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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 September 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 November 9, 1998, there were 9,409,333 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
(in thousands)
<CAPTION>
September 30, December 31,
1998 1997
(Unaudited)
------------ -----------
<S> <C> <C>
ASSETS
- ------
Current Assets:
Cash and cash equivalents $ 64,755 $ 98,075
Marketable securities 128,647 124,811
Accrued interest receivable 1,504 2,014
Accounts receivable, net 30,969 36,913
Film contract rights 44,028 24,627
Deferred tax benefit 4,895 5,233
Prepaid expenses and other
current assets 2,574 1,721
------------ -----------
Total current assets 277,372 293,394
------------ -----------
Marketable Securities, noncurrent 11,006 47,695
------------ -----------
Other Investments 26,385 17,531
------------ -----------
Film Contract Rights, noncurrent 9,584 4,517
------------ -----------
Property and Equipment, net 15,790 13,175
------------ -----------
Intangible Assets, net 86,989 11,156
------------ -----------
Other Assets 475 518
------------ -----------
$ 427,601 $ 387,986
=========== ===========
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LIABILITIES AND SHAREHOLDERS' INVESTMENT
- ----------------------------------------
Current Liabilities:
Film contracts payable $ 27,392 $ 26,268
Accounts payable 2,161 3,090
Accrued expenses 31,739 22,428
Income taxes payable 12,227 8,475
------------ -----------
Total current liabilities 73,519 60,261
------------ -----------
Film Contracts Payable after One Year 30,820 16,483
------------ -----------
Other Liabilities 1,121 10,502
------------ -----------
Shareholders' Investment:
Preferred stock $1.00 par value - -
Common stock $.10 par value 947 941
Additional paid-in capital 7,011 3,635
Retained earnings 318,521 283,271
Treasury stock, at cost (7,010) -
Increase to reflect marketable
securities at fair value 2,672 12,893
------------ -----------
322,141 300,740
------------ -----------
$ 427,601 $ 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 Nine Months
Ended September 30, Ended September 30,
------------------ ------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Revenues $ 40,111 $ 40,436 $127,907 $123,682
-------- -------- -------- --------
Expenses:
Operating 14,912 13,927 45,707 40,280
Selling, general and
administrative 14,606 12,741 45,412 39,573
-------- -------- -------- --------
29,518 26,668 91,119 79,853
-------- -------- -------- --------
Operating income 10,593 13,768 36,788 43,829
-------- -------- -------- --------
Interest and Other Income:
Gain on sale of BHC
Communications, Inc.
common stock - - 19,932 -
Interest and other income 3,163 3,045 8,318 8,906
-------- -------- -------- --------
3,163 3,045 28,250 8,906
-------- -------- -------- --------
Income before income taxes 13,756 16,813 65,038 52,735
Income Tax Provision (5,300) (6,675) (25,100) (20,925)
-------- -------- -------- --------
Net income $ 8,456 $ 10,138 $ 39,938 $ 31,810
======== ======== ======== ========
Earnings per Share:
Basic $ .90 $ 1.08 $ 4.25 $ 3.40
Diluted $ .89 $ 1.07 $ 4.23 $ 3.37
Average Number of Common and Common
Equivalent Shares Outstanding:
Basic 9,404 9,386 9,390 9,370
Diluted 9,450 9,455 9,438 9,438
<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,
-------------------
1998 1997
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 39,938 $ 31,810
Adjustment to reconcile net income to net
cash provided from operating activities:
Film contract payments (20,691) (18,692)
Film contract amortization 18,480 15,341
Depreciation and other amortization 5,036 3,455
Gain on sale of BHC common stock (19,932) -
Gain on dispositions of other investments (1,132) (375)
Changes in assets and liabilities:
Accounts receivable 5,944 5,368
Prepaid and other assets (7,099) (2,453)
Accounts payable and accrued expenses 8,382 3,584
Income taxes payable 1,306 (1,677)
-------- --------
Net cash provided from
operating activities 30,232 36,361
-------- --------
Cash Flows from Investing Activities:
Sales of marketable securities 132,402 129,254
Purchases of marketable securities (95,301) (127,634)
Purchases of other investments (8,854) -
Station acquisition:
Fixed assets (2,568) -
Intangibles (77,668) -
Capital expenditures (3,247) (2,065)
-------- --------
Net cash used in
investing activities (55,236) (445)
-------- --------
Cash Flows from Financing Activities:
Dividends paid (4,688) (4,687)
Proceeds from exercise of employee stock options 3,382 3,267
Purchases of treasury stock (7,010) (2,430)
-------- --------
Net cash used in financing activities (8,316) (3,850)
-------- --------
Net (Decrease) Increase in Cash and Cash Equivalents (33,320) 32,066
Cash and Cash Equivalents at Beginning of Period 98,075 21,695
-------- --------
Cash and Cash Equivalents at End of Period $ 64,755 $ 53,761
======== ========
<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,
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 September 30, 1998, of the investments in
U.S. Government securities, 78% mature within one year and all
within two years. 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>
September 30, 1998
U.S. Government securities $117,730 $ 404 $ - $118,134
Other equity securities 17,526 4,609 616 21,519
-------- ------- ------ --------
$135,256 $ 5,013 $ 616 $139,653
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<CAPTION>
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 nine months ended September 30, 1998, UTV realized
marketable securities gains of $21,064,000, 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 nine months ended
