-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, bR8sdvBXqDJVGUh9i8yASGppVe6dafmxhTAjEKWha/kOeLKBDhfa21qqaMgT9/O+ fMfHFjTNvSrd9DfidXxscg== 0000950150-95-000079.txt : 19950216 0000950150-95-000079.hdr.sgml : 19950216 ACCESSION NUMBER: 0000950150-95-000079 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950201 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19950215 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TIMES MIRROR CO /NEW/ CENTRAL INDEX KEY: 0000925260 STANDARD INDUSTRIAL CLASSIFICATION: NEWSPAPERS: PUBLISHING OR PUBLISHING & PRINTING [2711] IRS NUMBER: 954481525 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13492 FILM NUMBER: 95511559 BUSINESS ADDRESS: STREET 1: TIMES MIRROR SQUARE STREET 2: 202 WEST 1ST FLR CITY: LOS ANGELES STATE: CA ZIP: 90053 BUSINESS PHONE: 2132373700 MAIL ADDRESS: STREET 1: TIMES MIRROR SQUARE STREET 2: 202 WEST 1ST ST CITY: LOS ANGELES STATE: CA ZIP: 90053 FORMER COMPANY: FORMER CONFORMED NAME: NEW TMC INC DATE OF NAME CHANGE: 19940613 8-K 1 FORM 8-K 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ------------------------ FORM 8-K ------------------------ CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES AND EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): FEBRUARY 1, 1995 ------------------------ THE TIMES MIRROR COMPANY (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER) DELAWARE 1-4914 95-4481525 (STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER OF INCORPORATION) IDENTIFICATION NO.) TIMES MIRROR SQUARE 90053 LOS ANGELES, CALIFORNIA (ZIP CODE) (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:(213) 237-3700 NEW TMC INC. (FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS GENERAL On February 1, 1995, the predecessor ("Old Times Mirror") to The Times Mirror Company (the "Company" or "New Times Mirror") consummated a series of transactions described below (collectively, the "Transactions") which resulted in the acquisition of Old Times Mirror's cable television business by Cox Communications, Inc. ("Cox"). All references herein to "Times Mirror" shall mean Old Times Mirror and New Times Mirror, as the successor to Old Times Mirror, collectively. THE TIMES MIRROR COMPANY The Company, as the successor to Old Times Mirror, is engaged principally in the newspaper publishing, professional information and consumer media businesses. The Company publishes the Los Angeles Times, Newsday and New York Newsday, The Baltimore Sun newspapers, The Hartford Courant, The Morning Call, The Advocate and the Greenwich Time. In addition, the Company publishes several smaller newspapers. Prior to the consummation of the Transactions, these businesses (the "Publishing Business") were conducted by Old Times Mirror, which was also engaged in the ownership and operation of cable television systems. Old Times Mirror's cable television business consisted of Old Times Mirror's wholly owned subsidiary, Times Mirror Cable Television, Inc. ("TMCT"), and the subsidiaries of TMCT (collectively with TMCT, "Times Mirror Cable"). Times Mirror Cable owns and operates approximately 60 cable systems in four geographic regions, including Phoenix, Arizona, Southern California and Rhode Island. As of September 30, 1994, these systems, which were operated under the name "Dimension Cable Services," served approximately 1.2 million basic subscribers in 13 states and passed approximately 2.1 million homes. Old Times Mirror was incorporated in 1884 in the State of California and was reincorporated in the State of Delaware in 1986. The Company was incorporated in the State of Delaware in June 1994 for the purpose of owning and operating the Publishing Business after the consummation of the Transactions. The Company was originally incorporated under the name "New TMC Inc.," but changed its name to "The Times Mirror Company" immediately after the consummation of the Transactions. COX COMMUNICATIONS, INC. Cox, which was a wholly owned subsidiary of Cox Enterprises, Inc. ("Cox Enterprises") prior to the consummation of the Transactions, is a fully-integrated diversified media and broadband communications company with operations and investments in four related areas: (i) U.S. cable television systems; (ii) international cable television systems; (iii) programming; and (iv) telecommunications and technology. Prior to the consummation of the Transactions, Cox was the sixth largest cable television operator in the United States, serving as of September 30, 1994 approximately 1.9 million basic customers in 18 states. Internationally, Cox has invested significantly in cable systems in the United Kingdom and in Denmark. Cox also holds substantial investments in several cable television programming services, including The Discovery Channel, The Learning Channel, E! Entertainment, UK Gold and Viewer's Choice. Finally, Cox has numerous investments in the telecommunications and technology industry, including businesses involved in competitive access telephony, on-screen programming guides, communications, direct broadcast satellite operations, computer software and interactive services. Cox was incorporated in the State of Delaware in May 1994 under the name "Cox Cable Communications, Inc.," and on November 21, 1994, Cox's name was changed to "Cox Communications, Inc." Prior to Cox's incorporation, Cox's operations and investments were a division of Cox Holdings, Inc., a subsidiary of Cox Enterprises. DISPOSITION OF TIMES MIRROR CABLE Cox was selected as the buyer through an auction conducted by Old Times Mirror in which a number of potential buyers were invited to submit bids. Old Times Mirror received five bids and ultimately determined that Cox's bid was the most favorable. Old Times Mirror, the Company, Cox and Cox Enterprises then entered into that certain Agreement and Plan of Merger dated as of June 5, 