Attached files
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8-K - FORM 8-K - Graham Holdings Co | d8k.htm |
EX-99.1 - EXHIBIT 99.1 - Graham Holdings Co | dex991.htm |
Exhibit 99.2
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
On July 1, 2015, Graham Holdings Company (the "Company") completed the spin-off (the "Spin-Off") of its wholly owned subsidiary, Cable One, Inc. ("Cable ONE"), by way of a distribution of all the issued and outstanding shares of Cable ONE common stock, on a pro rata basis, to the Company's stockholders of record at 5:00pm EDT on June 15, 2015. Cable ONE is now an independent company trading on the New York Stock Exchange under the symbol "CABO." The distribution was made pursuant to a Separation and Distribution Agreement, dated as of June 16, 2015, between the Company and Cable ONE. The transaction was structured as a tax-free spin-off of Cable ONE for U.S. Federal income tax purposes.
After the distribution date, the Company does not beneficially own any shares of Cable ONE common stock and the Company will not consolidate the financial results of Cable ONE for the purposes of its own reporting for periods after July 1, 2015. The Company will reflect Cable ONE's historical financial results for the periods prior to the Spin-Off as discontinued operations in its consolidated financial statements beginning in the third quarter of 2015.
The accompanying unaudited pro forma condensed consolidated balance sheet presents the Company’s financial position assuming the Spin-Off occurred on March 31, 2015. The accompanying unaudited pro forma condensed consolidated statements of operations present the Company’s results of operations for the three months ended March 31, 2015, and for each of the three fiscal years in the period ended December 31, 2014, assuming the Spin-Off occurred on January 1, 2012.
The unaudited pro forma condensed consolidated financial statements have been prepared using assumptions and estimates that the Company believes are reasonable under the circumstances and are intended for informational purposes only. They are not necessarily indicative of the financial results that would have occurred if the transactions described herein had taken place on the dates indicated, nor are they indicative of the future consolidated results of the Company. However, management believes that the estimates and assumptions used provide a reasonable basis for presenting the significant effects of the Spin-Off and related transactions. Management also believes the pro forma adjustments give appropriate effect to the estimates and assumptions and are applied in conformity with accounting principles generally accepted in the United States of America.
The accompanying unaudited pro forma condensed consolidated balance sheet as of March 31, 2015, and the unaudited pro forma condensed consolidated statements of operations for the three months ended March 31, 2015, and for each of the three fiscal years in the period ended December 31, 2014, should be read in conjunction with the historical financial statements of the Company for the three months ended March 31, 2015 (unaudited), and for each of the three fiscal years in the period ended December 31, 2014 (audited), including the related notes, filed with the Securities and Exchange Commission, respectively, on Form 10-Q on May 11, 2015, and on Form 10-K on February 27, 2015.
The following is a brief description of the amounts recorded under each of the column headings in the accompanying unaudited pro forma condensed consolidated balance sheet and the unaudited pro forma condensed consolidated statements of operations:
Historical
This column reflects the Company’s historical financial position as of March 31, 2015, and historical operating results for the three months ended March 31, 2015, and each of the three years in the period ended December 31, 2014, prior to any adjustment for the Spin-Off and related transactions.
Spin-Off Transaction
This column reflects the effect of the Spin-Off and related transactions, giving effect to, among other things, the following:
• | the elimination of the historical assets, liabilities, equity and operating results of Cable ONE; |
• | the distribution of a dividend, tax-free for U.S. Federal income tax purposes, and other adjustments resulting from the Spin-Off; |
• | the post Spin-Off capital structure of the Company, including the (i) settlement of intercompany account balances between the Company and Cable ONE, and (ii) receipt of a distribution of $450 million in cash from Cable ONE on June 29, 2015; and |
1
• | the impact of, and transactions contemplated by, the Separation and Distribution Agreement, Employee Matters Agreement and Tax Matters Agreement, each dated as of June 16, 2015, between the Company and Cable ONE, and the provisions contained therein. |
These adjustments are more fully described in the notes to the accompanying unaudited pro forma condensed consolidated financial information.
Pro Forma
This column reflects the Company's financial position and operating results, excluding Cable ONE and giving effect to Spin-Off related adjustments.
