<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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
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
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
Name of each exchange on
Title of each class which registered
<S> <C>
Prior Preferred Stock New York Stock Exchange, Inc.
$1 cumulative dividend Pacific Stock Exchange, Inc.
Convertible Preferred Stock New York Stock Exchange, Inc.
$1.40 cumulative dividend Pacific Stock Exchange, Inc.
Common Stock, $.50 par value New York Stock Exchange, Inc.
Pacific Stock Exchange, Inc.
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
Class B Common Stock, $.50 par value
(Title of class)
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 [ ]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by
non-affiliates of the registrant, as of February 28, 1994, was
approximately $924,000,000.
<PAGE>
As of February 28, 1994, there were 20,180,497 shares of
the registrant's Common Stock and 7,361,797 shares of the
registrant's Class B Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The documents incorporated by reference into this
Form 10-K and the Parts hereof into which such documents are
incorporated are listed below:
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<CAPTION>
Document Part
<S> <C>
Those portions of the I, II
registrant's annual
report to stockholders
for the fiscal year ended
December 31, 1993 (the
"Annual Report") that are
specifically identified
herein as incorporated by
reference into this Form
10-K.
Those portions of the III
registrant's proxy
statement for the
registrant's 1994 Annual
Meeting (the "Proxy
Statement") that are
specifically identified
herein as incorporated by
reference into this Form
10-K.
<PAGE>
PART I
ITEM 1. BUSINESS.
General
Chris-Craft Industries, Inc. ("Chris-Craft"), the
registrant, was organized in Delaware in 1928 and adopted its
present name in 1962. Chris-Craft's principal business is
television broadcasting, conducted through its majority owned
(71.8% at February 28, 1994) subsidiary, BHC Communications,
Inc. ("BHC"), which owns 100% of Chris-Craft Television, Inc.
("CCTV"), 100% of Pinelands, Inc. ("Pinelands") and, as of
February 28, 1994, 54.3% of United Television, Inc. ("UTV").
At February 28, 1994, Chris-Craft (including UTV) had
1,180 full-time employees and 97 part-time employees.
The information appearing in the Annual Report under the
caption INDUSTRY SEGMENT INFORMATION is incorporated herein by
reference.
Television Division
BHC operates six very high frequency ("VHF") television
stations and two ultra high frequency ("UHF") television
stations, together constituting Chris-Craft's Television
Division. Commercial television broadcasting in the United
States is conducted on 68 channels numbered 2 through 69.
Channels 2 through 13 are in the VHF band, and channels 14
through 69 are in the UHF band. In general, UHF stations are
at a disadvantage relative to VHF stations, because UHF
frequencies are more difficult for households to receive.
This disadvantage is eliminated when a viewer receives the UHF
station through a cable system.
Commercial broadcast television stations may be either
affiliated with one of the three national networks (ABC, NBC
and CBS) or may be independent. In addition, Fox Broadcasting
Company ("Fox") has established itself as a national network
by entering into affiliation agreements with independent
stations in many television markets. Chris-Craft, through
BHC, is organizing, in partnership with Paramount
Communications, Inc., an additional network, The Paramount
Network, which currently plans to commence broadcasting in
January 1995. There can be no assurance that the network will
be viable. Moreover, Chris-Craft knows of one other effort to
establish a network, and it is considered unlikely that two
additional networks will be viable.
The following table sets forth certain information with
respect to BHC's stations and their respective markets:
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
Total
Commercial
DMA TV Stations Commercial
Station and House- DMA Operating in Cable
Location(a) Channel holds(b) Rank(b) Market(c) Penetration(d)
<S> <C> <C> <C> <C> <C>
KCOP
Los Angeles 13 5,006,380 2nd 7VHF 59%
10UHF
KPTV
Portland 12 890,120 27th 4VHF 57%
2UHF
WWOR(e)
Secaucus 9 6,692,370 1st 6VHF 64%
14UHF
KMSP
Minneapolis/ 9 1,389,420 14th 4VHF 47%
St. Paul 3UHF
KTVX
Salt Lake City 4 616,720 38th 4VHF 51%
2UHF
KMOL
San Antonio 4 610,660 40th 3VHF 63%
3UHF
KBHK
San Francisco 44 2,253,220 5th 4VHF 67%
10UHF
KUTP
Phoenix 45 1,097,480 20th 4VHF 53%
<FN> 4UHF
_________________
(a) KCOP and KPTV are owned by CCTV; WWOR is owned by Pinelands; the
remaining stations are owned by UTV. All stations are independent, except
for KTVX, an ABC affiliate, and KMOL, an NBC affiliate.
(b) Designated Market Area ("DMA") is an exclusive geographic area
consisting of all counties in which the home-market commercial stations
received a preponderance of total viewing hours. The ranking shown is the
nationwide rank, in terms of television households in DMA, of the market
served by the station. Source: Nielsen Media Research television
households universe estimates.
(c) Additional channels have been allocated by the Federal Communications
Commission ("FCC") for activation as commercial television stations in
certain of these markets. Also, additional stations may be located within
the respective DMAs of BHC stations but outside the greater metropolitan
television markets in which BHC stations operate.
(d) Cable penetration refers to the percentage of DMA television viewing
households receiving cable television service, as estimated by Nielsen
Media Research.
(e) WWOR broadcasts across a tri-state area including the entire New York
City metropolitan area. Its broadcast signal is also carried as a
"superstation" on numerous cable television systems throughout the United
States.
<PAGE>
Television stations derive their revenues primarily from
selling advertising time. The television advertising sales
market consists primarily of national network advertising,
national spot advertising and local spot advertising. An
advertiser wishing to reach a nationwide audience usually
purchases advertising time directly from the national
networks, from "superstations" (i.e., broadcast stations
carried by cable operators in areas outside their broadcast
coverage area) or from "unwired" networks (groups of otherwise
unrelated stations whose advertising time is combined for
national sale). A national advertiser wishing to reach a
particular regional or local audience usually buys advertising
time from local stations through national advertising sales
representative firms having contractual arrangements with
local stations to solicit such advertising. Local businesses
generally purchase advertising from the stations' local sales
staffs.
Television stations compete for television advertising
revenue primarily with other television stations serving the
same DMA. There are 211 DMAs in the United States. DMAs are
ranked annually by the estimated number of households owning
a television set within the DMA. Advertising rates that a
television station can command vary in part with the size, in
terms of television households, of the DMA served by the
station.
Within a DMA, the relative advertising rates charged by
competing stations depend primarily on three factors: the
stations' program ratings (number of television households or
persons within those households tuned to a program as a
percentage of total television households or persons within
those households in the viewing area); the time of day the
advertising will run; and the demographic qualities of a
program's viewers (primarily age and sex). Ratings data for
television markets are measured by A.C. Nielsen Co.
("Nielsen"). This rating service uses two terms to quantify
a station's audience: rating points and share points. A
rating point represents one percent of all television
households in the entire DMA, and a share point represents one
percent of all television households within the DMA actually
using at least one television set at the time of measurement.
Because the major networks regularly provide first-run
programming during prime time viewing hours (in general, 8:00
P.M. to 11:00 P.M. Eastern time), their affiliates generally
(but do not always) achieve higher audience shares during
those hours than independent stations. However, independent
stations generally have substantially more advertising time
("inventory") for sale than network affiliates, because the
networks use almost all of their affiliates' inventory during
network shows. Independent stations' smaller audiences and
greater inventory during prime time hours generally result in
lower advertising rates charged and more advertising time sold
during those hours, whereas affiliates' larger audiences and
limited inventory generally allow affiliates to charge higher
advertising rates for prime time programming. By selling more
advertising time, an independent station typically achieves a
share of advertising revenues in its market greater than its
audience ratings. On the other hand, because a nonaffiliated
station broadcasts more syndicated programming than a network-
affiliated station, total programming costs for an independent
station are generally higher than those of a network affiliate
in the same market.
<PAGE>
Programming
BHC's independent stations depend heavily on independent
third parties for programming, as do BHC's network affiliates
for their non-network broadcasts. Recognizing the need to
have a more direct influence on the quality of programming
available to its stations, and desiring to participate in
potential profits through national syndication of programming,
BHC has begun to invest directly in the development of
original programming. The aggregate amount invested through
December 31, 1993 was not significant to BHC's financial
position. BHC's independent stations currently expect to
broadcast, as affiliates of The Paramount Network, four hours
of original prime time programming over two nights per week,
beginning in January 1995. BHC's television stations also
produce programming directed to meet the needs and interests
of the area served, such as local news and events, public
affairs programming, children's programming and sports.
Programs obtained from independent sources consist
principally of syndicated television shows, many of which have
been shown previously on a network, and syndicated feature
films, which were either made for network television or have
been exhibited previously in motion picture theatres (most of
which films have been shown previously on network and cable
television). Syndicated programs are sold to individual
stations to be broadcast one or more times. Independent
television stations generally have large numbers of syndi-
cation contracts; each contract is a license for a particular
series or program that usually prohibits licensing the same
programming to other television stations in the same market.
A single syndication source may provide a number of different
series or programs.
Licenses for syndicated programs are often offered for
cash sale (i.e., without any barter element) to stations;
however, some are offered on a barter or cash plus barter
basis. In the case of a cash sale, the station purchases the
right to broadcast the program, or a series of programs, and
sells advertising time during the broadcast. The cash price
of such programming varies, depending on the perceived
desirability of the program and whether it comes with
commercials that must be broadcast (i.e., on a cash plus
barter basis). Bartered programming is offered to stations
without charge, but comes with a greater number of commercials
that must be broadcast, and therefore with less time available
for sale by the station. Recently, the amount of bartered and
cash plus barter programming broadcast both industry-wide and
by BHC's stations has increased substantially.
BHC television stations are frequently required to make
substantial financial commitments to obtain syndicated pro-
gramming while such programming is still being broadcast by a
network and before it is available for broadcast by BHC
stations or before it has been produced. Generally,
syndication contracts require the station to acquire an entire
program series, before the number of episodes of original
showings that will be produced has been determined. While
analyses of network audiences are used in estimating the value
and potential profitability of such programming, there is no
assurance that a successful network program will continue to
be successful or profitable when broadcast after network
airing.
For many years, the FCC has restricted the ability of
television networks to acquire financial interests in the
production of television shows by independent sources, or to
participate in the syndication of television programs, either
on a first-run or an off-network basis. These rules were
based in part on concern that networks engaged in syndication
would have economic incentives to discriminate against
independent stations (such as those owned by BHC) in making
programs available in the syndication market, either by
warehousing them or favoring the network's owned or affiliated
stations. Late in 1992, the United States Court of Appeals
for the Seventh Circuit remanded the rules to the FCC with
instructions to revisit the need for them. In 1993, the FCC
adopted new rules which allow networks to acquire financial
interests and passive syndication rights in off-network
<PAGE>
programs, but bar them from actively syndicating such programs
in the United States or delaying the entry into syndication of
any long-running prime time network-owned series beyond the
fourth year after its network debut. The new rules also bar
networks from acquiring domestic financial interests or
syndication rights in first-run programs unless the network is
the sole producer of the program and prohibit networks from
active domestic syndication of all first-run programs.
However, these rules are scheduled to expire in November 1995,
unless the FCC issues an order to the contrary. A number of
petitions for review of these new regulations have been filed,
which have been consolidated and transferred to the Seventh
Circuit, where they remain pending. Chris-Craft cannot
predict the outcome of the proceedings in court or before the
FCC.
Pursuant to generally accepted accounting principles,
commitments for programming not available for broadcast are
not recorded as liabilities until the programming becomes
available for broadcast, at which time the related contract
right is also recorded as an asset. BHC television stations
had prepaid broadcast rights, unamortized film contract rights
for programming available for telecasting and deposits on film
contracts for programming not available for telecasting
aggregating $186,079,000 as of December 31, 1993. The
stations were committed for film and sports rights contracts
aggregating $117,900,000 for programming not available for
broadcasting as of that date. License periods for particular
programs or films generally run from one to five years. Long-
term contracts for the broadcast of syndicated television
series generally provide for an initial telecast and
subsequent reruns for a period of years, with full payment to
be made by the station over a period of time shorter than the
rerun period. See Notes 1(C) and 10 of Notes to Consolidated
Financial Statements.
KTVX and KMOL are primary affiliates of their respective
networks. Network programs are produced either by the net-
works themselves or by independent production companies and
are transmitted by the networks to their affiliated stations
for broadcast.
In general, network primary affiliation agreements are
automatically renewed for two-year periods, unless advance
written notice of termination is given by either the affiliate
or the network. The agreement gives the affiliate the right
to broadcast all programs transmitted by the network. The
affiliate must run in its entirety, together with all network
commercials, any network programming the affiliate elects to
broadcast and is allowed to broadcast a limited number of
commercials it has sold. For each hour of programming broad-
cast by the affiliate, the network generally pays the affili-
ate a fee, specified in the agreement (although subject to
change by the network), which varies in amount depending on
the time of day during which the program is broadcast and
other factors. Prime time programming generally earns the
highest fee. A network may, and sometimes does, designate
certain programs to be provided with no compensation to the
station.
An affiliate may accept or reject a program offered by a
network and instead broadcast programming from another source.
Rejection of a program gives the network the right to offer
that program to another station in the area.
<PAGE>
Sources of Revenue
The principal source of revenues for BHC stations is the
sale of advertising time to national and local advertisers.
Such time sales are represented by spot announcements pur-
chased to run between programs and program segments and by
program sponsorship. The relative contributions of national
and local advertising to BHC's gross revenues vary from time
to time. During the year ended December 31, 1993, national
advertising contributed 32%, and local advertising contributed
57%, of total gross revenues. Most advertising contracts are
short-term. Like that of the television broadcasting
business, generally, BHC's television business is seasonal.
In terms of revenues, generally the fourth quarter is
strongest, followed by the second, third and first.
Advertising is generally placed with BHC stations through
advertising agencies, which are allowed a commission generally
equal to 15% of the price of advertising placed. National
advertising time is usually sold through an independent
national sales representative, which also receives a
commission, while local advertising time is sold by each
station's sales staff. Practices with respect to sale of
advertising time do not differ markedly between BHC's network
and non-network stations, although the network-affiliated
stations have less inventory to sell.
Government Regulation
Television broadcasting operations are subject to the
jurisdiction of the FCC under the Communications Act of 1934,
as amended (the "Communications Act"). The Communications Act
empowers the FCC, among other things, to issue, revoke or
modify broadcast licenses, to assign frequencies, to determine
the locations of stations, to regulate the broadcasting equip-
ment used by stations, to establish areas to be served, to
adopt such regulations as may be necessary to carry out the
provisions of the Communications Act and to impose certain
penalties for violation of its regulations. BHC television
stations are subject to a wide range of technical, reporting
and operational requirements imposed by the Communications Act
or by FCC rules and policies.
The Communications Act provides that a license may be
granted to any applicant if the public interest, convenience
and necessity will be served thereby, subject to certain
limitations, including the requirement that the FCC allocate
licenses, frequencies, hours of operation and power in a
manner that will provide a fair, efficient and equitable
distribution of service throughout the United States.
Television licenses generally are issued for five-year terms.
Upon application, and in the absence of a conflicting
application that would require the FCC to hold a hearing, or
adverse questions as to the licensee's qualifications,
television licenses have usually been renewed for additional
terms without a hearing by the FCC. An existing license
automatically continues in effect once a timely renewal
application has been filed until a final FCC decision is
issued.
KMSP's license renewal was granted on April 15, 1993, and
is due to expire on April 1, 1998. KTVX's license renewal was
granted on September 29, 1993, and is due to expire on October
1, 1998. KMOL's license renewal application is currently
pending, subject to two petitions challenging the station's
compliance with FCC requirements concerning equal employment
opportunity; UTV has vigorously opposed the petitions, and
believes that they are without merit. KUTP, KCOP, KBHK, and
KPTV have each filed timely renewal applications, which are
pending. No petitions to deny any of those applications have
<PAGE>
been filed, no competing applications have been filed, and the
deadlines for filing such petitions and competing applications
have all expired. Pursuant to FCC requirements, each
station's application has reported instances in which the
station has exceeded the commercial limits applicable to
children's programs. In the case of KBHK, these instances
have been substantial, and the FCC has recently granted
renewals, in such cases, subject to forfeitures of as much as
$80,000. WWOR's license renewal was granted on January 22,
1992 and expires on June 1, 1994. A renewal application was
timely filed on January 31, 1994. The deadline for filing
petitions to deny or competing applications against that
application has not yet expired.
Under existing FCC regulations governing multiple
ownership of broadcast stations, a license to operate a tele-
vision station generally will not be granted to any party (or
parties under common control) if such party directly or in-
directly owns, operates, controls or has an attributable
interest in another television or radio station serving the
same market or area. The FCC, however, is favorably disposed
to grant waivers of this rule for radio station-television
station combinations in the top 25 television markets, in
which there will be at least 30 separately owned, operated and
controlled broadcast licenses, and in certain other
circumstances.
FCC regulations further provide that a broadcast license
will not be granted if that grant would result in a concentra-
tion of control of radio and television broadcasting in a
manner inconsistent with the public interest, convenience or
necessity. FCC rules generally deem such concentration of
control to exist if any party, or any of its officers,
directors or stockholders, directly or indirectly, owns,
operates, controls or has an attributable interest in more
than 12 television stations, or in television stations capable
of reaching, in the aggregate, a maximum of 25% of the
national audience. This percentage is determined by the DMA
market rankings of the percentage of the nation's television
households considered within each market. Because of certain
limitations of the UHF signal, however, the FCC will attribute
only 50% of a market's DMA reach to owners of UHF stations for
the purpose of calculating the audience reach limits.
Applying the 50% reach attribution rule to UHF stations KBHK
and KUTP, the eight BHC stations are deemed to reach
approximately 18% of the nation's television households.
To facilitate minority group participation in radio and
television broadcasting, the FCC will allow entities with
attributable ownership interests in stations controlled by
minority group members to exceed the ownership limits.
The FCC's multiple ownership rules require the at-
tribution of the licenses held by a broadcasting company to
its officers, directors and certain of its stockholders, so
there would ordinarily be a violation of FCC regulations where
an officer, director or such a stockholder and a television
broadcasting company together hold interests in more than the
permitted number of stations or more than one station that
serves the same area. In the case of a corporation
controlling or operating television stations, such as Chris-
Craft, there is attribution only to stockholders who own 5% or
more of the voting stock, except for institutional investors,
including mutual funds, insurance companies and banks acting
in a fiduciary capacity, which may own up to 10% of the voting
stock without being subject to such attribution, provided that
such entities exercise no control over the management or
policies of the broadcasting company.
The Communications Act and FCC regulations prohibit the
holder of an attributable interest in a television station
from having an attributable interest in a cable television
system located within the predicted coverage area of that
station. FCC regulations also prohibit the holder of an
attributable interest in a television station from having an
attributable interest in a daily newspaper located within the
predicted coverage area of that station.
<PAGE>
The Communications Act limits the amount of capital stock
that aliens may own in a television station licensee or any
corporation directly or indirectly controlling such licensee.
No more than 20% of a licensee's capital stock and, if the FCC
so determines, no more than 25% of the capital stock of a
company controlling a licensee, may be owned or voted by
aliens or their representatives. Should alien ownership
exceed this limit, the FCC may revoke or refuse to grant or
renew a television station license or approve the assignment
or transfer of such license. Chris-Craft believes the
ownership of its stock by aliens to be below the applicable
limit.
The Communications Act prohibits the assignment of a
broadcast license or the transfer of control of a licensee
without the prior approval of the FCC. Legislation was
introduced in the past that would impose a transfer fee on
sales of broadcast properties. Although that legislation was
not adopted, similar proposals, or a general spectrum
licensing fee, may be advanced and adopted in the future.
Recent legislation has imposed annual regulatory fees
applicable to BHC's stations, currently ranging as high as
$18,000 per station.
The foregoing does not purport to be a complete summary
of all the provisions of the Communications Act or regulations
and policies of the FCC thereunder. Reference is made to the
Communications Act, such regulations and the public notices
promulgated by the FCC for further information.
Other Federal agencies, including principally the Federal
Trade Commission, also impose a variety of requirements that
affect the business and operations of broadcast stations.
Proposals for additional or revised requirements are
considered by the FCC, other Federal agencies or Congress from
time to time. Chris-Craft cannot predict what new or revised
Federal requirements may result from such consideration or
what impact, if any, such requirements might have upon the
operation of BHC television stations.
Competition
BHC television stations compete for advertising revenue
in their respective markets, primarily with other broadcast
television stations and cable television channels, and compete
with other advertising media, as well. Such competition is
intense.
In addition to programming, management ability and
experience, technical factors and television network
affiliations are important in determining competitive
position. Competitive success of a television station depends
primarily on public response to the programs broadcast by the
station in relation to competing entertainment, and the
results of this competition affect the advertising revenues
earned by the station from the sale of advertising time.
Audience ratings provided by Nielsen have a direct
bearing on the competitive position of television stations.
In general, network programs achieve higher ratings than
independent station programs.
There are at least five other commercial television
stations in each market served by a BHC station. Chris-Craft
believes that the three VHF network-affiliated stations and
the two other independent VHF stations in New York City
generally attract a larger viewing audience than does WWOR,
and that WWOR generally attracts a viewing audience larger
than the audience attracted by the UHF stations in the New
York City market. In Los Angeles, the three VHF network-
affiliated stations and two independent VHF stations generally
attract a larger viewing audience than does KCOP, and KCOP
generally attracts a viewing audience approximately the same
size as the audiences attracted by the other independent VHF
station but larger than the ten UHF stations in Los Angeles.
<PAGE>
In Portland, the three VHF network-affiliated stations
generally attract a larger audience than does KPTV, which
generally attracts a larger audience than the other
independent stations, both of which are UHF stations. Chris-
Craft believes that, in Minneapolis/St. Paul, KMSP generally
attracts a smaller viewing audience than the three VHF net-
work-affiliated stations, but a larger viewing audience than
the other independent stations, all of which are UHF stations.
In Salt Lake City, KTVX generally ranks first of the six
television stations in terms of audience share. In San
Antonio, KMOL ranks third of the six stations in terms of
audience share. KBHK generally ranks fifth in terms of
audience share, behind the one independent and three network-
affiliated VHF television stations, of the 14 commercial
television stations in San Francisco. KUTP ranks sixth in
terms of audience share, of the eight commercial stations in
the Phoenix market.
BHC stations may face increased competition in the future
from additional television stations that may enter their
respective markets. See note (c) to the table under
Television Division.
Cable television has become a major competitor of
television broadcasting stations. Because cable television
systems operate in each market served by a BHC station, the
stations are affected by rules governing cable operations. If
a station is not widely accessible by cable in those markets
having strong cable penetration, it may lose effective access
to a significant portion of the local audience. Even if a
television station is carried on a local cable system, an
unfavorable channel position on the cable system may adversely
affect the station's audience ratings and, in some
circumstances, a television set's ability to receive the
station being carried on an unfavorable channel position.
Some cable system operators may be inclined to place broadcast
stations in unfavorable channel locations.
FCC regulations requiring cable television stations to
carry or reserve channels for retransmission of local
broadcast signals have twice been invalidated in Federal
court. In October 1992, Congress enacted legislation designed
to provide television broadcast stations the right to be
carried on cable television stations (and to be carried on
specific cable channel positions), or (at the broadcaster's
election) to prohibit cable carriage of the television
broadcast station without its consent. This legislation is
currently being challenged in the United States Supreme Court,
and Chris-Craft cannot predict the outcome. While Federal law
now generally prohibits local telephone companies from
providing video programming to subscribers in their service
areas, this restriction has been invalidated by one federal
district court and is currently being challenged in other
federal courts; legislation eliminating or relaxing the law
has been proposed.
"Syndicated exclusivity" rules allow television stations
to prevent local cable operators from importing distant
television programming that duplicates syndicated programming
in which local stations have acquired exclusive rights. In
conjunction with these rules, network nonduplication rules
protect the exclusivity of network broadcast programming
within the local video marketplace. The FCC is also reviewing
its "territorial exclusivity" rule, which limits the area in
which a broadcaster can obtain exclusive rights to video
programming. Chris-Craft believes that the competitive posi-
tion of BHC stations would likely be enhanced by an expansion
of broadcasters' permitted zones of exclusivity.
Alternative technologies could increase competition in
the areas served by BHC stations and, consequently, could
adversely affect their profitability. Direct broadcast
satellite ("DBS") systems and subscription television ("STV"),
recognized as potential competitors a few years ago, have thus
far failed to materialize as such. However, at least two DBS
operators are scheduled to begin service in 1994. An
additional challenge is now posed by multichannel multipoint
distribution services ("MMDS"). Two four-channel MMDS
licenses have been granted in most television markets. MMDS
<PAGE>
operation can provide commercial programming on a paid basis.
A similar service can also be offered using the instructional
television fixed service ("ITFS"). The FCC now allows the
educational entities that hold ITFS licenses to lease their
"excess" capacity for commercial purposes. The multichannel
capacity of ITFS could be combined with either an existing
single channel MDS or a new MMDS to increase the number of
available channels offered by an individual operator. The
emergence of home satellite dish antennas has also made it
possible for individuals to receive a host of video
programming options via satellite transmission.
Technological developments in television transmission
have created the possibility that one or more of the broadcast
and nonbroadcast television media will provide enhanced or
"high definition" pictures and sound to the public of a
quality that is technically superior to that of the pictures
and sound currently available. It is not yet clear when and
to what extent technology of this kind will be available to
the various television media; whether and how television
broadcast stations will be able to avail themselves of these
improvements; whether all television broadcast stations will
be afforded sufficient spectrum to do so; what channels will
be assigned to each of them to permit them to do so; whether
viewing audiences will make choices among services upon the
basis of such differences; or, if they would, whether
significant additional expense would be required for
television stations to provide such services. Many segments
of the television industry are intensively studying enhanced
and "high definition" television technology, and both Congress
and the FCC have initiated proceedings and studies on its
potential and its application to television service in the
United States.
The broadcasting industry is continuously faced with
technological changes, competing entertainment and communica-
tions media and governmental restrictions or actions of Fed-
eral regulatory bodies, including the FCC. These
technological changes may include the introduction of digital
compression by cable systems that would significantly increase
the number and availability of cable program services with
which BHC stations compete for audience and revenue, the
establishment of interactive video services, and the offering
of multimedia services that include data networks and other
computer technologies. Such factors have affected, and will
continue to affect, the revenue growth and profitability of
Chris-Craft.
<PAGE>
Industrial Division
Chris-Craft Industrial Products, Inc., the wholly owned
subsidiary of Chris-Craft that constitutes its Industrial
Division, is primarily engaged in manufacturing plastic
flexible films and non-woven fiber products. These products
are marketed as roll and cut stock as well as proprietary and
private-label end products. The end products include plastic
flexible films, water-soluble hospital laundry bags, fiber
carpet underlay, and original equipment automotive non-woven
sound control, insulation and barrier padding.
Significant portions of the sales of the Industrial Divi-
sion are to the original equipment automotive industry, health
care facilities and floor covering marketers. Sales of par-
ticular items may vary widely from year to year as spe-
cifications, designs and other conditions change. The
products of the Industrial Division are sold by it directly
and by sales agents and distributors.
Fiber pads sold to two automotive suppliers each
accounted for 12.9% of the Division's 1993 sales revenues.
Additionally, sales of plastic film to a large chemical
manufacturer and to a health care customer equaled 5.4% and
4.2% of 1993 Division revenues, respectively. Sales to these
accounts are generally made on the basis of competitive bid-
ding on each item sold. Similar arrangements with these
customers have prevailed for a number of years. The loss of
these customers, unless their business was replaced by others,
would have an adverse effect on the Industrial Division.
On February 28, 1994, Chris-Craft Nonwovens, Inc.
("Nonwovens"), which manufactured non-woven materials for
vinyl substrate in automotive, marine and decorative end uses,
leased all of its equipment to an unaffiliated corporation
which simultaneously assumed Nonwovens' lease on its Utica,
New York facility. The new lessee purchased all of Nonwovens'
inventory and hired its employees, in order to continue
operation of the facility. The lessee agreed to purchase the
equipment from Nonwovens prior to March 31, 1995, with the
purchase obligation secured by an irrevocable letter of
credit. Following the lease closing on February 28, 1994,
Nonwovens ceased operations other than collection of
outstanding accounts receivable.
Plastic Flexible Films
Chris-Craft's plastic flexible films are polyvinyl
alcohol products that are water soluble at different
temperatures. Chris-Craft's major use for such film is in the
manufacture of water-soluble hospital laundry bags. The film
is also used as water-soluble packaging for pre-measured
amounts of chemical compounds. Management is aware of
competition from two other domestic and several foreign
producers of similar film.
Another series of polyvinyl alcohol film is used as a
release agent in connection with the fabrication of
fiberglass-reinforced and other plastic products. For certain
of these applications, Chris-Craft's film competes with those
of a number of producers of other types of films.
Fiber and Other Products
The Industrial Division manufactures carpet underlay from
both jute and synthetic fibers and non-woven, bonded pads used
by the automotive industry for insulation and sound control.
<PAGE>
M.D. Industries, Inc., a subsidiary of the Industrial
Division, markets health care products manufactured by the
Division and by others, including proprietary products made
for M.D. Industries.
The Industrial Division is faced with keen competition in
each of its product lines from other companies that manu-
facture and sell these products.
Raw Materials
Principal raw materials used by the Industrial Division
include polymers, fiber and chemical additives. These have
generally been readily available from many sources, except
that the availability of jute at economic prices has from time
to time been limited.
ITEM 2. PROPERTIES.
Television Division
KCOP owns its studios and offices in two buildings in Los
Angeles containing a total of approximately 54,000 square feet
located on adjacent sites having a total area of approximately
1.93 acres. KCOP's transmitter is located atop Mt. Wilson on
property utilized pursuant to a permit issued by the United
States Forest Service.
KPTV owns its studios and offices in a building in Port-
land, Oregon, containing approximately 33,520 square feet
located on a site of approximately 1.09 acres. Its trans-
mitter is located on its own property at a separate site
containing approximately 16.18 acres.
WWOR owns office and studio facilities in Secaucus, New
Jersey, containing approximately 110,000 square feet on
approximately 3.5 acres and leases additional office space in
New York City. Along with almost all of the television
stations licensed to the New York market, WWOR's transmitter
is located on top of the World Trade Center in New York City
pursuant to a lease agreement which expires in 2004, unless
terminated by WWOR in 1994 or 1999.
Physical facilities consisting of offices and studio
facilities are owned by UTV in Minneapolis, San Antonio and
Phoenix and are leased in Salt Lake City and San Francisco.
The Salt Lake City lease agreement expires in 1999 and is
renewable, at an increased rental, for two five-year periods.
The San Francisco lease expires in 2007.
The Minneapolis facility includes approximately 49,700
square feet of space on a 5.63-acre site. The Salt Lake City
facility is approximately 30,400 square feet on a 2.53-acre
site. The San Antonio facility is approximately 41,000 square
feet on a .92-acre site. The San Francisco facility is
approximately 27,700 square feet in downtown San Francisco.
The Phoenix facility is approximately 26,400 square feet on a
3.03-acre site. Smaller buildings containing transmission
equipment are owned by UTV at sites separate from the studio
facilities.
<PAGE>
UTV owns a 55-acre tract in Shoreview, Minnesota, of
which 40 acres are used by KMSP for transmitter facilities and
tower.
KTVX's transmitter facilities and tower are located at a
site on Mt. Nelson, close to Salt Lake City, under a lease
that expires in 2004. KTVX also maintains back-up transmitter
facilities and tower at a site on nearby Mt. Vision under a
lease that expires in 2002 and is renewable, at no increase in
rental, for a 50-year period.
KMOL's transmitter facilities are located at a site near
San Antonio on land and on a tower owned by Texas Tall Tower
Corporation, a corporation owned in equal shares by UTV and
another television station that also transmits from the same
tower.
KBHK's transmitter is located on Mt. Sutro, as part of
the Sutro Tower complex, which also houses equipment for other
San Francisco television stations and many of its FM radio
stations. The lease for the Mt. Sutro facilities expires in
February 1995.
KUTP's transmitter facilities and tower are located on a
site within South Mountain Park, a communications park owned
by the City of Phoenix, which also contains transmitter
facilities and towers for the other television stations in
Phoenix as well as facilities for several FM radio stations.
The license for this space expires in 2012.
Industrial Division
As described below, the Industrial Division owns plants
in Gary, Indiana and Waterford, New York and leases facilities
in Northbrook, Illinois and in South Holland, Illinois which
leases expire on October 31, 1999 and June 30, 1998,
respectively.
