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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
______________
Form 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934 for the quarterly period ended March 31, 2000.
or
[ ] Transition report pursuant to Section 13 of 15(d) of the Securities
Exchange Act of 1934 for transition period from to .
Commission File No. 333-38689
______________
FOX SPORTS NETWORKS, LLC
(Exact name of registrant as specified in its charter)
Delaware 95-4577574
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1440 South Sepulveda Boulevard, Los Angeles, CA 90025
(Address of principal executive offices)
Registrant's telephone number, including area code: (310) 444-8123
___________
Indicate by check mark whether the Registrant has (1) 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) been subject to such
filing requirements for the past 90 days.
Yes X No
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PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
FOX SPORTS NETWORKS, LLC
(A Delaware Limited Liability Company)
Condensed Consolidated Balance Sheets
March 31, 2000 and June 30, 1999
(Dollars in thousands)
March 31, June 30,
2000 1999
---------- ----------
(unaudited)
Assets
Current assets:
Cash and cash equivalents............................................................ $ 9,208 $ 59,145
Trade and other receivables, net of allowance for doubtful accounts of $23,292 at
March 31, 2000 and $21,925 at June 30, 1999........................................ 174,962 164,739
Receivables from equity affiliates, net.............................................. 25,182 43,892
Program rights, current.............................................................. 123,245 106,790
Notes receivable, current............................................................ 1,935 1,935
Prepaid expenses and other current assets............................................ 13,940 13,968
---------- ----------
Total current assets.............................................................. 348,472 390,469
Property and equipment, net............................................................ 53,088 53,794
Investments in affiliates.............................................................. 942,610 856,948
Notes receivable, long-term............................................................ 5,994 12
Program rights, non-current............................................................ 135,389 103,567
Excess cost, net of accumulated amortization of $103,207 at March 31, 2000 and
$92,813 at June 30, 1999........................................................... 483,571 493,965
Other assets........................................................................... 45,768 33,743
---------- ----------
Total Assets...................................................................... $2,014,892 $1,932,498
========== ==========
Liabilities and Members' Equity
Current liabilities:
Accounts payable and accrued expenses................................................ $ 179,583 $ 195,961
Program rights payable............................................................... 106,239 73,061
Current portion of long-term debt.................................................... 2,431 13,253
Accrued interest..................................................................... 6,158 18,903
Other current liabilities............................................................ 14,172 9,168
---------- ----------
Total current liabilities......................................................... 308,583 310,346
Non-current program rights payable..................................................... 123,793 96,021
Long-term debt, net of current portion................................................. 1,519,362 1,488,178
Minority interest...................................................................... 24,294 2,207
Commitments and contingencies
Members' equity........................................................................ 38,860 35,746
---------- ----------
Total Liabilities and Members' Equity............................................. $2,014,892 $1,932,498
========== ==========
The accompanying notes are an integral part of these condensed
consolidated balance sheets.
2
FOX SPORTS NETWORKS, LLC
(A Delaware Limited Liability Company)
Condensed Consolidated Statements of Operations
For the Three Months and Nine Months Ended March 31, 2000 and 1999
(Dollars in thousands)
Three Months Ended March 31, Nine Months Ended March 31,
---------------------------------- ---------------------------------
2000 1999 2000 1999
-------- -------- -------- --------
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues:
Programming......................................... $112,140 $ 84,815 $309,822 $238,300
Advertising......................................... 57,635 40,931 165,488 119,297
Direct broadcast.................................... 35,936 29,489 102,460 92,279
Other............................................... 13,097 16,708 50,482 51,239
-------- -------- -------- --------
218,808 171,943 628,252 501,115
-------- -------- -------- --------
Expenses:
Operating........................................... 148,939 120,484 423,083 353,216
General and administrative.......................... 19,941 18,352 56,022 67,671
Depreciation and amortization....................... 13,031 5,991 31,536 18,860
-------- -------- -------- --------
181,911 144,827 510,641 439,747
-------- -------- -------- --------
Operating income...................................... 36,897 27,116 117,611 61,368
-------- -------- -------- --------
Other expenses (income):
Interest, net....................................... 32,359 26,804 94,625 82,708
Subsidiaries' income tax expense.................... 326 94 1,699 650
Equity loss of affiliates, net...................... 10,252 9,784 13,962 22,041
Other............................................... 35 23 32 (1,531)
