2008 | 2007 | 2006 | 2005(1) | 2004(1) | ||||||||||||||||
OPERATING RESULTS FOR YEAR ENDED DECEMBER 31: | ||||||||||||||||||||
Revenue | $ | 404,416 | $ | 451,384 | $ | 512,085 | $ | 557,830 | $ | 562,246 | ||||||||||
Operating and Corporate Costs, Excluding Depreciation and Amortization, Goodwill Impairment and Special Changes | 373,934 | 363,611 | 409,814 | 393,026 | 392,693 | |||||||||||||||
Goodwill Impairment | 430,126 | — | 515,916 | — | — | |||||||||||||||
Depreciation and Amortization | 11,052 | 19,840 | 20,756 | 20,826 | 18,429 | |||||||||||||||
Restructuring Charges | 14,100 | — | — | — | — | |||||||||||||||
Special Charges | 13,245 | 4,626 | 1,579 | — | — | |||||||||||||||
Operating (Loss) Income | (438,041 | ) | 63,307 | (435,980 | ) | 143,978 | 151,124 | |||||||||||||
Net (Loss) Income | (427,563 | ) | 24,368 | (469,453 | ) | 77,886 | 86,955 | |||||||||||||
NET (LOSS) INCOME attributable to Common Stockholders | (430,644 | ) | 24,363 | (469,528 | ) | 77,816 | 86,955 | |||||||||||||
(Loss) Income Per Basic Share (2) | ||||||||||||||||||||
Common stock | $ | (878.73 | ) | $ | 56.59 | $ | (1,091.76 | ) | $ | 171.56 | $ | 179.80 | ||||||||
Class B stock | $ | — | $ | 3.20 | $ | 51.20 | $ | 48.00 | $ | — | ||||||||||
(Loss) Income Per Diluted Share (2) | ||||||||||||||||||||
Common stock | $ | (878.73 | ) | $ | 56.38 | $ | (1,091.76 | ) | $ | 170.05 | $ | 175.65 | ||||||||
Class B stock | $ | — | $ | 3.20 | $ | 51.20 | $ | 48.00 | $ | — | ||||||||||
Dividends Declared (2) | ||||||||||||||||||||
Common stock | $ | — | $ | 3.85 | $ | 64.10 | $ | 59.44 | $ | — | ||||||||||
Class B stock | $ | — | $ | 3.20 | $ | 51.20 | $ | 48.00 | $ | — | ||||||||||
BALANCE SHEET DATA AT DECEMBER 31: | ||||||||||||||||||||
Current Assets | $ | 119,468 | $ | 138,154 | $ | 149,222 | $ | 172,245 | $ | 174,346 | ||||||||||
Working Capital / (Deficit) (3) | (208,034 | ) | 47,294 | 29,313 | 72,094 | 93,005 | ||||||||||||||
Total Assets | 205,088 | 669,757 | 696,701 | 1,239,646 | 1,262,495 | |||||||||||||||
Long-Term Debt (3) | — | 345,244 | 366,860 | 427,514 | 359,439 | |||||||||||||||
Total Shareholders’ Equity (Deficit) | (203,145 | ) | 227,631 | 202,931 | 704,029 | 800,709 |
(1) | Effective January 1, 2006, we adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 123 (Revised 2004), “Share Based Payment” (“SFAS 123R”) utilizing the modified retrospective transition alternative. Accordingly, results for years prior to 2006 have been restated to reflect stock-based compensation expense in accordance with SFAS 123R. | |
(2) | No cash dividend was paid on our common stock or Class B stock in 2004 or 2008. The payment of dividends is restricted by the terms of our outstanding indebtedness, and we do not plan on paying dividends for the foreseeable future. On August 3, 2009, a 200:1 reverse stock split was declared and effective. All per share amounts have been adjusted for this split (see Note 1 to the Annual Consolidated Financial Statements). | |
(3) | On November 30, 2008, we failed to make the interest payment on our previously outstanding senior notes which constituted an event of default under the then existing senior notes. Accordingly, $249,053 of debt previously considered long-term was reclassified as short-term debt, which resulted in a working capital deficit of $208,034 on December 31, 2008. |
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations (in thousands except for share and per share amounts) |
2
3
2008 | 2007 | 2006 | ||||||||||||||||||||||
$ | % of Total | $ | % of Total | $ | % of Total | |||||||||||||||||||
Metro | $ | 194,884 | 48 | % | $ | 232,446 | 51 | % | $ | 265,768 | 52 | % | ||||||||||||
Network | 209,532 | 52 | % | 218,938 | 49 | % | 246,317 | 48 | % | |||||||||||||||
Total (1) | $ | 404,416 | 100 | % | $ | 451,384 | 100 | % | $ | 512,085 | 100 | % | ||||||||||||
(1) | As described above, we currently aggregate revenue data based on the operating segment. A number of advertisers purchase both local/regional and national commercial airtime in both segments. Our objective is to optimize total revenue from those advertisers. |
4
2008 | 2007 | 2006 | ||||||||||||||||||||||
$ | % of Total | $ | % of Total | $ | % of Total | |||||||||||||||||||
Programming, production and distribution expenses | $ | 293,740 | 81 | % | $ | 274,645 | 78 | % | $ | 301,562 | 76 | % | ||||||||||||
Selling expenses | 34,343 | 10 | % | 34,237 | 10 | % | 46,814 | 12 | % | |||||||||||||||
Stock-based compensation | 5,443 | 2 | % | 5,386 | 2 | % | 6,345 | 2 | % | |||||||||||||||
Other operating expenses | 26,966 | 7 | % | 36,172 | 10 | % | 40,475 | 10 | % | |||||||||||||||
$ | 360,492 | 100 | % | $ | 350,440 | 100 | % | $ | 395,196 | 100% | ||||||||||||||
5
6
7
Net income in 2008 decreased $451,931 to a loss of $(427,563) or $(878.73) per basic and diluted common share, from net income of $24,368 or $56.59 per basic and $56.38 per diluted common share and $3.20 per basic and diluted Class B share in 2007. This compares with a net loss of $(469,453) or $(1,091.76) per basic and diluted common share and $51.20 per basic and diluted Class B share in 2006.
