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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, 1999
--------------
/ / 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
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(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 11, 1999, there were 9,413,913 shares of the registrant's
common stock outstanding.
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PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements.
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UNITED TELEVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited - in thousands)
<CAPTION>
March 31, December 31,
1999 1998
------------ ------------
<S> <C> <C>
ASSETS
- ------
Current Assets:
Cash and cash equivalents $ 63,786 $ 50,771
Marketable securities 166,455 166,056
Accrued interest receivable 470 890
Accounts receivable, net 35,524 38,853
Film contract rights 29,262 38,074
Deferred tax benefit 6,294 6,209
Prepaid expenses and other
current assets 3,094 1,935
----------- -----------
Total current assets 304,885 302,788
----------- -----------
Other Investments 26,385 26,385
----------- -----------
Film Contract Rights, noncurrent 4,924 5,113
----------- -----------
Property and Equipment, net 16,549 16,537
----------- -----------
Intangible Assets, net 85,722 86,359
----------- -----------
Other Assets 471 459
----------- -----------
$ 438,936 $ 437,641
=========== ===========
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LIABILITIES AND SHAREHOLDERS' INVESTMENT
- ----------------------------------------
Current Liabilities:
Film contracts payable $ 26,489 $ 28,433
Accounts payable 3,040 1,902
Dividend payable 4,708 -
Accrued expenses 26,474 30,313
Income taxes payable 15,429 13,158
----------- -----------
Total current liabilities 76,140 73,806
----------- -----------
Film Contracts Payable after One Year 20,350 23,756
----------- -----------
Deferred Tax Liabilities 2,139 2,632
----------- -----------
Shareholders' Investment:
Preferred stock $1.00 par value - -
Common stock $.10 par value 942 941
Additional paid-in capital 1,874 1,480
Retained earnings 334,769 331,409
Treasury stock, at cost - -
Accumulated other comprehensive income 2,722 3,617
----------- -----------
340,307 337,447
----------- -----------
$ 438,936 $ 437,641
=========== ===========
<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,
---------------------
1999 1998
-------- --------
<S> <C> <C>
Net Revenues $ 44,961 $ 39,293
-------- --------
Expenses:
Operating 18,540 15,955
Selling, general and administrative 16,053 15,366
-------- --------
34,593 31,321
-------- --------
Operating income 10,368 7,972
Interest and Other Income 2,975 2,988
-------- --------
Income before income taxes 13,343 10,960
Income Tax Provision (5,275) (4,350)
-------- --------
Net income 8,068 6,610
======== ========
Earnings per Share:
Basic $ .86 $ .71
Diluted $ .86 $ .70
Average Number of Common and Common
Equivalent Shares Outstanding:
Basic 9,413 9,369
Diluted 9,434 9,422
<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
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)
<CAPTION>
Three Months
Ended March 31,
-------------------
1999 1998
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 8,068 $ 6,610
Adjustments to reconcile net income to net
cash provided from operating activities:
Film contract payments (7,334) (6,793)
Film contract amortization 8,101 6,177
Depreciation and other amortization 1,652 1,615
Gain on dispositions of investments (465) (543)
Changes in assets and liabilities:
Accounts receivable 3,329 7,506
Prepaid and other assets 2,130 1,828
Accounts payable and accrued expenses (2,701) (3,188)
Income taxes payable 2,271 2,414
-------- --------
Net cash provided from
operating activities 15,051 15,626
-------- --------
Cash Flows from Investing Activities:
Sales of marketable securities 616 33,387
Purchases of marketable securities (2,020) (34,978)
Station acquisition:
Fixed assets - (2,568)
Intangible assets - (77,712)
Capital expenditures (1,027) (509)
-------- --------
Net cash used in investing activities (2,431) (82,380)
-------- --------
Cash Flows from Financing Activities:
Proceeds from exercise of employee stock options 395 2,009
Purchases of treasury stock - (7,010)
-------- --------
Net cash provided from (used in)
financing activities 395 (5,001)
-------- --------
Net Increase (Decrease) in Cash
and Cash Equivalents 13,015 (71,755)
Cash and Cash Equivalents at Beginning of Period 50,771 98,075
-------- --------
Cash and Cash Equivalents at End of Period $ 63,786 $ 26,320
======== ========
<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 (58.5% at March 31, 1999) 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 March 31, 1999, 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, 1999
U.S. Government securities $144,602 $ 98 $ 47 $144,653
Equity securities 17,375 5,064 637 21,802
-------- ------- ------ --------
$161,977 $ 5,162 $ 684 $166,455
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Gross Unrealized
----------------
Cost Gains Losses Fair Value
-------- ------- ------ ----------
December 31, 1998:
U.S. Government securities $142,578 $ 209 $ 26 $142,761
Equity securities 17,526 6,236 467 23,295
-------- ------- ------ --------
$160,104 $ 6,445 $ 493 $166,056
======== ======= ====== ========
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, 1999, UTV realized marketable
securities gains of $465,000. 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 1999 and
1998 totaled $3,005,000 and $1,936,000, respectively.