</TABLE>
<TABLE>
<CAPTION>
Factory and
Office Space Site
Plant Location Principal Product (Square Feet) (Acres)
<S> <C> <C> <C>
Gary, Indiana Plastic flexible films 48,000 5
and water-disposable
hospital bags
Waterford, Carpet underlay and 100,000 18
New York automotive insulation
and sound control pads
Northbrook, Health care products 5,166 -
Illinois
South Warehouse for healthcare 33,000 -
Holland, products distribution
Illinois
</TABLE>
Chris-Craft believes its properties are adequate for their present
uses.
<PAGE>
ITEM 3. LEGAL PROCEEDINGS.
Montrose Chemical Corporation of California ("Montrose"),
whose stock is 50% owned by Chris-Craft and 50% by a
subsidiary of ICI Americas, Inc. ("ICI"), discontinued its
manufacturing operations in 1983 and has since been defending
claims for costs and damages relating to environmental
matters. Chris-Craft has been named as a defendant in certain
of these actions by plaintiffs seeking to hold Chris-Craft
liable for Montrose activities.
In April 1983, the United States of America and the State
of California instituted an action in the Federal District
Court for the Central District of California, United States of
America et al. v. J.B. Stringfellow, et al., Case No. 83-2501
(JMI) (Mcx), against Montrose and approximately 30 other
defendants relating to alleged environmental impairment at the
Stringfellow Hazardous Waste Disposal Site in California. The
complaint alleges that Montrose generated toxic wastes
containing DDT which were deposited at the Stringfellow Site
between 1969 and 1972, allegedly constituting approximately
19% by volume of all toxic wastes deposited at the site.
During this period, the Stringfellow Site was licensed as a
hazardous waste disposal facility by the State of California.
The action seeks an injunction against numerous generators of
waste materials which were deposited at the Stringfellow Site,
including Montrose, the owners of the Stringfellow Site and
others to abate the release of substances from the site and to
remedy allegedly hazardous conditions. The action seeks to
impose joint and several liability against all defendants for
all costs of removal and remedial action incurred by the
federal and state governments at the site. On September 30,
1990, the United States Environmental Protection Agency
("EPA") issued a Record of Decision for the site which
selected some of the interim remedial measures preferred by
the EPA and the State, the estimated present value of the
capital costs of which was estimated by them to be
$169,000,000, although the estimate purports to be subject to
potential variations of up to 50%. Plaintiffs also seek
recovery for remedial expenditures. The action also seeks
unspecified damages for alleged harm to natural resources.
Private parties have intervened in the action. On June 22,
1992, Montrose and other defendants signed a consent decree
with the United States regarding certain remedial work at and
near the Stringfellow Site, which decree was entered by the
District Court in October 1992. On November 30, 1993 Special
Master Harry V. Peetris entered a recommended ruling
allocating liability at the site under both the Comprehensive
Environmental Response, Compensation and Liability Act of 1980
("CERCLA") and state law. The CERCLA allocation was 65% to
the State of California, 10% to the owners of the site and 25%
to the generator defendants (including Montrose). The state
law allocation was 100% to the State and 0% to the
Stringfellow entities. The Special Master's recommended
ruling will be reviewed by the District Court before it enters
a final allocation decision. The State is expected to appeal
when the final order is entered by the District Court. In
addition, the United States Department of Justice has sought
and received information regarding the relationship between
Montrose and its two 50% shareholders. The Department's
inquiry is directed to the issue whether Chris-Craft, as a
shareholder of Montrose, shall be added as a party to the
action.
In February 1993 Montrose and Chris-Craft were among a
group of defendants which settled a case entitled Newman, et
al. v. J.B. Stringfellow, et al., Case No. 165944 MF, in
Riverside County (California) Superior Court. In Newman more
than 4,000 plaintiffs sought unspecified monetary damages from
more than 20 defendants for personal injury and property
damage purportedly caused by substances allegedly released
from the Stringfellow site. Montrose contributed
approximately $7.5 million to the Newman settlement, over 80%
of which was covered by insurance. Chris-Craft made no
contribution to the settlement. The State of California is
appealing the August 1993 order of the Newman court finding
the settlement was in good faith.
In 1992 Chris-Craft was named a defendant in a personal
injury action entitled Teresa Howell v. J.B. Stringfellow,
Jr., et al., Case No. 216798 in Riverside County (California)
<PAGE>
Superior Court, involving claims brought by an individual
plaintiff seeking to recover unspecified damages from
approximately 15 defendants (including Montrose) for alleged
injuries purportedly resulting from exposure to substances
disposed of at the Stringfellow Hazardous Waste Disposal Site
in California. On January 25, 1994, the court in the Howell
case ordered the suit to be dismissed as time-barred by
applicable statutes of limitations.
In June 1990, the United States of America and the State
of California commenced an action in the United States
District Court for the Central District of California,
entitled United States of America, et al. v. Montrose Chemical
Corporation of California, et al., Civil Action No. 90-3122
AAH (JRX), against, among others, Montrose and Chris-Craft.
Certain United States subsidiaries of ICI (the "ICI
Subsidiaries"), as well as Westinghouse Electric Corporation,
Potlatch Corporation and Simpson Paper Company, which have no
connection with Chris-Craft, were also named as defendants.
Brought under CERCLA, the complaint alleges that Montrose
released hazardous substances, including DDT, into the
environment in and around Los Angeles, California, including
the waters surrounding the Palos Verdes Peninsula, the Los
Angeles-Long Beach Harbor, and the Channel Islands. The
complaint alleges that other defendants released PCBs into the
same waters. The complaint seeks a declaration that
defendants are jointly and severally liable for damages (in
amounts not specified), including loss of use and cost of
restoration, resulting from injury to natural resources caused
by the alleged releases, plaintiffs' response costs incurred
in connection with such damage, and plaintiffs' costs in
assessing such damages. On April 26, 1993, the court approved
a settlement between the plaintiffs, the Los Angeles County
Sanitation District ("LACSD") and numerous municipalities and
local government entities which had been sued by Montrose,
Chris-Craft and other defendants as third-party defendants.
The settlement would resolve all liability between the
plaintiffs and the LACSD and the third-party entities for
approximately $42 million in cash and in-kind services, and
purports to immunize the settling defendants from the cross-
claims and third party claims of Montrose and Chris-Craft.
Montrose, Chris-Craft and other defendants have appealed the
District court's approval of the settlement to the Ninth
Circuit Court of Appeals. Plaintiffs also seek to hold
Montrose, Chris-Craft, and the ICI Subsidiaries jointly and
severally liable for all costs incurred in connection with the
alleged hazardous substance contamination at the Montrose
plant site in Torrance, California. Montrose terminated most
of its operations, including all DDT manufacturing, prior to
1983.
Since 1984 Montrose has been complying with a Consent
Order entered into with the Nevada Department of Conservation
and Natural Resources Division of Environmental Protection
("DEP") requiring operation of a ground water intercept
treatment system near a production facility used by Montrose
until 1985 in Henderson, Nevada. The EPA and DEP are
currently reconsidering whether the complex that includes the
Henderson facility should be included on the National Priority
List. In April 1991, Montrose entered into a second consent
order with DEP and other parties requiring investigation of
environmental conditions at the Henderson facility.
Montrose is a defendant in an action styled Levin Metals
Corporation, et al. v. Parr-Richmond Terminal Company, et al.,
Case Numbers C-84-6273 BAC, C-84-6234 BAC and C-85-4776 BAC in
the United States District Court for the Northern District of
California, in which it is alleged that Montrose contributed
to the contamination of certain real property in Richmond,
California, and in which damages sought exceed $15 million.
In December 1992 two parties to the Parr-Richmond action filed
pleadings naming Chris-Craft as a defendant alleging, among
other things, that Chris-Craft is secondarily liable under
corporate liability theories for Montrose's liabilities, if
any. Chris-Craft filed an answer denying liability on June
11, 1993, asserting numerous affirmative defenses and filing
<PAGE>
counterclaims. The court in the Levin case has ordered
discovery efforts to proceed in advance of a mediation
conference scheduled for early June 1994.
In January 1990, Montrose and Chris-Craft were each
notified by the United States National Oceanic and Atmospheric
Administration that the United States intends to name each of
them as a defendant in an action seeking recovery for alleged
damage to natural resources emanating from the Richmond site.
In March 1990, the EPA added the site to the National Priority
List. In August 1991 and March 1992, the EPA invited
potentially responsible parties, including Chris-Craft, to
undertake investigation and remedial actions at the site.
Chris-Craft has not taken any such actions.
In August 1992, Montrose was named one of approximately
18 defendants in Alderman, et al. v. Cadillac
Fairview/California, Inc., et al., Case No. BC062039 in Los
Angeles County (California) Superior Court, where
approximately 100 individual plaintiffs seek to recover
unspecified amounts for alleged personal injuries and property
damage purportedly caused by contamination at two neighboring
properties in California, one of which formerly was used by
Montrose for manufacturing operations. Chris-Craft was added
as a defendant in December 1992. After the complaint against
Chris-Craft was served, the United States of America, a third-
party defendant, removed the Alderman action to the United
States District Court for the Central District of California,
where it is currently pending (Case No. 92-7535 ER).
Plaintiffs have moved to remand the Alderman action to state
court; their motion to remand is pending. In January 1993,
Chris-Craft filed an answer denying the allegations against it
and denying any and all liability. No substantial discovery
has yet occurred in the Alderman action, although much is
scheduled for 1994. A statement of damages filed by the
plaintiffs alleges general damages of $7 million.
In October 1992, Montrose was named one of approximately
20 defendants in T H Agriculture and Nutrition Company, Inc.
v. Aceto Chemical Co., Inc., Case No. C92-4152-MHP in the
Federal District Court for the Northern District of
California, where it is alleged Montrose contributed to
contamination at a former pesticide formulation site in
Fresno, California and where damages sought exceed $21
million. During 1993 Montrose rejected a settlement demand by
the plaintiffs of $12.69 million. Chris-Craft was added as a
defendant in January 1994.
In October 1992, Montrose was named one of approximately
28 third party defendants by a County Sanitation District of
Los Angeles County in Acosta, et al. v. County Sanitation
Districts of Los Angeles County, et al., Case No. BC057637 in
Los Angeles County (California) Superior Court, where it is
alleged Montrose is partially liable for an unspecified
decrease in the values of properties owned by approximately
530 individual plaintiffs living near a Sanitation District
sewage treatment facility.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of Chris-Craft, as of February 28,
1994, are as follows:
<TABLE>
<CAPTION> Has served
Positions with Chris-Craft as officer
Name and age as of February 28, 1994 since
<S> <C> <C>
Herbert J. Siegel Chairman of the Board and
President; 65 1968
Evan C Thompson Executive Vice President and President,
Television Division; 51 1982
John C. Siegel Senior Vice President; 41 1985
William D. Siegel Senior Vice President; 39 1985
Joelen K. Merkel Vice President and Treasurer; 42 1980
Brian C. Kelly General Counsel and Secretary; 42 1992
The principal occupation of each of the individuals for
the past five years is stated in the foregoing table, except
that prior to being elected General Counsel and Secretary of
Chris-Craft on December 14, 1992, Brian C. Kelly served as
President of Finevest Foods, Inc. ("Finevest") from July 1992
through December 13, 1992, served as Executive Vice President,
General Counsel and Secretary of Finevest from March 1992
until July 1992 and served as Vice President, General Counsel
and Secretary of Finevest from January 1989 through February
1992. Finevest filed a Chapter 11 bankruptcy petition on
February 11, 1991, and emerged from bankruptcy on July 9, 1992
pursuant to a confirmed reorganization plan. All officers
hold office until the meeting of the Board following the next
annual meeting of stockholders or until removed by the Board.
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
The information appearing in the Annual Report under the
caption STOCK PRICE, DIVIDEND AND RELATED INFORMATION is
incorporated herein by this reference.
ITEM 6. SELECTED FINANCIAL DATA.
The information appearing in the Annual Report under the
caption SELECTED FINANCIAL DATA is incorporated herein by this
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
The information appearing in the Annual Report under the
caption MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS is incorporated herein by this
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements, notes thereto,
report of independent accountants thereon and quarterly
financial information (unaudited) appearing in the Annual
Report are incorporated herein by this reference. Except as
specifically set forth herein and elsewhere in this Form 10-K,
no information appearing in the Annual Report is incorporated
by reference into this report nor is the Annual Report deemed
to be filed, as part of this report or otherwise, pursuant to
the Securities Exchange Act of 1934.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information appearing in the Proxy Statement under
the captions ELECTION OF DIRECTORS--Nominees of the Board of
Directors and ELECTION OF DIRECTORS-- Compliance with Section
16(a) of the Securities Exchange Act of 1934 is incorporated
herein by this reference. Information relating to Chris-
Craft's executive officers is set forth in Part I under the
caption EXECUTIVE OFFICERS OF THE REGISTRANT.
ITEM 11. EXECUTIVE COMPENSATION.
The information appearing in the Proxy Statement under
the caption ELECTION OF DIRECTORS--Executive Compensation is
incorporated herein by this reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.
The information appearing in the Proxy Statement under
the caption ELECTION OF DIRECTORS--Voting Securities of Certain
Beneficial Owners and Management is incorporated herein by
this reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information appearing in the Proxy Statement under
the caption ELECTION OF DIRECTORS--Certain Relationships and
Related Transactions is incorporated herein by this reference.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this
report:
1. The financial statements and quarterly finan-
cial information incorporated by reference
from the Annual Report pursuant to Item 8.
2. The report of predecessor independent public
accountants and the schedules and report of
independent accountants thereon, listed in the
Index to Consolidated Financial Statements and
Schedules.
3. Exhibits listed in the Exhibit Index,
including the following registrant
compensatory plans or arrangements listed
below:
Benefit Equalization Plan
1988 Management Incentive Plan
1989 Director Stock Option Plan
Employment Agreement dated as of January 1,
1994 between Herbert J. Siegel and
Chris-Craft
Employment Agreement dated as of January 1,
1994 between Evan C Thompson and
Chris-Craft
(b) No reports on Form 8-K were filed by the registrant
during the last quarter of the period covered by this report.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: March 29, 1994
CHRIS-CRAFT INDUSTRIES, INC.
(Registrant)
By: WILLIAM D. SIEGEL
William D. Siegel
Senior Vice President
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated.
</TABLE>
<TABLE>
<CAPTION>
Signature and Title Date
<S> <C>
HERBERT J. SIEGEL March 29, 1994
Herbert J. Siegel
Chairman, President and
Director (principal execu-
tive officer)
WILLIAM D. SIEGEL March 29, 1994
William D. Siegel
Senior Vice President
(principal financial
officer) and Director
JOELEN K. MERKEL March 29, 1994
Joelen K. Merkel
Vice President and
Treasurer (principal
accounting officer)
EVAN C THOMPSON March 29, 1994
Evan C Thompson
Executive Vice President and
Director
HOWARD ARVEY March 29, 1994
Howard Arvey
Director
LAWRENCE R. BARNETT March 29, 1994
Lawrence R. Barnett
Director
DAVID F. LINOWES March 29, 1994
David F. Linowes
Director
NORMAN PERLMUTTER March 29, 1994
Norman Perlmutter
Director
JAMES J. ROCHLIS March 29, 1994
James J. Rochlis
Director
ALVIN R. ROZELLE March 29, 1994
Alvin R. Rozelle
Director
JOHN C. SIEGEL March 29, 1994
John C. Siegel
Director
T. CHANDLER HARDWICK, III March 29, 1994
T. Chandler Hardwick, III
Director
<PAGE>
CHRIS-CRAFT INDUSTRIES, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
CONSOLIDATED FINANCIAL STATEMENTS:
Report of Independent Accountants
Consolidated Balance Sheets -- December 31, 1993 and 1992
Consolidated Statements of Income -- For the Years
Ended December 31, 1993, 1992 and 1991
Consolidated Statements of Cash Flows -- For the Years
Ended December 31, 1993, 1992 and 1991
Consolidated Statements of Shareholders' Investment -- For
the Years Ended December 31, 1993, 1992 and 1991
Notes to Consolidated Financial Statements
SCHEDULES:
Report of Predecessor Independent Public Accountants
Report of Independent Accountants on Financial Statement
Schedules
I. Marketable Securities - Other Investments
II. Amounts Receivable from Related Parties,
Underwriters, Promoters and Employees
other than Related Parties
X. Supplementary Income Statement Information
Schedules other than those listed above have been omitted
since the information is not applicable, not required or is
included in the respective financial statements or notes
thereto.
<PAGE>
REPORT OF PREDECESSOR INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of Chris-Craft
Industries, Inc.:
We have audited the consolidated statements of income,
shareholders' investment and cash flows of Chris-Craft
Industries, Inc. (a Delaware corporation) and subsidiaries for
the year ended December 31, 1991. These financial statements
and the schedules referred to below are the responsibility of
the Company's management. Our responsibility is to express an
opinion on these financial statements and schedules based on
our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management,
as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the results
of operations and cash flows of Chris-Craft Industries, Inc.
and subsidiaries for the year ended December 31, 1991, in
conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on
the basic financial statements taken as a whole. The
schedules listed in the index to consolidated financial
statements and schedules for the year ended December 31, 1991
are presented for purposes of complying with the Securities
and Exchange Commission's rules and are not part of the basic
financial statements. These schedules have been subjected to
the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as
a whole.
ARTHUR ANDERSEN & CO.
New York, New York,
February 10, 1992.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors
of Chris-Craft Industries, Inc.
Our audits of the consolidated financial statements referred
to in our report dated February 8, 1994 appearing on page 13
of the 1993 Annual Report to Shareholders of Chris-Craft
Industries, Inc. (which report and consolidated financial
statements are incorporated by reference in this Annual Report
on Form 10-K) also included audits of the Financial Statement
Schedules as of December 31, 1993 and 1992, and the years then
ended, listed in Item 14(a) of this Form 10-K. In our
opinion, these Financial Statement Schedules present fairly,
in all material respects, the information set forth therein
when read in conjunction with the related consolidated
financial statements.
PRICE WATERHOUSE
New York, New York
February 8, 1994
<PAGE>
Schedule I
CHRIS-CRAFT INDUSTRIES, INC. AND SUBSIDIARIES
MARKETABLE SECURITIES - OTHER INVESTMENTS
DECEMBER 31, 1993
(Columns C, D, and E in Thousands)
</TABLE>
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
Amount at Which
Number of Sahres or Each Portfolio of
Principal Amount of Market Value of Each Equity Security issues
Name of Issuer and Title Bonds and Cost of Each Issue at Balance Sheet Carried in the
of Each Issuer Notes Issue Date Balance Sheet
<S> <C> <C> <C> <C>
Current marketable
securities:
United States Government
direct issue securities $1,225,240,000 $1,371,425 $1,373,396 $1,372,602
Other Various 125,010 124,144 123,008
$1,496,435 $1,497,540 $1,495,610
</TABLE>
<PAGE>
Schedule II
CHRIS-CRAFT INDUSTRIES, INC. AND SUBSIDIARIES
AMOUNTS RECEIVABLE FROM RELATED PARTIES,
UNDERWRITERS, PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
(In Thousands)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
Balance at Deductions Balance at
Beginning Amounts Amounts End of Period
Name of Debtor of Period Additions Collected Written Off Current Noncurrent
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
Garth S. Lindsey (Officer of UTV) $100 $ - $ 20 $ - $ 20 $ 60
Year ended December 31, 1992:
Garth S. Lindsey (Officer of UTV) $120 $ - $ 20 $ - $ 20 $ 80
Year ended December 31, 1991:
Garth S. Lindsey (Officer of UTV) $140 $ - $ 20 $ - $ 20 $100
</TABLE>
The loan was made for the purpose of assisting Mr. Lindsey in relocating his
home in connection with the relocation of UTV's executive offices from
Minneapolis to Los Angeles. The loan was represented by a non-interest bearing
five-year note, with no payment due before maturity. In December 1988, the
note was revised and extended. Under the Revision and Extension Agreement, 10%
of the original balance is due and payable December 31 of each year through
December 31, 1997. Such installments will be forgiven on each such December 31
if the borrower is still employed by UTV on each such forgiveness date. The
note is secured by a deed of trust on the borrower's home and provides that at
the option of the holder the loan will become due and payable upon sale or
further encumbrance of the borrower's home without the consent of the holder or
upon the borrower's voluntary termination of employment with UTV.
<PAGE>
Schedule X
CHRIS-CRAFT INDUSTRIES, INC. AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
(In Thousands)
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
Item December 31, 1993 December 31, 1992 December 31, 1991
<S> <C> <C> <C>
Maintenance and repairs $ 3,142 $ 2,506 $ 2,397
Depreciation and amortization of property,
plant and equipment $ 11,710 $ 8,868 $ 6,461
Amortization of intangible assets $ 9,270 $ 4,304 $ 1,611
Advertising costs $ 10,226 $ 7,138 $ 7,661
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Incorporated by
Reference to: Exhibit No. Exhibit
<S> <C> <C>
Exhibit 3(A)[1] 3(A) Restated Certificate
of Incorporation
Exhibit 3(B)[1] (B) By-Laws
Exhibit 11(H)[2] 10(A) Benefit Equalization
Plan of registrant
Exhibit10(B)(1) [6] (A)(1) Amendment No. 1 thereto
* (B) Employment Agreement
dated January 1,
1994 between
registrant and
Herbert J. Siegel
* (C) Split-Dollar Agreement
dated January 6,
1994 between
registrant and
William D. Siegel
* (D) Split-Dollar Agreement
dated January 6, 1994
between registrant
and John C. Siegel
Exhibit 10(E)[3] (E) Form of Agreement
under Executive
Deferred Income
Plan of registrant
* (F) Employment Agreement
dated January 1,
1994 between
registrant and
Evan C Thompson
Exhibit A to Proxy (G) 1988 Management
Statement of registrant Incentive Plan
dated March 23, 1988
(File No. 1-2999)
Exhibit 10(G)(1)[8] (G)(1) Amendment No. 1
thereto
Exhibit 10(c)[5] (H) Management Agreement
between the
registrant and BHC
dated July 21,
1989
<PAGE>
Exhibit 19[7] (H)(1) Amendment No. 1
thereto dated
October 31, 1991
* (H)(2) Amendment No.2
thereto dated
March 24, 1994
Exhibit A to Proxy (I) 1989 Director Stock
Statement of registrant Option Plan
dated April 26,
1990 (File No.
1-2999)
Exhibit 10(I)(1)[8] (I)(1) Amendment No. 1
thereto
Exhibit 28[9] (J) Agreement and Plan
of Merger among BHC
Communications,
Inc., BHC
Acquisition Corp.
and Pinelands, Inc.
dated May 7, 1992
* 11 Computation of
Primary and Fully
Diluted Income per
Share
* 13 Portions of the Annual
Report incorporated by
reference
* 22 Subsidiaries of the
registrant
* 24(a) Consent of Price
Waterhouse
* (b) Consent of Arthur
Andersen & Co.
<FN>
_________________________
* Filed herewith.
[1] Registrant's Annual Report on Form 10-K for the year ended
December 31, 1986.
[2] Registrant's Registration Statement on Form S-1 (Regis. No. 2-
65906).
[3] Registrant's Annual Report on Form 10-K for the fiscal year
ended August 31, 1983.
[4] Registrant's Annual Report on Form 10-K for the year ended
December 31, 1985.
[5] BHC's Registration Statement on Form S-1 (Regis. No. 33-
31091).
[6] Registrant's Annual Report on Form 10-K for the year ended
December 31, 1989.
[7] Registrant's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 1991.
[8] Registrant's Annual Report on Form 10-K for the year ended
December 31, 1991.
[9] BHC's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1992.
</TABLE>
EMPLOYMENT AGREEMENT
AGREEMENT made as of January 1, 1994 between
CHRIS-CRAFT INDUSTRIES, INC., a Delaware corporation
("Chris-Craft"), and HERBERT J. SIEGEL (the "Executive").
This Agreement supersedes the Agreement made as of
September 1, 1983 between Chris-Craft and the Executive.
The Executive is now, and for many years has been,
Chairman of the Board, President and Chief Executive Officer
of Chris-Craft. Chris-Craft wishes to secure the continued
services of the Executive as its Chief Executive Officer for
an additional extended period. In addition, because of the
position the Executive holds with Chris-Craft and the
position that he will hold during the term of his full-time
employment under this Agreement, Chris-Craft wishes to
secure the further services of the Executive as a consultant
to Chris-Craft, and wishes to insure that the Executive will
refrain from competing with Chris-Craft, after the
termination of his full time employment.
In consideration of the covenants and agreements
herein contained, the parties agree as follows:
1. Employment; Term
1.1 Chris-Craft shall continue to employ the
Executive, and the Executive shall continue to serve, as
Chief Executive Officer of Chris-Craft during the Employment
Term (as defined in Section 1.2).
1.2 The term of the Executive's employment
under Section 1.1 of this Agreement (the "Employment Term")
shall commence on January 1, 1994 and end on December 31,
1998, unless extended as provided in this Section 1.2 or
Section 8 or sooner terminated pursuant to the provisions of
Section 9 or Section 10. On each of January 1, 1995 and
January 1, 1996, the Employment Term shall be automatically
extended for one additional year (so that, on each such
January 1, the Employment Term shall have five years to run)
without further action by the parties, unless Chris-Craft
shall have served written notice upon the Executive prior to
October 1, 1994, or prior to October 1, 1995, as the case
may be, that such extension shall not take place. If a
notice that an extension shall not take place is served, the
Employment Term shall not, thereafter, be extended.
2. Duties and Authority.
2.1 During the Employment Term, the
Executive shall devote his full business time and energies
to the business and affairs of Chris-Craft and shall not
accept other employment or permit such personal business
interests as he may have to interfere with the performance
of his duties hereunder. The Executive agrees, during the
Employment Term, to use his best efforts, skill and
abilities to promote Chris-Craft's interests; to serve as a
director and officer of Chris-Craft and any of its domestic
subsidiary corporations if elected by the Board of Directors
or stockholders of Chris-Craft or any such subsidiary
corporation; and to perform such duties (consistent with his
status set forth below in this Section 2) as may be assigned
to him by the Board of Directors of Chris-Craft.
2.2 Subject only to the direction and
control of Chris-Craft's Board of Directors (which direction
and control shall be such as is customarily exercised over a
chief executive officer), the Executive shall perform all
services and duties necessary or appropriate for the
management of Chris-Craft's business and that of its
subsidiaries.
2.3 Throughout the Employment Term, the
Executive shall be elected to, and shall continue in, the
office denominated that of chief executive officer of Chris-
Craft in the by-laws or other constitutional instruments of
Chris-Craft (at the date hereof, the Office of Chairman of
the Board is so denominated), and shall continue to perform
on behalf of Chris-Craft substantially the same functions,
and have substantially the same authority, duties and
responsibilities, as on the date hereof, and Chris-Craft
shall not confer on any other officer or employee authority,
responsibility or power superior or equal to the authority,
responsibility or power vested in the Executive hereunder.
3. Location.
During the Employment Term, the Executive's
services under this Agreement shall be performed principally
in New York, New York, or elsewhere in the New York City
Metropolitan area. The parties, however, acknowledge and
agree that the nature of the Executive's duties hereunder
shall require reasonable domestic and international travel
from time to time.
4. Cash Compensation.
4.1 Base Salary. During the Employment
Term, Chris-Craft shall pay to the Executive, in monthly or
more frequent installments in accordance with Chris-Craft's
regular payroll practices for senior executives, a base
salary of not less than $950,000 per annum; provided,
however, that such minimum base salary shall be adjusted
upward, as of January 1, 1995, and as of each successive
January 1 to the end of the Employment Term, in proportion
to any increase in the Consumer Price Index, as defined in
Section 4.5, between the December levels of the two
immediately preceding years ("COLA Adjustment"). Each such
adjustment shall be made retroactively when the Consumer
Price Index for the December next preceding the date of such
adjustment becomes available. It is understood that Chris-
Craft may, at any time, in the discretion of its Board of
Directors increase, but not decrease, the Executive's base
salary. In the event that the Executive's base salary is
adjusted by the Board pursuant to the last preceding
sentence, the new base salary shall be adjusted upward, as
of each following January 1, in proportion to any increase
in the Consumer Price Index from the effective date of the
last previous adjustment by the Board.
4.2 Section 162(m) Limit.
4.2.1 In no event shall the sum of the
Executive's base salary and other Remuneration (as defined
in Section 4.2.2) for any calendar year exceed the Section
162(m) Limit (as defined in Section 4.2.2). Chris-Craft
shall, to the extent foreseeable, reduce each regular cash
compensation payment in any year by the proportion that (a)
the excess of (i) the sum of all such regular cash
compensation payments for such year over (ii) the Section
162(m) Limit bears to (b) the sum of all such regular cash
compensation payments for such year and shall reduce or omit
other cash compensation payments (other than Excluded
Remuneration) to the extent same would cause Remuneration in
such year to exceed the Section 162(m) Limit, provided that
in no event will cash compensation payable to the Executive
during any calendar year be reduced below $750,000 (the
"Minimum Annual Payment").
4.2.2 For purposes of this Agreement,
"Remuneration" shall mean "applicable employee remuneration"
as defined in Section 162(m) of the Internal Revenue Code of
1986, as amended from time to time (the "Code"), or any
successor or similar provision, which is paid or incurred
with respect to the Executive by Chris-Craft or any
Affiliate of Chris-Craft, other than Excluded Remuneration;
"Excluded Remuneration" shall mean any Gross-Up Payment or
other payment required under Section 7 or any forgiveness of
indebtedness under Section 7, or any payment required under
Sections 10.1, 10.2 and 10.4; "Affiliate" shall mean any
corporation which is a member of the same "controlled group"
as Chris-Craft within the meaning of Section 414(b) of the
Code, except that for this purpose Section 1563 of the Code
shall be applied by substituting "50 percent" for "80
percent"; and "Section 162(m) Limit" shall mean $1,000,000,
subject to adjustment as provided in this Section 4.2.2. If
one or more amendments to Section 162(m) of the Code or any
successor or similar provision shall change the amount of
Remuneration for a year that is deductible by Chris-Craft or
any Affiliate of Chris-Craft for Federal income tax
purposes, a corresponding change shall be made to the
Section 162(m) Limit for purposes of this Agreement for all
years to which any such amendment shall be applicable.
Unless and until there is a Change in Law (defined below)
with respect to a taxable year of Chris-Craft, Chris-Craft
and the Executive acknowledge and agree that Remuneration
shall not include any amounts payable to the Executive
pursuant to Section 4.4 hereof, and any amounts includable
in the Executive's taxable income with respect to amounts
described in Section 6.1(d). For purposes of the preceding
sentence, "Change in Law" shall mean an amendment to Section
162(m), or the issuance or revision of one or more judicial
decisions or administrative rules, regulations or other
pronouncements, following the date hereof which, in the
written legal opinion of counsel to Chris-Craft, will more
likely than not result in the inclusion of the amount in
question in "applicable employee remuneration" as defined in
Section 162(m) of the Code.
4.2.3 The provisions of this Section 4.2
shall be interpreted in a manner consistent with the
intention of the parties that a deduction not be disallowed
to Chris-Craft or any Affiliate for Federal income tax
purposes with respect to any Remuneration payable to the
Executive under this Agreement by reason of Code Section
162(m) (other than subparagraph (4)(F) thereof) or any
successor or similar provision (except for Excluded
Remuneration) and the Minimum Annual Payment.
4.3 Deferred Compensation. During the
Employment Term, Chris-Craft shall credit to the Executive's
Account (as defined in Section 4.3.1) the amount specified
in Section 4.3.2.
4.3.1 Chris-Craft shall maintain, on its
books, a special account with respect to the Executive (the
"Account"), in accordance with the terms of this Agreement,
until Executive shall have been paid all amounts credited
thereto.
4.3.2 During each year of the Employment
Term, Chris-Craft shall credit to the Account, as of the end
of each month, (a) an amount equal to the sum of (i)
$45,833.33, subject to COLA Adjustment plus (ii) the amounts
by which all cash compensation payments or distributions
during such month shall have been reduced or omitted
pursuant to the last sentence of Section 4.2.1; and (b)
interest on the Account balance as of the end of the
preceding month, computed at a rate to be adjusted as of the
last day of each calendar quarter to equal the yield, as of
the last business day of such quarter, as reported in The
Wall Street Journal, on U.S. Treasury Notes maturing in the
month that is five years after the last month of such
quarter (the "Interest Rate"). Amounts credited to the
Account, excluding interest, shall be deemed compensation
for the year credited, for purposes of determining benefits
respecting each of Chris-Craft's qualified employee benefit
plans under Chris-Craft's Benefit Equalization Plan (the
"BEP"). If no yield for such notes is so published as of
the last day of a particular quarter, there shall be
substituted the average of the yields so published for the
months next preceding and following. If The Wall Street
Journal is not published on the last day of a particular
quarter, there shall be substituted the appropriate yield
reported on the last previous day on which The Wall Street
Journal was published. Following the Employment Term,
Chris-Craft shall credit to the Account, as of the last day
of each month (based each month on a 30-day month and a 360-
day year), interest on the Account Balance as of such date,
computed at the Interest Rate.
