> 15
Virginia Newspaper Operations of Worrell Enterprises, Inc.
Combined Condensed Balance Sheet
As of September 30, 1995
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Assets
- ------
Current assets:
<S> <C>
Cash and cash equivalents $ 117
Receivables:
Trade accounts, less allowance for doubtful accounts
of $171 3,755
Other 330
Inventories 576
Prepaid expenses and other current assets 55
-----------
Total current assets 4,833
Property, plant and equipment, net 4,752
Intangible assets, net 8,588
Other assets 42
-----------
Total assets $ 18,215
===========
Liabilities and Divisional Equity
- ---------------------------------
Current liabilities:
Accounts payable:
Trade $ 222
Affiliates 890
Accrued expenses:
Salaries and related expenses 620
Profit sharing plan 117
Other 216
Current portion of capitalized lease obligations 9
Deferred subscription revenue 1,263
Carrier bond liability 161
-----------
Total current liabilities 3,498
Capitalized lease obligations 3,083
Other noncurrent liabilities 75
Commitments and contingencies ---
Divisional equity 11,559
-----------
Total liabilities and divisional equity $ 18,215
===========
The accompanying notes are an integral part of these
combined condensed financial statements.
</TABLE>
<PAGE> 16
The Virginia Newspaper Operations of Worrell Enterprises, Inc.
Combined Condensed Statement of Operations
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended
September 30,
1995 1994
------ ------
<S> <C> <C>
Revenues:
Advertising $ 21,875 $ 21,236
Circulation 6,703 6,542
Other 1,369 1,343
----------- -----------
29,947 29,121
----------- -----------
Costs and expenses:
Production 13,127 12,367
General and administrative 2,068 2,168
Depreciation and amortization 900 894
----------- -----------
16,095 15,429
----------- -----------
Operating income 13,852 13,692
----------- -----------
Other income (expense):
Interest income 1,078 198
Interest expense (311) (323)
Other, net (202) (243)
----------- -----------
565 (368)
----------- -----------
Net income $ 14,417 $ 13,324
=========== ===========
The accompanying notes are an integral part of these
combined condensed financial statements.
</TABLE>
<PAGE> 17
The Virginia Newspaper Operations of Worrell Enterprises, Inc.
Combined Condensed Statement of Cash Flows
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1995 1994
------ ------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 14,417 $ 13,324
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 900 894
Loss (gain) on sale of property, plant and equipment (13) 6
Changes in assets and liabilities
(Increase) decrease in receivables (52) 152
Increase in inventories (121) (106)
(Increase) decrease in prepaid expenses
and other current assets 191 (103)
Decrease in other assets 18 1
Increase in accounts payable 196 38
Increase in accrued expenses 122 52
Increase (decrease) in other liabilities 70 (2)
------------ ------------
Net cash provided by operating activities 15,728 14,256
------------ ------------
Cash flows from investing activities:
Capital expenditures (433) (645)
Other, net 14 44
------------ ------------
Net cash used in investing activities (419) (601)
------------ ------------
Cash flows from financing activities:
Reduction of capitalized lease obligations (6) (4)
Dividends to WEI (15,281) (13,690)
------------ ------------
Net cash used in financing activities (15,287) (13,694)
------------ ------------
Net increase (decrease) in cash and cash equivalents 22 (39)
Cash and cash equivalents at beginning of year 95 136
------------ ------------
Cash and cash equivalents at end of period $ 117 $ 97
============ ============
Cash paid for interest $ 311 $ 311
============ ============
The accompanying notes are an integral part of these
combined condensed financial statements.
</TABLE>
<PAGE> 18
The Virginia Newspaper Operations of Worrell Enterprises, Inc.
Notes to Interim Financial Statements
Unaudited
1. The accompanying unaudited combined condensed financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial reporting, and with applicable quarterly reporting regulations
of the Securities and Exchange Commission. They do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation of interim financial
information have been included. The results of operations for interim periods
are not necessarily indicative of the results that may be expected for the full
fiscal year.
2. Inventories are principally newsprint.
<PAGE> 19
MEDIA GENERAL, INC.
