Attached files
| file | filename |
|---|---|
| 8-K - 8-K - E.W. SCRIPPS Co | a8-kxapril12015newspapersp.htm |
| EX-10.1 - EXHIBIT 10.1 - E.W. SCRIPPS Co | ex101-secondamendedandrest.htm |
The E.W. Scripps Company
Unaudited Pro Forma Condensed Consolidated Financial Information
On July 30, 2014, The E.W. Scripps Company ("Scripps") and Journal Communications, Inc. ("Journal") agreed to merge their broadcast operations and spin-off their newspaper businesses into a separate publicly traded company. On April 1, 2015 these transactions were consummated.
The unaudited pro forma condensed consolidated statements of operations that follow for the years ended December 31, 2014, 2013 and 2012 have been derived from the historical consolidated financial statements of Scripps for the year ended December 31, 2014 included in Scripps' Annual Report on Form 10-K for the year ended December 31, 2014.
The unaudited pro forma condensed consolidated statements of operations for the years ended December 31, 2014, 2013 and 2012, have been prepared as though the Scripps newspaper spin-off occurred as of January 1, 2012.
The unaudited pro forma condensed consolidated financial statements are provided for informational purposes only and do not purport to represent what the actual results of operations or the financial position of Scripps would be had the transactions occurred on the dates assumed, nor are they necessarily indicative of future results of operations or financial position. The unaudited pro forma condensed consolidated financial statements do not reflect any cost savings or other synergies that management of Scripps believes could have been achieved had the Scripps newspaper spin-off been completed on the dates indicated.
The unaudited pro forma condensed consolidated 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.
The E.W. Scripps Company
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of December 31, 2014
(in thousands) | Historical | Newspaper Spin-off (a) | Scripps Pro Forma | |||||||||
Assets | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 158,459 | $ | — | $ | 158,459 | ||||||
Restricted cash | 6,810 | — | 6,810 | |||||||||
Accounts and notes receivable, less allowances | 136,567 | (36,958 | ) | 99,609 | ||||||||
Inventory | 6,183 | (6,183 | ) | — | ||||||||
Deferred income taxes | 12,836 | (2,082 | ) | 10,754 | ||||||||
Miscellaneous | 7,805 | (1,284 | ) | 6,521 | ||||||||
Total current assets | 328,660 | (46,507 | ) | 282,153 | ||||||||
Investments | 9,530 | (76 | ) | 9,454 | ||||||||
Property, plant and equipment | 343,389 | (185,548 | ) | 157,841 | ||||||||
Goodwill | 106,261 | — | 106,261 | |||||||||
Other intangible assets | 189,260 | (2,001 | ) | 187,259 | ||||||||
Deferred income taxes | 37,946 | 16,666 | 54,612 | |||||||||
Miscellaneous | 17,685 | (1,942 | ) | 15,743 | ||||||||
Total Assets | $ | 1,032,731 | $ | (219,408 | ) | $ | 813,323 | |||||
Liabilities and Equity | ||||||||||||
Current liabilities: | ||||||||||||
Accounts payable | $ | 21,004 | $ | (7,017 | ) | $ | 13,987 | |||||
Customer deposits and unearned revenue | 29,948 | (21,136 | ) | 8,812 | ||||||||
Current portion of long-term debt | 2,000 | — | 2,000 | |||||||||
Accrued liabilities: | ||||||||||||
Employee compensation and benefits | 33,305 | (12,404 | ) | 20,901 | ||||||||
Miscellaneous | 38,123 | (6,733 | ) | 31,390 | ||||||||
Other current liabilities | 10,158 | (852 | ) | 9,306 | ||||||||
Total current liabilities | 134,538 | (48,142 | ) | 86,396 | ||||||||
Long-term debt (less current portion) | 196,000 | — | 196,000 | |||||||||
Other liabilities (less current portion) | 182,260 | (13,089 | ) | 169,171 | ||||||||
Equity: | ||||||||||||
The E.W. Scripps Company total shareholders’ equity | 518,276 | (156,520 | ) | 361,756 | ||||||||
Noncontrolling interest | 1,657 | (1,657 | ) | — | ||||||||
Total equity | 519,933 | (158,177 | ) | 361,756 | ||||||||
Total Liabilities and Equity | $ | 1,032,731 | $ | (219,408 | ) | $ | 813,323 | |||||
See notes to unaudited pro forma condensed consolidated financial statements.
