SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from N/A to N/A
Commission File Number 0-27192
ASCENT ENTERTAINMENT GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 52-1930707
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Tabor Center
1200 Seventeenth Street, Suite 2800
Denver, Colorado 80202
(Address of principal executive office)
(303) 626-7000
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding twelve (12) months (or for such shorter period
that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
The number of shares outstanding of the Registrant's Common Stock as of
June 30, 1998 was 29,755,600 shares.
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<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ASCENT ENTERTAINMENT GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 38,544 $ 25,250
Receivables, net 52,677 62,572
Prepaid expenses 10,884 15,876
Income taxes receivable (Note 4) 9,075 8,212
Deferred income taxes 1,457 2,577
Current portion of film inventory 1,542 8,628
Other current assets 917 1,462
-------- --------
Total current assets 115,096 124,577
-------- --------
Property and equipment, net 355,541 336,859
Goodwill, net 118,027 122,341
Franchise rights, net 94,966 97,373
Film inventory, net (Note 3) 20,906 17,442
Investments 6,401 5,979
Other assets, net 25,548 34,413
-------- --------
TOTAL ASSETS $736,485 $738,984
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 39,022 $ 24,202
Deferred income 24,995 48,004
Other taxes payable 10,476 10,657
Accrued compensation 13,477 13,480
Accrued film participations 8,246 1,274
Income taxes payable 1,986 2,213
Other accrued liabilities 21,433 16,965
-------- --------
Total current liabilities 119,635 116,795
-------- --------
Long-term debt 288,549 259,958
Other long-term liabilities 41,037 37,448
Deferred income taxes 1,838 1,917
-------- --------
TOTAL LIABILITIES 451,059 416,118
-------- --------
Minority interest 88,681 95,168
Commitments and contingencies (Note 5) -- --
STOCKHOLDERS' EQUITY:
Preferred stock, par value
$.01 per share, 5,000 shares
authorized, none outstanding -- --
Common stock, par value $.01
per share, 60,000 shares
authorized; 29,756 shares issued
and outstanding 297 297
Additional paid-in capital 306,862 307,248
Accumulated deficit (112,048) (81,147)
Other 1,634 1,300
-------- --------
Total stockholders' equity 196,745 227,698
-------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS'EQUITY $736,485 $738,984
-------- --------
-------- --------
See accompanying notes to these condensed unaudited consolidated financial
statements.
</TABLE>
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<TABLE>
ASCENT ENTERTAINMENT GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
REVENUES $ 81,509 $ 87,604 $199,541 $177,453
OPERATING EXPENSES:
Cost of services 67,057 70,020 167,116 155,991
Depreciation and amortization 27,305 25,183 54,201 50,548
General and administrative 2,497 1,154 4,633 3,152
-------- -------- -------- --------
Total operating expenses 96,859 96,357 225,950 209,691
-------- -------- -------- --------
Operating loss (15,350) ( 8,753) (26,409) (32,238)
Other income, net 397 203 805 399
Interest expense, net ( 6,188) ( 5,557) (11,824) (10,286)
-------- -------- -------- --------
Loss before taxes and minority
Interest (21,141) (14,107) (37,428) (42,125)
Income tax benefit 76 1,899 102 7,130
-------- -------- -------- --------
Loss before minority interest (21,065) (12,208) (37,326) (34,995)
Minority interest in
loss of subsidiaries, net of
taxes 3,050 2,461 6,425 7,602
-------- -------- -------- --------
NET LOSS $(18,015) $ (9,747) $(30,901) $(27,393)
-------- -------- -------- --------
-------- -------- -------- --------
BASIC AND DILUTED NET
LOSS PER COMMON SHARE $ (.60) $ (.33) $ (1.04) $ (.92)
-------- -------- -------- --------
-------- -------- -------- --------
Weighted average number of
common shares outstanding 29,756 29,755 29,756 29,754
-------- -------- -------- --------
-------- -------- -------- --------
See accompanying notes to these condensed unaudited consolidated financial
statements.
</TABLE>
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<TABLE>
ASCENT ENTERTAINMENT GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<CAPTION>
SIX MONTHS ENDED JUNE 30,
1998 1997
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $(30,901) $(27,393)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization 54,201 50,548
Amortization of film inventory 14,296 7,866
Minority interest in losses
of subsidiaries, net (6,425) (7,602)
Interest accretion on Senior
Secured Notes 7,591 --
Changes in operating assets and
liabilities 19,093 (1,388)
Other (684) 129
-------- --------
Net cash provided by operating
activities 57,171 22,160
-------- --------
INVESTING ACTIVITIES:
Proceeds from note receivable 1,322 1,444
Proceeds from sale of investment 261 1,920
Purchase of property and equipment (62,844) (45,071)
Net expenditures for film production costs (3,616) (3,064)
Other -- 455
-------- --------
Net cash used in investing activities (64,877) (44,316)
-------- --------
FINANCING ACTIVITIES - proceeds from
borrowings under credit facilities 21,000 33,000
-------- --------
NET INCREASE IN CASH AND CASH
EQUIVALENTS 13,294 10,844
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 25,250 3,963
-------- --------
CASH AND CASH EQUIVALENTS, END
OF PERIOD $ 38,544 $ 14,807
-------- --------
-------- --------
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid, net of interest capitalized $ 4,674 $ 7,383
-------- --------
-------- --------
Income taxes paid $ 77 $ 265
-------- --------
-------- --------
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Reversal of accrual made in OCC purchase
price allocation $ -- $ 3,000
-------- --------
-------- --------
See accompanying notes to these condensed unaudited consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
ASCENT ENTERTAINMENT GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED)
(IN THOUSANDS)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net loss $(18,015) $ (9,747) $(30,901) $(27,393)
Other comprehensive income (loss):
Unrealized gain (loss) on
securities (684) 829 513 579
Income tax (expense) benefit
related to other comprehensive
income 239 (290) (180) (202)
-------- -------- -------- --------
Other comprehensive income (loss),
net of tax (445) 539 333 377
-------- -------- -------- --------
Comprehensive Loss $(18,460) $ (9,208) $(30,568) $(27,016)
-------- -------- -------- --------
-------- -------- -------- --------
See accompanying notes to these condensed unaudited consolidated financial
statements.
