<PAGE>
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-Q
----------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended
JUNE 30, 2000
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-16061
KEY3MEDIA GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-4799962
(State of Incorporation) (I.R.S. Employer Identification No.)
5100 Willshire Blvd., Suite 325 90036
Los Angeles, CA (Zip Code)
(Address of principal executive
offices)
Registrant's telephone number, including area code: (323) 954-3000
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, and (2) has been subject to such filing
requirements for the past 90 days.
YES [_] NO [X]
As of September 5, 2000 there were 65 million shares of the Registrant's
voting common stock, par value $0.01 per share, issued and outstanding. No
shares of any other class of the capital stock of the Registrant are currently
issued or outstanding.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<PAGE>
KEY3MEDIA GROUP, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page(s)
-------
<S> <C>
Part I. Financial Information
Item 1.Financial Statements:
Report of Independent Accountants................................ 4
Condensed Combined Balance Sheets as of June 30, 2000 (Unaudited)
and December 31, 1999........................................... 5
Condensed Combined Statements of Operations (Unaudited) for the
Three and Six Months Ended June 30, 2000 and 1999............... 6
Pro Forma Condensed Combined Statements of Operations (Unaudited)
for the Three and Six Months Ended June 30, 2000 and 1999....... 7-8
Condensed Combined Statements of Cash Flows (Unaudited) for Six
Months Ended June 30, 2000 and 1999............................. 9
Condensed Combined Statement of Changes in Division Equity
(Unaudited) for the Six Months Ended June 30, 2000.............. 10
Notes to Unaudited Condensed Combined Financial Statements....... 11-16
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................... 17
Item 3.Quantitative and Qualitative Disclosures About Market Risk.... 20
Part II. Other Information
Item 1.Legal Proceedings............................................. 21
Item 2.Changes in Securities and Use of Proceeds..................... 21
Item 4.Exhibits and Reports on Form 8-K.............................. 21
</TABLE>
2
<PAGE>
CAUTIONARY LEGEND REGARDING FORWARD-LOOKING STATEMENTS
Some of the information in this Form 10-Q may constitute forward-looking
statements which are subject to various risks and uncertainties. These
forward-looking statements include, without limitation, statements regarding
our future business plans and strategies and our future financial position or
results of operations, as well as other statements that are not historical.
You can find many of these statements by looking for words like "will," "may,"
"believes," "expects," "anticipates," "plans" and "estimates" and for similar
expressions.
Because forward-looking statements involve risks and uncertainties, there
are many factors that could cause the actual results to differ materially from
those expressed or implied. These include, but are not limited to, general
economic conditions, the state of the information technology industry,
technological changes and developments, intellectual property rights,
competition, capital expenditures and factors impacting our international
operations. In addition, the Registration Statement on Form S-1 (File No. 333-
36828) that we filed with the SEC contains important cautionary statements and
discusses many of the factors that could materially affect the accuracy of our
forward-looking statements and/or adversely affect our business, results of
operations and financial position under the captions "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", which statements and factors are incorporated herein by
reference.
If there are any subsequent written or oral forward-looking statements made
by us or any person acting on our behalf, they are qualified in total by the
cautionary statements and factors contained or referred to in this section. We
do not undertake any obligation to release publicly any revisions to the
forward-looking statements to reflect events or circumstances after the date
of this document or to reflect the occurrence of unanticipated events.
3
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders:
We have reviewed the accompanying condensed combined balance sheet of
Key3Media Group, Inc., (formerly ZD Events, a division of Ziff-Davis Inc.), as
defined in Note 1 to the condensed combined financial statements as of June
30, 2000, and the related condensed combined statement of operations, cash
flows and changes in division equity for the three-month and six-month periods
ended June 30, 2000. These financial statements are the responsibility of the
Company's management. We did not make a similar review of the condensed
combined financial statements for the three-month and six-month periods ended
June 30, 1999.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying condensed combined interim financial
statements for them to be in conformity with generally accepted accounting
principles.
We previously audited in accordance with generally accepted auditing
standards, the combined balance sheet as of December 31, 1999, and the related
combined statement of operations, of changes in division equity, and of cash
flows for the year then ended (not presented herein), and in our report dated
April 12, 2000, except for Note 16, for which the date is April 13, 2000 we
expressed an unqualified opinion on those combined financial statements. In
our opinion, the information set forth in the accompanying condensed combined
balance sheet as of December 31, 1999, is fairly stated in all material
respects in relation to the combined balance sheet from which it has been
derived.
As discussed, in Note 1, certain costs and expenses presented in the
condensed combined financial statements represent allocations and estimates of
the costs of services provided to Key3Media Group, Inc., (formerly ZD Events)
by management of Ziff-Davis Inc. As a result, the condensed combined financial
statements presented may not be indicative of the financial position, results
of operations or cash flows that would have been achieved had Key3Media Group,
Inc. (formerly ZD Events) operated as a nonaffiliated entity.
PricewaterhouseCoopers LLP
Boston, Massachusetts
August 31, 2000
4
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements.
KEY3MEDIA GROUP, INC.
CONDENSED COMBINED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31, June 30,
1999 2000
------------ -----------
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents........................... $ 5,570 $ 67,534
Accounts receivable, net............................ 69,383 69,823
Prepaid event expenses.............................. 4,584 13,550
Deferred tax asset.................................. 4,443 4,443
Other current assets................................ 1,952 1,510
-------- ----------
Total current assets.............................. 85,932 156,860
Property and equipment, net........................... 10,028 9,015
Intangible assets, net................................ 875,526 859,687
Other assets.......................................... 78 156
-------- ----------
Total assets...................................... $971,564 $1,025,718
======== ==========
Liabilities and Division Equity
Current liabilities:
Accounts payable.................................... $ 8,777 $ 2,803
Bank overdraft...................................... 2,351 5,977
Accrued expenses.................................... 23,178 28,771
Deferred revenue.................................... 85,799 131,442
Other current liabilities........................... 3,131 4,034
-------- ----------
Total current liabilities......................... 123,236 173,027
-------- ----------
Deferred taxes........................................ 61,553 62,326
Note payable to affiliate............................. 382,002 232,002
Notes payable......................................... -- 150,000
Other long-term liabilities........................... 8,381 7,566
Commitments and contingencies (Note 6)
Division equity:
Division capital.................................... 328,022 330,775
Retained earnings................................... 73,246 74,635
Deferred compensation............................... (982) (387)
Other comprehensive income (loss)................... (3,894) (4,226)
-------- ----------
Total division equity............................. 396,392 400,797
-------- ----------
Total liabilities and division equity............. $971,564 $1,025,718
======== ==========
</TABLE>
The accompanying notes are an integral part of these condensed combined
financial statements.
