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SECURITIES AND EXCHANGE COMMISSION
UNDER
THE SECURITIES ACT OF 1933
Georgia | 4833 | 58-0285030 | ||
(State or other jurisdiction of | (Primary Standard Industrial | (I.R.S. Employer | ||
incorporation or organization) | Classification Code Number) | Identification No.) |
Atlanta, Georgia 30319
(404) 504-9828
(Address, including zip code, and telephone number, including area code, of the registrant’s principal executive offices)
Gray Television, Inc.
4370 Peachtree Road, N.E.
Atlanta, Georgia 30319
(404) 504-9828
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Mark L. Hanson, Esq.
Jones Day
1420 Peachtree Street, N.E., Suite 800
Atlanta, Georgia 30309
(404) 581-8573
As soon as practicable after the effective date of this registration statement.
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ (Do not check if a smaller reporting company) | Smaller reporting company o |
Proposed maximum | Proposed maximum | |||||||||||||||||||||
Title of each class of securities | Amount to be | offering price | aggregate | Amount of | ||||||||||||||||||
to be registered | registered | per unit(1) | offering price(1) | registration fee | ||||||||||||||||||
101/2% Senior Secured Second Lien Notes due 2015 | $ | 365,000,000 | 100 | % | $ | 365,000,000 | $ | 26,024.50 | ||||||||||||||
Guarantees of 101/2% Senior Secured Second Lien Notes due 2015 (2) | — | — | — | — | (3) | |||||||||||||||||
Total | $ | 365,000,000 | 100 | % | $ | 365,000,000 | $ | 26,024.50 | ||||||||||||||
(1) | Estimated in accordance with Rule 457(f) under the Securities Act of 1933 solely for purposes of calculating the registration fee. | |
(2) | See inside facing page for registrant guarantors. | |
(3) | In accordance with Rule 457(n), no separate registration fee for the guarantees is payable. |
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State or Other | ||||||||||||
Jurisdiction of | Primary Standard | IRS Employer | ||||||||||
Exact Name of Registrant as Specified | Incorporation or | Industrial Classification | Identification | |||||||||
in its Charter(1) | Organization | Code Number | Number | |||||||||
WVLT-TV, Inc. | Georgia | 4833 | 58-2256206 | |||||||||
Gray Television Group, Inc. | Delaware | 4833 | 13-2982954 | |||||||||
Gray Television Licensee, LLC | Nevada | 4833 | 51-0376603 |
(1) | The address and telephone number of each of the additional registrants is: 4370 Peachtree Road, NE, Atlanta, Georgia 30319; telephone (404) 504-9828. |
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Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state.
Aggregate Principal Amount of Newly
Issued 101/2% Senior Secured Second Lien Notes due 2015
Restricted 101/2% Senior Secured Second Lien Notes due 2015
Issued in April 2010
1 | ||||||||
11 | ||||||||
24 | ||||||||
31 | ||||||||
32 | ||||||||
33 | ||||||||
34 | ||||||||
37 | ||||||||
56 | ||||||||
67 | ||||||||
69 | ||||||||
70 | ||||||||
73 | ||||||||
109 | ||||||||
114 | ||||||||
116 | ||||||||
117 | ||||||||
118 | ||||||||
F-1 | ||||||||
EX-3.3 | ||||||||
EX-3.4 | ||||||||
EX-3.5 | ||||||||
EX-3.6 | ||||||||
EX-3.7 | ||||||||
EX-3.8 | ||||||||
EX-5.1 | ||||||||
EX-5.2 | ||||||||
EX-12.1 | ||||||||
EX-23.2 | ||||||||
EX-25.1 | ||||||||
EX-99.1 | ||||||||
EX-99.2 | ||||||||
EX-99.3 | ||||||||
EX-99.4 |
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• | we have a significant amount of debt, and have the ability to incur additional debt, any of which could restrict our future operating and strategic flexibility and expose us to the risks of financial leverage; | ||
• | the agreements governing our various debt and other obligations restrict our business and limit our ability to act; | ||
• | our ability to meet our debt service obligations on the exchange notes and our other debt will depend on our future performance, which is, and will be, subject to many factors that are beyond our control; | ||
• | we are dependent on advertising revenues, which are seasonal and may fluctuate as a result of a number of factors, including a continuation of the economic downturn; | ||
• | we are highly dependent upon a limited number of advertising categories; | ||
• | we are highly dependent on network affiliations and may lose a significant amount of television programming if a network terminates or significantly changes its affiliation with us; | ||
• | we purchase television programming in advance of earning any related revenue, and may not earn sufficient revenue to offset the costs thereof; | ||
• | we are subject to risks of competition from other local stations as well as from cable systems, the Internet and other providers; | ||
• | we may incur significant capital and operating costs; | ||
• | we may incur impairment charges related to our assets; and | ||
• | we are subject to risks and limitations due to government regulation of the broadcasting industry, including Federal Communications Commission (“FCC” or the “Commission”) control over the renewal and transfer of broadcasting licenses, which could materially adversely affect our operations and growth strategy. |
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• | our Annual Report on Form 10-K (the “2009 Form 10-K”) filed on April 7, 2010; | ||
• | the portions of our proxy statement for our 2010 annual meeting of shareholders incorporated by reference into the 2009 Form 10-K, which proxy statement was filed on April 26, 2010; | ||
• | our Quarterly Report on Form 10-Q, filed on May 10, 2010; and | ||
• | our Current Reports on Form 8-K, filed on April 1, 2010; April 12, 2010; April 20, 2010; April 22, 2010; and April 30, 2010. |
4370 Peachtree Road, N.E.
Atlanta, Georgia 30319
(404) 504-9828
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The Exchange Offer | We are offering to exchange up to (i) $365,000,000 aggregate principal amount of our registered 101/2% Senior Secured Second Lien Notes due 2015 (the “exchange notes”) for an equal principal amount of our outstanding restricted 101/2% Senior Secured Second Lien Notes due 2015 (the “original notes”) that were issued in April 2010. The terms of the exchange notes are identical in all material respects to those of the original notes, except that the exchange notes will be issued in a transaction registered under the Securities Act, and the transfer restrictions, registration rights and related special interest provisions relating to the original notes do not apply to the exchange notes. The exchange notes will be of the same class as the outstanding original notes. Holders of original notes do not have any appraisal or dissenters’ rights in connection with the exchange offer. | |
Purpose of the Exchange Offer | The exchange notes are being offered to satisfy our obligations under the registration rights agreement entered into at the time we issued and sold the original notes. | |
Expiration Date; Withdrawal of Tenders; Return of Original Notes Not Accepted for Exchange | The exchange offer will expire at 9:00 a.m., New York City time, on , 2010, or on a later date and time to which we extend it (the “expiration date”). Tenders of original notes in the exchange offer may be withdrawn at any time prior to the expiration date. As soon as practicable following the expiration date, we will exchange the exchange notes for validly tendered original notes. Any original notes that are not accepted for exchange for any reason will be returned without expense to the tendering holder promptly after the expiration or termination of the exchange offer. | |
Procedures for Tendering Original Notes | Each holder of original notes wishing to participate in the exchange offer must complete, sign and date the accompanying letter of transmittal, or its facsimile, in accordance with its instructions, and mail or otherwise deliver it, or its facsimile, together with the original notes and any other required documentation to the exchange agent at the address in the letter of transmittal. Original notes may be physically delivered, but physical delivery is not required if a confirmation of a book-entry transfer of the original notes to the exchange agent’s account at DTC is delivered in a timely fashion. A holder may also tender its original notes by means of DTC’s Automated Tender Offer Program (“ATOP”), subject to the terms and procedures of that program. See “The Exchange Offer — Procedures for Tendering Original Notes.” | |
Conditions to the Exchange Offer | The exchange offer is not conditioned upon any minimum aggregate principal amount of original notes being tendered for exchange. The exchange offer is subject to customary conditions, which may be waived by us in our discretion. We currently expect that all of the conditions will be satisfied and that no waivers will be necessary. | |
Exchange Agent | U.S. Bank National Association. | |
U.S. Federal Income Tax Considerations | Your exchange of an original note for an exchange note will not constitute a taxable exchange. The exchange will not result in taxable income, gain or loss being recognized by you or by us. Immediately after the exchange, you will have the same adjusted basis and holding period in each exchange note received as you had immediately prior to the exchange in the corresponding original note surrendered. See “Certain U.S. Federal Income Tax Considerations.” | |
Risk Factors | You should consider carefully the risk factors beginning on page 11 of this prospectus before deciding whether to participate in the exchange offer. |
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Issuer | Gray Television, Inc. | |
Notes Offered | $365,000,000 aggregate principal amount of 101/2% senior secured second lien notes due 2015. The new notes offered hereby will be of the same class as the original notes. | |
Maturity Date | June 29, 2015. | |
Interest | Interest on the exchange notes will accrue at a rate of 10.5% per annum, payable semi-annually, in cash in arrears, on May 1 and November 1 of each year, commencing November 1, 2010. | |
Guarantees | The exchange notes will be fully and unconditionally guaranteed on a senior secured basis by all of our existing and future domestic restricted subsidiaries. | |
Ranking | The exchange notes and the guarantees will be our and the guarantors’ senior secured obligations and will: | |
• rank senior in right of payment to our and the guarantors’ existing and future debt and other obligations that expressly provide for their subordination to the exchange notes and the guarantees; | ||
• be effectively senior to our and the guarantors’ existing and future unsecured debt to the extent of the value of the collateral securing the exchange notes, after giving effect to first-priority liens on the collateral and permitted liens; | ||
• be effectively junior to our and the guarantors’ obligations that are either (i) secured by first priority liens on the collateral, including indebtedness under our senior credit facility or (ii) secured by assets that are not part of the collateral that is securing the exchange notes, in each case to the extent of the value of the collateral securing such debt; and | ||
• be structurally subordinated to all of the existing and future liabilities of our subsidiaries, if any, that do not guarantee the exchange notes. | ||
After giving effect to the issuance of the original notes and the use of proceeds from the original notes, at March 31, 2010, the Company and the guarantors would have had approximately $879.4 million aggregate principal amount of total indebtedness (excluding intercompany indebtedness), of which $879.0 million would have been senior debt (including the original notes), and of which approximately $514.0 million would have ranked effectively senior to the exchange notes to the extent of the assets securing such debt. |
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Security | The exchange notes and the guarantees will be secured by a second priority lien on substantially all of the assets owned by us and the guarantors, which assets also secure obligations under our senior credit facility, subject to certain exceptions and permitted liens. Under the security documents we and the guarantors have, subject to certain exceptions, granted security interests in substantially all of our and their real, personal and fixture property, including (i) all present and future shares of capital stock of (or other ownership or profit interests in) each of our present and future direct and indirect subsidiaries, held by us or any subsidiary guarantor (but, (a) as to the voting stock of any foreign subsidiary, not to exceed 66% of the outstanding voting stock and (b) excluding any capital stock of a subsidiary to the extent necessary for such subsidiary not to be subject to any requirement to file separate financial statements with the SEC pursuant to Rule 3-16 or Rule 3-10 of Regulation S-X under the Exchange Act, due to the fact that such subsidiary’s capital stock secured the exchange notes or guarantees); (ii) all present and future intercompany debt owed to us or any subsidiary guarantor; (iii) substantially all of our and each subsidiary guarantor’s present and future property and assets, real and personal, including, but not limited to, machinery and equipment, inventory and other goods, accounts receivable, owned real estate, leaseholds, fixtures, bank accounts, general intangibles, financial assets, investment property, license rights, patents, trademarks, trade names, copyrights, other intellectual property, chattel paper, insurance proceeds, contract rights, hedge agreements, documents, instruments, indemnification rights, tax refunds and cash; (iv) all FCC licenses except to the extent (but only to the extent) and for so long as that at such time the collateral agent may not validly possess a security interest directly in the FCC license pursuant to applicable Federal law, including the Communications Act of 1934, as amended (the “Communications Act”), and the rules, regulations and policies promulgated thereunder, as in effect at such time, but including at all times all proceeds incident or appurtenant to the FCC licenses and all proceeds of the FCC licenses, and the right to receive all monies, consideration and proceeds derived from or in connection with the sale, assignment, transfer, or other disposition of the FCC licenses; and (v) all proceeds and products of the property and assets described in clauses (i), (ii), and (iv) above. For more details, see “Description of Notes—Security.” | |
The value of collateral at any time will depend on market and other economic conditions, including the availability of suitable buyers for the collateral. The liens on the collateral may be released without the consent of the holders of the exchange notes if collateral is disposed of in a transaction that complies with the indenture and the related security documents or in accordance with the provisions of an intercreditor agreement to be entered into relating to the collateral securing the exchange notes and our senior credit facility. See “Risk Factors—Risks Related to the Exchange Notes— It may be difficult to realize upon the value of the collateral securing the exchange notes” and “Description of Notes—Security” and “Description of Notes— Intercreditor Agreement.” | ||
Certain security interests, including those granted or to be granted pursuant to mortgages on certain of our owned and leased real properties intended to constitute collateral that secures the original notes and the exchange notes, were not in place on the date of issuance of the original notes, and may not be in place on the date of issuance of the exchange notes. We are required to file or cause to be filed UCC financing statements to perfect the security interests in the collateral that can be perfected by such filings on the date of the issuance of the original notes. With respect to the portion of the collateral securing the exchange notes for which a valid and perfected security interest in favor of the collateral agent was not created or perfected on or prior to the date of issuance of the original notes and which cannot be perfected by the filing of UCC financing statements, we have agreed to use our commercially reasonable efforts to complete those actions required to create and perfect such security interest within 150 days following the date of issuance of the original notes. |
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Intercreditor Agreement | Pursuant to an intercreditor agreement, the liens securing the exchange notes will be second priority liens that will be expressly junior in priority to the liens that secure obligations under our senior credit facility and obligations under certain hedging and cash management arrangements. The rights of holders of the exchange notes to the collateral and their ability to enforce rights will be materially limited by the intercreditor agreement. The holders of the first priority lien obligations will receive all proceeds from any realization of the collateral or from the collateral or proceeds thereof in any insolvency or liquidation proceeding, in each case until the first priority lien obligations are paid in full. See “Description of Notes—Intercreditor Agreement.” | |
Optional Redemption | On or after November 1, 2012, we may redeem the exchange notes, in whole or in part, at any time, at the redemption prices described under “Description of Notes—Redemption—Optional Redemption.” In addition, we may redeem up to 35% of the aggregate principal amount of the exchange notes before November 1, 2012 with the net cash proceeds from certain equity offerings at a redemption price of 110.500% of the principal amount plus accrued and unpaid interest, if any, to the redemption date. We may also redeem some or all of the exchange notes before November 1, 2012 at a redemption price of 100% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date, plus a “make whole” premium. | |
Change of Control | If we experience certain kinds of changes of control, we will be required to offer to purchase the exchange notes at 101% of their principal amount, plus accrued and unpaid interest. For more details, see “Description of Notes—Change of Control.” | |
Mandatory Offer to Purchase Following Certain Asset Sales and Certain Events of Loss | If we sell certain assets, or upon certain events of loss, under certain circumstances we will be required to use the net proceeds resulting from such events to offer to purchase the exchange notes at 100% of their principal amount, plus accrued and unpaid interest, as described under “Description of Notes—Certain Covenants — Limitation on Asset Sales” and “Description of Notes — Certain Covenants — Events of Loss.” | |
Certain Covenants | The indenture contains covenants that limit, among other things, our ability and the ability of our restricted subsidiaries to: | |
• incur additional debt; | ||
• declare or pay dividends, redeem stock or make other distributions to stockholders; | ||
• make investments; | ||
• create liens or use assets as security in other transactions; | ||
• enter into agreements restricting our or our subsidiaries’ ability to pay dividends or make certain other payments; | ||
• merge or consolidate, or sell, transfer, lease or dispose of substantially all of our assets; | ||
• engage in transactions with affiliates; and | ||
• sell or transfer assets. |
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These covenants are subject to a number of important qualifications and limitations. See “Description of Notes—Certain Covenants.” | ||
Use of Proceeds | We will not receive any cash proceeds from the issuance of the exchange notes. See “Use of Proceeds.” |
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Three Months Ended March 31, | Year Ended December 31, | |||||||||||||||||||
2010 | 2009 | 2009 | 2008 | 2007 | ||||||||||||||||
(unaudited) | ||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||
Revenues (less agency commissions)(1) | $ | 70,482 | $ | 61,354 | $ | 270,374 | $ | 327,176 | $ | 307,288 | ||||||||||
Operating expenses before depreciation, amortization, impairment, and gains on disposal of assets, net: | ||||||||||||||||||||
Broadcast | 47,567 | 45,654 | 187,583 | 199,572 | 199,687 | |||||||||||||||
Corporate and administrative | 2,922 | 4,046 | 14,168 | 14,097 | 15,090 | |||||||||||||||
Depreciation | 7,975 | 8,261 | 32,595 | 34,561 | 38,558 | |||||||||||||||
Amortization of intangible assets | 122 | 149 | 577 | 792 | 825 | |||||||||||||||
Impairment of goodwill and broadcast licenses(2) | — | — | — | 338,681 | — | |||||||||||||||
Gain on disposals of assets, net | (44 | ) | (1,522 | ) | (7,628 | ) | (1,632 | ) | (248 | ) | ||||||||||
Operating expenses | 58,542 | 56,588 | 227,295 | 586,071 | 253,912 | |||||||||||||||
Operating income (loss) | 11,940 | 4,766 | 43,079 | (258,895 | ) | 53,376 | ||||||||||||||
Other income (expense): | ||||||||||||||||||||
Miscellaneous income (expense), net | 39 | 12 | 54 | (53 | ) | 972 | ||||||||||||||
Interest expense | (19,611 | ) | (10,113 | ) | (69,088 | ) | (54,079 | ) | (67,189 | ) | ||||||||||
Loss from early extinguishment of debt(3) | (349 | ) | (8,352 | ) | (8,352 | ) | — | (22,853 | ) | |||||||||||
Loss before income taxes | (7,981 | ) | (13,687 | ) | (34,307 | ) | (313,027 | ) | (35,694 | ) | ||||||||||
Income tax benefit | (3,238 | ) | (4,767 | ) | (11,260 | ) | (111,011 | ) | (12,543 | ) | ||||||||||
Net loss | (4,743 | ) | (8,920 | ) | (23,047 | ) | (202,016 | ) | (23,151 | ) | ||||||||||
Preferred stock dividends (includes accretion of issuance cost of $301, $301, $1,202, $576 and $439, respectively) | 4,551 | 4,051 | 17,119 | 6,593 | 1,626 | |||||||||||||||
Net loss available to common stockholders | (9,294 | ) | (12,971 | ) | (40,166 | ) | (208,609 | ) | (24,777 | ) | ||||||||||
Balance Sheet Data (at end of period): | ||||||||||||||||||||
Cash and cash equivalents | $ | 13,664 | $ | 14,857 | $ | 16,000 | $ | 30,649 | $ | 15,338 | ||||||||||
Working capital | 14,163 | 13,388 | 11,712 | 19,645 | 21,872 | |||||||||||||||
Net intangible assets, broadcast licenses and goodwill | 990,697 | 991,247 | 990,819 | 991,396 | 1,330,869 | |||||||||||||||
Total assets | 1,235,815 | 1,248,442 | 1,245,739 | 1,278,265 | 1,625,969 | |||||||||||||||
Total debt and long-term accrued facility fees | 814,034 | 798,359 | 810,116 | 800,380 | 925,000 | |||||||||||||||
Redeemable preferred stock(4) | 93,687 | 92,484 | 93,386 | 92,183 | — | |||||||||||||||
