GRAY TELEVISION, INC.
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) March 15, 2007
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, 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 March 15, 2007, Gray Television Inc. issued a press release reporting its financial results for
the fourth quarter ended December 31, 2006. A copy of the press release is hereby attached as
Exhibit 99 and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) |
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Exhibits |
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99 |
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Press Release issued by Gray Television Inc. on March 15, 2007 |
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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March 15, 2007 |
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 |
99
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Press release issued by Gray Television Inc. on March 15, 2007 |
EX-99 PRESS RELEASE ISSUED 3-15-07
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Gray |
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Exhibit 99 |
Television, Inc. |
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NEWS RELEASE
Gray Reports Operating Results
For the Three Months and Year Ended December 31, 2006
Atlanta, Georgia March 15, 2007. . . Gray Television, Inc. (Gray or the Company) (NYSE: GTN)
today announced results from operations for the three months (fourth quarter) and year ended
December 31, 2006 as compared to the three months and year ended December 31, 2005.
Significant items to note for the period ended December 31, 2006:
Pro forma net revenue increased 26% in the fourth quarter of 2006, to $101.9 million, compared to
$81.2 million in 2005. For the year ended December 31, 2006, pro forma net revenue increased 13%,
to $334.7 million, compared to $297.1 million in 2005.
Pro forma Broadcast Cash Flow increased 42%, to $48.6 million, in the fourth quarter of 2006
compared to $34.3 million in 2005. For the year ended December 31, 2006, pro forma Broadcast Cash
Flow increased 21%, to $143.8 million, compared to $119.1 million in 2005. See Page 8 for a
reconciliation of this Non-GAAP term to Net Income.
Grays quarter and year end results benefited from record net political revenue in a
non-presidential election year. The Companys strategy of owning strong #1 news stations in a
majority of its markets allowed it to capture a majority of the net political revenue spent in
those markets.
General Comment on Expansion of Operations:
Since January 1, 2005, Gray has continued to grow through acquisitions of new stations and the
start up of new operations. During the last two years, the Company has completed two top 100
market acquisitions with the purchase of WSAZ, Charleston Huntington, WV on November 30, 2005
and WNDU, South Bend, IN on March 3, 2006. These two stations are significant to Gray and have
added to Grays Broadcast Cash Flow from their date of acquisition. Due to their relative
significance to Grays results of operations, Grays pro forma results have been presented to
include the results of WSAZ and WNDU as if each station had been acquired on January 1, 2005.
Comments on Results of Operations for the Three Months Ended December 31, 2006:
Revenues.
On a pro forma(1) basis, after giving effect to the acquisition of television stations
WSAZ and WNDU, total net revenue for all stations increased 26%, or $20.7 million, due primarily to
increases in political advertising revenues. These increases were partially offset by decreases in
local advertising revenues, national advertising revenues and network compensation.
Political advertising revenues increased to $25.6 million from $1.7 million reflecting the
cyclical influence of the 2006 elections.
Local and national advertising was influenced, in part, by the proportion of the total available
advertising time utilized by political announcements.
4370 Peachtree Road, NE * Atlanta, GA 30319
(404) 504-9828 * Fax (404) 261-9607
Operating expenses.
On a pro forma(1) basis, after giving effect to the acquisition of television stations
WSAZ and WNDU, total broadcast expenses (before depreciation, amortization and loss on disposal of
assets) increased approximately 11% to $53.4 million.
Payroll related expenses increased approximately 4% or $1.3 million. This increase was due
primarily to routine compensation increases at Grays existing stations, increased incentive
compensation and modest staffing increases at each station to support the operation of the new
digital second channels.
Non-payroll related expenses increased approximately 21% or $3.8 million. This increase was
largely due to an incremental increase in non-payroll expenses for the digital second channels
and an incremental increase in national sales representative commissions on political advertising
revenue.
