-----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, pS+9DzO038C6ox0J3e6H4FUBTXPaRIaikSjuk1Qwc8gx8RqSzbuEXtSDHMX1sjlj DPc065+001+/jIe9S3fE9Q== 0000855433-94-000004.txt : 19940816 0000855433-94-000004.hdr.sgml : 19940816 ACCESSION NUMBER: 0000855433-94-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940815 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BHC COMMUNICATIONS INC CENTRAL INDEX KEY: 0000855433 STANDARD INDUSTRIAL CLASSIFICATION: 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: 94544129 BUSINESS ADDRESS: STREET 1: 767 FIFTH AVE 46TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10153 BUSINESS PHONE: 2124210200 10-Q 1 LIVE FOR BHC 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, 1994 ---------------------------------- 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, 1994 there were 6,843,215 shares of the issuer's Class A Common Stock outstanding and 18,000,000 shares of the issuer's Class B Common Stock outstanding. PART I -- FINANCIAL INFORMATION BHC COMMUNICATIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of dollars) -------------------------------------
June 30, December 31, 1994 1993 ------------ ------------ (UNAUDITED) ASSETS - ------ CURRENT ASSETS: Cash and cash equivalents $ 179,126 $ 35,371 Marketable (substantially all U.S. Government) securities 1,275,195 1,471,158 Accounts receivable, net 90,765 85,376 Film contract and prepaid broadcast rights 75,616 98,882 Prepaid expenses and other current assets 64,760 54,518 ------------ ------------ Total current assets 1,685,462 1,745,305 ------------ ------------ FILM CONTRACT AND PREPAID BROADCAST RIGHTS, less current portion 75,920 87,197 ------------ ------------ PROPERTY AND EQUIPMENT, net 50,501 52,035 ------------ ------------ INTANGIBLE ASSETS 337,734 342,395 ------------ ------------ OTHER ASSETS 12,338 14,606 ------------ ------------ $ 2,161,955 $ 2,241,538 ============ ============ LIABILITIES AND SHAREHOLDERS' INVESTMENT - ---------------------------------------- CURRENT LIABILITIES: Film contracts payable within one year $ 83,161 $ 112,798 Accounts payable and accrued expenses 59,828 81,834 Income taxes payable 76,907 69,340 ----------- ------------ Total current liabilities 219,896 263,972 ----------- ------------ FILM CONTRACTS PAYABLE AFTER ONE YEAR 80,528 95,699 ----------- ------------ OTHER LIABILITIES 15,875 15,563 ----------- ------------ MINORITY INTEREST 91,501 87,483 ----------- ------------ SHAREHOLDERS' INVESTMENT: Class A common stock - par value $.01 per share; authorized 200,000,000 shares; outstanding 7,723,418 shares 77 77 Class B common stock - par value $.01 per share; authorized 200,000,000 shares; outstanding 18,000,000 shares 180 180 Capital surplus 97,528 98,182 Retained earnings 1,724,891 1,686,532 Treasury stock, at cost (56,127) (6,150) Reduction to reflect marketable securities at fair value (12,394) - ------------ ------------ 1,754,155 1,778,821 ------------ ------------ $ 2,161,955 $ 2,241,538 ============ ============ The accompanying notes to condensed consolidated financial statements are an integral part of these balance sheets.
