-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, o2K8VhdmqlJaBkc1euUDbxgkC6gHvWji2uEsyn0IKlRzq2kH1P8w98JLbnm3BAq9 n1W3p9RcVHB6hpXow9aiBw== 0000950144-95-001338.txt : 19950517 0000950144-95-001338.hdr.sgml : 19950516 ACCESSION NUMBER: 0000950144-95-001338 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950512 SROS: NYSE 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: 1934 Act SEC FILE NUMBER: 001-09118 FILM NUMBER: 95538294 BUSINESS ADDRESS: STREET 1: 2501 118TH AVE NORTH CITY: ST PETERSBURG STATE: FL ZIP: 33716 BUSINESS PHONE: 8135728585 10-Q 1 HOME SHOPPING NETWORK, FORM 10-Q, 03-31-95 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1995 COMMISSION FILE NUMBER 1-9118 ------------------------ 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.)
2501 118TH AVENUE NORTH, ST. PETERSBURG, FLORIDA 33716 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (813) 572-8585 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) NOT APPLICABLE (FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST REPORT) 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 APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Total number of shares of outstanding stock (net of 6,986,000 shares of common stock held in treasury) as of May 1, 1995: Common stock.............. 70,606,329 Class B common stock...... 20,000,000
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 PART I -- FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS HOME SHOPPING NETWORK, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
- ------------------------------------------------------------------------------------- THREE MONTHS ENDED MARCH 31, ----------------------- 1995 1994 - ------------------------------------------------------------------------------------- (In thousands, except per share data) NET SALES................................................... $243,610 $274,215 Cost of sales............................................... 161,935 175,615 -------- -------- Gross profit.............................................. 81,675 98,600 -------- -------- Operating expenses: Selling and marketing..................................... 42,147 38,168 Engineering and programming............................... 25,357 24,224 General and administrative................................ 19,294 20,254 Depreciation and amortization............................. 8,944 6,095 Restructuring charge...................................... 2,041 -- -------- -------- 97,783 88,741 -------- -------- Operating profit (loss)................................ (16,108) 9,859 Other income (expense): Interest income........................................... 555 3,449 Interest expense.......................................... (1,219) (2,087) Miscellaneous............................................. 2,347 246 -------- -------- 1,683 1,608 -------- -------- Earnings (loss) before income taxes......................... (14,425) 11,467 Income tax expense (benefit)................................ (5,626) 4,816 -------- -------- NET EARNINGS (LOSS)......................................... $ (8,799) $ 6,651 ========= ========= Net earnings (loss) per common share........................ $ (.10) $ .07 ========= ========= Weighted average shares outstanding......................... 91,190 95,282 ========= =========
The accompanying notes are an integral part of these statements. 1 3 HOME SHOPPING NETWORK, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
- ---------------------------------------------------------------------------------------- MARCH 31, --------------------- DECEMBER 31, ASSETS 1995 1994 1994 - ---------------------------------------------------------------------------------------- (In thousands) CURRENT ASSETS Cash and cash equivalents....................... $ 20,562 $ 45,675 $ 33,648 Accounts and notes receivable, net.............. 32,007 29,407 40,841 Income taxes receivable......................... 12,578 -- 2,816 Note and interest receivable from related party......................................... -- 5,810 -- Inventories, net................................ 111,328 103,504 118,801 Deferred income taxes........................... 16,873 29,093 22,108 Other current assets, net....................... 9,557 11,010 10,632 -------- -------- ------------ Total current assets................. 202,905 224,499 228,846 PROPERTY, PLANT AND EQUIPMENT Computer and broadcast equipment................ 106,789 107,638 106,144 Buildings and leasehold improvements............ 75,369 72,576 74,514 Furniture and other equipment................... 47,343 43,895 46,183 -------- -------- ------------ 229,501 224,109 226,841 Less accumulated depreciation and amortization............................... 121,337 107,215 116,697 -------- -------- ------------ 108,164 116,894 110,144 Land............................................ 17,818 17,708 17,774 Construction in progress........................ 2,496 2,951 3,182 -------- -------- ------------ 128,478 137,553 131,100 OTHER ASSETS Cable distribution fees, net ($35,086, $0 and $34,174, respectively, to related parties..... 79,177 -- 67,978 Long-term investment in related party........... 10,000 10,000 10,000 Other non-current assets........................ 9,817 5,464 8,575 Note receivable from related party (net of current maturity)............................. -- 125,359 -- -------- -------- ------------ 98,994 140,823 86,553 -------- -------- ------------ $430,377 $502,875 $446,499 ========= ========= ============
The accompanying notes are an integral part of these statements. 2 4 HOME SHOPPING NETWORK, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
- ---------------------------------------------------------------------------------------- MARCH 31, --------------------- DECEMBER 31, LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994 1994 - ---------------------------------------------------------------------------------------- (In thousands) CURRENT LIABILITIES Current maturities of long-term obligations........ $ 1,540 $ 25,338 $ 1,690 Accounts payable................................... 86,850 77,882 75,264 Income taxes payable............................... -- 19,284 -- Accrued liabilities: Programming fees ($28,096, $1,932 and $26,591, respectively, to related parties)............. 37,467 11,296 50,170 Sales returns.................................... 9,343 12,404 12,304 Litigation settlements........................... 4,850 14,450 14,450 Treasury stock................................... -- -- 13,109 Other............................................ 37,189 40,077 38,786 -------- -------- ------------ Total current liabilities............... 177,239 200,731 205,773 LONG-TERM OBLIGATIONS (net of current maturities)...................................... 72,365 86,900 27,491 DEFERRED INCOME TAXES.............................. 