SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A-2
Amendment No. 2
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
July 26, 1996
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Date of Report (Date of Earliest Event Reported)
TRIBUNE COMPANY
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
1-8572 36-1880355
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(Commission File Number) (IRS Employer Identification No.)
435 North Michigan Avenue, Chicago, Illinois 60611
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(Address of principal executive office (Zip Code)
Registrant's telephone number, including area code (312) 222-9100
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This Current Report on Form 8-K/A amends and supplements Item 7 (b) of the
Current Report on Form 8-K filed on July 26, 1996.
Item 7. Financial Statements and Exhibits
---------------------------------
(b) Pro Forma Financial Information
The unaudited pro forma condensed consolidated balance sheet as of June
30, 1996 and unaudited pro forma condensed consolidated statements of
income for the fiscal year ended December 31, 1995 and the first half
ended June 30, 1996, are filed as Exhibit 99.1 hereto and incorporated
by reference herein.
(c) Exhibits
99.1 Unaudited pro forma condensed consolidated balance sheet as of
June 30,1996 and unaudited pro forma condensed consolidated
statements of income for the fiscal year ended December 31,
1995 and the first half ended June 30, 1996.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRIBUNE COMPANY
By /s/ R. Mark Mallory
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R. Mark Mallory
Vice President and Controller
August 14, 1996
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EXHIBIT INDEX
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Exhibit No. Exhibit Description
- ----------- -------------------
99.1 Unaudited pro forma condensed consolidated balance sheet as of
June 30, 1996 and unaudited pro forma condensed consolidated
statements of income for the fiscal year ended December 31, 1995
and the first half ended June 30, 1996.
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Exhibit 99.1
TRIBUNE COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
INTRODUCTORY COMMENTS
The following unaudited pro forma condensed consolidated financial
statements give pro forma effect to the pending acquisition of Renaissance
Communications Corp. ("Renaissance") by Tribune Company ("Tribune" or the
"Company"). On July 1, 1996, Tribune announced it had agreed to acquire
Renaissance for $36 per Renaissance common share, or approximately $1.1 billion
in cash. The transaction is subject to certain closing conditions, including
Federal Communications Commission and other regulatory approval, and is expected
to close in 1997. Tribune expects to finance the acquisition with medium to
long-term borrowings and commercial paper. The acquisition will be accounted for
as a purchase.
The pro forma condensed consolidated statements of income presented
herein also show the pro forma effects of the March 1, 1996, sale of the
Company's holdings of QUNO Corporation ("QUNO"), a Canadian newsprint company,
as part of QUNO's merger with Donohue Inc. At the time of the merger, the
Company owned approximately 34% of QUNO's common stock plus $138.8 million in
QUNO convertible debt. Tribune's investment in QUNO was accounted for as a
discontinued operation in the Company's 1995 consolidated financial statements.
The Company's gross proceeds from the sale were approximately $427 million,
consisting of $284 million in cash, $74 million in short-term notes and $69
million in Donohue common stock. Tribune sold the notes and common stock for
cash shortly after the transaction. The proceeds were used to pay down debt and
to fund 1996 acquisitions. The after-tax proceeds from the sale were
approximately $331 million. Tribune recorded an after-tax gain on the sale of
the discontinued operations of QUNO of $89.3 million, or $1.45 per share on a
primary basis, in the first quarter of 1996.
The pro forma condensed consolidated statements of income also include
the pro forma effects of five 1996 acquisitions. These include the acquisition
of Houston television station KHTV in January 1996 for approximately $102
million in cash, the acquisition of the remaining minority interest in
Philadelphia television station WPHL in February 1996 for approximately $23
million in cash, the acquisition of two education publishers in March 1996--
Educational Publishing Corporation (EPC) for $200 million in cash and NTC
Publishing Group (NTC) for $82 million in cash, and the acquisition of San Diego
television station KTTY in April 1996 for $70.5 million in cash. Further, the
1995 pro forma condensed consolidated statement of income includes the pro forma
effects of the 1995 acquisitions of Jamestown Publishers-acquired in May for
approximately $6 million in cash and Everyday Learning- acquired in August for
approximately $25 million in cash; the 1995 dispositions of Times Advocate
Company-sold in July for $16 million in cash and Compton's NewMedia-sold in
December for an interest in SoftKey International Inc. (see note 3 to the
Company's audited consolidated financial statements for the year ended December
31, 1995 for a full discussion of this transaction); and various 1995 equity
investments, including Qwest Broadcasting LLC (33%) and The Warner Bros.
