UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 5, 2015 (September 7, 2015)
MEDIA GENERAL, INC.
(Exact name of registrant as specified in its charter)
Virginia |
|
1-6383 |
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46-5188184 |
(State or other jurisdiction of incorporation) |
|
(Commission File Number) |
|
(IRS Employer Identification No.) |
333 E. Franklin Street |
Richmond, VA 23219 |
(Address of principal executive offices, including zip code) |
(804) 887-5000
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☒ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 8.01 Other Events.
On September 8, 2015, Media General, Inc. (the “Company”) announced the entry into an Agreement and Plan of Merger by and among the Company, certain of its subsidiaries and Meredith Corporation, an Iowa corporation (“Meredith”), providing for a strategic business combination transaction between the Company and Meredith (the “Meredith Merger”). This Form 8-K includes Meredith’s audited financial statements as of June 30, 2015 and 2014 and for each of the years in the three year period ended June 30, 2015, and the pro forma financial information relating to the Meredith Merger.
Item 9.01. Financial Statements and Exhibits.
(a) Financial statements of business acquired
The audited consolidated financial statements of Meredith as of June 30, 2015 and 2014 and for each of the years in the three-year period ended June 30, 2015, the notes related thereto and the report of the independent registered public accounting firm thereon are filed herewith as Exhibit 99.1 and incorporated herein by reference.
The audited consolidated financial statements of each of LIN Media, LLC (“LIN Media”) and LIN Television Corporation (“LIN Television”) as of December 31, 2013, and 2012 and for each of the years in the three-year period ended December 31, 2013, the notes related thereto and the reports of the independent registered public accounting firm thereon are filed herewith as Exhibit 99.2 and incorporated herein by reference.
The unaudited consolidated financial statements of each of LIN Media and LIN Television as of September 30, 2014 and 2013 and for each of the nine-months ended September 30, 2014 and 2013 and the notes related thereto are filed herewith as Exhibit 99.4 and incorporated herein by reference .
(b) Pro forma financial information
The unaudited pro forma condensed combined financial information as of and for the six months ended June 30, 2015 and for the year ended December 31, 2014 and the notes related thereto are filed herewith as Exhibit 99.3 and incorporated herein by reference.
(d) Exhibits
Exhibit |
|
Description |
23.1 |
|
Consent of KPMG LLP, independent registered public accounting firm of Meredith. |
23.2 | Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm of LIN Media. | |
23.3 | Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm of LIN Television. | |
99.1 |
|
Audited consolidated financial statements of Meredith as of June 30, 2015 and 2014 and for each of the years in the three-year period ended June 30, 2015. |
99.2 | Audited consolidated financial statements of each of LIN Media and LIN Television as of December 31, 2013 and 2012 and for each of the years in the three-year period ended December 31, 2013. | |
99.3 |
|
Unaudited pro forma condensed combined financial information as of and for the six months ended June 30, 2015 and for the year ended December 31, 2014. |
99.4 | Unaudited consolidated financial statements of each of LIN Media and LIN Television as of and for the nine months ended September 30, 2014 and 2013. |
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.
Date: November 5, 2015 |
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MEDIA GENERAL, INC. | |||
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By: |
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/s/ James F. Woodward | ||
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Name: |
|
James F. Woodward | ||
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Title: |
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Senior Vice President – Finance and Chief Financial Officer |
EXHIBIT INDEX
Exhibit |
|
Description |
23.1 |
|
Consent of KPMG LLP, independent registered public accounting firm of Meredith. |
23.2 | Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm of LIN Media. | |
23.3 | Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm of LIN Television. | |
99.1 |
|
Audited consolidated financial statements of Meredith as of June 30, 2015 and 2014 and for each of the years in the three-year period ended June 30, 2015. |
99.2 | Audited consolidated financial statements of each of LIN Media and LIN Television as of December 31, 2013 and 2012 and for each of the years in the three-year period ended December 31, 2013. | |
99.3 |
|
Unaudited pro forma condensed combined financial information as of and for the six months ended June 30, 2015 and for the year ended December 31, 2014. |
99.4 | Unaudited consolidated financial statements of each of LIN Media and LIN Television as of and for the nine months ended September 30, 2014 and 2013. |
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statements (No. 333-193654) on Form S-3 and (No. 333-204000 and 333-201200) on Form S-8 of Media General, Inc. of our report dated August 24, 2015, with respect to the consolidated balance sheets of Meredith Corporation and subsidiaries as of June 30, 2015 and 2014, and the related consolidated statements of earnings, comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended June 30, 2015, and the effectiveness of internal control over financial reporting as of June 30, 2015, which report appears in the Form 8-K of Media General, Inc. dated November 5, 2015.
/s/ KPMG LLP
Des Moines, Iowa
November 4, 2015
Exhibit 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-204000), Form S-8 (No 333-201200) and Form S-3 (No. 333-193654) of Media General, Inc. of our report dated March 3, 2014, except with respect to our opinion on the consolidated financial statements insofar as it relates to the change in reportable segments described in Note 21 as to which the date is June 13, 2014, relating to the financial statements of LIN Media LLC, which appears in this Current Report on 8-K of Media General, Inc.
/s/PricewaterhouseCoopers LLP
Hartford, CT
November 5, 2015
Exhibit 23.3
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-204000), Form S-8 (No 333-201200) and Form S-3 (No. 333-193654) of Media General, Inc. of our report dated March 3, 2014, except with respect to our opinion on the consolidated financial statements insofar as it relates to the change in reportable segments described in Note 19, as to which the date is June 13, 2014, relating to the financial statements of LIN Television Corporation, which appears in this Current Report on 8-K of Media General, Inc.
/s/ PricewaterhouseCoopers LLP
Hartford, CT
November 5, 2015
Exhibit 99.1
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial Statements and Supplementary Data | |
Page | |
Report of Independent Registered Public Accounting Firm |
2 |
Report of Management |
4 |
Financial Statements |
|
Consolidated Balance Sheets as of June 30, 2015 and 2014 |
5 |
Consolidated Statements of Earnings for the Years Ended June 30, 2015, 2014, and 2013 |
7 |
Consolidated Statements of Comprehensive Income for the Years Ended June 30, 2015, 2014, and 2013 |
8 |
Consolidated Statements of Shareholders' Equity for the Years Ended June 30, 2015, 2014, and 2013 |
9 |
Consolidated Statements of Cash Flows for the Years Ended June 30, 2015, 2014, and 2013 |
10 |
Notes to Consolidated Financial Statements |
12 |
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
Meredith Corporation:
We have audited the accompanying consolidated balance sheets of Meredith Corporation and subsidiaries (the Company) as of June 30, 2015 and 2014, and the related consolidated statements of earnings, comprehensive income, shareholders' equity, and cash flows for each of the years in the three-year period ended June 30, 2015. We also have audited the Company's internal control over financial reporting as of June 30, 2015, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these consolidated financial statements and an opinion on the Company's internal control over financial reporting based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included 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. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Meredith Corporation and subsidiaries as of June 30, 2015 and 2014, and the results of their operations and their cash flows for each of the years in the three-year period ended June 30, 2015, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2015, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
/s/ KPMG LLP
Des Moines, Iowa
August 24, 2015
REPORT OF MANAGEMENT
To the Shareholders of Meredith Corporation:
Meredith management is responsible for the preparation, integrity, and objectivity of the financial information included in this Annual Report on Form 10-K. We take this responsibility very seriously as we recognize the importance of having well-informed, confident investors. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and include amounts based on our informed judgments and estimates. We have adopted appropriate accounting policies and are fully committed to ensuring that those policies are applied properly and consistently. In addition, we strive to report our consolidated financial results in a manner that is relevant, complete, and understandable. We welcome any suggestions from those who use our reports.
To meet our responsibility for financial reporting, our internal control systems and accounting procedures are designed to provide reasonable assurance as to the reliability of financial records. In addition, our internal audit staff monitors and reports on compliance with Company policies, procedures, and internal control systems.
The consolidated financial statements and the effectiveness of the Company's internal control over financial reporting have been audited by an independent registered public accounting firm in accordance with the standards of the Public Company Accounting Oversight Board (United States). The independent registered public accounting firm was given unrestricted access to all financial records and related information, including all Board of Directors and Board committee minutes.
The Audit Committee of the Board of Directors is responsible for reviewing and monitoring the Company's accounting policies, internal controls, and financial reporting practices. The Audit Committee is also directly responsible for the appointment, compensation, and oversight of the Company's independent registered public accounting firm. The Audit Committee consists solely of independent directors who meet with the independent registered public accounting firm, management, and internal auditors to review accounting, auditing, and financial reporting matters. To ensure complete independence, the independent registered public accounting firm has direct access to the Audit Committee without the presence of management representatives.
At Meredith, we have always placed a high priority on good corporate governance and will continue to do so in the future.
/s/ Joseph Ceryanec
Joseph Ceryanec
Chief Financial Officer
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Meredith Corporation and Subsidiaries
Consolidated Balance Sheets
Assets |
June 30, |
2015 |
2014 |
||||||
(In thousands) |
|||||||||
Current assets |
|||||||||
Cash and cash equivalents |
$ | 22,833 | $ | 36,587 | |||||
Accounts receivable (net of allowances of $8,495 in 2015 and $7,813 in 2014) |
284,646 | 257,644 | |||||||
Inventories |
24,681 | 24,008 | |||||||
Current portion of subscription acquisition costs |
122,350 | 96,893 | |||||||
Current portion of broadcast rights |
4,516 | 4,551 | |||||||
Assets held for sale |
— | 56,010 | |||||||
Other current assets |
23,505 | 17,429 | |||||||
Total current assets |
482,531 | 493,122 | |||||||
Property, plant, and equipment |
|||||||||
Land |
24,858 | 23,363 | |||||||
Buildings and improvements |
151,320 | 143,169 | |||||||
Machinery and equipment |
324,185 | 314,839 | |||||||
Leasehold improvements |
14,284 | 14,125 | |||||||
Construction in progress |
12,975 | 5,610 | |||||||
Total property, plant, and equipment |
527,622 | 501,106 | |||||||
Less accumulated depreciation |
(313,886 |
) |
(296,168 |
) | |||||
Net property, plant, and equipment |
213,736 | 204,938 | |||||||
Subscription acquisition costs |
103,842 | 101,533 | |||||||
Broadcast rights |
1,795 | 3,114 | |||||||
Other assets |
67,750 | 86,935 | |||||||
Intangible assets, net |
972,382 | 813,297 | |||||||
Goodwill |
1,001,246 | 840,861 | |||||||
Total assets |
$ | 2,843,282 | $ | 2,543,800 |
See accompanying Notes to Consolidated Financial Statements
Meredith Corporation and Subsidiaries
Consolidated Balance Sheets (continued)
Liabilities and Shareholders' Equity |
June 30, |
2015 |
2014 |
||||||
(In thousands except per share data) |
|||||||||
Current liabilities |
|||||||||
Current portion of long-term debt |
$ | 62,500 | $ | 87,500 | |||||
Current portion of long-term broadcast rights payable |
4,776 | 4,511 | |||||||
Accounts payable |
93,944 | 81,402 | |||||||
Accrued expenses |
|||||||||
Compensation and benefits |
71,233 | 57,637 | |||||||
Distribution expenses |
13,056 | 8,504 | |||||||
Other taxes and expenses |
79,366 | 69,906 | |||||||
Total accrued expenses |
163,655 | 136,047 | |||||||
Current portion of unearned subscription revenues |
206,126 | 173,643 | |||||||
Total current liabilities |
531,001 | 483,103 | |||||||
Long-term debt |
732,500 | 627,500 | |||||||
Long-term broadcast rights payable |
2,998 | 4,327 | |||||||
Unearned subscription revenues |
151,221 | 151,533 | |||||||
Deferred income taxes |
311,645 | 277,477 | |||||||
Other noncurrent liabilities |
162,067 | 108,208 | |||||||
Total liabilities |
1,891,432 | 1,652,148 | |||||||
Shareholders' equity |
|||||||||
Series preferred stock, par value $1 per share |
|||||||||
Authorized 5,000 shares; none issued |
— | — | |||||||
Common stock, par value $1 per share |
|||||||||
Authorized 80,000 shares; issued and outstanding 37,657 shares in 2015 (excluding 24,451 treasury shares) and 36,776 shares in 2014 (excluding 24,395 treasury shares) |
37,657 | 36,776 | |||||||
Class B stock, par value $1 per share, convertible to common stock |
|||||||||
Authorized 15,000 shares; issued and outstanding 6,963 shares in 2015 and 7,700 shares in 2014 |
6,963 | 7,700 | |||||||
Additional paid-in capital |
49,019 | 41,884 | |||||||
Retained earnings |
870,859 | 814,050 | |||||||
Accumulated other comprehensive loss |
(12,648 |
) |
(8,758 |
) | |||||
Total shareholders' equity |
951,850 | 891,652 | |||||||
Total liabilities and shareholders' equity |
$ | 2,843,282 | $ | 2,543,800 |
See accompanying Notes to Consolidated Financial Statements
Meredith Corporation and Subsidiaries
Consolidated Statements of Earnings
Years ended June 30, |
2015 |
2014 |
2013 |
|||||||||
(In thousands except per share data) |
||||||||||||
Revenues |
||||||||||||
Advertising |
$ | 896,548 | $ | 778,391 | $ | 823,690 | ||||||
Circulation |
313,685 | 327,214 | 322,223 | |||||||||
All other |
383,943 | 363,103 | 325,427 | |||||||||
Total revenues |
1,594,176 | 1,468,708 | 1,471,340 | |||||||||
Operating expenses |
||||||||||||
Production, distribution, and editorial |
598,941 | 567,024 | 561,058 | |||||||||
Selling, general, and administrative |
695,319 | 655,241 | 654,098 | |||||||||
Depreciation and amortization |
57,804 | 59,928 | 45,350 | |||||||||
Total operating expenses |
1,352,064 | 1,282,193 | 1,260,506 | |||||||||
Income from operations |
242,112 | 186,515 | 210,834 | |||||||||
Interest expense, net |
(19,352 |
) |
(12,176 |
) |
(13,430 |
) | ||||||
Earnings before income taxes |
222,760 | 174,339 | 197,404 | |||||||||
Income taxes |
(85,969 |
) |
(60,798 |
) |
(73,754 |
) | ||||||
Net earnings |
$ | 136,791 | $ | 113,541 | $ | 123,650 | ||||||
Basic earnings per share |
$ | 3.07 | $ | 2.54 | $ | 2.78 | ||||||
Basic average shares outstanding |
44,522 | 44,636 | 44,455 | |||||||||
Diluted earnings per share |
$ | 3.02 | $ | 2.50 | $ | 2.74 | ||||||
Diluted average shares outstanding |
45,323 | 45,410 | 45,085 | |||||||||
Dividends paid per share |
$ | 1.78 | $ | 1.68 | $ | 1.58 |
See accompanying Notes to Consolidated Financial Statements
Meredith Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
Years ended June 30, |
2015 |
2014 |
2013 |
|||||||||
(In thousands) |
||||||||||||
Net earnings |
$ | 136,791 | $ | 113,541 | $ | 123,650 | ||||||
Other comprehensive income (loss), net of income taxes |
||||||||||||
Pension and other postretirement benefit plans activity |
(2,591 |
) |
7,583 | 6,774 | ||||||||
Unrealized loss on interest rate swaps |
(1,299 |
) |
— | — | ||||||||
Other comprehensive income (loss), net of income taxes |
(3,890 |
) |
7,583 | 6,774 | ||||||||
Comprehensive income |
$ | 132,901 | $ | 121,124 | $ | 130,424 |
See accompanying Notes to Consolidated Financial Statements
Meredith Corporation and Subsidiaries
Consolidated Statements of Shareholders' Equity
(In thousands except per share data) |
Common Stock - $1 par value |
Class B Stock - $1 par value |
Additional Paid-in Capital |
Retained Earnings |
Accumulated Other Comprehensive Income (Loss) |
Total |
||||||||||||||||||
Balance at June 30, 2012 |
$ | 35,791 | $ | 8,716 | $ | 53,275 | $ | 722,778 | $ | (23,115 |
) |
$ | 797,445 | |||||||||||
Net earnings |
— | — | — | 123,650 | — | 123,650 | ||||||||||||||||||
Other comprehensive income, net of tax |
— | — | — | — | 6,774 | 6,774 | ||||||||||||||||||
Stock issued under various incentive plans, net of forfeitures |
1,537 | — | 37,982 | — | — | 39,519 | ||||||||||||||||||
Purchases of Company stock |
(1,471 |
) |
(7 |
) |
(53,256 |
) |
— | — | (54,734 |
) | ||||||||||||||
Share-based compensation |
— | — | 11,518 | — | — | 11,518 | ||||||||||||||||||
Conversion of class B to common stock |
385 | (385 |
) |
— | — | — | — | |||||||||||||||||
Dividends paid, 1.58 dollars per share |
||||||||||||||||||||||||
Common stock |
— | — | — | (57,196 |
) |
— | (57,196 |
) | ||||||||||||||||
Class B stock |
— | — | — | (13,331 |
) |
— | (13,331 |
) | ||||||||||||||||
Tax benefit from incentive plans |
— | — | 651 | — | — | 651 | ||||||||||||||||||
Balance at June 30, 2013 |
36,242 | 8,324 | 50,170 | 775,901 | (16,341 |
) |
854,296 | |||||||||||||||||
Net earnings |
— | — | — | 113,541 | — | 113,541 | ||||||||||||||||||
Other comprehensive income, net of tax |
— | — | — | — | 7,583 | 7,583 | ||||||||||||||||||
Stock issued under various incentive plans, net of forfeitures |
1,550 | — | 57,335 | — | — | 58,885 | ||||||||||||||||||
Purchases of Company stock |
(1,639 |
) |
(1 |
) |
(76,586 |
) |
— | — | (78,226 |
) | ||||||||||||||
Share-based compensation |
— | — | 12,224 | — | — | 12,224 | ||||||||||||||||||
Conversion of class B to common stock |
623 | (623 |
) |
— | — | — | — | |||||||||||||||||
Dividends paid, 1.68 dollars per share |
||||||||||||||||||||||||
Common stock |
— | — | — | (61,949 |
) |
— | (61,949 |
) | ||||||||||||||||
Class B stock |
— | — | — | (13,443 |
) |
— | (13,443 |
) | ||||||||||||||||
Tax deficiency from incentive plans |
— | — | (1,259 |
) |
— | — | (1,259 |
) | ||||||||||||||||
Balance at June 30, 2014 |
36,776 | 7,700 | 41,884 | 814,050 | (8,758 |
) |
891,652 | |||||||||||||||||
Net earnings |
— | — | — | 136,791 | — | 136,791 | ||||||||||||||||||
Other comprehensive loss, net of tax |
— | — | — | — | (3,890 |
) |
(3,890 |
) | ||||||||||||||||
Stock issued under various incentive plans, net of forfeitures |
1,069 | — | 40,182 | — | — | 41,251 | ||||||||||||||||||
Purchases of Company stock |
(924 |
) |
(1 |
) |
(45,839 |
) |
— | — | (46,764 |
) | ||||||||||||||
Share-based compensation |
— | — | 12,515 | — | — | 12,515 | ||||||||||||||||||
Conversion of class B to common stock |
736 | (736 |
) |
— | — | — | — | |||||||||||||||||
Dividends paid, 1.78 dollars per share |
||||||||||||||||||||||||
Common stock |
— | — | — | (67,276 |
) |
— | (67,276 |
) | ||||||||||||||||
Class B stock |
— | — | — | (12,706 |
) |
— | (12,706 |
) | ||||||||||||||||
Tax benefit from incentive plans |
— | — | 277 | — | — | 277 | ||||||||||||||||||
Balance at June 30, 2015 |
$ | 37,657 | $ | 6,963 | $ | 49,019 | $ | 870,859 | $ | (12,648 |
) |
$ | 951,850 |
See accompanying Notes to Consolidated Financial Statements
Meredith Corporation and Subsidiaries
Consolidated Statements of Cash Flows
Years ended June 30, |
2015 |
2014 |
2013 |
|||||||||
(In thousands) |
||||||||||||
Cash flows from operating activities |
||||||||||||
Net earnings |
$ | 136,791 | $ | 113,541 | $ | 123,650 | ||||||
Adjustments to reconcile net earnings to net cash provided by operating activities |
||||||||||||
Depreciation |
38,918 | 35,627 | 33,607 | |||||||||
Amortization |
17,628 | 13,099 | 11,743 | |||||||||
Share-based compensation |
12,515 | 12,224 | 11,518 | |||||||||
Deferred income taxes |
47,220 | 25,178 | 44,848 | |||||||||
Amortization of broadcast rights |
16,576 | 8,785 | 9,660 | |||||||||
Payments for broadcast rights |
(16,364 |
) |
(10,332 |
) |
(13,036 |
) | ||||||
Provision for write-down of impaired assets |
3,142 | 11,447 | — | |||||||||
Fair value adjustment to contingent consideration |
(1,500 |
) |
(5,700 |
) |
(2,500 |
) | ||||||
Excess tax benefits from share-based payments |
(6,471 |
) |
(4,855 |
) |
(5,438 |
) | ||||||
Changes in assets and liabilities, net of acquisitions/dispositions |
||||||||||||
Accounts receivable |
(18,991 |
) |
(2,430 |
) |
(16,575 |
) | ||||||
Inventories |
(1,013 |
) |
4,133 | (5,814 |
) | |||||||
Other current assets |
(6,501 |
) |
2,100 | (1,899 |
) | |||||||
Subscription acquisition costs |
(27,766 |
) |
(1,011 |
) |
(46,601 |
) | ||||||
Other assets |
(391 |
) |
5,620 | 7,052 | ||||||||
Accounts payable |
10,040 | 1,598 | 10,657 | |||||||||
Accrued expenses and other liabilities |
13,866 | 4,208 | 15,229 | |||||||||
Unearned subscription revenues |
(19,093 |
) |
(30,013 |
) |
13,806 | |||||||
Other noncurrent liabilities |
(6,259 |
) |
(5,129 |
) |
(820 |
) | ||||||
Net cash provided by operating activities |
192,347 | 178,090 | 189,087 | |||||||||
Cash flows from investing activities |
||||||||||||
Acquisitions of and investments in businesses |
(257,030 |
) |
(417,461 |
) |
(50,190 |
) | ||||||
Additions to property, plant, and equipment |
(33,245 |
) |
(24,822 |
) |
(25,969 |
) | ||||||
Proceeds from disposition of assets |
83,434 | — | — | |||||||||
Net cash used in investing activities |
(206,841 |
) |
(442,283 |
) |
(76,159 |
) | ||||||
Cash flows from financing activities |
||||||||||||
Proceeds from issuance of long-term debt |
470,000 | 666,000 | 175,000 | |||||||||
Repayments of long-term debt |
(390,000 |
) |
(301,000 |
) |
(205,000 |
) | ||||||
Dividends paid |
(79,982 |
) |
(75,392 |
) |
(70,527 |
) | ||||||
Purchases of Company stock |
(46,764 |
) |
(78,226 |
) |
(54,734 |
) | ||||||
Proceeds from common stock issued |
41,251 | 58,885 | 39,519 | |||||||||
Excess tax benefits from share-based payments |
6,471 | 4,855 | 5,438 | |||||||||
Other |
(236 |
) |
(2,016 |
) |
(770 |
) | ||||||
Net cash provided by (used in) financing activities |
740 | 273,106 | (111,074 |
) | ||||||||
Net increase (decrease) in cash and cash equivalents |
(13,754 |
) |
8,913 | 1,854 | ||||||||
Cash and cash equivalents at beginning of year |
36,587 | 27,674 | 25,820 | |||||||||
Cash and cash equivalents at end of year |
$ | 22,833 | $ | 36,587 | $ | 27,674 |
See accompanying Notes to Consolidated Financial Statements
Meredith Corporation and Subsidiaries
Consolidated Statements of Cash Flows (continued)
Years ended June 30, |
2015 |
2014 |
2013 |
|||||||||
(In thousands) |
||||||||||||
Supplemental disclosures of cash flow information |
||||||||||||
Cash paid |
||||||||||||
Interest |
$ | 19,111 | $ | 11,271 | $ | 12,758 | ||||||
Income taxes |
40,419 | 34,957 | 22,871 | |||||||||
Non-cash transactions |
||||||||||||
Broadcast rights financed by contracts payable |
15,300 | 9,985 | 11,774 |
See accompanying Notes to Consolidated Financial Statements
Meredith Corporation and Subsidiaries
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Nature of Operations—Meredith Corporation (Meredith or the Company) is a diversified media company focused primarily on the home and family marketplace. The Company has two segments: local media and national media. The Company's local media segment includes 16 owned television stations and one managed television station and related digital and mobile media operations. The national media segment includes magazine publishing, custom content and customer relationship marketing, digital and mobile media, brand licensing, database-related activities, and other related operations. Meredith's operations are primarily diversified geographically within the United States (U.S.) and the Company has a broad customer base.
Principles of Consolidation—The consolidated financial statements include the accounts of Meredith Corporation and its wholly owned subsidiaries. Significant intercompany balances and transactions are eliminated. Meredith does not have any off-balance sheet financing activities. The Company's use of special-purpose entities is limited to Meredith Funding Corporation, whose activities are fully consolidated in Meredith's consolidated financial statements (See Note 6).
Retrospective Adjustments—During fiscal 2015, we updated the purchase accounting for an acquisition that occurred in fiscal 2014. We retrospectively adjusted the provisional amounts recognized at the acquisition date to reflect fair values and, as required by the accounting guidance for business combinations, made adjustments to the June 30, 2014, Consolidated Balance Sheet. (See Note 2.)
Use of Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements. The Company bases its estimates on historical experience, management expectations for future performance, and other assumptions as appropriate. Key areas affected by estimates include the assessment of the recoverability of long-lived assets, including goodwill and other intangible assets, which is based on such factors as estimated future cash flows; the determination of the net realizable value of broadcast rights, which is based on estimated future revenues; provisions for returns of magazines sold, which are based on historical experience and current marketplace conditions; pension and postretirement benefit expenses, which are actuarially determined and include assumptions regarding discount rates, expected returns on plan assets, and rates of increase in compensation and healthcare costs; and share-based compensation expense, which is based on numerous assumptions including future stock price volatility and employees' expected exercise and post-vesting employment termination behavior. While the Company re-evaluates its estimates on an ongoing basis, actual results may vary from those estimates.
Cash and Cash Equivalents—Cash and short-term investments with original maturities of three months or less are considered to be cash and cash equivalents. Cash and cash equivalents are stated at cost, which approximates fair value.
Accounts Receivable—The Company's accounts receivable are primarily due from advertisers. Credit is extended to clients based on an evaluation of each client's creditworthiness and financial condition; collateral is not required. The Company maintains allowances for uncollectible accounts, rebates, rate adjustments, returns, and discounts. The allowance for uncollectible accounts is based on the aging of such receivables and any known specific collectability exposures. Accounts are written off when deemed uncollectible. Allowances for rebates, rate adjustments, returns, and discounts are generally based on historical experience and current market conditions. Concentration of credit risk with respect to accounts receivable is generally limited due to the large number of geographically diverse clients and individually small balances.
Inventories—Inventories are stated at the lower of cost or market. Cost is determined on the last-in first-out (LIFO) basis for paper and on the first-in first-out or average basis for all other inventories.
Subscription Acquisition Costs—Subscription acquisition costs primarily represent magazine agency commissions. These costs are deferred and amortized over the related subscription term, typically one to two years. In addition, direct-response advertising costs that are intended to solicit subscriptions and are expected to result in probable future benefits are capitalized. These costs are amortized over the period during which future benefits are expected to be received. The asset balance of the capitalized direct-response advertising costs is reviewed quarterly to ensure the amount is realizable. Any write-downs resulting from this review are expensed as subscription acquisition advertising costs in the current period. Capitalized direct-response advertising costs were $5.9 million at June 30, 2015 and $6.5 million at June 30, 2014. There were no material write-downs of capitalized direct-response advertising costs in any of the fiscal years in the three-year period ended June 30, 2015.
Property, Plant, and Equipment—Property, plant, and equipment are stated at cost. Costs of replacements and major improvements are capitalized, and maintenance and repairs are charged to operations as incurred. Depreciation expense is provided primarily by the straight-line method over the estimated useful lives of the assets: 5-45 years for buildings and improvements and 3-20 years for machinery and equipment. The costs of leasehold improvements are amortized over the lesser of the useful lives or the terms of the respective leases. Depreciation and amortization of property, plant, and equipment was $38.9 million in fiscal 2015, $35.6 million in fiscal 2014, and $33.6 million in fiscal 2013.
Broadcast Rights—Broadcast rights consist principally of rights to broadcast syndicated programs, sports, and feature films. The total cost of these rights is recorded as an asset and as a liability when programs become available for broadcast. The current portion of broadcast rights represents those rights available for broadcast that are expected to be amortized in the succeeding year. These rights are valued at the lower of unamortized cost or estimated net realizable value, and are generally charged to operations on an accelerated basis over the contract period. Impairments of unamortized costs to net realizable value are included in production, distribution, and editorial expenses in the accompanying Consolidated Statements of Earnings. There were no impairments to unamortized costs in fiscals 2015, 2014, or 2013. Future write-offs can vary based on changes in consumer viewing trends and the availability and costs of other programming.
Intangible Assets and Goodwill—Amortizable intangible assets consist primarily of network affiliation agreements, advertiser relationships, and customer lists. Intangible assets with finite lives are amortized over their estimated useful lives. The useful life of an intangible asset is the period over which the asset is expected to contribute directly or indirectly to future cash flows. Network affiliation agreements are amortized over the period of time the agreements are expected to remain in place, assuming renewals without material modifications to the original terms and conditions (generally 25 to 40 years from the original acquisition date). Other intangible assets are amortized over their estimated useful lives, ranging from 1 to 10 years.
Intangible assets with indefinite lives include Federal Communications Commission (FCC) broadcast licenses. These licenses are granted for a term of up to eight years, but are renewable if the Company provides at least an average level of service to its customers and complies with the applicable FCC rules and policies and the Communications Act of 1934. The Company has been successful in every one of its past license renewal requests and has incurred only minimal costs in the process. The Company expects the television broadcasting business to continue indefinitely; therefore, the cash flows from the broadcast licenses are also expected to continue indefinitely.
Goodwill and certain other intangible assets (FCC broadcast licenses and trademarks), which have indefinite lives, are not amortized but tested for impairment annually or when events occur or circumstances change that would indicate the carrying value exceeds the fair value. The review of goodwill is performed at the reporting unit level. The Company has three reporting units, local media, magazine brands, and Meredith Xcelerated Marketing (MXM). We also assess, at least annually, whether assets classified as indefinite-lived intangible assets continue to have indefinite lives.
At May 31, 2015, the date the Company last performed our annual evaluation of impairment of goodwill, management elected to perform the two-step goodwill impairment test for all reporting units. The first step of this test is to compare the fair value of a reporting unit to its carrying value. In reviewing other indefinite-lived intangible assets for impairment, the Company compares the fair value of the asset to the asset’s carrying value.
Fair value is determined using a discounted cash flow model, which requires us to estimate the future cash flows expected to be generated by the reporting unit or to result from the use of the asset. These estimates include assumptions about future revenues (including projections of overall market growth and our share of market), estimated costs, and appropriate discount rates where applicable. Our assumptions are based on historical data, various internal estimates, and a variety of external sources and are consistent with the assumptions used in both our short-term financial forecasts and long-term strategic plans. Depending on the assumptions and estimates used, future cash flow projections can vary within a range of outcomes. Changes in key assumptions about the local media, magazine brands, and MXM and their prospects or changes in market conditions could result in an impairment charge.
Additional information regarding intangible assets and goodwill is provided in Note 4.
Impairment of Long-lived Assets—Long-lived assets (primarily property, plant, and equipment and amortizable intangible assets) are reviewed for impairment whenever events and circumstances indicate the carrying value of an asset may not be recoverable. Recoverability is measured by comparison of the forecasted undiscounted cash flows of the operation to which the assets relate to the carrying amount of the assets. Tests for impairment or recoverability require significant management judgment, and future events affecting cash flows and market conditions could result in impairment losses.
Derivative Financial Instruments—Meredith does not engage in derivative or hedging activities, except to hedge interest rate risk on debt as described in Note 6. Fundamental to our approach to risk management is the desire to minimize exposure to volatility in interest costs of variable rate debt, which can impact our earnings and cash flows. In fiscal 2015, we entered into interest rate swap agreements with counterparties that are major financial institutions. These agreements effectively fix the variable rate cash flow on $300.0 million of a combination of our variable-rate private placement senior notes and bank term loan. We designated and accounted for the interest rate swaps as cash flow hedges in accordance with Accounting Standards Codification 815, Derivatives and Hedging. The effective portion of the change in the fair value of interest rate swaps is reported in other comprehensive income (loss). The gain or loss included in other comprehensive income (loss) is subsequently reclassified into net earnings on the same line in the Consolidated Statements of Earnings as the hedged item in the same period that the hedge transaction affects net earnings. The ineffective portion of a change in fair value of the interest rate swaps would be reported in interest expense. During fiscal 2015, the interest rate swap agreements were considered effective hedges and there were no material gains or losses recognized in earnings for hedge ineffectiveness.
Revenue Recognition—The Company's primary source of revenue is advertising. Other sources include circulation and other revenues.
Advertising revenues—Advertising revenues are recognized when advertisements are published (defined as an issue's on-sale date) or aired by the broadcasting station, net of agency commissions and net of provisions for estimated rebates, rate adjustments, and discounts. Barter revenues are included in advertising revenue and are also recognized when the commercials are broadcast. Barter advertising revenues and the offsetting expense are recognized at the fair value of the advertising surrendered, as determined by similar cash transactions. Barter advertising revenues were not material in any period. Website advertising revenues are recognized ratably over the contract period or as services are delivered.
Circulation revenues—Circulation revenues include magazine single copy and subscription revenue. Single copy revenue is recognized upon publication, net of provisions for estimated returns. The Company bases its estimates for returns on historical experience and current marketplace conditions. Revenues from magazine subscriptions are deferred and recognized proportionately as products are distributed to subscribers.
Other revenues—Revenues from customer relationship marketing and other custom programs are recognized when the products or services are delivered. In addition, the Company participates in certain arrangements containing multiple deliverables. The guidance for accounting for multiple-deliverable arrangements requires that overall arrangement consideration be allocated to each deliverable (unit of accounting) in the revenue arrangement based on the relative selling price as determined by vendor specific objective evidence, third-party evidence, or estimated selling price. The related revenue is recognized when each specific deliverable of the arrangement is delivered. Brand licensing-based revenues are accrued generally monthly or quarterly based on the specific mechanisms of each contract. Payments are generally made by the Company's partners on a quarterly basis. Generally, revenues are accrued based on estimated sales and adjusted as actual sales are reported by partners. These adjustments are typically recorded within three months of the initial estimates and have not been material. Any minimum guarantees are typically earned evenly over the fiscal year. Retransmission revenues are recognized over the contract period based on the negotiated fee.
In certain instances, revenues are recorded gross in accordance with GAAP although the Company receives cash for a lesser amount due to the netting of certain expenses. Amounts received from customers in advance of revenue recognition are deferred as liabilities and recognized as revenue in the period earned.
Contingent Consideration—The Company estimates and records the acquisition date estimated fair value of contingent consideration as part of purchase price consideration for acquisitions. Additionally, each reporting period, the Company estimates changes in the fair value of contingent consideration, and any change in fair value is recognized in the Consolidated Statement of Earnings. An increase in the earn-out expected to be paid will result in a charge to operations in the quarter that the anticipated fair value of contingent consideration increases, while a decrease in the earn-out expected to be paid will result in a credit to operations in the quarter that the anticipated fair value of contingent consideration decreases. The estimate of the fair value of contingent consideration requires subjective assumptions to be made of future operating results, discount rates, and probabilities assigned to various potential operating result scenarios. Future revisions to these assumptions could materially change the estimate of the fair value of contingent consideration and, therefore, materially affect the Company’s future financial results.
Advertising Expenses—The majority of the Company's advertising expenses relate to direct-mail costs for magazine subscription acquisition efforts. Advertising costs that are not capitalized are expensed the first time the advertising takes place. Total advertising expenses included in the Consolidated Statements of Earnings were $75.8 million in fiscal 2015, $79.5 million in fiscal 2014, and $90.2 million in fiscal 2013.
Share-based Compensation—The Company establishes fair value for its equity awards to determine their cost and recognizes the related expense over the appropriate vesting period. The Company recognizes expense for stock options, restricted stock, restricted stock units, and shares issued under the Company's employee stock purchase plan. See Note 11 for additional information related to share-based compensation expense.
Income Taxes—The income tax provision is calculated under the liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period when such a change is enacted.
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50 percent likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.
Self-Insurance—The Company self-insures for certain medical claims, and its responsibility generally is capped through the use of a stop loss contract with an insurance company at a certain dollar level (usually $300 thousand). A third-party administrator is used to process claims. The Company uses actual claims data and estimates of incurred-but-not-reported claims to calculate estimated liabilities for unsettled claims on an undiscounted basis. Although management re-evaluates the assumptions and reviews the claims experience on an ongoing basis, actual claims paid could vary significantly from estimated claims.
Pensions and Postretirement Benefits Other Than Pensions—Retirement benefits are provided to employees through pension plans sponsored by the Company. Pension benefits are primarily a function of both the years of service and the level of compensation for a specified number of years. It is the Company's policy to fund the qualified pension plans to at least the extent required to maintain their fully funded status. In addition, the Company provides health care and life insurance benefits for certain retired employees, the expected costs of which are accrued over the years that the employees render services. It is the Company's policy to fund postretirement benefits as claims are paid. Additional information is provided in Note 8.
Comprehensive Income—Comprehensive income consists of net earnings and other gains and losses affecting shareholders' equity that, under GAAP, are excluded from net earnings. Other comprehensive income (loss) includes changes in prior service cost and net actuarial losses from pension and postretirement benefit plans, net of taxes, and changes in the fair value of interest rate swap agreements, net of taxes, to the extent that they are effective.
Earnings Per Share—Basic earnings per share is calculated by dividing net earnings by the weighted average common and Class B shares outstanding. Diluted earnings per share is calculated similarly but includes the dilutive effect, if any, of the assumed exercise of securities, including the effect of shares issuable under the Company's share-based incentive plans.
Adopted Accounting Pronouncements—In July 2013, the Financial Accounting Standards Board (FASB) issued guidance on the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The guidance requires the netting of unrecognized tax benefits against a deferred tax asset for a loss or other carryforward that would apply in settlement of uncertain tax positions. Under the new standard, unrecognized tax benefits are netted against all available same-jurisdiction loss or other tax carryforwards that would be utilized, rather than only against carryforwards that are created by the unrecognized tax benefits. The guidance was effective for the Company in the first quarter of fiscal 2015. The adoption of this guidance did not have an impact on our results of operations or cash flows and we have updated our presentation of unrecognized tax benefits net of our deferred tax assets where applicable on our Consolidated Balance Sheets.
In April 2015, the FASB issued guidance related to disclosures for investments in certain entities that calculate net asset value (NAV) per share. This guidance eliminates the requirement to categorize investments in the fair value hierarchy if their fair value is measured at NAV per share. The reporting entity must disclose the amount of investments measured at NAV to allow users to reconcile total investments in the fair value hierarchy to total investments measured at fair value in the Consolidated Balance Sheets. The guidance is effective for fiscal years beginning after December 15, 2015, with early adoption permitted. The Company adopted this update for the year ended June 30, 2015. The adoption of this guidance required a change in the format of a disclosure only and did not have an impact on our results.
Pending Accounting Pronouncements—In May 2014, the FASB issued an accounting standards update that replaces existing revenue recognition guidance. The new guidance requires a company to recognize revenue for the transfer of promised goods or services equal to the amount it expects to receive in exchange for those goods or services. Additionally, the guidance requires enhanced disclosures about the nature, amount, timing, and uncertainty of revenue and cash flows from customer contracts. This guidance will be effective for in the Company in the first quarter of fiscal 2019. Early application is not permitted and companies may chose either a full retrospective or cumulative effect method of adoption. The Company is evaluating the method of adoption and the impact the guidance will have on our results of operations and financial position.
In April 2015, the FASB issued guidance on the presentation of debt issuance costs. The new standard requires that debt issuance costs be recorded as a reduction from the face amount of the related debt, with amortization recorded as interest expense, rather than recording as a deferred asset. The guidance is effective for the Company in the first quarter of fiscal 2017 with early adoption permitted. The guidance is to be retrospectively applied to all prior periods. Adoption of the new guidance is not expected to have a material impact on the consolidated financial statements.
In April 2015, the FASB issued guidance on the presentation of cloud computing arrangements that include a software license. The new guidance requires capitalization of the software license fee as internal-use software if certain criteria are met, otherwise the costs are expensed as incurred. The standard is effective for the Company in the first quarter of fiscal 2017. Early adoption is permitted and companies can chose either prospective adoption to arrangements entered into or materially modified after the effective date, or full retrospective adoption. Adoption of the new guidance is not expected to have a material impact on the consolidated financial statements.
In June 2015, the FASB issued an accounting standards update that made technical corrections to the FASB Accounting Standards Codification. These technical corrections are divided into four categories: amendments related to differences between original guidance and the codification, guidance clarification and reference corrections, minor structural changes to simplify the codification, and minor improvements that are not expected to have a significant impact on current accounting practice. The amendments are effective for the Company in the first quarter of fiscal 2017 with early adoption permitted. All other changes are effective upon the issuance of the guidance. Adoption of the amendments is not expected to have a material impact on the consolidated financial statements.
2. Acquisitions
Fiscal 2015
During fiscal 2015, Meredith paid $257.0 million primarily for the acquisitions of the television station WGGB, the
ABC affiliate in Springfield, Massachusetts; MyWedding LLC (Mywedding); the television station WALA, the FOX affiliate in Mobile, Alabama-Pensacola, Florida; Selectable Media, Inc. (Selectable Media); the Shape brand and related digital assets (collectively Shape); and the assets of a shopper marketing platform technology.
On October 31, 2014, Meredith acquired WGGB. The results of WGGB's operations have been included in the consolidated financial statements since that date. The fair value of the consideration, including the purchase of working capital, totaled $52.6 million, which consisted of $49.3 million of cash and $3.3 million of contingent consideration. The contingent consideration arrangement requires the Company to pay contingent payments based on certain future regulatory actions. We estimated the fair value of the contingent consideration using a probability-weighted discounted cash flow model. The fair value is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in Note 14. As of June 30, 2015, the Company estimates the future payments will range from zero to $4.0 million.
Effective November 1, 2014, Meredith completed its acquisition of Martha Stewart Living magazine and its related digital assets (collectively Martha Stewart Living Media Properties). In addition, Meredith entered into a 10-year licensing arrangement with Martha Stewart Living Omnimedia (MSLO) for the licensing of the Martha Stewart Living trade name. The acquired business operations include sales and marketing, circulation, production, and other non-editorial functions. Meredith will source editorial content from MSLO. The results of the Martha Stewart Living Media Properties have been included in the consolidated financial statements since the effective date. There was no cash consideration exchanged in this transaction.
On November 13, 2014, Meredith acquired 100 percent of the membership interests in Mywedding. Mywedding operates mywedding.com, one of the top wedding websites in the U.S., providing couples with a complete wedding planning product suite. The results of Mywedding have been included in the consolidated financial statements since that date. The acquisition-date fair value of the consideration was $42.7 million, which consisted of $20.1 million of cash and $22.6 million of contingent consideration. The contingent consideration arrangement requires the Company to pay a contingent payment based on certain financial targets achieved during fiscal 2018 primarily based on earnings before interest, taxes, depreciation, and amortization (EBITDA), as defined in the acquisition agreement. The contingent consideration is not dependent on the continued employment of the sellers. We estimated the fair value of the contingent consideration using a probability-weighted discounted cash flow model. The fair value is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in Note 14. As of June 30, 2015, the Company estimates the future payments will range from $11.1 million to $40.0 million.
On December 19, 2014, Meredith acquired WALA. The results of WALA's operations have been included in the consolidated financial statements since that date. The cash purchase price, including the purchase of working capital, was $90.4 million.
On December 30, 2014, Meredith acquired 100 percent of the outstanding stock of Selectable Media, a leading native and engagement-based digital advertising company. The results of Selectable Media have been included in the consolidated financial statements since that date. The acquisition-date fair value of the consideration totaled $30.2 million, which consisted of $23.0 million of cash and $7.2 million of contingent consideration. The contingent consideration arrangement requires the Company to pay contingent payments based on certain financial targets over the next three fiscal years primarily based on revenue, as defined in the acquisition agreement. The contingent consideration is not dependent on the continued employment of the sellers. We estimated the fair value of the contingent consideration using a probability-weighted discounted cash flow model. The fair value is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in Note 14. As of June 30, 2015, the Company estimates the future payments will range from $7.3 million to $8.0 million.
Effective February 1, 2015, Meredith completed its acquisition of Shape. Shape is the women's active lifestyle category leader with content focusing on exercise, beauty, nutrition, health, fashion, wellness, and other lifestyle topics to help women lead a healthier, active lifestyle. The results of Shape have been included in the consolidated financial statements since the effective date. The acquisition-date fair value of the consideration totaled $87.4 million, which consisted of $60.0 million of cash and $27.4 million of contingent consideration. The contingent consideration arrangement requires the Company to pay a contingent payment based on the achievement of certain financial targets over the next three fiscal years primarily based on operating profit, as defined in the acquisition agreement. We estimated the fair value of the contingent consideration using a probability-weighted discounted cash flow model. The fair value is based on significant inputs not observable in the market and thus represent a Level 3 measurement as defined in Note 14. As of June 30, 2015, the Company estimates the future payments will range from $25.2 million to $32.0 million.
On June 19, 2015, Meredith completed the acquisition of Qponix, a leading shopper marketing data platform technology (hereafter referred to as Meredith Shopper Marketing). The results of the business from these assets have been included in the consolidated financial statements since the date of acquisition. The acquisition-date fair value of the consideration totaled $2.3 million, which consisted of $1.5 million of cash and $0.8 million of contingent consideration. The contingent consideration arrangement requires the Company to pay a contingent payment based on a percentage of net revenues for a period of up to 10 years until the maximum payout is reached, as defined in the asset purchase agreement. We estimated the fair value of the contingent consideration using a probability-weighted discounted cash flow model. The fair value is based on significant inputs not observable in the market and thus represent a Level 3 measurement as defined in Note 14. As of June 30, 2015, the Company estimates the future payments will be $0.8 million.
The following table summarizes the total estimated fair values of the assets acquired and liabilities assumed by segment during the year ended June 30, 2015:
(In thousands) |
Local Media Acquisitions |
National Media Acquisitions |
Total |
|||||||||
Accounts receivable |
$ | 5,162 | $ | 4,323 | $ | 9,485 | ||||||
Current portion of broadcast rights |
1,582 | — | 1,582 | |||||||||
Other current assets |
133 | 1,036 | 1,169 | |||||||||
Property, plant, and equipment |
14,391 | 130 | 14,521 | |||||||||
Other noncurrent assets |
1,907 | 3,055 | 4,962 | |||||||||
Intangible assets |
107,476 | 70,350 | 177,826 | |||||||||
Total identifiable assets acquired |
130,651 | 78,894 | 209,545 | |||||||||
Deferred subscription revenue |
— | (51,264 |
) |
(51,264 |
) | |||||||
Current portion of broadcast rights |
(1,582 |
) |
— | (1,582 |
) | |||||||
Other current liabilities |
(1,378 |
) |
(6,808 |
) |
(8,186 |
) | ||||||
Long-term liabilities |
(5,242 |
) |
(59,634 |
) |
(64,876 |
) | ||||||
Total liabilities assumed |
(8,202 |
) |
(117,706 |
) |
(125,908 |
) | ||||||
Net identifiable assets acquired |
122,449 | (38,812 |
) |
83,637 | ||||||||
Goodwill |
17,320 | 143,433 | 160,753 | |||||||||
Net assets acquired |
$ | 139,769 | $ | 104,621 | $ | 244,390 |
The following table provides details of the acquired intangible assets by acquisition:
(In thousands) |
WGGB |
Martha Stewart |
Mywedding |
WALA |
Selectable Media |
Shape |
Meredith Shopper Marketing |
Total |
||||||||||||||||||||||||
Intangible assets subject to amortization |
||||||||||||||||||||||||||||||||
National media |
||||||||||||||||||||||||||||||||
Advertiser relationships |
$ | — | $ | 3,200 | $ | 1,600 | $ | — | $ | 2,250 | $ | 6,700 | $ | — | $ | 13,750 | ||||||||||||||||
Customer lists |
— | 1,850 | — | — | — | 1,200 | — | 3,050 | ||||||||||||||||||||||||
Other |
— | — | — | — | 2,450 | 700 | 1,200 | 4,350 | ||||||||||||||||||||||||
Local media |
||||||||||||||||||||||||||||||||
Retransmission agreements |
761 | — | — | 3,193 | — | — | — | 3,954 | ||||||||||||||||||||||||
Other |
70 | — | — | 121 | — | — | — | 191 | ||||||||||||||||||||||||
Total |
831 | 5,050 | 1,600 | 3,314 | 4,700 | 8,600 | 1,200 | 25,295 | ||||||||||||||||||||||||
Intangible assets not subject to amortization |
||||||||||||||||||||||||||||||||
National media |
||||||||||||||||||||||||||||||||
Trademarks |
— | — | 5,300 | — | — | 37,900 | — | 43,200 | ||||||||||||||||||||||||
Internet domain names |
— | — | — | — | — | 6,000 | — | 6,000 | ||||||||||||||||||||||||
Local media |
||||||||||||||||||||||||||||||||
FCC licenses |
33,116 | — | — | 70,215 | — | — | — | 103,331 | ||||||||||||||||||||||||
Total |
33,116 | — | 5,300 | 70,215 | — | 43,900 | — | 152,531 | ||||||||||||||||||||||||
Intangible assets, net |
$ | 33,947 | $ | 5,050 | $ | 6,900 | $ | 73,529 | $ | 4,700 | $ | 52,500 | $ | 1,200 | $ | 177,826 |
As of the date of each acquisition, Meredith allocated the purchase price to the assets acquired and liabilities assumed based on their respective preliminary fair values. The above purchase price allocations are considered preliminary and are subject to revisions when the valuations of intangible assets are finalized upon receipt of the various final valuation reports for those assets from third party valuation experts. Therefore, the provisional measurements of fixed assets, intangible assets, goodwill, and deferred income tax balances are subject to change.
The useful life of the advertiser relationships ranges from three to four years, the customer lists' useful lives are two years, and other national media intangible assets' useful lives are five to seven years. The useful lives of the retransmission agreements are six years and local media other intangible assets' useful lives are one to three years.
For all acquisitions, goodwill is attributable primarily to expected synergies and the assembled workforces. Goodwill, with a provisionally assigned value of $136.2 million, is expected to be fully deductible for tax purposes.
Mywedding and Selectable Media are subject to legal and regulatory requirements, including but not limited to those related to taxation, in each of the jurisdictions in the countries in which they operate. The Company has conducted a preliminary assessment of liabilities arising in each of these jurisdictions, and has recognized provisional amounts in its initial accounting for the acquisitions for all identified liabilities in accordance with the business combinations guidance. However, the Company is continuing its review of these matters during the measurement period, and if new information about facts and circumstances that existed at the acquisition date identifies adjustments to the liabilities initially recognized, or any additional liabilities that existed at the acquisition date, the acquisition accounting will be revised to reflect the resulting adjustments to the provisional amounts initially recognized.
During fiscal 2015, acquisition related costs of $1.4 million were incurred. These costs are included in the selling, general, and administrative line in the Consolidated Statements of Earnings.
Fiscal 2014
During fiscal 2014, Meredith paid $417.5 million primarily for the acquisitions of the television station KMOV, the CBS affiliate in St. Louis, Missouri and the television station KTVK, an independent station in Phoenix, Arizona.
Effective February 28, 2014, Meredith acquired KMOV. The results of KMOV's operations have been included in the consolidated financial statements since that date. The final cash purchase price was $186.7 million, which included an additional cash working capital adjustment payment in fiscal 2015 of $0.9 million. During fiscal 2015, the Company finalized the determination of the fair values of the assets acquired and liabilities assumed. As such, fixed assets were decreased $0.5 million, network affiliation agreements intangible assets were increased $1.0 million, other intangibles were decreased $0.1 million, and a corresponding decrease of $0.4 million was recorded to goodwill. These adjustments did not have a significant impact on our Consolidated Balance Sheet as of June 30, 2014. Therefore, we have not retrospectively adjusted for these measurement period adjustments.
Effective June 19, 2014, Meredith acquired KTVK and an interest in the assets of KASW, the CW affiliate in Phoenix, Arizona. The final cash purchase price was $223.4 million. During fiscal 2015, the Company finalized the determination of the fair values of the assets acquired and liabilities assumed. The final cash purchase price was allocated as $167.4 million for KTVK and $56.0 million for the interest in KASW assets. As part of the FCC approval of the transaction, Meredith was required to sell its interest in the KASW assets. Accordingly, this interest was shown on the Consolidated Balance Sheet as assets held for sale at June 30, 2014. The sale of the Company's interest in the KASW assets was completed during fiscal 2015. As the final valuation of the intangible assets acquired was not complete at June 30, 2014, the recorded intangible asset values were based on provisional estimates of fair value. Upon determination of the final fair values of the assets acquired and liabilities assumed, the amount recorded to assets held for sale were retrospectively increased $23.0 million. A corresponding respective adjustment to the assets of KTVK was recorded as a $23.9 million reduction to the FCC license and $0.8 million reduction of goodwill, partially offset by a $1.7 million increase in retransmission agreements. The comparative information as of June 30, 2014, was retrospectively adjusted, as required by the accounting guidance for business combinations, to reflect the updated values assigned to each of the intangible assets.
As of the date of each acquisition, Meredith allocates the purchase price to the assets acquired and liabilities assumed based on their respective preliminary fair values. The following table summarizes the total estimated fair values of the assets acquired and liabilities assumed:
(In thousands) |
||||
Accounts receivable |
$ | 18,934 | ||
Current portion of broadcast rights |
6,495 | |||
Other current assets |
1,015 | |||
Property, plant, and equipment |
31,719 | |||
Other noncurrent assets |
10,186 | |||
Intangible assets |
251,325 | |||
Total identifiable assets acquired |
319,674 | |||
Current portion of broadcast rights |
(6,495 |
) | ||
Other current liabilities |
(309 |
) | ||
Long-term liabilities |
(10,184 |
) | ||
Total liabilities assumed |
(16,988 |
) | ||
Net identifiable assets acquired |
302,686 | |||
Goodwill |
51,456 | |||
Net assets acquired |
$ | 354,142 |
The following table provides details of the acquired intangible assets by acquisition:
(In thousands) |
KMOV |
KTVK |
Total |
|||||||||
Intangible assets subject to amortization |
||||||||||||
Network affiliation agreements |
$ | 10,750 | $ | — | $ | 10,750 | ||||||
Retransmission agreements |
3,250 | 14,026 | 17,276 | |||||||||
Other |
7 | 1,014 | 1,021 | |||||||||
Total |
14,007 | 15,040 | 29,047 | |||||||||
Intangible assets not subject to amortization |
||||||||||||
FCC licenses |
101,973 | 120,305 | 222,278 | |||||||||
Intangible assets, total |
$ | 115,980 | $ | 135,345 | $ | 251,325 |
The useful life of the network affiliation agreement is seven years and other intangible assets useful lives range from one to six years.
Goodwill, with an assigned value of $51.5 million, is expected to be fully deductible for tax purposes and is attributable to expected synergies and the assembled workforces of KMOV and KTVK.
During fiscal 2014, acquisition related costs of $5.5 million were expensed in the period in which they were incurred. These costs are included in the selling, general, and administrative line in the Consolidated Statements of Earnings.
Fiscal 2013
Meredith paid $50.2 million in fiscal 2013 primarily for the acquisitions of Parenting and Babytalk magazines and related digital assets (collectively Parenting) and Living the Country Life, LLC (Living the Country Life) and additional capital contributions to our minority investment in the Next Issue Media joint venture.
In October 2012, Meredith acquired the remaining 49 percent of the outstanding stock of Living the Country Life. The results of Living the Country Life's operations have been included in the consolidated financial statements since that date. The cash purchase price was $1.4 million.
In May 2013, Meredith acquired Parenting. The Parenting acquisition included Parenting and Babytalk magazine titles and related digital assets including the website www.parenting.com. The results of Parenting's operations have been included in the consolidated financial statements since that date. The acquisition-date fair value of the consideration totaled $45.5 million, which consisted of $41.5 million cash and a preliminary estimate of $4.0 million contingent consideration. The contingent consideration arrangement requires the Company to pay contingent payments should certain financial targets, generally based on revenues, be met over four fiscal years. Our estimate of the fair value of the contingent consideration is based on a probability-weighted discounted cash flow model. The estimated fair value is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in Note 14. Revenue growth for the Parenting acquisition was initially strong and in line with the original estimate; however, a slowdown in advertising revenues in the second half of fiscal 2014 resulted in lower revenue expectations. Therefore, the Company recognized non-cash credits to operations of $2.3 million in fiscal 2014 and $0.5 million in fiscal 2015, to reduce the estimated contingent consideration payable. These credits were recorded in the selling, general, and administrative expense line on the Consolidated Statements of Earnings. As of June 30, 2015, the Company estimates the future aggregate payments will range from zero to $5.1 million.
As a result of the acquisitions, the assets and liabilities of Parenting, consisting primarily of identifiable intangible assets and unearned subscription revenues, are reflected in the Company's Consolidated Balance Sheet. The consolidated financial statements reflect the allocation of the purchase price to the assets acquired and liabilities assumed, based on their respective fair values. Definite-lived intangible assets include an internet domain name of $3.1 million, trademark of $1.7 million, customer lists of $1.5 million, advertiser relationships of $1.3 million, and developed content of $0.9 million. The definite-lived intangible assets have useful lives ranging from two to 10 years. Goodwill is attributable to expected synergies and has an assigned value of $56.4 million, of which $33.0 million is expected to be deductible for tax purposes.