4.3.3 On the January 15 first-occurring
following the year in which expiration or termination of the
Employment Term shall have occurred, Chris-Craft shall pay
to the Executive an amount equal to one-fifth of the Account
balance as of such January 15 (including interest accrued in
accordance with Section 4.3.2 through such January 15) (the
"First Payment"), and the Account balance shall be reduced
by the amount of such First Payment. On each succeeding
January 15, until Chris-Craft shall have made five payments
(including the First Payment) pursuant to this Section
4.3.3, Chris-Craft shall pay to the Executive a sum equal to
the amount of the First Payment, plus interest credited to
the Account through the date of such payment, from the first
day after the date of the immediately preceding payment, and
the Account balance shall be reduced by the amount of such
sum.
4.4 Bonus.
4.4.1 In addition to his base salary and
the deferred amounts referred to in Section 4.3.2 above, the
Executive shall be entitled to receive, with respect to each
fiscal year of Chris-Craft, or portion thereof, during the
Employment Term, a bonus equal to 1 1/2% of the amount by
which Chris-Craft's "Pre-tax Income" (as defined in Section
4.4.2) for the fiscal year in question exceeds $36,000,000.
The bonus shall be paid to Executive as soon as practicable,
but not later than March 31 of the year following the end of
each such fiscal year. The amount of the bonus payable with
respect to any fiscal year that includes but does not end on
the last day of the Employment Term shall be determined by
multiplying the bonus which would have been payable with
respect to the whole of such fiscal year (if the whole of
such fiscal year were within the Employment Term) by a
fraction, the numerator of which is the number of days of
such year included in the Employment Term and the
denominator of which is 365.
4.4.2 As used in this Section 4.4, the
term "Pre-tax Income" shall mean Chris-Craft's "Income
before provision for income taxes and minority interest," as
such amount is reported on Chris-Craft's audited
consolidated statements of income included in its Annual
Report to Shareholders; provided that, in determining such
"Pre-tax Income," for purposes of this Section 4.4.2, there
shall be excluded (i) any loss, (determined in conformity
with generally accepted accounting principles) of any
business commenced or newly acquired by Chris-Craft during
(or within the six months next preceding commencement of)
the Employment Term, if such business would at any time
during such Term constitute a Development Stage Company
under Securities and Exchange Commission Regulation S-X
assuming such business were organized as a separate entity,
e.g., the broadcast television network currently under
development; but only to the extent that the loss of such
business, aggregated with the losses of all other such
businesses (if any) so commenced or acquired, exceed
$10,000,000 in any fiscal year and provided further that
such losses incurred by any business shall not be so
excluded for any fiscal year beginning after the fourth
anniversary of the date of commencement or acquisition of
such business by Chris-Craft; and (ii) any goodwill
amortization (similarly determined) arising out of a
business acquisition during the Employment Term. As used in
the next preceding sentence, the term "Chris-Craft" includes
any entity in which Chris-Craft has a substantial interest,
the financial results of which are reflected in Chris-
Craft's consolidated statements of income.
4.5 Consumer Price Index. The words
"Consumer Price Index," as used in this Agreement shall mean
the Consumer Price Index for All Urban Consumers, U.S. City
Average, All Items (1982-84=100), as reported by the Bureau
of Labor Statistics of the U.S. Department of Labor. In the
event that this Consumer Price Index shall be superseded or
shall be published by a different agency, then the
superseding index shall be substituted for this Consumer
Price Index in such a manner as to implement the intent of
this Agreement that the Executive's base salary and Deferred
Compensation shall be adjusted annually, beginning as of
January 1, 1995, so that the purchasing power thereof shall
be maintained at a level at least equivalent to the
purchasing power thereof at January 1, 1994.
5. Expenses.
In addition to the compensation provided in
Section 4 and in Section 11, Chris-Craft will pay or
reimburse the Executive for all reasonable expenses actually
incurred or paid by him during the Employment Term or the
Consulting Term (as defined in Section 11) in the
performance of his services hereunder upon presentation of
expense statements, vouchers, or such other supporting
information as Chris-Craft may customarily require of its
senior executives.
6. Additional Benefits.
6.1 During the Employment Term:
(a) The Executive will be entitled
to reasonable annual vacation periods, not less than an
aggregate of nine weeks in each calendar year, with full pay
and allowances.
(b) The Executive will also be
eligible for sick leave in accordance with Chris-Craft's
customary practice for senior executives.
(c) The Executive will be entitled
to participate in any insurance, pension, profit-sharing,
stock option, stock purchase or other benefit plan of Chris-
Craft now existing or hereafter adopted for the benefit of
the employees generally or of the executives of Chris-Craft;
provided that the Executive shall begin receiving payments
under the BEP, at the latest, upon attaining age 70,
regardless whether the Executive shall continue to be a
Chris-Craft employee at age 70.
(d) Upon approval of a new stock
option plan by Chris-Craft stockholders at their 1994 annual
meeting, Chris-Craft shall grant the Executive a 10-year
option covering 300,000 shares that shall be exercisable
during the Employment Term and Consulting Term.
(e) Chris-Craft shall match the
Executive's contributions (including any contribution by any
trust of which the Executive is the grantor) to recognized
charities, during each year of the Employment Term and the
Consulting Term, in an amount equal to the sum of (i)
$200,000, plus (ii) the amount by which (x) the product
obtained by multiplying $200,000 by the number of previous
years in which this Agreement shall have been in effect
shall exceed (y) the total amount of all matching
contributions made by Chris-Craft pursuant to this sentence
in such previous years. Matching contributions made by
Chris-Craft pursuant hereto shall be in addition to any
contributions made to match Executive's contributions under
any other charitable gift matching program generally
applicable with respect to contributions made by employees
or directors of Chris-Craft or any of its subsidiaries.
(f) The Executive shall be
entitled to such additional benefits as may be granted to
him from time to time by the Board of Directors of Chris-
Craft.
6.2 As an additional inducement to the
Executive to enter this Employment Agreement, Chris-Craft
shall enter into separate written split-dollar insurance
agreements (the "Split Dollar Agreements") with Executive's
sons, John C. Siegel and William D. Siegel, pursuant to
which, under each agreement, Chris-Craft shall procure, and
pay the full amount of each annual premium for 15 years on,
split-dollar, last-to-die policies on the lives of Executive
and his wife having face amounts totaling $15,000,000, such
annual premiums to be in amounts set forth on Schedule A for
all policies procured pursuant to this Section 6.2 (i.e.,
pursuant to both Split Dollar Agreements). John C. Siegel
and William D. Siegel will be the owners of the policies
procured pursuant to their respective agreements and shall
have the full right to designate and change, from time-to-
time, the beneficiaries thereunder.
6.3 No payment or benefit made or provided
under this Agreement shall be deemed to constitute payment
to the Executive, his legal representatives or beneficiaries
in lieu of, or in reduction of, any benefit or payment under
an insurance, pension, profit-sharing or other benefit plan,
and no payment under any such plan shall reduce any payment
or benefit due under this Agreement.
7. Certain Additional Payments by Chris-Craft
7.1 Anything in this Agreement to the
contrary notwithstanding, in the event it shall be
determined that any payment or distribution by Chris-Craft
to or for the Executive's benefit (whether paid or payable
or distributed or distributable pursuant to the terms of
this Agreement or otherwise (including pursuant to any of
Chris-Craft's benefit plans)), determined without regard to
any additional payment required under this Section 7 (a
"Payment") would be subject to the excise tax imposed by
Section 4999 of the Code (and any successor provision and
any similar provision of state or local income tax law)
(collectively, "Section 4999"), or any interest or penalty
is incurred by the Executive with respect to such excise tax
(such excise tax, together with any such interest or
penalty, hereinafter collectively to be referred to as the
"Excise Tax"), then the Executive shall be entitled to
receive or have paid to the Internal Revenue Service or
other appropriate authority (and any relevant state or local
authority) ("IRS") on his behalf an additional payment (a
"Gross-Up Payment") in an amount equal to the sum of (a) the
Excise Tax plus (b) all taxes, penalties and interest
(including any excise tax imposed by Section 4999 of the
Code) paid or payable by Executive on account of the
operation of this Section 7, such that, after payment by
Executive of all such other taxes (including any interest or
penalty imposed with respect to such taxes) and any Excise
Tax imposed upon the Gross-Up Payment, Executive shall be in
the same position as he would have been had no Excise Tax
been imposed upon the Payments.
7.1.1 Subject to the provisions of
Section 7.3, all determinations required to be made under
this Section 7, including whether and when a Gross-Up
Payment is required, the amount of such Gross-Up Payment,
and the assumptions to be utilized in arriving at such
determination, shall be made by Price Waterhouse or any
other nationally recognized accounting firm (the "Accounting
Firm") that shall be Chris-Craft's outside auditors at the
time of such determination, which Accounting Firm shall
provide detailed supporting calculations both to the
Executive and Chris-Craft within 15 business days of the
receipt of notice from Chris-Craft or the Executive that
there has been a Payment that the person giving notice
believes may be subject to the Excise Tax, or such earlier
time as shall be requested by Chris-Craft. All fees and
expenses of the Accounting Firm shall be borne solely by
Chris-Craft. Any Gross-Up Payment, as determined pursuant
to this Section 7, shall be paid by Chris-Craft to the IRS
on the Executive's behalf within five business days after
the receipt of the Accounting Firm's determination. If the
Accounting Firm shall determine that no Excise Tax is
payable by the Executive, it shall furnish to the Executive
written advice that failure to report the Excise Tax on the
Executive's applicable federal income tax return would not
be reasonably likely to result in the imposition of a
penalty for fraud, negligence, or disregard of rules or
regulations. Any determination by the Accounting Firm shall
be binding upon Chris-Craft and the Executive in determining
whether a Gross-Up Payment is required or the amount thereof
(subject to Section 7.1.2 and 7.2), in the absence of
material mathematical or legal error.
7.1.2 As a result of uncertainty in the
application of Section 4999 of the Code that may exist at
the time of the initial determination by the Accounting
Firm, it may be possible that in making the calculations
required to be made hereunder, the Accounting Firm shall
determine that a Gross-Up Payment need not be made that
properly should be made ("Underpayment") or that a Gross-Up
Payment not properly needed to be made should be made
("Overpayment"). In the event that Chris-Craft shall
exhaust or fail to adequately pursue its remedies pursuant
to Section 7.2, and the Executive thereafter shall be
required to make a payment of any Excise Tax, the Accounting
Firm shall determine the amount of the Underpayment that
occurred, and Chris-Craft shall promptly pay the amount
thereof to the IRS on the Executive's behalf. In the event
that the Accounting Firm shall determine that an Overpayment
was made, any such Overpayment shall be treated for all
purposes as a loan to the Executive with interest at the
applicable Federal rate provided for in Section 1274(d) of
the Code; provided, however, that the amount to be repaid by
the Executive to Chris-Craft shall be reduced to the extent
that any portion of the Overpayment to be repaid will not be
offset by a corresponding reduction in tax by reason of such
repayment of the Overpayment.
7.2 Executive shall give Chris-Craft written
notice of any claim by the IRS that, if successful, would
require the payment by Chris-Craft of a Gross-Up Payment.
The Executive shall give such notice, within ten business
days after the Executive shall be informed in writing of
such claim, provided that failure by the Executive to
provide such notice shall not result in a waiver or
forfeiture of any rights of Executive under this Section 7
except to the extent of actual damages suffered by Chris-
Craft as a result of such failure; provided further that if
such failure prevents the contest of such claim no payment
shall be required with respect to such claim by Chris-Craft
under this Section 7. The Executive shall not pay such
claim prior to the expiration of 15 days following the date
on which the Executive gives such notice to Chris-Craft. If
Chris-Craft shall notify the Executive in writing prior to
the expiration of such 15-day period that Chris-Craft
desires to contest such claim, the Executive shall:
(a) give Chris-Craft any
information reasonably requested by Chris-Craft relating to
such claim,
(b) take such action in connection
with contesting such claim as Chris-Craft shall reasonably
request in writing from time to time, including, without
limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by Chris-
Craft,
(c) cooperate in good faith with
Chris-Craft's contest of such claim, and
(d) permit Chris-Craft to control
any proceedings to the extent relating to such claim;
provided, however, that Chris-Craft shall bear and pay
directly all costs and expenses (including additional
interest and penalties) incurred in connection with such
contest and shall indemnify and hold Executive harmless, on
an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto)
imposed in relation to such claim, including all costs and
expenses. Without limiting the foregoing provisions of this
Section 7.2, and to the extent its actions do not
unreasonably interfere or prejudice the Executive's disputes
with the IRS as to other issues, Chris-Craft shall control
all proceedings taken in connection with such contest and,
at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and
conferences with the IRS in respect of such claim and may,
at its sole option, either direct the Executive to pay the
tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute
such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as Chris-Craft shall determine;
provided, however, that if Chris-Craft shall direct the
Executive to pay such claim and sue for a refund, Chris-
Craft shall advance the amount of such the Executive, on an
interest-free basis, and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise
Tax or income tax (including interest or penalties with
respect thereto) imposed with respect to such advance or
with respect to any imputed income with respect to such
advance, and further provided that any extension of the
statute of limitations relating to taxes for the Executive's
taxable year with respect to which such contested amount
shall to be due shall be limited solely to such claim.
Furthermore, Chris-Craft's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment
would be payable hereunder, and the Executive shall be
entitled to settle or contest, as the case may be, any other
issue raised by the IRS to the extent that such settlement
or contest would not be reasonably likely to have a material
adverse effect on the issues with respect to the Gross-Up
Payment.
7.3 If, after the Executive's receipt of an
amount advanced by Chris-Craft pursuant to Section 7.2, the
Executive shall become entitled to receive any refund with
respect to such claim, the Executive shall promptly pay to
Chris-Craft the amount of such refund (together with any
interest paid or credited thereon after taxes applicable
thereto). If, after the Executive's receipt of an amount
advanced by Chris-Craft pursuant to Section 7.2, a
determination shall be made that the Executive shall not be
entitled to any refund with respect to such claim, and
Chris-Craft shall not notify the Executive in writing of its
intent to contest such denial of refund prior to the
expiration of 30 days after Chris-Craft shall receive notice
of such determination, then such advance shall be forgiven
and shall not be required to be repaid, and the amount of
such advance shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid.
7.4 This Section 7 shall remain in full
force and effect following the termination of the Employment
Term for any reason until the expiration of the statute of
limitations on the assessment of taxes applicable to the
Executive for all periods in which the Executive may incur a
liability for taxes (including Excise Taxes), interest or
penalties arising out of the operation of this Agreement.
8. Change in Control; Extension of Term.
8.1 Chris-Craft, on behalf of itself and its
stockholders, wishes to assure itself of continuity of
management in the event of any Change in Control (as defined
in Section 8.2 of this Agreement). Notwithstanding anything
to the contrary in this Agreement, if a Change in Control
(as defined in Section 8.2 hereof) shall occur during the
Employment Term, and the Employment Term shall not have
previously terminated for any reason (other than in
connection with or as a result of a Change in Control), the
Employment Term shall automatically be extended to the third
anniversary of such Change in Control, if, pursuant to
Section 1.2, the Employment Term otherwise might have
terminated before such third anniversary.
8.2 For the purposes of this Agreement, a
"Change in Control" shall mean:
8.2.1 The acquisition by any individual,
entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act ("Rule 13d-3")) of 20% or more of the combined
voting power of the then outstanding voting securities of
Chris-Craft entitled to vote generally in the election of
directors (the "Outstanding Voting Securities"); provided,
however, that the following acquisitions shall not
constitute a Change in Control: (v) any acquisition of a
security (i) directly from Chris-Craft that is authorized by
the Incumbent Board, as defined in Section 8.2.2, or (ii) of
a class constituting a class of Outstanding Voting
Securities on the date hereof that results from conversion
of a security of any such class; (w) any acquisition by
Chris-Craft; (x) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by Chris-
Craft or any corporation controlled by Chris-Craft; (y) any
change in ownership of Outstanding Voting Securities by any
Person identified or referred to in "Table I, Beneficial
Ownership of Chris-Craft Stock," in Chris-Craft's Proxy
Statement for its 1993 Annual Meeting of Stockholders, so
long as (i) any such Person who is an officer or director of
Chris-Craft remains such, or (ii) any Person that, with
respect to a change in such Person's ownership of
Outstanding Voting Securities, as of the date hereof, would
have an obligation to make a filing under Rule 13d-3, would
not be required, in connection with such change in
ownership, to change from filing on Schedule 13G to Schedule
13D or to change any response to Schedule 13D, Item 4, other
than paragraph (a) thereof or paragraph (j), as it might
relate to paragraph (a); or (z) any acquisition by any
corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (a), (b),
and (c) of Section 8.2.3 are satisfied; or
8.2.2 Individuals who, as of the date
hereof, constitute the Board (the "Incumbent Board") cease
for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or
nomination for election by the stockholders of Chris-Craft,
shall be approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest
(as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board; or
8.2.3 Approval by the stockholders of
Chris-Craft of a reorganization, merger or consolidation, in
each case, unless, following such reorganization, merger or
consolidation: (a) more than 60% of the combined voting
power of the then outstanding voting securities of the
corporation resulting from such reorganization, merger, or
consolidation, which may be Chris-Craft (the "Resulting
Corporation"), entitled to vote generally in the election of
directors (the "Resulting Corporation Voting Securities")
shall then be owned beneficially, directly or indirectly, by
all or substantially all of the Persons who were the
beneficial owners of Outstanding Voting Securities
immediately prior to such reorganization, merger, or
consolidation, in substantially the same proportions as
their respective ownerships of Outstanding Voting Securities
immediately prior to such reorganization, merger or
consolidation; (b) no Person (excluding Chris-Craft, any
employee benefit plan (or related trust) of Chris-Craft, the
Resulting Corporation, and any Person beneficially owning,
immediately prior to such reorganization, merger or
consolidation, directly or indirectly, 20% or more of the
combined voting power of Outstanding Voting Securities)
shall own beneficially, directly or indirectly, 20% or more
of the combined voting power of the Resulting Corporation
Voting Securities; and (c) at least a majority of the
members of the board of directors of the Corporation shall
have been members of the Incumbent Board at the time of the
execution of the initial agreement providing for such
reorganization, merger or consolidation; or
8.2.4 Approval by the stockholders of
Chris-Craft of (a) a complete liquidation or dissolution of
Chris-Craft or (b) the sale or other disposition of all or
substantially all of the assets of Chris-Craft, other than
to a corporation (the "Buyer") with respect to which (i)
following such sale or other disposition, more than 60% of
the combined voting power of securities of Buyer entitled to
vote generally in the election of directors ("Buyer Voting
Securities"), shall be owned beneficially, directly or
indirectly, by all or substantially all of the Persons who
were the beneficial owners of the Outstanding Voting
Securities immediately prior to such sale or other
disposition, in substantially the same proportion as their
respective ownerships of Outstanding Voting Securities,
immediately prior to such sale or other disposition; (ii) no
Person (excluding Chris-Craft and any employee benefit plan
(or related trust) of Chris-Craft or Buyer and any Person
that shall immediately prior to such sale or other
disposition own beneficially, directly or indirectly, 20% or
more of the combined voting power of Outstanding Voting
Securities), shall own beneficially, directly or indirectly,
20% or more of the combined voting power of, Buyer Voting
Securities; and (iii) at least a majority of the members of
the board of directors of Buyer shall have been members of
the Incumbent Board at the time of the execution of the
initial agreement or action of the Board providing for such
sale or other disposition of assets of Chris-Craft.
9. Termination of Agreement for Cause.
Chris-Craft may terminate this Agreement, and
all of Chris-Craft's obligations hereunder except its
obligation to pay to the Executive amounts accrued to the
date of termination, "for cause" upon 30 days written
notice. As used in this Agreement, the term "for cause"
shall mean and be limited to the following events: (a) the
Executive's conviction (which conviction, through lapse of
time or otherwise, is not subject to appeal) in a court of
law of a felony involving moral turpitude; (b) the
Executive's material breach of any of the covenants set
forth in Section 12; (c) the Executive's dishonesty in the
course of fulfilling his duties hereunder; or (d) the
Executive's continuing, repeated, wilful failure or refusal
to perform his duties in accordance with the terms of
Section 2; provided, however, that this Agreement may not be
terminated for cause under the immediately preceding clause
(d), unless the Executive shall have first received written
notice from the Board of Directors of Chris-Craft advising
him of the specific acts or omissions alleged to constitute
a failure or refusal to perform his duties, and such failure
or refusal to perform his duties continues after the
Executive shall have had a reasonable opportunity to correct
the acts or omissions cited in such notice. In no event
shall the alleged incompetence of the Executive in the
performance of his duties hereunder be deemed grounds for
termination of this Agreement for cause.
10. Termination Other Than for Cause.
10.1 Death. If the Executive shall die
during the Employment Term, this Agreement, and all of
Chris-Craft's obligations hereunder, shall terminate, except
(a) with regard to payments from the Account pursuant to
Section 4.3.3 (which Account shall include Deferred
compensation payable through the last day of the month in
which his death occurred) and (b) that Chris-Craft shall pay
to the Executive's estate, (i) within 30 days after his
death, the base salary, and bonus with respect to the then
current fiscal year, which would have been payable to the
Executive under Section 4 had the Employment Term ended on
the last day of the month in which his death occurred, and
(ii) an annual amount (payable at the same times as salary
is paid to other executive employees of Chris-Craft) equal
to the Executive's "Average Annual Compensation" (as defined
in Section 10.3) at the date of his death; such annual
amount shall be payable for each of the three 12-month
periods following the first day of the month following the
month in which the Executive's death shall occur.
10.2 Disability. If, during the Employment
Term, the Executive shall become disabled (as defined in
Chris-Craft's then existing disability policy) so that he
shall be unable substantially to perform his services
hereunder, (a) for a period of six consecutive months or (b)
for an aggregate of six months within any period of 12
consecutive months, then the Board of Directors of Chris-
Craft may, at any time during the continuance of such
disability, terminate the Employment Term on 30 days' prior
written notice to the Executive. After such termination,
the Executive shall have no further obligation to perform
services for Chris-Craft pursuant to Section 2 but shall be
entitled to receive from Chris-Craft, within 30 days after
such termination, in lieu of the amounts which would
otherwise be payable under Section 4, (i) the base salary,
and bonus with respect to the then current fiscal year,
which would have been payable to the Executive under Section
4, had the Employment Term ended on the last day of the
month in which the Employment Term was terminated pursuant
to this Section 10.2, and (ii) an amount (payable at the
same times as salary is paid to the other executive
employees of Chris-Craft) at an annual rate equal to one-
half of the Executive's "Average Annual Compensation" (as
defined in Section 10.3) at the date of the termination of
the Employment Term, such amount to be payable for the
period beginning on the first day of the month following the
month in which the Employment Term shall have been
terminated pursuant to this Section 10.2 and ending on the
day on which the Employment Term would have ended (as
extended, if theretofore extended) if not terminated
pursuant to this Section 10. The Executive shall have no
obligation to accept any employment offered to him by others
in order to minimize, or to be set off against, the amounts
to which he is entitled pursuant to this Section 10.2.
Chris-Craft shall not interpose any defense against payment
of such amounts based on refusal of the Executive to seek or
accept other employment. However, if the Executive shall
obtain other employment, then amounts due to him pursuant to
this Section 10.2 shall be reduced, pro tanto, by amounts
actually received by him for services rendered in such other
employment during the time amounts are payable pursuant to
said Section 10.2.
10.3 Average Annual Compensation. As used in
Sections 10.1 and 10.2, the term "Average Annual
Compensation" shall mean the mean annual compensation
received or receivable by the Executive pursuant to Section
4 (without regard to the effect of the provisions of Section
4.2) with respect to each of the three full fiscal years of
Chris-Craft immediately preceding the date of the
Executive's death (in the case of Section 10.1) or the date
of the termination of the Employment Term (in the case of
Section 10.2); provided, however, that if the Executive
shall die, or the Employment Term shall be terminated due to
his disability, prior to January 1, 1997, the Average Annual
Compensation shall be the mean of (i) the amount received or
receivable by the Executive, or that would have become
receivable by the Executive pursuant to Section 4 (including
salary, Deferred Compensation and bonus and without regard
to the effect of the provisions of Section 4.2) had he lived
through December 31, 1994, and (ii) the mean amount received
or receivable by the Executive pursuant to Section 4
(including salary, Deferred Compensation and bonus and
without regard to the effect of the provisions of Section
4.2) for each full fiscal year of Chris-Craft, if any,
beginning after December 31, 1994 and ending on the
December 31 immediately preceding the date of the
Executive's death or the date of the termination of the
Employment Term due to his disability, as the case may be.
10.4 Termination by Executive.
10.4.1 If, during the Employment Term, (a)
the Executive shall not be elected (and continued) as a
director and as chief executive officer of Chris-Craft, or
(b) the Executive shall not be continuously afforded the
authority, responsibilities and prerogatives contemplated in
Section 2.2 and 2.3, or (c) Chris-Craft shall, without the
consent of the Executive, be merged or consolidated with any
other corporation, or (d) Chris-Craft shall, without the
consent of the Executive, be dissolved, or (e) Chris-Craft
shall, without the consent of the Executive, sell all or
substantially all of its assets, or (f) the Executive shall
be required to perform his principal services under this
Agreement at a place other than that set forth in Section 3,
or (g) Chris-Craft shall fail to cure a material breach of
this Agreement within 10 days after notice, then the
Executive shall have the election (but not the obligation)
to terminate the Employment Term on 60 days' prior written
notice to Chris-Craft. Such right to terminate the
Employment Term shall be the Executive's exclusive remedy in
the event of the occurrence of any of the events described
in this Section 10.4.1. For purposes of clause (b) of the
preceding sentence, the Executive shall be deemed not to
have been continuously afforded the authority,
responsibilities and prerogatives contemplated in Sections
2.2 and 2.3 if there shall occur any reduction in the scope,
level or nature of the Executive's employment hereunder, or
any demotion, any phasing out or assignment to others, of
the duties contemplated in Section 2. For purposes of this
Section 10.4, any determination made by the Executive in
good faith that any of the events described in clauses (a)
through (g) of the first sentence of this Section 10.4.1 has
occurred shall be conclusive.
10.4.2 If the Executive shall elect to
terminate the Employment Term upon the occurrence of any
event described in Section 10.4.1, or if Chris-Craft shall
terminate this Agreement other than for cause or disability
pursuant to Sections 9 and 10 hereof, then the Executive
shall have no further obligation to perform services for
Chris-Craft pursuant to Section 2 but he shall be entitled
to receive from Chris-Craft, 30 days after the date of
termination of the Employment Term, for the period beginning
on the date of such termination and running through the day
on which the Employment Term would have ended (as extended,
if theretofore extended) if not terminated pursuant to this
Section 10, assuming no additional extensions of the
Employment Term, and ending on the day on which the
Consulting Term would have ended (the "Cutoff Date"), in
lieu of the amounts that would otherwise be payable
hereunder, a lump sum in cash of an amount equal to the
aggregate of (a) compensation that would have been payable
each year at the rate of the (i) base salary payable to the
Executive pursuant to Section 4.1 and (ii) all amounts of
Deferred Compensation payable to the Executive pursuant to
Section 4.3 (each at the rate in effect on the date of the
termination of the Employment Term (including any COLA
Adjustment theretofore required to have been made)); (b) all
consulting fees payable pursuant to Section 11 hereof
subject to COLA Adjustment; and (c) an amount equal to the
mean performance bonuses theretofore paid to or payable to
the Executive pursuant to this Agreement, multiplied by the
number of years remaining in the Employment Term at the date
of termination (including the year in which the termination
occurs). Notwithstanding the above, Deferred Compensation
amounts, previously deferred and credited to the Account
shall be paid in accordance with Section 4.3.3. In
addition, until the Cutoff Date, Chris-Craft shall maintain,
at its expense, all insurance coverages and medical and
health benefits in respect of the Executive that shall have
been in effect with respect to him prior to the occurrence
of the event entitling the Executive to terminate this
Agreement.
11. Consulting Services.
Unless the Employment Term shall theretofore
have been terminated for cause pursuant to Section 9, or on
account of the death of the Executive, during the five-year
period (the "Consulting Term") beginning on the date of
termination of the Employment Term (or, if the Employment
Term shall have been terminated pursuant to Section 10.2 or
10.4, on the date the Employment Term would have ended (as
extended, if theretofore extended) if it had not been
terminated pursuant to said Section 10.2 or 10.4), the
Executive shall render to Chris-Craft such consultation and
advice as the Board of Directors or the Chief Executive
Officer of Chris-Craft may request, subject to the
Executive's reasonable convenience and other business
activities; provided, however, that the Executive shall not
be required to devote more than 20 hours in any month to
such services, which shall be performed at a time and place
mutually convenient to both parties. For his consulting
services, the Executive shall receive, as a consulting fee,
compensation at the rate of $500,000 per annum, payable in
equal monthly installments; Chris-Craft shall also provide
the Executive with an office and a secretary, as well as the
use of such other facilities and amenities (including, as
examples, any airplane or automotive transportation utilized
by Chris-Craft) as Chris-Craft shall from time to time make
available to its most senior officers. Such facilities and
amenities shall be furnished on a level at least equivalent
to those made available to the Executive under his
employment contract expiring December 31, 1993. The
consulting fee shall be adjusted upward, as of the beginning
of the Consulting Term and as of each successive January 1
to the end of the Consulting Term, in proportion to any
increase in the Consumer Price Index, as defined in Section
4.4, from the December 1993 level (as of the beginning of
the Consulting Term) and from the December level of the
prior year as of each successive January 1. Each such
adjustment shall be made retroactively when the Consumer
Price Index for the month next preceding the date of such
adjustment becomes available. In addition, Executive shall
be entitled to participate in each insurance plan or medical
or health plan generally available to Chris-Craft senior
executives. In the event that the Executive shall be
discharged by Chris-Craft during the Consulting Term other
than for cause (as defined in Section 9), he shall
nevertheless be entitled to receive his full consulting fee,
and the above-mentioned facilities and amenities, for the
remainder of the Consulting Term. If the Executive shall
die during the Consulting Term, his estate shall be entitled
to receive the full consulting fee payable hereunder until
the earlier to occur of (a) the third anniversary of the
date of his death or (b) the end of the Consulting Term.
If, during the Consulting Term, the Executive shall be
disabled from performing his consulting services, and such
disability shall continue for a period of six consecutive
months or for an aggregate of six months within any period
of 12 consecutive months, or if such disability shall exist
at the start of the Consulting Term and shall be a
continuation of a disability for which the Employment Term
shall have been terminated pursuant to Section 10.2, and the
Board of Directors of Chris-Craft, by written notice to the
Executive (before the Executive shall recover from such
disability) shall terminate the Executive's consulting
services, the Executive shall have no further obligation to
perform consulting services for Chris-Craft and shall be
entitled to receive compensation at the rate of one-half of
the consulting fee payable hereunder until the end of the
Consulting Term.
12. Protection of Confidential Information; Non-
Competition.