Weighted-average shares outstanding used to compute basic earnings per share were 490,077, 430,563, and 430,066 in 2008, 2007 and 2006, respectively. Weighted-average shares outstanding used to compute diluted earnings per share were 490,077, 432,127, and 430,066 in 2008, 2007, and 2006, respectively. As a result of incurring a net loss in 2008 and 2006, basic and diluted weighted-average common shares outstanding are equivalent, as common stock equivalents from stock options, unvested restricted stock and warrants would be anti-dilutive.
8
9
10
Payments due by Period | ||||||||||||||||||||
Total | <1 year | 1 - 3 years | 3 - 5 years | >5 years | ||||||||||||||||
Contractual Obligations (1) | ||||||||||||||||||||
Debt | $ | 260,005 | $ | 260,005 | $ | — | $ | — | $ | — | ||||||||||
Capital Lease Obligations | 2,560 | 960 | 1,600 | — | — | |||||||||||||||
Operating Leases | 50,840 | 9,007 | 11,820 | 11,015 | 18,998 | |||||||||||||||
Other Long-term Obligations (2) | 669,623 | 108,442 | 176,639 | 148,004 | 236,538 | |||||||||||||||
Total Contractual Obligations | $ | 983,028 | $ | 378,414 | $ | 190,059 | $ | 159,019 | $ | 255,536 | ||||||||||
(1) | The above table excludes our Fin 48 reserves as the future cash flows are uncertain as of December 31, 2008. | |
(2) | Includes the estimated net interest payments on fixed and variable rate debt. Estimated interest payments on floating rate instruments are computed using our interest rate as of December 31, 2008, and borrowings outstanding are assumed to remain at current levels. |
11
12
13
14
15
16
AND FINANCIAL STATEMENT SCHEDULE
Page | ||||
1. Consolidated Financial Statements | ||||
—Report of Independent Registered Public Accounting Firm | F-2 | |||
—Consolidated Balance Sheets at December 31, 2008 and 2007 | F-3 | |||
—Consolidated Statements of Operations for the years ended December 31, 2008, 2007 and 2006 | F-4 | |||
—Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2008, 2007 and 2006 | F-5 | |||
—Consolidated Statements of Cash Flows for the years ended December 31, 2008 and 2007 | F-6 | |||
—Notes to Consolidated Financial Statements | F-7 | |||
2. Financial Statement Schedule: | ||||
II. —Valuation and Qualifying Accounts | F-37 |
F-1
F-2
CONSOLIDATED BALANCE SHEET
(In thousands, except share and per share amounts)
December 31, | December 31, | |||||||
2008 | 2007 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 6,437 | $ | 6,187 | ||||
Accounts receivable, net of allowance for doubtful accounts of $3,632 (2008) and $3,602 (2007) | 94,273 | 108,271 | ||||||
Warrants, current portion | — | 9,706 | ||||||
Prepaid and other assets | 18,758 | 13,990 | ||||||
Total Current Assets | 119,468 | 138,154 | ||||||
Property and equipment, net | 30,417 | 33,012 | ||||||
Goodwill | 33,988 | 464,114 | ||||||
Intangible assets, net | 2,660 | 3,443 | ||||||
Deferred tax asset | 14,220 | 12,916 | ||||||
Other assets | 4,335 | 18,118 | ||||||
TOTAL ASSETS | $ | 205,088 | $ | 669,757 | ||||
LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY (DEFICIT) | ||||||||
CURRENT LIABILITIES: | ||||||||
Accounts payable | $ | 27,807 | $ | 17,378 | ||||
Amounts payable to related parties | 22,680 | 30,859 | ||||||
Deferred revenue | 2,397 | 5,815 | ||||||
Income taxes payable | — | 7,246 | ||||||
Accrued expenses and other liabilities | 25,565 | 29,562 | ||||||
Current maturity of long-term debt | 249,053 | — | ||||||
Total Current Liabilities | 327,502 | 90,860 | ||||||
Long-term debt | — | 345,244 | ||||||
Other liabilities | 6,993 | 6,022 | ||||||
TOTAL LIABILITIES | 334,495 | 442,126 | ||||||
Commitments and Contingencies | ||||||||
Redeemable preferred stock: $.01 par value, authorized: 10,000 shares; issued and outstanding: 75 shares of Series A Convertible Preferred Stock; liquidation preference $1,000 per share, plus accumulated dividends | 73,738 | — | ||||||
SHAREHOLDERS’ (DEFICIT) EQUITY | ||||||||
Common stock, $ .01 par value: authorized: 300,000 shares; issued and outstanding: 101,253 (2008) and 87,105 (2007) | 1,013 | 872 | ||||||
Class B stock, $ .01 par value: authorized: 3,000 shares; issued and outstanding: 292 (2008 and 2007) | 3 | 3 | ||||||
Additional paid-in capital | 293,120 | 290,786 | ||||||
Net unrealized gain | 267 | 5,955 | ||||||
Accumulated deficit | (497,548 | ) | (69,985 | ) | ||||