Minority interest................................... 2,157 679 4,179 2,538
-------- -------- -------- --------
45,129 37,384 114,497 106,406
-------- -------- -------- --------
Net (loss) income..................................... $ (8,232) $(10,268) $ 3,114 $(45,038)
======== ======== ======== ========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
FOX SPORTS NETWORKS, LLC
(A Delaware Limited Liability Company)
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended March 31, 2000 and 1999
(Dollars in thousands)
Nine Months Ended
March 31,
2000 1999
--------- ---------
(unaudited) (unaudited)
Cash flows from operating activities:
Net income (loss)................................................................. $ 3,114 $ (45,038)
Adjustments to reconcile net (loss) income to net cash provided by (used in)
operating activities:
Depreciation and amortization.................................................. 31,536 18,860
Interest accretion and amortization of debt issuance costs..................... 67,126 23,084
Equity loss of affiliates, net................................................. 13,962 22,041
Minority interests............................................................. 4,179 2,538
Changes in operating assets and liabilities:
Trade and other receivables.................................................... (3,972) 21,820
Program rights................................................................. (46,854) (80,469)
Prepaid expenses and other operating assets.................................... (27,827) (6,610)
Accounts payable and accrued expenses.......................................... (33,571) (35,495)
Program rights payable......................................................... 57,348 79,715
Other operating liabilities.................................................... (7,759) (23,448)
--------- ---------
Net cash provided by (used in) operating activities......................... 57,282 (23,002)
--------- ---------
Cash flows from investing activities:
Advances from equity affiliates................................................... 15,934 70,653
Advances to equity affiliates..................................................... (44,372) (60,819)
Notes receivable collected from third parties..................................... 6 5,235
Notes receivable.................................................................. (5,988)
Purchases of property and equipment............................................... (9,787) (16,993)
Investments in equity affiliates.................................................. (28,838) (62,363)
Distributions from equity affiliates.............................................. 7,286 40,051
--------- ---------
Net cash used in investing activities....................................... (65,759) (24,236)
--------- ---------
Cash flows from financing activities:
Borrowings of long-term debt...................................................... 294,365 167,000
Repayment of long-term debt....................................................... (333,305) (100,149)
Distribution to minority shareholder of subsidiary................................ (2,520) (2,040)
--------- ---------
Net cash (used in) provided by financing activities......................... (41,460) 64,811
--------- ---------
Net (decrease) increase in cash and cash equivalents................................ (49,937) 17,573
Cash and cash equivalents, beginning of period...................................... 59,145 16,696
--------- ---------
Cash and cash equivalents, end of period............................................ $ 9,208 $ 34,269
========= =========
Supplemental cash flow disclosure:
Cash paid for interest $ 44,549 $ 73,557
========= =========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
FOX SPORTS NETWORKS, LLC
(A Delaware Limited Liability Company)
Notes to Condensed Consolidated Financial Statements
March 31, 2000 (unaudited)
(Dollars in thousands)
(1) Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of
Fox Sports Networks, LLC (the "Company") have been prepared by the Company
pursuant to the instructions for Form 10-Q and, accordingly, certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted where permitted by regulation. In management's opinion, the accompanying
unaudited condensed consolidated financial statements reflect all adjustments,
primarily consisting of normal recurring accruals, necessary for a fair
presentation of the consolidated results of operations for the interim periods
presented. The condensed consolidated results of operations for such interim
periods are not necessarily indicative of the results that may be expected for
future interim periods or for the year ended June 30, 2000. These interim
condensed consolidated financial statements and the notes thereto should be read
in conjunction with the audited consolidated financial statements and notes
thereto included in the Company's Transition Report on Form 10-K, as amended,
for the six months ended June 30, 1999.
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements, and the reported amounts of revenues and expenses during
the reporting period. Because of the use of estimates inherent in the financial
reporting process, actual results could differ from those estimates.
The Company consolidates all subsidiaries in which it has a majority
interest and voting control is held by either the Company or Fox Entertainment
Group, Inc. ("Fox"), its parent. The percentage of ownership, together with the
degree to which the Company controls the management and operation of a regional
sports network ("RSN"), determines the appropriate accounting treatment for the
Company's interest in that particular RSN. If the Company owns a majority
interest in a particular RSN, but neither the Company nor Fox have voting
control, the ownership interest is accounted for using the equity method of
accounting.
