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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(MARK ONE)
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
------------------
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-8411
-----------------------------
UNITED TELEVISION, INC.
-----------------------
(Exact name of registrant as specified in its charter)
DELAWARE 41-0778377
- -------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
132 S. Rodeo Drive, Fourth Floor, Beverly Hills, CA 90212
- ---------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(310) 281-4844
--------------
(Registrant's telephone number, including area code)
Not Applicable
--------------
(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
---- ----
As of November 10, 1997, there were 9,400,839 shares of the
registrant's common stock outstanding.
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNITED TELEVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited - in thousands)
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
ASSETS
- ------
Current Assets:
Cash and cash equivalents $ 53,761 $ 21,695
Marketable securities 157,584 159,257
Accrued interest receivable 1,842 2,336
Accounts receivable, net 32,188 37,556
Film contract rights 32,590 21,045
Deferred tax benefit 4,406 4,536
Prepaid expenses and other
current assets 3,081 3,370
----------- -----------
Total current assets 285,452 249,795
----------- -----------
Marketable Securities, noncurrent 45,879 36,876
----------- -----------
Other Investments 17,531 17,531
----------- -----------
Film Contract Rights, noncurrent 3,870 4,691
----------- -----------
Property and Equipment, net 13,600 14,533
----------- -----------
Intangible Assets, net 11,308 11,765
----------- -----------
Other Assets 439 407
----------- -----------
$ 378,079 $ 335,598
=========== ===========
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LIABILITIES AND SHAREHOLDERS' INVESTMENT
- ----------------------------------------
Current Liabilities:
Film contracts payable $ 28,156 $ 25,402
Accounts payable 3,051 3,645
Accrued expenses 22,702 18,524
Income taxes payable 9,291 10,968
----------- -----------
Total current liabilities 63,200 58,539
----------- -----------
Film Contracts Payable after One Year 20,592 19,177
----------- -----------
Other Liabilities 10,672 7,441
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Shareholders' Investment:
Preferred stock $1.00 par value - -
Common stock $.10 par value 959 934
Additional paid-in capital 3,375 133
Retained earnings 270,102 242,979
Treasury stock, at cost (2,430) -
Increase to reflect marketable
securities at fair value 11,609 6,395
----------- -----------
283,615 250,441
----------- -----------
$ 378,079 $ 335,598
=========== ===========
<FN>
The accompanying notes to condensed consolidated financial statements
are an integral part of these balance sheets.
</TABLE>
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<TABLE>
UNITED TELEVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - in thousands except per share data)
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
------------------ ------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Revenues $ 40,436 $ 40,835 $123,682 $126,885
-------- -------- -------- --------
Expenses:
Operating 13,927 11,511 40,280 42,387
Selling, general and
administrative 12,741 15,264 39,573 41,917
-------- -------- -------- --------
26,668 26,775 79,853 84,304
-------- -------- -------- --------
Operating income 13,768 14,060 43,829 42,581
Interest and Other Income 3,045 2,374 8,906 7,343
-------- -------- -------- --------
Income before income taxes 16,813 16,434 52,735 49,924
Income Tax Provision (6,675) (6,250) (20,925) (19,500)
-------- -------- -------- --------
Net income $ 10,138 $ 10,184 $ 31,810 $ 30,424
======== ======== ======== ========
Net Income per Share $ 1.08 $ 1.08 $ 3.39 $ 3.20
======== ======== ======== ========
Average Outstanding Common Shares 9,386 9,453 9,370 9,507
======== ======== ======== ========
<FN>
The accompanying notes to condensed consolidated financial statements
are an integral part of these statements.
</TABLE>
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<TABLE>
UNITED TELEVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)
<CAPTION>
Nine Months
Ended September 30,
-------------------
1997 1996
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 31,810 $ 30,424
Adjustment to reconcile net income to net
cash provided from operating activities:
Film contract payments (18,692) (19,664)
Film contract amortization 15,341 20,217
Depreciation and other amortization 3,455 3,404
Gain on dispositions of marketable securities (375) (113)
Changes in assets and liabilities:
Accounts receivable 5,368 7,136
Prepaid and other assets (2,453) (506)
Accounts payable and accrued expenses 3,584 122
Income taxes payable (1,677) 3,634
-------- --------
Net cash provided from
operating activities 36,361 44,654
-------- --------
Cash Flows from Investing Activities:
Sales of marketable securities 129,254 179,235
Purchases of marketable securities (127,634) (175,221)
Purchases of other investments - (20,193)
Capital expenditures (2,065) (2,406)
-------- --------
Net cash used in
investing activities (445) (18,585)
-------- --------
Cash Flows from Financing Activities:
Dividends paid (4,687) (4,750)
Proceeds from exercise of stock options 3,267 3,563
Purchases of treasury stock (2,430) (23,171)
-------- --------
Net cash used in
financing activities (3,850) (24,358)
-------- --------
Net Increase in Cash and Cash Equivalents 32,066 1,711
Cash and Cash Equivalents at Beginning of Period 21,695 16,888
-------- --------
Cash and Cash Equivalents at End of Period $ 53,761 $ 18,599
======== ========
<FN>
The accompanying notes to condensed consolidated financial statements
are an integral part of these statements.
