CVC » Topics » Principles of Combination

These excerpts taken from the CVC 8-K filed Oct 10, 2008.
Principles of Combination—NMG’s operations are conducted through the following wholly-owned subsidiaries of Tribune: Newsday, Inc., Star Community Publishing Group, LLC, and Tribune Newspaper Holdings, LLC. The accompanying unaudited condensed combined financial statements are derived from the historical accounting records of Tribune, and present NMG’s condensed combined financial position, results of operations and cash flows as of and for the periods presented as if NMG was a separate entity and as it was historically managed.

 

In the opinion of management, the accompanying unaudited condensed combined financial statements contain all adjustments necessary for a fair statement of the condensed combined financial position of NMG as of June 29, 2008 and the condensed combined results of its operations and cash flows for the first halves ended June 29, 2008 and July 1, 2007.  All adjustments reflected in the accompanying unaudited condensed combined financial statements are of a normal recurring nature.  NMG’s condensed combined results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

 

All significant intercompany accounts within NMG have been eliminated.  All significant intercompany transactions between NMG and Tribune and affiliates have been included within the unaudited condensed combined financial statements and are considered to be effectively settled through equity contributions or distributions or through cash payments at the time the transactions were recorded.  Except for promissory notes outstanding in favor of Tribune and affiliates, the accumulated net effect of intercompany transactions between NMG and Tribune and affiliates are included in division equity.  These intercompany transactions are further described in Note 3.  The total net effect of these intercompany transactions, other than non-cash items such as stock-based compensation, including debt transactions with Tribune and affiliates, are reflected in the unaudited condensed combined statement of cash flows as financing activities.

 

The unaudited condensed combined financial statements include allocations of expenses relating to NMG from Tribune.  These allocated expenses include allocations of Tribune corporate overhead and centralized services using allocation methods as described further in Note 3. The expense and cost allocations to NMG have been determined on bases that management considers to be a reasonable reflection of the utilization of services provided or the benefit received by NMG during the periods presented.  The financial information in these unaudited condensed combined financial statements does not include all expenses that would have been incurred had NMG operated as a separate stand-alone entity and accordingly may not reflect NMG’s combined results of operations, financial position and cash flows had NMG been a stand-alone entity during the periods presented.

 

As of June 29, 2008, the Group’s significant accounting policies and estimates, which are detailed in the Group’s audited combined financial statements for the fiscal year ended December 30, 2007, have not changed from December 30, 2007, except for the adoption of Financial Accounting Standards Board (“FASB”) Statement No. 157, “Fair Value Measurements” (“FAS No.157”) and FASB Statement No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“FAS No. 159”), both of which were adopted effective December 31, 2007.  The adoption of FAS No. 157 had no impact on the Group’s unaudited condensed combined financial statements.  In addition, NMG did not elect the fair value option under FAS No. 159 for any of its financial assets or liabilities.

 

In February 2008, the FASB issued Staff Position No. 157-2 (“FSP No. 157-2”) which defers the effective date of FAS No. 157 for all nonfinancial assets and liabilities, except those items recognized or disclosed at fair value on an annual or more frequently recurring basis, until one year after the adoption of FAS No. 157. The Group is currently evaluating the impact of FAS No. 157 on the assets and liabilities within the scope of FSP 157-2, the provisions of which become effective beginning in the Group’s first quarter of 2009.

 

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Principles of Combination— NMG’s operations are conducted through the following wholly-owned subsidiaries of Tribune:  Newsday, Inc., Star Community Publishing Group, LLC, and Tribune Newspaper Holdings, LLC.  Historically, separate financial statements have not been prepared for NMG.  The accompanying combined financial statements are derived from the historical accounting records of Tribune, and present NMG’s combined financial position, results of operations and cash flows as of and for the periods presented as if NMG was a separate entity and as it was historically managed.

 

All significant intercompany accounts within NMG have been eliminated.  All significant intercompany transactions between NMG and Tribune and its affiliates have been included within the combined financial statements and are considered to be effectively settled through equity contributions or distributions or through cash payments at the time the transactions were recorded.  Except for promissory notes outstanding in favor of Tribune and affiliates, the accumulated net effect of intercompany transactions between NMG and Tribune and affiliates are included in division equity (deficit).  These intercompany transactions are further described in Note 4.  The total net effect of these intercompany transactions, other than non-cash items such as stock-based compensation, including debt transactions with Tribune and affiliates, are reflected in the combined statements of cash flows as financing activities.

 

The combined financial statements include allocations of expenses relating to NMG from Tribune.  These allocated expenses include allocations of Tribune corporate overhead and centralized services using allocation methods as described further in Note 4. The expense and cost allocations to NMG have been determined on bases that management considers to be a reasonable reflection of the utilization of services provided or the benefit received by NMG during the periods presented.  The financial information in these combined financial statements does not include all expenses that would have been incurred had NMG operated as a separate stand-alone entity and accordingly may not reflect NMG’s combined results of operations, financial position and cash flows had NMG been a stand-alone entity during the periods presented.

 

EXCERPTS ON THIS PAGE:

8-K (2 sections)
Oct 10, 2008
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