<PAGE> 1
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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 QUARTERLY PERIOD ENDED
JUNE 30, 1996
COMMISSION FILE NUMBER 0-23592
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NEW WORLD COMMUNICATIONS GROUP INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 13-3743606
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3200 WINDY HILL ROAD
SUITE 1100 - WEST
ATLANTA, GEORGIA 30339
(Address of principal executive offices)
(770) 955-0045
(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 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
APPLICABLE ONLY TO CORPORATE ISSUERS:
AS OF AUGUST 8, 1996 THE REGISTRANT HAD 29,316,620 SHARES OF CLASS A
COMMON STOCK, PAR VALUE $0.01 PER SHARE, 39,696,261 SHARES OF CLASS B COMMON
STOCK, PAR VALUE $0.01 PER SHARE (INCLUDING CLASS A WARRANTS, $0.01 EXERCISE
PRICE), NO SHARES OF VOTING PREFERRED STOCK, PAR VALUE $0.01 PER SHARE AND NO
CLASS A WARRANTS, SERIES 2 ("NEW $0.01 WARRANTS") OUTSTANDING.
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<PAGE> 2
NEW WORLD COMMUNICATIONS GROUP INCORPORATED
INDEX
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Item 1. Financial Statements:
Condensed Consolidated Balance Sheet
June 30, 1996 and December 31, 1995 . . . . . . . . . . . . . . . . . I-1
Condensed Consolidated Statement of Operations
Three Months Ended June 30, 1996 and 1995 . . . . . . . . . . . . . . I-2
Condensed Consolidated Statement of Operations
Six Months Ended June 30, 1996 and 1995 . . . . . . . . . . . . . . . I-3
Consolidated Statement of Stockholders' Equity . . . . . . . . . . . . . I-4
Condensed Consolidated Statement of Cash Flows
Six Months Ended June 30, 1996 and 1995 . . . . . . . . . . . . . . . I-5
Notes to Condensed Consolidated Financial Statements . . . . . . . . . . . I-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . I-10
</TABLE>
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PART II. OTHER INFORMATION
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . . . . . . . . II-2
Item 4. Submission of Matters to a Vote of Security-Holders . . . . . . . . . . . II-2
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-3
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . II-3
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-4
</TABLE>
<PAGE> 4
NEW WORLD COMMUNICATIONS GROUP INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
------------ ---------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 59,376 $ 75,361
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180,187 175,210
Television program contract rights . . . . . . . . . . . . . . . . . . . 11,599 23,735
Film costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81,415 83,761
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,545 3,705
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . 4,410 4,410
------------------ -----------------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . 341,532 366,182
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . 212,808 213,059
Long-term receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,292 22,819
Television program contract rights . . . . . . . . . . . . . . . . . . . . . 5,132 5,419
Film costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,996 35,393
Intangible assets and excess reorganization value . . . . . . . . . . . . . . 1,499,091 1,522,337
Equity investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,106 36,549
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,203 30,864
Assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 16,727
------------------ -----------------
$ 2,178,160 $ 2,249,349
================== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . $ 77,981 $ 82,542
Television program contracts payable . . . . . . . . . . . . . . . . . . 14,375 26,872
Deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,364 35,532
Participations and residuals payable . . . . . . . . . . . . . . . . . . 54,178 43,434
Current portion of long-term debt and notes payable . . . . . . . . . . 34,092 32,069
------------------ -----------------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . 200,990 220,449
Non-current television program contract rights . . . . . . . . . . . . . . . 6,611 7,448
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 952,877 976,392
Other non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . 23,702 26,257
Participations and residuals payable . . . . . . . . . . . . . . . . . . . . 13,303 23,908
Deferred tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,904 77,510
Series A preferred stock, $.01 par value, 1,200,000 shares authorized,
issued and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . 59,873 59,867
Series C preferred stock, $.01 par value, 25,000 shares authorized,
issued and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . 245,825 245,444
Series E preferred stock, $.01 par value, 300,000 shares authorized,
issued and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . 30,000 30,000
Commitments and contingencies
Stockholders' equity:
Series B preferred stock, $.01 par value, 250,000 shares
authorized, issued and outstanding . . . . . . . . . . . . . . . . . 224,850 224,850
Class A common stock, $.01 par value, 400,000,000 shares authorized,
28,986,326 and 28,056,860 issued and outstanding . . . . . . . . . . 290 281
Class B common stock, $.01 par value, 400,000,000 shares
authorized, 39,927,523 and 40,548,431 issued and outstanding . . . . 399 405
Common stock warrants . . . . . . . . . . . . . . . . . . . . . . . . . 10,500 10,500
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . 764,103 761,329
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . (430,067) (415,291)
------------------ -----------------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . 570,075 582,074
------------------ -----------------
$ 2,178,160 $ 2,249,349
================== =================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
I-1
<PAGE> 5
NEW WORLD COMMUNICATIONS GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
------------------------------------------------
1996 1995
--------------------- -------------------------
<S> <C> <C>
