<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
- -----------------------------------------------------------------------
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: 1-9046
----------------------
Cablevision Systems Corporation
---------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 11-2776686
- ------------------------------- -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Media Crossways, Woodbury, New York 11797
- --------------------------------------- --------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 364-8450
------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Number of shares of common stock outstanding as of October 25, 1995:
Class A Common Stock 12,390,236
Class B Common Stock 11,573,709
- --------------------------------------------------------------------------------
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<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
--------------------- ---------------------
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenues . . . . . . . . . . . . . . . . . $ 787,293 $ 591,645 $ 278,158 $ 223,468
--------- --------- --------- ---------
Operating expenses:
Technical . . . . . . . . . . . . . . . . 302,385 215,202 109,142 80,562
Selling, general and. . . . . . . . . . .
administrative . . . . . . . . . . . . . 194,821 121,801 63,210 49,397
Restructuring charge. . . . . . . . . . . - 4,306 - -
Depreciation and amortization . . . . . . 236,788 175,954 77,251 65,859
--------- --------- --------- ---------
733,994 517,263 249,603 195,818
--------- --------- --------- ---------
Operating profit. . . . . . . . . . . 53,299 74,382 28,555 27,650
--------- --------- --------- ---------
Other income (expense):
Interest expense. . . . . . . . . . . . . (236,680) (188,724) (81,362) (70,138)
Interest income . . . . . . . . . . . . . 1,308 1,013 518 521
Share of affiliates' net losses . . . . . (73,090) (54,662) (20,398) (20,405)
Gain on sale of affiliate interests . . . 36,198 - 36,198 -
Write off of deferred financing costs . . (2,888) - - -
Provision for preferential payment to
related party. . . . . . . . . . . . . . (4,200) (4,200) (1,400) (1,400)
Minority interest . . . . . . . . . . . . (6,229) (1,656) (1,953) (1,656)
Miscellaneous . . . . . . . . . . . . . . (4,836) (4,885) (1,837) (1,453)
--------- --------- --------- ---------
(290,417) (253,114) (70,234) (94,531)
--------- --------- --------- ---------
Net loss . . . . . . . . . . . . . . . . . (237,118) (178,732) (41,679) (66,881)
Dividend requirements applicable to
preferred stocks. . . . . . . . . . . . . (7,272) (4,098) (2,354) (2,044)
--------- --------- --------- ---------
Net loss applicable to common
shareholders. . . . . . . . . . . . . . . $(244,390) $(182,830) $ (44,033) $ (68,925)
--------- --------- --------- ---------
--------- --------- --------- ---------
Net loss per common share. . . . . . . . . $ (10.29) $ (7.82) $ (1.85) $ (2.93)
--------- --------- --------- ---------
--------- --------- --------- ---------
Average number of common shares
outstanding (in thousands). . . . . . . . 23,745 23,386 23,812 23,511
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
See accompanying notes to
consolidated financial statements.
(2)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
ASSETS September 30, December 31,
1995 1994
-------- --------
(unaudited)
<S> <C> <C>
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . $ 21,950 $ 11,350
Accounts receivable trade (less allowance for doubtful accounts of
$12,216 and $10,087) . . . . . . . . . . . . . . . . . . . . . . . . 84,949 72,881
Notes receivable affiliates. . . . . . . . . . . . . . . . . . . . . . - 2,143
Notes and other receivables. . . . . . . . . . . . . . . . . . . . . . 18,543 14,280
Prepaid expenses and other assets. . . . . . . . . . . . . . . . . . . 18,244 20,794
Property, plant and equipment, net . . . . . . . . . . . . . . . . . . 941,853 886,028
Investments in affiliates. . . . . . . . . . . . . . . . . . . . . . . 143,141 42,954
Advances to affiliates . . . . . . . . . . . . . . . . . . . . . . . . 29,421 36,681
Feature film inventory . . . . . . . . . . . . . . . . . . . . . . . . 144,219 129,496
Franchises, net of accumulated amortization of
$296,447 and $240,609. . . . . . . . . . . . . . . . . . . . . . . . 380,848 436,686
Excess costs over fair value of net assets acquired and other
intangible assets, net of accumulated amortization of
$523,861 and $475,673. . . . . . . . . . . . . . . . . . . . . . . . 478,815 430,028
Deferred financing, acquisition and other costs, net of
accumulated amortization of $23,953 and $18,422. . . . . . . . . . . 48,853 50,949
Deferred interest expense, net of accumulated amortization of
$38,630 and $28,095. . . . . . . . . . . . . . . . . . . . . . . . . 31,608 42,143
----------- -----------
$ 2,342,444 $ 2,176,413
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to
consolidated financial statements.
