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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 13, 1996
COMCAST CORPORATION
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(Exact name of registrant as specified in its charter)
Pennsylvania 0-6983 23-1709202
- --------------- ---------------- --------------
(State or other (Commission file (IRS employer
jurisdiction of number) identification
incorporation) no.)
1500 Market Street, Philadelphia, PA 19102-2148
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 665-1700
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Item 2. Acquisition or Disposition of Assets.
On November 13, 1996, Comcast Corporation (the "Company") acquired the
cable television operations ("Scripps Cable") of The E.W. Scripps Company
("E.W. Scripps") in exchange for 93.049 million shares of the Company's Class
A Special Common Stock, par value $1.00 per share (the "Class A Special
Common Stock"), valued at $1.552 billion, based on the average closing price of
the Class A Special Common Stock for the period from November 11, 1996 to
November 15, 1996 (the "Scripps Transaction"). The Scripps Transaction was
consummated pursuant to the terms of an Agreement and Plan of Merger ("the
Merger Agreement"), incorporated by reference herein, between the Company,
E.W. Scripps and Scripps Howard, Inc., a wholly owned subsidiary of
E.W. Scripps. The Company has accounted for the Scripps Transaction under the
purchase method and Scripps Cable has been consolidated with the Company
effective November 1, 1996.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS
The Company's Unaudited Pro Forma Condensed Consolidated Financial
Statements are included in this Report and are listed in the Index
to Unaudited Pro Forma Financial Information.
The audited combined financial statements of Scripps Cable as of
and for each of the three years in the period ended December 31,
1995 are incorporated by reference from the Company's Current Report
on Form 8-K/A filed on July 22, 1996, which filing incorporated
such statements by reference from the Form 8-K/A(5) of
The E.W. Scripps Company (commission file no. 1-16914)
dated July 18, 1996.
The unaudited combined financial statements of Scripps Cable for the
nine months ended September 30, 1996 are incorporated by reference
from the Form 8-K/A(7) of The E.W. Scripps Company (commission file
no. 1-16914) dated November 1, 1996.
(b) EXHIBITS
EXHIBIT NO.
10.1 Agreement and Plan of Merger (the "Merger Agreement"),
dated as of October 28, 1995, by and among The E.W. Scripps
Company, Scripps Howard, Inc. and Comcast Corporation
and Form of Amendment to the Merger Agreement
(incorporated by reference from Exhibit 2.1 to the
Company's Registration Statement on Form S-4, file
no. 333-13083.
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SIGNATURE
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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.
Dated: November 27, 1996 COMCAST CORPORATION
By: /s/ Joseph J. Euteneuer
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Joseph J. Euteneuer
Vice President and
Corporate Controller
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COMCAST CORPORATION
INDEX TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
Unaudited Pro Forma Financial Information F - 1
Unaudited Pro Forma Condensed Consolidated
Balance Sheet as of September 30, 1996 F - 2
Unaudited Pro Forma Condensed Consolidated Statement
of Operations for the Nine Months Ended September 30, 1996 F - 3
Unaudited Pro Forma Condensed Consolidated Statement
of Operations for the Year Ended December 31, 1995 F - 4
Notes to Unaudited Pro Forma Condensed Consolidated
Financial Statements F - 5
<PAGE>
UNAUDITED PRO FORMA
FINANCIAL INFORMATION
On November 13, 1996, the Company acquired the cable television operations
("Scripps Cable") of The E.W. Scripps Company ("E.W. Scripps") in exchange
for 93.049 million shares of the Company's Class A Special Common Stock
valued at $1.552 billion, based on the average closing price of the Class A
Special Common Stock for the period from November 11, 1996 to November 15, 1996
(the "Scripps Transaction"). In February 1995, the Company and
Tele-Communications, Inc. ("TCI") acquired all of the outstanding stock of QVC,
Inc. ("QVC") not previously owned by them (the "QVC Acquisition") for
approximately $1.4 billion in cash. For a further description of the Scripps
Transaction, the QVC Acquisition and certain related transactions, see the
notes to unaudited pro forma condensed consolidated financial statements.
