-----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, AEJ3YYveANmiPIHI29dZKA2MKr02qFMCmnOi+6Ji2A0FVkqhWmSp8Dl5KrB1qgvF Wole8iPW8orT4H6Bax+/Nw== 0000855433-96-000002.txt : 19960517 0000855433-96-000002.hdr.sgml : 19960517 ACCESSION NUMBER: 0000855433-96-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 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: 96565228 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 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 March 31, 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 April 30, 1996 there were 5,928,205 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) -------------------------------------
March 31, December 31, 1996 1995 ------------ ------------ ASSETS - ------ CURRENT ASSETS: Cash and cash equivalents $ 115,919 $ 72,179 Marketable securities(substantially all U.S. Government securities) 1,347,295 1,427,186 Accounts receivable, net 71,825 89,988 Film contract and prepaid broadcast rights 102,599 95,541 Prepaid expenses and other current assets 43,354 32,545 ------------ ------------ Total current assets 1,680,992 1,717,439 ------------ ------------ FILM CONTRACT AND, IN 1995, PREPAID BROADCAST RIGHTS, less current portion 22,020 50,361 ------------ ------------ PROPERTY AND EQUIPMENT, net 49,626 48,338 ------------ ------------ INTANGIBLE ASSETS 321,423 323,752 ------------ ------------ OTHER ASSETS 20,168 19,120 ------------ ------------ $ 2,094,229 $ 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) -------------------------------------
March 31, December 31, 1996 1995 ------------ ------------ LIABILITIES AND SHAREHOLDERS' INVESTMENT - ---------------------------------------- CURRENT LIABILITIES: Film contracts payable within one year $ 82,345 $ 87,634 Accounts payable and other liabilities 68,174 72,906 Income taxes payable 31,129 28,429 ----------- ------------ Total current liabilities 181,648 188,969 ----------- ------------ FILM CONTRACTS PAYABLE AFTER ONE YEAR 75,900 86,392 ----------- ------------ OTHER LIABILITIES 6,139 6,504 ----------- ------------ MINORITY INTEREST 89,342 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 1,774,693 1,779,560 Treasury stock, at cost (34,836) (6,493) Increase to reflect marketable securities at market value 1,098 8,581 ------------ ------------ 1,741,200 1,781,893 ------------ ------------ $ 2,094,229 $ 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 Ended March 31, -------------------- 1996 1995 --------- --------- OPERATING REVENUES $ 101,045 $ 104,475 --------- --------- OPERATING EXPENSES: Television expenses 51,817 51,072 Selling, general and administrative 30,035 29,298 --------- --------- 81,852 80,370 --------- --------- Operating income 19,193 24,105 --------- --------- OTHER INCOME (EXPENSE): Interest and other income 22,482 20,597 Equity in United Paramount Network loss (32,754) (38,403) --------- --------- (10,272) (17,806) --------- --------- Income before income taxes and minority interest 8,921 6,299 INCOME TAX PROVISION 4,300 2,600 --------- --------- Income before minority interest 4,621 3,699 MINORITY INTEREST (3,543) (3,309) --------- --------- Net income $ 1,078 $ 390 ========= ========= AVERAGE OUTSTANDING COMMON SHARES 24,188 24,683 ========= ========= NET INCOME PER SHARE $ .04 $ .02 ========= ========= 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) -----------------------------------------------
Three Months Ended March 31, ------------------------ 1996 1995 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,078 $ 390 Adjustments to reconcile net income to net cash provided from operating activities: Film contract payments (22,683) (23,520) Film contract amortization 22,249 17,612 Depreciation and other amortization 4,710 5,027 Equity in United Paramount Network loss 32,754 38,403 Minority interest 3,543 3,309 Other (2,105) 206 Changes in assets and liabilities: Accounts receivable 18,163 21,243 Other assets (3,521) 1,852 Accounts payable and other liabilities (3,863) (4,416) Income taxes 2,769 (3,803) ----------- ----------- Net cash provided from operating activities 53,094 56,303 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Disposition (purchase) of marketable securities, net 70,112 (61,831) Investment in United Paramount Network (33,610) (38,028) Capital expenditures (3,668) (1,026) Other (5) (11) ----------- ----------- Net cash provided from (used in) investing activities 32,829 (100,896) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Purchases of treasury stock (29,291) (11,143) Capital transactions of subsidiary (12,892) (9,362) ----------- ----------- Net cash used in financing activities (42,183) (20,505) ----------- ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 43,740 (65,098) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 72,179 222,201 ----------- ----------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 115,919 $ 157,103 =========== =========== 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 March 31, 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 March 31, 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 to 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 March 31, 1996, BHC's marketable securities, which consisted substantially of U.S. Government securities, had a carrying value of $1,346,021,000 and a fair value of $1,347,295,000. The difference of $1,274,000 ($1,098,000 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, 78% mature within one year, 95% 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 $2,983,000 at March 31, 1996 and $2,121,000 at December 31, 1995 and is included in other assets on 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 statement of operations for the three months ended March 31, 1996 is as follows (in thousands): Operating revenues* $ 10,908 Operating expenses* 42,602 ---------- Operating loss (31,694) Other expenses (1,060) ---------- Loss before interest on BHC advances (32,754) Interest on BHC advances (eliminated in consolidation) (2,523) ---------- Net loss $ (35,277) ========== * With respect to certain of its programming, UPN derives no revenue and incurs no programming expense. 