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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT
(AMENDMENT NO. 30)
PURSUANT TO SECTION 14(D)(1) OF THE
SECURITIES EXCHANGE ACT OF 1934 AND
SCHEDULE 13D
(AMENDMENT NO. 31)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
PARAMOUNT COMMUNICATIONS INC.
(Name of Subject Company)
VIACOM INC.
NATIONAL AMUSEMENTS, INC.
SUMNER M. REDSTONE
BLOCKBUSTER ENTERTAINMENT CORPORATION
(Bidder)
COMMON STOCK, $1.00 PAR VALUE
(Title of Class of Securities)
699216 10 7
(CUSIP Number of Class of Securities)
PHILIPPE P. DAUMAN, ESQ.
VIACOM INC.
1515 BROADWAY
NEW YORK, NEW YORK 10036
TELEPHONE: (212) 258-6000
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Bidder)
COPIES TO:
STEPHEN R. VOLK, ESQ.
SHEARMAN & STERLING
599 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022
TEL.: (212) 848-4000
ROGER S. AARON, ESQ.
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
TEL.: (212) 735-3000
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Page 1 of Pages
Exhibit Index on Page
<PAGE>
This Amendment No. 30 to the Tender Offer Statement on
Schedule 14D-1 and Amendment No. 31 to Schedule 13D (the
"Statement") relates to the offer by Viacom Inc., a Delaware
corporation ("Purchaser"), to purchase shares of Common Stock,
par value $1.00 per share (the "Shares"), of Paramount
Communications Inc., a Delaware corporation (the "Company"), at a
price of $107 per Share, net to the seller in cash, upon the
terms and subject to the conditions set forth in Purchaser's
Offer to Purchase dated October 25, 1993 (the "Offer to
Purchase"), a copy of which was attached as Exhibit (a)(1) to
Amendment No. 1, filed with the Securities and Exchange
Commission (the "Commission") on October 26, 1993, to the Tender
Offer Statement on Schedule 14D-1 filed with the Commission on
October 25, 1993 (the "Schedule 14D-1"), as supplemented by
the Supplement thereto dated November 8, 1993 (the "First
Supplement"), the Second Supplement thereto dated January 7,
1994 (the "Second Supplement") and the Third Supplement thereto
dated January 18, 1994 (the "Third Supplement") and in the
related Letters of Transmittal.
Capitalized terms used but not defined herein have the
meanings assigned to such terms in the Offer to Purchase, the
First Supplement, the Second Supplement, the Third Supplement
and the Schedule 14D-1.
ITEM 9. FIANANCIAL STATEMENTS OF CERTAIN BIDDERS.
Item 9 is hereby amended and supplemented by restating
in their entirety the pro forma financial statements contained
therein as follows:
<PAGE>
VIACOM BLOCKBUSTER INC.
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed balance sheet at
September 30, 1993 gives effect to the Blockbuster Merger as if the Blockbuster
Merger had occurred at such date, and was prepared based upon the unaudited
balance sheets of Purchaser and Blockbuster at September 30, 1993. The following
unaudited pro forma combined statements of operations for the nine months ended
September 30, 1993 and for the year ended December 31, 1992 give effect to the
Blockbuster Merger as if the Blockbuster Merger had occurred at the beginning of
the period presented and were prepared based upon the unaudited statements of
operations of Purchaser and Blockbuster for the nine months ended September 30,
1993 and the audited statements of Purchaser and Blockbuster for the year ended
December 31, 1992. These unaudited pro forma combined condensed financial
statements should be read in conjunction with the audited financial statements,
including the notes thereto, and the unaudited financial statements, including
the notes thereto, of (i) Purchaser contained in Purchaser's Annual Report on
Form 10-K for the year ended December 31, 1992, as amended by Form 10-K/A
Amendment No. 1 dated November 29, 1993, and in Purchaser's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1993, respectively, in each case
filed by Purchaser with the Commission, and of (ii) Blockbuster contained in
Blockbuster's Annual Report on Form 10-K for the year ended December 31, 1992,
in Blockbuster's Current Report on Form 8-K dated October 22, 1993, and in
Blockbuster's Quarterly Report on Form 10-Q for the quarter ended September 30,
1993, respectively, in each case filed by Blockbuster with the Commission. More
comprehensive financial information is included in such reports and other
documents filed by Purchaser and Blockbuster with the Commission, and the
following financial data is qualified in its entirety by reference to such
reports and other documents, including the financial information and related
notes contained therein. Such reports and other documents may be inspected and
copies may be obtained from the offices of the Commission in the same manner as
set forth with respect to information about the Company in Section 7 of the
Offer to Purchase.
The unaudited pro forma information is not necessarily indicative of the
operating results or financial position of the combined company that would have
occurred if the Blockbuster Merger had occurred at the date indicated, nor is it
indicative of future operating results or financial position.
