EX-99.6 9 ex996-combinedproforma.htm EXHIBIT 99.6 Exhibit


Exhibit 99.6

THE E.W. SCRIPPS COMPANY
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

On September 19, 2019, Scripps acquired 8 television stations for consideration of $580 million. Seven of the stations were previously operated by Tribune Media Company ("Tribune") and the remaining station was operated by Nexstar Media Group, Inc. ("Nexstar"). Nexstar was required to divest these stations in order to complete its acquisition of Tribune. Scripps previously closed on the acquisition of 15 television stations from Cordillera Communications, LLC ("Cordillera") on May 1, 2019. Cordillera was a wholly owned subsidiary of EPI Preferred, LLC ("EPI") and comprised substantially all of the key operating assets of EPI. In connection with this Cordillera transaction, the Company provided unaudited pro forma condensed combined financial information within a Current Report on Form 8-K/A dated July 17, 2019. The following unaudited pro forma condensed combined financial statements give pro forma effect to the Cordillera transaction for the periods prior to Scripps' May 1, 2019 ownership of those television stations.
The following unaudited pro forma condensed combined financial statements for the six months ended June 30, 2019 and the year ended December 31, 2018 are based on the historical consolidated financial statements of each of Scripps and EPI, the historical financial statements of KASW (a carve-out of Nexstar Media Group, Inc.) (the "Nexstar Assets"), and the historical combined financial statements of the Tribune carve-out stations (the "Tribune Assets") giving pro forma effect to the respected acquisitions as if they had all been consummated on January 1, 2018. We have derived the following unaudited pro forma condensed combined balance sheet from the historical condensed consolidated balance sheets of Scripps, the historical condensed balance sheets of the Nexstar Assets, and the historical condensed combined balance sheets of the Tribune Assets, each as of June 30, 2019, giving pro forma effect to the acquisition as if it had been consummated on June 30, 2019. As Scripps acquired the television stations from EPI on May 1, 2019, those assets were included in the historical condensed consolidated balance sheets of Scripps as of June 30, 2019. The historical financial information has been adjusted to give effect to matters that are (i) directly attributable to the aforesaid transactions, (ii) factually supportable and (iii) with respect to the statement of operations, expected to have a continuing impact on the operating results of the combined company.
Scripps and EPI have different fiscal years. Scripps’ fiscal year ends on December 31, whereas EPI’s fiscal year ends on September 30. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2018 combines Scripps’ year ended December 31, 2018 with EPI’s year ended September 30, 2018. The unaudited pro forma condensed combined statement of operations for the year end December 31, 2018 has been prepared utilizing period ends that differ by less than 93 days, as permitted by Rule 11-02 Regulation S-X.
The unaudited pro forma condensed combined financial statements were prepared using the acquisition method of accounting in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 805, Business Combinations, with Scripps considered as the accounting acquirer. Accordingly, consideration paid by Scripps to complete the acquisitions has been allocated to identifiable assets and liabilities of the acquired Cordillera and Nexstar-Tribune stations based on estimated fair values as of the closing date of the respective acquisition. Management made preliminary allocations of the considerations transferred to the assets acquired and liabilities assumed based on the information available and management’s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed. The finalization of the purchase accounting assessments may result in changes to the valuations of assets acquired and liabilities assumed, which could be material. Accordingly, the pro forma adjustments related to the allocation of considerations transferred are preliminary and have been presented solely for the purpose of providing unaudited pro forma condensed combined financial information in the Current Report on Form 8-K. Management expects to finalize the accounting for the business combinations as soon as practicable within the measurement periods in accordance with ASC 805, but in no event later than one year from May 1, 2019 for the Cordillera acquisition and no event later than one year from September 19, 2019 for the Nexstar-Tribune acquisition.
The unaudited pro forma condensed combined financial statements do not necessarily reflect what the combined company’s financial condition or results of operations would have been had the acquisitions occurred on the dates indicated. They also may not be useful in predicting the future financial condition and results of operations of the combined company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.





