Gray Reports Operating Results for the Three Months Ended March 31,
2005 ATLANTA, May 5 /PRNewswire-FirstCall/ -- Gray Television, Inc.
("Gray") (NYSE:GTN) today announced results from operations for the
three months ("first quarter") ended March 31, 2005 as compared to
the three months ended March 31, 2004. Significant items to note
for the three months ended March 31, 2005: The results for the
three months ended March 31, 2005 generally exceeded previously
issued guidance for the first quarter of 2005. Three Months Ended
Change from Same Period March 31, 2005 of Prior Year Net local
broadcast Increased 5% or $1.8 million advertising revenue,
excluding political advertising revenue of $39.1 million Net
political advertising Decreased $3.2 million revenue of $293,000
reflecting the "off-year" of the political election cycle Total net
revenue of $71.6 Decreased 4%, or $3.2 million, million reflecting
the decrease in net political revenues Broadcast net revenue of
Decreased 6%, or $3.6 million, $58.3 million reflecting the
decrease in net political revenues As of March 31, December 31,
2005 2004 Cash on Hand $36.7 million $50.6 million Total Debt(1)
$655.0 million $655.9 million Gray purchased a combined total of
367,700 shares of Gray Common Stock ("GTN") and Gray Class A Common
Stock ("GTNA") for $5.2 million during the first quarter of 2005.
In addition, since April 1, 2005, Gray has repurchased
approximately $11.3 million aggregate principal amount of the
company's 9-1/4% Senior Subordinated Notes due 2011 for a total
cost of approximately $12.7 million including accrued interest.
Comments on Results of Operations for the Three Months Ended March
31, 2005: Revenues. Total revenues for the three months ended March
31, 2005 decreased 4% to $71.6 million as compared to the same
period of the prior year. * Broadcasting revenues decreased 6% over
the same period of the prior year to $58.3 million. The decrease in
broadcasting revenues reflects a 5% increase in non-political local
broadcast advertising revenues offset by decreased political
advertising revenues, national advertising revenues and network
compensation. Excluding political advertising revenues, local
broadcasting advertising revenues increased 5% to $39.1 million
from $37.4 million. Approximately 40% of this increase, or 2%
compared to the prior period, is attributable to results from
Gray's launch of three UPN second channels in three of its existing
television markets during the second half of 2004, results of WCAV,
Charlottesville, VA which began operations in August 2004 and the
acquisition of KKCO on January 31, 2005, offset in part by the sale
of the Company's satellite uplink operations on December 31, 2004.
We attribute the remaining increase of approximately 3% in
non-political local broadcasting advertising revenues to a moderate
increase in demand for commercial time by local advertisers.
Political advertising revenues decreased to $293,000 from $3.5
million reflecting the cyclical influence of the 2004 Presidential
election. National broadcasting advertising revenues decreased 6%
to $15.3 million from $16.2 million due to a decrease in demand
from national advertisers. Network compensation revenue decreased
32% to $1.6 million due to lower revenue recorded from newly
renewed network affiliation agreements. However, under the terms of
the affiliation agreements, Gray's cash payments received or
receivable in excess of revenue recognized in accordance with
generally accepted accounting principles approximated $459,000 for
the three months ended March 31, 2005. In the prior period, the
network compensation revenue and the related cash payments received
or receivable were approximately equal in their respective amounts.