12.1 The Executive agrees that, in view of
the fact that his work for Chris-Craft will bring him into
close contact with many confidential affairs of Chris-Craft
not readily available to the public, he will not at any time
(whether during the Employment Term, the Consulting Term, or
thereafter) disclose to any person, firm, corporation,
partnership or other entity whatsoever (except Chris-Craft
or any of its subsidiaries), or any officer, director,
stockholder, partner, associate, employee, agent or
representative of any such firm, corporation or other
entity, any confidential information or trade secrets of
Chris-Craft which may come into his possession during the
Employment Term or the Consulting Term. (the "Confidential
Materials") the term "Confidential Materials" does not
include information which at the time of disclosure or
thereafter is generally available to or known by the public
otherwise than by reason of the Executive's disclosure
thereof in violation of this Agreement (ii) is, was or
becomes available to the Executive on a nonconfidential
basis from a source other than Chris-Craft, provided that
the Executive has no reason to believe that such source is
or was bound by a confidentiality agreement with Chris-
Craft, (iii) has been made available, or is made available,
on an unrestricted basis to a third party by Chris-Craft, by
an individual authorized to do so, or (iv) is known by the
Executive prior to its disclosure to the Executive. The
Executive may use and disclose Confidential Materials to the
extent necessary to assert any right or defend against any
claim arising under this Agreement or pertaining to
Confidential Materials or their use, to the extent necessary
to comply with any applicable statute, constitution, treaty,
rule, regulation, ordinance or order, whether of the United
States, any state thereof, or any other jurisdiction
applicable to the Executive, or if the Executive receives a
request to disclose all or any part of the information
contained in the Confidential Materials under the terms of a
subpoena, order, civil investigative demand or similar
process issued by a court of competent jurisdiction or by a
governmental body or agency, whether of the United States or
any state thereof, or any other jurisdiction applicable to
the Executive.
12.2 From the date hereof to the last day of
the Consulting Term, the Executive will not, except on
behalf of Chris-Craft or any of its subsidiaries, directly
or indirectly, whether as an officer, director, stockholder,
partner, associate, employee, agent or representative,
become or be interested in, or associated with, any other
person, firm, corporation, partnership or other entity
whatsoever, engaged in a business competitive with any of
the businesses of Chris-Craft or any of its subsidiaries in
any of the markets in which Chris-Craft or any of its
subsidiaries carries on such business; provided, however,
that the Executive may own as an investor securities of any
such corporation which securities are registered under
Section 12(b) or 12(g) of the Securities Exchange Act of
1934, so long as he is not part of any control group of such
corporation.
12.3 The Executive agrees that a violation of
the covenants set forth in Section 12.1 or 12.2, or any
provision thereof, will cause irreparable injury to Chris-
Craft and that Chris-Craft shall be entitled, in addition to
any other rights and remedies it may have, at law or in
equity, to an injunction enjoining and restraining the
Executive from doing or continuing to do any such act and
any other violation or threatened violation of said Section
12.1 or 12.2.
12.4 If any provision of Section 12 as
applied to any circumstance shall be adjudged by a court to
be invalid or unenforceable, the same shall in no way affect
any other provision of this Section 12, the application of
such provision in any other circumstances, or the validity
or enforceability of this Section 12. Chris-Craft and the
Executive intend this Section 12 to be enforced as written.
However, if any provision, or any part thereof, is held to
be unenforceable because of the duration of such provision
or the area covered thereby, or otherwise, Chris-Craft and
the Executive agree that the court making such determination
shall have the power to reduce the duration and/or area of
such provision, and/or to delete specific words or phrases
("blue-pencilling"), and in its reduced or blue-pencilled
form such provision shall then be enforceable and shall be
enforced.
12.5 Chris-Craft and the Executive intend to,
and do hereby, confer jurisdiction to enforce the covenants
contained in this Section 12 upon the courts of any state of
the United States and any other governmental jurisdiction
within the geographical scope of such covenants. If the
courts of any one or more of such states or jurisdictions
shall hold such covenants wholly unenforceable by reason of
the breadth of such scope or otherwise, it is the intention
of Chris-Craft and the Executive that such determination
shall not bar or in any way affect Chris-Craft's right to
the relief provided above in the courts of any other state
or jurisdiction within the geographical scope of such
covenants, as to breaches of such covenants in such other
respective states or jurisdictions, the above covenants as
they relate to each state or jurisdiction being, for this
purpose, severable into diverse and independent covenants.
13. Notices.
All notices, requests, consents and other
communications, required or permitted to be given hereunder,
shall be in writing and shall be deemed to have been duly
given (a) if delivered personally, when delivered; (b) if
delivered by overnight carrier, on the first business day
following such delivery; (c) if delivered by registered or
certified mail, return receipt requested, on the third
business day after having been mailed in New York, New York.
In any case, each such notice, request, or consent or other
communication shall be addressed as follows or to such other
address as either party shall designate by notice in writing
to the other in accordance herewith:
13.1 If to Chris-Craft:
Chris-Craft Industries, Inc.
767 Fifth Avenue
New York, New York 10153
Attention: Board of Directors
13.2 If to the Executive to him at his
address set forth on the personnel records of Chris-Craft.
With a copy to:
Harold I. Kahen, Esq.
Loeb and Loeb
345 Park Avenue
New York, New York 10154
14. General.
14.1 This Agreement shall be governed by and
construed and enforced in accordance with the laws of the
State of New York applicable to agreements made and to be
performed entirely in New York.
14.2 The section headings contained herein
are for reference purposes only and shall not in any way
affect the meaning or interpretation of this Agreement.
14.3 This Agreement sets forth the entire
agreement and understanding of the parties relating to the
subject matter hereof, and supersedes all prior agreements,
arrangements and understandings, written or oral, between
the parties.
14.4 This Agreement and the benefits
hereunder are personal to Chris-Craft and are not assignable
or transferable, nor may the services to be performed
hereunder be assigned by Chris-Craft to any person, firm or
corporation; provided, however, that this Agreement and the
benefits hereunder may be assigned by Chris-Craft to any
corporation acquiring all or substantially all of the assets
of Chris-Craft or to any corporation into which Chris-Craft
may be merged or consolidated, and this Agreement and the
benefits hereunder will automatically be deemed assigned to
any such corporation, subject, however, to the Executive's
right to terminate the Employment Term in such event as
provided in Section 10.4. In the event of any assignment of
this Agreement to any corporation acquiring all or
substantially all of the assets of Chris-Craft or to any
other corporation into which Chris-Craft may be merged or
consolidated, the responsibilities and duties assigned to
the Executive by such successor corporation shall be the
responsibilities and duties of, and compatible with the
status of, a senior executive officer of such successor
corporation. Chris-Craft may delegate any of its
obligations hereunder to any subsidiary of Chris-Craft,
provided that such delegation shall not relieve Chris-Craft
of its obligations hereunder.
14.5 This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or
covenants hereof may be waived, only by a written instrument
executed by both of the parties hereto, or in the case of a
waiver, by the party waiving compliance. The failure of
either party at any time or times to require performance of
any provision hereof shall in no manner affect the right at
a later time to enforce the same. No waiver by either party
of the breach of any term or covenant contained in this
Agreement, whether by conduct or otherwise, in any one or
more instances, shall be deemed to be, or construed as, a
further or continuing waiver of any such breach, or a waiver
of the breach of any other term or covenant contained in
this Agreement.
14.6 Whenever this Agreement provides for any
payment to the Executive's estate, such payment may be made
instead to such beneficiary or beneficiaries as the
Executive may have designated by written notice to Chris-
Craft. The Executive shall have the right to revoke any
such designation and to redesignate a beneficiary or
beneficiaries by written notice to Chris-Craft to such
effect.
14.7 In case of any dispute or disagreement
arising out of, or in connection with, this Agreement, until
the final determination of such dispute or disagreement
Chris-Craft shall continue to pay to the Executive all of
the compensation provided in this Agreement, and the
Executive shall be entitled to continue to receive all of
the other benefits provided herein. If any such dispute or
disagreement shall result in legal action between Chris-
Craft and the Executive, the Executive shall be entitled to
recover from Chris-Craft any actual expenses for attorney's
fees and disbursements incurred by him in connection with
the Executive's good faith maintenance or defense of such
action, on an after-tax basis. During the pendency of any
such action, Chris-Craft shall pay all actual attorney's
fees and expenses incurred by the Executive in connection
therewith upon receipt of an undertaking by the Executive to
repay such amounts as shall be found in such action as
having been incurred in connection with the Executive's
maintenance or defense of such action other than in good
faith.
IN WITNESS WHEREOF, the parties have duly executed
this Agreement as of the date first above written.
CHRIS-CRAFT INDUSTRIES, INC.
/s/ Herbert J. Siegel By /s/ Brian C. Kelly
Herbert J. Siegel General Counsel and
Secretary
<TABLE>
<CAPTION>
Table of Contents to Employment Agreement
Section Page
<S> <C>
1. Employment; Term . . . . . . . . . . . . . . . . . . 1
2. Duties and Authority . . . . . . . . . . . . . . . . 2
3. Location . . . . . . . . . . . . . . . . . . . . . . 4
4. Cash Compensation. . . . . . . . . . . . . . . . . . 4
4.1 Base Salary. . . . . . . . . . . . . . . . 4
4.2 Section 162(m) Limit . . . . . . . . . . . 5
4.3 Deferred Compensation. . . . . . . . . . . 7
4.4 Bonus. . . . . . . . . . . . . . . . . . . 9
4.5 Consumer Price Index . . . . . . . . . . . 11
5. Expenses . . . . . . . . . . . . . . . . . . . . . . 12
6. Additional Benefits. . . . . . . . . . . . . . . . . 12
7. Certain Additional Payments by Chris-Craft . . . . . 15
8. Change in Control; Extension of Term . . . . . . . . 22
9. Termination of Agreement for Cause . . . . . . . . . 27
10. Termination Other Than for Cause . . . . . . . . . . 28
10.1 Death. . . . . . . . . . . . . . . . . . . 28
10.2 Disability . . . . . . . . . . . . . . . . 28
10.3 Average Annual Compensation. . . . . . . . 30
10.4 Termination by Executive . . . . . . . . . 31
11. Consulting Services . . . . . . . . . . . . . . . . 34
12. Protection of Confidential Information; Non-
Competition. . . . . . . . . . . . . . . . . . . . . 36
13. Notices. . . . . . . . . . . . . . . . . . . . . . . 40
14. General. . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
SPLIT-DOLLAR AGREEMENT
THIS AGREEMENT made and entered into as of this
6th day of January, 1994, by and between CHRIS-CRAFT
INDUSTRIES, INC., a Delaware corporation (hereinafter
referred to as the "Corporation"), and WILLIAM D. SIEGEL, an
individual residing at 610 Park Avenue, New York, New York
10022 (hereinafter referred to as the "Owner").
W I T N E S S E T H:
WHEREAS, HERBERT J. SIEGEL (the "Executive") is
now and for many years has been the chief executive officer
of the Corporation and has provided services essential for
and crucial to the success of the Corporation; and
WHEREAS, the Corporation wishes to recognize the
Executive's past services to the Corporation and desires to
provide an inducement for his continued employment; and
WHEREAS, the Executive wishes to provide life
insurance protection for members of his family under several
policies of life insurance (hereinafter referred to
collectively as the "Policies" and any one individually as a
"Policy"), insuring his life and the life of his wife
(hereinafter jointly referred to as the "Insureds"), which
Policies are described in Exhibit A attached hereto and
which Policies are issued by the insurance companies
identified in said Exhibit A (hereinafter referred to as
the "Insurers"); and
WHEREAS, the Corporation is willing to pay the
premiums due on the Policies for a period of fifteen (15)
years, under a split dollar arrangement, as an employment
benefit for the Executive, on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises
and the mutual promises contained herein, the parties hereto
agree as follows:
1. Purchase of Policies. The Owner will
contemporaneously purchase the Policies from the Insurers in
the total face amount of $15 million. The parties agree
that they will take all necessary action to cause the
Insurers to issue the Policies and shall take any further
action which may be necessary to cause the Policies to
conform to the provisions of this Agreement. The parties
agree that the rights and obligations of the parties hereto
in each Policy shall be subject to the terms and conditions
of this Agreement and to the collateral assignment filed
with the Insurer relating to such Policy.
2. Ownership of Policies. The Owner shall be
the sole and absolute owner of each Policy and may exercise
all ownership rights granted to the owner thereof by the
terms of such Policy, except to the extent the rights of the
Owner are specifically limited by this Agreement. Without
limiting the foregoing, the Owner shall have the right to
change the beneficiary and the right to exercise settlement
options with respect to each of the Policies.
3. Policy Dividends. All dividends declared on
the Policies shall be applied to purchase paid-up additional
insurance on the lives of the Insureds. The parties hereto
agree that the dividend election provisions of each of the
Policies shall conform to the provisions hereof.
4. Payment of Premiums.
(a) Subject to paragraph (b) of this Section
4, with respect to each of the first fifteen annual premium
payments for each Policy, the Corporation shall pay the full
amount specified in Exhibit B hereto to the respective
Insurers; provided, however, that the Corporation shall not
make a premium payment to the extent that such payment would
result in a Policy being classified as a modified endowment
contract under Section 7702A of the Internal Revenue Code of
1986, as amended, or any successor thereto. The Corporation
shall make each such payment on or before the due date of
the Policy premium, or within the grace period provided
therefore, and shall, upon request, promptly furnish the
Executive and the Owner evidence of timely payment of such
premiums. The Corporation shall annually furnish the
Executive with a statement of the amount of income
reportable by the Executive for federal and state income tax
purposes as a result of the insurance protection provided
the Owner.
(b) Notwithstanding paragraph (a), the
Executive during his lifetime, or the Owner after the
Executive's death, may notify the Corporation at any time
that he has made the revocable election to pay the annual
cost of current life insurance protection provided by the
Policy(ies). In the event that this election is made,
thirty (30) days prior to the due date of each Policy
premium, the Corporation shall notify the Executive or the
Owner, as applicable, of the exact amount due as a result of
such election, which shall be an amount equal to the then
current annual cost of life insurance on the joint lives of
the Insureds, measured by U.S. Life Table 38, while both are
alive, and thereafter measured by the lower of the PS 58
rate, set forth in Revenue Ruling 55-747 (or the
corresponding applicable provision of any future Revenue
Ruling), or the Insurer's then current published premium
rate for annually renewable term insurance for standard
risks. The Executive or the Owner, as applicable, shall pay
such required contribution to the Corporation prior to the
premium due date. If neither the Executive nor the Owner
makes such timely payment, the Corporation shall treat such
failure as a revocation of the election and shall make the
full premium payment, pursuant to paragraph (a).
(c) The Corporation shall not be obligated
to make any Policy premium payment beyond the first fifteen
annual premium payments for each Policy or, if earlier, the
death of the later to die of the Insureds.
5. Collateral Assignment. To secure the
repayment to the Corporation of its interest hereunder (as
described in Sections 7(b) and 9(a)), the Owner has,
contemporaneously herewith, assigned each Policy to the
Corporation as collateral, on a form acceptable for such
assignment by the Insurer under such Policy. The collateral
assignment of each Policy to the Corporation hereunder shall
not be terminated, altered or amended by the Owner, without
the express written consent of the Corporation. The parties
hereto agree to take all actions necessary to cause such
collateral assignments to conform to the provisions of this
Agreement. The Corporation agrees that it will not exercise
its right to surrender a Policy under a collateral
assignment except as provided in this Agreement. The
Corporation's rights in a Policy shall be strictly limited
to those rights specified herein and by the terms of the
collateral assignment of such Policy. Without limiting the
foregoing, the Corporation shall not have the right to
borrow any amount under any of the Policies.
6. Limitations on Owner's Rights in Policies.
Except as otherwise provided herein, the Owner shall not
borrow against, surrender or cancel any Policy, nor
terminate the dividend election thereof without, in any such
case, the express written consent of the Corporation.
7. Collection of Death Proceeds.
(a) Upon the death of the later to die of
the Insureds, the Corporation and the Owner shall cooperate
to take whatever action is necessary to collect the death
benefit provided under each Policy. Such cooperation shall
not be unreasonably withheld by either of the parties. When
the death benefits under all of the Policies have been
collected and paid as provided herein, this Agreement shall
terminate.
(b) Upon the death of the later to die of
the Insureds, the Corporation shall have the unqualified
right to receive a portion of the death benefit under each
Policy equal to the greater of (i) the cumulative premiums
paid by the Corporation on such Policy or (ii) the cash
value (determined immediately preceding the death of the
later to die of the Insureds) of all paid-up additions of
such Policy which were purchased with Policy dividends. The
balance of the death benefit provided under each Policy, if
any, shall be paid directly to the Owner in the manner and
in the amount or amounts provided in the beneficiary
designation provision of the Policy. In no event shall the
amount payable to the Corporation hereunder with respect to
any Policy exceed the Policy proceeds payable as a result of
the maturity of the Policy as a death claim. No amount
shall be paid from such death benefit to the Owner until the
full amount due the Corporation hereunder has been paid.
(c) Notwithstanding any provision hereof to
the contrary, in the event that for any reason whatsoever no
death benefit shall be payable under a Policy upon the death
of the later to die of the Insureds, and, in lieu thereof,
the Insurer shall refund all or any part of the premiums
paid for such Policy, the Corporation shall have the
unqualified right to receive its cumulative premiums paid
for such Policy, and the balance of the refund shall be
payable to the Owner.
8. Termination of the Agreement During the
Lifetime of the Insureds.
(a) This Agreement shall terminate, without
notice, with respect to all of the Policies, while either of
the Insureds is alive, upon the total cessation of the
Corporation's business or upon the bankruptcy, receivership,
or dissolution of the Corporation.
(b) The termination of the Executive's
employment with the Corporation for any reason shall not
result in the termination of this Agreement.
9. Disposition of a Policy on Termination of the
Agreement During the Lifetime of the Insureds.
(a) For sixty (60) days after the date of
the termination of this Agreement during the lifetime of the
Insureds with respect to one or more of the Policies, the
Owner shall have the option of obtaining the release of the
collateral assignment of such Policy(ies) to the
Corporation. To obtain such release, the Owner shall repay
to the Corporation, with respect to a Policy, the lesser of
(i) the cash value of the Policy or (ii) the greater of (A)
the cumulative premiums paid by the Corporation for such
Policy or (B) the cash value of all paid-up additions of
such Policy purchased with Policy dividends. In order to
make such payment the Owner may, but need not, obtain a
Policy loan on such Policy, which loan shall be disbursed
directly to the Corporation. Upon receipt of such payment,
the Corporation shall release the collateral assignment of
the Policy, by the execution and delivery of an appropriate
instrument of release.
(b) If, with respect to any Policy, the
Owner fails to exercise the option described in paragraph
(a) within such sixty (60) day period, the Corporation may
enforce its right under the collateral assignment to
surrender the Policy and be repaid the amount due to the
Corporation pursuant to paragraph (a) from the cash
surrender value of such Policy. Thereafter, the Corporation
shall have no further interest in and to the Policy, either
under the terms thereof or under this Agreement.
10. Insurer Not a Party. Each Insurer shall be
fully discharged from its obligations under its Policy by
payment of the Policy death benefit to the beneficiary or
beneficiaries named in the Policy, subject to the terms and
conditions of the collateral assignment executed by the
Owner and filed with the Insurer in connection therewith.
In no event shall an Insurer be considered a party to this
Agreement, or any modification or amendment hereof. No
provision of this Agreement, however amended or modified,
shall in any way be construed as enlarging, changing,
varying, or in any other way affecting the obligations of
any Insurer as expressly provided in the Policies, except
insofar as the provisions hereof are incorporated by the
collateral assignment executed by the Owner and filed with
the Insurer in connection herewith.
11. Named Fiduciary, Determination of Benefits,
Claims Procedure and Administration.
(a) The Corporation is hereby designated as
the named fiduciary under this Agreement. The named
fiduciary shall have authority to control and manage the
operation and administration of this Agreement and shall be
responsible for establishing and carrying out a funding
policy and method consistent with the objectives of this
Agreement.
(b) A person who believes that he or she is
being denied a benefit to which he or she is entitled under
this Agreement (hereinafter referred to as a "Claimant") may
file a written request for such benefit with the
Corporation, setting forth his or her claim. Upon receipt
of a claim, the Corporation shall advise the Claimant that a
reply will be forthcoming within ninety (90) days and shall,
in fact, deliver such reply within such period. The
Corporation may, however, extend the reply period for an
additional ninety (90) days for reasonable cause.
(c) If a claim is denied, in whole or in
part, the Corporation shall deliver to the Claimant a
written opinion, using language calculated to be understood
by the Claimant, setting forth: (1) the specific reason or
reasons for such denial; (2) the specific reference to
pertinent provisions of this Agreement on which such denial
is based; (3) a description of any additional material or
information necessary for the Claimant to perfect his or her
claim and an explanation of why such material or such
information is necessary; (4) appropriate information as to
the steps to be taken if the Claimant wishes to submit the
claim for review; (5) the time limit for requesting a
review; and (6) the time limit for such review to take
place.
(d) Within sixty (60) days after the receipt
by the Claimant of the written opinion described above, the
Claimant may request in writing that the Secretary of the
Corporation review the determination of the Corporation.
Such request must be addressed to the Secretary of the
Corporation, at its then principal place of business. The
Claimant or his or her duly authorized representative may,
but need not, review the pertinent documents and submit
issues and comments in writing for consideration by the
Corporation. If the Claimant does not request a review of
the Corporation's determination by the Secretary of the
Corporation within such sixty (60) day period, the Claimant
shall be barred and estopped from challenging the
Corporation's determination.
(e) Within sixty (60) days of receipt of a
request for review, the Secretary shall review the
Corporation's determination. After considering all
materials presented by the Claimant, the Secretary shall
render a written opinion, written in a manner calculated to
be understood by the Claimant, setting forth the specific
reasons for the decision and containing specific references
to the pertinent provisions of this Agreement on which the
decision is based. If special circumstances require that
the sixty (60) day time period be extended, the Secretary
shall so notify the Claimant and shall render the decision
as soon as possible, but no later than one hundred twenty
(120) days after receipt of the request for review.
12. Amendment. This Agreement may not be
amended, altered or modified, except by a written instrument
signed by the parties hereto, or their respective successors
or assigns, and may not be otherwise terminated except as
provided herein.
13. Assignment. Each of the parties to this
Agreement may assign his or its respective rights hereunder.
The Corporation may not transfer its obligations hereunder
to any individual or entity other than BHC Communications,
Inc. or another of the Corporation's affiliates, without the
written consent of the Owner.
14. Binding Effect. This Agreement shall be
binding upon and inure to the benefit of the Corporation and
its successors and assigns, and the Executive, the Owner,
and their respective successors, assigns, heirs, executors,
administrators and beneficiaries.
15. Notice. All notices, requests, consents and
other communications, required or permitted to be given
hereunder, shall be in writing and shall be deemed to have
been duly given if delivered personally or on the third
business day after having been mailed in New York, New York,
first-class, postage prepaid, by registered or certified
mail, return receipt requested, as follows (or to such other
address as either party shall designate by notice in writing
to the other in accordance herewith):
If to Corporation:
Chris-Craft Industries, Inc.
767 Fifth Avenue
New York, New York 10153
Attention: Board of Directors
If to Owner, to him at his address set forth on
the personnel records of the Corporation.
16. Governing Law. This Agreement and the rights
of the parties hereunder shall be governed by and construed
in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement, in duplicate, as of the day and
year first above written.
CHRIS-CRAFT INDUSTRIES, INC.
By: BRIAN C. KELLY
Title: General Counsel
and Secretary
WILLIAM D. SIEGEL
William D. Siegel
Acknowledged By:
HERBERT J. SIEGEL
Herbert J. Siegel
<PAGE>
EXHIBIT A
The following life insurance policies are subject
to the attached Split-Dollar Agreement:
1. Insurer New York Life Insurance Company
Insured Herbert J. Siegel and Ann L. Siegel
Policy Number XXXXXXXXXX
Face Amount $10,000,000
Dividend Option Paid-up Additions
Date of Issue 12-14-93
2. Insurer John Hancock Life Insurance Company
Insured Herbert J. Siegel and Ann L. Siegel
Policy Number XXXXXXXX
Face Amount $5,000,000
Dividend Option Paid-up Additions
Date of Issue 12-14-93
<PAGE>
<PAGE>
EXHIBIT B
Schedule of annual premium payments to be made by the
Corporation on the New York Life Policy:
Year 1 - $462,680
Year 2 - $462,680
Year 3 - $462,680
Year 4 - $432,680
Year 5 - $432,680
Year 6 - $432,680
Year 7 - $432,680
Year 8 - $432,680
Year 9 - $239,180
Year 10 - $239,180
Year 11 - $239,180
Year 12 - $239,180
Year 13 - $239,180
Year 14 - $239,180
Year 15 - $239,180
Schedule of annual premium payments to be made by the
Corporation on the John Hancock Policy:
Year 1 - $227,200
Year 2 - $227,200
Year 3 - $227,200
Year 4 - $214,700
Year 5 - $214,700
Year 6 - $214,700
Year 7 - $214,700
Year 8 - $214,700
Year 9 - $214,700
Year 10 - $214,700
Year 11 - $214,700
Year 12 - $214,700
Year 13 - $214,700
Year 14 - $214,700
Year 15 - $214,700
<PAGE>
SPLIT-DOLLAR COLLATERAL ASSIGNMENT
FOR VALUE RECEIVED, the undersigned owner
(hereafter the "Assignor") assigns, transfers and sets over
to CHRIS-CRAFT INDUSTRIES, INC. (hereafter the "Assignee"),
its successors or assigns, certain rights in and to policy
number 45 088 939 (hereafter the "Policy"), and any and all
supplemental benefit riders or agreements issued under said
Policy, issued by the New York Life Insurance Company
(hereafter the "Insurer"), subject to all the terms and
conditions of the Policy and this Assignment and to all
superior liens, if any, which the Insurer or any prior
Assignee may have against the Policy. The Assignor by this
instrument and the Assignee by acceptance of the Assignment
jointly and severally agree to the conditions and provisions
hereof. This Assignment is made and the Policy is to be
held as collateral security for any and all liabilities of
the Assignor (or any of Assignor's successors or assigns) to
the Assignee, either now existing or that may hereafter
arise under the Split-Dollar Agreement, dated as of January
6, 1994, with regard to the Policy, which is annexed hereto
and incorporated herein by reference.
1. (a) It is expressly agreed that the Assignee shall
have the following rights in the Policy:
(1) the right to surrender the Policy and to
receive the Policy cash value and any
dividend credits outstanding, but not in
excess of the greater of (i) the aggregate
premiums paid by the Assignee on the Policy
or (ii) the cash value of all paid-up
additions of the Policy purchased with Policy
dividends; and
(2) the right to receive from the death proceeds
of the Policy, and to elect an income
settlement option with respect thereto, an
amount equal to the greater of (i) the
aggregate premiums paid by the Assignee on
the Policy or (ii) the cash value (determined
immediately preceding the death of the last
to die of the individuals insured by the
Policy, namely, Herbert J. and Ann L. Siegel)
of all paid-up additions of the Policy
purchased with Policy dividends.
(3) the right to release this Assignment to the
Assignor or his assigns;
(b) It is expressly agreed that the Assignor shall not
(i) exercise the right to receive loans against
the Policy or (ii) exercise the right to surrender
or partially surrender the Policy and receive some
or all of the Policy cash value, without the
written consent of the Assignee.
(c) Except as provided in Paragraphs (a) and (b)
above, all other rights in the Policy, including
but not limited to the right to designate and
change the beneficiary of the Policy, are
expressly reserved to the Assignor and are
therefore excluded from this Assignment.
2. Any death proceeds of the Policy in excess of the
amount payable to the Assignee shall be paid by the
Insurer directly to the beneficiary named under the
Policy.
3. All provisions of this Assignment shall be binding upon
the executors, administrators, successors and assigns
of the Assignor.
4. All Policy options and designations in effect as of the
date of this Assignment shall remain in effect unless
specifically changed by this Assignment or by action
taken thereafter consistent with this Assignment.
5. The Insurer is hereby authorized to recognize the
Assignee's claim of right hereunder without
investigating the validity or amount thereof, the
giving of any notice, or the existence or amount of any
liabilities of the Assignor to the Assignee. Payment
by the Insurer of any or all death proceeds of the
Policy to the Assignee in reliance upon an affidavit of
any officer of the Assignee as to the aggregate
premiums paid by the Assignee shall be a full discharge
of the Insurer for such share of the death proceeds and
shall be binding on all parties claiming any interest
under the Policy.
Signed at New York, New York on January 6, 1994
(City and State) (Date)
Mary E. Davis William D. Siegel
Witness Signature of William D. Siegel,
Owner of Policy
ACCEPTED BY:
CHRIS-CRAFT INDUSTRIES, INC.
By: Brian C. Kelly
Title: General Counsel and Secretary
<PAGE>
Subassignment
FOR VALUE RECEIVED, Chris-Craft Industries, Inc., a
Delaware corporation ("CCI"), hereby assigns to BHC
Communications, Inc., a Delaware corporation, 767 Fifth
Avenue, New York, New York 10513 ("BHC"), 85% of CCI's
interest in and rights under the above instrument, including
the right to receive 85% of any amount that the Insurer
would be obligated to pay CCI pursuant to the above
instrument in absence of this Subassignment, and hereby
instructs the Insurer to pay BHC directly, concurrently with
any payment made by Insurer to CCI pursuant to the above
instrument, such amount as BHC shall be entitled to receive
pursuant to this Subassignment. For all purposes of the
above instrument (including paragraph 5), the term
"Assignee" shall refer to BHC and CCI, as their respective
interests may appear.
CHRIS-CRAFT INDUSTRIES, INC.
By: Brian C. Kelly
Title: General Counsel and Secretary
SPLIT-DOLLAR AGREEMENT
THIS AGREEMENT made and entered into as of this
6th day of January, 1994, by and between CHRIS-CRAFT
INDUSTRIES, INC., a Delaware corporation (hereinafter
referred to as the "Corporation"), and JOHN C. SIEGEL, an
individual residing at 2541 Filbert Street, San Francisco,
California 94123 (hereinafter referred to as the "Owner").
W I T N E S S E T H:
WHEREAS, HERBERT J. SIEGEL (the "Executive") is
now and for many years has been the chief executive officer
of the Corporation and has provided services essential for
and crucial to the success of the Corporation; and
WHEREAS, the Corporation wishes to recognize the
Executive's past services to the Corporation and desires to
provide an inducement for his continued employment; and
WHEREAS, the Executive wishes to provide life
insurance protection for members of his family under several
policies of life insurance (hereinafter referred to
collectively as the "Policies" and any one individually as a
"Policy"), insuring his life and the life of his wife
(hereinafter jointly referred to as the "Insureds"), which
Policies are described in Exhibit A attached hereto and
which Policies are issued by the insurance companies
identified in said Exhibit A (hereinafter referred to as
the "Insurers"); and
WHEREAS, the Corporation is willing to pay the
premiums due on the Policies for a period of fifteen (15)
years, under a split dollar arrangement, as an employment
benefit for the Executive, on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises
and the mutual promises contained herein, the parties hereto
agree as follows:
1. Purchase of Policies. The Owner will
contemporaneously purchase the Policies from the Insurers in
the total face amount of $15 million. The parties agree
that they will take all necessary action to cause the
Insurers to issue the Policies and shall take any further
action which may be necessary to cause the Policies to
conform to the provisions of this Agreement. The parties
agree that the rights and obligations of the parties hereto
in each Policy shall be subject to the terms and conditions
of this Agreement and to the collateral assignment filed
with the Insurer relating to such Policy.
2. Ownership of Policies. The Owner shall be
the sole and absolute owner of each Policy and may exercise
all ownership rights granted to the owner thereof by the
terms of such Policy, except to the extent the rights of the
Owner are specifically limited by this Agreement. Without
limiting the foregoing, the Owner shall have the right to
change the beneficiary and the right to exercise settlement
options with respect to each of the Policies.
3. Policy Dividends. All dividends declared on
the Policies shall be applied to purchase paid-up additional
insurance on the lives of the Insureds. The parties hereto
agree that the dividend election provisions of each of the
Policies shall conform to the provisions hereof.
4. Payment of Premiums.
(a) Subject to paragraph (b) of this Section
4, with respect to each of the first fifteen annual premium
payments for each Policy, the Corporation shall pay the full
amount specified in Exhibit B hereto to the respective
Insurers; provided, however, that the Corporation shall not
make a premium payment to the extent that such payment would
result in a Policy being classified as a modified endowment
contract under Section 7702A of the Internal Revenue Code of
1986, as amended, or any successor thereto. The Corporation
shall make each such payment on or before the due date of
the Policy premium, or within the grace period provided
therefore, and shall, upon request, promptly furnish the
Executive and the Owner evidence of timely payment of such
premiums. The Corporation shall annually furnish the
Executive with a statement of the amount of income
reportable by the Executive for federal and state income tax
purposes as a result of the insurance protection provided
the Owner.
