-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GxGl9rSn5AHk/EbVWmRQsqI6sz1VxhZXzMRMimnuzzKn8Os2s10baiugbkcZDfBm oHc7w9IjAJchoT8hkd2niQ== 0000216539-96-000004.txt : 19960105 0000216539-96-000004.hdr.sgml : 19960105 ACCESSION NUMBER: 0000216539-96-000004 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951024 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960104 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDIA GENERAL INC CENTRAL INDEX KEY: 0000216539 STANDARD INDUSTRIAL CLASSIFICATION: NEWSPAPERS: PUBLISHING OR PUBLISHING & PRINTING [2711] IRS NUMBER: 540850433 STATE OF INCORPORATION: VA FISCAL YEAR END: 1226 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-06383 FILM NUMBER: 96501088 BUSINESS ADDRESS: STREET 1: 333 E GRACE ST CITY: RICHMOND STATE: VA ZIP: 23219 BUSINESS PHONE: 8046496000 8-K/A 1 NEWSPAPER ACQUISITION 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 8-K/A Amendment No. 1 CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of Earliest Event Reported) October 24, 1995 Media General, Inc. (Exact name of registrant as specified in its charter) Virginia 1-6383 54-0850433 (State or other (Commission (IRS Employer jurisdiction of File Number) Identification No.) incorporation) 333 E. Grace St., Richmond, Virginia 23219 (Address of principal executive offices) (Zip Code) (804) 649-6000 (Registrant's telephone number, including area code) N/A ----------- (Former name or former address, if changed since last report.) 2 Item 7. Financial Statements and Exhibits The following financial statements and pro forma financial information omitted from the Form 8-K dated November 7, 1995, (October 24, 1995, date of earliest event reported) in reliance upon Item 7(a)(4) and 7(b)(2) of Form 8-K are filed herewith. (a) (1) Financial Statements of the Virginia Newspaper Operations of Worrell Enterprises, Inc., as of and for the years ended December 31, 1994 and 1993. Report of Independent Certified Public Accountants Combined Balance Sheet Combined Statement of Operations and Divisional Equity Combined Statement of Cash Flows Notes to Combined Financial Statements (2) Unaudited Combined Condensed Balance Sheet of the Virginia Newspaper Operations of Worrell Enterprises, Inc., as of September 30, 1995, and Unaudited Combined Condensed Statements of Operations and Cash Flows for the nine months ended September 30, 1995 and 1994. (b) Pro Forma Combined Condensed Financial Statements of Media General, Inc. Pro Forma Combined Condensed Balance Sheet as of September 24, 1995 Pro Forma Combined Condensed Statement of Operations for the year ended December 25, 1994 Pro Forma Combined Condensed Statement of Operations for the nine months ended September 24, 1995 Notes to Pro Forma Combined Condensed Financial Statements (c) Exhibits 23. Consent of Price Waterhouse LLP 3 Report of Independent Certified Public Accountants To the Stockholders and Board of Directors of Worrell Enterprises, Inc. In our opinion, the accompanying combined balance sheet and the related combined statements of operations and divisional equity and of cash flows present fairly, in all material respects, the financial position of the Virginia Newspaper Operations of Worrell Enterprises, Inc. at December 31, 1994 and 1993, and the results of their operations and their cash flows for the years then ended in conformity with generally accepted accounting principles. 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 audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. Price Waterhouse LLP Fort Lauderdale, Florida November 3, 1995 4 The Virginia Newspaper Operations of Worrell Enterprises, Inc. Combined Balance Sheet (In thousands)
December 31, 1994 1993 ------ ------ Assets - ------ Current assets: Cash and cash equivalents $ 95 $ 136 Receivables: Trade accounts, less allowance for doubtful accounts of $175 and $226, respectively 3,817 3,791 Other 216 115 Inventories 455 333 Prepaid expenses and other current assets 246 202 ------------ ------------ Total current assets 4,829 4,577 Property, plant and equipment, net 4,913 4,974 Intangible assets, net 8,895 9,336 Other assets 60 40 ------------ ------------ Total assets $ 18,697 $ 18,927 ============ ============ Liabilities and Divisional Equity - --------------------------------- Current liabilities: Accounts payable: Trade $ 292 $ 228 Affiliates 624 516 Accrued expenses: Salaries and related expenses 548 558 Profit sharing plan 138 140 Other 145 155 Current portion of capitalized lease obligations 13 9 Deferred subscription revenue 1,174 1,153 Carrier bond liability 149 155 ------------ ------------ Total current liabilities 3,083 2,914 Capitalized lease obligations 3,085 3,098 Other noncurrent liabilities 106 148 Commitments and contingencies --- --- Divisional equity 12,423 12,767 ------------ ------------ Total liabilities and divisional equity $ 18,697 $ 18,927 ============ ============ The accompanying notes are an integral part of these combined financial statements.
