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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 1, 1996
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Garden State Newspapers, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 22-2675173
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(State or other jurisdiction (Commission (Employer
of incorporation) File Number) Identification No.)
1560 Broadway, Suite 1450, Denver, CO 80202
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 837-0886
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No Change
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(Former name or former address, if changed since last report.)
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Item 2. Acquisitions or Dispositions of Assets
On May 1, 1996, Garden State Investments, Inc., a wholly owned subsidiary of
Garden State Newspapers, Inc. (the "Registrant"), sold the common stock of The
Johnstown Tribune Publishing Company, publisher of the Johnstown
Tribune-Democrat, to American Publishing (1991), Inc. ("American Publishing")
in exchange for $32.6 million in cash and substantially all the assets used in
the publication of the following daily and weekly newspapers:
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Newspaper Location Daily Publication Weekly Publication
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Bridgeton, New Jersey Bridgeton Evening News None
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Fort Morgan, Colorado Fort Morgan Times Morgan Times Review(a)
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Sterling, Colorado Journal-Advocate J. A. Shopper(a)
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Lamar, Colorado Lamar Daily News Tri-State Trader(a)
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Millville, New Jersey Millville News Millville Shopper News(a)
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Sidney, Nebraska Sidney Telegraph High Plains Shopping Guide(a)
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North Adams, Massachusetts The Transcript The Transcript Spotlight(a)
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Akron, Colorado None Akron News Reporter(b)
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Brush, Colorado None Brush News-Tribune(b)
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Julesburg, Colorado None Julesburg Advocate(b)
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(a) Free Weekly Distribution
(b) Paid Weekly Distribution
The Registrant also assumed non-compete and other long-term obligations with a
discounted value of approximately $1.0 million in association with the
acquisition of the newspapers listed above. All the assets and the liabilities
assumed have been recorded at their estimated fair market values at the date of
the acquisition.
Immediately after the above described acquisition, the Registrant contributed
all of the newly acquired assets and liabilities of the Sidney, Nebraska; and
the Akron, Brush, Fort Morgan, Julesburg, Lamar and Sterling, Colorado daily
and weekly newspapers to a newly formed corporation, Eastern Colorado
Publishing Company ("Eastern Colorado"). The common stock of Eastern Colorado
was then sold to The Denver Post Corporation, an affiliate of the Registrant,
for approximately $15.6 million, including the assumption of $0.2 million of
discounted non-compete covenants and other long-term obligations (The Denver
Post Corporation is a 60 percent owned subsidiary of Affiliated Newspapers
Investments, Inc., parent company of the Registrant). No gain or loss was
realized on the sale of the Eastern Colorado common stock. The sale price of
the Eastern Colorado common stock was deemed to be fair based on an independent
appraisal of the transaction.
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Proceeds from the sale of The Johnstown Tribune Publishing Company and Eastern
Colorado were used to prepay certain debt obligations of the Registrant and its
subsidiaries as follows: (1) $4.6 million was prepaid to holders of the
Registrant's Senior Secured Notes; (2) $21.3 million was prepaid against
borrowings under the NJN Investments, Inc., a subsidiary of the Registrant,
revolver, representing 100 percent of the amount outstanding; (3) $7.5 million
was prepaid against a bank term loan, representing amounts due through
September, 1996; and (4) the remaining amount of approximately $13.6 million
was prepaid against the Registrant's revolving credit agreement.
The description of the purchase and sale transactions set forth herein are
qualified in their entirety by the provisions of the purchase and sales
agreements which are attached hereto as exhibits.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Businesses Acquired
Not Applicable Due to Size.
(b) Unaudited Pro Forma Financial Information
Unaudited pro forma financial information has been
presented for the disposition of The Johnstown
Tribune Publishing Company common stock beginning at
page 5 of this report. The acquisition of the
newspapers listed above did not require the
presentation of pro forma financial information as
required by Form 8-K. Accordingly, the acquisition
transaction has been omitted from the unaudited pro
forma financial information.
(c) Exhibits
2.1 Agreement dated April 29, 1996 by and among American
Publishing (1991) Inc., Berksire Newspapers, Inc.,
Evening News Company, Sidney Publication Company,
Sterling Publishing Company and Garden State
Investments, Inc.
2.2 Agreement dated April 30, 1996 by and among Garden
State Investments, Inc. and The Denver Post
Corporation for the sale/purchase of the capital
stock of Eastern Colorado Publishing Company.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GARDEN STATE NEWSPAPERS, INC.
Date: May 15, 1996 By: /s/ Joseph J. Lodovic, IV
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Joseph J. Lodovic, IV
Executive Vice President,
Chief Financial Officer
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GARDEN STATE NEWSPAPERS, INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The accompanying unaudited pro forma balance sheet as of March 31, 1996, gives
effect to the sale of the common stock of The Johnstown Tribune Publishing
Company, publisher of the Johnstown Tribune-Democrat, as if this transaction
had occurred on July 1, 1995.
