10-Q 1 utv10q.txt 033101UTV10Q PAGE 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 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, 2001 -------------- / / 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 1-8411 ----------------------------- UNITED TELEVISION, INC. ----------------------- (Exact name of registrant as specified in its charter) DELAWARE 41-0778377 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 132 S. Rodeo Drive, Fourth Floor, Beverly Hills, CA 90212 ---------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (310) 281-4844 -------------- (Registrant's telephone number, including area code) Not Applicable -------------- (Former name, former address and former fiscal year, if changed since last report) 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 May 8, 2001, there were 9,560,953 shares of the registrant's common stock outstanding. Page 2 PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements. --------------------- UNITED TELEVISION, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited - in thousands)

Page 4 UNITED TELEVISION, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited - in thousands except per share data)

Page 5 UNITED TELEVISION, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited - in thousands)

Page 6 UNITED TELEVISION, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. PRINCIPLES OF CONSOLIDATION: UTV is a majority owned (57.8% at March 31, 2001) subsidiary of BHC Communications, Inc. (BHC), a majority owned subsidiary of Chris-Craft Industries, Inc. (Chris-Craft). The accompanying condensed consolidated financial statements include the accounts of UTV and its subsidiaries after elimination of all significant intercompany accounts and transactions. Preparation of financial statements in accordance with generally accepted accounting principles requires the use of management estimates and assumptions. Actual results could differ from those estimates. The financial information included herein has been prepared by UTV, 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, UTV 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 UTV'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 this interim period are not necessarily indicative of results to be expected for the full fiscal year, due to seasonal factors, among others. 2. MARKETABLE SECURITIES: All of UTV's marketable securities have been categorized as available for sale and as a result are carried at fair market value. At March 31, 2001, of the investments in U.S. Government securities, 77% mature within seven months and all within 18 months. Marketable securities classified by security type are as follows (in thousands): Gross Unrealized ---------------- Cost Gains Losses Fair Value -------- ------- ------ ---------- March 31, 2001 U.S. Government securities $109,086 $ 694 $ - $109,780 Equity securities 10,739 406 144 11,001 -------- ------- ------ -------- $119,825 $ 1,100 $ 144 $120,781 ======== ======= ====== ======== Page 7 Gross Unrealized ---------------- Cost Gains Losses Fair Value -------- ------- ------ ---------- December 31, 2000: U.S. Government securities $104,542 $ 334 $ 8 $104,868 Equity securities 10,721 591 268 11,044 -------- ------- ------ -------- $115,263 $ 925 $ 276 $115,912 ======== ======= ====== ======== The difference between cost and fair value, net of taxes, is reflected as an increase to shareholders' investment in the accompanying balance sheets. For purposes of computing realized gains and losses, cost is determined using the specific identification method. For the three months ended March 31, 2001, UTV realized marketable securities gains of $300,000. 3. SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for income taxes for the first quarter of 2001 and 2000 totaled $984,000 and $153,000, respectively. 4. COMPREHENSIVE INCOME: Other comprehensive income includes only unrealized gains and losses on marketable securities classified as available for sale (see Note 2), net of reclassification adjustments for gains included in net income. Comprehensive income is as follows (in thousands): Three Months Ended March 31, ------------------- 2001 2000 -------- -------- Net income $ 7,019 $ 9,134 Other comprehensive income, net of taxes 186 242 -------- -------- Comprehensive income $ 7,205 $ 9,376 ======== ======== Page 8 5. COMMITMENTS: The aggregate amount payable by UTV under contracts for programming not currently available for telecasting at March 31, 2001, and, accordingly, not included in film contracts payable and the related contract rights in the accompanying Condensed Consolidated Balance Sheets, totaled $89,583,000. UTV remains obligated for possible future consideration relating to the 1999 purchase of UHF station WRBW in Orlando, Florida of up to $25,000,000. 6. PENDING MERGER: As reported in UTV's Current Report on Form 8-K, dated August 23, 2000, UTV, BHC and Chris-Craft have each agreed to be acquired by The News Corporation Limited ("News Corp.") for consideration consisting of cash and News Corp. American depositary preferred shares. Subject to limitations set forth in the respective merger agreements, UTV, BHC and Chris-Craft stockholders may elect to receive the consideration as all cash, all stock or a combination thereof. Shareholders of each of UTV, BHC and Chris-Craft approved the mergers at a special meeting of shareholders held on April 24, 2001. The only matter considered at the UTV special meeting was the approval and adoption of the Agreement and Plan of Merger dated August 13, 2001, as amended, among UTV, News Corp., News Publishing Australia Limited and Fox Television Holdings, Inc. This matter was approved, with the following votes cast: For 8,641,520 Against 182,766 Withheld 6,196 Broker non-votes -0- Consummation of each transaction is subject to receipt of Federal Communications Commission approvals and satisfaction of other customary conditions. The parties anticipate that the transactions will be completed in the first half of 2001. Page 9 UNITED TELEVISION, INC. AND SUBSIDIARIES Item 2. Management's