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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 JUNE 30, 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 Incorporation) (I.R.S. Employer 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 12,010,363 shares of Class A Common Stock, 21,683,235 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 July 15, 1997.
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<PAGE>
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PART I--FINANCIAL INFORMATION:
Glossary................................................................................................... 2
Introduction............................................................................................... 4
Item 1. Consolidated Financial Statements
Condensed Consolidated Balance Sheets at June 30, 1997 and December 31, 1996........................... 5
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 1997 and
1996.................................................................................................. 6
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 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............ 11
PART II--OTHER INFORMATION:
Item 1. Legal Proceedings................................................................................. 20
Item 2. Changes in Securities............................................................................. 20
Item 3. Defaults Upon Senior Securities................................................................... 20
Item 4. Submission of Matters to a Vote of Security Holders............................................... 20
Item 5. Other Information................................................................................. 20
Item 6. Exhibits and Reports on form 8-K.................................................................. 21
</TABLE>
1
<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 15 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.
"Broadcast Cash Flow" means earnings before corporate charges, interest,
taxes, depreciation and amortization.
"EBITDA" means earnings before interest, taxes, depreciation and
amortization.
"Entravision" means Entravision Communications Company, LLC, which owns nine
of the Company's Affiliated Stations.
"Galavision" means the Galavision Spanish-language general entertainment
basic cable network, a wholly-owned subsidiary of the Company.
"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.
"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.
2
<PAGE>
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
GLOSSARY
"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.
"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>
JUNE 30, DECEMBER 31,
1997 1996
----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 15,125 $ 11,588
Short-term investment..................................... 92 90
Accounts receivable, less allowance for doubtful accounts
of $9,198 in 1997 and $8,738 in 1996.................... 96,907 87,954
Program rights............................................ 5,307 4,673
Prepaid expenses and other................................ 5,384 7,485
----------- ------------
Total current assets.................................... 122,815 111,790
Property and equipment, less accumulated depreciation of
$29,756 in 1997 and $22,183 in 1996....................... 110,086 103,373
Intangible assets, less accumulated amortization of $154,362
in 1997 and $133,988 in 1996.............................. 654,530 639,934
Deferred financing costs, less accumulated amortization of
$1,135 in 1997 and $343 in 1996........................... 9,351 8,958
Deferred income taxes....................................... 19,178 7,000
Note Receivable-Entravision................................. 10,000 10,000
Other assets................................................ 3,197 3,312
----------- ------------
Total assets............................................ $929,157 $884,367
----------- ------------
----------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities.................. $ 61,529 $ 70,522
Accrued interest.......................................... 1,660 2,367
Accrued license fee....................................... 6,239 4,322
Obligation for program rights............................. 489 482
Current portion of long-term debt......................... 47,735 42,657
----------- ------------
Total current liabilities............................... 117,652 120,350
Long-term debt including accrued interest, net of current
portion................................................... 470,389 458,808
Capital lease obligations, net of current portion........... 38,214 39,329
Obligation for program rights, net of current portion....... 160 331
Other long-term liabilities................................. 3,372 3,342
----------- ------------
Total liabilities....................................... 629,787 622,160
----------- ------------
Redeemable preferred stock, $.01 par value (12,000 shares
issued and outstanding at June 30, 1997).................. 12,121 --
----------- ------------
Stockholders' equity:
Preferred stock, $.01 par value (10,000,000 shares
authorized, 12,000 redeemable shares issued and
outstanding at June 30, 1997; 10,000,000 shares
authorized, 12,000 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........................................... 331,331 331,331
Accumulated deficit....................................... (44,508) (69,550)
----------- ------------
Total stockholders' equity................................ 287,249 262,207
----------- ------------
Total liabilities and stockholders' equity.................. $929,157 $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 AND SIX MONTHS ENDED JUNE 30,
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- --------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net revenues............................................. $ 122,327 $ 52,229 $ 207,928 $ 91,420
Direct operating expenses................................ 41,815 8,250 75,357 16,365
Selling, general and administrative expenses............. 35,106 18,082 65,029 34,094
Depreciation and amortization............................ 14,304 8,639 28,052 17,148
------------ ------------ ------------ ------------
Operating income......................................... 31,102 17,258 39,490 23,813
Interest expense......................................... 10,174 10,165 20,435 20,301
Amortization of deferred financing costs................. 418 776 792 1,749
Non-recurring expense of acquired station reversal....... (1,059) -- (1,059) --
Minority interest in net loss of consolidated
subsidiary............................................. -- 1,154 -- 273
------------ ------------ ------------ ------------
Income before taxes and extraordinary loss on
extinguishment of debt................................. 21,569 5,163 19,322 1,490
Provision (benefit) for income taxes..................... (5,945) 596 (5,922) 596
------------ ------------ ------------ ------------
Income before extraordinary loss on extinguishment of
debt................................................... 27,514 4,567 25,244 894
Extraordinary loss on extinguishment of debt............. -- (362) -- (645)
------------ ------------ ------------ ------------
Net income............................................... 27,514 4,205 25,244 249
Preferred stock dividends................................ (180) -- (202) --
------------ ------------ ------------ ------------
Net income applicable to common stock.................... $ 27,334 $ 4,205 $ 25,042 $ 249
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Income per share before extraordinary loss............... $ 0.48 $ 0.27 $ 0.44 $ 0.05
Extraordinary loss....................................... -- (0.02) -- (0.04)
------------ ------------ ------------ ------------
Net income per share..................................... 0.48 0.25 0.44 0.01
Less preferred stock dividends........................... (0.01) -- (0.01) --
------------ ------------ ------------ ------------
Net income per share applicable to common stock.......... $ 0.47 $ 0.25 $ 0.43 $ 0.01
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Weighted average common shares outstanding............... 57,678,496 16,640,056 57,647,907 16,640,056
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
See notes to condensed consolidated financial statements
6
<PAGE>
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Net income...................................................................................... $ 25,244 $ 249
Adjustments to reconcile net income to net cash from operating activities:
Depreciation.................................................................................... 7,678 3,037
Gain on sale of fixed assets.................................................................... (197) --
Amortization of intangible assets and deferred financing costs.................................. 21,166 15,858
Accretion of interest on Sponsor Loans.......................................................... -- 4,642
Minority interest............................................................................... -- 273
Extraordinary loss on extinguishment of debt.................................................... -- 1,181
Changes in assets and liabilities:
Accounts receivable........................................................................... (8,203) 1,565
Intangible assets............................................................................. 5,600 --
Deferred income taxes......................................................................... (12,178) --
License fees payable.......................................................................... 27,123 --
Payment of license fees....................................................................... (25,206) --
Program rights................................................................................ (634) --
Due to the Network............................................................................ -- (11,702)
Prepaid expenses and other assets............................................................. 2,216 78
Accounts payable and accrued liabilities...................................................... (8,493) (6,417)
Accrued interest.............................................................................. 3,036 3,292
Obligations for program rights................................................................ (164) (1,190)
Other, net.................................................................................... 50 49
--------- ---------
Net cash provided by operating activities....................................................... 37,038 10,915
--------- ---------
Cash flow from investing activities:
Acquisition of Sacramento..................................................................... (28,936) --
Proceeds from sale of fixed assets............................................................ 298 --
Capital expenditures.......................................................................... (13,690) (6,183)
Organization costs............................................................................ (134) --
--------- ---------
Net cash used in investing activities........................................................... (42,462) (6,183)
--------- ---------
Cash flow from financing activities:
Proceeds from issuance of long-term debt...................................................... 59,000 29,000
Proceeds from Sponsor Loans................................................................... -- 23,834
Payments of long-term debt.................................................................... (47,273) (22,010)
Advances to the Network....................................................................... -- (16,784)
Reduction of Sponsor Loans-Program Cost Sharing Agreement..................................... -- (5,074)
Repurchase of Senior Subordinated Notes....................................................... -- (13,489)
Preferred stock dividends paid................................................................ (81) --
Tax payments to Partners...................................................................... (1,500) --
Deferred financing costs...................................................................... (1,185) (82)
--------- ---------
Net cash provided by (used in) financing activities............................................. 8,961 (4,605)
--------- ---------
Net increase in cash............................................................................ 3,537 127
Cash and cash equivalents, beginning of year.................................................... 11,588 14,029
--------- ---------
Cash and cash equivalents, end of period........................................................ $ 15,125 $ 14,156
--------- ---------
--------- ---------
Supplemental disclosure of cash flow information:
Interest paid during the period................................................................. $ 15,616 $ 11,987
--------- ---------
--------- ---------
</TABLE>
See notes to condensed consolidated financial statements
7
<PAGE>
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 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 totaling 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. A third station
located in Sacramento, CA was acquired in March of 1997 for a purchase price of
approximately $40,200,000, principally all of which has been allocated to
intangible assets pending the completion of an independent appraisal.
