<PAGE>
================================================================================
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 Commission file number:
September 30, 1996 0-25042
YOUNG BROADCASTING INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3339681
(State of other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
599 Lexington Avenue
New York, New York 10022
(Address of principal executive offices)
Registrant's telephone number, including area code: (212) 754-7070
----------------------------
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
---- ----
----------------------------
Number of shares of Common Stock outstanding as of October 31, 1996:
12,201,737 shares of Class A Common Stock, 2,028,620 shares of Class B Common
Stock, and 0 shares of Class C Common Stock.
================================================================================
<PAGE>
YOUNG BROADCASTING INC.
FORM 10-Q
Table of Contents
<TABLE>
<CAPTION>
Part I Page
----
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets as of December 31, 1995 and
September 30, 1996........................................................ 2
Consolidated Statements of Operations for the Three and Nine Months Ended
September 30, 1995 and 1996............................................... 4
Consolidated Statements of Stockholders' Equity (Deficit) for the Nine
Months Ended September 30, 1996........................................... 5
Consolidated Statements of Cash Flows for the Nine Months Ended
September 30, 1995 and 1996............................................... 6
Notes to Consolidated Financial Statements................................ 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations............................................................. 10
Part II
Item 6. Exhibits and Reports on Form 8-K.......................................... 19
Signatures.................................................................................. 20
</TABLE>
<PAGE>
Item 1. Financial Statements.
Young Broadcasting Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
December 31, September 30,
1995 1996
---------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 3,425,633 $ 8,201,845
Trade accounts receivable, less allowance for doubtful accounts of
$785,000 in 1995 and $781,000 in 1996 27,431,914 26,054,139
Current portion of loans receivable - officers 808,783 369,233
Current portion of program license rights 6,426,198 8,627,330
Prepaid expenses 956,052 2,246,672
---------------------------------------
Total current assets 39,048,580 45,499,219
---------------------------------------
Property and equipment
Land and land improvements 5,165,489 6,065,855
Buildings and building improvements 23,094,346 29,156,789
Broadcast equipment 87,023,341 116,640,526
Office furniture, fixtures and other equipment 5,306,416 7,502,630
Vehicles 1,385,790 2,831,918
---------------------------------------
121,975,382 162,197,718
Less accumulated depreciation and amortization (62,844,245) (74,003,836)
---------------------------------------
Net property and equipment 59,131,137 88,193,882
Program license rights, excluding current portion 3,180,397 2,533,877
Deposits and other assets 1,545,285 481,379
Loans receivable - officers, excluding current portion 1,194,175 1,194,175
Broadcasting licenses and other intangibles, less accumulated amortization
of $63,852,304 in 1995 and $71,319,183 in 1996 180,722,385 242,697,074
Deferred charges less accumulated amortization of $1,536,057 in 1995 and $3,349,857
in 1996 11,275,993 15,100,252
---------------------------------------
Total Assets $296,097,952 $395,699,858
=======================================
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
Young Broadcasting Inc. and Subsidiaries
Consolidated Balance Sheets (Continued)
(Unaudited)
<TABLE>
<CAPTION>
December 31, September 30,
1995 1996
---------------------------------------
<S> <C> <C>
Liabilities and stockholders' deficit
Current liabilities:
Trade accounts payable $ 4,482,852 $ 4,902,842
Accrued expenses:
Interest 6,920,874 9,454,987
Other 3,391,684 3,787,170
---------------------------------------
Total accrued expenses 10,312,558 13,242,157
Current installments of program license liability 5,817,936 8,132,507
Current installments of long-term debt 907,834 988,859
Current installments of obligations under capital leases 48,335 38,197
---------------------------------------
Total current liabilities 21,569,515 27,304,562
Program license liability, excluding current installments 3,035,951 2,869,305
Long-term debt, excluding current installments 51,949,014 25,379,157
11.75% Senior Subordinated Notes 120,000,000 120,000,000
10.125% Senior Subordinated Notes 125,000,000 125,000,000
9% Senior Subordinated Notes - 125,000,000
Obligations under capital leases, excluding current installments 87,589 61,973
---------------------------------------
Total liabilities 321,642,069 425,614,997
---------------------------------------
Stockholders' deficit:
Class A Common Stock, $.001 par value. Authorized 20,000,000 shares; issued and
outstanding 4,955,088 at 1995 and 4,887,264 at 1996 4,955 4,888
Class B Common Stock, $.001 par value. Authorized 20,000,000 shares; issued and
outstanding 2,029,620 at 1995 and 1996 2,029 2,029
Class C Common Stock, $.001 par value. Authorized 20,000,000 shares; issued and
outstanding 3,563,473 at 1995 and 1996 3,564 3,564
Additional paid-in capital 128,051,024 126,184,867
Accumulated deficit (153,605,689) (156,110,487)
---------------------------------------
Total stockholders' deficit (25,544,117) (29,915,139)
---------------------------------------
---------------------------------------
Total liabilities and stockholders' deficit $ 296,097,952 $395,699,858
=======================================
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
Young Broadcasting Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1996 1995 1996
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net operating revenue $29,593,496 $35,386,703 $88,937,567 $99,145,651
-------------------------------------------------------------------------
Operating expenses 7,168,814 8,554,679 20,959,384 23,098,462
Amortization of program license rights 1,567,602 1,910,774 4,639,369 5,545,486
Selling, general and administrative expenses 5,381,168 7,051,227 17,178,893 19,932,391
Depreciation and amortization 6,156,274 7,487,248 18,606,452 20,560,565
Corporate overhead 704,954 979,673 2,271,169 3,150,746
Non-cash compensation - - 437,982 15,400
-------------------------------------------------------------------------
Operating income 8,614,684 9,403,102 24,844,318 26,842,601
-------------------------------------------------------------------------
Interest income 83,544 109,776 299,310 1,391,870
Interest expense (8,400,837) (10,369,757) (24,470,342) (30,112,011)
