-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FtZusg4jaEofgrPrO8b52pdfDYK+y9dE2MJe8Kl1ozmVvqz1lgA8kyM2u1eJ+c71 tcEM4J9MSMQITKo0SiXaZQ== 0000950123-99-007671.txt : 19990817 0000950123-99-007671.hdr.sgml : 19990817 ACCESSION NUMBER: 0000950123-99-007671 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990816 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HOME SHOPPING NETWORK INC CENTRAL INDEX KEY: 0000791024 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-CATALOG & MAIL-ORDER HOUSES [5961] IRS NUMBER: 592649518 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-22069 FILM NUMBER: 99690141 BUSINESS ADDRESS: STREET 1: 1 HSN DRIVE CITY: ST PETERSBURG STATE: FL ZIP: 33729 BUSINESS PHONE: 8135728585 10-Q 1 HOME SHOPPING NETWORK, INC. 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 16, 1999. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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, 1999 COMMISSION FILE NUMBER 0-22069 HOME SHOPPING NETWORK, INC. (Exact name of Registrant as specified in its charter) DELAWARE 59-2649518 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.)
152 WEST 57TH STREET NEW YORK, NEW YORK (Address of principal executive offices) 10019 (Zip Code) (212) 314-7300 (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 __ - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 PART I -- FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS HOME SHOPPING NETWORK, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, - ---------------------------------------------------------------------------------------------- 1999 1998 1999 1998 - ---------------------------------------------------------------------------------------------- (In thousands) NET REVENUES Networks and television production.......... $316,612 $309,841 $ 648,365 $476,003 Electronic retailing........................ 285,122 266,224 560,905 508,420 Internet services........................... 6,544 4,720 12,851 8,533 Other....................................... 2,836 3,627 6,882 6,815 -------- -------- ---------- -------- Total net revenues....................... 611,114 584,412 1,229,003 999,771 -------- -------- ---------- -------- Operating costs and expenses: Cost of sales............................... 182,586 167,300 358,672 319,580 Program costs............................... 149,280 167,661 319,347 257,799 Selling and marketing....................... 73,107 69,636 135,738 125,231 General and administrative.................. 57,760 44,323 113,796 77,884 Other operating costs....................... 22,190 23,125 44,319 42,851 Amortization of cable distribution fees..... 6,186 4,954 12,276 10,564 Depreciation and amortization............... 43,555 40,658 86,562 68,251 -------- -------- ---------- -------- Total operating costs and expenses....... 534,664 517,657 1,070,710 902,160 -------- -------- ---------- -------- Operating profit......................... 76,450 66,755 158,293 97,611 Other income (expense): Interest income............................. 8,708 3,496 19,323 5,422 Interest expense............................ (20,241) (34,995) (40,619) (54,082) Gain on sale of securities.................. 2,970 -- 50,270 -- Other, net.................................. (7,958) (7,047) 1,658 (12,720) -------- -------- ---------- -------- (16,521) (38,546) 30,632 (61,380) -------- -------- ---------- -------- Earnings before income taxes and minority interest................................. 59,929 28,209 188,925 36,231 Income tax expense.......................... (13,962) (6,430) (34,154) (13,359) Minority interest........................... (37,394) (15,064) (114,700) (19,394) -------- -------- ---------- -------- NET EARNINGS.................................. $ 8,573 $ 6,715 $ 40,071 $ 3,478 ======== ======== ========== ========
The accompanying notes are an integral part of these statements. 1 3 HOME SHOPPING NETWORK, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
- ----------------------------------------------------------------------------------------- JUNE 30, DECEMBER 31, ASSETS 1999 1998 - ----------------------------------------------------------------------------------------- (In thousands) CURRENT ASSETS Cash and cash equivalents................................... $ 13,658 $ 234,903 Accounts and notes receivable, net of allowance of $29,587 and $20,572, respectively................................. 324,448 317,298 Inventories, net............................................ 365,240 411,727 Investment held for sale.................................... 31,352 -- Other current assets, net................................... 17,857 14,685 ---------- ---------- Total current assets.............................. 752,555 978,613 PROPERTY, PLANT AND EQUIPMENT Computer and broadcast equipment............................ 98,533 95,013 Buildings and leasehold improvements........................ 55,484 55,136 Furniture and other equipment............................... 40,935 30,068 ---------- ---------- 194,952 180,217 Less accumulated depreciation and amortization............ (59,508) (43,262) ---------- ---------- 135,444 136,955 Land........................................................ 10,242 10,242 Projects in progress........................................ 25,231 14,587 ---------- ---------- 170,917 161,784 OTHER ASSETS Intangible assets, net...................................... 5,163,905 5,231,776 Cable distribution fees, net ($38,478 and $39,650, respectively, to related parties)......................... 100,886 100,416 Long-term investments....................................... 48,574 57,830 Notes and accounts receivable, net of current portion ($1,980 and $3,356, respectively, from related parties)... 26,111 41,508 Inventories, net............................................ 140,109 150,293 Deferred income taxes....................................... 105,267 119,110 Advances to USAi and subsidiaries........................... 479,811 120,436 Deferred charges and other, net ($4,673 and $4,357, respectively, from related parties)....................... 39,822 39,075 ---------- ---------- $7,027,957 $7,000,841 ========== ==========
The accompanying notes are an integral part of these statements. 2 4 HOME SHOPPING NETWORK, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
