<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________________ TO_________________
COMMISSION FILE NUMBER: 1-9724
SPECTRAVISION, INC.
-------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 75-2182004
------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1501 NORTH PLANO ROAD, RICHARDSON, TEXAS 75081
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(214) 234-2721
--------------
(Registrant's telephone number,
including area code)
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
----- -----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS: 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
--- ---
Number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date:
<TABLE>
<CAPTION>
Outstanding at
Title of each Class November 6, 1995
- -------------------------------------- ----------------
<S> <C>
Class A Common Stock, $0.001 Par Value 4,593,526
Class B Common Stock, $0.001 Par Value 19,390,379
</TABLE>
<PAGE>
INDEX
PAGE I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Financial Position
as of September 30, 1995 and December 31, 1994........... 2
Condensed Consolidated Statements of Operations
for the Three Months ended September 30, 1995 and 1994... 4
Condensed Consolidated Statements of Operations
for the Nine Months ended September 30, 1995 and 1994.... 5
Condensed Consolidated Statements of Cash Flows
for the Nine Months ended September 30, 1995 and 1994.... 6
Notes to the Condensed Consolidated Financial Statements. 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...................... 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings........................................ 18
Item 6. Exhibits and Reports on Form 8-K......................... 18
Signature............................................................. 19
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
<PAGE>
SPECTRAVISION, INC.
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
(unaudited)
<S> <C> <C>
ASSETS
Cash and Cash Equivalents $ - $ 1,317
Accounts Receivable (net) 17,575 20,417
Debt Issuance Costs (net) 5,893 6,797
Prepaids and Other Assets 8,346 8,933
Video Systems 272,681 295,628
Less Accumulated Depreciation and Amortization (147,676) (149,045)
--------- ---------
Total Video Systems 125,005 146,583
Building and Equipment
Building 4,216 4,294
Furniture, Fixtures and Other Equipment 6,619 6,887
--------- ---------
10,835 11,181
Less Accumulated Depreciation (5,576) (4,965)
--------- ---------
Total Building and Equipment 5,259 6,216
Land 2,559 2,559
Hotel Contracts (net) 48,052 50,000
--------- ---------
TOTAL ASSETS $ 212,689 $ 242,822
========= =========
</TABLE>
See Accompanying Notes to the Condensed Consolidated Financial Statements
2
<PAGE>
SPECTRAVISION, INC.
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
(unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' DEFICIT
Liabilities
Accounts Payable $ 6,415 $ 48,807
Accrued Liabilities
Interest 9 3,413
Compensation 2,152 4,495
Other 13,779 21,522
Income Taxes 483 290
Deferred Income Taxes 5,913 6,757
Debt
Bank Credit Facility - 12,500
Canadian Bank Credit Facility - 7,350
Foothill Revolving Credit Facility 14,259 -
11.5% Senior Discount Notes - 172,295
11.65% Senior Subordinated Reset Notes - 294,768
Capitalized Lease Obligations 1,293 23,492
Other Debt - 158
--------- ---------
Total Debt 15,552 510,563
Liabilities Subject to Settlement Under
Reorganization 583,178 -
--------- ---------
Total Liabilities 627,481 595,847
Contingent Value Rights Subject to Settlement
Under Reorganization 20,000 20,000
Stockholders' Deficit
Class A Common Stock - $0.001 par value,
authorized 6,000,000 shares, issued and
outstanding, 4,593,526 shares at
September 30, 1995 and December 31,
1994, respectively 5 5
Class B Common Stock - $0.001 par value,
authorized 144,000,000 shares, issued and
outstanding 19,390,379 shares at
September 30, 1995 and December 31,
1994, respectively 19 19
Paid in Capital 392,185 392,185
Retained Deficit (827,828) (765,729)
Foreign Currency Translation 827 495
--------- ---------
Total Stockholders' Deficit (434,792) (373,025)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 212,689 $ 242,822
========= =========
</TABLE>
See Accompanying Notes to the Condensed Consolidated Financial Statements
3
<PAGE>
SPECTRAVISION, INC. (DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
------------------------------
1995 1994
------------ ------------
<S> <C> <C>
REVENUES:
Pay-Per View $ 25,930 $ 29,147
Free-To-Guest 3,413 3,679
Other 1,256 1,776
----------- ------------
TOTAL REVENUES 30,599 34,602
DIRECT COSTS:
Pay-Per-View 10,769 10,014
Free-To-Guest 2,850 3,008
Other 586 768
----------- -----------
TOTAL DIRECT COSTS 14,205 13,790
DEPRECIATION AND AMORTIZATION 8,901 11,453
OPERATING EXPENSES 12,668 7,632
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE 9,430 8,675
RESEARCH AND DEVELOPMENT (NET) 181 851
EXCHANGE LOSS - 74
----------- -----------
TOTAL COSTS AND EXPENSES 45,385 42,475
----------- -----------
OPERATING LOSS (14,786) (7,873)
NON-OPERATING (INCOME) EXPENSE - -
INTEREST EXPENSE, NET (Contractual interest expense of $19,801
for the three months ended September 30, 1995) 719 14,697
----------- -----------
LOSS BEFORE REORGANIZATION ITEMS AND INCOME TAXES (15,505) (22,570)
REORGANIZATION ITEMS 7,091 -
----------- -----------
LOSS BEFORE INCOME TAXES (22,596) (22,570)
INCOME TAXES
State and Foreign Provision 100 61
Deferred Benefit (241) -
----------- -----------
TOTAL INCOME TAX BENEFIT (141) 61
----------- -----------
