|
|
|
|
|
|
|
|
|
|
|
|
|
|
Previous: SCRIPPS E W CO /DE, 10-Q, 1996-05-15 |
Next: SUPER FUND PREFERRED LTD PARTNERSHIP, NT 10-Q, 1996-05-15 |
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A (4)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934.
Date of report (Date of earliest event reported) December 28, 1995
Commission File Number 1-16914
THE E.W. SCRIPPS COMPANY
(Exact name of registrant as specified in its charter)
Delaware 51-0304972
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1105 N. Market Street
Wilmington, Delaware 19801
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (302) 478-4141
Not Applicable
(Former name, former address and former fiscal year, if changed since
last report.)
<PAGE>
INDEX TO THE E. W. SCRIPPS COMPANY
AMENDMENT TO CURRENT REPORT ON FORM 8-K DATED DECEMBER 28, 1995
This fourth amendment to The E.W. Scripps Company Current Report on
Form 8-K filed on December 29, 1995 provides quarterly financial
information for Scripps Cable for the period ended March 31, 1996
under Item 7. Financial Statements and Exhibits.
Item No. Page
7 Financial Statements and Exhibits
(A) Index to Financial Statements and
Financial Information F - 1
(B) Index to Pro Forma Financial Information P - 1
.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
THE E.W. SCRIPPS COMPANY
Dated : May 15, 1996 By: /s/ D. J. Castellini
D. J. Castellini
Senior Vice President,
Finance & Administration
<PAGE>
SCRIPPS CABLE
Index to Financial Statements and Financial Information
Item No. Page
1. Combined Balance Sheets F-2
2. Combined Statements of Income and Retained Earnings F-4
3. Combined Statements of Cash Flows F-5
4. Notes to Combined Financial Statements F-6
5. Management's Discussion and Analysis of Financial
Condition and Results of Operations of Scripps Cable F-8
<PAGE>
<TABLE>
SCRIPPS CABLE
COMBINED BALANCE SHEETS
<CAPTION>
( in thousands ) As of
March 31, December 31, March 31,
1996 1995 1995
(Unaudited) (Unaudited)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS :
Cash and cash equivalents $ 1,943 $ 3,085 $ 910
Accounts receivable (less allowances - $1,251, $1,288, and $1,270) 12,147 12,107 9,894
Inventories 10,641 12,822 11,472
Deferred income taxes 5,421 5,421 5,421
Miscellaneous 3,316 446 3,164
Total current assets 33,468 33,881 30,861
PROPERTY, PLANT, AND EQUIPMENT :
Land and improvements 3,788 3,691 3,695
Buildings and improvements 9,613 9,529 9,449
Equipment 608,431 587,052 556,141
Total property, plant, and equipment 621,832 600,272 569,285
Less accumulated depreciation 314,253 305,715 277,851
Net property, plant, and equipment 307,579 294,557 291,434
GOODWILL AND OTHER INTANGIBLE ASSETS :
Goodwill 41,061 40,965 40,755
Non-competition agreements 5,800 5,800 5,800
Franchise costs 208,424 158,541 159,542
Customer lists 1,719 1,719 1,719
Other intangible assets 7,098 7,100 7,053
Total goodwill and other intangible assets 264,102 214,125 214,869
Less accumulated amortization 122,008 120,629 115,690
Net goodwill and other intangible assets 142,094 93,496 99,179
OTHER ASSETS 642 639 1,005
TOTAL ASSETS $ 483,783 $ 422,573 $ 422,479
See notes to combined financial statements.
