- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
(AMENDMENT NO. 37)
PURSUANT TO SECTION 14(D)(1) OF THE
SECURITIES EXCHANGE ACT OF 1934 AND
SCHEDULE 13D
(AMENDMENT NO. 38)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
PARAMOUNT COMMUNICATIONS INC.
(Name of Subject Company)
VIACOM INC.
NATIONAL AMUSEMENTS, INC.
SUMNER M. REDSTONE
BLOCKBUSTER ENTERTAINMENT CORPORATION
(Bidder)
COMMON STOCK, $1.00 PAR VALUE
(Title of Class of Securities)
699216 10 7
(CUSIP Number of Class of Securities)
PHILIPPE P. DAUMAN, ESQ.
VIACOM INC.
1515 BROADWAY
NEW YORK, NEW YORK 10036
TELEPHONE: (212) 258-6000
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Bidder)
COPIES TO:
STEPHEN R. VOLK, ESQ.
SHEARMAN & STERLING
599 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022
TEL.: (212) 848-4000
ROGER S. AARON, ESQ.
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
TEL.: (212) 735-3000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Page 1 of Pages
Exhibit Index on Page
This Amendment No. 37 to the Tender Offer Statement on
Schedule 14D-1 and Amendment No. 38 to Schedule 13D (the
"Statement") relates to the offer by Viacom Inc., a Delaware
corporation ("Purchaser"), to purchase shares of Common Stock,
par value $1.00 per share (the "Shares"), of Paramount
Communications Inc., a Delaware corporation (the "Company"), at a
price of $107 per Share, net to the seller in cash, upon the
terms and subject to the conditions set forth in Purchaser's
Offer to Purchase dated October 25, 1993 (the "Offer to
Purchase"), a copy of which was attached as Exhibit (a)(1) to
Amendment No. 1, filed with the Securities and Exchange
Commission (the "Commission") on October 26, 1993, to the Tender
Offer Statement on Schedule 14D-1 filed with the Commission on
October 25, 1993 (the "Schedule 14D-1"), as supplemented by
the Supplement thereto dated November 8, 1993 (the "First
Supplement"), the Second Supplement thereto dated January 7,
1994 (the "Second Supplement"), the Third Supplement thereto
dated January 18, 1994 (the "Third Supplement") and the Fourth
Supplement thereto dated February 1, 1994 (the "Fourth
Supplement") and in the related Letters of Transmittal.
Capitalized terms used but not defined herein have the
meanings assigned to such terms in the Offer to Purchase, the
First Supplement, the Second Supplement, the Third Supplement,
the Fourth Supplement and the Schedule 14D-1.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE
SUBJECT COMPANY.
Item 3(b) is hereby amended and supplemented as follows:
On February 3, 1994, Purchaser's financial advisor
delivered to the Company's financial advisor a memorandum
analyzing the Offer, including a comparison of the Offer
and the QVC Offer. A copy of such memorandum is filed as
Exhibit (a)(90) to the Schedule 14D-1 and is incorporated
herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Item 9 is hereby amended and supplemented as follows:
On February 2, 1994, Blockbuster released its earnings
for the quarter ended December 31, 1993. A copy of the press
release reporting such earnings is filed as Exhibit (a)(91)
to the Schedule 14D-1 and is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
Item 11 is hereby amended and supplemented to add
the following Exhibits:
99(a)(90) Memorandum delivered by Purchaser's financial
advisor to the Company's financial advisor on
February 3, 1994
99(a)(91) Press Release issued by Blockbuster on
February 2, 1994
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Statement is true, complete and correct.
February 4, 1994
VIACOM INC.
By /s/ PHILIPPE P. DAUMAN
...................................
Philippe P. Dauman
Senior Vice President, General
Counsel and Secretary
*
...................................
Sumner M. Redstone,
Individually
NATIONAL AMUSEMENTS, INC.
By *
...................................
