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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
Commission File Number: 0-16099
Telemundo Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware 13-3348686
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2290 West 8th Avenue
Hialeah, Florida 33010
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (305) 884-8200
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act:
Series A Common Stock, $.01 Par Value
Series A Common Stock Purchase Warrants
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 ____
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Indicate by check mark whether the Registrant has filed
all documents and reports required to be filed by Section 12,
13 or 15(d) of the Securities Exchange Act of 1934 subsequent
to the distribution of securities under a plan confirmed by a
court. Yes __X__ No ___
As of March 27, 1995, 10,000,000 shares of the Common
Stock of Telemundo Group, Inc. were outstanding, and the
aggregate market value of the voting stock held by
nonaffiliates was approximately $48,532,000. Directors,
officers and 10% or greater stockholders are considered
affiliates for purposes of this calculation but should not be
deemed affiliates for any other purpose.
Documents Incorporated by Reference:
(1) Portions of Telemundo Group, Inc. 1994 Annual Report to
Stockholders -- Parts II and IV.
(2) Portions of Telemundo Group, Inc. Proxy Statement for the
1995 Annual Meeting of Stockholders -- Part III.
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TABLE OF CONTENTS
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Page
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PART I
Item 1. BUSINESS............................................. 1
Item 2. PROPERTIES........................................... 13
Item 3. LEGAL PROCEEDINGS.................................... 14
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.. 14
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.......................... 14
Item 6. SELECTED FINANCIAL DATA.............................. 14
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION................... 14
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.......... 15
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.................. 15
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT... 15
Item 11. EXECUTIVE COMPENSATION............................... 15
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT....................................... 15
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...... 15
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K......................................... 15
PART I
Item 1. BUSINESS
Telemundo Group, Inc., together with its subsidiaries
(collectively, the "Company" or "Registrant"), is a Spanish-
language television network that, through its owned and
operated stations and affiliates, serves 53 markets in the
continental United States, including the 32 largest Hispanic
markets, and reaches approximately 86% of all U.S. Hispanic
households. U.S. Hispanics presently constitute approximately
10% of the U.S. population and are projected to be the largest
minority group in the United States by the year 2000. The
Company also owns and operates a television station and related
production facilities in Puerto Rico. The Company also
produces Spanish-language programming for use on its network
and for sale in foreign countries and sells advertising time on
behalf of its owned and operated television stations and
affiliates.
The Company currently owns and operates the following full-
power Spanish-language television stations in the continental
United States: (i) KVEA, serving the Los Angeles market, (ii)
WNJU, serving the New York market, (iii) WSCV, serving the
Miami-Ft. Lauderdale market, (iv) KTMD, serving the Houston-
Galveston market, (v) KVDA, serving the San Antonio market and
(vi) KSTS, serving the San Francisco-San Jose market. In
addition, the Company owns and operates 12 low-power television
stations. The Company's affiliates include 32 television
stations and 73 cable affiliates that receive the Company's
signal directly from the satellite. The signal from the
Company's owned and operated stations and affiliates also is
carried on an additional 541 cable systems throughout the
United States. The Company also owns and operates WKAQ-TV,
serving Puerto Rico. Unless otherwise indicated, references to
the United States in this Annual Report on Form 10-K exclude
Puerto Rico.
The Company also is a lead partner in TeleNoticias del
Mundo, L.P. ("TeleNoticias"), which launched a 24-hours-per-day
Spanish-language news service in December 1994. The service
originates from the Company's network operations center near
Miami, Florida and is distributed in the United States and 16
countries in Latin America and Europe.
General Development of Business
The Company was organized in May 1986 under the laws of
Delaware and is the successor to John Blair & Company, formerly
a diversified communications company ("Blair"). The Company
began its United States network with three television stations
in January 1987, providing approximately 18 hours per week of
network programming. The Company now transmits Spanish-
language programming 24-hours-per-day to its network of owned
and operated stations and affiliates in the United States. The
Company, through its owned and operated stations and
affiliates, has increased its coverage of all U.S. Hispanic
households from 65% at the beginning of 1989 to approximately
86% in March 1995.
In June 1993, certain holders of the Company's outstanding
public debt and the indenture trustee for such debt filed an
involuntary petition against Telemundo Group, Inc. for
reorganization under Chapter 11 of the Bankruptcy Code in the
United States Bankruptcy Court for the Southern District of New
York (the "Bankruptcy Court"). The petition was filed solely
against Telemundo Group, Inc. and did not include its
subsidiaries. At the time of the involuntary filing, the
Company was in default on its public indebtedness, aggregating
approximately $309 million (including interest). On July 30,
1993, Telemundo Group, Inc., after reaching an agreement in
principle with its major creditors on a financial
restructuring, consented to the entry of an order for relief
under Chapter 11 of the Bankruptcy Code.
On July 20, 1994, the Bankruptcy Court confirmed the
Company's Second Amended Chapter 11 Plan of Reorganization
dated April 29, 1994 (the "Plan"). On December 30, 1994 (the
"Consummation Date"), the Company consummated the Plan.
Pursuant to the Plan, as of the Consummation Date, all of the
Company's then-outstanding debt as well as all of its then-
outstanding common stock and other securities were canceled.
Holders of the canceled debt as well as certain other claimants
received on the Consummation Date various combinations of cash;
new 10.25% Senior Notes due December 30, 2001 (the "Senior
Notes"); new Common Stock, $.01 par value ("Common Stock"),
divided into two series, Series A ("Series A Common Stock") and
Series B ("Series B Common Stock"); or five-year warrants to
purchase Series A Common Stock at an exercise price of $7.00
per share ("Warrants"). A total of approximately $36,000,000
in cash; $116,888,000 principal amount of Senior Notes;
4,388,394 shares of Series A Common Stock; 5,611,606 shares of
Series B Common Stock (for a total of 10,000,000 shares of
Common Stock); and 639,750 Warrants were distributed in
accordance with the Plan.
Immediately prior to the Consummation Date, Reliance Group
Holdings, Inc. or its subsidiaries (collectively, "Reliance")
owned or controlled 58.4% of the Company's then-outstanding
common stock. Following the Consummation Date and pursuant to
the Plan, Reliance's holdings of the new Common Stock were
reduced to approximately 10.2% of the total Common Stock
outstanding, all of which is Series A Common Stock. In
addition, Reliance was issued warrants to purchase 416,667
shares of Series A Common Stock at an exercise price of $7.19
per share, exercisable in three equal annual installments
beginning December 30, 1995 and for five years from the date
the options become exercisable.
Narrative Description of Business
The Company's principal source of revenue is the sale of
network advertising time on its network and the sale of local
and national spot advertising time on the Company's owned and
operated television stations. Additionally, the network and
several of the Company's stations sell blocks of air time
during non-network programming hours to independent programmers
("block time programmers").
The Company's Television Network
The Company's television network covers 53 markets in the
continental United States, including the 32 largest Hispanic
markets, and reaches approximately 86% of all U.S. Hispanic
households. Coverage in the United States is achieved through
six full-power and 12 low-power owned and operated television
stations, and 32 independent television broadcast stations and
73 cable systems affiliated with the Company by agreement. The
signal from the Company's owned and operated stations and
affiliates also is carried on an additional 541 cable systems
throughout the United States. In certain markets where the
Company either does not own and operate or is not affiliated
with a full-power television broadcast station, coverage of the
market is achieved through one or more low-power television
stations, cable carriage, or a combination of low-power
television stations and cable systems.
Network programming for the Company's owned and operated
stations and affiliates is transmitted 24-hours-per-day via
satellite from the Company's network operations center near
Miami, Florida.
The Company's Television Stations
The Company owns and operates seven full-power and 12 low-
power Spanish-language television stations in the United States
and Puerto Rico. Population statistics in the following
discussion are from A.C. Nielsen Company's NHTI Universe
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Estimates 1995, unless otherwise indicated.
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Full-Power Stations. The Company's owned and operated
full power stations broadcast network programming and produce
and broadcast local news and other programming. Each full
power station also sells certain time to block time
programmers. The following table sets forth certain
information about the Company's owned and operated full-power
Spanish-language television stations:
Number of Other
Ranking of Full-Time
Approximate Market by Size Spanish-language
Hispanic of Hispanic Television
Households Households in Stations
Station and in Market the Continental Operating in
Market Served Area United States Market Area(a)
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KVEA, Channel 52 1,268,000 1 2(b)
Los Angeles, CA
WNJU, Channel 47 902,000 2 1(c)
New York, NY
WSCV, Channel 51 419,000 3 3(d)
Miami-Ft.
Lauderdale, FL
KTMD, Channel 48 269,000 4 2(e)
Houston-Galveston, TX
KVDA, Channel 60 268,000 5 2(f)
San Antonio, TX
KSTS, Channel 48 264,000 7 2(g)
San Francisco-
San Jose, CA
WKAQ-TV, Channel 2 1,064,000* N/A 6(h)
San Juan, PR
_______________________
(a) The Company and each of its Spanish-language competitors
broadcast over UHF, except in Puerto Rico, where WKAQ-TV and
its three major competitors broadcast over VHF. The
Company's principal competitor, the Univision Group, owns a
Spanish-language station in each of the continental U.S.
markets that are served by the Company's owned and operated
full-power stations. Independent Spanish-language stations
also broadcast in the Los Angeles, Miami, Houston, San
Antonio and San Francisco broadcast markets. The
independent stations in Los Angeles and Houston and one of
the independent stations in Miami are full-power stations.
(b) Seven VHF stations and twelve other UHF stations broadcast
in English.
(c) Seven VHF stations and twelve other UHF stations broadcast
in English.
(d) Five VHF stations and five other UHF stations broadcast in
English.
(e) Four VHF stations and seven other UHF stations broadcast in
English.
(f) Four VHF stations and three other UHF stations broadcast in
English.
(g) Five VHF stations and seven other UHF stations broadcast in
English.
(h) Consists of four VHF and two UHF stations. Another VHF
station and a UHF station broadcast predominantly in
English.
*Source: Mediafax, Television Audience Measurements Puerto Rico,
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December 1994.
Los Angeles: The Company owns and operates KVEA, Channel
52, licensed to Corona, California and serving the Los Angeles
market. KVEA, which began operating a Spanish-language station
in 1985, serves the largest U.S. Hispanic market, representing
approximately 21% of the total U.S. Hispanic population. There
are an estimated 5.1 million Hispanics in the Los Angeles Direct
Marketing Area ("DMA"), constituting approximately 36% of the
Los Angeles DMA population. DMA is a term developed by A.C.
Nielsen Company, a national media rating service ("Nielsen"),
and is used in the television industry to describe a distinct
television market geographically.
New York: The Company owns and operates WNJU, Channel 47,
licensed to Linden, New Jersey and serving the New York
metropolitan market. WNJU, which began operating as a Spanish-
language station in 1965, serves the second largest U.S.
Hispanic market, representing approximately 12% of the total
U.S. Hispanic population. The current Hispanic population in
the New York DMA is estimated to be approximately 2.8 million,
or 16% of the New York DMA population.
Miami: The Company owns and operates WSCV, Channel 51,
licensed to Ft. Lauderdale, Florida and serving the Miami-Ft.
Lauderdale market. WSCV began operating as a Spanish-language
television station in 1985. WSCV serves the third largest U.S.
Hispanic market, representing approximately 5% of the Hispanic
population in the United States. An estimated 1.2 million
Hispanics reside in the Miami DMA, constituting approximately
36% of the Miami DMA population.
Houston: The Company owns and operates KTMD, Channel 48,
licensed to Galveston, Texas, which serves the Houston-Galveston
market. KTMD began operating as a Spanish-language station in
1987. The Houston-Galveston market is the fourth largest
Hispanic market in the United States. The Hispanic population
in the Houston DMA (which includes Houston and Galveston) is
approximately 944,000, or approximately 23% of the Houston DMA population.
San Antonio: The Company owns and operates KVDA, Channel
60, serving the San Antonio, Texas market. KVDA began operating
as a Spanish-language station in 1989. The San Antonio market is
the fifth largest Hispanic market (in terms of television
households) in the United States. The Hispanic population in
the San Antonio DMA is approximately 877,000, or approximately
50% of the San Antonio DMA population.
San Francisco: The Company owns and operates television
station KSTS, Channel 48, licensed to San Jose, California and
serving the San Francisco-San Jose market. KSTS began operating
as a Spanish-language station in 1987. The San Francisco-San
Jose Hispanic market is the sixth largest Hispanic market in the
United States. The Hispanic population in the San Francisco
DMA, which includes San Jose, is approximately 940,000, or
approximately 16% of the San Francisco DMA population.
San Juan: The Company owns and operates television station
WKAQ-TV ("WKAQ") (Channel 2 in San Juan), which together with
its affiliate, WOLE (Channel 12 in Mayaguez), and its translator
facilities, cover virtually all of Puerto Rico. WKAQ has
operated as a Spanish-language television station since 1954.
The current population of Puerto Rico is approximately 3.3
million.
Low-Power Stations. The Company owns and operates 12 low-
power television stations and has received permission from the
Federal Communications Commission ("FCC") to build three
additional low-power television stations. Low-power television
stations and "translator stations" (collectively, "LPTVs")
generally operate at significantly lower levels of power than
full-power stations, and their signals generally cover smaller
areas than those covered by full-power stations. Under FCC
rules, LPTVs operate on a secondary basis and are subject to
displacement. Under the 1992 Cable Act (described below), LPTVs
have very limited cable carriage rights. See "--FCC
Regulation." The Company's LPTVs operate with minimal staff and
generally do not originate programming or have their own sales
forces.
Santa Fe: The Company owns and operates K52BS, Channel 52,
formerly an affiliate of the Company. K52BS is located in the
Albuquerque DMA, in which an estimated 531,000 Hispanics reside.
Sacramento: During 1991 and 1992, the Company began
operating three LPTVs in the Sacramento DMA. The LPTVs
broadcast the signal of KSTS, the Company's owned and operated
station serving the San Francisco-San Jose market. An estimated
472,000 Hispanics live in the Sacramento DMA.
Boston: In March 1995, the Company began operating an LPTV
in Boston, Massachusetts. An estimated 248,000 Hispanics reside
in the Boston DMA.
Austin: The Company owns and operates K11SF, Channel 11,
formerly an affiliate of the Company. An estimated 208,000
Hispanics reside in the Austin DMA.
Salinas: The Company owns and operates K15CU, Channel 15 in
the Salinas-Monterey market. K15CU broadcasts the signal of
KSTS, the Company's owned and operated station. An estimated
192,000 Hispanics reside in the Salinas-Monterey DMA.
Odessa-Midland: The Company owns and operates K60EE,
Channel 60, in Odessa, Texas and K49CD, Channel 49, in Midland,
Texas. The Hispanic population in the Odessa-Midland DMA is
approximately 131,000.
Santa Maria: The Company owns and operates K27EI, Channel
27, in Santa Maria, California. Santa Maria is located in the
Santa Barbara DMA. The Hispanic population of the Santa Barbara
DMA is approximately 132,000 (approximately one quarter of whom
are reached by the Santa Maria LPTV).
Colorado Springs: The Company owns and operates K49CJ,
Channel 49, formerly an affiliate of the Company. K49CJ
rebroadcasts the signal of the Company's Denver affiliate. An
estimated 106,000 Hispanics reside in the Colorado Springs DMA.
Salt Lake City: The Company constructed an LPTV in Salt
Lake City in 1993, which began broadcasting in February 1994.
In addition, the FCC has granted the Company a permit to
construct an LPTV in Ogden, Utah, which is part of the Salt Lake
City DMA. It is anticipated that the Ogden LPTV will commence
broadcasting in the third quarter of 1995. The Hispanic
population of the Salt Lake City DMA is approximately 105,000.
Amarillo: In February 1994, the Company was granted a
permit to construct an LPTV in Amarillo, Texas. It is
anticipated that this LPTV will commence broadcasting in the
third quarter of 1995. An estimated 87,000 Hispanics reside in
the Amarillo DMA.
Abilene: In September 1993, the Company was granted a
permit to construct an LPTV in Abilene, Texas. It is
anticipated that this LPTV will commence broadcasting in the
second quarter of 1995. An estimated 44,000 Hispanics reside
in the Abilene DMA.
Affiliates
The Company currently has affiliation agreements with 105
affiliates serving 42 Hispanic markets in the United States.
The Company's affiliates in these markets, which consist of 32
television broadcast stations and 73 cable affiliates that take
the network's signal directly from the satellite, add an
additional 2.2 million Hispanic households to the network's
total coverage.
The Company's current contracts with its affiliates
generally have two to five year terms and some provide for
compensation to the affiliate. The Company provides its
affiliates with programming and retains network advertising
spots, and the related revenue, during a portion of the
commercial advertising time available during such programming.
The Company also acts as the exclusive representative of the
affiliates for national and regional spot advertising sales, and
receives a commission on such sales. Advertising sales
representation services may be provided to affiliated stations
not owned by the Company by reason of a waiver of FCC
regulations granted by the FCC. Revenue from the Company's
representation services represented less than 1% of the total
revenue of the Company in 1994.
Programming
The Company currently transmits via satellite to its owned
and operated stations and affiliates 24 hours of Spanish-
language programming per day, including movies, novelas (soap
operas), variety shows, national and international news, music,
talk and entertainment shows, children's shows, public affairs
programs and sporting events. Approximately 50% of the
Company's network programming is produced in the United States,
primarily by the Company. The balance of the Company's
programming is purchased from various distributors of Spanish-
language programming, located primarily in South America and
Mexico.
The Company's programming schedule includes Ocurrio Asi, a
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news magazine format program; Sevcec, the Company's talk show
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format program; five major movie blocks, including Cine
----
Millonario, a prime time movie showcase; and Padrisimo, a
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musical variety program. In 1993, the Company began producing
national and international network news programs at its network
operations center. In December 1994, pursuant to the agreement
among the partners in the venture, TeleNoticias assumed
production of the Company's network news programs.
To attempt to counteract a decline in network ratings, the
Company recently formed a new Los Angeles-based production unit
that is initially scheduled to produce three hours of network
programming per weekday. This production unit will permit the
Company to address specifically the interests and culture of the
largest cross-section of Hispanics in the United States.
The programming lineup of WKAQ in San Juan differs from
those of the Company's other owned and operated stations but
includes 18 hours per week of network programming. Through its
own production studios in Puerto Rico, WKAQ produces or co-
produces approximately 24 hours of programming weekly for its
own use, including miniseries, news, public affairs, music,
variety and comedy shows primarily directed toward the Puerto
Rican market. WKAQ also broadcasts United States syndicated
programming dubbed in Spanish, in addition to programming
originating in Latin America and Europe.
The Company also sells the rights to broadcast its original
programming in foreign countries. Revenue from the
international syndication of the Company's programming
represented less than 2% of the Company's revenue in 1994.
TeleNoticias
In July 1994, the Company entered into a partnership
agreement with subsidiaries of Reuters Holdings PLC, an
international news and information organization, Antena 3 de
Television, S.A., a Spain media company, and Arte
Radiotelevisivo Argentino S.A., an Argentina media company, to
launch TeleNoticias, a 24-hours-per-day international Spanish-
language news service with distribution in Latin America, the
United States and Europe. The service, which commenced
transmitting in December 1994, originates from the Company's
network operations center in Hialeah, Florida. The service is
distributed in 17 countries, including the United States,
Mexico, Spain, Venezuela and Chile.
The Company holds a 42% interest in TeleNoticias. The
Company provides certain services to TeleNoticias, including
the use of a news studio and satellite uplink facilities at the
Company's network operations center. Pursuant to contract,
TeleNoticias produces the Company's network news programs and
provides certain other news services.
Sales and Marketing
The Company has a network and national spot sales and
marketing force, including account executives and sales managers
with backgrounds in both Spanish-language and English-language
television, to sell advertising time broadcast over the
Company's entire network (network sales) and to sell advertising
time in markets covered by the Company's owned and operated
stations and affiliates (national spot sales). The Company has
sales offices in New York, Los Angeles, Miami, Chicago, San
Francisco, San Antonio, Dallas and Orange County, California.
In addition, each owned and operated full-power station has a
sales and marketing force to sell local and national spot
advertising on its behalf.
The Company and its owned and operated television stations
sell their advertising time to a broad and diverse group of
advertisers, none of whom accounted for 10% or more of the
Company's 1994 total revenue.
Competition
The Company's owned and operated television stations and
affiliates face competition for advertising revenue from other
Spanish-language television stations serving the same markets
and competing for the same viewers, including those carried on
cable television, and from other Spanish-language and English-
language media, including television stations, cable channels,
radio stations, magazines, newspapers, movies, videocassettes
and other forms of entertainment. The English-language media
are generally better developed and better capitalized than the
Spanish-language media in the United States.
The Company's principal Spanish-language television
competitor is the Univision Group ("Univision"), which was
acquired by A. Jerrold Perenchio, Grupo Televisa, S.A. de C.V.
("Televisa"), a Mexican media company, and Corporacion
Venezolana de Television, C.A. ("Venevision"), a Venezuelan
media company, in December 1992. In each of the markets in
which the Company owns and operates full-power stations, except
Puerto Rico, the Company's stations compete directly with full-
power Univision stations. The Univision stations and the
Univision network affiliates together reach a larger percentage
of Hispanic viewers in the United States than the Company's
stations and affiliates. Generally, the Univision stations have
been operating in their markets longer than have the Company's
competing stations.
In a related transaction, Univision entered into an
agreement with Televisa to manage the Galavision cable network
("Galavision"). Univision also obtained an option to acquire
Galavision in 1996. Galavision, which has operated primarily as
a Spanish-language cable television network since 1980 and
serves approximately 1.5 million subscribers, also competes with
the Company. Both Televisa and Venevision have entered into
long term contracts to supply Spanish-language programming to
the Univision and Galavision networks.
Televisa is the largest producer of Spanish-language
programming in the world, substantially all of which is
produced in Mexico. Because of the supply contracts between
Televisa and Univision, Univision has a competitive advantage
in obtaining programming originating from Mexico.
There are several independent Spanish-language television
stations that broadcast, on a full-time or part-time basis, in
markets in which the Company owns and operates stations.
Independent Spanish-language television stations compete with
Company-owned stations in the Los Angeles, Miami, Houston, San
Antonio and San Francisco broadcast areas. The independent
station in Los Angeles has a program supply agreement with
Televisa. The independent stations in Los Angeles and Houston
and one of the independent stations in Miami are full-power
stations.
WKAQ has three significant Spanish-language television
station competitors. In addition, three other Spanish-language
television stations operate in Puerto Rico.
Competitive success of a television station depends
primarily on public response to the programs broadcast by the
station and this affects the revenue earned by the station from
the sale of advertising time. In addition to programming,
factors determining competitive position include management
ability and experience, marketing, research and promotional
efforts.
In recent years, the FCC has adopted policies providing for
authorization of new technologies and a more favorable operating
environment for certain existing technologies that have the
potential to provide additional competition for television
stations. The broadcasting industry at both the national and
local level faces increasing competition from cable program
networks and other non-broadcast video program distributors.
Broadcasters also face continuous changes in technology, such as
the introduction of digital signal compression, which creates
the potential for distribution of vast amounts of video
programming by cable system operators and telephone companies,
as well as governmental restrictions or actions of federal
regulatory bodies, including the FCC. Each of these factors
could adversely affect the Company's operations.
FCC Regulation
The ownership of the Company's television stations and
certain of its television broadcasting operations are subject to
the jurisdiction of the FCC under the Communications Act of
1934, as amended (the "Communications Act"). The Communications
Act empowers the FCC, among other matters, to issue, renew,
revoke and modify broadcast licenses, to determine the location
of stations, to establish areas to be served and to regulate
certain aspects of broadcast programming. The Communications
Act prohibits the assignment of a broadcast license or the
transfer of control of a licensee without the prior approval of
the FCC. If the FCC determines that violations of the
Communications Act or the FCC's own regulations have occurred,
it may impose sanctions ranging from admonition of a licensee to
license revocation.
The Communications Act provides that a license may be
granted to any applicant if the public interest, convenience and
necessity will be served thereby, subject to certain
limitations. Television broadcast licenses are issued initially
for terms of five years. Upon application, and in the absence
of a conflicting application or an adverse finding as to the
licensee's qualifications, broadcast licenses usually have been
renewed for additional terms of up to five years without a
hearing by the FCC. FCC licenses of full-power stations owned
by the Company have the following expiration dates: WKAQ and
WSCV - February 1, 1997; KTMD and KVDA - August 1, 1998; KSTS -
December 1, 1998; and WNJU - June 1, 1999.
The renewal application for KVEA is pending before the FCC.
The processing of the renewal application for KVEA was deferred
during the pendency of the Company's Chapter 11 reorganization,
but the renewal application is now being processed. Under FCC rules
a broadcast license remains in effect until the renewal application
is acted on by the FCC. Renewal applications are usually granted in
the normal course. However, pursuant to the Communications Act and FCC
regulations, renewal applications are subject to the filing of
petitions to deny and competing applications for the frequencies
on which the stations operate.
Under existing FCC regulations governing multiple ownership
of broadcast stations, a license to operate a television station
will not be granted (unless established waiver standards are
met) to any party (or parties under common control) that has an
"attributable interest" in another broadcast station with an
overlapping service area. The regulations also prohibit (with
certain qualifications) any person or entity from having an
"attributable interest" in more than 12 full-power television
stations, subject to a further limitation based on the
percentage of national audience included within the relevant
stations' markets. Additionally, the rules prohibit (with
certain qualifications) anyone with an "attributable interest"
in a television station from also having an "attributable
interest" in a radio station, daily newspaper or cable
television system serving a community located within the
relevant coverage area of that station, and vice versa.
Under existing FCC regulations, the officers, directors
and certain of the equity owners of a broadcasting company are
deemed to have an "attributable interest" in the broadcasting
company. In the case of a corporation controlling or operating
television stations, there is attribution only to directors and
officers and to stockholders who own 5% or more of the
outstanding voting stock. Institutional investors, including
mutual funds, insurance companies and banks acting in a
fiduciary capacity, may own up to 10% of the outstanding voting
stock without being subject to such attribution, provided that
such stockholders exercise no control over the management or
policies of the broadcasting company. Notwithstanding the
attribution standards set forth in the previous sentence, a
noncontrolling stockholder will not be deemed to have an
"attributable interest" in a broadcasting company if a "single
majority stockholder" owns or controls the vote of more than 50
percent of the Company's voting stock. Currently, no stock
holder of the Company qualifies as a "single majority
stockholder." In the case of the Company, there are presently
three attributable stockholders: TLMD Partners II, L.L.C.,
Bastion Capital Fund, L.P. ("Bastion") and Reliance.
In connection with the grant of consent to the transfer of
control of the Company's controlled television licensees from
Telemundo Group, Inc. as debtor-in-possession to the
reorganized Telemundo Group, Inc., the FCC granted a 12-month
waiver of its "television duopoly rule" to permit the orderly
disposition of station KSMS-TV, Channel 67, Monterey,
California, which is presently licensed to KSMS-TV, L.P. The
temporary waiver was necessary because the Grade B contour of
KSMS-TV overlaps with the Grade B contour of KSTS, which is
licensed to a Company subsidiary. The television duopoly rule
generally prohibits a party from holding attributable interests
in television stations that have overlapping Grade B contours.
Daniel D. Villanueva, who has an attributable interest in the
Company because of his affiliation with Bastion, also has an
attributable interest in KSMS-TV. Pursuant to the waiver, Mr.
Villanueva must refrain from all discussions and involvement
regarding the Telemundo network and KSTS with any Bastion or
Company officer or director, or any employee with access to
information pertinent to those subjects, until KSMS-TV is sold.
An application before the FCC for consent to the sale of KSMS-
TV to a third party, which was filed on September 23, 1994, was
informally objected to, and is still pending before the FCC.
The Communications Act limits the amount of capital stock
that aliens may own in a broadcast station licensee and in the
parent company of a licensee. No more than 20% of a direct
licensee's capital stock may be owned or voted by aliens or
their representatives. Also, aliens may not serve as officers
or directors of direct broadcast licensees. The Company is not
the direct licensee of any of its FCC licenses; instead it
directly or indirectly controls the FCC licensee companies.
Regarding a company that directly or indirectly controls an FCC
licensee, the Communications Act provides that such a company
may not have more than 25% of its capital stock owned of record
or voted by aliens or their representatives and may not have
any officer or more than 25% of its directors who are aliens,
if the Commission finds that the public interest would be
served by denial or revocation of that station's license. The
FCC may revoke or refuse to grant or renew a broadcast station
license or refuse to approve the assignment or transfer of such
license if the alien restrictions on direct licensees are not
met, or if the Commission finds that such actions would be in
the public interest if the benchmarks on companies that control
licensees are exceeded. The Company's Restated Certificate of
Incorporation provides that the transfer of the Company's
capital stock, whether voluntary or involuntary, will not be
permitted and will be ineffective if such transfer would
violate (or would result in a violation of) the Communications
Act or any of the rules or regulations promulgated thereunder.
The FCC has undertaken several initiatives to change aspects
of television and radio regulation, particularly with respect to
broadcast programming, station ownership restrictions and
attribution rules. Significant areas of regulation remain,
however, and the FCC continues to enforce strictly its
regulations in several such areas, including equal employment
obligations, children's programming, "indecent" programming
restrictions, the "character qualifications" of licensees,
political advertising, environmental concerns, technical
operating matters and antenna tower maintenance. The FCC
recently indicated its intent to enforce strictly its commercial
restrictions with respect to children's programming by levying
substantial monetary forfeitures for violations of the
commercial limits. The FCC is also considering imposing minimum
quantitative requirements on television stations for children's
programming. The FCC also indicated its intent to enforce its
equal employment opportunity rules vigorously, with respect to
both numerical guidelines and recruitment efforts, by imposing
substantial monetary forfeitures and shorter-term renewals.
The FCC has adopted regulations implementing the Cable
Television Consumer Protection and Competition Act of 1992 (the
"1992 Cable Act"). These regulations required television
broadcasters to elect, on or before June 17, 1993, whether to
exercise either certain "must carry" or "retransmission consent"
rights in connection with their carriage by local cable
television systems. Those stations that elected to exercise
must carry rights could demand carriage on a specified channel
on cable systems within their DMA. However, these must carry
rights are not absolute, but are dependent on variables such as
the number of activated channels on, and location and size of,
the cable system, the amount of duplicative programming on a
broadcast station, the channel positioning demands of other
broadcast stations and the signal quality of the stations at the
cable system's principal headend. LPTVs have very limited must
carry rights, although cable systems cannot retransmit LPTV
stations' signals without their consent. The Company's owned
and operated full-power stations in the United States have
elected "must carry" rights. The constitutionality of the must-
carry provisions have been challenged in federal district court,
and a ruling on the challenge is expected in the summer of 1995.
The Company's stations serving several markets and many of
the Company's affiliates are classified by the FCC as "low-
power" stations. Certain of the Company's owned and operated
stations and affiliates increase their coverage through use of
"translators" that rebroadcast the station's signal. Both low-
power and translator stations are referred to as "LPTV" stations
and generally operate at significantly lower levels of power
than full-power stations. Under FCC rules, such LPTV stations
operate on a secondary basis; that is, they are subject to
displacement by a full-power station or other facility if one is
licensed and they must tolerate defined levels of
electromagnetic interference from full-power stations.
The Commission is conducting a rulemaking proceeding to
devise a table of channel allotments in connection with the
introduction of advanced (or "high definition") television
service ("ATV"). The FCC has preliminarily decided to allot a
second broadcast channel to each full-power commercial
television station for ATV operation. According to this
preliminary decision, stations would be permitted to phase in
their ATV operations over an approximately 15-year period
following adoption of a final table of allotments, at the end of
which they would be required to surrender their non-ATV channel.
Under certain circumstances, conversion to ATV operations may
reduce a station's geographical coverage area. In addition, the
FCC will maintain the secondary status of LPTV stations in
connection with its implementation of a channel allotment plan
for ATV. The Commission has acknowledged that ATV channel
allotment may involve displacement of existing LPTV stations,
particularly in major television markets. A number of the
Company's owned and operated and affiliated low-power stations
may be affected.
The Commission has issued a notice of proposed rulemaking
to consider (i) changes to its attribution rules, including
changing the exemption for minority stockholders when there is
a single majority stockholder and the exemption for nonvoting
stockholders, (ii) potential revision of the treatment of
limited partnerships and (iii) a review of the cross-interest
policy involving key employees, nonattributable equity
interests and joint ventures. The Commission is also
considering making attributable multiple business arrangements
among local broadcasters, such as joint sales, as well as local
television time brokerage (also known as local marketing
agreements). The FCC is conducting an inquiry to consider
proposals to increase broadcasters' obligations under its rules
implementing the Children's Television Act of 1990, which
requires television stations to present programming
specifically directed to the "educational and informational"
needs of children. The FCC also is conducting a rulemaking
proceeding to consider changes to its television multiple
ownership rules that might increase the number of television
stations that may be commonly owned on a national basis, relax
the local joint co-ownership prohibition from Grade B contour
overlaps to Grade A overlaps only, and review the radio-
television ownership restriction. Alternative legislation
being considered by Congress, if enacted, might eliminate all
broadcast multiple ownership restrictions, or, alternatively,
would require the FCC to review and modify or eliminate
ownership rules that are not necessary for fair competition and
diversity of information. The FCC continues to restrict
network representation of affiliates for the sale of spot
advertising time (the Company acts as the exclusive
representative of its affiliates pursuant to a waiver of FCC
regulations). Other aspects of FCC network-affiliate
regulations are not currently applicable to the Company because
of its status as a Spanish-language network.
