GRANITE BROADCASTING CORP - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2002

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 0-19728

GRANITE BROADCASTING CORPORATION
(exact name of registrant as specified in its charter)

DELAWARE		13-3458782
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

767 Third Avenue 34th Floor New York, New York 10017
(address of principal executive offices) (zip code)

(212) 826-2530
(registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ý No o

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.Class A Voting Common Stock, par value $.01 per share - 178,500 shares outstanding at November 3, 2002; Common Stock (Nonvoting), par value $.01 per share – 18,581,160 shares outstanding at November 8, 2002.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

GRANITE BROADCASTING CORPORATION

CONSOLIDATED BALANCE SHEET

	September 30, 2002						December 31, 2001
	(Unaudited)
ASSETS

Current assets:
Cash and cash equivalents (including $3,964,188 and $9,286,326 of restricted cash at September 30, 2002 and December 31, 2001 respectively)	$				82,195,127		$		29,426,856
Accounts receivable, net	20,047,616						22,411,572
Film contract rights	23,131,726						16,077,027
Other current assets	4,407,369						6,131,223
Net assets held for sale	—						33,201,988
Total current assets	129,781,838						107,248,666

Non-current assets:
Property and equipment, net	37,037,948						33,611,468
Film contract rights and other non-current assets	20,537,391						51,874,512
Deferred financing fees, net	6,656,692						14,887,940
Intangible assets, net	307,467,209						523,474,666
Total assets	$		501,481,078				$			731,097,252

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities:
Accounts payable	$			1,655,488			$	1,704,626
Accrued interest	7,879,437						4,255,195
Other accrued liabilities	7,648,605						2,943,466
Film contract rights payable	29,855,522						25,133,014
Income taxes payable	13,463,293						69,874
Other current liabilities	4,787,655						5,738,440
Total current liabilities	65,290,000						39,844,615

Non-current liabilities:
Long-term debt	312,781,969						401,206,439
Film contract rights payable	33,684,510						22,859,716
Deferred tax liability	45,125,024						68,868,284
Other non-current liabilities	24,931,267						24,353,351

Cumulative exchangeable preferred stock, net of offering costs	198,036,496						272,108,759

Stockholders’ deficit:
Common Stock: 41,000,000 shares authorized consisting of 1,000,000 shares of Class A Voting Common Stock, $.01 par value, and 40,000,000 shares of Common Stock (Nonvoting), $.01 par value; 178,500 shares of Class A Voting Common Stock and 18,581,160 shares of Common Stock (Nonvoting) (18,447,927 shares at December 31, 2001) issued and outstanding	187,596						186,264
Accumulated deficit	(177,690,144					)	(96,703,997				)
Less: Unearned compensation	(523,549					)	(1,329,179				)
Treasury stock	(342,091					)	(297,000				)
Total stockholders’ deficit	(178,368,188					)	(98,143,912				)
Total liabilities and stockholders’ deficit	$	501,481,078					$	731,097,252

See accompanying notes

GRANITE BROADCASTING CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS

	Three Months Ended September 30,						Nine Months Ended September 30,
	2002			2001			2002			2001
	(Unaudited)						(Unaudited)
Net revenues	$	26,083,671		$	25,502,449		$	102,179,342		$	82,856,948
Station operating expenses	21,220,434			27,024,257			76,160,339			80,363,013
Depreciation expense	1,350,113			1,693,037			4,608,205			4,706,482
Amortization expense	2,377,515			6,413,798			16,615,563			19,242,400
Corporate expense	2,330,923			2,102,659			6,947,237			7,140,345
Non-cash compensation expense	410,619			331,809			1,065,490			1,130,994
Operating loss	(1,605,933		)	(12,063,111		)	(3,217,492		)	(29,726,286		)
Other expenses (income):
Interest expense	6,670,880			12,723,097			27,139,517			34,623,542
Interest income	(281,119		)	(511,878		)	(595,845		)	(1,172,227		)
Non-cash interest expense	974,635			2,211,492			11,928,787			5,281,435
Gain on station sale	—			—			(192,406,138		)	—
Other	239,153			(126,715		)	542,281			409,772
(Loss) income before income taxes, extraordinary item, and cumulative effect of a change in accounting principle	(9,209,482		)	(26,359,107		)	150,173,906			(68,868,808		)
(Benefit) provision for income taxes:
Current	(6,936,357		)	50,520			32,398,279