Attached files
| file | filename |
|---|---|
| 8-K - 8-K - TEGNA INC | a2225299z8-k.htm |
| EX-2.1 - EX-2.1 - TEGNA INC | a2225299zex-2_1.htm |
| EX-10.1 - EX-10.1 - TEGNA INC | a2225299zex-10_1.htm |
| EX-3.1 - EX-3.1 - TEGNA INC | a2225299zex-3_1.htm |
| EX-99.1 - EX-99.1 - TEGNA INC | a2225299zex-99_1.htm |
| EX-10.3 - EX-10.3 - TEGNA INC | a2225299zex-10_3.htm |
| EX-10.2 - EX-10.2 - TEGNA INC | a2225299zex-10_2.htm |
Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Overview
Effective as of 12.01 a.m. (Eastern Time) on June 29, 2015, TEGNA Inc., formerly known as Gannett Co., Inc. (the “Company”) completed the separation of its business into two independent publicly-traded companies (the “Separation”). The Company has retained the Broadcasting and Digital businesses and Gannett Co., Inc., formerly known as Gannett SpinCo, Inc. (“Gannett” or “SpinCo”) holds entities and other assets and liabilities that formed the principal part of the Company’s former Publishing business. Effective with the filing with the U.S. Securities and Exchange Commission (the “Commission”) of the Company’s Quarterly Report on Form 10-Q for the quarter ending September 27, 2015, SpinCo will be reported as a discontinued operation of the Company. In connection with the Separation, the Company undertook a series of internal reorganization transactions to facilitate the transfer to SpinCo of the entities associated with the above-referenced business and the related assets and liabilities.
Basis of preparation
The unaudited pro forma condensed consolidated financial statements of the Company have been derived from our historical consolidated financial statements and are being presented to give effect to the Separation of SpinCo into an independent, publicly-traded company. The following unaudited pro forma condensed consolidated financial statements should be read in conjunction with our historical consolidated financial statements and accompanying notes which are available at the Commission’s web site at www.sec.gov and the Company’s web site at www.tegna.com.
The unaudited pro forma condensed consolidated financial statements give effect to the following:
· The contribution by the Company to SpinCo, pursuant to the Separation, of all the assets and liabilities that comprise the businesses of SpinCo;
· The transfers to and from SpinCo, in connection with the Separation, of certain assets and liabilities that were reflected in our historical consolidated financial statements; and
· The impact of, and transactions contemplated by, the separation and distribution agreement, transition services agreement, tax matters agreement and employee matters agreement between the Company and SpinCo and the provisions contained therein.
The unaudited pro forma condensed consolidated statements of income for the quarter ended March 29, 2015 and for the fiscal years ended December 28, 2014, December 29, 2013 and December 30, 2012, reflect our results as if the events had occurred on December 26, 2011. The unaudited pro forma condensed consolidated balance sheet as of March 29, 2015 gives effect to these events as if they occurred on that date.
The unaudited pro forma condensed consolidated financial statements are subject to the assumptions and adjustments described in the accompanying notes. Our management believes that these assumptions and adjustments are reasonable under the circumstances and given the information available at this time.
The unaudited pro forma condensed consolidated financial statements are not intended to be a complete presentation of the Company’s financial position or results of operations had the Separation occurred as of and for the periods indicated. In addition, the unaudited pro forma condensed consolidated financial statements are provided for illustrative and information purposes only, and are not necessarily indicative of the Company’s future results of operations or financial condition had the Separation been completed on the dates assumed. The unaudited pro forma condensed consolidated financial statements do not reflect any cost savings or other synergies that the Company’s management believes could have been achieved had the Separation been completed on the dates indicated. The pro forma adjustments are based on available information and assumptions that the Company’s management believes are reasonable, that reflect the impacts of events directly attributable to the Separation that are factually supportable, and for purposes of the statements of income, are expected to have a continuing impact on the Company.
TEGNA Inc.
