<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-Q
-----------
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997
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: 333-03741
333-03741-01
MUZAK LIMITED PARTNERSHIP
MUZAK CAPITAL CORPORATION
(Exact Name of Registrants as Specified in their Charter)
DELAWARE 13-3647593
DELAWARE 91-1722302
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
2901 THIRD AVE., SUITE 400
SEATTLE, WA 98121
(206) 633-3000
(Address, Including Zip Code, and Telephone Number, Including Area Code
of Registrants' Principal Executive Offices)
N/A
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
Indicate by check mark whether the registrants: (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days.
Yes [x] No [_]
Muzak Capital Corporation meets the conditions set forth in General
Instruction H (1) (a) and (b) of Form 10-Q and is therefore filing this form
with the reduced disclosure format.
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrants have 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 [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, at August 14,
1997: Muzak Capital Corporation - 100.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
MUZAK LIMITED PARTNERSHIP
Consolidated Balance Sheets
(In thousands)
June 30, December 31,
1997 1997
------ ------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents. . . . . . . . . . . $20,313 $25,686
Accounts receivable, net of allowance for
doubtful accounts of $526 and $496. . . . . . 14,957 15,600
Inventories. . . . . . . . . . . . . . . . . . 3,617 3,722
Prepaid expenses . . . . . . . . . . . . . . . 1,338 1,607
Other . . . . . . . . . . . . . . . . . . . . 398 351
-------- --------
Total current assets . . . . . . . . . . . . 40,623 46,966
Property and equipment, net. . . . . . . . . . 37,409 37,182
Deferred costs and intangible assets, net. . . 31,127 33,765
Other . . . . . . . . . . . . . . . . . . . . 1,684 1,129
-------- --------
Total assets . . . . . . . . . . . . . . . . $110,843 $119,042
======== ========
LIABILITIES AND PARTNERS' DEFICIT
Current Liabilities:
Accounts payable . . . . . . . . . . . . . . . 5,174 8,681
Advance billings . . . . . . . . . . . . . . . 4,898 4,688
Accrued interest . . . . . . . . . . . . . . . 2,500 2,500
Accrued expenses . . . . . . . . . . . . . . . 3,876 2,423
Current portion of long-term obligations . . . 544 482
Current portion of equity repurchase
obligations . . . . . . . . . . . . . . . . . 1,225 -
-------- --------
Total current liabilities. . . . . . . . . . 18,217 18,774
Long-term obligations, net of current
portion . . . . . . . . . . . . . . . . . . . 100,817 100,620
Unearned installation income . . . . . . . . . 3,915 3,637
Commitments and contingencies. . . . . . . . . - -
Redeemable preferred partnership
interests . . . . . . . . . . . . . . . . . . 6,290 6,091
Equity repurchase obligations, net of
current portion . . . . . . . . . . . . . . . 1,132 -
Partners' Deficit:
Limited partners' interests (deficiencies) . . (1,485) 2,170
General partners' deficiencies . . . . . . . . (18,043) (12,250)
-------- --------
Total partners' deficit. . . . . . . . . . . (19,528) (10,080)
-------- --------
Total liabilities and partners' deficit. . . $110,843 $119,042
======== ========
</TABLE>
The accompanying notes are an integral part of
these financial statements.
