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PAGE 1
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, 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 August 12, 1998, there were 9,404,333 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,
1998 1997
----------- -----------
<S> <C> <C>
ASSETS
- ------
Current Assets:
Cash and cash equivalents $ 68,396 $ 98,075
Marketable securities 113,114 124,811
Accrued interest receivable 1,309 2,014
Accounts receivable, net 38,270 36,913
Film contract rights 13,604 24,627
Deferred tax benefit 5,254 5,233
Prepaid expenses and other
current assets 2,964 1,721
----------- -----------
Total current assets 242,911 293,394
----------- -----------
Marketable Securities, noncurrent 14,617 47,695
----------- -----------
Other Investments 26,385 17,531
----------- -----------
Film Contract Rights, noncurrent 3,093 4,517
----------- -----------
Property and Equipment, net 15,125 13,175
----------- -----------
Intangible Assets, net 87,649 11,156
----------- -----------
Other Assets 493 518
----------- -----------
$ 390,273 $ 387,986
=========== ===========
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PAGE 3
LIABILITIES AND SHAREHOLDERS' INVESTMENT
- ----------------------------------------
Current Liabilities:
Film contracts payable $ 20,854 $ 26,268
Accounts payable 2,493 3,090
Accrued expenses 19,586 22,428
Income taxes payable 20,942 8,475
----------- -----------
Total current liabilities 63,875 60,261
----------- -----------
Film Contracts Payable after One Year 11,551 16,483
----------- -----------
Other Liabilities 1,404 10,502
----------- -----------
Shareholders' Investment:
Preferred stock $1.00 par value - -
Common stock $.10 par value 947 941
Additional paid-in capital 6,888 3,635
Retained earnings 310,065 283,271
Treasury stock, at cost (7,010) -
Increase to reflect marketable
securities at fair value 2,553 12,893
----------- -----------
313,443 300,740
----------- -----------
$ 390,273 $ 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>
Three Months Six Months
Ended June 30, Ended June 30,
------------------ ------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Revenues $ 48,503 $ 44,919 $ 87,796 $ 83,246
-------- -------- -------- --------
Expenses:
Operating 14,840 13,428 30,795 26,353
Selling, general and
administrative 15,440 13,404 30,806 26,832
-------- -------- -------- --------
30,280 26,832 61,601 53,185
-------- -------- -------- --------
Operating income 18,223 18,087 26,195 30,061
-------- -------- -------- --------
Interest and Other Income:
Gain on sale of BHC
Communications, Inc.
common stock 19,932 - 19,932 -
Interest and other income 2,167 2,795 5,155 5,861
-------- -------- -------- --------
22,099 2,795 25,087 5,861
-------- -------- -------- --------
Income before income taxes 40,322 20,882 51,282 35,922
Income Tax Provision (15,450) (8,275) (19,800) (14,250)
-------- -------- -------- --------
Net income $ 24,872 $ 12,607 $ 31,482 $ 21,672
======== ======== ======== ========
Earnings per Share:
Basic $ 2.65 $ 1.35 $ 3.36 $ 2.31
Diluted $ 2.63 $ 1.34 $ 3.34 $ 2.30
Average Number of Common and Common
Equivalent Shares Outstanding:
Basic 9,396 9,360 9,382 9,362
Diluted 9,444 9,419 9,433 9,429
<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,
-------------------
1998 1997
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 31,482 $ 21,672
Adjustment to reconcile net income to net
cash provided from operating activities:
Film contract payments (13,621) (11,613)
Film contract amortization 12,223 10,159
Depreciation and other amortization 3,358 2,309
Gain on sale of BHC common stock (19,932) -
Gain on dispositions of other investments (499) (316)
Changes in assets and liabilities:
Accounts receivable (1,357) 3,254
Prepaid and other assets 2,985 2,828
Accounts payable and accrued expenses (3,439) (4,195)
Income taxes payable 10,021 (260)
-------- --------
Net cash provided from
operating activities 21,221 23,838
-------- --------
Cash Flows from Investing Activities:
Sales of marketable securities 78,155 88,465
Purchases of marketable securities (29,961) (99,913)
Purchases of other investments (8,854) -
Station acquisition:
Fixed assets (2,568) -
Intangibles (77,668) -
Capital expenditures (1,565) (1,371)
-------- --------
Net cash used in
investing activities (42,461) (12,819)
-------- --------
Cash Flows from Financing Activities:
Dividends paid (4,688) (4,687)
Proceeds from exercise of employee stock options 3,259 2,511
Purchases of treasury stock (7,010) (2,430)
-------- --------