5,295 8,094 6,792 COMMITMENTS AND CONTINGENCIES...................... -- -- -- STOCKHOLDERS' EQUITY Preferred stock -- $.01 par value; authorized 500,000 shares, no shares issued and outstanding...................................... -- -- -- Common stock -- $.01 par value; authorized 150,000,000 shares, issued 77,591,329 and 77,163,260 shares at March 31, 1995 and 1994, respectively, and 77,553,329 shares at December 31, 1994......................................... 776 772 776 Class B -- convertible common stock -- $.01 par value; authorized, issued and outstanding, 20,000,000 shares at March 31, 1995 and 1994 and December 31, 1994, respectively.................. 200 200 200 Additional paid-in capital......................... 167,724 163,691 167,463 Retained earnings.................................. 60,761 59,434 69,560 Treasury stock -- 6,986,000 and 3,105,700 common shares at March 31, 1995 and 1994, respectively, and 4,440,700 common shares at December 31, 1994, at cost.......................................... (48,718) (14,027) (27,136) Unearned compensation.............................. (5,265) (2,920) (4,420) -------- -------- ------------ 175,478 207,150 206,443 -------- -------- ------------ $430,377 $502,875 $446,499 ========= ========= ============
The accompanying notes are an integral part of these statements. 3 5 HOME SHOPPING NETWORK, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------ ADDITIONAL COMMON PAID-IN RETAINED TREASURY UNEARNED STOCK CLASS B CAPITAL EARNINGS STOCK COMPENSATION TOTAL CONVERTIBLE COMMON STOCK - ------------------------------------------------------------------------------------------------------------------ (In thousands) BALANCE AT JANUARY 1, 1994..... $762 $ 206 $160,371 $52,783 $(14,027) $ (3,541) $196,554 Issuance of common stock upon exercise of stock options.... 4 -- 2,172 -- -- -- 2,176 Income tax benefit related to executive stock award program and stock options exercised.................... -- -- 1,148 -- -- -- 1,148 Expense related to executive stock award program.......... -- -- -- -- -- 621 621 Conversion of Class B common stock to common stock........ 6 (6) -- -- -- -- -- Net earnings for the three months ended March 31, 1994......................... -- -- -- 6,651 -- -- 6,651 ------ ----------- ---------- -------- -------- ------------ -------- BALANCE AT MARCH 31, 1994...... $772 $ 200 $163,691 $59,434 $(14,027) $ (2,920) $207,150 ======= ========= ======== ======= ======== =========== ======== BALANCE AT JANUARY 1, 1995..... $776 $ 200 $167,463 $69,560 $(27,136) $ (4,420) $206,443 Issuance of common stock upon exercise of stock options.... -- -- 211 -- -- -- 211 Income tax benefit related to executive stock award program and stock options exercised.................... -- -- 50 -- -- -- 50 Expense related to executive stock award program.......... -- -- -- -- -- 164 164 Unearned compensation related to employee equity participation plan......................... -- -- -- -- -- (1,264) (1,264) Expense related to employee equity participation plan.... -- -- -- -- -- 255 255 Purchase of treasury stock, at cost......................... -- -- -- -- (21,582) -- (21,582) Net loss for the three months ended March 31, 1995......... -- -- -- (8,799 ) -- -- (8,799) ------ ----------- ---------- -------- -------- ------------ -------- BALANCE AT MARCH 31, 1995...... $776 $ 200 $167,724 $60,761 $(48,718) $ (5,265) $175,478 ======= ========= ======== ======= ======== =========== ========
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)
- ---------------------------------------------------------------------------------------------- THREE MONTHS ENDED MARCH 31, ----------------------- 1995 1994 - ---------------------------------------------------------------------------------------------- (In thousands) Cash flows from operating activities: Net earnings (loss).................................................. $ (8,799) $ 6,651 Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities: Depreciation and amortization...................................... 6,423 6,095 Amortization of cable distribution fees............................ 2,521 -- Deferred income taxes.............................................. 3,738 (34) Common stock and change in stock appreciation rights issued for services provided............................................... (869) 266 Inventory carrying value adjustment................................ (536) 1,299 Provision for losses on accounts and notes receivable.............. 84 177 (Gain) loss on sale of assets...................................... (18) 121 Equity in (earnings) losses of unconsolidated affiliates........... 44 (114) Change in current assets and liabilities: (Increase) decrease in accounts and notes receivable............ 3,540 (1,668) Increase in income taxes receivable............................. (9,762) -- Decrease in inventories......................................... 8,009 6,127 (Increase) decrease in other current assets..................... 2,372 (2,940) Increase (decrease) in accounts payable......................... 11,586 (10,976) Increase (decrease) in accrued liabilities and income taxes payable........................................................ (25,524) 3,870 Increase in cable distribution fees................................ (13,719) -- Stock purchases for employee benefit plan.......................... (1,264) -- -------- -------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES............. (22,174) 8,874 -------- -------- Cash flows from investing activities: Capital expenditures............................................... (3,343) (3,814) Decrease in notes receivable and other............................. 2,280 334 Increase in intangible assets...................................... (631) (463) Proceeds from sale of assets....................................... 539 1,894 Proceeds from long-term notes receivable........................... -- 1,142 -------- -------- NET CASH USED IN INVESTING ACTIVITIES........................... (1,155) (907) -------- -------- Cash flows from financing activities: Proceeds from unsecured credit facility............................ 45,000 -- Purchases of treasury stock........................................ (34,691) -- Principal payments on long-term obligations........................ (277) (34) Proceeds from issuance of common stock............................. 211 2,176 -------- -------- NET CASH PROVIDED BY FINANCING ACTIVITIES....................... 10,243 2,142 -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS................. (13,086) 10,109 Cash and cash equivalents at beginning of period..................... 33,648 35,566 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD........................... $ 20,562 $ 45,675 ======== ========
