<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACTS OF 1934
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 1998
COMMISSION FILE NUMBERS:
ACME Intermediate Holdings, LLC 333-40277
ACME Television, LLC 333-40281
-----------------
ACME TELEVISION, LLC
and
ACME INTERMEDIATE HOLDINGS, LLC
(Exact name of registrants as specified in their charter)
-----------------
<TABLE>
<S> <C> <C>
Delaware ACME Television, LLC 52-2050588
Delaware ACME Intermediate Holdings, LLC 52-2050589
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
----------------
2101 E. Fourth Street, Suite 202
Santa Ana, California 92705
(Address of principal executive offices) (Zip Code)
Registrants' telephone number, including area code: 714-245-9499
----------------
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
- --------------------------------- ------------------------
<S> <C>
None None
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrants (1) have 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, and (2) have been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
100% of the membership units of ACME TELEVISION, LLC are owned directly or
indirectly by ACME INTERMEDIATE HOLDINGS, LLC. 92% of the membership units of
ACME INTERMEDIATE HOLDINGS, LLC are owned by ACME Television Holdings, LLC. Such
membership units are not publicly traded and have no quantifiable market value.
Indicate the number of membership units outstanding of each of ACME Television,
LLC's classes of equity as of the latest practicable date: At November 13, 1998,
there were outstanding 200 membership units, without par value.
Indicate the number of membership units outstanding of each of ACME Intermediate
Holdings, LLC's classes of equity, as of the latest practicable date: At
November 13, 1998, there were 895,425 membership units without par value.
================================================================================
<PAGE> 2
ACME TELEVISION, LLC AND
ACME INTERMEDIATE HOLDINGS, LLC
FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM NUMBER
Page
<S> <C> <C>
PART I - FINANCIAL STATEMENTS
Item 1. FINANCIAL STATEMENTS
Introductory Comments 3
ACME INTERMEDIATE HOLDINGS, LLC and ACME TELEVISION, LLC and
Subsidiaries
Consolidated Balance Sheets as of December 31, 1997 and
September 30, 1998 4
Consolidated Statements of Operations and Members' Capital
for the Three Months Ended September 30, 1998 and
September 30, 1997 5
Consolidated Statements of Operations and Member' Capital for
the Nine Months Ended September 30, 1998 and September
30, 1997 6
Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 1998 and September 30, 1997 7
Notes to 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 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
</TABLE>
2
<PAGE> 3
ACME TELEVISION, LLC AND
ACME INTERMEDIATE HOLDINGS, LLC
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS IMPORTANT EXPLANATORY NOTE:
This integrated Form 10-Q is filed pursuant to the Securities Exchange Act of
1934, as amended, for each of ACME INTERMEDIATE HOLDINGS, LLC and its
subsidiary, ACME TELEVISION, LLC. Unless the context requires otherwise,
references to the "Company" refer to both ACME INTERMEDIATE HOLDINGS, LLC and
ACME TELEVISION, LLC.
ACME INTERMEDIATE HOLDINGS, LLC is a holding company with no separate operations
apart from its operating subsidiary, ACME TELEVISION, LLC. Separate financial
information has been provided for each entity and, where appropriate, separate
disclosures. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted pursuant to such rules and regulations. It is
suggested that these Consolidated Financial Statements be read in conjunction
with the financial information set forth in the Annual Reports on Form 10-K of
each of ACME INTERMEDIATE HOLDINGS, LLC and ACME TELEVISION, LLC for the fiscal
year ended December 31, 1997.
3
<PAGE> 4
ACME TELEVISION, LLC AND
ACME INTERMEDIATE HOLDINGS, LLC
Consolidated Balance Sheets
(Unaudited - In thousands)
<TABLE>
<CAPTION>
DECEMBER 31, 1997 SEPTEMBER 30, 1998
---------------------------- ------------------------------
ACME ACME
ACME INTERMEDIATE ACME INTERMEDIATE
ASSETS TELEVISION HOLDINGS TELEVISION HOLDINGS
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 8,820 $ 8,820 $ 1,288 $ 1,288
Accounts receivable, net 699 677 8,812 8,812
Due from affiliates 162 54 132 39
Current portion of program broadcast rights 614 614 4,416 4,416
Prepaid expenses and other assets 3,032 3,060 823 823
Deferred income taxes -- -- 342 342
--------- --------- --------- ---------
Total current assets 13,327 13,225 15,813 15,720
Property and equipment, net 7,346 7,346 13,131 13,131
Program broadcast rights, less current
portion 587 587 10,322 10,322
Intangible assets, net 36,004 36,004 230,574 230,574
Investment in affiliates -- -- 5,766 5,766
Deposits 143,000 143,000 163 163
Other assets 17,418 19,010 10,624 12,223
--------- --------- --------- ---------
$ 217,682 $ 219,172 $ 286,393 $ 287,899
========= ========= ========= =========
LIABILITIES AND MEMBERS' CAPITAL
Current liabilities:
Accounts payable $ 3,361 $ 3,363 $ 2,669 $ 2,669
Accrued expenses 651 651 6,363 6,363
Notes payable to banks -- -- 8,000 8,000
Current portion of program rights payable 653 653 6,825 6,825
Current portion of obligations under lease 292 292 819 819
Other current liabilities -- -- -- 28
--------- --------- --------- ---------
Total current liabilities 4,957 4,959 24,676 24,704
Program broadcast rights payable, net of
current portion 1,351 1,351 8,204 8,204
Obligations under lease, net of current