Total stockholders’ equity | 88,140 | 107,154 | 93,620 | 117,107 | 337,845 | |||||||||||||||
Cash Flow Data: | ||||||||||||||||||||
Net cash provided by (used for): | ||||||||||||||||||||
Operating activities | $ | 6,986 | $ | (1,296 | ) | $ | 18,903 | $ | 73,675 | $ | 28,360 | |||||||||
Investing activities | (3,185 | ) | (5,469 | ) | (17,531 | ) | (16,340 | ) | (25,662 | ) | ||||||||||
Financing activities | (6,137 | ) | (9,027 | ) | (16,021 | ) | (42,024 | ) | 7,899 | |||||||||||
Other Financial and Operating Data: | ||||||||||||||||||||
Capital expenditures | 2,888 | 5,183 | 17,756 | 15,019 | 24,605 | |||||||||||||||
Ratio of earnings to fixed charges(5) | — | N/A | — | — | — |
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(1) | Our revenues fluctuate significantly between years, in accordance with, among other things, increased political advertising expenditures in even-numbered years. | |
(2) | As of December 31, 2008, we recorded a non-cash impairment expense of $338.7 million resulting from a write down of $98.6 million in the carrying value of our goodwill and a write down of $240.1 million in the carrying value of our broadcast licenses. The write-down of our goodwill and broadcast licenses related to seven stations and 23 stations, respectively. As of this testing date, we believed events had occurred and circumstances changed that more likely than not reduce the fair value of our broadcast licenses and goodwill below their carrying amounts. These events, which accelerated in the fourth quarter of 2008, included: (i) the continued decline of the price of our common stock and Class A common stock; (ii) the decline in the current selling prices of television stations; (iii) the decline in local and national advertising revenues excluding political advertising revenue; and (iv) the decline in the operating profit margins of some of our stations. | |
(3) | In 2010 and 2009, we recorded a loss on early extinguishment of debt related to an amendment of our senior credit facility. In 2007, we recorded a loss on early extinguishment of debt related to a refinancing of our senior credit facility and the redemption of our 9.25% Senior Subordinated Notes (“9.25% Notes”). | |
(4) | On June 26, 2008, we issued 750 shares of Series D perpetual preferred stock and on July 15, 2008, we issued an additional 250 shares of our Series D perpetual preferred stock. We generated net cash proceeds from such issuances of approximately $91.6 million after a 5.0% original issue discount, transaction fees and expenses. The Series D perpetual preferred stock has a liquidation value of $100,000 per share, for a total liquidation value of $75.0 million. The $8.4 million of original issue discount, transaction fees and expenses is being accreted over a seven-year period ending June 30, 2015. | |
Amounts exclude unamortized original issuance costs and accrued and unpaid dividends. Such costs and dividends aggregated $29.5 million, $14.3 million, $25.5 million and $10.8 million as of March 31, 2010, March 31, 2009, December 31, 2009 and 2008, respectively. | ||
(5) | For purposes of this ratio: | |
The term “fixed charges” means the sum of: (i) interest expensed and capitalized, (ii) amortized premiums, discounts and capitalized expenses related to indebtedness, (iii) an estimate of the interest within rental expense, and (iv) preference security dividend requirements of consolidated subsidiaries. | ||
The term “preference security dividend” is the amount of pre-tax earnings required to pay the dividends on outstanding preference securities. The dividend requirement is computed as the amount of the dividend divided by (1 minus the effective income tax rate applicable to continuing operations). | ||
The term “earnings” is the amount resulting from adding and subtracting the following items. We add the following: (i) pre-tax income from continuing operations before adjustment for income or loss from equity investees; (ii) fixed charges; (iii) amortization of capitalized interest; (iv) distributed income of equity investees; and (v) our share of pre-tax losses of equity investees for which charges arising from guarantees are included in fixed charges. From the total of the added items, we subtract the following: (i) interest capitalized; (ii) preference security dividend requirements of consolidated subsidiaries; and (iii) the noncontrolling interest in pre-tax income of subsidiaries that have not incurred fixed charges. Equity investees are investments that we account for using the equity method of accounting. | ||
Our ratio of earnings to fixed charges for the year ended December 31, 2006 was 1.21:1.00. | ||
For the three months ended March 31, 2010 and the years ended December 31, 2009, 2008, 2007 and 2005, earnings were inadequate to cover fixed charges by approximately $15.7 million, $59.9 million, $323.2 million, $38.2 million and $1.9 million, respectively. |
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• | how long payments under the exchange notes could be delayed following commencement of a bankruptcy case; | ||
• | whether or when the collateral agent could repossess or dispose of the collateral; | ||
• | the value of the collateral at the time of the bankruptcy petition; or | ||
• | whether or to what extent holders of the exchange notes would be compensated for any delay in payment or loss of value of the collateral through the requirement of “adequate protection.” |
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• | such subsidiary guarantor received less than reasonably equivalent value or fair consideration for the incurrence of its guarantee or granting of the lien; and | ||
• | such subsidiary guarantor: |
• | was (or was rendered) insolvent by the incurrence of the guarantee; | ||
• | was engaged or about to engage in a business or transaction for which its assets constituted unreasonably small capital to carry on its business; | ||
• | intended to incur, or believed that it would incur, obligations beyond its ability to pay as those obligations matured; or | ||
• | was a defendant in an action for money damages, or had a judgment for money damages docketed against it and, in either case, after final judgment, the judgment was unsatisfied. |
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• | the liquidity of any trading market for the exchange notes; | ||
• | your ability to sell your exchange notes; or | ||
• | the price at which you may be able to sell your exchange notes. |
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• | make it more difficult for us to satisfy our financial obligations, including those relating to the exchange notes; | ||
• | require us to dedicate a substantial portion of any cash flow from operations to the payment of interest and principal due under our debt, which will reduce funds available for other business purposes, including capital expenditures and acquisitions; | ||
• | place us at a competitive disadvantage compared with some of our competitors that may have less debt and better access to capital resources; and | ||
• | limit our ability to obtain additional financing required to fund working capital and capital expenditures and for other general corporate purposes. |
• | incur additional debt; | ||
• | declare or pay dividends, redeem stock or make other distributions to stockholders; | ||
• | make investments or acquisitions; | ||
• | create liens or use assets as security in other transactions; | ||
• | issue guarantees; |
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• | merge or consolidate, or sell, transfer, lease or dispose of substantially all of our assets; | ||
• | amend our articles of incorporation or bylaws; | ||
• | engage in transactions with affiliates; and | ||
• | purchase, sell or transfer certain assets. |
• | economic conditions in the areas where our stations are located and in the nation as a whole; | ||
• | the popularity of our programming; | ||
• | changes in the population demographics in the areas where our stations are located; | ||
• | local and national advertising price fluctuations, which can be affected by the availability of programming, the popularity of programming, and the relative supply of and demand for commercial advertising; | ||
• | our competitors’ activities, including increased competition from other forms of advertising-based mediums, particularly network, cable television, direct satellite television and internet; | ||
• | the duration and extent of any network preemption of regularly scheduled programming for any reason, including as a result of the outbreak or continuance of military hostilities or terrorist attacks, and decisions by advertisers to withdraw or delay planned advertising expenditures for any reason, including as a result of military action or terrorist attacks; and | ||
• | other factors that may be beyond our control. For example, a labor dispute or other disruption at a major national advertiser, programming provider or network, or a recession nationally and/or in a particular market, might make it more difficult to sell advertising time and space and could reduce our revenue. |
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• | additional indebtedness; | ||
• | liens; | ||
• | amendments to our by-laws and articles of incorporation; | ||
• | our ability to issue equity securities having liquidation preferences senior or equivalent to the liquidation preferences of the Series D perpetual preferred stock; | ||
• | mergers and the sale of assets; | ||
• | guarantees; | ||
• | investments and acquisitions; | ||
• | payment of dividends and the redemption of our capital stock; and | ||
• | related-party transactions. |
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• | terminate the exchange offer and not accept for exchange any original notes for any reason, including if any of the events set forth below under “— Conditions to the Exchange Offer” shall have occurred and shall not have been waived by us; and | ||
• | amend the terms of the exchange offer in any manner, whether before or after any tender of the original notes. |
• | properly completing and signing the accompanying letter of transmittal or a facsimile and delivering the letter of transmittal together with a timely confirmation of a book-entry transfer of the original notes being tendered, if the procedure is available, into the exchange agent’s account at The Depository Trust Company, or DTC, for that purpose pursuant to the procedure for book-entry transfer described below, or | ||
• | complying with the guaranteed delivery procedures described below. |
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• | the tendering holder’s properly completed and duly signed letter of transmittal accompanied by a book-entry confirmation is received by the exchange agent; or | ||
• | notice of guaranteed delivery or letter or facsimile transmission to similar effect from an eligible institution is received by the exchange agent. |
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• | it is not an affiliate of ours or our subsidiaries or, if the transferor is an affiliate of ours or our subsidiaries, it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable; | ||
• | the exchange notes are being acquired in the ordinary course of business of the person receiving the exchange notes, whether or not the person is the registered holder; | ||
• | the transferor has not entered into an arrangement or understanding with any other person to participate in the distribution, within the meaning of the Securities Act, of the exchange notes; | ||
• | the transferor is not a broker-dealer who purchased the original notes for resale pursuant to an exemption under the Securities Act; and | ||
• | the transferor will be able to trade the exchange notes acquired in the exchange offer without restriction under the Securities Act. |
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• | there is threatened, instituted or pending any action or proceeding before, or any injunction, order or decree shall have been issued by, any court or governmental agency or other governmental regulatory or administrative agency or of the SEC: | ||
• | seeking to restrain or prohibit the making or consummation of the exchange offer, | ||
• | assessing or seeking any damages as a result thereof, or | ||
• | resulting in a material delay in our ability to accept for exchange or exchange some or all of the original notes pursuant to the exchange offer; or | ||
• | the exchange offer violates any applicable law or any applicable interpretation of the staff of the SEC. |
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By Registered or Certified Mail, Overnight | ||||
Courier or Hand Delivery: | Facsimile Transmission Number: | Confirm by Telephone or for Information: | ||
U.S. Bank National Association | (651) 495-8158 | (800) 934-6802 | ||
West Side Flats Operations Center | Attention: Specialized Finance | |||
Attn: Specialized Finance 60 Livingston Avenue Mail Station—EP-MN-WS2N St. Paul MN 55107-2292 |
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Three Months Ended March 31, | Year Ended December 31, | |||||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||||||
Consolidated ratio of earnings to fixed charges(1)(2) | — | — | — | — | 1.21 | — |
(1) | For purposes of this ratio: |
The term “fixed charges” means the sum of: (i) interest expensed and capitalized, (ii) amortized premiums, discounts and capitalized expenses related to indebtedness, (iii) an estimate of the interest within rental expense, and (iv) preference security dividend requirements. | |||
The term “preference security dividend” is the amount of pre-tax earnings required to pay the dividends on outstanding preference securities. The dividend requirement is computed as the amount of the dividend divided by (1 minus the effective income tax rate applicable to continuing operations). | |||
The term “earnings” is the amount resulting from adding and subtracting the following items. We add the following: (i) pre-tax income from continuing operations before adjustment for income or loss from equity investees; (ii) fixed charges; (iii) amortization of capitalized interest; (iv) distributed income of equity investees; and (v) our share of pre-tax losses of equity investees for which charges arising from guarantees are included in fixed charges. From the total of the added items, we subtract the following: (i) interest capitalized; (ii) preference security dividend requirements of consolidated subsidiaries; and (iii) the noncontrolling interest in pre-tax income of subsidiaries that have not incurred fixed charges. Equity investees are investments that we account for using the equity method of accounting. |
(2) | For the three months ended March 31, 2010 and the years ended December 31, 2009, 2008, 2007 and 2005, earnings were inadequate to cover fixed charges by approximately $15.7 million, $59.9 million, $323.2 million, $38.2 million and $1.9 million, respectively. |
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As of March 31, 2010 | ||||||||
Actual | As Adjusted | |||||||
(Dollars in millions) | ||||||||
Cash and cash equivalents | $ | 13.7 | $ | 12.6 | ||||
Long-term debt (including current maturities): | ||||||||
Senior credit facility: | ||||||||
Revolving credit facility(1) | $ | — | $ | — | ||||
Term loans | 789.8 | 489.8 | ||||||
Long-term accrued facility fee(2) | 24.2 | 24.2 | ||||||
Original notes(3) | — | 365.0 | ||||||
Long-term debt (including current portion) and accrued facility fee | $ | 814.0 | $ | 879.0 | ||||
Less current portion of long-term debt | (8.1 | ) | (5.0 | ) | ||||
Total long-term debt and accrued facility fee | 805.9 | 874.0 | ||||||
Series D perpetual preferred stock (at liquidation value, including accrued dividends)(4) | 123.2 | 47.6 | ||||||
Total stockholders’ equity(4) | 88.1 | 113.7 | ||||||
Total capitalization | $ | 1,017.2 | $ | 1,035.3 | ||||
(1) | The maximum available borrowing capacity under the revolving credit facility was $40.0 million as of March 31, 2010. | |
(2) | Includes $24.2 million of accrued facility fee. Affiliates of certain of the initial purchasers of the original notes are lenders under our senior credit facility and, accordingly, received a portion of the net proceeds from the offering of the original notes. | |
(3) | Reflects $365.0 million aggregate principal amount of original notes, before deducting $7.0 million of unamortized original issue discount. | |
(4) | Pursuant to the Exchange Agreement, concurrently with the completion of the offering of original notes, we issued holders of our Series D perpetual preferred stock 8.5 million shares of our common stock, together with $50.0 million in cash, in exchange for $75.59 million of Series D perpetual preferred stock, including accrued dividends. |
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Three Months Ended March 31, | Year Ended December 31, | |||||||||||||||||||||||||||
2010 | 2009 | 2009 | 2008 | 2007 | 2006(1) | 2005(2) | ||||||||||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||||||||||
Revenues (less agency commissions)(3) | $ | 70,482 | $ | 61,354 | $ | 270,374 | $ | 327,176 | $ | 307,288 | $ | 332,137 | $ | 261,553 | ||||||||||||||
Impairment of goodwill and broadcast licenses(4) | — | — | — | 338,681 | — | — | — | |||||||||||||||||||||
Operating income (loss) | 11,940 | 4,766 | 43,079 | (258,895 | ) | 53,376 | 87,991 | 60,861 | ||||||||||||||||||||
Loss on early extinguishment of debt(5) | (349 | ) | (8,352 | ) | (8,352 | ) | — | (22,853 | ) | (347 | ) | (6,543 | ) | |||||||||||||||
(Loss) income from continuing operations | (7,981 | ) | (13,687 | ) | (23,047 | ) | (202,016 | ) | (23,151 | ) | 11,711 | 4,604 | ||||||||||||||||
Loss from discontinued publishing and wireless operations, net of income tax of $0, $0, $0, $0, $0, $0 and $3,253 respectively(6) | — | — | — | — | — | — | (1,242 | ) | ||||||||||||||||||||
Net (loss) income | (4,743 | ) | (8,920 | ) | (23,047 | ) | (202,016 | ) | (23,151 | ) | 11,711 | 3,362 | ||||||||||||||||
Net (loss) income available to common stockholders | (9,294 | ) | (12,971 | ) | (40,166 | ) | (208,609 | ) | (24,777 | ) | 8,464 | (2,286 | ) | |||||||||||||||
Net (loss) income from continuing operations available to common stockholders per common share: | ||||||||||||||||||||||||||||
Basic | (0.19 | ) | (0.27 | ) | (0.83 | ) | (4.32 | ) | (0.52 | ) | 0.17 | (0.02 | ) | |||||||||||||||
Diluted | (0.19 | ) | (0.27 | ) | (0.83 | ) | (4.32 | ) | (0.52 | ) | 0.17 | (0.02 | ) | |||||||||||||||
Net (loss) income available to common stockholders per common share: | ||||||||||||||||||||||||||||
Basic | (0.19 | ) | (0.27 | ) | (0.83 | ) | (4.32 | ) | (0.52 | ) | 0.17 | (0.05 | ) | |||||||||||||||
Diluted | (0.19 | ) | (0.27 | ) | (0.83 | ) | (4.32 | ) | (0.52 | ) | 0.17 | (0.05 | ) | |||||||||||||||
Cash dividends declared per common share(7) | — | — | — | 0.09 | 0.12 | 0.12 | 0.12 | |||||||||||||||||||||
Balance Sheet Data (at end of period): | ||||||||||||||||||||||||||||
Total assets | $ | 1,235,815 | $ | 1,248,442 | $ | 1,245,739 | $ | 1,278,265 | $ | 1,625,969 | $ | 1,628,287 | $ | 1,525,054 | ||||||||||||||
Long-term debt (including current portion) | 789,789 | 798,359 | 791,809 | 800,380 | 925,000 | 851,654 | 792,509 | |||||||||||||||||||||
Long-term accrued facility fee(8) | 24,245 | — | 18,307 | — | — | — | — | |||||||||||||||||||||
Redeemable preferred stock(9) | 93,687 | 92,484 | 93,386 | 92,183 | — | 37,451 | 39,090 |
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Three Months Ended March 31, | Year Ended December 31, | |||||||||||||||||||||||||||
2010 | 2009 | 2009 | 2008 | 2007 | 2006(1) | 2005(2) | ||||||||||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
Total stockholders’ equity | 88,140 | 107,154 | 93,620 | 117,107 | 337,845 | 379,754 | 380,996 | |||||||||||||||||||||
Other Data: | ||||||||||||||||||||||||||||
Ratio of earnings to fixed charges(10) | — | N/A | — | — | — | 1.21 | — |
(1) | Reflects the acquisition of WNDU-TV on March 3, 2006 as of the acquisition date. For further information concerning this acquisition, see “Business” included elsewhere in this prospectus. | |
(2) | Reflects the acquisitions of KKCO-TV on January 31, 2005, WSWG-TV on November 10, 2005 and WSAZ-TV on November 30, 2005, as of their respective acquisition dates. | |
(3) | Our revenues fluctuate significantly between years, consistent with, among other things, increased political advertising expenditures in even-numbered years. | |
(4) | As of December 31, 2008, we recorded a non-cash impairment expense of $338.7 million resulting from a write down of $98.6 million in the carrying value of our goodwill and a write down of $240.1 million in the carrying value of our broadcast licenses. The write-down of our goodwill and broadcast licenses related to seven stations and 23 stations, respectively. As of this testing date, we believe events had occurred and circumstances changed that more likely than not reduce the fair value of our broadcast licenses and goodwill below their carrying amounts. These events which accelerated in the fourth quarter of 2008 included: (i) the continued decline of the price of our common stock and Class A common stock; (ii) the decline in the current selling prices of television stations; (iii) the decline in local and national advertising revenues excluding political advertising revenue; and (iv) the decline in the operating profit margins of some of our stations. |
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(5) | In 2010 and 2009, we recorded a loss on early extinguishment of debt related to an amendment of our senior credit facility. In 2007, we recorded a loss on early extinguishment of debt related to a refinancing of our senior credit facility and the redemption of our 9.25% Notes. In 2006, we recorded a loss on early extinguishment of debt related to the repurchase of a portion of our 9.25% Notes. In 2005, we recorded a loss on early extinguishment of debt related to two amendments to our then existing senior credit facility and the repurchase of a portion of our 9.25% Notes. | |
(6) | On December 30, 2005, we completed (i) the contribution of all of our membership interests in Gray Publishing, LLC, which included our Gray Publishing and Graylink Wireless businesses and certain other assets, to Triple Crown Media, Inc. (“TCM”) and (ii) the spinoff of all the common stock of TCM to our shareholders. The selected financial information for 2005 reflects the reclassification of the results of operations of those businesses as discontinued operations, net of income tax. | |