Acquisition related costs were expensed by the Company in the period in which they were incurred. Acquisition costs related to the acquisitions were not material to the Company's results of operations. In fiscal 2013, the Company incurred $5.1 million for acquisition costs for professional fees and expenses related to a strategic transaction that did not materialize. These costs are included in the selling, general, and administrative line in the Consolidated Statements of Earnings.
3. Inventories
Inventories consist of paper stock, editorial content, and books. Of total net inventory values, 52 percent at June 30, 2015, and 49 percent at June 30, 2014, were determined using the LIFO method. LIFO inventory income included in the Consolidated Statements of Earnings was $0.5 million in fiscal 2015, $0.8 million in fiscal 2014, and $1.7 million in fiscal 2013.
June 30, |
2015 |
2014 |
||||||
(In thousands) |
||||||||
Raw materials |
$ | 13,900 | $ | 11,993 | ||||
Work in process |
12,053 | 13,398 | ||||||
Finished goods |
2,428 | 2,814 | ||||||
28,381 | 28,205 | |||||||
Reserve for LIFO cost valuation |
(3,700 |
) |
(4,197 |
) | ||||
Inventories |
$ | 24,681 | $ | 24,008 |
4. Intangible Assets and Goodwill
Intangible assets consist of the following:
June 30, |
2015 |
2014 |
||||||||||||||||||||||
(In thousands) |
Gross Amount |
Accumulated Amortization |
Net Amount |
Gross Amount |
Accumulated Amortization |
Net Amount |
||||||||||||||||||
Intangible assets subject to amortization |
||||||||||||||||||||||||
National media |
||||||||||||||||||||||||
Advertiser relationships |
$ | 20,879 | $ | (7,660 |
) |
$ | 13,219 | $ | 8,752 | $ | (6,069 |
) |
$ | 2,683 | ||||||||||
Customer lists |
9,120 | (6,679 |
) |
2,441 | 16,257 | (14,852 |
) |
1,405 | ||||||||||||||||
Other |
20,675 | (7,361 |
) |
13,314 | 17,105 | (5,608 |
) |
11,497 | ||||||||||||||||
Local media |
||||||||||||||||||||||||
Network affiliation agreements |
229,309 | (129,362 |
) |
99,947 | 228,314 | (122,888 |
) |
105,426 | ||||||||||||||||
Retransmission agreements |
21,229 | (3,454 |
) |
17,775 | 17,404 | (188 |
) |
17,216 | ||||||||||||||||
Other |
1,212 | (126 |
) |
1,086 | 1,020 | — | 1,020 | |||||||||||||||||
Total |
$ | 302,424 | $ | (154,642 |
) |
147,782 | $ | 288,852 | $ | (149,605 |
) |
139,247 | ||||||||||||
Intangible assets not subject to amortization |
||||||||||||||||||||||||
National media |
||||||||||||||||||||||||
Internet domain names |
7,827 | 1,827 | ||||||||||||||||||||||
Trademarks |
192,089 | 148,889 | ||||||||||||||||||||||
Local media |
||||||||||||||||||||||||
FCC licenses |
624,684 | 523,334 | ||||||||||||||||||||||
Total |
824,600 | 674,050 | ||||||||||||||||||||||
Intangible assets, net |
$ | 972,382 | $ | 813,297 |
Amortization expense was $17.6 million in fiscal 2015, $13.1 million in fiscal 2014, and $11.7 million in fiscal 2013. Future amortization expense for intangible assets is expected to be as follows: $20.0 million in fiscal 2016, $17.8 million in fiscal 2017, $14.8 million in fiscal 2018, $12.5 million in fiscal 2019, and $11.6 million in fiscal 2020.
During fiscal 2014, the Company recorded an impairment charge of $10.3 million on national media intangible assets, including $9.5 million of trademarks and $0.8 million of customer lists. Management determined these intangible assets were fully impaired as part of management's commitment to performance improvement plans, including the conversion of Ladies' Home Journal from a subscription-based magazine to a quarterly newsstand special interest publication and the closure of Meredith's medical sales force training business. The impairment charges are recorded in the depreciation and amortization line in the Consolidated Statements of Earnings.
Changes in the carrying amount of goodwill were as follows:
(In thousands) |
National |
Local |
Total |
|||||||||
Balance at June 30, 2013 |
$ | 788,854 | $ | — | $ | 788,854 | ||||||
Acquisitions |
184 | 51,823 | 52,007 | |||||||||
Balance at June 30, 2014 |
789,038 | 51,823 | 840,861 | |||||||||
Acquisitions |
143,433 | 16,952 | 160,385 | |||||||||
Balance at June 30, 2015 |
$ | 932,471 | $ | 68,775 | $ | 1,001,246 |
The national media segment is comprised of two reporting units, the magazine brands reporting unit, which has $760.6 million of goodwill, and the MXM reporting unit, which has $171.9 million of goodwill.
Meredith completed annual impairment reviews of goodwill and intangible assets with indefinite lives as of May 31, 2015, 2014, and 2013. No impairments were recorded as a result of those reviews. As of May 31, 2015, the fair value of the local media reporting unit significantly exceeded its net assets, the fair value of the magazine brands reporting unit exceeded its net assets by approximately 20 percent, and the fair value of the MXM reporting unit exceeded its net assets by nearly 50 percent.
The fair value of the magazine brands reporting unit assumes a discount rate of 10 percent. Assumed revenue growth rates range from down 1.6 percent to up 2.0 percent. The assumed terminal growth rate is 2.0 percent. These assumptions are contingent upon a stable economic environment, continuing strong consumer engagement, and a continuing shift to digital platforms. Holding other assumptions constant, a 100 basis point increase in the discount rate would result in an estimated fair value that exceeds net assets by 4 percent. Holding other assumptions constant, a 100 basis point decrease in the terminal growth rate would result in an estimated fair value that exceeds net assets by 8 percent. Both of these scenarios individually would result in the magazine brands reporting unit passing step one of the test.
The fair value of the MXM reporting unit assumes a discount rate of 12 percent, near term revenue growth rates ranging from 5.0 percent to 7.0 percent, and a terminal growth rate of 5.0 percent. These assumptions are contingent upon a stable economic environment and either retaining or replacing key customers. Holding other assumptions constant, a 100 basis point increase in the discount rate would result in an estimated fair value that exceeds net assets by 30 percent. Holding other assumptions constant, a 100 basis point decrease in the terminal growth rate would result in an estimated fair value that exceeds net assets by more than 30 percent. Both of these scenarios individually would result in the MXM reporting unit passing step one of the test.
5. Restructuring Accrual
During the second quarter of fiscal 2015, management committed to several performance improvement plans related to business realignments resulting primarily from recent broadcast station acquisitions, recent digital business acquisitions, and other selected workforce reductions. In connection with these plans, the Company recorded a pre-tax restructuring charge of $6.7 million. The restructuring charge includes severance and related benefit costs of $5.3 million related to the involuntary termination of employees and other write-downs and accruals of $0.2 million, which are recorded in the selling, general, and administrative line of the Consolidated Statements of Earnings. The Company also wrote down video production fixed assets that the Company abandoned for $1.2 million, which is recorded in the depreciation and amortization line of the Consolidated Statements of Earnings. The majority of severance costs will be paid out over the next 6 months. The plans affected approximately 140 employees.
During the third quarter of fiscal 2015, management committed to several performance improvement plans related to certain acquisition integrations, business realignments, and other selected workforce reductions. In connection with these plans, the Company recorded a pre-tax restructuring charge of $9.9 million. The restructuring charge includes severance and related benefit costs of $9.4 million related to the involuntary termination of employees and other write-downs and accruals of $0.2 million, which are recorded in the selling, general, and administrative line of the Consolidated Statements of Earnings. The Company also wrote down manuscript and art inventory for $0.3 million, which is recorded in the production, distribution, and editorial line of the Consolidated Statements of Earnings. The majority of severance costs will be paid out over the next 9 months. The plans affected approximately 135 employees.
In the third quarter of fiscal 2014, management committed to several performance improvement plans related primarily to business realignments including converting Ladies' Home Journal from a monthly subscription magazine to a newsstand only quarterly special interest publication, the closing of our medical sales force training business, and other selected workforce reductions. In connection with these plans, the Company recorded a pre-tax restructuring charge of $20.8 million. The restructuring charge includes severance and related benefit costs of $8.5 million related to the involuntary termination of employees, an accrual for vacated lease spaces of $0.4 million, and other accruals of $0.5 million, all of which are recorded in the selling, general, and administrative line of the Consolidated Statements of Earnings. The Company also wrote down intangible assets by $10.3 million (see Note 4) and fixed assets of $0.9 million, which are recorded in the depreciation and amortization line of the Consolidated Statements of Earnings, and manuscript and art inventory by $0.2 million, which is recorded in the production, distribution, and editorial line of the Consolidated Statements of Earnings. The majority of severance costs have been paid out. These plans affected approximately 100 employees.
In the fourth quarter of fiscal 2014, management committed to a performance improvement plan related primarily to business realignments from recent broadcast station acquisitions that included selected workforce reductions. In connection with this plan, the Company recorded a pre-tax restructuring charge of $3.7 million. The restructuring charge includes severance and related benefit costs of $3.4 million related to the involuntary termination of employees and an accrual for vacating a building of $0.3 million, which are recorded in the selling, general, and administrative line of the Consolidated Statements of Earnings. The majority of severance costs have been paid out. The plan affected approximately 75 employees.
During the years ended June 30, 2015 and 2014, the Company recorded reversals of $0.1 million and $1.4 million, respectively, of excess restructuring reserves accrued in prior fiscal years. The reversals of excess restructuring reserves are recorded in the selling, general, and administrative line of the Consolidated Statements of Earnings.
Details of changes in the Company's restructuring accrual are as follows:
Years ended June 30, |
2015 |
2014 |
||||||
(In thousands) |
||||||||
Balance at beginning of year |
$ | 13,545 | $ | 8,103 | ||||
Severance accrual |
14,670 | 11,915 | ||||||
Other accruals |
285 | 1,141 | ||||||
Cash payments |
(12,664 |
) |
(6,258 |
) | ||||
Reversal of excess accrual |
(105 |
) |
(1,356 |
) | ||||
Balance at end of year |
$ | 15,731 | $ | 13,545 |
6. Long-term Debt
Long-term debt consists of the following:
June 30, |
2015 |
2014 |
||||||
(In thousands) |
||||||||
Variable-rate credit facilities |
||||||||
Asset-backed bank facility of $100 million, due 10/23/2015 |
$ | 80,000 | $ | 70,000 | ||||
Revolving credit facility of $200 million, due 3/27/2019 |
77,500 | 20,000 | ||||||
Term loan of $250 million, due 3/27/2019 |
237,500 | 250,000 | ||||||
Private placement notes |
||||||||
7.19% senior notes, due 7/13/2014 |
— | 25,000 | ||||||
2.62% senior notes, due 3/1/2015 |
— | 50,000 | ||||||
3.04% senior notes, due 3/1/2016 |
50,000 | 50,000 | ||||||
3.04% senior notes, due 3/1/2017 |
50,000 | 50,000 | ||||||
3.04% senior notes, due 3/1/2018 |
50,000 | 50,000 | ||||||
Floating rate senior notes, due 12/19/2022 |
100,000 | — | ||||||
Floating rate senior notes, due 2/28/2024 |
150,000 | 150,000 | ||||||
Total long-term debt |
795,000 | 715,000 | ||||||
Current portion of long-term debt |
(62,500 |
) |
(87,500 |
) | ||||
Long-term debt |
$ | 732,500 | $ | 627,500 |
The following table shows principal payments on the debt due in succeeding fiscal years:
Years ending June 30, |
||||
(In thousands) |
||||
2016 |
$ | 62,500 | ||
2017 |
75,000 | |||
2018 |
75,000 | |||
2019 |
332,500 | |||
2020 |
— | |||
Thereafter |
250,000 | |||
Total long-term debt |
$ | 795,000 |
In connection with the asset-backed bank facility, Meredith entered into a revolving agreement to sell all of its rights, title, and interest in the majority of its accounts receivable related to advertising and miscellaneous revenues to Meredith Funding Corporation, a special purpose entity established to purchase accounts receivable from Meredith. At June 30, 2015, $172.0 million of accounts receivable net of reserves were outstanding under the agreement. Meredith Funding Corporation in turn sells receivable interests to a major national bank. In consideration of the sale, Meredith receives cash and a subordinated note, bearing interest at the prime rate, 3.25 percent at June 30, 2015, from Meredith Funding Corporation. The agreement is structured as a true sale under which the creditors of Meredith Funding Corporation will be entitled to be satisfied out of the assets of Meredith Funding Corporation prior to any value being returned to Meredith or its creditors. The accounts of Meredith Funding Corporation are fully consolidated in Meredith's consolidated financial statements. The interest rate on the asset-backed bank facility is based on a fixed spread over London Interbank Offered Rate (LIBOR). The weighted average effective interest rate was 1.04 percent as of June 30, 2015.
In February 2015, we renewed our asset-backed bank facility for an additional six-month period on terms substantially similar to those previously in place. The renewed facility will expire in October 2015. We expect to renew the asset-backed bank facility on or before its expiration date under substantially similar terms.
During fiscal 2014, Meredith entered into a credit agreement that provided for a revolving credit facility of $200.0 million and a term loan of $250.0 million, for a five-year term which expires March 27, 2019. The term loan is payable in quarterly installments based on an amortization schedule as set forth in the agreement. The new credit agreement replaced our prior revolving credit facility. In connection with this transaction, in fiscal 2014 the Company wrote off $0.6 million of deferred financing costs to the interest expense line of the Consolidated Statements of Earnings.
In addition, Meredith issued $150.0 million in private placement floating-rate senior notes during fiscal 2014, which are due February 28, 2024. In fiscal 2015, Meredith issued $100.0 million in private placement floating-rate senior notes, which are due December 19, 2022.
During fiscal 2015, the Company entered into interest rate swap agreements to hedge variable interest rate risk on the $250.0 million floating-rate senior notes and on $50.0 million of the term loan. The expiration of the swaps is as follows: $50.0 million in August 2018, $100.0 million in March 2019, and $150.0 million in August 2019. Under the swaps the Company will pay fixed rates of interest (1.36 percent on the swap maturing in August 2018, 1.53 percent on the swap maturing in March 2019, and 1.76 percent on the swaps maturing in August 2019) and receive variable rates of interest based on the one to three-month London Interbank Offered Rate (LIBOR) (0.19 percent on the swap maturing in August 2018, 0.28 percent on the swap maturing in March 2019, and 0.28 percent on the swaps maturing in August 2019 as of June 30, 2015) on the $300.0 million notional amount of indebtedness. The swaps are designated as cash flow hedges. The Company evaluates the effectiveness of the hedging relationships on an ongoing basis by recalculating changes in fair value of the derivatives and related hedged items independently.
Unrealized gains or losses on cash flow hedges are recorded in other comprehensive loss to the extent the cash flow hedges are effective. The amount of the swap that offsets the effects of interest rate changes on the related debt is subsequently reclassified into interest expense. Any ineffective portions on cash flow hedges are recorded in interest expense. No material ineffectiveness existed at June 30, 2015.
The fair value of the interest rate swap agreements is the estimated amount the Company would pay or receive to terminate the swap agreements. At June 30, 2015, the swaps had a fair value of $2.2 million net liability. The Company is exposed to credit-related losses in the event of nonperformance by counterparties to the swap agreements. This exposure is managed through diversification and the monitoring of the creditworthiness of the counterparties. There was $1.1 million of potential loss that the Company would incur on the interest rate swaps if the counterparties were to fail to meet their obligations under the agreements at June 30, 2015. Given the strong creditworthiness of the counterparties, management does not expect any of them to fail to meet their obligations. Additionally, the concentration of risk with any individual counterparty is not considered significant at June 30, 2015.
The interest rates on the private placement floating-rate senior notes is based on a fixed spread over LIBOR. Interest rates on the private placement floating-rate senior notes were 3.03 percent on the $100.0 million note and 3.26 percent on the $150.0 million note at June 30, 2015, after taking into account the effect of outstanding interest rate swap agreements. As of June 30, 2015, the weighted average interest rate was 1.88 percent for the revolving credit facility and term loan, after taking into account the effect of outstanding interest rate swap agreement. The interest rate under both facilities is variable based on LIBOR and Meredith's debt to trailing 12 month EBITDA (earnings before interest, taxes, depreciation, and amortization as defined in the debt agreement) ratio.
All of the Company's debt agreements include financial covenants and failure to comply with any such covenants could result in the debt becoming payable on demand. The most significant financial covenants require a ratio of debt to trailing 12 month EBITDA less than 3.75 and a ratio of EBITDA to interest expense of greater than 2.75. The Company was in compliance with these and all other financial covenants at June 30, 2015.
Interest expense related to long-term debt totaled $18.5 million in fiscal 2015, $10.9 million in fiscal 2014, and $12.7 million in fiscal 2013.
At June 30, 2015, Meredith had additional credit available under the asset-backed bank facility of up to $20.0 million (depending on levels of accounts receivable) and had $122.5 million of credit available under the revolving credit facility with an option to request up to another $200.0 million. The commitment fee for the asset-backed bank facility ranges from 0.40 percent to 0.45 percent of the unused commitment based on utilization levels. The commitment fees for the revolving credit facility ranges from 0.125 percent to 0.25 percent of the unused commitment based on the Company's leverage ratio. Commitment fees paid in fiscal 2015 were not material.
7. Income Taxes
The following table shows income tax expense (benefit) attributable to earnings before income taxes:
Years ended June 30, |
2015 |
2014 |
2013 |
|||||||||
(In thousands) |
||||||||||||
Currently payable |
||||||||||||
Federal |
$ | 39,429 | $ | 37,615 | $ | 30,604 | ||||||
State |
4,583 | 2,764 | 1,419 | |||||||||
Foreign |
35 | 37 | 42 | |||||||||
44,047 | 40,416 | 32,065 | ||||||||||
Deferred |
||||||||||||
Federal |
36,314 | 18,138 | 35,383 | |||||||||
State |
5,608 | 2,386 | 6,453 | |||||||||
Foreign |
— | (142 |
) |
(147 |
) | |||||||
41,922 | 20,382 | 41,689 | ||||||||||
Income taxes |
$ | 85,969 | $ | 60,798 | $ | 73,754 |
The differences between the statutory U.S. federal income tax rate and the effective tax rate were as follows:
Years ended June 30, |
2015 |
2014 |
2013 | |||||||||
U.S. statutory tax rate |
35.0% |
|
35.0% |
|
35.0% |
| ||||||
State income taxes, less federal income tax benefits |
2.9 | 2.2 | 3.0 | |||||||||
Settlements - audits / tax litigation |
(0.1) |
|
(0.3) |
|
(1.6) |
| ||||||
Restructuring of international operations |
— | (2.5) |
|
— | ||||||||
Other |
0.8 | 0.5 | 1.0 | |||||||||
Effective income tax rate |
38.6% |
|
34.9% |
|
37.4% |
|
The Company's effective tax rate was 38.6 percent in fiscal 2015, 34.9 percent in fiscal 2014, and 37.4 percent in fiscal 2013. The fiscal 2014 rate reflected tax benefits realized due to expiring federal and state statutes of limitations and federal tax benefits from the restructuring of Meredith's international operations. The fiscal 2013 rate reflected favorable adjustments primarily due to tax benefits from the resolution of state and local tax contingencies.
The tax effects of temporary differences that gave rise to deferred tax assets and deferred tax liabilities were as follows:
June 30, |
2015 |
2014 |
||||||
(In thousands) |
||||||||
Deferred tax assets |
||||||||
Accounts receivable allowances and return reserves |
$ | 15,670 | $ | 15,964 | ||||
Compensation and benefits |
35,850 | 34,320 | ||||||
Indirect benefit of uncertain state and foreign tax positions |
9,925 | 10,875 | ||||||
All other assets |
7,068 | 5,174 | ||||||
Total deferred tax assets |
68,513 | 66,333 | ||||||
Valuation allowance |
(1,808 |
) |
(1,742 |
) | ||||
Net deferred tax assets |
66,705 | 64,591 | ||||||
Deferred tax liabilities |
||||||||
Subscription acquisition costs |
87,036 | 76,359 | ||||||
Accumulated depreciation and amortization |
288,952 | 255,936 | ||||||
Deferred gains from dispositions |
23,908 | 24,048 | ||||||
All other liabilities |
6,842 | 4,907 | ||||||
Total deferred tax liabilities |
406,738 | 361,250 | ||||||
Net deferred tax liability |
$ | 340,033 | $ | 296,659 |
The Company's deferred tax assets are more likely than not to be fully realized except for a valuation allowance of $1.8 million that was recorded for capital losses and certain net operating losses booked in fiscal 2014, fiscal 2013, and fiscal 2012. The net current portions of deferred tax assets and liabilities are included in accrued expenses-other taxes and expenses at June 30, 2015 and 2014, in the Consolidated Balance Sheets.
A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:
Years ended June 30, |
2015 |
2014 |
||||||
(In thousands) |
||||||||
Balance at beginning of year |
$ | 37,995 | $ | 42,402 | ||||
Increases in tax positions for prior years |
— | 327 | ||||||
Decreases in tax positions for prior years |
(2,028 |
) |
(699 |
) | ||||
Increases in tax positions for current year |
5,686 | 5,756 | ||||||
Settlements |
(1,853 |
) |
(652 |
) | ||||
Lapse in statute of limitations |
(3,881 |
) |
(9,139 |
) | ||||
Balance at end of year |
$ | 35,919 | $ | 37,995 |
The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was $27.3 million as of June 30, 2015, and $26.8 million as of June 30, 2014. The uncertain tax benefit recognized during fiscal 2015 from lapse in statute of limitations that related to income tax positions on temporary differences was $2.6 million. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense. The amount of accrued interest and penalties related to unrecognized tax benefits was $7.7 million and $7.6 million as of June 30, 2015 and 2014, respectively.
The total amount of unrecognized tax benefits at June 30, 2015, may change significantly within the next 12 months, decreasing by an estimated range of $2.3 million to $23.1 million. The change, if any, may result primarily from foreseeable federal and state examinations, ongoing federal and state examinations, anticipated state settlements, expiration of various statutes of limitation, the results of tax cases, or other regulatory developments.
The Company's federal tax returns have been audited through fiscal 2002, and are closed by expiration of the statute of limitations for fiscal 2003, fiscal 2004, and fiscal 2005. Fiscal 2006 through fiscal 2010 are under the jurisdiction of IRS Appeals, while fiscals 2011 and 2012 are currently under the jurisdiction of IRS Exam. The Company has various state income tax examinations ongoing and at various stages of completion, but generally the state income tax returns have been audited or closed to audit through fiscal 2005.
8. Pension and Postretirement Benefit Plans
Savings and Investment Plan
Meredith maintains a 401(k) Savings and Investment Plan that permits eligible employees to contribute funds on a pretax basis. The plan allows employee contributions of up to 50 percent of eligible compensation subject to the maximum allowed under federal tax provisions. The Company matches 100 percent of the first 3 percent and 50 percent of the next 2 percent of employee contributions.
The 401(k) Savings and Investment Plan allows employees to choose among various investment options, including the Company's common stock, for both their contributions and the Company's matching contribution. Company contribution expense under this plan totaled $9.7 million in fiscal 2015, $9.3 million in fiscal 2014, and $8.7 million in fiscal 2013.
Pension and Postretirement Plans
Meredith has noncontributory pension plans covering substantially all employees. These plans include qualified (funded) plans as well as nonqualified (unfunded) plans. These plans provide participating employees with retirement benefits in accordance with benefit provision formulas. The nonqualified plans provide retirement benefits only to certain highly compensated employees. The Company also sponsors defined healthcare and life insurance plans that provide benefits to eligible retirees.
Obligations and Funded Status
The following tables present changes in, and components of, the Company's net assets/liabilities for pension and other postretirement benefits:
Pension |
Postretirement |
|||||||||||||||
June 30, |
2015 |
2014 |
2015 |
2014 |
||||||||||||
(In thousands) |
||||||||||||||||
Change in benefit obligation |
||||||||||||||||
Benefit obligation, beginning of year |
$ | 152,608 | $ | 140,549 | $ | 10,445 | $ | 12,302 | ||||||||
Service cost |
12,173 | 10,196 | 117 | 170 | ||||||||||||
Interest cost |
5,582 | 5,604 | 407 | 480 | ||||||||||||
Participant contributions |
— | — | 802 | 842 | ||||||||||||
Plan amendments |
— | 915 | — | (1,732 |
) | |||||||||||
Actuarial loss (gain) |
(1,996 |
) |
4,083 | (1,007 |
) |
(114 |
) | |||||||||
Benefits paid (including lump sums) |
(12,940 |
) |
(8,739 |
) |
(1,356 |
) |
(1,503 |
) | ||||||||
Benefit obligation, end of year |
$ | 155,427 | $ | 152,608 | $ | 9,408 | $ | 10,445 | ||||||||
Change in plan assets |
||||||||||||||||
Fair value of plan assets, beginning of year |
$ | 145,179 | $ | 128,267 | $ | — | $ | — | ||||||||
Actual return on plan assets |
3,857 | 25,117 | — | — | ||||||||||||
Employer contributions |
5,490 | 534 | 554 | 661 | ||||||||||||
Participant contributions |
— | — | 802 | 842 | ||||||||||||
Benefits paid (including lump sums) |
(12,940 |
) |
(8,739 |
) |
(1,356 |
) |
(1,503 |
) | ||||||||
Fair value of plan assets, end of year |
$ | 141,586 | $ | 145,179 | $ | — | $ | — | ||||||||
Under funded status, end of year |
$ | (13,841 |
) |
$ | (7,429 |
) |
$ | (9,408 |
) |
$ | (10,445 |
) |
Benefits paid directly from Meredith assets are included in both employer contributions and benefits paid.
Fair value measurements for pension assets as of June 30, 2015, were as follows:
June 30, 2015 |
Total Fair Value |
Quoted Prices (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
||||||||||||
(In thousands) |
||||||||||||||||
Investments in registered investment companies 1 |
$ | 140,983 | $ | 80,229 | $ | — | $ | — | ||||||||
Pooled separate accounts 1 |
603 | — | — | — | ||||||||||||
Total assets at fair value |
$ | 141,586 | $ | 80,229 | $ | — | $ | — |
1 Certain investments that are measured at fair value using NAV per share have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented as the change in plan assets.
Fair value measurements for pension assets as of June 30, 2014, were as follows:
June 30, 2014 |
Total Fair Value |
Quoted Prices (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
||||||||||||
(In thousands) |
||||||||||||||||
Investments in registered investment companies 1 |
$ | 144,619 | $ | 85,509 | $ | — | $ | — | ||||||||
Pooled separate accounts 1 |
560 | — | — | — | ||||||||||||
Total assets at fair value |
$ | 145,179 | $ | 85,509 | $ | — | $ | — |
1 Certain investments that are measured at fair value using NAV per share have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented as the change in plan assets.
Refer to Note 14 for a discussion of the three levels in the hierarchy of fair values.
The following amounts are recognized in the Consolidated Balance Sheets:
Pension |
Postretirement |
|||||||||||||||
June 30, |
2015 |
2014 |
2015 |
2014 |
||||||||||||
(In thousands) |
||||||||||||||||
Other assets |
||||||||||||||||
Prepaid benefit cost |
$ | 18,071 | $ | 23,078 | $ | — | $ | — | ||||||||
Accrued expenses-compensation and benefits |
||||||||||||||||
Accrued benefit liability |
(2,780 |
) |
(2,408 |
) |
(700 |
) |
(770 |
) | ||||||||
Other noncurrent liabilities |
||||||||||||||||
Accrued benefit liability |
(29,132 |
) |
(28,099 |
) |
(8,708 |
) |
(9,675 |
) | ||||||||
Net amount recognized, end of year |
$ | (13,841 |
) |
$ | (7,429 |
) |
$ | (9,408 |
) |
$ | (10,445 |
) |
The accumulated benefit obligation for all defined benefit pension plans was $143.4 million and $138.3 million at June 30, 2015 and 2014, respectively.
The following table provides information about pension plans with projected benefit obligations and accumulated benefit obligations in excess of plan assets:
June 30, |
2015 |
2014 |
||||||
(In thousands) |
||||||||
Projected benefit obligation |
$ | 32,012 | $ | 30,550 | ||||
Accumulated benefit obligation |
29,099 | 26,379 | ||||||
Fair value of plan assets |
100 | 44 |
Costs
The components of net periodic benefit costs recognized in the Consolidated Statements of Earnings were as follows:
Pension |
Postretirement |
|||||||||||||||||||||||
Years ended June 30, |
2015 |
2014 |
2013 |
2015 |
2014 |
2013 |
||||||||||||||||||
(In thousands) |
||||||||||||||||||||||||
Components of net periodic benefit costs |
||||||||||||||||||||||||
Service cost |
$ | 12,173 | $ | 10,196 | $ | 10,100 | $ | 117 | $ | 170 | $ | 377 | ||||||||||||
Interest cost |
5,582 | 5,604 | 4,911 | 407 | 480 | 611 | ||||||||||||||||||
Expected return on plan assets |
(11,037 |
) |
(9,687 |
) |
(9,465 |
) |
— | — | — | |||||||||||||||
Prior service cost (credit) amortization |
225 | 391 | 359 | (432 |
) |
(440 |
) |
(537 |
) | |||||||||||||||
Actuarial loss (gain) amortization |
667 | 2,030 | 3,250 | (433 |
) |
(365 |
) |
— | ||||||||||||||||
Curtailment credit |
— | — | — | — | (1,511 |
) |
— | |||||||||||||||||
Net periodic benefit costs (credit) |
$ | 7,610 | $ | 8,534 | $ | 9,155 | $ | (341 |
) |
$ | (1,666 |
) |
$ | 451 |
Amounts recognized in the accumulated other comprehensive loss component of shareholders' equity for Company-sponsored plans were as follows:
June 30, 2015 |
Pension |
Postretirement |
Total |
|||||||||
(In thousands) |
||||||||||||
Unrecognized net actuarial losses (gains), net of taxes |
$ | 12,733 | $ | (2,070 |
) |
$ | 10,663 | |||||
Unrecognized prior service cost (credit), net of taxes |
589 | (716 |
) |
(127 |
) | |||||||
Total |
$ | 13,322 | $ | (2,786 |
) |
$ | 10,536 |
During fiscal 2016, the Company expects to recognize as part of its net periodic benefit costs $0.6 million of net actuarial losses and $0.2 million of prior-service costs for the pension plans, and $0.7 million of net actuarial gains and $0.4 million of prior service credit for the postretirement plan that are included, net of taxes, in the accumulated other comprehensive loss component of shareholders' equity at June 30, 2015.
Assumptions
Benefit obligations were determined using the following weighted average assumptions:
Pension |
Postretirement |
|||||||||||||||
June 30, |
2015 |
2014 |
2015 |
2014 |
||||||||||||
Weighted average assumptions |
||||||||||||||||
Discount rate |
3.75 |
% |
3.57 |
% |
4.20% |
|
4.00% |
| ||||||||
Rate of compensation increase |
3.50 |
% |
3.50 |
% |
3.50% |
|
3.50% |
| ||||||||
Rate of increase in health care cost levels |
||||||||||||||||
Initial level |
NA | NA | 7.00% |
|
7.00% |
| ||||||||||
Ultimate level |
NA | NA | 5.00% |
|
5.00% |
| ||||||||||
Years to ultimate level (in years) |
NA | NA | 6 | 4 |
NA-Not applicable |
Net periodic benefit costs were determined using the following weighted average assumptions:
Pension |
Postretirement |
|||||||||||||||||||||||
Years ended June 30, |
2015 |
2014 |
2013 |
2015 |
2014 |
2013 |
||||||||||||||||||
Weighted average assumptions |
||||||||||||||||||||||||
Discount rate |
3.57 |
% |
3.92 |
% |
3.50 |
% |
4.00 |
% |
4.50 |
% |
4.10 |
% | ||||||||||||
Expected return on plan assets |
8.00 |
% |
8.00 |
% |
8.00 |
% |
NA | NA | NA | |||||||||||||||
Rate of compensation increase |
3.50 |
% |
3.50 |
% |
3.50 |
% |
3.50 |
% |
3.50 |
% |
3.50 |
% | ||||||||||||
Rate of increase in health care cost levels |
||||||||||||||||||||||||
Initial level |
NA | NA | NA | 7.00 |
% |
7.50 |
% |
8.00 |
% | |||||||||||||||
Ultimate level |
NA | NA | NA | 5.00 |
% |
5.00 |
% |
5.00 |
% | |||||||||||||||
Years to ultimate level (in years) |
NA | NA | NA | 4 | 5 | 6 | ||||||||||||||||||
NA-Not applicable |
The expected return on plan assets assumption was determined, with the assistance of the Company's investment consultants, based on a variety of factors. These factors include but are not limited to the plans' asset allocations, review of historical capital market performance, historical plan performance, current market factors such as inflation and interest rates, and a forecast of expected future asset returns. The Company reviews this long-term assumption on a periodic basis.
Assumed rates of increase in healthcare cost have a significant effect on the amounts reported for the healthcare plans. A change of one percentage point in the assumed healthcare cost trend rates would have the following effects:
One Percentage Point Increase |
One Percentage Point Decrease |
|||||||
(In thousands) |
||||||||
Effect on service and interest cost components for fiscal 2015 |
$ | 26 | $ | (26 |
) | |||
Effect on postretirement benefit obligation as of June 30, 2015 |
408 | (335 |
) |
Plan Assets
The targeted and weighted average asset allocations by asset category for investments held by the Company's pension plans are as follows:
2015 Allocation |
2014 Allocation |
|||||||||||||||
June 30, |
Target |
Actual |
Target |
Actual |
||||||||||||
Domestic equity securities |
35 |
% |
35 |
% |
35 |
% |
36 |
% | ||||||||
Fixed income investments |
30 |
% |
29 |
% |
30 |
% |
27 |
% | ||||||||
International equity securities |
25 |
% |
25 |
% |
25 |
% |
26 |
% | ||||||||
Global equity securities |
10 |
% |
11 |
% |
10 |
% |
11 |
% | ||||||||
Fair value of plan assets |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
Meredith's investment policy seeks to maximize investment returns while balancing the Company's tolerance for risk. The plan fiduciaries oversee the investment allocation process. This includes selecting investment managers, setting long-term strategic targets, and monitoring asset allocations. Target allocation ranges are guidelines, not limitations, and plan fiduciaries may occasionally approve allocations above or below a target range, or elect to rebalance the portfolio within the targeted range. The investment portfolio contains a diversified blend of equity and fixed-income investments. Furthermore, equity investments are diversified across domestic and international stocks and between growth and value stocks and small and large capitalizations. The primary investment strategy currently employed is a dynamic target allocation method that periodically rebalances among various investment categories depending on the current funded position. This program is designed to actively move from return-seeking investments (such as equities) toward liability-hedging investments (such as long-duration fixed-income) as funding levels improve. The reverse effect occurs when funding levels decrease.
Equity securities did not include any Meredith Corporation common or Class B stock at June 30, 2015 or 2014.
Cash Flows
Although we do not have a minimum funding requirement for the pension plans in fiscal 2016, the Company is currently determining what voluntary pension plan contributions, if any, will be made in fiscal 2016. Actual contributions will be dependent upon investment returns, changes in pension obligations, and other economic and regulatory factors. Meredith expects to contribute $0.7 million to its postretirement plan in fiscal 2016.
The following benefit payments, which reflect expected future service as appropriate, are expected to be paid:
Years ending June 30, |
Pension Benefits |
Postretirement Benefits |
||||||
(In thousands) |
||||||||
2016 |
$ | 21,239 | $ | 700 | ||||
2017 |
25,555 | 732 | ||||||
2018 |
15,975 | 749 | ||||||
2019 |
15,409 | 744 | ||||||
2020 |
20,172 | 713 | ||||||
2021-2025 |
80,390 | 3,185 |
Other
The Company maintains collateral assignment split-dollar life insurance arrangements on certain key officers and retirees. The net periodic pension cost for fiscal 2015, 2014, and 2013 was $0.4 million, $0.3 million, and $0.3 million, respectively, and the accrued liability at June 30, 2015 and 2014, was $4.2 million and $4.1 million, respectively.
9. Earnings per Share
The calculation of basic earnings per share for each period is based on the weighted average number of common and Class B shares outstanding during the period. The calculation of diluted earnings per share for each period is based on the weighted average number of common and Class B shares outstanding during the period plus the effect, if any, of dilutive common stock equivalent shares.
The following table presents the calculations of earnings per share:
Years ended June 30, |
2015 |
2014 |
2013 |
|||||||||
(In thousands except per share data) |
||||||||||||
Net earnings |
$ | 136,791 | $ | 113,541 | $ | 123,650 | ||||||
Basic average shares outstanding |
44,522 | 44,636 | 44,455 | |||||||||
Dilutive effect of stock options and equivalents |
801 | 774 | 630 | |||||||||
Diluted average shares outstanding |
45,323 | 45,410 | 45,085 | |||||||||
Earnings per share |
||||||||||||
Basic |
$ | 3.07 | $ | 2.54 | $ | 2.78 | ||||||
Diluted |
3.02 | 2.50 | 2.74 |
In addition, antidilutive options excluded from the above calculations totaled 0.9 million options for the year ended June 30, 2015 ($50.52 weighted average exercise price), 1.8 million options for the year ended June 30, 2014 ($50.54 weighted average exercise price), and 3.1 million options for the year ended June 30, 2013 ($46.56 weighted average exercise price).
10. Capital Stock
The Company has two classes of common stock outstanding: common and Class B. Each class receives equal dividends per share. Class B stock, which has 10 votes per share, is not transferable as Class B stock except to family members of the holder or certain other related entities. At any time, Class B stock is convertible, share for share, into common stock with one vote per share. Class B stock transferred to persons or entities not entitled to receive it as Class B stock will automatically be converted and issued as common stock to the transferee. The principal market for trading the Company's common stock is the New York Stock Exchange (trading symbol MDP). No separate public trading market exists for the Company's Class B stock.
From time to time, the Company's Board of Directors has authorized the repurchase of shares of the Company's common stock on the open market. In May 2014, the Board approved the repurchase of $100.0 million of shares. As of June 30, 2015, $97.0 million remained available under the current authorizations for future repurchases.
Repurchases of the Company's common and Class B stock are as follows:
Years ended June 30, |
2015 |
2014 |
2013 |
|||||||||
(In thousands) |
||||||||||||
Number of shares |
925 | 1,640 | 1,477 | |||||||||
Cost at market value |
$ | 46,764 | $ | 78,226 | $ | 54,734 |
Effective July 1, 2013, shares deemed to be delivered to the Company on tender of stock in payment for the exercise price of options are no longer included as part of our repurchase program and thus they do not reduce the repurchase authority granted by our Board. Shares delivered or deemed to be delivered to us in satisfaction of tax withholding on option exercises and the vesting of restricted shares continue to reduce the repurchase authority granted by our Board. Shares tendered for the exercise price of stock options were 0.7 million shares at of cost of $35.6 million in fiscal 2015 and 1.1 million shares at a cost of $54.1 million in fiscal 2014.
11. Common Stock and Share-based Compensation Plans
Meredith has an employee stock purchase plan and a stock incentive plan, both of which are shareholder-approved. More detailed descriptions of these plans follows. Compensation expense recognized for these plans was $12.5 million in fiscal 2015, $12.2 million in fiscal 2014, and $11.5 million in fiscal 2013. The total income tax benefit recognized in earnings was $4.6 million in fiscal 2015, $4.5 million in fiscal 2014, and $4.2 million in fiscal 2013.
Employee Stock Purchase Plan
Meredith has an employee stock purchase plan (ESPP) available to substantially all employees. The ESPP allows employees to purchase shares of Meredith common stock through payroll deductions at the lesser of 85 percent of the fair market value of the stock on either the first or last trading day of an offering period. The ESPP has quarterly offering periods. One million five hundred thousand common shares are authorized and approximately 290,000 shares remain available for issuance under the ESPP. Compensation cost for the ESPP is based on the present value of the cash discount and the fair value of the call option component as of the grant date using the Black-Scholes option-pricing model. The term of the option is three months, the term of the offering period. The expected stock price volatility was 37 percent in fiscal 2015, 36 percent in fiscal 2014, and 35 percent in fiscal 2013. Information about the shares issued under this plan is as follows:
Years ended June 30, |
2015 |
2014 |
2013 |
|||||||||
Shares issued (in thousands) |
72 | 86 | 130 | |||||||||
Average fair value |
$ | 7.52 | $ | 7.59 | $ | 5.55 | ||||||
Average purchase price |
39.95 | 40.30 | 29.50 | |||||||||
Average market price |
50.83 | 48.36 | 38.56 |
Stock Incentive Plan
Meredith has a stock incentive plan that permits the Company to issue stock options, restricted stock, stock equivalent units, restricted stock units, and performance shares to key employees and directors of the Company. Approximately 8.7 million shares remained available for future awards under the plan as of June 30, 2015. Forfeited awards, shares deemed to be delivered to us on tender of stock in payment for the exercise price of options, and shares reacquired pursuant to tax withholding on option exercises and the vesting of restricted shares increase shares available for future awards. The plan is designed to provide an incentive to contribute to the achievement of long-range corporate goals; provide flexibility in motivating, attracting, and retaining employees; and to align more closely the employees' interests with those of shareholders.
The Company has awarded restricted shares of common stock and restricted stock units to eligible key employees and to non-employee directors under the plan. In addition, certain awards are granted based on specified levels of Company stock ownership. All awards have restriction periods tied primarily to employment and/or service. The awards generally vest over three or five years. The awards are recorded at the market value of traded shares on the date of the grant as unearned compensation. The initial values of the grants, net of estimated forfeitures, are amortized over the vesting periods.
The Company's restricted stock activity during the year ended June 30, 2015, was as follows:
Restricted Stock |
Shares |
Weighted Average Grant Date Fair Value |
Aggregate Intrinsic Value |
|||||||||
(Shares and Aggregate Intrinsic Value in thousands) |
||||||||||||
Nonvested at June 30, 2014 |
565 | $ | 35.77 | |||||||||
Granted |
9 | 51.22 | ||||||||||
Vested |
(186 |
) |
26.72 | |||||||||
Forfeited |
(23 |
) |
40.00 | |||||||||
Nonvested at June 30, 2015 |
365 | 40.48 | $ | 19,075 |
As of June 30, 2015, there was $2.3 million of unearned compensation cost related to restricted stock granted under the plan. That cost is expected to be recognized over a weighted average period of 1.3 years. The weighted average grant date fair value of restricted stock granted during the years ended June 30, 2015, 2014, and 2013 was $51.22, $48.01, and $34.69, respectively. The total fair value of shares vested during the years ended June 30, 2015, 2014, and 2013, was $7.8 million, $6.2 million, and $5.6 million, respectively.
The Company's restricted stock unit activity during the year ended June 30, 2015, was as follows:
Restricted Stock Units |
Shares |
Weighted Average Grant Date Fair Value |
Aggregate Intrinsic Value |
|||||||||
(Shares and Aggregate Intrinsic Value in thousands) |
||||||||||||
Nonvested at June 30, 2014 |
— | $ | — | |||||||||
Granted |
173 | 46.21 | ||||||||||
Vested |
(3 |
) |
45.69 | |||||||||
Forfeited |
(11 |
) |
46.19 | |||||||||
Nonvested at June 30, 2015 |
159 | 46.22 | $ | 8,314 |
As of June 30, 2015, there was $3.0 million of unearned compensation cost related to restricted stock units granted under the plan. That cost is expected to be recognized over a weighted average period of 2.2 years. The weighted average grant date fair value of restricted stock granted during the year ended June 30, 2015 was $46.21. The total fair value of shares vested during the year ended June 30, 2015 was $0.1 million.
Meredith also has outstanding stock equivalent units resulting from the deferral of compensation of employees and directors under various deferred compensation plans. The period of deferral is specified when the deferral election is made. These stock equivalent units are issued at the market price of the underlying stock on the date of deferral. In addition, shares of restricted stock may be converted to stock equivalent units upon vesting.
The following table summarizes the activity for stock equivalent units during the year ended June 30, 2015:
Stock Equivalent Units |
Units |
Weighted Average Issue Date Fair Value |
Aggregate Intrinsic Value |
|||||||||
(Units and Aggregate Intrinsic Value in thousands) |
||||||||||||
Balance at June 30, 2014 |
229 | $ | 38.19 | |||||||||
Additions |
40 | 46.33 | ||||||||||
Converted to common stock |
(4 |
) |
28.88 | |||||||||
Balance at June 30, 2015 |
265 | 36.12 | $ | 4,251 |
The total intrinsic value of stock equivalent units converted to common stock was $0.1 million in fiscal 2015, $0.1 million in fiscal 2014, and zero for fiscal year 2013.
Meredith has granted nonqualified stock options to certain employees and directors under the plan. The grant date of options issued is the date the Compensation Committee of the Board of Directors approves the granting of the options. The exercise price of options granted is set at the fair value of the Company's common stock on the grant date. All options granted under the plan expire at the end of 10 years. Options granted vest three years from the date of grant.
A summary of stock option activity and weighted average exercise prices follows:
Stock Options |
Options |
Weighted Average Exercise Price |
Weighted Average Remaining Contractual Term |
Aggregate Intrinsic Value |
||||||||||||
(Options and Aggregate Intrinsic Value in thousands) |
||||||||||||||||
Outstanding July 1, 2014 |
3,878 | $ | 40.26 | |||||||||||||
Granted |
467 | 46.30 | ||||||||||||||
Exercised |
(1,018 |
) |
37.00 | |||||||||||||
Forfeited |
(658 |
) |
48.40 | |||||||||||||
Outstanding June 30, 2015 |
2,669 | 40.55 | 6.0 | $ | 31,882 | |||||||||||
Exercisable June 30, 2015 |
1,225 | 39.15 | 3.7 | 16,856 |
The fair value of each option is estimated as of the date of grant using the Black-Scholes option-pricing model. Expected volatility is based on historical volatility of the Company's common stock and other factors. The expected life of options granted incorporates historical employee exercise and termination behavior. Different expected lives are used for separate groups of employees who have similar historical exercise patterns. The risk-free rate for periods that coincide with the expected life of the options is based on the U.S. Treasury yield curve in effect at the time of grant.
The following summarizes the assumptions used in determining the fair value of options granted:
Years ended June 30, |
2015 |
2014 |
2013 |
|||||||||||
Risk-free interest rate |
1.4 - 2.8% | 1.9 - 2.1% | 0.4 - 1.3% | |||||||||||
Expected dividend yield |
4.00% |
|
4.20% |
|
5.00% |
| ||||||||
Expected option life (in years) |
7 - 8 | 7 - 8 | 7 - 8 | |||||||||||
Expected stock price volatility |
37% |
|
36% |
|
35% |
|
The weighted average grant date fair value of options granted during the years ended June 30, 2015, 2014, and 2013, was $11.59, $11.41, and $6.62, respectively. The total intrinsic value of options exercised during the years ended June 30, 2015, 2014, and 2013 was $14.2 million, $9.6 million, and $12.0 million, respectively. As of June 30, 2015, there was $2.8 million in unrecognized compensation cost for stock options granted under the plan. This cost is expected to be recognized over a weighted average period of 1.7 years.
Cash received from option exercises under all share-based payment plans for the years ended June 30, 2015, 2014, and 2013 was $37.7 million, $54.5 million, and $34.7 million, respectively. The actual tax benefit realized for the tax deductions from option exercises totaled $5.5 million, $3.7 million, and $4.7 million, respectively, for the years ended June 30, 2015, 2014, and 2013.
12. Commitments and Contingent Liabilities
The Company occupies certain facilities and sales offices and uses certain equipment under lease agreements. Rental expense for such leases was $20.1 million in fiscal 2015, $20.2 million in fiscal 2014, and $20.5 million in fiscal 2013.
Below are the minimum rental commitments at June 30, 2015, under all noncancelable operating leases due in succeeding fiscal years:
Years ending June 30, |
||||
(In thousands) |
||||
2016 |
$ | 18,364 | ||
2017 |
17,341 | |||
2018 |
15,783 | |||
2019 |
14,065 | |||
2020 |
13,663 | |||
Thereafter |
71,247 | |||
Total minimum rentals |
$ | 150,463 |
Most of the future lease payments relate to the lease of office facilities in New York City through December 31, 2026. In the normal course of business, leases that expire are generally renewed or replaced by leases on similar properties.
The Company has recorded commitments for broadcast rights payable in future fiscal years. The Company also is obligated to make payments under contracts for broadcast rights not currently available for use and therefore not included in the consolidated financial statements. Such unavailable rights amounted to $30.3 million at June 30, 2015. The fair value of these commitments for unavailable broadcast rights, determined by the present value of future cash flows discounted at the Company's current borrowing rate, was $28.9 million at June 30, 2015.
The table shows broadcast rights payments due in succeeding fiscal years:
Years ending June 30, |
Recorded Commitments |
Unavailable Rights |
||||||
(In thousands) |
||||||||
2016 |
$ | 4,776 | $ | 10,874 | ||||
2017 |
1,734 | 10,719 | ||||||
2018 |
654 | 7,174 | ||||||
2019 |
330 | 1,286 | ||||||
2020 |
142 | 208 | ||||||
Thereafter |
138 | 35 | ||||||
Total amounts payable |
$ | 7,774 | $ | 30,296 |
The Company is involved in certain litigation and claims arising in the normal course of business. In the opinion of management, liabilities, if any, arising from existing litigation and claims are not expected to have a material effect on the Company's earnings, financial position, or liquidity.
13. Other Comprehensive Income (Loss)
Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from nonowner sources. Comprehensive income (loss) includes net earnings as well as items of other comprehensive income (loss).
The following table summarizes the items of other comprehensive income (loss) and the accumulated other comprehensive loss balances:
Minimum Pension/Post Retirement Liability Adjustments |
Interest |
Accumulated |
||||||||||
(In thousands) |
||||||||||||
Balance at June 30, 2012 |
$ | (23,115 |
) |
$ | — | $ | (23,115 |
) | ||||
Current-year adjustments, pretax |
10,997 | — | 10,997 | |||||||||
Tax expense |
(4,223 |
) |
— | (4,223 |
) | |||||||
Other comprehensive loss |
6,774 | — | 6,774 | |||||||||
Balance at June 30, 2013 |
(16,341 |
) |
— | (16,341 |
) | |||||||
Current-year adjustments, pretax |
12,310 | — | 12,310 | |||||||||
Tax expense |
(4,727 |
) |
— | (4,727 |
) | |||||||
Other comprehensive income |
7,583 | — | 7,583 | |||||||||
Balance at June 30, 2014 |
(8,758 |
) |
— | (8,758 |
) | |||||||
Current-year adjustments, pretax |
(4,206 |
) |
(2,109 |
) |
(6,315 |
) | ||||||
Tax benefit |
1,615 | 810 | 2,425 | |||||||||
Other comprehensive income |
(2,591 |
) |
(1,299 |
) |
(3,890 |
) | ||||||
Balance at June 30, 2015 |
$ | (11,349 |
) |
$ | (1,299 |
) |
$ | (12,648 |
) |
14. Fair Value Measurement
Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Specifically, it establishes a hierarchy prioritizing the use of inputs in valuation techniques. The defined levels within the hierarchy are as follows:
• Level 1 |
Quoted prices (unadjusted) in active markets for identical assets or liabilities; | |
• Level 2 |
Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; | |
• Level 3 |
Assets or liabilities for which fair value is based on valuation models with significant unobservable pricing inputs and which result in the use of management estimates. |
The following table sets forth the carrying value and the estimated fair value of the Company's financial instruments:
June 30, 2015 |
June 30, 2014 |
|||||||||||||||
(In thousands) |
Carrying Value |
Fair Value |
Carrying Value |
Fair Value |
||||||||||||
Broadcast rights payable |
$ | 7,774 | $ | 7,490 | $ | 8,838 | $ | 8,408 | ||||||||
Long-term debt |
795,000 | 797,121 | 715,000 | 717,032 |
The fair value of broadcast rights payable was determined using the present value of expected future cash flows discounted at the Company's current borrowing rate with inputs included in Level 3. The fair value of long-term debt was determined using the present value of expected future cash flows using borrowing rates currently available for debt with similar terms and maturities with inputs included in Level 2.
As of June 30, 2015, the Company had assets related to its qualified pension plans measured at fair value. The required disclosures regarding such assets are presented within Note 8. In addition, the Company has liabilities related to contingent consideration payables that are valued at estimated fair value as discussed in Note 2. The Company does not have any other assets or liabilities recognized at fair value.
The following table sets forth the liabilities measured at fair value on a recurring basis:
(In thousands) |
June 30, 2015 |
June 30, 2014 |
||||||
Other assets |
||||||||
Interest rate swaps |
$ | 1,139 | $ | — | ||||
Accrued expenses and other liabilities |
||||||||
Contingent consideration |
800 | 50 | ||||||
Interest rate swaps |
3,295 | — | ||||||
Other noncurrent liabilities |
||||||||
Contingent consideration |
60,735 | 1,650 |
The fair value of interest rate swaps is determined based on discounted cash flows derived using market observable inputs including swap curves that are included in Level 2. The fair value of the contingent consideration is based on significant inputs not observable in the market and thus represents Level 3 measurements.
The following table represents the changes in the fair value of Level 3 contingent consideration for the year ended June 30, 2015.
(in thousands) |
||||
Balance at beginning of year |
$ | 1,700 | ||
Additions due to acquisitions |
61,335 | |||
Change in present value of contingent consideration 1 |
(1,500 |
) | ||
Balance at end of year |
$ | 61,535 |
1 Change in present value of contingent consideration is included in earning and comprised of changes in estimated earn out payments based on projections of performance and the amortization of the present value discount. |
15. Financial Information about Industry Segments
Meredith is a diversified media company focused primarily on the home and family marketplace. On the basis of products and services, the Company has established two reportable segments: national media and local media. The national media segment includes magazine publishing, customer relationship marketing, digital and mobile media, brand licensing, database-related activities, and other related operations. The local media segment consists primarily of the operations of network-affiliated television stations. Virtually all of the Company's revenues are generated in the U.S. and substantially all of the assets reside within the U.S. There are no material intersegment transactions.
There are two principal financial measures reported to the chief executive officer (the chief operating decision maker) for use in assessing segment performance and allocating resources. Those measures are operating profit and earnings before interest, taxes, depreciation, and amortization (EBITDA). Operating profit for segment reporting, disclosed below, is revenues less operating costs and unallocated corporate expenses. Segment operating expenses include allocations of certain centrally incurred costs such as employee benefits, occupancy, information systems, accounting services, internal legal staff, and human resources administration. These costs are allocated based on actual usage or other appropriate methods, primarily number of employees. Unallocated corporate expenses are corporate overhead expenses not attributable to the operating groups. Interest income and expense are not allocated to the segments. In accordance with authoritative guidance on disclosures about segments of an enterprise and related information, EBITDA is not presented below.
Significant non-cash items included in segment operating expenses other than depreciation and amortization of fixed and intangible assets is the amortization of broadcast rights in the local media segment. Broadcast rights amortization totaled $16.6 million in fiscal 2015, $8.8 million in fiscal 2014, and $9.7 million in fiscal 2013.
Segment assets include intangible, fixed, and all other non-cash assets identified with each segment. Jointly used assets such as office buildings and information technology equipment are allocated to the segments by appropriate methods, primarily number of employees. Unallocated corporate assets consist primarily of cash and cash items, assets allocated to or identified with corporate staff departments, and other miscellaneous assets not assigned to a segment.
The following table presents financial information by segment:
Years ended June 30, |
2015 |
2014 |
2013 |
|||||||||
(In thousands) |
||||||||||||
Revenues |
||||||||||||
National media |
$ | 1,059,852 | $ | 1,065,898 | $ | 1,095,195 | ||||||
Local media |
534,324 | 402,810 | 376,145 | |||||||||
Total revenues |
$ | 1,594,176 | $ | 1,468,708 | $ | 1,471,340 | ||||||
Segment profit |
||||||||||||
National media |
$ | 122,681 | $ | 113,113 | $ | 137,985 | ||||||
Local media |
162,677 | 113,060 | 124,116 | |||||||||
Unallocated corporate |
(43,246 |
) |
(39,658 |
) |
(51,267 |
) | ||||||
Income from operations |
242,112 | 186,515 | 210,834 | |||||||||
Interest expense, net |
(19,352 |
) |
(12,176 |
) |
(13,430 |
) | ||||||
Earnings before income taxes |
$ | 222,760 | $ | 174,339 | $ | 197,404 | ||||||
Depreciation and amortization |
||||||||||||
National media |
$ | 17,186 | $ | 29,455 | $ | 19,199 | ||||||
Local media |
38,779 | 28,815 | 24,471 | |||||||||
Unallocated corporate |
1,839 | 1,658 | 1,680 | |||||||||
Total depreciation and amortization |
$ | 57,804 | $ | 59,928 | $ | 45,350 | ||||||
Assets |
||||||||||||
National media |
$ | 1,665,542 | $ | 1,422,855 | $ | 1,454,225 | ||||||
Local media |
1,072,152 | 996,935 | 587,611 | |||||||||
Unallocated corporate |
105,588 | 124,010 | 98,223 | |||||||||
Total assets |
$ | 2,843,282 | $ | 2,543,800 | $ | 2,140,059 | ||||||
Capital expenditures |
||||||||||||
National media |
$ | 4,829 | $ | 5,491 | $ | 6,455 | ||||||
Local media |
23,224 | 16,578 | 14,688 | |||||||||
Unallocated corporate |
5,192 | 2,753 | 4,826 | |||||||||
Total capital expenditures |
$ | 33,245 | $ | 24,822 | $ | 25,969 |
16. Selected Quarterly Financial Data (unaudited)
Year ended June 30, 2015 |
First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
Total |
|||||||||||||||
(In thousands except per share data) |
||||||||||||||||||||
Revenues |
||||||||||||||||||||
National media |
$ | 246,326 | $ | 242,381 | $ | 275,298 | $ | 295,847 | $ | 1,059,852 | ||||||||||
Local media |
124,858 | 156,524 | 122,881 | 130,061 | 534,324 | |||||||||||||||
Total revenues |
$ | 371,184 | $ | 398,905 | $ | 398,179 | $ | 425,908 | $ | 1,594,176 | ||||||||||
Operating profit |
||||||||||||||||||||
National media |
$ | 28,895 | $ | 26,107 | $ | 23,460 | $ | 44,219 | $ | 122,681 | ||||||||||
Local media |
36,312 | 54,986 | 31,420 | 39,959 | 162,677 | |||||||||||||||
Unallocated corporate |
(12,355 |
) |
(12,231 |
) |
(7,774 |
) |
(10,886 |
) |
(43,246 |
) | ||||||||||
Income from operations |
$ | 52,852 | $ | 68,862 | $ | 47,106 | $ | 73,292 | $ | 242,112 | ||||||||||
Net earnings |
$ | 29,365 | $ | 39,591 | $ | 25,256 | $ | 42,579 | $ | 136,791 | ||||||||||
Basic earnings per share |
0.66 | 0.89 | 0.57 | 0.95 | 3.07 | |||||||||||||||
Diluted earnings per share |
0.65 | 0.87 | 0.56 | 0.94 | 3.02 | |||||||||||||||
Dividends per share |
0.4325 | 0.4325 | 0.4575 | 0.4575 | 1.7800 |
In the second quarter of fiscal 2015, the Company recorded a pre-tax restructuring charge of $6.7 million.
