-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RyvQlz9zqvTQpWFPOPwatvVjy/+Ct4aXcugYGAdQkowHQdg2E/CGeU9VlYd0CW41 KHyuomgUuX1ytnBXGP7H6A== 0000895759-01-000012.txt : 20010322 0000895759-01-000012.hdr.sgml : 20010322 ACCESSION NUMBER: 0000895759-01-000012 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010321 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHRIS CRAFT INDUSTRIES INC CENTRAL INDEX KEY: 0000020067 STANDARD INDUSTRIAL CLASSIFICATION: TELEVISION BROADCASTING STATIONS [4833] IRS NUMBER: 941461226 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 001-02999 FILM NUMBER: 1573015 BUSINESS ADDRESS: STREET 1: 767 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10153 BUSINESS PHONE: 2124074898 MAIL ADDRESS: STREET 1: 5355 TOWN CENTER ROAD STREET 2: SUITE 200 CITY: BOCA RATON STATE: FL ZIP: 33486 FORMER COMPANY: FORMER CONFORMED NAME: NATIONAL AUTOMOTIVE FIBRES INC DATE OF NAME CHANGE: 19681112 10-K405 1 0001.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------- FORM 10-K FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2000 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 1-2999 CHRIS-CRAFT INDUSTRIES, INC. (Exact name of registrant as specified in its charter) Delaware 94-1461226 (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 Securities registered pursuant to Section 12(b) of the Act: Name of each Exchange Title of each class on which registered Convertible Preferred Stock New York Stock Exchange $1.40 cumulative dividend Pacific Exchange Common Stock, $.50 par value New York Stock Exchange Pacific Exchange Securities registered pursuant to Section 12(g) of the Act: Class B Common Stock, $.50 par value (Title of class) 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 [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value of the voting stock held by non-affiliates of the registrant, as of February 28, 2001, was approximately $2,313,000,000. As of February 28, 2001, there were 27,273,688 shares of the registrant's Common Stock and 7,769,269 shares of the registrant's Class B Common Stock outstanding. 2 DOCUMENTS INCORPORATED BY REFERENCE The documents incorporated by reference into this Form 10-K and the Parts hereof into which such documents are incorporated are listed below: Document Part None. 3 PART I ITEM 1. BUSINESS. General Chris-Craft Industries, Inc. ("Chris-Craft"), the registrant, was organized in Delaware in 1928 and adopted its present name in 1962. Chris-Craft's principal business is television broadcasting, conducted through its majority owned (80% at February 28, 2001) subsidiary, BHC Communications, Inc. ("BHC"), which owns 100% of Chris-Craft Television, Inc. ("CCTV"), 100% of Pinelands, Inc. ("Pinelands") and, as of February 28, 2001, 57.9% of United Television, Inc. ("UTV"). At February 28, 2001, Chris-Craft (including BHC and UTV) had 1,274 full-time employees and 138 part-time employees. The information appearing in Note 10 of Notes to Consolidated Financial Statements in the Annual Report, Industry Segment Information, is incorporated herein by reference. Acquisition by The News Corporation Limited Chris-Craft, BHC and UTV have each agreed to be acquired by The News Corporation Limited ("News Corp.") for consideration consisting of cash and News Corp. preferred American depositary shares ("ADSs"). The mergers are structured initially as "forward mergers" as described below. For each merger to be effected as a forward merger, the parties to that merger must obtain a favorable tax ruling from the Internal Revenue Service regarding the merger and a related tax opinion from their respective legal counsel. In addition, the Federal Communications Commission ("FCC") must consent to the mergers and related reorganization transactions and the structure proposed by the parties for the ownership and operation of Chris-Craft's, BHC's and UTV's television stations following the mergers. If those tax and regulatory conditions are not met with respect to a particular merger, that merger will be restructured as a "reverse merger" as described below. If a merger is effected as a forward merger, Chris-Craft, BHC and UTV, as applicable, simultaneously with the closing of the merger, will merge into News Publishing Australia Limited, a subsidiary of News Corp. News Publishing will survive each of the forward mergers and transfer the television assets formerly held by Chris-Craft, BHC and UTV, as applicable, to a subsidiary of Fox Entertainment Group. The Fox Entertainment Group subsidiary will simultaneously transfer the title to all of the FCC licenses to Fox Television Stations, Inc. If a merger is restructured as a reverse merger, a subsidiary of Fox Entertainment Group will merge into Chris-Craft, BHC or UTV, as applicable, and Chris-Craft, BHC or UTV, as applicable, will be the surviving corporation. The Chris-Craft merger will occur first, followed by the BHC merger and then the UTV merger. Because each merger is a separate transaction, it is possible that one or more of the mergers may be effected as a forward merger, with the other mergers being effected as reverse mergers. The principal difference to stockholders between the forward mergers and the reverse mergers is that, in the forward mergers, the receipt of preferred ADSs, but not cash, by Chris-Craft, BHC or UTV stockholders will generally be tax-free for U.S. federal income tax purposes. In the reverse mergers, such receipt will be taxable. In addition, under a forward merger, the respective stockholders will have the ability to elect to receive the consideration as all cash, all stock or a combination thereof, subject to pro-ration and adjustment as described in the merger agreement related thereto. In the reverse mergers, Chris-Craft, BHC and UTV stockholders will receive more consideration than they would otherwise receive in the forward mergers; however, they will not be able to make any election as to the type of merger consideration they will receive. Chris-Craft has agreed to vote its BHC stock in favor of the acquisition of BHC by News Corp., and BHC has agreed to vote its UTV stock in favor of the acquisition of UTV by News Corp. The parties anticipate that the transactions will be completed in the first half of 2001. Closing of the transactions will be conditioned on stockholder approvals and other regulatory and contractual conditions. 4 Television Division BHC operates six very high frequency ("VHF") television stations and four ultra high frequency ("UHF") television stations, together constituting Chris-Craft's Television Division. Commercial television broadcasting in the United States is conducted on 68 channels numbered 2 through 69. Channels 2 through 13 are in the VHF band, and channels 14 through 69 are in the UHF band. In general, UHF stations are at a disadvantage relative to VHF stations, because UHF frequencies are more difficult for households to receive. This disadvantage is eliminated when a viewer receives the UHF station through a cable system. Commercial broadcast television stations may be affiliated with one of the three major national networks (ABC, NBC and CBS); three more recently established national networks (Fox Broadcasting Company ("Fox"), United Paramount Network ("UPN"), and The WB Network ("WB")), which provide substantially fewer hours of programming; or may be independent. The following table sets forth certain information with respect to BHC stations and their respective markets: Total Commercial Network Af- DMA TV Stations DMA Station and filiation/ House- DMA Operating in Cable TV Location(1) Channel holds(2) Rank(2) Market(3) Penetration(4) - ----------- ----------- ---------- -------- ------------ -------------- WWOR (5) UPN 9 6,935,610 1st 6VHF 75% Secaucus 14UHF KCOP UPN 13 5,354,150 2nd 7VHF 65% Los Angeles 10UHF KPTV UPN 12 1,017,760 23rd 4VHF 62% Portland 2UHF KMSP UPN 9 1,510,130 14th 4 VHF 55% Minne- 3 UHF apolis/ St. Paul KTVX ABC 4 732,380 36th 4 VHF 53% Salt 2 UHF Lake City KMOL NBC 4 693,810 37th 3 VHF 65% San 3 UHF Antonio KBHK UPN 44 2,431,720 5th 4 VHF 72% San 10 UHF Francisco KUTP UPN 45 1,441,660 17th 4 VHF 59% Phoenix 4 UHF WRBW UPN 65 1,126,000 21st 3 VHF 76% Orlando 9 UHF WUTB UPN 24 1,010,160 24th 3 VHF 68% Baltimore 3 UHF - ------------ (1) KCOP and KPTV are wholly owned by CCTV; WWOR is owned by Pinelands; the remaining stations are owned by UTV or wholly owned subsidiaries of UTV. (2) Designated Market Area ("DMA") is an exclusive geographic area consisting of all counties in which the home-market commercial stations received a preponderance of total viewing hours. The ranking shown is the nationwide rank, in terms of television households in DMA, of the market served by the station. Source: Nielsen Media Research television households universe estimates. (3) Additional channels have been allocated by the FCC for activation as commercial television stations in certain of these markets. Also, additional stations may be located within the respective DMAs of UTV stations but outside the greater metropolitan television markets in which UTV stations operate. (4) Cable penetration refers to the percentage of DMA television viewing households receiving cable television service, as estimated by Nielsen Media Research. (5) WWOR UPN 9 broadcasts across a tri-state area including the entire New York City metropolitan area. 5 Television stations derive their revenues primarily from selling advertising time. The television advertising sales market consists primarily of national network advertising, national spot advertising and local spot advertising. An advertiser wishing to reach a nationwide audience usually purchases advertising time directly from the national networks, "superstations" (i.e., broadcast stations carried by cable operators in areas outside their broadcast coverage area), barter program syndicators, national basic cable networks, or "unwired" networks (groups of otherwise unrelated stations whose advertising time is combined for national sale). A national advertiser wishing to reach a particular regional or local audience usually buys advertising time from local stations through national advertising sales representative firms having contractual arrangements with local stations to solicit such advertising. Local businesses generally purchase advertising from the stations' local sales staffs. Television stations compete for television advertising revenue primarily with other television stations and cable television channels serving the same DMA. There are 210 DMAs in the United States. DMAs are ranked annually by the estimated number of households owning a television set within the DMA. Advertising rates that a television station can command vary in part with the size, in terms of television households, of the DMA served by the station. Within a DMA, the advertising rates charged by competing stations depend primarily on four factors: the stations' program ratings, the time of day the advertising will run, the demographic qualities of a program's viewers (primarily age and sex), and the amount of each station's inventory. Ratings data for television markets are measured by A.C. Nielsen Company ("Nielsen"). This rating service uses two terms to quantify a station's audience: rating points and share points. A rating point represents one percent of all television households in the entire DMA tuned to a particular station, and a share point represents one percent of all television households within the DMA actually using at least one television set at the time of measurement and tuned to the station in question. Because the major networks regularly provide first-run programming during prime time viewing hours (in general, 8:00 P.M. to 11:00 P.M. Eastern/Pacific time), their affiliates generally (but do not always) achieve higher audience shares, but have substantially less advertising time ("inventory") to sell, during those hours than affiliates of the newer networks or independent stations, since the major networks use almost all of their affiliates' prime time inventory for network programming. Although the newer networks generally use the same amount of their affiliates' inventory during network broadcasts, the newer networks provide less programming; accordingly, their affiliates, as well as non-affiliated stations, generally have substantially more inventory for sale than the major-network affiliates. The newer network affiliates' and independent stations' smaller audiences and greater inventory during prime time hours generally result in lower advertising rates charged and more advertising time sold during those hours, as compared with major affiliates' larger audiences and limited inventory, which generally allow the major-network affiliates to charge higher advertising rates for prime time programming. By selling more advertising time, the new-network or independent station typically achieves a share of advertising revenues in its market greater than its audience ratings. On the other hand, total programming costs for such a station, because it broadcasts more syndicated programming than a major-network affiliate, are generally higher than those of a major-network affiliate in the same market. These differences have been reduced by the growth of the Fox network, which currently provides 15 weekly hours of programming during prime time and additional programming in other periods, and are being reduced further as the other newer networks provide expanded schedules of programming. Programming BHC's UPN stations depend heavily on independent third parties for programming, as do KTVX and KMOL for their non-network broadcasts. Recognizing the need to have a more direct influence on the quality of programming available to its stations, and desiring to participate in potential profits through national syndication of programming, BHC invests directly in the development of original programming. The aggregate amount invested in original programming through December 31, 2000 was not significant to Chris-Craft's financial position. BHC television stations also produce programming directed to meet the needs and interests of the area served, such as local news and events, public affairs programming, children's programming and sports. Programs obtained from independent sources consist principally of syndicated television shows, many of which have been shown previously on a major network, and syndicated feature films, which were either made for network television or have been exhibited previously in motion picture theaters (most of which films have been shown previously on network or cable television). Syndicated programs are sold to individual stations to be broadcast one or more times. Television stations not affiliated with a major network generally have large numbers 6 of syndication contracts; each contract is a license for a particular series or program that usually prohibits licensing the same programming to other television stations in the same market. A single syndication source may provide a number of different series or programs. Licenses for syndicated programs are often offered for cash sale (i.e., without any barter element) to stations; however, some are offered on a barter or cash plus barter basis. In the case of a cash sale, the station purchases the right to broadcast the program, or a series of programs, and sells advertising time during the broadcast. The cash price of such programming varies, depending on the perceived desirability of the program and whether it comes with commercials that must be broadcast (i.e., on a cash plus barter basis). Barter programming is offered to stations for no cash consideration, but comes with a greater number of commercials that must be broadcast and, therefore, with less inventory. Barter and cash plus barter programming reduce both the amount of cash required for program purchases and the amount of time available for sale. Although the direct impact on broadcasters' operating income generally is believed to be neutral, program distributors that acquire barter air time compete with television stations and broadcasting networks for sales of air time. Chris-Craft believes that the effect of barter on BHC television stations is not significantly different from its impact on the industry as a whole. BHC television stations are frequently required to make substantial financial commitments to obtain syndicated programming while such programming is still being broadcast by another network and before it is available for broadcast by BHC stations, or even before it has been produced. Generally, syndication contracts require the station to acquire an entire program series, before the number of episodes of original showings that will be produced has been determined. While analyses of network audiences are used in estimating the value and potential profitability of such programming, there is no assurance that a successful network program will continue to be successful or profitable when broadcast after initial network airing. Pursuant to generally accepted accounting principles, commitments for programming not available for broadcast are not recorded as liabilities until the programming becomes available for broadcast, at which time the related contract right is also recorded as an asset. BHC television stations had unamortized film contract rights for programming available for telecasting and deposits on film contracts for programming not available for telecasting aggregating $165,113,000 as of December 31, 2000. The stations were committed for film and sports rights contracts aggregating $280,100,000 for programming not available for broadcasting as of that date. License periods for particular programs or films generally run from one to five years. Long-term contracts for the broadcast of syndicated television series generally provide for an initial telecast and subsequent reruns for a period of years, with full payment to be made by the station over a period of time shorter than the rerun period. See Notes 1(C) and 9 of Notes to Consolidated Financial Statements. KTVX and KMOL are primary affiliates of their respective networks. UTV has 10-year affiliation agreements for KTVX and KMOL, which expire in 2005. Current FCC rules do not limit the duration of affiliation agreements. The licensee subsidiaries for Chris-Craft's eight UPN-affiliated stations have agreed to modify and extend the terms of their UPN affiliations to the end of the 2001-2002 season (approximately August 31, 2002). The subsidiaries have options, exercisable by December 17, 2001, to extend the affiliation term for each of their stations through the end of the 2004-2005 season (approximately August 31, 2005). An affiliation agreement gives the affiliate the right to broadcast all programs transmitted by the network. Network programs are produced either by the networks themselves or by independent production companies and are transmitted by the networks to their affiliated stations for broadcast. The affiliate must run in its entirety, together with all network commercials, any network programming the affiliate elects or is required to broadcast, and is allowed to broadcast a limited number of commercials it has sold. Subject to certain limitations contained in the affiliation agreement, an affiliate may accept or reject a program offered by the network and instead broadcast programming from another source. Rejection of a program may give the network the right to offer that program to another station in the area. For each hour of programming broadcast by the affiliate, the major networks generally have paid their affiliates a fee, specified in the agreement (although subject to change by the network), which varies in amount depending on the time of day during which the program is broadcast and other factors. Prime time programming 7 generally earns the highest fee. A network may, and sometimes does, designate certain programs to be broadcast with no compensation to the station. Sources of Revenue The principal source of revenues for BHC stations is the sale of advertising time to national and local advertisers. Such time sales are represented by spot announcements purchased to run between programs and program segments and by program sponsorship. Most advertising contracts are short-term. The relative contributions of national and local advertising to BHC's gross cash advertising revenues vary from time to time. BHC's television business is seasonal, like that of the television broadcasting business generally. In terms of revenues, generally the fourth quarter is strongest, followed by the second, third and first. Advertising is generally placed with BHC stations through advertising agencies, which are allowed a commission generally equal to 15% of the price of advertising placed. National advertising time is usually sold through a national sales representative, which also receives a commission, while local advertising time is sold by each station's sales staff. UTV has established a national sales representative organization, United Television Sales, Inc. ("UTS"), which represents nine of the ten BHC stations. Practices with respect to the sale of advertising time do not differ markedly between BHC's major network and UPN stations, although the major-network affiliated stations have less inventory to sell. Government Regulation Television broadcasting operations are subject to the jurisdiction of the FCC under the Communications Act of 1934, as amended (the "Communications Act"). The Communications Act empowers the FCC, among other things, to issue, revoke or modify broadcast licenses, to assign frequencies, to determine the locations of stations, to regulate the broadcasting equipment used by stations, to establish areas to be served, to adopt such regulations as may be necessary to carry out the provisions of the Communications Act and to impose certain penalties for violation of its regulations. BHC television stations are subject to a wide range of technical, reporting and operational requirements imposed by the Communications Act or by FCC rules and policies. The Communications Act provides that a license may be granted to any applicant if the public interest, convenience and necessity will be served thereby, subject to certain limitations, including the requirement that the FCC allocate licenses, frequencies, hours of operation and power in a manner that will provide a fair, efficient and equitable distribution of service throughout the United States. Prior to 1998, television licenses generally were issued for five-year terms, but such licenses and their renewals are now normally issued for eight years. Upon application, and in the absence of adverse questions as to the licensee's qualifications or operations, television licenses have usually been renewed for additional terms without a hearing by the FCC. An existing license automatically continues in effect once a timely renewal application has been filed until a final FCC decision is issued. KMSP UPN 9's license renewal was granted on February 11, 2000 and is due to expire on April 1, 2006. KTVX's license renewal was granted on October 9, 1998 and is due to expire on October 1, 2006. KUTP UPN 45's license renewal was granted on April 20, 1999 and is due to expire on October 1, 2006. KCOP UPN 13's license renewal was granted on January 8, 1999 and is due to expire on December 1, 2006. KBHK UPN 44's license renewal was granted on January 8, 1999 and is due to expire on December 1, 2006. KPTV UPN 12's license renewal was granted on January 28, 1999 and is due to expire on February 1, 2006. KMOL's license renewal was granted on November 12, 1998 and is due to expire on August 1, 2006. WWOR UPN 9's license renewal was granted on July 7, 1999 and is due to expire on June 1, 2007. WUTB UPN 24's license was assigned to UTV of Baltimore, Inc., a subsidiary of UTV, on January 20, 1998 and is due to expire on October 1, 2004. WRBW UPN 65's license was assigned to UTV of Orlando, Inc., a subsidiary of UTV, on July 7, 1999 and is due to expire on February 1, 2005. On August 5, 1999, the FCC adopted changes in several of its broadcast ownership rules (collectively, the "FCC Ownership Rules"). These rule changes became effective on November 16, 1999. Further changes were made in a series of orders released on January 19, 2001. 