SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A-3
Amendment No. 3
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
July 26, 1996
-------------
Date of Report (Date of Earliest Event Reported)
TRIBUNE COMPANY
---------------
(Exact name of registrant as specified in its charter)
Delaware
--------
(State or other jurisdiction of incorporation)
1-8572 36-1880355
------ ----------
(Commission File Number) (IRS Employer Identification No.)
435 North Michigan Avenue, Chicago, Illinois 60611
- -------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 222-9100
<PAGE>
This Current Report on Form 8-K/A amends and supplements Items 7(a) and 7(b) of
the Current Report on Form 8-K filed on July 26, 1996.
Item 7. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements of Businesses Acquired
The financial statements of Renaissance Communications Corp. for the
three months and nine months ended September 30, 1996 and September 30,
1995 (as filed with Renaissance Communications Corp.'s Quarterly Report
on Form 10-Q for the quarter ended September 30, 1996) are included
herewith as Exhibit 99.1.
(b) Pro Forma Financial Information
The unaudited pro forma condensed consolidated balance sheet as of
September 29, 1996 and unaudited pro forma condensed consolidated
statements of income for the fiscal year ended December 31, 1995 and
the first three quarters ended September 29, 1996, are filed as Exhibit
99.2 hereto and incorporated by reference herein.
(c) Exhibits
99.1 Financial statements of Renaissance Communications Corp. as
set forth in the Quarterly Report on Form 10-Q of Renaissance
Communications Corp. for the quarter ended September 30, 1996.
99.2 Unaudited pro forma condensed consolidated balance sheet as of
September 29,1996 and unaudited pro forma condensed
consolidated statements of income for the fiscal year ended
December 31, 1995 and the first three quarters ended September
29, 1996.
1
<PAGE>
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
(Registrant)
Date: November 8, 1996 /s/ R. Mark Mallory
-------------------
R. Mark Mallory
Vice President and Controller
2
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Exhibit Description
- ----------- -------------------
99.1 Financial statements of Renaissance Communications Corp. as set
forth in the Quarterly Report on Form 10-Q of Renaissance
Communications Corp. for the quarter ended September 30, 1996.
99.2 Unaudited pro forma condensed consolidated balance sheet as of
September 29, 1996 and unaudited pro forma condensed
consolidated statements of income for the fiscal year ended
December 31, 1995 and the first three quarters ended
September 29, 1996.
3
Exhibit 99.1
Renaissance Communications Corp.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
(Unaudited) (Audited)
------------------------------------
(in thousands)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $13,238 $9,912
Accounts receivable, less allowance for
doubtful accounts of $2,209,000 and $2,128,000
in 1996 and 1995, respectively 34,513 41,258
Note receivable from officer 3,154 0
Barter program rights 35,533 29,247
Program rights 35,128 35,451
Prepaid expenses and other current assets 3,747 3,464
------------------------------------
Total current assets 125,313 119,332
Property, plant and equipment, net of accumulated
depreciation of $37,697,000 and $33,061,000
in 1996 and 1995, respectively 35,049 37,215
Barter program rights 18,860 14,247
Program rights 38,186 45,445
Intangible assets, net of accumulated amortization
of $29,000,000 and $23,412,000 in 1996 and
1995, respectively 152,948 158,858
Deferred financing costs, net of accumulated
amortization of $4,254,000 and $2,642,000
in 1996 and 1995, respectively 1,519 3,131
Note receivable and other assets 4,072 4,331
------------------------------------
Total assets $375,947 $382,559
====================================
</TABLE>
See accompanying notes
1
<PAGE>
Renaissance Communications Corp.
Consolidated Balance Sheets (Continued)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
(Unaudited) (Audited)
------------------------------------
(in thousands)
<S> <C> <C>
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $1,932 $2,464
Accrued expenses 10,641 8,325
Senior secured term loan 10,027 16,209
Barter program payable 35,533 29,247
Program payable 44,853 41,247
-----------------------------------
Total current liabilities 102,986 97,492
Senior secured term loan and revolving credit facility 16,304 47,546
Barter program payable 18,860 14,247
Program payable 47,424 54,563
Deferred income taxes 4,263 4,263
Other noncurrent liabilities 0 301
Common shareholders' equity:
Common Stock, par value $.01 per share, authorized
97,500,000 shares, issued and outstanding 30,337,207
and 30,037,206 shares in 1996 and 1995 303 300
Additional paid - in capital 164,270 162,273
Notes receivable from warrant exercise (2,000) 0
Accumulated earnings 23,537 1,574
---------------------------------
Total shareholders' equity 186,110 164,147
---------------------------------
Total liabilities and shareholders' equity $375,947 $382,559
=================================
</TABLE>
See accompanying notes
2
<PAGE>
Renaissance Communications Corp.
