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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 13, 1996 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 13, 1996, Comcast Corporation (the "Company") acquired the cable television operations ("Scripps Cable") of The E.W. Scripps Company ("E.W. Scripps") in exchange for 93.049 million shares of the Company's Class A Special Common Stock, par value $1.00 per share (the "Class A Special Common Stock"), valued at $1.552 billion, based on the average closing price of the Class A Special Common Stock for the period from November 11, 1996 to November 15, 1996 (the "Scripps Transaction"). The Scripps Transaction was consummated pursuant to the terms of an Agreement and Plan of Merger ("the Merger Agreement"), incorporated by reference herein, between the Company, E.W. Scripps and Scripps Howard, Inc., a wholly owned subsidiary of E.W. Scripps. The Company has accounted for the Scripps Transaction under the purchase method and Scripps Cable has been consolidated with the Company effective November 1, 1996. 2 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) FINANCIAL STATEMENTS The Company's Unaudited Pro Forma Condensed Consolidated Financial Statements are included in this Report and are listed in the Index to Unaudited Pro Forma Financial Information. The audited combined financial statements of Scripps Cable as of and for each of the three years in the period ended December 31, 1995 are incorporated by reference from the Company's Current Report on Form 8-K/A filed on July 22, 1996, which filing incorporated such statements by reference from the Form 8-K/A(5) of The E.W. Scripps Company (commission file no. 1-16914) dated July 18, 1996. The unaudited combined financial statements of Scripps Cable for the nine months ended September 30, 1996 are incorporated by reference from the Form 8-K/A(7) of The E.W. Scripps Company (commission file no. 1-16914) dated November 1, 1996. (b) EXHIBITS EXHIBIT NO. 10.1 Agreement and Plan of Merger (the "Merger Agreement"), dated as of October 28, 1995, by and among The E.W. Scripps Company, Scripps Howard, Inc. and Comcast Corporation and Form of Amendment to the Merger Agreement (incorporated by reference from Exhibit 2.1 to the Company's Registration Statement on Form S-4, file no. 333-13083. 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: November 27, 1996 COMCAST CORPORATION By: /s/ Joseph J. Euteneuer ----------------------- Joseph J. Euteneuer Vice President and Corporate Controller 4 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, 1996 F - 2 Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Nine Months Ended September 30, 1996 F - 3 Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 1995 F - 4 Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements F - 5 UNAUDITED PRO FORMA FINANCIAL INFORMATION On November 13, 1996, the Company acquired the cable television operations ("Scripps Cable") of The E.W. Scripps Company ("E.W. Scripps") in exchange for 93.049 million shares of the Company's Class A Special Common Stock valued at $1.552 billion, based on the average closing price of the Class A Special Common Stock for the period from November 11, 1996 to November 15, 1996 (the "Scripps Transaction"). In February 1995, the Company and Tele-Communications, Inc. ("TCI") acquired all of the outstanding stock of QVC, Inc. ("QVC") not previously owned by them (the "QVC Acquisition") for approximately $1.4 billion in cash. For a further description of the Scripps Transaction, the QVC Acquisition and certain related transactions, see the notes to unaudited pro forma condensed consolidated financial statements. The following unaudited pro forma condensed consolidated financial statements reflect the consolidated financial position of the Company and Scripps Cable as of September 30, 1996, their consolidated operations for the nine months ended September 30, 1996 and their, along with QVC's, consolidated operations for the year ended December 31, 1995. See the notes to unaudited pro forma condensed consolidated financial statements for a description of the assumptions used in preparing these unaudited pro forma condensed consolidated financial statements. The unaudited pro forma condensed consolidated balance sheet assumes the Scripps Transaction occurred on September 30, 1996. The unaudited pro forma condensed consolidated statements of operations for the nine months ended September 30, 1996 and for the year ended December 31, 1995 assume the QVC Acquisition and the Scripps Transaction occurred on January 1, 1995. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with: 1) the historical consolidated financial statements of the Company included in the Company's Annual Report on Form 10-K for the year ended December 31, 1995; 2) the historical condensed consolidated financial statements included in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996; 3) the historical combined financial statements of Scripps Cable for the year ended December 31, 1995 incorporated by reference herein; and 4) the historical combined financial statements of Scripps Cable for the nine months ended September 30, 1996 incorporated by reference herein. The results presented in the unaudited pro forma condensed consolidated statements of operations are not necessarily indicative of the results which actually would have occurred had the QVC Acquisition and the Scripps Transaction occurred on the dates indicated or which may result in the future. F-1 COMCAST CORPORATION UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET SEPTEMBER 30, 1996 (DOLLARS IN THOUSANDS) See notes to unaudited pro forma condensed consolidated financial statements. F-2
(D) The Company Scripps Cable Pro Forma The Company Historical Historical Adjustments Pro Forma ----------- ------------- ----------- ----------- ASSETS Current Assets Cash, cash equivalents and short-term investments $526,662 $1,596 ($1,596) (E.3.) $526,662 Accounts receivable, net 350,675 11,496 362,171 Inventories, net 256,251 10,670 266,921 Prepaid charges and other 57,990 6,954 64,944 Deferred income taxes 65,758 5,421 71,179 ---------- -------- ---------- ----------- Total current assets 1,257,336 36,137 (1,596) 1,291,877 Investments, principally in affiliates 1,278,733 1,278,733 Property and Equipment, net 2,051,562 318,698 308,031 (E.1.) 2,678,291 Deferred Charges, net 5,241,677 137,054 1,382,310 (E.2.,6.) 6,761,041 ---------- -------- ---------- ----------- $9,829,308 $491,889 $1,688,745 $12,009,942 ---------- -------- ---------- ----------- ---------- -------- ---------- ----------- LIABILITIES AND STOCKHOLDERS' (DEFICIENCY) EQUITY Current Liabilities Accounts payable and accrued expenses $990,414 $34,727 ($3,781) (E.3.) $1,021,360 Current portion of long-term debt 150,550 150,550 ---------- -------- ---------- ----------- Total current liabilities 1,140,964 34,727 (3,781) 1,171,910 Long-term Debt, less current portion 7,233,745 7,233,745 Due to Affiliates 340,982 (340,982) (E.3.) Deferred Income Taxes 1,501,820 103,576 494,527 (E.6.) 2,099,923 Minority Interest and Other 891,492 8,775 (8,775) (E.3.) 891,492 Stockholders' (Deficiency) Equity Preferred stock 31,850 31,850 Common stock 233,313 1,801 91,248 (E.4.,5.) 326,362 Additional capital 869,911 35,144 1,423,392 (E.4.,5.) 2,328,447 Accumulated deficit (2,089,358) (33,116) 33,116 (E.5.) (2,089,358) Unrealized gains on marketable securities 32,716 32,716 Cumulative translation adjustments (17,145) (17,145) ---------- -------- ---------- ----------- Total stockholders' (deficiency) equity (938,713) 3,829 1,547,756 612,872 ---------- -------- ---------- ----------- $9,829,308 $491,889 $1,688,745 $12,009,942 ---------- -------- ---------- ----------- ---------- -------- ---------- ----------- COMCAST CORPORATION UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 1996 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) See notes to unaudited pro forma condensed consolidated financial statements. F-3