- ---------------------------------------------------------------------------------------- JUNE 30, DECEMBER 31, LIABILITIES AND STOCKHOLDERS' EQUITY 1999 1998 - ---------------------------------------------------------------------------------------- (In thousands) CURRENT LIABILITIES Current maturities of long-term obligations................. $ 40,825 $ 28,223 Accounts payable, trade..................................... 117,796 159,288 Obligations for program rights and film costs............... 218,531 184,074 Cable distribution fees payable ($18,663 and $18,633, respectively, to related parties)......................... 27,782 44,588 Deferred revenue............................................ 41,847 30,813 Deferred income taxes....................................... 10,015 10,016 Other accrued liabilities................................... 261,091 248,702 ---------- ---------- Total current liabilities......................... 717,887 705,704 LONG-TERM OBLIGATIONS, net of current....................... 707,951 732,307 OBLIGATIONS FOR PROGRAM RIGHTS AND FILM COSTS, net of current................................................... 339,547 409,716 OTHER LONG-TERM LIABILITIES................................. 51,765 49,857 MINORITY INTEREST........................................... 3,888,646 3,783,085 STOCKHOLDERS' EQUITY Common stock................................................ 1,221,408 1,221,408 Additional paid-in capital.................................. 70,755 70,755 Retained earnings........................................... 5,695 18,379 Unrealized gain in available for sale securities............ 24,746 10,353 Unearned compensation....................................... (443) (723) ---------- ---------- Total stockholders' equity................................ 1,322,161 1,320,172 ---------- ---------- $7,027,957 $7,000,841 ========== ==========
The accompanying notes are an integral part of these statements. 3 5 HOME SHOPPING NETWORK, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED) - --------------------------------------------------------------------------------
ADDITIONAL UNEARNED COMMON PAID-IN RETAINED UNREALIZED COMPENSATION TOTAL STOCK CAPITAL EARNINGS GAINS TOTAL - --------------------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) BALANCE AT JANUARY 1, 1999......................... $1,320,172 $1,221,408 $70,755 $18,379 $10,353 $(723) Comprehensive Income: Net earnings for the six months ended June 30, 1999............................................ 40,071 -- -- 40,071 -- -- Increase in unrealized gains in available for sale securities...................................... 14,393 -- -- -- 14,393 -- ---------- Comprehensive income............................ 54,464 -- -- -- -- -- Mandatory tax distribution to LLC partners......... (52,755) -- -- (52,755) -- -- Cancellation of employee equity program............ 280 -- -- -- -- 280 ---------- ---------- ------- ------- ------- ----- BALANCE AT JUNE 30, 1999........................... $1,322,161 $1,221,408 $70,755 $ 5,695 $24,746 $(443) ========== ========== ======= ======= ======= =====
The accompanying notes are an integral part of these statements. 4 6 HOME SHOPPING NETWORK, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, ------------------------- - ---------------------------------------------------------------------------------------- 1999 1998 - ---------------------------------------------------------------------------------------- (In thousands) Cash flows from operating activities: Net earnings................................................ $ 40,071 $ 3,478 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization............................. 86,562 68,251 Amortization of cable distribution fees................... 12,276 10,564 Amortization of program rights and film costs............. 261,252 226,998 Gain on sale of securities................................ (50,270) -- Minority interest......................................... 114,700 19,394 Changes in current assets and liabilities: Accounts receivable..................................... 3,108 (46,673) Inventories............................................. (2,177) (15,103) Accounts payable........................................ (41,286) 53,292 Accrued liabilities..................................... 30,759 52,814 Payment for program rights and film costs................. (255,335) (233,742) Increase in cable distribution fees....................... (12,746) (1,140) Other, net................................................ 7,387 (23,249) --------- ----------- NET CASH PROVIDED BY OPERATING ACTIVITIES........... 194,301 114,884 --------- ----------- Cash flows from investing activities: Acquisition of Universal Transaction, net of cash acquired................................................ -- (1,297,233) Acquisitions, net of cash acquired........................ (7,500) -- Capital expenditures, net................................. (28,862) (14,660) Increase in long-term investments......................... (12,150) (7,178) Proceeds from long-term notes receivable.................. 3,691 -- Proceeds from sale of securities.......................... 61,080 -- Other, net................................................ 2,163 (20,855) --------- ----------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES.......................................... 18,422 (1,339,926) --------- ----------- Cash flows from financing activities: Borrowings................................................ -- 1,741,380 Principal payments on long-term obligations............... (13,942) (629,822) Payment of mandatory tax distribution to LLC Partners..... (52,755) -- Proceeds from issuance of LLC shares...................... 22,732 402,454 Repurchase of LLC shares.................................. (4,938) -- Intercompany.............................................. (385,065) (273,316) --------- ----------- NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES.......................................... (433,968) 1,240,696 --------- ----------- NET INCREASE IN CASH AND CASH EQUIVALENTS................... (221,245) 15,654 Cash and cash equivalents at beginning of period............ 234,903 23,022 --------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 13,658 $ 38,676 ========= ===========