Sumner M. Redstone
Chairman, Chief Executive
Officer and President
*By /s/ PHILIPPE P. DAUMAN
...................................
Philippe P. Dauman
Attorney-in-Fact under Powers
of Attorney filed as Exhibit (a)(36)
to the Schedule 14D-1
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Statement is true, complete and correct.
February 4, 1994
BLOCKBUSTER ENTERTAINMENT CORPORATION
By /s/ STEVEN R. BERRARD
...................................
Steven R. Berrard
President and
Chief Operating Officer
EXHIBIT INDEX
PAGE IN
SEQUENTIAL
EXHIBIT NUMBERING
NO. SYSTEM
- ------- ----------
99(a)(90) Memorandum delivered by Purchaser's
financial advisor to the Company's
financial advisor on February 3, 1994
99(a)(91) Press Release issued by Blockbuster on
February 2, 1994
MEMORANDUM
----------
To: Lazard Freres & Co.
From: Smith Barney Shearson Inc.
Date: February 3, 1994
cc: Viacom Inc.
We have set forth a summary of our analysis of Viacom's offer and
a comparison to QVC's offer.
I. Viacom's final offer has substantially improved and
increased the certainty of the value to be received by
Paramount shareholders
. Replaced 5% convertible exchangeable preferred stock
("CEPS") valued in the market at a discount with 8%
subordinated debt valued in the market at a premium
- Value is estimated at 103% for subordinated
debentures versus 80% to 85% for CEPS
- Subordinated debt alternative recognizes
Blockbuster capital strength and has equivalent
after tax cost to preferred stock
. Increased per share principal amount of subordinated
debt by increasing exchange ratio
- $17.50 of subordinated debt per back-end PCI share
- $15.20 of CEPS under previous offer
. Higher principal amount and premium combined increase
value by $5.49 per back-end PCI share
- $18.03 per share for subordinated debt (at 103%
valuation)
- $12.54 per share for CEPS (at 82.5% value under
previous offer)
. Split CEPS into straight preferred and warrant in the
highly unlikely case Blockbuster merger is not consummated
- Created effective 10 year maturity for this
straight preferred
-- allows for amortization of discount
-- increases value by approximately 5%
- Warrant increases shares issuable over CEPS
-- 13.3 mm under CEPS
-- 18.4 mm under warrant
- Preferred may be used at $50 face for warrant
exercise
- Principal amount increased
. The $70 per share warrant represents incremental value
in conjunction with subordinated debt
- Warrant valued at $5.00
- Adds $1.50 per PCI back-end share
. Increased share price protection through improvements in CVR
- Lowered first year floor from $38 to $36
-- Provides $12 of price protection
- Lowered second year floor from $38 to $37
-- Provides $14 of price protection
. Total back-end value increase as a result of the above
is over $8 per share
II. Viacom has significantly improved the certainty of the value in its offer
. Almost $70 of our estimated $85 offer (over 80%) is in
cash or equivalents
Value per
PCI Share
---------
Cash $53.61
Subordinated debt (1) 8.99
CVR(2) 5.57
--------
$68.17
========
(1) Assumes 103% valuation, see attached exhibit
(2) Assumes $12 of guaranteed price protection
. Both the three year and five year warrants are much
more stable in value than common stock
. Certainty of Viacom's offer is much greater than QVC's offer
VIA QVC
--- ---
Cash $53.61 $52.10
Subordinated debt 8.99 3.87(1)
CVR 5.57 0.00
-------- --------
Total $68.17 $55.97
Difference = $12.20 (22% improvement over QVC components)
(1) Assumes 65% valuation of preferred only, excluding
warrant (approximate 9% yield)
III. Analyst community favors Viacom bid
. Paine Webber, Chris Dixon, February 2, "Shareholders
should tender to Viacom"
. Kidder Peabody, Alan Gould, February 2, "Viacom bid
looks superior"
. Prudential Securities, S. Williams, February 2, "...we
favor Viacom"
. Duff and Phelps, Goss, February 2, "We feel the Viacom
offer is preferable due to its higher amount of front
end cash and the guarantee provision in the back end"
. Analysts universally recognize that QVC's current stock
price does not reflect impact of their acquisition
proposal. Selected estimated post transaction stock
prices for QVC are:
- $28.53 - $33.57 (Kidder Peabody)
- $35.00 (Prudential)
- $36.30 (Paine Webber)
. See Paine Webber research report dated February 3, 1994
IV. Blockbuster deal is progressing at quick pace
. Blockbuster and Merrill Lynch have had no third party
inquiries
. Blockbuster management continues to be enthusiastic
about creating one of the largest and most diversified
entertainment companies in the world
. Date to close estimated to be in late April
Week of
-------
Jan. 17 HSR filing for Merger
Feb. 7 File Viacom/Blockbuster joint proxy
statement, which also serves as Viacom
registration statement for the merger
securities, with the SEC on a
confidential basis.
