Attached files
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| 8-K - FORM 8-K - GRAY TELEVISION INC | g27157e8vk.htm |
Exhibit 99
| Gray Television, Inc. |
NEWS RELEASE
Gray Reports Operating Results
For the Three Month Period Ended March 31, 2011
Atlanta, Georgia — May 9, 2011. . . Gray Television, Inc. (“Gray,” “we,” “us” or “our”) (NYSE:
GTN) today announced results from operations for the three month period ended March 31, 2011
(“first quarter of 2011”) as compared to the three month period ended March 31, 2010 (“first
quarter of 2010”).
Highlights:
For the three month periods ended March 31, 2011 and 2010, our revenue, broadcast expense and
corporate and administrative expense were as follows:
| Three Months Ended March 31, | ||||||||||||
| 2011 | 2010 | % Change | ||||||||||
| (in thousands except for percentages) | ||||||||||||
Revenue (less agency commissions) |
$ | 69,742 | $ | 70,482 | (1 | )% | ||||||
Operating expenses (before depreciation,
amortization and gain on disposal of assets): |
||||||||||||
Broadcast expense |
$ | 48,179 | $ | 47,567 | 1 | % | ||||||
Corporate and administrative expense |
$ | 3,038 | $ | 2,922 | 4 | % | ||||||
We are pleased with our operating results for the first quarter of 2011. Although our
revenue decreased from the first quarter of 2010, the decrease was largely due to reduced
political advertising revenue resulting from 2011 being an “off year” in a two year political
election cycle and reduced national advertising resulting from the lack of the Olympic Games in
2011 and a change in broadcast networks carrying the Super Bowl in 2011 compared to 2010. Even
with these events, our non-political advertising revenue for the first quarter of 2011 increased
over our non-political advertising revenue for the first quarter of 2010. Our non-political
advertising revenue includes our local, national and internet advertising revenue.
Our broadcast and corporate and administrative expenses (excluding depreciation,
amortization and gain on disposal of assets) increased in the first quarter of 2011 compared to the
first quarter of 2010 due primarily to compensation increases.
Financing Activities in 2010 Reduced Overall Cost of Capital:
Interest expense decreased $3.6 million in the first quarter of 2011 compared to the first
quarter of 2010 primarily due to the issuance of our 101/2% senior secured second lien notes due
2015 (the “Notes”), the amendment of our senior credit facility in 2010, and the related use of
proceeds. Proceeds were used to, among other things, repurchase $60.7 million of our Series D
Perpetual Preferred Stock on April 29, 2010, resulting in a decrease in our Series D Perpetual
Preferred Stock dividends of $2.8 million in the first quarter of 2011 compared to the first
quarter of 2010.
4370 Peachtree Road, NE * Atlanta, GA 30319
(404) 504-9828 * Fax (404) 261-9607
(404) 504-9828 * Fax (404) 261-9607
Comments on Results of Operations for the First Quarter of 2011 Compared
to the First Quarter of 2010:
Revenue.
Total revenue decreased $0.8 million, or 1%, to $69.7 million for the first quarter
of 2011 compared to the first quarter of 2010 primarily due to decreased national and
political advertising revenue, partially offset by increased local and internet
advertising revenue and retransmission consent revenue. Political advertising revenue
decreased due to decreased advertising from political candidates and special interest
groups in the “off year” of the two year election cycle. Net advertising revenue
associated with the broadcast of the 2011 Super Bowl on our one primary FOX-affiliated
channel and four secondary digital FOX-affiliated channels approximated $0.2 million
which was a decrease from our approximated $0.9 million earned in 2010 in connection
with the broadcast of the 2010 Super Bowl on our seventeen CBS-affiliated channels. In
addition, results in the first quarter of 2010 benefited from approximately $2.8 million
of net revenue earned from the broadcast of the 2010 Winter Olympic Games on our
NBC-affiliated channels. There was no corresponding broadcast of Olympic Games during
the first quarter of 2011. Retransmission consent revenue increased due to the improved
terms of our retransmission contracts compared to those of the first quarter of 2010. We
continued to earn base consulting revenue under our agreement with Young Broadcasting,
Inc.; however, we did not record any incentive consulting revenue in the first quarter
of 2011 based on its operating results.
