<PAGE>
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, 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: 1-2999
------------------------------
CHRIS-CRAFT INDUSTRIES, INC.
----------------------------
(Exact name of Registrant as specified in its charter)
Delaware 94-1461226
- - ------------------------------- ------------------------------
- - -
(State or other jurisdiction of (I.R.S. Employer
Identification
incorporation or organization) 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, 1994 there were 20,945,481 shares of the issuer's
Common Stock outstanding and 7,753,168 shares of the issuer's
Class B Common Stock outstanding.
<PAGE>
<TABLE>
PART I -- FINANCIAL INFORMATION
CHRIS-CRAFT INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
-------------------------------------
<CAPTION>
March 31, December 31,
1994 1993
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
- - ------
CURRENT ASSETS:
Cash and cash equivalents $ 186,822 $ 40,497
Marketable (substantially all U.S.
Government) securities 1,306,193 1,495,610
Accounts receivable, net 74,121 89,869
Film contract and prepaid broadcast rights 92,035 98,882
Prepaid expenses and other current assets 69,182 65,913
----------- -----------
Total current assets 1,728,353 1,790,771
----------- -----------
FILM CONTRACT AND PREPAID BROADCAST RIGHTS,
less current portion 82,611 87,197
----------- -----------
PROPERTY, PLANT AND EQUIPMENT, net 54,234 54,461
----------- -----------
INTANGIBLE ASSETS 335,208 333,925
----------- -----------
OTHER ASSETS 15,278 16,824
----------- -----------
$ 2,215,684 $ 2,283,178
=========== ===========
<PAGE>
LIABILITIES AND SHAREHOLDERS' INVESTMENT
- - ----------------------------------------
CURRENT LIABILITIES:
Film contracts payable within one year $ 98,276 $ 112,798
Accounts payable and other liabilities 86,636 107,338
Income taxes payable 80,229 74,764
----------- -----------
Total current liabilities 265,141 294,900
----------- -----------
FILM CONTRACTS PAYABLE AFTER ONE YEAR 85,727 95,699
----------- -----------
OTHER LIABILITIES 19,235 18,737
----------- -----------
MINORITY INTEREST 579,264 615,615
----------- -----------
SHAREHOLDERS' INVESTMENT:
Prior preferred stock - $1.00 dividend; currently
authorized 73,399 shares; outstanding 73,399 shares 1,578 1,578
Convertible preferred stock - $1.40 dividend;
currently authorized 287,260 shares;
outstanding 287,260 and 297,946 shares 5,027 5,214
Class B common stock - par value $.50 per share;
authorized 50,000,000 shares; outstanding
7,774,377 and 7,379,866 shares 3,887 3,690
Common stock - par value $.50 per share; authorized
100,000,000 shares; outstanding 20,954,819 and
19,911,536 shares 11,268 10,747
Capital surplus 311,765 275,443
Retained earnings 943,020 961,555
Treasury stock, at cost (2,532) -
Reduction to reflect marketable
securities at fair value (7,696) -
----------- -----------
1,266,317 1,258,227
----------- -----------
$ 2,215,684 $ 2,283,178
=========== ===========
<FN>
The accompanying notes to condensed consolidated financial statements
are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
CHRIS-CRAFT INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands of dollars except per share data)
(UNAUDITED)
-----------------------------------------------
<CAPTION>
Three Months
Ended March 31,
----------------------
1994 1993
---------- ----------
<S> <C> <C>
OPERATING REVENUES $ 101,775 $ 96,285
---------- ----------
OPERATING EXPENSES:
Expenses directly associated with revenues 56,388 60,807
Selling, general and administrative 28,008 28,764
---------- ----------
84,396 89,571
---------- ----------
Operating income 17,379 6,714
---------- ----------
OTHER INCOME:
Interest and other income, net 13,899 5,969
Income associated with Time Warner Inc. securities - 108,413
---------- ----------
13,899 114,382
---------- ----------
Income before income taxes
and minority interest 31,278 121,096
INCOME TAX PROVISION 13,300 42,300
---------- ----------
Income before minority interest 17,978 78,796
MINORITY INTEREST (6,802) (29,295)
---------- ----------
Net income $ 11,176 $ 49,501
========== ==========
Net income per share:
Primary $ .39 $ 1.76
========== ==========
Fully diluted $ .30 $ 1.33
========== ==========
3% STOCK 3% STOCK
DIVIDENDS PER COMMON SHARE DIVIDEND DIVIDEND
========== ==========
<FN>
The accompanying notes to condensed consolidated financial statements
are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
