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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM 8-K/A
(Amendment No. 1)
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"), Comcast's wholly
owned subsidiary, Comcast LCI Holdings, Inc. ("LCI Holdings"), Lenfest
Communications, Inc. ("Lenfest") and the Lenfest stockholders entered into an
Agreement and Plan of Merger ("Merger Agreement") pursuant to which Comcast was
to acquire Lenfest in exchange for a specified number of shares of its Class A
Special Common Stock, par value $1.00 per share (the "Class A Special Common
Stock"), determined by formula, as defined in the Merger Agreement (the "Lenfest
Acquisition"), subject to closing adjustments. At the time Comcast entered into
the Merger Agreement, the consideration to be exchanged in the Lenfest
Acquisition was calculated to be approximately 116 million shares of Class A
Special Common Stock, subject to closing adjustments, with a value of $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.
On January 18, 2000, the Lenfest Acquisition closed. At the time of
closing, the consideration to be exchanged in the Lenfest Acquisition was
calculated to be 121.4 million shares of Class A Special Common Stock, subject
to closing adjustments, with a value of $6.077 billion, based on the average
closing price of the Class A Special Common Stock for the period from January
12, 2000 to January 14, 2000. Immediately upon closing of the Lenfest
Acquisition, Lenfest was merged with and into LCI Holdings, with LCI Holdings as
the surviving corporation. 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, 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, 1999 and 1998 and for each of the three years in the
period ended December 31, 1999 (incorporated by reference to Lenfest's
Annual Report on Form 10-K filed on March 30, 2000).
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: April 3, 2000 COMCAST CORPORATION
By: /s/ Lawrence J. Salva
-----------------------
Lawrence J. Salva
Senior Vice President and
Chief Accounting Officer
4
EXHIBIT INDEX
-------------
23.1 Consent of Pressman Ciocca Smith LLP.
99.1 The audited consolidated financial statements of Lenfest as of
December 31, 1999 and 1998 and for each of the three years in the
period ended December 31, 1999 (incorporated by reference to Lenfest's
Annual Report on Form 10-K filed on March 30, 2000).
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 December 31, 1999 F - 2
Unaudited Pro Forma Condensed Consolidated Statement
of Operations for the Year Ended December 31, 1999 F - 3
Notes to Unaudited Pro Forma Condensed Consolidated
Financial Statements F - 4
UNAUDITED PRO FORMA
FINANCIAL INFORMATION
On November 16, 1999, Comcast Corporation ("Comcast"), Comcast's wholly owned
subsidiary, Comcast LCI Holdings, Inc. ("LCI Holdings"), Lenfest Communications,
Inc. ("Lenfest") and the Lenfest stockholders entered into an Agreement and Plan
of Merger (the "Merger Agreement") pursuant to which Comcast was to acquire
Lenfest in exchange for a specified number of shares of its Class A Special
Common Stock, par value $1.00 per share (the "Class A Special Common Stock"),
determined by formula, as defined in the Merger Agreement (the "Lenfest
Acquisition"), subject to closing adjustments.
On January 18, 2000, the Lenfest Acquisition closed. At the time of closing, the
consideration to be exchanged in the Lenfest Acquisition was calculated to be
121.4 million shares of Class A Special Common Stock, subject to closing
adjustments, with a value of $6.077 billion, based on the average closing price
of the Class A Special Common Stock for the period from January 12, 2000 to
January 14, 2000. The determination of the closing adjustments is ongoing.
Immediately upon closing of the Lenfest Acquisition, Lenfest was merged with and
into LCI Holdings, with LCI Holdings as the surviving corporation.
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, 1999 for
purposes of the condensed consolidated statement of operations for the year
ended December 31, 1999. For purposes of the condensed consolidated balance
sheet, the Lenfest Acquisition was assumed to have occurred on December 31,
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 period,
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.
F-1
Comcast Corporation
Pro Forma Condensed Consolidated Balance Sheet (Unaudited)
As of December 31, 1999
(Dollars in millions)
Historical Historical Pro Forma Comcast
Comcast Lenfest Adjustments Pro Forma
------- ------- ----------- ---------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $922.2 $145.0 $4.1 (4),(5),(6) $1,071.3
Investments 7,606.0 159.0 7,765.0
Accounts receivable, less allowance for doubtful accounts 673.3 30.9 (5.7)(4),(6),(9),(11) 698.5
Inventories, net 457.0 457.0
Other current assets 100.1 3.0 1.4 (4),(6) 104.5
------------------------------------- ---------
Total current assets 9,758.6 337.9 (0.2) 10,096.3
------------------------------------- ---------
INVESTMENTS 5,548.8 (30.9) 169.1 (4),(6) 5,687.0
------------------------------------- ---------
PROPERTY AND EQUIPMENT 5,099.0 1,096.3 502.0 (1),(4),(6) 6,697.3
Accumulated depreciation (1,700.9) (530.6) 530.6 (1),(4) (1,700.9)
------------------------------------- ---------
Property and equipment, net 3,398.1 565.7 1,032.6 4,996.4
------------------------------------- ---------
DEFERRED CHARGES AND OTHER 12,722.1 927.6 7,689.4 (2),(4),(5),(6),(8),(16) 21,339.1
Accumulated amortization (2,742.0) (322.8) 322.8 (2),(4) (2,742.0)
------------------------------------- ---------
Deferred charges and other, net 9,980.1 604.8 8,012.2 18,597.1
------------------------------------- ---------
$28,685.6 $1,477.5 $9,213.7 $39,376.8
===================================== =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES
Accounts payable and accrued expenses $2,786.5 $130.8 $73.6 (4),(6),(9),(11),(16) $2,990.9
Accrued interest 104.5 21.5 0.7 (6) 126.7
Deferred income taxes 2,118.6 2,118.6
Current portion of long-term debt 517.5 205.0 722.5
------------------------------------- ---------
Total current liabilities 5,527.1 357.3 74.3 5,958.7
------------------------------------- ---------
LONG-TERM DEBT, less current portion 8,707.2 1,286.6 337.9 (3),(6) 10,331.7
------------------------------------- ---------
DEFERRED INCOME TAXES 3,150.5 23.3 2,492.0 (4),(8) 5,665.8
------------------------------------- ---------
MINORITY INTEREST AND OTHER 959.5 42.6 (6) 1,002.1
------------------------------------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIENCY)
Series B convertible preferred stock 569.6 569.6
Class A special common stock 716.4 121.4 (5) 837.8
Class A common stock 26.0 26.0
Class B common stock 9.4 9.4
Additional capital 3,527.0 51.6 5,904.2 (5),(7) 9,482.8
Accumulated deficit (619.8) (323.1) 323.1 (4),(7) (619.8)
Accumulated other comprehensive income 6,112.7 81.8 (81.8)(7) 6,112.7
------------------------------------- ---------
Total stockholders' equity (deficiency) 10,341.3 (189.7) 6,266.9 16,418.5
------------------------------------- ---------
$28,685.6 $1,477.5 $9,213.7 $39,376.8
===================================== =========
See notes to unaudited pro forma condensed consolidated financial statements.