PRO FORMA COMBINED CONDENSED
FINANCIAL STATEMENTS
(UNAUDITED)
The following unaudited pro forma combined condensed balance sheet (balance
sheet) as of September 24, 1995, and the pro forma combined condensed statements
of operations for the year ended December 25, 1994, and for the nine months
ended September 24, 1995, (statements of operations), give effect to the
acquisition by Virginia Newspapers, Inc., a newly formed, wholly owned
subsidiary of Media General, Inc., (the Company) of the real property,
equipment, furniture and other assets and intangibles of The Virginia Newspaper
Operations of Worrell Enterprises, Inc., (WEIVNO) acquired on October 26, 1995,
for approximately $232 million. The acquisition has been accounted for using
the purchase method of accounting.
The pro forma combined condensed balance sheet presents the financial position
of the Company and WEIVNO as of September 24, 1995, assuming that the
acquisition occurred as of that date. The pro forma combined condensed
statements of operations have been prepared assuming the acquisition occurred as
of the beginning of the periods presented.
The pro forma combined condensed financial statements are provided for
informational purposes only, and are not necessarily indicative of the past or
future results of operations or financial position of the Company that would
have occurred had the acquisition been consummated on the respective dates
assumed. The pro forma combined condensed financial statements have been
prepared on the basis of preliminary estimates of the fair value of the assets
acquired.
This information should be read in conjunction with the previously filed Form 8-
K, dated November 7, 1995, the previously filed historical consolidated
financial statements and accompanying notes of Media General, Inc., contained in
its Annual Report on Form 10-K for the fiscal year ended December 25, 1994, and
in its 1995 Quarterly Reports on Forms 10-Q and in conjunction with the
historical financial statements and accompanying notes of The Virginia Newspaper
Operations of Worrell Enterprises, Inc., included elsewhere in this Form 8-K/A.
<PAGE> 20
Media General, Inc.
Pro Forma Combined Condensed Balance Sheet
As of September 24, 1995
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Media
General, Pro Forma Pro Forma
Inc. WEIVNO* Adjustments Balance
--------- ---------- ----------- ---------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 17,832 $ 117 $ (15,000) (1) $ 2,949
Accounts receivable - net 68,770 3,755 --- 72,525
Inventories 20,033 576 --- 20,609
Other 26,226 385 --- 26,611
----------- ----------- ---------- -----------
Total current assets 132,861 4,833 (15,000) 122,694
----------- ----------- ---------- -----------
Investments in unconsolidated
affiliates 93,880 --- --- 93,880
Other assets 33,473 312 13,825 (2) 47,610
Property, plant and equipment-
net 494,356 4,752 5,745 (3) 504,853
Excess of cost of businesses
acquired over equity in
net assets - net 43,490 8,318 197,771 (4) 249,579
----------- ----------- ---------- -----------
$ 798,060 $ 18,215 $ 202,341 $ 1,018,616
=========== =========== ========== ===========
LIABILITIES
AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 32,191 $ 1,112 $ --- $ 33,303
Accrued expenses and other
liabilities 72,906 2,386 (9) (5) 75,283
Income taxes payable 1,313 --- --- 1,313
----------- ------------ ---------- -----------
Total current liabilities 106,410 3,498 (9) 109,899
----------- ----------- ---------- -----------
Long-term debt 128,750 3,083 213,909 (6) 345,742
Deferred income taxes 99,337 --- --- 99,337
Other liabilities and deferred
credits 105,499 75 --- 105,574
Stockholders' equity 358,064 11,559 (11,559) (7) 358,064
----------- ----------- ---------- -----------
$ 798,060 $ 18,215 $ 202,341 $ 1,018,616
=========== =========== ========== ===========
* For comparability, WEIVNO amounts, which are as of September 30, 1995, have been reclassified to conform with Media
General, Inc.'s presentation.
See notes to the pro forma combined condensed financial statements.
</TABLE>
<PAGE> 21
Media General, Inc.