Net revenue
Broadcasting . . . . . . . . . . . . . . . . . . . . . . . . $ 115,565 $ 110,413
Television production and distribution . . . . . . . . . . . 58,040 57,135
--------------------- ---------------------
173,605 167,548
Operating expenses
Direct costs-
Broadcasting . . . . . . . . . . . . . . . . . . . . . . 44,042 44,194
Television production and distribution . . . . . . . . . 46,151 46,869
Selling, general and administrative-
Broadcasting . . . . . . . . . . . . . . . . . . . . . . 21,592 20,694
Television production and distribution . . . . . . . . . 11,118 9,394
Depreciation and amortization of intangible assets . . . . . . . 19,319 18,792
Corporate expenses . . . . . . . . . . . . . . . . . . . . . . . 4,377 4,789
--------------------- ---------------------
Income from operations . . . . . . . . . . . . . . . . . . . 27,006 22,816
--------------------- ---------------------
Other income (expense):
Interest expense . . . . . . . . . . . . . . . . . . . . . . (22,944) (23,953)
Interest and investment income and other 860 1,285
--------------------- ---------------------
Other income (expense), net . . . . . . . . . . . . . . (22,084) (22,668)
--------------------- ---------------------
Income before income taxes . . . . . . . . . . . . . . . . . . . 4,922 148
Provision for income taxes . . . . . . . . . . . . . . . . . . . (3,442) (2,759)
Equity in earnings of affiliates . . . . . . . . . . . . . . . . 1,549 (151)
--------------------- ---------------------
Net income (loss) . . . . . . . . . . . . . . . . . . . . . 3,029 (2,762)
Preferred stock dividends and accretion . . . . . . . . . . . . . (1,679) (1,102)
--------------------- ---------------------
Net income (loss) to common shareholders $ 1,350 $ (3,864)
===================== =====================
Net income (loss) per common and common
equivalent share . . . . . . . . . . . . . . . . . . . . . . $ .02 $ (0.06)
===================== =====================
Weighted average common and common
equivalent shares outstanding . . . . . . . . . . . . . 88,078 68,398
===================== =====================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
I-2
<PAGE> 6
NEW WORLD COMMUNICATIONS GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-----------------------------------------------
1996 1995
--------------------- -----------------------
<S> <C> <C>
Net revenue
Broadcasting . . . . . . . . . . . . . . . . . . . . . . . . $ 208,142 $ 177,519
Television production and distribution . . . . . . . . . . . 127,332 104,893
--------------------- ---------------------
335,474 282,412
Operating expenses
Direct costs-
Broadcasting . . . . . . . . . . . . . . . . . . . . . . 87,561 82,339
Television production and distribution . . . . . . . . . 104,661 83,752
Selling, general and administrative-
Broadcasting . . . . . . . . . . . . . . . . . . . . . . 43,496 36,803
Television production and distribution . . . . . . . . . 21,286 18,347
Depreciation and amortization of intangible assets . . . . . . . 38,381 31,544
Corporate expenses . . . . . . . . . . . . . . . . . . . . . . . 10,251 8,865
--------------------- ---------------------
Income from operations . . . . . . . . . . . . . . . . . . . 29,838 20,762
--------------------- ---------------------
Other income (expense):
Interest expense . . . . . . . . . . . . . . . . . . . . . . (45,912) (40,838)
Gain on sale of WSBK-TV . . . . . . . . . . . . . . . . . . - 40,471
Interest and investment income and other . . . . . . . . . . 2,091 5,492
--------------------- ---------------------
Other income (expense), net . . . . . . . . . . . . (43,821) 5,125
--------------------- ---------------------
Income (loss) before income taxes . . . . . . . . . . . . . . . . (13,983) 25,887
Benefit (provision) for income taxes . . . . . . . . . . . . . . 1,159 (35,838)
Equity in earnings of affiliates . . . . . . . . . . . . . . . . 1,397 (303)
--------------------- ---------------------
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . (11,427) (10,254)
Preferred stock dividends and accretion . . . . . . . . . . . . . (3,349) (2,202)
--------------------- ---------------------
Loss to common shareholders . . . . . . . . . . . . . . . . $ (14,776) $ (12,456)
===================== =====================
Net loss per common and common equivalent share . . . . . . . . . $ (.22) $ (0.18)
===================== =====================
Weighted average common and common
equivalent shares outstanding . . . . . . . . . . . . . 68,678 68,366
===================== =====================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
I-3
<PAGE> 7
NEW WORLD COMMUNICATIONS GROUP INCORPORATED
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SERIES B CLASS A CLASS B COMMON ADDITIONAL TOTAL
PREFERRED COMMON COMMON STOCK PAID-IN ACCUMULATED STOCKHOLDERS'
STOCK STOCK STOCK WARRANTS CAPITAL DEFICIT EQUITY
---------- ----------- ----------- ----------- ---------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 $ 224,850 $ 281 $ 405 $ 10,500 $ 761,329 $ (415,291) $ 582,074
Net loss . . . . . . . . . . . - - - - - (11,427) (11,427)
Preferred stock dividends and
accretion . . . . . . . . . - - - - - (3,349) (3,349)
Interest on note receivable
from stockholder . . . . . . - - - - (232) - (232)
Exercise of employee stock
options and $8.47 warrants . - 3 - 3,006 - 3,009
Conversion of Class B common
stock into Class A common
stock . . . . . . . . . . . - 6 (6) - - - -
---------- ----------- ----------- ---------- ---------- ------------- --------------
Balance at June 30, 1996 . . . $ 224,850 $ 290 $ 399 $ 10,500 $ 764,103 $ (430,067) $ 570,075
========== =========== =========== ========== ========== ============== ==============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
I-4
<PAGE> 8
NEW WORLD COMMUNICATIONS GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------------------------------
1996 1995
------------------- ---------------------
<S> <C> <C>
Cash flow from operating activities:
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (11,427) $ (10,254)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Gain on sale of WSBK-TV. . . . . . . . . . . . . . . . . . . . . . . . - (40,471)