TOTAL SHAREHOLDERS’ (DEFICIT) EQUITY | (203,145 | ) | 227,631 | |||||
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY (DEFICIT) | $ | 205,088 | $ | 669,757 | ||||
F-3
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Recast-Note 1 | Recast-Note 1 | Recast-Note 1 | ||||||||||
NET REVENUE | $ | 404,416 | $ | 451,384 | $ | 512,085 | ||||||
Operating Costs (includes related party expenses of $73,049,$66,633 and $75,514 respectively) | 360,492 | 350,440 | 395,196 | |||||||||
Depreciation and Amortization (includes related party warrant amortization of $1,618, $9,706 and $9,706 respectively) | 11,052 | 19,840 | 20,756 | |||||||||
Corporate General and Administrative Expenses (includes related party expenses of $610, $3,394 and $3,273, respectively) | 13,442 | 13,171 | 14,618 | |||||||||
Goodwill Impairment | 430,126 | — | 515,916 | |||||||||
Restructuring Charges | 14,100 | — | — | |||||||||
Special Charges (includes related party expenses of $5,000, $0 and $0, respectively) | 13,245 | 4,626 | 1,579 | |||||||||
842,457 | 388,077 | 948,065 | ||||||||||
OPERATING (LOSS) INCOME | (438,041 | ) | 63,307 | (435,980 | ) | |||||||
Interest Expense | 16,651 | 23,626 | 25,590 | |||||||||
Other Income | (12,369 | ) | (411 | ) | (926 | ) | ||||||
INCOME (LOSS) BEFORE INCOME TAX | (442,323 | ) | 40,092 | (460,644 | ) | |||||||
INCOME TAX (BENEFIT) EXPENSE | (14,760 | ) | 15,724 | 8,809 | ||||||||
NET (LOSS) INCOME | $ | (427,563 | ) | $ | 24,368 | $ | (469,453 | ) | ||||
NET (LOSS) INCOME attributable to Common Shareholders | $ | (430,644 | ) | $ | 24,363 | $ | (469,528 | ) | ||||
(LOSS) EARNINGS PER SHARE (Recast-Note 1) | ||||||||||||
COMMON STOCK | ||||||||||||
BASIC | $ | (878.73 | ) | $ | 56.59 | $ | (1,091.76 | ) | ||||
DILUTED | $ | (878.73 | ) | $ | 56.38 | $ | (1,091.76 | ) | ||||
CLASS B STOCK | ||||||||||||
BASIC | $ | — | $ | 3.20 | $ | 51.20 | ||||||
DILUTED | $ | — | $ | 3.20 | $ | 51.20 | ||||||
WEIGHTED AVERAGE SHARES OUTSTANDING (Recast-Note 1): | ||||||||||||
COMMON STOCK | ||||||||||||
BASIC | 490 | 431 | 430 | |||||||||
DILUTED | 490 | 432 | 430 | |||||||||
CLASS B STOCK | ||||||||||||
BASIC | 1 | 1 | 1 | |||||||||
DILUTED | 1 | 1 | 1 | |||||||||
F-4
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ (DEFICIT) EQUITY
(In thousands)
(Accumulated | Unrealized Gain on | Total | Other | |||||||||||||||||||||||||||||||||||||||||
Additional | Deficit) | Available | Share- | Compre- | ||||||||||||||||||||||||||||||||||||||||
Common Stock | Class B Stock | Paid-in | Retained | for Sale | Treasury Stock | holders’ | hensive | |||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Earnings | Securities | Shares | Amount | Equity | Income (Loss) | ||||||||||||||||||||||||||||||||||
Balance as of December 31, 2005 | 86,674 | $ | 867 | 292 | $ | 3 | $ | 300,419 | $ | 402,740 | $ | — | — | $ | — | $ | 704,029 | |||||||||||||||||||||||||||
Net loss for 2006 | — | — | — | — | — | (469,453 | ) | — | — | — | (469,453 | ) | (469,453 | ) | ||||||||||||||||||||||||||||||
Comprehensive income | — | — | — | — | — | — | 4,570 | — | — | 4,570 | 4,570 | |||||||||||||||||||||||||||||||||
Equity based compensation | — | — | — | — | 12,269 | — | — | — | — | 12,269 | — | |||||||||||||||||||||||||||||||||
Issuance common stock under equity based compensation plans | 387 | 4 | — | — | 388 | — | — | — | — | 392 | — | |||||||||||||||||||||||||||||||||
Excess windfall (shortfall) benefits on stock option exercises | — | — | — | — | (131 | ) | — | — | — | — | (131 | ) | — | |||||||||||||||||||||||||||||||
Cancellations of vested equity grants | — | — | — | — | (10,351 | ) | — | — | — | — | (10,351 | ) | — | |||||||||||||||||||||||||||||||
Cancellation of warrants | — | — | — | — | 290 | — | — | — | — | 290 | — | |||||||||||||||||||||||||||||||||
Cash dividend paid | — | — | — | — | — | (27,640 | ) | — | — | — | (27,640 | ) | — | |||||||||||||||||||||||||||||||
Purchase of treasury stock | — | — | — | — | — | — | — | (750 | ) | (11,044 | ) | (11,044 | ) | — | ||||||||||||||||||||||||||||||
Retirement of treasury stock | (750 | ) | (7 | ) | — | — | (11,037 | ) | — | — | 750 | 11,044 | — | — | ||||||||||||||||||||||||||||||
Balance as of December 31, 2006 | 86,311 | $ | 864 | 292 | $ | 3 | $ | 291,847 | $ | (94,353 | ) | $ | 4,570 | — | $ | — | $ | 202,931 | $ | (464,883 | ) | |||||||||||||||||||||||
