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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 2, 1998
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TCA Cable TV, Inc.
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(Exact name of registrant as specified in its charter)
Texas 0-11478 75-1798185
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(State or other jurisdiction (Commission (IRS Employer
of incorporation File Number) Identification No.)
3015 S.S.E. Loop 323, Tyler, Texas 75701
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (903) 595-3701
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On November 13, 1997, TCA Holdings II, L.P, a Texas limited
partnership ("TCA") and wholly-owned affiliate of TCA Cable TV, Inc. (the
"Company"), entered into a General Partnership Agreement (the "Agreement") with
TCI American Cable Holdings, IV, a Colorado limited partnership and an affiliate
of Tele-Communication, Inc. (the "TCI Affiliate"), pursuant to which TCA and the
TCI Affiliate agreed to form TCA Cable Partners II general partnership (the
"Partnership") to operate cable television systems in Texas, Louisiana and New
Mexico. In exchange for TCA's contribution of approximately $46.6 million of
debt and certain assets of the cable television systems (the "Company Systems")
owned by it in the cities and adjacent unincorporated areas set forth below, TCA
acquired an 80% partnership interest in the Partnership. The estimated fair
value of the Company Systems is $315 million. The cities and adjacent
unincorporated areas where the Company Systems are located are: Cannon AFB, NM,
Clovis, NM, Texico, NM, Amarillo, TX, Andrews, TX, Athens, TX, Ballinger, TX,
Big Springs, TX, Canyon, TX, Clarksville, TX, Coahoma, TX, Como, TX, Dalhart,
TX, Farwell, TX, Floydada, TX, Gladewater, TX, Goodfellow AFB, TX, Grand Saline,
TX, Henderson, TX, Hide A Way Lake, TX, Honey Grove, TX, Lake Tanglewood, TX,
Lindale, TX, Miles, TX, Mineola, TX, Paris, TX, Plainview, TX, Quitman, TX,
Reno, TX, Roxton, TX, San Angelo, TX, Snyder, TX, Sulphur Springs, TX, Toco, TX,
Union Grove, TX, Warren City, TX, White Oak, TX, Winnsboro, TX, and Winters, TX.
In exchange for the TCI Affiliate's contribution to the Partnership of
approximately $247.9 million of debt and certain assets of the cable television
systems (the "TCA Systems") owned by it in the cities or adjacent unincorporated
areas set forth below, the TCI Affiliate acquired a 20% partnership interest in
the Partnership. The estimated fair value of the TCA Systems contributed is
also $315 million. The cities and adjacent unincorporated areas where the TCA
Systems are located are: Barksdale AFB, LA, Bossier City, LA, Bossier Parish,
LA, Calcasieu Parish, LA, Fillmore, LA, Haughton, LA, Lake Charles, LA,
Pinceton, LA, Sulfur, LA, Abilene, TX, Bowie County, TX, Camp, TX, Cherokee, TX,
Cooke County, TX, DeKalb, TX, Dyess AFB, TX, Franklin County, TX,
Gainesville,TX, Grayson, TX, Hooks, TX, Jacksonville, TX, Maud, TX, Mineral
Wells, TX, Mt. Pleasant, TX, Mt. Vernon, TX, Nolan County, TX, New Boston, TX,
Oak Ridge, TX, Palo Pinto County, TX, Perryton, TX, Pittsburg, TX, Red River
Army Depot, TX, Sadler, TX, Smith County, TX, Sweetwater, TX, Titus County, TX,
Tye, TX, Tyler, TX, Whitesboro, TX, and Whitehouse, TX.
The transfer to the Partnership of the Company Systems and the TCA
Systems was consummated on February 2, 1998.
The assets contributed to the Partnership included, with certain
exceptions as set forth in the Agreement, all the assets and properties, real
and personal, tangible and intangible, used in the operation of the Company
Systems and the TCA Systems. Pursuant to the Agreement, the Partnership assumed
certain liabilities of the Company Systems and the TCA Systems.