Corporate and administrative expenses, before depreciation, amortization and loss on disposal of
assets increased 67% to $5.0 million from $3.0 million due, in part, to an incremental increase in
legal fees and consulting expense. In addition, the 2006 period includes an aggregate of
approximately $511,000 of non-cash expenses recorded in connection with restricted stock awards and
the Companys adoption on January 1, 2006 of Statement of Financial Accounting Standards No. 123(R)
(SFAS 123(R)) which relates to the new accounting rules for expensing stock based compensation.
The corresponding period of 2005 contains $97,000 of non-cash expenses associated with restricted
stock awards.
Comments on Results of Operations for the Year Ended December 31, 2006:
Revenues.
On a pro forma(1) basis, after giving effect to the acquisition of television stations
WSAZ and WNDU, total net revenue for all stations increased 13%, or $37.6 million, due primarily to
increases in political advertising revenues and local advertising revenues. These increases were
partially offset by decreases in national advertising revenues and network compensation.
Political advertising revenues increased to $42.8 million from $3.7 million reflecting the
cyclical influence of the 2006 elections.
Local and national advertising was influenced, in part, by the proportion of the total available
advertising time utilized by political announcements.
Operating expenses.
On a pro forma(1) basis, after giving effect to the acquisition of television stations
WSAZ and WNDU, total broadcast expenses (before depreciation, amortization and loss on disposal of
assets) increased approximately 6% to $193.6 million.
Payroll related expenses increased approximately 3% or $3.4 million. This increase was due
primarily to routine compensation increases at Grays existing stations, increased incentive
compensation and modest staffing increases at each station to support the operation of the new
digital second channels.
Non-payroll related expenses increased approximately 11% or $7.3 million. This increase was
largely due to an incremental increase in non-payroll expenses for the digital second channels
and an incremental increase in national sales representative commissions on political
advertising revenue.
Corporate and administrative expenses, before depreciation, amortization and loss on disposal
of assets increased 27% to $15.1 million from $11.9 million due, in part, to incremental increases
in legal fees,
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Gray Television, Inc. |
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Earnings release for the year ended December 31, 2006
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Page 2 of 9 |
payroll expense and consulting expense. The 2006 period also includes an aggregate of
approximately $1.1 million of non-cash expenses recorded in connection with restricted stock awards
and the Companys adoption on January 1, 2006 of SFAS 123(R) which relates to the new accounting
rules for expensing stock based compensation. The corresponding period of 2005 contains $391,000
of non-cash expenses associated with restricted stock awards.
Other Financial Data:
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December 31, |
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2006 |
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2005 |
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(dollars in thousands) |
Cash |
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$ |
4,741 |
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$ |
9,315 |
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Total debt(2) |
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851,654 |
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792,509 |
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Available credit under senior credit facility |
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97,000 |
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58,500 |
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Years Ended December 31, |
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2006 |
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2005 |
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(dollars in thousands) |
Net cash provided by operating activities |
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$ |
79,860 |
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$ |
50,482 |
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Net cash used in investing activities |
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(129,305 |
) |
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(245,925 |
) |
Net cash provided by financing activities |
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44,871 |
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154,192 |
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Gray generated $79.9 million of net cash from operations during 2006 compared to $50.5 million
for the prior year. The increase was due largely to the addition of WSAZ and WNDU as well as
additional advertising revenue at Grays existing stations.
During 2006, Gray borrowed $84.9 million to finance the acquisition of WNDU and repaid $25.8
million for a net increase in debt of $59.1 million since December 31, 2005.
Gray repurchased 175 shares of Series C Redeemable Serial Preferred Stock for $1.8 million and
repurchased 902,200 shares of common stock for $5.6 million. The preferred shares were retired and
the common stock is held in treasury.
A Detailed table of operating results follows on the next page.
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Gray Television, Inc. |
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Earnings release for the year ended December 31, 2006
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Page 3 of 9 |
Gray Television, Inc.
