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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 June 30, 2000
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/ / 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
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(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 August 7, 2000, there were 9,514,223 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,
2000 1999
----------- -----------
<S> <C> <C>
ASSETS
------
Current Assets:
Cash and cash equivalents $ 70,585 $ 31,498
Marketable securities 135,102 154,699
Accrued interest receivable 1,740 829
Accounts receivable, net 49,517 47,687
Film contract rights 25,650 44,474
Deferred tax asset 4,949 4,160
Prepaid expenses and other
current assets 3,584 2,175
----------- -----------
Total current assets 291,127 285,522
----------- -----------
Other Investments 38,347 35,594
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Film Contract Rights, noncurrent 8,773 12,013
----------- -----------
Property and Equipment, net 33,482 29,042
----------- -----------
Intangible Assets, net 139,999 142,020
----------- -----------
Other Assets 637 490
----------- -----------
$ 512,365 $ 504,681
=========== ===========
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LIABILITIES AND SHAREHOLDERS' INVESTMENT
----------------------------------------
Current Liabilities:
Film contracts payable $ 32,964 $ 38,240
Accounts payable 2,840 2,890
Accrued expenses 33,476 35,723
Income taxes payable 12,470 8,772
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Total current liabilities 81,750 85,625
----------- -----------
Film Contracts Payable after One Year 27,243 36,117
----------- -----------
Shareholders' Investment:
Preferred stock $1.00 par value - -
Common stock $.10 par value 952 949
Additional paid-in capital 9,614 7,594
Retained earnings 390,063 370,430
Accumulated other comprehensive income 2,743 3,966
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403,372 382,939
----------- -----------
$ 512,365 $ 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>
Three Months Six Months
Ended June 30, Ended June 30,
------------------ ------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Revenues $ 60,011 $ 53,427 $113,950 $ 98,388
-------- -------- -------- --------
Expenses:
Operating 21,359 18,267 44,727 36,807
Selling, general and
administrative 18,165 16,176 36,119 32,229
-------- -------- -------- --------
39,524 34,443 80,846 69,036
-------- -------- -------- --------
Operating income 20,487 18,984 33,104 29,352
Interest and Other Income 4,913 2,903 7,530 5,878
-------- -------- -------- --------
Income before income taxes 25,400 21,887 40,634 35,230
Income Tax Provision (10,150) (8,650) (16,250) (13,925)
-------- -------- -------- --------
Net income $ 15,250 $ 13,237 $ 24,384 $ 21,305
======== ======== ======== ========
Earnings per Share:
Basic $ 1.60 $ 1.41 $ 2.57 $ 2.26
Diluted $ 1.60 $ 1.40 $ 2.56 $ 2.26
Average Number of Common and Common
Equivalent Shares Outstanding:
Basic 9,502 9,417 9,498 9,415
Diluted 9,536 9,437 9,536 9,436
<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,
-------------------
2000 1999
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 24,384 $ 21,305
Adjustment to reconcile net income to net
cash provided from operating activities:
Film contract payments (18,132) (14,831)
Film contract amortization 21,327 16,766
Depreciation and other amortization 4,612 3,362
Gain on dispositions of investments (l,825) (759)
Changes in assets and liabilities:
Accounts receivable (1,830) (4,269)
Prepaid and other assets 2,252 5,028
Accounts payable and accrued expenses (2,297) (4,030)
Income taxes payable 3,698 (3,135)
-------- --------
Net cash provided from
operating activities 32,189 19,437
-------- --------
Cash Flows from Investing Activities:
Sales of marketable securities 24,657 32,798
Purchases of marketable securities (5,247) (35,796)
Purchases of other investments (2,753) -
Station acquisition:
Intangible assets (9) -
Capital expenditures (7,022) (3,948)
-------- --------
Net cash provided from (used in)
investing activities 9,626 (6,946)
-------- --------
Cash Flows from Financing Activities:
Dividends paid (4,751) (4,708)
Proceeds from exercise of employee stock options 2,023 1,400
Purchases of treasury stock - (828)
-------- --------
Net cash used in financing activities (2,728) (4,136)
-------- --------
Net Increase in Cash and Cash Equivalents 39,087 8,355
Cash and Cash Equivalents at Beginning of Period 31,498 50,771
-------- --------
Cash and Cash Equivalents at End of Period $ 70,585 $ 59,126
======== ========
<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 June 30, 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
June 30, 2000, of the investments in U.S. Government securities, 83%
mature within one year and all within 14 months. 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, 2000
U.S. Government securities $114,415 $ 62 $ 138 $114,339
Equity securities 16,173 5,671 1,081 20,763
-------- ------- ------ --------
$130,588 $ 5,733 $1,219 $135,102
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Gross Unrealized
----------------
Cost Gains Losses Fair Value
-------- ------- ------ ----------
<S> <C> <C> <C> <C>
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
======== ======= ====== ========
</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 purposes of computing realized gains and losses, cost was
determined using the specific identification method. For the six months
ended June 30, 2000, UTV realized marketable securities gains of $1,825,000.
3. SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income taxes for the six months ended June 30, 2000
and 1999 totaled $12,552,000 and $17,060,000, 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 Six Months
Ended June 30, Ended June 30,
------------------ ------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net income $ 15,250 $ 13,237 $ 24,384 $ 21,305
Other comprehensive income
(loss), net of taxes (1,465) 809 (1,223) (86)
-------- -------- -------- --------
Comprehensive income $ 13,785 $ 14,046 $ 23,161 $ 21,219
======== ======== ======== ========
</TABLE>
5. COMMITMENTS:
The aggregate amount payable by UTV under contracts for programming
not currently available for telecasting at June 30, 2000, and, accordingly,
not included in film contracts payable and the related contract rights in
the accompanying Condensed Consolidated Balance Sheets, totaled $119,966,000.
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
-------------------------------------------------
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 $3,195,000 and $1,935,000 in the
first six months of 2000 and 1999, 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
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 six months of 2000 totaled $32,189,000,
and cash and marketable securities increased $19,490,000 to $205,687,000
at June 30, 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 $9,480,000 during the first six months of
2000 to $209,377,000 at June 30, 2000. Working capital at June 30, 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.
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 $119,966,000 at June 30, 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 June 30, 2000, 721,249 shares were
authorized for purchase. From January 1, 1998, through December 31, 1999,
76,900 shares were purchased for an aggregate cost of $7,838,000. No
shares were purchased during the first six months of 2000.
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UTV's commitments for capital expenditures at June 30, 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,
KMSP-TV in Minneapolis/St. Paul and KTVX-TV in Salt Lake City have
completed 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 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 risks related to its marketable
securities holdings, which are all held for other than trading purposes.
The table below provides information as of June 30, 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 $114,415 $114,339
Equity securities 16,173 20,763
All of UTV's marketable securities have been categorized as
available for sale and are comprised substantially of U.S. Government
securities, 83% of which mature within one year and all within 14 months.
(See Note 2 of Notes 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. Second quarter 2000 net income
increased 15% to $15,250,000, or $1.60 per basic and diluted share, from
$13,237,000, or $1.41 per basic share ($1.40 per diluted share) last year.
Consolidated net revenue rose 12% for the quarter to a second
quarter record $60,011,000, from $53,427,000 last year. The increase
reflected an 8% increase in same station local and national advertising
revenue and revenue at WRBW, which was acquired in July 1999. Same
station sales gains primarily resulted from increased demand in certain
markets in which UTV stations are located and strong ratings related to
successful syndicated series.
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Operating income rose 8% to a second quarter record $20,487,000,
from $18,984,000 last year. Consolidated operating expenses increased
15%, reflecting a 9% increase in same station operating expenses,
including an 11% increase in same station programming costs, and
operating expenses at WRBW. Interest and other income for the quarter
increased 69% to $4,913,000, from $2,903,000 in 1999.
Net income for the first six months of 2000 increased 14% to
$24,384,000, or $2.57 per basic share ($2.56 per diluted share), from
last year's net income of $21,305,000, or $2.26 per basic and diluted
share.
Year to date consolidated net revenues rose 16% to $113,950,000,
from $98,388,000 in 1999. The increase reflected an 11% increase in
same station local and national advertising revenues and revenue at WRBW.
The revenue increase more than offset a 17% increase in consolidated
operating expenses. The expense increase reflected a 10% increase in
same station operating expenses, primarily resulting from a 15% increase
in same station programming costs, and expenses at WRBW. Interest and
other income for the period increased 28% to $7,530,000, from $5,878,000
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.
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 15, 2000.
At the meeting, the following were elected directors, by the
number of votes set forth opposite their respective names:
Broker
For Withheld Non-votes
--------- -------- ---------
Norman Perlmutter 9,178,229 21,536 - 0 -
Howard F. Roycroft 9,177,955 21,810 - 0 -
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At the meeting, the selection of PricewaterhouseCoopers LLP
as UTV's auditors for the current year was ratified by the
following vote:
Broker
For Against Abstain Non-votes
--------- ------- ------- ---------
9,193,065 2,133 4,567 - 0 -
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: August 9, 2000 By: /s/ Garth S. Lindsey
--------------- -------------------------
Garth S. Lindsey
Executive Vice President
and Chief Financial
Officer (Principal
Financial and Accounting
Officer)