The pro forma adjustments are based upon available information and upon
certain assumptions set forth herein, including the notes to the unaudited pro
forma combined condensed financial statements, which Purchaser and Blockbuster
believe are reasonable under the circumstances. The pro forma adjustments
reflect the Blockbuster Merger Consideration (see Note 1). Blockbuster
historical information has been adjusted for certain proposed or completed
acquisitions. (See Blockbuster Pro Forma Information.)
The Blockbuster Merger is being accounted for by the purchase method of
accounting, and accordingly, the cost to Purchaser to acquire Blockbuster,
calculated to be approximately $8.5 billion as of January 5, 1994, will be
allocated to the assets and liabilities acquired according to their respective
fair values. The cost to Purchaser to acquire Blockbuster pursuant to the
Blockbuster Merger is subject to change based upon the market value of Viacom
Common Stock at the time of the Blockbuster Merger. A change in the fair market
value of Viacom Common Stock will result in a corresponding change in the excess
of unallocated acquisition cost over the net assets acquired and the related
amortization thereof. The valuations and other studies, which will provide the
basis for such an allocation, have not yet progressed to a stage where there is
sufficient information to make an allocation in the accompanying unaudited pro
forma combined condensed financial statements. Accordingly, the purchase
accounting adjustments made in connection with the development of the unaudited
pro forma combined condensed financial information are preliminary and have been
made solely for purposes of developing such unaudited pro forma combined
condensed financial information. However, on the basis of its preliminary
analysis, Purchaser currently believes that substantially all of the excess cost
over Blockbuster net assets acquired will be allocated to intangible assets. For
pro forma purposes, the approximate $6.5 billion excess of unallocated
acquisition cost over the net assets acquired, based on a calculation of the
acquisition cost as of January 5, 1994, is being amortized over 40 years at the
rate of $163.7 million per year. Purchaser believes that such 40 year
amortization period is appropriate based on Purchaser's belief that (i) the
"Blockbuster" brand will continue to be a leading source for entertainment
products for an indeterminable period of time of at least 40 years, (ii) the
merger with Blockbuster will increase Purchaser's ability to exploit Purchaser's
franchises, trademarks and products for an indeterminable time of at least 40
years and such franchises, trademarks and products will continue to support the
diversification of the Blockbuster retail product and (iii) the "Blockbuster"
brand is exploitable in areas other than retail outlets.
<PAGE>
VIACOM BLOCKBUSTER INC.
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
AT SEPTEMBER 30, 1993
(IN MILLIONS)
<TABLE> <CAPTION>
PRO FORMA
PRO FORMA ---------------------------------------
PURCHASER COMBINED DEBIT CREDIT COMBINED
HISTORICAL BLOCKBUSTER* ADJUSTMENTS ADJUSTMENTS COMPANY
---------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash & short term investments................... $ 63.9 $ 70.5 $ 1,800.0(1b) $ 30.0(1a) $ 1,904.4
Other current assets............................ 936.9 615.0 1,551.9
---------- ------------ ------------ ------------ -----------
Total current assets.......................... 1,000.8 685.5 1,800.0 30.0 3,456.3
---------- ------------ ------------ ------------ -----------
Property and equipment, net..................... 529.9 490.7 1,020.6
Videocassette rental inventory, net............. 430.9 430.9
Intangible assets, at amortized cost............ 2,214.2 815.3 6,546.2(1a) 9,575.7
Other assets.................................... 880.7 2,076.1 1,850.0(1c) 1,106.8
---------- ------------ ------------ ------------ -----------
$ 4,625.6 $ 4,498.5 $ 8,346.2 $ 1,880.0 $ 15,590.3
---------- ------------ ------------ ------------ -----------
---------- ------------ ------------ ------------ -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities............................. $ 992.3 $ 1,826.2 $ 1,250.0(1c) $ 1,568.5
Long-term debt.................................. 2,359.1 615.3 2,974.4
Other liabilities............................... 365.5 146.9 512.4
Stockholders' Equity:
Preferred stock............................... 600.0(1c) $ 1,800.0(1b) 1,200.0
Common stock.................................. 908.7 1,910.1 6,516.2(1a) 9,335.0
---------- ------------ ------------ ------------ -----------
Total Stockholders' Equity................. 908.7 1,910.1 600.0 8,316.2 10,535.0
---------- ------------ ------------ ------------ -----------
$ 4,625.6 $ 4,498.5 $ 1,850.0 $ 8,316.2 $ 15,590.3
---------- ------------ ------------ ------------ -----------
---------- ------------ ------------ ------------ -----------
</TABLE>
See notes to unaudited pro forma combined condensed financial statements.
- ---------------
* See Blockbuster Pro Forma Combined Statements.