5 The Virginia Newspaper Operations of Worrell Enterprises, Inc. Combined Statement of Operations and Divisional Equity (In thousands)
Year Ended December 31, 1994 1993 ------ ------ Revenues: Advertising $ 29,287 $ 28,238 Circulation 8,727 8,552 Other 1,766 1,778 ------------ ------------ 39,780 38,568 ------------ ------------ Costs and expenses: Production 16,735 16,797 General and administrative 2,925 2,818 Depreciation and amortization 1,222 1,189 ------------ ------------ 20,882 20,804 ------------ ------------ Operating income 18,898 17,764 ------------ ------------ Other income (expense): Interest income 438 349 Interest expense (417) (434) Other, net (341) (313) ------------ ------------ (320) (398) ------------ ------------ Net income 18,578 17,366 ------------ ------------ Divisional equity at beginning of year 12,767 13,526 Contributions from WEI --- 942 Dividends to WEI (18,922) (19,067) ------------ ------------ Divisional equity at end of year $ 12,423 $ 12,767 ============ ============ Unaudited pro forma data (Note 10): Income before provision for income taxes 18,578 17,366 Pro forma provision for income taxes 7,378 6,908 ------------ ------------ Pro forma net income $ 11,200 $ 10,458 ============ ============ The accompanying notes are an integral part of these combined financial statements.
6 The Virginia Newspaper Operations of Worrell Enterprises, Inc. Combined Statement of Cash Flows (In thousands)
Year Ended December 31, 1994 1993 ------ ------ Cash flows from operating activities: Net income $ 18,578 $ 17,366 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 1,222 1,189 Loss on sale of property, plant and equipment 44 18 Changes in assets and liabilities Increase in receivables (127) (29) (Increase) decrease in inventories (122) 60 Increase in prepaid expenses and other current assets (44) (32) Increase in other assets (20) (1) Increase in accounts payable 172 495 Decrease in accrued expenses (22) (84) (Decrease) increase in other liabilities (27) 77 ------------ ------------ Net cash provided by operating activities 19,654 19,059 ------------ ------------ Cash flows from investing activities: Acquisition of intangible assets --- (406) Capital expenditures (808) (415) Proceeds from sale of property, plant and equipment 44 --- ------------ ------------ Net cash used in investing activities (764) (821) ------------ ------------ Cash flows from financing activities: Reduction of capitalized lease obligations (9) (20) Dividends to WEI (18,922) (19,067) Contributions from WEI --- 942 ------------ ------------ Net cash used in financing activities (18,931) (18,145) ------------ ------------ Net (decrease) increase in cash and cash equivalents (41) 93 Cash and cash equivalents at beginning of year 136 43 ------------ ------------ Cash and cash equivalents at end of year $ 95 $ 136 ============ ============ Cash paid for interest $ 418 $ 430 ============ ============ The accompanying notes are an integral part of these combined financial statements.
7 The Virginia Newspaper Operations of Worrell Enterprises, Inc. Notes to Combined Financial Statements December 31, 1994 and 1993 1. Organization, Principal Business Activities and Basis of Presentation: Organization and Principal Business Activities The Virginia Newspaper Operations of Worrell Enterprises, Inc. (the Virginia Newspapers) primary business is the management of daily, weekly, semi-monthly and monthly newspapers in Virginia. The Virginia Newspapers consist of the Charlottesville, Culpeper, Lynchburg, Richlands and Suffolk, Virginia branches which are majority owned by Worrell Enterprises, Inc. (WEI) and the Orange branch which is owned by a trust affiliated with the majority stockholder of WEI. All significant intercompany balances of the Virginia Newspapers have been eliminated in the accompanying combined financial statements. Basis of Presentation The accompanying combined financial statements have been prepared as if the Virginia Newspapers had operated as an independent stand alone entity for all the periods presented, except the Virginia Newspapers generally have not had borrowings other than amounts due to WEI and there was no allocation of WEI's consolidated borrowings and interest expense. Because the accompanying combined financial statements do not include an allocation of WEI's borrowings and related interest expense and the divisional nature of the combined financial statements, certain costs and expenses represent allocations of the Virginia Newspapers' share of the total cost of WEI and, accordingly, the financial information included herein is not necessarily indicative of the financial position, results of operations and cash flows of the Virginia Newspapers in the future or indicative of the results that would have been reported if the Virginia Newspapers had operated as an unaffiliated enterprise. Management believes the combined statement of operations and divisional equity includes a reasonable allocation of costs incurred by WEI which benefit the Virginia Newspapers. Such expenses relate primarily to executive management, general liability and property insurance, legal and accounting services, and other support services. 