(7) | Cash dividends for 2007 and 2006 include a cash dividend of $0.03 per share approved in the fourth quarters of 2007 and 2006, respectively, and paid in the first quarters of 2008 and 2007, respectively. | |
(8) | On March 31, 2009, we amended our senior credit facility. Effective on that date, we began to incur an annual facility fee equal to 3% multiplied by the outstanding balance under our senior credit facility. See Note 3. “Long-term Debt and Accrued Facility Fee” of our notes to our audited consolidated financial statements included elsewhere in this prospectus for further information regarding our accrued facility fee. | |
(9) | On June 26, 2008, we issued 750 shares of Series D perpetual preferred stock and on July 15, 2008, we issued an additional 250 shares of our Series D perpetual preferred stock. We generated net cash proceeds from such issuances of approximately $91.6 million, after a 5.0% original issue discount, transaction fees and expenses. The Series D perpetual preferred stock has a liquidation value of $100,000 per share, for a total liquidation value of $100.0 million. The $8.4 million of original issue discount, transaction fees and expenses is being accreted over a seven-year period ending June 30, 2015. | |
On May 22, 2007, we redeemed all outstanding shares of our Series C preferred stock. | ||
Amounts exclude unamortized original issuance costs and accrued and unpaid dividends. Such costs and dividends aggregated $29.5 million, $14.3 million, $25.5 million and $10.8 million as of March 31, 2010, March 31, 2009, December 31, 2009 and December 31, 2008, respectively. | ||
(10) | For purposes of this ratio: | |
The term “fixed charges” means the sum of: (i) interest expensed and capitalized, (ii) amortized premiums, discounts and capitalized expenses related to indebtedness, (iii) an estimate of the interest within rental expense, and (iv) preference security dividend requirements. | ||
The term “preference security dividend” is the amount of pre-tax earnings required to pay the dividends on outstanding preference securities. The dividend requirement is computed as the amount of the dividend divided by (1 minus the effective income tax rate applicable to continuing operations). | ||
The term “earnings” is the amount resulting from adding and subtracting the following items. We add the following: (i) pre-tax income from continuing operations before adjustment for income or loss from equity investees; (ii) fixed charges; (iii) amortization of capitalized interest; (iv) distributed income of equity investees; and (v) our share of pre-tax losses of equity investees for which charges arising from guarantees are included in fixed charges. From the total of the added items, we subtract the following: (i) interest capitalized; (ii) preference security dividend requirements of consolidated subsidiaries; and (iii) the noncontrolling interest in pre-tax income of subsidiaries that have not incurred fixed charges. Equity investees are investments that we account for using the equity method of accounting. | ||
For the three months ended March 31, 2010 and the years ended December 31, 2009, 2008, 2007 and 2005, earnings were inadequate to cover fixed charges by approximately $15.7 million, $59.9 million, $323.2 million, $38.2 million and $1.9 million, respectively. |
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FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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Three Months Ended March 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Amount | Percent of Total | Amount | Percent of Total | |||||||||||||
Revenues: | ||||||||||||||||
Local | $ | 43,511 | 61.7 | % | $ | 39,286 | 64.0 | % | ||||||||
National | 13,951 | 19.8 | % | 12,875 | 21.0 | % | ||||||||||
Internet | 3,072 | 4.4 | % | 2,564 | 4.2 | % | ||||||||||
Political | 2,783 | 3.9 | % | 1,009 | 1.6 | % | ||||||||||
Retransmission consent | 4,639 | 6.6 | % | 3,640 | 5.9 | % | ||||||||||
Production and other | 1,932 | 2.7 | % | 1,842 | 3.0 | % | ||||||||||
Network compensation | 44 | 0.1 | % | 138 | 0.3 | % | ||||||||||
Consulting revenue | 550 | 0.8 | % | — | 0.0 | % | ||||||||||
Total | $ | 70,482 | 100.0 | % | $ | 61,354 | 100.0 | % | ||||||||
Year End December 31, | ||||||||||||||||||||||||
2009 | 2008 | 2007 | ||||||||||||||||||||||
Revenues: | Amount | Percent of Total | Amount | Percent of Total | Amount | Percent of Total | ||||||||||||||||||
Local | $ | 170,813 | 63.2 | % | $ | 186,492 | 57.0 | % | $ | 200,686 | 65.3 | % | ||||||||||||
National | 53,892 | 19.9 | % | 68,417 | 20.9 | % | 77,365 | 25.2 | % | |||||||||||||||
Internet | 11,413 | 4.2 | % | 11,859 | 3.6 | % | 9,506 | 3.1 | % | |||||||||||||||
Political | 9,976 | 3.7 | % | 48,455 | 14.8 | % | 7,808 | 2.5 | % | |||||||||||||||
Retransmission consent | 15,645 | 5.8 | % | 3,046 | 0.9 | % | 2,436 | 0.8 | % | |||||||||||||||
Production and other | 7,119 | 2.6 | % | 8,155 | 2.5 | % | 8,719 | 2.8 | % | |||||||||||||||
Network compensation | 653 | 0.2 | % | 752 | 0.3 | % | 768 | 0.3 | % | |||||||||||||||
Consulting revenue | 863 | 0.4 | % | — | 0.0 | % | — | 0.0 | % | |||||||||||||||
Total | $ | 270,374 | 100.0 | % | $ | 327,176 | 100.0 | % | $ | 307,288 | 100.0 | % | ||||||||||||
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Three Months Ended March 31, | ||||||||
2010 | 2009 | |||||||
Statutory federal income tax rate | 35.0 | % | 35.0 | % | ||||
State income taxes | 6.0 | % | 0.9 | % | ||||
Reserve for uncertain tax positions | (4.2 | )% | 1.0 | % | ||||
Adjustments to valuation allowance of deferred tax assets | 2.2 | % | (1.6 | )% | ||||
Other | 1.6 | % | (0.5 | )% | ||||
Effective income tax rate | 40.6 | % | 34.8 | % | ||||
Income tax benefit | $ | (3,238 | ) | $ | (4,767 | ) |
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Year Ended December 31, | ||||||||
2009 | 2008 | |||||||
Statutory federal income tax rate | 35.0 | % | 35.0 | % | ||||
State income taxes | 2.6 | % | 3.7 | % | ||||
Change in valuation allowance | (4.5 | )% | 0.1 | % | ||||
Reserve for uncertain tax positions | 1.1 | % | (0.2 | )% | ||||
Goodwill impairment | 0.0 | % | (3.0 | )% | ||||
Other | (1.4 | )% | (0.1 | )% | ||||
Effective income tax rate | 32.8 | % | 35.5 | % | ||||
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Year Ended December 31, | ||||||||
2008 | 2007 | |||||||
Statutory federal income tax rate | 35.0 | % | 35.0 | % | ||||
State income taxes | 3.7 | % | 4.1 | % | ||||
Change in valuation allowance | 0.1 | % | (1.2 | )% | ||||
Reserve for uncertain tax positions | (0.2 | )% | (2.8 | )% | ||||
Goodwill impairment | (3.0 | )% | 0.0 | % | ||||
Other | (0.1 | )% | 0.0 | % | ||||
Effective income tax rate | 35.5 | % | 35.1 | % | ||||
Three Months Ended | ||||||||
March 31, | ||||||||
2010 | 2009 | |||||||
Net cash provided by (used in) operating activities | $ | 6,986 | $ | (1,296 | ) | |||
Net cash used in investing activities | (3,185 | ) | (5,469 | ) | ||||
Net cash used in financing activities | (6,137 | ) | (9,027 | ) | ||||
Decrease in cash | $ | (2,336 | ) | $ | (15,792 | ) | ||
As of | ||||||||
March 31, | December 31, | |||||||
2010 | 2009 | |||||||
Cash | $ | 13,664 | $ | 16,000 | ||||
Long-term debt including current portion | $ | 789,789 | $ | 791,809 | ||||
Long-term accrued facility fee | $ | 24,245 | $ | 18,307 | ||||
Preferred stock, excluding unamortized original issue discount | $ | 93,687 | $ | 93,386 | ||||
Borrowing availability under our senior credit facility | $ | 40,000 | $ | 31,681 | ||||
Leverage ratio as defined under our senior credit facility: | ||||||||
Actual | 8.43 | 8.42 | ||||||
Maximum allowed | 9.00 | 8.75 |
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As Amended and | ||||||||||
Prior to Issuance | As Amended and | |||||||||
of Original Notes and | After Issuance of | |||||||||
Related | Original Notes and Related | |||||||||
Prior to Amendment | Repayment of the | Repayment of the | ||||||||
Description | on March 31, 2010 | Term Loan | Term Loan | |||||||
Annual interest rate on outstanding term loan balance | LIBOR plus 3.50% or BASE plus 2.50% | Same | Same | |||||||
Annual interest rate on outstanding revolving loan balance | LIBOR plus 3.50% or BASE plus 2.50% | Same | Same |
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As Amended and | |||||||||||
Prior to Issuance | As Amended and | ||||||||||
of Original Notes and | After Issuance of | ||||||||||
Related | Original Notes and Related | ||||||||||
Prior to Amendment | Repayment of the | Repayment of the | |||||||||
Description | on March 31, 2010 | Term Loan | Term Loan | ||||||||
Annual facility fee rate | 3.00% with a potential for reduction in future periods. | 3.00% with a potential for reduction in future periods. | 0.75% with a potential for reduction in future periods. | ||||||||
Annual incentive fee rate | None | 2.00 | % | None | |||||||
Annual commitment fee on undrawn revolving loan balance | 0.50 | % | Same | Same | |||||||
Revolving loan commitment | $50 million | $40 million | $40 million | ||||||||
Maximum total net leverage ratio at: | |||||||||||
March 31, 2010 through June 29, 2010 | 7.00x | 9.00x | Replaced with a first lien leverage test as described above. | ||||||||
June 30, 2010 through September 29, 2010 | 6.50x | 9.50x | |||||||||
September 30, 2010 through March 30, 2011 | 6.50x | 9.75x | |||||||||
March 31, 2011 and thereafter | 6.50x | 6.50x | |||||||||
Minimum fixed charge coverage ratio | None | Same | 0.90x to 1.00x | ||||||||
Maximum cash balance that can be deducted from total debt to calculate net debt in the total net leverage ratio (or first lien leverage test, as applicable) | $10.0 million | Same | $15.0 million |
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Payment Due by Period | ||||||||||||||||||||
Less Than | More Than | |||||||||||||||||||
1 Year | 1-3 Years | 3-5 Years | 5 Years | |||||||||||||||||
Contractual Obligations | Total | 2010 | 2011-2012 | 2013-2014 | after 2014 | |||||||||||||||
Contractual obligations recorded in our balance sheet as of December 3l, 2009: | ||||||||||||||||||||
Long-term debt obligations(1) | $ | 791,809 | $ | 8,080 | $ | 16,160 | $ | 767,569 | $ | — | ||||||||||
Long-term accrued facility fee(2) | 18,307 | — | — | 18,307 | — | |||||||||||||||
Dividends currently accrued(3) | 18,917 | — | — | — | 18,917 | |||||||||||||||
Programming obligations currently accrued(4) | 16,802 | 15,271 | 1,241 | 290 | — | |||||||||||||||
Interest rate swap agreements(5) | 6,344 | 6,344 | — | — | — | |||||||||||||||
Acquisition-related liabilities(6) | 1,790 | 863 | 834 | 93 | — | |||||||||||||||
Off-balance sheet arrangements as of December 31, 2009: | ||||||||||||||||||||
Cash interest on long-term debt obligations(7) | 261,169 | 53,568 | 104,939 | 102,662 | — | |||||||||||||||
Cash interest on long-term accrued facility fee(8) | 8,189 | 1,136 | 3,487 | 3,566 | — | |||||||||||||||
Operating lease obligations(9) | 8,119 | 1,321 | 1,780 | 1,231 | 3,787 | |||||||||||||||
Dividends not currently accrued(10) | 85,000 | 17,000 | 34,000 | 34,000 | unknown | |||||||||||||||
Purchase obligations not currently accrued(11) | 832 | 832 | — | — | — | |||||||||||||||
Programming obligations not currently accrued(12) | 22,304 | 4,502 | 16,526 | 1,257 | 19 | |||||||||||||||
Obligation to UK(13) | 45,426 | 7,763 | 15,963 | 17,200 | 4,500 | |||||||||||||||
Total | $ | 1,285,008 | $ | 116,680 | $ | 194,930 | $ | 946,175 | $ | 27,223 | ||||||||||
(1) | “Long-term debt obligations” represent current and all future payment principal obligations under our senior credit facility. These amounts are recorded as liabilities as of the current balance sheet date. As of December 31, 2009, the interest rate on the balance outstanding under the senior credit facility, excluding effects of interest rate swap agreements, was 6.8%. | |
(2) | “Long-term accrued facility fee” represents a facility fee accrued as of December 31, 2009 under our senior credit facility at a rate of 3.0% per annum, which is payable in subsequent periods. | |
(3) | “Dividends currently accrued” represent Series D perpetual preferred stock dividends accrued as of December 31, 2009 and payable in subsequent periods. | |
(4) | “Programming obligations currently accrued” represent obligations for syndicated television programming whose license period has begun and the product is available. These amounts are recorded as liabilities as of the current balance sheet date. | |
(5) | “Interest rate swap agreements” represent certain contracts that allow us to fix the interest rate on a portion of our long-term debt balance. We have estimated obligations associated with these contracts. Although the fair value of these contracts can fluctuate significantly based on market interest rates, the amounts in the table are estimated settlement amounts. These amounts |
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are recorded as liabilities as of the current balance sheet date. | ||
(6) | “Acquisition related liabilities” represent certain obligations associated with acquisitions of television stations that were completed in prior years. These amounts are recorded as liabilities as of the current balance sheet date. | |
(7) | “Cash interest on long-term debt obligations” includes estimated interest expense on long-term debt obligations based upon the average debt balances expected in the future and computed using an interest rate of 6.8%. This was the interest rate on the balance outstanding under the senior credit facility, excluding the effects of our interest rate swap agreements, as of December 31, 2009. Our senior credit facility will mature on December 31, 2014. |
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(8) | “Cash interest on long-term accrued facility fee” represents estimated interest expense on the accrued facility fee obligation under our senior credit facility. Effective as of March 31, 2009, we incur a facility fee equal to 3.0% per annum on the outstanding revolving and term loans thereunder. From March 31, 2009 through April 30, 2010, this fee accrues and becomes payable on the respective maturity dates of those loans (March 19, 2014 and December 31, 2014, respectively). From April 30, 2010 until the maturity dates under the senior credit facility, such accrued amounts bear interest at 6.5% per year. These interest payments are included in this item as “cash interest on long-term accrued facility fee.” From April 30, 2010 until the maturity dates under our senior credit facility, the fee will be payable in cash on a quarterly basis. This portion of the fee is included in the estimate of “Cash interest on long-term debt obligations” above. | |
(9) | “Operating lease obligations” represent payment obligations under non-cancelable lease agreements classified as operating leases. These amounts are not recorded as liabilities as of the current balance sheet date. | |
(10) | “Dividends not currently accrued” represent Series D perpetual preferred stock dividends for future periods and assumes that the $100 million of Series D perpetual preferred stock remains outstanding in future periods with a dividend rate of 17%. For the column headed “More than 5 years, after 2014,” we cannot estimate a dividend amount; due to the perpetual nature of our Series D perpetual preferred stock and its holders’ having the right to request that we repurchase such Stock on or after June 30, 2015. | |
(11) | “Purchase obligations not currently accrued” generally represent payment obligations for equipment. It is our policy to accrue for these obligations when the equipment is received and the vendor has completed the work required by the purchase agreement. These amounts are not recorded as liabilities as of the current balance sheet date because we had not yet received the equipment. | |
(12) | “Programming obligations not currently accrued” represent obligations for syndicated television programming whose license period has not yet begun or the product is not yet available. These amounts are not recorded as liabilities as of the current balance sheet date. | |
(13) | “Obligation to UK” represents total obligations, excluding any potential revenues, under the UK Agreement. These amounts are not recorded as liabilities as of the current balance sheet date. See “Off-Balance Sheet Arrangements” immediately preceding this table for additional information concerning this obligation. |
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As of December 31 | ||||||||
2009 | 2008 | |||||||
(Dollars in millions) | ||||||||
Pre-tax impairment charge: | ||||||||
Broadcast licenses | $ | — | $ | 240.1 | ||||
Goodwill | $ | — | $ | 98.6 | ||||
Significant assumptions: | ||||||||
Forecast period | 10 years | 10 years | ||||||
Increase or (decrease) in market advertising revenue for projection year compared to latest historical period(1) | (4.4)% to 8.9% | (15.8)% to (2.3)% | ||||||
Positive or (negative) advertising revenue compound growth rate for forecast period | (0.3)% to 3.7% | 1.1% to 3.4% | ||||||
Operating cash flow margin: | ||||||||
Broadcast licenses | 8.3% to 50.0% | 11.0% to 50.0% | ||||||
Goodwill | 11.1% to 50.0% | 11.5% to 50.0% | ||||||
Discount rate: | ||||||||
Broadcast licenses | 9.50 | % | 10.50 | % | ||||
Goodwill | 10.50 | % | 11.50 | % |
(1) | Depending on whether the first year of the respective projection period is an even- or odd-numbered year, assumptions relating to market advertising growth rates can vary significantly from year to year reflecting the significant cyclical impact of political advertising in even-numbered years. The fiscal 2009 analysis generally anticipated an increase in revenues for fiscal 2010. As a result, overall future projected revenue growth rates thereafter were low given the high starting point of these projections. Conversely, since the fiscal 2008 analysis assumed cyclically low revenues for fiscal 2009, the subsequent projected growth rates were higher. |
Hypothetical Impairment | ||||||||
Charge As of | ||||||||
December 31, 2009 | ||||||||
Broadcast | ||||||||
License | Goodwill | |||||||
(In millions) | ||||||||
Hypothetical change: | ||||||||
A 100 basis point decrease in advertising revenue growth rate throughout the forecast period | $ | 29.4 | $ | 3.9 | ||||
A 100 basis point decrease in operating cash flow margin throughout the forecast period | $ | 0.5 | $ | — | ||||
A 100 basis point increase in the applicable discount rate | $ | 29.9 | $ | 4.2 | ||||
A 5% reduction in the fair value of broadcast licenses and enterprise values | $ | 1.1 | $ | — | ||||
A 10% reduction in the fair value of broadcast licenses and enterprise values | $ | 6.8 | $ | 2.8 |
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Percentage of Total | ||||||||||||
Value Reassigned to Network | ||||||||||||
As | Affiliation Agreements | |||||||||||
Reported | 50% | 25% | ||||||||||
Balance Sheet (As of December 3l, 2009): | ||||||||||||
Broadcast licenses | $ | 818,981 | $ | 262,598 | $ | 540,789 | ||||||
Other intangible assets, net (including network affiliation agreements) | 1,316 | 185,347 | 93,332 | |||||||||
Statement of Operations (For the year ended December 31, 2009): | ||||||||||||
Amortization of intangible assets | 577 | 36,626 | 18,602 | |||||||||
Operating income | 43,079 | 7,030 | 25,054 | |||||||||
Net loss | (23,047 | ) | (45,037 | ) | (34,042 | ) | ||||||
Net loss available to common stockholders | (40,166 | ) | (62,156 | ) | (51,161 | ) | ||||||
Net loss available to common stockholders, per share — basic and diluted | $ | (0.83 | ) | $ | (1.28 | ) | $ | (1.05 | ) |
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Primary Network | ||||||||||||||||||||||
DMA | Broadcast | Station | News | |||||||||||||||||||
Rank | Primary Network | Secondary Network | License | Rank in | Rank in | |||||||||||||||||
(a) | Market | Station | Affil.(b) | Exp.(c) | Affil.(b) | Exp.(c) | Expiration | DMA(d) | DMA(e) | |||||||||||||
59 | Knoxville, TN | WVLT | CBS | 12/31/14 | My Net. | 10/04/11 | 08/01/05(i) | 2 | 2 | |||||||||||||
62 | Lexington, KY | WKYT | CBS | 12/31/14 | CW | 09/17/14 | 08/01/05(i) | 1 | 1 | |||||||||||||
63 | Charleston/Huntington, WV | WSAZ | NBC | 01/01/12 | My Net. | 10/04/11 | 10/01/12 | 1 | 1 | |||||||||||||
69 | Wichita/Hutchinson, KS | KAKE | ABC | 12/31/13 | NA | NA | 06/01/06(i) | 2 | 2 | |||||||||||||
(Colby, KS) | KLBY(f) | ABC | 12/31/13 | NA | NA | 06/01/06(i) | 2 | 2 | ||||||||||||||
(Garden City, KS) | KUPK(f) | ABC | 12/31/13 | NA | NA | 06/01/06(i) | 2 | 2 | ||||||||||||||
76 | Omaha, NE | WOWT | NBC | 01/01/12 | Universal Sports | 12/31/11 | 06/01/06(i) | 2 | 1 | |||||||||||||
85 | Madison, WI | WMTV | NBC | 01/01/12 | News | NA | 12/01/05(i) | 2 | 2 | |||||||||||||
89 | Waco-Temple-Bryan, TX | KWTX | CBS | 12/31/14 | CW | 12/31/14 | 08/01/06(i) | 1 | 1 | |||||||||||||
(Bryan, TX) | KBTX(g) | CBS | 12/31/14 | CW | 12/31/14 | 08/01/06(i) | 1 | 1 | ||||||||||||||
91 | South Bend, IN | WNDU | NBC | 01/01/12 | NA | NA | 08/01/13 | 2 | 2 | |||||||||||||
92 | Colorado Springs, CO | KKTV | CBS | 12/31/14 | My Net. | 10/04/11 | 04/01/06(i) | 1 | 2 | |||||||||||||
103 | Greenville/New Bern/Washington, NC | WITN | NBC | 01/01/12 | My Net. | 10/04/11 | 12/01/04(i) | 2 | 1 | |||||||||||||
105 | Lincoln/Hastings/Kearney, NE | KOLN | CBS | 12/31/14 | My Net. | 10/04/11 | 06/01/06(i) | 1 | 1 | |||||||||||||
Grand Island, NE | KGIN(h) | CBS | 12/31/14 | My Net. | 10/04/11 | 06/01/06(i) | 1 | 1 | ||||||||||||||
106 | Tallahassee, FL/Thomasville, GA | WCTV | CBS | 12/31/14 | My Net. | 10/04/11 | 04/01/13 | 1 | 1 | |||||||||||||
108 | Reno, NV | KOLO | ABC | 12/31/13 | Universal Sports | 01/09/11 | 10/01/06(i) | 1 | 1 | |||||||||||||
114 | Augusta, GA | WRDW | CBS | 12/31/14 | My Net. | 10/04/11 | 04/01/13 | 1 | 1 | |||||||||||||
News | NA | |||||||||||||||||||||
115 | Lansing, MI | WILX | NBC | 01/01/12 | News | NA | 10/01/05(i) | 2 | 1 | |||||||||||||
127 | La Crosse/Eau Claire, WI | WEAU | NBC | 01/01/12 | News | NA | 12/01/05(i) | 1 | 1 | |||||||||||||
134 | Rockford, IL | WIFR | CBS | 12/31/14 | News | NA | 12/01/05(i) | 1 | 1 | |||||||||||||
135 | Wausau/Rhinelander, WI | WSAW | CBS | 12/31/14 | My Net. | 10/04/11 | 12/01/05(i) | 1 | 1 | |||||||||||||
News | NA | |||||||||||||||||||||