Pro Forma Condensed Consolidated Statement of Income
For the quarter ended March 29, 2015
Unaudited, in thousands (except per share data)
|
|
|
TEGNA |
|
Separation of |
|
Pro Forma |
|
Pro Forma |
| ||||
|
Revenues |
|
$ |
1,472,765 |
|
$ |
(712,239 |
) |
$ |
17,301 |
(b) |
$ |
777,827 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
| ||||
|
Cost of sales and operating expenses, exclusive of depreciation |
|
700,639 |
|
(459,242 |
) |
5,124 |
(b) |
246,521 |
| ||||
|
Selling, general and administrative expenses, exclusive of depreciation |
|
447,244 |
|
(162,728 |
) |
(6,236 |
)(c) |
278,280 |
| ||||
|
Depreciation |
|
49,483 |
|
(24,996 |
) |
— |
|
24,487 |
| ||||
|
Amortization of intangible assets |
|
32,087 |
|
(3,399 |
) |
— |
|
28,688 |
| ||||
|
Facility consolidation and asset impairment charges |
|
12,384 |
|
(1,549 |
) |
— |
|
10,835 |
| ||||
|
Total |
|
1,241,837 |
|
(651,914 |
) |
(1,112 |
) |
588,811 |
| ||||
|
Operating income |
|
230,928 |
|
(60,325 |
) |
18,413 |
|
189,016 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Non-operating (expense) income: |
|
|
|
|
|
|
|
|
| ||||
|
Equity income in unconsolidated investees, net |
|
5,058 |
|
(6,307 |
) |
— |
|
(1,249 |
) | ||||
|
Interest expense |
|
(70,759 |
) |
89 |
|
— |
|
(70,670 |
) | ||||
|
Other non-operating items |
|
22,780 |
|
1,685 |
|
— |
|
24,465 |
| ||||
|
Total |
|
(42,921 |
) |
(4,533 |
) |
— |
|
(47,454 |
) | ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Income before income taxes |
|
188,007 |
|
(64,858 |
) |
18,413 |
|
141,562 |
| ||||
|
Provision for income taxes |
|
60,523 |
|
(13,269 |
) |
6,848 |
(d) |
54,102 |
| ||||
|
Net income |
|
127,484 |
|
(51,589 |
) |
11,565 |
|
87,460 |
| ||||
|
Net income attributable to noncontrolling interests |
|
(14,590 |
) |
— |
|
— |
|
(14,590 |
) | ||||
|
Net income attributable to TEGNA Inc. |
|
$ |
112,894 |
|
$ |
(51,589 |
) |
$ |
11,565 |
|
$ |
72,870 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net income per share - basic |
|
$ |
0.50 |
|
|
|
|
|
$ |
0.32 |
| ||
|
Net income per share - diluted |
|
$ |
0.49 |
|
|
|
|
|
$ |
0.31 |
| ||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Weighted average number of common shares outstanding: |
|
|
|
|
|
|
|
|
| ||||
|
Basic |
|
227,089 |
|
|
|
|
|
227,089 |
| ||||
|
Diluted |
|
231,931 |
|
|
|
|
|
231,931 |
| ||||
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.
TEGNA Inc.
Pro Forma Condensed Consolidated Statement of Income
For the fiscal year ended December 28, 2014
Unaudited, in thousands (except per share data)
The pro forma numbers presented in the table below exclude the pre acquisition results of Cars.com and six London Broadcasting television stations which were acquired on October 1, 2014 and July 8, 2014, respectively. Pro forma adjustments are further disclosed in footnote (i) in the accompanying Notes. The pro forma adjustments also exclude the favorable impact of new terms Cars.com entered into with its affiliates prior to October 1, 2014, the effective date of new terms.