</TABLE>
<PAGE>
ASCENT ENTERTAINMENT GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. GENERAL
The accompanying unaudited condensed consolidated financial statements
have been prepared by Ascent Entertainment Group, Inc. ("Ascent" or the
"Company") pursuant to the rules and regulations of the Securities and
Exchange Commission (the "Commission"). These financial statements should
be read in the context of the financial statements and notes thereto filed
with the Commission in the Company's 1997 Annual Report on Form 10-K.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such regulations.
The accompanying condensed consolidated financial statements reflect all
adjustments and disclosures which are, in the opinion of management,
necessary for a fair presentation. All such adjustments are of a normal
recurring nature. The results of operations for the interim periods are not
necessarily indicative of the results for the entire year.
During the first quarter of 1998, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive
Income." Accordingly, the Company has included in these condensed
consolidated statements, Condensed Consolidated Statements of Comprehensive
Loss for the three and six-month periods ended June 30, 1998 and 1997,
respectively.
2. ORGANIZATION AND BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts
of Ascent and its majority-owned subsidiaries which include On Command
Corporation ("OCC"), the Denver Nuggets Limited Partnership (the "Nuggets"),
the Colorado Avalanche LLC (the "Avalanche"), Beacon Communications Corp.
("Beacon") and the Ascent Arena Company, LLC (the "Arena Company"). Ascent
Network Services, Inc. ("ANS"), formerly a wholly owned subsidiary of Ascent
was merged into Ascent and became an operating division of Ascent on May 30,
1997. Significant intercompany transactions have been eliminated.
Ascent executed an initial public offering (the "Offering") of its
common stock on December 18, 1995. Prior to the Offering, Ascent was a
wholly owned subsidiary of COMSAT Corporation ("COMSAT"). Until June 27,
1997 COMSAT continued to own a majority (80.67%) of Ascent's common stock and
control Ascent. In addition, Ascent's relationship with COMSAT was governed
by three agreements entered into in connection with the Offering; an
Intercompany Services Agreement, a Corporate Agreement and a Tax Sharing
Agreement.
On June 27, 1997, COMSAT consummated the distribution of its 80.67%
ownership interest in Ascent to the COMSAT shareholders on a pro-rata basis
in a transaction that was tax-free for federal income tax purposes (the
"Distribution"). As discussed in Note 14 to the Company's 1997 Consolidated
Financial Statements, Ascent and COMSAT entered into a Distribution Agreement
and a Tax Disaffiliation Agreement in connection with the Distribution. In
order to maintain the tax-free status of the Distribution, Ascent is subject
to the numerous restrictions under the Distribution Agreement, including
restrictions on the following activities: (i) Ascent shall not take any
action, nor fail or omit to take any action, that would cause the
Distribution to be taxable or cause any representation made in the tax ruling
documents related to the Distribution to be untrue in a manner which would
have an adverse effect on the tax-free status of the Distribution; (ii) until
July 1998, Ascent will not sell or otherwise issue to any person, or redeem
or otherwise acquire from any person, any Ascent stock or securities
exercisable or convertible into Ascent stock or any instruments that afford
any person the right to acquire stock of Ascent; (iii) until July 1999,
Ascent will not sell, transfer or otherwise dispose of assets that, in the
aggregate, constitute more than 60% of its gross assets as of the
Distribution, other than in the ordinary course of business; (iv) until July
1999, Ascent will not voluntarily dissolve or liquidate or engage in any
merger, consolidation or other reorganization; (v) until July 1999, Ascent
will continue the active conduct of its ANS satellite distribution, service
and maintenance business; and (vi) until July 1999, Ascent will not unwind
the merger of ANS with and into Ascent in any way.
The restrictions noted in items (ii) through (vi) above will be waived
with respect to any particular transaction if either COMSAT or Ascent have
obtained a ruling from the IRS in form and substance reasonably satisfactory
to COMSAT that such transaction will not adversely affect the tax-free
status of the Distribution, or COMSAT has determined in its sole discretion,
exercised in good faith solely to preserve the tax-free status of the
Distribution that such transaction could not reasonably be expected to have
a material adverse effect on the tax-free status of Distribution, or, with
respect to a transaction occurring at least one year after the Distribution,
Ascent obtains an unqualified tax opinion in form and substance reasonably
acceptable to COMSAT that such transaction will not disqualify the
Distribution's tax-free status.
Pursuant to the Distribution Agreement, Ascent will indemnify COMSAT
against any tax related losses incurred by COMSAT to the extent such losses
are caused by any breach by Ascent of its representations, warranties or
covenants made in the Distribution Agreement. In turn, COMSAT will
indemnify Ascent against any tax related losses incurred by Ascent to the
extent such losses are caused by any COMSAT action causing the Distribution
to be taxable. To the extent that tax related losses are attributable to
subsequent tax legislation or regulation, such losses will be borne equally
by COMSAT and Ascent.
In addition, Ascent and COMSAT terminated the Intercompany Services
Agreement and Corporate Agreement entered into in connection with the
Offering resulting in among other things, the termination of the restriction
on Ascent's incurring indebtedness without the consent of COMSAT. As a
result of the Distribution, Ascent became an independent publicly held
corporation.
<TABLE>
3. FILM INVENTORY
Film inventory consists of the following at June 30, 1998 and December
31, 1997:
<CAPTION>
1998 1997
(in thousands)
<S> <C> <C>
Films released, less amortization $13,846 $20,359
Films in process and development 2,089 --
Development 6,513 5,711
------- -------
Total Film Inventory $22,448 $26,070
------- -------
------- -------
</TABLE>
4. RELATED PARTY TRANSACTIONS WITH COMSAT
COMSAT provided administrative services to Ascent pursuant to an
Intercompany Services Agreement (the "Services Agreement"). The Services
Agreement, which was amended in December 1996 to reflect a reduced level of
services to be provided effective January 1, 1997, was terminated on June 27,
1997 in connection with the Distribution. Total charges incurred under this
agreement were approximately $173,333 for the six-month period ended
June 30, 1997.
