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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): November 16, 1999
COMCAST CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 0-6983 23-1709202
- ---------------- ---------------- -------------
(State or other (Commission file (IRS employer
jurisdiction of number) identification
incorporation) no.)
1500 Market Street, Philadelphia, PA 19102-2148
--------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 665-1700
--------------
Item 2. Acquisition or Disposition of Assets.
On November 16, 1999, Comcast Corporation ("Comcast") entered into a
definitive agreement to purchase Lenfest Communications, Inc. ("Lenfest") in
exchange for approximately 116.0 million shares, subject to closing adjustments,
of Comcast's Class A Special Common Stock, par value $1.00 per share (the
"Lenfest Acquisition"). The Lenfest Acquisition is to be consummated pursuant to
the terms of an Agreement and Plan of Merger between Comcast, Comcast LCI
Holding, Inc., a wholly owned subsidiary of Comcast, Lenfest and the Lenfest
stockholders as named therein. The Agreement and Plan of Merger is incorporated
by reference hereto as Exhibit 10.1.
The unaudited pro forma condensed consolidated financial statements of
Comcast Corporation are included in this Report under Item 7 and are listed in
the index to unaudited pro forma financial information.
2
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The unaudited pro forma condensed consolidated financial statements of Comcast
Corporation are included in this Report and are listed in the index to unaudited
pro forma financial information.
EXHIBIT NO.
10.1 Agreement and Plan of Merger (the "Merger Agreement"), dated as of
November 16, 1999, by and among Comcast Corporation ("Comcast"),
Comcast LCI Holdings, Inc., a wholly owned subsidiary of Comcast,
Lenfest Communications, Inc. ("Lenfest") and Lenfest's stockholders as
named therein (incorporated by reference to Exhibit 10.1 to our
Current Report on Form 8-K filed on December 13, 1999).
23.1 Consent of Pressman Ciocca Smith LLP.
99.1 The audited consolidated financial statements of Lenfest as of
December 31, 1998 and 1997 and for each of the three years in the
period ended December 31, 1998 (incorporated by reference to Lenfest's
Annual Report on Form 10-K filed on March 31, 1999).
99.2 The unaudited condensed consolidated financial statements of Lenfest
for the nine months ended September 30, 1999 (incorporated by
reference to Lenfest's Quarterly Report on Form 10-Q filed on
November 5, 1999).
3
SIGNATURE
---------
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, thereunto duly authorized.
Dated: December 17, 1999 COMCAST CORPORATION
By: /s/ Joseph J. Euteneuer
-----------------------
Joseph J. Euteneuer
Vice President and
Corporate Controller
4
EXHIBIT INDEX
-------------
23.1 Consent of Pressman Ciocca Smith LLP.
99.1 The audited consolidated financial statements of Lenfest as of
December 31, 1998 and 1997 and for each of the three years in the
period ended December 31, 1998 (incorporated by reference to Lenfest's
Annual Report on Form 10-K filed on March 31, 1999).
99.2 The unaudited condensed consolidated financial statements of Lenfest
for the nine months ended September 30, 1999 (incorporated by
reference to Lenfest's Quarterly Report on Form 10-Q filed on
November 5, 1999).
5
COMCAST CORPORATION
INDEX TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
Unaudited Pro Forma Financial Information F - 1
Unaudited Pro Forma Condensed Consolidated
Balance Sheet as of September 30, 1999 F - 2
Unaudited Pro Forma Condensed Consolidated Statement
of Operations for the Nine Months Ended September 30, 1999 F - 3
Unaudited Pro Forma Condensed Consolidated Statement
of Operations for the Year Ended December 31, 1998 F - 4
Notes to Unaudited Pro Forma Condensed Consolidated
Financial Statements F - 5
UNAUDITED PRO FORMA
FINANCIAL INFORMATION
On November 16, 1999, Comcast Corporation ("Comcast") entered into a definitive
agreement to purchase Lenfest Communications, Inc. ("Lenfest") in exchange for
approximately 116.0 million shares, subject to closing adjustments, of Comcast's
Class A Special Common Stock, par value $1.00 per share (the "Class A Special
Common Stock"), valued at $5.339 billion, based on the average closing price of
the Class A Special Common Stock for the period from November 9, 1999 to
November 22, 1999 (the "Lenfest Acquisition").
