ATLANTA, March 13 /PRNewswire-FirstCall/ -- Gray Television, Inc.
("Gray," "we" or "us") (NYSE:GTN) today announced results from
operations for the three months ("fourth quarter") and year ended
December 31, 2007 as compared to the three months and year ended
December 31, 2006. Comments on As Reported Results of Operations
for the Three Months Ended December 31, 2007: For the three months
ended December 31, 2007 and 2006, we did not complete any
acquisitions or disposals of properties; therefore, the following
comments are on our "as reported" results. Revenues. On an as
reported basis, total net revenue for all stations decreased $17.6
million, or 17%, to $84.3 million due primarily to decreased
political advertising revenues partially offset by increased local
advertising revenue and national advertising revenue in the current
period. On an as reported basis: Political advertising revenues
decreased $23.0 million, or 90%, to $2.6 million reflecting the
influence of the 2006 elections. Local advertising revenue
increased $3.1 million, or 6%, to $54.2 million and national
advertising revenue increased $0.8 million, or 4%, to $21.2
million. Internet advertising revenue increased $0.7 million, or
36%, to $2.7 million and retransmission consent revenue increased
$0.5 million, or 112%, to $1.0 million. In our previous
disclosures, we had included internet advertising revenue with
local advertising revenue and retransmission consent revenue was
included with production and other revenue. We are now presenting
internet advertising revenue and retransmission consent revenue
separately. Operating expenses. On an as reported basis, total
broadcast expenses (before depreciation, amortization and loss on
disposal of assets) decreased $1.2 million, or 2%, to $52.2
million. The decrease primarily reflects reduced national sales
representative commissions on the reduced political revenues. On an
as reported basis, corporate and administrative expenses, before
depreciation, amortization and loss on disposal of assets,
decreased $1.4 million, or 29%, to $3.5 million due primarily to
incremental decrease in legal expense and non-cash stock based
compensation expense. We recorded non- cash stock based
compensation expense for the three months ended December 31, 2007
and 2006 of $134,000 and $511,000, respectively. Comments on
Results of Operations for the Year Ended December 31, 2007: Due to
the significance of WNDU to our results of operations, Gray's pro
forma broadcast results for the year ended December 31, 2006 have
been presented to include the results of WNDU as if the station had
been acquired on January 1, 2006. The acquisition of WNDU did not
significantly affect corporate and administrative expenses.
Therefore, corporate and administrative expenses are presented on
an "as reported" basis. Revenues. On a pro forma(1) basis, total
net revenue for all stations decreased $27.4 million, or 8%, to
$307.3 million due primarily to decreased political advertising
revenues and decreased national advertising revenues partially
offset by increased local advertising revenue in the current
period. On a pro forma(1) basis: Political advertising revenues
decreased $35.0 million, or 82%, to $7.8 million reflecting the
influence of the 2006 elections. Local advertising revenue
increased $6.7 million, or 3%, to $200.7 million and national
advertising revenue decreased $1.8 million, or 2%, to $77.4
million. Internet advertising revenue increased $1.9 million, or
25%, to $9.5 million and retransmission consent revenue increased
$0.9 million, or 56%, to $2.4 million. In our previous disclosures,
we had included internet advertising revenue with local advertising
revenue and retransmission consent revenue was included with
production and other revenue. We are now presenting internet
advertising revenue and retransmission consent revenue separately.