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three months ended September 30, Nine months ended September 30,
1996 1995 1996 1995
------------------------------- ---------------------------------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Net revenue $38,992 $36,795 $122,226 $104,808
Barter revenue 9,214 7,205 27,158 20,847
------------------------------- ---------------------------------
Total revenue 48,206 44,000 149,384 125,655
Operating expenses 3,912 3,702 11,759 10,602
Selling, general and administrative expenses 8,406 8,666 27,090 25,488
Amortization of program rights 12,219 10,015 32,667 23,674
Amortization of barter program rights 9,018 6,988 26,442 20,051
Depreciation and amortization 3,684 3,849 11,253 12,042
------------------------------- ---------------------------------
Total operating expenses 37,239 33,220 109,211 91,857
------------------------------- ---------------------------------
Profit from operations 10,967 10,780 40,173 33,798
Other income (expense) net (90) 19,041 (183) 18,990
Interest income 397 333 976 1,027
Interest expense (763) (1,747) (2,737) (5,809)
------------------------------- ---------------------------------
Income before provision for income taxes and
extraordinary item 10,511 28,407 38,229 48,006
Provision for income taxes 4,297 4,959 15,634 6,759
------------------------------- ---------------------------------
Income before extraordinary item 6,214 23,448 22,595 41,247
Extraordinary item:
Loss on early extinguishment of debt, net of taxes 410 0 632 0
------------------------------- ---------------------------------
Net income $5,804 $23,448 $21,963 $41,247
=============================== =================================
Net income per common and common equivalent
share before extraordinary loss $0.20 $0.76 $0.73 $1.34
Extraordinary loss 0.01 0.00 0.02 0.00
------------------------------- ---------------------------------
Net income per common and common equivalent share $0.19 $0.76 $0.71 $1.34
=============================== =================================
Shares used in earnings per share calculation 31,076 30,708 30,958 30,689
=============================== =================================
</TABLE>
See accompanying notes
3
<PAGE>
Renaissance Communications Corp.
Consolidated Statement of Changes in Shareholders' Equity
Nine months ended September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Additional Notes
Common Paid-In Receivable From Accumulated
Stock Capital Warrant Exercise Earnings Total
-----------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995 $300 $162,273 $1,574 $164,147
Net Income 21,963 21,963
Exercise of warrants 3 1,997 (2,000) 0
-----------------------------------------------------------------------------
Balance at September 30, 1996 $303 $164,270 ($2,000) $23,537 $186,110
=============================================================================
</TABLE>
See accompanying notes
4
<PAGE>
Renaissance Communications Corp.
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended September 30,
1996 1995
---------------------------------
(in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income $21,963 $41,247
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization 11,253 12,042
Amortization of program rights,
net of barter 32,667 23,674
Amortization of discount on certain contracts payable - 3
Provision for bad debts 601 319
Loss on early extinguishment of debt, net of taxes 632 -
Gain (loss) on disposal of fixed assets 183 52
Program payments (28,617) (21,381)
Decreases (increases) in assets and increases
(decreases) in liabilities:
Accounts receivable 6,144 6,341
Prepaid expenses, other current assets
and other assets (424) (1,056)
Accounts payable (532) (825)
Accrued expenses 2,776 805
---------------------------------
Total adjustments 24,683 19,974
---------------------------------
Net cash provided by operating activities 46,646 61,221
Cash flows from investing activities:
Capital expenditures (3,142) (3,942)
Payment associated with the acquisition of KDAF - (34,500)
Issuance of note receivable to officer (3,154) -
Proceeds from principal payment on note receivable 400 400
---------------------------------
Net cash used in investing activities (5,896) (38,042)
---------------------------------
Cash flows from financing activities:
Proceeds from revolving credit facility - 34,500
Principal payments on senior secured term loan and
revolving credit facility (37,424) (57,356)
Principal payments on other noncurrent liabilities - (63)
Proceeds from exercise of warrants (See Note 2) - 850
---------------------------------
Net cash used in financing activities (37,424) (22,069)
---------------------------------
Net increase (decrease) in cash and cash equivalents 3,326 1,110
Cash and cash equivalents
Balance at the beginning of the period 9,912 10,129
---------------------------------
Balance at the end of the period $13,238 $11,239
=================================
</TABLE>
See accompanying notes
5
<PAGE>
Renaissance Communications Corp.
