Attached files
| file | filename |
|---|---|
| 8-K - 8-K - AMERICAN MEDIA INC | form8-k_disposalx012615.htm |
| EX-2.1 - EXHIBIT 2.1 - AMERICAN MEDIA INC | exhibit21assetpurchaseagre.htm |
| EX-10.1 - EXHIBIT 10.1 - AMERICAN MEDIA INC | exhibit101creditagreementa.htm |
Exhibit 99.1
UNAUDITED PRO FORMA FINANCIAL INFORMATION
On January 26, 2015, we entered into the Purchase Agreement with Meredith pursuant to which we sold certain assets relating to our Shape, Fit Pregnancy and Natural Health brands and magazines, which comprises our Women's Active Lifestyle segment (the "Business"). We received the initial cash consideration of $60 million on January 30, 2015 when the transaction closed. We are further entitled to additional consideration, in the form of a one-time payment following Meredith's 2018 fiscal year, based on 40% of the adjusted operating profit of the combination of our Shape brand and Meredith's Fitness brand, up to $60 million.
Pursuant to the Purchase Agreement, we will continue to publish these magazines with on-sale dates through March 31, 2015, after which Meredith will assume publishing responsibilities for such titles. Effective as of the closing, Meredith assumed control over the digital assets used with Shape, Fit Pregnancy and Natural Health. As a result, our Women's Active Lifestyle segment will have no remaining operations subsequent to March 31, 2015.
The following unaudited pro forma consolidated balance sheet as of September 30, 2014, has been prepared to give effect to the divestiture of the assets of the Business as if it occurred on September 30, 2014. The unaudited pro forma consolidated statement of income (loss) for the six months ended September 30, 2014 and the fiscal years ended March 31, 2014, 2013 and 2012 have been prepared to give effect to the divestiture of the Business as if it occurred on April 1, 2011.
The unaudited pro forma financial information was prepared utilizing our historical financial data derived from the interim consolidated financial statements included in our Quarterly Report on Form 10-Q filed with the SEC on November 14, 2014 and from the audited consolidated financial statements for each of the three years in the period ended March 31, 2014 included in our Annual Report on Form 10-K filed with the SEC on August 15, 2014. The pro forma adjustments are described in the notes to the unaudited pro forma information and are based upon available information and assumptions that we believe are reasonable.
The unaudited pro forma financial information are for informational purposes only and are not necessarily indicative of what our financial performance and financial position would have been had the transaction been completed on the dates assumed nor is such unaudited pro forma financial information necessarily indicative of the results to be expected in any future period.
AMERICAN MEDIA, INC. AND SUBSIDIARIES
UNAUDITED PRO FORM CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2014
(in thousands, except share information)
(a) | |||||||||||
As Reported | Divestiture in Women's Active Lifestyle Segment | Pro Forma | |||||||||
ASSETS | |||||||||||
CURRENT ASSETS: | |||||||||||
Cash and cash equivalents | $ | 7,560 | $ | 59,998 | $ | 67,558 | |||||
Trade receivables, net | 31,063 | (11,298 | ) | 19,765 | |||||||
Inventories | 2,797 | (899 | ) | 1,898 | |||||||
Prepaid expenses and other current assets | 25,378 | (1,633 | ) | 23,745 | |||||||
Total current assets | 66,798 | 46,168 | 112,966 | ||||||||
PROPERTY AND EQUIPMENT, NET: | |||||||||||
Leasehold improvements | 3,798 | — | 3,798 | ||||||||
Furniture, fixtures and equipment | 44,011 | (282 | ) | 43,729 | |||||||
Less – accumulated depreciation | (26,730 | ) | 9 | (26,721 | ) | ||||||
Total property and equipment, net | 21,079 | (273 | ) | 20,806 | |||||||
