<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): June 1, 1994
A. H. BELO CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-8598 75-0135890
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
P.O. Box 655237
Dallas, Texas 75265-5237
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 977-6606
<PAGE> 2
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
The undersigned hereby files the following financial statements, pro forma
financial information and exhibits as part of this report:
7(a). Financial Statements of Business Acquired.
Audited financial statements of Rampart Operating Partnership
("Rampart") for the following periods:
Balance Sheets at December 31, 1993 and 1992;
Statements of Operations for the years ended December
31, 1993 and 1992;
Statements of Partners' Capital (Deficit) for the
years ended December 31, 1993 and 1992;
Statements of Cash Flows for the years ended December
31, 1993 and 1992;
Notes to Financial Statements.
Unaudited Condensed Balance Sheet at March 31, 1994 and the
related Statements of Operations and Cash Flows of Rampart for
the three-month periods ended March 31, 1994 and 1993.
The foregoing Financial Statements, together with the Report
of Independent Auditors, are included on pages F-1 through
F-17 of this report.
7(b). Pro Forma Financial Information.
Pro Forma Consolidated Condensed Balance Sheet as of March 31,
1994;
Pro Forma Consolidated Statement of Earnings for the Three
Months Ended March 31, 1994;
Pro Forma Consolidated Statement of Earnings for the Year
Ended December 31, 1993;
Notes to Pro Forma Consolidated Financial Statements.
The foregoing Pro Forma Financial Information is included on
pages P-1 through P-5 of this report.
7(c). Exhibits.
The following exhibits are included as part of this report:
10.1 Asset Purchase Agreement dated as of March 29, 1994
between Rampart and A. H. Belo Corporation (the
"Company") (incorporated by reference to Exhibit
10.1 to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 1994).
23.1 Consent of Deloitte & Touche.
28.1 Press Release of the Company dated May 31, 1994.
<PAGE> 3
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, thereunto duly authorized.
A. H. BELO CORPORATION
(Registrant)
By: /s/MICHAEL D. PERRY
Michael D. Perry
Senior Vice President and
Chief Financial Officer
Date: August 2, 1994
<PAGE> 4
ITEM 7(a)
FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
<PAGE> 5
RAMPART OPERATING PARTNERSHIP
FINANCIAL STATEMENTS FOR THE YEARS
ENDED DECEMBER 31, 1993 AND 1992
AND INDEPENDENT AUDITORS' REPORT
F-1
<PAGE> 6
DELOITTE &
TOUCHE
(LOGO) Suite 3700 Telephone: (504) 581-2727
One Shell Square Facsimile: (504) 561-7293
701 Poydras Street
New Orleans, Louisiana 70139-3700
INDEPENDENT AUDITORS' REPORT
To the Partners of
Rampart Operating Partnership
New Orleans, Louisiana
We have audited the accompanying balance sheets of Rampart Operating
Partnership as of December 31, 1993 and 1992, and the related statements of
operations, partners' capital (deficit), and cash flows for the years then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Rampart Operating Partnership at December
31, 1993 and 1992, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.
As discussed in Note 9 to the financial statements, on March 29, 1994, the
Partnership entered into an agreement to sell substantially all of the assets
of WWL-TV.
/s/ DELOITTE & TOUCHE
March 29, 1994
DELOITTE TOUCHE
TOHMATSU
INTERNATIONAL
F-2
<PAGE> 7
RAMPART OPERATING PARTNERSHIP
BALANCE SHEETS
DECEMBER 31, 1993 AND 1992
<TABLE>
<CAPTION>
ASSETS 1993 1992
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 230,940 $ 848,020
Accounts receivable, less allowance for doubtful
accounts of $180,000 and $200,000 at December 31,
1993 and 1992, respectively 5,862,754 5,801,878
Broadcast rights (Note 2) 2,367,300 2,899,519
Prepaid expenses 177,211 82,225
------------ ------------
Total current assets 8,638,205 9,631,642
------------ ------------
PROPERTY, PLANT AND EQUIPMENT, net (Note 3) 30,208,901 34,780,863
------------ ------------
OTHER ASSETS:
Intangible assets, net (Note 4) 22,332,003 27,590,728
Deferred financing and organization costs, net (Note 5) 1,573,578 2,113,825
Broadcast rights (Note 2) -- 236,549
Other 374,735 305,230
------------ ------------
Total other assets 24,280,316 30,246,332
------------ ------------
TOTAL $ 63,127,422 $ 74,658,837
============ ============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 388,490 $ 233,441
Accrued expenses 586,986 380,361
Broadcast contracts payable (Note 2) 2,166,317 2,392,653
------------ ------------
Total current liabilities 3,141,793 3,006,455
------------ ------------
LONG-TERM DEBT (Note 6):
Revolving credit note 19,000,000 22,800,000
Senior notes 40,000,000 40,000,000
Subordinated notes 17,699,821 16,846,944
------------ ------------
Total long-term debt 76,699,821 79,646,944
------------ ------------
OTHER 300,000 --
------------ ------------
COMMITMENTS AND CONTINGENCIES (Notes 2 and 7)
PARTNERS' CAPITAL (DEFICIT):
Contributed capital 26,687,160 26,687,160
Accumulated deficit (43,701,352) (34,681,722)
------------ ------------
Total partners' capital (deficit) (17,014,192) (7,994,562)
------------ ------------
TOTAL $ 63,127,422 $ 74,658,837
============ ============
</TABLE>
See notes to financial statements.