Net income for 2007 | — | — | — | — | — | 24,368 | — | — | — | 24,368 | 24,368 | |||||||||||||||||||||||||||||||||
Comprehensive income | — | — | — | — | — | — | 1,385 | — | — | 1,385 | 1,385 | |||||||||||||||||||||||||||||||||
Equity based compensation | — | — | — | — | 9,606 | — | — | — | — | 9,606 | — | |||||||||||||||||||||||||||||||||
Issuance common stock under equity based compensation plans | 794 | 8 | — | — | (344 | ) | — | — | — | — | (336 | ) | — | |||||||||||||||||||||||||||||||
Cancellations of vested equity grants | — | — | — | — | (7,099 | ) | — | — | — | — | (7,099 | ) | — | |||||||||||||||||||||||||||||||
Cancellation of warrants | — | — | — | — | (1,561 | ) | — | — | — | — | (1,561 | ) | — | |||||||||||||||||||||||||||||||
Cash dividend paid | — | — | — | — | (1,663 | ) | — | — | — | — | (1,663 | ) | — | |||||||||||||||||||||||||||||||
Balance as of December 31, 2007 | 87,105 | $ | 872 | 292 | $ | 3 | $ | 290,786 | $ | (69,985 | ) | $ | 5,955 | — | $ | — | $ | 227,631 | $ | 25,753 | ||||||||||||||||||||||||
Net loss for 2008 | — | — | — | — | — | (427,563 | ) | — | — | — | (427,563 | ) | (427,563 | ) | ||||||||||||||||||||||||||||||
Comprehensive income | — | — | — | — | — | — | (5,688 | ) | — | — | (5,688 | ) | (5,688 | ) | ||||||||||||||||||||||||||||||
Equity based compensation | — | — | — | — | 5,443 | — | — | — | — | 5,443 | — | |||||||||||||||||||||||||||||||||
Issuance common stock under equity based compensation plans | 110 | 1 | — | — | (1,727 | ) | — | — | — | — | (1,726 | ) | — | |||||||||||||||||||||||||||||||
Issuance of common stock | 14,038 | 140 | — | — | 22,471 | — | — | — | — | 22,611 | — | |||||||||||||||||||||||||||||||||
Issuance of warrants | — | — | — | — | 440 | — | — | — | — | 440 | — | |||||||||||||||||||||||||||||||||
Cancellations of vested equity grants | — | — | — | — | (4,722 | ) | — | — | — | — | (4,722 | ) | — | |||||||||||||||||||||||||||||||
Cancellation of warrants | — | — | — | — | (19,571 | ) | — | — | — | — | (19,571 | ) | — | |||||||||||||||||||||||||||||||
Balance as of December 31, 2008 | 101,253 | $ | 1,013 | 292 | $ | 3 | $ | 293,120 | $ | (497,548 | ) | $ | 267 | — | $ | — | $ | (203,145 | ) | $ | (433,251 | ) |
F-5
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
CASH FLOW FROM OPERATING ACTIVITIES: | ||||||||||||
Net (loss) income | $ | (427,563 | ) | $ | 24,368 | $ | (469,453 | ) | ||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 11,052 | 19,840 | 20,756 | |||||||||
Goodwill Impairment | 430,126 | — | 515,916 | |||||||||
Loss on disposal of property and equipment | 1,257 | — | — | |||||||||
Deferred taxes | (13,907 | ) | (6,480 | ) | (20,546 | ) | ||||||
Non-cash stock compensation | 5,443 | 9,606 | 12,269 | |||||||||
Gain on sale of marketable securities | (12,420 | ) | — | — | ||||||||
Amortization of deferred financing costs | 1,674 | 481 | 359 | |||||||||
(4,338 | ) | 47,815 | 59,301 | |||||||||
Changes in assets and liabilities: | ||||||||||||
Decrease in Accounts receivable | 13,998 | 7,234 | 17,278 | |||||||||
(Increase) Decrease in Prepaid and other assets | (2,515 | ) | (990 | ) | 6,367 | |||||||
(Decrease) in Deferred revenue | (3,418 | ) | (2,335 | ) | (936 | ) | ||||||
(Decrease) Increase in Income taxes payable | (7,246 | ) | 1,097 | (15,724 | ) | |||||||
Increase (Decrease) in Accounts payable, accrued expenses and other liabilities | 13,736 | (29,435 | ) | 32,813 | ||||||||
(Decrease) Increase in Amounts payable to related parties | (8,179 | ) | 4,515 | 5,152 | ||||||||
Net Cash Provided By Operating Activities | 2,038 | 27,901 | 104,251 | |||||||||
CASH FLOW FROM INVESTING ACTIVITIES: | ||||||||||||
Capital expenditures | (7,313 | ) | (5,849 | ) | (5,880 | ) | ||||||
Proceeds from sale of marketable securities | 12,741 | — | — | |||||||||
Collection of loan receivable | — | — | 2,000 | |||||||||
Acquisition of companies and other | — | — | 75 | |||||||||
Net Cash Provided (Used) In Investing Activities | 5,428 | (5,849 | ) | (3,805 | ) | |||||||
CASH FLOW FROM FINANCING ACTIVITIES: | ||||||||||||
Issuance of common stock | 22,760 | — | 392 | |||||||||
Issuance of series A convertible preferred stock and warrants | 74,168 | — | — | |||||||||
