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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 March 31, 1998
--------------
/ / 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 May 13, 1998, there were 9,397,593 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>
March 31, December 31,
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
- ------
Current Assets:
Cash and cash equivalents $ 26,320 $ 98,075
Marketable securities 131,206 124,811
Accrued interest receivable 1,594 2,014
Accounts receivable, net 29,407 36,913
Film contract rights 19,284 24,627
Deferred tax benefit 5,348 5,233
Prepaid expenses and other
current assets 2,576 1,721
----------- -----------
Total current assets 215,735 293,394
----------- -----------
Marketable Securities, noncurrent 48,671 47,695
----------- -----------
Other Investments 17,531 17,531
----------- -----------
Film Contract Rights, noncurrent 3,662 4,517
----------- -----------
Property and Equipment, net 15,172 13,175
----------- -----------
Intangible Assets, net 88,333 11,156
----------- -----------
Other Assets 495 518
----------- -----------
$ 389,599 $ 387,986
=========== ===========
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LIABILITIES AND SHAREHOLDERS' INVESTMENT
- ----------------------------------------
Current Liabilities:
Film contracts payable $ 24,409 $ 26,268
Accounts payable 2,848 3,090
Dividend payable 4,688 -
Accrued expenses 19,482 22,428
Income taxes payable 13,336 8,475
----------- -----------
Total current liabilities 64,763 60,261
----------- -----------
Film Contracts Payable after One Year 13,768 16,483
----------- -----------
Other Liabilities 10,225 10,502
----------- -----------
Shareholders' Investment:
Preferred stock $1.00 par value - -
Common stock $.10 par value 945 941
Additional paid-in capital 5,640 3,635
Retained earnings 285,193 283,271
Treasury stock, at cost (7,010) -
Adjustment to reflect marketable
securities at fair value 16,075 12,893
----------- -----------
300,843 300,740
----------- -----------
$ 389,599 $ 387,986
=========== ===========
<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>
For the Three Months
Ended March 31,
---------------------
1998 1997
-------- --------
<S> <C> <C>
Net Revenues $ 39,293 $ 38,327
-------- --------
Expenses:
Operating 15,955 12,925
Selling, general and administrative 15,366 13,428
-------- --------
31,321 26,353
-------- --------
Operating income 7,972 11,974
Interest and Other Income 2,988 3,066
-------- --------
Income before income taxes 10,960 15,040
Income Tax Provision (4,350) (5,975)
-------- --------
Net income 6,610 9,065
======== ========
Earnings per Share:
Basic $ .71 $ .97
Diluted $ .70 $ .96
Average Number of Common and Common
Equivalent Shares Outstanding:
Basic 9,369 9,364
Diluted 9,422 9,439
<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>
Three Months
Ended March 31,
-------------------
1998 1997
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 6,610 $ 9,065
Adjustment to reconcile net income to net
cash provided from operating activities:
Film contract payments (6,793) (5,577)
Film contract amortization 6,177 4,998
Depreciation and other amortization 1,615 1,204
Gain on dispositions of investments (543) (281)
Changes in assets and liabilities:
Accounts receivable 7,506 7,459
Prepaid and other assets 1,828 1,305
Accounts payable and accrued expenses (3,188) (3,158)
Income taxes payable 2,414 4,961
-------- --------
Net cash provided from
operating activities 15,626 19,976
-------- --------
Cash Flows from Investing Activities:
Sales of marketable securities 33,387 29,014
Purchases of marketable securities (34,978) (11,042)
Station acquisition:
Fixed assets (2,568) -
Intangibles (77,712) -
Capital expenditures (509) (810)
-------- --------
Net cash (used in) provided from
investing activities (82,380) 17,162
-------- --------
Cash Flows from Financing Activities:
Proceeds from exercise of employee stock options 2,009 1,776
Purchases of treasury stock (7,010) (2,430)
-------- --------
Net cash used in
financing activities (5,001) (654)
-------- --------
Net (Decrease) Increase in Cash and Cash Equivalents (71,755) 36,484
Cash and Cash Equivalents at Beginning of Period 98,075 21,695
-------- --------
Cash and Cash Equivalents at End of Period $ 26,320 $ 58,179
======== ========
<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 (58.7% at March 31, 1998) 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 March 31, 1998, all U.S. Government securities mature within
one year. Marketable securities classified by security type are
as follows (in thousands):
Gross Unrealized
----------------
Cost Gains Losses Fair Value
-------- ------- ------ ----------
March 31, 1998
U.S. Government securities $121,447 $ 2 $ 107 $121,342
BHC Class A common stock 11,325 20,640 - 31,965
Other equity securities 20,655 6,396 481 26,570
-------- ------- ------ --------
$153,427 $27,038 $ 588 $179,877
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Gross Unrealized
----------------
Cost Gains Losses Fair Value
-------- ------- ------ ----------
December 31, 1997:
U.S. Government securities $115,123 $ 31 $ 103 $115,051
BHC Class A common stock 11,325 18,177 - 29,502
Other equity securities 24,845 4,457 1,349 27,953
-------- ------- ------ --------
$151,293 $22,665 $1,452 $172,506
======== ======= ====== ========
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 quarter ended March 31, 1998, UTV realized gains on
sales of marketable securities of $543,000. 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 first quarter of 1998 and
1997 totaled $1,936,000 and $1,014,000, respectively.