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,606) 26,700
Equity in (income) loss of affiliates. . . . . . . . . . . . . . . . . (1,397) 303
Depreciation and amortization of intangible assets . . . . . . . . . . 38,381 31,544
Television program contract rights amortization
over (under) payments . . . . . . . . . . . . . . . . . . . . . . . (913) 2,927
Film cost amortization over additions. . . . . . . . . . . . . . . . . 1,743 11,381
Noncash interest expense, compensation and foreign exchange. . . . . . 1,000 1,541
Changes in assets and liabilities, net of acquisitions and
dispositions:
Receivables . . . . . . . . . . . . . . . . . . . . . . . 1,181 (20,320)
Prepaid expenses and other assets . . . . . . . . . . . . (874) (2,319)
Current liabilities . . . . . . . . . . . . . . . . . . . (20,026) (11,713)
Other noncurrent liabilities . . . . . . . . . . . . . . . (2,619) (203)
-------------------- --------------------
Total adjustments . . . . . . . . . . . . . . . 13,870 (630)
-------------------- --------------------
Net cash provided by (used in) operating activities . . . . . . . . . . 2,443 (10,884)
Cash flow from investing activities:
Capital expenditures and equity investments . . . . . . . . . . . . . . (14,055) (25,941)
Broadcast station acquisitions, net of cash acquired . . . . . . . . . . - (360,084)
Proceeds from sale of broadcast stations . . . . . . . . . . . . . . . . - 207,500
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345 33
-------------------- --------------------
Net cash used in investing activities . . . . . . . . . . . . . . . . . (13,710) (178,492)
Cash flow from financing activities:
Issuance of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 476,000
Preferred stock dividends paid . . . . . . . . . . . . . . . . . . . . . (2,962) (1,914)
Repayment of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,765) (398,104)
Proceeds from exercise of stock options and warrants . . . . . . . . . . 3,009 992
-------------------- --------------------
Net cash provided by (used in) financing activities . . . . . . . . . . (4,718) 76,974
-------------------- --------------------
Net decrease in cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15,985) (112,402)
Cash balance, beginning of period . . . . . . . . . . . . . . . . . . . . . . 75,361 155,699
-------------------- --------------------
Cash balance, end of period . . . . . . . . . . . . . . . . . . . . . . . . . $ 59,376 $ 43,297
==================== ====================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
I-5
<PAGE> 9
NEW WORLD COMMUNICATIONS GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
(CONTINUED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------------------------------
1996 1995
--------------------- --------------------
<S> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid during the period for interest . . . . . . . . . . . . . . . . $ 46,432 $ 37,249
==================== ====================
Supplemental schedule of noncash investing and financing activities:
Purchase of television program contract rights . . . . . . . . . . . . . $ 5,530 $ 2,084
==================== ====================
Additions to film costs . . . . . . . . . . . . . . . . . . . . . . . . $ 62,145 $ 27,737
=================== ====================
Argyle stations purchase:
Fair value of assets acquired . . . . . . . . . . . . . . . . . . . . . $ 778,527
Purchase option applied to purchase price . . . . . . . . . . . . . . . (100,000)
Cash paid, net of cash received . . . . . . . . . . . . . . . . . . . . (360,084)
--------------------
Liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . $ 318,443
====================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
I-6
<PAGE> 10
NEW WORLD COMMUNICATIONS GROUP INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
(unaudited)
1. DESCRIPTION OF THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES
New World Communications Group Incorporated ("NWCG" or the "Company")
is a vertically integrated entertainment company which operates,
through wholly-owned subsidiaries, twelve broadcast television
stations, television production operations, filmed entertainment
libraries, and filmed entertainment distribution businesses.
INTERIM REPORTING
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
and the rules and regulations of the Securities and Exchange
Commission. In the opinion of management the statements reflect all
adjustments, which are of a normal recurring nature, necessary to
present fairly the Company's financial position, results of operations
and cash flows for the unaudited interim periods presented. Results
for the interim periods presented are not necessarily indicative of
the results which might be expected for the entire year. The
unaudited condensed consolidated financial statements should be read
in conjunction with the consolidated financial statements for the year
ended December 31, 1995. Certain prior period amounts have been
reclassified to conform to current presentation.
2. PROPOSED MERGER WITH NEWS CORP.
The Company, NWCG (Parent) Holdings Corporation, a Delaware
corporation and a subsidiary of Andrews Group Incorporated ("NWCGP"),
NWCG Holdings Corporation, a Delaware corporation and a subsidiary of
NWCGP ("Holdings"), and The News Corporation Limited, a South
Australia corporation ("News Corp."), entered into a binding
Memorandum of Understanding, dated as of July 17, 1996 (the
"Agreement") pursuant to which (a) a subsidiary of News Corp. will
merge with and into the Company and the Company will become a
subsidiary of News Corp. (the "Merger"), and each outstanding share of
common stock of the Company (other than shares held by News Corp.)
will be converted into the right to receive 1.45 American Depository
Receipts ("ADRs") of News Corp., each representing four Preferred
Limited Voting Ordinary Shares of News Corp. (b) News Corp. will
purchase from NWCGP (i) all of the shares of capital stock of the
Company owned by NWCGP and (ii) all of the outstanding stock of
Holdings for 1.45 ADRs per share of common stock of the Company owned
in the aggregate by NWCGP and Holdings, reduced by the amount of
certain indebtedness of Holdings, (c) News Corp.
