-----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, KWTVV1rhnrAeuYW5GbHDxs57N8T848GrrjZ3jWRKcpT7OfGASNmJa6lTD5uFpQUb ElSY91zCxvncaJ04sYfziQ== 0000855433-98-000004.txt : 19981113 0000855433-98-000004.hdr.sgml : 19981113 ACCESSION NUMBER: 0000855433-98-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981112 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: SEC FILE NUMBER: 001-10342 FILM NUMBER: 98743953 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 10-Q DOCUMENT 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 September 30, 1998 ---------------------------------- 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 October 31, 1998 there were 4,515,405 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 ITEM 1. FINANCIAL STATEMENTS BHC COMMUNICATIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of dollars) (UNAUDITED) -------------------------------------
September 30, December 31, 1998 1997 ------------ ------------ ASSETS - ------ CURRENT ASSETS: Cash and cash equivalents $ 299,587 $ 282,504 Marketable securities (substantially all U.S. Government securities) 1,086,588 1,204,776 Accounts receivable, net 72,831 86,198 Film contract rights 115,637 95,859 Prepaid expenses and other current assets 38,136 44,533 ------------ ------------ Total current assets 1,612,779 1,713,870 ------------ ------------ INVESTMENTS 72,537 47,594 ------------ ------------ FILM CONTRACT RIGHTS, less current portion 32,564 26,118 ------------ ------------ PROPERTY AND EQUIPMENT, net 47,064 45,180 ------------ ------------ INTANGIBLE ASSETS 373,183 303,827 ------------ ------------ OTHER ASSETS 6,903 5,899 ------------ ------------ $ 2,145,030 $ 2,142,488 ============ ============ The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
Page 3 BHC COMMUNICATIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of dollars) (UNAUDITED) -------------------------------------
September 30, December 31, 1998 1997 ------------- ------------ LIABILITIES AND SHAREHOLDERS' INVESTMENT - ---------------------------------------- CURRENT LIABILITIES: Film contracts payable within one year $ 101,580 $ 98,033 Accounts payable and accrued expenses 96,991 87,768 Income taxes payable 38,562 28,129 ------------ ------------ Total current liabilities 237,133 213,930 ------------ ------------ FILM CONTRACTS PAYABLE AFTER ONE YEAR 73,186 70,934 ------------ ------------ OTHER LIABILITIES 15,004 17,197 ------------ ------------ MINORITY INTEREST 133,453 115,473 ------------ ------------ SHAREHOLDERS' INVESTMENT: Class A common stock - par value $.01 per share; authorized 200,000,000 shares; outstanding 5,026,108 shares 50 50 Class B common stock - par value $.01 per share; authorized 200,000,000 shares; outstanding 18,000,000 shares 180 180 Retained earnings 1,734,998 1,723,402 Treasury stock, at cost (62,539) (6,627) Increase to reflect marketable securities at fair value 13,565 7,949 ------------ ------------ 1,686,254 1,724,954 ------------ ------------ $ 2,145,030 $ 2,142,488 ============ ============ 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 of dollars except per share data) (UNAUDITED) -----------------------------------------------
Three Months Nine Months Ended September 30, Ended September 30, -------------------- -------------------- 1998 1997 1998 1997 --------- --------- --------- --------- OPERATING REVENUES $ 102,794 $ 105,998 $ 322,869 $ 325,951 --------- --------- --------- --------- OPERATING EXPENSES: Television expenses 52,023 54,070 155,347 156,894 Selling, general and administrative 30,088 31,111 99,083 97,167 --------- --------- --------- --------- 82,111 85,181 254,430 254,061 --------- --------- --------- --------- Operating income 20,683 20,817 68,439 71,890 --------- --------- --------- --------- OTHER INCOME (EXPENSE): Interest and other income 20,168 21,066 58,964 61,706 Equity in United Paramount Network loss (10,438) (19,579) (52,819) (53,881) Gain on change of ownership in United Paramount Network - - - 152,224 --------- --------- --------- --------- 9,730 1,487 6,145 160,049 --------- --------- --------- --------- Income before income taxes and minority interest 30,413 22,304 74,584 231,939 INCOME TAX PROVISION 11,100 9,400 27,100 93,300 --------- --------- --------- --------- Income before minority interest 19,313 12,904 47,484 138,639 MINORITY INTEREST (3,501) (4,190) (11,077) (13,017) --------- --------- --------- --------- Net income $ 15,812 $ 8,714 $ 36,407 $ 125,622 ========= ========= ========= ========= Earnings per share: Basic $ .70 $ .37 $ 1.61 $ 5.36 ========= ========= ========= ========= Diluted $ .70 $ .37 $ 1.60 $ 5.35 ========= ========= ========= ========= 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) -----------------------------------------------