Feb. 7 to Mar. 7 Expected 30-day SEC review period.
Feb. 14 HSR waiting period expires
March 7 Receive SEC comments.
Mar. 7 to Mar. 21 Expected period needed to
respond to SEC comments. Joint
proxy/registration statement
declared effective.
March 21 Mail joint proxy/registration statement
to Viacom and Blockbuster stockholders.
Mar. 21 to April 18 30-day proxy solicitation period.
April 18 Stockholders meetings of Viacom and
Blockbuster to approve the merger.
Merger effected immediately after votes.
Paramount Merger
----------------
Because much of the disclosure in the Viacom/Blockbuster
joint proxy/registration statement would be the same as in the
Viacom/Paramount joint proxy/registration statement, the
expectation is that the SEC would clear and allow to be declared
effective the two joint proxy/registration statements either at
the same time or at approximately the same time, even if the
Viacom/Paramount joint proxy/registration statement is filed
after the Viacom/Blockbuster statement. This means that the
expectation is that the merger between Paramount and Viacom could
take place either at the same time as the merger of Viacom and
Blockbuster or shortly thereafter. Additionally,
Viacom/Paramount should be in a position to close earlier than
would a merger of QVC and Paramount.
V. Synergies very significant in Viacom/Paramount/Blockbuster
. Cost savings very significant (est. minimum $200
million on an annualized basis)
- Elimination of duplicate television production,
distribution and sales
- Overhead and administration
- Purchasing economies (combined company will be the
largest buyer of product from Hollywood)
- Production
- Management of theaters and other operations
. Revenue enhancements equally as significant (est. at
more than $200 million on an annualized basis when merger
benefits are fully realized)
- Cross promotional opportunities between MTV and
music retailing, theaters and retail, Paramount
Studios and Showtime, other
- Combined libraries
- Database marketing
- Merchandising
- Fifth network
- NYNEX benefits
. Strongly capitalized company
- Net debt and preferred to 1994E EBITDA is 4.7x for
Viacom/Paramount/Blockbuster versus 6.7x for
QVC/Paramount
VI. Global entertainment powerhouse
. Combined company will have total assets of over $24
billion and over 25 different lines of business
. Tremendous content rich assets uniquely positioned to
be exploited worldwide
. Deep and entrepreneurial management team unparalleled
in the industry
. Well diversified with no dependence on a single line of
business
VII. QVC's final offer did not improve in value and reflects the
loss of confidence of its partners
. Net value barely changed
- $740 mm additional cash ($104 vs. $92)
- ($500 mm)(1) reduction in common stock (1.2361 vs. 1.43)
- ($200 mm) (2) reduction in preferred stock (.32 vs. .2386)
-------------
$40 mm (or $0.33 per PCI share)
(1) Based on $42 price supposedly paid by Bell South
(2) Assumes 80% of $50 per share face amount (including warrant value)
. Clearly strategic partners have lost confidence in
QVC/PCI
- Taking into account price reduction for previous
common stock purchase commitment, BellSouth bought
shares at an effective price of approximately $31
per share.