I-7
<PAGE> 11
NEW WORLD COMMUNICATIONS GROUP INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
(unaudited)
will purchase from an affiliate of NWCGP certain real estate
consisting of an office building that serves as the Company's
headquarters in Los Angeles, California, and (d) News Corp. will
assume all of the obligations of an affiliate of NWCGP under certain
promissory notes issued in connection with the acquisition of NW
Entertainment. In addition, NWCGP has agreed to vote, or cause to be
voted, all of the shares of capital stock of the Company beneficially
owned by it or its subsidiaries in favor of the Merger and, if
applicable, the other transactions contemplated by the Agreement.
The Merger and the other transactions are conditioned on one another
and the Merger is subject to certain other conditions, including
regulatory approvals and the approval of the shareholders of the
Company. There can be no assurance that all of the conditions to the
consummation of the Merger will be satisfied or that, as a condition
to the grant of any approvals by government agencies, changes will not
be required to the terms of the Agreement. No effects of the proposed
merger with News Corp. are reflected in the accompanying unaudited
condensed consolidated financial statements.
3. ACQUISITIONS, DISPOSITIONS AND PRO FORMA FINANCIAL INFORMATION
WSBK-TV
In March 1995 the Company sold its investment in WSBK-TV (the "Boston
Station") for gross proceeds of $107.5 million. The Company repaid
$19.5 million of the Bank Credit Agreement Loans in March 1995 and
$77.3 million of the Step-Up Notes in April 1995 from the net proceeds
of the Boston Station sale.
ARGYLE STATIONS
The Company purchased certain debt and equity securities of Argyle
Television Holding Inc. ("Argyle") for total consideration of
approximately $750.4 million, including the $100 million in cash paid
for an option in 1994 and assumption of debt of approximately $283.6
million. Argyle controlled four VHF television stations, KDFW- TV
(Dallas, Texas), KTBC-TV (Austin, Texas), KTVI-TV (St. Louis,
Missouri) and WVTM-TV (Birmingham, Alabama). For financial reporting
purposes, the acquisition occurred on March 31, 1995. FCC approval
for change in control of the television stations occurred on April 14,
1995. The acquisition has been accounted for as a purchase.
I-8
<PAGE> 12
NEW WORLD COMMUNICATIONS GROUP INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
(unaudited)
CANNELL ENTERTAINMENT
In July 1995 the Company purchased Cannell Entertainment Inc. for
Series E Cumulative Convertible Redeemable Preferred Stock ("Series E
Preferred Stock") valued at approximately $30 million and certain
other consideration. The acquisition has been accounted for as a
purchase.
PRO FORMA FINANCIAL INFORMATION
The following condensed pro forma financial information gives effect
to, as of January 1, 1995, the purchase of the four Argyle stations,
the sale of the Boston Station, borrowings necessary to fund the
acquisition, repayment of a portion of NW Television's debt and the
issuance of preferred stock. The pro forma financial information does
not necessarily reflect the future results or the results that would
have occurred had these transactions actually occurred on January 1,
1995 (in thousands, except per share).
<TABLE>
<CAPTION>
Pro Forma for the
Six Months Ended
June 30, 1995
----------------------
<S> <C>
Net revenue $ 306,299
Net loss $ (12,059)
===================
Net loss per common and common equivalent share $ (.22)
===================
</TABLE>
PENDING DISPOSITION
In May 1996 the Company entered into an agreement to sell
substantially all of the assets of KNSD-TV (the "San Diego Station")
and WVTM-TV (the "Birmingham Station") to National Broadcasting
Company, Inc. ("NBC") for $425 million, subject to certain
adjustments. The transaction is subject to various closing
conditions, including regulatory approval.
I-9
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Company operates broadcast television stations, a television
production company and filmed entertainment distribution businesses.
The following discussion and analysis of the financial condition and
results of operations of the Company should be read in conjunction with the
accompanying unaudited condensed consolidated financial statements and related
notes of the Company and its annual report for the year ended December 31,
1995. No effects of the proposed merger with News Corp. are reflected in the
accompanying unaudited condensed consolidated financial statements (Note 2).
RESULTS OF OPERATIONS
Three months ended June 30, 1996 Compared to 1995. Net revenue
increased $6.1 million or 3.6% in 1996 over 1995. The increase in broadcasting
revenue of $5.2 million is due primarily to political advertising and the
recovery of a portion of the market share enjoyed prior to the Fox conversion.
The Company had expected the conversion to Fox to result in an initial decline
in revenues. Production and distribution revenue increased $.9 million or 1.6%
primarily due to increases in network and cable revenues.