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 A -- BASIS OF PRESENTATION The interim Condensed Consolidated Financial Statements of Home Shopping Network, Inc. and Subsidiaries (the "Company") are unaudited and should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto for the years ended December 31, 1994 and 1993, the four months ended December 31, 1992 and the year ended August 31, 1992. Certain amounts in the Condensed Consolidated Financial Statements for the three month period ended March 31, 1994, have been reclassified to conform to the 1995 presentation. 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 and a nonrecurring item as discussed in Note E. 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 annual Consolidated Financial Statements and Notes thereto. NOTE B -- COMMITMENTS AND CONTINGENCIES Litigation A consolidated class action initiated in 1990 is pending against the Company in the Court of Common Pleas of Bucks County, Pennsylvania. The complaints allege violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law with respect to the Company's pricing practices for diamond and imitation diamond jewelry. Plaintiffs seek compensatory damages of $100 per class member, treble damages, attorneys' fees, costs, interest and other relief on behalf of all Pennsylvania residents who purchased any jewelry containing diamonds or imitation diamonds from the Home Shopping Club between December 27, 1984 and May 20, 1991. Substantial discovery has been taken in the case. Plaintiffs and the Company have filed motions for summary judgment, which will be heard by the Court on June 2, 1995. The Company believes that it has meritorious defenses and is vigorously defending this action. The Company is also involved in various other lawsuits either as plaintiff or defendant. In the opinion of management, the ultimate outcome of these other lawsuits should not have a material impact on the Company's liquidity, results of operations or financial condition. NOTE C -- CREDIT FACILITY On March 29, 1995, the Company's revolving credit facility, which expires on August 30, 1997, was amended and increased from $100.0 million to $150.0 million. Borrowings under the credit facility may be used for general corporate purposes. The interest rate on borrowings under the credit facility is tied to LIBOR plus a margin based on the Company's total debt to operating cash flow ratio. At March 31, 1995, the Company was in compliance with all covenants contained in the credit facility. At April 30, 1995, $80.0 million was outstanding under this facility. NOTE D -- INCOME TAXES The Company's federal income tax returns have been examined by the Internal Revenue Service ("IRS") for all years through August 31, 1989. All assessments relating to these examinations have been paid. The assessments included a disallowance of deductions for royalty payments made to a then related party. Subsequent to March 31, 1995, the IRS completed its examination of the Company's federal income tax returns for fiscal years 1990 and 1991, proposing adjustments resulting in income tax deficiencies of $3.0 million, primarily related to the previously discussed royalty payments. The Company also made such royalty payments during fiscal years 1992 through early 1993. The deductibility of these payments will also be 6 8 HOME SHOPPING NETWORK, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (UNAUDITED) challenged by the IRS upon audit. The Company has made adequate provision for this issue for all of the above years. The Company continues to maintain that it has meritorious positions regarding the deductibility of these payments and intends to file a refund claim with the IRS for payments made for years through fiscal 1989 and will contest the assessment for this matter on open tax years. NOTE E -- RESTRUCTURING CHARGE During the three months ended March 31, 1995, the Company recorded a charge of $2.0 million covering employee and other costs related to the closing of its fulfillment center in Reno, Nevada. Management believes the restructuring will be completed by June 30, 1995. During the three months ended March 31, 1995, no payments were made related to this charge. NOTE F -- EARNINGS (LOSS) PER COMMON SHARE Primary earnings (loss) per common share is based on net earnings (loss) divided by the weighted average common shares outstanding giving effect to stock options when dilutive. Fully diluted earnings per share is not materially different from primary earnings per share in any period presented. NOTE G -- STATEMENTS OF CASH FLOWS For purposes of reporting cash flows, cash and cash equivalents include cash and short-term investments. Short-term investments consist primarily of auction preferred shares, money market funds and certificates of deposit with original maturities of less than 91 days. Supplemental disclosures of cash flow information:
-------------------------------------------------------------------------------------- THREE MONTHS ENDED MARCH 31, ---------------- 1995 1994 -------------------------------------------------------------------------------------- (In thousands) CASH PAID FOR: Interest.......................................................... $ 938 $ 1,334 Income taxes...................................................... 348 4
On March 27, 1995, Precision Systems, Inc. ("PSi") repaid $2.7 million, plus accrued interest, of its $5.0 million loan from the Company. Under an agreement between the Company and PSi, the remaining principal balance of the loan has been recorded as a prepayment of future monthly software maintenance payments due PSi from the Company through December 1996. 7 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS HOME SHOPPING NETWORK, INC. AND SUBSIDIARIES GENERAL Home Shopping Network, Inc. (the "Company") is a holding company, the subsidiaries of which conduct the day-to-day operations of the Company's various business activities. The Company's primary business is electronic retailing conducted by Home Shopping Club, Inc. ("HSC"), a wholly-owned subsidiary of the Company. A. CONSOLIDATED RESULTS OF OPERATIONS The following discussion presents the material changes in the consolidated results of operations of the Company which have occurred in the quarter ended March 31, 1995, compared with the quarter ended March 31, 1994. Reference should also be made to the Condensed Consolidated Financial Statements included herein. All tables and discussion included herein calculate the percentage changes using actual dollar amounts, versus rounded dollar amounts. NET SALES For the quarter ended March 31, 1995, net sales for the Company decreased $30.6 million, or 11.2%, to $243.6 million from $274.2 million compared to the same period in 1994. Net sales of HSC decreased $46.3 million, or 18.4% for the quarter ended March 31, 1995, reflecting a 16.5% decrease in the number of packages shipped and a 2.0% decrease in the average price per unit sold compared to the same period in 1994. The decrease in HSC sales for the quarter ended March 31, 1995 was primarily offset by sales of $11.8 million by the Company's infomercial joint venture, HSN Direct Joint Venture ("HSND"), which commenced operations during the third quarter of 1994. The remaining increase in sales is attributable to the Company's other subsidiary operations. Management attributes the decline in net sales