Selected As Reported and Pro Forma Operating Data (Unaudited)
(in thousands except for per share data and percentages)
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As Reported |
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Pro Forma(1) |
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Three Months Ended |
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Three Months Ended |
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December 31, |
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December 31, |
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% |
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% |
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2006 |
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2005 |
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Change |
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2006 |
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2005 |
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Change |
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Revenues (less agency commissions) |
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$ |
101,920 |
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$ |
72,975 |
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40 |
% |
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$ |
101,920 |
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$ |
81,197 |
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26 |
% |
Operating expenses: |
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Operating expenses before depreciation,
amortization and loss on disposal of assets, net: |
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53,444 |
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43,607 |
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23 |
% |
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53,444 |
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48,296 |
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11 |
% |
Corporate and administrative |
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4,956 |
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2,964 |
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67 |
% |
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4,956 |
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2,964 |
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67 |
% |
Depreciation and amortization of intangible assets |
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9,698 |
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7,590 |
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28 |
% |
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9,698 |
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9,172 |
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6 |
% |
Loss on disposals of assets, net |
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528 |
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1,309 |
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(60 |
)% |
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528 |
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1,309 |
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(60 |
)% |
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68,626 |
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55,470 |
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24 |
% |
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68,626 |
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61,741 |
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11 |
% |
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Operating income |
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33,294 |
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17,505 |
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90 |
% |
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33,294 |
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|
19,456 |
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|
71 |
% |
Other income (expense): |
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Miscellaneous income (expense), net |
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181 |
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(150 |
) |
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(221 |
)% |
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181 |
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(150 |
) |
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(221 |
)% |
Interest expense |
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(17,123 |
) |
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(13,002 |
) |
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32 |
% |
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(17,123 |
) |
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(16,202 |
) |
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6 |
% |
Loss on early extinguishment of debt |
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(1,773 |
) |
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(100 |
)% |
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(1,773 |
) |
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(100 |
)% |
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Income from continuing operations before
income tax expense |
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16,352 |
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|
2,580 |
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|
534 |
% |
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16,352 |
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|
1,331 |
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|
1129 |
% |
Income tax expense |
|
|
7,765 |
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|
1,450 |
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|
436 |
% |
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7,765 |
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|
519 |
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|
1396 |
% |
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Income from continuing operations |
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8,587 |
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|
1,130 |
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|
660 |
% |
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8,587 |
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|
812 |
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|
958 |
% |
Loss from operations of discontinued publishing
and wireless operations net of income tax expense
of $0, $810, $0 and $810, respectively |
|
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(4,979 |
) |
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(100 |
)% |
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|
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|
(4,979 |
) |
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(100 |
)% |
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Net income (loss) |
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8,587 |
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|
(3,849 |
) |
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(323 |
)% |
|
|
8,587 |
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|
(4,167 |
) |
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|
(306 |
)% |
Preferred dividends (includes accretion of issuance
cost of $21, $29, $21, $29, respectively) |
|
|
778 |
|
|
|
814 |
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(4 |
)% |
|
|
778 |
|
|
|
814 |
|
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|
(4 |
)% |
Deemed non-cash preferred stock dividend |
|
|
|
|
|
|
2,390 |
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|
(100 |
)% |
|
|
|
|
|
|
2,390 |
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|
(100 |
)% |
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|
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|
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|
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|
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|
Net income (loss) available to common stockholders |
|
$ |
7,809 |
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|
$ |
(7,053 |
) |
|
|
(211 |
)% |
|
$ |
7,809 |
|
|
$ |
(7,371 |
) |
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|
(206 |
)% |
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Basic per share information: |
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|
Income (loss) from continuing operations
available to common stockholders |
|
$ |
0.16 |
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|
$ |
(0.05 |
) |
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|
$ |
0.16 |
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|
$ |
(0.05 |
) |
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Loss from discontinued operations, net of tax |
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(0.10 |
) |
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(0.10 |
) |
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|
Net income (loss) available to common stockholders |
|
$ |
0.16 |
|
|
$ |
(0.15 |
) |
|
|
|
|
|
$ |
0.16 |
|
|
$ |
(0.15 |
) |
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|
|
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|
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|
Weighted average shares outstanding |
|
|
48,040 |
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|
|
48,630 |
|
|
|
(1 |
)% |
|
|
48,040 |
|
|
|
48,630 |
|
|
|
(1 |
)% |
|
|
|
|
|
|
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Diluted per share information: |
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
available to common stockholders |
|
$ |
0.16 |
|
|
$ |
(0.05 |
) |
|
|
|
|
|
$ |
0.16 |
|
|
$ |
(0.05 |
) |
|
|
|
|
Loss from discontinued operations, net of tax |
|
|
|
|
|
|
(0.10 |
) |
|
|
|
|
|
|
|
|
|
|
(0.10 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common stockholders |
|
$ |
0.16 |
|
|
$ |
(0.15 |
) |
|
|
|
|
|
$ |
0.16 |
|
|
$ |
(0.15 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding |
|
|
48,076 |
|
|
|
48,630 |
|
|
|
(1 |
)% |
|
|
48,076 |
|
|
|
48,630 |
|
|
|
(1 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
Political revenue (less agency commission) |
|
$ |
25,605 |
|
|
$ |
1,433 |
|
|
|
1687 |
% |
|
$ |
25,605 |
|
|
$ |
1,713 |
|
|
|
1395 |
% |
|
|
|
Gray Television, Inc. |
|
|
Earnings release for the year ended December 31, 2006 |
|
Page 4 of 9 |
Gray Television, Inc.
