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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MARCH 31, 1997 COMMISSION FILE NUMBER: 001-12223
------------------------
UNIVISION COMMUNICATIONS INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE NO. 95-4398884
(STATE OF (I.R.S. EMPLOYER
INCORPORATION) IDENTIFICATION)
</TABLE>
UNIVISION COMMUNICATIONS INC.
1999 AVENUE OF THE STARS, SUITE 3050
LOS ANGELES, CALIFORNIA 90067
TEL: (310) 556-7676
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
------------------------
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 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 _.
There were 11,771,861 shares of Class A Common Stock, 21,921,737 shares of
Class P Common Stock, 4,459,291 shares of Class T Common Stock and 4,459,291 of
Class V Common Stock outstanding as of April 15, 1997.
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<PAGE>
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
PART I--FINANCIAL INFORMATION:
Glossary.................................................................................................... 2
Introduction................................................................................................ 4
</TABLE>
<TABLE>
<S> <C> <C> <C>
Item 1. Consolidated Financial Statements
Condensed Consolidated Balance Sheets at March 31, 1997 and December
31, 1996........................................................... 5
Condensed Consolidated Statements of Operations for the three months
ended March 31, 1997 and 1996...................................... 6
Condensed Consolidated Statements of Cash Flows for the three months
ended March 31, 1997 and 1996...................................... 7
Notes to the Condensed Consolidated Financial Statements............. 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.............................................. 12
</TABLE>
<TABLE>
<S> <C> <C>
PART II--OTHER INFORMATION:
Item 1. Legal Proceedings............................................................ 18
Item 2. Changes in Securities........................................................ 18
Item 3. Defaults Upon Senior Securities.............................................. 18
Item 4. Submission of Matters to a Vote of Security Holders.......................... 18
Item 5. Other Information............................................................ 18
Item 6. Exhibits and Reports on form 8-K............................................. 18
</TABLE>
<PAGE>
PART I
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
GLOSSARY
The following terms are used in this Form 10-Q to refer to the companies and
operations indicated:
"Acquisition" means the December 1992 acquisition of the Network and UTG
(excluding the Chicago, Houston and Sacramento O&Os) by Perenchio, Televisa and
Venevision.
"Affiliated Stations" means the eight full-power and 14 low-power television
stations with which the Company has Affiliation Agreements. The Sacramento
full-power Affiliated Station was acquired by the Company on March 20, 1997.
"Affiliation Agreements" means the affiliation agreements between the
Company and each Affiliated Station and Cable Affiliate.
"Agreement Concerning Production and Acquisition of Programs" means the cost
sharing agreement among the Network, Televisa and Venevision (which was
terminated as part of the Reorganization).
"Broadcast Affiliates" means the O&Os and the Affiliated Stations.
"Broadcast Cash Flow" means earnings before corporate charges, interest,
taxes, depreciation and amortization.
"Cable Affiliates" means the approximately 790 cable television systems with
which Univision has Affiliation Agreements. These cable television systems
retransmit the Network satellite signal and are not located in DMAs where the
Company has full-power Broadcast Affiliates.
"Combined Net Time Sales" means time sales of both UTG and the Network from
broadcasting, including barter and trade and television subscription revenues,
less advertising commissions, certain special event revenues, music license
fees, outside affiliate compensation and taxes other than withholding taxes.
"EBITDA" means earnings before interest, taxes, depreciation and
amortization.
"Entravision" means Entravision Communications Company, LLC, which owns
eight of the Company's Affiliated Stations.
"Galavision" means the Galavision Spanish-language general entertainment
basic cable network, a wholly-owned subsidiary of the Company.
"Hispanic" means all persons in the U.S. of Hispanic descent or origin.
"Hispanic Households" means all U.S. households with a head of household who
is of Hispanic descent or origin, regardless of the language spoken in the
household.
"Network" or "UNLP" means the Univision Spanish-language television network
owned by the Company and one of the Company's subsidiaries; the Network is a
partnership that prior to the Reorganization was owned and controlled by the
Principal Stockholders.
"New Bank Facility" means the Company's new credit agreement dated September
26, 1996, as amended, which provides for aggregate commitments of up to $600
million and imposes financial and other restrictions on the Company.
"Old Bank Facility" means UTG's old bank credit agreement that was
terminated as part of the Reorganization.
2
<PAGE>
"O&Os" means the 12 full-power and seven low-power television stations owned
and operated by the Company. On March 20, 1997, the Company acquired its
Sacramento full-power Affiliated Station.
"Offering" means the sale of 9,395,500 shares of Class A Common Stock by the
Company in its initial public offering that closed on October 2, 1996.
"PCI" means Perenchio Communications, Inc. which changed its name to
Univision Communications Inc. in June 1996.
"Perenchio" means A. Jerrold Perenchio and his affiliates.
"Principal Stockholders" means Perenchio, Televisa and Venevision.
"Program License Agreements" means the amended and restated program license
agreements between the Company and Televisa and the Company and Venevision
(which became effective as part of the Reorganization).
"PTIH" means PTI Holdings, Inc., a subsidiary of the Company.
"Reorganization" means the reorganization of the Company immediately prior
to the closing of the Offering.
"Sponsor Loans" means the loans made to the Company by Televisa and
Venevision each quarter from the Acquisition through the Reorganization.
"Televisa" means Grupo Televisa, S.A. and its affiliates.
"Univision" or the "Company" means Univision Communications Inc. ("UCI") and
its wholly-owned subsidiaries, after giving effect to the Reorganization.
"Univision Affiliates" means the Broadcast Affiliates and the Cable
Affiliates.
"UTG" means Univision Television Group, Inc., the Company's subsidiary that
owns and operates the O&Os.
"UNHP" means The Univision Network Holding Limited Partnership, the entity
that owned substantially all of the partnership interests in the Network prior
to the Reorganization and that was liquidated as part of the Reorganization.