In the third quarter of fiscal 2015, the Company recorded a pre-tax restructuring charge of $9.9 million.
Year ended June 30, 2014 |
First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
Total |
|||||||||||||||
(In thousands except per share data) |
||||||||||||||||||||
Revenues |
||||||||||||||||||||
National media |
$ | 266,899 | $ | 249,694 | $ | 269,680 | $ | 279,625 | $ | 1,065,898 | ||||||||||
Local media |
89,553 | 104,354 | 97,734 | 111,169 | 402,810 | |||||||||||||||
Total revenues |
$ | 356,452 | $ | 354,048 | $ | 367,414 | $ | 390,794 | $ | 1,468,708 | ||||||||||
Operating profit |
||||||||||||||||||||
National media |
$ | 28,076 | $ | 28,070 | $ | 13,614 | $ | 43,353 | $ | 113,113 | ||||||||||
Local media |
25,676 | 35,225 | 26,696 | 25,463 | 113,060 | |||||||||||||||
Unallocated corporate |
(10,944 |
) |
(11,394 |
) |
(9,081 |
) |
(8,239 |
) |
(39,658 |
) | ||||||||||
Income from operations |
$ | 42,808 | $ | 51,901 | $ | 31,229 | $ | 60,577 | $ | 186,515 | ||||||||||
Net earnings |
$ | 24,041 | $ | 30,569 | $ | 18,486 | $ | 40,445 | $ | 113,541 | ||||||||||
Basic earnings per share |
0.54 | 0.68 | 0.41 | 0.91 | 2.54 | |||||||||||||||
Diluted earnings per share |
0.53 | 0.67 | 0.41 | 0.89 | 2.50 | |||||||||||||||
Dividends per share |
0.4075 | 0.4075 | 0.4325 | 0.4325 | 1.6800 |
In the second quarter of fiscal 2014, the Company recorded $1.6 million in acquisition transaction costs. Also in the second quarter, the Company recorded a reduction in contingent consideration payable of $1.1 million.
In the third quarter of fiscal 2014, the Company recorded a pre-tax restructuring charge of $20.8 million and acquisition transaction costs of $1.5 million. Also in the third quarter, the Company recorded a reduction in contingent consideration payable of $2.3 million and $1.4 million in reversals of excess restructuring reserves accrued in prior fiscal years.
In the fourth quarter of fiscal 2014, the Company recorded a pre-tax restructuring charge of $3.7 million and acquisition transaction costs $2.4 million. The Company recorded a reduction in contingent consideration payable of $2.3 million in the fourth quarter of fiscal 2014.
46
Exhibit 99.2
Index to Financial Statements | |
LIN Media LLC | |
Report of Independent Registered Public Accounting Firm |
F-2 |
Consolidated Balance Sheets |
F-4 |
Consolidated Statements of Operations |
F-5 |
Consolidated Statements of Comprehensive Income (Loss) |
F-6 |
Consolidated Statements of Stockholders’ Equity (Deficit) |
F-7 |
Consolidated Statements of Cash Flows |
F-10 |
Notes to Consolidated Financial Statements |
F-11 |
LIN Television Corporation |
|
Report of Independent Registered Public Accounting Firm |
F-59 |
Consolidated Balance Sheets |
F-60 |
Consolidated Statements of Operations |
F-61 |
Consolidated Statements of Comprehensive Income (Loss) |
F-62 |
Consolidated Statements of Stockholders’ Equity (Deficit) |
F-63 |
Consolidated Statements of Cash Flows |
F-66 |
Notes to Consolidated Financial Statements |
F-67 |
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of LIN Media LLC:
In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of LIN Media LLC and its subsidiaries at December 31, 2013 and December 31, 2012, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2013 in conformity with accounting principles generally accepted in the United States of America. 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 the standards of the Public Company Accounting Oversight Board (United States). 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, 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 our opinion.
/s/PricewaterhouseCoopers LLP
Hartford, Connecticut
March 3, 2014, except for Note 21, as to which the date is June 13, 2014
|
December 31, | ||||||
|
2013 |
2012 | |||||
|
(in thousands, except
share data) | ||||||
ASSETS |
|
| |||||
Current assets: |
|
| |||||
Cash and cash equivalents |
$ |
12,525 |
|
$ |
46,307 |
| |
Accounts receivable, less allowance for doubtful accounts (2013—$3,188; 2012—$3,599) |
145,309 |
|
126,150 |
| |||
Deferred income tax assets |
6,898 |
|
— |
| |||
Other current assets |
15,201 |
|
6,863 |
| |||
Total current assets |
179,933 |
|
179,320 |
| |||
Property and equipment, net |
221,078 |
|
241,491 |
| |||
Deferred financing costs |
16,448 |
|
19,135 |
| |||
Goodwill |
203,528 |
|
192,514 |
| |||
Broadcast licenses |
536,515 |
|
536,515 |
| |||
Other intangible assets, net |
47,049 |
|
59,554 |
| |||
Other assets |
12,299 |
|
12,885 |
| |||
Total assets (a) |
$ |
1,216,850 |
|
$ |
1,241,414 |
| |
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND SHAREHOLDERS' EQUITY (DEFICIT) |
|
| |||||
Current liabilities: |
|
| |||||
Current portion of long-term debt |
$ |
17,364 |
|
$ |
10,756 |
| |
Accounts payable |
14,002 |
|
18,955 |
| |||
Income taxes payable |
1,420 |
|
766 |
| |||
Accrued expenses |
51,696 |
|
153,246 |
| |||
Deferred income tax liabilities |
— |
|
168,219 |
| |||
Program obligations |
7,027 |
|
10,770 |
| |||
Total current liabilities |
91,509 |
|
362,712 |
| |||
Long-term debt, excluding current portion |
927,328 |
|
879,471 |
| |||
Deferred income tax liabilities |
64,686 |
|
40,556 |
| |||
Program obligations |
4,146 |
|
4,281 |
| |||
Other liabilities |
27,209 |
|
42,716 |
| |||
Total liabilities (a) |
1,114,878 |
|
1,329,736 |
| |||
Commitments and Contingencies (Note 13) |
|
|
|
| |||
Redeemable noncontrolling interest |
12,845 |
|
3,242 |
| |||
LIN Media LLC shareholders' equity (deficit): |
|
| |||||
Class A common shares, 100,000,000 shares authorized, Issued: 39,013,005 and 35,672,528 shares as of December 31, 2013 and 2012, respectively, Outstanding: 34,065,346 and 30,724,869 shares as of December 31, 2013 and 2012, respectively (b) |
624,564 |
|
313 |
| |||
Class B common shares, 50,000,000 shares authorized, 20,901,726 and 23,401,726 shares as of December 31, 2013 and 2012, respectively, issued and outstanding; convertible into an equal number of shares of class A or class C common shares (b) |
518,395 |
|
235 |
| |||
Class C common shares, 50,000,000 shares authorized, 2 shares as of December 31, 2013 and 2012, issued and outstanding; convertible into an equal number of shares of class A common shares |
— |
|
— |
| |||
Treasury shares, 4,947,659 of class A common shares as of December 31, 2013 and 2012, at cost (b) |
(21,984 |
) |
(21,984 |
) | |||
Additional paid-in capital (b) |
— |
|
1,129,691 |
| |||
Accumulated deficit |
(1,006,322 |
) |
(1,164,435 |
) | |||
Accumulated other comprehensive loss |
(25,526 |
) |
(35,384 |
) | |||
Total shareholders' equity (deficit) |
89,127 |
|
(91,564 |
) | |||
Total liabilities, redeemable noncontrolling interest and shareholders' equity (deficit) |
$ |
1,216,850 |
|
$ |
1,241,414 |
|
(a) |
Our consolidated assets as of December 31, 2013 and 2012 include total assets of $56,056 and $60,380, respectively, of variable interest entities ("VIEs") that can only be used to settle the obligations of the VIEs. These assets include broadcast licenses and other intangible assets of $44,677 and $46,604 and program rights of $2,186 and $2,060 as of December 31, 2013 and 2012, respectively. Our consolidated liabilities as of December 31, 2013 and 2012 include $4,126 and $4,577, respectively, of total liabilities of the VIEs for which the VIE's creditors have no recourse to the Company, including $2,727 and $4,152, respectively, of program obligations. See further description in Note 1—"Basis of Presentation and Summary of Significant Accounting Policies." |
(b) |
In conjunction with the Merger of LIN TV with and into LIN LLC on July 30, 2013, LIN LLC was deemed the successor reporting entity to LIN TV. As such, the additional paid-in capital amount within LIN LLC's shareholders' equity as of December 31, 2013 has been allocated to the Class A and B share balances to conform to LIN LLC's basis of presentation as a limited liability company. For purposes of LIN TV's shareholders' deficit balance as of December 31, 2012, LIN TV's class A, B and C common shares had a par value of $0.01 per share that is not reflected as of December 31, 2013, as each share represents a limited liability interest in LIN LLC. |
|
Year Ended December 31, | ||||||||||
|
2013 |
2012 |
2011 | ||||||||
|
(in thousands, except per share data) | ||||||||||
Net revenues |
$ |
652,363 |
|
$ |
553,462 |
|
$ |
400,003 |
| ||
Operating expenses: |
|
|
| ||||||||
Direct operating |
251,078 |
|
160,222 |
|
130,618 |
| |||||
Selling, general and administrative |
162,550 |
|
125,267 |
|
103,770 |
| |||||
Amortization of program rights |
29,242 |
|
23,048 |
|
21,406 |
| |||||
Corporate |
41,377 |
|
34,246 |
|
26,481 |
| |||||
Depreciation |
46,854 |
|
32,149 |
|
26,246 |
| |||||
Amortization of intangible assets |
22,826 |
|
6,364 |
|
1,199 |
| |||||
Restructuring |
3,895 |
|
1,009 |
|
707 |
| |||||
Contract termination costs (Note 12) |
3,887 |
|
— |
|
— |
| |||||
Loss from asset dispositions |
710 |
|
96 |
|
472 |
| |||||
Operating income |
89,944 |
|
171,061 |
|
89,104 |
| |||||
Other expense: |
|
|
| ||||||||
Interest expense, net |
56,607 |
|
46,683 |
|
50,706 |
| |||||
Share of loss in equity investments |
56 |
|
98,309 |
|
4,957 |
| |||||
Gain on derivative instruments |
— |
|
— |
|
(1,960 |
) | |||||
Loss on extinguishment of debt |
— |
|
3,341 |
|
1,694 |
| |||||
Other expense, net |
2,100 |
|
237 |
|
51 |
| |||||
Total other expense, net |
58,763 |
|
148,570 |
|
55,448 |
| |||||
Income before (benefit from) provision for income taxes |
31,181 |
|
22,491 |
|
33,656 |
| |||||
(Benefit from) provision for income taxes |
(125,420 |
) |
40,463 |
|
(16,045 |
) | |||||
Income (loss) from continuing operations |
156,601 |
|
(17,972 |
) |
49,701 |
| |||||
Discontinued operations: |
|
|
| ||||||||
Loss from discontinued operations, net of a benefit from income taxes of $541 and $595 for the years ended December 31, 2012 and 2011, respectively |
— |
|
(1,018 |
) |
(920 |
) | |||||
Gain on sale of discontinued operations, net of a provision for income taxes of $6,223 for the year ended December 31, 2012 |
— |
|
11,389 |
|
— |
| |||||
Net income (loss) |
156,601 |
|
(7,601 |
) |
48,781 |
| |||||
Net (loss) income attributable to noncontrolling interests |
(1,512 |
) |
(556 |
) |
204 |
| |||||
Net income (loss) attributable to LIN Media LLC |
$ |
158,113 |
|
$ |
(7,045 |
) |
$ |
48,577 |
| ||
Basic income (loss) per common share attributable to LIN Media LLC: |
|
|
| ||||||||
Income (loss) from continuing operations attributable to LIN Media LLC |
$ |
3.02 |
|
$ |
(0.32 |
) |
$ |
0.89 |
| ||
Loss from discontinued operations, net of tax |
— |
|
(0.02 |
) |
(0.02 |
) | |||||
Gain on sale of discontinued operations, net of tax |
— |
|
0.21 |
|
— |
| |||||
Net income (loss) attributable to LIN Media LLC |
$ |
3.02 |
|
$ |
(0.13 |
) |
$ |
0.87 |
| ||
Weighted-average number of common shares outstanding used in calculating basic income (loss) per common share |
52,439 |
|
54,130 |
|
55,768 |
| |||||
Diluted income (loss) per common share attributable to LIN Media LLC: |
|
|
| ||||||||
Income (loss) from continuing operations attributable to LIN Media LLC |
$ |
2.84 |
|
$ |
(0.32 |
) |
$ |
0.87 |
| ||
Loss from discontinued operations, net of tax |
— |
|
(0.02 |
) |
(0.02 |
) | |||||
Gain on sale of discontinued operations, net of tax |
— |
|
0.21 |
|
— |
| |||||
Net income (loss) attributable to LIN Media LLC |
$ |
2.84 |
|
$ |
(0.13 |
) |
$ |
0.85 |
| ||
Weighted-average number of common shares outstanding used in calculating diluted income (loss) per common share |
55,639 |
|
54,130 |
|
57,079 |
|
|
Year Ended December 31, | ||||||||||
|
2013 |
2012 |
2011 | ||||||||
|
(in thousands) | ||||||||||
Net income (loss) |
$ |
156,601 |
|
$ |
(7,601 |
) |
$ |
48,781 |
| ||
Pension net gain (loss), net of tax of $5,705, $1,523 and $(7,291) for the years ended December 31, 2013, 2012 and 2011, respectively |
8,738 |
|
2,424 |
|
(11,212 |
) | |||||
Amortization of pension net losses, net of tax of $734, $609 and $379 for the years ended December 31, 2013, 2012 and 2011, respectively, reclassified |
1,120 |
|
969 |
|
374 |
| |||||
Comprehensive income (loss) |
166,459 |
|
(4,208 |
) |
37,943 |
| |||||
Comprehensive (loss) income attributable to noncontrolling interest |
(1,512 |
) |
(556 |
) |
204 |
| |||||
Comprehensive income (loss) attributable to LIN Media LLC |
$ |
167,971 |
|
$ |
(3,652 |
) |
$ |
37,739 |
|
|
Common Stock |
|
|
|
|
| ||||||||||||||||||||||||||||||||||
|
Class A |
Class B |
Class C |
Treasury
Shares
(at cost) |
Additional
Paid-In
Capital |
Accumulated
Deficit |
Accumulated
Other
Comprehensive
Loss |
Total
Shareholders'
Equity | ||||||||||||||||||||||||||||||||
|
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
||||||||||||||||||||||||||||||||||
Balance at December 31, 2012 |
35,672,528 |
|
$ |
313 |
|
23,401,726 |
|
$ |
235 |
|
2 |
|
$ |
— |
|
$ |
(21,984 |
) |
$ |
1,129,691 |
|
$ |
(1,164,435 |
) |
$ |
(35,384 |
) |
$ |
(91,564 |
) | ||||||||||
Pension liability adjustment, net of tax of $6,439 |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
9,858 |
|
9,858 |
| ||||||||||||||||||
Issuance of class A common shares |
840,477 |
|
395 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
1,450 |
|
— |
|
— |
|
1,845 |
| ||||||||||||||||||
Conversion of class B common shares to class A common shares |
2,500,000 |
|
25 |
|
(2,500,000 |
) |
(25 |
) |
— |
|
— |
|
— |
|
|
|
— |
|
— |
|
— |
| ||||||||||||||||||
Tax benefit from exercise of share options |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
1,591 |
|
— |
|
— |
|
1,591 |
| ||||||||||||||||||
Share-based compensation |
— |
|
2,593 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
6,691 |
|
— |
|
— |
|
9,284 |
| ||||||||||||||||||
Net income |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
158,113 |
|
— |
|
158,113 |
| ||||||||||||||||||
Effect of the Merger |
— |
|
621,238 |
|
— |
|
518,185 |
|
— |
|
— |
|
— |
|
(1,139,423 |
) |
— |
|
— |
|
— |
| ||||||||||||||||||
Balance at December 31, 2013 |
39,013,005 |
|
$ |
624,564 |
|
20,901,726 |
|
$ |
518,395 |
|
2 |
|
$ |
— |
|
$ |
(21,984 |
) |
$ |
— |
|
$ |
(1,006,322 |
) |
$ |
(25,526 |
) |
$ |
89,127 |
|
|
Common Shares |
|
|
|
|
| ||||||||||||||||||||||||||||||||||
|
Class A |
Class B |
Class C |
Treasury
Shares
(at cost) |
Additional
Paid-In
Capital |
Accumulated
Deficit |
Accumulated
Other
Comprehensive
Loss |
Total
Stockholders'
Deficit | ||||||||||||||||||||||||||||||||
|
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
||||||||||||||||||||||||||||||||||
Balance at December 31, 2011 |
34,650,169 |
|
$ |
309 |
|
23,401,726 |
|
$ |
235 |
|
2 |
|
$ |
— |
|
$ |
(10,598 |
) |
$ |
1,121,589 |
|
$ |
(1,157,390 |
) |
$ |
(38,777 |
) |
$ |
(84,632 |
) | ||||||||||
Pension liability adjustment, net of tax of $2,132 |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
3,393 |
|
3,393 |
| ||||||||||||||||||
Issuance of class A common stock |
1,022,359 |
|
4 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
1,310 |
|
— |
|
— |
|
1,314 |
| ||||||||||||||||||
Stock-based compensation |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
6,792 |
|
— |
|
— |
|
6,792 |
| ||||||||||||||||||
Purchase of LIN TV class A common stock |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(11,386 |
) |
— |
|
— |
|
— |
|
(11,386 |
) | ||||||||||||||||||
Net loss |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(7,045 |
) |
— |
|
(7,045 |
) | ||||||||||||||||||
Balance at December 31, 2012 |
35,672,528 |
|
$ |
313 |
|
23,401,726 |
|
$ |
235 |
|
2 |
|
$ |
— |
|
$ |
(21,984 |
) |
$ |
1,129,691 |
|
$ |
(1,164,435 |
) |
$ |
(35,384 |
) |
$ |
(91,564 |
) |
|
Common Stock |
|
|
|
|
| ||||||||||||||||||||||||||||||||||
|
Class A |
Class B |
Class C |
Treasury
Stock
(at cost) |
Additional
Paid-In
Capital |
Accumulated
Deficit |
Accumulated
Other
Comprehensive
Loss |
Total
Stockholders'
Deficit | ||||||||||||||||||||||||||||||||
|
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
||||||||||||||||||||||||||||||||||
Balance at December 31, 2010 |
32,509,759 |
|
$ |
294 |
|
23,502,059 |
|
$ |
235 |
|
2 |
|
$ |
— |
|
$ |
(7,869 |
) |
$ |
1,109,814 |
|
$ |
(1,205,967 |
) |
$ |
(27,939 |
) |
$ |
(131,432 |
) | ||||||||||
Pension liability adjustment, net of tax of $(6,912) |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(10,838 |
) |
(10,838 |
) | ||||||||||||||||||
Issuance of LIN TV Corp. class A common stock |
1,150,000 |
|
12 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
4,761 |
|
— |
|
— |
|
4,773 |
| ||||||||||||||||||
Purchase of LIN TV Corp. class A common stock |
(2,729 |
) |
(2,729 |
) | ||||||||||||||||||||||||||||||||||||
Stock-based compensation |
890,077 |
|
3 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
7,014 |
|
— |
|
— |
|
7,017 |
| ||||||||||||||||||
Conversion of class B common stock to class A common stock |
100,333 |
|
— |
|
(100,333 |
) |
||||||||||||||||||||||||||||||||||
Net income |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
48,577 |
|
— |
|
48,577 |
| ||||||||||||||||||
Balance at December 31, 2011 |
34,650,169 |
|
$ |
309 |
|
23,401,726 |
|
$ |
235 |
|
2 |
|
$ |
— |
|
$ |
(10,598 |
) |
$ |
1,121,589 |
|
$ |
(1,157,390 |
) |
$ |
(38,777 |
) |
$ |
(84,632 |
) |
|
Year ended December 31, | ||||||||||
|
2013 |
2012 |
2011 | ||||||||
|
(in thousands) | ||||||||||
OPERATING ACTIVITIES: |
|
|
| ||||||||
Net income (loss) |
$ |
156,601 |
|
$ |
(7,601 |
) |
$ |
48,781 |
| ||
Loss from discontinued operations |
— |
|
1,018 |
|
920 |
| |||||
Gain on sale of discontinued operations |
— |
|
(11,389 |
) |
— |
| |||||
Adjustment to reconcile net income to net cash provided by operating activities: |
|
|
| ||||||||
Depreciation |
46,854 |
|
32,149 |
|
26,246 |
| |||||
Amortization of intangible assets |
22,826 |
|
6,364 |
|
1,199 |
| |||||
Amortization of financing costs and note discounts |
3,638 |
|
2,589 |
|
3,755 |
| |||||
Amortization of program rights |
29,242 |
|
23,048 |
|
21,406 |
| |||||
Cash payments for programming |
(31,677 |
) |
(24,258 |
) |
(24,622 |
) | |||||
Loss on extinguishment of debt |
— |
|
1,830 |
|
1,694 |
| |||||
Gain on derivative instruments |
— |
|
— |
|
(1,960 |
) | |||||
Share of loss in equity investments |
56 |
|
98,309 |
|
4,957 |
| |||||
Deferred income taxes, net |
(27,222 |
) |
38,263 |
|
(16,586 |
) | |||||
Extinguishment of income tax liability related to the Merger |
(131,481 |
) |
— |
|
— |
| |||||
Share-based compensation |
9,374 |
|
6,857 |
|
6,176 |
| |||||
Loss from asset dispositions |
710 |
|
96 |
|
472 |
| |||||
Other, net |
(1,155 |
) |
1,724 |
|
754 |
| |||||
Changes in operating assets and liabilities, net of acquisitions: |
|
|
| ||||||||
Accounts receivable |
(10,958 |
) |
(33,403 |
) |
(8,825 |
) | |||||
Other assets |
(4,254 |
) |
(2,146 |
) |
(138 |
) | |||||
Accounts payable |
(8,679 |
) |
7,983 |
|
3,318 |
| |||||
Income taxes payable |
654 |
|
— |
|
— |
| |||||
Accrued interest expense |
4,327 |
|
1,746 |
|
(851 |
) | |||||
Other liabilities and accrued expenses |
(9,889 |
) |
6,256 |
|
(3,634 |
) | |||||
Net cash provided by operating activities, continuing operations |
48,967 |
|
149,435 |
|
63,062 |
| |||||
Net cash used in operating activities, discontinued operations |
— |
|
(2,736 |
) |
(402 |
) | |||||
Net cash provided by operating activities |
48,967 |
|
146,699 |
|
62,660 |
| |||||
INVESTING ACTIVITIES: |
|
|
| ||||||||
Capital expenditures |
(29,374 |
) |
(28,230 |
) |
(20,069 |
) | |||||
Change in restricted cash |
— |
|
255,159 |
|
(255,159 |
) | |||||
Payments for business combinations, net of cash acquired |
(10,082 |
) |
(358,495 |
) |
(9,033 |
) | |||||
Proceeds from the sale of assets |
86 |
|
79 |
|
74 |
| |||||
Payments on derivative instruments |
— |
|
— |
|
(2,020 |
) | |||||
Shortfall loans to joint venture with NBCUniversal |
— |
|
(2,292 |
) |
(2,483 |
) | |||||
Capital contribution to joint venture with NBCUniversal |
(100,000 |
) |
— |
|
— |
| |||||
Other investments, net |
— |
|
— |
|
(375 |
) | |||||
Net cash used in investing activities, continuing operations |
(139,370 |
) |
(133,779 |
) |
(289,065 |
) | |||||
Net cash provided by (used in) investing activities, discontinued operations |
— |
|
29,520 |
|
(115 |
) | |||||
Net cash used in investing activities |
(139,370 |
) |
(104,259 |
) |
(289,180 |
) | |||||
FINANCING ACTIVITIES: |
|
|
| ||||||||
Net proceeds on exercises of employee and director share-based compensation |
1,845 |
|
1,314 |
|
841 |
| |||||
Tax benefit from exercises of share options |
1,591 |
|
— |
|
— |
| |||||
Proceeds from borrowings on long-term debt |
139,000 |
|
328,333 |
|
417,695 |
| |||||
Principal payments on long-term debt |
(85,160 |
) |
(322,179 |
) |
(175,216 |
) | |||||
Payment of long-term debt issue costs |
(655 |
) |
(10,272 |
) |
(7,662 |
) | |||||
Treasury shares purchased |
— |
|
(11,386 |
) |
(2,729 |
) | |||||
Net cash provided by (used in) financing activities |
56,621 |
|
(14,190 |
) |
232,929 |
| |||||
Net (decrease) increase in cash and cash equivalents |
(33,782 |
) |
28,250 |
|
6,409 |
| |||||
Cash and cash equivalents at the beginning of the period |
46,307 |
|
18,057 |
|
11,648 |
| |||||
Cash and cash equivalents at the end of the period |
$ |
12,525 |
|
$ |
46,307 |
|
$ |
18,057 |
|
|
December 31, | ||||||
|
2013 |
2012 | |||||
ASSETS |
|
| |||||
Current assets: |
|
| |||||
Cash and cash equivalents |
$ |
278 |
|
$ |
418 |
| |
Accounts receivable, net |
6,345 |
|
6,021 |
| |||
Other assets |
927 |
|
2,092 |
| |||
Total current assets |
7,550 |
|
8,531 |
| |||
Property and equipment, net |
2,469 |
|
3,190 |
| |||
Broadcast licenses and other intangible assets, net |
44,677 |
|
46,604 |
| |||
Other assets |
1,360 |
|
2,055 |
| |||
Total assets |
$ |
56,056 |
|
$ |
60,380 |
| |
LIABILITIES |
|
| |||||
Current liabilities: |
|
| |||||
Current portion of long-term debt |
$ |
1,162 |
|
$ |
1,451 |
| |
Accounts payable |
63 |
|
— |
| |||
Accrued expenses |
1,336 |
|
425 |
| |||
Program obligations |
1,303 |
|
2,185 |
| |||
Total current liabilities |
3,864 |
|
4,061 |
| |||
Long-term debt, excluding current portion |
3,005 |
|
3,950 |
| |||
Program obligations |
1,424 |
|
1,967 |
| |||
Other liabilities |
47,763 |
|
50,402 |
| |||
Total liabilities |
$ |
56,056 |
|
$ |
60,380 |
|
|
Year Ended December 31, | ||||||||||
|
2013 |
2012 |
2011 | ||||||||
Barter revenue |
$ |
5,552 |
|
$ |
4,220 |
|
$ |
4,071 |
| ||
Barter expense |
(5,455 |
) |
(4,176 |
) |
(3,967 |
) |
|
Year Ended December 31, | ||||||||||
|
2013 |
2012 |
2011 | ||||||||
Direct operating |
$ |
320 |
|
$ |
270 |
|
$ |
256 |
| ||
Selling, general and administrative |
1,460 |
|
1,019 |
|
1,266 |
| |||||
Corporate |
7,594 |
|
5,568 |
|
4,654 |
| |||||
Total share-based compensation |
$ |
9,374 |
|
$ |
6,857 |
|
$ |
6,176 |
|
|
Year Ended December 31, | ||||||||||
|
2013 |
2012 |
2011 | ||||||||
Numerator for earnings per common share calculation: |
|
|
| ||||||||
Income (loss) from continuing operations |
$ |
156,601 |
|
$ |
(17,972 |
) |
$ |
49,701 |
| ||
Net (loss) income attributable to noncontrolling interest included in continuing operations |
(1,512 |
) |
(556 |
) |
204 |
| |||||
Income (loss) from continuing operations attributable to LIN LLC |
158,113 |
|
(17,416 |
) |
49,497 |
| |||||
Income (loss) from discontinued operations, including gain on sale |
— |
|
10,371 |
|
(920 |
) | |||||
Net income (loss) attributable to LIN LLC |
$ |
158,113 |
|
$ |
(7,045 |
) |
$ |
48,577 |
| ||
Denominator for earnings per common share calculation: |
|
|
| ||||||||
Weighted-average common shares, basic |
52,439 |
|
54,130 |
|
55,768 |
| |||||
Effect of dilutive securities: |
|
|
| ||||||||
Share options and restricted shares |
3,200 |
|
— |
|
1,311 |
| |||||
Weighted-average common shares, diluted |
55,639 |
|
54,130 |
|
57,079 |
|
|
Redeemable
Noncontrolling
Interest | ||
Acquisition of redeemable noncontrolling interest |
$ |
3,503 |
|
Net loss |
(556 |
) | |
Share-based compensation |
295 |
| |
Balance as of December 31, 2012 |
3,242 |
| |
Acquisition of redeemable noncontrolling interest |
11,025 |
| |
Net loss |
(1,512 |
) | |
Share-based compensation |
90 |
| |
Balance as of December 31, 2013 |
$ |
12,845 |
|
Current assets |
$ |
7,315 |
|
Equipment |
99 |
| |
Definite-lived intangible assets |
4,620 |
| |
Goodwill |
1,854 |
| |
Current liabilities |
(4,302 |
) | |
Noncontrolling interest |
(3,834 |
) | |
Total |
$ |
5,752 |
|
Current assets |
$ |
3,759 |
|
Non-current assets |
13 |
| |
Equipment |
179 |
| |
Definite-lived intangible assets |
3,580 |
| |
Goodwill |
9,160 |
| |
Current liabilities |
(920 |
) | |
Non-current liabilities |
(1,361 |
) | |
Noncontrolling interest |
(7,191 |
) | |
Total |
$ |
7,219 |
|
Program rights assets |
$ |
2,040 |
|
Property and equipment |
100,124 |
| |
Broadcast licenses |
133,120 |
| |
Definite-lived intangible assets |
55,837 |
| |
Goodwill |
65,024 |
| |
Current liabilities |
(417 |
) | |
Non-current liabilities |
(2,239 |
) | |
Long-term debt assumed |
(13,989 |
) | |
Total |
$ |
339,500 |
|
2012 |
2011 | ||||||
Net revenue |
$ |
658,163 |
|
$ |
514,340 |
| |
Net (loss) income |
$ |
(11,720 |
) |
$ |
23,950 |
| |
Basic (loss) income per common share attributable to LIN LLC |
$ |
(0.22 |
) |
$ |
0.43 |
| |
Diluted (loss) income per common share attributable to LIN LLC |
$ |
(0.22 |
) |
$ |
0.42 |
|
Current assets |
$ |
1,656 |
|
Non-current assets |
1,968 |
| |
Other intangible assets |
12,898 |
| |
Goodwill |
5,331 |
| |
Non-current liabilities |
(2,858 |
) | |
Total |
$ |
18,995 |
|
|
||||||||||||||||||||||||
|
2012 |
2011 | ||||||||||||||||||||||
|
WWHO-
TV |
WUPW-
TV |
Total |
WWHO-
TV |
WUPW-
TV |
Total | ||||||||||||||||||
Net revenues |
$ |
440 |
|
$ |
2,193 |
|
$ |
2,633 |
|
$ |
4,236 |
|
$ |
7,585 |
|
$ |
11,821 |
| ||||||
Operating (loss) income |
(393 |
) |
(1,166 |
) |
(1,559 |
) |
(699 |
) |
1,079 |
|
380 |
| ||||||||||||
Net (loss) income |
(252 |
) |
(766 |
) |
(1,018 |
) |
(1,427 |
) |
507 |
|
(920 |
) |
|
January 1 - February 12, |
Year Ended December 31, | |||||||||
|
2013 |
2012 |
2011 | ||||||||
SVO: |
|
|
| ||||||||
Net revenues |
$ |
11,951 |
|
$ |
143,474 |
|
$ |
118,833 |
| ||
Operating expenses |
(9,148 |
) |
(79,124 |
) |
(71,350 |
) | |||||
Net income before taxes |
2,805 |
|
64,653 |
|
47,791 |
| |||||
Net income after taxes |
2,793 |
|
64,515 |
|
47,743 |
| |||||
SVH: |
|
|
| ||||||||
Equity in income from limited partnership in SVO |
$ |
2,786 |
|
$ |
64,354 |
|
$ |
47,624 |
| ||
Interest and other expense |
(8,039 |
) |
(69,365 |
) |
(68,003 |
) | |||||
Net loss |
(5,253 |
) |
(5,011 |
) |
(20,379 |
) | |||||
Cash distributions to SVH from SVO |
6,905 |
|
55,025 |
|
53,846 |
| |||||
Shortfall loans from LIN Television to SVH |
— |
|
2,292 |
|
2,483 |
| |||||
Shortfall loans from General Electric Company ("GE") to SVH |
— |
|
8,954 |
|
9,701 |
| |||||
|
February 12, |
December 31, |
| ||||||||
|
2013 (2) |
2012 |
| ||||||||
SVH: |
|
|
| ||||||||
Cash and cash equivalents |
$ |
6,905 |
|
$ |
— |
|
| ||||
Non-current assets |
205,433 |
|
209,552 |
|
| ||||||
Current liabilities |
8,155 |
|
544 |
|
| ||||||
Non-current liabilities(1) |
865,354 |
|
864,927 |
|
| ||||||
Shortfall loans outstanding and accrued interest payable to LIN Television from SVH |
10,159 |
|
10,080 |
|
| ||||||
Shortfall loans outstanding and accrued interest payable to NBCUniversal and General Electric from SVH |
39,695 |
|
39,382 |
|
|
(1) |
See Note 13—"Commitments and Contingencies" for further description of the GECC Note. Non-current liabilities includes shortfall loans outstanding and accrued interest payable to the joint venture partners. |
(2) |
Represents balances prior to the effect of the JV Sale Transaction. |
|
December 31, | ||||||
|
2013 |
2012 | |||||
Land and land improvements |
$ |
21,152 |
|
$ |
21,147 |
| |
Buildings and fixtures |
179,209 |
|
176,940 |
| |||
Broadcast equipment and other |
319,912 |
|
311,907 |
| |||
Total property and equipment |
520,273 |
|
509,994 |
| |||
Less accumulated depreciation |
(299,195 |
) |
(268,503 |
) | |||
Property and equipment, net |
$ |
221,078 |
|
$ |
241,491 |
|
|
Weighted-Average
Remaining Useful
Life (in years) |
December 31, | |||||||
|
2013 |
2012 | |||||||
Finite-Lived Intangible Assets: |
|
|
| ||||||
Network affiliations |
1 |
$ |
32,996 |
|
$ |
32,996 |
| ||
Customer relationships |
9 |
14,941 |
|
8,631 |
| ||||
Non-compete agreements |
1 |
1,588 |
|
1,588 |
| ||||
Completed technology |
3 |
10,191 |
|
6,370 |
| ||||
Favorable leases |
31 |
8,573 |
|
8,573 |
| ||||
Retransmission consent agreements |
4 |
7,860 |
|
7,859 |
| ||||
Other intangible assets |
19 |
9,817 |
|
9,609 |
| ||||
Accumulated amortization |
|
(38,917 |
) |
(16,072 |
) | ||||
Net finite-lived intangible assets |
|
$ |
47,049 |
|
$ |
59,554 |
| ||
Indefinite-Lived Intangible Assets: |
|
|
| ||||||
Broadcast licenses |
|
$ |
536,515 |
|
$ |
536,515 |
| ||
Summary: |
|
|
| ||||||
Goodwill |
|
$ |
203,528 |
|
$ |
192,514 |
| ||
Broadcast licenses and finite-lived intangible assets, net |
|
583,564 |
|
596,069 |
| ||||
Total intangible assets |
|
$ |
787,092 |
|
$ |
788,583 |
|
|
Projected Aggregate
Amortization Expense | ||
For the years ended December 31, |
| ||
2014 |
$ |
15,971 |
|
2015 |
5,783 |
| |
2016 |
4,980 |
| |
2017 |
3,266 |
| |
2018 |
2,042 |
| |
Thereafter |
15,007 |
| |
Total |
$ |
47,049 |
|
|
Year Ended December 31, | ||||||
|
2013 |
2012 | |||||
Broadcast: |
|||||||
Balance as of January 1, 2013 and 2012, respectively |
$ |
185,237 |
|
$ |
114,882 |
| |
Acquisitions |
— |
|
70,355 |
| |||
Balance as of December 31, 2013 and 2012, respectively |
$ |
185,237 |
|
$ |
185,237 |
| |
Digital: |
|||||||
Balance as of January 1, 2013 and 2012, respectively |
$ |
7,277 |
|
$ |
7,187 |
| |
Acquisitions/Adjustments |
11,014 |
|
90 |
| |||
Balance as of December 31, 2013 and 2012, respectively |
$ |
18,291 |
|
$ |
7,277 |
| |
Total: |
|||||||
Balance as of January 1, 2013 and 2012, respectively |
$ |
192,514 |
|
$ |
122,069 |
| |
Acquisitions |
11,014 |
|
70,445 |
| |||
Balance as of December 31, 2013 and 2012, respectively |
$ |
203,528 |
|
$ |
192,514 |
|
|
December 31, | ||||||
|
2013 |
2012 | |||||
Senior Secured Credit Facility: |
|
| |||||
Revolving credit loans |
$ |
5,000 |
|
$ |
— |
| |
$118,750 and $125,000 Term loans, net of discount of $345 and $435 as of December 31, 2013 and December 31, 2012, respectively |
118,405 |
|
124,565 |
| |||
$314,200 and $257,400 Incremental term loans, net of discount of $1,684 and $2,020 as of December 31, 2013 and December 31, 2012, respectively |
312,516 |
|
255,380 |
| |||
83/8% Senior Notes due 2018 |
200,000 |
|
200,000 |
| |||
63/8% Senior Notes due 2021 |
290,000 |
|
290,000 |
| |||
Capital lease obligations |
14,604 |
|
14,881 |
| |||
Other debt |
4,167 |
|
5,401 |
| |||
Total debt |
944,692 |
|
890,227 |
| |||
Less current portion |
17,364 |
|
10,756 |
| |||
Total long-term debt |
$ |
927,328 |
|
$ |
879,471 |
|
|
Credit Facility | ||||||||||
|
Revolving
Facility |
Term Loans |
Incremental
Term Loans | ||||||||
Final maturity date |
10/26/2017 |
|
10/26/2017 |
|
12/21/2018 |
| |||||
Available balance as of December 31, 2013 |
$ |
70,000 |
|
$ |
— |
|
$ |
— |
| ||
Interest rates as of December 31, 2013: |
|
|
| ||||||||
Interest rate |
0.17 |
% |
0.17 |
% |
1.00 |
% | |||||
Applicable margin |
2.75 |
% |
2.75 |
% |
3.00 |
% | |||||
Total |
2.92 |
% |
2.92 |
% |
4.00 |
% |
|
83/8% Senior Notes |
Final maturity date |
4/15/2018 |
Annual interest rate |
8.375% |
Payable semi-annually in arrears |
April 15th |
October 15th |
|
63/8% Senior Notes |
Final maturity date |
1/15/2021 |
Annual interest rate |
6.375% |
Payable semi-annually in arrears |
January 15th |
July 15th |
Revolving
Facilities |
Term Loans |
Incremental
Term Loans |
83/8% Senior
Notes |
63/8% Senior
Notes |
Capital
Leases |
Other
Debt |
Total | ||||||||||||||||||||||||
Final maturity date |
10/26/2017 |
|
|
10/26/2017 |
|
12/21/2018 |
|
4/15/2018 |
|
1/15/2021 |
|
Various |
|
Various |
|
|
| ||||||||||||||
2014 |
$ |
— |
|
|
$ |
12,500 |
|
$ |
3,200 |
|
|
$ |
— |
|
$ |
— |
|
$ |
502 |
|
$ |
1,162 |
|
$ |
17,364 |
| |||||
2015 |
— |
|
|
18,750 |
|
3,200 |
|
|
— |
|
— |
|
528 |
|
1,162 |
|
23,640 |
| |||||||||||||
2016 |
— |
|
|
25,000 |
|
3,200 |
|
|
— |
|
— |
|
620 |
|
1,024 |
|
29,844 |
| |||||||||||||
2017 |
5,000 |
|
(1) |
62,500 |
|
3,200 |
|
|
— |
|
— |
|
577 |
|
819 |
|
72,096 |
| |||||||||||||
2018 |
— |
|
— |
|
301,400 |
|
|
200,000 |
|
— |
|
609 |
|
— |
|
502,009 |
| ||||||||||||||
2019 and thereafter |
— |
|
|
— |
|
— |
|
— |
|
290,000 |
|
11,768 |
|
— |
|
301,768 |
| ||||||||||||||
Total |
$ |
5,000 |
|
|
$ |
118,750 |
|
$ |
314,200 |
|
|
$ |
200,000 |
|
$ |
290,000 |
|
$ |
14,604 |
|
$ |
4,167 |
|
$ |
946,721 |
|
(1) |
An additional $25 million was outstanding on our revolving credit facility as of the date of this report and is not reflected in our balance sheet as of December 31, 2013. |
|
December 31, 2013 |
December 31, 2012 | |||||||||||||
|
Carrying
Amount |
Estimated
Fair Value |
Carrying
Amount |
Estimated
Fair Value | |||||||||||
|
(in thousands) | ||||||||||||||
Revolving credit loans |
$ |
5,000 |
|
$ |
5,000 |
|
$ |
— |
|
$ |
— |
| |||
Term loans |
430,921 |
|
432,105 |
|
379,945 |
|
380,599 |
| |||||||
Senior notes |
490,000 |
|
512,983 |
|
490,000 |
|
524,500 |
| |||||||
Other debt |
4,167 |
|
4,167 |
|
5,401 |
|
5,401 |
| |||||||
Total |
$ |
930,088 |
|
$ |
954,255 |
|
$ |
875,346 |
|
$ |
910,500 |
|
|
Year Ended December 31, | ||||||||||
|
2013 |
2012 |
2011 | ||||||||
Employee share options |
$ |
2,933 |
|
$ |
1,868 |
|
$ |
1,492 |
| ||
Restricted share awards |
6,348 |
|
4,896 |
|
4,320 |
| |||||
Modifications to share option agreements |
93 |
|
93 |
|
364 |
| |||||
Total share-based compensation |
$ |
9,374 |
|
$ |
6,857 |
|
$ |
6,176 |
|
Shares |
Weighted-
Average
Exercise Price
Per Share | |||||
Outstanding at the beginning of the year |
4,894 |
|
$ |
3.42 |
| |
Granted during the year |
110 |
|
12.29 |
| ||
Exercised or converted during the year |
(420 |
) |
3.23 |
| ||
Forfeited during the year |
(163 |
) |
5.43 |
| ||
Expired during the year |
(9 |
) |
3.57 |
| ||
Outstanding at the end of the year |
4,412 |
|
3.58 |
| ||
Exercisable or convertible at the end of the year |
3,304 |
|
2.79 |
|
|
Year Ended December 31, | ||||
|
2013 |
2012 |
2011 | ||
Expected term(1) |
5 to 6 years |
5 to 6 years |
5 to 6 years | ||
Expected volatility(2) |
95% to 96% |
98% to 99% |
97% to 99% | ||
Expected dividends |
$— |
$— |
$— | ||
Risk-free rate(3) |
0.8% to 1.2% |
0.6% to 1.1% |
0.9% to 2.6% |
(1) |
The expected term was estimated using our historical experience. |
(2) |
Expected volatility is based on historical trends for our class A common shares over the expected term. |
(3) |
The risk-free interest rate for each grant is equal to the U.S. Treasury yield curve in effect at the time of grant for instruments with a similar expected life. |
Shares |
Weighted-
Average
Price Per
Share | |||||
Unvested at the beginning of the year |
2,294 |
|
$ |
5.98 |
| |
Granted during the year |
582 |
|
18.89 |
| ||
Vested during the year |
(960 |
) |
6.00 |
| ||
Forfeited during the year |
(205 |
) |
5.87 |
| ||
Unvested at the end of the year |
1,711 |
|
10.37 |
|
|
Year Ended December 31, | ||||||||||
|
2013 |
2012 |
2011 | ||||||||
Total fair value of options and awards granted |
$ |
12,349 |
|
$ |
10,347 |
|
$ |
4,983 |
| ||
Total intrinsic value of options exercised |
5,136 |
|
865 |
|
225 |
| |||||
Total fair value of awards vested |
18,050 |
|
7,718 |
|
7,522 |
|
|
Year Ended
December 31, | ||||||
|
2013 |
2012 | |||||
Change in projected benefit obligation |
|
| |||||
Projected benefit obligation, beginning of period |
$ |
134,969 |
|
$ |
133,047 |
| |
Service cost |
— |
|
— |
| |||
Interest cost |
5,259 |
|
5,379 |
| |||
Actuarial (gain) loss |
(10,282 |
) |
1,485 |
| |||
Benefits paid |
(4,943 |
) |
(4,942 |
) | |||
Curtailment |
— |
|
— |
| |||
Projected benefit obligation, end of period |
$ |
125,003 |
|
$ |
134,969 |
| |
Accumulated benefit obligation |
$ |
125,003 |
|
$ |
134,969 |
| |
Change in plan assets |
|
| |||||
Fair value of plan assets, beginning of period |
$ |
96,412 |
|
$ |
82,314 |
| |
Actual return on plan assets |
10,611 |
|
11,621 |
| |||
Employer contributions |
5,359 |
|
7,419 |
| |||
Benefits paid |
(4,943 |
) |
(4,942 |
) | |||
Fair value of plan assets, end of period |
$ |
107,439 |
|
$ |
96,412 |
| |
Unfunded status of the plan |
$ |
(17,564 |
) |
$ |
(38,557 |
) | |
Total amount recognized as accrued benefit liability |
$ |
(17,564 |
) |
$ |
(38,557 |
) |
|
December 31, | ||||||
|
2013 |
2012 | |||||
Other accrued expenses (current) |
$ |
(695 |
) |
$ |
(373 |
) | |
Other liabilities (long-term) |
(16,869 |
) |
(38,184 |
) | |||
Total amount recognized as accrued pension benefit liability |
$ |
(17,564 |
) |
$ |
(38,557 |
) | |
Accumulated other comprehensive loss: |
|
| |||||
Net loss |
$ |
32,681 |
|
$ |
48,978 |
| |
Tax benefit |
12,915 |
|
19,354 |
| |||
Net loss, net of tax benefit |
19,766 |
|
29,624 |
| |||
Pension tax liability |
5,760 |
|
5,760 |
| |||
Accumulated other comprehensive loss related to net periodic pension benefit cost |
$ |
25,526 |
|
$ |
35,384 |
|
|
December 31, | ||||||||||
|
2013 |
2012 |
2011 | ||||||||
Net gain (loss) |
$ |
14,443 |
|
$ |
3,947 |
|
$ |
(18,503 |
) | ||
Amortization of net actuarial loss |
1,854 |
|
1,578 |
|
753 |
| |||||
Net gain (loss) |
$ |
16,297 |
|
$ |
5,525 |
|
$ |
(17,750 |
) | ||
Tax benefit (provision) |
6,439 |
|
2,132 |
|
(6,912 |
) | |||||
Total amount recognized in other comprehensive income (loss) |
$ |
9,858 |
|
$ |
3,393 |
|
$ |
(10,838 |
) |
|
Year Ended December 31, | ||||||||||
|
2013 |
2012 |
2011 | ||||||||
Service cost |
$ |
— |
|
$ |
— |
|
$ |
— |
| ||
Interest cost |
5,259 |
|
5,379 |
|
5,872 |
| |||||
Expected return on plan assets |
(6,450 |
) |
(6,190 |
) |
(6,824 |
) | |||||
Amortization of prior service cost |
— |
|
— |
|
— |
| |||||
Amortization of net loss |
1,854 |
|
1,579 |
|
754 |
| |||||
Net periodic benefit cost (gain) |
$ |
663 |
|
$ |
768 |
|
$ |
(198 |
) |
|
Expected Future Pension
Benefit Payments | ||
For Years Ended December 31, |
| ||
2014 |
$ |
7,914 |
|
2015 |
5,879 |
| |
2016 |
5,955 |
| |
2017 |
5,966 |
| |
2018 |
6,281 |
| |
2019 through 2023 |
38,156 |
|
|
Year Ended December 31, | ||||||||||||
|
2013 |
2012 |
2011 | ||||||||||
SERP |
Retirement Plan |
SERP |
Retirement Plan |
SERP |
Retirement Plan | ||||||||
Discount rate used to estimate our pension benefit obligation |
4.70% |
5.00% |
3.60% |
4.00% |
3.90 |
% |
4.20 |
% | |||||
Discount rate used to determine net periodic pension benefit |
3.60% |
4.00% |
3.90% |
4.20% |
5.25 |
% |
5.25 |
% | |||||
Rate of compensation increase |
N/A |
N/A |
N/A |
N/A |
N/A |
|
N/A |
| |||||
Expected long-term rate-of-return on plan assets |
N/A |
7.00% |
N/A |
7.00% |
N/A |
|
7.00 |
% |
|
Target Allocation |
Percentage of Plan Assets
as of December 31, | ||||||
Asset Category |
2013 |
2013 |
2012 | |||||
Equity securities |
60 |
% |
60 |
% |
55 |
% | ||
Debt securities |
40 |
% |
40 |
% |
45 |
% | ||
100 |
% |
100 |
% |
100 |
% |
Quoted Prices in Active Markets for Identical Assets |
Significant
Observable Inputs |
||||||||||
|
(Level 1) |
(Level 2) |
Total | ||||||||
December 31, 2013: |
|
||||||||||
Cash and cash equivalents |
$ |
690 |
|
$ |
— |
|
$ |
690 |
| ||
Money market fund |
— |
|
762 |
|
762 |
| |||||
Commingled pools: |
|
|
| ||||||||
U.S. equity |
— |
|
37,645 |
|
37,645 |
| |||||
International equity |
— |
|
18,884 |
|
18,884 |
| |||||
REIT |
— |
|
3,213 |
|
3,213 |
| |||||
High yield bond |
— |
|
4,101 |
|
4,101 |
| |||||
Emerging markets |
— |
|
5,994 |
|
5,994 |
| |||||
Investment grade fixed income |
— |
|
36,150 |
|
36,150 |
| |||||
Total |
$ |
690 |
|
$ |
106,749 |
|
$ |
107,439 |
| ||
December 31, 2012: |
|
||||||||||
Cash and cash equivalents |
$ |
573 |
|
$ |
— |
|
$ |
573 |
| ||