2. Accounting Principles: Cash and Cash Equivalents For purposes of the balance sheet and the statement of cash flows, all highly liquid instruments with an original maturity at issuance of three months or less are considered to be cash equivalents. Inventories Inventories are stated at the lower of cost or market value, cost being determined using the first-in, first-out method. Inventories consist primarily of newsprint and other supplies utilized in the printing of newspapers. 8 The Virginia Newspaper Operations of Worrell Enterprises, Inc. Notes to Combined Financial Statements December 31, 1994 and 1993 Property, Plant and Equipment Property, plant and equipment is stated at cost and depreciated using the straight-line method over estimated useful lives ranging from three to forty years. Capitalized lease properties are amortized over the shorter of the life of the lease term or the estimated useful life of the asset underlying the lease, generally eleven to twenty-five years. Amortization of capitalized lease properties is included in depreciation and amortization expense. Intangible Assets The excess of the aggregate purchase price over the fair value of the net assets of entities acquired is generally being amortized on a straight-line basis over 40 years. Other intangible assets primarily represent a covenant not to compete agreement which is being amortized on the straight-line basis over the term of the agreement, which is ten years. Reserve for Self-Insurance WEI is self-insured for employee medical insurance and workers' compensation claims, and has paid premium policies in force to limit its total exposure. WEI charges the Virginia Newspapers a premium for their insurance coverage. Management considers this premium to be representative of the insurance costs that would have been incurred by the Virginia Newspapers if they had been operating as a stand-alone entity. Income Taxes Beginning March 1987, WEI elected to be taxed under the provisions of Subchapter S of the Internal Revenue Code. Under those provisions and analogous provisions of certain state laws, WEI does not pay federal or state corporate income taxes on its taxable income. Instead, the shareholders are liable for individual federal and state income taxes for their respective shares of WEI's taxable income (see Note 10). 9 The Virginia Newspaper Operations of Worrell Enterprises, Inc. Notes to Combined Financial Statements December 31, 1994 and 1993 3. Trade Accounts Receivable: Trade accounts receivable are comprised of the following: (In thousands)
December 31, 1994 1993 ------ ------ Retail advertising $ 3,286 $ 3,213 Classified advertising 234 295 Job printing 250 260 Circulation 129 166 Other current receivables 93 83 Less - allowance for doubtful accounts (175) (226) ------------ ------------ $ 3,817 $ 3,791 ============ ============ 4. Property, Plant and Equipment: The components of property, plant and equipment are as follows: (In thousands) December 31, 1994 1993 ------ ------ Machinery and equipment $ 6,900 $ 6,466 Buildings and improvements 3,303 3,295 Office furniture and fixtures 1,542 1,564 Capitalized lease properties 4,423 4,423 Land 6 2 Motor vehicles 292 257 Construction in progress 35 1 ------------ ------------ 16,501 16,008 Less - accumulated depreciation (11,588) (11,034) ------------ ------------ $ 4,913 $ 4,974 ============ ============
Depreciation expense on property, plant and equipment, excluding capitalized lease amortization, amounted to $736,000 and $661,000 for 1994 and 1993, respectively. 10 The Virginia Newspaper Operations of Worrell Enterprises, Inc. Notes to Combined Financial Statements December 31, 1994 and 1993 The following is an analysis of the capitalized lease properties reflected above: (In thousands)
December 31, 1994 1993 ------ ------ Building $ 1,616 $ 1,616 Equipment 2,807 2,807 ------------ ------------ 4,423 4,423 Less - accumulated depreciation (3,436) (3,390) ------------ ------------ $ 987 $ 1,033 ============ ============ Capitalized lease amortization expense approximated $46,000 in each of 1994 and 1993. 5. Intangible Assets: Intangible assets consist of the following: (In thousands) December 31, 1994 1993 ------ ------ Goodwill, net of accumulated amortization of $6,825 and $6,442 in 1994 and 1993, respectively $ 8,605 $ 8,987 Paid subscribers, net of accumulated amortization of $170 and $155 in 1994 and 1993, respectively 1 15 Covenant not to compete, net of accumulated amortization of $25 and $0 in 1994 and 1993, respectively 225 250 Other intangibles, net of accumulated amortization of $358 and $338 in 1994 and 1993, respectively 64 84 ------------ ------------ $ 8,895 $ 9,336 ============ ============