Television Network (12.5%). All of these acquisitions were accounted for as
purchases. The 1995 pro forma statement of income also includes the pro forma
effect of a Renaissance television station exchange which occurred in July 1995
whereby Renaissance exchanged its Denver television station and approximately
$34.5 million in cash for a Dallas station. The pro forma condensed consolidated
balance sheet as of June 30, 1996 includes the pro forma effect of the
Renaissance acquisition.
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The pro forma information is based on historical financial statements
of the Company after adjusting for the transactions and assumptions as set forth
in the accompanying notes to the pro forma statements. The pro forma condensed
consolidated balance sheet assumes the transactions occurred at June 30, 1996,
and the pro forma condensed consolidated statements of income assume the
transactions occurred at the beginning of the periods presented. The pro forma
condensed consolidated statements of income only include income from continuing
operations. As QUNO was accounted for as a discontinued operation in Tribune's
1995 consolidated financial statements, all income from QUNO, including the
interest income on the convertible debenture, was reflected as income from
discontinued operations of QUNO and reported as a separate amount in the
consolidated statement of income. Therefore, the pro forma adjustments for QUNO
include only a pro forma interest expense adjustment for the proceeds received,
and the related tax effect.
The pro forma condensed consolidated financial statements may not be
indicative of the results that would have occurred if the transactions had
occurred during the periods presented or the respective dates of the financial
statements, as the case may be, or results which may be attained in the future.
The purchase accounting adjustments reflected in these pro forma condensed
consolidated financial statements are preliminary and will change as appraisals
are completed and more facts become known. The purchase accounting adjustments
represent the Company's preliminary determination of the adjustments necessary
to present fairly the Company's pro forma results of operations and financial
position and are based upon available information and certain assumptions
considered reasonable under the circumstances. The unaudited pro forma
statements do not reflect any synergies anticipated by the Company as a result
of the acquisitions. The pro forma condensed consolidated statements should be
read in association with the consolidated financial statements of the Company
and Renaissance as set forth in their Annual Reports on Form 10-K for the year
ended December 31, 1995 and their Quarterly Reports on Form 10-Q for the quarter
ended June 30, 1996.
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TRIBUNE COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
(In thousands of dollars)
Historical (1)
--------------------- Pro Forma Tribune
Assets Tribune Renaissance Adjustments Pro Forma
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Current Cash and short-term investments $ 56,339 $ 10,707 $ (10,707)(a) $ 56,339
Assets Accounts receivable, net 346,574 41,375 387,949
Inventories 94,500 94,500
Broadcast rights 143,774 44,914 188,688
Prepaid expenses and other 20,031 6,830 26,861
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Total current assets 661,218 103,826 (10,707) 754,337
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Properties Net properties 649,793 35,855 685,648
- -------------------------------------------------------------------------------------------------------------------
Other Broadcast rights 156,041 46,321 202,362
Assets Intangible assets, net 1,251,614 155,132 1,074,826 (b) 2,481,572
Investments and other assets 828,448 6,687 835,135
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Total other assets 2,236,103 208,140 1,074,826 3,519,069
----------------------------------------------------------------------------------------------------
Total assets $ 3,547,114 $ 347,821 $ 1,064,119 $ 4,959,054
====================================================================================================
Historical (1)
--------------------- Pro Forma Tribune
Liabilities and Shareholders' Equity Tribune Renaissance Adjustments Pro Forma
- -------------------------------------------------------------------------------------------------------------------
Current Long-term debt due within one year $ 29,380 $ 14,367 $ (14,367)(c) $ 29,380
Liabilities Contracts payable for broadcast rights 162,602 56,369 218,971
Accounts payable and other current
liabilities 416,884 12,614 429,498
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Total current liabilities 608,866 83,350 (14,367) 677,849
- -------------------------------------------------------------------------------------------------------------------
Long-Term Debt (less portions due within one year) 982,218 28,676 1,177,468 (d) 2,159,686
(28,676)(c)
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Other Deferred income taxes 196,797 4,263 110,000 (e) 311,060
Non-Current Contracts payable for broadcast rights 198,174 50,926 249,100
Liabilities Compensation and other obligations 135,675 300 135,975
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Total other non-current liabilities 530,646 55,489 110,000 696,135
- -------------------------------------------------------------------------------------------------------------------
Shareholders' Series B convertible preferred stock 312,470 312,470
Equity Common stock and additional paid-in capital 135,420 164,573 (164,573)(f) 135,420
Retained earnings 2,108,182 17,733 (17,733)(f) 2,108,182
Treasury stock (at cost) (1,026,723) (1,026,723)
Unearned compensation related to ESOP (245,532) (245,532)
Note receivable from warrant exercise (2,000) 2,000 (f)
