<PAGE> 1
================================================================================
QUARTERLY REPORT UNDER SECTION 13 0R 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended March 31, 1997
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the transition period from
______________ to _____________
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Commission file number 33-72646
USA MOBILE COMMUNICATIONS, INC. II
(Exact name of Registrant as specified in its Charter)
DELAWARE 31-1236804
(State of incorporation) (I.R.S. Employer Identification No.)
1800 WEST PARK DRIVE, SUITE 250
WESTBOROUGH, MASSACHUSETTS 01581
(address of principal executive offices) (Zip Code)
(508) 870-6700
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months or for such shorter period that the Registrant was
required to file such reports, and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
The number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: 748.7501 shares of the Company's
Common Stock ($.01 par value) were outstanding as of May 14,1997.
================================================================================
<PAGE> 2
USA MOBILE COMMUNICATIONS, INC. II
(A WHOLLY-OWNED SUBSIDIARY OF ARCH COMMUNICATIONS GROUP, INC.)
QUARTERLY REPORT ON FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page
--------------------- ----
<S> <C> <C>
Item 1. Financial Statements:
Consolidated Condensed Balance Sheets as of March 31, 1997 and
December 31, 1996 3
Consolidated Condensed Statements of Operations for the
Three Months Ended March 31, 1997 and 1996 4
Consolidated Condensed Statements of Cash Flows for the
Three Months Ended March 31, 1997 and 1996 5
Notes to Consolidated Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition 10
and Results of Operations
PART II. OTHER INFORMATION 16
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
USA MOBILE COMMUNICATIONS, INC. II
(A WHOLLY-OWNED SUBSIDIARY OF ARCH COMMUNICATIONS GROUP, INC.)
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
-------------- -----------------
ASSETS (unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,044 $ 891
Accounts receivable, net 7,742 8,034
Inventories 12,435 8,807
Prepaid expenses and other 733 962
Due from Arch Communications Enterprises, Inc. 107 --
--------- ---------
Total current assets 22,061 18,694
--------- ---------
Property and equipment, at cost 155,748 144,448
Less accumulated depreciation and amortization (43,630) (33,127)
--------- ---------
Property and equipment, net 112,118 111,321
--------- ---------
Intangible and other assets, net 414,728 428,839
--------- ---------
$ 548,907 $ 558,854
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 14,377 $ 4,850
Accrued interest 7,941 7,736
Accrued expenses and other liabilities 12,437 14,695
Payable to Arch Communications Enterprises, Inc. -- 27
Payable to Arch Communications Group, Inc. 1,181 2,950
--------- ---------
Total current liabilities 35,936 30,258
--------- ---------
Long-term debt 283,000 278,000
--------- ---------
Deferred income taxes 35,431 40,731
--------- ---------
Stockholders' equity:
Common stock - $.01 par value -- --
Additional paid-in capital 283,353 283,353
Accumulated deficit (88,813) (73,488)
--------- ---------
Total stockholders' equity 194,540 209,865
--------- ---------
$ 548,907 $ 558,854
========= =========
</TABLE>
The accompanying notes are an integral part of these financial consolidated
statements
3
<PAGE> 4
USA MOBILE COMMUNICATIONS, INC. II
(A WHOLLY-OWNED SUBSIDIARY OF ARCH COMMUNICATIONS GROUP, INC.)
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended March 31, 1997 and 1996
(unaudited and in thousands)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Service, rental, and maintenance revenues $ 34,156 $ 28,988
Product sales 4,902 3,876
-------- --------
Total revenues 39,058 32,864
Cost of products sold (3,502) (2,364)
-------- --------
35,556 30,500
-------- --------
Operating expenses:
Service, rental, and maintenance 7,239 6,320
Selling 5,523 5,540
General and administrative 7,697 6,394
Depreciation and amortization 27,934 21,828
-------- --------
Total operating expenses 48,393 40,082
-------- --------
Operating income (loss) (12,837) (9,582)
Interest expense, net (7,788) (7,565)
-------- --------
Income (loss) before income tax benefit (20,625) (17,147)
Benefit from income taxes 5,300 4,315
-------- --------
Net income (loss) $(15,325) $(12,832)
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
4
<PAGE> 5
USA MOBILE COMMUNICATIONS, INC. II
(A WHOLLY-OWNED SUBSIDIARY OF ARCH COMMUNICATIONS GROUP, INC.)
