<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 1996 Commission File Number: 33-59534
UNIVISION TELEVISION GROUP, INC.
(Exact Name of Registrant as specified in its charter)
Delaware No. 95-4398877
(State of Incorporation) I.R.S. Employer Identification
6701 Center West Drive, Fifteenth Floor, Los Angeles, California 90045
Tel: (310) 216-3434
(address and telephone number of principal executive offices)
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 ________ NO X .
There were 1,000 shares of Common Stock, $.01 par value, outstanding as of
July 31, 1996.
<PAGE> 2
UNIVISION TELEVISION GROUP, INC.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I - FINANCIAL INFORMATION:
# Financial Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
# Financial Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
# Item 1. Consolidated Financial Statements
# UNIVISION TELEVISION GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Operations for the three and six
months ended June 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Balance Sheets at June 30, 1996 and December 31, 1995 . . . . . . . . . . . . . . . . . 5
Consolidated Statements of Cash Flows for the
six months ended June 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
# THE UNIVISION NETWORK HOLDING LIMITED PARTNERSHIP AND SUBSIDIARY
Consolidated Statements of Operations for the three and six
months ended June 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Consolidated Balance Sheets at June 30, 1996 and December 31, 1995 . . . . . . . . . . . . . . . . . 12
Consolidated Statements of Cash Flows for the
six months ended June 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
# Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
PART II - OTHER INFORMATION:
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . 25
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Item 6. Exhibits and Reports on form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
<PAGE> 3
UNIVISION TELEVISION GROUP, INC.
FINANCIAL TERMS
The following terms are used in this Form 10-Q to refer to the companies and
operations indicated:
"NETWORK" - The Univision Network Limited Partnership ("UNLP"). The Network is
held by UNHP, its general partner, and Network Limited Partner, Inc., its
limited partner.
"NEW BANK FACILITY" - The Company's new credit agreement, expected to be
entered into prior to the closing of the Offering, provides for aggregate
commitments of up to $600 million and will impose financial and other
restrictions on the Company.
"OWNERS" - Perenchio, Televisa and Venevision.
"PERENCHIO" - A. Jerrold Perenchio.
"PTI" - Perenchio Television, Inc., a Delaware corporation, a wholly-owned
subsidiary of PTIH and the parent of UTG.
"PTIH" - a Delaware corporation, the parent of PTI and indirect parent of UTG.
"SPONSOR LOANS" - The loans made to UTG by Televisa and Venevision each quarter
since December 17, 1992.
"TELEVISA" - Grupo Televisa, S.A., a publicly held Mexican Corporation, the
parent of Univisa.
"UNHP" - The Univision Network Holding Limited Partnership, a Delaware limited
partnership, and the general partner of the Network. UNHP is beneficially
owned by Sunshine Acquisition, L.P., Bravo Enterprises, Inc. and Univisa
Broadcasting, L.P., as its general partners, and Network Limited Partner, Inc.,
as its limited partner.
"UNIVISION GROUP" - The combined operations of UTG and the Network.
"UTG" - Univision Television Group, Inc., a Delaware corporation. UTG is a
wholly-owned subsidiary of PTI and through such ownership is indirectly held by
affiliates of the Owners through PTIH and UCI.
"VENEVISION" - Corporacion Venezolana de Television, C.A. (Venevision), a
Venezuelan corporation, together with its affiliates.
2
<PAGE> 4
UNIVISION TELEVISION GROUP, INC.
FINANCIAL INTRODUCTION
The businesses of UTG and UNHP are under separate management and ownership
structures and are operated as two distinct businesses. Notwithstanding this
separation, the business operations of UTG and UNHP remain substantially
dependent on one another. UTG is dependent on the Network for programming and
advertising sales support while UTG represents 71% of the Network's total
coverage of Hispanic households in the U.S.
In addition, UTG's bank credit agreement and Senior Subordinated Note indenture
contain operating and financial covenants which measure performance of the two
operations combined. PTI, UNHP and UNLP are guarantors of the bank credit
agreement and the Senior Subordinated Notes. Consequently, unaudited condensed
consolidated financial statements of UTG and unaudited condensed consolidated
financial statements of UNHP are included in this Form 10-Q.
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
statements. The interim financial statements are unaudited but include all
adjustments, which are of a normal recurring nature, that management considers
necessary to fairly present the financial position and the results of
operations for such periods. Results of operations of interim periods are not
necessarily indicative of results for a full year. These financial statements
should be read in conjunction with the audited consolidated financial
statements of UTG and UNHP included in the December 31, 1995 Form 10-K of UTG.
Univision Communications Inc. ("UCI"- formerly PCI), the parent of UTG, has
filed a registration statement with the Securities and Exchange Commission for
an initial public offering of its Class A Common Stock. If the offering
occurs, UTG will obtain funds from its parent and from a New Bank Facility
which is expected to be entered into concurrently with the offering, to pay off
all amounts owing under its existing bank facility and terminate such facility,
defease its 11 3/4% Senior Subordinated Notes, pay all intercompany debt owed
to UNLP and repay Sponsor Loan Notes plus accrued interest to Televisa and
Venevision.