1994, as amended (the "Merger Agreement"), pursuant to which Cox 1 3 acquired Times Mirror Cable and the Company became the successor to Old Times Mirror. This was accomplished through the Transactions, which consisted of, among other things: (i) the contribution of the Publishing Business by Old Times Mirror to the Company (the "Contribution"); (ii) the assumption by the Company of all of the liabilities of Old Times Mirror other than those related to Times Mirror Cable and certain other liabilities, including the indebtedness described below under the caption "Consideration"; (iii) the exchange (the "Chandler Exchange") by Old Times Mirror's controlling stockholders, Chandler Trust No. 1, Chandler Trust No. 2 and Chandis Securities Company (collectively, the "Chandler Trusts"), of all of their Old Times Mirror Series A Common Stock, par value $1.00 per share ("Old Times Mirror Series A Common Stock"), and Old Times Mirror Series C Common Stock, par value $1.00 per share ("Old Times Mirror Series C Common Stock" and together with the Old Times Mirror Series A Common Stock, the "Old Times Mirror Common Stock"), for the same number of shares of the Company's Series A Common Stock, par value $1.00 per share (the "Series A Common Stock"), and the Company's Series C Common Stock, par value $1.00 per share (the "Series C Common Stock" and together with the Series A Common Stock, the "Common Stock"), and the commitment by the Company to issue to the Chandler Trusts shares of the Company's Cumulative Redeemable Preferred Stock, Series A, par value $1.00 per share (the "Series A Preferred Stock"), and, under certain circumstances, additional shares of Series A Common Stock (such shares of Series A Preferred Stock and additional shares of Series A Common Stock, if any, are hereinafter referred to as the "Additional Chandler Shares"); and (iv) the merger of Old Times Mirror (then consisting only of Times Mirror Cable) with and into Cox (the "Merger"). Upon the effectiveness of the Merger on February 1, 1995, each share of Old Times Mirror Series A Common Stock outstanding immediately prior to the Merger was converted into one share of Series A Common Stock and a portion of a share of Cox's Class A Common Stock, par value $1.00 per share ("Cox Class A Common Stock"), and each share of Old Times Mirror Series C Common Stock outstanding immediately prior to the Merger was converted into one share of Series C Common Stock and a portion of a share of Cox Class A Common Stock. As a result of the Chandler Exchange, the Chandler Trusts were not stockholders of Old Times Mirror at the time the Merger was consummated and therefore did not receive any of the securities issued in the Merger. The Additional Chandler Shares will be issued on an as yet undetermined date sometime between March 20, 1995 and May 3, 1995. CONSIDERATION The consideration paid by Cox for the acquisition of Times Mirror Cable consists of: (i) the issuance in the Merger of between 48,806,033 shares and 59,651,818 shares of Cox Class A Common Stock to stockholders of Old Times Mirror other than the Chandler Trusts (the "Other Stockholders") and (ii) the assumption by Cox of $1.364 billion of Old Times Mirror's debt and accrued interest. The indebtedness assumed by Cox consisted of: (i) approximately $57 million of Old Times Mirror's publicly held notes not repurchased or exchanged in certain tender and exchange offers prior to the effective date of the Merger and (ii) approximately $1.306 billion of new indebtedness (the "New Indebtedness") incurred by Old Times Mirror shortly before the Merger. As part of the Contribution, Old Times Mirror transferred to the Company as a capital contribution approximately $773 million in cash, which constituted all of the proceeds from the incurrence of the New Indebtedness that remained after repayment of indebtedness incurred to fund the tender offer referred to above and certain other obligations of Old Times Mirror. The value of the Cox Class A Common Stock issued to the Other Stockholders (based on the average of the closing prices of a share of Cox Class A Common Stock on the New York Stock Exchange for the five trading days ending on the Valuation Date (as defined below) will be $932 million, or $10.45 per share of Old Times Mirror Common Stock held by the Other Stockholders, provided that the average closing price of the Cox Class A Common Stock during such five trading day period (the "Trading Value") is not less than $15.624 or greater than $19.096. Based on this valuation, the Additional Chandler Shares to be issued to the Chandler Trusts will have a value of $412 million, or $10.45 per share of Old Times Mirror Common Stock held by the Chandler Trusts. There can be no assurance that prior to or after the Valuation Date the Cox Class A Common Stock will have a Trading Value within the range from $15.624 to $19.096 per share. If the Trading Value during the five trading day period is less than $15.624, the value of the Cox Class A Common 2 4 Stock received by the Other Stockholders would be less than $932 million, which would mean that the Other Stockholders would receive Cox Class A Common Stock with a value of less than $10.45 per share of Old Times Mirror Common Stock. If the value of the Other Stockholders' Cox Class A Common Stock is less than $932 million, the number of Additional Chandler Shares to be issued would be reduced so that the value of the Additional Chandler Shares to be issued with respect to each share of Old Times Mirror Common Stock owned by the Chandler Trusts would remain substantially equivalent to the value of the Cox Class A Common Stock to be issued with respect to each share of Old Times Mirror Common Stock owned by the Other Stockholders. The "Valuation Date" will be a date to be selected by Cox that is no earlier than March 17, 1995 and no later than May 1, 1995. JOINT VENTURE BETWEEN THE COMPANY AND COX As part of the Merger Agreement, the Company and Cox have agreed to form a joint venture for the purpose of purchasing investment interests in general audience and theme-based cable or pay television programming operations in the United States and throughout the world. The joint venture will be structured as a limited partnership in which a corporation, owned two-thirds by the Company and one-third by Cox, will be the general partner and the Company and Cox will each be limited partners. The Company has agreed to contribute up to $200 million to the joint venture and Cox has agreed to contribute up to $100 million, and the Company and Cox will share in all profits, losses and distributions of the joint venture in proportion to their capital commitments. 