-----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, FSh4rgAlQq0Rzurvc39WBGUopJ1rC6WWviICmEJVPP29ym9kvqClaTQm9o6CBR61 7x/8DT3+4CmBDmLU11h4Ow== 0000855433-95-000007.txt : 19951119 0000855433-95-000007.hdr.sgml : 19951119 ACCESSION NUMBER: 0000855433-95-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 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: 95591846 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 10-Q TEXT 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, 1995 ---------------------------------- 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, 1995 there were 6,301,505 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) -------------------------------------
September 30, December 31, 1995 1994 ------------ ------------ (UNAUDITED) ASSETS - ------ CURRENT ASSETS: Cash and cash equivalents $ 137,834 $ 222,201 Marketable securities(substantially all U.S. Government securities) 1,361,598 1,274,244 Accounts receivable, net 82,413 96,681 Film contract and prepaid broadcast rights 116,230 89,245 Prepaid expenses and other current assets 31,278 46,976 ------------ ------------ Total current assets 1,729,353 1,729,347 ------------ ------------ FILM CONTRACT AND PREPAID BROADCAST RIGHTS, less current portion 52,453 59,228 ------------ ------------ PROPERTY AND EQUIPMENT, net 47,050 49,015 ------------ ------------ INTANGIBLE ASSETS 326,083 333,074 ------------ ------------ OTHER ASSETS 38,110 17,799 ------------ ------------ $ 2,193,049 $ 2,188,463 ============ ============ 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) -------------------------------------
September 30, December 31, 1995 1994 ------------ ------------ (UNAUDITED) LIABILITIES AND SHAREHOLDERS' INVESTMENT - ---------------------------------------- CURRENT LIABILITIES: Film contracts payable within one year $ 95,531 $ 81,696 Accounts payable and other liabilities 85,201 70,834 Income taxes payable 28,393 55,782 ----------- ------------ Total current liabilities 209,125 208,312 ----------- ------------ FILM CONTRACTS PAYABLE AFTER ONE YEAR 93,479 89,048 ----------- ------------ OTHER LIABILITIES 5,842 5,655 ----------- ------------ MINORITY INTEREST 94,282 95,564 ----------- ------------ SHAREHOLDERS' INVESTMENT: Class A common stock - par value $.01 per share; authorized 200,000,000 shares; outstanding 6,877,518 shares 69 69 Class B common stock - par value $.01 per share; authorized 200,000,000 shares; outstanding 18,000,000 shares 180 180 Capital surplus 22,001 29,611 Retained earnings 1,784,274 1,779,409 Treasury stock, at cost (23,309) (6,254) Adjustment to reflect marketable securities at market value 7,106 (13,131) ------------ ------------ 1,790,321 1,789,884 ------------ ------------ $ 2,193,049 $ 2,188,463 ============ ============ 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 Nine Months Ended September 30, Ended September 30, -------------------- -------------------- 1995 1994 1995 1994 --------- --------- --------- --------- OPERATING REVENUES $ 111,551 $ 107,259 $ 336,979 $ 323,059 --------- --------- --------- --------- OPERATING EXPENSES: Television expenses 55,686 57,988 159,305 168,950 Selling, general and administrative 33,596 26,251 92,112 81,308 --------- --------- --------- --------- 89,282 84,239 251,417 250,258 --------- --------- --------- --------- Operating income 22,269 23,020 85,562 72,801 --------- --------- --------- --------- OTHER INCOME (EXPENSE): Interest and other income 20,410 16,299 59,746 44,606 Equity in United Paramount Network loss (28,722) (159) (95,834) (159) --------- --------- --------- --------- (8,312) 16,140 (36,088) 44,447 --------- --------- --------- --------- Income before income taxes and minority interest 13,957 39,160 49,474 117,248 INCOME TAX PROVISION (BENEFIT) (6,600) 3,200 9,000 36,000 --------- --------- --------- --------- Income before minority interest 20,557 35,960 40,474 81,248 MINORITY INTEREST (2,732) (3,351) (11,005) (10,280) --------- --------- --------- --------- Net income $ 17,825 $ 32,609 $ 29,469 $ 70,968 ========= ========= ========= ========= AVERAGE OUTSTANDING COMMON SHARES 24,530 24,929 24,597 25,065 ========= ========= ========= ========= NET INCOME PER SHARE $ .73 $ 1.31 $ 1.20 $ 2.83 ========= ========= ========= ========= 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, ------------------------ 1995 1994 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 29,469 $ 70,968 Adjustments to reconcile net income to net cash provided from operating activities: Film contract payments (66,621) (92,279) Film contract amortization 65,030 72,124 Prepaid broadcast rights 3,639 6,284 Depreciation and other amortization 14,943 15,358 Equity in United Paramount Network loss 95,834 159 Minority interest 11,005 10,280 Other 3,903 978 Changes in assets and liabilities: Accounts receivable 14,268 11,062 Other assets (4,797) 1,427 Accounts payable and other liabilities 1,396 (5,035) Income taxes (24,643) (7,431) ----------- ----------- Net cash provided from operating activities 143,426 83,895 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Dispositions (purchases) of marketable securities, net (44,270) 210,077 Investment in and advances to United Paramount Network (105,856) (289) Capital expenditures (5,992) (6,467) Other (8,018) (48) ----------- ----------- Net cash provided from (used in) investing activities (164,136) 203,273 ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Dividend (24,504) - Purchases of treasury stock (16,929) (60,888) Capital transactions of subsidiary (22,224) (8,480) ----------- ----------- Net cash used in financing activities (63,657) (69,368) ----------- ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (84,367) 217,800 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 222,201 35,371 ----------- ----------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 137,834 $ 253,171 =========== =========== 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 (73% at September 30, 1995) subsidiary of Chris-Craft Industries, Inc., operates eight television stations, three wholly owned and five owned by United Television, Inc., 57% owned by BHC at September 30, 1995. 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 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 to a fair statement of the results for the interim periods. Certain amounts for 1994 have been reclassified to conform to the 1995 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. 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, 1995, BHC's marketable securities, which consisted substantially of U.S. Government securities, had a carrying value of $1,350,651,000 and a fair value of $1,361,598,000. The difference of $10,947,000 ($7,106,000 net of income taxes and minority interest) is reflected as an adjustment to shareholders' investment in the accompanying condensed consolidated balance sheet. Of the investments in U.S. Government securities, 80% mature within one year, 96% within two years and all within four years. At December 31, 1994, BHC's marketable securities, which consisted substantially of U.S. Government securities, had a carrying value of $1,299,322,000 and a fair value of $1,274,244,000. The difference of $25,078,000 ($13,131,000 net of income taxes and minority interest) is reflected as an adjustment to shareholders' investment in the accompanying condensed consolidated balance sheet. Page 7 3. SHAREHOLDERS' INVESTMENT: As of September 30, 1995, there were outstanding 18,000,000 shares of Class B common stock, all held by Chris-Craft, and 6,524,055 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 224,810 Class A common shares purchased by BHC during 1995. At September 30, 1995, purchases of an additional 745,513 shares of Class A common stock were authorized. In February 1995, 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 $24.5 million, was paid in April 1995. BHC has no plan to pay dividends on a regular basis. 4. COMMITMENTS: Commitments of BHC's television stations for film contracts entered into but not available for broadcasting at September 30, 1995 aggregated approximately $141 million, including $27.8 million applicable to UTV. BHC also has a commitment to invest over time up to $65 million, including $40 million applicable to UTV, in management buyout limited partnerships. In July 1994, BHC and Viacom Inc.'s Paramount Television Group formed the United Paramount Network, a fifth broadcast television network which premiered January 1995. BHC currently owns 100% of UPN, and accounts for UPN under the equity method since 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. The cost of developing UPN will be significant, and BHC has agreed to make minimum UPN expenditures of at least $150,000,000 through 1996. Network expenditures and related operating losses are expected to significantly exceed such amount for that period, and to remain substantial thereafter. Page 8 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 $1.5 billion at September 30, 1995, and BHC has no debt outstanding. While BHC is currently expending significant amounts to develop the United Paramount Network, such expenditures for the first nine months of 1995 were less than the cash flow generated by BHC's television station group. BHC's operating cash flow is generated primarily by its core television broadcasting business. 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 $1.6 million and $20.2 million, respectively, in the first nine months of 1995 and 1994), and is dependent upon the mix of programs aired and payment terms of the stations' contracts. Station earnings rose 11% in the first nine months of 1995, and broadcast cash flow increased 34% from the corresponding 1994 amount, to $117.8 million from $88.1 million last year. 