<PAGE>
Page 1
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, 1996
----------------------------------
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 July 31, 1996 there were 5,911,205 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 2
<TABLE>
PART I -- FINANCIAL INFORMATION
BHC COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
(UNAUDITED)
-------------------------------------
<CAPTION>
June 30, December 31,
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents $ 114,400 $ 72,179
Marketable securities (substantially
all U.S. Government securities) 1,314,641 1,427,186
Accounts receivable, net 91,263 89,988
Film contract and prepaid broadcast rights 81,095 95,541
Prepaid expenses and other current assets 40,082 32,545
------------ ------------
Total current assets 1,641,481 1,717,439
------------ ------------
FILM CONTRACT AND, IN 1995, PREPAID BROADCAST
RIGHTS, less current portion 15,750 50,361
------------ ------------
PROPERTY AND EQUIPMENT, net 49,191 48,338
------------ ------------
INTANGIBLE ASSETS 319,093 323,752
------------ ------------
OTHER ASSETS 39,042 19,120
------------ ------------
$ 2,064,557 $ 2,159,010
============ ============
<FN>
The accompanying notes to condensed consolidated financial statements
are an integral part of these statements.
</TABLE>
<PAGE>
Page 3
<TABLE>
PART I -- FINANCIAL INFORMATION
BHC COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
(UNAUDITED)
-------------------------------------
<CAPTION>
June 30, December 31,
1996 1995
------------ ------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' INVESTMENT
- ----------------------------------------
CURRENT LIABILITIES:
Film contracts payable within one year $ 76,923 $ 87,634
Accounts payable and other liabilities 56,338 72,906
Income taxes payable 30,005 28,429
----------- ------------
Total current liabilities 163,266 188,969
----------- ------------
FILM CONTRACTS PAYABLE AFTER ONE YEAR 63,657 86,392
----------- ------------
OTHER LIABILITIES 5,971 6,504
----------- ------------
MINORITY INTEREST 91,664 95,252
----------- ------------
SHAREHOLDERS' INVESTMENT:
Class A common stock - par value $.01 per share;
authorized 200,000,000 shares; outstanding
6,492,808 shares 65 65
Class B common stock - par value $.01 per share;
authorized 200,000,000 shares; outstanding
18,000,000 shares 180 180
Retained earnings 1,778,332 1,779,560
Treasury stock, at cost (38,142) (6,493)
Adjustment to reflect marketable
securities at market value (436) 8,581
------------ ------------
1,739,999 1,781,893
------------ ------------
$ 2,064,557 $ 2,159,010
============ ============
<FN>
The accompanying notes to condensed consolidated financial statements
are an integral part of these statements.
</TABLE>
<PAGE>
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<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,
-------------------- --------------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
OPERATING REVENUES $ 120,920 $ 120,953 $ 221,965 $ 225,428
--------- --------- --------- ---------
OPERATING EXPENSES:
Television expenses 52,843 52,547 104,660 103,619
Selling, general and administrative 31,476 29,218 61,511 58,516
--------- --------- --------- ---------
84,319 81,765 166,171 162,135
--------- --------- --------- ---------
Operating income 36,601 39,188 55,794 63,293
--------- --------- --------- ---------
OTHER INCOME (EXPENSE):
Interest and other income 20,021 18,739 42,503 39,336
Equity in United Paramount
Network loss (34,990) (28,709) (67,744) (67,112)
--------- --------- --------- ---------
(14,969) (9,970) (25,241) (27,776)
--------- --------- --------- ---------
Income before income taxes
and minority interest 21,632 29,218 30,553 35,517
INCOME TAX PROVISION 11,000 13,000 15,300 15,600
--------- --------- --------- ---------
Income before minority interest 10,632 16,218 15,253 19,917
MINORITY INTEREST (4,963) (4,964) (8,506) (8,273)
--------- --------- --------- ---------
Net income $ 5,669 $ 11,254 $ 6,747 $ 11,644
========= ========= ========= =========
AVERAGE OUTSTANDING COMMON SHARES 24,025 24,578 24,106 24,631
========= ========= ========= =========
NET INCOME PER SHARE $ .24 $ .46 $ .28 $ .47
========= ========= ========= =========
<FN>
The accompanying notes to condensed consolidated financial statements
are an integral part of these statements.