The unaudited pro forma information set forth below for Comcast gives effect to
the Lenfest Acquisition as if it had been completed on January 1, 1998 for
purposes of the condensed consolidated statement of operations for the nine
months ended September 30, 1999 and for the year ended December 31, 1998. For
purposes of the condensed consolidated balance sheet, the Lenfest Acquisition
was assumed to have occurred on September 30, 1999. This information is based on
the historical consolidated balance sheets and related historical consolidated
statements of operations of Comcast and Lenfest giving effect to the Lenfest
Acquisition using the purchase method of accounting for business combinations.
This pro forma financial information should be read in conjunction with the
historical consolidated financial statements of Comcast and Lenfest and the
respective notes thereto that have been incorporated herein by reference.
The pro forma adjustments do not reflect any operating efficiencies and cost
savings that may be achieved with respect to the combined company. The pro forma
adjustments do not include any adjustments to historical sales for any future
price changes nor any adjustments to selling, marketing or any other expenses
for any future operating changes. Upon the closing of the Lenfest Acquisition,
Lenfest may incur certain integration related expenses not reflected in the pro
forma financial statements as a result of the elimination of duplicate
facilities, operational realignment and related workforce reductions. Such costs
would generally be recognized by Comcast as a liability assumed as of the merger
date resulting in additional goodwill in accordance with Emerging Issues Task
Force No. 95-3, Recognition of Liabilities in Connection with a Purchase
Business Combination. The assessment of integration related expenses is ongoing.
The following information is not necessarily indicative of the financial
position or operating results that would have occurred had the Lenfest
Acquisition been consummated on the dates, or at the beginning of the periods,
for which such transaction has been given effect.
For purposes of preparing Comcast's consolidated financial statements, Comcast
will establish a new basis for Lenfest's assets and liabilities based upon fair
values thereof and the Comcast purchase price, including the costs of the
Lenfest Acquisition. A final determination of required purchase accounting
adjustments, including the allocation of the purchase price to the assets
acquired and liabilities assumed based on their respective fair values, has not
yet been made. Accordingly, the purchase accounting adjustments made in
connection with the development of the pro forma condensed consolidated
financial information are preliminary and have been made solely for purposes of
developing such pro forma condensed consolidated financial information. Comcast
will obtain an independent appraisal of the fair value of certain of Lenfest's
assets and liabilities and will make appropriate purchase accounting adjustments
upon completion of that appraisal. Assuming completion of the Lenfest
Acquisition, the actual financial position and results of operations will
differ, perhaps significantly, from the pro forma amounts reflected herein
because of a variety of factors, including access to additional information,
changes in values not currently identified and changes in operating results
between the dates of the pro forma financial data and the date on which the
Lenfest Acquisition takes place.
F-1
Comcast Corporation
Pro Forma Condensed Consolidated Balance Sheet (Unaudited)
As of September 30, 1999
(Dollars in millions)
Historical Historical Pro Forma Comcast
Comcast Lenfest Adjustments Pro Forma
------- ------- ----------- ---------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $881.9 $77.8 $4.1 (4),(5),(6) $963.8
Investments 5,354.1 110.9 (31.2) (4) 5,433.8
Accounts receivable, less allowance for doubtful accounts 541.6 26.5 (6.2) (4),(6),(9),(11) 561.9
Inventories, net 468.4 468.4
Other current assets 95.3 5.5 1.0 (4),(6) 101.8
---------------------------------- ---------
Total current assets 7,341.3 220.7 (32.3) 7,529.7
---------------------------------- ---------
INVESTMENTS 2,683.2 (32.8) 165.6 (4),(6) 2,816.0
---------------------------------- ---------
PROPERTY AND EQUIPMENT 4,832.3 1,030.3 398.8 (1),(4),(6) 6,261.4
Accumulated depreciation (1,622.5) (503.3) 503.3 (1),(4) (1,622.5)
---------------------------------- ---------