Nine Months Ended September 30, ------------------------ 1998 1997 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 36,407 $ 125,622 Adjustments to reconcile net income to net cash provided from operating activities: Film contract payments (75,654) (73,734) Film contract amortization 61,506 68,660 Prepaid broadcast rights - 21,114 Depreciation and other amortization 15,995 14,372 Equity in United Paramount Network loss 52,819 53,881 Gain on change of ownership in United Paramount Network - (152,224) Minority interest 11,077 13,017 Other (3,395) 1,333 Changes in assets and liabilities: Accounts receivable 13,367 9,836 Other assets 853 (9,026) Accounts payable and other liabilities 3,002 4,532 Income taxes 8,164 25,849 ----------- ----------- Net cash provided from operating activities 124,141 103,232 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Station acquisition (includes $77,668 of intangibles) (80,280) - Distribution from United Paramount Network - 116,261 Disposition (purchase) of marketable securities, net 131,349 (58,784) Investment in United Paramount Network (57,000) (26,235) Other investments (21,699) (3,618) Capital expenditures, net (6,999) (5,564) Other (19) (36) ----------- ----------- Net cash (used in) provided from investing activities (34,648) 22,024 ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Payment of special dividend (22,738) (23,599) Purchases of treasury stock (44,110) (56,735) Capital transactions of subsidiary (5,562) (1,096) ----------- ----------- Net cash used in financing activities (72,410) (81,430) ----------- ----------- NET INCREASE IN CASH AND CASH EQUIVALENTS 17,083 43,826 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 282,504 146,751 ----------- ----------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 299,587 $ 190,577 =========== =========== 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 (79.9% at September 30, 1998) subsidiary of Chris-Craft Industries, Inc., operates nine television stations, three wholly owned and six owned by United Television, Inc. (UTV), 58.6% owned by BHC at September 30, 1998. 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. Certain prior year amounts have been restated to conform with the 1998 presentation. 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 September 30, 1998, BHC's marketable securities, which consisted substantially of U.S. Government securities, had a cost of $1,063,732,000 and a fair value of $1,086,588,000. The difference of $22,856,000 ($13,565,000, net of income taxes and minority interest) is reflected as an increase to shareholders' investment in the accompanying condensed consolidated balance sheet. Of the investments in U.S. Government securities, 97% mature within one year, and all within two years. At December 31, 1997, BHC's marketable securities, which consisted substantially of U.S. Government securities, had a cost of Page 7 $1,191,173,000 and a fair value of $1,204,776,000. The difference of $13,603,000 ($7,949,000, 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 owned 100% of UPN from its inception through January 15, 1997, when Viacom completed the exercise of its option to acquire a 50% interest in UPN. The purchase price included $155 million in cash (an amount equal to one- half of BHC's aggregate cash contributions to UPN through the exercise date, plus interest), additional cash available for ongoing UPN expenditures, as well as a non-cash contribution of UPN development costs previously incurred by Viacom. UPN distributed $116,261,000 to BHC pursuant to the option exercise, and BHC recorded a net pretax gain on the exercise of $152,224,000 in the first quarter of 1997. BHC and Viacom now share equally in UPN funding requirements and in UPN losses. UPN has been organized as a partnership, and BHC accounts for its partnership interest under the equity method. The carrying value of such interest totalled $5,293,000 at September 30, 1998 and $1,112,000 at December 31, 1997, and is included in Investments in the accompanying condensed consolidated balance sheets. UPN is still in its early development and is expected to continue to incur significant start-up losses and to require significant funding for the next several years. However, BHC believes that the funds from the Viacom option exercise will substantially offset its aggregate UPN funding for 1997 and 1998. UPN's condensed statements of operations are as follows (in thousands): Three Months Nine Months Ended September 30, Ended September 30, ------------------- ------------------- 1998 1997 1998 1997 --------- --------- --------- --------- Operating revenues* $ 19,012 $ 21,987 $ 66,808 $ 54,896 Operating expenses* 40,266 61,358 173,623 159,323 --------- --------- --------- --------- Operating loss (21,254) (39,371) (106,815) (104,427) Other income, net 379 213 1,177 1,327 --------- --------- --------- --------- Net loss $ (20,875)$ (39,158) $(105,638)$(103,100) ========= ========= ========= ========= * With respect to certain of its programming, through August 31, 1997 UPN derived no revenue and incurred no programming expense. 