The principal components of our revenue were as follows:
Local advertising revenue increased $0.3 million, or 1%, to $43.8 million.
National advertising revenue decreased $1.0 million, or 7%, to $13.0 million.
Internet advertising revenue increased $1.1 million, or 38%, to $4.2 million.
Political advertising revenue decreased $1.4 million, or 50%, to $1.4 million.
Retransmission advertising revenue increased $0.4 million, or 9%, to $5.0 million.
Production and other revenue decreased $0.3 million, or 17%, to $1.6 million.
Consulting revenue from our agreement with Young Broadcasting, Inc. was $0.6 million.
Our five largest advertising categories by customer type, excluding political
advertising, demonstrated the following changes during the first quarter of 2011
compared to the first quarter of 2010: automotive increased 3%; medical increased 5%;
restaurant decreased 4%; communications decreased 1%; and furniture and appliances
increased 7%.
Operating expenses.
Broadcast expense (before depreciation, amortization and gain on disposal of
assets) increased $0.6 million, or 1%, to $48.2 million. This increase was due
primarily to increases in compensation expense of $1.0 million partially offset by a
decrease in non-compensation expense of $0.4 million. Compensation expense increased
primarily due to increases in accruals for annual incentive compensation of $0.5
million, increases in salary and commission expense of $0.2 million and increases in
health care expense of $0.1 million. Non-compensation expense decreased primarily due
to a decrease in professional services and national sales commissions.
Corporate and administrative expense (before depreciation, amortization and
gain on disposal of assets) increased $0.1 million, or 4%, to $3.0 million
due primarily to increased compensation expense. Compensation expense increased due to
an increase in accruals for annual incentive compensation expenses of $0.2 million
offset, in part, by a decrease in non-cash stock-based compensation of $0.1 million. We
recorded non-cash stock-based compensation expense during the three month periods ended
March 31, 2011 and 2010 of $34,000 and $155,000, respectively. Non-cash stock-based
compensation expense decreased primarily due to all stock options becoming fully vested
in 2010. We amortize the expense of our stock options over their vesting period.
| Gray Television, Inc. Earnings Release for the three month period ended March 31, 2011 |
Page 2 of 8 |
Detailed table of operating results:
Gray Television, Inc.
Selected Operating Data (Unaudited)
(in thousands except for per share data and percentages)
Selected Operating Data (Unaudited)
(in thousands except for per share data and percentages)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2011 | 2010 | |||||||
Revenue (less agency commissions) |
$ | 69,742 | $ | 70,482 | ||||
Operating expenses before depreciation,
amortization and gain on disposal of assets, net: |
||||||||
Broadcast |
48,179 | 47,567 | ||||||
Corporate and administrative |
3,038 | 2,922 | ||||||
Depreciation |
6,998 | 7,975 | ||||||
Amortization of intangible assets |
34 | 122 | ||||||
Gain on disposals of assets, net |
(13 | ) | (44 | ) | ||||
| 58,236 | 58,542 | |||||||
Operating income |
11,506 | 11,940 | ||||||
Other income (expense): |
||||||||
Miscellaneous income, net |
— | 39 | ||||||
Interest expense |
(16,000 | ) | (19,611 | ) | ||||
Loss from early extinguishment of debt |
— | (349 | ) | |||||
Loss before income tax benefit |
(4,494 | ) | (7,981 | ) | ||||
Income tax benefit |
(1,411 | ) | (3,238 | ) | ||||
Net loss |
(3,083 | ) | (4,743 | ) | ||||
Preferred dividends (including accretion of issuance