Notes to Consolidated Financial Statements
(Unaudited)
1. Financial Statement Presentation
--------------------------------
As of September 30, 1996, Renaissance Communications Corp. (the
"Company") owned and operated six television stations: KDAF, Dallas,
Texas; WDZL, Miami/Ft. Lauderdale, Florida; KTXL, Sacramento,
California; WTIC, Hartford/New Haven, Connecticut; WXIN, Indianapolis,
Indiana; and WPMT, Harrisburg, Pennsylvania. The interim financial
statements presented herein include the accounts of the Company and its
wholly owned subsidiaries for the period of time they were owned and
operated by the Company. All significant intercompany items and
transactions are eliminated in consolidation.
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all the normal recurring adjustments
necessary for a fair presentation of the results for the interim
periods presented. The results for the interim period are not
necessarily indicative of the results to be expected for the full year.
2. Shareholders' Equity
--------------------
On May 21, 1996, certain family members of an officer exercised
warrants for 300,000 shares. The exercise price was satisfied through
the issuance of $2,000,000 in demand notes to the Company. The notes
bear interest at an annual rate of 6%.
3. Pending Transactions
--------------------
On July 1, 1996, the Company entered into a definitive agreement to be
acquired by Tribune Company for $36.00 per share in cash for an
aggregate purchase price of $1.13 billion. The transaction is subject
to shareholder and FCC approval. Stockholders of the Company who own 60
percent of the Company's common stock have agreed to vote for the
transaction. A meeting of shareholders has been scheduled for November
12, 1996 and all the required applications have been filed with the
FCC. The transaction is expected to close in early 1997.
6
Exhibit 99.2
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 early 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. In 1996, Tribune recorded an after-tax gain on the
sale of the discontinued operations of QUNO of $89.3 million, or $1.46 per share
on a primary basis.
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 approximately $200 million in cash
and NTC Publishing Group (NTC) for approximately $82 million in cash, and the
acquisition of San Diego television station KSWB (formerly KTTY) in April 1996
for approximately $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 The Learning Company, Inc. (formerly 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 September 29, 1996 includes the pro forma effect of the
Renaissance acquisition.
1
<PAGE>
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 September 29,
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 at 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 September 29, 1996 for Tribune Company and September 30, 1996
for Renaissance.
2
<PAGE>
TRIBUNE COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 29, 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 $ 14,040 $ 13,238 $ (13,238)(a) $ 14,040
Assets Accounts receivable, net 365,723 37,667 403,390
Inventories 76,804 76,804
Broadcast rights 163,002 70,661 233,663
Prepaid expenses and other 22,967 3,747 26,714
--------------------------------------------------------------------------------------------------------------
Total current assets 642,536 125,313 (13,238) 754,611
- -----------------------------------------------------------------------------------------------------------------------------
Properties Net properties 640,105 35,049 675,154
- -----------------------------------------------------------------------------------------------------------------------------
Other Broadcast rights 188,993 57,046 246,039
Assets Intangible assets, net 1,243,092 152,948 1,069,029 (b) 2,465,069
Investments and other assets 807,086 5,591 812,677
--------------------------------------------------------------------------------------------------------------
Total other assets 2,239,171 215,585 1,069,029 3,523,785
--------------------------------------------------------------------------------------------------------------
Total assets $3,521,812 $ 375,947 $1,055,791 $4,953,550
==============================================================================================================
Historical (1)
-------------------------- Pro Forma Tribune
Liabilities and Shareholders' Equity Tribune Renaissance Adjustments Pro Forma
- -----------------------------------------------------------------------------------------------------------------------------
Current Long-term debt due within one year $ 29,301 $ 10,027 $ (10,027)(c) $ 29,301
Liabilities Contracts payable for broadcast rights 177,891 80,386 258,277
Accounts payable and other current
liabilities 401,475 12,573 414,048
--------------------------------------------------------------------------------------------------------------
Total current liabilities 608,667 102,986 (10,027) 701,626
- -----------------------------------------------------------------------------------------------------------------------------
Long-Term Debt (less portions due within one year) 896,553 16,304 1,158,232 (d) 2,054,785
(16,304)(c)
- -----------------------------------------------------------------------------------------------------------------------------
Other Deferred income taxes 193,918 4,263 110,000 (e) 308,181
Non-Current Contracts payable for broadcast rights 234,120 66,284 300,404
Liabilities Compensation and other obligations 135,215 135,215