4. SHAREHOLDERS' INVESTMENT: As of September 30, 1998, there were outstanding 18,000,000 Page 8 shares of Class B common stock, all held by Chris-Craft, and 4,515,405 shares of Class A common stock, after reflecting as treasury stock 510,703 Class A common shares purchased by BHC during 1998, including 226,503 shares from UTV. At September 30, 1998, 189,297 shares of Class A common stock remain authorized for purchase. In January 1998, BHC's Board of Directors declared a special cash dividend of $1.00 per share on BHC's Class A and Class B common stock. The dividend, totalling $22.7 million, was paid in February 1998. 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 $7,010,000 and $2,430,000 in the first nine months of 1998 and 1997, respectively, and proceeds to UTV of $3,382,000 and $3,267,000 in the first nine months of 1998 and 1997, respectively, from the exercise of stock options. 5. COMPREHENSIVE INCOME: Effective January 1, 1998, BHC adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income." Other comprehensive income (loss) includes only unrealized gains and losses on marketable securities classified as available-for-sale (see Note 2), net of a reclassification adjustment for gains (losses) included in net income. Comprehensive income is as follows (in thousands): Three Months Nine Months Ended September 30, Ended September 30, -------------------- -------------------- 1998 1997 1998 1997 --------- --------- --------- --------- Net income $ 15,812 $ 8,714 $ 36,407 $ 125,622 Other comprehensive income (loss), net of taxes and minority interest (2,648) 1,013 5,616 1,765 --------- --------- --------- --------- Comprehensive income $ 13,164 $ 9,727 $ 42,023 $ 127,387 ========= ========= ========= ========= 6. COMMITMENTS: Commitments of BHC's television stations for film contracts entered into but not available for broadcasting at September 30, 1998 aggregated approximately $329.6 million, including $83.5 million applicable to UTV. BHC also has a remaining commitment to invest over time up to $24.8 million, of which $14.8 million is to be invested in management buyout limited partnerships, including $11.0 million applicable to UTV. BHC expects to make significant expenditures developing UPN. See Note 3. In 1997, UTV signed a definitive agreement to purchase the assets of UHF television station WRBW in Orlando, Florida, for approximately Page 9 $60 million and possible future consideration. The acquisition is subject to FCC approval and other conditions in the agreement. 7. EARNINGS PER SHARE: Computations of earnings per share are as follows (in thousands of dollars except per share amounts): Three Months Nine Months Ended September 30, Ended September 30, --------------------- ---------------------- 1998 1997 1998 1997 ---------- ---------- ---------- ----------- BASIC: - ------ Weighted average common shares outstanding 22,515,405 23,261,974 22,647,280 23,440,298 ========== ========== ========== =========== Net income $ 15,812 $ 8,714 $ 36,407 $ 125,622 ========== ========== ========== =========== Basic earnings per share $ .70 $ .37 $ 1.61 $ 5.36 ========== ========== ========== =========== DILUTED: - -------- Weighted average common shares outstanding 22,515,405 23,261,974 22,647,280 23,440,298 ========== ========== ========== =========== Net income $ 15,812 $ 8,714 $ 36,407 $ 125,622 Dilution of UTV net income from UTV stock options (25) (41) (75) (127) ---------- ---------- ---------- ----------- $ 15,787 $ 8,673 $ 36,332 $ 125,495 ========== ========== ========== =========== Diluted earnings per share $ .70 $ .37 $ 1.60 $ 5.35 ========== ========== ========== =========== Page 10 BHC COMMUNICATIONS, INC. ------------------------ ITEM 2. 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 $1.39 billion at September 30, 1998, and BHC has no debt outstanding. BHC has expended significant funds developing United Paramount Network since UPN's inception in 1994, but cash flow provided from BHC's operating activities has exceeded such BHC funding of UPN. 