cost of $118 and $301, respectively) |
1,789 | 4,551 | ||||||
Net loss available to common stockholders |
$ | (4,872 | ) | $ | (9,294 | ) | ||
Basic and diluted per share information: |
||||||||
Net loss available to common stockholders |
$ | (0.09 | ) | $ | (0.19 | ) | ||
Weighted-average shares outstanding |
57,112 | 48,565 | ||||||
Political revenue (less agency commission) |
$ | 1,381 | $ | 2,783 | ||||
| Gray Television, Inc. Earnings Release for the three month period ended March 31, 2011 |
Page 3 of 8 |
Other Financial Data:
| As of | ||||||||
| March 31, | December 31, | |||||||
| 2011 | 2010 | |||||||
| (dollars in thousands) | ||||||||
Cash |
$ | 9,772 | $ | 5,431 | ||||
Long-term debt, including current portion |
$ | 825,836 | $ | 826,704 | ||||
Preferred stock(1) |
$ | 37,299 | $ | 37,181 | ||||
Borrowing availability under our senior credit facility |
$ | 40,000 | $ | 40,000 | ||||
| Three Months Ended March 31, | ||||||||
| 2011 | 2010 | |||||||
| (in thousands) | ||||||||
Net cash provided by operating activities |
$ | 14,860 | $ | 6,986 | ||||
Net cash used in investing activities |
(9,313 | ) | (3,185 | ) | ||||
Net cash used in financing activities |
(1,206 | ) | (6,137 | ) | ||||
Net increase (decrease) in cash |
$ | 4,341 | $ | (2,336 | ) | |||
| (1) | As of March 31, 2011, preferred stock does not include unaccreted original issuance costs and accrued preferred stock dividends of $2.0 million and $15.8 million, respectively. As of December 31, 2010, preferred stock does not include unaccreted original issuance costs and accrued preferred stock dividends of $2.1 million and $14.1 million, respectively. |
Internet Initiatives:
We continue to focus on expanding local content on our websites to drive increased
traffic. Our website page view data for the three months ended March 31, 2011 compared
to the three months ended March 31, 2010 is as follows:
Gray Websites — Data
| Three Months Ended March 31, | ||||||||||||
| % | ||||||||||||
| 2011 | 2010 | Change | ||||||||||
| (in millions except for percentages) | ||||||||||||
Advertising impressions generated |
793 | 649 | 22 | % | ||||||||
Total page views (including mobile page views) |
271 | 230 | 18 | % | ||||||||
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.
| Gray Television, Inc. Earnings Release for the three month period ended March 31, 2011 |
Page 4 of 8 |
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.”
Guidance for the Three Months Ending June 30, 2011 (the “Second Quarter of 2011”)
We currently anticipate that our results of operations for the three month
period ending June 30, 2011 will approximate the ranges presented in the table below:
| Three Months Ended June 30, | ||||||||||||||||||||
| 2011 | % Change | 2011 | %Change | |||||||||||||||||
| Guidance | From | Guidance | From | |||||||||||||||||
| Low | Actual | High | Actual | Actual | ||||||||||||||||
| Selected operating data: | Range | 2010 | Range | 2010 | 2010 | |||||||||||||||
| (in thousands except for percentages) | ||||||||||||||||||||
OPERATING REVENUES: |
||||||||||||||||||||
Revenues (less agency commissions) |
$ | 74,000 | (2 | )% | $ | 75,000 | (1 | )% | $ | 75,636 | ||||||||||
OPERATING EXPENSES: |
||||||||||||||||||||
(before depreciation, amortization
and other expenses) |
||||||||||||||||||||
Broadcast |
$ | 48,700 | 6 | % | $ | 49,200 | 7 | % | $ | 46,092 | ||||||||||
Corporate and administrative |
$ | 3,400 | (11 | )% | $ | 3,700 | (4 | )% | $ | 3,837 | ||||||||||
Other selected data: |
||||||||||||||||||||
Political advertising revenues (less
agency commissions) |
$ | 1,250 | (78 | )% | $ | 1,350 | (76 | )% | $ | 5,588 | ||||||||||
Comments on Guidance:
Net Revenue.
