SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A-2
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
August 9, 1996
UNITED VIDEO SATELLITE GROUP, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-22662 73-1290412
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
7140 South Lewis Avenue, Tulsa, Oklahoma 74136-5422
(Address of Principal Executive Office) (Zip code)
(918) 488-4000
(Registrant's telephone number, including area code)
1
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired
The following financial statements of Netlink USA, Retail Division are
attached:
Appendix I Netlink USA, Retail Division, Financial Statements as of
December 31, 1995 and for the year then ended.
Appendix II Netlink USA, Retail Division, Unaudited Financial
Statements as of March 31, 1996 and for the three months
ended March 31, 1996 and 1995.
(b) Pro Forma Financial Information
The pro forma financial information is attached as Appendix III.
(c) Exhibits
2. Agreement between United Video Satellite Group, Inc. and Liberty Media
Corporation dated August 9, 1996 (previously filed under Form 8-K on
August 9, 1996).
23. Consent of Independent Auditors.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNITED VIDEO SATELLITE GROUP, INC.
DATE: January 11, 1999 By: /s/ Peter C. Boylan, III
-----------------------------
Peter C. Boylan, III
Operating President and
Chief Operating Officer
3
<PAGE>
Independent Auditors' Report
The Board of Directors
Netlink USA:
We have audited the accompanying balance sheet of Netlink USA, Retail Division
(an operating division of Netlink USA, an indirect wholly-owned partnership of
Liberty Media Corporation) as of December 31, 1995, and the related statements
of operations and accumulated deficit and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Netlink USA, Retail Division as
of December 31, 1995, and the results of its operations and its cash flows for
the year then ended, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Denver, Colorado
August 9, 1996
4
<PAGE>
NETLINK USA, RETAIL DIVISION
(An Operating Division of Netlink USA,
An Indirect Wholly-Owned Partnership of Liberty Media Corporation)
Balance Sheet
December 31, 1995
(in thousands)
- - -----------------------------------------------------------------------
Assets
Current assets:
Cash $ 694
Accounts receivable:
Trade 8,504
Other 1,786
-------
10,290
Less allowance for doubtful accounts 2,326
-------
7,964
Prepaid expenses and other current assets 345
-------
Total current assets 9,003
Property and equipment 6,960
Less accumulated depreciation 4,948
-------
2,012
Excess cost over acquired net assets, net of
accumulated amortization of $430 3,087
-------
$14,102
=======
Liabilities and Accumulated Deficit
Current liabilities:
Cash overdraft $ 3,565
Accounts payable 1,003
Accrued liabilities (note 3) 9,649
Deferred revenue 40,414
-------
Total current liabilities 54,631
Commitments and contingencies (note 4)
Accumulated deficit (40,529)
-------
$14,102
=======
See accompanying notes to financial statement.