Selected As Reported and Pro Forma Operating Data (Unaudited)
(in thousands except for per share data and percentages)
|
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|
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|
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|
|
|
|
|
As Reported |
|
|
Pro Forma(1) |
|
|
|
Years Ended |
|
|
Years Ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
|
|
|
|
|
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
% |
|
|
|
2006 |
|
|
2005 |
|
|
Change |
|
|
2006 |
|
|
2005 |
|
|
Change |
|
Revenues (less agency commissions) |
|
$ |
332,137 |
|
|
$ |
261,553 |
|
|
|
27 |
% |
|
$ |
334,722 |
|
|
$ |
297,050 |
|
|
|
13 |
% |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses before depreciation,
amortization and loss on disposal of assets, net: |
|
|
191,502 |
|
|
|
161,905 |
|
|
|
18 |
% |
|
|
193,639 |
|
|
|
182,936 |
|
|
|
6 |
% |
Corporate and administrative |
|
|
15,097 |
|
|
|
11,896 |
|
|
|
27 |
% |
|
|
15,097 |
|
|
|
11,896 |
|
|
|
27 |
% |
Depreciation and amortization of intangible assets |
|
|
36,526 |
|
|
|
25,490 |
|
|
|
43 |
% |
|
|
37,194 |
|
|
|
32,936 |
|
|
|
13 |
% |
Loss on disposals of assets, net |
|
|
1,021 |
|
|
|
1,401 |
|
|
|
(27 |
)% |
|
|
1,021 |
|
|
|
1,401 |
|
|
|
(27 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
244,146 |
|
|
|
200,692 |
|
|
|
22 |
% |
|
|
246,951 |
|
|
|
229,169 |
|
|
|
8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
87,991 |
|
|
|
60,861 |
|
|
|
45 |
% |
|
|
87,771 |
|
|
|
67,881 |
|
|
|
29 |
% |
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Miscellaneous income, net |
|
|
677 |
|
|
|
558 |
|
|
|
21 |
% |
|
|
677 |
|
|
|
558 |
|
|
|
21 |
% |
Interest expense |
|
|
(66,787 |
) |
|
|
(46,549 |
) |
|
|
43 |
% |
|
|
(67,212 |
) |
|
|
(59,511 |
) |
|
|
13 |
% |
Loss on early extinguishment of debt |
|
|
(347 |
) |
|
|
(6,543 |
) |
|
|
(95 |
)% |
|
|
(347 |
) |
|
|
(6,543 |
) |
|
|
(95 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before
income tax expense |
|
|
21,534 |
|
|
|
8,327 |
|
|
|
159 |
% |
|
|
20,889 |
|
|
|
2,385 |
|
|
|
776 |
% |
Income tax expense |
|
|
9,823 |
|
|
|
3,723 |
|
|
|
164 |
% |
|
|
9,588 |
|
|
|
930 |
|
|
|
931 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations |
|
|
11,711 |
|
|
|
4,604 |
|
|
|
154 |
% |
|
|
11,301 |
|
|
|
1,455 |
|
|
|
677 |
% |
Loss from operations of discontinued publishing
and wireless operations net of income tax expense
of $0, $3,253, $0 and $3,253, respectively |
|
|
|
|
|
|
(1,242 |
) |
|
|
(100 |
)% |
|
|
|
|
|
|
(1,242 |
) |
|
|
(100 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
11,711 |
|
|
|
3,362 |
|
|
|
248 |
% |
|
|
11,301 |
|
|
|
213 |
|
|
|
5206 |
% |
Preferred dividends (includes accretion of issuance
cost of $111, $87, $111 and $87, respectively) |
