-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MRH7tYSSPDUe6sPnBAAWa4iA6XfV2XbOw+9Wk+ThAzmY4y85AD0az80JUhcoUz/6 1xeyZzo7b61ODVgA1Apa/Q== /in/edgar/work/0000912057-00-049924/0000912057-00-049924.txt : 20001115 0000912057-00-049924.hdr.sgml : 20001115 ACCESSION NUMBER: 0000912057-00-049924 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GRANITE BROADCASTING CORP CENTRAL INDEX KEY: 0000839621 STANDARD INDUSTRIAL CLASSIFICATION: [4833 ] IRS NUMBER: 133458782 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-19728 FILM NUMBER: 766681 BUSINESS ADDRESS: STREET 1: 767 THIRD AVE 34TH FL CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2128262530 MAIL ADDRESS: STREET 1: 767 THIRD AVE 34TH FL CITY: NEW YORK STATE: NY ZIP: 10017 10-Q 1 a2030442z10-q.txt 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2000 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to _____________ Commission File Number 0-19728 GRANITE BROADCASTING CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 13-3458782 (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification No.) 767 Third Avenue - 34th Floor New York, New York 10017 Telephone number: (212) 826-2530 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----------- ------------ (APPLICABLE ONLY TO CORPORATE ISSUERS:) Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class A Voting Common Stock, par value $.01 per share - 178,500 shares outstanding at November 14, 2000; Common Stock (Nonvoting), par value $.01 per share - 18,259,646 shares outstanding at November 14, 2000. PART I. FINANCIAL INFORMATION GRANITE BROADCASTING CORPORATION CONSOLIDATED BALANCE SHEET
September 30, December 31, ASSETS 2000 1999 ------------ ------------ (Unaudited) Current assets: Cash and cash equivalents $ 4,510,340 $ 5,453,542 Accounts receivable, net 26,751,765 33,017,344 Film contract rights 20,147,116 17,510,909 Other assets 13,445,012 10,399,749 ------------ ------------ Total current assets 64,854,233 66,381,544 Property and equipment, net 42,382,327 39,176,169 Film contract rights 8,961,182 11,125,490 Other non-current assets 15 511 659 3,142,422 Deferred financing fees, net 5,405,071 8,209,537 Intangible assets, net 582,504,311 602,555,693 ------------ ------------ Total Assets $719,618,783 $730,590,855 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 2,476,113 $ 3,120,875 Accrued interest 7,406,147 3,487,384 Income taxes payable 1,609,427 3,912,027 Other accrued liabilities 5,245,116 3,867,448 Film contract rights 17,743,415 22,049,869 Other current liabilities 4,949,095 6,473,693 ------------ ------------ Total current liabilities 39,429,313 42,911,296 Long-term debt 299,381,845 303,874,304 Film contract rights payable 26,204,190 18,000,393 Deferred tax liability 84,252,884 84,117,915 Cumulative Exchangeable Preferred Stock, net of offering costs 231,891,383 210,708,780 Other non-current liabilities 18,058,169 20,894,010 ------------ ------------ Total liabilities 699,217,784 680,506,698 Stockholders' equity: Common Stock: 41,000,000 shares authorized consisting of 1,000,000 shares of Class A Common Stock, $.01 par value, and 40,000,000 shares of Common Stock (Nonvoting), $.01 par value; 178,500 shares of Class A Common Stock and 18,259,646 shares of Common Stock (Nonvoting) (17,964,081 shares at December 31,1999) issued and outstanding 184,381 181,425 Additional paid-in capital 7,869,332 17,909,802 Accumulated earnings 14,830,945 35,123,239 Less: Unearned compensation (1,299,784) (1,946,434) Treasury stock (297,000) (297,000) Note receivable from officer (886,875) (886,875) ------------ ------------ Total stockholders' equity 20,400,999 50,084,157 ------------ ------------ Total liabilities and stockholders' equity $719,618,783 $730,590,855 ============ ============
See accompanying notes. -1- GRANITE BROADCASTING CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended September 30, Nine Months Ended September 30, -------------------------------- ------------------------------ 2000 1999 2000 1999 ------------ ------------- ------------- ------------- (Unaudited) (Unaudited) Net revenues $ 32,238,416 $ 35,578,729 $ 103,153,475 $ 110,378,956 Station operating expenses 25,311,888 22,884,702 75,065,005 68,043,639 Write-off of film contracts 1,716,535 -- 1,716,535 -- Depreciation expense 1,486,325 1,447,013 4,293,606 4,247,228 Amortization expense 6,546,074 6,696,536 20,318,521 19,539,434 Corporate Expense 2,210,084 1,817,541 7,693,200 6,524,565 Non-cash compensation expense 215,550 204,193 646,650 727,901 ------------ ------------- ------------- ------------- Operating (loss) income (5,248,040) 2,528,744 (6,580,042) 11,296,189 Other expenses: Equity in net loss of investee -- -- -- 