Operating expenses, excluding depreciation, amortization and corporate
expenses, increased $1.8 million in 1996. Television broadcasting expense
increased $.8 million due to higher costs to support the increase in local
programming associated with the Company's conversion of certain broadcast
stations to the Fox Network offset by lower programming contract costs.
Production and distribution operating expenses increased $1.0 million due
primarily to amortization of production costs associated with increased
production activity.
Interest expense decreased $1.0 million as a result of the scheduled
repayment of certain of NW Television's debt and lower interest rates.
Interest and investment income and other decreased $.4 million in 1996
primarily due to lower cash and short-term investment balances.
Six months ended June 30, 1996 Compared to 1995. Net revenue
increased $53.1 million or 18.8% in 1996 over 1995. The increase in
broadcasting revenue of $30.6 million reflects an increase of $25.1 million for
the four stations acquired on March 31, 1995 from Argyle Television Holding,
Inc. ("Argyle") and an increase of $11.2 million for the eight original
stations owned for both periods ("Eight Stations"), offset by a decrease of
$5.7 million reflecting the sale of WSBK-TV (Boston) in March of 1995. On a
same station basis for both periods, net revenue increased $6.7 million due
primarily to political advertising and the recovery of a portion of the market
share enjoyed prior to the Fox conversion. The Company had expected the
conversion to Fox to result in an initial decline in revenues. Production and
distribution revenue increased $22.5 million or 21.4% primarily due to
increases in network and cable revenues, reflecting substantially increased
production activity.
I-10
<PAGE> 14
Operating expenses, excluding depreciation, amortization and corporate
expenses, increased $35.8 million in 1996. The television broadcasting expense
increase of $11.9 million includes $20.2 million from the Argyle stations,
offset by a decrease of $2.1 million for the Eight Stations and by a decrease
of $6.2 million reflecting the sale of WSBK-TV (Boston) in March of 1995. On a
same station basis for both periods, operating expenses increased $1.6 million
due to higher costs to support the increase in local programming associated
with the Company's conversion of certain broadcast stations to the Fox Network
offset by lower programming contract costs. Production and distribution
operating expenses increased $23.8 million due primarily to amortization of
production costs associated with increased production activity.
Depreciation and amortization of intangible assets increased $6.8
million in 1996 due primarily to the acquisition of the Argyle stations.
Corporate expenses increased $1.4 million in 1996 principally due to increased
personnel and salaries.
Interest expense increased $5.1 million as a result of higher debt
balances for the acquisition of the broadcast television stations and the
Entertainment Line of Credit used primarily to fund the increased production
activity. Interest and investment income and other decreased $3.4 million in
1996 primarily due to lower cash and short-term investment balances.
The income tax expense in 1995 resulted primarily from the recognition
of income taxes on the sale of the Boston Station. The liability associated
with these taxes was offset by utilization of pre-Plan Effective Date net
operating losses. The utilization was reflected as a reduction of excess
reorganization value.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1996, the Company has total outstanding debt of $987.0
million. The Company has limited additional borrowing capacity under its
borrowing facilities. Significant expansion of the Company's broadcasting or
production segments will require additional funding not currently available to
the Company.
The Company plans to reduce certain of its debt with the proceeds from
the pending sales of the San Diego and Birmingham stations to NBC. The gross
proceeds from the sale of the San Diego Station of $225 million, subject to
certain adjustments, will be used to pay off the Bank Credit Agreement Loans
and to offer to repurchase all of the outstanding Step-Up Notes and a portion
of the 11% Notes. There is no guarantee that the offers made to repurchase the
Step-Up Notes and the 11% Notes will be accepted by all of the holders; any
remaining net proceeds will be available for use by the Company as permitted by
its various debt instruments. A portion of the gross proceeds from the sale of
the Birmingham Station of $200 million, subject to certain adjustments, will be
used to reduce the Acquisition Credit Agreement balance.
I-11
<PAGE> 15
The Company currently anticipates that any other necessary financing
may be obtained through restructuring or refinancing outstanding capitalization
or possibly through additional equity or debt financings or additional bank
credit arrangements. Should such additional sources of financing be needed to
fund acquisitions or operations and not be obtainable, the Company's liquidity
would be severely adversely affected. There can be no assurance that any of
such actions could be effected on satisfactory terms, that they would enable
the Company to continue to satisfy the Company's capital requirements or that
they would be permitted by the terms of existing or future debt agreements.
The Merger will result in a change of control under certain of the
Company's debt agreements, which will result in an event of default thereunder
or give the holders of such debt the right to require the Company to repurchase
such indebtedness. No effect of a change in control is reflected in the
accompanying unaudited condensed consolidated financial statements.
The Company's capital budget for 1996 is approximately $30 million,
primarily for the broadcasting segment. In connection with the broadcast
stations' change in affiliation to the Fox Network, the broadcasting segment
provides more locally-produced programming which requires additional capital
expenditures and operating expenses.
I-12
<PAGE> 16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
See "Item 3. Legal Proceedings" of the Company's Form 10-K for the
year ended December 31, 1995 for a discussion of the action, Steven Cooperman,
On Behalf of Himself and Derivatively on Behalf of SCI Television, Inc., a
Delaware corporation (or its successor corporation, SCI Parent Corporation to
be re-named New World Communications Group, Inc.) v. Ronald O. Perelman, et
al., and SCI Television, Inc., a Delaware corporation (or its successor
corporation, SCI Parent Corporation to be re-named New World Communications
Group, Inc.), Case No. BC100359 (Superior Court of the State of California,
County of Los Angeles).