OTHER ASSETS: | |||||||||||
Deferred debt costs, net | 6,068 | — | 6,068 | ||||||||
Deferred rack costs, net | 4,496 | (321 | ) | 4,175 | |||||||
Investments in affiliates | 438 | — | 438 | ||||||||
Other long-term assets | 3,624 | — | 3,624 | ||||||||
Total other assets | 14,626 | (321 | ) | 14,305 | |||||||
GOODWILL AND OTHER IDENTIFIED INTANGIBLE ASSETS: | |||||||||||
Goodwill | 178,008 | (22,064 | ) | 155,944 | |||||||
Other identified intangibles, net | 261,207 | (34,635 | ) | 226,572 | |||||||
Total goodwill and other identified intangible assets, net | 439,215 | (56,699 | ) | 382,516 | |||||||
TOTAL ASSETS | $ | 541,718 | $ | (11,125 | ) | $ | 530,593 | ||||
LIABILITIES AND STOCKHOLDERS' DEFICIT | |||||||||||
CURRENT LIABILITIES: | |||||||||||
Accounts payable | $ | 19,706 | $ | (451 | ) | $ | 19,255 | ||||
Accrued expenses and other liabilities | 35,072 | 300 | 35,372 | ||||||||
Accrued interest | 12,570 | — | 12,570 | ||||||||
Deferred revenues | 45,825 | (2,559 | ) | 43,266 | |||||||
Total current liabilities | 113,173 | (2,710 | ) | 110,463 | |||||||
NON-CURRENT LIABILITIES: | |||||||||||
Senior secured notes | 365,473 | — | 365,473 | ||||||||
Revolving credit facility | 7,600 | — | 7,600 | ||||||||
Other non-current liabilities | 6,670 | — | 6,670 | ||||||||
Deferred income taxes | 96,281 | (16,255 | ) | 80,026 | |||||||
Total liabilities | 589,197 | (18,965 | ) | 570,232 | |||||||
COMMITMENTS AND CONTINGENCIES | |||||||||||
Redeemable noncontrolling interests | 4,259 | — | 4,259 | ||||||||
STOCKHOLDERS' DEFICIT: | |||||||||||
Common stock, $0.0001 par value; 100 shares issued and outstanding | — | — | — | ||||||||
Additional paid-in capital | 945,037 | — | 945,037 | ||||||||
Accumulated deficit | (996,496 | ) | 7,840 | (988,656 | ) | ||||||
Accumulated other comprehensive loss | (279 | ) | — | (279 | ) | ||||||
Total stockholders' deficit | (51,738 | ) | 7,840 | (43,898 | ) | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ | 541,718 | $ | (11,125 | ) | $ | 530,593 | ||||
AMERICAN MEDIA, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME (LOSS)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2014
(in thousands)
Six Months Ended September 30, 2014 | |||||||||
(b) | |||||||||
As Reported | Divestiture in Women's Active Lifestyle Segment | Pro Forma | |||||||
OPERATING REVENUES: | |||||||||
Circulation | $ | 86,388 | $ | (3,367 | ) | $ | 83,021 | ||
Advertising | 55,674 | (24,174 | ) | 31,500 | |||||
Other | 10,379 | (90 | ) | 10,289 | |||||
Total operating revenues | 152,441 | (27,631 | ) | 124,810 | |||||
OPERATING EXPENSES: | |||||||||
Editorial | 18,502 | (3,518 | ) | 14,984 | |||||
Production | 43,084 | (6,539 | ) | 36,545 | |||||
Distribution, circulation and other cost of sales | 25,607 | (5,417 | ) | 20,190 | |||||
Selling, general and administrative | 53,772 | (8,776 | ) | 44,996 | |||||
Depreciation and amortization | 6,548 | (510 | ) | 6,038 | |||||
Impairment of goodwill and intangible assets | 18,458 | — | 18,458 | ||||||
Total operating expenses | 165,971 | (24,760 | ) | 141,211 | |||||
OPERATING LOSS (INCOME) | (13,530 | ) | 2,871 | (16,401 | ) | ||||
OTHER INCOME (EXPENSES): | |||||||||
Interest expense | (27,798 | ) | — | (27,798 | ) | ||||
Amortization of deferred debt costs | (2,057 | ) | — | (2,057 | ) | ||||
Other income (expenses), net | 299 | — | 299 | ||||||
Total other expenses, net | (29,556 | ) | — | (29,556 | ) | ||||
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | (43,086 | ) | 2,871 | (45,957 | ) | ||||
INCOME TAX (BENEFIT) PROVISION | (2,271 | ) | 1,073 | (3,344 | ) | ||||
NET LOSS FROM CONTINUING OPERATIONS | $ | (40,815 | ) | $ | 1,798 | $ | (42,613 | ) | |
AMERICAN MEDIA, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME (LOSS)
FOR THE FISCAL YEAR ENDED MARCH 31, 2014