Other expense, net (45,974) (186,506) (137,725) (627,258)
-------------------------------------------------------------------------
(8,363,267) (10,446,487) (24,308,757) (29,347,399)
-------------------------------------------------------------------------
Income (loss) before extraordinary item 251,417 (1,043,385) 535,561 (2,504,798)
Extrordinary loss on extinguishment of debt - - (9,125,000) -
=========================================================================
Net income (loss) $251,417 $ (1,043,385) $(8,589,439) $(2,504,798)
=========================================================================
Income (loss) per common share
Primary and fully diluted
Before extraordinary item $0.02 $(0.10) $0.05 $(0.24)
=========================================================================
Net income (loss) $0.02 $(0.10) $(0.79) $(0.24)
=========================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
Young Broadcasting Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity (Deficit)
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional Total
---------------------------- Paid-In Accumulated Stockholders'
Class A Class B Class C Capital Deficit Equity (Deficit)
--------- --------- -------- ------------- -------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995............ $4,955 $2,029 $3,564 $128,051,024 $(153,605,689) $(25,544,117)
Repurchase and retirement of Class A
Common Stock...................... (111) - - (2,923,693) - (2,923,804)
Contribution of shares into Company's
defined contribution plan......... 28 - - 728,641 - 728,669
Exercise of common stock options.... 16 - - 313,495 - 313,511
Issuance of common stock options
below market value .............. - - - 15,400 - 15,400
Net loss for the nine months ended
September 30, 1996................ - - - - (2,504,798) (2,504,798)
------------------------------------------------------------------------------
Balance at September 30, 1996........... $4,888 $2,029 $3,564 $126,184,867 ($156,110,487) ($29,915,139)
===============================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
Young Broadcasting Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1995 1996
--------------------------------------
<S> <C> <C>
Operating activities
Net loss $ (8,589,439) $ (2,504,798)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization of property and equipment 10,404,251 11,279,886
Amortization of program license rights 4,639,369 5,545,486
Amortization of broadcasting licenses, other intangibles and deferred charges 8,202,201 9,280,679
Non-cash compensation 437,982 15,400
Non-cash interest expense on outstanding indebtedness 322,247 275,966
Loss on disposal of fixed assets - 66,298
Extraordinary loss on extinguishment of debt 9,125,000 -
Deferred acquisition and debt refinancing costs incurred (3,437,500) (3,125,000)
Decrease in trade accounts receivable 269,811 5,547,988
Increase in prepaid expenses (634,073) (1,217,764)
Decrease in trade accounts payable (958,052) (542,554)
Increase in accrued expenses and other liabilities 1,379,292 3,170,432
--------------------------------------
Net cash provided by operating activities 21,161,089 27,792,019
--------------------------------------
Investing activities
Purchase of KWQC-TV - (57,173,000)
Purchase of KELO-TV - (51,281,308)
Capital expenditures (3,051,364) (2,907,930)
(Increase) decrease in deposits and other assets (1,502,828) 1,064,206
--------------------------------------
Net cash used in investing activities (4,554,192) (110,298,032)
--------------------------------------
Financing activities
Proceeds from issuance of public subordinated debt 125,000,000 125,000,000
Borrowings from working capital facility 3,500,000 25,400,000
Principal payments on long-term debt (138,346,161) (52,164,798)
Deferred acquisition and debt refinancing costs incurred (2,987,272) (2,574,003)
Repurchase of Class A Common Stock - (2,923,804)
Proceeds from exercise of Common Stock options 50,000 313,511
Principal payments under capital lease obligations (233,086) (35,754)
Payments on programming license liabilities (4,854,575) (5,732,927)
-------------------------------------
Net cash (used in) provided by financing activities (17,871,094) 87,282,225
-------------------------------------
Net (decrease) increase in cash (1,264,197) 4,776,212
Cash and cash equivalents at beginning of year 6,304,402 3,425,633
-------------------------------------
Cash and cash equivalents at September 30 $ 5,040,205 $ 8,201,845
=====================================
Supplemental disclosure of cash flow information
Interest paid $ 20,459,919 $ 27,292,901
Income taxes paid $- $-
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
Young Broadcasting Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
1. Principles of Consolidation
The accompanying consolidated financial statements include those of Young
Broadcasting Inc. and subsidiaries (the "Company"), consisting of eleven network
affiliated (four with CBS, six with ABC and one with NBC) commercial television
broadcasting stations in the states of Michigan, Wisconsin, Louisiana, Illinois,
Tennessee, New York, Virginia, Iowa and South Dakota. Significant intercompany
transactions and accounts have been eliminated. The accompanying condensed
consolidated financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial statements and
with the instructions to Form 10-Q and Article 10 of Regulation S-X. The interim
financial statements are unaudited but include all adjustments, which are of a
normal recurring nature, that the Company considers necessary for a fair
presentation of results for such period. Operating results of interim periods
are not necessarily indicative of results for a full year.
2. Acquisitions
On April 15, 1996, the Company acquired from Broad Street Television, L.P. the
assets of KWQC-TV ("KWQC"), Channel 6, in Davenport, Iowa, for approximately $55
million plus outstanding receivables of the station. This acquisition was
accounted for as a purchase. A substantial portion of the purchase price was
allocated to intangible assets. Such intangibles will be amortized over their
estimated lives which will not exceed 40 years. The KWQC acquisition was
financed with approximately $56.2 million of net proceeds from the January 1996
$125 million 9% Senior Subordinated Notes Offering (the "January 1996 Notes
Offering") due 2006.
On May 31, 1996, the Company acquired from Midcontinent Television of South
Dakota, a wholly owned subsidiary of Midcontinent Media, Inc. of Minneapolis,
Minnesota, the assets of KELO-TV ("KELO"), Channel 11, in Sioux Falls, South
Dakota and its satellite stations for approximately $50 million plus outstanding
receivables of the stations. This acquisition was accounted for as a purchase. A
substantial portion of the purchase price was allocated to intangible assets.
