ATLANTA, Feb. 27, 2018 /PRNewswire/ -- Gray
Television, Inc. ("Gray," "we," "us" or "our") (NYSE: GTN and
GTN.A) today announces record results of operations for the
fourth quarter and full year ended December
31, 2017, including record revenue and net income.
Gray's Chairman and Chief Executive Officer Hilton Howell declared, "We are extremely
pleased by all that we have accomplished in 2017 and look forward
to an even more successful 2018." In particular, several important
measures of performance stood out:
- our total revenue for the year ended December 31, 2017 was a new record, increasing by
approximately $70.3 million, or 9%,
to $882.7 million compared to
2016;
- our combined local and national advertising revenue increased
by approximately $20.9 million, or
16%, in the fourth quarter of 2017 compared to the fourth quarter
of 2016. For all of 2017, our combined local and national
advertising revenue increased $68.4
million, or 14%, compared to 2016;
- our fourth quarter of 2017 political advertising revenue was
$7.5 million, significantly exceeding
our guidance;
- our fourth quarter of 2017 broadcast operating expense was
$150.7 million and was near the low
end of our guidance;
- our fourth quarter of 2017 corporate and administrative expense
was $7.1 million, which was below our
guidance;
- our fully diluted net income per share for the fourth quarter
and year ended December 31, 2017 was
$2.13 and $3.55,
respectively;
- as of December 31, 2017, our
Total Leverage Ratio, Net of all Cash (as defined below) improved
to 4.16 times, on a trailing eight-quarter basis and our cash
balance increased to $462.4
million;
- our net income of $165.6 million
for the fourth quarter of 2017 was our highest net income for any
fourth quarter in our history. Our Broadcast Cash Flow was
$85.9 million for the fourth quarter
of 2017. Our Free Cash Flow was $40.4
million for the fourth quarter of 2017;
- included in our net income for the fourth quarter of 2017 was a
net income tax benefit of $134.4
million, resulting primarily from the enactment of the Tax
Cuts and Jobs Act of 2017 (the "TCJA"); and
- in December 2017, we completed an
underwritten public offering of 17.25 million shares of our common
stock at a price to the public of $14.50 per share. The net proceeds of the
offering, after discounts and expenses, were approximately
$238.9 million.
Selected Operating
Data on As-Reported Basis (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
2017
|
|
2016
|
|
% Change
2017 to
2016
|
|
2015
|
|
% Change
2017 to
2015
|
|
(dollars in
thousands)
|
Revenue (less agency
commissions):
|
|
|
|
|
|
|
|
|
|
Total
|
$
233,609
|
|
$
237,619
|
|
(2)%
|
|
$
169,487
|
|
38 %
|
Political
|
$
7,464
|
|
$
48,519
|
|
(85)%
|
|
$
9,213
|
|
(19)%
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
(1):
|
|
|
|
|
|
|
|
|
|
Broadcast
|
$
150,670
|
|
$
128,511
|
|
17 %
|
|
$
101,969
|
|
48 %
|
Corporate and
administrative
|
$
7,105
|
|
$
8,922
|
|
(20)%
|
|
$
11,030
|
|
(36)%
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
165,570
|
|
$
35,834
|
|
362 %
|
|
$
14,987
|
|
1005 %
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Cash Flow
(2):
|
|
|
|
|
|
|
|
|
|
Broadcast Cash
Flow
|
$
85,864
|
|
$
109,469
|
|
(22)%
|
|
$
67,849
|
|
27 %
|
Broadcast Cash Flow
Less
|
|
|
|
|
|
|
|
|
|
Cash Corporate
Expenses
|
$
79,938
|
|
$
101,515
|
|
(21)%
|
|
$
57,609
|
|
39 %
|
Free Cash
Flow
|
$
40,383
|
|
$
68,486
|
|
(41)%
|
|
$
28,996
|
|
39 %
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
|
|
2017
|
|
2016
|
|
% Change
2017 to
2016
|
|
2015
|
|
% Change
2017 to
2015
|
|
(dollars in
thousands)
|
Revenue (less agency
commissions):
|
|
|
|
|
|
|
|
|
|
Total
|
$
882,728
|
|
$
812,465
|
|
9 %
|
|
$
597,356
|
|
48 %
|
Political
|
$
16,498
|
|
$
90,095
|
|
(82)%
|
|
$
17,163
|
|
(4)%
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
(1):
|
|
|
|
|
|
|
|
|
|
Broadcast
|
$
557,116
|
|
$
475,131
|
|
17 %
|
|
$
374,182
|
|
49 %
|
Corporate and
administrative
|
$
31,541
|
|
$
40,347
|
|
(22)%
|
|
$
34,343
|
|
(8)%
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
261,952
|
|
$
62,273
|
|
321 %
|
|
$
39,301
|
|
567 %
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Cash Flow
(2):
|
|
|
|
|
|
|
|
|
|
Broadcast Cash
Flow
|
$
329,503
|
|
$
338,801
|
|
(3)%
|
|
$
224,484
|
|
47 %
|
Broadcast Cash Flow
Less
|
|
|
|
|
|
|
|
|
|
Cash Corporate
Expenses
|
$
302,369
|
|
$
302,332
|
|
0 %
|
|
$
193,261
|
|
56 %
|
Free Cash
Flow
|
$
171,005
|
|
$
148,126
|
|
15 %
|
|
$
93,984
|
|
82 %
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes
depreciation, amortization, and loss (gain) on disposal of
assets.
|
|
|
|
|
|
|
(2) Non-GAAP terms
and related reconciliations to net income are included
below.