The percentage interest received by TCA in the Partnership in
consideration of the contribution of the TCA Systems was determined based on
arm's length negotiations among TCA and the TCI Affiliate.
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To the best knowledge of the Company there is no material relationship
between the TCI Affiliate and the Company, or any of its affiliates, any
director or officer of the Company, or any associate of such director or
officer.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements
The audited combined balance sheets, combined
statements of operations and retained earnings, and combined
statements of cash flows of the TCA Systems as of September
30, 1997 and December 31, 1996 and 1995, and for the nine
months ended September 30, 1997 and the years ended December
31, 1996 and 1995 were previously filed as Annex A to the
Company's Form 8-K dated November 13, 1997 and filed on
January 27, 1998.
(b) Pro Forma Financial Information
The unaudited pro forma condensed consolidated
balance sheet of the Company attached hereto as Annex A has
been adjusted to give effect to the acquisition of the TCA
Systems which closed on February 2, 1998, as though such
acquisition had occurred on October 31, 1997. The unaudited
pro forma condensed consolidated statement of operations of
the Company for the year ended October 31, 1997 attached
hereto as Annex A present the consolidated results of the
Company as if the Company had acquired the TCA Systems on
November 1, 1996. Such pro forma information is not
necessarily indicative of results that would have been
obtained had the acquisition been consummated on the dates
indicated and should not be construed as representative of
future operations.
(c) Exhibits.
The following is a list of exhibits filed as part of this Current
Report on Form 8-K:
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C>
2.1 General Partnership Agreement of TCA Cable Partners II dated as of November 13,
1997.(1)
3.1 Articles of Incorporation.(2)
3.2 Articles of Amendment to Articles of Incorporation.(3)
3.3 Articles of Amendment to Articles of Incorporation.(3)
3.4 Articles of Amendment to Articles of Incorporation.(4)
</TABLE>
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<TABLE>
<S> <C>
3.5 Amended and Restated Bylaws.(5)
4.5 Form of Stock Certificate.(2)
4.2 Rights Agreement dated January 15, 1998, between the Company and ChaseMellon
Shareholder Services, L.L.C. which includes the Certificate of Designations for the
Series A Junior Participating Preferred Stock as Exhibit A, the Form of Right
Certificate as Exhibit B and the Summary of Rights to Purchase Shares as Exhibit C.(1)
23.1 Consent of KPMG Peat Marwick LLC(6)
</TABLE>
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(1) Previously filed as an exhibit to the
Registrant's Form 8-K dated January 15, 1998
and incorporated herein by reference.
(2) Previously filed as an Exhibit to the
Registrant's Registration Statement on Form
S-1, File No. 2-75516, and incorporated
herein by reference.
(3) Previously filed as an Exhibit to the
Registrant's Registration Statement on Form
S-8, File No. 33-21901, and incorporated
herein by reference.
(4) Previously filed as an exhibit to
Registrant's Form 10-K for the fiscal year
ended October 31, 1993, filed January 27,
1994 and incorporated by reference herein.
(5) Previously filed as an exhibit to the
Registrant's Form 10-K for the fiscal year
ended October 31, 1997, filed January 27,
1998 and incorporated herein by reference.
(6) Previously filed as an Exhibit to the
Registrants Form 8-K dated January 27, 1998
and incorporated herein by reference.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TCA CABLE TV, INC.