Through June 27, 1997, the date of the Distribution, Ascent was a member
of COMSAT's consolidated tax group for federal income tax purposes.
Accordingly, Ascent prepared its tax provision based on Ascent's inclusion in
COMSAT's consolidated tax return pursuant to the tax sharing agreement
entered into in connection with the Offering (see note 2). Pursuant to the
tax sharing agreement and the Tax Disaffiliation Agreement, taxes payable or
receivable with respect to periods that Ascent was included in COMSAT's
consolidated tax group are settled with COMSAT annually. At June 30, 1998
and December 31, 1997, Ascent's federal income tax receivable from COMSAT was
$8,264,000 and $7,945,000, respectively. As a result of the Distribution
(see note 2), the Company is no longer a part of COMSAT's consolidated tax
group and accordingly, may be unable to recognize tax benefits and will
receive no cash payments from COMSAT for losses incurred subsequent to June
27, 1997.
5. LITIGATION
The Company and its subsidiaries are defendants, and may be potential
defendants, in lawsuits and claims arising in the ordinary course of their
businesses. While the outcomes of such claims, lawsuits, or other
proceedings cannot be predicted with certainty, management expects that such
liability, to the extent not provided for by insurance or otherwise, will not
have a material adverse effect on the financial condition of the Company.
6. NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 131 "Disclosures about
Segments of an Enterprise and Related Information", which redefines how
operating segments are determined and requires disclosures of certain
financial and descriptive information about a company's operating segments.
Adoption of SFAS No. 131 will not impact the Company's consolidated financial
position, results of operations or cash flows. While the Company has not
completed its analysis of which operating segments it will report under SFAS
No. 131 in the future, it is required to and will adopt SFAS 131 in the
Company's 1998 Annual Report on Form 10-K.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which defines derivatives, requires that
all derivatives be carried at fair value, and provides for hedging accounting
when certain conditions are met. SFAS No. 133 is effective for all fiscal
quarters of fiscal years beginning after June 15, 1999. On a forward-looking
basis, although the Company has not fully assessed the implications of SFAS
No. 133, the Company does not believe adoption of SFAS No. 133 will have
a material impact on the Company's financial position or results of
operations.
7. SUBSEQUENT EVENTS
ARENA FINANCING - On July 29, 1998, the Arena Company's beneficially
owned trust, The Denver Arena Trust (the "Trust") issued and sold
$139,835,000 principal amount of 6.94% Arena Revenue Backed Notes (the "Arena
Notes") due November 2019. The proceeds from the sale of the Arena Notes
were used by the Trust to purchase from the Arena Company revenue contracts
related to the naming rights, suite licensing and certain corporate
sponsorships of the Arena Company, and the underlying rights related to such
contracts (collectively, the "Revenue Rights.") The Arena Company will use
the net proceeds together with equity investments and intercompany loans from
the Company to fund the construction of the new arena, to be called the Pepsi
Center. The Arena Notes are non-recourse to the Arena Company but the Arena
Company is obligated to the noteholders to construct and operate the Pepsi
Center. Should a payment default occur absent a default in the Arena
Company's obligations to construct and operate the Pepsi Center, the
noteholders will have no recourse to the assets of the Company. Conversely,
the Revenue Rights are not available to the creditors of Ascent and/or the
Arena Company. To secure the Arena Company's obligations to construct and
operate the new arena, the Arena Company has pledged to the Trust
substantially all of the Arena Company's assets, including the Pepsi Center
itself. These assets, if necessary, could be pledged to a subsequent lender
which agreed to an appropriate intercreditor agreement with the Trust.
The Arena Notes provide for semi-annual payments of interest on May 15
and November 15 of each year and annual payments of principal on November 15
of each year commencing November 15, 1999. The amount of principal payable
will be equal to the lesser of the targeted principal distribution amount or
the cash available for such payment after application to all prior payment
priorities. The targeted principal distribution amount has been calculated
so that based on the projected revenues contractually obligated to be paid
under the Revenue Rights, the Arena Notes will be paid in full by November,
2014.
Pursuant to the Arena Notes, the Trust has established restricted cash
accounts which, among other things, will receive proceeds from the Revenue
Contracts, disburse required principal and interest payments and establish
debt service principal and interest reserve balances on behalf of the
noteholders. The Arena Notes also provide that if the aggregate cash
available in these restricted cash accounts exceed the required principal,
interest and other payments due, including the required reserve balances, the
balance of such excess cash available may be distributed to the Arena
Company, subject to certain covenant restrictions.
NBA COLLECTIVE BARGAINING - The NBA Collective Bargaining Agreement with
the NBA Players' Association; which governs the terms and conditions of
employment of NBA players by the NBA's member teams, including the Nuggets,
has been terminated and negotiations have commenced on a new collective
bargaining agreement. Effective July 1, 1998, the NBA has locked out
players. The Company is unable to predict the timing and outcome of such
negotiations and work stoppage.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL:
Certain of the statements in this report are forward-looking and relate
to anticipated future events and operating results. Statements which look
forward in time are based on management's current expectations and
assumptions, which may be affected by subsequent developments and business
conditions, and necessarily involve risks and uncertainties. Therefore,
there can be no assurance that actual future results will not differ
materially from anticipated results. Although the Company has attempted to
identify some of the important factors that may cause actual results to
differ materially from those anticipated, those factors should not be viewed
as the only factors which may affect future operating results. Accordingly,
the following should be read in conjunction with the Condensed Consolidated
Financial Statements (unaudited) included in this filing, and with the
Consolidated Financial Statements, notes thereto, and Management's Discussion
and Analysis of Financial Condition and Results of Operations contained in
the Company's 1997 Annual Report on Form 10-K, as previously filed with the
Commission.
