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, 1994
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:
Title of each class Name of each Exchange
on which registered
Prior Preferred Stock New York Stock Exchange, Inc.
$1.00 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.
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, 1995, was approximately
$897,000,000.
As of February 28, 1995, there were 20,897,522 shares of the
registrant's Common Stock and 7,531,802 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:
Document Part
Those portions of the registrant's annual I, II
report to stockholders for the fiscal year
ended December 31, 1994 (the "Annual Report")
that are specifically identified herein as
incorporated by reference into this Form 10-K.
Those portions of the registrant's proxy III
statement for the registrant's 1995 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 (73.1% at February 28, 1995) subsidiary, BHC
Communications, Inc. ("BHC"), which owns 100% of Chris-Craft Television,
Inc. ("CCTV"), 100% of Pinelands, Inc. ("Pinelands") and, as of February
28, 1995, 56.1% of United Television, Inc. ("UTV").
At February 28, 1995, Chris-Craft (including UTV) had 1,072 full-
time employees and 102 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. The
United Paramount Network ("UPN"), a fifth broadcast television network
jointly formed by BHC and the Paramount Television Group, a unit of
Viacom Inc. ("Paramount"), began broadcasting a total of four hours of
original prime time programming over two nights per week, in January
1995. As of February 28, 1995, UPN had 114 affiliates reaching more
than 83% of all U.S. households, including all of BHC's and Paramount's
independent stations, and UPN continues to seek additional affiliates to
expand its household reach. Because of UPN's substantial start-up and
expansion costs, and the intense competition that characterizes the
broadcast television network business, UPN is not expected to become
profitable in the near future.
The following table sets forth certain information with respect to
BHC's stations and their respective markets:
xxx
<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 13 4,936,180 2nd 7VHF 60%
Los Angeles 10UHF
WWOR (e) 9 6,716,020 1st 6VHF 65%
Secaucus 14UHF
KPTV 12 919,540 25th 4VHF 58%
Portland 2UHF
KMSP 9 1,410,630 14th 4VHF 48%
Minneapolis/ 3UHF
St. Paul
KTVX 4 638,450 37th 4VHF 52%
Salt Lake City 2UHF
KMOL 4 627,920 39th 3VHF 64%
San Antonio 3UHF
KBHK 44 2,250,600 5th 4VHF 68%
San Francisco 10UHF
KUTP 45 1,132,600 19th 4VHF 54%
Phoenix 4UHF
_______________
(a) KCOP and KPTV are owned by CCTV; WWOR is owned by Pinelands; the
remaining stations are owned by UTV. All stations are UPN
affiliates (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 house-
holds 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 Com-
munications 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.
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.
These differences between operating as an independent and as a
major-network affiliate have been reduced by the growth of the Fox
network, which currently provides 15 weekly hours of programming during
prime time and additional programming in other periods to many
independents, and would be reduced further if UPN or another such
network venture should successfully provide an expanded schedule of
programming to other independents. Another feature of competition
between major-network affiliates and independents is created by the
FCC's "prime time access rule," which effectively prevents affiliates of
the major networks in the country's fifty largest markets from
broadcasting more than three hours of network or "off network"
entertainment and/or sports between 7 and 11 p.m., Eastern time. ("Off
network" shows are reruns of network programs that are distributed to
stations on a syndicated basis.) One effect of this rule is to
facilitate the purchase of the rights to popular "off network" shows by
independent stations (including those affiliated with Fox or UPN).
Recently, however, the FCC has begun a proceeding to consider whether to
retain, eliminate or modify this rule. Chris-Craft is unable to predict
the outcome of these proceedings.
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 joined in the formation of UPN, and
has begun to invest directly in the development of original programming.
The aggregate amount invested through December 31, 1994 was not
significant to Chris-Craft's financial position. 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
theaters (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 syndication 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 programming while such
programming is still being broadcast by a network and before it is
available for broadcast by BHC stations or even 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
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. The new rules and the projected
"sunset" were upheld by the United States Court of Appeals for the
Seventh Circuit on July 12, 1994. The FCC will conduct a review of
whether the rules should be retained (with the burden of proof assigned
to the proponents of retention) beginning in May 1995. 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 $148,473,000 as of December 31, 1994. The stations were
committed for film and sports rights contracts aggregating $146,400,000
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 9 of
Notes to Consolidated Financial Statements.
KTVX and KMOL are primary affiliates of their respective networks.
Network programs are produced either by the networks themselves or by
independent production companies and are transmitted by the networks to
their affiliated stations for broadcast.
In general, major 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
broadcast by the affiliate, the network generally pays the affiliate 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.
In May 1994, the Fox network persuaded the owner of some (and
prospective owners of other) VHF stations that were located in large
markets and were then affiliated with major networks to switch (or agree
to switch) those affiliations to Fox. The sharply increased competition
among networks for station affiliates (as the displaced networks have
sought alternate outlets) has resulted in the negotiation of some major-
network affiliation agreements with terms as long as ten years and with
guaranteed compensation to the affiliate at increased levels. However,
no new uniform pattern exists.
United Paramount Network
In January 1995, UPN began broadcasting four hours of original
prime time programming per week, consisting of Star Trek: Voyager, a
one-hour science fiction adventure, and two half-hour comedies on Monday
nights and two one-hour dramas on Tuesday nights. The network also
broadcasts two hours of previously exhibited movies on Saturday
afternoons and has announced plans to broadcast one hour of original
children's programming on Sunday mornings, commencing in September 1995.
UPN intends, over the next several years, to expand its prime time
programming to five nights per week, as well as to begin broadcasting in
other day parts.
UPN licenses its current programming, except for Star Trek:
Voyager, on the same bases as are customary in the industry and seeks
license or ownership rights for all other programming from all available
sources (including Paramount) on arms-length terms.
UPN's primary affiliate station agreements have three year terms
and provide commercial time to the stations as consideration for
broadcasting the network's programming.
BHC currently owns 100% of UPN, and Paramount has an option
exercisable through January 15, 1997 to acquire an interest in the
network equal to that of BHC. The option price is equivalent to
approximately one-half of BHC's aggregate cash contributions to UPN
through the exercise date, plus interest. Payment may be deferred
through the option expiration date. BHC expenditures for UPN are
expected to be substantial. See Management's Discussion and Analysis of
Financial Condition and Results of Operations and Note 9 of Notes to
Consolidated Financial Statements.
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 purchased 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, 1994, national advertising
contributed 35%, and local advertising contributed 56%, 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 equipment 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. KUTP's
license renewal was granted on March 28, 1994, and is due to expire on
October 1, 1998. KCOP's license renewal was granted on April 18, 1994,
and is due to expire on December 1, 1998. KMOL, WWOR, KBHK and KPTV
have each filed timely renewal applications, which are pending. In all
four cases, no competing applications have been filed, and the deadlines
for filing such applications have expired. The license renewals of KMOL
and WWOR have been opposed by petitions challenging each station's
compliance with FCC requirements concerning equal employment
opportunity. In each case, the station has vigorously opposed the
petition or petitions, and Chris-Craft believes that those petitions are
without merit. No petitions to deny either KBHK or the KPTV renewal
application have been filed, and the deadlines for filing such petitions
have 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; the FCC has recently granted renewals
in such cases, subject to forfeitures of as much as $80,000.
Under existing FCC regulations governing multiple ownership of
broadcast stations, a license to operate a television station generally
will not be granted to any party (or parties under common control) if
such party directly or indirectly 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 concentration 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 attribution 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 FCC has recently begun a proceeding to consider liberalization
of the various TV ownership restrictions described above, as well as
changes (not all of which would be liberalizing in effect) in the rules
for attributing the licenses held by an enterprise to various parties.
Chris-Craft is unable to predict the outcome of these proceedings.
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.
