<PAGE> 1
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) May 5, 1998
Cox Communications, Inc.
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(Exact name of Registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation or organization)
1-6590 58-2112288
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(Commission File Number) (I.R.S. Employer Identification Number)
1400 Lake Hearn Drive
Atlanta, Georgia 30319
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Address of principal executive offices) (Zip Code)
(404) 843-5000
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Registrant's telephone number, including area code
<PAGE> 2
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of business acquired:
Not applicable.
(b) Pro Forma financial information:
Pro forma financial statements reflecting the acquisition of certain
cable television and other assets in Las Vegas, Nevada, are included in
this amended report beginning on page F-1.
(c) Exhibits:
2.1 Agreement and Plan of Merger Among Cox Communications, Inc.,
Cox Communications Las Vegas, Inc., PrimeSouth Diversified, Inc. and
the Greenspun Shareholders (incorporated by reference to the
Registrant's report on Form 8-K dated May 8, 1998 and filed May 28,
1998).
<PAGE> 3
PRO FORMA COMBINED CONDENSED BALANCE SHEET
MARCH 31, 1998
(UNAUDITED)
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The following unaudited pro forma combined condensed balance sheet has been
prepared based upon the historical consolidated balance sheets for Cox
Communications, Inc. ("Cox") and Prime South Diversified, Inc. and Subsidiaries
("PSDI") as of March 31, 1998, and give effect to the Merger and certain related
transactions assuming such events had occurred on that date. Cox has not yet
received an appraisal of the assets and properties of PSDI. The pro forma
information presented may be adjusted once complete information of the fair
value of PSDI assets and liabilities is developed. This statement should be read
in conjunction with the historical financial statements of Cox and PSDI
including the notes thereto and the notes to this unaudited pro forma combined
condensed balance sheet.
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<TABLE>
<CAPTION>
MARCH 31, 1998 PRO FORMA ADJUSTMENTS
-------------------------- --------------------------- PRO FORMA
COX PSDI DEBIT CREDIT TOTAL
----------- ----------- ---------- ----------- ----------
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C>
ASSETS
Cash $ 30,454 $ 6,151 $ $ $ 36,605
Restricted cash 197,810 197,810
Accounts and notes receivable, net
for doubtful accounts 137,684 17,382 149(7) 154,917
Net plant and equipment 2,055,315 209,202 27,798(5) 2,292,315
Investments 1,667,641 6,553 1,674,194
Intangible assets 2,429,130 72,699
1,029,760(8)
385,860(9) 3,917,449
Amounts due from CEI 14,042 14,042
Other assets 91,458 2,644 94,102
Purchase price to be allocated 312,520(1) 93,030(1)
22,000(2) 27,798(5)
453,772(3) 3,663(7)
356,230(4) 1,029,760(8)
9,729(6)
----------- ----------- ---------- ----------- ----------
Total assets $ 6,623,534 $ 314,631 $2,597,669 $ 1,154,400 $8,381,434
=========== =========== ========== =========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable & accrued expenses 252,463 25,018 277,481
Deferred income 29,833 7,833 37,666
Deferred income taxes 799,728 9,729(6)
385,860(9) 1,195,317
Other liabilities 76,527 76,527
Contingent interest payable 93,030 93,030(1)
Debt 3,082,916 633,000 312,520(1)
22,000(2) 4,050,436
Capitalized Leases 5,710 5,710
----------- ----------- ---------- ----------- ----------
Total liabilities 4,241,467 764,591 93,030 730,109 5,643,137
----------- ----------- ---------- ----------- ----------
Minority interest in equity of consolidated subsidiary 3,812 3,812(7)
SHAREHOLDERS' EQUITY
Preferred Stock 2,406(4) 2,406
Class A Common Stock 257,479 5,633(4) 263,112
Class C Common Stock 13,799 13,799
PSDI Class A convertible Common Stock 1 1(3)
Additional paid-in capital 1,794,488 348,191(4) 2,142,679
Retained earnings (accumulated deficit) (22,314) (453,773) 453,773(3) (22,314)
Foreign currency translation adjustment 16,035 16,035
Net unrealized gain on securities 322,580 322,580
----------- ----------- ---------- ----------- ----------
Total shareholders' equity 2,382,067 (453,772) 1 810,003 2,738,297
----------- ----------- ---------- ----------- ----------
Total liabilities and shareholders' $ 6,623,534 $ 314,631 $ 96,843 $ 1,540,112 $8,381,434
=========== =========== ========== =========== ==========
</TABLE>
F-1
<PAGE> 4
NOTES TO PRO FORMA COMBINED CONDENSED BALANCE SHEET
(Thousands of Dollars)
The following adjustments are presented to reflect the effects of recording the
Merger and applying purchase accounting to the accounts of PSDI.