</TABLE>
<PAGE>
<TABLE>
SCRIPPS CABLE
COMBINED BALANCE SHEETS
<CAPTION>
( in thousands ) As of
March 31, December 31, March 31,
1996 1995 1995
(Unaudited) (Unaudited)
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDER'S DEFICIENCY
CURRENT LIABILITIES :
Accounts payable $ 7,712 $ 12,244 $ 11,544
Customer deposits and unearned revenue 2,587 2,475 2,936
Accrued liabilities :
Employee compensation and benefits 973 1,174 1,111
Copyright and programming costs 7,778 7,164 7,048
Lawsuits and related settlements 3,285 3,784 6,100
Property taxes 1,339 1,038 2,679
Interest on advances from parent company 1,599 1,599 1,718
Income taxes (5) (22) (34)
Miscellaneous 6,354 5,818 5,309
Total current liabilities 31,622 35,274 38,411
DEFERRED INCOME TAXES 79,525 80,193 79,805
ADVANCES FROM PARENT COMPANY 374,569 312,737 321,967
OTHER LONG-TERM OBLIGATIONS 8,725 9,325 11,073
COMMITTMENTS AND CONTINGENCIES (Note 3)
STOCKHOLDER'S DEFICIENCY :
Capital stock 1,801 1,801 1,801
Additional paid-in capital 35,144 35,144 35,144
Retained earnings (deficit) (47,603) (51,901) (65,722)
Total stockholder's deficiency (10,658) (14,956) (28,777)
TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIENCY $ 483,783 $ 422,573 $ 422,479
See notes to combined financial statements.
</TABLE>
<PAGE>
<TABLE>
SCRIPPS CABLE
COMBINED STATEMENTS OF INCOME AND RETAINED EARNINGS
<CAPTION>
( in thousands ) (Unaudited)
Three months ended
March 31,
1996 1995
<S> <C> <C>
OPERATING REVENUES $ 76,250 $ 66,995
OPERATING EXPENSES :
Employee compensation and benefits 11,238 11,002
Cable television programming costs 21,218 17,692
Other operating expenses 12,348 11,114
Depreciation and amortization 15,511 13,723
Total operating expenses 60,315 53,531
OPERATING INCOME 15,935 13,464
OTHER CREDITS (CHARGES) :
Interest on advances from parent company (8,698) (8,663)
Other interest expense (134)
Miscellaneous, net (28) 845
Net other credits (charges) (8,726) (7,952)
INCOME BEFORE INCOME TAXES 7,209 5,512
PROVISION FOR INCOME TAXES 2,911 1,643
NET INCOME 4,298 3,869
RETAINED EARNINGS (DEFICIT) :
Beginning of year (51,901) (69,591)
End of period $ (47,603) $ (65,722)
See notes to combined financial statements.
</TABLE>
<PAGE>
<TABLE>
SCRIPPS CABLE
COMBINED STATEMENTS OF CASH FLOWS
<CAPTION>
( in thousands ) (Unaudited)
Three months ended
March 31,
1996 1995
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 4,298 $ 3,869
Adjustments to reconcile net income
to net cash flows from operating activities:
Depreciation and amortization 15,511 13,723
Deferred income taxes (668) (837)
Prepaid franchise fees (38) 646
Changes in certain working capital accounts (4,334) 5,881
Miscellaneous, net (688) (820)
Net operating activities 14,081 22,462
Cash Flows From Investing Activities:
Additions to property, plant, and equipment (14,994) (7,693)
Acquistion of cable television systems (62,152) (132)
Miscellaneous, net 715 (569)
Net investing activities (76,431) (8,394)
Cash Flows From Financing Activities:
Increases in advances from parent company 62,449 (13,453)
Payments on advances from parent company (616) (558)
Miscellaneous, net (625) (1,250)
Net financing activities 61,208 (15,261)
Increase (Decrease) in Cash and Cash Equivalents (1,142) (1,193)
Cash and Cash Equivalents:
Beginning of year 3,085 2,103
End of period $ 1,943 $ 910
Supplemental Cash Flow Disclosures:
Interest paid $ 8,697 $ 8,697
Income taxes paid 3,537 6,883
See notes to combined financial statements.