for the quarter ended March 31, 1995, to the initial impact of the Company's new merchandising and programming strategies. Since September 1994, the Company has appointed new senior management personnel with expertise in merchandising and has also instituted procedures intended to improve purchasing and other merchandising practices. Management's emphasis in this area includes offering a greater variety of products, developing strong private label lines, selling higher margin items and offering name brand and other high quality merchandise. The Company has continued to significantly restyle its programming. This includes new on-air presentations, an increase in the number of items aired per hour and the display of item numbers which enables a customer to order an item when it is off the air. During the remainder of 1995, the Company plans additional changes, including combining HSN 1 and HSN 2 into one network, the expansion of its HSN Spree network, and additional improvements in merchandising and programming. These changes are expected to be introduced in the second and third quarters of 1995 and may not be fully implemented until the end of 1995. The Company has made significant progress in executing these strategies, which are aimed at long-term improvements in sales by attempting to attract new customers and increase the frequency of sales. However, the initial impact of these changes was a slowdown in sales during the fourth quarter of 1994 and, as anticipated, a decline in sales and operating results during the first quarter of 1995. Sales and operating results through mid-1995 are expected to continue to be negatively affected by these changes. While management believes the Company's new merchandising and programming strategy will ultimately improve results, it estimates the earliest that sales will be positively affected will be the latter half of 1995. There can be no assurance that these changes will achieve management's intended results. 8 10 For the quarter ended March 31, 1995, HSC's merchandise return percentage decreased to 24.1% from 25.0% for the same period in 1994. Management is evaluating the Company's product mix and taking other steps in the area of merchandising, as discussed above, in an attempt to continue to reduce the merchandise return rate. In addition, promotional price discounts increased to 3.5% of HSC sales for the quarter ended March 31, 1995, from 2.3% in the same period in 1994. At March 31, 1995, HSC had approximately 5.0 million active members representing a 3.7% increase over March 31, 1994. An active member is defined as an HSC member that has completed a transaction within the last 18 months or placed an order within the last seven months. In addition, 58.8% of active members have made more than one purchase in the last 18 months. During 1994, the Company significantly increased its program carriage and believes that future levels of net sales of HSC will be dependent on the success of the new merchandising and programming strategies in increasing market penetration. Market penetration represents the level of active members within a market. The following table highlights the changes in the estimated unduplicated television household reach of HSC programming by category for the twelve months ended March 31, 1995:
--------------------------------------------------------------------------------------------- CABLE BROADCAST SATELLITE TOTAL --------------------------------------------------------------------------------------------- (In thousands of households) Balance -- March 31, 1994..................... 34,530 24,946 3,100 62,576 Net additions................................. 3,016 802 650 4,468 Shift in classification....................... 3,326 (3,326) -- -- Change in Nielsen household counts............ -- 336 -- 336 ------ --------- --------- ------ Balance -- March 31, 1995..................... 40,872 22,758 3,750 67,380 ====== ======= ====== ======
As of March 31, 1995, there were 94.8 million homes in the United States with a television set, 60.0 million basic cable television subscribers and 3.8 million homes with satellite dish receivers. The cable television household growth was achieved through increased cable system carriage of HSC's broadcast signal due to the implementation of "must carry" beginning in September 1993, and the Company's aggressive campaign to obtain contracts for cable carriage of HSC programming. Because HSC programming is now on a cable channel line-up, former broadcast households can now more easily access HSC programming. The decrease in broadcast television households was primarily attributable to the shift in classification from broadcast to cable. This decrease was offset, in part, by the addition of broadcast television households due to changes in the composition of the broadcast television station group with which HSC has affiliation agreements. During the remainder of 1995, cable system contracts covering 3.9 million cable subscribers are subject to termination or renewal. This represents 9.5% of the total number of unduplicated cable households receiving HSC programming, exclusive of "must carry" subscribers. The Company is pursuing both renewals and additional cable television system contracts, but channel availability, competition, cost of carriage, cable re-regulation and ownership or affiliation of the Company's competitors with cable system operators are some of the factors affecting the negotiations for cable television system contracts. Although management cannot determine the percentage of expiring contracts that will be renewed or the number of households that will be added through new contracts, management believes that a majority of the contracts will be renewed. HSC's market penetration lags behind increases in carriage. As a result of the increase in carriage since late 1993, the Company has initially experienced a decrease in its market penetration. As the new households mature, the Company expects market penetration to improve, but there can be no assurance that this will occur. The Company is developing new marketing programs aimed at increasing consumer awareness of HSC programming to further improve market penetration. In addition to the new ventures that commenced in late 1994, HSND and a joint venture with Black Entertainment Television, Inc., and its expanded role in computer on-line interactive shopping, the Company has engaged the services of consultants to assist in developing its planned shopping service, Television 9 11 Shopping Mall, which it expects to launch by early 1996. These business activities did not have a material negative impact on the Company's results of operations during the quarter ended March 31, 1995. A full year of these business activities may have a material negative impact on the Company's results of operations in 1995. The Company is also engaged in discussions with various entities to explore other new business opportunities. The pursuit of these potential business opportunities