On December 29, 1993, WEI acquired 75% of the outstanding common stock of Culpeper Communications Corporation. The Orange branch of the Virginia Newspaper Operations acquired the remaining 25%, resulting in an investment of $114,660. The acquisition was accounted for as a purchase. The investment has been eliminated in the accompanying combined financial statements. As a result of this transaction, goodwill of $156,694 and covenants not to compete of $250,000 were recorded on the acquisition date. 11 The Virginia Newspaper Operations of Worrell Enterprises, Inc. Notes to Combined Financial Statements December 31, 1994 and 1993 Amortization expense on intangible assets amounted to $441,000 and $482,000 in 1994 and 1993, respectively. 6. Deferred Subscription Revenue: Deferred subscription revenue is comprised of the following: (In thousands)
December 31, 1994 1993 ------ ------ Carrier subscriptions paid in advance $ 953 $ 917 Mail subscriptions paid in advance 221 236 ------------ ------------ $ 1,174 $ 1,153 ============ ============ 7. Capitalized and Operating Lease Obligations: (In thousands) December 31, 1994 1993 ------ ------ Capitalized lease obligations, primarily with WEI affiliates, payable in quarterly installments with imputed interest rates of 12.5% to 14.84% $ 3,098 $ 3,107 Less - current portion (13) (9) ------------ ------------ $ 3,085 $ 3,098 ============ ============ Minimum future rentals under noncancelable leases are as follows: (In thousands) Year Ending Operating Capital December 31, Leases Leases ----------- ------ ------ 1995 $ 674 $ 426 1996 653 428 1997 643 431 1998 179 368 1999 18 534 Thereafter through 2013 --- 5,586 --------- --------- 2,167 7,773 Less - future interest --- (4,675) --------- --------- Total $ 2,167 $ 3,098 ========= =========
12 The Virginia Newspaper Operations of Worrell Enterprises, Inc. Notes to Combined Financial Statements December 31, 1994 and 1993 Substantially all capital leases are with affiliates. Included in the above minimum future rentals under operating leases are amounts payable through 1998 to a company controlled by the principal stockholder of WEI totalling $2,015,013. Rent expense under operating leases, principally with affiliates, was $690,000 and $678,000 in 1994 and 1993, respectively. 8. Related Party Transactions: The accompanying financial statements include a corporate overhead allocation which is based upon the estimated historical costs incurred by WEI which benefit the Virginia Newspapers. In addition to corporate overhead, WEI incurs workers' compensation, property and liability and health insurance costs on behalf of the Virginia Newspapers. The accompanying financial statements include a premium charged by WEI for workers' compensation and property and liability insurance based upon the related salaries and assets of the Virginia Newspapers relative to total WEI consolidated salaries and assets. Group health insurance is charged directly to the Virginia Newspapers based upon headcount and elected coverage. WEI provides the Virginia Newspapers with certain software support, accounting, tax and legal services. In addition, the Virginia Newspaper employees participate in the Worrell Profit Sharing Savings Plan which is sponsored and administered by WEI. All direct charges relating to these services and participation in the plan are charged to the Virginia Newspapers and are included in the accompanying financial statements. The allocation for software support, accounting, legal and tax services is based upon the costs incurred by WEI which benefit the Virginia Newspapers. The allocated amount included in the statement of operations and divisional equity approximated $444,000 in 1993 and 1994. WEI provides centralized cash management functions for the Virginia Newspapers. As part of this practice, surplus cash is remitted to WEI and WEI makes certain cash advances to the Virginia Newspapers. Interest is charged or paid on the net WEI investment amount. Net interest income earned on the net WEI investment by the Virginia Newspapers was $387,400 and $241,300 in 1994 and 1993, respectively. Periodically, WEI makes contributions to or receives dividends from the branches on an as needed basis. Total dividends of $18,921,588 and $19,066,744 were paid to WEI by the Virginia Newspapers in 1994 and 1993, respectively. Total contributions of $941,941 were received by the Culpeper and Suffolk branches from WEI, including a $340,340 net capital contribution to Culpeper in conjunction with the purchase of the outstanding stock of Culpeper Communications Corporation on December 29, 1993. No contributions were received in 1994. 