133,603 Interest expense, net 7,214,096 9,232,562 21,641,674 29,231,335 Non-cash interest expense 600,514 663,900 2,099,313 2,124,366 Gain on station sales -- (101,291,854) -- (101,291,854) Gain from insurance settlement -- -- (1,247,105) (2,655,408) Other 505,532 725,893 1,333,516 1,396,597 ------------ ------------- ------------- ------------- (Loss) income before income taxes and extraordinary item (13,568,182) 93,198,243 (30,407,440) 82,357,550 (Benefit) provision for income taxes (2,728,968) 37,953,269 (6,404,942) 34,488,279 ------------ ------------- ------------- ------------- (Loss) income before extraordinary item (10,839,214) 55,244,974 (24,002,498) 47,869,271 Extraordinary (loss) gain on early extinguishment of debt, net of tax -- (892,980) 3,710,204 (892,980) ------------ ------------- ------------- ------------- Net (loss) income $(10,839,214) $ 54,351,994 $ (20,292,294) $ 46,976,291 ============ ============= ============= ============= Net (loss) income attributable to common shareholders $(18,041,457) $ 47,482,936 $ (41,474,897) $ 26,536,992 ============ ============= ============= ============= Per basic common share: (Loss) income before extraordinary item $ (0.98) $ 3.49 $ (2.45) $ 2.17 Extraordinary (loss) gain -- (0.06) .20 (0.06) ------------ ------------- ------------- ------------- Net (loss) income $ (0.98) $ 3.43 $ (2.25) $ 2.11 ============ ============= ============= ============= Weighted average common shares outstanding 18,438,000 13,846,000 18,393,000 12,578,000 Net (loss) income attributable to common shareholders assuming dilution $(18,041,457) $ 47,972,605 $ (41,474,897) $ 28,212,941 ============ ============= ============= ============= Per common share assuming dilution: (Loss) income before extraordinary item $ (0.98) $ 2.53 $ 2.45 $ 1.55 Extraordinary (loss) gain -- (0.05) .20 (0.05) ------------ ------------- ------------- ------------- Net (loss) income $ (0.98) $ 2.48 $ (2.25) $ 1.50 ============ ============= ============= ============= Weighted average common shares outstanding assuming dilution 18,438,000 19,369,000 18,393,000 18,770,000
See Accompanying Notes -2-
Class A Common Additional Common Stock Paid-in Retained Stock (Nonvoting) Capital Earnings ------- ----------- ------------- ----------- Balance at December 31, 1999 $1,785 $179,640 $17,909,802 $35,123,239 Dividends on Cumulative Exchangable Preferred Stock (20,807,492) Accretion of offering costs related to Cumulative Exchangeable Preferred Stock (375,111) Exercise of stock options 2,303 (971,461) Issuance of Common Stock (Nonvoting) 653 (653) Stock expense related to stock plans (35,593) Issuance of Warrants 12,149,840 Net loss (20,292,294) ------- ----------- ------------- ----------- Balance at September 30, 2000 $1,785 $182,596 $7,869,332 $14,830,945 ======= =========== ============= =========== Total Unearned Note Receivable Treasury Stockholders' Compensation from Officer Stock Equity ------------ --------------- ---------- ------------- Balance at December 31, 1999 $(1,946,434) $(886,875) $(297,000) $50,084,157 Dividends on Cumulative Exchangable Preferred Stock (20,807,492) Accretion of offering costs related to Cumulative Exchangeable Preferred Stock (375,111) Exercise of stock options (969,158) Issuance of Common Stock (Nonvoting) - Stock expense related to stock plans 646,650 611,057 Issuance of Warrants 12,149,840 Net loss (20,292,294) ------------ --------------- ---------- ------------- Balance at September 30, 2000 $(1,299,784) $(886,875) $(297,000) $20,400,999 ============ =============== ========== =============
-3- GRANITE BROADCASTING CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS
Nine Months Ended September 30, ------------------------------- 2000 1999 ------------ ------------- (Unaudited) Cash flows from operating activities: Net (loss) income $(20,292,294) $ 46,976,291 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of intangible assets 20,318,521 19,539,434 Depreciation 4,293,606 4,247,228 Non-cash compensation expense 646,650 727,901 Non-cash interest expense 2,099,313 2,124,366 Equity in net loss of investee -- 133,603 Deferred tax expense 134,969 8,455,521 Net gain on disposition of assets -- (101,291,854) Gain from insurance proceeds (1,247,105) (2,655,408) Extraordinary (gain) loss (6,183,674) 1,373,815 Change in assets and liabilities net of amounts disposed: Decrease in accounts receivable, net 6,265,579 4,338,206 Increase in accounts payable and accrued liabilities 3,673,211 5,925,860 Increase in income taxes payable 170,870 23,353,730 Increase in film contract rights and other non-current assets (3,944,822) (29,912,752) Increase in film contract rights payable and other current