<PAGE>
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, 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
--------------
(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 8, 1999, there were 9,444,783 shares of the registrant's
common stock outstanding.
<PAGE>
PAGE 2
<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,
1999 1998
(Unaudited)
------------ -----------
<S> <C> <C>
ASSETS
- ------
Current Assets:
Cash and cash equivalents $ 20,216 $ 50,771
Marketable securities 152,968 166,056
Accrued interest receivable 120 890
Accounts receivable, net 42,652 38,853
Film contract rights 51,361 38,074
Deferred tax benefit 4,089 6,209
Prepaid expenses and other
current assets 2,124 1,935
------------ -----------
Total current assets 273,530 302,788
------------ -----------
Other Investments 33,596 26,385
------------ -----------
Film Contract Rights, noncurrent 17,792 5,113
------------ -----------
Property and Equipment, net 25,673 16,537
------------ -----------
Intangible Assets, net 141,633 86,359
------------ -----------
Other Assets 489 459
------------ -----------
$ 492,713 $ 437,641
=========== ===========
<PAGE>
PAGE 3
LIABILITIES AND SHAREHOLDERS' INVESTMENT
- ----------------------------------------
Current Liabilities:
Film contracts payable $ 39,899 $ 28,433
Accounts payable 2,688 1,902
Accrued expenses 35,148 30,313
Income taxes payable 7,027 13,158
------------ -----------
Total current liabilities 84,762 73,806
------------ -----------
Film Contracts Payable after One Year 41,496 23,756
------------ -----------
Other Liabilities 335 2,632
------------ -----------
Shareholders' Investment:
Preferred stock $1.00 par value - -
Common stock $.10 par value 945 941
Additional paid-in capital 3,773 1,480
Retained earnings 358,888 331,409
Treasury stock, at cost (828) -
Increase to reflect marketable
securities at fair value 3,342 3,617
------------ -----------
366,120 337,447
------------ -----------
$ 492,713 $ 437,641
============ ===========
<FN>
The accompanying notes to condensed consolidated financial statements are an
integral part of these balance sheets.
</TABLE>
<PAGE>
PAGE 4
<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,
------------------ ------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Revenues $ 51,390 $ 40,111 $149,778 $127,907
-------- -------- -------- --------
Expenses:
Operating 20,241 14,912 57,048 45,707
Selling, general and
administrative 16,809 14,606 49,038 45,412
-------- -------- -------- --------
37,050 29,518 106,086 91,119
-------- -------- -------- --------
Operating income 14,340 10,593 43,692 36,788
-------- -------- -------- --------
Interest and Other Income:
Gain on sale of BHC
Communications, Inc.
common stock - - - 19,932
Interest and other income 3,642 3,163 9,520 8,318
-------- -------- -------- --------
3,642 3,163 9,520 28,250
-------- -------- -------- --------
Income before income taxes 17,982 13,756 53,212 65,038
Income Tax Provision (7,100) (5,300) (21,025) (25,100)
-------- -------- -------- --------
Net income $ 10,882 $ 8,456 $ 32,187 $ 39,938
======== ======== ======== ========
Earnings per Share:
Basic $ 1.16 $ .90 $ 3.42 $ 4.25
Diluted $ 1.15 $ .89 $ 3.41 $ 4.23
Average Number of Common and Common
Equivalent Shares Outstanding:
Basic 9,417 9,404 9,416 9,390
Diluted 9,450 9,450 9,441 9,438
<FN>
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
</TABLE>
<PAGE>
PAGE 5
<TABLE>
UNITED TELEVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)
<CAPTION>
Nine Months
Ended September 30,
-------------------
1999 1998
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 32,187 $ 39,938
Adjustment to reconcile net income to net
cash provided from operating activities:
Film contract payments (22,383) (20,691)
Film contract amortization 25,877 18,480
Depreciation and other amortization 5,385 5,036
Gain on sale of BHC common stock - (19,932)
Gain on dispositions of marketable
securities and other investments (2,193) (1,132)
Changes in assets and liabilities:
Accounts receivable (2,502) 5,944
Prepaid and other assets (1,075) (7,099)
Accounts payable and accrued expenses 5,621 8,382
Income taxes payable (6,131) 1,306
-------- --------
Net cash provided from operating activities 34,786 30,232
-------- --------
Cash Flows from Investing Activities:
Sales of marketable securities 68,262 132,402
Sale of other investments 7,644 -
Purchases of marketable securities (54,857) (95,301)
Purchases of other investments (13,433) (8,854)
Station acquisitions:
Fixed assets (3,914) (2,568)
Intangible assets (57,521) (77,668)
Accounts receivable (1,297) -
Film contracts, net 1,222 -