2
GRAHAM HOLDINGS COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2015
Spin-Off | |||||||||||
(in thousands) | Historical | Transaction | Pro Forma | ||||||||
(1) | |||||||||||
Assets | |||||||||||
Current Assets | |||||||||||
Cash and cash equivalents | $ | 619,367 | $ | 444,233 | (3) | $ | 1,063,600 | ||||
Restricted cash | 31,559 | — | 31,559 | ||||||||
Investments in marketable equity securities and other investments | 214,980 | — | 214,980 | ||||||||
Accounts receivable, net | 495,631 | (25,880 | ) | 469,751 | |||||||
Inventories | 11,634 | — | 11,634 | ||||||||
Income taxes receivable | — | 14,503 | (4) | 14,503 | |||||||
Deferred income taxes | 4,215 | (1,347 | ) | (4) | 2,868 | ||||||
Other current assets | 91,202 | (16,313 | ) | 74,889 | |||||||
Current assets held for sale | 17,498 | — | 17,498 | ||||||||
Total Current Assets | 1,486,086 | 415,196 | 1,901,282 | ||||||||
Property, Plant and Equipment, Net | 823,376 | (610,751 | ) | 212,625 | |||||||
Investments in Affiliates | 36,120 | — | 36,120 | ||||||||
Goodwill, Net | 1,314,351 | (85,488 | ) | 1,228,863 | |||||||
Indefinite-Lived Intangible Assets, Net | 510,966 | (496,321 | ) | 14,645 | |||||||
Amortized Intangible Assets, Net | 90,854 | (541 | ) | 90,313 | |||||||
Prepaid Pension Cost | 1,164,001 | — | 1,164,001 | ||||||||
Deferred Charges and Other Assets | 65,691 | (13,374 | ) | 52,317 | |||||||
Noncurrent Assets Held for Sale | 33,945 | — | 33,945 | ||||||||
Total Assets | $ | 5,525,390 | $ | (791,279 | ) | $ | 4,734,111 | ||||
Liabilities and Equity | |||||||||||
Current Liabilities | |||||||||||
Accounts payable and accrued liabilities | $ | 414,155 | $ | (62,960 | ) | (2) | $ | 351,195 | |||
Income taxes payable | 11,235 | (11,235 | ) | (4) | — | ||||||
Deferred revenue | 376,124 | (22,050 | ) | 354,074 | |||||||
Dividends declared | 15,645 | — | 15,645 | ||||||||
Short-term borrowings | 5,171 | — | 5,171 | ||||||||
Current liabilities held for sale | 25,850 | — | 25,850 | ||||||||
Total Current Liabilities | 848,180 | (96,245 | ) | 751,935 | |||||||
Postretirement Benefits Other Than Pensions | 37,269 | — | 37,269 | ||||||||
Accrued Compensation and Related Benefits | 240,089 | (25,748 | ) | (2) | 214,341 | ||||||
Other Liabilities | 82,539 | (57 | ) | 82,482 | |||||||
Deferred Income Taxes | 755,014 | (292,358 | ) | (4) (7) | 462,656 | ||||||
Long-Term Debt | 399,645 | — | 399,645 | ||||||||
Non-current liabilities held for sale | 8,085 | — | 8,085 | ||||||||
Total Liabilities | 2,370,821 | (414,408 | ) | 1,956,413 | |||||||
Redeemable Noncontrolling Interest | 22,694 | — | 22,694 | ||||||||
Redeemable Preferred Stock | 10,510 | — | 10,510 | ||||||||
Preferred Stock | — | — | — | ||||||||
Common Stockholders’ Equity | |||||||||||
Common stock | 20,000 | — | 20,000 | ||||||||
Capital in excess of par value | 302,205 | 30,841 | (5) (7) | 333,046 | |||||||
Retained earnings | 5,998,241 | (407,202 | ) | (5) (7) | 5,591,039 | ||||||
Accumulated other comprehensive income, net of tax | |||||||||||
Cumulative foreign currency translation adjustment | (3,581 | ) | — | (3,581 | ) | ||||||
Unrealized gain on available-for-sale securities | 46,804 | — | 46,804 | ||||||||
Unrealized gain on pensions and other postretirement plans | 393,329 | — | 393,329 | ||||||||
Cost of Class B common stock held in treasury | (3,635,633 | ) | (510 | ) | (5) | (3,636,143 | ) | ||||
Total Common Stockholders’ Equity | 3,121,365 | (376,871 | ) | 2,744,494 | |||||||
Total Liabilities and Equity | $ | 5,525,390 | $ | (791,279 | ) | $ | 4,734,111 | ||||
3
GRAHAM HOLDINGS COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2015
Spin-Off | |||||||||||||