Debt repayments and payments of capital lease obligations | (104,737 | ) | (25,730 | ) | (60,685 | ) | ||||||
Termination of swap contracts | 2,150 | — | — | |||||||||
Dividend payments | — | (1,663 | ) | (27,640 | ) | |||||||
Repurchase of common stock | — | — | (11,044 | ) | ||||||||
Deferred financing costs | (1,556 | ) | — | (352 | ) | |||||||
Excess windfall tax benefits from stock option exercises | — | — | 12 | |||||||||
Net Cash Used in Financing Activities | (7,216 | ) | (27,393 | ) | (99,317 | ) | ||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 250 | (5,341 | ) | 1,129 | ||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 6,187 | 11,528 | 10,399 | |||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 6,437 | $ | 6,187 | $ | 11,528 | ||||||
F-6
F-7
F-8
Buildings | 40 years | |
Leasehold Improvements | Shorter of life or lease term | |
Recording, broadcasting and studio equipment | 5 – 10 years | |
Furniture and equipment and other | 3 – 10 years |
F-9
F-10
F-11
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Net (Losses) Income | $ | (427,563 | ) | $ | 24,368 | $ | (469,453 | ) | ||||
Less: Accumulated Preferred Stock dividends | (3,081 | ) | — | — | ||||||||
Less: distributed earnings to Common shareholders | — | 1,658 | 27,565 | |||||||||
Less: distributed earnings to Class B shareholders | — | 5 | 75 | |||||||||
Undistributed earnings | $ | (430,644 | ) | $ | 22,705 | $ | (497,093 | ) | ||||
Earnings — Common stock | ||||||||||||
Basic | ||||||||||||
Distributed earnings to Common shareholders | $ | — | $ | 1,658 | $ | 27,565 | ||||||
Undistributed earnings allocated to Common shareholders | (430,644 | ) | 22,705 | (497,093 | ) | |||||||
Total Earnings — Common stock, basic | $ | (430,644 | ) | $ | 24,363 | $ | (469,528 | ) | ||||
Diluted | ||||||||||||
Distributed earnings to Common shareholders | $ | — | $ | 1,658 | $ | 27,565 | ||||||
Distributed earnings to Class B shareholders | — | 5 | — | |||||||||
Undistributed earnings allocated to Common shareholders | (430,644 | ) | 22,705 | (497,093 | ) | |||||||
Total Earnings — Common stock, diluted | $ | (430,644 | ) | $ | 24,368 | $ | (469,528 | ) | ||||
Weighted average Common shares outstanding, basic | 490 | 431 | 430 | |||||||||
Share-based compensation | — | — | — | |||||||||
Warrants | — | — | — | |||||||||
Weighted average Class B shares | — | 1 | — | |||||||||
Weighted average Common shares outstanding, diluted | 490 | 432 | 430 | |||||||||
(Loss) Earnings per Common share, basic | ||||||||||||
Distributed earnings, basic | $ | — | $ | 3.85 | $ | 64.10 | ||||||
Undistributed earnings — basic | (873.73 | ) | 52.73 | (1,155.85 | ) | |||||||
Total | $ | (873.73 | ) | $ | 56.59 | $ | (1,091.76 | ) | ||||
(Loss) Earnings per Common share, diluted | ||||||||||||
Distributed earnings, diluted | $ | — | $ | 3.84 | $ | 64.10 | ||||||
Undistributed earnings — diluted | (873.73 | ) | 52.54 | (1,155.85 | ) | |||||||
Total | $ | (873.73 | ) | $ | 56.38 | $ | (1,091.76 | ) | ||||
Earnings per share — Class B Stock | ||||||||||||
Basic | ||||||||||||
Distributed earnings to Class B shareholders | $ | — | $ | 5 | $ | 75 | ||||||
Undistributed earnings allocated to Class B shareholders | — | — | — | |||||||||
Total Earnings — Class B Stock, basic | $ | — | $ | 5 | $ | 75 | ||||||
Diluted | ||||||||||||
Distributed earnings to Class B shareholders | $ | — | $ | 5 | $ | 75 | ||||||
Undistributed earnings allocated to Class B shareholders | — | — | — | |||||||||
Total Earnings — Class B Stock, diluted | $ | — | $ | 5 | $ | 75 | ||||||
F-12
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Weighted average Class B shares outstanding, basic | 1 | 1 | 1 | |||||||||
Share-based compensation | — | — | — | |||||||||
Warrants | — | — | — | |||||||||
Weighted average Class B shares outstanding, diluted | 1 | 1 | 1 | |||||||||
Earnings per Class B share, basic | ||||||||||||
Distributed earnings, basic | $ | — | $ | 3.20 | $ | 51.20 | ||||||
Undistributed earnings — basic | — | — | — | |||||||||
Total | $ | — | $ | 3.20 | $ | 51.20 | ||||||
Earnings per Class B share, diluted | ||||||||||||
Distributed earnings, diluted | $ | — | $ | 3.20 | $ | 51.20 | ||||||
Undistributed earnings — diluted | — | — | — | |||||||||
Total | $ | — | $ | 3.20 | $ | 51.20 | ||||||
2008 | 2007 | 2006 | ||||||||||
