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