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, -------------------- -------------------- 1994 1993 1994 1993 --------- --------- --------- --------- OPERATING REVENUES $ 119,832 $ 113,199 $ 215,800 $ 202,780 --------- --------- --------- --------- OPERATING EXPENSES: Television expenses 58,885 63,192 110,962 118,880 Selling, general and administrative 26,300 24,963 55,057 50,060 --------- --------- --------- --------- 85,185 88,155 166,019 168,940 --------- --------- --------- --------- Operating income 34,647 25,044 49,781 33,840 --------- --------- --------- --------- OTHER INCOME: Interest and other income, net 14,859 10,177 28,307 17,933 Income associated with Time Warner Inc. securities - 132,986 - 241,399 --------- --------- --------- --------- 14,859 143,163 28,307 259,332 --------- --------- --------- --------- Income before income taxes and minority interest 49,506 168,207 78,088 293,172 INCOME TAX PROVISION 20,800 69,000 32,800 112,000 --------- --------- --------- --------- Income before minority interest 28,706 99,207 45,288 181,172 MINORITY INTEREST (4,015) (6,568) (6,929) (12,615) --------- --------- --------- --------- Net income $ 24,691 $ 92,639 $ 38,359 $ 168,557 ========= ========= ========= ========= AVERAGE OUTSTANDING COMMON SHARES 25,014 25,887 25,132 25,942 ========= ========= ========= ========= NET INCOME PER SHARE $ .99 $ 3.58 $ 1.53 $ 6.50 ========= ========= ========= ========= The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
BHC COMMUNICATIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of dollars) (UNAUDITED) -----------------------------------------------
Six Months Ended June 30, ------------------------- 1994 1993 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 38,359 $ 168,557 Adjustments to reconcile net income to net cash provided from (used in) operating activities: Film contract payments (66,453) (71,903) Film contract amortization 48,249 50,058 Depreciation and other amortization 10,257 10,201 Loss (gain) on disposition of marketable securities 602 (215,061) Minority interest 6,929 12,615 Other (911) 225 Changes in assets and liabilities: Accounts receivable (5,389) (7,720) Other assets (2,490) (6,521) Accounts payable and other liabilities 1,336 8,607 Income taxes 12,691 45,630 ----------- ----------- Net cash provided from (used in) operating activities 43,180 (5,312) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Dispositions (purchases) of marketable securities, net 163,869 (32,805) Capital expenditures (4,060) (3,165) Other (37) (1,187) ----------- ----------- Net cash provided from (used in) investing activities 159,772 (37,157) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Purchases of treasury stock (57,219) (11,642) Dividend - (51,893) Capital transactions of subsidiary (1,978) (9,754) ----------- ----------- Net cash used in financing activities (59,197) (73,289) ----------- ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 143,755 (115,758) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 35,371 172,882 ----------- ----------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 179,126 $ 57,124 =========== =========== The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
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 (72% at June 30, 1994) subsidiary of Chris-Craft Industries, Inc., operates eight television stations, three wholly owned and five owned by United Television, Inc., 55% owned by BHC at June 30, 1994. The interest of UTV shareholders other than BHC in the operating results 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 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 to a fair statement of the results for the interim periods. Certain amounts for 1993 have been reclassified to conform to 1994 presentation. 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. NEW ACCOUNTING STANDARD: Effective January 1, 1994, BHC adopted Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity Securities." In accordance with SFAS No. 115, prior period financial statements have not been restated to reflect the change in accounting principle. BHC classifies its marketable securities as available-for-sale. At June 30, 1994, BHC's marketable securities, which consisted substantially of U.S. Government securities, had a carrying value of $1,299,415,000 and a fair value of $1,275,195,000. The difference of $24,220,000 ($12,394,000 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, 56% mature within one year, 77% within two years and all within five years. 3. SHAREHOLDERS' INVESTMENT: As of June 30, 1994, there were outstanding 18,000,000 shares of Class B common stock, all held by Chris-Craft, and 6,964,174 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 635,800 Class A common shares purchased by BHC during 1994. At June 30, 1994, purchases of an additional 1,180,423 shares of Class A common stock were authorized. 