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 1997 and 1996
(unaudited and in thousands)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Net cash provided by operating activities $ 9,773 $ 4,541
-------- --------
Cash flows used for investing activities:
Additions to property and equipment, net (13,521) (14,820)
Additions to intangible and other assets (1,099) (372)
-------- --------
Net cash used for investing activities (14,620) (15,192)
-------- --------
Cash flows from financing activities:
Issuance of long-term debt 61,000 11,000
Repayment of long-term debt (56,000) (47,500)
Proceeds from Arch Communications Enterprises, Inc. demand loan -- 32,500
Capital contribution for Arch Communications Group, Inc. -- 15,000
-------- --------
Net cash provided by financing activities 5,000 11,000
-------- --------
Net increase in cash and cash equivalents 153 349
Cash and cash equivalents, beginning of period 891 1,543
-------- --------
Cash and cash equivalents, end of period $ 1,044 $ 1,892
======== ========
Supplemental disclosure:
Interest paid $ 7,444 $ 6,880
</TABLE>
The accompanying notes are an integral part of these financial consolidated
statements
5
<PAGE> 6
USA MOBILE COMMUNICATIONS, INC. II
(A WHOLLY-OWNED SUBSIDIARY OF ARCH COMMUNICATIONS GROUP, INC.)
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
(a) Preparation of Interim Financial Statements - The consolidated
condensed financial statements of USA Mobile Communications, Inc. II ("USA
Mobile II") have been prepared in accordance with the rules and regulations of
the Securities and Exchange Commission. The financial information included
herein, other than the consolidated condensed balance sheet as of December 31,
1996, has been prepared by management without audit by independent accountants.
The consolidated condensed balance sheet at December 31, 1996 has been derived
from, but does not include all the disclosures contained in, the audited
consolidated financial statements for the year ended December 31, 1996. In the
opinion of management, all of these unaudited statements include all adjustments
and accruals consisting only of normal recurring accrual adjustments which are
necessary for a fair presentation of the results of all interim periods reported
herein. These consolidated financial statements should be read in conjunction
with the consolidated financial statements and accompanying notes included in
USA Mobile II's Annual Report on Form 10-K for the year ended December 31, 1996.
The results of operations for the periods presented are not necessarily
indicative of the results that may be expected for a full year.
(b) Intangible and Other Assets - Intangible and other assets, net of
accumulated amortization, are composed of the following (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
----------- ------------
(unaudited)
<S> <C> <C>
Goodwill $235,867 $242,769
Purchased FCC licenses 113,834 117,183
Purchased subscriber lists 60,869 65,256
Non-competition agreements 2,415 2,615
Deferred financing costs 1,034 248
Other 709 768
-------- --------
$414,728 $428,839
======== ========
</TABLE>
6
<PAGE> 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
FORWARD-LOOKING STATEMENTS
This Form 10-Q contains forward-looking statements. For this purpose,
any statements contained herein that are not statements of historical fact may
be deemed to be forward-looking statements. Without limiting the foregoing, the
words "believes", "anticipates", "plans", "expects" and similar expressions are
intended to identify forward-looking statements. There are a number of important
factors that could cause USA Mobile II's actual results to differ materially
from those indicated or suggested by such forwarding-looking statements. These
factors include, without limitation, those set forth below under the caption
"Factors Affecting Future Operating Results".