3 5 ITEM 7. PRO FORMA FINANCIAL INFORMATION INDEX TO UNAUDITED PRO FORMA FINANCIAL DATA
PAGE ----- Unaudited Pro Forma Condensed Consolidated Balance Sheet................................ 5 Unaudited Pro Forma Condensed Consolidated Statements of Income......................... 6 Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet and Statements of Income................................................................................ 7
4 6 UNAUDITED PRO FORMA FINANCIAL DATA UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET The unaudited pro forma condensed consolidated balance sheet of Times Mirror has been derived from the historical consolidated balance sheet of Times Mirror adjusted for certain costs and expenses to be incurred as a result of the consummation of the Transactions. The pro forma condensed consolidated balance sheet has been prepared assuming the Transactions occurred on September 25, 1994. The pro forma condensed consolidated balance sheet should be read in conjunction with the historical consolidated financial statements and the notes thereto for the year ended December 31, 1993 contained in Old Times Mirror's report on Form 8-K dated November 10, 1994. The pro forma condensed consolidated balance sheet is not necessarily indicative of the financial position of Times Mirror that would have actually been obtained had the Transactions been consummated on September 25, 1994.
ASSETS PRO FORMA ADJUSTMENTS -------------------------- HISTORICAL DEBIT CREDIT PRO FORMA ------------ ---------- ---------- ------------ (IN THOUSANDS OF DOLLARS) Current Assets Cash and cash equivalents................... $ 92,242 $1,306,000(a) $ 52,000(b) 12,232(c) 548,574(a) $ 785,436 Accounts receivable, less allowance for doubtful accounts of $77,305.............. 524,549 524,549 Inventories................................. 148,472 148,472 Net assets of discontinued Cable operations................................ 626,091 626,091(d) Prepaid and other........................... 148,926 148,926 ------------ ------------ Total Current Assets................... 1,540,280 1,607,383 Property, plant and equipment, at cost less accumulated depreciation of $813,857........ 1,294,005 1,294,005 Goodwill...................................... 711,947 711,947 Other intangibles............................. 122,652 122,652 Deferred charges and other assets............. 543,956 543,956 ------------ ------------ $4,212,840 $4,279,943 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable............................ $ 359,680 $ $ 359,680 Accrued liabilities......................... 45,768 45,768 Short-term debt............................. 128,044 103,574(a) 24,470 Other current liabilities................... 357,134 1,000(d) 356,134 ------------ ------------ Total Current Liabilities.............. 890,626 786,052 Long-term debt................................ 749,044 1,363,000(d) $1,306,000(a) 445,000(a) 247,044 Other liabilities and deferrals............... 654,177 654,177 ------------ ------------ Total Liabilities...................... 2,293,847 1,687,273 Cox Class A common stock...................... 932,000(d) 932,000(e) Shareholders' Equity Series A common stock....................... 98,700 1,345(f) 16,563(g) 80,792 Series B common stock....................... Series C common stock, convertible.......... 31,259 31,259 Series A preferred stock.................... 412,000(h) 412,000 Series B preferred stock.................... 350,000(g) 350,000 Additional paid-in capital.................. 167,331 167,331 Retained earnings........................... 1,707,446 52,000(b) 1,669,909(d) 12,232(c) 932,000(e) 60,198(f) 333,437(g) 412,000(h) 1,575,488 ------------ ------------ 2,004,736 2,616,870 ------------ ------------ Less treasury stock, at cost................ 61,543 61,543(f) 0 Less guaranteed debt of ESOP................ 24,200 24,200 ------------ ------------ Total Shareholders' Equity............. 1,918,993 2,592,670 ------------ ------------ $4,212,840 $4,279,943 =========== ===========
5 7 UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME The unaudited pro forma condensed consolidated statements of income of Times Mirror have been derived from the historical consolidated statements of income of Times Mirror adjusted for interest expense expected to be reduced as a result of the Transactions. The pro forma condensed consolidated statements of income have been prepared assuming that the transaction occurred on January 1, 1993. The pro forma condensed consolidated statements of income should be read in conjunction with the historical consolidated financial statements and the notes thereto for the year ended December 31, 1993 contained in Old Times Mirror's report on Form 8-K dated November 10, 1994. The pro forma condensed consolidated statements of income are not necessarily indicative of the financial results of Times Mirror that would have actually been obtained had the Transactions been consummated on January 1, 1993.
