<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, 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
--------------
(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 10, 2000, there were 9,520,753 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
(Unaudited - in thousands)
<CAPTION>
September 30, December 31,
2000 1999
------------ -----------
<S> <C> <C>
ASSETS
------
Current Assets:
Cash and cash equivalents $ 90,609 $ 31,498
Marketable securities 131,855 154,699
Accrued interest receivable 1,756 829
Accounts receivable, net 42,320 47,687
Film contract rights 42,197 44,474
Deferred tax asset 5,029 4,160
Prepaid expenses and other
current assets 2,990 2,175
----------- -----------
Total current assets 316,756 285,522
----------- -----------
Other Investments 38,733 35,594
----------- -----------
Film Contract Rights, noncurrent 12,244 12,013
------------ -----------
Property and Equipment, net 33,428 29,042
------------ -----------
Intangible Assets, net 139,016 142,020
------------ -----------
Other Assets 635 490
------------ -----------
$ 540,812 $ 504,681
============ ===========
<PAGE>
PAGE 3
LIABILITIES AND SHAREHOLDERS' INVESTMENT
----------------------------------------
Current Liabilities:
Film contracts payable $ 40,354 $ 38,240
Accounts payable 1,862 2,890
Accrued expenses 37,670 35,723
Income taxes payable 9,542 8,772
----------- -----------
Total current liabilities 89,428 85,625
----------- -----------
Film Contracts Payable after One Year 36,957 36,117
----------- -----------
Shareholders' Investment:
Preferred stock $1.00 par value - -
Common stock $.10 par value 952 949
Additional paid-in capital 10,568 7,594
Retained earnings 400,288 370,430
Accumulated other comprehensive income 2,619 3,966
------------ -----------
414,427 382,939
------------ -----------
$ 540,812 $ 504,681
============ ===========
<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,
------------------ ------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Revenues $ 54,230 $ 51,390 $168,180 $149,778
-------- -------- -------- --------
Expenses:
Operating 22,271 20,241 66,998 57,048
Selling, general and
administrative 18,233 16,809 54,352 49,038
-------- -------- -------- --------
40,504 37,050 121,350 106,086
-------- -------- -------- --------
Operating income 13,726 14,340 46,830 43,692
Interest and Other Income 3,324 3,642 10,854 9,520
-------- -------- -------- --------
Income before income taxes 17,050 17,982 57,684 53,212
Income Tax Provision (6,825) (7,100) (23,075) (21,025)
-------- -------- -------- --------
Net income $ 10,225 $ 10,882 $ 34,609 $ 32,187
======== ======== ======== ========
Earnings per Share:
Basic $ 1.07 $ 1.16 $ 3.64 $ 3.42
Diluted $ 1.07 $ 1.15 $ 3.63 $ 3.41
Average Number of Common and Common
Equivalent Shares Outstanding:
Basic 9,515 9,417 9,507 9,416
Diluted 9,559 9,450 9,546 9,441
<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,
-------------------
2000 1999
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 34,609 $ 32,187
Adjustment to reconcile net income to net
cash provided from operating activities:
Film contract payments (27,291) (22,383)
Film contract amortization 31,729 25,877
Depreciation and other amortization 7,056 5,385
Gain on dispositions of investments (2,127) (2,193)
Changes in assets and liabilities:
Accounts receivable 5,367 (2,502)
Prepaid and other assets (1,326) (1,075)
Accounts payable and accrued expenses 919 5,621
Income taxes payable 770 (6,131)
-------- --------
Net cash provided from
operating activities 49,706 34,786
-------- --------
Cash Flows from Investing Activities:
Sales of marketable securities 77,640 68,262
Sales of other investments - 7,644
Purchases of marketable securities (54,885) (54,857)
Purchases of other investments (3,139) (13,433)
Station acquisition:
Fixed assets - (3,914)
Intangible assets (9) (57,521)
Accounts receivable - (1,297)
Film contracts, net - 1,222
Other, net - 152
Capital expenditures (8,428) (8,360)
-------- --------
Net cash provided from (used in)
investing activities 11,179 (62,102)
-------- --------
Cash Flows from Financing Activities:
Dividends paid (4,751) (4,708)
Proceeds from exercise of employee stock options 2,977 2,297
Purchases of treasury stock - (828)
-------- --------
Net cash used in financing activities (1,774) (3,239)
-------- --------
Net Increase in Cash and Cash Equivalents 59,111 (30,555)
Cash and Cash Equivalents at Beginning of Period 31,498 50,771
-------- --------
Cash and Cash Equivalents at End of Period $ 90,609 $ 20,216
======== ========
<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:
UTV is a majority owned (57.9% at September 30, 2000) subsidiary
of BHC Communications, Inc. ("BHC"), a majority owned subsidiary of
Chris-Craft Industries, Inc. ("Chris-Craft").