There are additional FCC regulations and policies, and
regulations and policies of other federal agencies governing
network-affiliate relations, political broadcasts, public
affairs programming, equal employment opportunity, taxation and
other areas affecting the business and operations of broadcast
stations. Proposals for additional or revised rules are
considered by federal regulatory agencies and Congress from time
to time. The Company cannot predict the resolution of these
issues or other issues discussed above, although their outcome
could, over a period of time, affect, either adversely or
favorably, the broadcasting industry.
The foregoing does not purport to be a complete summary of
all the provisions of the Communications Act or other
Congressional acts or of the regulations and policies of the FCC
thereunder. Reference is made to the Communications Act, other
Congressional acts, such regulations and policies, and the
public notices promulgated by the FCC for further information.
The laws, rules, regulations and interpretations governing the
Company's business are revised from time to time and it is not
possible to predict the effect that future regulatory changes
will have on the Company's business.
Seasonality of Business
The overall business of the Company reflects seasonal
patterns with respect to advertiser expenditures for broadcast
time that are reflected in the Company's quarterly revenue. The
Company's revenue generally is highest in the fourth quarter,
which reflects increased advertising during the holiday season,
and lowest in the first quarter.
Employees
As of March 1, 1995, the Company and its subsidiaries had
approximately 1,300 employees, approximately 210 of whom were
employees of WKAQ in Puerto Rico. Approximately 60 employees at
WNJU's studio facility in New Jersey, approximately 25 KSTS
employees and approximately 120 employees of WKAQ are covered by
union contracts. The Company believes its relations with its
employees and unions are satisfactory.
Item 2. PROPERTIES
In 1994, the Company moved its corporate headquarters from
New York City to space adjacent to the Company's network
operations center, Miami network sales office and Miami owned
and operated broadcast station in Hialeah, Florida near Miami.
These facilities are located in approximately 120,000 square
feet of space under a lease which expires in December 1996,
with renewal options extending until December 2002.
The Company's New York network and national spot sales and
marketing offices and WNJU's sales and business offices are
located in New York City in approximately 38,000 square feet of
leased space. The term of the lease runs through February 1998.
In addition, the Company leases various properties
throughout the country in which its LPTVs, broadcasting
equipment, sales offices and other offices are located. None of
these properties are material to the Company's business.
The following information is provided with respect to
properties of the Company's owned and operated full-power
television stations:
KVEA: The offices and studios of KVEA are located in leased
premises in Glendale, California. The two leases expire on
January 31, 1997 and on February 1, 1997, respectively, and each
may be renewed for one five-year term. KVEA also leases its
transmitter and broadcast tower site on Mount Wilson in the Los
Angeles area under a month-to-month lease, which lease is being
extended.
WNJU: The offices and studios of WNJU are located in leased
premises in Hasbrouck Heights, New Jersey under a lease that
expires in 1999, and WNJU's sales force and business office
occupies office space in the Company's New York sales office.
The transmitter and antenna of WNJU are located on top of One
World Trade Center in New York City under a lease that expires
in 2004.
WSCV: The offices and studios of WSCV are located in the
same leased premises occupied by the Company's network
operations center in Hialeah, Florida. In addition, WSCV leases
space for its antenna and transmitter in Miami, Florida under a
lease that expires in 2003, with renewal options through 2010.
KSTS: The offices and studios of KSTS are located in leased
premises in San Jose, California under leases that expire in
1998. The transmitter and antenna of KSTS are located on leased
property on Monument Peak, approximately eight miles northeast
of San Jose, under a lease that expires in 1998.
KVDA: The offices and studio of KVDA are located in owned
premises of approximately 20,000 square feet in San Antonio,
Texas. The transmitter and broadcast tower of KVDA are located
on approximately 80 acres of owned land outside of San Antonio.
KTMD: The offices and studio of KTMD are located in leased
premises in Houston, Texas. The lease covering these premises
expires on December 31, 1997. KTMD's tower and transmitter are
located on property owned by KTMD between Houston and Galveston.
WKAQ: The offices and studios of WKAQ and its related
production facilities are located in owned premises consisting
of approximately 200,000 square feet in San Juan, Puerto Rico.
The transmitter and broadcast tower of WKAQ are located on
property owned by the Department of Natural Resources of the
Commonwealth of Puerto Rico, which has granted WKAQ a use permit
expiring in 1998. WKAQ also operates several translator
facilities to cover small towns in the mountainous regions of
Puerto Rico.
Item 3. LEGAL PROCEEDINGS
The Company and its subsidiaries are involved in certain
litigation arising in the normal course of their businesses,
none of which is material. In addition, the Company was
involved in 1994 in the following material legal proceedings:
Chapter 11 Reorganization
For a description of the consummation of the Company's
Chapter 11 reorganization proceedings, see "Business -- General
Development of Business."
John Blair Proceeding
The Company, several affiliates and officers of the
Company, and the Company's independent auditors were defendants
in an action brought in December 1987 styled John Blair
----------
Communications, Inc., et al. v. Reliance Capital Group, L.P.,
------------------------------------------------------------
et al. in the Supreme Court of the State of New York, County of
-----
New York. This litigation was settled in connection with the
consummation of the Plan and all claims related thereto were
dismissed with prejudice following the Consummation Date.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders in the
fourth quarter of the fiscal year covered by this Annual Report
on Form 10-K.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
See the information in Note 13 to the Notes to
Consolidated Financial Statements appearing on page 22 of the
Telemundo Group, Inc. 1994 Annual Report to Stockholders, which
information is incorporated herein by reference.
Item 6. SELECTED FINANCIAL DATA
See the information under the caption "Selected Financial
Data" on page 2 of the Telemundo Group, Inc. 1994 Annual Report
to Stockholders, which information is incorporated herein by
reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
See the information under the caption "Management's
Discussion and Analysis of Results of Operations and Financial
Condition" on pages 3 through 6 of the Telemundo Group, Inc.
1994 Annual Report to Stockholders, which information is
incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements of the Company and
Subsidiaries, including the independent auditor's report
thereon, included on pages 7 through 23 of the Telemundo Group,
Inc. 1994 Annual Report to Stockholders, which information is
incorporated herein by reference, are listed in Item 14 below.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding the directors and executive
officers of the Company is incorporated herein by reference
from the Company's Proxy Statement for the 1995 Annual Meeting
of Stockholders under the captions "Election of Directors" and
"Executive Officers of the Company."
Item 11. EXECUTIVE COMPENSATION
See the information in the Company's Proxy Statement for
the 1995 Annual Meeting of Stockholders under the caption
"Executive Compensation," which information is incorporated
herein by reference, except for the information under the
subcaptions "Compensation Committee Report" and "Performance
Graph."
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
See the information in the Company's Proxy Statement for
the 1995 Annual Meeting of Stockholders under the caption
"Security Ownership of Certain Beneficial Owners and
Management," which information is incorporated herein by
reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See the information in the Company's Proxy Statement for
the 1995 Annual Meeting of Stockholders under the caption
"Related Party Transactions," which information is incorporated
herein by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
(a) 1. Financial Statements.
The Consolidated Financial Statements of Telemundo Group,
Inc. and Subsidiaries, including the independent auditor's
report thereon, which appear on pages 7 through 23 of the
Telemundo Group, Inc. 1994 Annual Report to Stockholders, are
incorporated herein by reference.
1994 Annual
Report Page No.
--------------
TELEMUNDO GROUP, INC. AND SUBSIDIARIES:
Consolidated Statements of Operations 7
Consolidated Balance Sheets 8
Consolidated Statements of Changes in
Common Stockholders' Equity (Deficiency) 9
Consolidated Statements of Cash Flows 10
Notes to Consolidated Financial
Statements (1-13) 11-22
Independent Auditors' Report 23
2. Financial Statement Schedules.
VIII. Valuation and Qualifying Accounts
All other schedules have been omitted because they are
inapplicable, not required, or the information is included
elsewhere in the consolidated financial statements or notes
thereto.
3. Exhibits.
Exhibit
Number
------
2.1 Chapter 11 Plan of Reorganization filed with the United
States Bankruptcy Court for the Southern District of New
York (the "Bankruptcy Court") on November 19, 1993, filed
as Exhibit 2.1 to the Company's Current Report on Form 8-
K dated November 22, 1993 and incorporated herein by
reference.
2.2 Second Amended Disclosure Statement pursuant to Section
1125 of the Bankruptcy Code dated April 29, 1994, filed
as Exhibit 28.1 to the Company's Current Report on Form 8-
K dated July 20, 1994 and incorporated herein by
reference.
2.3 Second Amended Plan of Reorganization filed with the
Bankruptcy Court on April 29, 1994, filed as Exhibit 2.2
to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1994 (the "March 31, 1994 10-Q")
and incorporated herein by reference.
2.4 Order Pursuant to Section 1129 of the Bankruptcy Code
confirming the Debtor's Second Amended Chapter 11 Plan of
Reorganization dated July 20, 1994, filed as Exhibit 2.2
to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1994 (the "September 30, 1994
10-Q") and incorporated herein by reference.
3.1 The Company's Restated Certificate of Incorporation,
filed as Exhibit 4.1 to the Company's Current Report on
Form 8-K dated December 30, 1994 (the "December 30, 1994
8-K") and incorporated herein by reference.
3.2 The Company's Restated Bylaws.
4.1 Indenture dated as of December 30, 1994 between the
Company and Bankers Trust Company with respect to the
10.25% Senior Notes due December 30, 2001, filed as
Exhibit 4.2 to the December 30, 1994 8-K and incorporated
herein by reference.
4.2 Warrant Agreement dated as of December 30, 1994 between
the Company and Shawmut Bank Connecticut, National
Association, filed as Exhibit 4.3 to the December 30,
1994 8-K and incorporated herein by reference.
4.3 Warrant Agreement dated as of December 30, 1994 between
the Company and Reliance Insurance Company, filed as
Exhibit 4.4 to the December 30, 1994 8-K and incorporated
herein by reference.
4.4 Registration Rights Agreement dated as of December 30,
1994 between the Company, Apollo Advisors, L.P. and
Reliance Insurance Company, filed as Exhibit 4.5 to the
December 30, 1994 8-K and incorporated herein by refer
ence.
10.1 The Company's 1994 Stock Plan.
10.2 Lease Termination Agreement dated as of October 1, 1993
between The Mutual Life Insurance Company of New York and
the Company, filed as Exhibit 10.3 to the Company's
Annual Report on Form 10-K for the year ended December
31, 1993 (the "1993 10-K") and incorporated herein by
reference.
10.3 Lease dated as of April 1, 1993 between E & W Development
and the Company, filed as Exhibit 10.4 to the 1993 10-K
and incorporated herein by reference.
10.4 The Company's Retirement and Savings Plan (the
"Retirement Plan"), dated as of January 1, 1987, filed as
Exhibit 10.15 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1988 and incorporated
herein by reference.*
10.5 Instrument of Amendment dated August 30, 1989 and
Amendment No. 2 dated March 11, 1991 to the Retirement
Plan, filed as Exhibit 10.6 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1990
and incorporated herein by reference.*
10.6 Instrument of Amendment dated December 21, 1994 to the
Retirement Plan.*
10.7 Description of Severance Arrangement with certain
officers of the Company, filed as Exhibit 10.17 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1991 and incorporated herein by reference.*
10.8 Employment Agreements between the Company and each of
Joaquin F. Blaya, Jose C. Cancela, Filiberto Fernandez
and Jose Del Cueto, filed as Exhibit 10.19 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1992, and incorporated herein by
reference.*
10.9 Employment Agreement between the Company and Gustavo Pupo-
Mayo dated as of September 16, 1994.*
10.10 Continuation Agreement between the Company and Bernard S.
Carrey dated October 15, 1993 filed as Exhibit 10.18 to
the 1993 10-K and incorporated herein by reference.*
10.11 Continuation Agreement between the Company and Kevin M.
Sheehan dated October 15, 1993 filed as Exhibit 10.19 to
the 1993 10-K and incorporated herein by reference.*
10.12 Amendment No. 1 dated as of May 15, 1994 to Employment
Agreement between the Company and Joaquin F. Blaya dated
as of May 26, 1992, filed as Exhibit 10.1 to the
Company's Form 10-Q for the quarter ended June 30, 1994
(the "June 30, 1994 10-Q") and incorporated herein by
reference.*
10.13 Employment Agreement between the Company and Joaquin F.
Blaya dated as of May 15, 1994, filed as Exhibit 10.2 to
the June 30, 1994 10-Q and incorporated herein by
reference.*
10.14 Employment Agreement dated as of May 15, 1994 between
the Company and Peter J. Housman II, filed as Exhibit
10.3 to the June 30, 1994 10-Q and incorporated herein
by reference.*
10.15 Amendment No. 1 dated as of May 15, 1994 to Employment
Agreement between the Company and Jose C. Cancela dated
as of May 27, 1992, filed as Exhibit 10.4 to the June
30, 1994 10-Q and incorporated herein by reference.*
10.16 Employment Agreement dated as of May 15, 1994 between
the Company and Jose C. Cancela, filed as Exhibit 10.5
to the June 30, 1994 10-Q and incorporated herein by
reference.*
10.17 Settlement Agreement dated May 16, 1994 between John
Blair Communications, Inc., John Blair & Company, Inc.,
Blair Entertainment Corporation, JHR Acquisition Corp.,
Telemundo Group, Inc., Reliance Capital Group, L.P.,
Reliance Associates, L.P., Reliance Capital Group, Inc.,
Reliance Group Holdings, Inc., Deloitte & Touche, Henry
R. Silverman, Donald G. Raider, Peter J. Housman II, and
the Official Committee of Unsecured Creditors in
Telemundo Group, Inc.'s Chapter 11 case, filed as
Exhibit 10.6 to the June 30, 1994 10-Q and incorporated
herein by reference.
10.18 Agreement dated April 25, 1994 between Olympia & York
Companies (USA) and the Company, filed as Exhibit 10.7
to the June 30, 1994 10-Q and incorporated herein by
reference.
10.19 Limited Partnership Agreement dated July 20, 1994
between Telemundo News Network, Inc., Telenoticias del
Mundo, Inc., Reuter Latam News, Inc., Antena 3
International, Inc. and Artear Argentina Corporation,
filed as Exhibit 10.8 to the June 30, 1994 10-Q and
incorporated herein by reference.
10.20 Loan and Security Agreement dated as of December 31,
1994 between the Company and Foothill Capital
Corporation, filed as Exhibit 10.1 to the December 30,
1994 8-K and incorporated herein by reference.
10.21 Stock Option Agreements dated as of December 31, 1994
between the Company and each of Joaquin F. Blaya, Jose
C. Cancela and Peter J. Housman II.*
13.1 Portions of Telemundo Group, Inc. 1994 Annual Report to
Stockholders.
21.1 List of Subsidiaries of the Company.
24.1 Power of Attorney (included on signature page of this
Annual Report on Form 10-K).
________________________
* Management contract or compensatory plan or arrangement
required to be filed as an exhibit pursuant to Item 14(c) of
this form.
(b) Reports on Form 8-K.
During the three months ended December 31, 1994, the
Company filed a Report on Form 8-K dated December 20, 1994, in
which the Company reported an Item 5 event, which was the
setting of a record date for distributions under the Company's
Plan. No financial statements were required to be filed with
the report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, in the City of Hialeah, Florida, on
the 29th day of March, 1995.
TELEMUNDO GROUP, INC.
(Registrant)
By /s/ Roland A. Hernandez
-------------------------
Roland A. Hernandez
President and Chief
Executive Officer
The undersigned directors and officers of Telemundo Group,
Inc. hereby constitute and appoint Peter J. Housman II and Jose
M. Sariego, and each of them, with full power to act without
the other and with full power of substitution and
resubstitution, our true and lawful attorneys-in-fact with full
power to execute in our name and behalf in the capacities
indicated below this Annual Report on Form 10-K and any and all
amendments thereto and to file the same, with all exhibits
thereto and other documents in connection therewith, with the
Securities and Exchange Commission and hereby ratify and
confirm all that such attorneys-in-fact, or any of them, or
their substitutes shall lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Exchange
Act of 1934, this Report has been signed by the following
persons in the capacities indicated on March 29, 1995.
Signature Title
--------- -----
/s/ Leon D. Black Chairman of the Board and
----------------- Director
Leon D. Black
/s/ Roland A. Hernandez President, Principal
----------------------- Executive Officer
Roland A. Hernandez and Director
/s/ Peter J. Housman II Principal Financial Officer
-----------------------
Peter J. Housman II
/s/ Steven E. Dawson Principal Accounting
-------------------- Officer
Steven E. Dawson
/s/ Guillermo Bron Director
------------------
Guillermo Bron
/s/ Arthur M. Goldberg Director
----------------------
Arthur M. Goldberg
/s/ John J. Hannan Director
------------------
John J. Hannan
/s/ Alan Kolod Director
--------------
Alan Kolod
/s/ Barry W. Ridings Director
--------------------
Barry W. Ridings
/s/ Bruce H. Spector Director
--------------------
Bruce H. Spector
/s/ David E. Yurkerwich Director
-----------------------
David E. Yurkerwich
<TABLE>
TELEMUNDO GROUP,INC. AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
(In thousands of dollars)
<CAPTION>
-------------------------------------------------------------------------------------------------------------
Column B Column C Column D Column E
-------------------------------------------------------------------------------------------------------------
Additions
---------------------------
Balance at Charged to Charged to Deducted Balance
beginning profit and loss other accounts from reserves at end
Description of period or income --describe --describe(a) of period
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1994:
Allowance for doubtful accounts $2,501 $2,392 $ -- $2,048 $2,845
====== ====== ==== ====== ======
Year Ended December 31, 1993:
Allowance for doubtful accounts $2,007 $2,052 $ -- $1,558 $2,501
====== ====== ==== ====== ======
Year Ended December 31, 1992:
Allowance for doubtful accounts $2,046 $1,641 $ -- $1,680 $2,007
====== ====== ==== ====== ======
Year Ended December 31, 1994:
Reserve for TV Program
Exhibition Rights $2,137 $3,705 $ -- $4,593 $1,249
====== ====== ==== ====== ======
Year Ended December 31, 1993:
Reserve for TV Program
Exhibition Rights $2,172 $1,666 $ -- $1,701 $2,137
====== ====== ==== ====== ======
Year Ended December 31, 1992:
Reserve for TV Program
Exhibition Rights $3,107 $1,017 $ -- $1,952 $2,172
====== ====== ==== ====== ======
----------------------------
(a) Amounts written off, net
of recoveries
S-1
</TABLE>
EXHIBIT INDEX
Exhibit
Number
------
2.1 Chapter 11 Plan of Reorganization filed with the United
States Bankruptcy Court for the Southern District of New
York (the "Bankruptcy Court") on November 19, 1993, filed
as Exhibit 2.1 to the Company's Current Report on Form 8-
K dated November 22, 1993 and incorporated herein by
reference.
2.2 Second Amended Disclosure Statement pursuant to Section
1125 of the Bankruptcy Code dated April 29, 1994, filed
as Exhibit 28.1 to the Company's Current Report on Form 8-
K dated July 20, 1994 and incorporated herein by
reference.
2.3 Second Amended Plan of Reorganization filed with the
Bankruptcy Court on April 29, 1994, filed as Exhibit 2.2
to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1994 (the "March 31, 1994 10-Q")
and incorporated herein by reference.
2.4 Order Pursuant to Section 1129 of the Bankruptcy Code
confirming the Debtor's Second Amended Chapter 11 Plan of
Reorganization dated July 20, 1994, filed as Exhibit 2.2
to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1994 (the "September 30, 1994
10-Q") and incorporated herein by reference.
3.1 The Company's Restated Certificate of Incorporation,
filed as Exhibit 4.1 to the Company's Current Report on
Form 8-K dated December 30, 1994 (the "December 30, 1994
8-K") and incorporated herein by reference.
3.2 The Company's Restated Bylaws.
4.1 Indenture dated as of December 30, 1994 between the
Company and Bankers Trust Company with respect to the
10.25% Senior Notes due December 30, 2001, filed as
Exhibit 4.2 to the December 30, 1994 8-K and incorporated
herein by reference.
4.2 Warrant Agreement dated as of December 30, 1994 between
the Company and Shawmut Bank Connecticut, National
Association, filed as Exhibit 4.3 to the December 30,
1994 8-K and incorporated herein by reference.
4.3 Warrant Agreement dated as of December 30, 1994 between
the Company and Reliance Insurance Company, filed as
Exhibit 4.4 to the December 30, 1994 8-K and incorporated
herein by reference.
4.4 Registration Rights Agreement dated as of December 30,
1994 between the Company, Apollo Advisors, L.P. and
Reliance Insurance Company, filed as Exhibit 4.5 to the
December 30, 1994 8-K and incorporated herein by refer
ence.
10.1 The Company's 1994 Stock Plan.
10.2 Lease Termination Agreement dated as of October 1, 1993
between The Mutual Life Insurance Company of New York and
the Company, filed as Exhibit 10.3 to the Company's
Annual Report on Form 10-K for the year ended December
31, 1993 (the "1993 10-K") and incorporated herein by
reference.
10.3 Lease dated as of April 1, 1993 between E & W Development
and the Company, filed as Exhibit 10.4 to the 1993 10-K
and incorporated herein by reference.
10.4 The Company's Retirement and Savings Plan (the
"Retirement Plan"), dated as of January 1, 1987, filed as
Exhibit 10.15 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1988 and incorporated
herein by reference.*
10.5 Instrument of Amendment dated August 30, 1989 and
Amendment No. 2 dated March 11, 1991 to the Retirement
Plan, filed as Exhibit 10.6 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1990
and incorporated herein by reference.*
10.6 Instrument of Amendment dated December 21, 1994 to the
Retirement Plan.*
10.7 Description of Severance Arrangement with certain
officers of the Company, filed as Exhibit 10.17 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1991 and incorporated herein by reference.*
10.8 Employment Agreements between the Company and each of
Joaquin F. Blaya, Jose C. Cancela, Filiberto Fernandez
and Jose Del Cueto, filed as Exhibit 10.19 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1992, and incorporated herein by
reference.*
10.9 Employment Agreement between the Company and Gustavo Pupo-
Mayo dated as of September 16, 1994.*
10.10 Continuation Agreement between the Company and Bernard S.
Carrey dated October 15, 1993 filed as Exhibit 10.18 to
the 1993 10-K and incorporated herein by reference.*
10.11 Continuation Agreement between the Company and Kevin M.
Sheehan dated October 15, 1993 filed as Exhibit 10.19 to
the 1993 10-K and incorporated herein by reference.*
10.12 Amendment No. 1 dated as of May 15, 1994 to Employment
Agreement between the Company and Joaquin F. Blaya dated
as of May 26, 1992, filed as Exhibit 10.1 to the
Company's Form 10-Q for the quarter ended June 30, 1994
(the "June 30, 1994 10-Q") and incorporated herein by
reference.*
10.13 Employment Agreement between the Company and Joaquin F.
Blaya dated as of May 15, 1994, filed as Exhibit 10.2 to
the June 30, 1994 10-Q and incorporated herein by
reference.*
10.14 Employment Agreement dated as of May 15, 1994 between
the Company and Peter J. Housman II, filed as Exhibit
10.3 to the June 30, 1994 10-Q and incorporated herein
by reference.*
10.15 Amendment No. 1 dated as of May 15, 1994 to Employment
Agreement between the Company and Jose C. Cancela dated
as of May 27, 1992, filed as Exhibit 10.4 to the June
30, 1994 10-Q and incorporated herein by reference.*
10.16 Employment Agreement dated as of May 15, 1994 between
the Company and Jose C. Cancela, filed as Exhibit 10.5
to the June 30, 1994 10-Q and incorporated herein by
reference.*
10.17 Settlement Agreement dated May 16, 1994 between John
Blair Communications, Inc., John Blair & Company, Inc.,
Blair Entertainment Corporation, JHR Acquisition Corp.,
Telemundo Group, Inc., Reliance Capital Group, L.P.,
Reliance Associates, L.P., Reliance Capital Group, Inc.,
Reliance Group Holdings, Inc., Deloitte & Touche, Henry
R. Silverman, Donald G. Raider, Peter J. Housman II, and
the Official Committee of Unsecured Creditors in
Telemundo Group, Inc.'s Chapter 11 case, filed as
Exhibit 10.6 to the June 30, 1994 10-Q and incorporated
herein by reference.
10.18 Agreement dated April 25, 1994 between Olympia & York
Companies (USA) and the Company, filed as Exhibit 10.7
to the June 30, 1994 10-Q and incorporated herein by
reference.
10.19 Limited Partnership Agreement dated July 20, 1994
between Telemundo News Network, Inc., Telenoticias del
Mundo, Inc., Reuter Latam News, Inc., Antena 3
International, Inc. and Artear Argentina Corporation,
filed as Exhibit 10.8 to the June 30, 1994 10-Q and
incorporated herein by reference.
10.20 Loan and Security Agreement dated as of December 31,
1994 between the Company and Foothill Capital
Corporation, filed as Exhibit 10.1 to the December 30,
1994 8-K and incorporated herein by reference.
10.21 Stock Option Agreements dated as of December 31, 1994
between the Company and each of Joaquin F. Blaya, Jose
C. Cancela and Peter J. Housman II.*
13.1 Portions of Telemundo Group, Inc. 1994 Annual Report to
Stockholders.
21.1 List of Subsidiaries of the Company.
24.1 Power of Attorney (included on signature page of this
Annual Report on Form 10-K).
________________________
* Management contract or compensatory plan or arrangement
required to be filed as an exhibit pursuant to Item 14(c) of
this form.
RESTATED BY-LAWS OF TELEMUNDO GROUP, INC.
(A Delaware Corporation)
ARTICLE I
Offices
SECTION 1. Registered Office. The registered office of the
Corporation within the State of Delaware shall be at 1209 Orange Street
in the City of Wilmington, County of New Castle, 19801, and the name of
the resident agent in charge thereof is The Corporation Trust Company.
SECTION 2. Other Offices. The Corporation may also have an office or
offices other than said registered office at such place or places, either
within or without the State of Delaware, as the Board of Directors shall
from time to time determine or the business of the Corporation may
require.
ARTICLE II
Meetings of Stockholders
SECTION 1. Place of Meetings. All meetings of the stockholders for
the election of directors or for any other purpose shall be held at any
such place, either within or without the State of Delaware, as shall be
designated from time to time by the Board of Directors and stated in the
notice of meeting or in a duly executed waiver thereof.
SECTION 2. Annual Meeting. The annual meeting of stockholders shall
be held at such date and time as shall be designated from time to time by
the Board of Directors and stated in the notice of meeting or in a duly
executed waiver thereof. Except as otherwise provided in the Certificate
of Incorporation, at such annual meeting, the stockholders shall elect,
by a plurality vote, a Board of Directors and transact such other
business as may properly be brought before the meeting.
SECTION 3. Special Meetings. Special meetings of stockholders, unless
otherwise prescribed by statute, may be called at any time by the Board
of Directors or the Chairman of the Board, if one shall have been
elected, or the President and Chief Executive Officer and shall be called
by the Secretary upon the request in writing of a stockholder or
stockholders holding of record at least 20 percent of the voting power of
the issued and outstanding shares of stock of the Corporation entitled to
vote at such meeting.
SECTION 4. Notice of Meetings. Except as otherwise expressly required
by statute, written notice of each annual and special meeting of
stockholders stating the date, place and hour of the meeting, and, in the
case of a special meeting, the purpose or purposes for which the meeting
is called, shall be given to each stockholder of record entitled to vote
thereat not less than ten nor more than sixty days before the date of the
meeting. Business transacted at any special meeting of stockholders shall
be limited to the purposes stated in the notice. Notice shall be given
personally or by mail and, if by mail, shall be sent in a postage prepaid
envelope, addressed to the stockholder at his address as it appears on
the records of the Corporation. Notice by mail shall be deemed given at
the time when the same shall be deposited in the United States mail,
postage prepaid. Notice of any meeting shall not be required to be given
to any person who attends such meeting, except when such person attends
the meeting in person or by proxy for the express purpose of objecting,
at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened, or to any person
who, either before or after the meeting, shall submit a signed written
waiver of notice, in person or by proxy. Neither the business to be
transacted at, nor the purpose of, an annual or special meeting of
stockholders need be specified in any written waiver of notice.
SECTION 5. List of Stockholders. The officer who has charge of the
stock ledger of the Corporation shall prepare and make, at least ten days
before each meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, showing
the address of and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting,
either at a place within the city, town or village where the meeting is
to be held, which place shall be specified in the notice of meeting, or,
if not specified, at the place where the meeting is to be held. The list
shall be produced and kept at the time and place of the meeting during
the whole time thereof, and may be inspected by any stockholder who is
present.
SECTION 6. Quorum, Adjournments. (a) Except as provided in subsection
(b) of this Section 6, the holders of a majority of the voting power of
the issued and outstanding stock of the Corporation entitled to vote
thereat, present in person or represented by proxy, shall constitute a
quorum for the transaction of business at all meetings of stockholders,
except as otherwise provided by statute or by the Certificate of
Incorporation. If, however, such quorum shall not be present or
represented by proxy at any meeting of stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy,
shall have the power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be
present or represented by proxy. At such adjourned meeting at which a
quorum shall be present or represented by proxy, any business may be
transacted which might have been transacted at the meeting as originally
called. If the adjournment is for more than thirty days, or, if after
adjournment a new record date is set, a notice of the adjourned meeting
shall be given to each stockholder of record entitled to vote at the
meeting.
(b) Where a separate vote by a series is required, a majority of the
outstanding shares of such series, present in person or represented by
proxy, shall constitute a quorum entitled to take action with respect to
that vote on that matter and the affirmative vote of the majority of
shares of such series present in person or represented by proxy at the
meeting shall be the act of such series.
SECTION 7. Organization. At each meeting of stockholders, the
Chairman of the Board, if one shall have been elected, or, in his absence
or if one shall not have been elected, the President and Chief Executive
Officer shall act as chairman of the meeting. The Secretary or, in his
absence or inability to act, the person whom the chairman of the meeting
shall appoint secretary of the meeting shall act as secretary of the
meeting and keep the minutes thereof.
SECTION 8. Order of Business. The order of business at all meetings
of the stockholders shall be as determined by the chairman of the
meeting.
SECTION 9. Voting. Except as otherwise provided by statute or the
Certificate of Incorporation, each stockholder of the Corporation shall
be entitled at each meeting of stockholders to one vote for each share of
capital stock of the Corporation standing in his name on the record of
stockholders of the Corporation:
(a) on the date fixed pursuant to the provisions of Section 7 of
Article V of these By-Laws as the record date for the determination
of the stockholders who shall be entitled to notice of and to vote at
such meeting; or
(b) if no such record date shall have been so fixed, then at the
close of business on the day next preceding the day on which notice
thereof shall be given, or, if notice is waived, at the close of
business on the date next preceding the day on which the meeting is
held.
Each stockholder entitled to vote at any meeting of stockholders may
authorize another person or persons to act for him by a proxy signed by
such stockholder or his attorney-in-fact, but no proxy shall be voted
after three years from its date, unless the proxy provides for a longer
period. Any such proxy shall be delivered to the secretary of the meeting
at or prior to the time designated in the order of business for so
delivering such proxies. When a quorum is present at any meeting, the
affirmative vote of a majority of the shares present in person or
represented by proxy, and entitled to vote on the subject matter, shall
decide any question brought before such meeting, unless the question is
one upon which by express provision of statute or of the Certificate of
Incorporation or of these By-Laws, a different vote is required, in which
case such express provision shall govern and control the decision of such
question. Unless required by statute, or determined by the chairman of
the meeting to be advisable, the vote on any question need not be by
ballot. On a vote by ballot, each ballot shall be signed by the
stockholder voting, or by his proxy, if there be such proxy, and shall
state the number of shares voted.