5
<PAGE>
KEY3MEDIA GROUP, INC.
CONDENSED COMBINED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
For the For the
three months six months
ended June 30, ended June 30,
---------------- ------------------
1999 2000 1999 2000
------- ------- -------- --------
<S> <C> <C> <C> <C>
Net revenues............................ $74,066 $93,916 $ 93,034 $115,063
Operating expenses:
Cost of production.................... 21,314 25,484 29,371 33,896
Selling, general and administrative... 20,488 26,790 38,227 47,520
Stock based compensation (Note 4)..... 131 537 262 668
Depreciation and amortization......... 8,316 9,263 19,411 18,455
------- ------- -------- --------
50,249 62,074 87,271 100,539
------- ------- -------- --------
Income from operations.................. 23,817 31,842 5,763 14,524
------- ------- -------- --------
Other income (expenses):
Interest expense...................... (5,816) (7,008) (11,627) (12,669)
Interest income....................... 113 292 221 382
Equity in earnings from joint
venture.............................. 669 -- 1,311 --
Other income (expense), net........... 9 (5) 10 65
------- ------- -------- --------
(5,025) (6,721) (10,085) (12,222)
------- ------- -------- --------
Income (loss) before income tax
provision (benefit).................... 18,792 25,121 (4,322) 2,302
Income tax provision (benefit).......... 7,453 9,972 (1,714) 913
------- ------- -------- --------
Net income (loss)................... 11,339 15,149 (2,608) 1,389
======= ======= ======== ========
Basic net income (loss) per common
share.................................. $ 0.21 $ 0.28 $ (0.05) $ 0.03
Diluted net income (loss) per common
share.................................. $ 0.21 $ 0.28 $ (0.05) $ 0.03
Shares used in computing basic net
income (loss)
per common share....................... 53,358 53,358 53,358 53,358
Shares used in computing diluted net
income (loss)
per common share....................... 53,358 53,358 53,358 53,358
</TABLE>
The accompanying notes are an integral part of these condensed combined
financial statements.
6
<PAGE>
KEY3MEDIA GROUP, INC.
PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share amounts)
In connection with the spin off of our Company by Ziff-Davis Inc. on August
18, 2000, we have prepared pro forma condensed combined statements of
operations by adjusting our historical condensed combined statements of
operations to give effect to the following transactions related to the spin
off as if they had occurred on January 1 of the relevant period:
. new borrowing of $330 million under a credit facility by our wholly
owned subsidiary Key3Media Events, Inc.;
. our issuance and sale of $75 million initial principal amount of zero
coupon debentures with detachable warrants;
. Key3Media Events' repayment of its existing indebtedness of $382
million; and
. our issuance of 21,049,233 stock options under our Key3Media 2000 Stock
Option and Incentive Plan.
<TABLE>
<CAPTION>
For the For the
three months six months
ended June 30, ended June 30,
---------------- -----------------
1999 2000 1999 2000
------- ------- ------- --------
<S> <C> <C> <C> <C>
Net revenues.............................. $74,066 $93,916 $93,034 $115,063
Operating expenses(e)..................... 51,053 62,878 88,879 102,147
------- ------- ------- --------
Income from operations................ 23,013 31,038 4,155 12,916
------- ------- ------- --------
Other income (expenses):
Interest expense(a),(b),(c),(d)......... (13,916) (13,916) (27,832) (27,832)
Interest income......................... 113 292 221 382
Equity in earnings from joint venture... 669 -- 1,311 --
Other income (expense), net............. 9 (5) 10 65
------- ------- ------- --------
(13,125) (13,629) (26,290) (27,385)
------- ------- ------- --------
Income (loss) before income tax provision
(benefit)(f)............................. 9,888 17,409 (22,135) (14,469)
Income tax provision (benefit)............ 3,926 6,911 (8,788) (5,744)
------- ------- ------- --------
Net income (loss)..................... 5,962 10,498 (13,347) (8,725)
======= ======= ======= ========
Pro forma basic net income (loss) per
common share(g).......................... $ 0.09 $ 0.16 $ (0.21) $ (0.13)
Pro forma diluted net income (loss) per
common share(g).......................... $ 0.06 $ 0.11 $ (0.21) $ (0.13)
Shares used in computing pro forma basic
net income (loss) per common share(g).... 65,000 65,000 65,000 65,000
Shares used in computing pro forma diluted
net income (loss) per common share(g).... 92,849 92,849 92,849 92,849
</TABLE>
The accompanying notes are an integral part of these pro forma condensed
combined financial statements.
7
<PAGE>
KEY3MEDIA GROUP, INC.
PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS (Unaudited)--(Continued)
(Dollars in thousands, except per share amounts)
(a) Reflects the increased interest expense of $5,417, $4,375, $2,706, and
$1,514 for the six months ended June 30, 1999 and 2000 and three months
ended June 30, 1999 and 2000, respectively, associated with Key3Media
Events' borrowing of $330 million under the new credit facility compared
to borrowings under its prior lending arrangements.
(b) Reflects the increased interest expense of $8,747, $8,747, $4,373, and
$4,373 for the six months ended June 30, 1999 and 2000 and three months
ended June 30, 1999 and 2000, respectively, associated with our debt
related to $75 million of zero coupon debentures with detachable
warrants.