The E.W. Scripps Company
Unaudited Pro Forma Condensed Combined Balance Sheet
As of June 30, 2019
(In thousands,
except per share data)
 
Scripps Historical
(Note 1)
 
Nexstar
Historical
(Note 1)
 
Tribune
Historical
(Note 1)
 
Pro Forma
Adjustments
 
 
 
Pro Forma Combined
Assets
 
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
 
 
 Cash and cash equivalents
 
$
56,514

 
$
—

 
$
497

 
$
62,753

 
4(a)
 
$
119,764

Cash restricted for pending acquisition
 
240,000

 
—

 
—

 
(240,000
)
 
4(a)
 
—

 Accounts and notes receivable, less allowances
 
323,575

 
3,491

 
60,424

 
(63,915
)
 
4(b)
 
323,575

 Programming
 
49,942

 
1,351

 
8,478

 
—

 
 
 
59,771

 FCC repack receivable
 
28,130

 
—

 
—

 
—

 
 
 
28,130

 Miscellaneous
 
22,963

 
105

 
2,947

 
—

 
 
 
26,015

   Total current assets
 
721,124

 
4,947

 
72,346

 
(241,162
)
 
 
 
557,255

Investments
 
7,688

 
—

 
—

 
—

 
 
 
7,688

Property and equipment
 
315,288

 
3,263

 
36,173

 
—

 
 
 
354,724

Operating lease right-of-use asset
 
46,580

 
—

 
—

 
70,721

 
4(c)
 
117,301

Goodwill
 
1,111,247

 
32,203

 
—

 
213,090

 
4(b)
 
1,356,540

Other intangible assets
 
724,792

 
35,623

 
288,885

 
(22,508
)
 
4(b)
 
1,026,792

Programming (less current portion)
 
93,902

 
1,963

 
9,169

 
—

 
 
 
105,034

Deferred income taxes
 
8,557

 
—

 
—

 
—

 
 
 
8,557

Miscellaneous
 
18,547

 
—

 
16,346

 
—

 
 
 
34,893

Total Assets
 
$
3,047,725

 
$
77,999

 
$
422,919

 
$
20,141

 
 
 
$
3,568,784

Liabilities and Equity
 
 
 
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 Accounts Payable
 
$
43,648

 
$
187

 
$
2,309

 
$
(2,496
)
 
4(b)
 
$
43,648

 Unearned revenue
 
6,522

 
23

 
1,822

 
(1,845
)
 
4(b)
 
6,522

 Current portion of long-term debt
 
10,650

 
—

 
—

 
—

 
 
 
10,650

 Accrued liabilities:
 
 
 
 
 
 
 
 
 
 
 


  Employee compensation and benefits
 
34,266

 
134

 
4,191

 
(2,744
)
 
4(b)
 
35,847

  Programming liability
 
61,503

 
1,425

 
23,807

 
—

 
 
 
86,735

  Miscellaneous
 
43,762

 
257

 
507

 
(422
)
 
4(b)
 
44,104

  Other current liabilities
 
18,247

 
—

 
—

 
2,006

 
4(c)
 
20,253

   Total current liabilities
 
218,598

 
2,026

 
32,636

 
(5,501
)
 
 
 
247,759

Long-term debt (less current portion)
 
1,537,849

 
—

 
—

 
419,250

 
4(d)
 
1,957,099

Deferred income taxes
 
25,185

 
4,925

 
19,378

 
(24,303
)
 
4(b)
 
25,185

Operating lease liabilities
 
41,234

 
—

 
—

 
69,169

 
4(c)
 
110,403

Other liabilities (less current portion)
 
308,206

 
2,516

 
17,417

 
(454
)
 
4(c)
 
327,685

Total Liabilities
 
2,131,072

 
9,467

 
69,431

 
458,161

 
 
 
2,668,131

Equity:
 
 
 
 
 
 
 