"Venevision" means Corporacion Venezolana de Television, C.A. and its
affiliates.
3
<PAGE>
PART I
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
INTRODUCTION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial statements. The interim financial statements are unaudited but include
all adjustments, which are of a normal recurring nature, that management
considers necessary to fairly present the financial position and the results of
operations for such periods. Results of operations of interim periods are not
necessarily indicative of results for a full year. These financial statements
should be read in conjunction with the audited consolidated financial statements
in the Company's Annual Report on Form 10-K for December 31, 1996, as amended.
4
<PAGE>
PART I, ITEM 1
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT NUMBER OF SHARES)
<TABLE>
<CAPTION>
ASSETS MARCH 31, DECEMBER 31,
1997 1996
----------- ------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents........................ $ 17,611 $ 11,588
Short-term investment............................ 92 90
Accounts receivable, less allowance for doubtful
accounts of $9,092 in 1997 and $8,738 in 1996.. 72,993 87,954
Program rights................................... 5,493 4,673
Prepaid expenses and other....................... 6,126 7,485
----------- ------------
Total current assets........................... 102,315 111,790
Property and equipment, less accumulated
depreciation of $25,901 in 1997 and $22,183 in
1996........................................... 105,143 103,373
Intangible assets, less accumulated amortization
of $143,957 in 1997 and $133,988 in 1996....... 670,242 639,934
Deferred financing costs, less accumulated
amortization of $717 in 1997 and $343 in
1996........................................... 8,598 8,958
Deferred income taxes............................ 7,000 7,000
Note Receivable-Entravision...................... 10,000 10,000
Other assets..................................... 3,370 3,312
----------- ------------
Total assets................................... $906,668 $884,367
----------- ------------
----------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities......... $ 58,863 $ 70,522
Accrued interest................................. 3,476 2,367
Accrued license fee.............................. 4,948 4,322
Obligation for program rights.................... 757 482
Dividend Payable................................. 22 --
Current portion of long-term debt................ 45,164 42,657
----------- ------------
Total current liabilities...................... 113,230 120,350
Long-term debt including accrued interest, net of
current portion................................ 479,125 458,808
Capital lease obligations, net of current
portion........................................ 38,771 39,329
Obligation for program rights, net of current
portion........................................ 240 331
Other long-term liabilities...................... 3,387 3,342
----------- ------------
Total liabilities.............................. 634,753 622,160
----------- ------------
Stockholders equity:
Preferred stock, $.01 par value (10,000,000
shares authorized, 12,000 shares issued and
outstanding at March 31, 1997; 10,000,000
shares authorized, 12,000 issued and
outstanding and held in escrow at December 31,
1996)......................................... -- --
Common stock, $.01 par value (197,660,000
shares authorized, 42,612,180 shares issued
and outstanding).............................. 426 426
Paid-in-capital................................ 343,331 331,331
Accumulated deficit............................ (71,842) (69,550)
----------- ------------
Total stockholders equity...................... 271,915 262,207
----------- ------------
Total liabilities and stockholders equity........ $906,668 $884,367
----------- ------------
----------- ------------
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31,
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
------------- ------------
<S> <C> <C>
Net revenues......................................................................... $ 85,601 $ 39,191
Direct operating expenses............................................................ 33,542 8,115
Selling, general and administrative expenses......................................... 29,923 16,012
Depreciation and amortization........................................................ 13,748 8,509
------------- ------------
Operating income..................................................................... 8,388 6,555
Interest expense..................................................................... 10,261 10,136
Amortization of deferred financing costs............................................. 374 973
Minority interest in net income of consolidated subsidiary........................... -- (881)
------------- ------------
Loss before taxes and extraordinary loss on extinguishment of debt................... (2,247) (3,673)
Provision for income taxes........................................................... 23 --
------------- ------------
Loss before extraordinary loss on extinguishment of debt............................. (2,270) (3,673)
Extraordinary loss on extinguishment of debt......................................... -- (283)
------------- ------------
Net loss............................................................................. $ (2,270) $ (3,956)
------------- ------------
------------- ------------
Loss per share before extraordinary loss............................................. $ (0.05) $ (1.61)
Extraordinary loss................................................................... -- (0.12)
------------- ------------
Net loss per share................................................................... (0.05) (1.73)
Less preferred stock dividends....................................................... -- --
------------- ------------
Net loss per share applicable to common stock........................................ $ (0.05) $ (1.73)
------------- ------------
------------- ------------
Weighted average common shares outstanding........................................... 42,612,180 2,280,105
------------- ------------
------------- ------------
</TABLE>
See notes to condensed consolidated financial statements.
