-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NqIXpssE8jxu9idb8WikA2i5lKw1PgQyQt2oqqR80Rp6mw85Qg7lfgV5eiVzvQQa YAHWmGoJehBP12RcQYWkdw== 0000855433-96-000005.txt : 19960816 0000855433-96-000005.hdr.sgml : 19960816 ACCESSION NUMBER: 0000855433-96-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: BHC COMMUNICATIONS INC CENTRAL INDEX KEY: 0000855433 STANDARD INDUSTRIAL CLASSIFICATION: TELEVISION BROADCASTING STATIONS [4833] IRS NUMBER: 592104168 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10342 FILM NUMBER: 96614736 BUSINESS ADDRESS: STREET 1: 767 FIFTH AVE 46TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10153 BUSINESS PHONE: 2124210200 MAIL ADDRESS: STREET 1: 767 FIFTH AVE STREET 2: 46TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10153 10-Q 1 BHC COMMUNICATIONS, INC. 2ND QUARTER 10-Q 1996 Page 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (MARK ONE) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 ---------------------------------- OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 1-10342 ------------------------------- BHC COMMUNICATIONS, INC. ------------------------ (Exact name of Registrant as specified in its charter) Delaware 59-2104168 - ------------------------------ -------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 767 Fifth Avenue, New York, New York 10153 - ------------------------------------ ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (212) 421-0200 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 -------- -------- As of July 31, 1996 there were 5,911,205 shares of the issuer's Class A Common Stock outstanding and 18,000,000 shares of the issuer's Class B Common Stock outstanding. Page 2 PART I -- FINANCIAL INFORMATION BHC COMMUNICATIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of dollars) (UNAUDITED) -------------------------------------
June 30, December 31, 1996 1995 ------------ ------------ ASSETS - ------ CURRENT ASSETS: Cash and cash equivalents $ 114,400 $ 72,179 Marketable securities (substantially all U.S. Government securities) 1,314,641 1,427,186 Accounts receivable, net 91,263 89,988 Film contract and prepaid broadcast rights 81,095 95,541 Prepaid expenses and other current assets 40,082 32,545 ------------ ------------ Total current assets 1,641,481 1,717,439 ------------ ------------ FILM CONTRACT AND, IN 1995, PREPAID BROADCAST RIGHTS, less current portion 15,750 50,361 ------------ ------------ PROPERTY AND EQUIPMENT, net 49,191 48,338 ------------ ------------ INTANGIBLE ASSETS 319,093 323,752 ------------ ------------ OTHER ASSETS 39,042 19,120 ------------ ------------ $ 2,064,557 $ 2,159,010 ============ ============ The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
Page 3 PART I -- FINANCIAL INFORMATION BHC COMMUNICATIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of dollars) (UNAUDITED) -------------------------------------
June 30, December 31, 1996 1995 ------------ ------------ LIABILITIES AND SHAREHOLDERS' INVESTMENT - ---------------------------------------- CURRENT LIABILITIES: Film contracts payable within one year $ 76,923 $ 87,634 Accounts payable and other liabilities 56,338 72,906 Income taxes payable 30,005 28,429 ----------- ------------ Total current liabilities 163,266 188,969 ----------- ------------ FILM CONTRACTS PAYABLE AFTER ONE YEAR 63,657 86,392 ----------- ------------ OTHER LIABILITIES 5,971 6,504 ----------- ------------ MINORITY INTEREST 91,664 95,252 ----------- ------------ SHAREHOLDERS' INVESTMENT: Class A common stock - par value $.01 per share; authorized 200,000,000 shares; outstanding 6,492,808 shares 65 65 Class B common stock - par value $.01 per share; authorized 200,000,000 shares; outstanding 18,000,000 shares 180 180 Retained earnings 1,778,332 1,779,560 Treasury stock, at cost (38,142) (6,493) Adjustment to reflect marketable securities at market value (436) 8,581 ------------ ------------ 1,739,999 1,781,893 ------------ ------------ $ 2,064,557 $ 2,159,010 ============ ============ The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
Page 4 BHC COMMUNICATIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands except per share data) (UNAUDITED) -------------------------------------------