3
<PAGE> 5
UNIVISION TELEVISION GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------- ----------------------------
1996 1995 1996 1995
---------------------------- ----------------------------
<S> <C> <C> <C> <C>
Net revenues $ 52,229 $ 47,732 $ 91,420 $ 82,279
Direct operating expenses 8,250 7,697 16,365 15,201
Selling, general and administrative expenses 18,142 15,370 34,154 28,723
Depreciation and amortization 8,660 8,379 17,192 16,537
----------- ----------- ----------- -----------
Operating income 17,177 16,286 23,709 21,818
Interest expense 8,117 9,096 16,216 18,057
Amortization of deferred financing costs 776 1,160 1,749 2,320
----------- ----------- ----------- -----------
Income before extraordinary loss on
extinguishment of debt 8,284 6,030 5,744 1,441
Provision for income taxes (Note 4) 350 - 500 -
Extraordinary loss on extinguishment of debt
(net of income tax benefit of $350 and $500) (548) - (681) -
----------- ----------- ----------- -----------
Net income $ 7,386 $ 6,030 $ 4,563 $ 1,441
=========== =========== =========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 6
UNIVISION TELEVISION GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
------------- --------------
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 14,156 $ 14,029
Trade accounts receivable, less allowance
for doubtful accounts of $4,672 in 1996
and $3,853 in 1995 36,386 37,951
Prepaid expenses and other 2,619 3,043
------------- -------------
Total current assets 53,161 55,023
Property and equipment, less accumulated
depreciation of $16,918 in 1996 and
$13,888 in 1995 28,704 25,557
Intangible assets, less accumulated
amortization of $100,675 in 1996 and
$86,520 in 1995 436,956 451,111
Deferred financing costs, less accumulated
amortization of $15,103 in 1996 and
$13,597 in 1995 10,182 12,193
Deferred income taxes 2,000 2,000
Other assets 2,092 1,746
------------- -------------
Total assets $ 533,095 $ 547,630
============= =============
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE> 7
UNIVISION TELEVISION GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
------------- -------------
LIABILITIES AND SHAREHOLDER'S EQUITY (Unaudited)
<S> <C> <C>
Current liabilities:
Accounts payable and accrued liabilities $ 34,849 $ 41,266
Due to the Network 36,019 64,505
Accrued interest 5,488 6,281
Program rights obligations 977 1,899
Current portion of long-term debt 37,477 17,313
------------- -------------
Total current liabilities 114,810 131,264
Long-term debt, net of current portion 216,248 242,072
Sponsor loans, including accrued interest 131,763 108,361
Program rights obligations - long term 485 753
Other long-term liabilities 1,347 1,301
Shareholder's equity:
Common stock; $.01 par value, 1,000 shares
authorized, issued and outstanding - -
Paid-in-capital 98,442 98,442
Accumulated deficit (30,000) (34,563)
------------ ------------
Total shareholder's equity 68,442 63,879
------------ ------------
Total liabilities and shareholder's equity $ 533,095 $ 547,630
============= =============
</TABLE>
See notes to condensed consolidated financial statements.
6
<PAGE> 8
UNIVISION TELEVISION GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
------------- -------------
<S> <C> <C>
Net income $ 4,563 $ 1,441
Adjustment to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation expense 3,037 2,430
Amortization of intangible assets and deferred
financing costs 15,904 16,427
Accretion of interest on sponsor loans 4,642 3,140
Extraordinary loss on extinguishment of debt 1,181 -
Changes in assets and liabilities:
Accounts receivable 1,565 (1,827)
Due from Network 34,697 27,688
Due to Network (46,399) (32,388)
Prepaid and other assets 78 655
Accrued interest (793) (844)
Accounts payable and accrued liabilities (6,417) (3,172)
Obligations for program rights (1,190) (2,289)
Other, net 47 648
------------- -------------
Net cash provided by operating activities 10,915 11,909
Cash flow from investing activities:
Capital expenditures (6,183) (4,872)
Purchase of short-term investments - (50)
------------- -------------
Net cash used in investing activities (6,183) (4,922)
Cash flow from financing activities:
Proceeds from long-term debt 29,000 30,000
Repayments of long-term debt (22,010) (44,039)
Proceeds from sponsor loans 23,834 20,544
Reduction of sponsor loans - cost sharing agreement (5,074) -
Repurchase of senior subordinated notes (13,489) -
Advances from Network 48,355 22,457
Advances to Network (65,139) (36,177)
Deferred financing costs (82) (62)
------------- -------------
Net cash used in financing activities (4,605) (7,277)
Net increase(decrease) in cash 127 (290)
Cash, beginning of year 14,029 5,869
------------- -------------
Cash, end of period $ 14,156 $ 5,579
============= =============
Supplemental disclosure of cash flow information:
Interest paid during the period $ 11,987 $ 15,456
============= =============
</TABLE>
See notes to condensed consolidated financial statements.
7
<PAGE> 9
UNIVISION TELEVISION GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
JUNE 30, 1996
(UNAUDITED)
1. ORGANIZATION AND ACQUISITION
On December 17, 1992 (effective close of business December 16, 1992),
Univision Station Group, Inc. ("USG") and KTVW, Inc. ("KTVW") were
acquired by Univision Television Group, Inc. ("UTG" or "Company") with
USG as the surviving corporation. Concurrently, USG's name was
changed to Univision Television Group, Inc. ("UTG"), and PTI Holdings,
Inc. ("PTIH") contributed the capital stock of UTG and KTVW to
Perenchio Television, Inc. ("PTI") and PTI then contributed the
capital stock of KTVW to UTG. KTVW was subsequently merged into UTG.
As a result of the above transactions, UTG is a wholly-owned
subsidiary of PTI, and PTI is a wholly-owned subsidiary of PTIH.
PTIH and Univision Communications Inc. ("UCI") are beneficially owned
by affiliates of A. Jerrold Perenchio (together with his affiliates
"Perenchio"), affiliates of Grupo Televisa, S.A. de C.V. (together
with its affiliates, "Televisa") and Dennevar, B.V., an affiliate of
Venevision International Limited (together with its affiliates,
"Venevision"), (collectively, the "Owners").
UCI and its subsidiaries had no operations prior to the acquisitions.
The aggregate purchase price for USG and KTVW was approximately
$489,000,000, including approximately $11,000,000 of acquisition
costs. A subordinated note due from PTIH to the seller (which was
subsequently sold to a third party and then sold to the public as a
series of notes) financed $5,442,000 of the purchase price, and is
included as a capital contribution from PTIH to PTI and from PTI to
UTG in the consolidated financial statements. These subordinated
notes are not guaranteed in any form by PTI nor secured by its assets.
The acquisition was accounted for under the purchase method of
accounting. Accordingly, the assets acquired and liabilities assumed
have been recorded at the fair values at the date of the acquisition.
In addition to current assets and liabilities, the purchase price was
allocated principally to property and equipment of approximately
$22,000,000 and intangible assets of approximately $473,000,000.