may include the creation of new business entities, both domestic and international, development and distribution of broadcast and cable television programming, changes in the Company's broadcast relationships and/or expansion in the carriage of the Company's programming by operators of cable television systems. There can be no assurance that the Company will be able to reach agreements with the necessary parties to pursue these business opportunities. COST OF SALES For the quarter ended March 31, 1995, cost of sales decreased $13.7 million, or 7.8%, to $161.9 million from $175.6 million for the quarter ended March 31, 1994. As a percentage of net sales, cost of sales increased to 66.5% from 64.0% compared to the quarter ended March 31, 1994. Cost of sales of HSC decreased $21.8 million for the quarter ended March 31, 1995, which was primarily offset by an increase in cost of sales for HSND of $4.8 million. The remaining increase in cost of sales is attributable to the Company's other subsidiary operations. As a percentage of HSC sales, cost of sales increased to 69.7% from 65.6%, compared to the quarter ended March 31, 1994. The dollar decreases in consolidated and HSC's cost of sales relate to the lower sales volumes, and the increases in cost of sales percentages compared to the first quarter of 1994 relate primarily to promotional price discounts, as discussed in "Net Sales." OPERATING EXPENSES The following table highlights the operating expense section from the Company's Condensed Consolidated Statements of Operations, including the dollar and percentage changes for the quarter ended March 31, 1995, compared to the quarter ended March 31, 1994:
----------------------------------------------------------------------------------------- THREE MONTHS ENDED MARCH 31, --------------- $ % 1995 1994 CHANGE CHANGE ----------------------------------------------------------------------------------------- (In millions, except %) Selling and marketing............................. $42.2 $38.2 $4.0 10.4% Engineering and programming....................... 25.4 24.2 1.2 4.7 General and administrative........................ 19.3 20.2 (.9) (4.7) Depreciation and amortization..................... 8.9 6.1 2.8 46.7 Restructuring charge.............................. 2.0 -- 2.0 100.0 ----- ----- ------ $97.8 $88.7 $9.1 ===== ===== =====
As a percentage of net sales, these expenses increased to 40.1% from 32.4% compared to the quarter ended March 31, 1994. SELLING AND MARKETING For the quarter ended March 31, 1995, selling and marketing expenses, as a percentage of net sales, increased to 17.3% from 13.9%, compared to the quarter ended March 31, 1994. 10 12 The major components of selling and marketing expenses are detailed below, including the dollar and percentage changes for the quarter ended March 31, 1995, compared to the quarter ended March 31, 1994:
----------------------------------------------------------------------------------------- THREE MONTHS ENDED MARCH 31, --------------- $ % 1995 1994 CHANGE CHANGE ----------------------------------------------------------------------------------------- (In millions, except %) Telephone, operator and customer service.......... $12.7 $13.1 $ (.4) (2.8)% Fees to cable system operators: Commissions..................................... 7.3 9.8 (2.5) (25.7) Marketing payments for cable advertising........ 4.3 7.6 (3.3) (43.3) Performance bonus commissions................... 3.4 .7 2.7 387.2 HSND selling expenses............................. 6.3 -- 6.3 100.0
Telephone, operator and customer service expenses are typically related to sales, call volume and the number of packages shipped. Although telephone expenses decreased 22.4% compared to the quarter ended March 31, 1994, operator and customer service payroll expenses remained relatively constant in total dollars, while increasing as a percent of sales compared to the quarter ended March 31, 1994. Management is reviewing these expenses, and operator and customer service expenses are expected to fluctuate more in relation to call volume and package volume for the remainder of 1995. For the quarter ended March 31, 1995, commissions to cable system operators decreased as a result of the decrease in sales volume. Marketing payments for cable advertising, which relate primarily to previous contractual commitments, decreased for the quarter ended March 31, 1995, compared to the quarter ended March 31, 1994. As older agreements expire or are renegotiated and new cable carriage agreements are executed, marketing payments for cable advertising are being replaced by other forms of incentive compensation to cable operators. These include payment of cable distribution fees, as discussed in "Depreciation and Amortization," and performance bonus commissions. Accordingly, marketing payments for cable advertising are expected to continue to decrease, and depreciation and amortization will increase for the remainder of 1995. Performance bonus commissions, which commenced in the first quarter of 1994 in connection with new cable agreements, require payments based upon HSC attaining certain sales levels in the cable operator's franchise area. These expenses may increase based upon sales volume and the renewal or addition of cable contracts. In addition, cable operators which have executed affiliation agreements to carry HSN 2 are compensated for all sales of HSN 2 within their franchise areas, regardless of whether a customer's order results from watching the program via cable, satellite dish, or on a broadcast television station. Thus, with the advent of "must carry," HSC is paying commissions to cable operators in addition to the hourly affiliation payments made to broadcast television stations. As a result of the above factors, subject to sales volume, fees paid to cable system operators are expected to remain at higher levels in future periods. Selling and marketing expenses related to HSND, which primarily consist of media and telephone, operator and customer service expenses, are expected to remain at these levels for the remainder of 1995. The remaining net increase in selling and marketing expenses is attributable to advertising and promotional expenses of the Company's other subsidiary operations. Management believes that total selling and marketing expenses in future periods will be at higher levels as the Company maintains its efforts to increase the number of cable systems carrying HSC programming, increase market penetration through expanded direct mailings and other advertising to customers and develop new electronic retailing opportunities. ENGINEERING AND PROGRAMMING For the quarter ended March 31, 1995, engineering and programming expenses, as a percentage of net sales, increased to 10.4% from 8.8% compared to the quarter ended March 31, 1994. 