Based on our current forecast, we currently believe our second quarter of 2011
local revenue, excluding political advertising revenue, will increase from the three
months ended June 30, 2010 (the “second quarter of 2010”) by approximately 4%. We
currently believe our second quarter of 2011 national revenue, excluding political
advertising revenue, will increase from the second quarter of 2010 by approximately 1%.
We anticipate our second quarter of 2011 internet revenue, excluding political
advertising revenue, will increase from the second quarter of 2010 by approximately
50%.
We anticipate our second quarter of 2011 political advertising revenue will be
between $1.3 million and $1.4 million.
We anticipate that our retransmission consent revenue during the second quarter
of 2011 will increase approximately $0.2 million, to a total of approximately $4.9
million.
We estimate our base consulting revenue will remain at $0.6 million for the second
quarter of 2011. We do not anticipate recording any incentive consulting revenue in the
second quarter of 2011.
Broadcast Operating Expense (before depreciation, amortization and gain/loss on disposal of
assets).
The anticipated increase in broadcast operating expense for the second quarter of
2011 compared to the second quarter of 2010 is due primarily to anticipated increases
in base compensation expense and benefits. For the full year of 2011, we currently
anticipate that total broadcast operating expense will range between $193.5 million and
$194.5 million in comparison to an actual amount of $196.4 million for the full year of
2010.
| Gray Television, Inc. Earnings Release for the three month period ended March 31, 2011 |
Page 5 of 8 |
Corporate and Administrative Expense (before depreciation, amortization and gain on disposal
of assets).
The anticipated decrease in corporate expense for the second quarter of 2011
compared to the second quarter of 2010 is due primarily to expected decreases in
compensation expenses. In the second quarter of 2010, Gray expensed and paid bonuses
to certain executive officers for their role in connection with the successful
completion of certain financing activities. Currently, we do not anticipate such bonus
expense in the second quarter of 2011. For the full year of 2011, we currently
anticipate that corporate and administrative operating expense will range between
$13.1 million and $13.4 million in comparison to an actual amount of $13.6 million for
the full year of 2010.
Revenue (less agency commissions) by Category:
The table below presents our revenue (less agency commissions) or “net revenue”
by type for the three month periods ended March 31, 2011 and 2010, respectively:
| Three Months Ended March 31, | ||||||||||||||||
| 2011 | 2010 | |||||||||||||||
| Percent | Percent | |||||||||||||||
| Amount | of Total | Amount | of Total | |||||||||||||
| (in thousands except for percentages) | ||||||||||||||||
Revenue (less agency commissions) |
||||||||||||||||
Local |
$ | 43,765 | 62.8 | % | $ | 43,511 | 61.7 | % | ||||||||
National |
12,975 | 18.6 | % | 13,951 | 19.8 | % | ||||||||||
Internet |
4,247 | 6.1 | % | 3,072 | 4.4 | % | ||||||||||
Political |
1,381 | 2.0 | % | 2,783 | 3.9 | % | ||||||||||
Retransmission consent |
5,047 | 7.2 | % | 4,639 | 6.6 | % | ||||||||||
Production and other |
1,599 | 2.3 | % | 1,932 | 2.7 | % | ||||||||||
Network compensation |
178 | 0.3 | % | 44 | 0.1 | % | ||||||||||
Consulting |
550 | 0.7 | % | 550 | 0.8 | % | ||||||||||
Total |
$ | 69,742 | 100.0 | % | $ | 70,482 | 100.0 | % | ||||||||
The aggregate internet revenues presented above are derived from: (i)
direct internet revenue and (ii) internet related commercial time sales.
