e8vk
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 8, 2010 (November 8, 2010)
Gray Television, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Georgia
(State or Other Jurisdiction of Incorporation)
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1-13796
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58-0285030 |
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(Commission File Numbers)
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(IRS Employer Identification No.) |
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4370 Peachtree Road, NE, Atlanta, Georgia
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30319 |
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(Address of Principal Executive Offices)
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(Zip Code) |
404-504-9828
(Registrants Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
The information set forth under this Item 2.02 is being furnished and shall not be deemed filed
for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be
deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be
expressly set forth by specific reference in such filing.
On November 8, 2010, Gray Television, Inc. issued a press release reporting its financial results
for the three-month and nine-month periods ended September 30, 2010. A copy of the press release is
attached as Exhibit 99 and incorporated herein by reference.
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Item 9.01 |
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Financial Statements and Exhibits. |
(d) Exhibits
99 Press Release issued by Gray Television, Inc. on November 8, 2010
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Gray Television, Inc.
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November 8, 2010 |
By: |
/s/ James C. Ryan
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Name: |
James C. Ryan |
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Title: |
Chief Financial Officer and Senior Vice President |
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Exhibit Index
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Exhibit No. |
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Description |
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99 |
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Press release issued by Gray Television, Inc. on November 8, 2010 |
exv99
Exhibit 99
NEWS
RELEASE
Gray Reports Operating Results
For the Three-Month and Nine-Month Periods Ended September 30, 2010
Atlanta, Georgia November 8, 2010. . . Gray Television, Inc. (Gray, we, us or our)
(NYSE: GTN) today announced results from operations for the three-month period (the third
quarter) and nine-month period ended September 30, 2010 as compared to the three-month and
nine-month periods ended September 30, 2009.
Special Comment on 2010 Political Advertising Revenue:
For the three and nine month periods ended September 30, 2010, political advertising revenue
was $16.0 million and $24.4 million, respectively, both of which exceeded our initial expectations.
Based on our preliminary estimated results for the quarter ending December 31, 2010, we presently
believe that political advertising revenue will approximate $33.0 million for the period and that
full year 2010 political advertising revenue will approximate $57.5 million; both setting all time
records for Gray. See below for more detail regarding our current expectations for our results of
operations, including political advertising revenue, for the quarter ending December 31, 2010.
Highlights:
For the three-month and nine-month periods ended September 30, 2010, our total net revenue,
broadcast expenses and corporate and administrative expenses were as follows:
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Three Months Ended September 30, |
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2010 |
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2009 |
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% Change |
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(in thousands except for percentages) |
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Revenues (less agency commissions) |
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$ |
85,345 |
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$ |
66,446 |
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28 |
% |
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Operating expenses (before depreciation,
amortization and gain on disposal of assets): |
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Broadcast |
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$ |
49,796 |
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$ |
46,173 |
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8 |
% |
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Corporate and administrative |
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$ |
3,369 |
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$ |
3,308 |
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2 |
% |
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Nine Months Ended September 30, |
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2010 |
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2009 |
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% Change |
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(in thousands except for percentages) |
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Revenues (less agency commissions) |
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$ |
231,463 |
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$ |
192,857 |
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20 |
% |
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Operating expenses (before depreciation,
amortization and gain on disposal of assets): |
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Broadcast |
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$ |
143,455 |
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$ |
136,994 |
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5 |
% |
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Corporate and administrative |
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$ |
10,128 |
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$ |
10,946 |
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(7 |
)% |
4370 Peachtree Road, NE * Atlanta, GA 30319
(404) 504-9828 * Fax (404) 261-9607
Our operating results from the third quarter of 2010 exceeded our initial forecasts. We
experienced improvements in all major revenue classifications, including local, national and
political advertising
revenue, in the third quarter of 2010 compared to the third quarter of 2009. We experienced
positive period over period results in the first and second quarters of 2010 and that trend
continued in the third quarter of 2010. We have benefited and continue to believe that we are well
positioned to benefit from further expected increases in political advertising in 2010. While our
revenues have increased, we also continue to focus on controlling our operating costs.
Comments on Results of Operations for the Three-Month Period Ended September 30, 2010:
Revenue.
Total revenue increased $18.9 million, or 28%, to $85.3 million for the three-month period
ended September 30, 2010 compared to the three-month period ended September 30, 2009 reflecting
increases in political, local, national and internet advertising revenue, retransmission consent
revenue, production and other revenue and consulting revenue. Local, national and internet
advertising revenue increased due to increased spending by advertisers in an improving economic
environment. Political advertising revenue increased due to increased advertising from political
candidates and special interest groups in advance of elections in November 2010. Retransmission
revenue increased due to the improved terms of our retransmission contracts compared to those in
effect during the three-month period ended September 30, 2009. We continued to earn consulting
revenue from our agreement with Young Broadcasting, Inc. This agreement was effective August 10,
2009, and the increase in revenue from the agreement was due to it being in place for only a
portion of the three-month period ended September 30, 2009.