portion 443 443 2,457 2,457
Deferred taxes -- -- 33,140 33,140
Other liabilities -- -- 1,654 1,654
Senior discount notes 130,833 130,833 141,598 141,598
Senior secured notes -- 36,863 -- 40,668
--------- --------- --------- ---------
Total liabilities 137,584 174,449 211,729 252,425
--------- --------- --------- ---------
Members' deficit 85,516 51,357 92,561 58,400
Accumulated deficit (5,418) (6,634) (17,897) (22,926)
--------- --------- --------- ---------
Total members' capital 80,098 44,723 74,664 35,474
--------- --------- --------- ---------
Total liabilities and members' capital $ 217,682 $ 219,172 $ 286,393 $ 287,899
========= ========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
ACME TELEVISION, LLC AND
ACME INTERMEDIATE HOLDINGS, LLC
Consolidated Statements of Operations and Members' Capital
(Unaudited - In thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30
--------------------------------------------------------------
1997 1998
---------------------------- ----------------------------
ACME ACME
ACME INTERMEDIATE ACME INTERMEDIATE
TELEVISION HOLDINGS TELEVISION HOLDINGS
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Broadcast revenues $ 759 $ 759 $ 11,805 $ 11,805
Operating expenses:
Programming 439 439 4,610 4,610
Selling, general and administrative 1,291 1,291 5,234 5,234
LMA fees -- -- -- --
Depreciation and amortization 385 385 3,534 3,534
-------- -------- -------- --------
Operating expenses 2,115 2,115 13,378 13,378
Operating loss (1,356) (1,356) (1,573) (1,573)
Interest income (3) (3) 20 20
Interest expense (112) (112) (4,102) (5,404)
Gain on sale of asset -- -- 1,112 1,112
-------- -------- -------- --------
Loss before taxes (1,471) (1,471) (4,543) (5,845)
Income tax benefit -- -- 402 402
-------- -------- -------- --------
Net loss (1,471) (1,471) (4,141) (5,443)
Parent's contribution 59,852 21,537 -- --
Unit offering -- 4,162 -- --
Members' capital (deficit) at beginning of period 23,897 23,897 78,805 40,917
-------- -------- -------- --------
Members' capital at end of period $ 82,278 $ 48,125 $ 74,664 $ 35,474
======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
ACME TELEVISION, LLC AND
ACME INTERMEDIATE HOLDINGS, LLC
Consolidated Statements of Operations and Members' Capital
(Unaudited - In thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30
--------------------------------------------------------------
1997 1998
---------------------------- ----------------------------
ACME ACME
ACME INTERMEDIATE ACME INTERMEDIATE
TELEVISION HOLDINGS TELEVISION HOLDINGS
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Broadcast revenues $ 2,155 $ 2,155 $ 31,132 $ 31,132
Operating expenses:
Programming 1,096 1,096 11,073 11,073
Selling, general and administrative 3,173 3,173 14,902 14,902
LMA fees -- -- 228 228
Depreciation and amortization 551 551 7,715 7,715
-------- -------- -------- --------
Operating expenses 4,820 4,820 33,918 33,918
Operating loss (2,665) (2,665) (2,786) (2,786)
Interest income -- -- 208 208
Interest expense (573) (573) (11,785) (15,600)
Gain on sale of asset -- -- 1,112 1,112
-------- -------- -------- --------
Loss before taxes (3,238) (3,238) (13,251) (17,066)
Income tax benefit -- -- 767 767
-------- -------- -------- --------
Net loss (3,238) (3,238) (12,484) (16,299)
Parent's contribution 85,516 47,201 7,050 7,050
Unit Offering -- 4,162 -- --
Members' capital at beginning of period -- -- 80,098 44,723
-------- -------- -------- --------
Members' capital at end of period $ 82,278 $ 48,125 $ 74,664 $ 35,474
======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE> 7
ACME TELEVISION, LLC AND
ACME INTERMEDIATE HOLDINGS, LLC
Consolidated Statements of Cash Flows
(Unaudited - In thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30
-----------------------------------------------------------------
1997 1998
----------------------------- -----------------------------
ACME ACME
ACME INTERMEDIATE ACME INTERMEDIATE
TELEVISION HOLDINGS TELEVISION HOLDINGS
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (3,238) $ (3,238) $ (12,484) $ (16,299)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 551 551 7,715 7,715
Amortization of discount on Senior Notes
and debt issuance costs -- -- 10,765 14,580
Gain on sale of construction permit -- -- (1,112) (1,112)
Changes in assets and liabilities:
Increase in accounts receivables, net (405) (405) (3,794) (3,794)
Increase in programming rights (102) (102) (5,545) (5,545)
Increase in prepaid expenses and
other current assets (201) (201) (303) (303)
Decrease in deferred income taxes -- -- (560) (560)
Increase (decrease) in accounts payable 714 714 (538) (538)
Increase in accrued expenses 499 499 1,771 1,771
Increase in programming rights payable (150) (150) 4,767 4,767
Increase in other liabilities -- -- 118 118
--------- --------- --------- ---------
Net cash provided by (used in) operating activities (2,332) (2,332) 800 800
--------- --------- --------- ---------
Cash flows from investing activities:
Deposit relating to station acquisition (143,016) (143,016) -- --
Increase in other assets (2,920) (2,920) (786) (786)
Increase (decrease) in accounts payable 1,500 1,500 (115) (115)
Decrease in other liabilities -- -- (828) (828)
Increase in accrued expenses 3,453 3,453 1,281 1,281
Purchase of property and equipment (2,963) (2,963) (3,990) (3,990)
Increase in notes receivable (1,811) (1,811) -- --
Cash acquired in acquisition -- -- 779 779
Purchase of station -- -- (14,450) (14,450)
Purchase of construction permit -- -- (2,225) (2,225)
Sale of construction permit -- -- 3,337 3,337