Property and equipment, net 3,209.8 527.0 902.1 4,638.9
---------------------------------- ---------
DEFERRED CHARGES AND OTHER 11,496.6 933.9 6,942.8 (2),(4),(5),(6),(8),(16) 19,373.3
Accumulated amortization (2,466.0) (310.9) 310.9 (2), (4) (2,466.0)
---------------------------------- ---------
Deferred charges and other, net 9,030.6 623.0 7,253.7 16,907.3
---------------------------------- ---------
$22,264.9 $1,337.9 $8,289.1 $31,891.9
================================== =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES
Accounts payable and accrued expenses $2,197.3 $97.2 $74.1 (4),(6),(9),(11),(16) $2,368.6
Accrued interest 140.9 38.3 0.7 (6) 179.9
Deferred income taxes 1,575.3 1,575.3
Current portion of long-term debt 178.4 178.4
---------------------------------- ---------
Total current liabilities 4,091.9 135.5 74.8 4,302.2
---------------------------------- ---------
LONG-TERM DEBT, less current portion 6,778.0 1,436.4 361.4 (3),(6) 8,575.8
---------------------------------- ---------
DEFERRED INCOME TAXES 2,883.7 7.1 2,234.1 (8) 5,124.9
---------------------------------- ---------
MINORITY INTEREST AND OTHER 875.4 31.6 (6) 907.0
---------------------------------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIENCY)
Series B convertible preferred stock 562.3 562.3
Class A special common stock 715.1 116.0 (5) 831.1
Class A common stock 27.2 27.2
Class B common stock 9.4 9.4
Additional capital 3,448.2 50.7 5,172.2 (5),(7) 8,671.1
Accumulated deficit (371.9) (312.8) 312.8 (4),(7) (371.9)
Accumulated other comprehensive income 3,245.6 21.0 (13.8) (4),(6),(7) 3,252.8
---------------------------------- ---------
Total stockholders' equity (deficiency) 7,635.9 (241.1) 5,587.2 12,982.0
---------------------------------- ---------
$22,264.9 $1,337.9 $8,289.1 $31,891.9
================================== =========
See notes to unaudited pro forma condensed consolidated financial statements.
F-2
Comcast Corporation
Pro Forma Condensed Consolidated Statement of Operations (Unaudited)
Nine Months Ended September 30, 1999
(Amounts in millions, except per share data)
Historical Historical Pro Forma Comcast
Comcast Lenfest Adjustments Pro Forma
REVENUES
Service income $2,418.4 $404.5 $60.1 (4),(6),(9),(10),(11) $2,883.0
Net sales from electronic retailing 1,959.2 1,959.2
-------------------------------- ---------
4,377.6 404.5 60.1 4,842.2
-------------------------------- ---------
COSTS AND EXPENSES
Operating 1,201.6 145.9 4.6 (4),(6),(9),(10),(11) 1,352.1
Cost of goods sold from electronic retailing 1,181.1 1,181.1
Selling, general and administrative 648.6 89.6 4.5 (4),(6) 742.7
Depreciation 402.7 73.0 73.5 (4),(6),(12) 549.2
Amortization 456.2 38.0 404.6 (4),(6),(12) 898.8
-------------------------------- ---------
3,890.2 346.5 487.2 4,723.9
-------------------------------- ---------
OPERATING INCOME 487.4 58.0 (427.1) 118.3
OTHER (INCOME) EXPENSE
Interest expense 392.8 93.1 7.5 (6),(13) 493.4
Investment income (229.1) (0.8) (0.4) (6) (230.3)
Equity in net income of affiliates (0.9) (5.4) 10.7 (4),(6) 4.4
Other (income) expense (1,433.6) 0.9 0.2 (4) (1,432.5)
-------------------------------- ---------
(1,270.8) 87.8 18.0 (1,165.0)
-------------------------------- ---------
INCOME (LOSS) BEFORE INCOME TAX EXPENSE,
MINORITY INTEREST, DISCONTINUED OPERATIONS
AND EXTRAORDINARY ITEMS 1,758.2 (29.8) (445.1) 1,283.3
INCOME TAX EXPENSE 827.9 (159.0) (14) 668.9
-------------------------------- ---------
INCOME (LOSS) BEFORE MINORITY INTEREST,
DISCONTINUED OPERATIONS AND EXTRAORDINARY
ITEMS 930.3 (29.8) (286.1) 614.4
MINORITY INTEREST INCOME (18.2) (18.2)
-------------------------------- ---------
INCOME (LOSS) FROM CONTINUING OPERATIONS 948.5 (29.8) (286.1) 632.6
PREFERRED DIVIDENDS (22.4) (22.4)
-------------------------------- ---------
INCOME (LOSS) FROM CONTINUING OPERATIONS
FOR COMMON STOCKHOLDERS $926.1 ($29.8) ($286.1) $610.2
================================ =========
Basic earnings for common stockholders per common share
from continuing operations $1.24 $0.71
========== =========
Basic weighted average number of common shares
outstanding during the period 747.0 116.0 (15) 863.0
========== ======== =========
Diluted earnings for common stockholders per common share
from continuing operations $1.16 $0.68
========== =========
Diluted weighted average number of common shares
outstanding during the period 815.4 116.0 (15) 931.4
========== ======== =========
See notes to unaudited pro forma condensed consolidated financial statements.