<PAGE>
VIACOM BLOCKBUSTER INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1993
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE> <CAPTION>
PRO FORMA
PRO FORMA --------------------------------------
PURCHASER COMBINED DEBIT CREDIT COMBINED
HISTORICAL BLOCKBUSTER* ADJUSTMENTS ADJUSTMENTS COMPANY
---------- ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Revenues......................................... $ 1,474.6 $ 1,824.2 $ 3,298.8
Expenses:
Operating...................................... 643.1 1,386.7 $ 313.0(2a) 1,716.8
Selling, general and administrative............ 412.6 149.2 561.8
$ 313.0(2a)
Depreciation and amortization.................. 112.0 122.7(2b) 547.7
---------- ------------ ------------ ------------ ----------
Total expenses............................ 1,167.7 1,535.9 435.7 313.0 2,826.3
---------- ------------ ------------ ------------ ----------
Earnings from operations......................... 306.9 288.3 435.7 313.0 472.5
Other income (expense):
Interest expense............................... (117.3) (73.5) (190.8)
Interest and other investment income........... 5.9 5.9
Other items, net............................... 63.3(3) 15.9 22.5(2d) 56.7
---------- ------------ ------------ ------------ ----------
Total other income (expense).............. (54.0) (51.7) 22.5 (128.2)
---------- ------------ ------------ ------------ ----------
Earnings before income taxes..................... 252.9 236.6 458.2 313.0 344.3
Provision for income taxes....................... 106.9 89.4 .2(2e) 196.1
Equity in loss of affiliated companies, net of
tax............................................ (2.8) (2.8)
---------- ------------ ------------ ------------ ----------
Earnings before extraordinary items.............. 143.2 147.2 458.2 313.2 145.4
Preferred stock dividend requirements............ 67.5(2c) 22.5(2d) 45.0
---------- ------------ ------------ ------------ ----------
Earnings attributable to common stock before
extraordinary items............................ $ 143.2 $ 147.2 $ 525.7 $335.7 $ 100.4
---------- ------------ ------------ ------------ ----------
---------- ------------ ------------ ------------ ----------
Weighted average number of common and common
equivalent shares.............................. 120.5 311.2
Primary earnings per common share before
extraordinary items............................ $ 1.19 $ 0.32(2f)
</TABLE>
See notes to unaudited pro forma combined condensed financial statements.
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* See Blockbuster Pro Forma Combined Statements.
<PAGE>
VIACOM BLOCKBUSTER INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1992
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE> <CAPTION>
PRO FORMA
PRO FORMA --------------------------------------
PURCHASER COMBINED DEBIT CREDIT COMBINED
HISTORICAL BLOCKBUSTER* ADJUSTMENTS ADJUSTMENTS COMPANY
---------- ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Revenues......................................... $ 1,864.7 $ 2,296.6 $ 4,161.3
Expenses:
Operating...................................... 854.0 1,820.6 $ 350.4(2a) 2,324.2
Selling, general and administrative............ 518.0 173.4 691.4
$ 350.4(2a)
Depreciation and amortization.................. 144.8 163.7(2b) 658.9
---------- ------------ ------------ ------------ ----------
Total expenses............................ 1,516.8 1,994.0 514.1 350.4 3,674.5
---------- ------------ ------------ ------------ ----------
Earnings from operations......................... 347.9 302.6 514.1 350.4 486.8
Other income (expense):
Interest expense............................... (194.1) (94.0) (288.1)
Interest and other investment income........... 9.9 9.9
Other items, net............................... 1.8(3) 17.4 30.0(2d) (10.8)
---------- ------------ ------------ ------------ ----------
Total other income (expense).............. (192.3) (66.7) 30.0 (289.0)
---------- ------------ ------------ ------------ ----------
Earnings before income taxes..................... 155.6 235.9 544.1 350.4 197.8
Provision for income taxes....................... 84.8 84.7 0.3(2e) 169.2
Equity in loss of affiliated companies, net of
tax............................................ (4.7) (4.7)
---------- ------------ ------------ ------------ ----------
Earnings before extraordinary items.............. 66.1 151.2 544.1 350.7 23.9
Preferred stock dividend requirements............ 90.0(2c) 30.0(2d) 60.0
---------- ------------ ------------ ------------ ----------
Earnings (loss) attributable to common stock
before extraordinary items..................... $ 66.1 $ 151.2 $ 634.1 $ 380.7 $ (36.1)
---------- ------------ ------------ ------------ ----------
---------- ------------ ------------ ------------ ----------
Weighted average number of common shares......... 120.2 290.0
Earnings (loss) per common share before
extraordinary items............................ $ 0.55 $ (0.12)(2f)
</TABLE>
See notes to unaudited pro forma combined condensed financial statements.
- ---------------
* See Blockbuster Pro Forma Combined Statements.