Operating expenses. On a pro forma(1) basis, total broadcast
expenses (before depreciation, amortization and loss on disposal of
assets) increased $6.0 million, or 3%, to $199.7 million. On a pro
forma(1) basis, operation of our digital second channels is
attributed for $3.1 million of the overall increase and reflects
the expansion of the number of digital second channels to 40 as of
December 31, 2007. On a pro forma(1) basis, the remaining $2.9
million of the overall increase is attributable to the operation of
our primary channels and reflects routine increases in payroll,
programming and promotion. On an as reported basis, corporate and
administrative expenses, before depreciation, amortization and loss
on disposal of assets, remained consistent with that of the prior
year at $15.1 million. We recorded non-cash stock based
compensation expense during the year ended December 31, 2007 and
2006 of $1.2 million and $1.1 million, respectively. 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 traffic to our web sites. This strong revenue growth
reflects the significantly increased traffic to our websites as
illustrated below by the aggregate page views reported by our web
sites in 2007 compared to 2006. Gray Websites - Aggregate Page
Views Year Ended December 31, % 2007 2006 Change (in millions)
Total Aggregate Page Views (including video plays and cell phone
page views) 424.4 251.9 68% Video Plays Only 32.5 13.5 141% Cell
Phone Page Views Only 25.6 7.7 232% We attribute the increase in
our web traffic to increased posting of local content and to
increased public awareness of our sites as the result of our on-air
promotion of our sites. The aggregate internet revenues discussed
above are derived from two sources. The first source is advertising
or sponsorship opportunities directly on our web sites. We call
this "direct internet revenue." The other source is television
advertising time purchased by our clients to directly promote their
involvement in our web sites. We refer to this internet revenue
source as "internet related commercial time sales." In the future
we anticipate our direct internet revenue will grow at a
significantly faster pace relative to our internet related
commercial time sales. Other Financial Data on an "as reported"
basis (in thousands): December 31, 2007 December 31, 2006 Cash
$15,338 $4,741 Total debt(2) 925,000 851,654 Preferred stock -
37,451 Available credit under senior credit facility 100,000 97,000
Year Ended December 31, 2007 2006 Net cash provided by operating
activities $28,360 $79,860 Net cash used in investing activities
(25,662) (129,305) Net cash provided by financing activities 7,899
44,871 For the year ended December 31, 2007, we repurchased 647,800
shares of our common stock for $5.5 million at an average price per
share of $8.49. For the year ended December 31, 2006, we
repurchased 902,200 shares of our common stock for $5.6 million at
an average price per share of $6.21. The repurchased common stock
is held in treasury. A detailed table of operating results follows.
Gray Television, Inc. Selected Operating Data (Unaudited) (in
thousands, except for per share data and percentages) As Reported
Three Months Ended December 31, % 2007 2006 Change Revenues (less
agency commissions) $84,272 $101,920 (17)% Operating expenses
before depreciation, amortization and loss on disposal of assets,
net: Broadcast 52,238 53,444 (2)% Corporate and administrative
3,513 4,956 (29)% Depreciation and amortization of intangible
assets 9,335 9,698 (4)% (Gain) loss on disposals of assets, net
(370) 528 (170)% 64,716 68,626 (6)% Operating income 19,556 33,294
(41)% Other income (expense): Miscellaneous income (expense), net
(13) 181 (107)% Interest expense (16,580) (17,123) (3)% Income
(loss) before income tax 2,963 16,352 Income tax expense 1,478
7,765 Net income 1,485 8,587 Preferred dividends (includes
accretion of issuance cost of $0 and $21, respectively) - 778 Net
income available to common stockholders $1,485 $7,809 Basic per
share information: Net income available to common stockholders
$0.03 $0.16 Weighted average shares outstanding 47,969 48,040 0 %
Diluted per share information: Net income available to common
stockholders $0.03 $0.16 Weighted average shares outstanding 48,034
48,076 0 % Political revenue (less agency commission) $2,627
$25,605 (90)% Gray Television, Inc. Selected Operating Data
(Unaudited) (in thousands, except for per share data and
percentages) As Reported Years Ended December 31, % 2007 2006
Change Revenues (less agency commissions) $307,288 $332,137 (7)%
Operating expenses before depreciation, amortization and loss on
disposal of assets, net: Broadcast 199,687 191,502 4 % Corporate
and administrative 15,090 15,097 0 % Depreciation and amortization
of intangible assets 39,383 36,526 8 % (Gain) loss on disposals of
assets, net (248) 1,021 (124)% 253,912 244,146 4 % Operating income
53,376 87,991 (39)% Other income (expense): Miscellaneous income,
net 972 677 44 % Interest expense (67,189) (66,787) 1 % Loss on
early extinguishment of debt (22,853) (347) Income (loss) before
income tax benefit (35,694) 21,534 Income tax expense (benefit)
(12,543) 9,823 Net income (loss) (23,151) 11,711 Preferred