5
<PAGE>
NETLINK USA, RETAIL DIVISION
(An Operating Division of Netlink USA,
An Indirect Wholly-Owned Partnership of Liberty Media Corporation)
Statement of Operations and Accumulated Deficit
Year Ended December 31, 1995
(in thousands)
- - -----------------------------------------------------------------------
Revenue $139,071
Operating expenses:
Operating, including amounts from affiliates
(note 3) 116,509
Selling, general and administrative, including
amounts from affiliates (note 3) 21,371
Bad debt expense 2,106
Depreciation and amortization 1,243
--------
141,229
--------
Operating loss (2,158)
Other expenses (41)
--------
Net loss (2,199)
Accumulated deficit, beginning of year (35,536)
Net advances to parent (2,794)
--------
Accumulated deficit, end of year $(40,529)
========
See accompanying notes to financial statements
6
<PAGE>
NETLINK USA, RETAIL DIVISION
(An Operating Division of Netlink USA,
An Indirect Wholly-Owned Partnership of Liberty Media Corporation)
Statement of Cash Flows
Year Ended December 31, 1995
(in thousands)
- - -----------------------------------------------------------------------
Cash flows from operating activities:
Net loss $(2,199)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 1,243
Bad debt expense 2,106
Changes in operating assets and liabilities:
Change in accounts receivable (2,045)
Change in prepaid expenses and other current
assets 56
Change in accounts payable and accrued
liabilities 474
Change in deferred revenue 2,482
-------
Net cash provided by operating activities 2,117
Cash flows used in investing activities -
Capital expended for property and equipment (233)
-------
Net cash used in investing activities (233)
Cash flows used in financing activities:
Net change in advances to parent (2,794)
Change in cash overdraft 363
-------
Net cash used in financing activities (2,431)
-------
Net decrease in cash (547)
Cash at beginning of period 1,241
-------
Cash at end of period $ 694
=======
See accompanying notes to financial statements
7
<PAGE>
NETLINK USA, RETAIL DIVISION
(An Operating Division of Netlink USA,
An Indirect Wholly-Owned Partnership of Liberty Media Corporation)
Notes to Financial Statements
December 31, 1995
- - -----------------------------------------------------------------------
(1) Organization
Netlink USA (the "Company" or "Netlink"), is an indirect, wholly-owned
partnership of Liberty Media Corporation ("Liberty"), which is a
wholly-owned subsidiary of Tele-Communications, Inc. ("TCI"). The Company
is engaged in the businesses of selling C-band distributed video
programming and miscellaneous ancillary services to retail customers (the
Retail C-Band Business) and wholesale customers (the Wholesale C-Band
Business) in the United States.
Effective April 1, 1996, Liberty and United Video Satellite Group, Inc.
("UVSG"), agreed to form a limited liability company for the purpose of
combining and operating UVSG's Superstar Satellite Entertainment retail
business and the Retail C-Band Business (the "Venture"). Effective April 1,
1996, Liberty and UVSG contributed certain assets and liabilities of their
respective Retail C-Band Businesses to the Venture.
The accompanying financial statements represent the historical results of
the Retail C-Band Business which was contributed to the Venture.
(2) Summary of Significant Accounting Policies
Property and Equipment
Property and equipment is stated at cost. Depreciation is computed on a
straight-line basis using estimated useful lives of the assets which range
from 5 to 10 years.
Excess Cost Over Acquired Net Assets
Excess cost over acquired net assets consists of the difference between the
acquisition cost and amounts allocated to the tangible assets acquired.
Such amounts are being amortized on a straight-line basis over 30 years.
The Company assesses the recoverability of excess cost over acquired net
assets and long-term assets based on future undiscounted operating cash
flows.
Income Taxes
No provision has been made for income taxes in the accompanying financial
statements as the earnings or losses of the Retail C- Band Business are
reported in the respective income tax returns of the partners of Netlink
USA individually.
Deferred Revenue
The Company receives programming revenue from subscribers in monthly,
quarterly, semi-annual and annual installments. The Company recognizes
revenue on a straight-line basis over the term of the service agreement.
Deferred revenue at December 31, 1995
<PAGE>
represents amounts billed to customers for services to be provided
subsequent to December 31, 1995.
8
<PAGE>
NETLINK USA, RETAIL DIVISION
(An Operating Division of Netlink USA,
An Indirect Wholly-Owned Partnership of Liberty Media Corporation)
Notes to Financial Statements, Continued
- - -----------------------------------------------------------------------
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenue
and expenses during the reporting period. Actual results could differ from
those estimates.
(3) Related Party Transactions
Certain programming services are purchased by the Company from affiliates
of Liberty and TCI. Charges aggregated approximately $18,088,000 for the
year ended December 31, 1995 for programming services. Accrued liabilities
at December 31, 1995 includes approximately $1,726,000 related to these
services from related parties. Netlink also purchases certain programming
from Netlink USA, Wholesale C-Band Business at rates approximating those
charged to third parties. For the year ended December 31, 1995, such
charges aggregated approximately $8,017,000.