(3)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
----------- -----------
(unaudited)
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
<S> <C> <C>
Accounts payable $ 119,634 $ 120,627
Accrued liabilities:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,826 39,322
Payroll and related benefits . . . . . . . . . . . . . . . . . . . . 45,668 34,085
Franchise fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,796 19,179
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113,576 86,047
Accounts payable to affiliates . . . . . . . . . . . . . . . . . . . . 16,235 22,273
Feature film rights payable. . . . . . . . . . . . . . . . . . . . . . 136,355 110,542
Bank debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,371,585 1,335,419
Senior debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 888,596 862,440
Subordinated debentures. . . . . . . . . . . . . . . . . . . . . . . . 623,590 623,534
Subordinated notes payable . . . . . . . . . . . . . . . . . . . . . . 141,268 141,268
Obligation to related party. . . . . . . . . . . . . . . . . . . . . . 191,579 193,079
Capital lease obligations and other debt . . . . . . . . . . . . . . . 7,610 13,496
----------- -----------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . 3,723,318 3,601,311
----------- -----------
Deficit investment in affiliates . . . . . . . . . . . . . . . . . . . 437,732 393,637
----------- -----------
Series G Redeemable Exchangeable Preferred Stock, $.01
par value, 4,500,000 shares authorized, 2,500,000
shares issued at September 30, 1995 ($100 per
share liquidation preference). . . . . . . . . . . . . . . . . . . . 250,000 -
----------- -----------
Commitments and contingencies
Stockholders' deficiency:
8% Series C Cumulative Preferred Stock, $.01 par value,
112,500 shares authorized, 110,622 shares issued
($100 per share liquidation preference) . . . . . . . . . . . . . 1 1
8% Series D Cumulative Preferred Stock, $.01 par value,
112,500 shares authorized, none issued ($100 per
share liquidation preference) . . . . . . . . . . . . . . . . . . - -
Series E Redeemable Exchangeable Convertible Preferred
Stock, $.01 par value, 100,000 shares authorized and
issued ($1,000 per share liquidation preference). . . . . . . . . 1 1
Class A Common Stock, $.01 par value, 50,000,000 shares
authorized, 12,338,111 and 11,850,242 shares issued . . . . . . . 123 119
Class B Common Stock, $.01 par value, 20,000,000 shares
authorized, 11,573,909 and 11,787,622 shares issued . . . . . . . 116 118
Par value in excess of capital contributed . . . . . . . . . . . . . (79,478) (74,016)
Accumulated deficit. . . . . . . . . . . . . . . . . . . . . . . . . (1,986,132) (1,741,521)
----------- -----------
(2,065,369) (1,815,298)
Less treasury stock, at cost (50,000 shares) . . . . . . . . . . . . (3,237) (3,237)
----------- -----------
Total stockholders' deficiency . . . . . . . . . . . . . . . . . . . (2,068,606) (1,818,535)
----------- -----------
$ 2,342,444 $ 2,176,413
----------- -----------
----------- -----------
</TABLE>
See accompanying notes
to consolidated financial statements.
(4)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
------ ------
<S> <C> <C>
Cash flows from operating activities:
Net loss. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . $(237,118) $(178,732)
--------- ---------
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization. . . . . . . . . . . . . . . . . . . 236,788 175,954
Share of affiliates' net losses. . . . . . . . . . . . . . . . . . 73,090 54,662
Minority interest. . . . . . . . . . . . . . . . . . . . . . . . . 6,229 1,656
Amortization of deferred financing . . . . . . . . . . . . . . . . 4,023 3,285
Amortization of deferred interest. . . . . . . . . . . . . . . . . 10,535 10,536
Amortization of debenture discount . . . . . . . . . . . . . . . . 56 111
Accretion of interest on debt. . . . . . . . . . . . . . . . . . . 29,272 26,382
Write off of deferred finance costs. . . . . . . . . . . . . . . . 2,888 -
Loss on sale of equipment. . . . . . . . . . . . . . . . . . . . . 3,174 2,098
Gain on sale of affiliate interests. . . . . . . . . . . . . . . . (36,198) -
Changes in assets and liabilities net of effects
of acquisitions:
Decrease (increase) in accounts receivable
trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,488) 8,753
Decrease in notes receivable, affiliates . . . . . . . . . . . 357 536
Increase in notes and other receivables. . . . . . . . . . . . (5,095) (5,981)
Decrease (increase) in prepaid expenses and
other assets. . . . . . . . . . . . . . . . . . . . . . . . . 454 (2,942)
Decrease (increase) in advances to affiliates. . . . . . . . . (4,335) 1,049
Decrease (increase) in feature film inventory. . . . . . . . . (14,723) 4,057
Increase (decrease) in accounts payable. . . . . . . . . . . . (2,167) 4,606
Increase in accrued interest . . . . . . . . . . . . . . . . . 11,504 19,049
Increase in accrued payroll and related
benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . 9,536 2,713
Decrease in accrued franchise fees . . . . . . . . . . . . . . (2,383) (5,191)
Increase (decrease) in accrued liabilities, other. . . . . . . 17,196 (6,622)
Increase (decrease) in feature film rights
payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,941 (4,283)
Increase in accounts payable to affiliates . . . . . . . . . . 1,434 2,925
--------- ---------
Total adjustments. . . . . . . . . . . . . . . . . . . . . . 352,088 293,353
--------- ---------
Net cash provided by operating activities. . . . . . . . . . . . . $ 114,970 $ 114,621
--------- ---------
</TABLE>
See accompanying notes
to consolidated financial statements.