NET LOSS $ (22,455) $ (22,631)
=========== ===========
Net Loss $(0.94) $(0.95)
=========== ===========
AVERAGE COMMON SHARES OUTSTANDING 23,983,905 23,983,905
</TABLE>
See Accompanying Notes to the Condensed Consolidated Financial Statements
4
<PAGE>
SPECTRAVISION, INC. (DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------------
1995 1994
------------ ------------
<S> <C> <C>
REVENUES:
Pay-Per View $ 81,040 $ 91,828
Free-To-Guest 10,289 11,254
Other 4,478 5,157
----------- -----------
TOTAL REVENUES 95,807 108,239
DIRECT COSTS:
Pay-Per-View 29,925 31,340
Free-To-Guest 8,523 8,827
Other 1,641 1,890
----------- -----------
TOTAL DIRECT COSTS 40,089 42,057
DEPRECIATION AND AMORTIZATION 27,821 33,982
OPERATING EXPENSES 32,089 24,016
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE 21,212 20,487
RESEARCH AND DEVELOPMENT (NET) 1,364 2,078
EXCHANGE LOSS 254 210
----------- -----------
TOTAL COSTS AND EXPENSES 122,829 122,830
----------- -----------
OPERATING LOSS (27,022) (14,591)
NON-OPERATING (INCOME) EXPENSE (139) (1,163)
INTEREST EXPENSE, NET (Contractual interest expense of $50,600
for the nine months ended September 30, 1995) 27,638 42,057
----------- -----------
LOSS BEFORE REORGANIZATION ITEMS, INCOME TAXES
AND EXTRAORDINARY ITEM
(54,521) (55,485)
REORGANIZATION ITEMS 7,268 -
----------- -----------
LOSS BEFORE INCOME TAXES AND EXTRAORDINARY ITEM (61,789) (55,485)
INCOME TAXES
State and Foreign Provision 120 762
Deferred Benefit (725) (4,304)
----------- -----------
TOTAL INCOME TAX BENEFIT (605) (3,542)
----------- -----------
LOSS BEFORE EXTRAORDINARY ITEM (61,184) (51,943)
EXTRAORDINARY ITEM
Loss from Debt Extinguishment (915) -
----------- -----------
NET LOSS $ (62,099) $ (51,943)
=========== ===========
LOSS PER COMMON SHARE:
Before Extraordinary Item $(2.55) $(2.17)
Extraordinary Item (.04) -
----------- -----------
Net Loss $(2.59) $(2.17)
=========== ===========
AVERAGE COMMON SHARES OUTSTANDING 23,983,905 23,983,905
</TABLE>
See Accompanying Notes to the Condensed Consolidated Financial Statements
5
<PAGE>
SPECTRAVISION, INC. (DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
------------------------------
1995 1994
------------ -----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $(62,099) $(51,943)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization 27,821 33,982
Other non-cash items:
Conversion of non-cash interest to secondary notes 18,494 16,469
Deferred income tax benefit (725) (4,304)
Extraordinary loss from debt extinguishment 915 -
Accretion of discount on senior notes 8,609 13,423
Amortization of debt issuance cost 632 952
Exchange loss 254 210
Loss on disposal of fixed assets under reorganization 3,500 -
Other items, net 42 (743)
Increase (decrease) in:
Accounts payable 20,864 5,949
Accrued interest (995) 9,349
Other accrued liabilities 5,553 7,013
Income taxes payable 193 343
Decrease (increase) in:
Accounts receivable 2,869 (2,932)
Debt issuance costs (643) -
Prepaids and other assets (121) (3,182)
-------- --------
Net cash provided by operating activities 25,163 24,586
INVESTING ACTIVITIES:
Cost of in-process systems and capital expenditures (17,156) (45,989)
FINANCING ACTIVITIES:
Borrowing under Foothill revolving facility 49,449 12,500
Repayment of Foothill revolving facility (35,190) -
Repayment of revolving credit facility (19,896) -
Repayment of Canadian bank credit facility (7,350) -
Borrowing under revolving credit facility 7,396 -
Repayment of other debt and capitalized leases (3,671) (2,938)
-------- --------
Net cash provided by (used in) financing activities (9,262) 9,562
Effect of exchange rate changes on cash (62) (10)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,317) (11,851)
Cash and cash equivalents at beginning of period 1,317 14,285
-------- --------
Cash and cash equivalents at end of period $ - $ 2,434
======== ========
</TABLE>
See Accompanying Notes to the Condensed Consolidated Financial Statements
6
<PAGE>
SPECTRAVISION, INC.
(DEBTOR-IN-POSSESSION)
NOTES TO THE CONSENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
1. GENERAL NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------------------
These condensed consolidated financial statements should be read in the
context of the financial statements and notes thereto filed with the Securities
and Exchange Commission in the 1994 Annual Report on Form 10-K of SpectraVision,
Inc. ("SpectraVision", or the "Company"). The accompanying unaudited condensed
consolidated financial statements include SpectraVision and all of its
subsidiaries. Intercompany transactions have been eliminated. Certain prior
period amounts have been reclassified to conform with the current period
presentation. In the opinion of management, these financial statements include
all adjustments, consisting only of normal recurring adjustments, except as
described in note 4, necessary to present fairly the Company's financial
position and results of its operations for the periods presented. The results
of operations for such interim periods are not necessarily indicative of results
of operations for the entire year.
2. ORGANIZATION AND BASIS OF PRESENTATION
--------------------------------------
The Company is a leading provider of in-room entertainment services to the
lodging industry. Founded in 1971, the Company originally developed and
patented a system, known as "Spectravision", which provides in-room television
viewing of recently released major and other motion pictures on a pay-per-view
("PPV") basis.