</TABLE>
<PAGE>
NOTES TO COMBINED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The combined financial statements of Scripps Cable include EWS Cable
Company ("EWSCC") - 100 shares of no-par capital stock authorized, 50
shares issued and outstanding; L-R Cable Company ("LRCC") - 100 shares
of no-par capital stock authorized, 50 shares issued and outstanding;
Scripps Howard Cable Company ("SHCC") - 100 shares of no-par capital
stock authorized, 80 shares issued and outstanding; Scripps Howard
Cable Company of Sacramento ("SHCCS") - 2,000 shares of no-par capital
stock authorized, 100 shares issued and outstanding, and cable
television operations owned and operated by Scripps Howard
Broadcasting Company ("SHB").
EWSCC and LRCC are wholly-owned subsidiaries of Scripps Howard, Inc.
("SHI"), which is a wholly-owned subsidiary of The E.W. Scripps
Company ("Scripps"). SHCC and SHCCS are wholly-owned subsidiary
companies of SHB. Prior to 1993 SHB was 86%-owned by SHI. SHI
acquired 5.7% of the outstanding shares of SHB in 1993 and Scripps
acquired the remaining minority interest in SHB in 1994.
The historical basis in assets and liabilities of the cable television
systems has been carried over. The historical combined financial
statements do not necessarily reflect the results of operations or
financial position that would have existed if Scripps Cable were an
independent company. SHI provides certain legal, treasury,
accounting, tax, risk management and other corporate services to
Scripps Cable.
On October 28, 1995 Scripps and Comcast Corporation ("Comcast")
reached an agreement pursuant to which Scripps will contribute all of
its non-cable television assets to SHI and SHI's cable television
systems subsidiaries ("Scripps Cable") will be transferred to and held
directly by Scripps. Scripps Cable will then be acquired by Comcast
through a tax-free merger (the "Merger") with Scripps.
The closing date of the Transactions is expected to be in the third
quarter of 1996, subject to regulatory approvals and certain other
conditions. Controlling shareholders in Scripps and Comcast have
agreed to vote in favor of the Merger, and as a result completion of
the Transactions is assured so long as such conditions are satisfied
and such regulatory approvals (including approval of the Spin-Off as a
tax-free transaction by the Internal Revenue Service and approval of
the Merger by the Federal Communications Commission and certain
franchise authorities) are received. While there can be no assurances
regarding such approvals, management believes all such approvals will
be obtained.
The financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Except as disclosed herein, there has been no
material change in the information disclosed in the notes to the
combined financial statements for the year ended December 31, 1995
included in the third amendment to The E.W. Scripps Company's
Current Report on Form 8-K dated December 28, 1995. Financial
information as of December 31, 1995 included in these financial
statements has been derived from the audited combined financial
statements included in that report. In management's opinion all
adjustments (consisting of normal recurring accruals) necessary for
a fair presentation of the interim periods have been made.
Results of operations are not necessarily indicative of the results
that may be expected for future interim periods or for the full
year.
Certain liabilities included in these combined financial statements
(primarily income taxes payable, accruals for lawsuits and related
settlements, and amounts due Scripps) will not be assumed by Comcast.
At March 31, 1996 those liabilities totaled approximately
$386,600,000.
<PAGE>
2. ACQUISITIONS AND DIVESTITURES
Acquisitions
1996 - In 1995 SHB reached an agreement to acquire cable television
systems adjacent to the Knoxville and Chattanooga systems for
$62,500,000 (the "Mid-Tenn Purchase"). The acquisitions were
completed in January 1996.
1995 - SHCC acquired a cable television system.
The following table presents additional information about the
acquisitions:
<TABLE>
<CAPTION>
( in thousands ) Three months ended
March 31,
1996 1995
<S> <C> <C>
Goodwill and other intangible assets acquired $ 50,619 $ 85
Other assets acquired 11,771 47
Total 62,390 132
Liabilities assumed (238)
Cash paid $ 62,152 $ 132
</TABLE>
The acquisitions have been accounted for as purchases. The acquired
operations have been included in the Combined Statements of Income
from the dates of acquisition. Pro forma results are not presented
because the combined results of operations would not be significantly
different from the reported amounts.