<PAGE>
VIACOM BLOCKBUSTER INC.
NOTES TO UNAUDITED PRO FORMA
COMBINED CONDENSED FINANCIAL STATEMENTS
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(1) The cost to acquire Blockbuster pursuant to the Blockbuster Merger, the
financing of such cost and the determination of the unallocated excess of
acquisition cost over the net assets acquired are set forth below. Pursuant
to the Blockbuster Merger, holders of shares of Blockbuster Common Stock
will be entitled to receive, for each Blockbuster share, (a) .08 of one
share of Viacom Class A Common Stock, (b) .60615 of one share of Viacom
Class B Common Stock and (c) one variable common right (a "VCR"), which at
the January 5, 1994 market price, represents an additional .05929 of one
share of Viacom Class B Common Stock. As described in Annex A to the
Blockbuster Merger Agreement, the VCR conversion rates vary and could result
in the issuance of a maximum of 34.2 million shares of Viacom Class B Common
Stock.
<TABLE>
<S> <C>
(a) Total acquisition costs and financing:
Viacom Class A Common Stock........................................................ $ 947.9
Viacom Class B Common Stock........................................................ 6,525.6
VCRs............................................................................... 638.3
----------
Acquisition costs financed......................................................... 8,111.8
Excess value of exchange ratio over exercise price of Blockbuster stock options and
warrants......................................................................... 314.5
Blockbuster Merger costs........................................................... 30.0
----------
Total acquisition costs............................................................ 8,456.3
Blockbuster pro forma net assets as of September 30, 1993.......................... 1,910.1
----------
Excess of acquisition costs over net assets acquired............................... $ 6,546.2
----------
----------
</TABLE>
(b) Reflects the issuance of Viacom Preferred Stock to NYNEX for $1.2
billion and Blockbuster for $600 million.
(c) Eliminates the intercompany investment by Blockbuster of $600 million
of Viacom Preferred Stock and the potential $1.25 billion investment
in Viacom Class B Common Stock and related $1.25 billion Blockbuster
debt financing.
(2) Other pro forma adjustments made to the unaudited combined condensed
financial statements reflect the following:
(a) Reflects the reclassification of the historical presentation of
depreciation and amortization expense of $313.0 million for the nine
months ended September 30, 1993 and $350.4 million for the year ended
December 31, 1992, to conform the presentations of Purchaser and
Blockbuster financial statements.
(b) An increase in amortization expense of $122.7 million for the nine
months ended September 30, 1993 and $163.7 million for the year ended
December 31, 1992, resulting from an increase in intangible assets of
approximately $6.5 billion amortized over 40 years.
(c) Reflects the 5% cumulative dividend requirement of the $1.8 million of
Viacom Preferred Stock in the amount of $67.5 million and $90 million
for the nine months ended September 30, 1993 and year ended December
31, 1992, respectively.
(d) Eliminates the 5% cumulative annual dividend requirement on the $600
million intercompany Preferred Stock investment by Blockbuster in the
amount of $22.5 million for the nine months ended September 30, 1993
and $30 million for the year ended December 31, 1992.
(e) Reflects the income tax effects of pro forma adjustments. The
effective income tax rates on a pro forma basis are affected by
amortization of excess acquisition costs, which are not deductible
for tax purposes.
<PAGE>
(f) Pro forma primary earnings per common share for the nine months ended
September 30, 1993 is calculated based on the weighted average number
of shares of Viacom Common Stock and common stock equivalents
outstanding and the number of shares of Viacom Common Stock and common
stock equivalents to be issued in exchange for Blockbuster Common
Stock and common stock equivalents, as if the transaction occurred at
the beginning of the period. Pro forma loss per common share for the
year ended December 31, 1992, is calculated based on the weighted
average number of shares of Viacom Common Stock outstanding and the
number of shares of Viacom Common Stock to be issued in exchange for
Blockbuster Common Stock, as if the transaction occurred at the
beginning of the period. The common stock equivalents would have an
antidilutive effect on earnings per common share for the year ended
December 31, 1992 due to the pro forma combined company loss.
Conversion of the Viacom Preferred Stock would have an antidilutive
effect on earnings per common share for both periods presented and
therefore fully diluted earnings per common share is not presented.
(3) Other items, net, of the Purchaser, for the nine months ended September 30,
1993 reflects a net gain of $63.3 million due to the sale of the Viacom
Cablevision of Wisconsin, Inc. system and other non-recurring transactions.
Other items, net, of the Purchaser, for the year ended December 31, 1992
reflects a net gain of $1.8 million relating to certain aspects of the
settlement of the Time Warner antitrust lawsuit, net of 1992 legal expenses
related to such lawsuit, and the reserve for litigation related to a summary
judgment against Purchaser in a dispute with CBS Inc. arising under the 1970
agreement associated with the spin-off of Viacom International by CBS Inc.