13 The Virginia Newspaper Operations of Worrell Enterprises, Inc. Notes to Combined Financial Statements December 31, 1994 and 1993 9. Employee Benefits: Profit Sharing Plan The Virginia Newspapers participate in the Worrell Profit Sharing Savings Plan and make a discretionary contribution to such plan for all eligible employees who elect salary deferrals. An employee vests in his portion of employer contributions to the extent of 10% after two years of service, 20% after three years and an additional 20% each year thereafter, reaching 100% vesting after seven years. Total employer contributions, which are included in general and administrative expense, were $127,602 and $125,514 for the years ended December 31, 1994 and 1993, respectively. Postretirement Health Insurance Benefits In conjunction with the acquisition of the Lynchburg, Virginia newspapers, WEI agreed to provide health insurance to six retirees for the remainder of their lifetime. At December 31, 1994 and 1993 the liability for these benefits totalled $52,706 and $63,949, respectively. This liability is included in other noncurrent liabilities in the accompanying combined financial statements. 10. Pro Forma Provision for Income Taxes (Unaudited): The consolidated income statement includes a pro forma adjustment for income taxes which would have been recorded if the Company had been a C corporation, based on tax rates in effect during those periods, as calculated under FAS 109. The pro forma provisions for income taxes are as follows: (In thousands)
December 31, 1994 1993 ------ ------ Current: Federal $ 6,215 $ 5,770 State 1,133 1,052 ------------ ------------ $ 7,348 $ 6,822 ============ ============ Deferred: Federal $ 25 $ 74 State 5 12 ------------ ------------ 30 86 ------------ ------------ $ 7,378 $ 6,908 ============ ============
14 The Virginia Newspaper Operations of Worrell Enterprises, Inc. Notes to Combined Financial Statements December 31, 1994 and 1993 Deferred tax assets (liabilities) on a pro forma basis would be comprised of the following components: (In thousands)
December 31, 1994 1993 ------ ------ Vacation liability $ 133 $ 133 Self-insurance reserve 21 26 Allowance for doubtful accounts 93 72 Tax depreciation in excess of book depreciation (501) (455) ------------ ------------ $ (254) $ (224) ============ ============ The pro forma effective tax rates of 39.7% in 1994 and 39.8% in 1993 differ from the U.S. statutory federal tax rate because of state taxes.
11. Subsequent Events: On October 26, 1995, WEI sold the net assets and related publications of the Virginia Newspaper Operations to Media General, Inc. 15 Virginia Newspaper Operations of Worrell Enterprises, Inc. Combined Condensed Balance Sheet As of September 30, 1995 (In thousands) (Unaudited)
Assets - ------ Current assets: Cash and cash equivalents $ 117 Receivables: Trade accounts, less allowance for doubtful accounts of $171 3,755 Other 330 Inventories 576 Prepaid expenses and other current assets 55 ----------- Total current assets 4,833 Property, plant and equipment, net 4,752 Intangible assets, net 8,588 Other assets 42 ----------- Total assets $ 18,215 =========== Liabilities and Divisional Equity - --------------------------------- Current liabilities: Accounts payable: Trade $ 222 Affiliates 890 Accrued expenses: Salaries and related expenses 620 Profit sharing plan 117 Other 216 Current portion of capitalized lease obligations 9 Deferred subscription revenue 1,263 Carrier bond liability 161 ----------- Total current liabilities 3,498 Capitalized lease obligations 3,083 Other noncurrent liabilities 75 Commitments and contingencies --- Divisional equity 11,559 ----------- Total liabilities and divisional equity $ 18,215 =========== The accompanying notes are an integral part of these combined condensed financial statements.
16 The Virginia Newspaper Operations of Worrell Enterprises, Inc. Combined Condensed Statement of Operations (In thousands) (Unaudited)
Nine months ended September 30, 1995 1994 ------ ------ Revenues: Advertising $ 21,875 $ 21,236 Circulation 6,703 6,542 Other 1,369 1,343 ----------- ----------- 29,947 29,121 ----------- ----------- Costs and expenses: Production 13,127 12,367 General and administrative 2,068 2,168 Depreciation and amortization 900 894 ----------- ----------- 16,095 15,429 ----------- ----------- Operating income 13,852 13,692 ----------- ----------- Other income (expense): Interest income 1,078 198 Interest expense (311) (323) Other, net (202) (243) ----------- ----------- 565 (368) ----------- ----------- Net income $ 14,417 $ 13,324 =========== =========== The accompanying notes are an integral part of these combined condensed financial statements.