Such intangibles will be amortized over their estimated lives which will not
exceed 40 years. The KELO acquisition was financed with approximately $15.7
million of net proceeds from the January 1996 Notes Offering, $25.4 million
under the Senior Credit Facility, a $3 million promissory note and the remaining
balance from cash balances of the Company.
The following pro forma information gives effect to the acquisitions of KWQC and
KELO (including expense reductions) and the new WTVO affiliation agreement as if
they had been effected on January 1, 1995 and 1996. The pro forma information
for the three months and nine months ended September 30, 1995 and 1996 does not
purport to represent what the Company's results of operations would have been if
such transactions had been effected at such date and do not purport to project
results of operations of the Company in any future period.
7
<PAGE>
YOUNG BROADCASTING INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------- ----------------------
September 30, September 30,
1995/(1)/ 1996 1995/(1)/ 1996/(1)/
---- ---- ---- ----
(dollars in thousands) (dollars in thousands)
<S> <C> <C> <C> <C>
Net Revenues(2)......................................... $35,531 $35,387 $107,225 $108,333
Operating Income........................................ 10,145 9,403 29,474 29,471
Income (loss) before extraordinary item................. 318 (1,043) (1,861) (2,803)
Net income (loss) applicable to common stockholders..... 318 (1,043) (10,986) (2,803)
Net income (loss) per common share:
Primary and Fully Diluted...................... $ 0.03 $(0.10) $ (1.01) $ (0.27)
</TABLE>
(1) Pro forma adjustments to net revenues include additional annualized
network compensation under the new WTVO and KELO affiliation agreements
and a programming change at KWQC in the aggregate amount of $155,000
and $555,000 for the three and nine months ended September 30, 1995,
respectively. Pro forma adjustments to net revenues include additional
network compensation under the new KWQC and KELO affiliation agreements
of $179,000 for the nine months ended September 30, 1996.
Pro forma adjustments include expense reductions of approximately
$792,000 and $2.4 million and the elimination of the KWQC management
fee of $87,000 and $273,000 for the three and nine months ended
September 30, 1995, respectively. Pro forma adjustments include expense
reductions of approximately $1.1 million and the elimination of the
KWQC management fee of $101,000 for the nine months ended September 30,
1996.
(2) Net revenues are total revenues net of agency and national representation
commissions.
3. Pending Acquisition
On May 10, 1996, the Company entered into an agreement with a subsidiary of The
Walt Disney Company ("Disney") to acquire from Disney the assets of KCAL-TV,
Channel 9, in Los Angeles, California for $368 million plus $17 million for net
working capital. This acquisition will be accounted for as a purchase. It is
anticipated that a substantial portion of the purchase price will be allocated
to intangible assets. Such intangibles will be amortized over their estimated
lives which will not exceed 40 years. The Disney acquisition has received FCC
approval and it is anticipated that the closing will occur in the second half of
November 1996.
8
<PAGE>
Young Broadcasting Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
4. Subsequent Event
On October 4, 1996, the Company completed a public offering of its Common Stock,
(the "Offering"). The Offering included 5,250,000 shares sold by the Company and
2,111,398 shares sold by selling stockholders of the Company. The net proceeds
to the Company of $162.9 million were used to pay down $20.0 million under the
Senior Credit Facility and repurchase the ABC Stock and ABC Warrants for $54.8
million (see paragraph below). The Company invested the remaining net proceeds,
approximately $88.1 million, in low risk commercial paper. The Company will use
the remaining net proceeds to partially finance the KCAL-TV acquisition.
The Company repurchased 1,500,000 shares of the Company's Class C Common Stock
(the "ABC Stock") and warrants to purchase 750,000 shares of such Class C Common
Stock (the "ABC Warrants") from Capital Cities/ABC, Inc., a wholly-owned
subsidiary of Disney, concurrently with the closing of the Offering. The Company
repurchased the ABC Stock at a per share price equal to the difference between
the public offering price per share ($32.50) of the Class A Common Stock, less
the underwriting discount per share. The Company repurchased the ABC Warrants at
a per share price equal to the difference between the public offering price per
share of the Class A Common Stock and the per share exercise price of the ABC
Warrants ($22.80), plus $2, less one-half of the underwriting discount per
share.
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
FORWARD-LOOKING STATEMENTS
THE FORWARD-LOOKING STATEMENTS CONTAINED IN THIS REPORT, CONCERNING
AMONG OTHER THINGS, INCREASES IN NET REVENUES AND BROADCAST CASH FLOW (AS
DEFINED) AND REDUCTIONS IN OPERATING EXPENSES, INVOLVE RISKS AND UNCERTAINTIES,
AND ARE SUBJECT TO CHANGE BASED ON VARIOUS IMPORTANT FACTORS, INCLUDING THE
IMPACT OF CHANGES IN NATIONAL AND REGIONAL ECONOMIES, SUCCESSFUL INTEGRATION OF
ACQUIRED TELEVISION STATIONS (INCLUDING ACHIEVEMENT OF SYNERGIES AND COST
REDUCTIONS), PRICING FLUCTUATIONS IN LOCAL AND NATIONAL ADVERTISING AND
VOLATILITY IN PROGRAMMING COSTS.
Introduction
The operating revenues of the Company's stations are derived primarily
from advertising revenues and, to a much lesser extent, from compensation paid
by the networks to the stations for broadcasting network programming. The
stations' primary operating expenses are for employee compensation, news
gathering, production, programming and promotion costs. A high proportion of the
operating expenses of the stations are fixed.
Advertising is sold for placement within and adjoining a station's
network and locally originated programming. Advertising is sold in time
increments and is priced primarily on the basis of a program's popularity among
the specific audience an advertiser desires to reach, as measured principally by
periodic audience surveys. In addition, advertising rates are affected by the
number of advertisers competing for the available time, the size and demographic
makeup of the market served by the station and the availability of alternative
advertising media in the market area. Rates are highest during the most
desirable viewing hours, with corresponding reductions during other hours. The
ratings of a local station affiliated with a national television network can be
affected by ratings of network programming.