The principal components of our revenue were as follows:
Local advertising revenue increased $3.1 million, or 8%, to $44.3 million.
National advertising revenue increased $1.5 million, or 12%, to $14.3 million.
Internet advertising revenue increased $0.4 million, or 14%, to $3.3 million.
Political advertising revenue increased $13.0 million, or 422%, to $16.0 million.
Retransmission consent revenue increased $0.3 million, or 8%, to $4.7 million.
Production and other revenue increased $0.3 million, or 17%, to $2.0 million.
Consulting revenue from our agreement with Young Broadcasting, Inc. increased $0.2 million, or
76% to $0.6 million.
Advertising revenue categories by customer type, excluding political advertising,
demonstrating significant improvement during the three-month period ended September 30, 2010
compared to the three-month period ended September 30, 2009 were: automotive, increasing 26%;
medical services, increasing
18%; communications, increasing 11%; and financial and insurance services, increasing 11%.
Revenue categories reflecting period over period declines were: paid programming, decreasing 10%;
restaurants, decreasing 10%; and home improvement, decreasing 4%.
Operating expenses.
Broadcast expenses (before depreciation, amortization and gain on disposal of assets)
increased $3.6 million, or 8%, to $49.8 million. The increase was due primarily to an increase in
payroll expense of $3.2 million and national sales representation expense of $0.9 million,
partially offset by a decrease in employee benefit expense of $0.3 million. Payroll expense
increased primarily due to increases in sales and certain other accrued incentive compensation due
to the increase in advertising revenue discussed above. National sales representation fees earned
by third parties also increased due to increased advertising revenue. National sales representation
expense is equal to a certain percentage of our national sales revenue (including certain
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Gray Television, Inc. |
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Earnings Release for the three-month and nine-month periods ended September 30, 2010
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Page 2 of 13 |
political
advertising revenue) and increases as this revenue increases. Employee benefit expense decreased
due to a lower amount of health care claims. As of September 30, 2010 and 2009, we
employed 2,164 and 2,202 employees, respectively, in our broadcast operations. Since December
31, 2007, we have decreased the total number of employees in our broadcast operations by 261
persons, a decrease of 10.8%.
Corporate and administrative expenses (before depreciation, amortization and gain on disposal
of assets) increased $0.1 million, or 2%, to $3.4 million. The increase was due primarily to an
increase in payroll expense of $0.5 million partially offset by a decrease in relocation expense of
$0.2 million and consulting expense of $0.1 million. The increase in payroll expense was due
primarily to an increase in accrued bonus compensation of $0.7 million for certain executive
officers, resulting from the increase in revenues discussed above, partially offset by a decrease
in non-cash stock-based compensation expense of $0.3 million. We recorded non-cash stock-based
compensation expense during the three-month periods ended September 30, 2010 and 2009 of $57,000
and $346,000, respectively. Non-cash stock-based compensation expense decreased due to the majority
of our outstanding stock options becoming fully vested. Relocation expense decreased due to the
relocation of certain employees in the third quarter of 2009, while no similar relocations took
place in the third quarter of 2010. Consulting expense decreased due to the expiration, on December
31, 2009, of a consulting agreement with our former Chairman.
Comments on Results of Operations for the Nine-Month Period Ended September 30, 2010:
Revenue.
Total revenue increased $38.6 million, or 20%, to $231.5 million for the nine-months ended
September 30, 2010 compared to the nine-months ended September 30, 2009, reflecting increases in
political, local, national and internet advertising revenue and retransmission consent revenue,
production and other revenue and consulting revenue. Local, national and internet advertising
revenue increased due to increased spending by advertisers in an improving economic environment.
Political advertising revenues increased due to increased advertising from political candidates and
special interest groups. Net advertising revenue associated with the broadcast of the 2010 Super
Bowl on our seventeen CBS-affiliated stations approximated $860,000 which was an increase from our
approximate $750,000 of Super Bowl revenues earned in 2009 on our ten NBC-affiliated stations. In
addition, results in the nine-month period ended September 30, 2010 benefited from approximately
$2.8 million of net revenues earned from the broadcast of the 2010 Winter Olympic Games on our
NBC-affiliated stations. There was no corresponding broadcast of Olympic Games during the
nine-month period ended September 30, 2009. Retransmission revenue increased due to the improved
terms of our retransmission contracts compared to those in effect during the nine-month period
ended September 30, 2009. We continued to earn consulting revenue from our agreement with Young
Broadcasting, Inc. The increase was due to the agreement being effective for only a portion of the
nine-month period ended September 30, 2009.
