<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 June 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
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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 July 31, 1994 there were 6,843,215 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>
<TABLE>
PART I -- FINANCIAL INFORMATION
BHC COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
-------------------------------------
<CAPTION>
June 30, December 31,
1994 1993
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents $ 179,126 $ 35,371
Marketable (substantially all U.S. Government)
securities 1,275,195 1,471,158
Accounts receivable, net 90,765 85,376
Film contract and prepaid broadcast rights 75,616 98,882
Prepaid expenses and other current assets 64,760 54,518
------------ ------------
Total current assets 1,685,462 1,745,305
------------ ------------
FILM CONTRACT AND PREPAID BROADCAST RIGHTS,
less current portion 75,920 87,197
------------ ------------
PROPERTY AND EQUIPMENT, net 50,501 52,035
------------ ------------
INTANGIBLE ASSETS 337,734 342,395
------------ ------------
OTHER ASSETS 12,338 14,606
------------ ------------
$ 2,161,955 $ 2,241,538
============ ============
<PAGE>
LIABILITIES AND SHAREHOLDERS' INVESTMENT
- ----------------------------------------
CURRENT LIABILITIES:
Film contracts payable within one year $ 83,161 $ 112,798
Accounts payable and accrued expenses 59,828 81,834
Income taxes payable 76,907 69,340
----------- ------------
Total current liabilities 219,896 263,972
----------- ------------
FILM CONTRACTS PAYABLE AFTER ONE YEAR 80,528 95,699
----------- ------------
OTHER LIABILITIES 15,875 15,563
----------- ------------
MINORITY INTEREST 91,501 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 97,528 98,182
Retained earnings 1,724,891 1,686,532
Treasury stock, at cost (56,127) (6,150)
Reduction to reflect marketable
securities at fair value (12,394) -
------------ ------------
1,754,155 1,778,821
------------ ------------
$ 2,161,955 $ 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 Six Months
Ended June 30, Ended June 30,
-------------------- --------------------
1994 1993 1994 1993
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
OPERATING REVENUES $ 119,832 $ 113,199 $ 215,800 $ 202,780
--------- --------- --------- ---------
OPERATING EXPENSES:
Television expenses 58,885 63,192 110,962 118,880
Selling, general and administrative 26,300 24,963 55,057 50,060
--------- --------- --------- ---------
85,185 88,155 166,019 168,940
--------- --------- --------- ---------
Operating income 34,647 25,044 49,781 33,840
--------- --------- --------- ---------
OTHER INCOME:
Interest and other income, net 14,859 10,177 28,307 17,933
Income associated with Time Warner Inc. securities - 132,986 - 241,399
--------- --------- --------- ---------
14,859 143,163 28,307 259,332
--------- --------- --------- ---------
Income before income taxes
and minority interest 49,506 168,207 78,088 293,172
INCOME TAX PROVISION 20,800 69,000 32,800 112,000
--------- --------- --------- ---------
Income before minority interest 28,706 99,207 45,288 181,172
MINORITY INTEREST (4,015) (6,568) (6,929) (12,615)
--------- --------- --------- ---------
Net income $ 24,691 $ 92,639 $ 38,359 $ 168,557
========= ========= ========= =========
AVERAGE OUTSTANDING COMMON SHARES 25,014 25,887 25,132 25,942
========= ========= ========= =========
NET INCOME PER SHARE $ .99 $ 3.58 $ 1.53 $ 6.50
========= ========= ========= =========
<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>
Six Months
Ended June 30,
-------------------------
1994 1993
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 38,359 $ 168,557
Adjustments to reconcile net income to net cash
provided from (used in) operating activities:
Film contract payments (66,453) (71,903)
Film contract amortization 48,249 50,058
Depreciation and other amortization 10,257 10,201
Loss (gain) on disposition of marketable securities 602 (215,061)
Minority interest 6,929 12,615
Other (911) 225
Changes in assets and liabilities:
Accounts receivable (5,389) (7,720)
Other assets (2,490) (6,521)
Accounts payable and other liabilities 1,336 8,607
Income taxes 12,691 45,630
----------- -----------
Net cash provided from (used in) operating activities 43,180 (5,312)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Dispositions (purchases) of marketable securities, net 163,869 (32,805)
Capital expenditures (4,060) (3,165)
Other (37) (1,187)
----------- -----------
Net cash provided from (used in) investing activities 159,772 (37,157)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchases of treasury stock (57,219) (11,642)
Dividend - (51,893)
Capital transactions of subsidiary (1,978) (9,754)
----------- -----------
Net cash used in financing activities (59,197) (73,289)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 143,755 (115,758)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 35,371 172,882
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 179,126 $ 57,124
=========== ===========
<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 June 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 June 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 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 June 30, 1994, BHC's marketable securities, which
consisted substantially of U.S. Government securities, had a
carrying value of $1,299,415,000 and a fair value of
$1,275,195,000. The difference of $24,220,000 ($12,394,000 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, 77% within two
years and all within five years.
3. SHAREHOLDERS' INVESTMENT:
As of June 30, 1994, there were outstanding 18,000,000
shares of Class B common stock, all held by Chris-Craft, and
6,964,174 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 635,800 Class A common shares purchased by
BHC during 1994. At June 30, 1994, purchases of an additional
1,180,423 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 June 30, 1994
aggregated approximately $140.2 million, including $39.9 million
applicable to UTV.
From July 1994 through January 1997, which includes both the
pre-launch period and the first two years of operations of the
United Paramount Television Network, BHC expects to make minimum
expenditures on behalf of the Network of at least $150 million.
Since exact expenditures cannot be projected and Network revenues
may not be significant during this period, actual funding
requirements may exceed this expected level. Upon any exercise
of the PCI option (see Item 5), BHC will recoup approximately
one-half of its Network funding expenditures to that date (plus
interest), and future expenditures will be shared equally with
PCI.