6
<PAGE>
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Net loss.................................................................................... $ (2,270) $ (3,956)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation................................................................................ 3,779 1,455
Amortization of intangible assets and deferred financing costs.............................. 10,343 8,027
Accretion of interest on Sponsor Loans...................................................... -- 2,244
Minority interest........................................................................... -- (882)
Extraordinary loss on extinguishment of debt................................................ -- 283
Changes in assets and liabilities:
Accounts receivable....................................................................... 15,711 7,013
License fees payable...................................................................... 11,229 --
Payment of license fees................................................................... (10,603) --
Due to the Network........................................................................ -- (5,393)
Program rights............................................................................ (820) --
Prepaid expenses and other assets......................................................... 1,299 305
Accounts payable and accrued liabilities.................................................. (11,126) (7,169)
Accrued interest.......................................................................... 2,980 (1,579)
Obligations for program rights............................................................ 184 (780)
Other, net................................................................................ 114 49
--------- ---------
Net cash provided by (used in) operating activities......................................... 20,820 (383)
--------- ---------
Cash flow from investing activities:
Acquisition of Sacramento................................................................. (28,761) --
Capital expenditures...................................................................... (4,906) (3,564)
Organization costs........................................................................ (13) --
--------- ---------
Net cash used in investing activities....................................................... (33,680) (3,564)
--------- ---------
Cash flow from financing activities:
Proceeds from issuance of long-term debt.................................................. 44,000 17,000
Proceeds from Sponsor Loans............................................................... -- 12,986
Payments of long-term debt................................................................ (23,604) (7,000)
Advances to the Network................................................................... -- (15,070)
Reduction of Sponsor Loans-Program Cost Sharing Agreement................................. -- (5,074)
Repurchase of Senior Subordinated Notes................................................... -- (3,199)
Tax payments to Partners.................................................................. (1,500) --
Deferred financing costs.................................................................. (13) --
--------- ---------
Net cash provided by (used in) financing activities......................................... 18,883 (357)
--------- ---------
Net increase (decrease) in cash............................................................. 6,023 (4,304)
Cash and cash equivalents, beginning of year................................................ 11,588 14,029
--------- ---------
Cash and cash equivalents, end of period.................................................... $ 17,611 $ 9,725
--------- ---------
--------- ---------
Supplemental disclosure of cash flow information:
Interest paid during the period........................................................... $ 7,329 $ 9,366
--------- ---------
--------- ---------
</TABLE>
See notes to consolidated financial statements.
7
<PAGE>
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
1. ORGANIZATION AND ACQUISITION
Through October 2, 1996, Univision Communications Inc. ("UCI"), formerly
Perenchio Communications, Inc. ("PCI"), and its 80% owned subsidiary, PTI
Holdings, Inc. ("PTIH") were beneficially owned by affiliates of A. Jerrold
Perenchio (together with his affiliates, "Perenchio"), affiliates of Grupo
Televisa, S.A. (together with its affiliates, "Televisa") and Dennevar, B.V., an
affiliate of Venevision International Limited (together with its affiliates,
"Venevision") (collectively, the "Principal Stockholders"). Perenchio
Television, Inc. ("PTI") was a wholly-owned subsidiary of PTIH, and Univision
Television Group, Inc. ("UTG") was a wholly-owned subsidiary of PTI.
PCI and its subsidiaries had no operations prior to the 1992 acquisition of
the station group by the Principal Stockholders totalling approximately
$489,000,000, including approximately $11,000,000 of acquisition costs. The
acquisition was accounted for under the purchase method of accounting.
Accordingly, the assets acquired and liabilities assumed have been recorded at
the fair values at the date of the acquisition. In addition to current assets
and liabilities, the purchase price was allocated principally to property and
equipment of approximately $22,000,000 and intangible assets of approximately
$473,000,000 comprised of approximately $270,000,000 attributable to affiliation
agreements, approximately $156,500,000 attributable to FCC television broadcast
licenses and approximately $46,500,000 attributable to all other intangible
assets including goodwill. Two additional stations, Chicago and Houston, were
acquired during 1994 for an aggregate purchase price of $67,000,000 resulting in
additional intangible assets of approximately $64,000,000.
Through October 2, 1996, the businesses of the Company and the Network were
under separate management and ownership structures. Notwithstanding this
separation, the business operations of the Company and the Network remained
substantially dependent upon one another. The Company is dependent upon the
Network for programming and advertising sales support, while the Company
represented 78% of the Network's total broadcast distribution.
Effective close of business October 2, 1996, as part of the Offering and
Reorganization, PTIH became a wholly-owned subsidiary of the Company. PTI was
merged with and into PTIH. The Company and one of the Company's subsidiaries
acquired The Univision Network Holding Limited Partnership (" UNHP") and The
Univision Network Limited Partnership ("the Network") which had existing
intangible assets of approximately $23,000,000. The Network had acquired the
Galavision cable network on June 30, 1996 for $15,000,000 and substantially all
of the purchase price was allocated to goodwill. On October 2, 1996, UNHP was
liquidated. UCI and PTIH are holding companies and otherwise inactive. UCI and
its subsidiaries are referred to as "the Company" for all periods discussed
subsequent to October 2, 1996. PCI and its subsidiaries are referred to as "the
Company" for all periods discussed prior to October 2, 1996.
The acquisition of the minority interests of PTIH and the Network has been
accounted for under the purchase method of accounting, and, accordingly, the
Network's operating results have been included with the Company's since October
3, 1996. The total consideration paid in excess of the estimated fair value of
the net assets related to the minority interests of PTIH and the Network
acquired was approximately $203,000,000. The Company has preliminarily allocated
this amount to goodwill pending the outcome of a fair value appraisal of the
individual assets and liabilities, which is expected to be completed by the end
of the second quarter of 1997.
8
<PAGE>
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1997
(UNAUDITED)
1. ORGANIZATION AND ACQUISITION (CONTINUED)
Televisa and Venevision also own warrants to acquire additional shares of
UCI. These warrants cannot be exercised by either Televisa or Venevision (or by
any other non-U.S. citizen) unless the foreign ownership restrictions of the
Communications Act of 1934 are amended to permit increased alien ownership.
Subject to certain restrictions, Televisa and Venevision may transfer such
warrants. If Televisa and Venevision were to exercise these warrants, their
ownership of UCI would be approximately 20% each.
As of March 31, 1997, the Company owns and operates twelve Spanish-language
full-power television stations serving New York, Los Angeles, Miami, San
Antonio, San Francisco, Fresno, Dallas, Phoenix, Albuquerque, Houston,
Sacramento and Chicago and seven Spanish-language low-power television stations
serving Hartford, Fort Worth, Philadelphia, Tucson, Austin, Albuquerque and
Bakersfield. The Company's television stations are affiliated with the
Spanish-language television network owned and operated by the Network.