SECTION 10. Inspectors. The Board of Directors may, in advance of any
meeting of stockholders, appoint one or more inspectors to act at such
meeting or any adjournment thereof. If any of the inspectors so appointed
shall fail to appear or act, the chairman of the meeting shall, or if
inspectors shall not have been appointed, the chairman of the meeting
may, appoint one or more inspectors. Each inspector, before entering upon
the discharge of his duties, shall take and sign an oath faithfully to
execute the duties of inspector at such meeting with strict impartiality
and according to the best of his ability. The inspectors shall determine
the number of shares of capital stock of the Corporation outstanding and
the voting power of each, the number of shares represented at the
meeting, the existence of a quorum, the validity and effect of proxies,
and shall receive votes, ballots or consents, hear and determine all
challenges and questions arising in connection with the right to vote,
count and tabulate all votes, ballots or consents, determine the results,
and do such acts as are proper to conduct the election or vote with
fairness to all stockholders. On request of the chairman of the meeting,
the inspectors shall make a report in writing of any challenge, request
or matter determined by them and shall execute a certificate of any fact
found by them. No director or candidate for the office of director shall
act as an inspector of an election of directors. Inspectors need not be
stockholders.
SECTION 11. Action by Consent. Whenever the vote of stockholders at a
meeting thereof is required or permitted to be taken for or in connection
with any corporate action, by any provision of statute or of the
Certificate of Incorporation or of these By-Laws, the meeting and vote of
stockholders may be dispensed with, and the action taken without such
meeting and vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares of stock
of the Corporation entitled to vote thereon were present and voted.
ARTICLE III
Board of Directors
SECTION 1. General Powers. The business and affairs of the
Corporation shall be managed by or under the direction of the Board of
Directors. The Board of Directors may exercise all such authority and
powers of the Corporation and do all such lawful acts and things as are
not by statute or the Certificate of Incorporation directed or required
to be exercised or done by the stockholders.
SECTION 2. Number, Qualifications, Election and Term of Office. The
number of directors constituting the initial Board of Directors shall be
nine (9). Except as otherwise provided in the Certificate of
Incorporation, thereafter, the number of directors may be fixed, from
time to time, by the affirmative vote of a majority of the entire Board
of Directors. Any decrease in the number of directors shall be effective
at the time of the next succeeding annual meeting of stockholders unless
there shall be vacancies in the Board of Directors, in which case such
decrease may become effective at any time prior to the next succeeding
annual meeting to the extent of the number of such vacancies. Directors
need not be stockholders. Except as otherwise provided by statute or
these By-Laws, the directors shall be elected at the annual meeting of
stockholders. Each director shall hold office until his successor shall
have been elected and qualified, or until his death, or until he shall
have resigned, or have been removed, as hereinafter provided in these By-
Laws.
SECTION 3. Place of Meetings. Meetings of the Board of Directors
shall be held at such place or places, within or without the State of
Delaware, as the Board of Directors may from time to time determine or as
shall be specified in the notice of any such meeting.
SECTION 4. Annual Meeting. The Board of Directors shall meet for the
purpose of organization, the election of officers and the transaction of
other business, as soon as practicable after each annual meeting of
stockholders, on the same day and at the same place where such annual
meeting shall be held. Notice of such meeting need not be given. In the
event such annual meeting is not so held, the annual meeting of the Board
of Directors may be held at such other time or place (within or without
the State of Delaware) as shall be specified in a notice thereof given as
hereinafter provided in Section 7 of this Article III.
SECTION 5. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such time and place as the Board of Directors
may fix. If any day fixed for a regular meeting shall be a legal holiday
at the place where the meeting is to be held, then the meeting which
would otherwise be held on that day shall be held at the same hour on the
next succeeding business day. Notice of regular meetings of the Board of
Directors need not be given except as otherwise required by statute or
these By-Laws.
SECTION 6. Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board, if one shall have
been elected, or by two or more directors of the Corporation or by the
President and Chief Executive Officer.
SECTION 7. Notice of Meetings. Notice of each special meeting of the
Board of Directors (and of each regular meeting for which notice shall be
required) shall be given by the Secretary as hereinafter provided in this
Section 7, in which notice shall be stated the time and place of the
meeting. Except as otherwise required by these By-Laws, such notice need
not state the purposes of such meeting. Notice of each such meeting shall
be mailed, postage prepaid, to each director, addressed to him at his
residence or usual place of business, by first class mail, at least two
days before the day on which such meeting is to be held, or shall be sent
addressed to him at such place by telegraph, cable, telex, telecopier or
other similar means, or be delivered to him personally or be given to him
by telephone or other similar means, at least twenty-four hours before
the time at which such meeting is to be held. Notice of any such meeting
need not be given to any director who shall, either before or after the
meeting, submit a signed waiver of notice or who shall attend such
meeting, except when he shall attend for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened.
SECTION 8. Quorum and Manner of Acting. A majority of the entire
Board of Directors shall constitute a quorum for the transaction of
business at any meeting of the Board of Directors, and, except as
otherwise expressly required by statute or the Certificate of
Incorporation or these By-Laws, the act of a majority of the directors
present at any meeting at which a quorum is present shall be the act of
the Board of Directors. In the absence of a quorum at any meeting of the
Board of Directors, a majority of the directors present thereat may
adjourn such meeting to another time and place. Notice of the time and
place of any such adjourned meeting shall be given to all of the
directors unless such time and place were announced at the meeting at
which the adjournment was taken, in which case such notice shall only be
given to the directors who were not present thereat. At any adjourned
meeting at which a quorum is present, any business may be transacted
which might have been transacted at the meeting as originally called. The
directors shall act only as a Board and the individual directors shall
have no power as such.
SECTION 9. Organization. At each meeting of the Board of Directors,
the Chairman of the Board, if one shall have been elected, or, in the
absence of the Chairman of the Board or if one shall not have been
elected, the President and Chief Executive Officer (or, in his absence,
another director chosen by a majority of the directors present) shall act
as chairman of the meeting and preside thereat. The Secretary or, in his
absence, any person appointed by the chairman shall act as secretary of
the meeting and keep the minutes thereof.
SECTION 10. Resignations. Any director of the Corporation may resign
at any time by giving written notice of his resignation to the
Corporation. Any such resignation shall take effect at the time specified
therein or, if the time when it shall become effective shall not be
specified therein, immediately upon its receipt. Unless otherwise
specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 11. Vacancies. Except as otherwise provided in the
Certificate of Incorporation, any vacancy in the Board of Directors,
whether arising from death, resignation, removal (with or without cause),
an increase in the number of directors or any other cause, may be filled
by the vote of a majority of the directors then in office, though less
than a quorum, or by the sole remaining director or by the stockholders
at the next annual meeting thereof or at a special meeting thereof. Each
director so elected shall hold office until his successor shall have been
elected and qualified.
SECTION 12. Removal of Directors. Except as otherwise provided in the
Certificate of Incorporation, any director may be removed, either with or
without cause, at any time, by the holders of a majority of the voting
power of the issued and outstanding capital stock of the Corporation
entitled to vote at an election of directors.
SECTION 13. Compensation. The Board of Directors shall have authority
to fix the compensation, including fees and reimbursement of expenses, of
directors for services to the Corporation in any capacity.
SECTION 14. Committees. The Board of Directors may, by resolution
passed by a majority of the entire Board of Directors, designate one or
more committees, including an executive committee, each committee to
consist of one or more of the directors of the Corporation. The Board of
Directors may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any
meeting of the committee.
Except to the extent restricted by statute or the Certificate of
Incorporation, each such committee, to the extent provided in the
resolution creating it, shall have and may exercise all the powers and
authority of the Board of Directors and may authorize the seal of the
Corporation to be affixed to all papers which require it. Each such
committee shall serve at the pleasure of the Board of Directors and have
such name as may be determined from time to time by resolution adopted by
the Board of Directors. Each committee shall keep regular minutes of its
meetings and report the same to the Board of Directors.
SECTION 15. Action by Consent. Unless restricted by the Certificate
of Incorporation, any action required or permitted to be taken by the
Board of Directors or any committee thereof may be taken without a
meeting if all members of the Board of Directors or such committee, as
the case may be, consent thereto in writing, and the writing or writings
are filed with the minutes of the proceedings of the Board of Directors
or such committee, as the case may be.
SECTION 16. Telephonic Meeting. Unless restricted by the Certificate
of Incorporation, any one or more members of the Board of Directors or
any committee thereof may participate in a meeting of the Board of
Directors or such committee by means of a conference telephone or similar
communications equipment by means of which all persons participating in
the meeting can hear each other. Participation by such means shall
constitute presence in person at a meeting.
ARTICLE IV
Officers
SECTION 1. Number and Qualifications. The officers of the Corporation
shall be elected by the Board of Directors and shall include the
President and Chief Executive Officer, one or more additional Presidents,
one or more Vice-Presidents, the Secretary and the Treasurer. If the
Board of Directors wishes, it may also elect as an officer of the
Corporation a Chairman of the Board and may elect other officers
(including one or more Assistant Treasurers and one or more Assistant
Secretaries) as may be necessary or desirable for the business of the
Corporation. Any two or more offices may be held by the same person, and
no officer except the Chairman of the Board need be a director. Each
officer shall hold office until his successor shall have been duly
elected and shall have qualified, or until his death, or until he shall
have resigned or have been removed, as hereinafter provided in these By-
Laws.
SECTION 2. Resignations. Any officer of the Corporation may resign at
any time by giving written notice of his resignation to the Corporation.
Any such resignation shall take effect at the time specified therein or,
if the time when it shall become effective shall not be specified
therein, immediately upon receipt. Unless otherwise specified therein,
the acceptance of any such resignation shall not be necessary to make it
effective.
SECTION 3. Removal. Any officer of the Corporation may be removed,
either with or without cause, at any time, by the Board of Directors at
any meeting thereof.
SECTION 4. Chairman of the Board. The Chairman of the Board, if one
shall have been elected, shall be a member of the Board and, if present,
shall preside at each meeting of the Board of Directors or the
stockholders. He shall advise and counsel with the President and Chief
Executive Officer, and in his absence with other executives of the
Corporation, and shall perform such other duties as may from time to time
be assigned to him by the Board of Directors.
SECTION 5. President and Chief Executive Officer. The President and
Chief Executive Officer shall be the chief executive officer of the
Corporation. He shall, in the absence of the Chairman of the Board or if
a Chairman of the Board shall not have been elected, preside at each
meeting of the Board of Directors or the stockholders. He shall perform
all duties incident to the office of President and Chief Executive
Officer and such other duties as may from time to time be assigned to him
by the Board of Directors.
SECTION 6. Additional Presidents and Vice-Presidents. Each additional
President and Vice-President shall perform all such duties as from time
to time may be assigned to him by the Board of Directors or the President
and Chief Executive Officer. At the request of the President and Chief
Executive Officer or in his absence or in the event of his inability or
refusal to act, the additional President or Vice-President, or if there
shall be more than one, the additional Presidents or the Vice-Presidents
in the order determined by the Board of Directors (or if there be no such
determination, then the additional Presidents or Vice-Presidents in the
order of their election), shall perform the duties of the President and
Chief Executive Officer, and, when so acting, shall have the powers of
and be subject to the restrictions placed upon the President and Chief
Executive Officer in respect of the performance of such duties.
SECTION 7. Treasurer. The Treasurer shall
(a) have charge and custody of, and be responsible for, all the
funds and securities of the Corporation;
(b) keep full and accurate accounts of receipts and disbursements
in books belonging to the Corporation;
(c) deposit all moneys and other valuables to the credit of the
Corporation in such depositaries as may be designated by the Board of
Directors or pursuant to its direction;
(d) receive, and give receipts for, moneys due and payable to the
Corporation from any source whatsoever;
(e) disburse the funds of the Corporation and supervise the
investments of its funds, taking proper vouchers therefor;
(f) render to the Board of Directors, whenever the Board of
Directors may require, an account of the financial condition of the
Corporation; and
(g) in general, perform all duties incident to the office of
Treasurer and such other duties as from time to time may be assigned
to him by the Board of Directors.
SECTION 8. Secretary. The Secretary shall
(a) keep or cause to be kept in one or more books provided for the
purpose, the minutes of all meetings of the Board of Directors, the
committees of the Board of Directors and the stockholders;
(b) see that all notices are duly given in accordance with the
provisions of these By-Laws and as required by law;
(c) be custodian of the records and the seal of the Corporation
and affix and attest the seal to all certificates for shares of the
Corporation (unless the seal of the Corporation on such certificates
shall be a facsimile, as hereinafter provided) and affix and attest
the seal to all other documents to be executed on behalf of the
Corporation under its seal;
(d) see that the books, reports, statements, certificates and
other documents and records required by law to be kept and filed are
properly kept and filed; and
(e) in general, perform all duties incident to the office of
Secretary and such other duties as from time to time may be assigned
to him by the Board of Directors.
SECTION 9. The Assistant Treasurer. The Assistant Treasurer, or if
there shall be more than one, the Assistant Treasurers in the order
determined by the Board of Directors (or if there be no such
determination, then in the order of their election), shall, in the
absence of the Treasurer or in the event of his inability or refusal to
act, perform the duties and exercise the powers of the Treasurer and
shall perform such other duties as from time to time may be assigned by
the Board of Directors.
SECTION 10. The Assistant Secretary. The Assistant Secretary, or if
there be more than one, the Assistant Secretaries in the order determined
by the Board of Directors (or if there be no such determination, then in
the order of their election), shall, in the absence of the Secretary or
in the event of his inability or refusal to act, perform the duties and
exercise the powers of the Secretary and shall perform such other duties
as from time to time may be assigned by the Board of Directors.
SECTION 11. Officers' Bonds or Other Security. If required by the
Board of Directors, any officer of the Corporation shall give a bond or
other security for the faithful performance of his duties, in such amount
and with such surety as the Board of Directors may require.
SECTION 12. Compensation. The compensation of the officers of the
Corporation for their services as such officers shall be fixed from time
to time by the Board of Directors. An officer of the Corporation shall
not be prevented from receiving compensation by reason of the fact that
he is also a director of the Corporation.
ARTICLE V
Stock Certificates and Their Transfer
SECTION 1. Stock Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate, signed by, or in the
name of the Corporation by, the Chairman of the Board or the President
and Chief Executive Officer or another President or a Vice-President and
by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary of the Corporation, certifying the number of shares
owned by him in the Corporation. If the Corporation shall be authorized
to issue more than one class of stock or more than one series of any
class, the designations, preferences and relative, participating,
optional or other special rights of each class of stock or series thereof
and the qualifications, limitations or restriction of such preferences
and/or rights shall be set forth in full or summarized on the face or
back of the certificate which the Corporation shall issue to represent
such class or series of stock, provided that, except as otherwise
provided in Section 202 of the General Corporation Law of the State of
Delaware, in lieu of the foregoing requirements, there may be set forth
on the face or back of the certificate which the Corporation shall issue
to represent such class or series of stock, a statement that the
Corporation will furnish without charge to each stockholder who so
requests the designations, preferences and relative, participating,
optional or other special rights of each class of stock or series thereof
and the qualifications, limitations or restrictions of such preferences
and/or rights.
SECTION 2. Facsimile Signatures. Any or all of the signatures on a
certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer, transfer agent
or registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer, transfer
agent or registrar at the date of issue.
SECTION 3. Lost Certificates. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been
lost, stolen or destroyed. When authorizing such issue of a new
certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require
the owner of such lost, stolen or destroyed certificate or certificates,
or his legal representative, to give the Corporation a bond in such sum
as it may direct sufficient to indemnify it against any claim that may be
made against the Corporation on account of the alleged loss, theft or
destruction of any such certificate or the issuance of such new
certificate.
SECTION 4. Transfers of Stock. Upon surrender to the Corporation or
the transfer agent of the Corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the Corporation to issue a
new certificate to the person entitled thereto, cancel the old
certificate and record the transaction upon its records; provided,
however, that the Corporation shall be entitled to recognize and enforce
any lawful restriction on transfer. Whenever any transfer of stock shall
be made for collateral security, and not absolutely, it shall be so
expressed in the entry of transfer if, when the certificates are
presented to the Corporation for transfer, both the transferor and the
transferee request the Corporation to do so.
SECTION 5. Transfer Agents and Registrars. The Board of Directors may
appoint, or authorize any officer or officers to appoint, one or more
transfer agents and one or more registrars.
SECTION 6. Regulations. The Board of Directors may make such
additional rules and regulations, not inconsistent with these By-Laws, as
it may deem expedient concerning the issue, transfer and registration of
certificates for shares of stock of the Corporation.
SECTION 7. Fixing the Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or to express consent
to corporate action in writing without a meeting, or entitled to receive
payment of any dividend or other distribution or allotment of any rights,
or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the
Board of Directors may fix, in advance, a record date, which shall not be
more than sixty nor less than ten days before the date of such meeting,
nor more than sixty days prior to any other action. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the
adjourned meeting.
SECTION 8. Registered Stockholders. The Corporation shall be entitled
to recognize the exclusive right of a person registered on its records as
the owner of shares of stock to receive dividends and to vote as such
owner, shall be entitled to hold liable for calls and assessments a
person registered on its records as the owner of shares of stock, and
shall not be bound to recognize any equitable or other claim to or
interest in such share or shares of stock on the part of any other
person, whether or not it shall have express or other notice thereof,
except as otherwise provided by the laws of Delaware.
ARTICLE VI
Indemnification of Directors and Officers
SECTION 1. General. The Corporation shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right
of the Corporation) by reason of the fact that he is or was after the
Consummation Date (as defined in the Certificate of Incorporation) a
director, officer, employee or agent of the Corporation, or is or was
after the Consummation Date serving at the request of the Corporation as
a director, officer, employee or agent of another corporation,
partnership, limited liability company, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding if he acted in
good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
SECTION 2. Actions By or In Right of the Corporation. The Corporation
shall indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or
in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was after the Consummation Date a
director, officer, employee or agent of the Corporation, or is or was
after the Consummation Date serving at the request of the Corporation as
a director, officer, employee or agent of another corporation,
partnership, limited liability company, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement
of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, provided that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless and only to the extent
that the Court of Chancery of the State of Delaware or the court in which
such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such expenses which the Court of Chancery or such other
court shall deem proper.
SECTION 3. Indemnification in Certain Cases. To the extent that a
director, officer, employee or agent of the Corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Sections 1 and 2 of this Article VI, or in
defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
SECTION 4. Procedure. Any indemnification under Sections 1 and 2 of
this Article VI (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination
that indemnification of the director, officer, employee or agent is
proper in the circumstances because he has met the applicable standard of
conduct set forth in such Sections 1 or 2, as appropriate. Such
determination shall be made (a) by the Board of Directors by a majority
vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (b) if such a quorum is not obtainable,
or, even if obtainable a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (c) by the
stockholders.
SECTION 5. Advances for Expenses. Expenses incurred in defending a
civil or criminal action, suit or proceeding shall be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the
director, officer, employee or agent to repay such amount if it shall be
ultimately determined that he is not entitled to be indemnified by the
Corporation as authorized in this Article VI.
SECTION 6. Rights Not Exclusive. The indemnification and advancement
of expenses provided by, or granted pursuant to, the other subsections of
this Article VI shall not be deemed exclusive of any other rights to
which those seeking indemnification or advancement of expenses may be
entitled under any law, by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office.
SECTION 7. Insurance. The Corporation shall have power to purchase
and maintain insurance on behalf of any person who is or was after the
Consummation Date a director, officer, employee or agent of the
Corporation, or is or was after the Consummation Date serving at the
request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, limited liability company, joint
venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article
VI.
SECTION 8. Survival of Rights. The indemnification and advancement of
expenses provided by, or granted pursuant to, this Article VI shall
continue as to a person who after the Consummation Date has ceased to be
a director, officer, employee or agent and shall inure to the benefit of
the heirs, executors and administrators of such a person.
ARTICLE VII
General Provisions
SECTION 1. Dividends. Subject to the provisions of statute and the
Certificate of Incorporation, dividends upon the shares of capital stock
of the Corporation may be declared by the Board of Directors at any
regular or special meeting. Dividends may be paid in cash, in property or
in shares of stock of the Corporation, unless otherwise provided by
statute or the Certificate of Incorporation.
SECTION 2. Reserves. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such
sum or sums as the Board of Directors may, from time to time, in its
absolute discretion, think proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation or for such other purpose as
the Board of Directors may think conducive to the interests of the
Corporation. The Board of Directors may modify or abolish any such
reserves in the manner in which it was created.
SECTION 3. Seal. The seal of the Corporation shall be in such form as
shall be approved by the Board of Directors.
SECTION 4. Fiscal Year. The fiscal year of the Corporation shall be
fixed, and once fixed, may thereafter be changed, by resolution of the
Board of Directors.
SECTION 5. Checks, Notes, Drafts, Etc. All checks, notes, drafts or
other orders for the payment of money of the Corporation shall be signed,
endorsed or accepted in the name of the Corporation by such officer,
officers, person or persons as from time to time may be designated by the
Board of Directors or by an officer or officers authorized by the Board
of Directors to make such designation.
SECTION 6. Execution of Contracts, Deeds, Etc. The Board of Directors
may authorize any officer or officers, agent or agents, in the name and
on behalf of the Corporation to enter into or execute and deliver any and
all deeds, bonds, mortgages, contracts and other obligations or
instruments, and such authority may be general or confined to specific
instances.
SECTION 7. Voting of Stock in Other Corporations. Unless otherwise
provided by resolution of the Board of Directors, the Chairman of the
Board or the President and Chief Executive Officer, from time to time,
may (or may appoint one or more attorneys or agents to) cast the votes
which the Corporation may be entitled to cast as a shareholder or
otherwise in any other corporation, any of whose shares or securities may
be held by the Corporation, at meetings of the holders of the shares or
other securities of such other corporation. In the event one or more
attorneys or agents are appointed, the Chairman of the Board or the
President and Chief Executive Officer may instruct the person or persons
so appointed as to the manner of casting such votes or giving such
consent. The Chairman of the Board or the President and Chief Executive
Officer may, or may instruct the attorneys or agents appointed to,
execute or cause to be executed in the name and on behalf of the
Corporation and under its seal or otherwise, such written proxies,
consents, waivers or other instruments as may be necessary or proper in
the circumstances.
ARTICLE VIII
Amendments
These By-Laws may be amended or repealed or new by-laws adopted (a)
by action of the stockholders entitled to vote thereon at any annual or
special meeting of stockholders or (b) if the Certificate of
Incorporation so provides, by action of the Board of Directors at a
regular or special meeting thereof.
Dated: December 30, 1994
TELEMUNDO GROUP, INC.
1994 STOCK PLAN
SECTION 1. Establishment, Purpose, and Effective Date of Plan
1.1 Establishment. Telemundo Group, Inc., a Delaware corporation (the
``Company''), hereby establishes the ``1994 STOCK PLAN'' (the ``Plan'')
for key employees. The Plan permits the grant of Stock Options, Stock
Appreciation Rights and Restricted Stock.
1.2 Purpose. The purpose of the Plan is to advance the interests of
the Company and its Subsidiaries and promote continuity of management by
encouraging and providing key employees with the opportunity to acquire
an equity interest in the Company and to participate in the increase in
shareholder value as reflected in the growth in the price of the shares
of the Company's Stock and by enabling the Company to attract and retain
the services of key employees upon whose judgment, interest, skills, and
special effort the successful conduct of its operations is largely
dependent.
1.3 Effective Date. The Plan shall become effective on the
Consummation Date, as defined in the Second Amended Chapter 11 Plan of
Reorganization of Telemundo Group, Inc. as debtor and debtor-in-
possession, dated April 29, 1994 and confirmed by the United States
Bankruptcy Court for the Southern District of New York on July 20, 1994,
as amended or modified from time to time (the ``Bankruptcy Plan''),
subject to the approval by the affirmative votes of the holders of a
majority of the securities of the Company entitled to vote.
SECTION 2. Definitions; Construction
2.1 Definitions. Whenever used herein, the following terms shall have
the respective meanings set forth below:
(a) ``Act'' means the Securities Exchange Act of 1934, as amended.
(b) ``Apollo'' means, collectively, Apollo Advisors, L.P., a
Delaware limited partnership, Lion Advisors, L.P., a Delaware limited
partnership, Apollo Investment Fund, L.P., a Delaware limited
partnership, Apollo Investment Fund II, L.P., a Delaware limited
partnership, or any investment fund, investment account or other
entity whose investing manager, investment advisor or general
partner, or any principal thereof, is any of the foregoing entities
or individuals or any principal or affiliate of any of them;
provided, however, that no entity or individual shall be deemed
within the definition of Apollo when that entity or individual ceases
to be an affiliate of any of the foregoing entities or individuals or
an investment fund, investment account or other entity whose
investing manager, investment advisor or general partner, or any
principal thereof, is any of the foregoing entities or individuals or
any principal or affiliate of any of them.
(c) ``Board'' means the Board of Directors of the Company.
(d) ``Change in Capitalization'' means any increase or reduction
in the number of shares of Stock, or any change (including, but not
limited to, a change in value) in the shares of Stock or exchange of
shares of Stock for a different number or kind of shares or other
securities of the Company or any other corporation or other entity,
by reason of a reclassification, recapitalization, merger,
consolidation, reorganization, spin-off, split-up, issuance (other
than pursuant to the Bankruptcy Plan) of warrants or rights or
debentures, stock dividend, stock split or reverse stock split,
extraordinary dividend, property dividend, combination or exchange of
shares or otherwise.
(e) A ``Change in Control'' means an event or series of events
after the Consummation Date by which(i) any ``person'' or ``group''
(as such terms are used in Section 13(d) and 14(d) of the Act)
becomes the ``beneficial owner'' (as defined in Rule 13d-3 under the
Act), directly or indirectly, of more than 50% of the aggregate
voting power of all the capital stock of the Company normally
entitled to vote in the election of directors or (ii) during any
period of two consecutive calendar years individuals who at the
beginning of such period constituted the Board (together with any new
directors whose election by the Board or whose nomination for
election by the Company's stockholders was approved by a vote of at
least a majority of the directors then still in office who either
were directors at the beginning of such period or whose election or
nomination was previously so approved) cease for any reason to
constitute a majority of the directors then in office; provided,
however, that it shall not constitute a Change in Control if, in the
case of clause (i) above, Apollo and/or TLMD and/or Reliance
Insurance Company, a Pennsylvania corporation, and/or its affiliates
(collectively, ``Reliance'') become the beneficial owners, directly
or indirectly, of more than 50% of the aggregate voting power of all
the capital stock of the Company entitled to vote in the election of
directors or, in the case of clause (ii) above, such Change in
Control would be caused by the designation of directors by Apollo,
TLMD or Reliance. Notwithstanding anything to the contrary set forth
above in this definition, a ``Change in Control'' shall not be deemed
to have occurred upon the happening of any of the events specified in
clauses (i) and (ii) of this definition, if and so long as any shares
of Series B Common Stock of the Company are issued and outstanding
and the holders of such shares have the power to elect at least a
majority of the Board.
(f) ``Code'' means the Internal Revenue Code of 1986, as amended.
(g) ``Committee'' means a committee of the Board designated to
administer the Plan which shall consist solely of two or more members
of the Board who are ``disinterested'' within the meaning of Rule
16b-3 under the Act and ``outside directors'' within the meaning of
Section 162(m) of the Code.
(h) ``Company'' means Telemundo Group, Inc., a Delaware
corporation, and any successors thereto.
(i) ``Disability'' shall have the meaning assigned to the terms
``total disability'' or ``totally disabled'' in the Telemundo Group,
Inc. long-term disability program for salaried employees, provided
the Participant remains totally disabled for six consecutive months;
or, if the Company does not maintain a long-term disability program,
an individual shall have a ``Disability'' if he is unable to engage
in any substantial activity by reason of any medically determinable,
physical or mental impairment that can be expected to result in death
or which has lasted or can be expected to last for a continuous
period of not less than 12 months.
(j) ``Eligible Employee'' means any key employee designated by the
Committee as eligible to participate in the Plan pursuant to
Subsection 3.1.
(k) ``Employee Option'' means an Option granted to an Eligible
Employee pursuant to Section 6.
(l) ``Fair Market Value'' means the mean of the high and low
prices at which the Stock is reported to have traded on the relevant
date as reported on the NASDAQ Electronic Interdealer Quotation
System (``NASDAQ System''); and if there is no trade on the relevant
date, the Fair Market Value shall mean the mean of the low asked and
high bid prices on that date as reported on the NASDAQ System. If the
principal market for the Stock shall become a national securities
exchange then the fair market value shall mean the mean of the high
and low prices at which the Stock is reported to have traded on the
relevant date; and if there is no trade on the relevant date, the
Fair Market Value shall mean the mean of the low asked and high bid
prices on that date. If no Fair Market Value has been established in
accordance with the foregoing, Fair Market Value shall be the value
established by the Board in good faith and, in the case of an
Incentive Stock Option, in accordance with Section 422 of the Code.
(m) ``Option'' means the right to purchase Stock at a stated price
for a specified period of time. For purposes of the Plan an Option
may be either (i) an ``incentive stock option'' within the meaning of
Section 422 of the Code or (ii) a ``nonstatutory stock option.''
(n) ``Option Agreement'' means the agreement evidencing the grant
of an Option as described in Subsection 6.2.
(o) ``Option Price'' means the price at which Stock may be
purchased pursuant to an Option.
(p) ``Optionee'' means a person to whom an Option has been granted
under the Plan.
(q) ``Participant'' means an Eligible Employee who has been
granted and, at the time of reference, holds an Option or share of
Restricted Stock.
(r) ``Period of Restriction'' means the period during which shares
of Restricted Stock are subject to restrictions pursuant to Section 9
of the Plan.
(s) ``Pooling Period'' means, with respect to a Pooling
Transaction, the period ending on the day after the first date on
which the combined entity resulting from the Pooling Transaction
publishes thirty days of combined operating results, or if the Board
makes a determination, such other period following the Pooling
Transaction which the Board reasonably determines is appropriate in
connection with the Pooling Transaction as a means of qualifying for
and pursuing ``pooling of interests'' accounting treatment.
(t) ``Pooling Transaction'' means an acquisition of or by the
Company in a transaction which is intended to be treated as a
``pooling of interests'' under generally accepting accounting
principles.
(u) ``Restricted Stock'' means Stock granted to an Eligible
Employee pursuant to Section 9 of the Plan.
(v) ``Retirement'' shall have the meaning assigned to such term in
the Telemundo Group, Inc. retirement plan, or if such plan is not in
effect, such term shall mean the termination of employment with the
Company by reason of the attainment of the age of sixty.
(w) ``Stock'' means the Series A Common Stock of the Company, par
value of $.01 per share.
(x) ``Stock Appreciation Right'' means the right to receive the
increase in the value of Stock subject to an Option in lieu of
purchasing such Stock.
(y) ``Subsidiary'' means any present or future subsidiary of the
Company, as defined in Section 424(f) of the Code.
(z) ``TLMD'' means TLMD Partners II, L.L.C., a Delaware limited
liability company, and its affiliates, members (including voting
committee members), investing managers and investment advisors, or any
investment fund, investment account or other entity whose investing
manager, investment advisor or general partner, or any principal thereof,
is any of the foregoing entities or individuals or any principal or
affiliate of any of them; provided, however, that no entity or individual
shall be deemed within the definition of TLMD when that entity or
individual ceases to be an affiliate of any of the foregoing entities or
individuals or an investment fund, investment account or other entity
whose investing manager, investment advisor or general partner, or any
principal thereof, is any of the foregoing entities or individuals or any
principal or affiliate of any of them.
2.2 Number. Except when otherwise indicated by the context, the
singular shall include the plural, and the plural shall include the
singular.
SECTION 3. Eligibility and Participation
3.1 Eligibility and Participation. Eligible Employees in the Plan
shall be selected by the Committee from among those officers and other
key employees of the Company and its Subsidiaries who, in the opinion of
the Committee, are in a position to contribute materially to the
Company's continued growth and development and to its long-term financial
success.
SECTION 4. Stock Subject to Plan
4.1 Number. The total number of shares of Stock subject to issuance
under the Plan may not exceed 1,000,000 subject to adjustment upon
occurrence of any of the events indicated in Subsection 4.5. The maximum
number of shares of Stock with respect to which Options or Stock
Appreciation Rights may be granted to any Eligible Employee during the
term of the Plan cannot exceed 700,000. The shares to be delivered under
the Plan may consist, in whole or in part, of authorized but unissued
Stock or treasury Stock, not reserved for any other purpose.
4.2 Unused Stock; Unexercised Rights. In the event any shares of
Stock are subject to an Option, which for any reason expires or is
terminated unexercised as to such shares, or any shares of Stock subject
to a Restricted Stock grant made under the Plan are reacquired by the
Company pursuant to Section 9 of the Plan, such shares again shall become
available for issuance under the Plan.
4.3 Exercise of Stock Appreciation Right. Whenever a Stock
Appreciation Right is exercised and payment of the amount determined in
Subsection 8.1(b) is made in cash, the shares of Stock allocable to the
portion of the Option surrendered may again be the subject of Options or
Restricted Stock hereunder. Whenever a Stock Appreciation Right is
exercised and payment of the amount determined in Subsection 8.1(b) is
made in shares of Stock, no shares of Stock with respect to which the
Stock Appreciation Right is exercised may again be the subject of Options
or Restricted Stock hereunder.