3. COMMITMENTS AND CONTINGENCIES
In 1994 Scripps Cable accrued an estimate of the ultimate costs,
including attorneys' fees and settlements, of certain lawsuits against
the Sacramento cable television system related primarily to employment
issues and to the timing and amount of late-payment fees assessed to
subscribers. In May 1996 Scripps Cable agreed to settle the late-
payment fee lawsuits. There was no additional charge resulting from
the settlement. Management believes the possibility of incurring a
loss greater than the amount accrued for the employment issues
lawsuits is remote. Amounts accrued, less payments for settlements
and attorney fees, are included in accrued lawsuits and related
settlements in the accompanying Combined Balance Sheets. Pursuant to
the terms of the Merger New Scripps will indemnify Comcast against
losses related to these lawsuits.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS OF SCRIPPS CABLE
Scripps Cable's revenues are primarily earned from subscriber fees for
basic, cable programming and premium television services (including
pay-per-view programming), and the rental of converters and remote
control devices. Historically Scripps Cable's revenue growth has been
primarily achieved through internal subscriber growth, additional
services offered subscribers, acquisitions, and increases in rates for
services provided to cable television subscribers. Regulations
adopted by the Federal Communications Commission ("FCC") pursuant to
the 1992 Cable Act have affected Scripps Cable's ability to increase
rates for certain subscriber services or to restructure its rates for
certain services. The Telecommunications Act of 1996 provides some
significant relief from the burdens of rate regulation by, among other
things, expanding the flexibility of operators to set differing rates
for providing services to multiple dwelling units and by modifying the
threshold for the filing of a complaint that would trigger review of
new non-basic cable programming rates. Most importantly, the new law
sets a maximum threshold of three years for the elimination of all
rate regulation of non-basic cable programming services.
RESULTS OF OPERATIONS
Earnings before interest, income taxes, corporate management fees,
depreciation, and amortization ("EBITDA") is included in the
discussion of results of operations because:
Changes in depreciation and amortization are often unrelated to
current performance. Management believes the year-over-year change in
EBITDA is a more useful measure of year-over-year performance than the
change in operating income because, combined with information on
capital spending plans, it is a more reliable indicator of results
that may be expected in future periods. However, management's belief
that EBITDA is a more useful measure of year-over-year performance is
not shared by the accounting profession.
Financial analysts use EBITDA to value cable television
businesses.
Acquisitions of cable television businesses are based on
multiples of EBITDA.
EBITDA should not, however, be construed as an alternative measure of
the amount of Scripps Cable's income or cash flow from operating
activities as EBITDA excludes significant costs of doing business.
<PAGE>
Combined results of operations are as follows:
<TABLE>
<CAPTION>
( in thousands, except per subscriber information ) Year-to-Date
1996 Change 1995
<S> <C> <C> <C>
Operating revenues:
Basic and cable programming services $ 51,164 14.6 % $ 44,629
Premium and pay-per-view services 14,397 15.8 % 12,435
Other monthly services 4,101 (8.3)% 4,473
Advertising 3,200 23.9 % 2,582
Installation and miscellaneous 3,388 17.8 % 2,876
Total operating revenues 76,250 13.8 % 66,995
Operating expenses:
Employee compensation and benefits 11,238 2.1 % 11,002
Program costs 21,218 19.9 % 17,692
Other 12,348 11.1 % 11,114
Depreciation and amortization 15,511 13.0 % 13,723
Total operating expenses 60,315 12.7 % 53,531
Operating income 15,935 18.4 % 13,464
Interest expense (8,698) (8,797)
Miscellaneous, net (28) 845
Income taxes (2,911) (1,643)
Net income $ 4,298 $ 3,869
Other Financial and Statistical Data
EBITDA $ 31,446 15.7 % $ 27,187
Percent of operating revenues:
Operating income 20.9 % 20.1 %
EBITDA 41.2 % 40.6 %
Capital expenditures $ 14,994 94.9 % $ 7,693
Average number of basic subscribers 794.4 6.5 % 746.1
Average monthly revenue per
monthly subscriber $31.99 6.9 % $29.93
Program costs as a percent of
basic and premium revenue 32.36% 31.00%
Homes passed at end of period 1,245.7 5.9 % 1,176.1
Basic subscribers at end of period 806.5 7.2 % 752.1
Penetration at end of period 64.75% 63.95%
</TABLE>
<PAGE>
In January Scripps Cable acquired cable television systems adjacent to
the Knoxville and Chattanooga systems for $62,500,000 (the "Mid-Tenn
Purchase"). The acquired cable systems increased operating revenues
4%. The remaining increase in operating revenues is primarily due to
higher average monthly revenue per subscriber.