(5)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(Dollars in thousands)
(Unaudited)
continued
<TABLE>
<CAPTION>
1995 1994
------ ------
<S> <C> <C>
Cash flows from investing activities:
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . $(188,946) $(198,913)
Proceeds from sale of plant and equipment. . . . . . . . . . . . . . 1,225 1,233
Additions to intangible assets . . . . . . . . . . . . . . . . . . . (928) (145)
(Increase) decrease in investments in affiliates, net. . . . . . . . (1,966) 2,615
Payments for acquisitions, net of cash acquired. . . . . . . . . . . (203,549) (675,627)
Proceeds from sale of affiliate interests. . . . . . . . . . . . . . 32,850 -
-------- --------
Net cash used in investing activities. . . . . . . . . . . . . . . (361,314) (870,837)
-------- --------
Cash flows from financing activities:
Issuance of bank debt to finance acquisitions. . . . . . . . . . . . 203,549 544,701
Issuance of subordinated notes payable and other debt. . . . . . . . - 145,268
Proceeds from bank debt. . . . . . . . . . . . . . . . . . . . . . . 264,292 168,912
Repayment of bank debt . . . . . . . . . . . . . . . . . . . . . . . (431,675) (170,804)
Proceeds from senior debt. . . . . . . . . . . . . . . . . . . . . . 6,500 2,500
Repayment of senior debt . . . . . . . . . . . . . . . . . . . . . . (9,616) (8,500)
Preferred stock dividends. . . . . . . . . . . . . . . . . . . . . . (7,493) (4,319)
Net proceeds from issuance of redeemable
exchangeable convertible preferred stock . . . . . . . . . . . . . 239,462 98,521
Issuance of common stock . . . . . . . . . . . . . . . . . . . . . . 5,078 7,954
Decrease in obligation to related party. . . . . . . . . . . . . . . (1,500) (1,505)
Payments of capital lease obligations and other debt . . . . . . . . (5,886) (2,039)
Additions to deferred financing and other costs. . . . . . . . . . . (5,767) (2,972)
-------- --------
Net cash provided by financing activities. . . . . . . . . . . . . 256,944 777,717
-------- --------
Net increase in cash and cash equivalents. . . . . . . . . . . . . . . 10,600 21,501
Cash and cash equivalents at beginning of year . . . . . . . . . . . . 11,350 12,944
-------- --------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . $ 21,950 $ 34,445
---------- ----------
---------- ----------
</TABLE>
See accompanying notes
to consolidated financial statements.
(6)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)
Note 1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Cablevision
Systems Corporation and its majority owned subsidiaries (the "Company") have
been prepared in accordance with the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted.
Note 2. RESPONSIBILITY FOR INTERIM FINANCIAL STATEMENTS
The consolidated financial statements as of September 30, 1995 presented in this
Form 10-Q are unaudited; however, in the opinion of management, such statements
include all adjustments, consisting solely of normal recurring adjustments,
necessary for a fair presentation of the results for the periods presented.
The interim financial statements should be read in conjunction with the audited
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1994.
The results of operations for the interim periods are not necessarily indicative
of the results that might be expected for future interim periods or for the full
year ending December 31, 1995.
Note 3. LOSS PER COMMON SHARE
Net loss per common share is computed based on the weighted average number of
common shares outstanding. Common stock equivalents were not included in the
computation as their effect would be to decrease net loss per share.
Note 4. CASH FLOWS
For purposes of the consolidated statements of cash flows, the Company considers
short-term investments with a maturity at date of purchase of three months or
less to be cash equivalents. The Company paid cash interest expense of
approximately
(7)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share amounts)
(Unaudited)
Note 4. CASH FLOWS (continued)
$181,290 and $129,361 for the nine months ended September 30, 1995 and 1994,
respectively. The Company's noncash financing activities for the nine months
ended September 30, 1994 included capital lease obligations of $4,020 incurred
when the Company entered into leases for new equipment.
Note 5. RECENT DEVELOPMENTS
On October 16, 1995, the Board of Directors of the Company elected
James L. Dolan to succeed Charles F. Dolan as Chief Executive Officer of the
Company effective immediately. Charles F. Dolan remains as Chairman of the
Board of the Company. James L. Dolan, a son of Charles F. Dolan, has been Chief
Executive Officer of Rainbow Programming Holdings, Inc. since 1992 and has been
a member of the Board of Directors of the Company since 1991.
On September 26, 1995, the Company issued 2.5 million shares of its 11-3/4%
Series G Redeemable Exchangeable Preferred Stock (the "Series G Preferred
Stock") with an aggregate liquidation preference of $250,000. The Company is
required to redeem the Series G Preferred Stock on October 1, 2007 at a
redemption price per share equal to the liquidation preference of $100 per
share, plus accrued and unpaid dividends thereon. Before October 1, 2000,
dividends may, at the option of the Company, be paid in cash or by issuing fully
paid and nonassessable shares of Series G Preferred Stock with an aggregate
liquidation preference equal to the amount of such dividends. On and after
October 1, 2000, dividends must be paid in cash. The terms of the Series G
Preferred Stock permit the Company, at its option, after January 1, 1996, to
exchange the Series G Preferred Stock for the Company's 11-3/4% Senior
Subordinated Debentures due 2007 (the "11-3/4% Debentures") in an aggregate
principal amount equal to the aggregate liquidation preference of the shares of
Series G Preferred Stock. The net proceeds of approximately $240,000 were
initially used to repay bank debt. The Company reborrowed $103,000 on
October 26, 1995 to redeem its outstanding Series E Preferred Stock.
(8)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
The following tables set forth on a historical basis certain items related to
operations as a percentage of net revenues for the periods indicated.
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS DATA
Nine Months Ended September 30,
---------------------------------------------
1995 1994
---------------------- ------------------- (Increase)
% of % of Decrease
Amount Revenues Amount Revenues in Net Loss
------ -------- ------ -------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Revenues . . . . . . . . . .$ 787,293 100% $ 591,645 100% $195,648
Operating expenses:
Technical. . . . . . . . . . 302,385 38 215,202 36 (87,183)
Selling, general &
administrative . . . . . 194,821 25 121,801 21 (73,020)
Restructuring charge . . . - - 4,306 1 4,306
Depreciation and
amortization . . . . . . 236,788 30 175,954 30 (60,834)
--------- --------- --------
Operating profit . . . . . . 53,299 7 74,382 13 (21,083)
Other expense:
Interest expense, net. . . (235,372) (30) (187,711) (32) (47,661)
Share of affiliates' net
loss. . . . . . . . . . (73,090) (9) (54,662) (9) (18,428)
Gain on sale of affiliate
interests . . . . . . . 36,198 5 - 36,198
Write-off of deferred
financing costs . . . . (2,888) - - - (2,888)
Provision for preferential
payment to related party (4,200) (1) (4,200) (1) -
Minority interest. . . . . (6,229) (1) (1,656) - (4,573)
Miscellaneous, net . . . . 4,836) (1) (4,885) (1) 49
--------- --------- --------
Net loss . . . . . . . . . .$(237,118) (30)% $(178,732) (30)% $(58,386)
--------- --------- --------
--------- --------- --------
OTHER OPERATING DATA:
Operating profit before
depreciation
and amortization (1) . . . $290,087 $ 250,336
Currently payable interest
expense, net . . . . . . . 192,794 148,410
Net cash provided by
operating activities (2) . 114,970 114,621
Net cash used in investing
activities (2) . . . . . . 361,314 870,837
Net cash provided by
financing activities (2) . 256,944 777,717
</TABLE>
(1) Operating profit before depreciation and amortization is presented here to
provide additional information about the Company's ability to meet future
debt service, capital expenditures and working capital requirements.