The principal components of our revenue were as follows:
Local advertising revenue increased $10.0 million, or 8%, to $133.7 million.
National advertising revenue increased $4.0 million, or 11%, to $42.0 million.
Internet advertising revenue increased $1.3 million, or 16%, to $9.5 million.
Political advertising revenue increased $19.4 million, or 386%, to $24.4 million.
Retransmission consent revenue increased $2.1 million, or 17%, to $14.0 million.
Production and other revenue increased $0.6 million, or 12%, to $5.8 million.
Consulting revenue from our agreement with Young Broadcasting, Inc. increased $1.3 million or
427%, to $1.7 million.
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Gray Television, Inc. |
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Earnings Release for the three-month and nine-month periods ended September 30, 2010
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Page 3 of 13 |
Advertising revenue categories by customer type, excluding political advertising,
demonstrating significant improvement during the nine-month period ended September 30, 2010
compared to the nine-month period ended September 30, 2009 were: automotive, increasing 38%;
financial and insurance services, increasing 16%; medical services, increasing 16%; supermarkets,
increasing 12%; and home improvement, increasing 5%. Revenue categories reflecting period over
period declines were: paid programming, decreasing 17%; communications, decreasing 10%; and
restaurants, decreasing 8%.
Operating expenses.
Broadcast expenses (before depreciation, amortization and gain on disposal of assets)
increased $6.5 million, or 5%, to $143.5 million. This increase was primarily due to increases in
payroll expense of $5.2 million, national sales representation expense of $1.4 million, employee
benefit expense of $0.1 million and market research expense of $0.2 million, partially offset by
decreases in electricity expense of $0.4 million and bad debt expense of $0.4 million. Payroll
expense increased primarily due to increases in sales and certain other accrued incentive
compensation of $4.7 million due to the increase in advertising revenue discussed above. National
sales representation fees earned by third parties also increased due to increased advertising
revenue. National sales representation expense is equal to a certain percentage of our national
sales revenue (including certain political advertising revenue) and increases as this revenue
increases. Employee benefit expense increased due to an increase in pension expense of $0.7
million which was largely offset by a decrease in health care expense of $0.6 million. Bad debt
expense decreased primarily due to an improvement in the quality of our accounts receivable
balances. We attribute this to an improving economy and an increased focus on collections.
Electricity expenses decreased due to the discontinuance of our analog broadcasts.
Corporate and administrative expenses (before depreciation, amortization and gain on disposal
of assets) decreased $0.8 million, or 7%, to $10.1 million. The decrease was due primarily to a
decrease in relocation expense of $0.6 million, consulting expense of $0.4 million and legal
expense of $0.5 million partially offset by an increase in payroll expense of $1.0 million.
Relocation expense decreased due to the relocation of certain employees in the first nine months of
2009, while no similar relocations took place in the first nine months of 2010. Consulting expense
decreased due to the expiration, on December 31, 2009, of a consulting agreement with our former
Chairman. Legal expense decreased due to a decrease in the number of retransmission consent
revenue contracts being negotiated in the current period compared to the nine-month period ended
September 30, 2009. The increase in payroll expense was due primarily to an increase in bonus
compensation expense partially offset by a decrease in non-cash stock-based compensation. Bonus
compensation expense increased due to the payment of $1.05 million in bonuses to certain executive
officers. In addition, bonus compensation expense increased $0.7 million reflecting the accrual of
certain incentive compensation for certain executive officers in the third quarter of 2010
resulting from the increase in revenues discussed above. No bonus payments had been made to or
accrued for these individuals in 2009. Non-cash stock-based compensation expense decreased $0.8
million due to the majority of our outstanding stock options becoming fully vested. We recorded
non-cash stock-based compensation expense during the nine-month periods ended September 30, 2010
and 2009 of $274,000 and $1,044,000, respectively.
Refinancing Activities in the Current Year:
During 2010, we have taken a number of actions designed to further strengthen our balance
sheet. On March 31, 2010, we amended our senior credit facility. This amendment modified our
leverage ratio covenant and certain other terms of our senior credit facility and allowed for
additional financial and covenant flexibility. In order to obtain this amendment, we incurred loan
issuance costs of approximately $4.5 million, including legal and professional fees. These fees
were funded from our existing cash balances. As a result of this amendment, we recorded a loss
from early extinguishment of debt of $0.3 million.
On April 29, 2010, we issued $365.0 million of senior secured third lien notes due 2015 (the
Notes) in a transaction exempt from the registration requirements of the Securities Act of 1933.