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 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 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.
The following pro forma statements do 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
8
<PAGE>
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1997
(UNAUDITED)
1. ORGANIZATION AND ACQUISITION (CONTINUED)
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 SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- ---------------------------
1997 1996 1997 1996
ACTUAL PRO FORMA ACTUAL PRO FORMA
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Net revenues............................................. $ 122,327 $ 98,182 $ 207,928 $ 170,856
------------ ------------ ------------ -------------
Direct operating expenses................................ 41,764 30,965 75,236 57,272
Selling, general and administrative expenses............. 32,104 24,859 59,836 47,448
Corporate charges........................................ 3,053 2,305 5,314 4,319
Depreciation and amortization............................ 14,304 14,087 28,052 27,903
------------ ------------ ------------ -------------
Operating income......................................... 31,102 25,966 39,490 33,914
Interest expense......................................... 10,174 9,971 20,435 19,776
Amortization of deferred financing costs................. 418 372 792 744
Non-recurring expense of acquired station reversal....... (1,059) -- (1,059) --
------------ ------------ ------------ -------------
Income before taxes and extraordinary income (loss) on
extinguishment of debt................................. 21,569 15,623 19,322 13,394
Provision (benefit) for income taxes..................... (5,945) 5,358 (5,922) 5,358
------------ ------------ ------------ -------------
Income before extraordinary income (loss) on
extinguishment of debt................................. 27,514 10,265 25,244 8,036
Extraordinary income (loss) on extinguishment of debt.... -- 5,268 -- (13,369)
------------ ------------ ------------ -------------
Net income (loss)........................................ 27,514 15,533 25,244 (5,333)
Preferred stock dividends................................ (180) -- (202) --
------------ ------------ ------------ -------------
Net income (loss) applicable to common stock............. $ 27,334 $ 15,533 $ 25,042 $ (5,333)
------------ ------------ ------------ -------------
------------ ------------ ------------ -------------
Income per share before extraordinary income (loss)...... 0.48 0.18 0.44 $ 0.14
Extraordinary income (loss) per share.................... -- 0.09 -- (0.23)
------------ ------------ ------------ -------------
Net income (loss) per share.............................. 0.48 0.27 0.44 (0.09)
Less preferred stock dividends........................... (0.01) -- (0.01) --
------------ ------------ ------------ -------------
Net income (loss) per share.............................. $ 0.47 $ 0.27 $ 0.43 $ (0.09)
------------ ------------ ------------ -------------
------------ ------------ ------------ -------------
Weighted average common shares outstanding............... 57,678,496 57,678,496 57,647,907 57,647,907
------------ ------------ ------------ -------------
------------ ------------ ------------ -------------
</TABLE>
9
<PAGE>
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1997
(UNAUDITED)
2. STATION ACQUISITION
UTG has entered into an asset purchase agreement to acquire the assets
(excluding the studio building and leaseholds, accounts receivable, cash and
cash equivalents and any and all rights to the call letters KUZZ-TV) of
English-language station KUZZ-TV, Channel 45, in Bakersfield, CA from Buck Owens
Production Company, Inc. The purchase price is approximately $14,000,000. The
Company plans to continue to operate the station, which is a UPN affiliate, as
an English-language station for the near term. The acquisition is subject to
approval by the Federal Communications Commission ("FCC") and no assurance can
be given that such approval will be obtained.
3. INCOME TAXES
The Company files a consolidated Federal income tax return. The Company
accounts for income taxes under the liability method pursuant to Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes."
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.
No federal income taxes had been provided for the years ended December 31,
1995 and 1994, as the Company had a loss for both financial reporting and tax
purposes. For financial reporting and tax purposes, the Company provided for
$229,000 of taxes in 1996.
At December 31, 1996, the Company had deferred tax assets totaling
$86,500,000 and a valuation allowance of $79,500,000, resulting in a net
deferred tax asset of $7,000,000. The valuation allowance at December 31, 1996
was deemed necessary based upon the history and accumulation of losses the
Company had incurred in the past. During the second quarter of 1997, the Company
had income for both book and tax purposes; however, the Company has not
determined that it has established a consistent trend of profitability at June
30, 1997. Therefore, at June 30, 1997, the Company has evaluated its deferred
taxes and the associated valuation allowance and has determined that a deferred
tax asset of approximately $75,700,000 and a valuation allowance of
approximately $56,500,000, resulting in a net deferred tax asset of
approximately $19,200,000 represents, more likely than not, the tax benefits
that will be realized. Realization of any loss carryforwards is contingent upon
the Company's generating future taxable income. Going forward, the Company will
continue to evaluate if additional deferred tax assets can be realized based on
an evaluation of continuing profitability into the future.
4. UNAUDITED FINANCIAL STATEMENTS
Certain reclassifications have been made to the prior year financial
statements to conform to the current presentation.
10
<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 and six months
ended June 30, 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 and six months ended June 30, 1997, the Company's results
included the operations of the Network, and as a result, revenues, expenses and
other items include the Network for these periods. Consequently, significant
variances exist when the results for the three and six months ended June 30,
1997 are compared to those for the three and six months ended June 30, 1996.
Accordingly, management's discussion and analysis of results of operations for
the three and six months ended June 30, 1997, as compared to June 30, 1996, has
been presented on an historical basis and, in addition, on a pro forma basis as
described above. Furthermore, the three and six months ended June 30, 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 pro
forma three and six months ended June 30, 1996 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.
11
<PAGE>
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
FORM 10-Q
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997 ("1997") COMPARED TO THE SIX MONTHS ENDED JUNE
30, 1996 ("1996")
The following table sets forth selected data from the operating results of
the Company for the six months ended June 30, 1997 and 1996 on a historical and
pro forma basis (in thousands):
<TABLE>
<CAPTION>
HISTORICAL ACTUAL/PRO FORMA
--------------------- ----------------------
1997 1996 % 1997 1996 %
ACTUAL ACTUAL INCREASE ACTUAL PRO FORMA INCREASE
---------- --------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net revenues..................................... $ 207,928 $ 91,420 127.4% $ 207,928 $ 170,856 21.7%
Direct operating expenses........................ 75,357 16,365 360.5% 75,357 57,371 31.4%
Selling, general and administrative expenses..... 65,029 34,094 90.7% 65,029 51,668 25.9%
Depreciation and amortization.................... 28,052 17,148 63.6% 28,052 27,903 .5%
---------- --------- ----- ---------- ---------- ---
Operating income................................. $ 39,490 $ 23,813 65.8% $ 39,490 $ 33,914 16.4%
---------- --------- ----- ---------- ---------- ---
---------- --------- ----- ---------- ---------- ---
Other Data:
Broadcast cash flow............................ $ 72,856 $ 44,156 65.0% $ 72,856 $ 66,136 10.2%
Corporate charges.............................. 5,314 3,195 66.3% 5,314 4,319 23.0%
---------- --------- ----- ---------- ---------- ---
EBITDA......................................... $ 67,542 $ 40,961 64.9% $ 67,542 $ 61,817 9.3%
---------- --------- ----- ---------- ---------- ---
---------- --------- ----- ---------- ---------- ---
</TABLE>
REVENUES. Net revenues increased to $207,928,000 for the six months ended
June 30, 1997 from $91,420,000 for the same period in 1996, an increase of
$116,508,000 or 127.4%. The acquisition of the Network accounted for $95,288,000
or 81.8% of the increase, and the O&Os and Galavision, which was acquired by the
Network on June 30, 1996, accounted for $17,346,000 or 14.9% and $3,874,000 or
3.3%, respectively. Had the Network been owned since January 1, 1996, net
revenues would have been $170,856,000 in 1996 compared to $207,928,000 in 1997,
an increase of $37,072,000 or 21.7%. The increase is due to higher net revenues
of $17,346,000 at the O&Os, $15,852,000 at the Network and $3,874,000 related to
Galavision. The O&Os' increase, which was due to an increase of approximately
15% in spots sold and a 10% increase in the price for advertising spots, was
primarily derived from Los Angeles, Miami, Chicago, New York and Houston, with
increases at all other O&Os. The Network's increase is due to an increase of
approximately 24% in the price of advertising spots, offset in part by a
decrease in volume of approximately 9%.