<PAGE>
<TABLE>
<CAPTION>
MUZAK LIMITED PARTNERSHIP
Consolidated Statement of Operations
(Unaudited)
(In thousands)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Music and other business services. . . $14,459 $13,671 $28,778 $26,977
Equipment and related services . . . . 7,613 7,546 15,087 15,180
------- ------- ------- -------
Total revenues. . . . . . . . . . . . 22,072 21,217 43,865 42,157
------- ------- ------- -------
Cost of revenues:
Music and other business services. . . 4,368 3,792 8,621 7,501
Equipment and related services . . . . 5,041 5,050 9,966 10,304
------- ------- ------- -------
Total cost of revenues. . . . . . . . 9,409 8,842 18,587 17,805
------- ------- ------- -------
Gross profit . . . . . . . . . . . . . . 12,663 12,375 25,278 24,352
Selling, general and administrative
expenses. . . . . . . . . . . . . . . . 8,690 7,581 16,613 15,107
Depreciation . . . . . . . . . . . . . . 2,942 2,618 5,804 5,155
Amortization . . . . . . . . . . . . . . 2,484 2,327 4,945 4,464
------- ------- ------- -------
Operating income (loss) . . . . . . . (1,453) (151) (2,084) (374)
Interest expense . . . . . . . . . . . . (2,680) (1,776) (5,375) (3,574)
Interest income. . . . . . . . . . . . . 279 24 610 52
Equity in losses of joint venture. . . . (336) (75) (494) (118)
Other income (expense), net. . . . . . . 368 (55) 355 (161)
------- ------- ------- -------
Net loss. . . . . . . . . . . . . . . (3,822) (2,033) (6,988) (4,175)
Redeemable preferred returns. . . . . (99) (272) (199) (543)
------- ------- ------- -------
Net loss attributable to general
and limited partners. . . . . . . . . ($3,921) ($2,305) ($7,187) ($4,718)
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of
these financial statements.
<PAGE>
<TABLE>
<CAPTION>
MUZAK LIMITED PARTNERSHIP
Consolidated Statement of Cash Flows
(Unaudited)
(In thousands)
Six Months Ended
June 30,
1997 1996
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net loss . . . . . . . . . . . . . . . . . . . . .($6,988) ($4,175)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Provision for doubtful accounts. . . . . . . . . 181 225
Depreciation . . . . . . . . . . . . . . . . . . 5,804 5,155
Amortization, net of deferred financing cost . . 4,946 4,464
Deferred financing cost amortization . . . . . . 338 605
Equity in losses of joint venture. . . . . . . . 494 117
Gain on sale of affiliate. . . . . . . . . . . . (389) -
Non-cash incentive compensation. . . . . . . . . 100 -
Change in operating assets and liabilities:
Accounts receivable. . . . . . . . . . . . . . . 462 750
Inventories. . . . . . . . . . . . . . . . . . . 105 220
Accounts payable . . . . . . . . . . . . . . . . (3,507) 1,531
Advance billings . . . . . . . . . . . . . . . . 210 107
Accrued interest . . . . . . . . . . . . . . . . - (72)
Accrued expenses . . . . . . . . . . . . . . . . 1,453 1,161
Unearned installation income . . . . . . . . . . 278 406
Other, net . . . . . . . . . . . . . . . . . . . 223 70
------- -------
Net cash provided by operating activities. . . . 3,710 10,564
------- -------
INVESTING ACTIVITIES
Additions to property and equipment. . . . . . . . (6,110) (4,546)
Additions to deferred costs and intangible assets. (2,911) (2,870)
Investment in joint venture. . . . . . . . . . . . (804) -
Proceeds from sale of affiliate. . . . . . . . . . 1,260 -
Other, net . . . . . . . . . . . . . . . . . . . . (269) 155
. . . . . . . . . . . . . . . . . . . . . . . .------- -------
Net cash used in investing activities. . . . . . (8,834) (7,261)
------- -------
FINANCING ACTIVITIES
Borrowings under revolving notes payable, net. . . - 1,450
Principal payments on long-term debt . . . . . . . (11) (2,536)
Principal payments under capital leases. . . . . . (233) (213)
Contributions by partners. . . . . . . . . . . . . 29 172
Other, net . . . . . . . . . . . . . . . . . . . . (34) (52)
------- -------
Net cash used in financing activities. . . . . . (249) (1,179)
------- -------
Net increase (decrease) in cash and cash
equivalents . . . . . . . . . . . . . . . . . . (5,373) 2,124
CASH AND CASH EQUIVALENTS, beginning of period . . . 25,686 1,115
------- -------
CASH AND CASH EQUIVALENTS, end of period . . . . . .$20,313 $3,239
======= =======
The accompanying notes are an integral part of
these financial statements.