Most advertising contracts are short-term, and generally run only for a
few weeks. The Company estimates that approximately 54% of the annual gross
revenue of the Company's stations is generated from local advertising, which is
sold by a station's sales staff directly to local accounts, and the remainder of
the advertising revenue primarily represents national advertising, which is sold
by a national advertising sales representative. The stations generally pay
commissions to advertising agencies on local, regional and national advertising,
and, on national advertising, the stations also pay commissions to the national
sales representative.
The advertising revenues of the Company's stations are generally
highest in the second and fourth quarters of each year, due in part to increases
in consumer advertising in the spring and retail advertising in the period
leading up to and including the holiday season. In addition, advertising
revenues are generally higher during even numbered election years due to
spending by political candidates, which spending typically is heaviest during
the fourth quarter.
"Broadcast cash flow" is defined as operating income before income
taxes and interest expense, plus depreciation and amortization (including
amortization of program license rights), non-cash compensation and corporate
overhead, less payments for program license liabilities. The Company has
included broadcast cash flow data because such data are commonly used as a
measure of performance for broadcast companies and are also used by investors to
measure a company's ability to service debt.
10
<PAGE>
Broadcast cash flow is not, and should not be used as, an indicator or
alternative to operating income, net income or cash flow as reflected in the
Consolidated Financial Statements, is not intended to represent funds available
for debt service, dividends, reinvestment or other discretionary uses, is not a
measure of financial performance under generally accepted accounting principles
and should not be considered in isolation or as a substitute for measures of
performance prepared in accordance with generally accepted
accounting principles.
The following table sets forth certain operating data for the three and
nine months ended September 30, 1995 and 1996:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
September 30, September 30,
------------- -------------
1995 1996 1995 1996
---- ---- ---- ----
(dollars in thousands) (dollars in thousands)
<S> <C> <C> <C> <C>
Operating Income................................... $ 8,614 $ 9,403 $ 24,844 $ 26,843
Add:
Amortization of Program License Rights........ 1,568 1,911 4,639 5,545
Depreciation and Amortization................. 6,156 7,487 18,606 20,561
Corporate Overhead............................ 705 980 2,271 3,151
Non-cash Compensation......................... 0 0 438 15
Less:
Payments for Program License Liabilities...... (1,633) (2,009) (4,855) (5,733)
---------------------------- ----------------------------
Broadcast Cash Flow................................ $ 15,410 $ 17,772 $ 45,943 $ 50,382
============================ ============================
</TABLE>
Television Revenues
Set forth below are the principal types of television revenues received
by the Company's stations for the periods indicated and the percentage
contribution of each to the Company's total revenues, as well as agency and
national sales representative commissions:
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
1995 1996 1995 1996
---- ---- ---- ----
Amount % Amount % Amount % Amount %
------ - ------ - ------ - ------ -
(dollars in thousands) (dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Local................... $ 18,804 54.2 $ 22,358 53.9 $ 56,177 53.9 $ 62,795 54.1
National................ 12,576 36.2 12,668 30.6 37,883 36.4 38,191 32.9
Network................. 2,445 7.1 2,902 7.0 7,493 7.2 8,431 7.3
Political............... 495 1.4 2,997 7.2 790 0.7 4,458 3.8
Production/Other........ 394 1.1 555 1.3 1,839 1.8 2,209 1.9
---------------------------------------- -------------------------------------------
Total............... 34,714 100.0 41,480 100.0 104,182 100.0 116,084 100.0
Commissions.............. (5,120) (14.7) (6,093) (14.7) (15,244) (14.6) (16,938) (14.6)
---------------------------------------- -------------------------------------------
Net Revenue.............. $ 29,594 85.3 $ 35,387 85.3 $ 88,938 85.4 $ 99,146 85.4
======================================== ===========================================
</TABLE>
11
<PAGE>
Results of Operations
Three Months Ended September 30, 1996 Compared to Three Months Ended September
30, 1995
Actual
------
Net revenue for the three months ended September 30, 1996 was $35.4
million, an increase of $5.8 million, or 19.6%, compared to $29.6 million for
the three months ended September 30, 1995, with the acquired stations, KWQC-TV
(Quad Cities) and KELO-TV (Sioux Falls, SD) (the "Acquisitions"), accounting for
all of this increase. Gross local and national revenues were down 1.4% and
13.7%, respectively, compared to the same period in 1995 for the stations owned
prior to the Acquisitions. Network compensation increased $457,000 for the three
months ended September 30, 1996, or 18.7%, with $403,000 of such increase
attributable to the acquired stations and $54,000 due to the network affiliation
switch and a new network compensation agreement at the Company's Rockford,
Illinois station (WTVO-TV). Political revenue for the three months ended
September 30, 1996 was $3.0 million, an increase of $2.5 million, compared to
$495,000 for the same period in 1995.
Operating expenses, including selling, general and administrative
expenses, for the three months ended September 30, 1996 were $15.6 million,
compared to $12.5 million for the three months ended September 30, 1995, an
increase of $3.1 million, or 24.8%, with the acquired stations accounting for
$2.8 million of such increase.
Amortization of program license rights for the three months ended
September 30, 1996 was $1.9 million, compared to $1.6 million for the three
months ended September 30, 1995, an increase of $343,000, or 21.9%. Amortization
of program license rights at the acquired stations was approximately $200,000.
Depreciation of property and equipment and amortization of intangible
assets was $7.5 million for the three months ended September 30, 1996, compared
to $6.2 million for the three months ended September 30, 1995, an increase of
$1.3 million, or 21.0%. The increase is due principally from depreciation and
amortization at the acquired stations.
The Company made payments for program license liabilities of $2.0
million during the three months ended September 30, 1996, compared to $1.6
million for the three months ended September 30, 1995, an increase of $376,000,
or 23.0%. Program license payments related to the acquired stations were
$346,000.