|
|
|
TEGNA |
|
Separation of |
|
Pro Forma |
|
Pro Forma |
| ||||
|
Revenues |
|
$ |
6,008,174 |
|
$ |
(3,151,701 |
) |
$ |
28,448 |
(b) |
$ |
2,884,921 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
| ||||
|
Cost of sales and operating expenses, exclusive of depreciation |
|
3,048,579 |
|
(1,957,434 |
) |
20,208 |
(b) |
1,111,353 |
| ||||
|
Selling, general and administrative expenses, exclusive of depreciation |
|
1,539,476 |
|
(688,424 |
) |
(26,288 |
)(c) |
824,764 |
| ||||
|
Depreciation |
|
185,868 |
|
(99,028 |
) |
— |
|
86,840 |
| ||||
|
Amortization of intangible assets |
|
79,856 |
|
(13,885 |
) |
— |
|
65,971 |
| ||||
|
Facility consolidation and asset impairment charges |
|
96,364 |
|
(35,216 |
) |
— |
|
61,148 |
| ||||
|
Total |
|
4,950,143 |
|
(2,793,987 |
) |
(6,080 |
) |
2,150,076 |
| ||||
|
Operating income |
|
1,058,031 |
|
(357,714 |
) |
34,528 |
|
734,845 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Non-operating (expense) income: |
|
|
|
|
|
|
|
|
| ||||
|
Equity income in unconsolidated investees, net |
|
167,319 |
|
(15,857 |
) |
— |
|
151,462 |
| ||||
|
Interest expense |
|
(273,244 |
) |
576 |
|
— |
|
(272,668 |
) | ||||
|
Other non-operating items |
|
403,954 |
|
449 |
|
— |
|
404,403 |
| ||||
|
Total |
|
298,029 |
|
(14,832 |
) |
— |
|
283,197 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Income before income taxes |
|
1,356,060 |
|
(372,546 |
) |
34,528 |
|
1,018,042 |
| ||||
|
Provision for income taxes |
|
225,600 |
|
11,817 |
|
12,844 |
(d) |
250,261 |
| ||||
|
Net income |
|
1,130,460 |
|
(384,363 |
) |
21,684 |
|
767,781 |
| ||||
|
Net income attributable to noncontrolling interests |
|
(68,289 |
) |
— |
|
— |
|
(68,289 |
) | ||||
|
Net income attributable to TEGNA Inc. |
|
$ |
1,062,171 |
|
$ |
(384,363 |
) |
$ |
21,684 |
|
$ |
699,492 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net income per share - basic |
|
$ |
4.69 |
|
|
|
|
|
$ |
3.09 |
| ||
|
Net income per share - diluted |
|
$ |
4.58 |
|
|
|
|
|
$ |
3.02 |
| ||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Weighted average number of common shares outstanding: |
|
|
|
|
|
|
|
|
| ||||
|
Basic |
|
226,292 |
|
|
|
|
|
226,292 |
| ||||
|
Diluted |
|
231,907 |
|
|
|
|
|
231,907 |
| ||||
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.
TEGNA Inc.
Pro Forma Condensed Consolidated Statement of Income
For the fiscal year ended December 29, 2013
Unaudited, in thousands (except per share data)
|
|
|
TEGNA |
|
Separation of |
|
Pro Forma |
|
Pro Forma |
| ||||
|
Revenues |
|
$ |
5,161,362 |
|
$ |
(3,299,793 |
) |
$ |
13,537 |
(b) |
$ |
1,875,106 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
| ||||
|
Cost of sales and operating expenses, exclusive of depreciation |
|
2,882,449 |
|
(2,042,702 |
) |
20,149 |
(b) |
859,896 |
| ||||
|
Selling, general and administrative expenses, exclusive of depreciation |
|
1,291,858 |
|
(695,790 |
) |
(26,125 |
)(c) |
569,943 |
| ||||
|
Depreciation |
|
153,203 |
|
(98,197 |
) |
— |
|
55,006 |
| ||||
|
Amortization of intangible assets |
|
36,369 |
|
(14,119 |
) |
— |
|
22,250 |
| ||||
|
Facility consolidation and asset impairment charges |
|
58,240 |
|
(26,611 |
) |
— |
|
31,629 |
| ||||
|
Total |
|
4,422,119 |
|
(2,877,419 |
) |
(5,976 |
) |
1,538,724 |
| ||||
|
Operating income |
|
739,243 |
|
(422,374 |
) |
19,513 |
|
336,382 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Non-operating (expense) income: |
|
|
|
|
|
|
|
|
| ||||
|
Equity income in unconsolidated investees, net |
|
43,824 |
|
(22,769 |
) |
— |
|
21,055 |
| ||||
|
Interest expense |
|
(176,064 |
) |
1,246 |
|
— |