Unless the context otherwise requires, all references herein to the Company
are not intended to imply exact corporate relationships and include
SpectraVision, SPI Newco, Inc. ("Newco") its direct subsidiary, Spectradyne,
Inc. ("Spectradyne") the direct subsidiary of Newco, and the foreign
subsidiaries.
3. BANKRUPTCY PROCEEDINGS
----------------------
On June 8, 1995 (the "Petition Date"), SpectraVision, together with Newco,
Spectradyne, Spectradyne International, Inc., and Kalevision Systems, Inc. -
USA, filed voluntary petitions for reorganization under Chapter 11 of the United
States Bankruptcy Code ("Chapter 11") in the United States Bankruptcy Court for
the District of Delaware (the "Bankruptcy Court") and are currently operating
their respective businesses as debtors-in-possession pursuant to sections 1107
and 1108 of the Bankruptcy Code. On June 23, 1995, a single unsecured
creditors' committee was appointed by the U.S. Trustee for the District of
Delaware pursuant to Section 1102 of the Bankruptcy Code (the "Creditors'
Committee"). The Creditors' Committee has the right to review and object to
certain business transactions and is expected to participate in the negotiation
of the Company's plan of reorganization.
In early 1995, the Company determined that a financial restructuring would
be required to ensure the Company's long-term survival. The Company conducted
restructuring negotiations with representatives of its secured and unsecured
creditors during April and May 1995, working toward the development of an
overall restructuring plan. In June 1995, the Company concluded that the
Chapter 11 filing should be made in order to preserve the value of its assets
and to ensure that the business had sufficient cash resources to continue
operations while it completed the financial restructuring process. Costs
related to the pre-petition restructuring negotiations in the amount of $369,000
deducted from non-operating income are included in results of operations.
As of the Petition Date, actions to collect pre-petition indebtedness have
been automatically stayed pursuant to Section 362 of the Bankruptcy Code
(subject to order of the Bankruptcy Court) and, in certain circumstances, other
pre-petition contractual obligations may not be enforced against the Company.
In addition, the Company may reject pre-petition executory contracts and lease
obligations, and parties affected by these rejections may file claims with the
Bankruptcy Court in accordance with the reorganization process.
7
<PAGE>
SPECTRAVISION, INC.
(DEBTOR-IN-POSSESSION)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
Substantially all liabilities as of the Petition Date are subject to being paid
or compromised under a plan of reorganization to be voted upon by all impaired
classes of creditors and equity security holders and approved by the Bankruptcy
Court.
The accompanying condensed consolidated financial statements have been
prepared on a going concern basis, which assumes continuity of operations,
realization of assets and liquidation of liabilities in the ordinary course of
business. However, as a result of the Chapter 11 filings and circumstances
relating to these events in the accompanying condensed consolidated statements
of operations, such realization of assets and liquidation of liabilities is
subject to significant uncertainty. In addition, the Company's independent
public accountants included in their report on the Company's consolidated
financial statements for the year ended December 31, 1994, an explanatory
paragraph that describes the uncertainty about the Company's ability to continue
as a going concern.
As a Chapter 11 debtor, the Company may sell (subject, in certain
circumstances, to Bankruptcy Court approval) or otherwise dispose of assets, and
liquidate or settle liabilities for amounts other than those reflected in the
condensed consolidated financial statements. The amounts reported in the
condensed consolidated financial statements do not give effect to any
adjustments to the carrying value of assets or amounts of liabilities that might
result as a consequence of actions taken pursuant to a plan of reorganization.
If the Company is unable to obtain confirmation of a plan of reorganization, its
creditors or equity security holders may seek a liquidation of the Company by
conversion to a Chapter 7 bankruptcy proceeding. In that event, it is likely
that additional liabilities and claims would be asserted which are not presently
reflected in the condensed consolidated financial statements. In the event of a
liquidation, the amounts reflected in the condensed consolidated financial
statements would be subject to adverse adjustments in amounts which, while not
presently determinable, could be material.
Financial accounting and reporting during a Chapter 11 proceeding is
prescribed in Statement of Position No. 90-7, "Financial Reporting by Entities
in Reorganization Under the Bankruptcy Code" ("SOP 90-7"). Accordingly,
certain pre-petition obligations, which may be impaired, have been classified as
obligations subject to Chapter 11 reorganization proceedings and include the
following estimated amounts at September 30, 1995 (dollars in thousands):
<TABLE>
<S> <C>
Debt Instruments:
11.5% Senior Discount Notes due 2000 $180,904
11.65% Senior Subordinated Reset Notes due 2001 313,262
--------
Total debt instruments 494,166
Accrued Expenses:
Interest 2,401
Liabilities 5,888
Compensation 885
--------
9,174
Capital lease obligations 22,992
Accounts payable 56,846
--------
Total liabilities subject to settlement under reorganization $583,178
========
Contingent Value Rights subject to settlement under reorganization $ 20,000
========
</TABLE>
8
<PAGE>
SPECTRAVISION, INC.
(DEBTOR-IN-POSSESSION)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
Pursuant to SOP 90-7, the Company has discontinued, effective June 8, 1995,
the accrual of interest on pre-petition debt that is unsecured or estimated to
be undersecured.