8 Among other changes, the FCC relaxed its "television duopoly" rule, which barred any entity from having an attributable interest in more than one television station with overlapping service areas. Under the new rules, one entity may have attributable interests in two television stations in the same DMA, provided that (1) one of the two stations is not among the top four in audience share, and (2) at least eight independently owned and operated commercial and noncommercial television stations will remain in the DMA, if the proposed transaction is consummated. The new rules also permit common ownership of television stations in the same DMA, if one of the stations to be commonly owned has failed, is failing, or is unbuilt, or if extraordinary public interest factors are present. To transfer ownership in two commonly owned television stations in the same DMA, it will be necessary to again demonstrate compliance with the new rules. Lastly, the new rules authorize the common ownership of television stations with overlapping signal contours as long as the stations to be commonly owned are located in different DMAs. Similarly, the FCC relaxed its "one-to-a-market" rule, which restricts the common ownership of television and radio stations in the same market. One entity now may own up to two television stations and six radio stations or one television station and seven radio stations in the same market, provided that (1) 20 independent media voices (including certain newspapers and a single cable system) will remain in the relevant market following consummation of the proposed transaction, and (2) the proposed combination is consistent with the television duopoly and local radio ownership rules. If fewer than 20 but more than 9 independent voices will remain in a market following a proposed transaction, and the proposed combination is otherwise consistent with the FCC's rules, a single entity may have attributable interests in up to two television stations and four radio stations. If these various "independent voices" tests are not met, a party generally may have an attributable interest in no more than one television station and one radio station in a market. The FCC made other changes to its rules that determine what constitutes an "attributable interest" in applying the FCC Ownership Rules. Under the new rules, a party will be deemed to have an attributable interest in a television or radio station, cable system or daily newspaper that triggers the FCC's cross-ownership restrictions, if (1) it is a non-passive investor, and it owns 5% or more of the voting stock in the media outlet or its controlling parent; (2) it is a passive investor (i.e., bank trust department, insurance company or mutual fund) and it owns 20% or more of the voting stock; or (3) its interests (which may be in the form of debt or equity (even if non-voting), or both) exceeds 33% of the total asset value of the media outlet, and it either (i) supplies at least 15% of a station's weekly broadcast hours or (ii) has an attributable interest in another media outlet in the same market. The FCC also declared that local marketing agreements, or "LMAs", now will be attributable interests for purposes of the FCC Ownership Rules. The FCC will grandfather LMAs that were in effect prior to November 5, 1996, until it has completed the review of its attribution regulations in 2004. Parties may seek the permanent grandfathering of such an LMA, on a non-transferable basis, by demonstrating that the LMA is in the public interest and that it otherwise complies with FCC Ownership Rules. Finally, the FCC eliminated (i) its "cross interest" policy, which had prohibited common ownership of a cognizable interest in one media outlet and a "meaningful" non-cognizable interest in another media outlet serving essentially the same market; and (ii) effective 60 days from publication in the Federal Register of the January 2001 orders, the "single majority shareholder" exception to the attribution rules. The single majority shareholder exception provided that if a single shareholder owned more than 50% of a media outlet's voting stock, other shareholders in that media outlet whose voting interests would otherwise have been attributable (such as 5% or more of the voting stock) would be deemed non-attributable. All interests that were deemed to be non-attributable based on the single majority shareholder exception as of the adoption date of the FCC's 2001 orders will continue to be treated as non-attributable interests. It is difficult to assess how these changes in the FCC ownership restrictions will affect Chris-Craft's broadcast business. FCC regulations further provide that a broadcast license will not be granted if that grant would result in a concentration of control of radio and television broadcasting in a manner inconsistent with the public interest, convenience or necessity. FCC rules deem such concentration of control to exist if any party, or any of its officers, directors or stockholders, directly or indirectly, owned, operated, controlled, or had an attributable interest in television stations capable of reaching, in the aggregate, a maximum of 35% of the national audience. This percentage is determined by the DMA market rankings of the percentage of the nation's television households considered within each market. Because of certain limitations of the UHF signal, however, the FCC will attribute only 50% of a market's DMA reach to owners of UHF stations for the purpose of calculating the audience reach 9 limits. Applying the 50% reach attribution rule to BHC's four UHF stations, the 10 BHC stations are deemed to reach approximately 19% of the nation's television households. The FCC is considering whether to eliminate the 50% attribution reduction under this rule for UHF stations. FCC regulations also prohibit common ownership or control between any two of ABC, NBC, CBS, and Fox, or any one of those four networks, and, under current interpretation, either UPN or WB. The FCC is considering whether to modify or eliminate this rule. The Telecom Act directed the FCC to conduct a rule-making proceeding to require the inclusion, in all television sets 13 inches or larger, of a feature (commonly referred to as the V-Chip) designed to enable viewers to block display of programs carrying a common rating and authorized the FCC to establish an advisory committee to recommend a system for rating video programming that contains sexual, violent or other indecent material about which parents should be informed, before it is displayed to children, if the television industry does not establish a satisfactory voluntary rating system of its own. On March 12, 1998, the FCC voted to accept an industry proposal providing for a voluntary ratings system of "TV Parental Guidelines" under which all video programming will be designated in one of six categories to permit the electronic blocking of selected video programming. The FCC has begun a separate proceeding to address technical issues related to the "V-Chip." The FCC has directed that all television receiver models with picture screens 13 inches or greater be equipped with "V-Chip" technology under a phased implementation beginning on July 1, 1999. Chris-Craft cannot predict how changes in the implementation of the ratings system and "V-Chip" technology will affect Chris-Craft's business. The FCC recently adopted regulations requiring increased closed-captioning of video programming. Subject to various exemptions, television stations will be required to begin broadcasting specified amounts or a specified percentage of new programs with closed captioning in the year 2000 and specified percentages of pre-rule programming commencing in 2008. New FCC video description requirements for television broadcast stations, which will take effect on April 1, 2002, require television broadcast stations in the top 25 DMAs that are affiliated with the top four networks (ABC, NBC, CBS and Fox) to provide video described programming. Mandatory video description of emergency information, which applies to all television stations and cable operators, will become effective once the Office of Management and Budget completes a separate review of this provision. FCC regulations prohibit the holder of an attributable interest in a television station from having an attributable interest in a cable television system located within the predicted coverage area of that station. FCC regulations also prohibit the holder of an attributable interest in a television station from having an attributable interest in a daily newspaper located within the predicted coverage area of that station. The FCC intends to conduct a rule-making proceeding to consider possible modification of this latter regulation. FCC regulations implementing the Cable Television Consumer Protection and Competition Act of 1992 (the "1992 Cable Act") require each television broadcaster to elect, at three-year intervals beginning June 17, 1993, either to (i) require carriage of its signal by cable systems in the station's market ("must-carry") or (ii) negotiate the terms on which such broadcast station would permit transmission of its signal by the cable systems within its market ("retransmission consent"). In June 1997, the U.S. Supreme Court upheld the constitutionality of the must-carry provisions. The FCC has taken a number of steps to implement digital television service ("DTV") (including high definition) in the United States. In December 1996, the FCC adopted a DTV broadcast standard. On February 17, 1998, the FCC affirmed an amended table of digital channel allotments and rules for the implementation of DTV, initially adopted in 1997. The digital table of allotments provides each existing television station licensee or permittee with a second broadcast channel to be used during the transition to DTV, conditioned upon the surrender of one of the channels at the end of the DTV transition period. The DTV channels assigned to the BHC television stations are as follows: KCOP, channel 66; KBHK, channel 45; KMSP, channel 26; WWOR, channel 38; KPTV, channel 30; KMOL, channel 58; KTVX, channel 40; KUTP, channel 26; WUTB, channel 41; and WRBW, channel 41. Implementation of DTV is expected to improve the technical quality of television. Furthermore, the implementing rules permit broadcasters to use their assigned digital spectrum flexibly to provide either standard or high-definition video signals and additional services, including, for example, data transfer, subscription video, interactive materials, and audio signals, as long as they continue to provide at least one free, over-the-air television service. However, the digital table of allotments was devised on the basis of certain technical assumptions that have 10 not been subjected to extensive field testing and that, along with specific digital channel assignments, may be subjected to further administrative and judicial review. Conversion to DTV may reduce the geographic reach of the BHC television stations or result in increased interference, with, in either case, a corresponding loss of population coverage. DTV implementation will impose additional costs on BHC, primarily due to the capital costs associated with construction of DTV facilities, and increased operating costs, both during and after the transition period. In addition, the Telecommunications Act requires the FCC to assess and collect a fee for any use of a broadcaster's DTV channel for which it receives subscription fees or other compensation other than advertising revenue. The FCC has set a target date of 2006 for expiration of the transition period, subject to biennial reviews to evaluate the progress of DTV, including the rate of consumer acceptance. The FCC has recently ruled that a television broadcaster may demand must-carry of its digital signal on cable systems if its analog station is not being carried on the cable system. This digital must-carry rule applies only to a single stream of programming that is provided free over the air and specifically does not apply to ancillary and supplementary services. On January 18, 2001, the FCC adopted rules resolving a number of technical and legal matters related to whether cable television operators should be required to carry digital television signals, in addition to the currently required carriage of stations' analog signals. The FCC tentatively concluded that a dual channel carriage requirement may impermissibly burden a cable operator's First Amendment rights. The FCC therefore issued a further notice of proposed rulemaking to determine the need for dual carriage for a successful transition to digital television and the extent of harm to cable operators. The FCC also concluded that a digital-only television station can immediately assert its rights to carriage on a cable system and that a television station that returns its analog spectrum and converts to digital has must-carry rights on cable systems. Based on the current record, the FCC concluded that, for a digital television station, the primary video that is entitled to mandatory carriage includes a single programming stream and other program-related content. The FCC seeks comment in the further notice on the scope of "program-related" content. Some of BHC's television stations have begun broadcasting on their DTV channels, in addition to their analog broadcasts. BHC has filed applications with the FCC for permits to construct DTV facilities for each of its other stations. Future capital expenditures by Chris-Craft will be compatible with the new technology whenever possible. The FCC is conducting a rulemaking proceeding to consider relaxing or eliminating its rules prohibiting broadcast networks from (i) restricting their affiliates' rights to reject network programming, (ii) reserving an option to use specified amounts of their affiliates' broadcast time, and (iii) forbidding their affiliates from broadcasting the programming of another network; and to consider relaxing its rule prohibiting network affiliated stations from preventing other stations from broadcasting the programming of their network. Chris-Craft is unable to predict the outcome of these proceedings. The Communications Act limits the amount of capital stock that aliens (including their representatives, foreign governments, their representatives and entities organized under the laws of a foreign country) may own in a television station licensee or any corporation directly or indirectly controlling such licensee. No more than 20% of a licensee's capital stock and, if the FCC so determines, no more than 25% of the capital stock of a company controlling a licensee, may be owned, directly or indirectly, or voted by aliens or their representatives. Should alien ownership exceed this limit, the FCC may revoke or refuse to grant or renew a television station license or approve the assignment or transfer of such license. Chris-Craft believes the ownership by aliens of its stock and that of BHC and UTV to be below the applicable limit. On January 20, 2000, the FCC approved new equal employment opportunity and outreach requirements for all broadcast licensees (and cable operators). The key elements were: (1) licensees must implement a minority outreach program; (2) licensees with five or more full-time employees must place a report regarding their outreach efforts in their public inspection file annually, and, if they have more than 10 full-time employees, they must submit the last four years of these reports to the FCC at the halfway point and endpoint of their license terms, which will be subject to FCC review; (3) licensees with five or more full-time employees also must file with the FCC a "Statement of Compliance" with regard to their outreach efforts every two years; and (4) licensees with five or more full-time employees also must file annual employment reports, of the sort filed prior to 1998, which the FCC will use only to monitor minority employment. In a decision released January 16, 2001, the United States Court of Appeals for the District of Columbia Circuit struck down the outreach provisions of the new rule as unconstitutional. On January 31, the FCC suspended enforcement of the rule. The FCC has petitioned for a partial rehearing of the decision. The Communications Act prohibits the assignment of a broadcast license or the transfer of control of a licensee without the prior approval of the FCC. Legislation was introduced in the past that would impose a transfer fee on sales of broadcast properties. Although that legislation was not adopted, similar proposals, or a general spectrum licensing fee, may be advanced and adopted in the future. Recent legislation has imposed annual regulatory fees applicable to BHC stations, currently ranging as high as $35,025 per station. The foregoing does not purport to be a complete summary of all the provisions of the Communications Act or regulations and policies of the FCC thereunder. Reference is made to the Communications Act, such regulations and the public notices promulgated by the FCC for further information. 11 Other Federal agencies, including principally the Federal Trade Commission, also impose a variety of requirements that affect the business and operations of broadcast stations. Proposals for additional or revised requirements are considered by the FCC, other Federal agencies or Congress from time to time. Chris-Craft cannot predict what new or revised Federal requirements may result from such consideration or what impact, if any, such requirements might have upon the operation of BHC television stations. Competition BHC television stations compete for advertising revenue in their respective markets, primarily with other broadcast television stations and cable television channels, and compete with other advertising media as well. Such competition is intense. In addition to programming, management ability and experience, technical factors and television network affiliations are important in determining competitive position. Competitive success of a television station depends primarily on public response to the programs broadcast by the station in relation to competing entertainment, and the results of this competition affect the advertising revenues earned by the station from the sale of advertising time. Audience ratings provided by Nielsen have a direct bearing on the competitive position of television stations. In general, major network programs achieve higher ratings than other programs. There are at least five other commercial television stations in each market served by a BHC station. Chris-Craft believes that the three VHF major-network affiliates and the two other VHF stations in New York City generally attract a larger viewing audience than does WWOR UPN 9, and that WWOR UPN 9 generally attracts a viewing audience larger than the audiences attracted by the UHF stations in the New York City market. In Los Angeles, the three VHF major-network affiliates, three other VHF stations, and one UHF station generally attract a larger viewing audience than does KCOP UPN 13, and KCOP UPN 13 generally attracts a viewing audience larger than the other nine UHF stations in Los Angeles. In Portland, the three VHF major-network affiliated stations generally attract a larger audience than does KPTV UPN 12, which generally attracts an audience equal to one and larger than the other of the independent stations, both of which are UHF stations. Chris-Craft believes that, in Minneapolis/St. Paul, KMSP UPN 9 generally attracts a smaller viewing audience than the three major network-affiliated VHF stations, has a viewing audience the same size as the Fox UHF affiliate, and has a larger viewing audience than the other two stations, both of which are UHF stations. In Salt Lake City, KTVX generally ranks second of the six television stations in terms of audience share. In San Antonio, KMOL generally ranks first of the six stations in terms of audience share. Of the 14 commercial television stations in San Francisco, KBHK UPN 44 generally ranks fifth in terms of audience share, behind the three major network-affiliated VHF television stations, and the VHF Fox affiliate. KUTP UPN 45 generally ranks sixth in terms of audience share, of the eight commercial stations in the Phoenix market. WRBW UPN 65 generally ranks sixth in terms of audience share, of the twelve commercial stations in the Orlando market. In Baltimore, WUTB UPN 24 generally ranks sixth of the six commercial stations in terms of audience share. BHC stations may face increased competition in the future from additional television stations that may enter their respective markets. See note (3) to the table under Television Division. Cable television is a major competitor of television broadcasting stations. Because cable television systems operate in each market served by a BHC station, the stations are affected by rules governing cable operations. If a station is not widely accessible by cable in those markets having strong cable penetration, it may lose effective access to a significant portion of the local audience. Even if a television station is carried on a local cable system, an unfavorable channel or service tier position on the cable system may adversely affect the station's audience ratings and, in some circumstances, a television set's ability to receive the station being carried on an unfavorable channel position. Some cable system operators may be inclined to place broadcast stations in unfavorable channel locations. While Federal law has until recently generally prohibited local telephone companies from providing video programming to subscribers in their service areas, this prohibition has been substantially eliminated by the Telecom Act. The FCC has also recently adopted rules for "Open Video Systems" -- a new structure of video delivery system authorized by the Telecom Act for provision by local telephone companies and, if permitted by the FCC, others. Chris-Craft is unable to predict the outcome or effect of these developments. As of June 1999, there were approximately 60,000 subscribers to OVS systems. 