Unrealized gain on investments 141,567 141,567
----------------------------------------------------------------------------------------------------
Total shareholders' equity 1,425,384 180,306 (180,306) 1,425,384
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Total liabilities and shareholders' equity $3,547,114 $ 347,821 $ 1,064,119 $ 4,959,054
====================================================================================================
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
3
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TRIBUNE COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE FIRST HALF ENDED JUNE 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Historical (2)
------------------------------------- Pro Forma Tribune
(In thousands, except per share data) Tribune Renaissance Other (1) Adjustments Pro Forma
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating Publishing $ 657,828 $ $ $ $ 657,828
Revenues Broadcasting and Entertainment 440,475 101,178 4,413 546,066
Education 80,746 13,584 94,330
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Total operating revenues 1,179,049 101,178 17,997 1,298,224
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Operating Cost of sales (exclusive of items
Expenses shown below) 597,925 45,719 7,611 651,255
Selling, general and administrative 283,441 18,777 9,561 311,779
Depreciation and amortization of
intangible assets 65,735 7,569 235 15,710 (a) 89,249
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Total operating expenses 947,101 72,065 17,407 15,710 1,052,283
- ------------------------------------------------------------------------------------------------------------------------------------
Operating Profit 231,948 29,113 590 (15,710) 245,941
Interest income 16,375 579 16,954
Interest expense (21,988) (1,974) (1,084) (37,930)(b) (62,976)
- ------------------------------------------------------------------------------------------------------------------------------------
Income from Continuing Operations
Before Income Taxes 226,335 27,718 (494) (53,640) 199,919
Income taxes (91,666) (11,337) (289) 17,474 (c) (85,818)
- ------------------------------------------------------------------------------------------------------------------------------------
Income from Continuing Operations 134,669 16,381 (783) (36,166) 114,101
Preferred dividends, net of tax (9,393) (9,393)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Income from Continuing Operations
Attributable to Common Shares $ 125,276 $ 16,381 $ (783) $(36,166) $ 104,708
- ------------------------------------------------------------------------------------------------------------------------------------
Net Income Per Share from Continuing Operations
Primary $ 2.04 $ 1.70
Fully diluted $ 1.88 $ 1.57
Shares Outstanding
Primary 61,422 61,422
Fully diluted 68,161 68,161
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
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TRIBUNE COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
Historical (3)
--------------------------------- (2) Pro Forma Adjustments Tribune
(In thousands, except per share data) Tribune Renaissance Other(1) Dispositions Acquisitions Dispositions Pro Forma
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Publishing $ 1,312,767 $ $ $ (8,501) $ $ $ 1,304,266
Revenues Broadcasting and Entertainment 828,806 179,218 39,729 8,066 (a) 1,055,819
Education 103,101 110,537 (26,366) 187,272
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Total operating revenues 2,244,674 179,218 150,266 (34,867) 8,066 2,547,357
- ------------------------------------------------------------------------------------------------------------------------------------
Operating Cost of sales (exclusive of
Expenses items shown below) 1,164,609 80,150 61,861 (19,257) (1,339)(a) 1,286,024
Selling, general and
administrative 553,868 35,933 61,775 (24,652) 833 (a) 627,757
Depreciation and amortization
of intangible assets 120,986 15,756 2,050 (4,455) 40,792 (b) 174,791
(338)(a)
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Total operating expenses 1,839,463 131,839 125,686 (48,364) 39,948 2,088,572
- ------------------------------------------------------------------------------------------------------------------------------------
Operating Profit 405,211 47,379 24,580 13,497 (31,882) 458,785
Other 14,672 18,964 600 (c) 34,236
Interest income 14,465 1,356 4 3,559 (d) 19,384
Interest expense (21,814) (7,137) (6,079) (103,051)(e) 24,346 (f) (113,735)
- ------------------------------------------------------------------------------------------------------------------------------------
Income from Continuing Operations
Before Income Taxes 412,534 60,562 18,505 13,497 (131,374) 24,946 398,670
Income taxes (167,076) (11,526) (5,244) (5,258) 28,080 (g) (9,793)(g) (170,817)
- ------------------------------------------------------------------------------------------------------------------------------------
Income from Continuing Operations 245,458 49,036 13,261 8,239 (103,294) 15,153 227,853
Preferred dividends, net of tax (18,841) (18,841)
- ------------------------------------------------------------------------------------------------------------------------------------
Income from Continuing Operations
Attributable to Common Shares $ 226,617 $ 49,036 $ 13,261 $ 8,239 $(103,294) $15,153 $ 209,012
- ------------------------------------------------------------------------------------------------------------------------------------
Net Income Per Share from Continuing Operations
Primary $ 3.50 $ 3.23
Fully diluted $ 3.22 $ 2.98
Shares Outstanding
Primary 64,790 64,790
Fully diluted 71,506 71,506
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
5
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TRIBUNE COMPANY
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
A. Unaudited Pro Forma Condensed Consolidated Balance Sheet as of
June 30, 1996.