F-3
<PAGE> 8
RAMPART OPERATING PARTNERSHIP
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1993 AND 1992
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
GROSS OPERATING REVENUES $33,211,943 $ 30,503,653
Less commissions (4,740,765) (4,307,198)
----------- ------------
Net operating revenues 28,471,178 26,196,455
----------- ------------
OPERATING EXPENSES:
Depreciation and amortization 11,190,746 13,239,962
Production 10,991,017 11,480,292
General and administrative 3,827,510 3,310,802
Sales and promotion 2,327,001 2,140,622
----------- ------------
Total 28,336,274 30,171,678
----------- ------------
INCOME (LOSS) FROM OPERATIONS 134,904 (3,975,223)
----------- ------------
OTHER INCOME (EXPENSE):
Interest expense (8,939,700) (9,526,079)
Loss on disposition of assets (431,209) (1,298,793)
Other, net 216,375 238,760
----------- ------------
Total (9,154,534) (10,586,112)
----------- ------------
NET LOSS $(9,019,630) $(14,561,335)
=========== ============
</TABLE>
See notes to financial statements.
F-4
<PAGE> 9
RAMPART OPERATING PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
YEARS ENDED DECEMBER 31, 1993 AND 1992
<TABLE>
<CAPTION>
MANAGING OTHER
GENERAL GENERAL
CONTRIBUTED CAPITAL PARTNER PARTNERS TOTAL
<S> <C> <C> <C>
Balance, December 31, 1993 and 1992 $ 26,419,864 $ 267,296 $ 26,687,160
============ ========= ============
ACCUMULATED DEFICIT
Balance, January 1, 1992 (19,917,311) (203,076) (20,120,387)
Allocation of net loss (14,492,019) (69,316) (14,561,335)
------------ --------- ------------
Balance, December 31, 1992 (34,409,330) $(272,392) (34,681,722)
Allocation of net loss (9,012,889) (6,741) (9,019,630)
------------ --------- ------------
Balance, December 31, 1993 $(43,422,219) $(279,133) $(43,701,352)
============ ========= ============
</TABLE>
See notes to financial statements.
F-5
<PAGE> 10
RAMPART OPERATING PARTNERSHIP
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1993 AND 1992
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(9,019,630) $(14,561,335)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization 11,190,746 13,239,962
Loss on disposition of assets 431,209 1,298,793
Deferred interest on subordinated notes 852,877 811,780
Other non-cash items (33,934) (53,640)
Change in assets and liabilities:
Accounts receivable (60,876) (38,928)
Prepaid expenses (94,986) 153,302
Accounts payable 155,049 (269,719)
Accrued interest payable -- (3,784,849)
Accrued expenses 206,625 (24,596)
----------- ------------
Net cash provided by (used in) operating
activities 3,627,080 (3,229,230)
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposition of assets -- 307,675
Capital expenditures (444,160) (223,768)
----------- ------------
Net cash (used in) provided by investing
activities (444,160) 83,907
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on revolving credit note 5,100,000 9,850,000
Payments on revolving credit note (8,900,000) (7,050,000)
----------- ------------
Net cash (used in) provided by financing
activities (3,800,000) 2,800,000
----------- ------------
NET (DECREASE) IN CASH AND
CASH EQUIVALENTS (617,080) (345,323)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 848,020 1,193,343
----------- ------------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 230,940 $ 848,020
=========== ============
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid for interest $ 8,058,323 $ 12,491,148
=========== ============
</TABLE>
See notes to financial statements.
F-6
<PAGE> 11
RAMPART OPERATING PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1993 AND 1992
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - Rampart Operating Partnership (the "Operating
Partnership") was formed on August 24, 1990 to acquire substantially
all of the assets of WWL-TV (the "Station"), a network-affiliated
television station authorized to broadcast on VHF Channel 4 in New
Orleans, Louisiana, from Loyola University ("Loyola"). The Operating
Partnership, a Louisiana general partnership, has three general
partners. Rampart Broadcasting Limited Partnership (the "Limited
Partnership") is the managing general partner and owns an approximate
99% equity interest in the Operating Partnership. Allocation of
partnership profits and losses is determined based upon the provisions
of the Operating Partnership agreement, primarily in accordance with
each partner's ownership interest.
CASH AND CASH EQUIVALENTS - Cash and cash equivalents include cash on
hand and investments (at cost) in repurchase agreements with
maturities of three months or less secured by United States Government
securities.
BROADCAST RIGHTS - Broadcast rights consist of rights to broadcast
syndicated programs and feature films and are stated at the lower of
unamortized cost or estimated net realizable value. The cost of these
rights is recorded as an asset and liability when the program becomes
available for broadcast. The amount charged to operations is based on
varying rates as appropriate to match related revenues with these
expenses. Broadcast rights that will be amortized in the succeeding
year are classified as current assets. The liability for these rights
is classified as current in accordance with the payment terms of the
various agreements.
PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment are
stated at cost. Additions and improvements are capitalized, while
expenditures for maintenance and repairs are expensed as incurred.