(In thousands, except per share amounts) | Historical | Transaction | Pro Forma | ||||||||||
(1) | |||||||||||||
Operating Revenues | |||||||||||||
Education | $ | 500,602 | $ | — | $ | 500,602 | |||||||
Subscriber | 187,597 | (187,049 | ) | 548 | |||||||||
Advertising | 74,027 | (7,573 | ) | 66,454 | |||||||||
Other | 83,922 | (4,101 | ) | 79,821 | |||||||||
846,148 | (198,723 | ) | 647,425 | ||||||||||
Operating Costs and Expenses | |||||||||||||
Operating | 383,077 | (73,854 | ) | 309,223 | |||||||||
Selling, general and administrative | 353,202 | (50,248 | ) | (6) (7) | 302,954 | ||||||||
Depreciation of property, plant and equipment | 58,545 | (36,348 | ) | 22,197 | |||||||||
Amortization of intangible assets | 4,769 | (31 | ) | 4,738 | |||||||||
799,593 | (160,481 | ) | 639,112 | ||||||||||
Income from Operations | 46,555 | (38,242 | ) | 8,313 | |||||||||
Equity in losses of affiliates, net | (404 | ) | — | (404 | ) | ||||||||
Interest income | 559 | — | 559 | ||||||||||
Interest expense | (8,521 | ) | 19 | (8,502 | ) | ||||||||
Other expense, net | (1,105 | ) | — | (1,105 | ) | ||||||||
Income (Loss) from Continuing Operations Before Income Taxes | 37,084 | (38,223 | ) | (1,139 | ) | ||||||||
Provision for Income Taxes | 14,500 | (14,292 | ) | 208 | |||||||||
Income (Loss) from Continuing Operations | 22,584 | (23,931 | ) | (1,347 | ) | ||||||||
Income from Continuing Operations Attributable to Noncontrolling Interests | (774 | ) | — | (774 | ) | ||||||||
Income (Loss) from Continuing Operations Attributable to Graham Holdings Company | 21,810 | (23,931 | ) | (2,121 | ) | ||||||||
Redeemable Preferred Stock Dividends | (420 | ) | — | (420 | ) | ||||||||
Income (Loss) from Continuing Operations Attributable to Graham Holdings Company Common Stockholders | $ | 21,390 | $ | (23,931 | ) | $ | (2,541 | ) | |||||
Per Share Information Attributable to Graham Holdings Company Common Stockholders | |||||||||||||
Basic income (loss) per common share from continuing operations | $ | 3.64 | $ | (0.56 | ) | ||||||||
Basic average number of common shares outstanding | 5,704 | 5,704 | |||||||||||
Diluted income (loss) per common share from continuing operations | $ | 3.62 | $ | (0.56 | ) | ||||||||
Diluted average number of common shares outstanding | 5,791 | 5,704 | |||||||||||
Per Share Information Attributable to Graham Holdings Company Common Stockholders - Adjusted Pro Forma | |||||||||||||
Basic loss per common share from continuing operations | $ | (0.49 | ) | (8) | |||||||||
Basic average number of common shares outstanding | 5,697 | (8) | |||||||||||
Diluted loss per common share from continuing operations | $ | (0.49 | ) | (8) | |||||||||
Diluted average number of common shares outstanding | 5,697 | (8) | |||||||||||
4
GRAHAM HOLDINGS COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2014
Spin-Off | |||||||||||||
(In thousands, except per share amounts) | Historical | Transaction | Pro Forma | ||||||||||
(1) | |||||||||||||
Operating Revenues | |||||||||||||
Education | $ | 2,160,417 | $ | — | $ | 2,160,417 | |||||||
Subscriber | 746,047 | (744,409 | ) | 1,638 | |||||||||
Advertising | 343,576 | (35,362 | ) | 308,214 | |||||||||
Other | 285,126 | (18,363 | ) | 266,763 | |||||||||
3,535,166 | (798,134 | ) | 2,737,032 | ||||||||||
Operating Costs and Expenses | |||||||||||||
Operating | 1,562,360 | (300,607 | ) | 1,261,753 | |||||||||
Selling, general and administrative | 1,325,558 | (191,561 | ) | (6) (7) | 1,133,997 | ||||||||
Depreciation of property, plant and equipment | 203,646 | (128,733 | ) | 74,913 | |||||||||
Amortization of intangible assets | 18,368 | (181 | ) | 18,187 | |||||||||
Impairment of goodwill and other long-lived assets | 17,302 | — | 17,302 | ||||||||||