Money market fund |
— |
|
519 |
|
519 |
| |||||
Commingled pools: |
|
|
| ||||||||
U.S. equity |
— |
|
30,034 |
|
30,034 |
| |||||
International equity |
— |
|
15,241 |
|
15,241 |
| |||||
REIT |
— |
|
3,875 |
|
3,875 |
| |||||
High yield bond |
— |
|
2,916 |
|
2,916 |
| |||||
Emerging markets |
— |
|
6,374 |
|
6,374 |
| |||||
Investment grade fixed income |
— |
|
36,880 |
|
36,880 |
| |||||
Total |
$ |
573 |
|
$ |
95,839 |
|
$ |
96,412 |
|
Severance and
Related | |||
Balance as of December 31, 2011 |
$ |
515 |
|
Charges |
1,009 |
| |
Payments |
(807 |
) | |
Balance as of December 31, 2012 |
$ |
717 |
|
Charges |
3,895 |
| |
Payments |
(4,189 |
) | |
Balance as of December 31, 2013 |
$ |
423 |
|
Operating Leases
and Agreements |
Syndicated
Television
Programming(1) |
Total | |||||||||
Year |
|
|
| ||||||||
2014 |
$ |
45,076 |
|
$ |
27,119 |
|
$ |
72,195 |
| ||
2015 |
33,930 |
|
26,675 |
|
60,605 |
| |||||
2016 |
16,140 |
|
17,387 |
|
33,527 |
| |||||
2017 |
12,146 |
|
3,133 |
|
15,279 |
| |||||
2018 |
1,611 |
|
153 |
|
1,764 |
| |||||
Thereafter |
7,139 |
|
214 |
|
7,353 |
| |||||
Total obligations |
$ |
116,042 |
|
$ |
74,681 |
|
$ |
190,723 |
|
|
Year Ended December 31, | ||||||||||
|
2013 |
2012 |
2011 | ||||||||
Current: |
|
|
| ||||||||
Federal |
$ |
26,056 |
|
$ |
21 |
|
$ |
543 |
| ||
State |
5,636 |
|
1,571 |
|
652 |
| |||||
Foreign |
— |
|
633 |
|
— |
| |||||
Total current |
$ |
31,692 |
|
$ |
2,225 |
|
$ |
1,195 |
| ||
Deferred: |
|
|
| ||||||||
Federal |
$ |
(124,201 |
) |
$ |
33,865 |
|
$ |
(25,907 |
) | ||
State |
(32,911 |
) |
4,373 |
|
8,667 |
| |||||
Total deferred |
(157,112 |
) |
38,238 |
|
(17,240 |
) | |||||
Total current and deferred |
$ |
(125,420 |
) |
$ |
40,463 |
|
$ |
(16,045 |
) |
Year Ended December 31, | |||||||||||
2013 |
2012 |
2011 | |||||||||
Provision assuming federal statutory rate |
$ |
10,913 |
|
$ |
7,871 |
|
$ |
11,780 |
| ||
State taxes, net of federal tax benefit |
3,863 |
|
5,723 |
|
1,790 |
| |||||
State tax law/rate changes, net of federal tax benefit |
— |
|
1,883 |
|
5,703 |
| |||||
Change in valuation allowance |
(18,157 |
) |
(4,622 |
) |
(36,541 |
) | |||||
Share compensation |
(53 |
) |
(17 |
) |
601 |
| |||||
Reserve for tax contingencies |
124 |
|
633 |
|
— |
| |||||
Impact of JV Sale Transaction |
— |
|
28,435 |
|
— |
| |||||
Impact of the Merger |
(124,306 |
) |
— |
|
— |
| |||||
Non-deductible acquisition and Merger related transaction costs |
1,645 |
|
— |
|
— |
| |||||
Other |
551 |
|
557 |
|
622 |
| |||||
$ |
(125,420 |
) |
$ |
40,463 |
|
$ |
(16,045 |
) | |||
Effective income tax rate on continuing operations |
(402.2 |
)% |
179.9 |
% |
(47.7 |
)% |
|
December 31, | ||||||
|
2013 |
2012 | |||||
Deferred tax liabilities: |
|
| |||||
Deferred gain related to equity investment in NBC joint venture |
$ |
— |
|
$ |
259,049 |
| |
Property and equipment |
11,816 |
|
12,822 |
| |||
Intangible assets |
54,859 |
|
36,761 |
| |||
Deferred gain on debt repurchase |
18,140 |
|
18,309 |
| |||
Noncontrolling interest |
849 |
|
549 |
| |||
Other |
7,629 |
|
7,476 |
| |||
Total |
$ |
93,293 |
|
$ |
334,966 |
| |
Deferred tax assets: |
|
| |||||
Net operating loss carryforwards |
$ |
(17,707 |
) |
$ |
(110,169 |
) | |
Equity investments |
(2,372 |
) |
(1,554 |
) | |||
Other |
(15,426 |
) |
(32,625 |
) | |||
Valuation allowance |
— |
|
18,157 |
| |||
Total |
(35,505 |
) |
(126,191 |
) | |||
Net deferred tax liabilities |
$ |
57,788 |
|
$ |
208,775 |
|
|
Year Ended December 31, | ||||||||||
|
2013 |
2012 |
2011 | ||||||||
Balance at beginning of year |
$ |
26,559 |
|
$ |
26,381 |
|
$ |
26,610 |
| ||
Additions for tax positions of current year |
733 |
|
1,798 |
|
2,386 |
| |||||
Additions for tax positions of prior years |
— |
|
— |
|
— |
| |||||
Reductions for tax positions of prior years |
(2,084 |
) |
(1,133 |
) |
(2,128 |
) | |||||
Reductions related to settlements with taxing authorities |
— |
|
— |
|
— |
| |||||
Reductions related to expiration of the statute of limitations |
(730 |
) |
(487 |
) |
(487 |
) | |||||
Balance at end of year |
$ |
24,478 |
|
$ |
26,559 |
|
$ |
26,381 |
|
|
December 31, | ||||||
|
2013 |
2012 | |||||
Accrued compensation |
$ |
11,817 |
|
$ |
11,275 |
| |
Accrued contract costs |
3,394 |
|
4,163 |
| |||
Accrued interest |
12,168 |
|
7,841 |
| |||
Accrued capital contribution to joint venture |
— |
|
100,000 |
| |||
Other accrued expenses |
24,317 |
|
29,967 |
| |||
Total |
$ |
51,696 |
|
$ |
153,246 |
|
LIN Media LLC |
LIN Television Corporation |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Consolidating/ Eliminating Adjustments |
LIN Media LLC Consolidated | ||||||||||||||||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Cash and cash equivalents |
$ |
— |
|
$ |
10,313 |
|
$ |
3 |
|
$ |
2,209 |
|
$ |
— |
|
$ |
12,525 |
| |||||
Accounts receivable, net |
— |
|
88,905 |
|
39,416 |
|
16,988 |
|
— |
|
145,309 |
| |||||||||||
Deferred income tax assets |
— |
|
5,818 |
|
1,080 |
|
— |
|
— |
|
6,898 |
| |||||||||||
Other current assets |
— |
|
12,264 |
|
1,049 |
|
1,888 |
|
— |
|
15,201 |
| |||||||||||
Total current assets |
— |
|
117,300 |
|
41,548 |
|
21,085 |
|
— |
|
179,933 |
| |||||||||||
Property and equipment, net |
— |
|
180,480 |
|
35,752 |
|
4,846 |
|
— |
|
221,078 |
| |||||||||||
Deferred financing costs |
— |
|
16,357 |
|
— |
|
91 |
|
— |
|
16,448 |
| |||||||||||
Goodwill |
— |
|
169,492 |
|
18,518 |
|
15,518 |
|
— |
|
203,528 |
| |||||||||||
Broadcast licenses, net |
— |
|
— |
|
493,814 |
|
42,701 |
|
— |
|
536,515 |
| |||||||||||
Other intangible assets, net |
— |
|
31,303 |
|
1,840 |
|
13,906 |
|
— |
|
47,049 |
| |||||||||||
Advances to consolidated subsidiaries |
1,900 |
|
7,764 |
|
968,728 |
|
— |
|
(978,392 |
) |
— |
| |||||||||||
Investment in consolidated subsidiaries |
87,227 |
|
1,534,600 |
|
— |
|
— |
|
(1,621,827 |
) |
— |
| |||||||||||
Other assets |
— |
|
52,778 |
|
2,688 |
|
1,276 |
|
(44,443 |
) |
12,299 |
| |||||||||||
Total assets |
$ |
89,127 |
|
$ |
2,110,074 |
|
$ |
1,562,888 |
|
$ |
99,423 |
|
$ |
(2,644,662 |
) |
$ |
1,216,850 |
| |||||
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Current portion of long-term debt |
$ |
— |
|
$ |
16,112 |
|
$ |
— |
|
$ |
1,252 |
|
$ |
— |
|
$ |
17,364 |
| |||||
Accounts payable |
— |
|
4,185 |
|
5,339 |
|
4,478 |
|
— |
|
14,002 |
| |||||||||||
Income taxes payable |
— |
|
749 |
|
671 |
|
— |
|
— |
|
1,420 |
| |||||||||||
Accrued expenses |
— |
|
42,570 |
|
6,254 |
|
2,872 |
|
— |
|
51,696 |
| |||||||||||
Program obligations |
— |
|
4,711 |
|
1,013 |
|
1,303 |
|
— |
|
7,027 |
| |||||||||||
Total current liabilities |
— |
|
68,327 |
|
13,277 |
|
9,905 |
|
— |
|
91,509 |
| |||||||||||
Long-term debt, excluding current portion |
— |
|
924,223 |
|
— |
|
3,105 |
|
— |
|
927,328 |
| |||||||||||
Deferred income tax liabilities |
— |
|
30,013 |
|
33,824 |
|
849 |
|
— |
|
64,686 |
| |||||||||||
Program obligations |
— |
|
2,505 |
|
217 |
|
1,424 |
|
— |
|
4,146 |
| |||||||||||
Intercompany liabilities |
— |
|
970,628 |
|
— |
|
7,764 |
|
(978,392 |
) |
— |
| |||||||||||
Other liabilities |
— |
|
27,151 |
|
58 |
|
44,443 |
|
(44,443 |
) |
27,209 |
| |||||||||||
Total liabilities |
— |
|
2,022,847 |
|
47,376 |
|
67,490 |
|
(1,022,835 |
) |
1,114,878 |
| |||||||||||
Redeemable noncontrolling interest |
— |
|
— |
|
— |
|
12,845 |
|
— |
|
12,845 |
| |||||||||||
Total shareholders' equity (deficit) |
89,127 |
|
87,227 |
|
1,515,512 |
|
19,088 |
|
(1,621,827 |
) |
89,127 |
| |||||||||||
Total liabilities, redeemable noncontrolling interest and shareholders' equity (deficit) |
$ |
89,127 |
|
$ |
2,110,074 |
|
$ |
1,562,888 |
|
$ |
99,423 |
|
$ |
(2,644,662 |
) |
$ |
1,216,850 |
|
LIN Media LLC |
LIN Television Corporation |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Consolidating/ Eliminating Adjustments |
LIN Media LLC Consolidated | ||||||||||||||||||
ASSETS |
|
|
|
|
|
| |||||||||||||||||
Current assets: |
|
|
|
|
|
| |||||||||||||||||
Cash and cash equivalents |
$ |
— |
|
$ |
44,625 |
|
$ |
573 |
|
$ |
1,109 |
|
$ |
— |
|
$ |
46,307 |
| |||||
Accounts receivable, net |
— |
|
87,103 |
|
31,144 |
|
7,903 |
|
— |
|
126,150 |
| |||||||||||
Deferred income tax assets |
— |
|
67,412 |
|
— |
|
97 |
|
(67,509 |
) |
— |
| |||||||||||
Other current assets |
— |
|
4,850 |
|
554 |
|
1,459 |
|
— |
|
6,863 |
| |||||||||||
Total current assets |
— |
|
203,990 |
|
32,271 |
|
10,568 |
|
(67,509 |
) |
179,320 |
| |||||||||||
Property and equipment, net |
— |
|
197,125 |
|
39,534 |
|
4,832 |
|
— |
|
241,491 |
| |||||||||||
Deferred financing costs |
— |
|
19,020 |
|
— |
|
115 |
|
— |
|
19,135 |
| |||||||||||
Goodwill |
— |
|
169,492 |
|
18,518 |
|
4,504 |
|
— |
|
192,514 |
| |||||||||||
Broadcast licenses, net |
— |
|
— |
|
493,814 |
|
42,701 |
|
— |
|
536,515 |
| |||||||||||
Other intangible assets, net |
— |
|
48,897 |
|
2,775 |
|
7,882 |
|
— |
|
59,554 |
| |||||||||||
Advances to consolidated subsidiaries |
— |
|
6,746 |
|
1,345,971 |
|
— |
|
(1,352,717 |
) |
— |
| |||||||||||
Investment in consolidated subsidiaries |
— |
|
1,554,903 |
|
— |
|
— |
|
(1,554,903 |
) |
— |
| |||||||||||
Other assets |
— |
|
53,987 |
|
2,552 |
|
1,626 |
|
(45,280 |
) |
12,885 |
| |||||||||||
Total assets |
$ |
— |
|
$ |
2,254,160 |
|
$ |
1,935,435 |
|
$ |
72,228 |
|
$ |
(3,020,409 |
) |
$ |
1,241,414 |
| |||||
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND SHAREHOLDERS' DEFICIT |
|
|
|
|
|
| |||||||||||||||||
Current liabilities: |
|
|
|
|
|
| |||||||||||||||||
Current portion of long-term debt |
$ |
— |
|
$ |
9,243 |
|
$ |
— |
|
$ |
1,513 |
|
$ |
— |
|
$ |
10,756 |
| |||||
Accounts payable |
— |
|
14,335 |
|
3,385 |
|
1,235 |
|
— |
|
18,955 |
| |||||||||||
Income taxes payable |
— |
|
372 |
|
394 |
|
— |
|
— |
|
766 |
| |||||||||||
Accrued expenses |
— |
|
37,020 |
|
115,605 |
|
621 |
|
— |
|
153,246 |
| |||||||||||
Deferred income tax liabilities |
— |
|
— |
|
235,728 |
|
— |
|
(67,509 |
) |
168,219 |
| |||||||||||
Program obligations |
— |
|
7,479 |
|
1,106 |
|
2,185 |
|
— |
|
10,770 |
| |||||||||||
Total current liabilities |
— |
|
68,449 |
|
356,218 |
|
5,554 |
|
(67,509 |
) |
362,712 |
| |||||||||||
Long-term debt, excluding current portion |
— |
|
875,512 |
|
— |
|
3,959 |
|
— |
|
879,471 |
| |||||||||||
Deferred income tax liabilities |
— |
|
10,910 |
|
29,000 |
|
646 |
|
— |
|
40,556 |
| |||||||||||
Program obligations |
— |
|
2,222 |
|
92 |
|
1,967 |
|
— |
|
4,281 |
| |||||||||||
Intercompany liabilities |
— |
|
1,345,971 |
|
3,842 |
|
2,904 |
|
(1,352,717 |
) |
— |
| |||||||||||
Accumulated losses in excess of investment in consolidated subsidiaries |
91,564 |
|
— |
|
— |
|
— |
|
(91,564 |
) |
— |
| |||||||||||
Other liabilities |
— |
|
42,660 |
|
56 |
|
45,280 |
|
(45,280 |
) |
42,716 |
| |||||||||||
Total liabilities |
91,564 |
|
2,345,724 |
|
389,208 |
|
60,310 |
|
(1,557,070 |
) |
1,329,736 |
| |||||||||||
Redeemable noncontrolling interest |
— |
|
— |
|
— |
|
3,242 |
|
— |
|
3,242 |
| |||||||||||
Total shareholders' (deficit) equity |
(91,564 |
) |
(91,564 |
) |
1,546,227 |
|
8,676 |
|
(1,463,339 |
) |
(91,564 |
) | |||||||||||
Total liabilities, redeemable noncontrolling interest and shareholders' equity (deficit) |
$ |
— |
|
$ |
2,254,160 |
|
$ |
1,935,435 |
|
$ |
72,228 |
|
$ |
(3,020,409 |
) |
$ |
1,241,414 |
|
LIN Media LLC |
LIN Television Corporation |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Consolidating/ Eliminating Adjustments |
LIN Media LLC Consolidated | ||||||||||||||||||
Net revenues |
$ |
— |
|
$ |
428,806 |
|
$ |
181,678 |
|
$ |
55,850 |
|
$ |
(13,971 |
) |
$ |
652,363 |
| |||||
Operating expenses: |
| ||||||||||||||||||||||
Direct operating |
— |
|
145,176 |
|
76,275 |
|
37,295 |
|
(7,668 |
) |
251,078 |
| |||||||||||
Selling, general and administrative |
— |
|
109,679 |
|
40,934 |
|
12,516 |
|
(579 |
) |
162,550 |
| |||||||||||
Amortization of program rights |
— |
|
21,452 |
|
5,690 |
|
2,100 |
|
— |
|
29,242 |
| |||||||||||
Corporate |
709 |
|
40,668 |
|
— |
|
— |
|
— |
|
41,377 |
| |||||||||||
Depreciation |
— |
|
38,306 |
|
7,256 |
|
1,292 |
|
— |
|
46,854 |
| |||||||||||
Amortization of intangible assets |
— |
|
17,594 |
|
935 |
|
4,297 |
|
— |
|
22,826 |
| |||||||||||
Restructuring |
— |
|
3,633 |
|
— |
|
262 |
|
— |
|
3,895 |
| |||||||||||
Contract termination costs |
— |
|
3,887 |
|
— |
|
— |
|
— |
|
3,887 |
| |||||||||||
Loss from asset dispositions |
— |
|
705 |
|
5 |
|
— |
|
— |
|
710 |
| |||||||||||
Operating (loss) income |
(709 |
) |
47,706 |
|
50,583 |
|
(1,912 |
) |
(5,724 |
) |
89,944 |
| |||||||||||
Other (income) expense: |
|
|
|
|
|
| |||||||||||||||||
Interest expense, net |
— |
|
56,386 |
|
— |
|
221 |
|
— |
|
56,607 |
| |||||||||||
Share of loss in equity investments |
— |
|
56 |
|
— |
|
— |
|
— |
|
56 |
| |||||||||||
Intercompany (income) expense |
(20 |
) |
27,947 |
|
(28,243 |
) |
316 |
|
— |
|
— |
| |||||||||||
Other, net |
|
|
2,097 |
|
— |
|
3 |
|
— |
|
2,100 |
| |||||||||||
Total other (income) expense, net |
(20 |
) |
86,486 |
|
(28,243 |
) |
540 |
|
— |
|
58,763 |
| |||||||||||
(Loss) income from continuing operations before taxes and equity in (loss) income from operations of consolidated subsidiaries |
(689 |
) |
(38,780 |
) |
78,826 |
|
(2,452 |
) |
(5,724 |
) |
31,181 |
| |||||||||||
(Benefit from) provision for income taxes |
— |
|
(155,975 |
) |
31,530 |
|
(975 |
) |
— |
|
(125,420 |
) | |||||||||||
Net (loss) income from continuing operations |
(689 |
) |
117,195 |
|
47,296 |
|
(1,477 |
) |
(5,724 |
) |
156,601 |
| |||||||||||
Equity in income (loss) from operations of consolidated subsidiaries |
158,802 |
|
41,607 |
|
— |
|
— |
|
(200,409 |
) |
— |
| |||||||||||
Net income (loss) |
158,113 |
|
158,802 |
|
47,296 |
|
(1,477 |
) |
(206,133 |
) |
156,601 |
| |||||||||||
Net loss attributable to noncontrolling interests |
— |
|
— |
|
— |
|
(1,512 |
) |
— |
|
(1,512 |
) | |||||||||||
Net income (loss) attributable to LIN Media LLC |
$ |
158,113 |
|
$ |
158,802 |
|
$ |
47,296 |
|
$ |
35 |
|
$ |
(206,133 |
) |
$ |
158,113 |
|
LIN Media LLC |
LIN Television Corporation |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Consolidating/ Eliminating Adjustments |
LIN Media LLC Consolidated | ||||||||||||||||||
Net income (loss) |
$ |
158,113 |
|
$ |
158,802 |
|
$ |
47,296 |
|
$ |
(1,477 |
) |
$ |
(206,133 |
) |
$ |
156,601 |
| |||||
Pension net gain, net of tax of $5,705 |
8,738 |
|
8,738 |
|
— |
|
— |
|
(8,738 |
) |
8,738 |
| |||||||||||
Amortization of pension net losses, net of tax of $734 |
1,120 |
|
1,120 |
|
— |
|
— |
|
(1,120 |
) |
1,120 |
| |||||||||||
Comprehensive income (loss) |
167,971 |
|
168,660 |
|
47,296 |
|
(1,477 |
) |
(215,991 |
) |
166,459 |
| |||||||||||
Comprehensive loss attributable to noncontrolling interest |
— |
|
— |
|
— |
|
(1,512 |
) |
— |
|
(1,512 |
) | |||||||||||
Comprehensive income (loss) attributable to LIN Media LLC |
$ |
167,971 |
|
$ |
168,660 |
|
$ |
47,296 |
|
$ |
35 |
|
$ |
(215,991 |
) |
$ |
167,971 |
|
LIN Media LLC |
LIN Television Corporation |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Consolidating/ Eliminating Adjustments |
LIN Media LLC Consolidated | ||||||||||||||||||
Net revenues |
$ |
— |
|
$ |
369,779 |
|
$ |
181,458 |
|
$ |
9,571 |
|
$ |
(7,346 |
) |
$ |
553,462 |
| |||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Direct operating |
— |
|
96,504 |
|
62,352 |
|
5,201 |
|
(3,835 |
) |
160,222 |
| |||||||||||
Selling, general and administrative |
— |
|
85,638 |
|
37,917 |
|
2,152 |
|
(440 |
) |
125,267 |
| |||||||||||
Amortization of program rights |
— |
|
16,644 |
|
5,437 |
|
967 |
|
— |
|
23,048 |
| |||||||||||
Corporate |
— |
|
30,357 |
|
3,889 |
|
— |
|
— |
|
34,246 |
| |||||||||||
Depreciation |
— |
|
24,061 |
|
7,635 |
|
453 |
|
— |
|
32,149 |
| |||||||||||
Amortization of intangible assets |
— |
|
4,139 |
|
935 |
|
1,290 |
|
— |
|
6,364 |
| |||||||||||
Restructuring |
— |
|
1,009 |
|
— |
|
— |
|
— |
|
1,009 |
| |||||||||||
Loss (gain) from asset dispositions |
— |
|
111 |
|
(15 |
) |
— |
|
— |
|
96 |
| |||||||||||
Operating income (loss) |
— |
|
111,316 |
|
63,308 |
|
(492 |
) |
(3,071 |
) |
171,061 |
| |||||||||||
Other expense (income): |
|
|
|
|
|
| |||||||||||||||||
Interest expense, net |
— |
|
46,625 |
|
— |
|
156 |
|
(98 |
) |
46,683 |
| |||||||||||
Share of loss in equity investments |
— |
|
153 |
|
98,156 |
|
— |
|
— |
|
98,309 |
| |||||||||||
Loss on extinguishment of debt |
— |
|
3,341 |
|
— |
|
— |
|
— |
|
3,341 |
| |||||||||||
Intercompany fees and expenses |
— |
|
26,549 |
|
(26,548 |
) |
(1 |
) |
— |
|
— |
| |||||||||||
Other, net |
— |
|
237 |
|
— |
|
— |
|
— |
|
237 |
| |||||||||||
Total other expense (income), net |
— |
|
76,905 |
|
71,608 |
|
155 |
|
(98 |
) |
148,570 |
| |||||||||||
Income (loss) from continuing operations before taxes and equity in (loss) income from operations of consolidated subsidiaries |
— |
|
34,411 |
|
(8,300 |
) |
(647 |
) |
(2,973 |
) |
22,491 |
| |||||||||||
Provision for (benefit from) income taxes |
— |
|
44,298 |
|
(3,320 |
) |
(515 |
) |
— |
|
40,463 |
| |||||||||||
Net loss from continuing operations |
— |
|
(9,887 |
) |
(4,980 |
) |
(132 |
) |
(2,973 |
) |
(17,972 |
) | |||||||||||
Loss from discontinued operations, net |
— |
|
(251 |
) |
(744 |
) |
— |
|
(23 |
) |
(1,018 |
) | |||||||||||
(Loss) gain on the sale of discontinued operations, net |
— |
|
(289 |
) |
11,678 |
|
— |
|
— |
|
11,389 |
| |||||||||||
Equity in (loss) income from operations of consolidated subsidiaries |
(7,045 |
) |
3,382 |
|
— |
|
— |
|
3,663 |
|
— |
| |||||||||||
Net (loss) income |
(7,045 |
) |
(7,045 |
) |
5,954 |
|
(132 |
) |
667 |
|
(7,601 |
) | |||||||||||
Net loss attributable to noncontrolling interests |
— |
|
— |
|
— |
|
(556 |
) |
— |
|
(556 |
) | |||||||||||
Net (loss) income attributable to LIN Media LLC |
$ |
(7,045 |
) |
$ |
(7,045 |
) |
$ |
5,954 |
|
$ |
424 |
|
$ |
667 |
|
$ |
(7,045 |
) |
LIN Media LLC |
LIN Television Corporation |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Consolidating/ Eliminating Adjustments |
LIN Media LLC Consolidated | ||||||||||||||||||
Net (loss) income |
$ |
(7,045 |
) |
$ |
(7,045 |
) |
$ |
5,954 |
|
$ |
(132 |
) |
$ |
667 |
|
$ |
(7,601 |
) | |||||
Pension net gain, net of tax of $1,523 |
2,424 |
|
2,424 |
|
— |
|
— |
|
(2,424 |
) |
2,424 |
| |||||||||||
Amortization of pension net losses, net of tax of $609 |
969 |
|
969 |
|
— |
|
— |
|
(969 |
) |
969 |
| |||||||||||
Comprehensive (loss) income |
(3,652 |
) |
|
(3,652 |
) |
|
5,954 |
|
|
(132 |
) |
|
(2,726 |
) |
|
(4,208 |
) | ||||||
Comprehensive loss attributable to noncontrolling interest |
— |
|
— |
|
— |
|
(556 |
) |
— |
|
(556 |
) | |||||||||||
Comprehensive (loss) income attributable to LIN Media LLC |
$ |
(3,652 |
) |
$ |
(3,652 |
) |
$ |
5,954 |
|
$ |
424 |
|
$ |
(2,726 |
) |
$ |
(3,652 |
) |
LIN Media LLC |
LIN Television Corporation |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Consolidating/ Eliminating Adjustments |
LIN Media LLC Consolidated | ||||||||||||||||||
Net revenues |
$ |
— |
|
$ |
263,958 |
|
$ |
136,891 |
|
$ |
1,745 |
|
$ |
(2,591 |
) |
$ |
400,003 |
| |||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Direct operating |
— |
|
78,492 |
|
53,877 |
|
604 |
|
(2,355 |
) |
130,618 |
| |||||||||||
Selling, general and administrative |
— |
|
69,018 |
|
34,825 |
|
491 |
|
(564 |
) |
103,770 |
| |||||||||||
Amortization of program rights |
— |
|
15,535 |
|
5,438 |
|
433 |
|
— |
|
21,406 |
| |||||||||||
Corporate |
— |
|
24,838 |
|
1,643 |
|
— |
|
— |
|
26,481 |
| |||||||||||
Depreciation |
— |
|
19,169 |
|
7,030 |
|
47 |
|
— |
|
26,246 |
| |||||||||||
Amortization of intangible assets |
— |
|
264 |
|
868 |
|
67 |
|
— |
|
1,199 |
| |||||||||||
Restructuring |
— |
|
707 |
|
— |
|
— |
|
— |
|
707 |
| |||||||||||
Loss from asset dispositions |
— |
|
351 |
|
121 |
|
— |
|
— |
|
472 |
| |||||||||||
Operating income |
— |
|
55,584 |
|
33,089 |
|
103 |
|
328 |
|
89,104 |
| |||||||||||
Other expense (income): |
|
|
|
|
|
| |||||||||||||||||
Interest expense, net |
— |
|
50,688 |
|
— |
|
21 |
|
(3 |
) |
50,706 |
| |||||||||||
Share of loss in equity investments |
— |
|
260 |
|
4,697 |
|
— |
|
— |
|
4,957 |
| |||||||||||
Gain on derivative instruments |
— |
|
(1,960 |
) |
— |
|
— |
|
— |
|
(1,960 |
) | |||||||||||
Loss on extinguishment of debt |
— |
|
1,694 |
|
— |
|
— |
|
— |
|
1,694 |
| |||||||||||
Intercompany fees and expenses |
— |
|
57,931 |
|
(57,945 |
) |
14 |
|
— |
|
— |
| |||||||||||
Other, net |
— |
|
68 |
|
(4 |
) |
(13 |
) |
— |
|
51 |
| |||||||||||
Total other expense (income), net |
— |
|
108,681 |
|
(53,252 |
) |
22 |
|
(3 |
) |
55,448 |
| |||||||||||
(Loss) income from continuing operations before taxes and equity in income (loss) from operations of consolidated subsidiaries |
— |
|
(53,097 |
) |
86,341 |
|
81 |
|
331 |
|
33,656 |
| |||||||||||
(Benefit from) provision for income taxes |
— |
|
(50,521 |
) |
34,536 |
|
(60 |
) |
— |
|
(16,045 |
) | |||||||||||
Net (loss) income from continuing operations |
— |
|
(2,576 |
) |
51,805 |
|
141 |
|
331 |
|
49,701 |
| |||||||||||
(Loss) income from discontinued operations, net |
— |
|
(1,316 |
) |
544 |
|
— |
|
(148 |
) |
(920 |
) | |||||||||||
Equity in income (loss) from operations of consolidated subsidiaries |
48,577 |
|
52,469 |
|
— |
|
— |
|
(101,046 |
) |
— |
| |||||||||||
Net income (loss) |
48,577 |
|
48,577 |
|
52,349 |
|
141 |
|
(100,863 |
) |
48,781 |
| |||||||||||
Net loss attributable to noncontrolling interests |
— |
|
— |
|
— |
|
204 |
|
— |
|
204 |
| |||||||||||
Net income (loss) attributable to LIN Media LLC |
$ |
48,577 |
|
$ |
48,577 |
|
$ |
52,349 |
|
$ |
(63 |
) |
$ |
(100,863 |
) |
$ |
48,577 |
|
LIN Media LLC |
LIN Television Corporation |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Consolidating/ Eliminating Adjustments |
LIN Media LLC Consolidated | ||||||||||||||||||
Net income (loss) |
$ |
48,577 |
|
$ |
48,577 |
|
$ |
52,349 |
|
$ |
141 |
|
$ |
(100,863 |
) |
$ |
48,781 |
| |||||
Pension net loss, net of tax of $(7,291) |
(11,212 |
) |
(11,212 |
) |
— |
|
— |
|
11,212 |
|
(11,212 |
) | |||||||||||
Amortization of pension net loss, net of tax of $379 |
374 |
|
374 |
|
— |
|
— |
|
(374 |
) |
374 |
| |||||||||||
Comprehensive income (loss) |
37,739 |
|
37,739 |
|
52,349 |
|
141 |
|
(90,025 |
) |
37,943 |
| |||||||||||
Comprehensive income attributable to noncontrolling interest |
— |
|
— |
|
— |
|
— |
|
204 |
|
204 |
| |||||||||||
Comprehensive income (loss) attributable to LIN Media LLC |
$ |
37,739 |
|
|
$ |
37,739 |
|
|
$ |
52,349 |
|
|
$ |
141 |
|
|
$ |
(90,229 |
) |
|
$ |
37,739 |
|
LIN Media LLC |
LIN Television Corporation |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Consolidating/ Eliminating Adjustments |
LIN Media LLC Consolidated | ||||||||||||||||||
OPERATING ACTIVITIES: |
|
|
|
|
|
| |||||||||||||||||
Net cash (used in) provided by operating activities, continuing operations |
$ |
(589 |
) |
$ |
(1,986 |
) |
$ |
50,612 |
|
$ |
930 |
|
$ |
— |
|
$ |
48,967 |
| |||||
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Capital expenditures |
— |
|
(22,768 |
) |
(3,540 |
) |
(3,066 |
) |
— |
|
(29,374 |
) | |||||||||||
Payments for business combinations, net of cash acquired |
— |
|
(10,082 |
) |
— |
|
— |
|
— |
|
(10,082 |
) | |||||||||||
Proceeds from the sale of assets |
— |
|
66 |
|
20 |
|
— |
|
— |
|
86 |
| |||||||||||
Capital contribution to joint venture with NBCUniversal |
— |
|
— |
|
(100,000 |
) |
— |
|
— |
|
(100,000 |
) | |||||||||||
Receipt of dividend |
2,000 |
|
78,011 |
|
— |
|
— |
|
(80,011 |
) |
— |
| |||||||||||
Advances on intercompany borrowings |
(2,000 |
) |
(4,550 |
) |
— |
|
— |
|
6,550 |
|
— |
| |||||||||||
Payments from intercompany borrowings |
— |
|
15,009 |
|
145,358 |
|
— |
|
(160,367 |
) |
— |
| |||||||||||
Net cash (used in) provided by investing activities, continuing operations |
— |
|
55,686 |
|
41,838 |
|
(3,066 |
) |
(233,828 |
) |
(139,370 |
) | |||||||||||
FINANCING ACTIVITIES: |
|
|
|
|
|
| |||||||||||||||||
Net proceeds on exercises of employee and director stock-based compensation |
589 |
|
1,256 |
|
— |
|
— |
|
— |
|
1,845 |
| |||||||||||
Tax benefit from exercises of share options |
— |
|
1,591 |
|
— |
|
— |
|
— |
|
1,591 |
| |||||||||||
Proceeds from borrowings on long-term debt |
— |
|
139,000 |
|
— |
|
— |
|
— |
|
139,000 |
| |||||||||||
Principal payments on long-term debt |
— |
|
(83,846 |
) |
— |
|
(1,314 |
) |
— |
|
(85,160 |
) | |||||||||||
Payment of long-term debt issue costs |
— |
|
(655 |
) |
— |
|
— |
|
— |
|
(655 |
) | |||||||||||
Payment of dividend |
— |
|
(2,000 |
) |
(78,011 |
) |
— |
|
80,011 |
|
— |
| |||||||||||
Proceeds from intercompany borrowings |
— |
|
2,000 |
|
— |
|
4,550 |
|
(6,550 |
) |
— |
| |||||||||||
Payments on intercompany borrowings |
— |
|
(145,358 |
) |
(15,009 |
) |
— |
|
160,367 |
|
— |
| |||||||||||
Net cash provided by (used in) financing activities |
589 |
|
(88,012 |
) |
(93,020 |
) |
3,236 |
|
233,828 |
|
56,621 |
| |||||||||||
Net (decrease) increase in cash and cash equivalents |
— |
|
(34,312 |
) |
(570 |
) |
1,100 |
|
— |
|
(33,782 |
) | |||||||||||
Cash and cash equivalents at the beginning of the period |
— |
|
44,625 |
|
573 |
|
1,109 |
|
— |
|
46,307 |
| |||||||||||
Cash and cash equivalents at the end of the period |
$ |
— |
|
$ |
10,313 |
|
$ |
3 |
|
$ |
2,209 |
|
$ |
— |
|
$ |
12,525 |
|
LIN Media LLC |
LIN Television Corporation |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Consolidating/ Eliminating Adjustments |
LIN Media LLC Consolidated | ||||||||||||||||||
OPERATING ACTIVITIES: |
|
|
|
|
|
| |||||||||||||||||
Net cash provided by operating activities, continuing operations |
$ |
— |
|
$ |
142,255 |
|
$ |
4,998 |
|
$ |
2,159 |
|
$ |
23 |
|
$ |
149,435 |
| |||||
Net cash used in operating activities, discontinued operations |
— |
|
(471 |
) |
(2,242 |
) |
— |
|
(23 |
) |
(2,736 |
) | |||||||||||
Net cash provided by operating activities |
— |
|
141,784 |
|
2,756 |
|
2,159 |
|
— |
|
146,699 |
| |||||||||||
INVESTING ACTIVITIES: |
|
|
|
|
|
| |||||||||||||||||
Capital expenditures |
— |
|
(20,158 |
) |
(5,709 |
) |
(2,363 |
) |
— |
|
(28,230 |
) | |||||||||||
Change in restricted cash |
— |
|
255,159 |
|
— |
|
— |
|
— |
|
255,159 |
| |||||||||||
Payments for business combinations, net of cash acquired |
— |
|
(352,162 |
) |
— |
|
(6,333 |
) |
— |
|
(358,495 |
) | |||||||||||
Proceeds from the sale of assets |
— |
|
30 |
|
49 |
|
— |
|
— |
|
79 |
| |||||||||||
Shortfall loan to joint venture with NBCUniversal |
— |
|
(2,292 |
) |
— |
|
— |
|
— |
|
(2,292 |
) | |||||||||||
Advances on intercompany borrowings |
— |
|
(2,400 |
) |
— |
|
— |
|
2,400 |
|
— |
| |||||||||||
Payments from intercompany borrowings |
— |
|
20,382 |
|
— |
|
— |
|
(20,382 |
) |
— |
| |||||||||||
Net cash used in investing activities, continuing operations |
— |
|
(101,441 |
) |
(5,660 |
) |
(8,696 |
) |
(17,982 |
) |
(133,779 |
) | |||||||||||
Net cash provided by investing activities, discontinued operations |
— |
|
6,314 |
|
23,206 |
|
— |
|
— |
|
29,520 |
| |||||||||||
Net cash (used in) provided by investing activities |
— |
|
(95,127 |
) |
17,546 |
|
(8,696 |
) |
(17,982 |
) |
(104,259 |
) | |||||||||||
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Net proceeds on exercises of employee and director stock-based compensation |
— |
|
1,314 |
|
— |
|
— |
|
— |
|
1,314 |
| |||||||||||
Proceeds from borrowings on long-term debt |
— |
|
322,000 |
|
— |
|
6,333 |
|
— |
|
328,333 |
| |||||||||||
Principal payments on long-term debt |
— |
|
(320,374 |
) |
— |
|
(1,805 |
) |
— |
|
(322,179 |
) | |||||||||||
Payment of long-term debt issue costs |
— |
|
(10,157 |
) |
— |
|
(115 |
) |
— |
|
(10,272 |
) | |||||||||||
Treasury stock purchased |
— |
|
(11,386 |
) |
— |
|
— |
|
— |
|
(11,386 |
) | |||||||||||
Proceeds from intercompany borrowings |
— |
|
— |
|
— |
|
2,400 |
|
(2,400 |
) |
— |
| |||||||||||
Payments on intercompany borrowings |
— |
|
— |
|
(20,382 |
) |
— |
|
20,382 |
|
— |
| |||||||||||
Net cash (used in) provided by financing activities |
— |
|
(18,603 |
) |
(20,382 |
) |
6,813 |
|
17,982 |
|
(14,190 |
) | |||||||||||
Net increase (decrease) in cash and cash equivalents |
— |
|
28,054 |
|
(80 |
) |
276 |
|
— |
|
28,250 |
| |||||||||||
Cash and cash equivalents at the beginning of the period |
— |
|
16,571 |
|
653 |
|
833 |
|
— |
|
18,057 |
| |||||||||||
Cash and cash equivalents at the end of the period |
$ |
— |
|
$ |
44,625 |
|
$ |
573 |
|
$ |
1,109 |
|
$ |
— |
|
$ |
46,307 |
|
LIN Media LLC |
LIN Television Corporation |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Consolidating/ Eliminating Adjustments |
LIN Media LLC Consolidated | ||||||||||||||||||
OPERATING ACTIVITIES: |
|
|
|
|
|
| |||||||||||||||||
Net cash provided by operating activities, continuing operations |
$ |
— |
|
$ |
52,012 |
|
$ |
10,799 |
|
$ |
103 |
|
$ |
148 |
|
$ |
63,062 |
| |||||
Net cash (used in) provided by operating activities, discontinued operations |
— |
|
(1,180 |
) |
926 |
|
— |
|
(148 |
) |
(402 |
) | |||||||||||
Net cash provided by operating activities |
— |
|
50,832 |
|
11,725 |
|
103 |
|
— |
|
62,660 |
| |||||||||||
INVESTING ACTIVITIES: |
|
|
|
|
|
| |||||||||||||||||
Capital expenditures |
— |
|
(12,266 |
) |
(7,763 |
) |
(40 |
) |
— |
|
(20,069 |
) | |||||||||||
Change in restricted cash |
— |
|
(255,159 |
) |
— |
|
— |
|
— |
|
(255,159 |
) | |||||||||||
Payments for business combinations, net of cash acquired |
— |
|
(10,046 |
) |
— |
|
1,013 |
|
— |
|
(9,033 |
) | |||||||||||
Proceeds from the sale of assets |
— |
|
72 |
|
2 |
|
— |
|
— |
|
74 |
| |||||||||||
Payments on derivative instruments |
— |
|
(2,020 |
) |
— |
|
— |
|
— |
|
(2,020 |
) | |||||||||||
Shortfall loan to joint venture with NBCUniversal |
— |
|
(2,483 |
) |
— |
|
— |
|
— |
|
(2,483 |
) | |||||||||||
Other investments, net |
— |
|
(375 |
) |
— |
|
— |
|
— |
|
(375 |
) | |||||||||||
Advances to consolidated subsidiaries |
— |
|
(400 |
) |
— |
|
— |
|
400 |
|
— |
| |||||||||||
Payments from consolidated subsidiaries |
— |
|
3,750 |
|
— |
|
— |
|
(3,750 |
) |
— |
| |||||||||||
Net cash (used in) provided by investing activities, continuing operations |
— |
|
|
(278,927 |
) |
|
(7,761 |
) |
|
973 |
|
|
(3,350 |
) |
(289,065 |
) | |||||||
Net cash used in investing activities, discontinued operations |
— |
|
(106 |
) |
(9 |
) |
— |
|
— |
|
(115 |
) | |||||||||||
Net cash (used in) provided by investing activities |
— |
|
|
(279,033 |
) |
|
(7,770 |
) |
|
973 |
|
|
(3,350 |
) |
(289,180 |
) | |||||||
FINANCING ACTIVITIES: |
|
|
|
| |||||||||||||||||||
Net proceeds on exercises of employee and director stock-based compensation |
— |
|
841 |
|
— |
|
— |
|
— |
|
841 |
| |||||||||||
Proceeds from borrowings on long-term debt |
— |
|
417,695 |
|
— |
|
— |
|
— |
|
417,695 |
| |||||||||||
Principal payments on long-term debt |
— |
|
(174,573 |
) |
— |
|
(643 |
) |
— |
|
(175,216 |
) | |||||||||||
Payment of long-term debt issue costs |
— |
|
(7,662 |
) |
— |
|
— |
|
— |
|
(7,662 |
) | |||||||||||
Treasury stock purchased |
— |
|
(2,729 |
) |
— |
|
— |
|
— |
|
(2,729 |
) | |||||||||||
Proceeds from intercompany borrowings |
— |
|
— |
|
— |
|
400 |
|
(400 |
) |
— |
| |||||||||||
Payments on intercompany borrowings |
— |
|
— |
|
(3,750 |
) |
— |
|
3,750 |
|
— |
| |||||||||||
Net cash provided by (used in) financing activities, continuing operations |
— |
|
233,572 |
|
(3,750 |
) |
(243 |
) |
3,350 |
|
232,929 |
| |||||||||||
Net cash provided by (used in) financing activities |
$ |
— |
|
$ |
233,572 |
|
$ |
(3,750 |
) |
$ |
(243 |
) |
$ |
3,350 |
|
$ |
232,929 |
| |||||
Net increase in cash and cash equivalents |
— |
|
|
5,371 |
|
|
205 |
|
|
833 |
|
|
— |
|
|
6,409 |
| ||||||
Cash and cash equivalents at the beginning of the period |
— |
|
11,200 |
|
448 |
|
— |
|
— |
|
11,648 |
| |||||||||||
Cash and cash equivalents at the end of the period |
— |
|
16,571 |
|
653 |
|
833 |
|
— |
|
18,057 |
|
|
Quarter Ended | ||||||||||||||
|
March 31,
2013 |
June 30,
2013 |
September 30,
2013 |
December 31,
2013 | |||||||||||
|
(in thousands, except per share data) | ||||||||||||||
Net revenues |
$ |
140,992 |
|
$ |
164,346 |
|
$ |
163,110 |
|
$ |
183,915 |
| |||
Operating income |
$ |
11,776 |
|
$ |
26,916 |
|
$ |
23,226 |
|
$ |
28,026 |
| |||
(Loss) income from continuing operations |
$ |
(1,020 |
) |
$ |
7,169 |
|
$ |
146,508 |
|
(1) |
$ |
3,944 |
| ||
Net (loss) income attributable to LIN Media LLC |
$ |
(856 |
) |
$ |
7,475 |
|
$ |
146,938 |
|
$ |
4,556 |
| |||
Basic (loss) earnings per common share from continuing operations attributable to LIN Media LLC |
$ |
(0.02 |
) |
$ |
0.14 |
|
$ |
2.78 |
|
$ |
0.09 |
| |||
Basic (loss) earnings per common share attributable to LIN Media LLC |
$ |
(0.02 |
) |
$ |
0.14 |
|
$ |
2.78 |
|
$ |
0.09 |
| |||
Diluted (loss) earnings per common share from continuing operations attributable to LIN Media LLC |
$ |
(0.02 |
) |
$ |
0.13 |
|
$ |
2.63 |
|
$ |
0.08 |
| |||
Diluted (loss) earnings per common share attributable to LIN Media LLC |
$ |
(0.02 |
) |
$ |
0.13 |
|
$ |
2.63 |
|
$ |
0.08 |
| |||
Weighted-average number of common shares outstanding used in calculating income per common share: |
|
|
|
||||||||||||
Basic |
51,910 |
|
52,278 |
|
52,791 |
|
52,879 |
| |||||||
Diluted |
51,910 |
|
55,595 |
|
55,855 |
|
56,240 |
| |||||||
|
Quarter Ended | ||||||||||||||
|
March 31,
2012 |
June 30,
2012 |
September 30,
2012 |
December 31,
2012 | |||||||||||
|
(in thousands, except per share data) | ||||||||||||||
Net revenues |
$ |
103,200 |
|
$ |
121,016 |
|
$ |
133,076 |
|
$ |
196,170 |
| |||
Operating income |
$ |
20,460 |
|
$ |
34,995 |
|
$ |
44,367 |
|
$ |
71,239 |
| |||
Income (loss) from continuing operations |
$ |
5,115 |
|
$ |
15,457 |
|
$ |
19,619 |
|
$ |
(58,163 |
) | |||
(Loss) income from discontinued operations |
$ |
(1,231 |
) |
$ |
11,602 |
|
$ |
— |
|
$ |
— |
| |||
Net income (loss) attributable to LIN Media LLC |
$ |
4,266 |
|
$ |
27,118 |
|
$ |
19,659 |
|
$ |
(58,088 |
) | |||
Basic earnings (loss) per common share from continuing operations attributable to LIN Media LLC |
$ |
0.10 |
|
$ |
0.28 |
|
$ |
0.37 |
|
$ |
(1.09 |
) | |||
Basic earnings (loss) per common share attributable to LIN Media LLC |
$ |
0.08 |
|
$ |
0.49 |
|
$ |
0.37 |
|
$ |
(1.09 |
) | |||
Diluted earnings (loss) per common share from continuing operations attributable to LIN Media LLC |
$ |
0.10 |
|
$ |
0.27 |
|
$ |
0.36 |
|
$ |
(1.09 |
) | |||
Diluted earnings (loss) per common share attributable to LIN Media LLC |
$ |
0.08 |
|
$ |
0.48 |
|
$ |
0.36 |
|
$ |
(1.09 |
) | |||
Weighted-average number of common shares outstanding used in calculating income per common share: |
|
|
|
| |||||||||||
Basic |
56,184 |
|
55,174 |
|
53,066 |
|
53,169 |
| |||||||
Diluted |
57,512 |
|
56,300 |
|
54,353 |
|
53,169 |
|
|
Year Ended December 31, | ||||||||||
|
2013 |
2012 |
2011 | ||||||||
|
(in thousands) | ||||||||||
Cash paid for interest expense |
$ |
48,646 |
|
$ |
42,348 |
|
$ |
47,801 |
| ||
Cash paid for income taxes—continuing operations |
$ |
32,937 |
|
$ |
1,103 |
|
$ |
559 |
| ||
Non-cash investing activities: |
|||||||||||
Accrual for estimated shortfall loans to SVH |
$ |
— |
|
$ |
— |
|
$ |
4,697 |
| ||
Non-cash financing activities: |
|
|
| ||||||||
Capital leases assumed in acquisitions |
$ |
179 |
|
$ |
14,896 |
|
$ |
— |
|
Balance at
Beginning of
Period |
Charged(Released) to
Operations |
Deductions |
Balance at
End of
Period | ||||||||||||
|
(in thousands) | ||||||||||||||
Allowance for doubtful accounts as of December 31, |
|
|
|
| |||||||||||
2013 |
$ |
3,599 |
|
$ |
1,608 |
|
$ |
(2,019 |
) |
$ |
3,188 |
| |||
2012 |
$ |
2,310 |
|
$ |
2,047 |
|
$ |
(758 |
) |
$ |
3,599 |
| |||
2011 |
$ |
2,194 |
|
$ |
760 |
|
$ |
(644 |
) |
$ |
2,310 |
| |||
Valuation allowance for state and federal deferred tax assets as of December 31, |
|
|
|
|
| ||||||||||
2013 |
$ |
18,157 |
|
$ |
(18,157 |
) |
$ |
— |
|
$ |
— |
| |||
2012 |
$ |
23,422 |
|
$ |
(5,265 |
) |
$ |
— |
|
$ |
18,157 |
| |||
2011 |
$ |
59,990 |
|
$ |
(36,568 |
) |
$ |
— |
|
$ |
23,422 |
|
Year ended December 31, | |||||||||||
2013 |
2012 |
2011 | |||||||||
(in thousands) | |||||||||||
Net revenues: |
|||||||||||
Broadcast |
$ |
576,510 |
|
$ |
512,367 |
|
$ |
372,783 |
| ||
Digital |
75,853 |
|
41,095 |
|
27,220 |
| |||||
Total net revenues |
$ |
652,363 |
|
$ |
553,462 |
|
$ |
400,003 |
|
Year ended December 31, | |||||||||||
2013 |
2012 |
2011 | |||||||||
(in thousands) | |||||||||||
Segment Adjusted EBITDA: |
|||||||||||
Broadcast |
$ |
205,843 |
|
$ |
241,831 |
|
$ |
141,081 |
| ||
Digital |
4,020 |
|
1,970 |
|
292 |
| |||||
Total segment Adjusted EBITDA |
209,863 |
|
243,801 |
|
141,373 |
| |||||
Unallocated corporate |
(23,966 |
) |
(24,268 |
) |
(18,514 |
) | |||||
Less: |
|||||||||||
Depreciation |
46,854 |
|
32,149 |
|
26,246 |
| |||||
Amortization of intangible assets |
22,826 |
|
6,364 |
|
1,199 |
| |||||
Amortization of program rights |
29,242 |
|
23,048 |
|
21,406 |
| |||||
Share-based compensation |
9,374 |
|
6,857 |
|
6,176 |
| |||||
Non-recurring and acquisition-related charges (1) |
10,842 |
|
3,207 |
|
2,171 |
| |||||
Restructuring charge |
3,895 |
|
1,009 |
|
707 |
| |||||
Contract termination costs |
3,887 |
|
— |
|
— |
| |||||
Loss on sale of assets |
710 |
|
96 |
|
472 |
| |||||
Add: |
|||||||||||
Cash payments for programming |
31,677 |
|
24,258 |
|
24,622 |
| |||||
Operating income |
89,944 |
|
171,061 |
|
|
89,104 |
| ||||
Other expense: |
|||||||||||
Interest expense, net |
56,607 |
|
46,683 |
|
50,706 |
| |||||
Share of loss in equity investments |
56 |
|
98,309 |
|
4,957 |
| |||||
Gain on derivative instruments |
— |
|
— |
|
(1,960 |
) | |||||
Loss on extinguishment of debt |
— |
|
3,341 |
|
1,694 |
| |||||
Other expense, net |
2,100 |
|
237 |
|
51 |
| |||||
Total other expense, net |
58,763 |
|
148,570 |
|
55,448 |
| |||||
Consolidated income before (benefit from) provision for income taxes |
$ |
31,181 |
|
$ |
22,491 |
|
$ |
33,656 |
|
Year ended December 31, | |||||||||||
2013 |
2012 |
2011 | |||||||||
(in thousands) | |||||||||||
Operating income (loss): |
|||||||||||
Broadcast |
$ |
142,753 |
|
$ |
207,431 |
|
$ |
118,399 |
| ||
Digital |
(365 |
) |
(461 |
) |
(815 |
) | |||||
Unallocated corporate |
(52,444 |
) |
(35,909 |
) |
(28,480 |
) | |||||
Total operating income |
$ |
89,944 |
|
$ |
171,061 |
|
$ |
89,104 |
|
Year ended December 31, | |||||||||||
2013 |
2012 |
2011 | |||||||||
(in thousands) | |||||||||||
Depreciation and amortization: |
|||||||||||
Broadcast |
$ |
64,887 |
|
$ |
35,521 |
|
$ |
25,761 |
| ||
Digital |
4,046 |
|
2,365 |
|
1,105 |
| |||||
Unallocated corporate |
747 |
|
627 |
|
579 |
| |||||
Total depreciation and amortization |
$ |
69,680 |
|
$ |
38,513 |
|
$ |
27,445 |
|
Year ended December 31, | |||||||||||
2013 |
2012 |
2011 | |||||||||
(in thousands) | |||||||||||
Capital expenditures: |
|||||||||||
Broadcast |
$ |
22,957 |
|
$ |
23,342 |
|
$ |
18,616 |
| ||
Digital |
4,416 |
|
2,884 |
|
722 |
| |||||
Unallocated corporate |
2,001 |
|
2,004 |
|
731 |
| |||||
Total capital expenditures |
$ |
29,374 |
|
$ |
28,230 |
|
$ |
20,069 |
|
December 31, |
December 31, | ||||||
2013 |
2012 | ||||||
(in thousands) | |||||||
Assets: |
|||||||
Broadcast |
$ |
1,100,343 |
|
$ |
1,136,861 |
| |
Digital |
69,690 |
|
29,351 |
| |||
Unallocated corporate |
46,817 |
|
75,202 |
| |||
Total assets |
$ |
1,216,850 |
|
$ |
1,241,414 |
|
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholder of LIN Television Corporation:
In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of LIN Television Corporation and its subsidiaries at December 31, 2013 and December 31, 2012, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2013 in conformity with accounting principles generally accepted in the United States of America. 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 the standards of the Public Company Accounting Oversight Board (United States). 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, 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 our opinion.