Depreciation is computed using the straight-line method over the
estimated useful lives of the assets, as follows:
<TABLE>
<S> <C>
Buildings 35 years
Equipment 5-10 years
</TABLE>
The cost and accumulated depreciation of property sold or retired are
removed from the accounts, and gains or losses, if any, are reflected
in earnings for the period.
INTANGIBLE ASSETS - Intangible assets are stated at cost and are
amortized using the straight-line method over periods generally not to
exceed 40 years.
DEFERRED FINANCING AND ORGANIZATION COSTS - Deferred financing costs
consist of professional fees and other costs incurred in connection
with the issuance of long-term debt. These costs are amortized on a
straight-line basis over the term of the related debt.
Deferred organization costs consist of professional fees and other
costs incurred in connection with the organization of the Operating
Partnership and acquisition of the Station. These costs are amortized
using the straight-line method over a five year period.
F-7
<PAGE> 12
NON-MONETARY TRANSACTIONS - Certain transactions of the Operating
Partnership involve non-monetary exchanges in which the Operating
Partnership provides commercial air time to customers in exchange for
goods and services. Such trade transactions are recorded at the
estimated fair market value of the products or services received.
Revenues from such transactions are recognized when commercials are
broadcast, and goods or services are recorded when received or used.
Such revenues recorded in the year ended December 31, 1993 and 1992
amounted to $1,348,015 and $1,078,813, respectively. If goods or
services are received prior to the broadcast of the commercial, a
liability is recorded; likewise, if the commercial is broadcast prior
to receipt of the goods or services, a receivable is recorded.
INCOME TAXES - Rampart Operating Partnership, as a partnership, is not
subject to income taxes. Any income or loss of the entity is reported
to the appropriate Federal and state income tax authorities for
informational purposes, while actual profit or loss passes to
individual partners for taxation.
RECLASSIFICATIONS - Certain 1992 amounts included in the accompanying
financial statements have been reclassified to conform with the 1993
presentation.
2. BROADCAST RIGHTS AND CONTRACTS PAYABLE
Broadcast rights and broadcast contracts payable, and the changes
therein, for the years ended December 31, 1993 and 1992 are presented
below:
<TABLE>
<CAPTION>
BROADCAST
BROADCAST CONTRACTS
RIGHTS PAYABLE
<S> <C> <C>
Total at December 31, 1991 $ 4,558,773 $ 3,083,189
New programs available for broadcast 3,554,000 3,554,000
Amortization of rights (4,976,705) --
Payments made on contracts -- (4,244,536)
------------ -------------
Total at December 31, 1992 3,136,068 2,392,653
New programs available for broadcast 3,249,500 3,249,500
Amortization of rights (4,018,268) --
Payments made on contracts -- (3,475,836)
------------ -------------
Total at December 31, 1993 $ 2,367,300 $ 2,166,317
============ =============
</TABLE>
In addition, the Operating Partnership has entered into commitments
for programs which are not yet available for broadcast and, therefore,
these obligations are not included in the accompanying financial
statements. These commitments amounted to $4,423,400 and $7,695,500
at December 31, 1993 and 1992, respectively.
F-8
<PAGE> 13
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following at December 31,
1993 and 1992:
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
Land $ 7,211,041 $ 7,211,041
Buildings and improvements 7,009,195 6,964,467
Equipment 31,640,813 31,903,782
------------ ------------
Total 45,861,049 46,079,290
Less accumulated depreciation (15,652,148) (11,298,427)
------------ ------------
Property, plant and equipment, net $ 30,208,901 $ 34,780,863
============ ============
</TABLE>
4. INTANGIBLE ASSETS
Intangible assets consist of the following at December 31, 1993 and
1992:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIVES
(YEARS) 1993 1992
<S> <C> <C> <C>
Market environment 4-40 $ 14,634,800 $ 14,634,800
Assembled staff and talent contracts 4-7 11,951,800 11,951,800
Network affiliation agreement 6-25 9,551,104 9,551,104
Advertising client base and contracts 1-16 7,399,373 7,399,373
Television station licenses 25 3,604,687 3,604,687
Other 1-30 1,271,169 1,271,169
------------- ------------
Total 48,412,933 48,412,933
Less accumulated amortization (26,080,930) (20,822,205)
------------- ------------
Intangible assets, net $ 22,332,003 $ 27,590,728
============= ============
</TABLE>
5. DEFERRED FINANCING AND ORGANIZATION COSTS
Deferred financing and organization costs consist of the following at
December 31, 1993 and 1992:
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
Deferred financing costs $ 2,395,813 $ 2,395,813
Organization costs 989,940 989,940
------------ ------------
Total 3,385,753 3,385,753
Less accumulated amortization (1,812,175) (1,271,928)
------------ ------------
Deferred financing and organization costs, net $ 1,573,578 $ 2,113,825
============ ============
</TABLE>
6. LONG-TERM DEBT
In connection with the acquisition of the Station, the Operating
Partnership together with the Limited Partnership (the "Partnerships")
entered into a Securities Purchase and Revolving Credit Agreement
dated as of August 27, 1990 (the "Credit Agreement") with certain
lenders who are also limited partners in the Limited Partnership. The
Credit Agreement provides for the issuance by the Operating
Partnership of revolving credit, senior and subordinated notes.