4. REORGANIZATION
--------------
In September 1995, in connection with the Company's bankruptcy, management
approved a company restructuring ("Restructure") that it believes is required to
maintain the viability of the business. This restructure will result in, among
other things, discontinuing service to a number of unprofitable hotels with
revenues of approximately $2.6 million and $2.3 million for the nine months
ended September 30, 1994 and 1995, respectively, and will further result in the
elimination of certain positions within the Company. It is currently
anticipated such actions will be completed by December 31, 1995. As a result,
the Company recorded a Restructure charge of $6.3 million in the third quarter
of 1995. Of this total, $.9 million relates to the cost of deinstalling certain
hotels and $1.7 million was recorded for estimated losses on the disposal of
deinstalled equipment. The Company also recorded $.4 million in employee
severance costs which will be incurred in the Restructure process. The Company
recorded an additional charge of $2.3 million which represents the write-off or
abandonment of other fixed assets and $1.0 million for other costs associated
with the Restructure process.
Total bankruptcy reorganization items of $7.3 million for the nine months
ended September 30, 1995 include normal bankruptcy, professional and
miscellaneous changes of $1.0 million and the Restructure charges discussed
above.
In addition, as a result of a review during the third quarter of 1995, the
Company recorded several adjustments to reflect the impact of certain changes in
estimates that are not related to operations in the third quarter. These
changes in estimates totalled $7.1 million. Such adjustments related primarily
to revisions in the Company's prior estimates of amounts due Electronic Data
Systems Corporation ("EDS") and chargebacks to EDS under the EDS Services and
Technology Agreement of $4.0 million. The company recorded additional
provisions for doubtful accounts of $.3 million, a reserve of $.8 million of
obsolete inventory held by a third party and an increase related to certain
liabilities of $1.5 million which included $.4 million for prior year's employee
related sick pay liability, $.2 million in pre-petition legal bills, $.2 million
of music rights liability, $.2 million in computer costs, $.1 million in film
costs, $.3 million of consulting costs and $.1 million in insurance costs.
Other miscellaneous adjustments of $.5 million were also recorded by the
Company.
The total effect of the bankruptcy reorganization items and changes in
estimates was to increase net loss for the three months and nine months ended
September 30, 1995 by approximately $14.4 million or $0.60 per common share and
$11.4 million or $0.48 per common share, respectively.
5. DEBT
----
Foothill Revolving Facility: On June 9, 1995, Spectradyne entered into a
loan and security agreement with Foothill Capital Corporation to provide debtor-
in-possession financing (the "Foothill Loan"). The Foothill Loan allows for
revolving advances up to a maximum amount of $40 million and bears interest
payable monthly at prime plus 1.75% with a floor of 8.5%. Proceeds from initial
advances under the Foothill Loan were used to repay outstanding balances and
accrued interest under the Company's revolving credit facility and the Canadian
bank credit facility (referred to here as the "Old Credit Facilities"). The
Foothill Loan matures June 15, 1997.
9
<PAGE>
SPECTRAVISION, INC.
(DEBTOR-IN-POSSESSION)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
The Foothill Loan is secured by all of the assets of Spectradyne and
certain subsidiaries, all of the outstanding stock of the Company's subsidiaries
and the guarantees of SpectraVision and certain subsidiaries. The Foothill Loan
contains various and customary financial and operating covenants including
limitations on additional indebtedness and limitations on capital expenditures.
At September 30, 1995 the Company was not in compliance with the financial
covenants relating to its operating cash flow and its fixed charges to cash flow
ratio requirements. On November 15, 1995 the Company obtained a waiver from
Foothill Capital Corporation for these covenant violations.
SENIOR SUBORDINATED RESET NOTES: At June 1, 1995, the Company exercised
its option under the indenture for the Company's 11.65% Senior Subordinated
Reset Notes ("Reset Notes") to pay interest for the six months ended June 1,
1995 in additional Reset Notes, (the "PIK Option"). The indenture requires
interest to accrue at 12.65% per annum during the PIK Option period.
Accordingly, $18,494,000 of additional Reset Notes were issued at June 1, 1995.
6. EXTRAORDINARY LOSS
------------------
The Company applied the proceeds from the initial advance under the
Foothill Loan to repay outstanding obligations under the Old Credit Facilities.
As a result of extinguishment of this debt, the Company wrote-off unamortized
debt issuance costs in the amount of $915,000.
7. CONTINGENCIES
-------------
On October 20, 1994, a purported class action complaint was filed in the
United States District Court alleging misrepresentations and omissions
concurrent with and following the Company's 1993 offerings of Class B Common
Stock and Senior Discount Notes. The plaintiff seeks unspecified damages,
prejudgment interest, and fees and costs of the plaintiff. The Company believes
that it has meritorious defenses to the claims and it intends to vigorously
defend itself. Proceedings in this lawsuit with respect to the Company have
been stayed as a result of the Chapter 11 filings.
The Company and its subsidiaries and related companies are potential and
named defendants in several other lawsuits and claims arising in the ordinary
course of business. While the outcome of such claims, lawsuits or other
proceedings against the Company cannot be predicted with certainty, management
expects that such liability, to the extent not provided for through insurance or
otherwise, will not have a material adverse effect on the operating results or
financial condition of the Company. Proceedings in connection with any lawsuit
against the Company have been stayed as a result of the Chapter 11 filings.
10
<PAGE>
SPECTRAVISION, INC.