The following unaudited pro forma condensed consolidated financial statements
reflect the consolidated financial position of the Company and Scripps Cable
as of September 30, 1996, their consolidated operations for the nine months
ended September 30, 1996 and their, along with QVC's, consolidated operations
for the year ended December 31, 1995. See the notes to unaudited pro forma
condensed consolidated financial statements for a description of the
assumptions used in preparing these unaudited pro forma condensed
consolidated financial statements.
The unaudited pro forma condensed consolidated balance sheet assumes the
Scripps Transaction occurred on September 30, 1996. The unaudited pro forma
condensed consolidated statements of operations for the nine months ended
September 30, 1996 and for the year ended December 31, 1995 assume the QVC
Acquisition and the Scripps Transaction occurred on January 1, 1995.
The unaudited pro forma condensed consolidated financial statements should be
read in conjunction with: 1) the historical consolidated financial
statements of the Company included in the Company's Annual Report on Form
10-K for the year ended December 31, 1995; 2) the historical condensed
consolidated financial statements included in the Company's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1996; 3) the historical
combined financial statements of Scripps Cable for the year ended December
31, 1995 incorporated by reference herein; and 4) the historical combined
financial statements of Scripps Cable for the nine months ended September 30,
1996 incorporated by reference herein.
The results presented in the unaudited pro forma condensed consolidated
statements of operations are not necessarily indicative of the results which
actually would have occurred had the QVC Acquisition and the Scripps
Transaction occurred on the dates indicated or which may result in the future.
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COMCAST CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
(D)
The Company Scripps Cable Pro Forma The Company
Historical Historical Adjustments Pro Forma
----------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash, cash equivalents and
short-term investments $526,662 $1,596 ($1,596) (E.3.) $526,662
Accounts receivable, net 350,675 11,496 362,171
Inventories, net 256,251 10,670 266,921
Prepaid charges and other 57,990 6,954 64,944
Deferred income taxes 65,758 5,421 71,179
---------- -------- ---------- -----------
Total current assets 1,257,336 36,137 (1,596) 1,291,877
Investments, principally in affiliates 1,278,733 1,278,733
Property and Equipment, net 2,051,562 318,698 308,031 (E.1.) 2,678,291
Deferred Charges, net 5,241,677 137,054 1,382,310 (E.2.,6.) 6,761,041
---------- -------- ---------- -----------
$9,829,308 $491,889 $1,688,745 $12,009,942
---------- -------- ---------- -----------
---------- -------- ---------- -----------
LIABILITIES AND STOCKHOLDERS'
(DEFICIENCY) EQUITY
Current Liabilities
Accounts payable and accrued expenses $990,414 $34,727 ($3,781) (E.3.) $1,021,360
Current portion of long-term debt 150,550 150,550
---------- -------- ---------- -----------
Total current liabilities 1,140,964 34,727 (3,781) 1,171,910
Long-term Debt, less current portion 7,233,745 7,233,745
Due to Affiliates 340,982 (340,982) (E.3.)
Deferred Income Taxes 1,501,820 103,576 494,527 (E.6.) 2,099,923
Minority Interest and Other 891,492 8,775 (8,775) (E.3.) 891,492
Stockholders' (Deficiency) Equity
Preferred stock 31,850 31,850
Common stock 233,313 1,801 91,248 (E.4.,5.) 326,362
Additional capital 869,911 35,144 1,423,392 (E.4.,5.) 2,328,447
Accumulated deficit (2,089,358) (33,116) 33,116 (E.5.) (2,089,358)
Unrealized gains on marketable securities 32,716 32,716
Cumulative translation adjustments (17,145) (17,145)
---------- -------- ---------- -----------
Total stockholders' (deficiency) equity (938,713) 3,829 1,547,756 612,872
---------- -------- ---------- -----------
$9,829,308 $491,889 $1,688,745 $12,009,942
---------- -------- ---------- -----------
---------- -------- ---------- -----------
</TABLE>
See notes to unaudited pro forma condensed consolidated financial statements.
