Gray Television, Inc. News
Gray Reports Operating Results for the Three Months Ended March 31, 2008
Comments on Results of Operations for the Three Months Ended
Revenues.
Total net revenues for all stations increased
Political advertising revenues increased
Internet advertising revenue increased
Local advertising revenue decreased
National advertising revenue decreased
Operating expenses.
Broadcast expenses (before depreciation, amortization and gain on disposal of assets) increased
During the first quarter of 2008, we initiated a program of selective staff reductions at our television stations. These staff reductions are expected to save approximately
Corporate and administrative expenses (before depreciation, amortization and gain on disposal of assets) decreased
expense during the three months ended
Internet Initiatives:
We have continued to expand our internet initiatives in each of our markets. Our focus has been to expand local content to attract traffic to our websites.
This strong revenue growth reflects the significantly increased traffic to our websites as illustrated below by the aggregate page views reported by our websites in the three months ended
Gray Websites - Aggregate Page Views Three Months Ended March 31, % 2008 2007 Change (in millions) Total Aggregate Page Views (including video plays and cell phone page views) 161.4 106.2 52%
We attribute the increase in our website traffic to increased posting of local content and to increased public awareness of our websites as the result of our on-air promotion of our websites.
The aggregate internet revenues discussed above are derived from two sources. The first source is advertising or sponsorship opportunities directly on our websites. We call this "direct internet revenue." The other source is television advertising time purchased by our clients to directly promote their involvement in our websites. We refer to this internet revenue source as "internet related commercial time sales."
In the future we anticipate our direct internet revenue will grow at a significantly faster pace relative to our internet related commercial time sales. Other Financial Data: March 31, December 31, 2008 2007 (in thousands) Cash $15,294 $15,338 Total debt 922,688 925,000 Available credit under senior credit facility 100,000 100,000 Three Months Ended March 31, 2008 2007 (in thousands) Net cash provided by (used in) operating activities $6,671 $(1,581) Net cash used in investing activities (2,949) (9,781) Net cash (used in) provided by financing activities (3,766) 7,930 Detailed table of operating results: Gray Television, Inc. Selected Operating Data (Unaudited) (in thousands except for per share data and percentages) Three Months Ended March 31, % 2008 2007 Change Revenues (less agency commissions) $70,999 $69,681 2 % Operating expenses: Operating expenses before depreciation, amortization and loss on disposal of assets, net: 50,016 48,818 2 % Corporate and administrative 3,539 4,061 (13)% Depreciation and amortization of intangible assets 9,084 9,776 (7)% (Gain) loss on disposals of assets, net (921) (3) 61,718 62,652 (1)% Operating income 9,281 7,029 32 % Other income (expense): Miscellaneous income, net 27 359 (92)% Interest expense (15,799) (17,272) (9)% Loss on early extinguishment of debt - (6,492) (100)% Loss before income tax benefit (6,491) (16,376) (60)% Income tax benefit (2,641) (5,862) (55)% Net loss (3,850) (10,514) (63)% Preferred dividends (includes accretion of issuance cost of $0 and $22, respectively) - 778 (100)% Net loss available to common stockholders $(3,850) $(11,292) (66)% Basic and diluted per share information: Net loss available to common stockholders $(0.08) $(0.24) Weighted average shares outstanding 48,153 47,734 1 % Political revenue (less agency commission) $3,073 $1,097 180 % Guidance for the Second Quarter of 2008 We currently anticipate that our broadcasting results of operations for the three months ending June 30, 2008 will approximate the ranges presented in the table below. % % 2008 Change 2008 Change Guidance From Guidance From Low Actual High Actual Actual Selected operating data Range 2007 Range 2007 2007 (dollars in millions) OPERATING REVENUES: Revenues (less agency commissions) $78,000 (2)% $80,000 0 % $79,750 OPERATING EXPENSES: (before depreciation, amortization and other expenses) Broadcast $49,500 1 % $50,000 2 % $49,048 Corporate $3,700 3 % $3,900 9 % $3,584 OTHER SELECTED DATA: Broadcast political revenues (less agency commissions) $3,300 $3,800 $2,634 Expense for non-cash contributions to 401(k) plan $575 $625 $596 Expense for corporate non-cash stock-based compensation $375 $425 $310
Comments on Guidance:
The total revenues anticipated for the second quarter of 2008 reflect an incremental increase in political revenues. Local non-political advertising for the second quarter of 2008 is currently anticipated to approximate or be slightly below the results of the second quarter of 2007. National non- political advertising revenue is currently anticipated to be down approximately 6% to 7% in the second quarter of 2008 compared to the second quarter of 2007. Internet advertising revenue for the second quarter of 2008 is currently anticipated to increase approximately 30% to 35% compared to the second quarter of 2007.