F-9
<PAGE> 14
REVOLVING CREDIT
The Operating Partnership had available $23,000,000 at December 31,
1993 and 1992 under a revolving credit agreement, with amounts
outstanding thereunder of $19,000,000 and $22,800,000, respectively.
The Operating Partnership is required to pay a commitment fee of 1/2
of 1% per annum on the unused portion of the loan commitment available
under the revolving credit note. On February 22, 1993, the Credit
Agreement was amended to provide for, among other things, the
following maximum principal amounts available to August 31, 1997:
<TABLE>
<CAPTION>
PERIODS
--------------------- MAXIMUM PRINCIPAL BALANCE
FROM TO OF REVOLVING LOANS
<S> <C> <C>
07/01/92 12/31/94 $23,000,000
01/01/95 12/31/95 20,000,000
01/01/96 12/31/96 17,500,000
01/01/97 08/31/97 15,000,000
</TABLE>
Interest is payable quarterly based upon the three-month London
Interbank Offered Rate ("LIBOR"), plus 2.75 percentage points. The
rate is established at the end of each quarter for the succeeding
quarter. The applicable interest rate on the revolving credit note
outstanding at December 31, 1993 and 1992 was 6.125% and 6.0%,
respectively. The Operating Partnership had an "interest rate swap"
agreement from December 19, 1990 through December 19, 1992 covering
$15,000,000 of the amount outstanding under the revolving credit note.
The Operating Partnership agreed to make quarterly payments based upon
a floor LIBOR rate of 7%, in exchange for quarterly payments by the
lender based upon a LIBOR rate cap of 9%. The effective annual
interest rate on the amount covered by this agreement was 9.8% for the
year ended December 31, 1992.
The Operating Partnership entered into an interest rate cap corridor
agreement on January 14, 1993 to provide for interest rate protection
covering $15,000,000 of the amount outstanding under the revolving
credit note. The protected interest rate is 6.0% up to but not
exceeding 9.0% based on the three-month LIBOR. The cost of this
agreement was $114,000, which will be amortized over its term of July
1, 1993 through June 30, 1995.
SENIOR NOTES
Immediately prior to the acquisition, the Operating Partnership issued
$40,000,000 of senior notes bearing interest at 12% per annum, with
interest payable semi-annually. The notes mature on August 31, 1997,
at which time the outstanding principal balances must be paid in full.
SUBORDINATED NOTES
The Operating Partnership also issued $15,000,000 of subordinated
notes bearing interest at 17% per annum, of which 12% is payable
semi-annually and 5% is deferred, added to the outstanding principal
balance of the notes and compounded semi-annually until paid.
However, upon the occurrence of certain events set forth in the Credit
Agreement, the interest deferral would cease and the entire 17% would
be paid currently from that date forward. Cumulative deferred
interest amounted to $2,699,821 and $1,846,944 at December 31, 1993
and 1992, respectively. The notes mature on August 31, 1997.
F-10
<PAGE> 15
COVENANTS
The Credit Agreement contains financial and operating covenants that
prohibit or significantly limit the Partnerships' ability to, among
other things, incur or repay any other indebtedness, cause cash
distributions to be made to partners, issue additional equity
interests or make capital expenditures above certain annual amounts.
The Credit Agreement also requires the Partnerships to maintain
specified working capital reserves and interest coverage percentages.
Specifically, the principal restrictive covenants of the Credit
Agreement are as follows:
-- Require the Partnerships to maintain a working capital reserve
of $3,000,000 at the end of each quarter and limit annual
capital expenditures to $750,000.
-- Limit indebtedness other than amounts outstanding under the
Credit Agreement to $500,000.
-- Substantially restrict any distributions to partners other
than in limited instances specified by the Credit Agreement.
-- Require specified percentages of operating cash flow to cash
interest expense for each four quarter period during the term
of the Credit Agreement.
For the four quarter periods ended during 1992 the
required percentage was 120%. The Partnership was
not in compliance with this percentage during certain
periods in 1992; however, waivers were obtained for
all instances of non-compliance from the principal
lender. On February 22, 1993 the Credit Agreement
was amended to provide for the following revised
required percentages:
<TABLE>
<CAPTION>
FOR QUARTERS ENDED PERCENTAGE
<S> <C>
March 31, 1993 through September 30, 1995 110%
December 31, 1995 and thereafter 125%
</TABLE>
See Note 9, "Subsequent Event," for discussion regarding the Operating
Partnership's agreement to sell the Station. All amounts outstanding
under the Credit Agreement will become immediately due and payable
concurrently with the sale of the Station.
7. COMMITMENTS AND CONTINGENCIES
In the normal course of business, there are various commitments such
as long-term employment contracts and consulting agreements, which are
not recorded as obligations in the accompanying financial statements.
These agreements expire at various dates through 1997. The total
commitment at December 31, 1993 and 1992 was approximately $4,141,000
and $3,700,000, respectively.