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
BLOCKBUSTER ENTERTAINMENT CORPORATION AND SUBSIDIARIES,
SUPER CLUB RETAIL ENTERTAINMENT CORPORATION AND SUBSIDIARIES,
SPELLING ENTERTAINMENT GROUP INC. AND SUBSIDIARIES,
SOUND WAREHOUSE, INC. AND SUBSIDIARY AND SHOW INDUSTRIES, INC.
The historical financial statements of Blockbuster include the financial
position and results of operations of WJB Video Limited Partnership and certain
of its affiliates ("WJB"), with which Blockbuster consolidated in August 1993.
This transaction has been accounted for under the pooling of interests method of
accounting and, accordingly, all of Blockbuster's historical financial data has
been restated as if the companies had operated as one entity since inception.
The following unaudited pro forma condensed consolidated balance sheet
presents the pro forma financial position of Blockbuster as of September 30,
1993 as if the acquisition of Super Club Retail Entertainment Corporation and
subsidiaries ("Super Club") had been consummated as of September 30, 1993. The
balance sheet also contains pro forma adjustments for certain significant
transactions subsequent to September 30, 1993 which transactions have either
occurred or may occur in connection with Purchaser's proposed acquisition of the
Company. These transactions include a $600 million and a $1.25 billion
investment in Purchaser, additional borrowings of $1.85 billion and the sale of
14,650,000 shares of Blockbuster's common stock in an underwritten public
offering and are reflected in the balance sheet as if these transactions had
been consummated as of September 30, 1993. Spelling Entertainment Group Inc. and
subsidiaries ("Spelling Entertainment"), Sound Warehouse, Inc. and subsidiary
("Sound Warehouse") and Show Industries, Inc. ("Show Industries") are included
in Blockbuster's historical balance sheet at September 30, 1993.
The following unaudited pro forma condensed consolidated statement of
operations for the nine months ended September 30, 1993 presents the pro forma
results of continuing operations of Blockbuster as if the acquisition of Super
Club and the majority of the outstanding common stock of Spelling Entertainment
as well as the significant transactions referred to above had been consummated
at the beginning of the period presented. The following unaudited pro forma
condensed consolidated statement of operations for the twelve months ended
December 31, 1992 presents the pro forma results of continuing operations of
Blockbuster as if the acquisitions of Super Club, Spelling Entertainment, Sound
Warehouse and Show Industries as well as the significant transactions referred
to above had been consummated at the beginning of the period presented. The
following unaudited pro forma condensed consolidated statements of operations do
not give effect to the estimated cost savings to be realized from the
consolidation of certain Super Club, Sound Warehouse and Show Industries
operational and administrative functions, including the elimination of duplicate
facilities and personnel, and management fees previously charged by related
affiliates. These unaudited pro forma condensed consolidated financial
statements should be read in conjunction with the respective historical
financial statements and notes thereto of Blockbuster, Super Club, Spelling
Entertainment, Sound Warehouse and Show Industries.
Income from continuing operations per common and common equivalent share is
based on the combined weighted average number of common shares and common share
equivalents outstanding which include, where appropriate, the assumed exercise
or conversion of warrants and options. In computing income from continuing
operations per common and common equivalent share, Blockbuster utilizes the
treasury stock method. Computing income from continuing operations per share on
a fully diluted basis assumes conversion of Blockbuster's Liquid Yield Option
Notes ("LYONs") when dilutive, in which case income from continuing operations
is increased for the hypothetical elimination of interest expense, net of tax,
related to the LYONs. The increase to income from continuing operations,
assuming conversion of the LYONs, was approximately $5,770,000 and the number of
shares used to compute income from continuing operations per share on a fully
diluted basis was increased by approximately 8,306,000 shares for the twelve
months ended December 31, 1992. No such
<PAGE>
adjustment was necessary for the nine months ended September 30, 1993 as the
LYONs were converted to shares of Blockbuster's common stock during this period.
The unaudited pro forma condensed consolidated financial statements were
prepared utilizing the accounting policies of the respective entities as
outlined in their historical financial statements except as described in the
accompanying notes. The unaudited pro forma condensed consolidated financial
statements reflect Blockbuster's preliminary allocations of purchase prices
which will be subject to further adjustments as Blockbuster finalizes the
allocations of the purchase prices in accordance with generally accepted
accounting principles. All of the aforementioned acquisitions, excluding WJB,
were accounted for under the purchase method of accounting. The unaudited pro
forma condensed consolidated results of operations do not necessarily reflect
actual results which would have occurred if the aforementioned acquisitions had
taken place on the assumed dates, nor are they indicative of the results of
future combined operations. If either the Merger or the Blockbuster Merger were
not to occur, certain pro forma adjustments included in these unaudited pro
forma condensed consolidated financial statements would change significantly.