The Company has made a $10,000,000 investment in Entravision Communications
Company, LLC ("Entravision") in the form of a note which matures on December 30,
2021, and has an annual interest rate of 7.01%. The Company has an option to
acquire a 25.55% equity interest in Entravision. Entravision owns eight
Affiliated Stations (stations that have Affiliation Agreements with the Network)
and has an agreement to acquire a ninth. This group of nine stations represents
approximately 13% of the Network's distribution. Exercising the Company's option
to acquire the equity interest in Entravision would not require additional
investment. The Company intends to exercise its option sometime during 1997.
On March 20, 1997, the Company completed its acquisition of its affiliated
station in Sacramento, California (KCSO). The purchase price was approximately
$40,200,000 and included $12,000,000 of the Company's preferred stock and
$28,200,000 in cash, $24,000,000 of which was financed with borrowings from the
New Bank Facility. The acquisition included fixed assets, a guaranteed minimum
accounts receivable balance and the FCC license. Subject to completion of an
appraisal, substantially all of the purchase price has been allocated to
intangible assets. Subsequent to the acquisition, the FCC approved a change in
the call letters of the station to KUVS.
The pro forma March 31, 1996 unaudited consolidated statement of operations
gives effect to the Reorganization, the sale of the 9,395,500 shares of Class A
Common Stock and the application of the net proceeds therefrom as if such
transactions had occurred as of January 1, 1996.
9
<PAGE>
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1997
(UNAUDITED)
1. ORGANIZATION AND ACQUISITION (CONTINUED)
The pro forma statement does not purport to represent what the Company s
consolidated financial position or results of operations would actually have
been if the transactions described above in fact had occurred on the dates
assumed or to project consolidated financial position or results of operations
for any future date or period.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
1997 1996
ACTUAL PRO FORMA
------------- -------------
<S> <C> <C>
Net revenues..................................................................... $ 85,601 $ 72,674
------------- -------------
Direct operating expenses........................................................ 33,472 26,307
Selling, general and administrative expenses..................................... 27,732 22,589
Corporate charges................................................................ 2,261 2,014
Depreciation and amortization.................................................... 13,748 13,816
------------- -------------
Operating income................................................................. 8,388 7,948
Interest expense................................................................. 10,261 9,805
Amortization of deferred financing costs......................................... 374 372
------------- -------------
Loss before taxes and extraordinary loss on extinguishment of debt............... (2,247) (2,229)
Provision for income taxes....................................................... 23 --
------------- -------------
Loss before extraordinary loss on extinguishment of debt......................... (2,270) (2,229)
Extraordinary loss on extinguishment of debt..................................... -- (18,637)
------------- -------------
Net loss......................................................................... $ (2,270) $ (20,866)
------------- -------------
------------- -------------
Loss per share before extraordinary loss......................................... $ (0.05) $ (0.05)
Extraordinary loss per share..................................................... -- (0.44)
------------- -------------
Net loss per share............................................................... (0.05) (0.49)
Less preferred stock dividends................................................... -- --
------------- -------------
Net loss per share............................................................... $ (0.05) $ (0.49)
------------- -------------
------------- -------------
Weighted average common shares outstanding....................................... 42,612,180 42,612,180
------------- -------------
------------- -------------
</TABLE>
2. UNAUDITED FINANCIAL STATEMENTS
Certain reclassifications have been made to the prior year financial
statements to conform to the current presentation.
3. NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued a new standard,
"Earnings per Share" ("SFAS 128"). SFAS 128 provides for revisions to the
current method of calculating earnings per share and
10
<PAGE>
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1997
(UNAUDITED)
3. NEW ACCOUNTING PRONOUNCEMENTS (CONTINUED)
for the disclosure of certain information about the capital structure of the
reporting entity. SFAS 128 will become effective for financial statements issued
for both interim and annual periods ending after December 15, 1997; early
adoption is not permitted. The Company believes the new pronouncement will have
a favorable impact on earnings per share.
The Financial Accounting Standards Board has issued a new standard,
"Disclosure of Information about Capital Structure" ("SFAS 129"). SFAS 129
requires all entities, including those who were previously exempt, to provide
the capital structure disclosures previously required by the Accounting
Principal Board--Opinion 15. SFAS 129 will become effective for financial
statements issued for periods ending after December 15, 1997.
11
<PAGE>
PART I, ITEM 2
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
FORM 10-Q
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following management's discussion and analysis should be read in
conjunction with the Condensed Consolidated Financial Statements and the Notes
to Condensed Consolidated Financial Statements. In particular, Note 1
(ORGANIZATION AND ACQUISITION) to the Condensed Consolidated Financial
Statements explains the acquisition of the Network on October 2, 1996, and
presents the results of operations of the Company on a pro forma basis for the
three months ended March 31, 1996, as if the 1996 acquisition of the Network,
and related Reorganization had occurred as of January 1, 1996.
RESULTS OF OPERATIONS
For the three months ended March 31, 1997, the Company's results included
the operations of the Network, and as a result, revenues, expenses and other
items include the Network for this period. Consequently, significant variances
exist when the results for the three months ended March 31, 1997 are compared to
those for the three months ended March 31, 1996. Accordingly, management's
discussion and analysis of results of operations for the three months ended
March 31, 1997, as compared to March 31, 1996, has been presented on an
historical basis and, in addition, on a basis that includes the results of
operations of the Network for the three months ended March 31, 1996.
Furthermore, the three months ended March 31, 1996 results of operations include
the pro forma impact of adjustments for interest expense on the Company's New
Bank Facility, amortization of Network goodwill and acquisition-related
financing costs and related income tax benefits. The three months ended March
31, 1996 pro forma results of operations are not necessarily indicative of what
would have occurred if the Network acquisition had taken place on January 1,
1996.