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
larger than the other independent VHF station and the ten UHF stations
in Los Angeles. 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 network-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 generally 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 generally 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
Federal courts, 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 held constitutionally invalid by six federal
district courts, and two such rulings have been affirmed by the United
States Courts of Appeals for the Fourth and Ninth Circuits. Legislation
eliminating or relaxing this ban has also been proposed. One version of
such legislation was adopted by the House of Representatives in 1994.
Chris-Craft is unable to predict the outcome of these developments.
"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 position 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. Two direct broadcast satellite ("DBS") systems began
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 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 communications media and
governmental restrictions or actions of Federal 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.
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. 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 and
water-soluble hospital laundry bags.
Significant portions of the sales of the Industrial Division are to
the flexible film packaging industry and health care facilities. Sales
of particular items may vary widely from year to year as specifications,
designs and other conditions change. The products of the Industrial
Division are sold by it directly and by sales agents and distributors.
Sales of plastic film to a large chemical manufacturer and to a
health care customer equalled 9.3% and 6.4% of 1994 Division revenues,
respectively. Sales to these accounts are generally made on the basis
of competitive bidding 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. During 1994, non-woven fiber
pads sold to one automotive supplier accounted for 17.5% of the
Division's revenues. However, manufacturing of such fiber products for
the automotive industry at the Division's Waterford, New York facility
was discontinued at the end of 1994, except for small quantities needed
in early 1995 to complete contract obligations. Employment of
substantially all of the facility's approximately 100 employees was
terminated in January and February 1995, and Chris-Craft is currently
evaluating offers to purchase the assets located at the facility.
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 purchased the equipment from
Nonwovens on February 28, 1995. 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 based primarily on
polyvinyl alcohol polymers; some of the film products are water-soluble
in their end use applications while others are made water-insoluble.
Chris-Craft's major use for such film is in water-soluble packaging for
pre-measured amounts of chemical compounds. The film is also used in
the manufacture of water-soluble hospital laundry bags. 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.
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 manufacture and sell these
products.
Raw Materials
Principal raw materials used by the Industrial Division include
polymers and chemical additives. These have generally been readily
available from many sources.
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 Portland,
Oregon, containing approximately 33,520 square feet located on a site of
approximately 1.09 acres. Its transmitter 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 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.
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 2005 and is renewable for
two five-year periods.
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
Plant Location Principal Product Space (Square Feet) Site (Acres)
-------------- ----------------- ------------------- ------------
<S> <C> <C> <C>
Gary, Indiana Plastic flexible films 48,000 5
and water-disposable
hospital bags
Northbrook, Health care products 5,166 --
Illinois
South Holland, Warehouse for healthcare 33,000 --
Illinois products distribution
Waterford, New Carpet underlay and 100,000 18
York automotive insulation
and sound control pads
(ceased production in
March 1995)
__________________
Chris-Craft believes its properties are adequate for their present
uses.
ITEM 3. LEGAL PROCEEDINGS.
Montrose Chemical Corporation of California ("Montrose"), whose
stock is 50% owned by Chris-Craft and 50% by a subsidiary of Zeneca
Holdings, Inc. ("Zeneca"), 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, entitled United States of America et al.
v. J.B. Stringfellow, et al., Case No. 83-2501 JMI (MCX), against
Montrose and approximately 20 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 million 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.
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, as amended ("CERCLA" or the "Superfund" statute) 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, in 1986-7 the United States
Department of Justice sought and received information regarding the
relationship between Montrose and its two 50% shareholders. The
Department's inquiry was directed to the issue whether Chris-Craft, as
a shareholder of Montrose, should be added as a party to the action.
Chris-Craft is not aware of any further action taken by the Department
in this matter.
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 affiliates of Zeneca the "Zeneca Affiliates"), 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, plaintiffs alleged with
respect to Montrose, Chris-Craft, and the Zeneca Affiliates, in the
first cause of action, 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 first
cause of action also alleged that other of the defendants released PCBs
into the same waters. The complaint sought 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
plaintiff's costs in assessing such damages. In the second cause of
action, plaintiffs also sought to hold Montrose, Chris-Craft, and the
Zeneca Affiliates jointly and severally liable for all costs incurred in
connection with alleged hazardous substance contamination to soil and
ground water at the site of Montrose' former plant in Torrance,
California. In October 1994, as required by a case management order
(which anticipates a trial in 1998 or later), the plaintiffs produced
expert reports to support the first cause of action describing both the
alleged natural resources damages and also possible restoration plans
for dredging or capping the allegedly contaminated ocean sediments.
Although the plaintiffs have stated that they have not completed their
restoration analysis, based on their current knowledge, they would seek
to recover between approximately $300 million and $1.1 billion from the
defendants not participating in the purported settlement described
below. On March 21, 1995, after an appeal by Montrose, Chris-Craft,
and the Zeneca Affiliates, the United States Court of Appeals for the
Ninth Circuit reversed an April 1993 District Court order approving a
purported settlement between plaintiffs, the Los Angeles
County Sanitation District ("LACSD"), and numerous municipalities and
local government entities that had been sued by Montrose, Chris-Craft,
and other defendants as third-party defendants. The purported
settlement would have resolved all liability between the plaintiffs and
the LACSD and the government entities for approximately $42 million in
cash and in-kind services, and purported to immunize the settling
defendants from the cross-claims and third party claims of Montrose and
Chris-Craft.
On March 22, 1995, the District Court in U.S. v. Montrose granted
the defendants' motion for summary judgment on the first cause of
action, ruling that the government's claim for natural resource damages
was barred by the applicable statute of limitations. The effect of this
ruling is to dismiss the natural resources damages claims. In addition,
the Court ruled on other motions that CERCLA would limit the collective
maximum liability of Montrose, Chris-Craft, and the Zeneca Affiliates
for natural resource damages to $50 million and further that the
government would have the burden of proving that any alleged damages are
the result of releases occurring after enactment of CERCLA in 1980.
The District Court has issued an order certifying its rulings for appeal,
and, at this time, it is uncertain what action the Court of Appeals
will take.
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 a case entitled Levin Metals
Corporation, et al. v. Parr-Richmond Terminal Company, et al., Case Nos.
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 claimed exceed
$15 million. In March 1990, the EPA added the site to the "National
Priority List", which covers sites eligible for remediation under the
Superfund program. 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 counterclaims. During October 1994 -
January 1995, the parties to the Levin case, along with EPA,
participated in extensive mediation proceedings in an attempt at
settlement. These proceedings culminated in a proposed partial
settlement by EPA with parties other than Montrose and Chris-Craft.
Montrose and Chris-Craft are continuing to negotiate with the settling
parties and the EPA, and likely will object to the partial settlement if
not allowed to participate in it.
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. Chris-Craft has received no further correspondence
about this possible claim.
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. 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. A statement of damages filed
by the plaintiffs alleges general damages of $7 million. Settlement
mediation under the auspices of a retired judge began in February 1995.
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. CV-F-93-5404 DWW/DLB in the Federal
District Court for the Eastern District of California, where it is
alleged Montrose contributed to contamination at a former pesticide
formulation site in Fresno, California and where damages claimed 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 on the grounds that it is secondarily liable for any
liabilities of Montrose. Under a case management order, the proceedings
are stayed as to Chris-Craft, pending a trial on the claims against
Montrose and other defendants.
In September 1994, EPA notified Chris-Craft that it had been
designated as a "potentially responsible party" under CERCLA (a "PRP")
in connection with the Diamond Alkali Superfund Site on the Passaic
River in Newark, New Jersey. The EPA alleges that hazardous substances
were released into the river from a facility operated by a predecessor
company. The facility was located adjacent to the Diamond Alkali
property, but not on the riverfront, and was sold by Chris-Craft in
1972. Chris-Craft disputes that it is a responsible party. At the
request of EPA, Maxus Energy Corp., the former owner of the Diamond
Alkali property and a designated PRP at the site, is currently
performing a feasibility study estimated to cost approximately $10
million to determine the extent of contamination in the area and to
evaluate possible corrective actions.
