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, 1995
----------------------------------
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 April 30, 1995 there were 6,503,855 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>
March 31, December 31,
1995 1994
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents $ 157,103 $ 222,201
Marketable securities(substantially
all U.S. Government securities) 1,344,611 1,274,244
Accounts receivable, net 75,438 96,681
Film contract and prepaid broadcast rights 82,709 89,245
Prepaid expenses and other current assets 43,336 46,976
------------ ------------
Total current assets 1,703,197 1,729,347
------------ ------------
FILM CONTRACT AND PREPAID BROADCAST RIGHTS,
less current portion 53,309 59,228
------------ ------------
PROPERTY AND EQUIPMENT, net 47,345 49,015
------------ ------------
INTANGIBLE ASSETS 330,743 333,074
------------ ------------
OTHER ASSETS 18,023 17,799
------------ ------------
$ 2,152,617 $ 2,188,463
============ ============
<PAGE>
LIABILITIES AND SHAREHOLDERS' INVESTMENT
- ----------------------------------------
CURRENT LIABILITIES:
Film contracts payable within one year $ 75,932 $ 81,696
Accounts payable and other liabilities 86,196 70,834
Income taxes payable 51,042 55,782
----------- ------------
Total current liabilities 213,170 208,312
----------- ------------
FILM CONTRACTS PAYABLE AFTER ONE YEAR 82,185 89,048
----------- ------------
OTHER LIABILITIES 5,665 5,655
----------- ------------
MINORITY INTEREST 91,767 95,564
----------- ------------
SHAREHOLDERS' INVESTMENT:
Class A common stock - par value $.01 per share;
authorized 200,000,000 shares; outstanding
6,877,518 shares 69 69
Class B common stock - par value $.01 per share;
authorized 200,000,000 shares; outstanding
18,000,000 shares 180 180
Capital surplus 26,310 29,611
Retained earnings 1,755,195 1,779,409
Treasury stock, at cost (17,245) (6,254)
Reduction to reflect marketable
securities at market value (4,679) (13,131)
------------ ------------
1,759,830 1,789,884
------------ ------------
$ 2,152,617 $ 2,188,463
============ ============
<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 INCOME
(In thousands except per share data)
(UNAUDITED)
-------------------------------------------
<CAPTION>
Three Months
Ended March 31,
--------------------
1995 1994
--------- ---------
<S> <C> <C>
OPERATING REVENUES $ 104,475 $ 95,968
--------- ---------
OPERATING EXPENSES:
Television expenses 51,072 52,077
Selling, general and administrative 29,298 28,757
--------- ---------
80,370 80,834
--------- ---------
Operating income 24,105 15,134
--------- ---------
OTHER INCOME (EXPENSE):
Interest and other income 20,597 13,448
Equity in United Paramount Network loss (38,403) -
--------- ---------
(17,806) 13,448
--------- ---------
Income before income taxes
and minority interest 6,299 28,582
INCOME TAX PROVISION 2,600 12,000
--------- ---------
Income before minority interest 3,699 16,582
MINORITY INTEREST (3,309) (2,914)
--------- ---------
Net income $ 390 $ 13,668
========= =========
AVERAGE OUTSTANDING COMMON SHARES 24,683 25,251
========= =========
NET INCOME PER SHARE $ .02 $ .54
========= =========
<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>
Three Months
Ended March 31,
------------------------
1995 1994
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 390 $ 13,668
Adjustments to reconcile net income to net cash
provided from operating activities:
Film contract payments (23,520) (36,893)
Film contract amortization 17,612 25,107
Depreciation and other amortization 5,027 5,125
Equity in United Paramount Network loss 38,403 -
Minority interest 3,309 2,914
Other 206 (42)
Changes in assets and liabilities:
Accounts receivable 21,243 14,881
Other assets 1,852 3,326
Accounts payable and other liabilities (4,416) (5,308)
Income taxes (3,803) 7,312
----------- -----------
Net cash provided from operating activities 56,303 30,090
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Dispositions (purchases) of marketable securities, net (61,831) 170,334
Investment in and advances to United Paramount Network (38,028) -
Capital expenditures (1,026) (2,696)
Other (11) (18)
----------- -----------
Net cash provided from (used in)
investing activities (100,896) 167,620