Options | 7,000 | 6,426 | 6,993 | |||||||||
Restricted Stock | 364 | 971 | 326 | |||||||||
Restricted Stock Units | 1,216 | 203 | 226 | |||||||||
Warrants | 10,000 | 3,000 | 3,500 |
F-13
F-14
F-15
2008 | 2007 | 2006 | ||||||||||
Representation Agreement | $ | 15,440 | $ | 27,319 | $ | 27,142 | ||||||
Programming and Affiliations | 57,609 | 39,314 | 48,372 | |||||||||
Management Agreement (excluding warrant amortization) | 610 | 3,394 | 3,273 | |||||||||
Warrant Amortization | 1,618 | 9,706 | 9,706 | |||||||||
Payment upon closing of Master Agreement | 5,000 | — | — | |||||||||
$ | 80,277 | $ | 79,733 | $ | 88,493 | |||||||
December 31, | ||||||||
2008 | 2007 | |||||||
Property and equipment is recorded at cost and is summarized as follows: | ||||||||
Land, buildings and improvements | $ | 11,999 | $ | 12,188 | ||||
Recording, broadcasting and studio equipment | 75,907 | 71,090 | ||||||
Furniture, equipment and other | 18,445 | 19,274 | ||||||
$ | 106,351 | $ | 102,552 | |||||
Less: Accumulated depreciation and amortization | 75,934 | 69,540 | ||||||
Property and equipment, net | $ | 30,417 | $ | 33,012 | ||||
F-16
F-17
2008 | 2007 | |||||||
Balance as of January 1, | $ | 464,114 | $ | 464,114 | ||||
Impairment (Metro/Traffic) | (303,703 | ) | — | |||||
Impairment (Network) | (126,423 | ) | — | |||||
Balance as of December 31, | $ | 33,988 | $ | 464,114 | ||||
F-18
2008 | 2007 | |||||||
Revolving Credit Facility/Term Loan | $ | 41,000 | $ | 145,000 | ||||
4.64% Senior Notes due on November 30, 2009 | 51,475 | 50,000 | ||||||
5.26% Senior Notes due on November 30, 2012 | 154,503 | 150,000 | ||||||
Deferred derivative gain | 2,075 | |||||||
Fair market value of Swap | — | 244 | ||||||
$ | 249,053 | $ | 345,244 | |||||
F-19
Year | ||||
2009 | $ | 246,978 | ||
2010 | — | |||
2011 | — | |||
2012 | — | |||
$ | 246,978 | |||
Interest Rate | ||||||||||||||||
Maturity Dates | Notional Principal Amount | Paid (1) | Received | Variable Rate Index | ||||||||||||
November 2009 | $ | 25,000 | 5.08 | 3.91 | 3 Month LIBOR | |||||||||||
November 2012 | $ | 25,000 | 5.08 | 4.41 | 3 Month LIBOR |
(1) | The interest rate paid at December 31, 2006 was 5.37%. |
F-20
December 31, 2008 | December 31, 2007 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
Amount | Value | Amount | Value | |||||||||||||
Borrowings (Short and Long Term) | 249,053 | 158,100 | 345,000 | 345,732 | ||||||||||||
Risk management contracts: | ||||||||||||||||
Interest rate swaps | — | — | 244 | 244 | ||||||||||||
Series A Preferred Stock | 75,000 | 50,000 | — | — |
• | Level 1 — Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities; | ||
• | Level 2 — Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly; | ||
• | Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. |
F-21
Level 1 | Level 2 | Level 3 | ||||||||||
Assets: | ||||||||||||
Investments | $ | 433 | $ | — | $ | — | ||||||
Total Assets | $ | 433 | $ | — | $ | — | ||||||
F-22
F-23
2008 | ||||||||
Weighted | ||||||||
Average | ||||||||
Exercise | ||||||||
Shares | Price | |||||||
Outstanding, beginning of year | 3,888 | $ | 21.86 | |||||
Granted | 6,588 | $ | 1.36 | |||||
Exercised | — | — | ||||||
Cancelled, forfeited or expired | (3,476 | ) | $ | 11.76 | ||||
Outstanding, end of year | 7,000 | $ | 7.52 | |||||
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Risk-Free Interest Rate | 2.64 | % | 4.52 | % | 4.53 | % | ||||||
Expected Term | 4.8 | 5.7 | 6.2 | |||||||||
Expected Volatility | 55.99 | % | 40.12 | % | 45.05 | % | ||||||
Expected Dividend Yield | 0.00 | % | 0.79 | % | 2.80 | % |
F-24
Remaining | ||||||||||||
Weighted | Weighted | |||||||||||
Average | Average | |||||||||||
Number of | Exercise | Contractual | ||||||||||
Options | Price | Life (In Years) | ||||||||||
Options Outstanding at Exercise Price of: | ||||||||||||
$0.00 - $1.87 | 3,878 | $ | 0.96 | 8.75 | ||||||||
$1.87 - $6.16 | 1,166 | 2.14 | 9.16 | |||||||||
$6.37 - $9.88 | 28 | 6.63 | 7.90 | |||||||||
$10.09 - $19.93 | 495 | 15.35 | 4.43 | |||||||||
$20.25 - $26.96 | 733 | 21.28 | 3.93 | |||||||||
$30.19 - $38.34 | 700 | 32.72 | 3.43 | |||||||||
7,000 | $ | 7.50 | 7.47 |
2008 | ||||||||
Weighted Avg | ||||||||
Grant Date | ||||||||
Fair Value | ||||||||
Shares | Per Share | |||||||
Unvested, beginning of year | 950 | $ | 7.56 | |||||
Granted | 41 | $ | 0.63 | |||||