The E.W. Scripps Company
Unaudited Pro Forma Condensed Consolidated Statements of Operations
For the Year Ended December 31, 2014
(in thousands, except per share data) | Historical | Newspaper Spin-off (a) | Scripps Pro Forma | |||||||||
Operating Revenues: | ||||||||||||
Advertising | $ | 646,407 | $ | (224,861 | ) | $ | 421,546 | |||||
Subscriptions | 121,565 | (121,565 | ) | — | ||||||||
Retransmission | 56,185 | — | 56,185 | |||||||||
Other | 44,911 | (23,889 | ) | 21,022 | ||||||||
Total operating revenues | 869,068 | (370,315 | ) | 498,753 | ||||||||
Costs and Expenses: | ||||||||||||
Employee compensation and benefits | 415,595 | (157,725 | ) | 257,870 | ||||||||
Programs and program licenses | 55,487 | — | 55,487 | |||||||||
Newsprint, press supplies and other printing costs | 45,362 | (45,362 | ) | — | ||||||||
Newspaper distribution | 46,948 | (46,948 | ) | — | ||||||||
Other expenses | 205,755 | (87,437 | ) | 118,318 | ||||||||
Defined benefit pension plan expense | 10,000 | (4,329 | ) | 5,671 | ||||||||
Acquisition and related integration costs | 13,974 | (4,266 | ) | 9,708 | ||||||||
Total costs and expenses | 793,121 | (346,067 | ) | 447,054 | ||||||||
Depreciation, Amortization, and (Gains) Losses: | ||||||||||||
Depreciation | 40,668 | (16,500 | ) | 24,168 | ||||||||
Amortization of intangible assets | 8,402 | (390 | ) | 8,012 | ||||||||
(Gains) losses, net on disposal of property, plant and equipment | (2,260 | ) | (612 | ) | (2,872 | ) | ||||||
Net depreciation, amortization, and (gains) losses | 46,810 | (17,502 | ) | 29,308 | ||||||||
Operating income | 29,137 | (6,746 | ) | 22,391 | ||||||||
Interest expense | (8,494 | ) | — | (8,494 | ) | |||||||
Miscellaneous, net | (8,389 | ) | 696 | (7,693 | ) | |||||||
Income before income taxes | 12,254 | (6,050 | ) | 6,204 | ||||||||
Provision (benefit) for income taxes | 2,032 | (3,350 | ) | (1,318 | ) | |||||||
Net income | 10,222 | (2,700 | ) | 7,522 | ||||||||
Net loss attributable to noncontrolling interests | (307 | ) | 307 | — | ||||||||
Net income attributable to the shareholders of The E.W. Scripps Company | $ | 10,529 | $ | (3,007 | ) | $ | 7,522 | |||||
Net income per basic share of common stock attributable to the shareholders of The E.W. Scripps Company: | $ | 0.18 | $ | 0.13 | ||||||||
Net income per diluted share of common stock attributable to the shareholders of The E.W. Scripps Company: | $ | 0.18 | $ | 0.13 | ||||||||
Weighted average shares outstanding: | ||||||||||||
Basic | 56,342 | 56,342 | ||||||||||
Diluted | 57,239 | 57,239 | ||||||||||
See notes to unaudited pro forma condensed consolidated financial statements.