YEAR ENDED DECEMBER 31, 1993 --------------------------------------------- PRO FORMA ADJUSTMENTS ----------------- HISTORICAL DEBIT CREDIT PRO FORMA ---------- ------ ------ ---------- (IN THOUSANDS OF DOLLARS EXCEPT PER SHARE AMOUNTS) Revenues........................................... $3,243,749 $3,243,749 Cost of sales...................................... 1,759,052 1,759,052 Selling, general and administrative................ 1,215,491 1,215,491 Restructuring charges.............................. 80,164 80,164 ---------- ---------- Operating profit................................... 189,042 189,042 Interest expense................................... (84,054) 50,033(i) (34,021) Other, net......................................... 4,797 4,797 ---------- ---------- Income from continuing operations before income taxes.............................. 109,785 159,818 Income taxes....................................... 58,116 20,514(i) 78,630 ---------- ---------- Income from continuing operations.................. $ 51,669 $ 81,188 ========= ========= Earnings per common share from continuing operations....................................... $ .40 $ .19
NINE MONTHS ENDED SEPTEMBER 25, 1994 --------------------------------------------- PRO FORMA ADJUSTMENTS ----------------- HISTORICAL DEBIT CREDIT PRO FORMA ---------- ------ ------ ---------- (IN THOUSANDS OF DOLLARS EXCEPT PER SHARE AMOUNTS) Revenues........................................... $2,400,068 $2,400,068 Cost of sales...................................... 1,291,433 1,291,433 Selling, general and administrative................ 921,880 921,880 ---------- ---------- Operating profit................................... 186,755 186,755 Interest expense................................... (51,757) 33,964(i) (17,793) Nonrecurring gain.................................. 22,099 22,099 Other, net......................................... 2,062 2,062 ---------- ---------- Income from continuing operations before income taxes.............................. 159,159 193,123 Income taxes....................................... 79,774 13,925(i) 93,699 ---------- ---------- Income from continuing operations.................. $ 79,385 $ 99,424 ========= ========= Earnings per common share from continuing operations....................................... $ .61 $ .49
6 8 NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AND STATEMENTS OF INCOME (a) To record $1.306 billion of new indebtedness incurred by Times Mirror immediately prior to the Merger. Cash proceeds from this debt were or will be used to purchase or redeem $100 million of fixed rate public notes, all outstanding commercial paper and short-term borrowings related to the debt tender offer. There was $103,574,000 of commercial paper outstanding at September 25, 1994, however, additional short-term borrowings were incurred in mid-December 1994 to fund the debt tender offer. The debt tender offer ended on December 8, 1994 and resulted in the tender of approximately $345 million of debt. These interim borrowings were paid off at or prior to the completion of the Transactions. (b) Expenses incurred in connection with the Transactions are estimated at approximately $52 million, consisting of legal, accounting, investment banking fees, shareholder litigation costs and costs and expenses incurred for the registration of the capital stock of New Times Mirror. These costs have been reflected in the pro forma balance sheet as a reduction of retained earnings, as these costs relate to the disposition of Times Mirror Cable and the redemption of stockholder interests. (c) Times Mirror paid a premium to retire the approximately $345 million of fixed rate public notes, as described in note (a) above. The premium and related costs of approximately $12.2 million were recorded as an extraordinary loss in the fourth quarter of 1994, reducing net income. This extraordinary loss is not reflected in the pro forma statements of income. (d) To record the disposition of Times Mirror Cable. Proceeds of $2.296 billion are comprised of approximately $932 million of Cox Class A Common Stock, received by the Other Stockholders in the Merger, and the assumption of $1.364 billion in debt and accrued interest by Cox. The gain is expected to be approximately $1.6 billion. This gain is not reflected in the pro forma statements of income. (e) To reflect the deemed distribution of approximately $932 million of the proceeds from the sale of Times Mirror Cable. These proceeds are in the form of Cox Class A Common Stock distributed by Cox directly to the Other Stockholders in the Merger. (f) To retire treasury stock outstanding as of the Merger date. (g) To record the issuance of $350 million, or 16,563,343 shares, of New Times Mirror's Conversion Preferred Stock, Series B, par value $1.00 per share (the "Series B Preferred Stock"), assumed to be exchanged for Series A Common Stock. Stockholders electing to receive Series B Preferred Stock will receive it in exchange for a like number of shares of Common Stock. Each share of Series B Preferred Stock has a stated value of $21.131 per share. The Series B Preferred Stock is stated at liquidation value. (h) To record the issuance of $412 million of Series A Preferred Stock to the Chandler Trusts. The Series A Preferred Stock is stated at liquidation value. (i) To reduce interest expense assuming all commercial paper and $500 million of fixed rate public notes outstanding as of January 1, 1993 were retired using cash proceeds from the new indebtedness or were assumed by Cox pursuant to the Merger. (j) The pro forma earnings per share calculation was determined on the aggregate number of shares of Series A and Series C Common Stock assumed outstanding at January 1, 1993, assuming that the issuance of the Series B Preferred Stock reduces the number of Series A shares by 16,563,343. The Series A and Series B Preferred Stock are not common stock equivalents for earnings per share purposes. The estimated preferred stock dividends of $59.8 million for 1993 and $44.9 million for the first three quarters of 1994 have been deducted from income from continuing operations for purposes of determining earnings per common share from continuing operations. The preferred stock dividends have been estimated using a 9% dividend rate for the Series A Preferred Stock and a 6.5% dividend rate for the Series B Preferred Stock. Subsequent to the Merger, dividends on Common Stock are expected to be reduced. Beginning in June 1995 and continuing for a period of three years, New Times Mirror has agreed to pay an annual dividend on shares of Common Stock of no less than 24 cents per share, subject to the fiduciary duties of New Times Mirror's Board of Directors. Thereafter, the payment of dividends on Common Stock will depend on future earnings, capital requirements, financial condition and other factors. 7 9 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. THE TIMES MIRROR COMPANY By /s/ O. JEAN WILLIAMS -------------------------------- O. Jean Williams Secretary and Associate General Counsel February 15, 1995 8 10 EXHIBIT INDEX
SEQUENTIALLY EXHIBIT DESCRIPTION NUMBERED PAGE ------- ----------- ------------- 2.1 Agreement and Plan of Merger by and between The Times Mirror Company, New TMC Inc., Cox Cable Communications, Inc. and Cox Enterprises, Inc., dated as of June 5, 1994*...................... 2.2 Amendment No. 1 to Agreement and Plan of Merger by and between The Times Mirror Company, New TMC Inc., Cox Communications, Inc. and Cox Enterprises, Inc. dated as of December 16, 1994*.............. 2.3 Amendment No. 2 to Agreement and Plan of Merger by and between The Times Mirror Company, New TMC Inc., Cox Communications, Inc. and Cox Enterprises, Inc. dated as of January 30, 1995................ 2.4 Amended and Restated Stock Exchange and Registration Rights Agreement by and between the Times Mirror Company, New TMC Inc. and certain stockholders of The Times Mirror Company dated as of December 16, 1994*................................................