11 13 Engineering and programming expenses, which increased primarily due to HSND programming costs of $1.3 million for the quarter ended March 31, 1995, are expected to remain relatively constant for the remainder of 1995. GENERAL AND ADMINISTRATIVE For the quarter ended March 31, 1995, general and administrative expenses, as a percentage of net sales, increased to 7.9% from 7.4% compared to the quarter ended March 31, 1994. Legal expense and expenses in connection with the Company's executive stock award program and stock appreciation rights granted in 1993 decreased $2.7 million for the quarter ended March 31, 1995, compared to the quarter ended March 31, 1994. The above decreases were offset by increases for the quarter ended March 31, 1995, totaling $1.8 million, in payroll expense, consulting and other administrative expenses. Based on present circumstances, management expects general and administrative expenses to remain at current levels for the remainder of 1995. DEPRECIATION AND AMORTIZATION Depreciation and amortization increased primarily due to the amortization of cable distribution fees, which totaled $2.5 million for the quarter ended March 31, 1995. Amortization of these fees is expected to total $10.5 million in 1995 based on existing agreements. This amortization could increase if additional cable distribution fees are paid during the remainder of 1995 in connection with renewing or adding long-term cable system contracts, as discussed in "Net Sales." The balance of the increase in depreciation and amortization is attributable to capital asset additions during the twelve months ended March 31, 1995. Accordingly, depreciation and amortization will be higher for the remainder of 1995. RESTRUCTURING CHARGE The restructuring charge for the quarter ended March 31, 1995, of $2.0 million represents management's estimate of costs to be incurred in connection with the closing of the Company's Reno, Nevada, distribution center, which is expected to be accomplished by June 30, 1995. The decision to close the Reno distribution center was based on an evaluation of the Company's overall distribution strategy. Management believes that consolidation of the Company's distribution facilities will result in better operating efficiencies and increased service to customers. OTHER INCOME (EXPENSE) For the quarter ended March 31, 1995, net other income increased $.1 million to $1.7 million compared to the quarter ended March 31, 1994. Interest income decreased $2.9 million for the quarter ended March 31, 1995, compared to the quarter ended March 31, 1994, primarily due to the repayment by Silver King Communications, Inc. ("SKC"), in August 1994, of its indebtedness to the Company. Interest income is expected to further decrease for the remainder of 1995. Interest expense decreased $.9 million for the quarter ended March 31, 1995, primarily as a result of the repayment by the Company, in August 1994, of its Senior Term Loans. In late 1994 and the first quarter of 1995, the Company borrowed funds under its amended bank facility and intends to borrow additional amounts in 1995 as discussed in "Financial Position, Liquidity and Capital Resources." Interest expense for the last nine months of 1995 will show an increase as a result of these borrowings and higher interest rates compared to 1994. For the quarter ended March 31, 1995, net miscellaneous income increased $2.1 million compared to the quarter ended March 31, 1994. Net miscellaneous income for the quarter ended March 31, 1995, includes the receipt of proceeds from a lawsuit settlement totaling $.6 million, a gain on the sale of other assets of $.6 million and royalty income related to HSND of $.5 million. 12 14 INCOME TAXES The Company's effective tax rate was a benefit of (39.0)% for the quarter ended March 31, 1995, and an expense of 42.0% for the quarter ended March 31, 1994. The Company's effective tax rate for these periods differed from the statutory rate due primarily to the amortization of goodwill and other acquired intangible assets relating to acquisitions from prior years, state income taxes and the provision for interest on adjustments proposed by the Internal Revenue Service ("IRS"), as discussed in Note D to the Condensed Consolidated Financial Statements included herein. The Company's effective tax rate is expected to vary from the statutory rate for the remainder of 1995. NET EARNINGS (LOSS) The Company had a net loss of $(8.8) million, or $(.10) per share, for the quarter ended March 31, 1995, compared to net earnings of $6.7 million, or $.07 per share, for the quarter ended March 31, 1994. The decrease in results for the quarter ended March 31, 1995, was primarily attributable to a decrease in net sales of $30.6 million and a decrease in gross profit of $16.9 million compared to the quarter ended March 31, 1994. As discussed in "Restructuring Charge," the results for the quarter ended March 31, 1995, included $2.0 million of costs expected to be incurred in connection with the closing of the Company's Reno, Nevada, distribution center. SEASONALITY The Company believes that seasonality does impact its business but not to the same extent it impacts the retail industry in general. B. FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES The following table highlights various balances and ratios from the Condensed Consolidated Financial Statements included herein:
----------------------------------------------------------------------------------------- MARCH 31, ----------------- DECEMBER 31, 1995 1994 1994 ----------------------------------------------------------------------------------------- Cash and cash equivalents (millions)................. $ 20.6 $ 45.7 $ 33.6 Working capital (millions)........................... $ 25.7 $ 23.8 $ 23.1 Current ratio........................................ 1.14:1 1.12:1 1.11:1 Accounts receivable, net (millions).................. $ 32.0 $ 29.4 $ 40.8 Inventories, net (millions).......................... $111.3 $103.5 $118.8 Inventory turnover (annualized for March periods only).............................................. 5.63 6.55 6.36
Cash and cash equivalents totaled $20.6 million at March 31, 1995, compared to $45.7 million at March 31, 1994, and $33.6 million at December 31, 1994. The principal source of cash for the twelve months ended March 31, 1995, was the repayment by SKC of its obligation to the Company in the amount of $131.2 million and borrowings by the Company under its revolving credit facility. These funds, along with operating funds, were used principally to repay the $110.0 million balance of the Company's Senior Term Loans, pay cable distribution fees of $54.8 million, purchase treasury stock, pay settlements to the IRS in the amount of $19.6 million, pay litigation settlements and pay for $18.1 million of capital expenditures. The principal source of cash for the quarter ended March 31, 1995, was borrowings by the Company under its revolving credit facility. These funds, along with operating funds, were used principally to pay cable distribution fees of $23.5 million, purchase treasury stock, pay litigation settlements and pay for capital expenditures. Net earnings adjusted