On August 2, 1994, the Company completed its acquisition of all of the
stock of Combined Broadcasting of Chicago, Inc. The purchase price
was approximately $36,000,000, plus the assumption of program rights
obligations totaling approximately $11,000,000. The unpaid portion of
program rights obligations is payable in varying amounts through the
year 1999. The acquisition was financed with borrowings from the Bank
Facility. Substantially all of the purchase price has been allocated
to intangible assets.
On September 30, 1994, the Company completed its acquisition of all of
the stock of Pueblo Broadcasting Corporation which owned and operated
a television station affiliated with the Network serving Houston,
Texas. The purchase price was approximately $20,000,000 and was
financed with borrowings from the Bank Facilities and cash generated
through operations. Substantially all of the purchase price has been
allocated to intangible assets. During 1995, certain adjustments were
made to the preliminary allocation of the purchase price which has
resulted in an increase in the intangible assets of $2,300,000.
8
<PAGE> 10
UNIVISION TELEVISION GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
JUNE 30, 1996
(UNAUDITED)
In June 1996, UNLP signed a letter of intent with Entravision, which
owns and operates seven of the Affiliated Stations, to make a $10
million investment in the form of a note and an option to acquire a
25% equity interest in Entravision.
The Company owns and operates eleven Spanish-language full-power
television stations serving New York, Los Angeles, Miami, San Antonio,
an Francisco, Fresno, Dallas, Phoenix, Albuquerque, Houston and
Chicago and six Spanish-language low-power television stations serving
Hartford, Philadelphia, Tucson, Austin, Albuquerque and Bakersfield.
The company's television stations are affiliated with the
Spanish-language television network owned and operated by the Univision
Network Limited Partnership (the "Network"), which is also ultimately
beneficially owned by the Owners.
The businesses of the Company and the Network are under separate
management and ownership structures. Notwithstanding this separation,
the business operations of the Company and the Network remain
substantially dependent on one another. The Company is dependent on
the Network for programming and advertising sales support while the
Company represents 71% of the Network's total coverage of Hispanic
households in the U.S. The Company and the Network are collectively
referred to herein as the "Univision Group."
2. UNAUDITED FINANCIAL STATEMENTS
Certain reclassifications have been made to the prior year financial
statements to conform with the current presentation.
3. EARLY EXTINGUISHMENT OF DEBT
During the quarter ended June 30, 1996, UTG purchased at a premium
$9,650,000 face amount of its 11 3/4% Senior Subordinated Notes due
2001, resulting in an extraordinary loss of $898,000, including the
write-off of the related financing costs. During the six months ended
June 30, 1996, UTG purchased at a premium $12,650,000 face amount of
its 11 3/4% Senior Subordinated Notes due 2001, resulting in an
extraordinary loss of $1,181,000, including the write-off of the
related financing costs. The related income tax benefits associated
with these extraordinary losses were $350,000 and $500,000,
respectively.
4. INCOME TAXES
The Company is included in the consolidated federal tax return filed
by its parent company. As agreed, consolidated taxes payable are
allocated between its parent and the Company based on their respective
contributions to taxable income.
9
<PAGE> 11
UNIVISION TELEVISION GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
JUNE 30, 1996
(UNAUDITED)
5. THE OFFERING
In June 1996, the Company's parent filed a registration statement on
Form S-1 with the Securities and Exchange Commission for the sale of
up to 8,842,105 shares of Class A Common Stock. The net proceeds to
the Company from this offering are intended, along with the proceeds
from a New Bank Facility, to be used to refinance the existing Bank
Facility, to re-pay existing long-term debt, to fund capital
expenditures and for general corporate and working capital purposes.
Concurrent with the Offering, the Company intends to convert UCI
preferred stock and PTIH common and preferred stock outstanding into
UCI common stock.
The Company's parent intends to consummate the following transactions,
among others, concurrent with the offering:
a. The Company will enter into the New Bank Facility and will repay
$165 million owing under, and terminate, the existing Bank
Facility;
b. The Company will defease its 11 3/4% Senior Subordinated Notes
due 2001 (the "Senior Subordinated Notes") by, among other things,
depositing $85.1 million with the trustee under the indenture
governing such notes.
10
<PAGE> 12
THE UNIVISION NETWORK HOLDING LIMITED PARTNERSHIP
THE UNIVISION NETWORK HOLDING LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP) AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------- ----------------------------
1996 1995 1996 1995
---------------------------- ----------------------------
<S> <C> <C> <C> <C>
Net revenues $ 45,953 $ 40,502 $ 79,436 $ 70,419
Direct operating expenses 22,764 21,119 41,005 38,379
Selling, general and administrative expenses 11,972 11,136 22,648 21,274
Depreciation and amortization 2,828 2,515 5,513 4,850
----------- ----------- ----------- -----------
Operating income 8,389 5,732 10,270 5,916
Interest expense 2,418 1,937 4,799 3,851
----------- ----------- ----------- -----------
Net income allocable to the general partners $ 5,971 $ 3,795 $ 5,471 $ 2,065
=========== =========== =========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
11
<PAGE> 13
THE UNIVISION NETWORK HOLDING LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP) AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
------------- --------------
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash $ 21 $ 29
Short-term investments 86 85
Trade accounts receivable, less allowance
for doubtful accounts of $3,607 in 1996
and $3,849 in 1995 46,005 32,675
Due from UTG 36,019 64,505
Program rights 4,516 2,899
Prepaid expenses and other 2,245 1,956
------------- -------------
Total current assets 88,892 102,149
Property and equipment, less accumulated
depreciation of $14,637 in 1996 and
$11,324 in 1995 74,143 48,618
Intangible assets, less accumulated
amortization of $16,094 in 1996 and
$13,886 in 1995 6,769 8,977
Other assets 660 621
------------- -------------
Total assets $ 170,464 $ 160,365
============= =============
</TABLE>
See notes to condensed consolidated financial statements.