136 | Topeka, KS | WIBW | CBS | 12/31/14 | My Net. | 10/04/11 | 06/01/06(i) | 1 | 1 | |||||||||||||
145 | Albany, GA | WSWG | CBS | 12/31/14 | My Net. | 10/04/11 | 04/01/13 | 3 | NA(j) | |||||||||||||
151 | Panama City, FL | WJHG | NBC | 01/01/12 | CW | 09/17/12 | 02/01/05(i) | 1 | 1 | |||||||||||||
My Net. | 10/04/11 | |||||||||||||||||||||
161 | Sherman, TX/Ada, OK | KXII | CBS | 12/31/14 | FOX | 06/30/11 | 08/01/06(i) | 1 | 1 | |||||||||||||
My Net. | 10/04/11 | |||||||||||||||||||||
172 | Dothan, AL | WTVY | CBS | 12/31/14 | CW | 09/01/12 | 04/01/13 | 1 | 1 | |||||||||||||
My Net. | 10/04/11 | |||||||||||||||||||||
178 | Harrisonburg, VA | WHSV | ABC | 12/31/13 | ABC | 12/31/13 | 10/01/12 | 1 | 1 | |||||||||||||
FOX | 06/30/11 | |||||||||||||||||||||
My Net. | 10/04/11 | |||||||||||||||||||||
182 | Bowling Green, KY | WBKO | ABC | 12/31/13 | FOX | 06/30/11 | 08/01/05(i) | 1 | 1 | |||||||||||||
CW | 09/01/13 | |||||||||||||||||||||
183 | Charlottesville, VA | WCAV | CBS | 12/31/14 | News | NA | 10/01/12 | 2 | 2 | |||||||||||||
WVAW | ABC | 12/31/13 | NA | NA | 10/01/12 | 3 | 4 | |||||||||||||||
WAHU | FOX | 06/30/11 | My Net. | 10/04/11 | 01/01/12 | 4 | 3 | |||||||||||||||
184 | Grand Junction, CO | KKCO | NBC | 01/01/16 | NA | NA | 04/01/06(i) | 1 | 1 | |||||||||||||
185 | Meridian, MS | WTOK | ABC | 12/31/13 | CW | 09/15/10 | 06/01/05(i) | 1 | 1 | |||||||||||||
My Net. | 10/04/11 | |||||||||||||||||||||
194 | Parkersburg, WV | WTAP | NBC | 01/01/12 | FOX | 06/30/11 | 10/01/04(i) | 1 | 1 | |||||||||||||
My Net. | 10/04/11 | |||||||||||||||||||||
(k) | Hazard, KY | WYMT | CBS | 12/31/14 | NA | NA | 08/01/05(i) | 1 | 1 |
(a) | DMA rank based on data published by Nielsen or other public sources for the 2009-2010 television season. | |
(b) | Indicates network affiliations. The majority of our stations are affiliated with a network. We also have independent stations and stations broadcasting local news and weather. Such stations are identified as “News.” |
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(c) | Indicates date of expiration of network license. | |
(d) | Based on the average of Nielsen data for the March, May, July and November 2009 rating periods (except for Hazard, KY, as described in note (k)), measured from Sunday to Saturday, 6 a.m. to 2 a.m. | |
(e) | Based on our review of Nielsen data for the March, May, July and November 2009 rating periods (except for Hazard, KY, as described in note (k)) for various news programs. | |
(f) | KLBY-TV and KUPK-TV are satellite stations of KAKE-TV under FCC rules. KLBY-TV and KUPK-TV retransmit the signal of the primary station and may offer some locally originated programming, such as local news. | |
(g) | KBTX-TV is a satellite station of KWTX-TV under FCC rules. KBTX-TV retransmits the signal of the primary station and may offer some locally originated programming, such as local news. | |
(h) | KGIN-TV is a satellite station of KOLN-TV under FCC rules. KGIN-TV retransmits the signal of the primary station and may offer some locally originated programming, such as local news. | |
(i) | We have filed a license renewal application with the FCC, and renewal is pending. We anticipate that all pending applications will be renewed in due course. | |
(j) | This station does not currently broadcast local news that is specific to the Albany, Georgia market. | |
(k) | The rankings shown for WYMT-TV are based on Nielsen data for the trading area for the four most recent reporting periods, which are November 2008 and February, May and November 2009. |
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Name | Age | Position Held With Gray | ||||
Hilton H. Howell, Jr. | 48 | Chief Executive Officer, Vice Chairman and Director | ||||
William E. Mayher, III | 70 | Chairman of the Board of Directors | ||||
Robert S. Prather, Jr. | 65 | President, Chief Operating Officer and Director | ||||
James C. Ryan | 49 | Chief Financial Officer and Senior Vice President | ||||
Robert A. Beizer | 70 | Vice President for Law and Development and Secretary | ||||
J. Mack Robinson | 85 | Director and Chairman Emeritus | ||||
Richard L. Boger | 62 | Director | ||||
Ray M. Deaver | 68 | Director | ||||
T.L. Elder | 70 | Director | ||||
Zell B. Miller | 77 | Director | ||||
Howell W. Newton | 62 | Director | ||||
Hugh E. Norton | 76 | Director | ||||
Harriett J. Robinson | 78 | Director |
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As Amended and | ||||||||
Prior to | As Amended and | |||||||
the Offering of | After Giving Effect to | |||||||
Original | the Offering of | |||||||
Notes and Related | Original Notes and | |||||||
Repayment of | Related Repayment of | |||||||
Description | Term Loan | Term Loan | ||||||
Annual interest rate on outstanding term loan balance | LIBOR plus 3.5% or BASE plus 2.5% | Same | ||||||
Annual interest rate on outstanding revolving loan balance | LIBOR plus 3.5% or BASE plus 2.5% | Same | ||||||
Annual facility fee rate | 3.0% with a potential reduction in future periods | 1.25% with a potential reduction in future periods. | ||||||
Annual incentive fee rate | 2.0 | % | 0.0 | % | ||||
Annual commitment fee on undrawn revolving loan balance | 0.50 | % | Same | |||||
Revolving loan commitment | $40 million | $40 million | ||||||
Maximum total net leverage ratio at: | ||||||||
March 31, 2010 through June 29, 2010 | 9.00x | Replaced with first | ||||||
June 30, 2010 through September 29, 2010 | 9.50x | lien leverage test | ||||||
September 30, 2010 through March 30, 2011 | 9.75x | |||||||
March 31, 2011 and thereafter | 6.50x | |||||||
Minimum fixed charge coverage ratio | None | 0.90x to 1.0x | ||||||
Maximum cash balance that can be deducted from total debt to calculate total net debt in the total net leverage ratio (or first lien leverage test, as applicable) | $10.0 million | $15.0 million |
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• | the “Company,” we mean Gray Television, Inc. and not its subsidiaries; and | ||
• | the “Notes,” we mean the original notes, the exchange notes and Additional Notes we may issue from time to time under the Indenture (and exchange notes issued in exchange therefor). |
• | equally in right of payment with all existing and future senior Indebtedness (including any Permitted Additional Pari Passu Secured Obligations permitted to be incurred in accordance with the Indenture) of the Company; | ||
• | senior in right of payment to all existing and future subordinated Indebtedness of the Company; | ||
• | effectively junior to any obligations of the Company that are secured by a Lien on the Collateral that is senior or prior to the Second Priority Liens, including the First Priority Liens securing obligations under the Senior Credit Facility referred to below, and potentially any Permitted Liens; | ||
• | effectively senior to any obligations of the Company that are unsecured to the extent of the value of the Collateral after giving effect to the First Priority Liens, and potentially any Permitted Liens; and | ||
• | structurally junior to any Indebtedness or Obligations of any non-guarantor Subsidiaries. |
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• | our total indebtedness (excluding intercompany indebtedness) would have been approximately $879.4 million; | ||
• | the Company would have had approximately $879.4 million of secured indebtedness, $514.0 million of which would have been under the Senior Credit Facility ranking effectively senior to the extent of the value of the collateral securing the Senior Credit Facility and $365.0 million of which would be the Notes offered hereby; and | ||
• | the Subsidiary Guarantors would have had approximately $879.4 million of indebtedness, including guarantees of indebtedness of $514.0 million under our Senior Credit Facility and $365.0 million of indebtedness as Subsidiary Guarantors of the Notes. |
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• | equally in right of payment with all existing and future senior Indebtedness (including Permitted Additional Pari Passu Secured Obligations) of each Subsidiary Guarantor; | ||
• | senior in right of payment to all existing and future subordinated Indebtedness of each Subsidiary Guarantor; | ||
• | effectively junior to any obligations of each Subsidiary Guarantor that are secured by a Lien on the Collateral that is senior or prior to the Second Priority Liens, including the First Priority Liens securing obligations under the Senior Credit Facility referred to below, and potentially any Permitted Liens; | ||
• | effectively senior to any obligations of each Subsidiary Guarantor that are unsecured to the extent of the value of the Collateral after giving effect to the First Priority Liens, and potentially any Permitted Liens; and | ||
• | structurally junior to any Indebtedness or Obligations of any non-Subsidiary Guarantor Subsidiaries. |
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• | first, to the First Priority Representative for application to the First Priority Obligations in accordance with the terms of the First Priority Documents, until the First Priority Obligations Payment Date; | ||
• | second, to amounts owing to the Collateral Agent in its capacity as such in accordance with the terms of the Security Documents, to amounts owing to the Trustee in its capacity as such in accordance with the terms of the Indenture; | ||
• | third, to amounts owing to any representative for Permitted Additional Pari Passu Secured Obligations in its capacity as such in accordance with the terms of such Permitted Additional Pari Passu Secured Obligations; | ||
• | fourth, ratably to amounts owing to the holders of Second Lien Obligations in accordance with the terms of the Security Documents and the Indenture; and | ||
• | fifth, to the Company and/or other persons entitled thereto. |
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• | Pursuant to the Intercreditor Agreement, the Collateral Agent, the Trustee, the Holders of the Notes and the holders of any Permitted Additional Pari Passu Secured Obligations agree that the First Priority Representative and the other First Priority Secured Parties have no duties to them in respect of the maintenance or preservation of the Collateral. The First Priority Representative has agreed in the Intercreditor Agreement to hold, until the First Priority Obligations Payment Date, certain possessory collateral also for the benefit of the Trustee, the Collateral Agent and the holders of the Second Lien Obligations. | ||
• | In addition, the Collateral Agent, the Trustee and the Holders of the Notes and the holders of any Permitted Additional Pari Passu Secured Obligations have agreed to not institute any suit or other proceeding or assert in any suit, insolvency proceeding or other proceeding any claim against any First Priority Secured Party seeking damages from or other relief by way of specific performance, injunction or otherwise, with respect to, and no First Priority Secured Party shall be liable for, any action taken or omitted to be taken by any First Priority Secured Party with respect to, the Collateral or pursuant to the First Priority Documents. They further agree not to seek, and waive, any right to have the Collateral marshalled upon disposition or other foreclosure. | ||
• | The Intercreditor Agreement provides for the right of the Collateral Agent and the holders of Second Lien Obligations to exercise rights and remedies as unsecured creditors against the Company or any Subsidiary Guarantor, subject to certain terms, conditions, waivers and limitations as more fully set forth in the Intercreditor Agreement. |
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• | Pursuant to the Intercreditor Agreement, the Collateral Agent, for itself and on behalf of the Holders of the Notes and the holders of any Permitted Additional Pari Passu Secured Obligations, irrevocably appoints the First Priority Representative and any officer or agent of the First Priority Representative, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place of the Collateral Agent or in the First Priority Representative’s own name, from time to time in the First Priority Representative’s sole discretion, for the purpose of carrying out the terms of the releases of the Second Priority Liens as permitted thereby, including releases upon sales due to enforcement of remedies or otherwise provided for in the Intercreditor Agreement, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of such section of the Intercreditor Agreement, including, without limitation, any financing statements, endorsements, assignments, releases or other documents or instruments of transfer. | ||
• | Notwithstanding anything to the contrary contained in any agreement or filing to which any Second Priority Secured Party may now or hereafter be a party, and regardless of the time, order or method of grant, attachment, recording or perfection of any financing statements or other security interests, assignments, pledges, deeds, mortgages and other liens, charges or encumbrances or any defect or deficiency or alleged defect or deficiency in any of the foregoing, notwithstanding any provision of the Uniform Commercial Code or any applicable law or any First Priority Document or Second Priority Document or any other circumstance whatsoever, the First Priority Liens will rank senior to any Second Priority Liens on the Collateral. The Collateral for the First Priority Liens, the Second Priority Liens and the Permitted Additional Pari Passu Secured Obligations is intended at all times to be the same;providedthat the Excluded Property identified in clause (d) of the definition of Excluded Property may secure the First Lien Obligations. | ||
• | Any amendment, waiver or consent in respect of any First Priority Security Documents shall automatically apply to any comparable provision of the Security Documents (subject to certain exceptions). | ||
• | The Trustee, the Collateral Agent, the Holders and the holders of any Permitted Additional Pari Passu Secured Obligations agree that (i) in certain circumstances the holders under the Senior Credit Facility are required by the terms thereof to be repaid with proceeds of dispositions of Collateral prior to repayment of the Second Lien Obligations and (ii) they will not accept payments from such dispositions of Collateral until applied to repayment of the Senior Credit Facility as so required. The First Priority Representative acknowledges that, except as otherwise set forth in the Intercreditor Agreement, nothing in the Intercreditor Agreement shall prohibit the receipt by the Second Priority Representative or any Holders of Notes of required payments under the Indenture so long as (x) such receipt is not the direct or indirect result of the exercise by the Second Priority Representative or any second priority creditors of rights or remedies as a secured creditor (including set-off or recoupment) or enforcement of any Lien held by any of them or (y) such payment or receipt of such payment is not otherwise in contravention of the Intercreditor Agreement or any First Priority Document. The Trustee, the Collateral Agent, the Holders and the holders of any Permitted Additional Pari Passu Secured Obligations agree that if they receive payments at any time from the Collateral in violation of the Intercreditor Agreement, they will promptly turn such payments over to the First Priority Representative. |
• | it will not object to or otherwise contest (and, as necessary, will consent to) the Company’s or such Subsidiary Guarantor’s use of cash collateral if the First Lien Obligation holders consent (or do not object) to such usage; | ||
• | if the First Lien Obligation holders consent to a DIP financing, the Collateral Agent, on behalf of the holders of the Second Lien Obligations, will be deemed to have consented to, and will not object to, such DIP financing and to the priming of their Liens in connection therewith in the event that the Liens in favor of the First Lien Obligation holders are primed in connection with such DIP financing, so long as the maximum principal amount of indebtedness that may be outstanding from time to time under such DIP financing plus the aggregate principal amount of First Priority Obligations shall not exceed an aggregate amount equal to $40.0 million in excess of the Maximum First Priority Indebtedness amount; |
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• | none of them shall object, contest, or support any other person objecting to or contesting, (a) any request by the First Priority Representative or the other First Priority Secured Parties for adequate protection or any adequate protection provided to the First Priority Representative or the other First Priority Secured Parties or (b) any objection by the First Priority Representative or any other First Priority Secured Parties to any motion, relief, action or proceeding based on a claim of a lack of adequate protection or (c) the payment of interest, fees, expenses or other amounts to the First Priority Representative or any other First Priority Secured Party;providedthat under certain circumstances (i) if the First Priority Secured Parties (or any subset thereof) are granted adequate protection consisting of additional collateral (with replacement liens on such additional collateral) and/or superpriority claims in connection with any DIP financing or use of cash collateral, and the First Priority Representative does not file an objection to the adequate protection being provided to them, then in connection with any such DIP financing or use of cash collateral the Second Priority Representative, on behalf of itself and any of the Second Priority Secured Parties, may seek or accept adequate protection consisting (as applicable) of (x) a replacement Lien on the same additional collateral, subordinated to the Liens securing the First Priority Obligations and such DIP financing on the same basis as the other Liens securing the Second Priority Obligations are so subordinated to the First Priority Obligations under this Agreement and/or (y) superpriority claims junior in all respects to the superpriority claims granted to the First Priority Secured Parties, subject to certain limitations set forth in the Intercreditor Agreement; | ||
• | none of them will seek relief from the automatic stay or from any other stay in any Insolvency Proceeding or take any action in derogation thereof, in each case in respect of any Collateral, without the prior written consent of the First Priority Representative; | ||
• | they will not oppose any sale or other disposition of the Collateral consented to by the First Lien Obligation holders and shall be deemed to have consented to under Section 373 of the Bankruptcy Code and released the Liens securing the Second Lien Obligations;providedthat the Liens of the Second Priority Secured Parties attach to the proceeds of such sale to the same extent and junior priority as such Liens have with respect to the Collateral; and | ||
• | no Second Priority Secured Party shall support or vote in favor of any plan of reorganization (and each shall be deemed to have voted to reject any plan of reorganization) unless such plan (a) pays off, in cash in full, all First Priority Obligations or (b) is accepted by the class of holders of First Priority Obligations voting thereon in accordance with Bankruptcy Code § 1126 and is supported by the First Priority Representative. |
Year | Percentage | |||
November 1, 2012 | 107.875 | % | ||
May 1, 2013 | 105.250 | % | ||
May 1, 2014 and thereafter | 100.000 | % |
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• | holders subject to the alternative minimum tax; | ||
• | banks, insurance companies, or other financial institutions; | ||
• | real estate investment trusts and regulated investment companies; | ||
• | tax-exempt organizations; | ||
• | brokers and dealers in securities or currencies; | ||
• | persons who have ceased to be citizens or residents of the United States; | ||
• | traders in securities that elect to use a mark-to-market method of tax accounting for their securities holdings; | ||
• | U.S. Holders (as defined below) whose “functional currency” is not the U.S. dollar or who hold notes through a foreign entity or foreign account; | ||
• | persons that will hold the notes as a position in a hedging transaction, straddle, conversion transaction or other risk reduction transaction; | ||
• | persons deemed to sell the notes under the constructive sale provisions of the Code; or | ||
• | partnerships (or other entities or arrangements classified as partnerships for U.S. federal income tax purposes) or other pass-through entities, or investors in such entities. |
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• | an individual who is a citizen or resident of the United States; | ||
• | a corporation created or organized in or under the laws of the United States, a state thereof or the District of Columbia; | ||
• | an estate the income of which is subject to U.S. federal income taxation regardless of its source; or | ||
• | a trust that (1) is subject to the supervision of a court within the United States, if one or more U.S. persons have the authority to control all substantial decisions of the trust, or (2) has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a U.S. person. |
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• | you do not actually or constructively own 10% or more of the total combined voting power of all classes of our stock that are entitled to vote; | ||
• | you are not a controlled foreign corporation that is actually or constructively related to us through stock ownership; | ||
• | you are not a bank whose receipt of interest on a note is described in Section 881(c)(3)(A) of the Code; and | ||
• | you provide the applicable withholding agent with, among other things, your name and address, and certify, under penalties of perjury, that you are not a U.S. person (which certification may be made on an IRS Form W-8BEN (or successor form)). |
• | if you are an individual non-U.S. holder, you are present in the United States for at least 183 days in the taxable year of such disposition and certain other conditions are met; or | ||
• | that gain is effectively connected with the conduct by you of a trade or business within the United States. |
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F-1
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Gray Television, Inc.