liabilities 4,656,989 24,007,617 Decrease other non-current liabilities (246,938) (1,529,915) Increase in other assets (4,442,078) (123,786) ------------ ------------- Net cash provided by operating activities 5,902,797 5,689,857 Cash flows from investing activities: Proceeds from disposition of assets, net -- 171,308,975 Insurance proceeds received 1,627,572 6,747,789 WB affiliation payment (4,143,582) (4,243,921) Investments (258,917) (133,603) Capital expenditures (7,353,240) (10,315,767) ------------ ------------- Net cash (used in) provided by investing activities (10,128,167) 163,363,473 Cash flows from financing activities: Proceeds from bank loan 95,000,000 54,500,000 Repayment of bank debt (10,327,572) (135,000,000) Retirement of senior subordinated notes (81,019,763) (32,065,000) Dividends paid -- (1,776,629) Payment of deferred financing fees (367,416) (503,965) Other financing activities (3,081) 68,109 ------------ ------------- Net cash provided by (used in) financing activities 3,282,168 (114,777,485) ------------ ------------- Net (decrease) increase in cash and cash equivalents (943,202) 54,275,845 Cash and cash equivalents, beginning of period 5,453,542 762,392 ------------ ------------- Cash and cash equivalents, end of period $ 4,510,340 $ 55,038,237 ============ ============= Supplemental information: Cash paid for interest $ 18,111,000 $ 23,400,000 Income taxes paid 190,000 1,691,000 Non-cash capital expenditures 147,000 88,000 Non-cash dividend 20,807,500 18,389,000 Valuation of Warrants 12,150,000 --
See accompanying notes. -4- GRANITE BROADCASTING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements include the accounts of Granite Broadcasting Corporation and its subsidiaries (the "Company"), have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. Operating results for the three and nine month periods ended September 30, 2000 are not necessarily indicative of the results that may be expected for the year ended December 31, 2000. For further information, refer to the Company's consolidated financial statements and notes thereto for the year ended December 31, 1999 which were included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. All significant inter-company accounts and transactions have been eliminated. Data at and for the year ended December 31, 1999 are derived from the Company's audited consolidated financial statements. In the opinion of management, all adjustments of a normal recurring nature which are necessary for a fair presentation of the results for the interim periods have been made. NOTE 2 - LONG TERM DEBT In 2000, the Company repurchased $53,535,000 face amount of its 8 7/8% Senior Subordinated Notes due May 15, 2008 (the "8 7/8% Notes"); $4,100,000 face amount of its 9 3/8% Senior Subordinated Notes due December 1, 2005 (the "9 3/8% Notes"); and $31,703,000 face amount of its 10 3/8% Senior Subordinated Notes due May 15, 2005 (the "10 3/8% Notes"). As a result of the aforementioned repurchases, the Company incurred an extraordinary gain after the write-off of related deferred financing fees, net of tax, of approximately $3,710,000 NOTE 3 - RECENT DEVELOPMENTS In July 1999, the Company and the American Broadcasting Companies, Inc. ("ABC") agreed to terminate the ABC affiliation for KNTV, effective July 1, 2000. The Company received $14,000,000 in cash on September 1, 1999 in accordance with the agreement. As of May 31, 2000, the Company signed definitive agreements forming a strategic alliance (the "Strategic Alliance") with the National Broadcasting Company, Inc. ("NBC"). Pursuant to the Strategic Alliance, KNTV will become the NBC affiliate in the San Francisco-Oakland-San Jose California television market for a ten-year term commencing on January 1, 2002 (the "San Francisco Affiliation"). The Company also extended the affiliation agreements of its three existing NBC affiliated stations, KSEE-TV, serving Fresno-Visalia, California; WEEK-TV, serving Peoria-Bloomington, Illinois and KBJR-TV, serving Duluth, Minnesota-Superior, Wisconsin until December 31, 2011. As part of such extension, NBC shall pay the Company a total of $2,430,000 in affiliate compensation in equal semi-annual installments through December 31, 2001, at which time the affiliation payments terminate. The Company has received permission from the FCC to increase KNTV's signal coverage, and began broadcasting at increased power in May 2000. The Company is also seeking to reach all cable homes in the San Francisco-Oakland-San Jose DMA through expanded cable coverage. In consideration for the San Francisco affiliation, the Company agreed to pay NBC $362,000,000 in nine annual installments, with the initial payment in the