The increase in broadcast operating expenses, before depreciation, amortization and gain on disposal of assets, primarily reflects routine increases in payroll costs. For the full year of 2008, broadcast operating expenses, before depreciation, amortization and loss on disposal of assets are currently anticipated to increase less than 2% over full year 2007 results with national sales representative commissions on anticipated political revenue representing the majority of any overall increase and the remainder is attributable to severance costs relating to staff reductions at certain television stations.
Changes in the classification of certain items:
The classification of certain prior year amounts in the accompanying consolidated financial statements have been changed in order to conform to the current year presentation.
In our previous disclosures, we had included internet advertising revenue with local advertising revenue and retransmission consent revenue was included with production and other revenue. We are now presenting internet advertising revenue and retransmission consent revenue separately. The table below presents our expanded disclosure for the three months ended
Three Months Ended March 31, 2008 2007 Percent Percent Amount of Total Amount of Total Broadcasting net revenues: Local $45,719 64.4% $46,697 67.0% National 16,337 23.0% 17,093 24.5% Internet 2,629 3.7% 2,058 3.0% Political 3,073 4.3% 1,097 1.6% Retransmission consent 646 0.9% 454 0.6% Production and other 2,421 3.4% 2,094 3.0% Network compensation 174 0.3% 188 0.3% Total $70,999 100.0% $69,681 100.0%
The aggregate internet revenues presented above are derived from two sources: (i) direct internet revenue and (ii) internet related commercial time sales.
Conference Call Information
Gray Television, Inc. will host a conference call to discuss its first quarter operating results on
Reconciliations: Reconciliation of net loss to the non-GAAP terms: Three Months Ended 2008 2007 (in thousands) Net loss $(3,850) $(10,514) Adjustments to reconcile to Broadcast Cash Flow Less Cash Corporate Expenses: Depreciation and amortization of intangible assets 9,084 9,776 Non-cash stock based compensation 294 520 (Gain) on disposals of assets, net (921) (3) Miscellaneous (income) expense, net (27) (359) Interest expense 15,799 17,272 Loss on early extinguishment of debt - 6,492 Income tax expense (benefit) (2,641) (5,862) Amortization of program broadcast rights 3,851 3,793 Common stock contributed to 401(k) plan excluding corporate 401(k) contributions 626 618 Network compensation revenue recognized (174) (188) Network compensation per network affiliation agreement 30 78 Payments for program broadcast rights (3,775) (3,804) Broadcast Cash Flow Less Cash Corporate Expenses 18,296 17,819 Corporate and administrative expenses excluding amortization of non-cash stock-based compensation 3,245 3,541 Broadcast Cash Flow $21,541 $21,360
Non-GAAP Terms
This press release includes the non-GAAP financial measure of Broadcast Cash Flow and Broadcast Cash Flow Less Cash Corporate Expenses. These non- GAAP amounts are used by us to approximate the amount used to calculate a key financial performance covenant as defined in our senior credit facility. Broadcast Cash Flow is defined as operating income, plus corporate expense, depreciation and amortization (including amortization of program broadcast rights), non-cash compensation and (gain) loss on disposal of assets and cash payments received or receivable under network affiliation agreements less payments for program broadcast obligations, less network compensation revenue and less income (loss) from discontinued operations, net of income taxes. Corporate expenses (excluding depreciation, amortization and non-cash stock- based compensation) are deducted from Broadcast Cash Flow to calculate "Broadcast Cash Flow Less Cash Corporate Expenses." These non-GAAP terms are used in addition to and in conjunction with results presented in accordance with GAAP and should be considered as supplements to, and not as substitutes for, net loss calculated in accordance with GAAP.
The Company
Gray Television, Inc. is a television broadcast company headquartered in
Cautionary Statements for Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act
The comments on our current expectations of operating results for the second quarter of 2008 and other future events are "forward looking statements" for purposes of the Private Securities Litigation Reform Act of 1995. Actual results of operations are subject to a number of risks and uncertainties and may differ materially from the current expectations discussed in this press release. All information set forth in this release and its attachments is as of
SOURCE Gray Television, Inc.
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