(D) The Company Scripps Cable Pro Forma The Company Historical Historical Adjustments Pro Forma ---------- ------------- ------------- ------------- Revenues, net $2,870,869 $231,408 ($608) (E.7.) $3,101,669 ---------- -------- -------- ---------- Operating, Selling, General and Administrative Expenses and Cost of Goods Sold 2,008,862 133,054 (608) (E.7.) 2,141,308 Depreciation and Amortization 490,990 40,810 98,876 (E.8.) 630,676 ---------- -------- -------- ---------- 2,499,852 173,864 98,268 2,771,984 ---------- -------- -------- ---------- Operating Income 371,017 57,544 (98,876) 329,685 Investment (Income) Expense Interest expense 403,735 26,072 (26,045) (E.9.) 403,762 Investment income (63,706) (63,706) Equity in net losses of affiliates 89,198 89,198 Gain from equity offering of affiliate (40,638) (40,638) Other 22,673 79 22,752 ---------- -------- -------- ---------- 411,262 26,151 (26,045) 411,368 ---------- -------- -------- ---------- (Loss) Income Before Income Tax Expense and Minority Interest (40,245) 31,393 (72,831) (81,683) Income Tax Expense 33,894 12,608 (22,473) (E.10.) 24,029 Minority Interest (47,423) (47,423) ---------- -------- -------- ---------- (Loss) Income from Continuing Operations ($26,716) $18,785 ($50,358) ($58,289) ---------- -------- -------- ---------- ---------- -------- -------- ---------- Loss from Continuing Operations Per Share ($0.11) ($0.18) ---------- ---------- ---------- ---------- Weighted Average Number of the Company's Common Shares Outstanding During the Period 236,189 93,049 (E.11.) 329,238 ---------- -------- ---------- ---------- -------- ---------- COMCAST CORPORATION UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1995 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) See notes to unaudited pro forma condensed consolidated financial statements. F-4
(A) QVC The Company QVC Pro Forma Historical Historical Adjustments ----------- ---------- ----------- Revenues, net $3,362,946 $131,469 ($1,095) (B.1.) ---------- -------- -------- Operating, Selling, General and Administrative Expenses and Cost of Goods Sold 2,344,103 108,044 (469) (B.1.) Depreciation and Amortization 689,052 5,001 4,781 (B.1.,2.) ---------- -------- -------- 3,033,155 113,045 4,312 ---------- -------- -------- Operating Income 329,791 18,424 (5,407) Investment (Income) Expense Interest expense 524,727 125 12,256 (B.3.) Investment income (229,848) (1,634) 348 (B.4.) Equity in net losses of affiliates 86,618 2,285 5,480 (B.5.) Other (6,296) ---------- -------- -------- 375,201 776 18,084 ---------- -------- -------- (Loss) Income Before Income Tax Expense and Minority Interest (45,410) 17,648 (23,491) Income Tax Expense 42,171 8,055 (8,134) (B.6.) Minority Interest (49,732) (802) (B.7.) ---------- -------- -------- (Loss) Income from Continuing Operations ($37,849) $9,593 ($14,555) ---------- -------- -------- ---------- -------- -------- Loss from Continuing Operations Per Share ($0.16) ---------- ---------- Weighted Average Number of the Company's Common Shares Outstanding During the Period 239,679 ---------- ---------- The Company (D) The Company Pro Forma Scripps Cable Pro Forma with Scripps Cable Pro Forma with QVC and QVC Historical Adjustments Scripps Cable ---------- ------------- ------------- ------------- Revenues, net $3,493,320 $279,482 ($766) (E.7.) $3,772,036 ---------- -------- -------- ---------- Operating, Selling, General and Administrative Expenses and Cost of Goods Sold 2,451,678 162,810 (766) (E.7.) 2,613,722 Depreciation and Amortization 698,834 54,099 131,707 (E.8.) 884,640 ---------- -------- -------- ---------- 3,150,512 216,909 130,941 3,498,362 ---------- -------- -------- ---------- Operating Income 342,808 62,573 (131,707) 273,674 Investment (Income) Expense Interest expense 537,108 35,258 (34,915) (E.9.) 537,451 Investment income (231,134) (231,134) Equity in net losses of affiliates 94,383 94,383 Other (6,296) (2,288) (8,584) ---------- -------- -------- ---------- 394,061 32,970 (34,915) 392,116 ---------- -------- -------- ---------- (Loss) Income Before Income Tax Expense and Minority Interest (51,253) 29,603 (96,792) (118,442) Income Tax Expense 42,092 11,913 (29,887) (E.10.) 24,118 Minority Interest (50,534) (50,534) ---------- -------- -------- ---------- (Loss) Income from Continuing Operations ($42,811) $17,690 ($66,905) ($92,026) ---------- -------- -------- ---------- ---------- -------- -------- ---------- Loss from Continuing Operations Per Share ($0.18) ($0.28) ---------- ---------- ---------- ---------- Weighted Average Number of the Company's Common Shares Outstanding During the Period 239,679 93,049 (E.11.) 