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 September 30, 2000, of the investments in U.S. Government securities,
all 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, 2000
U.S. Government securities $111,330 $ 97 $ 76 $111,351
Equity securities 16,215 5,398 1,109 20,504
-------- ------- ------ --------
$127,545 $ 5,495 $1,185 $131,855
======== ======= ====== ========
<PAGE>
PAGE 7
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 nine months
ended September 30, 2000, UTV realized marketable securities gains of
$2,127,000.
3. SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income taxes for the nine months ended September 30,
2000 and 1999 totaled $22,305,000 and $27,156,000, 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,
------------------ ------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net income $ 10,225 $ 10,882 $ 34,609 $ 32,187
Other comprehensive loss,
net of taxes (124) (189) (1,347) (275)
-------- -------- -------- --------
Comprehensive income $ 10,101 $ 10,693 $ 33,262 $ 31,912
======== ======== ======== ========
</TABLE>
5. COMMITMENTS:
The aggregate amount payable by UTV under contracts for programming
not currently available for telecasting at September 30, 2000, and,
accordingly, not included in film contracts payable and the related
contract rights in the accompanying Condensed Consolidated Balance Sheets,
totaled $113,784,000. UTV remains obligated for possible future
consideration relating to the 1999 purchase of WRBW in Orlando, Florida
of up to $25,000,000.
<PAGE>
PAGE 8
6. PENDING MERGER:
As reported in UTV's Current Report on Form 8-K, dated August 23,
2000, UTV, BHC and Chris-Craft have each agreed to be acquired by The
News Corporation Limited ("News Corp.") for consideration consisting of
cash and News Corp. American depositary preferred shares. Subject to
limitations set forth in the respective merger agreements, UTV, BHC and
Chris-Craft stockholders may elect to receive the consideration as all
cash, all stock or a combination thereof. Consummation of each
transaction is subject to stockholder approval, receipt of Federal
Communications Commission and other regulatory approvals, and satisfaction
of other customary conditions. Chris-Craft has agreed to vote its BHC
stock in favor of the acquisition of BHC by News Corp., and BHC has agreed
to vote its UTV stock in favor of the acquisition of UTV by News Corp.
The parties anticipate that the transactions will be completed in the
first half of 2001.
<PAGE>
PAGE 9
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 $4,438,000 and $3,494,000 in the
first nine 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 nine 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 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 2000 totaled $49,706,000,
and cash and marketable securities increased $36,267,000 to $222,464,000
at September 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 $27,431,000 during the first nine months
of 2000 to $227,328,000 at September 30, 2000. Working capital at
September 30, 2000 remains substantially in excess of UTV's normal
operating requirements.
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 $113,784,000 at September 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 September 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 nine months of 2000.
<PAGE>
PAGE 10
UTV's commitments for capital expenditures at September 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, KTVX-TV in Salt Lake City and KUTP-TV in
Phoenix 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.
As reported in UTV's Current Report on Form 8-K, dated August 23,
2000, UTV, BHC and Chris-Craft have each agreed to be acquired by The
News Corporation Limited ("News Corp.") for consideration consisting of
cash and News Corp. American depositary preferred shares. Subject to
limitations set forth in the respective merger agreements, UTV, BHC and
Chris-Craft stockholders may elect to receive the consideration as all
cash, all stock or a combination thereof. Consummation of each
transaction is subject to stockholder approval, receipt of Federal
Communications Commission and other regulatory approvals, and satisfaction
of other customary conditions. Chris-Craft has agreed to vote its BHC
stock in favor of the acquisition of BHC by News Corp., and BHC has agreed
to vote its UTV stock in favor of the acquisition of UTV by News Corp.
The parties anticipate that the transactions will be completed in the
first half of 2001.