We used the net proceeds from the issuance of the Notes to, among other things, repay $300.0
million in principal outstanding under our
senior credit facility. With the completion of these transactions, we have been able to
reduce the total cost of
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Gray Television, Inc. |
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Earnings Release for the three-month and nine-month periods ended September 30, 2010
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Page 4 of 13 |
borrowings under our senior credit facility from an effective interest
rate of the London Interbank Offered Rate (LIBOR) plus 8.50% to an effective rate of LIBOR plus
4.25%, achieve additional financial and covenant flexibility, and eliminate certain fees
thereunder. We were in compliance with all financial covenants as of September 30, 2010.
Internet Initiatives:
We have continued to expand our internet initiatives in each of our markets. Our focus has
been to expand local content to attract additional traffic to our websites. Our website page view
data for the three-month and nine-month periods ended September 30, 2010 compared to the
three-month and nine-month periods ended September 30, 2009 is as follows:
Gray Websites Aggregate Page Views
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Three Months Ended September 30, |
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2010 |
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2009 |
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% Change |
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(in millions, except percentages) |
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Advertising impressions generated |
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613.8 |
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492.0 |
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25 |
% |
Total page views (including mobile page views) |
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198.9 |
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189.3 |
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5 |
% |
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Nine Months Ended September 30, |
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2010 |
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2009 |
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% Change |
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(in millions, except percentages) |
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Advertising impressions generated |
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1,904.9 |
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1,595.0 |
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19 |
% |
Total page views (including mobile page views) |
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623.5 |
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557.2 |
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12 |
% |
We attribute the increase in our website traffic to increased posting of local content
and public awareness of our websites resulting from our on-air promotion of our websites.
Our aggregate internet revenues are derived from two sources. The first source is advertising
or sponsorship opportunities directly on our websites. We call this direct internet revenue.
The other revenue source is television advertising time purchased by our clients to directly
promote their involvement in our websites. We refer to this internet revenue source as
internet-related commercial time sales.
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Gray Television, Inc. |
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Earnings Release for the three-month and nine-month periods ended September 30, 2010
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Page 5 of 13 |
Other Financial Data:
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September
30, 2010 |
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December
31, 2009 |
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(in thousands) |
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Cash |
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$ |
20,170 |
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$ |
16,000 |
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Long-term debt, including current portion |
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$ |
845,857 |
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$ |
791,809 |
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Long-term accrued facility fee |
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$ |
11,139 |
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$ |
18,307 |
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Preferred stock (1) |
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$ |
37,063 |
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$ |
93,386 |
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Borrowing availability under our senior credit facility |
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$ |
40,000 |
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$ |
31,681 |
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Nine Months Ended September 30, |
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2010 |
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2009 |
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(in thousands) |
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Net cash provided by operating activities |
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$ |
24,739 |
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$ |
5,438 |
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Net cash used in investing activities |
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(10,916 |
) |
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(13,946 |
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Net cash used in financing activities |
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(9,653 |
) |
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(13,941 |
) |
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Net increase (decrease) in cash |
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$ |
4,170 |
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$ |
(22,449 |
) |
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(1) |
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As of September 30, 2010, preferred stock does not include unaccreted original issuance
costs and accrued preferred stock dividends of $2.2 million and $12.4 million, respectively.
As of December 31, 2009, preferred stock does not include unaccreted original issuance costs
and accrued preferred stock dividends of $6.6 million and $18.9 million, respectively. |
Payment of Principal Balances Under our Senior Credit Facility Subsequent to September 30, 2010
Subsequent to September 30, 2010 and prior to the issuance of this press release, we
permanently pre-paid $15.1 million of our outstanding obligations owed under our senior credit
facility. We used cash from operations to fund this payment.
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Gray Television, Inc. |
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Earnings Release for the three-month and nine-month periods ended September 30, 2010
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Page 6 of 13 |
Detailed table of operating results:
Gray Television, Inc.