17 The Virginia Newspaper Operations of Worrell Enterprises, Inc. Combined Condensed Statement of Cash Flows (In thousands) (Unaudited)
Nine Months Ended September 30, 1995 1994 ------ ------ Cash flows from operating activities: Net income $ 14,417 $ 13,324 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 900 894 Loss (gain) on sale of property, plant and equipment (13) 6 Changes in assets and liabilities (Increase) decrease in receivables (52) 152 Increase in inventories (121) (106) (Increase) decrease in prepaid expenses and other current assets 191 (103) Decrease in other assets 18 1 Increase in accounts payable 196 38 Increase in accrued expenses 122 52 Increase (decrease) in other liabilities 70 (2) ------------ ------------ Net cash provided by operating activities 15,728 14,256 ------------ ------------ Cash flows from investing activities: Capital expenditures (433) (645) Other, net 14 44 ------------ ------------ Net cash used in investing activities (419) (601) ------------ ------------ Cash flows from financing activities: Reduction of capitalized lease obligations (6) (4) Dividends to WEI (15,281) (13,690) ------------ ------------ Net cash used in financing activities (15,287) (13,694) ------------ ------------ Net increase (decrease) in cash and cash equivalents 22 (39) Cash and cash equivalents at beginning of year 95 136 ------------ ------------ Cash and cash equivalents at end of period $ 117 $ 97 ============ ============ Cash paid for interest $ 311 $ 311 ============ ============ The accompanying notes are an integral part of these combined condensed financial statements.
18 The Virginia Newspaper Operations of Worrell Enterprises, Inc. Notes to Interim Financial Statements Unaudited 1. The accompanying unaudited combined condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial reporting, and with applicable quarterly reporting regulations of the Securities and Exchange Commission. They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of interim financial information have been included. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the full fiscal year. 2. Inventories are principally newsprint. 19 MEDIA GENERAL, INC. PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) The following unaudited pro forma combined condensed balance sheet (balance sheet) as of September 24, 1995, and the pro forma combined condensed statements of operations for the year ended December 25, 1994, and for the nine months ended September 24, 1995, (statements of operations), give effect to the acquisition by Virginia Newspapers, Inc., a newly formed, wholly owned subsidiary of Media General, Inc., (the Company) of the real property, equipment, furniture and other assets and intangibles of The Virginia Newspaper Operations of Worrell Enterprises, Inc., (WEIVNO) acquired on October 26, 1995, for approximately $232 million. The acquisition has been accounted for using the purchase method of accounting. The pro forma combined condensed balance sheet presents the financial position of the Company and WEIVNO as of September 24, 1995, assuming that the acquisition occurred as of that date. The pro forma combined condensed statements of operations have been prepared assuming the acquisition occurred as of the beginning of the periods presented. The pro forma combined condensed financial statements are provided for informational purposes only, and are not necessarily indicative of the past or future results of operations or financial position of the Company that would have occurred had the acquisition been consummated on the respective dates assumed. The pro forma combined condensed financial statements have been prepared on the basis of preliminary estimates of the fair value of the assets acquired. This information should be read in conjunction with the previously filed Form 8- K, dated November 7, 1995, the previously filed historical consolidated financial statements and accompanying notes of Media General, Inc., contained in its Annual Report on Form 10-K for the fiscal year ended December 25, 1994, and in its 1995 Quarterly Reports on Forms 10-Q and in conjunction with the historical financial statements and accompanying notes of The Virginia Newspaper Operations of Worrell Enterprises, Inc., included elsewhere in this Form 8-K/A. 20 Media General, Inc. Pro Forma Combined Condensed Balance Sheet As of September 24, 1995 (In thousands) (Unaudited)
Media General, Pro Forma Pro Forma Inc. WEIVNO* Adjustments Balance --------- ---------- ----------- --------- ASSETS Current assets: Cash and cash equivalents $ 17,832 $ 117 $ (15,000) (1) $ 2,949 Accounts receivable - net 68,770 3,755 --- 72,525 Inventories 20,033 576 --- 20,609 Other 26,226 385 --- 26,611 ----------- ----------- ---------- ----------- Total current assets 132,861 4,833 (15,000) 122,694 ----------- ----------- ---------- ----------- Investments in unconsolidated affiliates 93,880 --- --- 93,880 Other assets 33,473 312 13,825 (2) 47,610 Property, plant and equipment- net 494,356 4,752 5,745 (3) 504,853 Excess of cost of businesses acquired over equity in net assets - net 43,490 8,318 197,771 (4) 249,579 ----------- ----------- ---------- ----------- $ 798,060 $ 18,215 $ 202,341 $ 1,018,616 =========== =========== ========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 32,191 $ 1,112 $ --- $ 33,303 Accrued expenses and other liabilities 72,906 2,386 (9) (5) 75,283 Income taxes payable 1,313 --- --- 1,313 ----------- ------------ ---------- ----------- Total current liabilities 106,410 3,498 (9) 109,899 ----------- ----------- ---------- ----------- Long-term debt 128,750 3,083 213,909 (6) 345,742 Deferred income taxes 99,337 --- --- 99,337 Other liabilities and deferred credits 105,499 75 --- 105,574 Stockholders' equity 358,064 11,559 (11,559) (7) 358,064 ----------- ----------- ---------- ----------- $ 798,060 $ 18,215 $ 202,341 $ 1,018,616 =========== =========== ========== =========== * For comparability, WEIVNO amounts, which are as of September 30, 1995, have been reclassified to conform with Media General, Inc.'s presentation. See notes to the pro forma combined condensed financial statements.