for non-cash items totaled $39.2 million and $2.6 million for the twelve months and three months ended March 31, 1995, respectively. Accounts and notes receivable, net, increased to $32.0 million at March 31, 1995, from $29.4 million at March 31, 1994, and decreased from $40.8 million at December 31, 1994. The primary reason for the increase compared to March 31, 1994, is "FlexPay" sales which resulted in accounts receivable totaling $21.1 million at March 31, 1995, compared to $17.1 million at March 31, 1994. Compared to December 31, 1994, 13 15 "FlexPay" accounts receivable decreased from $23.6 million. The Company's financing of "FlexPay" accounts receivable has not had a significant impact on its liquidity position. In addition, on March 27, 1995, Precision Systems, Inc. ("PSi") repaid $2.7 million, plus accrued interest, of its $5.0 million loan from the Company. Under an agreement between the Company and PSi, the remaining principal balance of the loan has been recorded as a prepayment of future monthly software maintenance payments due PSi from the Company through December 1996. Inventories, net, increased to $111.3 million at March 31, 1995, from $103.5 million at March 31, 1994, and decreased from $118.8 million at December 31, 1994. The inventory balance is net of a carrying adjustment of $18.3 million at March 31, 1995, which represents a decrease from $26.7 million at March 31, 1994, and from $18.8 million at December 31, 1994. The carrying adjustment decrease from March 31, 1994, and December 31, 1994, to March 31, 1995, relates primarily to merchandise sold through the Company's retail outlet stores. Capital expenditures for the quarter ended March 31, 1995 were $3.3 million. The Company estimates capital expenditures will range between $18.0 to $20.0 million for the remainder of 1995. On March 29, 1995, the Company's $100.0 million revolving credit facility was amended and increased to $150.0 million, as discussed in Note C to the Condensed Consolidated Financial Statements included herein. The credit facility contains restrictive covenants, some of which under certain circumstances may restrict the total amount of borrowing available and preclude the Company from purchasing its common stock. As of April 30, 1995, $80.0 million was outstanding under this facility. In February 1995, the Company paid $9.6 million, plus interest, in connection with litigation settlements, using borrowings under its bank facility. During the remainder of 1995, management expects to pay cable distribution fees, totaling $30.8 million, relating to current contracts with cable system operators to carry HSC programming. Of this amount, $27.6 million is payable to a related party over the next six months along with interest at 1% over one-month LIBOR. The Company has agreed to participate in the investor group which was awarded a major league baseball franchise for the Tampa Bay area. The Company's commitment is contingent upon its securing certain merchandising and broadcasting rights with respect to the franchise. If the Company obtains those rights, it has agreed to contribute $10.0 million as a general and limited partner. Management believes that available cash, internally generated funds and the credit facility will provide sufficient capital resources to meet the Company's foreseeable needs. As of April 30, 1995, the Company has $65.0 million of bank credit lines available to back letters of credit and which are used exclusively to facilitate inventory imports. Presentation of letters of credit by vendors results in an immediate charge to the Company's account with no interest charges incurred. Outstanding letters of credit amounted to $14.9 million at April 30, 1995, leaving $50.1 million available. For the quarter ended March 31, 1995, the Company did not pay any cash dividends and does not anticipate paying cash dividends in the immediate future. At April 30, 1995, .7 million options to purchase the Company's stock were outstanding and exercisable at prices ranging between $3.25 and $14.75. The exercise of such stock options would result in a cash inflow of $2.0 million to the Company. In 1994, the Company's Board of Directors authorized the repurchase of up to an additional $75.0 million of the Company's common stock. In 1994, the Company repurchased 1.3 million shares at a total cost of $13.1 million and in the quarter ended March 31, 1995, the Company repurchased an additional 2.6 million shares at a total additional cost of $21.6 million. The Company may, subject to cash availability, debt covenants and market conditions, continue to repurchase its common stock within the limits set by the Board of Directors. Under the terms of its credit facility, the Company may not repurchase any of its common stock prior to July 1, 1995, and may make purchases thereafter only if it meets certain cash flow ratios. 14 16 PART II -- OTHER INFORMATION ITEM 1 -- LEGAL PROCEEDINGS On April 26, 1993, four stockholders of the Company filed with the Delaware Chancery Court a purported class action complaint, styled as 7547 Corp. v. Liberty Media Corp., C.A. No. 12956, on behalf of an unspecified class of stockholders of the Company (the "Section 203 Action"). The defendants in the original complaint were Liberty, Liberty Program Investments, Inc. ("LPI"), the Company, and certain current and former directors of the Company (Messrs. Speer, Forstmann, McNamara, Wandler, Chu, James, Ramsey and Roberts); on June 24, 1994, plaintiffs filed an amended complaint which names additional defendants who are past or present directors of the Company (Messrs. Barton, Bennett, Draper, Hogan, Malone, Hindery and McNamee). The gravamen of the amended complaint in the Section 203 action was that, prior to the time when Liberty reached an agreement, arrangement or understanding with RMS Limited Partnership, a Nevada Limited Partnership ("RMS"), to allow Liberty to purchase a controlling equity interest in the Company, the Company's Board and Executive Committee failed to take effective action to approve the proposed transaction and, thereby, failed under Section 203(a)(1) to exempt Liberty from the restrictions under Section 203 on any "business combination" between Liberty and the Company prior to December 4, 1995. As a result, plaintiffs alleged that any business combination involving Liberty, its affiliates or associates, and the Company would require the affirmative vote of 66 2/3% of the outstanding voting stock of the Company which is not owned by Liberty. Plaintiffs also alleged that Liberty's disclosures regarding the effectiveness of the Section 203 exemption by the HSN Executive Committee on December 4, 1992, were false and misleading. Plaintiffs asserted that Liberty disregarded the conflicts of interest held by the members of the HSN Executive Committee on the Section 203 exemption, and that Liberty knew that no valid action had been taken by the Company's Board to exempt Liberty from the restrictions under Section 203. The amended