Selected Operating Data (Unaudited)
(in thousands except for per share data and percentages)
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Three Months Ended |
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September 30, |
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% |
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2010 |
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2009 |
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Change |
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Revenues (less agency commissions) |
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$ |
85,345 |
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$ |
66,446 |
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28 |
% |
Operating expenses before depreciation,
amortization and gain on disposal of assets, net: |
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Broadcast |
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49,796 |
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46,173 |
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8 |
% |
Corporate and administrative |
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3,369 |
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|
3,308 |
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2 |
% |
Depreciation |
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7,495 |
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|
8,025 |
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(7 |
)% |
Amortization of intangible assets |
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120 |
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145 |
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(17 |
)% |
Gain on disposals of assets, net |
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(85 |
) |
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(1,835 |
) |
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(95 |
)% |
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|
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|
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|
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|
60,695 |
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|
55,816 |
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9 |
% |
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|
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|
Operating income |
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|
24,650 |
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|
10,630 |
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|
|
132 |
% |
Other income (expense): |
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Miscellaneous (expense) income, net |
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(15 |
) |
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|
13 |
|
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(215 |
)% |
Interest expense |
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|
(16,671 |
) |
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|
(19,400 |
) |
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(14 |
)% |
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Income (loss) before income tax |
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|
7,964 |
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|
|
(8,757 |
) |
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|
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Income tax expense (benefit) |
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|
2,456 |
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|
(3,237 |
) |
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Net income (loss) |
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|
5,508 |
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|
|
(5,520 |
) |
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Preferred dividends (includes accretion of issuance
cost of $118 and $301, respectively) |
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|
1,789 |
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|
|
4,468 |
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(60 |
)% |
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|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common stockholders |
|
$ |
3,719 |
|
|
$ |
(9,988 |
) |
|
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Basic per share information: |
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|
|
|
|
|
|
|
|
|
Net income (loss) available to common stockholders |
|
$ |
0.07 |
|
|
$ |
(0.21 |
) |
|
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|
|
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|
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|
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|
Weighted-average shares outstanding |
|
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57,071 |
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|
|
48,519 |
|
|
|
18 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted per share information: |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common stockholders |
|
$ |
0.07 |
|
|
$ |
(0.21 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding |
|
|
57,072 |
|
|
|
48,519 |
|
|
|
18 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Political advertising revenue (less agency commissions) |
|
$ |
16,042 |
|
|
$ |
3,071 |
|
|
|
422 |
% |
|
|
|
Gray Television, Inc. |
|
|
Earnings Release for the three-month and nine-month periods ended September 30, 2010
|
|
Page 7 of 13 |
Gray Television, Inc.
Selected Operating Data (Unaudited)
(in thousands except for per share data and percentages)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
|
|
|
|
|
|
|
|
|
% |
|
|
|
2010 |
|
|
2009 |
|
|
Change |
|
Revenues (less agency commissions) |
|
$ |
231,463 |
|
|
$ |
192,857 |
|
|
|
20 |
% |
Operating expenses before depreciation,
amortization and gain on disposal of assets, net: |
|
|
|
|
|
|
|
|
|
|
|
|
Broadcast |
|
|
143,455 |
|
|
|
136,994 |
|
|
|
5 |
% |
Corporate and administrative |
|
|
10,128 |
|
|
|
10,946 |
|
|
|
(7 |
)% |
Depreciation |
|
|
23,401 |
|
|
|
24,538 |
|
|
|
(5 |
)% |
Amortization of intangible assets |
|
|
362 |
|
|
|
440 |
|
|
|
(18 |
)% |
Gain on disposals of assets, net |
|
|
(609 |
) |
|
|
(4,455 |
) |
|
|
(86 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
176,737 |
|
|
|
168,463 |
|
|
|
5 |
% |
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
54,726 |
|
|
|
24,394 |
|
|
|
124 |
% |
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
Miscellaneous income, net |
|
|
43 |
|
|
|
26 |
|
|
|
65 |
% |
Interest expense |
|
|
(53,713 |
) |
|
|
(49,520 |
) |
|
|
8 |
% |
Loss on early extinguishment of debt |
|
|
(349 |
) |
|
|
(8,352 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income tax expense (benefit) |
|
|
707 |
|
|
|
(33,452 |
) |
|
|
|
|
Income tax benefit |
|
|
(592 |
) |
|
|
(12,364 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
|
1,299 |
|
|
|
(21,088 |
) |
|
|
|
|
Preferred dividends (includes accretion of issuance
cost of $4,371 and $903, respectively) |
|
|
12,793 |
|
|
|
12,569 |
|
|
|
2 |
% |
|
|
|
|
|
|
|
|
|
|
|
Net loss available to common stockholders |
|
$ |
(11,494 |
) |
|
$ |
(33,657 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted per share information: |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss available to common stockholders |
|
$ |
(0.22 |
) |
|
$ |
(0.69 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding |
|
|
53,394 |
|
|
|
48,505 |
|
|
|
10 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Political advertising revenue (less agency commissions) |
|
$ |
24,413 |
|
|
$ |
5,022 |
|
|
|
386 |
% |
|
|
|
Gray Television, Inc. |
|
|
Earnings Release for the three-month and nine-month periods ended September 30, 2010
|
|
Page 8 of 13 |
Guidance for the Fourth Quarter of 2010
We currently anticipate that our broadcast results of operations for the three-month period ending
December 31, 2010 (the fourth quarter of 2010) will approximate the ranges presented in the table
below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 |
|
|
% Change |
|
|
2010 |
|
|
% Change |
|
|
|
|
|
|
Guidance |
|
|
From |
|
|
Guidance |
|
|
From |
|
|
|
|
|
|
Low |
|
|
Actual |
|
|
High |
|
|
Actual |
|
|
Actual |
|
Selected operating data: |
|
Range |
|
|
2009 |
|
|
Range |
|
|
2009 |
|
|
2009 |
|
|
|
|
|
|
|
(dollars in thousands) |
|
|
|
|
|
OPERATING REVENUE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue (less agency commissions) |
|
$ |
104,500 |
|
|
|
35 |
% |
|
$ |
105,500 |
|
|
|
36 |
% |
|
$ |
77,517 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(before depreciation, amortization and
gain on disposal of assets): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadcast |
|
$ |
52,800 |
|
|
|
4 |
% |
|
$ |
53,300 |
|
|
|
5 |
% |
|
$ |
50,589 |
|
Corporate and administrative |
|
$ |
4,000 |
|
|
|
24 |
% |
|
$ |
4,200 |
|
|
|
30 |
% |
|
$ |
3,222 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER SELECTED DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Political advertising revenues
(less agency commissions) |
|
$ |
33,000 |
|
|
|
566 |
% |
|
$ |
33,000 |
|
|
|
566 |
% |
|
$ |
4,954 |
|
Comments on Guidance:
Revenue.