Operating profit before depreciation and amortization should be considered
in addition to and not as a substitute for net income and cash flows as
indicators of financial performance and liquidity as reported in accordance
with generally accepted accounting principles.
(2) See Item 1. - "Consolidated Statements of Cash Flows".
(9)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS DATA
Three Months Ended September 30,
---------------------------------------------
1995 1994
---------------------- ------------------- (Increase)
% of % of Decrease
Amount Revenues Amount Revenues in Net Loss
------ -------- ------ -------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Revenues. . . . . . . . . . . . . . $ 278,158 100% $ 223,468 100% $ 54,690
Operating expenses:
Technical . . . . . . . . . . . . 109,142 39 80,562 36 (28,580)
Selling, general &
administrative. . . . . . . . . 63,210 23 49,397 22 (13,813)
Depreciation and
amortization. . . . . . . . . . 77,251 28 65,859 29 (11,392)
--------- --------- --------
Operating profit. . . . . . . . . . 28,555 10 27,650 12 905
Other expense:
Interest expense, net . . . . . . (80,844) (29) (69,617) (31) (11,227)
Share of affiliates' net loss . . (20,398) (7) (20,405) (9) 7
Gain on sale of affiliate
interests. . . . . . . . . . . 36,198 13 - - 36,198
Provision for preferential
payment to related party. . . . (1,400) - (1,400) (1) -
Minority interest . . . . . . . . (1,953) (1) (1,656) (1) (297)
Miscellaneous, net. . . . . . . . (1,837) (1) (1,453) (1) (384)
--------- --------- --------
Net loss. . . . . . . . . . . . . . $ (41,679) (15)% $ (66,881) (30)% $ 25,202
--------- --------- --------
--------- --------- --------
OTHER OPERATING DATA:
Operating profit before
depreciation
and amortization (1). . . . . . . $105,806 $ 93,509
Currently payable interest
expense, net. . . . . . . . . . . 66,221 56,217
Net cash provided by
operating activities. . . . . . . 24,694 70,677
Net cash used in investing
activities. . . . . . . . . . . . 132,790 604,232
Net cash provided by
financing activities. . . . . . . 106,559 550,601
</TABLE>
(1) Operating profit before depreciation and amortization is presented here to
provide additional information about the Company's ability to meet future
debt service, capital expenditures and working capital requirements.
Operating profit before depreciation and amortization should be considered
in addition to and not as a substitute for net income and cash flows as
indicators of financial performance and liquidity as reported in accordance
with generally accepted accounting principles.
(10)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
ACQUISITIONS. In March 1994, the Company completed the acquisition of North
Coast Cable; in July 1994, the Company through Rainbow Programming Holdings,
Inc. ("Rainbow Programming") purchased an additional approximate 50% interest in
American Movie Classics Company ("AMCC"), giving Rainbow Programming a 75%
ownership interest in AMCC; and in August 1994, the Company consummated the
acquisition of Monmouth Cablevision Associates ("Monmouth Cable") and Riverview
Cablevision Associates, L.P. ("Riverview Cable" and collectively with Monmouth
Cable, "Monmouth/Riverview"). In addition, in July 1995, Rainbow Programming
consummated the purchase of the 50% interest in SportsChannel (New York)
Associates ("SCNY") and Rainbow News 12 Company ("RN12") that was previously
owned by National Broadcasting Company ("NBC"), whose results are now
consolidated with those of the Company. The foregoing acquisitions will
collectively be referred to as the "Acquisitions".
REVENUES for the nine and three months ended September 30, 1995 increased $195.6
million (33%) and $54.7 million (24%), respectively, when compared to the same
periods in 1994. Increases of 21% and 12%, respectively, for the nine and three
month periods were attributable to the Acquisitions, with the remaining increase
of 12% in each period resulting primarily from internal growth in the average
number of subscribers (approximately 147,500 (10%) for the nine month period)
and to increases in revenues attributable to other sources such as pay-per-view
and advertising.
TECHNICAL EXPENSES increased 40% and 35%, respectively, for the nine and three
months ended September 30, 1995 over the corresponding 1994 periods. Increases
of approximately 22% and 17% for the respective nine and three month periods
were directly attributable to the Acquisitions. The remaining 18% increase in
each period was due primarily to increases in those costs directly associated
with the internal growth in the average number of subscribers mentioned above as
well as to increases in programming rates for certain of the Company's cable
television services. As a percentage of revenues, technical expenses increased
2% and 3%, respectively, for the nine and three months ended September 30, 1995
over the same 1994 periods.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES increased 60% and 28%,
respectively, for the nine and three months ended September 30, 1995 over the
comparable 1994 periods. Increases of 24% and 9% for the respective periods
resulted from the Acquisitions. During 1995 and 1994, selling general and
administrative expenses include non-cash adjustments related to an incentive
stock plan. Excluding these adjustments, and the effects of the Acquisitions
discussed above, selling, general and administrative expenses would have
increased 20% and 34%, respectively, for the nine and three months ended
September 30, 1995 over the same 1994 periods primarily due to higher
administrative and customer service costs, and as a percentage of revenues,
would have increased 1% and 3% for the respective periods.