</TABLE>
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UNITED TELEVISION, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. PRINCIPLES OF CONSOLIDATION:
The accompanying condensed consolidated financial
statements include the accounts of UTV and its subsidiaries
after elimination of all significant intercompany accounts
and transactions. UTV is a majority owned (58.6% at
September 30, 1997) subsidiary of BHC Communications, Inc.
(BHC), a majority owned subsidiary of Chris-Craft
Industries, Inc.
The financial information included herein has been
prepared by UTV, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. However, UTV believes
that the disclosures herein are adequate to make the information
presented not misleading. It is suggested that these condensed
consolidated financial statements be read in conjunction with
the financial statements and the notes thereto included in UTV's
latest annual report on Form 10-K. The information furnished
reflects all adjustments (consisting only of normal recurring
adjustments) which are, in the opinion of management, necessary
to a fair statement of the results for the interim periods.
The results for this interim period are not necessarily
indicative of results to be expected for the full fiscal year,
due to seasonal factors, among others.
2. MARKETABLE SECURITIES:
All of UTV's marketable securities have been categorized
as available for sale and as a result are carried at fair
market value. At September 30, 1997, all U.S. Government
securities mature within two years. Marketable securities
classified by security type are as follows (in thousands):
Gross Unrealized
----------------
Cost Gains Losses Fair Value
-------- ------- ------ ----------
September 30, 1997
U.S. Government securities $147,900 $ 51 $ 156 $147,795
BHC Class A common stock 11,325 18,007 - 29,332
Other equity securities 25,136 2,787 1,587 26,336
-------- ------- ------ --------
$184,361 $20,845 $1,743 $203,463
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Gross Unrealized
----------------
Cost Gains Losses Fair Value
-------- ------- ------ ----------
December 31, 1996:
U.S. Government securities $149,908 $ 87 $ 555 $149,440
BHC Class A common stock 11,325 11,637 - 22,962
Other equity securities 24,382 1,004 1,655 23,731
-------- ------- ------ --------
$185,615 $12,728 $2,210 $196,133
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The difference between cost and fair value, net of taxes,
is reflected as an increase to shareholders' investment in the
accompanying balance sheets.
For the nine months ended September 30, 1997, UTV realized
marketable securities gains of $375,000. For purposes of
computing realized gains and losses, cost was determined using
the specific identification method.
3. SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income taxes for the nine months ended
September 30, 1997 and 1996 totaled $22,602,000 and $15,866,000,
respectively.
4. COMMITMENTS:
The aggregate amount payable by UTV 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 Condensed
Consolidated Balance Sheet, totaled $67,673,000 at September 30,
1997. UTV has a remaining commitment to invest over time up
to $19,807,000 in a management buyout limited partnership.
UTV has signed a definitive agreement to purchase the
assets of UHF television station WRBW-TV in Orlando, Florida,
for approximately $60,000,000 and possible future consideration.
The acquisition is subject to FCC approval and other conditions
in the agreement.
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UNITED TELEVISION, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations.
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Liquidity and Capital Resources
- -------------------------------
UTV's operating cash flow is generated primarily by
its television broadcasting operations and generally
parallels the earnings of UTV's television stations, adjusted
to reflect the difference between film contract payments and
film contract amortization. The relationship between such
payments and amortization may vary greatly between periods
(payments exceeded amortization by $3,351,000 in the first
nine months of 1997, while amortization exceeded payments by
$553,000 in the first nine months of 1996) and is dependent
upon the mix of programs aired and payment terms of the
stations' contracts. UTV stations generated substantial cash
flow in the first nine months of 1997, and UTV expects them to
do the same for the full year. With its considerable cash and
marketable securities balances, UTV continues to be well
positioned to pursue new opportunities and deal effectively
with uncertainties that may arise in the television broadcasting
industry or economic environment.
UTV's cash flow is augmented by interest and dividend
income associated with its cash and marketable securities.
UTV's cash flow from operations for the first nine months of
1997 totaled $36,361,000, and cash and marketable securities
increased $39,396,000 to $257,224,000 at September 30, 1997.
UTV has a remaining commitment to invest over time up to
$19,807,000 in a management buyout limited partnership.