Three Months Six Months Ended June 30, Ended June 30, -------------------- -------------------- 1996 1995 1996 1995 --------- --------- --------- --------- OPERATING REVENUES $ 120,920 $ 120,953 $ 221,965 $ 225,428 --------- --------- --------- --------- OPERATING EXPENSES: Television expenses 52,843 52,547 104,660 103,619 Selling, general and administrative 31,476 29,218 61,511 58,516 --------- --------- --------- --------- 84,319 81,765 166,171 162,135 --------- --------- --------- --------- Operating income 36,601 39,188 55,794 63,293 --------- --------- --------- --------- OTHER INCOME (EXPENSE): Interest and other income 20,021 18,739 42,503 39,336 Equity in United Paramount Network loss (34,990) (28,709) (67,744) (67,112) --------- --------- --------- --------- (14,969) (9,970) (25,241) (27,776) --------- --------- --------- --------- Income before income taxes and minority interest 21,632 29,218 30,553 35,517 INCOME TAX PROVISION 11,000 13,000 15,300 15,600 --------- --------- --------- --------- Income before minority interest 10,632 16,218 15,253 19,917 MINORITY INTEREST (4,963) (4,964) (8,506) (8,273) --------- --------- --------- --------- Net income $ 5,669 $ 11,254 $ 6,747 $ 11,644 ========= ========= ========= ========= AVERAGE OUTSTANDING COMMON SHARES 24,025 24,578 24,106 24,631 ========= ========= ========= ========= NET INCOME PER SHARE $ .24 $ .46 $ .28 $ .47 ========= ========= ========= ========= The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
Page 5 BHC COMMUNICATIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of dollars) (UNAUDITED) -----------------------------------------------
Six Months Ended June 30, ------------------------ 1996 1995 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 6,747 $ 11,644 Adjustments to reconcile net income to net cash provided from operating activities: Film contract payments (44,857) (45,323) Film contract amortization 43,773 40,778 Depreciation and other amortization 9,591 9,968 Equity in United Paramount Network loss 67,744 67,112 Minority interest 8,506 8,273 Other 1,361 4,479 Changes in assets and liabilities: Accounts receivable (1,275) 3,893 Other assets (1,745) (3,818) Accounts payable and other liabilities (2,137) (1,402) Income taxes 2,058 (2,787) ----------- ----------- Net cash provided from operating activities 89,766 92,817 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Disposition (purchase) of marketable securities, net 99,772 (59,609) Investment in United Paramount Network (76,600) (83,445) Capital expenditures (5,785) (3,259) Other (12,890) (16) ----------- ----------- Net cash provided from (used in) investing activities 4,497 (146,329) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Dividend - (24,504) Purchases of treasury stock (32,567) (14,874) Capital transactions of subsidiary (19,475) (15,044) ----------- ----------- Net cash used in financing activities (52,042) (54,422) ----------- ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 42,221 (107,934) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 72,179 222,201 ----------- ----------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 114,400 $ 114,267 =========== =========== The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
Page 6 BHC COMMUNICATIONS, INC. ------------------------ NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ----------------------------------------------------- 1. PRINCIPLES OF CONSOLIDATION: The accompanying condensed consolidated financial statements include the accounts of BHC Communications, Inc. and its subsidiaries. BHC, a majority owned (75% at June 30, 1996) subsidiary of Chris-Craft Industries, Inc., operates eight television stations, three wholly owned and five owned by United Television, Inc., 58% owned by BHC at June 30, 1996. The interest of UTV shareholders other than BHC in the net income and net assets of UTV is set forth as minority interest in the accompanying condensed consolidated statements of income and condensed consolidated balance sheets, respectively. Intercompany accounts and transactions have been eliminated. The financial information included herein has been prepared by BHC, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. However, BHC believes that the disclosures herein are adequate to make the information presented not misleading. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and the notes thereto included in BHC's latest annual report on Form 10-K. The information furnished reflects all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the results for the interim periods. The results for these interim periods are not necessarily indicative of results to be expected for the full year, due to seasonal factors, among others. 