* Publishing and other revenues consists primarily of Gray's
newspaper publishing and paging operations. Publishing revenues
increased 5% to $11.5 million. Retail advertising revenue and
classified advertising revenue were the primary contributors to the
increase in publishing revenues with both increasing 10% over the
prior period. Operating expenses. Operating expenses before
depreciation, amortization and loss on disposal of assets increased
4% over the same period of the prior year to $51.2 million. The
increase in expenses for the first quarter of 2005 included
non-cash charges of approximately $613,000 for common stock
contributed to Gray's 401(k) plan compared to $560,000 for the same
period of 2004. * Broadcasting expenses, before depreciation,
amortization and loss on disposal of assets increased 3% to $38.7
million. Approximately 50% of this increase, is attributable to
operating expenses relating to Gray's launch of three UPN second
channels in three of its existing television markets during the
second half of 2004, expenses of WCAV, Charlottesville, VA which
began operations in August 2004 and expenses of KKCO, acquired on
January 31, 2005, offset, in part, by the sale of the Company's
satellite uplink operations on December 31, 2004. The remaining
increase is attributable primarily to routine increases in payroll
and benefits costs. Balance Sheet: Gray's cash balance was $36.7
million at March 31, 2005 compared to $50.6 million at December 31,
2004. The decrease in cash reflects $18.8 million of net cash
generated by Gray's operations during the first quarter of 2005
compared to $23.9 million for first quarter of 2004. The 2005 net
cash generated from operations was offset by the return of $13.4
million of capital to Gray's common and preferred shareholders
through the payment of dividends and the purchase of its common
stock, as well as $6.7 million of cash used for capital
expenditures. Gray also used $13.9 million in the purchase of KKCO-
TV. Total debt outstanding at March 31, 2005 and December 31, 2004
was $655.0 million and $655.9 million(1), respectively. Detailed
table of operating results follows on the next page. Gray
Television, Inc. (in thousands, except per share data and
percentages) Three Months Ended Selected operating data: March 31,
% 2005 2004 Change OPERATING REVENUES Broadcasting (less agency
commissions) $58,309 $61,910 (6)% Publishing and other 13,241
12,819 3 % TOTAL OPERATING REVENUES 71,550 74,729 (4)% EXPENSES
Operating expenses before depreciation, amortization and loss on
disposal of assets: Broadcasting 38,694 37,398 3 % Publishing and
other 9,817 9,402 4 % Corporate and administrative 2,646 2,373 12 %
Depreciation 5,814 5,801 0 % Amortization of intangible assets 209
283 (26)% Amortization of restricted stock awards 98 94 4 % Loss on
disposal of assets, net 34 4 750 % TOTAL EXPENSES 57,312 55,355 4 %
Operating income 14,238 19,374 (27)% Miscellaneous income
(expense), net 295 143 106 % Interest expense (11,113) (10,461) 6 %
INCOME BEFORE INCOME TAX EXPENSE 3,420 9,056 (62)% Income tax
expense 1,345 3,554 (62)% NET INCOME 2,075 5,502 (62)% Preferred
dividends 815 822 (1)% NET INCOME AVAILABLE TO COMMON STOCKHOLDERS
$1,260 $4,680 (73)% Diluted per share information: Net income per
share available to common stockholders $0.03 $0.09 (67)% Weighted
average shares outstanding 49,045 50,503 (3)% Political revenue
(less agency commission) $293 $3,534 (92)% Guidance for the Second
Quarter of 2005 We currently anticipate that Gray's results of
operations for the three months ended June 30, 2005 will
approximate the ranges presented in the table below (dollars in
thousands). Three Months Ended June 30, 2005 % 2005 % Guidance
Change Guidance Change Actual Low Range From High Range From 2004
Selected operating 2004 2004 data: OPERATING REVENUES Broadcasting
(less agency commissions) $68,500 (4)% $69,250 (3)% $71,235
Publishing and other 13,625 4 % 13,725 5 % 13,118 TOTAL OPERATING
REVENUES 82,125 (3)% 82,975 (2)% 84,353 OPERATING EXPENSES
Operating expenses before depreciation, amortization and other
expenses: Broadcasting 39,700 7 % 39,850 8 % 37,053 Publishing and
other 9,900 7 % 9,975 8 % 9,278 Corporate and administrative 2,600
20 % 2,750 27 % 2,163 Depreciation and amortization of intangibles
6,000 (2)% 6,200 2 % 6,107 Amortization of restricted stock 90 (4)%
100 6 % 94 Loss on disposal of assets 50 (108)% 50 (108)% (626)
TOTAL OPERATING EXPENSES 58,340 8 % 58,925 9 % 54,069 OPERATING
INCOME $23,785 (21)% $24,050 (21)% $30,284 Other Selected Data
Political revenues (less agency commissions) $475 (91)% $550 (90)%
$5,422 The above guidance for Broadcasting includes the current
period impact of Gray's launch of three UPN second channels in
three of its existing television markets during the second half of
2004, results of WCAV, Charlottesville, VA which began operations
in August 2004 and the acquisition of KKCO on January 31, 2005
offset in part by the sale of the Company's satellite uplink
operations on December 31, 2004. For television stations
continuously operated since the beginning of the second quarter of
2004, Gray currently anticipates that its local revenue, excluding
political revenue, will increase between 6% and 8% over the second
quarter of 2004, national revenue, excluding political revenue, is
currently expected to be generally consistent with the results from
the second quarter of 2004 and operating expenses, before
depreciation, amortization and loss on disposal of assets, will
increase approximately 3% over the results from the second quarter
of 2004. Also included within the operating expense estimates
presented above, we currently estimate that non-cash 401(k) plan
expense will range between $450,000 and $500,000 for the three
months ended June 30, 2005 compared with $392,000 for the same
period of 2004. Conference Call Information Gray Television, Inc.