In each case involving Montrose where Chris-Craft has been named as
a defendant, Chris-Craft contends that it is not liable and that it
neither owned nor operated the facilities involved, nor did it arrange
for the disposal of hazardous substances. Chris-Craft and its
predecessors were shareholders of Montrose and provided certain
management services to Montrose as it conducted its operations. Based
on the available information, the status of the proceedings, and the
applicable legal and accounting standards, Chris-Craft, in reliance,
among other things, on the advice of counsel, believes that it should
have no liability (under CERCLA or otherwise) for the operations of
Montrose and does not presently consider liability to be "probable" in
any of the Montrose-related cases. Accordingly, under Statement of
Financial Accounting Standards No. 5, "Accounting for Contingencies," no
amount has been reserved in Chris-Craft's financial statements. The
Diamond Alkali Superfund Site matter does not include Montrose, but
based on the review to date by Chris-Craft and its counsel, they believe
Chris-Craft has been erroneously identified as a PRP at the site; Chris-
Craft is unable to determine at this stage if it could have any
liability at the site.
If a court ultimately rejected Chris-Craft's defenses, under CERCLA
Chris-Craft could be held jointly and severally liable, without regard
to fault, for response costs and natural resource damages. A liable
party's ultimate liability at a site generally depends on its
involvement at the site, the nature and extent of contamination, the
remedy selected, the role of other parties in creating the alleged
contamination and the availability of contribution from those parties,
as well as any insurance or indemnification agreements which may apply.
In most cases, both the resolution of the complex issues involved and
any necessary remediation expenditures occur over a number of years.
Future legal and technical developments in each of the foregoing matters
will be periodically reviewed to determine if the accrual of reserves
would be appropriate.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of Chris-Craft, as of February 28, 1995, are
as follows:
</TABLE>
<TABLE>
<CAPTION> Has served
Positions with Chris-Craft as officer
Name and age as of February 28, 1995 since
---- ----------------------------- ----------
<S> <C> <C>
Herbert J. Siegel Chairman of the Board and 1968
President; 66
Evan C Thompson Executive Vice President and 1982
President, Television Division;
52
John C. Siegel Senior Vice President; 42 1985
William D. Siegel Senior Vice President; 40 1985
Joelen K. Merkel Vice President and Treasurer; 43 1980
Brian C. Kelly General Counsel and Secretary; 43 1992
</TABLE>
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 until 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 financial
information incorporated by reference from the Annual
Report pursuant to Item 8.
2. Exhibits listed in the Exhibit Index, including
compensatory plans or arrangements listed below:
- Benefit Equalization Plan
- 1988 Management Incentive Plan
- 1989 Director Stock Option Plan
- 1994 Management Incentive Plan
- 1994 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.
Dated: March 29, 1995
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.
Signature and Title Date
HERBERT J. SIEGEL March 29, 1995
-------------------------
Herbert J. Siegel
Chairman, President and
Director (principal
executive officer)
WILLIAM D. SIEGEL March 29, 1995
-------------------------
William D. Siegel
Senior Vice President and
Director (principal
financial officer)
JOELEN K. MERKEL March 29, 1995
-------------------------
Joelen K. Merkel
Vice President and Treasurer
(principal accounting officer)
EVAN C THOMPSON March 29, 1995
-------------------------
Evan C Thompson
Executive Vice President and
Director
HOWARD ARVEY March 29, 1995
-------------------------
Howard Arvey
Director
LAWRENCE R. BARNETT March 29, 1995
-------------------------
Lawrence R. Barnett
Director
T. CHANDLER HARDWICK, III March 29, 1995
-------------------------
T. Chandler Hardwick, III
Director
JEANE J. KIRKPATRICK March 29, 1995
-------------------------
Jeane J. Kirkpatrick
Director
DAVID F. LINOWES March 29, 1995
-------------------------
David F. Linowes
Director
NORMAN PERLMUTTER March 29, 1995
-------------------------
Norman Perlmutter
Director
JAMES J. ROCHLIS March 29, 1995
-------------------------
James J. Rochlis
Director
ALVIN R. ROZELLE March 29, 1995
-------------------------
Alvin R. Rozelle
Director
JOHN C. SIEGEL March 29, 1995
-------------------------
John C. Siegel
Director
<PAGE>
CHRIS-CRAFT INDUSTRIES, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS:
Report of Independent Accountants
Consolidated Balance Sheets - December 31, 1994 and 1993
Consolidated Statements of Income - For the Years
Ended December 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows - For the Years
Ended December 31, 1994, 1993 and 1992
Consolidated Statements of Shareholders' Investment - For
the Years Ended December 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Incorporated by
Reference to: Exhibit No. Exhibit
--------------- ----------- -------
<S> <C> <C>
Exhibit 3(A) [1] 3.1 Restated Certificate
of Incorporation
Exhibit 3(B) [2] 3.2 Restated By-Laws
Exhibit 11(H) [2] 10.1 Benefit Equalization Plan of
registrant
Exhibit 10(B)(1) [5] 10.2 Amendment No. 1 thereto
* 10.3 Amendment No. 2 thereto
Exhibit 10(B) [8] 10.4 Employment Agreement dated
January 1, 1994 between
registrant and Herbert J. Siegel
Exhibit 10(C) [8] 10.5 Split-Dollar Agreement dated
January 6, 1994 between
registrant and William D. Siegel
Exhibit 10(D) [8] 10.6 Split-Dollar Agreement dated
January 6, 1994 between
registrant and John C. Siegel
Exhibit 10(E) [3] 10.7 Form of Agreement under Executive
Deferred Income Plan of
registrant
Exhibit 10(F) [8] 10.8 Employment Agreement dated
January 1, 1994 between
registrant and Evan C Thompson
Exhibit A to Proxy 10.9 1988 Management Incentive Plan
Statement of registrant
dated March 23, 1988 (File
No. 1-2999)
Exhibit 10(G)(1) [7] 10.10 Amendment No. 1 thereto
Exhibit 10(c) [4] 10.11 Management Agreement between
the registrant and BHC dated
July 21, 1989
Exhibit 19 [6] 10.12 Amendment No. 1 thereto dated
October 31, 1991
Exhibit 10(H)(2) [8] 10.13 Amendment No.2 thereto dated
March 24, 1994
Exhibit A to Proxy 10.14 1989 Director Stock Option Plan
Statement of registrant
dated April 26, 1990
(File No. 1-2999)
Exhibit 10(I)(1) [7] 10.15 Amendment No. 1 thereto
Exhibit A to registrant's 10.16 1994 Management Incentive Plan
proxy statement dated
March 25, 1994 (File
No. 1-2999)
Exhibit B to registrant's 10.17 1994 Director Stock Option Plan
proxy statement dated
March 25, 1994 (File
No. 1-2999)
Exhibit 10.10 [9] 10.18 Option Agreement dated July 19,
1994 between BHC Network Partner,
Inc. and PCI Network Partner,
Inc.
* 11 Computation of Primary and
Fully Diluted Income per Share
* 13 Portions of the Annual Report
incorporated by reference
* 21 Subsidiaries of the registrant
* 23 Consent of Price Waterhouse LLP
* 27 Financial Data Schedule
_________________________
* 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] BHC's Registration Statement on Form S-1 (Regis. No. 33-31091).
[5] Registrant's Annual Report on Form 10-K for the year ended
December 31, 1989.
[6] Registrant's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 1991.
[7] Registrant's Annual Report on Form 10-K for the year ended
December 31, 1991.
[8] Registrant's Annual Report on Form 10-K for the year ended
December 31, 1993.
[9] BHC's Annual Report on Form 10-K for the year ended December 31,
1994.
</TABLE>
RESOLVED, that the Corporation's Benefit Equalization Plan be,
and hereby is, amended, by inserting the following as the last sentence
of Section 2.3.
"Notwithstanding anything contained herein to the contrary,
any distribution that otherwise would have been payable to
a Member under this Section 2.3 prior to the death, retirement,
disability, or termination of employment of such Member, shall
not be paid to such Member until the earliest to occur of his
death, retirement, disability or termination of employment."