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 September 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 $111,330 $111,351
Equity securities 16,215 20,504
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 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. Third quarter 2000 net income decreased
6% to $10,225,000, or $1.07 per basic and diluted share, from
$10,882,000, or $1.16 per basic share ($1.15 per diluted share) last year.
<PAGE>
PAGE 11
Consolidated net revenue rose 6% for the quarter to a third quarter
record $54,230,000, from $51,390,000 last year. The increase reflected
strong national advertising sales gains at UTV's stations, partially
offset by a slight decline in local advertising sales. Combined local
and national time sales revenue rose 4% for the quarter. Revenue for
September was negatively impacted at most of the UTV stations by the
Olympics, as some advertisers shifted spending from non-Olympic stations
to the Olympics programming, while others reduced television advertising
while the Olympics were airing.
Operating income fell 4% to $13,726,000, from $14,340,000 last year.
Consolidated operating expenses increased 9%, including a 12% increase
in programming costs. Interest and other income for the quarter
decreased 9% to $3,324,000, from $3,642,000 in 1999.
Net income for the first nine months of 2000 increased 8% to
$34,609,000, or $3.64 per basic share ($3.63 per diluted share), from
last year's net income of $32,187,000, or $3.42 per basic share ($3.41
per diluted share).
Year to date consolidated net revenues rose 12% to $168,180,000,
from $149,778,000 in 1999. The increase reflected an 8% increase in
same station local and national advertising revenues as well as revenue
at WRBW, UTV's Orlando station, which was acquired in July 1999. The
revenue increase more than offset a 14% increase in consolidated
operating expenses. The expense increase reflected a 9% increase in
same station operating expenses, primarily resulting from a 13% increase
in same station programming costs, and expenses at WRBW. Operating
income for the nine-month period increased 7% to $46,830,000, from last
year's $43,692,000. Interest and other income for the period increased
14% to $10,854,000, from $9,520,000 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 1. Legal Proceedings.
------------------
Between August 14 and 21, 2000, various purported stockholders of
UTV filed complaints in the Delaware Court of Chancery entitled Pyenson
v. UTV, et al., Civil Action No. 18222; Malamud v. UTV, et al., Civil
Action No. 18218; and Rand v. UTV, et al., Civil Action No. 18235
(which we collectively refer to as the "UTV lawsuits"). During the
same period, various purported stockholders of BHC filed complaints
in the Delaware Court of Chancery entitled Gissen v. BHC, et al.,
Civil Action No. 18209; Piven V. BHC, et al., Civil Action No. 18211;
Voege v. Siegel, et al., Civil Action No. 18210; Stubbe v. BHC, et al.,
Civil Action No. 18217; and Rand v. BHC, et al., Civil Action No. 18229
(which we collectively refer to as the "BHC lawsuits" and, together with
<PAGE>
PAGE 12
the UTV actions, as the "Delaware actions"). The Delaware actions
assert claims against Chris-Craft, UTV, BHC, and various of their
officers and directors, alleging, among other things, that Chris-Craft
and/or BHC and the individual defendants engaged in self-dealing with
respect to the BHC and/or UTV mergers. The Delaware actions seek class
action certification and injunctive relief against Chris-Craft, BHC and
UTV mergers, or, in the alternative, to obtain rescission of the
mergers or rescissory damages, and other relief.
On September 25, 2000, the court entered an order of consolidation,
consolidating the BHC lawsuits as In re BHC Communications, Inc.
Shareholders Litigation, Civil Action No. 18209 and directing the
plaintiffs to file a consolidated amended complaint. On October 2,
2000, the court entered an order of consolidation, consolidating the
UTV lawsuits as In re United Television, Inc. Shareholders Litigation,
Civil Action No. 18218 and directing that the complaint filed in
Malamud v. UTV, Civil Action No. 18218, shall be deemed the operative
complaint in the consolidated action.
Chris-Craft, BHC and UTV believe that the Delaware actions are
without merit and intend to defend them vigorously.
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) Exhibit 27 - Financial Data Schedule
(b) A Form 8-K was filed August 23, 2000. The item numbers
reported were 5 and 7.
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 14, 2000 By: /s/ Garth S. Lindsey
----------------- ----------------------------
Garth S. Lindsey
Executive Vice President
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