September 30, 1998 and 1997 totaled $23,794,000 and $22,602,000,
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 adjustments for gains included
in net income. Comprehensive income is as follows (in thousands):
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
------------------ ------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net income $ 8,456 $ 10,138 $ 39,938 $ 31,810
Other comprehensive income
(loss), net of taxes 119 2,116 (10,221) 5,214
-------- -------- -------- --------
Comprehensive income $ 8,575 $ 12,254 $ 29,717 $ 37,024
======== ======== ======== ========
</TABLE>
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5. COMMITMENTS:
The aggregate amount payable by UTV under contracts for
programming not currently available for telecasting at
September 30, 1998, and, accordingly, not included in film
contracts payable and the related contract rights in the
accompanying Condensed Consolidated Balance Sheets, totaled
$83,488,000. 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 $2,211,000 and $3,351,000 in the first nine 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 nine 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 nine months of 1998 totaled
$30,232,000. 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 $66,173,000 to $204,408,000 at
September 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
$29,280,000 during the first nine months of 1998 to $203,853,000
at September 30, 1998. Working capital at September 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.
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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 $83,488,000
at September 30, 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 September 30, 1998, 729,649
shares were authorized for purchase. From January 1, 1996,
through September 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 nine months of 1998 for an aggregate
cost of $7,010,000.
UTV's commitments for capital expenditures at September 30, 1998
were not material in relation to UTV's financial position. During
1998, UTV began the process of converting its stations to digital
television. This conversion requires 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. Third quarter 1998 net income
decreased 17% to $8,456,000, or $.90 per share ($.89 per share
diluted), from $10,138,000, or $1.08 per share ($1.07 per share
diluted), in last year's third quarter. The decrease in net income
resulted from a slight decrease in revenues and an increase in
operating expenses.
Consolidated net revenue declined 1% for the quarter to
$40,111,000, from $40,436,000 last year. The reduction reflects
a 7% decrease in same station local and national advertising sales,
partially offset by 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.
Third quarter operating income fell 23% to $10,593,000, from
$13,768,000 last year. Same station operating expenses rose 7%,
including a 13% increase in programming costs. The decline in same
station net revenues, coupled with the increase in same station
operating expenses and an operating loss at WUTB, resulted in the
decrease in operating income. The decrease was partially offset by
higher earnings at UTV's production entity.
Interest and other income for the quarter increased 4% to
$3,163,000, from $3,045,000 in 1997.
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PAGE 11
Net income for the first nine months of 1998 increased 26%
to $39,938,000, or $4.25 per share ($4.23 per share diluted), from
last year's net income of $31,810,000, or $3.40 per share ($3.37
per share diluted). The increase in net income resulted from an
after-tax gain recorded during the second quarter of $12,932,000, or
$1.38 per share ($1.37 per share diluted), on the sale to BHC, its
majority stockholder, of UTV's holding of BHC Class A Common Stock.
Consolidated net revenues for the nine-month period rose 3%
to $127,907,000, from $123,682,000 in 1997. The increase reflects
revenues associated with WUTB-TV, partially offset by a 1% decline
in same station local and national advertising sales.
Operating income for the nine-month period fell 16% to
$36,788,000, from $43,829,000 last year. The decline in same
station local and national advertising time sales, coupled with an
operating loss at WUTB and a 7% increase in same station operating
expenses, including a 12% increase in programming expenses, resulted
in the decline in operating income. The decrease was partially
offset by higher earnings at UTV's production entity.
Interest and other income for the nine-month period decreased
7% to $8,318,000, from $8,906,000 last year.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
-----------------------------------------------------------
Not applicable.
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 10, 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 12
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
SEPTEMBER 30, 1998 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-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 64,755
<SECURITIES> 128,647
<RECEIVABLES> 30,969
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 277,372
<PP&E> 73,372
<DEPRECIATION> 57,582
<TOTAL-ASSETS> 427,601
<CURRENT-LIABILITIES> 73,519
<BONDS> 0
<COMMON> 947
0
0
<OTHER-SE> 321,194
<TOTAL-LIABILITY-AND-EQUITY> 427,601
<SALES> 127,907
<TOTAL-REVENUES> 127,907
<CGS> 91,119
<TOTAL-COSTS> 91,119
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 65,038
<INCOME-TAX> 25,100
<INCOME-CONTINUING> 39,938
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 39,938
<EPS-PRIMARY> 4.25
<EPS-DILUTED> 4.23
</TABLE>