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,
------------------------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Number of shares of common stock:
Weighted average outstanding during
the period 29,445,509 28,617,413 28,354,331
Assumed exercise of stock options 232,812 483,925 396,000
Total shares used in computation
of primary income per share 29,678,321 29,101,338 28,750,331
Weighted average outstanding
during the period (as per above) 29,445,509 28,617,413 28,354,331
Assumed conversion of $1.40
convertible preferred stock into
common stock 8,876,498 9,339,317 9,539,717
Assumed exercise of stock options 232,812 511,419 526,954
Total shares used in computation
of fully diluted income per share 38,554,819 38,468,149 38,421,002
Net income - computation of primary
income per share:
Net income $ 64,741 $ 149,068 $ 65,150
Less - Dividend requirements on
preferred stock (471) (493) (504)
$ 64,270 $ 148,575 $ 64,646
Net income - computation of fully
diluted income per share:
Net income $ 64,741 $ 149,068 $ 65,150
Less - Dividend requirements on
preferred stock (73) (73) (73)
$ 64,668 $ 148,995 $ 65,077
Net income per share:
Primary $ 2.17 $ 5.11 $ 2.25
Fully diluted $ 1.68 $ 3.87 $ 1.69
---------------------
* Computations give effect to all common stock dividends, including the
3% stock dividend declared in February, 1995.
</TABLE>
Exhibit 21
The following were the registrant's subsidiaries as of December
31, 1994, 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
BHC Network Partner, Inc. Delaware
Chris-Craft Television, Inc. Delaware
BHC Network Partner II, 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 23
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, and 33-54817) of Chris-Craft Industries, Inc. of our report
dated February 14, 1995 appearing on page 15 of the Annual Report to
Shareholders of Chris-Craft Industries, Inc. which is incorporated by
reference in this Annual Report on Form 10-K.
PRICE WATERHOUSE LLP
New York, New York
March 28, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS INCORPORATED BY REFERENCE INTO
REGISTRANT'S ANNUAL REPORT ON FORM 10-K
FOR YEAR ENDED 31 DECEMBER 1994 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<EXCHANGE-RATE> 1
<CASH> 226183
<SECURITIES> 1294278
<RECEIVABLES> 107415
<ALLOWANCES> 7640
<INVENTORY> 2353
<CURRENT-ASSETS> 1768959
<PP&E> 134286
<DEPRECIATION> 82662
<TOTAL-ASSETS> 2232217
<CURRENT-LIABILITIES> 243557
<BONDS> 0
0
6527
<COMMON> 15064
<OTHER-SE> 1284627
<TOTAL-LIABILITY-AND-EQUITY> 2232217
<SALES> 23831
<TOTAL-REVENUES> 481364
<CGS> 19108
<TOTAL-COSTS> 373532
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 163783
<INCOME-TAX> 57300
<INCOME-CONTINUING> 64741
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 64741
<EPS-PRIMARY> 2.17
<EPS-DILUTED> 1.68
</TABLE>
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Chris-Craft Industries, Inc. and Subsidiaries
<TABLE>
<CAPTION>
(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA)
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1994
Operating revenues ............... $101,775 $126,130 $112,803 $140,656 $481,364
Operating income ................. 17,379 33,648 20,176 36,629 107,832
Income associated with
Time Warner Inc. securities .... -- -- -- -- --
Income before income taxes
and minority interest .......... 31,278 49,051 37,012 46,442 163,783
Net income ....................... 11,176 17,122 22,422 14,021 64,741
Primary net income per share ..... .38 .57 .75 .47 2.17
Fully diluted net income per share $ .29 $ .44 $ .58 $ .36 $ 1.68
YEAR ENDED DECEMBER 31, 1993
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 ..... 1.71 2.16 .44 .82 5.11
Fully diluted net income per share $ 1.29 $ 1.63 $ .34 $ .62 $ 3.87
</TABLE>
<PAGE>
INDUSTRY SEGMENT INFORMATION
Chris-Craft Industries, Inc. and Subsidiaries
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, 1994
Television Division ........ $457,533 $124,552 $20,355 $ 8,049 $2,184,132(c)
Industrial Division ........ 23,831 (3,557) 512 2,416 9,805
Other (a) .................. -- (13,163) 21 35 38,280
$481,364 $107,832 $20,888 $10,500 $2,232,217
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 $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
<FN>
(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 $1,274,244 at December 31, 1994, $1,471,158 at
December 31, 1993 and $1,243,722 at December 31, 1992.
</FN>
</TABLE>
<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,
1994 1993
High Low High Low
First Quarter .................. 38-1/8 33 35-5/8 31-1/8
Second Quarter ................. 38-1/8 32 35-3/4 30-5/8
Third Quarter .................. 41-1/2 35-3/8 42-5/8 34-1/4
Fourth Quarter ................. 40-1/8 33-1/8 43-3/8 35-3/8
Chris-Craft paid 3% stock dividends on its common stock in April 1994 and
April 1993. Chris-Craft has declared a 3% stock dividend payable in April 1995.
The Board of Directors plans to continue to consider, on an annual basis, the
payment of dividends in common stock. As of February 24, 1995, there were 3,104
holders of record of common stock and 1,898 holders of record of Class B common
stock.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP (LOGO) February 14, 1995
1177 Avenue of the Americas
New York, New York 10036
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, 1994 and 1993, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1994, 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.
(Price Waterhouse LLP Signature)
<PAGE>
CONSOLIDATED BALANCE SHEETS
Chris-Craft Industries, Inc. and Subsidiaries
<TABLE>
<CAPTION>
(IN THOUSANDS OF DOLLARS) DECEMBER 31,
1994 1993
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ................................................... $ 226,183 $ 40,497
Marketable securities (substantially all U.S. Government securities) ........ 1,294,278 1,495,610
Accounts receivable, less allowance for doubtful accounts of
$7,640 and $6,319 .......................................................... 99,775 89,869
Film contract and prepaid broadcast rights .................................. 89,245 98,882
Prepaid expenses and other current assets ................................... 59,478 65,913
Total current assets ....................................................... 1,768,959 1,790,771
FILM CONTRACT RIGHTS, including deposits,
less estimated portion to be used within one year .......................... 59,228 87,197
PROPERTY AND EQUIPMENT, at cost:
Land, buildings and improvements ............................................ 37,049 36,935
Machinery and equipment ..................................................... 97,237 92,252
134,286 129,187
Less-Accumulated depreciation ............................................... 82,662 74,726
51,624 54,461
INTANGIBLE ASSETS ........................................................... 329,517 333,925
OTHER ASSETS ................................................................ 22,889 16,824
$ 2,232,217 $ 2,283,178
<PAGE>
(IN THOUSANDS OF DOLLARS) DECEMBER 31,
1994 1993
LIABILITIES AND SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Film contracts payable within one year ...................................... $ 81,696 $ 112,798
Accounts payable and accrued expenses ....................................... 100,984 107,338
Income taxes payable ........................................................ 60,877 74,764
Total current liabilities ................................................ 243,557 294,900
FILM CONTRACTS PAYABLE AFTER ONE YEAR ....................................... 89,048 95,699
OTHER LONG-TERM LIABILITIES ................................................. 9,192 18,737
MINORITY INTEREST ........................................................... 584,202 615,615
COMMITMENTS AND CONTINGENCIES (NOTE 9)
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 282,826 shares; outstanding 282,826
and 297,946 shares (liquidating value $23 per share,
aggregating $6,505) ...................................................... 4,949 5,214
Class B common stock- par value $.50 per share; currently authorized
50,000,000 shares; outstanding 7,567,821 and 7,379,866 shares ........... 3,784 3,690
Common stock- par value $.50 per share; currently authorized 100,000,000
shares; outstanding 20,979,174 and 19,911,536 shares ..................... 11,280 10,747
Capital surplus ............................................................. 298,090 275,443
Retained earnings ........................................................... 996,331 961,555
Reduction to reflect marketable securities at market value .................. (9,794) --
1,306,218 1,258,227
$ 2,232,217 $ 2,283,178
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
Chris-Craft Industries, Inc. and Subsidiaries
<TABLE>
<CAPTION>
(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA) YEAR ENDED DECEMBER 31,
1994 1993 1992
<S> <C> <C> <C>
OPERATING REVENUES:
Television revenues ................................... $ 457,533 $ 411,999 $ 307,883
Sales of manufactured products ........................ 23,831 27,734 23,652
481,364 439,733 331,535
OPERATING EXPENSES:
Television expenses ................................... 232,635 230,088 208,031
Cost of manufactured products sold .................... 19,108 21,523 18,025