4.4 Restricted Stock. Whenever any shares of Stock granted to an
Eligible Employee are forfeited pursuant to Section 9 herein, such shares
may again be the subject of Options or Restricted Stock hereunder, but
only if the Participant had not been paid any dividend or received any
other benefit of ownership of such forfeited shares.
4.5 Adjustment in Capitalization.
(a) In the event of a Change in Capitalization, the Committee
shall conclusively determine the appropriate adjustments, if any, to
the (i) maximum number and class of shares of Stock or other
securities with respect to which Options or Restricted Stock may be
granted under the Plan; (ii) the number and class of shares of Stock
or other securities which are subject to outstanding Options or
Restricted Stock granted under the Plan, and the purchase price
therefor, if applicable; and (iii) the maximum number of shares of
Stock or other securities with respect to which Options or Stock
Appreciation Rights may be granted to any Eligible Employee during
the term of the Plan.
(b) Any such adjustment in the shares of Stock or other securities
subject to outstanding incentive stock options (including any
adjustments in the purchase price) shall be made in such manner as
not to constitute a modification as defined by Section 424(h)(3) of
the Code and only to the extent otherwise permitted by Sections 422
and 424 of the Code.
(c) If, by reason of a Change in Capitalization, a grantee of
Restricted Stock shall be entitled to, or an Optionee shall be
entitled to exercise an Option with respect to, new, additional or
different shares of stock or securities, such new additional or
different shares shall thereupon be subject to all of the conditions,
restrictions and performance criteria which were applicable to the
Restricted Stock or shares of Stock subject to the Option, as the
case may be, prior to such Change in Capitalization.
SECTION 5. Duration of Plan
5.1 Duration of Plan. The Plan shall remain in effect, subject to the
Board's right to earlier terminate the Plan pursuant to Subsection 12.3
hereof, until all Stock subject to it shall have been purchased or
acquired pursuant to the provisions hereof. Notwithstanding the
foregoing, no Option or Restricted Stock may be granted under the Plan on
or after the tenth anniversary of the Consummation Date.
SECTION 6. Option Grants for Eligible Employees
6.1 Grant of Employee Options. Subject to the provisions of Sections
4 and 5, Employee Options may be granted to Eligible Employees at any
time and from time to time as shall be determined by the Committee. The
Committee shall have complete discretion consistent with the terms of the
Plan in determining whether to grant Employee Options and the number of
Options granted to each Eligible Employee. The Committee also shall
determine whether an Employee Option is to be an incentive stock option
within the meaning of Section 422 of the Code or a nonstatutory stock
option. Nothing in this Section 6 of the Plan shall be deemed to prevent
the grant of nonstatutory stock options in excess of the maximum
established by Section 422 of the Code.
6.2 Option Agreement. Each Employee Option shall be evidenced by an
Option Agreement that shall specify the type of Option granted, the
Option Price, the duration of the Option, the number of shares of Stock
to which the Option pertains and such other provisions as the Committee
shall determine.
6.3 Option Price. The Option Price for each Employee Option shall be
determined by, or in the manner specified by, the Committee; provided
that (i) subject to Section 4.5 hereof, Employee Options with respect to
no more than 600,000 shares of Stock may have an Option Price less than
the Fair Market Value of the Stock on the date the Option is granted and
(ii) in the case of an incentive stock option, no Employee Option shall
have an Option Price that is less than the Fair Market Value of the Stock
on the date the Option is granted (110% of Fair Market Value in the case
of an incentive stock option granted to any person who owns stock
possessing more than 10% of the total combined voting power of all
classes of stock of the Company or any Subsidiary (a ``Ten Percent
Stockholder'')).
6.4 Duration of Employee Options. Each Employee Option shall expire
at such time as the Committee shall determine at the time it is granted;
provided, however, that no Employee Option shall be exercisable later
than the tenth anniversary date of its grant (the fifth anniversary in
the case of an incentive stock option granted to a Ten Percent
Stockholder).
6.5 Exercise of Employee Options. Employee Options granted under the
Plan shall be exercisable at such times and be subject to such
restrictions and conditions as the Committee shall in each instance
approve, which need not be the same for all Eligible Employees.
SECTION 7. Terms and Conditions Applicable to All Options
7.1 Payment. The Option Price shall be payable to the Company in full
upon exercise of an Option either (i) in cash or its equivalent, or (ii)
at the discretion of the Committee, by tendering shares of Stock held by
the Optionee for more than six months having a Fair Market Value at the
time of exercise equal to the Option Price or (iii) by a combination of
(i) and (ii). The proceeds from such a payment shall be added to the
general funds of the Company and shall be used for general corporate
purposes.
7.2 Restrictions on Stock Transferability. The Committee may impose
such restrictions on any shares of Stock acquired pursuant to the
exercise of an Option under the Plan as it may deem advisable, including,
without limitation, restrictions under applicable Federal securities law,
under requirements of any stock exchange upon which such shares of Stock
are then listed and under any blue sky or state securities laws
applicable to such shares.
7.3 Termination of Employment Due to Retirement. The Committee may
provide in the Option Agreement that in the event the employment of the
Optionee is terminated by reason of Retirement or for a reason other than
for Cause or following a Change in Control, any outstanding Options
granted to the Optionee which are then exercisable shall continue to be
exercisable at any time prior to the earlier of the expiration date of
the Options and one year after the date of termination, and any Options
not then exercisable shall terminate immediately, subject to such
exceptions (which shall be set forth in the Option Agreement) as the
Committee may, in its sole discretion, approve.
7.4 Termination of Employment Due to Death or Disability. The
Committee may provide in the Option Agreement the rights of an Optionee
under any then outstanding Option granted to the Optionee pursuant to the
Plan in the event the employment of the Optionee is terminated by reason
of death or Disability.
7.5 Termination of Employment for Cause. Notwithstanding anything to
the contrary herein, if the employment of the Optionee shall terminate
for Cause, any then outstanding Option granted pursuant to the Plan to
the Optionee shall terminate immediately; provided, that the Committee
may waive, in whole or in part, the automatic forfeiture of such Employee
Options and may set forth such waiver or condition in the Option
Agreement or at any other time, including following the termination of
employment. For purposes of this Plan, ``Cause'' means the Optionee's
knowingly or recklessly causing material injury to the Company, the
Optionee's willful misconduct in the performance of (or failure to
perform) his duties, or the Optionee's dishonest, fraudulent or unlawful
behavior involving moral turpitude whether or not in connection with his
employment.
7.6 Nontransferability and Exercisability of Options. No Option
granted under the Plan may be sold, transferred, pledged, assigned or
otherwise alienated or hypothecated, otherwise than by will or by the
laws of descent and distribution. Further, all Options granted to an
Optionee under the Plan shall be exercisable during his lifetime only by
such Optionee. Notwithstanding any provision of the Plan to the contrary,
no Option shall be exercisable prior to the time a registration statement
under the Securities Act of 1933 is effective with respect to the shares
of Stock issuable upon the exercise of such Option.
SECTION 8. Stock Appreciation Rights
8.1 Stock Appreciation Rights. The Committee may, in its discretion,
in connection with the grant of an Employee Option, grant to the Optionee
Stock Appreciation Rights, the terms and conditions of which shall be set
forth in an agreement. A Stock Appreciation Right shall cover the same
shares of Stock covered by the Option (or such lesser number of shares of
Stock as the Committee may determine) and shall, except as provided in
this Section 8, be subject to the same terms and conditions as the
related Option. Stock Appreciation Rights shall be subject to the
following terms and provisions:
(a) A Stock Appreciation Right may be granted:
(i) either at the time of grant, or at any time thereafter
during the term of the Option if related to a nonstatutory stock
option; or
(ii) only at the time of grant if related to an incentive stock
option.
(b) A Stock Appreciation Right will entitle the holder of the
related Option, upon exercise of the Stock Appreciation Right, to
surrender such Option, or any portion thereof to the extent
unexercised, and to receive payment of an amount determined by
multiplying (i) the excess of the Fair Market Value of a share of
Stock on the date of exercise of such Stock Appreciation Right over
the purchase price of a share of Stock under the related Option, by
(ii) the number of shares as to which such Stock Appreciation Right
has been exercised. Notwithstanding the foregoing, the Committee may
limit in any manner the amount payable with respect to any Stock
Appreciation Right by including such a limit in the agreement
evidencing the Stock Appreciation Right at the time it is granted.
(c) A Stock Appreciation Right will be exercisable at such time or
times and only to the extent that a related Option is exercisable,
and will not be transferable except to the extent that such related
Option may be transferable. A Stock Appreciation Right granted in
connection with an incentive stock option shall be exercisable only
if the Fair Market Value of a share of Stock on the date of exercise
exceeds the purchase price of a share of Stock specified in the
related Option.
(d) Upon the exercise of a Stock Appreciation Right, the related
Option shall be canceled to the extent of the number of shares of
Stock as to which the Stock Appreciation Right is exercised, and upon
the exercise of an Option granted in connection with a Stock
Appreciation Right, the Stock Appreciation Right shall be canceled to
the extent of the number of shares of Stock as to which the Option is
exercised or surrendered.
(e) Stock Appreciation Rights shall be exercised by an Optionee
only by a written notice delivered in person or by mail to the
Secretary of the Company at the Company's principal executive office,
specifying the number of shares of Stock with respect to which the
Stock Appreciation Right is being exercised. If requested by the
Committee, the Optionee shall deliver the agreement evidencing the
Stock Appreciation Right being exercised and the agreement evidencing
any related Option to the Secretary of the Company who shall endorse
thereon a notation of such exercise and return such agreement to the
Optionee.
(f) Payment of the amount determined under Subsection (b) may be
made by the Company in the discretion of the Committee, solely in
whole shares of Stock in a number determined at their Fair Market
Value on the date preceding the date of exercise of the Stock
Appreciation Right, or solely in cash, or in a combination of cash
and Stock. If the Committee decides to make full payment in Stock and
the amount payable results in a fractional share, payment for the
fractional share will be made in cash. Notwithstanding the foregoing,
no payment in the form of cash may be made upon the exercise of a
Stock Appreciation Right pursuant to Subsection (b) to an officer of
the Company or a Subsidiary who is subject to Section 16 of the
Exchange Act, unless the exercise of such Stock Appreciation Right is
made either (i) during the period beginning on the third business day
and ending on the twelfth business day following the date of release
for publication of the Company's quarterly or annual statements of
sales and earnings or (ii) pursuant to an irrevocable election to
receive cash made at least six months prior to the exercise of such
Stock Appreciation Right.
(g) No Stock Appreciation Right may be exercised before the date
six months after the date it is granted.
(h) Subject to the terms of the Plan, the Committee may modify
outstanding awards of Stock Appreciation Rights or accept the
surrender of outstanding awards of Stock Appreciation Rights (to the
extent not exercised) and grant new awards in substitution for them.
Notwithstanding the foregoing, no modification of an award of Stock
Appreciation Rights shall adversely alter or impair any rights or
obligations under the agreement granting such Stock Appreciation
Rights without the Optionee's consent.
SECTION 9. Restricted Stock
9.1 Grant of Restricted Stock. Subject to the provisions of Sections
4 and 5, the Committee, at any time and from time to time, may grant
shares of Restricted Stock under the Plan to such Eligible Employees and
in such amounts as it shall determine in its sole discretion. Each grant
of Restricted Stock shall be made pursuant to a written agreement which
shall contain such restrictions, terms and conditions as the Committee
may determine in its discretion. Restrictions upon shares of Restricted
Stock shall lapse at such time or times and on such terms and conditions
as the Committee may determine.
9.2 Transferability. Except as provided in this Section 9, the shares
of Restricted Stock granted hereunder may not be sold, transferred,
pledged, assigned or otherwise alienated or hypothecated for such period
of time as shall be determined by the Committee and shall be specified in
the Restricted Stock grant, or upon earlier satisfaction of other
conditions as specified by the Committee in its sole discretion and set
forth in the Restricted Stock grant; provided that Restricted Stock
granted to officers, directors or any person who owns, directly or
indirectly, more than 10% of any class of equity security of the Company
which is registered pursuant to Section 12 of the Act may not be sold for
at least six months after the date of grant.
9.3 Other Restrictions. The Committee may impose such other
restrictions on any shares of Restricted Stock granted to any Eligible
Employee pursuant to the Plan as it may deem advisable including, without
limitation, restrictions under applicable federal or state securities
laws, and may legend the certificates representing Restricted Stock to
give appropriate notice of such restrictions.
9.4 Certificate Legend. In addition to any legends placed on
certificates pursuant to Subsection 9.3 hereof, each certificate
representing shares of Restricted Stock granted pursuant to the Plan
shall bear the following legend:
``The sale or other transfer of the shares of stock represented by
this certificate, whether voluntary, involuntary or by operation of
law, is subject to certain restrictions on transfer set forth in
Telemundo Group, Inc.'s 1994 Stock Plan, rules of administration
adopted pursuant to such Plan and a Restricted Stock grant dated .
A copy of the Plan, such rules and such Restricted Stock grant may
be obtained from the Secretary of Telemundo Group, Inc.''
9.5 Removal of Restrictions. Except as otherwise provided in this
Section 9, shares of Restricted Stock covered by each Restricted Stock
grant made under the Plan shall become freely transferable by the
Eligible Employee after the last day of the Period of Restriction. Once
the shares are released from the restrictions, the Eligible Employee
shall be entitled to have the legend required by Subsection 9.4 removed
from his Stock certificate.
9.6 Voting Rights. During the Period of Restriction, Eligible
Employees holding shares of Restricted Stock granted hereunder may
exercise full voting rights with respect to those shares.
9.7 Dividends and Other Distributions. During the Period of
Restriction, Eligible Employees holding shares of Restricted Stock
granted hereunder shall be entitled to receive all dividends and other
distributions paid with respect to those shares while they are so held.
If any such dividends or distributions are paid in shares of Stock, the
shares shall be subject to the same restrictions on transferability as
the shares of Restricted Stock with respect to which they were paid.
SECTION 10. Beneficiary Designation
10.1 Beneficiary Designation. Subject to Subsections 7.6 and 9.2,
each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under the Plan is to be paid in case of
the Participant's death before he or she receives any or all of such
benefit. Each designation will revoke all prior designations by the same
Participant, shall be in a form prescribed by the Committee and will be
effective only when filed by the Participant in writing with the
Committee during the lifetime of the Participant. In the absence of any
such designation, benefits remaining unpaid at the Participant's death
shall be paid to the estate of the Participant.
SECTION 11. Rights of Employees
11.1 Employment. Nothing in the Plan shall interfere with or limit in
any way the right of the Company to terminate any Participant's
employment or service at any time nor confer upon any Participant any
right to continue in the employ or service of the Company.
11.2 Participation. No employee shall have a right to be selected as
an Eligible Employee or, having been so selected, to be selected again as
an Optionee or recipient of Restricted Stock. The preceding sentence
shall not be construed or applied so as to deny an employee any
participation in the Plan solely on the basis that the employee was a
Participant in connection with a prior grant of benefits under the Plan.
SECTION 12. Administration; Powers and Duties of the Committee
12.1 Administration. The Committee shall be responsible for the
administration of the Plan. The Committee, by majority action thereof, is
authorized to interpret the Plan, to prescribe, amend, and rescind rules
and regulations relating to the Plan, to provide for conditions and
assurances deemed necessary or advisable to protect the interests of the
Company, and to make all other determinations necessary or advisable for
the administration of the Plan, but only to the extent not contrary to
the express provisions of the Plan. Determinations, interpretations, or
other actions made or taken by the Committee pursuant to the provisions
of the Plan shall be final and binding and conclusive for all purposes
and upon all persons whomsoever. No member of the Committee shall be
personally liable for any action, determination or interpretation made or
taken with respect to the Plan and all members of the Committee shall be
fully indemnified by the Company with respect to any such action,
determination or interpretation.
12.2 Change in Control. Without limiting the authority of the
Committee as provided herein, the Committee, either at the time Employee
Options or shares of Restricted Stock are granted, or, if so provided in
the applicable Option Agreement or Restricted Stock grant, at any time
thereafter, shall have the authority to take such actions as it deems
advisable, including to accelerate in whole or in part the exercisability
of Employee Options and/or the last day of the Period of Restriction upon
a Change in Control. The Option Agreements and Restricted Stock grants
approved by the Committee may contain provisions whereby, in the event of
a Change in Control, the acceleration of the exercisability of Employee
Options and/or the last day of the Period of Restriction may be automatic
or may be subject to the discretion of the Committee or may depend upon
whether the Change in Control shall be approved by a majority of the
members of the Board or such other criteria as the Committee may specify.
Nothing herein shall obligate the Committee to take any action upon a
Change in Control.
12.3 Amendment, Modification and Termination of Plan. The Board may
at any time terminate, and from time to time may amend or modify, the
Plan, provided, however, that no such action of the Board, without
approval of the stockholders, may:
(a) Increase the total amount of Stock which may be issued under
the Plan, except as provided in Subsection 4.5 of the Plan.
(b) Materially increase the cost of the Plan or materially
increase the benefits to Participants.
(c) Extend the period during which Options or Restricted Stock may
be granted.
(d) Extend the maximum period after the date of grant during which
Options may be exercised.
(e) Change the class of individuals eligible to receive Options or
Restricted Stock.
Any amendment which requires stockholder approval in order for the
Plan to continue to comply with Rule 16b-3 of the Act or any other law,
regulation or stock exchange requirement shall not be effective unless
approved by the requisite vote of stockholders. No amendment,
modification or termination of the Plan shall in any manner adversely
affect any Options or Restricted Stock theretofore granted to any
Participant under the Plan, without the consent of that Participant.
12.4 Interpretation. Unless otherwise expressly stated in the
relevant Agreement, any grant of Options, Stock Appreciation Rights and
Restricted Stock is intended to be performance-based compensation within
the meaning of 162(m)(4)(C) of the Code. The Committee shall not be
entitled to exercise any discretion otherwise authorized hereunder with
respect to such Options, Stock Appreciation Rights or Restricted Stock if
the ability to exercise such discretion or the exercise of such
discretion itself would cause the compensation attributable to such
Options to fail to qualify as such performance-based compensation.
SECTION 13. Tax Withholding
13.1 Tax Withholding. At such times as an Eligible Employee
recognizes taxable income in connection with the receipt of shares,
securities, cash or property hereunder (a ``Taxable Event''), the
Eligible Employee shall pay to the Company an amount equal to the
federal, state and local income taxes and other amounts as may be
required by law to be withheld by the Company in connection with the
Taxable Event (the ``Withholding Taxes'') prior to the issuance, or
release from escrow, of such shares or the payment of such cash. The
Company shall have the right to deduct from any payment of cash to an
Eligible Employee an amount equal to the Withholding Taxes in
satisfaction of the obligation to pay Withholding Taxes. In satisfaction
of his obligation to pay Withholding Taxes to the Company, the Eligible
Employee may make a written election (the ``Tax Election''), which may be
accepted or rejected in the discretion of the Committee, to have withheld
a portion of the shares of Stock then issuable to him having an aggregate
Fair Market Value, on the date preceding the date of such issuance, equal
to the Withholding Taxes, provided that in respect of an Eligible
Employee who may be subject to liability under Section 16(b) of the
Exchange Act either: (i) the Tax Election is made at least six (6) months
prior to the date of the Taxable Event and the Tax Election is
irrevocable with respect to all Taxable Events of a similar nature
occurring prior to the expiration of six (6) months following a
revocation of the Tax Election; or (ii) in the case of the exercise of an
Option (A) the Optionee makes the Tax Election at least six (6) months
after the date the Option was granted, (B) the Option is exercised during
the ten (10) day period beginning on the third business day and ending on
the twelfth business day following the release for publication of the
Company's quarterly or annual statement of sales and earnings (a ``Window
Period'') and (C) the Tax Election is made during the Window Period in
which the related Option is exercised or prior to such Window Period and
subsequent to the immediately preceding Window Period; or (iii) in the
case of a Taxable Event relating to the grant of shares of Restricted
Stock (A) the Eligible Employee makes the Tax Election at least six (6)
months after the date such stock was granted and (B) the Tax Election is
made (x) in the case of a Taxable Event occurring within a Window Period,
during the Window Period in which the Taxable Event occurs, or (y) in the
case of a Taxable Event not occurring within a Window Period, during the
Window Period immediately preceding the Taxable Event relating to such
Restricted Stock. Notwithstanding the foregoing, the Committee may, by
the adoption of rules or otherwise, (i) modify the provisions of this
Section 13.1 or impose such other restrictions or limitations on Tax
Elections as may be necessary to ensure that the Tax Elections will be
exempt transactions under Section 16(b) of the Exchange Act, and (ii)
permit Tax Elections to be made at such other times and subject to such
other conditions as the Committee determines will constitute exempt
transactions under Section 16(b) of the Act.
SECTION 14. Requirements of Law
14.1 Requirements of Law. The granting of Options or Restricted
Stock, and the issuance of shares of Stock upon the exercise of an Option
shall be subject to all applicable laws, rules and regulations, and to
such approvals by any governmental agencies or national securities
exchanges as may be required.
14.2 Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of New
York without giving effect to the choice of law principles thereof,
except to the extent that such law is preempted by federal law.
14.3 Listing, etc. Each Option or share of Restricted Stock is
subject to the requirement that, if at any time the Committee determines,
in its discretion, that the listing, registration or qualification of
shares of Stock issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as
a condition of, or in connection with, the grant of an Option or the
issuance of shares of Stock, no Options or shares of Restricted Stock
shall be granted or payment made or shares of Stock issued, in whole or
in part, unless listing, registration, qualification, consent or approval
has been effected or obtained free of any conditions as reasonably
acceptable to the Committee acting in good faith.
14.4 Restriction on Transfer. Notwithstanding anything contained in
the Plan or any Agreement to the contrary, in the event that the
disposition of shares of Stock acquired pursuant to the Plan is not
covered by a then current registration statement under the Securities Act
of 1933, as amended, and is not otherwise exempt from such registration,
such shares of Stock shall be restricted against transfer to the extent
required by the Securities Act of 1933, as amended, and Rule 144 or other
regulations thereunder. The Committee may require any individual
receiving shares of Stock pursuant to an Option or share of Restricted
Stock granted under the Plan, as a condition precedent to receipt of such
shares of Stock to represent and warrant to the Company in writing that
the shares of Stock acquired by such individual are acquired without a
view to any distribution thereof and will not be sold or transferred
other than pursuant to an effective registration thereof under said Act
or pursuant to an exemption applicable under the Securities Act of 1933,
as amended, or the rules and regulations promulgated thereunder. The
certificates evidencing any of such shares of Stock shall be
appropriately legended to reflect their status as restricted securities
aforesaid.
Dated: December 30, 1994
INSTRUMENT OF AMENDMENT
-----------------------
TELEMUNDO GROUP, INC. RETIREMENT AND SAVINGS PLAN
-------------------------------------------------
WHEREAS, Telemundo Group, Inc. (the "Company") maintains the
Telemundo Group, Inc. Retirement and Savings Plan (the "Plan"); and
WHEREAS, Section 12.1 of the Plan authorizes the Board of
Directors of the Company to make certain amendments to the Plan;
NOW, THEREFORE, effective as of January 1, 1989 (or such
other date as may be set forth below), the Plan is amended as follows:
1. Section 1.9 of the Plan is hereby amended by the
deletion of the last sentence and the addition of the following words at
the end thereof:
"For calendar years beginning on or after January 1, 1989, a
Participant's Compensation for any such year that may be taken into
account under the Plan shall not exceed the amount permissible under
section 401(a)(17) of the Code (which is $200,000 for 1989, $209,200 for
1990, $222,220 for l991, $228,860 for l992, $235,840 for 1993, and
$150,000 for 1994).
In determining the Compensation of a Participant for purposes
of this limitation, the rules of section 414(q)(6) of the Code shall
apply, except in applying such rules, the term "family" shall include
only the spouse of the Participant and any lineal descendants of the
Participant who have not attained age 19 before the close of the year.
If, as a result of the application of such rules the adjusted dollar
limitation is exceeded, then the limitation shall be prorated among the
affected individuals in proportion to each such individual's compensation
as determined under this Section prior to the application of this
limitation."
2. Section 4.1 is hereby amended in its
entirety to read as follows:
"4.1 Compensation Reduction. Effective for payroll periods
beginning on or after April 1, 1989 (or such later date on which
Compensation reduction is uniformly permitted to all Participants), any
Participant may elect to have his Compensation reduced by a whole
percentage thereof, from 2% to 15%, in order to have Before-Tax
Contributions made on his behalf under Section 4.2 below, subject to the
limitations of Sections 4.6 and 4.9 below. The Participant's
Compensation from any Employer shall be reduced, for each payroll period
ending at least 14 days after such election is filed, by such percentage
of his Compensation in each such payroll period as he shall have
selected. A Participant may change the percentage of his Compensation
reduction or may entirely discontinue such reductions twice during any
twelve-month period, effective as of any January 1 or July 1, by filing a
written election with the Committee (on a form satisfactory to the
Committee) within the time limits specified by the Committee. A Par-
ticipant who has elected to suspend reductions in his Compensation may
resume such reductions, as of any January 1 or July 1, by filing a
written notice with the Committee (on a form satisfactory to the
Committee) within the time limits specified by the Committee.
A Compensation reduction election made by a Participant shall
be cancelled to the extent necessary to conform to the limitation in the
maximum amount of Before-Tax Contributions."
3. Section 4.6 is hereby amended to read in its entirety
as follows:
"4.6 Limitation With Respect to Before-Tax Contributions.
In no event shall the Company make Before-Tax Contributions for
Participants for any year that would result in a violation of the
deferral percentage limitation set forth below. The deferral percentage
for eligible Employees who are Highly Compensated Employees (the "Highly-
Paid Group") shall not exceed the greater of (a) or (b) below:
(a) the deferral percentage for the eligible Employees who
are not in the Highly-Paid Group, times 1.25, or
(b) the deferral percentage for the eligible Employees who
are not in the Highly-Paid Group, times 2.0, but only to the extent
the deferral percentage for the eligible Employees who are in the
Highly-Paid Group does not exceed the deferral percentage for
eligible Employees who are not in the Highly-Paid Group by more
than two percentage points.
The deferral percentage for each of the above groups of
eligible Employees for any calendar year shall be the average of the
ratios, calculated separately for each eligible Employee in the
particular group, of:
(i) the aggregate amount of the Before-Tax
Contributions paid to the Plan on his behalf for such
year, to
(ii) the eligible Employee's "compensation" paid by
the Company for such year (for periods during which he
is an eligible Employee).
In applying the foregoing limitation at any time with respect
to a particular calendar year, to the extent required by applicable
Treasury Regulations issued under section 402(g) or 401(k) of the Code,
Before-Tax Contributions for such calendar year previously distributed to
a Participant pursuant to clause (c) of Section 4.9 shall nevertheless be
taken into account without regard to the fact that they have been
distributed, except that Before-Tax Contributions thus distributed
pursuant to clause (c) of Section 4.9 to a Participant who is not in the
Highly-Paid Group in order to conform to the requirements of section
401(a)(30) of the Code (i.e., excess deferrals pursuant to section 401(k)
of the Code contributed to plans maintained by the Company or an Affili-
ate) shall not be taken into account for purposes of the foregoing
limitation.
Notwithstanding the foregoing, if the Company aggregates two
or more plans for the purpose of satisfying section 410(b) of the Code
(other than section 410(b)(2)(A)(ii)), such plans shall be treated as one
plan for purposes of the deferral percentage limitation described above.
For purposes of this Section, "compensation" means wages as
defined in section 3401(a) of the Code for purposes of income tax
withholding at the source, but determined without regard to any rules
that limit the remuneration included in wages based on the nature or
location of the employment or the services performed. Notwithstanding
the foregoing, for years after 1988, "compensation" shall include any
amount which is not includable in the gross income of the Participant
under section 125, 402(a)(8), 402(h) or 403(b) of the Code pursuant to a
salary reduction agreement. Notwithstanding the foregoing,
"compensation" shall not take into account annual remuneration in excess
of the maximum amount permissible under section 401(a)(17) of the Code
(as described in Section 1.9 of the Plan). The term "highly compensated
employee" shall be defined as provided in section 414(q)(1) through (11)
of the Code. Notwithstanding the foregoing, if elected by the Company
for any calendar year, the term "highly compensated employee" shall be
defined for such calendar year by substituting $50,000 for $75,000 in
section 414(q)(1)(B) and by disregarding section 414(q)(1)(C); provided,
however, that the foregoing election shall not be available for a
calendar year unless the Company, itself or through its Affiliates,
maintained significant business activities (and employed employees) in at
least two significantly separate geographic areas at all times during
such calendar year.
The following special rules shall apply in calculating the
deferral ratio for any eligible Employee who is a "highly compensated
employee":
(iv) If any such Employee is eligible to have contributions under
section 401(k) of the Code made on his behalf under any other plan
maintained by the Company or an Affiliate for any calendar year,
such deferral ratio shall be calculated for him for such year as
though (a) such contributions made on his behalf under any such
other plan (and any other employer contributions required to be
taken into account under such other plan in applying the deferral
rate requirement under section 401(k)(3) of the Code) were made
under this Plan and (b) any compensation required to be taken into
account in applying the test under section 401(k)(3) of the Code
under such other plan (that is not otherwise taken into account
under this Section) were paid by the Company to such Employee.
(v) In determining the above ratio for any Employee in the
Highly-Paid Group, the Before-Tax Contributions and the
compensation of such Employee shall include such Contributions
(including contributions required to be taken into account in
applying the deferral rate requirement under Code section 401(k)(3)
under any other plan of the Company or its Affiliates) and
compensation (including compensation paid by any of its Affiliates)
of all of the Employee's family members covered under Code section
414(q)(6), with such family group to be considered a single
Employee in the Highly-Paid Group for purposes hereof, and such
"family members" shall be disregarded in determining the deferral
percentage for the eligible Employees who are not in the Highly-
Paid Group.
The Trustees shall reduce the maximum rate of Before-Tax
Contributions that may be elected by Participants who are in the Highly-
Paid Group (including special limits on reductions in respect of cash
bonuses) to the extent necessary to ensure that the foregoing limitations
set forth in this Section are not exceeded. In the event that as a
result of any such decrease in the maximum permissible rate of Before-Tax
Contributions, a Compensation reduction election made by a Participant
cannot be fully effectuated during any year, the Participant's
Compensation reduction election shall be cancelled to the extent
necessary to conform to such decrease and the amount as to which such
reduction election is cancelled shall be paid to the Participant in cash.
In the event a Participant's Compensation reduction is required to be
cancelled during a period of suspension under Section 4.12, the entire
amount as to which such reduction is cancelled shall be paid to the
Participant in cash.
No Participant may elect a rate of Compensation reduction for
any year which the Trustees determine would result in a deferral
percentage that exceeds the limitations of this Section. To enforce this
requirement, at the beginning of the first quarter and the beginning of
the fourth quarter of each calendar year (or more frequently), the
Trustees shall review the Compensation reduction elections made for such
year to determine whether the deferral percentage limitations of this
Section will be satisfied. Further, in the case of any Participant in
the Highly-Paid Group who after June of such year has requested an
increase in the rate of his Compensation reductions (including an
Employee who is electing to become a Participant after the date he was
first eligible), the Trustees may delay such increase until the next
January l in order to ensure that the deferral percentage limitations are
not exceeded for the year.
To the extent that despite the foregoing any Before-Tax
Contribution is made for a Participant in the Highly-Paid Group in
violation of the deferral percentage limit set forth above, such excess
contribution (determined in accordance with section 401(k) of the Code
and applicable Treasury Regulations, and taking into account any
applicable rules relating to family aggregation) shall be distributed to
the Participant to the extent practicable by March 15 of the year next
following the year in which such excess contributions were made, and in
no event later than the December 31 of the year next following the year
in which such excess contributions were made; provided, however, that to
the extent required under applicable Treasury Regulations issued under
section 401(k) of the Code, any distribution required to be made to a
Participant under this paragraph shall be reduced by any excess Before-
Tax Contributions previously distributed to the Participant pursuant to
this Section.
The amount distributed to any Participant pursuant to the
foregoing in respect of excess contributions for any calendar year shall
be adjusted to reflect gain or loss during such calendar year (but not
gain or loss since the end of such calendar year) considered allocable to
such excess Before-Tax Contributions. For this purpose, the gain or loss
considered allocable to excess Before-Tax Contributions shall equal the
total net gain or loss for the calendar year in the Participant's Before-
Tax Contributions accounts, multiplied by a fraction the numerator of
which is the amount of the Participant's excess Before-Tax Contributions
for the calendar year and the denominator of which is the sum of the
aggregate balance in such accounts at the beginning of such calendar year
plus the aggregate of all Before-Tax Contributions made to the
Participant's accounts for such calendar year. Any Matching
Contributions that were made in respect of any Before-Tax Contributions
required to be thus distributed (adjusted for gain or loss in a manner
comparable to the procedure described above) shall be forfeited as of
December 31 of the calendar year for which they were made.
