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Previous: AMERICAN MEDIA INC, SC 13G, 1999-02-17 |
Next: FIDELITY MUNICIPAL TRUST II, N-30D, 1999-02-17 |
<PAGE> 1
================================================================================
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 February 17, 1999
(Date of earliest event reported) (February 3, 1999)
AMERICAN MEDIA, INC.
- --------------------------------------------------------------------------------
(Exact name of the registrant as specified in its charter)
Delaware 1-10784 65-0203383
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission file number) (IRS Employee
of incorporation or organization) Identification No.)
600 East Coast Avenue, Lantana, Florida 33464-0002
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (561) 540-1000
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<PAGE> 2
AMERICAN MEDIA, INC. AND SUBSIDIARY
INDEX TO FORM 8-K
<TABLE>
<CAPTION>
PAGES(S)
--------
<S> <C>
Item 2. Acquisition or Disposition of Assets - 3
Item 7. Financial Statements, Unaudited Pro Forma Financial Information and Exhibits 3
Unaudited Pro Forma Consolidated Balance Sheet ......................................... 4
Unaudited Pro Forma Consolidated Statements of Income .................................. 5-6
Notes to Unaudited Pro Forma Consolidated Financial Statements.......................... 7
Signature............................................................................... 8
</TABLE>
2
<PAGE> 3
ITEM 2. - ACQUISITION OR DISPOSITION OF ASSETS
On February 3, 1999 American Media, Inc. (the "Company") sold certain of the
trademarks and publishing assets of the publications SOAP OPERA MAGAZINE and
SOAP OPERA NEWS (the "Soap Properties") to Primedia, Inc. ("Primedia") for $10
million in cash and the assumption by Primedia of the publications' deferred
subscription liabilities. The cash proceeds were used to pay down amounts
outstanding under the Company's Credit Agreement. The Company may be entitled to
receive additional cash payments from Primedia over the next four years based on
a percentage of the incremental increase in operating income of Primedia's soap
publications excluding depreciation (except display rack depreciation),
amortization and certain corporate expense allocations over a pre-defined base
year.
In connection with the disposition of the Soap Properties, the Company entered
in to a non-competition agreement with Primedia which prohibits the Company from
ownership, management, operation or control of any business in the soap opera
publications field in the United States and Canada for a period of ten years. In
addition, it prohibits the Company from entering into new merchandising service
agreements for any soap opera publication in the United States and Canada for a
period of four years.
ITEM 7. - FINANCIAL STATEMENTS AND EXHIBITS
(a) NOT APPLICABLE
(b) THE UNAUDITED PRO FORMA FINANCIAL INFORMATION REQUIRED IS ATTACHED HERETO.
(c) NOT APPLICABLE
AMERICAN MEDIA, INC.
UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL INFORMATION
The following unaudited pro forma consolidated balance sheet as of December 28,
1998, and the unaudited pro forma consolidated statements of income for the nine
month period ended December 28, 1998 and the year ended March 30, 1998 have been
prepared to give effect to the sale of the Soap Properties and the use of the
proceeds therefrom. The adjustments to the unaudited pro forma consolidated
balance sheet have been prepared as if the transaction was consummated on
December 28, 1998, while the adjustments to the unaudited consolidated pro forma
statements of income have been prepared as if the transaction was consummated as
of the beginning of the respective periods presented. The unaudited pro forma
consolidated financial information has been adjusted to reflect the effect of
the pro forma adjustments described in the accompanying notes and is not
necessarily indicative of the consolidated financial position or results of
operations had the sale transaction actually been effected as of the assumed
dates.
The unaudited pro forma consolidated financial information should be read in
conjunction with the Company's consolidated financial statements and notes
thereto included in the Company's Quarterly Report on Form 10-Q for the nine
months ended December 28, 1998 and Annual Report on Form 10-K for the fiscal
year ended March 30, 1998.
3
<PAGE> 4
AMERICAN MEDIA, INC. AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
As of December 28, 1998
(in 000's)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
--------- --------- ---------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 7,502 $ 10,000 (a) $ 7,502
(10,000)(b)
Receivables, net 10,373 10,373
Inventories 11,045 11,045
Prepaid expenses and other 3,022 3,022
--------- --------- ---------
Total current assets 31,942 0 31,942
--------- --------- ---------
PROPERTY AND EQUIPMENT, at cost:
Land and buildings 4,039 4,039
Machinery, fixtures and equipment 21,436 21,436
Display racks 23,699 (5,096)(a) 18,603
--------- --------- ---------
49,174 (5,096) 44,078
Less - accumulated depreciation (19,701) 1,801 (a) (17,900)
--------- --------- --------
29,473 (3,295) 26,178
--------- --------- ---------
DEFERRED DEBT COSTS, net 6,065 6,065
--------- --------- ---------
GOODWILL AND OTHER INTANGIBLES, net 565,239 565,239
--------- --------- ---------
$ 632,719 $ (3,295) $ 629,424
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of term loan $ 18,750 $ 18,750
Accrued expenses 39,127 800 (a) 39,927
Accrued and current deferred income taxes 7,822 3,011 (a) 10,833
Deferred revenues 26,817 (2,233)(a) 24,584
--------- --------- ---------
Total current liabilities 92,516 1,578 94,094
--------- --------- ---------
LONG TERM DEBT:
Term Loan and Revolving Credit Commitment, net of current portion 273,250 (10,000)(b) 263,250
Senior Subordinated Debt 200,134 200,134
--------- --------- ---------
473,384 (10,000) 463,384
--------- --------- ---------
DEFERRED INCOME TAXES 7,673 7,673
--------- --------- ---------
STOCKHOLDERS' EQUITY:
Common stock 428 428
Additional paid-in capital 59,343 59,343
Retained earnings 5,517 5,127 (a) 10,644
Less - Stock held in treasury, at cost (6,142) (6,142)
--------- --------- ---------
TOTAL STOCKHOLDERS' EQUITY 59,146 5,127 64,273
--------- --------- ---------
$ 632,719 $ (3,295) $ 629,424
========= ========= =========
</TABLE>
The accompanying notes to unaudited pro forma consolidated financial statements
are an integral part of this consolidated balance sheet.
