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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) June 30, 2000
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MediaNews Group, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 76-0425553
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(State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.)
1560 Broadway, Suite 2100, Denver, CO 80202
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 303-563-6360
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N/A
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(Former name or former address, if changed since last report.)
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Item 2. Acquisition or Disposition of Assets
Disposition
Effective June 30, 2000, MediaNews Group, Inc. (the "Registrant"), sold
substantially all of the assets used in the publication of The Express Times, in
Easton Pennsylvania; the Gloucester County Times, in Woodbury, New Jersey;
Today's Sunbeam, in Salem, New Jersey; the Bridgeton News, in Bridgeton, New
Jersey and the Registrant's remaining New Jersey weekly newspapers (the
"Disposition Transaction") to Penn Jersey Advance, Inc. for $145.0 million in
cash, plus an adjustment for working capital.
The sale was consummated in accordance with the Asset Purchase Agreement
dated June 30, 2000, between Penn Jersey Advance, Inc. and MediaNews Group and
its wholly owned subsidiaries. The descriptions of this transaction contained
herein are qualified by reference to the Asset Purchase Agreement, which is
attached as an Exhibit hereto.
Acquisition
On July 10, 2000, the Registrant agreed to acquire from Thomson Newspapers,
Inc., substantially all the assets used in the publication of the Connecticut
Post (the "Acquisition Transaction"), a daily newspaper distributed primarily in
Fairfield County, Connecticut, for approximately $205.0 million in cash, which
includes $5.0 million of working capital. The Connecticut Post has daily and
Sunday circulation of approximately 79,000 and 90,000, respectively, as of March
31, 2000, the most recent data for which such data is published. The purchase is
expected to close on October 1, 2000.
Proceeds from the June 30, 2000 sale described above will be used to fund a
majority of the acquisition price in a tax efficient exchange. The remaining
purchase price will be funded from available borrowings under the Registrant's
existing bank credit agreement.
The description of the acquisition of the Connecticut Post set forth herein
is qualified in its entirety by the provisions of the Asset Purchase Agreement
between Thomson Newspapers, Inc. and MediaNews Group, Inc., which is attached as
an exhibit hereto.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired
The Unaudited Pro Forma Financial Information with respect to the acquired
business is based on the unaudited financial statements of the acquired
business for the twelve month period ended June 30, 1999 and the nine month
period ended March 31, 2000.
(b) Unaudited Pro Forma Financial Information
Unaudited pro forma financial information has been presented for the
Disposition Transaction and the Acquisition Transaction described above,
beginning on page 5 of this report.
(c) Exhibits
2.1 Asset Purchase Agreement dated June 30, 2000 between Penn Jersey
Advance, Inc. and MediaNews Group and its wholly owned subsidiaries,
Long Beach Publishing Company, Easton Publishing Company, South Jersey
Newspapers Company and Internet Media Publishing, Inc.
2.2 Asset Purchase Agreement dated as of July 10, 2000 among Thomson
Newspapers, Inc., Thomson Newspapers Licensing Corporation, TN
Customer Holding LLC and MediaNews Group, Inc.
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MEDIANEWS GROUP, INC.
UNAUDITED PRO FROMA FINANCIAL INFORMATION
The accompanying unaudited pro forma balance sheet as of March 31, 2000,
gives effect to the Acquisition Transaction and the Disposition Transaction, as
if they had occurred on March 31, 2000.
The accompanying unaudited pro forma consolidated statement of operations for
the nine months ended March 31, 2000, and for the year ended June 30, 1999, give
effect to the Acquisition Transaction and the Disposition Transaction, as if the
transactions had occurred on July 1, 1999 and July 1, 1998, respectively.
The pro forma financial information is not necessarily indicative of the
future operations or of the consolidated results of operations had the
Acquisition Transaction and the Disposition Transaction actually taken place on
July 1, 1999 and July 1, 1998. The pro forma financial information should be
read in conjunction with the historical financial statements and notes there to,
appearing in the June 30, 1999, Form 10K of Garden State Newspapers, Inc. and
the March 31, 2000, Form 10Q for MediaNews Group, Inc., as successor issuer to
Garden State Newspapers, Inc.
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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.
MEDIANEWS GROUP, INC.