4. 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):
Three Months
Ended March 31,
-------------------
1999 1998
-------- --------
Net income $ 8,068 $ 6,610
Other comprehensive income, net of taxes (895) 3,172
-------- --------
Comprehensive income $ 7,173 $ 9,782
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5. COMMITMENTS:
The aggregate amount payable by UTV under contracts for
programming not currently available for telecasting at March 31,
1999, and, accordingly, not included in film contracts payable and
the related contract rights in the accompanying Condensed
Consolidated Balance Sheets, totaled $94,931,000. At March 31,
1999, UTV has a remaining commitment to invest over time up
to $10,952,000 in management buyout limited partnerships.
In October 1997, UTV signed a definitive agreement to purchase
the assets of UHF television station WRBW-TV in Orlando, Florida, for
$60,000,000 and possible future consideration. The acquisition is
subject to Federal Communications Commission 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 (amortization
exceeded payments by $767,000 in the first quarter of 1999, while
payments exceeded amortization by $616,000 in the first quarter
of 1998) 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 1999, 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 or 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 1999 totaled
$15,051,000, and cash and marketable securities increased $13,414,000
to $230,241,000 at March 31, 1999. UTV has a remaining commitment
to invest over time up to $10,952,000 in management buyout limited
partnerships.
Working capital decreased $237,000 during the first quarter of
1999 to $228,745,000 at March 31, 1999. Working capital at March 31,
1999 remains substantially in excess of UTV's normal operating
requirements.
In October 1997, UTV signed a definitive agreement to purchase the
assets of UHF television station WRBW-TV in Orlando, Florida, for
$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 $94,931,000
at March 31, 1999. 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, 1999, purchase of an
additional 729,649 shares was so authorized. From January 1, 1997,
through March 31, 1999, 99,100 shares were purchased for an
aggregate cost of $9,764,000. No shares were purchased during the
first quarter of 1999.
UTV's commitments for capital expenditures at March 31, 1999
were not material in relation to UTV's financial position. During
1998, UTV's stations began converting to digital television (DTV).
This conversion will require the purchase of digital transmitting
equipment to telecast over a newly assigned frequency. In April 1999,
KBHK-TV in San Francisco became the first of the UTV stations to make
the initial conversion to DTV signal transmission. This conversion
rollout 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 DTV, will be funded from operations or current cash balances.
UTV has no present requirement for additional capital.
UTV, which completed an assessment of its year 2000 issues in 1998,
believes that the total estimated compliance cost is immaterial. UTV
expects to have completed all remediation efforts, including third party
systems testing, by September 30, 1999. UTV continues to believe that
such issues will not have a material effect on its business, results of
operations or financial condition.
Quantitative and Qualitative Disclosures about Market Risk
- ----------------------------------------------------------
UTV is subject to certain market risk related to its marketable
securities holdings, which are all held for other than trading purposes.
The table below provides information as of March 31, 1999 about the
U.S. Government securities which are subject to interest rate
sensitivity and the equity securities which are subject to equity
market sensitivity (in thousands):
Cost Fair Value
-------- ----------
U.S. Government securities $144,602 $144,653
Equity securities 17,375 21,802
All of UTV's marketable securities have been categorized as
available for sale and are comprised substantially of U.S. Government
securities, all of which mature within one year. (See Note 2 to
Condensed Consolidated Financial Statements.)
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Results of Operations
- ---------------------
UTV's primary source of revenue is the sale to advertisers
of time on its six television stations. First quarter 1999 net
income increased 22% to $8,068,000, or $.86 per basic and diluted
share, from $6,610,000, or $.71 per share ($.70 per diluted share),
in last year's first quarter. Strong local and national advertising
sales more than offset an increase in station operating expenses.
Consolidated net revenues rose 14% for the quarter to
$44,961,000, from $39,293,000 last year. The increase primarily
reflects greater local and national advertising time sales generated
as a result of increased audience ratings on syndicated programming.
The revenue increase was partially offset by increases in station
operating expenses, including an 18% increase in station programming
costs. Operating income increased 30% to $10,368,000, from last year's
$7,972,000.
Interest and other income for the quarter was $2,975,000, compared
to $2,988,000 in 1998.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
-----------------------------------------------------------
The information appearing in the MD&A under the caption
"Quantitative and Qualitative Disclosures about Market Risk" is
incorporated herein by this reference.
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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 13, 1999 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
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM 10Q DATED
MARCH 31, 1999 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-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 63,786
<SECURITIES> 166,455
<RECEIVABLES> 35,524
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 304,885
<PP&E> 75,701
<DEPRECIATION> 59,152
<TOTAL-ASSETS> 438,936
<CURRENT-LIABILITIES> 76,140
<BONDS> 0
<COMMON> 942
0
0
<OTHER-SE> 339,365
<TOTAL-LIABILITY-AND-EQUITY> 438,936
<SALES> 44,961
<TOTAL-REVENUES> 44,961
<CGS> 34,593
<TOTAL-COSTS> 34,593
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 13,343
<INCOME-TAX> 5,275
<INCOME-CONTINUING> 8,068
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,068
<EPS-PRIMARY> .86
<EPS-DILUTED> .86
</TABLE>
