Form 8-K

 

 

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) August 3, 2012 (August 3, 2012)

 

 

Gray Television, Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Georgia

(State or Other Jurisdiction of Incorporation)

 

1-13796   58-0285030

(Commission

File Number)

 

(IRS Employer

Identification No.)

4370 Peachtree Road, NE, Atlanta, Georgia   30319
(Address of Principal Executive Offices)   (Zip Code)

404-504-9828

(Registrant’s 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):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ 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 (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 (the “Securities Act”), except as shall be expressly set forth by specific reference in such filing.

On August 3, 2012, Gray Television, Inc. issued a press release reporting its financial results for the three-month and six-month periods ended June 30, 2012. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K and incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits

 

99.1    Press release issued by Gray Television, Inc. on August 3, 2012


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.

 

    Gray Television, Inc.
August 3, 2012     By:  

/s/ James C. Ryan

      Name:   James C. Ryan
      Title:   Chief Financial Officer and Senior Vice President


Exhibit Index

 

Exhibit
No.

  

Description

99.1    Press release issued by Gray Television, Inc. on August 3, 2012
EX-99.1

Exhibit 99.1

Gray

Television, Inc.

 

NEWS RELEASE

Gray Reports Operating Results, Including Record Revenue,

For the Three-Month and Six-Month Periods Ended June 30, 2012

Atlanta, Georgia – August 3, 2012… Gray Television, Inc. (“Gray,” “we,” “us” or “our”) (NYSE: GTN and GTN.A) today announced results from operations for the three-month period (the “second quarter of 2012”) and six-month period ended June 30, 2012 as compared to the three-month period (the “second quarter of 2011”) and six-month period ended June 30, 2011.

Highlights:

Our revenue for the second quarter of 2012 was the highest revenue Gray has reported for a second quarter. For the second quarters of 2012 and 2011, our revenue, broadcast expense and corporate and administrative expense were as follows:

 

     Three Months Ended June 30,  
     2012      2011      % Change  
     (in thousands except for percentages)  

Revenue (less agency commissions)

   $ 94,691       $ 76,201         24

Operating expenses (before depreciation, amortization and gain on disposal of assets):

        

Broadcast

   $ 52,829       $ 47,930         10

Corporate and administrative

   $ 3,629       $ 3,402         7

We are pleased with our operating results for the second quarter of 2012. Our period over period increase in revenue for the second quarter was primarily due to increases in political advertising revenue and retransmission consent revenue. In addition, our local advertising, national advertising, internet advertising and other revenue also increased.

Our period over period increase in broadcast and corporate and administrative expenses (excluding depreciation, amortization and gain on disposal of assets) reflects increases in compensation, programing costs and national sales commissions.

Comments on Results of Operations for the Three-Month Period Ended June 30, 2012:

Revenue.

Our total revenue for the second quarter of 2012 was the highest revenue Gray has reported for a second quarter. Total revenue increased $18.5 million, or 24%, to $94.7 million for the second quarter of 2012 compared to the second quarter of 2011 due primarily to increased political advertising, retransmission consent, local advertising, national advertising, internet advertising, and other revenue. Political advertising revenue increased due to increased advertising from political candidates and special interest groups in the “on year” of the two-year election cycle. Our political advertising revenue also increased due to additional advertising related to a special election to recall the Governor of Wisconsin, where we own three television stations. Retransmission consent revenue increased primarily due to improved terms in our retransmission contracts. A significant portion of our retransmission consent contracts expired on December 31, 2011 and

 

4370 Peachtree Road, NE * Atlanta, GA 30319

(404) 504-9828 * Fax (404) 261-9607


we were able to renew substantially all of these contracts under terms more favorable to Gray, which resulted in increased revenue in the second quarter of 2012 compared to the second quarter of 2011. Local, national and internet advertising revenue increased due to our increased spending by advertisers in a gradually improving economic environment. Other revenue increased due to receipt of certain cable copyright royalty payments during the second quarter of 2012. If any similar copyright royalty payments are received in future periods, they are likely to recur in lower amounts. We also continued to earn consulting revenue under our agreement with Young Broadcasting, Inc. (“Young”). This agreement expires on December 31, 2012.

