-----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, R9wxey3Xa4lL4qBcOXN+TV6uM0PDjOwt/TXg8YdJxC/2tHfbJNwfhxWvpMv3sqNa mSDk2Sw+2GRvTyq4dxZy0g== 0000855433-97-000002.txt : 19970520 0000855433-97-000002.hdr.sgml : 19970520 ACCESSION NUMBER: 0000855433-97-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 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: 97607356 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 LIVE 1ST QUARTER BHC 1997 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, 1997 ---------------------------------- 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, 1997 there were 5,376,005 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, 1997 1996 ------------ ------------ ASSETS - ------ CURRENT ASSETS: Cash and cash equivalents $ 245,708 $ 146,751 Marketable securities (substantially all U.S. Government securities) 1,276,127 1,245,241 Accounts receivable, net 74,073 87,459 Film contract and, in 1996, prepaid broadcast rights 69,979 115,498 Prepaid expenses and other current assets 54,476 52,354 ------------ ------------ Total current assets 1,720,363 1,647,303 ------------ ------------ INVESTMENTS 73,873 46,944 ------------ ------------ FILM CONTRACT RIGHTS, less current portion 25,867 28,536 ------------ ------------ PROPERTY AND EQUIPMENT, net 46,998 48,077 ------------ ------------ INTANGIBLE ASSETS 310,761 313,079 ------------ ------------ OTHER ASSETS 13,714 13,324 ------------ ------------ $ 2,191,576 $ 2,097,263 ============ ============ 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, 1997 1996 ------------ ------------ LIABILITIES AND SHAREHOLDERS' INVESTMENT - ---------------------------------------- CURRENT LIABILITIES: Film contracts payable within one year $ 91,985 $ 97,222 Accounts payable and accrued expenses 71,160 77,477 Income taxes payable 97,917 35,543 ----------- ------------ Total current liabilities 261,062 210,242 ----------- ------------ FILM CONTRACTS PAYABLE AFTER ONE YEAR 68,590 80,837 ----------- ------------ OTHER LIABILITIES 4,719 5,424 ----------- ------------ MINORITY INTEREST 96,549 95,227 ----------- ------------ SHAREHOLDERS' INVESTMENT: Class A common stock - par value $.01 per share; authorized 200,000,000 shares; outstanding 5,839,508 shares 58 58 Class B common stock - par value $.01 per share; authorized 200,000,000 shares; outstanding 18,000,000 shares 180 180 Retained earnings 1,785,572 1,710,323 Treasury stock, at cost (23,156) (6,677) Adjustment to reflect marketable securities at market value (1,998) 1,649 ------------ ------------ 1,760,656 1,705,533 ------------ ------------ $ 2,191,576 $ 2,097,263 ============ ============ 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, ---------------------- 1997 1996 --------- --------- OPERATING REVENUES $ 101,118 $ 101,045 --------- --------- OPERATING EXPENSES: Television expenses 50,971 51,817 Selling, general and administrative 32,655 30,035 --------- --------- 83,626 81,852 --------- --------- Operating income 17,492 19,193 --------- --------- OTHER INCOME (EXPENSE): Gain on change of ownership in United Paramount Network, net 152,224 - Interest and other income 20,008 22,482 Equity in United Paramount Network loss (17,898) (32,754) --------- --------- 154,334 (10,272) --------- --------- Income before income taxes and minority interest 171,826 8,921 INCOME TAX PROVISION 68,700 4,300 --------- --------- Income before minority interest 103,126 4,621 MINORITY INTEREST (3,636) (3,543) --------- --------- Net income $ 99,490 $ 1,078 ========= ========= AVERAGE COMMON SHARES OUTSTANDING 23,660 24,188 ========= ========= NET INCOME PER SHARE $ 4.21 $ .04 ========= =========
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, ------------------------ 1997 1996 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 99,490 $ 1,078 Adjustments to reconcile net income to net cash provided from operating activities: Film contract payments (23,151) (22,683) Film contract amortization 24,574 22,249 Prepaid broadcast rights 17,051 123 Depreciation and other amortization 4,819 4,710 Equity in United Paramount Network loss 17,898 32,754 Gain on change of ownership in United Paramount Network, net (152,224) - Minority interest 3,636 3,543 Other 793 (2,228) Changes in assets and liabilities: Accounts receivable 13,386 18,163 Other assets (2,853) (3,521) Accounts payable and other liabilities (2,121) (3,863) Income taxes 62,622 2,769 ----------- ----------- Net cash provided from operating activities 63,920 53,094 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Distribution from United Paramount Network 116,261 - Disposition (purchase) of marketable securities, net (31,307) 70,112 Investment in United Paramount Network (2,850) (33,610) Increase in other investments (3,382) - Capital expenditures (1,422) (3,668) Other (30) (5) ----------- ----------- Net cash provided from investing activities 77,270 32,829 ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Payment of special dividend (23,599) - Purchases of treasury stock (16,047) (29,291) Capital