<PAGE>
BLOCKBUSTER ENTERTAINMENT CORPORATION AND SUBSIDIARIES AND
SUPER CLUB RETAIL ENTERTAINMENT CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1993
(IN THOUSANDS)
<TABLE> <CAPTION>
SUPER CLUB
RETAIL
ENTERTAINMENT PRO FORMA
CORPORATION AS ADJUSTMENTS
OF OCTOBER 2, ------------------------
BLOCKBUSTER 1993 COMBINED DEBIT CREDIT PRO FORMA
----------- ---------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Current Assets:
Cash and cash
equivalents.............. $ 63,077 $ 7,394 $ 70,471 $ 70,471
Accounts receivable, less
allowance................ 88,460 20,528 108,988 108,988
Merchandise inventories.... 204,691 89,315 294,006 294,006
Film costs and program
rights, net.............. 156,924 156,924 156,924
Other...................... 51,694 3,423 55,117 55,117
----------- ---------------- ----------- ----------- ----------- -----------
Total Current Assets... 564,846 120,660 685,506 685,506
Videocassette rental
inventory, net........... 405,834 25,112 430,946 430,946
Property and equipment,
net...................... 445,933 44,790 490,723 490,723
Intangible assets, net..... 784,757 105,810 890,567 $ 30,565(b) $ 105,810(a) 815,322
Investment in Viacom
Inc. .................... 1,850,000(e) 1,850,000
Other assets............... 224,746 1,297 226,043 226,043
----------- ---------------- ----------- ----------- ----------- -----------
$ 2,426,116 $ 297,669 $ 2,723,785 $ 1,880,565 $ 105,810 $ 4,498,540
----------- ---------------- ----------- ----------- ----------- -----------
----------- ---------------- ----------- ----------- ----------- -----------
Current Liabilities:
Current portion of long-
term debt................ $ 56,833 $ 1,029 $ 57,862 $ 1,250,000(g) $1,307,862
Accounts payable........... 193,548 58,278 251,826 251,826
Accrued liabilities........ 177,163 11,191 188,354 188,354
Accrued participation
expenses................. 39,249 39,249 39,249
Income taxes payable....... 38,211 720 38,931 38,931
----------- ---------------- ----------- ----------- ----------- -----------
Total Current
Liabilities.................. 505,004 71,218 576,222 1,250,000 1,826,222
Long-term debt............... 438,488 89,845 528,333 $ 513,068(f,i) 600,000(g) 615,265
Other liabilities............ 71,434 311 71,745 71,745
Minority interest in
subsidiaries............... 75,207 75,207 75,207
Shareholders' Equity:
Preferred stock............ 20,852 20,852 20,852(c)
Common stock............... 22,212 174 22,386 174(c) 1,990(d,h) 24,202
Capital in excess of par
value.................... 853,967 172,033 1,026,000 172,033(c) 572,128(d,h) 1,426,095
Cumulative foreign currency
translation adjustment... (37,205) (37,205) (37,205)
Retained earnings
(deficit)................ 497,009 (56,764) 440,245 56,764(c) 497,009
----------- ---------------- ----------- ----------- ----------- -----------
Total Shareholders'
Equity............... 1,335,983 136,295 1,472,278 193,059 630,882 1,910,101
----------- ---------------- ----------- ----------- ----------- -----------
$ 2,426,116 $ 297,669 $ 2,723,785 $ 706,127 $ 2,480,882 $ 4,498,540
----------- ---------------- ----------- ----------- ----------- -----------
----------- ---------------- ----------- ----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
BLOCKBUSTER ENTERTAINMENT CORPORATION AND SUBSIDIARIES,
SUPER CLUB RETAIL ENTERTAINMENT CORPORATION AND SUBSIDIARIES AND
SPELLING ENTERTAINMENT GROUP INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1993
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE> <CAPTION>
SUPER CLUB
RETAIL SPELLING
ENTERTAINMENT ENTERTAINMENT PRO FORMA
CORPORATION GROUP INC. ADJUSTMENTS
NINE MONTHS THREE MONTHS -------------------- PRO
BLOCKBUSTER ENDED 10/2/93 ENDED 3/31/93 COMBINED DEBIT CREDIT FORMA
--------- ------------- ------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Rental revenue.......................... $ 931,512 $ 50,576 $ 982,088 $ 982,088
Product sales........................... 404,160 215,912 620,072 620,072
Other revenue........................... 167,635 2,873 $ 51,509 222,017 222,017
--------- ------------- ------------- --------- --------- --------- ---------
1,503,307 269,361 51,509 1,824,177 1,824,177
Operating Costs and Expenses:
Cost of product sales................... 260,426 157,050 417,476 417,476
Operating expenses...................... 836,882 100,761 38,049 975,692 $ 6,518(k,l) 969,174
Selling, general and administrative..... 120,013 21,439 7,737 149,189 149,189
--------- ------------- ------------- --------- --------- --------- ---------
Operating Income (loss)................... 285,986 (9,889) 5,723 281,820 6,518 288,338
Interest expense.......................... (24,936) (3,925) (2,437) (31,298) $ 42,776(q) 551(p) (73,523)
Interest income........................... 5,572 99 210 5,881 5,881
Other income (expense), net............... (5,580) 992 (883) (5,471) 1,083(j) 22,500(r) 15,946
--------- ------------- ------------- --------- --------- --------- ---------
Income (loss) before taxes................ 261,042 (12,723) 2,613 250,932 43,859 29,569 236,642
Provision for income taxes................ 98,691 106 1,674 100,471 11,020(s) 89,451
--------- ------------- ------------- --------- --------- --------- ---------
Income (loss) from continuing
operations.............................. $ 162,351 $ (12,829) $ 939 $ 150,461 $ 43,859 $ 40,589 $ 147,191
--------- ------------- ------------- --------- --------- --------- ---------