12 "Syndicated exclusivity" rules allow television stations to prevent local cable operators from importing distant television programming that duplicates syndicated programming in which local stations have acquired exclusive rights. In conjunction with these rules, network nonduplication rules protect the exclusivity of network broadcast programming within the local video marketplace. The FCC is also reviewing its "territorial exclusivity" rule, which limits the area in which a broadcaster can obtain exclusive rights to video programming. Chris-Craft believes that the competitive position of BHC stations would likely be enhanced by an expansion of broadcasters' permitted zones of exclusivity. Alternative technologies could increase competition in the areas served by BHC stations and, consequently, could adversely affect their profitability. The emergence of home satellite dish antennas has made it possible for individuals to receive a host of video programming options via satellite transmission. Four direct-to-home satellite systems ("DTH") currently provide service. The number of subscribers to DTH services increased substantially during the past five years, to approximately 13.1 million as of December 1999. On November 29, 1999, the President signed the Satellite Home Viewer Improvement Act ("SHVIA"). Among other things, SHVIA provides for a statutory copyright license to enable satellite carriers to retransmit local television broadcast stations' programming into the stations' respective local markets. After May 27, 2000, satellite carriers were prohibited from delivering a local signal into their local markets--so called "local-into-local" service--without the consent or must-carry election of such stations, but stations are obligated to engage in good faith retransmission consent negotiations with the carriers. SHVIA and implementing FCC regulations do not require satellite carriers to, but provide that carriers that choose to do so must, comply with certain mandatory signal carriage requirements by January 1, 2002. Further, the Act authorizes satellite carriers to continue to provide certain network signals to unserved households, as defined in SHVIA and FCC rules, except that carriers may not provide more than two same-network stations to a household in a single day. Also, households that do not receive a signal of Grade A intensity from any of a particular network's affiliates may continue to receive distant station signals for that network until December 31, 2004, under certain conditions. The FCC has adopted several regulations, as required by SHVIA, to implement certain aspects of the Act, such as standards for good faith retransmission consent negotiations, must-carry procedures, exclusivity protection for local stations against certain distant signals, and enforcement. Certain portions of SHVIA and related regulations are currently being challenged in court. An additional challenge is now posed by wireless cable systems, including multichannel distribution services ("MDS"). Two four-channel MDS licenses have been granted in most television markets. MDS operation can provide commercial programming on a paid basis. A similar service can also be offered using the instructional television fixed service ("ITFS"). The FCC now allows the educational entities that hold ITFS licenses to lease their "excess" capacity for commercial purposes. The multichannel capacity of ITFS could be combined with either an existing single channel MDS or a newer multichannel multi-point distribution service to increase the number of available channels offered by an individual operator. At the end of 1999, wireless cable systems served about 1.5 million subscribers. The broadcasting industry is continuously faced with technological changes, competing entertainment and communications media and governmental restrictions or actions of Federal regulatory bodies, including the FCC. These technological changes may include the introduction of digital compression by cable systems that would significantly increase the number and availability of cable program services with which BHC stations compete for audience and revenue, the establishment of interactive video services, and the offering of multimedia services that include data networks and other computer technologies. Such factors have affected, and will continue to affect, the revenue growth and profitability of Chris-Craft. Industrial Division Chris-Craft Industrial Products, Inc., the wholly owned subsidiary of Chris-Craft that constitutes its Industrial Division, is primarily engaged in manufacturing plastic flexible films and distributing containment systems to the healthcare industry. These products are marketed as roll and cut stock as well as proprietary and private-label end products. The end products include plastic flexible films and water-soluble hospital laundry bags. Significant portions of the sales of the Industrial Division are to the flexible film packaging industry, composite material fabricators and health care facilities. Sales of particular items may vary widely from year to year as specifications, designs and other conditions change. The products of the Industrial Division are sold by it directly and by sales agents and distributors. 13 Sales of various kinds of plastic film to a large chemical manufacturer and major distributor equaled 22.2% and 7.1%, respectively, and sales to two health care customers equaled 8.7% and 6.6%, of 2000 Division revenues. Sales to these accounts are generally made on the basis of competitive bidding on each item sold. Similar arrangements with these customers have prevailed for a number of years. The loss of these customers, unless their business was replaced by others, would have an adverse effect on the Industrial Division. Plastic Flexible Films Flexible films manufactured by Chris-Craft are based primarily on polyvinyl alcohol polymers; some of the film products are water-soluble in their end use applications, while other applications do not require water solubility. Chris-Craft's major uses for such film are in water-soluble packaging for pre-measured amounts of chemical compounds and composite material fabrication. The films also are used in the manufacture of water-soluble hospital laundry bags. Management is aware of competition from one other domestic and several foreign producers of similar film. Another series of polyvinyl alcohol film is used as a release medium in connection with the fabrication of fiberglass-reinforced and other plastic products. For certain of these applications, Chris-Craft's film competes with those of a number of producers of other types of films. M.D. Industries, Inc., a subsidiary of the Industrial Division, markets health care products manufactured by the Division and by others, including proprietary products made for M.D. Industries. The Industrial Division is faced with keen competition in each of its product lines from other companies that manufacture and sell these products. Raw Materials Principal raw materials used by the Industrial Division include polymers and chemical additives. These have generally been readily available from many sources. ITEM 2. PROPERTIES. Television Division KCOP owns its studios and offices in two buildings in Los Angeles containing a total of approximately 54,000 square feet located on adjacent sites having a total area of approximately 1.93 acres. KCOP's transmitter is located atop Mt. Wilson on property utilized pursuant to a permit issued by the United States Forest Service. KPTV owns its studios and offices in a building in Portland, Oregon, containing approximately 45,300 square feet located on a site of approximately 2.0 acres. Its transmitter is located on its own property at a separate site containing approximately 16.18 acres. WWOR owns office and studio facilities in Secaucus, New Jersey, containing approximately 110,000 square feet on approximately 3.5 acres and leases additional office space in New York City. Along with almost all of the television stations licensed to the New York market, WWOR's transmitter is located on top of the World Trade Center in New York City pursuant to a lease agreement which expires in 2004. Physical facilities consisting of offices and studio facilities are owned by UTV in Minneapolis, Salt Lake City, San Antonio and Phoenix and are leased in Baltimore, Orlando and San Francisco. The Baltimore lease expires in April 2005 and is renewable, at increased rental, for two five-year periods. The Orlando lease expires in March 2004. The San Francisco lease expires in 2007. UTV also occupies leased facilities in various cities throughout the country. The Minneapolis facility includes approximately 49,700 square feet of space on a 5.63-acre site. The Salt Lake City facility is approximately 48,000 square feet on a 6.03-acre site. The San Antonio facility is approximately 41,000 square feet on a .92-acre site. The San Francisco facility is approximately 27,700 square feet in downtown San Francisco. The Phoenix facility is approximately 26,400 square feet on a 3.03-acre site. The 14 Orlando facility is approximately 8,750 square feet and is located at Universal Studios in Orlando. The Baltimore facility is approximately 11,700 square feet and is located in an office park in a suburb of Baltimore. Smaller buildings containing transmission equipment are owned by UTV at sites separate from the studio facilities. UTV owns a 55-acre tract in Shoreview, Minnesota, of which 40 acres are used by KMSP for transmitter facilities and tower. KTVX's analog transmitter facilities and tower are located at a site on Mt. Nelson, close to Salt Lake City, under a lease that expires in 2004. KTVX also maintains back-up analog transmitter facilities and tower at a site on nearby Mt. Vision under a lease that expires in July 2002 and is renewable, at no increase in rental, for a 50-year period. KTVX's DTV transmitting facilities are located at a site on Farnsworth Peak, close to Salt Lake City, in a facility, and on a tower, which will eventually accommodate the DTV facilities of most of the television stations in Salt Lake City. UTV is a member of the partnership that operates the facility. KMOL's transmitter facilities are located at a site near San Antonio on land and on a tower owned by Texas Tall Tower Corporation, a corporation owned in equal shares by UTV and another television station that also transmits from the same tower. KBHK's transmitter is located on Mt. Sutro, as part of the Sutro Tower complex, which also houses equipment for other San Francisco television stations and many of its FM radio stations. The lease for the Mt. Sutro facilities expires in 2005 and is renewable for two five-year periods. KUTP's transmitter facilities and tower are located on a site within South Mountain Park, a communications park owned by the City of Phoenix, which also contains transmitter facilities and towers for the other television stations in Phoenix as well as facilities for several FM radio stations. The license for this space expires in 2012. WRBW's analog transmitter facilities are located on a site near Orlando. The building containing the transmitter and the tower on which the antenna is mounted are shared with another television station as well as several FM radio stations. The lease for the tower and building expires in September 2001, and is renewable for two five-year periods. WRBW's DTV transmitting facilities are currently being constructed on another site near Orlando. The building containing the transmitter, and the tower on which the antenna is mounted, are shared with two other stations. The lease for the tower and building will expire 15 years after the commencement of the lease and is renewable for two additional 15-year periods. WRBW has an option to move its analog facilities to this same site under similar lease terms, and has begun the process. WUTB's transmitter facilities are located on a site near Baltimore. The building containing the transmitter, and the tower on which the antenna is mounted are shared with another television station. The lease for the tower and building expires in December 2004 and is renewable for a five-year period. Industrial Division As described below, the Industrial Division owns a plant in Gary, Indiana and leases facilities in Northbrook, Illinois and in South Holland, Illinois, which leases expire on October 31, 2004 and June 30, 2003, respectively. Factory and Plant Office Space Site Location Principal Product (Square Feet) (Acres) Gary IN Plastic flexible films 55,600* 5 and water-soluble hospital bags Northbrook IL Health care products 3,169 -- South Holland IL Warehouse for healthcare 32,241 -- products distribution - --------- *Chris-Craft is currently expanding operating space to 68,600 square feet. Completion is expected in 2001. Chris-Craft believes its properties are adequate for their present uses. 15 ITEM 3. LEGAL PROCEEDINGS. Montrose Chemical Corporation of California ("Montrose"), whose stock is 50% owned by Chris-Craft and 50% by a subsidiary of Astra Zeneca Inc. (f/k/a Zeneca, Inc.) ("Zeneca"), discontinued its manufacturing operations in 1983 and has since been defending claims for costs and damages relating to environmental matters. In 1983, the United States of America and the State of California instituted an action in the Federal District Court for the Central District of California, entitled United States of America et al. v. J.B. Stringfellow, et al., Case No. 83-2501 JMI (MCX), against Montrose and approximately 20 other defendants relating to alleged environmental impairment at the Stringfellow Hazardous Waste Disposal Site in California. Chris-Craft is not a defendant in this action. The action seeks to impose joint and several liability against all defendants for all costs of removal and remedial action incurred by the Federal and state governments at the site. In 1990, the United States Environmental Protection Agency ("EPA") issued a Record of Decision for the site which selected some of the interim remedial measures preferred by the EPA and the State, the estimated present value of the capital costs of which was estimated by them to be $169 million although the estimate purports to be subject to potential variations of up to 50%. Plaintiffs also seek recovery for remedial expenditures and unspecified damages for alleged harm to natural resources. In September 1998, the District Court entered a ruling now on appeal allocating liability at the site under both the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended ("CERCLA" or the "Superfund" statute) and state law. The CERCLA allocation was 65% to the State of California, 10% to the owners of the site and 25% to the generator defendants (including Montrose). The state law allocation was 100% to the State. In December 1998, the defendants (including Montrose) and the State executed a settlement agreement that establishes a framework for resolving the litigation. The agreement is subject to certain conditions, but does not contemplate any monetary contribution by Chris-Craft. In May 1998, a group of current or former residents of the vicinity of the Stringfellow Site filed suit, entitled Austin v. Stringfellow, No. 312339, California Superior Court, Riverside County, alleging personal injury and property damage from exposure to the site. A second amended complaint was filed in November 1998 on behalf of approximately 750 plaintiffs, approximately 100 of whom are minors, and names Montrose and Chris-Craft and more than 160 additional defendants. In March 2000, the court granted the defendants' motion to dismiss the complaint as to almost all of the adult defendants on statute of limitations grounds. In June 1990, the United States of America and the State of California commenced an action in the United States District Court for the Central District of California, entitled United States of America et al. v. Montrose Chemical Corporation of California et al., Civil Action No. 90-3122 AAH (JRX), against, among others, Montrose and Chris-Craft. Certain United States affiliates of Zeneca (the "Zeneca Affiliates"), as well as CBS Corporation (formerly Westinghouse Electric Corporation), which has no connection with Chris-Craft, were also named as defendants. Brought under CERCLA, plaintiffs alleged with respect to Montrose, Chris-Craft, and the Zeneca Affiliates that Montrose released hazardous substances, including DDT, into the environment in and around Los Angeles, California, including the waters surrounding the Palos Verdes 16 Peninsula, the Los Angeles-Long Beach Harbor, and the Channel Islands ("Offshore Areas"). The complaint also alleged that Westinghouse (now CBS) released PCBs into the same waters. The complaint sought a declaration that defendants are jointly and severally liable for damages (in amounts not specified) resulting from injury to natural resources caused by the alleged releases, including loss of use and costs of restoration, plus plaintiffs' costs in assessing such damages. The complaint also sought recovery of response costs incurred and to be incurred by EPA in connection with potential restoration and remediation efforts at the affected ocean areas. Although EPA has not selected any response actions, in September 2000, it undertook a "pilot capping program" whereby, on a test basis, it dropped dredged sediments from barges onto a portion of the allegedly contaminated sediments in the waters near the Palos Verdes Peninsula. Also in the complaint, plaintiffs sought to hold Montrose, Chris-Craft, and the Zeneca Affiliates jointly and severally liable for all costs incurred and to be incurred in connection with alleged hazardous substance contamination to soil and ground water at the site of Montrose's former plant in Torrance, California. Montrose and EPA are investigating the former plant site and certain other onshore areas, and evaluating potential response actions. In March 1997, the plaintiffs lodged with the District Court an amended $45.7 million settlement with the Los Angeles County Sanitation District and a series of other local governmental entities that had been sued by Montrose, Chris-Craft and other defendants as third-party defendants (the "LACSD Defendants"), which purports to cover claims both for natural resource damages and also for response costs relating to the Offshore Areas. In attempting to justify the settlement, plaintiffs said they valued their total natural resource damage and response cost claims with respect to the area of sediments at approximately $482 million. In December 1998, the plaintiffs lodged with the District Court a $9.5 million consent decree with CBS. In August 1999, the District Court approved the amended LACSD and CBS consent decrees. Chris-Craft and the other remaining defendants have appealed. On May 23, 2000, the court denied cross-motions for summary judgment brought by the plaintiffs and Chris-Craft regarding its liability. Trial on all the plaintiffs' claims against Montrose, Chris-Craft and the Zeneca Affiliates commenced on October 17, 2000. On October 27, 2000, while the trial was pending, the parties announced they had reached an agreement in principle on a partial settlement resolving all disputes concerning the Offshore Areas. On December 19, 2000, a partial consent decree was lodged which effectuates this agreement. The decree was approved by the District Court on March 15, 2001 following public comment. Under the decree, the defendants collectively have agreed to pay the plaintiffs a total of $73 million. This amount is to be paid into an escrow in two parts (Montrose paid $50 million in January 2000, with the remaining $23 million to be paid by Montrose by May 1, 2001) and subsequently turned over to the plaintiffs. The decree does not resolve the plaintiffs' claims to recover response costs expected to be incurred as a result of alleged releases of hazardous substances by Montrose to certain onshore areas. Except for approving the decree, the court has adjourned further proceedings until June 19, 2001, including ruling on the plaintiffs' claim that Chris-Craft is liable for cleanup costs at onshore areas. As to this claim, Chris-Craft contends that it is not liable and that it neither owned nor operated the facilities involved. Chris-Craft and its predecessors were shareholders of Montrose and provided certain management services to Montrose as it conducted its operations. Based on the available information, the status of the proceedings, and the applicable legal and accounting standards, Chris-Craft, in reliance on, among other things, the advice of counsel, believes that it should have no liability (under CERCLA or otherwise) for the operations of Montrose and does not presently consider liability to be "probable" in any of the Montrose-related cases. Accordingly, under Statement of Financial Accounting Standards No. 5, "Accounting for Contingencies," no amount has been reserved in Chris-Craft's financial statements. 