transactions of subsidiary (2,587) (12,892) ----------- ----------- Net cash used in financing activities (42,233) (42,183) ----------- ----------- NET INCREASE IN CASH AND CASH EQUIVALENTS 98,957 43,740 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 146,751 72,179 ----------- ----------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 245,708 $ 115,919 =========== =========== 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 (76% at March 31, 1997) subsidiary of Chris-Craft Industries, Inc., operates eight television stations, three wholly owned and five owned by United Television, Inc., 59% owned by BHC at March 31, 1997. The interest of UTV shareholders other than BHC in the net income and net assets of UTV is set forth as minority interest in the accompanying condensed consolidated statements of income and condensed consolidated balance sheets, respectively. Intercompany accounts and transactions have been eliminated. The financial information included herein has been prepared by BHC, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. However, BHC believes that the disclosures herein are adequate to make the information presented not misleading. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and the notes thereto included in BHC's latest annual report on Form 10-K. The information furnished reflects all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the results for the interim periods. The results for these interim periods are not necessarily indicative of results to be expected for the full year, due to seasonal factors, among others. 2. MARKETABLE SECURITIES: In accordance with Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity Securities", BHC classifies its marketable securities as available-for- sale. At March 31, 1997, BHC's marketable securities, which consisted substantially of U.S. Government securities, had a carrying value of $1,280,352,000 and a fair value of $1,276,127,000. The difference of $4,225,000 ($1,998,000 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, 87% mature within one year and all within two years. At December 31, 1996, BHC's marketable securities, which consisted substantially of U.S. Government securities, had a carrying value of $1,243,205,000 and a fair value of $1,245,241,000. The difference of Page 7 $2,036,000 ($1,649,000 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 $25,308,000 at March 31, 1997 and $1,394,000 at December 31, 1996, 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 substantial portion of its share of such funding requirements in 1997 and 1998 will be offset by the proceeds of the Viacom option exercise. UPN's condensed consolidated statements of operations are as follows (in thousands): Three Months Ended March 31, ---------------------------- 1997 1996 ---------- ---------- Operating revenues* $ 15,681 $ 10,908 Operating expenses* 47,516 42,602 ---------- ---------- Operating loss (31,835) (31,694) Other income (expenses) 702 (1,060) ---------- ---------- Loss before interest on BHC advances (31,133) (32,754) Interest on BHC advances (eliminated in consolidation) - (2,523) ---------- ---------- Net loss $ (31,133) $ (35,277) ========== ========== * With respect to certain of its programming, UPN derives no revenue and incurs no programming expense. Page 8 4. SHAREHOLDERS' INVESTMENT: As of March 31, 1997, there were outstanding 18,000,000 shares of Class B common stock, all held by Chris-Craft, and 5,549,000 shares of Class A common stock, after reflecting as treasury stock BHC's pro rata interest in its Class A common shares held by UTV and 156,600 Class A common shares purchased by BHC during 1997. At March 31, 1997, 1,075,713 shares of Class A common stock remain authorized for purchase. In January 1997, BHC 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 $23.6 million, was paid in February 1997. 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 $2,430,000 and $15,317,000 in the first three months of 1997 and 1996, respectively, net of proceeds to UTV of $1,776,000 and $2,425,000 in the first three months of 1997 and 1996, respectively, from the exercise of stock options, all net of intercompany eliminations. 5. COMMITMENTS: Commitments of BHC's television stations for film contracts entered into but not available for broadcasting at March 31, 1997 aggregated approximately $182.2 million, including $60.9 million applicable to UTV. BHC also has a remaining commitment to invest over time up to $30.6 million, including $19.8 million applicable to UTV, in management buyout limited partnerships. BHC expects 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 $1.52 billion at March 31, 1997, and BHC has no debt outstanding. BHC expended significant funds in 1996 and 1995 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 believes that the substantial portion of its share of such funding requirements for 1997 and 1998 will be offset by the proceeds of the Viacom option exercise, described below. 