SHIFT IN OPERATING FOCUS
On April 30, 1997, Arch Communications Group, Inc. ("Arch") announced
it was shifting its operating focus to put a higher priority on leverage
reduction rather than subscriber unit growth. Arch's deleveraging efforts will
focus on but not be limited to slowing capital expenditures, across-the-board
operating efficiencies and the possible sale of non-strategic assets. The
following discussion does not reflect the future impact of this shift in
operating focus.
RESULTS OF OPERATIONS
Total revenues increased to $39.1 million or 18.8% for the three months
ended March 31, 1997, as compared to $32.9 million for the corresponding 1996
period. Service, rental and maintenance revenues, which consist primarily of
recurring revenues associated with the sale or lease of pagers, increased 17.8%
to $34.2 million for the three months ended March 31, 1997, from $29.0 million
for the three months ended March 31, 1996. These increases in revenues were
primarily due to the increase in the number of pagers in service from March 31,
1996 to March 31, 1997. Maintenance revenues represented less than 10% of total
service, rental and maintenance revenues in the three months ended March 31,
1997 and 1996. USA Mobile II does not differentiate between service and rental
revenues.
Service, rental and maintenance expenses, which consist primarily of
telephone line and site rental expenses, increased to $7.2 million in the three
months ended March 31, 1997 from $6.3 million in the three months ended March
31, 1996. The increase was due primarily to increased expenses associated with
system expansions and the provision of paging services to a greater number of
subscribers.
Selling expenses remained flat at $5.5 million in the three months
ended March 31, 1997 as compared to the three months ended March 31, 1996.
Selling expenses are directly related to the number of net new subscribers
added. Therefore, such expenses may increase in the future if pagers in service
are added at a more rapid rate than in the past.
General and administrative expenses increased to $7.7 million in the
three months ended March 31, 1997 from $6.4 million in the three months ended
March 31, 1996. The increase was due primarily to increased expenses associated
with supporting more pagers in service.
Depreciation and amortization expenses increased to $27.9 million in
the three months ended March 31, 1997 from $21.8 million in the three months
ended March 31, 1996. These expenses reflect USA Mobile II's continued
investment in pagers and other system expansion capital to support continued
growth.
Operating loss increased to $12.8 million in the three months ended
March 31, 1997 from $9.6 million in the three months ended March 31, 1996, as a
result of the factors outlined above.
Net interest expense increased to $7.8 million in the three months
ended March 31, 1997 from $7.6 million in the corresponding 1996 period. The
increase was attributable to an increase in USA Mobile II's outstanding debt.
During the three months ended March 31, 1997 and 1996, USA Mobile II
recognized an income tax benefit of $5.3 million and $4.3 million, respectively,
representing the tax benefit of operating losses subsequent to September 7, 1995
which were available to offset previously established deferred tax liabilities
arising from Arch's acquisition of USA Mobile.
7
<PAGE> 8
USA Mobile II's net loss was $15.3 million for the three months ended
March 31, 1997 as compared to $12.8 million for the three months ended March 31,
1996 as a result of factors outlined above.
Earnings Before Interest, Taxes, Depreciation and Amortization,
("EBITDA"), increased 23.3% to $15.1 million in the three months ended March 31,
1997 from $12.2 million in the three months ended march 31, 1996, as a result of
the factors outlined above. EBITDA is a standard measure of financial
performance in the paging industry and is also one of the financial measures
used to calculate whether USA Mobile II is in compliance with the covenants
under its credit facility, but should not be construed as an alternative to
operating income or cash flows from operating activities as determined in
accordance with generally accepted accounting principles. EBITDA does not
reflect income tax benefit and interest expense. USA Mobile's financial
objective is to increase its EBITDA, as such earnings are a significant source
of funds for servicing indebtedness and for investments in continued growth,
including purchase of pagers and paging system equipment, construction and
expansion of paging systems.
FACTORS AFFECTING FUTURE OPERATING RESULTS
The following important factors, among others, could cause USA Mobile
II's actual operating results to differ materially from those indicated or
suggested by forward-looking statements made in this Form 10-Q or presented
elsewhere by USA Mobile II's management from time to time.