|
(174,818 |
) | ||||
|
Other non-operating items |
|
(47,890 |
) |
2,611 |
|
— |
|
(45,279 |
) | ||||
|
Total |
|
(180,130 |
) |
(18,912 |
) |
— |
|
(199,042 |
) | ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Income before income taxes |
|
559,113 |
|
(441,286 |
) |
19,513 |
|
137,340 |
| ||||
|
Provision for income taxes |
|
113,200 |
|
(97,246 |
) |
7,333 |
(d) |
23,287 |
| ||||
|
Net income |
|
445,913 |
|
(344,040 |
) |
12,180 |
|
114,053 |
| ||||
|
Net income attributable to noncontrolling interests |
|
(57,233 |
) |
— |
|
— |
|
(57,233 |
) | ||||
|
Net income attributable to TEGNA Inc. |
|
$ |
388,680 |
|
$ |
(344,040 |
) |
$ |
12,180 |
|
$ |
56,820 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net income per share - basic |
|
$ |
1.70 |
|
|
|
|
|
$ |
0.25 |
| ||
|
Net income per share - diluted |
|
$ |
1.66 |
|
|
|
|
|
$ |
0.24 |
| ||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Weighted average number of common shares outstanding: |
|
|
|
|
|
|
|
|
| ||||
|
Basic |
|
228,541 |
|
|
|
|
|
228,541 |
| ||||
|
Diluted |
|
234,189 |
|
|
|
|
|
234,189 |
| ||||
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.
TEGNA Inc.
Pro Forma Condensed Consolidated Statement of Income
For the fiscal year ended December 30, 2012
Unaudited, in thousands (except per share data)
|
|
|
TEGNA |
|
Separation of |
|
Pro Forma |
|
Pro Forma |
| ||||
|
Revenues |
|
$ |
5,353,197 |
|
$ |
(3,449,893 |
) |
$ |
12,814 |
(b) |
$ |
1,916,118 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
| ||||
|
Cost of sales and operating expenses, exclusive of depreciation |
|
2,943,847 |
|
(2,117,654 |
) |
20,592 |
(b) |
846,785 |
| ||||
|
Selling, general and administrative expenses, exclusive of depreciation |
|
1,303,427 |
|
(755,179 |
) |
(24,439 |
)(c) |
523,809 |
| ||||
|
Depreciation |
|
160,746 |
|
(105,498 |
) |
— |
|
55,248 |
| ||||
|
Amortization of intangible assets |
|
33,293 |
|
(14,289 |
) |
— |
|
19,004 |
| ||||
|
Facility consolidation and asset impairment charges |
|
122,129 |
|
(32,075 |
) |
— |
|
90,054 |
| ||||
|
Total |
|
4,563,442 |
|
(3,024,695 |
) |
(3,847 |
) |
1,534,900 |
| ||||
|
Operating income |
|
789,755 |
|
(425,198 |
) |
16,661 |
|
381,218 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Non-operating (expense) income: |
|
|
|
|
|
|
|
|
| ||||
|
Equity income in unconsolidated investees, net |
|
22,387 |
|
(11,386 |
) |
— |
|
11,001 |
| ||||
|
Interest expense |
|
(150,469 |
) |
1,495 |
|
— |
|
(148,974 |
) | ||||
|
Other non-operating items |
|
8,734 |
|
(648 |
) |
— |
|
8,086 |
| ||||
|
Total |
|
(119,348 |
) |
(10,539 |
) |
— |
|
(129,887 |
) | ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Income before income taxes |
|
670,407 |
|
(435,737 |
) |
16,661 |
|
251,331 |
| ||||
|
Provision for income taxes |
|
195,400 |
|
(96,757 |
) |
6,260 |
(d) |
104,903 |
| ||||
|
Net income |
|
475,007 |
|
(338,980 |
) |
10,401 |
|
146,428 |
| ||||
|
Net income attributable to noncontrolling interests |
|
(50,727 |
) |
— |
|
— |
|
(50,727 |
) | ||||
|
Net income attributable to TEGNA Inc. |
|
$ |
424,280 |
|
$ |
(338,980 |
) |
$ |
10,401 |
|
$ |
95,701 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net income per share - basic |
|
$ |
1.83 |
|
|
|
|
|
$ |
0.41 |
| ||
|
Net income per share - diluted |
|
$ |
1.79 |
|
|
|
|
|
$ |
0.40 |
| ||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Weighted average number of common shares outstanding: |
|
|
|
|
|
|
|
|
| ||||
|
Basic |
|
232,327 |
|
|
|
|
|
232,327 |
| ||||
|
Diluted |
|
236,690 |
|
|
|
|
|
236,690 |
| ||||
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.