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 (amortization exceeded payments by $1.4 million in the 1997 first quarter, and payments exceeded amortization by $.4 million in the corresponding 1996 period), and is dependent upon the mix of programs aired and payment terms of the stations' contracts. Reflecting such $1.8 million variance between periods, broadcast cash flow in the first quarter of 1997 declined only 4% from 1996's corresponding amount, while station earnings declined 12%, 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 totalled $1.52 billion at March 31, 1997, compared to $1.39 billion at December 31, 1996. First quarter operating cash flow increased to $63.9 million from last year's $53.1 million, primarily reflecting a $17.1 million refund of prepaid broadcasting rights. Cash balances were also augmented by the $116.3 million distribution from UPN, as set forth below. In January 1997, BHC declared a special cash dividend of $1.00 per share, aggregating $23.6 million, which was paid 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 6,800,000 Class A common shares. Through March 31, 1997, 5,724,287 shares were purchased for a total cost of $374.7 million, including $16.5 Page 10 million in 1997. From 1993 through March 31, 1997, UTV purchased 1,382,876 of its common shares at an aggregate cost of $86.7 million, of which $2.4 million was expended in the first quarter of 1997, and at March 31, 1997, 801,149 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 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. BHC and Viacom now share equally in UPN losses and funding requirements. BHC funding of UPN totalled $145.6 million in 1996 and $128.6 million in 1995. UPN is still in its early development, and is expected for the next several years to continue to incur substantial start- up losses and to require significant funding. However, BHC believes that the substantial portion of its share of such funding requirements for 1997 and 1998 will be offset by the proceeds of the Viacom option exercise. BHC's television stations make commitments for programming that will not be available for telecasting until future dates. At March 31, 1997, commitments for such programming totalled approximately $182.2 million, including $60.9 million applicable to UTV. BHC also has a remaining commitment to invest over time up to $30.6 million, including $19.8 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, 1997 (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 1997 first quarter net income increased to $99,490,000, or $4.21 per share, from net income of $1,078,000, or $.04 per share, in the first quarter of 1996. The substantial increase in net income primarily reflects a net pretax gain of $152,224,000 on the January 1997 acquisition by Viacom Inc. of a 50% interest in United Paramount Network, which previously had been 100% owned by BHC. The earnings gain also reflects a significant Page 11 reduction in the amount of UPN start-up losses included in BHC's operating results, reflecting BHC's reduced ownership interest. Demand for television advertising continued to be lackluster in several key areas, and operating revenues at BHC's core television station group totalled $99,243,000 in the first quarter, just above last year's $98,985,000. Station operating expenses increased moderately, causing a 12% decline in station earnings, to $21,550,000 from $24,568,000. That decline was almost fully offset by an increase in earnings at BHC's television production subsidiaries. Operating income declined 9%, to $17,492,000 from $19,193,000, as corporate office expenses rose $1.1 million, primarily due to the increase to $12 million from $8 million in the annual management fee paid to Chris-Craft. UPN's first quarter loss was slightly larger than in 1996, due primarily to its expanded schedule, but the amount of UPN losses included in BHC's financial statements, which are recorded under the equity method of accounting, declined to $17,898,000 from $32,754,000, reflecting BHC's reduced ownership interest. Interest and other income, which consists mostly of amounts earned on BHC's cash and marketable securities holdings, totalled $20,008,000 in the first quarter, compared to $22,482,000 in 1996. The decline primarily reflects smaller 1997 gains on sales of securities. Minority interest reflects the interest of shareholders other than BHC in the net income of UTV, 59% owned by BHC at March 31, 1997 and 58% owned by BHC at March 31, 1996. 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, 1997 Page 13 EXHIBIT INDEX Incorporated by Reference to: Exhibit No. Exhibit - ------------- ----------- ------- 27 Financial Data Schedule EX-27 2 LIVE FDS 1ST QUARTER 1997
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 10Q DATED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 1000 3-MOS DEC-31-1997 MAR-31-1997 245708 1276127 79769 5696 0 1720363 140362 93364 2191576 261062 0 0 0 238 1760418 2191576 0 101118 0 83626 0 0 0 171826 68700 99490 0 0 0 99490 4.21 0
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