The accompanying notes are an integral part of these statements. 5 7 HOME SHOPPING NETWORK, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 -- ORGANIZATION AND BASIS OF PRESENTATION Home Shopping Network, Inc. (the "Company", "Holdco" or "Home Shopping"), is a holding company, whose subsidiary USANi LLC is engaged in diversified media and electronic commerce businesses. In December 1996, the Company consummated a merger with USA Networks, Inc. ("USAi"), formerly known as HSN, Inc., and became a subsidiary of USAi (the "Home Shopping Merger"). On February 12, 1998, USAi acquired USA Networks, a New York general partnership, consisting of cable television networks, USA Network and the Sci-Fi Channel ("Networks"), as well as the domestic television production and distribution businesses of Universal Studios ("Studios USA") from Universal Studios, Inc. ("Universal"), an entity controlled by The Seagram Company Ltd. ("Seagram") (the "Universal Transaction"). In connection with the Universal Transaction, the Company formed a new subsidiary, USANi LLC, and contributed the operating assets of the Home Shopping Network services ("HSN") to USANi LLC. Furthermore, USAi contributed Networks and Studios USA to USANi LLC on February 12, 1998. As of June 30, 1999, the Company engages in three principal areas of business: - NETWORKS AND TELEVISION PRODUCTION, which includes Networks and Studios USA. Networks operates the USA Network and The Sci-Fi Channel cable networks and Studios USA produces and distributes television programming. - ELECTRONIC RETAILING, consisting primarily of the Home Shopping Network and America's Store, which are engaged in the electronic retailing business. - INTERNET SERVICES, which represents the Company's on-line retailing networks business. BASIS OF PRESENTATION The interim Condensed Consolidated Financial Statements and Notes thereto of the Company are unaudited and should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto for the year ended December 31, 1998 contained in the Form S-4 Registration Statement (File No. 333-71305) for the $500.0 million 6 3/4% Senior Notes. In the opinion of the Company, all adjustments necessary for a fair presentation of such Condensed Consolidated Financial Statements have been included. Such adjustments consist of normal recurring items. Interim results are not necessarily indicative of results for a full year. The interim Condensed Consolidated Financial Statements and Notes thereto are presented as permitted by the Securities and Exchange Commission and do not contain certain information included in the Company's audited Consolidated Financial Statements and Notes thereto. NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES See the Company's Form S-4 Registration Statement (File No. 333-71305) for the fiscal year ended December 31, 1998 for a summary of all significant accounting policies. ACCOUNTING ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footnotes thereto. Actual results could differ from those estimates. Significant estimates underlying the accompanying consolidated financial statements and notes include the inventory carrying adjustment, program rights and film cost amortization, sales return accrual and other revenue 6 8 HOME SHOPPING NETWORK, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED) NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED) allowances, allowance for doubtful accounts, recoverability of intangibles and other long-lived assets, management's forecast of anticipated revenues from the distribution of television product in order to evaluate the ultimate recoverability of film inventory and amortization of program usage. NOTE 3 -- BUSINESS ACQUISITIONS UNIVERSAL TRANSACTION In connection with the Universal Transaction, USAi paid Universal approximately $4.1 billion in the form of a cash payment of approximately $1.6 billion, a portion of which ($300 million plus interest) was deferred until no later than June 30, 1998, and an effective 45.8% interest in USAi through shares of common stock, par value $.01 per share, of USAi (the "Common Stock") and Class B common stock, par value $.01 per share, of USAi (the "Class B Common Stock"), and shares ("LLC Shares") of a newly formed limited liability company ("USANi LLC") which are exchangeable (subject to regulatory restrictions) into shares of Common Stock and Class B Common Stock. At the closing of the Universal Transaction, USAi contributed its Home Shopping business to USANi LLC, a subsidiary of USAi. Simultaneously with this transaction, the remaining 1,178,322 shares of Class B Common Stock were issued in accordance with Liberty Media Corporation's ("Liberty") contingent right to receive such shares as part of the Home Shopping Merger in 1996. The Investment Agreement, as amended and restated as of December 18, 1997, among USAi, Home Shopping, Universal and Liberty, a subsidiary of AT&T Corporation (the "Investment Agreement"), relating to the Universal Transaction also contemplated that, on or prior to June 30, 1998, USAi and Liberty, would complete a transaction involving a $300 million cash investment, plus an interest factor, by Liberty in USAi through the purchase of Common Stock or LLC Shares. The transaction closed on June 30, 1998 with Liberty making a cash payment of $308.5 million in exchange for 15,000,000 LLC shares. The following unaudited pro forma condensed combined financial information for the six months ended June 30, 1998, is presented to show the results of the Company, as if the Universal Transaction had occurred as of January 1, 1998. The pro forma results include certain adjustments, including increased amortization related to goodwill and other intangibles, changes in programming and film costs amortization and an increase in interest expense, and are not necessarily indicative of what the results would have been had the transactions actually occurred on the aforementioned dates.
SIX MONTHS ENDED JUNE 30, 1998 ---------------- (IN THOUSANDS) Net revenues......................................... $1,571,135 Net earnings......................................... $ 7,233
NOTE 4 -- CONSOLIDATED STATEMENTS OF CASH FLOWS SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS FOR THE SIX MONTHS ENDED JUNE 30, 1999: During the six months ended June 30, 1999, the Company acquired post-production equipment through a capital lease totaling $2.1 million. 7 9 HOME SHOPPING NETWORK, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED) NOTE 4 -- CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED) SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS FOR THE SIX MONTHS ENDED JUNE 30, 1998:
- ---------------------------------------------------------------------------- (In thousands) ACQUISITION OF USA NETWORKS AND STUDIOS USA Acquisition price.................................... $ 4,115,531 Less: Amount paid in cash............................ (1,300,983) ----------- Total Non-Cash Consideration......................... $ 2,814,548 =========== Components of Non-Cash Consideration: Deferred purchase price liability.................... $ 300,000 Issuance of Common Shares and Class B Shares......... 277,898 Issuance of USANi LLC Shares......................... 2,236,650 ----------- $ 2,814,548 =========== Exchange of Minority Interest in USANi LLC for Deferred Purchase Price Liability.............................. $ 199,576 ===========
As of March 1, 1998, the 5 7/8% Convertible Subordinated Debentures were converted to 7,499,022 shares of USAi Common Stock. During the six months ended June 30, 1998, the Company acquired computer equipment through a capital lease totaling $15.5 million. NOTE 5 -- INVENTORIES