Date: February 12, 1998 By: /s/ Jimmie F. Taylor
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Jimmie F. Taylor
Its: VP, CFO & Treasurer
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ANNEX A
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TCA CABLE TV, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
TCA SYSTEMS
TCA CABLE SEPTEMBER 30, PRO FORMA
OCTOBER 31, 1997 1997 ADJUSTMENTS TOTAL
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<S> <C> <C> <C> <C>
Cash................... $ 3,270,190 $ 118,000 $ $ 3,388,190
Accounts receivable,
subscribers.......... 15,852,757 2,176,000 18,028,757
Accounts receivable,
other................ 1,017,070 1,017,070
Income tax
receivable........... 529,830 529,830
Property, plant and
equipment, at cost... 437,246,720 91,618,000 (44,368,000)(a) 484,496,720
Less accumulated
depreciation......... (208,416,640) (42,389,000) 42,389,000 (a) (208,416,640)
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228,830,080 49,229,000 (1,979,000) 276,080,080
Intangibles, net....... 464,602,414 145,597,000 122,153,000 (a) 732,352,414
Prepaid expenses and
other assets......... 7,029,979 211,000 2,000,000 (b) 9,240,979
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$721,132,320 $197,331,000 $ 122,174,000 $1,040,637,320
============ ============ ============= ==============
LIABILITIES
Accounts payable....... $ 12,047,781 $ 3,299,000 $ $ 15,346,781
Accrued expenses....... 23,653,545 23,653,545
Subscriber advance
payments............. 3,522,240 3,522,240
Deferred income taxes.. 71,580,000 65,009,000 (65,009,000)(c) 71,580,000
Term debt.............. 317,025,181 249,106,000 (d) 566,131,181
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427,828,747 68,308,000 184,097,000 680,233,747
Redeemable minority
interest............. 122,636,878 67,100,000 (e) 189,736,878
SHAREHOLDERS' EQUITY
Common stock........... 2,499,105 2,499,105
Additional paid-in
capital.............. 51,845,522 51,845,522
Retained earnings...... 119,108,443 42,300,000 (42,300,000)(f) 119,108,443
Due to TCI
Communications,
Inc.................. 86,723,000 (86,723,000)(f)
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173,453,070 129,023,000 (129,023,000) 173,453,070
Less treasury stock at
cost................. (2,786,375) (2,786,375)
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170,666,695 129,023,000 (129,023,000) 170,666,695
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$721,132,320 $197,331,000 $ 122,174,000 $1,040,637,320
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</TABLE>
See Accompanying Notes
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TCA CABLE TV, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
TCA CABLE TCA SYSTEMS
YEAR ENDED YEAR ENDED PRO FORMA
OCTOBER 31, 1997 SEPTEMBER 30, 1997 ADJUSTMENTS TOTAL
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<S> <C> <C> <C> <C>
Revenues............... $307,501,312 $ 68,035,000 $ $375,536,312
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Operating expenses:
Other operating
expenses (*)...... 147,806,854 23,636,000 171,442,854
Selling, general and
administrative.... 23,817,927 13,349,000 37,166,927
Depreciation and
amortization...... 44,255,420 12,099,000 (2,255,250)(g) 54,099,170
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215,880,201 49,084,000 (2,255,250) 262,708,951
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Operating income....... 91,621,111 18,951,000 2,255,250 112,827,361
Other income........... 389,768 (311,000) 78,768
Interest expense....... (22,182,337) (16,444,572)(h) (39,416,909)
(790,000)(h)
Minority interest...... (7,088,633) (3,878,201)(i) (10,966,834)
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Income before
income taxes.... 62,739,909 18,640,000 (18,857,523) 62,522,386
Provision for income
taxes................ 24,600,000 7,887,000 (7,392,149)(j) 25,094,851
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Net income... $ 38,139,909 $ 10,753,000 $(11,465,374) $ 37,427,535
============ ============ ============ ============
Earnings per common
share................ $ 1.53 $ 1.50
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</TABLE>
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(*) Includes salaries, wages and benefits; programming costs; and other
operating expenses.
See Accompanying Notes
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NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On February 2, 1998, the Company and TCI American Cable Holdings IV, L. P.