--------------------------------------------------------------------------------------------------------------
Total other non-current liabilities 563,253 70,547 110,000 743,800
- -----------------------------------------------------------------------------------------------------------------------------
Shareholders' Series B convertible preferred stock 312,470 312,470
Equity Common stock and additional paid-in capital 138,713 164,573 (164,573)(f) 138,713
Retained earnings 2,156,071 23,537 (23,537)(f) 2,156,071
Treasury stock (at cost) (1,019,893) (1,019,893)
Unearned compensation related to ESOP (245,532) (245,532)
Note receivable from warrant exercise (2,000) 2,000 (f)
Unrealized gain on investments 111,510 111,510
--------------------------------------------------------------------------------------------------------------
Total shareholders' equity 1,453,339 186,110 (186,110) 1,453,339
--------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $3,521,812 $ 375,947 $1,055,791 $4,953,550
==============================================================================================================
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
3
<PAGE>
TRIBUNE COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE QUARTERS ENDED SEPTEMBER 29, 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 $ 980,612 $ $ $ $ 980,612
Revenues Broadcasting and Entertainment 663,380 149,384 4,413 817,177
Education 153,384 13,584 166,968
------------------------------------------------------------------------------------------------------------------
Total operating revenues 1,797,376 149,384 17,997 1,964,757
- --------------------------------------------------------------------------------------------------------------------------------
Operating Cost of sales (exclusive of
Expenses items shown below) 901,873 70,868 7,611 980,352
Selling, general and administrative 443,727 27,273 9,561 480,561
Depreciation and amortization of
intangible assets 103,515 11,253 235 22,318 (a) 137,321
------------------------------------------------------------------------------------------------------------------
Total operating expenses 1,449,115 109,394 17,407 22,318 1,598,234
- --------------------------------------------------------------------------------------------------------------------------------
Operating Profit 348,261 39,990 590 (22,318) 366,523
Interest income 24,075 976 25,051
Interest expense (34,680) (2,737) (1,084) (57,146)(b) (95,647)
- --------------------------------------------------------------------------------------------------------------------------------
Income from Continuing Operations
Before Income Taxes 337,656 38,229 (494) (79,464) 295,927
Income taxes (136,751) (15,634) (289) 25,700 (c) (126,974)
- --------------------------------------------------------------------------------------------------------------------------------
Income from Continuing Operations 200,905 22,595 (783) (53,764) 168,953
Preferred dividends, net of tax (14,090) (14,090)
- --------------------------------------------------------------------------------------------------------------------------------
Net Income from Continuing Operations
Attributable to Common Shares $ 186,815 $ 22,595 $ (783) $ (53,764) $ 154,863
- --------------------------------------------------------------------------------------------------------------------------------
Net Income Per Share from Continuing Operations
Primary $ 3.04 $ 2.52
Fully diluted $ 2.79 $ 2.33
Shares Outstanding
Primary 61,360 61,360
Fully diluted 68,255 68,255
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
4
<PAGE>
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
-----------------------------------------------------------------------------------------------------------------------
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)
-----------------------------------------------------------------------------------------------------------------------
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
<PAGE>
TRIBUNE COMPANY
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
A. Unaudited Pro Forma Condensed Consolidated Balance Sheet as of
September 29, 1996.
(1) This column includes the pro forma adjustments to the September 29, 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 Three Quarters Ended September 29, 1996.
(1) The amounts in this column represent the historical 1996 results of
operations for Tribune's 1996 acquisitions (KHTV, EPC, NTC and KSWB) 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 three quarters ended
September 29, 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 1996
acquisitions to reflect nine 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
<PAGE>
(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 5.4%. This pro forma adjustment also includes an amount
for additional interest expense for the acquisitions made during the
first three quarters of 1996, as if completed at the beginning of the
year, and the elimination of $3.8 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 an average commercial paper rate of
5.4%.
(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 KSWB'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. KSWB 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, KSWB, 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.
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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 KSWB'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. KSWB 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.
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