- ------------------------------------------------------------------------------------------------ JUNE 30, DECEMBER 31, 1999 1998 --------------------- --------------------- INVENTORIES CONSIST OF: CURRENT NONCURRENT CURRENT NONCURRENT - ------------------------------------------------------------------------------------------------ (In thousands) Film costs: Released, less amortization............... $ 78,241 $ 55,307 $ 98,082 $ 61,310 In process and unreleased................. 3,159 -- 138 -- Programming costs, net of amortization...... 125,141 84,802 151,192 88,983 Merchandise held for sale................... 158,198 -- 162,315 -- Other....................................... 501 -- -- -- -------- -------- -------- -------- Total............................. $365,240 $140,109 $411,727 $150,293 ======== ======== ======== ========
The Company estimates that approximately 90% of unamortized film costs at June 30, 1999 will be amortized within the next three years. NOTE 6 -- PROGRAM RIGHTS AND FILM COSTS As of June 30, 1999, the liability for program rights, representing future payments to be made under program contract agreements amounted to $460.6 million. Annual payments required are $99.9 million in 1999, $140.9 million in 2000, $80.6 million in 2001, $52.4 million in 2002, $36.6 million in 2003 and $50.2 million in 2004 and thereafter. Amounts representing interest are $35.1 million and the present value of future payments is $425.5 million. 8 10 HOME SHOPPING NETWORK, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED) NOTE 6 -- PROGRAM RIGHTS AND FILM COSTS -- (CONTINUED) As of June 30, 1999, the liability for film costs amounted to $132.6 million. Annual payments are $45.6 million in 1999 and $87.0 million in 2000. Unrecorded commitments for program rights consist of programs for which the license period has not yet begun or the program is not yet available to air. As of June 30, 1999, the unrecorded commitments amounted to $774.7 million. Annual commitments are $35.2 million for the remainder of 1999, $128.3 million in 2000, $166.2 million in 2001, $150.3 million in 2002, $105.6 million in 2003 and $189.1 million in 2004 and thereafter. NOTE 7 -- INVESTMENTS During the three and six months ended June 30, 1999, the Company recognized gains of $3.0 million and $50.3 million, respectively, from the sale of securities in a publicly traded entity. In March 1999, the Company entered into a series of financial instruments to hedge the value of the Company's investment in securities of a publicly traded entity. This hedge establishes a floor and ceiling for the value of these securities and is intended to minimize the impact of market fluctuations until the Company sells these securities. The hedge instruments expire during the third quarter of 1999. The Company intends to sell the securities during the third quarter of 1999. Based on the closing price of the underlying securities, the fair value of the hedge as of June 30, 1999 reflects a loss of $11.7 million, which is offset by the unrealized gain on the fair value of the security from the date the hedge transaction was entered. NOTE 8 -- GUARANTEE OF NOTES On November 23, 1998, USAi and USANi LLC issued $500.0 million 6 3/4% Senior Notes due 2005 (the "Notes") as co-obligors. Home Shopping is a guarantor of the Notes. Substantially all of the significant subsidiaries of USANi LLC and substantially all of the significant wholly owned subsidiaries of USAi (principally subsidiaries engaged in the broadcasting and ticketing operations) have jointly and severally guaranteed USAi's indebtedness. Certain insignificant subsidiaries of USANi LLC do not guarantee the indebtedness. NOTE 9 -- INDUSTRY SEGMENTS For the three and six months ended June 30, 1999 and 1998, the Company operated principally in three industry segments: Networks and television production, Electronic retailing and Internet services. Networks and television production segment consists of the cable networks USA Network and The Sci-Fi Channel and Studios USA, which produces and distributes television programming, which were acquired on February 12, 1998. The Electronic retailing segment consists of Home Shopping Network and America's Store, which are engaged in the sale of merchandise through electronic retailing. Internet services segment represents the Company's on-line retailing networks business. 9 11 HOME SHOPPING NETWORK, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED) NOTE 9 -- INDUSTRY SEGMENTS -- (CONTINUED)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, -------------------- ---------------------- 1999 1998 1999 1998 -------- -------- ---------- -------- (IN THOUSANDS) Revenue Networks and television production.......... $316,612 $309,841 $ 648,365 $476,003 Electronic retailing........................ 285,122 266,224 560,905 508,420 Internet services........................... 6,544 4,720 12,851 8,533 Other....................................... 2,836 3,627 6,882 6,815 -------- -------- ---------- -------- $611,114 $584,412 $1,229,003 $999,771 ======== ======== ========== ======== Operating profit Networks and television production.......... $ 77,154 $ 57,317 $ 157,869 $ 85,189 Electronic retailing........................ 19,144 17,346 33,552 25,405 Internet services........................... (11,755) (3,778) (19,000) (6,388) Other....................................... (8,093) (4,130) (14,128) (6,595) -------- -------- ---------- -------- $ 76,450 $ 66,755 $ 158,293 $ 97,611 ======== ======== ========== ========
10 12 ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL Home Shopping Network, Inc. (the "Company" or "Holdco"), is a holding company, the subsidiaries of which are engaged in diversified media and electronic commerce businesses. EBITDA Earnings before interest, income taxes, depreciation and amortization ("EBITDA") is defined as operating profit plus depreciation and amortization. EBITDA is presented here as a management tool and as a valuation methodology for companies in the media, entertainment and communications industries. EBITDA does not purport to represent cash provided by operating activities. EBITDA should not be considered in isolation or as a substitute for measures of performance prepared in accordance with generally accepted accounting principles. THIS REPORT INCLUDES FORWARD-LOOKING STATEMENTS RELATING TO SUCH MATTERS AS ANTICIPATED FINANCIAL PERFORMANCE, BUSINESS PROSPECTS, NEW DEVELOPMENTS, NEW MERCHANDISING STRATEGIES AND SIMILAR MATTERS. A VARIETY OF FACTORS COULD CAUSE THE COMPANY'S ACTUAL RESULTS AND EXPERIENCE TO DIFFER MATERIALLY FROM THE ANTICIPATED RESULTS OR OTHER EXPECTATIONS EXPRESSED IN THE COMPANY'S FORWARD-LOOKING STATEMENTS. THE RISKS AND UNCERTAINTIES THAT MAY AFFECT THE OPERATIONS, PERFORMANCE, DEVELOPMENT