April 6, 2010
F-2
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December 31, | ||||||||
2009 | 2008 | |||||||
(In thousands) | ||||||||
Assets: | ||||||||
Current assets: | ||||||||
Cash | $ | 16,000 | $ | 30,649 | ||||
Accounts receivable, less allowance for doubtful accounts of $1,092 and $1,543, respectively | 57,179 | 54,685 | ||||||
Current portion of program broadcast rights, net | 10,220 | 10,092 | ||||||
Deferred tax asset | 1,597 | 1,830 | ||||||
Marketable securities | — | 1,384 | ||||||
Prepaid and other current assets | 1,788 | 3,167 | ||||||
Total current assets | 86,784 | 101,807 | ||||||
Property and equipment, net | 148,092 | 162,903 | ||||||
Deferred loan costs, net | 1,619 | 2,850 | ||||||
Broadcast licenses | 818,981 | 818,981 | ||||||
Goodwill | 170,522 | 170,522 | ||||||
Other intangible assets, net | 1,316 | 1,893 | ||||||
Investment in broadcasting company | 13,599 | 13,599 | ||||||
Other | 4,826 | 5,710 | ||||||
Total assets | $ | 1,245,739 | $ | 1,278,265 | ||||
Liabilities and stockholders’ equity: | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 6,047 | $ | 11,515 | ||||
Employee compensation and benefits | 9,675 | 9,603 | ||||||
Accrued interest | 13,531 | 9,877 | ||||||
Other accrued expenses | 4,814 | 9,128 | ||||||
Interest rate hedge derivatives | 6,344 | — | ||||||
Dividends payable | — | 3,000 | ||||||
Federal and state income taxes | 4,206 | 4,374 | ||||||
Current portion of program broadcast obligations | 15,271 | 15,236 | ||||||
Acquisition related liabilities | 863 | 980 | ||||||
Deferred revenue | 6,241 | 10,364 | ||||||
Current portion of long-term debt | 8,080 | 8,085 | ||||||
Total current liabilities | 75,072 | 82,162 | ||||||
Long-term debt, less current portion | 783,729 | 792,295 | ||||||
Long-term accrued facility fee | 18,307 | — | ||||||
Program broadcast obligations, less current portion | 1,531 | 1,534 | ||||||
Deferred income taxes | 142,204 | 143,975 | ||||||
Long-term deferred revenue | 2,638 | 3,310 | ||||||
Long-term accrued dividends | 18,917 | — | ||||||
Accrued pension costs | 13,969 | 18,782 | ||||||
Interest rate hedge derivatives | — | 24,611 | ||||||
Other | 2,366 | 2,306 | ||||||
Total liabilities | 1,058,733 | 1,068,975 | ||||||
Commitments and contingencies (Note 11) | ||||||||
Preferred stock, no par value; cumulative; redeemable; designated 1.00 shares, issued and outstanding 1.00 shares, ($100,000 aggregate liquidation value) | 93,386 | 92,183 | ||||||
Stockholders’ equity: | ||||||||
Common stock, no par value; authorized 100,000 shares, issued 47,530 shares and 47,179 shares, respectively | 453,824 | 452,289 | ||||||
Class A common stock, no par value; authorized 15,000 shares, issued 7,332 shares | 15,321 | 15,321 | ||||||
Accumulated deficit | (303,698 | ) | (263,532 | ) | ||||
Accumulated other comprehensive loss, net of income tax benefit | (9,314 | ) | (24,458 | ) | ||||
156,133 | 179,620 | |||||||
Treasury stock at cost, common stock, 4,655 shares | (40,115 | ) | (40,115 | ) | ||||
Treasury stock at cost, Class A common stock, 1,579 shares | (22,398 | ) | (22,398 | ) | ||||
Total stockholders’ equity | 93,620 | 117,107 | ||||||
Total liabilities and stockholders’ equity | $ | 1,245,739 | $ | 1,278,265 | ||||
F-3
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Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In thousands, except for per share data) | ||||||||||||
Revenues (less agency commissions) | $ | 270,374 | $ | 327,176 | $ | 307,288 | ||||||
Operating expenses before depreciation, amortization, impairment, and gain on disposal of assets, net | ||||||||||||
Broadcast | 187,583 | 199,572 | 199,687 | |||||||||
Corporate and administrative | 14,168 | 14,097 | 15,090 | |||||||||
Depreciation | 32,595 | 34,561 | 38,558 | |||||||||
Amortization of intangible assets | 577 | 792 | 825 | |||||||||
Impairment of goodwill and broadcast licenses | — | 338,681 | — | |||||||||
Gain on disposals of assets, net | (7,628 | ) | (1,632 | ) | (248 | ) | ||||||
Operating expenses | 227,295 | 586,071 | 253,912 | |||||||||
Operating income (loss) | 43,079 | (258,895 | ) | 53,376 | ||||||||
Other income (expense): | ||||||||||||
Miscellaneous income (expense), net | 54 | (53 | ) | 972 | ||||||||
Interest expense | (69,088 | ) | (54,079 | ) | (67,189 | ) | ||||||
Loss from early extinguishment of debt | (8,352 | ) | — | (22,853 | ) | |||||||
Loss before income taxes | (34,307 | ) | (313,027 | ) | (35,694 | ) | ||||||
Income tax benefit | (11,260 | ) | (111,011 | ) | (12,543 | ) | ||||||
Net loss | (23,047 | ) | (202,016 | ) | (23,151 | ) | ||||||
Preferred dividends (includes accretion of issuance cost of $1,202, $576 and $439, respectively) | 17,119 | 6,593 | 1,626 | |||||||||
Net loss available to common stockholders | $ | (40,166 | ) | $ | (208,609 | ) | $ | (24,777 | ) | |||
Basic and diluted per share information: | ||||||||||||
Net loss available to common stockholders | $ | (0.83 | ) | $ | (4.32 | ) | $ | (0.52 | ) | |||
Weighted average shares outstanding | 48,510 | 48,302 | 47,788 | |||||||||
Dividends declared per share | $ | — | $ | 0.09 | $ | 0.12 |
F-4
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Accumulated | ||||||||||||||||||||||||||||||||||||||||||||
Class A | Class A | Common | Other | |||||||||||||||||||||||||||||||||||||||||
Common Stock | Common Stock | Accumulated | Treasury Stock | Treasury Stock | Comprehensive | |||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Deficit | Shares | Amount | Shares | Amount | Income (Loss) | Total | ||||||||||||||||||||||||||||||||||
(In thousands, except for number of shares) | ||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2006 | 7,331,574 | $ | 15,321 | 45,690,633 | $ | 443,698 | $ | (20,026 | ) | (1,578,554 | ) | $ | (22,398 | ) | (3,123,750 | ) | $ | (34,412 | ) | $ | (2,429 | ) | $ | 379,754 | ||||||||||||||||||||
Net loss | — | — | — | — | (23,151 | ) | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Loss on derivatives, net of income tax | — | — | — | — | — | — | — | — | — | (10,754 | ) | — | ||||||||||||||||||||||||||||||||
Adjustment to pension liability, net of income tax | — | — | — | — | — | — | — | — | — | 136 | — | |||||||||||||||||||||||||||||||||
Comprehensive loss | — | — | — | — | — | — | — | — | — | — | (33,769 | ) | ||||||||||||||||||||||||||||||||
Common stock cash dividends ($0.12) per share | — | — | — | — | (5,757 | ) | — | — | — | — | — | (5,757 | ) | |||||||||||||||||||||||||||||||
Preferred stock dividends (including accretion of original issuance costs) | — | — | — | — | (1,626 | ) | — | — | — | — | — | (1,626 | ) | |||||||||||||||||||||||||||||||
Issuance of common stock: | ||||||||||||||||||||||||||||||||||||||||||||
401(k) plan | — | — | 264,419 | 2,242 | — | — | — | — | — | — | 2,242 | |||||||||||||||||||||||||||||||||
Non-qualified stock plan | — | — | 163,295 | 1,271 | — | — | — | — | — | — | 1,271 | |||||||||||||||||||||||||||||||||
Directors’ restricted stock plan | — | — | 55,000 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Repurchase of common stock | — | — | — | — | — | — | — | (647,800 | ) | (5,518 | ) | — | (5,518 | ) | ||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | 1,248 | — | — | — | — | — | — | 1,248 | |||||||||||||||||||||||||||||||||
Balance at December 31, 2007 | 7,331,574 | $ | 15,321 | 46,173,347 | $ | 448,459 | $ | (50,560 | ) | (1,578,554 | ) | $ | (22,398 | ) | (3,771,550 | ) | $ | (39,930 | ) | $ | (13,047 | ) | $ | 337,845 | ||||||||||||||||||||
F-5
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Accumulated | ||||||||||||||||||||||||||||||||||||||||||||
Class A | Class A | Common | Other | |||||||||||||||||||||||||||||||||||||||||
Common Stock | Common Stock | Accumulated | Treasury Stock | Treasury Stock | Comprehensive | |||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Deficit | Shares | Amount | Shares | Amount | Income (Loss) | Total | ||||||||||||||||||||||||||||||||||
(In thousands, except for number of shares) | ||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2007 | 7,331,574 | $ | 15,321 | 46,173,347 | $ | 448,459 | $ | (50,560 | ) | (1,578,554 | ) | $ | (22,398 | ) | (3,771,550 | ) | $ | (39,930 | ) | $ | (13,047 | ) | $ | 337,845 | ||||||||||||||||||||
Net loss | — | — | — | — | (202,016 | ) | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Loss on derivatives, net of income tax | — | — | — | — | — | — | — | — | — | (4,262 | ) | — | ||||||||||||||||||||||||||||||||
Adjustment to pension liability, net of income tax | — | — | — | — | — | — | — | — | — | (7,149 | ) | — | ||||||||||||||||||||||||||||||||
Comprehensive loss | — | — | — | — | — | — | — | — | — | — | (213,427 | ) | ||||||||||||||||||||||||||||||||
Common stock cash dividends ($0.09) per share | — | — | — | — | (4,363 | ) | — | — | — | — | — | (4,363 | ) | |||||||||||||||||||||||||||||||
Preferred stock dividends (including accretion of original issuance costs) | — | — | — | — | (6,593 | ) | — | — | — | — | — | (6,593 | ) | |||||||||||||||||||||||||||||||
Issuance of common stock: | ||||||||||||||||||||||||||||||||||||||||||||
401(k) plan | — | — | 950,601 | 2,380 | — | — | — | — | — | — | 2,380 | |||||||||||||||||||||||||||||||||
Directors’ restricted stock plan | — | — | 55,000 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Repurchase of common stock | — | — | — | — | — | — | — | (883,200 | ) | (185 | ) | — | (185 | ) | ||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | 1,450 | — | — | — | — | — | — | 1,450 | |||||||||||||||||||||||||||||||||
Balance at December 31, 2008 | 7,331,574 | $ | 15,321 | 47,178,948 | $ | 452,289 | $ | (263,532 | ) | (1,578,554 | ) | $ | (22,398 | ) | (4,654,750 | ) | $ | (40,115 | ) | $ | (24,458 | ) | $ | 117,107 | ||||||||||||||||||||
F-6
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Accumulated | ||||||||||||||||||||||||||||||||||||||||||||
Class A | Class A | Common | Other | |||||||||||||||||||||||||||||||||||||||||
Common Stock | Common Stock | Accumulated | Treasury Stock | Treasury Stock | Comprehensive | |||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Deficit | Shares | Amount | Shares | Amount | Income (Loss) | Total | ||||||||||||||||||||||||||||||||||
(In thousands, except for number of shares) | ||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2008 | 7,331,574 | $ | 15,321 | 47,178,948 | $ | 452,289 | $ | (263,532 | ) | (1,578,554 | ) | $ | (22,398 | ) | (4,654,750 | ) | $ | (40,115 | ) | $ | (24,458 | ) | $ | 117,107 | ||||||||||||||||||||
Net loss | — | — | — | — | (23,047 | ) | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Gain on derivatives, net of income tax | — | — | — | — | — | — | — | — | — | 11,143 | — | |||||||||||||||||||||||||||||||||
Adjustment to pension liability, net of income tax | — | — | — | — | — | — | — | — | — | 4,001 | — | |||||||||||||||||||||||||||||||||
Comprehensive loss | — | — | — | — | — | — | — | — | — | — | (7,903 | ) | ||||||||||||||||||||||||||||||||
Preferred stock dividends (including accretion of original issuance costs) | — | — | — | — | (17,119 | ) | — | — | — | — | — | (17,119 | ) | |||||||||||||||||||||||||||||||
Issuance of common stock: | ||||||||||||||||||||||||||||||||||||||||||||
401(k) plan | — | — | 350,554 | 147 | — | — | — | — | — | — | 147 | |||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | 1,388 | — | — | — | — | — | — | 1,388 | |||||||||||||||||||||||||||||||||
Balance at December 31, 2009 | 7,331,574 | $ | 15,321 | 47,529,502 | $ | 453,824 | $ | (303,698 | ) | (1,578,554 | ) | $ | (22,398 | ) | (4,654,750 | ) | $ | (40,115 | ) | $ | (9,314 | ) | $ | 93,620 | ||||||||||||||||||||
F-7
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Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In thousands) | ||||||||||||
Operating activities | ||||||||||||
Net loss | $ | (23,047 | ) | $ | (202,016 | ) | $ | (23,151 | ) | |||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||
Depreciation | 32,595 | 34,561 | 38,558 | |||||||||
Amortization of intangible assets | 577 | 792 | 825 | |||||||||
Amortization of deferred loan costs | 329 | 475 | 967 | |||||||||
Amortization of restricted stock awards | 1,388 | 1,450 | 1,248 | |||||||||
Loss from early extinguishment of debt | 8,352 | — | 22,853 | |||||||||
Accrual of long-term accrued facility fee | 18,307 | — | — | |||||||||
Impairment of goodwill and broadcast licenses | — | 338,681 | — | |||||||||
Amortization of program broadcast rights | 15,130 | 16,070 | 15,194 | |||||||||
Payments on program broadcast obligations | (15,287 | ) | (13,968 | ) | (14,101 | ) | ||||||
Common stock contributed to 401(K) Plan | 147 | 2,380 | 2,242 | |||||||||
Deferred revenue, network compensation | (617 | ) | (604 | ) | (300 | ) | ||||||
Deferred income taxes | (11,219 | ) | (110,990 | ) | (13,823 | ) | ||||||
Gain on disposals of assets, net | (7,628 | ) | (1,632 | ) | (248 | ) | ||||||
Payment for sports marketing agreement | — | — | (4,950 | ) | ||||||||
Other | 2,574 | 257 | 173 | |||||||||
Changes in operating assets and liabilities, net of business acquisitions: | ||||||||||||
Accounts receivable | (2,483 | ) | 8,385 | (2,089 | ) | |||||||
Other current assets | 3,208 | 3,387 | (3,169 | ) | ||||||||
Accounts payable | (4,238 | ) | 2,162 | 2,082 | ||||||||
Employee compensation, benefits and pension costs | 72 | (2,017 | ) | 288 | ||||||||
Accrued expenses | (2,288 | ) | 870 | (374 | ) | |||||||
Accrued interest | 3,654 | (6,001 | ) | 5,047 | ||||||||
Income taxes payable | (168 | ) | (282 | ) | 1,141 | |||||||
Deferred revenue other, including current portion | (455 | ) | 1,715 | (53 | ) | |||||||
Net cash provided by operating activities | 18,903 | 73,675 | 28,360 | |||||||||
Investing activities | ||||||||||||
Acquisition of television businesses and licenses, net of cash acquired | — | — | (92 | ) | ||||||||
Purchases of property and equipment | (17,756 | ) | (15,019 | ) | (24,605 | ) | ||||||
Proceeds from asset sales | 104 | 199 | 272 | |||||||||
Equipment transactions related to spectrum reallocation, net | 697 | (766 | ) | (211 | ) | |||||||
Payments on acquisition related liabilities | (805 | ) | (779 | ) | (1,012 | ) | ||||||
Other | 229 | 25 | (14 | ) | ||||||||
Net cash used in investing activities | (17,531 | ) | (16,340 | ) | (25,662 | ) | ||||||
Financing activities | ||||||||||||
Proceeds from borrowings on long-term debt | — | 16,000 | 392,500 | |||||||||
Repayments of borrowings on long-term debt | (8,571 | ) | (140,621 | ) | (318,500 | ) | ||||||
Deferred and other loan costs | (7,450 | ) | — | (16,255 | ) | |||||||
Dividends paid, net of accreted preferred stock dividend | — | (8,825 | ) | (7,709 | ) | |||||||
Proceeds from issuance of common stock | — | — | 1,271 | |||||||||
Proceeds from issuance of preferred stock | — | 91,607 | — | |||||||||
Purchase of common stock | — | (185 | ) | (5,518 | ) | |||||||
Redemption of preferred stock | — | — | (31,400 | ) | ||||||||
Redemption and purchase of preferred stock from related party | — | — | (6,490 | ) | ||||||||
Net cash (used in) provided by financing activities | (16,021 | ) | (42,024 | ) | 7,899 | |||||||
Net (decrease) increase in cash and cash equivalents | (14,649 | ) | 15,311 | 10,597 | ||||||||
Cash and cash equivalents at beginning of period | 30,649 | 15,338 | 4,741 | |||||||||
Cash and cash equivalents at end of period | $ | 16,000 | $ | 30,649 | $ | 15,338 | ||||||
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Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Trade barter revenue | $ | 1,289 | $ | 1,850 | $ | 2,256 | ||||||
Trade barter expense | (1,324 | ) | (1,892 | ) | (2,116 | ) | ||||||
Net trade barter (expense) income | $ | (35 | ) | $ | (42 | ) | $ | 140 | ||||
F-9
Table of Contents
December 31, | ||||||||
2009 | 2008 | |||||||
Property and equipment: | ||||||||
Land | $ | 23,046 | $ | 22,452 | ||||
Buildings and improvements | 51,606 | 49,766 | ||||||
Equipment | 291,682 | 296,013 | ||||||
366,334 | 368,231 | |||||||
Accumulated depreciation | (218,242 | ) | (205,328 | ) | ||||
Total property and equipment, net | $ | 148,092 | $ | 162,903 | ||||
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Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Weighted-average shares outstanding — basic | 48,510 | 48,302 | 47,788 | |||||||||
Stock options and restricted stock | — | — | — | |||||||||
Weighted-average shares outstanding — diluted | 48,510 | 48,302 | 47,788 | |||||||||
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Potentially dilutive securities outstanding at end of period: | ||||||||||||
Employee stock options | 1,476 | 1,949 | 864 | |||||||||
Unvested restricted stock | 66 | 100 | 128 | |||||||||
Total | 1,542 | 2,049 | 992 | |||||||||
F-11
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F-12
Table of Contents
December 31, | ||||||||
2009 | 2008 | |||||||
Accumulated balances of items included in accumulated other comprehensive loss: | ||||||||
Loss on derivatives, net of income tax | $ | (3,870 | ) | $ | (15,013 | ) | ||