 
 
 
 


   Preferred stock
 
—

 
—

 
—

 
—

 
 
 
—

   Common stock:
 
 
 
 
 
 
 
 
 
 
 
—

     Class A
 
690

 
—

 
—

 
—

 
 
 
690

     Voting
 
119

 
—

 
—

 
—

 
 
 
119

Total common stock
 
809

 
—

 
—

 
—

 
 
 
809

Additional paid-in capital
 
1,111,849

 
 
 
 
 
 
 
 
 
1,111,849

Accumulated deficit
 
(101,529
)
 
 
 
 
 
(16,000
)
 
4(e)
 
(117,529
)
Accumulated other comprehensive loss, net
 
(94,476
)
 
 
 
 
 
 
 
 
 
(94,476
)
Total Equity
 
 
 
 
 
 
 
(16,000
)
 
4(e)
 
 
 
916,653

 
68,532

 
353,488

 
(422,020
)
 
4(b)
 
900,653

Total Liabilities and Equity
 
$
3,047,725

 
$
77,999

 
$
422,919

 
$
20,141

 
 
 
$
3,568,784





The E.W. Scripps Company
Unaudited Pro Forma Condensed Combined Statements of Operations
For the Year Ended December 31, 2018
(in thousands,
except per share data)
 
Scripps
Historical
(Note 1)
 
EPI Preferred
Historical
(Note 1)
 
Excluded EPI Tucson
Station
 
Nexstar
Historical
(Note 1)
 
Tribune
Historical
(Note 1)
 
Pro Forma
Adjustments
 
 
 
Pro Forma
Combined
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advertising
 
$
836,049

 
$
133,271

 
$
(15,543
)
 
$
9,622

 
$
168,863

 
$
—

 
 
 
$
1,132,262

Retransmission and carriage
 
304,402

 
46,256

 
(7,227
)
 
9,211

 
72,075

 
(16,600
)
 
3(a)
 
408,117

Other
 
67,974

 
2,033

 
(103
)
 
487

 
8,653

 
—

 
 
 
79,044

       Total operating revenues
 
1,208,425

 
181,560

 
(22,873
)
 
19,320

 
249,591

 
(16,600
)
 
 
 
1,619,423

Costs and Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Employee compensation and benefits
 
394,029

 
69,042

 
(7,886
)
 
3,024

 
74,533

 
—

 
 
 
532,742

Programming
 
350,753

 
30,908

 
(4,431
)
 
3,250

 
82,422

 
—

 
 
 
462,902

Impairment of programming assets
 
8,920

 
—

 
—

 
—

 
—

 
—

 
 
 
8,920

Other expenses
 
246,487

 
29,262

 
(3,257
)
 
1,614

 
59,762

 
—

 
 
 
333,868

Acquisition and related integration costs
 
4,124

 
—

 
—

 
—

 
—

 
(1,277
)
 
3(b)
 
2,847

Restructuring costs
 
8,911

 
—

 
—

 
—

 
—

 
—

 
 
 
8,911

       Total costs and expenses
 
1,013,224

 
129,212

 
(15,574
)
 
7,888

 
216,717

 
(1,277
)
 
 
 
1,350,190

Depreciation, Amortization, and (Gains) Losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation
 
34,641

 
5,978

 
(534
)
 
807

 
8,499

 
2,365

 
3(c)
 
51,756

Amortization of intangible assets
 
29,346

 
155

 
(10
)
 
50

 
19,927

 
(2,412
)
 
3(d)
 
47,056

Losses (gains), net on disposal of property, plant and equipment
 
1,255

 
—

 
—

 
—

 
—

 
—

 
 
 
1,255

Net depreciation, amortization, and losses (gains)
 
65,242

 
6,133

 
(544
)
 
857

 
28,426

 
(47
)
 
 
 
100,067

Operating income
 
129,959

 
46,215

 
(6,755
)
 
10,575

 
4,448

 
(15,276
)
 