AND RESULTS OF THE COMPANY'S BUSINESS INCLUDE, BUT ARE NOT LIMITED TO, THE FOLLOWING: MATERIAL ADVERSE CHANGES IN ECONOMIC CONDITIONS IN THE MARKETS SERVED BY THE COMPANY; FUTURE REGULATORY ACTIONS AND CONDITIONS IN THE COMPANY'S OPERATING AREAS; COMPETITION FROM OTHERS; SUCCESSFUL INTEGRATION OF THE COMPANY'S DIVISIONS' MANAGEMENT STRUCTURES; PRODUCT DEMAND AND MARKET ACCEPTANCE; THE ABILITY TO PROTECT PROPRIETARY INFORMATION AND TECHNOLOGY OR TO OBTAIN NECESSARY LICENSES ON COMMERCIALLY REASONABLE TERMS; AND OBTAINING AND RETAINING KEY EXECUTIVES AND EMPLOYEES. TRANSACTIONS AFFECTING THE COMPARABILITY OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The Universal Transaction in February 1998 caused a significant increase in net revenues, operating costs and expenses and operating profit. To enhance comparability, the discussion of consolidated results of operations is supplemented, where appropriate, with separate pro forma financial information that gives effect to the Universal Transaction as if it had occurred as of January 1, 1998. The pro forma information is not necessarily indicative of the revenues and cost of revenues that would have actually been reported had the Universal Transaction occurred as of January 1, 1998, nor is it necessarily indicative of future results. A. CONSOLIDATED RESULTS OF OPERATIONS The following discussions present the material changes in the consolidated results of operations of the Company for the quarter and six months ended June 30, 1999, compared with the quarter and six months ended June 30, 1998. The operations for the quarter and six months ended June 30, 1998, consist of the operations of Home Shopping and, since February 12, 1998, the results of USA Networks and Studios USA. Reference should also be made to the unaudited Condensed Consolidated Financial Statements included herein. QUARTER AND SIX MONTHS ENDED JUNE 30, 1999 VS. QUARTER AND SIX MONTHS ENDED JUNE 30, 1998 The Universal Transaction resulted in significant increases in net revenues, operating costs and expenses, other income (expense) for the six months ended June 30, 1999 when compared to 1998. NET REVENUES For the quarter ended June 30, 1999, revenues increased $26.7 million compared to 1998 primarily due to increases of $18.9 million and $6.8 million from the Electronic retailing and Networks and television production businesses, respectively. 11 13 For the six months ended June 30, 1999, revenues increased $229.2 million compared to 1998 primarily due to increases of $172.4 million from the Networks and television production businesses and $52.5 million from the Electronic retailing business. OPERATING COSTS AND EXPENSES For the quarter ended June 30, 1999, total operating costs and expenses increased $17.0 million compared to 1998 primarily due to increased costs of $17.1 million and $9.8 million from the Electronic retailing and Internet services businesses, respectively, offset by lower costs of the Networks and television production business. For the six months ended June 30, 1999, total operating costs and expenses increased $168.6 million compared to 1998 primarily due to increased costs of $99.7 million associated with including the operations of USA Networks and Studios USA for the full period in 1999 and increased costs of $44.3 million and $16.9 million from the Electronic retailing and Internet services businesses, respectively. OTHER INCOME (EXPENSE), NET For the quarter and six months ended June 30, 1999, interest expense, net decreased $20.0 million and $27.4 million, respectively, compared to 1998 primarily due to lower borrowing levels as a result of the repayment of bank debt from proceeds of equity transactions involving Universal and Liberty during 1998 and lower interest rates. For the quarter ended June 30, 1999, other, net totaled $8.0 million of expense compared to $7.0 million of expense in 1998. For the six months ended June 30, 1999, other, net totaled $1.7 million in income compared to $12.7 million of expense in 1998 primarily due to the reversal of equity losses in the quarter ended March 31, 1999 which were previously recorded as a result of the Universal Transaction. INCOME TAXES The Company pays income taxes based on its allocation of earnings from its ownership of USANi LLC. The Company's effective tax rate for the quarter and six months ended June 30, 1999 is higher than the statutory rate as a result of non-deductible goodwill and other acquired intangible assets and state income taxes. MINORITY INTEREST For the quarter and six months ended June 30, 1999, minority interest primarily represents Universal's and Liberty Media Corporation's ("Liberty") ownership interest in USANi LLC. For the quarter and six months ended June 30, 1998, minority interest primarily represents Universal's ownership interest in USANi LLC for the period February 12 through June 30, 1998. PRO FORMA QUARTER AND SIX MONTHS ENDED JUNE 30, 1999 VS. PRO FORMA QUARTER AND SIX MONTHS ENDED JUNE 30, 1998 The following unaudited pro forma operating results of the Company presents combined results of operations as if the Universal Transaction had occurred on January 1, 1998. The Unaudited Combined Condensed Pro Forma Statements of Operations are presented for illustrative purposes only and are not necessarily indicative of the results of operations that would have actually been reported had the Universal Transaction occurred as of January 1, 1998, nor are they necessarily indicative of future results of operations. 12 14 UNAUDITED COMBINED CONDENSED PRO FORMA STATEMENTS OF OPERATIONS
- ----------------------------------------------------------------------------------------------- THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ---------------------- -------------------------- 1999 1998 1999 1998 - ----------------------------------------------------------------------------------------------- (In thousands) NET REVENUES: Networks and television production... $316,612 $309,841 $ 648,365 $ 633,367 Electronic retailing................. 285,122 266,224 560,905 508,420 Internet services.................... 6,544 4,720 12,851 8,533 Other................................ 2,836 3,627 6,882 6,815 -------- -------- ---------- ---------- Total net revenues........... 611,114 584,412 1,229,003 1,157,135 Operating costs and expenses: Cost of sales........................ 182,586 167,300 358,672 319,580 Program costs........................ 149,280 167,661 319,347 345,482 Selling and marketing................ 73,107 69,636 135,738 141,754 General and administrative........... 57,760 44,323 113,796 87,463 Other operating costs................ 22,190 23,125 44,319 45,521 Amortization of cable distribution fees.............................. 6,186 4,954 12,276 10,564 Depreciation and amortization........ 43,555 40,658 86,562 82,025 -------- -------- ---------- ---------- Total operating costs and expenses................... 534,664 517,657 1,070,710 1,032,839 -------- -------- ---------- ---------- Operating profit............. $ 76,450 $ 66,755 $ 158,293 $ 124,746 ======== ======== ========== ========== EBITDA............................... $126,191 $112,367 $ 257,131 $ 217,335 ======== ======== ========== ==========