Based on our current forecasts, we currently believe our fourth quarter of 2010 local revenue,
excluding political revenue, will approximate the amount of local revenue that we recorded for the
three-month period ended December 31, 2009 (the fourth quarter of 2009). We currently believe our
fourth quarter of 2010 national revenue, excluding political revenue, will decrease from the fourth
quarter of 2009 by approximately 6%. These estimates of local and national advertising revenue
reflect the reallocation of commercial time sale inventory to political advertisers to meet the air
time requests of those political advertisers.
We anticipate our fourth quarter of 2010 internet revenue will increase from the fourth
quarter of 2009 by approximately 16%.
We anticipate our fourth quarter of 2010 political advertising revenue will increase to
approximately $33.0 million.
We anticipate that our fourth quarter of 2010 retransmission consent revenue will increase
approximately $0.8 million, to a total of approximately $4.5 million, reflecting the successful
retransmission negotiations concluded in 2009 and 2010.
We estimate our base consulting revenue will remain stable at $0.6 million for the fourth
quarter of 2010.
Broadcast Operating Expense (before depreciation, amortization and gain/loss on disposal of
assets).
The anticipated increase in broadcast operating expense for the fourth quarter of 2010
compared to the fourth quarter of 2009 is due primarily to commissions or other accrued incentive
compensation expected to be earned by employees and national representation firm fees earned by
third parties, both of which would result from higher anticipated revenue.
|
|
|
Gray Television, Inc. |
|
|
Earnings Release for the three-month and nine-month periods ended September 30, 2010
|
|
Page 9 of 13 |
Corporate and Administrative Expense (before depreciation, amortization and gain/loss on disposal
of assets).
The anticipated increase in corporate expense for the fourth quarter of 2010 as compared to
the fourth quarter of 2009 is due primarily to an increase in accrued bonus compensation for
certain executive officers. Similar bonuses were not accrued for these executive officers in the
fourth quarter of 2009.
Net Revenue By Category:
The table below presents our net revenue by type for the three-month and nine-month periods
ended September 30, 2010 and 2009, respectively (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
Percent |
|
|
|
|
|
|
Percent |
|
|
|
Amount |
|
|
of Total |
|
|
Amount |
|
|
of Total |
|
Broadcasting net revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Local |
|
$ |
44,278 |
|
|
|
51.9 |
% |
|
$ |
41,135 |
|
|
|
61.9 |
% |
National |
|
|
14,294 |
|
|
|
16.7 |
% |
|
|
12,783 |
|
|
|
19.2 |
% |
Internet |
|
|
3,329 |
|
|
|
3.9 |
% |
|
|
2,925 |
|
|
|
4.4 |
% |
Political |
|
|
16,042 |
|
|
|
18.8 |
% |
|
|
3,071 |
|
|
|
4.6 |
% |
Retransmission consent |
|
|
4,658 |
|
|
|
5.5 |
% |
|
|
4,312 |
|
|
|
6.5 |
% |
Production and other |
|
|
2,022 |
|
|
|
2.4 |
% |
|
|
1,735 |
|
|
|
2.6 |
% |
Network compensation |
|
|
172 |
|
|
|
0.2 |
% |
|
|
172 |
|
|
|
0.3 |
% |
Consulting revenue |
|
|
550 |
|
|
|
0.6 |
% |
|
|
313 |
|
|
|
0.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
85,345 |
|
|
|
100.0 |
% |
|
$ |
66,446 |
|
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
Percent |
|
|
|
|
|
|
Percent |
|
|
|
Amount |
|
|
of Total |
|
|
Amount |
|
|
of Total |
|
Broadcasting net revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Local |
|
$ |
133,675 |
|
|
|
57.8 |
% |
|
$ |
123,693 |
|
|
|
64.1 |
% |
National |
|
|
42,036 |
|
|
|
18.2 |
% |
|
|
38,031 |
|
|
|
19.7 |
% |
Internet |
|
|
9,525 |
|
|
|
4.1 |
% |
|
|
8,200 |
|
|
|
4.3 |
% |
Political |
|
|
24,413 |
|
|
|
10.5 |
% |
|
|
5,022 |
|
|
|
2.6 |
% |
Retransmission consent |
|
|
13,967 |
|
|
|
6.0 |
% |
|
|
11,911 |
|
|
|
6.2 |
% |
Production and other |
|
|
5,808 |
|
|
|
2.5 |
% |
|
|
5,205 |
|
|
|
2.7 |
% |
Network compensation |
|
|
389 |
|
|
|
0.2 |
% |
|
|
482 |
|
|
|
0.2 |
% |
Consulting revenue |
|
|
1,650 |
|
|
|
0.7 |
% |
|
|
313 |
|
|
|
0.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
231,463 |
|
|
|
100.0 |
% |
|
$ |
192,857 |
|
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
The aggregate internet revenues presented above are derived from two sources: (i) direct
internet revenue and (ii) internet related commercial time sales.