The principal components of our revenue for the second quarter of 2012 compared to the second quarter of 2011 were as follows:

Local advertising revenue increased $0.6 million, or 1%, to $48.4 million.

National advertising revenue increased $0.9 million, or 7%, to $14.3 million.

Internet advertising revenue increased $1.5 million, or 31%, to $6.4 million.

Political advertising revenue increased $10.8 million, or 467%, to $13.1 million.

Retransmission consent revenue increased $3.2 million, or 64%, to $8.3 million.

Other revenue increased $1.4 million, or 65%, to $3.6 million.

Consulting revenue from our agreement with Young remained at $0.6 million in the second quarter of 2012.

Our five largest nonpolitical advertising categories on a combined local and national basis by customer type for the second quarter of 2012 demonstrated the following changes in revenue during the second quarter of 2012 compared to the second quarter of 2011: automotive increased 20%; medical increased 8%; restaurant decreased 5%; communications increased 2%; and furniture and appliances increased 3%.

Operating expenses.

Broadcast expenses (before depreciation, amortization and gain on disposal of assets) increased $4.9 million, or 10%, to $52.8 million for the second quarter of 2012 compared to the second quarter of 2011. This increase was due primarily to increases in compensation expense of $3.2 million and non-compensation expense of $1.7 million. Compensation expense increased primarily due to increases in salaries, incentive compensation, pension expenses and healthcare expenses. Non-compensation expense increased primarily due to an increase in programing costs and national sales commissions. As of June 30, 2012 and 2011, we employed 2,070 and 2,087 total employees, respectively, in our broadcast operations.

Corporate and administrative expenses (before depreciation, amortization and gain on disposal of assets) increased $0.2 million, or 7%, to $3.6 million. The increase was due primarily to increases in compensation expense of $0.3 million partially offset by a decrease in non-compensation expense of $0.1 million. Compensation expense increased primarily due to increases in salaries, incentive compensation and stock-based compensation expense. We recorded non-cash stock-based compensation expense during the second quarter of 2012 and the second quarter of 2011 of $140,000 and $34,000, respectively. Non-cash stock-based compensation expense increased due to the grant of additional equity incentive awards during the second quarter of 2012.

Comments on Results of Operations for the Six-Month Period Ended June 30, 2012:

Revenue.

Our total revenue for the first six months of 2012 was the highest revenue Gray has reported for the first half of a year. Total revenue increased $29.4 million, or 20%, to $175.4 million for the six months ended June 30, 2012 compared to the six months ended June 30, 2011 due primarily to increased political advertising, retransmission consent, local advertising, national advertising, internet advertising, and other revenue. Political advertising revenue reflected increased advertising from political candidates and special

 

Gray Television, Inc.     
Earnings Release for the three-month and six-month periods ended June 30, 2012    Page 2 of 11  


interest groups during the “on year” of the two-year political advertising cycle. Our political advertising revenue also increased due to additional advertising related to a special election to recall the Governor of Wisconsin, where we have three television stations. Local, national and internet advertising revenue increased due to increased spending by advertisers in a gradually improving economic environment. In addition, local and national net advertising revenue was positively influenced by the broadcast of the 2012 Super Bowl on our ten primary NBC channels, earning us approximately $0.8 million, an increase of approximately $0.6 million compared to the broadcast of the 2011 Super Bowl on our one primary FOX-affiliated channel and four secondary digital FOX-affiliated channels, which earned us approximately $0.2 million.

Retransmission consent revenue increased primarily due to improved terms in our retransmission contracts. A significant portion of our retransmission consent contracts expired on December 31, 2011 and we were able to renew substantially all of these contracts under terms more favorable to Gray, which resulted in increased revenue in the six months ended June 30, 2012 compared to the six months ended June 30, 2011. Other revenue increased due to our receipt of a cable copyright royalty distribution during 2012 period. If any similar copyright royalty payments are received in future periods, they are likely to recur in lower amounts. We continued to earn consulting revenue under our agreement with Young in the six-month period ended June 30, 2012.

The principal components of our revenue for the six months ended June 30, 2012 compared to the six months ended June 30, 2011 were as follows:

Local advertising revenue increased $2.7 million, or 3%, to $94.3 million.

National advertising revenue increased $0.9 million, or 3%, to $27.3 million.

Internet advertising revenue increased $2.9 million, or 32%, to $12.1 million.