EXPENSES. Direct operating expenses, before the reduction of corporate
charges of $121,000 and $98,000 for the six months ended June 30, 1997 and 1996,
respectively, increased to $75,357,000 in 1997 from $16,365,000 in 1996, an
increase of $58,992,000 or 360.5%. The acquisition of the Network accounted for
$56,410,000 or 95.6% of the increase, and the O&Os and Galavision accounted for
$1,362,000 or 2.3% and $1,220,000 or 2.1%, respectively. Had the Network been
owned since January 1, 1996, direct operating expenses, before the reduction of
corporate charges, would have been $57,371,000 in 1996 compared to $75,357,000
in 1997, an increase of $17,986,000 or 31.4%. The increase is primarily due to
higher license fees of $10,734,000. 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 program suppliers,
Televisa and Venevision, increased from 9.5% to 13.0% of net revenues for the
six months ended June 30, 1996 and 1997, respectively. The new morning show,
DESPIERTA AMERICA, which began airing mid-April 1997 and generated revenues of
approximately $2,200,000, accounted for approximately $1,400,000 (including
start-up costs of approximately $560,000) of the total increase in programming
costs over 1996. The remainder of the increase is due primarily to higher
technical and news costs and $1,220,000 of costs
12
<PAGE>
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
FORM 10-Q
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
related to Galavision. As a percentage of net revenues, direct operating
expenses increased to 36.2% in 1997 from 33.6% in 1996 assuming the Network had
been owned since January 1, 1996.
Selling, general and administrative expenses, before the reduction of
corporate charges of $5,193,000 and $3,097,000 for the six months ended June 30,
1997 and 1996, respectively, increased to $65,029,000 in 1997 from $34,094,000
in 1996, an increase of $30,935,000 or 90.7%. The acquisition of the Network
accounted for $20,365,000 or 65.8% of the increase, and the O&Os and Galavision
accounted for $7,681,000 or 24.8% and $2,889,000 or 9.4%, respectively. Had the
Network been owned since January 1, 1996, selling, general and administrative
expenses, before the reduction of corporate charges, would have been $51,668,000
in 1996 compared to $65,029,000 in 1997, an increase of $13,361,000 or 25.9%.
The increase is due in large part to increased selling costs at the O&Os and the
Network of $4,414,000 associated with increased sales and staff levels and
increased research costs of $692,000, both of which are consistent with the
Company's strategy of investing in sales management and research. In addition,
there were compensation costs of approximately $1,600,000 related to new and
existing senior management positions and an increase in costs associated with
management changes of approximately $500,000. The acquisition of Galavision
accounted for $2,889,000, which was predominantly sales related. As a percentage
of net revenues, selling, general and administrative expenses increased to 31.3%
in 1997 from 30.2% in 1996 assuming the Network had been owned since January 1,
1996.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased to
$28,052,000 in 1997 from $17,148,000 in 1996, an increase of $10,904,000 or
63.6%. The acquisition of the Network accounted for $4,181,000 or 38.3% of the
increase, and the O&Os and Galavision accounted for $6,037,000 or 55.4% and
$686,000 or 6.3%, respectively. Had the Network been owned since January 1,
1996, depreciation and amortization would have been $27,903,000 in 1996 compared
to $28,052,000 in 1997, an increase of $149,000 or 0.5%. The increase is due
primarily to an increase in depreciation related to increased capital
expenditures offset in part by a decrease in goodwill amortization.
OPERATING INCOME. As a result of the above factors, operating income
increased to $39,490,000 in 1997 from $23,813,000 in 1996, an increase of
$15,677,000 or 65.8%. The acquisition of the Network accounted for $14,331,000
of the increase, the O&Os accounted for $2,266,000 and Galavision accounted for
a decrease in operating income of $920,000. Had the Network been owned since
January 1, 1996, operating income would have been $33,914,000 in 1996 compared
to $39,490,000 in 1997, an increase of $5,576,000 or 16.4%, and as a percentage
of net revenues, operating income would have decreased from 19.8% in 1996 to
19.0% in 1997.
INTEREST EXPENSE. Interest expense increased to $20,435,000 in 1997 from
$20,301,000 in 1996, an increase of $134,000 or 0.7%. On a pro forma basis,
interest expense was $19,776,000 in 1996 compared to $20,435,000 in 1997, an
increase of $659,000 or 3.3%. The increase is due primarily to higher borrowings
during 1997 as compared to 1996, partially offset by lower interest rates in
1997.
MINORITY INTEREST. For the six months ended June 30, 1996, the Company
reported minority interest expense of $273,000, consisting of the minority
interest in the net loss of subsidiary of $183,000 and preferred stock dividends
attributable to minority stockholders of $90,000. The minority interest was
acquired as part of the Reorganization during 1996. On a pro forma basis,
minority interest is eliminated from the 1996 operating results of the Company.
INCOME BEFORE EXTRAORDINARY ITEMS. As a result of the above factors, income
before extraordinary items increased to $25,244,000 in 1997 from $894,000 in
1996, an increase of $24,350,000. On a pro forma basis,
13
<PAGE>
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
FORM 10-Q
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
income before extraordinary items increased to $25,244,000 in 1997 from
$8,036,000 in 1996, an increase of $17,208,000.
EXTRAORDINARY LOSS. During the six months ended June 30, 1996, UTG
purchased at a premium $12,650,000 face amount of its 11 3/4% Senior
Subordinated Notes due 2001. The purchase resulted in an extraordinary loss of
$1,181,000, including the write-off of the related deferred financing costs. The
related income tax benefit associated with the extraordinary losses was
$536,000. 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 $13,369,000, including a related tax benefit of
$5,268,000 for the six months ended June 30, 1996.
PROVISION (BENEFIT) FOR INCOME TAXES. For the six months ended June 30,
1997, the Company reported a net income tax benefit of $5,922,000 compared to an
income tax provision of $596,000 for the six months ended June 30, 1996. On a
pro forma basis, the Company reported an income tax provision of $5,358,000 for
the six months ended June 30, 1996.
NET INCOME (LOSS). As a result of the above factors, net income increased
to $25,244,000 in 1997 from $249,000 in 1996, an increase of $24,995,000. On a
pro forma basis, net income increased to $25,244,000 in 1997 from a net loss of
$5,333,000 in 1996, an improvement of $30,577,000.