For the quarter ended June 30, 1999, pro forma revenues for the Company increased $26.7 million, or 4.6%, to $611.1 million from $584.4 million compared to pro forma 1998. For the quarter ended June 30, 1999, pro forma cost of revenues and other costs, excluding depreciation and amortization, increased $12.9 million, or 2.7%, to $484.9 million from $472.0 million compared to pro forma 1998. For the six months ended June 30, 1999, pro forma revenues for the Company increased $71.9 million, or 6.2%, to $1.23 billion from $1.16 billion compared to pro forma 1998. For the six months ended June 30, 1999, pro forma cost of revenues and other costs, excluding depreciation and amortization, increased $32.1 million, or 3.4%, to $971.9 million from $939.8 million compared to pro forma 1998. For the quarter ended June 30, 1999, pro forma EBITDA increased $13.8 million, or 12.3%, to $126.2 million from $112.4 million compared to pro forma 1998. For the six months ended June 30, 1999, pro forma EBITDA increased $39.8 million, or 18.3%, to $257.1 million from $217.3 million compared to pro forma 1998. The following discussion provides an analysis of the aforementioned increases in pro forma revenues and costs of revenues and other costs, excluding depreciation and amortization, by significant business segment. Networks and television production Net revenues for the quarter ended June 30, 1999 increased by $6.8 million, or 2.2%, to $316.6 million from $309.8 million compared to 1998. The increase primarily resulted from an increase in advertising revenues due to higher ratings at USA Network and a significant increase in advertising revenues and affiliate revenues due to higher ratings and an increase in subscribers of The Sci-Fi Channel. The increases were partially offset by lower revenue at Studios USA due to fewer deliveries of network product, fewer pilots produced and increased usage of internally produced series for which revenue recognition is deferred until aired on USA Network and The Sci-Fi Channel. Net revenues for the six months ended June 30, 1999 increased by $15.0 million, or 2.4%, to $648.4 million from $633.4 million compared to 1998. The increase primarily resulted from an increase in advertising revenues and affiliate revenues at USA Network and The Sci-Fi Channel due to higher ratings and subscribers partially offset by fewer deliveries of network product, fewer pilots produced and increased usage of internally produced series for which revenue recognition is deferred until aired on USA Network and The Sci-Fi Channel. 13 15 Cost of revenues and other costs for the quarter ended June 30, 1999 decreased by $14.3 million, or 6.4%, to $211.1 million from $225.4 million. The decrease resulted primarily from lower overhead and marketing costs in both the networks and the television production business, lower television production and higher usage of internally produced product, partially offset by higher programming costs at The Sci-Fi Channel. Cost of revenues and other costs for the six months ended June 30, 1999 decreased by $31.1 million, or 6.7%, to $433.9 million from $465.0 million. The decrease resulted primarily from lower overhead and marketing costs, lower television production and increased usage of internally produced product. EBITDA for the quarter ended June 30, 1999 increased $21.1 million, or 25.0%, to $105.5 million from $84.4 million compared to pro forma 1998. EBITDA for the six months ended June 30, 1999 increased $46.1 million, or 27.4%, to $214.5 million from $168.4 million compared to pro forma 1998. Electronic retailing Net revenues for the quarter ended June 30, 1999 increased by $18.9 million, or 7.1%, to $285.1 million from $266.2 million compared to 1998. The increase resulted from higher revenues on both the Home Shopping Network and America's Store services, higher continuity (or off-air) sales and higher revenues on Home Shopping en Espanol, which was launched on March 30, 1998. The increases were partially offset by a planned decrease in the mail order business. Net revenues for the six months ended June 30, 1999 increased by $52.5 million, or 10.3%, to $560.9 million from $508.4 million compared to 1998. The increase resulted from higher revenues on both the Home Shopping Network and America's Store services, higher continuity (or off-air) sales, higher revenues on Home Shopping en Espanol and revenues from Short Shopping which began in September 1998. The increases were partially offset by a planned decrease in the mail order business. Cost of revenues and other costs for the quarter ended June 30, 1999 increased by $14.8 million, or 6.4%, to $245.7 million from $230.9 million. This increase resulted primarily from higher sales (gross margin decreased to 38.8% in 1999 compared to 39.4% in 1998) and higher merchandising personnel costs. Also contributing to the increase in costs was cost of sales of Home Shopping en Espanol and costs associated with developing the Company's Short Shopping concept. Cost of revenues and other costs for the six months ended June 30, 1999 increased by $39.4 million, or 8.8%, to $487.1 million from $447.7 million. This increase resulted primarily from higher sales (gross margin decreased to 38.8% in 1999 compared to 39.3% in 1998) and higher merchandising personnel costs. Also contributing to the increase in costs was cost of sales of Home Shopping en Espanol and costs associated with developing the Company's Short Shopping concept. EBITDA for the quarter ended June 30, 1999 increased $4.1 million, or 11.5%, to $39.4 million from $35.3 million compared to 1998. EBITDA for the six months ended June 30, 1999 increased $13.0 million, or 21.4%, to $73.8 million from $60.8 million compared to 1998. Internet services Net revenues for the quarter ended June 30, 1999 increased by $1.8 million, or 38.6%, to $6.5 million from $4.7 million compared to pro forma 1998. The increase resulted from an increase in registered users to USAi's primary online retailing service, First Auction, which was partially offset by the shut down of another service during 1998. Net revenues for the six months ended June 30, 1999 increased by $4.3 million, or 50.6%, to $12.8 million from $8.5 million compared to pro forma 1998. The increase resulted from an increase in registered users to USAi's primary online retailing service, First Auction, which was partially offset by the shut down of another service during 1998. Cost of revenues and other costs for the quarter ended June 30, 1999 increased by $9.7 million, or 118.5%, to $17.8 million from $8.1 million compared to pro forma 1998. The increase resulted primarily from increased costs to maintain and enhance the Internet services, the costs incurred to develop a new electronic commerce site to be launched in the third quarter of 1999, increased costs of shipping products as First Auction expanded its product mix and increased advertising and promotion costs. 