(c) Reflects the increased interest expense of $941 and $471 for the six
months ended and three months ended June 30, 1999 and 2000, respectively,
resulting from the costs incurred as a result of borrowing $330 million
under the new credit facility.
(d) Reflects the increased interest expense of $1,100 and $550 for the six
months ended and three months ended June 30, 1999 and 2000, respectively,
resulting from the costs incurred as a result of our issuance of
$75 million of zero coupon debentures with detachable warrants.
(e) Reflects compensation expense of $1,608 and $804 for the six months ended
and three months ended June 30, 1999 and 2000, respectively, associated
with the issuance of 21,049,233 stock options under the Key3Media 2000
Stock Option and Incentive Plan amortized ratably over a four year
period.
(f) The effective tax rate used to calculate our income tax expense for the
year ended December 31, 1999 was applied to the pro forma adjustments to
determine the income tax (benefit) of $(7,074), $(6,657), $(3,527), and
$(3,061) for the six months ended June 30, 1999 and 2000 and three months
ended June 30, 1999 and 2000, respectively.
(g) Pro forma net income (loss) per share was calculated using the 65.0
million shares outstanding subsequent to our spin-off from ZDI. Pro forma
diluted net income per share includes 21,049,233 options for our shares
granted to directors and employees and 6.8 million warrants.
The accompanying notes are an integral part of these pro forma condensed
combined financial statements.
8
<PAGE>
KEY3MEDIA GROUP, INC.
CONDENSED COMBINED STATEMENTS OF CASH FLOWS (Unaudited)
For the Six Months Ended June 30, 2000 and 1999
(Dollars in thousands)
<TABLE>
<CAPTION>
1999 2000
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)......................................... $ (2,608) $ 1,389
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization............................ 19,411 18,455
Stock-based compensation................................. 262 668
Loss on disposal of fixed assets......................... -- 61
Foreign exchange gain/(loss)............................. (10) (64)
Deferred income taxes.................................... (4,749) 773
Provision for uncollectible accounts receivable.......... 845 510
Changes in operating assets and liabilities:
Accounts receivable..................................... (25,837) (904)
Prepaid event expenses.................................. (4,314) (8,966)
Other current assets.................................... (2,595) 442
Other assets............................................ (278) (78)
Accounts payable........................................ 4,796 (5,974)
Accrued expenses........................................ (5,028) 5,593
Deferred revenue........................................ 56,246 45,511
Other liabilities....................................... 2,945 88
-------- --------
Total adjustments...................................... 41,694 56,115
-------- --------
Net cash provided by operating activities.............. 39,086 57,504
-------- --------
Cash flows from investing activities:
Purchase of property and equipment........................ (137) (1,747)
Purchase of intangible assets............................. (2,019) --
-------- --------
Net cash used in investing activities.................. (2,156) (1,747)
-------- --------
Cash flows from financing activities:
Net transactions with Softbank, ZDI and affiliates
excluding noncash transactions with affiliates........... (34,277) 2,680
Increase in bank overdraft................................ 627 3,626
-------- --------
Net cash provided by (used in) financing activities.... (33,650) 6,306
-------- --------
Effects of exchange rate changes on cash................... (759) (99)
-------- --------
Net increase in cash and cash equivalents.................. 2,521 61,964
Cash and cash equivalents at beginning of period........... 10,385 5,570
-------- --------
Cash and cash equivalents at end of period................. $ 12,906 $ 67,534
======== ========
Supplemental cash flow disclosures:
Noncash financing activities:
Reduction in notes payable to affiliates as a result of
bank borrowings retained by an affiliate................. -- $150,000
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed combined
financial statements.
9
<PAGE>
KEY3MEDIA GROUP, INC.
CONDENSED COMBINED STATEMENT OF CHANGES IN DIVISION EQUITY
(Unaudited)
For the Six Months Ended June 30, 2000
<TABLE>
<CAPTION>
Accumulated
other
Division Retained comprehensive Deferred
capital earnings income (loss) compensation Total
-------- -------- ------------- ------------ --------
<S> <C> <C> <C> <C> <C>
Balance at December 31,
1999................... $328,022 $73,246 $(3,894) $(982) $396,392
Net transactions with
affiliates............. 2,680 2,680
Foreign currency
translation
adjustment............. (332) (332)
Amortization of deferred
compensation........... 378 290 668
Forfeiture of stock
options................ (305) 305 --
Net income.............. 1,389 1,389
-------- ------- ------- ----- --------
Balance at June 30, 2000
(unaudited)............ $330,775 $74,635 $(4,226) $(387) $400,797
-------- ------- ------- ----- --------
</TABLE>
The accompanying notes are an integral part of these condensed combined
financial statements.
10
<PAGE>
KEY3MEDIA GROUP, INC.
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share amounts)
(1) Organization and Nature of Operations
These unaudited condensed combined financial statements have been prepared
by the management of Key3Media Group, Inc. (the "Company") in accordance with
generally accepted accounting principles for interim financial information and
the applicable rules and regulations of the Securities and Exchange
Commission. Accordingly, they do not include all information and footnotes
required by generally accepted accounting principles for complete financial
statements. However, in the opinion of management, the interim financial
statements reflect all adjustments, consisting of only normal recurring
adjustments, necessary for a fair presentation of the results for the periods
presented. The results of operations for the interim periods are not
necessarily indicative of the results of operations to be expected for the
full year.
These unaudited interim condensed combined financial statements should be
read together with the Company's Registration Statement on Form S-1 (No. 333-
36828) and the audited combined financial statements contained therein.