Pro Forma Combined Condensed Statement of Operations
For the year ended December 25, 1994
(In thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Media
General, Pro Forma Pro Forma
Inc. WEIVNO* Adjustments Balance
---------- ---------- ---------- ----------
<S> <C> <C> <C>
Revenues $ 626,247 $ 39,780 $ --- $ 666,027
---------- ---------- ---------- ----------
Operating costs:
Production costs 332,557 11,820 (397) (1) 343,980
Selling, distribution and
administrative 171,989 7,840 --- 179,829
Depreciation and amortization 55,450 1,222 6,660 (2) 63,332
----------- ---------- ---------- ----------
Total operating costs 559,996 20,882 6,263 587,141
---------- ---------- ---------- ----------
Operating income 66,251 18,898 (6,263) 78,886
---------- ---------- ---------- ----------
Other income (expense):
Interest expense (16,948) (417) (12,645) (3) (30,010)
Investment income (loss) -
unconsolidated affiliates 2,935 --- --- 2,935
Gain on sale of Garden State
Newspapers investment 91,520 --- --- 91,520
Other, net (789) 97 (547) (4) (1,239)
---------- ---------- ---------- ----------
Total other income (expense) 76,718 (320) (13,192) 63,206
---------- ---------- ---------- ----------
Income before income taxes 142,969 18,578 (19,455) 142,092
---------- ---------- ---------- ----------
Income tax expense (benefit) 25,960 --- (333) (5) 25,627
---------- ---------- ---------- ----------
Net income $ 117,009 $ 18,578 $ (19,122) $ 116,465
========== ========== ========== ==========
Earnings per common share
and equivalent $ 4.45 $ 4.43
========== ==========
Weighted average common shares
and equivalents 26,283 26,283
* For comparability, WEIVNO amounts, which are for the year ended December 31, 1994, have been reclassified to conform with
Media General, Inc.'s presentation.
See notes to the pro forma combined condensed financial statements.
</TABLE>
<PAGE> 22
Media General, Inc.
Pro Forma Combined Condensed Statement of Operations
For the nine months ended September 24, 1995
(In thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Media
General, Pro Forma Pro Forma
Inc. WEIVNO* Adjustments Balance
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues $ 507,091 $ 29,947 $ --- $ 537,038
---------- ---------- ---------- ----------
Operating costs:
Production costs 283,479 9,498 (274) (1) 292,703
Selling, distribution and
administrative 131,569 5,697 --- 137,266
Depreciation and amortization 44,356 900 5,013 (2) 50,269
---------- ---------- ---------- ----------
Total operating costs 459,404 16,095 4,739 480,238
---------- ---------- ---------- ----------
Operating income 47,687 13,852 (4,739) 56,800
---------- ---------- ---------- ----------
Other income (expense):
Interest expense (10,213) (311) (9,486) (3) (20,010)
Investment income -
unconsolidated affiliates 10,631 --- --- 10,631
Other, net 5,100 876 (2,136) (4) 3,840
---------- ---------- ---------- ----------
Total other income (expense) 5,518 565 (11,622) (5,539)
---------- ---------- ---------- ----------
Income before income taxes 53,205 14,417 (16,361) 51,261
---------- ---------- ---------- ----------
Income tax expense (benefit) 18,493 --- (737) (5) 17,756
---------- ---------- ---------- ----------
Net income $ 34,712 $ 14,417 $ (15,624) $ 33,505
========== ========== ========== ==========
Earnings per common share
and equivalent $ 1.31 $ 1.27
========== ==========
Weighted average common shares
and equivalents 26,478 26,478
* For comparability, WEIVNO amounts, which are for the nine months ended September 30, 1995, have been reclassified to
conform with Media General, Inc.'s presentation.
See notes to the pro forma combined condensed financial statements.
</TABLE>
<PAGE> 23
Media General, Inc.
Notes to Pro Forma Combined Condensed Financial Statements
BALANCE SHEET
- -------------
September 24, 1995 Adjustments:
(1) Use of invested cash for acquisition.
(2) Adjust identifiable intangibles, principally subscription list, to
estimated fair market value.
(3) Adjust property, plant and equipment to estimated fair market value.
(4) Adjustment to record the excess of acquisition cost over the fair
value of net assets acquired (goodwill).