The deferral percentages for eligible Employees in the
Highly-Paid Group and for eligible Employees who are not in the Highly-
Paid Group shall be determined in accordance with any requirements
established by applicable Treasury Regulations; and the foregoing
provisions of this Section shall be interpreted and administered in
accordance with such Treasury Regulations.
Notwithstanding the foregoing provisions of this Section, the
Company may, in lieu of returning all or a portion of the excess Before-
Tax Contributions (and earnings thereon) in accordance with the procedure
set forth in this Section, make a failsafe contribution to the Trust Fund
for any year if it is specifically directed to do so by resolution of the
Board (which resolution may also direct the application of existing
forfeitures under the Plan to the payment of such failsafe contribution),
with such failsafe contribution to be in such amount as is specified in
such resolution. Any failsafe contribution hereunder for a year shall be
first allocated to the account of the eligible employee who is not in the
Highly-Paid Group with the lowest Compensation, with his allocation to be
such amount as shall cause the total contributions to such Account for
such year to equal 6% of his Compensation (or such other percentage as
may be specified in such Board resolution), then making a similar
allocation for the eligible Employee with the next lowest Compensation
and repeating this process until the failsafe contribution has been fully
allocated for such year."
4. Article IV is hereby amended to renumber
Sections 4.7 to 4.11 (and all references thereto) as Sections 4.8 to 4.12
and to add the following new Section 4.7 to the Plan:
"4.7 Contribution Percentage Limitation with Respect to
Matching Contributions. Notwithstanding the foregoing, in no event shall
Matching Contributions be made on a Participant's behalf, for any
calendar year in violation of the special limitations regarding
contribution percentages set forth below.
The contribution percentage for eligible Employees in the
Highly-Paid Group shall not exceed the greater of (a) or (b) below:
(a) the contribution percentage for eligible Employees who
are not in the Highly-Paid Group, times 1.25, or
(b) the contribution percentage for eligible Employees who
are not in the Highly-Paid Group, times 2.0, but only if the
percentage for eligible Employees in the Highly-Paid Group does not
exceed the contribution percentage for eligible Employees who are
not in the Highly-Paid Group by more than 2.0 percentage points;
provided, however that clause (b) above shall be applied only to
the extent such application does not violate the provisions of any
Treasury Regulation concerning coordination of the deferral and
contribution percentage tests imposed under sections 401(k) and
401(m) of the Code, respectively.
The contribution percentage for a specified group of
Employees for a calendar year shall be the average of the ratios
(calculated separately) for each Employee in such group of: (i) the
aggregate amount of Matching Contributions made on his behalf for such
year, to (ii) the Employee's compensation paid by the Company and its
Affiliates (for periods during which he is an eligible Employee).
The following special rules shall apply in calculating the
contribution ratio for any eligible Employee who is a "Highly Compensated
Employee":
(i) If any such Employee is eligible to make employee
contributions or have matching employer contributions made for him
under any other plan maintained by a Company or an Affiliate for
any year, such ratio shall be calculated for him for such year as
though the employee contributions made by him and matching employer
contributions made on his behalf under any such other plan were
made under this Plan.
(ii) In determining the above ratio for any Employee in the
Highly-Paid Group, the Matching Contributions and the compensation
of such Employee shall include the Matching Contributions
(including employee contributions and matching employer
contributions under any other plan of a Company or its Affiliates)
and compensation (including compensation paid by any of its
Affiliates) of all family members covered under Code section
414(q)(6), and such family members shall be disregarded in
determining the contribution percentage for eligible Employees who
are not in the Highly-Paid Group (and shall otherwise be disregard
to the extent permitted by section 401(m) of the Code and
applicable Regulations).
Notwithstanding the foregoing, the contribution ratio
applicable under clause (i) above shall in no event be smaller than the
contribution ratio that would apply to the Participant in the absence of
such clause and the contribution ratio applicable under clause (ii) above
shall be the greater of: (1) the actual deferral ratio determined by
combining the Matching Contributions, compensation, and amounts treated
as Matching Contributions of all the eligible family members who are in
the Highly-Paid Group without regard to family aggregation, and (2) the
actual deferral ratio determined by combining the Matching Contributions,
compensation and amounts treated as Matching Contributions of all the
eligible family members.
In determining the above ratios, Before-Tax Contributions for
all Participants shall be taken into account (to the extent permissible
under section 401(m) of the Code), if this results in satisfaction of the
above contribution percentage requirements.
If the contribution percentage for eligible Employees in the
Highly-Paid Group would otherwise be more than the amount permitted under
the above restrictions, the maximum rate of Before-Tax Contributions that
will be matched by Matching Contributions for employees in the Highly-
Paid Group shall be decreased to the extent necessary to satisfy the
above restrictions.
The contribution percentages for eligible Employees in the
Highly-Paid Group and for eligible Employees who are not in the Highly-
Paid Group shall be determined in accordance with any requirements
established by applicable Treasury Regulations; and the foregoing
provisions of this Section 4.7 shall be interpreted and administered in
accordance with such Treasury Regulations."
5. Section 4.9 is hereby amended by deleting the entire
section and substituting the following words:
1.
(b) No Contributions shall be made on behalf of a Participant for any
calendar year if his "Annual Additions" for the year would thereby exceed
the lesser of (i) 25% of his "gross compensation" for such year or (ii)
$30,000 (or such greater amount as may be permitted under section
415(c)(1)(A) of the Code).
(c) Annual Additions. For purposes of this Section, the
phrase "Annual Additions" for the calendar year means, in respect of a
Participant, the sum for any calendar year of any Before-Tax
Contributions and any Matching Contributions made on his behalf to the
Trust for such year. If a Participant receives medical benefits under a
defined benefit pension plan maintained by the Company or is a "key
employee" (as defined in section 419A(d)(3) of the Code) who receives
post-retirement medical benefits from a funded welfare benefit plan, his
Annual Additions for purposes of the dollar limitation in (c)(ii) above
shall also include any amount required to be taken into account under
section 415(l) or 419A(d)(2) of the Code. Any other employer or employee
contributions to the Plan (other than an amount reimbursed to the Plan
for a loss resulting from an adjudicated fiduciary violation of Part 4 of
Title I of ERISA) shall be included as Annual Additions.
In the event that a reduction in a Participant's Annual
Additions shall be required for any calendar year to conform to the
limitations of clause (a) above, the Before-Tax Contribution allocable to
the Participant for such calendar year shall be paid directly to him
(together with any net earnings thereon) before the end of the year or as
soon as possible thereafter, to the extent that such Participant would
otherwise have excess Annual Additions for the year.
(d) Dollar Limit. The total amount of Before-Tax
Contributions contributed on behalf of any Participant for any calendar
year shall not exceed $7,000 (or of such other amount as may be the
maximum annual amount permitted under section 402(g) of the Code or other
applicable law for such year), less any amount previously contributed or
to be contributed during such year as elective deferrals pursuant to
section 401(k) of the Code to another profit sharing or stock bonus plan
maintained by a Company or an Affiliate during such year. Any
Compensation reduction election made by a Participant shall be cancelled
to the extent necessary to conform to such limit in the maximum amount of
Before-Tax Contributions and the amount as to which such Compensation
reduction election is cancelled shall be paid to him in cash.
If, despite the foregoing, the aggregate elective deferrals
pursuant to section 401(k) of the Code contributed during any calendar
year for any Participant under the Plan and under other profit sharing or
stock bonus plans maintained by the Company or an Affiliate nevertheless
exceed the maximum dollar amount permitted under section 402(g) of the
Code, the amount of any such excess for the calendar year shall be
distributed to the Participant from such plans no later than April 15 of
the next following calendar year. If the Participant shall have made
such contributions to more than one such plan, such distribution shall be
made on a pro rata basis from the Plan and each such other plan, unless
the Participant notifies the Trustees, in a notarized writing not later
than March 1 following the close of the calendar year, that such
distribution should be made from the Plan and each such other plan in
some other proportion. In any case of excess deferrals as described
above, the Participant shall be deemed to have notified the Plan that
excess deferrals have been contributed on his behalf and shall be deemed
to have designated such deferrals as excess deferrals.
In addition, if a Participant notifies the Trustees, in a
notarized writing not later than March 1 following the close of the
calendar year, that more than the maximum dollar amount permitted under
section 402(g) has been contributed as Before-Tax Contributions on his
behalf for such calendar year as a result of his participation in a
qualified retirement plan of another employer and he designates the
amount which constitutes an excess deferral under the Plan, the amount of
any such excess Before-Tax Contributions to the Plan for the calendar
year shall be distributed to the Participant from his accounts not later
than April 15 of the next following calendar year.
Any amount to be distributed from the Plan for any calendar
year in accordance with the foregoing three paragraphs shall be adjusted
to reflect gain or loss during such calendar year (but not gain or loss
since the end of such calendar year) considered allocable to the excess
Before-Tax Contribution. For this purpose, the gain or loss considered
allocable to an excess Before-Tax Contribution shall equal the total net
gain or loss for the calendar year in the Participant's Before-Tax
Contributions accounts, multiplied by a fraction the numerator of which
is the amount of the Participant's excess Before-Tax Contributions for
the calendar year and the denominator of which is the sum of the
aggregate balance in such accounts at the beginning of such calendar year
plus the aggregate of all Before-Tax Contributions made to the
Participant's accounts for such calendar year.
The amount of excess Before-Tax Contributions which are to be
distributed hereunder to a Participant from his accounts with respect to
any calendar year shall be reduced by any excess Before-Tax Contributions
previously distributed to such Participant under Section 4.6 for such
calendar year. In the event any such reduction shall be applicable, to
the extent required by Treasury Regulations issued under section 402(g)
or 401(k) of the Code, such prior distribution of excess Before-Tax
Contributions under Section 4.6 shall be treated as though it had been a
distribution of excess Before-Tax Contributions under this Section.
Any Matching Contributions that were made in respect of any
such refunded Before-Tax Contributions (adjusted to reflect earnings in a
manner comparable to the procedure described above) shall be forfeited as
of December 31 of the year for which they were made. For purposes of
determining whether Matching Contributions must be forfeited in
connection with a refund of Before-Tax Contributions for any period under
this Section or under Section 4.6, it shall be assumed that Matching
Contributions for such period related to Before-Tax Contributions for the
Participant remaining in the Plan, to the extent thereof.
(e) Participation in Other Plans. If any Participant
hereunder is also a member in another employee retirement plan which (a)
is a defined contribution plan within the meaning of section 414(i) of
the Code and (b) is sponsored by a Company or an Affiliate (as defined
under section 415(h) of the Code for this purpose), then the foregoing
limitations shall be applied on an aggregate basis. Any reduction in
contributions under this Plan and any such other plan that is required to
satisfy such limitations shall be made in this Plan, except as may
otherwise be specifically provided under any such other plan.
If any Participant hereunder is also a member of another
employee retirement plan which is a defined benefit plan within the
meaning of section 414(j) of the Code maintained by a Company or an
Affiliate, the Annual Additions to the Participant's account under the
Plan for any year shall be limited to any extent necessary to ensure that
the sum of his defined contribution plan fraction and defined benefit
plan fraction does not exceed 1.0 for such year, with the benefits under
the defined benefit plan to be first reduced (in accordance with Treasury
Regulations) to the extent necessary so that the sum of the Participant's
defined benefit plan fraction (as defined in section 415(e)(2) of the
Code) and defined contribution plan fraction do not exceed 1.0. The
calculation of the defined contribution plan fraction and the defined
benefit plan fraction shall be made in accordance with the rules set
forth in section 415(e) of the Code.
For purposes of this Section 4.9, the term "gross
compensation" for any Participant shall mean all amounts included under
Treasury Regulation section 1.415-2(d)(2)(i) which are paid to such
Participant from a Company and its Affiliates for a calendar year subject
to a maximum limit for calendar years after 1988, equal to the maximum
amount permissible under section 401(a)(17) of the Code, (as described in
Section 1.9) excluding (1) amounts paid or reimbursed by a Company for
moving expenses, (2) any distributions from a plan of deferred
compensation maintained by a Company other than distributions from an
unfunded non-qualified plan, (3) amounts realized from the sale, exchange
or other disposition of stock acquired under an incentive stock option
and (4) amounts realized upon exercise of a non-qualified stock option.
No Participant may elect a rate of Compensation reduction for
any calendar year which the Trustees determine would result in excess
Annual Additions (taking into account any Matching Contributions due to
be made for the year)."
6. Clause (D) of Section 4.12 is hereby amended by
substituting the words "under clause (c) of Section 4.9" for the words
"under Section 4.1" therein."
7. Section 5.1 is amended by substituting the following
for the first sentence thereof:
"Effective at any time after December 31, 1994, the Committee
is authorized to adopt, at the direction of the Board, alternative
investment funds which may include funds similar to the Equity Account
described below or, without limitation, any other funds invested in
bonds, stocks or other securities appropriate for investment by
retirement plans under ERISA; provided, however, that except for any
holdings that may be incidental to a fund's investments that are of a
pooled or commingled nature, no such fund shall invest in any securities
issued or guaranteed by the Company or any Affiliate. In the event that
any such alternative funds are established, such funds shall be available
for investment, at the election of any Participant, in accordance with
uniform and nondiscriminatory rules adopted by the Committee, including
rules relating to (i) the right to make an advance election for the
investment of contributions in each such fund as of each Valuation Date,
(ii) the right to make an advance election to transfer amounts between
such funds as of each Valuation Date, (iii) the investment fund from
which partial withdrawals are to be made and (iv) the investment fund in
which contributions are to be invested in the absence of an election by
the Participant.
Except as provided above or in the next two paragraphs, all
Plan assets shall be invested in one or more contracts with an insurance
carrier or carriers entered into by the Company."
8. Section 7.2 is amended by substituting the following
for the last paragraph thereof:
"The value, as of the last day of each calendar year, of any
interest so forfeited under the Plan shall be used to reduce
contributions otherwise payable by the Employer for the year; provided,
however, that if the Plan should be terminated, or contributions
thereunder permanently discontinued, any amount not previously so applied
shall be credited to the Accounts of all Participants who are entitled to
share in Retirement Contributions for such year at the time of any such
event, provided that any such allocation shall be effected in a
nondiscriminatory manner."
9. Article VIII is hereby amended to renumber Sections 8.3
and 8.4 (and all reference thereto) as 8.4 and 8.5 and by the addition of
the following new Section 8.3:
"8.3 Direct Rollover Distributions From the Plan. This
Section applies to distributions made on or after January 1, 1993.
Notwithstanding any provision in any other Section of the Plan to the
contrary that would otherwise limit a distributee's election under this
Section, a Participant or other distributee under the Plan may elect to
have any portion of an eligible rollover distribution paid directly to an
eligible retirement plan specified by the distributee in a direct
rollover.
Any such election shall be made at the time and in the manner
prescribed by the Trustees and shall be subject to any uniform
restrictions or limitations (permissible under section 401(a)(31) and
other applicable Code provisions) that the Trustees may impose under
rules adopted by it.
Any benefit payment made under the Plan that is not in the
form of a direct rollover as described above shall be subject to any
applicable income tax withholding requirements. To the extent and in the
manner required by section 402(f) of the Code, each distributee who is to
receive an eligible rollover distribution from the Plan shall be notified
of the special Federal income tax provisions applicable to such
distribution.
For purposes of this Section, the following definitions shall
apply:
(a) An "eligible rollover distribution" is any lump sum
payment or other distribution of all or any portion of the balance to the
credit of the distributee, except that an eligible rollover distribution
does not include: (i) any life annuity or other distribution that is one
of a series of substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the distributee
or the joint lives (or joint life expectancies) of the distributee and
the distributee's designated beneficiary, or for a specified period of 10
years or more; (ii) any distribution to the extent such distribution is
required under section 401(a)(9) of the Code; and (iii) the portion of
any distribution that is not includable in gross income (determined
without regard to the exclusion for net unrealized appreciation with
respect to employer securities).
(b) An "eligible retirement plan" is an individual
retirement account described in section 408(a) of the Code, an individual
retirement annuity described in section 408(b) of the Code, an annuity
plan described in section 403(a) of the Code, or a qualified trust
described in section 401(a) of the Code, that accepts the distributee's
eligible rollover distribution. However, in the case of an eligible
rollover distribution to the surviving spouse, an eligible retirement
plan is an individual retirement account or individual retirement
annuity.
(c) A "distributee" includes a Participant (whether or not
he has terminated employment). In addition, the Participant's surviving
spouse and the Participant's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in section
414(p) of the Code, are distributees with regard to the interest of the
spouse or former spouse.
(d) A "direct rollover" is a payment by the Plan to the
eligible retirement plan specified by the distributee."
10. Clause (c) of Article XIII is hereby amended by adding
the words "($150,000 for years after 1993), or such greater amount as may
be permissible under section 401(a)(17) of the Code," after the $200,000
amount therein.
11. Clause (d) of Article XIII is hereby amended to read as
follows:
"(d) Compensation Limitation. For any calendar year in
which the Plan is a Top-Heavy Plan, only the first $200,000, ($150,000
for years after 1993) (or such larger amount as may be prescribed under
the Code, of a Participant's compensation shall be taken into account for
purposes of the Plan, to the extent required by section 416(d) of the
Code."
IN WITNESS WHEREOF, the Board of Directors of the Company has
caused this Instrument of Amendment to be adopted.
TELEMUNDO GROUP, INC.
By: /s/ Peter J. Housman II
------------------------
Peter J. Housman II
President, Business
and Corporate Affairs
Attest:
By: /s/ Horace G. Dawson, III
--------------------------
Horace G. Dawson, III
Assistant Secretary
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of September 16, 1994,
between TELEMUNDO GROUP, INC., a Delaware corporation (the
"Company"), and Gustavo Pupo-Mayo (the "Executive").
Section 1. Employment and Term. The Company agrees to
employ the Executive and the Executive agrees to serve as an
employee of the Company with the duties set forth in Section
2 for a term (the "Term") beginning as of September 16, 1994
(the "Commencement Date") and ending at the close of business
on September 15, 1997 (the "Termination Date") or any earlier
date of termination under Section 7.
Section 2. Duties. The Executive agrees during the
Term to serve as Senior Vice President-News and Public
Affairs of the Company. The Executive agrees to use his best
efforts to promote the interest of the Company, with
undivided loyalty, subject at all times to the direction of
the Chief Executive Officer of the Company, to whom the
Executive shall report. Notwithstanding the foregoing, the
Executive's initial assignment hereunder shall be as
President of TeleNoticias del Mundo, Inc., the general
partner of TeleNoticias del Mundo, L.P. ("TeleNoticias") to
which he shall have a duty of loyalty during such assignment
pursuant to the terms of the stockholders' agreement between
the TeleNoticias partners the ("TeleNoticias Agreement").
The Executive agrees to devote his entire business time and
attention to the performance of such duties. The parties
hereto acknowledge that the Executive was elected and serves
as President of TeleNoticias del Mundo, Inc. pursuant to the
terms of the TeleNoticias Agreement and the related
agreements. The Company shall not arbitrarily cause the
Executive to be removed from such position.
Section 3. Consideration; Salary and Bonus During Term.
(a) Consideration. The consideration for entering into
this Agreement shall be the performance of services by the
Executive pursuant to this Agreement and the employment of
the Executive by the Company as well as the payments and
benefits provided under this Agreement.
(b) Salary. The Company shall pay salary to the
Executive at the annual rate of $300,000 per year of the
Term, to be paid (subject to required withholdings) in
accordance with the Company's regular payroll practices.
(c) Bonus. During the Term, the Executive will be
eligible for a bonus each year in an amount computed and
payable in accordance with Exhibit A hereto.
Section 4. Vacations. The Executive shall be entitled
during the Term to vacations in accordance with the policies
of the Company for senior executive officers (but in no event
less than 20 paid vacation days per year). The Company shall
not pay the Executive any additional compensation for any
vacation time not used by the Executive.
Section 5. Fringe Benefits. During the Term, the
Executive shall enjoy the benefits, including, without
limitation, participation in medical insurance, group term
life insurance and retirement and savings plans, and salary
continuation benefits, customarily afforded to executives of
the Company in positions comparable to the Executive's.
Nothing in this Agreement shall restrict the right of the
Company generally to amend, modify or terminate any such
benefits for executives in positions comparable to the
Executive's.
Section 6. Expenses. The Company will pay reasonable
fees and expenses, not to exceed $3,000 in the aggregate,
incurred by the Executive to an attorney of his choice for
services rendered to the Executive in connection with the
negotiation, preparation and execution of this Agreement.
Section 7. Termination.
(a) The Company may terminate this Agreement for Cause
as determined by the Chief Executive Officer in his sole and
absolute discretion. "Cause" means the Executive's knowingly
or recklessly causing material injury to the Company; the
Executive's willful misconduct in the performance of (or
failure to perform) his duties hereunder; the Executive's
dishonest, fraudulent or unlawful behavior involving moral
turpitude whether or not in connection with his employment;
or the Executive's unsatisfactory performance of his duties
hereunder after written notice, including reasons of such
unsatisfactory performance and failure to remedy such
performance to the satisfaction of the Chief Executive
Officer within four (4) months of such notice. Upon the
effective date of termination under this Section 7(a), the
obligations of the parties under this Agreement shall cease,
except for the obligations of the Executive contained in
Sections 8 and 9.
(b) This Agreement shall terminate immediately upon the
death or other event rendering the Executive unable to
perform his duties and obligations under this agreement for a
period in excess of 90 days, whether or not consecutive,
during the Term as determined by the Chief Executive Officer
in his sole and absolute discretion and supported by
appropriate medical evidence. Upon the effective date of
termination under this Section 7(b), the obligations of the
parties under this Agreement shall cease, except for the
obligations of the Executive contained in Sections 8 and 9.
(c) If the Company terminates this Agreement other than
pursuant to Section 7(a) or 7(b), then the Company's sole
obligation to the Executive shall be to continue to pay
salary in accordance with Section 3(b) and maintain medical
benefits until the Termination Date substantially similar to
those provided the Executive during the Term of Employment.
The continuation of such medical benefits shall be in
satisfaction of the Company's obligations under Section 4980B
of the Internal Revenue Code of 1986, as amended, or any
similar state law requiring continuation of such benefits,
with respect to the period of time during which such benefits
are continued hereunder. Upon the effective date of
termination under this Section 7(c), the obligations of the
parties under this Agreement shall cease, except for the
obligations of the Company under the preceding sentence and
the obligations of the Executive contained in Sections 8 and
9.
Section 8. Confidentiality. Except as required in his
duties hereunder, the Executive will not, directly or
indirectly, use, disseminate or disclose any Confidential
Information. Upon expiration or termination of the Term, all
documents, records and similar repositories of or containing
Confidential Information, including copies thereof, then in
the Executive's possession, whether prepared by the Executive
or others, will be left with the Company. "Confidential
Information" means nonpublic information relating to the
Company or any affiliate of the Company. Following the
expiration or termination of the Term, the Executive agrees
to reasonably cooperate with the Company and its affiliates
with respect to matters with which the Executive was involved
during the Term. This Section 8 shall survive the expiration
or termination of the Term. If in connection with
Executive's cooperation with respect to legal matters, it is
necessary for Executive to be represented by separate
counsel, the Company will pay the reasonable fees of such
counsel, provided that if Executive is named as a defendant
in an action or proceeding by reason of fact that he was an
officer of the Company, any fees or expenses paid by the
Company will be subject to procedures and rights of
indemnification of officers and directors of the Company
under the Company's By-Laws and the laws of the State of
Delaware.
Section 9. Covenant Not to Interfere. The Executive
agrees and covenants that, for a period of one year following
the expiration or termination of the Term, he will not
interfere directly or indirectly in any way with the Company
or TeleNoticias. "Interfere" means to influence or attempt
to influence, directly or indirectly, customers, program
suppliers, employees, performers or independent contractors
of the Company or TeleNoticias, their subsidiaries or any of
their network affiliates to restrict, reduce, sever or
otherwise alter their relationship with the Company or
TeleNoticias, their subsidiaries or any of their network
affiliates. In the event any court having jurisdiction shall
reduce the duration or scope of the covenant not to interfere
set forth in this Section 9, such covenant, in its reduced
form, shall be enforceable. This Section 9 shall survive the
expiration or termination of the Term.
Section 10. Assignability, etc. The rights and
obligations of the Company under this Agreement shall inure
to the benefit of and shall be binding upon the successors
and assigns of the Company. The Executive acknowledges that
the services to be rendered by him are unique and personal
and accordingly that he may not assign any of his rights or
delegate any of his duties or obligations under this
Agreement.
Section 11. Notices. All notices given hereunder shall
be in writing and shall be sent by registered or certified
mail or delivered by hand and shall be deemed to be given on
the date received. Any notice by the Company to the
Executive shall be mailed or delivered to:
Gustavo Pupo-Mayo
438 Savona Avenue
Coral Gables, FL 33146
with a copy to:
Henri Spiegel, Esq.
4500 Biscayne Blvd.
Penthouse West
Miami, FL 33137
or such other address as may from time to time be provided by
the Executive to the Company for such purposes.
Any notice by the Executive to the Company shall be
mailed or delivered to:
Telemundo Group, Inc.
2290 West 8th Avenue
Hialeah, Florida 33010
Attn.: President, Business and Corporate Affairs
and
Telemundo Network, Inc.
2290 West 8th Avenue
Hialeah, Florida 33010
Attn.: Assistant General Counsel
or such address or addresses as may from time to time be
provided by the Company to the Executive for such purpose.
Section 12. Captions. The captions in this Agreement
are inserted for convenience only and do not constitute a
part of this Agreement.
Section 13. Amendments. etc. This Agreement may be
amended, modified or terminated only by an instrument in
writing signed by the parties hereto.
Section 14. Governing Law. This Agreement is made in
an shall be governed by and construed in accordance with the
laws of the State of Florida, without giving effect to
conflict of law principles. The Executive hereby consents to
the jurisdiction of the courts of the State of Florida. The
Executive hereby appoints the Corporate Secretary and the
Assistant Secretaries of the Company as his agents for
services of process and agrees to accept service of process
upon delivery to such agent, with a copy sent by registered
or certified mail to the Executive at his address as set
forth in Section 11.
Section 15. Understandings and Remedies. Each of the
parties to this Agreement will be entitled to enforce its
rights under this Agreement specifically, to recover damages
by reason of any breach of any provision of this Agreement
and to exercise all other rights existing in its favor. The
parties hereto agree and acknowledge that money damages may
not be an adequate remedy for any breach of the provisions of
this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction
for specific performance and/or injunctive relief in order to
enforce or prevent any violations of the provisions of this
Agreement. Such specific performance and/or injunctive
relief shall be available without the posting of any bond or
other security. Except when a party is seeking an injunction
or specific performance hereunder, the parties agree to
submit any dispute concerning this Agreement to binding
arbitration. The parties may agree to submit the matter to a
single arbitrator or to several arbitrators, may require that
arbitrators possess special qualifications or expertise or
may agree to submit a matter to a mutually acceptable firm of
experts for decision. In the event the parties shall fail to
thus agree upon terms of arbitration within twenty (20) days
from the first written demand for arbitration, then such
disputed matter shall be settled by arbitration under the
Rules of the American Arbitration Association, by three
arbitrators appointed in accordance with such Rules. Such
arbitration shall be held in Miami. Once a matter has been
submitted to arbitration pursuant to this section, the deci
sion of the arbitrators reached and promulgated as a result
thereof shall be final and binding upon all parties. The
cost of arbitration shall be shared equally by the parties
and each party shall pay the expenses of his/its attorneys,
except that the arbitrators shall be entitled to award the
costs of arbitration, attorneys and accountants' fees, as
well as costs, to the party that they determine to be the
prevailing party in any such arbitration.
Section 16. Prior Agreement. The Executive has
represented to the Company that the Executive is not a party
to any employment agreement or arrangement with any employer,
written or oral, which would prevent or affect the
Executive's employment hereunder, except for the letter
agreement between the Executive and Telemundo Group, Inc.,
dated July 31, 1992 (the "Prior Agreement"), the Company has
relied upon such representation in extending its offer of
employment. The Prior Agreement shall be terminated and of
no further force and effect upon the execution and delivery
of this agreement.
Section 17. Negotiations. The Executive and the
Company shall commence good faith discussions no later than
six (6) months prior to the Termination Date on whether both
parties desire to enter into a new employment agreement and
the terms thereof.
Section 18. Entire Agreement: Severability. This
Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof. Wherever
possible, each provision of this Agreement will be inter
preted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is
held to be invalid, illegal or unenforceable in any respect
under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this
Agreement will be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein.
Section 19. No Conflicts. The Executive represents and
warrants to the Company that the execution and performance of
this Agreement by the Executive does not violate or conflict
with any agreement, arrangement, understanding or
restriction, written or oral, between the Executive and any
other firm or person. The Executive shall indemnify and hold
harmless the Company and its subsidiaries, shareholders,
directors and officers from any all loss, damage or expense,
including attorneys' fees, arising out of any breach of the
foregoing representation and warranty by the Executive.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the day and year first above written.
TELEMUNDO GROUP, INC.
By: /s/ Peter J. Housman II
-----------------------------------------
Peter J. Housman II
President, Business and Corporate Affairs
/s/ Gustavo Pupo-Mayo
---------------------
Gustavo Pupo-Mayo
EXHIBIT A
1. The Executive shall be entitled to a bonus for each of
calendar years 1994, 1995, 1996 and 1997 in the amount
of up to 50% of Executive's salary, to be determined as
follows:
a) The Executive shall be entitled to a bonus for
calendar year 1994 in an amount equal to the amount
the Executive would have received if the Prior
Agreement (including the bonus schedule thereof)
had continued in effect through such year (taking
into account the increase in salary on the
effective date of this Agreement.)
b) The Executive shall be entitled to receive bonuses
based on the Net Contribution of TeleNoticias for
calendar years 1995 through 1997 in relation to its
budget as approved by the TeleNoticias del Mundo,
Inc. Board of Directors in an amount pursuant to a
bonus schedule to be determined by Telemundo each
year. For achieving the budgeted or targeted
performance level, a bonus of 37.5% of annual base
salary will be awarded. Progressively lower
percentages will be awarded for performance levels
under those budgeted or targeted. The range of
bonus percentages for Net Contribution will be 0%
to 37.5%. "Net Contribution" means operating
income plus depreciation and amortization
determined in accordance with generally accepted
accounting principles, but determined consistent
with the accounting method for determining "Net
Contribution" on TeleNoticias' Budget and internal
financial statements in prior periods.
c) In addition, the Executive shall be entitled
to receive a bonus based on the ratings performance
of the TeleNoticias produced prime-time news
programs on the Telemundo network pursuant to a
bonus schedule to be determined by Telemundo in
consultation with the TeleNoticias del Mundo, Inc.
Board of Directors. For achieving targeted ratings
levels, a bonus of 12.5% of annual base salary will
awarded. Progressively lower percentages will be
awarded for those ratings performance levels under
those targeted. The range of bonus percentages for
ratings performance will be 0% to 12.5%.
2. The bonus schedules shall be finalized within thirty
(30) days of the approval of the TeleNoticias budget by
the TeleNoticias del Mundo, Inc. Board of Directors.
The entire bonus, if any, to which Executive shall be
entitled shall be payable not later than February 15 of
the following year. Any bonus for a year shall be
payable only if the Executive remained in the employ of
the Company for the full year; provided, however, that
if Executive's employment is terminated by the Company
prior to December 31 for any reason other than for
"Cause" as defined in Section 7(a) of the Agreement,
then only the criteria contained in the bonus schedule
applicable to the period prior to termination shall be
considered and Executive's bonus shall be pro-rated for
the portion of the year prior to termination. The bonus
for calendar year 1997 shall be prorated to account for
the partial year.
NONQUALIFIED STOCK OPTION AGREEMENT
FOR CORPORATE OFFICERS
-----------------------------------
AGREEMENT made as of the 31st day of December, 1994 (the
"Grant Date"), between Telemundo Group, Inc., a Delaware
corporation (the "Company"), and Joaquin F. Blaya (the
"Optionee").
WHEREAS, the Company has adopted the 1994 Stock Plan (the
"Plan") in order to provide additional incentive to certain
officers and employees of the Company and its Subsidiaries; and
WHEREAS, the Committee responsible for administration of
the Plan has determined to grant an option to the Optionee as
provided herein;
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Option.
---------------
1.1 The Company hereby grants to the Optionee
the right and option (the "Option") to purchase all or any part
of an aggregate of 500,000 whole shares of Stock subject to,
and in accordance with, the terms and conditions set forth in
this Agreement.
1.2 The Option is not intended to qualify as an
Incentive Stock Option within the meaning of Section 422 of the
Code.
1.3 This Agreement shall be construed in
accordance and consistent with, and subject to, the provisions
of the Plan (the provisions of which are incorporated herein by
reference) and, except as otherwise expressly set forth herein,
the capitalized terms used in this Agreement shall have the
same definitions as set forth in the Plan.