</TABLE>
<PAGE>
Page 5
<TABLE>
BHC COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
(UNAUDITED)
-----------------------------------------------
<CAPTION>
Six Months
Ended June 30,
------------------------
1996 1995
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 6,747 $ 11,644
Adjustments to reconcile net income to net cash
provided from operating activities:
Film contract payments (44,857) (45,323)
Film contract amortization 43,773 40,778
Depreciation and other amortization 9,591 9,968
Equity in United Paramount Network loss 67,744 67,112
Minority interest 8,506 8,273
Other 1,361 4,479
Changes in assets and liabilities:
Accounts receivable (1,275) 3,893
Other assets (1,745) (3,818)
Accounts payable and other liabilities (2,137) (1,402)
Income taxes 2,058 (2,787)
----------- -----------
Net cash provided from operating activities 89,766 92,817
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Disposition (purchase) of marketable securities, net 99,772 (59,609)
Investment in United Paramount Network (76,600) (83,445)
Capital expenditures (5,785) (3,259)
Other (12,890) (16)
----------- -----------
Net cash provided from (used in)
investing activities 4,497 (146,329)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividend - (24,504)
Purchases of treasury stock (32,567) (14,874)
Capital transactions of subsidiary (19,475) (15,044)
----------- -----------
Net cash used in financing activities (52,042) (54,422)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 42,221 (107,934)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 72,179 222,201
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 114,400 $ 114,267
=========== ===========
<FN>
The accompanying notes to condensed consolidated financial statements
are an integral part of these statements.
</TABLE>
<PAGE>
Page 6 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 (75% at June 30, 1996) subsidiary of Chris-Craft
Industries, Inc., operates eight television stations, three wholly
owned and five owned by United Television, Inc., 58% owned by BHC at
June 30, 1996. The interest of UTV shareholders other than BHC in the
net income 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 for a fair
statement of the results for the interim periods. 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 June 30, 1996, BHC's marketable securities, which consisted
substantially of U.S. Government securities, had a carrying value of
$1,316,081,000 and a fair value of $1,314,641,000. The difference of
$1,440,000 ($436,000 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, 80% mature within one year, 99% within
two years and all within three years.
<PAGE>
Page 7
At December 31, 1995, BHC's marketable securities, which
consisted substantially of U.S. Government securities, had a carrying
value of $1,413,465,000 and a fair value of $1,427,186,000. The
difference of $13,721,000 ($8,581,000 net of income taxes and minority
interest) is reflected as an increase to shareholders' investment in
the accompanying condensed consolidated balance sheet.
3. UNITED PARAMOUNT NETWORK:
In July 1994, BHC, along with Viacom Inc.'s Paramount Television
Group, formed the United Paramount Network, a fifth broadcast
television network which premiered in 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.
UPN has been organized as a partnership, and BHC's partnership
interest is accounted for under the equity method. The carrying value
of such interest totalled $10,982,000 at June 30, 1996 and $2,121,000
at December 31, 1995 and is included in other assets in the
accompanying condensed consolidated balance sheets. UPN is still in
its infancy, and the cost of developing UPN is expected to remain
significant for several years.
UPN's condensed consolidated statements of operations for the
three and six months ended June 30, 1996 are as follows (in
thousands):
Three Months Ended Six Months Ended
June 30, 1996 June 30, 1996
------------- -------------
Operating revenues* $ 14,156 $ 25,064
Operating expenses* 49,152 91,754
---------- ----------
Operating loss (34,996) (66,690)
Other income (expense) 6 (1,054)
---------- ----------
Loss before interest
on BHC advances (34,990) (67,744)
Interest on BHC advances
(eliminated in consolidation) (3,248) (5,771)
---------- ----------
Net loss $ (38,238) $ (73,515)
========== ==========
* With respect to certain of its programming, UPN derives no
revenue and incurs no programming expense.