--------- --------- --------- ---------
Net cash used in investing activities (145,757) (145,757) (16,997) (16,997)
--------- --------- --------- ---------
Cash flows from financing activities:
Increase (decrease) in other assets (7,041) (8,584) 213 213
Increase (decrease) in accounts payable 82 82 (1,044) (1,044)
Increase in accrued expenses 3,824 3,824 31 31
Issuance of Senior Discount Notes 127,370 127,370 -- --
Issuance of Senior Secured Discount Notes -- 35,650 -- --
Contribution from parent 47,565 9,296 -- --
Issuance of Units -- 4,162 -- --
Increase in notes payable to bank, net of repayments 3,500 3,500 8,000 8,000
Additional capital leases, net of repayments -- -- 1,465 1,465
--------- --------- --------- ---------
Net cash provided by financing activities 175,300 175,300 8,665 8,665
--------- --------- --------- ---------
Net increase (decrease) in cash 27,211 27,211 (7,532) (7,532)
Cash at beginning of period -- -- 8,820 8,820
--------- --------- --------- ---------
Cash at end of period $ 27,211 $ 27,211 $ 1,288 $ 1,288
========= ========= ========= =========
</TABLE>
(Continued)
7
<PAGE> 8
ACME TELEVISION, LLC AND
ACME INTERMEDIATE HOLDINGS, LLC
Consolidated Statements of Cash Flows, Continued
(Unaudited - In thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30
--------------------------------------------------------------
1997 1998
---------------------------- ----------------------------
ACME ACME
ACME INTERMEDIATE ACME INTERMEDIATE
TELEVISION HOLDINGS TELEVISION HOLDINGS
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 540 $ 540 $ 422 $ 422
Income taxes -- -- -- --
======= ======= ======= =======
Noncash transactions:
Contribution of station assets from parent
in exchange for membership units $23,075 $23,075 $ 7,050 $ 7,050
Due from Affiliates 14,876 14,830 -- --
======= ======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
8
<PAGE> 9
ACME TELEVISION, LLC AND
ACME INTERMEDIATE HOLDINGS, LLC
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
ACME INTERMEDIATE HOLDINGS, LLC ("ACME Intermediate") is a holding company
with no assets or independent operations other than its investment in ACME
TELEVISION, LLC ("ACME TV"). ACME TV, through its subsidiaries, owns,
operates and / or holds licenses or options to acquire six commercially
licensed broadcast television stations (the "Stations") located throughout
the United States.
ACME Intermediate was formed on August 8, 1997. Upon formation, the
Company received a contribution from ACME Television Holdings, LLC (ACME
Parent) of ACME Parent's wholly-owned subsidiaries - ACME Television of
Oregon, LLC ("ACME Oregon") and ACME Television of Tennessee, LLC ("ACME
Tennessee") and certain other assets. This contribution was made in
exchange for membership units in the Company and was treated as a
transaction between entities under common control, similar to a pooling of
interests. Accordingly, the transaction was recorded at historical cost
and ACME Intermediate has reflected the results of operations of the
entities contributed for all of the periods presented.
ACME TV was formed on August 15, 1997. Upon formation, ACME Parent
contributed to ACME TV, through ACME Intermediate, the net assets of ACME
Oregon, ACME Tennessee and other net assets in exchange for membership
units.
The accompanying unaudited consolidated financial statements of ACME
INTERMEDIATE include the accounts of ACME INTERMEDIATE and ACME TV. The
accompanying unaudited consolidated financial statements of ACME TV
include the accounts of ACME TV and its subsidiaries. All significant
intercompany items and transactions have been eliminated in each of the
sets of consolidated financial statements.
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions for Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for the fair presentation of the financial position
as of September 30, 1998 and the results of operations for the three
months ended September 30, 1998 have been included. Operating results for
the three months ended September 30, 1998 are not necessarily indicative
of the results that may be expected for the fiscal year ending December
31, 1998. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Annual Reports on Form
10-K of each of ACME TV and ACME Intermediate for the year ended December
31, 1997.
NOTE 2 - ACQUISITIONS
The Company was formed in 1997 and operated only one station (under a
Local Marketing Agreement, an "LMA") - KWBP Channel 32, serving Portland,
Oregon - during the second quarter of 1997. In September 1997, the Company
completed its acquisition of KWBP. During the fourth quarter of 1997, the
Company completed its acquisition of WBXX Channel 20, serving Knoxville,
Tennessee and launched the station, which was previously off the air.
In September 1997, the Company entered into a purchase agreement to
acquire station KPLR Channel 11, serving St. Louis, Missouri, and
effective October 1, 1997, began operating the station pursuant to an LMA.
The acquisition was completed in March 1998, at which time the LMA was
terminated. The total purchase price was $145 million. The acquisition was
accounted for under the purchase method. The
9
<PAGE> 10
ACME TELEVISION, LLC AND
ACME INTERMEDIATE HOLDINGS, LLC
Notes to Consolidated Financial Statements, Continued
(Unaudited)
excess of the purchase price over the fair value of net assets acquired
(including $83 million allocated to the FCC license) of approximately $62
million was recorded as goodwill and is being amortized on a straight line
basis over 20 years.