Political advertising revenue increased $14.4 million, or 390%, to $18.1 million.

Retransmission consent revenue increased $6.7 million, or 66%, to $16.8 million.

Other revenue increased $1.5 million, or 38%, to $5.5 million.

Consulting revenue from our agreement with Young was $1.3 million in the six-month period ended June 30, 2012.

Our five largest nonpolitical advertising categories on a combined local and national basis by customer type for the six-month period ended June 30, 2012 demonstrated the following changes in revenue during the six-month period ended June 30, 2012 compared to the six-month period ended June 30, 2011: automotive increased 14%; medical increased 11%; restaurant increased 1%; communications increased 9%; and furniture and appliances increased 4%.

Operating expenses.

Broadcast expenses (before depreciation, amortization and gain on disposal of assets) increased $7.5 million, or 8%, to $103.6 million for the six-month period ended June 30, 2012 compared to the six-month period ended June 30, 2011. This increase was due primarily to increases in compensation expense of $3.9 million and non-compensation expense of $3.5 million. Compensation expense increased primarily due to increases in salaries, incentive compensation and pension expenses. Non-compensation expense increased primarily due to an increase in programing costs, other professional services and national sales commissions.

Corporate and administrative expenses (before depreciation, amortization and gain on disposal of assets) increased $0.3 million, or 5%, to $6.7 million. The increase was due primarily to an increase in compensation expense of $0.5 million, partially offset by a decrease in non-compensation expense of $0.2 million. Compensation expense increased primarily due to increases in salaries, incentive compensation and stock-based compensation expense. We recorded non-cash stock-based compensation expense during the

 

Gray Television, Inc.     
Earnings Release for the three-month and six-month periods ended June 30, 2012    Page 3 of 11  


six-month periods ended June 30, 2012 and 2011 of $154,000 and $68,000, respectively. Non-cash stock-based compensation expense increased due to the grant of additional equity incentive awards during the six-month period ended June 30, 2012.

Detailed table of operating results:

Gray Television, Inc.

Selected Operating Data (Unaudited)

(in thousands except for net income per share data)

 

     Three Months Ended
June 30,
 
     2012     2011  

Revenue (less agency commissions)

   $ 94,691      $ 76,201   

Operating expenses before depreciation, amortization and gain on disposal of assets, net:

    

Broadcast

     52,829        47,930   

Corporate and administrative

     3,629        3,402   

Depreciation

     5,716        6,638   

Amortization of intangible assets

     18        34   

Gain on disposals of assets, net

     (547     (831
  

 

 

   

 

 

 
     61,645        57,173   
  

 

 

   

 

 

 

Operating income

     33,046        19,028   

Other income (expense):

    

Miscellaneous income, net

     —          3   

Interest expense

     (15,126     (15,343
  

 

 

   

 

 

 

Income before income tax

     17,920        3,688   

Income tax expense

     6,926        1,129   
  

 

 

   

 

 

 

Net income

     10,994        2,559   

Preferred stock dividends (includes accretion of issuance cost of $77 and $118, respectively)

     1,179        1,788   
  

 

 

   

 

 

 

Net income attributable to common stockholders

   $ 9,815      $ 771   
  

 

 

   

 

 

 

Basic per share information:

    

Net income attributable to common stockholders

   $ 0.17      $ 0.01   
  

 

 

   

 

 

 

Weighted-average shares outstanding

     57,151        57,115   
  

 

 

   

 

 

 

Diluted per share information:

    

Net income attributable to common stockholders

   $ 0.17      $ 0.01   
  

 

 

   

 

 

 

Weighted-average shares outstanding

     57,190        57,116   
  

 

 

   

 

 

 

Political advertising revenue (less agency commissions)

   $ 13,138      $ 2,316   

 

Gray Television, Inc.     
Earnings Release for the three-month and six-month periods ended June 30, 2012    Page 4 of 11  


Gray Television, Inc.

