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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 June 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 August 11, 1997, there were 9,384,914 shares of the
registrant's common stock outstanding.
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<TABLE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNITED TELEVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited - in thousands)
<CAPTION>
June 30, December 31,
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
- ------
Current Assets:
Cash and cash equivalents $ 28,108 $ 21,695
Marketable securities 169,956 159,257
Accrued interest receivable 1,869 2,336
Accounts receivable, net 34,302 37,556
Film contract rights 11,826 21,045
Deferred tax benefit 4,497 4,536
Prepaid expenses and other
current assets 3,885 3,370
----------- -----------
Total current assets 254,443 249,795
----------- -----------
Marketable Securities, noncurrent 43,034 36,876
----------- -----------
Other Investments 17,531 17,531
----------- -----------
Film Contract Rights, noncurrent 3,695 4,691
----------- -----------
Property and Equipment, net 13,900 14,533
----------- -----------
Intangible Assets, net 11,460 11,765
----------- -----------
Other Assets 423 407
----------- -----------
$ 344,486 $ 335,598
=========== ===========
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LIABILITIES AND SHAREHOLDERS' INVESTMENT
- ----------------------------------------
Current Liabilities:
Film contracts payable $ 21,801 $ 25,402
Accounts payable 2,936 3,645
Accrued expenses 15,038 18,524
Income taxes payable 10,708 10,968
----------- -----------
Total current liabilities 50,483 58,539
----------- -----------
Film Contracts Payable after One Year 14,001 19,177
----------- -----------
Other Liabilities 9,397 7,441
----------- -----------
Shareholders' Investment:
Preferred stock $1.00 par value - -
Common stock $.10 par value 940 934
Additional paid-in capital 2,638 133
Retained earnings 259,964 242,979
Treasury stock, at cost (2,430) -
Increase to reflect marketable
securities at fair value 9,493 6,395
----------- -----------
270,605 250,441
----------- -----------
$ 344,486 $ 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 Six Months
Ended June 30, Ended June 30,
------------------ ------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Revenues $ 44,919 $ 45,816 $ 83,246 $ 86,050
-------- -------- -------- --------
Expenses:
Operating 13,428 15,170 26,353 30,876
Selling, general and
administrative 13,404 13,470 26,832 26,653
-------- -------- -------- --------
26,832 28,640 53,185 57,529
-------- -------- -------- --------
Operating income 18,087 17,176 30,061 28,521
Interest and Other Income 2,795 2,498 5,861 4,969
-------- -------- -------- --------
Income before income taxes 20,882 19,674 35,922 33,490
Income Tax Provision (8,275) (7,800) (14,250) (13,250)
-------- -------- -------- --------
Net income $ 12,607 $ 11,874 $ 21,672 $ 20,240
======== ======== ======== ========
Net Income per Share $ 1.35 $ 1.25 $ 2.31 $ 2.12
======== ======== ======== ========
Average Outstanding Common Shares 9,360 9,465 9,362 9,534
======== ======== ======== ========
<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>
Six Months
Ended June 30,
-------------------
1997 1996
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 21,672 $ 20,240
Adjustment to reconcile net income to net
cash provided from operating activities:
Film contract payments (11,613) (12,524)
Film contract amortization 10,159 13,964
Depreciation and other amortization 2,309 2,223
Gain on dispositions of marketable securities (316) (99)
Changes in assets and liabilities:
Accounts receivable 3,254 1,814
Prepaid and other assets 2,828 2,800
Accounts payable and accrued expenses (4,195) (4,771)
Income taxes payable (260) 3,884
-------- --------
Net cash provided from
operating activities 23,838 27,531
-------- --------
Cash Flows from Investing Activities:
Sales of marketable securities 88,465 128,479
Purchases of marketable securities (99,913) (124,150)
Purchases of other investments - (2,663)
Capital expenditures (1,371) (1,287)
-------- --------
Net cash (used in) provided from
investing activities (12,819) 379
-------- --------
Cash Flows from Financing Activities:
Dividends paid (4,687) (4,750)
Proceeds from exercise of stock options 2,511 3,435
Purchases of treasury stock (2,430) (20,914)
-------- --------
Net cash used in financing activities (4,606) (22,229)
-------- --------
Net Increase in Cash and Cash Equivalents 6,413 5,681
Cash and Cash Equivalents at Beginning of Period 21,695 16,888
-------- --------
Cash and Cash Equivalents at End of Period $ 28,108 $ 22,569
======== ========
<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 (58.8% at June 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 June 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
-------- ------- ------ ----------
June 30, 1997
U.S. Government securities $160,504 $ 17 $ 353 $160,168
BHC Class A common stock 11,325 15,742 - 27,067
Other equity securities 25,542 2,088 1,875 25,755
-------- ------- ------ --------
$197,371 $17,847 $2,228 $212,990
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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 six months ended June 30, 1997, UTV realized
marketable securities gains of $316,000. 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 six months ended June 30,
1997 and 1996 totaled $14,510,000 and $9,366,000, 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 $75,629,000 at June 30,
1997. UTV has a remaining commitment to invest over time up
to $19,807,000 in a management buyout limited partnership.