(1) This column includes the pro forma adjustments to the June 30, 1996
unaudited condensed consolidated balance sheet and reflects the following:
(a) The existing cash of Renaissance is assumed to immediately reduce the
debt incurred to finance the acquisition.
(b) The excess of acquisition cost over the fair value of net tangible
assets acquired (i.e., goodwill and other intangible assets). This
adjustment assumes no adjustments to net properties, broadcast rights,
or other assets and liabilities. The allocation of purchase price for
the Renaissance acquisition is very preliminary and will change as
appraisals are completed and more facts become known.
(c) The existing debt of Renaissance is assumed to be repaid at acquisition
date.
(d) The issuance of approximately $1.2 billion in medium to long-term notes
and commercial paper necessary to finance the Renaissance acquisition
and to repay debt assumed.
(e) The estimated deferred taxes related to identifiable intangible assets
acquired.
(f) The elimination of Renaissance's equity accounts.
B. Unaudited Pro Forma Condensed Consolidated Statement of Income for the First
Half Ended June 30, 1996.
(1) The amounts in this column represent the historical first half 1996 results
of operations for Tribune's 1996 acquisitions (KHTV, EPC, NTC and KTTY)
from the beginning of the year until their respective dates of acquisition.
(2) This column includes the pro forma adjustments to the unaudited condensed
consolidated statement of income for the first half ended June 30, 1996 and
reflects the following:
(a) The amortization of the estimated excess of acquisition cost over the
fair value of net tangible assets acquired. The assumed lives for this
excess range from 5 to 40 years with most over 40, including all of the
Renaissance excess. This includes an adjustment for the first half 1996
acquisitions to reflect six months of expense. The allocation of
purchase price for the Renaissance acquisition is very preliminary and
will change as appraisals are completed and more facts become known.
6
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(b) Additional interest expense for the 1996 acquisitions resulting from
increased debt levels. The Renaissance acquisition is assumed to be
financed with both commercial paper and medium to long-term notes, at
an average interest rate of approximately 7%. The other 1996
acquisitions are assumed to be financed with commercial paper at an
average rate of 5.43%. This pro forma adjustment also includes an
amount for additional interest expense for the acquisitions made during
the first half of 1996, as if completed at the beginning of the year,
and the elimination of $3.1 million of interest expense incurred by the
acquired businesses and included in their historical financial
statements. This represents interest expense on debt that is assumed to
be repaid at the date of acquisition. Finally, the adjustment also
includes $3.9 million of interest savings from the QUNO proceeds,
assuming they had been received at the beginning of the year. The QUNO
proceeds were approximately $427 million and were assumed to be used to
finance the 1996 acquisitions. The interest expense savings from the
QUNO proceeds was calculated at the average first half 1996 commercial
paper rate of 5.43%.
(c) This adjustment represents the income tax effect of the pro forma
adjustments and a pro forma amount for income taxes on NTC's and KTTY's
earnings. The effective tax rate on the pro forma adjustments differs
from the Company's federal statutory tax rate of 35% due to
non-deductible amortization of intangible assets and state taxes. NTC
was a partnership and as such recorded no income tax expense in the
period in 1996 prior to Tribune's acquisition. If the Company had
acquired NTC at the beginning of the period, income tax expense would
have been recorded. KTTY recorded no tax benefit related to its 1996
pre-acquisition loss. Tribune would have realized the benefit of such
loss, therefore the tax benefit would have been recorded.