INDEBTEDNESS AND HIGH DEGREE OF LEVERAGE
USA Mobile II is highly leveraged. At March 31, 1997, USA Mobile II had
outstanding $283.0 million of total debt. Many factors, some of which will be
beyond USA Mobile II's control, such as prevailing economic conditions, will
affect the performance of USA Mobile II. In addition, covenants imposed by the
credit facility and other indebtedness of USA Mobile II restrict the ability of
USA Mobile II to incur additional indebtedness and prohibit certain activities
and may limit other aspects of USA Mobile II's operations. There can be no
assurance that USA Mobile II will be able to generate sufficient cash flow to
cover required interest and principal payments on its indebtedness. If USA
Mobile II is unable to meet interest and principal payments in the future, it
may, depending upon the circumstances which then exist, seek additional equity
or debt financing, attempt to refinance its existing indebtedness or sell all or
part of its business or assets to raise funds to repay its indebtedness. There
can be no assurance that sufficient equity or debt financing will be available
or, if available, that it will be on terms acceptable to USA Mobile II, that USA
Mobile II will be able to refinance its existing indebtedness or that sufficient
funds could be raised through asset sales. USA Mobile II's high degree of
leverage may have important consequences for USA Mobile II, including: (i) the
ability of USA Mobile to obtain additional financing for acquisitions, working
capital, capital expenditures or other purposes, if necessary, may be impaired
or such financing may not be on favorable terms; (ii) a substantial portion of
the cash flow of USA Mobile II will be used to pay interest expense, which will
reduce the funds which would otherwise be available for operations and future
business opportunities; (iii) USA Mobile II may be more highly leveraged than
its competitors which may place it at a competitive disadvantage; and (iv) USA
Mobile II's high degree of leverage will make it more vulnerable to a downturn
in its business or the economy generally.
FUTURE CAPITAL NEEDS
USA Mobile II's business strategy requires the availability of
substantial funds to finance the continued development and future growth and
expansion of its operations. The amount of capital required by USA Mobile II
will depend upon a number of factors, including subscriber growth, technological
developments, marketing and sales expenses, competitive conditions, acquisition
strategy and acquisition opportunities. No assurance can be given that
additional equity or debt financing will be available to USA Mobile II on
acceptable terms, if at all. The unavailability of sufficient financing when
needed would have a material adverse effect on USA Mobile II.
HISTORY OF LOSSES
USA Mobile II has not reported any net income since its inception,
except that USA Mobile II reported net income of $17.6 million in the year ended
December 31, 1991 resulting from an extraordinary gain of $42.2 million
attributable to the restructuring of its debt. USA Mobile II's historical net
losses have resulted principally from (i) substantial depreciation and
amortization expenses, primarily related to intangible assets and pager
depreciation, and (ii) interest expense on debt incurred primarily to finance
acquisitions of paging operations and other costs of growth. Substantial and
increased amounts of debt are expected to be outstanding for the foreseeable
future, which will result in significant additional interest expense which could
8
<PAGE> 9
have a substantial negative impact on USA Mobile II. USA Mobile II expects to
continue to report net losses for the foreseeable future.
GROWTH AND ACQUISITION STRATEGY
USA Mobile II has pursued and intends to continue to pursue
acquisitions of paging businesses as well as the continued internal growth of
USA Mobile II's paging business. The process of integrating acquired paging
businesses may involve unforeseen difficulties and may require a
disproportionate amount of the time and attention of USA Mobile II's management
and the financial and other resources of USA Mobile II. No assurance can be
given that suitable additional acquisitions can be identified, financed and
completed on acceptable terms, or that USA Mobile II's future acquisitions will
be successful. Implementation of USA Mobile II's growth strategies will be
subject to numerous other contingencies beyond the control of USA Mobile II,
including general and regional economic conditions, interest rates, competition,
changes in regulation or technology and the ability to attract and retain
skilled employees. Accordingly, no assurance can be given that USA Mobile II's
growth strategies will prove effective or that the goals of USA Mobile II will
be achieved.