(in thousands)
Fiscal Year Ended March 31, 2014 | |||||||||
(b) | |||||||||
As Reported | Divestiture in Women's Active Lifestyle Segment | Pro Forma | |||||||
OPERATING REVENUES: | |||||||||
Circulation | $ | 196,421 | $ | (8,808 | ) | $ | 187,613 | ||
Advertising | 120,578 | (47,625 | ) | 72,953 | |||||
Other | 27,222 | (442 | ) | 26,780 | |||||
Total operating revenues | 344,221 | (56,875 | ) | 287,346 | |||||
OPERATING EXPENSES: | |||||||||
Editorial | 38,510 | (7,640 | ) | 30,870 | |||||
Production | 89,195 | (13,531 | ) | 75,664 | |||||
Distribution, circulation and other cost of sales | 57,241 | (11,218 | ) | 46,023 | |||||
Selling, general and administrative | 95,731 | (17,400 | ) | 78,331 | |||||
Depreciation and amortization | 14,203 | (768 | ) | 13,435 | |||||
Impairment of goodwill and intangible assets | 9,238 | — | 9,238 | ||||||
Total operating expenses | 304,118 | (50,557 | ) | 253,561 | |||||
OPERATING INCOME | 40,103 | 6,318 | 33,785 | ||||||
OTHER EXPENSES: | |||||||||
Interest expense | (58,353 | ) | 2 | (58,351 | ) | ||||
Amortization of deferred debt costs | (1,664 | ) | — | (1,664 | ) | ||||
Other expenses, net | (79 | ) | — | (79 | ) | ||||
Total other expenses, net | (60,096 | ) | 2 | (60,094 | ) | ||||
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | (19,993 | ) | 6,320 | (26,309 | ) | ||||
INCOME TAX PROVISION | 33,278 | 2,413 | 30,865 | ||||||
NET LOSS FROM CONTINUING OPERATIONS | $ | (53,271 | ) | $ | 3,907 | $ | (57,174 | ) | |
AMERICAN MEDIA, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME (LOSS)
FOR THE FISCAL YEAR ENDED MARCH 31, 2013
(in thousands)
Fiscal Year Ended March 31, 2013 | |||||||||
(b) | |||||||||
As Reported | Divestiture in Women's Active Lifestyle Segment | Pro Forma | |||||||
OPERATING REVENUES: | |||||||||
Circulation | $ | 212,720 | $ | (9,762 | ) | $ | 202,958 | ||
Advertising | 107,151 | (41,939 | ) | 65,212 | |||||
Other | 28,655 | (191 | ) | 28,464 | |||||
Total operating revenues | 348,526 | (51,892 | ) | 296,634 | |||||
OPERATING EXPENSES: | |||||||||
Editorial | 40,850 | (7,230 | ) | 33,620 | |||||
Production | 95,809 | (13,802 | ) | 82,007 | |||||
Distribution, circulation and other cost of sales | 65,742 | (11,786 | ) | 53,956 | |||||
Selling, general and administrative | 81,745 | (13,892 | ) | 67,853 | |||||
Depreciation and amortization | 9,932 | (359 | ) | 9,573 | |||||
Impairment of goodwill and intangible assets | 54,523 | (3,925 | ) | 50,598 | |||||
Total operating expenses | 348,601 | (50,994 | ) | 297,607 | |||||
OPERATING (LOSS) INCOME | (75 | ) | 898 | (973 | ) | ||||
OTHER EXPENSES: | |||||||||
Interest expense | (59,779 | ) | 118 | (59,661 | ) | ||||
Amortization of deferred debt costs | (1,433 | ) | — | (1,433 | ) | ||||
Other expenses, net | (252 | ) | — | (252 | ) | ||||
Total other expenses, net | (61,464 | ) | 118 | (61,346 | ) | ||||
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | (61,539 | ) | 1,016 | (62,319 | ) | ||||
INCOME TAX (BENEFIT) PROVISION | (5,994 | ) | 377 | (6,371 | ) | ||||
NET LOSS FROM CONTINUING OPERATIONS | $ | (55,545 | ) | $ | 639 | $ | (55,948 | ) | |
AMERICAN MEDIA, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME (LOSS)
FOR THE FISCAL YEAR ENDED MARCH 31, 2012
(in thousands)
Fiscal Year Ended March 31, 2012 | |||||||||
(b) | |||||||||
As Reported | Divestiture in Women's Active Lifestyle Segment | Pro Forma | |||||||
OPERATING REVENUES: | |||||||||
Circulation | $ | 228,683 | $ | (10,817 | ) | $ | 217,866 | ||
Advertising | 126,117 | (53,983 | ) | 72,134 | |||||
Other | 31,816 | (272 | ) | 31,544 | |||||
Total operating revenues | 386,616 | (65,072 | ) | 321,544 | |||||
OPERATING EXPENSES: | |||||||||
Editorial | 43,008 | (8,057 | ) | 34,951 | |||||
Production | 112,281 | (17,176 | ) | 95,105 | |||||