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 $14.1 million in the first nine months of 1998 and by $5.1 million in the corresponding 1997 period), and is dependent upon the mix of programs aired and payment terms of the stations' contracts. Reflecting such amounts, broadcast cash flow in the first nine months of 1998 declined 14.3%, while station earnings declined only 5%, 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, which balances declined to $1.39 billion at September 30, 1998, from $1.49 billion at December 31, 1997. Such decline occurred despite an increase in operating cash flow, primarily due to the $80.3 million television station acquisition, described below, UPN funding, treasury stock purchases and the payment of a special dividend. Operating cash flow for the first nine months of 1998 rose to $124.1 million from $103.2 million, despite the decline in broadcast cash flow, primarily because the 1997 amount includes income tax payments related to the UPN distribution described below (the distribution is reported as a cash flow from investing activities). A special cash dividend of $1.00 per share, aggregating $22.7 million, was paid in February 1998. A similar $1.00 per share special Page 11 dividend, aggregating $23.6 million, was paid by BHC in February 1997. BHC plans to consider annually the payment of a special dividend. Since April 1990, BHC's Board of Directors has authorized the purchase of up to 7,081,087 Class A common shares. Through September 30, 1998, 6,891,790 shares were purchased, including 226,503 shares from UTV, for a total cost of $516.1 million, including $62.5 million in 1998. From 1993 through September 30, 1998, UTV purchased 1,454,376 of its common shares at an aggregate cost of $94.1 million, of which $7.0 million was expended in the first nine months of 1998, and, at September 30, 1998, 729,649 UTV shares remained authorized for purchase. In January 1998, UTV purchased the assets of UHF television station WHSW, Channel 24, in Baltimore, Maryland for $80.3 million in cash. The station's call letters were changed to WUTB and the station became a UPN affiliate. UTV has signed a definitive agreement to purchase the assets of WRBW in Orlando, Florida, for approximately $60 million and possible future consideration. UTV expects to use a portion of available cash and marketable securities balances to complete this transaction, which is subject to Federal Communications Commission approval, as well as satisfaction of certain conditions. BHC intends to further 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 owned 100% of UPN from its inception through January 15, 1997, when Viacom completed the exercise of its option to acquire a 50% interest in UPN. The purchase price included $155 million in cash (an amount equal to one-half of BHC's aggregate cash contributions to UPN through the exercise date, plus interest), additional cash available for ongoing UPN expenditures, as well as a non-cash contribution of UPN development costs previously incurred by Viacom. UPN distributed $116.3 million to BHC following the closing and BHC recorded a net pretax gain of $152.2 million on the transaction in the first quarter of 1997. BHC and Viacom now share equally in UPN losses and funding requirements. UPN, still in its early development, incurred start-up losses of $170.2 million in 1997, $146.3 million in 1996 and $129.3 million in 1995, and is expected for the next several years to continue to incur substantial start-up losses and to require significant funding. BHC funding of UPN totalled $57.0 million in the first nine months of 1998. BHC's television stations make commitments for programming that will not be available for telecasting until future dates. At September 30, Page 12 1998, commitments for such programming totalled approximately $329.6 million, including $83.5 million applicable to UTV. BHC also has a remaining commitment to invest over time up to $24.8 million, of which $14.8 million is to be invested in management buyout limited partnerships, including $11.0 million applicable to UTV. BHC capital expenditures generally have not been material in relation to its financial position, and the related capital expenditure commitments at September 30, 1998 (including any related to UPN) were not material. During 1998, BHC began the process of converting its stations to digital television. This conversion will require the purchase of digital transmitting equipment to telecast over newly assigned frequencies. This conversion is expected to take place over a number of years and will proceed as market conditions require. BHC expects that its expenditures