Net cash used in financing activities (8,439) (4,606)
-------- --------
Net (Decrease) Increase in Cash and Cash Equivalents (29,679) 6,413
Cash and Cash Equivalents at Beginning of Period 98,075 21,695
-------- --------
Cash and Cash Equivalents at End of Period $ 68,396 $ 28,108
======== ========
<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 June 30,
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
for 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, 1998, all U.S. Government
securities mature within one year. Marketable securities
classified by security type are as follows (in thousands):
<TABLE>
<CAPTION>
Gross Unrealized
----------------
Cost Gains Losses Fair Value
-------- ------- ------ ----------
<S> <C> <C> <C> <C>
June 30, 1998
U.S. Government securities $103,114 $ 16 $ 33 $103,097
Other equity securities 20,416 4,750 532 24,634
-------- ------- ------ --------
$123,530 $ 4,766 $ 565 $127,731
======== ======= ====== ========
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PAGE 7
Gross Unrealized
----------------
Cost Gains Losses Fair Value
-------- ------- ------ ----------
<S> <C> <C> <C> <C>
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
======== ======= ====== ========
</TABLE>
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, 1998, UTV realized
marketable securities gains of $20,431,000, including a gain of
$19,932,000 resulting from the sale to BHC of UTV's holding of
BHC Class A common stock. 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, 1998 and 1997 totaled $9,779,000 and $14,510,000,
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 Six Months
Ended June 30, Ended June 30,
------------------ ------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net income $ 24,872 $ 12,607 $ 31,482 $ 21,672
Other comprehensive income,
net of taxes (13,522) 3,514 (10,339) (349)
-------- -------- -------- --------
Comprehensive income $ 11,350 $ 16,121 $ 21,143 $ 21,323
======== ======== ======== ========
</TABLE>
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5. COMMITMENTS:
The aggregate amount payable by UTV under contracts for
programming not currently available for telecasting at
June 30, 1998, and, accordingly, not included in film contracts
payable and the related contract rights in the accompanying
Condensed Consolidated Balance Sheets, totaled $95,356,000. UTV
also has a remaining commitment to invest over time up to
$10,952,000 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.
UTV expects to use a portion of available cash and marketable
securities balances to complete this transaction, which is subject
to Federal Communications Commission approval, as well as
satisfaction of certain conditions.
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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 $1,398,000 and $1,454,000 in the first six months
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 six months
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 six months of 1998 totaled
$21,221,000. However, as a result of cash used to acquire WUTB-TV,
to purchase UTV common shares and to make other investments, cash
and marketable securities decreased $74,454,000 to $196,127,000 at
June 30, 1998. UTV has a remaining commitment to invest over time
up to $10,952,000 in management buyout limited partnerships.
Reflecting the WUTB-TV acquisition, treasury stock purchases
and other investments, partially offset by the sale to BHC of UTV's
holding of BHC Class A common stock, working capital decreased
$54,097,000 during the first six months of 1998 to $179,036,000
at June 30, 1998. Working capital at June 30, 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 expects to use a portion of available cash and marketable
securities balances to complete this transaction, which is subject
to Federal Communications Commission approval, as well as
satisfaction of certain conditions. 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.
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 $95,356,000
at June 30, 1998. UTV expects to continue to satisfy these
commitments in the ordinary course of business.
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PAGE 10
UTV's Board of Directors has from time to time authorized
the purchase of UTV common shares. At June 30, 1998, 729,649
shares were authorized for purchase. From January 1, 1996,
through June 30, 1998, 462,600 shares were purchased for an
aggregate cost of $42,574,000, of which 68,500 shares were
purchased during the first six months of 1998 for an aggregate
cost of $7,010,000.