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 $1.5 billion at September 30, 1995 and December 31, 1994. First nine months operating cash flow of $143.4 million was more than offset by United Paramount Network funding of $105.9 million, treasury stock purchases by BHC and UTV totalling $38.2 million and payment of the 1995 special dividend set forth below. 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 dividends on a regular basis. Since April 1990, BHC's Board of Directors has authorized the purchase of up to 5,500,000 Class A common shares. Through September 30, 1995, 4,754,487 shares were purchased for a total cost of $282.1 million, including $16.9 million applicable to shares purchased in the first nine months of 1995. 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. Page 9 In July 1994, BHC and Viacom Inc.'s Paramount Television Group formed the United Paramount Network, a fifth broadcast television network which premiered 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 $105.9 million in the first nine months of 1995. The cost of developing UPN will be significant, and BHC has agreed to make minimum UPN expenditures of at least $150 million through 1996. UPN expenditures and related operating losses are expected to significantly exceed such amount for that period, and to remain substantial thereafter. BHC's television stations make commitments for programming that will not be available for telecasting until future dates. At September 30, 1995, commitments for such programming totalled approximately $141 million, including $27.8 million applicable to UTV. BHC also has a commitment to invest over time up to $65 million, including $40 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 September 30, 1995 (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 1995 third quarter operating results reflect record station earnings and a substantial increase in interest income. However, UPN start-up losses lowered net income, to $17,825,000, or $.73 per share, compared to $32,609,000, or $1.31 per share, in last year's period. Excluding UPN, pretax income increased 9%, to $42,679,000 from $39,319,000. BHC also achieved substantial increases in station earnings and interest income for the first nine months of 1995. However, after UPN start-up losses, BHC net income for the period declined to $29,469,000, or $1.20 per share, from $70,968,000, or $2.83 per share, last year. Excluding UPN, BHC pretax income for the nine months increased 24%, to $145,308,000 from $117,407,000. Television station earnings increased 2% in the third quarter, to $33,697,000 from $33,095,000 last year, as a 2% increase in station operating revenues more than offset a 3% increase in station programming expenses. The moderate increase in revenues reflects a softening in demand for television advertising. Such demand appears to be softening further and BHC expects fourth quarter net revenues to be less than last year's. BHC believes that broadcast television stations in general are experiencing a reduction in the level of fourth quarter business. Station earnings for the first nine months of 1995 increased 11%, to $112,083,000 from $100,596,000, reflecting a 4% increase in operating revenues and a 4% decline in station programming expenses. Primarily due to one-time expenses of approximately $3.7 million associated with establishing a national sales representative subsidiary, consolidated Page 10 operating income, which further reflects program development expenses, goodwill amortization and corporate office expenses of BHC and UTV, declined slightly in the third quarter, to $22,269,000 from last year's $23,020,000. Nine month consolidated operating income rose 18% even after the one-time expenses, to $85,562,000 from last year's $72,801,000. UPN's pretax losses of $28,722,000 in the third quarter and $95,834,000 in the nine month period were as expected, and are reflected in BHC's financial statements under the equity method. UPN is in its infancy, and will incur substantial start-up losses for several years. Interest and other income increased to $20,410,000 from $16,299,000 in the third quarter, and to $59,746,000 from $44,606,000 in the nine month period, primarily reflecting higher interest rates on BHC's substantial money market holdings. Income taxes in both third quarters reflect $20 million reversals of state income taxes accrued in 1989 and 1990, following the favorable resolution in each quarter of routine audits. Page 11 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 14, 1995 Page 12 EXHIBIT INDEX Incorporated by Reference to: Exhibit No. Exhibit ------------- ----------- ------- 27 Financial Data Schedule EX-27 2 BHC FDS WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 1000 9-MOS DEC-31-1995 SEP-30-1995 1 137834 1361598 88737 6324 0 1729353 130577 83527 2193049 209125 0 0 0 249 1790072 2193049 0 336979 0 251417 0 0 0 49474 9000 29469 0 0 0 29469 1.20 0
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