In July 1999, The News Corporation Limited acquired from Liberty Media
Corporation ("Liberty") substantially all of Liberty's 50% interest in the
Company and transferred that interest to Fox in exchange for common stock of
Fox. In connection with this transaction, voting control of certain majority-
owned subsidiaries of the Company, previously held by Liberty, has been acquired
by Fox and, accordingly, these subsidiaries are consolidated for the nine months
ended March 31, 2000 (See Note 5). These majority-owned subsidiaries which were
previously accounted for using the equity method of accounting, are:
Fox Sports Net Pittsburgh, LP (formerly Liberty/Fox KBL LP)
Fox Sports Net Chicago Holdings, LLC (formerly Fox/Liberty Chicago LP)
Fox Sports Net Bay Area Holdings, LLC (formerly Fox/Liberty Bay Area LP)
Fox Sports Net Upper Midwest Holdings, LP (formerly Fox/Liberty Upper
Midwest LP)
Fox Sports Net Distribution, LP (formerly Fox/Liberty Distribution LP)
(2) Reclassifications
Certain reclassifications have been made to the prior year financial
statements in order to conform to the current year presentation.
5
FOX SPORTS NETWORKS, LLC
(A Delaware Limited Liability Company)
Notes to Condensed Consolidated Financial Statements -- (Continued)
March 31, 2000 (unaudited)
(Dollars in thousands)
(3) Debt
Debt at March 31, 2000 and June 30, 1999 is summarized as follows:
March 31, June 30,
2000 1999
---------- ----------
(unaudited)
19/th/ Holdings--Term loan........................................................... $ 400,000 $ 400,000
19/th/ Holdings--Revolver............................................................ 288,864 277,000
Senior Notes......................................................................... 500,000 500,000
Senior Discount Notes................................................................ 322,704 300,786
Other................................................................................ 10,225 23,645
---------- ----------
1,521,793 1,501,431
Less current portion................................................................. (2,431) (13,253)
---------- ----------
$1,519,362 $1,488,178
========== ==========
In July 1999, 19th Holdings Corporation ("19th Holdings"), a wholly-owned
subsidiary of Fox, acquired the debt outstanding under a bank facility (the
"19th Facility") from a group of banks, led by The Chase Manhattan Bank.
Borrowings under the 19th Facility bear interest at a fixed rate determined on
an annual basis by 19th Holdings. 19th Holdings has determined that the rate of
interest on this debt through June 2000 shall be 8%.
(4) Summarized Financial Information
Summarized unaudited statement of operations information for subsidiaries
accounted for under the equity method for which separate financial information
would be required for annual periods, is as follows:
Three Months Ended March 31, Nine Months Ended March 31,
2000 1999 2000 1999
-------- -------- -------- --------
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues.................................. $279,333 $233,650 $777,277 $623,542
Operating income (loss)................... 17,136 (16,897) 14,022 (66,672)
Net (loss) income......................... (17,235) (9,857) (20,833) (47,646)
(5) Supplemental Disclosure to Condensed Consolidated Statements of Cash Flows
The consolidation of certain majority-owned subsidiaries previously
accounted for using the equity method (see Note 1) is a non-cash investing
activity that resulted in increases to various assets and liabilities on the
Company's condensed consolidated balance sheet that are not reflected in the
condensed consolidated statements of cash flows for the nine months ended March
31, 2000. Such increases primarily consisted of a $78,072 increase in
investments in equity affiliates, a $47,148 decrease in receivables from equity
affiliates and a $20,428 increase in minority interest.
6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
This document contains statements that constitute "forward-looking statements"
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended, and Section 27A of the Securities Act of 1933, as amended. The words
"expect," "estimate," "anticipate," "predict," "believe" and similar expressions
and variations thereof are intended to identify forward-looking statements.
These statements appear in a number of places in this document and include
statements regarding the intent, belief or current expectations of the Company,
its members or its officers with respect to, among other things, trends
affecting the Company's financial condition or results of operations. The
readers of this document are cautioned that any such forward-looking statements
are not guarantees of future performance and involve risks and uncertainties,
including those risks and uncertainties discussed in this document under the
heading "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and in the Company's Transition Report on Form 10-K, as amended,
for the six months ended June 30, 1999 under the headings "Business" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." The Company does not ordinarily make projections of its future
operating results and undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. Readers should carefully review the risk factors discussed
in the other documents filed by the Company with the Securities and Exchange
Commission. This report should be read in conjunction with the unaudited
condensed consolidated financial statements of the Company and related notes set
forth elsewhere herein.
The following discussion and analysis should be read in conjunction with the
Management's Discussion and Analysis included in the Company's Transition Report
on Form 10-K, as amended, for the six months ended June 30, 1999.