<PAGE>
MUZAK LIMITED PARTNERSHIP
FORM 10-Q
Notes to Consolidated Financial Statements
Six months ended June 30, 1997 and 1996
(Unaudited)
NOTE 1. FINANCIAL STATEMENT PREPARATION:
The consolidated financial statements as of June 30, 1997 and December 31,
1996 and for the three and six month periods ended June 30, 1997 and 1996
have been prepared by Muzak Limited Partnership (the "Company") pursuant to
the rules and regulations of the Securities and Exchange Commission (the
"Commission"). The financial information as of and for the three and six
month periods ended June 30, 1997 and 1996 is unaudited, but, in the opinion
of management, reflects all adjustments (consisting only of normal recurring
adjustments and accruals) necessary for a fair presentation of the financial
position, results of operations and cash flows for the interim periods.
Certain information and note disclosures normally included in the Company's
annual financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted in accordance with the
rules and regulations of the Commission. These consolidated financial
statements should be read in conjunction with the financial statements and
notes thereto contained in the Company's Annual Report on Form 10-K filed
with the Commission on March 31, 1997.
The results of operations for the three and six month periods ended June 30,
1997 are not necessarily indicative of the Company's results of operations
for the entire fiscal year ended December 31, 1997.
Certain reclassifications of prior year balances have been made for
consistent presentation.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation - The accompanying consolidated financial
statements of the Company include the accounts of the Company and its wholly-
owned subsidiary, Muzak Capital Corporation. All significant intercompany
accounts and transactions have been eliminated in consolidation.
New Accounting Pronouncements - SFAS No. 130, "Reporting Comprehensive
Income" and SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information," were recently issued and are effective for the
Company's year ending December 31, 1998. The Company is currently evaluating
the effects of these standards. Management believes that the impact of
adopting these standards will not be material to the financial statements,
taken as a whole.
<PAGE>
NOTE 3. PROPERTY AND EQUIPMENT, NET:
</TABLE>
<TABLE>
<CAPTION>
Property and equipment consist of the following (in thousands):
June 30, December 31,
1997 1996
------- -------
<S> <C> <C>
Equipment provided to subscribers. . . . $53,124 $49,340
Machinery and equipment. . . . . . . . . 11,575 10,745
Vehicles . . . . . . . . . . . . . . . . 3,417 3,072
Furniture and fixtures . . . . . . . . . 2,280 2,260
Land and buildings . . . . . . . . . . . 858 858
Leasehold improvements . . . . . . . . . 856 916
------- -------
Total property and equipment. . . . 72,110 67,191
Less: Accumulated depreciation
and amortization. . . . . . . . . (34,701) (30,009)
------- -------
$37,409 $37,182
======= =======
</TABLE>
NOTE 4. DEFERRED COSTS AND INTANGIBLE ASSETS, NET:
<TABLE>
<CAPTION>
Deferred costs and intangible assets consists of the following (in
thousands):
June 30, December 31,
1997 1996
------- -------
<S> <C> <C>
Income producing contracts . . . . . . . $39,328 $39,830
Deferred subscriber acquisition costs. . 12,704 11,056
Master recording rights and deferred
production costs . . . . . . . . . . 10,922 9,883
Deferred financing costs . . . . . . . . 4,423 4,423
Organization costs . . . . . . . . . . 4,432 4,432
Non-compete agreements . . . . . . . . . 846 846
Other. . . . . . . . . . . . . . . . . . 774 758
------- -------
Total deferred costs and
intangible assets. . . . . . . . . 73,429 71,228
Less: Accumulated amortization. . . . . (42,302) (37,463)
------- -------
$31,127 $33,765
======= =======
</TABLE>
<PAGE>
NOTE 5. LONG-TERM OBLIGATIONS:
<TABLE>
<CAPTION>
Long-term obligations are summarized as follows (in thousands):
June 30, 1997 December 31, 1996
-------- --------
<S> <C> <C>
Senior notes . . . . . . . . . . . . . $100,000 $100,000
Capital lease obligations. . . . . . . 1,205 935
Other. . . . . . . . . . . . . . . . . 156 167
-------- --------
Total long-term obligations . . . 101,361 101,102
Less: Current portion . . . . . . . . (544) (482)
-------- --------
$100,817 $100,620
======== ========
</TABLE>
NOTE 6. SEVERANCE AGREEMENTS:
The Company entered into individual severance agreements with six separated
members of management which provide for the following:
Severance Payments: Included in selling, general and administration expense,
the Company took a charge of approximately $750,000 in the second quarter of
1997 for severance payments that will be paid over the next eighteen months.