Selling, general and administrative ................... 121,789 112,790 88,674
373,532 364,401 314,730
Operating income ................................... 107,832 75,332 16,805
OTHER INCOME (EXPENSE):
Interest and other income, net ........................ 55,951 52,661 36,790
Income associated with Time Warner Inc. securities, net -- 256,622 94,059
Interest expense ...................................... -- -- (2,283)
55,951 309,283 128,566
Income before provision for income taxes
and minority interest ........................... 163,783 384,615 145,371
PROVISION FOR INCOME TAXES ............................ 57,300 147,200 37,800
Income before minority interest .................... 106,483 237,415 107,571
MINORITY INTEREST ..................................... 41,742 88,347 42,421
Net income ......................................... $ 64,741 $ 149,068 $ 65,150
NET INCOME PER SHARE:
Primary ............................................ $ 2.17 $ 5.11 $ 2.25
Fully diluted ...................................... $ 1.68 $ 3.87 $ 1.69
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Chris-Craft Industries, Inc. and Subsidiaries
<TABLE>
<CAPTION>
(IN THOUSANDS OF DOLLARS ) YEAR ENDED DECEMBER 31,
1994 1993 1992
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ............................................................... $ 64,741 $ 149,068 $ 65,150
Adjustments to reconcile net income to net cash provided from
(used in) operating activities:
Film contract amortization .......................................... 101,869 102,768 117,659
Film contract payments .............................................. (117,928) (147,557) (103,174)
Prepaid broadcast rights ............................................ 8,166 (34,426) --
Depreciation and other amortization ................................. 20,888 20,980 13,398
Gain on disposition of Time Warner Inc. securities .................. -- (219,373) (8,082)
Minority interest ................................................... 41,742 88,347 42,421
Other ............................................................... 9,032 (7,813) (36,788)
Changes in assets and liabilities (in 1992, net of amounts acquired):
Accounts receivable .............................................. (9,906) (9,108) 10,703
Other assets ..................................................... 263 (7,884) 8,958
Accounts payable and other liabilities ........................... 10,527 4,386 (11,143)
Income taxes ..................................................... 3,952 6,230 2,408
Net cash provided from (used in) operating activities ........... 133,346 (54,382) 101,510
CASH FLOWS FROM INVESTING ACTIVITIES:
Disposition of marketable securities ..................................... 1,097,750 947,015 404,976
Purchase of marketable securities ........................................ (937,730) (938,896) --
Capital expenditures, net ................................................ (10,676) (11,197) (11,074)
Purchase of Pinelands, Inc., net of cash acquired ........................ -- -- (279,422)
Other .................................................................... (6,887) (8,227) (3,196)
Net cash provided from (used in) investing activities ........... 142,457 (11,305) 111,284
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital transactions of subsidiaries ..................................... (82,353) (50,081) (90,824)
Purchase of treasury stock ............................................... (20,386) (9,964) (8,451)
Proceeds from exercise of employee stock options ......................... 13,095 5,336 3,863
Dividends on preferred stock ............................................. (473) (495) (505)
Repayment of long-term debt .............................................. -- (15,625) (1,875)
Net cash used in financing activities ........................... (90,117) (70,829) (97,792)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ..................... 185,686 (136,516) 115,002
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR ........................... 40,497 177,013 62,011
CASH AND CASH EQUIVALENTS AT END OF YEAR ................................. $ 226,183 $ 40,497 $ 177,013
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT
Chris-Craft Industries, Inc. and Subsidiaries
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
Treasury
Outstanding Shares Shares
---------------------------------------------- ---------
Class B $1.00 $1.40
Common Common Preferred Preferred Common
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1991 ... 17,762,625 7,687,734 73,399 308,640 --
Net income ..................... -- -- -- -- --
Capital transactions of BHC .... -- -- -- -- --
Dividends on preferred stock ... -- -- -- -- --
Common stock dividend - 2% ..... 355,899 151,448 -- -- --
Conversion of preferred stock .. 79,456 -- -- (2,807) --
Conversion of Class B
common stock ................. 442,694 (442,694) -- -- --
Stock options, including
related tax benefits ......... 421,838 -- -- -- --
Acquisition of treasury stock .. -- -- -- -- (350,200)
Retirement of treasury stock .. (350,200) -- -- -- 350,200
BALANCE AT DECEMBER 31, 1992 ... 18,712,312 7,396,488 73,399 305,833 --
Net income ..................... -- -- -- -- --
Capital transactions of BHC .... -- -- -- -- --
Dividends on preferred stock -- -- -- -- --
Common stock dividend - 3% ..... 559,637 221,799 -- -- --
Conversion of preferred stock . 148,535 78,731 -- (7,887) --
Conversion of Class B
common stock ................. 317,152 (317,152) -- -- --
Stock options, including related
tax benefits ................. 439,700 -- -- -- --
Acquisition of treasury stock .. -- -- -- -- (265,800)
Retirement of treasury stock .. (265,800) -- -- -- 265,800
BALANCE AT DECEMBER 31, 1993 ... 19,911,536 7,379,866 73,399 297,946 --
Net income ..................... -- -- -- -- --
Marketable securities
valuation adjustment ......... -- -- -- -- --
Capital transactions of BHC .... -- -- -- -- --
Dividends on preferred stock ... -- -- -- -- --
Common stock dividend - 3% ..... 608,418 226,571 -- -- --
Conversion of preferred stock .. 250,339 195,244 -- (15,120) --
Conversion of Class B
common stock ................. 233,860 (233,860) -- -- --
Stock options, including
related tax benefits ......... 537,221 -- -- -- --
Acquisition of treasury stock .. -- -- -- -- (562,200)
Retirement of treasury stock ... (562,200) -- -- -- 562,200
BALANCE AT DECEMBER 31, 1994 ... 20,979,174 7,567,821 73,399 282,826 --
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Dollar Amount
------------------------------------------------------------------
Market
Common Preferred Capital Retained Treasury Valuation
Stocks Stocks Surplus Earnings Stock Account
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1991 ... $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% ..... 254 -- 12,679 (12,933) -- --
Conversion of preferred stock .. 40 (49) 9 -- -- --
Conversion of Class B
common stock ................. -- -- -- -- -- --
Stock options, including
related tax benefits ......... 210 -- 4,852 -- -- --
Acquisition of treasury stock .. -- -- -- -- (9,986) --
Retirement of treasury stock .. (175) -- (9,811) -- 9,986 --
BALANCE AT DECEMBER 31, 1992 ... 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% ..... 391 -- 24,357 (24,748) -- --
Conversion of preferred stock . 114 (138) 24 -- -- --
Conversion of Class B
common stock ................. -- -- -- -- -- --
Stock options, including related
tax benefits ................. 220 -- 8,517 -- -- --
Acquisition of treasury stock .. -- -- -- -- (9,129) --
Retirement of treasury stock .. (133) -- (8,996) -- 9,129 --
BALANCE AT DECEMBER 31, 1993 ... 14,437 6,792 275,443 961,555 -- --
Net income ..................... -- -- -- 64,741 -- --
Marketable securities
valuation adjustment ......... -- -- -- -- -- (9,794)
Capital transactions of BHC .... -- -- (1,991) -- -- --
Dividends on preferred stock ... -- -- -- (473) -- --
Common stock dividend - 3% ..... 417 -- 29,075 (29,492) -- --
Conversion of preferred stock .. 223 (265) 42 -- -- --
Conversion of Class B
common stock ................. -- -- -- -- -- --
Stock options, including
related tax benefits ......... 268 -- 15,340 -- -- --
Acquisition of treasury stock .. -- -- -- -- (20,100) --
Retirement of treasury stock ... (281) -- (19,819) -- 20,100 --
BALANCE AT DECEMBER 31, 1994 ... $15,064 $6,527 $298,090 $996,331 $ -- $(9,794)
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chris-Craft Industries, Inc. and Subsidiaries
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 (72.7% at December 31, 1994
and 70.3% at December 31, 1993) 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 (55.2% at December 31, 1994 and 54.3% at
December 31, 1993) 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 completed the acquisition of Pinelands, Inc., owner and
operator of television station WWOR, which broadcasts into a tri-state area
including New York City. The $313 million acquisition, funded from BHC's
internal cash balances, has been accounted for as a purchase, 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 has
been prepared as if the acquisition had occurred at the beginning of that 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 date indicated or that may be obtained in the future.