2. MARKETABLE SECURITIES: In accordance with Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity Securities", BHC classifies its marketable securities as available- for-sale. At June 30, 1996, BHC's marketable securities, which consisted substantially of U.S. Government securities, had a carrying value of $1,316,081,000 and a fair value of $1,314,641,000. The difference of $1,440,000 ($436,000 net of income taxes and minority interest) is reflected as a reduction of shareholders' investment in the accompanying condensed consolidated balance sheet. Of the investments in U.S. Government securities, 80% mature within one year, 99% within two years and all within three years. Page 7 At December 31, 1995, BHC's marketable securities, which consisted substantially of U.S. Government securities, had a carrying value of $1,413,465,000 and a fair value of $1,427,186,000. The difference of $13,721,000 ($8,581,000 net of income taxes and minority interest) is reflected as an increase to shareholders' investment in the accompanying condensed consolidated balance sheet. 3. UNITED PARAMOUNT NETWORK: In July 1994, BHC, along with Viacom Inc.'s Paramount Television Group, formed the United Paramount Network, a fifth broadcast television network which premiered in January 1995. BHC currently owns 100% of UPN, and Paramount has an option exercisable through January 15, 1997 to acquire an interest in UPN equal to that of BHC. The option price is equivalent to approximately one-half of BHC's aggregate cash contributions to UPN through the exercise date, plus interest; payment may be deferred through the option expiration date. UPN has been organized as a partnership, and BHC's partnership interest is accounted for under the equity method. The carrying value of such interest totalled $10,982,000 at June 30, 1996 and $2,121,000 at December 31, 1995 and is included in other assets in the accompanying condensed consolidated balance sheets. UPN is still in its infancy, and the cost of developing UPN is expected to remain significant for several years. UPN's condensed consolidated statements of operations for the three and six months ended June 30, 1996 are as follows (in thousands): Three Months Ended Six Months Ended June 30, 1996 June 30, 1996 ------------- ------------- Operating revenues* $ 14,156 $ 25,064 Operating expenses* 49,152 91,754 ---------- ---------- Operating loss (34,996) (66,690) Other income (expense) 6 (1,054) ---------- ---------- Loss before interest on BHC advances (34,990) (67,744) Interest on BHC advances (eliminated in consolidation) (3,248) (5,771) ---------- ---------- Net loss $ (38,238) $ (73,515) ========== ========== * With respect to certain of its programming, UPN derives no revenue and incurs no programming expense. Page 8 4. SHAREHOLDERS' INVESTMENT: As of June 30, 1996, there were outstanding 18,000,000 shares of Class B common stock, all held by Chris-Craft, and 6,020,000 shares of Class A common stock, after reflecting as treasury stock BHC's pro rata interest in its Class A common shares held by UTV and 341,100 Class A common shares purchased by BHC during 1996. In January 1996, BHC's Board of Directors authorized the purchase of up to an additional 1,300,000 shares of Class A common stock. At June 30, 1996, 1,544,513 shares of Class A common stock remain authorized for purchase. Capital transactions of subsidiary, as set forth in the accompanying condensed consolidated statements of cash flows, reflect purchases by UTV of its common shares totalling $17,479,000 and $12,887,000 in the first six months of 1996 and 1995, respectively, net of proceeds from the exercise of stock options, as well as UTV's dividend of $.50 per share in both periods, all net of intercompany eliminations. 