|
|
|
|
|
Selected Operating
Data on Combined Historical Basis (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
2017
|
|
2016
|
|
% Change
2017 to
2016
|
|
2015
|
|
% Change
2017 to
2015
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in
thousands)
|
Revenue (less agency
commissions):
|
|
|
|
|
|
|
|
|
|
Total
|
$
233,609
|
|
$
275,529
|
|
(15)%
|
|
$
224,708
|
|
4 %
|
Political
|
$
7,464
|
|
$
63,369
|
|
(88)%
|
|
$
12,088
|
|
(38)%
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
(1):
|
|
|
|
|
|
|
|
|
|
Broadcast
|
$
150,670
|
|
$
146,465
|
|
3 %
|
|
$
138,817
|
|
9 %
|
Corporate and
administrative
|
$
7,105
|
|
$
8,922
|
|
(20)%
|
|
$
11,030
|
|
(36)%
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Cash Flow
(2):
|
|
|
|
|
|
|
|
|
|
Broadcast Cash
Flow
|
$
85,831
|
|
$
129,968
|
|
(34)%
|
|
$
91,501
|
|
(6)%
|
Broadcast Cash Flow
Less
|
|
|
|
|
|
|
|
|
|
Cash Corporate
Expenses
|
$
79,905
|
|
$
122,014
|
|
(35)%
|
|
$
81,261
|
|
(2)%
|
Operating Cash Flow
as Defined in
|
|
|
|
|
|
|
|
|
|
our Senior Credit
Agreement
|
$
77,384
|
|
$
122,758
|
|
(37)%
|
|
$
81,794
|
|
(5)%
|
Free Cash
Flow
|
$
40,453
|
|
$
87,872
|
|
(54)%
|
|
$
50,089
|
|
(19)%
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
|
|
2017
|
|
2016
|
|
% Change
2017 to
2016
|
|
2015
|
|
% Change
2017 to
2015
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in
thousands)
|
Revenue (less agency
commissions):
|
|
|
|
|
|
|
|
|
|
Total
|
$
895,081
|
|
$
946,001
|
|
(5)%
|
|
$
821,599
|
|
9 %
|
Political
|
$
16,539
|
|
$
117,538
|
|
(86)%
|
|
$
21,934
|
|
(25)%
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
(1):
|
|
|
|
|
|
|
|
|
|
Broadcast
|
$
570,131
|
|
$
553,118
|
|
3 %
|
|
$
524,285
|
|
9 %
|
Corporate and
administrative
|
$
31,541
|
|
$
40,347
|
|
(22)%
|
|
$
34,343
|
|
(8)%
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Cash Flow
(2):
|
|
|
|
|
|
|
|
|
|
Broadcast Cash
Flow
|
$
331,874
|
|
$
400,877
|
|
(17)%
|
|
$
325,963
|
|
2 %
|
Broadcast Cash Flow
Less
|
|
|
|
|
|
|
|
|
|
Cash Corporate
Expenses
|
$
304,740
|
|
$
364,408
|
|
(16)%
|
|
$
294,740
|
|
3 %
|
Operating Cash Flow
as Defined in
|
|
|
|
|
|
|
|
|
|
our Senior Credit
Agreement
|
$
302,257
|
|
$
369,967
|
|
(18)%
|
|
$
300,014
|
|
1 %
|
Free Cash
Flow
|
$
173,772
|
|
$
213,526
|
|
(19)%
|
|
$
173,748
|
|
0 %
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes
depreciation, amortization, and loss (gain) on disposal of
assets.
|
|
|
|
|
|
|
(2) Non-GAAP terms
and related reconciliations to net income are included
below.
|
|
|
|
|
Results of Operations for the Fourth Quarter of 2017 on
As-Reported Basis:
Revenue (Less Agency Commissions).
The table below presents our revenue (less agency commissions)
by type for the fourth quarter of 2017 and 2016 (dollars in
thousands):
|
|
Three Months Ended
December 31,
|
|
|
2017
|
|
2016
|
|
Amount
|
|
Percent
|
|
|
|
|
Percent
|
|
|
|
Percent
|
|
Increase
|
|
Increase
|
|
|
Amount
|
|
of
Total
|
|
Amount
|
|
of
Total
|
|
(Decrease)
|
|
(Decrease)
|
Revenue (less
agency commissions):
|
|
|
|
|
|
|
|
|
|
|
|
|
Local (including
internet/digital/mobile)
|
|
$
120,714
|
|
51.7%
|
|
$
107,083
|
|
45.1%
|
|
$
13,631
|
|
13 %
|
National
|
|
31,995
|
|
13.7%
|
|
24,776
|
|
10.4%
|
|
7,219
|
|
29 %
|
Political
|
|
7,464
|
|
3.2%
|
|
48,519
|
|
20.4%
|
|
(41,055)
|
|
(85)%
|
Retransmission
consent
|
|
69,509
|
|
29.8%
|
|
51,965
|
|
21.9%
|
|
17,544
|
|
34 %
|
Other
|
|
3,927
|
|
1.6%
|
|
5,276
|
|
2.2%
|
|
(1,349)
|
|
(26)%
|
Total
|
|
$
233,609
|
|
100.0%
|
|
$
237,619
|
|
100.0%
|
|
$
(4,010)
|
|
(2)%
|
The 2017 Acquisitions and 2016 Acquisitions (each as defined
below) collectively accounted for approximately $64.4 million of our total revenue in the fourth
quarter of 2017, and the 2016 Acquisitions accounted for
approximately $42.5 million of our
total revenue in the fourth quarter of 2016.
Excluding the revenue contributed by the 2017 Acquisitions and
2016 Acquisitions, our total revenue decreased by $25.8 million in the fourth quarter of 2017 as
compared to the fourth quarter of 2016. This was primarily the
result of a decrease in political advertising revenue of
approximately $34.5 million due to
2017 being the "off-year" of the two-year election cycle. This
decrease was partially offset by increases in national advertising
revenue of $1.8 million and
retransmission consent revenue of approximately $7.9 million, primarily due to higher
retransmission consent rates.
Broadcast Operating Expenses.
Broadcast operating expenses (before depreciation, amortization
and gain or loss on disposal of assets) increased $22.2 million, or 17%, to $150.7 million for the fourth quarter of 2017
compared to the fourth quarter of 2016. The 2017 Acquisitions and
2016 Acquisitions collectively accounted for approximately
$40.5 million of our broadcast
operating expenses in the fourth quarter of 2017, and the 2016
Acquisitions accounted for approximately $22.0 million of our broadcast operating expenses
in the fourth quarter of 2016. Including the impact of the 2017
Acquisitions and 2016 Acquisitions, total retransmission expense
increased $9.3 million, or 35%, to
$35.6 million in the fourth quarter
of 2017 compared to the fourth quarter of 2016, consistent with
increases in retransmission consent revenue.
Excluding the impact of the 2017 Acquisitions and 2016
Acquisitions, in the fourth quarter of 2017:
- Total non-compensation expenses increased $1.8 million, or 3%, primarily due to
retransmission expense (reverse network compensation) increases of
$3.6 million, partially offset by
decreases in professional fees of $1.2
million.
- Total compensation expenses increased $1.8 million, or 3%. Non-cash share-based
compensation expenses were $2.8
million and $0.3 million in
the fourth quarters of 2017 and 2016, respectively.
Corporate and Administrative Operating
Expenses.