(b) Notwithstanding paragraph (a), the
Executive during his lifetime, or the Owner after the
Executive's death, may notify the Corporation at any time
that he has made the revocable election to pay the annual
cost of current life insurance protection provided by the
Policy(ies). In the event that this election is made,
thirty (30) days prior to the due date of each Policy
premium, the Corporation shall notify the Executive or the
Owner, as applicable, of the exact amount due as a result of
such election, which shall be an amount equal to the then
current annual cost of life insurance on the joint lives of
the Insureds, measured by U.S. Life Table 38, while both are
alive, and thereafter measured by the lower of the PS 58
rate, set forth in Revenue Ruling 55-747 (or the
corresponding applicable provision of any future Revenue
Ruling), or the Insurer's then current published premium
rate for annually renewable term insurance for standard
risks. The Executive or the Owner, as applicable, shall pay
such required contribution to the Corporation prior to the
premium due date. If neither the Executive nor the Owner
makes such timely payment, the Corporation shall treat such
failure as a revocation of the election and shall make the
full premium payment, pursuant to paragraph (a).
(c) The Corporation shall not be obligated
to make any Policy premium payment beyond the first fifteen
annual premium payments for each Policy or, if earlier, the
death of the later to die of the Insureds.
5. Collateral Assignment. To secure the
repayment to the Corporation of its interest hereunder (as
described in Sections 7(b) and 9(a)), the Owner has,
contemporaneously herewith, assigned each Policy to the
Corporation as collateral, on a form acceptable for such
assignment by the Insurer under such Policy. The collateral
assignment of each Policy to the Corporation hereunder shall
not be terminated, altered or amended by the Owner, without
the express written consent of the Corporation. The parties
hereto agree to take all actions necessary to cause such
collateral assignments to conform to the provisions of this
Agreement. The Corporation agrees that it will not exercise
its right to surrender a Policy under a collateral
assignment except as provided in this Agreement. The
Corporation's rights in a Policy shall be strictly limited
to those rights specified herein and by the terms of the
collateral assignment of such Policy. Without limiting the
foregoing, the Corporation shall not have the right to
borrow any amount under any of the Policies.
6. Limitations on Owner's Rights in Policies.
Except as otherwise provided herein, the Owner shall not
borrow against, surrender or cancel any Policy, nor
terminate the dividend election thereof without, in any such
case, the express written consent of the Corporation.
7. Collection of Death Proceeds.
(a) Upon the death of the later to die of
the Insureds, the Corporation and the Owner shall cooperate
to take whatever action is necessary to collect the death
benefit provided under each Policy. Such cooperation shall
not be unreasonably withheld by either of the parties. When
the death benefits under all of the Policies have been
collected and paid as provided herein, this Agreement shall
terminate.
(b) Upon the death of the later to die of
the Insureds, the Corporation shall have the unqualified
right to receive a portion of the death benefit under each
Policy equal to the greater of (i) the cumulative premiums
paid by the Corporation on such Policy or (ii) the cash
value (determined immediately preceding the death of the
later to die of the Insureds) of all paid-up additions of
such Policy which were purchased with Policy dividends. The
balance of the death benefit provided under each Policy, if
any, shall be paid directly to the Owner in the manner and
in the amount or amounts provided in the beneficiary
designation provision of the Policy. In no event shall the
amount payable to the Corporation hereunder with respect to
any Policy exceed the Policy proceeds payable as a result of
the maturity of the Policy as a death claim. No amount
shall be paid from such death benefit to the Owner until the
full amount due the Corporation hereunder has been paid.
(c) Notwithstanding any provision hereof to
the contrary, in the event that for any reason whatsoever no
death benefit shall be payable under a Policy upon the death
of the later to die of the Insureds, and, in lieu thereof,
the Insurer shall refund all or any part of the premiums
paid for such Policy, the Corporation shall have the
unqualified right to receive its cumulative premiums paid
for such Policy, and the balance of the refund shall be
payable to the Owner.
8. Termination of the Agreement During the
Lifetime of the Insureds.
(a) This Agreement shall terminate, without
notice, with respect to all of the Policies, while either of
the Insureds is alive, upon the total cessation of the
Corporation's business or upon the bankruptcy, receivership,
or dissolution of the Corporation.
(b) The termination of the Executive's
employment with the Corporation for any reason shall not
result in the termination of this Agreement.
9. Disposition of a Policy on Termination of the
Agreement During the Lifetime of the Insureds.
(a) For sixty (60) days after the date of
the termination of this Agreement during the lifetime of the
Insureds with respect to one or more of the Policies, the
Owner shall have the option of obtaining the release of the
collateral assignment of such Policy(ies) to the
Corporation. To obtain such release, the Owner shall repay
to the Corporation, with respect to a Policy, the lesser of
(i) the cash value of the Policy or (ii) the greater of (A)
the cumulative premiums paid by the Corporation for such
Policy or (B) the cash value of all paid-up additions of
such Policy purchased with Policy dividends. In order to
make such payment the Owner may, but need not, obtain a
Policy loan on such Policy, which loan shall be disbursed
directly to the Corporation. Upon receipt of such payment,
the Corporation shall release the collateral assignment of
the Policy, by the execution and delivery of an appropriate
instrument of release.
(b) If, with respect to any Policy, the
Owner fails to exercise the option described in paragraph
(a) within such sixty (60) day period, the Corporation may
enforce its right under the collateral assignment to
surrender the Policy and be repaid the amount due to the
Corporation pursuant to paragraph (a) from the cash
surrender value of such Policy. Thereafter, the Corporation
shall have no further interest in and to the Policy, either
under the terms thereof or under this Agreement.
10. Insurer Not a Party. Each Insurer shall be
fully discharged from its obligations under its Policy by
payment of the Policy death benefit to the beneficiary or
beneficiaries named in the Policy, subject to the terms and
conditions of the collateral assignment executed by the
Owner and filed with the Insurer in connection therewith.
In no event shall an Insurer be considered a party to this
Agreement, or any modification or amendment hereof. No
provision of this Agreement, however amended or modified,
shall in any way be construed as enlarging, changing,
varying, or in any other way affecting the obligations of
any Insurer as expressly provided in the Policies, except
insofar as the provisions hereof are incorporated by the
collateral assignment executed by the Owner and filed with
the Insurer in connection herewith.
11. Named Fiduciary, Determination of Benefits,
Claims Procedure and Administration.
(a) The Corporation is hereby designated as
the named fiduciary under this Agreement. The named
fiduciary shall have authority to control and manage the
operation and administration of this Agreement and shall be
responsible for establishing and carrying out a funding
policy and method consistent with the objectives of this
Agreement.
(b) A person who believes that he or she is
being denied a benefit to which he or she is entitled under
this Agreement (hereinafter referred to as a "Claimant") may
file a written request for such benefit with the
Corporation, setting forth his or her claim. Upon receipt
of a claim, the Corporation shall advise the Claimant that a
reply will be forthcoming within ninety (90) days and shall,
in fact, deliver such reply within such period. The
Corporation may, however, extend the reply period for an
additional ninety (90) days for reasonable cause.
(c) If a claim is denied, in whole or in
part, the Corporation shall deliver to the Claimant a
written opinion, using language calculated to be understood
by the Claimant, setting forth: (1) the specific reason or
reasons for such denial; (2) the specific reference to
pertinent provisions of this Agreement on which such denial
is based; (3) a description of any additional material or
information necessary for the Claimant to perfect his or her
claim and an explanation of why such material or such
information is necessary; (4) appropriate information as to
the steps to be taken if the Claimant wishes to submit the
claim for review; (5) the time limit for requesting a
review; and (6) the time limit for such review to take
place.
(d) Within sixty (60) days after the receipt
by the Claimant of the written opinion described above, the
Claimant may request in writing that the Secretary of the
Corporation review the determination of the Corporation.
Such request must be addressed to the Secretary of the
Corporation, at its then principal place of business. The
Claimant or his or her duly authorized representative may,
but need not, review the pertinent documents and submit
issues and comments in writing for consideration by the
Corporation. If the Claimant does not request a review of
the Corporation's determination by the Secretary of the
Corporation within such sixty (60) day period, the Claimant
shall be barred and estopped from challenging the
Corporation's determination.
(e) Within sixty (60) days of receipt of a
request for review, the Secretary shall review the
Corporation's determination. After considering all
materials presented by the Claimant, the Secretary shall
render a written opinion, written in a manner calculated to
be understood by the Claimant, setting forth the specific
reasons for the decision and containing specific references
to the pertinent provisions of this Agreement on which the
decision is based. If special circumstances require that
the sixty (60) day time period be extended, the Secretary
shall so notify the Claimant and shall render the decision
as soon as possible, but no later than one hundred twenty
(120) days after receipt of the request for review.
12. Amendment. This Agreement may not be
amended, altered or modified, except by a written instrument
signed by the parties hereto, or their respective successors
or assigns, and may not be otherwise terminated except as
provided herein.
13. Assignment. Each of the parties to this
Agreement may assign his or its respective rights hereunder.
The Corporation may not transfer its obligations hereunder
to any individual or entity other than BHC Communications,
Inc. or another of the Corporation's affiliates, without the
written consent of the Owner.
14. Binding Effect. This Agreement shall be
binding upon and inure to the benefit of the Corporation and
its successors and assigns, and the Executive, the Owner,
and their respective successors, assigns, heirs, executors,
administrators and beneficiaries.
15. Notice. All notices, requests, consents and
other communications, required or permitted to be given
hereunder, shall be in writing and shall be deemed to have
been duly given if delivered personally or on the third
business day after having been mailed in New York, New York,
first-class, postage prepaid, by registered or certified
mail, return receipt requested, as follows (or to such other
address as either party shall designate by notice in writing
to the other in accordance herewith):
If to Corporation:
Chris-Craft Industries, Inc.
767 Fifth Avenue
New York, New York 10153
Attention: Board of Directors
If to Owner, to him at his address set forth on
the personnel records of the Corporation.
16. Governing Law. This Agreement and the rights
of the parties hereunder shall be governed by and construed
in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement, in duplicate, as of the day and
year first above written.
CHRIS-CRAFT INDUSTRIES, INC.
By: BRIAN C. KELLY
Title: General Counsel
and Secretary
JOHN C. SIEGEL
John C. Siegel
Acknowledged By:
HERBERT J. SIEGEL
Herbert J. Siegel
<PAGE>
EXHIBIT A
The following life insurance policies are subject
to the attached Split-Dollar Agreement:
1. Insurer New York Life Insurance Company
Insured Herbert J. Siegel and Ann L. Siegel
Policy Number XXXXXXXXXX
Face Amount $10,000,000
Dividend Option Paid-up Additions
Date of Issue 12-14-93
2. Insurer John Hancock Life Insurance Company
Insured Herbert J. Siegel and Ann L. Siegel
Policy Number XXXXXXXXXX
Face Amount $5,000,000
Dividend Option Paid-up Additions
Date of Issue 12-14-93
<PAGE>
EXHIBIT B
Schedule of annual premium payments to be made by the
Corporation on the New York Life Policy:
Year 1 - $462,680
Year 2 - $462,680
Year 3 - $462,680
Year 4 - $432,680
Year 5 - $432,680
Year 6 - $432,680
Year 7 - $432,680
Year 8 - $432,680
Year 9 - $239,180
Year 10 - $239,180
Year 11 - $239,180
Year 12 - $239,180
Year 13 - $239,180
Year 14 - $239,180
Year 15 - $239,180
Schedule of annual premium payments to be made by the
Corporation on the John Hancock Policy:
Year 1 - $227,200
Year 2 - $227,200
Year 3 - $227,200
Year 4 - $214,700
Year 5 - $214,700
Year 6 - $214,700
Year 7 - $214,700
Year 8 - $214,700
Year 9 - $214,700
Year 10 - $214,700
Year 11 - $214,700
Year 12 - $214,700
Year 13 - $214,700
Year 14 - $214,700
Year 15 - $214,700
<PAGE>
SPLIT-DOLLAR COLLATERAL ASSIGNMENT
FOR VALUE RECEIVED, the undersigned owner
(hereafter the "Assignor") assigns, transfers and sets over
to CHRIS-CRAFT INDUSTRIES, INC. (hereafter the "Assignee"),
its successors or assigns, certain rights in and to policy
number 45 088 935 (hereafter the "Policy"), and any and all
supplemental benefit riders or agreements issued under said
Policy, issued by the New York Life Insurance Company
(hereafter the "Insurer"), subject to all the terms and
conditions of the Policy and this Assignment and to all
superior liens, if any, which the Insurer or any prior
Assignee may have against the Policy. The Assignor by this
instrument and the Assignee by acceptance of the Assignment
jointly and severally agree to the conditions and provisions
hereof. This Assignment is made and the Policy is to be
held as collateral security for any and all liabilities of
the Assignor (or any of Assignor's successors or assigns) to
the Assignee, either now existing or that may hereafter
arise under the Split-Dollar Agreement, dated as of January
6, 1994, with regard to the Policy, which is annexed hereto
and incorporated herein by reference.
1. (a) It is expressly agreed that the Assignee shall
have the following rights in the Policy:
(1) the right to surrender the Policy and to
receive the Policy cash value and any
dividend credits outstanding, but not in
excess of the greater of (i) the aggregate
premiums paid by the Assignee on the Policy
or (ii) the cash value of all paid-up
additions of the Policy purchased with Policy
dividends; and
(2) the right to receive from the death proceeds
of the Policy, and to elect an income
settlement option with respect thereto, an
amount equal to the greater of (i) the
aggregate premiums paid by the Assignee on
the Policy or (ii) the cash value (determined
immediately preceding the death of the last
to die of the individuals insured by the
Policy, namely, Herbert J. and Ann L. Siegel)
of all paid-up additions of the Policy
purchased with Policy dividends.
(3) the right to release this Assignment to the
Assignor or his assigns;
(b) It is expressly agreed that the Assignor shall not
(i) exercise the right to receive loans against
the Policy or (ii) exercise the right to surrender
or partially surrender the Policy and receive some
or all of the Policy cash value, without the
written consent of the Assignee.
(c) Except as provided in Paragraphs (a) and (b)
above, all other rights in the Policy, including
but not limited to the right to designate and
change the beneficiary of the Policy, are
expressly reserved to the Assignor and are
therefore excluded from this Assignment.
2. Any death proceeds of the Policy in excess of the
amount payable to the Assignee shall be paid by the
Insurer directly to the beneficiary named under the
Policy.
3. All provisions of this Assignment shall be binding upon
the executors, administrators, successors and assigns
of the Assignor.
4. All Policy options and designations in effect as of the
date of this Assignment shall remain in effect unless
specifically changed by this Assignment or by action
taken thereafter consistent with this Assignment.
5. The Insurer is hereby authorized to recognize the
Assignee's claim of right hereunder without
investigating the validity or amount thereof, the
giving of any notice, or the existence or amount of any
liabilities of the Assignor to the Assignee. Payment
by the Insurer of any or all death proceeds of the
Policy to the Assignee in reliance upon an affidavit of
any officer of the Assignee as to the aggregate
premiums paid by the Assignee shall be a full discharge
of the Insurer for such share of the death proceeds and
shall be binding on all parties claiming any interest
under the Policy.
Signed at Carlsbad, CA on January 6, 1994
(City and State) (Date)
Theresa Lemmel John C. Siegel
Witness Signature of John C. Siegel,
Owner of Policy
ACCEPTED BY:
CHRIS-CRAFT INDUSTRIES, INC.
By: Brian C. Kelly
Title: General Counsel and Secretary
<PAGE>
Subassignment
FOR VALUE RECEIVED, Chris-Craft Industries, Inc., a
Delaware corporation ("CCI"), hereby assigns to BHC
Communications, Inc., a Delaware corporation, 767 Fifth
Avenue, New York, New York 10513 ("BHC"), 85% of CCI's
interest in and rights under the above instrument, including
the right to receive 85% of any amount that the Insurer
would be obligated to pay CCI pursuant to the above
instrument in absence of this Subassignment, and hereby
instructs the Insurer to pay BHC directly, concurrently with
any payment made by Insurer to CCI pursuant to the above
instrument, such amount as BHC shall be entitled to receive
pursuant to this Subassignment. For all purposes of the
above instrument (including paragraph 5), the term
"Assignee" shall refer to BHC and CCI, as their respective
interests may appear.
CHRIS-CRAFT INDUSTRIES, INC.
By: Brian C. Kelly
Title: General Counsel and Secretary
EMPLOYMENT AGREEMENT
AGREEMENT made as of January 1, 1994 between
CHRIS-CRAFT INDUSTRIES, INC., a Delaware corporation
("Chris-Craft"), and EVAN C THOMPSON (the "Executive").
This Agreement supersedes the Agreement made as of
October 1, 1989 between Chris-Craft and the Executive.
The Executive is now, and for many years has been,
Executive Vice President and President of the Television
Division of Chris-Craft. Chris-Craft wishes to secure the
continued services of the Executive as its Executive Vice
President and President of its Television Division for an
additional extended period. In addition, because of the
position the Executive holds with Chris-Craft and the
position that he will hold during the term of his full-time
employment under this Agreement, Chris-Craft wishes to
secure the further services of the Executive as a consultant
to Chris-Craft, and wishes to insure that the Executive will
refrain from competing with Chris-Craft, after the
termination of his full-time employment.
In consideration of the covenants and agreements
herein contained, the parties agree as follows:
1. Employment; Term
1.1 Chris-Craft shall continue to employ the
Executive, and the Executive shall continue to serve, as
Executive Vice President and President, Television Division
of Chris-Craft during the Employment Term (as defined in
Section 1.2).
1.2 The term of the Executive's employment
under Section 1.1 of this Agreement (the "Employment Term")
shall commence on January 1, 1994 and end on December 31,
1998, unless extended as provided in this Section 1.2 or
Section 8 or sooner terminated pursuant to the provisions of
Section 9 or Section 10. On each of December 31, 1996 and
December 31, 1997, the Employment Term shall be
automatically extended for one additional year (so that, on
each such December 31, the Employment Term shall have three
years to run) without further action by the parties, unless
Executive shall have served written notice upon Chris-Craft
prior to December 31, 1996, or prior to December 31, 1997,
as the case may be, that such extension shall not take
place. On December 31, 1998, the Employment Term shall be
automatically extended for one additional year without
further action by the parties, unless one of the parties
shall have served written notice upon the other party prior
to October 1, 1998 that such extension shall not take place.
If a notice that an extension shall not take place is
served, the Employment Term shall not, thereafter, be
extended.
2. Duties and Authority.
2.1 During the Employment Term, the
Executive shall devote his full business time and energies
to the business and affairs of Chris-Craft and shall not
accept other employment or permit such personal business
interests as he may have to interfere with the performance
of his duties hereunder. Executive's services for Chris-
Craft shall include all executive services and duties
commensurate with his position at Chris-Craft that may be
requested of him for or on behalf of any television
broadcasting or programming entity owned or operated by
Chris-Craft or any affiliate of Chris-Craft ("Affiliate"),
as defined in Rule 12b-2 of the Securities Exchange Act of
1934 (the "Exchange Act"). The Executive agrees, during the
Employment Term, to use his best efforts, skill and
abilities to promote Chris-Craft's interests; to serve as a
director and officer of Chris-Craft and any of its domestic
subsidiary corporations if elected by the Board of Directors
or stockholders of Chris-Craft or any such subsidiary
corporation; and to perform such duties (consistent with his
status set forth below in this Section 2) as may be assigned
to him by the Chief Executive Officer or Board of Directors
of Chris-Craft.
2.2 Subject only to the direction and
control of Chris-Craft's Chief Executive Officer and Chris-
Craft's Board of Directors (which direction and control
shall be such as is customarily exercised over an executive
vice president), the Executive shall perform all services
and duties necessary or appropriate for the management of
Chris-Craft's Television Division business.
2.3 Throughout the Employment Term, the
Executive shall be elected to, and shall continue in, the
office denominated that of Executive Vice President of
Chris-Craft and President, Television Division, and shall
continue to perform on behalf of Chris-Craft substantially
the same functions, and have substantially the same
authority, duties and responsibilities, as on the date
hereof, and, except as provided in Sections 2.1 and 2.2,
Chris-Craft shall not confer on any other officer or
employee authority, responsibility or power superior or
equal to the authority, responsibility or power vested in
the Executive hereunder.
3. Location.
During the Employment Term, the Executive's
services under this Agreement shall be performed principally
in Beverly Hills, California, or elsewhere in the
Metropolitan Los Angeles area. The parties, however,
acknowledge and agree that the nature of the Executive's
duties hereunder shall require reasonable domestic and
international travel from time to time.
4. Cash Compensation.
4.1 Base Salary. During the Employment
Term, Chris-Craft shall pay to the Executive, in monthly or
more frequent installments in accordance with Chris-Craft's
regular payroll practices for senior executives, a base
salary of not less than $950,000 per annum; provided,
however, that such minimum base salary shall be adjusted
upward, as of January 1, 1995, and as of each successive
January 1 to the end of the Employment Term, in proportion
to any increase in the Consumer Price Index, as defined in
Section 4.5, between the December levels of the two
immediately preceding years ("COLA Adjustment"). Each such
adjustment shall be made retroactively when the Consumer
Price Index for the December next preceding the date of such
adjustment becomes available. It is understood that Chris-
Craft may, at any time, in the discretion of its Board of
Directors increase, but not decrease, the Executive's base
salary. In the event that the Executive's base salary is
adjusted by the Board pursuant to the last preceding
sentence, the new base salary shall be adjusted upward, as
of each following January 1, in proportion to any increase
in the Consumer Price Index from the effective date of the
last previous adjustment by the Board.
4.2 Section 162(m) Limit.
4.2.1 In no event shall the sum of the
Executive's base salary and other Remuneration (as defined
in Section 4.2.2) for any calendar year exceed the Section
162(m) Limit (as defined in Section 4.2.2). Chris-Craft
shall, to the extent foreseeable, reduce each regular cash
compensation payment in any year by the proportion that (a)
the excess of (i) the sum of all such regular cash
compensation payments for such year over (ii) the Section
162(m) Limit bears to (b) the sum of all such regular cash
compensation payments for such year and shall reduce or omit
other cash compensation payments) (other than Excluded
Remuneration) to the extent same would cause Remuneration in
such year to exceed the Section 162(m) Limit, provided that
in no event will cash compensation payable to the Executive
during any calendar year be reduced below $750,000 (the
"Minimum Annual Payment").
4.2.2 For purposes of this Agreement,
"Remuneration" shall mean "applicable employee remuneration"
as defined in Section 162(m) of the Internal Revenue Code of
1986, as amended from time to time (the "Code"), or any
successor or similar provision, which is paid or incurred
with respect to the Executive by Chris-Craft or any Chris-
Craft Affiliate, other than Excluded Remuneration; "Excluded
Remuneration" shall mean any Gross-Up Payment or other
payment required under Section 7 or any forgiveness of
indebtedness under Section 7, or any payment required under
Sections 10.1, 10.2 or 10.4; "Section 162(m) Limit" shall
mean $1,000,000, subject to adjustment as provided in this
Section 4.2.2; and for purposes of this Section 4.2 only,
"Chris-Craft Affiliate" shall mean any corporation which is
a member of the same "controlled group" as Chris-Craft
within the meaning of Section 414(b) of the Code, except
that for this purpose Section 1563 of the Code shall be
applied by substituting "50 percent" for "80 percent". If
one or more amendments to Section 162(m) of the Code or any
successor or similar provision shall change the amount of
Remuneration for a year that is deductible by Chris-Craft or
any Chris-Craft Affiliate for Federal income tax purposes, a
corresponding change shall be made to the Section 162(m)
Limit for purposes of this Agreement for all years to which
any such amendment shall be applicable. Unless and until
there is a Change in Law with respect to a taxable year of
Chris-Craft, Chris-Craft and the Executive acknowledge and
agree that subject to Stockholder Approval as defined in
Section 4.4, Remuneration shall not include any amounts
payable to the Executive pursuant to Section 4.4 hereof, and
any amounts includible in the Executive's taxable income
with respect to amounts described in Section 6.1(d). For
purposes of the preceding sentence, "Change in Law" shall
mean an amendment to Section 162(m), or the issuance or
revision of one or more judicial decisions or administrative
rules, regulations or other pronouncements, following the
date hereof which, in the written legal opinion of counsel
to Chris-Craft, will more likely than not result in the
inclusion of the amount in question in "applicable employee
remuneration" as defined in Section 162(m) of the Code.
4.2.3 The provisions of this Section 4.2
shall be interpreted in a manner consistent with the
intention of the parties that a deduction not be disallowed
to Chris-Craft or any Chris-Craft Affiliate for Federal
income tax purposes with respect to any Remuneration payable
to the Executive under this Agreement by reason of Code
Section 162(m) (other than subparagraph (4)(F) thereof) or
any successor or similar provision (except for Excluded
Remuneration) and the Minimum Annual Payment.
4.3 Deferred Compensation. During the
Employment Term, Chris-Craft shall credit to the Executive's
Account (as defined in Section 4.3.1) the amount specified
in Section 4.3.2.
4.3.1 Chris-Craft shall maintain, on its
books, a special account, comprised of two sub-accounts,
Subaccount A and Subaccount B, with respect to the Executive
(the "Account"), in accordance with the terms of this
Agreement, until Executive shall have been paid all amounts
required by Section 4.3.3 to be paid to Executive with
respect thereto. Prior to December 1 of each year, Chris-
Craft's General Counsel and Secretary shall notify Executive
of the option to select the periods to which compensation
payable pursuant to this Section 4.3 will be deferred and,
within fifteen (15) days following receipt of such notice,
Executive shall notify Chris-Craft's Vice President --
Finance, if Executive wishes that the Deferred Compensation
(as defined in clause (a) of the first sentence of Section
4.3.2) be credited to Subaccount A, Subaccount B, or a
combination of both Subaccount A and Subaccount B (any such
combination to be specified in a manner that will not
prevent Chris-Craft's Vice President-Finance from computing
on a monthly basis the amounts to be credited to each
subaccount in accordance with Section 4.3.2). Absent such
notice from Executive, Deferred Compensation for such year
shall be credited to Subaccount B. Deferred Compensation
for 1994 shall be credited to Subaccount B.
4.3.2 During each year of the Employment
Term, Chris-Craft shall credit, as of the end of each month,
(a) to the appropriate Subaccount, an amount equal to the
sum of (i) $20,833.33, subject to COLA Adjustment, plus (ii)
the amounts by which all cash compensation payments or
distributions during such month shall have been reduced or
omitted pursuant to the last sentence of Section 4.2.1 (the
"Deferred Compensation"); and (b) interest on each
Subaccount balance as of the end of the preceding month,
computed at a rate to be adjusted as of the last business
day of each calendar quarter to equal the yield, as of the
last day of such quarter, as reported in The Wall Street
Journal, on U.S. Treasury Notes maturing in the month that
is five years after the last month of such quarter (the
"Interest Rate"). Amounts credited to the Account,
excluding interest, shall be deemed compensation for the
year credited, for purposes of determining benefits
respecting each of Chris-Craft's qualified employee benefit
plans under Chris-Craft's Benefit Equalization Plan (the
"BEP"). If no yield for such notes is so published as of
the last day of a particular quarter, there shall be
substituted the average of the yields so published for the
months next preceding and following. If The Wall Street
Journal is not published on the last day of a particular
quarter, there shall be substituted the appropriate yield
reported on the last previous day on which The Wall Street
Journal was published. Following the Employment Term,
Chris-Craft shall credit to Subaccount B, as of the last day
of each month (based each month on a 30-day month and a 360-
day year), interest on such Subaccount balance as of such
date, computed at the Interest Rate.
4.3.3 On the January 15 first-occurring
following the year in which expiration or termination of the
Employment Term shall have occurred, Chris-Craft shall pay
to the Executive a lump sum equal to the Subaccount A
balance as of such January 15 (including interest accrued in
accordance with Section 4.3.2 at the Interest Rate used for
the last quarter of the previous year through such January
15), and Chris-Craft will have no further obligation to make
any payment to the Executive with respect to Subaccount A.
On such January 15, Chris-Craft also shall pay to the
Executive an amount equal to one-fifth of the Subaccount B
balance as of such January 15 (including interest accrued
through such January 15) (the "First Payment"), and the
balance of such Subaccount shall be reduced by the amount of
such First Payment. On each succeeding January 15, until
Chris-Craft shall have made five payments with respect to
Subaccount B (including the First Payment) pursuant to this
Section 4.3.3, Chris-Craft shall pay to the Executive a sum
equal to the amount of the First Payment, plus interest
credited to Subaccount B through the date of such payment,
from the first day after the date of the immediately
preceding payment, and the balance shall be reduced by the
amount of such sum, such that the entire Amount of
Subaccount B plus any interest thereon shall have been paid
to the Executive by the fourth anniversary of the First
Payment. In the event that for tax purposes Chris-Craft
treats any portion of Subaccount B in a manner consistent
with the notion that Executive should include any unpaid
amount (determined without regard to this sentence) in
taxable income, Chris-Craft shall pay such amount to
Executive at the time Executive would be treated as having
received such income.
4.4 Bonus.
4.4.1 (a) In addition to his base salary
and the deferred amounts referred to in Section 4.3.2 above,
the Executive shall be entitled to receive with respect to
each fiscal year of Chris-Craft, or portion thereof, during
the Employment Term, a bonus equal to 1% of the amount up to
$50,000,000 by which Chris-Craft's "TV Broadcast Cash Flow"
(as defined in Section 4.4.2) for the fiscal year in
question exceeds $20,000,000 (the "Low Base Amount"), and 2%
of the amount by which TV Broadcast Cash Flow exceeds
$50,000,000 (the "High Base Amount") (each of the Low Base
Amount and the High Base Amount, a "Base Amount").
(b) If Chris-Craft shall acquire,
in one or more transactions, additional television stations
having aggregate Mean TV Broadcast Cash Flow (as defined
below) exceeding $10,000,000, the Proforma Amount shall be
increased, or if Chris-Craft shall dispose of a television
station having Mean TV Broadcast Cash Flow exceeding
$5,000,000, the Pro Forma Amount shall be decreased, by (1)
for the year during which the acquisition or disposition
occurs, an amount equal to the Mean TV Broadcast Cash Flow
of the television station (or stations) so acquired or
disposed of, multiplied by a fraction, the numerator of
which is the number of days remaining in such year following
such acquisition or disposition and the denominator of which
is 365, and (2) for any other year, an amount equal to the
Mean TV Broadcast Cash Flow of the television station (or
stations) so acquired or disposed of, and, in such event,
Executive's bonus, shall be calculated solely pursuant to
whichever of the following two formulae as shall be
applicable (but shall not be less than zero for any year):
i) If Chris-Craft TV
Broadcast Cash Flow for the year in question shall exceed
the Pro Forma Amount, the bonus shall be equal to:
300,000 + .02 [((High Base Amount/Pro Forma Amount) x (Chris-Craft TV Broadcast
Cash Flow)) - High Base Amount]
ii) If Chris-Craft TV
Broadcast Cash Flow for the fiscal year shall be less than
the Pro Forma Amount, the bonus shall be equal to:
.01 x [((High Base Amount/Pro Forma Amount) x (Chris-Craft TV Broadcast Cash
Flow)) - Low Base Amount]
(c) The Board of Directors will
consider adjusting the base salary, the Base Amounts, and if
applicable, the Pro Forma Amount, or the percentages or
formulae used to calculate the bonus, if, and at such time
as, Chris-Craft shall own ten or more television stations or
the Executive shall have chief operating responsibility for
a business owned by Chris-Craft that derives revenues
(determined in accordance with generally accepted accounting
principles) exceeding $25,000,000 other than from television
broadcasting. Any such adjustment shall be determined and
approved in accordance with the procedures set forth in
Section 162(m)(4)(C) of the Code or any similar or successor
provision. In the event such determination and approval is
not obtained, any adjustment shall be treated as Deferred
Compensation payable in accordance with Section 4.3.2.
(d) Subject to the approval of the
stockholders of each of Chris-Craft and BHC Communications,
Inc. at their respective 1994 annual meetings ("Stockholder
Approval"), the bonus shall be paid to Executive as soon as
practicable, but not later than March 31 of the year
following the end of each such fiscal year. In the event
Stockholder Approval is not obtained, the bonus amounts
shall be treated as Deferred Compensation payable in
accordance with Section 4.3.2. The amount of the bonus
payable with respect to any fiscal year that includes but
does not end on the last day of the Employment Term shall be
determined by multiplying the bonus which would have been
payable with respect to the whole of such fiscal year (if
the whole of such fiscal year were within the Employment
Term) by a fraction, the numerator of which is the number of
days of such year included in the Employment Term and the
denominator of which is 365.