CHRIS-CRAFT INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
(UNAUDITED)
-----------------------------------------------
<CAPTION>
Three Months
Ended March 31,
-----------------------------
1994 1993
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 11,176 $ 49,501
Adjustments to reconcile net income to net cash
provided from operating activities:
Film contract payments (36,893) (36,071)
Film contract amortization 25,107 23,824
Depreciation and other amortization 5,233 5,264
Loss (gain) on disposition of marketable securities 602 (93,741)
Minority interest 6,802 29,295
Other (704) 2,424
Changes in assets and liabilities:
Accounts receivable 15,748 11,349
Other assets 3,439 (2,409)
Accounts payable and other liabilities (7,502) 1,545
Income taxes 8,415 37,429
------------ ------------
Net cash provided from operating activities 31,423 28,410
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Dispositions (purchases) of marketable securities, net 163,600 (64,574)
Capital expenditures, net (3,240) (949)
Other 42 (1,578)
------------ ------------
Net cash provided from (used in) investing activities 160,402 (67,101)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital transactions of subsidiaries (49,834) (14,502)
Purchase of treasury stock (2,930) (7,323)
Proceeds from option exercises 7,483 -
Repayment of long term debt - (15,625)
BHC dividend to public shareholders - (15,893)
Other (219) (193)
------------ ------------
Net cash used in financing activities (45,500) (53,536)
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 146,325 (92,227)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 40,497 177,013
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 186,822 $ 84,786
============ ============
<FN>
The accompanying notes to condensed consolidated financial statements
are an integral part of these statements.
</TABLE>
<PAGE>
CHRIS-CRAFT INDUSTRIES, INC.
----------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
1. PRINCIPLES OF CONSOLIDATION:
The accompanying condensed consolidated financial statements
include the accounts of Chris-Craft Industries, Inc. and its
subsidiaries, including Chris-Craft's majority owned (72% at
March 31, 1994) television broadcasting subsidiary, BHC
Communications, Inc., and BHC's majority owned (54% at March 31,
1994) subsidiary, United Television, Inc. (UTV). The pro rata
interests of BHC and UTV minority shareholders in the net income
of the respective companies are reflected in minority interest in
the accompanying condensed consolidated statements of income.
The minority shareholders' interests in the net assets of BHC and
UTV are reflected as minority interest in the accompanying
condensed consolidated balance sheets. Intercompany accounts and
transactions have been eliminated.
The financial information included herein has been prepared
by Chris-Craft, 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, Chris-Craft
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
Chris-Craft'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, Chris-Craft 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. At January 1, 1994, Chris-Craft classified its
marketable securities as available-for-sale.
At March 31, 1994, Chris-Craft's marketable securities,
which consisted substantially of U.S. Government securities, had
a carrying value of $1,325,165,000 and a fair value of
$1,306,193,000. The difference of $18,972,000 ($7,696,000 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, 76% mature
within two years and all within five years.
3. SHAREHOLDERS' INVESTMENT:
Chris-Craft paid 3% stock dividends on its common and Class
B common stock in the respective shares of such classes on April
4, 1994. During the three months ended March 31, 1994, 27,304
shares of Class B common stock were converted into 27,304 shares
of common stock, and 10,686 shares of $1.40 convertible preferred
stock were converted into 116,929 shares of common stock and
195,244 shares of Class B common stock. In addition, 376,188
shares of common stock, including 85,556 shares held in treasury,
were issued upon exercise of stock options, and 85,556 shares of
common stock were received in partial payment of option
exercises. During the three month period, 71,200 shares of
common stock were purchased by Chris-Craft, all of which were
held in treasury at March 31, 1994. As of March 31, 1994,
697,302 shares of common stock and 12,899 shares of $1.00 prior
preferred stock remained authorized for purchase.