Corporate and administrative expenses (before depreciation,
amortization and gain or loss on disposal of assets) decreased
$1.8 million, or 20%, to $7.1 million in the fourth quarter of 2017 as
compared to the fourth quarter of 2016. This decrease reflects the
following:
- Non-compensation expenses decreased $1.0
million, or 24%, in the fourth quarter of 2017 due primarily
to decreases of $0.7 million in legal
and other professional fees related to the acquisitions completed
in 2017 compared to those completed in 2016.
- Compensation expenses decreased $0.8
million, or 17%, in the fourth quarter of 2017 due primarily
to decreases in incentive compensation. Non-cash share-based
compensation expenses were $1.2
million in the fourth quarter of 2017 compared to
$1.0 million in the fourth quarter of
2016.
Taxes.
During the fourth quarter of 2017, we made aggregate federal and
state income tax payments of $0.8
million. We did not make any federal or state income tax
payments in the fourth quarter of 2016. The TCJA, that was signed
into law on December 22, 2017,
reduced the value of our deferred tax liabilities, with a credit to
earnings for a reduction of those liabilities. Accordingly, we
recorded a tax benefit of $134.4
million in the fourth quarter of 2017, compared to a tax
expense of $24.3 million in the
fourth quarter of 2016. In addition, the TCJA is expected to
materially affect our income tax obligations in 2018 and subsequent
years. Among other things, the new law should result in a positive
effect on our net earnings and earnings per share. It will also
limit or eliminate certain deductions, to which we have been
entitled in past years, likely increasing our federal and state
income tax payment obligations beginning in 2018.
Results of Operations for the Fourth Quarter of 2017 on
Combined Historical Basis:
Revenue (Less Agency Commissions).
On a Combined Historical Basis, total revenue decreased
$41.9 million, or 15%, to
$233.6 million in the fourth quarter
of 2017 as compared to the fourth quarter of 2016. The changes in
Combined Historical Basis revenue were approximately as
follows:
- Local advertising revenue (including internet/digital/mobile)
was unchanged.
- National advertising revenue increased $2.5 million, or 8%, to $32.0 million.
- Political advertising revenue decreased $55.9 million, or 88%, to $7.5 million.
- Retransmission consent revenue increased $11.5 million, or 20%, to $69.5 million.
- Other revenue increased $0.1
million, or 2%, to $3.9
million.
Broadcast Operating Expenses.
On a Combined Historical Basis, broadcast operating expenses
(before depreciation, amortization and gain or loss on disposal of
assets) increased $4.2 million, or
3%, to $150.7 million in the fourth
quarter of 2017 as compared to the fourth quarter of 2016. The net
increase was primarily the result of:
- Retransmission expense (reverse network compensation) increased
$6.0 million, or 20%, to $35.6 million, consistent with increases in
retransmission consent revenue.
- Compensation expense decreased by approximately $0.5 million, or 1%, to $76.9 million.
Results of Operations for the Year Ended December 31, 2017 on As-Reported Basis:
Revenue (Less Agency Commissions).
The table below presents our revenue (less agency commissions)
by type for the years ended December 31,
2017 and 2016, respectively (dollars in thousands):
|
|
Year Ended
December 31,
|
|
|
2017
|
|
2016
|
|
Amount
|
|
Percent
|
|
|
|
|
Percent
|
|
|
|
Percent
|
|
Increase
|
|
Increase
|
|
|
Amount
|
|
of
Total
|
|
Amount
|
|
of
Total
|
|
(Decrease)
|
|
(Decrease)
|
Revenue (less
agency commissions):
|
|
|
|
|
|
|
|
|
|
|
|
|
Local (including
internet/digital/mobile)
|
|
$
451,261
|
|
51.1%
|
|
$
403,336
|
|
49.6%
|
|
$
47,925
|
|
12 %
|
National
|
|
118,817
|
|
13.5%
|
|
98,351
|
|
12.1%
|
|
20,466
|
|
21 %
|
Political
|
|
16,498
|
|
1.9%
|
|
90,095
|
|
11.1%
|
|
(73,597)
|
|
(82)%
|
Retransmission
consent
|
|
276,603
|
|
31.3%
|
|
200,879
|
|
24.7%
|
|
75,724
|
|
38 %
|
Other
|
|
19,549
|
|
2.2%
|
|
19,804
|
|
2.5%
|
|
(255)
|
|
(1)%
|
Total
|
|
$
882,728
|
|
100.0%
|
|
$
812,465
|
|
100.0%
|
|
$
70,263
|
|
9 %
|
The 2017 Acquisitions and 2016 Acquisitions collectively
accounted for approximately $232.2
million of our total revenue in the year ended December 31, 2017, and the 2016 Acquisitions
accounted for approximately $130.4
million of our total revenue in the year ended December 31, 2016.
Excluding the revenue contributed by the 2017 Acquisitions and
2016 Acquisitions, our total revenue decreased by $31.6 million. This was primarily the result of a
decrease in political advertising revenue of approximately
$63.4 million, due to 2017 being the
"off-year" of the two-year election cycle. This decrease was
partially offset by an increase in retransmission consent revenue
of approximately $36.8 million
primarily due to higher retransmission consent rates.
Broadcast Operating Expenses.
Broadcast operating expenses (before depreciation, amortization
and gain or loss on disposal of assets) increased $82.0 million, or 17%, to $557.1 million for the year ended December 31, 2017 compared to the year ended
December 31, 2016. The 2017
Acquisitions and 2016 Acquisitions collectively accounted for
approximately $135.6 million of our
broadcast operating expenses in the year ended December 31, 2017, and the 2016 Acquisitions
accounted for approximately $74.6
million of our broadcast operating expenses for the year
ended December 31, 2016. Including
the impact of the 2017 Acquisitions and 2016 Acquisitions, total
retransmission expense increased $38.7
million, or 40%, to $136.3
million in the year ended December
31, 2017 compared to the year ended December 31, 2016, consistent with increases in
retransmission consent revenue.
Excluding the impact of the 2017 Acquisitions and the 2016
Acquisitions, in the year ended December 31,
2017:
- Non-compensation expenses increased by $20.3 million, or 9%, primarily due to
retransmission expense (reverse network compensation) increases of
$19.3 million and professional fee
increases of $2.7 million.
- Compensation expenses increased $0.7
million, or less than 1%.
Corporate and Administrative Operating
Expenses.
Corporate and administrative expenses (before depreciation,
amortization and gain or loss on disposal of assets) decreased
$8.8 million, or 22%, to $31.5 million for the year ended December 31, 2017 compared to the year ended
December 31, 2016. This decrease
reflects in part the following:
- Non-compensation expense decreased $7.3
million, or 31%, due primarily to decreases of $8.5 million of legal and other professional fees
related to the acquisitions completed in 2017 compared to those
completed in 2016.