--------- ------------- ------------- --------- --------- --------- ---------
Weighted average common and common
equivalent shares outstanding........... 212,873 235,827
Income from continuing operations per
common and common equivalent share...... $ 0.76 $ 0.62
Weighted average common and common
equivalent shares outstanding--assuming
full dilution........................... 214,206 237,160
Income from continuing operations per
common and common equivalent share--
assuming full dilution.................. $ 0.76 $ 0.62
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
BLOCKBUSTER ENTERTAINMENT CORPORATION AND SUBSIDIARIES,
SUPER CLUB RETAIL ENTERTAINMENT CORPORATION AND SUBSIDIARIES,
SPELLING ENTERTAINMENT GROUP INC. AND SUBSIDIARIES,
SOUND WAREHOUSE, INC. AND SUBSIDIARY AND SHOW INDUSTRIES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1992
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE> <CAPTION>
SUPER CLUB SPELLING SOUND SHOW
RETAIL ENTERTAINMENT WAREHOUSE, INDUSTRIES,
ENTERTAINMENT GROUP INC. INC. INC.
CORPORATION TWELVE MONTHS TEN MONTHS TEN MONTHS
TWELVE MONTHS ENDED ENDED ENDED
BLOCKBUSTER ENDED 4/3/93 12/31/92 10/31/92 10/31/92 COMBINED
----------- -------------- ------------- ------------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Rental revenue............................ $ 969,333 $ 68,223 $ 21,213 $ 22,300 $1,081,069
Product sales............................. 298,338 312,940 218,383 75,607 905,268
Television programming revenue............ $ 258,519 258,519
Royalties and other fees.................. 48,173 3,541 51,714
----------- -------------- ------------- ------------- ------------- ----------
1,315,844 384,704 258,519 239,596 97,907 2,296,570
Operating Costs and Expenses:
Cost of product sales..................... 196,175 222,676 142,901 49,362 611,114
Operating expenses........................ 763,220 133,945 216,687 77,011 45,814 1,236,677
Selling, general and administrative....... 113,587 27,166 12,207 12,612 7,865 173,437
----------- -------------- ------------- ------------- ------------- ----------
Operating income (loss)..................... 242,862 917 29,625 7,072 (5,134) 275,342
Interest expense............................ (17,793) (6,690) (9,891) (10,759) (3,532) (48,665)
Interest income............................. 7,044 119 2,488 255 9,906
Other income (expense), net................. (893) 187 (5,120) (5,826)
----------- -------------- ------------- ------------- ------------- ----------
Income (loss) before taxes.................. 231,220 (5,467) 17,102 (3,432) (8,666) 230,757
Provision for (benefit of) income taxes..... 82,951 314 9,185 (287) 92,163
----------- -------------- ------------- ------------- ------------- ----------
Income (loss) from continuing operations.... $ 148,269 $ (5,781) $ 7,917 $ (3,145) $ (8,666) $ 138,594
----------- -------------- ------------- ------------- ------------- ----------
----------- -------------- ------------- ------------- ------------- ----------
Weighted average common and common
equivalent shares outstanding............. 192,427
-----------
-----------
Income from continuing operations per common
and common equivalent share............... $ 0.77
-----------
-----------
Weighted average common and common
equivalent shares outstanding-- assuming
full dilution............................. 202,314
-----------
-----------
Income from continuing operations per common
and common equivalent share--assuming full
dilution.................................. $ 0.76
-----------
-----------
<PAGE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
-------------------- PRO
DEBIT CREDIT FORMA
--------- --------- ----------
<S> <C> <C> <C>
Revenue:
Rental revenue............................ $1,081,069
Product sales............................. 905,268
Television programming revenue............ 258,519
Royalties and other fees.................. 51,714
--------- --------- ----------
2,296,570
Operating Costs and Expenses:
Cost of product sales..................... 611,114
Operating expenses........................ $ 27,228(k-o) 1,209,449
Selling, general and administrative....... 173,437
--------- --------- ----------
Operating income (loss)..................... 27,228 302,570
Interest expense............................ $ 57,035(q) 11,722(p) (93,978)
Interest income............................. 9,906
Other income (expense), net................. 6,757(j) 30,000(r) 17,417
--------- --------- ----------
Income (loss) before taxes.................. 63,792 68,950 235,915
Provision for (benefit of) income taxes..... 7,469(s) 84,694
--------- --------- ----------
Income (loss) from continuing operations.... $ 63,792 $ 76,419 $ 151,221
--------- --------- ----------
--------- --------- ----------
Weighted average common and common
equivalent shares outstanding............. 225,267
----------
----------
Income from continuing operations per common
and common equivalent share............... $ 0.67
----------
----------
Weighted average common and common
equivalent shares outstanding-- assuming
full dilution............................. 235,154
----------
----------
Income from continuing operations per common
and common equivalent share--assuming full
dilution.................................. $ 0.67
----------
----------
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(a) Represents an entry to eliminate the historical intangible assets of
Super Club.
