SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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, 1994
----------------------------------
OR
/ / 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: 1-10342
-------------------------------
BHC COMMUNICATIONS, INC.
------------------------
(Exact name of Registrant as specified in its charter)
Delaware 59-2104168
- ------------------------------ --------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
767 Fifth Avenue, New York, New York 10153
- ------------------------------------ ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 421-0200
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 October 31, 1994 there were 6,786,215 shares of the
issuer's Class A Common Stock outstanding and 18,000,000 shares
of the issuer's Class B Common Stock outstanding.<PAGE>
<PAGE>
<TABLE>
PART I -- FINANCIAL INFORMATION
BHC COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
-------------------------------------
<CAPTION>
September 30, December 31,
1994 1993
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents $ 253,171 $ 35,371
Marketable (substantially all U.S. Government)
securities 1,231,282 1,471,158
Accounts receivable, net 74,314 85,376
Film contract and prepaid broadcast rights 103,306 98,882
Prepaid expenses and other current assets 58,067 54,518
------------ ------------
Total current assets 1,720,140 1,745,305
------------ ------------
FILM CONTRACT AND PREPAID BROADCAST RIGHTS,
less current portion 70,010 87,197
------------ ------------
PROPERTY AND EQUIPMENT, net 49,933 52,035
------------ ------------
INTANGIBLE ASSETS 335,403 342,395
------------ ------------
OTHER ASSETS 13,305 14,606
------------ ------------
$ 2,188,791 $ 2,241,538
============ ============
<PAGE>
LIABILITIES AND SHAREHOLDERS' INVESTMENT
- ----------------------------------------
CURRENT LIABILITIES:
Film contracts payable within one year $ 90,806 $ 112,798
Accounts payable and accrued expenses 73,708 81,834
Income taxes payable 54,697 69,340
----------- ------------
Total current liabilities 219,211 263,972
----------- ------------
FILM CONTRACTS PAYABLE AFTER ONE YEAR 91,725 95,699
----------- ------------
OTHER LIABILITIES 6,755 15,563
----------- ------------
MINORITY INTEREST 90,444 87,483
----------- ------------
SHAREHOLDERS' INVESTMENT:
Class A common stock - par value $.01 per share; authorized
200,000,000 shares; outstanding 7,723,418 shares 77 77
Class B common stock - par value $.01 per share; authorized
200,000,000 shares; outstanding 18,000,000 shares 180 180
Capital surplus 95,458 98,182
Retained earnings 1,757,500 1,686,532
Treasury stock, at cost (60,907) (6,150)
Reduction to reflect marketable
securities at fair value (11,652) -
------------ ------------
1,780,656 1,778,821
------------ ------------
$ 2,188,791 $ 2,241,538
============ ============
<FN>
The accompanying notes to condensed consolidated financial statements
are an integral part of these balance sheets.
</TABLE>
<PAGE>
<TABLE>
BHC COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share data)
(UNAUDITED)
-------------------------------------------
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
-------------------- --------------------
1994 1993 1994 1993
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
OPERATING REVENUES $ 107,259 $ 100,216 $ 323,059 $ 302,996
--------- --------- --------- ---------
OPERATING EXPENSES:
Television expenses 57,988 52,382 168,950 171,262
Selling, general and
administrative 26,410 23,354 81,467 73,414
--------- --------- --------- ---------
84,398 75,736 250,417 244,676
--------- --------- --------- ---------
Operating income 22,861 24,480 72,642 58,320
--------- --------- --------- ---------
OTHER INCOME:
Interest and other income 16,299 11,996 44,606 29,929
Income associated with Time
Warner Inc. securities - 12,340 - 253,739
--------- --------- --------- ---------
16,299 24,336 44,606 283,668
--------- --------- --------- ---------
Income before income taxes
and minority interest 39,160 48,816 117,248 341,988
INCOME TAX PROVISION 3,200 21,000 36,000 133,000
--------- --------- --------- ---------
Income before minority
interest 35,960 27,816 81,248 208,988
MINORITY INTEREST (3,351) (3,300) (10,280) (15,915)
--------- --------- --------- ---------
Net income $ 32,609 $ 24,516 $ 70,968 $ 193,073
========= ========= ========= =========
AVERAGE OUTSTANDING COMMON
SHARES 24,929 25,875 25,065 25,920
========= ========= ========= =========
NET INCOME PER SHARE $ 1.31 $ .95 $ 2.83 $ 7.45
========= ========= ========= =========
<FN>
The accompanying notes to condensed consolidated financial statements
are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