17 Since 1984, Montrose has been complying with a Consent Order entered into with the Nevada Department of Conservation and Natural Resources Division of Environmental Protection ("DEP") requiring operation of a ground water intercept treatment system near a production facility used by Montrose until 1985 in Henderson, Nevada. The EPA and DEP are currently reconsidering whether the complex that includes the Henderson facility should be included on the National Priority List. In April 1991, and again in February and June 1996, Montrose entered into additional consent orders with DEP and other parties requiring investigation of environmental conditions at the Henderson facility. In September 1994, the EPA notified Chris-Craft that it had been designated as a "potentially responsible party" under CERCLA (a "PRP") in connection with the Diamond Alkali Superfund Site on the Passaic River in Newark, New Jersey. The EPA alleges that hazardous substances were released into the river from a facility operated by a predecessor company. The facility was located near the Diamond Alkali property, but not on the riverfront, and was sold by Chris-Craft in 1972. Chris-Craft disputes that it is a responsible party. At the request of the EPA, Maxus Energy Corp., the former owner of the Diamond Alkali property and a designated PRP at the site, is currently performing a feasibility study estimated to cost approximately $10 million to determine the extent of contamination in the area and to evaluate possible corrective actions. The Diamond Alkali Superfund Site matter does not involve Montrose, and based on the review to date by Chris-Craft and its counsel, they believe Chris-Craft has been erroneously identified as a PRP at the site; Chris-Craft is unable to determine at this stage if it could have any liability at the site. If a court ultimately rejected Chris-Craft's defenses in one or more of the foregoing matters, under CERCLA Chris-Craft might be held jointly and severally liable, without regard to fault, for response costs and natural resource damages. A party's ultimate liability at a site generally depends on its involvement at the site, the nature and extent of contamination, the remedy selected, the role of other parties in creating the alleged contamination and the availability of contribution from those parties, as well as any insurance or indemnification agreements which may apply. In most cases, both the resolution of the complex issues involved and any necessary remediation expenditures occur over a number of years. Future legal and technical developments in each of the foregoing matters will be periodically reviewed to determine if an accrual of reserves would be appropriate. Between August 14 and 21, 2000, various purported stockholders of BHC filed complaints in the Delaware Court of Chancery entitled Gissen v. BHC, et al., Civil Action No. 18209; Piven v. BHC, et al., Civil Action No. 18211; Voege v. Siegel, et al., Civil Action No. 18210; Stubbe v. BHC, et al., Civil Action No. 18217; and Rand v. BHC, et al., Civil Action No. 18229 (which collectively are referred to as the "BHC lawsuits"). During the same period, various purported stockholders of UTV filed complaints in the Delaware Court of Chancery entitled Pyenson v. UTV, et al., Civil Action No. 18222; Malamud v. UTV, et al., Civil Action No. 18218; and Rand v. UTV, et al., Civil Action No. 18235 (which collectively are referred to as the "UTV lawsuits" and, together with the BHC actions, as the "Delaware actions"). The Delaware actions assert claims against Chris-Craft, UTV, BHC, and some of their officers and directors, alleging, among other things, that Chris-Craft and/or BHC and/or UTV and the individual defendants breached their fiduciary duties to stockholders, and that certain defendants engaged in self-dealing, with respect to the News Corp. acquisitions by merger of BHC and/or UTV. The Delaware actions seek class action certification and injunctive relief against Chris-Craft, BHC and UTV or, in the alternative, to obtain rescission of the mergers or rescissory damages, and other relief. On September 25, 2000, the Court entered an order of consolidation, consolidating the BHC lawsuit as In re BHC Communications, Inc. Shareholders Litigation, Civil Action No. 18209, and directing the plaintiffs to file a consolidated amended complaint. On October 2, 2000, the Court entered an order of consolidation, consolidating the United Television lawsuit as In re United Television, Inc. Shareholders Litigation, Civil Action No. 18218, and directing that the complaint filed in Malamud v. UTV, Civil Action No. 18218, shall be 18 deemed the operative complaint in the consolidated action. A consolidated complaint and an amended consolidated complaint have been filed in connection with each of the BHC and UTV lawsuits. We were advised that all defendants in the BHC and UTV lawsuits filed motions to dismiss the complaints in the Delaware actions. The Court heard arguments on the motions to dismiss on March 14, 2001. The Court reserved its decision on the motions but informed the plaintiffs that they must respond in writing within two weeks of the oral argument date as to whether they wish to amend their complaints. No answer has been filed in the Delaware actions. Discovery has been stayed by consent, pending a decision on the motions to dismiss. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable. EXECUTIVE OFFICERS OF THE REGISTRANT. The executive officers of Chris-Craft, as of February 28, 2001, are as follows: Has served Name Positions with Chris-Craft and as officer age as of February 28, 2001 since Herbert J. Siegel Chairman of the Board and 1968 President; 72 Evan C Thompson Executive Vice President 1982 and President,Television Division; 58 John C. Siegel Executive Vice President; 48 1985 William D. Siegel Executive Vice President; 46 1985 Joelen K. Merkel Senior Vice President and 1980 Treasurer; 49 Brian C. Kelly Senior Vice President and General 1992 Counsel and Secretary; 49 The principal occupation of each of the individuals for the past five years is stated in the foregoing table. All officers hold office until the meeting of the Board following the next annual meeting of stockholders or until removed by the Board. 19 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. Chris-Craft common stock is traded on the New York Stock Exchange and the Pacific Exchange. The high and low sales prices reported in the consolidated transaction reporting system are shown below for the periods indicated. Since Chris-Craft Class B common stock is ordinarily nontransferable, there is no trading market for such class. 2000 1999 High Low High Low - ----------------------------------------------------------------------------- First Quarter 79 59 3/16 48 7/16 41 5/16 Second Quarter 70 1/2 56 7/16 49 3/4 43 7/8 Third Quarter 85 5/16 62 59 1/2 46 Fourth Quarter 86 7/8 63 7/8 78 1/4 55 7/8 Chris-Craft paid 3% stock dividends on its common stock in April 2000 and April 1999. As of February 28, 2001, there were 2,328 holders of record of common stock and 1,468 holders of record of Class B common stock. ITEM 6. SELECTED FINANCIAL DATA. (In thousands of dollars As of and for the year ended December 31, except per share data) ------------------------------------------ 2000 1999 1998 1997 1996 Operating revenue $ 528,842 $ 491,547 $ 467,093 $ 464,646 $ 465,695 ============================================================================= Operating income $ 115,232 $ 94,197 $ 94,670 $ 95,525 $ 103,268 Interest and other income, net 138,191 106,183 80,337 80,556 81,879 Equity in United Paramount Network loss (35,696) (97,344) (88,597) (87,430) (146,313) Gain on change of ownership in United Paramount Network - - - 153,933 - Income taxes 1,100 (32,300) (32,500) (99,600) (19,500) Minority interest (60,814) (28,303) (24,440) (49,483) (18,522) - ----------------------------------------------------------------------------- Net income $ 158,013 $ 42,433 $ 29,470 $ 93,501 $ 812 ============================================================================= Earnings per share - Basic $ 4.52 $ 1.21 $ .84 $ 2.70 $ .01 Diluted 3.58 .97 .67 2.13 .01 Cash and marketable securities 1,445,117 1,359,668 1,415,543 1,501,929 1,395,179 Working capital 1,580,407 1,353,942 1,387,978 1,486,556 1,418,085 Film contract rights 165,113 151,369 123,502 121,977 144,034 Investments 89,662 104,176 69,881 50,130 48,194 Total assets 2,552,209 2,345,985 2,245,423 2,226,429 2,137,259 Long-term debt - - - - - Minority interest 553,394 503,447 479,820 484,268 506,260 Shareholders' investment $1,602,202 $1,441,803 $1,408,469 $1,383,180 $1,288,918 20 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. LIQUIDITY AND CAPITAL RESOURCES Chris-Craft's financial position continues to be strong and highly liquid. Cash and marketable securities totalled $1.45 billion at December 31, 2000, and Chris-Craft has no debt outstanding. Chris-Craft's 80.0% owned television broadcasting subsidiary, BHC Communications, Inc., invested significant funds in United Paramount Network from UPN's inception in 1994 until March 31, 2000, when BHC sold its remaining 50% interest in the network. Chris-Craft's operating cash flow is generated primarily by its Television Division's 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 (amortization exceeded payments by $3.2 million in 2000 and payments exceeded amortization by $1.1 million in 1999), and is dependent upon the mix of programs aired and payment terms of the stations' contracts. Additionally, station operating income for 2000 included a non-cash $10 million programming write down. Reflecting such amounts, broadcast cash flow in 2000 increased 22%, while station earnings increased 11%, 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. Chris-Craft's cash flow additionally reflects earnings associated with its cash and marketable securities, most of which are held by BHC. Such balances rose slightly, to $1.45 billion at December 31, 2000, from $1.36 billion at December 31, 1999. Such $85 million increase reflects 2000 operating cash flow of $124.8 million, which was partially offset by final UPN net funding totalling $25.9 million, and capital expenditures totalling $14.4 million. BHC generates most of Chris-Craft's consolidated cash flow. Parent company obligations consist solely of corporate office expenditures, current and accrued. Most parent company cash flow in recent years has been provided from the receipt by Chris-Craft of its share of special dividends paid by BHC. BHC paid a $2.00 per share special cash dividend in February 2000, aggregating $45.0 million (of which Chris-Craft received $36.0 million), and a $1.00 per share special cash dividend (of which Chris-Craft received $18.0 million) in each of the previous three years. Chris-Craft, from time to time, has purchased shares of its own capital stock. No shares were purchased during 2000, and, at December 31, 2000, 586,602 common shares remained authorized for purchase. BHC, from time to time, has purchased shares of its own stock. No shares were purchased during 2000, and, at December 31, 2000, 185,497 Class A shares remained authorized for purchase. During the three year period ended December 31, 2000, UTV expended $7.8 million acquiring its own common shares. No shares were purchased during 2000, and, at December 31, 2000, 721,249 UTV shares remained authorized for purchase. In January 1998, UTV purchased the assets of UHF television station WHSW, Channel 24, in Baltimore, Maryland for $80.2 million in cash. The station's call letters were changed to WUTB, and the station became a UPN affiliate. In July 1999, UTV purchased the assets of UHF television station WRBW, Channel 65, a UPN affiliate in Orlando, Florida, for $61.3 million in cash. UTV remains obligated for possible future consideration relating to the purchase of WRBW of up to $25 million. 21 In July 1994, BHC, along with Viacom Inc.'s Paramount Television Group, formed UPN, a broadcast television network which premiered in January 1995. BHC owned 100% of UPN from its inception through January 15, 1997, when Viacom completed the exercise of its option to acquire a 50% interest in UPN, and, accordingly, BHC and Viacom shared equally in UPN's losses and funding requirements. On March 31, 2000, BHC sold for $5 million its remaining 50% interest in UPN to Viacom. As a result of the sale, BHC has no further ownership interest in the network or obligation to fund UPN's operations. UPN incurred start-up losses of $194.7 million in 1999, $177.2 million in 1998, $170.2 million in 1997, $146.3 million in 1996 and $129.3 million in 1995. BHC funding of UPN totalled $29.1 million in 2000, $106.6 million in 1999 and $88.1 million in 1998. Equity loss and other related to UPN for the year ended December 31, 2000 includes equity loss in UPN of $22,574,000, loss on sale of BHC's interest in UPN of $11,347,000 and related expenses of $1,775,000. Chris-Craft's television stations make commitments for programming that will not be available for telecasting until future dates. At December 31, 2000, commitments for such programming totalled $280.1 million, including $104.0 million applicable to UTV. Chris-Craft's capital expenditures generally have not been material in relation to its financial position, and the related capital expenditure commitments at December 31, 2000 were not material. During 2000, Chris-Craft stations continued the process of converting to digital television (DTV). This conversion requires the purchase of digital transmitting equipment to telecast over newly assigned frequencies. Six of Chris-Craft's ten 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. Chris-Craft expects that its expenditures for future film contract commitments and capital requirements for its present business, including the cost to convert to DTV, will be satisfied primarily from operations, marketable securities or cash balances. As set forth in Note 9, Chris-Craft has been named as a defendant (or a "potentially responsible party") in certain actions seeking recovery for environmental damage allegedly related to (i) the activities (discontinued since 1983) of 50% owned Montrose Chemical Corporation of California ("Montrose California") and (ii) the activities of Montrose Chemical Co., a predecessor company to Chris-Craft. As further set forth in Note 9, Chris-Craft does not presently consider liability to be "probable" in any of the Montrose California related matters and believes it has been erroneously identified as a potentially responsible party and is unable to determine at this stage if it could have any liability regarding Montrose Chemical Co. Accordingly, no amount has been reserved in Chris-Craft's financial statements relating to these matters. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Chris-Craft is subject to certain market risk relating to its marketable securities holdings, which are all held for other than trading purposes. The table below provides information as of December 31, 2000 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 $ 1,091,231 $ 1,092,975 Equity securities $ 95,909 $ 99,628 All of Chris-Craft's marketable securities have been categorized as available for sale, and are comprised substantially of U.S. Government securities, 99% of which mature in one year and all of which mature in 17 months. 22 RESULTS OF OPERATIONS - 2000 VERSUS 1999 Chris-Craft net income in 2000 rose to $158,013,000, or $4.52 per share ($3.58 per share diluted), compared to net income in 1999 of $42,433,000, or $1.21 per share ($.97 per share diluted). The substantial increase in net income resulted primarily from the December 2000 settlement with the Internal Revenue Service by BHC of a previously denied Federal income tax refund claim for $124.4 million, including interest of $42.9 million. In addition, the increase in net income reflects the elimination, subsequent to March 2000, of losses attributable to BHC's former 50% interest in UPN, which was sold by BHC in the first quarter of 2000. Television station earnings in 2000 increased 11%, to $146,952,000 from $131,808,000, reflecting solid revenue growth and a reduction of approximately $4.3 million in expense associated with stock price based retirement plans. Station operating revenues for the year rose 8%, to a record $495,273,000 from $459,938,000, and same station full year operating revenues rose 6%. The increase in station earnings was augmented by an increase, to $9,596,000 from $8,777,000, in earnings at BHC's television production subsidiaries. Corporate office expenses of BHC and UTV reflect $2.8 million of acquisition related expenses and a reduction of $1.2 million in stock price based retirement plan expense. Television Division operating income in 2000 accordingly rose 14%, to a record $131,346,000 from $114,726,000 in 1999. Industrial Division operating income rose 10% in 2000, to a record $4,607,000 from $4,204,000 in 1999. The Division's operating revenues increased 5%, to $23,338,000 from $22,200,000 in 1999, and its profit margin benefitted from improved product mix and manufacturing efficiencies. Consolidated operating income increased 22%, to a record $115,232,000 from $94,197,000. Operating income for 2000 includes a favorable swing of approximately $13.6 million of expense recorded for stock price based retirement plans, reflecting a 5% decline during 2000 in the market price of Chris-Craft's common stock together with a 54% market price increase in 1999. Additionally, 2000 operating income includes a $5.5 million favorable litigation settlement, offset by $8.8 million of expenses associated with the expected acquisitions by News Corp. of Chris-Craft, BHC and UTV. On March 31, 2000, BHC sold its 50% interest in UPN to Viacom. As a result of the sale, BHC has no further ownership interest in the network or obligation to fund UPN's operations. Losses associated with BHC's former interest in UPN declined to $35,696,000 from $97,344,000, following the sale. The 2000 amount includes equity loss in UPN of $22,574,000, loss on sale of BHC's interest in UPN of $11,347,000 and related expenses of $1,775,000. Interest and other income, which primarily includes earnings on Chris-Craft's consolidated $1.4 billion in cash and marketable securities, totalled $138,191,000, compared to $106,183,000 in 1999. The 2000 amount includes $42.9 million of interest on BHC's Federal income tax refund settlement. Net gains on securities totalled $7.5 million in 2000 and $33.1 million in 1999. Chris-Craft's income tax provisions reflect the realization of certain tax benefits, including $81.5 million recorded by BHC in December 2000 upon settlement with the IRS of the Federal income tax refund claimed for capital losses generated in 1993, and $8.8 million of corresponding state income tax refunds. In 1999, Chris-Craft's income tax provision reflected the reversal of the valuation allowance recorded in previous years, since the uncertainty of realization of those tax benefits had been removed. 23 Minority interest reflects the interest of shareholders other than Chris-Craft in the net income of BHC, 80% owned by Chris-Craft at December 31, 2000 and December 31, 1999, and 79.96% owned by Chris-Craft at December 31, 1998, and the interest of shareholders other than BHC in the net income of UTV, 57.9% owned by BHC at December 31, 2000, 58.1% owned by BHC at December 31, 1999, and 58.5% owned by BHC at December 31, 1998. RESULTS OF OPERATIONS - 1999 VERSUS 1998 Chris-Craft net income in 1999 rose to $42,433,000, or $1.21 per share ($.97 per share diluted), from net income in 1998 of $29,470,000, or $.84 per share ($.67 per share diluted). The 44% increase in net income is mostly attributable to marketable securities gains. Television station earnings in 1999 increased 7%, to $131,808,000 from $123,123,000, and rose 10% excluding expense associated with stock price based retirement plans. The increase in station earnings primarily reflects growth in station operating revenues, which more than offset modest increases in station operating expenses. Station operating revenues rose 5%, to $459,938,000 from $436,664,000, and same station operating revenues rose 4%. Station operating revenues were positively affected by generally strong demand for television advertising time, as well as the generally positive impact of UPN's improved competitive position on the prime time results of BHC's eight UPN affiliates. Nonetheless, several BHC stations recorded lower operating revenues in 1999. Station operating revenues in 1998 include retroactive network compensation recorded by our NBC affiliate upon finalization of a long-term affiliation agreement. Such compensation was offset by certain copyright royalty revenues recorded in 1999. The increase in station earnings was partially offset by a decline, to $8,777,000 from $10,202,000, in earnings at BHC's television production subsidiaries, and a $1.1 million increase in corporate office expenses of BHC and UTV. Television Division operating income in 1999 accordingly rose 5%, to $114,726,000 from $109,299,000. Excluding stock price based retirement plan expense, Television Division operating income increased 9% in 1999. Industrial Division operating income rose 15% in 1999, to a record $4,204,000 from $3,642,000 in 1998. The Division's operating revenues increased 5%, to $22,200,000 from $21,243,000 in 1998, and its profit margin was enhanced by improved product mix and manufacturing efficiencies. Consolidated operating income declined slightly, to $94,197,000 from $94,670,000, primarily due to an increase of approximately $3.2 million in corporate office stock price based retirement plan expense. Excluding all such expense, which in 1999 reflects the 54% increase in the market price of Chris-Craft common stock, consolidated operating income increased 7%. UPN's loss in 1999 widened to $194,688,000 from $177,193,000, reflecting the expansion of the network's prime time schedule to five weekday evenings from three during most of 1998, as well as ratings shortfalls and expenses related to cancelled programs earlier in 1999. BHC's 50% share of UPN's loss accordingly rose to $97,344,000 from $88,597,000 in 1998. Interest and other income, which consists mostly of amounts earned on Chris-Craft's consolidated cash and marketable securities holdings, rose significantly in 1999, to $106,183,000 from $80,337,000. The increase reflects a $27.8 million increase, to approximately $33.1 million from approximately $5.3 million, in marketable securities gains. Interest income declined slightly in 1999, due to a modest decline in the average amount of funds invested. Chris-Craft's effective income tax rate reflects in both years the realization of certain income tax benefits and, in 1999, the reversal of the valuation allowance recorded in previous years, since the uncertainty of realization of those benefits has been removed. ITEM 7A. 