4.4.2 As used in this Section 4.4, the
term "TV Broadcast Cash Flow" shall mean operating income
plus depreciation and amortization of good will and
programming contracts, minus payments on programming
contracts as such items shall be determined in accordance
with generally accepted accounting principles; "Chris-Craft
TV Broadcast Cash Flow" for any year shall mean the TV
Broadcast Cash Flow of television stations owned by Chris-
Craft or any Affiliate of Chris-Craft during any portion of
such year; "Mean TV Broadcast Cash Flow" shall mean the mean
TV Broadcast Cash Flow of a television station for the three
full fiscal years of such television station prior to
acquisition or disposition by Chris-Craft; and, until
increased or decreased pursuant to Section 4.4.1(b), the
"Pro Forma Amount" shall equal the High Base Amount.
4.5 Consumer Price Index. The words
"Consumer Price Index," as used in this Agreement shall mean
the Consumer Price Index for All Urban Consumers, U.S. City
Average, All Items (1982-84=100), as reported by the Bureau
of Labor Statistics of the U.S. Department of Labor. In the
event that this Consumer Price Index shall be superseded or
shall be published by a different agency, then the
superseding index shall be substituted for this Consumer
Price Index in such a manner as to implement the intent of
this Agreement that the Executive's base salary and Deferred
Compensation shall be adjusted annually, beginning as of
January 1, 1995, so that the purchasing power thereof shall
be maintained at a level at least equivalent to the
purchasing power thereof at January 1, 1994.
5. Expenses.
In addition to the compensation provided in
Section 4 and in Section 11, Chris-Craft will pay or
reimburse the Executive for all reasonable expenses actually
incurred or paid by him during the Employment Term or the
Consulting Term (as defined in Section 11) in the
performance of his services hereunder upon presentation of
expense statements, vouchers, or such other supporting
information as Chris-Craft may customarily require of its
senior executives.
6. Additional Benefits.
6.1 During the Employment Term:
(a) The Executive will be entitled
to reasonable annual vacation periods, not less than an
aggregate of six weeks in each calendar year, with full pay
and allowances.
(b) The Executive will be eligible
for sick leave in accordance with Chris-Craft's customary
practice for senior executives.
(c) The Executive will be entitled
to participate in any insurance, pension, profit-sharing,
stock option, stock purchase or other benefit plan of Chris-
Craft now existing or hereafter adopted for the benefit of
the employees generally or of the executives of Chris-Craft.
(d) Upon approval of a new stock
option plan by Chris-Craft stockholders at their 1994 annual
meeting, Chris-Craft shall grant the Executive a 10-year
option covering 200,000 shares that shall be exercisable
during the Employment Term and Consulting Term.
(e) Chris-Craft shall match the
Executive's contributions (including any contribution by any
trust of which the Executive is the grantor) to recognized
charities, during each year of the Employment Term, in an
amount equal to the sum of (i) $100,000, plus (ii) the
amount by which (x) the product obtained by multiplying
$100,000 by the number of previous years in which this
Agreement shall have been in effect shall exceed (y) the
total amount of all matching contributions made by Chris-
Craft pursuant to this sentence in such previous years.
Matching contributions made by Chris-Craft pursuant hereto
shall be in addition to any contributions made to match
Executive's contributions under any other charitable gift
matching program generally applicable with respect to
contributions made by employees or directors of Chris-Craft
or any of its subsidiaries.
(f) The Executive shall be
entitled to such additional benefits as may be granted to
him from time to time by the Board of Directors of Chris-
Craft.
6.2 No payment or benefit made or provided
under this Agreement shall be deemed to constitute payment
to the Executive, his legal representatives or beneficiaries
in lieu of, or in reduction of, any benefit or payment under
an insurance, pension, profit-sharing or other benefit plan,
and no payment under any such plan shall reduce any payment
or benefit due under this Agreement.
7. Certain Additional Payments by Chris-Craft
7.1 Anything in this Agreement to the
contrary notwithstanding, in the event it shall be
determined that any payment, distribution or transfer by
Chris-Craft or any Affiliate or other event occurring with
respect to the Executive and Chris-Craft for the Executive's
benefit (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or
otherwise (including pursuant to any of Chris-Craft's
benefit plans)), determined without regard to any additional
payment required under this Section 7 (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the
Code (and any successor provision and any similar provision
of state or local income tax law) (collectively, "Section
4999"), or any interest or penalty is incurred by the
Executive with respect to such excise tax (such excise tax,
together with any such interest or penalty, hereinafter
collectively to be referred to as the "Excise Tax"), then
the Executive shall be entitled to receive or have paid to
the Internal Revenue Service or other appropriate authority
(and any relevant state or local authority) ("IRS") on his
behalf an additional payment (a "Gross-Up Payment") in an
amount equal to the sum of (a) the Excise Tax plus (b) all
other taxes, penalties and interest (including any excise
tax imposed by Section 4999) paid or payable by Executive on
account of the operation of this Section 7, such that, after
payment by Executive of all such other taxes (including any
interest or penalty imposed with respect to such taxes) and
any Excise Tax imposed upon the Gross-Up Payment, Executive
shall be in the same position as he would have been had no
Excise Tax been imposed upon the Payments.
7.1.1 Subject to the provisions of
Section 7.3, all determinations required to be made under
this Section 7, including whether and when a Gross-Up
Payment is required, the amount of such Gross-Up Payment,
and the assumptions to be utilized in arriving at such
determination, shall be made by Price Waterhouse or any
other nationally recognized accounting firm (the "Accounting
Firm") that shall be Chris-Craft's outside auditors at the
time of such determination, which Accounting Firm shall
provide detailed supporting calculations both to the
Executive and Chris-Craft within 15 business days of the
receipt of notice from Chris-Craft or the Executive that
there has been a Payment that the person giving notice
believes may be subject to the Excise Tax, or such earlier
time as shall be requested by Chris-Craft. All fees and
expenses of the Accounting Firm shall be borne solely by
Chris-Craft. Any Gross-Up Payment, as determined pursuant
to this Section 7, shall be paid by Chris-Craft to the IRS
on the Executive's behalf within five business days after
the receipt of the Accounting Firm's determination. If the
Accounting Firm shall determine that no Excise Tax is
payable by the Executive, it shall furnish to the Executive
written advice that failure to report the Excise Tax on the
Executive's applicable federal income tax return would not
be reasonably likely to result in the imposition of a
penalty for fraud, negligence, or disregard of rules or
regulations. Any determination by the Accounting Firm shall
be binding upon Chris-Craft and the Executive in determining
whether a Gross-Up Payment is required or the amount thereof
(subject to Section 7.1.2 and 7.2), in the absence of
material mathematical or legal error.
7.1.2 As a result of uncertainty in the
application of Section 4999 of the Code that may exist at
the time of the initial determination by the Accounting
Firm, it may be possible that in making the calculations
required to be made hereunder, the Accounting Firm shall
determine that a Gross-Up Payment need not be made that
properly should be made ("Underpayment") or that a Gross-Up
Payment not properly needed to be made should be made
("Overpayment"). In the event that Chris-Craft shall
exhaust or fail to adequately pursue its remedies pursuant
to Section 7.2, and the Executive thereafter shall be
required to make a payment of any Excise Tax, the Accounting
Firm shall determine the amount of the Underpayment that
occurred, and Chris-Craft shall promptly pay the amount
thereof to the IRS on the Executive's behalf. In the event
that the Accounting Firm shall determine that an Overpayment
was made, any such Overpayment shall be treated for all
purposes as a loan to the Executive with interest at the
applicable Federal rate provided for in Section 1274(d) of
the Code; provided, however, that the amount to be repaid by
the Executive to Chris-Craft shall be reduced to the extent
that any portion of the Overpayment to be repaid will not be
offset by a corresponding reduction in tax by reason of such
repayment of the Overpayment.
7.2 Executive shall give Chris-Craft written
notice of any claim by the IRS that, if successful, would
require the payment by Chris-Craft of a Gross-Up Payment.
The Executive shall give such notice within ten business
days after the Executive shall be informed in writing of
such claim, provided that failure by the Executive to
provide such notice shall not result in a waiver or
forfeiture of any rights of Executive under this Section 7
except to the extent of actual damages suffered by Chris-
Craft as a result of such failure; provided further that if
such failure prevents the contest of such claim no payment
shall be required with respect to such claim by Chris-Craft
under this Section 7. The Executive shall not pay such
claim prior to the expiration of 15 days following the date
on which the Executive gives such notice to Chris-Craft. If
Chris-Craft shall notify the Executive in writing prior to
the expiration of such 15-day period that Chris-Craft
desires to contest such claim, the Executive shall:
(a) give Chris-Craft any
information reasonably requested by Chris-Craft relating to
such claim,
(b) take such action in connection
with contesting such claim as Chris-Craft shall reasonably
request in writing from time to time, including, without
limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by Chris-
Craft,
(c) cooperate in good faith with
Chris-Craft's contest of such claim, and
(d) permit Chris-Craft to control
any proceedings to the extent relating to such claim;
provided, however, that Chris-Craft shall bear and pay
directly all costs and expenses (including additional
interest and penalties) incurred in connection with such
contest and shall indemnify and hold Executive harmless, on
an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto)
imposed in relation to such claim, including all costs and
expenses. Without limiting the foregoing provisions of this
Section 7.2, and to the extent its actions do not
unreasonably interfere or prejudice the Executive's disputes
with the IRS as to other issues, Chris-Craft shall control
all proceedings taken in connection with such contest and,
at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and
conferences with the IRS in respect of such claim and may,
at its sole option, either direct the Executive to pay the
tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute
such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as Chris-Craft shall determine;
provided, however, that if Chris-Craft shall direct the
Executive to pay such claim and sue for a refund, Chris-
Craft shall advance the amount of such payment to the
Executive, on an interest-free basis, and shall indemnify
and hold the Executive harmless, on an after-tax basis, from
any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such
advance or with respect to any imputed income with respect
to such advance, and further provided that any extension of
the statute of limitations relating to taxes for the
Executive's taxable year with respect to which such
contested amount shall be claimed to be due shall be limited
solely to such claim. Furthermore, Chris-Craft's control of
the contest shall be limited to issues with respect to which
a Gross-Up Payment would be payable hereunder, and the
Executive shall be entitled to settle or contest, as the
case may be, any other issue raised by the IRS to the extent
that such settlement or contest would not be reasonably
likely to have a material adverse effect on the issues with
respect to the Gross-Up Payment.
7.3 If, after the Executive's receipt of an
amount advanced by Chris-Craft pursuant to Section 7.2, the
Executive shall become entitled to receive any refund with
respect to such claim, the Executive shall promptly pay to
Chris-Craft the amount of such refund (together with any
interest paid or credited thereon after taxes applicable
thereto). If, after the Executive's receipt of an amount
advanced by Chris-Craft pursuant to Section 7.2, a
determination shall be made that the Executive shall not be
entitled to any refund with respect to such claim, and
Chris-Craft shall not notify the Executive in writing of its
intent to contest such denial of refund prior to the
expiration of 30 days after Chris-Craft shall receive notice
of such determination, then such advance shall be forgiven
and shall not be required to be repaid, and the amount of
such advance shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid.
7.4 This Section 7 shall remain in full
force and effect following the termination of the Employment
Term for any reason until the expiration of the statute of
limitations on the assessment of taxes applicable to the
Executive for all periods in which the Executive may incur a
liability for taxes (including Excise Taxes), interest or
penalties arising out of the operation of this Agreement.
8. Change in Control; Extension of Term.
8.1 Chris-Craft, on behalf of itself and its
stockholders, wishes to assure itself of continuity of
management in the event of any Change in Control (as defined
in Section 8.2 of this Agreement). Notwithstanding anything
to the contrary in this Agreement, if a Change in Control
(as defined in Section 8.2 hereof) shall occur during the
Employment Term, and the Employment Term shall not have
previously terminated for any reason (other than in
connection with or as a result of a Change in Control), the
Employment Term shall automatically be extended to the third
anniversary of such Change in Control, if, pursuant to
Section 1.2, the Employment Term otherwise might have
terminated before such third anniversary.
8.2 For the purposes of this Agreement, a
"Change in Control" shall mean:
8.2.1 The acquisition by any individual,
entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act ("Rule 13d-3")) of 20% or more of the
combined voting power of the then outstanding voting
securities of Chris-Craft entitled to vote generally in the
election of directors (the "Outstanding Voting Securities");
provided, however, that the following acquisitions shall not
constitute a Change in Control: (v) any acquisition of a
security (i) directly from Chris-Craft that is authorized by
the Incumbent Board, as defined in Section 8.2.2, or (ii) of
a class constituting a class of Outstanding Voting
Securities on the date hereof that results from conversion
of a security of any such class; (w) any acquisition by
Chris-Craft; (x) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by Chris-
Craft or any corporation controlled by Chris-Craft; (y) any
change in ownership of Outstanding Voting Securities by any
Person identified or referred to in "Table I, Beneficial
Ownership of Chris-Craft Stock," in Chris-Craft's Proxy
Statement for its 1993 Annual Meeting of Stockholders, so
long as (i) any such Person who is an officer or director of
Chris-Craft remains such, or (ii) any Person that, with
respect to a change in such Person's ownership of
Outstanding Voting Securities, as of the date hereof, would
have an obligation to make a filing under Rule 13d-3, would
not be required, in connection with such change in
ownership, to change from filing on Schedule 13G to Schedule
13D or to change any response to Schedule 13D, Item 4, other
than paragraph (a) thereof or paragraph (j), as it might
relate to paragraph (a); or (z) any acquisition by any
corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (a), (b),
and (c) of Section 8.2.3 are satisfied; or
8.2.2 Individuals who, as of the date
hereof, constitute the Board (the "Incumbent Board") cease
for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or
nomination for election by the stockholders of Chris-Craft,
shall be approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest
(as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board; or
8.2.3 Approval by the stockholders of
Chris-Craft of a reorganization, merger or consolidation, in
each case, unless, following such reorganization, merger or
consolidation: (a) more than 60% of the combined voting
power of the then outstanding voting securities of the
corporation resulting from such reorganization, merger, or
consolidation, which may be Chris-Craft (the "Resulting
Corporation"), entitled to vote generally in the election of
directors (the "Resulting Corporation Voting Securities")
shall then be owned beneficially, directly or indirectly, by
all or substantially all of the Persons who were the
beneficial owners of Outstanding Voting Securities
immediately prior to such reorganization, merger, or
consolidation, in substantially the same proportions as
their respective ownerships of Outstanding Voting Securities
immediately prior to such reorganization, merger or
consolidation; (b) no Person (excluding Chris-Craft, any
employee benefit plan (or related trust) of Chris-Craft, the
Resulting Corporation, and any Person beneficially owning,
immediately prior to such reorganization, merger or
consolidation, directly or indirectly, 20% or more of the
combined voting power of Outstanding Voting Securities)
shall own beneficially, directly or indirectly, 20% or more
of the combined voting power of the Resulting Corporation
Voting Securities; and (c) at least a majority of the
members of the board of directors of the Corporation shall
have been members of the Incumbent Board at the time of the
execution of the initial agreement providing for such
reorganization, merger or consolidation; or
8.2.4 Approval by the stockholders of
Chris-Craft of (a) a complete liquidation or dissolution of
Chris-Craft or (b) the sale or other disposition of all or
substantially all of the assets of Chris-Craft, other than
to a corporation (the "Buyer") with respect to which (i)
following such sale or other disposition, more than 60% of
the combined voting power of securities of Buyer entitled to
vote generally in the election of directors ("Buyer Voting
Securities"), shall be owned beneficially, directly or
indirectly, by all or substantially all of the Persons who
were the beneficial owners of the Outstanding Voting
Securities immediately prior to such sale or other
disposition, in substantially the same proportion as their
respective ownerships of Outstanding Voting Securities,
immediately prior to such sale or other disposition; (ii) no
Person (excluding Chris-Craft and any employee benefit plan
(or related trust) of Chris-Craft or Buyer and any Person
that shall immediately prior to such sale or other
disposition own beneficially, directly or indirectly, 20% or
more of the combined voting power of Outstanding Voting
Securities), shall own beneficially, directly or indirectly,
20% or more of the combined voting power of, Buyer Voting
Securities; and (iii) at least a majority of the members of
the board of directors of Buyer shall have been members of
the Incumbent Board at the time of the execution of the
initial agreement or action of the Board providing for such
sale or other disposition of assets of Chris-Craft.
9. Termination of Agreement for Cause.
Chris-Craft may terminate this Agreement, and
all of Chris-Craft's obligations hereunder except its
obligation to pay to Executive amounts accrued to the date
of termination, "for cause" upon 30 days written notice. As
used in this Agreement, the term "for cause" shall mean and
be limited to the following events: (a) the Executive's
conviction (which conviction, through lapse of time or
otherwise, is not subject to appeal) in a court of law of a
felony involving moral turpitude; (b) the Executive's
material breach of any of the covenants set forth in Section
12; (c) the Executive's dishonesty in the course of
fulfilling his duties hereunder; or (d) the Executive's
continuing, repeated, wilful failure or refusal to perform
his duties in accordance with the terms of Section 2;
provided, however, that this Agreement may not be terminated
for cause under the immediately preceding clause (d), unless
the Executive shall have first received written notice from
the Board of Directors of Chris-Craft advising him of the
specific acts or omissions alleged to constitute a failure
or refusal to perform his duties, and such failure or refu-
sal to perform his duties continues after the Executive
shall have had a reasonable opportunity to correct the acts
or omissions cited in such notice. In no event shall the
alleged incompetence of the Executive in the performance of
his duties hereunder be deemed grounds for termination of
this Agreement for cause.
10. Termination Other Than for Cause.
10.1 Death. If the Executive shall die
during the Employment Term, this Agreement, and all of
Chris-Craft's obligations hereunder, shall terminate, except
(a) with regard to payments from the Account pursuant to
Section 4.3.3 (which Account shall include Deferred
Compensation payable through the last day of the month in
which his death occurred) and (b) that Chris-Craft shall pay
to the Executive's estate, (i) within 30 days after his
death, the base salary, and bonus with respect to the then
current fiscal year, which would have been payable to the
Executive under Section 4 had the Employment Term ended on
the last day of the month in which his death occurred, and
(ii) an amount (payable at the same time as salary is paid
to other executive employees of Chris-Craft) equal to the
Executive's "Average Annual Compensation" (as defined in
Section 10.3) at the date of his death; such amount shall be
payable for the 12-month period following the first day of
the month following the month in which the Executive's death
shall occur.
10.2 Disability. If, during the Employment
Term, the Executive shall become disabled (as defined in
Chris-Craft's then existing disability policy) so that he
shall be unable substantially to perform his services
hereunder, (a) for a period of six consecutive months or (b)
for an aggregate of six months within any period of 12
consecutive months, then the Board of Directors of Chris-
Craft may, at any time during the continuance of such
disability, terminate the Employment Term on 30 days' prior
written notice to the Executive. After such termination,
the Executive shall have no further obligation to perform
services for Chris-Craft pursuant to Section 2 but shall be
entitled to receive from Chris-Craft, within 30 days after
such termination, in lieu of the amounts which would
otherwise be payable under Section 4, (i) the base salary,
and bonus with respect to the then current fiscal year,
which would have been payable to the Executive under Section
4, had the Employment Term ended on the last day of the
month in which the Employment Term was terminated pursuant
to this Section 10.2, and (ii) an amount (payable in equal
monthly installments on the 15th day of each month) at an
annual rate equal to one-half of the Executive's "Average
Annual Compensation" (as defined in Section 10.3) at the
date of the termination of the Employment Term, such amount
to be payable for the period beginning on the first day of
the month following the month in which the Employment Term
shall have been terminated pursuant to this Section 10.2 and
ending on the day on which the Employment Term would have
ended (as extended, if theretofore extended) if not
terminated pursuant to this Section 10.2. The Executive
shall have no obligation to accept any employment offered to
him by others in order to minimize, or to be set off
against, the amounts to which he is entitled pursuant to
this Section 10.2. Chris-Craft shall not interpose any
defense against payment of such amounts based on refusal of
the Executive to seek or accept other employment. However,
if the Executive shall obtain other employment, then amounts
due to him pursuant to this Section 10.2 shall be reduced,
pro tanto, by amounts actually received by him for services
rendered in such other employment during the time amounts
are payable pursuant to said Section 10.2.
10.3 Average Annual Compensation. As used in
Sections 10.1 and 10.2, the term "Average Annual
Compensation" shall mean the mean annual compensation
received or receivable by the Executive pursuant to Section
4 (without regard to the effect of the provisions of Section
4.2) with respect to each of the three full fiscal years of
Chris-Craft immediately preceding the date of the
Executive's death (in the case of Section 10.1) or the date
of the termination of the Employment Term (in the case of
Section 10.2); provided, however, that if the Executive
shall die, or the Employment Term shall be terminated due to
Executive's disability, prior to January 1, 1997, the
Average Annual Compensation shall be the mean of (i) the
amount received or receivable by the Executive, or that
would have become receivable by the Executive, pursuant to
Section 4 (including salary, Deferred Compensation and bonus
and without regard to the effect of the provisions of
Section 4.2) had he worked through December 31, 1994, and
(ii) the mean amount received or receivable by the Executive
pursuant to Section 4 (including salary, Deferred
Compensation and bonus and without regard to the effect of
the provisions of Section 4.2) for each full fiscal year of
Chris-Craft, if any, beginning after December 31, 1994 and
ending on the December 31 immediately preceding the date of
the Executive's death or date of termination of the
Employment Term due to Executive's disability, as the case
may be.
10.4 Termination by Executive.
10.4.1 Executive may, (but shall not be
obligated to) terminate the Employment Term on 60 days'
prior written notice given at any time within two years
following a Change in Control or, if during the Employment
Term, (a) the Executive shall not be elected (and continued)
as a director of Chris-Craft or UTV and as Executive Vice
President of Chris-Craft and President of Chris-Craft's
Television Division, or Executive shall be removed from such
board or office; or (b) Chris-Craft shall fail to cure a
material breach of this Agreement within 10 days after
notice; or (c) the Executive shall not be continuously
afforded the authority, responsibilities and prerogatives
contemplated in Section 2.2 and 2.3; or (d) Chris-Craft
shall materially reduce any benefit to which Executive is
entitled pursuant to Section 6.1 and shall not have
similarly reduced such benefit with respect to Chris-Craft
senior executives generally; or (e) the Executive shall be
required to perform his principal services under this
Agreement at a place other than that set forth in Section 3.
Such right to terminate the Employment Term shall be the
Executive's exclusive remedy in the event of the occurrence
of any of the events described in this Section 10.4.1. For
purposes of clause (c) of the preceding sentence, the
Executive shall be deemed not to have been continuously
afforded the authority, responsibilities and prerogatives
contemplated in Sections 2.2 and 2.3 if there shall occur
any reduction in the scope, level or nature of the
Executive's employment hereunder, or any demotion, any
phasing out or assignment to others, of the duties
contemplated in Section 2. For purposes of this Section
10.4, any determination made by the Executive in good faith
that any of the events described in clauses (a) through (e)
of the first sentence of Section 10.4.1 has occurred shall
be conclusive.
10.4.2 If the Executive shall elect to
terminate the Employment Term upon the occurrence of any
event described in Section 10.4.1, or if Chris-Craft shall
terminate this Agreement other than for cause or disability
pursuant to Sections 9 and 10 hereof, then the Executive
shall have no further obligation to perform services for
Chris-Craft pursuant to Section 2, but he shall be entitled
to receive from Chris-Craft, 30 days after the date of
termination of the Employment Term, for the period beginning
on the date of such termination and running through the day
on which the Employment Term would have ended (as extended,
if theretofore extended) if not terminated pursuant to this
Section 10, assuming no additional extensions of the
Employment Term, and ending on the day on which the
Consulting Term would have ended (the "Cutoff Date"), in
lieu of the amounts that would otherwise be payable
hereunder, a lump sum in cash of an amount equal to the
aggregate of (a) compensation that would have been payable
each year at the rate of the (i) base salary payable to the
Executive pursuant to Section 4.1 and (ii) all amounts of
Deferred Compensation payable to the Executive pursuant to
Section 4.3 (each at the rate in effect on the date of the
termination of the Employment Term (including any COLA
Adjustment theretofore required to have been made)); (b) all
consulting fees payable pursuant to Section 11 hereof
subject to COLA Adjustment; and (c) an amount equal to the
mean performance bonuses theretofore paid to or payable to
the Executive pursuant to this Agreement, multiplied by the
number of years remaining in the Employment Term at the date
of termination (including the year in which the termination
occurs). Notwithstanding the above, Deferred Compensation
amounts previously deferred and credited to the Account
shall be paid in accordance with Section 4.3.3. In
addition, until the Cutoff Date, Chris-Craft shall maintain,
at its expense, all insurance coverages and medical and
health benefits in respect of the Executive that shall have
been in effect with respect to him prior to the occurrence
of the event entitling the Executive to terminate this
Agreement.
11. Consulting Services.
Unless the Employment Term shall theretofore
have been terminated for cause pursuant to Section 9, or on
account of the death of the Executive, during the period (i)
beginning on the date of termination of the Employment Term
(or, if the Employment Term shall have been terminated
pursuant to Section 10.2 or 10.3, on the date the Employment
Term would have ended (as extended, if theretofore extended)
if it had not been terminated pursuant to said Section 10.2
or 10.3), and (ii) ending May 31, 2007 (the "Consulting
Term"), the Executive shall render to Chris-Craft such
consultation and advice as the Board of Directors or the
Chief Executive Officer of Chris-Craft may request, subject
to the Executive's reasonable convenience and other business
activities; provided, however, that the Executive shall not
be required to devote more than 20 hours in any month to
such services, which shall be performed at a time and place
mutually convenient to both parties. For his consulting
services, the Executive shall receive, as a consulting fee,
compensation at the rate of $250,000 per annum, payable in
equal monthly installments; Chris-Craft shall also provide
the Executive with an office and a secretary, as well as the
use of such other facilities and amenities (including, as
examples, any airplane or automotive transportation utilized
by Chris-Craft) as Chris-Craft shall from time to time make
available to its most senior officers. The consulting fee
shall be adjusted upward, as of the beginning of the
Consulting Term and as of each successive January 1 to the
end of the Consulting Term, in proportion to any increase in
the Consumer Price Index, as defined in Section 4.4, from
the December 1993 level (as of the beginning of the
Consulting Term) and from the December level of the prior
year as of each successive January 1. Each such adjustment
shall be made retroactively when the Consumer Price Index
for the month next preceding the date of such adjustment
becomes available. In addition, Executive shall be entitled
to participate in each insurance plan or medical or health
plan generally available to Chris-Craft senior executives.
In the event that the Executive shall be discharged by
Chris-Craft during the Consulting Term other than for cause
(as defined in Section 9), he shall nevertheless be entitled
to receive his full consulting fee for the remainder of the
Consulting Term. If the Executive shall die during the
Consulting Term, his estate shall be entitled to receive the
full consulting fee payable hereunder until the earlier to
occur of (a) the first anniversary of the date of his death
or (b) the end of the Consulting Term. If, during the
Consulting Term, the Executive shall be disabled from
performing his consulting services, and such disability
shall continue for a period of six consecutive months or for
an aggregate of six months within any period of 12
consecutive months, or if such disability shall exist at the
start of the Consulting Term and shall be a continuation of
a disability for which the Employment Term shall have been
terminated pursuant to Section 10.2, and the Board of
Directors of Chris-Craft, by written notice to the Executive
(before the Executive shall recover from such disability)
shall terminate the Executive's consulting services, the
Executive shall have no further obligation to perform
consulting services for Chris-Craft and shall be entitled to
receive compensation at the rate of one-half of the
consulting fee payable hereunder until the end of the
Consulting Term.
12. Protection of Confidential Information; Non-
Competition.
12.1 The Executive agrees that, in view of
the fact that his work for Chris-Craft will bring him into
close contact with many confidential affairs of Chris-Craft
not readily available to the public, he will not at any time
(whether during the Employment Term, the Consulting Term, or
thereafter) disclose to any person, firm, corporation,
partnership or other entity whatsoever (except Chris-Craft
or any of its subsidiaries), or any officer, director,
stockholder, partner, associate, employee, agent or
representative of any such firm, corporation or other
entity, any confidential information or trade secrets of
Chris-Craft which may come into his possession during the
Employment Term or the Consulting Term (the "Confidential
Materials"). The term "Confidential Materials" does not
include information which (i) at the time of disclosure or
thereafter is generally available to or known by the public
otherwise than by reason of the Executive's disclosure
thereof in violation of this Agreement, (ii) is, was or
becomes available to the Executive on a nonconfidential
basis from a source other than Chris-Craft, provided that
the Executive has no reason to believe that such source is
or was bound by a confidentiality agreement with Chris-
Craft, (iii) has been made available, or is made available,
on an unrestricted basis to a third party by Chris-Craft, by
an individual authorized to do so, or (iv) is known by the
Executive prior to its disclosure to the Executive. The
Executive may use and disclose Confidential Materials to the
extent necessary to assert any right or defend against any
claim arising under this Agreement or pertaining to
Confidential Materials or their use, to the extent necessary
to comply with any applicable statute, constitution, treaty,
rule, regulation, ordinance or order, whether of the United
States, any state thereof, or any other jurisdiction
applicable to the Executive, or if the Executive receives a
request to disclose all or any part of the information
contained in the Confidential Materials under the terms of a
subpoena, order, civil investigative demand or similar
process issued by a court of competent jurisdiction or by a
governmental body or agency, whether of the United States or
any state thereof, or any other jurisdiction applicable to
the Executive.
12.2 During the Employment Term, Executive
shall devote his full-time business energies, and time to
the performance of this Agreement as set forth in Section
2.1 hereof. Executive's services during the Consulting Term
shall be rendered on the basis set forth in Section 11.
Executive shall not, either during the Employment Term or
the Consulting Term, render services of any kind to others,
engage in any other business activity or acquire any
interest of any type in any other person or entity that
would prevent his fulfilling his obligations under this
Agreement or that Executive knows is in competition with
Chris-Craft or any Affiliate. For purposes of this
Agreement, a person or entity shall be deemed to be in
competition with Chris-Craft or any Affiliate if he or it
engages in any line of business substantially the same as
any line of business that Chris-Craft or any Affiliate
engages in or has a definitive plan to engage in during the
term of this Agreement, except that, during the Consulting
Term, the engagement in such activity in a geographical
market in which Chris-Craft or any Affiliate has not engaged
for more than two years or in which Executive knows that
Chris-Craft or any Affiliate has no definitive plan to
engage or the engagement in a line of business that Chris-
Craft has a definitive plan to engage in but, of which
Executive had no knowledge at any time prior to Executive's
engagement in such business, shall not be deemed in
competition with Chris-Craft or an Affiliate. For purposes
of this Section 12 only, the term "Affiliate" shall not
include any entity that would constitute an Affiliate solely
because it is under common control with Chris-Craft.
12.3 Notwithstanding anything to the contrary
stated in this Agreement, Executive may acquire and/or
retain, solely as an investment, and take customary actions
to maintain and preserve Executive's ownership of:
(a) securities of any corporation
that are registered under Section 12(b) or 12(g) of the
Exchange Act and that are publicly traded, as long as
Executive is not part of any control group of such
corporation and such securities, do not, or if they are
convertible securities, if converted, together with all
other securities of such corporation owned by the executive,
would not, constitute more than one percent (1%) of the
outstanding voting power of that corporation;
(b) any securities of a
partnership, trust, corporation (other than a corporation
that has securities covered by the preceding clause (a)) or
other person so long as Executive remains a passive investor
in that entity and does not become part of any control group
thereof and so long as such entity is not, directly or
indirectly, in competition with Chris-Craft or any
Affiliate; and
(c) securities of Chris-Craft or
any Affiliate.
12.4 The parties hereto acknowledge that
Executive's performance and services hereunder are of a
special, unique, unusual, extraordinary and intellectual
character, which cannot be reasonably or adequately
compensated in an action at law for damages, and that a
breach by Executive of the terms hereof will cause Chris-
Craft irreparable injury. Executive agrees that Chris-Craft
is entitled to injunctive and other equitable relief to
prevent a breach or threatened breach of this Section 12,
which shall be in addition to any other rights or remedies
to which Chris-Craft may be entitled.
12.5 If any provisions of this Section 12 as
applied to any circumstance shall be adjudged by a court to
be invalid or unenforceable, the same shall in no way affect
any other provision of this Section 12, the application of
such provision in any other circumstances, or the validity
or enforceability of this Section 12. Chris-Craft and the
Executive intend this Section 12 to be enforced as written.
However, if any provision, or any part thereof, is held to
be unenforceable because of the duration of such provision
or the area covered thereby, or otherwise, Chris-Craft and
the Executive agree that the court making such determination
shall have the power to reduce the duration and/or area of
such provision, and/or to delete specific words or phrases
("blue-penciling"), and in its reduced or blue-penciled form
such provision shall then be enforceable and shall be
enforced.