12
<PAGE> 14
THE UNIVISION NETWORK HOLDING LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP) AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
------------- -------------
LIABILITIES AND PARTNERS' EQUITY (Unaudited)
<S> <C> <C>
Current liabilities:
Accounts payable and accrued liabilities $ 33,245 $ 37,977
Deferred advertising revenues - 9,603
Program cost sharing advance 1,966 4,157
Obligations for program rights 116 236
Accrued station compensation 4,081 2,988
Management and license fees payable 17,508 22,536
Current portion of capital lease obligations 2,195 1,324
------------- ------------
Total current liabilities 59,111 78,821
Subordinated notes, including accrued interest 48,551 45,704
Other liabilities:
Capital lease obligations, net of current portion 40,518 18,246
Other long-term liabilities 1,946 2,704
General partners' equity 20,337 14,889
Limited partners' equity 1 1
------------- ------------
Total liabilities and partners' equity $ 170,464 $ 160,365
============= ============
</TABLE>
See notes to condensed consolidated financial statements.
13
<PAGE> 15
THE UNIVISION NETWORK HOLDING LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP) AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
------------- -------------
<S> <C> <C>
Net income $ 5,471 $ 2,065
Adjustment to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation expense 3,305 2,640
Amortization of intangible assets 2,208 2,210
Accretion of interest on subordinate loans 2,847 2,530
Changes in assets and liabilities:
Accounts receivable (13,330) (4,839)
Due from UTG 46,399 32,388
Due to UTG (34,697) (27,688)
Program rights (1,617) 273
Prepaid and other assets (327) 732
Accounts payable and accrued liabilities (4,531) (4,343)
Deferred advertising revenues (9,603) (12,658)
Management and license fees payable 30,311 27,284
Payment of license fees (23,834) (20,544)
Payment of management fee (11,505) (7,203)
Program cost sharing advance (2,191) (99)
Accrued station compensation 1,093 (1,601)
Obligations for program rights (120) (514)
Other liabilities (748) (1,625)
------------ -------------
Net cash used in operating activities (10,869) (10,992)
Cash flow from investing activities:
Advances from UTG 65,139 36,177
Advances to UTG (48,355) (22,457)
Capital expenditures (4,926) (2,145)
------------ -------------
Net cash provided by investing activities 11,858 11,575
Cash flow from financing activities:
Principal payments of capital lease obligations (997) (593)
------------ -------------
Net cash used in financing activities (997) (593)
Net decrease in cash (8) (10)
Cash, beginning of year 29 40
------------ -------------
Cash, end of period $ 21 $ 30
============ =============
Supplemental disclosure of cash flow information:
Interest paid during the period $ 1,891 $ 1,118
============ =============
</TABLE>
See notes to consolidated financial statements.
14
<PAGE> 16
THE UNIVISION NETWORK HOLDING LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP) AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
1. ORGANIZATION AND ACQUISITION
The Univision Network Holding Limited Partnership (the "Partnership"
or "UNHP") was formed on December 7, 1992 pursuant to the laws of the
State of Delaware for the purpose of owning and operating a
Spanish-language television network in the United States. The General
Partners of UNHP are affiliates of A. Jerrold Perenchio (together with
his affiliates, "Perenchio"), Grupo Televisa, S.A. de C.V. (together
with its affiliates, "Televisa") and Venevision International, Inc.
(together with its affiliates, "Venevision"), respectively
(collectively, the "Owners"). The Owners initially contributed a cash
capital contribution of approximately $7,002,000.
On December 17, 1992 (effective close of business December 16, 1992),
UNHP purchased the stock of Univision, Inc. and certain other assets
from Univision Holdings, Inc. for an aggregate purchase price of
approximately $38,684,000, including $273,000 of acquisition costs. A
portion of the total purchase price was financed by a 7% subordinated
note with a face amount of $61,094,000 due to the seller (which note
was subsequently sold to a third party and then to the public as a
series of notes), which was discounted for financial reporting
purposes to $31,911,000 (12.5% effective rate). The stock and other
assets were immediately contributed by UNHP to The Univision Network
Limited Partnership ("UNLP" or the "Network"), of which UNHP is the
sole general partner. Univision, Inc. then liquidated and distributed
its assets to UNLP (which also assumed all of the liabilities of
Univision, Inc., including tax liabilities attributable to its
liquidation). The acquisition was accounted for under the purchase
method of accounting. Accordingly, the assets acquired and
liabilities assumed have been recorded at the fair values at the date
of the acquisitions. In addition to current assets and liabilities,
the purchase price was allocated principally to property and equipment
of approximately $27,000,000 and intangible assets of approximately
$13,000,000.
As a result of the acquisitions, UNLP owns and operates a
Spanish-language television network which is affiliated with twenty
full-power television stations and eighteen low-power television
stations, including eleven full-power stations and six low-power
stations owned and operated by Univision Television Group, Inc.
("UTG"). UTG is ultimately beneficially owned by Perenchio, Televisa
and Venevision.
The businesses of UTG and the Network are under separate management
and ownership structures. Notwithstanding this separation, the
business operations of UTG and the Network remain substantially
dependent on one another. UTG is dependent on the Network for
programming and advertising sales support while UTG represents 71% of
the Network's total coverage of Hispanic households in the U.S.
Subject to certain special allocations, net losses of the Partnership
are first allocated to reduce partners' capital accounts to the amount
of unrecovered capital contributions, and thereafter to the General
Partners in equal proportions, and net income is first allocated to
offset any prior net losses and thereafter to the Partners in
accordance with their Ownership Percentage Interests. Various
provisions of the Partnership agreement govern the allocation of gains
and losses to the individual
15
<PAGE> 17
THE UNIVISION NETWORK HOLDING LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP) AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
partners for tax purposes. Upon dissolution of the Partnership, the
assets of the Partnership shall be distributed to the partners, after
payment of all debts and other obligations, first to reduce their
respective capital contributions, and thereafter, in accordance with
their respective Ownership Percentage Interests. Subject to obtaining
any necessary consents from lenders to the Partnership, the
Partnership is required to make sufficient cash distributions on a
quarterly basis to fund the partners' tax liabilities attributable to
their ownership interests in the Partnership.