The accompanying unaudited pro forma consolidated statements of operations for
the nine months ended March 31, 1996 and the year ended June 30, 1995, give
effect to the sale of the common stock of The Johnstown Tribune Publishing
Company, publisher of the Johnstown Tribune-Democrat, herein referred to as the
"Johnstown Sale," as if the Johnstown Sale had occurred on July 1, 1995 and
July 1, 1994, respectively.
These pro forma statements are not necessarily indicative of the future
operations or of the consolidated results of operations had the Johnstown Sale
actually taken place on July 1, 1995 or July 1, 1994. The unaudited pro forma
financial information should be read in conjunction with the Company's
historical financial statements and notes thereto appearing in the Company's
Form 10-K and 10-Q for the periods ending June 30, 1995 and March 31, 1996,
respectively.
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GARDEN STATE NEWSPAPERS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
March 31, 1996
(Amounts in Thousands)
ASSETS As Pro Forma
Reported Adjustments Pro Forma
-------- ----------- ---------
CURRENT ASSETS
Cash and cash equivalents . . . . . . . . . . . . . $ 1,485 $ 1,672 (a),(c) $ 3,105
Accounts receivable, less allowance
for doubtful accounts . . . . . . . . . . . . . . 27,183 (1,321) (a) 25,862
Inventories of newsprint and supplies . . . . . . . 6,641 (401) (a) 6,240
Prepaid expenses and other assets . . . . . . . . . 6,239 (1,793) (a) 4,446
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TOTAL CURRENT ASSETS . . . . . . . . . . . . . 41,548 (1,843) 39,705
PROPERTY, PLANT AND EQUIPMENT
Land . . . . . . . . . . . . . . . . . . . . . . . 5,296 (128) (a),(d) 5,168
Buildings and improvements . . . . . . . . . . . . 34,189 (1,593) (a),(d) 32,596
Machinery and equipment . . . . . . . . . . . . . . 90,634 (5,793) (a),(d) 84,841
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Total Property, Plant and Equipment . . . . . . 130,119 (7,514) 122,605
Less accumulated depreciation and amortization . . (52,238) 5,181 (a) (47,057)
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Net Property, Plant and Equipment . . . . . . . 77,881 (2,333) 75,548
OTHER ASSETS
Investment in partnership . . . . . . . . . . . . 6,122 -- 6,122
Subscriber accounts, net of accumulated
amortization . . . . . . . . . . . . . . . . . . . 47,143 (1,646) (a) 45,497
Excess of cost over fair value of net assets
acquired, 101,613 (31,597) (a) 70,016
net of accumulated amortization . . . . . . . . .
Covenants net of compete and other identifiable 4,703 -- 4,703
intangible assets, not to accumulated amortization 3,244 (1,805) (a) 1,439
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Other . . . . . . . . . . . . . . . . . . . . . . . 162,825 (35,048) 127,777
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TOTAL OTHER ASSETS . . . . . . . . . . . . . . $282,254 $(39,224) $243,030
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TOTAL ASSETS . . . . . . . . . . . . . . . . . . . .
See notes to unaudited pro forma financial information.
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GARDEN STATE NEWSPAPERS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
March 31, 1996
(In Thousands)
As Pro Forma
Reported Adjustments Pro Forma
-------- ----------- ---------
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
Trade accounts payable . . . . . . . . . . . . . . . . . . $ 6,483 $ (144) (a) $ 6,339
Accrued liabilities . . . . . . . . . . . . . . . . . . . . 13,407 (705) (a) 12,702
Unearned income . . . . . . . . . . . . . . . . . . . . . . 7,375 (1,017) (a) 6,358
Income taxes . . . . . . . . . . . . . . . . . . . . . . . 578 -- 578
Current portion of long-term debt and
capital lease obligation . . . . . . . . . . . . . . . . 21,266 (12,600) (b) 8,666
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TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . 49,109 (14,466) 34,643
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATION . . . . . . . . . . . . . . . . . . . . . . . . . 238,704 (34,300) (b) 204,404
OTHER LIABILITIES . . . . . . . . . . . . . . . . . . . . . . 8,898 (920) (a) 7,978
DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . . . . . 13,579 (2,685) (a) 10,894
SHAREHOLDERS' DEFICIT
Common stock . . . . . . . . . . . . . . . . . . . . . . . 1 -- 1
Additional paid in capital . . . . . . . . . . . . . . . . 78,570 -- 78,570
Deficit . . . . . . . . . . . . . . . . . . . . . . . . . (106,607) 13,147 (a) (93,460)
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TOTAL SHAREHOLDERS' DEFICIT . . . . . . . . . . . . . . . (28,036) 13,147 (14,889)
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TOTAL LIABILITIES AND SHAREHOLDERS'
DEFICIT . . . . . . . . . . . . . . . . . . . . . . . . . $282,254 $(39,224) $243,030
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See notes to unaudited pro forma financial information.