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. 24 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. CHRIS-CRAFT INDUSTRIES, INC. AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS: Report of Independent Accountants Consolidated Balance Sheets - December 31, 2000 and 1999 Consolidated Statements of Income - For the Years Ended December 31, 2000, 1999 and 1998 Consolidated Statements of Cash Flows - For the Years Ended December 31, 2000, 1999 and 1998 Consolidated Statements of Shareholders' Investment - For the Years Ended December 31, 2000, 1999 and 1998 Notes to Consolidated Financial Statements QUARTERLY FINANCIAL INFORMATION 25 Report of Independent Certified Public Accountants PricewaterhouseCoopers LLP 200 East Las Olas Blvd. Fort Lauderdale FL 33301 To the Board of Directors and Shareholders of Chris-Craft Industries, Inc. In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, shareholders' investment and cash flows present fairly, in all material respects, the financial position of Chris-Craft Industries, Inc. and its subsidiaries at December 31, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. /s/ PricewaterhouseCoopers LLP March 8, 2001, except as to Note 8 which is as of March 14, 2001 26 Consolidated Balance Sheets Chris-Craft Industries, Inc. and Subsidiaries December 31, (In thousands of dollars) 2000 1999 - ---------------------------------------------------------------------------- Assets Current Assets: Cash and cash equivalents $ 252,514 $ 119,427 Marketable securities (substantially all U.S. Government securities) 1,192,603 1,240,241 Income tax refund receivable 129,649 - Accounts receivable, less allowance for doubtful accounts of $4,330 and $4,676 105,595 102,292 Film contract rights 121,135 111,819 Prepaid expenses and other current assets 57,312 71,316 - ---------------------------------------------------------------------------- Total current assets 1,858,808 1,645,095 - ---------------------------------------------------------------------------- Investments 89,662 104,176 - ---------------------------------------------------------------------------- Film Contract Rights, including deposits, less estimated portion to be used within one year 43,978 39,550 - ---------------------------------------------------------------------------- Property and Equipment, at cost: Land, buildings and improvements 52,219 49,559 Machinery and equipment 131,541 132,665 - ---------------------------------------------------------------------------- 183,760 182,224 Less - Accumulated depreciation 116,569 117,185 - ---------------------------------------------------------------------------- 67,191 65,039 - ---------------------------------------------------------------------------- Intangible Assets 460,793 474,846 - ---------------------------------------------------------------------------- Other Assets 31,777 17,279 - ---------------------------------------------------------------------------- $ 2,552,209 $ 2,345,985 ============================================================================ 27 December 31, 2000 1999 - ---------------------------------------------------------------------------- Liabilities and Shareholders' Investment Current Liabilities: Film contracts payable within one year $ 107,913 $ 102,737 Accounts payable and accrued expenses 145,976 153,509 Income taxes payable 24,512 34,907 - ---------------------------------------------------------------------------- Total current liabilities 278,401 291,153 - ---------------------------------------------------------------------------- Film Contracts Payable after One Year 101,471 84,372 - ---------------------------------------------------------------------------- Other Long-Term Liabilities 16,741 25,210 - ---------------------------------------------------------------------------- Minority Interest 553,394 503,447 - ---------------------------------------------------------------------------- Commitments and Contingencies (Note 9) Shareholders' Investment: Cumulative preferred stock - Prior preferred stock - redeemed in 2000; $1.00 dividend; stated at liquidating value of $21.50 per share; outstanding 73,399 shares at December 31, 1999 - 1,578 Convertible preferred stock - $1.40 dividend; stated at $17.50 per share; currently authorized 232,809 shares; outstanding 232,809 and 234,374 shares (liquidating value $23.00 per share, aggregating $5,355) 4,075 4,102 Class B common stock - par value $.50 per share; currently authorized 50,000,000 shares; outstanding 7,832,694 and 7,997,292 shares 3,916 3,999 Common stock - par value $.50 per share; currently authorized 100,000,000 shares; outstanding 27,167,559 and 25,781,763 shares 14,375 13,682 Capital surplus 490,001 420,390 Retained earnings 1,087,149 991,398 Accumulated other comprehensive income 2,686 6,654 - ---------------------------------------------------------------------------- 1,602,202 1,441,803 - ---------------------------------------------------------------------------- $ 2,552,209 $ 2,345,985 ============================================================================ The accompanying notes to consolidated financial statements are an integral part of these statements. 28 Consolidated Statements of Income Chris-Craft Industries, Inc. and Subsidiaries Year ended December 31, (In thousands except per share data) 2000 1999 1998 - ---------------------------------------------------------------------------- Operating Revenues: Television revenues $ 505,504 $ 469,347 $ 445,850 Sales of manufactured products 23,338 22,200 21,243 - ---------------------------------------------------------------------------- 528,842 491,547 467,093 - ---------------------------------------------------------------------------- Operating Expenses: Television expenses 239,763 219,936 210,947 Cost of manufactured products sold 14,408 13,833 13,754 Selling, general and administrative 159,439 163,581 147,722 - ---------------------------------------------------------------------------- 413,610 397,350 372,423 - ---------------------------------------------------------------------------- Operating income 115,232 94,197 94,670 - ---------------------------------------------------------------------------- Other Income (Expense): Interest and other income, net 138,191 106,183 80,337 Equity loss and other related to United Paramount Network (35,696) (97,344) (88,597) - ---------------------------------------------------------------------------- 102,495 8,839 (8,260) - ---------------------------------------------------------------------------- Income before (benefit) provision for income taxes and minority interest 217,727 103,036 86,410 (Benefit) Provision for Income Taxes (1,100) 32,300 32,500 - ---------------------------------------------------------------------------- Income before minority interest 218,827 70,736 53,910 Minority Interest 60,814 28,303 24,440 - ---------------------------------------------------------------------------- Net income $ 158,013 $ 42,433 $ 29,470 ============================================================================ Weighted Average Common Shares Outstanding 34,913 34,599 34,545 ============================================================================ Earnings per Share: Basic $ 4.52 $ 1.21 $ .84 Diluted $ 3.58 $ .97 $ .67 ============================================================================ The accompanying notes to consolidated financial statements are an integral part of these statements. 29 Consolidated Statements of Cash Flows Chris-Craft Industries, Inc. and Subsidiaries Year ended December 31, ------------------------------- (In thousands of dollars) 2000 1999 1998 - ---------------------------------------------------------------------------- Cash Flows from Operating Activities: Net income $ 158,013 $ 42,433 $ 29,470 Adjustments to reconcile net income to net cash provided from operating activities: Film contract amortization 107,851 99,735 88,507 Film contract payments (104,613) (100,834) (100,824) Programming write down 10,000 - - Depreciation and other amortization 26,259 24,378 22,088 Equity loss and other related to United Paramount Network 35,696 97,344 88,597 Net gain on disposition of marketable securities (17,541) (33,123) (5,316) Minority interest 60,814 28,303 24,440 Other 4,528 (3,482) 2,486 Changes in assets and liabilities: Accounts receivable (3,303) (12,613) 1,090 Interest receivable on tax refund (44,019) - - Other assets (3,072) (5,499) 7,271 Accounts payable and other liabilities (11,245) 23,479 1,198 Income taxes (94,600) (4,056) 8,900 - ---------------------------------------------------------------------------- Net cash provided from operating activities 124,768 156,065 167,907 - ---------------------------------------------------------------------------- Cash Flows from Investing Activities: Disposition of marketable securities 539,970 463,317 414,133 Purchase of marketable securities (484,361) (484,480) (391,963) Station acquisitions (includes $58,903 and $77,646 of intangible assets) - (61,269) (80,214) Investment in United Paramount Network (25,875) (106,550) (88,100) Other investments (5,871) (21,247) (22,153) Capital expenditures (14,353) (20,616) (12,260) Other 2,937 (3,118) (1,852) - ---------------------------------------------------------------------------- Net cash provided from (used in) investing activities 12,447 (233,963) (182,409) - ---------------------------------------------------------------------------- Cash Flows from Financing Activities: Capital transactions of subsidiaries (7,971) (2,445) (56,408) Purchase of treasury stock - (11,145) (20,171) Proceeds from exercise of employee stock options 6,060 7,020 5,783 Redemption of prior preferred stock (1,835) - - Dividends on preferred stock (382) (402) (414) - ---------------------------------------------------------------------------- Net cash used in financing activities (4,128) (6,972) (71,210) - ---------------------------------------------------------------------------- Net Increase (Decrease) in Cash and Cash Equivalents 133,087 (84,870) (85,712) Cash and Cash Equivalents at Beginning of Year 119,427 204,297 290,009 - ---------------------------------------------------------------------------- Cash and Cash Equivalents at End of Year $ 252,514 $ 119,427 $ 204,297 ============================================================================ The accompanying notes to consolidated financial statements are an integral part of these statements. 30 Consolidated Statements of Shareholders' Investment Chris-Craft Industries, Inc. and Subsidiaries
Treasury Outstanding Shares Shares -------------------------------------------- -------- Class B $1.00 $1.40 Common Common Preferred Preferred Common - ----------------------------------------------------------------------------------------------------------- Balance at December 31, 1997 23,652,015 7,930,384 73,399 246,601 - Comprehensive income: Net income - - - - - Other comprehensive income: Unrealized net gain on securities (net of tax of $8,954) - - - - - Reclassification adjustment (net of tax of $1,887) - - - - - Other comprehensive income, net of tax - - - - - Total comprehensive income - - - - - Capital transactions of subsidiaries - - - - - Dividends on preferred stock - - - - - Common stock dividend - 3% 708,435 237,302 - - - Conversion of preferred stock 151,109 209,566 - (10,666) - Conversion of Class B common stock 249,315 (249,315) - - - Stock options, including related tax benefits 190,722 - - - - Acquisition of treasury stock - - - - (395,400) Retirement of treasury stock (395,400) - - - 395,400 - ----------------------------------------------------------------------------------------------------------- Balance at December 31, 1998 24,556,196 8,127,937 73,399 235,935 - Comprehensive income: Net income - - - - - Other comprehensive income: Unrealized net gain on securities (net of tax of $5,414) - - - - - Reclassification adjustment (net of tax of $11,624) - - - - - Other comprehensive income, net of tax - - - - - Total comprehensive income - - - - - Capital transactions of subsidiaries - - - - - Dividends on preferred stock - - - - - Common stock dividend - 3% 733,553 242,313 - - - Conversion of preferred stock 54,232 46 - (1,561) - Conversion of Class B common stock 373,004 (373,004) - - - Stock options, including related tax benefits 310,278 - - - - Acquisition of treasury stock - - - - (245,500) Retirement of treasury stock (245,500) - - - 245,500 - ----------------------------------------------------------------------------------------------------------- Balance at December 31, 1999 25,781,763 7,997,292 73,399 234,374 - Comprehensive income: Net income - - - - - Other comprehensive income: Unrealized net gain on securities (net of tax of $1,760) - - - - - Reclassification adjustment (net of tax of $5,629) - - - - - Other comprehensive income, net of tax - - - - - Total comprehensive income - - - - - Capital transactions of subsidiaries - - - - - Dividends on preferred stock - - - - - Common stock dividend - 3% 776,123 238,632 - - - Conversion of preferred stock 56,127 - - (1,565) - Conversion of Class B common stock 403,230 (403,230) - - - Stock options, including related tax benefits 150,316 - - - - Redemption of prior preferred stock - - (73,399) - - - ----------------------------------------------------------------------------------------------------------- Balance at December 31, 2000 27,167,559 7,832,694 - 232,809 - =========================================================================================================== Dollar Amount (In thousands) ------------------------------------------------------------------------------ Accumulated Other Common Preferred Capital Retained Treasury Comprehensive Comprehensive Stocks Stocks Surplus Earnings Stock Income Income ------------------------------------------------------------------------------ Balance at December 31, 1997 $16,582 $ 5,893 $ 343,956 $ 1,010,384 $ - $ 6,365 Comprehensive income: Net income - - - 29,470 - - $ 29,470 Other comprehensive income: -------- Unrealized net gain on securities (net of tax of $8,954) - - - - - - 12,199 Reclassification adjustment (net of tax of $1,887) - - - - - - (2,494) Other comprehensive income, -------- net of tax - - - - - 9,705 9,705 -------- Total comprehensive income - - - - - - $ 39,175 Capital transactions ======== of subsidiaries - - (924) - - - Dividends on preferred stock - - - (414) - - Common stock dividend - 3% 473 - 45,783 (46,256) - - Conversion of preferred stock 180 (186) 6 - - - Conversion of Class B common stock - - - - - - Stock options including related tax benefits 96 - 6,877 - - - Acquisition of treasury stock - - - - (19,521) - Retirement of treasury stock (198) - (19,323) - 19,521 - - ------------------------------------------------------------------------------------------ Balance at December 31, 1998 17,133 5,707 376,375 993,184 - 16,070 Comprehensive income: Net income - - - 42,433 - - $ 42,433 Other comprehensive income: -------- Unrealized net gain on securities (net of tax of $5,414) - - - - - - 7,623 Reclassification adjustment (net of Tax of $11,624) - - - - - - (17,039) Other comprehensive -------- income, net of tax - - - - - (9,416) (9,416) -------- Total comprehensive income - - - - - - $ 33,017 ======== Capital transactions of subsidiaries - - 1,474 - - - Dividends on preferred stock - - - (402) - - Common stock dividend - 3% 488 - 43,328 (43,817) - - Conversion of preferred stock 27 (27) - - - - Conversion of Class B common stock - - - - - - Stock options, including related tax benefits 155 - 10,236 - - - Acquisition of treasury stock - - - - (11,145) - Retirement of treasury stock (122) - (11,023) - 11,145 - - ------------------------------------------------------------------------------------------ Balance at December 31, 1999 17,681 5,680 420,390 991,398 - 6,654 Comprehensive income: Net income - - - 158,013 - - $158,013 Other comprehensive income: -------- Unrealized net gain on securities (net of tax of $1,760) - - - - - - 2,426 Reclassification adjustment (net of tax of $5,629) - - - - - - (6,394) Other comprehensive -------- income, net of tax - - - - - (3,968) (3,968) -------- Total comprehensive income - - - - - - $154,045 Capital transactions of ======== subsidiaries - - 1,055 - - - Dividends on preferred stock - - - (382) - - Common stock dividend - 3% 507 - 61,373 (61,880) - - Conversion of preferred stock 28 (27) (1) - - - Conversion of Class B common stock - - - - - - Stock options, including related tax benefits 75 - 7,441 - - - Redemption of prior preferred stock - (1,578) (257) - - - - ------------------------------------------------------------------------------------------ Balance at December 31, 2000 $18,291 $ 4,075 $ 490,001 $ 1,087,149 $ - $ 2,686 ==========================================================================================
The accompanying notes to consolidated financial statements are an integral part of these statements. 32 Notes to Consolidated Financial Statements Chris-Craft Industries, Inc. and Subsidiaries NOTE 1 - ----------------------------------------------------------------------------- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (A) BUSINESS AND BASIS OF PRESENTATION Chris-Craft's primary business is television broadcasting, conducted through its majority owned (80.0% at December 31, 2000 and 1999) television broadcasting subsidiary, BHC Communications, Inc. BHC wholly owned subsidiaries operate three television stations, and BHC's majority owned (57.9% at December 31, 2000 and 58.1% at December 31, 1999) subsidiary, United Television, Inc. (UTV), operates seven television stations. BHC accounted for its interest in the partnership that operated the United Paramount Network (UPN), a broadcast television network which premiered in January 1995, under the equity method. BHC recorded 100% of UPN's start-up losses from the network's 1994 inception through January 15, 1997, when Viacom Inc. completed its acquisition of a 50% interest in the partnership. Thereafter, BHC has recorded 50% of UPN's start-up losses. On March 31, 2000, BHC sold its remaining 50% interest in UPN to Viacom. As a result of the sale, BHC has no further ownership interest in the network or obligation to fund UPN's operations. The accompanying consolidated financial statements include the accounts of Chris-Craft and its subsidiaries, after elimination of all significant intercompany accounts and transactions. The pro rata interests of BHC and UTV minority shareholders in the net income and net assets of BHC and UTV are set forth as Minority Interest in the Consolidated Statements of Income and Consolidated Balance Sheets, respectively. Chris-Craft has elected to present Comprehensive Income in the Consolidated Statements of Shareholders' Investment. Such amounts have been presented net of income taxes and minority interests. Preparation of financial statements in accordance with generally accepted accounting principles requires the use of management estimates and assumptions. Actual results could differ. (B) FINANCIAL INSTRUMENTS Cash equivalents are securities having maturities at time of purchase not exceeding three months. The fair value of cash equivalents approximates carrying value, reflecting their short maturities. All of Chris-Craft's marketable securities have been categorized as available for sale and are carried at fair market value. Since marketable securities are available for current operations, all are included in current assets, as follows: Gross Unrealized ---------------- (In thousands) Cost Gains Losses Fair Value December 31, 2000: U.S. Government securities $ 1,091,231 $ 1,777 $ 33 $ 1,092,975 Other 95,909 5,275 1,556 99,628 - -------------------------------------------------------------------------- $ 1,187,140 $ 7,052 $ 1,589 $ 1,192,603 ========================================================================== 33 Gross Unrealized ---------------- (In thousands) Cost Gains Losses Fair Value December 31, 1999: U.S. Government securities $ 1,149,089 $ 35 $ 2,520 $ 1,146,604 Other 75,342 21,090 2,795 93,637 - -------------------------------------------------------------------------- $ 1,224,431 $21,125 $ 5,315 $ 1,240,241 ========================================================================== Of the U.S. Government securities held at December 31, 2000, 99% mature within one year and all within 17 months. Certain additional information related to Chris-Craft's marketable securities as of and for the years ended December 31, 2000, 1999 and 1998 is as follows: (In thousands) 2000 1999 1998 - ------------------------------------------------------------------------- Sales proceeds $ 539,970 $ 463,317 $ 414,133 Realized gains 19,702 33,153 6,018 Realized losses 2,161 30 702 Net unrealized gain 5,463 15,810 33,621 Adjustment for unrealized gain, net of deferred income taxes and minority interests $ 2,686 $ 6,654 $ 16,070 ========================================================================= For purposes of computing realized gains and losses, cost was determined using the specific identification method. (C) FILM CONTRACTS Chris-Craft's television stations own film contract rights which allow generally for limited showings of films and syndicated programs. Film contract rights and related liabilities are recorded when the programming becomes available for telecasting. Contracts are amortized over the estimated