TEGNA Inc.
Pro Forma Condensed Consolidated Balance Sheet
As of March 29, 2015
Unaudited, in thousands (except share data)
|
|
|
TEGNA |
|
Separation of |
|
Pro Forma |
|
Pro Forma |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
ASSETS |
|
|
|
|
|
|
|
|
| ||||
|
Current assets |
|
|
|
|
|
|
|
|
| ||||
|
Cash and cash equivalents |
|
$ |
135,681 |
|
$ |
(60,462 |
) |
$ |
— |
|
$ |
75,219 |
|
|
Trade receivables, less allowance for doubtful receivables |
|
831,587 |
|
(298,564 |
) |
— |
|
533,023 |
| ||||
|
Other receivables |
|
67,372 |
|
(14,389 |
) |
— |
|
52,983 |
| ||||
|
Inventories |
|
41,732 |
|
(41,857 |
) |
125 |
(e) |
— |
| ||||
|
Deferred income taxes |
|
162,449 |
|
(8,345 |
) |
(1,311 |
)(h) |
152,793 |
| ||||
|
Assets held for sale |
|
23,477 |
|
(23,477 |
) |
— |
|
— |
| ||||
|
Prepaid expenses and other current assets |
|
111,170 |
|
(30,650 |
) |
(125 |
)(e) |
80,395 |
| ||||
|
Total current assets |
|
1,373,468 |
|
(477,744 |
) |
(1,311 |
) |
894,413 |
| ||||
|
Property, plant and equipment |
|
|
|
|
|
|
|
|
| ||||
|
Cost |
|
3,832,280 |
|
(2,575,654 |
) |
— |
|
1,256,626 |
| ||||
|
Less accumulated depreciation |
|
(2,276,092 |
) |
1,672,699 |
|
— |
|
(603,393 |
) | ||||
|
Net property, plant and equipment |
|
1,556,188 |
|
(902,955 |
) |
— |
|
653,233 |
| ||||
|
Intangible and other assets |
|
|
|
|
|
|
|
|
| ||||
|
Goodwill |
|
4,475,941 |
|
(535,960 |
) |
— |
|
3,939,981 |
| ||||
|
Indefinite-lived and amortizable intangible assets, less accumulated amortization |
|
3,204,871 |
|
(45,705 |
) |
— |
|
3,159,166 |
| ||||
|
Deferred income taxes |
|
62,085 |
|
(240,392 |
) |
178,307 |
(h) |
— |
| ||||
|
Investments and other assets |
|
311,907 |
|
(62,531 |
) |
14,921 |
(f) |
264,297 |
| ||||
|
Total intangible and other assets |
|
8,054,804 |
|
(884,588 |
) |
193,228 |
|
7,363,444 |
| ||||
|
Total assets |
|
$ |
10,984,460 |
|
$ |
(2,265,287 |
) |
$ |
191,917 |
|
$ |
8,911,090 |
|
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.
TEGNA Inc.