|
|
3,247 |
|
|
|
3,258 |
|
|
|
0 |
% |
|
|
3,247 |
|
|
|
3,258 |
|
|
|
0 |
% |
Deemed non-cash preferred stock dividend |
|
|
|
|
|
|
2,390 |
|
|
|
(100 |
)% |
|
|
|
|
|
|
2,390 |
|
|
|
(100 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common stockholders |
|
$ |
8,464 |
|
|
$ |
(2,286 |
) |
|
|
(470 |
)% |
|
$ |
8,054 |
|
|
$ |
(5,435 |
) |
|
|
(248 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic per share information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
available to common stockholders |
|
$ |
0.17 |
|
|
$ |
(0.02 |
) |
|
|
|
|
|
$ |
0.17 |
|
|
$ |
(0.08 |
) |
|
|
|
|
Loss from discontinued operations, net of tax |
|
|
|
|
|
|
(0.03 |
) |
|
|
|
|
|
|
|
|
|
|
(0.03 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common stockholders |
|
$ |
0.17 |
|
|
$ |
(0.05 |
) |
|
|
|
|
|
$ |
0.17 |
|
|
$ |
(0.11 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding |
|
|
48,408 |
|
|
|
48,649 |
|
|
|
0 |
% |
|
|
48,408 |
|
|
|
48,649 |
|
|
|
0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted per share information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
available to common stockholders |
|
$ |
0.17 |
|
|
$ |
(0.02 |
) |
|
|
|
|
|
$ |
0.17 |
|
|
$ |
(0.08 |
) |
|
|
|
|
Loss from discontinued operations, net of tax |
|
|
|
|
|
|
(0.03 |
) |
|
|
|
|
|
|
|
|
|
|
(0.03 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common stockholders |
|
$ |
0.17 |
|
|
$ |
(0.05 |
) |
|
|
|
|
|
$ |
0.17 |
|
|
$ |
(0.11 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding |
|
|
48,425 |
|
|
|
48,649 |
|
|
|
0 |
% |
|
|
48,425 |
|
|
|
48,649 |
|
|
|
0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Political revenue (less agency commission) |
|
$ |
42,682 |
|
|
$ |
2,862 |
|
|
|
1391 |
% |
|
$ |
42,762 |
|
|
$ |
3,659 |
|
|
|
1069 |
% |
|
|
|
Gray Television, Inc. |
|
|
Earnings release for the year ended December 31, 2006
|
|
Page 5 of 9 |
Guidance for the First Quarter of 2007
We currently anticipate that Grays broadcasting results of operations for the three months ending
March 31, 2007 will approximate the ranges presented in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% |
|
% |
|
|
|
|
|
% |
|
% |
|
|
|
|
|
|
2007 |
|
Change |
|
Change |
|
2007 |
|
Change |
|
Change |
|
|
|
|
|
|
Guidance |
|
From |
|
From |
|
Guidance |
|
From |
|
From |
|
|
|
|
|
|
Low |
|
Actual |
|
Pro Forma |
|
High |
|
Actual |
|
Pro Forma |
|
Actual |
|
Pro Forma |
Selected operating data: |
|
Range |
|
2006 |
|
2006 |
|
Range |
|
2006 |
|
2006 |
|
2006 |
|
2006 |
|
|
(dollars in thousands) |
OPERATING REVENUES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues (less agency
commissions) |
|
$ |
69,000 |
|
|
|
1 |
% |
|
|
(3 |
)% |
|
$ |
69,500 |
|
|
|
2 |
% |
|
|
(2 |
)% |
|
$ |
68,234 |
|
|
$ |