Equity Repurchase Obligations: The agreements provide for the redemption of
the separated employees' entire partnership interest in the Company. The
total repurchase obligation for the separated employees' partnership
interests under those severance agreements as of June 30, 1997 is $2,357,000
at a redemption price of $2.33 per partnership interest unit. In accordance
with these severance agreements, on July 15, 1997, the Company redeemed
311,233 partnership interest units totaling $725,172. Partially offsetting
these redemptions was the purchase of 107,296 partnership interest units by
existing and new management members for $250,000. In addition, the Company
paid $1,262,000 to five of the six separated management members in exchange
for notes bearing interest at 7% per annum.
Options to Purchase Partnership Interest Units: The options of the separated
members of management were canceled by the Company. Four of the separated
members of management received $24,828 in the aggregate for such canceled
options and new options were issued to the remaining two separated members.
The Company has adequately accrued compensation expense related to the new
and the canceled options.
<PAGE>
NOTE 7. SALE OF AFFILIATE:
On June 1, 1997, the Company sold its Spokane, Washington affiliate to an
existing Muzak franchisee for $1.4 million, of which $1,260,000 was received
at closing and $140,000 remains in escrow subject to purchase price
adjustments. The Spokane franchise territory includes 31 counties in
Washington, Idaho, and Oregon.
NOTE 8. SUBSEQUENT EVENTS:
The Company has signed letters of intent related to three acquisitions for a
total purchase price of approximately $2.75 million.
NOTE 9. SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest expense for the six month periods ended June 30, 1997
and 1996 was approximately $5,038,000 and $3,025,000, respectively.
Non-cash financing and investing items for the six month periods ended June
30, 1997 and 1996 include the following:
- The transfer of inventory, prepaid expenses, and machinery and equipment
with a book value of $394,000 from a business segment in exchange for a
note receivable in April, 1996.
- Organization costs of $700,000 related to an unconsummated equity
financing which were capitalized and included in accounts payable during
the second quarter of 1996 and were subsequently written off in the fourth
quarter of 1996.
- Purchases of vehicles acquired under capital leases during the six month
periods ended June 30, 1997 and 1996 of approximately $499,000 and
$293,000, respectively.
<PAGE>
<TABLE>
<CAPTION>
MUZAK CAPITAL CORPORATION
BALANCE SHEET
June 30, 1997
ASSETS
<S> <C>
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1
STOCKHOLDER'S EQUITY
Preferred Stock--authorized 10,000,000 shares
of $0.01 par value each; no shares issued and
outstanding . . . . . . . . . . . . . . . . . . . . . . . $ --
Common Stock--authorized 30,000,000 shares of
$0.01 par value each; 100 shares issued and
outstanding . . . . . . . . . . . . . . . . . . . . . . . 1
TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1
</TABLE>
<PAGE>
NOTE TO FINANCIAL STATEMENT
Muzak Capital Corporation ("Capital Corp."), a wholly-owned subsidiary
of Muzak Limited Partnership (the "Company"), was formed on May 8, 1996.
Capital Corp. has no independent operations and is dependent on the cash flow
of the Company to meet its sole obligation as co-issuer with the Company of
the 10% Senior Notes due 2003, the payment of principal and interest thereon
when due.<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following should be read in conjunction with the Management's Discussion
and Analysis of Financial Condition and Results of Operations included in the
registrant's Form 10-K filed with the Securities and Exchange Commission on
March 31, 1997.
FORWARD-LOOKING STATEMENTS
When used in this Quarterly Report on Form 10-Q or future filings by the
Company, as defined below, and Capital Corp., as defined below, with the
Securities and Exchange Commission, in the Company's and Capital Corp.'s
press releases or other public communications, or in oral statements made
with the approval of an authorized executive officer, the words or phrases
"will likely result," "are expected to," "will continue," "is anticipated,"
"estimate," "project" or similar expressions are intended to identify
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. The Company and Capital Corp. wish to caution
readers not to place undo reliance on any such forward-looking statements,
which speak only as of the date made, and to advise readers that various
factors, including rapid technological change, competitive pricing,
concentrations in and dependence on satellite delivery capabilities, and
development of new services could affect the Company's and Capital Corp.'s
financial performance and could cause the Company's and Capital Corp.'s
actual results for future periods to differ materially from those anticipated
or projected.