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GARDEN STATE NEWSPAPERS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Nine Months Ended March 31, 1996
(In Thousands)
As Pro Forma
Reported Adjustments Pro Forma
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OPERATING REVENUES $180,937 $(13,387) (a) $ 167,550
COST AND EXPENSES
Cost of sales . . . . . . . . . . . . . . . . . . 73,211 (4,608) (a) 68,603
Selling, general, and administrative . . . . . . 75,237 (4,086) (a) 71,151
Depreciation and amortization . . . . . . . . . . 15,180 (1,946) (a) 13,234
Interest expense . . . . . . . . . . . . . . . . 20,576 (2,533) (b) 18,043
Other, (net) . . . . . . . . . . . . . . . . . 2,869 34 (a) 2,903
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TOTAL COST AND EXPENSES . . . . . . . . . . . 187,073 (13,139) 173,934
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LOSS BEFORE INCOME
TAXES . . . . . . . . . . . . . . . . . . . . . . (6,136) 248 (6,384)
INCOME TAX BENEFIT (EXPENSE) . . . . . . . . . . . 152 (223) (a) (71)
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NET LOSS . . . . . . . . . . . . . . . . . . . . . $(5,984) $ 471 $(6,455)
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See notes to unaudited pro forma financial information.
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GARDEN STATE NEWSPAPERS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended June 30, 1995
(In Thousands)
As Pro Forma
Reported Adjustments Pro Forma
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OPERATING REVENUES $213,045 $(17,419) (a) $195,626
COST AND EXPENSES
Cost of sales . . . . . . . . . . . . . . . . . . 79,098 (5,719) (a) 73,379
Selling, general, and administrative . . . . . . 90,513 (5,525) (a) 84,988
Depreciation and amortization . . . . . . . . . . 18,710 (2,596) (a) 16,114
Interest expense . . . . . . . . . . . . . . . . 25,806 (2,547) (c) 23,259
Other, (net) . . . . . . . . . . . . . . . . . 2,387 132 (a) 2,519
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TOTAL COST AND EXPENSES . . . . . . . . . . . 216,514 (16,255) 200,259
GAIN ON SALE OF NEWSPAPER PROPERTY . . . . . . . . 4,153 - 4,153
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INCOME (LOSS) BEFORE INCOME TAXES . . . . . . . . . 684 (1,164) (480)
INCOME TAX BENEFIT (EXPENSE) . . . . . . . . . . . 364 (344) (a) 20
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NET INCOME (LOSS) . . . . . . . . . . . . . . . . . $ 1,048 $ (1,508) $ (460)
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See notes to unaudited pro forma financial information.
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GARDEN STATES NEWSPAPERS, INC.
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
NOTE 1: UNAUDITED PRO FORMA BALANCE SHEETS
(a) To eliminate assets and liabilities of The Johnstown
Tribune Publishing Company as of March 31, 1995, to
reflect the Johnstown Sale.
(b) Apply net cash proceeds of approximately $46.9
million to the reduction of current and long-term debt.
(c) Increase cash to reflect the reduction in interest
expense as a result of paying down long-term debt,
net of cash expenses associated with the Johnstown
Sale.
(d) Record preliminary estimate of fair value of
long-term assets received as consideration in the
Johnstown Sale.
NOTE 2: UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
(a) To eliminate revenues and expenses directly
associated with the operations of The Johnstown
Tribune Publishing Company.
(b) To reduce interest expense to reflect the use of the
proceeds from the Johnstown Sale to reduce the
Company's long-term debt. The interest reduction
does not reflect nine months of interest savings on
the full pay down as $21.5 million was borrowed on
August 31, 1995 and $11.0 million was borrowed on
March 10, 1996 in conjunction with the New England
Newspapers and San Mateo acquisitions, respectively.
If the Johnstown Sale had occurred on July 1, 1995,
proceeds from the sale which were not used to pay
debt or acquire additional newspapers would have been
invested in short-term financial instruments, the
effect of which is not reflected in the pro forma
adjustments.
(c) To reduce interest expense to reflect the use of the
proceeds from the Johnstown Sale to reduce the
Company's long-term debt. The reduction in interest
expense in fiscal year-end June 30, 1995, was limited
because $21.1 million of the amounts repaid in
conjunction with the Johnstown Sale were not borrowed
during fiscal year-end 1995. The Company's remaining
debt could not be repaid without substantial
penalties or renegotiations with the note holders.
If the Johnstown Sale had occurred on July 1, 1994,
proceeds from the sale which were not used to pay
down debt of approximately $17.3 million would have
been invested in short-term financial instruments,
the effect of which is not reflected in the pro forma
adjustments.
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