F-2
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COMCAST CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
(D)
The Company Scripps Cable Pro Forma The Company
Historical Historical Adjustments Pro Forma
---------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues, net $2,870,869 $231,408 ($608) (E.7.) $3,101,669
---------- -------- -------- ----------
Operating, Selling, General and
Administrative Expenses and Cost of Goods Sold 2,008,862 133,054 (608) (E.7.) 2,141,308
Depreciation and Amortization 490,990 40,810 98,876 (E.8.) 630,676
---------- -------- -------- ----------
2,499,852 173,864 98,268 2,771,984
---------- -------- -------- ----------
Operating Income 371,017 57,544 (98,876) 329,685
Investment (Income) Expense
Interest expense 403,735 26,072 (26,045) (E.9.) 403,762
Investment income (63,706) (63,706)
Equity in net losses of affiliates 89,198 89,198
Gain from equity offering of affiliate (40,638) (40,638)
Other 22,673 79 22,752
---------- -------- -------- ----------
411,262 26,151 (26,045) 411,368
---------- -------- -------- ----------
(Loss) Income Before Income Tax Expense
and Minority Interest (40,245) 31,393 (72,831) (81,683)
Income Tax Expense 33,894 12,608 (22,473) (E.10.) 24,029
Minority Interest (47,423) (47,423)
---------- -------- -------- ----------
(Loss) Income from Continuing Operations ($26,716) $18,785 ($50,358) ($58,289)
---------- -------- -------- ----------
---------- -------- -------- ----------
Loss from Continuing Operations Per Share ($0.11) ($0.18)
---------- ----------
---------- ----------
Weighted Average Number of the Company's
Common Shares Outstanding During the Period 236,189 93,049 (E.11.) 329,238
---------- -------- ----------
---------- -------- ----------
</TABLE>
See notes to unaudited pro forma condensed consolidated financial statements.
F-3
<PAGE>
COMCAST CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
(A)
QVC
The Company QVC Pro Forma
Historical Historical Adjustments
----------- ---------- -----------
<S> <C> <C> <C>
Revenues, net $3,362,946 $131,469 ($1,095) (B.1.)
---------- -------- --------
Operating, Selling, General and
Administrative Expenses and Cost of Goods Sold 2,344,103 108,044 (469) (B.1.)
Depreciation and Amortization 689,052 5,001 4,781 (B.1.,2.)
---------- -------- --------
3,033,155 113,045 4,312
---------- -------- --------
Operating Income 329,791 18,424 (5,407)
Investment (Income) Expense
Interest expense 524,727 125 12,256 (B.3.)
Investment income (229,848) (1,634) 348 (B.4.)
Equity in net losses of affiliates 86,618 2,285 5,480 (B.5.)
Other (6,296)
---------- -------- --------
375,201 776 18,084
---------- -------- --------
(Loss) Income Before Income Tax Expense
and Minority Interest (45,410) 17,648 (23,491)
Income Tax Expense 42,171 8,055 (8,134) (B.6.)
Minority Interest (49,732) (802) (B.7.)
---------- -------- --------
(Loss) Income from Continuing Operations ($37,849) $9,593 ($14,555)
---------- -------- --------
---------- -------- --------
Loss from Continuing Operations Per Share ($0.16)
----------
----------
Weighted Average Number of the Company's
Common Shares Outstanding During the Period 239,679
----------
----------
<CAPTION>
The Company (D) The Company
Pro Forma Scripps Cable Pro Forma
with Scripps Cable Pro Forma with QVC and
QVC Historical Adjustments Scripps Cable
---------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues, net $3,493,320 $279,482 ($766) (E.7.) $3,772,036
---------- -------- -------- ----------
Operating, Selling, General and
Administrative Expenses and Cost of Goods Sold 2,451,678 162,810 (766) (E.7.) 2,613,722
Depreciation and Amortization 698,834 54,099 131,707 (E.8.) 884,640
---------- -------- -------- ----------
3,150,512 216,909 130,941 3,498,362
---------- -------- -------- ----------
Operating Income 342,808 62,573 (131,707) 273,674
Investment (Income) Expense
Interest expense 537,108 35,258 (34,915) (E.9.) 537,451
Investment income (231,134) (231,134)
Equity in net losses of affiliates 94,383 94,383
Other (6,296) (2,288) (8,584)
---------- -------- -------- ----------
394,061 32,970 (34,915) 392,116
---------- -------- -------- ----------
(Loss) Income Before Income Tax Expense
and Minority Interest (51,253) 29,603 (96,792) (118,442)
Income Tax Expense 42,092 11,913 (29,887) (E.10.) 24,118
Minority Interest (50,534) (50,534)
---------- -------- -------- ----------
(Loss) Income from Continuing Operations ($42,811) $17,690 ($66,905) ($92,026)
---------- -------- -------- ----------
---------- -------- -------- ----------
Loss from Continuing Operations Per Share ($0.18) ($0.28)
---------- ----------
---------- ----------
Weighted Average Number of the Company's
Common Shares Outstanding During the Period 239,679 93,049 (E.11.) 332,728
---------- -------- ----------
---------- -------- ----------
</TABLE>
See notes to unaudited pro forma condensed consolidated financial statements.