BROADCAST CASH FLOW. Broadcast cash flow increased to $72,856,000 in 1997
from $44,156,000 in 1996, an increase of $28,700,000 or 65.0%. The acquisition
of the Network accounted for $19,874,000 of the increase, the O&Os accounted for
$9,061,000 of the increase and Galavision accounted for a decrease in broadcast
cash flow of $235,000. Had the Network been owned since January 1, 1996,
broadcast cash flow would have been $66,136,000 in 1996 compared to $72,856,000
in 1997, an increase of $6,720,000 or 10.2%, and as a percentage of net
revenues, broadcast cash flow would have decreased from 38.7% in 1996 to 35.0%
in 1997.
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 program suppliers, Televisa and Venevision, increased
from 9.5% to 13.0% of net revenues for the six months ended June 30, 1996 and
1997, respectively. Had the revised license fee been in effect in 1996, the
license fee would have increased by $6,500,000 and broadcast cash flow would
have increased by $13,220,000 or 22.2%, from $59,636,000 in 1996 to $72,856,000
in 1997, and as a percentage of net revenues, broadcast cash flow would have
increased from 34.9% in 1996 to 35.0% in 1997.
CORPORATE CHARGES. Corporate charges increased to $5,314,000 in 1997 from
$3,195,000 in 1996, an increase of $2,119,000 or 66.3%. The acquisition of the
Network accounted for $1,361,000 or 64.2% of the increase, and the O&Os
accounted for $758,000 or 35.8%. Had the Network been owned since January 1,
1996, corporate charges would have been $4,319,000 in 1996 compared to
$5,314,000 in 1997, an increase of $995,000 or 23.0%. The increase is primarily
due to costs associated with being a public company and increased staffing
costs, and as a percentage of net revenues, corporate charges would have
increased from 2.5% in 1996 to 2.6% in 1997.
EBITDA. EBITDA increased to $67,542,000 in 1997 from $40,961,000 in 1996,
an increase of $26,581,000 or 64.9%. The acquisition of the Network accounted
for $18,513,000 of the increase, the O&Os accounted for $8,303,000 of the
increase and Galavision accounted for a decrease in EBITDA of $235,000. Had the
Network been owned since January 1, 1996, EBITDA would have been $61,817,000 in
14
<PAGE>
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
FORM 10-Q
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
1996 compared to $67,542,000 in 1997, an increase of $5,725,000 or 9.3%, and as
a percentage of net revenues, EBITDA would have decreased from 36.2% in 1996 to
32.5% in 1997.
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 $6,500,000
and EBITDA would have increased by $12,225,000 or 22.1%, from $55,317,000 in
1996 to $67,542,000 in 1997, and as a percentage of net revenues, EBITDA would
have increased from 32.4% in 1996 to 32.5% in 1997.
THREE MONTHS ENDED JUNE 30, 1997 ("1997") COMPARED TO THE THREE MONTHS ENDED
JUNE 30, 1996 ("1996")
The following table sets forth selected data from the operating results of
the Company for the three months ended June 30, 1997 and 1996 on a historical
and pro forma basis (in thousands):
<TABLE>
<CAPTION>
HISTORICAL ACTUAL/PRO FORMA
--------------------- -----------------------
1997 1996 % 1997 1996 %
ACTUAL ACTUAL INCREASE ACTUAL PRO FORMA INCREASE
---------- --------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net revenues..................................... $ 122,327 $ 52,229 134.2% $ 122,327 $ 98,182 24.6%
Direct operating expenses........................ 41,815 8,250 406.8% 41,815 31,014 34.8%
Selling, general and administrative expenses..... 35,106 18,082 94.1% 35,106 27,115 29.5%
Depreciation and amortization.................... 14,304 8,639 65.6% 14,304 14,087 1.5%
---------- --------- ----- ---------- ----------- ---
Operating income................................. $ 31,102 $ 17,258 80.2% $ 31,102 $ 25,966 19.8%
---------- --------- ----- ---------- ----------- ---
---------- --------- ----- ---------- ----------- ---
Other Data:
Broadcast cash flow............................ $ 48,459 $ 27,640 75.3% $ 48,459 $ 42,358 14.4%
Corporate charges.............................. 3,053 1,743 75.2% 3,053 2,305 32.5%
---------- --------- ----- ---------- ----------- ---
EBITDA......................................... $ 45,406 $ 25,897 75.3% $ 45,406 $ 40,053 13.4%
---------- --------- ----- ---------- ----------- ---
---------- --------- ----- ---------- ----------- ---
</TABLE>
REVENUES. Net revenues increased to $122,327,000 for the three months ended
June 30, 1997 from $52,229,000 for the same period in 1996, an increase of
$70,098,000 or 134.2%. The acquisition of the Network accounted for $56,021,000
or 79.9% of the increase, and the O&Os and Galavision, which was acquired by the
Network on June 30, 1996, accounted for $11,911,000 or 17.0% and $2,166,000 or
3.1%, respectively. Had the Network been owned since January 1, 1996, net
revenues would have been $98,182,000 in 1996 compared to $122,327,000 in 1997,
an increase of $24,145,000 or 24.6%. The increase is due to higher net revenues
of $11,911,000 at the O&Os, $10,068,000 at the Network and $2,166,000 related to
Galavision. The O&Os' increase, which was due to an increase of approximately
16% in spots sold and a 12% increase in the price of advertising spots, was
primarily derived from Los Angeles, Miami, Chicago, New York and Houston, with
increases at all other O&Os. The Network's increase is due to an increase of
approximately 21% in the price of advertising spots, offset in part by a
decrease in volume of approximately 6%.
EXPENSES. Direct operating expenses, before the reduction of corporate
charges of $51,000 and $49,000 for the three months ended June 30, 1997 and
1996, respectively, increased to $41,815,000 in 1997 from $8,250,000 in 1996, an
increase of $33,565,000 or 406.8%. The acquisition of the Network accounted for
$32,140,000 or 95.8% of the increase, and the O&Os and Galavision accounted for
$824,000 or 2.4% and $601,000 or 1.8%, respectively. Had the Network been owned
since January 1, 1996, direct operating expenses, before the reduction of
corporate charges, would have been $31,014,000 in 1996 compared to
15
<PAGE>
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
FORM 10-Q
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
$41,815,000 in 1997, an increase of $10,801,000 or 34.8%. The increase is
primarily due to higher license fees of $6,251,000. 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
program suppliers, Televisa and Venevision, increased from 9.8% to 13.0% of net
revenues for the three months ended June 30, 1996 and 1997, respectively. The
new morning show, DESPIERTA AMERICA, which began airing mid-April 1997 and
generated net revenues of approximately $2,200,000, accounted for approximately
$1,000,000 of the total increase in programming over 1996. The remainder of the
increase is due primarily to higher technical and news costs and $601,000 of
costs related to Galavision. As a percentage of net revenues, direct operating
expenses increased to 34.2% in 1997 from 31.6% in 1996 assuming the Network had
been owned since January 1, 1996.
Selling, general and administrative expenses, before the reduction of
corporate charges of $3,002,000 and $1,694,000 for the three months ended June
30, 1997 and 1996, respectively, increased to $35,106,000 in 1997 from
$18,082,000 in 1996, an increase of $17,024,000 or 94.1%. The acquisition of the
Network accounted for $10,956,000 or 64.3% of the increase, and the O&Os and
Galavision accounted for $4,539,000 or 26.7% and $1,529,000 or 9.0%,
respectively. Had the Network been owned since January 1, 1996, selling, general
and administrative expenses, before the reduction of corporate charges, would
have been $27,115,000 in 1996 compared to $35,106,000 in 1997, an increase of
$7,991,000 or 29.5%. The increase is due in large part to increased selling
costs at the O&Os and the Network of $2,586,000 associated with increased sales
and staff levels and increased research costs of $203,000, both of which are
consistent with the Company's strategy of investing in sales management and
research. In addition, there were compensation costs of approximately $800,000
related to new and existing senior management positions and an increase in costs
associated with management changes of approximately $360,000. The acquisition of
Galavision accounted for $1,529,000, which was predominantly sales related. As a
percentage of net revenues, selling, general and administrative expenses
increased to 28.7% in 1997 from 27.6% in 1996 assuming the Network had been
owned since January 1, 1996.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased to
$14,304,000 in 1997 from $8,639,000 in 1996, an increase of $5,665,000 or 65.6%.