F-3
Comcast Corporation
Pro Forma Condensed Consolidated Statement of Operations (Unaudited)
Year Ended December 31, 1998
(Amounts in millions, except per share data)
Historical Historical Pro Forma Comcast
Comcast Lenfest Adjustments Pro Forma
REVENUES
Service income $2,742.6 $470.4 $78.3 (4),(6),(9),(10),(11) $3,291.3
Net sales from electronic retailing 2,402.7 2,402.7
-------------------------------- ---------
5,145.3 470.4 78.3 5,694.0
-------------------------------- ---------
COSTS AND EXPENSES
Operating 1,410.3 169.9 9.1 (4),6),(9),(10),(11) 1,589.3
Cost of goods sold from electronic retailing 1,462.0 1,462.0
Selling, general and administrative 776.3 105.0 2.8 (4),(6) 884.1
Depreciation 463.9 89.3 55.2 (4),(6),(12) 608.4
Amortization 475.7 48.6 541.8 (4),(6),(12) 1,066.1
-------------------------------- ---------
4,588.2 412.8 608.9 5,609.9
-------------------------------- ---------
OPERATING INCOME 557.1 57.6 (530.6) 84.1
OTHER (INCOME) EXPENSE
Interest expense 466.7 120.1 13.0 (6),(13) 599.8
Investment income (1,828.0) (17.2) (0.5) (6) (1,845.7)
Equity in net losses of affiliates 515.9 3.8 (1.2) (4),(6) 518.5
Gain from equity offering of affiliate (157.8) (157.8)
Other expense 2.9 0.3 3.2
-------------------------------- ---------
(1,000.3) 107.0 11.3 (882.0)
-------------------------------- ---------
INCOME (LOSS) BEFORE INCOME TAX EXPENSE
(BENEFIT), MINORITY INTEREST, DISCONTINUED
OPERATIONS AND EXTRAORDINARY ITEMS 1,557.4 (49.4) (541.9) 966.1
INCOME TAX EXPENSE (BENEFIT) 594.0 (3.1) (187.1) (14) 403.8
-------------------------------- ---------
INCOME (LOSS) BEFORE MINORITY INTEREST,
DISCONTINUED OPERATIONS AND
EXTRAORDINARY ITEMS 963.4 (46.3) (354.8) 562.3
MINORITY INTEREST INCOME (44.3) (44.3)
-------------------------------- ---------
INCOME (LOSS) FROM CONTINUING OPERATIONS 1,007.7 (46.3) (354.8) 606.6
PREFERRED DIVIDENDS (29.1) (29.1)
-------------------------------- ---------
INCOME (LOSS) FROM CONTINUING OPERATIONS
FOR COMMON STOCKHOLDERS $978.6 ($46.3) ($354.8) $577.5
================================ =========
Basic earnings for common stockholders per common share
from continuing operations $1.34 $0.68
========== =========
Basic weighted average number of common shares
outstanding during the period 733.0 116.0 (15) 849.0
========== ======== =========
Diluted earnings for common stockholders per common share
from continuing operations $1.25 $0.66
========== =========
Diluted weighted average number of common shares
outstanding during the period 806.0 116.0 (15) 922.0
========== ======== =========
See notes to unaudited pro forma condensed consolidated financial statements.