(DEBTOR-IN-POSSESSION)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
8. BALANCE SHEET OF ENTITIES UNDER CHAPTER 11
------------------------------------------
The condensed balance sheet of SpectraVision and all entities included in
the Chapter 11 filings is as follows (dollars in thousands):
<TABLE>
<S> <C>
ASSETS
Cash and Cash Equivalents $ -
Accounts Receivable 14,115
Debt Issuance Costs 5,893
Prepaids and Other Assets 7,593
Video Systems 234,784
Less accumulated depreciation and amortization (123,700)
---------
Total Video Systems 111,084
Building and Equipment
Building 4,217
Furniture, fixtures and other equipment 5,358
Less accumulated depreciation (4,464)
---------
Total Building and Equipment 5,111
Land 2,559
Hotel Contracts (net) 48,052
Investment in and advances to subsidiaries 31,508
---------
TOTAL ASSETS $ 225,915
=========
LIABILITIES
Accounts Payable 8,520
Accrued Interest 10
Other Accrued Liabilities 15,555
Deferred Income Taxes 5,708
Foothill Revolving Facility 14,260
Capital Lease Obligations 942
---------
44,995
Liabilities Subject to Settlement Under Reorganization 583,178
Intercompany Payable 4,526
---------
Total Liabilities 632,699
Rights Subject to Settlement Under Reorganization 20,000
Stockholders' Deficit
Common Stock 24
Paid in Capital 392,764
Retained Deficit (819,572)
---------
Total Stockholders' Deficit (426,784)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 225,915
=========
</TABLE>
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
On the Petition Date, SpectraVision, together with Newco, Spectradyne,
Spectradyne International, Inc., and Kalevision Systems, Inc. - USA, filed
voluntary petitions for reorganization under Chapter 11 in the Bankruptcy Court
and are currently operating their respective businesses as debtors-in-possession
pursuant to sections 1107 and 1108 of the Bankruptcy Code. On June 23, 1995,
the Creditors' Committee was appointed by the U.S. Trustee for the District of
Delaware pursuant to Section 1102 of the Bankruptcy Code. The Creditors'
Committee has the right to review and object to certain business transactions
and is expected to participate in the negotiation of the Company's plan of
reorganization.
In early 1995, the Company determined that a financial restructuring would
be required to ensure the Company's long-term survival. The Company conducted
restructuring negotiations with representatives of its secured and unsecured
creditors during April and May 1995, working toward the development of an
overall restructuring plan. In June 1995, the Company concluded that the
Chapter 11 filing should be made in order to preserve the value of its assets
and to ensure that the business had sufficient cash resources to continue
operations while it completed the financial restructuring process.
At September 30, 1995, the Company had total liabilities of approximately
$627.5 million and total assets of $212.7 million. The Company's cash flow from
operations (earnings before interest, taxes, depreciation, amortization and
other non-cash items) for the nine months ended September 30, 1995 was $1.1
million as compared to $19.6 million cash flow from operations for the nine
months ended September 30, 1994. Cash and Cash Equivalents was $1.3 million at
December 31, 1994 and $0 at September 30, 1995. During the nine months ended
September 30, 1995, the Company used available cash of $1.3 million, cash flow
from operations and working capital of $25.2 million and net borrowings under
the Foothill Loan in the amount of $14.3 million for capital expenditures of
$17.2 million, payment of other debt and capital leases in the amount of $3.7
million, and payment of the outstanding balance of the Old Credit Facilities in
the amount of $19.9 million. The Change in accounts payable from December 31,
1994 to September 30, 1995 is due to a reclassification of $56.8 million of
accounts payable to liabilities subject to settlement under reorganization.
Changes in Video Systems since December 31, 1994 include capital purchases of
$17.2 million offset by the conversion of equipment purchases from EDS to
operating leases in the amount of $16.0 million and the write-off of assets of
$24.1 million.
On June 9, 1995, Spectradyne entered into the Foothill Loan which allows
for revolving advances up to a maximum amount of $40 million and bears interest
payable monthly at prime plus 1.75% with a floor of 8.5%. Proceeds from initial
advances under the Foothill Loan were used to repay outstanding balances and
accrued interest under the Old Credit Facilities. At September 30, 1995, the
Company had $25.7 million available under the Foothill Loan.
The Company believes the Foothill Loan together with cash from operations
will be adequate to cover its minimum capital requirements and working capital
needs through the remainder of 1995. However, the Company's ability to maintain
or increase cash flows from operations is dependent on a number of factors, many
of which are beyond the Company's control. Until a plan of reorganization is
approved by the creditors and confirmed by the Bankruptcy Court, the long term
liquidity and adequacy of the Company's capital resources cannot be determined.
At September 30, 1995 the Company was not in compliance with the financial
covenants relating to its operating cash flow and its fixed changes to cash flow
ratio requirements. Under the terms of the Foothill Loan, the lenders may, at
their option, give notice that the amounts outstanding are immediately due and
payable. The Company is currently seeking a waiver from Foothill Capital
Corporation for these covenant violations. No waiver has been issued at this
time.
12
<PAGE>
Under the Bankruptcy Code, claims arising prior to the Petition Date may
not be paid outside of a plan of reorganization without the prior approval of
the Bankruptcy Court. Certain pre-petition claims have subsequently been paid
or satisfied with the approval of the Bankruptcy Court. These claims include
certain sales and use taxes, certain freight charges, certain subcontractors
charges and salaries, wages and employee benefits.
Additionally, as a result of the Chapter 11 filing, the Company has, for
financial reporting purposes, suspended the accrual of interest on pre-petition
debt which is either unsecured or estimated to be undersecured, which will
reduce the amount of interest expense recognized through the Chapter 11 period.
The Company's liquidity and capital resources may also be affected by decisions
that it makes in connection with the Chapter 11 proceedings with respect to its
leases of equipment and real property, and the expenses which accrue during the
Chapter 11 proceedings and other factors arising from the Chapter 11
proceedings. For example, pursuant to the Bankruptcy Code, the Company will be
required to pay legal and other advisory fees and expenses associated with its
Chapter 11 case. The Company presently estimates that such expenses will be
substantial and may average as much as $500,000 per month, although such fees
and expenses cannot be predicted with any meaningful degree of certainty at this
time.