Selected Operating Data (Unaudited)

(in thousands except for net income per share data)

 

     Six Months Ended
June 30,
 
     2012     2011  

Revenue (less agency commissions)

   $ 175,365      $ 145,943   

Operating expenses before depreciation, amortization and gain on disposal of assets, net:

    

Broadcast

     103,601        96,109   

Corporate and administrative

     6,735        6,440   

Depreciation

     11,607        13,636   

Amortization of intangible assets

     37        68   

Gain on disposals of assets, net

     (482     (844
  

 

 

   

 

 

 
     121,498        115,409   
  

 

 

   

 

 

 

Operating income

     53,867        30,534   

Other income (expense):

    

Miscellaneous income, net

     2        3   

Interest expense

     (30,289     (31,343
  

 

 

   

 

 

 

Income (loss) before income tax expense (benefit)

     23,580        (806

Income tax expense (benefit)

     9,215        (282
  

 

 

   

 

 

 

Net income (loss)

     14,365        (524

Preferred stock dividends (includes accretion of issuance cost of $154 and $236, respectively)

     2,358        3,577   
  

 

 

   

 

 

 

Net income (loss) attributable to common stockholders

   $ 12,007      $ (4,101
  

 

 

   

 

 

 

Basic per share information:

    

Net income (loss) attributable to common stockholders

   $ 0.21      $ (0.07
  

 

 

   

 

 

 

Weighted-average shares outstanding

     57,149        57,113   
  

 

 

   

 

 

 

Diluted per share information:

    

Net income (loss) attributable to common stockholders

   $ 0.21      $ (0.07
  

 

 

   

 

 

 

Weighted-average shares outstanding

     57,169        57,113   
  

 

 

   

 

 

 

Political advertising revenue (less agency commissions)

   $ 18,097      $ 3,697   

 

Gray Television, Inc.     
Earnings Release for the three-month and six-month periods ended June 30, 2012    Page 5 of 11  


Other Financial Data:

 

     June 30, 2012     December 31, 2011  
     (in thousands)  

Cash

   $ 28,041      $ 5,190   

Long-term debt, including current portion

   $ 821,498      $ 832,233   

Preferred stock (1)

   $ 24,996      $ 24,841   

Borrowing availability under our senior credit facility

   $ 40,000      $ 31,000   
     Six Months Ended June 30,  
     2012     2011  
     (in thousands)  

Net cash provided by operating activities

   $ 45,107      $ 17,262   

Net cash used in investing activities

     (10,845     (16,199

Net cash used in financing activities

     (11,411     (3,037
  

 

 

   

 

 

 

Net increase (decrease) in cash

   $ 22,851      $ (1,974
  

 

 

   

 

 

 

 

(1) As of June 30, 2012, preferred stock does not include unaccreted original issuance costs and accrued preferred stock dividends of $0.9 million and $15.9 million, respectively. As of December 31, 2011, preferred stock does not include unaccreted original issuance costs and accrued preferred stock dividends of $1.1 million and $13.7 million, respectively.

Internet Initiatives:

We continue to focus on expanding local content on our websites to drive increased traffic. Our website page view data for the three-month and six-month periods ended June 30, 2012 compared to the three-month and six-month periods ended June 30, 2011 is as follows:

Gray Websites – Data

 

     Three Months Ended June 30,  
     2012      2011      % Change  
     (in millions, except percentages)  

Advertising impressions generated

     1,077.4         878.6         23

Total page views (including mobile page views)

     383.9         267.0         44
     Six Months Ended June 30,  
     2012      2011      % Change  
     (in millions, except percentages)  

Advertising impressions generated

     2,108.9         1,671.2         26

Total page views (including mobile page views)

     763.8         537.7         42

 

Gray Television, Inc.     
Earnings Release for the three-month and six-month periods ended June 30, 2012    Page 6 of 11  


We attribute the increase in our website traffic to increased posting of local content and to 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.”

Guidance for the Third Quarter of 2012

We currently anticipate that our results of operations for the three-month period ending September 30, 2012 (the “third quarter of 2012”) will approximate the ranges presented in the table below. Based on our estimates, we believe our third quarter 2012 revenue will set a new third quarter record for Gray.