Introduction
Fox Sports Networks, LLC (together with its subsidiaries, the "Company")
was formed to provide cable programming through its interests in regional sports
networks ("RSNs") and Fox Sports Net ("FSN"), a national sports programming
service, and through FX Network ("FX"), a general entertainment network. The
Company's interests in the sports programming business are derived through its
99% ownership interests in Fox Sports Net, LLC and Fox Sports RPP Holdings, LLC,
while its interest in FX is derived through its 99% ownership interest in FX
Networks, LLC.
In July 1999, The News Corporation Limited ("News Corporation") acquired
from Liberty Media Corporation ("Liberty") substantially all of Liberty's 50%
interest in the Company and its businesses. News Corporation transferred the
acquired interests to Fox Entertainment Group, Inc. ("Fox") in exchange for
common stock of Fox.
In connection with the acquisition of a 40% interest in Regional
Programming Partners ("RPP") and the formation of National Sports Partners and
National Advertising Partners, the Company and a group of banks led by The Chase
Manhattan Bank, amended and restated an existing credit agreement to permit
borrowings by Fox Sports Net, LLC, Fox Sports RPP Holdings, LLC and FX Networks,
LLC, each a subsidiary of the Company (together, the "Co-Borrowers"), in the
amount of $800.0 million (the "Bank Facility"). The Bank Facility was comprised
of a $400.0 million revolving credit facility and a $400.0 million term loan
facility. The proceeds of the loans under the Bank Facility were used to
finance, in part, the acquisition of the interest in RPP.
In July 1999, 19th Holdings Corporation ("19th Holdings"), a wholly-owned
subsidiary of Fox, acquired the debt outstanding under the Bank Facility from
the group of banks, and in so doing, assumed the rights and obligations of the
group of banks under the Bank Facility. The Company and 19th Holdings
subsequently amended and restated the Bank Facility to provide, among other
things, a fixed rate of interest, determined by 19th Holdings on an annual
basis, and eliminated substantially all of the affirmative and negative
covenants other than with respect to the payment of principal and interest (the
"19th Facility"). The Company currently expects that remaining availability
under the 19th Facility will primarily be used for investments in certain
subsidiaries of the Company and for working capital purposes.
7
Significant Accounting Practices
Basis of Presentation
The Company's ownership interests in the RSNs are held either directly or
indirectly and have different voting rights attached thereto. The Company
consolidates all subsidiaries in which it has a majority interest and voting
control is held by either the Company or Fox, its parent. The percentage of
ownership, together with the degree to which the Company controls the management
and operation of an RSN, determines the appropriate accounting treatment for the
Company's interest in that particular RSN. If the Company owns a majority
interest in a particular RSN, but neither the Company nor Fox have voting
control, the ownership interest is accounted for using the equity method of
accounting. Under the equity method of accounting, the financial condition and
results of operations of entities are not reflected on a consolidated basis and,
accordingly, the consolidated revenues and expenses of the Company, as reported
on its consolidated statements of operations, do not include revenues and
expenses related to the entities accounted for under the equity method.
The following RSNs, together with Fox Sports Direct and FX Networks, LLC,
are consolidated in the financial statements of the Company at March 31, 2000
and 1999: West RSN, West 2 RSN, Northwest RSN, Utah RSN, Arizona RSN, South RSN,
Southwest RSN, Rocky Mountain RSN, Midwest RSN and Detroit RSN. The Pittsburgh
RSN is consolidated in the financial statements of the Company for the nine
months ended March 31, 2000.
As of March 31, 2000 and 1999, the following are accounted for using the
equity method of accounting: Sunshine RSN, Chicago RSN, Bay Area RSN,
D.C./Baltimore RSN, RPP, National Sports Partners and National Advertising
Partners. The Pittsburgh RSN is accounted for using the equity method of
accounting at March 31, 1999.
Because the Company reports the results of a significant number of its
unconsolidated subsidiary entities on the equity method, its financial results
do not represent the total combined revenues and expenses of all the businesses
in which the Company holds ownership interests.