The E.W. Scripps Company
Unaudited Pro Forma Condensed Consolidated Statements of Operations
For the Year Ended December 31, 2013
(in thousands, except per share data) | Historical | Newspaper Spin-off (a) | Scripps Pro Forma | |||||||||
Operating Revenues: | ||||||||||||
Advertising | $ | 613,093 | $ | (242,360 | ) | $ | 370,733 | |||||
Subscriptions | 117,762 | (117,762 | ) | — | ||||||||
Retransmission | 42,505 | — | 42,505 | |||||||||
Other | 43,511 | (24,392 | ) | 19,119 | ||||||||
Total operating revenues | 816,871 | (384,514 | ) | 432,357 | ||||||||
Costs and Expenses: | ||||||||||||
Employee compensation and benefits | 391,207 | (165,563 | ) | 225,644 | ||||||||
Programs and program licenses | 53,826 | — | 53,826 | |||||||||
Newsprint, press supplies and other printing costs | 46,965 | (46,965 | ) | — | ||||||||
Newspaper distribution | 48,490 | (48,490 | ) | — | ||||||||
Other expenses | 201,089 | (88,339 | ) | 112,750 | ||||||||
Defined benefit pension plan expense | 8,837 | (727 | ) | 8,110 | ||||||||
Restructuring costs | 4,893 | — | 4,893 | |||||||||
Total costs and expenses | 755,307 | (350,084 | ) | 405,223 | ||||||||
Depreciation, Amortization, and Losses (Gains): | ||||||||||||
Depreciation | 40,839 | (16,695 | ) | 24,144 | ||||||||
Amortization of intangible assets | 6,923 | (545 | ) | 6,378 | ||||||||
Losses (gains), net on disposal of property, plant and equipment | 166 | 130 | 296 | |||||||||
Net depreciation, amortization, and losses (gains) | 47,928 | (17,110 | ) | 30,818 | ||||||||
Operating income (loss) | 13,636 | (17,320 | ) | (3,684 | ) | |||||||
Interest expense | (10,448 | ) | — | (10,448 | ) | |||||||
Miscellaneous, net | (11,760 | ) | 423 | (11,337 | ) | |||||||
Loss before income taxes | (8,572 | ) | (16,897 | ) | (25,469 | ) | ||||||
Benefit for income taxes | (7,848 | ) | (5,398 | ) | (13,246 | ) | ||||||
Net loss | (724 | ) | (11,499 | ) | (12,223 | ) | ||||||
Net loss attributable to noncontrolling interests | (250 | ) | 250 | — | ||||||||
Net loss attributable to the shareholders of The E.W. Scripps Company | $ | (474 | ) | $ | (11,749 | ) | $ | (12,223 | ) | |||
Net loss per basic share of common stock attributable to the shareholders of The E.W. Scripps Company: | $ | (0.01 | ) | $ | (0.22 | ) | ||||||
Net loss per diluted share of common stock attributable to the shareholders of The E.W. Scripps Company: | $ | (0.01 | ) | $ | (0.22 | ) | ||||||
Weighted average shares outstanding: | ||||||||||||
Basic | 56,516 | 56,516 | ||||||||||
Diluted | 56,516 | 56,516 | ||||||||||
See notes to unaudited pro forma condensed consolidated financial statements.
The E.W. Scripps Company
Unaudited Pro Forma Condensed Consolidated Statements of Operations
For the Year Ended December 31, 2012
(in thousands, except per share data) | Historical | Newspaper Spin-off (a) | Scripps Pro Forma | |||||||||
Operating Revenues: | ||||||||||||
Advertising | $ | 711,144 | $ | (258,172 | ) | $ | 452,972 | |||||
Subscriptions | 117,700 | (117,700 | ) | — | ||||||||
Retransmission | 30,867 | — | 30,867 | |||||||||
Other | 43,747 | (23,219 | ) | 20,528 | ||||||||
Total operating revenues | 903,458 | (399,091 | ) | 504,367 | ||||||||
Costs and Expenses: | ||||||||||||
Employee compensation and benefits | 396,241 | (170,404 | ) | 225,837 | ||||||||
Programs and program licenses | 56,783 | — | 56,783 | |||||||||
Newsprint, press supplies and other printing costs | 51,266 | (51,266 | ) | — | ||||||||
Newspaper distribution | 50,379 | (50,379 | ) | — | ||||||||
Other expenses | 201,302 | (91,236 | ) | 110,066 | ||||||||
Defined benefit pension plan expense | 8,620 | (438 | ) | 8,182 | ||||||||
Acquisition and related integration costs | 5,826 | — | 5,826 | |||||||||
Restructuring costs | 9,335 | — | 9,335 | |||||||||
Total costs and expenses | 779,752 | (363,723 | ) | 416,029 | ||||||||
Depreciation, Amortization, and Losses (Gains): | ||||||||||||
Depreciation | 42,258 | (18,235 | ) | 24,023 | ||||||||
Amortization of intangible assets | 7,074 | (661 | ) | 6,413 | ||||||||
Losses (gains), net on disposal of property, plant and equipment | 474 | 169 | 643 | |||||||||
Net depreciation, amortization, and losses (gains) | 49,806 | (18,727 | ) | 31,079 | ||||||||