14 16 Cost of revenues and other costs for the six months ended June 30, 1999 increased by $16.7 million, or 117.2%, to $30.9 million from $14.2 million compared to pro forma 1998. The increase resulted primarily from increased costs to maintain and enhance the Internet services and increased advertising and promotion costs. An increased loss is expected for the remainder of 1999 as new sites are rolled out. EBITDA loss for the quarter ended June 30, 1999 increased $7.8 million, to $11.2 million from $3.4 million compared to pro forma 1998. EBITDA loss for the six months ended June 30, 1999 increased $12.4 million, to $18.1 million from $5.7 million compared to pro forma 1998. Other Other includes the actual results from a business which was sold in the second quarter of 1999. Costs are related to these revenues and corporate expenses. FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES The operating results and capital resources and liquidity requirements of USAi, Holdco and USANi LLC are dependent on each other. The investment agreement, among Universal Studios, Inc. ("Universal"), Liberty Media Corporation, a subsidiary of AT&T Corporation, ("Liberty"), USAi and Holdco requires that no less frequently than monthly, (1) all cash generated by entities not owned by USANi LLC be transferred to USANi LLC and (2) any cash needs by entities not owned by USANi LLC be funded by USANi LLC. In addition, USAi and USANi LLC are jointly and severally obligated under the notes. Net cash provided by operating activities was $194.3 million for the six months ended June 30, 1999 compared to $114.9 million for the six months ended June 30, 1998. These cash proceeds were used to pay for capital expenditures of $28.9 million, to make long-term investments totaling $12.2 million, to make principal payments on long-term obligations of $13.9 million, to make mandatory tax distribution payments to LLC partners of $52.8 million, including $23.9 to USAi, and to provide funding to USAi. The Company generated cash proceeds of $61.1 million from the sale of securities in a publicly traded entity during the six months ended June 30, 1999. Under the investment agreement, transfers of cash between USAi and USANi LLC are evidenced by a demand note and accrue interest at USANi LLC's borrowing rate under the existing credit agreement. Certain transfers of funds between Holdco, USANi LLC and USAi are not evidenced by a demand note and do not accrue interest, primarily relating to the establishment of the operations of USANi LLC and capital contributions from USAi into USANi LLC. . During the six months ended June 30, 1999, net transfers from USANi LLC to USAi totaling approximately $359.1 million, including $357.5 million related to the Hotel Reservations Network Transaction and the October Films/PFE Transaction, $26.3 million to fund the operations of USAi's television broadcast operations and $14.7 million to repay a portion of the outstanding borrowings assumed in the October Films/PFE Transaction. Funds were also transferred to USAi to purchase shares of treasury stock. These amounts were offset by $47.0 million of funds transferred to USANi LLC from the Ticketing operations business. On February 12, 1998, USAi and USANi LLC, as borrower, entered into the credit agreement which provides for a $1.6 billion credit facility. The credit facility was used to finance the Universal transaction and to refinance USAi's then-existing $275.0 million revolving credit facility. The credit facility consists of (1) a $600.0 million revolving credit facility with a $40.0 million sub-limit for letters of credit, (2) a $750.0 million Tranche A Term Loan and, (3) a $250.0 million Tranche B Term Loan. On August 5, 1998, USANi LLC permanently repaid the Tranche B Term Loan in the amount of $250.0 million from cash on hand. The revolving credit facility and the Tranche A Term Loan mature on December 31, 2002. On November 23, 1998, USAi and USANi LLC completed an offering of $500.0 million 6 3/4% Senior Notes due 2005 (the "Notes"). Proceeds received from the sale of the Notes together with available cash were used to repay and permanently reduce $500.0 million of the Tranche A Term Loan. The existing credit facility is guaranteed by substantially all of USAi's material subsidiaries. The interest rate on borrowings under the existing credit facility is tied to an alternate base rate or the London InterBank Rate, in each case, plus an applicable margin. As of June 30, 1999 and as of July 31, 1999, there was $237.5 million in outstanding borrowings under the Tranche A Term Loan, no borrowings under the revolving credit portion of the credit facility, and $599.1 15 17 million was available for borrowing after taking into account outstanding letters of credit. As of June 30, 1999, the interest rate on loans outstanding under the Tranche A Term Loan was 5.79%. Under the investment agreement relating to the Universal transaction, USAi has granted to Universal and Liberty preemptive rights with respect to future issuances of USAi's common stock and Class B common stock. These preemptive rights generally allow Universal and Liberty the right to maintain an ownership percentage in USAi equal to the ownership percentage that entity held, on a fully converted basis, immediately prior to the issuance. In July 1999, Universal and Liberty exercised their preemptive rights, resulting in total cash proceeds to the company of $362.6 million. Universal purchased 7.4 million USANi LLC Shares and Liberty purchased 3.6 million shares of USAi Common Stock. As part of the Universal transaction, USAi entered into a joint venture agreement relating to the development of international general entertainment television channels including international versions of USA Network, The Sci-Fi Channel and Universal's action/adventure channel, 13th Street. USAi has elected to have Universal buy out its 50% interest in the venture. Accordingly, during the quarter ended March 31, 1999, USANi LLC reversed amounts previously recorded for its share of losses of the joint venture. The Company anticipates that it will need to invest working capital