- Compensation expenses decreased $1.5
million, or 9%, primarily as a result of decreases in
incentive compensation. Non-cash share-based compensation expenses
were $4.4 million in the year ended
December 31, 2017 compared to
$3.9 million in the year ended
December 31, 2016.
Gain or Loss on Disposal of Assets, net.
We recorded a gain on disposal of assets of $74.2 million in the year ended December 31, 2017 and a loss on disposal of
assets of $0.3 million in the year
ended December 31, 2016. On
May 30, 2017, we tendered two of our
broadcast licenses and made other modifications to our broadcast
spectrum related to our participation in the FCC's reverse auction
for broadcast spectrum. Proceeds from this auction, which we
received on August 7, 2017, were
$90.8 million while the combined cost
of the assets disposed of was $13.1
million. Due to planning in connection with this transaction
and our recently completed acquisitions, we have been able to defer
any related income tax obligations on a long-term basis.
Loss from Early Extinguishment of Debt.
In the year ended December 31,
2017, we recorded a loss from early extinguishment of debt
of approximately $2.9 million, or
approximately $1.7 million after tax,
related to the amendment and restatement of our senior credit
facility. In the year ended December 31,
2016, we recorded a loss from early extinguishment of debt
of approximately $32.0 million, or
approximately $19.5 million after
tax, related to the tender offer and redemption of our 7½% senior
notes due 2020.
Taxes.
During the year ended December 31,
2017, we made aggregate federal and state income tax
payments totaling $2.0 million
compared to $14.6 million for the
year ended December 31, 2016.
Primarily as a result of the enactment of the TCJA, in the year
ended December 31, 2017 we recorded a
tax benefit of $68.7 million,
compared a tax provision of $43.4
million in the year ended December
31, 2016.
Results of Operations for the Year Ended December 31, 2017 on Combined Historical
Basis:
Revenue (Less Agency Commissions).
On a Combined Historical Basis, revenue decreased $50.9 million, or 5%, to $895.1 million for the year ended December 31, 2017 compared to the year ended
December 31, 2016. The changes in
Combined Historical Basis revenue were approximately as
follows:
- Local advertising revenue (including internet/digital/mobile)
decreased $6.0 million, or 1%, to
$459.6 million.
- National advertising revenue increased $2.6 million, or 2%, to $122.1 million.
- Political advertising revenue decreased $101.0 million, or 86%, to $16.5 million.
- Retransmission consent revenue increased $53.3 million, or 24%, to $279.8 million.
- Other revenue increased $0.1
million, or less than 1%, to $17.1
million.
Local and national advertising revenue decreased $3.4 million, or 1%, in part, as a result of the
impact of the broadcast of the 2017 Super Bowl on our
FOX-affiliated stations generating approximately $0.6 million of local and national advertising
revenue, compared to $2.1 million
that we earned from the broadcast of the 2016 Super Bowl on our
CBS-affiliated stations, and the lack of revenue from Olympic Games
in 2017 compared with $8.2 million of
revenue from the Olympic Games in 2016.
Broadcast Operating Expenses.
On a Combined Historical Basis, broadcast operating expenses
(before depreciation, amortization and gain or loss on disposal of
assets) increased $17.0 million, or
3%, to $570.1 million for the year
ended December 31, 2017 compared to
the year ended December 31, 2016.
This increase reflects, in part:
- Retransmission expense (reverse network compensation) increased
$26.9 million, or 24%, to
$138.8 million, consistent with
increases in retransmission consent revenue.
- Syndicated programming and licensing expenses decreased
approximately $1.7 million, or 7%, to
$22.3 million.
- Compensation expense decreased approximately $4.7 million, or 2%, to $284.4 million.
Detailed table of operating results on As-Reported
Basis:
Gray Television,
Inc.
|
Selected Operating
Data (Unaudited)
|
(in thousands except
for net income per share data)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
Revenue (less agency
commissions)
|
$ 233,609
|
|
$ 237,619
|
|
$ 882,728
|
|
$ 812,465
|
Operating expenses
before depreciation,
|
|
|
|
|
|
|
|
amortization and
(gain) loss on disposal
|
|
|
|
|
|
|
|
of assets,
net:
|
|
|
|
|
|
|
|
Broadcast
|
150,670
|
|
128,511
|
|
557,116
|
|
475,131
|
Corporate and
administrative
|
7,105
|
|
8,922
|
|
31,541
|
|
40,347
|
Depreciation
|
13,418
|
|
11,686
|
|
51,973
|
|
45,923
|
Amortization of
intangible assets
|
6,388
|
|
4,231
|
|
25,072
|
|
16,596
|
(Gain)
loss on disposal of assets, net
|
939
|
|
395
|
|
(74,200)
|
|
329
|
Operating
expenses
|
178,520
|
|
153,745
|
|
591,502
|
|
578,326
|
Operating
income
|
55,089
|
|
83,874
|
|
291,226
|
|
234,139
|
Other income
(expense):
|
|
|
|
|
|
|
|
Miscellaneous income,
net
|
126
|
|
35
|
|
162
|
|
775
|
Interest
expense
|
(24,070)
|
|
(23,766)
|
|
(95,259)
|
|
(97,236)
|
Loss from early
extinguishment of debt
|
-
|
|
-
|
|
(2,851)
|
|
(31,987)
|
Income before income
tax
|
31,145
|
|
60,143
|
|
193,278
|
|
105,691
|
Income tax (benefit)
expense
|
(134,425)
|
|
24,309
|
|
(68,674)
|
|
43,418
|
Net income
|
$ 165,570
|
|
$
35,834
|
|
$ 261,952
|
|
$
62,273
|
|
|
|
|
|
|
|
|
Basic per share
information:
|
|
|
|
|
|
|
|
Net income
|
$
2.15
|
|
$
0.50
|
|
$
3.59
|
|
$
0.87
|
Weighted-average
shares outstanding
|
76,869
|
|
71,845
|
|
73,061
|
|
71,848
|
|
|
|
|
|
|
|
|
Diluted per share
information:
|
|
|
|
|
|
|
|
Net income
|
$
2.13
|
|
$
0.49
|
|
$
3.55
|
|
$
0.86
|
Weighted-average
shares outstanding
|
77,826
|
|
72,889
|
|
73,836
|
|
72,764
|
|
|
|
|
|
|
|
|
Political advertising
revenue
|
|
|
|
|
|
|
|
(less agency
commissions)
|
$
7,464
|
|
$
48,519
|
|
$
16,498
|
|
$
90,095
|
|
|
|
|
|
|
|
|
Revenue related to
Olympic broadcasts
|
|
|
|
|
|
|
|
(less agency
commissions)
|
$
-
|
|
$
-
|
|
$
-
|
|
$
8,192
|
Other Financial Data:
|
December 31,
2017
|
|
December 31,
2016
|
|
(in
thousands)
|
|
|
|
|
Cash
|
$
462,399
|
|
$
325,189
|
Long-term debt
including current portion
|
$
1,837,428
|
|
$
1,756,747
|
Borrowing
availability under our senior credit facility
|
$
100,000
|
|
$
60,000
|
|
|
|
|
|
Year Ended
December 31,
|
|
2017
|
|
2016
|
|
(in
thousands)
|
|
|
|
|
Net cash provided by
operating activities
|
$
180,015
|
|
$
210,085
|
Net cash used in
investing activities
|
(349,799)
|
|
(479,334)
|
Net cash provided by
financing activities
|
306,994
|
|
497,120
|
Net increase in
cash
|
$
137,210
|
|
$
227,871
|
Guidance for the Quarter Ending March
31, 2018:
Based on our current forecasts for the quarter ending
March 31, 2018 (the "first quarter of
2018"), we anticipate changes from the quarter ended March 31, 2017 (the "first quarter of 2017") as
outlined below. Our estimates for the first quarter of 2018 include
approximately $9.8 million of
revenues and $6.8 million of
broadcast operating expenses estimated to be contributed by the
stations acquired after the first quarter of 2017.