Certain TCI corporate general and administrative costs are charged to
Netlink at rates set at the beginning of the year based on projected levels
of utilization for that year. The utilization- based charges are set at
levels that management believes to be reasonable and that approximate the
costs Netlink would incur for comparable services on a stand alone basis.
During the year ended December 31, 1995, Netlink was allocated $316,000 in
corporate general and administrative costs by TCI.
TCI manages certain treasury activities for Netlink on a centralized basis.
Cash receipts are remitted to TCI and cash disbursements are funded by TCI
on a daily basis. The net amount of such cash activities are included as a
component of the accumulated deficit balance.
(4) Commitments and Contingencies
Netlink leases office space and equipment under lease arrangements. Rental
expense under such arrangements amounted to approximately $319,000 for the
year ended December 31, 1995. This lease, which is classified as an
operating lease, expires on December 31, 1996.
The Company is being audited by various state sales tax authorities.
Subsequent to 1995, the Company was assessed approximately $330,000 in
delinquent sales taxes, interest and penalties in three states, which has
been provided for in the accompanying financial statements. Obligations
that may arise based on future state sales tax audits have not been
provided for in the accompanying financial statements. The amount of future
assessments is estimated by management to range from $-0- to $500,000.
<PAGE>
In March 1996, the Company reached an agreement with one of its satellite
dealers to advance commissions aggregating $2,400,000 through March 1997.
9
<PAGE>
Appendix II
NETLINK USA, RETAIL DIVISION
(An Operating Division of Netlink USA,
An Indirect Wholly-Owned Partnership of Liberty Media Corporation)
Condensed Balance Sheet (unaudited)
March 31, 1996
(in thousands)
- - -----------------------------------------------------------------------
Assets
Current assets:
Cash $ 2,168
Trade and other receivables, net 14,273
Prepaid expenses and other current assets 467
-------
Total current assets 16,908
Property and equipment 6,960
Less accumulated depreciation 5,230
-------
1,730
Excess cost over acquired net assets, net of
accumulated amortization of $459 3,058
-------
$21,696
=======
Liabilities and Accumulated Deficit
Current liabilities:
Cash overdraft $ 1,445
Accounts payable 1,304
Accrued liabilities (note 2) 11,792
Deferred revenue 50,940
-------
Total current liabilities 65,481
Commitments and contingencies (note 3)
Accumulated deficit (43,785)
-------
$21,696
=======
See accompanying notes to financial statements.
10
<PAGE>
NETLINK USA, RETAIL DIVISION
(An Operating Division of Netlink USA,
An Indirect Wholly-Owned Partnership of Liberty Media Corporation)
Condensed Statements of Operations and Accumulated Deficit (unaudited)
(in thousands)
- - -----------------------------------------------------------------------
Three Months Ended March 31,
1996 1995
------ ------
Revenue $ 39,062 $ 29,528
Operating expenses:
Operating, including amounts from
affiliates (note 2) 31,138 26,672
Selling, general and administrative,
including amounts from affiliates
(note 2) 6,685 4,869
Bad debt expense 590 444
Depreciation and amortization 311 265
------- -------
38,724 32,250
------- -------
Operating earnings (loss) 338 (2,722)
Other expenses (11) (28)
------- -------
Net earnings (loss) 327 (2,750)
Accumulated deficit, beginning of period (40,529) (35,536)
Net advances to parent (3,583) (5,561)
------- -------
Accumulated deficit, end of period $(43,785) $(43,847)
======== ========
See accompanying notes to financial statements.