On August 18, 2000, Ziff Davis Inc. ("ZDI") completed the previously
announced spin-off of the Company, a new company formed to hold ZDI's trade
show and conference business, to the holders of ZDI common stock. As a part of
the spin-off, the Company raised approximately $75 million through the
issuance of zero coupon senior debentures with detachable warrants and sold
11,641,950 common shares of its common stock for $6 per share. In addition,
the Company's wholly owned subsidiary Key3Media Events, Inc. ("Key3Media
Events") borrowed $330 million from a syndicate of banks. The proceeds of
these transactions were used to repay Key3Media Events' $382 million of
existing indebtedness and to fund a $42.998 million cash dividend to ZDI, and
the balance was retained for working capital and general corporate purposes.
Prior to June 1, 2000, ZDI provided to the Company certain centralized
administrative services including but not limited to legal, tax and financial
accounting, management information, telecommunications and human resources.
Since June 1, 2000 the Company has provided these services for itself. Charges
for the services provided by ZDI were generally based upon utilization;
however, where measuring utilization was impractical, ZDI used percentages
based upon headcount or revenue in determining charges for these services.
Management of the Company believes the allocated cost of the centralized
administrative services approximated the cost it would have incurred if it had
obtained the same administrative services from unaffiliated third parties.
A portion of the cost of administrative services charged to the Company by
ZDI included amounts for certain cash management and treasury activities.
These activities included the investment of surplus cash and the issuance,
repayment and repurchase of short-term and long-term debt. The Company
generally remitted its cash receipts (other than receipts of foreign
operations or operations that were not wholly owned) to ZDI, and ZDI generally
funded the Company's cash disbursements (other than disbursements of foreign
operations or operations that were not wholly owned), on a daily basis. The
cash funding described was accounted for within Division Equity and upon the
April 13, 2000 signing of a loan agreement with two banks (Note 5) the Company
assumed responsibility for its cash management and treasury activities.
The Company recorded $2,490 and $5,217 for centralized administrative
charges from ZDI for the six months ended June 30, 2000 and 1999,
respectively.
Certain reclassifications were made to the prior year condensed combined
financial statements to conform to the June 30, 2000 presentation.
11
<PAGE>
KEY3MEDIA GROUP, INC.
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (Unaudited)--(Continued)
(in thousands, except per share amounts)
(2) Net Income Per Share
Unaudited, pro forma net income (loss) per share was calculated using the
65.0 million shares outstanding subsequent to the spin-off from Ziff-Davis
Inc. Pro forma diluted net income per share was calculated using approximately
21.0 million options for our shares granted to directors and employees and 6.8
million warrants. In the future, basic net income per share will be calculated
based on the weighted average shares of common stock outstanding during the
period, and diluted earnings per share will be calculated based on the
weighted average of common stock outstanding, plus the dilutive effect of
stock options and other dilutive securities, calculated using the treasury
stock method. These dilutive securities were excluded from the calculation of
diluted net loss per share as the effect of their inclusion would have been
antidilutive.
(3) Comprehensive Income (loss)
The components of comprehensive income (loss) were as follows (in
thousands):
<TABLE>
<CAPTION>
Three months Six months
ended June 30, ended June 30,
---------------- ---------------
1999 2000 1999 2000
------- ------- ------- ------
<S> <C> <C> <C> <C>
Net income (loss)........................ $11,339 $15,149 $(2,608) $1,389
Other comprehensive income:
Foreign currency translation
adjustment............................ (146) (116) (370) (332)
------- ------- ------- ------
Total comprehensive income (loss)........ $11,193 $15,033 $(2,978) $1,057
======= ======= ======= ======
</TABLE>
(4) Stock Compensation
On May 31, 2000, ZDI's Board of Directors voted to amend certain stock
option plans under which certain employees of the Company had been granted
options to purchase shares of ZDI and ZDNet common stock. The amendment
accelerated the vesting of all unvested option grants for 1998 and half of the
unvested option grants for 1999 and provided for the exercise of these option
grants through June 30, 2000. This acceleration of the vesting of the ZDI and
ZDNet stock options resulted in an additional noncash stock based compensation
expense of $406 thousand in the three months ended June 30, 2000.
(5) Debt
Notes payable consisted of the following:
<TABLE>
<CAPTION>
June 30,
-----------------
1999 2000
-------- --------
<S> <C> <C>
Note payable to Ziff-Davis Inc.--a related party.......... $382,002 $232,002
Notes payable to Banks.................................... -- 150,000
-------- --------
$382,002 $382,002
======== ========
</TABLE>
In May 1998 Key3Media Events entered into a Loan Agreement with ZDI for
$382,002 (the "Loan"). The Loan stated that interest payments were due on a
quarterly basis beginning June 1998 at a rate of 6% per annum. The Loan was
payable on March 31, 2008 and contained no financial covenants. On April 13,
2000, Key3Media Events entered into a Revolving Credit Agreement ("the
Agreement") with two banks and borrowed $150 million which represented the
maximum amount available under the Agreement. The proceeds of this borrowing
were
12
<PAGE>
KEY3MEDIA GROUP, INC.
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (Unaudited)--(Continued)
(in thousands, except per share amounts)
used to repay a portion of the Loan. Under the terms of the Agreement,
Key3Media Events was required to maintain certain financial and operating
covenants, which included maximum leverage and minimum interest coverage
ratios and limits on capitalized leases and capital expenditures. The
Agreement bore interest at a base rate or eurodollar rate, at the option of
Key3Media Events. The base rate was equal to the higher of the lender's
commercial lending rate or 1/2 of 1% per annum above the federal funds rate.
The eurodollar rate was equal to the London Interbank Offered Rate divided by
a percentage equal to 100% minus the eurodollar rate reserve percentage, as
defined in the Agreement. The Agreement had an interest rate of 9.5% as of
June 30, 2000. The Loan and the Agreement were repaid on August 18, 2000.
For the three and six month periods ended June 30, 2000 interest expense
related to the Agreement was $3.2 million. The balance of interest expense for
each period related to the Loan.