4
<PAGE> 5
AMERICAN MEDIA, INC. AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
For the Three Fiscal Quarters Ended December 28, 1998
(in 000's, except per share information)
<TABLE>
<CAPTION>
Disposition
of Soap
Historical Properties Adjustments Pro Forma
---------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Circulation $189,523 $(17,087) $172,436
Advertising 16,882 (670) 16,212
Other 15,778 (43) 15,735
-------- -------- --------- --------
222,183 (17,800) 0 204,383
-------- -------- --------- --------
OPERATING EXPENSES:
Editorial 21,840 (3,168) 18,672
Production 60,772 (11,905) 409 (c) 49,276
Distribution, circulation and other cost of sales 52,147 (7,081) 45,066
Selling, general and administrative expenses 20,201 (392) 19,809
Depreciation and amortization 23,994 (1,139) 22,855
-------- -------- --------- --------
178,954 (23,685) 409 155,678
-------- -------- --------- --------
Operating income 43,229 5,885 (409) 48,705
INTEREST EXPENSE (35,575) 570 (d) (35,005)
OTHER INCOME, net 3,387 3,387
-------- -------- --------- --------
Income before provision for income taxes 11,041 5,885 161 17,087
PROVISION FOR INCOME TAXES 8,311 2,177 60 (e) 10,548
-------- -------- --------- --------
Net income $ 2,730 $ 3,708 $ 101 $ 6,539
======== ======== ========= ========
BASIC AND DILUTED EARNINGS PER SHARE $0.06 $0.15
======== ========
</TABLE>
The accompanying notes to unaudited pro forma consolidated financial statements
are an integral part of this consolidated statement.
5
<PAGE> 6
AMERICAN MEDIA, INC. AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
For the Fiscal Year Ended March 30, 1998
(in 000's, except per share information)
<TABLE>
<CAPTION>
Disposition
of Soap
Historical Properties Adjustments Pro Forma
---------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Circulation $262,249 ($22,735) $239,514
Advertising 23,643 (851) 22,792
Other 21,792 (97) 21,695
-------- -------- --------- --------
307,684 (23,683) 0 284,001
-------- -------- --------- --------
OPERATING EXPENSES:
Editorial 30,497 (4,124) 26,373
Production 82,296 (17,165) 546 (c) 65,677
Distribution, circulation and other cost of sales 66,883 (8,535) 58,348
Selling, general and administrative expenses 27,721 (821) 26,900
Depreciation and amortization 30,327 (1,053) 29,274
-------- -------- --------- --------
237,724 (31,698) 546 206,572
-------- -------- --------- --------
Operating income 69,960 8,015 (546) 77,429
INTEREST EXPENSE (50,486) 780 (d) (49,706)
OTHER INCOME, net (1,790) (1,790)
-------- -------- --------- --------
Income before provision for income taxes 17,684 8,015 234 25,933
PROVISION FOR INCOME TAXES 12,152 2,966 87 (e) 15,205
-------- -------- --------- --------
Net income $ 5,532 $ 5,049 $ 147 $ 10,728
======== ======== ========= ========
BASIC AND DILUTED EARNINGS PER SHARE $0.13 $ 0.25
======== ========
</TABLE>
The accompanying notes to unaudited pro forma consolidated financial statements
are an integral part of this consolidated statement.
6
<PAGE> 7
AMERICAN MEDIA, INC. AND SUBSIDIARY
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
DETAILS OF THE PRO FORMA ADJUSTMENTS
(a) To record (i) the receipt of $10,000,000 in cash and the assumption of the
publications' deferred subscription liabilities by Primedia, (ii) the
write off of certain assets and accrual of certain liabilities related to
the Soap Properties disposition and (iii) the booking of the related gain,
net of income taxes. The gain is not shown on the unaudited pro forma
statements of income because it is a non-recurring item however it is
included in retained earnings on the unaudited pro forma balance sheet.
(b) To record the pay down of Term Loan and Revolving Credit Commitment in the
amount of $10,000,000.
(c) To record additional printing costs resulting from reduced production
efficiencies.
(d) To reflect the reduction in interest expense resulting from the
$10,000,000 pay down of the Term Loan and Revolving Credit Commitment
assuming average interest rates of 7.6% and 7.8% for the nine months ended
December 28, 1998 and the year ended March 30, 1998, respectively.
(e) To record tax impact of pro forma adjustment (c) and (d), above.
7
<PAGE> 8
SIGNATURE
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed by the
undersigned, thereto duly authorized.
AMERICAN MEDIA, INC.
Registrant
Date: February 17, 1999 By /s/ Peter A. Nelson
--------------------------
Peter A. Nelson
Executive Vice President
Chief Financial Officer
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