Other, net 152 -
Capital expenditures (8,360) (3,247)
-------- --------
Net cash used in investing activities (62,102) (55,236)
-------- --------
Cash Flows from Financing Activities:
Dividends paid (4,708) (4,688)
Proceeds from exercise of employee stock options 2,297 3,382
Purchases of treasury stock (828) (7,010)
-------- --------
Net cash used in financing activities (3,239) (8,316)
-------- --------
Net Decrease in Cash and Cash Equivalents (30,555) (33,320)
Cash and Cash Equivalents at Beginning of Period 50,771 98,075
-------- --------
Cash and Cash Equivalents at End of Period $ 20,216 $ 64,755
======== ========
<FN>
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
</TABLE>
<PAGE>
PAGE 6
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 (58.4% at September 30,
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 September 30, 1999, 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>
September 30, 1999
U.S. Government securities $129,876 $ 6 $ 94 $129,788
Other equity securities 17,594 6,596 1,010 23,180
-------- ------ ------ --------
$147,470 $6,602 $1,104 $152,968
======== ====== ====== ========
<PAGE>
PAGE 7
<CAPTION>
Gross Unrealized
----------------
Cost Gains Losses Fair Value
-------- ------- ------ ----------
<S> <C> <C> <C> <C>
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
======== ======= ====== ========
</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, 1999, UTV realized
marketable securities gains of $771,000. 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 nine months ended
September 30, 1999 and 1998 totaled $27,156,000 and $23,794,000,
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):
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
------------------ ------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net income $ 10,882 $ 8,456 $ 32,187 $ 39,938
Other comprehensive (loss)
income, net of taxes (189) 119 (275) (10,221)
-------- -------- -------- --------
Comprehensive income $ 10,693 $ 8,575 $ 31,912 $ 29,717
======== ======== ======== ========
</TABLE>
<PAGE>
PAGE 8
5. COMMITMENTS:
The aggregate amount payable by UTV under contracts for
programming not currently available for telecasting at
September 30, 1999, and, accordingly, not included in film
contracts payable and the related contract rights in the
accompanying Condensed Consolidated Balance Sheets, totaled
$78,802,000. At September 30, 1999, UTV also has a remaining
commitment to invest over time up to $5,011,000 in investment
limited partnerships.
In July, 1999, UTV completed the acquisition of the net
assets of UHF television station WRBW-TV in Orlando, Florida.
UTV remains obligated for possible future consideration relating
to the purchase of up to $25,000,000.
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 $3,494,000 in the first nine months of 1999,
while payments exceeded amortization by $2,211,000 in the first
nine months 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 nine months 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 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, marketable securities and other investments.
UTV's cash flow from operations for the first nine months of 1999
totaled $34,786,000. However, as a result of cash used to acquire
WRBW-TV and to make other investments, cash and marketable securities
decreased $43,643,000 to $173,184,000 at September 30, 1999. UTV has
a remaining commitment to invest over time up to $5,011,000 in
investment limited partnerships.
Reflecting the WRBW-TV acquisition and other investments, working
capital decreased $40,214,000 during the first nine months of 1999
to $188,768,000 at September 30, 1999. Working capital at September 30,
1999 remains substantially in excess of UTV's normal operating
requirements.
<PAGE>
PAGE 9
In July, 1999, UTV completed the purchase of the net assets of UHF
television station WRBW-TV in Orlando, Florida for $60,000,000 plus a
net amount of $1,358,000 related to the purchase of receivables,
assumption of programming obligations and other adjustments. The
purchase price was paid from working capital. UTV remains obligated
for possible future consideration relating to the purchase of up to
$25,000,000. 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 $78,802,000
at September 30, 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 September 30, 1999, 721,249
shares were authorized for purchase. From January 1, 1997, through
September 30, 1999, 107,500 shares were purchased for an aggregate
cost of $10,592,000, of which 8,400 shares were purchased during the
first nine months of 1999 for an aggregate cost of $828,000.