The acquisition of the Network accounted for $2,126,000 or 37.5% of the
increase, and the O&Os and Galavision accounted for $3,206,000 or 56.6% and
$333,000 or 5.9%, respectively. Had the Network been owned since January 1,
1996, depreciation and amortization would have been $14,087,000 in 1996 compared
to $14,304,000 in 1997, an increase of $217,000 or 1.5%. The increase is due
primarily to an increase in depreciation related to increased capital
expenditures offset by a decrease in goodwill amortization.
OPERATING INCOME. As a result of the above factors, operating income
increased to $31,102,000 in 1997 from $17,258,000 in 1996, an increase of
$13,844,000 or 80.2%. The acquisition of the Network accounted for $10,798,000
of the increase, the O&Os accounted for an increase of $3,342,000 and Galavision
accounted for a decrease of $296,000. Had the Network been owned since January
1, 1996, operating income would have been $25,966,000 in 1996 compared to
$31,102,000 in 1997, an increase of $5,136,000 or 19.8%, and as a percentage of
net revenues, operating income would have decreased from 26.4% in 1996 to 25.4%
in 1997.
INTEREST EXPENSE. Interest expense increased to $10,174,000 in 1997 from
$10,165,000 in 1996, an increase of $9,000 or .1%. On a pro forma basis,
interest expense was $9,971,000 in 1996 compared to $10,174,000 in 1997, an
increase of $203,000 or 2.0%. The increase is due primarily to higher borrowings
during 1997 as compared to 1996, partially offset by lower rates in 1997.
16
<PAGE>
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
FORM 10-Q
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
MINORITY INTEREST. For the three months ended June 30, 1996, the Company
reported minority interest expense of $1,154,000, consisting of the minority
interest in the net loss of subsidiary of $1,110,000 and preferred stock
dividends attributable to minority stockholders of $44,000. The minority
interest was acquired as part of the Reorganization during 1996. On a pro forma
basis, minority interest is eliminated from the 1996 operating results of the
Company.
INCOME BEFORE EXTRAORDINARY ITEMS. As a result of the above factors, income
before extraordinary items increased to $27,514,000 in 1997 from $4,567,000 in
1996, an increase of $22,947,000. On a pro forma basis, income before
extraordinary items increased to $27,514,000 in 1997 from $10,265,000 in 1996,
an increase of $17,249,000.
EXTRAORDINARY LOSS. During the three months ended June 30, 1996, UTG
purchased at a premium $9,650,000 face amount of its 11 3/4% Senior Subordinated
Notes due 2001. The purchase resulted in an extraordinary loss of $898,000,
including the write-off of the related deferred financing costs. The related
income tax benefit associated with the extraordinary losses was $536,000. 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 before taxes of $18,637,000. Since the Company did not have
taxable income during the first quarter of 1996, the related tax benefit of
$5,268,000 on the extraordinary loss was recorded during the three months ended
June 30, 1996.
PROVISION (BENEFIT) FOR INCOME TAXES. For the three months ended June 30,
1997, the Company reported a net income tax benefit of $5,945,000 compared to an
income tax provision of $596,000 for the three months ended June 30, 1996. On a
pro forma basis, the Company reported an income tax provision of $5,358,000 for
the three months ended June 30, 1996.
NET INCOME. As a result of the above factors, net income increased to
$27,514,000 in 1997 from $4,205,000 in 1996, an increase of $23,309,000. On a
pro forma basis, net income increased to $27,514,000 in 1997 from $15,533,000 in
1996, an increase of $11,981,000.
BROADCAST CASH FLOW. Broadcast cash flow increased to $48,459,000 in 1997
from $27,640,000 in 1996, an increase of $20,819,000 or 75.3%. The acquisition
of the Network accounted for $13,669,000 or 65.6% of the increase, and the O&Os
accounted for $7,114,000 or 34.2% and Galavision accounted for $36,000 or 0.2%.
Had the Network been owned since January 1, 1996, broadcast cash flow would have
been $42,358,000 in 1996 compared to $48,459,000 in 1997, an increase of
$6,101,000 or 14.4%, and as a percentage of net revenues, broadcast cash flow
would have decreased from 43.1% in 1996 to 39.6% in 1997.
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 program suppliers, Televisa and Venevision, increased
from 9.8% to 13.0% of net revenues for the three months ended June 30, 1996 and
1997, respectively. Had the revised license fee been in effect in 1996, the
license fee would have increased by $3,514,000 and broadcast cash flow would
have increased by $9,615,000 or 24.8%, from $38,844,000 in 1996 to $48,459,000
in 1997, and as a percentage of net revenues, broadcast cash flow would be 39.6%
in both 1996 and 1997.
CORPORATE CHARGES. Corporate charges increased to $3,053,000 in 1997 from
$1,743,000 in 1996, an increase of $1,310,000 or 75.2%. The acquisition of the
Network accounted for $744,000 or 56.8% of the increase, and the O&Os accounted
for $566,000 or 43.2%. Had the Network been owned since January 1, 1996,
corporate charges would have been $2,305,000 in 1996 compared to $3,053,000 in
1997, an increase
17
<PAGE>
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
FORM 10-Q
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
of $748,000 or 32.5%. The increase is primarily due to costs associated with
being a public company in 1997 and increases in compensation costs, and as a
percentage of net revenues, corporate charges would have increased from 2.3% in
1996 to 2.5% in 1997.
EBITDA. EBITDA increased to $45,406,000 in 1997 from $25,897,000 in 1996,
an increase of $19,509,000 or 75.3%. The acquisition of the Network accounted
for $12,925,000 or 66.2% of the increase, the O&Os accounted for $6,548,000 or
33.6% and Galavision accounted for $36,000 or 0.2%. Had the Network been owned
since January 1, 1996, EBITDA would have been $40,053,000 in 1996 compared to
$45,406,000 in 1997, an increase of $5,353,000 or 13.4%, and as a percentage of
net revenues, EBITDA would have decreased from 40.8% in 1996 to 37.1% in 1997.
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 $3,514,000
and EBITDA would have increased by $8,867,000 or 24.3%, from $36,539,000 in 1996
to $45,406,000 in 1997, and as a percentage of net revenues, EBITDA would have
decreased from 37.2% in 1996 to 37.1% in 1997.
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 six months ended June 30, 1997 and 1996.
Capital expenditures totaled $13,690,000 and $11,109,000 for the six months
ended June 30, 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 is expected to
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 is
expected to 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
18
<PAGE>
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
FORM 10-Q
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
quarters most recently concluded (the "Leverage Ratio"). The first amendment to
the New Bank Facility credit agreement became effective April 10, 1997. 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.
On April 10, 1997, the Company entered into various Eurodollar loans at a
weighted average interest rate of 6.33%, which included an interest rate margin
cost of 0.60%. At June 30, 1997, the interest rate applicable to the Company's
Eurodollar loans was 6.35%, which includes an interest rate margin cost of
0.60%. On April 10, 1997 and June 30, 1997, the interest rate applicable to all
prime rate loans was 8.50%.
Pending FCC approval, the acquisition of station KUZZ-TV, Channel 45, in
Bakersfield, CA for approximately $14,000,000, is expected to be funded with
cash flow from operations and the Company's existing bank facility.
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, other timing differences and 1997 year to date book taxable
income, the Company has available a deferred tax asset of approximately
$75,700,000 to offset future taxes payable arising from operations. In addition,
at June 30, 1997, the Company has approximately $547,000,000 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 these payments 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.
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.