 
 
169,166

Interest expense
 
(36,184
)
 
(1,850
)
 
—

 
—

 
—

 
(69,250
)
 
3(e)
 
(107,284
)
Defined benefit plan expense
 
(19,752
)
 
—

 
—

 
—

 
—

 
—

 
 
 
(19,752
)
Miscellaneous, net
 
152

 
(378
)
 
—

 
—

 
—

 
(1,157
)
 
3(f)
 
(1,383
)
Income from operations before income taxes
 
74,175

 
43,987

 
(6,755
)
 
10,575

 
4,448

 
(85,683
)
 
 
 
40,747

Provision (benefit) for income taxes
 
18,098

 
(7,443
)
 
(1,723
)
 
2,641

 
1,471

 
(3,100
)
 
3(g)
 
9,944

Income from continuing operations, net of tax
 
56,077

 
51,430

 
(5,032
)
 
7,934

 
2,977

 
(82,583
)
 
 
 
30,803

Net loss from discontinued operations, net of tax
 
(36,328
)
 
—

 
—

 
—

 
—

 
—

 
 
 
(36,328
)
Net income (loss) attributable to noncontrolling interest
 
(632
)
 
40,541

 
(4,000
)
 
—

 
—

 
(36,541
)
 
 
 
(632
)
Net income attributable to Scripps shareholders
 
$
20,381

 
$
10,889

 
$
(1,032
)
 
$
7,934

 
$
2,977

 
$
(46,042
)
 
 
 
$
(4,893
)
Income from continuing operations per share of common stock:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.69

 
 
 
 
 
 
 
 
 
 
 
 
 
$
0.39

Diluted
 
$
0.68

 
 
 
 
 
 
 
 
 
 
 
 
 
$
0.38

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
81,369

 
 
 
 
 
 
 
 
 
 
 
 
 
81,369

Diluted
 
81,927

 
 
 
 
 
 
 
 
 
 
 
 
 
81,927





The E.W. Scripps Company
Unaudited Pro Forma Condensed Combined Statements of Operations
For the Six Months Ended June 30, 2019
(in thousands,
except per share data)
 
Scripps
Historical
(Note 1)
 
EPI Preferred
Historical
(Note 1)
 
Excluded EPI Tucson
Station
 
Nexstar
Historical
(Note 1)
 
Tribune
Historical
(Note 1)
 
Pro Forma
Adjustments
 
 
 
Pro Forma
Combined
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advertising
 
$
386,843

 
$
36,041

 
$
(4,083
)
 
$
3,613

 
$
79,007

 
$
—

 
 
 
$
501,421

Retransmission and carriage
 
180,608

 
18,025

 
(2,735
)
 
5,117

 
44,622

 
(15,900
)
 
3(a)
 
229,737

Other
 
62,207

 
666

 
(37
)
 
212

 
3,575

 
—

 
 
 
66,623

Total operating revenues
 
629,658

 
54,732

 
(6,855
)
 
8,942

 
127,204

 
(15,900
)
 
 
 
797,781

Costs and Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Employee compensation and benefits
 
225,805

 
22,284

 
(2,619
)
 
1,343

 
38,004

 
—

 
 
 
284,817

Programming
 
200,865

 
12,360

 
(1,757
)
 
1,479

 
44,057

 
—

 
 
 
257,004

Other expenses
 
134,167

 
9,439

 
(927
)
 
1,219

 
29,330

 
—

 
 
 
173,228

Acquisition and related integration costs
 
6,268

 
—

 
—

 
—

 
—

 
(3,199
)
 
3(b)
 
3,069

Restructuring costs
 
1,895

 
—

 
—

 
—

 
—

 
—

 
 
 
1,895

      Total costs and expenses
 
569,000

 
44,083

 
(5,303
)
 
4,041

 
111,391

 
(3,199
)
 
 
 
720,013

Depreciation, Amortization, and (Gains) Losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation
 