(5) Eliminate current portion of WEIVNO capital lease obligations related
to assets purchased.
(6) Adjustment to record funds that would have been borrowed at September
24, 1995, in connection with the acquisition, net of the elimination
of WEIVNO long-term debt related to capital lease obligations of
assets purchased.
(7) Eliminate WEIVNO historical net assets (divisional equity).
For purposes of these Pro Forma Combined Condensed Financial Statements
the purchase price was allocated as follows (In thousands):
Purchase price $231,992
Working capital acquired (1,335)
Property, plant and equipment at fair market value (10,497)
Identifiable intangibles (14,095)
Other liabilities and assets, net 24
--------
Excess of cost of business
acquired over equity in net assets $206,089
========
STATEMENTS OF OPERATIONS
- ------------------------
Adjustments for the year ended December 25, 1994:
(1) Eliminate WEIVNO rent expense related to assets purchased and
therefore no longer leased.
(2) Increase in depreciation expense resulting from adjustment of fixed
assets to estimated fair market value with lives based upon
remaining estimated useful life and increase in amortization expense
resulting from adjustment of intangibles to estimated fair market
value with lives ranging from 10-35 years.
<PAGE> 24
(3) Increase in interest expense based on actual borrowings of $209
million for the acquisition (at an actual effective fixed rate of
6.25%); net of WEIVNO historical interest expense eliminated on
capitalized leases related to assets purchased.
(4) Eliminate Media General interest income on cash investments which
would have been used for the acquisition and eliminate WEIVNO
interest income.
(5) Record income tax benefit at an effective rate of 37.925% on the pro
forma adjustments and the addition of WEIVNO income before income
taxes.
Adjustments for the nine months ended September 24, 1995:
(1) Eliminate WEIVNO rent expense related to assets purchased and
therefore no longer leased.
(2) Increase in depreciation expense resulting from adjustment of fixed
assets to estimated fair market value with lives based upon
remaining estimated useful life and increase in amortization expense
resulting from adjustment of intangibles to estimated fair market
value with lives ranging from 10-35 years.
(3) Increase in interest expense based on actual borrowings of $209
million for the acquisition (at an actual effective fixed rate of
6.25%); net of WEIVNO historical interest expense eliminated on
capitalized leases related to assets purchased.
(4) Eliminate Media General interest income on cash investments which
would have been used for the acquisition and eliminate WEIVNO
interest income.
(5) Record income tax benefit at an effective rate of 37.925% on the pro
forma adjustments and the addition of WEIVNO income before income
taxes.
<PAGE> 25
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.
MEDIA GENERAL, INC.
DATE: January 4, 1996 /s/ Marshall N. Morton
---------------- ----------------------------------------
Marshall N. Morton, Senior
Vice-President and Chief Financial
Officer
<PAGE> 1
Exhibit 23
One East Broward Boulevard Telephone 305 463 6280
Suite 1700
Fort Lauderdale, FL 33301
Price Waterhouse LLP
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of (a) the Registration Statement (Form S-8 No. 2-56905)
pertaining to the 1971 Unqualified Stock Option Plan and the 1976 Qualified and
Non-Qualified Stock Option Plans of Media General, Inc.; (b) the Registration
Statement (Form S-8 No. 33-29478) pertaining to the Media General, Inc.,
Employees Thrift Plan; (c) the Registration Statement (Form S-8 No. 33-23698)
pertaining to the 1987 Non-Qualified Stock Option Plan of Media General, Inc.;
(d) the Registration Statement (Form S-3 No. 33-26853) pertaining to the Media
General, Inc., Automatic Dividend Reinvestment and Stock Purchase Plan and (e)
the Registration Statement (Form S-8 No. 33-52472) pertaining to the 1987 Non-
Qualified Stock Option Plan of Media General, Inc., amended and restated May 17,
1991, of our report dated November 3, 1995 relating to the combined financial
statements of The Virginia Newspaper Operations of Worrell Enterprises, Inc.,
which appears in the Current Report on Form 8-K/A of Media General, Inc. dated
January 4, 1996.
Price Waterhouse LLP
Fort Lauderdale, Florida
January 4, 1996