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchases of treasury stock (11,143) (49,463)
Capital transactions of subsidiary (9,362) (371)
----------- -----------
Net cash used in financing activities (20,505) (49,834)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (65,098) 147,876
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 222,201 35,371
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 157,103 $ 183,247
=========== ===========
<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 (73% at March 31, 1995)
subsidiary of Chris-Craft Industries, Inc., operates eight
television stations, three wholly owned and five owned by United
Television, Inc., 56% owned by BHC at March 31, 1995. 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 consolidated
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 1994 have been reclassified to conform to the 1995
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. MARKETABLE SECURITIES:
In accordance with Statement of Financial Accounting
Standards (SFAS) No. 115, "Accounting for Certain Investments in
Debt and Equity Securities", BHC classifies its marketable
securities as available-for-sale.
At March 31, 1995, BHC's marketable securities, which
consisted substantially of U.S. Government securities, had a
carrying value of $1,354,370,000 and a fair value of
$1,344,611,000. The difference of $9,759,000 ($4,679,000 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, 73% mature within one year, 90% within two
years and all within five years.
At December 31, 1994, BHC's marketable securities, which
consisted substantially of U.S. Government securities, had a
carrying value of $1,299,322,000 and a fair value of
$1,274,244,000. The difference of $25,078,000 ($13,131,000 net
of income taxes and minority interest) is reflected as a
reduction of shareholders' investment in the accompanying
condensed consolidated balance sheet.
3. SHAREHOLDERS' INVESTMENT:
As of March 31, 1995, there were outstanding 18,000,000
shares of Class B common stock, all held by Chris-Craft, and
6,603,290 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 147,160 Class A common shares purchased by
BHC during 1995. At March 31, 1995, purchases of an additional
823,163 shares of Class A common stock were authorized. In
February 1995, BHC's Board of Directors declared a special cash
dividend of $1.00 per share on BHC's Class A and Class B common
stock. The dividend, totalling $24.7 million, was paid in April
1995. BHC has no plan to pay dividends on a regular basis.
4. COMMITMENTS:
Commitments of BHC's television stations for film contracts
entered into but not available for broadcasting at March 31, 1995
aggregated approximately $187.8 million, including $49.9 million
applicable to UTV.
In July 1994, BHC and Viacom Inc.'s Paramount Television
Group formed the United Paramount Network, a fifth broadcast
television network which premiered January 1995. BHC currently
owns 100% of UPN, and Paramount has an option exercisable through
January 15, 1997 to acquire an interest in UPN equal to that of
BHC. The option price is equivalent to approximately one-half of
BHC's aggregate cash contributions to UPN through the exercise
date, plus interest; payment may be deferred through the option
expiration date. The cost of developing UPN will be significant,
and BHC has agreed to make minimum UPN expenditures of at least
$150,000,000 through 1996. Network expenditures and related
operating losses are expected to significantly exceed such amount
for that period, and to remain substantial thereafter.
<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 $5.9 million and $11.8 million, respectively, in
the 1995 and 1994 first quarters), and is dependent upon the mix
of programs aired and payment terms of the stations' contracts.
Station earnings rose strongly in the 1995 first quarter, and
station cash flow was nearly double the corresponding 1994
amount.
BHC's cash flow additionally reflects earnings associated with
its cash and marketable securities. Cash and marketable
securities totalled $1.5 billion at March 31, 1995 and December
31, 1994. First quarter operating cash flow of $56.3 million was
offset by United Paramount Network funding of $38 million and
treasury stock purchases by BHC and UTV totalling $21 million.
