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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 31, 1997
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Garden State Newspapers, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 22-2675173
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1560 Broadway, Suite 1450, Denver, CO 80202
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 837-0886
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N/A
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(Former name or former address, if changed since last report.)
Amendment No. 1
The Company's current report on Form 8-K, dated July 31, 1997, is hereby
amended and supplemented as follows.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
The following Financial Statements and Pro Forma Financial Information are
hereby filed as a part of this report.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
(1) Not required.
(b) PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
(1) Unaudited pro forma balance sheet as of June 30, 1997.
(2) Unaudited pro forma condensed consolidated statement of operations for
the year ended June 30, 1997.
2
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GARDEN STATE NEWSPAPERS, INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The accompanying unaudited pro forma balance sheet as of June 30, 1997, gives
effect to the acquisition of THE SUN, a daily newspaper located in Lowell,
Massachusetts, as if the sale had occurred as of June 30, 1997.
The accompanying unaudited pro forma consolidated statements of operations for
the year ended June 30, 1997, give effect to the acquisition of substantially
all the assets used in publishing the PASADENA STAR-NEWS, WHITTIER DAILY NEWS,
SAN GABRIEL VALLEY TRIBUNE, TIMES-STANDARD, THE EVENING SUN and various related
publications, purchased on October 31, 1996; the February 28, 1997, acquisition
of the SENTINEL & ENTERPRISE, THE DAILY NEWS and THE DAILY NONPAREIL, and
various related publications; the sale of the POTOMAC NEWS on February 13, 1997;
and the July 31, 1997, acquisition of THE SUN, collectively referred to as the
"Acquisitions/Disposition," as if the acquisitions and disposition had occurred
on July 1, 1996.
These pro forma statements are not necessarily indicative of the future
operations or of the consolidated results of operations had the
Acquisitions/Disposition actually taken place on July 1, 1996. The pro forma
financial information should be read in conjunction with the Company's
historical financial statements and notes thereto appearing in the Company's
Form 10-K for the period ended June 30, 1997.
The Company has previously filed Forms 8-K for the October 31, 1996 and February
28, 1997, acquisitions as well as the February 13, 1997, disposition described
above.
3
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GARDEN STATE NEWSPAPERS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
June 30, 1997
(Amounts in Thousands)
<TABLE>
<CAPTION>
ASSETS ACQUISITION
AND
AS PRO FORMA
REPORTED ADJUSTMENTS PRO FORMA
-------- ------------- ----------
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . $ 8,944 $ (3,774) (a) $ 5,170
Accounts receivable, less allowance
for doubtful accounts . . . . . . . . . . . . . . . . . . 36,170 2,605 38,775
Inventories of newsprint and supplies . . . . . . . . . . . 6,170 147 6,317
Prepaid expenses and other assets . . . . . . . . . . . . . 3,295 65 3,360
-------- --------- ---------
TOTAL CURRENT ASSETS . . . . . . . . . . . . . . . . . 54,579 (957) 53,622
PROPERTY, PLANT AND EQUIPMENT
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,307 150 (b) 8,457
Buildings and improvements . . . . . . . . . . . . . . . . 43,462 1,150 (b) 44,612
Machinery and equipment . . . . . . . . . . . . . . . . . . 126,450 5,498 (b) 131,948
-------- --------- ---------
Total Property, Plant and Equipment . . . . . . . . . . 178,219 6,798 185,017
Less accumulated depreciation and amortization . . . . . . 57,670 -- (c) 57,670
-------- --------- ---------
Net Property, Plant and Equipment . . . . . . . . . . . 120,549 6,798 127,347
OTHER ASSETS
Investment in partnership . . . . . . . . . . . . . . . . 6,365 -- 6,365
Subscriber accounts, net of accumulated
amortization . . . . . . . . . . . . . . . . . . . . . . . 69,960 10,600 (b) 80,560
Excess of cost over fair value of net assets acquired,
net of accumulated amortization . . . . . . . . . . . . . 154,294 29,631 (d) 183,925
Covenants not to compete and other identifiable
intangible assets, net of accumulated amortization . . . . 6,684 11,757 (e) 18,441
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000 3,800 (f) 5,800
-------- --------- ---------
TOTAL OTHER ASSETS . . . . . . . . . . . . . . . . . . 239,303 55,788 295,091
-------- --------- ---------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . $414,431 $ 61,629 $ 476,060
-------- --------- ---------
-------- --------- ---------
</TABLE>
SEE NOTE 5 TO UNAUDITED PRO FORMA FINANCIAL INFORMATION.
