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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, 2000
--------------
/ / 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 9, 2000, there were 9,509,373 shares of the registrant's
common stock outstanding.
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<TABLE>
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,
2000 1999
------------ ------------
<S> <C> <C>
ASSETS
- ------
Current Assets:
Cash and cash equivalents $ 52,378 $ 31,498
Marketable securities 157,131 154,699
Accrued interest receivable 1,155 829
Accounts receivable, net 41,928 47,687
Film contract rights 37,428 44,474
Deferred tax assets 4,003 4,160
Prepaid expenses and other
current assets 3,378 2,175
----------- -----------
Total current assets 297,401 285,522
----------- -----------
Other Investments 36,272 35,594
----------- -----------
Film Contract Rights, noncurrent 7,192 12,013
----------- -----------
Property and Equipment, net 31,122 29,042
----------- -----------
Intangible Assets, net 140,996 142,020
----------- -----------
Other Assets 490 490
----------- -----------
$ 513,473 $ 504,681
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LIABILITIES AND SHAREHOLDERS' INVESTMENT
- ----------------------------------------
Current Liabilities:
Film contracts payable $ 35,019 $ 38,240
Accounts payable 3,170 2,890
Dividend payable 4,751 -
Accrued expenses 35,079 35,723
Income taxes payable 14,719 8,772
----------- -----------
Total current liabilities 92,738 85,625
----------- -----------
Film Contracts Payable after One Year 31,437 36,117
----------- -----------
Shareholders' Investment:
Preferred stock $1.00 par value - -
Common stock $.10 par value 951 949
Additional paid-in capital 9,326 7,594
Retained earnings 374,813 370,430
Accumulated other comprehensive income 4,208 3,966
----------- -----------
389,298 382,939
----------- -----------
$ 513,473 $ 504,681
=========== ===========
<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,
---------------------
2000 1999
-------- --------
<S> <C> <C>
Net Revenues $ 53,939 $ 44,961
-------- --------
Expenses:
Operating 23,368 18,540
Selling, general and administrative 17,954 16,053
-------- --------
41,322 34,593
-------- --------
Operating income 12,617 10,368
Interest and Other Income 2,617 2,975
-------- --------
Income before income taxes 15,234 13,343
Income Tax Provision (6,100) (5,275)
-------- --------
Net income $ 9,134 $ 8,068
======== ========
Earnings per Share:
Basic $ .96 $ .86
Diluted $ .96 $ .86
Average Number of Common and Common
Equivalent Shares Outstanding:
Basic 9,495 9,413
Diluted 9,536 9,434
<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,
-------------------
2000 1999
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 9,134 $ 8,068
Adjustments to reconcile net income to net
cash provided from operating activities:
Film contract payments (9,116) (7,334)
Film contract amortization 11,007 8,101
Depreciation and other amortization 2,178 1,652
Gain on dispositions of investments - (465)
Changes in assets and liabilities:
Accounts receivable 5,759 3,329
Prepaid and other assets 547 2,130
Accounts payable and accrued expenses (364) (2,701)
Income taxes payable 5,947 2,271
-------- --------
Net cash provided from
operating activities 25,092 15,051
-------- --------
Cash Flows from Investing Activities:
Sales of marketable securities - 616
Purchases of marketable securities (2,034) (2,020)
Purchases of other investments (678) -
Capital expenditures (3,234) (1,027)
-------- --------
Net cash used in investing activities (5,946) (2,431)
-------- --------
Cash Flows from Financing Activities:
Proceeds from exercise of employee stock options 1,734 395
-------- --------
Net cash provided from
financing activities 1,734 395
-------- --------
Net Increase in Cash and Cash Equivalents 20,880 13,015
Cash and Cash Equivalents at Beginning of Period 31,498 50,771
-------- --------
Cash and Cash Equivalents at End of Period $ 52,378 $ 63,786
======== ========
<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:
UTV is a majority owned (57.9% at March 31, 2000) subsidiary
of BHC Communications, Inc. (BHC), a majority owned subsidiary of
Chris-Craft Industries, Inc.
The accompanying condensed consolidated financial statements
include the accounts of UTV and its subsidiaries after elimination of
all significant intercompany accounts and transactions. Preparation
of financial statements in accordance with generally accepted
accounting principles requires the use of management estimates and
assumptions. Actual results could differ from those estimates.
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, 2000, of the investments in U.S. Government securities,
70% mature within one year and all within 17 months. Marketable
securities classified by security type are as follows (in thousands):
Gross Unrealized
----------------
Cost Gains Losses Fair Value
-------- ------- ------ ----------
March 31, 2000
U.S. Government securities $132,258 $ 16 $ 227 $132,047
Equity securities 17,949 7,927 792 25,084
-------- ------- ------ --------
$150,207 $ 7,943 $1,019 $157,131
======== ======= ====== ========
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Gross Unrealized
----------------
Cost Gains Losses Fair Value
-------- ------- ------ ----------
December 31, 1999:
U.S. Government securities $130,484 $ - $ 238 $130,246
Equity securities 17,689 7,739 975 24,453
-------- ------- ------ --------
$148,173 $ 7,739 $1,213 $154,699
======== ======= ====== ========
The difference between cost and fair value, net of taxes, is
reflected as an increase to shareholders' investment in the
accompanying balance sheets.