dividends (includes accretion of issuance cost of $439, $111, $439,
$111, respectively) 1,626 3,247 Net income (loss) available to
common stockholders $(24,777) $8,464 Basic per share information:
Net income (loss) available to common stockholders $(0.52) $0.17
Weighted average shares outstanding 47,788 48,408 (1)% Diluted per
share information: Net income (loss) available to common
stockholders $(0.52) $0.17 Weighted average shares outstanding
47,788 48,425 (1)% Political revenue (less agency commission)
$7,808 $42,682 (82)% Pro Forma(1) Years Ended December 31, % 2007
2006 Change Revenues (less agency commissions) $307,288 $334,722
(8)% Operating expenses before depreciation, amortization and loss
on disposal of assets, net: Broadcast 199,687 193,639 3 % Corporate
and administrative 15,090 15,097 0 % Depreciation and amortization
of intangible assets 39,383 37,194 6 % (Gain) loss on disposals of
assets, net (248) 1,021 (124)% 253,912 246,951 3 % Operating income
53,376 87,771 (39)% Other income (expense): Miscellaneous income,
net 972 677 44 % Interest expense (67,189) (67,212) 0 % Loss on
early extinguishment of debt (22,853) (347) Income (loss) before
income tax benefit (35,694) 20,889 Income tax expense (benefit)
(12,543) 9,588 Net income (loss) (23,151) 11,301 Preferred
dividends (includes accretion of issuance cost of $439, $111, $439,
$111, respectively) 1,626 3,247 Net income (loss) available to
common stockholders $(24,777) $8,054 Basic per share information:
Net income (loss) available to common stockholders $(0.52) $0.17
Weighted average shares outstanding 47,788 48,408 (1)% Diluted per
share information: Net income (loss) available to common
stockholders $(0.52) $0.17 Weighted average shares outstanding
47,788 48,425 (1)% Political revenue (less agency commission)
$7,808 $42,762 (82)% Guidance for the First Quarter of 2008: We
currently anticipate that our broadcasting results of operations
for the three months ending March 31, 2008 (the "first quarter")
will approximate the ranges presented in the table below. % % 2008
Change 2008 Change Guidance From Guidance From Low Actual High
Actual Actual Selected operating data: Range 2007 Range 2007 2007
(in thousands, except for percentages) OPERATING REVENUES: Revenues
(less agency commissions) $69,700 0 % $70,500 1 % $69,681 OPERATING
EXPENSES: (before depreciation, amortization and other expenses)
Broadcast $49,800 2 % $50,500 3 % $48,818 Corporate and
administrative $3,600 (11)% $3,900 (4)% $4,061 OTHER SELECTED DATA:
Broadcast political revenues (less agency commissions) $2,500
$2,600 $1,097 Expense for non-cash contributions to 401(k) plan
$575 $625 $671 Expense for corporate non-cash stock based
compensation $275 $350 $520 Comments on Guidance: The total revenue
results anticipated for the first quarter of 2008 reflect the
incremental increase in political revenues. Local non-political
advertising for first quarter 2008 is currently anticipated to be
comparable to the results for 2007. National non-political
advertising revenue is currently anticipated to be down 3% to 5% in
the first quarter of 2008 compared to first quarter 2007. Internet
revenue for the first quarter of 2008 is currently anticipated to
increase approximately 20% over the first quarter of 2007. The
increase in broadcast operating expenses, before depreciation,
amortization and loss on disposal of assets, primarily reflects
routine increases in payroll costs. For the full year of 2008,
broadcast operating expenses, before depreciation, amortization and
loss on disposal of assets are currently anticipated to increase
less than 3% over full year 2007 results with national sales
representative commissions on anticipated political revenue being a
significant component of any overall increase. Revenue on an "as
reported" basis by quarter (in thousands): In our previous
disclosures, we had included internet advertising revenue with
local advertising revenue and retransmission consent revenue was
included with production and other revenue. We are now presenting
internet advertising revenue and retransmission consent revenue
separately. The table below presents our expanded disclosure by
quarter for 2007 and 2006 (in thousands): 2007 Fiscal Quarters
Ended 2007 Fiscal March 31 June 30 Sept. 30 Dec. 31 Year Revenues:
Local $46,697 $52,009 $47,761 $54,219 $200,686 National 17,093
19,862 19,237 21,173 77,365 Internet 2,058 2,267 2,505 2,676 9,506
Political 1,097 2,634 1,450 2,627 7,808 Retransmission consent 454
488 501 993 2,436 Production and other 2,094 2,294 1,951 2,380
8,719 Network compensation 188 196 180 204 768 Total $69,681
$79,750 $73,585 $84,272 $307,288 2006 Fiscal Quarters Ended 2006
Fiscal March 31 June 30 Sept. 30 Dec. 31 Year Revenues: Local
$44,902 $50,387 $45,942 $51,117 $192,348 National 17,202 21,382
19,508 20,400 78,492 Internet 1,620 2,231 1,794 1,962 7,607
Political 1,776 4,706 10,595 25,605 42,682 Retransmission consent
365 339 390 469 1,563 Production and other 2,149 1,986 2,104 2,117
8,356 Network compensation 220 360 259 250 1,089 Total $68,234
$81,391 $80,592 $101,920 $332,137 The aggregate internet revenues
presented above are derived from two sources. The first source is
advertising or sponsorship opportunities directly on our web sites.