(6) Commitments and Contingencies
On March 17, 2000, Key3Media Events sued GES Exposition Services, Inc. for
breach of contract in the United States District Court for the District of
Massachusetts. The Company believes that GES is withholding commissions that
it is required to pay to Key3Media Events under contract. The Company believes
that GES owed Key3Media Events approximately $10 million as of June 30, 2000,
and that this balance is increasing. On June 19, GES filed an answer,
counterclaim and jury demand. Its counterclaim alleges that Key3Media Events
breached the contract, violated its fiduciary duty toward GES and converted
GES property to the benefit and use of Key3Media Events. GES has asked the
court to award unspecified damages as well as declaratory and injunctive
relief. The Company has received subsequent pleadings filed by GES alleging
damages of approximately $33 million on a variety of different legal theories
plus additional damages for lost future profits of $20 million. Management
believes that these claims are excessive and lack merit and intends to
vigorously defend them. In management's opinion, this litigation is not likely
to have a material adverse effect on the Company's financial position, results
of operations or cash flows. On August 18, 2000 the agreement with GES was
terminated by Key3Media Events pursuant to a 60 day notice of termination
delivered by Key3Media Events to GES on June 19, 2000.
In connection with its spin-off from ZDI, the Company and its subsidiaries
have received an indemnification from ZDI against all liabilities not related
to our businesses, including the class actions and derivative litigation filed
against ZDI discussed in the Company's Registration Statement on Form S-1 (No.
333-36828).
The Company and its subsidiaries are subject to various claims and legal
proceedings arising in the normal course of business. Management believes that
the ultimate liability, if any, in the aggregate will not be material to the
Company's financial position, results of operations or cash flows.
13
<PAGE>
KEY3MEDIA GROUP, INC.
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (Unaudited)--(Continued)
(in thousands, except per share amounts)
(7) Segment Information
<TABLE>
<CAPTION>
Three months Six months
ending June 30, ending June 30,
---------------- -----------------
1999 2000 1999 2000
------- ------- ------- --------
<S> <C> <C> <C> <C>
Net revenues:
North America......................... $71,883 $93,396 $90,476 $113,877
Europe................................ 905 520 1,021 866
Far East.............................. 1,278 -- 1,537 320
------- ------- ------- --------
$74,066 $93,916 $93,034 $115,063
------- ------- ------- --------
Other income (expense)
North America......................... $ 2 $ (1) $ 2 $ (1)
Europe................................ (1) (5) (1) 65
Far East.............................. 8 1 9 1
------- ------- ------- --------
$ 9 $ (5) $ 10 $ 65
======= ======= ======= ========
</TABLE>
<TABLE>
<CAPTION>
As of June 30,
---------------------
1999 2000
---------- ----------
<S> <C> <C>
Total assets:
North America........................................ $1,009,872 $1,011,248
Europe............................................... 19,358 13,189
Far East............................................. 3,433 1,281
---------- ----------
$1,032,663 $1,025,718
========== ==========
</TABLE>
Transactions between geographic areas are not significant.
(8) Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued SFAS 133,
"Accounting for Derivative Instruments and Hedging Activities". SFAS 133
establishes accounting and reporting standards requiring that every derivative
instrument be recorded in the balance sheet as either an asset or liability
measured at its fair value. This statement also requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. SFAS 133 will be effective for our fiscal
year ending December 31, 2001. Since we do not engage in hedging nor own any
derivatives, we believe that the adoption of SFAS 133 will not have a material
effect on our financial position or results of operations.
In December 1999, the Securities and Exchange Commission released Staff
Accounting Bulletin No. 101 ("SAB 101"), which provides guidance on the
recognition, presentation and disclosure of revenue in financial statements
filed with SEC. We were required to be in conformity with the provisions of
SAB 101 by the quarter ended June 30, 2000 and do not expect a material change
in our financial position or results of operations as a result of SAB 101.
However, Staff Accounting Bulletin No. 101B, "Second Amendment: Revenue
Recognition in Financial Statements" was issued to defer adoption of SAB 101
to the quarter ending December 31, 2000. We believe the adoption of SAB 101
will not result in a material change in our financial position or our results
of operations.
In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation--an interpretation of APB Opinion No. 25" ("FIN 44"). FIN 44
clarifies the application of APB No. 25 and among other issues clarifies the
following: the definition of
14
<PAGE>
KEY3MEDIA GROUP, INC.
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (Unaudited)--(Continued)
(in thousands, except per share amounts)
an employee for purposes of applying APB No. 25; the criteria for determining
whether a plan qualifies as a noncompensating plan; the accounting
consequences of various modifications to the terms of previously fixed stock
options or awards; and the accounting for an exchange of stock compensation
awards in a business combination. FIN 44 is effective July 1, 2000, but
certain conclusions in FIN 44 cover specific events that occurred after either
December 15, 1998 or January 12, 2000. The Company is in the process of
determining what impact, if any, the application of FIN 44 will have on its
financial position or results of operations.
(9) Subsequent Events
As described in Note 1, on August 3, 2000, the Company's wholly owned
subsidiary Key3Media Events entered into a credit facility with a syndicate of
banks which consists of two term loan facilities and a revolving credit
facility. The principal amount of the first term loan is $75 million which
will mature on August 3, 2005. The first term loan will be repaid quarterly in
annual amounts equal to 10% of the original principal amount of the loan in
the first year, 15% in the second year, 20% in the third year, 25% in the
fourth year and the remaining 30% in the fifth and final year. The principal
amount of the second term loan is $255 million which will mature on August 3,
2006. The second term loan will be repaid in equal quarterly amounts during
the final year of its term, subject to amortization of approximately 1% per
year prior to the final year. Key3Media Events borrowed $330 million under the
term loan facilities on August 18, 2000.
The revolving credit facility commits the banks to lend up to $50 million to
Key3Media Events for general corporate purposes. Key3Media Events may borrow,
repay and re-borrow under the revolving loan facility until August 3, 2005 at
which time Key3Media Events must repay any amounts outstanding under the
revolving credit facility.