5. COMMITMENTS: Commitments of BHC's television stations for film contracts entered into but not available for broadcasting at June 30, 1996 aggregated approximately $236.9 million, including $59.7 million applicable to UTV. BHC also has a remaining commitment to invest over time up to $60.5 million, including $37.3 million applicable to UTV, in management buyout limited partnerships. BHC is expected to make significant expenditures developing UPN. See Note 3. Page 9 BHC COMMUNICATIONS, INC. ------------------------ MANAGEMENT'S DISCUSSION AND ANALYSIS ------------------------------------ OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ------------------------------------------------ Liquidity and Capital Resources - ------------------------------- BHC's financial position is strong and highly liquid. Cash and marketable securities totalled $1.43 billion at June 30, 1996, and BHC has no debt outstanding. BHC is currently expending significant funds to develop the United Paramount Network, but cash flow provided from BHC's operating activities has substantially exceeded BHC's UPN funding since the network's January 1995 launch. BHC's operating cash flow is generated primarily by its core television station group. Broadcast cash flow reflects station operating income plus depreciation and film contract amortization less film contract payments. The relationship between film contract payments and related amortization may vary greatly between periods (payments exceeded amortization by $1.1 million and $4.5 million, respectively, in the first six months of 1996 and 1995), and is dependent upon the mix of programs aired and payment terms of the stations' contracts. Reflecting such $3.4 million variance between the six month periods of 1996 and 1995, broadcast cash flow declined 10%, to $70.3 million from $78.5 million in 1995, while station earnings declined 15%, as explained below. Although broadcast cash flow is often used in the broadcast television industry as an ancillary measure, it is not synonymous with operating cash flow computed in accordance with generally accepted accounting principles, and should not be considered alone or as a substitute for measures of performance computed in accordance with generally accepted accounting principles. BHC's cash flow additionally reflects earnings associated with its cash and marketable securities. Cash and marketable securities totalled $1.43 billion at June 30, 1996, compared to $1.5 billion at December 31, 1995, which decrease includes a $15.2 million marketable securities net valuation adjustment. Six month operating cash flow of $89.8 million was more than offset by UPN funding of $76.6 million and treasury stock purchases by BHC and UTV totalling $53.5 million. Special cash dividends of $2.00 per share, totalling $51.9 million, and $1.00 per share, totalling $24.5 million, were paid on BHC's Class A and Class B common stock, in January 1993 and April 1995, respectively. BHC has no plan to pay regular dividends. Page 10 Since April 1990, BHC's Board of Directors has authorized the purchase of up to 6,800,000 Class A common shares. Through June 30, 1996, 5,255,487 shares were purchased for a total cost of $328.0 million, including $31.5 million in 1996. From 1993 through June 30, 1996, UTV purchased 1,224,276 of its common shares at an aggregate cost of $72.5 million, and at June 30, 1996, 959,749 UTV shares remained authorized for purchase. BHC intends to expand its operations in the media, entertainment and communications industries and to explore business opportunities in other industries. BHC believes it is capable of raising significant additional capital to augment its already substantial financial resources, if desired, to fund such additional expansion. In July 1994, BHC, along with Viacom Inc.'s Paramount Television Group, formed UPN, a fifth broadcast television network which premiered in January 1995. BHC currently owns 100% of UPN, and accounts for UPN under the equity method, since Paramount has an option through January 15, 1997 to acquire an interest in UPN equal to that of BHC. The option price is equivalent to approximately one-half of BHC's aggregate cash contributions to UPN through the exercise date, plus interest. BHC expenditures related to UPN totalled $128.6 million in 1995 and $76.6 million in the first six months of 1996. UPN is still in its infancy, and the cost of developing UPN is expected to remain significant for several years. BHC's television stations make commitments for programming that will not be available for telecasting until future dates. At June 30, 1996, commitments for such programming totalled approximately $236.9 million, including $59.7 million applicable to UTV. BHC also has a remaining commitment to invest over time up to $60.5 million, including $37.3 million applicable to UTV, in management buyout limited partnerships. BHC capital expenditures generally have not been material in relation to its financial position, and the related capital expenditure commitments at June 