F-2
Comcast Corporation
Pro Forma Condensed Consolidated Statement of Operations (Unaudited)
Year Ended December 31, 1999
(Amounts in millions, except per share data)
Historical Historical Pro Forma Comcast
Comcast Lenfest Adjustments Pro Forma
------- ------- ----------- ---------
REVENUES
Service income $3,361.8 $542.8 $78.7 (4),(6),(9),(10),(11) $3,983.3
Net sales from electronic retailing 2,847.4 2,847.4
---------------------------------- ---------
6,209.2 542.8 78.7 6,830.7
---------------------------------- ---------
COSTS AND EXPENSES
Operating 1,663.1 208.6 5.7 (4),6),(9),(10),(11) 1,877.4
Cost of goods sold from electronic retailing 1,740.1 1,740.1
Selling, general and administrative 926.0 131.1 4.4 (4),(6) 1,061.5
Depreciation 572.0 102.7 63.7 (4),(6),(12) 738.4
Amortization 644.0 52.1 594.7 (4),(6),(12) 1,290.8
---------------------------------- ---------
5,545.2 494.5 668.5 6,708.2
---------------------------------- ---------
OPERATING INCOME 664.0 48.3 (589.8) 122.5
OTHER (INCOME) EXPENSE
Interest expense 538.3 125.5 9.7 (4),(6),(13) 673.5
Investment income (629.5) (20.2) (0.5)(6) (650.2)
Expense related to indexed debt 666.0 666.0
Equity in net (income) losses of affiliates (1.4) (7.5) 16.6 (4),(6) 7.7
Other (income) expense (1,409.4) 1.3 (0.1)(4) (1,408.2)
---------------------------------- ---------
(836.0) 99.1 25.7 (711.2)
---------------------------------- ---------
INCOME (LOSS) BEFORE INCOME TAX EXPENSE
(BENEFIT), MINORITY INTEREST, DISCONTINUED
OPERATIONS AND EXTRAORDINARY ITEMS 1,500.0 (50.8) (615.5) 833.7
INCOME TAX EXPENSE (BENEFIT) 723.7 (16.5) (201.6)(14) 505.6
---------------------------------- ---------
INCOME (LOSS) BEFORE MINORITY INTEREST,
DISCONTINUED OPERATIONS AND
EXTRAORDINARY ITEMS 776.3 (34.3) (413.9) 328.1
MINORITY INTEREST INCOME 4.6 4.6
---------------------------------- ---------
INCOME (LOSS) FROM CONTINUING OPERATIONS 780.9 (34.3) (413.9) 332.7
PREFERRED DIVIDENDS (29.7) (29.7)
---------------------------------- ---------
INCOME (LOSS) FROM CONTINUING OPERATIONS
FOR COMMON STOCKHOLDERS $751.2 ($34.3) ($413.9) $303.0
================================== =========
Basic earnings for common stockholders per common share
from continuing operations $1.00 $0.35
========== =========
Basic weighted average number of common shares
outstanding during the period 749.1 121.4 (15) 870.5
========== ======== =========
Diluted earnings for common stockholders per common share
from continuing operations $0.95 $0.35
========== =========
Diluted weighted average number of common shares
outstanding during the period 819.9 121.4 (15) 941.3
========== ======== =========
See notes to unaudited pro forma condensed consolidated financial statements.
F-3
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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 121.4 million shares of Class A Special
Common Stock issued by Comcast and the related additional capital valued
at $5.956 billion, based on the average closing price of the Class A
Special Common Stock for the period from January 12, 2000 to January 14,
2000, 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, of $53.8 million. As payments under the bonus plan were
contingent upon the closing of the Lenfest Acquisition, for purposes 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-4
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in this Form 8-K/A of Comcast
Corporation of our report dated March 27, 2000, on our audits of the
consolidated balance sheet of Lenfest Communications, Inc. and subsidiaries as
of December 31, 1999 and 1998, and the related consolidated statements of
operations, changes in stockholders' deficiency and cash flows for each of the
years in the three-year period ended December 31, 1999. Such consolidated
financial statements are not separately presented herein.
/s/ Pressman Ciocca Smith LLP
Hatboro, Pennsylvania
March 31, 2000