UTV's commitments for capital expenditures at September 30, 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. During 1999,
UTV stations KBHK-TV in San Francisco and KTVX-TV in Salt Lake City
have made 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 digital television, 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
has substantially completed all remediation efforts, including third
party systems testing. UTV continues to believe that such issues will
not have a material effect on its business, results of operations or
financial condition.
<PAGE>
PAGE 10
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 September 30, 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 $129,876 $129,788
Equity securities 17,594 23,180
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.)
Results of Operations
- ---------------------
UTV's primary source of revenue is the sale to advertisers of
time on its seven television stations. Third quarter 1999 net income
increased 29% to $10,882,000, or $1.16 per share ($1.15 per share
diluted), from $8,456,000, or $.90 per share ($.89 per share
diluted), in last year's third quarter. The increase in net income
resulted from an increase in revenues and a resulting increase in
operating income.
Consolidated net revenues rose 28% for the quarter to a record
$51,390,000, from $40,111,000 last year. The increase reflects strong
local and national advertising sales gains at most of UTV's stations,
as well as revenues at WRBW-TV, UTV's Orlando station acquired in
July, 1999. Same station local and national revenue rose 24% for the
quarter. Same station sales increases resulted primarily from strong
audience ratings and advertiser demand for the stations' newer
syndicated off-network series.
Third quarter operating income rose 35% to a third quarter
record $14,340,000, from $10,593,000 last year. Same station
operating expenses rose 19%, including a 27% increase in programming
costs, which reflects in part a decrease in earnings at UTV's
production entity.
Interest and other income for the quarter increased 15% to
$3,642,000, from $3,163,000 in 1998.
Net income for the first nine months of 1999 decreased to
$32,187,000, or $3.42 per share ($3.41 per share diluted), from
last year's net income of $39,938,000, or $4.25 per share ($4.23
per share diluted). The 1998 results reflected a net gain from
the sale of marketable securities of $12,932,000, or $1.38 per share
($1.37 per share diluted). On a comparable basis, excluding the
1998 gain on the sale of securities, net income rose 19% for the
nine-month period.
<PAGE>
PAGE 11
Consolidated net revenues for the nine-month period rose 17%
to $149,778,000, from $127,907,000 in 1998. The increase reflects a
16% increase in same station local and national advertising revenues as
well as revenues at newly acquired WRBW. Same station sales increases
primarily resulted from successful syndicated series and increased
acceptance by viewers and advertisers of WUTB, UTV's Baltimore
station, which was acquired in January, 1998 and then began operating
for the first time as a traditional commercial broadcasting station.
Operating income for the nine-month period increased 19% to
$43,692,000, from $36,788,000 last year. Same station operating
expenses rose 14%, including a 24% increase in same station program
costs, which reflects in part a decrease in earnings at UTV's
production entity.
Interest and other income for the nine-month period increased 14%
to $9,520,000, from $8,318,000 last year.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
-----------------------------------------------------------
The information appearing in the Management's Discussion and
Analysis under the caption "Quantitative and Qualitative Disclosures
about Market Risk" is incorporated herein by this reference.
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: November 10, 1999 By: /s/ Garth S. Lindsey
----------------- --------------------
Garth S. Lindsey
Executive Vice President
and Chief Financial
Officer (Principal
Financial and Accounting
Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM 10Q DATED
SEPTEMBER 30, 1999 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-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 20,216
<SECURITIES> 152,968
<RECEIVABLES> 42,652
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 273,530
<PP&E> 86,948
<DEPRECIATION> 61,275
<TOTAL-ASSETS> 492,713
<CURRENT-LIABILITIES> 84,762
<BONDS> 0
<COMMON> 945
0
0
<OTHER-SE> 365,175
<TOTAL-LIABILITY-AND-EQUITY> 492,713
<SALES> 149,778
<TOTAL-REVENUES> 149,778
<CGS> 106,086
<TOTAL-COSTS> 106,086
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 53,212
<INCOME-TAX> 21,025
<INCOME-CONTINUING> 32,187
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,187
<EPS-BASIC> 3.42
<EPS-DILUTED> 3.41
</TABLE>