Coverted to Common Stock | (363 | ) | $ | 6.65 | ||||
Forfeited | (264 | ) | $ | 7.67 | ||||
Unvested, end of year | 364 | $ | 7.55 | |||||
F-25
2008 | ||||||||
Weighted Avg | ||||||||
Grant Date | ||||||||
Fair Value | ||||||||
Shares | Per Share | |||||||
Outstanding, beginning of year | 230 | $ | 9.15 | |||||
Granted | 1,093 | $ | 0.69 | |||||
Dividend equivalents | — | |||||||
Coverted to Common Stock | (107 | ) | $ | 8.52 | ||||
Forfeited | — | |||||||
Outstanding, end of year | 1,216 | $ | 1.60 | |||||
Vested, end of year | 31 | |||||||
Unvested, end of year | 1,185 | |||||||
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Net (Loss) Income | $ | (427,563 | ) | $ | 24,368 | $ | (469,453 | ) | ||||
Unrealized gain on marketable securities net effect of income taxes | 6,732 | 1,385 | 4,570 | |||||||||
Adjustment for gains included in net income | (12,420 | ) | — | |||||||||
Comprehensive (Loss) Income | $ | (433,251 | ) | $ | 25,753 | $ | (464,883 | ) | ||||
F-26
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Current | ||||||||||||
Federal | $ | (1,220 | ) | $ | 18,466 | $ | 26,304 | |||||
State | 367 | 3,738 | 3,588 | |||||||||
$ | (853 | ) | $ | 22,204 | $ | 29,892 | ||||||
Deferred | ||||||||||||
Federal | (11,790 | ) | (5,542 | ) | (18,537 | ) | ||||||
State | (2,117 | ) | (938 | ) | (2,546 | ) | ||||||
(13,907 | ) | (6,480 | ) | (21,083 | ) | |||||||
Income (Benefit) Tax Expense | $ | (14,760 | ) | $ | 15,724 | $ | 8,809 | |||||
2008 | 2007 | |||||||
Deferred tax liabilities: | ||||||||
Property and equipment | $ | 5,076 | $ | 2,404 | ||||
Investment | 166 | 3,709 | ||||||
Other | 295 | 488 | ||||||
Total deferred tax liabilities | $ | 5,537 | $ | 6,601 | ||||
Deferred tax assets: | ||||||||
Goodwill, intangibles and other | 6,487 | 6,673 | ||||||
Allowance for doubtful accounts | 1,379 | 1,321 | ||||||
Deferred Compensation | 1,444 | 1,443 | ||||||
Equity Based Compensation | 8,460 | 11,401 | ||||||
Accrued expenses and other | 4,016 | — | ||||||
Total deferred tax assets | $ | 21,786 | $ | 20,838 | ||||
Net deferred tax assets | $ | 16,249 | $ | 14,237 | ||||
Net deferred tax asset — current | $ | 2,029 | $ | 1,321 | ||||
Net deferred tax asset — long term | $ | 14,220 | $ | 12,916 | ||||
F-27
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Federal statutory rate | 35.0 | % | 35.0 | % | 35.0 | % | ||||||
State taxes net of federal benefit | 0.3 | 3.3 | (0.2 | ) | ||||||||
Non-deductible portion of goodwill Impairment | (31.8 | ) | — | (36.6 | ) | |||||||
Other | (0.2 | ) | 0.9 | (0.1 | ) | |||||||
Effective tax rate | 3.3 | % | 32.2 | % | (1.9 | %) | ||||||
Unrecognized Tax Benefit | ||||
Balance at January 1, 2007 | $ | 7,513 | ||
Additions for prior year tax positions | 119 | |||
Settlements | (456 | ) | ||
Reductions related to expiration of statute of limitations | (706 | ) | ||
Balance at December 31, 2007 | $ | 6,470 | ||
Additions for tax positions | 533 | |||
Settlements | (444 | ) | ||
Reductions related to expiration of statue of limitations | (157 | ) | ||
Balance at December 31, 2008 | $ | 6,402 | ||
F-28
Leases | ||||||||||||||||
Year | Capital | Operating | Other | Total | ||||||||||||
2009 | 960 | 9,007 | 108,442 | 118,409 | ||||||||||||
2010 | 960 | 6,175 | 91,724 | 98,859 | ||||||||||||
2011 | 640 | 5,645 | 84,915 | 91,200 | ||||||||||||
2012 | — | 5,546 | 76,089 | 81,635 | ||||||||||||
2013 | — | 5,469 | 71,915 | 77,384 | ||||||||||||
Thereafter | — | 18,998 | 236,538 | 255,536 | ||||||||||||
2,560 | 50,840 | 669,623 | 723,023 |
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Cash paid for: | ||||||||||||
Interest | $ | 10,146 | $ | 24,239 | $ | 24,642 | ||||||
Income Taxes | 10,179 | 21,814 | 44,676 |
F-29
Severance | Facilities Consolidation | Contract | ||||||||||||||
Restructuring Liability | Termination Cost | Related Costs | Termination | Total | ||||||||||||
Charges | 6,765 | 831 | 6,504 | 14,100 | ||||||||||||
Payments | (3,487 | ) | (41 | ) | (1,108 | ) | (4,636 | ) | ||||||||
Non-Cash utilization | (80 | ) | (1,600 | ) | (1,680 | ) | ||||||||||
Balance at December 31, 2008 | 3,198 | 790 | 3,796 | 7,784 | ||||||||||||
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Professional and other fees related to the new CBS agreements, Gores Investment and debt refinancing | $ | 6,624 | $ | 3,626 | $ | 1,579 | ||||||