The Partnerships are named as defendants in several lawsuits arising
in the ordinary course of business. Pursuant to the asset purchase
agreement, the Operating Partnership acquired the assets of the
Station free of liability or obligations relating to ownership or
operation of the Station prior to the acquisition. In connection with
the acquisition of the Station, Loyola agreed to indemnify the
Operating Partnership against claims and litigation relating to the
prior operation of the Station by Loyola. While the outcome of these
lawsuits against the Partnerships cannot be predicted with certainty,
management does not expect these matters to have a material adverse
effect on the financial condition or results of operations of the
Partnerships.
F-11
<PAGE> 16
8. RELATED PARTY TRANSACTIONS
As discussed in Note 1, the managing general partner of the Operating
Partnership is Rampart Broadcasting Limited Partnership. The two
non-managing general partners of the Operating Partnership are
affiliated with parties that are limited partners in the Limited
Partnership. Several employees of the Operating Partnership are also
limited partners in the Limited Partnership. Additionally, five
employees of the Operating Partnership are the stockholders of Rampart
Broadcasting Company, a corporation which is the general partner in
the Limited Partnership.
The Operating Partnership has entered into an incentive bonus
agreement whereby the Operating Partnership is required to pay Rampart
Broadcasting Company an incentive bonus if the Operating Partnership
achieves stipulated cash flow projections. No such bonus was earned
for the years ended December 31, 1993 and 1992.
The Operating Partnership has retained a limited partner in the
Limited Partnership to provide national sales representation for the
Station. Amounts paid to this limited partner for the years ended
December 31, 1993 and 1992 were approximately $576,000 and $515,000,
respectively.
9. SUBSEQUENT EVENT
On March 29, 1994, the Partnership entered into an Asset Purchase
Agreement whereby substantially all of the assets of WWL- TV,
exclusive of cash and accounts receivable, will be sold. The sale of
the Station is contingent upon the occurrence of certain events,
principally Federal Communications Commission approval. The purchase
price of the assets is $110,000,000, subject to certain adjustments
provided for by the Asset Purchase Agreement, primarily resulting from
the operations of the Partnership prior to the date of the sale, which
is expected to occur in mid-year 1994. The Asset Purchase Agreement
provides for the establishment of a $2,000,000 indemnification escrow
fund out of the proceeds of the sale, the purpose of which is to
provide funds for the resolution of any pre-acquisition contingencies.
The consummation of the sale of the Station will result in the
ultimate dissolution of the Partnerships.
If the aforementioned sale is not consummated, the Operating
Partnership Agreement contains a provision which provides the two
non-managing general partners of the Operating Partnership the right
to cause the sale of the Station if specified cash flow requirements
for the 12 months ending August 31, 1994 are not achieved. Although
it is not possible to predict future performance with certainty,
management does not expect such cash flow requirements will be
achieved for the 12 months ending August 31, 1994; accordingly, the
non-managing general partners could exercise the aforementioned right
for up to 135 days following August 31, 1994.
* * * * * *
F-12
<PAGE> 17
RAMPART OPERATING PARTNERSHIP
FINANCIAL STATEMENTS FOR THE THREE MONTHS
ENDED MARCH 31, 1994 AND 1993 (UNAUDITED)
F-13
<PAGE> 18
RAMPART OPERATING PARTNERSHIP
CONDENSED BALANCE SHEET (unaudited)
<TABLE>
<CAPTION>
MARCH 31, 1994 DECEMBER 31, 1993
-------------- ----------------
<S> <C> <C>
- - - -- ASSETS
Current assets:
Cash and cash equivalents $ 186,908 $ 230,940
Accounts receivable, net 4,985,480 5,862,754
Broadcast rights 1,427,215 2,367,300
Prepaid expenses 360,467 177,211
----------- -----------
Total current assets 6,960,070 8,638,205
----------- -----------
Property, plant and equipment, at cost:
Land 7,211,041 7,211,041
Buildings 7,009,195 7,009,195
Equipment 31,809,959 31,640,813
----------- -----------
Total property, plant and equipment 46,030,195 45,861,049
Less accumulated depreciation 16,851,440 15,652,148
----------- -----------
Property, plant and equipment, net 29,178,755 30,208,901
----------- -----------
Intangible assets, net 21,378,681 22,332,003
Deferred financing and organization costs, net 1,438,519 1,573,578
Other 450,490 374,735
----------- -----------
Total assets $59,406,515 $63,127,422
=========== ===========
- - - -- LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Current liabilities:
Accounts payable $ 575,301 $ 388,490
Accrued expenses 748,759 586,986
Accrued interest payable 1,730,995 --
Broadcast contracts payable 1,357,993 2,166,317
----------- -----------
Total current liabilities 4,413,048 3,141,793
----------- -----------
Long-term debt 73,021,068 76,699,821
Other 287,240 300,000
Partners' Capital (Deficit):
Contributed capital 26,687,160 26,687,160
Accumulated deficit (45,002,001) (43,701,352)
----------- -----------
Total partners' capital (deficit) (18,314,841) (17,014,192)
----------- -----------
Total liabilities and partners' capital $59,406,515 $63,127,422
=========== ===========
</TABLE>
See accompanying Notes to Financial Statements.
