<PAGE>
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 March 31, 1994
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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
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BHC COMMUNICATIONS, INC.
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(Exact name of Registrant as specified in its charter)
Delaware 59-2104168
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
767 Fifth Avenue, New York, New York 10153
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(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
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As of April 30, 1994 there were 6,925,815 shares of the issuer's
Class A Common Stock outstanding and 18,000,000 shares of the
issuer's Class B Common Stock outstanding.
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<TABLE>
PART I -- FINANCIAL INFORMATION
BHC COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
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<CAPTION>
March 31, December 31,
1994 1993
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(UNAUDITED)
<S> <C> <C>
ASSETS
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CURRENT ASSETS:
Cash and cash equivalents $ 183,247 $ 35,371
Marketable (substantially all U.S. Government) securities 1,275,007 1,471,158
Accounts receivable, net 70,495 85,376
Film contract and prepaid broadcast rights 92,035 98,882
Prepaid expenses and other current assets 57,436 54,518
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Total current assets 1,678,220 1,745,305
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FILM CONTRACT AND PREPAID BROADCAST RIGHTS, less current portion 82,611 87,197
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PROPERTY AND EQUIPMENT, net 51,922 52,035
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INTANGIBLE ASSETS 340,065 342,395
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OTHER ASSETS 12,974 14,606
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$ 2,165,792 $ 2,241,538
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LIABILITIES AND SHAREHOLDERS' INVESTMENT
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CURRENT LIABILITIES:
Film contracts payable within one year $ 98,276 $ 112,798
Accounts payable and accrued expenses 63,724 81,834
Income taxes payable 73,701 69,340
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Total current liabilities 235,701 263,972
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FILM CONTRACTS PAYABLE AFTER ONE YEAR 85,727 95,699
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OTHER LIABILITIES 16,061 15,563
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MINORITY INTEREST 88,968 87,483
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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 $.01 per share; authorized
200,000,000 shares; outstanding 18,000,000 shares 180 180
Capital surplus 98,013 98,182
Retained earnings 1,700,200 1,686,532
Treasury stock, at cost (48,386) (6,150)
Reduction to reflect marketable
securities at fair value (10,749) -
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1,739,335 1,778,821
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$ 2,165,792 $ 2,241,538
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<FN>
The accompanying notes to condensed consolidated financial statements
are an integral part of these balance sheets.
</TABLE>
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<TABLE>
BHC COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share data)
(UNAUDITED)
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<CAPTION>
Three Months
Ended March 31,
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1994 1993
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<S> <C> <C>
OPERATING REVENUES $ 95,968 $ 89,581
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OPERATING EXPENSES:
Television expenses 52,077 55,688
Selling, general and administrative 28,757 25,097
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80,834 80,785
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Operating income 15,134 8,796
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OTHER INCOME:
Interest and other income 13,448 7,756
Income associated with Time Warner Inc. securities - 108,413
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13,448 116,169
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Income before income taxes
and minority interest 28,582 124,965
INCOME TAX PROVISION 12,000 43,000
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Income before minority interest 16,582 81,965
MINORITY INTEREST (2,914) (6,047)
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Net income $ 13,668 $ 75,918
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AVERAGE OUTSTANDING COMMON SHARES 25,251 25,997
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NET INCOME PER SHARE $ .54 $ 2.92
========= =========
<FN>
The accompanying notes to condensed consolidated financial statements
are an integral part of these statements.
</TABLE>
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<TABLE>
BHC COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
(UNAUDITED)
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<CAPTION>
Three Months
Ended March 31,
-------------------------
1994 1993
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 13,668 $ 75,918
Adjustments to reconcile net income to net cash
provided from operating activities:
Film contract payments (36,893) (36,071)
Film contract amortization 25,107 23,824
Depreciation and other amortization 5,125 5,129
Loss (gain) on disposition of marketable securities 602 (93,741)
Minority interest 2,914 6,047
Other (644) 225
Changes in assets and liabilities:
Accounts receivable 14,881 11,934
Other assets 3,326 (2,048)
Accounts payable and other liabilities (5,308) 1,033
Income taxes 7,312 38,290
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Net cash provided from operating activities 30,090 30,540
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CASH FLOWS FROM INVESTING ACTIVITIES:
Dispositions (purchases) of marketable securities, net 170,334 (56,576)
Capital expenditures, net (2,696) (1,054)
Other (18) -
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Net cash provided from (used in) investing activities 167,620 (57,630)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock (49,463) (7,743)
Dividend - (51,893)
Capital transactions of subsidiary (371) (6,759)
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Net cash used in financing activities (49,834) (66,395)
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 147,876 (93,485)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 35,371 172,882
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 183,247 $ 79,397
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<FN>
The accompanying notes to condensed consolidated financial statements
are an integral part of these statements.