3,127,234 | (621,082 | ) | 2,506,152 | ||||||||||
Income from Operations | 407,932 | (177,052 | ) | 230,880 | |||||||||
Equity in earnings of affiliates, net | 100,370 | — | 100,370 | ||||||||||
Interest income | 2,136 | — | 2,136 | ||||||||||
Interest expense | (36,586 | ) | 1,053 | (35,533 | ) | ||||||||
Other income, net | 853,259 | (75,249 | ) | 778,010 | |||||||||
Income from Continuing Operations Before Income Taxes | 1,327,111 | (251,248 | ) | 1,075,863 | |||||||||
Provision for Income Taxes | 406,100 | (90,306 | ) | 315,794 | |||||||||
Income from Continuing Operations | 921,011 | (160,942 | ) | 760,069 | |||||||||
Loss from Continuing Operations Attributable to Noncontrolling Interests | 583 | — | 583 | ||||||||||
Income from Continuing Operations Attributable to Graham Holdings Company | 921,594 | (160,942 | ) | 760,652 | |||||||||
Redeemable Preferred Stock Dividends | (847 | ) | — | (847 | ) | ||||||||
Income from Continuing Operations Attributable to Graham Holdings Company Common Stockholders | $ | 920,747 | $ | (160,942 | ) | $ | 759,805 | ||||||
Per Share Information Attributable to Graham Holdings Company Common Stockholders | |||||||||||||
Basic income per common share from continuing operations | $ | 139.44 | $ | 115.07 | |||||||||
Basic average number of common shares outstanding | 6,470 | 6,470 | |||||||||||
Diluted income per common share from continuing operations | $ | 138.88 | $ | 114.61 | |||||||||
Diluted average number of common shares outstanding | 6,559 | 6,559 | |||||||||||
Per Share Information Attributable to Graham Holdings Company Common Stockholders - Adjusted Pro Forma | |||||||||||||
Basic income per common share from continuing operations | $ | 115.47 | (8) | ||||||||||
Basic average number of common shares outstanding | 6,470 | (8) | |||||||||||
Diluted income per common share from continuing operations | $ | 115.10 | (8) | ||||||||||
Diluted average number of common shares outstanding | 6,541 | (8) | |||||||||||
5
GRAHAM HOLDINGS COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2013
Spin-Off | ||||||||||||
(In thousands, except per share amounts) | Historical | Transaction | Pro Forma | |||||||||
(1) | ||||||||||||
Operating Revenues | ||||||||||||
Education | $ | 2,163,734 | $ | — | $ | 2,163,734 | ||||||
Subscriber | 755,662 | (754,690 | ) | 972 | ||||||||
Advertising | 310,261 | (35,237 | ) | 275,024 | ||||||||
Other | 178,254 | (17,382 | ) | 160,872 | ||||||||
3,407,911 | (807,309 | ) | 2,600,602 | |||||||||
Operating Costs and Expenses | ||||||||||||
Operating | 1,532,497 | (321,633 | ) | 1,210,864 | ||||||||
Selling, general and administrative | 1,311,501 | (186,247 | ) | (7) | 1,125,254 | |||||||
Depreciation of property, plant and equipment | 229,355 | (128,184 | ) | 101,171 | ||||||||
Amortization of intangible assets | 12,139 | (220 | ) | 11,919 | ||||||||
Impairment of goodwill and other long-lived assets | 3,250 | — | 3,250 | |||||||||
3,088,742 | (636,284 | ) | 2,452,458 | |||||||||
Income from Operations | 319,169 | (171,025 | ) | 148,144 | ||||||||
Equity in earnings of affiliates, net | 13,215 | — | 13,215 | |||||||||
Interest income | 2,264 | — | 2,264 | |||||||||
Interest expense | (36,067 | ) | 135 | (35,932 | ) | |||||||
Other expense, net | (23,751 | ) | — | (23,751 | ) | |||||||
Income from Continuing Operations Before Income Taxes | 274,830 | (170,890 | ) | 103,940 | ||||||||
Provision for Income Taxes | 101,500 | (61,037 | ) | 40,463 | ||||||||
Income from Continuing Operations | 173,330 | (109,853 | ) | 63,477 | ||||||||
Income from Continuing Operations Attributable to Noncontrolling Interests | (480 | ) | — | (480 | ) | |||||||