In early March 1998, the Company entered into an agreement to purchase
station WTVK Channel 46, serving the Ft. Myers / Naples, Florida
marketplace and began operating the station pursuant to an LMA. The
Company received regulatory approvals and completed its acquisition of
WTVK on June 30, 1998 for a purchase price of approximately $15.6 million.
In connection with this transaction, $1.045 million in membership units
were issued to the sellers by ACME Parent, which was treated as a capital
contribution to ACME TV through ACME Intermediate.
The Company also owns a 49% interest in KUPX - Channel 16 (formerly KZAR)
serving the Salt Lake City, Utah marketplace and has exercised its option
to acquire the remaining interests in the station which was granted its
license from the FCC in May 1998. The acquisition of this remaining
interest has not yet been completed, is subject to regulatory approvals
and is not reflected in the accompanying financial statements. The Company
and the majority owners of KUPX have entered into an agreement with
another broadcaster in the Salt Lake City market to swap KUPX for KUWB
Channel 30, which the Company has operated since April 1998 under an
interim LMA. The swap of channels is subject to regulatory approvals.
In January 1998 the Company acquired the construction permit for station
KWBQ Channel 19 (formerly KAUO) serving the Albuquerque, New Mexico
marketplace. The Company expects the station to be built and operational
by January 1999.
The following table summarizes the operational status of each of the
stations as of September 30, 1998:
<TABLE>
<CAPTION>
STATIONS IN OPERATION DATE OF LMA DATE ACQUIRED
--------------------------- ------------------- ------------------
<S> <C> <C>
Portland, Oregon January 1997 June 1997
St. Louis, Missouri October 1997 March 1998
Knoxville, Tennessee (1) October 1997
Ft. Myers / Naples, March 1998 June 1998
Florida
Salt Lake City, Utah - KUWB April 1998
Salt Lake City, Utah - KUPX January 1998(2)
</TABLE>
(1) Commenced operations in October 1997.
(2) 49% interest.
<TABLE>
<CAPTION>
STATION NOT IN OPERATION DATE ACQUIRED
----------------------------------- -------------------------
<S> <C>
Albuquerque, New Mexico January 1998
</TABLE>
In January 1998, ACME Television Licenses of Tennessee, LLC, which is
wholly owned by ACME TV, became the applicant for a construction permit
("CP") for KWMB TV in Harrison, Arkansas through a settlement agreement
with other applicants. The CP was subsequently assigned to Carman-Harrison
LLC on September 11, 1998 resulting in a gain of $1,112,000 recognized by
the Company at September 30, 1998.
NOTE 3 - RECENT PRONOUNCEMENTS
In September 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 130,
"Reporting Comprehensive Income" which is effective for fiscal
10
<PAGE> 11
ACME TELEVISION, LLC AND
ACME INTERMEDIATE HOLDINGS, LLC
Notes to Consolidated Financial Statements, Continued
(Unaudited)
periods beginning after December 15, 1997. SFAS No. 130 establishes
standards for reporting and displaying comprehensive income and its
components. The Company believes SFAS No. 130 will not have an effect on
the manner in which the Company currently reports.
In September 1997, the FASB issued SFAS No. 131, "Disclosures About
Segments of an Enterprise and Related Information" which is effective for
fiscal periods beginning after December 15, 1997. SFAS No. 131 establishes
standards for reporting information about operating segments and for
related disclosures about products, services, geographic areas and major
customers. The Company does not divide its business into segments and,
accordingly, does not believe SFAS No. 131 will have any applicability to
the Company's financial reporting.
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133 ("SFAS 133")
"Accounting for Derivative Instruments and Hedging Activities", which
establishes accounting and reporting standards for derivative instruments
and hedging activities. SFAS 133 is effective for all fiscal quarters of
all fiscal years beginning after June 15, 1999. The Company is determining
the effect of SFAS 133 on its financial statements.
11
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
INTRODUCTION
This Quarterly Report on Form 10-Q contains forward-looking statements that
involve risks and uncertainties. Actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including changes in national and regional economies, competition in
the television business, pricing fluctuations in local and national advertising,
program ratings and changes in programming costs, regulatory changes and
technological advancements, among other factors.
The operating revenues of the Stations are derived primarily from the sale of
advertising time. The stations sell commercial time during the programs to
national, regional and local advertisers. Credit arrangements are determined on
an individual customer basis. The Company generally pays commissions to
advertising agencies on local, regional and national advertising and to national
sales representatives on national advertising. All such commission is reflected
as deductions from gross revenues in the accompanying consolidated financial
statements.
The primary operating expenses of the Company consist of employee salaries,
programming, advertising and promotional expenses and depreciation and
amortization.
The following table sets forth certain operating data for ACME Television and
ACME Intermediate for the three months and nine months ended September 30, 1998
and 1997:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
------------------------- -------------------------
1997 1998 1997 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Operating income (loss) $(1,356) (1,573) (2,665) (2,786)
Add:
Time brokerage agreement fees -- -- -- 228
Program amortization 484 1,597 484 3,792
Depreciation and amortization 385 3,534 551 7,715
Corporate expense 323 498 742 1,861
Less:
Program payments (425) (1,446) (425) (3,599)
------- ------- ------- -------
Broadcast cash flow $ (589) 2,610 (1,313) 7,211
======= ======= ======= =======
</TABLE>
"Broadcast cash flow" means operating income plus time brokerage fees, program
amortization, depreciation and amortization and corporate expense, less
scheduled program payments as adjusted to reflect reductions for impaired or
expired rights in connection with acquisitions. The Company has included
broadcast cash flow data because such data are commonly used as a measure of
performance for broadcast companies and are also used by investors to measure a
company's ability to service debt. However, the Company's definition of
broadcast cash flow may not be comparable to similarly titled measures presented
by other companies. Broadcast cash flow is not, and should not be used as, an
indicator or alternative to operating income, net income or cash flow as
reflected in the consolidated financial statements, is not a measure of
financial performance under generally accepted accounting principles and should
not be considered in isolation or as a substitute for measures of performance
prepared in accordance with generally accepted accounting principles.
THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1997
Net broadcast revenues for the three months ended September 30, 1998 increased
$11.1 million to $11.8 million compared to $759,000 for the three months ended
September 30, 1997. This increase is due primarily to the expansion in the
number of the Company's operating stations as described in "Note 2 -
Acquisitions" above. Net revenues increased $241,000 for the three months ended
September 30, 1998 compared to the three months ended June 30, 1998 as a result
of increased sports revenues and increased market shares, offset somewhat by
seasonably lower advertising rates.
12
<PAGE> 13
Operating expenses increased $11.3 million to $13.4 million compared to the
prior year quarter's operating expense of $2.1 million. This increase was also
due to the additional stations added since the third quarter of 1997. Operating
expenses increased $231,000 for the quarter ended September 30, 1998 compared to
the three months ended June 30, 1998. This increase is due primarily to the
increased program costs attributable to barter contracts.
Interest expense for the current year quarter was $4.1 million for ACME TV and
$5.4 million for ACME Intermediate, primarily representing the amortization of
original issuance discount of the Company's September 1997 issued senior
discount notes (ACME Television) and senior secured notes (ACME Intermediate)
along with related amortization of prepaid financing costs. The interest expense
of $112,000 during the third quarter of 1997 represents interest on ACME TV's
revolving credit facility.
Apart from the Company's Missouri operations (which pertain solely to the
Company's investment in KPLR), which are organized as traditional "C"
corporations, ACME Intermediate and ACME TV and its operating subsidiaries are
organized as limited liability companies. Accordingly, although the Company is
subject to various minimum state taxes, all federal tax attributes are passed
through to the members of the Company. The Company's Missouri operations, after
deduction of allocable interest charges, generated a net taxable loss. The
Company has not recognized the benefit of such a loss. The Company has recorded
a tax benefit for the decrease on the deferred tax liability relating to the
amortization of other intangibles, primarily for the FCC licenses, relating to
the KPLR acquisition which are not deductible for tax purposes.
The Company recorded a gain of $1.1 million in the current year quarter related
to the assignment of a construction permit which it acquired earlier in the
year.
The net loss for ACME TV and for ACME Intermediate for the three months ended
September 30, 1998 was $4.1 million and $5.4 million, respectively, compared to
a net loss of $1.5 for the comparable quarter of the prior year. These increased
net losses are due primarily to the amortization of broadcast licenses relating
to the Companies' newly acquired and operating stations and the substantially
increased interest expense incurred in connection with the September 1997
issuance of long-term debt to finance these acquisitions.
Broadcast cash flow for the three months ended September 30, 1998 was $2.6
million, compared to a negative broadcast cash flow of $587,000 for the
corresponding quarter in 1997. This increase is attributable primarily to the
Company's operations of KPLR, which was operated under an LMA from October 1,
1997 and acquired on March 13, 1998.
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1997
Net broadcast revenues for the nine months ended September 30, 1998 increased
$28.9 million to $31.1 million compared to $2.2 million for the nine months
ended September 30, 1997. This increase is due primarily to the expansion in the
number of Company's operating stations as described in "Note 2 - Acquisitions"
above.
Operating expenses increased $29.1 million to $33.9 million compared to the
prior year's nine months operating expenses of $4.8 million. This increase was
also due to the additional stations added since the third quarter of 1997.
13
<PAGE> 14
Interest expense for the current year was $11.8 million for ACME TV and $15.6
million for ACME Intermediate, primarily representing the amortization of
original issuance discount of the Company's September 1997 issued senior
discount notes (ACME Television) and senior secured notes (ACME Intermediate)
along with related amortization of prepaid financing costs. The interest expense
of $573,000 during the first nine months of 1997 represents primarily the
interest expense assumed by the Company, on behalf of the seller of KWBP
(Portland), during the interim LMA period, and interest expense related to ACME
TV's revolving credit facility.
Apart from the Company's Missouri operations (which pertain solely to the
Company's investment in KPLR), which are organized as traditional "C"
corporations, ACME Intermediate and ACME TV and its operating subsidiaries are
organized as limited liability companies. Accordingly, although the Company is
subject to various minimum state taxes, all federal tax attributes are passed
through to the members of the Company. The Company's Missouri operations, after
deduction of allocable interest charges, generated a net taxable loss, and a
corresponding deferred tax benefit was recorded for the goodwill amortization.
The Company recorded a gain of $1.1 million during the nine months ended
September 30, 1998 related to the purchase and subsequent assignment of a
construction permit serving Harrison, Arkansas.
The net loss for ACME TV and for ACME Intermediate for the nine months ended
September 30, 1998 was $12.5 million and $16.3 million, respectively, compared
to a net loss of $3.2 million for the comparable nine months of the prior year.