Program costs have increased due to the growth in the number of
subscribers, additional programming offered subscribers, and increased
costs to produce or purchase programming. Other operating expenses
and depreciation and amortization increased primarily due to the Mid-
Tenn Purchase. The acquired cable systems increased EBITDA 6%.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow from operating activities was $14.1 million in 1996, and
$22.5 million in 1995. Cash flow from operating activities in 1995
included an $11.3 million refund of disputed Sacramento property
taxes, including interest.
Scripps Cable invests heavily in its cable plant, continually
replacing and modernizing its technology by rebuilding and upgrading
its systems with fiber optic cable. Capital expenditures in the first
quarter of 1995 increased primarily due to the rebuild of the
Sacramento system. Acquisitions of cable television systems and
capital expenditures are financed through cash flow from operating
activities and, if necessary, additional advances from Scripps.
Advances from Scripps increased in 1996 due to the Mid-Tenn Purchase.
<PAGE>
THE E.W. SCRIPPS COMPANY
Index to Pro Forma Financial Information
Item No. Page
(B) 1. Pro Forma Balance Sheet as of March 31, 1996. P - 2
2. Pro Forma Statements of Income for the Three
Months Ended March 31, 1996. P - 3
3. Notes to Pro Forma Financial Information. P - 4
<PAGE>
<TABLE>
THE E.W. SCRIPPS COMPANY
PRO FORMA BALANCE SHEET
AS OF MARCH 31, 1996
<CAPTION>
( in thousands )
REPORTED SCRIPPS PRO FORMA PRO FORMA
AMOUNTS CABLE ADJUSTMENTS AMOUNTS
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 12,871 $ (8,000) (A) $ 4,871
Accounts and notes receivable 148,468 148,468
Program rights and production costs 51,911 51,911
Inventories 12,941 12,941
Deferred income taxes 22,608 22,608
Miscellaneous 17,630 17,630
Total current assets 266,429 (8,000) 258,429
NET ASSETS OF DISCONTINUED CABLE OPERATIONS 372,784 $ 372,784
INVESTMENTS 55,069 55,069
PROPERTY, PLANT, AND EQUIPMENT 428,885 428,885
GOODWILL AND OTHER INTANGIBLE ASSETS 490,692 490,692
OTHER ASSETS:
Program rights and production costs (less current portion) 23,379 23,379
Miscellaneous 15,360 15,360
Total other assets 38,739 38,739
TOTAL ASSETS $ 1,652,598 $ 372,784 $ (8,000) $ 1,271,814
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 34,741 $ 34,741
Accounts payable 62,537 62,537
Customer deposits and unearned revenue 23,799 23,799
Accrued liabilities:
Employee compensation and benefits 27,137 27,137
Artist and author royalties 8,734 8,734
Interest 1,030 1,030
Income taxes 7,301 7,301
Lawsuits and related settlements 7,867 7,867
Miscellaneous 35,840 35,840
Total current liabilities 208,986 208,986
DEFERRED INCOME TAXES 84,057 84,057
LONG-TERM DEBT (LESS CURRENT PORTION) 31,824 31,824
OTHER LONG-TERM OBLIGATIONS AND MINORITY INTERESTS 110,268 110,268
STOCKHOLDERS' EQUITY 1,217,463 $ 372,784 $ (8,000) (A) 836,679
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,652,598 $ 372,784 $ (8,000) $ 1,271,814
</TABLE>
<PAGE>
<TABLE>
THE E.W. SCRIPPS COMPANY
PRO FORMA STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1996