<PAGE>
Page 8
4. SHAREHOLDERS' INVESTMENT:
As of June 30, 1996, there were outstanding 18,000,000 shares of
Class B common stock, all held by Chris-Craft, and 6,020,000 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 341,100
Class A common shares purchased by BHC during 1996. In January 1996,
BHC's Board of Directors authorized the purchase of up to an
additional 1,300,000 shares of Class A common stock. At June 30,
1996, 1,544,513 shares of Class A common stock remain authorized for
purchase.
Capital transactions of subsidiary, as set forth in the
accompanying condensed consolidated statements of cash flows, reflect
purchases by UTV of its common shares totalling $17,479,000 and
$12,887,000 in the first six months of 1996 and 1995, respectively,
net of proceeds from the exercise of stock options, as well as UTV's
dividend of $.50 per share in both periods, all net of intercompany
eliminations.
5. COMMITMENTS:
Commitments of BHC's television stations for film contracts
entered into but not available for broadcasting at June 30, 1996
aggregated approximately $236.9 million, including $59.7 million
applicable to UTV. BHC also has a remaining commitment to invest over
time up to $60.5 million, including $37.3 million applicable to UTV,
in management buyout limited partnerships.
BHC is expected to make significant expenditures developing UPN.
See Note 3.
<PAGE>
Page 9
BHC COMMUNICATIONS, INC.
------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------
Liquidity and Capital Resources
- -------------------------------
BHC's financial position is strong and highly liquid. Cash and
marketable securities totalled $1.43 billion at June 30, 1996, and BHC
has no debt outstanding. BHC is currently expending significant funds
to develop the United Paramount Network, but cash flow provided from
BHC's operating activities has substantially exceeded BHC's UPN
funding since the network's January 1995 launch.
BHC's operating cash flow is generated primarily by its core
television station group. Broadcast cash flow reflects station
operating income plus depreciation and film contract amortization less
film contract payments. The relationship between film contract
payments and related amortization may vary greatly between periods
(payments exceeded amortization by $1.1 million and $4.5 million,
respectively, in the first six months of 1996 and 1995), and is
dependent upon the mix of programs aired and payment terms of the
stations' contracts. Reflecting such $3.4 million variance between
the six month periods of 1996 and 1995, broadcast cash flow declined
10%, to $70.3 million from $78.5 million in 1995, while station
earnings declined 15%, as explained below. Although broadcast cash
flow is often used in the broadcast television industry as an
ancillary measure, it is not synonymous with operating cash flow
computed in accordance with generally accepted accounting principles,
and should not be considered alone or as a substitute for measures of
performance computed in accordance with generally accepted accounting
principles.
BHC's cash flow additionally reflects earnings associated with its
cash and marketable securities. Cash and marketable securities
totalled $1.43 billion at June 30, 1996, compared to $1.5 billion at
December 31, 1995, which decrease includes a $15.2 million marketable
securities net valuation adjustment. Six month operating cash flow of
$89.8 million was more than offset by UPN funding of $76.6 million and
treasury stock purchases by BHC and UTV totalling $53.5 million.
Special cash dividends of $2.00 per share, totalling $51.9 million,
and $1.00 per share, totalling $24.5 million, were paid on BHC's Class
A and Class B common stock, in January 1993 and April 1995,
respectively. BHC has no plan to pay regular dividends.
<PAGE>
Page 10
Since April 1990, BHC's Board of Directors has authorized the purchase
of up to 6,800,000 Class A common shares. Through June 30, 1996,
5,255,487 shares were purchased for a total cost of $328.0 million,
including $31.5 million in 1996. From 1993 through June 30, 1996, UTV
purchased 1,224,276 of its common shares at an aggregate cost of $72.5
million, and at June 30, 1996, 959,749 UTV shares remained authorized
for purchase.
BHC intends to expand its operations in the media, entertainment and
communications industries and to explore business opportunities in
other industries. BHC 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, along with Viacom Inc.'s Paramount Television
Group, formed UPN, a fifth broadcast television network which
premiered in January 1995. BHC currently owns 100% of UPN, and
accounts for UPN under the equity method, since 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. BHC expenditures related to UPN totalled $128.6
million in 1995 and $76.6 million in the first six months of 1996.
UPN is still in its infancy, and the cost of developing UPN is
expected to remain significant for several years.