|
|
Low
End
|
|
%
Change
|
|
High
End
|
|
%
Change
|
|
|
|
|
Guidance
for
|
|
From
|
|
Guidance
for
|
|
From
|
|
As-Reported
|
|
|
the
First
|
|
As-Reported
|
|
the
First
|
|
As-Reported
|
|
First
|
|
|
Quarter
of
|
|
First Quarter
of
|
|
Quarter
of
|
|
First Quarter
of
|
|
Quarter
of
|
Selected operating
data:
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2017
|
|
|
(dollars in
thousands)
|
OPERATING
REVENUE:
|
|
|
|
|
|
|
|
|
|
|
Revenue (less agency
commissions)
|
|
$
223,000
|
|
10 %
|
|
$
228,000
|
|
12 %
|
|
$
203,461
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
(before depreciation,
amortization and
|
|
|
|
|
|
|
|
|
|
loss (gain) on
disposals of assets):
|
|
|
|
|
|
|
|
|
|
|
Broadcast
|
|
$
152,000
|
|
14 %
|
|
$
156,000
|
|
17 %
|
|
$
133,471
|
Corporate and
administrative
|
|
$
8,750
|
|
14 %
|
|
$
9,500
|
|
23 %
|
|
$
7,709
|
|
|
|
|
|
|
|
|
|
|
|
OTHER SELECTED
DATA:
|
|
|
|
|
|
|
|
|
|
|
Political advertising
revenue
|
|
|
|
|
|
|
|
|
|
|
(less agency
commissions)
|
|
$
5,000
|
|
279 %
|
|
$
5,500
|
|
316 %
|
|
$
1,321
|
Comments on First Quarter 2018 Guidance:
We are currently negotiating two large MVPD agreement renewals
and, while we cannot assure the outcome of the negotiations, we
currently anticipate that the renewals will be retroactive to
January 1, 2018.
Revenue.
Based on our current forecasts for the first quarter of 2018, we
anticipate changes from the first quarter of 2017 as outlined
below:
- We believe our first quarter of 2018 local advertising revenue
(including internet/digital/mobile) will increase by 1% to 2%.
- We expect our first quarter of 2018 national advertising
revenue will change by -3% to +1%.
- We believe our first quarter of 2018 political advertising
revenue will range between approximately $5.0 to $5.5
million, reflecting 2018 being an on-year of the political
advertising revenue cycle.
- We believe our first quarter of 2018 retransmission consent
revenue will range between $85
million and $87.5 million, an
increase of 26% to 29%.
For the first quarter of 2018, we anticipate our revenue will
reflect a $13.2 million incremental
increase from the 2017 Acquisitions.
Included in our forecast of local and national advertising
revenue above, we anticipate that the revenue from the broadcast of
the 2018 Super Bowl on our NBC-affiliated stations will be
approximately $2.3 million, compared
to $0.6 million that we earned from
the broadcast of the 2017 Super Bowl on our FOX-affiliated
stations. Our portfolio of NBC-affiliated stations is much larger
and these NBC-affiliated stations serve larger television markets
than our portfolio of FOX-affiliated stations. In addition,
we anticipate that our revenue from the broadcast of the Winter
Olympic Games on our NBC-affiliated stations will approximate
$5.0 million to $5.8 million; there were no Olympic broadcasts in
the first quarter of 2017.
Broadcast Operating Expenses (before depreciation,
amortization and loss (gain) on disposal of
assets).
For the first quarter of 2018, we anticipate our broadcast
operating expenses will reflect a $8.4
million incremental increase from the 2017 Acquisitions, as
well as the anticipated increases in payroll and related employee
benefits. Included in our first quarter 2018 broadcast operating
expenses are network programming fees currently estimated to range
between $42.5 million and
$43.7 million, compared to
$32.3 million in the first quarter of
2017. Non-cash stock based compensation expenses expected to be
included in broadcast operating expenses are $1.6 million in the first quarter of 2018
compared to $0.3 million in the first
quarter of 2017.
Corporate and Administrative Operating Expenses (before
depreciation, amortization and loss (gain) on disposal of
assets).
For the first quarter of 2018, we anticipate our corporate and
administrative operating expenses will increase to within a range
of approximately $8.8 million to
$9.5 million, reflecting an
anticipated increase from the first quarter of 2017 of
approximately $1.1 million to
$1.8 million as a result of routine
compensation increases and higher legal and other professional fees
in 2018 related to potential acquisitions. Non-cash stock based
compensation expenses expected to be included in expenses are
$1.0 million in the first quarter of
2018, unchanged from the first quarter of 2017.
The Company
We are a television broadcast company headquartered in
Atlanta, Georgia, that owns and
operates over 100 television stations across 57 television markets
that collectively broadcast over 200 program streams including over
100 channels affiliated with the CBS Network, the NBC Network, the
ABC Network and the FOX Network. Our portfolio includes the
number-one or number-two ranked television station for both overall
audience and news audience in all 57 of our 57 markets, which
collectively cover approximately 10.4 percent of total United States television households.
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 first quarter of 2018 or other periods, the impact of
recently completed transactions, future operating expenses, future
income tax payments 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 the date hereof. 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, 2017 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 fourth quarter
operating results on February 27,
2018. The call will begin at 11:00
a.m. Eastern Time. The live dial-in number is 1 (800)
946-0716 and the confirmation code is 6165505. 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: 6165505 until March 29, 2018.