As a result of the Reorganization, the Company's major assets are its
investments in UTG and the Network, from which substantially all of its revenues
are derived. UTG's net revenues are derived from the owned and operated stations
(the "O&Os") and include gross advertising revenues generated from the sale of
national and local spot advertising time, net of agency commissions. The
Network's net revenues include gross advertising revenues generated from the
sale of Network advertising, net of agency commissions and station compensation
to the Affiliated Stations. Also included in net revenues are other
miscellaneous revenues.
Direct operating expenses consist of programming, news and general operating
costs.
12
<PAGE>
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
FORM 10-Q
The following table sets forth selected data from the operating results of
the Company for the three months ended March 31, 1997 and 1996 on a historical
and pro forma basis (in thousands):
<TABLE>
<CAPTION>
HISTORICAL ACTUAL/PRO FORMA %
-------------------- % ---------------------- INCREASE
1997 1996 INCREASE 1997 1996 (DECREASE)
--------- --------- ----------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Actual Actual Actual Pro forma
Net revenues................................... $ 85,601 $ 39,191 118.4 % $ 85,601 $ 72,674 17.8 %
Direct operating expenses...................... 33,542 8,115 313.3 % 33,542 26,356 27.3 %
Selling, general and administrative expenses... 29,923 16,012 86.9 % 29,923 24,554 21.9 %
Depreciation and amortization.................. 13,748 8,509 61.6 % 13,748 13,816 (.5 )%
--------- --------- ----- --------- ----------- ---
---
Operating income............................... $ 8,388 $ 6,555 28.0 % $ 8,388 $ 7,948 5.5 %
--------- --------- ----- --------- ----------- ---
--------- --------- ----- --------- ----------- ---
Other Data:
Broadcast cash flow.......................... $ 24,397 $ 16,516 47.7 % $ 24,397 $ 23,778 2.6 %
Corporate charges............................ 2,261 1,452 55.7 % 2,261 2,014 12.3 %
--------- --------- ----- --------- ----------- ---
EBITDA....................................... $ 22,136 $ 15,064 46.9 % $ 22,136 $ 21,764 1.7 %
--------- --------- ----- --------- ----------- ---
--------- --------- ----- --------- ----------- ---
</TABLE>
THREE MONTHS ENDED MARCH 31, 1997 ("1997") COMPARED TO THE THREE MONTHS ENDED
MARCH 31, 1996 ("1996")
REVENUES. Net revenues increased to $85,601,000 for the three months ended
March 31, 1997 from $39,191,000 for the same period in 1996, an increase of
$46,410,000 or 118.4%. The acquisition of the Network accounted for $39,267,000
or 84.6% of the increase, and the O&Os and Galavision, which was acquired June
30, 1996, accounted for $5,435,000 or 11.7% and $1,708,000 or 3.7%,
respectively. Had the Network been owned since January 1, 1996, net revenues
would have been $72,674,000 in 1996 compared to $85,601,000 in 1997, an increase
of $12,927,000 or 17.8%. The increase is due to higher net revenues of
$5,435,000 at the O&Os, $5,784,000 at the Network and $1,708,000 related to
Galavision. The O&Os' increase, which was due to approximately 10% increase in
spots sold and a 10% increase in the price for advertising spots, was primarily
derived from Los Angeles, Miami, Chicago, Houston and New York, with increases
at all other O&Os. The Network s increase is due primarily to price increases,
offset in part by a decrease in volume of approximately 12%.
EXPENSES. Direct operating expenses, before the reduction of corporate
charges of $70,000 and $49,000 for the three months ended March 31, 1997 and
1996, respectively, increased to $33,542,000 in 1997 from $8,115,000 in 1996, an
increase of $25,427,000 or 313.3%. The acquisition of the Network accounted for
$24,270,000 or 95.4% of the increase, and the O&Os and Galavision accounted for
$538,000 or 2.1% and $619,000 or 2.5% respectively. Had the Network been owned
since January 1, 1996, direct operating expenses, before the reduction of
corporate charges, would have been $26,356,000 in 1996 compared to $33,542,000
in 1997, an increase of $7,186,000 or 27.3%. The increase is primarily due to
higher license fees of $4,483,000. As a result of the Company's Offering in
September 1996 and its subsequent corporate Reorganization in the fourth quarter
of 1996, the net program license fee payable to Univision's programming
partners, Televisa and Venevision, increased from 9.1% to 13.0% of net revenues
in the first quarter. The remainder of the increase is due primarily to higher
technical, programming and news costs and $619,000 of costs related to
Galavision. As a percentage of net revenues, direct operating expenses increased
to 39.2% in 1997 from 36.3% in 1996 assuming the Network had been owned since
January 1, 1996.
13
<PAGE>
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
FORM 10-Q
Selling, general and administrative expenses, before the reduction of
corporate charges of $2,191,000 and $1,403,000 for the three months ended March
31, 1997 and 1996, respectively, increased to $29,923,000 in 1997 from
$16,012,000 in 1996, an increase of $13,911,000 or 86.9%. The acquisition of the
Network accounted for $9,409,000 or 67.6% of the increase, and the O&Os and
Galavision accounted for $3,142,000 or 22.6% and $1,360,000 or 9.8%,
respectively. Had the Network been owned since January 1, 1996, selling, general
and administrative expenses, before the reduction of corporate charges, would
have been $24,554,000 in 1996 compared to $29,923,000 in 1997, an increase of
$5,369,000 or 21.9%. The increase is primarily a result of increased selling
costs at the O&Os and the Network of $1,827,000 associated with increased sales
and staff levels and increased research costs of $489,000, both of which are
consistent with the Company's strategy of investing in sales management and
research. The acquisition of Galavision accounted for $1,360,000, which was
predominantly sales related. As a percentage of net revenues, selling, general
and administrative expenses increased to 35.0% in 1997 from 33.8% in 1996
assuming the Network had been owned since January 1, 1996.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased to
$13,748,000 in 1997 from $8,509,000 in 1996, an increase of $5,239,000 or 61.6%.