At Key3Media Events' election, loans under the credit facility will bear
interest at a margin over, (1) the higher of the federal funds rate plus 1/2%
and Citibank, N.A.'s base rate or (2) the London interbank offered rate, or
LIBOR. The margin Key3Media Events pays will vary between 0.75% and 4.00%
depending on (a) what Key3Media Events chooses as its base rate and (b) the
ratio of its total debt to EBITDA.
On August 18, 2000, the Company issued zero coupon senior debentures with an
initial principal amount of $75 million. The purchasers paid $72,937,500 for
the debentures and the warrants described below. The principal amount of the
debentures will accrete at a rate of 12% per year, compounded quarterly, for
the first five years and 15% per year, compounded quarterly, after that. If
our consolidated ratio of debt to EBITDA in the previous four quarters is
higher than 4.50:1.00, the accretion rate will increase by 1.25% until the
ratio falls below 4.50:1.00 for the previous four quarters. The debentures
will mature in seven years and nine months.
The Company can redeem the debentures at any time before the first
anniversary of the issuance of the debentures at 112% of the initial principal
amount. On or after the first but before the fifth anniversary of the
issuance, we can redeem the debentures at 100% of their accreted principal
amount. On or after the fifth anniversary, we cannot redeem the debentures.
The purchasers of our debentures received warrants to purchase 6.8 million
shares of our common stock at $6.00 per share, subject to adjustment as
described below and to customary anti-dilution rights. Cashless exercise is
permitted and the warrants will expire seven years after they are issued,
except that if the number of shares that may be purchased upon exercise of the
warrants increases on any anniversary of the issue date, then the warrants
will expire as to those additional shares seven years after that anniversary.
(10) Unaudited Information
With respect to the unaudited financial information of Key3Media Group, Inc.
for the six month periods ended June 30, 2000 and 1999 incorporated by
reference in the S-8 registration statement dated August 23, 2000,
15
<PAGE>
KEY3MEDIA GROUP, INC.
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (Unaudited)--(Continued)
(in thousands, except per share amounts)
PricewaterhouseCoopers LLP reported that they had applied limited procedures
in accordance with professional standards for a review of such information.
However, their separate report dated August 31, 2000 incorporated by reference
therein and included herein, states that they did not audit and they do not
express an opinion on that unaudited financial information. Accordingly, the
degree of reliance on their report on such information should be restricted in
light of the limited nature of the review procedures applied.
PricewaterhouseCoopers LLP is not subject to the liability provisions of
Section 11 of the Securities Act of 1933 ("Act") for their report on the
unaudited financial information because that report is not a "report" or a
"part" of the registration statement prepared or certified by
PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the Act.
If the debentures are redeemed within 22 months after they are issued, the
number of shares that must be issued upon exercise of the warrants will
decrease by 523,000. If the debentures are still outstanding on the following
anniversaries, the number of shares that must be issued upon exercise of the
warrants will increase by 1.5 million on the second and third anniversaries of
the issuance of the debentures and by 1.75 million on the fourth and fifth
anniversaries.
16
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The discussion below should be read in conjunction with our historical
condensed combined financial statements and the notes thereto. Historical
results and percentage relationships set forth in the condensed combined
financial statements, including trends which might appear, should not be taken
as indicative of future operations. The Company considers portions of this
information to be forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934, both as amended, with respect to the Company's expectations for
future periods. Although the Company believes that the expectations reflected
in such forward-looking statements are based upon reasonable assumptions, it
can give no assurance that its expectations will be achieved. For this
purpose, any statements contained herein that are not statements of historical
fact may be deemed to be forward-looking statements. Without limiting the
foregoing, words like "will", "may", "believes", "expects", "anticipates",
"plans", and "estimates" and similar expressions are intended to identify
forward-looking statements. Because forward-looking statements involve risks
and uncertainties, there are many factors that could cause the actual results
to differ materially from those expressed or implied. These include, but are
not limited to, general economic conditions, the state of the information
technology industry, technological changes and developments, intellectual
property rights, competition, capital expenditures and factors impacting our
international operations. In addition, the Registration Statement on Form S-1
(File No. 333-3682) that we filed with the SEC contains important cautionary
statements and discusses many of the factors that could materially affect the
accuracy of our forward-looking statements and/or adversely affect our
business, results of operations and financial position under the captions
"Risk Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations", which statements and factors are
incorporated herein by reference.
Results of Operations
Three Months Ended June 30, 2000 Versus Three Months Ended June 30, 1999
Our total revenue increased $19.9 million, or 26.8%, to $93.9 million in the
second quarter of 2000 from $74.0 million in the comparable period in 1999.
Exhibitor services revenue increased by $6.8 million, or 13.9%, to $55.4
million in the second quarter of 2000 from $48.6 million in the comparable
period in 1999. This increase was attributable to a 1.8% increase in the
average rental rate per square foot paid by exhibitors to $56.43 from $55.41
and an increase of 10.0% in net square feet of exhibit space rented at our
events to 672,290 in the second quarter of 2000 from 611,039 in the comparable
period in 1999 along with a $2.5 million increase in the exhibition activity
at JavaOne during 2000 compared with 1999 and an 5.5% increase in the number
of exhibitors at our events to 1,292 from 1,225.
Conference fees increased $10.4 million, or 52.4%, to $30.3 million in the
second quarter of 2000 from $19.9 million in the comparable period in 1999.
This increase was attributable to a 22.5% increase in the number of
participants at the conferences that we offer at our events to 19,431 from
15,861. This increase also resulted from a 24.4% increase in the average
revenue per conference attendee in the second quarter of 2000 to $1,560
compared with $1,254 than in the comparable period in 1999. The increase in
conference attendees for the three months ended June 30, 2000 was due to more
specific customization and a greater number of programs offered at our JavaOne
and N+I events.
Advertising and sponsorship revenues increased $2.7 million, or 47.9%, to
$8.2 million in the second quarter of 2000 from $5.5 million in the comparable
period in 1999. This increase is attributable to the increased advertising and
sponsorship opportunities at N+I.