UNHP holds a 99.99% general partner interest in UNLP. The remaining
limited partner interest is held by the Network Limited Partner, Inc.
which is owned by Perenchio, Televisa and Venevision. UNHP and UNLP
had no operations or transactions prior to the acquisitions described
above.
In June 1996, UNLP signed a letter of intent with Entravision, which
owns and operates seven of the Affiliated Stations, to make a $10
million investment in the form of a note and an option to acquire a
25% equity interest in Entravision.
2. UNAUDITED FINANCIAL STATEMENTS
Certain reclassifications have been made to the prior year financial
statements to conform with the current presentation.
3. SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITY
The Network has entered into two transponder agreements which qualify
as capital lease obligations. The first agreement, which is
effectively a nine-year lease, commenced January 1, 1995, resulting
in a total capitalized cost of $7,753,135. The second agreement, for
two additional transponders, commenced January 1996. Payments under
the second agreement will aggregate approximately $41,000,000 over the
15 year anticipated life of the transponders and a total capitalized
cost of approximately $24,000,000. UNLP's obligations under both
agreements are contingent on the successful operation of the
transponders. The two transponders covered by the second agreement
were successfully deployed in 1996.
4. THE OFFERING
In June 1996, UTG's parent filed a registration statement on Form S-1
with the Securities and Exchange Commission for the sale of up to
8,842,105 shares of Class A Common Stock. The net proceeds to UTG
from this offering are intended, along with the proceeds from a New
Bank Facility, to be used to refinance the existing Bank Facility, to
re-pay existing long- term debt, to fund capital expenditures and for
general corporate and working capital purposes.
Concurrent with the Offering, the Company intends to convert UCI
preferred stock and PTIH common and preferred stock outstanding into
UCI common stock.
16
<PAGE> 18
THE UNIVISION NETWORK HOLDING LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP) AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
UTG's parent intends to consummate the following transactions, among
others, concurrent with the offering:
a. The Network will make a distribution to its partners in the amount
of $60.0 million;
b. UTG's parent will acquire the Network from its partners in
exchange for 19,014.5 shares of Common Stock and $40.0 million in
cash;
c. UNLP will pay $15.0 million, together with interest, to Televisa,
representing full payment of outstanding principal of and accrued
interest on the note issued by UNLP on July 1, 1996, to Televisa
as payment for the acquisition of Galavision.
17
<PAGE> 19
UNIVISION TELEVISON GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following management's discussion and analysis describes the results of
operations of UTG and UNHP for the three months and six months ended June 30,
1996 as compared to the three months and six months ended June 30, 1995.
RESULTS OF OPERATIONS
UTG net revenues includes gross advertising revenues generated from the sale of
national and local spot advertising time plus an allocation of network gross
revenues, net of agency commissions. Network revenues are allocated to UTG
based on a formula set forth in each of its affiliation agreements. UTG's
allocated share of total Network gross revenues, net of agency commission, was
72% and 71% during 1995 and 1996, respectively. Based on the current
affiliation agreements, net advertising revenues are shared by UTG and the
Network, 62% to each station owned by UTG and 38% to the Network during 1995
and 1996. Also included in net revenues are other miscellaneous revenues.
Direct operating expenses consist of programming and news costs and general
operating costs.
UTG CONSOLIDATED
REVENUES. Net revenues for the 1996 second quarter of $52,229,000 increased
$4,497,000 or 9.4% from the corresponding 1995 period. The increase is due to
higher local and national spot net revenues of $5,578,000, primarily from Los
Angeles and Miami, with increases at all other stations except for New York and
San Antonio, and an increase in UTG's share of Network net revenues of
$1,448,000. These net increases were partially offset by the Network's share of
higher local and national net revenues of $2,256,000.
The six months net revenues of $91,420,000 increased $9,141,000 or 11.1% from
the corresponding 1995 period. The increase is due to higher local and
national spot net revenues of $12,092,000, primarily from Los Angeles and
Miami, with increases at all other stations except for New York, and an
increase in UTG's share of Network net revenues of $1,899,000. These net
increases were partially offset by the Network's share of higher local and
national net revenues of $4,732,000.
UTG's increase in gross advertising revenues during the six months ended June
30, 1996 resulted from a combination of increased prices for advertising spots
of approximately 26% offset in part by a decrease of 7% in the number of spots
being sold.
A major initiative has been implemented to improve the performance of the New
York station. In addition to improvements in the station's sales and research
organizations, a significant advertising and promotional campaign has been
implemented to increase the awareness among advertisers about the New York
Hispanic community and the advertisers' ability to reach that audience through
the New York station.
18
<PAGE> 20
UNIVISION TELEVISION GROUP, INC.
FORM 10-Q
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
EXPENSES. Direct expenses increased to $8,250,000 and $16,365,000 for the three
and six month periods ended June 30, 1996, an increase of $553,000 or 7.2% and
$1,164,000 or 7.7%, respectively, from the corresponding 1995 period. For both
periods the increase is due principally to increases in programming and
technical costs. As a percentage of net revenues, direct expenses decreased
from 16.1% in the second quarter of 1995 to 15.8% in the same quarter of 1996
and for the six months ended 1996, direct expenses decreased from 18.5% in 1995
to 17.9% in the same period of 1996.
Selling, general and administrative expenses increased to $18,142,000 and
$34,154,000 for the three and six month periods ended June 30, 1996, an
increase of $2,772,000 or 18.0% and $5,431,000 or 18.9%, respectively, from the
corresponding 1995 period. For both periods the increase is primarily due to
increased selling costs associated with higher sales, increases in corporate
sales support and increased research fees. As a percentage of net revenues,
selling, general and administrative expenses increased from 32.2% in the second
quarter of 1995 to 34.7% in the same quarter of 1996 and for the six months
ended 1996, selling general and administrative expenses increased from 34.9% in
1995 to 37.4% in the same period of 1996.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased to
$8,660,000 and $17,192,000 for the three and six month periods ended June 30,
1996, an increase of $281,000 or 3.4% and $655,000 or 4.0%, respectively, from
the corresponding 1995 period. For both periods the increase is due primarily
to increased capital expenditures. As a percentage of net revenues,
depreciation and amortization decreased from 17.6% in the second quarter of
1995 to 16.6% in the same quarter of 1996 and for the six months ended 1996,
depreciation and amortization decreased from 20.1% in 1995 to 18.8% in the same
period of 1996.