SEASONALITY, VARIABILITY AND OTHER:
The Company's businesses are subject to the effects of both seasonality
and variability. Consequently, the operating results for the quarter ended
June 30, 1998 for each segment and line of business, and for the Company as a
whole, are not necessarily indicative of the results for the full year.
The MultiMedia Distribution segment revenues and primarily those of OCC
are influenced principally by hotel occupancy rates, the "buy rate" or
percentage of occupied rooms at hotels that buy movies or other services at
the property and the price of the movie or service. Occupancy rates vary by
property based on the property's location, competitive position within its
marketplace, seasonal factors, and general economic conditions. Buy rates
generally reflect the hotel's guest mix profile, the popularity of the motion
picture or services available at the hotel and the guests' other
entertainment alternatives. Higher revenues are generally realized during
the summer months and lower revenues realized during the winter months due to
business and vacation travel patterns which impact the lodging industry's
occupancy rates.
The Entertainment segment revenues are influenced by various factors.
Revenues for the Nuggets and Avalanche correspond to the NBA and NHL playing
seasons, which extend from the fall to late spring depending on the extent of
each team's post-season playoff participation. Accordingly, the Company
realizes the vast majority of its revenues from the Nuggets and the Avalanche
during such period. Specifically, the Avalanche were involved in one playoff
round in 1998 as compared to three rounds of playoffs in 1997 and
accordingly, the Avalanche's revenues decreased during the six months ended
June 30, 1998 as compared to the same period in 1997. Conversely, Beacon's
revenues fluctuate based upon the delivery and/or availability of the films it
produces, the timing of theatrical and home video releases and seasonal
consumer purchasing behavior. Release and delivery dates for theatrical
products are determined by several factors, including the distributor's
schedule, the timing of vacation and holiday periods and competition in the
market. Specifically, Beacon released Air Force One to the home video market
in February 1998 and accordingly, Beacon's revenues significantly increased
during the six months ended June 30, 1998 as compared to the same period in
1997. In addition, the operating results for the third and fourth quarters
of 1998 as compared to the same periods in 1997 will be significantly
impacted by AIR FORCE ONE which was released theatrically in the third
quarter of 1997. Beacon currently has no movie releases planned for the
remainder of 1998.
Furthermore, Beacon's operating results are significantly affected by
accounting policies required for the film and entertainment industry and
management's estimates of the ultimate realizable value of its films.
Production advances received prior to the delivery or completion of a film are
treated and recorded as deferred income and are generally recognized as
revenues on the date the film is delivered or made available for delivery.
The Company generally capitalizes all costs incurred to produce a film. Such
costs include the acquisition of story rights, the development of stories,
the direct costs of production, print and advertising costs, production
overhead and interest expense relating to financing the project. Capitalized
exploitation or distribution costs include those costs that clearly benefit
future periods such as film prints and prerelease and early release
advertising that is expected to benefit the film in future markets. These
costs, as well as participation and talent residuals, are amortized each
period under the individual film forecast method which uses the ratio that
the current period's gross revenues from all sources for the film bear to
management's estimate of anticipated total gross revenues for such film from
all sources. In the event management reduces its estimates of the future
gross revenues associated with a particular film, which had been expected to
yield greater future proceeds, a write-down and a corresponding decrease in
the Company's earnings for the quarter and fiscal year end in which such
write-down is taken could result and could be material.
ANALYSIS OF OPERATIONS
CONSOLIDATED OPERATIONS
THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED JUNE 30, 1997
Revenues for the second quarter of 1998 were $ 81.5 million, a decrease
of $6.1 million or 7.0%, as compared to $87.6 million in revenues for the
second quarter of 1997. While revenues at OCC increased by $4.5 million
within the Multimedia Distribution segment, the Entertainment segment
experienced a $10.8 million decrease in revenues due to certain non-recurring
events that occurred during the second quarter of 1997. The increase in
revenues at OCC is primarily attributable to increases in its on-demand movie
business from new hotel installations, continued conversions of hotels served
by SpectraVision equipment to On Command equipment and strong buy rights in
its core movie product. The decrease in revenues in the Entertainment
segment is primarily attributable to a decrease in revenues of $8.4 million
at Beacon combined with decreased revenues from the Avalanche. During the
second quarter of 1997, Beacon recognized revenues of $6.8 million from the
delivery of the motion picture PLAYING GOD to its domestic distributor and
additional revenues from prior movie releases. In contrast, during the
second quarter of 1998, Beacon had minimal revenues as no pictures were
released or delivered and generated minimal revenues from prior movie
releases. In addition, during the quarter ended June 30, 1998, the Avalanche
experienced a decrease in revenues from their participation in the 1998
Stanley Cup Playoffs. During the second quarter of 1998, the Avalanche had 5
fewer home playoff games as a result of playing in only one playoff round as
compared to three rounds of the playoffs in 1997. The Avalanche playoff
revenue decrease was partially offset by the receipt of NHL expansion
proceeds during the second quarter of 1998.
Cost of services for the second quarter of 1998 were $67.1 million, a
decrease of $2.9 million or 4.1%, as compared to the second quarter of 1997.
This decrease is attributable to decreased film amortization costs of $7.5
million at Beacon, offset by reserves taken on certain film projects at
Beacon of $840,000 and by higher costs at OCC. The increased costs at OCC
are primarily attributable to an increase in hotel commission and free-to-
guest expenses, higher research and development expenditures relating to
OCC's new digital platforms and programming support, and higher expenses in
the areas of program management and marketing in order to support new
products and initiatives.
Depreciation and amortization for the second quarter of 1998 was $27.3
million, an increase of $2.1 million or 8.3%, as compared to the second
quarter of 1997. This increase is attributable to the continuing
installation of on-demand video systems at OCC and the resulting increase in
depreciation.
General and administrative expenses for the second quarter of 1998 were
$ 2.5 million, an increase of $1.3 million as compared to the second quarter
of 1997. This increase in operating costs at Ascent corporate primarily
reflects the expense recognized during the second quarter of 1998 for the
Company's stock appreciation rights, which were granted in June 1997 combined
with an increase in compensation costs and the non-recurrence of a favorable
expense settlement which occurred during the second quarter of 1997.