-- $31 does not take into account reduction in
conversion price of convertible preferred
. Even reported $42 per share price for new BellSouth
commitment represents a discount to QVC's current
market price
. All strategic investors had the common stock per share
price in their previous commitments lowered from $60 to
$52 per share
- Greatly increases shares outstanding, diluting PCI
shareholders
- 4.5 million additional shares
. All strategic investors had the conversion price
lowered to $55 from $65.45 on their convertible
preferred
- Adds substantial dilution to PCI shareholders
. QVC continues to be willing to transfer value to
strategic partners at the expense of public
shareholders
. QVC's offer has approximately $185 mm less in cash than
Viacom's offer
. QVC does not provide any price protection on its common
stock, even though its common stock represents a
greater portion of its offer than common stock in
Viacom's offer
- This reflects no conviction with respect to
QVC/PCI stock price
- QVC offers no additional upside participation
VIII. Viacom's post merger stock price is expected to be higher than QVC's
. Calculation of post merger stock price - same multiple
VIA/PCI VIA/PCI/BV QVC/PCI
------- ---------- -------
1994E EBITDA (a) $1,439 $2,192 $967
Multiple 13.0x 13.0x 13.0x
Net Debt and
Preferred (b) 9,529 10,379 6,450
Common Shares (c) 200 362 169
Implied Value/Share $45.89 $50.05 $36.22
. Calculation of post merger stock price - weighted
multiple
1994E EBITDA (a) $1,439 $2,192 $967
Multiple 13.4x 13.0x 11.7x
Net Debt and
Preferred (b) 9,529 10,379 6,450
Common Shares (c) 200 362 169
Implied Value/Share $48.77 $50.05 $28.78
(a) Based on Wall Street and Smith Barney estimates -
includes full year 1994 synergies
(b) QVC figure includes $717 million of debt that QVC
may be required to incur to repurchase Liberty Media's
shares at $60 per share
(c) QVC figure includes 11.9 million shares that may be
repurchased from Liberty Media. All figures exclude
warrants and shares underlying newly issued convertible
preferred
IX. Viacom's offer has significantly higher value per PCI
share based on a variety of methodologies
Value Per PCI Share (a)
-----------------------------
Stock Prices Used VIA QVC Difference
- ----------------- --- --- ----------
Lowest stock price since takeover began $84.55 $80.30 $ 4.25
Pro Forma stock price using weighted
EBITDA multiple $91.18 $73.73 $17.45
VIA - market, QVC - BellSouth
purported purchase price ($42) $84.55 $83.20 $ 1.35
VIA - market, QVC - BellSouth
actual purchase price ($31) $84.55 $75.09 $ 9.46
(a) See attached for detailed calculations
X. Additionally, we reviewed Lazard's previous analysis and, in
our view, QVC's offer is inferior under all methodologies employed
CONFIDENTIAL PROJECT VOLTAGE
- ------------------------------------------------------------------------------------------------------------------------------------
Viacom Offer Analysis
(Dollars expressed in millions, except per share)
Current market price: $33.50
Value as a Trading Blended Basis Front-end Back-end Aggregate
Security Face Value % of face Value Ratio Value Value Ratio Value Value
Cash --- --- --- 0.501 $53.61 $107.00 --- $6,592