(b) Represents an entry to record intangible assets resulting from the
preliminary allocation of the purchase price for Super Club.
(c) Represents an entry to eliminate the prior equity balances of Super
Club.
(d) Represents the recording of equity resulting from Blockbuster's
issuance of its common stock to the sellers of Super Club.
(e) Represents Blockbuster's investment in Purchaser.
(f) Represents the elimination of Super Club related party payables
excluded from the purchase transaction.
(g) Represents additional debt incurred by Blockbuster which was used
to fund Blockbuster's investment in Purchaser.
(h) Represents the recording of equity resulting from the sale of
14,650,000 shares of Blockbuster's common stock in an underwritten
public offering in November 1993.
(i) Represents proceeds from Blockbuster's equity sale which were used
to reduce its existing indebtedness.
(j) Represents the recording of the minority interest resulting from
Blockbuster's purchase of the majority of the outstanding common
stock of Spelling Entertainment.
(k) Represents a net adjustment related to the elimination of the
historical amortization of intangible assets and the recording of
amortization, on a straight-line basis, on the intangible assets
resulting from the preliminary purchase price allocations of the
acquired entities. Intangible assets resulting from the purchase of
Super Club, Spelling Entertainment, Sound Warehouse and Show
Industries are being amortized over a 40 year life which
approximates their useful lives.
(l) Represents reductions to programming and distribution, depreciation
and occupancy expenses resulting from preliminary purchase price
allocations which reflect the fair market value of various assets
and liabilities related to Spelling Entertainment.
(m) Represents a reduction to videocassette rental inventory
amortization expense due to adjustments to the carrying value of
Sound Warehouse and Show Industries' videocassette rental inventory
as a result of the preliminary purchase price allocations and the
assignment of remaining useful lives.
(n) Represents a reduction to property and equipment depreciation
expense resulting from adjustments to the carrying value of Sound
Warehouse and Show Industries' property and equipment as a result
of preliminary purchase price allocations and the assignment of
remaining useful lives.
(o) Represents the elimination of the amortization of deferred
financing costs of Sound Warehouse and Show Industries.
(p) Represents the reduction in interest expense resulting from the
revaluation of outstanding indebtedness of Spelling Entertainment,
Sound Warehouse and Show Industries by Blockbuster at current
interest rates.
(q) Represents additional interest expense resulting from Blockbuster's
additional borrowings used to fund its investment in Purchaser.
(r) Represents dividend income related to a portion of Blockbuster's
investment in Purchaser.
(s) Represents the incremental change in the combined entity's
provision for income taxes as a result of the pretax earnings of
Super Club, Spelling Entertainment, Sound Warehouse and Show
Industries and all pro forma adjustments as described above.
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Statement is true, complete and correct.
January 25, 1994
VIACOM INC.
By /s/ PHILIPPE P. DAUMAN
...................................
Philippe P. Dauman
Senior Vice President, General
Counsel and Secretary
*
...................................
Sumner M. Redstone,
Individually
NATIONAL AMUSEMENTS, INC.
By *
...................................
Sumner M. Redstone
Chairman, Chief Executive
Officer and President
*By /s/ PHILIPPE P. DAUMAN
...................................
Philippe P. Dauman
Attorney-in-Fact under Powers
of Attorney filed as Exhibit (a)(36)
to the Schedule 14D-1
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Statement is true, complete and correct.
January 25, 1994
BLOCKBUSTER ENTERTAINMENT CORPORATION
By /s/ STEVEN R. BERRARD
...................................
Steven R. Berrard
President and
Chief Operating Officer