- --------------- * Filed as an exhibit to the Registration Statement on Form S-4 of the Registrant (File No. 33-80154) and incorporated herein by reference. EX-2.3 2 EXHIBIT 2.3/AM.#2 TO AGREEMENT & PLAN OF MERGER 1 EXHIBIT 2.3 AMENDMENT NO. 2 TO AGREEMENT AND PLAN OF MERGER This Amendment No. 2 to Agreement and Plan of Merger (this "Amendment"), dated as of January 30, 1995, is made by and among The Times Mirror Company, a Delaware corporation (the "Company"), New TMC Inc., a Delaware corporation and wholly owned subsidiary of the Company ("New Times Mirror"), Cox Communications, Inc., a Delaware corporation ("Acquiror"), and Cox Enterprises, Inc., a Delaware corporation ("CEI"). RECITALS WHEREAS, the parties hereto (including Acquiror under the name "Cox Cable Communications, Inc.") have entered into that certain Agreement and Plan of Merger dated as of June 5, 1994 as amended by Amendment No. 1 thereto dated as of December 16, 1994 (the "Merger Agreement") pursuant to which and subject to the terms and conditions thereof (i) the Company will contribute to New Times Mirror all of the assets of the Company except the capital stock of Times Mirror Cable Television, Inc., a Delaware corporation and wholly owned subsidiary of the Company ("TMCT" and together with its subsidiaries (other than KDFW, KTBC and WVTM (as defined in Section 6.10(a)(i)) "Cable"), and certain other assets, (ii) subsequent to such contribution, the Chandler Trust No. 1, the Chandler Trust No. 2 and Chandis Securities Company (collectively, the "Trusts"), which are the controlling stockholders of the Company, will exchange all of their shares of the capital stock of the Company for shares of the capital stock of New Times Mirror, and (iii) the Company will merge with and into Acquiror, as a result of which the stockholders of the Company immediately prior to such merger will become stockholders of New Times Mirror and of Acquiror. WHEREAS, for federal income tax purposes, it is intended that such transactions will qualify as a tax-free reorganization within the meaning of Sections 368(a)(1)(D), 355, and 368(a)(1)(A) of the Internal Revenue Code. WHEREAS, the parties to the Merger Agreement now wish to make certain amendments and modifications thereto. NOW, THEREFORE, in consideration of the foregoing and the representations, warranties and agreements set forth below, the parties hereto agree that the Merger Agreement shall be amended as follows: 1. Section 2.02(a). Subsection (a) of Section 2.02 of the Merger Agreement is hereby amended to read in its entirety as follows: "(a) Immediately prior to the Closing and pursuant to the terms of the Contribution and Assumption Agreement to be entered into by the Company and New Times Mirror in the form attached hereto as Exhibit B (the "Contribution Agreement"), the Company shall contribute and transfer (the "Contribution") to New Times Mirror all the Company's right, title and interests in any and all assets of the Company, whether tangible or intangible and whether fixed, contingent or otherwise, including the stock of all subsidiaries of the Company; provided, however, that the Company shall not contribute to New Times Mirror (i) the issued and outstanding capital stock of TMCT or any subsidiaries thereof, (ii) the Company's rights created pursuant to the Contribution Agreement, and (iii) cash sufficient to pay all expenditures incurred in connection with the Exchange Offer (as defined in Section 2.03) and other expenses relating to the transactions described in this Agreement that are the responsibility of the Company hereunder, including, without limitation, the Company's obligations under Section 6.26(e)." 1 2 2. Section 6.03(c). Subsection (c) of Section 6.03 of the Merger Agreement is hereby amended to read in its entirety as follows: "(c) subject to Section 6.26(e), declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock, or redeem or otherwise acquire any of its securities; provided, however, that any subsidiary of TMCT may declare and pay dividends that are payable to TMCT or to any other subsidiary of TMCT, and TMCT may declare and pay dividends to the Company in an aggregate amount not to exceed Cable's consolidated adjusted net income for the period from January 1, 1994 to the Closing Date before giving effect to the Closing Payment (as defined in Section 6.26(e)) decreased for the amount by which the working capital surplus of Cable as of the Closing Date before giving effect to the Closing Payment is less than $37,667,000 minus the Designated Expenditures (as defined below) and increased for the amount by which the working capital surplus of Cable as of the Closing Date is greater than $37,667,000 minus the Designated Expenditures; for purposes of this paragraph, (i) Cable's working capital means (A) cash and accounts receivable (net of allowance for doubtful accounts) less accounts payable, unearned income and accrued liabilities, all determined as of the Closing Date on a basis consistent with the amounts set forth on the Cable Balance Sheet (as defined in Section 4.06), minus (B) cash flow generated by the Laguna Village cable system between the date of its acquisition by Cable and the Closing Date; (ii) Cable's consolidated adjusted net income for such period means Cable's consolidated net income, determined in accordance with GAAP, (A) increased by the sum of (1) the amount of depreciation and amortization deductions taken during such period, and (2) the amount of accrued but unpaid Company Consolidated Income Taxes deducted in calculating Cable's consolidated net income to the extent not otherwise paid