70,819 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(before depreciation, amortization
and other expenses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadcast |
|
$ |
49,000 |
|
|
|
9 |
% |
|
|
4 |
% |
|
$ |
49,500 |
|
|
|
10 |
% |
|
|
5 |
% |
|
$ |
45,064 |
|
|
$ |
47,201 |
|
Corporate |
|
$ |
3,800 |
|
|
|
2 |
% |
|
|
2 |
% |
|
$ |
3,900 |
|
|
|
4 |
% |
|
|
4 |
% |
|
$ |
3,743 |
|
|
$ |
3,743 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER SELECTED DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadcast political revenues
(less agency commissions) |
|
$ |
500 |
|
|
|
|
|
|
|
|
|
|
$ |
700 |
|
|
|
|
|
|
|
|
|
|
$ |
1,776 |
|
|
$ |
1,856 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadcast Olympic revenues
(less agency commissions) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
$ |
2,880 |
|
|
$ |
3,390 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expense for non-cash
contributions to 401(k) plan |
|
$ |
525 |
|
|
|
|
|
|
|
|
|
|
$ |
575 |
|
|
|
|
|
|
|
|
|
|
$ |
573 |
|
|
$ |
573 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expense for corporate non-cash
stock based compensation |
|
$ |
490 |
|
|
|
|
|
|
|
|
|
|
$ |
510 |
|
|
|
|
|
|
|
|
|
|
$ |
198 |
|
|
$ |
198 |
|
Pro forma information presented in this guidance section includes operating results of WNDU as
if it had been acquired on January 1, 2006.
Comments on Guidance
On a pro forma basis after giving effect to the acquisition of WNDU, the growth in local revenue
over the pro forma results for the first quarter of 2006 was not expected to completely off-set the
$3.4 million of pro forma revenue earned from the broadcast of the 2006 Winter Olympics or the
approximate $1.2 million incremental decline in pro forma political revenues.
On a pro forma basis, after giving effect to the acquisition of WNDU, approximately $1.2 million of
the expected increase in broadcast operating expenses for all stations, before depreciation,
amortization and loss on disposal of assets is attributable to the incremental costs of the digital
second channels discussed above.
Changes in the classification of certain items:
The classification of certain prior year amounts in the accompanying consolidated financial
statements have been changed in order to conform to the current year presentation.
Conference Call Information
Gray Television, Inc. will host a conference call to discuss its fourth quarter and year ended
operating results on March 15, 2007. The call will begin at 2:00 PM Eastern Time. The live
dial-in number is 1-800-946-
|
|
|
Gray Television, Inc. |
|
|
Earnings release for the year ended December 31, 2006
|
|
Page 6 of 9 |
0716 and the confirmation code is 4477457. 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: 4477457 until March 22, 2007.