number of showings, using primarily accelerated methods as films are used, based on management's estimates of the flow of revenue and the ultimate total cost for each contract. In the opinion of management, future revenue derived from airing programming will be sufficient to cover related unamortized rights balances at December 31, 2000. The estimated costs of recorded film contract rights to be charged to income within one year are included in current assets; payments on such contracts due within one year are included in current liabilities. The approximate future maturities of film contracts payable after one year at December 31, 2000 are $51,148,000, $36,644,000, $11,360,000 and $2,319,000 in 2002, 2003, 2004 and thereafter, respectively. The net present value at December 31, 2000 of such payments, based on a 9.5% discount rate, was approximately $79,900,000. See Note 9. In the 2000 second quarter, Chris-Craft recorded an impairment charge of $10 million related to one of its programs. (D) DEPRECIATION AND AMORTIZATION Depreciation of property and equipment is generally provided on the straight-line method over the estimated useful lives of the assets, ranging from three to 40 years, except that leasehold improvements are amortized over the lives of the respective leases, if shorter. (E) INTANGIBLE ASSETS Intangible assets reflect the excess of the purchase prices of businesses acquired over net tangible assets at dates of acquisition. The carrying values of such intangibles as of December 31, 2000 and 1999 are as follows: 34 (In thousands) 2000 1999 - ------------------------------------------------------------------------- Television Division $ 460,019 $ 474,072 Industrial Division 774 774 - ------------------------------------------------------------------------- $ 460,793 $ 474,846 ========================================================================= Television Division amounts primarily relate to television station WWOR, which was acquired in 1992, and television stations WRBW and WUTB, the assets of which were acquired in 1999 and 1998, respectively, and are being amortized on a straight-line basis over 40-year periods. Accumulated amortization of intangible assets totalled $104,709,000 at December 31, 2000 and $90,650,000 at December 31, 1999. Intangible assets at December 31, 2000 and 1999 include goodwill, net of amortization, totalling $55,217,000 and $56,652,000, respectively, resulting from purchases by BHC of its own shares at prices greater than net book value. Chris-Craft reviews its long-lived assets, identifiable intangibles and goodwill and reserves for their impairment based generally upon estimated future undiscounted cash flows whenever events or changes in circumstances indicate the carrying value may not be fully recoverable. (F) REVENUE RECOGNITION AND BARTER TRANSACTIONS Revenue is recognized upon broadcast of television advertising and upon shipment of manufactured products. The estimated fair value of goods or services received by Chris-Craft's television stations in barter (nonmonetary) transactions, most of which relate to the acquisition of programming, is recognized as revenue when the air time is used by the advertiser. Barter revenue totalled $44,541,000 in 2000, $44,222,000 in 1999 and $47,654,000 in 1998. Barter expense in each year approximated barter revenue. (G) EARNINGS PER SHARE Earnings per share amounts have been computed as follows: Year ended December 31, (In thousands except per share data) 2000 1999 1998 - ------------------------------------------------------------------------- BASIC - Net income $ 158,013 $ 42,433 $ 29,470 Less: Preferred stock dividends (381) (402) (410) - ------------------------------------------------------------------------- Income available to common shareholders $ 157,632 $ 42,031 $ 29,060 ========================================================================= Weighted average common shares outstanding 34,913 34,599 34,545 ========================================================================= Basic per share amount $ 4.52 $ 1.21 $ .84 ========================================================================= 35 Year ended December 31, (In thousands except per share data) 2000 1999 1998 - ------------------------------------------------------------------------- DILUTED - Income available to common shareholders $ 157,632 $ 42,031 $ 29,060 Effect of dilutive securities - Convertible preferred stock dividend 326 329 337 Dilution of UTV net income from UTV stock options (74) (76) (82) - ------------------------------------------------------------------------- Income available assuming dilution $ 157,884 $ 42,284 $ 29,315 ========================================================================= Weighted average common shares outstanding 34,913 34,599 34,545 Effect of dilutive securities - Convertible preferred stock 8,396 8,442 8,707 Stock options 841 483 312 - ------------------------------------------------------------------------- Weighted average shares outstanding assuming dilution 44,150 43,524 43,564 ========================================================================= Diluted per share amount $ 3.58 $ .97 $ .67 ========================================================================= All securities which could dilute per share amounts are included in the computation of diluted earnings per share. (H) STOCK-BASED COMPENSATION Chris-Craft has chosen to continue to account for stock-based compensation using the intrinsic value method. See Note 6. (I) SUPPLEMENTAL CASH FLOW INFORMATION AND DISCLOSURE OF NONCASH INVESTING ACTIVITIES Cash paid for income taxes totalled $93,700,000 in 2000, $36,100,000 in 1999 and $30,600,000 in 1998. NOTE 2 - ------------------------------------------------------------------------------ UNITED PARAMOUNT NETWORK AND OTHER INVESTMENTS: In July 1994, BHC, along with Viacom Inc.'s Paramount Television Group, formed the United Paramount Network, a broadcast television network which premiered in January 1995. BHC owned 100% of UPN from its inception through January 15, 1997, when Viacom completed the exercise of its option to acquire a 50% interest in UPN, and, accordingly, BHC and Viacom shared equally in UPN's losses and funding requirements. On March 31, 2000, BHC sold its remaining 50% interest in UPN to Viacom. As a result of the sale, BHC has no further ownership interest in the network or obligation to fund UPN's operations. UPN had been organized as a partnership, and BHC's partnership interest was accounted for under the equity method. At December 31, 1999, the carrying value of such interest totalled $9,821,000, and is included in Investments on the accompanying Consolidated Balance Sheets. Equity loss and other related to UPN in the accompanying Consolidated Statements of Income totalled $35,696,000 for 36 the year ended December 31, 2000 and includes equity loss in UPN of $22,574,000, loss on sale of BHC's interest in UPN of $11,347,000, and related expenses of $1,775,000. Condensed consolidated financial statements of UPN, insofar as reflected in Chris-Craft's financial statements, are as follows: BALANCE SHEET December 31, (In thousands) 1999 - ------------------------------------------------------------------------- Current assets $ 85,531 Other assets 30,826 - ------------------------------------------------------------------------- $ 116,357 ========================================================================= Current liabilities $ 96,715 Partners' capital 19,642 - ------------------------------------------------------------------------- $ 116,357 ========================================================================= STATEMENTS OF OPERATIONS Year ended December 31, (In thousands) 2000* 1999 1998 - ------------------------------------------------------------------------- Operating revenues $ 36,535 $ 134,127 $ 96,401 Operating expenses 81,964 325,845 275,165 - ------------------------------------------------------------------------- Operating loss (45,429) (191,718) (178,764) Other income (expense), net 281 (2,970) 1,571 - ------------------------------------------------------------------------- Net loss $ (45,148) $ (194,688) $ (177,193) ========================================================================= * Reflects UPN's results of operations through March 31, 2000, the date BHC sold its remaining interest. The following information as it relates to UPN is provided in accordance with Statement of Financial Accounting Standards (SFAS) 131. See Note 10. Year ended December 31, (In thousands) 1999 1998 - ------------------------------------------------------------------------- Depreciation and amortization $ 751 $ 2,069 Capital expenditures $ 454 $ 1,565 Also included in Investments on the accompanying Consolidated Balance Sheets are Chris-Craft's other investments which it considers long-term. In December 2000, Chris-Craft recorded an impairment charge of $10 million related to these investments. 37 NOTE 3 - ----------------------------------------------------------------------------- ACCOUNTS PAYABLE AND ACCRUED EXPENSES: Accounts payable and accrued expenses consist of the following: December 31, (In thousands) 2000 1999 - ------------------------------------------------------------------------- Accounts payable $ 10,723 $ 9,830 Accrued expenses - Payroll and compensation 64,777 76,189 Deferred barter revenue 41,978 39,754 Other 28,498 27,736 - ------------------------------------------------------------------------- $ 145,976 $ 153,509 ========================================================================= NOTE 4 - ----------------------------------------------------------------------------- SHAREHOLDERS' INVESTMENT: In September 2000, Chris-Craft redeemed all 73,399 outstanding shares of its $1.00 prior preferred stock at a redemption price of $25.00 per share. Each share of $1.40 convertible preferred stock is redeemable by Chris-Craft at $40.00 and is convertible into common stock as set forth below. Chris-Craft has authorized 10,000,000 shares of preferred stock, $1.00 par value, that may be issued without further shareholder approval, in one or more series, the terms and provisions of which shall be set by the Board of Directors. Each share of Class B common stock entitles the holder to ten votes (common stock entitles the holder to one vote per share), is convertible at all times into common stock on a share-for-share basis, is not transferable except to specified persons ("Permitted Transferees") and, in general, carries the same per share dividend and liquidation rights as a share of common stock, except that the Board of Directors may in its discretion declare greater cash dividends per share on the common stock than on the Class B common stock. No additional Class B shares may be issued without further shareholder approval, except upon the conversion of $1.40 convertible preferred shares by holders of record on November 10, 1986 (the record date for the initial distribution of Class B common stock) or Permitted Transferees, or in payment of stock dividends or stock splits on outstanding shares of Class B common stock. So long as any Class B common stock is outstanding, each share of $1.40 convertible preferred stock will entitle the holder on November 10, 1986, or Permitted Transferees, to convert such share of $1.40 convertible preferred stock into 11.97643 shares of common stock and 23.95286 shares of Class B common stock, and to 252.0 votes. The foregoing special conversion and voting rights will be available to holders of $1.40 convertible preferred stock transferred after November 10, 1986 only under the same circumstances as those in which the Class B common stock is transferable. Each share of $1.40 convertible preferred stock transferred after November 10, 1986 entitles its holder (other than a Permitted Transferee) to convert such share into 35.92929 shares of common stock and 35.9 votes. Chris-Craft, from time to time, has purchased shares of its capital stock, including 1999 purchases of 245,500 shares of common stock. No shares were purchased in 2000, and, at December 31, 2000, 586,602 shares of common stock remained authorized for purchase. 38 As of December 31, 2000, shares of Chris-Craft's authorized but unissued common stock were reserved for issuance as follows: Shares - ------------------------------------------------------------------------- Conversion of Class B common stock 7,832,694 Conversion of $1.40 convertible preferred stock* 8,364,662 Stock options (including options outstanding for 3,629,386 shares) 4,969,126 - ------------------------------------------------------------------------- 21,166,482 ========================================================================= * Including Class B common shares. NOTE 5 - ----------------------------------------------------------------------------- CAPITAL TRANSACTIONS OF SUBSIDIARIES: BHC had outstanding, at December 31, 2000, 4,511,605 shares of Class A common stock and 18,000,000 shares of Class B common stock. Chris-Craft owns all outstanding Class B common shares and 10,000 Class A common shares, which represented 80% of BHC's then outstanding equity and 97.6% of BHC's voting power. From January 1990, when BHC became a public company and was 60% owned by Chris-Craft, through December 31, 1998, BHC purchased 6,895,590 shares of its Class A common stock, including 226,503 from UTV in 1998, at an aggregate cost of $516,503,000. BHC treasury stock expenditures totalled $46,305,000 in 1998. Since December 31, 1998, no additional shares were acquired by BHC. At December 31, 2000, 185,497 Class A common shares remained authorized for purchase. UTV has also acquired its own shares, expending $828,000 in 1999 and $7,010,000 in 1998, and received proceeds of $3,049,000 in 2000, $4,849,000 in 1999 and $3,579,000 in 1998 from the exercise of stock options. There were no shares acquired by UTV in 2000. Such transactions, together with BHC special dividends of $2.00 per share in 2000, and $1.00 per share in 1999 and 1998, and UTV dividends of $.50 per share in 2000, 1999 and 1998, are reflected in the accompanying Consolidated Statements of Cash Flows and Consolidated Statements of Shareholders' Investment under the caption Capital transactions of subsidiaries, net of intercompany eliminations and minority interests. NOTE 6 - ----------------------------------------------------------------------------- STOCK OPTIONS: Under the 1999 Management Incentive Plan, adopted by Chris-Craft shareholders in May 1999, options (including Incentive Stock Options) to purchase shares of common stock may be granted from time to time to employees of Chris-Craft and its subsidiaries, at prices not less than the fair market value at date of grant. The 1999 Plan replaced a similar plan, the 1994 Plan, which was terminated with respect to the grant of additional options when the 1999 Plan became effective. One grant of options under the 1999 Plan is exercisable in 50% installments commencing four years from date of grant. All other options are exercisable in cumulative annual installments of 33 1/3% commencing one year from date of grant. Options expire over a period determined by the Plan Committees, which may not exceed ten years from date of grant. Options currently outstanding expire either five or ten years from date of grant. Both the 1999 Plan and the 1994 Plan permit the Plan Committees to award stock appreciation rights to holders of options granted under the Plans. Such rights entitle the holders, in lieu of exercising their options, to receive payment from Chris-Craft in cash, stock or a combination thereof, equal to the greater of the appreciation in market value or book value of the shares covered by exercisable options. No stock appreciation rights have been awarded under either Plan. 39 Transactions under the two Plans during the three years ended December 31, 2000 were as follows: Weighted Average (In thousands of dollars except Shares under Exercise per share data) Option Price Total - ----------------------------------------------------------------------------- Outstanding, December 31, 1997 1,050,511 $ 31.72 $ 33,321 Increase to reflect 3% stock dividend 30,333 - - Granted 122,500 $ 51.31 6,285 Exercised (174,571) $ 31.21 (5,449) - ----------------------------------------------------------------------------- Outstanding, December 31, 1998 1,028,773 $ 33.20 34,157 Increase to reflect 3% stock dividend 76,300 - - Granted 2,716,800 $ 51.14 138,947 Exercised (364,618) $ 30.78 (11,222) Cancelled (7,897) $ 49.89 (394) - ----------------------------------------------------------------------------- Outstanding, December 31, 1999 3,449,358 $ 46.82 161,488 Increase to reflect 3% stock dividend 103,156 - - Granted 40,000 $ 75.75 3,030 Exercised (114,514) $ 43.82 (5,018) Cancelled (57,459) $ 41.82 (2,403) - ----------------------------------------------------------------------------- Outstanding December 31, 2000 3,420,541 $ 45.93 $ 157,097 ============================================================================= Of the 3,420,541 shares subject to options under the above plans at December 31, 2000, 1,089,051 shares are subject to options currently exercisable at $28.79 to $49.83 per share that expire from June 14, 2003 through January 7, 2009. The remaining 2,331,490 shares are subject to options exercisable at $40.89 to $73.54 per share that expire from June 14, 2003 to September 27, 2009. At December 31, 2000, options for 1,297,802 shares were available for grant under the 1999 Plan. Chris-Craft received 0 common shares in 2000, 83,310 common shares in 1999 and 7,396 common shares in 1998 as partial payment of exercised options. Under the 1994 Director Stock Option Plan, a fixed number of immediately exercisable options to purchase shares of common stock are granted annually to each nonemployee director of Chris-Craft, at prices equal to fair market value at date of grant. The 1994 Director Stock Option Plan replaced a similar plan which has been terminated with respect to the grant of additional options. Transactions under the two Plans during the three years ended December 31, 2000 were as follows: Weighted Average (In thousands of dollars Shares under Exercise except per share data) Option Price Total - --------------------------------------------------------------------------- Outstanding, December 31, 1997 159,600 $ 36.87 $ 5,885 Increase to reflect 3% stock dividend 4,597 - - Granted 45,008 $ 56.50 2,542 Exercised (23,547) $ 31.46 (741) - --------------------------------------------------------------------------- Outstanding, December 31, 1998 185,658 $ 41.40 7,686 Increase to reflect 3% stock dividend 5,544 - - Granted 46,352 $ 47.00 2,178 Exercised (28,970) $ 29.66 (859) - --------------------------------------------------------------------------- Outstanding, December 31, 1999 208,584 $ 43.17 9,005 Increase to reflect 3% stock dividend 6,228 - - Granted 29,835 $ 63.00 1,880 Exercised (35,802) $ 29.16 (1,044) - --------------------------------------------------------------------------- Outstanding, December 31, 2000 208,845 $ 47.12 $ 9,841 =========================================================================== 40 Of the 208,845 shares subject to options under the 1994 Director Stock Option Plan at December 31, 2000, 131,274 are subject to options currently exercisable at $38.21 to $53.26 per share that expire from April 24, 2001 through May 2, 2003. The remaining 77,571 shares are subject to options currently exercisable at $45.63 to $63.00 per share that expire from May 3, 2004 to May 15, 2005. At December 31, 2000, options for 41,938 shares were available for grant under this plan. UTV also maintains stock option plans, and has chosen, like Chris-Craft, to continue to account for stock-based compensation using the intrinsic value method. If Chris-Craft and UTV had elected to recognize compensation expense based upon the fair value at the grant date for awards under their plans using the methodology prescribed by SFAS 123, Chris-Craft net income and earnings per share would have been the pro forma amounts as follows: Year ended December 31, (In thousands except per share amounts) 2000 1999 1998 - ----------------------------------------------------------------------------- Net income: As reported $ 158,013 $ 42,433 $ 29,470 Pro forma $ 152,058 $ 37,608 $ 28,975 Earnings per share: Basic - As reported $ 4.52 $ 1.21 $ .84 Pro forma $ 4.34 $ 1.08 $ .83 Diluted - As reported $ 3.58 $ .97 $ .67 Pro forma $ 3.44 $ .86 $ .66 These pro forma amounts may not be representative of the pro forma effect on net income in future years, since the estimated fair value of stock options is amortized over the vesting period, pro forma compensation expense related to grants made prior to 1995 is not considered and additional options may be granted in future years. The weighted average fair values of Chris-Craft options granted during 2000, 1999 and 1998 were $16.87, $11.10 and $12.24 per share, respectively, at dates of grant. The fair values of options were estimated using the Black-Scholes option pricing model with the following weighted average assumptions for the years ended December 31, 2000, 1999 and 1998, respectively: dividend yields of zero for all periods; expected volatility of 16.7%, 17.6% and 15.6%; risk free interest rates of 6.6%, 5.1% and 5.4%; and expected option life of 3.5, 3.5 and 3.9 years. NOTE 7 - ----------------------------------------------------------------------------- RETIREMENT PLANS: Chris-Craft and UTV maintain noncontributory defined benefit pension plans covering substantially all their employees. Benefits accrue annually based on compensation paid to participants each year. The funding policy is to contribute annually to the plans amounts sufficient to fund current service costs and to amortize any unfunded accrued liability over periods not to exceed 30 years. The estimated funded status of the Chris-Craft and UTV plans, including amounts accrued in the nonqualified plans, was as follows: 41 December 31, (In thousands) 2000 1999 - ----------------------------------------------------------------------------- Change in benefit obligation: Benefit obligation at beginning of year $ 56,922 $ 59,181 Service cost 4,095 4,065 Interest cost 4,687 3,931 Actuarial loss/(gain) 12,580 (7,825) Benefits paid (1,939) (2,430) - ----------------------------------------------------------------------------- Benefit obligation at end of year 76,345 56,922 - ----------------------------------------------------------------------------- Change in plan assets: Fair value of plan assets at beginning of year 42,010 37,219 Actual return on plan assets 975 3,082 Employer contributions 5,381 4,139 Benefits paid (1,939) (2,430) - ----------------------------------------------------------------------------- Fair value of plan assets at end of year 46,427 42,010 - ----------------------------------------------------------------------------- Plan assets less than projected benefit obligation (29,918) (14,912) Unrecognized initial net asset 16 (34) Unrecognized prior service cost 651 699 Unrecognized net actuarial loss/(gain) 5,628 (9,308) - ----------------------------------------------------------------------------- Pension liability $ (23,623) $ (23,555) ============================================================================= Pension expense, including amounts accrued in Chris-Craft and UTV nonqualified plans for retirement benefits in excess of statutory limitations, was as follows: Year ended December 31, (In thousands) 2000 1999 1998 - ----------------------------------------------------------------------------- Service cost $ 4,095 $ 4,065 $ 4,187 Interest cost 4,687 3,931 3,574 Expected return on plan assets (3,324) (2,912) (2,533) Amortization: Initial unrecognized net asset (50) (50) (50) Prior service cost 48 48 47 Actuarial gain (7) - (9) - ----------------------------------------------------------------------------- Net periodic pension cost $ 5,449 $ 5,082 $ 5,216 ============================================================================= Assumptions used in accounting for pension plans for each year are as follows: 2000 1999 1998 - ----------------------------------------------------------------------------- Discount rate 7.00% 7.50% 6.75% Rate of increase in future compensation levels 4.00% 4.00% 4.00% Expected long-term rate of return on assets 7.75% 7.75% 7.75% The accumulated benefit obligation, projected benefit obligation and fair value of plan assets for the above plans that had an accumulated benefit obligation in excess of the fair value of plan assets were $37,823,000, $47,410,000, and $20,437,000, respectively, at December 31, 2000 and $10,456,000, $13,972,000 and $0, respectively, at December 31, 1999. Chris-Craft and certain of its subsidiaries maintain other retirement plans, primarily stock purchase and profit sharing plans. The aggregate costs of such plans, including related amounts accrued in the nonqualified plans referred to above, were $4,193,000 in 2000, $18,263,000 in 1999 and $8,931,000 in 1998. 