Pension liability adjustments, net of income tax | (5,444 | ) | (9,445 | ) | ||||
Accumulated other comprehensive loss | $ | (9,314 | ) | $ | (24,458 | ) | ||
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F-14
Table of Contents
December 31, | ||||||||
2009 | 2008 | |||||||
Long-term debt: | ||||||||
Senior credit facility — current portion | $ | 8,080 | $ | 8,085 | ||||
Senior credit facility — long-term portion | 783,729 | 792,295 | ||||||
Total long-term debt including current portion | 791,809 | 800,380 | ||||||
Long-term accrued facility fee | 18,307 | — | ||||||
Total long-term debt and accrued facility fee | $ | 810,116 | $ | 800,380 | ||||
Borrowing availability under our senior credit facility | $ | 31,681 | $ | 12,262 | ||||
Leverage ratio as defined in our senior credit facility: | ||||||||
Actual | 8.42 | 7.14 | ||||||
Maximum allowed | 8.75 | 7.25 |
F-15
Table of Contents
Leverage Ratio | ||||||||||||
Maximum Allowed | ||||||||||||
Agreement | ||||||||||||
Giving Effect | Agreement | |||||||||||
to 2009 | Pre-2009 | |||||||||||
Actual | Amendment | Amendment | ||||||||||
Leverage ratios under our senior credit facility as of: | ||||||||||||
December 31, 2008 | 7.14 | NA | 7.25 | |||||||||
March 31, 2009 | 7.48 | 8.00 | 7.25 | |||||||||
June 30, 2009 | 7.98 | 8.25 | 7.25 | |||||||||
September 30, 2009 | 8.22 | 8.50 | 7.25 | |||||||||
December 31, 2009 | 8.42 | 8.75 | 7.00 |
F-16
Table of Contents
Minimum Principal Maturities | ||||||||||||
Long-Term Accrued | Long-Term | |||||||||||
Year | Facility Fee | Debt | Total | |||||||||
2010 | $ | — | $ | 8,080 | $ | 8,080 | ||||||
2011 | — | 8,080 | 8,080 | |||||||||
2012 | — | 8,080 | 8,080 | |||||||||
2013 | — | 8,080 | 8,080 | |||||||||
2014 | 18,307 | 759,489 | 777,796 | |||||||||
Total | $ | 18,307 | $ | 791,809 | $ | 810,116 | ||||||
F-17
Table of Contents
• | managing current and forecasted interest rate risk while maintaining financial flexibility and solvency; | ||
• | proactively managing our cost of capital to ensure that we can effectively manage operations and execute our business strategy, thereby maintaining a competitive advantage and enhancing shareholder value; and | ||
• | complying with covenant requirements in our senior credit facility. |
F-18
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As of December 31, 2009 | As of December 31, 2008 | |||||||||||||||
Balance Sheet | Fair | Balance Sheet | Fair | |||||||||||||
Location | Value | Location | Value | |||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||
Interest rate swap agreements | Current liabilities | $ | 6,344 | Noncurrent liabilities | $ | 24,611 |
Cash Flow Hedging Relationships | ||||||||||||
for the Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Interest rate swap agreements: | ||||||||||||
Asset (liability) at beginning of period | $ | (24,611 | ) | $ | (17,625 | ) | $ | 4 | ||||
Effective portion of gains (losses) recognized in other comprehensive income (loss) | 35,497 | 719 | (17,693 | ) | ||||||||
Effective portion of gains (losses) recorded in accumulated other comprehensive income (loss) and reclassified into interest expense | (17,230 | ) | (7,705 | ) | 64 | |||||||
Portion of gains (losses) representing the amount of hedge ineffectiveness and the amount excluded from the assessment of hedge effectiveness and recorded as an increase (decrease) in interest expense | — | — | — | |||||||||
Asset (liability) at end of period | $ | (6,344 | ) | $ | (24,611 | ) | $ | (17,625 | ) | |||
F-19
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As of December 31, 2009 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Marketable securities | $ | — | $ | — | $ | — | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Interest rate swap agreements | $ | — | $ | 6,344 | $ | — | $ | 6,344 |
As of December 31, 2008 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Marketable securities | $ | — | $ | 1,384 | $ | — | $ | 1,384 | ||||||||
Liabilities: | ||||||||||||||||
Interest rate swap agreements | $ | — | $ | 24,611 | $ | — | $ | 24,611 |
Impairment Loss | ||||||||||||||||||||
As of December 31, 2009 | For The Year Ended | |||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | December 31, 2009 | ||||||||||||||||
Assets: | ||||||||||||||||||||
Property and equipment, net | $ | — | $ | — | $ | 148,092 | $ | 148,092 | $ | — | ||||||||||
Program broadcast rights | — | — | 11,265 | 11,265 | 177 | |||||||||||||||
Investment in broadcasting company | — | — | 13,599 | 13,599 | — | |||||||||||||||
Broadcast licenses | — | — | 818,981 | 818,981 | — | |||||||||||||||
Goodwill | — | — | 170,522 | 170,522 | — | |||||||||||||||
Other intangible assets, net | — | — | 1,316 | 1,316 | — | |||||||||||||||
Total | $ | — | $ | — | $ | 1,163,775 | $ | 1,163,775 | $ | 177 | ||||||||||
Impairment Loss | ||||||||||||||||||||
As of December 31, 2008 | For The Year Ended | |||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | December 31, 2008 | ||||||||||||||||
Assets: | ||||||||||||||||||||
Property and equipment, net | $ | — | $ | — | $ | 162,903 | $ | 162,903 | $ | — | ||||||||||
Program broadcast rights | — | — | 11,068 | 11,068 | 627 | |||||||||||||||
Investment in broadcasting company | — | — | 13,599 | 13,599 | — | |||||||||||||||
Broadcast licenses | — | — | 818,981 | 818,981 | 240,085 | |||||||||||||||
Goodwill | — | — | 170,522 | 170,522 | 98,596 | |||||||||||||||
Other intangible assets, net | — | — | 1,893 | 1,893 | — | |||||||||||||||
Total | $ | — | $ | — | $ | 1,178,966 | $ | 1,178,966 | $ | 339,308 | ||||||||||
F-20
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F-21
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Redemption | ||||
Price | ||||
Date of Redemption | per Share | |||
January 1, 2009 through June 30, 2009 | $ | 105,000 | ||
July 1, 2009 through December 31, 2009 | $ | 106,500 | ||
January 1, 2010 through June 30, 2010 | $ | 108,000 | ||
July 1, 2010 through December 31, 2010 | $ | 106,000 | ||
January 1, 2011 through June 30, 2011 | $ | 104,000 | ||
July 1, 2011 through December 31, 2011 | $ | 102,000 | ||
January 1, 2012 and thereafter | $ | 100,000 |
F-22
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Year Ended December 31, | ||||||||
2008 | 2007 | |||||||
Expected term (in years) | 2.63 | 2.76 | ||||||
Volatility | 36.71 | % | 32.20 | % | ||||
Risk-free interest rate | 2.77 | % | 4.41 | % | ||||
Dividend yield | 1.65 | % | 1.41 | % | ||||
Expected forfeitures | 2.57 | % | 3.65 | % |
F-23
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Year Ended December 31, | ||||||||||||||||||||||||
2009 | 2008 | 2007 | ||||||||||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||
Exercise | Exercise | Exercise | ||||||||||||||||||||||
Options | Price | Options | Price | Options | Price | |||||||||||||||||||
Stock options outstanding — beginning of period | — | $ | — | 21 | $ | 15.39 | 21 | $ | 15.39 | |||||||||||||||
Options expired | — | — | (21 | ) | 15.39 | — | — | |||||||||||||||||
Stock options outstanding — end of period | — | $ | — | — | $ | — | 21 | $ | 15.39 | |||||||||||||||
Exercisable at end of period | — | $ | — | — | $ | — | 21 | $ | 15.39 |
Year Ended December 31, | ||||||||||||||||||||||||
2009 | 2008 | 2007 | ||||||||||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||
Exercise | Exercise | Exercise | ||||||||||||||||||||||
Options | Price | Options | Price | Options | Price | |||||||||||||||||||
Stock options outstanding — beginning of period | 1,949 | $ | 8.31 | 842 | $ | 9.96 | 1,797 | $ | 9.82 | |||||||||||||||
Options granted | — | — | 1,333 | 7.49 | 55 | 8.69 | ||||||||||||||||||
Options exercised | — | — | — | — | (163 | ) | 7.78 | |||||||||||||||||
Options forfeited | (460 | ) | 8.31 | (66 | ) | 8.17 | (42 | ) | 9.55 | |||||||||||||||
Options expired | (13 | ) | 12.37 | (160 | ) | 10.25 | (805 | ) | 10.02 | |||||||||||||||
Stock options outstanding — end of period | 1,476 | $ | 8.28 | 1,949 | $ | 8.31 | 842 | $ | 9.96 | |||||||||||||||
Exercisable at end of period | 498 | $ | 9.93 | 614 | $ | 10.01 | 789 | $ | 10.05 |
As of December 31, 2009 | ||||||||||||||||||||||||||
Weighted | Number of | Weighted Average | ||||||||||||||||||||||||
Average | Average | Options | Exercise Price | |||||||||||||||||||||||
Exercise Price | Number of | Exercise | Remaining | Outstanding | per Share of | |||||||||||||||||||||
per Share | Options | Price | Contractual | That Are | Options That are | |||||||||||||||||||||
Low | High | Outstanding | per Share | Life | Exercisable | Exercisable | ||||||||||||||||||||
(In thousands) | (In years) | (In thousands) | ||||||||||||||||||||||||
$ | 1.78 | $ | 3.56 | 10 | $ | 2.10 | 3.6 | — | $ | — | ||||||||||||||||
3.56 | 5.34 | 35 | 3.61 | 3.4 | — | — | ||||||||||||||||||||
7.13 | 8.91 | 1,017 | 7.68 | 3.0 | 84 | 8.23 | ||||||||||||||||||||
8.91 | 10.69 | 338 | 9.71 | 0.6 | 338 | 9.71 | ||||||||||||||||||||
$ | 12.47 | $ | 14.25 | 76 | $ | 12.77 | 0.2 | 76 | $ | 12.77 | ||||||||||||||||
1,476 | 498 | |||||||||||||||||||||||||
F-24
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Weighted | ||||||||
Number of | Average | |||||||
Shares | Fair Value | |||||||
(In thousands) | ||||||||
Restricted Stock: | ||||||||
Non-vested common restricted shares, December 31, 2008 | 100 | $ | 6.64 | |||||
Vested | (34 | ) | 7.19 | |||||
Non-vested common restricted shares, December 31, 2009 | 66 | $ | 6.36 | |||||
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Current: | ||||||||||||
Federal | $ | — | $ | — | $ | — | ||||||
State and local | 344 | 354 | 274 | |||||||||
State and local — reserve for uncertain tax positions | (385 | ) | 525 | 1,006 | ||||||||
Current income tax expense | (41 | ) | 879 | 1,280 | ||||||||
Deferred: | ||||||||||||
Federal | (11,640 | ) | (99,510 | ) | (12,504 | ) | ||||||
State and local | 421 | (12,380 | ) | (1,319 | ) | |||||||
Deferred income tax benefit | (11,219 | ) | (111,890 | ) | (13,823 | ) | ||||||
Total income tax benefit | $ | (11,260 | ) | $ | (111,011 | ) | $ | (12,543 | ) | |||
F-25
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December 31, | ||||||||
2009 | 2008 | |||||||
Deferred tax liabilities: | ||||||||
Net book value of property and equipment | $ | 16,800 | $ | 17,469 | ||||
Broadcast licenses, goodwill and other intangibles | 245,520 | 231,351 | ||||||
Unearned income | — | 62 | ||||||
Network compensation | — | 273 | ||||||
Restricted stock | 12 | 17 | ||||||
Total deferred tax liabilities | 262,332 | 249,172 | ||||||
Deferred tax assets: | ||||||||
Liability under supplemental retirement plan | 14 | 18 | ||||||
Liability for accrued vacation | 763 | 782 | ||||||
Allowance for doubtful accounts | 426 | 602 | ||||||
Liability under severance and purchase liabilities | 18 | 83 | ||||||
Liability under health and welfare plan | 675 | 608 | ||||||
Capital loss carryforwards | 264 | 261 | ||||||
Liability for pension plan | 5,434 | 7,307 | ||||||
Federal operating loss carryforwards | 99,853 | 77,172 | ||||||
State and local operating loss carryforwards | 13,931 | 11,540 | ||||||
Alternative minimum tax carryforwards | 890 | 890 | ||||||
Unearned income | 1,150 | 955 | ||||||
Network compensation | 1,162 | 1,366 | ||||||
Interest rate swap agreements | 2,474 | 9,598 | ||||||
Stock options | 693 | 507 | ||||||
Other | 440 | 247 | ||||||
Total deferred tax assets | 128,187 | 111,936 | ||||||
Valuation allowance for deferred tax assets | (6,462 | ) | (4,909 | ) | ||||
Net deferred tax assets | 121,725 | 107,027 | ||||||
Deferred tax liabilities, net of deferred tax assets | $ | 140,607 | $ | 142,145 | ||||
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Statutory federal rate applied to loss before income taxes | $ | (12,007 | ) | $ | (109,560 | ) | $ | (12,493 | ) | |||
State and local taxes, net of federal tax benefit | (906 | ) | (11,584 | ) | (1,476 | ) | ||||||
Change in valuation allowance | 1,553 | (306 | ) | 431 | ||||||||
Reserve for uncertain tax positions | (385 | ) | 525 | 1,006 | ||||||||
Goodwill impairment | — | 9,301 | — | |||||||||
Other items, net | 485 | 613 | (11 | ) | ||||||||
Income tax benefit as recorded | $ | (11,260 | ) | $ | (111,011 | ) | $ | (12,543 | ) | |||
Effective income tax rate | 32.8 | % | 35.5 | % | 35.1 | % |
F-26
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Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Balance at beginning of period | $ | 3,227 | $ | 2,949 | $ | 2,231 | ||||||
Change resulting from positions taken in prior periods: | ||||||||||||
Increase | 48 | 23 | 10 | |||||||||
Decrease | — | (153 | ) | (31 | ) | |||||||
Increase resulting from positions taken in current period | — | 744 | 926 | |||||||||
Decrease as a result of settlements with taxing authorities | — | (51 | ) | — | ||||||||
Reduction in benefit from lapse in statute of limitations | (447 | ) | (285 | ) | (187 | ) | ||||||
Balance at end of period | $ | 2,828 | $ | 3,227 | $ | 2,949 | ||||||
F-27
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December 31, | ||||||||
2009 | 2008 | |||||||
Change in projected benefit obligation: | ||||||||
Projected benefit obligation at beginning of year | $ | 37,998 | $ | 31,498 | ||||
Service cost | 3,248 | 2,917 | ||||||
Interest cost | 2,189 | 1,925 | ||||||
Actuarial (gains) losses | (3,201 | ) | 2,350 | |||||
Benefits paid | (717 | ) | (692 | ) | ||||
Projected benefit obligation at end of year | $ | 39,517 | $ | 37,998 | ||||
Change in plan assets: | ||||||||
Fair value of plan assets at beginning of year | $ | 20,901 | $ | 25,267 | ||||
Actual return on plan assets | 3,102 | (6,387 | ) | |||||
Company contributions | 3,430 | 2,713 | ||||||
Benefits paid | (717 | ) | (692 | ) | ||||
Fair value of plan assets at end of year | 26,716 | 20,901 | ||||||
Funded status of plan | $ | (12,801 | ) | $ | (17,097 | ) | ||
Amounts recognized in our balance sheets consist of: | ||||||||
Accrued benefit cost | $ | (4,721 | ) | $ | (3,094 | ) | ||
Accumulated other comprehensive income | (8,080 | ) | (14,003 | ) | ||||
Net liability recognized | $ | (12,801 | ) | $ | (17,097 | ) | ||
Year Ended December 31, | ||||||||
2009 | 2008 | |||||||
Weighted-average assumptions used to determine net periodic benefit cost for our active plan: | ||||||||
Discount rate | 5.79 | % | 6.10 | % | ||||
Expected long-term rate of return on plan assets | 7.00 | % | 7.00 | % | ||||
Estimated rate of increase in compensation levels | 5.00 | % | 5.00 | % |
F-28
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As of December 31, | ||||||||
2009 | 2008 | |||||||
Weighted-average assumptions used to determine benefit obligations: | ||||||||
Discount rate | 6.27 | % | 5.79 | % | ||||
Estimated rate of increase in compensation levels | 5.00 | % | 5.00 | % |
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Components of net periodic pension cost: | ||||||||||||
Service cost | $ | 3,248 | $ | 2,917 | $ | 2,974 | ||||||
Interest cost | 2,189 | 1,925 | 1,667 | |||||||||
Expected return on plan assets | (1,558 | ) | (1,763 | ) | (1,590 | ) | ||||||
Recognized net actuarial loss | 1,176 | 98 | 155 | |||||||||
Net periodic pension cost | $ | 5,055 | $ | 3,177 | $ | 3,206 | ||||||
Years | Amount | |||
2010 | $ | 1,028 | ||
2011 | 1,131 | |||
2012 | 1,360 | |||
2013 | 1,508 | |||
2014 | 1,617 | |||
2015-2019 | 11,032 |
As of December 31, | ||||||||
2009 | 2008 | |||||||
Asset category: | ||||||||
Insurance general account | 37 | % | 40 | % | ||||
Cash management accounts | 3 | % | 2 | % | ||||
Equity accounts | 54 | % | 53 | % | ||||
Fixed income account | 6 | % | 5 | % | ||||
Total | 100 | % | 100 | % | ||||
Target Range | ||||||||||||
Asset class: | ||||||||||||
Large cap equities | 23 | % | to | 91 | % | |||||||
Mid cap equities | 0 | % | to | 15 | % | |||||||
Small cap equities | 0 | % | to | 16 | % | |||||||
International equities | 5 | % | to | 25 | % | |||||||
Fixed income | 0 | % | to | 30 | % | |||||||
Cash | 0 | % | to | 20 | % |
F-29
Table of Contents
As of December 31, 2009 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Immediate participation guarantee contract | $ | — | $ | 9,925 | $ | — | $ | 9,925 | ||||||||
Common and collective trust fund | — | 16,792 | — | 16,792 | ||||||||||||
Total | $ | — | $ | 26,717 | $ | — | $ | 26,717 | ||||||||
As of December 31, 2008 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Immediate participation guarantee contract | $ | — | $ | 8,399 | $ | — | $ | 8,399 | ||||||||
Common and collective trust fund | — | 12,502 | — | 12,502 | ||||||||||||
Total | $ | — | $ | 20,901 | $ | — | $ | 20,901 | ||||||||
Year Ended December 31, | ||||||||||||||||||||||||
2009 | 2008 | 2007 | ||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||
Contributions to the Capital Accumulation Plan | ||||||||||||||||||||||||
Matching contributions | 351 | $ | 147 | 867 | $ | 1,707 | 176 | $ | 1,593 | |||||||||||||||
Voluntary contributions | — | $ | — | 84 | $ | 673 | 88 | $ | 648 |
F-30
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Syndicated | ||||||||||||||||