4. COMPREHENSIVE INCOME:
Effective January 1, 1998, UTV adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income."
Other comprehensive income includes only unrealized gains and
losses on marketable securities classified as available for sale
(see Note 2), net of reclassification adjustment for gains included
in net income. Comprehensive income is as follows (in thousands):
<TABLE>
<CAPTION>
Three Months
Ended March 31,
-------------------
1998 1997
-------- --------
<S> <C> <C>
Net income $ 6,610 $ 9,065
Other comprehensive income, net of taxes 3,172 (416)
-------- --------
Comprehensive income $ 9,782 $ 8,649
======== ========
</TABLE>
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5. COMMITMENTS:
The aggregate amount payable by UTV under contracts for
programming not currently available for telecasting at March 31,
1998, and, accordingly, not included in film contracts payable and
the related contract rights in the accompanying Condensed
Consolidated Balance Sheets, totaled $78,777,000. At March 31,
1998, UTV also had a remaining commitment to invest over time up
to $19,807,000 ($10,952,000 at May 14, 1998) in management
buyout limited partnerships.
In 1997, UTV 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
------------------------------------
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 $616,000 and $579,000 in the first quarter of 1998
and 1997, respectively) 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 quarter of 1998, and
are expected 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 quarter of 1998 totaled
$15,626,000. However, as a result of cash used to acquire WUTB-TV
and to purchase UTV common shares, cash and marketable securities
decreased $64,384,000 to $206,197,000 at March 31, 1998. UTV had
a remaining commitment to invest over time up to $19,807,000
($10,952,000 at May 14, 1998) in management buyout limited
partnerships.
Reflecting the WUTB-TV acquisition and treasury stock purchases,
working capital decreased $82,161,000 during the first quarter of
1998 to $150,972,000 at March 31, 1998. Working capital at March 31,
1998 remains substantially in excess of UTV's normal operating
requirements.
In 1997, UTV 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. UTV
continues to be 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.
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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 $78,777,000
at March 31, 1998. UTV expects to continue to satisfy these
commitments in the ordinary course of business.
UTV's Board of Directors has from time to time authorized the
purchase of UTV common shares. At March 31, 1998, purchase of an
additional 729,649 shares was so authorized. From January 1, 1996,
through March 31, 1998, 462,600 shares were purchased for an
aggregate cost of $42,574,000, of which 68,500 shares were
purchased during the first quarter of 1998 for an aggregate cost
of $7,010,000.
UTV's commitments for capital expenditures at March 31, 1998
were not material in relation to UTV's financial position. UTV
currently expects that during 1998 its stations will begin
converting to digital television. This conversion will require
the purchase of digital transmitting equipment to telecast over a
newly assigned frequency. This conversion roll-out is expected to
take a number of years and will be subject to competitive market
conditions. Funds for capital expenditures have generally been
provided from operations. UTV expects that future capital
expenditures for its present business, including the cost to convert
to digital television, 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 six television stations. First quarter 1998 net
income decreased 27% to $6,610,000, or $.71 per share ($.70 per
share diluted), from $9,065,000, or $.97 per share ($.96 per share
diluted), in last year's first quarter. An increase in expenses,
including those associated with WUTB-TV, UTV's newly acquired
Baltimore station which began broadcasting for the first time as a
traditional commercial broadcasting station early in the first
quarter, more than offset a slight increase in same station
revenue and the additional revenue generated at WUTB-TV.
Consolidated net revenues rose 3% for the quarter to
$39,293,000, from $38,327,000 last year. The increase reflects
revenue at WUTB-TV and increased same station barter revenue.
Same station local and national advertising sales were comparable
to last year.
The revenue increase was more than offset by an operating
loss at WUTB-TV and increases in same station operating expenses,
including a 12% increase in programming costs. Additionally
reflecting a decrease during the quarter in operating income
associated with UTV's production entity, operating income decreased
33% to $7,972,000, from last year's $11,974,000.
Interest and other income for the quarter decreased 3% to
$2,988,000, from $3,066,000 in 1997.
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UNITED TELEVISION, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) Exhibit 27 - Financial Data Schedule
(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: May 14, 1998 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
MARCH 31, 1998 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-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 26,320
<SECURITIES> 131,206
<RECEIVABLES> 29,407
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 215,735
<PP&E> 70,691
<DEPRECIATION> 55,519
<TOTAL-ASSETS> 389,599
<CURRENT-LIABILITIES> 64,763
<BONDS> 0
<COMMON> 945
0
0
<OTHER-SE> 299,898
<TOTAL-LIABILITY-AND-EQUITY> 389,599
<SALES> 39,293
<TOTAL-REVENUES> 39,293
<CGS> 31,321
<TOTAL-COSTS> 31,321
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 10,960
<INCOME-TAX> 4,350
<INCOME-CONTINUING> 6,610
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,610
<EPS-PRIMARY> .71
<EPS-DILUTED> .70
</TABLE>