In order for the Company to reorganize and emerge from the Chapter 11
proceedings, a plan of reorganization must be confirmed by the Bankruptcy Court.
If the Company is unable to obtain confirmation of a plan of reorganization, its
creditors or equity security holders may seek a liquidation of the Company by
conversion to a Chapter 7 bankruptcy proceeding. In that event, it is likely
that additional liabilities and claims would be asserted which are not presently
reflected in the condensed consolidated financial statements. In the event of a
liquidation, the amounts reflected in the condensed consolidated financial
statements would be subject to adverse adjustments in amounts which, while not
presently determinable, could be material.
RESULTS OF OPERATIONS
The following discussion and analysis addresses the results of operations
for the three month periods ended September 30, 1995 (the "1995 Third Quarter")
and September 30, 1994 (the "1994 Third Quarter") and the nine month periods
ended September 30, 1995 (the "1995 Nine Months") and September 30, 1994 (the
"1994 Nine Months").
The Company's operations consist primarily of its pay-per-view and free-to-
guest services through its ownership of Spectradyne and the Company's other
operating subsidiaries. The following table sets forth certain information
regarding the Company's pay-per-view customer base and certain statistical data
affecting pay-per-view revenues.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Hotels Served at September 30 2,113 2,352 2,113 2,352
Average Rooms Served During the Period 592,579 658,308 592,675 666,246
Average Price per View $ 7.80 $ 7.69 $ 7.78 $ 7.70
Revenue per Equipped Room per Day ("RER") $ 0.49 $ 0.49 $ 0.50 $ 0.51
</TABLE>
THIRD QUARTER ENDED SEPTEMBER 30, 1995 COMPARED
TO THIRD QUARTER ENDED SEPTEMBER 30, 1994
Total revenues decreased to $30.6 million in the 1995 Third Quarter from
$34.6 million in the 1994 Third Quarter, a decrease of $4.0 million or 11.6%.
Of the total revenues reported in the 1995 Third Quarter, 84.7% were revenues
from pay-per-view, 11.2% were from free-to-guest, 4.1% were from other sources.
Pay-per-view revenues decreased to $25.9 million in the 1995 Third Quarter
from $29.1 million in the 1994 Third Quarter, a decrease of $3.2 million or
11.0%. This decrease in pay-per-view revenues primarily
13
<PAGE>
reflects the decline in the number of rooms served, which resulted in a decrease
in revenues of approximately $2.9 million. The decline in the number of revenue
producing rooms during the quarter is due to the loss of rooms from non-renewal
of certain hotel PPV contracts as a result of the intense competition in the
hotel pay-per-view industry and the Company's current capital constraints. The
number of views for the hotels on the system at both September 30, 1995 and 1994
also declined resulting in an approximate $.6 million reduction in pay-per-view
revenues for the 1995 Third Quarter. These decreases were offset slightly by an
increase in average price per view from $7.69 during the 1994 Third Quarter to
$7.80 for the 1995 Third Quarter contributing approximately $.3 million to pay-
per-view revenue.
Free-to-guest revenues decreased to $3.4 million in the 1995 Third Quarter
from $3.7 million in the 1994 Third Quarter, a decrease of $266,000 or 7.2%.
This decrease primarily reflects the decline in the number of hotels served as
well as negotiated price reductions in connection with certain PPV contract
renewals.
Pay-per-view direct costs increased to $10.8 million in the 1995 Third
Quarter from $10.0 million in the 1994 Third Quarter, an increase of $755,000 or
7.5%. As a percentage of pay-per-view revenues, pay-per-view direct costs
increased to 41.5% in the 1995 Third Quarter from 34.4% in the 1994 Third
Quarter. This percentage increase is primarily due to increased film licensing
fees. Films licensing costs were 18.0% of pay-per-view revenues as compared to
14.9% in the 1994 Third Quarter. In the third quarter, the Company introduced a
new entertainment guide which increased startup costs $.9 million.
Additionally, transmission costs increased in connection with the compressed
digital video ("CDV") satellite network and music rights costs were recorded.
Free-to-guest direct costs decreased slightly to $2.9 million in the 1995
Third Quarter from $3.0 million in the 1994 Third Quarter, a decrease of
$158,000 or 5.3%. As a percentage of free-to-guest revenues, free-to-guest
direct costs increased to 83.5% in the 1995 Third Quarter from 81.8% in the 1994
Third Quarter. The increase in free-to-guest direct costs as a percentage of
free-to-guest revenues primarily reflects the price reductions in free-to-guest
revenues in connection with certain PPV contract renewals.
Operating expenses increased to $12.7 million in the 1995 Third Quarter
from $7.6 million in the 1994 Third Quarter, an increase of approximately $5.1
million or 66.0%. Changes in accounting estimates by the Company increased
operating costs for the 1995 Third Quarter by $3.8 million. These included the
recording of EDS invoices in the amount of $2.2 million, an inventory reserve
for inventory held by third parties of $.8 million, employee sick pay liability
of $.2 million and other miscellaneous adjustments totalling $.6 million.
Operating expenses consist primarily of maintenance of hotel systems including
contractual services performed by EDS, pay-per-view equipment rental expense
(primarily integrated receiver decoders and file servers for the digital guest
choice system) and pay-per-view equipment repairs performed by a third party.
The remainder of the increase is primarily attributed to third party charges for
a backlog in repairs of approximately $.7 million and the establishment of an
in-house field service organization in the 1995 Third Quarter costing $.6
million.