42 NOTE 8 - ----------------------------------------------------------------------------- INCOME TAXES: Income taxes are provided in the accompanying Consolidated Statements of Income as follows: Year ended December 31, (In thousands) 2000 1999 1998 - ----------------------------------------------------------------------------- Current: Federal $ (8,500) $ 29,300 $ 24,300 State 7,300 10,000 8,500 - ----------------------------------------------------------------------------- (1,200) 39,300 32,800 - ----------------------------------------------------------------------------- Deferred: Federal (200) (7,200) (800) State 300 200 500 - ----------------------------------------------------------------------------- 100 (7,000) (300) - ----------------------------------------------------------------------------- $ (1,100) $ 32,300 $ 32,500 ============================================================================= In December 2000, BHC and the Internal Revenue Service settled for $124.4 million, including $42.9 million in interest through December 31, 2000, BHC's previously denied claim for a refund for capital losses generated in 1993. In addition, BHC recorded a corresponding state tax refund of $9.6 million, including $800,000 of interest through December 31, 2000. The IRS paid BHC a total of $126.1 million, which was received on March 14, 2001. Differences between income taxes at the federal statutory income tax rate and total income taxes provided are as follows: Year ended December 31, (In thousands) 2000 1999 1998 - ----------------------------------------------------------------------------- Taxes at federal statutory rate $ 76,204 $ 36,063 $ 30,244 State income taxes, net 4,941 6,630 5,850 Amortization of intangible assets 3,626 3,626 3,250 Dividend from BHC - 1,260 1,260 Reversal of valuation allowance - (8,973) - Realization of tax benefit (86,300) (6,500) (8,500) Other 429 194 396 - ----------------------------------------------------------------------------- $ (1,100) $ 32,300 $ 32,500 ============================================================================= In 1999, the valuation allowance was reversed as the uncertainty regarding realization was removed when BHC became a member of the Chris-Craft affiliated group. Deferred tax assets and deferred tax liabilities reflect the tax effect of the following differences between financial statement carrying amounts and tax bases of assets and liabilities: 43 December 31, (In thousands) 2000 1999 - ----------------------------------------------------------------------------- Accrued liabilities not deductible until paid $ 34,124 $ 36,759 Film contract rights 9,527 8,254 Tax credit and loss carryforwards - 2,947 Investments 8,898 - Other 291 205 - ----------------------------------------------------------------------------- Deferred tax assets 52,840 48,165 - ----------------------------------------------------------------------------- Investments - (12,402) Other intangibles (4,392) (3,324) Property and equipment (2,286) (2,259) Receivable not yet taxable (15,298) - SFAS 115 adjustment (1,940) (5,809) - ----------------------------------------------------------------------------- Deferred tax liabilities (23,916) (23,794) - ----------------------------------------------------------------------------- Net deferred tax assets $ 28,924 $ 24,371 ============================================================================= Tax benefits of $1,457,000, $3,371,000 and $1,189,000 arising from the exercise of employee stock options were credited to capital surplus in 2000, 1999 and 1998, respectively. NOTE 9 - ----------------------------------------------------------------------------- COMMITMENTS AND CONTINGENCIES: The aggregate amount payable by Chris-Craft's television stations under contracts for programming not currently available for telecasting and, accordingly, not included in film contracts payable and the related contract rights in the accompanying Consolidated Balance Sheets totalled $280,100,000 at December 31, 2000 (including $104,000,000 applicable to UTV). At December 31, 2000, UTV remains obligated for possible future consideration relating to the purchase of WRBW of up to $25,000,000. In April 1999, a jury awarded damages totalling $7.3 million (approximately $8.8 million including legal fees and interest through March 2001) to a former WWOR employee who filed suit alleging discrimination by the station. The station and its counsel believe the award to be unjustified and have filed an appeal which is scheduled to be heard in late March 2001. It is not possible to reasonably estimate the amount, if any, which ultimately will be paid. Accordingly, no amount has been reserved in Chris-Craft's financial statements relating to this matter. Montrose Chemical Corporation of California, whose stock is 50% owned by Chris-Craft and 50% by a subsidiary of AstraZeneca Inc., discontinued its manufacturing operations in 1983 and has since been defending claims for costs and damages relating to environmental matters. Chris-Craft is a defendant in certain of these actions. After insurance reimbursements totalling $11,105,000 in 2000, $1,174,000 in 1999 and $3,611,000 in 1998, Montrose-related net (recoveries) expenses of $(1,356,000) in 2000, $1,632,000 in 1999 and $1,279,000 in 1998, are included in the accompanying Consolidated Statements of Income under the caption Interest and other income, net. Montrose is one of numerous defendants in a suit relating to alleged environmental impairment at the Stringfellow Hazardous Waste Disposal Site in California, brought in 1983 by the Federal Government and the State of California, which claim Montrose generated approximately 19% of the waste placed at the site. In 1990, the U.S. Environmental Protection Agency issued a Record 44 of Decision for the site, which selected some of the interim remedial measures preferred by the EPA and the State, the present value of which was estimated by them to be $169 million, although the estimate is subject to potential variations of up to 50%. A ruling issued in 1995 allocated at least 65% of the liability (under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended ["CERCLA"]) at the site to the State of California and approximately 25% of the liability to the generator defendants (including Montrose). A separate ruling under California law allocated 100% of the liability to the State. The State's appeal of the allocation rulings is pending. In December 1998, the State and the defendants, including Montrose, preliminarily agreed to a structure that, if certain conditions are satisfied, would resolve the Stringfellow suit. Chris-Craft is not a defendant. In May 1998, a group of approximately 750 current or former residents of the vicinity of the Stringfellow Site filed suit against Montrose, Chris-Craft and approximately 160 other defendants alleging personal injury and property damage from exposure to the site. In March 2000, the court dismissed the complaint as to all but approximately 125 plaintiffs on statute of limitations grounds. In February 2001, an individual plaintiff filed a similar action. In June 1990, the Federal Government and the State of California commenced an action against Montrose, Chris-Craft, affiliates of AstraZeneca and other defendants, alleging that Montrose and others released hazardous substances into Los Angeles Harbor and adjacent waters, and seeking to recover damages resulting from alleged injury to natural resources. In 1997, the Federal and State Governments stated they estimated the alleged damages at approximately $482 million. In December 2000, following a partial trial in October 2000, Montrose, Chris-Craft and the AstraZeneca affiliates entered into a partial consent decree that settled all claims against them respecting offshore areas for a collective total of $73 million, of which Montrose paid $50 million into escrow in January 2001, with the remaining $23 million to be paid by Montrose by May 1, 2001. The consent decree was entered by the court in March 2001. The action also seeks recovery for costs related to alleged hazardous substance contamination of the Montrose plant site in Torrance, California. Chris-Craft's potential liability for such costs was tried at the October 2000 trial, and a ruling is expected in June 2001 at the earliest. Chris-Craft contended that it is not liable and that it neither owned nor operated the facilities involved, nor did it arrange for the disposal of hazardous substances. Based on the available information, the status of the proceeding, and the applicable legal and accounting standards, Chris-Craft, in reliance among other things on the advice of counsel, believes that it should have no liability (under CERCLA or otherwise) for the operations of Montrose and does not presently consider liability to be "probable." Accordingly, under SFAS No. 5, "Accounting for Contingencies," no amount has been reserved for this action in Chris-Craft's financial statements. In September 1994, the EPA designated Chris-Craft as a "potentially responsible party" under CERCLA (a "PRP") in connection with the Diamond Alkali Superfund Site on the Passaic River in Newark, New Jersey. The EPA alleges that hazardous substances were released into the river from a facility operated by a Chris-Craft predecessor company. The facility was located near the Diamond Alkali property, but not on the river front, and was sold by Chris-Craft in 1972. Chris-Craft disputes that it is a responsible party. The former owner of the Diamond Alkali property is currently performing a study estimated to cost approximately $10 million to determine the extent of contamination in the area and to evaluate possible corrective actions. The Diamond Alkali Superfund Site matter does not involve Montrose, and based on the review to date by Chris-Craft and its counsel, they believe Chris-Craft has been erroneously identified as a PRP at the site; Chris-Craft is unable to determine at this stage if it could have any liability at the site. 45 If a court ultimately rejected Chris-Craft's defenses in one or more of the foregoing matters, under CERCLA, Chris-Craft could be held jointly and severally liable, without regard to fault, for response costs and natural resource damages. A party's ultimate liability at a site generally depends on its involvement at the site, the nature and extent of contamination, the remedy selected, the role of other parties in creating the alleged contamination and the availability of contribution from those parties, as well as any insurance or indemnification agreements which may apply. In most cases, both the resolution of the complex issues involved and any necessary remediation expenditures occur over a number of years. Future legal and technical developments in each of the foregoing matters will be periodically reviewed to determine if an accrual of reserves for possible liability would be appropriate. Between August 14 and 21, 2000, various purported stockholders of BHC filed complaints in the Delaware Court of Chancery entitled Gissen v. BHC, et al., Civil Action No. 18209; Piven v. BHC, et al., Civil Action No. 18211; Voege v. Siegel, et al., Civil Action No. 18210; Stubbe v. BHC, et al., Civil Action No. 18217; and Rand v. BHC, et al., Civil Action No. 18229 (which collectively are referred to as the "BHC lawsuits"). During the same period, various purported stockholders of UTV filed complaints in the Delaware Court of Chancery entitled Pyenson v. UTV, et al., Civil Action No. 18222; Malamud v. UTV, et al., Civil Action No. 18218; and Rand v. UTV, et al., Civil Action No. 18235 (which collectively are referred to as the "UTV lawsuits" and, together with the BHC actions, as the "Delaware actions"). The Delaware actions assert claims against Chris-Craft, UTV, BHC, and some of their officers and directors, alleging, among other things, that Chris-Craft and/or BHC and/or UTV and the individual defendants breached their fiduciary duties to stockholders, and that certain defendants engaged in self-dealing, with respect to the News Corp. acquisitions by merger of BHC and/or UTV. The Delaware actions seek class action certification and injunctive relief against Chris-Craft, BHC and UTV or, in the alternative, to obtain rescission of the mergers or rescissory damages, and other relief. On September 25, 2000, the court entered an order of consolidation, consolidating the BHC lawsuits as In re BHC Communications, Inc. Shareholders Litigation, Civil Action No. 18209 and directing the plaintiffs to file a consolidated amended complaint. On October 2, 2000, the court entered an order of consolidation, consolidating the UTV lawsuits as In re United Television, Inc. Shareholders Litigation, Civil Action No. 18218 and directing that the complaint filed in Malamud v. UTV, Civil Action No. 18218, shall be deemed the operative complaint in the consolidated action. Chris-Craft, BHC and United Television believe that the Delaware actions are without merit and intend to defend them vigorously. Chris-Craft is a party to various other pending legal proceedings arising in the ordinary course of business. In the opinion of management, after taking into account the opinion of counsel with respect thereto, the ultimate resolution of these other matters will not have a material effect on Chris-Craft's consolidated financial position or results of operations. 46 NOTE 10 - ----------------------------------------------------------------------------- INDUSTRY SEGMENT INFORMATION: The following table presents Chris-Craft's two reportable segments, the Television Division and the Industrial Division. UPN, which was accounted for under the equity method, was also considered a reportable segment under SFAS 131. However, all required segment information is included in Note 2. The accounting policies of the segments are the same as those described in the "Summary of Significant Accounting Policies." See Note 1.
Deferred Operating Depreciation Investment Tax Operating Income and Capital Segment in Assets (In thousands) Revenues (Loss) Amortization Expenditures Assets UPN (Liabilities) - ------------------------------------------------------------------------------------------------------------ Year Ended December 31, 2000 Television Division $505,504 $131,346 $ 25,655 $ 11,595 $2,434,481(b) $ - $ 5,278 Industrial Division 23,338 4,607 567 2,811 13,118 - 214 Reconciling items (a) - (20,721) 37 3 104,610 - 23,432 - ------------------------------------------------------------------------------------------------------------ $528,842 $115,232 $ 26,259 $ 14,409 $2,552,209 $ - $ 28,924 ============================================================================================================ Year Ended December 31, 1999 Television Division $469,347 $114,726 $ 23,824 $ 19,636 $2,281,100(b) $ 9,821 $ (334) Industrial Division 22,200 4,204 520 945 10,943 - 211 Reconciling items (a) - (24,733) 34 45 53,942 - 24,494 - ------------------------------------------------------------------------------------------------------------ $491,547 $ 94,197 $ 24,378 $ 20,626 $2,345,985 $ 9,821 $ 24,371 ============================================================================================================ Year Ended December 31, 1998 Television Division $445,850 $109,299 $ 21,278 $ 11,347 $2,199,687(b) $ 615 $ (8,305) Industrial Division 21,243 3,642 424 1,119 8,738 - 234 Reconciling items (a) - (18,271) 386 67 36,998 - 19,512 - ------------------------------------------------------------------------------------------------------------ $467,093 $ 94,670 $ 22,088 $ 12,533 $2,245,423 $ 615 $ 11,441 ============================================================================================================ (a) Consists of Corporate Office and subsidiaries not included in Television Division or Industrial Division. Related operating loss consists solely of general and administrative expenses and, accordingly, excludes nonoperating income. Related assets consist primarily of cash and marketable securities. (b) Includes marketable securities having an aggregate carrying value of $1,136,103, at December 31, 2000, $1,219,144, at December 31, 1999 and $1,202,070 at December 31, 1998.
NOTE 11 - ----------------------------------------------------------------------------- PROPOSED MERGER: As reported in Chris-Craft's Current Report on Form 8-K, dated August 23, 2000, Chris-Craft, BHC, and UTV have each agreed to be acquired by The News Corporation Limited ("News Corp.") for consideration consisting of cash and News Corp. preferred American depositary shares. Subject to limitations set forth in 47 the respective merger agreements, Chris-Craft, BHC and UTV stockholders may elect to receive the consideration as all cash, all stock or a combination thereof. Consummation of each transaction is subject to stockholder approval, receipt of Federal Communications Commission and other regulatory approvals, and satisfaction of other customary conditions. Chris-Craft has agreed to vote its BHC stock in favor of the acquisition of BHC by News Corp., and BHC has agreed to vote its UTV stock in favor of the acquisition of UTV by News Corp. The parties anticipate that the transactions will be completed in the first half of 2001. Quarterly Financial Information (Unaudited) Chris-Craft Industries, Inc. and Subsidiaries
(In thousands of dollars First Second Third Fourth except per share data) Quarter Quarter Quarter Quarter Year - ----------------------------------------------------------------------------- Year Ended December 31, 2000 Operating revenues $127,834 $138,040 $124,668 $138,300 $528,842 Operating income 28,825 32,296 22,924 31,187 115,232 Interest and other income, net 20,533 25,235 26,096 66,327 138,191 Equity loss and other related to United Paramount Network (35,696) - - - (35,696) Income before income taxes and minority interest 13,662 57,531 49,020 97,514 217,727 Net income 2,935 20,389 19,266 115,423 158,013 Earnings per share - Basic .08 .58 .55 3.30 4.52 Diluted $ .07 $ .46 $ .43 $ 2.62 $ 3.58 Year Ended December 31, 1999 Operating revenues $111,460 $123,825 $119,804 $136,458 $491,547 Operating income 19,566 27,687 24,351 22,593 94,197 Interest and other income, net 18,676 24,464 18,190 44,853 106,183 Equity loss and other related to United Paramount Network (30,150) (27,188) (16,900) (23,106) (97,344) Income before income taxes and minority interest 8,092 24,963 25,641 44,340 103,036 Net income 748 6,722 7,761 27,202 42,433 Earnings per share - Basic .02 .19 .22 .78 1.21 Diluted $ .02 $ .15 $ .18 $ .62 $ .97
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Not applicable. 48 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. To be provided by amendment. ITEM 11. EXECUTIVE COMPENSATION. To be provided by amendment. 49 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The management of Chris-Craft has been informed that, as of February 28, 2001, the persons and groups identified in Table I below, including all directors, nominees for director, executive officers and all owners known to Chris-Craft of more than 5% of any class of Chris-Craft voting securities, owned beneficially, within the meaning of Securities and Exchange Commission ("SEC") Rule 13d-3, the securities of Chris-Craft reflected in such table. Except as reflected in Tables II and III, as of February 28, 2001, each director or executive officer of Chris-Craft disclaims beneficial ownership of securities of any Chris-Craft subsidiary. Except as otherwise specified, the named beneficial owner claims sole investment and voting power as to the securities reflected in the tables.