332,728 ---------- -------- ---------- ---------- -------- ---------- NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS QVC A. SUMMARY OF TRANSACTIONS In February 1995, the Company and Tele-Communications, Inc. ("TCI") acquired all of the outstanding stock of QVC, Inc. and its subsidiaries ("QVC") not previously owned by them (approximately 65% of such shares on a fully diluted basis) for $46, in cash, per share (the "QVC Acquisition"), representing a total cost of approximately $1.4 billion. The QVC Acquisition, including the exercise of certain warrants held by the Company, was financed with cash contributions from the Company (see below) and TCI of $296.3 million and $6.6 million, respectively, borrowings of $1.1 billion under a $1.2 billion QVC credit facility and existing cash and cash equivalents held by QVC. Following the acquisition, the Company and TCI own, through their respective subsidiaries, 57.45% and 42.55%, respectively, of QVC. The Company, through a management agreement, is responsible for the day to day operations of QVC. The Company has accounted for the QVC Acquisition under the purchase method and QVC was consolidated with the Company effective February 1, 1995. QVC's historical results of operations included in the unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 1995 represents QVC's historical results of operations for the month ended January 31, 1995. In January 1995, the Company exchanged its investments in Heritage Communications, Inc. ("Heritage") with TCI for approximately 13.3 million publicly-traded Class A common shares of TCI with a fair market value of approximately $290.0 million. Shortly thereafter, the Company sold approximately 9.1 million unrestricted TCI shares for total proceeds of approximately $188.1 million (collectively, the "Heritage Transaction"). As a result of these transactions, the Company recognized a pre-tax gain of $141.0 million in 1995. The Company's cash contribution in connection with the QVC Acquisition was funded, in part, by the cash proceeds from the Heritage Transaction, along with a borrowing of $80.0 million under a subsidiary's credit facility. F-5 B. PRO FORMA ADJUSTMENTS The following adjustments and elimination entries have been made to the unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 1995 to reflect the QVC Acquisition: 1. Elimination of commissions and other payments by QVC to the Company. 2. Represents additional depreciation and amortization expense resulting from the increased fair market value of the assets acquired in excess of their historical book values and amortization of goodwill arising from the acquisition. Depreciation expense is based on a weighted average property and equipment life of approximately 7 years. Amortization expense is based on a life of 30 years for goodwill and 10 years for cable television distribution rights. Debt issuance costs are amortized over the term of the related debt. 3. Represents the increase in interest expense due to the incurrence of additional long-term indebtedness, at a weighted average interest rate of 8.3%. 4. Elimination of interest income on the Company's notes receivable from Heritage, which were exchanged for TCI Shares in connection with the Heritage Transaction. 5. Elimination of the Company's historical equity in the net income of QVC. The Company historically accounted for its investment in QVC under the equity method through the date of the QVC Acquisition. 6. Represents the adjustments to the tax provision resulting from the pro forma adjustments. 7. Represents the minority interest resulting from TCI's 42.55% interest in QVC. F-6 SCRIPPS CABLE C. SUMMARY OF TRANSACTIONS On November 13, 1996, the Company acquired the cable television operations ("Scripps Cable") of The E.W. Scripps Company ("E.W. Scripps") in exchange for 93.049 million shares of the Company's Class A Special Common Stock, par value $1.00 per share (the "Class A Special Common Stock"), valued at $1.552 billion, based on the average closing price of the Class A Special Common Stock for the period from November 11, 1996 to November 15, 1996 (the "Scripps Transaction"). The Scripps Transaction was consummated pursuant to the terms of an Agreement and Plan of Merger ("the Merger Agreement"), incorporated by reference herein, between