Selling, general and administrative expenses increased to $9.4 million in
the 1995 Third Quarter from $8.7 million in the 1994 Third Quarter, an increase
in $755,000 or 8.7%. This increase is due primarily to changes in estimates
made by the Company in the third quarter. These totalled $3.1 million resulting
from increases in reserves for receivables from EDS of $1.8 million, other
reserves of $.3 million, employee sick pay liability of $.2 million, consulting
fees of $.3 million and the recording of other miscellaneous liabilities of $.5
million. Decreases in salaries and benefits as a result of the reduction in
workforce, along with decreases in advertising and public relations expenditures
offset these increases.
Interest expense (net) decreased to $.7 million in the 1995 Third Quarter
from $14.7 million in the 1994 Third Quarter, a decrease of $14.0 million or
95.1%. The decrease is primarily due to the non-accrual of interest on debt
instruments subject to settlement under reorganization for the period June 8,
1995 to September 30, 1995. The company also capitalized interest in the amount
of $.6 million for the 1995 Third Quarter.
14
<PAGE>
Reorganization items increased $7.1 million in the 1995 Third Quarter from
$0 in the 1994 Third Quarter. These 1995 Third Quarter costs relate primarily
to restructuring costs in the 1995 Third Quarter which include discontinuing
service to a number of unprofitable hotels and the elimination of certain
positions within the Company. It is currently anticipated such actions will be
completed by December 31, 1995. As a result, the Company recorded a
reorganization charge of $6.3 million in the third quarter of 1995. Of this
total, $.9 million relates to the cost of deinstalling certain hotels and $1.7
million was recorded for estimated losses on the disposal of deinstalled
equipment. The Company also recorded $.4 million in employee severance costs
which will be incurred in the reorganization process. The Company recorded an
additional charge of $2.3 million which represents the write-off or abandonment
of other fixed assets and $1.0 million for other costs associated with the
Restructure process.
Total bankruptcy reorganization items of $7.1 million for the three months
ended September 30, 1995 include normal professional and miscellaneous charges
of $.8 million and the Restructure charges discussed above.
State and foreign income tax expense increased to $100,000 in the 1995
Third Quarter from $61,000 in the 1994 Third Quarter, an increase of $39,000 or
63.9%, primarily due to lower taxable income in the 1995 Third Quarter.
Net loss was $22.5 million for 1995 and $22.6 million for 1994. Although
the net loss for the Third Quarters remained relatively constant, there were
significant variances in the various line items making up the loss for each
year. These included the decline in pay-per-view sales, increased operating
expenses, reduced interest expense and the reorganization items.
NINE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED
TO NINE MONTHS ENDED SEPTEMBER 30, 1994
Total revenues decreased to $95.8 million in the 1995 Nine Months from
$108.2 million in the 1994 Nine Months, a decrease of $12.4 million or 11.5%.
Of the total revenues reported in the 1995 Nine Months, 84.6% were revenues from
pay-per-view, 10.7% were from free-to-guest and 4.7% were from other sources.
Pay-per-view revenues decreased to $81.0 million in the 1995 Nine Months
from $91.8 million in the 1994 Nine Months, a decrease of $10.8 million or
11.8%. This decrease in pay-per-view revenues primarily reflects the decline in
the number of rooms served which resulted in a decrease in revenues of
approximately $10.2 million. Additionally, RER declined from $0.51 in the 1994
Nine Months to $0.50 in the 1995 Nine Months. The decline in RER contributed
approximately $1.6 million to the decrease in the pay-per-view revenues for the
1995 Nine Months. These decreases were offset slightly by an increase in
average price per view from $7.70 during the 1994 Nine Months to $7.78 for the
1995 Nine Months contributing almost $1.0 million to pay-per-view revenue.
Free-to-guest revenues decreased to $10.3 million in the 1995 Nine Months
from $11.3 million in the 1994 Nine Months, a decrease of $965,000 or 8.6%.
This decrease primarily reflects the decline in the number of hotels served and
negotiated price reductions in connection with certain PPV contract renewals.
Pay-per-view direct costs decreased to $29.9 million in the 1995 Nine
Months from $31.3 million in the 1994 Nine Months, a decrease of $1.4 million or
4.5%. This is attributable to the reduction in the number of pay-per-view
views. As a percentage of pay-per-view revenues, pay-per-view direct costs
increased to 36.9% in the 1995 Nine Months from 34.1% in the 1994 Nine Months.
This percentage increase reflects the additional transmission costs in
connection with the CDV satellite network, startup costs associated with the
issuance of a new program guide in the 1995 Third Quarter and the recording of
music rights costs somewhat offset by lower costs for in-room cards.
Free-to-guest direct costs decreased to $8.5 million in the 1995 Nine
Months from $8.8 million in the 1994 Nine Months, a decrease of $304,000 or
3.4%. As a percentage of free-to-guest revenues, free-to-guest
15
<PAGE>
direct costs increased to 82.8% in the 1995 Nine Months from 78.4% in the 1994
Nine Months. This increase in free-to-guest direct costs as a percentage of
free-to-guest revenues primarily reflects the price reductions in free-to-guest
revenues in connection with certain PPV contract renewals.
Operating expenses increased to $32.1 million in the 1995 Nine Months from
$24.0 million in the 1994 Nine Months, an increase of $8.1 million or 33.6%.
The Company recorded $2.2 million in increases due to changes in estimates.
Theses changes included the recording of $1.2 million of EDS invoices, employee
sick pay benefits of $.2 million and reserves for inventories held by third
parties of $.8 million. Costs also increased due to increases in EDS service
fees of approximately $3.2 million and equipment lease expenses of $4.2 million.