Date: July 14, 2000 BY: /s/ Joseph J. Lodovic, IV
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Joseph J. Lodovic, IV
Executive Vice President,
Chief Financial Officer
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MEDIANEWS GROUP, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
March 31, 2000
(Amounts in Thousands)
Disposition and Acquisition and
As Pro Forma Pro Forma
Reported Adjustments Adjustments Pro Forma
---------- --------------- --------------- ----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents..................................... $ -- $ -- $ -- $ --
Accounts receivable, less allowance for doubtful accounts..... 111,957 (6,219) (a) 6,836 112,574
Inventories of newsprint and supplies......................... 22,408 (917) (a) 1,180 22,671
Prepaid expenses and other assets............................. 6,883 (172) (a) 278 6,989
Income tax receivable......................................... 3,693 -- -- 3,693
---------- -------- -------- ----------
TOTAL CURRENT ASSETS........................................ 144,941 (7,308) 8,294 145,927
PROPERTY, PLANT AND EQUIPMENT
Land.......................................................... 29,690 (866) (a) 2,632 (f) 31,456
Buildings and improvements.................................... 115,732 (4,991) (a) 7,186 (f) 117,927
Machinery and equipment....................................... 371,748 (13,471) (a) 14,885 (f) 373,162
---------- -------- -------- ----------
Total Property, Plant And Equipment......................... 517,170 (19,328) 24,703 522,545
Less accumulated depreciation and amortization................ (153,384) 7,261 (a) -- (g) (146,123)
---------- -------- -------- ----------
Net Property, Plant and Equipment........................... 363,786 (12,067) 24,703 376,422
OTHER ASSETS
Investment in partnerships.................................... 17,844 -- -- 17,844
Subscriber accounts, net of accumulated amortization.......... 118,520 (5,993) (a) 8,000 (f) 120,527
Excess of cost over fair value of net assets acquired,
net of accumulated amortization............................. 327,015 (8,345) (a) 192,072 (h) 510,742
Covenants not to compete and other identifiable
intangible assets, net of accumulated amortization.......... 12,544 -- -- 12,544
Other......................................................... 43,488 (70) (a) -- 43,418
---------- -------- -------- ----------
TOTAL OTHER ASSETS.......................................... 519,411 (14,408) 200,072 705,075
---------- -------- -------- ----------
TOTAL ASSETS..................................................... $1,028,138 $(33,783) $233,069 $1,227,424
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See notes to unaudited pro forma financial information.
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MEDIANEWS GROUP, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
March 31, 2000
(In Thousands)
Disposition and Acquisition and
As Pro Forma Pro Forma
Reported Adjustments Adjustments Pro Forma
---------- --------------- --------------- ----------
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
Trade accounts payable........................................ $ 32,440 $ (830) (a) $ -- $ 31,610
Accrued liabilities........................................... 57,917 290 (a),(b) 3,097 (i) 61,304
Unearned income............................................... 27,086 (1,968) (a) 697 25,815
Income taxes.................................................. -- 5,267 (d) -- 5,267
Current portion of long-term debt and capital
lease obligation............................................ 11,758 -- -- 11,758
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TOTAL CURRENT LIABILITIES................................... 129,201 2,759 3,794 135,754
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATION..................... 835,801 (149,120) (c) 205,000 (k) 891,681
OTHER LIABILITIES............................................... 16,215 -- -- 16,215
DEFERRED INCOME TAXES........................................... 40,333 561 (d) 24,275 (j) 65,169
MINORITY INTEREST............................................... 129,283 -- -- 129,283
SHAREHOLDERS' DEFICIT
Common stock.................................................. 23 -- -- 23
Additional paid in capital.................................... 3,610 -- -- 3,610
Deficit...................................................... (126,328) 112,017 (e) -- (14,311)
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TOTAL SHAREHOLDERS' DEFICIT................................ (122,695) 112,017 -- (10,678)
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TOTAL LIABILITIES AND SHAREHOLDERS'
DEFICIT...................................................... $1,028,138 $ (33,783) $223,069 $1,227,424
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See notes to unaudited pro forma financial information.
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MEDIANEWS GROUP, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
Nine Months Ended March 31, 2000
(In Thousands)
Disposition and Acquisition and
As Pro Forma Pro Forma
Reported Adjustments Adjustments Pro Forma
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OPERATING REVENUES........................................... $700,226 $(40,594) (a) $48,800 $708,432
COST AND EXPENSES
Cost of sales.............................................. 238,348 (12,207) (a) 11,877 (c) 238,018
Selling, general, and administrative....................... 329,020 (21,012) (a) 19,768 (d) 327,776
Depreciation and amortization.............................. 46,823 (2,715) (a) 5,589 (e) 49,697
Interest expense........................................... 55,891 -- 2,840 (f) 58,731
Other, (net)............................................... 6,780 (835) (a) 292 6,237
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TOTAL COST AND EXPENSES................................. 676,862 (36,769) 40,366 680,459
GAIN ON SALE OF NEWSPAPER PROPERTY........................... 3,323 -- -- 3,323
MINORITY INTEREST............................................ 20,706 -- -- 20,706
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INCOME BEFORE INCOME TAXES................................... 5,981 (3,825) 8,434 10,590
INCOME TAX (EXPENSE) BENEFIT................................. (1,461) 1,365 (b) (3,711) (g) (3,807)
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NET INCOME................................................... $ 4,520 $ (2,460) $ 4,723 $ 6,783
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EARNING PER COMMON SHARE..................................... $ 1.95 $ (1.06) $ 2.04 $ 2.93
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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 STATEMENTS OF OPERATIONS
Year Ended June 30, 1999
(In Thousands)
Disposition and Acquisition and
As Pro Forma Pro Forma
Reported Adjustments Adjustments Pro Forma
-------- --------------- --------------- ---------
OPERATING REVENUES............................................. $568,637 $(53,414) (a) $63,843 $579,066
COST AND EXPENSES
Cost of sales................................................ 183,845 (18,742) (a) 15,636 (c) 180,739
Selling, general, and administrative......................... 254,923 (25,169) (a) 26,499 (d) 256,253
Depreciation and amortization................................ 44,825 (3,629) (a) 7,453 (e) 48,649
Interest expense............................................. 56,479 -- 3,640 (f) 60,119
Other, (net)................................................. 13,014 (289) (a) -- 12,725
-------- -------- ------- --------
TOTAL COST AND EXPENSES.................................... 553,086 (47,829) 53,228 558,485
MINORITY INTEREST.............................................. 5,521 -- -- 5,521
-------- -------- ------- --------
INCOME (LOSS) BEFORE INCOME TAXES AND
EXTRAORDINARY LOSS........................................... 10,030 (5,585) 10,615 15,060
INCOME TAX EXPENSE............................................. (4,474) 1,988 (b) (4,292) (g) (6,778)
EXTRAORDINARY LOSS............................................. (6,378) -- -- (6,378)
-------- -------- ------- --------
NET INCOME (LOSS).............................................. $ (822) $ (3,597) $ 6,323 $ 1,904
======== ======== ======= ========
EARNING (LOSS) PER COMMON SHARE:
Net Income before extraordinary loss......................... $ 2.40 $ (1.55) $ 2.72 $ 3.57
Extraordinary loss........................................... (2.75) -- -- (2.75)
-------- -------- ------- --------
Earnings Per Common Share.................................... $ (.35) $ (1.55) $ 2.72 $ .82
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See notes to unaudited pro forma financial information.