Other income increased by $.2 million in the second quarter of 1998 as
compared to the same period last year. This increase is primarily
attributable to an increase in interest income recognized on the Company's
cash and cash equivalent balances.
Interest expense increased $.6 million in the second quarter of 1998 as
compared to the second quarter of 1997. This increase is attributable to
additional borrowings incurred during 1997 and the first half of 1998 combined
with an increase in borrowing costs at Ascent, primarily those costs related
to the issuance of the Company's 11.875% Senior Secured Discount Notes in
December 1997.
The Company recorded a minimal income tax benefit in the second quarter
of 1998 as compared to an income tax benefit of $1.9 million in the second
quarter of 1997. Prior to the Distribution from COMSAT on June 27, 1997, the
Company was able to recognize tax benefits from its taxable losses as a
result of a tax sharing agreement with COMSAT so long as Ascent was a member
of the consolidated tax group of COMSAT. During the second quarter of 1998,
the Company and the members of its consolidated tax group recognized no tax
benefit from its operating losses due to uncertainties regarding its ability
to realize a portion of the benefits associated with future deductible
temporary differences (deferred tax assets) and net operating loss carry
forwards, prior to their expiration.
Minority interest reflects the losses attributable to the minority
interest in the Company's 57% owned subsidiary, OCC.
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997
Revenues for the six months ended June 30, 1998 were $199.5 million, an
increase of $22.0 million or 12.4%, as compared to $177.5 million in revenues
for the six months ended June 30, 1997. This increase is attributable to an
$8.3 million increase in revenues at OCC within the Multimedia Distribution
segment and a $13.7 million increase in revenues within the Entertainment
segment. The increase in revenues at OCC is primarily attributable to
increases in its on-demand movie business from the non-recurrence of the
interruption in satellite service to a number of SpectraVision hotels which
occurred during the first quarter of 1997, from new hotel installations,
continued conversions of SpectraVision equipment to On Command equipment, and
strong buy rates in its core movie product. The increase in revenues in the
Entertainment segment is primarily attributable to an increase in revenues of
$8.8 million at Beacon combined with increased revenues from the Nuggets.
During the six months ended June 30, 1998, Beacon recognized revenues of
$13.9 million from the video release of the motion picture AIR FORCE ONE and
additional revenues from the delivery of the motion picture A THOUSAND ACRES
to foreign distributors. In contrast, during the six months ended June 30,
1997, Beacon generated revenues of $6.8 million from the delivery of PLAYING
GOD to its domestic distributor and additional revenues from prior movie
releases. During the six months ended June 30, 1998, the Nuggets realized
increased distributions from the NBA's national television contract and an
increase in distributions under their regional broadcasting agreement with
Fox Sports Rocky Mountain. While the Avalanche realized increased revenues
from regular season ticket and sponsorship sales and increased revenues from
their regional broadcasting agreement with Fox Sports Rocky Mountain, these
increases were substantially offset by a decline in playoff revenues of
$4.4 million.
Cost of services for the six months ended June 30, 1998 were $167.1
million, an increase of $11.1 million or 7.1%, as compared to $156.0 million
in cost of services for the six months ended June 30, 1997. This increase is
attributable to increased film amortization costs of $6.3 million at Beacon,
primarily from AIR FORCE ONE, reserves taken on certain film projects at
Beacon of $840,000, and higher operating costs at the Avalanche (principally
player salaries) and Nuggets (contract termination costs). While OCC has
experienced an increase in hotel commissions and free-to-guest expenses, an
increase in research and development expenditures and costs related to new
products and initiatives, these increases have been substantially offset by a
decline in certain non-recurring costs. Specifically, those costs associated
with the termination of satellite movie service related to SpectraVision
rooms and the non-recurrence of costs associated with the interruption of
satellite service which occurred during the first quarter of 1997.
Depreciation and amortization for the six months ended June 30, 1998 was
$54.2 million, an increase of $3.7 million or 7.3%, as compared to $50.5
million in depreciation and amortization for the six months ended June 30,
1997. This increase is attributable to the continuing installation of
on-demand video systems at OCC and the resulting increase in depreciation.
General and administrative expenses for the six months ended June 30,
1998 were $4.6 million, an increase of $1.4 million or 43.7%, as compared to
$3.2 million in general and administrative expenses for the six months ended
June 30, 1997. This increase primarily reflects the expense recognized
during the six months ended June 30, 1998 for the Company's stock
appreciation rights, which were granted in June 1997 combined with an
increase in compensation costs and the non-recurrence of a favorable expense
settlement which occurred during the second quarter of 1997.
Other income increased by $.4 million in the six months ended June 30,
1998 as compared to the same period last year. This increase is primarily
attributable to an increase in interest income recognized on the Company's
cash and cash equivalent balances.
Interest expense increased by $1.5 million during the six months ended
June 30, 1998 as compared to the six months ended June 30, 1997. This
increase is attributable to additional borrowings incurred during 1997 and
the first half of 1998 combined with an increase in borrowing costs at
Ascent, primarily those costs related to the issuance of the Company's
11.875% Senior Secured Discount Notes in December 1997.
The Company recorded a minimal income tax benefit during the six months
ended June 30, 1998 as compared to an income tax benefit of $7.1 million in
the six months ended June 30, 1997. Prior to the Distribution from COMSAT on
June 27, 1997, the Company was able to recognize tax benefits from its
taxable losses as a result of a tax sharing agreement with COMSAT so long as
Ascent was a member of the consolidated tax group of COMSAT. During the six
months ended June 30, 1998, the Company and the members of its consolidated
tax group recognized no tax benefit from its operating losses due to
uncertainties regarding its ability to realize a portion of the benefits
associated with future deductible temporary differences (deferred tax assets)
and net operating loss carry forwards, prior to their expiration.
Minority interest reflects the losses attributable to the minority
interest in the Company's 57% owned subsidiary, OCC.