I. Beneficial Ownership Of Chris-Craft Stock $1.40 Convertible Class B Common Common Stock Preferred Stock(2)(3) Stock (2)(3)(4) (3)(5)(6) Beneficial Owner(1) Number of Percent Number of Percent Number of Percent shares of class shares of class shares of class John C. Bogle......................... - - - - 29,494 * T. Chandler Hardwick, III............. - - - - 36,820 * Jeane J. Kirkpatrick.................. - - - - 23,868 David F. Linowes...................... 5,883 2.5% 144,511 1.8% 245,319 * Joelen K. Merkel(7)................... - - 24,766 * 151,358 Norman Perlmutter..................... - - 6,822 * 62,799 Herbert J. Siegel(8).................. 142,569 61.3% 5,019,030 44.9% 7,090,407 20.6% John C. Siegel(9)..................... - - 878,798 11.3% 1,605,830 6.0% William D. Siegel(9).................. - - 669,663 8.6% 793,871 3.1% Evan C Thompson(10)................... - - 779,362 10.0% 1,590,899 6.0% All directors and executive officers as 148,452 63.8% 7,355,356 65.0% 11,733,050 31.2% a group, including those named above (11 persons) (11)......................... Lawrence R. Barnett................... 50,654 21.8% 1,522,217 17.0% 2,178,078 7.4% James J. Rochlis...................... 15,953 6.9% 539,686 6.6% 762,188 2.7% Capital Research and Management Company - - - - 1,718,040 6.6% (12).................................. AXA, AXA Assurances - - 1,266,690 16.3% 1,514,901 5.3% I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle, AXA Conseil Vie Assurance Mutuelle, AXA Courtage Assurance Mutuelle, and AXA Financial Inc. (13)................ Gabelli Funds, LLC, - - 403,318 5.2% 6,134,528 22.2% GAMCO Investors, Inc., Gemini Capital Management Ltd., Gabelli International II Limited, Gabelli Performance Partnership L.P., and Mario J. Gabelli (14).............. The Gabelli Equity Trust - - 592,897 7.6% 592,897 2.1% Inc. (15).......................... Private Capital Management, Inc., Bruce - - - - 1,927,791 7.1% S. Sherman, Gregg J. Powers, SPS Partners, L.P. (16)
________________ * Less than 1%. 50 (1) The address of Capital Research and Management Company is 333 South Hope Street, Los Angeles, CA 90071; the address of AXA is 25, avenue Matignon, 75008 Paris France, of AXA Assurances I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle and AXA Conseil Vie Assurance Mutuelle is 370, rue Saint Honore, 75001 Paris France, of AXA Courtage Assurance Mutuelle is 26, rue Louis le Grand, 75002 Paris France, and of AXA Financial, Inc. is 1290 Avenue of the Americas, New York, NY 10104; the address of Gabelli Funds, LLC, GAMCO Investors, Inc., Gemini Capital Management Ltd., Gabelli International II Limited, and Mario J. Gabelli, and the Gabelli Equity Trust Inc. is One Corporate Center, Rye, NY 10580; the address of Private Capital Management, Inc., Bruce S. Sherman, Gregg J. Powers, and SPS Partners, L.P. is 3003 Tamiami Trail, N. Naples, FL 34103; the address of each other beneficial owner named in the table is c/o Chris-Craft Industries, Inc., 767 Fifth Avenue, New York, NY 10153. (2) Each share of $1.40 Convertible Preferred Stock is convertible into 11.97643 shares of Common Stock and 23.95286 shares of Class B Common Stock, except that if such share of $1.40 Convertible Preferred Stock was transferred after November 10, 1986 other than to a Permitted Transferee, as defined in Chris-Craft's certificate of incorporation, such share is convertible into 35.92929 shares of Common Stock. Each share of Class B Common Stock is convertible into one share of Common Stock. (3) At December 31, 2000, the Trustee of the Chris-Craft/UTV Employees' Stock Purchase Plan (the "Stock Purchase Plan") held 281,139 shares of Class B Common Stock and 687,839 shares of Common Stock (representing 3.6% and 2.5% of the outstanding shares of the respective classes at February 28, 2001). A committee appointed by the Board of Directors of Chris-Craft to administer the Stock Purchase Plan, comprised of John C. Siegel and another Chris-Craft executive officer, is empowered to direct voting of the shares held by the Trustee of that plan. The numbers of shares set forth in the table with respect to each named executive officer other than John C. Siegel include, with respect to the Stock Purchase Plan, only shares vested at December 31, 2000. The numbers of shares set forth in the table with respect to the named members of the Stock Purchase Plan Committee and all directors and executive officers as a group include all shares held in the Stock Purchase Plan as of December 31, 2000. If at February 28, 2001, the Class B Common Stock held in the Stock Purchase Plan at December 31, 2000 had been converted, and the Common Stock issuable upon such conversions had been added to the Common Stock then held in such plan, the shares of Common Stock held in the plan would represent 3.5% of the Common Stock that would have been outstanding. (4) Includes shares of Class B Common Stock issuable upon conversion of the $1.40 Convertible Preferred Stock reflected in the table opposite the identified person or group. In accordance with SEC rules, the percentages shown have been computed assuming that the only shares converted are those shares reflected opposite the identified person or group. (5) Includes shares of Common Stock issuable upon conversion of the $1.40 Convertible Preferred Stock and Class B Common Stock reflected in the table opposite the identified person or group. In accordance with SEC rules, the percentages shown have been computed assuming that the only shares converted are those shares reflected opposite the identified person or group. (6) Includes with respect to the following individuals the indicated numbers of shares issuable on exercise of options previously granted under the 1994 Director Stock Option Plan: Lawrence R. Barnett, 23,868, John C. Bogle, 23,868; T. Chandler Hardwick, III, 29,835; Jeane J. Kirkpatrick, 23,868; David F. Linowes, 29,835; Norman Perlmutter, 29,835; James J. Rochlis, 23,868. 51 (7) Ownership includes 81,333 shares of Common Stock issuable pursuant to currently exercisable stock options. (8) Ownership includes 358,214 shares of Common Stock issuable pursuant to a currently exercisable stock option and excludes 74,218 shares of Class B Common Stock owned by Mr. Siegel's wife and 38,842 shares of Class B Common Stock held by her as trustee. (9) Ownership includes 120,232 shares of Common Stock issuable pursuant to currently exercisable stock options. (10) Ownership includes 359,037 shares of Common Stock issuable pursuant to currently exercisable stock options and 2,351 shares of Common Stock held by the Evan C Thompson Foundation. (11) Ownership includes all shares held in the Stock Purchase Plan, as of December 31, 2000 (see Note 3), all other shares reflected in the table with respect to directors and named executive officers, and all other shares, including an additional 81,333 shares of Common Stock issuable pursuant to currently exercisable stock options, held by an executive officer of Chris-Craft not named in the table. Of the shares held in the Stock Purchase Plan, 104,141 shares of Class B Common Stock and 548,943 shares of Common Stock were held for the accounts of employees other than executive officers. (12) Voting power is disclaimed as to all shares. Information herein is furnished in reliance on Amendment No. 3 to Schedule 13G of the named owner dated February 9, 2001, filed with the SEC. (13) Voting power is shared as to 1,266,690 shares of Class B Common Stock, and investment power is shared as to 154,462 shares of Common Stock. Information is furnished herein in reliance on Amendment Nos. 12 and 19 to Schedule 13G of the named owners, each dated February 12, 2001, filed with the SEC. (14) Voting power is disclaimed as to 60,736 shares. Information is furnished herein in reliance on Amendment No. 35 to Schedule 13D of the named owners dated September 21, 2000, filed with the SEC. Amounts exclude shares referred to in Note 15. (15) Gabelli Funds, LLC has investment power respecting the referenced shares. Information is furnished herein in reliance on Amendment No. 8 to Schedule 13G of the named owner dated February 14, 2001, filed with the SEC. (16) Voting power and investment power is shares as to 1,908,165 shares. Information is furnished herein in reliance on Schedule 13G of the named owners dated February 14, 2001, filed with the SEC. 52 II. BENEFICIAL OWNERSHIP OF BHC CLASS A COMMON STOCK Beneficial Owner Number of Shares(1) John C. Bogle(3)............................... 309 T. Chandler Hardwick, III...................... - Jean J. Kirkpatrick............................ - David F. Linowes............................... 151 Joelen K. Merkel (2)........................... 200 Norman Perlmutter.............................. - Herbert J. Siegel.............................. 229 John C. Siegel................................. - William D. Siegel(3)........................... 540 Evan C. Thompson............................... - All Chris-Craft directors and executive officers as a group, including those named above (11 persons) (3)................................ 1,120 _________________ (1) Each amount shown represents less than 1% of the class. (2) Shares are owned jointly with the executive officer's husband. (3) Ownership includes 309 shares held in the Chris-Craft Profit Sharing Plan, of which John C. Bogle, William D. Siegel, and another Chris-Craft executive officer are Trustees. 53 III. BENEFICIAL OWNERSHIP OF UTV COMMON STOCK Percent of Beneficial Owner Number of Shares Class John C. Bogle.................................. - - T. Chandler Hardwick, III...................... - - Jean J. Kirkpatrick............................ - - David F. Linowes............................... - - Joelen K. Merkel............................... - - Norman Perlmutter(1)........................... 11,500 * Herbert J. Siegel.............................. - - John C. Siegel(2).............................. 220,070 2.3% William D. Siegel.............................. - - Evan C Thompson(2)............................. 35,000 * All Chris-Craft directors and executive officers as a group, including those named above (11 persons) (2)................ 270,570 2.8% ______________ * Less than 1% (1) Includes 9,500 shares issuable on exercise of options previously granted under UTV's 1995 Director Stock Option Plan. (2) As of December 31, 2000, (a) the Trustee of the Stock Purchase Plan held 209,070 shares of UTV Common Stock (representing 2.2% of the outstanding shares at February 28, 2001), and (b) the Trustees of the UTV Profit Sharing Plan held 10,000 shares of UTV Common Stock (representing less than 1% of the outstanding shares at February 28, 2001). John C. Siegel, Evan C Thompson, and another executive officer of UTV are the Trustees of the UTV Profit Sharing Plan empowered to vote and dispose of the shares held by that plan. The numbers of shares set forth in the table with respect to all Chris-Craft directors and executive officers as a group include all shares held in the Stock Purchase Plan and the UTV Profit Sharing Plan as of December 31, 2000, and the numbers of shares set forth respecting the named members of the Stock Purchase Plan and the named Trustees of the UTV Profit Sharing Plan include the respective numbers of shares held in those plans as of such date. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. To be provided by amendment. 54 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a) The following documents are filed as part of this report: (1) The financial statements, financial statement schedule, and quarterly financial information included in Item 8. (2) Exhibits listed in the Exhibit Index, including the compensatory plans listed below: *Benefit Equalization Plan *1994 Management Incentive Plan *1999 Management Incentive Plan *Management Incentive Compensation Plan *1994 Director Stock Option Plan *Employment Agreement dated January 1, 1994, as amended August 11, 2000, between Herbert J. Siegel and Chris-Craft. *Employment Agreement dated January 1, 1994, as amended September 28, 1999, between Evan C Thompson and Chris-Craft. *Employment Agreement dated September 28, 1999 between John C. Siegel and Chris-Craft. *Employment Agreement dated September 28, 1999 between William D. Siegel and Chris-Craft. *Employment Agreement dated September 28, 1999 between Joelen K. Merkel and Chris-Craft. *Employment Agreement dated September 28, 1999 between Brian C. Kelly and Chris-Craft. (b) The registrant filed reports on Form 8-K during the last quarter of the period covered by this report, as follows: Date Items Reported November 15, 2000 5, 7 December 12, 2000 5, 7 December 21, 2000 5 55 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. Dated: March 21, 2001 CHRIS-CRAFT INDUSTRIES, INC. (Registrant) By: WILLIAM D. SIEGEL William D. Siegel Executive Vice President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature and Title Date HERBERT J. SIEGEL March 21, 2001 Herbert J. Siegel Chairman, President and Director (principal executive officer) WILLIAM D. SIEGEL March 21, 2001 William D. Siegel Executive Vice President and Director (principal financial officer) JOELEN K. MERKEL March 21, 2001 Joelen K. Merkel Senior Vice President and Treasurer (principal accounting officer) EVAN C THOMPSON March 21, 2001 Evan C Thompson Executive Vice President and Director JOHN C. SIEGEL March 21, 2001 John C. Siegel Executive Vice President and Director JOHN C. BOGLE March 21, 2001 John C. Bogle Director 56 T. CHANDLER HARDWICK, III March 21, 2001 T. Chandler Hardwick, III Director JEANE J. KIRKPATRICK March 21, 2001 Jeane J. Kirkpatrick Director DAVID F. LINOWES March 21, 2001 David F. Linowes Director NORMAN PERLMUTTER March 21, 2001 Norman Perlmutter Director 57
EXHIBIT INDEX Incorporated by Reference to: Exhibit No. Exhibit Exhibit 3(A) [1] 3.1 Restated Certificate of Incorporation Exhibit 3(B) [1] 3.2 By-Laws Exhibit 11(H) [2] 10.1 Benefit Equalization Plan of registrant Exhibit 10(B)(1) [5] 10.2 Amendment No. 1 thereto Exhibit 10.3 [9] 10.3 Amendment No. 2 thereto Exhibit 10(B) [7] 10.4 Employment Agreement dated January 1, 1994 between registrant and Herbert J. Siegel Exhibit 10(C) [7] 10.5 Split-Dollar Agreement dated January 6, 1994 between registrant and William D. Siegel Exhibit 10(D) [7] 10.6 Split-Dollar Agreement dated January 6, 1994 between registrant and John C. Siegel Exhibit 10(E) [3] 10.7 Form of Agreement under Executive Deferred Income Plan of registrant Exhibit 10(F) [7] 10.8 Employment Agreement dated January 1, 1994 between registrant and Evan C Thompson Exhibit 10.9 [10] 10.9 Amendment thereto dated September 28, 1999 Exhibit 10(c) [4] 10.10 Management Agreement between the registrant and BHC dated July 21, 1989 Exhibit 19 [6] 10.11 Amendment No. 1 thereto dated October 31, 1991 Exhibit 10(H)(2) [7] 10.12 Amendment No. 2 thereto dated March 24, 1994 Exhibit A to registrant's proxy 10.13 1994 Management Incentive Plan statement dated March 25, 1994 (File No. 1-2999) Exhibit B to registrant's proxy 10.14 1994 Director Stock Option Plan statement dated March 25, 1994 (File No. 1-2999) Exhibit 10.10 [8] 10.15 Option Agreement dated July 19, 1994 between BHC Network Partner, Inc. and PCI Network Partner, Inc. Exhibit 10.16 [10] 10.16 Employment Agreement dated September 28, 1999 between John C. Siegel and Chris-Craft Exhibit 10.17 [10] 10.17 Employment Agreement dated September 28, 1999 between William D. Siegel and Chris-Craft Exhibit 10.18 [10] 10.18 Employment Agreement dated September 28, 1999 between Joelen K. Merkel and Chris-Craft Exhibit 10.19 [10] 10.19 Employment Agreement dated September 28, 1999 between Brian C. Kelly and Chris-Craft Exhibits 2.1, 10.1 and 10.2 [11] 10.20 Agreement and Plan of Merger dated August 13, 2000 by and among Chris-Craft, The News Corporation Limited, News Publishing Australia Limited, and Fox Television Holdings, Inc.; Voting Agreement dated August 13, 2000 among the News Corporation Limited, New Publishing Australia Limited and Chris-Craft; and Irrevocable Proxy to Vote BHC Class A Common Stock and Class B Common Stock. Exhibits 2.1, 10.1, 10.2, 10.3 and 10.21 Agreement and Plan of Merger dated 10.4 [12] August 13, 2000 by and among BHC, The News Corporation Limited, News Publishing Australia Limited, and Fox Television Holdings, Inc.; Voting Agreement dated August 13, 2000 among the News Corporation Limited, News Publishing Australia Limited and Chris-Craft; Irrevocable Proxy to Vote BHC Class A Common Stock and Class B Common Stock dated August 13, 2000; Voting Agreement dated August 13, 2000 among The News Corporation Limited, News Publishing Australia Limited and BHC; and Irrevocable Proxy to Vote Common Stock of UTV dated August 13, 2000. Exhibits 2.1, 10.1 and 10.2 [13] 10.22 Agreement and Plan of Merger dated August 13, 2000 among UTV, The News Corporation Limited, News Publishing Australia Limited and Fox Television Holding, Inc.; Voting Agreement dated August 13, 2000 among The News Corporation Limited, News Publishing Australia Limited and BHC; and Irrevocable Proxy to Vote Common Stock of UTV dated August 13, 2000. * 10.23 Amendment dated August 11, 2000 to Employment Agreement between registrant and Herbert J. Siegel * 21 Subsidiaries of the registrant * 23 Consent of PricewaterhouseCoopers LLP _________________________ * Filed herewith. [1] Registrant's Annual Report on Form 10-K for the year ended December 31, 1986. [2] Registrant's Registration Statement on Form S-1 (Regis. No. 2-65906). [3] Registrant's Annual Report on Form 10-K for the fiscal year ended August 31, 1983. [4] BHC's Registration Statement on Form S-1 (Regis. No. 33-31091). [5] Registrant's Annual Report on Form 10-K for the year ended December 31, 1989. [6] Registrant's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1991. [7] Registrant's Annual Report on Form 10-K for the year ended December 31, 1993. [8] BHC's Annual Report on Form 10-K for the year ended December 31, 1994. [9] Registrant's Annual Report on Form 10-K for the year ended December 31, 1994. [10] Registrant's Annual Report on Form 10-K for the year ended December 31, 1999. [11] Registrant's Current Report on Form 8-K dated August 23, 2000. [12] BHC's Current Report on Form 8-K dated August 23, 2000. [13] UTV's Current Report on Form 8-K dated August 23, 2000.
EX-21 2 0002.txt Exhibit 21 The following are the registrant's subsidiaries, other than subsidiaries that, if considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary: Jurisdiction of Name of Subsidiary Incorporation BHC Communications, Inc. Delaware Chris-Craft Television, Inc. Delaware KCOP Television, Inc. California Oregon Television, Inc. Oregon Pinelands, Inc. Delaware United Television, Inc. Delaware UTV of San Francisco, Inc. California UTV of San Antonio, Inc. Texas UTV of Baltimore, Inc. Delaware UTV of Orlando, Inc. Delaware United Television Sales, Inc. Delaware Chris-Craft Industrial Products, Inc. Delaware EX-23 3 0003.txt Exhibit 23 Consent of Independent Certified Public Accountants We hereby consent to the incorporation by reference in the Registration Statements on Forms S-8 (Nos. 333-91189, 333-69875 and 33-54817) of Chris-Craft Industries, Inc. of our report dated March 8, 2001, except as to Note 8, which is as of March 14, 2001, relating to the financial statements, which appears in this Form 10-K. PricewaterhouseCoopers LLP Fort Lauderdale, FL March 19, 2001 -----END PRIVACY-ENHANCED MESSAGE-----