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UNITED TELEVISION, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations.
------------------------------------
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 $1,454,000 in the first
six months of 1997, while amortization exceeded payments by
$1,440,000 in the first six 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 six 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 six months of
1997 totaled $23,838,000, and cash and marketable securities
increased $23,270,000 to $241,098,000 at June 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 $12,704,000 during the first six
months of 1997 to $203,960,000 at June 30, 1997, primarily
reflecting cash from operations offset by payment of a cash
dividend. Working capital at June 30, 1997 remains
substantially in excess of UTV's normal operating requirements.
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.
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
$75,629,000 at June 30, 1997. UTV expects to continue to
satisfy these commitments with funds provided from operations.
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UTV's Board of Directors has from time to time authorized
the purchase of UTV's common shares. At June 30, 1997, 801,149
shares were authorized for purchase. From January 1, 1995,
through June 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 six months of 1997 for an aggregate
cost of $2,430,000.
UTV's commitments for capital expenditures at June 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. Second quarter net
income totaled $12,607,000, a 6% increase over last year's
second quarter net income of $11,874,000. Reflecting a
reduction in average common shares outstanding, earnings
per share rose 8% to $1.35 in 1997, from $1.25 in 1996.
Consolidated net revenue for the quarter decreased 2% to
$44,919,000, from $45,816,000 in 1996. The decrease resulted
from reduced demand by both local and national advertisers.
After a 6% decrease in operating expenses, operating income
totaled a record $18,087,000, a 5% increase from last year's
$17,176,000. The decrease in operating expenses was attributable
primarily to a 14% decrease in programming costs.
Interest and other income for the quarter rose 12% to
$2,795,000, from $2,498,000 in 1996.
Net income for the first six months of 1997 increased
7% to $21,672,000, from last year's net income of $20,240,000.
Reflecting a reduction in average common shares outstanding,
earnings per share rose 9% to $2.31 in 1997, from $2.12
last year.
Consolidated net revenues for the six month period
decreased 3% to $83,246,000, from $86,050,000 in 1996.
After an 8% decrease in operating expenses, operating income
totaled $30,061,000, a 5% increase from last year's $28,521,000.
The decrease in operating expenses was attributable primarily
to an 18% decrease in programming costs.
Interest and other income for the six month period
increased 18% to $5,861,000, from $4,969,000 last year.
Item 3. Quantative and Qualative Disclosures about Market Risk.
-------------------------------------------------------
Not applicable.
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UNITED TELEVISION, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
UTV held its annual meeting of stockholders on May 6, 1997.
At the meeting, the following were elected directors, by
the number of votes set forth opposite their respective names:
Broker
For Withheld Non-votes
--------- -------- ---------
Lawrence R. Barnett 8,994,814 29,417 - 0 -
Norman Perlmutter 9,001,813 22,817 - 0 -
Howard F. Roycroft 9,001,414 24,169 - 0 -
Rocco C. Siciliano 9,000,062 22,418 - 0 -
At the meeting, the selection of Price Waterhouse LLP as UTV's
auditors for the current year was ratified by the following vote:
Broker
For Against Abstain Non-votes
--------- ------- ------- ---------
9,015,801 4,206 4,224 - 0 -
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: August 13, 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
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM 10Q DATED
JUNE 30, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 28,108
<SECURITIES> 169,956
<RECEIVABLES> 34,302
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 254,443
<PP&E> 67,710
<DEPRECIATION> 53,810
<TOTAL-ASSETS> 344,486
<CURRENT-LIABILITIES> 50,483
<BONDS> 0
<COMMON> 940
0
0
<OTHER-SE> 269,665
<TOTAL-LIABILITY-AND-EQUITY> 344,486
<SALES> 83,246
<TOTAL-REVENUES> 83,246
<CGS> 53,185
<TOTAL-COSTS> 53,185
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 35,922
<INCOME-TAX> 14,250
<INCOME-CONTINUING> 21,672
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,672
<EPS-PRIMARY> 2.31
<EPS-DILUTED> 2.31
</TABLE>