amount of $61,000,000 being due January 1, 2002. In addition, the Company has agreed to spend not less than $1,800,000 prior to or after January 1, 2002 in advertising expense to promote KNTV's affiliation switch to NBC. Other terms of the agreement include a right of first refusal in favor of NBC on the sale of KNTV, and an NBC right to purchase KNTV upon an uncured event of default by the Company, at a value to be determined by an independent appraiser. In addition, NBC will have the right to terminate the San Francisco Affiliation if it elects to acquire an attributable interest in another station in the San Francisco-Oakland-San Jose television market upon payment to Granite of a fee of $14,500,000. -5- Additionally on May 31, 2000, in consideration for the San Francisco Affiliation, the Company granted NBC a warrant to acquire 2,500,000 shares of the Company's Common Stock (Nonvoting), par value $0.01 per share (the "Common Stock (Nonvoting)"), at an exercise price of $12.50 per share (the "A Warrant") and a warrant to purchase 2,000,000 shares of Common Stock (Nonvoting) at an exercise price of $15.00 per share (the "B Warrant"). The A Warrant vests in full on December 31, 2000 and expires on December 31, 2011. The B Warrant vests in full on January 1, 2002, if the San Francisco Affiliation is in effect on that date, and expires on December 31, 2011 or on any date prior to January 1, 2007 on which the San Francisco Affiliation is terminated. Each warrant may be exercised for cash or surrender of a portion of a then exercisable warrant. The aggregate number of shares issuable upon exercise of the warrants (assuming they are exercised for cash) would represent approximately 20 percent of the Common Stock (Nonvoting) outstanding as of September 30, 2000 after giving effect to their issuance. The Company determined the fair value of the warrants in accordance with FASB Statement 123, "Accounting and Disclosure of Stock Based Compensation," using the Black Scholes model. The fair value, estimated to be $12,150,000, has been recorded as a component of other non-current assets and will be expensed on a straight-line basis over the life of the 10-year affiliation beginning January 1, 2002. -6- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Certain sections of this Form 10-Q contain various forward looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, which represent the Company's expectations or beliefs concerning future events. The forward-looking statements include, without limitation, the Company's ability to meet its future liquidity needs. The Company cautions that these forward-looking statements are further qualified by important factors that could cause actual results to differ materially from those in the forward looking statements. Such factors include, without limitation, general economic conditions, competition in the markets in which the Company's stations are located, technological change and innovation in the broadcasting industry and proposed legislation. INTRODUCTION The Company is a group broadcaster that owns and operates nine television stations diversified in geography, network affiliation and growth characteristics. Six of the Company's television stations are affiliated with ABC, NBC and CBS, two stations are affiliated with the WB Network and KNTV is a news-oriented independent station. The Company and ABC agreed to terminate the ABC affiliation for KNTV effective July 1, 2000. As a result, KNTV is operating as an independent television station until January 1, 2002, when it will become the NBC affiliate serving the San Francisco-Oakland-San Jose television market. During this transition period, KNTV will experience revenue declines due to the absence of a network affiliation and increased expenses in local news and syndicated programming. The Company's revenues are derived principally from local and national advertising and, to a lesser extent, from network compensation for the broadcast of programming and revenues from studio rental and commercial production activities. The primary operating expenses involved in owning and operating television stations are employee salaries, depreciation and amortization, programming and advertising and promotion expenses. The Company's operating revenues are generally lower in the first quarter and generally higher in the fourth quarter than in the other two quarters, due in part to increases in retail advertising in the fall months in preparation for the holiday season, and in election years due to increased political advertising. Comparisons of the Company's consolidated financial statements between the three and nine months ended September 30, 1999 and 2000 have