Operating income | 73,900 | (16,641 | ) | 57,259 | ||||||||
Interest expense | (12,246 | ) | — | (12,246 | ) | |||||||
Miscellaneous, net | (4,747 | ) | 510 | (4,237 | ) | |||||||
Income before income taxes | 56,907 | (16,131 | ) | 40,776 | ||||||||
Provision for income taxes | 16,985 | (7,575 | ) | 9,410 | ||||||||
Net income | 39,922 | (8,556 | ) | 31,366 | ||||||||
Net loss attributable to noncontrolling interests | (266 | ) | 266 | — | ||||||||
Net income attributable to the shareholders of The E.W. Scripps Company | $ | 40,188 | $ | (8,822 | ) | $ | 31,366 | |||||
Net income per basic share of common stock attributable to the shareholders of The E.W. Scripps Company: | $ | 0.70 | $ | 0.55 | ||||||||
Net income per diluted share of common stock attributable to the shareholders of The E.W. Scripps Company: | $ | 0.69 | $ | 0.54 | ||||||||
Weighted average shares outstanding: | ||||||||||||
Basic | 54,907 | 54,907 | ||||||||||
Diluted | 55,381 | 55,381 | ||||||||||
See notes to unaudited pro forma condensed consolidated financial statements.
The E.W. Scripps Company
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
Note 1 — Basis of Pro Forma Presentation
The accompanying unaudited pro forma condensed consolidated financial statements present the pro forma condensed consolidated financial position and results of operations of Scripps after giving effect to the spin-off of Scripps Newspapers. Scripps Newspapers is the business representing the principal publishing operations of Scripps, as described below.
Scripps Newspapers consists of daily and community newspapers in 13 markets across the United States. The newspapers earn revenue primarily from the sale of advertising to local and national advertisers and newspaper subscription fees. The newspapers operate in mid-size markets, focusing on news coverage within their local markets. Advertising and subscription revenues provide substantially all of the operating revenues for each newspaper market, and employee, newspaper distribution and newsprint costs are the primary expenses at each newspaper. The daily newspapers published by the Company are the Abilene (TX) Reporter-News, the Anderson (SC) Independent-Mail, the Corpus Christi (TX) Caller-Times, the Evansville (IN) Courier & Press, the Henderson (KY) Gleaner, the Kitsap (WA) Sun, the Knoxville (TN) News Sentinel, the Memphis (TN) Commercial Appeal, the Naples (FL) Daily News, the Redding (CA) Record-Searchlight, the San Angelo (TX) Standard-Times, the Treasure Coast (FL) News/Press/Tribune, the Ventura County (CA) Star and the Wichita Falls (TX) Times Record News. The business also include a 40% ownership in the Albuquerque Publishing Company, which publishes the Albuquerque Journal (NM).
The accompanying unaudited pro forma condensed consolidated financial statements have been prepared using and should be read in conjunction with the audited consolidated financial statements of Scripps for the years ended December 31, 2014, 2013 and 2012. The accompanying unaudited pro forma condensed consolidated financial statements are presented for illustrative purposes only and do not reflect the costs of any integration activities or benefits that may result from realization of future cost savings due to operating efficiencies or revenue synergies expected to result from the transactions.
Note 2 — Pro Forma Adjustments
Adjustments to Balance Sheet as of December 31, 2014
a.Reflects adjustment to eliminate the assets and liabilities to be distributed in the Scripps Newspapers spin-off.
Adjustments to the Statements of Operations for the years ended December 31, 2014, 2013 and 2012
a. | Reflects adjustment to present the operations of the Scripps Newspapers as discontinued operations. Excluded from these amounts are certain general corporate overhead expenses not specifically related to the the Scripps newspapers. Such general corporate expenses do not meet the requirements to be presented in discontinued operations, and thus are presented as part of Scripps' continuing operations. |
The provision for income taxes was determined using the U.S. GAAP intraperiod allocation rules.