<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 $18.2 million and $21.8 million, respectively, in
the 1994 and 1993 six month periods) and is dependent upon the
mix of programs aired and payment terms of the stations'
contracts. Station earnings rose strongly in the first six
months of 1994 and station cash flow accordingly increased 91%.
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 $1.45
billion at June 30, 1994 from $1.51 billion at December 31, 1993,
despite operating cash flow during the six month period of $43.2
million. Such decline primarily reflects the expenditure of
$57.2 million for treasury stock purchases and a $12.4 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 June
30, 1994, 4,319,577 shares have been purchased for a total cost
of $249.4 million, including $49.9 million applicable to shares
purchased in the first six 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.
As reported in Item 5, a subsidiary of BHC has entered into a
definitive agreement with a subsidiary of Paramount
Communications, Inc. ("PCI") to establish the United Paramount
Television Network (the "Network"). The Network, which had been
originally announced in October 1993, is scheduled to premiere
its initial four hours of prime time programming in January 1995.
BHC will provide funding for the Network until the PCI subsidiary
exercises its option to acquire an equity interest in the Network
equal to that held by BHC. PCI's option is exercisable at any
time prior to its expiration on January 16, 1997. From July 1994
through January 1997, which includes both the pre-launch period
and the first two years of Network operations, BHC expects to
make minimum expenditures on behalf of the Network of at least
$150 million. Since exact expenditures cannot be projected and
Network revenues may not be significant during this period,
actual funding requirements may exceed this expected level. Upon
any exercise of the PCI option, BHC will recoup approximately
one-half of its Network funding expenditures to that date (plus
interest), and future expenditures will be shared equally with
PCI. The expected net losses of the BHC subsidiary operating the
Network will be fully reflected in BHC's net income.
BHC's television stations make commitments for programming that
will not be available for telecasting until future dates. At
June 30, 1994, commitments for such programming totalled
approximately $140.2 million, including $39.9 million applicable
to UTV. BHC capital expenditures generally have not been
material in relation to its financial position, and the related
commitments at June 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 1994 second quarter operating revenues and operating income
were the highest of any quarter in its history. Second quarter
net income totalled $24,691,000, or $.99 per share, nearly double
last year's income of $12,728,000, or $.49 per share, excluding
after tax income associated with BHC's former holdings of Time
Warner securities. The increase reflects substantial growth in
television station earnings and higher interest income.
Including Time Warner income, 1993 second quarter net income
totalled $92,639,000, or $3.58 per share.
Net income for the first six months of 1994 totalled $38,359,000,
or $1.53 per share, 78% higher than last year's $21,498,000, or
$.83 per share, excluding Time Warner income. The increase
reflects substantial growth in both television station earnings
and interest income. Net income in last year's six month period,
including Time Warner income, totalled $168,557,000, or $6.50 per
share.
While the dollar amount of net income excluding Time Warner
income rose 94% in the second quarter and 78% in the six month
period, corresponding per share amounts increased 102% and 84%,
respectively, as purchases by BHC of its Class A common shares
reduced the average number of shares outstanding in the 1994
periods.
Operating revenues of BHC's eight television stations rose a
solid 6% in both the second quarter and six months periods,
reflecting a general strengthening in demand for television
advertising time. Programming expenses declined 10% in the
second quarter and 9% in the six months, and station earnings
accordingly rose 40% and 51% in the respective periods. After
increases in corporate level expenses, primarily a $4,500,000
increase in six month 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 38% in the second quarter, to $34,647,000 from last
year's $25,044,000, and 47% in the six month period, to
$49,781,000 from $33,840,000.
Interest and other income increased to $14,859,000 from
$10,177,000 in the second quarter, and to $28,307,000 from
$17,933,000 in the six 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
$121,320,000 and $215,061,000, respectively, in the 1993 second
quarter and six month periods.
<PAGE>
BHC COMMUNICATIONS, INC.
------------------------
PART II. OTHER INFORMATION AND SIGNATURE
----------------------------------------
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
The following matters were submitted to a vote of
security holders at the Registrant's annual meeting of
stockholders which was held on April 29, 1994.
The following were elected directors, each receiving the
numbers of votes set forth opposite their names:
Broker
For Withheld Non-votes
--- -------- ---------
John L. Eastman 185,397,517 3,511 -0-
William D. Siegel 185,398,302 2,696 -0-
Vin Weber 185,383,766 17,262 -0-
Performance-based compensation was approved by the
following votes:
Broker
For Against Abstain Non-votes
--- ------- ------- ---------
184,630,653 321,417 37,939 451,923
The selection of Price Waterhouse as BHC's auditors for
the current year was ratified by the following vote:
Broker
For Against Abstain Non-votes
--- ------- ------- ---------
185,412,628 15,194 14,110 -0-
<PAGE>
Item 5. Other Information.
------------------
United Paramount Television Network
-----------------------------------
On July 19, 1994 a subsidiary of BHC entered into a
definitive agreement with a subsidiary of Paramount
Communications, Inc. ("PCI") to establish the United Paramount
Television Network (the "Network"). The Network, which had been
originally announced in October 1993, is scheduled to premiere
its initial four hours of prime time programming in January 1995.
The six independent stations owned by BHC and United Television
will be affiliates of the Network. BHC will provide funding for
the Network until the PCI subsidiary exercises its option to acquire
an equity interest in the Network equal to that held by BHC.
PCI's option is exercisable at any time prior to its expiration on
January 16, 1997. Upon any exercise of the PCI option, BHC will
recoup approximately one-half of its Network funding expenditures
to that date (plus interest), and future expenditures will be shared
equally with PCI.
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.
<PAGE>
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: August 15, 1994