OPERATING INCOME. As a result of the factors described above, operating income
increased to $17,177,000 and $23,709,000 for the three and six month periods
ended June 30, 1996, an increase of $891,000 or 5.5% and $1,891,000 or 8.7%,
respectively, from the corresponding 1995 period. As a percentage of net
revenues, operating income decreased from 34.1% in the second quarter of 1995
to 32.9% in the same quarter of 1996 and for the six months ended 1996,
operating income decreased from 26.5% in 1995 to 25.9% in the same period of
1996.
INTEREST EXPENSE. Interest expense decreased to $8,117,000 and $16,216,000 for
the three and six month periods ended June 30, 1996, a decrease of $979,000 or
10.8% and $1,841,000 or 10.2%, respectively, from the corresponding 1995
period. This decrease was primarily a result of lower bank borrowings partially
offset by increased Sponsor Loan balances. As a percentage of net revenues,
interest expense decreased from 19.1% in the second quarter of 1995 to 15.5% in
the same quarter of 1996 and for the six months ended 1996, interest expense
decreased from 21.9% in 1995 to 17.7% in the same period of 1996.
EARLY EXTINGUISHMENT OF DEBT. During the quarter ended June 30, 1996, UTG
purchased at a premium $9,650,000 face amount of its 11 3/4% Senior
Subordinated Notes due 2001, resulting in an extraordinary loss of $898,000,
including the write-off of the related financing costs. During the six months
ended
19
<PAGE> 21
UNIVISION TELEVISION GROUP, INC.
FORM 10-Q
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
June 30, 1996, UTG purchased at a premium $12,650,000 face amount of its 11
3/4% Senior Subordinated Notes due 2001, resulting in an extraordinary loss of
$1,181,000, including the write-off of the related financing costs. The
related income tax benefits associated with these extraordinary losses were
$350,000 and $500,000, respectively.
NET INCOME. As a result of the above factors, UTG generated net income of
$7,386,000 in the second quarter of 1996 as compared to net income of
$6,030,000 in the same 1995 period. For the six months ended June 30, 1996,
UTG generated net income of $4,563,000 as compared to $1,441,000 in the same
1995 period. As a percentage of net revenues, net income increased from 12.6%
in the second quarter of 1995 to 14.1% in the same quarter of 1996 and for the
six months ended 1996, net income increased from 1.8% in 1995 to 5.0% in the
same period of 1996.
UNHP CONSOLIDATED
REVENUES. Net revenues for the 1996 second quarter of $45,953,000 increased
$5,451,000 or 13.5% from the corresponding 1995 period. This increase is due
primarily to increased Network advertising net revenues of $4,089,000, a higher
share of UTG's local and national spot net revenues of $2,256,000 as well as
decreased non-UTG station compensation of $518,000, partially offset by UTG's
share of higher Network sales of $1,448,000.
The six months net revenues of $79,436,000 increased $9,017,000 or 12.8% from
the corresponding 1995 period. The increase resulted from higher Network
advertising net revenues of $5,680,000 and the Network's higher share of UTG's
local and national spot net revenues of $4,732,000 that were partially offset
by UTG's share of higher Network sales of $1,899,000.
The Network's increase in gross advertising revenues during the six months
ended June 30, 1996 resulted from a combination of rate increases and increased
volume on previously lower demand dayparts as compared to 1995.
EXPENSES. Direct operating expenses increased to $22,764,000 and $41,005,000
for the three and six months ended June 30, 1996, an increase of $1,645,000 or
7.8% and $2,626,000 or 6.8%, respectively, from the corresponding 1995 period.
The second quarter and six month increases were due primarily to a higher
license fee payable to Televisa and Venevision under the Program License
Agreements of $1,559,000 and $2,422,000, respectively, based on higher combined
net time sales. As a percentage of net revenues, direct expenses decreased
from 52.1% in the second quarter of 1995 to 49.5% in the same quarter of 1996
and for the six months ended 1996, direct expenses decreased from 54.5% in 1995
to 51.6% in the same period of 1996.
Selling, general and administrative expenses increased to $11,972,000 and
$22,648,000 for the three and six months ended June 30, 1996, an increase of
$836,000 or 7.5% and $1,374,000 or 6.5%, respectively, from the corresponding
1995 period. The second quarter increase was due primarily to increased sales
force expense of $515,000 and higher management fees payable to the Owners of
$312,000. The six
20
<PAGE> 22
UNIVISION TELEVISION GROUP, INC.
FORM 10-Q
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
month increase was due primarily to a $1,045,000 increase in sales force
expense and a $484,000 increase in the management fee payable to the Owners,
offset partially by the timing of various expenditures for all other general
and administrative functions of $156,000. As a percentage of net revenues,
selling, general and administrative expenses decreased from 27.5% in the
second quarter of 1995 to 26% in the same quarter of 1996 and for the six
months ended 1996, selling, general and administrative expenses decreased from
30.2% in 1995 to 28.5% in the same period of 1996.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased to
$2,828,000 and $5,513,000 for the three and six months ended June 30, 1996, an
increase of $313,000 or 12.4% and $663,000 or 13.7%, respectively, from the
corresponding 1995 period. Both increases are due primarily to the addition of
two transponders capitalized in January 1996. As a percentage of net revenues,
depreciation and amortization, for the three and six months ended 1996,
remained the same at 6.2% and 6.9%, respectively, as compared to the same
periods in 1995.