the Company, E.W. Scripps and Scripps Howard, Inc. ("SHI"), a wholly owned subsidiary of E.W. Scripps. The Company has accounted for the Scripps Transaction under the purchase method and Scripps Cable has been consolidated with the Company effective November 1, 1996. F-7 D. BASIS OF PRESENTATION E.W. Scripps had historically been the holding company for its cable television operations along with other operations. In connection with the Scripps Transaction, in which E.W. Scripps was merged with and into the Company (the "Merger"), E.W. Scripps contributed its non-cable televison operations to SHI and distributed the shares of SHI to its shareholders (the "Distribution"). The Distribution occurred immediately prior to the closing of the Merger. Accordingly, when the Company acquired E.W. Scripps, it only purchased Scripps Cable. The historical combined financial statements of Scripps Cable included in the unaudited pro forma condensed consolidated financial statements represent the net assets that the Company acquired and exclude the assets, liabilities and results of operations of the non-cable television operations of E.W. Scripps. E. PRO FORMA ADJUSTMENTS The following adjustments and elimination entries have been made to the unaudited pro forma condensed consolidated balance sheet to reflect the Scripps Transaction: 1. Represents the estimated fair value of the property and equipment acquired in the Scripps Transaction in excess of the historical book value of such property and equipment ($308.0 million). The estimated fair value of the acquired property F-8 and equipment is subject to adjustment upon receipt by the Company of an independent appraisal of Scripps Cable. 2. Represents the allocation of the total consideration in the Scripps Transaction to deferred charges ($887.8 million), principally to franchise acquisition costs and subscriber lists. The purchase price allocation is subject to adjustment upon receipt by the Company of an independent appraisal of Scripps Cable. 3. Represents the elimination of cash and certain liabilities which were not acquired or assumed by the Company in the Scripps Transaction pursuant to the terms of the Merger Agreement (primarily income taxes payable, accruals for lawsuits and related settlements and amounts payable by Scripps Cable to E.W. Scripps) ($351.9 million in total). 4. Represents the par value of the Class A Special Common Stock issued by the Company for Scripps Cable ($93.0 million) and the related additional capital ($1.459 billion), based on the 93.049 million shares issued in the Scripps Transaction valued at $1.552 billion (based on the average closing price of the Class A Special Common Stock for the period from November 11, 1996 to November 15, 1996). 5. Represents the elimination of Scripps Cable's historical equity. 6. Represents goodwill and deferred income taxes resulting from differences in the book and tax bases of the assets of Scripps Cable arising from the acquisition ($494.5 million). The following adjustments and elimination entries have been made to the unaudited pro forma condensed consolidated statements of operations to reflect the Scripps Transaction: 7. Represents the elimination of commissions paid by QVC to Scripps Cable. 8. Represents additional depreciation and amortization expense resulting from the increased fair value of the assets acquired in excess of their historical book values and amortization of goodwill arising from the acquisition, offset, in part, by the elimination of Scripps Cable's historical goodwill amortization. Depreciation expense is based on a weighted average property and equipment life of approximately 10 years. Property and equipment of Scripps Cable principally consists of operating facilities, which is typically depreciated over a period of 12 years by the Company. Amortization expense is based on an average life for deferred charges and goodwill of 12 and 20 years, respectively. F-9 9. Represents the elimination of Scripps Cable's historical interest expense on balances due to affiliates. 10. Represents the adjustments to the tax provision resulting from the pro forma adjustments. 11. Represents the shares of Class A Special Common Stock issued in the Scripps Transaction. F-10