2. Purchase Price.
--------------
The price at which the Optionee shall be entitled to
purchase shares of Stock upon the exercise of the Option shall
be $7.00 per share.
3. Duration of Option.
------------------
The Option shall be exercisable to the extent and in the
manner provided herein for a period of ten years from the Grant
Date (the "Exercise Term"); provided, however, that the Option
may be earlier terminated as provided in Section 7 hereof.
4. Earnings Target.
---------------
The Committee shall establish the earnings target of the
Company for the first six full months commencing after the
Consummation Date (such earnings, the "Earnings Target")within
40 days of the commencement of such six month period. For
purposes of this Agreement, "earnings" means operating income
plus depreciation and amortization determined in accordance
with generally accepted accounting principles, but determined
consistent with the accounting method for determining "Net
Contribution" on the Company's internal financial statements in
prior periods and adjusted to eliminate the impact of changes
in accounting principles after the date of this Agreement and
of acquisitions or divestitures of operating units after the
date of this Agreement if taking such operating units into
account would either increase or decrease the actual earnings
attained by the Company by at least 5% of the Earnings Target.
5. Exercisability of Option.
------------------------
Unless otherwise provided in this Agreement or the Plan,
the Option shall entitle the Optionee to purchase, in whole at
any time or in part from time to time, one-fourth of the total
number of shares of Stock covered by the Option upon
certification by the Committee that the Company has attained
90% of the Earnings Target if as of the last day of the six-
month period referred to in Section 4 of this Agreement the
Optionee's employment with the Company has not been terminated.
Within 45 days after the last day of the six-month period
referred to in Section 4 of this Agreement, the Committee shall
meet to certify whether or not 90% of the Earnings Target has
been met. In addition, unless otherwise provided in this
Agreement or the Plan, the Option shall entitle the Optionee to
purchase, in whole or in part from time to time, an additional
one-fourth of the total number of shares of Stock covered by
the Option on each of May 25, 1995, 1996, and 1997 if as of the
relevant date the Committee has certified that the Company has
attained 90% of the Earnings Target and the Optionee's
employment with the Company has not been terminated; provided,
however, that if such certification is made after May 25, 1995,
the Optionee shall be entitled to purchase one-fourth of such
shares as of the date of certification if the Optionee's
employment with the Company has not been terminated as of
May 25, 1995. Each right of purchase shall be cumulative and
shall continue, unless sooner exercised or terminated as herein
provided, during the remaining period of the Exercise Term.
6. Manner of Exercise and Payment.
------------------------------
6.1 Subject to the terms and conditions of this
Agreement and the Plan, the Option may be exercised by delivery
of written notice to the Company, at its principal executive
office. Such notice shall state that the Optionee is electing
to exercise the Option and the number of shares of Stock in
respect of which the Option is being exercised and shall be
signed by the person or persons exercising the Option. If
requested by the Committee, such person or persons shall (i)
deliver this Agreement to the Secretary of the Company who
shall endorse thereon a notation of such exercise and (ii)
provide satisfactory proof as to the right of such person or
persons to exercise the Option.
6.2 The notice of exercise described in Section
6.1 shall be accompanied by the full purchase price for the
shares of Stock in respect of which the Option is being
exercised and by the Witholding Taxes, in cash, by check or, in
the discretion of the Committee, by transferring shares of
Stock to the Company held by the Optionee for more than six
months and having a Fair Market Value on the day preceding the
date of exercise equal to the cash amount for which such shares
of Stock are substituted.
6.3 Upon receipt of notice of exercise and full
payment for the shares of Stock in respect of which the Option
is being exercised and of the Witholding Taxes, the Company
shall, subject to Section 14 of the Plan, promptly take such
action as may be necessary to effect the transfer to the
Optionee of the number of shares of Stock as to which such
exercise was effective, including issuing and delivering such
shares of Stock and entering the Optionee's name as a
stockholder of record on the books of the Company.
6.4 The Optionee shall not be deemed to be the
holder of, or to have any of the rights of a holder with
respect, to any shares of Stock subject to the Option until (i)
the Option shall have been exercised pursuant to the terms of
this Agreement and the Optionee shall have paid the full
purchase price for the number of shares of Stock in respect of
which the Option was exercised, (ii) the Company shall have
issued and delivered the shares of Stock to the Optionee, and
(iii) the Optionee's name shall have been entered as a
stockholder of record on the books of the Company, whereupon
the Optionee shall have full voting and other ownership rights
with respect to such shares.
7. Termination of Employment.
-------------------------
7.1 Retirement. If the employment of the Optionee
is terminated by the Company or by the Optionee for any reason
other than for Cause or following a Change of Control, the
Optionee may at any time within one year after such termination
of employment (but in no event after the expiration of the
Exercise Term) exercise the Option to the extent, but only to
the extent, that the Option or portion thereof was exercisable
on the date of such termination of employment. On the date of
termination of employment the Option shall terminate to the
extent not then exercisable. Notwithstanding the foregoing, in
the event (i) the Company terminates the Optionee's employment
prior to May 25, 1995 for any reason other than for Cause or
following a Change of Control or (ii) the Optionee's employment
is terminated prior to May 25, 1995 by reason of death or
Disability, the Option shall be exercisable with respect to one-
half of the shares of Stock covered thereby (and shall
terminate with respect to the other one-half) if the Company
attains or has attained 90% of the Earnings Target, in which
event the Option shall be exercisable for a period of one year
after such termination but in no event after the expiration of
the Exercise Term or prior to certification by the Committee
that the Company has attained 90% of the Earnings Target. For
purposes of this Agreement, an Optionee's employment will be
considered terminated upon (i) an actual termination, (ii) a
change in the Optionee's status, title, position or
responsibilities (including reporting responsibilities) which,
in the Committee's reasonable judgment, represents a demotion
from his status, title, position or responsibilities as in
effect immediately prior thereto, or (iii) the assignment to
the Optionee of any duties or responsibilities which, in the
Committee's reasonable judgment, are inconsistent with such
status, title, position or responsibilities. In the event of
the Optionee's death, the Option shall be exercisable, to the
extent provided in the Plan and this Agreement, by the legatee
or legatees under his will, or by his personal representatives
or distributees, and such person or persons shall be
substituted for the Optionee each time the Optionee is referred
to herein.
7.2 Change of Control. If the Optionee's
employment is terminated by the Company or by the Optionee
following a Change in Control, the provisions of Section 8
shall apply.
7.3 Termination for Cause. Notwithstanding
anything to the contrary contained herein, if the employment of
the Optionee is terminated for Cause, the Option shall
terminate on the date of the Optionee's termination of
employment whether or not exercisable.
8. Effect of Change in Control.
---------------------------
Notwithstanding anything contained in the Plan or this
Agreement to the contrary other than the last sentence of this
Section 8, in the event of a Change in Control (A) all Options
outstanding on the date of such Change in Control shall become
immediately and fully exercisable and (B) upon termination of
an Optionee's employment with the Company following a Change in
Control, Options held by such Optionee shall remain exercisable
until the later of (x) one year after termination and (y) sixty
(60) days following the expiration of the Pooling Period (in
the event the Change in Control constitutes a Pooling
Transaction), but in no event beyond the stated term of the
Option. In the case of a Change in Control which also
constitutes a Pooling Transaction, the Board may take such
actions which it determines, after consultation with its
advisors, are reasonably necessary in order to assure that the
Pooling Transaction will qualify as such, including, but not
limited to, providing that all Options specifically identified
by the Committee shall not become immediately and fully
exercisable on the date of the Change in Control but rather
shall become immediately and fully exercisable on the date
following the last day of the Pooling Period (whether or not
the Optionee is then an employee of the Company).
9. Nontransferability.
------------------
The Option shall not be transferable other than by will
or by the laws of descent and distribution. During the
lifetime of the Optionee, the Option shall be exercisable only
by the Optionee.
10. No Right to Continued Employment.
--------------------------------
Nothing in this Agreement or the Plan shall be
interpreted or construed to confer upon the Optionee any right
with respect to continuance of employment by the Company, nor
shall this Agreement or the Plan interfere in any way with the
right of the Company to terminate the Optionee's employment at
any time.
11. Adjustments.
-----------
In the event of a Change in Capitalization or if the number
of shares of common stock of the Company outstanding upon
consummation of the Bankruptcy Plan is greater or less than
10,000,000, the Committee shall conclusively determine the
appropriate adjustments to the number and class of shares of
Stock subject to the Option and the purchase price for such
shares of Stock. The Committee's adjustment shall be made in
accordance with the provisions of Section 4.5 of the Plan
and shall be effective and final, binding and conclusive for all
purposes of the Plan and this Agreement.
12. Certain Events.
--------------
Subject to Section 8 hereof, upon the effective date
of (i) the liquidation or dissolution of the Company or (ii) a
merger or consolidation of the Company (a "Transaction"),
the Option shall continue in effect in accordance with its
terms and the Optionee shall be entitled to receive in respect
of all shares of Stock subject to the Option, upon exercise of
the Option, the same number and kind of stock, securities,
cash, property or other consideration that each holder of
shares of Stock was entitled to receive in the Transaction.
13. Withholding of Taxes.
--------------------
At such times as an Optionee recognizes taxable income in
connection with the receipt of shares of Stock, securities,
cash or property hereunder (a "Taxable Event"), the Optionee
shall pay to the Company an amount equal to the federal, state
and local income taxes and other amounts as may be required by
law to be withheld by the Company in connection with the
Taxable Event (the "Withholding Taxes") prior to the issuance,
or release from escrow, of such shares of Stock or securities
or the payment of such cash or such property. The Company
shall have the right to deduct from any payment of cash to an
Optionee or Grantee an amount equal to the Withholding Taxes in
satisfaction of the obligation to pay Withholding Taxes. In
satisfaction of the obligation to pay Withholding Taxes to the
Company, the Optionee may make a written election (the "Tax
Election"), which may be accepted or rejected in the discretion
of the Committee, to have withheld a portion of the shares then
issuable to him having an aggregate Fair Market Value, on the
date preceding the date of such issuance, equal to the
Withholding Taxes, provided that in respect of an Optionee who
may be subject to liability under Section 16(b) of the Exchange
Act either: (i) the Tax Election is made at least six (6)
months prior to the date of the Taxable Event and the Tax
Election is irrevocable with respect to all Taxable Events of a
similar nature occurring prior to the expiration of six (6)
months following a revocation of the Tax Election; or (ii) in
the case of the exercise of an Option (A) the Optionee makes
the Tax Election at least six (6) months after the date the
Option was granted, (B) the Option is exercised during the ten
(10) day period beginning on the third business day and ending
on the twelfth business day following the release for
publication of the Company's quarterly or annual statement of
sales and earnings (a "Window Period") and (C) the Tax Election
is made during the Window Period in which the related Option is
exercised or prior to such Window Period and subsequent to the
immediately preceding Window Period. Notwithstanding the
foregoing, the Committee may, by the adoption of rules or
otherwise, (i) modify the provisions of this Section 13 or
impose such other restrictions or limitations on Tax Elections
as may be necessary to ensure that the Tax Elections will be
exempt transactions under Section 16(b) of the Exchange Act,
and (ii) permit Tax Elections to be made at such other times
and subject to such other conditions as the Committee
determines will constitute exempt transactions under
Section 16(b) of the Exchange Act.
14. Employee Bound by the Plan.
--------------------------
The Optionee hereby acknowledges receipt of a copy of
the Plan and agrees to be bound by all the terms and provisions
thereof.
15. Modification of Agreement.
-------------------------
This Agreement may be modified, amended, suspended or
terminated, and any terms or conditions may be waived, but only
by a written instrument executed by the parties hereto.
16. Severability.
------------
Should any provision of this Agreement be held by a
court of competent jurisdiction to be unenforceable or invalid
for any reason, the remaining provisions of this Agreement
shall not be affected by such holding and shall continue in
full force in accordance with their terms.
17. Governing Law.
-------------
The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of
the State of New York without giving effect to the conflicts of
laws principles thereof.
18. Successors in Interest.
----------------------
This Agreement shall inure to the benefit of and be
binding upon any successor to the Company. This Agreement
shall inure to the benefit of the Optionee's legal
representatives. All obligations imposed upon the Optionee and
all rights granted to the Company under this Agreement shall be
final, binding and conclusive upon the Optionee's heirs,
executors, administrators and successors.
19. Resolution of Disputes.
----------------------
Any dispute or disagreement which may arise under, or as
a result of, or in any way relate to, the interpretation,
construction or application of this Agreement shall be
determined by binding arbitration. The parties may agree to
submit the matter to a single arbitrator or to several
arbitrators, may require that arbitrators possess special
qualifications or expertise or may agree to submit a matter to
a mutually acceptable firm of experts for decision. In the
event the parties shall fail to thus agree upon terms of
arbitration within twenty (20) days from the first written
demand for arbitration, then such disputed matter shall be
settled by arbitration under the Rules of the American
Arbitration Association, by three arbitrators appointed in
accordance with such Rules. Such arbitration shall be held in
New York City. Once a matter has been submitted to arbitration
pursuant to this section, the decision of the arbitrators
reached and promulgated as a result thereof shall be final and
binding upon all parties. The cost of arbitration shall be
shared equally by the parties and each party shall pay the
expenses of his/its attorneys, except that the arbitrators
shall be entitled to award the costs of arbitration, attorneys
and accountants' fees, as well as costs, to the party that they
determine to be the prevailing party in any such arbitration.
20. Shareholder Approval.
--------------------
The effectiveness of this Agreement and of the grant of
the Option pursuant hereto is subject to the approval of the
Plan and this Agreement by holders of a majority of the voting
shares of the Company on or before six months after the
Consummation Date and by the Board of Directors of the Company.
21. Counterparts.
------------
This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
TELEMUNDO GROUP, INC.
Attest: By: /s/ Peter J. Housman II
-----------------------------
Name: Peter J. Housman II
Title: President, Business
/s/ Horace G. Dawson, III and Corporate Affairs
-------------------------
Horace G. Dawson III
Assistant Secretary
/s/ Joaquin F. Blaya
--------------------
Joaquin F. Blaya
NONQUALIFIED STOCK OPTION AGREEMENT
FOR CORPORATE OFFICERS
-----------------------------------
AGREEMENT made as of the 31st day of December, 1994 (the
"Grant Date"), between Telemundo Group, Inc., a Delaware corporation
(the "Company"), and Jose C. Cancela (the "Optionee").
WHEREAS, the Company has adopted the 1994 Stock Plan (the
"Plan") in order to provide additional incentive to certain
officers and employees of the Company and its Subsidiaries; and
WHEREAS, the Committee responsible for administration of the
Plan has determined to grant an option to the Optionee as
provided herein;
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Option.
---------------
1.1 The Company hereby grants to the Optionee the
right and option (the "Option") to purchase all or any part of an
aggregate of 50,000 whole shares of Stock subject to, and in accordance
with, the terms and conditions set forth in this Agreement.
1.2 The Option is not intended to qualify as an
Incentive Stock Option within the meaning of Section 422 of the
Code.
1.3 This Agreement shall be construed in accordance
and consistent with, and subject to, the provisions of the Plan (the
provisions of which are incorporated herein by reference) and,
except as otherwise expressly set forth herein, the capitalized terms
used in this Agreement shall have the same definitions as set forth in
the Plan.
2. Purchase Price.
--------------
The price at which the Optionee shall be entitled to
purchase shares of Stock upon the exercise of the Option shall be $7.00
per share.
3. Duration of Option.
------------------
The Option shall be exercisable to the extent and in the
manner provided herein for a period of ten years from the Grant Date
(the "Exercise Term"); provided, however, that the Option may be
earlier terminated as provided in Section 7 hereof.
4. Earnings Target.
---------------
The Committee shall establish the earnings target of the
Company for the first six full months commencing after the
Consummation Date (such earnings, the "Earnings Target") within
40 days of the commencement of such six month period. For purposes
of this Agreement, "earnings" means operating income plus depreciation
and amortization determined in accordance with generally accepted
accounting principles, but determined consistent with the accounting
method for determining "Net Contribution" on the Company's internal
financial statements in prior periods and adjusted to eliminate the
impact of changes in accounting principles after the date of this
Agreement and of acquisitions or divestitures of operating units
after the date of this Agreement if taking such operating units into
account would either increase or decrease the actual earnings attained
by the Company by at least 5% of the Earnings Target.
5. Exercisability of Option.
------------------------
Unless otherwise provided in this Agreement or the Plan, the
Option shall entitle the Optionee to purchase, in whole at any
time or in part from time to time, one-fourth of the total number of
shares of Stock covered by the Option upon certification by the Committee
that the Company has attained 90% of the Earnings Target if as of the
last day of the six-month period referred to in Section 4 of this
Agreement the Optionee's employment with the Company has not been
terminated. Within 45 days after the last day of the six-month period
referred to in Section 4 of this Agreement, the Committee shall meet to
certify whether or not 90% of the Earnings Target has been met. In
addition, unless otherwise provided in this Agreement or the Plan, the
Option shall entitle the Optionee to purchase, in whole or in part from
time to time, an additional one-fourth of the total number of shares
of Stock covered by the Option on each of May 25, 1995, 1996, and
1997 if as of the relevant date the Committee has certified that the
Company has attained 90% of the Earnings Target and the Optionee's
employment with the Company has not been terminated; provided, however,
that if such certification is made after May 25, 1995, the Optionee shall
be entitled to purchase one-fourth of such shares as of the date of
certification if the Optionee's employment with the Company has
not been terminated as of May 25, 1995. Each right of purchase shall
be cumulative and shall continue, unless sooner exercised or
terminated as herein provided, during the remaining period of the Exercise
Term.
6. Manner of Exercise and Payment.
------------------------------
6.1 Subject to the terms and conditions of this
Agreement and the Plan, the Option may be exercised by delivery
of written notice to the Company, at its principal executive office.
Such notice shall state that the Optionee is electing to exercise the
Option and the number of shares of Stock in respect of which the Option
is being exercised and shall be signed by the person or persons
exercising the Option. If requested by the Committee, such person or
persons shall (i) deliver this Agreement to the Secretary of the Company
who shall endorse thereon a notation of such exercise and (ii)
provide satisfactory proof as to the right of such person or persons to
exercise the Option.
6.2 The notice of exercise described in Section
6.1 shall be accompanied by the full purchase price for the
shares of Stock in respect of which the Option is being exercised and by
the Witholding Taxes, in cash, by check or, in the discretion of the
Committee, by transferring shares of Stock to the Company held by
the Optionee for more than six months and having a Fair Market Value
on the day preceding the date of exercise equal to the cash amount for
which such shares of Stock are substituted.
6.3 Upon receipt of notice of exercise and full
payment for the shares of Stock in respect of which the Option is being
exercised and of the Witholding Taxes, the Company shall, subject
to Section 14 of the Plan, promptly take such action as may be
necessary to effect the transfer to the Optionee of the number of shares of
Stock as to which such exercise was effective, including issuing and
delivering such shares of Stock and entering the Optionee's name
as a stockholder of record on the books of the Company.
6.4 The Optionee shall not be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any
shares of Stock subject to the Option until (i) the Option shall
have been exercised pursuant to the terms of this Agreement and the
Optionee shall have paid the full purchase price for the number of shares
of Stock in respect of which the Option was exercised, (ii) the
Company shall have issued and delivered the shares of Stock to the
Optionee, and (iii) the Optionee's name shall have been entered as a
stockholder of record on the books of the Company, whereupon the Optionee
shall have full voting and other ownership rights with respect to such
shares.
7. Termination of Employment.
-------------------------
7.1 Retirement. If the employment of the Optionee is
terminated by the Company or by the Optionee for any reason other
than for Cause or following a Change of Control, the Optionee may at
any time within one year after such termination of employment (but in
no event after the expiration of the Exercise Term) exercise the
Option to the extent, but only to the extent, that the Option or portion
thereof was exercisable on the date of such termination of employment.
On the date of termination of employment the Option shall terminate to
the extent not then exercisable. Notwithstanding the foregoing, in
the event (i) the Company terminates the Optionee's employment prior
to May 25, 1995 for any reason other than for Cause or following a
Change of Control or (ii) the Optionee's employment is terminated prior to
May 25, 1995 by reason of death or Disability, the Option shall be
exercisable with respect to one-half of the shares of Stock covered
thereby (and shall terminate with respect to the other one-half)
if the Company attains or has attained 90% of the Earnings Target, in
which event the Option shall be exercisable for a period of one year
after such termination but in no event after the expiration of the
Exercise Term or prior to certification by the Committee that the
Company has attained 90% of the Earnings Target. For purposes of this
Agreement, an Optionee's employment will be considered terminated upon (i)
an actual termination, (ii) a change in the Optionee's status, title,
position or responsibilities (including reporting responsibilities) which,
in the Committee's reasonable judgment, represents a demotion from his
status, title, position or responsibilities as in effect immediately
prior thereto, or (iii) the assignment to the Optionee of any duties
or responsibilities which, in the Committee's reasonable judgment, are
inconsistent with such status, title, position or responsibilities. In
the event of the Optionee's death, the Option shall be exercisable, to
the extent provided in the Plan and this Agreement, by the legatee or
legatees under his will, or by his personal representatives or distributees,
and such person or persons shall be substituted for the Optionee each time
the Optionee is referred to herein.
7.2 Change of Control. If the Optionee's employment
is terminated by the Company or by the Optionee following a Change
in Control, the provisions of Section 8 shall apply.
7.3 Termination for Cause. Notwithstanding anything
to the contrary contained herein, if the employment of the Optionee
is terminated for Cause, the Option shall terminate on the date of
the Optionee's termination of employment whether or not exercisable.
8. Effect of Change in Control.
---------------------------
Notwithstanding anything contained in the Plan or this Agreement
to the contrary other than the last sentence of this Section 8, in the
event of a Change in Control (A) all Options outstanding on the date
of such Change in Control shall become immediately and fully exercisable
and (B) upon termination of an Optionee's employment with the Company
following a Change in Control, Options held by such Optionee shall remain
exercisable until the later of (x) one year after termination and
(y) sixty (60) days following the expiration of the Pooling Period
(in the event the Change in Control constitutes a Pooling Transaction),
but in no event beyond the stated term of the Option. In the case of a
Change in Control which also constitutes a Pooling Transaction, the Board
may take such actions which it determines, after consultation with its
advisors, are reasonably necessary in order to assure that the Pooling
Transaction will qualify as such, including, but not limited to, providing
that all Options specifically identified by the Committee shall not become
immediately and fully exercisable on the date of the Change in Control but
rather shall become immediately and fully exercisable on the date
following the last day of the Pooling Period (whether or not the Optionee
is then an employee of the Company).
9. Nontransferability.
------------------
The Option shall not be transferable other than by will or
by the laws of descent and distribution. During the lifetime of the
Optionee, the Option shall be exercisable only by the Optionee.
10. No Right to Continued Employment.
--------------------------------
Nothing in this Agreement or the Plan shall be interpreted
or construed to confer upon the Optionee any right with respect to
continuance of employment by the Company, nor shall this Agreement or
the Plan interfere in any way with the right of the Company to
terminate the Optionee's employment at any time.
11. Adjustments.
-----------
In the event of a Change in Capitalization or if the number
of shares of common stock of the Company outstanding upon
consummation of the Bankruptcy Plan is greater or less than 10,000,000,
the Committee shall conclusively determine the appropriate adjustments
to the number and class of shares of Stock subject to the Option and the
purchase price for such shares of Stock. The Committee's adjustment shall
be made in accordance with the provisions of Section 4.5 of the Plan
and shall be effective and final, binding and conclusive for all
purposes of the Plan and this Agreement.
12. Certain Events.
--------------
Subject to Section 8 hereof, upon the effective date of (i)
the liquidation or dissolution of the Company or (ii) a merger or
consolidation of the Company (a "Transaction"), the Option shall
continue in effect in accordance with its terms and the Optionee
shall be entitled to receive in respect of all shares of Stock subject
to the Option, upon exercise of the Option, the same number and kind of
stock, securities, cash, property or other consideration that each
holder ofshares of Stock was entitled to receive in the Transaction.
13. Withholding of Taxes.
--------------------
At such times as an Optionee recognizes taxable income in
connection with the receipt of shares of Stock, securities, cash
or property hereunder (a "Taxable Event"), the Optionee shall pay to
the Company an amount equal to the federal, state and local income
taxes and other amounts as may be required by law to be withheld by the
Company in connection with the Taxable Event (the "Withholding Taxes")
prior to the issuance, or release from escrow, of such shares of
Stock or securities or the payment of such cash or such property. The
Company shall have the right to deduct from any payment of cash
to an Optionee or Grantee an amount equal to the Withholding Taxes in
satisfaction of the obligation to pay Withholding Taxes. In satisfaction
of the obligation to pay Withholding Taxes to the Company, the Optionee
may make a written election (the "Tax Election"), which may be accepted
or rejected in the discretion of the Committee, to have withheld a portion
of the shares then issuable to him having an aggregate Fair Market Value,
on the date preceding the date of such issuance, equal to the Withholding
Taxes, provided that in respect of an Optionee who may be subject to
liability under Section 16(b) of the Exchange Act either: (i) the Tax
Election is made at least six (6) months prior to the date of the Taxable
Event and the Tax Election is irrevocable with respect to all Taxable
Events of a similar nature occurring prior to the expiration of six (6)
months following a revocation of the Tax Election; or (ii) in the case of
the exercise of an Option (A) the Optionee makes the Tax Election at least
six (6) months after the date the Option was granted, (B) the Option is
exercised during the ten (10) day period beginning on the third
business day and ending on the twelfth business day following the
release for publication of the Company's quarterly or annual
statement of sales and earnings (a "Window Period") and (C) the Tax
Election is made during the Window Period in which the related Option is
exercised or prior to such Window Period and subsequent to the immediately
preceding Window Period. Notwithstanding the foregoing, the Committee
may, by the adoption of rules or otherwise, (i) modify the provisions
of this Section 13 or impose such other restrictions or limitations on
Tax Elections as may be necessary to ensure that the Tax Elections will
be exempt transactions under Section 16(b) of the Exchange Act, and
(ii) permit Tax Elections to be made at such other times and subject to
such other conditions as the Committee determines will constitute exempt
transactions under Section 16(b) of the Exchange Act.
14. Employee Bound by the Plan.
--------------------------
The Optionee hereby acknowledges receipt of a copy of the
Plan and agrees to be bound by all the terms and provisions thereof.
15. Modification of Agreement.
-------------------------
This Agreement may be modified, amended, suspended or
terminated, and any terms or conditions may be waived, but only
by a written instrument executed by the parties hereto.
16. Severability.
------------
Should any provision of this Agreement be held by a court of
competent jurisdiction to be unenforceable or invalid for any
reason, the remaining provisions of this Agreement shall not be affected
by such holding and shall continue in full force in accordance with
their terms.
17. Governing Law.
-------------
The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the State of New
York without giving effect to the conflicts of laws principles
thereof.
18. Successors in Interest.
----------------------
This Agreement shall inure to the benefit of and be binding
upon any successor to the Company. This Agreement shall inure to
the benefit of the Optionee's legal representatives. All obligations
imposed upon the Optionee and all rights granted to the Company
under this Agreement shall be final, binding and conclusive upon the
Optionee's heirs, executors, administrators and successors.
19. Resolution of Disputes.
----------------------
Any dispute or disagreement which may arise under, or as a
result of, or in any way relate to, the interpretation,
construction or application of this Agreement shall be determined by binding
arbitration. The parties may agree to submit the matter to a single
arbitrator or to several arbitrators, may require that arbitrators
possess special qualifications or expertise or may agree to submit a
matter to a mutually acceptable firm of experts for decision. In the
event the parties shall fail to thus agree upon terms of arbitration
within twenty (20) days from the first written demand for arbitration,
then such disputed matter shall be settled by arbitration under the
Rules of the American Arbitration Association, by three arbitrators
appointed in accordance with such Rules. Such arbitration shall be
held in New York City. Once a matter has been submitted to arbitration
pursuant to this section, the decision of the arbitrators reached and
promulgated as a result thereof shall be final and binding upon all
parties. The cost of arbitration shall be shared equally by the parties
and each party shall pay the expenses of his/its attorneys, except that
the arbitrators shall be entitled to award the costs of arbitration,
attorneys and accountants' fees, as well as costs, to the party that
they determine to be the prevailing party in any such arbitration.
20. Shareholder Approval.
--------------------
The effectiveness of this Agreement and of the grant of the
Option pursuant hereto is subject to the approval of the Plan and
this Agreement by holders of a majority of the voting shares of the
Company on or before six months after the Consummation Date and by the
Board of Directors of the Company.
21. Counterparts.
------------
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
TELEMUNDO GROUP, INC.
Attest: By: /s/ Joaquin F. Blaya
---------------------------
Name: Joaquin F. Blaya
Title: President and Chief
Executive Officer
/s/ Horace G. Dawson, III
-------------------------
Horace G. Dawson, III
Assistant Secretary
/s/ Jose C. Cancela
-------------------
Jose C. Cancela
NONQUALIFIED STOCK OPTION AGREEMENT
FOR CORPORATE OFFICERS
------------------------------------
AGREEMENT made as of the 31st day of December, 1994 (the
"Grant Date"), between Telemundo Group, Inc., a Delaware
corporation (the "Company"), and Peter J. Housman II (the
"Optionee").
WHEREAS, the Company has adopted the 1994 Stock Plan (the
"Plan") in order to provide additional incentive to certain
officers and employees of the Company and its Subsidiaries; and
WHEREAS, the Committee responsible for administration of
the Plan has determined to grant an option to the Optionee as
provided herein;
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Option.
---------------
1.1 The Company hereby grants to the Optionee
the right and option (the "Option") to purchase all or any part
of an aggregate of 50,000 whole shares of Stock subject to, and
in accordance with, the terms and conditions set forth in this
Agreement.
1.2 The Option is not intended to qualify as an
Incentive Stock Option within the meaning of Section 422 of the
Code.
1.3 This Agreement shall be construed in
accordance and consistent with, and subject to, the provisions
of the Plan (the provisions of which are incorporated herein by
reference) and, except as otherwise expressly set forth herein,
the capitalized terms used in this Agreement shall have the
same definitions as set forth in the Plan.
2. Purchase Price.
--------------
The price at which the Optionee shall be entitled to
purchase shares of Stock upon the exercise of the Option shall
be $7.00 per share.
3. Duration of Option.
------------------
The Option shall be exercisable to the extent and in the
manner provided herein for a period of ten years from the Grant
Date (the "Exercise Term"); provided, however, that the Option
may be earlier terminated as provided in Section 7 hereof.
4. Earnings Target.
---------------
The Committee shall establish the earnings target of the
Company for the first six full months commencing after the
Consummation Date (such earnings, the "Earnings Target")within
40 days of the commencement of such six month period. For
purposes of this Agreement, "earnings" means operating income
plus depreciation and amortization determined in accordance
with generally accepted accounting principles, but determined
consistent with the accounting method for determining "Net
Contribution" on the Company's internal financial statements in
prior periods and adjusted to eliminate the impact of changes
in accounting principles after the date of this Agreement and
of acquisitions or divestitures of operating units after the
date of this Agreement if taking such operating units into
account would either increase or decrease the actual earnings
attained by the Company by at least 5% of the Earnings Target.
5. Exercisability of Option.
------------------------
Unless otherwise provided in this Agreement or the Plan,
the Option shall entitle the Optionee to purchase, in whole at
any time or in part from time to time, one-fourth of the total
number of shares of Stock covered by the Option upon
certification by the Committee that the Company has attained
90% of the Earnings Target if as of the last day of the six-
month period referred to in Section 4 of this Agreement the
Optionee's employment with the Company has not been terminated.
Within 45 days after the last day of the six-month period
referred to in Section 4 of this Agreement, the Committee shall
meet to certify whether or not 90% of the Earnings Target has
been met. In addition, unless otherwise provided in this
Agreement or the Plan, the Option shall entitle the Optionee to
purchase, in whole or in part from time to time, an additional
one-fourth of the total number of shares of Stock covered by
the Option on each of May 25, 1995, 1996, and 1997 if as of the
relevant date the Committee has certified that the Company has
attained 90% of the Earnings Target and the Optionee's
employment with the Company has not been terminated; provided,
however, that if such certification is made after May 25, 1995,
the Optionee shall be entitled to purchase one-fourth of such
shares as of the date of certification if the Optionee's
employment with the Company has not been terminated as of
May 25, 1995. Each right of purchase shall be cumulative and
shall continue, unless sooner exercised or terminated as herein
provided, during the remaining period of the Exercise Term.
6. Manner of Exercise and Payment.
------------------------------
6.1 Subject to the terms and conditions of this
Agreement and the Plan, the Option may be exercised by delivery
of written notice to the Company, at its principal executive
office. Such notice shall state that the Optionee is electing
to exercise the Option and the number of shares of Stock in
respect of which the Option is being exercised and shall be
signed by the person or persons exercising the Option. If
requested by the Committee, such person or persons shall (i)
deliver this Agreement to the Secretary of the Company who
shall endorse thereon a notation of such exercise and (ii)
provide satisfactory proof as to the right of such person or
persons to exercise the Option.