DEPENDENCE ON KEY PERSONNEL
The success of USA Mobile II will be dependent, to a significant
extent, upon the continued services of a relatively small group of executive
personnel. USA Mobile II does not have employment agreements with any of its
current executive officers, although all current executive officers have entered
into non-competition agreements with USA Mobile II. The loss or unavailability
of one or more of its executive officers or the inability to attract or retain
key employees in the future could have an adverse effect upon USA Mobile II's
operations.
COMPETITION AND TECHNOLOGICAL CHANGE
USA Mobile II faces competition from other paging service providers in
all markets in which it operates as well as from certain competitors who hold
nationwide licenses. USA Mobile II believes that competition for paging
subscribers is based on quality of service, geographic coverage and price and
that USA Mobile II generally competes effectively based on these factors.
Monthly fees for basic paging services have, in general, declined since USA
Mobile II commenced operations, due in part to competitive conditions, and USA
Mobile II may face significant price-based competition in the future which could
adversely affect USA Mobile II. Some of USA Mobile II's competitors possess
greater financial, technical and other resources than USA Mobile II. A trend
towards increasing consolidation in the paging industry in particular and the
wireless communications industry in general in recent years has led to
competition from increasingly larger and better capitalized competitors. If any
of such competitors were to devote additional resources to the paging business
or focus its strategy on USA Mobile II's markets, USA Mobile II's results of
operations could be adversely affected. A variety of wireless two-way
communication technologies currently are in use or under development. Although
such technologies generally are higher priced than paging services or not widely
available, technological improvements could result in increased capacity and
efficiency for wireless two-way communication and, accordingly, could result in
increased competition for USA Mobile II. Two-way service providers also could
elect to provide paging service as an adjunct to their primary services. Future
technological advances in the telecommunications industry could increase new
services or products competitive with the paging services provided by USA Mobile
II or could require USA Mobile II to reduce the price of its paging services or
incur additional capital expenditures to meet competitive requirements. Recent
and proposed regulatory changes by the FCC are aimed at encouraging such
technological advances and new services. For example, the FCC has created
potential sources of competition by opening up new spectrum for such services as
the General Wireless Communications Service ("GWCS") and the Wireless
Communications Service ("WCS") as well as speeding up licensing of other
services through auctions, including the Local Multipoint Distribution Service
("LMDS"), 220-222 MHz and broadband PCS services. Entities offering service on
wireless two-way communications technology, including cellular telephones and
specialized mobile radio services, also compete with the paging services that
the Company provides. There can be no assurance that the Company will be able to
compete successfully with its current and future competitors in the paging
business or with competitors offering alternative communication technologies.
9
<PAGE> 10
SUBSCRIBER TURNOVER
The results of operations of wireless messaging service providers, such
as USA Mobile II, can be significantly affected by subscriber cancellations. The
sales and marketing costs associated with attracting new subscribers are
substantial relative to the costs of providing service to existing customers.
Because the paging business is characterized by high fixed costs, disconnections
directly and adversely affect operating cash flow. An increase in its subscriber
cancellation rate may adversely affect USA Mobile II's results of operations.
DEPENDENCE ON SUPPLIERS
USA Mobile II does not manufacture any of the pagers used in its paging
operations. USA Mobile II buys pagers primarily from Motorola, Inc. ("Motorola")
and NEC America, Inc. ("NEC") and therefore is dependent on such manufacturers
to obtain sufficient pager inventory for new subscriber and replacement needs.