Operating | Television | |||||||||||||||
Year | Equipment | Lease | Programming | Total | ||||||||||||
2010 | $ | 832 | $ | 1,321 | $ | 4,502 | $ | 6,655 | ||||||||
2011 | — | 1,102 | 11,431 | 12,533 | ||||||||||||
2012 | — | 678 | 5,095 | 5,773 | ||||||||||||
2013 | — | 653 | 962 | 1,615 | ||||||||||||
2014 | — | 578 | 295 | 873 | ||||||||||||
Thereafter | — | 3,787 | 19 | 3,806 | ||||||||||||
Total | $ | 832 | $ | 8,119 | $ | 22,304 | $ | 31,255 | ||||||||
F-31
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Net Balance at | Net Balance at | |||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||
2008 | Adjustments | Impairment | Amortization | 2009 | ||||||||||||||||
Goodwill | $ | 170,522 | $ | — | $ | — | $ | — | $ | 170,522 | ||||||||||
Broadcast licenses | 818,981 | — | — | — | 818,981 | |||||||||||||||
Definite lived intangible assets | 1,893 | — | — | (577 | ) | 1,316 | ||||||||||||||
Total intangible assets net of accumulated amortization | $ | 991,396 | $ | — | $ | — | $ | (577 | ) | $ | 990,819 | |||||||||
Net Balance at | Net Balance at | |||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||
2007 | Adjustments | Impairment | Amortization | 2008 | ||||||||||||||||
Goodwill | 269,118 | $ | — | $ | (98,596 | ) | $ | — | $ | 170,522 | ||||||||||
Broadcast licenses | 1,059,066 | — | (240,085 | ) | — | 818,981 | ||||||||||||||
Definite lived intangible assets | 2,685 | — | — | (792 | ) | 1,893 | ||||||||||||||
Total intangible assets net of accumulated amortization | $ | 1,330,869 | $ | — | $ | (338,681 | ) | $ | (792 | ) | $ | 991,396 | ||||||||
As of | As of | |||||||||||
December 31, | December 31, | |||||||||||
2008 | Impairment | 2009 | ||||||||||
Goodwill, gross | $ | 269,118 | $ | — | $ | 269,118 | ||||||
Accumulated goodwill impairment | (98,596 | ) | — | (98,596 | ) | |||||||
Goodwill, net | $ | 170,522 | $ | — | $ | 170,522 | ||||||
As of | As of | |||||||||||
December 31, | December 31, | |||||||||||
2007 | Impairment | 2008 | ||||||||||
Goodwill, gross | $ | 269,118 | $ | — | $ | 269,118 | ||||||
Accumulated goodwill impairment | — | (98,596 | ) | (98,596 | ) | |||||||
Goodwill, net | $ | 269,118 | $ | (98,596 | ) | $ | 170,522 | |||||
As of December 31, 2009 | As of December 31, 2008 | |||||||||||||||||||||||
Accumulated | Accumulated | |||||||||||||||||||||||
Gross | Amortization | Net | Gross | Amortization | Net | |||||||||||||||||||
Intangible assets not currently subject to amortization: | ||||||||||||||||||||||||
Broadcast licenses | $ | 872,680 | $ | (53,699 | ) | $ | 818,981 | $ | 872,680 | $ | (53,699 | ) | $ | 818,981 | ||||||||||
Goodwill | 170,522 | — | 170,522 | 170,522 | — | 170,522 | ||||||||||||||||||
$ | 1,043,202 | $ | (53,699 | ) | $ | 989,503 | $ | 1,043,202 | $ | (53,699 | ) | $ | 989,503 | |||||||||||
Intangible assets subject to amortization: | ||||||||||||||||||||||||
Network affiliation agreements | $ | 1,264 | $ | (1,183 | ) | $ | 81 | $ | 1,264 | $ | (1,119 | ) | $ | 145 | ||||||||||
Other definite lived intangible assets | 13,484 | (12,249 | ) | 1,235 | 13,484 | (11,736 | ) | 1,748 | ||||||||||||||||
$ | 14,748 | $ | (13,432 | ) | $ | 1,316 | $ | 14,748 | $ | (12,855 | ) | $ | 1,893 | |||||||||||
Total intangibles | $ | 1,057,950 | $ | (67,131 | ) | $ | 990,819 | $ | 1,057,950 | $ | (66,554 | ) | $ | 991,396 | ||||||||||
F-32
Table of Contents
Fiscal Quarters | |||||||||||||||||||
First | Second | Third | Fourth | ||||||||||||||||
(In thousands, except for per share data) | |||||||||||||||||||
Year Ended December 31, 2009: | |||||||||||||||||||
Operating revenues | $ | 61,354 | $ | 65,057 | $ | 66,446 | $ | 77,517 | |||||||||||
Operating income | 4,766 | 8,998 | 10,630 | 18,685 | |||||||||||||||
Loss on early extinguishment of debt | (8,352 | ) | — | — | — | ||||||||||||||
Net loss | (8,920 | ) | (6,648 | ) | (5,520 | ) | (1,959 | ) | |||||||||||
Net loss available to common stockholders | (12,970 | ) | (10,699 | ) | (9,988 | ) | (6,509 | ) | |||||||||||
Basic net loss available to common stockholders per share | $ | (0.27 | ) | $ | (0.22 | ) | $ | (0.21 | ) | $ | (0.13 | ) | |||||||
Diluted net loss available to common stockholders per share | $ | (0.27 | ) | $ | (0.22 | ) | $ | (0.21 | ) | $ | (0.13 | ) | |||||||
Year Ended December 31, 2008: | |||||||||||||||||||
Operating revenues | $ | 70,999 | $ | 78,743 | $ | 82,631 | $ | 94,803 | |||||||||||
Impairment of goodwill and broadcast licenses | — | — | — | 338,681 | |||||||||||||||
Operating income | 9,281 | 18,738 | 20,511 | (307,425 | ) | ||||||||||||||
Net (loss) income | (3,850 | ) | 3,215 | 4,644 | (206,025 | ) | |||||||||||||
Net (loss) income available to common stockholders | (3,850 | ) | 3,090 | 1,477 | (209,326 | ) | |||||||||||||
Basic net (loss) income available to common stockholders per share | $ | (0.08 | ) | $ | 0.06 | $ | 0.03 | $ | (4.32 | ) | |||||||||
Diluted net (loss) income available to common stockholders per share | $ | (0.08 | ) | $ | 0.06 | $ | 0.03 | $ | (4.32 | ) |
F-33
Table of Contents
As Amended and | ||||||
As Amended and | After Giving Effect | |||||
Prior to Potential | to a Potential | |||||
Issuance of | Issuance of | |||||
Replacement Debt | Replacement Debt | |||||
Prior to Amendment | and Related | and Related | ||||
on March 31, | Repayment of Term | Repayment of Term | ||||
Description | 2010 | Loan | Loan | |||
Annual interest rate on outstanding term loan balance | LIBOR plus 3.50% | Same | Same | |||
or BASE plus 2.50% | ||||||
Annual interest rate on outstanding revolving loan balance | LIBOR plus 3.50% | Same | Same | |||
or BASE plus 2.50% | ||||||
Annual facility fee rate | 3.00% with | 3.00% with | 1.25% with | |||
a potential for | a potential for | a potential for | ||||
reduction in | reduction in | reduction in | ||||
future periods. | future periods. | future periods. | ||||
Annual incentive fee rate | 0.00% | 2.00% | 0.00% | |||
Annual commitment fee on undrawn revolving loan balance | 0.50% | Same | Same | |||
Revolving loan commitment | $50 million | $40 million | $40 million | |||
Maximum total net leverage ratio at: | ||||||
March 31, 2010 through June 29, 2010 | 7.00x | 9.00x | Replaced with | |||
June 30, 2010 through | a first lien | |||||
September 29, 2010 | 6.50x | 9.50x | leverage test | |||
September 30, 2010 through | ||||||
March 30, 2011 | 6.50x | 9.75x | as described above. | |||
March 31, 2011 and thereafter | 6.50x | 6.50x | ||||
Minimum fixed charge coverage ratio | None | Same | 0.90x to 1.00x | |||
Maximum cash balance that can be deducted from total debt | ||||||
to calculate net debt in the total net leverage ratio (or first lien leverage test, as applicable) | $10.0 million | Same | $15.0 million |
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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands)
March 31, | December 31, | |||||||
2010 | 2009 | |||||||
Assets: | ||||||||
Current assets: | ||||||||
Cash | $ | 13,664 | $ | 16,000 | ||||
Trade accounts receivable, less allowance for doubtful accounts of $847 and $1,092, respectively | 52,580 | 57,179 | ||||||
Current portion of program broadcast rights, net | 6,781 | 10,220 | ||||||
Deferred tax asset | 1,597 | 1,597 | ||||||
Prepaid and other current assets | 3,429 | 1,788 | ||||||
Total current assets | 78,051 | 86,784 | ||||||
Property and equipment, net | 143,196 | 148,092 | ||||||
Deferred loan costs, net | 5,631 | 1,619 | ||||||
Broadcast licenses | 818,981 | 818,981 | ||||||
Goodwill | 170,522 | 170,522 | ||||||
Other intangible assets, net | 1,194 | 1,316 | ||||||
Investment in broadcasting company | 13,599 | 13,599 | ||||||
Other | 4,641 | 4,826 | ||||||
Total assets | $ | 1,235,815 | $ | 1,245,739 | ||||
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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands)
March 31, | December 31, | |||||||
2010 | 2009 | |||||||
Liabilities and stockholders’ equity: | ||||||||
Current liabilities: | ||||||||
Trade accounts payable | $ | 5,666 | $ | 6,047 | ||||
Employee compensation and benefits | 9,553 | 9,675 | ||||||
Accrued interest | 12,664 | 13,531 | ||||||
Other accrued expenses | 4,193 | 4,814 | ||||||
Interest rate hedge derivatives | 360 | 6,344 | ||||||
Federal and state income taxes | 4,371 | 4,206 | ||||||
Current portion of program broadcast obligations | 11,883 | 15,271 | ||||||
Acquisition related liabilities | 863 | 863 | ||||||
Deferred revenue | 6,255 | 6,241 | ||||||
Current portion of long-term debt | 8,080 | 8,080 | ||||||
Total current liabilities | 63,888 | 75,072 | ||||||
Long-term debt, less current portion | 781,709 | 783,729 | ||||||
Long-term accrued facility fee | 24,245 | 18,307 | ||||||
Program broadcast obligations, less current portion | 1,391 | 1,531 | ||||||
Deferred income taxes | 141,079 | 142,204 | ||||||
Long-term deferred revenue | 2,578 | 2,638 | ||||||
Long-term accrued dividends | 23,167 | 18,917 | ||||||
Accrued pension costs | 13,761 | 13,969 | ||||||
Other | 2,170 | 2,366 | ||||||
Total liabilities | 1,053,988 | 1,058,733 | ||||||
Commitments and contingencies (Note 8) | ||||||||
Preferred stock, no par value; cumulative; redeemable; designated 1.00 shares, issued and outstanding 1.00 shares ($100,000 aggregate liquidation value) | 93,687 | 93,386 | ||||||
Stockholders’ equity: | ||||||||
Common stock, no par value; authorized 100,000 shares, issued 47,534 shares and 47,530 shares, respectively | 453,987 | 453,824 | ||||||
Class A common stock, no par value; authorized 15,000 shares, issued 7,332 shares | 15,321 | 15,321 | ||||||
Accumulated deficit | (312,992 | ) | (303,698 | ) | ||||
Accumulated other comprehensive loss, net of income tax | (5,663 | ) | (9,314 | ) | ||||
150,653 | 156,133 | |||||||
Treasury stock at cost, common stock, 4,655 shares | (40,115 | ) | (40,115 | ) | ||||
Treasury stock at cost, Class A common stock, 1,579 shares | (22,398 | ) | (22,398 | ) | ||||
Total stockholders’ equity | 88,140 | 93,620 | ||||||
Total liabilities and stockholders’ equity | $ | 1,235,815 | $ | 1,245,739 | ||||
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in thousands, except for per share data)
Three Months Ended | ||||||||
March 31, | ||||||||
2010 | 2009 | |||||||
Revenues (less agency commissions) | $ | 70,482 | $ | 61,354 | ||||
Operating expenses before depreciation, amortization and gain on disposal of assets, net: | ||||||||
Broadcast | 47,567 | 45,654 | ||||||
Corporate and administrative | 2,922 | 4,046 | ||||||
Depreciation | 7,975 | 8,261 | ||||||
Amortization of intangible assets | 122 | 149 | ||||||
Gain on disposal of assets, net | (44 | ) | (1,522 | ) | ||||
58,542 | 56,588 | |||||||
Operating income | 11,940 | 4,766 | ||||||
Other income (expense): | ||||||||
Miscellaneous income, net | 39 | 12 | ||||||
Interest expense | (19,611 | ) | (10,113 | ) | ||||
Loss from early extinguishment of debt | (349 | ) | (8,352 | ) | ||||
Loss before income taxes | (7,981 | ) | (13,687 | ) | ||||
Income tax benefit | (3,238 | ) | (4,767 | ) | ||||
Net loss | (4,743 | ) | (8,920 | ) | ||||
Preferred dividends (includes accretion of issuance cost of $301 and $301, respectively) | 4,551 | 4,051 | ||||||
Net loss available to common stockholders | $ | (9,294 | ) | $ | (12,971 | ) | ||
Basic and diluted per share information: | ||||||||
Net loss available to common stockholders | $ | (0.19 | ) | $ | (0.27 | ) | ||
Weighted average shares outstanding | 48,565 | 48,489 | ||||||
Dividends declared per common share | $ | — | $ | — | ||||
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CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME (Unaudited)
(in thousands, except for number of shares)
Accumulated | ||||||||||||||||||||||||||||||||||||||||||||
Class A | Class A | Common | Other | |||||||||||||||||||||||||||||||||||||||||
Common Stock | Common Stock | Accumulated | Treasury Stock | Treasury Stock | Comprehensive | |||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Deficit | Shares | Amount | Shares | Amount | Loss | Total | ||||||||||||||||||||||||||||||||||
Balance at December 31, 2009 | 7,331,574 | $ | 15,321 | 47,529,502 | $ | 453,824 | $ | (303,698 | ) | (1,578,554 | ) | $ | (22,398 | ) | (4,654,750 | ) | $ | (40,115 | ) | $ | (9,314 | ) | $ | 93,620 | ||||||||||||||||||||
Net loss | — | — | — | — | (4,743 | ) | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Gain on derivatives, net of income tax | — | — | — | — | — | — | — | — | — | 3,651 | ||||||||||||||||||||||||||||||||||
Comprehensive loss | (1,092 | ) | ||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends | — | — | — | — | (4,551 | ) | — | — | — | — | — | (4,551 | ) | |||||||||||||||||||||||||||||||
Issuance of common stock: 401(k) plan | — | — | 4,805 | 8 | — | — | — | — | — | — | 8 | |||||||||||||||||||||||||||||||||
Share-based compensation | 155 | 155 | ||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2010 | 7,331,574 | $ | 15,321 | 47,534,307 | $ | 453,987 | $ | (312,992 | ) | (1,578,554 | ) | $ | (22,398 | ) | (4,654,750 | ) | $ | (40,115 | ) | $ | (5,663 | ) | $ | 88,140 | ||||||||||||||||||||
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in thousands)
Three Months Ended | ||||||||
March 31, | ||||||||
2010 | 2009 | |||||||
Operating activities | ||||||||
Net loss | $ | (4,743 | ) | $ | (8,920 | ) | ||
Adjustments to reconcile net loss to net cash | ||||||||
provided by (used in) operating activities | ||||||||
Depreciation | 7,975 | 8,261 | ||||||
Amortization of intangible assets | 122 | 149 | ||||||
Amortization of deferred loan costs | 81 | 119 | ||||||
Amortization of restricted stock awards | 58 | 61 | ||||||
Amortization of stock option awards | 97 | 292 | ||||||
Write-off loan acquisition costs from early extinguishment of debt | 349 | 8,352 | ||||||
Accrual of long-term facility fee | 5,938 | — | ||||||
Amortization of program broadcast rights | 3,853 | 3,770 | ||||||
Payments on program broadcast obligations | (3,875 | ) | (3,856 | ) | ||||
Common stock contributed to 401(k) plan | 7 | 127 | ||||||
Deferred income taxes | (3,458 | ) | (4,718 | ) | ||||
Gain on disposal of assets, net | (44 | ) | (1,522 | ) | ||||
Pension expense net of contributions | (205 | ) | 703 | |||||
Other | (64 | ) | (107 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Receivables and other current assets | 3,084 | 5,082 | ||||||
Accounts payable and other current liabilities | (1,322 | ) | (3,730 | ) | ||||
Accrued interest | (867 | ) | (5,359 | ) | ||||
Net cash provided by (used in) operating activities | 6,986 | (1,296 | ) | |||||
Investing activities | ||||||||
Purchases of property and equipment | (2,888 | ) | (5,183 | ) | ||||
Proceeds from asset sales | 11 | 9 | ||||||
Equipment transactions related to spectrum reallocation, net | (106 | ) | (48 | ) | ||||
Payments on acquisition related liabilities | (162 | ) | (177 | ) | ||||
Other | (40 | ) | (70 | ) | ||||
Net cash used in investing activities | (3,185 | ) | (5,469 | ) | ||||
Financing activities | ||||||||
Repayments of borrowings on long-term debt | (2,020 | ) | (2,021 | ) | ||||
Deferred loan costs | (4,117 | ) | (7,006 | ) | ||||
Net cash used in financing activities | (6,137 | ) | (9,027 | ) | ||||
Net decrease in cash | (2,336 | ) | (15,792 | ) | ||||
Cash at beginning of period | 16,000 | 30,649 | ||||||
Cash at end of period | $ | 13,664 | $ | 14,857 | ||||
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2010 | 2009 | |||||||
Weighted-average shares outstanding-basic | 48,565 | 48,489 | ||||||
Stock options and restricted stock | — | — | ||||||
Weighted-average shares outstanding-diluted | 48,565 | 48,489 | ||||||
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Three Months Ended | ||||||||
March 31, | ||||||||
2010 | 2009 | |||||||
Potentially dilutive common shares outstanding at end of period: | ||||||||
Employee stock options | 1,383 | 1,939 | ||||||
Unvested restricted stock | 66 | 100 | ||||||
Total | 1,449 | 2,039 | ||||||
March 31, | December 31, | |||||||
2010 | 2009 | |||||||
Accumulated balances of items included in accumulated other comprehensive loss: | ||||||||
Loss on derivatives, net of income tax | $ | (219 | ) | $ | (3,870 | ) | ||
Pension liability adjustments, net of income tax | (5,444 | ) | (5,444 | ) | ||||
Accumulated other comprehensive loss | $ | (5,663 | ) | $ | (9,314 | ) | ||
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March 31, | December 31, | |||||||
2010 | 2009 | |||||||
Property and equipment: | ||||||||
Land | $ | 23,052 | $ | 23,046 | ||||
Buildings and improvements | 51,599 | 51,606 | ||||||
Equipment | 293,337 | 291,682 | ||||||
367,988 | 366,334 | |||||||
Accumulated depreciation | (224,792 | ) | (218,242 | ) | ||||
Total property and equipment, net | $ | 143,196 | $ | 148,092 | ||||
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March 31, | December 31, | |||||||
2010 | 2009 | |||||||
Long-term debt: | ||||||||
Senior credit facility — current portion | $ | 8,080 | $ | 8,080 | ||||
Senior credit facility — long-term portion | 781,709 | 783,729 | ||||||