Pro Forma Condensed Consolidated Balance Sheet
As of March 29, 2015
Unaudited, in thousands (except share data)
|
|
|
TEGNA |
|
Separation of |
|
Pro Forma |
|
Pro Forma |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
| ||||
|
Current liabilities |
|
|
|
|
|
|
|
|
| ||||
|
Accounts payable and current portion of film contracts payable |
|
$ |
230,553 |
|
$ |
(110,333 |
) |
$ |
— |
|
$ |
120,220 |
|
|
Accrued expenses |
|
509,017 |
|
(172,540 |
) |
— |
|
336,477 |
| ||||
|
Dividends payable |
|
45,496 |
|
— |
|
— |
|
45,496 |
| ||||
|
Income taxes |
|
24,380 |
|
(293 |
) |
— |
|
24,087 |
| ||||
|
Deferred income |
|
237,484 |
|
(84,528 |
) |
— |
|
152,956 |
| ||||
|
Current portion of long-term debt |
|
7,854 |
|
— |
|
— |
|
7,854 |
| ||||
|
Total current liabilities |
|
1,054,784 |
|
(367,694 |
) |
— |
|
687,090 |
| ||||
|
Noncurrent liabilities |
|
|
|
|
|
|
|
|
| ||||
|
Income taxes |
|
58,612 |
|
(20,103 |
) |
— |
|
38,509 |
| ||||
|
Deferred income taxes |
|
664,589 |
|
— |
|
176,996 |
(h) |
841,585 |
| ||||
|
Long-term debt |
|
4,351,548 |
|
— |
|
— |
|
4,351,548 |
| ||||
|
Post-retirement medical and life insurance liabilities |
|
94,596 |
|
(90,482 |
) |
— |
|
4,114 |
| ||||
|
Pension liabilities |
|
907,996 |
|
(639,434 |
) |
— |
|
268,562 |
| ||||
|
Other noncurrent liabilities |
|
303,851 |
|
(152,816 |
) |
25,533 |
(g) |
176,568 |
| ||||
|
Total noncurrent liabilities |
|
6,381,192 |
|
(902,835 |
) |
202,529 |
|
5,680,886 |
| ||||
|
Total liabilities |
|
7,435,976 |
|
(1,270,529 |
) |
202,529 |
|
6,367,976 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Redeemable noncontrolling interests |
|
12,817 |
|
— |
|
— |
|
12,817 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Total TEGNA Inc. shareholders’ equity |
|
3,294,486 |
|
(994,758 |
) |
(10,612 |
)(f) (g) |
2,289,116 |
| ||||
|
Noncontrolling interests |
|
241,181 |
|
— |
|
— |
|
241,181 |
| ||||
|
Total equity |
|
3,535,667 |
|
(994,758 |
) |
(10,612 |
) |
2,530,297 |
| ||||
|
Total liabilities, redeemable noncontrolling interest and equity |
|
$ |
10,984,460 |
|
$ |
(2,265,287 |
) |
$ |
191,917 |
|
$ |
8,911,090 |
|
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.
Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements
|
(a) |
|
Reflects the operations, assets, liabilities and equity of SpinCo, formerly the publishing businesses of the Company, as of March 29, 2015. Excluded from these amounts are certain general corporate overhead expenses not specifically related to SpinCo. Such general corporate expenses do not meet the requirements to be presented in discontinued operations, and thus will be presented as part of the Company’s continuing operations. They are, however, not necessarily indicative of future Company corporate expenses. |
|
|
|
|
|
(b) |
|
Represents adjustments for intercompany transactions that were previously eliminated in consolidation and will no longer be eliminated subsequent to the Separation. |
|
|
|
|
|
(c) |
|
Represents adjustments related to office space leasing and information technology arrangements between SpinCo and the Company, under the Transition Services Agreement. |
|
|
|
|
|
(d) |
|
In determining the tax rate to apply to our pro forma adjustments, we used the applicable statutory rate based on the jurisdiction in which the adjustment relates. |
|
|
|
|
|
(e) |
|
Represents adjustments to appropriately reclassify the credit balance. |
|
|
|
|
|
(f) |
|
The Company is retaining 1.5% of the outstanding shares of common stock of SpinCo. While this value will be recorded in future periods based upon the value of the underlying shares we own and the share price on each balance sheet date, shares of SpinCo were not traded as of March 29, 2015. Therefore, this balance represents 1.5% of the net assets to be contributed to SpinCo as of March 29, 2015. |
|
|
|
|
|
(g) |
|
Represents adjustments to record the indemnification payable due to SpinCo as a result of the spin transaction. |
|
|
|
|
|
(h) |
|
Represents a reclassification of net deferred tax liabilities. |
|
|
|
|
|
(i) |
|
To more appropriately reflect the ongoing operations of the Company, the table below includes pro forma adjustments as if the acquisitions of Cars.com on October 1, 2014 and six London Broadcasting Company television stations on July 8, 2014 had occurred at the beginning of 2014. Pro forma adjustments reflect depreciation expense and amortization of intangibles related to the fair value adjustments of the assets acquired. Pro forma adjustments exclude the favorable impact of new terms Cars.com entered into with its affiliates prior to October 1, 2014, the effective date of new terms. Pro forma adjustments also include the removal of fiscal year 2014 revenues and expenses of Gannett Healthcare Group, which was sold on December 29, 2014.