 

Selected operating data:

   Low End
Guidance for
the Third
Quarter of
2012
     % Change
From
Actual Third
Quarter of
2011
    High End
Guidance for
the Third
Quarter of
2012
     % Change
From
Actual Third
Quarter of
2011
    Actual
Third
Quarter of
2011
 
     (dollars in thousands)  

OPERATING REVENUE:

            

Revenue (less agency commissions)

   $ 98,000         28   $ 100,000         31   $ 76,518   

OPERATING EXPENSES

            

(before depreciation, amortization and gain on disposals of assets):

            

Broadcast

   $ 52,650         8   $ 53,250         9   $ 48,678   

Corporate and administrative

   $ 3,900         (5 )%    $ 4,100         0   $ 4,089   

OTHER SELECTED DATA:

            

Political advertising revenue (less agency commissions)

   $ 20,000         281   $ 21,000         301   $ 5,243   

Comments on Guidance:

Revenue.

Based on our current forecasts, we believe that our third quarter of 2012 local revenue, excluding political advertising revenue, will increase from the three-month period ended September 30, 2011 (the “third quarter of 2011”) by approximately 6% to 8%. We currently believe our third quarter of 2012 national revenue, excluding political advertising revenue, will increase from the third quarter of 2011 by approximately 6% to 7%.

We anticipate our third quarter of 2012 internet revenue, excluding political advertising revenue, will increase from the third quarter of 2011 by approximately 17% to 18%.

We anticipate our third quarter of 2012 retransmission consent revenue will increase from the third quarter of 2011 by approximately 62% to approximately $8.4 million.

We estimate our base consulting revenue will be $0.6 million for the third quarter of 2012. We do not anticipate recording any incentive consulting revenue in the third quarter of 2012.

Broadcast Operating Expense (before depreciation, amortization and gain on disposal of assets).

The anticipated increase in broadcast operating expense for the third quarter 2012 compared to the third quarter of 2011 is due primarily to anticipated increases in compensation expense, programming expense and national sales commission expense.

 

Gray Television, Inc.   
Earnings Release for the three-month and six-month periods ended June 30, 2012    Page 7 of 11


Revenue (less agency commissions) by Category:

The table below presents our net revenue (less agency commissions) or “net revenue” by type for the three-month and six-month periods ended June 30, 2012 and 2011, respectively (dollars in thousands):

 

     Three Months Ended June 30,  
     2012     2011  
     Amount      Percent
of Total
    Amount      Percent
of Total
 

Revenue (less agency commissions):

  

       

Local

   $ 48,417         51.1   $ 47,785         62.7

National

     14,321         15.1     13,428         17.6

Internet

     6,359         6.7     4,865         6.4

Political

     13,138         13.9     2,316         3.0

Retransmission consent

     8,279         8.7     5,055         6.6

Other

     3,627         3.8     2,202         3.0

Consulting

     550         0.7     550         0.7
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ 94,691         100.0   $ 76,201         100.0
  

 

 

    

 

 

   

 

 

    

 

 

 
     Six Months Ended June 30,  
     2012     2011  
     Amount      Percent
of Total
    Amount      Percent
of Total
 

Revenue (less agency commissions):

  

       

Local

   $ 94,292         53.8   $ 91,550         62.7

National

     27,327         15.6     26,403         18.1

Internet

     12,051         6.9     9,112         6.2

Political

     18,097         10.3     3,697         2.5

Retransmission consent

     16,757         9.6     10,102         6.9

Other

     5,496         3.1     3,979         2.8

Consulting

     1,345         0.7     1,100         0.8
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ 175,365         100.0   $ 145,943         100.0
  

 

 

    

 

 

   

 

 

    

 

 

 

The aggregate internet revenues presented above are derived from: (i) direct internet revenue and (ii) internet-related commercial time sales.

 

Gray Television, Inc.   
Earnings Release for the three-month and six-month periods ended June 30, 2012    Page 8 of 11


Non-GAAP Terms

From time to time, Gray supplements its financial results prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) by disclosing the non-GAAP financial measures 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 net income (loss) plus corporate and administrative expense, depreciation and amortization (including amortization of intangible assets and program broadcast rights), any loss on disposal of assets, any miscellaneous expense, interest expense, any income tax expense less any gain on disposal of assets, any miscellaneous income, any income tax benefits, payments for program broadcast obligations and network compensation revenue and network payments. Corporate and administrative 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 by management 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) and cash flows reported in accordance with GAAP.