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GARDEN STATE NEWSPAPERS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
June 30, 1997
(In Thousands)
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY ACQUISITION
AND
AS PRO FORMA
REPORTED ADJUSTMENTS PRO FORMA
-------- ------------- ----------
<S> <C> <C> <C>
CURRENT LIABILITIES
Trade accounts payable . . . . . . . . . . . . . . . . . . $ 6,286 $ -- $ 6,286
Accrued liabilities . . . . . . . . . . . . . . . . . . . . 23,714 1,625 (g) 25,339
Unearned income . . . . . . . . . . . . . . . . . . . . . . 10,746 161 10,907
Income taxes . . . . . . . . . . . . . . . . . . . . . . . 1,308 -- 1,308
Current portion of long-term debt . . . . . . . . . . . . . 6,247 213 (i) 6,460
-------- --------- ---------
TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . 48,301 1,999 50,300
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATION . . . . . . . . . . . . . . . . . . . . . . . . . 344,575 47,118 (h) 391,693
OTHER LIABILITIES . . . . . . . . . . . . . . . . . . . . . . 5,092 12,512 (i) 17,604
DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . . . . . 12,516 -- 12,516
SHAREHOLDERS' EQUITY
Common stock . . . . . . . . . . . . . . . . . . . . . . . 1 -- 1
Additional paid in capital . . . . . . . . . . . . . . . . 78,570 -- 78,570
Deficit . . . . . . . . . . . . . . . . . . . . . . . . . (74,624) -- (74,624)
-------- --------- ---------
TOTAL SHAREHOLDERS' EQUITY . . . . . . . . . . . . . . . 3,947 -- 3,947
-------- --------- ---------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY . . . . . . . . . . . . . . . . . . . . $ 414,431 $ 61,629 $ 476,060
-------- --------- ---------
-------- --------- ---------
</TABLE>
SEE NOTE 5 TO UNAUDITED PRO FORMA FINANCIAL INFORMATION.
5
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GARDEN STATE NEWSPAPERS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended June 30, 1997
(In thousands
<TABLE>
<CAPTION>
(NOTE 1) (NOTE 2) (NOTE 3)
OCTOBER 31, FEBRUARY 13, FEBRUARY 28, (NOTE 4)
1996 1997 1997 JULY 31, 1997
ACQUISITION DISPOSITION ACQUISITION ACQUISITION
AND AND AND AND
AS PRO FORMA PRO FORMA PRO FORMA PRO FORMA TOTAL
REPORTED ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS PRO FORMA
-------- ----------- ------------ ------------ ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES . . . . . . $302,902 $23,225 $(7,524)(a) $15,282 $ 23,836 (a) $357,721
COST AND EXPENSES
Cost of sales . . . . . . . . 106,476 7,539 (a)(c)(d) (2,617)(a) 4,245 (a) 7,770 (b)(c) 123,413
Selling, general &
administrative . . . . . . . 127,837 9,571 (b)(c) (2,790)(a) 6,408 (b)(c) 9,063 (b)(d)(e)(f) 150,089
Depreciation & amortization. . 24,689 2,151 (e) (810)(a) 1,547 (d) 4,498 (g) 32,075
Interest expense . . . . . . . 31,903 3,303 (f) -- 185 (e) 4,787 (h) 40,178
Other (net) . . . . . . . . . 7,995 -- 32 (a) -- -- 8,027
-------- ------- ------- ------- --------- --------
TOTAL COST AND EXPENSES . . . . 298,900 22,564 (6,185) 12,385 26,118 353,782
GAIN ON SALE OF
NEWSPAPER PROPERTY . . . . . . 30,575 -- -- -- -- 30,575
INCOME (LOSS) BEFORE INCOME
TAXES AND EXTRAORDINARY LOSS . 34,577 661 (1,339) 2,897 (2,282) 34,514
INCOME TAX BENEFIT (EXPENSE) . (1,066) (16)(g) (32) (b) (191) (f) 817 (i) (488)
-------- ------- ------- ------- --------- --------
NET INCOME (LOSS) BEFORE
EXTRAORDINARY LOSS . . . . . . $ 33,511 $ 645 $(1,371) $ 2,706 $ (1,465) $ 34,026
-------- ------- ------- ------- --------- --------
-------- ------- ------- ------- --------- --------
</TABLE>
SEE NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION.
6
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GARDEN STATE NEWSPAPERS, INC.
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
NOTE 1: UNAUDITED PRO FORMA ADJUSTMENTS FOR THE OCTOBER 31, 1996,
ACQUISITION
The following are pro forma adjustments to the historical
financial statements of the newspapers acquired on October
31, 1996. Actual operations of these newspapers have been
included from November 1, 1996.
(a) Adjust cost of sales to reflect the newsprint savings of
adjusting the web width of the presses to 50 inches and to
reflect the Company's historical cost of newsprint.
(b) Pension expense was eliminated as the pension plan was not
acquired and no new defined benefit pension plan will be
installed at any of the acquired newspapers.
(c) Certain personnel who were employed by the newspapers prior
to acquisition were not hired or replaced by Garden State
subsequent to the acquisition. Accordingly, the cost of
employing these individuals has been eliminated.
(d) Effective with the acquisition, certain cost savings have
been implemented with respect to the acquired newspapers
including the cost of acquiring plates, comics, TV books and
Sunday magazines. The cost savings have been reflected as a
pro forma adjustment.
(e) Depreciation and amortization expense of the acquired assets
has been adjusted to reflect the fair market value of the
acquired assets and the useful lives assigned to these
assets.
(f) Interest expense has been adjusted to reflect the borrowings
and rates of debt utilized in the acquisition of the assets.