RESTRUCTURING CHARGE The Company recorded a one time charge in the first
quarter of 1994 to provide for employee severance and related costs, resulting
from a restructuring of its operations, which was undertaken in response to FCC-
mandated rate reductions in substantially all of the Company's cable television
systems.
(11)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
OPERATING PROFIT BEFORE DEPRECIATION AND AMORTIZATION increased 16% and 13%,
respectively, for the nine and three months ended September 30, 1995 compared to
the same periods in 1994 as a result of the combined effect of the revenue and
expense changes discussed above. Operating profit before depreciation and
amortization is presented here to provide additional information about the
Company's ability to meet future debt service, capital expenditures and working
capital requirements. Operating profit before depreciation and amortization
should be considered in addition to and not as a substitute for net income and
cash flows as indicators of financial performance and liquidity as reported in
accordance with generally accepted accounting principles.
DEPRECIATION AND AMORTIZATION EXPENSE increased 35% and 17%, respectively, for
the nine and three months ended September 30, 1995 over the comparable 1994
periods. Increases of approximately 36% and 37% were attributable to the
Acquisitions. Decreases of 1% and 20%, respectively, for the nine and three
month periods were the net result of increased depreciation charges on capital
expenditures made during 1995 and 1994, being more than offset by decreased
depreciation and amortization charges on assets which became fully depreciated
or amortized during the periods.
NET INTEREST EXPENSE increased 25% and 16%, respectively, for the nine and three
months ended September 30, 1995 compared to the same 1994 periods. Increases of
14% and 8%, respectively, were related to the Acquisitions. Remaining increases
of 11% and 8%, respectively, resulted primarily from higher average debt levels,
reflecting the capital expenditures referred to above, as well as from generally
higher interest rates.
SHARE OF AFFILIATES' NET LOSSES increased from $54.7 million to $73.1 million
for the nine months ended September 30, 1995 compared to the same 1994 period.
Such amounts consist primarily of the Company's share in the net losses of
certain cable affiliates which, for the nine months ended September 30, 1995 and
1994 amounted to $66.0 million and $55.8 million, respectively, and in the net
(income) losses of certain programming businesses, in which the Company has
varying ownership interests, which aggregated $7.1 million and $(1.1) million
for the respective periods.
GAIN ON SALE OF AFFILIATE INTERESTS resulted from the collection of previously
reserved interest of $15.5 million on advances to a cable television affiliate
which was sold during the third quarter of 1995 and to a gain of $20.7 million
on the sale of the Company's interests in a programming partnership.
WRITE OFF OF DEFERRED FINANCING COSTS in 1995 relates primarily to costs
associated with Rainbow Programming's original $105 million credit facility
which was replaced in January 1995 with a new $202 million facility.
PROVISION FOR PREFERENTIAL PAYMENT TO RELATED PARTY consists of the expensing of
the proportionate amount due with respect to an annual payment ($5.6 million)
made in connection with the acquisition of Cablevision of New York City ("CNYC")
in 1992.
(12)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
MINORITY INTEREST in 1995 represents NBC's share of the net income of AMCC.
LIQUIDITY AND CAPITAL RESOURCES
For financing purposes, the Company is structured as the Restricted Group,
consisting of Cablevision Systems Corporation and certain of its subsidiaries,
as well as an unrestricted group of certain subsidiaries which includes V Cable,
Inc. ("V Cable"), Rainbow Programming and Cablevision MFR, Inc. On October 14,
1994, Cablevision of New York City ("CNYC"), formerly an unrestricted
subsidiary, became a member of the Restricted Group.
The following table presents selected historical results of operations and other
financial information related to the captioned groups or entities for the nine
months ended September 30, 1995. (Rainbow Programming, Rainbow Advertising Sales
Corporation ("Rainbow Advertising"), AMCC, SCNY, and a radio station located in
Cleveland, Ohio are included in "Other Unrestricted Subsidiaries").