4. SHAREHOLDERS' INVESTMENT: As of March 31, 1996, there were outstanding 18,000,000 shares of Class B common stock, all held by Chris-Craft, and 6,055,036 shares of Class A common stock, after reflecting as treasury stock BHC's pro Page 8 rata interest in its Class A common shares held by UTV and 306,400 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 March 31, 1996, 1,579,213 shares of Class A common stock remain authorized for purchase. 5. COMMITMENTS: Commitments of BHC's television stations for film contracts entered into but not available for broadcasting at March 31, 1996 aggregated approximately $187.4 million, including $55.8 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 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 $1.5 billion at March 31, 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 $.4 million and $5.9 million, respectively, in the 1996 and 1995 first quarters), and is dependent upon the mix of programs aired and payment terms of the stations' contracts. Reflecting such $5.5 million variance between the first quarters of 1996 and 1995, broadcast cash flow declined only 10%, to $26.2 million from $29.2 million in 1995, while station earnings declined 25%, 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 $1.5 billion at March 31, 1996, virtually unchanged from December 31, 1995. First quarter operating cash flow of $53.1 million was more than offset by UPN funding of $33.6 million and treasury stock purchases by BHC and UTV totalling $44.6 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. Since April 1990, BHC's Board of Directors has authorized the purchase of up to 6,800,000 Class A common shares. Through March 31, 1996, 5,220,787 shares were purchased for a total cost of $324.8 million, including $28.3 million in 1996. From 1993 through March 31, 1996, UTV purchased 1,160,676 of its common shares at an aggregate cost of $66.9 Page 10 million, and at March 31, 1996, 1,023,349 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 $33.6 million in the first quarter 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 March 31, 1996, commitments for such programming totalled approximately $187.4 million, including $55.8 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 March 31, 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 first quarter net income rose to $1,078,000, or $.04 per share, from last year's $390,000, or $.02 per share. Results for the quarter reflect a smaller start-up loss at BHC's United Paramount Network and an increase in income earned on BHC's substantial cash and marketable securities holdings. These positive factors offset a decline in earnings at BHC's core television station group. The rather lackluster demand for television advertising on BHC's stations which prevailed during the fourth quarter of 1995 continued into the first quarter of 1996, especially in Los Angeles and San Francisco. Station group revenues accordingly declined 5%, to $98,985,000 from $104,475,000 and, after a 4% increase in operating expenses, first quarter station earnings declined 25%, to $24,568,000 Page 11 from $32,703,000. Operating income declined only 20%, to $19,193,000 from $24,105,000, as BHC's television production subsidiaries recorded improved results. There are preliminary signs of strengthening demand for television advertising at BHC stations, and the upcoming Summer Olympic Games and political contests should have a further positive effect on advertising demand later in the year. Interest and other income in the first quarter rose to $22,482,000 from last year's $20,597,000, primarily reflecting marketable securities gains. UPN's first quarter loss declined to $32,754,000 from $38,403,000, as last year's amount included nonrecurring promotion expenses related to the network's January 1995 launch. UPN, which is accounted for under the equity method, is expected to incur substantial start-up losses for several more years. Minority interest reflects the interest of shareholders other than BHC in the net income of UTV, 58% owned at March 31, 1996 and 56% owned at March 31, 1995. Page 12 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: May 15, 1996 Page 13 EXHIBIT INDEX Incorporated by Reference to: Exhibit No. Exhibit - ------------- ----------- ------- 27 Financial Data Schedule EX-27 2 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 1000 3-MOS DEC-31-1996 MAR-31-1996 1 115919 1347295 77559 5734 0 1680992 135897 86271 2094229 181648 0 0 0 245 1740955 2094229 0 101045 0 81852 0 0 0 8921 4300 1078 0 0 0 1078 .04 0
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