Effects of Acquisitions and Divestitures on Our Results of
Operations and Non-GAAP Terms
From October 31, 2013 through
December 31, 2017, we completed 23
acquisition transactions and three divestiture transactions. As
more fully described in our Form 10-K to be filed with the
Securities and Exchange Commission today and in our prior
disclosures, these transactions added a net total of 51 television
stations in 31 television markets, including 26 new television
markets, to our operations.
We refer to the eight stations we acquired (excluding the
stations acquired in the Clarksburg Acquisition) during 2017 and
the stations we commenced operating under an LMA during that period
as the "2017 Acquisitions." We refer to the 13 stations acquired in
2016, and that we retained in those transactions, as well as the
stations in the Clarksburg Acquisition that we commenced operating
under an LMA on June 1, 2016, as the
"2016 Acquisitions." During 2015, we completed six acquisitions,
which collectively added seven television stations in six markets
(four new markets) to our operations, and we refer to those
stations as the "2015 Acquisitions." Unless the context of the
following discussion requires otherwise, we refer to the stations
acquired in the 2017 Acquisitions, the 2016 Acquisitions and the
2015 Acquisitions, collectively, as the "Acquisitions."
Due to the significant effect that our acquisitions and
divestitures have had on our results of operations, and in order to
provide more meaningful period over period comparisons, we present
herein certain financial information on a "Combined Historical
Basis." Unless otherwise defined, Combined Historical Basis
reflects financial results that have been compiled by adding Gray's
historical revenue and broadcast expenses to the historical revenue
and broadcast expenses of the Acquisitions and subtracting the
historical revenues and broadcast expenses of divested stations as
if they had been acquired or divested, respectively, on
January 1, 2015 (the beginning of the
earliest period presented) (the "Completed Transactions").
Combined Historical Basis financial information does not include
any adjustments for other events attributable to the Completed
Transactions except "Broadcast Cash Flow," "Broadcast Cash Flow
Less Cash Corporate Expenses," "Operating Cash Flow as Defined in
the Senior Credit Agreement" and "Total Leverage Ratio, Net of All
Cash" each give effect to expected synergies, and "Free Cash Flow"
on a Combined Historical Basis gives effect to the financings and
certain expected operating synergies related to the Completed
Transactions. "Operating Cash Flow as Defined in the Senior Credit
Agreement" and "Total Leverage Ratio, Net of All Cash" on a
Combined Historical Basis also reflect the add-back of legal and
other professional fees incurred in completing acquisitions.
Certain of the Combined Historical Basis financial information has
been derived from, and adjusted based on, unaudited, unreviewed
financial information prepared by other entities, which Gray cannot
independently verify. We cannot assure you that such financial
information would not be materially different if such information
were audited or reviewed and no assurances can be provided as to
the accuracy of such information, or that our actual results would
not differ materially from the Combined Historical Basis financial
information if the Completed Transactions had been completed at the
stated date. In addition, the presentation of Combined Historical
Basis, "Broadcast Cash Flow," "Broadcast Cash Flow Less Cash
Corporate Expenses," "Operating Cash Flow as Defined in the Senior
Credit Agreement," "Total Leverage Ratio, Net of All Cash" and
"Free Cash Flow," and the adjustments to such information,
including expected synergies resulting from such transactions, may
not comply with GAAP or the requirements for pro forma financial
information under Regulation S-X under the Securities Act.
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, Broadcast Cash Flow Less Cash
Corporate Expenses, Operating Cash Flow as defined in the Senior
Credit Agreement, Free Cash Flow and Total Leverage Ratio, Net of
All Cash. These non-GAAP amounts are used by us to approximate the
amount used to calculate key financial performance covenants
contained in our debt agreements and are used with our GAAP data to
evaluate our results and liquidity. These non-GAAP amounts may be
provided on an As-Reported Basis as well as a Combined Historical
Basis.
We define Broadcast Cash Flow as net income plus loss from early
extinguishment of debt, corporate and administrative expenses,
broadcast non-cash stock based compensation, depreciation and
amortization (including amortization of intangible assets and
program broadcast rights), any gain or loss on disposal of assets,
any miscellaneous expense, interest expense, any income tax
expense, non-cash 401(k) expense less any gain on disposal of
assets, any miscellaneous income, any income tax benefits, payments
for program broadcast obligations and network compensation
revenue.
We define Broadcast Cash Flow Less Cash Corporate Expenses as
net income plus loss from early extinguishment of debt, non-cash
stock based compensation, depreciation and amortization (including
amortization of intangible assets and program broadcast rights),
any gain or loss on disposal of assets, any miscellaneous expense,
interest expense, any income tax expense, and non-cash 401(k)
expense, less any gain on disposal of assets, any miscellaneous
income, any income tax benefits, payments for program broadcast
obligations and network compensation revenue.
We define Operating Cash Flow as defined in our Senior Credit
Agreement as Combined Historical Basis net income plus loss from
early extinguishment of debt, non-cash stock based compensation,
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, non-cash 401(k) expense and pension expenses less any gain
or loss on disposal of assets, any miscellaneous income, any income
tax benefits, payments for program broadcast obligations, network
compensation revenue and cash contributions to pension plans.
We define Free Cash Flow as net income plus loss from early
extinguishment of debt, non-cash stock based compensation,
depreciation and amortization (including amortization of intangible
assets and program broadcast rights), any loss on disposal of
assets, any miscellaneous expense, amortization of deferred
financing costs, any income tax expense, non-cash 401(k) expense
and pension expense, less any gain or loss on disposal of assets,
any miscellaneous income, any income tax benefits, payments for
program broadcast obligations, network compensation revenue,
contributions to pension plans, amortization of original issue
discount on our debt, capital expenditures (net of any insurance
proceeds) and the payment of income taxes (net of any refunds
received).
Our Total Leverage Ratio, Net of All Cash is the total
outstanding principal of our long-term debt and certain other
obligations as defined in our Senior Credit Agreement less all cash
divided by our average Operating Cash Flow as defined in our Senior
Credit Agreement for the preceding eight quarters. This average is
calculated by dividing the sum of our Operating Cash Flow as
defined in our Senior Credit Agreement for the preceding eight
quarters by two.
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 and cash flows reported in accordance with GAAP.