The Company and Capital Corp. do not undertake and specifically disclaim any
obligation to update any forward-looking statements to reflect the occurrence
of anticipated or unanticipated events or circumstances after the date of
such statements.
RESULTS OF OPERATIONS
Revenues. Total revenues increased 4.0% and 4.1% for the three and six month
periods ended June 30, 1997, respectively, as compared to the same periods in
1996. These increases were primarily due to a net increase in monthly
recurring service billings while equipment and related services revenues
remained essentially flat as compared to the 1996 periods. Monthly recurring
service billings increased by $24,000 and $46,000 over the three and six
month periods ended June 30, 1997, respectively, as compared to the same
periods in 1996. Equipment and related services revenues were impacted by a
higher percentage of new installations using EchoStar equipment than in the
prior year. As the Company's affiliates install more EchoStar equipment, the
mix of equipment purchased from the Company decreases as all EchoStar
equipment is purchased directly from EchoStar or other outside vendors.
<PAGE>
Gross Profit. Gross profit increased 2.3% and 3.8% over the three and six
month periods ended June 30, 1997, respectively, as compared to the same
periods in 1996, but gross margins as a percentage of revenues decreased
slightly over the same periods. Gross margins for the three and six month
periods ended June 30, 1997 were 57.4% and 57.6%, respectively, a decline
from the 58.3% and 57.8% for the same periods during 1996. The decline in
margins is primarily due to installation costs related to a higher level of
installations during the 1997 periods over the 1996 periods. In addition,
satellite uplink fees for the EchoStar satellite which were minimal during
the 1996 period negatively impacted margins for the three and six month
periods ended June 30, 1997 as compared to the same periods during 1996.
These fees increased significantly in February 1997, when the EchoStar II
satellite became functional, in accordance with the Company's agreements
with EchoStar. Our EchoStar residential revenues are growing and are now
approximately equal to the costs of these satellite facilities on a monthly
basis. Management anticipates that no further increases to these fees will
occur.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased as a percentage of revenues for the three
and six month periods ended June 30, 1997, as compared to the same periods in
1996. These expenses, as a percentage of revenues, were 39.4% and 37.9% for
the three and six month periods ended June 30, 1997, as compared to 35.7% and
35.8% for the same periods in 1996. These increases were a result of
approximately $750,000 in severance charges during the second quarter of 1997
related to certain management changes as well as increased sales costs
incurred to generate the increases in monthly recurring services billings as
compared to the same periods last year. As commissions are paid based on the
future value of these new contracts, these sales costs are incurred prior to
the benefits derived from the recurring revenues. Because of this, as long
as the Company continues to experience high sales levels, sales costs
associated with these recurring sales will continue to negatively impact
immediate operating results.
Depreciation and Amortization. Depreciation and amortization expenses
increased $500,000 and $1.1 million for the three and six month periods ended
June 30, 1997, respectively, as compared to the same periods during 1996.
These increases were primarily the result of investments in maintaining and
expanding the subscriber base over the last twelve months as well as capital
investments in other business opportunities, such as costs of the new
EchoStar uplink facility and start-up costs to create the Company's internet
MusicServer product.
Interest Expense and Other Income. Interest expense net of interest income,
equity in losses of joint venture and other income and expense increased
$500,000 and $1.1 million for the three and six month periods ended June 30,
1997, respectively, as compared to the same periods during 1996. These
increases were primarily the result of increased interest expense for the
1997 periods related to an increase in average interest bearing debt
outstanding since the October 1996 offering by the Company and Muzak Capital
Corporation of $100 million of 10% Senior Notes due 2003. Average interest-
bearing debt for the six months ended June 30, 1997 was $101.0 million
compared to $60.9 million for the six months ended June 30, 1996.
Net Loss. Net loss increased to $3.8 and $7.0 million for the three and six
month periods ended June 30, 1997, respectively, as compared to $2.0 and $4.2
million for the same periods in 1996.