|
|
|
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 year ended December 31, 2006
|
|
Page 7 of 9 |
Reconciliations:
Reconciliation of net income (loss) to the Non-GAAP terms:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As Reported |
|
|
Pro Forma(1) |
|
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2006 |
|
|
2005 |
|
|
2006 |
|
|
2005 |
|
|
|
(in thousands) |
|
|
(in thousands) |
|
Net income (loss) |
|
$ |
8,587 |
|
|
$ |
(3,849 |
) |
|
$ |
8,587 |
|
|
$ |
(4,167 |
) |
Adjustments to reconcile to Adjusted Broadcast Cash Flow: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization of intangible assets |
|
|
9,698 |
|
|
|
7,590 |
|
|
|
9,698 |
|
|
|
9,172 |
|
Amortization of non-cash stock based compensation |
|
|
511 |
|
|
|
97 |
|
|
|
511 |
|
|
|
97 |
|
Loss on disposals of assets, net |
|
|
528 |
|
|
|
1,309 |
|
|
|
528 |
|
|
|
1,309 |
|
Miscellaneous (income) expense, net |
|
|
(181 |
) |
|
|
150 |
|
|
|
(181 |
) |
|
|
150 |
|
Interest expense |
|
|
17,123 |
|
|
|
13,002 |
|
|
|
17,123 |
|
|
|
16,202 |
|
Loss on early extinguishment of debt |
|
|
|
|
|
|
1,773 |
|
|
|
|
|
|
|
1,773 |
|
Income tax expense |
|
|
7,765 |
|
|
|
1,450 |
|
|
|
7,765 |
|
|
|
519 |
|
Loss from discontinued operations |
|
|
|
|
|
|
4,979 |
|
|
|
|
|
|
|
4,979 |
|
Amortization of program broadcast rights |
|
|
3,803 |
|
|
|
2,959 |
|
|
|
3,803 |
|
|
|
2,959 |
|
Common Stock
contributed to 401(k) Plan
excluding corporate 401(k) contributions |
|
|
556 |
|
|
|
476 |
|
|
|
556 |
|
|
|
476 |
|
Network compensation revenue recognized |
|
|
(250 |
) |
|
|
(1,060 |
) |
|
|
(250 |
) |
|
|
(1,060 |
) |
Network compensation per network affiliation agreement |
|
|
539 |
|
|
|
1,935 |
|
|
|
539 |
|
|
|
1,935 |
|
Payments for program broadcast rights |
|
|
(4,482 |
) |
|
|
(2,880 |
) |
|
|
(4,482 |
) |
|
|
(2,880 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadcast Cash Flow Less Cash Corporate Expenses |
|
|
44,197 |
|
|
|
27,931 |
|
|
|
44,197 |
|
|
|
31,464 |
|
Corporate and administrative expenses excluding
amortization of non-cash stock based compensation |
|
|
4,445 |
|
|
|
2,867 |
|
|
|
4,445 |
|
|
|
2,867 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadcast Cash Flow |
|
$ |
48,642 |
|
|
$ |
30,798 |
|
|
$ |
48,642 |
|
|
$ |
34,331 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As Reported |
|
|
Pro Forma(1) |
|
|
|
Years Ended |
|
|
Years Ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2006 |
|
|
2005 |
|
|
2006 |
|
|
2005 |
|
|
|
(in thousands) |
|
|
(in thousands) |
|
Net income |
|
$ |
11,711 |
|
|
$ |
3,362 |
|
|
$ |
11,301 |
|
|
$ |
213 |
|
Adjustments to reconcile to Adjusted Broadcast Cash Flow: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization of intangible assets |
|
|
36,526 |
|
|
|
25,490 |
|
|
|
37,194 |
|
|
|
32,936 |
|
Amortization of non-cash stock based compensation |
|
|
1,092 |
|
|
|
391 |
|
|
|
1,092 |
|
|
|
391 |
|
Loss on disposals of assets, net |
|
|
1,021 |
|
|
|
1,401 |
|
|
|
1,021 |
|
|
|
1,401 |
|
Miscellaneous (income) expense, net |
|
|
(677 |
) |
|
|
(558 |
) |
|
|
(677 |
) |
|
|
(558 |
) |
Interest expense |
|
|
66,787 |
|
|
|
46,549 |
|
|
|
67,212 |
|
|
|
59,511 |
|
Loss on early extinguishment of debt |
|
|
347 |
|
|
|
6,543 |
|
|
|
347 |
|
|
|
6,543 |
|
Income tax expense |
|
|
9,823 |
|
|
|
3,723 |
|
|
|
9,588 |
|
|
|
930 |
|
Loss from discontinued operations |
|
|
|
|
|
|
1,242 |
|
|
|
|
|
|
|
1,242 |
|
Amortization of program broadcast rights |
|
|
14,234 |
|
|
|
11,577 |
|
|
|
14,234 |
|
|
|
11,577 |
|
Common Stock
contributed to 401(k) Plan
excluding corporate 401(k) contributions |
|
|
2,234 |
|
|
|
1,912 |
|
|
|
2,234 |
|
|
|
1,912 |
|
Network compensation revenue recognized |
|
|
(1,089 |
) |
|
|
(5,095 |
) |
|
|
(1,089 |
) |
|
|
(5,095 |
) |
Network compensation per network affiliation agreement |
|
|
2,216 |
|
|
|
8,031 |
|
|
|
2,216 |
|
|
|
8,031 |
|
Payments for program broadcast rights |
|
|
(14,839 |
) |
|
|
(11,452 |
) |
|
|
(14,839 |
) |
|
|
(11,452 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadcast Cash Flow Less Cash Corporate Expenses |