Income from Continuing Operations Attributable to Graham Holdings Company | 172,850 | (109,853 | ) | 62,997 | ||||||||
Redeemable Preferred Stock Dividends | (855 | ) | — | (855 | ) | |||||||
Income from Continuing Operations Attributable to Graham Holdings Company Common Stockholders | $ | 171,995 | $ | (109,853 | ) | $ | 62,142 | |||||
Per Share Information Attributable to Graham Holdings Company Common Stockholders | ||||||||||||
Basic income per common share from continuing operations | $ | 23.39 | $ | 8.45 | ||||||||
Basic average number of common shares outstanding | 7,238 | 7,238 | ||||||||||
Diluted income per common share from continuing operations | $ | 23.36 | $ | 8.44 | ||||||||
Diluted average number of common shares outstanding | 7,333 | 7,333 | ||||||||||
Per Share Information Attributable to Graham Holdings Company Common Stockholders - Adjusted Pro Forma | ||||||||||||
Basic income per common share from continuing operations | $ | 8.46 | (8) | |||||||||
Basic average number of common shares outstanding | 7,248 | (8) | ||||||||||
Diluted income per common share from continuing operations | $ | 8.45 | (8) | |||||||||
Diluted average number of common shares outstanding | 7,327 | (8) | ||||||||||
6
GRAHAM HOLDINGS COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2012
Spin-Off | |||||||||||||
(In thousands, except per share amounts) | Historical | Transaction | Pro Forma | ||||||||||
(1) | |||||||||||||
Operating Revenues | |||||||||||||
Education | $ | 2,184,532 | $ | — | $ | 2,184,532 | |||||||
Subscriber | 732,370 | (731,566 | ) | 804 | |||||||||
Advertising | 337,621 | (36,272 | ) | 301,349 | |||||||||
Other | 118,063 | (19,279 | ) | 98,784 | |||||||||
3,372,586 | (787,117 | ) | 2,585,469 | ||||||||||
Operating Costs and Expenses | |||||||||||||
Operating | 1,535,237 | (317,785 | ) | 1,217,452 | |||||||||
Selling, general and administrative | 1,317,494 | (185,285 | ) | (7) | 1,132,209 | ||||||||
Depreciation of property, plant and equipment | 240,139 | (129,107 | ) | 111,032 | |||||||||
Amortization of intangible assets | 19,510 | (211 | ) | 19,299 | |||||||||
Impairment of goodwill and other long-lived assets | 111,593 | — | 111,593 | ||||||||||
3,223,973 | (632,388 | ) | 2,591,585 | ||||||||||
Income (Loss) from Operations | 148,613 | (154,729 | ) | (6,116 | ) | ||||||||
Equity in earnings of affiliates, net | 14,086 | — | 14,086 | ||||||||||
Interest income | 3,393 | — | 3,393 | ||||||||||
Interest expense | (35,944 | ) | 126 | (35,818 | ) | ||||||||
Other expense, net | (5,456 | ) | 250 | (5,206 | ) | ||||||||
Income (Loss) from Continuing Operations Before Income Taxes | 124,692 | (154,353 | ) | (29,661 | ) | ||||||||
Provision for Income Taxes | 73,400 | (58,258 | ) | 15,142 | |||||||||
Income (Loss) from Continuing Operations | 51,292 | (96,095 | ) | (44,803 | ) | ||||||||
Income from Continuing Operations Attributable to Noncontrolling Interests | (74 | ) | — | (74 | ) | ||||||||
Income (Loss) from Continuing Operations Attributable to Graham Holdings Company | 51,218 | (96,095 | ) | (44,877 | ) | ||||||||
Redeemable Preferred Stock Dividends | (895 | ) | — | (895 | ) | ||||||||
Income (Loss) from Continuing Operations Attributable to Graham Holdings Company Common Stockholders | $ | 50,323 | $ | (96,095 | ) | $ | (45,772 | ) | |||||
Per Share Information Attributable to Graham Holdings Company Common Stockholders | |||||||||||||
Basic income (loss) per common share from continuing operations | $ | 6.40 | $ | (6.66 | ) | ||||||||
Basic average number of common shares outstanding | 7,360 | 7,360 | |||||||||||
Diluted income (loss) per common share from continuing operations | $ | 6.40 | $ | (6.66 | ) | ||||||||
Diluted average number of common shares outstanding | 7,404 | 7,360 | |||||||||||