For purposes of computing realized gains and losses, cost is
determined using the specific identification method. There was no sale
of marketable securities during the quarter ended March 31, 2000.
3. SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income taxes for the first quarter of 2000 and 1999
totaled $153,000 and $3,005,000, 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,
-------------------
2000 1999
-------- --------
Net income $ 9,134 $ 8,068
Other comprehensive income, net of taxes 242 (895)
-------- --------
Comprehensive income $ 9,376 $ 7,173
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5. COMMITMENTS:
The aggregate amount payable by UTV under contracts for programming
not currently available for telecasting at March 31, 2000, and,
accordingly, not included in film contracts payable and the related
contract rights in the accompanying Condensed Consolidated Balance
Sheets, totaled $79,045,000.
UTV remains obligated for possible future consideration relating to
the 1999 purchase of WRBW in Orlando, Florida of up to $25,000,000.
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UNITED TELEVISION, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
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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
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 $1,891,000 in the first quarter of
2000, and by $767,000 in the first quarter of 1999) 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 2000, 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 2000 totaled $25,092,000, and
cash and marketable securities increased $23,312,000 to $209,509,000
at March 31, 2000. UTV remains obligated for possible future
consideration relating to the 1999 purchase of WRBW in Orlando,
Florida of up to $25,000,000.
Working capital increased $4,766,000 during the first quarter of
2000 to $204,663,000 at March 31, 2000. Working capital at March 31,
2000 remains substantially in excess of UTV's normal operating
requirements.
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 $79,045,000 at March 31,
2000. 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, 2000, purchase of an
additional 721,249 shares was so authorized. From January 1, 1998,
through March 31, 2000, 76,900 shares were purchased for an aggregate
cost of $7,838,000. No shares were purchased during the first quarter
of 2000.
UTV's commitments for capital expenditures at March 31, 2000 were
not material in relation to UTV's financial position. UTV's stations
are continuing the process of converting to digital television (DTV).
This conversion requires the purchase of digital transmitting equipment
to telecast over a newly assigned frequency. KBHK-TV in San Francisco
and KTVX 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 remaining DTV conversion cost, will be funded
from operations or current cash balances. UTV has no present requirement
for additional capital.
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, 2000 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 $132,258 $132,047
Equity securities 17,949 25,084
All of UTV's marketable securities have been categorized as
available for sale and are comprised substantially of U.S. Government
securities, 70% of which mature within one year and all within 17 months.
(See Note 2 of Notes 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 seven television stations. First quarter 2000 net income
increased 13% to $9,134,000, or $.96 per basic and diluted share, from
$8,068,000, or $.86 per basic and diluted share, in last year's first
quarter. Strong revenue growth more than offset an increase in station
operating expenses.
Consolidated net revenues rose 20% for the quarter to $53,939,000,
from $44,961,000 last year. The increase reflected a 14% increase in
same station local and national advertising revenues and revenue at WRBW,
which was acquired in July, 1999. Same station sales increases primarily
resulted from an increase in demand at certain UTV stations as a
consequence of general market advertising rate increases and improved
ratings related to successful syndicated series.
The revenue increase was partially offset by a 19% increase in
consolidated operating expenses, reflecting a 12% increase in same
station operating expenses, including a 20% increase in same station
programming costs, and operating expenses at WRBW. Operating income
increased 22% to $12,617,000, from last year's $10,368,000.
Interest and other income for the quarter was $2,617,000, compared
to $2,975,000 in 1999.
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.
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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 11, 2000 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
MARCH 31, 2000 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-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 52,378
<SECURITIES> 157,131
<RECEIVABLES> 43,650
<ALLOWANCES> 1,722
<INVENTORY> 0
<CURRENT-ASSETS> 297,401
<PP&E> 93,986
<DEPRECIATION> 62,864
<TOTAL-ASSETS> 513,473
<CURRENT-LIABILITIES> 92,738
<BONDS> 0
<COMMON> 951
0
0
<OTHER-SE> 388,347
<TOTAL-LIABILITY-AND-EQUITY> 513,473
<SALES> 53,939
<TOTAL-REVENUES> 53,939
<CGS> 41,322
<TOTAL-COSTS> 41,322
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 15,234
<INCOME-TAX> 6,100
<INCOME-CONTINUING> 9,134
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,134
<EPS-BASIC> .96
<EPS-DILUTED> .96
</TABLE>