In July and August 1996, Joseph Gorga, Brian Barry and Anthony
Inguaggiato commenced separate actions on behalf of themselves and,
purportedly, all other similarly situated shareholders of the Company other
than the defendants against the Company, its directors, News Corp. and Fox
Television Stations, Inc., asserting, among other things, breaches of fiduciary
duty, unjust enrichment and abuse of control in connection with the
transactions contemplated by the Merger and the Agreement with News Corp.
These actions, pending in the Delaware Court of Chancery, have been or will be
consolidated under the caption In re New World Communications Group
Incorporated Shareholders Litigation, C.A. No. 15110. The consolidated
actions seek equitable relief and damages, including an injunction against the
Merger. The Company believes that the consolidated actions are entirely
without merit and intends to contest them vigorously.
The Company and its subsidiaries are defendants in a number of other
lawsuits which have arisen in the normal course of business. Management
believes that the ultimate resolution of this litigation will not have a
material adverse effect upon the Company or its subsidiaries.
Item 2. Changes in Securities.
Not applicable.
II-1
<PAGE> 17
Item 3. Defaults Upon Senior Securities.
(a) Not applicable.
(b) Not applicable.
Item 4. Submission of Matters to a Vote of Security-Holders.
At the Company's 1996 annual meeting of stockholders, held on May 22,
1996, an aggregate 4,218,666 shares of Class A Common Stock and 37,193,401
shares of Class B Common Stock were present in person or by proxy. Votes cast
for, against, and abstentions for the matters submitted to a vote of
security-holders were as follows:
(i) Election of Directors
<TABLE>
<CAPTION>
For Withheld
--- --------
<S> <C> <C>
Ronald Perelman 376,013,572 2,910
William Bevins 376,014,872 1,610
Arthur Bilger 376,014,872 1,610
David Dinkins 376,013,672 2,810
Irwin Engelman 376,014,472 2,010
Meyer Feldberg 376,014,347 2,010
Howard Gittis 376,014,872 1,610
Lee Iacocca 376,012,952 3,530
Howard Marks 376,014,872 1,610
David Ramon 376,014,872 1,610
James Robinson III 376,014,472 2,010
Marc Rowan 376,014,872 1,610
</TABLE>
(ii) Ratification of selection of Ernst & Young LLP as the
Company's independent auditors for fiscal year 1996
For: 376,013,882
Against: 940
Abstentions: 900
II-2
<PAGE> 18
(iii) Approval of the adoption of the Company's 1996 Stock
Option Plan
For: 372,984,242
Against: 284,170
Abstentions: 11,485
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
10.1 Third Amendment, dated as of June 29, 1996, to the
Credit Agreement, dated as of September 29, 1994, by
and among NW Acquisition, the financial institutions
from time to time parties thereto, the Co-Agents
named therein, the Managing Agents named therein, The
Chase Manhattan Bank (as successor by merger to the
Chase Manhattan Bank, N.A.), as Documentation Agent,
and the Chase Manhattan Bank (formerly named Chemical
Bank), as Administrative Agent.
11 Statement re: computation of per share earnings
27 Financial Data Schedule (for SEC use only).
(b) Reports filed on Form 8-K:
May 22, 1996 (Items 5 and 7).
July 17, 1996 (Items 1 and 7).
II-3
<PAGE> 19
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the Company has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
NEW WORLD COMMUNICATIONS GROUP INCORPORATED
(Registrant)
By: \s\Joseph P. Page
-------------------------------
Joseph P. Page
Executive Vice President and
Chief Financial Officer
Dated: August 12, 1996
II-4
<PAGE> 20
EXHIBIT INDEX
Exhibit No. Description
10.1 Third Amendment, dated as of June 29, 1996, to the
Credit Agreement, dated as of September 29, 1994, by
and among NW Acquisition, the financial institutions
from time to time parties thereto, the Co-Agents
named therein, the Managing Agents named therein, The
Chase Manhattan Bank (as successor by merger to the
Chase Manhattan Bank, N.A.), as Documentation Agent,
and the Chase Manhattan Bank (formerly named Chemical
Bank), as Administrative Agent.
11 Statement re: computation of per share earnings.
27 Financial Data Schedule (for SEC use only).
<PAGE> 1
EXHIBIT 10.1
THIRD AMENDMENT
THIRD AMENDMENT, dated as of June 29, 1996 (this "Amendment"),
to the Credit Agreement, dated as of September 29, 1994 (as amended,
supplemented or otherwise modified, the "Credit Agreement"), among NWC
Acquisition Corporation (the "Borrower"), the financial institutions parties
thereto (the "Lenders"), the Co-Agents named therein, the Managing Agents named
therein, The Chase Manhattan Bank (as successor by merger to The Chase
Manhattan Bank, N.A.), as documentation agent (in such capacity, the
"Documentation Agent"), and The Chase Manhattan Bank (formerly named Chemical
Bank), as administrative agent (in such capacity, the "Administrative Agent")
for the Lenders.