towards the development and expansion of its overall operations. Due primarily to the expansion of the Internet business, future capital expenditures are projected to be higher than current amounts. On March 1, 1999, the Company made a mandatory tax distribution payment to the LLC partners in the amount of $52.8 million, including $23.9 million to USAi. Under the terms of the investment agreement, USAi loaned that amount to USANi LLC. In management's opinion, available cash, internally generated funds and available borrowings will provide sufficient capital resources to meet the Company's foreseeable needs. OTHER MATTERS The Company is currently working to resolve the potential impact of the year 2000 on the processing of date-sensitive information by its computerized information systems. Although assessment of non-critical systems is an ongoing process, the Company has substantially completed its detailed assessment of all of its information technology and non-information technology hardware and software to assess the scope of its year 2000 issue. The Company has potential exposure in technological operations within its sole control and in technological operations which are dependent in some way on one or more third parties. The Company believes that it has identified all significant technological areas within its control. The Company has ongoing communications with significant vendors and customers to confirm their plans to become Year 2000 compliant and is assessing any possible risk to or effects on its operations. The Company believes that, with respect to technological operations which are dependent on third parties, the significant areas of potential risk are the ability of satellite and cable operators to receive the signal transmission of USA Network, The Sci-Fi Channel and the Home Shopping Network and America's Store services, and the ability of banks and credit card processors to process credit card transactions. Remediation of critical systems that are not Year 2000 compliant is substantially complete. The Company expects its Year 2000 assessment, remediation, implementation and testing to be completed by September 1999, except for some of its non-critical systems which are scheduled to be completed by October 1999. It is not possible at this time to predict with any reasonable certainty the total cost to address all Year 2000 issues. However, the Company believes that the total costs associated with the Year 2000 assessment, remediation, implementation and testing will not exceed $10 million of which approximately $6 million has been spent through July 31, 1999. This amount is exclusive of capital expenditures that have either been made or are currently planned to be made to replace existing hardware and software systems, all as part of its ongoing efforts to upgrade its infrastructure and systems. Accordingly, based on existing information, the Company believes that the costs of addressing potential problems will not have a material adverse effect on its financial position, results of operations or cash flows. However, if the Company, its customers or vendors were unable to resolve the issues in a timely manner, it could result in a material adverse effect on its financial position, results of operations or cash flows. The Company has 16 18 devoted and plans to continue to devote the necessary resources to resolve all significant year 2000 issues in a timely manner. During the second quarter of 1999, the Company developed contingency plans in the event it does not successfully complete all phases of its Year 2000 program for each of its significant operating divisions. SEASONALITY The Company's businesses are subject to the effects of seasonality. Networks and television production revenues are influenced by advertiser demand and the seasonal nature of programming, and generally peak in the spring and fall. The Company believes seasonality impacts its Electronic retailing segment but not to the same extent it impacts the retail industry in general. 17 19 PART II -- OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS In the Urban Broadcasting litigation, previously reported in the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1999, on May 17, 1999 Urban filed a Notice of Appeal with the court to appeal the Final Order of Judgment entered in the at-law action to the Virginia Supreme Court. On June 11, 1999, the Chancery Court entered a Final Order of Decree of Judgment in favor of Home Shopping Club LP ("HSC"), USA Networks, Inc. and USA Station Group of Virginia, Inc., which expressly declared that HSC had not breached the Television Affiliation Agreement between HSC and Urban. On June 11, 1999, Urban filed a Notice of Appeal with the court to appeal the Final Order of Decree of Judgment entered in the Chancery action to the Virginia Supreme Court. The Company is engaged in various other lawsuits either as plaintiff or defendant. In the opinion of management, the ultimate outcome of these various lawsuits should not have a material impact on the Company. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits
EXHIBIT NUMBER DESCRIPTION ------- ----------- 27.1 -- Financial Data Schedule (for SEC use only) 27.2 -- Financial Data Schedule (for SEC use only)
- --------------- * Reflects management contracts and compensatory plans. (b) Reports on Form 8-K None. 18 20 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. HOME SHOPPING NETWORK, INC. -------------------------------------- (Registrant) Dated August 16, 1999 /s/ BARRY DILLER ---------------------------------------- -------------------------------------------------------- Barry Diller Chairman of the Board and Chief Executive Officer Dated August 16, 1999 /s/ VICTOR A. KAUFMAN ---------------------------------------- -------------------------------------------------------- Victor A. Kaufman Office of the Chairman, Chief Financial Officer (Principal Financial Officer) Dated August 16, 1999 /s/ MICHAEL P. DURNEY ---------------------------------------- -------------------------------------------------------- Michael P. Durney Vice President, Controller (Chief Accounting Officer)
19 EX-27.1 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-1999 APR-01-1999 JUN-30-1999 13,658 0 324,448 0 365,240 752,555 170,917 59,508 7,027,957 717,887 497,077 0 0 0 1,322,161 7,027,957 611,114 611,114 331,866 331,866 202,798 0 11,533 59,929 13,962 8,573 0 0 0 8,573 0 0
EX-27.2 3 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS DEC-31-1999 JAN-01-1999 JUN-30-1999 13,658 0 324,448 0 365,240 752,555 170,917 59,508 7,027,957 717,887 497,077 0 0 0 1,322,161 7,027,957 1,229,003 1,229,003 678,019 678,019 392,691 0 21,296 188,925 34,154 40,071 0 0 0 40,071 0 0
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