Distribution, circulation and other cost of sales | 77,020 | (13,701 | ) | 63,319 | |||||
Selling, general and administrative | 79,451 | (12,977 | ) | 66,474 | |||||
Depreciation and amortization | 8,539 | (171 | ) | 8,368 | |||||
Impairment of goodwill and intangible assets | — | — | — | ||||||
Total operating expenses | 320,299 | (52,082 | ) | 268,217 | |||||
OPERATING INCOME | 66,317 | 12,990 | 53,327 | ||||||
OTHER EXPENSES: | |||||||||
Interest expense | (58,423 | ) | — | (58,423 | ) | ||||
Amortization of deferred debt costs | (1,584 | ) | — | (1,584 | ) | ||||
Other expenses, net | (1,526 | ) | — | (1,526 | ) | ||||
Total other expenses, net | (61,533 | ) | — | (61,533 | ) | ||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 4,784 | 12,990 | (8,206 | ) | |||||
INCOME TAX (BENEFIT) PROVISION | (17,509 | ) | 4,822 | (22,331 | ) | ||||
NET INCOME FROM CONTINUING OPERATIONS | $ | 22,293 | $ | 8,168 | $ | 14,125 | |||
AMERICAN MEDIA, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
Sale of Women's Active Lifestyle segment
On January 26, 2015, American Media, Inc. (the “Company”) and its indirect subsidiary Weider Publications, LLC entered into an asset purchase agreement (the "Purchase Agreement") with Meredith Corporation ("Meredith"). The Purchase Agreement provides for the sale of certain assets relating to the Company's Shape, Fit Pregnancy and Natural Health brands and magazines, which comprises the Company's Women's Active Lifestyle segment (the "Business"). The Company received the initial cash consideration of $60 million on January 30, 2015 when the transaction closed. The Company is further entitled to additional consideration (the "Additional Consideration"), in the form of a one-time payment, following the completion of Meredith's 2018 fiscal year. The Additional Consideration will be based upon 40% of the adjusted operating profit of the combination of the Company's Shape brand and Meredith's Fitness brand, up to $60 million.
Pursuant to the Purchase Agreement, the Company will continue to publish the Shape, Fit Pregnancy and Natural Health magazines with on-sale dates through March 31, 2015, after which Meredith will assume publishing responsibilities for such titles. Effective as of the closing, Meredith assumed control over the digital assets used with Shape, Fit Pregnancy and Natural Health.
The Purchase Agreement contains customary representations and warranties, covenants and indemnities for a transaction of this nature.
We expect to use the cash proceeds for general corporate purposes, including, but not limited to, paying down our outstanding debt balances.
Pro Forma Adjustments
(a) | Represents adjustments to reflect the disposition of the assets and liabilities of the Women's Active Lifestyle segment associated with the transaction described above for $60 million in cash. We expect to use the cash proceeds for general corporate purposes, including, but not limited to, paying down our outstanding debt balances. The net assets of the Business disposed of primarily included goodwill and tradename assets with book values of $22 million and $35 million, respectively. The net decrease to accumulated deficit of $8 million represents the estimated after-tax gain on the disposition of the Business as if it occurred on September 30, 2014. This non-recurring gain on the disposition of the Business is appropriately excluded from the pro forma statement of income (loss). |
(b) | Represents adjustments to eliminate the direct operating results of the Women's Active Lifestyle segment as if the disposition occurred on April 1, 2011. The effective tax rate was estimated to be 37.4% during the six months ended September 30, 2014 and 38.2%, 37.1% and 37.1% for the fiscal years ended March 31, 2014, 2013 and 2012, respectively. |