Closing Payment to CBS related to the new CBS agreements | 5,000 | — | — | |||||||||
Severance obligations related to executive officer changes | — | 1,000 | — | |||||||||
Re-engineering expenses | 1,621 | — | — | |||||||||
$ | 13,245 | $ | 4,626 | $ | 1,579 | |||||||
F-30
F-31
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Net Revenue | ||||||||||||
Network | $ | 209,532 | $ | 218,939 | $ | 246,317 | ||||||
Metro/Traffic | 194,884 | 232,445 | 265,768 | |||||||||
Total Net Revenue | $ | 404,416 | $ | 451,384 | $ | 512,085 | ||||||
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Segment Operating (Loss) Income | ||||||||||||
Network | $ | 14,562 | $ | 30,943 | $ | 38,192 | ||||||
Metro/Traffic | 24,577 | 64,033 | 73,173 | |||||||||
Total Segment Operating Income | $ | 39,139 | $ | 94,976 | $ | 111,365 | ||||||
Corporate Expenses | (19,709 | ) | (27,043 | ) | (29,850 | ) | ||||||
Restructuring and Special Charges | (27,345 | ) | (4,626 | ) | (1,579 | ) | ||||||
Goodwill Impairment | (430,126 | ) | — | (515,916 | ) | |||||||
Operating (Loss) Income | $ | (438,041 | ) | $ | 63,307 | $ | (435,980 | ) | ||||
Interest Expense | (16,651 | ) | (23,626 | ) | (25,590 | ) | ||||||
Other Income | 12,369 | 411 | 926 | |||||||||
(Loss) Income Before Income Taxes | $ | (442,323 | ) | $ | 40,092 | $ | (460,644 | ) | ||||
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Depreciation and Amortization | ||||||||||||
Network | $ | 3,139 | $ | 3,152 | $ | 3,571 | ||||||
Metro/Traffic | 6,120 | 6,955 | 7,453 | |||||||||
Corporate | 1,793 | 9,732 | 9,733 | |||||||||
Total Depreciation and Amortization | $ | 11,052 | $ | 19,839 | $ | 20,757 | ||||||
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Assets | ||||||||||||
Network | $ | 92,109 | $ | 218,276 | $ | 217,700 | ||||||
Metro/Traffic | 80,079 | 399,144 | 417,817 | |||||||||
Corporate | 32,900 | 52,337 | 61,186 | |||||||||
Total Assets | $ | 205,088 | $ | 669,757 | $ | 696,703 | ||||||
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Capital Expenditures | ||||||||||||
Network | $ | 5,634 | $ | 1,800 | $ | 751 | ||||||
Metro/Traffic | 1,538 | 4,042 | 4,059 | |||||||||
Corporate | 141 | 7 | 1,071 | |||||||||
Total Capital Expenditures | $ | 7,313 | $ | 5,849 | $ | 5,881 | ||||||
F-32
First | Second | Third | Fourth | For the | ||||||||||||||||
Quarter | Quarter | Quarter | Quarter | Year | ||||||||||||||||
Recast-Note 1 | Recast-Note 1 | Recast-Note 1 | Recast-Note 1 | Recast-Note 1 | ||||||||||||||||
2008 | ||||||||||||||||||||
Net revenue | $ | 106,627 | $ | 100,372 | $ | 96,299 | $ | 101,118 | $ | 404,416 | ||||||||||
Operating (loss) | (3,000 | ) | (195,609 | ) | (7,555 | ) | (231,877 | ) | (438,041 | ) | ||||||||||
Net (loss) | (5,338 | ) | (199,744 | ) | (10 | ) | (222,471 | ) | (427,563 | ) | ||||||||||
Net (loss) per share: | ||||||||||||||||||||
Basic | ||||||||||||||||||||
Common Stock | (11.94 | ) | (396.88 | ) | (2.88 | ) | (443.88 | ) | (878.73 | ) | ||||||||||
Class B Stock | — | — | — | — | — | |||||||||||||||
Diluted | ||||||||||||||||||||
Common Stock | (11.94 | ) | (396.88 | ) | (2.88 | ) | (443.88 | ) | (878.73 | ) | ||||||||||
Class B Stock | — | — | — | — | — | |||||||||||||||
2007 | ||||||||||||||||||||
Net revenue | $ | 113,959 | $ | 111,025 | $ | 108,083 | $ | 118,317 | $ | 451,384 | ||||||||||
Operating Income | 7,262 | 16,618 | 19,686 | 19,741 | 63,307 | |||||||||||||||
Net income | 715 | 6,897 | 8,452 | 8,304 | 24,368 | |||||||||||||||
Net income per share: | ||||||||||||||||||||
Basic | ||||||||||||||||||||
Common Stock | 1.65 | 16.02 | 19.62 | 19.28 | 56.59 | |||||||||||||||
Class B Stock | 3.20 | — | — | — | 3.20 | |||||||||||||||
Diluted | ||||||||||||||||||||
Common Stock | 1.65 | 15.94 | 19.55 | 19.21 | 56.38 | |||||||||||||||
Class B Stock | 3.20 | — | — | — | 3.20 |
F-33
F-34
F-35
F-36
Allowance for Doubtful Accounts
Balance at | Additions | Deductions | Balance at | |||||||||||||
Beginning of | Charged to Costs | Write-offs and | End of | |||||||||||||
Period | And Expenses | Other Adjustments | Period | |||||||||||||
2008 | $ | 3,602 | $ | 439 | $ | (409 | ) | $ | 3,632 | |||||||
2007 | $ | 4,387 | $ | 139 | $ | (924 | ) | $ | 3,602 | |||||||
2006 | $ | 2,797 | $ | 2,323 | $ | (733 | ) | $ | 4,387 |
F-37