These increased net losses are due primarily to the amortization of broadcast
licenses relating to the Companies' newly acquired and operating stations and
the substantially increased interest expense incurred in connection with the
September 1997 issuance of long-term debt to finance these acquisitions.
Broadcast cash flow for the nine months ended September 30, 1998 was $7.2
million, compared to a negative broadcast cash flow of $1.3 million for the
corresponding nine months in 1997. This increase is attributable primarily to
the Company's profitable operations of KPLR, which was operated under an LMA
from October 1, 1997 and acquired on March 13, 1998.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows provided by operating activities were $800,000 during the nine months
ended September 30, 1998 compared to cash flows used by operating activities of
$23 million during the nine months ended September 30, 1997, an increase of $3.1
million. This increase was primarily due to higher broadcast cash flow offset by
increased working capital needs.
Cash flows used in investing activities were $17.0 million during the nine
months ended September 30, 1998 compared to $145.8 million used in investing
activities during the nine months ended September 30, 1997. Cash flows used in
investing activities during the nine months ended September 30, 1998 related to
the Company's acquisition of WTVK and to capital expenditures principally
related to the build-out of KUWB, offset by net cash provided by the Company's
CP acquisition and subsequent assignment of Channel 31 serving Harrison,
Arkansas. The Company anticipates that future requirements for capital
expenditures will include those incurred in the continued build-out of its
station in Albuquerque, New Mexico and the upgrade of its other stations and
will be financed primarily through its $20 million capital equipment facility
(of which approximately $16.7 million is still available at September 30, 1998)
entered into with General Electric Capital Corporation ("GECC") earlier this
year.
Cash flows provided by financing activities during the nine months ended
September 30, 1998 were $8.665 million related to increases in notes payable and
additions to capital leases, net of repayments and paydowns of prior year-end
financing related liabilities, compared to cash flows provided by financing
activities during the prior year corresponding period related to parent
contributions, the Company's September 30, 1997 issuance of membership interests
in ACME Intermediate and notes in ACME Intermediate and ACME TV, and bank
borrowings of $3.5 million. At September 30, 1998 there was an outstanding
balance of $8 million due under the Company's existing credit agreement facility
with Canadian-Imperial Bank Corporation ("CIBC"). This facility allows for
revolving credit borrowings of up to a maximum of $40,000,000, dependent upon
certain financial ratios of the Company, can be used to fund future acquisitions
of broadcast stations and for general corporate purposes.
14
<PAGE> 15
The Company believes that internally generated funds from operations, financings
under the Company's capital equipment facility and additional borrowings under
its credit agreement, if necessary, will be sufficient to satisfy the Company's
cash requirements for its existing operations for the next twelve months and for
the foreseeable future thereafter. The Company expects that any future
acquisitions of television stations would be financed through funds generated
from operations, through additional borrowings under the existing CIBC credit
agreement and through additional debt and equity financings.
15
<PAGE> 16
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company currently and from time to time is involved in litigation incidental
to the conduct of its business. The Company is not currently party to any
lawsuit or proceeding which, in the opinion of management, is likely to have a
material adverse effect on the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ---------------- -------------------------------------------------------------
<S> <C>
*4.1 Third Supplemental Indenture, dated August 21, 1998, by and
among ACME Television, LLC and ACME Finance Corporation, as
Issuers, the Guarantors named therein, and Wilmington Trust
Company.
27.1 Financial Data Schedule for ACME Television, LLC
27.2 Financial Data Schedule for ACME Intermediate Holdings, LLC
</TABLE>
- -----------
* Filed herewith.
(b) REPORTS ON FORM 8-K.
The Company filed no reports on Form 8-K during the three months ended
September 30, 1998.
16
<PAGE> 17
SIGNATURES
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.
ACME TELEVISION, LLC
Date: November 16, 1998 By: /s/ Douglas E. Gealy
-----------------------------------
Douglas E. Gealy, President
Date: November 16, 1998 By: /s/ Thomas D. Allen
-----------------------------------
Thomas D. Allen
Executive Vice President/CFO
(principal financial officer)
SIGNATURES
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.
ACME INTERMEDIATE HOLDINGS, LLC
Date: November 16, 1998 By: /s/ Douglas E. Gealy
-----------------------------------
Douglas E. Gealy, President
Date: November 16, 1998 By: /s/ Thomas D. Allen
-----------------------------------
Thomas D. Allen
Executive Vice President/CFO
(principal financial officer)
17
<PAGE> 18
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ---------------- -------------------------------------------------------------
4.1 Third Supplemental Indenture, dated August 21, 1998, by and
among ACME Television, LLC and ACME Finance Corporation, as
Issuers, the Guarantors named therein, and Wilmington Trust
Company.
27.1 Financial Data Schedule for ACME Television, LLC
27.2 Financial Data Schedule for ACME Intermediate Holdings, LLC
<PAGE> 1
EXHIBIT 4.1
THIRD SUPPLEMENTAL INDENTURE, dated as of August 21, 1998, among ACME
TELEVISION, LLC, a Delaware limited liability company (the "Company"), and ACME
FINANCE CORPORATION, a Delaware corporation ("Finance" and, together with the
Company, jointly and severally, the "Issuers"), the Guarantors (as defined in
the Indenture (as defined herein) and referred to herein as the "Original
Guarantors"), the Additional Guarantors (as defined in the First Supplemental
Indenture (as defined herein) and referred to herein as the "Additional
Guarantors"), the Successor Guarantors (as defined in the First Supplemental
Indenture and referred to herein as the "Successor Guarantors"), the Additional
Missouri Guarantors (as defined in the Second Supplemental Indenture (as defined
herein) and referred to herein as the "Additional Missouri Guarantors") and ACME
Television of Florida, LLC, a Delaware limited liability company ("Television
Florida"), and ACME Television Licenses of Florida, LLC, a Delaware limited
liability company ("Licenses Florida"), (each a "Florida Guarantor" and,
together the "Florida Guarantors," and, together with the Additional Missouri
Guarantors, the Additional Guarantors, the Successor Guarantors and the Original
Guarantors, the "Guarantors"), and WILMINGTON TRUST COMPANY (the "Trustee"), as
Trustee under the Indenture.