F-4
PRO FORMA ADJUSTMENTS
The following adjustments and elimination entries have been made to the
unaudited pro forma condensed consolidated balance sheet and unaudited pro forma
condensed consolidated statement of operations to reflect the Lenfest
Acquisition:
1. Represents the estimated fair value of the property and equipment acquired
in excess of the historical book value of such property and equipment. The
estimated fair value of the acquired property and equipment is subject to
adjustment upon receipt by Comcast of an independent appraisal of Lenfest.
2. Represents the allocation of the excess of the total consideration over
the net assets acquired to deferred charges, principally to franchise
acquisition costs. The purchase price allocation is subject to adjustment
upon receipt by Comcast of an independent appraisal of Lenfest.
3. Represents the estimated fair value of the long-term debt acquired in
excess of the historical book value of such long-term debt. The purchase
price allocation is subject to adjustment upon receipt by Comcast of an
independent appraisal of Lenfest.
4. Represents the elimination of certain assets and liabilities and the
results of operations that were not acquired or assumed by the Company
pursuant to the terms of the Merger Agreement (primarily certain of
Lenfest's non-cable television operations).
5. Represents the par value of the 116.0 million shares of Class A Special
Common Stock issued by Comcast and the related additional capital valued
at $5.339 billion, based on the average closing price of the Class A
Special Common Stock for the period from November 9, 1999 to November 22,
1999, and certain other costs of the acquisition totaling $2.0 million.
6. Represents the consolidation of Garden State Cablevision L.P., an investee
previously accounted for under the equity method, owned 50% by Comcast and
50% by Lenfest.
7. Represents the elimination of Lenfest's historical equity.
8. Represents goodwill and deferred income taxes resulting from differences
in the book and tax bases of the assets of Lenfest arising from the
Lenfest Acquisition.
9. Represents the elimination of commissions paid to Lenfest by QVC, Inc., a
consolidated subsidiary of Comcast.
10. Represents the elimination of cable programming expenses charged to
Lenfest by E! Entertainment Television, Inc., a consolidated subsidiary of
Comcast.
11. Represents the elimination of cable programming expenses charged to
Lenfest by Comcast SportsNet, a consolidated subsidiary of Comcast.
12. Represents depreciation and amortization expense related to the fair value
of the assets acquired in excess of their historical book values and
amortization of deferred charges and goodwill arising from the Lenfest
Acquisition. Depreciation expense is based on a weighted average life for
property and equipment of 10 years. Amortization expense is based on a
weighted average life for deferred charges of 12 years and goodwill of 20
years.
13. Represents a reduction in interest expense resulting from the increased
fair value of the debt acquired in excess of its historical book value.
The reduction in interest expense is based on a weighted average maturity
date of Lenfest's long-term debt of approximately 7 years.
14. Represents the tax effects of the pro forma adjustments.
15. Represents the shares of Comcast's Class A Special Common stock issued in
the Lenfest Acquisition.
16. Represents bonus plan payments due under the Agreement and Plan of Merger,
entered into by Comcast, Comcast LCI Holdings, Inc., a wholly owned
subsidiary of Comcast, Lenfest and Lenfest's stockholders as named
therein, estimated at approximately $60.0 million. Payments under the
bonus plan are contingent upon the closing of the Lenfest Acquisition. For
the purpose of the pro forma financial statements, the bonus plan payments
have been recognized as a liability assumed as part of the Lenfest
Acquisition which results in additional deferred charges at the date of
acquisition.
F-5
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in this Form 8-K of Comcast
Corporation of our report dated March 5, 1999, on our audits of the consolidated
balance sheets of Lenfest Communications, Inc. and subsidiaries as of December
31, 1998 and 1997, and the related consolidated statements of operations and
comprehensive income (loss), changes in stockholders' equity (deficit) and cash
flows for each of the years in the three-year period ended December 31, 1998.
Such consolidated financial statements are not separately presented herein.
/s/ Pressman Ciocca Smith LLP
December 14, 1999
Hatboro, Pennsylvania