Corporate overhead for the three months ended September 30, 1996 was
$1.0 million, compared to $705,000 for the three months ended September 30,
1995, an increase of $275,000. This increase was the result of additional
personnel costs in 1996.
Interest income for the three months ended September 30, 1996 was
$110,000 compared to $84,000 for the three months ended September 30, 1995, an
increase of $26,000. This increase is primarily attributable to the higher cash
levels.
Interest expense was $10.4 million for the three months ended September
30, 1996, compared to $8.4 million for the three months ended September 30,
1995, an increase of $2.0 million. The increase is primarily attributable to the
Company's higher debt level following the January 1996 Notes offering and the
increased borrowings under the Company's senior credit facility (the "Senior
Credit Facility") to finance the KELO acquisition.
12
<PAGE>
The Company had a $25 million interest rate swap agreement which
expired on April 18, 1996 (the "Swap Agreement"). The net interest expense
resulting from the Swap Agreement amounted to $250,000 for the three months
ended September 30, 1995. At September 30, 1996, the Company was not holding any
derivative instruments. At September 30, 1996, fixed rate debt comprised $376
million, or 95.0%, of the Company's total debt.
As a result of the factors discussed above, the net loss was $1.0 million for
the three months ended September 30, 1996, compared to net income of $251,000
for the three months ended September 30, 1995.
Broadcast cash flow was $17.8 million for the three months ended
September 30, 1996, compared to $15.4 million for the three months ended
September 30, 1995, an increase of $2.4 million, or 15.6%, primarily
attributable to the acquired stations. Broadcast cash flow margins (broadcast
cash flow divided by net revenues) were 50.2% for the three months ended
September 30, 1996, compared to 52.1% for the three months ended September 30,
1995.
Nine Months Ended September 30, 1996 Compared to Nine Months Ended September 30,
1995
Actual
------
Net revenue for the nine months ended September 30, 1996 was $99.1
million, an increase of $10.2 million, or 11.5%, compared to $88.9 million for
the nine months ended September 30, 1995, with the acquired stations accounting
for $9.7 million of this increase. Gross local revenue was even and national
revenue was down 7.0%, as compared to the same period in 1995 for the stations
owned prior to the Acquisitions. Network compensation increased $938,000 for the
nine months ended September 30, 1996, of which is primarily attributable to the
acquired stations and the network affiliation switch and new network
compensation agreement at the Company's Rockford, Illinois station (WTVO-TV) of
$630,000 and $265,000, respectively. Political revenue for the nine months ended
September 30, 1996 was $4.5 million, an increase of $3.7 million over the same
period in 1995.
Operating expenses, including selling and general administrative
expenses were $43.0 million for the nine months ended September 30, 1996,
compared to $38.1 million for the nine months ended September 30, 1995, an
increase of $4.9 million, or 12.9%, with the acquired stations accounting for
substantially all of such increase.
Amortization of program license rights for the nine months ended
September 30, 1996 was $5.5 million compared to $4.6 million for the nine months
ended September 30, 1995, an increase of $906,000 or 19.5%. Amortization of
program license rights at the acquired stations was $354,000.
Depreciation of property and equipment and amortization of intangible
assets was $20.6 million for the nine months ended September 30, 1996, compared
to $18.6 million for the nine months ended September 30, 1995, an increase of
$2.0 million, or 10.8%. This increase is due principally from the depreciation
and amortization at the acquired stations which amounted to $1.9 million.
The Company made payments for program license liabilities of $5.7
million during the nine months ended September 30, 1996, compared with payments
of $4.9 million during the nine months ended September 30, 1995, an increase of
$878,000. Program license payments related to the acquired stations were
$562,000.
13
<PAGE>
Corporate overhead was $3.2 million for the nine months ended September
30, 1996, compared to $2.3 million for the period ended September 30, 1995, an
increase of $880,000. This increase is due to additional personnel expense.
Interest income for the nine months ended September 30, 1996 was $1.4
million compared to $299,000 for the same period in 1995, an increase of $1.1
million. This increase is primarily attributable to the higher cash levels
resulting from the January 1996 Notes offering. Approximately $71.9 million of
the net proceeds thereof remained after the repayment of approximately $50.0
million under the Senior Credit Facility which was invested in low risk
commercial paper, until it was used to finance the Acquisitions.
Interest expense was $30.1 million for the nine months ended September
30, 1996, compared with $24.5 million for the prior year period, an increase of
$5.6 million, or 22.9%. The increase in interest expense is due to the Company's
higher debt level following the January 1996 Notes Offering and the increased
borrowings under the Senior Credit Facility to finance the KELO acquisition.
The net interest expense resulting from the Swap Agreement amounted to
$315,000 for the nine months ended September 30, 1996, compared to $709,000 for
the nine months ended September 30, 1995. On April 18, 1996 the Company's $25
million Swap Agreement expired. At September 30, 1996, the Company was not
holding any derivative instruments. At September 30, 1996, fixed rate debt and
interest rate swap agreements comprised $376 million, or 95.0%, of the Company's
total debt.
In June 1995, the Company incurred a $9.1 million extraordinary loss on
the extinguishment of debt. This loss was related to the partial repayment and
the amendment of the Senior Credit Facility.
As a result of the factors discussed above, the net loss to the company
was $2.5 million for the nine months ended September 30, 1996, compared with a
net loss of $8.6 million for the same period in 1995. Loss before extraordinary
item was $2.5 million for the nine months ended September 30, 1996, compared to
income of $536,000 for the same period in 1995.
Broadcast cash flow was $50.4 million for the nine months ended
September 30, 1996, compared to $45.9 million for the same period in 1995, an
increase of $4.5 million, or 9.8%, of which approximately $4.8 million was
generated by the newly acquired stations. Broadcast cash flow margins (broadcast
cash flow divided by net revenues) were 50.8% for the nine months ended
September 30, 1996, compared to 51.7% for the same period in 1995.