Discussion and Analysis of Financial ------------------------------------------------- Condition and Results of Operations. ------------------------------------ Liquidity and Capital Resources ------------------------------- UTV's operating cash flow is generated primarily by its television broadcasting operations and generally parallels the earnings of UTV television stations, adjusted to reflect the difference between film contract payments and film contract amortization. The relationship between such payments and amortization may vary greatly between periods (amortization exceeded payments by $2,113,000 in the first quarter of 2001, and by $1,891,000 in the first quarter of 2000) and is dependent upon the mix of programs aired and payment terms of the stations' contracts. UTV stations generated substantial cash flow in the first quarter of 2001, and are expected to do the same for the full year. With its considerable cash and marketable securities balances, UTV continues to be well positioned to deal effectively with uncertainties that may arise in the television broadcasting industry or economic environment. UTV's cash flow is augmented by interest and dividend income associated with its cash and marketable securities. UTV's cash flow from operations for the first quarter of 2001 totaled $20,269,000, and cash and marketable securities increased $20,978,000 to $256,817,000 at March 31, 2001. UTV remains obligated for possible future consideration relating to the 1999 purchase of WRBW in Orlando, Florida of up to $25,000,000. Working capital increased $11,508,000 during the first quarter of 2001 to $258,003,000 at March 31, 2001. Working capital at March 31, 2001 remains substantially in excess of UTV's normal operating requirements. Page 10 UTV regularly makes current commitments for programming that will not be available for telecasting until future dates and had commitments for payments for such programming totaling $89,583,000 at March 31, 2001. UTV expects to continue to satisfy these commitments in the ordinary course of business. UTV's Board of Directors has from time to time authorized the purchase of UTV common shares. At March 31, 2001, purchase of an additional 721,249 shares was so authorized. From January 1, 1999, through March 31, 2001, 8,400 shares were purchased for an aggregate cost of $828,000. No shares were purchased during the first quarter of 2001 and UTV's merger agreement with News Corp. (see Note 6) prohibits any such purchases while the agreement is in effect. UTV's commitments for capital expenditures at March 31, 2001 were not material in relation to UTV's financial position. UTV's stations are continuing the process of converting to digital television (DTV). This conversion requires the purchase of digital transmitting equipment to telecast over a newly assigned frequency. Four of UTV's seven stations have made the initial conversion to DTV signal transmission. This conversion rollout is expected to take a number of years and will be subject to competitive market conditions. Funds for capital expenditures have generally been provided from operations. UTV expects that future capital expenditures for its present business, including the remaining DTV conversion cost, will be funded from operations or current cash balances. UTV has no present requirement for additional capital. Quantitative and Qualitative Disclosures about Market Risk ---------------------------------------------------------- UTV is subject to certain market risk related to its marketable securities holdings, which are all held for other than trading purposes. The table below provides information as of March 31, 2001 about the U.S. Government securities, which are subject to interest rate sensitivity, and the equity securities, which are subject to equity market sensitivity (in thousands): Cost Fair Value -------- ---------- U.S. Government securities $109,086 $109,780 Equity securities 10,739 11,001 All of UTV's marketable securities have been categorized as available for sale and are comprised substantially of U.S. Government securities, 77% of which mature within seven months and all within 18 months. (See Note 2 of Notes to Condensed Consolidated Financial Statements.) Page 11 Results of Operations --------------------- UTV's primary source of revenue is the sale to advertisers of time on its seven television stations. First quarter 2001 net income decreased 23% to $7,019,000, or $.74 per basic share ($.73 per diluted share), from $9,134,000, or $.96 per basic and diluted share, in last year's first quarter. Weak revenue, coupled with an increase in expenses, accounted for the decrease. Consolidated net revenues fell 6% for the quarter to $50,565,000, from $53,939,000 last year. The decrease reflected a 12% decrease in national advertising revenues. The revenue decrease reflected a general weakness in advertiser expenditures throughout the television industry. Consolidated operating expenses rose 3%. Program expenses rose only slightly from the prior year quarter. Operating income decreased 37% to $7,913,000, from last year's $12,617,000. Interest and other income for the quarter was $3,781,000, compared to $2,617,000 in 2000. Item 3. Quantitative and Qualitative Disclosures about Market Risk. ----------------------------------------------------------- The information appearing in the Management's Discussion and Analysis under the caption "Quantitative and Qualitative Disclosures about Market Risk" is incorporated herein by this reference. Page 12 UNITED TELEVISION, INC. AND SUBSIDIARIES PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. --------------------------------- (a) A Form 8-K was filed April 12, 2001. The item numbers reported were 5 and 7. (b) A Form 8-K was filed April 24, 2001. The item numbers reported were 5 and 7. 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. UNITED TELEVISION, INC. (Registrant) Date: May 14, 2001 By: /s/ Garth S. Lindsey ------------ ----------------------------- Garth S. Lindsey Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

UNITED TELEVISION INC 10-Q