</TABLE>
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BHC COMMUNICATIONS, INC.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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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 March 31, 1994)
subsidiary of Chris-Craft Industries, Inc., operates eight
television stations, three wholly owned and five owned by United
Television, Inc., 54% owned by BHC at March 31, 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 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. At
January 1, 1994, BHC classified its marketable securities as
available-for-sale.
At March 31, 1994, BHC's marketable securities, which
consisted substantially of U.S. Government securities, had a
carrying value of $1,293,979,000 and a fair value of
$1,275,007,000. The difference of $18,972,000 ($10,749,000 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, 56% mature within one year, 76% mature
within two years and all within five years.
3. SHAREHOLDERS' INVESTMENT:
As of March 31, 1994, there were outstanding 18,000,000
shares of Class B common stock, all held by Chris-Craft, and
7,065,427 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 535,000 Class A common shares purchased by
BHC during 1994. At March 31, 1994, purchases of an additional
1,281,223 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 March 31, 1994
aggregated approximately $103.1 million, including $26.8 million
applicable to UTV.
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BHC COMMUNICATIONS, INC.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
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OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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Liquidity and Capital Resources
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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 $11.8 million and $12.2 million, respectively, in
the 1994 and 1993 first quarters), and is dependent upon the mix
of programs aired and payment terms of the stations' contracts.
Station earnings rose strongly in the 1994 first quarter, and
station cash flow accordingly increased 236%.
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 $1.46
billion at March 31, 1994 from $1.51 billion at December 31,
1993, despite first quarter operating cash flow of $30.1 million.
Such decline primarily reflects the expenditure of $49.5 million
for treasury stock purchases, and a $19 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 March
31, 1994, 4,218,777 shares have been purchased for a total cost
of $241.7 million, including $42.3 million applicable to shares
purchased in the first quarter 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's television stations make commitments for programming that
will not be available for telecasting until future dates. At
March 31, 1994, commitments for such programming totalled
approximately $103.1 million, including $26.8 million applicable
to UTV. BHC capital expenditures generally have not been
material in relation to its financial position, and the related
commitments at March 31, 1994 were not material. BHC expects
that future film contract commitments and capital expenditure
requirements for its present business will be satisfied primarily
from operations or from current cash balances.
Results of Operations
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BHC 1994 first quarter net income totalled $13,668,000, or $.54
per share, compared to $75,918,000, or $2.92 per share, in last
year's first quarter. Excluding after tax income associated with
BHC's former holdings of Time Warner securities, 1993 first
quarter net income was $8,770,000, or $.34 per share. The 56%
increase in income excluding Time Warner amounts primarily
reflects substantial increases in television station earnings and
interest income.
BHC's core television broadcasting business achieved record first
quarter operating revenues and earnings. Relatively strong
demand for television advertising produced a 7% increase in
operating revenues, to $95,968,000 from last year's $89,581,000.
That increase, together with the favorable resolution of a
disputed music license arrangement, resulted in a 76% increase in
station earnings. After a $3,750,000 increase in management fee
expense (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 Chris-Craft), operating income rose 72%, to $15,134,000 from
$8,796,000.
First quarter interest and other income increased to $13,448,000
from $7,756,000 in 1993, primarily due to the placement of Time
Warner proceeds in money market instruments.
BHC's effective income tax rate rose to 42% from 34% in the 1993
first quarter, as 1993's pretax income included significant
dividend income which is not subject to full federal income tax.
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BHC COMMUNICATIONS, INC.
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PART II. OTHER INFORMATION AND SIGNATURE
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Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) None.
(b) No report on Form 8-K was filed during the quarter
for which this report is filed.
SIGNATURE
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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.
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(Registrant)
By: /s/ JOELEN K. MERKEL
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Joelen K. Merkel
Vice President and Treasurer
(Principal Accounting Officer)
Date: May 13, 1994