Pro Forma
The following pro forma information gives effect to the Acquisitions of
KWQC and KELO (including expense reductions) and the new affiliation agreement
as if they had been effected on January 1, 1995 and 1996. The pro forma
information for the three months and nine months ended September 30, 1995 and
1996 does not purport to represent what the Company's results of operations
would have been if such transactions had been effected at such date and do not
purport to project results of operations of the Company in any future period.
14
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
September 30, September 30,
1995 /(1)/ 1996 1995 /(1)/ 1996 /(1)/
------ ----- ----- -----
(dollars in thousands) (dollars in thousands)
<S> <C> <C> <C> <C>
Net Revenues................................................ $35,531 $35,387 $107,225 $108,333
Operating Expenses, Including Selling, General and
Administrative Expenses.................................... 15,270 15,606 46,463 46,913
Amortization of Program License Rights...................... 1,830 1,911 5,428 5,837
Depreciation and Amortization (3)........................... 7,581 7,487 23,151 22,946
Corporate Overhead.......................................... 705 980 2,271 3,151
Non-cash Compensation....................................... - - 438 15
------------------------ -------------------------
Operating Income............................................ $10,145 $9,403 $ 29,474 $ 29,471
======================== =========================
Broadcast Cash Flow (4)..................................... $18,397 $17,772 $ 55,186 $ 55,427
Broadcast Cash Flow Margin.................................. 51.8% 50.2% 51.5% 51.2%
Operating Cash Flow (5)..................................... $17,692 $16,792 $ 52,915 $ 52,276
Capital Expenditures........................................ $ 440 $ 1,273 $ 4,367 $ 3,051
</TABLE>
(1) Pro forma adjustments to net revenues include additional annualized
network compensation under the new WTVO and KELO affiliation agreements
and a programming change at KWQC in the aggregate amount of $155,000
and $555,000 for the three and nine months ended September 30, 1995,
respectively. Pro forma adjustments to net revenues include additional
network compensation under the new KWQC and KELO affiliation agreements
of $182,000 for the nine months ended September 30,1996.
Pro forma adjustments include expense reductions of approximately
$792,000 and $2.4 million and the elimination of the KWQC management
fee of $87,000 and $273,000 for the three and nine months ended
September 30, 1995, respectively. Pro forma adjustments include expense
reductions of approximately $1.1 million and the elimination of the
KWQC management fee of $101,000 for the nine months ended September 30,
1996.
(2) Net revenues are total revenues net of agency and national
representation commissions.
(3) Pro forma adjustments represent the additional amortization resulting
from the January 1996 Notes Offering, the June 1995 Notes Offering and
the Amendment. In addition, reflects the elimination of deferred
financing costs in connection with the Senior Credit Facility as
amended and restated pursuant to the Amendment. Furthermore, pro forma
adjustments reflect the amortization of intangibles associated with the
KWQC and KELO acquisitions for periods ranging from 2 to 40 years and a
net increase in annual depreciation resulting from the allocation of
the KWQC and KELO acquisitions purchase prices to the acquired property
and equipment depreciated over a new estimated useful life.
(4) "Broadcast cash flow" is defined as operating income before income
taxes and interest expense, plus depreciation and amortization
(including amortization of program license rights), non-cash
compensation and corporate overhead, less payments for program license
liabilities. The Company has included broadcast cash flow data because
such data are commonly used as a measure of performance for broadcast
companies and are also used by investors to measure a company's ability
to service debt. Broadcast cash flow is not, and should not be used as,
an indicator or alternative to operating income, net income or cash
flow as reflected in the Consolidated Financial Statements, is not
intended to represent funds available for debt service, dividends,
reinvestment or other discretionary uses, is not a measure of financial
performance under generally accepted
15
<PAGE>
accounting principles and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
generally accepted accounting principles.
(5) "Operating cash flow" is defined as operating income before income
taxes and interest expense, plus depreciation and amortization
(including amortization of program license rights) and non-cash
compensation, less payments for program license liabilities. The
Company has included operating cash flow data because such data are
commonly used by investors to measure a company's ability to service
debt and will be used in calculating the amount of additional
indebtedness that the Company may incur in the future under the
Indenture. Operating cash flow does not purport to represent cash
provided by operating activities as reflected in the Consolidated
Financial Statements, is not a measure of financial performance under
generally accepted accounting principles and should not be considered
in isolation or as a substitute for measures of performance prepared in
accordance with generally accepted accounting principles.
Liquidity and Capital Resources
The Company's primary sources of liquidity are cash flow from
operations and funds available under the Senior Credit Facility.
The Company's senior credit facility (the "Senior Credit Facility")
currently provides for borrowings of up to an aggregate of $80.0 million in the
form of a revolving facility which matures on December 31, 2000. The Company is
permitted to borrow at any time up to $65.0 million of such $80.0 million for
acquisitions meeting certain criteria which are approved by a majority of the
lenders under the Senior Credit Facility. Undrawn amounts under such facility
are available to the Company for working capital requirements and general
corporate purposes. As of September 30, 1996, there was $20.0 million
outstanding under the Senior Credit Facility.
The Company has entered into a commitment letter with certain of its
existing lenders pursuant to which the Senior Credit Facility will be amended
and restated (the "Amendment") to provide the Company with the ability to borrow
up to $500.0 million in the form of (i) a seven year reducing revolving credit
facility in the amount of $200.0 million (the "Revolver Facility") and (ii) a
seven year amortizing term loan facility in the amount of $300.0 million (the
"Term Facility").
On October 4, 1996, the Company completed a registered public offering
(the "Offering") of 5,250,000 shares of the Company's Class A Common Stock,
generating net proceeds to the Company of approximately $162.9 million. Upon
completion of the Offering, the Company used approximately $54.8 million of such
net proceeds to repurchase from Capital Cities/ABC, Inc., a wholly-owned
subsidiary of The Walt Disney Company "Disney"), 1,500,000 shares of the
Company's Class C Common Stock and warrants to purchase an additional 750,000
shares of such Common Stock. In addition, the Company used $20.0 million of such
net proceeds to repay in full the outstanding principal indebtedness and accrued
interest under the Senior Credit Facility. The remaining net proceeds of
approximately $88.1 million were placed in low risk commercial paper.