The acquisition of the Network accounted for $2,055,000 or 39.2% of the
increase, and the O&Os and Galavision accounted for $2,831,000 or 54.0% and
$353,000 or 6.8%, respectively. Had the Network been owned since January 1,
1996, depreciation and amortization would have been $13,816,000 in 1996 compared
to $13,748,000 in 1997, a decrease of $68,000 or 0.5%. The decrease is due
primarily to a decrease in goodwill amortization, offset by an increase in
depreciation related to increased capital expenditures.
OPERATING INCOME. As a result of the above factors, operating income
increased to $8,388,000 in 1997 from $6,555,000 in 1996, an increase of
$1,833,000 or 28.0%. The acquisition of the Network accounted for $3,533,000 of
the increase, and the O&Os and Galavision accounted for a decrease in operating
income of $1,076,000 and $624,000, respectively. Had the Network been owned
since January 1, 1996, operating income would have been $7,948,000 in 1996
compared to $8,388,000 in 1997, an increase of $440,000 or 5.5%. As a percentage
of net revenues, operating income decreased to 9.8% in 1997 from 10.9% in 1996
assuming the Network had been owned since January 1, 1996.
INTEREST EXPENSE. Interest expense increased to $10,261,000 in 1997 from
$10,136,000 in 1996, an increase of $125,000 or 1.2%. On a pro forma basis,
interest expense was $9,805,000 in 1996 compared to $10,261,000 in 1997, an
increase of $456,000 or 4.7%. The increase is due primarily to higher borrowings
during 1997 as compared to 1996.
MINORITY INTEREST. For the three months ended March 31, 1996, the Company
reported minority interest income of $881,000, associated with the net income of
a consolidated subsidiary. The minority interest of $881,000 in 1996 consisted
of the minority interest in the net income of subsidiary of $927,000 less
preferred stock dividends attributable to minority stockholders of $46,000. The
minority interest was acquired as part of the Reorganization during 1996 (see
Note 1). On a pro forma basis, minority interest is eliminated from the 1996
operating results of the Company.
LOSS BEFORE EXTRAORDINARY ITEMS. As a result of the above factors, loss
before extraordinary items decreased to $2,270,000 in 1997 from $3,673,000 in
1996, an improvement of $1,403,000. On a pro forma basis, loss before
extraordinary items increased to $2,270,000 in 1997 from $2,229,000 in 1996, an
increase of $41,000 or 1.8%.
EXTRAORDINARY LOSS. During the three months ended March 31, 1996, UTG
purchased at a premium $3,000,000 face amount of its 11 3/4% Senior Subordinated
Notes due 2001. The purchase resulted in an
14
<PAGE>
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
FORM 10-Q
extraordinary loss of $283,000, including the write-off of the related deferred
financing costs. On a pro forma basis, the Senior Subordinated Notes with a
total face amount of $92,050,000 are assumed to be defeased at January 1, 1996,
generating an extraordinary loss of $18,637,000 for the three months ended March
31, 1996.
NET LOSS. As a result of the above factors, net loss decreased to
$2,270,000 in 1997 from $3,956,000 in 1996, an improvement of $1,686,000. On a
pro forma basis, net loss decreased to $2,270,000 in 1997 from $20,866,000 in
1996, an improvement of $18,596,000.
BROADCAST CASH FLOW. Broadcast cash flow increased to $24,397,000 in 1997
from $16,516,000 in 1996, an increase of $7,881,000 or 47.7%. The acquisition of
the Network accounted for $6,205,000 of the increase, the O&Os accounted for
$1,947,000 of the increase and Galavision had a decrease in broadcast cash flow
of $271,000. Had the Network been owned since January 1, 1996, broadcast cash
flow would have been $23,778,000 in 1996 compared to $24,397,000 in 1997, an
increase of $619,000 or 2.6%. As a percentage of net revenues, broadcast cash
flow decreased to 28.5% in 1997 from 32.7% in 1996 assuming the Network had been
owned since January 1, 1996.
As a result of the Company's Offering in September 1996 and its subsequent
corporate Reorganization in the fourth quarter of 1996, the net program license
fee payable to Univision's programming partners, Televisa and Venevision,
increased from 9.1% to 13.0% of net revenues in the first quarter. Had the
revised license fee been in effect in 1996, the license fee would have increased
by $2,986,000 and broadcast cash flow would have increased by $3,605,000 or
17.3%, from $20,792,000 in the first quarter 1996 to $24,397,000 in the first
quarter 1997.
CORPORATE CHARGES. Corporate charges increased to $2,261,000 in 1997 from
$1,452,000 in 1996, an increase of $809,000 or 55.7%. The acquisition of the
Network accounted for $617,000 or 76.3% of the increase, and the O&Os accounted
for $192,000 or 23.7%. Had the Network been owned since January 1, 1996,
corporate charges would have been $2,014,000 in 1996 compared to $2,261,000 in
1997, an increase of $247,000 or 12.3%. As a percentage of net revenues,
corporate charges decreased to 2.6% in 1997 from 2.8% in 1996 assuming the
Network had been owned since January 1, 1996.
EBITDA. EBITDA increased to $22,136,000 in 1997 from $15,064,000 in 1996,
an increase of $7,072,000 or 46.9%. The acquisition of the Network accounted for
$5,588,000 of the increase, the O&Os accounted for $1,755,000 of the increase
and Galavision had a decrease in EBITDA of $271,000. Had the Network been owned
since January 1, 1996, EBITDA would have been $21,764,000 in 1996 compared to
$22,136,000 in 1997, an increase of $372,000 or 1.7%. As a percentage of net
revenues, EBITDA decreased to 25.9% in 1997 from 29.9% in 1996 assuming the
Network had been owned since January 1, 1996.