<TABLE>
<CAPTION>
Core Total Other Cablevision
Restricted Restricted Cablevision Unrestricted Systems
Group CNYC Group V Cable MFR Subsidiaries Corporation
---------- --------- ---------- --------- ----------- ------------ -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenues $348,773 $151,112 $ 499,885 $110,612 $ 57,526 $119,270 $ 787,293
Operating expenses:
Technical 128,761 69,946 198,707 44,122 19,074 40,482 302,385
Selling,
general and
administrative 53,330 38,555 91,885 15,760 8,769 78,407 194,821
Depreciation and
amortization 89,952 31,863 121,815 47,208 48,968 18,797 236,788
-------- -------- ---------- -------- -------- -------- ----------
Operating profit
(loss) $ 76,730 (1) $ 10,748 (1) $ 87,478 $ 3,522 $(19,285) $(18,416) $ 53,299
-------- -------- ---------- -------- -------- -------- ----------
-------- -------- ---------- -------- -------- -------- ----------
Currently payable
interest expense $113,048 $ 8,643 $ 121,691 $ 38,228 $ 20,956 $ 11,919 $ 192,794
-------- -------- ---------- -------- -------- -------- ----------
-------- -------- ---------- -------- -------- -------- ----------
Total interest
expense $114,970 $ 9,327 $ 124,297 $ 77,972 $ 21,302 $ 13,109 $ 236,680
-------- -------- ---------- -------- -------- -------- ----------
-------- -------- ---------- -------- -------- -------- ----------
Senior debt $814,363 $118,600 $ 932,963 $888,596 $206,200 $240,032 $2,267,791
-------- -------- ---------- -------- -------- -------- ----------
-------- -------- ---------- -------- -------- -------- ----------
Subordinated debt $623,590 $ - $ 623,590 $ - $141,268 (3) $ - $ 764,858
-------- -------- ---------- -------- -------- -------- ----------
-------- -------- ---------- -------- -------- -------- ----------
Obligation to related (2)
party $ - $191,579 (3) $ 191,579 $ - $ - $ - $ 191,579
-------- -------- ---------- -------- -------- -------- ----------
-------- -------- ---------- -------- -------- -------- ----------
Deficit investment in
affiliates $436,000 $ - $ 436,000 $ - $ - $ 1,132 $ 437,132
-------- -------- ---------- -------- -------- -------- ----------
-------- -------- ---------- -------- -------- -------- ----------
Capital expenditures $ 91,083 $ 65,392 $ 156,475 $ 18,694 $ 9,226 $ 4,738 $ 188,946 (4)
-------- -------- ---------- -------- -------- -------- ----------
-------- -------- ---------- -------- -------- -------- ----------
Ending Cable subscribers 957,000 382,000 $1,339,000 374,000 174,000 - 1,887,000
-------- -------- ---------- -------- -------- -------- ----------
-------- -------- ---------- -------- -------- -------- ----------
</TABLE>
(1) Includes management fees from CNYC of $5,287.
(2) Obligation of NYC LP Corp., a wholly-owned Restricted Group subsidiary,
relating to the CNYC acquisition.
(3) Guaranteed by the Restricted Group.
(4) Includes intercompany elimination of $187.
(13)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
RESTRICTED GROUP
On September 26, 1995, the Company issued 2,500,000 shares of its 11-3/4% Series
G Redeemable Exchangeable Preferred Stock (the "Series G Preferred Stock"). The
net proceeds of approximately $240 million were initially used to repay bank
debt. The Company reborrowed $103 million on October 26, 1995 to redeem its
outstanding Series E Preferred Stock.
On October 24, 1995, the Company commenced a public offering of its Series I
Cumulative Convertible Exchangeable Preferred Stock with an aggregate
liquidation preference of $300 million and of $250 million principal amount of
its Senior Subordinated Notes due 2005. The proceeds from these two offerings,
if completed, will be used to reduce existing bank debt and for general
corporate purposes. The Preferred Stock and the Notes are being offered under
the Company's Registration Statement on Form S-3, declared effective on
October 18, 1995.
On October 26, 1995, the Restricted Group, including CNYC, had total usage under
its $1.5 billion credit agreement (including credit facilities for CNYC and CNJ,
collectively the "Credit Agreement") of $1,046 million and letters of credit of
$20.4 million issued on behalf of the Company and CNYC. Unrestricted and
undrawn funds available to the Restricted Group under the Credit Agreement
amounted to approximately $433.6 million at October 26, 1995. The Credit
Agreement contains certain financial covenants that may limit the Restricted
Group's ability to utilize all of the undrawn funds available thereunder,
including covenants requiring the Restricted Group to maintain certain financial
ratios and restricting the permitted uses of borrowed funds.
As of October 26, 1995, the Company and CNYC had outstanding interest exchange
(swap and interest rate cap) agreements with several of their banks on a
notional amount of $275 million, on which the Company pays a fixed rate of
interest and receives a variable rate of interest for specified periods, with an
average maturity of two years. The average effective annual interest rate on
all bank debt outstanding as of September 30, 1995 was approximately 8.3%.
The Company believes for the Restricted Group that internally generated funds
together with funds available under its existing Credit Agreement will be
sufficient through December 31, 1996 to (i) meet its debt service and preferred
stock dividend requirements, including amortization requirements under the
Credit Agreement, (ii) fund its ongoing capital expenditures, including those
related to CNYC and the required upgrades under the New York upgrade agreement,
(iii) fund its anticipated investments in CNYC and the $5.6 million annual
payment to Charles F. Dolan in connection with the CNYC acquisition, (iv) fund
payments with respect to the proposed Cablevision of Boston Limited Partnership
acquisition and (v) fund any anticipated equity requirements in A-R Cable
Services, Inc. ("A-R Cable") and/or V Cable.
(14)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
The Company intends to incur additional expenditures to sufficiently upgrade its
plant to significantly increase its analog channel capacity and add new digital
channel capacity that will facilitate the startup of such adjunct businesses as
information services, video on demand and near video on demand, and residential
telephony. To implement successfully and roll out these adjunct new businesses
beyond the initial development phases, the Company will require additional
capital from the sale of equity in the capital markets or to a strategic
investor.
V CABLE
General Electric Capital Corporation ("GECC") has provided a term loan (the "V
Cable Term Loan") to V Cable in the amount of $26.6 million, as of September 30,
1995, which loan accretes interest at a rate of 10.62% compounded semi-annually
until December 31, 1997 (the reset date) and is payable in full on December 31,
2001. Under the credit agreement between VC Holding, Inc. ("VC Holding") and
GECC, GECC has extended to VC Holding a $501.9 million term loan (the "Series A
Term Loan"), a $265.4 million term loan (the "Series B Term Loan") and a
$25 million revolving line of credit (the "Revolving Line"). The Series A Term
Loan and any amounts drawn under the Revolving Line pay current cash interest
and mature on December 31, 2001. The Series B Term Loan does not pay cash
interest but rather accretes interest at a rate of 10.62% compounded
semi-annually until December 31, 1997 (the reset date) and is payable in full on
December 31, 2001. On October 26, 1995, VC Holding had no amounts outstanding
under the Revolving Line but did have letters of credit issued approximating
$0.9 million. Accordingly, unrestricted and undrawn funds under the VC Holding
Revolving Line amounted to approximately $24.1 million on October 26, 1995.