In addition, USA Mobile II purchases terminals and transmitters primarily from
Glenayre Technologies, Inc. ("Glenayre") and Motorola and thus is dependent on
such manufacturers for sufficient terminals and transmitters to meet its
expansion and replacement requirements. To date, USA Mobile II has not
experienced significant delays in obtaining pagers, terminals or transmitters,
but there can be no assurance that USA Mobile II will not experience such delays
in the future. USA Mobile II has never had a purchase agreement with Glenayre or
NEC. USA Mobile II's purchase agreement with Motorola expires in December 1997,
with a provision for automatic renewal for a one-year term. Although USA Mobile
II believes that sufficient alternative sources of pagers, terminals and
transmitters exist, there can be no assurance that USA Mobile II would not be
adversely affected if it were unable to obtain these items from current supply
sources or on terms comparable to existing terms.
GOVERNMENT REGULATION, FOREIGN OWNERSHIP AND POSSIBLE REDEMPTION
The paging operations of USA Mobile II are subject to regulation by the
FCC and various state regulatory agencies. There can be no assurance that those
agencies will not propose or adopt regulations or take actions that would have a
material adverse effect on USA Mobile II's business. Changes in regulation of
USA Mobile II's paging business or the allocation of radio spectrum for services
that compete with USA Mobile II's business could adversely USA Mobile II's
results of operations. Indeed, the FCC has created potential sources of
competition by opening up new spectrum for such services as the GWCS and the WCS
as well as, speeding up licensing of other services through auctions, including
the LMDS, 220-222 MHz and broadband PCS services. Further, the FCC has recently
adopted rules implementing a market area licensing scheme. In addition, some
aspects of the recently enacted Telecommunications Act of 1996 could have a
beneficial effect on USA Mobile II's business, but other provisions may place
additional burdens upon USA Mobile II or subject USA Mobile II to increased
competition.
10
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
USA Mobile II is involved in various lawsuits and claims arising in the
normal course of business. USA Mobile II believes that none of such matters will
have a material adverse effect on the USA Mobile II's business or financial
condition.
Item 2. Changes in Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibits listed on the accompanying index to exhibits are
filed as part of this Quarterly Report on Form 10-Q.
(b) None.
11
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report on Form 10-Q for the quarter ended
March 31, 1997, to be signed on its behalf by the undersigned thereunto duly
authorized.
USA MOBILE COMMUNICATIONS, INC. II
Dated: May 14, 1997 By: /s/ William A. Wilson
------------------------------
William A. Wilson
Executive Vice President and
Chief Financial Officer
12
<PAGE> 13
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
<S> <C> <C>
+10.12! - First Amended and Restated Credit Agreement, dated March 19, 1997, by and among Premiere
Page of Kansas, Inc., Q Media Paging-Alabama, Inc., USA Mobile Communications, Inc. III, Q
Media Company-Paging, Inc., W.Q. Communications, Inc., USA Mobile Communications, Inc. II,
The Lenders Party Hereto, and The Bank of New York, as Administrative Agent.
+10.13! - Letter Agreement dated January 7, 1997 and Amendment 1 dated May 1, 1997 between the
Company and Motorola, Inc.
27.1* - Financial Data Schedule.
</TABLE>
* Filed herewith
! Incorporated by reference from the Quarterly Report on Form 10-Q of Arch
for the quarter ended March 31, 1997. Confidential treatment requested with
respect to portions of this exhibit.
+ Identifies exhibits constituting a management contract or compensatory plan
13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 1,044
<SECURITIES> 0
<RECEIVABLES> 8,867
<ALLOWANCES> 1,125
<INVENTORY> 12,435
<CURRENT-ASSETS> 22,061
<PP&E> 155,748
<DEPRECIATION> 43,630
<TOTAL-ASSETS> 548,907
<CURRENT-LIABILITIES> 35,936
<BONDS> 283,000
0
0
<COMMON> 283,353
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 548,907
<SALES> 4,902
<TOTAL-REVENUES> 39,058
<CGS> 3,502
<TOTAL-COSTS> 12,762
<OTHER-EXPENSES> 35,631
<LOSS-PROVISION> 826
<INTEREST-EXPENSE> 7,788
<INCOME-PRETAX> (20,625)
<INCOME-TAX> (5,300)
<INCOME-CONTINUING> (15,325)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (15,325)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