18,970

 
2,205

 
(176
)
 
245

 
4,171

 
788

 
3(c)
 
26,203

Amortization of intangible assets
 
19,059

 
23

 
(1
)
 
25

 
8,866

 
(1,667
)
 
3(d)
 
26,305

Losses (gains), net on disposal of property, plant and equipment
 
317

 
—

 
—

 
—

 
—

 
—

 
 
 
317

Net depreciation, amortization, and losses (gains)
 
38,346

 
2,228

 
(177
)
 
270

 
13,037

 
(879
)
 
 
 
52,825

Operating income
 
22,312

 
8,421

 
(1,375
)
 
4,631

 
2,776

 
(11,822
)
 
 
 
24,943

Interest expense
 
(26,939
)
 
(1,149
)
 
—

 
—

 
—

 
(28,151
)
 
3(e)
 
(56,239
)
Defined benefit plan expense
 
(3,136
)
 
—

 
—

 
—

 
—

 
—

 
 
 
(3,136
)
Miscellaneous, net
 
(431
)
 
(565
)
 
2

 
—

 
—

 
—

 
 
 
(994
)
Loss from operations before income taxes
 
(8,194
)
 
6,707

 
(1,373
)
 
4,631

 
2,776

 
(39,973
)
 
 
 
(35,426
)
Provision (benefit) for income taxes
 
(1,014
)
 
187

 
(350
)
 
1,142

 
1,009

 
(8,800
)
 
3(g)
 
(7,826
)
Loss from continuing operations, net of tax
 
(7,180
)
 
6,520

 
(1,023
)
 
3,489

 
1,767

 
(31,173
)
 
 
 
(27,600
)
Net loss from discontinued operations, net of tax
 
—

 
—

 
—

 
—

 
—

 
—

 
 
 
—

Net income (loss) attributable to noncontrolling interest
 
—

 
5,766

 
(951
)
 
—

 
—

 
(4,815
)
 
 
 
—

Net loss attributable to Scripps shareholders
 
$
(7,180
)
 
$
754

 
$
(72
)
 
$
3,489

 
$
1,767

 
$
(26,358
)
 
 
 
$
(27,600
)
Loss from continuing operations per share of common stock:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
(0.09
)
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(0.34
)
Diluted
 
$
(0.09
)
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(0.34
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
80,748

 
 
 
 
 
 
 
 
 
 
 
 
 
80,748

Diluted
 
80,748

 
 
 
 
 
 
 
 
 
 
 
 
 
80,748






The E.W. Scripps Company
Notes to the Unaudited Pro Forma Condensed Combined Financial Statements

Note 1. Basis of Presentation
The unaudited pro forma condensed combined financial statements have been derived from the historical consolidated financial statements of Scripps and the acquired Cordillera television stations (reported within the parent entity, EPI), the historical financial statements of the Nexstar television station, and the historical combined financial statements of the Tribune television stations. The unaudited pro forma condensed combined balance sheet as of June 30, 2019 gives effect to the Nexstar and Tribune transaction as if it had occurred on June 30, 2019. The unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2019 and for the year ended December 31, 2018 give effect to all these acquisition transactions as if they had occurred on January 1, 2018.
These historical financial statements have been adjusted in the unaudited pro forma condensed combined statements of operations to give effect to pro forma events that are (1) directly attributable to the business combinations, (2) factually supportable, and (3) with respect to the unaudited pro forma condensed combined statements of operations, expected to have a continuing impact on the combined results following the business combinations.
Scripps has a different fiscal year end than EPI. Because the difference between Scripps’ and EPI’s fiscal year end dates is less than 93 days, the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2018 was prepared using Scripps’ audited consolidated statement of operations for the year ended December 31, 2018 and EPI’s audited consolidated statement of operations for the year ended September 30, 2018, as permitted under Rule 11-02 of Regulation S-X.
The unaudited pro forma condensed combined financial statements are based on preliminary purchase price allocations, provided for illustrative purposes only, and do not purport to represent what the combined company’s financial statements would have been had the transactions occurred on the dates indicated. They also may not be useful in predicting the future financial condition and results of operations of the combined company. The actual results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors. In addition, the unaudited pro forma condensed combined statement of operations do not reflect any future planned cost savings initiatives following the completion of the business combinations.
Certain reclassifications have been made to the presentation of the historical EPI consolidated financial statements and each of the Nexstar and Tribune combined financial statements to conform to the presentation used in the unaudited pro forma financial information contained herein.