LIQUIDITY AND CAPITAL RESOURCES
Six Months Ended June 30, 1997. Cash and cash equivalents decreased from
$25.7 million as of December 31, 1996 to $20.3 million as of June 30, 1997.
The Company's cash provided by operations for this period was $3.7 million,
including a net use of operating assets and liabilities of $776,000.
Operating cash flow and the reduction in cash and cash equivalents were used
to fund capital requirements associated with maintaining and expanding the
subscriber base and to reduce current liabilities. In addition to these
capital requirements, investing activities also include $1,260,000 in
proceeds from the sale of the Spokane, Washington operation and an additional
investment of $800,000 in Muzak Europe B.V., a joint venture in Europe in
which the Company is a 50% partner.
Outlook. The Company believes that its cash flows from operations, borrowing
availability and cash on hand will be adequate to support currently planned
business operations, capital expenditures and debt service requirements at
least through December, 1998. Equity repurchase obligations for $2,357,000
were recorded by the Company in June, 1997 related to individual severance
agreements with six separated members of management. In addition, the
Company currently has signed letters of intent related to three acquisitions
for a total purchase price of approximately $2,750,000. Other than these
transactions, if the Company engages in one or more material acquisitions,
joint ventures or alliances or other major business initiatives requiring
significant cash commitments, or incurs unanticipated expenses, additional
capital could be required.
Muzak Capital Corporation. Muzak Capital Corporation ("Capital Corp."), a
wholly-owned subsidiary of the Company, was organized May 8, 1996, has
nominal assets and conducts no business operations. Capital Corp. has no
independent operations and is dependent on the cash flow of the Company to
meet its sole obligation, the payment of interest and principal on the Senior
Notes when due. A discussion of Capital Corp. has been omitted in the
period-to-period comparison due to its lack of significant assets and lack of
operations.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is subject to various proceedings arising in the normal
course of business, none of which, individually or in the aggregate, is
expected to have a material adverse effect on the Company's financial
condition, results of operations or liquidity.
ITEM 2. CHANGES IN SECURITIES.
On July 25, 1997, the Company sold a total of 107,296 Class B
limited partnership units to two executive officers of the Company for a
total consideration of $250,000. The sales of the 107,296 Class B limited
partnership units was made in a transaction exempt from the registration
requirements of the Securities Act of 1933, as amended, pursuant to Section
4(2) thereof.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
27.1 Financial Data Schedule of Muzak Limited Partnership
27.2 Financial Data Schedule of Muzak Capital Corporation
(b) Reports on Form 8-K
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.
MUZAK LIMITED PARTNERSHIP
By: /s/ Brad D. Bodenman
---------------------
Date: August 14, 1997 Brad D. Bodenman
Controller
(Principal Financial Officer and
Chief Accounting Officer of Muzak
Limited Partnership)
MUZAK CAPITAL CORPORATION
By: /s/ Brad D. Bodenman
---------------------
Date: August 14, 1997 Brad D. Bodenman
Controller
(Principal Financial Officer and
Chief Accounting Officer of Muzak
Capital Corporation)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information
extracted from the financial statements contained in
the body of the accompanying Form 10-Q of MUZAK
LIMITED PARTNERSHIP and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000891983
<NAME> MUZAK LIMITED PARTNERSHIP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 20,313
<SECURITIES> 0
<RECEIVABLES> 15,483
<ALLOWANCES> 526
<INVENTORY> 3,617
<CURRENT-ASSETS> 40,623
<PP&E> 72,110
<DEPRECIATION> 34,701
<TOTAL-ASSETS> 110,843
<CURRENT-LIABILITIES> 18,217
<BONDS> 100,817
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 110,843
<SALES> 6,977
<TOTAL-REVENUES> 43,865
<CGS> 4,996
<TOTAL-COSTS> 18,587
<OTHER-EXPENSES> 27,362
<LOSS-PROVISION> 181
<INTEREST-EXPENSE> 5,375
<INCOME-PRETAX> (6,988)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,988)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,988)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information
extracted from the financial statements contained in
the body of the accompanying Form 10-Q of MUZAK
CAPITAL CORPORATION and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0001013763
<NAME> MUZAK CAPITAL CORPORATION
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 1
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