21 Media General, Inc. Pro Forma Combined Condensed Statement of Operations For the year ended December 25, 1994 (In thousands except per share amounts) (Unaudited)
Media General, Pro Forma Pro Forma Inc. WEIVNO* Adjustments Balance ---------- ---------- ---------- ---------- Revenues $ 626,247 $ 39,780 $ --- $ 666,027 ---------- ---------- ---------- ---------- Operating costs: Production costs 332,557 11,820 (397) (1) 343,980 Selling, distribution and administrative 171,989 7,840 --- 179,829 Depreciation and amortization 55,450 1,222 6,660 (2) 63,332 ----------- ---------- ---------- ---------- Total operating costs 559,996 20,882 6,263 587,141 ---------- ---------- ---------- ---------- Operating income 66,251 18,898 (6,263) 78,886 ---------- ---------- ---------- ---------- Other income (expense): Interest expense (16,948) (417) (12,645) (3) (30,010) Investment income (loss) - unconsolidated affiliates 2,935 --- --- 2,935 Gain on sale of Garden State Newspapers investment 91,520 --- --- 91,520 Other, net (789) 97 (547) (4) (1,239) ---------- ---------- ---------- ---------- Total other income (expense) 76,718 (320) (13,192) 63,206 ---------- ---------- ---------- ---------- Income before income taxes 142,969 18,578 (19,455) 142,092 ---------- ---------- ---------- ---------- Income tax expense (benefit) 25,960 --- (333) (5) 25,627 ---------- ---------- ---------- ---------- Net income $ 117,009 $ 18,578 $ (19,122) $ 116,465 ========== ========== ========== ========== Earnings per common share and equivalent $ 4.45 $ 4.43 ========== ========== Weighted average common shares and equivalents 26,283 26,283 * For comparability, WEIVNO amounts, which are for the year ended December 31, 1994, have been reclassified to conform with Media General, Inc.'s presentation. See notes to the pro forma combined condensed financial statements.
22 Media General, Inc. Pro Forma Combined Condensed Statement of Operations For the nine months ended September 24, 1995 (In thousands except per share amounts) (Unaudited)
Media General, Pro Forma Pro Forma Inc. WEIVNO* Adjustments Balance ---------- ---------- ---------- ---------- Revenues $ 507,091 $ 29,947 $ --- $ 537,038 ---------- ---------- ---------- ---------- Operating costs: Production costs 283,479 9,498 (274) (1) 292,703 Selling, distribution and administrative 131,569 5,697 --- 137,266 Depreciation and amortization 44,356 900 5,013 (2) 50,269 ---------- ---------- ---------- ---------- Total operating costs 459,404 16,095 4,739 480,238 ---------- ---------- ---------- ---------- Operating income 47,687 13,852 (4,739) 56,800 ---------- ---------- ---------- ---------- Other income (expense): Interest expense (10,213) (311) (9,486) (3) (20,010) Investment income - unconsolidated affiliates 10,631 --- --- 10,631 Other, net 5,100 876 (2,136) (4) 3,840 ---------- ---------- ---------- ---------- Total other income (expense) 5,518 565 (11,622) (5,539) ---------- ---------- ---------- ---------- Income before income taxes 53,205 14,417 (16,361) 51,261 ---------- ---------- ---------- ---------- Income tax expense (benefit) 18,493 --- (737) (5) 17,756 ---------- ---------- ---------- ---------- Net income $ 34,712 $ 14,417 $ (15,624) $ 33,505 ========== ========== ========== ========== Earnings per common share and equivalent $ 1.31 $ 1.27 ========== ========== Weighted average common shares and equivalents 26,478 26,478 * For comparability, WEIVNO amounts, which are for the nine months ended September 30, 1995, have been reclassified to conform with Media General, Inc.'s presentation. See notes to the pro forma combined condensed financial statements.