Results of Operations
Three months ended March 31, 2000 as compared with the three months ended
March 31, 1999
Total revenues for the three months ended March 31, 2000 were $218.8
million, an increase of $46.9 million, or 27%, over the three months ended March
31, 1999. Programming revenue was the largest source of revenue, representing
51% of total revenue, or $112.1 million, for the three months ended March 31,
2000. Advertising and direct broadcast revenue represented 26% and 16%,
respectively, of total revenue, or $57.6 million and $35.9 million,
respectively, for the three months ended March 31, 2000. For the three months
ended March 31, 1999, programming revenue was $84.8 million and advertising and
direct broadcast revenue were $40.9 million and $29.5 million, respectively, or
49%, 24% and 17%, respectively, of total revenues.
Programming and advertising revenue increased by $27.3 million and $16.7
million, respectively in the three months ended March 31, 2000 as compared to
the three months ended March 31, 1999. These increases represent a 32% and 41%
increase in programming and advertising revenue, respectively, between the
periods. The increase in programming revenue is primarily due to increases in
the average rate per subscriber at the RSNs. Also contributing to the increase
is a 4% increase in subscribers at the RSNs, and the continued subscriber growth
of FX, which reached 47.4 million households as of March 31, 2000, a 21%
increase over March 31, 1999. The increase in advertising revenue of 41% is
comprised of a 38% increase in advertising revenue by FX and a 43% increase by
the RSNs. Increased primetime Monday through Sunday ratings on FX, coupled with
the increase in subscribers, resulted in a 11% increase in average audience
during the three months ended March 31, 2000, as compared to the same period in
the prior year. The increased ratings together with increased subscribers
provided the basis for the
8
significant increase in advertising revenue at FX. The RSNs generated
significantly higher advertising revenues in the current period as compared to
the same period in the prior year primarily due to an increase in the number of
NBA and NHL events in the current period and an increase in the average revenue
generated per event.
Operating expenses totaled $148.9 million for the three months ended March
31, 2000, representing 68% of total revenues and an increase of $28.5 million,
or 24%, over the same period in the prior year. These expenses consist primarily
of rights fees, programming and production costs. Operating expenses for the
three months ended March 31, 1999 totaled $120.5 million, or 70% of total
revenues. The increase in operating expenses in the current period is primarily
due to the increase in rights fees and production expenses of the RSNs resulting
from the increase in the number of NBA and NHL events as described above, as
well as increased rights fees per event.
General and administrative expenses totaled $19.9 million for the three
months ended March 31, 2000, which represented 9% of total revenues. General and
administrative expenses for the three months ended March 31, 1999 totaled $18.4
million, or 11% of total revenues.
Depreciation and amortization expenses totaled $13.0 million and $6.0
million for the three months ended March 31, 2000 and 1999, respectively. The
increase between the periods is primarily due to increased amortization of cable
carriage fees in the current period.
Interest expense for the three months ended March 31, 2000 and 1999 totaled
$32.4 million and $26.8 million, respectively. The increase in interest expense
is primarily due to higher interest rates on debt outstanding under the 19th
Facility and additional borrowings.
Equity loss of affiliates for the three months ended March 31, 2000 and
1999 was $10.3 million and $9.8 million, respectively. FSN Chicago was
negatively impacted by increased rights fees and reduced advertising revenues on
NBA events and RPP was negatively impacted by the FSN Chicago results and
reduced interest income, net, which were substantially offset by improved
results at other equity affiliates.
Nine months ended March 31, 2000 as compared with the nine months ended March
31, 1999
Total revenues for the nine months ended March 31, 2000 were $628.3
million, an increase of $127.1 million, or 25%, over the nine months ended March
31, 1999. Programming revenue was the largest source of revenue, representing
49% of total revenue, or $309.8 million, for the nine months ended March 31,
2000. Advertising and direct broadcast revenue represented 26% and 16%,
respectively, of total revenue, or $165.5 million and $102.5 million,
respectively, for the nine months ended March 31, 2000. For the nine months
ended March 31, 1999, programming revenue was $238.3 million and advertising and
direct broadcast revenue were $119.3 million and $92.3 million, respectively, or
48%, 24% and 18%, respectively, of total revenues.
Programming and advertising revenue increased by $71.5 million and $46.2
million, respectively in the nine months ended March 31, 2000 as compared to the
nine months ended March 31, 1999. These increases represent a 30% and 39%
increase in programming and advertising revenue, respectively, between the
periods. The increase in programming revenue is comprised primarily of
increases in the average rate per subscriber at the RSNs, a 4% increase in
subscribers at the RSNs and the continued subscriber growth of FX. The increase
in advertising revenue of 39% is comprised of a 51% increase in advertising
revenue by FX and a 32% increase by the RSNs. Increased total day Monday
through Sunday ratings on FX, coupled with the increase in subscribers, resulted
in a 24% increase in average audience during the nine months ended March 31,
2000, as compared to the same period in the prior year. The increased total day
ratings together with increased subscribers provided the basis for the 51%
increase in advertising revenue at FX. Higher advertising revenues throughout
most of the RSNs due to the increase in the number of NBA events and in the
average revenue generated per event contributed to the RSNs' 32% increase in
advertising revenue in the current period.