pursuant to tax sharing arrangements, and (B) decreased by the sum of (1) the greater of (a) the amount of capital expenditures set forth on the capital expenditure budget attached as Schedule 6.03(g) plus $6,300,000 or (b) the amount of capital expenditures (other than Designated Expenditures) actually made by Cable during such period, (2) any dividends paid by TMCT to the Company from January 1, 1994 to June 5, 1994 with respect to 1994 net income, (3) to the extent not deducted in calculating Cable's consolidated net income, the amount of any payments made by Cable during such period in connection with obtaining any authorization, consent, order or approval of any governmental authority necessary for the transfer of control of any Franchise (as defined in Section 7.05(g)) held by Cable as a result of the violation of the terms of such Franchise by Cable, and (4) to the extent not deducted in calculating Cable's consolidated net income or described in clause (3), one-half of the amount of any payments made by Cable during such period in connection with obtaining any authorization, consent, order or approval of any governmental authority necessary for the transfer of control of any Franchise; and (iii) "Designated Expenditures" means the lesser of (A) the amount of capital expenditures and investments to be made prior to the Closing Date by Cable in accordance with the budget attached as Schedule 6.03(j) or (B) the amount of capital expenditures and investments actually made prior to the Closing Date by Cable in accordance with Section 6.03(j), whether paid or unpaid." 3. Section 6.03(g). Subsection (g) of Section 6.03 of the Merger Agreement is hereby amended to read in its entirety as follows: "(g) fail to make (i) capital expenditures substantially in accordance with the capital expenditure budget attached as Schedule 6.03(g) hereto, except for changes in expenditures that are appropriate in light of changed circumstances, and (ii) capital expenditures of $6,300,000 for January 1995;" 4. Section 6.26(e). Subsection (e) of Section 6.26 of the Merger Agreement is hereby amended to read in its entirety as follows: "(e) Immediately prior to the Closing, the Company shall make a cash payment to TMCT (the "Dividend Restoration Payment") in an amount equal to the aggregate amount, if any, of dividends and other distributions paid by TMCT to the Company after June 5, 1994 in excess of the 2 3 amount permitted by Section 6.03(c). Simultaneously therewith, the Company shall make a cash payment to TMCT (the "Working Capital Restoration Payment") in an amount equal to (i) $74,667,000 minus (ii) the amount, if any, of dividends that would have been payable by TMCT to the Company pursuant to Section 6.03(c) immediately prior to such payment but after giving effect to (A) a cash payment of $74,667,000 by the Company to TMCT and (B) the Dividend Restoration Payment plus (iii) the Specified Amount (as defined below). Attached hereto as Schedule 6.26(e) is a schedule showing the Company's calculation of the amount of the payments to be made pursuant to this Section 6.26(e) (collectively, the "Closing Payment"). "Specified Amount" shall mean an amount equal to the sum of all payments to be made to Cable Employees on or prior to the Closing Date pursuant to the Company's Long-Term Incentive Plan, stay bonus arrangements and stock option buy-outs. Upon receipt of the Closing Payment, TMCT shall promptly forward the Specified Amount to the Cable Employees entitled to receive payment thereof." 5. Article VI. Article VI of the Merger Agreement is hereby amended by adding new Section 6.27, which reads as follows: "6.27 Closing Payment Adjustment; Indemnification for Accruals. (a) If at any time prior to June 1, 1995 either Acquiror or New Times Mirror notifies the other that the amount of the Closing Payment made by the Company was incorrect, New Times Mirror and Acquiror shall cooperate with each other in conducting a review of Schedule 6.26(e) and the detail and calculations underlying the schedule to determine the correct amount of the Closing Payment. If it is ultimately determined that the Closing Payment as actually paid was smaller than the amount required by Section 6.26(e), New Times Mirror shall promptly pay to Acquiror cash in an amount equal to the underpayment. If it is ultimately determined that the Closing Payment as actually paid was larger than required by Section 6.26(e), Acquiror shall promptly pay to New Times Mirror cash in an amount equal to the overpayment. (b) New Times Mirror shall indemnify Acquiror against all Losses (as defined in Section 7.06) attributable to liability of Cable for (i) refund obligations relating to additional outlets, (ii) property taxes or (iii) general and automobile liability to the extent that such liability of Cable exceeds the accrual therefor on the financial statements of Cable as of the Closing Date; provided, however, that once New Times Mirror has indemnified Acquiror under this Section 6.27(b) for Losses equal to $12,500,000 in the aggregate, New Times Mirror shall have no further liability under this Section unless and to the extent that Losses subject to this Section exceed in the aggregate $12,500,000 plus the Acquiror Deductible (as defined in Section 6.27(d)). New Times Mirror shall have no liability under this Section 6.27(b) with respect to claims for Losses under clause (i) or (ii) where such claims are submitted by Acquiror after January 31, 1996 and New Times Mirror shall have no liability under this Section 6.27(b) with respect to claims for Losses under clause (iii) where such claims are submitted by