Cost of production increased $4.2 million, or 19.6%, to $25.5 million in the
second quarter of 2000 from $21.3 million in the comparable period in 1999. As
a percentage of revenue, these costs represented 27.1% of revenue compared to
28.8% in 1999.
SG&A expenses, including noncash stock based compensation expenses,
increased $6.7 million, or 32.5%, to $27.3 million in the second quarter of
2000 from $20.6 million in the comparable period in 1999. As a
17
<PAGE>
percentage of revenue, SG&A represented 29.1% of revenue in the second quarter
of 2000 compared to 27.8% in the comparable period in 1999. The increase in
SG&A as a percentage of revenue is primarily attributed to increased levels of
employment at our business locations in Massachusetts and California and the
addition of certain new senior managers in March of 2000.
As a result of the foregoing, EBITDA increased by $8.3 million, or 25.3%, to
$41.1 million in the second quarter of 2000 from $32.8 million in the
comparable period in 1999.
Depreciation and amortization increased $947,000 or 11.4%, to $9.2 million
in the second quarter of 2000 from $8.3 million in the comparable period in
1999. This increase is primarily due to additions of property and equipment.
The provision for income tax expense increased $2.5 million, or 33.8%, to
$10.0 million in the second quarter of 2000 from $7.5 million in the
comparable period in 1999. This increase is attributed to higher income before
taxes.
As a result of the foregoing, our net income increased $3.8 million, or
33.6%, to $15.1 million in the second quarter of 2000 from $11.3 million in
the comparable period in 1999.
Six Months Ended June 30, 2000 Versus Six Months Ended June 30, 1999
Our total revenue increased $22.0 million, or 23.7%, to $115.0 million in
the six months ended June 30, 2000 from $93.0 million in the comparable period
in 1999. Exhibitor services revenue increased by $7.0 million, or 11.4%, to
$68.1 million in the six months ended June 30, 2000 from $61.1 million in the
comparable period in 1999. This increase was attributable to a 3.0% increase
in the average rental rate per square foot paid by exhibitors to $53.00 from
$51.44 and an increase of 4.0% in net square feet of exhibit space rented at
our events to 870,733 in the six months ended June 30, 2000 from 836,956 in
the comparable period in 1999 along with a $2.5 million increase in the
exhibition activity at JavaOne during 2000 compared with 1999. There was a
0.9% decrease in the number of exhibitors at our events to 1,972 from 1,989
for the comparable period in 1999.
Conference fees increased $10.9 million, or 44.6%, to $35.5 million in the
six month ended June 30, 2000 from $24.5 million in the comparable period in
1999. This increase was attributable to a 21.3% increase in the number of
conference participants at our events to 25,474 from 21,007 and a 19.2%
increase in the average revenue per conference attendee in the six months
ended June 30, 2000 to $1,393 compared with $1,168 in the comparable period in
1999. This increase in conference attendees for the six months ended June 30,
2000 was due to more specific customization and a greater number of programs
offered at our JavaOne, N+I and Seybold Seminar events.
Advertising and sponsorship revenues increased $4.1 million, or 55.6%, to
$11.5 million in the six months ended June 30, 2000 from $7.4 million in the
comparable period in 1999. This increase is attributable to the increased
advertising and sponsorship opportunities at N+I.
Cost of production increased $4.5 million, or 15.4%, to $33.9 million in the
six months ended June 30, 2000 from $29.4 million in the comparable period in
1999. As a percentage of revenue these costs represented 29.5% of revenue in
2000 compared to 31.6% in 1999. Our cost of production decreased as a
percentage of our revenue because of the low fixed cost component of our
JavaOne, N+I and Seybold Seminar events.
SG&A expenses, including non cash stock based compensation expenses,
increased $9.7 million, or 25.2%, to $48.2 million in the six months ended
June 30, 2000 from $38.5 million in the comparable period in 1999. As a
percentage of revenue, SG&A represented 41.9% of revenue in the six months
ended June 30, 2000 compared to 41.4% for the six months ended June 30, 1999.
The increase in SG&A costs is due to an increase in personnel costs primarily
related to establishing the corporate office in Los Angeles and increased
contractor and temporary help responsible for information technology. These
are offset by a decrease in central service allocation charges from ZDI.
18
<PAGE>
As a result of the foregoing, EBITDA increased by $6.5 million, or 24.7% to
$33.0 million in the six months ended June 30, 2000 from $26.5 million in the
comparable period in 1999.
Depreciation and amortization decreased $1.0 million, or 5.0%, to $18.5
million in the six months ended June 30, 2000 from $19.4 million in the
comparable period in 1999. This decrease is primarily due to certain property
and equipment and intangible assets becoming fully depreciated or amortized in
the first quarter of 1999.
The provision for income tax expense increased $2.6 million, to $.9 million
in the six months ended June 30, 2000 from $(1.7) million in the comparable
period in 1999. This income is attributable to an increase in revenue at an
effective tax rate of 39.7%.
As a result of the foregoing, our net income increased $4.0 million, to $1.4
million in the six months ended June 30, 2000 from $(2.6) million in the
comparable period in 1999.
Liquidity and Capital Resources
Historically, the cash we generated from operating activities has exceeded
the cash we used in investing activities by significant amounts. We have used
cash in investing activities primarily to fund investments in property and
equipment and intangibles. For the six months ended June 30, 2000, we
generated net cash from operations of $57.5 million and used $1.7 million of
net cash in investing activities and for the six months ended June 30, 1999,
we had $39.1 million net cash provided by our operations and used $2.2 million
of net cash in investing activities. Prior to April 13, 2000 we, as a wholly-
owned subsidiary of ZDI, relied on ZDI's cash management and treasury
functions and remitted most of the cash we did not use in our business to ZDI,
which used it to fund its other businesses. We remitted $14.0 million to ZDI
during the six months ended June 30, 2000 and $66.2 million during the six
months ended June 30, 1999. As a result of these practices, we historically
had a working capital deficit and low cash balances. Since April 13, 2000, we
assumed responsibility for our cash management and treasury activities as if
we were an independent company. At June 30, 2000, we had a working capital
deficit of $16.2 million and cash and cash equivalents of $67.5 million. From
and after our spin-off from ZDI on August 18, 2000, we will no longer remit
any of our cash to ZDI and, as a result, unless we decide to prepay our
borrowings, we do not expect to have material working capital deficits in the
future.
