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 March 31, 2005
OR
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)
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Delaware |
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13-3458782 |
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(State of Incorporation) |
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(I.R.S. Employer Identification No.) |
767 Third Avenue, 34th Floor
New York, New York 10017
(212) 826-2530
(Address, including zip
code, and telephone number,
including area code, of registrant’s principal executive offices)
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
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the act). Yes o No ý
(APPLICABLE ONLY TO CORPORATE ISSUERS:)
As of May 3, 2005, the Registrant had 98,250 shares of Class A Voting Common Stock, par value $.01 per share outstanding; and 19,478,436 shares of Common Stock (Nonvoting), par value $.01 per share outstanding.
DOCUMENTS INCORPORATED BY REFERENCE: None
GRANITE BROADCASTING CORPORATION
Form 10-Q
Table of Contents
Granite Broadcasting Corporation is a Delaware corporation. As used in this Quarterly Report on Form 10-Q and unless the context otherwise requires, (1) ”Granite,” the “Company,” “we,” “us” and “our” refer to Granite Broadcasting Corporation, together with its direct and indirect subsidiaries, and (2) ”Malara Broadcast Group” and “Malara” refer to Malara Broadcast Group, Inc., together with its direct and indirect subsidiaries. Our principal executive offices are located at 767 Third Avenue, 34th Floor, New York, NY 10017, and our telephone number at that address is (212) 826-2530. Our web site is located at http://www.granitetv.com. The information on our web site is not part of this report.
As of March 8, 2005, we have shared services agreements and advertising representation agreements (which we generally refer to as local service agreements) relating to the two television stations owned by Malara Broadcast Group, but do not own any of the equity interests in Malara Broadcast Group. For a description of the relationship between us and Malara Broadcast Group, see Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Recent Developments.”
1
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report includes and incorporates forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. Generally, the words “anticipates,” “believes,” “expects,” “intends,” “estimates,” “projects,” “plans” and similar expressions identify forward-looking statements. We believe that the forward-looking statements contained in this report are based upon reasonable assumptions, we can give no assurance that our goals will be achieved. These forward-looking statements are subject to risks, uncertainties and assumptions about us, including, among other things:
• inability to implement our strategy, or, having implemented it, failure to realize anticipated cost savings or revenue opportunities available through implementation of our strategy;
• inability to effect dispositions or acquisitions of television stations, which are an important part of our strategy;
• the effects of governmental regulation of broadcasting, including adverse changes in, or interpretations of, the exceptions to the Federal Communications Commission’s duopoly rule which could restrict, or eliminate, our ability to enter into duopoly-type operating arrangements and implement our operating strategy;
• pricing fluctuations in national and local advertising;
• volatility or increases in programming costs;
• restrictions on our operations due to, and the effect of, our significant leverage and limited sources of liquidity;
• the impact of changes in national and regional economies;
• delay in any economic recovery or the recovery not being as robust as might otherwise have been anticipated;
• our ability to service our outstanding debt;
• successful integration of acquired television stations (including achievement of synergies and cost reductions);
• successful results of local services arrangement with Malara Broadcast Group stations in Fort Wayne, Indiana and Duluth, Minnesota;
• any extraordinary, newsworthy event, including hostilities or terrorist attacks;
• competition in the markets in which the stations we own and the stations to which we provide services are located;
• loss of network affiliations or changes in the terms of network affiliation agreements upon renewal; and
• technological change and innovation in the broadcasting industry.
Other matters set forth in this report, as well as risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2004, filed with the Securities and Exchange Commission may also cause actual results in the future to differ materially from those described in the forward-looking statements. We undertake no obligation to update and revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this report might not occur.
2
Item 1. Financial Statements
GRANITE BROADCASTING CORPORATION
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March 31, |
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December 31, |
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2005 |
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2004 |
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(Unaudited) |
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Assets |
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Current assets: |
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Cash and cash equivalents (Excludes $24,997,500 of restricted cash equivalents at March 31, 2005, which is shown separately below.) |
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$ |
37,951,592 |
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$ |
60,858,710 |
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Marketable securities, at fair value |
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2,502,465 |
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5,603,500 |
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Accounts receivable, less allowance for doubtful accounts ($812,456 at March 31, 2005 and $896,465 at December 31, 2004) |
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19,815,622 |
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20,551,203 |
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Film contract rights |
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9,694,579 |
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11,605,637 |
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Other current assets |
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5,399,757 |
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4,442,080 |
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Total current assets |
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75,364,015 |
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103,061,130 |
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Restricted cash equivalents |
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24,997,500 |
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— |
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Property and equipment, net |
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49,975,498 |
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45,739,747 |
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Film contract rights |
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4,021,223 |
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5,180,140 |
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Other non current assets |
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4,795,176 |
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8,430,731 |
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Deferred financing fees, less accumulated amortization ($2,509,582 at March 31, 2005 and $1,989,038 at December 31, 2004) |
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13,481,937 |
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11,760,080 |
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Goodwill, net |
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65,374,586 |
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47,632,113 |
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Broadcast licenses, net |
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134,755,735 |
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127,331,829 |
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Network affiliations, net |
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102,429,224 |
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80,793,410 |
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Total assets |
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$ |
475,194,894 |
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$ |
429,929,180 |
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Liabilities and stockholders’ deficit |
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Current liabilities: |
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Accounts payable |
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$ |
1,741,470 |
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$ |
1,859,291 |
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Accrued interest |
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13,162,500 |
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3,290,625 |
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Other accrued liabilities |
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6,420,290 |
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7,376,683 |
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Film contract rights payable |
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22,998,384 |
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24,526,448 |
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Other current liabilities |
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4,975,230 |
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3,785,399 |
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Total current liabilities |
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49,297,874 |
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40,838,446 |
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Long-term debt |
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454,467,473 |
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400,791,298 |
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Film contract rights payable |
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14,499,103 |
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17,976,348 |
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Deferred tax liability |
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19,107,125 |
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19,347,007 |
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Redeemable preferred stock |
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198,924,682 |
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198,835,862 |
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Accrued dividends on redeemable preferred stock |
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76,643,534 |
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70,256,573 |
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Other non current liabilities |
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13,728,342 |
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13,973,794 |
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Stockholders’ deficit: |
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Common stock: 41,000,000 shares authorized consisting of 1,000,000 shares of Class A Common Stock, $.01 par value, and 40,000,000 shares of Common Stock (Nonvoting), $.01 par value; 98,250 shares of Class A Common Stock and 19,478,436 shares of Common Stock (Nonvoting) (19,283,924 shares at December 31, 2004) issued and outstanding at March 31, 2005. |
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195,766 |
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193,820 |
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Additional paid-in capital |
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364,812 |
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361,088 |
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Accumulated other comprehensive gain (loss) |
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7,021 |
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(12,914 |
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Accumulated deficit |
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(350,904,073 |
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(331,410,284 |
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Less: Unearned compensation |
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(261,090 |
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(346,183 |
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Treasury stock, at cost |
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(875,675 |
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(875,675 |
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Total stockholders’ deficit |
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(351,473,239 |
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(332,090,148 |
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Total liabilities and stockholders’ deficit |
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$ |
475,194,894 |
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$ |
429,929,180 |
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See accompanying notes.
3
GRANITE BROADCASTING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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Three Months Ended March 31, |
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2005 |
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2004 |
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