Acquiror after January 31, 1997. (c) New Times Mirror shall indemnify Acquiror against all Losses attributable to liability of Cable for matters for which there was recorded or should have been recorded an accrual or reserve on the financial statements of Cable as of the Closing Date in order to have caused such financial statements to conform to GAAP (without regard to exceptions to the application thereof for immateriality), other than those covered by Section 6.27(b), to the extent that such liability of Cable exceeds the accrual therefor, if any, on the books of Cable as of the Closing Date; provided, however, that New Times Mirror shall have no liability under this Section unless and to the extent that Losses subject to this Section exceed in the aggregate the Acquiror Deductible. New Times Mirror shall have no liability under this Section 6.27(c) with respect to claims submitted by Acquiror after January 31, 1996. (d) "Acquiror Deductible" shall mean a deductible amount initially equal to $10,000,000 that will be reduced to the extent that (i) Losses in excess of $12,500,000 that are subject to Section 6.27(b) are incurred and (ii) Losses that are subject to Section 6.27(c) are incurred. 3 4 (e) Any disputes between the parties regarding accounting principles that the parties are unable to resolve shall be submitted to and conclusively resolved by the accounting firm of Arthur Andersen & Co. using such procedures as it may in its sole discretion elect after being presented with the position of each party. Such disputes may be submitted to any office of Arthur Andersen & Co. other than the New York, Los Angeles and Atlanta offices. The fees and expenses of Arthur Andersen & Co. shall be borne equally by New Times Mirror and Acquiror. (f) Disputes as to any matters in connection with this Section 6.27 other than disputes subject to Section 6.27(e) shall be conclusively resolved by arbitration conducted by a three-member panel in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect and judgment upon the award of the panel may be entered in any state or federal court of competent jurisdiction. Discovery shall be permitted in accordance with the rules of discovery then in effect in the United States District Court for the District of Columbia. The site of the arbitration shall be selected by Acquiror. The fees and expenses of arbitration, including the legal fees and expenses of the parties, shall be borne by one or both of the parties in the manner determined by the arbitration panel. (g) New Times Mirror shall have the right to participate reasonably in, but not control, any appeal to any regulatory authority regarding Cable's refund obligations relating to additional outlets. If Acquiror settles any matter regarding such obligations without the prior written consent of New Times Mirror, unless New Times Mirror shall have withheld its consent to such settlement unreasonably, New Times Mirror shall be released from its obligation to indemnify Acquiror against any losses relating to the settled matter. Any release of New Times Mirror pursuant to the preceding sentence shall not affect New Times Mirror's obligation to indemnify Acquiror against losses unrelated to the settled matter. (h) Whenever any claim shall arise for indemnification under this Section 6.27, Acquiror shall promptly notify New Times Mirror in writing of such claim and, when known, the facts constituting the basis for such claim (in reasonable detail). Failure of Acquiror to so notify New Times Mirror shall not relieve New Times Mirror of any liability hereunder except to the extent that such failure prejudices New Times Mirror. Subject to Section 6.27(g), after such notice if New Times Mirror undertakes to defend any such claim, then New Times Mirror shall be entitled, if it so elects, to take control of the defense and investigation with respect to such claim and to employ and engage attorneys of its own choice to handle and defend the same, at New Times Mirror's cost, risk and expense, upon written notice to Acquiror of such election, which notice acknowledges New Times Mirror's obligation to provide indemnification hereunder. New Times Mirror shall not settle any third-party claim that is the subject of indemnification without the prior written consent of Acquiror, which consent may not be unreasonably withheld; provided, however, that New Times Mirror may settle a claim without Acquiror's consent if such settlement (i) makes no admission or acknowledgment of liability or culpability with respect to Acquiror or Cable, (ii) includes a complete release of Acquiror and Cable and (iii) does not require Acquiror or Cable to make any payment or forego or take any action. Acquiror shall cooperate in all reasonable respects with New Times Mirror and its attorneys in the investigation, trial and defense of any lawsuit or action with respect to such claim and any appeal arising therefrom (including the filing in Acquiror's or Cable's name of appropriate cross claims and counterclaims). Acquiror may, at its own cost, participate in any investigation, trial and defense of such lawsuit or action controlled by New Times Mirror and any appeal arising therefrom. If, after receipt of a claim notice pursuant to this Section 6.27(h), New Times Mirror does not undertake to defend any such claim, Acquiror may, but shall have no obligation to, contest any lawsuit or action with respect to such claim and New Times Mirror shall be bound by the result obtained with respect thereto by Acquiror (including, without limitation, the settlement thereof without the consent of New Times Mirror). If