/s/PricewaterhouseCoopers LLP
Hartford, Connecticut
March 3, 2014 except for Note 19, as to which the date is June 13, 2014
|
December 31, | ||||||
|
2013 |
2012 | |||||
|
(in thousands, except share data) | ||||||
ASSETS |
|
| |||||
Current assets: |
|
| |||||
Cash and cash equivalents |
$ |
12,525 |
|
$ |
46,307 |
| |
Accounts receivable, less allowance for doubtful accounts (2013—$3,188; 2012—$3,599) |
145,409 |
|
126,150 |
| |||
Deferred income tax assets |
6,898 |
|
— |
| |||
Other current assets |
15,201 |
|
6,863 |
| |||
Total current assets |
180,033 |
|
179,320 |
| |||
Property and equipment, net |
221,078 |
|
241,491 |
| |||
Deferred financing costs |
16,448 |
|
19,135 |
| |||
Goodwill |
203,528 |
|
192,514 |
| |||
Broadcast licenses |
536,515 |
|
536,515 |
| |||
Other intangible assets, net |
47,049 |
|
59,554 |
| |||
Other assets |
12,299 |
|
12,885 |
| |||
Total assets (a) |
$ |
1,216,950 |
|
$ |
1,241,414 |
| |
LIABILITIES AND EQUITY (DEFICIT) |
|
| |||||
Current liabilities: |
|
| |||||
Current portion of long-term debt |
$ |
17,364 |
|
$ |
10,756 |
| |
Accounts payable |
14,002 |
|
18,955 |
| |||
Income taxes payable |
1,420 |
|
766 |
| |||
Accrued expenses |
51,696 |
|
153,246 |
| |||
Deferred income tax liabilities |
— |
|
168,219 |
| |||
Program obligations |
7,027 |
|
10,770 |
| |||
Total current liabilities |
91,509 |
|
362,712 |
| |||
Long-term debt, excluding current portion |
929,328 |
|
879,471 |
| |||
Deferred income tax liabilities |
64,686 |
|
40,556 |
| |||
Program obligations |
4,146 |
|
4,281 |
| |||
Other liabilities |
27,209 |
|
42,716 |
| |||
Total liabilities (a) |
1,116,878 |
|
1,329,736 |
| |||
Commitments and Contingencies (Note 13) |
|
|
|
| |||
Redeemable noncontrolling interest |
12,845 |
|
3,242 |
| |||
LIN Television Corporation stockholder's deficit: |
|
| |||||
Common Stock, $0.01 par value, 1,000 shares |
— |
|
— |
| |||
Investment in parent company's stock, at cost |
(21,984 |
) |
(21,984 |
) | |||
Additional paid-in capital |
1,140,370 |
|
1,130,239 |
| |||
Accumulated deficit |
(1,005,633 |
) |
(1,164,435 |
) | |||
Accumulated other comprehensive loss |
(25,526 |
) |
(35,384 |
) | |||
Total stockholder's equity (deficit) |
87,227 |
|
(91,564 |
) | |||
Total liabilities and deficit |
$ |
1,216,950 |
|
$ |
1,241,414 |
|
(a) |
Our consolidated assets as of December 31, 2013 and 2012 include total assets of $56,056 and $60,380, respectively, of variable interest entities ("VIEs") that can only be used to settle the obligations of the VIEs. These assets include broadcast licenses and other intangible assets of $44,677 and $46,604 and program rights of $2,186 and $2,060 as of December 31, 2013 and 2012, respectively. Our consolidated liabilities as of December 31, 2013 and 2012 include $4,126 and $4,577, respectively, of total liabilities of the VIEs for which the VIE's creditors have no recourse to the Company, including $2,727 and $4,152, respectively, of program obligations. See further description in Note 1—"Basis of Presentation and Summary of Significant Accounting Policies." |
|
Year Ended December 31, | ||||||||||
|
2013 |
2012 |
2011 | ||||||||
|
(in thousands, except
per share data) | ||||||||||
Net revenues |
$ |
652,363 |
|
$ |
553,462 |
|
$ |
400,003 |
| ||
Operating expenses: |
|
|
| ||||||||
Direct operating |
251,078 |
|
160,222 |
|
130,618 |
| |||||
Selling, general and administrative |
162,550 |
|
125,267 |
|
103,770 |
| |||||
Amortization of program rights |
29,242 |
|
23,048 |
|
21,406 |
| |||||
Corporate |
40,668 |
|
34,246 |
|
26,481 |
| |||||
Depreciation |
46,854 |
|
32,149 |
|
26,246 |
| |||||
Amortization of intangible assets |
22,826 |
|
6,364 |
|
1,199 |
| |||||
Restructuring |
3,895 |
|
1,009 |
|
707 |
| |||||
Contract termination costs (Note 12) |
3,887 |
|
— |
|
— |
| |||||
Loss from asset dispositions |
710 |
|
96 |
|
472 |
| |||||
Operating income |
90,653 |
|
171,061 |
|
89,104 |
| |||||
Other expense: |
|
|
| ||||||||
Interest expense, net |
56,627 |
|
46,683 |
|
50,706 |
| |||||
Share of loss in equity investments |
56 |
|
98,309 |
|
4,957 |
| |||||
Gain on derivative instruments |
— |
|
— |
|
(1,960 |
) | |||||
Loss on extinguishment of debt |
— |
|
3,341 |
|
1,694 |
| |||||
Other expense, net |
2,100 |
|
237 |
|
51 |
| |||||
Total other expense, net |
58,783 |
|
148,570 |
|
55,448 |
| |||||
Income before (benefit from) provision for income taxes
|
31,870 |
|
22,491 |
|
33,656 |
| |||||
(Benefit from) provision for income taxes |
(125,420 |
) |
40,463 |
|
(16,045 |
) | |||||
Income (loss) from continuing operations |
157,290 |
|
(17,972 |
) |
49,701 |
| |||||
Discontinued operations: |
|
|
| ||||||||
Loss from discontinued operations, net of a benefit from income taxes of $541 and $595 for the years ended December 31, 2012 and 2011, respectively |
— |
|
(1,018 |
) |
(920 |
) | |||||
Gain on sale of discontinued operations, net of a provision for income taxes of $6,223 for the year ended December 31, 2012 |
— |
|
11,389 |
|
— |
| |||||
Net income (loss) |
157,290 |
|
(7,601 |
) |
48,781 |
| |||||
Net (loss) income attributable to noncontrolling interests |
(1,512 |
) |
(556 |
) |
204 |
| |||||
Net income (loss) attributable to LIN Television Corporation |
$ |
158,802 |
|
$ |
(7,045 |
) |
$ |
48,577 |
|
|
Year Ended December 31, | ||||||||||
|
2013 |
2012 |
2011 | ||||||||
|
(in thousands) | ||||||||||
Net income (loss) |
$ |
157,290 |
|
$ |
(7,601 |
) |
$ |
48,781 |
| ||
Pension net gain (loss), net of tax of $5,705, $1,523 and $(7,291) for the years ended December 31, 2013, 2012 and 2011, respectively |
8,738 |
|
2,424 |
|
(11,212 |
) | |||||
Amortization of pension net losses, net of tax of $734, $609 and $379 for the years ended December 31, 2013, 2012 and 2011, respectively, reclassified |
1,120 |
|
969 |
|
374 |
| |||||
Comprehensive income (loss) |
167,148 |
|
(4,208 |
) |
37,943 |
| |||||
Comprehensive (loss) income attributable to noncontrolling interest |
(1,512 |
) |
(556 |
) |
204 |
| |||||
Comprehensive income (loss) attributable to LIN Television Corporation |
$ |
168,660 |
|
$ |
(3,652 |
) |
$ |
37,739 |
|
|
Common Stock |
Investment in Parent
Company's Common
Shares
(at cost) |
|
|
Accumulated
Other
Comprehensive
Loss |
| ||||||||||||||||||||
|
Additional
Paid-In
Capital |
Accumulated
Deficit |
Total
Stockholder's
Equity | |||||||||||||||||||||||
|
Shares |
Amount |
||||||||||||||||||||||||
Balance at December 31, 2012 |
1,000 |
|
$ |
— |
|
$ |
(21,984 |
) |
$ |
1,130,239 |
|
$ |
(1,164,435 |
) |
$ |
(35,384 |
) |
$ |
(91,564 |
) | ||||||
Pension liability adjustment, net of tax of $6,439 |
— |
|
— |
|
— |
|
— |
|
— |
|
9,858 |
|
9,858 |
| ||||||||||||
Issuance of LIN Media LLC class A common shares |
— |
|
— |
|
— |
|
1,256 |
|
— |
|
— |
|
1,256 |
| ||||||||||||
Tax benefit from exercise of share options |
— |
|
— |
|
— |
|
1,591 |
|
— |
|
— |
|
1,591 |
| ||||||||||||
Share-based compensation |
— |
|
— |
|
— |
|
9,284 |
|
— |
|
— |
|
9,284 |
| ||||||||||||
Dividend declared |
— |
|
— |
|
— |
|
(2,000 |
) |
— |
|
— |
|
(2,000 |
) | ||||||||||||
Net income |
— |
|
— |
|
— |
|
— |
|
158,802 |
|
— |
|
158,802 |
| ||||||||||||
Balance at December 31, 2013 |
1,000 |
|
$ |
— |
|
$ |
(21,984 |
) |
$ |
1,140,370 |
|
$ |
(1,005,633 |
) |
$ |
(25,526 |
) |
$ |
87,227 |
|
|
Common Stock |
Investment in Parent
Company's Common
Stock
(at cost) |
|
|
Accumulated
Other
Comprehensive
Loss |
| ||||||||||||||||||||
|
Additional
Paid-In
Capital |
Accumulated
Deficit |
Total
Stockholder's
Deficit | |||||||||||||||||||||||
|
Shares |
Amount |
||||||||||||||||||||||||
Balance at December 31, 2011 |
1,000 |
|
$ |
— |
|
$ |
(10,598 |
) |
$ |
1,122,133 |
|
$ |
(1,157,390 |
) |
$ |
(38,777 |
) |
$ |
(84,632 |
) | ||||||
Pension liability adjustment, net of tax of $2,132 |
— |
|
— |
|
— |
|
— |
|
— |
|
3,393 |
|
3,393 |
| ||||||||||||
Stock-based compensation |
— |
|
— |
|
— |
|
8,106 |
|
— |
|
— |
|
8,106 |
| ||||||||||||
Purchase of LIN TV Corp. class A common shares |
— |
|
— |
|
(11,386 |
) |
— |
|
— |
|
— |
|
(11,386 |
) | ||||||||||||
Net loss |
— |
|
— |
|
— |
|
— |
|
(7,045 |
) |
— |
|
(7,045 |
) | ||||||||||||
Balance at December 31, 2012 |
1,000 |
|
$ |
— |
|
$ |
(21,984 |
) |
$ |
1,130,239 |
|
$ |
(1,164,435 |
) |
$ |
(35,384 |
) |
$ |
(91,564 |
) |
|
Common Stock |
Investment in Parent
Company's Common
Stock
(at cost) |
|
|
Accumulated
Other
Comprehensive
Loss |
| ||||||||||||||||||||
|
Additional
Paid-In
Capital |
Accumulated
Deficit |
Total
Stockholder's
Deficit | |||||||||||||||||||||||
|
Shares |
Amount |
||||||||||||||||||||||||
Balance at December 31, 2010 |
1,000 |
|
$ |
— |
|
$ |
(7,869 |
) |
$ |
1,110,343 |
|
$ |
(1,205,967 |
) |
$ |
(27,939 |
) |
$ |
(131,432 |
) | ||||||
Pension liability adjustment, net of tax of $(6,912) |
— |
|
— |
|
— |
|
— |
|
— |
|
(10,838 |
) |
(10,838 |
) | ||||||||||||
Stock-based compensation |
— |
|
— |
|
— |
|
7,017 |
|
— |
|
— |
|
7,017 |
| ||||||||||||
Issuance of LIN TV Corp. class A common stock |
— |
|
4,773 |
|
4,773 |
| ||||||||||||||||||||
Purchase of LIN TV Corp. class A common stock |
— |
|
— |
|
(2,729 |
) |
— |
|
— |
|
— |
|
(2,729 |
) | ||||||||||||
Net income |
— |
|
— |
|
— |
|
— |
|
48,577 |
|
— |
|
48,577 |
| ||||||||||||
Balance at December 31, 2011 |
1,000 |
|
$ |
— |
|
$ |
(10,598 |
) |
$ |
1,122,133 |
|
$ |
(1,157,390 |
) |
$ |
(38,777 |
) |
$ |
(84,632 |
) |
|
Year ended December 31, | ||||||||||
|
2013 |
2012 |
2011 | ||||||||
|
(in thousands) | ||||||||||
OPERATING ACTIVITIES: |
|
|
| ||||||||
Net income (loss) |
$ |
157,290 |
|
$ |
(7,601 |
) |
$ |
48,781 |
| ||
Loss from discontinued operations |
— |
|
1,018 |
|
920 |
| |||||
Gain on sale of discontinued operations |
— |
|
(11,389 |
) |
— |
| |||||
Adjustment to reconcile net income to net cash provided by operating activities: |
|
|
| ||||||||
Depreciation |
46,854 |
|
32,149 |
|
26,246 |
| |||||
Amortization of intangible assets |
22,826 |
|
6,364 |
|
1,199 |
| |||||
Amortization of financing costs and note discounts |
3,638 |
|
2,589 |
|
3,755 |
| |||||
Amortization of program rights |
29,242 |
|
23,048 |
|
21,406 |
| |||||
Cash payments for programming |
(31,677 |
) |
(24,258 |
) |
(24,622 |
) | |||||
Loss on extinguishment of debt |
— |
|
1,830 |
|
1,694 |
| |||||
Gain on derivative instruments |
— |
|
— |
|
(1,960 |
) | |||||
Share of loss in equity investments |
56 |
|
98,309 |
|
4,957 |
| |||||
Deferred income taxes, net |
(27,222 |
) |
38,263 |
|
(16,586 |
) | |||||
Extinguishment of income tax liability related to the Merger |
(131,481 |
) |
— |
|
— |
| |||||
Share-based compensation |
9,374 |
|
6,857 |
|
6,176 |
| |||||
Loss from asset dispositions |
710 |
|
96 |
|
472 |
| |||||
Other, net |
(1,155 |
) |
1,724 |
|
754 |
| |||||
Changes in operating assets and liabilities, net of acquisitions: |
|
|
| ||||||||
Accounts receivable |
(11,058 |
) |
(33,403 |
) |
(8,825 |
) | |||||
Other assets |
(4,254 |
) |
(2,146 |
) |
(138 |
) | |||||
Accounts payable |
(8,679 |
) |
7,983 |
|
3,318 |
| |||||
Income taxes payable |
654 |
|
— |
|
— |
| |||||
Accrued interest expense |
4,327 |
|
1,746 |
|
(851 |
) | |||||
Other liabilities and accrued expenses |
(9,889 |
) |
6,256 |
|
(3,634 |
) | |||||
Net cash provided by operating activities, continuing operations |
49,556 |
|
149,435 |
|
63,062 |
| |||||
Net cash used in operating activities, discontinued operations |
— |
|
(2,736 |
) |
(402 |
) | |||||
Net cash provided by operating activities |
49,556 |
|
146,699 |
|
62,660 |
| |||||
INVESTING ACTIVITIES: |
|
|
| ||||||||
Capital expenditures |
(29,374 |
) |
(28,230 |
) |
(20,069 |
) | |||||
Change in restricted cash |
— |
|
255,159 |
|
(255,159 |
) | |||||
Payments for business combinations, net of cash acquired |
(10,082 |
) |
(358,495 |
) |
(9,033 |
) | |||||
Proceeds from the sale of assets |
86 |
|
79 |
|
74 |
| |||||
Payments on derivative instruments |
— |
|
— |
|
(2,020 |
) | |||||
Shortfall loans to joint venture with NBCUniversal |
— |
|
(2,292 |
) |
(2,483 |
) | |||||
Capital contribution to joint venture with NBCUniversal |
(100,000 |
) |
— |
|
— |
| |||||
Other investments, net |
— |
|
— |
|
(375 |
) | |||||
Net cash used in investing activities, continuing operations |
(139,370 |
) |
(133,779 |
) |
(289,065 |
) | |||||
Net cash provided by (used in) investing activities, discontinued operations |
— |
|
29,520 |
|
(115 |
) | |||||
Net cash used in investing activities |
(139,370 |
) |
(104,259 |
) |
(289,180 |
) | |||||
FINANCING ACTIVITIES: |
|
|
| ||||||||
Net proceeds on exercises of employee and director share-based compensation |
1,256 |
|
1,314 |
|
841 |
| |||||
Tax benefit from exercises of share options |
1,591 |
|
— |
|
— |
| |||||
Proceeds from borrowings on long-term debt |
141,000 |
|
328,333 |
|
417,695 |
| |||||
Payment of dividend |
(2,000 |
) |
— |
|
— |
| |||||
Principal payments on long-term debt |
(85,160 |
) |
(322,179 |
) |
(175,216 |
) | |||||
Payment of long-term debt issue costs |
(655 |
) |
(10,272 |
) |
(7,662 |
) | |||||
Treasury shares purchased |
— |
|
(11,386 |
) |
(2,729 |
) | |||||
Net cash provided by (used in) financing activities |
56,032 |
|
(14,190 |
) |
232,929 |
| |||||
Net (decrease) increase in cash and cash equivalents |
(33,782 |
) |
28,250 |
|
6,409 |
| |||||
Cash and cash equivalents at the beginning of the period |
46,307 |
|
18,057 |
|
11,648 |
| |||||
Cash and cash equivalents at the end of the period |
$ |
12,525 |
|
$ |
46,307 |
|
$ |
18,057 |
|
|
December 31, | ||||||
|
2013 |
2012 | |||||
ASSETS |
|
| |||||
Current assets: |
|
| |||||
Cash and cash equivalents |
$ |
278 |
|
$ |
418 |
| |
Accounts receivable, net |
6,345 |
|
6,021 |
| |||
Other assets |
927 |
|
2,092 |
| |||
Total current assets |
7,550 |
|
8,531 |
| |||
Property and equipment, net |
2,469 |
|
3,190 |
| |||
Broadcast licenses and other intangible assets, net |
44,677 |
|
46,604 |
| |||
Other assets |
1,360 |
|
2,055 |
| |||
Total assets |
$ |
56,056 |
|
$ |
60,380 |
| |
LIABILITIES |
|
| |||||
Current liabilities: |
|
| |||||
Current portion of long-term debt |
$ |
1,162 |
|
$ |
1,451 |
| |
Accounts payable |
63 |
|
— |
| |||
Accrued expenses |
1,336 |
|
425 |
| |||
Program obligations |
1,303 |
|
2,185 |
| |||
Total current liabilities |
3,864 |
|
4,061 |
| |||
Long-term debt, excluding current portion |
3,005 |
|
3,950 |
| |||
Program obligations |
1,424 |
|
1,967 |
| |||
Other liabilities |
47,763 |
|
50,402 |
| |||
Total liabilities |
$ |
56,056 |
|
$ |
60,380 |
|
|
Year Ended December 31, | ||||||||||
|
2013 |
2012 |
2011 | ||||||||
Barter revenue |
$ |
5,552 |
|
$ |
4,220 |
|
$ |
4,071 |
| ||
Barter expense |
(5,455 |
) |
(4,176 |
) |
(3,967 |
) |
|
Year Ended December 31, | ||||||||||
|
2013 |
2012 |
2011 | ||||||||
Direct operating |
$ |
320 |
|
$ |
270 |
|
$ |
256 |
| ||
Selling, general and administrative |
1,460 |
|
1,019 |
|
1,266 |
| |||||
Corporate |
7,594 |
|
5,568 |
|
4,654 |
| |||||
Total share-based compensation |
$ |
9,374 |
|
$ |
6,857 |
|
$ |
6,176 |
|
|
Redeemable
Noncontrolling
Interest | ||
Acquisition of redeemable noncontrolling interest |
$ |
3,503 |
|
Net loss |
(556 |
) | |
Share-based compensation |
295 |
| |
Balance as of December 31, 2012 |
3,242 |
| |
Acquisition of redeemable noncontrolling interest |
11,025 |
| |
Net loss |
(1,512 |
) | |
Share-based compensation |
90 |
| |
Balance as of December 31, 2013 |
$ |
12,845 |
|
Current assets |
$ |
7,315 |
|
Equipment |
99 |
| |
Definite-lived intangible assets |
4,620 |
| |
Goodwill |
1,854 |
| |
Current liabilities |
(4,302 |
) | |
Noncontrolling interest |
(3,834 |
) | |
Total |
$ |
5,752 |
|
Current assets |
$ |
3,759 |
|
Non-current assets |
13 |
| |
Equipment |
179 |
| |
Definite-lived intangible assets |
3,580 |
| |
Goodwill |
9,160 |
| |
Current liabilities |
(920 |
) | |
Non-current liabilities |
(1,361 |
) | |
Noncontrolling interest |
(7,191 |
) | |
Total |
$ |
7,219 |
|
Program rights assets |
$ |
2,040 |
|
Property and equipment |
100,124 |
| |
Broadcast licenses |
133,120 |
| |
Definite-lived intangible assets |
55,837 |
| |
Goodwill |
65,024 |
| |
Current liabilities |
(417 |
) | |
Non-current liabilities |
(2,239 |
) | |
Long-term debt assumed |
(13,989 |
) | |
Total |
$ |
339,500 |
|
2012 |
2011 | ||||||
Net revenue |
$ |
658,163 |
|
$ |
514,340 |
| |
Net (loss) income |
$ |
(11,720 |
) |
$ |
23,950 |
| |
Basic (loss) income per common share attributable to LIN LLC |
$ |
(0.22 |
) |
$ |
0.43 |
| |
Diluted (loss) income per common share attributable to LIN LLC |
$ |
(0.22 |
) |
$ |
0.42 |
|
Current assets |
$ |
1,656 |
|
Non-current assets |
1,968 |
| |
Other intangible assets |
12,898 |
| |
Goodwill |
5,331 |
| |
Non-current liabilities |
(2,858 |
) | |
Total |
$ |
18,995 |
|
|
||||||||||||||||||||||||
|
2012 |
2011 | ||||||||||||||||||||||
|
WWHO-
TV |
WUPW-
TV |
Total |
WWHO-
TV |
WUPW-
TV |
Total | ||||||||||||||||||
Net revenues |
$ |
440 |
|
$ |
2,193 |
|
$ |
2,633 |
|
$ |
4,236 |
|
$ |
7,585 |
|
$ |
11,821 |
| ||||||
Operating (loss) income |
(393 |
) |
(1,166 |
) |
(1,559 |
) |
(699 |
) |
1,079 |
|
380 |
| ||||||||||||
Net (loss) income |
(252 |
) |
(766 |
) |
(1,018 |
) |
(1,427 |
) |
507 |
|
(920 |
) |
|
January1 - February 12, |
Year Ended December 31, | |||||||||
|
2013 |
2012 |
2011 | ||||||||
SVO: |
|
|
| ||||||||
Net revenues |
$ |
11,951 |
|
$ |
143,474 |
|
$ |
118,833 |
| ||
Operating expenses |
(9,148 |
) |
(79,124 |
) |
(71,350 |
) | |||||
Net income before taxes |
2,805 |
|
64,653 |
|
47,791 |
| |||||
Net income after taxes |
2,793 |
|
64,515 |
|
47,743 |
| |||||
SVH: |
|
|
| ||||||||
Equity in income from limited partnership in SVO |
$ |
2,786 |
|
$ |
64,354 |
|
$ |
47,624 |
| ||
Interest and other expense |
(8,039 |
) |
(69,365 |
) |
(68,003 |
) | |||||
Net loss |
(5,253 |
) |
(5,011 |
) |
(20,379 |
) | |||||
Cash distributions to SVH from SVO |
6,905 |
|
55,025 |
|
53,846 |
| |||||
Shortfall loans from LIN Television to SVH |
— |
|
2,292 |
|
2,483 |
| |||||
Shortfall loans from General Electric Company ("GE") to SVH |
— |
|
8,954 |
|
9,701 |
|
|
February 12, |
December 31, | |||||
|
2013 (2) |
2012 | |||||
SVH: |
|
| |||||
Cash and cash equivalents |
$ |
6,905 |
|
$ |
— |
| |
Non-current assets |
205,433 |
|
209,552 |
| |||
Current liabilities |
8,155 |
|
544 |
| |||
Non-current liabilities(1) |
865,354 |
|
864,927 |
| |||
Shortfall loans outstanding and accrued interest payable to LIN Television from SVH |
10,159 |
|
10,080 |
| |||
Shortfall loans outstanding and accrued interest payable to NBCUniversal and General Electric from SVH |
39,695 |
|
39,382 |
|
(1) |
See Note 13—"Commitments and Contingencies" for further description of the GECC Note. Non-current liabilities includes shortfall loans outstanding and accrued interest payable to the joint venture partners. |
(2) |
Represents balances prior to the effect of the JV Sale Transaction. |
|
December 31, | ||||||
|
2013 |
2012 | |||||
Land and land improvements |
$ |
21,152 |
|
$ |
21,147 |
| |
Buildings and fixtures |
179,209 |
|
176,940 |
| |||
Broadcast equipment and other |
319,912 |
|
311,907 |
| |||
Total property and equipment |
520,273 |
|
509,994 |
| |||
Less accumulated depreciation |
(299,195 |
) |
(268,503 |
) | |||
Property and equipment, net |
$ |
221,078 |
|
$ |
241,491 |
|
|
Weighted-Average
Remaining Useful
Life (in years) |
December 31, | |||||||
|
2013 |
2012 | |||||||
Finite-Lived Intangible Assets: |
|
|
| ||||||
Network affiliations |
1 |
$ |
32,996 |
|
$ |
32,996 |
| ||
Customer relationships |
9 |
14,941 |
|
8,631 |
| ||||
Non-compete agreements |
1 |
1,588 |
|
1,588 |
| ||||
Completed technology |
3 |
10,191 |
|
6,370 |
| ||||
Favorable leases |
31 |
8,573 |
|
8,573 |
| ||||
Retransmission consent agreements |
4 |
7,860 |
|
7,859 |
| ||||
Other intangible assets |
19 |
9,817 |
|
9,609 |
| ||||
Accumulated amortization |
|
(38,917 |
) |
(16,072 |
) | ||||
Net finite-lived intangible assets |
|
$ |
47,049 |
|
$ |
59,554 |
| ||
Indefinite-Lived Intangible Assets: |
|
|
| ||||||
Broadcast licenses |
|
$ |
536,515 |
|
$ |
536,515 |
| ||
Summary: |
|
|
| ||||||
Goodwill |
|
$ |
203,528 |
|
$ |
192,514 |
| ||
Broadcast licenses and finite-lived intangible assets, net |
|
583,564 |
|
596,069 |
| ||||
Total intangible assets |
|
$ |
787,092 |
|
$ |
788,583 |
|
|
Projected Aggregate
Amortization Expense | ||
For the years ended December 31, |
| ||
2014 |
$ |
15,971 |
|
2015 |
5,783 |
| |
2016 |
4,980 |
| |
2017 |
3,266 |
| |
2018 |
2,042 |
| |
Thereafter |
15,007 |
| |
Total |
$ |
47,049 |
|
|
Year Ended December 31, | ||||||
|
2013 |
2012 | |||||
Broadcast: |
|||||||
Balance as of January 1, 2013 and 2012, respectively |
$ |
185,237 |
|
$ |
114,882 |
| |
Acquisitions |
— |
|
70,355 |
| |||
Balance as of December 31, 2013 and 2012, respectively |
$ |
185,237 |
|
$ |
185,237 |
| |
Digital: |
|||||||
Balance as of January 1, 2013 and 2012, respectively |
$ |
7,277 |
|
$ |
7,187 |
| |
Acquisitions/Adjustments |
11,014 |
|
90 |
| |||
Balance as of December 31, 2013 and 2012, respectively |
$ |
18,291 |
|
$ |
7,277 |
| |
Total: |
|||||||
Balance as of January 1, 2013 and 2012, respectively |
$ |
192,514 |
|
$ |
122,069 |
| |
Acquisitions |
11,014 |
|
70,445 |
| |||
Balance as of December 31, 2013 and 2012, respectively |
$ |
203,528 |
|
$ |
192,514 |
|
|
December 31, | ||||||
|
2013 |
2012 | |||||
Senior Secured Credit Facility: |
|
| |||||
Revolving credit loans |
$ |
5,000 |
|
$ |
— |
| |
$118,750 and $125,000 Term loans, net of discount of $345 and $435 as of December 31, 2013 and December 31, 2012, respectively |
118,405 |
|
124,565 |
| |||
$314,200 and $257,400 Incremental term loans, net of discount of $1,684 and $2,020 as of December 31, 2013 and December 31, 2012, respectively |
312,516 |
|
255,380 |
| |||
83/8% Senior Notes due 2018 |
200,000 |
|
200,000 |
| |||
63/8% Senior Notes due 2021 |
290,000 |
|
290,000 |
| |||
Capital lease obligations |
14,604 |
|
14,881 |
| |||
Other debt |
6,167 |
|
5,401 |
| |||
Total debt |
946,692 |
|
890,227 |
| |||
Less current portion |
17,364 |
|
10,756 |
| |||
Total long-term debt |
$ |
929,328 |
|
$ |
879,471 |
|
|
Credit Facility | ||||||||||
|
Revolving
Facility |
Term Loans |
Incremental
Term Loans | ||||||||
Final maturity date |
10/26/2017 |
|
10/26/2017 |
|
12/21/2018 |
| |||||
Available balance as of December 31, 2013 |
$ |
70,000 |
|
$ |
— |
|
$ |
— |
| ||
Interest rates as of December 31, 2013: |
|
|
| ||||||||
Interest rate |
0.17 |
% |
0.17 |
% |
1.00 |
% | |||||
Applicable margin |
2.75 |
% |
2.75 |
% |
3.00 |
% | |||||
Total |
2.92 |
% |
2.92 |
% |
4.00 |
% |
|
83/8% Senior Notes |
Final maturity date |
4/15/2018 |
Annual interest rate |
8.375% |
Payable semi-annually in arrears |
April 15th |
October 15th |
|
63/8% Senior Notes |
Final maturity date |
1/15/2021 |
Annual interest rate |
6.375% |
Payable semi-annually in arrears |
January 15th |
July 15th |
Revolving
Facilities |
Term Loans |
Incremental
Term Loans |
83/8%
Senior Notes |
63/8%
Senior Notes |
Capital
Leases |
Other Debt |
Total | ||||||||||||||||||||||||
Final maturity date |
10/26/2017 |
|
10/26/2017 |
|
12/21/2018 |
|
4/15/2018 |
|
1/15/2021 |
|
Various |
|
Various |
|
|
| |||||||||||||||
2014 |
$ |
— |
|
$ |
12,500 |
|
$ |
3,200 |
|
$ |
— |
|
$ |
— |
|
$ |
502 |
|
$ |
1,162 |
|
$ |
17,364 |
| |||||||
2015 |
— |
|
18,750 |
|
3,200 |
|
— |
|
— |
|
528 |
|
1,162 |
|
23,640 |
| |||||||||||||||
2016 |
— |
|
25,000 |
|
3,200 |
|
— |
|
— |
|
620 |
|
1,024 |
|
29,844 |
| |||||||||||||||
2017 |
5,000 |
|
(1) |
62,500 |
|
3,200 |
|
— |
|
— |
|
577 |
|
819 |
|
72,096 |
| ||||||||||||||
2018 |
— |
|
— |
|
301,400 |
|
200,000 |
|
— |
|
609 |
|
2,000 |
|
504,009 |
| |||||||||||||||
2019 and thereafter |
— |
|
— |
|
— |
|
— |
|
290,000 |
|
11,768 |
|
— |
|
301,768 |
| |||||||||||||||
Total |
$ |
5,000 |
|
|
$ |
118,750 |
|
$ |
314,200 |
|
|
$ |
200,000 |
|
$ |
290,000 |
|
$ |
14,604 |
|
$ |
6,167 |
|
$ |
948,721 |
|
(1) |
An additional $25 million was outstanding on our revolving credit facility as of the date of this report and is not reflected in our balance sheet as of December 31, 2013. |
|
December 31, 2013 |
December 31, 2012 | |||||||||||||
|
Carrying
Amount |
Estimated
Fair Value |
Carrying
Amount |
Estimated
Fair Value | |||||||||||
|
(in thousands) | ||||||||||||||
Revolving credit loans |
$ |
5,000 |
|
$ |
5,000 |
|
$ |
— |
|
$ |
— |
| |||
Term loans |
430,921 |
|
432,105 |
|
379,945 |
|
380,599 |
| |||||||
Senior notes |
490,000 |
|
512,983 |
|
490,000 |
|
524,500 |
| |||||||
Other debt |
6,167 |
|
6,167 |
|
5,401 |
|
5,401 |
| |||||||
Total |
$ |
932,088 |
|
$ |
956,255 |
|
$ |
875,346 |
|
$ |
910,500 |
|
|
Year Ended December 31, | ||||||||||
|
2013 |
|
2012 |
2011 | |||||||
Employee share options |
$ |
2,933 |
|
$ |
1,868 |
|
$ |
1,492 |
| ||
Restricted share awards |
6,348 |
|
4,896 |
|
4,320 |
| |||||
Modifications to share option agreements |
93 |
|
93 |
|
364 |
| |||||
Total share-based compensation |
$ |
9,374 |
|
$ |
6,857 |
|
$ |
6,176 |
|
Shares |
Weighted-
Average
Exercise Price
Per Share | |||||
Outstanding at the beginning of the year |
4,894 |
|
$ |
3.42 |
| |
Granted during the year |
110 |
|
12.29 |
| ||
Exercised or converted during the year |
(420 |
) |
3.23 |
| ||
Forfeited during the year |
(163 |
) |
5.43 |
| ||
Expired during the year |
(9 |
) |
3.57 |
| ||
Outstanding at the end of the year |
4,412 |
|
3.58 |
| ||
Exercisable or convertible at the end of the year |
3,304 |
|
2.79 |
|
|
Year Ended December 31, | ||||
|
2013 |
2012 |
2011 | ||
Expected term(1) |
5 to 6 years |
5 to 6 years |
5 to 6 years | ||
Expected volatility(2) |
95% to 96% |
98% to 99% |
97% to 99% | ||
Expected dividends |
$— |
$— |
$— | ||
Risk-free rate(3) |
0.8% to 1.2% |
0.6% to 1.1% |
0.9% to 2.6% |
(1) |
The expected term was estimated using our historical experience. |
(2) |
Expected volatility is based on historical trends for LIN LLC class A common shares over the expected term. |
(3) |
The risk-free interest rate for each grant is equal to the U.S. Treasury yield curve in effect at the time of grant for instruments with a similar expected life. |
Shares |
Weighted-
Average Price
Per Share | |||||
Unvested at the beginning of the year |
2,294 |
|
$ |
5.98 |
| |
Granted during the year |
582 |
|
18.89 |
| ||
Vested during the year |
(960 |
) |
6.00 |
| ||
Forfeited during the year |
(205 |
) |
5.87 |
| ||
Unvested at the end of the year |
1,711 |
|
10.37 |
|
|
Year Ended December 31, | ||||||||||
|
2013 |
2012 |
2011 | ||||||||
Total fair value of options and awards granted |
$ |
12,349 |
|
$ |
10,347 |
|
$ |
4,983 |
| ||
Total intrinsic value of options exercised |
5,136 |
|
865 |
|
225 |
| |||||
Total fair value of awards vested |
18,050 |
|
7,718 |
|
7,522 |
|
|
Year Ended
December 31, | ||||||
|
2013 |
|
2012 | ||||
Change in projected benefit obligation |
|
| |||||
Projected benefit obligation, beginning of period |
$ |
134,969 |
|
$ |
133,047 |
| |
Service cost |
— |
|
— |
| |||
Interest cost |
5,259 |
|
5,379 |
| |||
Actuarial (gain) loss |
(10,282 |
) |
1,485 |
| |||
Benefits paid |
(4,943 |
) |
(4,942 |
) | |||
Curtailment |
— |
|
— |
| |||
Projected benefit obligation, end of period |
$ |
125,003 |
|
$ |
134,969 |
| |
Accumulated benefit obligation |
$ |
125,003 |
|
$ |
134,969 |
| |
Change in plan assets |
|
| |||||
Fair value of plan assets, beginning of period |
$ |
96,412 |
|
$ |
82,314 |
| |
Actual return on plan assets |
10,611 |
|
11,621 |
| |||
Employer contributions |
5,359 |
|
7,419 |
| |||
Benefits paid |
(4,943 |
) |
(4,942 |
) | |||
Fair value of plan assets, end of period |
$ |
107,439 |
|
$ |
96,412 |
| |
Unfunded status of the plan |
$ |
(17,564 |
) |
$ |
(38,557 |
) | |
Total amount recognized as accrued benefit liability |
$ |
(17,564 |
) |
$ |
(38,557 |
) |
|
December 31, | ||||||
|
2013 |
|
2012 | ||||
Other accrued expenses (current) |
$ |
(695 |
) |
$ |
(373 |
) | |
Other liabilities (long-term) |
(16,869 |
) |
(38,184 |
) | |||
Total amount recognized as accrued pension benefit liability |
$ |
(17,564 |
) |
$ |
(38,557 |
) | |
Accumulated other comprehensive loss: |
|
| |||||
Net loss |
$ |
32,681 |
|
$ |
48,978 |
| |
Tax benefit |
12,915 |
|
19,354 |
| |||
Net loss, net of tax benefit |
19,766 |
|
29,624 |
| |||
Pension tax liability |
5,760 |
|
5,760 |
| |||
Accumulated other comprehensive loss related to net periodic pension benefit cost |
$ |
25,526 |
|
$ |
35,384 |
|
|
December 31, | ||||||||||
|
2013 |
2012 |
2011 | ||||||||
Net gain (loss) |
$ |
14,443 |
|
$ |
3,947 |
|
$ |
(18,503 |
) | ||
Amortization of net actuarial loss |
1,854 |
|
1,578 |
|
753 |
| |||||
Net gain (loss) |
$ |
16,297 |
|
|
$ |
5,525 |
|
|
$ |
(17,750 |
) |
Tax benefit (provision) |
6,439 |
|
2,132 |
|
(6,912 |
) | |||||
Total amount recognized in other comprehensive income (loss) |
$ |
9,858 |
|
|
$ |
3,393 |
|
|
$ |
(10,838 |
) |
|
Year Ended December 31, | ||||||||||
|
2013 |
|
2012 |
|
2011 | ||||||
Service cost |
$ |
— |
|
$ |
— |
|
$ |
— |
| ||
Interest cost |
5,259 |
|
5,379 |
|
5,872 |
| |||||
Expected return on plan assets |
(6,450 |
) |
(6,190 |
) |
(6,824 |
) | |||||
Amortization of prior service cost |
— |
|
— |
|
— |
| |||||
Amortization of net loss |
1,854 |
|
1,579 |
|
754 |
| |||||
Net periodic benefit cost (gain) |
$ |
663 |
|
$ |
768 |
|
$ |
(198 |
) |
For Years Ended December 31, |
Expected Future Pension
Benefit Payments | ||
2014 |
$ |
7,914 |
|
2015 |
5,879 |
| |
2016 |
5,955 |
| |
2017 |
5,966 |
| |
2018 |
6,281 |
| |
2019 through 2023 |
38,156 |
|
|
Year Ended December 31, | ||||||||||
|
2013 |
2012 |
2011 | ||||||||
SERP |
Retirement Plan |
SERP |
Retirement Plan |
SERP |
Retirement Plan | ||||||
Discount rate used to estimate our pension benefit obligation |
4.70% |
5.00% |
3.60% |
4.00% |
3.90% |
4.20% | |||||
Discount rate used to determine net periodic pension benefit |
3.60% |
4.00% |
3.90% |
4.20% |
5.25% |
5.25% | |||||
Rate of compensation increase |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A | |||||
Expected long-term rate-of-return on plan assets |
N/A |
7.00% |
N/A |
7.00% |
N/A |
7.00% |
|
Target Allocation |
Percentage of Plan Assets
as of December 31, | |||
Asset Category |
2013 |
2013 |
2012 | ||
Equity securities |
60% |
60% |
55% | ||
Debt securities |
40% |
40% |
45% | ||
100% |
100% |
100% |
Quoted Prices in Active Markets for Identical Assets |
Significant
Observable
Inputs |
||||||||||
|
(Level 1) |
(Level 2) |
Total | ||||||||
December 31, 2013: |
|
||||||||||
Cash and cash equivalents |
$ |
690 |
|
$ |
— |
|
$ |
690 |
| ||
Money market fund |
— |
|
762 |
|
762 |
| |||||
Commingled pools: |
|
— |
| ||||||||
U.S. equity |
— |
|
37,645 |
|
37,645 |
| |||||
International equity |
— |
|
18,884 |
|
18,884 |
| |||||
REIT |
— |
|
3,213 |
|
3,213 |
| |||||
High yield bond |
— |
|
4,101 |
|
4,101 |
| |||||
Emerging markets |
— |
|
5,994 |
|
5,994 |
| |||||
Investment grade fixed income |
— |
|
36,150 |
|
36,150 |
| |||||
Total |
$ |
690 |
|
$ |
106,749 |
|
$ |
107,439 |
| ||
December 31, 2012: |
|
||||||||||
Cash and cash equivalents |
$ |
573 |
|
$ |
— |
|
$ |
573 |
| ||
Money market fund |
— |
|
519 |
|
519 |
| |||||
Commingled pools: |
|
— |
| ||||||||
U.S. equity |
— |
|
30,034 |
|
30,034 |
| |||||
International equity |
— |
|
15,241 |
|
15,241 |
| |||||
REIT |
— |
|
3,875 |
|
3,875 |
| |||||
High yield bond |
— |
|
2,916 |
|
2,916 |
| |||||
Emerging markets |
— |
|
6,374 |
|
6,374 |
| |||||
Investment grade fixed income |
— |
|
36,880 |
|
36,880 |
| |||||
Total |
$ |
573 |
|
$ |
95,839 |
|
$ |
96,412 |
|
Severance and
Related | |||
Balance as of December 31, 2011 |
$ |
515 |
|
Charges |
1,009 |
| |
Payments |
(807 |
) | |
Balance as of December 31, 2012 |
$ |
717 |
|
Charges |
3,895 |
| |
Payments |
(4,189 |
) | |
Balance as of December 31, 2013 |
$ |
423 |
|
Operating Leases
and Agreements |
Syndicated
Television
Programming(1) |
Total | |||||||||
Year |
|
|
| ||||||||
2014 |
$ |
45,076 |
|
$ |
27,119 |
|
$ |
72,195 |
| ||
2015 |
33,930 |
|
26,675 |
|
60,605 |
| |||||
2016 |
16,140 |
|
17,387 |
|
33,527 |
| |||||
2017 |
12,146 |
|
3,133 |
|
15,279 |
| |||||
2018 |
1,611 |
|
153 |
|
1,764 |
| |||||
Thereafter |
7,139 |
|
214 |
|
7,353 |
| |||||
Total obligations |
$ |
116,042 |
|
$ |
74,681 |
|
$ |
190,723 |
|
|
Year Ended December 31, | ||||||||||
|
2013 |
|
2012 |
|
2011 | ||||||
Current: |
|
|
| ||||||||
Federal |
$ |
26,056 |
|
$ |
21 |
|
$ |
543 |
| ||
State |
5,636 |
|
1,571 |
|
652 |
| |||||
Foreign |
— |
|
633 |
|
— |
| |||||
Total current |
$ |
31,692 |
|
$ |
2,225 |
|
$ |
1,195 |
| ||
Deferred: |
|
|
| ||||||||
Federal |
$ |
(124,201 |
) |
$ |
33,865 |
|
$ |
(25,907 |
) | ||
State |
(32,911 |
) |
4,373 |
|
8,667 |
| |||||
Total deferred |
(157,112 |
) |
38,238 |
|
(17,240 |
) | |||||
Total current and deferred |
$ |
(125,420 |
) |
$ |
40,463 |
|
$ |
(16,045 |
) |
|
Year Ended December 31, | ||||||||||
2013 |
|
2012 |
|
2011 | |||||||
Provision assuming federal statutory rate |
$ |
10,913 |
|
$ |
7,871 |
|
$ |
11,780 |
| ||
State taxes, net of federal tax benefit |
3,863 |
|
5,723 |
|
1,790 |
| |||||
State tax law/rate changes, net of federal tax benefit |
— |
|
1,883 |
|
5,703 |
| |||||
Change in valuation allowance |
(18,157 |
) |
(4,622 |
) |
(36,541 |
) | |||||
Share compensation |
(53 |
) |
(17 |
) |
601 |
| |||||
Reserve for tax contingencies |
124 |
|
633 |
|
— |
| |||||
Impact of JV Sale Transaction |
— |
|
28,435 |
|
— |
| |||||
Impact of the Merger |
(124,306 |
) |
— |
|
— |
| |||||
Non-deductible acquisition and Merger related transaction costs |
1,645 |
|
— |
|
— |
| |||||
Other |
551 |
|
557 |
|
622 |
| |||||
$ |
(125,420 |
) |
$ |
40,463 |
|
$ |
(16,045 |
) | |||
Effective income tax rate on continuing operations |
(402.2 |
)% |
|
179.9 |
% |
|
(47.7 |
)% |
|
December 31, | ||||||
|
2013 |
2012 | |||||
Deferred tax liabilities: |
|
| |||||
Deferred gain related to equity investment in NBC joint venture |
$ |
— |
|
$ |
259,049 |
| |
Property and equipment |
11,816 |
|
12,822 |
| |||
Intangible assets |
54,859 |
|
36,761 |
| |||
Deferred gain on debt repurchase |
18,140 |
|
18,309 |
| |||
Noncontrolling interest |
849 |
|
549 |
| |||
Other |
7,629 |
|
7,476 |
| |||
Total |
$ |
93,293 |
|
$ |
334,966 |
| |
Deferred tax assets: |
|
| |||||
Net operating loss carryforwards |
$ |
(17,707 |
) |
$ |
(110,169 |
) | |
Equity investments |
(2,372 |
) |
(1,554 |
) | |||
Other |
(15,426 |
) |
(32,625 |
) | |||
Valuation allowance |
— |
|
18,157 |
| |||
Total |
(35,505 |
) |
(126,191 |
) | |||
Net deferred tax liabilities |
$ |
57,788 |
|
$ |
208,775 |
|
|
Year Ended December 31, | ||||||||||
|
2013 |
|
2012 |
|
2011 | ||||||
Balance at beginning of year |
$ |
26,559 |
|
$ |
26,381 |
|
$ |
26,610 |
| ||
Additions for tax positions of current year |
733 |
|
1,798 |
|
2,386 |
| |||||
Additions for tax positions of prior years |
— |
|
— |
|
— |
| |||||
Reductions for tax positions of prior years |
(2,084 |
) |
(1,133 |
) |
(2,128 |
) | |||||
Reductions related to settlements with taxing authorities |
— |
|
— |
|
— |
| |||||
Reductions related to expiration of the statute of limitations |
(730 |
) |
(487 |
) |
(487 |
) | |||||
Balance at end of year |
$ |
24,478 |
|
$ |
26,559 |
|
$ |
26,381 |
|
|
December 31, | ||||||
|
2013 |
2012 | |||||
Accrued compensation |
$ |
11,817 |
|
$ |
11,275 |
| |
Accrued contract costs |
3,394 |
|
4,163 |
| |||
Accrued interest |
12,168 |
|
7,841 |
| |||
Accrued capital contribution to joint venture |
— |
|
100,000 |
| |||
Other accrued expenses |
24,317 |
|
29,967 |
| |||
Total |
$ |
51,696 |
|
$ |
153,246 |
|
|
Year Ended December 31, | ||||||||||
|
2013 |
2012 |
2011 | ||||||||
|
(in thousands) | ||||||||||
Cash paid for interest expense |
$ |
48,646 |
|
$ |
42,348 |
|
$ |
47,801 |
| ||
Cash paid for income taxes—continuing operations |
$ |
32,937 |
|
$ |
1,103 |
|
$ |
559 |
| ||
Non-cash investing activities: |
|
|
| ||||||||
Accrual for estimated shortfall loans to SVH |
$ |
— |
|
$ |
— |
|
$ |
4,697 |
| ||
Non-cash financing activities: |
|
|
| ||||||||
Capital leases assumed in acquisitions |
$ |
179 |
|
$ |
14,896 |
|
$ |
— |
|
Balance at
Beginning of
Period |
Charged (Released) to
Operations |
Deductions |
Balance at
End of
Period | ||||||||||||
|
(in thousands) | ||||||||||||||
Allowance for doubtful accounts as of December 31, |
|
|
|
| |||||||||||
2013 |
$ |
3,599 |
|
$ |
1,608 |
|
$ |
(2,019 |
) |
$ |
3,188 |
| |||
2012 |
$ |
2,310 |
|
$ |
2,047 |
|
$ |
(758 |
) |
$ |
3,599 |
| |||
2011 |
$ |
2,194 |
|
$ |
760 |
|
$ |
(644 |
) |
$ |
2,310 |
| |||
Valuation allowance for state and federal deferred tax assets as of December 31, |
|
|
|
| |||||||||||
2013 |
$ |
18,157 |
|
$ |
(18,157 |
) |
$ |
— |
|
$ |
— |
| |||
2012 |
$ |
23,422 |
|
$ |
(5,265 |
) |
$ |
— |
|
$ |
18,157 |
| |||
2011 |
$ |
59,990 |
|
$ |
(36,568 |
) |
$ |
— |
|
$ |
23,422 |
|
Year ended December 31, | |||||||||||
2013 |
2012 |
2011 | |||||||||
(in thousands) | |||||||||||
Net revenues: |
|||||||||||
Broadcast |
$ |
576,510 |
|
$ |
512,367 |
|
$ |
372,783 |
| ||
Digital |
75,853 |
|
41,095 |
|
27,220 |
| |||||
Total net revenues |
$ |
652,363 |
|
$ |
553,462 |
|
$ |
400,003 |
|
Year ended December 31, | |||||||||||
2013 |
2012 |
2011 | |||||||||
(in thousands) | |||||||||||
Segment Adjusted EBITDA: |
|||||||||||
Broadcast |
$ |
205,843 |
|
$ |
241,831 |
|
$ |
141,081 |
| ||
Digital |
4,020 |
|
1,970 |
|
292 |
| |||||
Total segment Adjusted EBITDA |
209,863 |
|
243,801 |
|
141,373 |
| |||||
Unallocated corporate |
(23,257 |
) |
(24,268 |
) |
(18,514 |
) | |||||
Less: |
|||||||||||
Depreciation |
46,854 |
|
32,149 |
|
26,246 |
| |||||
Amortization of intangible assets |
22,826 |
|
6,364 |
|
1,199 |
| |||||
Amortization of program rights |
29,242 |
|
23,048 |
|
21,406 |
| |||||
Share-based compensation |
9,374 |
|
6,857 |
|
6,176 |
| |||||
Non-recurring and acquisition-related charges (1) |
10,842 |
|
3,207 |
|
2,171 |
| |||||
Restructuring charge |
3,895 |
|
1,009 |
|
707 |
| |||||
Contract termination costs |
3,887 |
|
— |
|
— |
| |||||
Loss on sale of assets |
710 |
|
96 |
|
472 |
| |||||
Add: |
|||||||||||
Cash payments for programming |
31,677 |
|
24,258 |
|
24,622 |
| |||||
Operating income |
90,653 |
|
171,061 |
|
|
89,104 |
| ||||
Other expense: |
|||||||||||
Interest expense, net |
56,627 |
|
46,683 |
|
50,706 |
| |||||
Share of loss in equity investments |
56 |
|
98,309 |
|
4,957 |
| |||||
Gain on derivative instruments |
— |
|
— |
|
(1,960 |
) | |||||
Loss on extinguishment of debt |
— |
|
3,341 |
|
1,694 |
| |||||
Other expense, net |
2,100 |
|
237 |
|
51 |
| |||||
Total other expense, net |
58,783 |
|
148,570 |
|
55,448 |
| |||||
Consolidated income before (benefit from) provision for income taxes |
$ |
31,870 |
|
$ |
22,491 |
|
$ |
33,656 |
|
Year ended December 31, | |||||||||||
2013 |
2012 |
2011 | |||||||||
(in thousands) | |||||||||||
Operating income (loss): |
|||||||||||
Broadcast |
$ |
142,753 |
|
$ |
207,431 |
|
$ |
118,399 |
| ||
Digital |
(365 |
) |
(461 |
) |
(815 |
) | |||||
Unallocated corporate |
(51,735 |
) |
(35,909 |
) |
(28,480 |
) | |||||
Total operating income |
$ |
90,653 |
|
$ |
171,061 |
|
$ |
89,104 |
|
Year ended December 31, | |||||||||||
2013 |
2012 |
2011 | |||||||||
(in thousands) | |||||||||||
Depreciation and amortization: |
|||||||||||
Broadcast |
$ |
64,887 |
|
$ |
35,521 |
|
$ |
25,761 |
| ||
Digital |
4,046 |
|
2,365 |
|
1,105 |
| |||||
Unallocated corporate |
747 |
|
627 |
|
579 |
| |||||
Total depreciation and amortization |
$ |
69,680 |
|
$ |
38,513 |
|
$ |
27,445 |
|
Year ended December 31, | |||||||||||
2013 |
2012 |
2011 | |||||||||
(in thousands) | |||||||||||
Capital expenditures: |
|||||||||||
Broadcast |
$ |
22,957 |
|
$ |
23,342 |
|
$ |
18,616 |
| ||
Digital |
4,416 |
|
2,884 |
|
722 |
| |||||
Unallocated corporate |
2,001 |
|
2,004 |
|
731 |
| |||||
Total capital expenditures |
$ |
29,374 |
|
$ |
28,230 |
|
$ |
20,069 |
|
December 31, |
December 31, | ||||||
2013 |
2012 | ||||||
(in thousands) | |||||||
Assets: |
|||||||
Broadcast |
$ |
1,100,343 |
|
$ |
1,136,861 |
| |
Digital |
69,690 |
|
29,351 |
| |||
Unallocated corporate |
46,917 |
|
75,202 |
| |||
Total assets |
$ |
1,216,950 |
|
$ |
1,241,414 |
|
Note 20—Condensed Consolidating Financial Statements
LIN Television, a 100% owned subsidiary of LIN LLC, is the primary obligor of our senior secured credit facility, our 83/8% Senior Notes and our 63/8% Senior Notes, which are further described in Note 7 — “ Debt”. LIN LLC fully and unconditionally guarantees all of LIN Television’s debt on a joint-and-several basis. Additionally, all of the consolidated 100% owned subsidiaries of LIN Television fully and unconditionally guarantee LIN Television’s senior secured credit facility, our 83/8% Senior Notes and our 63/8% Senior Notes on a joint-and-several basis, subject to customary release provisions. There are certain contractual restrictions on LIN Television’s ability to obtain funds in the form of dividends or loans from the non-guarantor subsidiaries.
The following condensed consolidating financial statements present the consolidated balance sheets, consolidated statements of operations, consolidated statements of comprehensive income and consolidated statements of cash flows of LIN Television, as the issuer, the guarantor subsidiaries, and the non-guarantor subsidiaries of LIN Television and the elimination entries necessary to consolidate or combine the issuer with the guarantor and non-guarantor subsidiaries. These statements are presented in accordance with the disclosure requirements under SEC Regulation S-X Rule 3-10.
LIN Television Corporation
Notes to Consolidated Financial Statements (Continued)
Condensed Consolidating Balance Sheet
As of December 31, 2013
(in thousands)
LIN Television |
Guarantor |
Non-Guarantor |
Consolidating/ |
LIN Television Corporation |
||||||||||||||||
ASSETS |
||||||||||||||||||||
Current assets: |
||||||||||||||||||||
Cash and cash equivalents |
$ | 10,313 | $ | 3 | $ | 2,209 | $ | — | $ | 12,525 | ||||||||||
Accounts receivable, net |
89,005 | 39,416 | 16,988 | — | 145,409 | |||||||||||||||
Deferred income tax assets |
5,818 | 1,080 | — | — | 6,898 | |||||||||||||||
Other current assets |
12,264 | 1,049 | 1,888 | — | 15,201 | |||||||||||||||
Total current assets |
117,400 | 41,548 | 21,085 | — | 180,033 | |||||||||||||||
Property and equipment, net |
180,480 | 35,752 | 4,846 | — | 221,078 | |||||||||||||||
Deferred financing costs |
16,357 | — | 91 | — | 16,448 | |||||||||||||||
Goodwill |
169,492 | 18,518 | 15,518 | — | 203,528 | |||||||||||||||
Broadcast licenses, net |
— | 493,814 | 42,701 | — | 536,515 | |||||||||||||||
Other intangible assets, net |
31,303 | 1,840 | 13,906 | — | 47,049 | |||||||||||||||
Advances to consolidated subsidiaries |
7,664 | 968,728 | — | (976,392 |
) |
— | ||||||||||||||
Investment in consolidated subsidiaries |
1,534,600 | — | — | (1,534,600 |
) |
— | ||||||||||||||
Other assets |
52,778 | 2,688 | 1,276 | (44,443 |
) |
12,299 | ||||||||||||||
Total assets |
$ | 2,110,074 | $ | 1,562,888 | $ | 99,423 | $ | (2,555,435 |
) |
$ | 1,216,950 | |||||||||
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND SHAREHOLDERS' EQUITY |
||||||||||||||||||||
Current liabilities: |
||||||||||||||||||||
Current portion of long-term debt |
$ | 16,112 | $ | — | $ | 1,252 | $ | — | $ | 17,364 | ||||||||||
Accounts payable |
4,185 | 5,339 | 4,478 | — | 14,002 | |||||||||||||||
Income taxes payable |
749 | 671 | — | — | 1,420 | |||||||||||||||
Accrued expenses |
42,570 | 6,254 | 2,872 | — | 51,696 | |||||||||||||||
Program obligations |
4,711 | 1,013 | 1,303 | — | 7,027 | |||||||||||||||
Total current liabilities |
68,327 | 13,277 | 9,905 | — | 91,509 | |||||||||||||||
Long-term debt, excluding current portion |
926,223 | — | 3,105 | — | 929,328 | |||||||||||||||
Deferred income tax liabilities |
30,013 | 33,824 | 849 | — | 64,686 | |||||||||||||||
Program obligations |
2,505 | 217 | 1,424 | — | 4,146 | |||||||||||||||
Intercompany liabilities |
968,628 | — | 7,764 | (976,392 |
) |
— | ||||||||||||||
Other liabilities |
27,151 | 58 | 44,443 | (44,443 |
) |
27,209 | ||||||||||||||
Total liabilities |
2,022,847 | 47,376 | 67,490 | (1,020,835 |
) |
1,116,878 | ||||||||||||||
Redeemable noncontrolling interest |
— | — | 12,845 | — | 12,845 | |||||||||||||||
Total shareholders' equity (deficit) |
87,227 | 1,515,512 | 19,088 | (1,534,600 |
) |
87,227 | ||||||||||||||
Total liabilities, redeemable noncontrolling interest and shareholders' equity (deficit) |
$ | 2,110,074 | $ | 1,562,888 | $ | 99,423 | $ | (2,555,435 |
) |
$ | 1,216,950 |
LIN Television Corporation
Notes to Consolidated Financial Statements (Continued)
Condensed Consolidating Statement of Operations
For the Year Ended December 31, 2013
(in thousands)
LIN Television |
Guarantor |
Non-Guarantor |
Consolidating/ |
LIN Television Corporation |
||||||||||||||||
Net revenues |
$ | 428,806 | $ | 181,678 | $ | 55,850 | $ | (13,971 |
) |
$ | 652,363 | |||||||||
Operating expenses: |
||||||||||||||||||||
Direct operating |
145,176 | 76,275 | 37,295 | (7,668 |
) |
251,078 | ||||||||||||||
Selling, general and administrative |
109,679 | 40,934 | 12,516 | (579 |
) |
162,550 | ||||||||||||||
Amortization of program rights |
21,452 | 5,690 | 2,100 | — | 29,242 | |||||||||||||||
Corporate |
40,668 | — | — | — | 40,668 | |||||||||||||||
Depreciation |
38,306 | 7,256 | 1,292 | — | 46,854 | |||||||||||||||
Amortization of intangible assets |
17,594 | 935 | 4,297 | — | 22,826 | |||||||||||||||
Restructuring |
3,633 | — | 262 | — | 3,895 | |||||||||||||||
Contract termination costs |
3,887 | — | — | — | 3,887 | |||||||||||||||
Loss from asset dispositions |
705 | 5 | — | — | 710 | |||||||||||||||
Operating (loss) income |
47,706 | 50,583 | (1,912 |
) |
(5,724 |
) |
90,653 | |||||||||||||
Other (income) expense: |
||||||||||||||||||||
Interest expense, net |
56,406 | — | 221 | — | 56,627 | |||||||||||||||
Share of loss in equity investments |
56 | — | — | — | 56 | |||||||||||||||
Intercompany (income) expense |
27,927 | (28,243 |
) |
316 | — | — | ||||||||||||||
Other, net |
2,097 | — | 3 | — | 2,100 | |||||||||||||||
Total other (income) expense, net |
86,486 | (28,243 |
) |
540 | — | 58,783 | ||||||||||||||
(Loss) income from continuing operations before taxes and equity in (loss) income from operations of consolidated subsidiaries |
(38,780 |
) |
78,826 | (2,452 |
) |
(5,724 |
) |
31,870 | ||||||||||||
(Benefit from) provision for income taxes |
(155,975 |
) |
31,530 | (975 |
) |
— | (125,420 |
) | ||||||||||||
Net (loss) income from continuing operations |
117,195 | 47,296 | (1,477 |
) |
(5,724 |
) |
157,290 | |||||||||||||
Equity in income (loss) from operations of consolidated subsidiaries |
41,607 | — | — | (41,607 |
) |
— | ||||||||||||||
Net income (loss) |
158,802 | 47,296 | (1,477 |
) |
(47,331 |
) |
157,290 | |||||||||||||
Net loss attributable to noncontrolling interests |
— | — | (1,512 |
) |
— | (1,512 |
) | |||||||||||||
Net income (loss) attributable to LIN Television Corporation |
$ | 158,802 | $ | 47,296 | $ | 35 | $ | (47,331 |
) |
$ | 158,802 |
LIN Television Corporation
Notes to Consolidated Financial Statements (Continued)
Condensed Consolidating Statement of Comprehensive Income
For the Year Ended December 31, 2013
(in thousands)
LIN Television |
Guarantor |
Non-Guarantor |
Consolidating/ |
LIN Television Corporation |
||||||||||||||||
Net income (loss) |
$ | 158,802 | $ | 47,296 | $ | (1,477 |
) |
$ | (47,331 |
) |
$ | 157,290 | ||||||||
Pension net gain, net of tax of $5,705 |
8,738 | — | — | — | 8,738 | |||||||||||||||
Amortization of pension net losses, net of tax of $734 |
1,120 | — | — | — | 1,120 | |||||||||||||||
Comprehensive income (loss) |
168,660 | 47,296 | (1,477 |
) |
(47,331 |
) |
167,148 | |||||||||||||
Comprehensive loss attributable to noncontrolling interest |
— | — | (1,512 |
) |
— | (1,512 |
) | |||||||||||||
Comprehensive income (loss) attributable to LIN Television Corporation |
$ | 168,660 | $ | 47,296 | $ | 35 | $ | (47,331 |
) |
$ | 168,660 |
LIN Television Corporation
Notes to Consolidated Financial Statements (Continued)
Condensed Consolidating Statement of Cash Flows
For the Year Ended December 31, 2013
(in thousands)
LIN Television |
Guarantor |
Non-Guarantor |
Consolidating/ |
LIN Television Corporation |
||||||||||||||||
OPERATING ACTIVITIES: |
||||||||||||||||||||
Net cash (used in) provided by operating activities, continuing operations |
$ | (1,986 |
) |
$ | 50,612 | $ | 930 | $ | — | $ | 49,556 | |||||||||
INVESTING ACTIVITIES: |
||||||||||||||||||||
Capital expenditures |
(22,768 |
) |
(3,540 |
) |
(3,066 |
) |
— | (29,374 |
) | |||||||||||
Payments for business combinations, net of cash acquired |
(10,082 |
) |
— | — | — | (10,082 |
) | |||||||||||||
Proceeds from the sale of assets |
66 | 20 | — | — | 86 | |||||||||||||||
Capital contribution to joint venture with NBCUniversal |
— | (100,000 |
) |
— | — | (100,000 |
) | |||||||||||||
Receipt of dividend |
78,011 | — | — | (78,011 |
) |
— | ||||||||||||||
Advances on intercompany borrowings |
(4,550 |
) |
— | — | 4,550 | — | ||||||||||||||
Payments from intercompany borrowings |
15,009 | 145,358 | — | (160,367 |
) |
— | ||||||||||||||
Net cash (used in) provided by investing activities, continuing operations |
55,686 | 41,838 | (3,066 |
) |
(233,828 |
) |
(139,370 |
) | ||||||||||||
FINANCING ACTIVITIES: |
||||||||||||||||||||
Net proceeds on exercises of employee and director stock-based compensation |
1,256 | — | — | — | 1,256 | |||||||||||||||
Tax benefit from exercises of share options |
1,591 | — | — | — | 1,591 | |||||||||||||||
Proceeds from borrowings on long-term debt |
141,000 | — | — | — | 141,000 | |||||||||||||||
Principal payments on long-term debt |
(83,846 |
) |
— | (1,314 |
) |
— | (85,160 |
) | ||||||||||||
Payment of long-term debt issue costs |
(655 |
) |
— | — | — | (655 |
) | |||||||||||||
Payment of dividend |
(2,000 |
) |
(78,011 |
) |
— | 78,011 | (2,000 | ) | ||||||||||||
Proceeds from intercompany borrowings |
— | — | 4,550 | (4,550 |
) |
— | ||||||||||||||
Payments on intercompany borrowings |
(145,358 |
) |
(15,009 |
) |
— | 160,367 | — | |||||||||||||
Net cash provided by (used in) financing activities |
(88,012 |
) |
(93,020 |
) |
3,236 | 233,828 | 56,032 | |||||||||||||
Net (decrease) increase in cash and cash equivalents |
(34,312 |
) |
(570 |
) |
1,100 | — | (33,782 |
) | ||||||||||||
Cash and cash equivalents at the beginning of the period |
44,625 | 573 | 1,109 | — | 46,307 | |||||||||||||||
Cash and cash equivalents at the end of the period |
$ | 10,313 | $ | 3 | $ | 2,209 | $ | — | $ | 12,525 |
F-105
Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
On September 8, 2015, Media General, Inc. and Meredith Corporation announced a definitive merger agreement under which Media General will acquire all the outstanding common stock of Meredith in a cash and stock transaction (the "Meredith Merger"). Consummation of the Meredith Merger is subject to customary closing conditions including, among other things, Federal Communication Commission approval and shareholder approval from both Media General and Meredith shareholders. On December 19, 2014, Media General and LIN Media LLC ("LIN") were combined in a business combination transaction (the "LIN Merger"). Also on that date, in connection with the LIN Merger, Media General and LIN swapped or otherwise divested certain stations.