BHC COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
(UNAUDITED)
-----------------------------------------------
<CAPTION>
Nine Months
Ended September 30,
-------------------------
1994 1993
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 70,968 $ 193,073
Adjustments to reconcile net income to net cash
provided from (used in) operating activities:
Film contract payments (92,279) (109,839)
Film contract amortization 72,124 73,150
Prepaid broadcast rights 6,284 (34,426)
Depreciation and other amortization 15,358 15,158
Gain on disposition of marketable securities - (219,349)
Minority interest 10,280 15,915
Other 978 -
Changes in assets and liabilities:
Accounts receivable 11,062 7,858
Other assets 1,297 (4,267)
Accounts payable and other liabilities (5,035) 4,485
Income taxes (7,431) 25,451
----------- -----------
Net cash provided from (used in) operating activities 83,606 (32,791)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Dispositions (purchases) of marketable securities, net 210,077 (25,440)
Capital expenditures (6,467) (7,017)
Other (48) (1,380)
----------- -----------
Net cash provided from (used in) investing activities 203,562 (33,837)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchases of treasury stock (60,888) (11,642)
Dividend - (51,893)
Capital transactions of subsidiary (8,480) (9,284)
----------- -----------
Net cash used in financing activities (69,368) (72,819)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 217,800 (139,447)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 35,371 172,882
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 253,171 $ 33,435
=========== ===========
<FN>
The accompanying notes to condensed consolidated financial statements
are an integral part of these statements.
</TABLE>
<PAGE>
BHC COMMUNICATIONS, INC.
------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------------
1. PRINCIPLES OF CONSOLIDATION:
The accompanying condensed consolidated financial statements
include the accounts of BHC Communications, Inc. and its
subsidiaries. BHC, a majority owned (72% at September 30, 1994)
subsidiary of Chris-Craft Industries, Inc., operates eight
television stations, three wholly owned and five owned by United
Television, Inc., 55% owned by BHC at September 30, 1994. The
interest of UTV shareholders other than BHC in the operating
results and net assets of UTV is set forth as minority interest
in the accompanying condensed consolidated statements of income
and condensed consolidated balance sheets, respectively.
Intercompany accounts and transactions have been eliminated.
The financial information included herein has been prepared
by BHC, 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, BHC believes that the disclosures
herein are adequate to make the information presented not
misleading. It is suggested that these condensed financial
statements be read in conjunction with the financial statements
and the notes thereto included in BHC'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 to a fair statement of the
results for the interim periods. Certain amounts for 1993 have
been reclassified to conform to the 1994 presentation. The
results for these interim periods are not necessarily indicative
of results to be expected for the full year, due to seasonal
factors, among others.
2. NEW ACCOUNTING STANDARD:
Effective January 1, 1994, BHC adopted Statement of
Financial Accounting Standards (SFAS) No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." In
accordance with SFAS No. 115, prior period financial statements
have not been restated to reflect the change in accounting
principle. BHC classifies its marketable securities as
available-for-sale.
At September 30, 1994, BHC's marketable securities, which
consisted substantially of U.S. Government securities, had a
carrying value of $1,254,200,000 and a fair value of
$1,231,282,000. The difference of $22,918,000 ($11,652,000 net
of income taxes and minority interest) is reflected as a
reduction of shareholders' investment in the accompanying
condensed consolidated balance sheet. Of the investments in U.S.
Government securities, 61% mature within one year, 79% within two
years and all within five years.
3. SHAREHOLDERS' INVESTMENT:
As of September 30, 1994, there were outstanding 18,000,000
shares of Class B common stock, all held by Chris-Craft, and
6,901,688 shares of Class A common stock, after reflecting as
treasury stock BHC's pro rata interest in its Class A common
shares held by UTV and 696,700 Class A common shares purchased by
BHC during 1994. At September 30, 1994, purchases of an
additional 1,119,523 shares of Class A common stock were
authorized.