Additional EDS fees are for services not contemplated in the original EDS
agreement and include, among other charges, premium charges for service of tape-
based sites and other services beyond the scope of the original agreement. These
costs were somewhat mitigated (approximately $1.5 million) by the elimination of
the Company's internal field service organization in the first half of 1995.
Selling, general and administrative expenses increased to $21.2 million in
the 1995 Nine Months from $20.5 million in the 1994 Nine Months, an increase of
$725,000 or 3.5%. The increase in selling, general and administrative expenses
was due to the recording of $1.9 million in changes in accounting estimates
which the Company made in the third quarter, along with increases in legal
expenses and increased property and business interruption insurance. These
expenses were offset by decreases in salaries and benefits as a result of the
reduction in workforce in late 1994 and reductions in advertising and public
relations
Non-operating income for the 1995 Nine Months was $139,000 and includes
adjustments to certain prior obligations which were settled for less than
anticipated. Non-operating income for the 1994 Nine Months was $1.2 million and
is comprised of business interruption insurance proceeds from hurricanes in 1993
and certain non-operating payments received in-lieu of performance under
purchase orders for equipment by a customer.
Interest expense (net) decreased to $27.6 million in the 1995 Nine Months
from $42.0 million in the 1994 Nine Months, a decrease of $14.4 million or
34.3%. This decrease was the result of the non-accrual of interest on debt
instruments subject to settlement under reorganization for the period June 8,
1995 to September 30, 1995 and the capitalization of interest in the amount of
$2.4 million during the 1995. This decrease was offset by an increase in
interest expense due to the increased outstanding balance of the 11.65% Senior
Subordinated Reset Notes during the 1995 Nine Months as compared to the 1994
Nine Months.
Reorganization items increased $7.3 million in the 1995 Nine Months from $0
in the 1994 Nine Months. These 1995 Nine Months costs relate primarily to
restructure costs in the 1995 Third Quarter which includes discontinuing service
to a number of unprofitable hotels and in the elimination of certain positions
within the Company. It is currently anticipated such actions will be completed
by December 31, 1995. As a result, the Company recorded a Restructure charge of
$6.3 million in the third quarter of 1995. Of this total, $.9 million relates
to the cost of deinstalling certain hotels and $1.7 million was recorded for
estimated losses on the disposal of deinstalled equipment. The Company also
recorded $.4 million in employee severance costs which will be incurred in the
Restructure process. The Company recorded an additional charge of $2.3 million
which represents the write-off or abandonment of other fixed assets and $1.0
million for other costs associated with the Restructure process.
Total bankruptcy reorganization items of $7.3 million for the nine months
ended September 30, 1995 include normal bankruptcy, professional and
miscellaneous charges of $1.0 million and the Restructure charges discussed
above.
State and foreign income taxes decreased to $120,000 in the 1995 Nine
Months from $762,000 in the 1994 Nine Months, a decrease of $642,000 or 84.3%
due to lower taxable income in the 1995 Nine Months.
Deferred income tax benefits decreased to $725,000 in the 1995 Nine Months
from $4.3 million in the 1994 Nine Months, a decrease of $3.6 million or 83.2%,
primarily due to the reduction in carrying value of hotel contracts recorded at
December 31, 1994.
16
<PAGE>
Extraordinary item of $915,000 represents the write-off of unamortized debt
issuance costs in connection with the extinguishment of the Company's Old Credit
Facilities.
Net loss increased to $62.1 million in the 1995 Nine Months from $51.9
million in the 1994 Nine Months, an increase of $10.2 million or 19.6%. The net
loss was greater in the 1995 Nine Months primarily due to lower pay-per-view
sales, increased operating expenses, the changes in estimates made by the
Company in the 1995 Third Quarter, the reorganization items, changes in deferred
tax benefits and the extraordinary item.
17
<PAGE>
PART II
ITEM 1. LEGAL PROCEEDINGS
See references made in the Company's form 10-Q for the Quarters ended
March 31, 1995 and June 30, 1995 for a description of certain legal
proceeding.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedules for the nine months ended
September 30, 1995
18
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SPECTRAVISION, INC.
November 14, 1995 /s/ RICHARD M. GOZIA
--------------------------- ------------------------------------------
(Date) RICHARD M. GOZIA
EXECUTIVE VICE PRESIDENT
(Chief Financial Officer and officer duly
authorized to sign on behalf of the
Registrant)
19
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
FOR QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERNECE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1994
<PERIOD-START> JAN-01-1995 JAN-01-1994
<PERIOD-END> SEP-30-1995 SEP-30-1994
<CASH> 0 1,317
<SECURITIES> 0 0
<RECEIVABLES> 17,575 20,417
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 187,296 212,313
<PP&E> 13,394 13,740
<DEPRECIATION> 5,576 4,965
<TOTAL-ASSETS> 212,689 242,822
<CURRENT-LIABILITIES> 212,665 (224,265)
<BONDS> 0 467,063
<COMMON> 24 24
0 0
0 0
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 212,689 242,822
<SALES> 0 0
<TOTAL-REVENUES> 95,946 109,402
<CGS> 0 0
<TOTAL-COSTS> 122,829 122,830
<OTHER-EXPENSES> 7,268 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 27,638 42,057
<INCOME-PRETAX> (61,789) (55,485)
<INCOME-TAX> (605) (3,542)
<INCOME-CONTINUING> (61,184) (51,943)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 915 0
<CHANGES> 0 0
<NET-INCOME> (62,099) (51,943)
<EPS-PRIMARY> (2.55) (2.17)
<EPS-DILUTED> (2.55) (2.17)
</TABLE>