|
|
|
Gray Television, Inc. |
|
|
Earnings Release for the three-month and nine-month periods ended September 30, 2010
|
|
Page 10 of 13 |
Conference Call Information
We will host a conference call to discuss our third quarter operating results on November 8,
2010. The call will begin at 11:00 AM Eastern Time. The live dial-in number is 1 (888) 297-0353
and the confirmation code is 5645853. The call will be webcast live and available for replay at
www.gray.tv. The taped replay of the conference call will be available at 1 (888) 203-1112,
Confirmation Code: 5645853 until December 7, 2010.
Non-GAAP Terms
This press release includes the non-GAAP financial measures of Broadcast Cash Flow and
Broadcast Cash Flow Less Cash Corporate Expenses. These non-GAAP amounts are used by us to
approximate the amount used to calculate a key financial performance covenant contained in our
senior credit facility. Broadcast Cash Flow is defined as operating income plus corporate expense,
depreciation and amortization (including amortization of program broadcast rights), impairment,
non-cash compensation and (gain) loss on disposal of assets and cash payments received or
receivable under network affiliation agreements, less payments for program broadcast obligations
and less network compensation revenue, net of income taxes. Corporate expenses (excluding
depreciation, amortization and non-cash stock-based compensation) are deducted from Broadcast Cash
Flow to calculate Broadcast Cash Flow Less Cash Corporate Expenses. These non-GAAP terms are not
defined in GAAP and our definitions may differ from, and therefore not be comparable to, similarly
titled measures used by other companies, thereby limiting their usefulness. Such terms are used in
addition to and in conjunction with results presented in accordance with GAAP and should be
considered as supplements to, and not as substitutes for, net loss and cash flows reported in
accordance with GAAP.
|
|
|
Gray Television, Inc. |
|
|
Earnings Release for the three-month and nine-month periods ended September 30, 2010
|
|
Page 11 of 13 |
Reconciliations:
Reconciliation of net income (loss) to the non-GAAP terms (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As Reported |
|
|
|
Three Months Ended |
|
|
|
September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
% Change |
|
Net income (loss) |
|
$ |
5,508 |
|
|
$ |
(5,520 |
) |
|
|
|
|
Adjustments to reconcile to Broadcast Cash Flow Less
Cash Corporate Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
7,495 |
|
|
|
8,025 |
|
|
|
|
|
Amortization of intangible assets |
|
|
120 |
|
|
|
145 |
|
|
|
|
|
Amortization of non-cash stock based compensation |
|
|
57 |
|
|
|
346 |
|
|
|
|
|
Gain on disposals of assets, net |
|
|
(85 |
) |
|
|
(1,835 |
) |
|
|
|
|
Miscellaneous expense (income), net |
|
|
15 |
|
|
|
(13 |
) |
|
|
|
|
Interest expense |
|
|
16,671 |
|
|
|
19,400 |
|
|
|
|
|
Income tax expense (benefit) |
|
|
2,456 |
|
|
|
(3,237 |
) |
|
|
|
|
Amortization of program broadcast rights |
|
|
3,733 |
|
|
|
3,822 |
|
|
|
|
|
Common stock contributed to 401(k) plan
excluding corporate 401(k) contributions |
|
|
8 |
|
|
|
8 |
|
|
|
|
|
Network compensation revenue recognized |
|
|
(172 |
) |
|
|
(172 |
) |
|
|
|
|
Network compensation per network affiliation agreement |
|
|
(60 |
) |
|
|
30 |
|
|
|
|
|
Payments for program broadcast rights |
|
|
(3,862 |
) |
|
|
(3,827 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadcast Cash Flow Less Cash Corporate Expenses |
|
|
31,884 |
|
|
|
17,172 |
|
|
|
86 |
% |
Corporate and administrative expenses excluding
amortization of non-cash stock-based compensation |
|
|
3,312 |
|
|
|
2,962 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadcast Cash Flow |
|
$ |
35,196 |
|
|
$ |
20,134 |
|
|
|
75 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As Reported |
|
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
% Change |
|
Net income (loss) |
|
$ |
1,299 |
|
|
$ |
(21,088 |
) |
|
|
|
|