19
<PAGE>
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 1. None
ITEM 2. None
ITEM 3. None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Stockholders was held on June 4, 1997 at which all
eight Directors were reelected to the Board, each of the alternate Class T
Director and Class V Director was reelected and the appointment of Arthur
Andersen LLP as the Company's independent auditors for the fiscal year 1997 was
ratified. No other matters were presented at the meeting. The number of shares
of the Company's Class A, Class P, Class T, Class V and Series A Cumulative
Convertible Preferred Stock ("Series A") present at the meeting, by proxy or in
person, collectively represented 96% of the voting interest of all shares of the
aforementioned classes of stock outstanding and eligible to vote at the Annual
Meeting.
The holders of the Class A, Class P and Series A stock reelected all six
Class A/P Directors. Except for A. Jerrold Perenchio, the votes cast for each of
the Class A/P Directors were as follows: 251,464,691 for their reelection and
2,515 votes were withheld. The votes cast for A. Jerrold Perenchio were
251,464,391 for his reelection and 2,815 were withheld.
The holders of the Class T stock reelected the Class T Director and his
alternate, and all 4,459,291 shares of Class T stock present at the meeting were
voted for their reelection. The holders of the Class V reelected the Class V
Director and his alternate, and all 4,459,291 shares of Class V stock present at
the meeting were voted for their reelection.
The votes cast for the ratification of the appointment of Arthur Andersen
LLP as the Company's auditors were as follows: 260,382,276 for, 1,048 were
withheld, and 2,464 abstained.
ITEM 5. OTHER INFORMATION
PROGRAM LICENSE AGREEMENTS
Through the Program License Agreements, the Company has the first right
until December 2017 to air in the U.S. all Spanish-language programming produced
by or for Televisa and Venevision (with certain exceptions).
The Program License Agreements are between the affiliates of the Company,
Televisa and Venevision. The performance of their affiliates has been
unconditionally guaranteed by Televisa and Venevision, respectively, and the
Company guaranteed the royalties earned under the Program License Agreements.
Pursuant to their respective guarantees, Televisa is obligated to use
commercially reasonable efforts to continue to produce programs available to the
Company at least to the same extent in terms of quality and quantity as in
calendar years 1989, 1990 and 1991 and Venevision is obligated to use
commercially reasonable efforts to produce or acquire programming sufficient to
enable its affiliate to provide at least nine hours per day of programs to the
Company.
As previously reported, the Company believes that the Venevision affiliate
has not been fulfilling its programming obligations, and that Venevision has not
used commercially reasonable efforts to enable the affiliate to do so. The full
amount of aggregate royalties through the period of this report have been paid.
Venevision continues to believe that Venevision and its affiliate have complied
with their obligations to the Company.
20
<PAGE>
UNIVISION COMMUNICATIONS INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
The Company has attempted to resolve this dispute through negotiations with
Venevision but they have not been successful. Thus, the Company has notified
Venevision of its intention to enforce its rights under the agreements by all
appropriate means including, if necessary, legal action, if Venevision continues
to fail to cause its affiliate to make available the programming the Company
believes the affiliate is obligated to provide. There can be no assurance, if
the Company were to commence such legal action or pursue other legal remedies,
that it would prevail.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<S> <C>
11.0 Computation of Primary and Fully Diluted Earnings Per Share
27.1 Financial Data Schedule
10.12(A) First Amendment to Credit Agreement dated as of April 10, 1997 (this
"Amendment") to the Credit Agreement dated as of September 26, 1996 (the
"Credit Agreement") among Univision Communications Inc. (the "Borrower"),
certain Lenders party thereto (collectively, the "Lenders"), Banque Paribas and
The Chase Manhattan Bank (collectively, the "Managing Agents") and The Chase
Manhattan Bank, as Administrative Agent (in such capacity, the "Administrative
Agent").
</TABLE>
(b) Reports on Form 8-K
The registrant did not file any reports on Form 8-K during the quarter.
21
<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
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
August 13, 1997
Los Angeles, California
22
<PAGE>
Exhibit 10.12(A)
FIRST AMENDMENT TO CREDIT AGREEMENT
FIRST AMENDMENT TO CREDIT AGREEMENT dated as of April 10, 1997 (this
"Amendment") to the Credit Agreement dated as of September 26, 1996 (the
"Credit Agreement") among Univision Communications Inc. (the "Borrower"),
certain Lenders party thereto (collectively, the "Lenders"), Banque Paribas
and The Chase Manhattan Bank (collectively, the "Managing Agents") and The
Chase Manhattan Bank, as Administrative Agent (in such capacity, the
"Administrative Agent").
R E C I T A L S
A. The Borrower and the Lenders have agreed to amend the Credit
Agreement for the purpose of reducing certain pricing terms under the
facility, on the terms and conditions set forth herein.
B. The undersigned are all of the parties to the aforesaid Credit
Agreement. Unless otherwise expressly provided in this Amendment or unless
the context otherwise requires, the terms defined in the Credit Agreement
shall have their defined meanings when used in this Amendment.
AGREEMENT
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT. Effective as of the date
first set forth above, the Credit Agreement is amended as follows:
(a) The definition of "Applicable Margin" contained in Section 1.1
is amended in its entirety to read as follows:
"APPLICABLE MARGIN": for each LIBOR Loan and for each Alternate Base
Rate Loan as set forth below:
Alternate
Leverage Level LIBOR Base Rate
1(Greater than=5.00:1) +1.000% 0
2(Less than 5.00:1-Greater than=4.50:1) +0.875% 0
3(Less than 4.50:1-Greater than=4.00:1) +0.675% 0
4(Less than 4.00:1-Greater than=3.50:1) +0.600% 0
5(Less than 3.50:1-Greater than=3.00:1) +0.500% 0
6(Less than 3.00:1) +0.350% 0 "
(b) The following new definitions are added to Section 1.1, in
appropriate alphabetical order:
<PAGE>
"APPLICABLE FEE RATE": for Commitment Fees as set forth below:
Leverage Level Rate
1(Greater than=5.00:1) 0.2500%
2(Less than 5.00:1-Greater than=4.50:1) 0.2500%
3(Less than 4.50:1-Greater than=4.00:1) 0.2500%
4(Less than 4.00:1-Greater than=3.50:1) 0.1875%
5(Less than 3.50:1-Greater than=3.00:1) 0.1875%
6(Less than 3.00:1) 0.1875%
"COMMITMENT FEE": as defined in Section 2.17(i)."
(c) Section 2.9(e) is amended in its entirety to read as follows:
"(e) For purposes of determining the Applicable Margin for all Loans,
or the Applicable Fee Rate for all Commitment Fees, interest rates on the
Loans, or the rate applicable to Commitment Fees, shall be calculated on
the basis of the Total Debt Ratio set forth in the most recent certificate
of a Responsible Officer of the Borrower delivered pursuant to Section
5.2(a)(i) (a "LEVERAGE LEVEL CERTIFICATE"). For accrued and unpaid
interest or Commitment Fees only (no changes being made for interest
payments or payments of Commitment Fees previously made), changes in
interest rates on the Loans or changes in the rate applicable to Commitment
Fees attributable to changes in the Applicable Margin or the Applicable Fee
Rate (as applicable) caused by changes in the applicable Leverage Level
shall be calculated upon the delivery of a Leverage Level Certificate and
such change shall be effective (x) in the case of an Alternate Base Rate
Loan, from the first day subsequent to the last day covered by the Leverage
Level Certificate, (y) in the case of a LIBOR Loan, from the first day of
the Interest Period applicable to such LIBOR Loans subsequent to the last
day covered by the Leverage Level Certificate and (z) in the case of
Commitment Fees, from the first day subsequent to the last day covered by
the Leverage Level Certificate. If, for any reason, the Borrower shall
fail to deliver a Leverage Level Certificate when due in accordance with
Section 5.2(a)(i), and such failure shall continue for a period of twenty
days, the Leverage Level shall be deemed to be Level 1, retroactive to the
date on which the Borrower should have delivered such Leverage Level
Certificate and shall continue until a Leverage Level Certificate
indicating a different Leverage Level is delivered to the Administrative
Agent."