12.6 Chris-Craft and the Executive intend to,
and do hereby, confer jurisdiction to enforce the covenants
contained in this Section 12 upon the courts of any state of
the United States and any other governmental jurisdiction
within the geographical scope of such covenants. If the
courts of any one or more of such states or jurisdictions
shall hold such covenants wholly unenforceable by reason of
the breadth of such scope or otherwise, it is the intention
of Chris-Craft and the Executive that such determination
shall not bar or in any way affect Chris-Craft's right to
the relief provided above in the courts of any other state
or jurisdiction within the geographical scope of such
covenants, as to breaches of such covenants in such other
respective states or jurisdictions, the above covenants as
they relate to each state or jurisdiction being, for this
purpose, severable into diverse and independent covenants.
13. Notices.
All notices, requests, consents and other
communications, required or permitted to be given hereunder,
shall be in writing and shall be deemed to have been duly
given (a) if delivered personally, when delivered; (b) if
delivered by overnight carrier, on the first business day
following such delivery; (c) if delivered by registered or
certified mail, return receipt requested, on the third
business day after having been mailed. In any case, each
such notice, request, or consent or other communication
shall be addressed as follows or to such other address as
either party shall designate by notice in writing to the
other in accordance herewith
13.1 If to Chris-Craft:
Chris-Craft Industries, Inc.
767 Fifth Avenue
New York, New York 10153
Attention: Board of Directors
with a copy to:
Harold I. Kahen, Esq.
Loeb and Loeb
345 Park Avenue
New York, New York 10154
13.2 If to the Executive to him at his
address set forth on the personnel records of Chris-Craft.
with a copy to:
Kenneth Doran, Esq.
Gibson, Dunn & Crutcher
2029 Century Park East
Los Angeles, California 90067
14. General.
14.1 This Agreement shall be governed by and
construed and enforced in accordance with the laws of the
State of New York applicable to agreements made and to be
performed entirely in New York.
14.2 The section headings contained herein
are for reference purposes only and shall not in any way
affect the meaning or interpretation of this Agreement.
14.3 This Agreement sets forth the entire
agreement and understanding of the parties relating to the
subject matter hereof, and supersedes all prior agreements,
arrangements and understandings, written or oral, between
the parties.
14.4 This Agreement and the benefits
hereunder are personal to Chris-Craft and are not assignable
or transferable, nor may the services to be performed
hereunder be assigned by Chris-Craft to any person, firm or
corporation; provided, however, that this Agreement and the
benefits hereunder may be assigned by Chris-Craft to any
corporation acquiring all or substantially all of the assets
of Chris-Craft or to any corporation into which Chris-Craft
may be merged or consolidated, and this Agreement and the
benefits hereunder will automatically be deemed assigned to
any such corporation, subject, however, to the Executive's
right to terminate the Employment Term to the extent
provided in Section 10.3. In the event of any assignment of
this Agreement to any corporation acquiring all or
substantially all of the assets of Chris-Craft or to any
other corporation into which Chris-Craft may be merged or
consolidated, the responsibilities and duties assigned to
the Executive by such successor corporation shall be the
responsibilities and duties of, and compatible with the
status of, a senior executive officer of such successor
corporation. Chris-Craft may delegate any of its
obligations hereunder to any subsidiary of Chris-Craft,
provided that such delegation shall not relieve Chris-Craft
of any of its obligations hereunder.
14.5 Whenever this Agreement provides for any
payment to the Executive's estate, such payment may be made
instead to such beneficiary or beneficiaries as the
Executive may have designated by written notice to Chris-
Craft. The Executive shall have the right to revoke any
such designation and to redesignate a beneficiary or
beneficiaries by written notice to Chris-Craft to such
effect.
14.6 This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or
covenants hereof may be waived, only by a written instrument
executed by both of the parties hereto, or in the case of a
waiver, by the party waiving compliance. The failure of
either party at any time or times to require performance of
any provision hereof shall in no manner affect the right at
a later time to enforce the same. No waiver by either party
of the breach of any term or covenant contained in this
Agreement, whether by conduct or otherwise, in any one or
more instances, shall be deemed to be, or construed as, a
further or continuing waiver of any such breach, or a waiver
of the breach of any other term or covenant contained in
this Agreement.
14.7 In case of any dispute or disagreement
arising out of, or in connection with, this Agreement, until
the final determination of such dispute or disagreement
Chris-Craft shall continue to pay to the Executive all of
the compensation provided in this Agreement, and the
Executive shall be entitled to continue to receive all of
the other benefits provided herein. If any such dispute or
disagreement shall result in legal action between Chris-
Craft and the Executive, the Executive shall be entitled to
recover from Chris-Craft any actual expenses for attorney's
fees and disbursements incurred by him in connection with
the Executive's good faith maintenance or defense of such
action, on an after-tax basis. During the pendency of any
such action, Chris-Craft shall pay all actual attorney's
fees and expenses incurred by the Executive in connection
therewith upon receipt of an undertaking by the Executive to
repay such amounts as shall be found in such action as
having been incurred in connection with the Executive's
maintenance or defense of such action other than in good
faith. Chris-Craft shall pay all reasonable attorneys' fees
and expenses incurred by the Executive in connection with
the negotiation of this Agreement.
IN WITNESS WHEREOF, the parties have duly executed
this Agreement as of the date first above written.
CHRIS-CRAFT INDUSTRIES, INC.
By /s/ Herbert J. Siegel
Chairman
/s/ Evan C Thompson
Evan C Thompson
<PAGE>
Table of Contents to Employment Agreement
Section Page
1. Employment; Term . . . . . . . . . . . . . . . . . . 1
2. Duties and Authority . . . . . . . . . . . . . . . . 3
3. Location . . . . . . . . . . . . . . . . . . . . . . 4
4. Cash Compensation. . . . . . . . . . . . . . . . . . 5
5. Expenses . . . . . . . . . . . . . . . . . . . . . . 16
6. Additional Benefits. . . . . . . . . . . . . . . . . 16
7. Certain Additional Payments by Chris-Craft . . . . . 18
8. Change in Control; Extension of Term . . . . . . . . 25
9. Termination of Agreement for Cause . . . . . . . . . 30
10. Termination Other Than for Cause . . . . . . . . . . 31
11. Consulting Services. . . . . . . . . . . . . . . . . 37
12. Protection of Confidential Information; Non-
Competition. . . . . . . . . . . . . . . . . . . . . 39
13. Notices. . . . . . . . . . . . . . . . . . . . . . . 44
14. General. . . . . . . . . . . . . . . . . . . . . . . 45
Exhibit 11
CHRIS-CRAFT INDUSTRIES INC. AND SUBSIDIARIES
COMPUTATION OF PRIMARY AND FULLY DILUTED INCOME PER SHARE
(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE FIGURES)
<TABLE>
<CAPTION>
Year Ended December 31,
1993 1992 1991
Number of shares of common stock: <C> <C> <C>
<S>
Average outstanding during the period 27,783,896 27,528,477 27,630,790
Assumed exercise of stock appreciation rights and options 469,693 384,466 486,358
Total shares used in computation of primary income per share 28,253,589 27,912,943 28,117,148
Average outstanding during the period (as per above) 27,783,896 27,528,477 27,630,790
Assumed conversion of $1.40 convertible preferred stock into common stock 9,067,298 9,261,861 9,317,044
Assumed exercise of stock appreciation rights and options 496,458 511,606 486,358
Total shares used in computation of fully diluted income per share 37,347,717 37,301,944 37,434,192
Net income - computation of primary income per share:
Net income $ 149,068 $ 65,150 $ 58,258
Less - Dividend requirements on preferred stock (493) (504) (506)
$ 148,575 $ 64,646 $ 57,752
Net income - computation of fully diluted income per share:
Net income $ 149,068 $ 65,150 $ 58,258
Less - Dividend requirements on preferred stock (73) (73) (73)
$ 148,995 $ 65,077 $ 58,185
Net income per share:
Primary $ 5.26 $ 2.32 $ 2.05
Fully diluted $ 3.99 $ 1.74 $ 1.55
<FN>
____________________________________
* Computations give effect to all common stock dividends, including 3% stock
dividend declared in January 1994.
</TABLE>
Exhibit 22
The following were the registrant's subsidiaries as of December
31, 1993, other than subsidiaries that, if considered in the
aggregate as a single subsidiary, would not constitute a
significant subsidiary at such date:
Jurisdiction
of
Name of Subsidiary Incorporation
BHC Communications, Inc. Delaware
Chris-Craft Television, Inc. Delaware
KCOP Television, Inc. California
Oregon Television, Inc. Oregon
Pinelands, Inc. Delaware
United Television, Inc. Delaware
UTV of San Francisco, Inc. California
UTV of San Antonio, Inc. Texas
Chris-Craft Industrial Products, Inc. Delaware
Exhibit 24(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Registration Statements on Form S-8 (Nos. 33-21900, 33-34205 and
33-35354) of Chris-Craft Industries, Inc. of our report dated
February 8, 1994 appearing on page 13 of the Annual Report to
Shareholders of Chris-Craft Industries, Inc. which is
incorporated by reference in this Annual Report on Form 10-K. We
also consent to the incorporation by reference of our report on
the Financial Statement Schedules, which appears on page 27 of
this Form 10-K.
PRICE WATERHOUSE
New York, New York
March 29, 1994
Exhibit 24(b)
CONSENT OF PREDECESSOR INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report (dated February 10, 1992) included in
this Form 10-K, into the Company's previously filed Registration
Statements File Nos. 33-21900, 33-34205, and 33-35354.
ARTHUR ANDERSEN & CO.
New York, New York,
March 29, 1994.
CHRIS-CRAFT INDUSTRIES, INC. AND SUBSIDIARIES
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA) FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER YEAR
YEAR ENDED DECEMBER 31, 1993
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES.................................. $ 96,285 $120,277 $106,725 $116,446 $439,733
OPERATING INCOME.................................... 6,714 22,360 20,729 25,529 75,332
INCOME ASSOCIATED WITH TIME WARNER INC. SECURITIES.. 108,413 132,986 12,340 2,883 256,622
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST.... 121,096 165,480 43,765 54,274 384,615
NET INCOME ........................................ 49,501 62,474 13,012 24,081 149,068
PRIMARY NET INCOME PER SHARE........................ 1.76 2.22 .45 .84 5.26
FULLY DILUTED NET INCOME PER SHARE.................. $ 1.33 $ 1.68 $ .35 $ .64 $ 3.99
YEAR ENDED DECEMBER 31, 1992
OPERATING REVENUES.................................. $ 61,056 $ 75,785 $ 84,219 $110,475 $331,535
OPERATING INCOME (LOSS)............................. (11,942) 9,134 9,913 9,700 16,805
INCOME ASSOCIATED WITH TIME WARNER INC. SECURITIES.. 21,522 21,494 22,535 28,508 94,059
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST.... 21,007 38,696 42,175 43,493 145,371
NET INCOME ........................................ 10,689 17,294 19,430 17,737 65,150
PRIMARY NET INCOME PER SHARE........................ .38 .62 .69 .63 2.32
FULLY DILUTED NET INCOME PER SHARE.................. $ .29 $ .46 $ .52 $ .48 $ 1.74
</TABLE>
CHRIS-CRAFT INDUSTRIES, INC. AND SUBSIDIARIES
INDUSTRY SEGMENT INFORMATION
The following table sets forth information for the years indicated in accordance
with Statement No. 14 of the Financial Accounting Standards Board. The business
of each industry segment is described elsewhere in this Annual Report.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
(IN THOUSANDS OF DOLLARS) OPERATING OPERATING DEPRECIATION AND CAPITAL IDENTIFIABLE
REVENUES INCOME (LOSS)(b) AMORTIZATION EXPENDITURES ASSETS
---------- ---------------- -------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1993
TELEVISION DIVISION................ $ 411,999 $ 87,811 $ 20,430 $ 11,618 $2,232,294(c)
INDUSTRIAL DIVISION................ 27,734 602 524 355 11,124
OTHER (a) ....................... -- (13,081) 26 7 39,760
$ 439,733 $ 75,332 $ 20,980 $ 11,980 $2,283,178
YEAR ENDED DECEMBER 31, 1992
TELEVISION DIVISION................ $ 307,883 $ 27,896 $ 12,667 $ 10,740 $2,135,038(c)
INDUSTRIAL DIVISION................ 23,652 1,392 479 480 9,900
OTHER (a) ....................... -- (12,483) 252 3 15,756
$ 331,535 $ 16,805 $ 13,398 $ 11,223 $2,160,694
YEAR ENDED DECEMBER 31, 1991
TELEVISION DIVISION................ $ 262,568 $ 4,042 $ 7,639 $ 10,622 $2,001,745(c)
INDUSTRIAL DIVISION ............... 21,267 1,268 411 934 8,630
OTHER (a) ....................... -- (9,125) 72 96 39,400
$ 283,835 $ (3,815) $ 8,122 $ 11,652 $2,049,775
</TABLE>
(a) Consists of Corporate Office and subsidiaries not included in Television
Division or Industrial Division. Related operating loss consists solely of
general and administrative expenses and, accordingly, excludes nonoperating
income. Related assets consist primarily of cash and marketable securities.
(b) See Consolidated Statements of Income for the reconciliation of operating
income (loss) to net income.
(c) Includes marketable securities having an aggregate carrying value of
$1,495,610 at December 31, 1993, $1,256,546 at December 31, 1992 and $1,632,478
at December 31, 1991.
<PAGE>
STOCK PRICE, DIVIDEND AND RELATED INFORMATION
Chris-Craft common stock is traded on the New York Stock Exchange and the
Pacific Stock Exchange. The high and low sales prices reported in the
consolidated transaction reporting system are shown below for the periods
indicated. Since Chris-Craft Class B common stock is ordinarily nontransferable,
there is no trading market for such class.
- --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1993 1992
-------------------------------
High Low High Low
FIRST QUARTER................. 35 5/8 31 1/8 27 7/8 24 3/4
SECOND QUARTER................ 35 3/4 30 5/8 28 1/4 25 1/8
THIRD QUARTER................. 42 5/8 34 1/4 27 3/8 25 3/4
FOURTH QUARTER................ 43 3/8 35 3/8 33 7/8 26 1/8
Chris-Craft paid a 3% stock dividend on its common stock in April 1993 and a
2% stock dividend on its common stock in April 1992. Chris-Craft has declared a
3% stock dividend payable in April 1994. The Board of Directors plans to
continue to consider, on an annual basis, the payment of dividends in common
stock. As of February 28, 1994, there were 3,495 holders of record of common
stock and 2,378 holders of record of Class B common stock.
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF CHRIS-CRAFT INDUSTRIES, INC.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, shareholders' investment and cash flows
present fairly, in all material respects, the financial position of Chris-Craft
Industries, Inc. and its subsidiaries at December 31, 1993 and 1992, and the
results of their operations and their cash flows for each of the two years in
the period ended December 31, 1993, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above. The financial statements of
Chris-Craft Industries, Inc. for the year ended December 31, 1991 were audited
by other independent accountants whose report dated February 10, 1992 expressed
an unqualified opinion on those statements.
/s/ Price Waterhouse
New York, New York
February 8, 1994
<PAGE>
CHRIS-CRAFT INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
(IN THOUSANDS OF DOLLARS) DECEMBER 31,
-------------------------
1993 1992
<S> <C> <C>
ASSETS
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS........................................ $ 40,497 $ 177,013
MARKETABLE SECURITIES
(SUBSTANTIALLY ALL U.S. GOVERNMENT AND,
IN 1992, SECURITIES REDEEMED) ................................ 1,495,610 806,524
ACCOUNTS RECEIVABLE,
LESS ALLOWANCE FOR DOUBTFUL ACCOUNTS OF $6,319 AND $4,869..... 89,869 81,344
FILM CONTRACT AND PREPAID BROADCAST RIGHTS....................... 98,882 104,128
PREPAID EXPENSES AND OTHER CURRENT ASSETS........................ 65,913 60,186
TOTAL CURRENT ASSETS.......................................... 1,790,771 1,229,195
NONCURRENT MARKETABLE SECURITIES................................. -- 450,022
FILM CONTRACT RIGHTS, INCLUDING DEPOSITS,
LESS ESTIMATED PORTION TO BE USED WITHIN ONE YEAR............. 87,197 83,390
PROPERTY AND EQUIPMENT, AT COST:
LAND, BUILDINGS AND IMPROVEMENTS ................................ 36,935 34,721
MACHINERY AND EQUIPMENT.......................................... 92,252 88,219
129,187 122,940
LESS-ACCUMULATED DEPRECIATION.................................... 74,726 67,908
54,461 55,032
INTANGIBLE ASSETS................................................ 333,925 338,200
OTHER ASSETS..................................................... 16,824 4,855
$2,283,178 $2,160,694
<PAGE>
LIABILITIES AND SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES:
CURRENT PORTION OF LONG-TERM DEBT .................................. $ -- $ 15,625
FILM CONTRACTS PAYABLE WITHIN ONE YEAR.............................. 112,798 139,731
ACCOUNTS PAYABLE AND ACCRUED EXPENSES............................... 107,338 100,792
INCOME TAXES PAYABLE................................................ 74,764 73,407
TOTAL CURRENT LIABILITIES........................................ 294,900 329,555
FILM CONTRACTS PAYABLE AFTER ONE YEAR............................... 95,699 131,803
OTHER LONG-TERM LIABILITIES......................................... 18,737 22,383
MINORITY INTEREST................................................... 615,615 565,206
COMMITMENTS AND CONTINGENCIES (NOTE 10)
SHAREHOLDERS' INVESTMENT:
CUMULATIVE PREFERRED STOCK-
PRIOR PREFERRED STOCK- $1.00 DIVIDEND; STATED AT
LIQUIDATING VALUE OF $21.50
PER SHARE; CURRENTLY AUTHORIZED 73,399
SHARES; OUTSTANDING 73,399 SHARES............................. 1,578 1,578
CONVERTIBLE PREFERRED STOCK- $1.40 DIVIDEND; STATED AT $17.50
PER SHARE; CURRENTLY AUTHORIZED 297,946 SHARES; OUTSTANDING
297,946 AND 305,833 SHARES (LIQUIDATING VALUE $23 PER SHARE,
AGGREGATING $6,853)........................................... 5,214 5,352
CLASS B COMMON STOCK- PAR VALUE $.50 PER SHARE; CURRENTLY AUTHORIZED
50,000,000 SHARES; OUTSTANDING 7,379,866 AND 7,396,488 SHARES. 3,690 3,698
COMMON STOCK- PAR VALUE $.50 PER SHARE; CURRENTLY AUTHORIZED 100,000,000
SHARES; OUTSTANDING 19,911,536 AND 18,712,312 SHARES.......... 10,747 10,147
CAPITAL SURPLUS..................................................... 275,443 253,242
RETAINED EARNINGS................................................... 961,555 837,730
1,258,227 1,111,747
$2,283,178 $2,160,694
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these balance sheets.
<PAGE>
CHRIS-CRAFT INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA) YEAR ENDED DECEMBER 31,
----------------------------------------
1993 1992 1991
<S> <C> <C> <C>
OPERATING REVENUES:
TELEVISION REVENUES................................. $ 411,999 $ 307,883 $ 262,568
SALES OF MANUFACTURED PRODUCTS...................... 27,734 23,652 21,267
439,733 331,535 283,835
OPERATING EXPENSES:
TELEVISION EXPENSES................................. 230,088 208,031 199,056
COST OF MANUFACTURED PRODUCTS SOLD.................. 21,523 18,025 16,215
SELLING, GENERAL AND ADMINISTRATIVE................. 112,790 88,674 72,379
364,401 314,730 287,650
OPERATING INCOME (LOSS).......................... 75,332 16,805 (3,815)
OTHER INCOME (EXPENSE):
INCOME ASSOCIATED WITH TIME WARNER INC. SECURITIES, NET 256,622 94,059 87,657
INTEREST AND OTHER INCOME, NET...................... 52,661 36,790 51,507
INTEREST EXPENSE.................................... -- (2,283) (2,350)
309,283 128,566 136,814
INCOME BEFORE PROVISION FOR INCOME TAXES
AND MINORITY INTEREST...................... 384,615 145,371 132,999
PROVISION FOR INCOME TAXES.......................... 147,200 37,800 34,300
INCOME BEFORE MINORITY INTEREST.................. 237,415 107,571 98,699
MINORITY INTEREST................................... (88,347) (42,421) (40,441)
NET INCOME....................................... $ 149,068 $ 65,150 $ 58,258
NET INCOME PER SHARE:
PRIMARY.......................................... $ 5.26 $ 2.32 $ 2.05
FULLY DILUTED.................................... $ 3.99 $ 1.74 $ 1.55
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
<PAGE>
CHRIS-CRAFT INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
(IN THOUSANDS OF DOLLARS) YEAR ENDED DECEMBER 31,
------------------------------------------
1993 1992 1991
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $ 149,068 $ 65,150 $ 58,258
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED
FROM (USED IN) OPERATING ACTIVITIES:
FILM CONTRACT AMORTIZATION 102,768 117,659 134,756
FILM CONTRACT PAYMENTS (147,557) (103,174) (108,480)
PREPAYMENT OF BROADCAST RIGHTS (34,426) -- --
DEPRECIATION AND OTHER AMORTIZATION 20,980 13,398 8,122
GAIN ON DISPOSITION OF TIME WARNER INC. SECURITIES (219,373) (8,082) (5,471)
MINORITY INTEREST 88,347 42,421 40,441
OTHER (PRIMARILY NONCASH TIME WARNER INC. DIVIDEND
INCOME IN 1992 AND 1991) (7,813) (36,788) (26,597)
CHANGES IN ASSETS AND LIABILITIES, NET OF AMOUNTS
ACQUIRED IN 1992 ACQUISITION:
ACCOUNTS RECEIVABLE (9,108) 10,703 (748)
OTHER ASSETS (7,884) 8,958 4,965
ACCOUNTS PAYABLE AND OTHER LIABILITIES 4,386 (11,143) 4,438
INCOME TAXES 6,230 2,408 (20,050)
NET CASH PROVIDED FROM (USED IN)
OPERATING ACTIVITIES (54,382) 101,510 89,634
CASH FLOWS FROM INVESTING ACTIVITIES:
DISPOSITION OF MARKETABLE SECURITIES 947,015 404,976 83,867
PURCHASE OF MARKETABLE SECURITIES (938,896) -- (87,590)
PURCHASE OF PINELANDS, INC., NET OF CASH ACQUIRED -- (279,422) (1,304)
CAPITAL EXPENDITURES, NET (11,197) (11,074) (11,641)
OTHER (8,227) (3,196) (4,632)
NET CASH PROVIDED FROM (USED IN)
INVESTING ACTIVITIES (11,305) 111,284 (21,300)
CASH FLOWS FROM FINANCING ACTIVITIES:
CAPITAL TRANSACTIONS OF SUBSIDIARIES (50,081) (90,824) (35,976)
REPAYMENT OF LONG-TERM DEBT (15,625) (1,875) (1,875)
PURCHASE OF TREASURY STOCK (9,964) (8,451) (13,401)
PROCEEDS FROM EXERCISE OF EMPLOYEE STOCK OPTIONS 5,336 3,863 1,790
DIVIDENDS ON PREFERRED STOCK (495) (505) (507)
NET CASH USED IN FINANCING ACTIVITIES (70,829) (97,792) (49,969)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (136,516) 115,002 18,365
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 177,013 62,011 43,646
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 40,497 $ 177,013 $ 62,011
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
<PAGE>
CHRIS-CRAFT INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS) TREASURY
OUTSTANDING SHARES SHARES DOLLAR AMOUNT
PRE- TREAS- MARKET
CLASS B $1.00 $1.40 COMMON FERRED CAPITAL RETAINED URY VALUATION
COMMON COMMON PREFFERED PREFERRED COMMON STOCKS STOCKS SURPLUS EARNINGS STOCK ACCOUNT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1990 ... 17,239,054 7,979,867 73,399 310,515 -- $13,400 $7,012 $244,517 $740,433 $ -- $(32,083)
NET INCOME ..................... -- -- -- -- -- -- -- -- 58,258 -- --
NONCURRENT MARKETABLE SECURITIES
VALUATION ADJUSTMENT ........ -- -- -- -- -- -- -- -- -- -- 32,083
CAPITAL TRANSACTIONS OF BHC .... -- -- -- -- -- -- -- (581) -- -- --
DIVIDENDS ON PREFERRED STOCK ... -- -- -- -- -- -- -- -- (507) -- --
COMMON STOCK DIVIDEND - 2% ..... 343,176 158,345 -- -- -- 251 -- 11,916 (12,167) -- --
CONVERSION OF PREFERRED STOCK .. 48,180 3,707 -- (1,875) -- 26 (33) 7 -- -- --
CONVERSION OF CLASS B
COMMON STOCK ................ 491,981 (491,981) -- -- -- -- -- -- -- -- --
STOCK OPTIONS, INCLUDING RELATED
TAX BENEFITS ................ 69,934 37,796 -- -- -- 54 -- 2,007 -- -- --
ACQUISITION OF TREASURY STOCK .. -- -- -- -- (429,700) -- -- -- -- (11,880) --
RETIREMENT OF TREASURY STOCK ... (429,700) -- -- -- 429,700 (215) -- (11,665) -- 11,880 --
BALANCE AT DECEMBER 31, 1991 ... 17,762,625 7,687,734 73,399 308,640 -- 13,516 6,979 246,201 786,017 -- --
NET INCOME ..................... -- -- -- -- -- -- -- -- 65,150 -- --
CAPITAL TRANSACTIONS OF BHC .... -- -- -- -- -- -- -- (688) -- -- --
DIVIDENDS ON PREFERRED STOCK ... -- -- -- -- -- -- -- -- (504) -- --
COMMON STOCK DIVIDEND -2% ...... 355,899 151,448 -- -- -- 254 -- 12,679 (12,933) -- --
CONVERSION OF PREFERRED STOCK .. 79,456 -- -- (2,807) -- 40 (49) 9 -- -- --
CONVERSION OF CLASS B
COMMON STOCK ................ 442,694 (442,694) -- -- -- -- -- -- -- -- --
STOCK OPTIONS, INCLUDING RELATED
TAX BENEFITS ................ 421,838 -- -- -- -- 210 -- 4,852 -- -- --
ACQUISITION OF TREASURY STOCK .. -- -- -- -- (350,200) -- -- -- -- (9,986) --
RETIREMENT OF TREASURY STOCK ... (350,200) -- -- -- 350,200 (175) -- (9,811) -- 9,986 --
BALANCE AT DECEMBER 31, 1992 ... 18,712,312 7,396,488 73,399 305,833 -- 13,845 6,930 253,242 837,730 -- --
NET INCOME ..................... -- -- -- -- -- -- -- -- 149,068 -- --
CAPITAL TRANSACTIONS OF BHC .... -- -- -- -- -- -- -- (1,701) -- -- --
DIVIDENDS ON PREFERRED STOCK ... -- -- -- -- -- -- -- -- (495) -- --
COMMON STOCK DIVIDEND - 3% ..... 559,637 221,799 -- -- -- 391 -- 24,357 (24,748) -- --
CONVERSION OF PREFERRED STOCK .. 148,535 78,731 -- (7,887) -- 114 (138) 24 -- -- --
CONVERSION OF CLASS B
COMMON STOCK ................ 317,152 (317,152) -- -- -- -- -- -- -- -- --
STOCK OPTIONS, INCLUDING RELATED
TAX BENEFITS ................ 439,700 -- -- -- -- 220 -- 8,517 -- -- --
ACQUISITION OF TREASURY STOCK .. -- -- -- -- (265,800) -- -- -- -- (9,129) --
RETIREMENT OF TREASURY STOCK ... (265,800) -- -- -- 265,800 (133) -- (8,996) -- 9,129 --
BALANCE AT DECEMBER 31, 1993 ... 19,911,536 7,379,866 73,399 297,946 -- $14,437 $6,792 $275,443 $961,555 $-- $--
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
<PAGE>
CHRIS-CRAFT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
- --------------------------------------------------------------------------------
(A) PRINCIPLES OF CONSOLIDATION-The accompanying consolidated financial
statements include the accounts of Chris-Craft Industries, Inc. and its
subsidiaries, including Chris-Craft's majority owned (70.3% at December 31, 1993
and 69.1% at December 31, 1992) television broadcasting subsidiary, BHC
Communications, Inc. BHC wholly owned subsidiaries operate three television
stations (including WWOR, acquired August 1992 in the transaction described
below), and BHC's majority owned (54.3% at December 31, 1993 and 52.9% at
December 31, 1992) subsidiary, United Television, Inc. (UTV), operates five
television stations. The pro rata interests of BHC and UTV minority shareholders
in the net income of the respective companies are reflected as minority interest
in the accompanying Consolidated Statements of Income. The minority
shareholders' interests in the net assets of BHC and UTV are reflected as
minority interest in the accompanying Consolidated Balance Sheets. Intercompany
accounts and transactions have been eliminated.
In August 1992, BHC acquired all outstanding shares of Pinelands, Inc., other
than the 4.9% of such shares which BHC had previously acquired. Pinelands owns
and operates independent television station WWOR, which broadcasts into a
tri-state area including New York City. The total acquisition price, including
the cost of previously acquired Pinelands shares and expenses related to the
acquisition, was approximately $313 million. The acquisition, funded from BHC's
internal cash balances, has been accounted for as a purchase. Pinelands' assets
and liabilities at the acquisition date have been recorded at their estimated
fair values, and the excess of purchase price over the fair value of net assets
acquired, totalling $305,897,000, is being amortized on a straight-line basis
over 40 years. The following unaudited pro forma consolidated financial
information for 1992 and 1991 has been prepared as if the acquisition had
occurred at the beginning of each year. Such pro forma information does not
purport to be indicative of the results of operations that actually would have
been obtained if the acquisition had occurred on the dates indicated or that may
be obtained in the future.
- --------------------------------------------------------------------------------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS) YEAR ENDED DECEMBER 31,
-----------------------
1992 1991
OPERATING REVENUES ............. $ 423,455 $ 446,740
NET INCOME ..................... $ 57,338 $ 56,091
NET INCOME PER SHARE -
PRIMARY ..................... $ 2.04 $ 1.98
FULLY DILUTED ............... $ 1.54 $ 1.50
(B) FINANCIAL INSTRUMENTS-Cash and cash equivalents totalled $40,497,000 at
December 31, 1993 and $177,013,000 at December 31, 1992. Cash equivalents are
money market securities having maturities at time of purchase not exceeding
three months. The fair value of cash equivalents approximates carrying value,
reflecting their short maturities.
Marketable securities are carried at cost, and related fair values are based
on quoted market prices. Current marketable securities consist primarily of (i)
U.S. Government securities totalling $1,372,602,000 at December 31, 1993 and
$536,013,000 at December 31, 1992 and (ii) at December 31, 1992, $255,649,000 of
Time Warner Inc. convertible preferred stock which was redeemed in February
1993. The fair value of current marketable securities totalled $1,497,540,000 at
December 31, 1993 and $899,000,000 at December 31, 1992.
Noncurrent marketable securities at December 31, 1992 totalled $450,022,000
and had an aggregate fair value of $547,734,000. Those securities consisted
primarily of Time Warner convertible preferred stock other than the stock
mentioned in the preceding paragraph, all of which were disposed in 1993.
(C) FILM CONTRACTS-Chris-Craft's television stations own film contract rights
which allow generally for limited showings of films and syndicated programs.
Film contract rights and related liabilities are recorded when the films become
available for telecasting.
Contracts are amortized over the estimated number of showings using primarily
accelerated methods as films are used, based on management's estimates of the
flow of revenue and ultimate total cost for each contract. The estimated costs
of recorded film contract rights to be charged to income within one year are
included in current assets; payments on such contracts due within one year are
included in current liabilities. The approximate future maturities of film
contracts payable after one year at December 31, 1993 are $47,269,000,
$26,858,000, $12,576,000 and $8,996,000 in 1995, 1996, 1997 and thereafter,
respectively. The net present value at December 31, 1993 of such payments, based
on a 6% discount rate, was approximately $83,100,000. See Note 10.
(D) DEPRECIATION AND AMORTIZATION- Depreciation of property and equipment is
generally provided for on the straight-line method over the estimated useful
lives of the assets, except that leasehold improvements are amortized over the
lives of the respective leases, if shorter.