F-4
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NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
QVC
A. SUMMARY OF TRANSACTIONS
In February 1995, the Company and Tele-Communications, Inc. ("TCI")
acquired all of the outstanding stock of QVC, Inc. and its subsidiaries
("QVC") not previously owned by them (approximately 65% of such
shares on a fully diluted basis) for $46, in cash, per share (the
"QVC Acquisition"), representing a total cost of approximately $1.4
billion. The QVC Acquisition, including the exercise of certain
warrants held by the Company, was financed with cash contributions
from the Company (see below) and TCI of $296.3 million and $6.6
million, respectively, borrowings of $1.1 billion under a $1.2
billion QVC credit facility and existing cash and cash equivalents
held by QVC. Following the acquisition, the Company and TCI own, through
their respective subsidiaries, 57.45% and 42.55%, respectively, of QVC.
The Company, through a management agreement, is responsible for the
day to day operations of QVC. The Company has accounted for the QVC
Acquisition under the purchase method and QVC was consolidated with the
Company effective February 1, 1995. QVC's historical results of
operations included in the unaudited pro forma condensed consolidated
statement of operations for the year ended December 31, 1995 represents
QVC's historical results of operations for the month ended January 31,
1995.
In January 1995, the Company exchanged its investments in Heritage
Communications, Inc. ("Heritage") with TCI for approximately 13.3 million
publicly-traded Class A common shares of TCI with a fair market value
of approximately $290.0 million. Shortly thereafter, the Company sold
approximately 9.1 million unrestricted TCI shares for total proceeds of
approximately $188.1 million (collectively, the "Heritage Transaction").
As a result of these transactions, the Company recognized a pre-tax gain
of $141.0 million in 1995.
The Company's cash contribution in connection with the QVC Acquisition was
funded, in part, by the cash proceeds from the Heritage Transaction, along
with a borrowing of $80.0 million under a subsidiary's credit facility.
F-5
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B. PRO FORMA ADJUSTMENTS
The following adjustments and elimination entries have been made to the
unaudited pro forma condensed consolidated statement of operations for the
year ended December 31, 1995 to reflect the QVC Acquisition:
1. Elimination of commissions and other payments by QVC to the Company.
2. Represents additional depreciation and amortization expense resulting
from the increased fair market value of the assets acquired in excess
of their historical book values and amortization of goodwill arising
from the acquisition. Depreciation expense is based on a weighted
average property and equipment life of approximately 7 years.
Amortization expense is based on a life of 30 years for goodwill and
10 years for cable television distribution rights. Debt issuance
costs are amortized over the term of the related debt.
3. Represents the increase in interest expense due to the incurrence of
additional long-term indebtedness, at a weighted average interest rate
of 8.3%.
4. Elimination of interest income on the Company's notes receivable from
Heritage, which were exchanged for TCI Shares in connection with the
Heritage Transaction.
5. Elimination of the Company's historical equity in the net income of
QVC. The Company historically accounted for its investment in QVC
under the equity method through the date of the QVC Acquisition.
6. Represents the adjustments to the tax provision resulting from the
pro forma adjustments.
7. Represents the minority interest resulting from TCI's 42.55% interest
in QVC.