BHC's television stations make commitments for programming that will
not be available for telecasting until future dates. At June 30,
1996, commitments for such programming totalled approximately $236.9
million, including $59.7 million applicable to UTV. BHC also has a
remaining commitment to invest over time up to $60.5 million,
including $37.3 million applicable to UTV, in management buyout
limited partnerships. BHC capital expenditures generally have not
been material in relation to its financial position, and the related
capital expenditure commitments at June 30, 1996 (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 second quarter net income totalled $5,669,000, or $.24 per share,
compared to $11,254,000, or $.46 per share, in last year's second
quarter. The decline in net income primarily reflects lower earnings
<PAGE>
Page 11
at BHC's core television station group and a larger start-up loss at
BHC's United Paramount Network.
While UPN's loss for the first six months of 1996 was about the same
as in last year's corresponding period, BHC six month net income
declined to $6,747,000, or $.28 per share, from last year's
$11,644,000, or $.47 per share, primarily due to lower station group
earnings.
In several of BHC's most important markets, demand for television
advertising continued to be lackluster and market share was lower,
and, accordingly, BHC station group revenues declined 2% in the
second quarter, to $118,463,000 from $120,953,000. Station earnings
declined 7%, to $42,450,000 from $45,683,000 and, after corporate
office expenses and other operating activities, operating income
accordingly declined 7%, to $36,601,000 from $39,188,000. For the
first six months of 1996, station group earnings declined 15%, to
$67,018,000 from $78,386,000, reflecting a 4% decline in station
operating revenues and a 6% increase in station programming expenses,
most of which increase occurred in the first quarter. Operating
income for the period declined 12%, to $55,794,000 from $63,293,000,
as the decline in station earnings was partially offset by improved
results at BHC's television production subsidiaries.
UPN's second quarter loss increased to $34,990,000 from last year's
$28,709,000, reflecting the expansion of the network's prime time
schedule from two to three weekday evenings. UPN's six month loss of
$67,744,000 was about even with last year's $67,112,000, as the
increase in UPN's second quarter loss was offset by promotion expenses
related to the network's January 1995 launch recorded in last year's
first quarter.
Interest and other income rose to $20,021,000 from $18,739,000 in the
second quarter, and to $42,503,000 from $39,336,000 in the six month
period, primarily reflecting marketable securities gains.
Minority interest reflects the interest of shareholders other than BHC
in the net income of UTV, 58% owned at June 30, 1996 and 56% owned at
June 30, 1995.
<PAGE>
Page 12
BHC COMMUNICATIONS, INC.
------------------------
PART II. OTHER INFORMATION
--------------------------
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 26, 1996.
The following were elected directors, each receiving the numbers
of votes set opposite his or her name:
Broker
For Withheld Non-votes
--- -------- ---------
Laurence M. Kashdin 184,184,782 128,218 -0-
Joelen K. Merkel 184,256,032 56,968 -0-
Herbert J. Siegel 184,254,427 58,573 -0-
The selection of Price Waterhouse LLP as BHC's auditors for the
current year was ratified by the following vote:
Broker
For Against Abstain Non-votes
--- ------- ------- ---------
184,290,869 10,466 11,685 -0-
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.
<PAGE>
Page 13
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 14, 1996
<PAGE>
Page 14
EXHIBIT INDEX
Incorporated by
Reference to: Exhibit No. Exhibit
- ------------- ----------- -------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 114400
<SECURITIES> 1314641
<RECEIVABLES> 97131
<ALLOWANCES> 5868
<INVENTORY> 0
<CURRENT-ASSETS> 1641481
<PP&E> 137094
<DEPRECIATION> 87903
<TOTAL-ASSETS> 2064557
<CURRENT-LIABILITIES> 163266
<BONDS> 0
0
0
<COMMON> 245
<OTHER-SE> 1739754
<TOTAL-LIABILITY-AND-EQUITY> 2064557
<SALES> 0
<TOTAL-REVENUES> 221965
<CGS> 0
<TOTAL-COSTS> 166171
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 30553
<INCOME-TAX> 15300
<INCOME-CONTINUING> 6747
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6747
<EPS-PRIMARY> .28
<EPS-DILUTED> 0
</TABLE>