A summary of the basis for these adjustments is as follows:
<TABLE>
<S> <C>
PURCHASE PRICE PLUS NET LIABILITIES ASSUMED:
Assumption of PSDI debt $ 660,710
Cash to be paid (see Note (1) below) 312,520
Issuance of Cox preferred shares 106,600
Issuance of Cox common shares 249,630
-----------
Total purchase price 1,329,460
-----------
ALLOCATION OF PURCHASE PRICE TO TANGIBLE ASSETS:
Estimated fair value of plant and equipment 237,000
Deferred taxes related to plant and equipment write-up (9,729)
Net working capital deficit and other assets/liabilities of
PSDI assumed or acquired (270)
-----------
227,001
-----------
Excess of purchase price over tangible assets $ 1,102,459
-----------
</TABLE>
(1) To record net borrowings of $312.5 million for cash merger consideration to
be paid at closing and funded under new credit arrangements. The existing
PSDI debt will be repaid by Cox under new credit arrangements. These credit
arrangements are expected to be negotiated prior to the consummation of the
Merger. The borrowings and repayment of PSDI existing debt will be completed
on the effective date of the Merger.
Cash to be paid by Cox upon consummation of the Merger includes the
following:
<TABLE>
<CAPTION>
<S> <C>
Cash payments to shareholders $ 196,770
Redemption of Bell South Contingent Interest 105,000 (a)
Other (non-compete agreements and merger related costs) 10,750
=========
$ 312,520
=========
</TABLE>
(a) Represents expected value of Bell South Contingent Interest at closing.
The book value at March 31, 1998 was $93.0 million.
(2) To record additional borrowings of $22.0 million under PSDI revolving credit
agreement anticipated prior to closing.
(3) To eliminate historical equity accounts of PSDI.
(4) To record estimated fair value of 2,406,000 shares of Cox Preferred and
5,633,000 shares of Cox Common to be issued to PSDI.
(5) To adjust plant and equipment of PSDI to estimated fair value based on
preliminary estimates.
(6) To record additional deferred income taxes related to the adjustment of
plant and equipment to estimated fair value. Because the Merger is a tax free
reorganization, a temporary difference, for which deferred taxes must be
recorded, results from the adjustment of plant and equipment to fair value.
(7) To eliminate intercompany receivable and minority interest of PSDI not being
acquired by Cox.
(8) To record intangibles resulting from the Merger. This adjustment amount
represents the preliminary estimate of the excess of the purchase price plus net
liabilities assumed over the fair value of tangible assets acquired, reduced by
the intangibles previously recorded by PSDI.
(9) To record deferred taxes and goodwill related to the excess purchase price
over tangible assets acquired (see Note (8) above).
F-2
<PAGE> 5
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998
(UNAUDITED)
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The following unaudited pro forma combined condensed statement of operations for
the three months ended March 31,1998 has been prepared from the historical
results of operations of both Cox Communications, Inc. ("Cox") and Prime South
Diversified, Inc. and Subsidiaries ("PSDI") for the period presented. This
statement presents the combined revenues and expenses of Cox and PSDI as if the
Merger had been consummated on January 1, 1997. This statement should be read in
conjunction with the historical financial statements of Cox and PSDI, including
the notes thereto, the unaudited pro forma combined condensed balance sheet and
the notes to this unaudited proforma combined condensed statement of operations.