Class B $33.50 --- $33.50 0.464 15.56 --- 0.93065 $31.18 1,913
Subdebt 50.00 103.0% 51.50 0.175 8.99 --- 0.35000 18.03 1,106
Warrant $60 strike 4.00 100.0% 4.00 0.250 1.00 --- 0.50000 2.00 123
Warrant $70 strike 5.00 100.0% 5.00 0.150 0.75 --- 0.30000 1.50 92
CVR 12.00 83.3% 10.00 0.464 4.64 --- 0.93065 9.31 571
Total trading value of Viacom offer --------- --------- ---------- ----------
$84.55 $107.00 $62.01 $10,397
========= ========= ========== ==========
VIA Hypothetical Price (a): $50.05
Value as a Trading Blended Basis Front-end Back-end Aggregate
Security Face Value % of face Value Ratio Value Value Ratio Value Value
Cash --- --- --- 0.501 $53.61 $107.00 --- $6,592
Class B $50.05 --- $50.05 0.464 23.24 --- 0.93065 $46.58 2,858
Subdebt 50.00 103.0% 51.50 0.175 8.99 --- 0.35000 18.03 1,106
Warrant $60 strike 6.00 100.0% 6.00 0.250 1.50 --- 0.50000 3.00 184
Warrant $70 strike 7.00 100.0% 7.00 0.150 1.05 --- 0.30000 2.10 129
CVR 12.00 50.0% 6.00 0.464 2.79 --- 0.93065 5.58 343
Total trading value of Viacom offer --------- --------- ---------- ----------
$91.18 $107.00 $75.29 $11,212
========= ========= ========== ==========
(a) Figure equals Viacom pro forma stock price at 13x EBITDA multiple
- -------------------------------------------------------------------------------
February 1994 SMITH BARNEY SHEARSON INC.
CONFIDENTIAL PROJECT VOLTAGE
- -------------------------------------------------------------------------------------------------------------------------------
QVC Offer Analysis
(Dollars expressed in millions, except per share)
QVC Hypothetical Price (a): $37.75
Value as a Trading Blended Basis Front-end Back-end Aggregate
Security Face Value % of face Value Ratio Value Value Ratio Value Value
- -------- ---------- ---------- -------- ----- ----- ----- ----- ----- ----------
Cash --- --- --- 0.501 $52.10 $104.00 --- --- $6,407
Common stock $37.75 100% $37.75 0.617 23.28 --- 1.23610 $46.66 2,863
Preferred & Warrant 50.00 80% 40.00 0.119 4.76 --- 0.23860 9.54 586
Stub warrant --- --- 3.76 0.041 0.15 0.08140 0.31 19
-------- -------- ------- ----------
Total trading value of QVC offer $80.30 $104.00 $56.51 $9,875
======== ======== ====== ==========
QVC Hypothetical Price (b): $42.00
Value as a Trading Blended Basis Front-end Back-end Aggregate
Security Face Value % of face Value Ratio Value Value Ratio Value Value
- -------- ---------- ---------- -------- ----- ----- ----- ----- ----- ----------
Cash --- --- --- 0.501 $52.10 $104.00 --- --- $6,407
Common stock $42.00 100% $42.00 0.617 25.91 --- 1.23610 $51.92 3,186
Preferred & Warrant 50.00 84% 42.00 0.119 5.00 --- 0.23860 10.02 615
Stub warrant --- --- 4.68 0.041 0.19 0.08140 0.38 23
------ -------- ------ ---------
Total trading value of QVC offer $83.20 $104.00 $62.32 $10,231
====== ======== ====== =========
QVC Hypothetical Price (c): $28.78
Value as a Trading Blended Basis Front-end Back-end Aggregate
Security Face Value % of face Value Ratio Value Value Ratio Value Value
- -------- ---------- ---------- -------- ----- ----- ----- ----- ----- ----------
Cash --- --- --- 0.501 $52.10 $104.00 --- --- $6,407
Common stock $28.78 100% $28.78 0.617 17.75 --- 1.23610 $35.57 2,183