F-6
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SCRIPPS CABLE
C. SUMMARY OF TRANSACTIONS
On November 13, 1996, the Company acquired the cable television
operations ("Scripps Cable") of The E.W. Scripps Company ("E.W. Scripps")
in exchange for 93.049 million shares of the Company's Class A Special
Common Stock, par value $1.00 per share (the "Class A Special Common
Stock"), valued at $1.552 billion, based on the average closing price of
the Class A Special Common Stock for the period from November 11, 1996 to
November 15, 1996 (the "Scripps Transaction"). The Scripps Transaction was
consummated pursuant to the terms of an Agreement and Plan of Merger ("the
Merger Agreement"), incorporated by reference herein, between the Company,
E.W. Scripps and Scripps Howard, Inc. ("SHI"), a wholly owned subsidiary
of E.W. Scripps. The Company has accounted for the Scripps Transaction
under the purchase method and Scripps Cable has been consolidated with the
Company effective November 1, 1996.
F-7
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D. BASIS OF PRESENTATION
E.W. Scripps had historically been the holding company for its cable
television operations along with other operations. In connection with the
Scripps Transaction, in which E.W. Scripps was merged with and into the
Company (the "Merger"), E.W. Scripps contributed its non-cable televison
operations to SHI and distributed the shares of SHI to its shareholders
(the "Distribution"). The Distribution occurred immediately prior to the
closing of the Merger. Accordingly, when the Company acquired E.W. Scripps,
it only purchased Scripps Cable.
The historical combined financial statements of Scripps Cable included in
the unaudited pro forma condensed consolidated financial statements
represent the net assets that the Company acquired and exclude the
assets, liabilities and results of operations of the non-cable television
operations of E.W. Scripps.
E. PRO FORMA ADJUSTMENTS
The following adjustments and elimination entries have been made to the
unaudited pro forma condensed consolidated balance sheet to reflect the
Scripps Transaction:
1. Represents the estimated fair value of the property and equipment
acquired in the Scripps Transaction in excess of the historical
book value of such property and equipment ($308.0 million). The
estimated fair value of the acquired property
F-8
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and equipment is subject to adjustment upon receipt by the Company of
an independent appraisal of Scripps Cable.
2. Represents the allocation of the total consideration in the Scripps
Transaction to deferred charges ($887.8 million), principally to
franchise acquisition costs and subscriber lists. The purchase price
allocation is subject to adjustment upon receipt by the Company of an
independent appraisal of Scripps Cable.
3. Represents the elimination of cash and certain liabilities which
were not acquired or assumed by the Company in the Scripps Transaction
pursuant to the terms of the Merger Agreement (primarily income taxes
payable, accruals for lawsuits and related settlements and amounts
payable by Scripps Cable to E.W. Scripps) ($351.9 million in total).
4. Represents the par value of the Class A Special Common Stock
issued by the Company for Scripps Cable ($93.0 million) and the
related additional capital ($1.459 billion), based on the
93.049 million shares issued in the Scripps Transaction valued at
$1.552 billion (based on the average closing price of the Class A
Special Common Stock for the period from November 11, 1996 to
November 15, 1996).
5. Represents the elimination of Scripps Cable's historical equity.
6. Represents goodwill and deferred income taxes resulting from
differences in the book and tax bases of the assets of Scripps Cable
arising from the acquisition ($494.5 million).
The following adjustments and elimination entries have been made to the
unaudited pro forma condensed consolidated statements of operations to
reflect the Scripps Transaction:
7. Represents the elimination of commissions paid by QVC to Scripps
Cable.
8. Represents additional depreciation and amortization
expense resulting from the increased fair value of the assets
acquired in excess of their historical book values and amortization
of goodwill arising from the acquisition, offset, in part, by the
elimination of Scripps Cable's historical goodwill amortization.
Depreciation expense is based on a weighted average property and
equipment life of approximately 10 years. Property and equipment of
Scripps Cable principally consists of operating facilities, which
is typically depreciated over a period of 12 years by the Company.
Amortization expense is based on an average life for deferred
charges and goodwill of 12 and 20 years, respectively.
F-9
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9. Represents the elimination of Scripps Cable's historical interest
expense on balances due to affiliates.
10. Represents the adjustments to the tax provision resulting from the
pro forma adjustments.
11. Represents the shares of Class A Special Common Stock issued in the
Scripps Transaction.
F-10