<TABLE>
SEGMENT OPERATING RESULTS
As discussed in Note 13 to the Company's 1997 Consolidated Financial
Statements, Ascent reports operating results in two segments: Multimedia
Distribution and Entertainment. Results by segment and certain information
regarding the number of guest-pay rooms at OCC are as follows:
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1998 1997 1998 1997
INCOME STATEMENT DATA: (dollars in millions)
<S> <C> <C> <C> <C>
Revenues:
Multimedia Distribution $ 65.9 $ 61.2 $126.6 $118.3
Entertainment 15.6 26.4 72.9 59.2
------ ------ ------ ------
Total Revenues $ 81.5 $ 87.6 $199.5 $177.5
------ ------ ------ ------
------ ------ ------ ------
Operating Loss:
Multimedia Distribution $ (4.7) $ (3.4) $ (9.9) $(13.0)
Entertainment (8.1) (4.2) (11.8) (16.0)
General & Administrative (2.5) (1.2) (4.7) (3.2)
------ ------ ------ ------
Total Operating Loss $(15.3) $ (8.8) $(26.4) $(32.2)
------ ------ ------ ------
------ ------ ------ ------
OTHER DATA:
EBITDA (1):
Multimedia Distribution $ 19.5 $ 18.7 $ 38.2 $ 30.4
Entertainment (5.0) (1.1) (5.8) (8.9)
General & Administrative (2.5) (1.2) (4.6) (3.2)
------ ------ ------ ------
Total EBITDA $ 12.0 $ 16.4 $ 27.8 $ 18.3
------ ------ ------ ------
------ ------ ------ ------
Capital Expenditures:
Multimedia Distribution $ 22.0 $ 24.4 $ 46.2 $ 44.5
Entertainment 8.3 .4 16.6 .6
------ ------ ------ ------
Total Capital Expenditures $ 30.3 $ 24.8 $ 62.8 $ 45.1
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
ROOM DATA: SIX MONTHS ENDED JUNE 30,
Number of Guest-Pay rooms 1998 1997
(at end of period):
On-Demand 801,000 733,000
Schedule only 115,000 188,000
------- -------
Total Guest-Pay rooms 916,000 921,000
------- -------
------- -------
(1) EBITDA represents earnings before interest expense, income taxes,
depreciation and amortization. The most significant difference between
EBITDA and cash provided from operations is changes in working capital.
EBITDA is presented because it is a widely accepted financial indicator
used by certain investors and analysts to analyze and compare companies
on the basis of operating performance. In addition, management believes
EBITDA provides an important additional perspective on the Company's
operating results and the Company's ability to service its long-term
debt and fund the Company's continuing growth. EBITDA is not intended
to represent cash flows for the period, or to depict funds available for
dividends, reinvestment or other discretionary uses. EBITDA has not
been presented as an alternative to operating cash flow or as an
indicator of operating performance and should not be considered in
isolation or as a substitute for measures of performance prepared in
accordance with generally accepted accounting principles, which are
presented in the Condensed Consolidated Statements of Cash Flows
(unaudited) and discussed in Liquidity and Capital Resources.
MULTIMEDIA DISTRIBUTION
The Multimedia Distribution segment includes the results of OCC and ANS.
The segment's second quarter revenues for 1998 increased $4.7 million, or
7.7% over last year's second quarter. Year-to-date revenues for the
MultiMedia Distribution segment increased $8.3 million over the first half of
1997. OCC's revenues grew $4.5 million and $8.3 million during the second
quarter of 1998 and first half of 1998, respectively. These increases are
due primarily attributable to increases in its on-demand movie business from
new hotel installations, continued conversions of hotels served by
SpectraVision equipment to On Command equipment, strong buy rates in its core
movie product and the non-recurrence of the satellite outage experienced at
SpectraVision properties during the first quarter 1997. ANS' revenues for
the second quarter of 1998 and six months ended June 30, 1998 were similar to
the comparable periods in 1997.
Operating losses for this segment increased by $1.3 million over last
year's second quarter. Year-to-date operating losses decreased by $3.1
million over the first half of 1998. The increase in the operating loss
during the second quarter of 1998 is attributable to increased depreciation
expense due to new hotel installations and continued conversions of hotels
served by SpectraVision equipment to On Command equipment. The operating
losses at OCC for the first half of 1997 were impacted on January 11, 1997 by
the loss of communication with a satellite, which delivered pay-per-view
programming to certain SpectraVision properties. While service was restored
to all affected hotels within a month, the loss of revenue and costs
associated with this loss of service resulted in a decrease in operating
income of approximately $3.0 million during the first quarter of 1997.
EBITDA of the Multimedia Distribution segment increased by $.8 million
and $7.8 for the second quarter and first half 1998 respectively, as compared
to the same periods last year. The increase in EBITDA in the second quarter
of 1998 is attributable to the increase in revenues at OCC in the second
quarter of 1998 as compared to 1997. As discussed above, the increase in
EBITDA in the first half of 1998 is primarily attributable to the
non-recurrence of the satellite failure that occurred during the first
quarter of 1997 combined with the increase in OCC revenues for the first half
of 1998 as compared to 1997.
Capital expenditures for the segment decreased by $2.4 million and
increased by $1.7 million during the second quarter and first half of 1998 as
compared to the same periods last year. The decrease in capital expenditures in
the second quarter of 1998 is attributable to a decrease in the number of
conversions of SpectraVision customer rooms to OCC systems. The increase in
capital expenditures in the first half of 1998 is attributable to both
conversions of SpectraVision customer rooms to OCC systems and the
installation of OCC equipment for new hotel customers.
ENTERTAINMENT
The Entertainment segment includes the results of the Nuggets, the
Avalanche, the Arena Company and Beacon. Revenues of the Entertainment
segment for the second quarter of 1998 decreased by $10.8 million over the
same quarter last year. The decrease in revenues in the Entertainment segment
in the second quarter is primarily attributable to a decrease in revenues of
$8.4 million at Beacon combined with decreased revenues from the Avalanche.