The unaudited pro forma condensed combined financial information for the year ended December 31, 2014 and for the six months ended and as of June 30, 2015 has been derived from the historical consolidated financial statements of Media General for the year ended December 31, 2014 and for the six months ended and as of June 30, 2015, the historical consolidated financial statements of LIN Media for the period January 1, 2014 to December 18, 2014, and the historical consolidated financial statements of Meredith Corporation for the calendar year ended December 31, 2014 and for the six months ended and as of June 30, 2015, along with certain adjustments.
Meredith's fiscal year ends on June 30. Therefore the Meredith unaudited historical consolidated financial statement of operations for the calendar year end December 31, 2014 is derived by combining the first six months of Meredith’s fiscal year 2015 and the last six months of Meredith’s fiscal year 2014. Meredith’s unaudited historical consolidated financial statement of operations for the six months ended June 30, 2015, is derived by subtracting the financial data from Meredith’s historical condensed consolidated financial statement of operations for the six months ended December 31, 2014 from the financial data from Meredith’s consolidated statement of earnings for the fiscal year ended June 30, 2015.
The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2014, have been prepared as though the LIN Merger and the Meredith Merger occurred as of January 1, 2014. The unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2015 have been prepared as though the Meredith Merger occurred as of January 1, 2014, and the unaudited pro forma condensed combined balance sheet information at June 30, 2015 has been prepared as if the Meredith Merger occurred as of June 30, 2015.
The pro forma adjustments give effect to events that are (1) directly attributable to the mergers, (2) factually supportable and (3) with respect to the statements of operations, expected to have a continuing impact on the combined company’s results. The pro forma adjustments are based on available information and assumptions that Media General’s and Meredith's managements believe are reasonable. Such adjustments are estimates and are subject to change.
The unaudited pro forma condensed combined financial statements are provided for informational purposes only and do not purport to represent what the actual combined results of operations or the combined financial position of the combined company would have been had the LIN Merger and the Meredith Merger occurred on the dates assumed, nor are they necessarily indicative of future combined results of operations or combined financial position. The unaudited pro forma condensed combined financial statements do not reflect any cost savings or other synergies that the managements of Media General and Meredith believe could have been achieved had the LIN Merger and the Meredith Merger been completed on the dates assumed.
The Meredith Merger will be accounted for using the acquisition method of accounting in accordance with ASC 805. Media General’s and Meredith’s managements have evaluated the guidance contained in ASC 805 with respect to the identification of the acquirer in the Meredith Merger and concluded, based on a consideration of the pertinent facts and circumstances, that Media General will acquire Meredith for financial accounting purposes. Accordingly, Media General’s cost to acquire Meredith has been allocated to the acquired assets, liabilities and commitments based upon their estimated fair values. The allocation of the purchase price is preliminary and is dependent upon certain valuations that have not progressed to a stage where there is sufficient information to make a final allocation. In addition, the final purchase price of Media General’s acquisition of Meredith will not be known until the date of closing of the Meredith Merger and could vary materially from the preliminary purchase price. Accordingly, the final acquisition accounting adjustments may be materially different from the preliminary unaudited pro forma adjustments presented.
The actual amounts recorded as of the completion of the Meredith Merger may differ materially from the information presented in the unaudited pro forma condensed combined financial statements as a result of several factors, including the following:
● |
changes in Meredith’s net assets between the pro forma balance sheet as of June 30, 2015 and the closing of the Meredith Merger, which could impact the preliminary estimated purchase price or the preliminary estimated fair value as of the effective date of the Meredith Merger; |
● |
changes in the price of Media General’s common stock; |
● |
the value of the combined company at the effective date of the Meredith Merger; and |
● |
other changes in net assets that may have occurred prior to the completion of the Meredith Merger, which could cause material differences in the information presented. |
The unaudited pro forma condensed combined financial statements should be read in conjunction with the accompanying notes and in conjunction with the consolidated financial statements and related notes of both Media General and Meredith filed with the Securities and Exchange Commission. The unaudited pro forma condensed combined financial statements constitute forward-looking information and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated. See “Risk Factors” and “Cautionary Note Regarding Forward Looking Statements,” which are included elsewhere and incorporated by reference in this prospectus.
Meredith Media General
Pro Forma Condensed Combined Balance Sheet
As of June 30, 2015
(Unaudited, in thousands)
Media General Historical |
Meredith Historical |
|
Pro Forma Company |
|||||||||||||||
ASSETS |
||||||||||||||||||
Current assets: |
||||||||||||||||||
Cash and cash equivalents |
$ | 72,078 | $ | 22,833 | $ | (34,666 | ) |
(a) |
$ | 60,245 | ||||||||
Trade accounts receivable, net |
246,295 | 284,646 | - | 530,941 | ||||||||||||||
Inventories |
- | 24,681 | - | 24,681 | ||||||||||||||
Current portion of subscription acquisition costs |
- | 122,350 | (122,350 | ) |
(b) |
- | ||||||||||||
Current portion of broadcast rights |
- | 4,516 | (4,516 | ) |
(c) |
- | ||||||||||||
Current deferred tax asset |
51,732 | - | (28,387 | ) |
(c) |
23,345 | ||||||||||||
Prepaid expenses and other current assets |
36,739 | 23,505 | 4,516 |
(c) |
64,760 | |||||||||||||
Total current assets |
406,844 | 482,531 | (185,403 | ) | 703,972 | |||||||||||||
Property and equipment, net |
483,581 | 213,736 | 31,662 |
(b) |
728,979 | |||||||||||||
Subscription acquisition rights |
- | 103,842 | (103,842 | ) |
(b) |
- | ||||||||||||
Broadcast rights |
- | 1,795 | (1,795 | ) |
(c) |
- | ||||||||||||
Other assets, net |
71,290 | 67,750 | 59,438 |
(a),(c),(f) |
198,478 | |||||||||||||
Definite lived intangible assets, net |
912,487 | 147,782 | 718,018 |
(b) |
1,778,287 | |||||||||||||
Broadcast licenses |
1,097,100 | 624,684 | 31,316 |
(b) |
1,753,100 | |||||||||||||
Trade names |
- | 199,916 | 74,684 |
(b) |
274,600 | |||||||||||||
Goodwill |
1,597,486 | 1,001,246 | 1,251,684 |
(b) |
3,850,416 | |||||||||||||
Total assets |
$ | 4,568,788 | $ | 2,843,282 | $ | 1,875,762 | $ | 9,287,832 | ||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||||
Current liabilities: |
||||||||||||||||||
Trade accounts payable |
$ | 33,293 | $ | 93,944 | $ | 54,900 |
(f) |
$ | 182,137 | |||||||||
Accrued salaries and wages |
24,822 | 71,233 | - | 96,055 | ||||||||||||||
Other accrued expenses and other current liabilities |
108,940 | 92,422 | (29,137 | ) |
(a),(c) |
172,225 | ||||||||||||
Current portion of unearned subscription revenues |
- | 206,126 | - | 206,126 | ||||||||||||||
Current portion of long-term broadcast rights payable |
- | 4,776 | (4,776 | ) |
(c) |
- | ||||||||||||
Current installments of long-term debt |
3,404 | 62,500 | (43,950 | ) |
(a) |
21,954 | ||||||||||||
Current installments of obligation under capital leases |
856 | - | - | 856 | ||||||||||||||
Total current liabilities |
171,315 | 531,001 | (22,963 | ) | 679,353 | |||||||||||||
Long-term debt |
2,272,695 | 732,500 | 1,757,608 |
(a) |
4,762,803 | |||||||||||||
Obligations under capital leases, excluding current installments |
14,436 | - | - | 14,436 | ||||||||||||||
Deferred income tax liabilities |
359,229 | 311,645 | 136,939 |
(a),(b),(e),(g) |
807,813 | |||||||||||||
Retirement and postretirement plans |
202,994 | - | 37,840 |
(c) |
240,834 | |||||||||||||
Unearned subscription rights |
- | 151,221 | - | 151,221 | ||||||||||||||
Long-term broadcast rights payable |
- | 2,998 | (2,998 | ) |
(c) |
- | ||||||||||||
Other liabilities |
35,005 | 162,067 | (34,842 | ) |
(c) |
162,230 | ||||||||||||
Total liabilities |
3,055,674 | 1,891,432 | 1,871,584 | 6,818,690 | ||||||||||||||
Noncontrolling interests |
31,065 | - | - | 31,065 | ||||||||||||||
Stockholders' equity: |
||||||||||||||||||
Common stock |
1,311,141 | 37,657 | 1,036,404 |
(d) |
2,385,202 | |||||||||||||
Class B stock |
- | 6,963 | (6,963 | ) |
(d) |
- | ||||||||||||
Additional paid in capital |
- | 49,019 | (49,019 | ) |
(d) |
- | ||||||||||||
Accumulated other comprehensive income (loss) |
(36,445 | ) | (12,648 | ) | 12,648 |
(a),(e) |
(36,445 | ) | ||||||||||
Retained earnings |
207,353 | 870,859 | (988,892 | ) |
(a),(d),(f) |
89,320 | ||||||||||||
Total stockholders' equity |
1,482,049 | 951,850 | 4,178 | 2,438,077 | ||||||||||||||
Total liabilities, noncontrolling interests and stockholders' equity |
$ | 4,568,788 | $ | 2,843,282 | $ | 1,875,762 | $ | 9,287,832 |
(a) |
Reflects (1) the issuance of debt financing and the expenditure of cash necessary to acquire Meredith, (2) the repayment of Meredith’s existing debt and settlement of its interest rate swaps and (3) the repayment of Media General’s 6-3⁄8% senior notes due 2021 (“Media General’s 2021 Notes”). If the Meredith Merger had occurred as of June 30, 2015, the carrying amount of Media General’s long-term debt would have been as follows on a pro forma basis: |
(In thousands) |
||||
Media General Credit Agreement |
$ | 1,566,000 | ||
5.875% Senior Notes due 2022 |
400,000 | |||
Other borrowings, less unamortized discounts |
18,757 | |||
Unsecured financing |
945,000 | |||
Incremental Term B Loan |
1,855,000 | |||
4,784,757 | ||||
Less: current installments of long-term debt |
21,954 | |||
Long-term debt |
$ | 4,762,803 |
Meredith Media General
Pro Forma Condensed Combined Balance Sheet
As of June 30, 2015
(Unaudited, in thousands)
(b) |
Reflects an adjustment to (1) eliminate capitalized subscription acquisition costs, (2) record identifiable tangible and intangible assets of Meredith at their preliminary estimated fair value, and (3) record goodwill for the excess of cost over fair value of net identifiable assets of Meredith. The allocation of purchase price is subject to change as the appraisals are completed and more facts become known. |
(c) |
Reflects reclassifications to the historical presentation of the Meredith balance sheet to conform to the presentation used in the Media General balance sheet. The adjustments reclassify current and long-term broadcast rights and broadcast rights payable, retirement and postretirement plan liabilities, and deferred income taxes, and certain other assets and liabilities. |
(d) |
Eliminates Meredith’s stockholders’ equity and records an estimate of the fair value of the number of shares of common stock expected to be issued to acquire Meredith (68,882,360) at an estimated stock price of $14.00 per share as of October 23, 2015 and an estimate of the fair value of stock options expected to be issued to certain Meredith employees to replace outstanding Meredith stock options. |
(e) |
Eliminate accumulated other comprehensive income and associated deferred income taxes related to Meredith's pension and postretirement plan liabilities and rate swaps. |
(f) |
Reflects the impact of merger-related expenses on the balance sheet. As of June 30, 2015, merger-related expenses are expected to total approximately $235.0 million including $60.7 million of deferred financing costs on the new debt issued and $54.9 million of accrued Meredith merger-related expenses. |
(g) |
Reflects the increase in deferred income tax liabilities for the difference between the book and tax basis of assets acquired as a result of purchase accounting. |
Meredith Media General
Pro Forma Condensed Combined Balance Sheet
As of June 30, 2015
(Unaudited, in thousands)
For purposes of these Pro Forma Condensed Combined Financial Statements the estimated purchase price of Meredith was allocated based on preliminary estimated fair value as follows (in thousands):
Estimated purchase price |
$ | 3,434,240 | ||
Working capital deficit acquired |
133,694 | |||
Property and equipment |
(245,398 | ) | ||
Definite-lived intangible assets |
(865,800 | ) | ||
FCC licenses (indefinite lived) |
(656,000 | ) | ||
Trade name (indefinite lived) |
(274,600 | ) | ||
Other assets acquired |
(66,463 | ) | ||
Pension and post-retirement liabilities assumed |
37,839 | |||
Long term unearned subscription revenues |
151,221 | |||
Other liabilities assumed |
127,226 | |||
Deferred income tax liability recorded in conjunction with acquisition |
476,971 | |||
Excess of cost over fair value of net identifiable assets of acquired businesses |
$ | 2,252,930 |
The amount allocated to definite-lived intangible assets represents the estimated fair values of network affiliations of $316.7 million, advertiser relationships of $212.9 million, customer relationships of $275.2 million, subscriber relationships of $45.5 million, and management contracts of $15.5 million. These intangible assets are expected to be amortized over the estimated remaining useful lives of 15 years for network affiliations, six to seven years for advertiser relationships, seven to ten years for customer relationships, six years for subscriber relationships, five years management contracts.
The equity component of the purchase price could be materially higher or lower depending on several factors including the share price of Media General voting common stock at the time the Meredith Merger closes. Media General and Meredith estimate that a 10% change in the share price would raise or lower the purchase price and goodwill by approximately $113 million.
Meredith Media General
Pro Forma Condensed Combined Statements of Operations
For the Twelve Months Ended December 31, 2014
Media General |
LIN Media |
Media General - LIN Merger |
Meredith |
Meredith - Media General |
||||||||||||||||||||||||||||||||||||||||||||||||||
Media General Historical |
Media General Station Divestitures |
Station Acquisitions |
Pro Forma Media General |
LIN Media Historical 1.1.14 - 12.18.14 |
LIN Media Station Divestitures |
Other (1) |
Pro Forma LIN Media |
Combined Company Pro Forma Adjustments |
Pro Forma Combined Company |
Meredith Historical |
Combined Company Pro Forma Adjustments |
Pro Forma Combined Company |
||||||||||||||||||||||||||||||||||||||||||
Net operating revenue |
$ | 674,963 | $ | (53,011 | ) | $ | 44,750 | $ | 666,702 | $ | 745,380 | $ | (68,173 | ) | $ | 1,367 | $ | 678,574 | $ | - | $ | 1,345,276 | $ | - | $ | (1,345,276 | ) |
(h) |
$ | - | ||||||||||||||||||||||||
Net operating advertising revenue |
- | - | - | - | - | - | - | - | - | - | 845,766 | 915,140 |
(h) |
1,760,906 | ||||||||||||||||||||||||||||||||||||||||
Circulation |
- | - | - | - | - | - | - | - | - | - | 309,100 | - | 309,100 | |||||||||||||||||||||||||||||||||||||||||
All other |
- | - | - | - | - | - | - | - | - | - | 373,431 | 430,136 |
(h) |
803,567 | ||||||||||||||||||||||||||||||||||||||||
Total net operating revenue | $ | 674,963 | $ | (53,011 | ) | $ | 44,750 | $ | 666,702 | $ | 745,380 | $ | (68,173 | ) | $ | 1,367 | $ | 678,574 | $ | - | $ | 1,345,276 | $ | 1,528,297 | $ | - | $ | 2,873,573 | ||||||||||||||||||||||||||
Operating costs: |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating expenses, excluding depreciation expense |
221,914 | (19,479 | ) | 12,369 | 214,804 | 287,996 | (24,939 | ) | 2,148 | 265,205 | - | 480,009 | 576,201 | (38,700 | ) |
|
1,017,510 | |||||||||||||||||||||||||||||||||||||
Selling, general and administrative expenses |
171,484 | (14,754 | ) | 9,328 | 166,058 | 178,571 | (15,789 | ) | 227 | 163,009 | 1,351 |
|
330,418 | 674,956 | (30,570 | ) |
(h),(i), (j) |
974,804 | ||||||||||||||||||||||||||||||||||||
Amortization of program license rights |
21,630 | (799 | ) | 3,088 | 23,919 | 26,628 | (3,655 | ) | - | 22,973 | - | 46,892 | - | 14,693 |
(i) |
61,585 | ||||||||||||||||||||||||||||||||||||||
Corporate and other expenses |
33,007 | - | 33,007 | 109,855 | - | (639 | ) | 109,216 | (25,646 | ) |
|
116,577 | - | 41,362 |
(h),(i) |
157,939 | ||||||||||||||||||||||||||||||||||||||
Depreciation and amortization |
66,557 | (1,956 | ) | 4,439 | 69,040 | 60,847 | (5,942 | ) | 242 | 55,147 | 34,232 |
(c) |
158,419 | 63,620 | 71,726 |
(i),(k) |
293,765 | |||||||||||||||||||||||||||||||||||||
(Gain) Loss related to property and equipment, net |
(8,935 | ) | (43 | ) | - | (8,978 | ) | 399 | (21 | ) | - | 378 | - | (8,600 | ) | - | - | (8,600 | ) | |||||||||||||||||||||||||||||||||||
Impairment of intangible assets and goodwill |
- | - | - | - | 60,867 | - | - | 60,867 | - | 60,867 | - | 10,322 |
|
71,189 | ||||||||||||||||||||||||||||||||||||||||
Restructuring |
- | - | - | - | 2,536 | - | - | 2,536 | - | 2,536 | - | 12,166 |
(i) |
14,702 | ||||||||||||||||||||||||||||||||||||||||
Merger-related expenses |
54,202 | - | - | 54,202 | - | - |
\- |
- | (45,241 | ) |
(b) |
8,961 | - | - | 8,961 | |||||||||||||||||||||||||||||||||||||||
Total operating costs |
559,859 | (37,031 | ) | 29,224 | 552,052 | 727,699 | (50,346 | ) | 1,978 | 679,331 | (35,304 | ) | 1,196,079 | 1,314,777 | 80,999 | 2,591,855 | ||||||||||||||||||||||||||||||||||||||
Operating income (loss) |
115,104 | (15,980 | ) | 15,526 | 114,650 | 17,681 | (17,827 | ) | (611 | ) | (757 | ) | 35,304 | 149,197 | 213,520 | (80,999 | ) | 281,718 | ||||||||||||||||||||||||||||||||||||
Other income (expense): |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense |
(45,704 | ) | - | - | (45,704 | ) | (54,330 | ) | 23 | (53 | ) | (54,360 | ) | (23,073 | ) |
(d) |
(123,137 | ) | (15,935 | ) | (109,810 | ) |
(l) |
(248,882 | ) | |||||||||||||||||||||||||||||
Debt modification and extinguishment costs |
(3,513 | ) | - | - | (3,513 | ) | - | - | - | - | - | (3,513 | ) | - | - | (3,513 | ) | |||||||||||||||||||||||||||||||||||||
Gain on sale of stations |
42,957 | - | - | 42,957 | - | - | - | - | (42,957 | ) |
(e) |
- | - | - | - | |||||||||||||||||||||||||||||||||||||||
Other, net |
129 | - | - | 129 | (156 | ) | - | 1 | (155 | ) | - | (26 | ) | - | - | (26 | ) | |||||||||||||||||||||||||||||||||||||
Total other income (expense) |
(6,131 | ) | - | - | (6,131 | ) | (54,486 | ) | 23 | (52 | ) | (54,515 | ) | (66,030 | ) | (126,676 | ) | (15,935 | ) | (109,810 | ) | (252,421 | ) | |||||||||||||||||||||||||||||||
Income (loss) before income taxes |
108,973 | (15,980 | ) | 15,526 | 108,519 | (36,805 | ) | (17,804 | ) | (663 | ) | (55,272 | ) | (30,726 | ) | 22,521 | 197,585 | (190,809 | ) | (m) | 29,297 | |||||||||||||||||||||||||||||||||
Income tax (expense) benefit |
(52,453 | ) | 6,391 | (6,210 | ) | (52,272 | ) | 4,383 | 10,625 | (461 | ) | 14,547 | 12,291 |
(f) |
(25,434 | ) | (69,698 | ) | 76,324 | (18,808 | ) | |||||||||||||||||||||||||||||||||
Net income (loss) |
56,520 | (9,589 | ) | 9,316 | 56,247 | (32,422 | ) | (7,179 | ) | (1,124 | ) | (40,725 | ) | (18,435 | ) | (2,913 | ) | 127,887 | (114,485 | ) | 10,489 | |||||||||||||||||||||||||||||||||
Net income (loss) attributable to noncontrolling interests (included above) |
3,014 | - | 3,014 | (129 | ) | 1,376 | - | 1,247 | 1,605 |
|
5,866 | - | - | 5,866 | ||||||||||||||||||||||||||||||||||||||||
Net income (loss) attributable to Company |
$ | 53,506 | $ | (9,589 | ) | $ | 9,316 | $ | 53,233 | $ | (32,293 | ) | $ | (8,555 | ) | $ | (1,124 | ) | $ | (41,972 | ) | $ | (20,040 | ) | $ | (8,779 | ) | $ | 127,887 | $ | (114,485 | ) | $ | 4,623 | ||||||||||||||||||||
Income (loss) per common share (basic) |
$ | 0.59 | $ | 0.59 | $ | (0.78 | ) | $ | (0.07 | ) | $ | 0.02 | ||||||||||||||||||||||||||||||||||||||||||
Weighted average common shares (basic) |
89,912 | 89,912 | 53,962 | 129,796 | 68,882 |
(n) |
198,678 | |||||||||||||||||||||||||||||||||||||||||||||||
Income (loss) per common share (assuming dilution) |
$ | 0.58 | $ | 0.58 | $ | (0.78 | ) | $ | (0.07 | ) | $ | 0.02 | ||||||||||||||||||||||||||||||||||||||||||
Weighted average common shares (assuming dilution) |
91,052 | 91,052 | 53,962 | 130,936 | 73,977 |
(n) |
204,913 |
(1) | Reflects seven weeks of data for Federated Media and its adjustments for LIN's purchase thereof. |
(a) |
Adjust stock compensation expense for incremental amounts related to equity awards issued to LIN employees as part of the aquisition. |
(b) |
Reflects the elimination of LIN and Media General expenses of $25.6 million and $45.2 million, respectively, related to the LIN Merger incurred during the year ended December 31, 2014. |
(c) |
Reflects the increase in depreciation and amortization expense resulting from the purchase price allocation for tangible and intangible assets to estimated fair value of LIN. Depreciation and amortization is based on estimated remaining useful lives. For the LIN Merger the intangible assets are expected to be amortized over 15 years for network affiliations, seven years for advertiser relationships, eight years for customer relationships, three years for completed technology, 31 years for favorable lease assets and six years for other intangible assets. |
(d) |
Adjust interest expense for the debt used to finance the LIN Merger as if the debt was outstanding for the entire period. |
(e) |
Reflects the elimination of the $43 million gain recorded on the Media General station divestitures. |
(f) |
Reflects the tax effect of pro forma adjustments using the statutory rate of approximately 40% in effect for the period presented. |
(g) |
Reflects the separate presentation of net income attributable to LIN's variable interest entities to be consistent with Media General's accounting policies. |
(h) |
Reflects the reclassification of revenues and expenses of Media General to be consistent with revenue and expenses classification presented. |
(i) |
Reflects the reclassification of certain operating costs of Meredith to be consistent with Media General's presentation. |
(j) |
Reflects the adjustment of Meredith pension expense to remove impact of previous actuarial gains and losses. |
(k) |
Reflects the increase in the depreciation and amortization expense resulting from the purchase price allocation of tangible and intangible assets to estimated fair value of Meredith. Depreciation and amortization is based on the estimated remaining useful lives. |
(l) |
Reflects adjustments to interest expense for the repayment of the outstanding Meredith debt, the repayment of Media General's 2021 Notes and the new debt issued by Media General to finance the Meredith Merger, based on an assumed weighted blended interest rate of 5.1%. The new debt to be issued by Media General is anticipated to be comprised of $945.0 million of unsecured financing and $1.855 billion of secured term loans. A 0.125% change in the assumed interest rate (on a blended basis) would increase or decrease annualized cash interest expenses by approximately $3.5 million. |
(m) |
Reflects the tax effect of pro forma adjustments using the statutory rate of approximately 40% in effect for the period presented. |
(n) |
Assumes that the approximately 68.9 million shares of voting common stock estimated to be issued to acquire Meredith were outstanding for the entire period. Diluted common shares include an estimate of the dilutive effect of equity instruments including those expected to be issued to certain Meredith employees to replace outstanding Meredith stock options. |
Meredith Media General
Pro Forma Condensed Combined Statements of Operations
For the Six Months Ended June 30, 2015
(Unaudited, in thousands except per share amounts)
Media General |
Meredith |
Meredith - Media General Merger |
||||||||||||||||
Media General Historical |
Meredith Historical |
Combined Company Pro Forma Adjustments |
Pro Forma Combined Company |
|||||||||||||||
Net operating revenue |
$ | 617,257 | $ | - | $ | (617,257 | ) |
(a) |
$ | - | ||||||||
Net operating advertising revenue |
- | 437,095 | 397,818 |
(a) |
834,913 | |||||||||||||
Circulation |
- | 188,332 | - | 188,332 | ||||||||||||||
All other |
- | 198,660 | 219,439 |
(a) |
418,099 | |||||||||||||
Total net operating revenue | $ | 617,257 | $ | 824,087 | $ | - | $ | 1,441,344 | ||||||||||
Operating costs: |
||||||||||||||||||
Operating expenses, excluding depreciation expense |
260,045 | 316,771 | (21,216 | ) |
(b) |
555,600 | ||||||||||||
Selling, general and administrative expenses |
159,521 | 356,191 | (6,658 | ) |
(b) |
509,054 | ||||||||||||
Amortization of program license rights |
23,805 | - | 9,131 |
(b) |
32,936 | |||||||||||||
Corporate and other expenses |
25,017 | - | 18,743 |
(b) |
43,760 | |||||||||||||
Depreciation and amortization |
82,901 | 30,727 | 37,580 |
(c) |
151,208 | |||||||||||||
Gain related to property and equipment, net |
(424 | ) | - | - | (424 | ) | ||||||||||||
Merger-related expenses |
8,893 | - | - | 8,893 | ||||||||||||||
Total operating costs |
559,758 | 703,689 | 37,580 | 1,301,027 | ||||||||||||||
Operating income |
57,499 | 120,398 | (37,580 | ) | 140,317 | |||||||||||||
Other income (expense): |
- | |||||||||||||||||
Interest expense |
(60,311 | ) | (10,325 | ) | (52,044 | ) |
(d) |
(122,680 | ) | |||||||||
Debt modification and extinguishment costs |
(2,440 | ) | - | - | (2,440 | ) | ||||||||||||
Other, net |
5,912 | - | - | 5,912 | ||||||||||||||
Total other income (expense) |
(56,839 | ) | (10,325 | ) | (52,044 | ) | (119,208 | ) | ||||||||||
Income before income taxes |
660 | 110,073 | (89,624 | ) | 21,109 | |||||||||||||
Income tax expense |
(459 | ) | (42,238 | ) | 35,850 |
(e) |
(6,847 | ) | ||||||||||
Net income |
201 | 67,835 | (53,774 | ) | 14,262 | |||||||||||||
Net income attributable to noncontrolling interests (included above) |
5,999 | - | - | 5,999 | ||||||||||||||
Net income (loss) attributable to Company |
$ | (5,798 | ) | $ | 67,835 | $ | (53,774 | ) | $ | 8,263 | ||||||||
Income (loss) per common share (basic) |
$ | (0.04 | ) | $ | 0.04 | |||||||||||||
Weighted average common shares (basic) |
129,275 | 68,882 |
(f) |
198,157 | ||||||||||||||
Income (loss) per common share (assuming dilution) |
$ | (0.04 | ) | $ | 0.04 | |||||||||||||
Weighted average common shares (assuming dilution) |
129,275 | 73,977 |
(f) |
204,717 |
(a) |
Reflects the reclassification of revenues of Media General to be consistent with the condensed combined financial statement revenue classification presented. |
(b) |
Reflects the reclassification of certain operating costs of Meredith to be consistent with Media General's presentation. |
(c) |
Reflects the increase in the depreciation and amortization expense resulting from the purchase price allocation of tangible and intangible assets to estimated fair value for Meredith. Depreciation and amortization is based on the estimated remaining useful lives. |
(d) |
Reflects adjustments to interest expense for the repayment of the outstanding Meredith debt, the repayment of Media General's 2021 Notes and the new debt issued by Media General to finance the Meredith Merger, based on an assumed weighted blended interest rate of 5.1%. The new debt to be issued by Media General is anticipated to be comprised of $945.0 million of unsecured financing and $1.855 billion of secured term loans. A 0.125% change in the assumed interest rate (on a blended basis) would increase or decrease annualized cash interest expenses by approximately $3.5 million. |
(e) |
Reflects the tax effect of pro forma adjustments using the statutory rate of approximately 40% in effect for the period presented. |
(f) |
Assumes that the approximately 68.9 million shares of voting common stock estimated to be issued to acquire Meredith were outstanding for the entire period. Diluted common shares include an estimate of the dilutive effect of equity instruments including those expected to be issued to certain Meredith employees to replace outstanding Meredith stock options. |
****
The unaudited pro forma condensed combined financial information does not reflect certain events that have occurred or may occur after the Meredith Merger. As such, the combined company’s financial statements may be materially different than the unaudited pro forma condensed combined financial information presented. The following material items are not reflected in the unaudited pro forma condensed combined financial information:
1. |
Media General expects to swap or otherwise divest certain television stations as part of the process of obtaining regulatory approvals for the Meredith Merger in the following markets: Portland, OR, Nashville, TN, Hartford, CT, Greenville, SC, Mobile, AL, and Springfield, MA. As the stations that will be swapped or otherwise divested are not yet known, the pro forma financial statements do not reflect any adjustments for such contemplated transactions. |
2. |
Meredith Merger transaction costs are excluded from the statements of operations and are reflected on the balance sheet as an adjustment as required by the pro forma rules. GAAP requires these costs to be recorded as period expenses. |
3. |
The pro forma condensed combined statements of operations reflect historical income tax expense of the respective companies and the tax effect of pro forma adjustments at the statutory rate. The effective tax rate of the combined company is expected to be closer to the statutory rate. |
4. |
Following the Meredith Merger, operating synergies of approximately $80 million are estimated to be achieved. These operating synergies are not reflected in the pro forma condensed combined statement of operations. |
Index to Financial Statements of LIN Media LLC | |
Unaudited Consolidated Financial Statements of LIN Media LLC | |
Consolidated Balance Sheets |
1 |
Consolidated Statements of Operations |
2 |
Consolidated Statements of Comprehensive Income |
3 |
Consolidated Statements of Shareholders’ Equity (Deficit) |
4 |
Consolidated Statements of Cash Flows |
6 |
Notes to Unaudited Consolidated Financial Statements (See separate index for Financial Statements of LIN Television Corporation) |
7 |
|
September 30, 2014 |
December 31, 2013 | |||||
|
(in thousands, except share data) | ||||||
ASSETS |
|
|
|
| |||
Current assets: |
|
|
|
| |||
Cash and cash equivalents |
$ |
23,382 |
|
$ |
12,525 |
| |
Marketable securities |
174 |
|
— |
| |||
Accounts receivable, less allowance for doubtful accounts (2014 - $4,748; 2013 - $3,188) |
145,370 |
|
145,309 |
| |||
Deferred income tax assets |
5,396 |
|
6,898 |
| |||
Other current assets |
19,096 |
|
15,201 |
| |||
Total current assets |
193,418 |
|
179,933 |
| |||
Property and equipment, net |
214,378 |
|
221,078 |
| |||
Deferred financing costs |
14,075 |
|
16,448 |
| |||
Goodwill |
195,421 |
|
203,528 |
| |||
Broadcast licenses |
491,062 |
|
536,515 |
| |||
Other intangible assets, net |
44,730 |
|
47,049 |
| |||
Other assets |
12,127 |
|
12,299 |
| |||
Total assets (a) |
$ |
1,165,211 |
|
$ |
1,216,850 |
| |
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND SHAREHOLDERS’ EQUITY |
|
|
|
| |||
Current liabilities: |
|
|
|
| |||
Current portion of long-term debt |
$ |
20,383 |
|
$ |
17,364 |
| |
Accounts payable |
15,485 |
|
14,002 |
| |||
Income taxes payable |
258 |
|
1,420 |
| |||
Accrued expenses |
64,197 |
|
51,696 |
| |||
Program obligations |
7,428 |
|
7,027 |
| |||
Total current liabilities |
107,751 |
|
91,509 |
| |||
Long-term debt, excluding current portion |
871,931 |
|
927,328 |
| |||
Deferred income tax liabilities |
50,712 |
|
64,686 |
| |||
Program obligations |
2,941 |
|
4,146 |
| |||
Other liabilities |
21,294 |
|
27,209 |
| |||
Total liabilities (a) |
1,054,629 |
|
1,114,878 |
| |||
Commitments and Contingencies (Note 9) |
|
|
|
| |||
Redeemable noncontrolling interest |
15,165 |
|
12,845 |
| |||
LIN Media LLC shareholders’ equity: |
|
|
|
| |||
Class A common shares, 100,000,000 shares authorized, Issued: 42,802,516 and 39,013,005 shares as of September 30, 2014 and December 31, 2013, respectively. Outstanding: 37,854,857 and 34,065,346 shares as of September 30, 2014 and December 31, 2013, respectively |
643,783 |
|
624,564 |
| |||
Class B common shares, 50,000,000 shares authorized, 17,901,726 and 20,901,726 shares as of September 30, 2014 and December 31, 2013, respectively, issued and outstanding; convertible into an equal number of shares of class A common or class C common shares |
518,365 |
|
518,395 |
| |||
Class C common shares, 50,000,000 shares authorized, 2 shares as of September 30, 2014 and December 31, 2013, issued and outstanding; convertible into an equal number of shares of class A common shares |
— |
|
— |
| |||
Treasury shares, 4,947,659 shares of class A common shares as of September 30, 2014 and December 31, 2013, at cost |
(21,984 |
) |
(21,984 |
) | |||
Accumulated deficit |
(1,019,738 |
) |
(1,006,322 |
) | |||
Accumulated other comprehensive loss |
(25,009 |
) |
(25,526 |
) | |||
Total LIN Media LLC shareholders’ equity |
95,417 |
|
89,127 |
| |||
Total liabilities, redeemable noncontrolling interest and shareholders’ equity |
$ |
1,165,211 |
|
$ |
1,216,850 |
|
(a) |
Our consolidated assets as of September 30, 2014 and December 31, 2013 include total assets of: $54,207 and $56,056 , respectively, of variable interest entities (“VIEs”) that can only be used to settle the obligations of the VIEs. These assets include broadcast licenses and other intangible assets of: $43,477 and $44,677 and program rights of: $1,664 and $2,186 as of September 30, 2014 and December 31, 2013 , respectively. Our consolidated liabilities as of September 30, 2014 and December 31, 2013 include $3,248 and $4,126 , respectively, of total liabilities of the VIEs for which the VIEs’ creditors have no recourse to the Company, including $1,986 and $2,727 , respectively, of program obligations. See further description in Note 1 — “Basis of Presentation and Summary of Significant Accounting Policies.” |
|
Three Months Ended September 30, |
Nine Months Ended September 30, | |||||||||||||
|
2014 |
2013 |
2014 |
2013 | |||||||||||
|
(in thousands, except per share data) |
(in thousands, except per share data) | |||||||||||||
Net revenues |
$ |
192,063 |
|
$ |
163,110 |
|
$ |
547,069 |
|
$ |
468,448 |
| |||
Operating expenses: |
|
|
|
|
|
|
|
| |||||||
Direct operating |
76,029 |
|
62,504 |
|
220,950 |
|
180,695 |
| |||||||
Selling, general and administrative |
44,306 |
|
41,319 |
|
137,554 |
|
118,657 |
| |||||||
Amortization of program rights |
6,972 |
|
7,605 |
|
20,353 |
|
22,542 |
| |||||||
Corporate |
8,521 |
|
10,682 |
|
29,718 |
|
30,047 |
| |||||||
Depreciation |
10,892 |
|
11,429 |
|
32,665 |
|
34,387 |
| |||||||
Amortization of intangible assets |
3,788 |
|
5,886 |
|
15,065 |
|
17,038 |
| |||||||
Impairment of broadcast licenses and goodwill |
60,867 |
|
— |
|
60,867 |
|
— |
| |||||||
Restructuring charge |
1,084 |
|
468 |
|
1,084 |
|
2,991 |
| |||||||
Loss (gain) from asset dispositions |
42 |
|
(9 |
) |
141 |
|
173 |
| |||||||
Operating (loss) income |
(20,438 |
) |
23,226 |
|
28,672 |
|
61,918 |
| |||||||
Other expense: |
|
|
|
|
|
|
|
| |||||||
Interest expense, net |
14,209 |
|
13,976 |
|
42,568 |
|
42,275 |
| |||||||
Share of loss in equity investments |
— |
|
— |
|
100 |
|
25 |
| |||||||
Other (income) expense, net |
(768 |
) |
2,055 |
|
(851 |
) |
2,115 |
| |||||||
Total other expense, net |
13,441 |
|
16,031 |
|
41,817 |
|
44,415 |
| |||||||
(Loss) income before (benefit from) provision for income taxes |
(33,879 |
) |
7,195 |
|
(13,145 |
) |
17,503 |
| |||||||
(Benefit from) provision for income taxes |
(7,996 |
) |
(139,313 |
) |
813 |
|
(135,154 |
) | |||||||
Net (loss) income |
(25,883 |
) |
146,508 |
|
(13,958 |
) |
152,657 |
| |||||||
Net income (loss) attributable to noncontrolling interests |
517 |
|
(430 |
) |
(542 |
) |
(900 |
) | |||||||
Net (loss) income attributable to LIN Media LLC |
$ |
(26,400 |
) |
$ |
146,938 |
|
$ |
(13,416 |
) |
$ |
153,557 |
| |||
Basic net (loss) income per common share: |
|||||||||||||||
Net (loss) income |
$ |
(0.49 |
) |
$ |
2.78 |
|
$ |
(0.25 |
) |
$ |
2.93 |
| |||
Weighted-average number of common shares outstanding used in calculating basic income per common share |
54,372 |
|
52,791 |
|
53,962 |
|
52,328 |
| |||||||
Diluted net (loss) income per common share: |
|||||||||||||||
Net (loss) income |
$ |
(0.49 |
) |
$ |
2.63 |
|
$ |
(0.25 |
) |
$ |
2.77 |
| |||
Weighted-average number of common shares outstanding used in calculating diluted income per common share |
54,372 |
|
55,855 |
|
53,962 |
|
55,378 |
|
|
Three Months Ended September 30, |
Nine Months Ended September 30, | |||||||||||||
|
2014 |
2013 |
2014 |
2013 | |||||||||||
|
(in thousands) |
(in thousands) | |||||||||||||
Net (loss) income |
$ |
(25,883 |
) |
$ |
146,508 |
|
$ |
(13,958 |
) |
$ |
152,657 |
| |||
Amortization of pension net losses, reclassified, net of tax of $113 and $169 for the three months ended September 30, 2014 and 2013, respectively, and $338 and $507 for the nine months ended September 30, 2014 and 2013, respectively |
172 |
|
259 |
|
517 |
|
777 |
| |||||||
Comprehensive (loss) income |
(25,711 |
) |
146,767 |
|
(13,441 |
) |
153,434 |
| |||||||
Comprehensive income (loss) attributable to noncontrolling interest |
517 |
|
(430 |
) |
(542 |
) |
(900 |
) | |||||||
Comprehensive (loss) income attributable to LIN Media LLC |
$ |
(26,228 |
) |
$ |
147,197 |
|
$ |
(12,899 |
) |
$ |
154,334 |
|
|
|
|
|
|
|
Accumulated |
| ||||||||||||||||||||
|
Common Shares |
Treasury |
|
Other |
Total | ||||||||||||||||||||||
|
Class A |
Class B |
Class C |
Shares |
Accumulated |
Comprehensive |
Shareholders' | ||||||||||||||||||||
|
Amount |
Amount |
Amount |
(at cost) |
Deficit |
Loss |
Equity | ||||||||||||||||||||
Balance as of December 31, 2013 |
$ |
624,564 |
|
$ |
518,395 |
|
$ |
— |
|
$ |
(21,984 |
) |
$ |
(1,006,322 |
) |
$ |
(25,526 |
) |
$ |
89,127 |
| ||||||
Pension liability adjustment, net of tax of $338 |
— |
|
— |
|
— |
|
— |
|
— |
|
517 |
|
517 |
| |||||||||||||
Issuance of class A common shares |
2,480 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
2,480 |
| |||||||||||||
Conversion of class B common shares to class A common shares |
30 |
|
(30 |
) |
— |
|
— |
|
— |
|
— |
|
— |
| |||||||||||||
Tax benefit from exercise of share options and vesting of restricted share awards |
13,476 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
13,476 |
| |||||||||||||
Share-based compensation |
6,095 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
6,095 |
| |||||||||||||
Noncontrolling interest adjustments |
(2,862 |
) |
— |
|
— |
|
— |
|
— |
|
— |
|
(2,862 |
) | |||||||||||||
Net loss |
— |
|
— |
|
— |
|
— |
|
(13,416 |
) |
— |
|
(13,416 |
) | |||||||||||||
Balance as of September 30, 2014 |
$ |
643,783 |
|
$ |
518,365 |
|
$ |
— |
|
$ |
(21,984 |
) |
$ |
(1,019,738 |
) |
$ |
(25,009 |
) |
$ |
95,417 |
|
|
|
|
|
|
|
|
Accumulated |
| |||||||||||||||||||||||
|
Common Stock |
Treasury |
Additional |
|
Other |
Total | |||||||||||||||||||||||||
Class A |
Class B |
Class C |
Stock |
Paid-In |
Accumulated |
Comprehensive |
Shareholders' | ||||||||||||||||||||||||
|
Amount |
Amount |
Amount |
(at cost) |
Capital |
Deficit |
Loss |
Deficit | |||||||||||||||||||||||
Balance as of December 31, 2012 |
$ |
313 |
|
$ |
235 |
|
$ |
— |
|
$ |
(21,984 |
) |
$ |
1,129,691 |
|
$ |
(1,164,435 |
) |
$ |
(35,384 |
) |
$ |
(91,564 |
) | |||||||
Pension liability adjustment, net of tax of $507 |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
777 |
|
777 |
| |||||||||||||||
Issuance of class A common shares |
4 |
|
— |
|
— |
|
— |
|
1,450 |
|
— |
|
— |
|
1,454 |
| |||||||||||||||
Conversion of class B common shares to class A common shares |
26 |
|
(26 |
) |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
| |||||||||||||||
Tax benefit from exercise of share options and vesting of restricted share awards |
— |
|
— |
|
— |
|
— |
|
2,180 |
|
— |
|
— |
|
2,180 |
| |||||||||||||||
Share-based compensation |
— |
|
— |
|
— |
|
— |
|
6,691 |
|
— |
|
— |
|
6,691 |
| |||||||||||||||
Effect of 2013 LIN LLC Merger |
621,827 |
|
518,185 |
|
— |
|
— |
|
(1,140,012 |
) |
— |
|
— |
|
— |
| |||||||||||||||
Net income attributable to LIN Media LLC |
— |
|
— |
|
— |
|
— |
|
— |
|
153,557 |
|
— |
|
153,557 |
| |||||||||||||||
Balance as of September 30, 2013 |
$ |
622,170 |
|
$ |
518,394 |
|
$ |
— |
|
$ |
(21,984 |
) |
$ |
— |
|
$ |
(1,010,878 |
) |
$ |
(34,607 |
) |
$ |
73,095 |
|
|
Nine Months Ended September 30, | ||||||
|
2014 |
2013 | |||||
|
(in thousands) | ||||||
OPERATING ACTIVITIES: |
|
|
|
| |||
Net (loss) income |
$ |
(13,958 |
) |
$ |
152,657 |
| |
Adjustment to reconcile net (loss) income to net cash provided by operating activities: |
|
|
|
| |||
Depreciation |
32,665 |
|
34,387 |
| |||
Amortization of intangible assets |
15,065 |
|
17,038 |
| |||
Impairment of broadcast licenses and goodwill |
60,867 |
|
— |
| |||
Amortization of financing costs and note discounts |
2,693 |
|
2,723 |
| |||
Amortization of program rights |
20,353 |
|
22,542 |
| |||
Cash payments for programming |
(20,444 |
) |
(23,994 |
) | |||
Share of loss in equity investments |
100 |
|
25 |
| |||
Deferred income taxes, net |
666 |
|
(7,144 |
) | |||
Extinguishment of income tax liability related to the 2013 LIN LLC Merger |
— |
|
(132,542 |
) | |||
Share-based compensation |
6,111 |
|
6,766 |
| |||
Loss from asset dispositions |
141 |
|
173 |
| |||
Other, net |
2,679 |
|
1,291 |
| |||
Changes in operating assets and liabilities, net of acquisitions: |
|
|
|
| |||
Accounts receivable |
9,526 |
|
3,191 |
| |||
Other assets |
(7,685 |
) |
(597 |
) | |||
Accounts payable |
(4,137 |
) |
(9,609 |
) | |||
Accrued interest expense |
(598 |
) |
3,761 |
| |||
Other liabilities and accrued expenses |
6,339 |
|
(12,163 |
) | |||
Net cash provided by operating activities |
110,383 |
|
58,505 |
| |||
INVESTING ACTIVITIES: |
|
|
|
| |||
Capital expenditures |
(17,066 |
) |
(21,671 |
) | |||
Acquisition of broadcast towers |
(7,257 |
) |
— |
| |||
Payments for business combinations, net of cash acquired |
(24,825 |
) |
(10,082 |
) | |||
Proceeds from the sale of assets |
114 |
|
76 |
| |||
Contributions to equity investments |
(100 |
) |
— |
| |||
Purchase of marketable securities |
(174 |
) |
— |
| |||
Capital contribution to joint venture with NBCUniversal |
— |
|
(100,000 |
) | |||
Net cash used in investing activities |
(49,308 |
) |
(131,677 |
) | |||
FINANCING ACTIVITIES: |
|
|
|
| |||
Net proceeds on exercises of employee and director share-based compensation |
2,480 |
|
1,450 |
| |||
Tax benefit from exercises of share options |
— |
|
2,180 |
| |||
Proceeds from borrowings on long-term debt |
45,000 |
|
101,000 |
| |||
Principal payments on long-term debt |
(97,698 |
) |
(49,394 |
) | |||
Payment of long-term debt issue costs |
— |
|
(654 |
) | |||
Net cash (used in) provided by financing activities |
(50,218 |
) |
54,582 |
| |||
Net increase (decrease) in cash and cash equivalents |
10,857 |
|
(18,590 |
) | |||
Cash and cash equivalents at the beginning of the period |
12,525 |
|
46,307 |
| |||
Cash and cash equivalents at the end of the period |
$ |
23,382 |
|
$ |
27,717 |
|
September 30, 2014 |
December 31, 2013 | ||||||
ASSETS |
|
|
|
| |||
Current assets: |
|
|
|
| |||
Cash and cash equivalents |
$ |
422 |
|
$ |
278 |
| |
Accounts receivable, net |
6,390 |
|
6,345 |
| |||
Other assets |
847 |
|
927 |
| |||
Total current assets |
7,659 |
|
7,550 |
| |||
Property and equipment, net |
2,054 |
|
2,469 |
| |||
Broadcast licenses and other intangible assets, net |
43,477 |
|
44,677 |
| |||
Other assets |
1,017 |
|
1,360 |
| |||
Total assets |
$ |
54,207 |
|
$ |
56,056 |
| |
LIABILITIES |
|
|
|
| |||
Current liabilities: |
|
|
|
| |||
Current portion of long-term debt |
$ |
1,162 |
|
$ |
1,162 |
| |
Accounts payable |
60 |
|
63 |
| |||
Accrued expenses |
1,201 |
|
1,336 |
| |||
Program obligations |
986 |
|
1,303 |
| |||
Total current liabilities |
3,409 |
|
3,864 |
| |||
Long-term debt, excluding current portion |
2,134 |
|
3,005 |
| |||
Program obligations |
1,000 |
|
1,424 |
| |||
Other liabilities |
47,664 |
|
47,763 |
| |||
Total liabilities |
$ |
54,207 |
|
$ |
56,056 |
|
|
Redeemable
Noncontrolling
Interest | ||
Balance as of December 31, 2013 |
$ |
12,845 |
|
Net loss |
(542 |
) | |
Share-based compensation and other |
16 |
| |
Accretion of mandatory purchase obligation of Dedicated Media |
4,971 |
| |
Reclassification to permanent equity |
(2,125 |
) | |
Balance as of September 30, 2014 |
$ |
15,165 |
|
|
Three Months Ended September 30, |
Nine Months Ended September 30, | ||||||||||
Denominator for EPS calculation: |
2014 |
2013 |
2014 |
2013 | ||||||||
Weighted-average common shares, basic |
54,372 |
|
52,791 |
|
53,962 |
|
52,328 |
| ||||
Effect of dilutive securities: |
0 |
|
|
|
0 |
|
|
| ||||
Share options and unvested restricted shares |
— |
|
3,064 |
|
— |
|
3,050 |
| ||||
Weighted-average common shares, diluted |
54,372 |
|
55,855 |
|
53,962 |
|
55,378 |
|
Current assets |
$ |
9,811 |
|
Property and equipment |
72 |
| |
Non-current assets |
195 |
| |
Other intangible assets |
11,497 |
| |
Goodwill |
7,306 |
| |
Current liabilities |
(6,367 |
) | |
Total |
$ |
22,514 |
|
|
Nine Months Ended September 30, 2014 |
Nine Months Ended September 30, 2013 | |||||
Net revenue |
$ |
548,436 |
|
$ |
500,229 |
| |
Net (loss) income |
$ |
(14,818 |
) |
$ |
144,688 |
| |
Basic (loss) income per common share attributable to LIN LLC |
$ |
(0.27 |
) |
$ |
2.77 |
| |
Diluted (loss) income per common share attributable to LIN LLC |
$ |
(0.27 |
) |
$ |
2.61 |
|
|
Goodwill | ||
Broadcast: |
|||
Balance as of December 31, 2013 |
$ |
185,237 |
|
Acquisitions |
— |
| |
Impairment charge |
(15,413 |
) | |
Balance as of September 30, 2014 |
$ |
169,824 |
|
Digital: |
|||
Balance as of December 31, 2013 |
$ |
18,291 |
|
Acquisitions |
7,306 |
| |
Balance as of September 30, 2014 |
$ |
25,597 |
|
Total: |
|||
Balance as of December 31, 2013 |
$ |
203,528 |
|
Acquisitions |
7,306 |
| |
Impairment charge |
(15,413 |
) | |
Balance as of September 30, 2014 |
$ |
195,421 |
|
|
September 30, 2014 |
December 31, 2013 | |||||||||||||
|
Gross Carrying
Amount |
Accumulated
Amortization |
Gross Carrying
Amount |
Accumulated
Amortization | |||||||||||
Broadcast licenses |
$ |
491,062 |
|
$ |
— |
|
$ |
536,515 |
|
$ |
— |
| |||
Intangible assets subject to amortization (1) |
98,712 |
|
(53,982 |
) |
85,966 |
|
(38,917 |
) | |||||||
Total |
$ |
589,774 |
|
$ |
(53,982 |
) |
$ |
622,481 |
|
$ |
(38,917 |
) |
(1) |
Intangible assets subject to amortization are amortized on a straight line basis and primarily include network affiliations, acquired customer and publisher relationships, completed technology, brand names, non-compete agreements, internal-use software, favorable operating leases, and retransmission consent agreements. |
September 30, 2014 |
December 31, 2013 | ||||||
Senior Secured Credit Facility: |
|
|
|
| |||
Revolving credit loans |
$ |
— |
|
$ |
5,000 |
| |
$100,370 and $118,750 Term loans, net of discount of $278 and $345 as September 30, 2014 and December 31, 2013, respectively |
100,092 |
|
118,405 |
| |||
$286,128 and $314,200 Incremental term loans, net of discount of $1,431 and $1,684 as of September 30, 2014 and December 31, 2013, respectively |
284,697 |
|
312,516 |
| |||
8 3 / 8 % Senior Notes due 2018 |
200,000 |
|
200,000 |
| |||
6 3 / 8 % Senior Notes due 2021 |
290,000 |
|
290,000 |
| |||
Capital lease obligations |
14,228 |
|
14,604 |
| |||
Other debt |
3,297 |
|
4,167 |
| |||