Preferred & Warrant 50.00 65% 32.50 0.119 3.87 --- 0.23860 7.75 476
Stub warrant --- --- 0.00 0.041 0.00 0.08140 0.00 0
------ -------- ------ ---------
Total trading value of QVC offer $73.73 $104.00 $43.33 $9,066
====== ======== ====== =========
QVC Hypothetical Price (d): $31.00
Value as a Trading Blended Basis Front-end Back-end Aggregate
Security Face Value % of face Value Ratio Value Value Ratio Value Value
- -------- ---------- ---------- -------- ----- ----- ----- ----- ----- ----------
Cash --- --- --- 0.501 $52.10 $104.00 --- --- $6,407
Common stock $31.00 100% $31.00 0.617 19.12 --- 1.23610 $38.32 2,351
Preferred & Warrant $50.00 65% 32.50 0.119 3.87 --- 0.23860 7.75 476
Stub warrant --- --- 0.00 0.041 0.00 0.08140 0.00 0
------ -------- ------ ---------
Total trading value of QVC offer $75.09 $104.00 $46.07 $9,234
====== ======== ====== =========
(a.) Lowest stock price since September 1993
(b.) Price BellSouth purchased $500 mm of equity per revised 2/1 bid
(c.) Figure equals QVC pro forma stock price at 11.7x EBITDA multiple
(d.) Effective price BellSouth purchased $500 mm of equity per revised 2/1
bid, approximately.
- -------------------------------------------------------------------------------
February 1994 SMITH BARNEY SHEARSON INC.
CONFIDENTIAL PROJECT VOLTAGE
- -----------------------------------------------------------------------------------------------------------------------------------
PRICE COMPARISON
Principal Type
Offer Moody S&P Amount of Offer Offer
Date Issuer Rating Rating [$ mil] Security Coupon Maturity Price Yield(%)
- ---- ------ ------ ------ ------ -------- ------ -------- ----- --------
01/31/94 USX Corporation Baa3 BB+ 300.0 Notes 7.200 02/15/04 99.786 7.200
01/28/94 News America Holdings Ba1 BBB- 200.0 Debenture 7.750 01/20/24 99.400 7.750
01/27/94 Turner Broadcasting System Ba2 BB+ 250.0 Senior Notes 7.400 02/01/04 99.845 7.422
01/25/94 YPF B1 BB- 350.0 Negotiable Obl 8.000 02/15/04 99.770 8.033
01/21/94 Banco Nacional de Comercio Ext Ba2 BB+ 500.0 Global Bonds 7.250 02/02/04 99.516 7.324
01/20/94 RP Scherer Ba1 BBB- 100.0 Senior Notes 6.750 02/01/04 99.286 6.852
01/18/94 The Black & Decker Ba1 BBB- 250.0 Notes 7.000 02/01/06 99.717 7.040
01/18/94 Duty Free International Ba1 BBB 115.0 Notes 7.000 01/15/04 99.600 7.056
Current Current Change
Issuer TW(%) Price in Price Industry
- ------ ------- ------- -------- --------
USX Corporation 7.285 99.399 -0.388 Steel
News America Holdings 7.804 99.371 -0.029 Media
Turner Broadcasting System 7.544 99.000 -0.846 Media
YPF 7.999 100.000 0.231 Natural Resource
Banco Nacional de Comercio Ext 7.393 99.000 -0.519 Bank
RP Scherer 6.835 99.388 0.103 Manufacturing
The Black & Decker 6.985 100.114 0.398 Manufacturing
Duty Free International 7.035 99.746 0.147 Retail
February 1994 SMITH BARNEY SHEARSON INC.
BLOCKBUSTER
ENTERTAINMENT NEWS RELEASE
FOR IMMEDIATE RELEASE Contact: Gregory K. Fairbanks
(305) 832-3000
BLOCKBUSTER REPORTS RECORD RESULTS;
NET INCOME UP 71%; REVENUE UP 66% FOR QUARTER
FORT LAUDERDALE, FL, February 2, 1994 -- Blockbuster Entertainment
Corporation (NYSE:BV) today reported record net income and revenue for the
quarter and year ended December 31, 1993.