The VC Holding Credit Agreement also provides for the assumption by VC Holding
of certain loans of U.S. Cable Television Group, L.P. ("U.S. Cable"), the
present value of which amounted to $94.7 million at September 30, 1995.
The Company, V Cable and VC Holding have entered into a general, non-binding
letter of intent with GECC. In the transactions contemplated by the letter of
intent, the Company would issue to GECC preferred stock having an initial
aggregate liquidation preference of $500 million for an aggregate purchase
price of %500 million. Fifty percent of the preferred stock would become
convertible into the Company's Class A Common Stock four years after the
date of issuance and the remaining fifty percent would become convertible
into the Company's Class A Common Stock six years after the date of issuance
(unless conversion is accelerated upon an event of default), in each case,
in whole or in part, and at a conversion rate based upon the trading value
of the Class A Common Stock at the time of conversion. The terms of the
preferred stock would give the Company the right to redeem the preferred
stock for cash at any time prior to conversion although there can be no
assurance that the Company will be able to do so. It is also anticipated that
the Company would grant GECC registration rights with respect to the
preferred stock and to the Class A Common
(15)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
Stock issuable upon any conversion of such preferred stock. The Company would
make an equity capial contribution to V Cable of the gross proceeds from such
issuance and V Cable would apply such amounts as set forth below.
As part of the proposed transactions contemplated by the letter of intent
(together with the issuance of the preferred stock to GECC, the "Proposed
V Cable Transactions"), the $500 million capital contribution received by
V Cable would be applied as follows: (i) approximately $27 million to repay
V Cable's outstanding indebtedness to GECC; (ii) approximately $95 million to
repay to GECC a portion of the debt of U.S. Cable payable by V Cable under
certain circumstances; (iii) approximately $328 million to repay to GECC a
portion of VC Holding's indebtedness; and (iv) approximately $50 million would
be used by VC Holding to make a preferred capital contribution to U.S. Cable as
discussed below.
The Proposed V Cable Transactions also contemplate that V Cable will enter into
one or more agreements pursuant to which, following the receipt of any required
franchise and regulatory approvals, (i) the U.S. Cable partnership will redeem
the 80% of U.S. Cable's partnership interests not already owned by V Cable for
approximately $4 million, (ii) VC Holding will make a preferred capital
contribution to U.S. Cable of approximately $50 million, and (iii) the U.S.
Cable partnership will refinance $165 million of U.S. Cable indebtedness payable
to GECC.
As part of the Proposed V Cable Transactions, GECC would also agree to provide
two new credit facilities, a $325 million three year revolving credit facility
for V Cable's Ohio subsidiary (approximately $215 million of which would be
drawn upon entering into such agreement) and a $260 million two year revolving
credit facility for V Cable's Long Island subsidiary (approximately $224 million
of which would be drawn upon entering into such agreement). The initial amounts
drawn under the respective revolving credit facilities will be used to repay all
remaining VC Holding debt to GECC. Both the Ohio and Long Island credit
facilities would be entered into upon completion of final documentation and the
receipt of any required franchise or regulatory approvals.
The letter of intent between the Company and GECC is a general, non-binding
letter of intent. There can be no assurance that the Proposed V Cable
Transactions will be consummated or will be consummated in the form described in
the letter of intent. If the Proposed V Cable Transactions, or similar
transactions with respect to V Cable, fail to occur, then V Cable believes that
it is likely that it will be unable to meet certain of its financial covenants
as of December 31, 1995. To remedy the anticipated covenant defaults, V Cable
may request waivers and/or amendments to its credit agreement and/or seek equity
contributions from the Company's Restricted Group. During 1995, the Restricted
Group has made equity contributions aggregating $2.3 million to enable V Cable
to meet certain of its financial covenants. There can be no
(16)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
assurance as to V Cable's ability to accomplish either of these alternatives in
the future or the terms or timing of such alternatives. Assuming any covenant
defaults are waived or cured, V Cable anticipates that its cash flow from
operations and amounts available under the VC Holding revolving credit line will
be sufficient to service its debt, to fund its capital expenditures and to meet
its working capital requirements through 1996.
MONMOUTH AND RIVERVIEW
Monmouth/Riverview are party to a credit facility, as amended on May 12,
1995, with a group of banks led by NationsBank of Texas, N.A., as agent (the
"Monmouth/Riverview Credit Facility"). The maximum amount available to
Monmouth/Riverview under the Monmouth/Riverview Credit Facility is $285 million
with a final maturity at June 30, 2003. The facility is a reducing revolving
loan, with scheduled facility reductions beginning on March 31, 1996 resulting
in a 15% reduction by December 31, 1998. As of October 26, 1995,
Monmouth/Riverview had outstanding bank borrowings of $206.2 million.
Unrestricted and undrawn funds available to Monmouth/Riverview under the
Monmouth/Riverview Credit Facility amounted to approximately $78.8 million at
October 26, 1995. The Monmouth/Riverview Credit Facility contains certain
financial covenants that may limit Monmouth/Riverview's ability to utilize all
of the undrawn funds available thereunder, including covenants requiring
Monmouth/Riverview to maintain certain financial ratios. Under the terms of the
Monmouth/Riverview Credit Facility, Monmouth/Riverview is prohibited from
transferring funds to Cablevision MFR. The weighted average interest rate on
all bank indebtedness as of September 30, 1995 was approximately 8.5%.