6.2 The notice of exercise described in Section
6.1 shall be accompanied by the full purchase price for the
shares of Stock in respect of which the Option is being
exercised and by the Witholding Taxes, in cash, by check or, in
the discretion of the Committee, by transferring shares of
Stock to the Company held by the Optionee for more than six
months and having a Fair Market Value on the day preceding the
date of exercise equal to the cash amount for which such shares
of Stock are substituted.
6.3 Upon receipt of notice of exercise and full
payment for the shares of Stock in respect of which the Option
is being exercised and of the Witholding Taxes, the Company
shall, subject to Section 14 of the Plan, promptly take such
action as may be necessary to effect the transfer to the
Optionee of the number of shares of Stock as to which such
exercise was effective, including issuing and delivering such
shares of Stock and entering the Optionee's name as a
stockholder of record on the books of the Company.
6.4 The Optionee shall not be deemed to be the
holder of, or to have any of the rights of a holder with
respect to, any shares of Stock subject to the Option until (i)
the Option shall have been exercised pursuant to the terms of
this Agreement and the Optionee shall have paid the full
purchase price for the number of shares of Stock in respect of
which the Option was exercised, (ii) the Company shall have
issued and delivered the shares of Stock to the Optionee, and
(iii) the Optionee's name shall have been entered as a
stockholder of record on the books of the Company, whereupon
the Optionee shall have full voting and other ownership rights
with respect to such shares.
7. Termination of Employment.
-------------------------
7.1 Retirement. If the employment of the Optionee
is terminated by the Company or by the Optionee for any reason
other than for Cause or following a Change of Control, the
Optionee may at any time within one year after such termination
of employment (but in no event after the expiration of the
Exercise Term) exercise the Option to the extent, but only to
the extent, that the Option or portion thereof was exercisable
on the date of such termination of employment. On the date of
termination of employment the Option shall terminate to the
extent not then exercisable. Notwithstanding the foregoing, in
the event (i) the Company terminates the Optionee's employment
prior to May 25, 1995 for any reason other than for Cause or
following a Change of Control or (ii) the Optionee's employment
is terminated prior to May 25, 1995 by reason of death or
Disability, the Option shall be exercisable with respect to one-
half of the shares of Stock covered thereby (and shall
terminate with respect to the other one-half) if the Company
attains or has attained 90% of the Earnings Target, in which
event the Option shall be exercisable for a period of one year
after such termination but in no event after the expiration of
the Exercise Term or prior to certification by the Committee
that the Company has attained 90% of the Earnings Target. For
purposes of this Agreement, an Optionee's employment will be
considered terminated upon (i) an actual termination, (ii) a
change in the Optionee's status, title, position or
responsibilities (including reporting responsibilities) which,
in the Committee's reasonable judgment, represents a demotion
from his status, title, position or responsibilities as in
effect immediately prior thereto, or (iii) the assignment to
the Optionee of any duties or responsibilities which, in the
Committee's reasonable judgment, are inconsistent with such
status, title, position or responsibilities. In the event of
the Optionee's death, the Option shall be exercisable, to the
extent provided in the Plan and this Agreement, by the legatee
or legatees under his will, or by his personal representatives
or distributees, and such person or persons shall be
substituted for the Optionee each time the Optionee is referred
to herein.
7.2 Change of Control. If the Optionee's
employment is terminated by the Company or by the Optionee
following a Change in Control, the provisions of Section 8
shall apply.
7.3 Termination for Cause. Notwithstanding
anything to the contrary contained herein, if the employment of
the Optionee is terminated for Cause, the Option shall
terminate on the date of the Optionee's termination of
employment whether or not exercisable.
8. Effect of Change in Control.
---------------------------
Notwithstanding anything contained in the Plan or this
Agreement to the contrary other than the last sentence of this
Section 8, in the event of a Change in Control (A) all Options
outstanding on the date of such Change in Control shall become
immediately and fully exercisable and (B) upon termination of
an Optionee's employment with the Company following a Change in
Control, Options held by such Optionee shall remain exercisable
until the later of (x) one year after termination and (y) sixty
(60) days following the expiration of the Pooling Period (in
the event the Change in Control constitutes a Pooling
Transaction), but in no event beyond the stated term of the
Option. In the case of a Change in Control which also
constitutes a Pooling Transaction, the Board may take such
actions which it determines, after consultation with its
advisors, are reasonably necessary in order to assure that the
Pooling Transaction will qualify as such, including, but not
limited to, providing that all Options specifically identified
by the Committee shall not become immediately and fully
exercisable on the date of the Change in Control but rather
shall become immediately and fully exercisable on the date
following the last day of the Pooling Period (whether or not
the Optionee is then an employee of the Company).
9. Nontransferability.
------------------
The Option shall not be transferable other than by will
or by the laws of descent and distribution. During the
lifetime of the Optionee, the Option shall be exercisable only
by the Optionee.
10. No Right to Continued Employment.
--------------------------------
Nothing in this Agreement or the Plan shall be
interpreted or construed to confer upon the Optionee any right
with respect to continuance of employment by the Company, nor
shall this Agreement or the Plan interfere in any way with the
right of the Company to terminate the Optionee's employment at
any time.
11. Adjustments.
-----------
In the event of a Change in Capitalization or if the
number of shares of common stock of the Company outstanding
upon consummation of the Bankruptcy Plan is greater or less
than 10,000,000, the Committee shall conclusively determine the
appropriate adjustments to the number and class of shares of
Stock subject to the Option and the purchase price for such
shares of Stock. The Committee's adjustment shall be made in
accordance with the provisions of Section 4.5 of the Plan
and shall be effective and final, binding and conclusive for
all purposes of the Plan and this Agreement.
12. Certain Events.
--------------
Subject to Section 8 hereof, upon the effective date
of (i) the liquidation or dissolution of the Company or (ii) a
merger or consolidation of the Company (a "Transaction"),
the Option shall continue in effect in accordance with its
terms and the Optionee shall be entitled to receive in respect
of all shares of Stock subject to the Option, upon exercise of
the Option, the same number and kind of stock, securities,
cash, property or other consideration that each holder of
shares of Stock was entitled to receive in the Transaction.
13. Withholding of Taxes.
--------------------
At such times as an Optionee recognizes taxable income in
connection with the receipt of shares of Stock, securities,
cash or property hereunder (a "Taxable Event"), the Optionee
shall pay to the Company an amount equal to the federal, state
and local income taxes and other amounts as may be required by
law to be withheld by the Company in connection with the
Taxable Event (the "Withholding Taxes") prior to the issuance,
or release from escrow, of such shares of Stock or securities
or the payment of such cash or such property. The Company
shall have the right to deduct from any payment of cash to an
Optionee or Grantee an amount equal to the Withholding Taxes in
satisfaction of the obligation to pay Withholding Taxes. In
satisfaction of the obligation to pay Withholding Taxes to the
Company, the Optionee may make a written election (the "Tax
Election"), which may be accepted or rejected in the discretion
of the Committee, to have withheld a portion of the shares then
issuable to him having an aggregate Fair Market Value, on the
date preceding the date of such issuance, equal to the
Withholding Taxes, provided that in respect of an Optionee who
may be subject to liability under Section 16(b) of the Exchange
Act either: (i) the Tax Election is made at least six (6)
months prior to the date of the Taxable Event and the Tax
Election is irrevocable with respect to all Taxable Events of a
similar nature occurring prior to the expiration of six (6)
months following a revocation of the Tax Election; or (ii) in
the case of the exercise of an Option (A) the Optionee makes
the Tax Election at least six (6) months after the date the
Option was granted, (B) the Option is exercised during the ten
(10) day period beginning on the third business day and ending
on the twelfth business day following the release for
publication of the Company's quarterly or annual statement of
sales and earnings (a "Window Period") and (C) the Tax Election
is made during the Window Period in which the related Option is
exercised or prior to such Window Period and subsequent to the
immediately preceding Window Period. Notwithstanding the
foregoing, the Committee may, by the adoption of rules or
otherwise, (i) modify the provisions of this Section 13 or
impose such other restrictions or limitations on Tax Elections
as may be necessary to ensure that the Tax Elections will be
exempt transactions under Section 16(b) of the Exchange Act,
and (ii) permit Tax Elections to be made at such other times
and subject to such other conditions as the Committee
determines will constitute exempt transactions under
Section 16(b) of the Exchange Act.
14. Employee Bound by the Plan.
--------------------------
The Optionee hereby acknowledges receipt of a copy of
the Plan and agrees to be bound by all the terms and provisions
thereof.
15. Modification of Agreement.
-------------------------
This Agreement may be modified, amended, suspended or
terminated, and any terms or conditions may be waived, but only
by a written instrument executed by the parties hereto.
16. Severability.
------------
Should any provision of this Agreement be held by a
court of competent jurisdiction to be unenforceable or invalid
for any reason, the remaining provisions of this Agreement
shall not be affected by such holding and shall continue in
full force in accordance with their terms.
17. Governing Law.
-------------
The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of
the State of New York without giving effect to the conflicts of
laws principles thereof.
18. Successors in Interest.
----------------------
This Agreement shall inure to the benefit of and be
binding upon any successor to the Company. This Agreement
shall inure to the benefit of the Optionee's legal
representatives. All obligations imposed upon the Optionee and
all rights granted to the Company under this Agreement shall be
final, binding and conclusive upon the Optionee's heirs,
executors, administrators and successors.
19. Resolution of Disputes.
----------------------
Any dispute or disagreement which may arise under, or as
a result of, or in any way relate to, the interpretation,
construction or application of this Agreement shall be
determined by binding arbitration. The parties may agree to
submit the matter to a single arbitrator or to several
arbitrators, may require that arbitrators possess special
qualifications or expertise or may agree to submit a matter to
a mutually acceptable firm of experts for decision. In the
event the parties shall fail to thus agree upon terms of
arbitration within twenty (20) days from the first written
demand for arbitration, then such disputed matter shall be
settled by arbitration under the Rules of the American
Arbitration Association, by three arbitrators appointed in
accordance with such Rules. Such arbitration shall be held in
New York City. Once a matter has been submitted to arbitration
pursuant to this section, the decision of the arbitrators
reached and promulgated as a result thereof shall be final and
binding upon all parties. The cost of arbitration shall be
shared equally by the parties and each party shall pay the
expenses of his/its attorneys, except that the arbitrators
shall be entitled to award the costs of arbitration, attorneys
and accountants' fees, as well as costs, to the party that they
determine to be the prevailing party in any such arbitration.
20. Shareholder Approval.
--------------------
The effectiveness of this Agreement and of the grant of
the Option pursuant hereto is subject to the approval of the
Plan and this Agreement by holders of a majority of the voting
shares of the Company on or before six months after the
Consummation Date and by the Board of Directors of the Company.
21. Counterparts.
------------
This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
TELEMUNDO GROUP, INC.
Attest: By: /s/ Joaquin F. Blaya
---------------------------
Name: Joaquin F. Blaya
Title: President and Chief
/s/ Horace G. Dawson, III Executive Officer
-------------------------
Horace G. Dawson, III
Assistant Secretary
/s/ Peter J. Housman II
-----------------------
Peter J. Housman II
<TABLE>
Exhibit 13.1
TELEMUNDO GROUP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(All amounts in thousands)
STATEMENT OF OPERATIONS DATA:
<CAPTION>
Year Ended December 31 1994 1993 1992 1991 1990
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Revenue................................ $183,894 $177,809 $153,572 $ 134,258 $127,831
Operating income (loss).................... 13,176 16,597 10,823 (241,447) (945)
Other (expense) income..................... (34) (351) 1,438 - -
Reorganization items....................... 76,255 (2,543) - - -
Interest expense-net of interest income.... (645) (24,411) (35,739) (31,534) (33,798)
Equity in net loss from TeleNoticias....... (1,314) - - - -
Income (loss) before extraordinary items... 84,049 (14,059) (26,743) (276,046) (37,818)
Extraordinary gain-extinguishment of debt.. 130,482 - - 1,045 25,871
Net income (loss)**........................ $214,531 $(14,059) $(26,743) $(275,001) $(11,947)
======== ======== ======== ========= ========
Net income (loss) per share................ $* $* $* $* $*
== == == == ==
Dividends declared on common shares........ - - - - -
======== ======== ======== ========= ========
BALANCE SHEET DATA:
December 31 1994 1993 1992 1991 1990
---------------------------------------------------------------------------------------------------
Working capital............................ $ 32,325 $ 65,691 $ 51,657 $ 38,795 $ 36,252
Broadcasting licenses and reorganization
value in excess of amounts allocable
to identifiable assets (1994),or excess
of cost over fair value of net assets
acquired (1990).......................... 92,792 - - - 241,725
Total assets............................... 232,024 169,657 148,564 149,044 398,775
Long-term debt (liabilities subject to
settlement prior to 1994)................ 100,724 326,784 304,183 267,827 243,195
Common stockholders' equity (deficiency)... 70,000 (214,816) (200,757) (174,014) 100,987
<FN>
* Net income (loss) per share is not applicable as the Company has been recapitalized and has adopted fresh
start reporting as of December 31, 1994 (see Note 2).
** Net income was significantly impacted by certain nonrecurring income and expense items related to the Company's
financial restructuring (see Note 2).
</TABLE>
TELEMUNDO GROUP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
---------------------------------------------------------------------
TRANSACTIONS AFFECTING COMPARABILITY OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
On December 30, 1994, Telemundo consummated its financial restructuring
through a plan of reorganization under chapter 11 of the Bankruptcy Code ("the
Plan") (see Note 2 of the consolidated financial statements for a description
of the chapter 11 proceedings and the plan of reorganization). Pursuant to
the provisions of the American Institute of Certified Public Accountants
Statement of Position 90-7 entitled, "Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code" ("SOP 90-7"), the Company adjusted
its assets and liabilities to their estimated fair values upon consummation of
the reorganization. The adjustments to reflect the consummation of the
reorganization, including the gain on debt discharge and the adjustment to
record assets and liabilities at their fair values, have been reflected in the
accompanying financial statements. The balance sheet at December 31, 1993 is
presented on a historical cost basis without giving effect to the
reorganization. Therefore, the Company's consolidated balance sheet as of
December 31, 1994 is generally not comparable to prior periods.
The following discussion and analysis of financial condition and results of
operations should be read in conjunction with the Company's consolidated
financial statements and related notes, to which note references relate.
Results of Operations
Net revenue for each of the three years in the period ended December 31, 1994
was as follows:
Year Ended Year Ended Year Ended
December 31 December 31 December 31
1994 Change 1993 Change 1992
----------- ------ ----------- ------- -----------
Net Commercial Air Time:
Continental U.S.:
Network and
National Spot..... $82,211,000 5 % $77,953,000 34 % $58,166,000
Local............... 44,563,000 (3)% 46,017,000 12 % 41,050,000
126,774,000 2 % 123,970,000 25 % 99,216,000
Puerto Rico............ 37,014,000 (4)% 38,711,000 (1)% 39,159,000
163,788,000 1 % 162,681,000 18 % 138,375,000
Other.................... 20,106,000 33 % 15,128,000 - % 15,197,000
$183,894,000 3 % $177,809,000 16 % $153,572,000
The increase in network and national spot revenue in 1994 is the result of an
increase in advertising expenditures in the overall marketplace, offset by the
Company receiving a smaller share of such expenditures as a result of a
decline in audience share. The increase in network and national spot revenue
during 1993 was the result of an increase in the Company's share of
advertising expenditures by existing advertisers and the attraction of new
advertisers.
TELEMUNDO GROUP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (Continued)
------------------------------------------------------------------------------
The decrease in local commercial air time revenue in 1994 is due primarily to
a decrease at KVEA (Los Angeles), which is related to the ratings decline,
partially offset by an increase at WSCV (Miami). The 1993 increase reflected
growth in revenue primarily at WSCV (Miami) and improved ratings in key time
periods.
The decline in audience share will continue to impact the Company's ability to
maintain its share of advertising expenditures in the first half of 1995 and,
as a result, revenue for the first half of 1995 is likely to decrease from the
same period in the prior year.
Commercial air time revenue at WKAQ (Puerto Rico) decreased 4% in 1994 and 1%
in 1993 as a result of a slight decline in ratings.
Other revenue increased 33% during 1994 due to increases in sales of blocks of
broadcast time in both the continental U.S. and Puerto Rico.
Operating expenses, excluding network and corporate expenses and depreciation
and amortization, increased $9.2 million or 8% in 1994 and $12.9 million or
12% in 1993. These increases reflect the Company's continuing effort to
upgrade the quality of its programming including the development and
production of its own network news programs from May 1993 to November 1994.
Beginning December 1994, TeleNoticias assumed production of the Company's
network news programs (see Note 4).
Network expenses, which represent costs associated with the network operations
center as well as sales, marketing, and other network costs not allocated to
specific television stations, increased 9% and 24% for 1994 and 1993,
respectively, primarily reflecting the operating costs associated with the
expanded levels of production and the contracted increases in the cost of the
Nielsen national Hispanic television ratings service. The rate of growth of
operating and network expenses has decreased during the second half of 1994
(and such expenses declined during the fourth quarter of 1994 as compared to
the fourth quarter of 1993), as the Company has implemented certain cost
saving measures in response to the 1994 decline in revenue growth.
Corporate expenses decreased by 23% and 8% for 1994 and 1993, respectively,
primarily due to the rent and other savings associated with the relocation of
the Company's headquarters to Miami.
Other expenses for the year ended December 31, 1993 represents $1.1 million of
financial advisory and legal costs associated with the Company's financial
restructuring prior to July 30, 1993, the date the Company consented to the
entry of an order for relief under Chapter 11 of the Bankruptcy Code,
partially offset by the reversal of a $750,000 liability which was no longer
required. Other income of $1.4 million for the year ended December 31, 1992
consists primarily of the net effect of the reversal of $4.3 million of
liabilities provided at the date of acquisition of the Company's predecessor
which were no longer required, offset by the payment of $3.0 million for
financial advisory and legal costs in conjunction with the financial
restructuring. All costs associated with the financial restructuring incurred
subsequent to July 29, 1993 are included in the caption "reorganization items"
on the consolidated statements of operations. As of December 31, 1994, the
TELEMUNDO GROUP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (Continued)
------------------------------------------------------------------------------
Company completed its reorganization to which the following nonrecurring
income and expense items relate:
(i) As a result of the application of "fresh start" reporting upon emergence
from bankruptcy, the Company adjusted its assets and liabilities to their
estimated fair value as of December 30, 1994 pursuant to the provisions of SOP
90-7. The resulting increase in the Company's net assets of $86.9 million is
included in reorganization items in the consolidated statement of operations
for the year ended December 31, 1994.
(ii) In accordance with SOP 90-7, the legal, professional and other costs and
expenses related to the reorganization totalling $11.6 million are included in
reorganization items in the consolidated statement of operations for the year
ended December 31, 1994.
(iii) Also pursuant to SOP 90-7, included in reorganization items in the
consolidated statement of operations for the year ended December 31, 1994 is
interest income of $967,000.
(iv) An extraordinary gain from debt forgiveness of $130.5 million is reported
in the consolidated statement of operations for the year ended December 31,
1994, which represents the total amount of liabilities discharged in the
reorganization, including accrued interest and unamortized discount, reduced
by the amount of distributions to holders of such liabilities. The
distributions, which are described in Note 2 to the consolidated financial
statements, included cash, new debt, shares of common stock and warrants to
purchase common stock.
Reorganization items of $2.5 million for 1993 are items associated with the
chapter 11 proceedings incurred from July 30, 1993 and include $1.8 million
for financial advisory and legal fees, an accrual of $1.0 million for
relocation, severance and other costs associated with the reorganization, a
$90,000 benefit related to the write-off of various assets and liabilities in
conjunction with the renegotiation of certain leases, and $235,000 of interest
income earned on cash balances that would have otherwise been used to make
scheduled principal and interest payments on debt in default and to pay
prepetition liabilities.
Interest expense for 1994 totalled $645,000 as compared to $25.0 million and
$37.0 million for 1993 and 1992, respectively. Interest expense has been
accrued through June 8, 1993 (the date an involuntary petition under chapter
11 was filed). Additional interest expense of $39.4 million and $21.3 million
would have been recorded for 1994 and 1993, respectively, if an involuntary
petition had not been filed. During 1993, the Company received notification
declaring due and payable in full its 12% junior subordinated discount
debentures as a result of defaults under the indenture agreement with the
trustee. Accordingly, included in interest expense for 1993 is $7.1 million
representing the additional interest expense to adjust the debentures to their
full face value on the consolidated balance sheet.
TELEMUNDO GROUP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (Continued)
------------------------------------------------------------------------------
Interest income of $967,000 for 1994 and interest income from the period July
30, 1993 to December 31, 1993 totalling $235,000 is included in reorganization
items on the consolidated statements of operations. Interest income was
$554,000 for the period from January 1, 1993 through July 29, 1993, as
compared to $1.3 million for the year ended December 31, 1992. The decrease
in interest income in 1993 from 1992 is due to lower rates of interest earned
on invested cash and the maturation of a note receivable in the third quarter
of 1992 that was earning interest at a higher rate than the reinvested cash.
Equity in net loss from TeleNoticias of $1.3 million represents the Company's
42% share of TeleNoticias' net loss for 1994 (see Note 4).
The income tax provision recorded in all periods relates to WKAQ, which is
taxed separately under Puerto Rico income tax regulations, withholding taxes
related to intercompany interest, and certain federal, state and local taxes.
The Company was liable for $110,000 in U.S. federal and state taxes for 1994
as a result of the alternative minimum tax. The utilization of net operating
loss carryforwards are subject to certain limitations imposed by Section 382
of the Internal Revenue Code and their use will be significantly limited each
year subsequent to December 31, 1994.
LIQUIDITY AND SOURCES OF CAPITAL
The Company's cash flows from operating activities are $8.1 million for 1994
as compared to $17.0 million and $14.2 million in 1993 and 1992, respectively.
The decrease in 1994 is the result of a decline in operating income and an
increase in advisory and other fees in connection with the chapter 11
proceedings, offset in part by the net effect of changes in certain asset and
liability accounts. The increase in 1993 from 1992 was primarily the result
of improved operating results.
The Company has working capital of $32.3 million at December 31, 1994, which
declined from prior years as a result of the distribution of cash upon
consummation of the plan of reorganization. The Company secured a $20 million
revolving credit facility on December 31, 1994, of which $200,000 was
outstanding at year end.
The Company plans on financing interim cash needs through cash generated from
operations and the revolving credit facility. The Company does not anticipate
the need to obtain any additional financing to fund operations.
Capital expenditures of approximately $12.6 million were made during 1994 for
the general replacement or upgrading of equipment at all stations, relocation
of the Company's corporate headquarters and an expansion and upgrading of the
network operations center including the TeleNoticias news studio. The Company
anticipates that capital expenditures of approximately $6.5 million will be
made during 1995 for the general replacement or upgrading of equipment at all
stations and upgrading of the network operations center.
TELEMUNDO GROUP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (Continued)
------------------------------------------------------------------------------
In July 1994, the Company entered into a partnership agreement with
subsidiaries of Reuters Holdings PLC, an international news and information
organization, Antena 3 de Television, S.A, a Spanish media company, and Arte
Radiotelevisivo Argentino, S.A., an Argentinean media company, to launch a 24-
hour international Spanish-language news service. The 24-hour news service,
TeleNoticias, which began transmitting on December 1, 1994, is produced and
distributed from the Company's network operations center in Hialeah, Florida.
The Company holds a 42% interest in the partnership. The Company is required
to make cash contributions to the partnership of up to $6.5 million during the
partnership's first fiscal year, which commenced on September 16, 1994, and up
to an aggregate of $10.0 million through its sixth fiscal year. The Company
made cash contributions totalling $5.5 million to the partnership in 1994,
primarily for start up costs. Certain equipment purchases previously made by
the Company were subsequently transferred to and reimbursed by the
partnership. Commencing December 1994, TeleNoticias assumed production of the
Company's network news programs for a six year period at an initial cost of $5
million per year, increasing by $500,000 each year. In addition, the Company
provides certain services to the partnership including the use of a news
studio in the Company's network operations center.
In March 1995, the Company agreed to a settlement in connection with
litigation brought against the Company's retirement and savings plan. The
Company has agreed to pay the settlement amount of $2.3 million on June 30,
1995 on behalf of the plan.
<TABLE>
TELEMUNDO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION> Predecessor
------------------------------------------
Year Ended December 31 1994 1993 1992
-------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net revenue..................................... $183,894,000 $177,809,000 $153,572,000
------------ ------------ ------------
Costs and expenses:
Direct operating costs.......................... 90,914,000 83,166,000 71,211,000
Selling, general and administrative expenses
other than network and corporate.............. 35,688,000 34,191,000 33,225,000
Network expenses................................ 28,501,000 26,167,000 21,026,000
Corporate expenses.............................. 4,811,000 6,219,000 6,772,000
Depreciation and amortization................... 10,804,000 11,469,000 10,515,000
----------- ---------- ----------
170,718,000 161,212,000 142,749,000
----------- ----------- -----------
Operating income................................ 13,176,000 16,597,000 10,823,000
Other (expense) income.......................... (34,000) (351,000) 1,438,000
Reorganization items............................ 76,255,000 (2,543,000) -
Interest expense - net of interest income of
$554,000 in 1993 and $1,308,000 in 1992....... (645,000) (24,411,000) (35,739,000)
Equity in net loss from TeleNoticias............ (1,314,000) - -
---------- ----------- ----------
Income (loss) before income taxes............... 87,438,000 (10,708,000) (23,478,000)
Income tax provision............................ (3,389,000) (3,351,000) (3,265,000)
---------- ----------- -----------
Income (loss) before extraordinary item......... 84,049,000 (14,059,000) (26,743,000)
Extraordinary gain - extinguishment of debt..... 130,482,000 - -
----------- ----------- -----------
Net income (loss)............................... $214,531,000 $(14,059,000) $(26,743,000)
=========== ============ ============
Net income (loss) per share..................... $* $* $*
== == ==
<FN>
* Net income (loss) per share is not applicable as the Company has been recapitalized and has
adopted fresh start reporting as of December 31, 1994 (see Note 2).
See notes to consolidated financial statements
</TABLE>
<TABLE>
TELEMUNDO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
Predecessor
-----------
Assets December 31 1994 1993
-------------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents............................... $ 1,850,000 $37,675,000
Accounts receivable, less allowance for doubtful
accounts of $2,845,000 and $2,501,000................. 47,673,000 43,141,000
Television programming.................................. 12,410,000 12,505,000
Prepaid expenses and other.............................. 6,296,000 5,760,000
----------- -----------
Total current assets.................................. 68,229,000 99,081,000
Property and equipment-net................................ 62,774,000 67,042,000
Television programming.................................... 3,172,000 2,827,000
Other assets.............................................. 909,000 707,000
Investment in TeleNoticias................................ 4,148,000 -
Broadcast licenses and reorganization value in excess of
amounts allocable to identifiable assets................. 92,792,000 -
----------- ----------
$232,024,000 $169,657,000
============ ============
Liabilities and Shareholders' Equity (Deficiency)
-----------------------------------------------
Current liabilities:
Accounts payable..................................... $ 7,308,000 $ 5,724,000
Accrued expenses and other........................... 23,304,000 22,527,000
Television programming obligations................... 5,292,000 5,139,000
----------- -----------
Total current liabilities........................... 35,904,000 33,390,000
Long-term debt......................................... 100,724,000 -
Capital lease obligations.............................. 7,263,000 7,814,000
Television programming obligations..................... 763,000 1,782,000
Other liabilities...................................... 17,370,000 14,703,000
Liabilities subject to settlement under chapter
11 proceedings....................................... - 326,784,000
------------- ------------
162,024,000 384,473,000
------------- ------------
Contingencies and commitments
Common stockholders' equity (deficiency):
Series A common stock, $.01 par value,
4,388,394 shares authorized, 4,388,394
shares outstanding at December 31, 1994............ 44,000 -
Series B common stock, $.01 par value,
5,611,606 shares authorized, 5,611,606
shares outstanding at December 31, 1994............ 56,000 -
Common stock, $.01 par value, 100,000 shares
authorized 37,042,924 shares outstanding
at December 31, 1993............................... - 370,000
Additional paid-in capital............................. 69,900,000 245,768,000
Retained earnings (deficit)............................ - (460,954,000)
----------- -----------
70,000,000 (214,816,000)
----------- -----------
$232,024,000 $169,657,000
============ ============
<FN>
See notes to consolidated financial statements
</TABLE>
<TABLE>
TELEMUNDO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN COMMON SHAREHOLDERS' EQUITY (DEFICIENCY)
<CAPTION>
Number of
Shares Common
Outstanding Stock
------------------------------ -----------------------------
Common
Series A Series B Series A Series B Additional Retained Shareholders'
Common Common Common Common Common Common Paid-in Earnings Equity
Stock Stock Stock Stock Stock Stock Capital (Deficit) (Deficiency)
------- -------- ------- ------ -------- ------- ------------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1,
1992.............. 37,042,924 - - $370,000 - - $ 245,768,000 $(420,152,000)$(174,014,000)
Net loss............ - - - - - - (26,743,000) (26,743,000)
---------- ------ ------ -------- --------- -------- -------------- ------------- -------------
Balance, December 31,
1992.............. 37,042,924 - - 370,000 - - 245,768,000 (446,895,000)(200,757,000)
Net Loss............ - - - - - - - (14,059,000) (14,059,000)
----------- ------- ------ -------- -------- ------- -------------- ------------- ----------
Balance, December 31,
1993.............. 37,042,924 - - 370,000 - - 245,768,000 (460,954,000)(214,816,000)
Net income.......... - - - - - - - 214,531,000 214,531,000
Elimination of former
equity interests.... (37,042,924) - - (370,000) - - (245,768,000) 246,423,000 285,000
Common stock
issued in the
restructuring
and application
of fresh start
reporting........ - 4,388,394 5,611,606 - 44,000 56,000 69,900,000 - 70,000,000
---------- ----------- ---------- ---- ------ ------ ----------- ----------- -----------
Balance, December 31,
1994............. - 4,338,394 5,611,606 - $44,000 $56,000 $69,900,000 $ - $70,000,000
========== =========== ========= ===== ====== ====== =========== =========== ===========
<FN>
See notes to consolidated financial statements
</TABLE>
<TABLE>
TELEMUNDO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Predecessor
------------------------------------------------
Year Ended December 31 1994 1993 1992
----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................ $214,531,000 $(14,059,000) $(26,743,000)
Charges not affecting cash:
Extraordinary gain-extinguishment of debt.. (130,482,000) - -
Fresh start revaluation.................... (86,901,000) - -
Depreciation and amortization.............. 10,804,000 11,469,000 10,515,000
Equity in net loss from TeleNoticias....... 1,314,000 - -
Accretion of zero coupon bonds............. - 12,900,000 19,653,000
Other...................................... - 735,000 -
Changes in assets and liabilities:
Accrued interest on debt in default........ - 10,998,000 15,974,000
Accounts receivable........................ (4,532,000) (5,283,000) (2,670,000)
Television programming..................... (250,000) (3,794,000) 3,282,000
Television program obligations............. (866,000) 931,000 (3,279,000)
Accounts payable and accrued expense
and other.................................. 4,465,000 3,067,000 (2,580,000)
------------ ----------- -----------
8,083,000 16,964,000 14,152,000
------------ ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment........... (12,550,000) (8,485,000) (3,992,000)
Investment in TeleNoticias.................... (5,462,000) - -
Payments relating to acquisitions and
divestitures................................ - (1,907,000) (4,058,000)
Principal payments of notes receivable
relating to the sale of a business.......... - - 10,981,000
----------- ---------- -----------
(18,012,000) (10,392,000) 2,931,000
----------- ---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of obligations under capital leases.. (594,000) (614,000) -
Borrowings under credit line.................. 200,000 - -
Payments of liabilities for settlements
relating to consummation of the Plan........ (35,928,000) - -
Proceeds from common stock issued pursuant
to the Plan................................. 10,426,000 - -
------------ ----------- ----------
(25,896,000) (614,000) -
------------ ----------- ----------
(Decrease) increase in cash and cash
equivalents................................. (35,825,000) 5,958,000 17,083,000
Cash and cash equivalents, beginning
of year..................................... 37,675,000 31,717,000 14,634,000
------------ ----------- -----------
Cash and cash equivalents, end of year........ $ 1,850,000 $37,675,000 $31,717,000
============ =========== ============
<FN>
SUPPLEMENTAL NONCASH INVESTING AND FINANCING ACTIVITY:
In 1993 capital lease obligations of $9,037,000 were incurred primarily to finance the acquisition of a satellite transponder.