(d) Section 2.17(i) is amended in its entirety to read as follows:
-2-
<PAGE>
"(i) to the Revolving Loan Lenders an unused commitment fee (the
"COMMITMENT FEE") to be shared pro rata among the Revolving Loan Lenders
with respect to the Revolving Loan Commitments for the period from and
including the Initial Closing Date to but excluding the Revolving Loan
Commitment Expiration Date, computed at the Applicable Fee Rate and based
on the average daily aggregate amount of the unused Aggregate Revolving
Loan Commitment from time to time in effect, to be payable quarterly in
arrears on the last day of each March, June, September and December and on
the Revolving Loan Commitment Expiration Date, commencing on the first such
date to occur after the Initial Closing Date."
(e) Section 5.17 is amended in its entirety to read as follows:
"5.17 ACCOUNTS. The Borrower shall maintain, and shall cause
its Subsidiaries to maintain, a cash management system reasonably
satisfactory to the Managing Agents and, as of the Initial Closing Date,
all accounts of the Borrower and each Subsidiary shall be pledged in
favor of the Administrative Agent, for the benefit of the Lenders,
pursuant to the Security Agreement or a Guarantor Security Agreement, as
applicable."
SECTION 2. CONDITIONS PRECEDENT. This Amendment shall become effective, as
of the date first above written, upon satisfaction of the follows:
(a) this Amendment shall have been executed by each of the Borrower
and the Lenders and counterparts of this document so executed shall have been
delivered to the Administrative Agent;
(b) the Administrative Agent shall have received evidence of the
Guarantors' consent to the Amendment;
(c) the representations and warranties contained in the Credit
Agreement and in each other Loan Document and certificate or other writing
delivered to the Lenders prior to or on the effective date hereof are correct on
and as of such date except to the extent that such representations and
warranties expressly relate to an earlier date and no Default has occurred and
is continuing or would result from the execution, delivery and performance of
this Amendment and the Administrative Agent shall have received a certificate
from a Responsible Officer of the Borrower certifying these statements; and
(d) the Managing Agents and the Administrative Agent shall have
received payment of all fees, costs, expenses and
-3-
<PAGE>
taxes accrued and unpaid and otherwise due and payable on or before the
effective date hereof by the Borrower in connection with this Amendment.
SECTION 3. REPRESENTATIONS AND WARRANTIES. (a) The Borrower represents
and warrants that it has duly authorized and approved the execution and delivery
of, and the performance by the Borrower of the obligations on its part contained
in, the Credit Agreement as amended by this Amendment, and the Credit Agreement
as amended by this Amendment constitutes the legal, valid and binding obligation
of the Borrower enforceable in accordance with the terms thereof.
(b) The Borrower represents and warrants that to the best of the
Borrower's knowledge, all approvals, consents and orders of, or filings with,
any governmental authority, legislative body, board, agency or commission having
jurisdiction which would constitute a condition precedent to the due performance
by the Borrower of its Obligations, or the absence of which would cause a
Material Adverse Effect, have been duly obtained.
SECTION 4. MISCELLANEOUS. (a) This Amendment shall be binding upon the
successors and assigns of the Borrower and the Lenders and shall, together with
the rights and remedies of the Lenders hereunder, inure to the benefit of the
Lenders and their successors and assigns.
(b) Except as expressly set forth herein, all provisions of the Credit
Agreement and all other Loan Documents shall continue in full force and effect.
(c) This Amendment may be executed in any number of counterparts and
by different parties hereto on separate counterparts, each of which counterparts
so executed and delivered shall be deemed to be an original, and all of which
counterparts, taken together, shall constitute but one and the same Amendment.
(d) This Amendment and the rights and obligations of the parties under
this Amendment shall be governed by, and construed and interpreted in accordance
with, the law of the State of New York (without reference to its choice of law
rules).
-4-
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this instrument to be duly
executed as of the date first above written.
UNIVISION COMMUNICATIONS INC.
By /s/ Andrew W. Hobson
-------------------------
Name: Andrew W. Hobson
Title: Asst. Secretary
THE CHASE MANHATTAN BANK,
as Administrative Agent, as
a Managing Agent and as a Lender
By /s/ Mary E. Bacon
-------------------------
Name: Mary E. Bacon
Title: Vice President
BANQUE PARIBAS,
as a Managing Agent
and as a Lender
By /s/ Linda L. Aleshire
-------------------------
Name: Linda L. Aleshire
Title: Vice President
By /s/ Stanley P. Berkman
-------------------------
Name: Stanley P. Berkman
Title: General Manager
Western Region
THE BANK OF NEW YORK, as a
Co-Agent and as a Lender
By /s/ Brendan T. Nedzi
-------------------------
Name: Brendan T. Nedzi
Title: Senior Vice President
-5-
<PAGE>
NATIONSBANK OF TEXAS, N.A.,
as a Co-Agent and as a Lender
By /s/ Keith Wilson
-------------------------
Name: Keith Wilson
Title: Vice President
ABN AMRO BANK N.V.,
By /s/ Andres von Dincklage
-------------------------
Name: Andres von Dincklage
Title: Group Vice President
By /s/ Thomas Fuller
-------------------------
Name: Thomas Fuller
Title: Vice President
BANK OF AMERICA ILLINOIS,
as a Lender
By /s/ Carl F. Salas
-------------------------
Name: Carl F. Salas
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON,
as a Lender
By /s/ Robert F. Milordi
-------------------------
Name: Robert F. Milordi
Title: Managing Director
BANK OF HAWAII,
as a Lender
By /s/ J. Bryan Scearce
-------------------------
Name: J. Bryan Scearce
Title: Vice President
-6-
<PAGE>
BANK OF IRELAND,
as a Lender
By /s/ John G. Cusack
---------------------------
Name: John G. Cusack
Title: A.V.P.
BANK OF MONTREAL,
as a Lender
By /s/ Karen S. Klapper
-------------------------
Name: Karen S. Klapper
Title: Director
BANK OF NOVA SCOTIA,
as a Lender
By /s/ Margot C. Bright
-------------------------
Name: Margot C. Bright
Title: Authorized Signatory
BANQUE FRANCAISE DU COMMERCE EXTERIEUR,
as a Lender
By /s/ Peter Karl Harris
-------------------------
Name: Peter Karl Harris
Title: Vice President
By /s/ William C. Maier
-------------------------
Name: William C. Maier
Title: VP - Group Manager
-7-
<PAGE>
BANQUE NATIONALE DE PARIS,
as a Lender
By /s/ Judith A. Dowling
---------------------------
Name: Judith A. Dowling
Title: Vice President
By /s/ Katherine Wolfe
---------------------------
Name: Katherine Wolfe
Title: Vice President
CIBC, INC.,
as a Lender
By /s/ Lorain Granberg
-------------------------
Name: Lorain Granberg
Title: Director, CIBC Wood Gundy
Securities Corp., As Agent
CORESTATES BANK, N.A.,
as a Lender
By /s/ Edward T. Kittrell
-------------------------
Name: Edward T. Kittrell
Title: Vice President
CAISSE NATIONALE DE CREDIT AGRICOLE,
as a Lender
By /s/ John McClosky
-------------------------
Name: John McClosky
Title: Vice President
CREDIT LYONNAIS,
as a Lender
By /s/ Mark D. Thorsheim
-------------------------
Name: Mark D. Thorsheim
Title: Vice President
-8-
<PAGE>
THE DAI-ICHI KANGYO BANK, LTD.,
as a Lender
By /s/ D. Murdock
---------------------------
Name: D. Murdock
Title: Vice President
FIRST HAWAIIAN BANK,
as a Lender
By /s/ Bruce E. Helberg
-------------------------
Name: Bruce E. Helberg
Title: Assistant Vice President
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA,
as a Lender
By /s/ Jim F. Redman
-------------------------
Name: Jim F. Redman
Title: Senior Vice President
FLEET BANK, N.A.
as a Lender
By /s/ Garret Komjathy
-------------------------
Name: Garret Komjathy
Title: Vice President
THE FUJI BANK, LIMITED,
as a Lender
By /s/ Teiji Teramoto
-------------------------
Name: Teiji Teramoto
Title: Vice President & Manager
-9-
<PAGE>
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, LOS ANGELES AGENCY,
as a Lender
By /s/ VINCENT L. TIMIRAOS
---------------------------
Name: VINCENT L. TIMIRAOS
Title: Senior Vice President
& Manager
LTCB TRUST COMPANY, as a Lender
By /s/ John J. Sullivan
-------------------------
Name: John J. Sullivan
Title: Executive Vice President
MELLON BANK, N.A.,
as a Lender
By /s/ John T. Kranefuss
-------------------------
Name: John T. Kranefuss
Title: A.V.P.