OPERATING INCOME. As a result of the factors described above, operating
income increased to $8,389,000 and $10,270,000 for the three and six months
ended June 30, 1996, an increase of $2,657,000 or 46.4% and $4,354,000 or
73.6%, respectively, from the corresponding 1995 period. As a percentage of
net revenues, operating income increased from 14.2% in the second quarter of
1995 to 18.3% in the same quarter of 1996 and for the six months ended 1996,
operating income increased from 8.4% in 1995 to 12.9% in the same period of
1996.
INTEREST EXPENSE. Interest expense increased to $2,418,000 and $4,799,000 for
the three and six months ended June 30, 1996, an increase of $481,000 or 24.8%
and $948,000 or 24.6%, respectively, from the corresponding 1995 period. For
both periods, the increase was due primarily to interest incurred from the
addition of the two Network transponder leases. As a percentage of net
revenues, interest expense increased from 4.8% in the second quarter of 1995
to 5.3% in the same quarter of 1996 and for the six months ended 1996, interest
expense increased from 5.5% in 1995 to 6.0% in the same period of 1996.
NET INCOME. As a result of the above factors, UNHP generated net income of
$5,971,000 in the second quarter of 1996 as compared to net income of
$3,795,000 in the same 1995 period. For the six months ended June 30, 1996,
UNHP generated net income of $5,471,000 as compared to $2,065,000 in the same
1995 period. As a percentage of net revenues, net income increased from 9.4%
in the second quarter of 1995 to 13.0% in the same quarter of 1996 and for the
six months ended 1996, net income increased from 2.9% in 1995 to 6.9% in the
same period of 1996.
UTG AND UNHP LIQUIDITY AND CAPITAL RESOURCEs
The Combined Entities' primary source of cash flow is its broadcasting
operations. Funds for debt service, capital expenditures and operations
historically have been provided by income from operations and by borrowings.
21
<PAGE> 23
UNIVISION TELEVISION GROUP, INC.
FORM 10-Q
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
UTG's existing bank credit agreement with a syndicate of banks and other
lenders (the "Bank Facility") requires most excess cash flow, as defined, of
both UTG and UNHP to be used to fund principal and/or interest payments under
the Bank Facility. Financial covenants in the Bank Facility and other debt
instruments of UTG measure operating performance of the Combined Entities. UTG
and the Network share a cash management system under which all excess cash is
loaned daily on a subordinated basis from the Network to UTG and cash
shortfalls at the Network are funded by repayments or by subordinated loans
from UTG to the Network.
The following discussion of liquidity and capital resources of UTG and UNHP
reflects the cash management and debt service requirements described above.
For the six month periods ended June 30, 1996 and 1995, UTG's net cash provided
by operations totaled $10,915,000 and $11,909,000, respectively. The 1996
period benefited from net income of $4,563,000, non-cash charges for
intangibles relating to acquisitions of $15,904,000 and accreted interest on
Sponsor Loans of $4,642,000. These sources of funds were partially offset by
net transactions with UNHP of $11,702,000, due primarily to the revenue sharing
arrangement with UNHP, and reductions of accounts payable and accrued
liabilities of $7,210,000. The 1995 period benefited primarily from non-cash
charges for intangibles of $16,427,000, accretion of interest on Sponsor Loans
of $3,140,000 and net income of $1,441,000. These benefits were partially
offset by net payments for transaction with UNHP of $4,700,000, reductions of
accounts payable and accrued liabilities of $4,016,000 and reductions in
program rights obligations of $2,289,000.
For the six month periods ended June 30, 1996 and 1995, UNHP's net cash used in
operations totaled $10,869,000 and $10,992,000, respectively. The 1996 period
was negatively impacted by the payment of license fees of $23,834,000, the full
year 1995 management fee of $9,371,000 and the first quarter 1996 management
fee of $2,134,000, reductions of accounts payable and accrued liabilities of
$4,531,000, amortization of deferred advertising revenues of $9,603,000 and
accounts receivable of $13,330,000. These uses of funds were partially offset
by benefits from net transactions with UTG of $11,702,000, due primarily from
UNHP's revenue sharing agreement with UTG, the accrual of current period
license fees payable under the Program License Agreements and a current period
management fee payable to the Owners of $30,311,000, and net income of
$5,471,000. The 1995 period was negatively impacted by the payment of license
fees of $20,544,000 and the full year 1994 management fee of $7,203,000,
amortization of deferred advertising revenues of $12,658,000 and accounts
receivable of $4,839,000. These uses of funds were partially offset by
benefits from net transactions with UTG of $4,700,000, due primarily from
UNHP's revenue sharing agreement with UTG, the accrual of current period
license fees payable under the Program License Agreements and the current
period management fee payable to the Owners of $27,284,000.
UTG's existing Bank Facilities, which total $400 million, consist of a $70
million six-year revolving credit loan (the "Working Capital Facility"), a $180
million five-year amortizing term loan, a $30 million six-year term loan, a $20
million five and one-half year term loan (collectively the "Term Facility") and
a $100 million five and one-half year term loan available under a revolving
credit facility,
22
<PAGE> 24
UNIVISION TELEVISION GROUP, INC.
FORM 10-Q
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
which to date has not been borrowed against. The Bank Facilities require, among
other things, mandatory prepayments equal to 75% of excess cash flow (as
defined) of the Univision Group, in addition to net proceeds (as defined)
received by the Univision Group in certain situations from the sale or other
disposition of assets, to be applied to ratably reduce the Term Facility and
the availability under the Working Capital Facility. Any such mandatory
prepayments reduce the scheduled amortization of the Term Facility in inverse
order of maturity.
As of June 30, 1996, UTG and UNHP had long term debt, including current
maturities, of $253,725,000 and $91,264,000, respectively. At December 31,
1995 these balances were at $259,385,000 and $65,274,000, respectively. UTG's
decrease is due primarily to payments under the revolving credit loan and note
payable of $22,010,000 and the purchase of $12,650,000 face amount of the 11
3/4% Senior Subordinated Notes for $13,489,000. These payments were offset by
borrowings on the revolving credit loan of $29,000,000. The increase in UNHP's
debt is due to an increase in capitalized leases (see Note 3) and accrued
interest on its subordinated debt.