Reconciliation on
As-Reported Basis, in thousands:
|
|
|
|
Three Months
Ended
|
|
December
31,
|
|
2017
|
|
2016
|
|
2015
|
|
|
|
|
|
|
Net income
|
$
165,570
|
|
$
35,834
|
|
$
14,987
|
Depreciation
|
13,418
|
|
11,686
|
|
9,806
|
Amortization of
intangible assets
|
6,388
|
|
4,231
|
|
3,267
|
Non-cash stock based
compensation
|
4,001
|
|
1,274
|
|
1,009
|
Loss (gain) on
disposal of assets, net
|
939
|
|
395
|
|
(482)
|
Miscellaneous income,
net
|
(126)
|
|
(36)
|
|
(1)
|
Interest
expense
|
24,070
|
|
23,766
|
|
18,649
|
Income tax (benefit)
expense
|
(134,425)
|
|
24,309
|
|
10,262
|
Amortization of
program broadcast rights
|
5,589
|
|
4,975
|
|
4,123
|
Common stock
contributed to 401(k) plan
|
|
|
|
|
|
excluding corporate
401(k) contributions
|
-
|
|
8
|
|
7
|
Payments for program
broadcast rights
|
(5,486)
|
|
(4,927)
|
|
(4,018)
|
Corporate and
administrative expenses excluding
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock based
compensation
|
5,926
|
|
7,954
|
|
10,240
|
Broadcast Cash
Flow
|
85,864
|
|
109,469
|
|
67,849
|
Corporate and
administrative expenses excluding
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock based
compensation
|
(5,926)
|
|
(7,954)
|
|
(10,240)
|
Broadcast Cash
Flow Less Cash Corporate Expenses
|
79,938
|
|
101,515
|
|
57,609
|
Pension (income)
expense
|
(124)
|
|
45
|
|
17
|
Contributions to
pension plans
|
(2,500)
|
|
(10)
|
|
(1,505)
|
Interest
expense
|
(24,070)
|
|
(23,766)
|
|
(18,649)
|
Amortization of
deferred financing costs
|
1,158
|
|
1,220
|
|
798
|
Net amortization of
original issue (premium) discount
|
|
|
|
|
|
on senior
notes
|
(152)
|
|
(153)
|
|
(216)
|
Purchase of property
and equipment
|
(13,090)
|
|
(10,366)
|
|
(8,972)
|
Income taxes received
(paid), net of refunds
|
(777)
|
|
1
|
|
(86)
|
Free Cash
Flow
|
$
40,383
|
|
$
68,486
|
|
$
28,996
|
Reconciliation on
As-Reported Basis, in thousands:
|
|
|
|
Year
Ended
|
|
December
31,
|
|
2017
|
|
2016
|
|
2015
|
|
|
|
|
|
|
Net income
|
$
261,952
|
|
$
62,273
|
|
$
39,301
|
Depreciation
|
51,973
|
|
45,923
|
|
36,712
|
Amortization of
intangible assets
|
25,072
|
|
16,596
|
|
11,982
|
Non-cash stock based
compensation
|
8,304
|
|
5,101
|
|
4,020
|
(Gain) loss on
disposal of assets, net
|
(74,200)
|
|
329
|
|
80
|
Miscellaneous income,
net
|
(162)
|
|
(775)
|
|
(103)
|
Interest
expense
|
95,259
|
|
97,236
|
|
74,411
|
Loss from early
extinguishment of debt
|
2,851
|
|
31,987
|
|
-
|
Income tax (benefit)
expense
|
(68,674)
|
|
43,418
|
|
26,448
|
Amortization of
program broadcast rights
|
21,033
|
|
19,001
|
|
14,960
|
Common stock
contributed to 401(k) plan
|
|
|
|
|
|
excluding corporate
401(k) contributions
|
16
|
|
29
|
|
26
|
Payments for program
broadcast rights
|
(21,055)
|
|
(18,786)
|
|
(14,576)
|
Corporate and
administrative expenses excluding
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock based
compensation
|
27,134
|
|
36,469
|
|
31,223
|
Broadcast Cash
Flow
|
329,503
|
|
338,801
|
|
224,484
|
Corporate and
administrative expenses excluding
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock based
compensation
|
(27,134)
|
|
(36,469)
|
|
(31,223)
|
Broadcast Cash
Flow Less Cash Corporate Expenses
|
302,369
|
|
302,332
|
|
193,261
|
Pension (income)
expense
|
(495)
|
|
165
|
|
4,207
|
Contributions to
pension plans
|
(3,124)
|
|
(3,048)
|
|
(5,421)
|
Interest
expense
|
(95,259)
|
|
(97,236)
|
|
(74,411)
|
Amortization of
deferred financing costs
|
4,624
|
|
4,884
|
|
3,194
|
Net amortization of
original issue (premium) discount
|
|
|
|
|
|
on senior
notes
|
(610)
|
|
(779)
|
|
(863)
|
Purchase of property
and equipment
|
(34,516)
|
|
(43,604)
|
|
(24,222)
|
Income taxes paid,
net of refunds
|
(1,984)
|
|
(14,588)
|
|
(1,761)
|
Free Cash
Flow
|
$
171,005
|
|
$
148,126
|
|
$
93,984
|
Reconciliation on
Combined Historical Basis, in thousands:
|
|
|
|
Three Months
Ended
|
|
December
31,
|
|
2017
|
|
2016
|
|
2015
|
|
|
Net income
|
$
165,570
|
|
$
53,440
|
|
$
21,288
|
Depreciation
|
13,418
|
|
12,793
|
|
13,352
|
Amortization of
intangible assets
|
6,388
|
|
4,341
|
|
5,150
|
Non-cash stock-based
compensation
|
4,001
|
|
1,274
|
|
1,009
|
Loss on disposal of
assets, net
|
939
|
|
416
|
|
678
|
Miscellaneous
(income) loss, net
|
(126)
|
|
(77)
|
|
1,365
|
Interest
expense
|
24,070
|
|
25,588
|
|
24,287
|
Income tax
(benefit) expense
|
(134,425)
|
|
23,641
|
|
8,744
|
Amortization of
program broadcast rights
|
5,589
|
|
5,351
|
|
5,875
|
Common stock
contributed to 401(k) plan
|
|
|
|
|
|
excluding corporate
401(k) contributions
|
-
|
|
8
|
|
7
|
Payments for program
broadcast rights
|
(5,486)
|
|
(5,303)
|
|
(5,770)
|
Corporate and
administrative expenses excluding
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock-based
compensation
|
5,926
|
|
7,954
|
|
10,240
|
Other
|
(33)
|
|
542
|
|
5,276
|
Broadcast Cash
Flow
|
85,831
|
|
129,968
|
|
91,501
|
Corporate and
administrative expenses excluding
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock-based
compensation
|
(5,926)
|
|
(7,954)
|
|
(10,240)
|
Broadcast Cash
Flow Less Cash Corporate Expenses
|
79,905
|
|
122,014
|
|
81,261
|
Pension (income)
expense
|
(124)
|
|
45
|
|
17
|
Contributions to
pension plans
|
(2,500)
|
|
(10)
|
|
(1,505)
|
Other
|
103
|
|
709
|
|
2,021
|
Operating Cash
Flow as Defined in Senior Credit Facility
|
77,384
|
|
122,758
|
|
81,794
|
Interest
expense
|
(24,070)
|
|
(25,588)
|
|
(24,287)
|
Amortization of
deferred financing costs
|
1,158
|
|
1,220
|
|
798
|
Net amortization of
original issue (premium) discount
|
.