| Gray Television, Inc. Earnings Release for the three month period ended March 31, 2011 |
Page 6 of 8 |
Non-GAAP Terms
This press release includes the non-GAAP financial measure of Broadcast Cash
Flow and Broadcast Cash Flow Less Cash Corporate Expenses. These non-GAAP amounts
are used by us to approximate the amount used to calculate a key financial
performance covenant 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), loss on disposal
of assets, miscellaneous expense, interest expense, loss on early extinguishment of
debt, income tax expense and expense of common stock contributed to our 401(k) plan,
less gain on disposal of assets, miscellaneous income, income tax benefit, payments for
program broadcast obligations and less network compensation revenue and network
payments. 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 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 (loss) and cash flows reported in accordance with GAAP.
Reconciliation:
Reconciliation of net loss to the non-GAAP terms:
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2011 | 2010 | |||||||
| (in thousands) | ||||||||
Net loss |
$ | (3,083 | ) | $ | (4,743 | ) | ||
Adjustments to reconcile from net loss to Broadcast Cash Flow Less |
||||||||
Cash Corporate Expenses: |
||||||||
Depreciation |
6,998 | 7,975 | ||||||
Amortization of intangible assets |
34 | 122 | ||||||
Non-cash stock-based compensation |
34 | 155 | ||||||
Gain on disposals of assets, net |
(13 | ) | (44 | ) | ||||
Miscellaneous (income) expense, net |
— | (39 | ) | |||||
Interest expense |
16,000 | 19,611 | ||||||
Loss on early extinguishment of debt |
— | 349 | ||||||
Income tax benefit |
(1,411 | ) | (3,238 | ) | ||||
Amortization of program broadcast rights |
3,833 | 3,853 | ||||||
Common stock contributed to 401(k) plan
excluding corporate 401(k) contributions |
8 | 7 | ||||||
Network compensation revenue recognized |
(178 | ) | (44 | ) | ||||
Network compensation per network affiliation agreement |
(60 | ) | (16 | ) | ||||
Payments for program broadcast rights |
(3,794 | ) | (3,875 | ) | ||||
Broadcast Cash Flow Less Cash Corporate Expenses |
18,368 | 20,073 | ||||||
Corporate and administrative expenses excluding
amortization of non-cash stock-based compensation |
3,004 | 2,767 | ||||||
Broadcast Cash Flow |
$ | 21,372 | $ | 22,840 | ||||
| Gray Television, Inc. Earnings Release for the three month period ended March 31, 2011 |
Page 7 of 8 |
The Company
Gray Television, Inc. is a television broadcast company headquartered in Atlanta, GA. Gray
currently operates 36 television stations serving 30 markets. We broadcast a primary channel from
each of our stations and also operate at least one digital second channel from the majority of our
stations. Each of our primary channels are affiliated with either CBS (17 channels), NBC (10
channels), ABC (8 channels) or FOX (1 channel). In addition, we currently operate 40 digital second
channels that are affiliated with either ABC (1 channel), FOX (4 channels), CW (8 channels),
MyNetworkTV (18 channels), Universal Sports Network (2 channels) and The Country Network (1
channel) or are operated as local news/weather channels (6 channels).
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 second quarter of 2011 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 is as of May 9, 2011. 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, 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.
Conference Call Information
Gray Television, Inc. will host a conference call to discuss its first quarter operating
results on May 9, 2011. The call will begin at 11:00 AM Eastern Time. The live dial-in number is
1-877-874-1589 and the confirmation code is 7632816. 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: 7632816 until June 8, 2011.
For information contact:
|
Web site: www.gray.tv | |
Bob Prather
|
Jim Ryan | |
President and Chief Operating Officer
|
Senior V. P. and Chief Financial Officer | |
(404) 266-8333
|
(404) 504-9828 |
| Gray Television, Inc. Earnings Release for the three month period ended March 31, 2011 |
Page 8 of 8 |