(g) Income taxes reflect the estimated state taxes that would be
due if Garden State had owned the acquired newspapers during
the pro forma periods presented. Historical income taxes
have been eliminated.
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GARDEN STATE NEWSPAPERS, INC.
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION--CONTINUED
NOTE 2: UNAUDITED PRO FORMA ADJUSTMENTS FOR THE FEBRUARY 13, 1997,
DISPOSITION
The following pro forma adjustments have been made to
reflect the February 13, 1997, sale of the POTOMAC NEWS.
(a) Eliminate revenues and expenses directly associated with the
operations of the POTOMAC NEWS.
(b) Income taxes have been adjusted to eliminate the deferred
tax benefit associated with the POTOMAC NEWS assets and
liabilities.
NOTE 3: UNAUDITED PRO FORMA ADJUSTMENTS FOR THE FEBRUARY 28, 1997,
ACQUISITION
The following are pro forma adjustments to the historical
financial statements of the newspapers acquired on February
28, 1997. Actual operations of these newspapers have been
included from March 1, 1997.
(a) Adjust cost of sales to reflect the newsprint saving of
adjusting the web width of the presses to 50 inches and to
reflect the Company's historical cost of newsprint.
(b) Pension expense was eliminated as the pension plan was not
acquired and no new defined benefit pension plan will be
installed at any of the acquired newspapers.
(c) Certain adjustments have been made to compensation to
reflect the Company's cost after acquisition.
(d) Depreciation and amortization expense of the acquired assets
has been adjusted to reflect the fair market value of the
acquired assets and the useful lives assigned to these
assets.
(e) Interest expense has been adjusted to reflect the borrowings
and rates of debt utilized in the acquisition of the assets.
(f) Income taxes reflect the estimated state taxes that would be
due if Garden State had owned these acquired newspapers
during the pro forma periods presented. Historical income
taxes have been eliminated.
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GARDEN STATE NEWSPAPERS, INC.
NOTES TO STATEMENT OF OPERATIONS
NOTE 4: UNAUDITED PRO FORMA ADJUSTMENTS FOR THE JULY 31, 1997,
ACQUISITION
The following are pro forma adjustments to the historical
financial statements of THE SUN, acquired July 31, 1997, for
the twelve months ended June 30, 1997.
(a) Historical advertising revenues have been increased to give
effect to the elimination of prompt payment discounts
provided by the prior owners.
(b) Certain personnel who were employed by the newspaper prior
to the acquisition were not hired or replaced. In addition,
certain employees' wages were reduced and bonuses
eliminated. Accordingly, the cost of employing these
individuals was eliminated or reduced.
(c) Cost of sales was adjusted to reflect the newsprint savings
of adjusting the web width of the press to 50 inches from 54
inches and to reflect the Company's cost of newsprint. The
web width reduction was completed in September, 1997.
(d) Certain expenses of the prior owners, such as vehicles,
insurance, professional fees, donations, club dues and
entertainment expenses, have been eliminated as these
expenses will not be incurred by the Company.
(e) Effective with the acquisition, the newspaper began
requiring the employees to pay a portion of their health
care costs. Prior to the acquisition all health care costs
were paid by the newspaper. Accordingly, an adjustment has
been made to reduce employee benefit costs to reflect the
contributions to be made by employees.
(f) Bad debt expense was reduced to reflect historical write-offs
in lieu of accruals in excess of bad debt reserve requirements.
(g) Depreciation and amortization expense of the acquired assets
has been adjusted to reflect the fair market value of the
assets acquired and the useful lives assigned to these
assets.
(h) Interest expense has been adjusted to reflect the borrowings
utilized in the acquisition of the assets.
(i) Income taxes have been adjusted to reflect the income tax
benefit of $0.8 million that would have been reported had
the newspaper been owned during the pro forma period.
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GARDEN STATE NEWSPAPERS, INC.
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
NOTE 5: UNAUDITED PRO FORMA BALANCE SHEET
The following are pro forma adjustments to the historical
balance sheet to reflect the newspaper acquired on July 31,
1997.
(a) Reduce cash on hand by the amount used to fund the
acquisition of THE SUN.
(b) Record property, plant and equipment and subscriber lists at
their estimated fair market value at the date of
acquisition.
(c) Eliminate historical accumulated depreciation on the plant
and equipment acquired.
(d) Record the excess of cost over the fair market value of
assets acquired.
(e) Record fair market value of covenants not to compete with
prior owners.
(f) Record pension assets acquired in conjunction with the
Acquisition.
(g) Adjust accrued liabilities to accrue the estimated
organization, closing and other costs associated with
completing the Acquisition.
(h) Record long-term debt incurred in the Acquisition.
(i) Record payments due to prior owners for covenants not to
compete and other long-term obligations, net of current
portion.
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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 hereunto duly authorized.
GARDEN STATE NEWSPAPERS, INC.
Date: October 13, 1997 By: /s/ Joseph J. Lodovic, IV
--------------------------------
Joseph J. Lodovic, IV
Executive Vice President,
Chief Financial Officer
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