|
|
|
|
|
on senior
notes
|
(152)
|
|
(153)
|
|
(216)
|
Purchase of property
and equipment
|
(13,090)
|
|
(10,366)
|
|
(6,750)
|
Income taxes received
(paid), net of refunds
|
(777)
|
|
1
|
|
(1,250)
|
Free Cash
Flow
|
$
40,453
|
|
$
87,872
|
|
$
50,089
|
Reconciliation on
Combined Historical Basis, in thousands:
|
|
|
|
Year
Ended
|
|
December
31,
|
|
2017
|
|
2016
|
|
2015
|
|
|
Net income
|
$
260,133
|
|
$
105,523
|
|
$
65,202
|
Depreciation
|
52,710
|
|
51,829
|
|
52,056
|
Amortization of
intangible assets
|
25,098
|
|
17,904
|
|
19,261
|
Non-cash stock-based
compensation
|
8,304
|
|
5,101
|
|
4,020
|
(Gain) loss on
disposal of assets, net
|
(74,250)
|
|
595
|
|
1,736
|
Miscellaneous
(income) expense, net
|
(171)
|
|
119
|
|
5,729
|
Interest
expense
|
95,999
|
|
102,354
|
|
96,597
|
Loss from early
extinguishment of debt
|
2,851
|
|
31,987
|
|
-
|
Income tax
(benefit) expense
|
(68,960)
|
|
42,225
|
|
22,391
|
Amortization of
program broadcast rights
|
21,296
|
|
21,349
|
|
21,799
|
Common stock
contributed to 401(k) plan
|
|
|
|
|
|
excluding corporate
401(k) contributions
|
16
|
|
29
|
|
26
|
Payments for program
broadcast rights
|
(21,318)
|
|
(21,134)
|
|
(21,415)
|
Corporate and
administrative expenses excluding
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock-based
compensation
|
27,134
|
|
36,469
|
|
31,223
|
Other
|
3,032
|
|
6,527
|
|
27,338
|
Broadcast Cash
Flow
|
331,874
|
|
400,877
|
|
325,963
|
Corporate and
administrative expenses excluding
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock-based
compensation
|
(27,134)
|
|
(36,469)
|
|
(31,223)
|
Broadcast Cash
Flow Less Cash Corporate Expenses
|
304,740
|
|
364,408
|
|
294,740
|
Pension (income)
expense
|
(495)
|
|
165
|
|
4,207
|
Contributions to
pension plans
|
(3,124)
|
|
(3,048)
|
|
(5,421)
|
Other
|
1,136
|
|
8,442
|
|
6,488
|
Operating Cash
Flow as Defined in Senior Credit Facility
|
302,257
|
|
369,967
|
|
300,014
|
Interest
expense
|
(95,999)
|
|
(102,354)
|
|
(96,597)
|
Amortization of
deferred financing costs
|
4,624
|
|
4,884
|
|
3,194
|
Net amortization of
original issue (premium) discount
|
|
|
|
|
|
on senior
notes
|
(610)
|
|
(779)
|
|
(863)
|
Purchase of property
and equipment
|
(34,516)
|
|
(43,604)
|
|
(27,000)
|
Income taxes paid,
net of refunds
|
(1,984)
|
|
(14,588)
|
|
(5,000)
|
Free Cash
Flow
|
$
173,772
|
|
$
213,526
|
|
$
173,748
|
Reconciliation of
Total Leverage Ratio, Net of All Cash, in thousands except for
ratio:
|
|
|
|
Combined
Historical Basis Operating Cash Flow
|
|
Eight Quarters
Ended
|
as defined in the
Senior Credit Agreement:
|
|
December 31,
2017
|
|
|
|
Net income
|
|
$
365,656
|
Depreciation
|
|
104,539
|
Amortization of
intangible assets
|
|
43,002
|
Non-cash stock-based
compensation
|
|
13,405
|
Gain on disposal of
assets, net
|
|
(73,655)
|
Miscellaneous income,
net
|
|
(52)
|
Interest
expense
|
|
198,353
|
Loss from early
extinguishment of debt
|
|
34,838
|
Income tax
benefit
|
|
(26,735)
|
Amortization of
program broadcast rights
|
|
42,645
|
Common stock
contributed to 401(k) plan
|
|
|
excluding corporate
401(k) contributions
|
|
45
|
Payments for program
broadcast rights
|
|
(42,452)
|
Corporate and
administrative expenses before depreciation,
amortization
|
|
|
of intangible assets
and non-cash stock-based compensation
|
|
63,603
|
Other
|
|
9,559
|
Broadcast Cash
Flow
|
|
732,751
|
Corporate and
administrative expenses before depreciation,
amortization
|
|
|
of intangible
assets and non-cash stock-based compensation
|
|
(63,603)
|
Broadcast Cash
Flow Less Cash Corporate Expenses
|
|
669,148
|
Pension
income
|
|
(330)
|
Contributions to
pension plans
|
|
(6,172)
|
Other
|
|
9,578
|
Operating Cash
Flow as defined in Senior Credit Agreement
|
|
$
672,224
|
Operating Cash
Flow as defined in Senior Credit
|
|
|
Agreement, divided
by two
|
|
$
336,112
|
|
|
|
|
|
December 31,
2017
|
Adjusted Total
Indebtedness:
|
|
|
Long term debt,
including current portion
|
|
$
1,837,427
|
Capital leases and
other debt
|
|
739
|
Total deferred
financing costs, net
|
|
27,993
|
Premium on
subordinated debt, net
|
|
(5,187)
|
Cash
|
|
(462,399)
|
Adjusted Total
Indebtedness, Net of All Cash
|
|
$
1,398,573
|
Total Leverage
Ratio, Net of All Cash
|
|
4.16
|
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SOURCE Gray Television