complaint alleged that, by asserting that Liberty was exempt from Section 203, Liberty and the other defendants misrepresented a material fact to all sellers of the Company's stock and holders of the Company's stock after the public announcement of the Liberty/RMS Agreement in Principle on December 7, 1992. Plaintiffs also alleged that the Liberty Tender Offer constituted a prohibited "business combination" under Section 203. Plaintiffs also alleged that the members of the Company's Executive Committee (Messrs. Speer, Wandler and Ramsey) had disabling conflicts of interest which prevented the Company's Executive Committee from taking effective action on December 4, 1992, to exempt Liberty from the restrictions of Section 203. The Company and the individual defendants allegedly aided and abetted Liberty in its asserted scheme to misrepresent its status under Section 203. The individual defendants also allegedly breached their fiduciary duties by failing to correct Liberty's asserted misrepresentation of its exemption from Section 203. Plaintiffs sought a declaratory judgment that Liberty is subject to Section 203, an award of damages to the plaintiff class members who sold the Company's common stock, and equitable relief. On November 16, 1994, the parties reached an agreement to settle the Section 203 Action subject to several conditions. Under the settlement, all claims which were, could have been or in the future might be asserted by any member of the Section 203 Class against any of the Defendants or their affiliates, which relate to or arise out of, directly or indirectly, the allegations contained in any complaint filed in the Section 203 action (the "Section 203 Claims"), would be dismissed with prejudice. In exchange for the foregoing release of the Section 203 Claims, Liberty and the Company have agreed, among other things, that the consummation of any "business combination," as defined in Section 203, prior to December 4, 1995, between the Company, on the one hand, and Liberty or any of its "affiliates" or "associates," on the other hand (a "Qualifying Business Combination"), shall be subject to the prior approval of the Company's board of directors, and the authorization at an annual or special meeting of the Company's stockholders, and not by written consent, by the affirmative vote of the holders of at least a majority of the outstanding voting stock which is not "owned" by Liberty (the "Section 203 Undertaking"). 15 17 The parties to the Section 203 Action also agreed, among other things, that upon the approval by the Delaware Chancery Court of the settlement of the Section 203 Action, (i) the Section 203 Undertaking shall be binding as against any member of the Section 203 Class, which shall include any holder, purchaser or seller of the Company's stock from and after October 12, 1994, through and including December 4, 1995 (a "Subsequent Company Stockholder"); and (ii) so long as Liberty and the Company comply with the Section 203 Undertaking, no member of the Section 203 Class (including any Subsequent Company Stockholder) shall be entitled to assert that any Qualifying Business Combination (a) is required to be separately approved by the Company's stockholders under any provision of Section 203, or (b) is otherwise subject to, conditioned upon, restricted by or prohibited under any provision of Section 203. Liberty also has agreed that, in the event it consummates a "business combination" (as defined in Section 203) with the Company prior to the hearing on the proposed settlement of the Section 203 Action, Liberty will comply with the Section 203 Undertaking. Plaintiffs' counsel in the Section 203 Action petitioned the Court for an award of attorneys' fees and expenses not to exceed $2.6 million. Liberty agreed to pay plaintiffs' counsel such fees and disbursements as may be awarded by the Delaware Chancery Court in the Section 203 Action, and the Company is not responsible for any of the fees or expenses of plaintiffs' counsel in the Section 203 Action. On January 25, 1995, the Delaware Chancery Court approved the settlement of the Section 203 Action. This disclosure is included in this Form 10-Q pursuant to the terms of the above settlement. ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On May 10, 1995, the annual meeting of stockholders was held. Stockholders present or in person by proxy, representing 20,000,000 shares of Class B Common Stock and 64,974,486 shares of Common Stock, voted on the following matters: The stockholders elected the following seven directors of the Company to hold office until the next annual meeting of stockholders or until their successors have been duly elected: Elected by holders of Common Stock voting as a separate class:
NUMBER OF SHARES FOR WHICH NUMBER OF SHARES AUTHORITY CAST IN FAVOR WITHHELD ---------------- ---------------- J. Anthony Forstmann................................ 64,289,967 684,519 George C. McNamee................................... 64,316,360 658,126
Elected by holders of Common Stock and Class B Common Stock voting as a single class:
NUMBER OF SHARES FOR WHICH NUMBER OF SHARES AUTHORITY CAST IN FAVOR WITHHELD ---------------- ---------------- Robert R. Bennett................................... 84,259,439 715,047 John M. Draper...................................... 84,273,544 700,942 David F. Dyer....................................... 84,293,536 680,950 Leo J. Hindery, Jr. ................................ 84,275,305 699,181 Gerald F. Hogan..................................... 84,312,416 662,070
The stockholders of both the Common Stock and Class B Common Stock voting as a single class also ratified the appointment of KPMG Peat Marwick LLP as the Company's independent auditors for 1995 as follows:
NUMBER OF SHARES NUMBER OF SHARES NUMBER OF SHARES CAST IN FAVOR CAST AGAINST ABSTAINING - ---------------- ---------------- ---------------- 84,349,254 136,402 488,830
16 18 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 May 12, 1995 /s/ GERALD F. HOGAN - ------------------------------------------ --------------------------------------------- Gerald F. Hogan President and Chief Executive Officer Dated May 12, 1995 /s/ KEVIN J. McKEON - ------------------------------------------ --------------------------------------------- Kevin J. McKeon Senior Vice President, Accounting & Finance and Treasurer (Principal Financial Officer) Dated May 12, 1995 /s/ BRIAN J. FELDMAN - ------------------------------------------ --------------------------------------------- Brian J. Feldman Controller (Chief Accounting Officer)
17 19 EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 27 Financial Data Schedule (for SEC purposes only) EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-1995 JAN-01-1995 MAR-31-1995 20,562 0 32,007 0 111,328 202,905 249,815 121,337 430,377 177,239 72,365 776 0 0 174,702 430,377 243,610 243,610 161,935 161,935 97,783 0 1,219 (14,425) (5,626) (8,799) 0 0 0 (8,799) (.10) (.10)
-----END PRIVACY-ENHANCED MESSAGE-----