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS) 1992
Operating revenues.................................. $423,455
Net income.......................................... $ 57,338
Net income per share -
Primary........................................... $ 1.98
Fully Diluted..................................... $ 1.49
(B) FINANCIAL INSTRUMENTS- Cash and cash equivalents totalled $226,183,000 at
December 31, 1994 and $40,497,000 at December 31, 1993. 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.
Effective January 1, 1994, Chris-Craft adopted Statement of Financial
Accounting Standards No. 115 (SFAS 115), "Accounting for Certain Investments in
Debt and Equity Securities". Prior to that date, marketable securities were
carried at the lower of cost or market at the balance sheet date. Under SFAS
115, all of Chris-Craft's marketable securities have been categorized as
available for sale, and are carried at fair market value. Since marketable
securities are available for current operations, all are included in current
assets at December 31, 1994, as follows:
(IN THOUSANDS) Fair Value Cost
U.S. Government securities ............... $1,216,167 $1,239,691
Other .................................... 78,111 80,072
$1,294,278 $1,319,763
Of the U.S. Government securities, 68% mature within one year, 87% within
two years, and all within five years.
The net unrealized holding loss at December 31, 1994 of $25,485,000
($9,794,000, net of deferred income taxes and minority interests) consists of
gross unrealized gains of $526,000 and gross unrealized losses of $26,011,000.
Proceeds from the sale of marketable securities totalled $1,097,750,000 in 1994,
and realized gains and losses were $1,286,000 and $7,734,000, respectively. The
cost of securities sold is based on specific identification.
Marketable securities at December 31, 1993 include U.S. Government
securities totalling $1,372,602,000. The aggregate fair value of marketable
securities at that date was $1,497,540,000.
(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, 1994 are $39,849,000,
$29,816,000, $12,865,000 and $6,518,000 in 1996, 1997, 1998 and thereafter,
respectively. The net present value at December 31, 1994 of such payments, based
on an 8.5% discount rate, was approximately $73,001,000. See Note 9.
(D) DEPRECIATION AND AMORTIZATION- Depreciation of property and equipment is
generally provided for on the
<PAGE>
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.
(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, 1994 and 1993 are as
follows:
(IN THOUSANDS) 1994 1993
Television Division ...................... $328,743 $333,151
Industrial Division ...................... 774 774
$329,517 $333,925
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 $38,011,000 at December 31, 1994 and $28,690,000 at
December 31, 1993. Intangible assets at December 31, 1994 are net of negative
goodwill totalling $4,331,000 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.
The estimated fair value of goods or services received in barter (nonmonetary)
transactions 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 14,
1995. Primary per share amounts were computed by dividing income, after
preferred stock dividend requirements of $471,000 in 1994, $493,000 in 1993, and
$504,000 in 1992, by the weighted average number of common and, when dilutive,
common equivalent, shares outstanding (29,678,000 in 1994, 29,101,000 in 1993
and 28,750,000 in 1992). 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
$53,343,000 in 1994, $142,465,000 in 1993 and $33,590,000 in 1992.
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 1990 merger of Warner and Time
Warner Inc., 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,
1994, the 18,000,000 Class B common shares held by Chris-Craft represented 72.7%
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, 1994.
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 of $1,896,188,000 on such
transactions.
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.
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
Gain on disposition, after expense
of $2,905 in 1993 .............................. $219,373 $8,082
Dividend income ................................. 14,672 85,977
Interest income ................................. 22,577 --
$256,622 $94,059
<PAGE>
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.
4. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
Accounts payable and accrued expenses consist of the following:
(IN THOUSANDS) DECEMBER 31,
1994 1993
Accounts payable ............................... $10,124 $7,872
Payable for securities purchased ............... 662 15,851
Accrued expenses -
Payroll and compensation .................... 39,832 29,016
Deferred barter revenue ..................... 32,601 33,252
Other ....................................... 17,765 21,347
$100,984 $107,338
5. 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 10.03008 shares of common stock and 20.06014 shares of Class B common stock
and to 210.0 votes (10.33098, 20.66194 and 216.3, respectively, as adjusted for
the 1995 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 30.09022
shares of common stock and 30.1 votes (30.99292 and 31.0, respectively, as
adjusted for the 1995 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 1994 purchases of
562,200 shares of common stock. At December 31, 1994, 1,706,302 shares of common
stock and 12,899 shares of $1.00 prior preferred stock remained authorized for
purchase.
As of December 31, 1994, shares of Chris-Craft's authorized but unissued
common stock were reserved for issuance as follows:
Shares
Conversion of Class B common stock ......................... 7,567,821
Conversion of $1.40 convertible preferred stock ............ 8,510,296*
Stock options (including options outstanding
for 1,768,613 shares) .................................... 3,486,913
Stock purchase plan ........................................ 20,000
19,585,030
*Including Class B common shares.
On February 9, 1995, the Board of Directors declared a 3% common stock
dividend, payable in April 1995, 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.
6. STOCK OPTIONS:
Under the 1994 Management Incentive Plan, adopted by Chris-Craft
shareholders in April 1994, 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, 1994,
<PAGE>
approximately 100 employees were eligible to participate in the Plans, of
whom 67 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 currently outstanding under the Plan expire either five
or ten years from date of grant. The Plan replaced a similar plan which was
terminated with respect to the grant of additional options when the 1994 Plan
became effective.
The Plan permits the Plan Committee to award stock appreciation rights to
holders of options granted under the Plan. Such rights entitle the holders, in
lieu of exercising their options, to receive payment from Chris-Craft in cash,
stock or a combination thereof, equal to the greater of the appreciation in
market value or book value of the shares covered by exercisable options. No
stock appreciation rights have been awarded under the Plan.
Transactions under the two plans during the two years ended December 31,
1994 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
Increase to reflect
3% stock dividend ........ 27,044 -- --
Granted ..................... 1,041,700 $34.38-$38.36 36,118
Exercised ................... (668,391) $18.73-$31.06 (19,586)
Cancelled ................... (5,150) $36.17 (186)
Outstanding,
December 31, 1994 ........ 1,673,529 $28.16-$38.36 $54,446
At December 31, 1994, options outstanding under the plans were exercisable
for 382,389 shares at prices ranging from $28.16 to $36.17 per share, and
options for 1,458,300 shares were available for grant. Options outstanding
expire at various dates from December 1997 through April 2004.
Under the 1994 Director Stock Option Plan, adopted by Chris-Craft
shareholders in April 1994, a fixed number of immediately exercisable options to
purchase shares of common stock are granted annually to each nonemployee
director of Chris-Craft at prices equal to fair market value at date of grant.
The 1994 Director Stock Option Plan replaced a similar plan which has been
terminated with respect to the grant of additional options. In 1994 and 1993,
options for 40,000 and 13,494 shares, at adjusted per share prices of $34.38 and
$30.95, respectively, were granted to directors. Options for 161,585 shares, at
prices ranging from $30.95 to $34.38, were exercised in 1994. At December 31,
1994, options were outstanding for 95,084 shares, at prices ranging from $24.98
to $34.38, and 260,000 shares were available for grant.