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders, the Documentation Agent
and the Administrative Agent are parties to the Credit Agreement;
WHEREAS, the Borrower has requested that the Administrative
Agent, the Documentation Agent and the Lenders agree to amend certain
provisions of the Credit Agreement, as more fully set forth herein;
WHEREAS, the Administrative Agent, the Documentation Agent and
the Lenders are willing to effect such amendments only upon the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and mutual
agreements contained herein, and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the Borrower, the Lenders, the
Documentation Agent and the Administrative Agent hereby agree as follows:
I. Defined Terms. Unless otherwise defined herein,
terms defined in the Credit Agreement shall have such meanings when used
herein.
2. Amendment of Subsection 1.1. Subsection 1.1 of the
Credit Agreement hereby is amended by deleting from the definition of the term
"Conversion Date" contained therein the date "September 29, 1996" and by
substituting therefor the date "March 31, 1997".
3. Amendment of Subsection 2.4(a). Subsection 2.4(a) of
the Credit Agreement hereby is amended by deleting said subsection 2.4(a) in
its entirety and by substituting therefor the following:
<PAGE> 2
2
(a) The Aggregate Acquisition Loan Commitment shall be
reduced (or, to the extent that the Conversion Date shall have
occurred, the Acquisition Term Loans shall be payable) in consecutive
quarterly installments on the last day of each March, June, September
and December (other than in the case of the final installment thereof,
which installment shall be payable on the Termination Date),
commencing on December 31, 1996, in a principal amount equal to the
percentage of such Aggregate Acquisition Loan Commitment in effect on
December 31, 1996 which is set forth opposite the period during which
the date of such payment occurs:
<TABLE>
<CAPTION>
Quarterly
Period Percentage
------ ----------
<S> <C>
12/31/96 - 09/30/97 2.50
10/01/97 - 09/30/99 5.00
10/01/99 and thereafter 6.25
</TABLE>
4. Amendment of Subsection 2.5. Subsection 2.5 of the
Credit Agreement hereby is amended by inserting the following at the end
thereof:
"Notwithstanding the foregoing provisions of this subsection 2.5, the
proceeds of any Acquisition R/C Loans that are borrowed during the
period between September 30, 1996 and March 31, 1997 may be used for
general corporate purposes of the Borrower and its Subsidiaries."
5. Amendment of Subsection 5.3. Subsection 5.3 of the
Credit Agreement hereby is amended by:
(a) inserting therein as a new clause (C) to the proviso to subsection
5.3(d)(ii) the following:
"and (C) no such mandatory prepayment shall be due pursuant to
this clause (ii) with respect to the Net Proceeds from the
sale, transfer or other disposition of the capital stock of
the holding company for WVTM-TV (or substantially all of the
assets thereof) pursuant to the sale agreeement with National
Broadcasting Corporation; and
(b) inserting therein as a new clause (h) thereof the following:
"(h) On September 30, 1996, the Aggregate
Acquisition Loan Commitment shall be reduced to the amount
which is equal to the aggregate principal amount of the
Acquisition R/C Loans then outstanding."
<PAGE> 3
3
6. Amendment of Subsection 9.1(a). Subsection 9.1(a) of
the Credit Agreement hereby is amended by deleting the matrix contained therein
in its entirety and by substituting therefor the following:
<TABLE>
<CAPTION>
NUMBER OF STATIONS
TIME ------------------------------------------------------------------
PERIOD 5 or more 4 3 2 1
--------------- --------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
EFFECTIVE DATE
6/29/96 6.00:1.0 5.75:1.0 5.750:1.0 5.50:1.0 4.750:1.0
6/30/96 - 9/29/96 6.25:1.0 5.75:1.0 5.750:1.0 5.50:1.0 4.750:1.0
9/30/96 - 3/30/97 6.00:1.0 5.75:1.0 5.750:1.0 5.50:1.0 4.750:1.0
3/31/97 - 6/29/97 6.00:1.0 5:75:1.0 5.000:1.0 4.00:1.0 3.000:1.0
6/30/97 - 6/29/98 5.25:1.0 4.50:1.0 4.375:1.0 3.50:1.0 2.625:1.0
6/30/98 - 6/29/99 4.75:1.0 4.00:1.0 3.750:1.0 3.00:1.0 2.250:1.0
6/30/99 - 6/29/2000 4.25:1.0 3.50:1.0 3.125:1.0 2.50:1.0 2.000:1.0
6/30/2000 AND
THEREAFTER 4.25:1.0 3.50:1.0 3.125:1.0 2.50:1.0 2.000:1.0
</TABLE>
7. Representations and Warranties. The Borrower hereby
confirms, reaffirms and restates the representations and warranties made by it
in Section 6 of the Credit Agreement, provided that each reference to the
Credit Agreement therein shall be deemed to be a reference to the Credit
Agreement after giving effect to this Amendment. The Borrower represents and
warrants that no Default or Event of Default has occurred and is continuing.
8. Continuing Effect of Credit Agreement. This
Amendment shall not constitute a waiver, amendment or modification of any other
provision of the Credit Agreement not expressly referred to herein and shall
not be construed as a waiver or consent to any further or future action on the
part of the Borrower that would require a waiver or consent of the Lenders or
the Administrative Agent. Except as expressly amended or modified herein, the
provisions of the Credit Agreement are and shall remain in full force and
effect.