4. COMMITMENTS: Commitments of BHC's television stations for film contracts entered into but not available for broadcasting at June 30, 1994 aggregated approximately $140.2 million, including $39.9 million applicable to UTV. From July 1994 through January 1997, which includes both the pre-launch period and the first two years of operations of the United Paramount Television Network, BHC expects to make minimum expenditures on behalf of the Network of at least $150 million. Since exact expenditures cannot be projected and Network revenues may not be significant during this period, actual funding requirements may exceed this expected level. Upon any exercise of the PCI option (see Item 5), BHC will recoup approximately one-half of its Network funding expenditures to that date (plus interest), and future expenditures will be shared equally with PCI. BHC COMMUNICATIONS, INC. ------------------------ MANAGEMENT'S DISCUSSION AND ANALYSIS ------------------------------------ OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ------------------------------------------------ Liquidity and Capital Resources - ------------------------------- BHC's core operating cash flow is generated primarily by its television broadcasting business. Television broadcasting cash flow generally parallels the earnings of BHC's television stations, adjusted to reflect (i) the difference between film contract payments and related film contract amortization and (ii) the effect of significant prepayments for other broadcast rights. The relationship between film contract payments and related amortization may vary greatly between periods (payments exceeded amortization by $18.2 million and $21.8 million, respectively, in the 1994 and 1993 six month periods) and is dependent upon the mix of programs aired and payment terms of the stations' contracts. Station earnings rose strongly in the first six months of 1994 and station cash flow accordingly increased 91%. BHC's cash flow additionally reflects earnings associated with its cash and marketable securities. Prior to their disposition in 1993, substantial dividend income was realized on BHC's large holdings of Time Warner Inc. convertible preferred shares. Proceeds from the Time Warner dispositions were placed mostly in money market instruments, primarily U.S. Government obligations, having significantly lower yields than the securities disposed. Total cash and marketable securities declined slightly to $1.45 billion at June 30, 1994 from $1.51 billion at December 31, 1993, despite operating cash flow during the six month period of $43.2 million. Such decline primarily reflects the expenditure of $57.2 million for treasury stock purchases and a $12.4 million reduction in the carrying value of marketable securities to reflect their fair value. A special cash dividend of $2.00 per share on BHC's Class A and Class B common stock, totalling $51.9 million, was paid in January 1993. This is the only dividend paid by BHC since it became a public company in January 1990, and BHC has no current plan to pay future cash dividends. Since April 1990, BHC's Board of Directors has authorized the purchase of up to 5,500,000 Class A common shares. Through June 30, 1994, 4,319,577 shares have been purchased for a total cost of $249.4 million, including $49.9 million applicable to shares purchased in the first six months of 1994. BHC intends to expand its operations in the media, entertainment and communications industries and to explore business opportunities in other industries. BHC currently has no outstanding debt, and believes it is capable of raising significant additional capital to augment its already substantial cash balances, if desired, to fund such additional expansion. As reported in Item 5, a subsidiary of BHC has entered into a definitive agreement with a subsidiary of Paramount Communications, Inc. ("PCI") to establish the United Paramount Television Network (the "Network"). The Network, which had been originally announced in October 1993, is scheduled to premiere its initial four hours of prime time programming in January 1995. BHC will provide funding for the Network until the PCI subsidiary exercises its option to acquire an equity interest in the Network equal to that held by BHC. PCI's option is exercisable at any time prior to its expiration on January 16, 1997. From July 1994 through January 1997, which includes both the pre-launch period and the first two years of Network operations, BHC expects to make minimum expenditures on behalf of the Network of at least $150 million. Since exact expenditures cannot be projected and Network revenues may not be significant during this period, actual funding requirements may exceed this expected level. Upon any exercise of the PCI option, BHC will recoup approximately one-half of its Network funding expenditures to that date (plus interest), and future expenditures will be shared equally with PCI. The expected net losses of the BHC subsidiary operating the Network will be fully reflected in BHC's net income. BHC's television stations make commitments for programming that will not be available for telecasting until future dates. At June 30, 1994, commitments for such programming totalled approximately $140.2 million, including $39.9 million applicable to UTV. BHC capital expenditures generally have not been material in relation to its financial position, and the related commitments at June 30, 1994 (including any related to the Network) were not material. BHC expects that its expenditures for the Network, future film contract commitments and capital expenditure requirements for its present business will be satisfied primarily from operations or from current marketable securities or cash balances. Results of Operations - --------------------- BHC 1994 second quarter operating revenues and operating income were the highest of any quarter in its history. Second quarter net income totalled $24,691,000, or $.99 per share, nearly double last year's income of $12,728,000, or $.49 per share, excluding after tax income associated with BHC's former holdings of Time Warner securities. The increase reflects substantial growth in television station earnings and higher interest income. Including Time Warner income, 1993 second quarter net income totalled $92,639,000, or $3.58 per share. Net income for the first six months of 1994 totalled $38,359,000, or $1.53 per share, 78% higher than last year's $21,498,000, or $.83 per share, excluding Time Warner income. The increase reflects substantial growth in both television station earnings and interest income. Net income in last year's six month period, including Time Warner income, totalled $168,557,000, or $6.50 per share. While the dollar amount of net income excluding Time Warner income rose 94% in the second quarter and 78% in the six month period, corresponding per share amounts increased 102% and 84%, respectively, as purchases by BHC of its Class A common shares reduced the average number of shares outstanding in the 1994 periods. Operating revenues of BHC's eight television stations rose a solid 6% in both the second quarter and six months periods, reflecting a general strengthening in demand for television advertising time. Programming expenses declined 10% in the second quarter and 9% in the six months, and station earnings accordingly rose 40% and 51% in the respective periods. After increases in corporate level expenses, primarily a $4,500,000 increase in six month management fee expense (reflecting a $3,000,000 increase, to $8,000,000 from $5,000,000, effective as of January 1, 1993 in the annual fee paid Chris-Craft), operating income rose 38% in the second quarter, to $34,647,000 from last year's $25,044,000, and 47% in the six month period, to $49,781,000 from $33,840,000. Interest and other income increased to $14,859,000 from $10,177,000 in the second quarter, and to $28,307,000 from $17,933,000 in the six month period, primarily reflecting the placement of Time Warner proceeds in money market instruments. Income associated with Time Warner securities reflects related dividend and interest income, as well as gains on disposition of $121,320,000 and $215,061,000, respectively, in the 1993 second quarter and six month periods. BHC COMMUNICATIONS, INC. ------------------------ PART II. OTHER INFORMATION AND SIGNATURE ---------------------------------------- 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 29, 1994. The following were elected directors, each receiving the numbers of votes set forth opposite their names: Broker For Withheld Non-votes --- -------- --------- John L. Eastman 185,397,517 3,511 -0- William D. Siegel 185,398,302 2,696 -0- Vin Weber 185,383,766 17,262 -0- Performance-based compensation was approved by the following votes: Broker For Against Abstain Non-votes --- ------- ------- --------- 184,630,653 321,417 37,939 451,923 The selection of Price Waterhouse as BHC's auditors for the current year was ratified by the following vote: Broker For Against Abstain Non-votes --- ------- ------- --------- 185,412,628 15,194 14,110 -0- Item 5. Other Information. ------------------ United Paramount Television Network ----------------------------------- On July 19, 1994 a subsidiary of BHC entered into a definitive agreement with a subsidiary of Paramount Communications, Inc. ("PCI") to establish the United Paramount Television Network (the "Network"). The Network, which had been originally announced in October 1993, is scheduled to premiere its initial four hours of prime time programming in January 1995. The six independent stations owned by BHC and United Television will be affiliates of the Network. BHC will provide funding for the Network until the PCI subsidiary exercises its option to acquire an equity interest in the Network equal to that held by BHC. PCI's option is exercisable at any time prior to its expiration on January 16, 1997. Upon any exercise of the PCI option, BHC will recoup approximately one-half of its Network funding expenditures to that date (plus interest), and future expenditures will be shared equally with PCI. Item 6. Exhibits and Reports on Form 8-K. --------------------------------- (a) None. (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: August 15, 1994 -----END PRIVACY-ENHANCED MESSAGE-----