<PAGE>
(E) INTANGIBLE ASSETS-Intangible assets reflect the excess of the purchase
prices of businesses acquired over net tangible assets at dates of acquisition.
The carrying values of such intangibles as of December 31, 1993 and 1992 are as
follows:
- --------------------------------------------------------------------------------
(IN THOUSANDS) 1993 1992
Television Division .......... $333,151 $337,426
Industrial Division .......... 774 774
$333,925 $338,200
Television Division amounts primarily relate to WWOR and are being amortized
on a straight-line basis over 40 year periods. Accumulated amortization of
intangible assets totalled $28,690,000 at December 31, 1993 and $19,420,000 at
December 31, 1992. Intangible assets at December 31, 1993 are net of negative
goodwill totalling $9,244,000 resulting from purchases by BHC of its own shares
at prices less than net book value.
(F)REVENUE RECOGNITION AND BARTER TRANSACTIONS-Revenue is recognized upon
broadcast of television advertising and upon shipment of manufactured products.
Barter (nonmonetary) transactions are recorded at the time related agreements
are consummated. The estimated fair value of goods or services received is
recognized as revenue when the air time is used by the advertiser.
(G) INCOME PER SHARE-Income per share amounts for all periods presented give
retroactive effect to all common stock dividends declared through February 8,
1994. Primary per share amounts were computed by dividing income, after
preferred stock dividend requirements of $493,000 in 1993, $504,000 in 1992, and
$506,000 in 1991, by the average number of common and, when dilutive, common
equivalent, shares outstanding (28,254,000 in 1993, 27,913,000 in 1992 and
28,117,000 in 1991). Stock options are the only common share equivalents.
Fully diluted per share amounts further assume conversion of the average
number of $1.40 convertible preferred shares outstanding.
(H) SUPPLEMENTAL CASH FLOW INFORMATION-Cash paid for income taxes totalled
$142,465,000 in 1993, $33,590,000 in 1992 and $54,348,000 in 1991.
(I) RECLASSIFICATIONS-Certain prior period amounts have been reclassified to
conform to the current year presentation.
2. BHC COMMUNICATIONS, INC.:
- --------------------------------------------------------------------------------
From January 1984 through August 1989, Chris-Craft held a 57.5% equity
interest in BHC and Warner Communications Inc. held the remaining 42.5%
interest. In August 1989, BHC was recapitalized, whereupon BHC's outstanding
shares consisted of 12,000,000 shares of Class A common stock (all held by
Warner and representing 40% of BHC's then outstanding equity), and 18,000,000
shares of Class B common stock (all held by Chris-Craft and representing 60% of
BHC's then outstanding equity). Pursuant to the January 10, 1990 merger of
Warner and Time Warner, the BHC Class A common shares held by Warner were
distributed to former Warner shareholders, including BHC subsidiaries. BHC has
acquired additional Class A common shares in open market purchases, and at
December 31, 1993, the 18,000,000 Class B common shares held by Chris-Craft
represented 70.3% of BHC's total common shares then outstanding for accounting
purposes.
BHC Class B common shares entitle the holder to ten votes per share, and BHC
Class A common shares entitle the holder to one vote per share. Accordingly,
Chris-Craft held 96% of BHC's voting power at December 31, 1993.
In November 1992, BHC's Board of Directors declared a special cash dividend
of $2.00 per share on BHC's Class A and Class B common stock. The dividend,
including $36,000,000 to Chris-Craft, was paid in January 1993. BHC has no
current plan to pay future cash dividends.
3. INTERESTS IN WARNER COMMUNICATIONS INC. AND TIME WARNER INC.:
- --------------------------------------------------------------------------------
From 1984 to 1989, BHC was Warner's largest shareholder, and Warner held a
significant minority interest in BHC. Pursuant to the merger of Warner and Time
Warner, BHC in 1989 sold for cash 63% of its interest in Warner, and in 1990
exchanged its remaining Warner shares primarily for Time Warner convertible
preferred stock. Chris-Craft recorded pretax gains on such transactions
totalling $1,896,188,000.
During 1993, Time Warner redeemed its convertible preferred shares held by
BHC for cash and convertible subordinated debentures. Such debentures
subsequently were partially redeemed by Time Warner, and the balance was sold.
Proceeds from the Time Warner dispositions have been placed primarily in money
market instruments having significantly lower yields than the securities
disposed. Income associated with Time Warner securities is included in the
accompanying Consolidated Statements of Income as follows:
- --------------------------------------------------------------------------------
(IN THOUSANDS) YEAR ENDED DECEMBER 31,
------------------------------------
1993 1992 1991
GAIN ON DISPOSITION, AFTER
EXPENSE OF $2,905 IN 1993 ......... $219,373 $ 8,082 $ 5,471
DIVIDEND INCOME ...................... 14,672 85,977 82,186
INTEREST INCOME ...................... 22,577 -- --
$256,622 $ 94,059 $ 87,657
Expense deducted from the 1993 gain on disposition consists of Chris-Craft
compensation expense reimbursed by BHC pursuant to its management agreement with
Chris-Craft.
<PAGE>
4. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
- --------------------------------------------------------------------------------
Accounts payable and accrued expenses consist of the following:
- --------------------------------------------------------------------------------
(IN THOUSANDS) DECEMBER 31,
------------------------
1993 1992
ACCOUNTS PAYABLE ............................... $ 7,872 $ 12,066
PAYABLE FOR SECURITIES PURCHASED ............... 15,851 1,535
BHC DIVIDEND PAYABLE ........................... -- 15,893
ACCRUED EXPENSES -
PAYROLL AND COMPENSATION .................... 29,016 24,241
DEFERRED BARTER REVENUE ..................... 33,252 25,335
OTHER ....................................... 21,347 21,722
$107,338 $100,792
5. LONG-TERM DEBT:
- --------------------------------------------------------------------------------
Long-term debt at December 31, 1992 consisted of outstanding 13% subordinated
debentures due 1999, which were redeemed at face value in January 1993 and
accordingly reflected as a current liability.
6. SHAREHOLDERS' INVESTMENT:
- --------------------------------------------------------------------------------
Each share of $1.00 prior preferred stock is redeemable by Chris-Craft at
$25.00. Each share of $1.40 convertible preferred stock is redeemable by
Chris-Craft at $40.00 and is convertible into common stock or Class B common
stock as set forth below. Chris-Craft has authorized 10,000,000 shares of
preferred stock, $1.00 par value, that may be issued without further shareholder
approval, in one or more series, the terms and provisions of which shall be set
by the Board of Directors.
Each share of Class B common stock entitles the holder to ten votes (common
stock entitles the holder to one vote per share), is convertible at all times
into common stock on a share-for-share basis, is not transferable except to
specified persons ("Permitted Transferees") and, in general, carries the same
per share dividend and liquidation rights as a share of common stock, except
that the Board of Directors may in its discretion declare greater cash dividends
per share on the common stock than on the Class B common stock. No additional
Class B shares may be issued without further shareholder approval, except upon
the conversion of $1.40 convertible preferred shares by holders of record on
November 10, 1986 (the record date for the initial distribution of Class B
common stock) or Permitted Transferees, or in payment of stock dividends or
stock splits on outstanding shares of Class B common stock.
So long as any Class B common stock is outstanding, each share of $1.40
convertible preferred stock will entitle the holder, if he was the holder on
November 10, 1986, to convert such share of $1.40 convertible preferred stock
into 9.73794 shares of common stock and 19.47587 shares of Class B common stock
and to 203.7 votes (10.03008, 20.06014 and 210.0, respectively, as adjusted for
the 1994 stock dividend described below). The foregoing special conversion and
voting rights will be available to holders of $1.40 convertible preferred stock
transferred after November 10, 1986 only under the same circumstances as those
in which the Class B common stock is transferable. Each share of $1.40
convertible preferred stock transferred after November 10, 1986 entitles its
holder (other than a Permitted Transferee) to convert such share into 29.21381
shares of common stock and 29.2 votes (30.09022 and 30.1, respectively, as
adjusted for the 1994 stock dividend described below).
Chris-Craft, from time to time, has purchased shares of its capital stock in
open market and privately negotiated transactions, including 1993 purchases of
265,800 shares of common stock. At December 31, 1993, 768,502 shares of common
stock and 12,899 shares of $1.00 prior preferred stock remained authorized for
purchase.
As of December 31, 1993, shares of Chris-Craft's authorized but unissued
common stock were reserved for issuance as follows:
- --------------------------------------------------------------------------------
SHARES
CONVERSION OF CLASS B COMMON STOCK .......................... 7,379,866
CONVERSION OF $1.40 CONVERTIBLE PREFERRED STOCK ............. 8,704,137*
STOCK OPTIONS (INCLUDING OPTIONS OUTSTANDING
FOR 1,488,698 SHARES) .................................... 1,616,062
STOCK PURCHASE PLAN ......................................... 20,000
17,720,065
*Including Class B common shares.
On January 27, 1994, the Board of Directors declared a 3% common stock
dividend, payable in April 1994, which will increase by 3% Chris-Craft's common
and Class B common shares outstanding and will also increase by 3% the number of
common shares issuable upon conversion of Chris-Craft's $1.40 convertible
preferred stock and upon exercise of stock options. Applicable conversion rates
and exercise prices will be adjusted accordingly.
7. STOCK OPTIONS:
- --------------------------------------------------------------------------------
Under the 1988 Management Incentive Plan, options (including Incentive Stock
Options) to purchase shares of common stock may be granted from time to time to
employees of Chris-Craft and its subsidiaries, at prices not less than the fair
market value at date of grant. As of December 31, 1993, approximately 50
employees were eligible to participate in the Plan, of whom 33 were
participating. Options are exercisable in cumulative annual installments of
331/3% commencing one year from date of grant, and expire over a period
determined by the Plan committee, which may not exceed ten years from date of
grant. Options granted under the Plan expire five years from date of grant.
Since substantially all options authorized under the Plan have been awarded,
Chris-Craft anticipates adoption of a new plan having similar provisions, under
which options for 2,500,000 shares may be granted.
<PAGE>
Stock option transactions during the year ended December 31, 1993 were as
follows:
- --------------------------------------------------------------------------------
(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA)
SHARES OPTION PRICE
UNDER OPTION PER SHARE TOTAL
OUTSTANDING,
DECEMBER 31, 1992 ...... 1,744,246 $17.77-$31.99 $ 46,379
INCREASE TO REFLECT
3% STOCK DIVIDEND ...... 52,243 -- --
GRANTED ................... 68,000 35.00-37.25 2,488
EXERCISED ................. (586,163) 17.77-31.61 (10,767)
OUTSTANDING,
DECEMBER 31, 1993 ...... 1,278,326 $18.73-$37.25 $ 38,100
At December 31, 1993, options outstanding under the Plan were exercisable for
810,523 shares at prices ranging from $18.73 to $31.99 per share, and options
for 179 shares were available for grant. Options outstanding expire at various
dates from March 1994 through December 1998.
Under the shareholder approved 1989 Director Stock Option Plan, immediately
exercisable options to purchase shares of common stock are granted annually to
non-employee directors of Chris-Craft at prices equal to fair market value at
date of grant. At December 31, 1993, such options expiring from November 1994
through April 1998 had been granted for 210,372 shares at exercise prices
ranging from $25.73 to $31.88 per share, and options for 127,185 shares were
available for grant. Such options will not be granted if a similar new plan for
300,000 shares, proposed by Chris-Craft, is adopted.
Proceeds from the exercise of options are credited to common stock to the
extent of par value, and the remainder is credited to capital surplus, except
that, when treasury stock is issued, the treasury stock account is reduced by
the average cost of the treasury stock, and any difference between such cost and
the exercise price is charged or credited to capital surplus. Related income tax
benefits which accrue to Chris-Craft are credited to capital surplus.
8. RETIREMENT PLANS:
- --------------------------------------------------------------------------------
Chris-Craft and UTV maintain noncontributory defined benefit pension plans
covering substantially all their employees. Benefits accrue annually based on
compensation paid to participants each year. The funding policy is to contribute
annually to the plans amounts sufficient to fund current service costs and to
amortize any unfunded accrued liability over periods not to exceed 30 years.
Pension expense, including amounts accrued in Chris-Craft and UTV
nonqualified plans for retirement benefits in excess of statutory limitations,
was as follows:
- --------------------------------------------------------------------------------
(IN THOUSANDS) YEAR ENDED DECEMBER 31,
-------------------------------------
1993 1992 1991
SERVICE COST ...................... $ 2,358 $ 1,634 $ 1,675
INTEREST COST ON PROJECTED
BENEFIT OBLIGATION ............. 1,861 1,676 1,470
ACTUAL RETURN ON PLAN ASSETS ...... (1,516) (1,037) (1,717)
AMORTIZATION OF
DEFERRED ITEMS ................. 250 (27) 996
$ 2,953 $ 2,246 $ 2,424
The estimated funded status of the Chris-Craft and UTV plans, including amounts
accrued in the nonqualified plans, was as follows:
- --------------------------------------------------------------------------------
(IN THOUSANDS) DECEMBER 31,
---------------------
1993 1992
ACTUARIAL PRESENT VALUE OF:
VESTED BENEFIT OBLIGATION ....................... $(20,366) $(16,434)
NONVESTED BENEFIT OBLIGATION .................... (1,412) (1,144)
ACCUMULATED BENEFIT OBLIGATION ............ (21,778) (17,578)
EFFECT OF PROJECTED COMPENSATION
INCREASES .................................... (7,709) (7,143)
PROJECTED BENEFIT OBLIGATION .............. (29,487) (24,721)
FAIR VALUE OF PLAN ASSETS (PRIMARILY LISTED
SECURITIES AND TEMPORARY INVESTMENTS) ........... 18,779 15,796
EXCESS .................................... (10,708) (8,925)
UNRECOGNIZED NET ASSET AT DATE OF
INITIAL APPLICATION OF SFAS NO. 87,
BEING AMORTIZED OVER 15 YEARS ................... (333) (382)
UNRECOGNIZED NET LOSS FROM PAST EXPERIENCE,
BEING AMORTIZED OVER 15 YEARS ................... 2,621 1,838
PENSION LIABILITY ......................... $ (8,420) $ (7,469)
Assumptions used in accounting for pension plans are as follows (except that
the discount rate has been reduced to 7.25% and the future compensation increase
rate has been reduced to 4.50% effective with the computation of the December
31, 1993 pension liability):
- --------------------------------------------------------------------------------
DISCOUNT RATE ................................................ 7.75%
RATE OF INCREASE IN FUTURE COMPENSATION LEVELS ............... 5.00%
EXPECTED LONG-TERM RATE OF RETURN ON ASSETS .................. 7.75%
Chris-Craft and certain of its subsidiaries maintain other retirement plans,
primarily stock purchase and profit sharing plans. The aggregate costs of such
plans, including related amounts accrued in the nonqualified plans referred to
above, were $8,395,000 in 1993, $6,723,000 in 1992 and $2,687,000 in 1991.
9. INCOME TAXES:
- --------------------------------------------------------------------------------
Effective January 1, 1993, Chris-Craft adopted Statement of Financial
Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes", under
which
<PAGE>
deferred income tax amounts reflect the expected future tax consequences
arising from temporary differences in the bases of assets and liabilities for
financial accounting and income tax purposes. The cumulative effect of adoption
of SFAS 109, the amount of which is immaterial, is included in the 1993
provision for income taxes.
Income taxes are provided in the accompanying consolidated statements of
income as follows:
- --------------------------------------------------------------------------------
(IN THOUSANDS) YEAR ENDED DECEMBER 31,
-------------------------------------------
1993 1992 1991
CURRENT (INCLUDING 1993 EFFECT
OF ADOPTION):
FEDERAL .............. $ 131,167 $ 26,068 $ 26,700
STATE ................ 16,475 8,100 6,625
147,642 34,168 33,325
DEFERRED:
FEDERAL .............. (2,467) 3,482 925
STATE ................ 2,025 150 50
(442) 3,632 975
$ 147,200 $ 37,800 $ 34,300
Differences between income taxes at the federal statutory income tax rate and
total income taxes provided are as follows:
- --------------------------------------------------------------------------------
(IN THOUSANDS) YEAR ENDED DECEMBER 31,
-------------------------------------
1993 1992 1991
TAXES AT FEDERAL
STATUTORY RATE ................. $ 134,615 $ 49,426 $ 45,220
STATE INCOME TAXES, NET ........... 12,017 5,445 4,406
AMORTIZATION OF INTANGIBLE
ASSETS ......................... 2,847 1,463 502
DIVIDEND EXCLUSION ................ (3,984) (20,574) (19,599)
ENACTED RATE CHANGE
(TO 35% FROM 34%) .............. (1,241) -- --
CAPITAL LOSSES NOT BENEFITTED ..... -- 612 2,665
OTHER ............................. 2,946 1,428 1,106
$ 147,200 $ 37,800 $ 34,300
Deferred tax assets and deferred tax liabilities at December 31, 1993 reflect
the tax effect of the following differences between financial statement carrying
amounts and tax bases of assets and liabilities:
- --------------------------------------------------------------------------------
(IN THOUSANDS)
ACCRUED LIABILITIES NOT DEDUCTIBLE UNTIL PAID .............. $ 34,375
INVESTMENTS ................................................ 6,186
FILM CONTRACT RIGHTS ....................................... 14,399
TAX CREDIT CARRYFORWARDS ................................... 3,341
OTHER ...................................................... 4,531
62,832
VALUATION ALLOWANCE ........................................ (9,464)
DEFERRED TAX ASSETS, NET ............................. 53,368
PROPERTY AND EQUIPMENT ..................................... (4,033)
OTHER ...................................................... (336)
DEFERRED TAX LIABILITIES ............................. (4,369)
NET DEFERRED TAX ASSETS .............................. $ 48,999
The valuation allowance reflects the inability to predict the realization of
future tax benefits relating to tax credit carryforwards and future dispositions
of certain investments having tax bases greater than related financial statement
carrying amounts.
A tax benefit of $3,402,000 arising from the exercise of employee stock
options was credited to capital surplus in 1993.
Certain states have audited income tax returns filed with them by Chris-Craft
and its subsidiaries, and are considering to propose adjustments increasing the
amount of income taxable by such states. Chris-Craft believes that reserves
previously provided are adequate to cover any additional taxes and interest
which might ultimately become payable.
10. Commitments and Contingencies:
- ------------------------------------------------------------------------------
The aggregate amount payable by Chris-Craft's television stations under
contracts for programming not currently available for telecasting and,
accordingly, not included in film contracts payable and the related contract
rights in the accompanying Consolidated Balance Sheet, totalled $117,900,000 at
December 31, 1993 (including $28,500,000 applicable to UTV).
Montrose Chemical Corporation of California, whose stock is 50% owned by
Chris-Craft and 50% by a subsidiary of Zeneca Inc. (formerly ICI Americas,
Inc.), discontinued its manufacturing operations in 1983 and has since been
defending claims for costs and damages relating to environmental matters. More
recently, Chris-Craft has been named as a defendant in certain of these actions
by plaintiffs seeking to hold Chris-Craft liable for Montrose activities.
Montrose related expenses of $4,337,000 in 1993, $1,396,000 in 1992 and
$5,840,000 in 1991, are included in the accompanying Consolidated Statements of
Income under the caption Interest and other income, net.
Montrose is one of numerous defendants in a suit relating to alleged
environmental impairment at the Stringfellow Hazardous Waste Disposal Site in
California, brought in 1983 by the Federal government and the State of
California, which claim Montrose generated approximately 19% of the waste placed
at the site. In 1990, the United States Environmental Protection Agency issued
a Record of Decision for the site which selected some of the interim remedial
measures preferred by the EPA and the State, the present value of which was
estimated by them to be $169 million, although the estimate is subject to
potential variations of up to 50%. A ruling issued in 1993 by the Special
Master in the suit allocated at least 65% of the liability (under Federal law)
at the site to the State of California, and approximately 25% of the liability
to the generator defendants (including Montrose). Under California law, the
Special Master allocated 100% of the liability to the State. The State is
expected to appeal the decision. The United States Department of Justice has
sought and received information regarding the relationship between Montrose and
its two shareholders in an inquiry directed to the issue whether Chris-Craft, as
a shareholder of Montrose, should be added as a party to the Government's
Stringfellow suit. During 1993, Montrose and Chris-Craft were among a group of
defendants which settled a suit brought by more than 4,000 individual plaintiffs
for alleged personal injuries and property damages purportedly
<PAGE>
caused by substances allegedly released from the Stringfellow site. Montrose
paid approximately $7.5 million in settlement, over 80% of which was covered by
insurance. Chris-Craft made no payment in the settlement. In June 1990, the
Federal government and the State of California commenced an action against
Montrose, Chris-Craft, and other defendants, alleging that Montrose and others
released hazardous substances into Los Angeles Harbor and adjacent waters, and
seeking to recover unspecified monetary damages resulting f rom alleged injury
to natural resources. The action also seeks recovery for costs related to
alleged hazardous substance contamination of the Montrose plant site in
Torrance, California. Montrose is also a defendant in an action brought in 1984
by private parties seeking damages in excess of $15 million, which alleges that
Montrose contributed to the contamination of certain property in Richmond,
California. Chris-Craft was added as a defendant in 1992. During 1990,
Montrose and Chris-Craft were notified by the Federal government of its
intention to name each of them as a defendant in an action seeking recovery for
alleged damage to natural resources emanating from the Richmond site, and in
1991 the EPA notified Chris-Craft it may seek to include Chris-Craft as one of
the parties responsible for remediation at this site. Montrose was named a
defendant in two additional private party actions during 1992, one of which also
named Chris-Craft. In 1993, Montrose and Chris-Craft were named among 35
defendants in a suit by the owners of a former pesticide formulation site in
Fresno, California, where damages sought exceed $21 million. Chris-Craft
intends vigorously to defend itself in Montrose related actions in which it is a
defendant. 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 because, among other reasons, (i) the discovery process in the suits
described above is not yet completed and (ii) significant uncertainties exist
regarding any basis for liability, the extent of any claimed environmental
damage and possible remedy selections.
Chris-Craft is a party to various other pending legal proceedings arising in
the normal course of business. In the opinion of management, after taking into
account the opinion of counsel with respect thereto, the ultimate resolution of
these matters will not have a material effect on Chris-Craft's consolidated
financial position or results of operations.
11. SEGMENT REPORTING:
- ------------------------------------------------------------------------------
Industry segment data is set forth in the table on page 12.
CHRIS-CRAFT INDUSTRIES, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA)
AS OF AND FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES ............... $ 439,733 $ 331,535 $ 283,835 $ 297,555 $ 267,499
OPERATING INCOME (LOSS) .......... $ 75,332 $ 16,805 $ (3,815) $ 21,865 $ 7,302
INTEREST AND OTHER INCOME, NET ... 52,661 36,790 51,507 73,001 51,895
INTEREST EXPENSE ................. -- (2,283) (2,350) (2,598) (12,170)
INCOME ASSOCIATED WITH TIME WARNER
AND, IN 1990 AND 1989,
WARNER SECURITIES ............. 256,622 94,059 87,657 685,215 1,301,602
INCOME TAXES ..................... (147,200) (37,800) (34,300) (277,000) (502,100)
MINORITY INTEREST ................ (88,347) (42,421) (40,441) (208,786) (373,239)
NET INCOME ................. $ 149,068 $ 65,150 $ 58,258 $ 291,697 $ 473,290
NET INCOME PER SHARE -
PRIMARY .................... $ 5.26 $ 2.32 $ 2.05 $ 10.26 $ 16.64
FULLY DILUTED .............. 3.99 1.74 1.55 7.69 12.36
CASH AND CURRENT MARKETABLE
SECURITIES .................... 1,536,107 983,537 961,749 869,574 1,056,973
WORKING CAPITAL .................. 1,495,871 899,640 939,664 845,362 1,015,582
FILM CONTRACT RIGHTS ............. 186,079 187,518 165,029 161,634 196,965
NONCURRENT MARKETABLE SECURITIES . -- 450,022 732,740 690,898 178,302
TOTAL ASSETS ..................... 2,283,178 2,160,694 2,049,775 1,939,181 1,613,489
LONG-TERM DEBT ................... -- -- 15,625 17,500 19,375
MINORITY INTEREST ................ 615,615 565,206 630,047 606,410 515,929
SHAREHOLDERS' INVESTMENT ......... $ 1,258,227 $ 1,111,747 $ 1,052,713 $ 973,279 $ 729,825
</TABLE>
<PAGE>
CHRIS-CRAFT INDUSTRIES, INC. AND SUBSIDIARIES
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 varies greatly between periods (payments exceeded amortization by
$44.8 million in 1993, but amortization exceeded payments by $14.5 million in
1992 and $26.3 million in 1991), and is dependent upon the mix of programs aired
and payment terms of the stations' contracts. In 1993, a Chris-Craft station
made a $34.4 million broadcast right prepayment, which will be amortized from
1994 through 1996. Such factors, despite a 126% increase in station earnings,
resulted in a 39% decline in 1993 station cash flow (9% excluding the broadcast
right prepayment). Chris-Craft expects that 1994 station cash flow will be
strong and will parallel more closely station earnings.
Chris-Craft's cash flow additionally reflects earnings associated with its
cash and marketable securities, most of which are held by majority owned
television 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 received in the
January 1990 merger of Time Warner and Warner Communications Inc., in which BHC
had been a major shareholder. During 1993, Time Warner redeemed its convertible
preferred shares held by BHC for cash and convertible subordinated debentures.
Such debentures subsequently were partially redeemed by Time Warner, and the
balance was sold. Proceeds from the Time Warner dispositions, which produced
1993 BHC pretax gains of $219.4 million, have been placed primarily in money
market instruments, mainly U.S. Government obligations, having significantly
lower yields than the securities disposed.
Consolidated cash and marketable securities increased to $1.54 billion at
December 31, 1993 from $1.43 billion at December 31, 1992, despite a deficit in
operating cash flow. Such deficit and nonoperating cash expenditures, primarily
the repayment of all long-term debt, and BHC's special cash dividend and
treasury stock purchases, described below, were more than offset by the Time
Warner dispositions. The operating cash flow deficit primarily reflects (i)
income taxes on the disposition of BHC's Time Warner convertible preferred
stock, the related gain on which is excluded from operating cash flow, (ii) the
$44.8 million excess of film payments over related amortization and (iii) the
$34.4 million broadcast right prepayment.
BHC generates most of Chris-Craft's consolidated cash flow. Parent company
obligations now consist solely of corporate office expenditures, current and
accrued, as Chris-Craft redeemed in January 1993 all $15.6 million of its
outstanding long-term debt. 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 current ability to meet parent company obligations.
Since April 1990, BHC's Board of Directors has authorized the purchase of up
to 5,500,000 Class A common shares. Through December 31, 1993, 3,683,777 shares
have been purchased for a total cost of $199.4 million, including $33.3 million
applicable to shares purchased in 1993. Chris-Craft ownership interest in BHC
accordingly increased to 70.3% at December 31, 1993 from 60% at December 31,
1989.
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 current commitments for programming
that will not be available for telecasting until future dates. At December 31,
1993, commitments for such programming totalled approximately $117.9 million,
including $28.5 million applicable to UTV. Chris-Craft capital expenditures
generally have not been material in relation to its financial position and the
related commitments at December 31, 1993 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 10, 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
- --------------------------------------------------------------------------------
1993 VERSUS 1992 Chris-Craft 1993 net income increased 129% to $149,068,000,
or $5.26 per share, from $65,150,000, or $2.32 per share, in 1992. The
significant earnings increase includes record Television Division results and
substantial gains on disposition of BHC's remaining Time Warner securities.
Reflecting a full year's operations at WWOR and generally improved demand for
television advertising at the Division's other seven stations, Television
Division operating revenues rose 34% in 1993, to $411,999,000 from $307,883,000.
Station earnings rose 126%, surpassing $100,000,000 for the first time, as
stations other than WWOR achieved
<PAGE>
a 104% increase in their aggregate earnings. Those stations recorded an 8%
increase in their operating revenues and a 10% reduction in their programming
expenses. After goodwill amortization (mostly relating to the acquisition of
WWOR), program development expense (reduced $3.1 million from 1992), and
corporate office expenses of BHC and UTV (increased $1.1 million from 1992,
excluding intercompany management fee), Television Division operating income
totalled $87,811,000, more than triple 1992's $27,896,000.
Consolidated operating income, which additionally reflects Industrial
Division operating income and Chris-Craft corporate office expense, increased
348% to $75,332,000 from $16,805,000 in 1992. Industrial Division operating
revenues rose 17%, to $27,734,000 from $23,652,000. However, the Division's
operating income declined to $602,000 from $1,392,000, primarily reflecting
reduced margins on key health care products, a provision to reduce the carrying
value of the Division's nonwoven fiber business (sold in February 1994) to net
realizable value, and higher operating expenses, including expenses for
developing and promoting new products.
The 1993 reduction in programming expenses described above primarily reflects
a significant decline in program amortization. Such decline is attributable to
(i) airing certain syndicated programs for periods longer than originally
estimated, reflecting their sustained success, (ii) the acquisition of fewer
replacement programs, (iii) final determination that certain contract costs
would be less than previously estimated, and (iv) generally lower costs of
programming. These favorable factors are expected to moderate, and it is
anticipated that program amortization will increase modestly in 1994.
Income associated with BHC's former holdings of Time Warner Inc. securities
increased to $256,622,000 in 1993, from $94,059,000 in 1992, as 1993 gains on
disposition aggregated $219.4 million versus $8.1 million in 1992. Other
nonoperating income totalled $52,661,000, up from $34,507,000 in 1992, primarily
reflecting other marketable securities gains and the placement of Time Warner
proceeds in money market instruments, which factors more than offset the
increase to $4.3 million from $1.4 million in Montrose related expenses.
Chris-Craft's effective income tax rate rose to 38% in 1993 from 26% in 1992,
primarily due to a reduction in the proportion of not fully taxable dividend
income included in pretax income.
Minority interest represents the interest (30.5% in 1993 and 32.0% in 1992)
of shareholders other than Chris-Craft in BHC's net income, and the interest
(45.7% in 1993 and 47.1% in 1992) of UTV's public shareholders in UTV's net
income. The differences between years primarily reflect purchases by BHC and UTV
of their respective common shares.
1992 VERSUS 1991 Chris-Craft net income in 1992 increased to $65,150,000, or
$2.32 per share, from $58,258,000, or $2.05 per share, in 1991. The increase in
net income primarily reflects strong Television Division earnings, as well as a
substantial decline from 1991 in nonoperating losses. These positive factors,
together with additional earnings from Chris-Craft's increased ownership of BHC,
more than offset a large decline in interest income.
Except for Olympics and political advertising, which did not significantly
benefit the Television Division, demand for television advertising was generally
sluggish throughout 1992. Operating revenues at stations other than WWOR
declined 2% in 1992, but the addition of WWOR brought Television Division
operating revenues for the year to a record $307,883,000, up 17% from 1991's
$262,568,000. Despite the modest decline in their revenues, earnings at stations
other than WWOR more than doubled, due to a 12% decline in their programming
expenses and a 3% decline in their nonprogramming expenses. Including WWOR,
station earnings rose 170%. After reflecting program development expense (no
significant change from 1991), corporate office expenses of BHC and UTV, and
goodwill amortization, Television Division operating income increased to
$27,896,000 from $4,042,000 in 1991.
Consolidated operating income, which additionally reflects Industrial
Division operating income and Chris-Craft corporate office expense, totalled
$16,805,000 in 1992, reversing a 1991 operating loss of $3,815,000. Industrial
Division operating income rose 10%, to $1,392,000 from $1,268,000 in 1991,
following an 11% increase in operating revenues. Chris-Craft corporate office
expenses increased $3.4 million, primarily reflecting a provision for market
value based benefit plan expense.
The 1992 reduction in programming expenses described above primarily reflects
a decline in program amortization attributable to the factors which similarly
affected 1993 amortization.
Income associated with Time Warner securities increased to $94,059,000 in
1992 from $87,657,000 in 1991, reflecting increased dividend income and gains on
sale of convertible preferred shares. Other nonoperating income, net declined to
$34,507,000 from $49,157,000, as the utilization of funds to acquire WWOR and
lower short-term interest rates resulted in a decrease in interest income. The
decline in interest income was partially offset by smaller nonoperating losses,
including a reduction to $1.4 million from $5.8 million in Montrose related
expense.
Minority interest in BHC's net income declined to 32.0% in 1992 from 35.1% in
1991 and minority interest in UTV's net income declined to 47.1% in 1992 from
48.0% in 1991, primarily reflecting purchases by BHC and UTV of their respective
common shares.