F-14
<PAGE> 19
RAMPART OPERATING PARTNERSHIP
STATEMENTS OF OPERATIONS (unaudited)
<TABLE>
<CAPTION>
Three months ended March 31, 1994 1993
---- ----
<S> <C> <C>
- - - -- NET OPERATING REVENUES
Gross operating revenues $ 8,671,104 $ 6,972,563
Less commissions (1,243,846) (969,856)
----------- -----------
Net operating revenues 7,427,258 6,002,707
----------- -----------
- - - -- OPERATING EXPENSES
Depreciation and amortization 2,419,435 3,220,606
Production 2,686,527 2,618,726
General and administrative 948,514 833,579
Sales and promotion 505,740 376,602
----------- -----------
Total 6,560,216 7,049,513
----------- -----------
Income (loss) from operations 867,042 (1,046,806)
----------- -----------
- - - -- OTHER INCOME (EXPENSE)
Interest expense (2,239,375) (2,253,635)
Other, net 71,684 49,645
----------- -----------
Total (2,167,691) (2,203,990)
----------- -----------
Net loss $(1,300,649) $(3,250,796)
=========== ===========
</TABLE>
See accompanying Notes to Financial Statements.
F-15
<PAGE> 20
RAMPART OPERATING PARTNERSHIP
STATEMENTS OF CASH FLOWS (unaudited)
<TABLE>
<CAPTION>
Three months ended March 31, 1994 1993
---- ----
<S> <C> <C>
- - - -- CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(1,300,649) $(3,250,796)
Adjustments to reconcile net loss
to net cash provided by operating activities
Depreciation and amortization 2,419,435 3,220,606
Deferred interest on subordinated notes 221,247 210,589
Other non-cash items (74,153) (3,932)
Change in assets and liabilities:
Accounts receivable 877,274 1,006,380
Prepaid expenses (184,860) (309,176)
Accounts payable 186,813 140
Accrued expenses 161,772 146,250
Accrued interest payable 1,730,995 1,705,408
----------- -----------
Net cash provided by operating activities 4,037,874 2,725,469
----------- -----------
- - - -- CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (169,146) (31,469)
----------- -----------
Net cash used by investing activities (169,146) (31,469)
----------- -----------
- - - -- CASH FLOWS FROM FINANCING ACTIVITIES
Net payments on revolving credit note (3,900,000) (3,100,000)
Other (12,760) --
----------- -----------
Net cash used by financing activities (3,912,760) (3,100,000)
----------- -----------
Net decrease in cash and cash equivalents (44,032) (406,000)
Cash and cash equivalents, beginning of period 230,940 848,020
----------- -----------
Cash and cash equivalents, end of period $ 186,908 $ 442,020
=========== ===========
- - - -- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest $ 272,882 $ 337,640
----------- -----------
</TABLE>
See accompanying Notes to Financial Statements.
F-16
<PAGE> 21
RAMPART OPERATING PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (unaudited)
(1) The unaudited condensed financial statements as of March 31, 1994 and
for the three-month periods ended March 31, 1994 and 1993 and related
notes should be read in conjunction with the audited financial
statements and related notes as of December 31, 1993.
(2) In the opinion of Rampart Operating Partnership (the "Company")
management, the accompanying unaudited financial statements contain
all adjustments necessary to present fairly the Company's financial
position as of March 31, 1994, and its results of operations and cash
flows for the three-month periods ended March 31, 1994 and 1993. All
such adjustments are of a normal recurring nature.
(3) On March 29, 1994, the Company and A. H. Belo Corporation ("Belo")
executed an agreement under which Belo would purchase certain of the
assets of the Company for $110,000,000, subject to certain
adjustments. The transaction was completed on June 1, 1994.
F-17
<PAGE> 22
ITEM 7(b)
PRO FORMA FINANCIAL INFORMATION
<PAGE> 23
A. H. BELO CORPORATION
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET (UNAUDITED)
MARCH 31, 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
A. H. Belo Pro Forma
Corporation Rampart Adjustments Pro Forma
----------- ------- ----------- ---------
(Note 2)
<S> <C> <C> <C> <C>
Assets
Current assets
Cash and temporary cash investments $ 7,277 $ 187 $ (187) (a) $ 7,277
Accounts receivable, net 71,390 4,985 (4,985) (a) 71,390
Other current assets 26,676 1,788 (1,788) (a) 26,676
---------- --------- --------- -----------
Total current assets 105,343 6,960 (6,960) 105,343
Property, plant and equipment, at cost:
Land 15,065 7,211 (2,760) (b) 19,516
Buildings 116,516 7,009 (2,649) (b) 120,876
Newspaper publishing equipment 183,301 -- 183,301
Broadcast equipment 93,335 31,810 (13,213) (b) 111,932
Other 36,298 -- 2,281 (b) 38,579
Advance payments on plant and
equipment expenditures 14,007 -- 14,007
---------- --------- --------- -----------
Total property, plant and equipment 458,522 46,030 (16,341) (b) 488,211
Less accumulated depreciation 189,100 16,851 (16,851) (b) 189,100
---------- --------- --------- -----------
Property, plant and equipment, net 269,422 29,179 510 (b) 299,111
Intangible assets, net 351,003 21,379 59,219 (c) 431,601
Other assets 57,247 1,889 (1,889) (a) 57,247
---------- --------- --------- -----------
Total assets $ 783,015 $ 59,407 $ 50,880 $ 893,302
========== ========= ========= ===========
Liabilities
Current liabilities
Accounts payable and accrued expenses $ 38,619 $ 2,682 $ (2,682) (a) $ 38,619
Other accrued liabilities 12,458 1,731 (1,731) (a) 12,458
---------- --------- --------- -----------
Total current liabilities 51,077 4,413 (4,413) 51,077
Long-term debt 260,400 73,021 36,979 (d) 370,400
Deferred income taxes 108,467 -- 108,467
Other liabilities 5,706 287 5,993
Shareholders' equity
Partners' capital (deficit) -- (18,314) 18,314 (e) --
Common stock - Series A 24,373 -- 24,373
Common stock - Series B 9,540 -- 9,540
Other shareholders' equity 323,452 323,452
---------- --------- --------- -----------
Total shareholders' equity 357,365 (18,314) 18,314 357,365
Total liabilities and
shareholders' equity $ 783,015 $ 59,407 $ 50,880 $ 893,302
========== ========= ========= ===========
</TABLE>
See accompanying notes.