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.
7. 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,
1994 1993 1992
Service cost ......................... $2,380 $2,358 $1,634
Interest cost on projected
benefit obligation ................ 2,052 1,861 1,676
Actual return on plan assets ......... (537) (1,516) (1,037)
Amortization of deferred items ....... (951) 250 (27)
$2,944 $2,953 $2,246
<PAGE>
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,
1994 1993
Actuarial present value of:
Vested benefit obligation ....................... $(23,261) $(20,366)
Nonvested benefit obligation .................... (1,558) (1,412)
Accumulated benefit obligation ............... (24,819) (21,778)
Effect of projected compensation increases ...... (7,655) (7,709)
Projected benefit obligation ................. (32,474) (29,487)
Fair value of plan assets (primarily listed
securities and temporary investments) ........... 19,774 18,779
Excess ....................................... (12,700) (10,708)
Unrecognized net asset at date of initial
application of SFAS No. 87, being amortized
over 15 years ................................... (283) (333)
Unrecognized net loss from past experience,
being amortized over 15 years ................... 2,637 2,621
Pension liability ............................ $(10,346) $(8,420)
Assumptions used in accounting for pension plans are as follows :
Discount rate at end of year ................................... 7.25%*
Rate of increase in future compensation levels ................. 4.50%*
Expected long-term rate of return on assets .................... 7.75%
*7.75% and 5.00%, respectively, in 1992.
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 $5,707,000 in 1994, $8,395,000 in 1993 and $6,723,000 in 1992.
8. INCOME TAXES:
Effective January 1, 1993, Chris-Craft adopted Statement of Financial
Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes", under
which 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,
1994 1993 1992
Current (including 1993 effect of adoption):
Federal ................................. $49,300 $131,167 $26,068
State ................................... (8,400) 16,475 8,100
40,900 147,642 34,168
Deferred:
Federal ................................. 14,800 (2,467) 3,482
State ................................... 1,600 2,025 150
16,400 (442) 3,632
$57,300 $147,200 $37,800
State income taxes in 1994 reflect a $20,000,000 reversal of amounts accrued
in prior years, following the favorable resolution of routine audits.
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,
1994 1993 1992
Taxes at federal
statutory rate ................... $57,324 $134,615 $49,426
State income taxes, net ............ (4,429) 12,017 5,445
Amortization of intangible
assets ........................... 2,801 2,847 1,463
Dividend exclusion ................. (447) (3,984) (20,574)
Enacted rate change
(to 35% from 34%) ................ -- (1,241) --
Capital losses not benefitted ...... -- -- 612
Other .............................. 2,051 2,946 1,428
$57,300 $147,200 $37,800
<PAGE>
Deferred tax assets and deferred tax liabilities reflect the tax effect of
the following differences between financial statement carrying amounts and tax
bases of assets and liabilities:
(IN THOUSANDS) DECEMBER 31,
1994 1993
Accrued liabilities not deductible until paid ...... $27,562 $34,375
Investments ........................................ 5,733 6,186
Film contract rights ............................... 6,870 14,399
Tax credit carryforwards ........................... 3,273 3,341
SFAS 115 adjustment ................................ 10,109 --
Other .............................................. 4,686 4,531
58,233 62,832
Valuation allowance ................................ (9,381) (9,464)
Deferred tax assets, net ........................ 48,852 53,368
Property and equipment ............................. (3,876) (4,033)
Other .............................................. (653) (336)
Deferred tax liabilities ........................ (4,529) (4,369)
Net deferred tax assets ......................... $44,323 $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.
Tax benefits of $2,514,000 and $3,402,000 arising from the exercise of
employee stock options were credited to capital surplus in 1994 and 1993,
respectively.
9. 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 $154,800,000 at
December 31, 1994 (including $45,400,000 applicable to UTV).
In July 1994, BHC and Viacom Inc.'s Paramount Television Group formed the
United Paramount Network, a fifth broadcast television network which premiered
January 1995. BHC currently owns 100% of UPN, and Paramount has an option
exercisable through January 15, 1997 to acquire an interest in UPN equal to that
of BHC. The option price is equivalent to approximately one-half of BHC's
aggregate cash contributions to UPN through the exercise date, plus interest;
payment may be deferred through the option expiration date. The cost of
developing UPN will be significant, and BHC has agreed to make minimum UPN
expenditures of at least $150,000,000 through 1996. Network expenditures and
related operating losses are expected to significantly exceed such amount for
that period, and to remain substantial thereafter.
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 net expenses (recoveries) of $(280,000) in 1994, $4,337,000 in
1993 and $1,396,000 in 1992, 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 the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA")) 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. 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 damages resulting
from alleged injury to natural resources. In 1994, the Federal and State
governments produced reports stating the alleged damages
<PAGE>
may range between $300 million and approximately $1.1 billion. While Montrose
and its shareholders are contesting liability in the case, the court has taken
under consideration whether their maximum aggregate collective liability should
be limited to $50 million. 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. In 1992, Montrose was named a defendant in an
additional private party action brought by approximately 100 plaintiffs claiming
$7 million in damages for alleged personal injuries and diminution in property
value in an area near Montrose's former Torrance, California plant; Chris-Craft
was also added as a defendant in 1992. 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.
In September 1994, the EPA designated Chris-Craft as a "potentially
responsible party" under CERCLA (a "PRP") in connection with the Diamond Alkali
Superfund Site on the Passaic River in Newark, New Jersey. The EPA alleges that
hazardous substances were released into the river from a facility operated by a
Chris-Craft predecessor company. The facility was located adjacent to the
Diamond Alkali property, but not on the river front, and was sold by Chris-Craft
in 1972. Chris-Craft disputes that it is a responsible party. The former owner
of the Diamond Alkali property is currently performing a study estimated to cost
approximately $10 million to determine the extent of contamination in the area
and to evaluate possible corrective actions.
Chris-Craft intends vigorously to defend itself in Montrose-related actions
in which it is a defendant. In each case involving Montrose where Chris-Craft
has been named as a defendant, Chris-Craft contends that it is not liable and
that it neither owned nor operated the facilities involved, nor did it arrange
for the disposal of hazardous substances. Chris-Craft and its predecessors were
shareholders of Montrose and provided certain management services to Montrose as
it conducted its operations. Based on the available information, the status of
the proceedings, and the applicable legal and accounting standards, Chris-Craft,
in reliance among other things on the advice of counsel, believes that it should
have no liability (under CERCLA or otherwise) for the operations of Montrose and
does not presently consider liability to be "probable" in any of the
Montrose-related cases. Accordingly, under Statement of Financial Accounting
Standards No. 5, "Accounting for Contingencies", no amount has been reserved in
the Company's financial statements. The Diamond Alkali Superfund Site matter
does not include Montrose, but based on the review to date by Chris-Craft and
its counsel, they believe Chris-Craft has been erroneously identified as a PRP
at the site; Chris-Craft is unable to determine at this stage if it could have
any liability at the site.
If a court ultimately rejected Chris-Craft's defenses, under CERCLA
Chris-Craft could be held jointly and severally liable, without regard to fault,
for response costs and natural resource damages. A liable party's ultimate
liability at a site generally depends on its involvement at the site, the nature
and extent of contamination, the remedy selected, the role of other parties in
creating the alleged contamination and the availability of contribution from
those parties, as well as any insurance or indemnification agreements which may
apply. In most cases, both the resolution of the complex issues involved and any
necessary remediation expenditures occur over a number of years. Future legal
and technical developments in each of the foregoing matters will be periodically
reviewed to determine if the accrual of reserves for possible liability would be
appropriate.
Chris-Craft is a party to various other pending legal proceedings arising in
the ordinary course of business. In the opinion of management, after taking into
account the opinion of counsel with respect thereto, the ultimate resolution of
these other matters will not have a material effect on Chris-Craft's
consolidated financial position or results of operations.