UTV's commitments for capital expenditures at June 30, 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. Second quarter 1998 net
income rose 97% to a second quarter record $24,872,000, or $2.65
per share ($2.63 per share diluted), from $12,607,000, or $1.35
per share ($1.34 per share diluted), in last year's second quarter.
The increase in net income resulted from an after-tax gain recorded
during the quarter of $12,932,000, or $1.38 per share ($1.37 per
share diluted), on the sale to BHC of UTV's holding of BHC Class A
common stock. The BHC stock had been received by UTV in 1990 as a
part of the distribution in the Time Warner merger.
Consolidated net revenue rose 8% for the quarter to
$48,503,000, from $44,919,000 last year. The increase reflects
revenue at WUTB-TV, UTV's newly acquired Baltimore television
station which early in the first quarter of 1998 began operating
for the first time as a traditional commercial broadcasting
station, as well as a 4% increase in same station local and
national advertising sales.
The increase in revenues was substantially offset by a 10%
increase in same station operating expenses, including a 12%
increase in programming costs, and an operating loss at WUTB-TV.
However, an increase in operating income during the quarter
associated with UTV's production entity resulted in record
operating income of $18,223,000, a 1% increase from last year's
$18,087,000.
Interest and other income for the quarter decreased 22% to
$2,167,000, from $2,795,000 in 1997.
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The favorable state tax position of the gain recognized on
the sale of BHC securities resulted in a decline in UTV's
effective tax rate to 38%, from 40% in the prior year's quarter.
Reflecting the gain on the sale of BHC securities, net income
for the first six months of 1998 increased 45% to $31,482,000, or
$3.36 per share ($3.34 per share diluted), from last year's net
income of $21,672,000, or $2.31 per share ($2.30 per share diluted).
Consolidated net revenues for the six month period rose 5%
to $87,796,000, from $83,246,000 in 1997. The increase reflects
revenues associated with WUTB-TV as well as a 2% increase in same
station local and national advertising sales.
More than offsetting the revenue increase were the WUTB-TV
operating loss and an 8% increase in same station operating
expenses, including a 12% increase in programming costs.
Operating income for the six month period decreased 13% to
$26,195,000, from last year's $30,061,000.
Interest and other income for the six month period decreased
12% to $5,155,000, from $5,861,000 last year.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
-----------------------------------------------------------
Not applicable.
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 5, 1998.
At the meeting, the following were elected directors, by the
number of votes set forth opposite their respective names:
Broker
For Withheld Non-votes
--------- -------- ---------
John L. Eastman 8,850,834 5,473 - 0 -
James D. Hodgson 8,849,615 6,692 - 0 -
Herbert J. Siegel 8,839,001 17,306 - 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
--------- ------- ------- ---------
8,850,204 2,448 3,655 - 0 -
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Item 5. Other Information.
------------------
The persons named on the form of proxy to be mailed in
connection with the solicitation of proxies on behalf of the
registrant's board of directors for the registrant's 1999 annual
stockholders meeting will vote in their own discretion on any matter
as to which the registrant shall not have received notice by
February 10, 1999.
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, 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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PAGE 13
EXHIBIT INDEX
Incorporated by
Reference to: Exhibit No. Exhibit
- --------------- ----------- -------
27 Financial Data Schedule
1113
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM 10Q DATED
JUNE 30, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 68,396
<SECURITIES> 113,114
<RECEIVABLES> 38,270
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 242,911
<PP&E> 71,690
<DEPRECIATION> 56,565
<TOTAL-ASSETS> 390,273
<CURRENT-LIABILITIES> 63,875
<BONDS> 0
<COMMON> 947
0
0
<OTHER-SE> 312,496
<TOTAL-LIABILITY-AND-EQUITY> 390,273
<SALES> 87,796
<TOTAL-REVENUES> 87,796
<CGS> 61,601
<TOTAL-COSTS> 61,601
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 51,282
<INCOME-TAX> 19,800
<INCOME-CONTINUING> 31,482
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31,482
<EPS-PRIMARY> 3.36
<EPS-DILUTED> 3.34
</TABLE>