11
<PAGE>
NETLINK USA, RETAIL DIVISION
(An Operating Division of Netlink USA,
An Indirect Wholly-Owned Partnership of Liberty Media Corporation)
Condensed Statements of Cash Flows (unaudited)
(in thousands)
- - -----------------------------------------------------------------------
Three Months Ended March 31,
1996 1995
------ ------
Cash flows from operating activities:
Net earnings (loss) $ 327 $(2,750)
Adjustments to reconcile net earnings
(loss) to net cash provided by
operating activities:
Depreciation and amortization 311 265
Bad debt expense 590 444
Changes in operating assets and
liabilities:
Change in accounts receivable (6,899) 2,032
Change in prepaid expenses and
other current assets (122) 96
Change in accounts payable and
accrued liabilities 2,444 1,975
Change in deferred revenue 10,526 454
------- -------
Net cash provided by operating activities 7,177 2,516
Cash flows used in investing activities -
Capital expended for property and
equipment -- (58)
------- -------
Net cash used in investing activities -- (58)
Cash flows used in financing activities:
Net change in advances to parent (3,583) (5,561)
Change in cash overdraft (2,120) 2,195
------- -------
Net cash used in financing activities (5,703) (3,366)
------- -------
Net increase (decrease) in cash 1,474 (908)
Cash at beginning of period 694 1,241
------- -------
Cash at end of period $ 2,168 $ 333
======= =======
See accompanying notes to financial statements.
12
<PAGE>
NETLINK USA, RETAIL DIVISION
(An Operating Division of Netlink USA,
An Indirect Wholly-Owned Partnership of Liberty Media Corporation)
Notes to Condensed Financial Statements (Unaudited)
March 31, 1996
- - -----------------------------------------------------------------------
(1) Organization
Netlink USA (the "Company" or "Netlink"), is an indirect, wholly-owned
partnership of Liberty Media Corporation ("Liberty"), which is a
wholly-owned subsidiary of Tele-Communicaations, Inc. ("TCI"). The Company
is engaged in the businesses of selling C- band distributed video
programming and miscellaneous ancillary services to retail customers (the
Retail C-Band Business) and wholesale customers (the Wholesale C-Band
Business) in the United States.
Effective April 1, 1996, Liberty and United Video Satellite Group, Inc.
("UVSG"), agreed to form a limited liability company for the purpose of
combining and operating UVSG's Superstar Satellite Entertainment retail
business and the Retail C-Band Business (the "Venture"). Effective April 1,
Liberty and UVSG contributed certain assets and liabilities of their
respective Retail C-Band Businesses to the Venture.
The accompanying condensed financial statements represent the historical
results of the Retail C-Band Business which was contributed to the Venture.
The accompanying interim financial statements are unaudited but, in the
opinion of management, reflect all adjustments (consisting of normal
recurring accruals) necessary for a fair presentation of the results for
such periods. The results of operations for any interim period are not
necessarily indicative of results for the full year. These financial
statements should be read in conjunction with the audited financial
statements of Netlink USA, Retail Division for the year ended December 31,
1995.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenue
and expenses during the reporting period. Actual results could differ from
those estimates.
(2) Related Party Transactions
Certain programming services are purchased by the Company from affiliates
of Liberty and TCI. Charges aggregated approximately $5,237,000 and
$2,831,000 for programming services for the three months ended March 31,
1996 and 1995, respectively. Accrued liabilities at March 31, 1996 and
December 31, 1995 includes
<PAGE>
approximately $1,911,000 and $1,726,000, respectively, related to these
services from related parties. Netlink also purchases certain programming
from Netlink USA, Wholesale C-Band Business at rates approximating those
charged to third parties. For the three months ended March 31, 1996 and
1995, such charges aggregated approximately $1,604,000 and $1,925,000.
Certain TCI corporate general and administrative costs are charged to
Netlink at rates set at the beginning of the year based on projected levels
of utilization for that year. The utilization-based charges are set at
levels that management believes to be reasonable and that approximate the
costs Netlink would incur for comparable services on a stand alone basis.
During the three months ended March 31, 1996 and 1995, Netlink was
allocated $57,000 and $31,000 in corporate general and administrative costs
by TCI.