Note 2. Preliminary Purchase Price Allocation
On May 1, 2019, Scripps completed the acquisition of 15 television stations from Cordillera Communications, LLC for cash consideration of $521 million, plus an estimated working capital adjustment of $23.9 million. The transaction was financed with a $765 million term loan B, of which $240 million of the proceeds were segregated for financing a portion of the television stations that were acquired from Nexstar.
On September 19, 2019, Scripps completed the acquisition of eight broadcast television stations from the Nexstar transaction with Tribune for consideration of $580 million. The purchase price and other related costs associated with the transaction were financed from a portion of the incremental term loan B proceeds and $500 million of senior unsecured notes issued on July 26, 2019. Additionally, the capacity for our revolving credit facility was increased to $210 million upon closing.
The unaudited pro forma condensed combined financial information includes various assumptions, including those related to the preliminary purchase price allocation of the assets acquired and liabilities assumed for the acquired stations based on management’s best estimates of fair value. The final purchase price allocation may vary based on final appraisals, valuations and analyses of the fair value of the acquired assets and assumed liabilities.




The following table summarizes the preliminary fair values of the television stations assets acquired and liabilities assumed at the closing date.
 
 
Cordillera
Stations
 
Nexstar/ Tribune
Stations
 
Total
 
 
 
 
 
 
 
Accounts receivable
 
$
26,264

 
$
—

 
$
26,264

Other current assets
 
986

 
12,881

 
13,867

Property and equipment
 
53,671

 
39,436

 
93,107

Operating lease right-of-use assets
 
4,667

 
70,721

 
75,388

Other assets
 
—

 
27,478

 
27,478

Fair value of acquired intangible assets
 
214,100

 
302,000

 
516,100

Residual goodwill from the transactions
 
253,735

 
245,293

 
499,028

Accounts payable
 
(15
)
 
—

 
(15
)
Accrued expenses
 
(3,835
)
 
(27,155
)
 
(30,990
)
Other current liabilities
 
(280
)
 
(2,006
)
 
(2,286
)
Operating lease liabilities
 
(4,387
)
 
(69,169
)
 
(73,556
)
Other long-term liabilities
 
—

 
(19,479
)
 
(19,479
)
Net purchase price
 
$
544,906

 
$
580,000

 
$
1,124,906


Note 3. Adjustments to the Unaudited Pro Forma Condensed Combined Statements of Operations
(a)
Reflects the adjustments to reduce retransmission revenue, primarily from CW affiliates, under Scripps' retransmission agreements in effect during each period.

(b)
Reflects the adjustments to reverse incurred and non-recurring transaction costs, which were recorded in Scripps’ acquisition and related integration costs. These transaction costs totaled $1.3 million for the twelve months ended 2018 and $3.2 million for the six months ended June 30, 2019.

(c)
Reflects the depreciation expense adjustment resulting from the fair value adjustments to Cordillera’s, Nexstar's and Tribune's property and equipment:
 
Year-Ended
 
Six Months Ended
 
Dec. 31, 2018
 
June 30, 2019
Depreciation expense for fair value adjustment to property and equipment
$
2,365

 
$
788



(d)
Reflects the incremental increase in intangible asset amortization expense resulting from the fair value adjustments to Cordillera’s, Nexstar's and Tribune's intangible assets:
 
Year-Ended
 
Six Months Ended
 
Dec. 31, 2018
 
June 30, 2019
Reversal of EPI's historical intangible asset amortization
$
(145
)
 