WHEREAS, the Issuers, the Original Guarantors and the Trustee have
previously entered into an Indenture dated as of September 30, 1997 (the
"Indenture") relating to the Issuers' 10 7/8% Senior Discount Notes due 2004
(the "Notes"); the Issuers, the Original Guarantors, the Additional Guarantors,
the Successor Guarantors and the Trustee have previously entered into a First
Supplemental Indenture dated as of February 11, 1998 (the "First Supplemental
Indenture") which amended the Indenture to provide for the guarantees of the
Additional Guarantors and the Successor Guarantors; and the Issuers, the
Original Guarantors, the Additional Guarantors, the Successor Guarantors, the
Additional Missouri Guarantors and the Trustee have previously entered into a
Second Supplemental Indenture dated as of March 13, 1998 (the "Second
Supplemental Indenture") which amended the Indenture to provide for the
guarantees of the Additional Missouri Guarantors;
WHEREAS, with respect to the Florida Guarantors, Section 9.01 of the
Indenture provides that the Issuers, the Original Guarantors and the Trustee
may, without the written consent of the holders of the outstanding Notes, amend
the Indenture as provided therein to provide for the acquisition of subsidiaries
by the Issuers;
WHEREAS, the Board of Directors or the Majority Member of each of
the Issuers, and the Original Guarantors have consented to this Third
Supplemental Indenture; and
WHEREAS, all acts and things prescribed by the Certificate of
Formation and the Operating Agreement (each as now in effect) of each of
Licenses Florida and Television Florida necessary to make this Third
Supplemental Indenture a valid instrument legally binding on each of the Florida
Guarantors for the purposes herein expressed, in accordance with its terms, have
been duly done and performed;
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Issuers, the Original Guarantors, the Additional Guarantors, the Successor
Guarantors, the Additional Missouri Guarantors, the
<PAGE> 2
Florida Guarantors and the Trustee hereby agree for the benefit of each other
and the equal and ratable benefit of the holders of the Notes as follows:
1. Additional Guarantors. As of the date hereof and pursuant to this
Third Supplemental Indenture, ACME Television of Florida, LLC, a Delaware
limited liability company, and ACME Television Licenses of Florida, LLC, a
Delaware limited liability company, each hereby becomes a Guarantor under the
Indenture in accordance with the terms and conditions of the Indenture and shall
each assume all rights and obligations of a Guarantor thereunder.
2. Compliance with and Fulfillment of Condition of Article IX. Each
Florida Guarantor's execution and delivery of this Third Supplemental Indenture
and the respective Guarantee (along with such documentation relating thereto as
the Trustee shall require, including, without limitation, an Opinion of Counsel
as to the enforceability of each such Guarantee and the Third Supplemental
Indenture and an Officer's Certificate from each entity) fulfills its
requirements under Section 9.01 of the Indenture.
3. Construction. For all purposes of this Third Supplemental Indenture,
except as otherwise herein expressly provided or unless the context otherwise
requires: (i) the terms and expressions used herein shall have the same meanings
as corresponding terms and expressions used in the Indenture; and (ii) the words
"herein," "hereof" and "hereby" and other words of similar import used in this
Third Supplemental Indenture refer to this Third Supplemental Indenture as a
whole and not to any particular Section hereof.
4. Trustee Acceptance. The Trustee accepts the amendment of the
Indenture effected by this Third Supplemental Indenture, as hereby amended, but
only upon the terms and conditions set forth in the Indenture, as hereby
amended, including the terms and provisions defining and limiting the
liabilities and responsibilities of the Trustee in the performance of its duties
and obligations under the Indenture, as hereby amended. Without limiting the
generality of the foregoing, the Trustee has no responsibility for the
correctness of the recitals of fact herein contained which shall be taken as the
statements of each of the Issuers and the Guarantors, respectively, and makes no
representations as to the validity or enforceability against any of the Issuers
and the Guarantors.
5. Indenture Ratified. Except as expressly amended hereby, the Indenture
is in all respects ratified and confirmed and all the terms, conditions and
provisions thereof shall remain in full force and effect.
6. Holders Bound. This Third Supplemental Indenture shall form a part of
the Indenture for all purposes, and every holder of the Notes heretofore and
hereafter authenticated and delivered shall be bound hereby.
7. Successors and Assigns. This Third Supplemental Indenture shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
<PAGE> 3
8. Counterparts. This Third Supplemental Indenture may be executed in
any number of counterparts, each of which when so executed shall be deemed to be
an original, and all of such counterparts shall together constitute one and the
same instrument.
9. Governing Law. This Third Supplemental Indenture and the Guarantees
hereunder shall be governed by and construed in accordance with the internal
laws of the State of New York without giving effect to principles of conflicts
of laws.
<PAGE> 4
IN WITNESS WHEREOF, the Issuers, the Guarantors and the Trustee have
caused this Third Supplemental Indenture to be duly executed as of the date
first above written.