been affected by the following: * the sale of KEYE-TV, the CBS affiliate serving Austin, Texas, in August 1999. * significant increases in local news and programming expense at KNTV. * significant increases in programming expense at the WB affiliates. It is anticipated that comparisons of the Company's consolidated financial statements for the year ended December 31, 2000 against the prior period will be affected by the above. The Company further anticipates that results for the year ended December 31, 2001 will continue to be adversely impacted by the changes at KNTV discussed above. The following table sets forth certain operating data for the three and nine-month periods ended September 30, 1999 and 2000: -7-
Three months ended Nine months ended September 30, September 30, -------------------------------- --------------------------------- 1999 2000 1999 2000 ------------ ----------- ------------ ------------ Operating income (loss) $ 2,529,000 $(5,248,000) $ 11,296,000 $ (6,580,000) Depreciation and amortization 8,144,000 8,032,000 23,786,000 24,612,000 Write-off of film contract rights -- 1,716,000 -- 1,716,000 Corporate expense 1,818,000 2,210,000 6,525,000 7,693,000 Non-cash compensation 204,000 216,000 728,000 647,000 Program amortization 3,420,000 5,320,000 9,463,000 16,303,000 Program payments (3,236,000) (5,504,000) (10,455,000) (15,128,000) ------------ ----------- ------------ ------------ Broadcast cash flow $ 12,879,000 $ 6,742,000 $ 41,343,000 $ 29,263,000 ============ =========== ============ ============
"Broadcast cash flow" is defined as operating income (loss) plus time brokerage agreement fees, depreciation and amortization, write-off of film contract rights, corporate expense, non-cash compensation and program amortization, less program payments. The Company has included broadcast cash flow data because such data is commonly used as a measure of performance for broadcast companies and is also used by investors to measure a company's ability to service debt. Broadcast cash flow is not, and should not be used as an indicator or alternative to operating income, net income or cash flow as reflected in the consolidated financial statements. It is not a measure of financial performance under generally accepted accounting principles and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with generally accepted accounting principles. THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 Net revenue totaled $32,238,000 for the three months ended September 30, 2000, a decrease of $3,341,000 or 9 percent, compared to $35,579,000 for the same period last year. The decrease was primarily due to reduced revenue of $2,616,000 resulting from the sale of the Austin station in August 1999 and lower national revenue, primarily at the WB affiliates of $2,304,000 offset, in part, by an increase of $1,696,000 in political advertising. Station operating expenses totaled $25,312,000 for the three months ended September 30, 2000, an increase of $2,427,000 or 11 percent, compared to $22,885,000 for the same period last year. The increase was due to increased expense in local news, primarily at KNTV, of $1,243,000 and increased program expense, primarily at KNTV and the WB affiliates of $1,800,000, offset in part by decreased operating expenses of $1,382,000 resulting from the sale of the Austin station. In connection with the changes at KNTV discussed above, the station's designated market area was changed from Salinas Monterey to San Francisco-Oakland-San Jose on September 1, 2000. As a result, KNTV will no longer be able to broadcast certain syndicated programs because such programs are currently licensed to other stations in the San Francisco-Oakland-San Jose market. Consequently, the Company wrote-off the book value of these programs totaling $1,716,000 during the three months ended September 30, 2000. Corporate expense totaled $2,210,000 for the three months ended September 30, 2000, an increase of $392,000 or 22 percent compared to $1,818,000 for the same period last year. The increase was primarily due to increased professional fees and timing of certain expenses incurred in 2000 compared to 1999. Net interest expense totaled $7,214,000 for the three months ended September 30, 2000, a decrease of $2,019,000 or 22 percent compared to $9,233,000 for the same period last year. The decrease was primarily due to the use of a portion of the net proceeds from the sale of the Austin station in August 1999 to reduce outstanding indebtedness. In addition, during the first six months of 2000 the Company used bank -8- borrowings to repurchase $89,338,000 face amount of its subordinated notes at various discounts, further reducing its debt