Adjustments to reconcile to Broadcast Cash Flow Less
Cash Corporate Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
23,401 |
|
|
|
24,538 |
|
|
|
|
|
Amortization of intangible assets |
|
|
362 |
|
|
|
440 |
|
|
|
|
|
Amortization of non-cash stock based compensation |
|
|
274 |
|
|
|
1,044 |
|
|
|
|
|
Gain on disposals of assets, net |
|
|
(609 |
) |
|
|
(4,455 |
) |
|
|
|
|
Miscellaneous income, net |
|
|
(43 |
) |
|
|
(26 |
) |
|
|
|
|
Interest expense |
|
|
53,713 |
|
|
|
49,520 |
|
|
|
|
|
Loss on early extinguishment of debt |
|
|
349 |
|
|
|
8,352 |
|
|
|
|
|
Income tax expense (benefit) |
|
|
(592 |
) |
|
|
(12,364 |
) |
|
|
|
|
Amortization of program broadcast rights |
|
|
11,438 |
|
|
|
11,353 |
|
|
|
|
|
Common stock contributed to 401(k) plan
excluding corporate 401(k) contributions |
|
|
23 |
|
|
|
(26 |
) |
|
|
|
|
Network compensation revenue recognized |
|
|
(389 |
) |
|
|
(482 |
) |
|
|
|
|
Network compensation per network affiliation agreement |
|
|
(136 |
) |
|
|
30 |
|
|
|
|
|
Payments for program broadcast rights |
|
|
(11,590 |
) |
|
|
(11,483 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadcast Cash Flow Less Cash Corporate Expenses |
|
|
77,500 |
|
|
|
45,353 |
|
|
|
71 |
% |
Corporate and administrative expenses excluding
amortization of non-cash stock-based compensation |
|
|
9,854 |
|
|
|
9,902 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadcast Cash Flow |
|
$ |
87,354 |
|
|
$ |
55,255 |
|
|
|
58 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gray Television, Inc. |
|
|
Earnings Release for the three-month and nine-month periods ended September 30, 2010
|
|
Page 12 of 13 |
Gray Television, Inc.
Gray Television, Inc. is a television broadcast company headquartered in Atlanta, GA. We
currently operate 36 television stations serving 30 markets. Each of the stations are affiliated
with either CBS (17 stations), NBC (10 stations), ABC (8 stations) or FOX (1 station). In
addition, we currently operate 39 digital second channels including 1 ABC, 4 Fox, 7 CW, 18
MyNetworkTV, 2 Universal Sports Network affiliates and 7 local news/weather channels in certain of
our existing markets.
Cautionary Statements for Purposes of the Safe Harbor Provisions of the Private Securities
Litigation Reform Act
This press release contains statements that constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 and the federal securities laws.
These forward-looking statements are not statements of historical facts, and may include, among
other things, statements regarding our current expectations and beliefs of operating results for
the fourth quarter of 2010 or other periods, internet strategies, future expenses and other future
events. Actual results are subject to a number of risks and uncertainties and may differ
materially from the current expectations and beliefs discussed in this press release. All
information set forth in this release and its attachments is as of November 8, 2010. We do not
intend, and undertake no duty, to update this information to reflect future events or
circumstances. Information about certain potential factors that could affect our business and
financial results and cause actual results to differ materially from those expressed or implied in
any forward-looking statements are included under the captions Risk Factors and Managements
Discussion and Analysis of Financial Condition and Results of Operations, in our Quarterly Report
on Form 10-Q for the periods ended March 31, 2010, June 30, 2010 and in subsequently filed reports,
which are filed with the U.S. Securities and Exchange Commission (the SEC) and available at the
SECs website at www.sec.gov.
|
|
|
For information contact:
|
|
Web site: www.gray.tv |
Bob Prather
|
|
Jim Ryan |
President and Chief Operating Officer
|
|
Senior V. P. and Chief Financial Officer |
(404) 266-8333
|
|
(404) 504-9828 |
|
|
|
Gray Television, Inc. |
|
|
Earnings Release for the three-month and nine-month periods ended September 30, 2010
|
|
Page 13 of 13 |