Per Share Information Attributable to Graham Holdings Company Common Stockholders - Adjusted Pro Forma | |||||||||||||
Basic loss per common share from continuing operations | $ | (6.41 | ) | (8) | |||||||||
Basic average number of common shares outstanding | 7,370 | (8) | |||||||||||
Diluted loss per common share from continuing operations | $ | (6.41 | ) | (8) | |||||||||
Diluted average number of common shares outstanding | 7,370 | (8) | |||||||||||
7
GRAHAM HOLDINGS COMPANY
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. | This column includes the elimination of the historical assets, liabilities, equity and operating results of Cable ONE in addition to the adjustments described in notes 2 to 7. |
2. | These adjustments include the effect of other liabilities assumed by Cable ONE related to general insurance and other employee benefits as of the distribution date pursuant to the terms of the Employee Matters Agreement. |
3. | This adjustment includes the distribution on June 29, 2015, by Cable ONE to the Company of $450 million, using cash on hand and the proceeds from Cable ONE's issuance of unsecured notes of $450 million in June 2015, pursuant to the terms of the Separation and Distribution Agreement. The $444.2 million adjustment also includes $5.8 million in cash and cash equivalents from the historical balance sheet of Cable ONE as of March 31, 2015. |
4. | These amounts include adjustments to give effect to the impact on income taxes and deferred income taxes due to the Spin-Off of Cable ONE. |
5. | This adjustment includes the effect of the modification on stock-based compensation due to the pro rata accelerated vesting of GHC awards issued to Cable ONE employees as a result of the Spin-Off. |
6. | This adjustment includes the removal of one-time costs of $3.5 million and $1.4 million for the year ended December 31, 2014 and the three months ended March 31, 2015, respectively, directly related to the Spin-Off that were incurred during the historical period. These costs were primarily for legal, tax, accounting, advisory and other costs directly related to the Spin-Off. |
7. | This adjustment includes the effect of the modification on stock-based compensation as a result of the Spin-Off. The modification resulted in additional stock-based compensation of $1.8 million, $1.3 million, and $0.1 million reflected in the pro forma statement of operations for the years ended December 31, 2014, 2013 and 2012, respectively. The modification also resulted in additional stock-based compensation amounting to $0.5 million reflected in the pro forma statement of operations for the three months ended March 31, 2015. The Company also incurred an estimated additional one-time stock-based compensation charge of $22.6 million on the modification of fully vested stock options, which is not included in the pro forma statements of operations. The Company will record the estimated one-time stock based compensation charge in its financial statements for the quarterly period ending September 30, 2015. |
8. | The adjusted basic and diluted earnings per share includes the effects of the lower dividend per share expected to be paid by the Company following the Spin-Off, and the elimination of restricted shares and stock options issued to Cable ONE employees. The Company's basic earnings per share is calculated under the two class method, which treats restricted stock as a participating security due to its nonforfeitable right to dividends. Cable ONE expects to pay $1.50 of the existing $2.65 quarterly dividend per share paid by the Company, which has been reflected in the pro forma statements of operations presented. |
8