During the second quarter of 1997, Beacon recognized revenues of $6.8 million
from the delivery of the motion picture PLAYING GOD to its domestic
distributors and additional revenues from prior movie releases. In contrast,
during the second quarter of 1998, Beacon had minimal revenues as no pictures
were released or delivered and generated minimal revenues from prior movie
releases. In addition, during the quarter ended June 30, 1998, the Avalanche
experienced a decrease in revenues from their participation in the 1998
Stanley Cup Playoffs. In 1998, the Avalanche had 5 fewer home playoff games
as a result of playing in only one playoff round as compared to the three
rounds of the playoffs in 1997. The Avalanche playoff revenue decrease was
partially offset by the receipt of NHL expansion proceeds during the second
quarter of 1998. Year to date revenues for the Entertainment segment
increased $13.7 million over the first half of 1997. This increase in
revenues is primarily attributable to an increase in revenues at Beacon of
$8.8 combined with increased revenues at the Nuggets of $4.3 million. During
the first half of 1998, Beacon generated revenues of $13.9 million from the
video release of the motion picture AIR FORCE ONE and additional revenues from
the delivery of the motion picture, A THOUSAND ACRES, to foreign
distributors. During the first half of 1997, Beacon generated revenues of
$6.8 million from the delivery of the motion picture PLAYING GOD to its
domestic distributors. Year to date revenues for the Nuggets have increased
from improvements in distributions from the NBA national television contract
and increased revenues from their regional broadcasting agreement with Fox
Sports Rocky Mountain. While the Avalanche realized increased revenues from
regular season ticket and sponsorship sales and increased revenues from their
regional broadcasting agreement with Fox Sports Rocky Mountain, these
increases were substantially off set by a decline in playoff revenues of $4.4
million.
Operating losses for this segment increased by $3.9 million during the
second quarter of 1998, as compared to the same period last year. This
decline for the quarter is primarily attributable to the decline in the
Avalanche's playoff operating margin of $1.8 million an increase in operating
costs (players' salaries at the Avalanche and contract termination costs at
the Nuggets) and reserves taken on certain film projects at Beacon. The
year-to-date operating loss for this segment has decreased by $4.2 million as
compared to the first half of 1997. This year-to-date improvement in 1998 is
attributable to the margin realized on the AIR FORCE ONE video release and
the Nuggets increased revenues, which were partially offset by the reduced
playoff margin from the Avalanche.
EBITDA for the Entertainment segment decreased by $3.9 million for the
second quarter of 1998 as compared to the same period last year. This
decrease primarily reflects the Avalanche's reduction in playoff games and
reserves taken on certain film projects at Beacon. On year-to-date basis,
EBITDA for the Entertainment segment increased by $3.1 million as compared
with the first half of 1997. This increase is primarily attributable to the
margin realized on the AIR FORCE ONE video release and the increase in Nuggets
revenues as previously discussed.
Capital expenditures for the Entertainment segment increased by $7.9
million and $16.0 million for the second quarter and first half of 1998 as
compared to the same periods last year. This increase is due to capital
expenditures incurred relating to the construction of the Pepsi Center, the
new arena in downtown Denver to be owned and managed by the Arena Company.
LIQUIDITY AND CAPITAL RESOURCES
The primary sources of cash during the three months ended June 30, 1998
were cash from operating activities of $57.2 million and borrowings under
OCC's credit facility of $21.0 million. Cash was expended primarily for
property and equipment as the Company continued to make investments to
support business growth. Specifically, capital expenditures of $45.2 million
were made by OCC for the continuing installation and conversion of on-demand
systems and $16.5 million was expended by the Arena Company for construction
costs at the Pepsi Center. In addition, $3.6 million of cash was invested by
Beacon on films under development and to acquire rights for film properties.
Long-term debt of the Company at June 30, 1998 consists primarily of the
Company's Senior Secured Discount Notes (the "Senior Notes") totaling $134.5
million, and $154.0 million outstanding under OCC's Credit Facility. Based
on borrowings at June 30, 1998, the Company had access to $50.0 million of
long-term financing under the Ascent credit facility and OCC had access to
$46.0 million of long-term financing under its credit facility, subject to
certain covenant restrictions (see Note 6 of the Company's 1997 Consolidated
Financial Statements). As discussed in Note 7 to the Company's unaudited
Condensed Consolidated Financial Statements, the Arena Company issued and
sold $139.8 million of non-recourse, long-term debt financing (the "Arena
Notes") on July 29, 1998 for the purposes of financing the development and
construction of the Pepsi Center.
The Company's cash requirements through the remainder of 1998 are
expected to include (i) the continuing conversion and installation by OCC of
on-demand in-room video entertainment systems, (ii) funding the development,
production and/or acquisition of rights for motion pictures at Beacon, (iii)
funding the operating requirements of Ascent and its subsidiaries, and (iv)
the payment of interest under the Ascent credit facility, if such facility
is utilized, and the OCC credit facility, and (v) funding the construction of
the Pepsi Center. The Company anticipates capital expenditures in connection
with the continued installation and conversion by OCC of on-demand service
will be approximately $40.0 to $55.0 million during the remainder of 1998.
The Company anticipates that OCC's funding for its operating requirements and
capital expenditures for the continued conversion and installation by OCC of
on-demand services will be funded primarily through cash flows from OCC's
operations and financed under the OCC credit facility. Beacon's cash
requirements with respect to the funding of additional productions at Beacon
will be dependent upon the number, nature and timing of the projects that the
Company determines to pursue during the remainder of 1998. To fund Beacon's
productions, the Company expects to utilize Beacon's domestic distribution
agreement with Universal Pictures when appropriate, and/or pre-sell a portion
of the international distribution rights to help fund motion picture costs.
Currently, such cash requirements are anticipated to be approximately $15.0
million to $20.0 million through the remainder of 1998. The future
expenditures for construction of the Pepsi Center will be funded through the
proceeds of the Arena Notes as discussed in Note 7 to the Company's unaudited
Condensed Consolidated Financial Statements. The Company's other long-term
capital requirements may include ANS's participation in an upgrade of the NBC
television affiliate network. ANS cash requirements, should it be awarded
the NBC contract, may consist of capital expenditures of $30.0 to $35.0
million, commencing in late 1998 or 1999.