$
(22
)
Reversal of Nexstar's historical intangible asset amortization
(50
)
 
(25
)
Reversal of Tribune's historical intangible asset amortization
(19,927
)
 
(8,866
)
Amortization of purchased identifiable intangible assets
17,710

 
7,246

Total intangible assets amortization expense adjustment
$
(2,412
)
 
$
(1,667
)





(e)
Reflects the adjustments to reverse interest expense associated with the EPI’s debt not assumed and the recognition of interest expense associated with Scripps’ new debt financing:
 
Year-Ended
 
Six Months Ended
 
Dec. 31, 2018
 
June 30, 2019
Reversal of EPI's historical interest expense
$
(1,850
)
 
$
(1,149
)
Interest expense on new debt financing
71,100

 
29,300

Total interest expense adjustment
$
69,250

 
$
28,151


(f)
Reflects the adjustments to reverse the gains and losses recognized from interest rate swaps that were in place on EPI’s outstanding debt. EPI’s statement of operations included a gain on derivative instruments of $1.2 million for the twelve months ended 2018.

(g)
Reflects the income tax effect of applying the estimated blended federal and state statutory rate of 25.2% for the year ended December 31, 2018 and the six months ended June 30, 2019 to EPI's pre-tax income and to the pro forma adjustments.

Note 4. Adjustments to the Unaudited Pro Forma Condensed Combined Balance Sheet
(a)
Represents adjustments to the combined company cash balance. Estimated transaction and other closing/financing costs associated with the transaction are not included in the pro forma results of operations as they are non-recurring in nature.
 
 
(in thousands)
Cash consideration for the acquisition of Nexstar/Tribune stations
 
$
(580,000
)
Cash outlay to pay down borrowings under revolving credit facility
 
(70,000
)
Issuance of new unsecured notes
 
500,000

Cash withheld for debt issuance costs

(10,750
)
Cash not acquired from Nexstar and Tribune

(497
)
Transactions costs paid
 
(16,000
)
Total cash adjustments
 
(177,247
)
Plus: utilization of restricted cash for the Nexstar transaction
 
240,000

Total cash and cash equivalents adjustments
 
$
62,753


(b)
Reflects the acquisition method of accounting based on the estimated fair value of assets acquired and liabilities assumed at the closing date.
 
 
(in thousands)
Cash not acquired
 
$
(497
)
Accounts receivable not acquired
 
(63,915
)
Adjustment of identifiable intangible assets to fair value
 
(22,508
)
Residual goodwill created from acquisition
 
213,090

Accounts payable amounts not assumed
 
2,496

Unearned revenue not assumed
 
1,845

Accrued employee compensation and benefits not assumed
 
2,744

Other accrued expenses not assumed
 
422

Deferred tax impact of purchase accounting treatment
 
24,303

Elimination of Nexstar and Tribune historical equity balances
 
422,020

Total Nexstar/Tribune transaction value
 
$
580,000





(c)
Represents the impact of adopting the new lease standard that requires the recognition of right-of-use assets and lease liabilities on the balance sheet.
 
(in thousands)
Operating lease right-of-use assets
$
70,721
 
Other current liabilities
2,006
 
Operating lease liabilities
69,169
 
Other liabilities (less current portion)
(454
)

(d)
To record the issuance of Scripps’ long-term debt and related debt issuance costs.
 
(in thousands)
Additional long-term debt from issuance of unsecured notes
$
500,000
 
Pay down borrowings under revolving credit facility
(70,000
)
Debt issuance costs on long-term debt
(10,750
)
Total long-term debt adjustment
$
419,250
 
Additionally, the capacity for Scripps' revolving credit facility was increased to $210 million upon closing of the Nexstar/Tribune transaction.

(e)
Represents the impact of estimated transaction costs associated with the transaction. These costs have not been included in the pro forma results of operations as they are non-recurring in nature.