Our cash flows are not as volatile as our revenues, because we receive
payments for events during the year but recognize them as revenue only when
the corresponding event occurs.
Capital expenditures for the six months ended June 30, 2000 were $1.7
million. We anticipate our capital expenditures for the balance of 2000 to
total approximately $13 million, including $2 million for tenant upgrades in
our newly leased corporate headquarters in Los Angeles and existing facilities
located in Needham, Massachusetts and Foster City, California, $4 million for
replacements and upgrades of property and equipment, $2 million for expanded
data center capacity to replace administrative services that were previously
provided by ZDI and $5 million for our new Internet initiatives.
On August 18, 2000 ZDI completed the previously announced spin-off of the
Company, a new company formed to hold ZDI's trade show and conference
business, to the holders of ZDI common stock. In connection with the spin-off,
we raised approximately $75 million through the issuance of zero coupon senior
debentures with detachable warrants and sold 11,641,950 common shares of our
common stock for $6 per share. Additionally our subsidiary Key3Media Events
borrowed $330 million from a syndicate of banks. The proceeds of these
transactions were used to repay and refinance Key3Media Events' existing
indebtedness of $382 million and to fund a cash dividend to ZDI of $43
million, and the balance were retained for working capital and general
corporate purposes.
Based upon current and anticipated levels of operations, management believes
that our cash on hand and cash flow from operations combined with borrowings
available under our credit facilities will be sufficient to enable us to meet
our cash operating requirements including venue rental payments, scheduled
interest and principal payments on debt and capital expenditures. We will,
however, be subject to general economic conditions and to financial, business
and other factors, including factors beyond our control.
19
<PAGE>
Seasonality
Our revenue is seasonal, because even though our customers pay us for an
event during the 12 months preceding the event, we do not recognize the
payments we receive as revenue until the event occurs. Historically, our
largest events occur in the second quarter (N+I, Las Vegas) and the fourth
quarter (COMDEX/Fall). As a result, the majority of our revenue is recorded in
these quarters. We may also experience seasonal fluctuations as events held in
one quarter in the current year may be held in a different quarter in future
years.
Inflation
The impact of inflation on our results of operations has not been
significant in recent years.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to various market risks, which includes the potential loss
arising from adverse changes in market rates and prices such as foreign
currency exchange and interest rates. We do not enter into derivatives or
other financial instruments for trading or speculative purposes. We do not
hedge our foreign currency rate risk; however, we expect to enter into
financial instruments to manage and reduce the impact of changes in interest
rates.
Currencies. We maintain operations, cash and other assets in Europe, Canada
and Asia. The results of operations and financial position of our foreign
operations are principally measured in their respective currency and
translated into U.S. dollars. As a result, exposure to foreign currency gains
and losses exists.
Interest. As a result of our August 18, 2000 spin off from ZDI, we rely
significantly on long-term floating rate debt in our capital structure. Our
new $330 million credit facility with a syndicate of banks requires that not
less than $165.0 million of the facility be covered by interest rate cap
agreements which eliminate our exposure to interest rate increases in LIBOR
above 9.5%. Notwithstanding the preceding, a one percentage point increase in
interest rates would result in a reduction of pretax earnings and cash flows
equal to $3.3 million.
20
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceeding
Legal proceedings are discussed in footnote 6 (Commitments and
Contingencies) contained in Part 1, Item 1--Notes to Condensed Combined
Financial Statements and such discussion is incorporated herein by reference.
Item 2. Changes in Securities
On August 18, 2000, a total of 65,000,000 shares of our voting common stock,
par value $0.01 per share, were sold or distributed. All of these shares were
registered under the Securities Act of 1933 by our Registration Statement on
Form S-1 (File No. 333-36828), which was declared effective by the Securities
and Exchange Commission on August 10, 2000. ZDI distributed 53,358,050 of our
shares to the holders of its ZD common stock for no consideration and we sold
the remaining 11,641,950 of our shares in an offering to new shareholders at
$6.00 per share. Proceeds of the offering were $69.9 million. No commissions
or other compensation was paid to anyone in connection with the offering and
ZDI paid all the expenses in connection with the offering and distribution
other than the discounts and commitment fees payable to the lenders as
described below and the New York Stock Exchange listing fees. We also received
aggregate net proceeds from the sale of our zero coupon senior debentures with
detachable warrants of $72.9 million (which reflects an issue discount of $2.1
million). Of the total proceeds of $142.8 million from the offering and the
sale of the debentures with warrants, we used $43.0 million to pay a dividend
to ZDI, retained $4.5 million and contributed the balance to our wholly-owned
subsidiary Key3Media Events. Key3Media Events used the contribution and the
net proceeds of $321.7 million from borrowings under its new credit facility
to repay its then outstanding borrowings of $150.0 million from external
lenders and $232.0 million from ZDI, and retained the balance for working
capital and general corporate purposes. Key3Media Events paid total commitment
fees of $8.3 million to the lenders under the new credit facility.
Item 4. Exhibits and Reports on Form 8-K
(a) Exhibits
The exhibit numbers in the following list correspond to the number
assigned to such exhibits in the Exhibit Table of Item 601 of
Regulation S-K:
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
15 Letter unaudited interim financial information
27 Financial Data Schedule for the three months ended June 30,
2000, filed herewith.
</TABLE>
(b) Reports on Form 8-K
No report on Form 8-K was filed by the Company during the three
months ended June 30, 2000.
21
<PAGE>
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.
/s/ Peter B. Knepper
-------------------------------------
Peter B. Knepper
Executive Vice President
Chief Financial and
Accounting Officer
September 6, 2000
22