9. Counterparts. This Amendment may be executed by one
or more of the parties hereto on any number of separate counterparts and all
such counterparts shall be deemed to be one and the same instrument. Each
party hereto confirms that any facsimile copy of such party's executed
counterpart of this Amendment (or its signature page thereof) shall be deemed
to be an executed original thereof.
10. Effectiveness. This Amendment shall be effective
upon receipt by the Administrative Agent of counterparts hereof, duly executed
and delivered by the Borrower and the Majority Lenders.
<PAGE> 4
4
11. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
NWC ACQUISITION CORPORATION
By: /s/ Joseph P. Page
------------------------------------
Title:Vice President & CFO
THE CHASE MANHATTAN BANK (formerly
named Chemical Bank and successor by
merger to The Chase Manhattan Bank,
N.A.), as Administrative Agent, as
Documentation Agent, as a Managing
Agent and as a Lender
By:
---------------------------------
Title:
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, Los Angeles Agency
By: /s/ Genichi Imai
---------------------------------
Title:Joint General Manager
BANK OF MONTREAL
By: /s/ Allegra Griffiths
---------------------------------
Title:Director
THE BANK OF NEW YORK
By: /s/ Catherine G. Goff
----------------------------------
Title:Assistant Vice President
<PAGE> 5
5
CREDIT LYONNAIS, New York Branch
By: /s/ James E. Morris
------------------------------------
Title:Vice President
CREDIT LYONNAIS, Cayman Island Branch
By: /s/ James E. Morris
------------------------------------
Title:Authorized Signature
NATIONSBANK OF TEXAS, N.A.
By: ------------------------------------
Title:
TORONTO DOMINION (TEXAS), INC.
By: /s/ Lisa Allison
------------------------------------
Title:Vice President
BANK OF AMERICA ILLINOIS
By: /s/ Fred L. Thorne
------------------------------------
Title:Vice President
UNION BANK
By: /s/ Bill Gooch
------------------------------------
Title:Vice President
BANQUE PARIBAS, New York Branch
By:
------------------------------------
Title:
<PAGE> 6
6
CITIBANK, N.A.
By: /s/ James Buchanan
------------------------------------
Title:Attorney-In-Fact
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Reginald T. Dawson
------------------------------------
Title:Director
BANKERS TRUST COMPANY
By: /s/ Mary Jo Jolly
------------------------------------
Title:Assistant Vice President
FLEET NATIONAL BANK
By: /s/ Alexander G. Ivanov
------------------------------------
Title:Assistant Vice President
By: /s/ Jeffrey R. Green
------------------------------------
Title:Assistant Vice President
THE FUJI BANK, LTD.
By:
------------------------------------
Title:
SHAWMUT BANK, N.A.
By:
------------------------------------
Title:
<PAGE> 1
Exhibit 11 - Statement Re: Computation of Per Share Earnings
Computation of Primary Earnings Per Share
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30, 1996 June 30, 1996
------------------ ------------------
<S> <C> <C>
Net income (loss) applicable to common stock . . . . . $ 1,350 $ (14,776)
================== =================
Weighted average number of shares outstanding during
the period . . . . . . . . . . . . . . . . . . . . 68,728 66,678
Net effect of dilutive options, warrants and
convertible preferred stock . . . . . . . . . . . 19,350 -
------------------ -----------------
Weighted average number of common and common
equivalent shares outstanding . . . . . . . . . . 88,078 66,678
================== =================
Earnings (loss) per common and common
equivalent share . . . . . . . . . . . . . . . . . $ .02 $ (.22)
================== =================
</TABLE>
No common stock equivalents are included in the calculation of primary earnings
per share for the six months ended June 30, 1996 due to their anti-dilutive
effect on net loss per share for the period.
Computation of Fully-Diluted Earnings Per Share
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30, 1996 June 30, 1996
----------------- -----------------
<S> <C> <C>
Net income (loss) applicable to common stock . . . . . $ 1,350 $ (14,776)
================= =================
Primary weighted average number of common and
common equivalent shares outstanding . . . . . . . 88,078 66,678
Weighted average number of common and common
equivalent shares and convertible shares,
assuming full dilution . . . . . . . . . . . . . . 88,078 66,678
================= =================
Earnings (loss) per common and common
equivalent share . . . . . . . . . . . . . . . . . $ .02 $ (.22)
================= =================
</TABLE>
This calculation is submitted in accordance with the rules and regulations of
the Securities and Exchange Commission. Under generally accepted accounting
principles, this presentation would not be made.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT JUNE 30, 1996 (UNAUDITED) AND THE
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30,
1996 (UNAUDITED) 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> 59,376
<SECURITIES> 0
<RECEIVABLES> 180,187
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 341,532
<PP&E> 212,808
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,178,160
<CURRENT-LIABILITIES> 200,990
<BONDS> 952,877
335,698
224,850
<COMMON> 689
<OTHER-SE> 344,536
<TOTAL-LIABILITY-AND-EQUITY> 2,178,160
<SALES> 0
<TOTAL-REVENUES> 335,474
<CGS> 0
<TOTAL-COSTS> 192,222
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 45,912
<INCOME-PRETAX> (13,983)
<INCOME-TAX> 1,159
<INCOME-CONTINUING> (11,427)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (11,427)
<EPS-PRIMARY> (0.22)
<EPS-DILUTED> (0.22)
</TABLE>