|
|
129,386 |
|
|
|
93,116 |
|
|
|
129,834 |
|
|
|
107,582 |
|
Corporate and administrative expenses excluding
amortization of non-cash stock based compensation |
|
|
14,005 |
|
|
|
11,505 |
|
|
|
14,005 |
|
|
|
11,505 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadcast Cash Flow |
|
$ |
143,391 |
|
|
$ |
104,621 |
|
|
$ |
143,839 |
|
|
$ |
119,087 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gray Television, Inc. |
|
|
Earnings release for the year ended December 31, 2006
|
|
Page 8 of 9 |
Non-GAAP Terms
This press release includes the non-GAAP financial measure of Broadcast Cash Flow and Broadcast
Cash Flow Less Cash Corporate Expenses. These non-GAAP amounts are used by the Company to
approximate the amount used to calculate key financial performance covenants including, but not
limited to, limitations on debt, interest coverage, and fixed charge coverage ratios as defined in
the Companys senior credit facility and/or senior subordinated note indenture. Broadcast Cash
Flow is defined as operating income, plus corporate expense, depreciation and amortization
(including amortization of program broadcast rights), 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, less network compensation revenue and less income
(loss) from discontinued operations, 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
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 income (loss) calculated in
accordance with GAAP.
Notes
(1) The pro forma presentation gives effect to the results of operations for the acquisition of
television stations WSAZ, Charleston Huntington, WV on November 30, 2005 and WNDU, South Bend, IN
on March 3, 2006 as if each station had been acquired on January 1, 2005. Due to the relative size
of the acquisition of KKCO, Grand Junction, CO and WSWG, Albany, GA, the results of operations for
KKCO and WSWG are included as of their respective acquisition date in both the As Reported and
Pro Forma results.
(2) Total debt as of December 31, 2006 and December 31, 2005 does not include $653,000 and
$811,000, respectively, of unamortized debt discount on Grays 91/4% Senior Subordinated Notes due
2011. The decrease is due to the amortization of the discount.
The Company
Gray Television, Inc. is a television broadcast company headquartered in Atlanta, GA. Gray
currently operates 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, Gray currently operates 36 digital second channels including 1 ABC, 5 Fox, 7 CW and 15
MyNetworkTV affiliates plus 6 local news/weather channels and 2 independent channels in certain
of its existing markets. Gray intends to start an additional 4 digital second channels during 2007
including 1 CW affiliate, 1 MyNetworkTV affiliate and 2 local news/weather channels.
Cautionary Statements for Purposes of the Safe Harbor Provisions of the Private Securities
Litigation Reform Act
The comments on Grays current expectations of operating results for the first quarter of 2007 and
other future events are forward looking statements for purposes of the Private Securities
Litigation Reform Act of 1995. Actual results of operations are subject to a number of risks and
uncertainties and may differ materially from the current expectations discussed in this press
release. All information set forth in this release and its attachments is as of March 15, 2007.
Gray does not intend, and undertakes no duty, to update this information to reflect future events
or circumstances. Information about potential factors that could affect Grays business and
financial results and cause actual results to differ materially from those in the forward-looking
statements is included under the
captions, Risk Factors and Managements Discussion and Analysis of Financial Condition and
Results of Operations, in Grays Annual Report on Form 10-K for the year ended December 31, 2006
which is on file with the SEC and available at the SECs website at www.sec.gov.
|
|
|
Gray Television, Inc. |
|
|
Earnings release for the year ended December 31, 2006
|
|
Page 9 of 9 |