The pro forma combined results are not necessarily indicative of the combined
results of future operations, and do not reflect any synergies and other cost
reductions that may result from the Merger.
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<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1998
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(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
PRO FORMA PRO FORMA
COX PSDI ADJUSTMENTS TOTAL
----------- --------- ----------- -------------
<S> <C> <C> <C> <C>
REVENUES $ 415,792 $ 44,205 $ 459,997
COSTS AND EXPENSES
Operating 127,723 22,853 150,576
Selling, general and administrative 138,924 1,815 140,739
Depreciation 87,040 8,748 $ 869(2) 96,657
Amortization 18,557 3,852 3,038(3)
2,412(4) 27,859
----------- --------- --------- -------------
OPERATING INCOME 43,548 6,937 (6,319) 44,166
Interest expense (53,124) (81,288) 66,354(1) (68,058)
Equity in net losses of affiliated companies (141,778) (141,778)
Other, net 1,283 (285) 290(6) 1,288
----------- --------- --------- -------------
INCOME (LOSS) BEFORE INCOME TAXES (150,071) (74,636) 60,325 (164,382)
Income taxes 48,152 (214) 4,268(5) 52,206
----------- --------- --------- -------------
NET INCOME (LOSS) $ (101,919) $ (74,850) $ 64,593 $ (112,176)
=========== ========= ========= =============
Per Share Data:
Loss Per Common Share $ (0.38) $ (0.41)
=========== =============
Basic weighted-average common shares outstanding 271,189,960 276,823,300(7)
=========== =============
</TABLE>
F-3
<PAGE> 6
NOTES TO PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
(1) To record additional interest expense as a result of the $312.5 million of
net borrowings and planned refinancing as described in Note (1) to the Pro Forma
Combined Condensed Balance Sheet. The adjustment also eliminates $68.5 million
of interest accrued by PSDI related to Bell South Contingent Interest. The
assumed weighted average interest rate used in the calculation was 6.3%.
(2) To record additional depreciation expense attributable to the preliminary
adjustment of PSDI's plant and equipment to fair value. Such depreciation
adjustment has been determined based on an estimated weighted average life of 8
years.
(3) To record amortization expense related to intangibles arising from the
Merger as discussed in Note 8 to the Pro Forma Combined Condensed Balance Sheet.
This adjustment reflects the amortization of the preliminary estimate of
intangibles over 40 years, net of the amount of amortization previously recorded
in PSDI's historical financial statements.
(4) To record additional amortization expense related to goodwill arising from
the Merger as discussed in Note 9 to the Pro Forma Combined Condensed Balance
Sheet. This adjustment reflects the amortization of the preliminary
estimate of goodwill over 40 years.
(5) To record tax effects, at a marginal rate of 35%, of the adjustments
reflected in Notes (1), (2) and (3) above and the tax benefit of PSDI's
historical pre-tax book loss for the three months ended March 31, 1998
previously unrecognized due to uncertainty of realization. Note that
amortization expense related to goodwill arising from the Merger in Note (4) is
not deductible for tax purposes.
(6) To eliminate minority interest in net income of consolidated subsidiary not
acquired by Cox.
(7) Represents shares to be outstanding following the issuance of additional
common shares as discussed in Note (4) to the Proforma Combined Condensed
Balance Sheet. Diluted loss per share has not been presented since the assumed
conversion, exercise or contingent issuance of securities would have an
anti-dilutive effect on loss per share.
F-4
<PAGE> 7
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
DECEMBER 31, 1997
(UNAUDITED)
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The following unaudited pro forma combined condensed statement of operations for
the year ended December 31, 1997 has been prepared from the historical results
of operations of both Cox Communications, Inc. ("Cox") and Prime South
Diversified, Inc. and Subsidiaries ("PSDI") for the period presented. The
statement presents the combined revenues and expenses of Cox and PSDI as if the
Merger had been consummated on January 1, 1997. This statement should be read in
conjunction with the historical financial statements of Cox and PSDI, including
the notes thereto, the unaudited pro forma combined condensed balance sheet and
the notes to this unaudited proforma combined condensed statement of operations.