P-1
<PAGE> 24
A. H. BELO CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1994
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
A. H. Belo Pro Forma
Corporation Rampart Adjustments Pro Forma
----------- ------- ----------- ---------
(Note 3)
<S> <C> <C> <C> <C>
Net Operating Revenues
Newspaper publishing $ 82,921 $ -- $ $ 82,921
Broadcasting 49,126 7,427 136 (a) 56,689
--------- -------- ------- ---------
Total net operating revenues 132,047 7,427 136 139,610
Operating Costs and Expenses
Salaries, wages and employee benefits 41,249 1,850 260 (b) 43,359
Newsprint, ink and other supplies 25,177 -- 25,177
Other production, distribution and operating costs 36,018 2,291 (124)(a), (b) 38,185
Depreciation 7,327 1,199 152 (c) 8,678
Amortization 3,092 1,220 (716)(d) 3,596
--------- -------- ------- ---------
Total operating costs and expenses 112,863 6,560 (428) 118,995
--------- -------- ------- ---------
Earnings from operations 19,184 867 564 20,615
Other Income and Expense
Interest expense (2,820) (2,239) 314 (e) (4,745)
Other, net 476 72 548
--------- -------- ------- ---------
Total other income and expense (2,344) (2,167) 314 (4,197)
Earnings
Earnings before income taxes 16,840 (1,300) 878 16,418
Income taxes 6,802 -- (148)(f) 6,654
--------- -------- ------- ---------
Net earnings $ 10,038 $ (1,300) $ 1,026 $ 9,764
========= ======== ======= =========
Weighted average shares outstanding 20,527 20,527
Earnings per common and common
equivalent share $ .49 $ .48
========= =========
</TABLE>
See accompanying notes.
P-2
<PAGE> 25
A. H. BELO CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)
YEAR ENDED DECEMBER 31, 1993
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
A. H. Belo Pro Forma
Corporation Rampart Adjustments Pro Forma
----------- ------- ----------- ---------
(Note 4)
<S> <C> <C> <C> <C>
Net Operating Revenues
Newspaper publishing $ 335,642 $ -- $ $ 335,642
Broadcasting 209,193 28,471 576 (a) 238,240
--------- -------- -------- ---------
Total net operating revenues 544,835 28,471 576 573,882
Operating Costs and Expenses
Salaries, wages and employee benefits 161,170 7,049 1,285 (b) 169,504
Newsprint, ink and other supplies 105,395 -- 105,395
Other production, distribution and
operating costs 145,310 10,096 (709)(a), (b) 154,697
Depreciation 25,281 4,885 517 (c) 30,683
Amortization 12,383 6,306 (4,291)(d) 14,398
Restructuring charge 5,822 -- 5,822
--------- -------- -------- ---------
Total operating costs and expenses 455,361 28,336 (3,198) 480,499
--------- -------- -------- ---------
Earnings from operations 89,474 135 3,774 93,383
Other Income and Expense
Interest expense (15,015) (8,940) 1,240 (e) (22,715)
Other, net 1,119 (215) 904
--------- -------- -------- ---------
Total other income and expense (13,896) (9,155) 1,240 (21,811)
Earnings
Earnings before income taxes and
cumulative effect of accounting change 75,578 (9,020) 5,014 71,572
Income taxes 31,100 -- (1,402)(f) 29,698
--------- -------- -------- ---------
Net earnings before cumulative
effect of accounting change $ 44,478 $ (9,020) $ 6,416 $ 41,874
========= ======== ======== =========
Weighted average shares outstanding 20,204 20,204
Per share earnings before cumulative
effect of accounting change $ 2.20 $ 2.07
========= =========
</TABLE>
See accompanying notes.
P-3
<PAGE> 26
Item 7(b). Pro Forma Financial Information. (cont.)
A. H. BELO CORPORATION
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1: GENERAL
On June 1, 1994, A. H. Belo Corporation (the "Company"), through its
wholly-owned subsidiary, WWL-TV, Inc., acquired the assets of television
station WWL-TV, the CBS affiliate in New Orleans, Louisiana, from Rampart
Operating Partnership ("Rampart") for approximately $110,000,000 in cash. The
transaction was financed with funds from the Company's existing revolving
credit facility utilizing short-term rates. However, for purposes of pro forma
financial results, the Company has assumed an interest rate representing a
long-term fixed rate that could have been obtained at the date of the
transaction.