See notes to consolidated financial statements
</TABLE>
TELEMUNDO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Telemundo Group, Inc. ("Telemundo"), together with its subsidiaries
(collectively, the "Company") is a Spanish-language television network that,
through its owned and operated stations and affiliates, serves 53 markets in
the continental United States, including the 32 largest Hispanic markets, and
reaches approximately 86% of all U.S. Hispanic households. The Company also
owns and operates a television station and related production facilities in
Puerto Rico. The Company produces Spanish-language programming for use on its
network and for sale in foreign countries and sells advertising time on behalf
of its owned and operated television stations and affiliates. The Company
also holds a 42% interest in TeleNoticias del Mundo, L.P. ("TeleNoticias"), a
24-hour Spanish language news service distributed in Latin America, the United
States and Europe.
BASIS OF PRESENTATION
On December 30, 1994, Telemundo consummated its financial restructuring
pursuant to a plan of reorganization under chapter 11 of the Bankruptcy Code
(see Note 2 for a description of the chapter 11 proceedings and the plan of
reorganization). Pursuant to the provisions of the American Institute of
Certified Public Accountants Statement of Position 90-7 entitled "Financial
Reporting by Entities in Reorganization Under the Bankruptcy Code" ("SOP 90-
7"), the Company adjusted its assets and liabilities to their estimated fair
values upon consummation of the reorganization. The adjustments to reflect
the consummation of the reorganization as of December 31, 1994, including the
gain on debt discharge and the adjustment to record assets and liabilities at
their fair values, have been reflected in the accompanying financial
statements. The balance sheet at December 31, 1993 is presented on a
historical cost basis without giving effect to the reorganization. Therefore,
the Company's balance sheet as of December 31, 1994 generally is not
comparable to prior periods and is separated by a line (see Note 2). For
purposes of these financial statements, the term "Predecessor" refers to the
Company prior to emergence from chapter 11 reorganization.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Telemundo and
its subsidiaries. All significant intercompany balances and transactions have
been eliminated in consolidation.
CASH AND CASH EQUIVALENTS
The Company considers short-term investments with a maturity of three months
or less to be cash equivalents. Such short-term investments are carried at
cost which approximates fair value.
TELEVISION PROGRAMMING
Television programming rights and the related obligations are recorded at
gross contract prices. The costs of the rights are amortized on varying bases
related to the license and distribution periods, usage of the programs and
management's estimate of revenue to be realized from each airing of the
programs.
TELEMUNDO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
----------------------------------------------------------------------------
DEPRECIATION AND AMORTIZATION
Property and equipment is depreciated by the straight-line method over
estimated useful lives as follows:
Buildings 40 Years
Antennas and Transmitters 20 Years
Other Broadcast Equipment 3 to 7 Years
Furniture and Fixtures 5 to 7 Years
Automobiles and Trucks 4 Years
Leasehold Improvements
and Satellite Transponder Life of Lease
BROADCAST LICENSES AND REORGANIZATION VALUE IN EXCESS OF AMOUNTS ALLOCABLE TO
IDENTIFIABLE ASSETS
Broadcasting licenses and reorganization value in excess of amounts allocable
to identifiable assets represents the portion of reorganization value not
attributable to specific tangible assets of the Company at the time of the
reorganization. This value is attributable primarily to FCC broadcast
licenses. The Company has contracted an independent appraisal firm that is
currently in the process of allocating a value between broadcast licenses and
other intangible assets. On an ongoing basis the Company will review the
carrying value of broadcast licenses and reorganization value in excess of
amounts allocable to identifiable assets and if such review indicates that
these values may not be recoverable, the Company's carrying value of broadcast
licenses or reorganization value in excess of amounts allocable to
identifiable assets will be reduced to its estimated fair value.
REVENUE RECOGNITION
Revenue is derived primarily from the sale of advertising time on a network,
national spot and local basis. In addition, the Company earns revenue from
the sale of blocks of broadcast time during non-network programming hours.
Revenue is recognized when earned, i.e., when the advertisement is aired or
the block of broadcast time is utilized. During 1994 and 1993, no customer
accounted for more than 10 percent of the Company's commercial air time
revenue. Commercial air time revenue from over 30 individual brands of a
major advertiser collectively accounted for 10 percent of the Company's total
commercial air time revenue in 1992.
PER COMMON SHARE INFORMATION
As a result of the effects of the reorganization, per share information for
all periods presented is not applicable and has therefore been omitted from
the accompanying financial statements.
RECLASSIFICATIONS
Certain reclassifications have been made in the prior years' financial
statements to conform with the current year's presentation.
TELEMUNDO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
------------------------------------------------------------------------------
2. CHAPTER 11 REORGANIZATION
On June 8, 1993 (the "Petition Date"), certain holders of the outstanding 13
5/8% subordinated debentures and the indenture trustee for such debentures
filed an involuntary petition for reorganization under chapter 11 of title 11
of the United States Code (the "Bankruptcy Code") in the United States
Bankruptcy Court for the Southern District of New York (the "Bankruptcy
Court"). The involuntary petition was filed against Telemundo and did not
include its subsidiaries. On July 30, 1993, the Company consented to the
entry of an order for relief under the Bankruptcy Code. On July 20, 1994, the
Bankruptcy Court entered an order confirming the Company's second amended plan
of reorganization (the "Plan"). The reorganization was consummated on
December 30, 1994 (the "Consummation Date") and is reflected in the
accompanying financial statements as if the consummation occurred on December
31, 1994, which is not significantly different than operations through
December 30, 1994.
Under the terms of the Plan, the following occurred: (a) an aggregate of
$31,348,000 in cash, $88,668,000 in principal amount of new 10.25% senior
notes ("New Senior Notes"), 8,550,000 shares of the common stock of
reorganized Telemundo ("New Common Stock") and 639,750 warrants to purchase
New Common Stock were issued in satisfaction of bondholder and general
unsecured creditor claims; (b) $7.0 million was paid to settle all claims
relating to an unfavorable long-term lease; and (c) $219,000 in cash and
$28,220,000 in New Senior Notes were issued and the Company received
$2,639,000 from a co-defendant as part of the Blair settlement agreement (see
Note 10). Under the Plan, pre-existing equity interests were canceled. The
existing stockholders were given rights to purchase 1,450,000 shares of New
Common Stock. Reliance Group Holdings, Inc. and its affiliates agreed to
acquire New Common Stock not acquired by other stockholders for which
commitment they received 416,667 warrants to purchase New Common Stock.
Substantially all distributions of securities and cash have been made.
Reorganization items are items associated with chapter 11 proceedings that
were incurred subsequent to July 29, 1993 and consisted of the following:
1994 1993
Reorganization Costs:
Professional fees $ (6,365,000) $ (1,850,000)
Contract cancellation costs (3,479,000) -
Litigation settlement (668,000) -
Interest income 967,000 235,000
Other (1,101,000) (928,000)
----------- -----------
(10,646,000) (2,543,000)
Revaluation of Assets and
Liabilities 86,901,000 -
---------- ------------
$ 76,255,000 $ (2,543,000)
============ ============
TELEMUNDO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
------------------------------------------------------------------------------
In connection with its consummation of the Plan on December 30, 1994,
Telemundo adopted fresh start reporting in accordance with SOP 90-7. The
fresh start reporting equity value of $70 million was determined by the
Company with the assistance of its financial advisors using certain financial
analyses, including discounted future cash flows. The significant factors
considered were analyses of publicly available information of other companies
believed to be comparable to the Company, industry, economic and overall
market conditions, and historical and projected performance of the Company.
Under fresh start reporting, the reorganization value of the entity has been
allocated to the reorganized company's assets and liabilities on a basis
substantially consistent with the purchase method of accounting. The portion
of reorganization value not attributable to specific tangible or identifiable
intangible assets were included in
TELEMUNDO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
"Broadcast Licenses and Reorganization Value in Excess of Amounts Allocable to
Identifiable Assets" in the accompanying
consolidated balance sheet as of December 31, 1994. The fresh start reporting adjustments will have a significant effect on
the Company's future statements of operations including depreciation and amortization and interest expense.
The effects of the Plan and fresh start reporting on the Company's consolidated balance sheet as of December 31, 1994 are as
follows (in thousands):
Adjustments to Record
Consummation of Plan
-------------------------------------
Discharge of
Predecessor Liabilities Reorganized
Balance Sheet Subject of Equity Fresh Balance Sheet
Dec. 31, 1994 Settlement Infusion Start Dec. 31, 1994
<S> ------------- ----------- -------- ----- --------------
ASSETS: <C> <C> <C> <C> <C>
Current assets:
Cash and cash
equivalents............... $ 20,352 $ (28,928)(a) $ 10,426 (b) $ - $ 1,850
Accounts receivable, less
allowance for doubtful
accounts.................. 47,673 - - - 47,673
Television programming...... 12,410 - - - 12,410
Prepaid expenses and
other...................... 6,296 - - - 6,296
--------- --------- ------- ------- --------
Total current assets..... 86,731 (28,928) 10,426 - 68,229
Property and equipment-net... 68,665 - - (5,891)(c) 62,774
Television programming....... 3,172 - - - 3,172
Other assets................. 909 - - - 909
Investment in TeleNoticias... 4,148 - - - 4,148
Broadcast licenses and
reorganization value in
excess of identifiable
assets..................... - - - 92,792 (d) 92,792
-------- --------- -------- -------- --------
$163,625 $ (28,928) $ 10,426 $ 86,901 $232,024
======== ========= ======== ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY):
Current liabilities:
Accounts payable........... $ 7,308 $ - $ - $ - $ 7,308
Accrued expenses and other. 20,567 - - 2,737 (d) 23,304
Television programming
obligations............ 5,292 - - - 5,292
--------- -------- -------- -------- --------
Total current
liabilities......... 33,167 - - 2,737 35,904
Long-term debt............... 200 100,524 (a) - - 100,724
Capital lease obligations.... 7,263 - - - 7,263
Television programming
obligations............... 763 - - - 763
Other liabilities............ 15,960 - - 1,410 (d) 17,370
Liabilities subject to
settlement under chapter 11
proceedings (including debt
in default)................ 319,784 (319,784)(a) - - -
Common stockholders' equity
(deficiency)............... (213,512) 190,332 (a) 10,426 (b) 82,754 (e) 70,000
--------- --------- ------- ------- --------
$ 163,625 $ (28,928) $10,426 $86,901 $232,024
========= ======== ======= ========
</TABLE>
TELEMUNDO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
------------------------------------------------------------------------------
To record discharge of liabilities subject to settlement pursuant to the Plan:
(i) cash distribution of $31,348,000, issuance of $88,668,000 in New Senior
Notes and issuance of 8,550,000 shares of New Common Stock valued at $7 per
share ($59,850,000) in satisfaction of bondholder and general unsecured
creditor claims, (ii) cash distribution of $219,000, issuance of $28,220,000
in New Senior Notes and receipt of $2,639,000 from a co-defendant as part of
the Blair settlement agreement (see Note 10), and (iii) $130,482,000 gain from
the discharge of liabilities subject to settlement. Pursuant to the
provisions of SOP 90-7, the $88,668,000 in New Senior Notes issued to
bondholders and general unsecured creditors and the $28,220,000 in New Senior
Notes issued as part of the Blair settlement agreement were recorded at their
fair values of $76,254,000 and $24,270,000, respectively, based upon market
trading activity at the time of consummation, reflecting an effective interest
rate of 13.34%.
Cash of $907,000 and New Senior Notes of $9,211,000 distributed represented
interest accretion from January 31, 1994 through December 30, 1994, pursuant
to the Plan.
The Plan also provided for the payment of $7.0 million to settle all claims
relating to an unfavorable long-term lease, which payment was made in June
1994.
To record cash received from existing stockholders for New Common Stock as
part of the consummation of the Plan (1,450,000 shares at $7.19 per share
pursuant to the Plan).
To record the effect of adjusting carrying value to fair market value in
accordance with fresh start reporting.
To record broadcast licenses and reorganization value in excess of amounts
allocable to identifiable net assets in accordance with fresh start reporting
and accrue for additional reorganization costs.
To record the fresh start reorganization equity value at $70,000,000.
TELEMUNDO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
------------------------------------------------------------------------------
3. PROPERTY AND EQUIPMENT
Predecessor
-----------
December 31 1994 1993
----------------------------------- ----------- ------------
Land............................... $ 4,161,000 $ 4,161,000
Buildings.......................... 15,975,000 12,837,000
Broadcast equipment, antennas
and transmitters................. 29,046,000 76,137,000
Satellite transponder.............. 6,999,000 8,706,000
Leasehold interests................ - 12,255,000
Leasehold improvements............. 6,593,000 7,859,000
---------- -----------
62,774,000 121,955,000
Less accumulated depreciation
and amortization................ - (54,913,000)
---------- -----------
$62,774,000 $67,042,000
=========== ===========
4. INVESTMENT IN TELENOTICIAS
In July 1994, the Company entered into a partnership agreement with
subsidiaries of Reuters Holdings PLC, an international news and information
organization, Antena 3 de Television, S.A., a Spanish media company, and Arte
Radiotelevisivo Argentino, S.A, an Argentinean media company, to launch a 24-
hour international Spanish-language news service. The 24-hour news service,
TeleNoticias, which began transmitting on December 1, 1994, is produced and
distributed from the Company's network operations center in Hialeah, Florida.
The Company holds a 42% interest in the partnership and accounts for its
interest in the partnership using the equity method. The Company is required
to make cash contributions to the partnership of up to $6.5 million during the
partnership's first fiscal year, which commenced on September 16, 1994, and up
to an aggregate of $10.0 million through its sixth fiscal year. The Company
made cash contributions totalling $5.5 million to the partnership in 1994,
primarily for start-up costs. Certain equipment purchases previously made by
the Company were subsequently transferred to and reimbursed by the
partnership. Commencing December 1994, TeleNoticias assumed production of the
Company's network news programs for a six year period at an initial cost of $5
million per year, increasing by $500,000 each year. In addition, the Company
provides certain services to the partnership including the use of a news
studio in the Company's network operations center.
5. ACCRUED EXPENSES
Predecessor
-----------
December 31 1994 1993
------------------------------------- ------------ ----------
Accrued compensation and
commissions........................ $ 3,865,000 $ 5,530,000
Accrued agency commissions........... 4,334,000 3,808,000
Accrued reorganization costs......... 5,677,000 2,847,000
Other accrued expenses............... 9,428,000 10,342,000
$23,304,000 $22,527,000
=========== ===========
TELEMUNDO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
------------------------------------------------------------------------------
6. LONG-TERM DEBT
December 31 1994
------------------------------------ -----------
10.25% senior notes................. $100,524,000
Revolving credit
facility.......................... 200,000
------------
100,724,000
Less: current portion............... -
------------
$100,724,000
============
All debt outstanding at December 31, 1993 was in default and was included in
liabilities subject to settlement in the consolidated balance sheet.
As described in Note 2, the Predecessor debt was exchanged for cash, debt and
securities pursuant to the Plan. Significant terms of the reorganized
Company's debt agreements are as follows:
10.25% Senior Notes: The 10.25% Senior Notes ("New Senior Notes") have been
recorded at their fair value of $100,524,000 reflecting an effective interest
rate of 13.34%, based upon market trading activity at the time of
consummation. The New Senior Notes are unsecured obligations of the Company
with an outstanding aggregate principal amount of $116,888,000 bearing
interest from December 31, 1994, payable semi-annually, and maturing December
30, 2001.
The New Senior Notes are redeemable, at the option of the Company, in whole or
in part, at any time after December 30, 1997, by payment of accrued and unpaid
interest thereon to the date of prepayment and payment of the following
redemption prices for each $100 of principal amount thereof:
Year Price
---- -----
1998......................... $105
1999......................... $103
2000......................... $101
The Company may also acquire New Senior Notes in open market purchases, tender
offers or in other market transactions.
The Company is required to make the following mandatory sinking fund payments:
Principal
December 30 Amount
----------- -----------
1999........................ $25,000,000
2000........................ $25,000,000
2001........................ $66,888,000
The Company may credit against such required sinking fund obligations, in the
order of the scheduled sinking fund payments, the principal amount of any and
all New Senior Notes acquired by the Company through open market purchases,
tender offers, and other market transactions.
TELEMUNDO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
------------------------------------------------------------------------------
Revolving Credit Facility: The Revolving Credit Facility ("Credit Facility")
allows for borrowings up to $20 million, subject to the Company's maintenance
of an adequate accounts receivable borrowing base, which was maintained at
December 31, 1994. Interest accrues at a rate of prime plus 1.75% (10.25% at
December 31, 1994) . Minimum annual interest during 1995 and 1996 is
$360,000. The agreement expires December 30, 1999 and is cancelable at the
Company's option prior to expiration upon payment of an early termination fee,
except during the first 60 days of 1998 or 1999 when the agreement may be
terminated without incurring an early termination fee. The Company is
required to pay a fee of 0.5% per annum based on the average unborrowed
portion of the Credit Facility. The Company is also required to pay other
annual fees and expenses in connection with the borrowing agreement. The
Credit Facility is secured by substantially all assets of the Company and does
not require compensating balances.
The New Senior Notes and Credit Facility agreements contain certain covenants
which, among other things, require the Company to maintain certain financial
ratios and impose on Telemundo and its subsidiaries certain limitations or
prohibitions on: (i) the incurrence of indebtedness or the guarantee or
assumption of indebtedness of another; (ii) the creation or incurrence of
mortgages, pledges or security interests on the property or assets of the
Company or any of its subsidiaries in order to secure debt; (iii) the sale of
assets of the Company or any of its subsidiaries; (iv) the merger or
consolidation of the Company with any person or other entity; (v) the payment
of dividends or the redemption or repurchase of any capital stock of the
Company; and (vi) investments and acquisitions.
Liabilities recorded as of the Petition Date that were expected to be settled
under a plan of reorganization were separately classified in the consolidated
balance sheet at December 31, 1993. At December 31, 1993, such liabilities
consisted primarily of debt in default aggregating $309,002,000 (including
accrued interest of $28,233,000 prior to the Petition Date) and other
obligations assumed as part of the acquisition of the Company's predecessor.
Included in interest expense for the year ended December 31, 1993 was
$7,100,000 representing the additional interest in the period to adjust
certain debentures to their full face value. Contractual interest obligations
were accrued up until June 8, 1993, the Petition Date. Additional interest
expense of $39,400,000 and $21,300,000 would have been recorded through
December 31,1994 and 1993, respectively, if the involuntary petition had not
been filed.
In addition to not making the scheduled principal payments on matured senior
notes, the Company did not make scheduled cash payments of interest totalling
$10,300,000 and $10,400,000 in 1993 and 1992, respectively. Included in
interest expense for the years ended December 31, 1993 and 1992 were accruals
of interest at stipulated rates (ranging from 11.0% to 13.6%) on matured debt
and on unpaid scheduled interest totalling $6,300,000 and $5,600,000,
respectively.
TELEMUNDO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
------------------------------------------------------------------------------
7. INCOME TAXES
The Company and its domestic subsidiaries file a consolidated federal income
tax return. The Company files a separate Puerto Rico income tax return for
its operations in Puerto Rico. The income tax provision consisted of:
Predecessor
------------------------------------
Year Ended December 31 1994 1993 1992
-------------------------- --------- ---------- ----------
Puerto Rico (a)........... $3,279,000 $3,195,000 $3,065,000
Federal, state and
local (b)............... 110,000 156,000 200,000
---------- ---------- ----------
$3,389,000 $3,351,000 $3,265,000
========== ========== ==========
Represents a provision for withholding tax related to intercompany interest.
Federal and state taxes are a result of the alternative minimum tax.
The Company paid $1,260,000, $1,025,000 and $988,000 for withholding taxes
related to its operations in Puerto Rico in 1994, 1993 and 1992, respectively.
In addition, the Company paid U.S. income taxes of $153,000 and $208,000 in
1993 and 1992, respectively.
The tax effects comprising the Company's net deferred taxes as of December 31,
1994 and 1993 are as follows:
Predecessor
December 31 1994 1993
------------------------------------ ------------- -------------
Deferred Tax Assets:
Net operating loss carryforwards
("NOLs")........................ $ 72,601,000 $ 88,344,000
Amortization of FCC broadcast
licenses........................ 32,824,000 34,763,000
Other............................. 5,541,000 2,092,000
------------ ------------
110,966,000 125,199,000
Deferred Tax Liabilities:
Amortization of FCC broadcast
licenses and other.............. (36,138,000) -
Accelerated depreciation.......... (2,022,000) (4,330,000)
----------- -----------
(38,160,000) (4,330,000)
Net deferred tax asset.............. 72,806,000 120,869,000
Valuation allowance................. (72,806,000) (120,869,000)
Net deferred tax $ - $ -
=========== ============
TELEMUNDO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
------------------------------------------------------------------------------
Limitations imposed by Section 382 of the Internal Revenue Code after a change
in control, which occurred on the consummation date, will limit the amount of
NOLs which will be available to offset future U.S. taxable income to
approximately $6,600,000 annually, or a total of $92,400,000 during the
permitted carryover period, except in certain circumstances.
As there is no assurance that the Company will generate sufficient earnings to
utilize its available tax assets, including its NOLs which are limited in any
given year, a valuation allowance has been established to offset the existing
net deferred tax asset.
The Company has NOLs expiring as follows:
Commonwealth of
U.S. Puerto Rico
----------------------------- ------------------------------
2002............$ 22,606,000 1996............. $ 5,772,000
2003............ 43,317,000 1997............. 4,958,000
2004............ 31,103,000 1998............. 5,973,000
2005............ 6,262,000 1999............. 5,657,000
2006............ 31,799,000 2000............. 3,402,000
2007............ 26,942,000 2001............. 1,629,000
2008............ 8,676,000 ---------
----------
$170,705,000 $27,391,000
============ ===========
The Company also has state tax NOLs in various jurisdictions.
8. WARRANTS
Pursuant to the Plan, 639,750 warrants were issued and outstanding at December
31, 1994 entitling the holders of each warrant to purchase one share of Series
A common stock at $7 per share. These warrants are exercisable from December
30, 1994 and expire on December 30, 1999.
Also pursuant to the Plan, 416,667 warrants were issued to Reliance Group
Holdings, Inc. and its affiliates. Each warrant entitles the holder to
purchase one share of Series A common stock at $7.19 per share and is
exercisable in three equal annual installments commencing December 30, 1995
and expires five years from the date it becomes exercisable.
The warrants contain certain antidilutive provisions in the event of a change
in the Company's capitalization.
9. EMPLOYEE RETIREMENT AND INCENTIVE PLANS
The Company maintains a qualified defined contribution retirement and savings
plan for its U.S. employees. The aggregate cost for this plan totalled
$1,054,000, $1,406,000 and $1,306,000 in 1994, 1993 and 1992, respectively.
TELEMUNDO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
------------------------------------------------------------------------------
Pursuant to the Plan, the Company has adopted a Stock Plan (the "Stock Plan")
whereby key employees may be granted restricted stock or options to acquire up
to 1,000,000 shares of Series A common stock. 600,000 of these options were
granted on the Consummation Date. Options to purchase 300,000 shares become
exercisable upon the attainment of certain earnings targets for the six month
period ending June 30, 1995; thereafter, if such earnings targets had been
met, options to purchase 150,000 shares become exercisable in each of 1996 and
1997. Each option entitles the holder to purchase one share of Series A
common stock at $7 per share for a maximum term of ten years. The grantee
must be employed by the Company on the vesting date in order for the options
to become exercisable. Of the 600,000 options granted on the consummation
date, 500,000 options issued to a former officer were canceled subsequent to
December 31, 1994. The former officer was issued separate options to purchase
150,000 shares of Series A common stock with an exercise price of $7 per share
exercisable from January 1, 1996 through December 31, 1998. The Stock Plan is
administered by a committee of the Company's board of directors.
Subsequent to year end, the Company issued options to purchase 512,500 shares
of Series A common stock to an officer of the Company for a maximum term of 10
years. The exercise price of these options is $10 per share and one-quarter
of the options vest annually upon the Company attaining certain earnings
targets. Any options that have not vested at the end of nine years from the
grant date will vest at that time if the officer is still employed by the
Company.
10. CONTINGENCIES AND COMMITMENTS
Telemundo, several affiliates and its independent auditors were defendants in
an action brought in December 1987 styled John Blair Communications, Inc., et.
al. v. Reliance Capital Group, L.P., et. al. in the Supreme Court of the State
of New York, County of New York. Telemundo and all other parties in the
action have settled the action. Such settlement is included in Telemundo's
Plan and is reflected in the consolidated financial statements.
The Company and its subsidiaries are also involved in a number of other
actions and are contesting the allegations of the complaints in each pending
action and believe, based on current knowledge, that the outcome of all such
actions will not have a material adverse effect on the Company's consolidated
financial position or results of operations.
The Company is obligated under various leases, some of which contain renewal
options and provide for cost escalation payments. At December 31, 1994,
future minimum rental payments under such leases are as follows:
TELEMUNDO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
------------------------------------------------------------------------------
Operating Capital
Leases Leases
---------- -----------
1995........................ $ 2,585,000 $ 1,159,000
1996........................ 2,486,000 1,189,000
1997........................ 2,217,000 1,219,000
1998........................ 1,773,000 1,260,000
1999........................ 1,285,000 1,380,000
2000 and later.............. 1,823,000 4,715,000
----------- -----------
Total minimum lease
payments.................. $12,169,000 10,922,000
===========
Less amount representing
interest.................. (3,093,000)
-----------
Present value of minimum
lease payments(includes
current portion of
$566,000)................. $ 7,829,000
===========
Rent expense was $2,711,000, $3,600,000 and $3,400,000 in 1994, 1993, and
1992, respectively.
Certain of the Company's affiliation agreements, which typically last two to
five years, provide for compensation to affiliates.
The Company has employment agreements with certain officers pursuant to which
the Company has commitments for compensation aggregating $1,761,000,
$1,725,000 and $1,214,000 for 1995, 1996 and 1997, respectively. These
agreements provide for additional compensation based upon the achievement of
certain performance targets.
11. TRANSACTIONS WITH AFFILIATES
The Company paid approximately $1,125,000, $1,053,000 and $933,000 in 1994,
1993 and 1992, respectively, to a broadcast television station affiliate in
which a director of the Company has a financial interest.
Reliance Insurance Company provided the Company with certain insurance
coverage for which the Company paid $910,000 and $593,000 in 1993 and 1992,
respectively.
In connection with the financial restructuring, the Company paid approximately
$204,000, $150,000 and $198,000 in 1994, 1993 and 1992, respectively, to a law
firm in which a director of the Company is a partner. The payments were for
services rendered prior to the director becoming a member of the Board.
Management believes that the transactions described above were on terms no
less favorable to the Company than could be obtained from unaffiliated
parties.
TELEMUNDO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
------------------------------------------------------------------------------
12. OTHER (EXPENSE) INCOME
Other expense in 1993 includes financial advisory and legal fees incurred
prior to July 30, 1993 totalling $1,100,000 partially offset by the reversal
of a $750,000 liability which was no longer required. Other income of
$1,400,000 for the year ended December 31, 1992 consists primarily of the net
effect of the reversal of $4,300,000 of liabilities provided at the date of
acquisition of the Company's predecessor which were no longer required, offset
by the payment of $3,000,000 in financial advisory and legal costs in
conjunction with the financial restructuring.
13. SELECTED QUARTERLY FINANCIAL DATA (Unaudited)
(in thousands, except per share data)
1994 Quarter
------------------------------------------------
First Second Third Fourth Year
-------- ------- -------- -------- --------
Net revenue................ $ 37,974 $ 49,094 $ 44,739 $ 52,087 $183,894
Operating income (loss).....$ (4,998) $ 5,354 $ 2,004 $ 10,816 $ 13,176
Income (loss) before
extraordinary items......$ (7,330) $ 2,908 $ (551) $ 89,022 $ 84,049
Net income (loss)**........$ (7,330) $ 2,908 $ (551) $219,504 $214,531
Net income (loss) per share $ * $ * $ * $ * $ *
Common stock price range (a):
High...................... $.25 $.25 $.28 -
Low....................... $.03 $.06 $.19 -
1993 Quarter
------------------------------------------------
First Second Third Fourth Year
-------- -------- ------- -------- --------
Net revenue............... $ 33,401 $ 44,799 $47,257 $ 52,352 $177,809
Operating income (loss)... $ (5,013) $ 5,029 $ 6,862 $ 9,719 $ 16,597
Net income (loss)......... $(22,770) $ (4,155) $ 6,011 $ 6,855 $(14,059)
Net income (loss) per
share................... $ * $ * $ * $ * $ *
Common stock price range (a):
High...................... $.88 $.13 $.10 $.25
Low....................... $.02 $.01 $.01 $.01
* Net income (loss) per share is not applicable as the Company has been
recapitalized and has adopted fresh start reporting as of December 31, 1994
(see Note 2).
** Net income for the year and for the fourth quarter was significantly
impacted by certain nonrecurring income and expense items related to the
Company's emergence from Chapter 11 bankruptcy proceedings (see Note 2).
(a)During 1994 and 1993 the Company's then-existing common stock was traded
in the over-the-counter market and was quoted in the National Association
of Securities Dealers Electronic Bulletin Board. Effective January
3, 1995, the Company's New Common Stock is traded over-the-counter and is
quoted on the NASDAQ National Market.
Independent Auditors' Report
To the Board of Directors and Stockholders of
Telemundo Group, Inc.
We have audited the accompanying consolidated balance sheet of Telemundo
Group, Inc. and its subsidiaries (the "Company") as of December 31, 1994
(Successor Company balance sheet) and 1993 (Predecessor Company balance
sheet), and the related consolidated statements of operations, changes in
common stockholders' equity (deficiency) and of cash flows for each of the
three years in the period ended December 31, 1994 (Predecessor Company
operations). Our audits also included the consolidated financial statement
schedule listed in item 14. These financial statements and the financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and the
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
As discussed in Notes 1 and 2 to the financial statements, on July 20, 1994,
the Bankruptcy Court entered an order confirming the plan of reorganization
which became effective after the close of business on December 30, 1994.
Accordingly, the accompanying financial statements have been prepared in
conformity with AICPA Statement of Position 90-7, "Financial Reporting for
Entities in Reorganization Under the Bankruptcy Code," for the Successor
Company as a new entity with assets, liabilities, and a capital structure
having carrying values not comparable with prior periods as described in Notes
1 and 2.
In our opinion, the Successor Company consolidated balance sheet presents
fairly, in all material respects, the financial position of the Company as of
December 31, 1994. Further, in our opinion, the Predecessor Company
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of the Predecessor Company as of
December 31, 1993, and the results of its operations and its cash flows for
each of the three years in the period ended December 31, 1994 in conformity
with generally accepted accounting principles. Also, in our opinion, such
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
/s/ Deloitte & Touche LLP
Miami, Florida
March 22, 1995
EXHIBIT 21.1
Jurisdiction of
Subsidiary Doing Business As Incorporation
---------- ----------------- ---------------
Estrella Communications, Inc. KVEA/Channel 52 Delaware
Estrella License Corporation Delaware
New Jersey Television Broadcasting New York
Corporation
Telemundo Network, Inc. Delaware
Telemundo News Network, Inc. Delaware
Telemundo of Austin, Inc. K11SF/Channel 11 Delaware
Telemundo of Colorado Springs, Inc. K49CJ/Channel 49 Delaware
Telemundo of Florida, Inc. WSCV/Channel 51 Delaware
Telemundo of Florida License Delaware
Corporation
Telemundo of Galveston-Houston, Inc. KTMD/Channel 48 Delaware
Telemundo of Galveston-Houston License Delaware
Corporation
Telemundo of Northern California, Inc. KSTS/Channel 48 California
Telemundo of Northern California Delaware
License Corporation
Telemundo of Puerto Rico, Inc. WKAQ-TV/Channel 2 Puerto Rico
Telemundo of Puerto Rico License Delaware
Corporation
Telemundo of San Antonio, Inc. KVDA/Channel 60 Texas
Telemundo of San Antonio License Delaware
Corporation
Telemundo of Santa Fe, Inc. K52BS/Channel 52 Delaware
WNJU License Corporation Delaware
WNJU-TV Broadcasting Corporation WNJU-TV/Channel 47 New Jersey
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000806083
<NAME> Telemundo Group, Inc. And Subsidiaries
<S> <C>
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 1,850,000
<SECURITIES> 0
<RECEIVABLES> 50,518,000
<ALLOWANCES> (2,845,000)
<INVENTORY> 0
<CURRENT-ASSETS> 68,229,000
<PP&E> 62,774,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 232,024,000
<CURRENT-LIABILITIES> (35,904,000)
<BONDS> 0
<COMMON> (100,000)
0
0
<OTHER-SE> (69,900,000)
<TOTAL-LIABILITY-AND-EQUITY> (232,024,000)
<SALES> 0
<TOTAL-REVENUES> 183,894,000
<CGS> 0
<TOTAL-COSTS> (170,718,000)
<OTHER-EXPENSES> (34,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (645,000)
<INCOME-PRETAX> 87,438,000
<INCOME-TAX> (3,389,000)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 130,482,000
<CHANGES> 0
<NET-INCOME> 214,531,000
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