will host a conference call to discuss its first quarter operating
results on May 5, 2005. The call will begin at 1:00 PM Eastern
Time. The live dial-in number is 1-888-789-0150 and the reservation
number is T564347G. The call will be webcast live and available for
replay at http://www.graytvinc.com/ . The taped replay of the
conference call will be available at 1-888-509-0081 until May 19,
2005. For information contact: Bob Prather Jim Ryan President and
Chief Operating Senior V. P. and Chief Officer Financial Officer
(404) 266-8333 (404) 504-9828 Web site: http://www.graytvinc.com/
Reconciliations: Reconciliation of Net Income to the Non-GAAP term
"EBITDA" ($ in thousands): Three Months Ended March 31, 2005 2004
Net income $2,075 $5,502 Add: Income tax expense 1,345 3,554
Interest expense 11,113 10,461 Amortization of restricted stock
awards 98 94 Amortization of intangible assets 209 283 Depreciation
5,814 5,801 EBITDA $20,654 $25,695 Reconciliation of Net Income to
the Non-GAAP term "Adjusted Media Cash Flow" ($ in thousands):
Three Months Ended March 31, 2005 2004 Net income $2,075 $5,502 Add
(subtract): Income tax expense 1,345 3,554 Interest expense 11,113
10,461 Miscellaneous (income) expense, net (295) (143) Loss on
disposal of assets, net 34 4 Amortization of restricted stock
awards 98 94 Amortization of intangible assets 209 283 Depreciation
5,814 5,801 Amortization of program license rights 2,815 2,756
Common Stock contributed to 401(k) Plan excluding corporate 401(k)
contributions 578 530 Network compensation revenue recognized
(1,643) n/a Network compensation per network affiliation agreement
2,102 n/a Payments on program broadcast obligations (2,815) (2,697)
Adjusted Media Cash Flow $21,430 $26,145 Reconciliations
-continued: Adjusted Media Cash Flow and EBITDA are non-GAAP terms
the Company uses as a measure of performance. Adjusted Media Cash
Flow and EBITDA 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 Company's senior
credit facility and/or subordinated note indenture. Adjusted Media
Cash Flow is defined as operating income, plus 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 and less
network compensation revenue. Accordingly, the Company has provided
a reconciliation of Adjusted Media Cash Flow to net income. EBITDA
is defined as net income before income tax expense, interest
expense, amortization of restricted stock awards, amortization of
intangible assets and depreciation expense. Notes (1) Total debt as
of March 31, 2005 and December 31, 2004 does not include $1.0
million, respectively, of unamortized debt discount on Gray's
9-1/4% Senior Subordinated Notes due March 2011. The Company Gray
Television, Inc. is a communications company headquartered in
Atlanta, Georgia, and currently owns 31 television stations serving
27 television markets. The stations include 16 CBS affiliates,
eight NBC affiliates and seven ABC affiliates. Gray Television,
Inc. has 23 stations ranked #1 in local news audience and 22
stations ranked #1 in overall audience within their respective
markets based on the average results of the 2004 Nielsen ratings
reports. The TV station group reaches approximately 5.5% of total
U.S. TV households. Gray also owns five daily newspapers, four in
Georgia and one in Indiana. Cautionary Statements for Purposes of
the "Safe Harbor" Provisions of the Private Securities Litigation
Reform Act The following comments on Gray's current expectations of
operating results for the first quarter of 2005 are "forward
looking" for purposes of the Private Securities Litigation Reform
Act of 1995. Actual results of operations are subject to a number
of risks and may differ materially from the current expectations
discussed in this press release. See Gray's Annual Report on Form
10-K for a discussion of risk factors that may affect its ability
to achieve the results contemplated by such forward looking
statements. DATASOURCE: Gray Television, Inc. CONTACT: Bob Prather,
President and Chief Operating Officer, +1-404-266-8333, or Jim
Ryan, Senior V. P. and Chief Financial Officer, +1-404-504-9828,
both of Gray Television, Inc. Web site: http://www.graytvinc.com/
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