TCI manages certain treasury activities for Netlink on a centralized basis.
Cash receipts are remitted to TCI and cash disbursements are funded by TCI
on a daily basis. The net amount of such cash activities are included as a
component of the accumulated deficit balance.
(3) Commitments and Contingencies
Netlink leases office space and equipment under lease arrangements. Rental
expense under such arrangements amounted to approximately $113,000 and
$100,000 for the three months ended March 31, 1996 and 1995, respectively.
The Company is being audited by various state sales tax authorities.
Subsequent to 1995, the Company was assessed approximately $183,000 in
delinquent sales taxes, interest and penalties in three states, which has
been provided for in the accompanying financial statements. Obligations
that may arise based on future state sales tax audits have not been
provided for in the accompanying financial statements. The amount of future
assessments is estimated by management to range from $-0- to $500,000.
In March 1996, the Company reached an agreement with one of its satellite
dealers to advance commissions aggregating $2,400,000 through March 1997.
13
<PAGE>
Appendix III
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Combined Financial Statements of United
Video Satellite Group, Inc. ("UVSG") have been derived from, and should be read
in conjunction with, the respective historical financial statements and notes
thereto of UVSG and Netlink USA, Retail Division ("Netlink"). The Unaudited Pro
Forma Combined Balance Sheet assumes that the combination of the retail C-band
home satellite dish businesses' assets, obligations and operations of UVSG's
Superstar division and Netlink (the "Merger") occurred as of March 31, 1996. The
Unaudited Pro Forma Combined Statements of Operations assume that the Merger
occurred as of January 1, 1995. The pro forma financial statments are unaudited
and are not necessarily indicative of the financial position or results of
operations of UVSG that would have occurred had the Merger occurred as of the
dates indicated or the future results of operations of UVSG.
14
<PAGE>
UNITED VIDEO SATELLITE GROUP, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
(In thousands, except per share data)
At March 31, 1996
-------------------------------------
Historical Pro Forma
-----------------
Adjust- Pro
UVSG Netlink ments Forma
---- ------- ------- -----
ASSETS
Current assets:
Cash and cash equivalents $49,468 $ 2,168 $(2,168)(1) $ 49,468
Marketable securities, at
market 29,369 -- 29,369
Accounts receivables, net
of allowance for doubt-
ful accounts 29,662 14,273 43,935
Accrued interest receivable 633 -- 633
Prepaid expenses and other 6,561 467 7,028
Deferred tax asset 1,224 -- 1,224
------- ------- ------- -------
Total current assets 116,917 16,908 (2,168) 131,657
Property, plant and
equipment, at cost, net 52,819 1,730 (1,730)(1) 52,819
Goodwill, net of accumulated
amortization 32,075 3,058 (3,058)(1) 32,075
Deferred tax asset 596 -- 596
Other Assets 2,278 -- 2,278
-------- ------- ------ --------
$204,685 $21,696 $(6,956) $219,425
======== ======= ======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Cash overdraft $ -- $ 1,445 $(1,445) $ --
Accounts payable 4,347 1,304 5,651
Accrued liabilities 28,470 11,792 40,262
Current portion of capital
lease obligations and
other long-term debt 3,107 -- 3,107
------- ------- ------- -------
35,924 14,541 (1,445) 49,020
Customer prepayments 59,906 50,940 110,846
------- ------- ------- -------
Total current liabilities 95,830 65,481 (1,445) 159,866
Deferred compensation 4,775 -- 4,775
Capital lease obligations
and other long-term debt 23,199 -- 23,199
Minority interest 3,133 -- (49,296)(1) (46,163)
<PAGE>
Stockholders' equity:
Preferred stock -- -- --
Common stock 360 -- 360
Additional paid in-capital 30,641 -- 30,641
Notes receivable from
stockholders (481) -- (481)
Retained earnings
(accumulated deficit) 47,305 (43,785) 43,785 (1) 47,305
Treasury stock (77) -- (77)
-------- ------- ------- -------
Total stockholders' equity 77,748 (43,785) 43,785 77,748
-------- ------- ------- -------
$204,685 $21,696 $(6,956) $219,425
======== ======= ======= ========
- - --------------
(1) The pro forma adjustments necessary to present the combined financial
position are as follows:
Net liabilities of Netlink $(43,785)
Less certain assets not contributed
to the venture by Netlink:
Cash (2,168)
Property, plant and equipment (1,730)
Goodwill (3,058)
Add:
Cash overdraft not contributed
to the venture by Netlink 1,445
---------
Minority interest in the venture $ (49,296)
=========
15
<PAGE>
UNITED VIDEO SATELLITE GROUP, INC.