30, 1996 (including any related to UPN) were not material. BHC expects that its expenditures for UPN, future film contract commitments and capital requirements for its present business will be satisfied primarily from operations, marketable securities or cash balances. Results of Operations - --------------------- BHC second quarter net income totalled $5,669,000, or $.24 per share, compared to $11,254,000, or $.46 per share, in last year's second quarter. The decline in net income primarily reflects lower earnings Page 11 at BHC's core television station group and a larger start-up loss at BHC's United Paramount Network. While UPN's loss for the first six months of 1996 was about the same as in last year's corresponding period, BHC six month net income declined to $6,747,000, or $.28 per share, from last year's $11,644,000, or $.47 per share, primarily due to lower station group earnings. In several of BHC's most important markets, demand for television advertising continued to be lackluster and market share was lower, and, accordingly, BHC station group revenues declined 2% in the second quarter, to $118,463,000 from $120,953,000. Station earnings declined 7%, to $42,450,000 from $45,683,000 and, after corporate office expenses and other operating activities, operating income accordingly declined 7%, to $36,601,000 from $39,188,000. For the first six months of 1996, station group earnings declined 15%, to $67,018,000 from $78,386,000, reflecting a 4% decline in station operating revenues and a 6% increase in station programming expenses, most of which increase occurred in the first quarter. Operating income for the period declined 12%, to $55,794,000 from $63,293,000, as the decline in station earnings was partially offset by improved results at BHC's television production subsidiaries. UPN's second quarter loss increased to $34,990,000 from last year's $28,709,000, reflecting the expansion of the network's prime time schedule from two to three weekday evenings. UPN's six month loss of $67,744,000 was about even with last year's $67,112,000, as the increase in UPN's second quarter loss was offset by promotion expenses related to the network's January 1995 launch recorded in last year's first quarter. Interest and other income rose to $20,021,000 from $18,739,000 in the second quarter, and to $42,503,000 from $39,336,000 in the six month period, primarily reflecting marketable securities gains. Minority interest reflects the interest of shareholders other than BHC in the net income of UTV, 58% owned at June 30, 1996 and 56% owned at June 30, 1995. Page 12 BHC COMMUNICATIONS, INC. ------------------------ PART II. OTHER INFORMATION -------------------------- Item 4. Submission of Matters to a Vote of Security Holders. ---------------------------------------------------- The following matters were submitted to a vote of security holders at the Registrant's annual meeting of stockholders which was held on April 26, 1996. The following were elected directors, each receiving the numbers of votes set opposite his or her name: Broker For Withheld Non-votes --- -------- --------- Laurence M. Kashdin 184,184,782 128,218 -0- Joelen K. Merkel 184,256,032 56,968 -0- Herbert J. Siegel 184,254,427 58,573 -0- The selection of Price Waterhouse LLP as BHC's auditors for the current year was ratified by the following vote: Broker For Against Abstain Non-votes --- ------- ------- --------- 184,290,869 10,466 11,685 -0- Item 6. Exhibits and Reports on Form 8-K. --------------------------------- (a) The following exhibits are filed herewith: Exhibit No. Description ----------- ----------- 27 Financial Data Schedule (b) No report on Form 8-K was filed during the quarter for which this report is filed. Page 13 SIGNATURE --------- 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. BHC COMMUNICATIONS, INC. ------------------------ (Registrant) By: /s/ JOELEN K. MERKEL ----------------------------- Joelen K. Merkel Vice President and Treasurer (Principal Accounting Officer) Date: August 14, 1996 Page 14 EXHIBIT INDEX Incorporated by Reference to: Exhibit No. Exhibit - ------------- ----------- ------- 27 Financial Data Schedule EX-27 2 FDS FOR 2ND QUARTER 10-Q 1996
5 1000 6-MOS DEC-31-1996 JUN-30-1996 114400 1314641 97131 5868 0 1641481 137094 87903 2064557 163266 0 0 0 245 1739754 2064557 0 221965 0 166171 0 0 0 30553 15300 6747 0 0 0 6747 .28 0
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