As of March 31, 1994, shares of Chris-Craft's authorized but
unissued common stock were reserved for issuance as follows:
Shares
----------
Conversion of Class B common stock 7,774,377
Conversion of $1.40 convertible
preferred stock 8,643,717*
Stock options (including options
outstanding for 1,145,851 shares) 1,277,069
Stock purchase plan 20,000
----------
17,715,163
==========
*Including Class B common shares.
The foregoing numbers exclude options to purchase 2,500,000
common shares under the 1994 Management Incentive Plan and
300,000 common shares under the 1994 Directors Stock Option Plan,
both adopted by stockholders on April 28, 1994.
4. COMMITMENTS AND CONTINGENCIES:
Commitments of BHC's television stations for film contracts
entered into but not available for broadcasting at March 31, 1994
aggregated approximately $103.1 million, including $26.8 million
applicable to UTV.
As set forth in Note 10 of Notes to Consolidated Financial
Statements in Chris-Craft's 1993 Annual Report, Chris-Craft has
been named as a defendant in certain actions seeking recovery for
environmental damage allegedly related to the activities
(discontinued since 1983) of 50% owned Montrose Chemical
Corporation of California. Chris-Craft is unable to determine
the amount of its liability, if any, relating to Montrose matters
or whether any such liability would have a material effect on
Chris-Craft's future financial position or results of operations.
5. INCOME PER SHARE:
Computations of income per share, all of which give
retroactive effect to the April 1994 3% stock dividend, are as
follows (in thousands of dollars except per share amounts):
<TABLE>
<CAPTION>
Three Months
Ended March 31,
--------------------------
1994 1993
------------ ------------
<S> <C> <C>
PRIMARY:
--------
Average outstanding common
and Class B common shares 28,315,983 27,681,319
Assumed exercise of stock options 216,184 423,945
------------ ------------
Total shares used in computation 28,532,167 28,105,264
============ ============
Net income $ 11,176 $ 49,501
Preferred stock dividend requirements (119) (124)
------------ ------------
$ 11,057 $ 49,377
============ ============
Primary income per share $ .39 $ 1.76
============ ============
FULLY DILUTED:
--------------
Average outstanding common
and Class B common shares 28,315,983 27,681,319
Assumed conversion of
$1.40 preferred stock 8,849,384 9,137,649
Assumed exercise of stock options 216,184 423,945
------------ ------------
Total shares used in computation 37,381,551 37,242,913
============ ============
Net income $ 11,176 $ 49,501
Preferred stock dividend requirements (18) (18)
------------ ------------
$ 11,158 $ 49,483
============ ============
Fully diluted income per share $ .30 $ 1.33
============ ============
</TABLE>
<PAGE>
CHRIS-CRAFT INDUSTRIES, INC.
----------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------
Liquidity and Capital Resources
- - -------------------------------
Chris-Craft's core operating cash flow is generated primarily by
the Television Division's broadcasting business. Television
broadcasting cash flow generally parallels the earnings of Chris-
Craft'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 $11.8 million
and $12.2 million, respectively, in the 1994 and 1993 first
quarters), and is dependent upon the mix of programs aired and
payment terms of the stations' contracts. Station earnings rose
strongly in the 1994 first quarter, and station cash flow
accordingly increased 236%.
Chris-Craft's cash flow additionally reflects earnings associated
with its cash and marketable securities, most of which are held
by majority owned broadcasting subsidiary, BHC Communications,
Inc. 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 $1.49
billion at March 31, 1994 from $1.54 billion at December 31,
1993, despite first quarter operating cash flow of $31.4 million.
Such decline primarily reflects BHC treasury stock purchases
totalling $49.5 million, and a $19 million reduction in the
carrying value of marketable securities to reflect their fair
value.
BHC generates most of Chris-Craft's consolidated cash flow.
Parent company obligations consist solely of corporate office
expenditures, current and accrued. Parent company cash balances
were augmented in January 1993 upon the receipt of $36 million in
dividends from BHC, which paid a one-time special cash dividend
of $2.00 per share. 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. Chris-Craft parent
company cash balances are substantially in excess of normal
operating requirements, and Chris-Craft expects that the present
BHC dividend policy will not affect Chris-Craft's ability to meet
parent company current obligations.