10. SEGMENT REPORTING:
Industry segment data is set forth in the table on page 13.
<PAGE>
SELECTED FINANCIAL DATA
Chris-Craft Industries, Inc. and Subsidiaries
<TABLE>
<CAPTION>
(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA) AS OF AND FOR THE YEARS ENDED DECEMBER 31,
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Operating revenues ............. $481,364 $439,733 $331,535 $283,835 $297,555
Operating income (loss) ........ $107,832 $75,332 $16,805 $(3,815) $21,865
Interest and other income, net . 55,951 52,661 36,790 51,507 73,001
Interest expense ............... -- -- (2,283) (2,350) (2,598)
Income associated with
Time Warner and, in 1990,
Warner securities ............ -- 256,622 94,059 87,657 685,215
Income taxes ................... (57,300) (147,200) (37,800) (34,300) (277,000)
Minority interest .............. (41,742) (88,347) (42,421) (40,441) (208,786)
Net income .................. $64,741 $149,068 $65,150 $58,258 $291,697
Net income per share -
Primary ..................... $2.17 $5.11 $2.25 $1.99 $9.96
Fully diluted ............... 1.68 3.87 1.69 1.51 7.47
Cash and current marketable
securities ................... 1,520,461 1,536,107 983,537 961,749 869,574
Working capital ................ 1,525,402 1,495,871 899,640 939,664 845,362
Film contract rights ........... 148,473 186,079 187,518 165,029 161,634
Noncurrent marketable
securities ................... -- -- 450,022 732,740 690,898
Total assets ................... 2,232,217 2,283,178 2,160,694 2,049,775 1,939,181
Long-term debt ................. -- -- -- 15,625 17,500
Minority interest .............. 584,202 615,615 565,206 630,047 606,410
Shareholders' investment ....... $1,306,218 $1,258,227 $1,111,747 $1,052,713 $973,279
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Chris-Craft Industries, Inc. and Subsidiaries
LIQUIDITY AND CAPITAL RESOURCES
Chris-Craft's core operating cash flow is generated primarily by the
Television Division's broadcasting business. Television broadcasting cash flow
generally parallels the earnings of Chris-Craft's television stations, adjusted
to reflect (i) the difference between film contract payments and related film
contract amortization and (ii) the effect of significant prepayments for other
broadcast rights. The relationship between film contract payments and related
amortization may vary greatly between periods (payments exceeded amortization by
$16.1 million in 1994 and $44.8 million in 1993, but amortization exceeded
payments by $14.5 million in 1992), 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, of which $8.2 million
was amortized in 1994 and the balance will be amortized through 1997. Station
earnings rose strongly in 1994, and station cash flow was more than double the
corresponding 1993 amount.
Chris-Craft's cash flow additionally reflects earnings associated with its
cash and marketable securities, most of which are held by 73% 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. Proceeds from the Time Warner
dispositions were placed mostly in money market instruments, primarily U.S.
Government obligations, having lower yields than the securities disposed.
Consolidated cash and marketable securities totalled $1.52 billion at
December 31, 1994 compared to $1.54 billion at December 31, 1993. Operating cash
flow in 1994 of $133.3 million was offset by BHC treasury stock purchases of
$73.4 million, Chris-Craft treasury stock purchases of $20.4 million and a $25.5
million reduction in the carrying value of marketable securities to reflect
their fair value. Chris-Craft's 1993 operating cash flow deficit of $54.4
million 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
special cash dividend of $2.00 per share. BHC will pay a special cash dividend
of $1.00 per share in April 1995, but BHC has no plan to pay dividends on a
regular basis. Chris-Craft parent company cash balances are substantially in
excess of normal operating requirements.
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, 1994, 4,529,677 shares
were purchased for a total cost of $265.2 million, including $65.8 million
applicable to shares purchased in 1994. Chris-Craft ownership interest in BHC
accordingly increased to 73% at December 31, 1994 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 financial resources, if desired, to fund such additional expansion.
In July 1994, BHC and Viacom Inc.'s Paramount Television Group formed the
United Paramount Network, a fifth broadcast television network which premiered
January 1995. BHC currently owns 100% of UPN, and Paramount has an option
through January 15, 1997 to acquire an interest in UPN equal to that of BHC. The
option price is equivalent to approximately one-half of BHC's aggregate cash
contributions to UPN through the exercise date, plus interest; payment may be
deferred through the option expiration date. BHC expenditures related to UPN
totalled $6.8 million in 1994. The cost of developing UPN will be significant,
and BHC has agreed to make minimum UPN expenditures of at least $150 million
through 1996. UPN expenditures and related operating losses are expected to
significantly exceed such amount for that period, and to remain substantial
thereafter.
<PAGE>
Chris-Craft's television stations make commitments for programming that will
not be available for telecasting until future dates. At December 31, 1994,
commitments for such programming totalled approximately $154.8 million,
including $45.4 million applicable to UTV. Chris-Craft capital expenditures
generally have not been material in relation to its financial position, and the
related capital expenditure commitments at December 31, 1994 (including any
related to UPN) were not material. Chris-Craft expects that its expenditures for
UPN, future film contract commitments and capital requirements for its present
business will be satisfied primarily from operations, marketable securities or
cash balances.
As set forth in Note 9, 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. As further set forth in Note 9, Chris-Craft does not presently
consider liability to be "probable" in any of the Montrose-related matters, and
no amount has been reserved in Chris-Craft's financial statements.
RESULTS OF OPERATIONS
1994 VERSUS 1993 Chris-Craft's core television station business achieved
record operating results in 1994. The substantial increase in Television
Division earnings, together with a reversal of previously accrued income taxes,
brought 1994 net income to $64,741,000, or $2.17 per share, 54% greater than
1993 income of $42,101,000, or $1.43 per share, excluding income associated with
BHC's former holdings of Time Warner securities. Net income in 1993, including
Time Warner income, was $149,068,000, or $5.11 per share.
A strong national economy and heavy political spending fueled demand for
television advertising in 1994. The Television Division's station group posted a
strong 11% increase in operating revenues, to a record $457,533,000 from
$411,999,000 in 1993. After a 2% decline in their programming expenses,
television station earnings increased 44%, easily surpassing 1993's record.
Television Division operating income in 1994 rose 42%, to a record $124,552,000
from 1993's $87,811,000, even after increases of approximately $9,000,000 in
other operating expenses, primarily program development expense.
Consolidated operating income, which additionally reflects Industrial
Division results and Chris-Craft corporate office expense, increased 43%, to an
all-time high of $107,832,000 from $75,332,000 in 1993. The Industrial Division
incurred a $3,557,000 operating loss, compared to operating income of $602,000
in 1993. Industrial Division 1994 results reflect a $3,500,000 provision for
discontinuing a product line, and related losses incurred before the
discontinuance.
Interest and other income rose to $55,951,000 from $52,661,000 in 1993. A
significant increase in interest income, reflecting the placement of Time Warner
proceeds in money market instruments, was partially offset by the UPN loss. The
1993 amount also reflects marketable securities gains.
State income taxes totalling $20,000,000, accrued by BHC in 1989 and 1990,
were reversed into income during 1994 following the favorable resolution of
routine audits. Such reversal was the primary factor in the reduction in
Chris-Craft's consolidated effective income tax rate to 35% in 1994 from 38% in
1993.
Minority interest represents the interest (27.9% in 1994 and 30.5% in 1993)
of shareholders other than Chris-Craft in BHC's net income, and the interest
(45.1% in 1994 and 45.7% in 1993) 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.
1993 VERSUS 1992 Chris-Craft 1993 net income increased 129% to $149,068,000,
or $5.11 per share, from $65,150,000, or $2.25 per share, in 1992. The
significant earnings increase reflected 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 a 104%
<PAGE>
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 expense 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 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 to net realizable value the carrying amount of a business
sold in February 1994, 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.
Income associated with BHC's former holdings of Time Warner 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.