We call this "direct internet revenue." The other source is
television advertising time purchased by our clients to directly
promote their involvement in our web sites. We refer to this
internet revenue source as "internet related commercial time
sales." Conference Call Information: We will host a conference call
to discuss our fourth quarter operating results on March 13, 2008.
The call will begin at 10:00 AM Eastern Time. The live dial-in
number is 1 (888) 211-4495 and the confirmation code is 9283465.
The call will be webcast live and available for replay at
http://www.gray.tv/. The taped replay of the conference call will
be available at 1 (888) 203-1112 until April 12, 2008. The
confirmation code for the taped replay is 9283465. Reconciliations:
Reconciliation of net income (loss) to the Non-GAAP terms (in
thousands): As Reported Three Months Ended December 31, 2007 2006
Net income $1,485 $8,587 Adjustments to reconcile to Broadcast Cash
Flow Less Cash Corporate Expenses: Depreciation and amortization of
intangible assets 9,335 9,698 Amortization of non-cash stock based
compensation 134 511 (Gain) loss on disposals of assets, net (370)
528 Miscellaneous (income) expense, net 13 (181) Interest expense
16,580 17,123 Income tax expense 1,478 7,765 Amortization of
program broadcast rights 3,849 3,803 Common stock contributed to
401(k) plan excluding corporate 401(k) contributions 400 556
Network compensation revenue recognized (204) (250) Network
compensation per network affiliation agreement 66 539 Payments for
program broadcast rights (2,594) (4,482) Broadcast Cash Flow Less
Cash Corporate Expenses 30,172 44,197 Corporate and administrative
expenses excluding amortization of non-cash stock based
compensation 3,379 4,445 Broadcast Cash Flow $33,551 $48,642 As
Reported Pro Forma(1) Year Ended Year Ended December 31, December
31, 2007 2006 2007 2006 Net income $(23,151) $11,711 $(23,151)
$11,301 Adjustments to reconcile to Broadcast Cash Flow Less Cash
Corporate Expenses: Depreciation and amortization of intangible
assets 39,383 36,526 39,383 37,194 Amortization of non-cash stock
based compensation 1,248 1,092 1,248 1,092 (Gain) loss on disposals
of assets, net (248) 1,021 (248) 1,021 Miscellaneous (income), net
(972) (677) (972) (677) Interest expense 67,189 66,787 67,189
67,212 Loss on early extinguishment of debt 22,853 347 22,853 347
Income tax expense (benefit) (12,543) 9,823 (12,543) 9,588
Amortization of program broadcast rights 15,194 14,234 15,194
14,234 Common stock contributed to 401(k) plan excluding corporate
401(k) contributions 2,150 2,234 2,150 2,234 Network compensation
revenue recognized (768) (1,089) (768) (1,089) Network compensation
per network affiliation agreement 301 2,216 301 2,216 Payments for
program broadcast rights (14,101) (14,839) (14,101) (14,839)
Broadcast Cash Flow Less Cash Corporate Expenses 96,535 129,386
96,535 129,834 Corporate and administrative expenses excluding
amortization of non-cash stock based compensation 13,842 14,005
13,842 14,005 Broadcast Cash Flow $110,377 $143,391 $110,377
$143,839 See the definition of Non-GAAP terms below. 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 us to approximate the
amount used to calculate a key financial performance covenant as
defined 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), 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 station WNDU, South Bend, IN on March 3,
2006 as if the station had been acquired on January 1, 2006. (2)
Total debt as of December 31, 2006 does not include $653,000 of
unamortized debt discount on our 9.25% Notes. The 9.25% Notes were
redeemed on April 18, 2007. 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 40 digital second channels including
1 ABC, 5 Fox, 8 CW and 16 MyNetworkTV affiliates plus 8 local
news/weather channels and 2 "independent" channels in certain of
our existing markets. Cautionary Statements for Purposes of the
"Safe Harbor" Provisions of the Private Securities Litigation
Reform Act: The comments on our current expectations of operating
results for the first quarter of 2008 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 is as of March
13, 2008. We do not intend, and undertake no duty, to update this
information to reflect future events or circumstances. Information
about potential factors that could affect our business and
financial results and cause actual results to differ materially
from those in the 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, 2006 which was
filed with the SEC and is available at the SEC's website at
http://www.sec.gov/. 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.gray.tv/
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