Operating expenses totaled $423.1 million for the nine months ended March
31, 2000, representing 67% of total revenues and an increase of $69.9 million,
or 20%, over the same period in the prior year. These expenses consist primarily
of rights fees, programming and production costs. Operating expenses for the
nine months ended March 31, 1999 totaled $353.2 million, or 70% of total
revenues. The increase in operating expenses in the current
9
period is primarily due to the increase in rights fees and production expenses
of the RSNs resulting from the increase in the number of NBA events as described
above.
General and administrative expenses totaled $56.0 million for the nine
months ended March 31, 2000, which represented 9% of total revenues. General and
administrative expenses for the nine months ended March 31, 1999 totaled $67.7
million, or 14% of total revenues. The decrease in general and administrative
expenses is primarily due to a decrease in the cash charge to earnings with
respect to an equity appreciation rights plan between the periods and a decrease
in the provision for potentially unrealizable accounts.
Depreciation and amortization expenses totaled $31.5 million and $18.9
million for the nine months ended March 31, 2000 and 1999, respectively. The
increase between the periods is primarily due to increased amortization of cable
carriage fees in the current period.
Interest expense for the nine months ended March 31, 2000 and 1999 totaled
$94.6 million and $82.7 million, respectively. The increase in interest expense
is primarily due to higher interest rates on debt outstanding under the 19th
Facility and additional borrowings.
Equity loss of affiliates for the nine months ended March 31, 2000 and 1999
was $14.0 million and $22.0 million, respectively. The improvements were
primarily at RPP, resulting from increased programming and advertising revenues
at its RSNs and improved performance of certain start up businesses, and
National Sports Partnership, as compared to the same period in the prior year.
Liquidity and Capital Resources
The Company's liquidity requirements arise from (i) the funding of general
working capital needs, (ii) its strategic plan to invest in and secure national
distribution for its network sports and general entertainment programming,
(iii) the acquisition of programming rights, and (iv) its capital expenditure
requirements.
Net cash provided by (used in) operating activities of the Company for the
nine months ended March 31, 2000 and 1999 was $57.3 million and ($23.0 million),
respectively.
Net cash used in investing activities of the Company for the nine months
ended March 31, 2000 and 1999 was $65.8 million and $24.2 million, respectively.
Net cash (used in) provided by financing activities for the Company for the
nine months ended March 31, 2000 and 1999 was ($41.5 million) and $64.8 million,
respectively.
The Company has a credit facility with 19th Holdings, a wholly-owned
subsidiary of Fox. Borrowings under the 19th Facility bear interest at a fixed
rate determined on an annual basis by 19th Holdings. 19th Holdings has
determined that the rate of interest on this debt through June 2000 shall be 8%.
During the nine months ended March 31, 2000, the Company made net borrowings of
$11.9 million bringing the total amount borrowed under the 19th Facility to
$688.9 million as of March 31, 2000. The total unused commitment pursuant to the
19th Facility was $111.1 million as of March 31, 2000.
Future capital requirements will be substantial as the Company continues to
invest in developing networks, acquire sports programming rights and explore
opportunities to expand its distribution. Although no assurances can be given
in this regard, the Company believes that its existing funds and the proceeds
from borrowings under its credit facility, will be sufficient to meet its plan
to secure national distribution, maintain and/or acquire programming, make
anticipated capital expenditures, and meet its projected working capital
requirements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
10
Not Applicable.
11
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable.
Item 2. Changes in Securities and Use of Proceeds
Not Applicable.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable.
Item 5. Other Information
Not Applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The following exhibit is filed as part of this report:
27 Financial Data Schedule (for SEC purposes only).
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the period covered by this
report.
12
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FOX SPORTS NETWORKS, LLC
Dated: May 10, 2000
By: /s/ Dennis Farrell
--------------------
Dennis Farrell
Senior Vice President, Finance
(Principal Financial Officer
and Principal Accounting Officer)
13
EXHIBIT INDEX
Exhibit No.
- -----------
27 Financial Data Schedule (for SEC purposes only).
14