23 Media General, Inc. Notes to Pro Forma Combined Condensed Financial Statements BALANCE SHEET - ------------- September 24, 1995 Adjustments: (1) Use of invested cash for acquisition. (2) Adjust identifiable intangibles, principally subscription list, to estimated fair market value. (3) Adjust property, plant and equipment to estimated fair market value. (4) Adjustment to record the excess of acquisition cost over the fair value of net assets acquired (goodwill). (5) Eliminate current portion of WEIVNO capital lease obligations related to assets purchased. (6) Adjustment to record funds that would have been borrowed at September 24, 1995, in connection with the acquisition, net of the elimination of WEIVNO long-term debt related to capital lease obligations of assets purchased. (7) Eliminate WEIVNO historical net assets (divisional equity). For purposes of these Pro Forma Combined Condensed Financial Statements the purchase price was allocated as follows (In thousands): Purchase price $231,992 Working capital acquired (1,335) Property, plant and equipment at fair market value (10,497) Identifiable intangibles (14,095) Other liabilities and assets, net 24 -------- Excess of cost of business acquired over equity in net assets $206,089 ======== STATEMENTS OF OPERATIONS - ------------------------ Adjustments for the year ended December 25, 1994: (1) Eliminate WEIVNO rent expense related to assets purchased and therefore no longer leased. (2) Increase in depreciation expense resulting from adjustment of fixed assets to estimated fair market value with lives based upon remaining estimated useful life and increase in amortization expense resulting from adjustment of intangibles to estimated fair market value with lives ranging from 10-35 years. 24 (3) Increase in interest expense based on actual borrowings of $209 million for the acquisition (at an actual effective fixed rate of 6.25%); net of WEIVNO historical interest expense eliminated on capitalized leases related to assets purchased. (4) Eliminate Media General interest income on cash investments which would have been used for the acquisition and eliminate WEIVNO interest income. (5) Record income tax benefit at an effective rate of 37.925% on the pro forma adjustments and the addition of WEIVNO income before income taxes. Adjustments for the nine months ended September 24, 1995: (1) Eliminate WEIVNO rent expense related to assets purchased and therefore no longer leased. (2) Increase in depreciation expense resulting from adjustment of fixed assets to estimated fair market value with lives based upon remaining estimated useful life and increase in amortization expense resulting from adjustment of intangibles to estimated fair market value with lives ranging from 10-35 years. (3) Increase in interest expense based on actual borrowings of $209 million for the acquisition (at an actual effective fixed rate of 6.25%); net of WEIVNO historical interest expense eliminated on capitalized leases related to assets purchased. (4) Eliminate Media General interest income on cash investments which would have been used for the acquisition and eliminate WEIVNO interest income. (5) Record income tax benefit at an effective rate of 37.925% on the pro forma adjustments and the addition of WEIVNO income before income taxes. 25 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. MEDIA GENERAL, INC. DATE: January 4, 1996 /s/ Marshall N. Morton ---------------- ---------------------------------------- Marshall N. Morton, Senior Vice-President and Chief Financial Officer EX-23 2 CONSENT 1 Exhibit 23 One East Broward Boulevard Telephone 305 463 6280 Suite 1700 Fort Lauderdale, FL 33301 Price Waterhouse LLP CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We hereby consent to the incorporation by reference in the Prospectus constituting part of (a) the Registration Statement (Form S-8 No. 2-56905) pertaining to the 1971 Unqualified Stock Option Plan and the 1976 Qualified and Non-Qualified Stock Option Plans of Media General, Inc.; (b) the Registration Statement (Form S-8 No. 33-29478) pertaining to the Media General, Inc., Employees Thrift Plan; (c) the Registration Statement (Form S-8 No. 33-23698) pertaining to the 1987 Non-Qualified Stock Option Plan of Media General, Inc.; (d) the Registration Statement (Form S-3 No. 33-26853) pertaining to the Media General, Inc., Automatic Dividend Reinvestment and Stock Purchase Plan and (e) the Registration Statement (Form S-8 No. 33-52472) pertaining to the 1987 Non- Qualified Stock Option Plan of Media General, Inc., amended and restated May 17, 1991, of our report dated November 3, 1995 relating to the combined financial statements of The Virginia Newspaper Operations of Worrell Enterprises, Inc., which appears in the Current Report on Form 8-K/A of Media General, Inc. dated January 4, 1996. Price Waterhouse LLP Fort Lauderdale, Florida January 4, 1996 -----END PRIVACY-ENHANCED MESSAGE-----