Working capital increased $30,996,000 during the first
nine months of 1997 to $222,252,000 at September 30, 1997,
primarily reflecting cash from operations offset by payment
of a cash dividend. Working capital at September 30, 1997
remains substantially in excess of UTV's normal operating
requirements.
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UTV is engaged in an ongoing review of business
opportunities in media, entertainment, communications and
other industries. UTV currently has no outstanding debt and
believes it is capable of raising significant additional
capital to augment its already substantial liquid assets,
if desired, to fund any resulting expansion. In October 1997,
UTV signed a definitive agreement to purchase the assets of
WRBW-TV in Orlando, Florida, for approximately $60,000,000 and
possible future consideration. UTV expects to use a portion
of available cash and marketable securities balances to
complete this transaction.
UTV regularly makes current commitments for programming
that will not be available for telecasting until future dates
and had commitments for payments for such programming totaling
$67,673,000 at September 30, 1997. UTV expects to continue to
satisfy these commitments with funds provided from operations.
UTV's Board of Directors has from time to time authorized
the purchase of UTV's common shares. At September 30, 1997,
801,149 shares were authorized for purchase. From January 1,
1995, through September 30, 1997, 824,268 shares were purchased
for an aggregate cost of $65,689,000, of which 27,600 shares
were purchased during the first nine months of 1997 for an
aggregate cost of $2,430,000.
UTV's commitments for capital expenditures at September 30,
1997 were not material in relation to UTV's financial position.
Funds for capital expenditures have generally been provided
from operations. UTV expects that future capital expenditures
for its present business will be funded from operations or
current cash balances. UTV has no present requirement for
additional capital.
Results of Operations
- ---------------------
UTV's primary source of revenue is the sale to advertisers
of time on its five television stations. Third quarter net
income totaled $10,138,000, a slight decrease from last year's
third quarter net income of $10,184,000. Reflecting a 1%
reduction in average common shares outstanding, earnings
per share were $1.08 in both quarters.
Consolidated net revenues for the quarter decreased 1% to
$40,436,000, from $40,835,000 in 1996. Despite a strong
increase in demand by national advertisers, soft demand by local
advertisers and the absence in the 1997 quarter of Olympics
related revenue recorded in the 1996 third quarter resulted in
the net revenue reduction. Consequently, although total
operating expenses decreased slightly, operating income decreased
2% to $13,768,000, from last year's $14,060,000.
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Interest and other income for the quarter rose 28% to
$3,045,000, from $2,374,000 in 1996.
Net income for the first nine months of 1997 increased
5% to $31,810,000, from last year's net income of $30,424,000.
Reflecting a reduction in average common shares outstanding,
earnings per share rose 6% to $3.39 in 1997, from $3.20
last year.
Consolidated net revenues for the nine month period
decreased 3% to $123,682,000, from $126,885,000 in 1996.
The decrease reflects reduced demand by local advertisers in
the 1997 period, Olympics related revenue recorded in the 1996
period, and a favorable retroactive network revenue adjustment
recorded in the 1996 period. After a 5% decrease in total
operating expenses (reflecting a 13% decrease in programming
costs), operating income totaled $43,829,000, a 3% increase
from last year's $42,581,000.
Interest and other income for the nine month period
increased 21% to $8,906,000, from $7,343,000 last year.
Item 3. Quantitative and Qualitative Disclosures about
Market Risk.
-----------------------------------------------
Not applicable.
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UNITED TELEVISION, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) See Exhibit Index.
(b) No report on Form 8-K was filed during the quarter
for which this report is being filed.
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned
thereunto duly authorized.
UNITED TELEVISION, INC.
(Registrant)
Date: November 12, 1997 By: /s/ Garth S. Lindsey
----------------- --------------------
Garth S. Lindsey
Executive Vice President
and Chief Financial
Officer (Principal
Financial and Accounting
Officer)
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EXHIBIT INDEX
Incorporated by
Reference to: Exhibit No. Exhibit
- ------------- ----------- -------
27 Financial Data Schedule
3
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM 10Q DATED
SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 53,761
<SECURITIES> 157,584
<RECEIVABLES> 32,188
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 285,452
<PP&E> 68,402
<DEPRECIATION> 54,802
<TOTAL-ASSETS> 378,079
<CURRENT-LIABILITIES> 63,200
<BONDS> 0
<COMMON> 959
0
0
<OTHER-SE> 282,656
<TOTAL-LIABILITY-AND-EQUITY> 378,079
<SALES> 123,682
<TOTAL-REVENUES> 123,682
<CGS> 79,853
<TOTAL-COSTS> 79,853
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 52,735
<INCOME-TAX> 20,925
<INCOME-CONTINUING> 31,810
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31,810
<EPS-PRIMARY> 3.39
<EPS-DILUTED> 3.39
</TABLE>