The following table reconciles certain fiscal year 2014 Pro Forma TEGNA Continuing Operations line items as disclosed above to the respective fiscal year TEGNA results on a non-GAAP basis. We use non-GAAP financial performance measures to supplement the financial information presented on a GAAP basis. These non-GAAP financial measures should not be considered in isolation from or as a substitute for the related GAAP measures and should be read in conjunction with financial information presented on a GAAP basis.
We believe that workforce restructuring, transformation costs and asset impairment charges are not indicative of normal, ongoing operations and their inclusion in results makes for inconsistent comparisons between years and peer group companies. Workforce restructuring primarily relates to incremental expenses we have incurred to centralize certain functions. Transformation costs include incremental expenses incurred by us to execute on our transformation and growth plan. Asset impairment charges reflect non-cash charges to reduce the book value of certain intangible assets to their respective fair value, as our projections for the business underlying the related asset had declined. |
|
|
|
For the fiscal year ended December 28, 2014 |
| ||||||||||||
|
In millions of dollars |
|
Pro Forma |
|
Workforce |
|
Transformation |
|
Asset |
|
Pro Forma |
|
TEGNA Pro |
| ||
|
Operating Revenue non-GAAP |
|
2,885 |
|
— |
|
— |
|
— |
|
360 |
|
3,245 |
| ||
|
Operating Expenses non-GAAP (3) |
|
2,150 |
|
(7 |
) |
(18 |
) |
(47 |
) |
333 |
|
2,411 |
| ||
|
Operating Income non-GAAP |
|
$ |
735 |
|
7 |
|
18 |
|
47 |
|
27 |
|
$ |
834 |
|
|
Depreciation non-GAAP |
|
87 |
|
— |
|
— |
|
— |
|
9 |
|
96 |
| ||
|
Amortization non-GAAP |
|
66 |
|
— |
|
(4 |
) |
— |
|
56 |
|
118 |
| ||
|
Adjusted EBITDA non-GAAP basis |
|
$ |
888 |
|
7 |
|
14 |
|
47 |
|
92 |
|
$ |
1,048 |
|
(1) See reconciliation to TEGNA historical GAAP results in the 2014 Pro Forma Condensed Consolidated Statement of Income above.
(2) The pro forma adjustments include additions to revenues and expenses for the acquisition of Cars.com on October 1, 2014 and six London Broadcasting Company television stations on July 8, 2014. Pro forma adjustments also reflect the disposal of Gannett Healthcare Group on December 29, 2014. The pro forma adjustments reflects the addition of revenue amortization for certain unfavorable contracts and amortization for definite-lived intangible assets as if the acquisitions had occurred on the first day of 2014.
(3) Included in TEGNA Operating Expenses are Corporate expenses which were approximately $71 million in 2014. Over the span of the next year after the separation on June 29, 2015, we expect Corporate expenses to decrease to between $50 million to $60 million on an annualized basis including $5 million to $8 million of non-cash stock based compensation expense. The decrease will reflect the cost reductions we will have as we resize the Company’s footprint as well as elimination of the impact of dis-synergies relative to the distribution of SpinCo.
Certain statements in this 8-K may be forward looking in nature or “forward looking statements” as defined in the Private Securities Litigation Reform Act of 1995. The forward looking statements contained in this 8-K are subject to a number of risks, trends and uncertainties that could cause actual performance to differ materially from these forward looking statements. A number of those risks, trends and uncertainties are discussed in our SEC reports, including our annual report on Form 10-K and quarterly reports on Form 10-Q. Any forward looking statements in this 8-K should be evaluated in light of these important risk factors.