Management of the Company believes that the available cash, cash flows
from operating activities, and funds available under the Ascent credit
facility and the OCC credit facility (see Note 6 of the Company's 1997 Notes
to Consolidated Financial Statements), together with the proceeds from the
Arena Notes will be sufficient for the Company and its subsidiaries to
satisfy their growth and finance working capital requirements during 1998.
However, it is the Company's expectation that cash flows from operations will
be insufficient to cover planned capital expenditures during 1998 and 1999
and, accordingly, the Company determined that no cash interest would be payable
on the Senior Notes until June 2003. Thereafter, the Company's ability to
pay interest on the Senior Notes and to satisfy its other debt obligations
will depend upon the future performance of the Company and, in particular, on
the successful implementation of the Company's strategy, including conversion
of the hotel rooms acquired in the acquisition of SpectraVision, Inc. to
OCC's on-demand technology, the upgrade and expansion of OCC's technology and
service offerings and the construction of the Pepsi Center in Denver, and the
ability to attain significant and sustained growth in the Company's cash
flow. There can be no assurance that the Company will successfully implement
its strategy or that the Company will be able to generate sufficient cash
flow from operating activities to meet its long-term debt service obligations
and working capital requirements. Based on the Company's current expectation
with respect to its existing businesses, the Company does not expect to have
cash flows after capital expenditures sufficient to repay all of the Senior
Notes at maturity and, accordingly, may have to refinance the Senior Notes at or
before their maturity. There can be no assurance that any such financing
could be obtained on terms that are acceptable to the Company, or at all. In
the absence of such financing, the Company could be forced to sell assets.
As previously discussed, on June 27, 1997, COMSAT completed the
Distribution of the Ascent common stock held by COMSAT as a tax-free dividend
to COMSAT's shareholders. The Distribution was intended, among other things,
to afford Ascent more flexibility in obtaining debt financing to meet its
growing needs. The Distribution Agreement between Ascent and COMSAT, (see
Note 2 of Notes to Condensed Consolidated Financial Statements) terminated
the Corporate Agreement between Ascent and COMSAT which imposed restrictions
on Ascent to ensure compliance with certain capital structure and debt
financing restrictions imposed on COMSAT by the Federal Communications
Commission. As a result, Ascent's financial leverage has increased and will
increase in the future for numerous reasons, including the financing of the
Pepsi Center (see Note 7 of the Company's unaudited Condensed Consolidated
Financial Statements). In addition, pursuant to the Distribution Agreement,
certain restrictions have been put in place to protect the tax-free status of
the Distribution. Among the restrictions, Ascent was not allowed to sell,
purchase or otherwise acquire stock or instruments which afford a person the
right to acquire the stock of Ascent until July 1998 (see Note 2 of Notes to
Condensed Consolidated Financial Statements). Finally, as a result of the
Distribution, Ascent is no longer part of COMSAT's consolidated tax group and
accordingly, Ascent may be unable to recognize tax benefits and will not
receive cash payments from COMSAT resulting from Ascent's anticipated
operating losses during 1998 and thereafter.
INFORMATION SYSTEMS AND THE YEAR 2000
The Company and its subsidiaries have developed plans to address the
possible exposure related to the impact on its computer systems of the Year
2000. Key financial information and operational and product systems have
been, and will continue to be assessed and plans have been developed to
address the necessary systems modifications required by December 31, 1999.
Many of the Company's systems include new hardware and packaged software
recently purchased from vendors who have represented that these systems are
already Year 2000 compliant. The Company is in the process of obtaining
assurances from vendors that timely updates will be made available to make
all remaining purchased software Year 2000 compliant. The Company will
utilize both internal and external resources to reprogram, replace, and/or
test all of its software for Year 2000 compliance, and the Company now
expects to complete the project during the first half of 1999. The financial
impact of making the required systems changes is not expected to be material to
the Company's consolidated financial position, results of operations, or cash
flows.
In addition, the Company and its subsidiaries are in the process of
communicating with others with whom they have significant business, including
but not limited to suppliers and the hotel customers at OCC, to determine
their Year 2000 compliance readiness and the extent to which the Company is
vulnerable to any third party Year 2000 issues. However, there can be no
guarantee that the systems of other companies on which the Company's systems
rely will be timely converted, or that a failure to convert by another
company, or a conversion that is incompatible with the Company's systems,
would not have a material adverse effect on the Company.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company and its subsidiaries are defendants and may be
potential defendants in lawsuits and claims arising in the ordinary
course of its business. While the outcomes of such claims,
lawsuits, or other proceedings cannot be predicted with certainty,
management expects that such liability, to the extent not provided
for by insurance or otherwise, will not have a material adverse
effect on the financial condition of the Company.
ITEM 2. CHANGE IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBIT
No. 27.0 Financial Data Schedule
(B) REPORTS ON FORM 8-K:
None
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
ASCENT ENTERTAINMENT GROUP, INC.
By: /s/ DAVID A. HOLDEN
David A. Holden
Vice President, Finance and Controller
(Principal Accounting Officer)
Date: August 14, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 38,544
<SECURITIES> 0
<RECEIVABLES> 52,677
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 115,096
<PP&E> 355,541
<DEPRECIATION> 0
<TOTAL-ASSETS> 736,485
<CURRENT-LIABILITIES> 119,635
<BONDS> 288,549
0
0
<COMMON> 297
<OTHER-SE> 196,448
<TOTAL-LIABILITY-AND-EQUITY> 736,485
<SALES> 0
<TOTAL-REVENUES> 199,541
<CGS> 0
<TOTAL-COSTS> 167,116
<OTHER-EXPENSES> 58,834
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,824
<INCOME-PRETAX> (37,428)
<INCOME-TAX> (102)
<INCOME-CONTINUING> (37,326)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (30,901)
<EPS-PRIMARY> (1.04)
<EPS-DILUTED> (1.04)
</TABLE>