C. Unaudited Pro Forma Condensed Consolidated Statement of Income for the
Fiscal Year Ended December 31, 1995.
(1) The amounts in this column represent the historical 1995 results of
operations of Tribune's 1996 acquisitions - KHTV, KTTY, EPC and NTC. This
column also includes the results of operations of the 1995 acquisitions
from the beginning of 1995 until their respective dates of acquisition, and
an estimate of equity income/loss for those equity method investments
entered into during 1995, for the portion of 1995 preceding the Company's
investment.
(2) The amounts in this column represent the historical 1995 results of
operations of Times Advocate Company and Compton's NewMedia until their
respective dates of sale. These results exclude the non-recurring pretax
loss of $7.5 million recorded on the Times Advocate sale and the
non-recurring pretax gain of $6.9 million recorded on the Compton's sale.
Income before income taxes does not reflect any allocations of corporate
administration and interest expenses.
(3) These columns include the pro forma adjustments to the 1995 unaudited
condensed consolidated statement of income and reflect the following:
(a) The pro forma effect, as disclosed in the Renaissance consolidated
financial statements for the year ended December 31, 1995 and in a Form
8-K dated June 30, 1995, of the Renaissance television station swap.
Effective July 3, 1995, Renaissance exchanged its KDVR-Denver station
and approximately $34.5 million in cash for the KDAF-Dallas station.
7
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(b) The amortization of the estimated excess of acquisition cost over the
fair value of net tangible assets acquired. The assumed lives for this
excess range from 5 to 40 years with most over 40, including all of the
Renaissance excess. This includes an adjustment for the 1995
acquisitions to reflect a full year of expense. The allocation of
purchase price for the Renaissance acquisition is very preliminary and
will change as appraisals are completed and more facts become known.
(c) The non-recurring net pretax loss for the Times Advocate and Compton's
dispositions included in the 1995 historical consolidated statement of
income. Tribune recorded a $7.5 million loss on the sale of Times
Advocate and a $6.9 million gain on the sale of Compton's. The 1995 pro
forma income statement has not been adjusted to remove a non-recurring
gain included in the Renaissance consolidated financial statements for
1995 of $19 million that relates to a settlement, net of expenses,
received by Renaissance in 1995 for an acquisition that did not occur
because of a higher offer. This amount contributes approximately $.18
per share to the pro forma primary net income per share in 1995.
(d) Interest income from the Qwest convertible notes. The Company's
investment in Qwest is comprised of a $7 million equity interest (33%)
and $63 million in 6% convertible notes.
(e) Additional interest expense for the 1996 acquisitions resulting from
increased debt levels. The Renaissance acquisition is assumed to be
financed with both commercial paper and medium to long-term notes, at
an average interest rate of approximately 7%. The other 1996
acquisitions are assumed to be financed with commercial paper at an
average rate of 5.9%. The 1996 acquisitions and investments that were
assumed to have occurred at the beginning of the year totaled $1.6
billion. This pro forma adjustment also includes an amount for
additional interest expense for the acquisitions and investments made
during 1995, as if completed at the beginning of the year, and the
elimination of $13.2 million of interest expense incurred by the
acquired businesses included in their historical financial statements.
This represents interest expense on debt that was either repaid at the
date of acquisition or not assumed by Tribune.
(f) Interest savings from the QUNO and Times Advocate proceeds. These
proceeds were assumed to be used to finance the acquisitions, and
therefore the interest expense savings was calculated at an average
commercial paper rate of 5.9%.
(g) These adjustments represent the income tax effects of the pro forma
adjustments and a pro forma amount for income taxes on Renaissance's,
NTC's and KTTY's earnings. The effective tax rate on the pro forma
adjustments differs from the Company's federal statutory tax rate of
35% due to non-deductible amortization of intangible assets and state
taxes. Renaissance reversed $11.8 million of a tax valuation allowance
in 1995. Under Tribune's purchase accounting, this valuation allowance
would not have reversed into Tribune's income in 1995. Therefore, this
$11.8 million is eliminated as a pro forma adjustment. NTC was a
partnership and as such recorded no income tax expense. If the Company
had acquired NTC at the beginning of 1995, income tax expense would
have been recorded. KTTY recorded no tax benefit related to its 1995
loss. Tribune would have realized the benefit of such loss, therefore
the tax benefit would have been recorded.
8