Total debt |
892,314 |
|
944,692 |
| |||
Less current portion |
20,383 |
|
17,364 |
| |||
Total long-term debt |
$ |
871,931 |
|
$ |
927,328 |
|
September 30, 2014 |
December 31, 2013 | ||||||
Carrying amount |
$ |
878,085 |
|
$ |
930,088 |
| |
Fair value |
889,194 |
|
954,255 |
|
Three Months Ended September 30, |
Nine Months Ended September 30, | ||||||||||||||
2014 |
2013 |
2014 |
2013 | ||||||||||||
(in thousands) | |||||||||||||||
Net revenues: |
|||||||||||||||
Broadcast |
$ |
159,733 |
|
$ |
143,594 |
|
$ |
457,029 |
|
$ |
419,054 |
| |||
Digital |
32,330 |
|
19,516 |
|
90,040 |
|
49,394 |
| |||||||
Total net revenues |
$ |
192,063 |
|
$ |
163,110 |
|
$ |
547,069 |
|
$ |
468,448 |
|
Three Months Ended September 30, |
Nine Months Ended September 30, | ||||||||||||||
2014 |
2013 |
2014 |
2013 | ||||||||||||
(in thousands) | |||||||||||||||
Segment Adjusted EBITDA: |
|||||||||||||||
Broadcast |
$ |
63,040 |
|
$ |
50,869 |
|
$ |
169,290 |
|
$ |
142,628 |
| |||
Digital |
3,547 |
|
1,236 |
|
3,209 |
|
3,196 |
| |||||||
Total segment Adjusted EBITDA |
66,587 |
|
52,105 |
|
172,499 |
|
145,824 |
| |||||||
Unallocated corporate Adjusted EBITDA |
(6,445 |
) |
(5,927 |
) |
(19,671 |
) |
(15,735 |
) | |||||||
Less: |
|||||||||||||||
Depreciation |
10,892 |
|
11,429 |
|
32,665 |
|
34,387 |
| |||||||
Amortization of intangible assets |
3,788 |
|
5,886 |
|
15,065 |
|
17,038 |
| |||||||
Amortization of program rights |
6,972 |
|
7,605 |
|
20,353 |
|
22,542 |
| |||||||
Impairment of broadcast licenses and goodwill |
60,867 |
|
— |
|
60,867 |
|
— |
| |||||||
Share-based compensation |
1,765 |
|
2,238 |
|
6,111 |
|
6,766 |
| |||||||
Non-recurring (1) and acquisition-related charges |
1,830 |
|
3,257 |
|
8,314 |
|
8,268 |
| |||||||
Restructuring charge |
1,084 |
|
468 |
|
1,084 |
|
2,991 |
| |||||||
Loss (gain) on sale of assets |
42 |
|
(9 |
) |
141 |
|
173 |
| |||||||
Add: |
|||||||||||||||
Cash payments for programming |
6,660 |
|
7,922 |
|
20,444 |
|
23,994 |
| |||||||
Operating (loss) income |
(20,438 |
) |
23,226 |
|
28,672 |
|
61,918 |
| |||||||
Other expense: |
|||||||||||||||
Interest expense, net |
14,209 |
|
13,976 |
|
42,568 |
|
42,275 |
| |||||||
Share of loss in equity investments |
— |
|
— |
|
100 |
|
25 |
| |||||||
Other (income) expense, net |
(768 |
) |
2,055 |
|
(851 |
) |
2,115 |
| |||||||
Total other expense, net |
13,441 |
|
16,031 |
|
41,817 |
|
44,415 |
| |||||||
Consolidated (loss) income before provision for income taxes |
$ |
(33,879 |
) |
$ |
7,195 |
|
$ |
(13,145 |
) |
$ |
17,503 |
|
Three Months Ended September 30, |
Nine Months Ended September 30, | ||||||||||||||
2014 |
2013 |
2014 |
2013 | ||||||||||||
(in thousands) | |||||||||||||||
Operating (loss) income: |
|||||||||||||||
Broadcast |
$ |
(11,098 |
) |
$ |
35,235 |
|
$ |
67,051 |
|
$ |
95,933 |
| |||
Digital |
801 |
|
9 |
|
(3,299 |
) |
251 |
| |||||||
Unallocated corporate |
(10,141 |
) |
(12,018 |
) |
(35,080 |
) |
(34,266 |
) | |||||||
Total operating (loss) income |
$ |
(20,438 |
) |
$ |
23,226 |
|
$ |
28,672 |
|
$ |
61,918 |
|
Three Months Ended September 30, |
Nine Months Ended September 30, | ||||||||||||||
2014 |
2013 |
2014 |
2013 | ||||||||||||
(in thousands) | |||||||||||||||
Depreciation and amortization: |
|||||||||||||||
Broadcast |
$ |
12,176 |
|
$ |
15,938 |
|
$ |
40,530 |
|
$ |
48,048 |
| |||
Digital |
1,927 |
|
1,206 |
|
5,683 |
|
2,883 |
| |||||||
Unallocated corporate |
577 |
|
171 |
|
1,517 |
|
494 |
| |||||||
Total depreciation and amortization |
$ |
14,680 |
|
$ |
17,315 |
|
$ |
47,730 |
|
$ |
51,425 |
|
Three Months Ended September 30, |
Nine Months Ended September 30, | ||||||||||||||
2014 |
2013 |
2014 |
2013 | ||||||||||||
(in thousands) | |||||||||||||||
Capital expenditures: |
|||||||||||||||
Broadcast |
$ |
3,906 |
|
$ |
5,359 |
|
$ |
12,211 |
|
$ |
16,728 |
| |||
Digital |
1,261 |
|
1,353 |
|
3,647 |
|
3,036 |
| |||||||
Unallocated corporate |
436 |
|
789 |
|
1,208 |
|
1,907 |
| |||||||
Total capital expenditures |
$ |
5,603 |
|
$ |
7,501 |
|
$ |
17,066 |
|
$ |
21,671 |
|
September 30, 2014 |
December 31, 2013 | ||||||
(in thousands) | |||||||
Assets: |
|||||||
Broadcast |
$ |
1,012,135 |
|
$ |
1,100,343 |
| |
Digital |
94,608 |
|
69,690 |
| |||
Unallocated corporate |
58,468 |
|
46,817 |
| |||
Total assets |
$ |
1,165,211 |
|
$ |
1,216,850 |
|
|
Three Months Ended September 30, |
Nine Months Ended September 30, | |||||||||||||
|
2014 |
2013 |
2014 |
2013 | |||||||||||
Net periodic pension cost: |
|
|
|
|
|
|
|
| |||||||
Interest cost |
$ |
1,509 |
|
$ |
1,314 |
|
$ |
4,528 |
|
$ |
3,942 |
| |||
Expected return on plan assets |
(1,771 |
) |
(1,670 |
) |
(5,311 |
) |
(5,010 |
) | |||||||
Amortization of net loss |
284 |
|
428 |
|
853 |
|
1,284 |
| |||||||
Net periodic cost |
$ |
22 |
|
$ |
72 |
|
$ |
70 |
|
$ |
216 |
| |||
Contributions: |
|
|
|
|
|
|
|
| |||||||
401(k) Plan |
$ |
1,134 |
|
$ |
1,229 |
|
$ |
3,279 |
|
$ |
3,653 |
| |||
Defined contribution retirement plans |
54 |
|
59 |
|
126 |
|
143 |
| |||||||
Defined benefit retirement plans |
2,584 |
|
1,231 |
|
5,264 |
|
3,944 |
| |||||||
Total contributions |
$ |
3,772 |
|
$ |
2,519 |
|
$ |
8,669 |
|
$ |
7,740 |
|
|
Severance and
Related | |||
Balance as of December 31, 2013 |
$ |
423 |
| |
Charges |
1,084 |
| ||
Payments |
(965 |
) | ||
Balance as of September 30, 2014 |
$ |
542 |
|
Year |
Operating Leases
and Agreements |
Syndicated
Television
Programming |
Total | |||||||||
2014 |
$ |
12,100 |
|
$ |
7,118 |
|
(1) |
$ |
19,218 |
| ||
2015 |
62,443 |
|
28,201 |
|
90,644 |
| ||||||
2016 |
54,624 |
|
19,714 |
|
74,338 |
| ||||||
2017 |
64,320 |
|
4,882 |
|
69,202 |
| ||||||
2018 |
59,451 |
|
277 |
|
59,728 |
| ||||||
Thereafter |
104,985 |
|
214 |
|
105,199 |
| ||||||
Total obligations |
$ |
357,923 |
|
$ |
60,406 |
|
$ |
418,329 |
|
|
LIN Media LLC |
LIN Television
Corporation |
Guarantor
Subsidiaries |
Non-Guarantor
Subsidiaries |
Consolidating/
Eliminating
Adjustments |
LIN Media LLC Consolidated | |||||||||||||||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Cash and cash equivalents |
$ |
2,138 |
|
$ |
19,066 |
|
$ |
1,150 |
|
$ |
1,028 |
|
$ |
— |
|
$ |
23,382 |
| |||||
Marketable securities |
— |
|
174 |
|
— |
|
— |
|
— |
|
174 |
| |||||||||||
Accounts receivable, net |
— |
|
79,511 |
|
43,208 |
|
22,651 |
|
— |
|
145,370 |
| |||||||||||
Deferred income tax assets |
— |
|
3,492 |
|
1,864 |
|
40 |
|
— |
|
5,396 |
| |||||||||||
Other current assets |
— |
|
14,963 |
|
2,518 |
|
1,615 |
|
— |
|
19,096 |
| |||||||||||
Total current assets |
2,138 |
|
117,206 |
|
48,740 |
|
25,334 |
|
— |
|
193,418 |
| |||||||||||
Property and equipment, net |
— |
|
173,197 |
|
38,630 |
|
2,551 |
|
— |
|
214,378 |
| |||||||||||
Deferred financing costs |
— |
|
14,002 |
|
— |
|
73 |
|
— |
|
14,075 |
| |||||||||||
Goodwill |
— |
|
154,079 |
|
30,328 |
|
11,014 |
|
— |
|
195,421 |
| |||||||||||
Broadcast licenses |
— |
|
— |
|
448,361 |
|
42,701 |
|
— |
|
491,062 |
| |||||||||||
Other intangible assets, net |
— |
|
22,083 |
|
14,389 |
|
8,258 |
|
— |
|
44,730 |
| |||||||||||
Advances to consolidated subsidiaries |
1,998 |
|
8,606 |
|
932,266 |
|
— |
|
(942,870 |
) |
— |
| |||||||||||
Investment in consolidated subsidiaries |
91,281 |
|
1,470,786 |
|
— |
|
— |
|
(1,562,067 |
) |
— |
| |||||||||||
Other assets |
— |
|
52,569 |
|
3,051 |
|
951 |
|
(44,444 |
) |
12,127 |
| |||||||||||
Total assets |
$ |
95,417 |
|
$ |
2,012,528 |
|
$ |
1,515,765 |
|
$ |
90,882 |
|
$ |
(2,549,381 |
) |
$ |
1,165,211 |
| |||||
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Current portion of long-term debt |
$ |
— |
|
$ |
19,137 |
|
$ |
— |
|
$ |
1,246 |
|
$ |
— |
|
$ |
20,383 |
| |||||
Accounts payable |
— |
|
5,473 |
|
7,157 |
|
2,855 |
|
— |
|
15,485 |
| |||||||||||
Income taxes payable |
— |
|
15 |
|
243 |
|
— |
|
— |
|
258 |
| |||||||||||
Accrued expenses |
— |
|
50,389 |
|
10,501 |
|
3,307 |
|
— |
|
64,197 |
| |||||||||||
Program obligations |
— |
|
5,334 |
|
1,108 |
|
986 |
|
— |
|
7,428 |
| |||||||||||
Total current liabilities |
— |
|
80,348 |
|
19,009 |
|
8,394 |
|
— |
|
107,751 |
| |||||||||||
Long-term debt, excluding current portion |
— |
|
869,759 |
|
— |
|
2,172 |
|
— |
|
871,931 |
| |||||||||||
Deferred income tax liabilities |
— |
|
13,844 |
|
36,209 |
|
659 |
|
— |
|
50,712 |
| |||||||||||
Program obligations |
— |
|
1,815 |
|
126 |
|
1,000 |
|
— |
|
2,941 |
| |||||||||||
Intercompany liabilities |
— |
|
934,264 |
|
— |
|
8,606 |
|
(942,870 |
) |
— |
| |||||||||||
Other liabilities |
— |
|
21,217 |
|
77 |
|
44,444 |
|
(44,444 |
) |
21,294 |
| |||||||||||
Total liabilities |
— |
|
1,921,247 |
|
55,421 |
|
65,275 |
|
(987,314 |
) |
1,054,629 |
| |||||||||||
Redeemable noncontrolling interest |
— |
|
— |
|
— |
|
15,165 |
|
— |
|
15,165 |
| |||||||||||
— |
| ||||||||||||||||||||||
Total shareholders’ equity (deficit) |
95,417 |
|
91,281 |
|
1,460,344 |
|
10,442 |
|
(1,562,067 |
) |
95,417 |
| |||||||||||
Total liabilities, redeemable noncontrolling interest and shareholders’ equity (deficit) |
$ |
95,417 |
|
$ |
2,012,528 |
|
$ |
1,515,765 |
|
$ |
90,882 |
|
$ |
(2,549,381 |
) |
$ |
1,165,211 |
|
|
LIN Media LLC |
LIN Television
Corporation |
Guarantor
Subsidiaries |
Non-Guarantor
Subsidiaries |
Consolidating/
Eliminating
Adjustments |
LIN Media LLC Consolidated | |||||||||||||||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Cash and cash equivalents |
$ |
— |
|
$ |
10,313 |
|
$ |
3 |
|
$ |
2,209 |
|
$ |
— |
|
$ |
12,525 |
| |||||
Accounts receivable, net |
— |
|
88,905 |
|
39,416 |
|
16,988 |
|
— |
|
145,309 |
| |||||||||||
Deferred income tax assets |
— |
|
5,818 |
|
1,080 |
|
— |
|
— |
|
6,898 |
| |||||||||||
Other current assets |
— |
|
12,264 |
|
1,049 |
|
1,888 |
|
— |
|
15,201 |
| |||||||||||
Total current assets |
— |
|
117,300 |
|
41,548 |
|
21,085 |
|
— |
|
179,933 |
| |||||||||||
Property and equipment, net |
— |
|
180,480 |
|
35,752 |
|
4,846 |
|
— |
|
221,078 |
| |||||||||||
Deferred financing costs |
— |
|
16,357 |
|
— |
|
91 |
|
— |
|
16,448 |
| |||||||||||
Goodwill |
— |
|
169,492 |
|
18,518 |
|
15,518 |
|
— |
|
203,528 |
| |||||||||||
Broadcast licenses |
— |
|
— |
|
493,814 |
|
42,701 |
|
— |
|
536,515 |
| |||||||||||
Other intangible assets, net |
— |
|
31,303 |
|
1,840 |
|
13,906 |
|
— |
|
47,049 |
| |||||||||||
Advances to consolidated subsidiaries |
1,900 |
|
7,764 |
|
968,728 |
|
— |
|
(978,392 |
) |
— |
| |||||||||||
Investment in consolidated subsidiaries |
87,227 |
|
1,534,600 |
|
— |
|
— |
|
(1,621,827 |
) |
— |
| |||||||||||
Other assets |
— |
|
52,778 |
|
2,688 |
|
1,276 |
|
(44,443 |
) |
12,299 |
| |||||||||||
Total assets |
$ |
89,127 |
|
$ |
2,110,074 |
|
$ |
1,562,888 |
|
$ |
99,423 |
|
$ |
(2,644,662 |
) |
$ |
1,216,850 |
| |||||
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Current portion of long-term debt |
$ |
— |
|
$ |
16,112 |
|
$ |
— |
|
$ |
1,252 |
|
$ |
— |
|
$ |
17,364 |
| |||||
Accounts payable |
— |
|
4,185 |
|
5,339 |
|
4,478 |
|
— |
|
14,002 |
| |||||||||||
Income taxes payable |
— |
|
749 |
|
671 |
|
— |
|
— |
|
1,420 |
| |||||||||||
Accrued expenses |
— |
|
42,570 |
|
6,254 |
|
2,872 |
|
— |
|
51,696 |
| |||||||||||
Program obligations |
— |
|
4,711 |
|
1,013 |
|
1,303 |
|
— |
|
7,027 |
| |||||||||||
Total current liabilities |
— |
|
68,327 |
|
13,277 |
|
9,905 |
|
— |
|
91,509 |
| |||||||||||
Long-term debt, excluding current portion |
— |
|
924,223 |
|
— |
|
3,105 |
|
— |
|
927,328 |
| |||||||||||
Deferred income tax liabilities |
— |
|
30,013 |
|
33,824 |
|
849 |
|
— |
|
64,686 |
| |||||||||||
Program obligations |
— |
|
2,505 |
|
217 |
|
1,424 |
|
— |
|
4,146 |
| |||||||||||
Intercompany liabilities |
— |
|
970,628 |
|
— |
|
7,764 |
|
(978,392 |
) |
— |
| |||||||||||
Other liabilities |
— |
|
27,151 |
|
58 |
|
44,443 |
|
(44,443 |
) |
27,209 |
| |||||||||||
Total liabilities |
— |
|
2,022,847 |
|
47,376 |
|
67,490 |
|
(1,022,835 |
) |
1,114,878 |
| |||||||||||
Redeemable noncontrolling interest |
— |
|
— |
|
— |
|
12,845 |
|
— |
|
12,845 |
| |||||||||||
Total shareholders’ equity (deficit) |
89,127 |
|
87,227 |
|
1,515,512 |
|
19,088 |
|
(1,621,827 |
) |
89,127 |
| |||||||||||
Total liabilities, redeemable noncontrolling interest and shareholders’ equity (deficit) |
$ |
89,127 |
|
$ |
2,110,074 |
|
$ |
1,562,888 |
|
$ |
99,423 |
|
$ |
(2,644,662 |
) |
$ |
1,216,850 |
|
|
LIN Media LLC |
LIN Television
Corporation |
Guarantor
Subsidiaries |
Non-Guarantor
Subsidiaries |
Consolidating/
Eliminating
Adjustments |
LIN Media LLC Consolidated | |||||||||||||||||
Net revenues |
$ |
— |
|
$ |
118,815 |
|
$ |
60,190 |
|
$ |
19,197 |
|
$ |
(6,139 |
) |
$ |
192,063 |
| |||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Direct operating |
— |
|
40,855 |
|
26,034 |
|
12,346 |
|
(3,206 |
) |
76,029 |
| |||||||||||
Selling, general and administrative |
— |
|
28,321 |
|
12,740 |
|
3,411 |
|
(166 |
) |
44,306 |
| |||||||||||
Amortization of program rights |
— |
|
5,194 |
|
1,432 |
|
346 |
|
— |
|
6,972 |
| |||||||||||
Corporate |
352 |
|
7,583 |
|
50 |
|
544 |
|
(8 |
) |
8,521 |
| |||||||||||
Depreciation |
— |
|
8,957 |
|
1,685 |
|
250 |
|
— |
|
10,892 |
| |||||||||||
Amortization of intangible assets |
— |
|
2,091 |
|
931 |
|
766 |
|
— |
|
3,788 |
| |||||||||||
Impairment of broadcast licenses and goodwill |
— |
|
15,414 |
|
45,453 |
|
— |
|
— |
|
60,867 |
| |||||||||||
Restructuring charge |
— |
|
846 |
|
238 |
|
— |
|
— |
|
1,084 |
| |||||||||||
Loss (gain) from asset dispositions |
— |
|
43 |
|
(2 |
) |
1 |
|
— |
|
42 |
| |||||||||||
Operating (loss) income |
(352 |
) |
9,511 |
|
(28,371 |
) |
1,533 |
|
(2,759 |
) |
(20,438 |
) | |||||||||||
Other (income) expense: |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Interest expense, net |
— |
|
14,163 |
|
(1 |
) |
47 |
|
— |
|
14,209 |
| |||||||||||
Intercompany fees and expenses |
(272 |
) |
7,478 |
|
(7,606 |
) |
150 |
|
250 |
|
— |
| |||||||||||
Other, net |
— |
|
(37 |
) |
(731 |
) |
— |
|
— |
|
(768 |
) | |||||||||||
Total other (income) expense, net |
(272 |
) |
21,604 |
|
(8,338 |
) |
197 |
|
250 |
|
13,441 |
| |||||||||||
(Loss) income before (benefit from) provision for income taxes |
(80 |
) |
(12,093 |
) |
(20,033 |
) |
1,336 |
|
(3,009 |
) |
(33,879 |
) | |||||||||||
(Benefit from) provision for income taxes |
— |
|
(204 |
) |
(8,013 |
) |
221 |
|
— |
|
(7,996 |
) | |||||||||||
Net (loss) income |
(80 |
) |
(11,889 |
) |
(12,020 |
) |
1,115 |
|
(3,009 |
) |
(25,883 |
) | |||||||||||
Equity in (loss) income from operations of consolidated subsidiaries |
(26,320 |
) |
(14,181 |
) |
— |
|
— |
|
40,501 |
|
— |
| |||||||||||
Net (loss) income |
(26,400 |
) |
(26,070 |
) |
(12,020 |
) |
1,115 |
|
37,492 |
|
(25,883 |
) | |||||||||||
Net income attributable to noncontrolling interests |
— |
|
— |
|
— |
|
517 |
|
— |
|
517 |
| |||||||||||
Net (loss) income attributable to LIN Media LLC |
$ |
(26,400 |
) |
$ |
(26,070 |
) |
$ |
(12,020 |
) |
$ |
598 |
|
$ |
37,492 |
|
$ |
(26,400 |
) |
|
LIN Media LLC |
LIN Television
Corporation |
Guarantor
Subsidiaries |
Non-Guarantor
Subsidiaries |
Consolidating/
Eliminating
Adjustments |
LIN Media LLC Consolidated | |||||||||||||||||
Net (loss) income |
$ |
(26,400 |
) |
$ |
(26,070 |
) |
$ |
(12,020 |
) |
$ |
1,115 |
|
$ |
37,492 |
|
$ |
(25,883 |
) | |||||
Amortization of pension net losses, net of tax of $113 |
172 |
|
172 |
|
— |
|
— |
|
(172 |
) |
172 |
| |||||||||||
Comprehensive (loss) income |
(26,228 |
) |
(25,898 |
) |
(12,020 |
) |
1,115 |
|
37,320 |
|
(25,711 |
) | |||||||||||
Comprehensive income attributable to noncontrolling interest |
— |
|
— |
|
— |
|
517 |
|
— |
|
517 |
| |||||||||||
Comprehensive (loss) income attributable to LIN Media LLC |
$ |
(26,228 |
) |
$ |
(25,898 |
) |
$ |
(12,020 |
) |
$ |
598 |
|
$ |
37,320 |
|
$ |
(26,228 |
) |
|
LIN Media LLC |
LIN Television
Corporation |
Guarantor
Subsidiaries |
Non-Guarantor
Subsidiaries |
Consolidating/
Eliminating
Adjustments |
LIN Media LLC Consolidated | |||||||||||||||||
Net revenues |
$ |
— |
|
$ |
338,293 |
|
$ |
172,454 |
|
$ |
54,597 |
|
$ |
(18,275 |
) |
$ |
547,069 |
| |||||
Operating expenses: |
|
|
|
|
|
| |||||||||||||||||
Direct operating |
— |
|
119,514 |
|
76,002 |
|
34,757 |
|
(9,323 |
) |
220,950 |
| |||||||||||
Selling, general and administrative |
— |
|
85,825 |
|
38,582 |
|
13,821 |
|
(674 |
) |
137,554 |
| |||||||||||
Amortization of program rights |
— |
|
14,919 |
|
4,236 |
|
1,198 |
|
— |
|
20,353 |
| |||||||||||
Corporate |
1,056 |
|
27,992 |
|
134 |
|
544 |
|
(8 |
) |
29,718 |
| |||||||||||
Depreciation |
— |
|
26,780 |
|
4,999 |
|
886 |
|
— |
|
32,665 |
| |||||||||||
Amortization of intangible assets |
— |
|
9,220 |
|
2,409 |
|
3,436 |
|
— |
|
15,065 |
| |||||||||||
Impairment of broadcast licenses and goodwill |
— |
|
15,414 |
|
45,453 |
|
— |
|
— |
|
60,867 |
| |||||||||||
Restructuring charge |
— |
|
846 |
|
238 |
|
— |
|
— |
|
1,084 |
| |||||||||||
Loss (gain) from asset dispositions |
— |
|
19 |
|
133 |
|
(11 |
) |
— |
|
141 |
| |||||||||||
Operating (loss) income |
(1,056 |
) |
37,764 |
|
268 |
|
(34 |
) |
(8,270 |
) |
28,672 |
| |||||||||||
Other (income) expense: |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Interest expense, net |
— |
|
42,431 |
|
(1 |
) |
138 |
|
— |
|
42,568 |
| |||||||||||
Share of loss in equity investments |
100 |
|
— |
|
— |
|
— |
|
100 |
| |||||||||||||
Intercompany fees and expenses |
(813 |
) |
22,794 |
|
(23,155 |
) |
424 |
|
750 |
|
— |
| |||||||||||
Other, net |
— |
|
(131 |
) |
(720 |
) |
— |
|
— |
|
(851 |
) | |||||||||||
Total other (income) expense, net |
(813 |
) |
65,194 |
|
(23,876 |
) |
562 |
|
750 |
|
41,817 |
| |||||||||||
(Loss) income before (benefit from) provision for income taxes |
(243 |
) |
(27,430 |
) |
24,144 |
|
(596 |
) |
(9,020 |
) |
(13,145 |
) | |||||||||||
(Benefit from) provision for income taxes |
— |
|
(8,614 |
) |
9,658 |
|
(231 |
) |
— |
|
813 |
| |||||||||||
Net (loss) income |
(243 |
) |
(18,816 |
) |
14,486 |
|
(365 |
) |
(9,020 |
) |
(13,958 |
) | |||||||||||
Equity in (loss) income from operations of consolidated subsidiaries |
(13,173 |
) |
6,393 |
|
— |
|
— |
|
6,780 |
|
— |
| |||||||||||
Net (loss) income |
(13,416 |
) |
(12,423 |
) |
14,486 |
|
(365 |
) |
(2,240 |
) |
(13,958 |
) | |||||||||||
Net income (loss) attributable to noncontrolling interests |
— |
|
— |
|
— |
|
(542 |
) |
— |
|
(542 |
) | |||||||||||
Net (loss) income attributable to LIN Media LLC |
$ |
(13,416 |
) |
$ |
(12,423 |
) |
$ |
14,486 |
|
$ |
177 |
|
$ |
(2,240 |
) |
$ |
(13,416 |
) |
|
LIN Media LLC |
LIN Television
Corporation |
Guarantor
Subsidiaries |
Non-Guarantor
Subsidiaries |
Consolidating/
Eliminating
Adjustments |
LIN Media LLC Consolidated | |||||||||||||||||
Net (loss) income |
$ |
(13,416 |
) |
$ |
(12,423 |
) |
$ |
14,486 |
|
$ |
(365 |
) |
$ |
(2,240 |
) |
$ |
(13,958 |
) | |||||
Amortization of pension net losses, net of tax of $338 |
517 |
|
517 |
|
— |
|
— |
|
(517 |
) |
517 |
| |||||||||||
Comprehensive (loss) income |
(12,899 |
) |
(11,906 |
) |
14,486 |
|
(365 |
) |
(2,757 |
) |
(13,441 |
) | |||||||||||
Comprehensive income (loss) attributable to noncontrolling interest |
— |
|
— |
|
— |
|
(542 |
) |
— |
|
(542 |
) | |||||||||||
Comprehensive (loss) income attributable to LIN Media LLC |
$ |
(12,899 |
) |
$ |
(11,906 |
) |
$ |
14,486 |
|
$ |
177 |
|
$ |
(2,757 |
) |
$ |
(12,899 |
) |
|
LIN Media LLC |
LIN Television
Corporation |
Guarantor
Subsidiaries |
Non-Guarantor
Subsidiaries |
Consolidating/
Eliminating
Adjustments |
LIN Media LLC Consolidated | |||||||||||||||||
Net revenues |
$ |
— |
|
$ |
106,982 |
|
$ |
45,335 |
|
$ |
14,458 |
|
$ |
(3,665 |
) |
$ |
163,110 |
| |||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Direct operating |
— |
|
37,105 |
|
17,973 |
|
9,532 |
|
(2,106 |
) |
62,504 |
| |||||||||||
Selling, general and administrative |
— |
|
27,223 |
|
10,785 |
|
3,351 |
|
(40 |
) |
41,319 |
| |||||||||||
Amortization of program rights |
— |
|
5,695 |
|
1,382 |
|
528 |
|
— |
|
7,605 |
| |||||||||||
Corporate |
277 |
|
10,405 |
|
— |
|
— |
|
— |
|
10,682 |
| |||||||||||
Depreciation |
— |
|
9,285 |
|
1,788 |
|
356 |
|
— |
|
11,429 |
| |||||||||||
Amortization of intangible assets |
— |
|
4,430 |
|
234 |
|
1,222 |
|
— |
|
5,886 |
| |||||||||||
Restructuring charge |
— |
|
468 |
|
— |
|
— |
|
— |
|
468 |
| |||||||||||
Gain from asset dispositions |
— |
|
(8 |
) |
(1 |
) |
— |
|
— |
|
(9 |
) | |||||||||||
Operating (loss) income |
(277 |
) |
12,379 |
|
13,174 |
|
(531 |
) |
(1,519 |
) |
23,226 |
| |||||||||||
Other expense (income): |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Interest expense, net |
— |
|
14,146 |
|
— |
|
(67 |
) |
(103 |
) |
13,976 |
| |||||||||||
Intercompany fees and expenses |
— |
|
7,891 |
|
(8,102 |
) |
211 |
|
— |
|
— |
| |||||||||||
Other, net |
— |
|
2,053 |
|
1 |
|
1 |
|
— |
|
2,055 |
| |||||||||||
Total other expense (income), net |
— |
|
24,090 |
|
(8,101 |
) |
145 |
|
(103 |
) |
16,031 |
| |||||||||||
(Loss) income before (benefit from) provision for income taxes |
(277 |
) |
(11,711 |
) |
21,275 |
|
(676 |
) |
(1,416 |
) |
7,195 |
| |||||||||||
(Benefit from) provision for income taxes |
— |
|
(147,671 |
) |
8,510 |
|
(152 |
) |
— |
|
(139,313 |
) | |||||||||||
Net (loss) income |
(277 |
) |
135,960 |
|
12,765 |
|
(524 |
) |
(1,416 |
) |
146,508 |
| |||||||||||
Equity in income (loss) from operations of consolidated subsidiaries |
147,215 |
|
11,255 |
|
— |
|
— |
|
(158,470 |
) |
— |
| |||||||||||
Net income (loss) |
146,938 |
|
147,215 |
|
12,765 |
|
(524 |
) |
(159,886 |
) |
146,508 |
| |||||||||||
Net loss attributable to noncontrolling interests |
— |
|
— |
|
— |
|
(430 |
) |
— |
|
(430 |
) | |||||||||||
Net income (loss) attributable to LIN Media LLC |
$ |
146,938 |
|
$ |
147,215 |
|
$ |
12,765 |
|
$ |
(94 |
) |
$ |
(159,886 |
) |
$ |
146,938 |
|
|
LIN Media LLC |
LIN Television
Corporation |
Guarantor
Subsidiaries |
Non-Guarantor
Subsidiaries |
Consolidating/
Eliminating
Adjustments |
LIN Media LLC Consolidated | |||||||||||||||||
Net income (loss) |
$ |
146,938 |
|
$ |
147,215 |
|
$ |
12,765 |
|
$ |
(524 |
) |
$ |
(159,886 |
) |
$ |
146,508 |
| |||||
Amortization of pension net losses, net of tax of $169 |
259 |
|
259 |
|
— |
|
— |
|
(259 |
) |
259 |
| |||||||||||
Comprehensive income (loss) |
147,197 |
|
147,474 |
|
12,765 |
|
(524 |
) |
(160,145 |
) |
146,767 |
| |||||||||||
Comprehensive loss attributable to noncontrolling interest |
— |
|
— |
|
— |
|
(430 |
) |
— |
|
(430 |
) | |||||||||||
Comprehensive income (loss) attributable to LIN Media LLC |
$ |
147,197 |
|
$ |
147,474 |
|
$ |
12,765 |
|
$ |
(94 |
) |
$ |
(160,145 |
) |
$ |
147,197 |
|
|
LIN Media LLC |
LIN Television
Corporation |
Guarantor
Subsidiaries |
Non-Guarantor
Subsidiaries |
Consolidating/
Eliminating
Adjustments |
LIN Media LLC Consolidated | |||||||||||||||||
Net revenues |
$ |
— |
|
$ |
311,221 |
|
$ |
130,972 |
|
$ |
35,841 |
|
$ |
(9,586 |
) |
$ |
468,448 |
| |||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Direct operating |
— |
|
108,313 |
|
54,886 |
|
22,825 |
|
(5,329 |
) |
180,695 |
| |||||||||||
Selling, general and administrative |
— |
|
80,611 |
|
30,008 |
|
8,341 |
|
(303 |
) |
118,657 |
| |||||||||||
Amortization of program rights |
— |
|
16,709 |
|
4,281 |
|
1,552 |
|
— |
|
22,542 |
| |||||||||||
Corporate |
277 |
|
29,770 |
|
— |
|
— |
|
— |
|
30,047 |
| |||||||||||
Depreciation |
— |
|
27,954 |
|
5,420 |
|
1,013 |
|
— |
|
34,387 |
| |||||||||||
Amortization of intangible assets |
— |
|
13,334 |
|
701 |
|
3,003 |
|
— |
|
17,038 |
| |||||||||||
Restructuring charge |
— |
|
2,991 |
|
— |
|
— |
|
— |
|
2,991 |
| |||||||||||
Loss (gain) from asset dispositions |
— |
|
193 |
|
(20 |
) |
— |
|
— |
|
173 |
| |||||||||||
Operating (loss) income |
(277 |
) |
31,346 |
|
35,696 |
|
(893 |
) |
(3,954 |
) |
61,918 |
| |||||||||||
Other expense (income): |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Interest expense, net |
— |
|
42,124 |
|
— |
|
151 |
|
— |
|
42,275 |
| |||||||||||
Share of loss in equity investments |
— |
|
25 |
|
— |
|
— |
|
— |
|
25 |
| |||||||||||
Intercompany fees and expenses |
— |
|
24,491 |
|
(24,702 |
) |
211 |
|
— |
|
— |
| |||||||||||
Other, net |
— |
|
2,113 |
|
1 |
|
1 |
|
— |
|
2,115 |
| |||||||||||
Total other expense (income), net |
— |
|
68,753 |
|
(24,701 |
) |
363 |
|
— |
|
44,415 |
| |||||||||||
(Loss) income before (benefit from) provision for income taxes |
(277 |
) |
(37,407 |
) |
60,397 |
|
(1,256 |
) |
(3,954 |
) |
17,503 |
| |||||||||||
(Benefit from) provision for income taxes |
— |
|
(158,607 |
) |
24,159 |
|
(706 |
) |
— |
|
(135,154 |
) | |||||||||||
Net (loss) income |
(277 |
) |
121,200 |
|
36,238 |
|
(550 |
) |
(3,954 |
) |
152,657 |
| |||||||||||
Equity in income (loss) from operations of consolidated subsidiaries |
153,834 |
|
32,634 |
|
— |
|
— |
|
(186,468 |
) |
— |
| |||||||||||
Net income (loss) |
153,557 |
|
153,834 |
|
36,238 |
|
(550 |
) |
(190,422 |
) |
152,657 |
| |||||||||||
Net loss attributable to noncontrolling interests |
— |
|
— |
|
— |
|
(900 |
) |
— |
|
(900 |
) | |||||||||||
Net income (loss) attributable to LIN Media LLC |
$ |
153,557 |
|
$ |
153,834 |
|
$ |
36,238 |
|
$ |
350 |
|
$ |
(190,422 |
) |
$ |
153,557 |
|
|
LIN Media LLC |
LIN Television
Corporation |
Guarantor
Subsidiaries |
Non-Guarantor
Subsidiaries |
Consolidating/
Eliminating
Adjustments |
LIN Media LLC Consolidated | |||||||||||||||||
Net income (loss) |
$ |
153,557 |
|
$ |
153,834 |
|
$ |
36,238 |
|
$ |
(550 |
) |
$ |
(190,422 |
) |
$ |
152,657 |
| |||||
Amortization of pension net losses, net of tax of $507 |
777 |
|
777 |
|
— |
|
— |
|
(777 |
) |
777 |
| |||||||||||
Comprehensive income (loss) |
154,334 |
|
154,611 |
|
36,238 |
|
(550 |
) |
(191,199 |
) |
153,434 |
| |||||||||||
Comprehensive loss attributable to noncontrolling interest |
— |
|
— |
|
— |
|
(900 |
) |
— |
|
(900 |
) | |||||||||||
Comprehensive income (loss) attributable to LIN Media LLC |
$ |
154,334 |
|
$ |
154,611 |
|
$ |
36,238 |
|
$ |
350 |
|
$ |
(191,199 |
) |
$ |
154,334 |
|
|
LIN Media LLC |
LIN Television
Corporation |
Guarantor
Subsidiaries |
Non-Guarantor
Subsidiaries |
Consolidating/
Eliminating
Adjustments |
LIN Media LLC Consolidated | |||||||||||||||||
OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Net cash (used in) provided by operating activities |
$ |
(342 |
) |
$ |
86,790 |
|
$ |
27,913 |
|
$ |
(3,228 |
) |
$ |
(750 |
) |
$ |
110,383 |
| |||||
INVESTING ACTIVITIES: |
|
|
|
|
|
| |||||||||||||||||
Capital expenditures |
— |
|
(12,113 |
) |
(3,610 |
) |
(1,343 |
) |
— |
|
(17,066 |
) | |||||||||||
Acquisition of broadcast towers |
— |
|
(7,257 |
) |
— |
|
— |
|
— |
|
(7,257 |
) | |||||||||||
Payments for business combinations, net of cash acquired |
— |
|
(24,825 |
) |
— |
|
— |
|
— |
|
(24,825 |
) | |||||||||||
Proceeds from the sale of assets |
— |
|
112 |
|
2 |
|
— |
|
— |
|
114 |
| |||||||||||
Contributions to equity investments |
— |
|
(100 |
) |
— |
|
— |
|
— |
|
(100 |
) | |||||||||||
Marketable securities |
— |
|
(174 |
) |
— |
|
— |
|
— |
|
(174 |
) | |||||||||||
Receipt of dividend |
— |
|
58,508 |
|
— |
|
— |
|
(58,508 |
) |
— |
| |||||||||||
Advances on intercompany borrowings |
— |
|
(4,329 |
) |
— |
|
— |
|
4,329 |
|
— |
| |||||||||||
Payments from intercompany borrowings |
— |
|
— |
|
35,350 |
|
— |
|
(35,350 |
) |
— |
| |||||||||||
Net cash provided by (used in) investing activities |
— |
|
9,822 |
|
31,742 |
|
(1,343 |
) |
(89,529 |
) |
(49,308 |
) | |||||||||||
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Net proceeds on exercises of employee and director share-based compensation |
2,480 |
|
— |
|
— |
|
— |
|
— |
|
2,480 |
| |||||||||||
Proceeds from borrowings on long-term debt |
— |
|
45,000 |
|
— |
|
— |
|
— |
|
45,000 |
| |||||||||||
Principal payments on long-term debt |
— |
|
(96,759 |
) |
— |
|
(939 |
) |
— |
|
(97,698 |
) | |||||||||||
Payment of dividend |
— |
|
(750 |
) |
(58,508 |
) |
— |
|
59,258 |
|
— |
| |||||||||||
Proceeds from intercompany borrowings |
— |
|
— |
|
— |
|
4,329 |
|
(4,329 |
) |
— |
| |||||||||||
Payments on intercompany borrowings |
— |
|
(35,350 |
) |
— |
|
— |
|
35,350 |
|
— |
| |||||||||||
Net cash provided by (used in)financing activities |
2,480 |
|
(87,859 |
) |
(58,508 |
) |
3,390 |
|
90,279 |
|
(50,218 |
) | |||||||||||
Net increase (decrease) in cash and cash equivalents |
2,138 |
|
8,753 |
|
1,147 |
|
(1,181 |
) |
— |
|
10,857 |
| |||||||||||
Cash and cash equivalents at the beginning of the period |
— |
|
10,313 |
|
3 |
|
2,209 |
|
— |
|
12,525 |
| |||||||||||
Cash and cash equivalents at the end of the period |
$ |
2,138 |
|
$ |
19,066 |
|
$ |
1,150 |
|
$ |
1,028 |
|
$ |
— |
|
$ |
23,382 |
|
|
LIN Media LLC |
LIN Television
Corporation |
Guarantor
Subsidiaries |
Non-Guarantor
Subsidiaries |
Consolidating/
Eliminating
Adjustments |
LIN Media LLC Consolidated | |||||||||||||||||
OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Net cash provided by (used in) operating activities |
$ |
1,801 |
|
$ |
76,031 |
|
$ |
41,463 |
|
$ |
(282 |
) |
$ |
(60,508 |
) |
$ |
58,505 |
| |||||
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Capital expenditures |
— |
|
(17,094 |
) |
(2,372 |
) |
(2,205 |
) |
— |
|
(21,671 |
) | |||||||||||
Payments for business combinations, net of cash acquired |
— |
|
(10,082 |
) |
— |
|
— |
|
— |
|
(10,082 |
) | |||||||||||
Proceeds from the sale of assets |
— |
|
56 |
|
20 |
|
— |
|
— |
|
76 |
| |||||||||||
Capital contributions to joint venture with NBCUniversal |
— |
|
— |
|
(100,000 |
) |
— |
|
— |
|
(100,000 |
) | |||||||||||
Advances on intercompany borrowings |
— |
|
(4,400 |
) |
— |
|
— |
|
4,400 |
|
— |
| |||||||||||
Payments from intercompany borrowings |
— |
|
15,009 |
|
133,835 |
|
— |
|
(148,844 |
) |
— |
| |||||||||||
Net cash (used in) provided by investing activities |
— |
|
(16,511 |
) |
31,483 |
|
(2,205 |
) |
(144,444 |
) |
(131,677 |
) | |||||||||||
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Net proceeds on exercises of employee and director share-based compensation |
199 |
|
1,251 |
|
— |
|
— |
|
— |
|
1,450 |
| |||||||||||
Tax benefit from exercises of share options |
— |
|
2,180 |
|
— |
|
— |
|
— |
|
2,180 |
| |||||||||||
Proceeds from borrowings on long-term debt |
— |
|
101,000 |
|
— |
|
— |
|
— |
|
101,000 |
| |||||||||||
Principal payments on long-term debt |
— |
|
(48,385 |
) |
— |
|
(1,009 |
) |
— |
|
(49,394 |
) | |||||||||||
Payment of long-term debt issue costs |
— |
|
(654 |
) |
— |
|
— |
|
— |
|
(654 |
) | |||||||||||
Payment of dividend |
— |
|
(2,000 |
) |
(58,508 |
) |
— |
|
60,508 |
|
— |
| |||||||||||
Proceeds from intercompany borrowings |
— |
|
— |
|
— |
|
4,400 |
|
(4,400 |
) |
— |
| |||||||||||
Payments on intercompany borrowings |
— |
|
(133,835 |
) |
(15,009 |
) |
— |
|
148,844 |
|
— |
| |||||||||||
Net cash (used in) provided by financing activities |
199 |
|
(80,443 |
) |
(73,517 |
) |
3,391 |
|
204,952 |
|
54,582 |
| |||||||||||
Net (decrease) increase in cash and cash equivalents |
2,000 |
|
(20,923 |
) |
(571 |
) |
904 |
|
— |
|
(18,590 |
) | |||||||||||
Cash and cash equivalents at the beginning of the period |
— |
|
44,625 |
|
573 |
|
1,109 |
|
— |
|
46,307 |
| |||||||||||
Cash and cash equivalents at the end of the period |
$ |
2,000 |
|
$ |
23,702 |
|
$ |
2 |
|
$ |
2,013 |
|
$ |
— |
|
$ |
27,717 |
|
Table of Contents
Item 1. Unaudited Consolidated Financial Statements of LIN Television Corporation
Consolidated Balance Sheets |
2 |
Consolidated Statements of Operations |
3 |
Consolidated Statements of Comprehensive Income |
4 |
Consolidated Statement of Stockholder’s Equity (Deficit) |
5 |
Consolidated Statements of Cash Flows |
6 |
Notes to Unaudited Consolidated Financial Statements |
7 |
LIN Television Corporation
Consolidated Balance Sheets
(unaudited)
September 30, 2014 |
December 31, 2013 |
|||||||
(in thousands, except share data) |
||||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 21,244 | $ | 12,525 | ||||
Marketable securities |
174 | - | ||||||
Accounts receivable, less allowance for doubtful accounts (2014 - $4,748; 2013 - $3,188) |
145,371 | 145,409 | ||||||
Deferred income tax assets |
5,396 | 6,898 | ||||||
Other current assets |
19,096 | 15,201 | ||||||
Total current assets |
191,281 | 180,033 | ||||||
Property and equipment, net |
214,378 | 221,078 | ||||||
Deferred financing costs |
14,075 | 16,448 | ||||||
Goodwill |
195,421 | 203,528 | ||||||
Broadcast licenses |
491,062 | 536,515 | ||||||
Other intangible assets, net |
44,730 | 47,049 | ||||||
Other assets |
12,127 | 12,299 | ||||||
Total assets (a) |
$ | 1,163,074 | $ | 1,216,950 | ||||
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDER'S EQUITY |
||||||||
Current liabilities: |
||||||||
Current portion of long-term debt |
$ | 20,383 | $ | 17,364 | ||||
Accounts payable |
15,485 | 14,002 | ||||||
Income taxes payable |
258 | 1,420 | ||||||
Accrued expenses |
64,197 | 51,696 | ||||||
Program obligations |
7,428 | 7,027 | ||||||
Total current liabilities |
107,751 | 91,509 | ||||||
Long-term debt, excluding current portion |
873,931 | 929,328 | ||||||
Deferred income tax liabilities |
50,712 | 64,686 | ||||||
Program obligations |
2,941 | 4,146 | ||||||
Other liabilities |
21,294 | 27,209 | ||||||
Total liabilities (a) |
1,056,629 | 1,116,878 | ||||||
Commitments and Contingencies (Note 9) |
||||||||
Redeemable noncontrolling interest |
15,165 | 12,845 | ||||||
LIN Television Corporation stockholder’s equity: |
||||||||
Common stock, $0.01 par value, 1,000 shares |
– |
– |
||||||
Investment in parent company’s shares, at cost |
(21,984 | ) | (21,984 | ) | ||||
Additional paid-in capital |
1,157,079 | 1,140,370 | ||||||
Accumulated deficit |
(1,018,806 | ) | (1,005,633 | ) | ||||
Accumulated other comprehensive loss |
(25,009 | ) | (25,526 | ) | ||||
Total stockholder’s equity |
91,280 | 87,227 | ||||||
Noncontrolling interest |
– |
– |
||||||
Total equity |
91,280 | 87,227 | ||||||
Total liabilities, noncontrolling interest and equity |
$ | 1,163,074 | $ | 1,216,950 |
(a) |
Our consolidated assets as of September 30, 2014 and December 31, 2013 include total assets of: $54,207 and $56,056, respectively, of variable interest entities (“VIEs”) that can only be used to settle the obligations of the VIEs. These assets include broadcast licenses and other intangible assets of: $43,477 and $44,677 and program rights of: $1,664 and $2,186 as of September 30, 2014 and December 31, 2013, respectively. Our consolidated liabilities as of September 30, 2014 and December 31, 2013 include $3,248 and $4,126, respectively, of total liabilities of the VIEs for which the VIEs’ creditors have no recourse to the Company, including $1,986 and $2,727, respectively, of program obligations. See further description in Note 1 - “Basis of Presentation and Summary of Significant Accounting Policies.” |
The accompanying notes are an integral part of the unaudited consolidated financial statements
LIN Television Corporation
Consolidated Statements of Operations
(unaudited)
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2014 |
2013 |
2014 |
2013 |
|||||||||||||
(in thousands, except per share data) |
(in thousands, except per share data) |
|||||||||||||||
Net revenues |
$ | 192,063 | $ | 163,110 | $ | 547,069 | $ | 468,448 | ||||||||
Operating expenses: |
||||||||||||||||
Direct operating |
76,029 | 62,504 | 220,950 | 180,695 | ||||||||||||
Selling, general and administrative |
44,306 | 41,319 | 137,554 | 118,657 | ||||||||||||
Amortization of program rights |
6,972 | 7,605 | 20,353 | 22,542 | ||||||||||||
Corporate |
8,169 | 10,405 | 28,662 | 29,770 | ||||||||||||
Depreciation |
10,892 | 11,429 | 32,665 | 34,387 | ||||||||||||
Amortization of intangible assets |
3,788 | 5,886 | 15,065 | 17,038 | ||||||||||||
Impairment of broadcast licenses and goodwill |
60,867 | - | 60,867 | - | ||||||||||||
Restructuring charge |
1,084 | 468 | 1,084 | 2,991 | ||||||||||||
Loss (gain) from asset dispositions |
42 | (9 | ) | 141 | 173 | |||||||||||
Operating (loss) income |
(20,086 | ) | 23,503 | 29,728 | 62,195 | |||||||||||
Other expense: |
||||||||||||||||
Interest expense, net |
14,231 | 13,976 | 42,631 | 42,275 | ||||||||||||
Share of loss in equity investments |
- | - | 100 | 25 | ||||||||||||
Other (income) expense, net |
(768 | ) | 2,055 | (851 | ) | 2,115 | ||||||||||
Total other expense, net |
13,463 | 16,031 | 41,880 | 44,415 | ||||||||||||
(Loss) income before (benefit from) provision for income taxes |
(33,549 | ) | 7,472 | (12,152 | ) | 17,780 | ||||||||||
(Benefit from) provision for income taxes |
(7,996 | ) | (139,313 | ) | 813 | (135,154 | ) | |||||||||
Net (loss) income |
(25,553 | ) | 146,785 | (12,965 | ) | 152,934 | ||||||||||
Net income (loss) attributable to noncontrolling interests |
517 | (430 | ) | (542 | ) | (900 | ) | |||||||||
Net income attributable to LIN Television Corporation |
$ | (26,070 | ) | $ | 147,215 | $ | (12,423 | ) | $ | 153,834 |
The accompanying notes are an integral part of the unaudited consolidated financial statements
LIN Television Corporation
Consolidated Statements of Comprehensive (Loss) Income
(unaudited)
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2014 |
2013 |
2014 |
2013 |
|||||||||||||
(in thousands) |
(in thousands) |
|||||||||||||||
Net (loss) income |
$ | (25,553 | ) | $ | 146,785 | $ | (12,965 | ) | $ | 152,934 | ||||||
Amortization of pension net losses, reclassified, net of tax of $113 and $169 for the three months ended September 30, 2014 and 2013, respectively, and $338 and $507 for the nine months ended September 30, 2014 and 2013, respectively |
172 | 259 | 517 | 777 | ||||||||||||
Comprehensive (loss) income |
(25,381 | ) | 147,044 | (12,448 | ) | 153,711 | ||||||||||
Comprehensive income (loss) attributable to noncontrolling interest |
517 | (430 | ) | (542 | ) | (900 | ) | |||||||||
Comprehensive (loss) income attributable to LIN Television Corporation |
$ | (25,898 | ) | $ | 147,474 | $ | (11,906 | ) | $ | 154,611 |
The accompanying notes are an integral part of the unaudited consolidated financial statements
LIN Television Corporation
Consolidated Statement of Stockholder’s Equity
(unaudited)
(in thousands)
Investment |
||||||||||||||||||||||||||||
Common Stock | in Parent | |||||||||||||||||||||||||||
Shares |
Amount |
Company’s Common Shares, at cost |
Additional Paid-in Capital |
Accumulated Deficit |
Accumulated Other Comprehensive Loss |
Total Stockholder’s Equity |
||||||||||||||||||||||
Balance as of December 31, 2013 |
1,000 | – | $ | (21,984 | ) | $ | 1,140,370 | $ | (1,005,633 | ) | $ | (25,526 | ) | $ | 87,227 | |||||||||||||
Pension liability adjustment, net of tax of $338 |
– |
– |
– |
– |
– |
517 | 517 | |||||||||||||||||||||
Tax benefit from exercise of share options and vesting of restricted share awards |
– |
– |
– |
13,476 |
– |
– |
13,476 | |||||||||||||||||||||
Share–based compensation |
– |
– |
– |
6,095 |
– |
– |
6,095 | |||||||||||||||||||||
Noncontrolling interest adjustments |
(2,862 | ) | (2,862 | ) | ||||||||||||||||||||||||
Dividends declared |
– |
– |
– |
– |
(750 | ) |
– |
(750 | ) | |||||||||||||||||||
Net income |
– |
– |
– |
– |
(12,423 | ) |
– |
(12,423 | ) | |||||||||||||||||||
Balance as of September 30, 2014 |
1,000 | $ | – | $ | (21,984 | ) | $ | 1,157,079 | $ | (1,018,806 | ) | $ | (25,009 | ) | $ | 91,280 |
The accompanying notes are an integral part of the unaudited consolidated financial statements
LIN Television Corporation
Consolidated Statement of Stockholder’s Deficit
(unaudited)
(in thousands)
Investment |
||||||||||||||||||||||||||||
Common Stock | in Parent | |||||||||||||||||||||||||||
Shares |
Amount |
Company’s Common Shares, at cost |
Additional Paid-in Capital |
Accumulated Deficit |
Accumulated Other Comprehensive Loss |
Total Stockholder’s Equity |
||||||||||||||||||||||
Balance as of December 31, 2013 |
1,000 | $ | – | $ | (21,984 | ) | $ | 1,130,239 | $ | (1,164,435 | ) | $ | (35,384 | ) | $ | (91,564 | ) | |||||||||||
Pension liability adjustment, net of tax of $507 |
– |
– |
– |
– |
– |
777 | 777 | |||||||||||||||||||||
Issuance of LIN TV Corp. class A common stock |
– |
– |
– |
1,255 |
– |
– |
1,255 | |||||||||||||||||||||
Tax benefit from exercise of stock options and vesting of restricted stock awards |
– |
– |
– |
2,180 |
– |
– |
2,180 | |||||||||||||||||||||
Stock-based compensation |
– |
– |
– |
6,691 |
– |
– |
6,691 | |||||||||||||||||||||
Dividends declared |
– |
– |
– |
– |
(2000 | ) |
– |
|||||||||||||||||||||
Net income |
– |
– |
– |
– |
153,834 |
– |
153,834 | |||||||||||||||||||||
Balance as of September 30, 2013 |
1,000 | $ | – | $ | (21,984 | ) | $ | 1,140,365 | $ | (1,012,601 | ) | $ | (34,607 | ) | $ | 71,173 |
The accompanying notes are an integral part of the unaudited consolidated financial statements
LIN Television Corporation
Consolidated Statements of Cash Flows
(unaudited)
Nine Months Ended September 30, |
||||||||
2014 |
2013 |
|||||||
(in thousands) |
||||||||
OPERATING ACTIVITIES |
||||||||
Net (loss) income |
$ | (12,965 | ) | $ | 152,934 | |||
Adjustment to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation |
32,665 | 34,387 | ||||||
Amortization of intangible assets |
15,065 | 17,038 | ||||||
Impairment of broadcast licenses and goodwill |
60,867 |
– |
||||||
Amortization of financing costs and note discounts |
2,693 | 2,723 | ||||||
Amortization of program rights |
20,353 | 22,542 | ||||||
Cash payments for programming |
(20,444 | ) | (23,994 | ) | ||||
Share of loss in equity investments |
100 | 25 | ||||||
Stock–based compensation |
6,111 | 6,766 | ||||||
Deferred income taxes, net |
666 | (7,144 | ) | |||||
Extinguishment of income tax liability related to the 2013 LIN LLC Merger |
– |
(132,542 | ) | |||||
Loss from asset dispositions |
141 | 173 | ||||||
Other, net |
2,679 | 1,291 | ||||||
Changes in operating assets and liabilities, net of acquisitions: |
||||||||
Accounts receivable |
9,625 | 3,113 | ||||||
Other assets |
(7,685 | ) | (597 | ) | ||||
Accounts payable |
(4,137 | ) | (9,609 | ) | ||||
Accrued interest expense |
(598 | ) | 3,761 | |||||
Other liabilities and accrued expenses |
6,339 | (12,163 | ) | |||||
Net cash provided by operating activities |
111,475 | 58,704 | ||||||
INVESTING ACTIVITIES: |
||||||||
Capital expenditures |
(17,066 | ) | (21,671 | ) | ||||
Acquisition of broadcast towers |
(7,257 | ) |
– |
|||||
Payments for business combinations, net of cash acquired |
(24,825 | ) | (10,082 | ) | ||||
Proceeds from the sale of assets |
114 | 76 | ||||||
Contributions to equity investments |
(100 | ) |
– |
|||||
Purchase of marketable securities |
(174 | ) |
– |
|||||
Capital contribution to joint venture with NBCUniversal |
– |
(100,000 | ) | |||||
Net cash used in investing activities |
(49,308 | ) | (131,677 | ) | ||||
FINANCING ACTIVITIES: |
||||||||
Net proceeds on exercises of employee and director stock–based compensation |
– |
1,251 | ||||||
Tax benefit from exercise of stock options |
– |
2,180 | ||||||
Proceeds from borrowings on long–term debt |
45,000 | 101,000 | ||||||
Payment of dividend |
(750 | ) | (2,000 | ) | ||||
Principal payments on long–term debt |
(97,698 | ) | (49,394 | ) | ||||
Payment of long–term debt issue costs |
– |
(654 | ) | |||||
Net cash (used in) provided by financing activities |
(53,448 | ) | 52,383 | |||||
Net increase (decrease) in cash and cash equivalents |
8,719 | (20,590 | ) | |||||
Cash and cash equivalents at the beginning of the period d |
12,525 | 46,307 | ||||||
Cash and cash equivalents at the end of the period |
$ | 21,244 | $ | 25,717 |
The accompanying notes are an integral part of the unaudited consolidated financial statements
LIN Television Corporation
Notes to Unaudited Consolidated Financial Statements
Note 1 - Basis of Presentation and Summary of Significant Accounting Policies
Principles of Consolidation
LIN Television Corporation, a Delaware corporation (“LIN Television”), together with its subsidiaries, is a local multimedia company operating in the United States. LIN Television and its subsidiaries are affiliates of HM Capital Partners I LP (“HMC”). In these notes, the terms “Company,” “we,” “us” or “our” mean LIN Television and all subsidiaries included in our consolidated financial statements. LIN Television is a wholly-owned subsidiary of LIN Media LLC (“LIN LLC”).
On July 30, 2013, LIN TV Corp., a Delaware corporation (“LIN TV”), completed its merger with and into LIN LLC, a Delaware limited liability company and wholly owned subsidiary of LIN TV, with LIN LLC as the surviving entity (the “2013 LIN LLC Merger”) pursuant to the Agreement and Plan of Merger, dated February 12, 2013, by and between LIN TV and LIN LLC (the “2013 LIN LLC Merger Agreement”). LIN LLC filed a Current Report on Form 8-K on July 31, 2013 (the “Form 8-K”) for the purpose of establishing LIN LLC as the successor registrant to LIN TV pursuant to Rule 12g-3(a) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and to disclose certain related matters, including the consummation of the 2013 LIN LLC Merger. Pursuant to Rule 12g-3(a) under the Exchange Act and in accordance with the filing of the Form 8-K, the class A common shares representing limited liability interests in LIN LLC, as the successor registrant to LIN TV, were deemed registered under Section 12(b) of the Exchange Act. References to "LIN LLC," "we," "us," or the "Company" in this Quarterly Report on Form 10-Q that include any period at and before the effectiveness of the 2013 LIN LLC Merger shall be deemed to refer to LIN TV as the predecessor registrant to LIN LLC. For more information concerning the effects of the 2013 LIN LLC Merger and the succession of LIN LLC to LIN TV upon its effectiveness, please see the Form 8-K.
LIN LLC has no independent assets or operations and guarantees all of our debt. All of the consolidated wholly-owned subsidiaries of LIN Television fully and unconditionally guarantee our Senior Secured Credit Facility, 83/8% Senior Notes due 2018 (the “83/8% Senior Notes”) and 63/8% Senior Notes due 2021 (the “63/8% Senior Notes”) on a joint-and-several basis, subject to customary release provisions.
The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All intercompany accounts and transactions have been eliminated.
In the opinion of management, the accompanying unaudited interim financial statements contain all adjustments necessary to state fairly our financial position, results of operations and cash flows for the periods presented. The interim results of operations are not necessarily indicative of the results to be expected for the full year.
The accompanying consolidated financial statements include the accounts of our Company, our wholly-owned and majority-owned and controlled subsidiaries, and VIEs for which we are the primary beneficiary. We review all local marketing agreements (“LMAs”), shared services agreements (“SSAs”), joint sales agreements (“JSAs”) and related agreements, to evaluate whether consolidation of entities that are party to such arrangements is required under U.S. GAAP.
During the first quarter of 2014, we began operating under two segments, which also represent our reportable segments, “Broadcast” and “Digital” that are disclosed separately from our corporate activities. Our Broadcast segment includes 43 television stations and seven digital channels that are either owned, operated or serviced by us in 23 U.S. markets, all of which are engaged principally in the sale of television advertising and digital advertising primarily related to our television station companion websites. Our Digital segment includes the operating results of the following digital companies: LIN Digital LLC ("LIN Digital"), LIN Mobile, LLC ("LIN Mobile"), HYFN, Inc. ("HYFN"), Dedicated Media, Inc. ("Dedicated Media"), and Federated Media Publishing LLC ("Federated Media"). Corporate and unallocated expenses primarily include our costs to operate as a public company and to operate our corporate locations. Corporate is not a reportable segment. We have retrospectively recast prior period disclosures to reflect this change in our reportable operating segments. See Note 5 - “Segment Reporting” for further discussion. Prior to January 1, 2014, we had one reportable segment.