The pro forma financial statements present the historical consolidated
financial statements of the Company adjusted for the acquisition. The
accompanying pro forma consolidated condensed balance sheet assumes the
transaction was completed on March 31, 1994. The accompanying pro forma
consolidated statements of earnings assume the transaction was completed at the
beginning of the periods indicated.
These pro forma financial statements are not necessarily indicative of the
financial position which would have actually been obtained had the acquisition
occurred on March 31, 1994 or the results of operations which would have
actually been obtained had the acquisition occurred on January 1, 1993 or 1994.
These pro forma financial statements should be read in conjunction with the
consolidated financial statements of the Company included in the annual report
for the year ended December 31, 1993 filed on Form 10-K and the quarterly
report for the three-month period ended March 31, 1994 filed on Form 10-Q and
the consolidated financial statements of Rampart included in Item 7(a) of this
Form 8-K/A.
NOTE 2: PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
(a) To eliminate assets and liabilities of Rampart not included in the
Asset Purchase Agreement dated as of March 29,1994 between the Company
and Rampart.
(b) To adjust the carrying value of certain property, plant and equipment
to estimated fair value as of the acquisition date.
(c) To record cost in excess of tangible assets acquired, calculated as
follows (in thousands):
<TABLE>
<S> <C>
Consideration paid at closing $110,000
Capital lease obligation assumed at closing 287
Property, plant and equipment, fair value (29,689)
--------
Excess cost over values assigned to tangible assets
of purchased subsidiaries 80,598
Rampart intangible assets, net (21,379)
--------
$ 59,219
========
</TABLE>
P-4
<PAGE> 27
(d) To reflect additional debt of $110,000,000 incurred by the Company to
complete the transaction, less Rampart's debt not assumed in the
transaction.
(e) To eliminate Rampart's historical partners' capital (deficit).
NOTE 3: PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS FOR THE THREE MONTHS
ENDED MARCH 31, 1994
(a) To reclassify certain commissions paid from a reduction of revenues to
other production, distribution and operating costs to conform to
presentation practices of the Company.
(b) To reclassify certain employee benefit costs from other production,
distribution and operating costs to salaries, wages and employee
benefits to conform to presentation practices of the Company.
(c) To adjust depreciation expense based on the estimated fair market
value of property, plant and equipment as of the acquisition date.
(d) To adjust amortization of excess cost over value assigned to tangible
assets of purchased subsidiaries of $80,598,000 over 40 years less
Rampart's amortization of intangibles of $1,220,000.
(e) To adjust interest expense to a rate of approximately 7 percent on
borrowings of $110,000,000. The interest rate is an assumed fixed
long-term borrowing rate that could have been obtained at the date of
the transaction.
(f) To reflect an adjustment to federal income taxes at a rate of 35
percent related to the net reduction in consolidated operating results
arising from Rampart's results of operations for the three months
ended March 31, 1994, adjusted for the pro forma items noted in (c),
(d) and (e).
NOTE 4: PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS FOR THE YEAR ENDED
DECEMBER 31, 1993
(a) To reclassify certain commissions paid from a reduction of revenues to
other production, distribution and operating costs to conform to
presentation practices of the Company.
(b) To reclassify certain employee benefit costs from other production,
distribution and operating costs to salaries, wages and employee
benefits to conform to presentation practices of the Company.
(c) To adjust depreciation expense based on the estimated fair market
value of property, plant and equipment as of the acquisition date.
(d) To adjust amortization of excess cost over value assigned to tangible
assets of purchased subsidiaries of $80,598,000 over 40 years less
Rampart's amortization of intangibles of $6,306,000.
(e) To adjust interest expense to a rate of approximately 7 percent on
borrowings of $110,000,000. The interest rate is an assumed fixed
long-term borrowing rate that could have been obtained at the date of
the transaction.
(f) To reflect an adjustment to federal income taxes at a rate of 35
percent related to the net reduction in consolidated operating results
arising from Rampart's results of operations for the year ended
December 31, 1993, adjusted for the pro forma items noted in (c), (d)
and (e).
P-5
<PAGE> 28
ITEM 7(c)
EXHIBITS
<PAGE> 29
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
EXHIBIT SEQ.
NUMBER DESCRIPTION PAGE NO.
- - - ------ ----------- --------
<S> <C> <C>
10.1 Asset Purchase Agreement dated as of March 29, 1994 between
Rampart and A. H. Belo Corporation (the "Company") (incorporated
by reference to Exhibit 10.1 to the Company's Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 1994). N/A
23.1 Consent of Deloitte & Touche. ___
28.1 Press Release of the Company dated May 31, 1994. N/A
</TABLE>
E-1
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in A. H. Belo Corporation's
Registration Statements (Form S-8 No. 33-30994 and Form S-8 No. 33-32526)
pertaining to its Employee Savings and Investment Plan and 1986 Long-Term
Incentive Plan of our report dated March 29, 1994 with respect to the financial
statements of Rampart Operating Partnership for the years ended December 31,
1993 and 1992 appearing in A. H. Belo Corporation's Form 8-K/A dated August 2,
1994.
/S/Deloitte & Touche
New Orleans, Louisiana
August 1, 1994
E-2