On May 10, 1996, the Company agreed to acquire KCAL-TV ("KCAL"), Los
Angeles, California from a wholly-owned subsidiary of Disney for a purchase
price of approximately $368.0 million, plus an estimated $17.0 million for
working capital. On September 20, 1996, the Federal Communications Commission
("FCC") granted the application for consent to the transfer of control of the
Disney subsidiary which holds the KCAL FCC licenses to a wholly-owned subsidiary
of the Company, and the Company anticipates closing the KCAL acquisition during
the fourth quarter of 1996. The Company intends to finance the acquisition with
the remaining net proceeds of the Offering and borrowings under the amended
Senior Credit Facility.
16
<PAGE>
Pursuant to the Amendment, the Revolver Facility will have a $185.0
million sublimit (the "Sublimit") for borrowings in connection with the
acquisition of additional television stations (and businesses, if any,
incidental thereto) pursuant to transactions which meet the following criteria:
(i) each of the acquired stations will become a wholly-owned subsidiary of the
Company and will become a part of the lenders' security package under the Senior
Credit Facility, and (ii) the Company can demonstrate that after giving pro
forma effect to each such acquisition (based upon assumptions, including
identified cost savings, that the agents for the lenders find reasonable), the
Company will be in compliance with all of the terms and conditions of the Senior
Credit Facility and have a total debt/operating cash flow ratio of less than
6.0x.
Pursuant to the Amendment, the Company will be prohibited from making
investments or advances to third parties exceeding $7.5 million in the aggregate
unless the third party becomes a guarantor of the Company's obligations.
However, the Company may utilize up to $20.0 million of its borrowing
availability under the Sublimit for the purpose of repurchasing shares of Common
Stock and for paying dividends, subject to the limitations set forth in the
indentures relating to the Company's outstanding Senior Subordinated Notes (the
"Indentures"), provided that the total debt/operating cash flow ratio is less
than 5.5x. In addition, the Company may utilize the undrawn amounts under the
Sublimit to retire or prepay subordinated debt, subject to the limitations set
forth in the Indentures, provided that the total debt/operating cash flow ratio
is less than 5.0x, or 4.5x after June 30, 2000; if the ratio exceeds such
amounts, the Company will be permitted to utilize only up to $20.0 million of
availability under the Sublimit. Undrawn amounts under the Revolver Facility are
available to the Company for working capital requirements and general corporate
purposes.
Pursuant to the Amendment, interest under the Senior Credit Facility
will be payable at the LIBOR rate, "CD Rate" or "Base Rate." In addition to the
index rates, the Company will pay a floating percentage tied to the Company's
ratio of total debt to operating cash flow; ranging, in the case of LIBOR rate
loans, from 1.25% based upon a ratio under 4:1 to 2.625% based upon a 6.5:1 or
greater ratio.
Each of the Company's subsidiaries has guaranteed the Company's
obligations under the Senior Credit Facility. The Senior Credit Facility is
secured by the pledge of all the stock of such subsidiaries and a first priority
lien on all of the assets of the Company and its subsidiaries.
The Senior Credit Facility imposes restrictions on the Company's
ability to incur additional indebtedness. Pursuant to the Amendment, the Company
will be permitted to incur, subject to the terms of the Indentures and
satisfaction of the financial covenants of the Senior Credit Facility, unsecured
subordinated debt, provided that the subordination and mandatory redemption
provisions, the covenants and the maturity of such indebtedness are comparable
to the notes under the Indentures and that the proceeds are used to repay the
outstanding balance of the Term Facility until the Company's debt to operating
cash flow ratio is less than 4.5x. The Company is also restricted as to the
amount of its capital lease obligations and guarantees. The Senior Credit
Facility also restricts the ability of the Company to amend material terms of
the Indentures.
The Company from time to time investigates alternatives for replacing
or refinancing its existing Senior Credit Facility. Any such replacement or
refinancing may or may not have terms and conditions, including restrictive
covenants and maintenance tests, similar to those in the Senior Credit Facility.
Interest on January 1996 Notes is payable semi-annually on January 15
and July 15, interest on the June 1995 Notes is payable semi-annually on
February 15 and August 15, and interest on the November 1994 Notes is payable
semi-annually on May 15 and November 15. The Indentures impose certain
limitations on the ability of the Company and certain of its Subsidiaries to,
among other things, pay dividends or make certain other restricted payments,
consummated certain asset sales, enter into certain transactions with
affiliates, incur indebtedness that is subordinate in right of payment to any
Senior Debt and senior in right of payment to the Notes, incur liens, impose
restrictions on the ability of a Subsidiary to pay dividends or make certain
payments to the Company,
17
<PAGE>
merge or consolidate with any person or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of the assets of the Company.
A $5.0 million portion of the purchase price in connection with the
Nationwide Acquisition has been deferred (having a net present value as of
September 30, 1996, discounted at 11.9% of $3.4 million) and is payable over the
remaining four-year period, without interest, in equal annual installments, with
the first such installment having been paid on November 14, 1995. The Company
paid a $3.0 million portion of the purchase price in connection with the KELO
Acquisition by delivery of a promissory note, the principal amount of which will
be payable in full on May 31, 1998, and which requires quarterly payments of
interest accruing at the prime rate.
The Company regularly enters into program contracts for the right to
broadcast television programs produced by others and program commitments for the
right to broadcast programs in the future. Such programming commitments are
generally made to replace expiring or canceled program rights. Payments under
such contracts are made in cash or the concession of advertising spots to the
program provider to resell, or a combination of both.
The Company anticipates that its operating cash flow, together with the
amounts available under the Senior Credit Facility, will be sufficient to
finance the operating requirements of its stations, debt service requirements
and anticipated program and capital expenditures.
The Company is regularly presented with opportunities to acquire
television stations which it evaluates on the basis of its acquisition strategy.