(the "TCI Affiliate"), an affiliate of Tele-Communications, Inc., formed a
partnership, TCA Cable Partners II (the "TCI Transaction"). The Company
contributed to TCA Cable Partners II certain cable systems in Texas and New
Mexico serving approximately 155,000 subscribers and $46.6 million in unsecured
debt and the TCI Affiliate contributed its systems in North Texas and Western
Louisiana serving approximately 150,000 subscribers and $247.9 million in
unsecured debt, in exchange for an 80% and 20% partnership interest,
respectively, in TCA Cable Partners II. The cable systems contributed by the
Company (the "Company Systems") and the TCI Affiliate (the "TCA Systems") are
each valued at approximately $315 million. The Company will finance the TCI
Transaction with a portion of the proceeds from a $150 million increase in the
Company's Primary Credit Facility and the issuance of $200 million in public
debt. Upon the closing of the TCI Transaction, the Company extended a loan to
TCA Cable Partners II in the aggregate amount of the unsecured debt of TCA Cable
Partners II. TCA Cable Partners II will in turn use the proceeds of the loan to
retire such debt. TCA Cable Partners II will be consolidated in the financial
statements of TCA and 20% of the estimated fair value of TCA Cable Partners II
net assets will be recorded by the Company as a redeemable minority interest at
the acquisition date. The TCI Affiliate has the right to require the Company to
purchase the TCI Affiliate's 20% partnership interest at fair market value
beginning in February 2003 through February 2023 (the "Put and Call Period"),
the term of the partnership agreement. The Company has a corresponding right to
require TCI to sell its 20% partnership interest in TCA Cable Partners II to the
Company at fair market value during the Put and Call Period. TCA Cable Partners
II will be managed by the Company. Giving effect to the TCI Transaction, the
Company on a pro forma basis serves approximately 850,000 subscribers.
The unaudited pro forma condensed consolidated balance sheet combines the
Company's October 31, 1997 consolidated balance sheet and the TCA Systems
September 30, 1997 combined balance sheet assuming the TCI Transaction occurred
on October 31, 1997. The unaudited pro forma condensed consolidated statement of
operations combines the Company's consolidated statement of operations for the
year ended October 31, 1997 and the TCA Systems combined statement of operations
for the year ended September 30, 1997 assuming the TCI Transaction occurred on
November 1, 1996. The fiscal year of the TCA Systems is December 31. The amounts
reported in the TCA Systems combined statement of operations for the twelve
month period ended September 30, 1997 represents the operating results for the
nine months ended September 30, 1997 plus the difference between the TCA Systems
operating results for the twelve months ended December 31, 1996 and the
operating results for the nine months ended September 30, 1996.
A description of the related pro forma adjustments is set forth below:
(a) Record the TCA Systems property, plant and equipment and
intangibles at their estimated fair value
(b) Record estimated debt issuance costs
(c) Eliminate TCA Systems deferred income taxes
(d) Record incremental borrowings: $200 million of Debentures due
2028 and $49,106,000 Primary Credit Facility
(e) Record redeemable minority interest at 20% of total estimated
fair value of TCA Cable Partners II net assets of $335,500,000
(f) Eliminate TCA Systems retained earnings and due to TCI
Communications, Inc.
(g) Adjust depreciation and amortization of TCA Systems property,
plant and equipment and intangibles based on estimated fair
values of $47,250,000 and $267,750,000, respectively, and
estimated useful lives of 15 and 40 years, respectively
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(h) Record interest expense on incremental borrowings and amortization
of related Treasury Locks termination cost ($7,900,000) as
follows:
$200,000,000 Debentures due 2028 at 6.7%(*)
$49,106,000 Primary Credit Facility at 6.2%(*)
$7,900,000 Treasury Locks termination cost over 10 years
(*) estimated interest rates include amortization of debt issuance
costs
(i) Record minority interest in TCA Cable Partners II income as
follows:
<TABLE>
<S> <C>
TCA Systems income before income taxes...................... $ 18,640,000
Company Systems income before income taxes.................. 18,852,526
Interest on TCA contributed debt of $46,600,000 at 6.7%..... (3,122,200)
Pretax impact of statement of operations pro forma
adjustments (excluding minority interest)................. (14,979,322)
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$ 19,391,004
TCA Cable Partners II pro forma income before income
taxes..................................................... X20%
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Minority interest in TCA Cable Partners II pro forma
earnings.................................................. $ 3,878,201
============
</TABLE>
(j) Tax effect pro forma adjustments at the Company's effective tax
rate of 39.2%