4. COMMITMENTS:
Commitments of BHC's television stations for film contracts
entered into but not available for broadcasting at September 30,
1994 aggregated approximately $152.7 million, including $38.4
million applicable to UTV.
BHC and the Paramount Television Group of Viacom, Inc.
jointly operate the United Paramount Network, a fifth television
network scheduled to premiere its initial four hours of prime
time programming in January 1995. The cost of launching the
Network will be significant. From July 1994 through January
1997, which includes both the pre-launch and the first two years
of Network operations, BHC has agreed to make minimum
expenditures on behalf of the Network of at least $150,000,000.
However, actual Network expenditures and related operating losses
for that period are anticipated to significantly exceed that
amount. Expenditures after that period are also expected to be
substantial. Network expenditures were not material in the third
quarter or nine month periods.
<PAGE>
BHC COMMUNICATIONS, INC.
------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------
Liquidity and Capital Resources
- -------------------------------
BHC's core operating cash flow is generated primarily by its
television broadcasting business. Television broadcasting cash
flow generally parallels the earnings of BHC's television
stations, adjusted to reflect (i) the difference between film
contract payments and related film contract amortization and (ii)
the effect of significant prepayments for other broadcast rights.
The relationship between film contract payments and related
amortization may vary greatly between periods (payments exceeded
amortization by $20.2 million and $36.7 million, respectively, in
the 1994 and 1993 nine month periods) and is dependent upon the
mix of programs aired and payment terms of the stations'
contracts. In the 1993 third quarter, a BHC station made a $34.4
million right prepayment, of which $6.3 million was amortized in
the first nine months of 1994. Station earnings rose strongly in
the first nine months of 1994 and station cash flow accordingly
increased 92%.
BHC's cash flow additionally reflects earnings associated with
its cash and marketable securities. Prior to their disposition
in 1993, substantial dividend income was realized on BHC's large
holdings of Time Warner Inc. convertible preferred shares.
Proceeds from the Time Warner dispositions were placed mostly in
money market instruments, primarily U.S. Government obligations,
having significantly lower yields than the securities disposed.
Total cash and marketable securities declined slightly to $1.48
billion at September 30, 1994 from $1.51 billion at December 31,
1993, despite operating cash flow during the nine month period of
$83.6 million. Such decline primarily reflects the expenditure
of $60.9 million for treasury stock purchases and a $22.9 million
reduction in the carrying value of marketable securities to
reflect their fair value.
A special cash dividend of $2.00 per share on BHC's Class A and
Class B common stock, totalling $51.9 million, was paid in
January 1993. This is the only dividend paid by BHC since it
became a public company in January 1990, and BHC has no current
plan to pay future cash dividends.
Since April 1990, BHC's Board of Directors has authorized the
purchase of up to 5,500,000 Class A common shares. Through
September 30, 1994, 4,380,477 shares have been purchased for a
total cost of $254.1 million, including $54.7 million applicable
to shares purchased in the first nine months of 1994.
BHC intends to expand its operations in the media, entertainment
and communications industries and to explore business
opportunities in other industries. BHC currently has no
outstanding debt, and believes it is capable of raising
significant additional capital to augment its already substantial
cash balances, if desired, to fund such additional expansion.
BHC and the Paramount Television Group of Viacom, Inc. jointly
operate the United Paramount Network, a fifth television network
scheduled to premiere its initial four hours of prime time
programming in January 1995. The cost of launching the Network
will be significant. From July 1994 through January 1997, which
includes both the pre-launch and the first two years of Network
operations, BHC has agreed to make minimum expenditures on behalf
of the Network of at least $150,000,000. However, actual Network
expenditures and related operating losses for that period are
anticipated to significantly exceed that amount. Expenditures
after that period are also expected to be substantial. Network
expenditures were not material in the third quarter or nine month
periods.
BHC's television stations make commitments for programming that
will not be available for telecasting until future dates. At
September 30, 1994, commitments for such programming totalled
approximately $152.7 million, including $38.4 million applicable
to UTV. BHC capital expenditures generally have not been
material in relation to its financial position, and the related
commitments at September 30, 1994 (including any related to the
Network) were not material. BHC expects that its expenditures
for the Network, future film contract commitments and capital
expenditure requirements for its present business will be
satisfied primarily from operations or from current marketable
securities or cash balances.