Other than the KCAL acquisition, the Company does not presently have any
agreements to acquire any television stations. The KCAL acquisition will be
accounted for as a purchase. It is anticipated that a substantial portion of the
purchase price will be allocated to intangible assets. Such intangible assets
will be amortized over their estimated lives which will not exceed 40 years.
Income Taxes
The Company and its subsidiaries file a consolidated federal income tax
return and such state or local tax returns as are required. The Company
anticipates making use of its net operating loss carry forward to the maximum
extent possible to reduce its future tax liabilities. Future utilization of a
significant portion of the Company's net operating losses for federal income tax
purposes will be subject to an annual limitation.
18
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit
Number Exhibit Description
11 Statement Re Computation of Per Share Earnings.
27 Financial Data Schedule
(b) Reports on Form 8-K. The Company filed the following reports on
Form 8-K during the quarter ended September 30, 1996:
1. Current Report on Form 8-K dated June 18, 1996 reporting
the filing of the Offering.
19
<PAGE>
SIGNATURES
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.
YOUNG BROADCASTING INC.
Date: November 6, 1996 By: /s/ Vincent J. Young
---------------------
Vincent J. Young
Chairman
Date: November 6, 1996 By: /s/ James A. Morgan
--------------------
James A. Morgan
Executive Vice President and
Chief Financial Officer
(principal financial officer)
20
<PAGE>
EXHIBIT 11
YOUNG BROADCASTING INC. AND SUBSIDIARIES
RE COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
----------------- ------------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1995 1996 1995 1996
--------------------------------- -------------------------------
<S> <C> <C> <C> <C>
SHARES OF COMMON STOCK OUTSTANDING
FOR THE ENTIRE PERIOD............................. 10,819,049 10,548,181 10,860,057 10,480,357
ISSUANCE OF 21,696 SHARES OF COMMON STOCK TO THE
COMPANY'S DEFINED CONTRIBUTION PLAN IN 1995..... 15,895 - - -
ISSUANCE OF 27,685 SHARES OF COMMON STOCK TO THE
COMPANY'S DEFINED CONTRIBUTION PLAN IN 1996..... - 27,279 - -
ISSUANCE OF 19,312 SHARES OF COMMON STOCK
UPON EXERCISE OF OPTIONS IN 1995................ 8,347 - - -
REPURCHASE OF 111,383 SHARES OF COMMON STOCK
FROM J.P. MORGAN CAPITAL CORPORATION IN 1996.... - (110,567) - -
ISSUANCE OF 5,937 SHARES OF COMMON STOCK
UPON EXERCISE OF OPTIONS IN 1996................ - 3,784 - -
ISSUANCE OF 9,937 SHARES OF COMMON STOCK
UPON EXERCISE OF OPTIONS IN 1996................ - 4,768 - -
--------------- ---------------- --------------- --------------
WEIGHTED AVERAGE SHARES OF COMMON
STOCK OUTSTANDING.............................. 10,843,291 10,473,445 10,860,057 10,480,357
PRIMARY DILUTIVE EFFECT OF 688,937 OPTIONS AND
750,000 WARRANTS IN 1995 EXPECTED TO BE
EXERCISED UNDER THE TREASURY STOCK METHOD
USING THE WEIGHTED AVERAGE MARKET PRICE OF
THE COMPANY'S SHARES OF COMMON STOCK................ 191,661 - 442,848 -
--------------- ---------------- --------------- --------------
TOTAL PRIMARY WEIGHTED AVERAGE SHARES OF
COMMON STOCK FOR THE PERIOD........................ 11,034,952 - 11,302,905 -
--------------- ---------------- --------------- --------------
FULLY DILUTIVE EFFECT OF 688,937 OPTIONS AND
750,000 WARRANTS IN 1995 EXPECTED TO BE
EXERCISED UNDER TREASURY STOCK METHOD USING
THE PERIOD-END MARKET PRICE OF THE COMPANY'S
SHARES OF COMMON STOCK.............................. 422,369 - 449,100 -
--------------- ---------------- --------------- --------------
TOTAL FULLY DILUTED WEIGHTED AVERAGE SHARES
OF COMMON STOCK FOR THE PERIOD..................... 11,265,660 - 11,309,157 -
--------------- ---------------- --------------- --------------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM............... $535,561 $(2,504,798) $251,417 $(1,043,385)
=============== ================ =============== ==============
NET INCOME (LOSS)..................................... $(8,589,439) $(2,504,798) $251,417 $(1,043,385)
=============== ================ =============== ==============
NET INCOME (LOSS) PER COMMON SHARE
PRIMARY
BEFORE EXTRAORDINARY ITEM...................... $0.05 $(0.24) $0.02 $(0.10)
=============== ================ =============== ==============
NET INCOME (LOSS)............................ $(0.79) $(0.24) $0.02 $(0.10)
=============== ================ =============== ==============
FULLY DILUTED
BEFORE EXTRAORDINARY ITEM..................... $0.05 $(0.24) $0.02 $(0.10)
=============== ================ =============== ==============
NET INCOME (LOSS)............................. $(0.79) $(0.24) $0.02 $(0.10)
=============== ================ =============== ==============
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 8,202
<SECURITIES> 0
<RECEIVABLES> 26,054
<ALLOWANCES> 781
<INVENTORY> 0
<CURRENT-ASSETS> 45,499
<PP&E> 162,198
<DEPRECIATION> 74,004
<TOTAL-ASSETS> 395,700
<CURRENT-LIABILITIES> 27,305
<BONDS> 370,000
0
0
<COMMON> 10
<OTHER-SE> (29,915)
<TOTAL-LIABILITY-AND-EQUITY> 395,700
<SALES> 0
<TOTAL-REVENUES> 99,146
<CGS> 0
<TOTAL-COSTS> 72,303
<OTHER-EXPENSES> 628
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28,720
<INCOME-PRETAX> (2,505)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,505)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,505)
<EPS-PRIMARY> (.24)
<EPS-DILUTED> (.24)
</TABLE>