THE NIPPON CREDIT BANK, LTD.,
as a Lender
By
-------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION, as a Lender
By
-------------------------
Name:
Title:
-10-
<PAGE>
ROYAL BANK OF CANADA,
as a Lender
By /s/ Barbara Meijer
---------------------------
Name: Barbara Meijer
Title: Senior Manager
THE SANWA BANK, LIMITED,
as a Lender
By /s/ Paul Judicke
-------------------------
Name: Paul Judicke
Title: Vice President
SOCIETE GENERALE,
as a Lender
By /s/ Mark Vigil
-------------------------
Name: Mark Vigil
Title: Vice President
THE SUMITOMO BANK, LTD.,
as a Lender
By /s/ Tatsuo Ueda
-------------------------
Name: Tatsuo Ueda
Title: General Manager
TRUST COMPANY BANK,
as a Lender
By
-------------------------
Name:
Title:
-11-
<PAGE>
UNION BANK OF CALIFORNIA, N.A.,
as a Lender
By /s/ William D. Gooch
---------------------------
Name: William D. Gooch
Title: Vice President
-12-
<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 SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- --------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
--------- --------- --------- ---------
PRIMARY EARNINGS PER SHARE
Income before extraordinary loss on extinguishment of debt........ $ 27,514 $ 4,567 $ 25,244 $ 894
Extraordinary loss on extinguishment of debt...................... -- (362) -- (645)
--------- --------- --------- ---------
Net income........................................................ 27,514 4,205 25,244 249
Less preferred stock dividends.................................... (180) -- (202) --
--------- --------- --------- ---------
Net income applicable to common stock............................. $ 27,334 $ 4,205 $ 25,042 $ 249
--------- --------- --------- ---------
--------- --------- --------- ---------
NUMBER OF SHARES ON WHICH NET INCOME PER SHARE IS BASED:
Historical weighted average common shares outstanding............. 126,666 10,000 126,666 10,000
Reorganization stock dividend (227.010528 shares for each common
share).......................................................... 28,754,515 2,270,105 28,754,515 2,270,105
Reorganization shares issued...................................... 4,335,499 -- 4,335,499 --
Public offering shares issued..................................... 8,170,000 -- 8,170,000 --
Additional shares issued to underwriters.......................... 1,225,500 -- 1,225,500 --
--------- --------- --------- ---------
Weighted average common shares before dilutive effect of common
stock equivalents............................................... 42,612,180 2,280,105 42,612,180 2,280,105
--------- --------- --------- ---------
Common stock equivalents:
Warrants.......................................................... 14,388,302 14,359,951 14,387,074 14,359,951
Options........................................................... 678,014 -- 648,653 --
--------- --------- --------- ---------
Weighted average common shares.................................... 57,678,496 16,640,056 57,647,907 16,640,056
--------- --------- --------- ---------
--------- --------- --------- ---------
PRIMARY EARNINGS PER SHARE:
Income per share before extraordinary loss........................ $ 0.48 $ 0.27 $ 0.44 $ 0.05
Extraordinary loss per share...................................... -- (0.02) -- (0.04)
--------- --------- --------- ---------
Net income per share.............................................. 0.48 0.25 0.44 0.01
Less preferred stock dividends.................................... (0.01) -- (0.01) --
--------- --------- --------- ---------
Net income per share applicable to common stock................... $ 0.47 $ 0.25 $ 0.43 $ 0.01
--------- --------- --------- ---------
--------- --------- --------- ---------
FULLY DILUTED EARNINGS PER SHARE (A)
Income before extraordinary loss on extinguishment of debt........ $ 27,514 4,567 $ 25,244 $ 894
Extraordinary loss on extinguishment of debt...................... -- (362) -- (645)
--------- --------- --------- ---------
Net income applicable to common stock............................. 27,514 4,205 25,244 249
Less preferred stock dividend..................................... -- -- -- --
--------- --------- --------- ---------
Net income applicable to common stock............................. $ 27,514 $ 4,205 $ 25,244 $ 249
--------- --------- --------- ---------
--------- --------- --------- ---------
NUMBER OF SHARES ON WHICH NET INCOME PER SHARE IS BASED:
Historical weighted average common shares outstanding............. 126,666 10,000 126,666 10,000
Reorganization stock dividend (227.010528 shares for each common
share).......................................................... 28,754,515 2,270,105 28,754,515 2,270,105
Reorganization shares issued...................................... 4,335,499 -- 4,335,499 --
Public offering shares issued..................................... 8,170,000 -- 8,170,000 --
Additional shares issued to underwriters.......................... 1,225,500 -- 1,225,500 --
--------- --------- --------- ---------
Weighted average common shares before dilutive effect of common
stock equivalents............................................... 42,612,180 2,280,105 42,612,180 2,280,105
--------- --------- --------- ---------
Common stock equivalents:
Warrants.......................................................... 14,393,281 14,359,951 14,393,281 14,359,951
Options........................................................... 802,512 -- 801,878 --
Convertible Preferred Stock....................................... 367,112 -- 367,112 --
--------- --------- --------- ---------
Weighted average common shares.................................... 58,175,085 16,640,056 58,174,451 16,640,056
--------- --------- --------- ---------
--------- --------- --------- ---------
FULLY DILUTED EARNINGS PER SHARE:
Income per share before extraordinary loss........................ $ 0.47 $ 0.27 $ 0.43 $ 0.05
Extraordinary loss per share...................................... -- (0.02) -- (0.04)
--------- --------- --------- ---------
Net income per share.............................................. 0.47 0.25 0.43 0.01
Less preferred stock dividend..................................... -- -- -- --
--------- --------- --------- ---------
Net income per share applicable to common stock................... $ 0.47 $ 0.25 $ 0.43 $ 0.01
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
- ------------------------
(a) This calculation is presented in accordance with the Securities and Exchange
Act of 1934, although it is not required disclosure under APB Opinion No.
15.
<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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 15,125
<SECURITIES> 0
<RECEIVABLES> 106,105
<ALLOWANCES> 9,198
<INVENTORY> 0
<CURRENT-ASSETS> 122,815
<PP&E> 139,842
<DEPRECIATION> 29,756
<TOTAL-ASSETS> 929,157
<CURRENT-LIABILITIES> 177,652
<BONDS> 508,603
12,121
0
<COMMON> 426
<OTHER-SE> 286,823
<TOTAL-LIABILITY-AND-EQUITY> 929,157
<SALES> 207,928
<TOTAL-REVENUES> 207,928
<CGS> 75,357
<TOTAL-COSTS> 75,357
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 921
<INTEREST-EXPENSE> 20,435
<INCOME-PRETAX> 19,322
<INCOME-TAX> (5,922)
<INCOME-CONTINUING> 25,244
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,244
<EPS-PRIMARY> .43
<EPS-DILUTED> .43
</TABLE>