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. In February 1995, the Board of Directors declared
a special cash dividend of $1.00 per share on BHC's Class A and
Class B common stock, totalling $24.7 million, which was paid in
April 1995. BHC has no plan to pay dividends on a regular basis.
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, 1995, 4,676,837 shares were purchased for a total cost of
$276.1 million, including $10.9 million applicable to shares
purchased in the first three months of 1995.
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
financial resources, if desired, to fund such additional
expansion.
In July 1994, BHC and Viacom Inc.'s Paramount Television Group
formed the United Paramount Network, a fifth broadcast television
network which premiered January 1995. BHC currently owns 100% of
UPN, and Paramount has an option through January 15, 1997 to
acquire an interest in UPN equal to that of BHC. The option
price is equivalent to approximately one-half of BHC's aggregate
cash contributions to UPN through the exercise date, plus
interest; payment may be deferred through the option expiration
date. BHC expenditures related to UPN totalled $38 million in
the first quarter of 1995. The cost of developing UPN will be
significant, and BHC has agreed to make minimum UPN expenditures
of at least $150 million through 1996. UPN expenditures and
related operating losses are expected to significantly exceed
such amount for that period, and to remain substantial
thereafter.
BHC's television stations make commitments for programming that
will not be available for telecasting until future dates. At
March 31, 1995, commitments for such programming totalled
approximately $187.8 million, including $49.9 million applicable
to UTV. BHC capital expenditures generally have not been
material in relation to its financial position, and the related
capital expenditure commitments at December 31, 1994 (including
any related to UPN) were not material. BHC expects that its
expenditures for UPN, future film contract commitments and
capital requirements for its present business will be satisfied
primarily from operations, marketable securities or cash
balances.
Results of Operations
- ---------------------
BHC's core television station group achieved record first quarter
earnings. However, as expected, UPN start-up losses
significantly impacted BHC's first quarter operating results.
Net income declined to $390,000, or $.02 per share, from
$13,668,000, or $.54 per share, in last year's period. Excluding
the UPN loss, BHC first quarter income increased 69% to
$23,048,000, or $.93 per share.
Station operating revenues rose 9%, to a first quarter record
$104,475,000 from $95,968,000 last year. Station earnings,
further bolstered by a 6% reduction in programming expense, rose
33%, surpassing the corresponding prior period amount for the
twelfth consecutive quarter. An increase in program development
expense was offset by a decrease in the management fee paid
Chris-Craft, and operating income increased 59% to a first
quarter record $24,105,000 from last year's $15,134,000.
UPN's first quarter pre-tax loss of $38,403,000 is reflected in
BHC's financial statements under the equity method. UPN is still
in its infancy, and will incur substantial start-up losses for
the next several years.
First quarter interest and other income increased to $20,597,000
from $13,448,000, primarily reflecting higher interest rates on
BHC's substantial money market holdings.
<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: May 12, 1995
<PAGE>
EXHIBIT INDEX
Incorporated by
Reference to: Exhibit No. Exhibit
- ------------- ----------- -------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 157103
<SECURITIES> 1344611
<RECEIVABLES> 82183
<ALLOWANCES> 6745
<INVENTORY> 0
<CURRENT-ASSETS> 1703197
<PP&E> 127398
<DEPRECIATION> 80053
<TOTAL-ASSETS> 2152617
<CURRENT-LIABILITIES> 213170
<BONDS> 0
0
0
<COMMON> 249
<OTHER-SE> 1759581
<TOTAL-LIABILITY-AND-EQUITY> 2152617
<SALES> 0
<TOTAL-REVENUES> 104475
<CGS> 0
<TOTAL-COSTS> 80370
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 6299
<INCOME-TAX> 2600
<INCOME-CONTINUING> 390
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 390
<EPS-PRIMARY> .02
<EPS-DILUTED> 0
</TABLE>