<CAPTION>
( in thousands, except per share data )
REPORTED SCRIPPS PRO FORMA PRO FORMA
AMOUNTS CABLE ADJUSTMENTS AMOUNTS
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Advertising $ 114,002 $ 114,002
Circulation 33,564 33,564
Other newspaper revenue 11,277 11,277
Total newspapers 158,843 158,843
Broadcast television 70,721 70,721
Entertainment 24,681 24,681
Total operating revenues 254,245 254,245
OPERATING EXPENSES:
Employee compensation and benefits 86,883 86,883
Newsprint and ink 34,169 34,169
Program rights and production costs 16,576 16,576
Other operating expenses 61,622 61,622
Depreciation 12,438 12,438
Amortization of intangible assets 5,081 5,081
Total operating expenses 216,769 216,769
OPERATING INCOME 37,476 37,476
OTHER CREDITS (CHARGES):
Interest expense (1,413) (1,413)
Miscellaneous, net (382) (382)
Net other credits (charges) (1,795) (1,795)
INCOME BEFORE TAXES AND MINORITY INTERESTS 35,681 35,681
PROVISION FOR INCOME TAXES 15,274 15,274
INCOME BEFORE MINORITY INTERESTS 20,407 20,407
MINORITY INTERESTS 687 687
INCOME FROM CONTINUING OPERATIONS 19,720 19,720
INCOME FROM DISCONTINUED OPERATIONS 9,595 $ 9,595
NET INCOME $ 29,315 $ 9,595 $ 19,720
AVERAGE WEIGHTED SHARES 80,204 80,204 80,204
PER SHARE OF COMMON STOCK:
Income from continuing operations $.25 $.25
Income from discontinued operations .12 $.12
Net income $.37 $.12 $.25
</TABLE>
<PAGE>
THE E.W. SCRIPPS COMPANY
NOTES TO PRO FORMA FINANCIAL INFORMATION
On October 28, 1995 The E.W. Scripps Company ("Scripps") and Comcast
Corporation ("Comcast") reached an agreement pursuant to which
Scripps will contribute all of its non-cable television assets to
Scripps Howard, Inc. ("SHI" - a wholly-owned subsidiary of Scripps
and the direct or indirect parent of all of Scripps' operations) and
SHI's cable television system subsidiaries ("Scripps Cable") will be
transferred to and held directly by Scripps. Scripps Cable will be
acquired by Comcast through a tax-free merger (the "Merger") with
Scripps. The remaining SHI business will continue as "New Scripps",
which will be distributed in a tax-free "spin-off" to Scripps
shareholders (the "Spin-Off") prior to the Merger and thereafter
renamed The E.W. Scripps Company. The Merger and Spin-off are
collectively referred to as the "Transactions." The accompanying
unaudited pro forma balance sheet and statements of income of
Scripps assume completion of the Transactions.
The pro forma balance sheet as of March 31, 1996 assumes the
Transactions occurred as of that date. The pro forma statements of
income assume the Transactions were completed at the beginning of
the period. Pro forma adjustments represent fees on the
Transactions. Earnings per share is based on the weighted average
shares outstanding for the period.
The pro forma financial information is not necessarily indicative of
the results which actually would have occurred had the Transactions
been completed as of the dates indicated or which may occur in the
future.
Explanation of specific pro forma adjustments are as follows:
(A) Effect of estimated expenses of $8.0 million on
Stockholders' Equity.
|
|