Since April 1990, BHC's Board of Directors has authorized the
purchase of up to 5,500,000 Class A common shares. Through March
31, 1994, 4,218,777 shares have been purchased for a total cost
of $241.7 million, including $42.3 million applicable to shares
purchased in the first quarter of 1994.
Chris-Craft intends to expand its operations in the media,
entertainment and communications industries and to explore
business opportunities in other industries. Chris-Craft
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.
Chris-Craft's television stations make commitments for
programming that will not be available for telecasting until
future dates. At March 31, 1994, commitments for such
programming totalled approximately $103.1 million, including
$26.8 million applicable to UTV. Chris-Craft capital
expenditures generally have not been material in relation to its
financial position, and the related commitments at March 31, 1994
were not material. Chris-Craft expects that future film contract
commitments and capital expenditure requirements for its present
business will be satisfied primarily from operations or from
current cash balances.
As set forth in Note 4, Chris-Craft has been named as a defendant
in certain actions seeking recovery for environmental damage
allegedly related to the activities (discontinued since 1983) of
50% owned Montrose Chemical Corporation of California. Chris-
Craft is unable to determine the amount of its liability, if any,
relating to Montrose matters or whether any such liability would
have a material effect on Chris-Craft's future financial
condition or results of operations.
Results of Operations
- - ---------------------
Chris-Craft 1994 first quarter net income totalled $11,176,000,
or $.39 per share, compared to $49,501,000, or $1.76 per share,
in last year's first quarter. Excluding after tax income
associated with BHC's former holdings of Time Warner securities,
1993 first quarter net income was $2,900,000, or $.10 per share.
The 285% increase in income excluding Time Warner amounts
primarily reflects substantial increases in Television Division
operating income and interest income.
Operating revenues and operating income for the 1994 and 1993
first quarters are as follows (in thousands):
Operating
Operating Revenues Income (Loss)
------------------ ------------------
1994 1993 1994 1993
-------- -------- -------- --------
Television Division $ 95,968 $ 89,581 $ 20,276 $ 10,186
Industrial Division 5,807 6,704 452 327
Corporate and other - - (3,349) (3,799)
-------- -------- -------- --------
$101,775 $ 96,285 $ 17,379 $ 6,714
======== ======== ======== ========
The Television Division achieved record first quarter operating
revenues and operating income. Relatively strong demand for
television advertising produced a 7% increase in the Division's
operating revenues, to $95,968,000 from last year's $89,581,000.
That increase, together with the favorable resolution of a
disputed music license arrangement, resulted in a 76% increase in
station earnings. After goodwill amortization, program
development expense, and corporate office expenses of BHC and
UTV, Television Division operating income nearly doubled, to
$20,276,000 from $10,186,000 in 1993.
Consolidated operating income, which additionally reflects
Industrial Division operating income and Chris-Craft corporate
office expense, increased 159%, to $17,379,000 from $6,714,000.
Industrial Division operating income increased 38%, to $452,000
from $327,000, primarily reflecting the elimination of losses
from a nonwoven fiber facility which has been sold. Industrial
Division operating revenues declined 13% as a result of that
sale.
First quarter interest and other income increased to $13,899,000
from $5,969,000 in 1993, primarily due to the placement of Time
Warner proceeds in money market instruments and 1993 Montrose
related expenses of $2.2 million.
Chris-Craft's effective income tax rate rose to 43% from 35% in
the 1993 first quarter, as 1993's pretax income included
significant dividend income which is not subject to full federal
income tax.
<PAGE>
CHRIS-CRAFT INDUSTRIES, INC.
----------------------------
PART II. OTHER INFORMATION AND SIGNATURE
----------------------------------------
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.
CHRIS-CRAFT INDUSTRIES, INC.
----------------------------
(Registrant)
By: /s/ JOELEN K. MERKEL
----------------------------
Joelen K. Merkel
Vice President and
Controller
(Principal Accounting
Officer)
Date: May 13, 1994