ISSUERS:
ACME TELEVISION, LLC
ACME FINANCE CORPORATION
ATTEST:
By: /s/ Douglas Gealy By: /s/ Thomas Allen
------------------------------- -------------------------------
Douglas Gealy Thomas Allen
President and Chief Operating Executive Vice-President and
Officer Chief Financial Officer
GUARANTORS:
FLORIDA GUARANTORS:
ACME TELEVISION OF FLORIDA, LLC
ACME TELEVISION LICENSES OF FLORIDA, LLC
ATTEST:
By: /s/ Douglas Gealy By: /s/ Thomas Allen
------------------------------- -------------------------------
Douglas Gealy Thomas Allen
President and Chief Operating Executive Vice-President and
Officer Chief Financial Officer
(for each of the above-listed Florida Guarantors)
<PAGE> 5
ADDITIONAL MISSOURI GUARANTORS:
ACME TELEVISION OF MISSOURI, INC.
ACME TELEVISION LICENSES OF MISSOURI, LLC
ATTEST:
By: /s/ Douglas Gealy By: /s/ Thomas Allen
------------------------------- -------------------------------
Douglas Gealy Thomas Allen
President and Chief Operating Executive Vice-President and
Officer Chief Financial Officer
(for each of the above-listed Additional Missouri Guarantors)
SUCCESSOR GUARANTORS:
ACME TELEVISION HOLDINGS OF OREGON, LLC
ACME TELEVISION HOLDINGS OF TENNESSEE, LLC
ACME TELEVISION LICENSES OF OREGON, LLC
ACME TELEVISION LICENSES OF TENNESSEE, LLC
ACME TELEVISION OF TENNESSEE, LLC
ACME TELEVISION OF OREGON, LLC
ATTEST:
By: /s/ Douglas Gealy By: /s/ Thomas Allen
------------------------------- -------------------------------
Douglas Gealy Thomas Allen
President and Chief Operating Executive Vice-President and
Officer Chief Financial Officer
(for each of the above-listed Successor Guarantors)
<PAGE> 6
ADDITIONAL GUARANTORS:
ACME TELEVISION LICENSES OF UTAH, LLC
ACME TELEVISION OF NEW MEXICO, LLC
ACME TELEVISION OF UTAH, LLC
ATTEST:
By: /s/ Douglas Gealy By: /s/ Thomas Allen
------------------------------- -------------------------------
Douglas Gealy Thomas Allen
President and Chief Operating Executive Vice-President and
Officer Chief Financial Officer
(for each of the above-listed Additional Guarantors)
ORIGINAL GUARANTORS:
ACME TELEVISION LICENSES OF MISSOURI, INC.
ACME TELEVISION HOLDINGS OF UTAH, LLC
ACME TELEVISION HOLDINGS OF NEW MEXICO, LLC
ACME TELEVISION LICENSES OF NEW MEXICO, LLC
ACME SUBSIDIARY HOLDINGS III, LLC
ATTEST:
By: /s/ Douglas Gealy By: /s/ Thomas Allen
------------------------------- -------------------------------
Douglas Gealy Thomas Allen
President and Chief Operating Executive Vice-President and
Officer Chief Financial Officer
(for each of the above-listed Original Guarantors)
WILMINGTON TRUST COMPANY
ATTEST:
By: /s/ Bruce L. Bisson By: /s/ Charlotte Paglia
------------------------------- -------------------------------
Name: Bruce L. Bisson Name: Charlotte Paglia
Title: Vice President Title: Financial Services Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEETS, STATEMENTS OF OPERATIONS AND MEMBERS' CAPITAL AND STATEMENTS OF
CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1997,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q FOR ACME
TELEVISION.
</LEGEND>
<CIK> 0001049510
<NAME> ACME TELEVISION LLC
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 1,288
<SECURITIES> 0
<RECEIVABLES> 8,812
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 15,813
<PP&E> 13,131
<DEPRECIATION> 0
<TOTAL-ASSETS> 286,393
<CURRENT-LIABILITIES> 24,676
<BONDS> 141,598
0
0
<COMMON> 0
<OTHER-SE> 74,664
<TOTAL-LIABILITY-AND-EQUITY> 286,393
<SALES> 0
<TOTAL-REVENUES> 31,132
<CGS> 0
<TOTAL-COSTS> 33,918
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (11,985)
<INCOME-PRETAX> (13,251)
<INCOME-TAX> 767
<INCOME-CONTINUING> (12,484)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,484)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEETS, STATEMENTS OF OPERATIONS AND MEMBERS' CAPITAL AND STATEMENTS OF
CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1997,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q FOR ACME
INTERMEDIATE HOLDINGS.
</LEGEND>
<CIK> 0001049530
<NAME> ACME INTERMEDIATE HOLDINGS, LLC
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 1,288
<SECURITIES> 0
<RECEIVABLES> 8,812
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 15,720
<PP&E> 13,131
<DEPRECIATION> 0
<TOTAL-ASSETS> 287,899
<CURRENT-LIABILITIES> 24,704
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 35,474
<TOTAL-LIABILITY-AND-EQUITY> 287,899
<SALES> 0
<TOTAL-REVENUES> 31,132
<CGS> 0
<TOTAL-COSTS> 33,918
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (15,600)
<INCOME-PRETAX> (17,066)
<INCOME-TAX> 767
<INCOME-CONTINUING> (10,854)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (16,299)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