The pro forma combined results are not necessarily indicative of the combined
results of future operations, and do not reflect any synergies and other cost
reductions that may result from the Merger.
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<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
-------------------------------------------------------
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
PRO FORMA PRO FORMA
COX PSDI ADJUSTMENTS TOTAL
----------- --------- ----------- -------------
<S> <C> <C> <C> <C>
REVENUES $ 1,610,364 $ 163,524 $ 1,773,888
COSTS AND EXPENSES
Operating 491,228 87,117 578,345
Selling, general and administrative 509,301 6,823 516,124
Depreciation 329,951 34,224 $ 3,475(2) 367,650
Amortization 74,587 15,068 12,493(3)
9,647(4) 111,795
----------- --------- -------- -------------
OPERATING INCOME 205,297 20,292 (25,615) 199,974
Interest expense (202,136) (50,739) (10,793)(1) (263,668)
Equity in net income (losses) of affiliated companies (404,440) 189 (404,251)
Gain (loss) on sale and exchange of cable television systems 51,835 (259) 51,576
Gain on issuance of stock by affiliated companies 90,796 90,796
Gain on sale of affiliated companies 248,656 248,656
Loss on write down of affiliated company (183,914) (1,967) (185,881)
Other, net 3,918 (2,338) 2,338(6) 3,918
----------- --------- -------- -------------
INCOME (LOSS) BEFORE INCOME TAXES (189,988) (34,822) (34,070) (258,880)
Income taxes 53,496 (197) 21,554(5) 74,853
----------- --------- -------- -------------
NET INCOME (LOSS) $ (136,492) $ (35,019) $(12,516) $ (184,027)
=========== ========= ======== =============
Per Share Data:
Loss Per Common Share $ (0.50) $ (0.67)
=========== =============
Basic weighted-average common shares outstanding 270,500,791 276,134,131(7)
=========== =============
</TABLE>
F-5
<PAGE> 8
NOTES TO PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
(1) To record additional interest expense as a result of the $312.5 million of
net borrowings and planned refinancing as described in Note (1) to the Pro Forma
Combined Condensed Balance Sheet. The adjustment also eliminates $1.3 million of
interest accrued by PSDI related to Bell South Contingent Interest. The assumed
weighted average interest rate used in the calculation was 6.3%.
(2) To record additional depreciation expense attributable to the preliminary
adjustment of PSDI's plant and equipment to fair value. Such depreciation
adjustment has been determined based on an estimated weighted average life of 8
years.
(3) To record amortization expense related to intangibles arising from the
Merger as discussed in Note 8 to the Pro Forma Combined Condensed Balance Sheet.
This adjustment reflects the amortization of the preliminary estimate of
intangibles over 40 years, net of the amount of amortization previously
recorded in PSDI's historical financial statements.
(4) To record amortization expense related to goodwill arising from the Merger
as discussed in Note 9 to the Pro Forma Combined Condensed Balance Sheet. This
adjustment reflects the amortization of the preliminary estimate of goodwill
over 40 years.
(5) To record tax effects, at a marginal rate of 35%, of the adjustments
reflected in Notes (1), (2) and (3) above and the tax benefit of PSDI's
historical pre-tax book loss for the year ended December 31, 1997 previously
unrecognized due to uncertainty of realization. Note that amortization expense
related to goodwill arising from the Merger in Note (4) is not deductible for
tax purposes.
(6) To eliminate minority interest in net income of consolidated subsidiary not
acquired by Cox.
(7) Represents shares to be outstanding following the issuance of additional
common shares as discussed in Note (4) to the Proforma Combined Condensed
Balance Sheet. Diluted loss per share has not been presented since the assumed
conversion, exercise or contingent issuance of securities would have an
anti-dilutive effect on loss per share.
F-6
<PAGE> 9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this amended report to be signed on its behalf by
the undersigned hereunto duly authorized.
COX COMMUNICATIONS, INC.
Dated: July 6, 1998 By: /s/ Andrew A. Merdek
---------------------------
Andrew A. Merdek
Corporate Secretary