there are one or more legal defenses available to Acquiror that conflict with those available to New Times Mirror, Acquiror shall have the right, at the expense of New Times Mirror, to assume the defense of the lawsuit or action; provided, however, that Acquiror may not settle such lawsuit or action without the prior written consent of New Times 4 5 Mirror, which consent may not be unreasonably withheld. At any time after the commencement of defense of any lawsuit or action, New Times Mirror may request Acquiror to agree in writing to the abandonment of such lawsuit or to the payment or compromise of such claim, whereupon such action shall be taken unless Acquiror determines that the contest should be continued and so notifies New Times Mirror in writing within 15 days of such request from New Times Mirror. If Acquiror determines that the lawsuit should be continued or that the claim should not be compromised, New Times Mirror shall be liable hereunder only to the extent of the lesser of (i) the amount that the other party(ies) to the lawsuit or claim had agreed to accept in payment or compromise as of the time that New Times Mirror made its request therefor to Acquiror or (ii) such amount for which New Times Mirror may be liable with respect to such lawsuit or claim by reason of the provisions hereof. (i) Nothing in this Section 6.27 shall affect the application of Section 9.01 to any matter not expressly covered by this Section 6.27." 6. Section 7.06. Section 7.06 of the Merger Agreement is hereby amended by adding the following to the end thereof: "Any Loss subject to Section 6.27 shall not also be subject to this Section 7.06." 7. Closing Date and Effective Time. Notwithstanding any provision of the Merger Agreement to the contrary, the "Closing Date" for purposes of the Merger Agreement shall be January 31, 1995 and the "Effective Time" for purposes of the Merger Agreement shall be 12:01 a.m., Eastern time, on February 1, 1995. 8. Verification of Designated Expenditures. For purposes of verifying after the Closing Date the amount of Designated Expenditures actually made by Cable prior thereto, Designated Expenditures shall be regarded as a discrete body of work and projects added to the capital expenditures contemplated by Section 6.03(g) (the "Budgeted Expenditures"). In the event of a possible overlap in description between Budgeted Expenditures and Designated Expenditures, reference shall first be made to the descriptions of the specific work and projects underlying the Budgeted Expenditures as described in Section 6.03(g) and the Designated Expenditures as described in Section 6.03(j), respectively, in order to determine the work and projects that were added as Designated Expenditures by Section 6.03(j) and the amount of capital expenditures actually made with respect to such work and projects. 9. Prior Consents Unimpaired. Nothing in this Amendment shall be construed to impair the validity and continuing effect of that certain Consent and Waiver, dated as of October 21, 1994, among the Company, New Times Mirror, Acquiror, and CEI (the "Telephony Consent"), and that certain Consent and Waiver, dated as of November 4, 1994, among the Company, New Times Mirror, Acquiror, and CEI (the "Newport News Consent"). For all purposes under the Merger Agreement, including determining whether either of the conditions in Section 7.04(a) and Section 7.04(b) has been satisfied, all representations, warranties, and covenants of Acquiror contained in the Merger Agreement or in any other document delivered pursuant to the Merger Agreement shall be deemed to include an exception for those matters described in the materials listed on Exhibit A to the Telephony Consent or on Exhibit A to the Newport News Consent. Exhibit A to the Telephony Consent and Exhibit A to the Newport News Consent are each hereby amended to add to the descriptions of the transactions described therein the descriptions of those transactions in the Joint Proxy Statement/Prospectus, as amended to date. 10. Miscellaneous. (a) Except where inconsistent with the express terms of this Amendment, all provisions of the Merger Agreement as originally entered into and amended prior to the date hereof shall remain in full force and effect. (b) This Amendment shall be governed by and construed in accordance with the laws of the State of Delaware regardless of the laws that might otherwise govern under principles of conflicts of laws applicable thereto. 5 6 (c) The rules of construction set forth in the Merger Agreement shall apply to this Amendment. (d) The parties shall take any actions and execute any other documents that may be reasonably necessary for the implementation and consummation of this Amendment. (e) This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when executed and delivered shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. IN WITNESS WHEREOF, each of the parties has caused this Amendment to be executed on its behalf by its officers thereunto duly authorized on the day and year first above written. THE TIMES MIRROR COMPANY By: /s/ THOMAS UNTERMAN ---------------------------------- Name: Thomas Unterman Title: Vice President NEW TMC INC. By: /s/ THOMAS UNTERMAN ---------------------------------- Name: Thomas Unterman Title: Vice President COX COMMUNICATIONS, INC. By: /s/ JIMMY W. HAYES ---------------------------------- Name: Jimmy W. Hayes Title: Senior Vice President, Finance COX ENTERPRISES, INC. By: /s/ JOHN R. DILLON ---------------------------------- Name: John R. Dillon Title: Senior Vice President and Chief Financial Officer 6 -----END PRIVACY-ENHANCED MESSAGE-----