 

Gray Television, Inc.   
Earnings Release for the three-month and six-month periods ended June 30, 2012    Page 9 of 11


Reconciliations:

Reconciliation of net income (loss) to the non-GAAP terms (dollars in thousands):

 

     As Reported  
     Three Months Ended June 30,  
     2012     2011     % Change  

Net income

   $ 10,994      $ 2,559     

Adjustments to reconcile from net income to Broadcast Cash Flow Less Cash Corporate Expenses:

      

Depreciation

     5,716        6,638     

Amortization of intangible assets

     18        34     

Non-cash stock based compensation

     140        34     

Gain on disposals of assets, net

     (547     (831  

Miscellaneous (income) expense, net

     —          (3  

Interest expense

     15,126        15,343     

Income tax expense

     6,926        1,129     

Amortization of program broadcast rights

     2,719        3,581     

Common stock contributed to 401(k) plan excluding corporate 401(k) contributions

     5        8     

Network compensation revenue recognized

     (156     (173  

Network compensation per network affiliation agreement

     —          (60  

Payments for program broadcast rights

     (2,801     (4,944  
  

 

 

   

 

 

   

Broadcast Cash Flow Less Cash Corporate Expenses

     38,140        23,315        64

Corporate and administrative expenses excluding depreciation, amortization of intangible assets and non-cash stock-based compensation

     3,489        3,368     
  

 

 

   

 

 

   

Broadcast Cash Flow

   $ 41,629      $ 26,683        56
  

 

 

   

 

 

   

 

     As Reported  
     Six Months Ended June 30,  
     2012     2011     % Change  

Net income (loss)

   $ 14,365      $ (524  

Adjustments to reconcile from net income (loss) to Broadcast Cash Flow Less Cash Corporate Expenses:

      

Depreciation

     11,607        13,636     

Amortization of intangible assets

     37        68     

Non-cash stock based compensation

     154        68     

Gain on disposals of assets, net

     (482     (844  

Miscellaneous (income) expense, net

     (2     (3  

Interest expense

     30,289        31,343     

Income tax expense (benefit)

     9,215        (282  

Amortization of program broadcast rights

     5,477        7,414     

Common stock contributed to 401(k) plan excluding corporate 401(k) contributions

     12        16     

Network compensation revenue recognized

     (313     (351  

Network compensation per network affiliation agreement

     (60     (120  

Payments for program broadcast rights

     (5,596     (8,738  
  

 

 

   

 

 

   

Broadcast Cash Flow Less Cash Corporate Expenses

     64,703        41,683        55

Corporate and administrative expenses excluding depreciation, amortization of intangible assets and non-cash stock-based compensation

     6,581        6,372     
  

 

 

   

 

 

   

Broadcast Cash Flow

   $ 71,284      $ 48,055        48
  

 

 

   

 

 

   

See the previous page for the definition of Non-GAAP terms.

 

Gray Television, Inc.     
Earnings Release for the three-month and six-month periods ended June 30, 2012    Page 10 of 11  


The Company

Gray Television, Inc. is a television broadcast company headquartered in Atlanta, GA. Gray currently owns and operates television stations broadcasting 36 primary channels in 30 markets. Currently, we broadcast a primary channel from each of our stations and also operate at least one secondary channel from the majority of our stations. Each of our primary channels are affiliated with either CBS (17 channels), NBC (10 channels), ABC (8 channels) or FOX (1 channel). In addition, we currently broadcast 41 digital second channels that are affiliated with either ABC (1 channel), FOX (4 channels), CW (8 channels), MyNetworkTV (18 channels), Untamed Sports Network (1 channel), The Country Network (1 channel), MeTV Network (1 channel) or are operated as local news/weather channels (7 channels). In addition, we have entered into agreements to launch three additional CBS affiliated secondary channels in certain of our existing markets in the fall of 2012.

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 third quarter of 2012 or other periods, internet strategies, future expenses, launching of future stations 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 is as of August 3, 2012. 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 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the year ended December 31, 2011 and may be contained in reports subsequently filed with the U.S. Securities and Exchange Commission (the “SEC”) and available at the SEC’s website at www.sec.gov.

Conference Call Information

We will host a conference call to discuss our second quarter operating results on August 3, 2012. The call will begin at 11:00 AM Eastern Time. The live dial-in number is 1 (800) 946-0709 and the confirmation code is 4223794. 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: 4223794 until September 2, 2012.

 

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 six-month periods ended June 30, 2012    Page 11 of 11