Capital expenditures net of dispositions of UTG totaled $6,183,000 and
$4,872,000, and of UNHP totaled $4,926,000 and $2,145,000 (excluding
capitalized transponder lease obligations) for the six month periods ended June
30, 1996 and 1995, respectively. UTG and UNHP anticipate that total capital
expenditures for 1996 will be approximately $27,000,000. In addition to normal
capital maintenance and several tower and antenna replacements, the Company is
also in the process of upgrading and relocating several of its television
station facilities. Capital spending in 1997 may approximate $20,000,000 to
$24,000,000 pending decisions on station relocations, while expenditures for
maintenance and replacement in 1998 and 1999 are expected to be approximately
$15,000,000 plus the impact of inflation each year.
UTG and UNHP expect earnings provided by operations, adjusted for non-cash
charges, to generate sufficient cash flows to satisfy debt service. Additional
sources of cash for UTG's debt service and capital expenditures of UTG and UNHP
will come from the Bank Facility and proceeds from the Sponsor Loans.
Financing activities to fund UTG's operation for the six months ended June 30,
1996 were primarily funded from proceeds of sponsor loans of $23,834,000 and
bank borrowings of $29,000,000, offset by net advances to the Network under the
cash management system of $16,784,000, payments of $22,010,000 on long-term
debt, repurchase of $12,650,000 face amount of the 11 3/4% Senior Subordinated
Notes for $13,489,000, and reduction of Sponsor Loans of $5,074,000 due to the
change of funding of cost sharing. The six months ended June 30, 1995 were
primarily funded from proceeds from sponsor loans of $20,544,000 and additional
bank borrowings of $30,000,000, offset by net advances to the Network under the
cash management system of $13,720,000 and repayments of long-term debt of
$44,039,000. Financing activities to fund UNHP's operations for the six months
ended June 30, 1996 and 1995, consisted of principal payments of capital lease
obligation of $997,000 and $593,000, respectively.
23
<PAGE> 25
UNIVISION TELEVISION GROUP, INC.
FORM 10-Q
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Management Committee of the Network from time to time considers which
programs are to be produced under the Program Cost Sharing Agreement. Should
it be determined that programs previously produced under the Program Cost
Sharing Agreement will no longer be produced under such agreement, and the
Network determines to continue producing such programs absent a new arrangement
with Televisa and Venevision, the Network would bear a greater proportion of
the costs and will retain worldwide rights to such programs. Furthermore, for
the one-year period commencing January 1, 1996, the Network, Televisa and
Venevision have agreed that in lieu of cash payments under the Program Cost
Sharing Agreement, UTG will instead receive payment in the form of Sponsor Loan
Notes having a principal amount equal to the costs to be funded by Televisa and
Venevision under the Program Cost Sharing Agreement. As a result of this form
of payment, the Network was not reimbursed in cash for these programming
expenditures of approximately $9,700,000 during the first six months of 1996.
For the balance of 1996, the Network will similarly not be reimbursed for such
programming costs of approximately $5,000,000 per quarter. Consequently, these
programming costs will be funded through the operations of UTG and UNLP.
The parent of UTG has filed a registration statement with the Securities and
Exchange Commission for an initial public offering of its Class A Common Stock.
If the offering occurs, UTG will obtain funds from its parent and from a New
Bank Facility which is expected to be entered into concurrently with the
offering, to pay off all amounts owing under its existing Bank Facility and
terminate such facility, defease its 11 3/4% Senior Subordinated Notes, pay
all intercompany debt owed to UNLP and repay Sponsor Loan Notes plus accrued
interest to Televisa and Venevision.
The Company investigates from time to time, and is currently investigating, the
acquisition of Spanish-language television stations in various communities with
relatively large Hispanic populations. No agreement has been reached for the
acquisition of any such stations. The Company also expects to explore other
media acquisition opportunities to complement and capitalize on the Company's
existing business and management. If its parents public offering proceeds, the
purchase price for any such acquisition may be paid with (i) cash derived from
operating cash flow, proceeds available under the New Bank Facility or proceeds
from future debt or equity offerings, or (ii) equity or debt securities of UTG,
or (iii) any combination thereof.
SEASONALITY
The advertising revenues of the Univision Group vary over the calendar year.
Historically, approximately 30% of total advertising revenues have been
generated in the fourth quarter and 20% in the first quarter with the remainder
approximately equally split between the second and third quarters. Because of
the relatively fixed nature of the costs of the Univision Group's business,
seasonal variations in operating income are more pronounced than those of
revenues.
24
<PAGE> 26
UNIVISION TELEVISION GROUP, INC.
PART II. OTHER INFORMATION
ITEM 1. None
ITEM 2. None
ITEM 3. None
ITEM 4. None
ITEM 5. None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K
The registrant did not file any reports on Form 8-K during the
quarter.
25
<PAGE> 27
UNIVISION TELEVISION GROUP, INC.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
UNIVISION TELEVISION GROUP, INC.
(Registrant)
By /s/ George W. Blank
---------------------------
August 12, 1996 George W. Blank
Los Angeles, California Executive Vice President
and Chief Financial Officer
26
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNIVISION
TELEVISION GROUP, INC.'S STATEMENTS OF EARNINGS AND BALANCE SHEETS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 14,156
<SECURITIES> 0
<RECEIVABLES> 41,058
<ALLOWANCES> 4,672
<INVENTORY> 0
<CURRENT-ASSETS> 53,161
<PP&E> 45,622
<DEPRECIATION> 16,918
<TOTAL-ASSETS> 533,095
<CURRENT-LIABILITIES> 114,810
<BONDS> 348,011
0
0
<COMMON> 0
<OTHER-SE> 68,442
<TOTAL-LIABILITY-AND-EQUITY> 533,095
<SALES> 91,420
<TOTAL-REVENUES> 91,420
<CGS> 16,365
<TOTAL-COSTS> 16,365
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,132
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<EXTRAORDINARY> (681)
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</TABLE>