Monmouth/Riverview has outstanding interest rate swap and cap agreements with
several banks on a notional amount of $130 million on which the Company pays a
fixed rate of interest and receives a variable rate of interest for specified
periods, with an average maturity of approximately one year.
The Company believes that for Monmouth/Riverview, internally generated funds
together with funds available under its existing credit agreement will be
sufficient to meet its debt service requirements including its amortization
requirements and to fund its capital expenditures through 1996.
(17)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
RAINBOW PROGRAMMING
On January 27, 1995, Rainbow entered into an amended and restated credit
facility with Toronto-Dominion (Texas), Inc., and Canadian Imperial Bank of
Commerce, as co-agents, and a group of banks for $202 million of which $108
million was drawn on such date to refinance Rainbow Programming's original $105
million credit facility. On July 12, 1995 Rainbow Programming consummated the
purchase of NBC's interests in SCNY and RN12 for approximately $95.5 million,
giving Rainbow Programming a 100% interest in SCNY and RN12. The purchase was
financed by an additional drawdown of $94 million under Rainbow Programming's
$202 million amended and restated credit facility and by a $2.5 million equity
contribution from the Company for the balance of the purchase price and related
fees. In July 1994, the proceeds of the initial $105 million loan under the
original facility plus $76 million of equity from the Company were used to
purchase Liberty Media Corporation's 50% interest in AMCC giving Rainbow
Programming a 75% ownership interest in AMCC. The credit facility is payable in
full at maturity on December 31, 1996 and bears interest at varying rates based
upon the banks' Base Rate or Eurodollar Rate, as defined in the credit
agreement. Repayment of the loan is anticipated to be made by Rainbow
Programming from one or a combination of the following: (i) internally generated
funds; (ii) refinancing the existing Rainbow Programming $202 million credit
facility; (iii) refinancing the existing $53 million credit agreement of AMCC
($38 million outstanding as of September 30, 1995); (iv) the sale of equity
interests in, or assets of, the programming businesses; and (v) advances from
the Restricted Group. The loan is secured by a pledge of the Company's stock in
Rainbow Programming and is guaranteed by the subsidiaries of Rainbow Programming
as permitted.
Rainbow Programming's financing needs have been funded by the Restricted Group's
investments in and advances to Rainbow Programming, by sales of equity interests
in the programming businesses and through separate external debt financing. The
Company expects that the future cash needs of Rainbow Programming's current
programming partnerships will increasingly be met by internally generated funds,
although certain of such partnerships will at least in the near future rely to
some extent upon their partners (including Rainbow Programming) for certain cash
needs. The partners' contributions may be supplemented through the sale of
additional equity interests in, or through the incurrence of indebtedness by,
such programming businesses.
(18)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
Part II. Other Information
Item 1. Legal Proceedings
The Company is party to various lawsuits, some involving substantial
amounts. Management does not believe that such lawsuits will have a
material adverse impact on the financial position of the Company.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
The index to exhibits is on page 21.
(b) The Company has filed Current Reports on Form 8-K with the
Commission on September 1, 1995, September 7, 1995 and on
October 17, 1995.
(19)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
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.
CABLEVISION SYSTEMS CORPORATION
Registrant
Date: October 27, 1995 /s/William J. Bell
--------------------- ---------------------------------------
By: William J. Bell, as Vice Chairman
of Cablevision Systems Corporation
Date: October 27, 1995 /s/Barry J. O'Leary
---------------------- ---------------------------------------
By: Barry J. O'Leary, as Senior Vice
President - Finance and Treasurer
and Principal Financial Officer of
Cablevision Systems Corporation
Date: October 27, 1995 /s/Jerry Shaw
---------------------- ------------------------------------------
By: Jerry Shaw, as Vice President and
Controller and Chief Accounting
Officer of Cablevision Systems
Corporation
(20)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
INDEX TO EXHIBITS
EXHIBIT PAGE
NO. DESCRIPTION NO.
- ------- ----------- ----
4.4 Certificate of Designations of the 11-3/4% Series G
Redeemable Exchangeable Preferred Stock (incorporated
herein by reference to Exhibit 3.1(d) to the Company's
Registration Statement on Form S-4 dated October 17,
1995, File No. 33-62717).
27 Financial Data Schedule
(21)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
Cable vision Systems Corporation
Financial Data Schedule
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 21,950
<SECURITIES> 0
<RECEIVABLES> 97,165
<ALLOWANCES> (12,216)
<INVENTORY> 144,219
<CURRENT-ASSETS> 0
<PP&E> 1,737,005
<DEPRECIATION> (795,152)
<TOTAL-ASSETS> 2,342,444
<CURRENT-LIABILITIES> 0
<BONDS> 3,224,228
<COMMON> 239
250,000
2
<OTHER-SE> (2,068,847)
<TOTAL-LIABILITY-AND-EQUITY> 2,342,444
<SALES> 0
<TOTAL-REVENUES> 787,293
<CGS> 0
<TOTAL-COSTS> 302,385
<OTHER-EXPENSES> 236,788
<LOSS-PROVISION> (11,034)
<INTEREST-EXPENSE> 236,680
<INCOME-PRETAX> (237,118)
<INCOME-TAX> 0
<INCOME-CONTINUING> (237,118)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (237,118)
<EPS-PRIMARY> (10.29)
<EPS-DILUTED> 0<F1>
<FN>
<F1>Not presented as the resultant computation would be a decrease in net loss
per share and therefore not meaningful.
</FN>
</TABLE>