For the three months ended December 31, 1993, net income rose 71 percent
to $81,295,000, or 34 cents per share from $47,646,000 or 23 cents per share
reported for the similar period of 1992. Net income for the year increased 64
percent to $243,646,000 or $1.10 per share as compared to $148,269,000 or 76
cents per share in 1992.
Company revenue for the fourth quarter was $723,697,000 as compared to
$436,718,000 for the same period in 1992, an increase of 66 percent. Company
revenue for the year was $2,227,003,000, an increase of 69 percent over the
$1,315,844,000 reported for 1992. Same-store revenue for Company-owned video
stores in operation for more than one year increased by 5.5 percent and 9.2
percent for the quarter and year ended December 31, 1993, respectively.
Systemwide revenue (consisting of revenue generated by the Company and its
franchise-owned stores) for the three months ended December 31, 1993 rose 49
percent to $891,354,000 from $599,639,000 for the same period of 1992. For
1993, systemwide revenue increased 47 percent to $2,909,158,000 from
$1,972,373,000 in 1992.
H. Wayne Huizenga, Chairman and Chief Executive Officer of Blockbuster,
commented: "The Company continued its record of profitable growth in all lines
of our business during the quarter. Our home video and music retail operations,
-more-
along with our programming and distribution businesses, posted strong gains in
both revenue and operating income."
As previously announced, Blockbuster has entered into an agreement to merge
with Viacom Inc., an entertainment leader with interests in cable television,
premium television networks, television and radio stations and other
entertainment-related businesses. The Company anticipates that the merger with
Viacom will be completed sometime during the second quarter of this year.
At December 31, 1993, there were 3,593 video stores in the Blockbuster
system (2,698 Company-owned and 895 franchise-owned) operating in 49 states, the
District of Columbia and nine other countries. Blockbuster also owns 531 music
stores (including 20 Megastores located in Continental Europe, Australia and the
United States in a joint venture with Virgin Retail Group). Blockbuster also
owns 70.5 percent of Spelling Entertainment Group Inc. and has a 35 percent
interest in Republic Pictures Corp., both leading producers and worldwide
distributors of motion picture and television entertainment. Spelling and
Republic have entered into an agreement to merge, with completion expected by
the end of the first quarter.
Blockbuster Entertainment Corporation is listed on both the New York Stock
Exchange and the London Stock Exchange.
Attached is a summary of operating results for the three-month and 12-month
periods ended December 31, 1993 and 1992.
-more-
BLOCKBUSTER ENTERTAINMENT CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------- -----------------------
1993 1992 1993 1992
---- ---- ---- ----
(a) (a)
Systemwide Revenue $891,354 $599,639 $2,909,158 $1,972,373
======== ======== ========== ==========
Revenue $723,697 $436,718 $2,227,003 $1,315,844
Operating Costs and Expenses 586,656 357,102 1,803,976 1,072,982
-------- -------- ---------- ---------
Operating Income 137,041 79,616 423,027 242,862
Other Expense, Net 8,249 5,313 33,193 11,642
-------- -------- ---------- ---------
Income Before Income Taxes 128,792 74,303 389,834 231,220
Provision for Income Taxes 47,497 26,657 146,188 82,951
-------- -------- ---------- ---------
Net Income $81,295 $47,646 $243,646 $148,269
======== ======== ========== ==========
Net Income per Common and
Common Equivalent Share $0.34 $0.24 $1.11 $0.77
======== ======== ========== ==========
Net Income per Common and
Common Equivalent Share -
assuming full dilution $0.34 $0.23 $1.10 $0.76
======== ======== ========== ==========
- --------------------------
(a) Operating results for the three and twelve month periods ended December 31,
1992 have been restated to reflect the Company's merger with WJB Video
Limited Partnership in a business combination accounted for under the
pooling-of-interests method of accounting.