Total long-term debt including current portion | 789,789 | 791,809 | ||||||
Long-term accrued facility fee | 24,245 | 18,307 | ||||||
Total long-term debt and accrued facility fee | $ | 814,034 | $ | 810,116 | ||||
Borrowing availability under our senior credit facility | $ | 40,000 | $ | 31,681 | ||||
Leverage ratio as defined in our senior credit facility: | ||||||||
Actual | 8.43 | 8.42 | ||||||
Maximum allowed | 9.00 | 8.75 |
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As Amended and | As Amended and | |||||||||||
Prior to the | After Giving Effect to | |||||||||||
Issuance of | the Issuance of | |||||||||||
Replacement | Replacement Debt | |||||||||||
Debt and Related | and Related | |||||||||||
Prior to Amendment | Repayment of | Repayment of | ||||||||||
Description | on March 31, 2010 | Term Loan | Term Loan | |||||||||
Annual interest rate on outstanding | ||||||||||||
term loan balance | LIBOR plus 3.50% | Same | Same | |||||||||
or BASE plus 2.50% | ||||||||||||
Annual interest rate on outstanding | ||||||||||||
revolving loan balance | LIBOR plus 3.50% | Same | Same | |||||||||
or BASE plus 2.50% | ||||||||||||
Annual facility fee rate | 3.00% with | 3.00% with | 1.25% with | |||||||||
a potential for | a potential for | a potential for | ||||||||||
reduction in | reduction in | reduction in | ||||||||||
future periods. | future periods. | future periods. | ||||||||||
Annual incentive fee rate | None | 2.00 | % | None | ||||||||
Annual commitment fee on undrawn | ||||||||||||
revolving loan balance | 0.50 | % | Same | Same | ||||||||
Revolving loan commitment | $50 million | $40 million | $40 million | |||||||||
Maximum total net leverage ratio at: | ||||||||||||
March 31, 2010 through | ||||||||||||
June 29, 2010 | 7.00x | 9.00x | Replaced with | |||||||||
June 30, 2010 through | a first lien | |||||||||||
September 29, 2010 | 6.50x | 9.50x | leverage test | |||||||||
September 30, 2010 through | as described above. | |||||||||||
March 30, 2011 | 6.50x | 9.75x | ||||||||||
March 31, 2011 and thereafter | 6.50x | 6.50x | ||||||||||
Minimum fixed charge coverage ratio | None | Same | 0.90x to 1.00x | |||||||||
Maximum cash balance that can be deducted from total debt to calculate net debt in the total net leverage ratio (or first lien leverage test, as applicable) | $10.0 million | Same | $15.0 million |
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• | managing current and forecasted interest rate risk while maintaining financial flexibility and solvency; | ||
• | proactively managing our cost of capital to ensure that we can effectively manage operations and execute our business strategy, thereby maintaining a competitive advantage and enhancing shareholder value; and | ||
• | complying with applicable covenant requirements and restrictions. |
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As of March 31, 2010 | As of December 31, 2009 | |||||||||||||||
Balance Sheet | Fair | Balance Sheet | Fair | |||||||||||||
Location | Value | Location | Value | |||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||
Interest rate swap agreements | Current liabilities | $ | 360 | Current liabilities | $ | 6,344 |
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Cash Flow Hedging | ||||||||
Relationships for the Three | ||||||||
Months Ended March 31, | ||||||||
2010 | 2009 | |||||||
Interest rate swap agreements: | ||||||||
Liability at beginning of period | $ | (6,344 | ) | $ | (24,611 | ) | ||
Effective portion of gains recognized in other comprehensive loss | 12,093 | 5,777 | ||||||
Effective portion of losses recorded in accumulated other comprehensive loss and reclassified into interest expense | (6,109 | ) | (1,617 | ) | ||||
Liability at end of period | $ | (360 | ) | $ | (20,451 | ) | ||
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As of March 31, 2010 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Liabilities: | ||||||||||||||||
Interest rate swap agreements | $ | — | $ | 360 | $ | — | $ | 360 |
As of December 31, 2009 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Liabilities: | ||||||||||||||||
Interest rate swap agreements | $ | — | $ | 6,344 | $ | — | $ | 6,344 |
Impairment Loss for the | ||||||||||||||||||||||||
As of March 31, 2010 | Three Months Ended March 31, | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | 2010 | 2009 | |||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Property and equipment, net | $ | — | $ | — | $ | 143,196 | $ | 143,196 | $ | — | $ | — | ||||||||||||
Program broadcast rights | — | — | 7,763 | 7,763 | 69 | 52 | ||||||||||||||||||
Investment in broadcasting company | — | — | 13,599 | 13,599 | — | — | ||||||||||||||||||
Broadcast licenses | — | — | 818,981 | 818,981 | — | — | ||||||||||||||||||
Goodwill | — | — | 170,522 | 170,522 | — | — | ||||||||||||||||||
Other intangible assets, net | — | — | 1,194 | 1,194 | — | — | ||||||||||||||||||
Total | $ | — | $ | — | $ | 1,155,255 | $ | 1,155,255 | $ | 69 | $ | 52 | ||||||||||||
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As of December 31, 2009 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Property and equipment, net | $ | — | $ | — | $ | 148,092 | $ | 148,092 | ||||||||
Program broadcast rights | — | — | 11,265 | 11,265 | ||||||||||||
Investment in broadcasting company | — | — | 13,599 | 13,599 | ||||||||||||
Broadcast licenses | — | — | 818,981 | 818,981 | ||||||||||||
Goodwill | — | — | 170,522 | 170,522 | ||||||||||||
Other intangible assets, net | — | — | 1,316 | 1,316 | ||||||||||||
Total | $ | — | $ | — | $ | 1,163,775 | $ | 1,163,775 | ||||||||
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Three Months Ended March 31, | ||||||||
2010 | 2009 | |||||||
Service cost | $ | 884 | $ | 776 | ||||
Interest cost | 640 | 550 | ||||||
Expected return on plan assets | (478 | ) | (501 | ) | ||||
Loss amortization | 249 | 103 | ||||||
Net periodic benefit cost | $ | 1,295 | $ | 928 | ||||
Three Months Ended March 31, | ||||||||
2010 | 2009 | |||||||
Stock-based compensation expense, gross | $ | 155 | $ | 353 | ||||
Income tax benefit at our statutory rate associated with stock-based compensation | (60 | ) | (124 | ) | ||||
Stock-based compensation expense, net | $ | 95 | $ | 229 | ||||
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Three Months Ended | ||||||||||||||||
March 31, 2010 | March 31, 2009 | |||||||||||||||
Weighted- | Weighted- | |||||||||||||||
Average | Average | |||||||||||||||
Options | Exercise Price | Options | Exercise Price | |||||||||||||
Common stock: | ||||||||||||||||
Stock options outstanding — beginning of period | 1,476 | $ | 8.28 | 1,949 | $ | 8.31 | ||||||||||
Options granted | — | $ | — | — | $ | — | ||||||||||
Options exercised | — | $ | — | — | $ | — | ||||||||||
Options expired | (34 | ) | $ | 12.78 | (2 | ) | $ | 12.41 | ||||||||
Options forfeited | (59 | ) | $ | 11.38 | (8 | ) | $ | 7.82 | ||||||||
Stock options outstanding — end of period | 1,383 | $ | 8.04 | 1,939 | $ | 8.31 | ||||||||||
Exercisable at end of period | 1,338 | $ | 8.20 | 655 | $ | 9.91 | ||||||||||
Weighted-average fair value of options granted during the period | $ | — | $ | — |
Weighted- | ||||||||
Number of | Average | |||||||
Shares | Fair Value | |||||||
Restricted Stock: | ||||||||
Non-vested common restricted shares, December 31, 2009 | 66 | $ | 6.64 | |||||
Granted | — | $ | — | |||||
Vested | — | $ | — | |||||
Non-vested common restricted shares, March 31, 2010 | 66 | $ | 6.64 | |||||
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Three Months Ended March 31, | ||||||||
2010 | 2009 | |||||||
Statutory federal income tax rate | 35.0 | % | 35.0 | % | ||||
State income taxes | 6.0 | % | 0.9 | % | ||||
Reserve for uncertain tax positions | (4.2 | )% | 1.0 | % | ||||
Adjustments to valuation allowance of deferred tax assets | 2.2 | % | (1.6 | )% | ||||
Other | 1.6 | % | (0.5 | )% | ||||
Effective income tax rate | 40.6 | % | 34.8 | % | ||||
Income tax benefit | $ | (3,238 | ) | $ | (4,767 | ) |
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Aggregate Principal Amount of Newly
Issued 101/2% Senior Secured Second Lien Notes due 2015
Restricted 101/2% Senior Secured Second Lien Notes due 2015
Issued in April 2010
Table of Contents
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II-2
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3.1 | Restated Articles of Incorporation of Gray Television, Inc. (incorporated by reference to Exhibit 3.1 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2009)** |
II-3
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3.2 | Bylaws of Gray Television, Inc. (incorporated by reference to Exhibit 3.2 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2009)** | |
3.3 | Articles of Incorporation of WVLT-TV, Inc., as amended to date* | |
3.4 | Bylaws of WVLT-TV, Inc., as amended to date * | |
3.5 | Certificate of Incorporation of Gray Television Group, Inc., as amended to date * | |
3.6 | Bylaws of Gray Television Group, Inc., as amended to date * | |
3.7 | Articles of Organization of Gray Television Licensee, LLC* | |
3.8 | Limited Liability Company Agreement of Gray Television Licensee, LLC* | |
4.1 | Indenture, dated April 29, 2010, by and among Gray Television, Inc., the guarantors signatory thereto and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed April 30, 2010)** | |
4.2 | Registration Rights Agreement, dated April 29, 2010, by and among Gray Television, Inc., the guarantors party thereto, Banc of America Securities LLC, Wells Fargo Securities, LLC and Citadel Securities LLC (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed April 30, 2010)** | |
4.3 | Form of Exchange Note (included in Exhibit 4.1)** | |
5.1 | Opinion of Jones Day regarding validity* | |
5.2 | Opinion of Woodburn and Wedge regarding validity* | |
10.1 | 2002 Long Term Incentive Plan (incorporated by reference to Appendix C to our definitive Proxy Statement on Schedule 14A filed August 15, 2002)** | |
10.2 | Director Restricted Stock Plan (incorporated by reference to Exhibit 10.12 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2002)** | |
10.3 | Credit Agreement dated as of March 19, 2007 by and among Gray Television, Inc., as Borrower; the Lenders Referred to Therein, as Lenders; Wachovia Bank, National Association, as Administrative Agent for the Lenders; Bank of America, N. A., as Syndication Agent; and Goldman Sachs Credit Partners L.P., Deutsche Bank Trust Company Americas and Bank of Scotland, each as a Documentation Agent; Wachovia Capital Markets, LLC, as Sole Lead Arranger; Wachovia Capital Markets, LLC, Banc of America Securities LLC and Goldman Sachs Credit Partners L.P. as Joint Bookrunners (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007)** | |
10.4 | Collateral Agreement dated as of March 19, 2007 by and among Gray Television, Inc. and certain of its Subsidiaries as Grantors, in favor of Wachovia Bank, National Association, as Administrative Agent (incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007)** | |
10.5 | Guaranty Agreement dated as of March 19, 2007 by and among certain Subsidiaries of Gray Television, Inc., as Guarantors, in favor of Wachovia Bank, National Association, as Administrative Agent (incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007)** | |
10.6 | 2007 Long Term Incentive Plan (incorporated by reference to Appendix A to our definitive Proxy Statement on Schedule 14A filed April 3, 2007)** |
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10.7 | Consulting Agreement dated as of December 23, 2008, by and between Gray Television, Inc. and J. Mack Robinson (incorporated by reference to Exhibit 10.9 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2008)** | |
10.8 | First Amendment to the Credit Agreement by and among Gray Television, Inc.; certain subsidiaries thereof; the Lenders party thereto pursuant to an authorization; and Wachovia Bank, National Association, as administrative agent, dated as of March 31, 2009 (incorporated by reference to Exhibit 10.10 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2008)** | |
10.9 | Second Amendment to the Credit Agreement by and among Gray Television, Inc., certain subsidiaries thereof, the Lenders party thereto and Wells Fargo Bank, N.A., successor-by-merger to Wachovia Bank, National Association, as administrative agent, dated as of March 31, 2010 (incorporated by reference to Exhibit 99.1 to our Current Report on Form 8-K filed April 12, 2010)** | |
12.1 | Statement regarding computation of earnings to fixed charges* | |
21.1 | Subsidiaries of the Registrant (incorporated by reference to Exhibit 21.1 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2009)** | |
23.1 | Consent of Jones Day (included in Exhibit 5.1)* | |
23.2 | Consent of McGladrey & Pullen, LLP* | |
23.3 | Consent of Woodburn and Wedge (included in Exhibit 5.2)* | |
24.1 | Powers of Attorney for Gray Television, Inc. (included in the signature page attached hereto)* | |
24.2 | Powers of Attorney for WVLT-TV, Inc. (included in the signature page attached hereto)* | |
24.3 | Powers of Attorney for Gray Television Group, Inc. (included in the signature page attached hereto)* | |
24.4 | Powers of Attorney for Gray Television Licensee, LLC (included in the signature page attached hereto)* | |
25.1 | Statement of Eligibility of the Trustee* | |
99.1 | Form of Letter of Transmittal* | |
99.2 | Form of Notice of Guaranteed Delivery* | |
99.3 | Form of Letter to DTC Participants* | |
99.4 | Form of Letter to Clients* |
* | Filed herewith. | |
** | Previously filed. |
II-5
Table of Contents
II-6
Table of Contents
Gray Television, Inc. | ||||
By: | /s/ James C. Ryan | |||
Name: | James C. Ryan | |||
Title: | Senior Vice President & Chief Financial Officer | |||
Name | Title | |||||
/s/ Hilton H. Howell, Jr. | Vice-Chairman and Chief Executive Officer | |||||
(Hilton H. Howell, Jr.) | (Principal Executive Officer) | |||||
/s/ James C. Ryan | Senior Vice President & Chief Financial Officer | |||||
(James C. Ryan) | (Principal Financial Officer) | |||||
/s/ Jackson S. Cowart, IV | Chief Accounting Officer & Assistant Secretary | |||||
(Jackson S. Cowart, IV) | (Principal Accounting Officer) | |||||
/s/ William E. Mayher, III | Chairman of the Board | |||||
(William E. Mayher, III) | ||||||
/s/ J. Mack Robinson | Director | |||||
(J. Mack Robinson) | ||||||
/s/ Richard L. Boger | Director | |||||
(Richard L. Boger) | ||||||
/s/ Ray M. Deaver | Director | |||||
(Ray M. Deaver) | ||||||
/s/ T. L. Elder | Director | |||||
(T. L. Elder) | ||||||
/s/ Zell B. Miller | Director | |||||
(Zell B. Miller) |
Table of Contents
Name | Title | |||||
/s/ Howell W. Newton | Director | |||||
/s/ Hugh E. Norton | Director | |||||
(Hugh E. Norton) | ||||||
/s/ Robert S. Prather, Jr. | Director | |||||
(Robert S. Prather, Jr.) | ||||||
/s/ Harriett J. Robinson | Director | |||||
(Harriett J. Robinson) | ||||||
/s/ Hilton H. Howell, Jr. | Director | |||||
(Hilton H. Howell, Jr.) |
Table of Contents
WVLT-TV, Inc. | ||||
By: | /s/ James C. Ryan | |||
Name: | James C. Ryan | |||
Title: | Vice President & Chief Financial Officer | |||
Name | Title | |||||
/s/ Hilton H. Howell, Jr. | Chairman of the Board (Principal Executive Officer) | |||||
/s/ James C. Ryan | Vice President & Chief Financial Officer | |||||
(James C. Ryan) | (Principal Financial Officer) | |||||
/s/ Jackson S. Cowart, IV | Chief Accounting Officer & Assistant Secretary | |||||
(Jackson S. Cowart, IV) | (Principal Accounting Officer) | |||||
/s/ Hilton H. Howell, Jr. | Director | |||||
(Hilton H. Howell, Jr.) | ||||||
/s/ Robert S. Prather, Jr. | Director | |||||
(Robert S. Prather, Jr.) |
Table of Contents
Gray Television Group, Inc. | ||||
By: | /s/ James C. Ryan | |||
Name: | James C. Ryan | |||
Title: | Senior Vice President, Assistant Secretary & Treasurer | |||
Name | Title | |||||
/s/ Hilton H. Howell, Jr. | Chairman of the Board (Principal Executive Officer) | |||||
/s/ James C. Ryan | Senior Vice President, Assistant Secretary & Treasurer (Principal Financial Officer) | |||||
/s/ Jackson S. Cowart, IV (Jackson S. Cowart, IV) | Chief Accounting Officer & Assistant Secretary | |||||
(Principal Accounting Officer) | ||||||
/s/ Hilton H. Howell, Jr. | Director | |||||
(Hilton H. Howell, Jr.) | ||||||
/s/ Robert S. Prather, Jr. | Director | |||||
(Robert S. Prather, Jr.) |
Table of Contents
Gray Television Licensee, LLC | ||||
By: | /s/ James C. Ryan | |||
Name: | James C. Ryan | |||
Title: | Treasurer | |||
Name | Title | |||||
/s/ Hilton H. Howell, Jr. | Chairman of the Board & President | |||||
(Hilton H. Howell, Jr.) | (Principal Executive Officer) | |||||
/s/ James C. Ryan | Treasurer | |||||
(James C. Ryan) | (Principal Financial Officer and Principal Accounting Officer) | |||||
/s/ Hilton H. Howell, Jr. | Director | |||||
(Hilton H. Howell, Jr.) | ||||||
/s/ Robert Beizer | Director | |||||
(Robert Beizer) | ||||||
/s/ Kristine Eppes | Director | |||||
(Kristine Eppes) |