UNAUDITED PRO FORMA
COMBINED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended March 31, 1996
-------------------------------------
Historical Pro Forma
-----------------
Adjust- Pro
UVSG Netlink ments Forma
---- ------- ------- -----
Revenues $73,442 $39,062 $112,504
Operating expenses:
Programming and delivery 31,573 31,728 63,301
Selling, general and
administrative 26,986 6,685 (974)(1) 32,697
Depreciation and
amortization 3,580 311 3,891
------- -------- ------- --------
62,139 38,724 (974) 99,889
------- ------- ------- --------
Operating income 11,303 338 974 12,615
Other income(expenses), net 344 (11) -- 333
------- ------- ------- --------
Income before income taxes 11,647 327 974 12,948
Provision for income taxes (4,342) -- 160 (2) (4,182)
Minority interest (68) -- (1,735)(3) (1,803)
-------- ------ ------- -------
Net income $ 7,237 $ 327 $ (601) $ 6,963
======== ====== ======= =======
Common and common equivalent
shares outstanding 36,968
=======
Earnings per share $ .19
=======
Year Ended December 31, 1995
-------------------------------------
Historical Pro Forma
-----------------
Adjust- Pro
UVSG Netlink ments Forma
---- ------- ------- -----
Revenues $262,919 $139,071 $ $401,990
Operating expenses:
Programming and delivery 120,594 118,615 239,209
Selling, general and
administrative 92,140 21,371 113,511
Depreciation and
amortization 11,769 1,243 13,012
<PAGE>
-------- -------- --------
224,503 141,229 365,732
-------- -------- --------
Operating income (loss) 38,416 (2,158) 36,258
Other income (expenses), net (484) (41) (525)
-------- -------- --------
Income (loss) before income
taxes 37,932 (2,199) 35,733
Provision for income taxes (14,483) -- 2,591 (2) (11,892)
Minority interest (277) -- (4,813)(3) (5,090)
------- -------- ------ --------
Net income (loss) $ 23,172 $ (2,199) $(2,222) $ 18,751
======== ======== ======= ========
Common and common equivalent
shares outstanding 36,591
========
Earnings per share $ .51
========
The pro forma adjustments necessary to prevent the combined results of
operations are as follows:
(1) To eliminate non-recurring severance accruals.
(2) To reflect a provision for income taxes on the pro forma adjustments.
(3) To reflect the minority interest to be held by Liberty Media Corporation.
16
Exhibit 23
Consent Of Independent Auditors
The Board of Directors
Netlink USA:
We consent to the incorporation by reference in the Registration Statements (No.
33-72272 and No. 333-2866) on Form S-8 of United Video Satellite Group, Inc. of
our report dated August 9, 1996, with respect to the balance sheet of Netlink
USA, Retail Division (an operating division of Netlink USA, an indirect
wholly-owned partnership of Liberty Media Corporation) as of December 31, 1995,
and the related statements of operations and accumulated deficit and cash flows
for the year then ended, which report appears in the Form 8-K of United Video
Satellite Group, Inc. dated October 23, 1996.
KPMG Peat Marwick LLP
Denver, Colorado
October 23, 1996