As explained in the broadcast cash flow commentary, had the revised license
fee been in effect in 1996, the license fee would have increased by $2,986,000
and EBITDA would have increased by $3,358,000 or 17.9%, from $18,778,000 in the
first quarter 1996 to $22,136,000 in the first quarter 1997.
15
<PAGE>
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
FORM 10-Q
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary source of cash flow is its broadcasting operations.
Funds for debt service, capital expenditures and operations historically have
been provided by income from operations and by borrowings. Capital expenditures
include UTG and the Network for the three months ended March 31, 1997 and 1996.
Capital expenditures totaled $4,906,000 and $3,564,000 for the three months
ended March 31, 1997 and 1996, respectively. These amounts exclude the
capitalized transponder lease obligations of the Network. In addition to
performing normal capital maintenance and replacing several towers and antennas,
the Company is also in the process of upgrading and relocating several of its
television station facilities. Furthermore, during the next few years, the
Company will also make an investment in digital technology. The amount of this
investment has not been quantified as the Company is in the process of
determining the options available to it. Capital spending in 1997, including a
carryover from 1996 of approximately $10,000,000 due to timing of certain
projects, will approximate $35,000,000. Capital spending in 1998 will
approximate $25,000,000, of which approximately $10,000,000 relates to the
relocation and upgrading of the Sacramento O&O. Capital spending in 1999 will
approximate $15,000,000.
In connection with the Reorganization, the Company entered into the New Bank
Facility with a syndicate of commercial banks and other lenders. The New Bank
Facility consisted of a $400 million amortizing term loan (the "Term Facility")
with a final maturity of December 31, 2003 and a $200 million reducing revolving
credit facility (the "Revolving Credit Facility") maturing on the same date.
The New Bank Facility will also permit the lenders thereunder to advance up
to an additional $250 million of term loans (the "Incremental Facility"),
although the Company has not requested and there are no commitments at this time
to lend any such additional amounts.
The Term Facility amortizes quarterly with $40 million required to be repaid
during 1997. The Revolving Credit Facility will have quarterly scheduled
reductions in availability beginning in 1999. If any loans are made available
under the Incremental Facility, such loans will be amortized beginning on March
31, 1999 and are required to be repaid in full on or before August 31, 2004.
Loans made under the New Bank Facility bear interest rates, which include
interest rate margin costs, determined by reference to the ratio of the Company
s total indebtedness to EBITDA for the four fiscal quarters most recently
concluded (the "Leverage Ratio"). During the three months ended March 31, 1997,
the Company negotiated the first amendment to the New Bank Facility credit
agreement. The amendment reduced the interest rate margins applicable to the
Eurodollar (Libor) loans which had ranged from 0.75% to 1.50% per annum down to
0.35% to 1.00% per annum. Furthermore, the interest rate margins applicable to
the prime rate loans which were either 0% or 0.25% per annum were reduced to 0%.
The cost associated with the first amendment amounted to approximately
$1,000,000, which has been capitalized and will be amortized over the term of
the related debt instruments. The interest rate margin changes became effective
on April 10, 1997, at which time the Company entered into various Eurodollar
loans at a weighted average interest rate of 6.33%, which includes an interest
rate margin cost of 0.60%. On March 31, 1997 and April 10, 1997 the interest
rate applicable to all prime rate loans was 8.50%.
Financing activities to fund Univision's operations are anticipated to be
favorably impacted by the increased availability of funds under the New Bank
Facility, partially offset by additional cash requirements for the New Bank
Facility in the form of debt acquisition costs, additional quarterly principal
payments and monthly interest as contrasted with semi-annual interest payments
on the Senior Subordinated Notes and deferred interest on the Sponsor Loans.
16
<PAGE>
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
FORM 10-Q
The Company expects to explore both Spanish-language television and other
media acquisition opportunities to compliment and capitalize on the Company's
existing business and management. The purchase price for such acquisitions may
be paid (i) with cash derived from operating cash flow, proceeds available under
the New Bank Facility or proceeds from future debt or equity offerings or (ii)
with equity or debt securities of the Company or (iii) with any combination
thereof.
As a result of net operating loss carryforwards attributable to the
Acquisition, net operating losses since the Acquisition, tax consequences of the
Reorganization and other timing differences, the Company has available a
deferred tax asset of approximately $87,500,000 to offset future taxes payable
arising from operations. In addition, as of March 31, 1997, the Company has
approximately $556,400,000 of net remaining intangible assets that will be
expensed over the next 20 years for financial reporting purposes that will not
be deductible for tax purposes.
The Company finalized the fees payable to a Televisa subsidiary for the
Spanish-language broadcast rights in the U.S. to all 64 of the 1998 World Cup
Soccer Championship Games. The terms call for a fixed payment of $25,000,000 in
four equal installments during May, June, August and September 1998. In addition
to the rights cost and consistent with past coverage of the World Cup Games, the
Company will be responsible for all costs associated with advertising,
promotion, and broadcast of the World Cup Games, as well as the production of
certain television programming related to the games. The funds for these
payments will come from income from operations and/or bank borrowings.
Future free cash flows of the Company will be substantially different from
historical free cash flows after the Reorganization and revision of the various
agreements among the Principal Stockholders due to the (i) amendments in the
Program License Agreements, (ii) discontinuance of Sponsor Loans to the Company,
(iii) elimination of the management fee, (iv) termination of the Program Cost
Sharing Agreement, and (v) changes in debt and capital structure.
SEASONALITY
The advertising revenues of the Company vary over the calendar year.
Historically, approximately 30% of total advertising revenues have been
generated in the fourth quarter and 20% in the first quarter with the remainder
approximately equally split between the second and third quarters. Because of
the relatively fixed nature of the costs of the Company's business, seasonal
variations in operating income are more pronounced than those of revenues.