Results of Operations
- ---------------------
BHC third quarter net income increased 33% to $32,609,000, or
$1.31 per share, from last year's $24,516,000, or $.95 per share.
Net income for the quarter includes a $20,000,000 reversal of
previously accrued taxes, and last year's net income includes
$12,340,000 associated with BHC's former holdings of Time Warner
securities.
Net income for the first nine months of 1994 totalled
$70,968,000, or $2.83 per share, compared to $193,073,000, or
$7.45 per share, last year. Excluding the income tax reversal
and Time Warner income, nine month net income totalled
$57,968,000, or $2.31 per share, up 42% from last year's
$40,718,000, or $1.57 per share.
Income per share amounts in the 1994 periods benefitted from
purchases by BHC of its Class A common shares, which reduced the
average number of common shares outstanding by 3.7% in the third
quarter and 3.3% in the nine month period.
Earnings of BHC's core television station group surpassed the
corresponding prior year amount for the tenth consecutive
quarter. Television station revenues rose 7% in both the third
quarter and nine month periods, reflecting generally strong
demand for television advertising time. Programming expenses
rose modestly in the third quarter, but declined 5% in the nine
month period. Station earnings accordingly increased 11% and 35%
in the respective periods. Third quarter operating income
declined 7% to $22,861,000 from $24,480,000, primarily due to
higher program development and management fee expenses. While
those expenses also increased during the nine month period
(program development expense increased $4,125,000, and management
fee expense increased $5,250,000, reflecting a $3,000,000
increase, to $8,000,000 from $5,000,000, effective as of January
1, 1993, in the annual fee paid to Chris-Craft), operating income
rose 25%, to $72,642,000 from $58,320,000.
Interest and other income increased to $16,299,000 from
$11,996,000 in the third quarter, and to $44,606,000 from
$29,929,000 in the nine month period, primarily reflecting the
placement of Time Warner proceeds in money market instruments.
Income associated with Time Warner securities reflects related
dividend and interest income, as well as gains on disposition of
$3,718,000 and $218,779,000, respectively, in the third quarter
and nine month periods.
The income tax reversal followed the favorable resolution of
routine audits, and reduced BHC's effective income tax rate to 8%
from 43% in the third quarter, and to 31% from 39% in the nine
month period.
<PAGE>
BHC COMMUNICATIONS, INC.
------------------------
PART II. OTHER INFORMATION AND SIGNATURE
----------------------------------------
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) The following exhibits are filed herewith:
Exhibit No. Description
----------- -----------
27 Financial Data Schedule
(b) No report on Form 8-K was filed during the quarter
for which this report is 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.
BHC COMMUNICATIONS, INC.
------------------------
(Registrant)
By: /s/ JOELEN K. MERKEL
-----------------------------
Joelen K. Merkel
Vice President and Treasurer
(Principal Accounting Officer)
Date: November 14, 1994
<PAGE>
EXHIBIT INDEX
Incorporated by
Reference to: Exhibit No. Exhibit
- ------------- ----------- -------
27 Financial Data Schedule
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> 12/31/94
<PERIOD-END> 09/30/94
<EXCHANGE-RATE> 1
<CASH> 253171
<SECURITIES> 1231282
<RECEIVABLES> 81036
<ALLOWANCES> 6722
<INVENTORY> 0
<CURRENT-ASSETS> 1720140
<PP&E> 127273
<DEPRECIATION> 77340
<TOTAL-ASSETS> 2188791
<CURRENT-LIABILITIES> 219211
<BONDS> 0
0
0
<COMMON> 257
<OTHER-SE> 1780399
<TOTAL-LIABILITY-AND-EQUITY> 2188791
<SALES> 0
<TOTAL-REVENUES> 323059
<CGS> 0
<TOTAL-COSTS> 250417
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 117248
<INCOME-TAX> 36000
<INCOME-CONTINUING> 70968
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 70968
<EPS-PRIMARY> 2.83
<EPS-DILUTED> 0
</TABLE>