for UPN, future film contract commitments and capital requirements for its present business, including the cost to convert to digital television, will be funded primarily from operations, marketable securities or cash balances. Results of Operations - --------------------- BHC net income in the third quarter of 1998 increased to $15,812,000, or $.70 per share ($.70 per share diluted),compared to net income in last year's period of $8,714,000, or $.37 per share ($.37 per share diluted). The increase in third quarter net income is primarily due to differences in the timing of expenses incurred by 50% owned UPN, which resulted in the network's posting a lower loss than in last year's third quarter. UPN incurred the significant expenses of its fall schedule launch in this year's fourth quarter, but incurred comparable expenses last year in the third quarter. Net income for the first nine months of 1998 declined to $36,407,000, or $1.61 per share ($1.60 per share diluted), from net income in last year's corresponding period of $125,622,000, or $5.36 per share ($5.35 per share diluted), primarily reflecting the 1997 first quarter gain of $152,224,000 recorded on the transaction through which BHC reduced its UPN ownership interest to its current 50% from 100%. Weighted average common shares outstanding declined to 22,515,000 from 23,262,000 in the third quarter, and to 22,647,000 from 23,440,000 in the nine month period, following continuing purchases by BHC of its Class A common shares. Third quarter operating income totalled $20,683,000, just below last year's $20,817,000. Higher income at BHC's production subsidiaries offset a decline in station earnings. Station earnings declined 8%, to $26,302,000 from $28,487,000, but declined 17% excluding amounts associated with stock price based retirement plan expense. Station operating revenues, including those of WUTB, declined 3%, to Page 13 $100,703,000 from $103,829,000. Same station revenues in the quarter declined 5%. Operating income for the first nine months of 1998 declined 5%, to $68,439,000 from $71,890,000, as a decline in station earnings and WUTB goodwill amortization were only partially offset by higher earnings at BHC's television production subsidiaries. Station earnings for the period declined 5%, to $86,543,000 from $90,731,000, and declined 8% excluding amounts associated with stock price based retirement plans. Total station operating revenues declined 1%, to $316,334,000 from $319,573,000, and same station revenues for the period declined 2%. UPN's third quarter loss declined substantially from last year's, primarily due to UPN's delaying the premiere of its fall schedule to early October. BHC's 50% share of such loss totalled $10,438,000, compared to last year's $19,579,000. BHC's share of UPN's year to date loss totalled $52,819,000 compared to last year's $53,881,000, as higher UPN losses for the first six months of 1998, attributable in part to mid-season programming changes, were offset by the effect of the differing launch dates of UPN's fall schedule. Interest and other income, which consists mostly of amounts earned on cash and marketable securities holdings, totalled $20,168,000 in the third quarter, compared to $21,066,000 last year, and totalled $58,964,000 in the nine month period, compared to $61,706,000 last year. The impact of lower interest rates has been only partially offset by an increase in gains on dispositions of marketable securities. BHC's effective income tax rate declined to 36% in 1998 from 40% in 1997 (42% in last year's third quarter), reflecting the recognition in 1998 of certain income tax credits. Minority interest reflects the interest of shareholders other than BHC in the net income of UTV, 59% owned by BHC at September 30, 1998 and September 30, 1997. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ------------------------------------------------------------------ Not applicable. Page 14 BHC COMMUNICATIONS, INC. ------------------------ PART II. OTHER INFORMATION 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. 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: November 12, 1998 Page 15 EXHIBIT INDEX Incorporated by Reference to: Exhibit No. Exhibit - ------------- ----------- ------- 27 Financial Data Schedule EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 10Q DATED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 1000 9-MOS DEC-31-1998 SEP-30-1998 299587 1086588 77479 4648 0 1612779 150361 103297 2145030 237133 0 0 0 230 1686024 2145030 0 322869 0 254430 0 0 0 74584 27100 36407 0 0 0 36407 1.61 1.60
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