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MEDIANEWS GROUP, INC.
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
NOTE 1: UNAUDITED PRO FORMA BALANCE SHEET
Disposition Transaction Pro Forma Adjustments
(a) Eliminate the assets and liabilities related to the Disposition Transaction
as of March 31, 2000, which were sold pursuant to the June 30, 2000, Asset
Purchase Agreement between Penn Jersey Advance, Inc. and MediaNews Group,
Inc. and its subsidiaries.
(b) Accrue certain estimated costs, which were directly associated with the
Disposition Transaction.
(c) Decrease long-term debt to reflect the proceeds from the sale and the
estimated working capital payment. The proceeds from the sale will be
reinvested in the Acquisition Transaction.
(d) Current and deferred income taxes have been adjusted to reflect the
estimated taxes payable associated with the gain on the Disposition
Transaction.
(e) Retained earnings have been adjusted to reflect the estimated gain after
income taxes from the Disposition Transaction.
Acquisition Transaction
The following pro forma adjustments have been made to the March 31, 2000
historical balance of the newspaper to be acquired in the Acquisition
Transaction.
(f) Record property, plant and equipment and subscriber lists at their
estimated fair market value.
(g) Eliminate historical accumulated depreciation on plant and equipment
acquired.
(h) Record the excess of cost over the fair market value of assets acquired.
(i) Increase accrued liabilities to accrue the estimated organization, closing
and other costs directly associated with the Acquisition Transaction.
(j) Increase deferred income taxes to reflect the expected deferral of income
taxes on the gain, from the Disposition Transaction, created by exchanging
for income tax purposes the assets of the Disposition Transaction for those
to be acquired in the Acquisition Transaction.
(k) Record the purchase price of the Acquisition Transaction as an increase in
long-term debt.
NOTE 2: UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
Disposition Transaction Pro Forma Adjustments
(a) Eliminate revenues and expenses directly associated with the operations
sold in the Disposition Transaction.
(b) Adjust income tax expense to reflect the elimination of the operating
results sold in the Disposition Transaction.
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MEDIANEWS GROUP, INC.
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
NOTE 2: UNAUDITED PRO FORMA STATEMENT OF OPERATIONS (CONTINUED)
Acquisition Transaction
The following are the pro forma adjustments to the historical financial
statements of the newspaper operations to be acquired in the Acquisition
Transaction.
(c) Cost of sales has been reduced to reflect the newsprint savings from
adjusting the web width of the presses from 55 inches to 50 inches and to
adjust Thomson Newspaper, Inc.'s corporate newsprint charge to reflect the
historical fair market value of the newsprint consumed.
(d) Pension expense was eliminated as the pension plan was not acquired and no
new defined benefit pension plan will be implemented at the acquired
newspaper.
(e) Depreciation and amortization expense of the acquired assets has been
adjusted to reflect the fair market value of the acquired assets and the
useful lives assigned to these assets.
(f) Interest expense has been adjusted to reflect the interest on borrowings
associated with the Acquisition Transaction.
(g) Income taxes reflect the estimated state taxes that would be due if
MediaNews Group had owned the newspaper to be acquired in the Acquisition
Transaction at the beginning of each pro forma period presented.
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
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2.1 Asset Purchase Agreement dated June 30, 2000 between Penn Jersey
Advance, Inc. and MediaNews Group and its wholly owned subsidiaries,
Long Beach Publishing Company, Easton Publishing Company, South Jersey
Newspapers Company and Internet Media Publishing, Inc.
2.2 Asset Purchase Agreement dated as of July 10, 2000 among Thomson
Newspapers, Inc., Thomson Newspapers Licensing Corporation, TN
Customer Holding LLC and MediaNews Group, Inc.
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