On July 24, 2014, LIN LLC filed a joint proxy statement/prospectus with the Securities and Exchange Commission ("SEC") which was mailed to the shareholders of LIN LLC in connection with a special meeting of the shareholders of LIN LLC to be held on August 20, 2014 for the purpose of voting on the proposal to adopt the Agreement and Plan of Merger, dated March 21, 2014, with Media General, Inc., a Virginia corporation ("Media General"), Mercury New Holdco, Inc., a Virginia corporation (“New Holdco”), Mercury Merger Sub 1, Inc., a Virginia corporation and a direct, wholly-owned subsidiary of New Holdco (“Merger Sub 1”), Mercury Merger Sub 2, LLC, a Delaware limited liability company and a direct, wholly owned subsidiary of New Holdco (“Merger Sub 2”).
On August 20, 2014, LIN LLC amended the terms of the Merger Agreement (as amended, the "Merger Agreement") following the announcement of CBS Affiliation Relations, a unit of CBS Corporation ("CBS") that it would not renew its network affiliation agreement related to our WISH-TV television station located in Indianapolis, Indiana upon the expiration of that agreement on December 31, 2014. As a result, the special meeting of the shareholders of LIN LLC was convened on August 20, 2014 and then adjourned before conducting any business. On September 15, 2014, LIN LLC filed a supplement and an updated joint proxy statement/prospectus with the SEC which was mailed to the shareholders of LIN LLC in connection with the special meeting of the shareholders of LIN LLC and which included a copy of the Merger Agreement. The meeting was held on October 6, 2014 and resulted in the adoption of the Merger Agreement and the approval of the Merger by the LIN LLC shareholders.
On August 20, 2014, we entered into an Asset Purchase Agreement for the sale of television stations WLUK-TV and WCWF-TV, Green Bay-Appleton, Wisconsin, by and among New Holdco and LIN Television, on the one hand, and Harrisburg Television, Inc. on the other hand, dated as of August 20, 2014; an Asset Purchase Agreement for the sale of television station WJCL-TV, Savannah, Georgia, by and among Media General, New Holdco, LIN Television and LIN License Company, LLC on the one hand, and WJCL Hearst Television LLC and Hearst Television Inc. on the other hand, dated as of August 20, 2014; an Asset Purchase Agreement for the sale of certain assets relating to television station WTGS-TV, Hardeeville, South Carolina (Savannah, Georgia market), by and among New Holdco and LIN Television, on the one hand, and Sinclair Communications, LLC on the other hand, dated as of August 20, 2014 (collectively, the “LIN Divestiture Agreements”), to divest certain of our television stations for approximately $70 million, $4.5 million and $17.5 million in cash, respectively, in order to address regulatory considerations related to the transactions contemplated by the Merger Agreement (the "Merger"). In addition, New Holdco, Media General and Meredith Corporation entered into an Asset Purchase Agreement for the sale of WALA-TV, Mobile, Alabama, dated August 20, 2014 (together with the LIN Divestiture Agreements, the “Divestiture Agreements”), in order to address regulatory considerations related to the Merger.
The Divestiture Agreements each contain representations, warranties, covenants and are conditioned on the closing of the Merger pursuant to the Merger Agreement, in addition to, customary closing conditions for transactions of this type, including, the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and receipt from the Federal Communications Commission ("FCC") of consent to the transfer of control of broadcast licensee subsidiaries of LIN LLC and Media General in connection with the transactions contemplated by each Divestiture Agreement.
Upon the closing of the Merger and these divestitures, LIN LLC will be merged into, and survived by, New Holdco, LIN Television will become a wholly-owned subsidiary of New Holdco and Media General will become a wholly-owned subsidiary of LIN Television ("New Media General"). The combined company will own and operate or service 71 stations across 48 markets, reaching 27.6 million or approximately 23% of U.S. television households. We currently expect the Merger to close during the fourth quarter of 2014.
Joint Venture Sale Transaction and Merger
On February 12, 2013, we, along with LIN TV and LIN Television of Texas, L.P., a Delaware limited partnership (“LIN Texas”) entered into an agreement whereby LIN Texas sold its 20.38% equity interest in Station Venture Holdings ("SVH"), a joint venture in which an affiliate of NBCUniversal ("NBC"), held the remaining 79.62% equity interest (collectively, the “JV Sale Transaction”). Pursuant to the JV Sale Transaction, LIN Television made a $100 million capital contribution to SVH and in turn, LIN TV was released from the guarantee of an $815.5 million note held by SVH ("GECC Guarantee") as well as any further obligations related to any shortfall funding agreements between us and SVH.
Concurrent with the closing of the JV Sale Transaction, LIN TV entered into the 2013 LIN LLC Merger Agreement. The 2013 LIN LLC Merger enabled the surviving entity to be classified as a partnership for federal income tax purposes and the change in classification was treated as a liquidation of LIN TV for federal income tax purposes, with the result that LIN TV realized a capital loss in its 100% equity interest in LIN Television.
For further discussion of the JV Sale Transaction and the 2013 LIN LLC Merger, refer to Item 1. "Business," Note 1 - "Basis of Presentation and Summary of Significant Accounting Policies" and Note 13 - "Commitments and Contingencies" to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2013 (the "10-K").
Variable Interest Entities
In determining whether we are the primary beneficiary of a VIE for financial reporting purposes, we consider whether we have the power to direct the activities of the VIE that most significantly impact the economic performance of the VIE and whether we have the obligation to absorb losses or the right to receive returns that would be significant to the VIE. We consolidate VIEs when we are the primary beneficiary.
We have a JSA and an SSA with WBDT Television, LLC (“WBDT”) for WBDT-TV in the Dayton, OH market. We also have JSAs and SSAs with affiliates of Vaughan Acquisition LLC (“Vaughan”) for WTGS-TV in the Savannah, GA market, WYTV-TV in the Youngstown, OH market and KTKA-TV in the Topeka, KS market and SSAs with KASY-TV Licensee, LLC (“KASY”), KWBQ-TV, KRWB-TV and KASY-TV in the Albuquerque, Santa-Fe NM market. Under these agreements, we provide administrative services to these stations, have an obligation to reimburse certain of the stations' expenses, and we are compensated through a performance-based fee structure that provides us the benefit of certain returns from the operation of these stations. We determined that WBDT, Vaughan and KASY are VIEs and as a result of the JSAs and/or SSAs, we have variable interests in these entities. We are the primary beneficiary of these entities, and therefore, we consolidate these entities within our consolidated financial statements.
An order that the FCC adopted in March 2014, however, will require changes in our relationship with these entities going forward. In that order, the FCC concluded that JSAs should be “attributable” for purposes of the media ownership rules if they permit a television licensee to sell more than 15% of the commercial inventory of a television station owned by a third party in the same market. Stations with JSAs that would put them in violation of the new rules will have until June 19, 2016 to amend or terminate those arrangements unless they are able to obtain a waiver of such rules. Accordingly, absent further developments, we will be required to modify or terminate our existing JSAs by no later than June 19, 2016.
The carrying amounts and classifications of the assets and liabilities of the variable interest entities described above, which have been included in our consolidating balance sheets as of September 30, 2014 and December 31, 2013 are as follows (in thousands):
September 30, 2014 |
December 31, 2013 |
|||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 422 | $ | 278 | ||||
Accounts receivable, net |
6,390 | 6,345 | ||||||
Other assets |
847 | 927 | ||||||
Total current assets |
7,659 | 7,550 | ||||||
Property and equipment, net |
2,054 | 2,469 | ||||||
Broadcast licenses and other intangible assets, net |
43,477 | 44,677 | ||||||
Other assets |
1,017 | 1,360 | ||||||
Total assets |
$ | 54,207 | $ | 56,056 | ||||
LIABILITIES |
||||||||
Current liabilities: |
||||||||
Current portion of long-term debt |
$ | 1,162 | $ | 1,162 | ||||
Accounts payable |
60 | 63 | ||||||
Accrued expenses |
1,201 | 1,336 | ||||||
Program obligations |
986 | 1,303 | ||||||
Total current liabilities |
3,409 | 3,864 | ||||||
Long-term debt, excluding current portion |
2,134 | 3,005 | ||||||
Program obligations |
1,000 | 1,424 | ||||||
Other liabilities |
47,664 | 47,763 | ||||||
Total liabilities |
$ | 54,207 | $ | 56,056 |
The assets of our consolidated VIEs can only be used to settle the obligations of the VIEs and may not be sold, or otherwise disposed of, except for assets sold or replaced with others of like kind or value. Other liabilities of $47.7 million and $47.8 million as of September 30, 2014 and December 31, 2013, respectively, serve to reduce the carrying value of the entities, and are eliminated in our consolidated financial statements. This reflects the fact that as of September 30, 2014 and December 31, 2013, we have an option that we may exercise if the FCC attribution rules change. The option would allow us to acquire the assets or member’s interest of the VIE entities for a nominal exercise price, which is significantly less than the carrying value of their tangible and intangible net assets. The options are carried at zero on our consolidated balance sheet, as any value attributable to the options is eliminated in the consolidation of the VIEs. In an order adopted in March 2014, the FCC concluded that JSAs should be "attributable" for purposes of the media ownership rules if they permit a television licensee to sell more than 15% of the commercial inventory of a television station owned by a third party in the same market. Stations with JSAs that would put them in violation of the new rules will have until June 19, 2016 to amend or terminate those arrangements, unless they are able to obtain a waiver of such rules. Accordingly, absent further developments, or the grant of waivers, we will be required to modify or terminate our existing JSAs no later than June 19, 2016.
Redeemable Noncontrolling Interest
The redeemable noncontrolling interest as of September 30, 2014 includes the interest of minority shareholders of HYFN and Dedicated Media. During the nine months ended September 30, 2014, we reclassified the interest of the minority shareholders of Nami Media, Inc. ("Nami Media") to permanent equity, as the mandatory redemption feature of Nami Media's minority shareholders' interest terminated in February 2014. In addition, during the third quarter of 2014, we adjusted the mandatory redeemable noncontrolling interest associated with Dedicated Media to equal $8.6 million, which represents our current estimate of the second stage purchase obligation for the minority shares of Dedicated Media. For further discussion, refer to Note 2 - "Acquisitions." The following table presents the activity of the redeemable noncontrolling interest included in our consolidated balance sheets, which represents third parties’ proportionate share of our consolidated net assets (in thousands):
Redeemable Noncontrolling Interest |
||||
Balance as of December 31, 2013 |
$ | 12,845 | ||
Net loss |
(542 | ) | ||
Share-based compensation and other |
16 | |||
Accretion of mandatory purchase obligation of Dedicated Media |
4,971 | |||
Reclassification to permanent equity |
(2,125 | ) | ||
Balance as of September 30, 2014 |
$ | 15,165 |
During the third quarter of 2014, Nami Media ceased operations. As a result, we reorganized our digital operations and transferred certain operating assets of Nami Media to LIN Digital. As of September 30, 2014, there are no longer noncontrolling interests in Nami Media and we have transferred the balance of noncontrolling interest related to Nami Media to Class A common shares in our statement of shareholders' equity for the nine months ended September 30, 2014.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires our management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the notes thereto. Our actual results could differ from these estimates. Estimates are used for the allowance for doubtful accounts in receivables, valuation of goodwill and intangible assets, assumptions used to determine fair value of financial instruments, amortization and impairment of program rights and intangible assets, share-based compensation and other long-term incentive compensation arrangements, pension costs, barter transactions, income taxes, employee medical insurance claims, useful lives of property and equipment, contingencies, litigation and net assets of businesses acquired.
Cash and Cash Equivalents
We consider all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
Recently Issued Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board ("FASB") and the International Accounting Standards Board ("IASB") issued a converged standard on revenue recognition from contracts with customers, ASU 2014-09 (Topic 606 and IFRS 15). This standard will supersede nearly all existing revenue recognition guidance. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. We are currently evaluating the impact this guidance will have on our financial condition, results of operations and cash flows.
In April 2014, the FASB issued Accounting Standard Update No. 2014-08, "Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360) - Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity" ("ASU 2014-08"). ASU 2014-08 changes the threshold for disclosing discontinued operations and the related disclosure requirements. Pursuant to ASU 2014-08, only disposals representing a strategic shift, such as a major line of business, a major geographical area or a major equity investment, should be presented as a discontinued operation. ASU 2014-08 is effective for annual periods beginning on or after December 15, 2014 with early adoption permitted but only for disposals or classifications as held for sale which have not been reported in financial statements previously issued or available for issuance. We have not yet adopted this new guidance and are currently evaluating the impact that it will have on our disclosures and consolidated financial statements.
In August 2014, the FASB issued ASU No. 2014-15, "Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern." This ASU establishes specific guidance to an organization's management on their responsibility to evaluate whether there is substantial doubt about the organization's ability to continue as a going concern. We have not yet adopted this standard and are currently evaluating the impact that the new guidance will have on our disclosures and consolidated financial statements.
Note 2 - Acquisitions
Federated Media Publishing, Inc.
On February 3, 2014, LIN Digital Media LLC, a wholly owned subsidiary of LIN Television, acquired 100% of the capital stock of Federated Media Publishing, Inc., which we subsequently converted into a Delaware limited liability company ("Federated Media"). Federated Media is a digital content and conversational marketing company that leverages the relationships and content from its publishing network to deliver contextually relevant advertising and conversational and engagement tools that reach agencies’ and brands’ targeted audiences across digital and social media platforms. The purchase price totaled $22.5 million, net of cash, including post-closing adjustments, and was funded from cash on hand and amounts drawn on our revolving credit facility.
The following table summarizes the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed by us in the acquisition (in thousands):
Redeemable Noncontrolling Interest |
||||
Current assets |
$ | 9,811 | ||
Property and equipment |
72 | |||
Non-current assets |
195 | |||
Other intangible assets |
11,497 | |||
Goodwill |
7,306 | |||
Current liabilities |
(6,367 | ) | ||
Total |
$ | 22,514 |
The amount allocated to definite-lived intangible assets represents the estimated fair values of publisher relationships of $4.2 million, customer relationships of $1.2 million, completed technology of $3.9 million, and trademarks of $2.2 million. These intangible assets will be amortized over the estimated remaining useful lives of approximately 8 years for publisher relationships, 4 years for customer relationships, 3 years for completed technology and 7 years for trademarks.
Goodwill of $7.3 million is the excess of the aggregate purchase price over the fair value of the identifiable net assets acquired, and primarily represents the benefits of the incremental revenue we expect to generate from the acquisition of Federated Media. All of the goodwill recognized in connection with the acquisition of Federated Media is deductible for tax purposes.
Net revenues and operating loss of Federated Media included in our consolidated statements of operations for the nine months ended September 30, 2014 were $17.1 million and $0.8 million, respectively.
Dedicated Media, Inc.
On April 9, 2013, we acquired a 60% interest (calculated on a fully diluted basis) in Dedicated Media, a multi-channel advertisement buying and optimization company. Under the terms of our agreement with Dedicated Media, we agreed to purchase the remaining outstanding shares of Dedicated Media by no later than February 15, 2015 if Dedicated Media achieves both (i) a target earnings before interest, taxes, depreciation and amortization (“EBITDA”) and (ii) a target gross profit in 2014, as outlined in the purchase agreement. The purchase price of these shares is based on multiples of Dedicated Media’s 2014 EBITDA and gross profit. As of September 30, 2014, we concluded it was probable that Dedicated Media would achieve at least the minimum levels of gross profit and adjusted EBITDA required to obligate LIN LLC to purchase the remaining outstanding shares of Dedicated Media. Based on management’s current projections of Dedicated Media’s 2014 gross profit and adjusted EBITDA, we estimate the purchase price for the remaining outstanding shares to be approximately $8.6 million and accordingly, we have adjusted the mandatory redeemable noncontrolling interest account for Dedicated Media to equal this estimated obligation and have recorded a corresponding decrease to equity on our statement of stockholder's equity for the nine months ended September 30, 2014. We believe the stage two purchase price of $8.6 million represents the fair value of the stage two shares to be acquired. This estimate is subject to change based on Dedicated Media’s actual results in 2014, which will be determined during the first quarter of 2015. Our maximum potential obligation under the purchase agreement is $26 million.
HYFN, Inc.
On April 4, 2013, we acquired a 50.1% interest (calculated on a fully diluted basis) in HYFN, a full service digital advertising agency specializing in the planning, development, deployment and support for websites, mobile sites, interactive banners, games and various applications for multiple devices. Under the terms of our agreement with HYFN, we agreed to purchase the remaining outstanding shares of HYFN by no later than February 15, 2016 if HYFN achieves both (i) a target EBITDA and (ii) target net revenues in 2015, as outlined in the transaction agreements. The purchase price of these shares is based on multiples of HYFN’s 2015 net revenue and EBITDA. Our maximum potential obligation under the terms of our agreement is approximately $62.4 million. If HYFN does not meet the target EBITDA or target net revenues in 2015, we have the option to purchase the remaining outstanding shares using the same purchase price multiple. As of September 30, 2014, we believe that achievement of the financial targets by HYFN is not yet probable and therefore, have not reflected this obligation in our consolidated financial statements.
Our obligations to purchase the noncontrolling interest holders’ shares of both Dedicated Media and HYFN are outside of our control, because they are based on the achievement of certain financial targets described above. Therefore, the noncontrolling interests related to Dedicated Media and HYFN as of September 30, 2014 has been reported as redeemable noncontrolling interest and classified as temporary equity on our consolidated balance sheets.
If we do not purchase the remaining outstanding shares of Dedicated Media or HYFN by the dates set forth in the respective purchase agreements, the noncontrolling interest holders have the right to purchase our interest. The purchase price of these shares is based on the same purchase price multiple described above and is exercisable only if the applicable financial targets are not met and we do not elect to purchase the remaining interest. The fair value of this option is zero and no amounts related to these options are included in our consolidated financial statements as of September 30, 2014.
Pro Forma Information
The following table sets forth unaudited pro forma results of operations for the nine months ended September 30, 2014 and 2013 assuming that the above acquisitions of Federated Media, Dedicated Media and HYFN, along with transactions necessary to finance the acquisitions, occurred on January 1, 2013 (in thousands):
Nine Months Ended |
Nine Months Ended |
|||||||
Net revenue |
$ | 548,436 | $ | 500,229 | ||||
Net (loss) income |
$ | (14,818 | ) | $ | 144,688 |
This pro forma financial information is based on historical results of operations, adjusted for the allocation of the purchase price and other acquisition accounting adjustments, and is not necessarily indicative of what our results would have been had we operated the business since January 1, 2013. The pro forma adjustments for the nine months ended September 30, 2014 and 2013 reflect depreciation expense, amortization of intangibles related to the fair value adjustments of the assets acquired, additional interest expense related to the financing of the transaction and the related tax effects of the adjustments.
In connection with the acquisition of Federated Media, we and Federated Media incurred a combined total of $0.8 million of transaction related costs primarily related to legal and other professional services. These costs were not included in the 2014 pro forma amounts. The 2013 pro forma net income was adjusted to include these costs, as they are directly attributable to the acquisition of Federated Media.
Note 3 - Intangible Assets
Goodwill totaled $195.4 million and $203.5 million at September 30, 2014 and December 31, 2013, respectively. The change in the carrying amount of goodwill during the nine months ended September 30, 2014 was as follows (in thousands):
Goodwill |
||||
Broadcast: |
||||
Balance as of December 31, 2013 |
$ | 185,237 | ||
Acquisitions |
- | |||
Impairment charge |
(15,413 | ) | ||
Balance as of September 30, 2014 |
$ | 169,824 | ||
Digital: |
||||
Balance as of December 31, 2013 |
$ | 18,291 | ||
Acquisitions |
7,306 | |||
Balance as of September 30, 2014 |
$ | 25,597 | ||
Total: |
||||
Balance as of December 31, 2013 |
$ | 203,528 | ||
Acquisitions |
7,306 | |||
Impairment charge |
(15,413 | ) | ||
Balance as of September 30, 2014 |
$ | 195,421 |
The following table summarizes the carrying amounts of intangible assets (in thousands):
September 30, 2014 |
December 31, 2013 |
|||||||||||||||
Gross Carrying Amount |
Accumulated Amortization |
Gross Carrying Amount |
Accumulated Amortization |
|||||||||||||
Broadcast licenses |
$ | 491,062 |
$ |
– | $ | 536,515 |
$ |
– | ||||||||
Intangible assets subject to amortization(1) |
98,712 | (53,982 | ) | 85,966 | (38,917 | ) | ||||||||||
Total |
$ | 589,774 | $ | (53,982 | ) | $ | 622,481 | $ | (38,917 | ) |
(1) |
Intangible assets subject to amortization are amortized on a straight line basis and primarily include network affiliations, acquired customer and publisher relationships, completed technology, brand names, non-compete agreements, internal-use software, favorable operating leases, and retransmission consent agreements. |
On August 11, 2014, CBS announced that it would not renew its network affiliation agreement related to WISH-TV in Indianapolis, Indiana when that agreement expires on December 31, 2014. This announcement prompted us to perform an interim impairment test of the broadcast licenses and goodwill associated with our Indianapolis market as of September 30, 2014.
We used the income approach to test our asset group and reporting unit for impairment as of September 30, 2014 and as a result, recorded an impairment charge in our Broadcast segment of $60.9 million during the third quarter 2014, resulting in a remaining balance of zero goodwill and $15.8 million attributable to the broadcast licenses in our Indianapolis market.
Note 4 - Debt
Debt consisted of the following (in thousands):
September 30, |
December 31, |
|||||||
Senior Secured Credit Facility: |
||||||||
Revolving credit loans |
$ |
– | $ | 5,000 | ||||
$100,370 and $118,750 Term loans, net of discount of $278 and $345 as September 30, 2014 and December 31, 2013, respectively |
100,092 | 118,405 | ||||||
$286,128 and $314,200 Incremental term loans, net of discount of $1,431 and $1,684 as of September 30, 2014 and December 31, 2013, respectively |
284,697 | 312,516 | ||||||
83/8% Senior Notes due 2018 |
200,000 | 200,000 | ||||||
63/8% Senior Notes due 2021 |
290,000 | 290,000 | ||||||
Capital lease obligations |
14,228 | 14,604 | ||||||
Other debt Total debt |
5,297 | 6,167 | ||||||
Total long-term debt |
894,314 | 946,692 | ||||||
Less current portion |
20,383 | 17,364 | ||||||
Total long-term debt |
$ | 873,931 | $ | 929,328 |
During the three and nine months ended September 30, 2014, we paid $38.6 million and $46.5 million, respectively, of principal on the term loans and incremental term loans related to mandatory quarterly and optional payments under our senior secured credit facility, respectively.
During the nine months ended September 30, 2014, we drew $45 million on our revolving credit facility to fund the acquisition of Federated Media as well as normal operating activities. We subsequently made payments against these borrowings, resulting in an outstanding balance on our revolving credit facility of zero as of September 30, 2014.
The fair values of our long-term debt are estimated based on quoted market prices for the same or similar issues (Level 2 inputs of the three-level fair value hierarchy). The carrying amounts and fair values of our long-term debt were as follows (in thousands):
September 30, |
December 31, |
|||||||
Carrying amount |
$ | 880,085 | $ | 932,088 | ||||
Fair value |
891,194 | 956,255 |
Note 5 - Segment Reporting
During the first quarter of 2014, we began operating under two operating segments, which also represent our reportable segments, “Broadcast” and “Digital” that are disclosed separately from our corporate activities. Our Broadcast segment includes 43 television stations and seven digital channels that are either owned, operated or serviced by us in 23 U.S. markets, all of which are engaged principally in the sale of television advertising and digital advertising primarily related to our television station companion websites, and our Digital segment includes the operating results of the following digital companies; LIN Digital, LIN Mobile, HYFN, Dedicated Media, and Federated Media. Unallocated corporate expenses primarily include our costs to operate as a public company and to operate our corporate locations.
We use earnings before interest, taxes, depreciation and amortization, excluding non-recurring charges, restructuring charges, share-based compensation, loss or gain on sales of assets, and adjusting amortization of program rights to deduct cash paid for programming (“Adjusted EBITDA”) as the primary financial measure reported to the chief executive officer (the chief operating decision maker) for use in assessing our operating segments’ operating performance. We believe that this measure is useful to investors because it eliminates significant non-cash expenses and non-recurring charges and as a result, allows investors to better understand our operating segments’ performance. All adjustments to Adjusted EBITDA presented below to arrive at consolidated income before income taxes except for depreciation and amortization and cash paid for programming relate primarily to corporate activities. Cash paid for programming pertains only to our Broadcast segment. As a result, we have disclosed depreciation and amortization by segment, as this is the only adjustment to operating income that the chief executive officer reviews on a segment basis. We have retrospectively recast prior period disclosures to reflect this change in our reportable segments.
Three Months Ended |
Nine Months Ended September 30 |
|||||||||||||||
2014 |
2013 |
2014 |
2013 |
|||||||||||||
(in thousands) |
||||||||||||||||
Net revenues: |
||||||||||||||||
Broadcast |
$ | 159,733 | $ | 143,594 | $ | 457,029 | $ | 419,054 | ||||||||
Digital |
32,330 | 19,516 | 90,040 | 49,394 | ||||||||||||
Total net revenues |
$ | 192,063 | $ | 163,110 | $ | 547,069 | $ | 468,448 |
The following table is a reconciliation of Adjusted EBITDA to consolidated income before provision for income taxes:
Three Months Ended |
Nine Months Ended September 30 |
|||||||||||||||
2014 |
2013 |
2014 |
2013 |
|||||||||||||
(in thousands) |
||||||||||||||||
Segment Adjusted EBITDA: |
||||||||||||||||
Broadcast |
$ | 63,040 | $ | 50,869 | $ | 169,290 | $ | 142,628 | ||||||||
Digital |
3,547 | 1,236 | 3,209 | 3,196 | ||||||||||||
Total segment Adjusted EBITDA |
66,587 | 52,105 | 172,499 | 145,824 | ||||||||||||
Unallocated corporate Adjusted EBITDA |
(6,093 | ) | (5,650 | ) | (18,615 | ) | (15,458 | ) | ||||||||
Less: |
||||||||||||||||
Depreciation |
10,892 | 11,429 | 32,665 | 34,387 | ||||||||||||
Amortization of intangible assets |
3,788 | 5,886 | 15,065 | 17,038 | ||||||||||||
Impairment of broadcast licenses and goodwill |
60,867 | - | 60,867 | - | ||||||||||||
Amortization of program rights |
6,972 | 7,605 | 20,353 | 22,542 | ||||||||||||
Share-based compensation |
1,765 | 2,238 | 6,111 | 6,766 | ||||||||||||
Non-recurring(1) and acquisition-related charges |
1,830 | 3,257 | 8,314 | 8,268 | ||||||||||||
Restructuring charge |
1,084 | 468 | 1,084 | 2,991 | ||||||||||||
Loss (gain) on sale of assets |
42 | (9 | ) | 141 | 173 | |||||||||||
Add: |
||||||||||||||||
Cash payments for programming |
6,660 | 7,922 | 20,444 | 23,994 | ||||||||||||
Operating (loss) income |
(20,086 | ) | 23,503 | 29,728 | 62,195 | |||||||||||
Other expense: |
||||||||||||||||
Interest expense, net |
14,231 | 13,976 | 42,631 | 42,275 | ||||||||||||
Share of loss in equity investments |
– |
– |
100 | 25 | ||||||||||||
Other (income) expense, net |
(768 | ) | 2,055 | (851 | ) | 2,115 | ||||||||||
Total other expense, net |
13,463 | 16,031 | 41,880 | 44,415 | ||||||||||||
Consolidated (loss) income before provision for income taxes |
$ | (33,549 | ) | $ | 7,472 | $ | (12,152 | ) | $ | 17,780 |
(1) |
Non-recurring charges for the three and nine months ended September 30, 2014 primarily consist of expenses related to the Merger and non-recurring charges for the three and nine months ended September 30, 2013 primarily consist of expenses related to the 2013 LIN LLC Merger. |
Three Months Ended |
Nine Months Ended September 30 |
|||||||||||||||
2014 |
2013 |
2014 |
2013 |
|||||||||||||
(in thousands) |
||||||||||||||||
Operating (loss) income: |
||||||||||||||||
Broadcast |
$ | (11,098 | ) | $ | 35,235 | $ | 67,051 | $ | 95,933 | |||||||
Digital |
801 | 9 | (3,299 | ) | 251 | |||||||||||
Unallocated corporate |
(9,789 | ) | (11,741 | ) | (34,024 | ) | (33,989 | ) | ||||||||
Total operating (loss) income |
$ | (20,086 | ) | $ | 23,503 | $ | 29,728 | $ | 62,195 |
Three Months Ended |
Nine Months Ended September 30 |
|||||||||||||||
2014 |
2013 |
2014 |
2013 |
|||||||||||||
(in thousands) |
||||||||||||||||
Depreciation and amortization: |
||||||||||||||||
Broadcast |
$ | 12,176 | $ | 15,938 | $ | 40,530 | $ | 48,048 | ||||||||
Digital |
1,927 | 1,206 | 5,683 | 2,883 | ||||||||||||
Unallocated corporate |
577 | 171 | 1,517 | 494 | ||||||||||||
Total depreciation and amortization |
$ | 14,680 | $ | 17,315 | $ | 47,730 | $ | 51,425 |
Three Months Ended |
Nine Months Ended September 30 |
|||||||||||||||
2014 |
2013 |
2014 |
2013 |
|||||||||||||
(in thousands) |
||||||||||||||||
Capital expenditures: |
||||||||||||||||
Broadcast |
$ | 3,906 | $ | 5,359 | $ | 12,211 | $ | 16,728 | ||||||||
Digital |
1,261 | 1,353 | 3,647 | 3,036 | ||||||||||||
Unallocated corporate Total capital expenditures |
436 | 789 | 1,208 | 1,907 | ||||||||||||
$ | 5,603 | $ | 7,501 | $ | 17,066 | $ | 21,671 |
September 30, |
December 31, |
|||||||
(in thousands) |
||||||||
Assets: |
||||||||
Broadcast |
$ | 1,012,135 | $ | 1,100,343 | ||||
Digital |
94,608 | 69,690 | ||||||
Unallocated corporate Total assets |
56,331 | 46,917 | ||||||
$ | 1,163,074 | $ | 1,216,950 |
Note 6 - Retirement Plans
The following table shows the components of the net periodic pension cost and the contributions to our 401(k) Plan and the retirement plans (in thousands):
Three Months Ended |
Nine Months Ended September 30 |
|||||||||||||||
2014 |
2013 |
2014 |
2013 |
|||||||||||||
(in thousands) |
||||||||||||||||
Net periodic cost: |
||||||||||||||||
Interest cost |
$ | 1,509 | $ | 1,314 | $ | 4,528 | $ | 3,942 | ||||||||
Expected return on plan assets |
(1,771 | ) | (1,670 | ) | (5,311 | ) | (5,010 | ) | ||||||||
Amortization of net loss |
284 | 428 | 853 | 1,284 | ||||||||||||
Net periodic cost Contributions: |
$ | 22 | $ | 72 | $ | 70 | $ | 216 | ||||||||
Contributions: |
||||||||||||||||
401(k) Plan |
$ | 1,134 | $ | 1,229 | $ | 3,279 | $ | 3,653 | ||||||||
Defined contribution retirement plans |
54 | 59 | 126 | 143 | ||||||||||||
Defined benefit retirement plans Total contributions |
2,584 | 1,231 | 5,264 | 3,944 | ||||||||||||
Total contributions |
$ | 3,772 | $ | 2,519 | $ | 8,669 | $ | 7,740 |
See Note 10 - “Retirement Plans” in Item 15 of our 10-K for a full description of our retirement plans.
Note 7 - Restructuring
As of December 31, 2013, we had a restructuring accrual of $0.4 million related to severance and related costs as a result of the integration of the television stations acquired during 2012 as well as severance and related costs at some of our digital companies. During the three and nine months ended September 30, 2014, we recorded a restructuring charge of $1.1 million for severance and related costs at our stations and digital operations. During the three and nine months, we made cash payments of $0.7 million and $1 million, respectively, related to these restructuring actions. We expect to make cash payments of approximately $0.5 million during the remainder of the year with respect to such transactions.
The activity for these restructuring actions is as follows (in thousands):
Severance and Related |
||||
Assets: |
||||
Balance as of December 31, 2013 |
$ | 423 | ||
Charges |
1,084 | |||
Payments |
(965 | ) | ||
Balance as of September 30, 2014 |
$ | 542 |
Note 8 - Income Taxes
We recorded a benefit from income taxes of $8 million and a provision for income taxes of $0.8 million for the three and nine months ended September 30, 2014, respectively, compared to a benefit from income taxes of $139.3 million and $135.2 million for the three and nine months ended September 30, 2013, respectively. The benefit from income taxes for the three months ended September 30, 2014 was primarily a result of an $18.4 million discrete tax benefit recognized as a result of the impairment charge recorded during the third quarter of 2014 related to the carrying value of the broadcast licenses and goodwill in our Indianapolis market whereas, the provision for income taxes for the nine months ended September 30, 2014 was primarily a result of our income from operations before tax. The benefit from income taxes for the three and nine months ended September 30, 2013 was primarily a result of a $124.6 million discrete tax benefit recognized as a result of the 2013 LIN LLC Merger as well as an $18.2 million discrete tax benefit recognized as a result of the reversal of a state valuation allowance during the third quarter of 2013. Our effective income tax rate was (6.7)% and (760.1)% for the nine months ended September 30, 2014 and September 30, 2013, respectively. The change in the effective income tax rate was primarily a result of the discrete tax benefit recognized during the third quarter 2013 as a result of the 2013 LIN LLC Merger and the reversal of a state valuation allowance during the third quarter of 2013. We expect our effective income tax rate to range between 40% and 42% during the remainder of 2014.
During the first quarter of 2013, approximately $162.8 million of short term deferred tax liabilities were reclassified to income taxes payable upon the consummation of the JV Sale Transaction. As a result of the close of the 2013 LIN LLC Merger on July 30, 2013, $131.5 million of this tax liability was extinguished, resulting in a remaining tax liability of approximately $31.3 million associated with the JV Sale Transaction. We made state and federal tax payments to settle this liability during the fourth quarter of 2013. For further discussion regarding the income tax effects of the JV Sale Transaction and the 2013 LIN LLC Merger, see Note 1 - “Basis of Presentation and Summary of Significant Accounting Policies” and Note 13 - “Commitments and Contingencies” to our consolidated financial statements in our 10-K.
Note 9 - Commitments and Contingencies
We lease land, buildings, vehicles and equipment pursuant to non-cancelable operating lease agreements and we contract for general services pursuant to non-cancelable operating agreements that expire at various dates through 2036. In addition, we have entered into commitments for future syndicated entertainment and sports programming. Future payments for these non-cancelable operating leases and agreements, and future payments associated with syndicated television programs as of September 30, 2014 are as follows (in thousands):
Commitments
Year |
Operating Leases and Agreements |
Syndicated Television Programming |
Total |
|||||||||
2014 |
$ | 12,100 | $ | 7,118 | (1) | $ | 19,218 | |||||
2015 |
62,443 | 28,201 | 90,644 | |||||||||
2016 |
54,624 | 19,714 | 74,338 | |||||||||
2017 |
64,320 | 4,882 | 69,202 | |||||||||
2018 |
59,451 | 277 | 59,728 | |||||||||
Thereafter |
104,985 | 214 | 105,199 | |||||||||
Total obligations |
$ | 357,923 | $ | 60,406 | $ | 418,329 |
(1) |
Includes $10.4 million of program obligations recorded on our consolidated balance sheet as of September 30, 2014. |
Contingencies
GECC Guarantee and the 2013 LIN LLC Merger
As further described in Note 1 - "Basis of Presentation and Summary of Significant Accounting Policies," pursuant to the JV Sale Transaction, LIN Television made a $100 million capital contribution to SVH and in turn, was released from the GECC Guarantee as well as any further obligations related to any shortfall funding agreements between LIN Television and SVH.
In February 2013, we entered into a $60 million Incremental Facility and utilized $40 million of cash on hand and borrowings under our revolving credit facility to fund the $100 million payment.
As a result of the JV Sale Transaction, after utilizing all of our available Federal net operating loss (“NOL”) carryforwards, we had an approximate $162.8 million income tax payable remaining, $131.5 million of which was extinguished as a result of the 2013 LIN LLC Merger. We made state and federal tax payments to settle the remaining liability of $31.3 million during the fourth quarter of 2013.
For further discussion of the GECC Guarantee and the 2013 LIN LLC Merger, refer to Note 13 - "Commitments and Contingencies" to our consolidated financial statements in our 10-K.
The Merger
We expect to incur approximately $1.5 - $2.5 million of legal and professional fees associated with the Merger and related financing during the fourth quarter of 2014. Contingent upon the consummation of the Merger and dependent upon the price of Media General's Class A common stock on the date of consummation, we will incur an advisory fee payable to J.P. Morgan Securities LLC, which we expect will be funded from the proceeds of Media General’s transaction financing. Based on the price of Media General's Class A common stock as of November 7, 2014, this advisory fee is estimated to be approximately $19.7 million, of which $1.5 million has already been paid. This advisory fee is contingent upon the consummation of the Merger and is not earned by JP Morgan until the Merger occurs. As of the date of this report, the necessary approval has not been obtained from the FCC and as a result, there is no assurance that the Merger and the corresponding advisory fee to be paid to JP Morgan will occur. As a result we do not deem the payment of the advisory fee to be probable and accordingly, did not record an obligation for this amount as of September 30, 2014.
Litigation
We are involved in various claims and lawsuits that are generally incidental to our business. We are vigorously contesting all of these matters. The outcome of any current or future litigation cannot be accurately predicted. We record accruals for such contingencies to the extent that we conclude it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. No estimate of the possible loss or range of loss can be made at this time because the inherently unpredictable nature of legal proceedings may be exacerbated by various factors, including: (i) the damages sought in the proceedings are unsubstantiated or indeterminate; (ii) discovery is not complete; (iii) the proceeding is in its early stages; (iv) the matters present legal uncertainties; (v) there are significant facts in dispute; or (vi) there is a wide range of potential outcomes. Although the outcome of these and other legal proceedings cannot be predicted, we believe that their ultimate resolution will not have a material adverse effect on us.
Following the announcement on March 21, 2014 of the execution of the Merger Agreement, three complaints were filed in the Delaware Court of Chancery challenging the proposed acquisition of LIN LLC: Sciabacucchi v. Lin Media LLC, et al. (C.A. No. 9530) (the “Sciabacucchi Action”), International Union of Operating Engineers Local 132 Pension Fund v. Lin Media LLC, et al. (C.A. No.9538) (the “Pension Fund Action”), and Pryor v. Lin Media LLC, et al. (C.A. No. 9577) (the “Pryor Action”). The litigations are putative class actions filed on behalf of the public stockholders of LIN LLC and name as defendants LIN LLC, our directors, Media General, New Holdco, Merger Sub 1 and Merger Sub 2 and HM Capital Partners LLC and several of its alleged affiliates (Hicks, Muse, Tate & Furst Equity Fund III, L.P.; HM3 Coinvestors, L.P.; Hicks, Muse, Tate & Furst Equity Fund IV, L.P.; Hicks, Muse, Tate & Furst Private Equity Fund IV, L.P.; HM4EQ Coinvestors, L.P.; Hicks, Muse & Co. Partners, L.P.; Muse Family Enterprises, Ltd.; and JRM Interim Investors, L.P. (together with HM Capital Partners LLC and individual director defendant John R. Muse, which we collectively refer to as “HMC”)).
On April 18, 2014, the plaintiff in the Pension Fund Action voluntarily dismissed that action without prejudice and, on April 21, 2014, the Court approved the dismissal.
On April 25, 2014, the plaintiff in the Sciabacucchi Action filed an amended complaint, and the plaintiffs in the Sciabacucchi and Pryor Actions each filed a motion for an expedited hearing on the plaintiff’s (yet-to-be filed) motion for a permanent injunction to enjoin the Merger, requesting, among other things, that the Court set a permanent injunction hearing for September 2014. On April 30, 2014, the plaintiffs in the Sciabacucchi and Pryor Actions filed a stipulation to consolidate the two actions, which was approved by the Court on May 1, 2014.
The operative complaint generally alleges that the individual defendants breached their fiduciary duties in connection with their consideration and approval of the Merger, that the entity defendants aided and abetted those breaches and that individual director defendant Royal W. Carson III and HMC breached their fiduciary duties as controlling shareholders of LIN LLC by causing LIN LLC to enter into the Merger, which plaintiffs allege will provide disparate consideration to HMC. The complaint seeks, among other things, declaratory and injunctive relief enjoining the Merger.
On May 15, 2014, plaintiffs in the consolidated action sent a letter to the Court withdrawing the pending motion to expedite.
The outcome of the lawsuit is uncertain and cannot be predicted with any certainty. An adverse judgment for monetary damages could have a material adverse effect on our operations and liquidity. An adverse judgment granting permanent injunctive relief could indefinitely enjoin completion of the Merger.
On October 3, 2014, LIN LLC received an appraisal rights notice from Cede & Co., the nominee of The Depository Trust Company, and purported holder of 44,585 LIN LLC common shares. Pursuant to the Merger Agreement and limited liability company agreement of LIN LLC, holders of LIN LLC common shares are entitled to demand appraisal and shall be entitled to payment from LIN LLC, after consummation of the Merger, of the fair value of the holder’s dissenting shares; provided, that the holder of such shares takes all required actions under applicable law to properly demand appraisal. The outcome of this appraisal notice cannot be predicted with any certainty at this time.
Note 10 — Condensed Consolidating Financial Statements
LIN Television, a 100% owned subsidiary of LIN LLC, is the primary obligor of our senior secured credit facility, our 8 3 / 8 % Senior Notes and our 6 3 / 8 % Senior Notes, which are further described in Note 4 — “Debt”. LIN LLC fully and unconditionally guarantees all of LIN Television’s debt on a joint-and-several basis. Additionally, all of the consolidated 100% owned subsidiaries of LIN Television fully and unconditionally guarantee LIN Television’s senior secured credit facility, our 8 3 / 8 % Senior Notes and our 6 3 / 8 % Senior Notes on a joint-and-several basis, subject to customary release provisions. There are certain contractual restrictions on LIN Television’s ability to obtain funds in the form of dividends or loans from the non-guarantor subsidiaries.
The following condensed consolidating financial statements present the consolidated balance sheets, consolidated statements of operations, consolidated statements of comprehensive income and consolidated statements of cash flows of, LIN Television, as the issuer, the guarantor subsidiaries, and the non-guarantor subsidiaries of LIN Television and the elimination entries necessary to consolidate or combine the issuer with the guarantor and non-guarantor subsidiaries. These statements are presented in accordance with the disclosure requirements under SEC Regulation S-X Rule 3-10.
Condensed Consolidating Balance Sheet
As of September 30, 2014
(in thousands)
LIN Television Corporation |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Consolidating/ Eliminating Adjustments |
LIN Television Corporation Consolidated |
||||||||||||||||
ASSETS |
||||||||||||||||||||
Current assets: |
||||||||||||||||||||
Cash and cash equivalents |
$ | 19,066 | $ | 1,150 | $ | 1,028 | $ | — | $ | 21,244 | ||||||||||
Marketable securities |
174 | — | — | — | 174 | |||||||||||||||
Accounts receivable, net |
79,511 | 43,208 | 22,652 | — | 145,371 | |||||||||||||||
Deferred income tax assets |
3,492 | 1,864 | 40 | — | 5,396 | |||||||||||||||
Other current assets |
14,963 | 2,518 | 1,615 | — | 19,096 | |||||||||||||||
Total current assets |
117,206 | 48,740 | 25,335 | — | 191,281 | |||||||||||||||
Property and equipment, net |
173,197 | 38,630 | 2,551 | — | 214,378 | |||||||||||||||
Deferred financing costs |
14,002 | — | 73 | — | 14,075 | |||||||||||||||
Goodwill |
154,079 | 30,328 | 11,014 | — | 195,421 | |||||||||||||||
Broadcast licenses |
— | 448,361 | 42,701 | — | 491,062 | |||||||||||||||
Other intangible assets, net |
22,083 | 14,389 | 8,258 | — | 44,730 | |||||||||||||||
Advances to consolidated subsidiaries |
8,606 | 932,266 | — | (940,872 |
) |
— | ||||||||||||||
Investment in consolidated subsidiaries |
1,470,786 | — | — | (1,470,786 |
) |
— | ||||||||||||||
Other assets |
52,569 | 3,051 | 951 | (44,444 |
) |
12,127 | ||||||||||||||
Total assets |
$ | 2,012,528 | $ | 1,515,765 | $ | 90,883 | $ | (2,456,102 |
) |
$ | 1,163,074 | |||||||||
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND SHAREHOLDERS’ EQUITY |
||||||||||||||||||||
Current liabilities: |
||||||||||||||||||||
Current portion of long-term debt |
$ | 19,137 | $ | — | $ | 1,246 | $ | — | $ | 20,383 | ||||||||||
Accounts payable |
5,473 | 7,157 | 2,855 | — | 15,485 | |||||||||||||||
Income taxes payable |
15 | 243 | — | — | 258 | |||||||||||||||
Accrued expenses |
50,389 | 10,501 | 3,307 | — | 64,197 | |||||||||||||||
Program obligations |
5,334 | 1,108 | 986 | — | 7,428 | |||||||||||||||
Total current liabilities |
80,348 | 19,009 | 8,394 | — | 107,751 | |||||||||||||||
Long-term debt, excluding current portion |
871,759 | — | 2,172 | — | 873,931 | |||||||||||||||
Deferred income tax liabilities |
13,844 | 36,209 | 659 | — | 50,712 | |||||||||||||||
Program obligations |
1,815 | 126 | 1,000 | — | 2,941 | |||||||||||||||
Intercompany liabilities |
932,264 | — | 8,606 | (940,870 |
) |
— | ||||||||||||||
Other liabilities |
21,217 | 77 | 44,444 | (44,444 |
) |
21,294 | ||||||||||||||
Total liabilities |
1,921,247 | 55,421 | 65,275 | (985,314 |
) |
1,056,629 | ||||||||||||||
Redeemable noncontrolling interest |
— | — | 15,165 | — | 15,165 | |||||||||||||||
— | ||||||||||||||||||||
Total shareholders’ equity (deficit) |
91,281 | 1,460,344 | 10,443 | (1,470,788 |
) |
91,280 | ||||||||||||||
Total liabilities, redeemable noncontrolling interest and shareholders’ equity (deficit) |
$ | 2,012,528 | $ | 1,515,765 | $ | 90,883 | $ | (2,456,102 |
) |
$ | 1,163,074 |
Condensed Consolidating Statement of Operations
For the Three Months Ended September 30, 2014
(in thousands)
LIN Television Corporation |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Consolidating/ Eliminating Adjustments |
LIN Television Corporation |
||||||||||||||||
Net revenues |
$ | 118,815 | $ | 60,190 | $ | 19,197 | $ | (6,139 |
) |
$ | 192,063 | |||||||||
Operating expenses: |
||||||||||||||||||||
Direct operating |
40,855 | 26,034 | 12,346 | (3,206 |
) |
76,029 | ||||||||||||||
Selling, general and administrative |
28,321 | 12,740 | 3,411 | (166 |
) |
44,306 | ||||||||||||||
Amortization of program rights |
5,194 | 1,432 | 346 | — | 6,972 | |||||||||||||||
Corporate |
7,583 | 50 | 544 | (8 |
) |
8,169 | ||||||||||||||
Depreciation |
8,957 | 1,685 | 250 | — | 10,892 | |||||||||||||||
Amortization of intangible assets |
2,091 | 931 | 766 | — | 3,788 | |||||||||||||||
Impairment of broadcast licenses and goodwill |
15,414 | 45,453 | — | — | 60,867 | |||||||||||||||
Restructuring charge |
846 | 238 | — | — | 1,084 | |||||||||||||||
Loss (gain) from asset dispositions |
43 | (2 |
) |
1 | — | 42 | ||||||||||||||
Operating (loss) income |
9,511 | (28,371 |
) |
1,533 | (2,759 |
) |
(20,086 |
) | ||||||||||||
Other (income) expense: |
||||||||||||||||||||
Interest expense, net |
14,185 | (1 |
) |
47 | — | 14,231 | ||||||||||||||
Intercompany fees and expenses |
7,456 | (7,606 |
) |
150 | — | — | ||||||||||||||
Other, net |
(37 |
) |
(731 |
) |
— | — | (768 |
) | ||||||||||||
Total other (income) expense, net |
21,604 | (8,338 |
) |
197 | — | 13,463 | ||||||||||||||
(Loss) income before (benefit from) provision for income taxes |
(12,093 |
) |
(20,033 |
) |
1,336 | (2,759 |
) |
(33,549 |
) | |||||||||||
(Benefit from) provision for income taxes |
(204 |
) |
(8,013 |
) |
221 | — | (7,996 |
) | ||||||||||||
Net (loss) income |
(11,889 |
) |
(12,020 |
) |
1,115 | (2,759 |
) |
(25,553 |
) | |||||||||||
Equity in (loss) income from operations of consolidated subsidiaries |
(14,181 |
) |
— | — | 14,181 | — | ||||||||||||||
Net (loss) income |
(26,070 |
) |
(12,020 |
) |
1,115 | 11,422 | (25,553 |
) | ||||||||||||
Net income attributable to noncontrolling interests |
— | — | 517 | — | 517 | |||||||||||||||
Net (loss) income attributable to LIN Television Corporation |
$ | (26,070 |
) |
$ | (12,020 |
) |
$ | 598 | $ | 11,422 | $ | (26,070 |
) |
Condensed Consolidating Statement of Comprehensive Loss
For the Three Months Ended September 30, 2014
(in thousands)
LIN Television Corporation |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Consolidating/ Eliminating Adjustments |
LIN Television Corporation |
||||||||||||||||
Net (loss) income |
$ | (26,070 |
) |
$ | (12,020 |
) |
$ | 1,115 | $ | 11,422 | $ | (25,553 |
) | |||||||
Amortization of pension net losses, net of tax of $113 |
172 | — | — | — |
|
172 | ||||||||||||||
Comprehensive (loss) income |
(25,898 |
) |
(12,020 |
) |
1,115 | 11,422 | (25,381 |
) | ||||||||||||
Comprehensive income attributable to noncontrolling interest |
— | — | 517 | — | 517 | |||||||||||||||
Comprehensive (loss) income attributable to LIN Television Corporation |
$ | (25,898 |
) |
$ | (12,020 |
) |
$ | 598 | $ | 11,422 | $ | (25,898 |
) |
Condensed Consolidating Statement of Operations
For the Nine Months Ended September 30, 2014
(in thousands)
LIN Television Corporation |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Consolidating/ Eliminating Adjustments |
LIN Television Corporation |
||||||||||||||||
Net revenues |
$ | 338,293 | $ | 172,454 | $ | 54,597 | $ | (18,275 |
) |
$ | 547,069 | |||||||||
Operating expenses: |
||||||||||||||||||||
Direct operating |
119,514 | 76,002 | 34,757 | (9,323 |
) |
220,950 | ||||||||||||||
Selling, general and administrative |
85,825 | 38,582 | 13,821 | (674 |
) |
137,554 | ||||||||||||||
Amortization of program rights |
14,919 | 4,236 | 1,198 | — | 20,353 | |||||||||||||||
Corporate |
27,992 | 134 | 544 | (8 |
) |
28,662 | ||||||||||||||
Depreciation |
26,780 | 4,999 | 886 | — | 32,665 | |||||||||||||||
Amortization of intangible assets |
9,220 | 2,409 | 3,436 | — | 15,065 | |||||||||||||||
Impairment of broadcast licenses and goodwill |
15,414 | 45,453 | — | — | 60,867 | |||||||||||||||
Restructuring charge |
846 | 238 | — | — | 1,084 | |||||||||||||||
Loss (gain) from asset dispositions |
19 | 133 | (11 |
) |
— | 141 | ||||||||||||||
Operating (loss) income |
37,764 | 268 | (34 |
) |
(8,270 |
) |
29,728 | |||||||||||||
Other (income) expense: |
||||||||||||||||||||
Interest expense, net |
42,494 | (1 |
) |
138 | — | 42,631 | ||||||||||||||
Share of loss in equity investments |
100 | — | — | — | 100 | |||||||||||||||
Intercompany fees and expenses |
22,731 | (23,155 |
) |
424 | — | — | ||||||||||||||
Other, net |
(131 |
) |
(720 |
) |
— | — | (851 |
) | ||||||||||||
Total other (income) expense, net |
65,194 | (23,876 |
) |
562 | — | 41,880 | ||||||||||||||
(Loss) income before (benefit from) provision for income taxes |
(27,430 |
) |
24,144 | (596 |
) |
(8,270 |
) |
(12,152 |
) | |||||||||||
(Benefit from) provision for income taxes |
(8,614 |
) |
9,658 | (231 |
) |
— | 813 | |||||||||||||
Net (loss) income |
(18,816 |
) |
14,486 | (365 |
) |
(8,270 |
) |
(12,965 |
) | |||||||||||
Equity in (loss) income from operations of consolidated subsidiaries |
6,393 | — | — | (6,393 | ) | — | ||||||||||||||
Net (loss) income |
(12,423 |
) |
14,486 | (365 |
) |
(14,663 |
) |
(12,965 |
) | |||||||||||
Net income (loss) attributable to noncontrolling interests |
— | — | (542 |
) |
— | (542 |
) | |||||||||||||
Net (loss) income attributable to LIN Television Corporation |
$ | (12,423 |
) |
$ | 14,486 | $ | 177 | $ | (14,663 |
) |
$ | (12,423 |
) |
Condensed Consolidating Statement of Comprehensive Loss
For the Nine Months Ended September 30, 2014
(in thousands)
LIN Television Corporation |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Consolidating/ Eliminating Adjustments |
LIN Television Corporation Consolidated |
||||||||||||||||
Net (loss) income |
$ | (12,423 |
) |
$ | 14,486 | $ | (365 |
) |
$ | (14,663 |
) |
$ | (12,965 |
) | ||||||
Amortization of pension net losses, net of tax of $338 |
517 | — | — | — |
|
517 | ||||||||||||||
Comprehensive (loss) income |
(11,906 |
) |
14,486 | (365 |
) |
(14,663 |
) |
(12,448 |
) | |||||||||||
Comprehensive income (loss) attributable to noncontrolling interest |
— | — | (542 |
) |
— | (542 |
) | |||||||||||||
Comprehensive (loss) income attributable to LIN Television Corporation |
$ | (11,906 |
) |
$ | 14,486 | $ | 177 | $ | (14,663 |
) |
$ | (11,906 |
) |
Condensed Consolidating Statement of Cash Flows
For the Nine Months Ended September 30, 2014
(in thousands)
LIN Television Corporation |
Guarantor Subsidiaries |
Non-Guarantor Subsidiaries |
Consolidating/ Eliminating Adjustments |
LIN Television Corporation |
||||||||||||||||
OPERATING ACTIVITIES: |
||||||||||||||||||||
Net cash (used in) provided by operating activities |
$ | 86,790 | $ | 27,913 | $ | (3,228 |
) |
$ | — |
|
$ | 111,475 | ||||||||
INVESTING ACTIVITIES: |
||||||||||||||||||||
Capital expenditures |
(12,113 |
) |
(3,610 |
) |
(1,343 |
) |
— | (17,066 |
) | |||||||||||
Acquisition of broadcast towers |
(7,257 |
) |
— | — | — | (7,257 |
) | |||||||||||||
Payments for business combinations, net of cash acquired |
(24,825 |
) |
— | — | — | (24,825 |
) | |||||||||||||
Proceeds from the sale of assets |
112 | 2 | — | — | 114 | |||||||||||||||
Contributions to equity investments |
(100 |
) |
— | — | — | (100 |
) | |||||||||||||
Marketable securities |
(174 |
) |
— | — | — | (174 |
) | |||||||||||||
Receipt of dividend |
58,508 | — | — | (58,508 |
) |
— | ||||||||||||||
Advances on intercompany borrowings |
(4,329 |
) |
— | — | 4,329 | — | ||||||||||||||
Payments from intercompany borrowings |
— | 35,350 | — | (35,350 |
) |
— | ||||||||||||||
Net cash provided by (used in) investing activities |
9,822 | 31,742 | (1,343 |
) |
(89,529 |
) |
(49,308 |
) | ||||||||||||
FINANCING ACTIVITIES: |
||||||||||||||||||||
Net proceeds on exercises of employee and director share-based compensation |
— | — | — | — | — | |||||||||||||||
Proceeds from borrowings on long-term debt |
45,000 | — | — | — | 45,000 | |||||||||||||||
Principal payments on long-term debt |
(96,759 |
) |
— | (939 |
) |
— | (97,698 |
) | ||||||||||||
Payment of dividend |
(750 |
) |
(58,508 |
) |
— | 58,508 | (750 | ) | ||||||||||||
Proceeds from intercompany borrowings |
— | — | 4,329 | (4,329 |
) |
— | ||||||||||||||
Payments on intercompany borrowings |
(35,350 |
) |
— | — | 35,350 | — | ||||||||||||||
Net cash provided by (used in)financing activities |
(87,859 |
) |
(58,508 |
) |
3,390 | 89,529 | (53,448 |
) | ||||||||||||
Net increase (decrease) in cash and cash equivalents |
8,753 | 1,147 | (1,181 |
) |
— | 8,719 | ||||||||||||||
Cash and cash equivalents at the beginning of the period |
10,313 | 3 | 2,209 | — | 12,525 | |||||||||||||||
Cash and cash equivalents at the end of the period |
$ | 19,066 | $ | 1,150 | $ | 1,028 | $ | — | $ | 21,244 |
28