17
<PAGE>
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 1. None
ITEM 2. None
ITEM 3. None
ITEM 4. None
ITEM 5. None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11.0 Computation of Primary and Fully Diluted Earnings Per Share
27.1 Financial Data Schedule
(b) Reports on Form 8-K
The registrant did not file any reports on Form 8-K during the
quarter.
18
<PAGE>
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNIVISION COMMUNICATIONS INC.
(Registrant)
By: /s/ GEORGE W. BLANK
-----------------------------------------
George W. Blank
May 15, 1997 EXECUTIVE VICE PRESIDENT
Los Angeles, California CHIEF FINANCIAL OFFICER
19
<PAGE>
EXHIBIT 11.0
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
COMPUTATION OF HISTORICAL PRIMARY AND FULLY DILUTED EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH
31,
------------------------
1997 1996
----------- -----------
<S> <C> <C>
PRIMARY EARNINGS PER SHARE
Loss before extraordinary loss on extinguishment of debt............................... $ (2,270) $ (3,673)
Extraordinary loss on extinguishment of debt........................................... -- (283)
----------- -----------
Net loss............................................................................... (2,270) (3,956)
Less preferred stock dividends......................................................... (22) --
----------- -----------
Net loss applicable to common stock.................................................... $ (2,292) $ (3,956)
----------- -----------
----------- -----------
NUMBER OF SHARES ON WHICH NET LOSS PER SHARE IS BASED:
Historical weighted average common shares outstanding................................ 126,666 10,000
Reorganization stock dividend (227.010528 shares for each common share).............. 28,754,515 2,270,105
Reorganization shares issued......................................................... 4,335,499 --
Public offering shares issued........................................................ 8,170,000 --
Additional shares issued to underwriters............................................. 1,225,500 --
----------- -----------
Weighted average common shares before dilutive effect of common stock equivalents.... 42,612,180 2,280,105
----------- -----------
Common stock equivalents:
Warrants............................................................................. -- --
Options.............................................................................. -- --
----------- -----------
Weighted average common shares....................................................... 42,612,180(a) 2,280,105(a)
----------- -----------
----------- -----------
PRIMARY EARNINGS PER SHARE:
Loss per share before extraordinary loss............................................. $ (0.05) $ (1.61)
Extraordinary loss per share......................................................... -- (0.12)
----------- -----------
Net loss per share................................................................... (0.05) (1.73)
Less preferred stock dividends....................................................... -- --
----------- -----------
Net loss per share applicable to common stock........................................ $ (0.05) $ (1.73)
----------- -----------
----------- -----------
FULLY DILUTED EARNINGS PER SHARE (B)
Loss before extraordinary loss on extinguishment of debt............................... $ (2,270) $ (3,673)
Extraordinary loss on extinguishment of debt........................................... -- (283)
----------- -----------
Net loss applicable to common stock.................................................... (2,270) (3,956)
Less preferred stock dividend.......................................................... (22) --
----------- -----------
Net loss applicable to common stock.................................................... $ (2,292) $ (3,956)
----------- -----------
----------- -----------
NUMBER OF SHARES ON WHICH NET LOSS PER SHARE IS BASED:
Historical weighted average common shares outstanding................................ 126,666 10,000
Reorganization stock dividend (227.010528 shares for each common share).............. 28,754,515 2,270,105
Reorganization shares issued......................................................... 4,335,499 --
Public offering shares issued........................................................ 8,170,000 --
Additional shares issued to underwriters............................................. 1,225,500 --
----------- -----------
Weighted average common shares before dilutive effect of common stock equivalents.... 42,612,180 2,280,105
----------- -----------
Common stock equivalents:
Warrants............................................................................. 14,385,741 14,359,951
Options.............................................................................. 616,759 --
Convertible Preferred Stock.......................................................... 367,112 --
----------- -----------
Weighted average common shares....................................................... 57,981,792 16,640,056
----------- -----------
----------- -----------
FULLY DILUTED EARNINGS PER SHARE:
Loss per share before extraordinary loss............................................. $ (0.04) $ (0.22)
Extraordinary loss per share......................................................... -- (0.02)
----------- -----------
Net loss per share................................................................... (0.04) (0.24)
Less preferred stock dividend........................................................ -- --
----------- -----------
Net loss per share applicable to common stock........................................ $ (0.04) $ (0.24)
----------- -----------
----------- -----------
</TABLE>
- ------------------------------
(a) For the three months ended March 31, 1997 and 1996 the Company reported
losses, therefore under APB Opinion No. 15, the warrants and the options
were excluded from the weighted average common shares outstanding since
their effect was antidilutive.
(b) This calculation is presented in accordance with the Securities Exchange Act
of 1934. Under APB Opinion No. 15, the fully diluted earnings per share
calculation would generate a loss per share of $.05 and $1.73 for 1997 and
1996, respectively.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNIVISION
COMMUNICATIONS INC. AND SUBSIDIARIES STATEMENTS OF EARNINGS AND BALANCE SHEETS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 17,611
<SECURITIES> 0
<RECEIVABLES> 82,085
<ALLOWANCES> 9,092
<INVENTORY> 0
<CURRENT-ASSETS> 102,315
<PP&E> 131,044
<DEPRECIATION> 25,901
<TOTAL-ASSETS> 906,668
<CURRENT-LIABILITIES> 113,230
<BONDS> 517,896
0
0
<COMMON> 426
<OTHER-SE> 271,489
<TOTAL-LIABILITY-AND-EQUITY> 906,668
<SALES> 85,601
<TOTAL-REVENUES> 85,601
<CGS> 33,542
<TOTAL-COSTS> 33,542
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 417
<INTEREST-EXPENSE> 10,261
<INCOME-PRETAX> (2,247)
<INCOME-TAX> 23
<INCOME-CONTINUING> (2,270)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,270)
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