outstanding. The gain on the sale of assets of $101,292,000 in 1999 resulted from the sale of the Austin station. During the three months ended September 30, 1999, the Company repurchased $32,065,000 of subordinated notes at various premiums, resulting in a net extraordinary loss of $893,000. NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 Net revenue totaled $103,153,000 for the nine months ended September 30, 2000, a decrease of $7,226,000 or 7 percent, compared to $110,379,000 for the same period last year. The decrease was primarily due to reduced revenue of $10,352,000 resulting from the sale of the Austin station in August 1999 offset, in part, by an increase of $4,489,000 in political advertising. Station operating expenses totaled $75,065,000 for the nine months ended September 30, 2000, an increase of $7,021,000 or 10 percent, compared to $68,044,000 for the same period last year. The increase was primarily due to additional investments made in local news, primarily at KNTV, of $7,120,000 and increased program expense, primarily at KNTV and the WB affiliates of $2,838,000, offset in part by decreased operating expenses of $5,549,000 resulting from the sale of the Austin station. In connection with the changes at KNTV discussed above, the station's designated market area was changed from Salinas Monterey to San Francisco-Oakland-San Jose on September 1, 2000. As a result, KNTV will no longer be able to broadcast certain syndicated programs because such programs are currently licensed to other stations in the San Francisco-Oakland-San Jose market. Consequently, the Company wrote-off the book value of these programs totaling $1,716,000 during the nine months ended September 30, 2000. Corporate expense increased $1,168,000 or 18 percent during the nine months ended September 30, 2000 as compared to the same period last year primarily due to an increase in professional fees, which includes the costs associated with the planned acquisition of the Buffalo UPN affiliate that was not consummated. Net interest expense totaled $21,642,000 for the nine months ended September 30, 2000, a decrease of $7,589,000 or 26 percent compared to $29,231,000 for the same period last year. The decrease was primarily due to the use of a portion of the net proceeds from the sale of the Austin station in August 1999 to reduce outstanding indebtedness. In addition, during the first six months of 2000 the Company used bank borrowings to repurchase $89,338,000 face amount of its subordinated notes at various discounts, further reducing its debt outstanding. The gain on the sale of assets of $101,292,000 in 1999 resulted from the sale of the Austin station. The Company sustained severe damage to certain assets in Duluth, Minnesota resulting from an ice storm that occurred in 1999. The Company wrote-off the book balances of the destroyed assets and received insurance proceeds for replacement assets during 1999, resulting in a gain of $2,655,000. Additional insurance proceeds were received in 2000 resulting in a gain of $1,247,000. As mentioned above, the Company repurchased $89,338,000 face amount of its senior subordinated notes at various discounts in 2000, resulting in extraordinary gain on the early extinguishment of debt, net of tax, of $3,710,000. During 1999, the Company repurchased $59,255,000 of subordinated notes at various premiums, resulting in a net extraordinary loss of $893,000. -9- LIQUIDITY AND CAPITAL RESOURCES In July 1999, the Company and ABC agreed to terminate the ABC affiliation for KNTV effective July 1, 2000. The Company received $14,000,000 in cash on September 1, 1999 in accordance with the agreement. As of May 31, 2000, the Company signed definitive agreements forming a strategic alliance with NBC. Pursuant to the agreements, KNTV will become the NBC affiliate in the San Francisco-Oakland-San Jose, California market for a ten-year term commencing January 1, 2002. In consideration for the San Francisco affiliation, the Company agreed to pay NBC $362,000,000 in nine annual installments, with the initial payment in the amount of $61,000,000 being due January 1, 2002. In addition, NBC extended the term of the Company's NBC affiliation agreements with KSEE, WEEK and KBJR until December 31, 2011. As a part of such extension, NBC shall pay the Company a total of $2,430,000 in affiliate compensation in equal semi-annual installments through December 31, 2001, at which time the affiliation payments terminate. The Company has also agreed to spend not less than $1,800,000 prior to or after January 1, 2002 in advertising expense to promote KNTV's affiliation switch to NBC. On June 10, 1998, the Company entered into a bank credit agreement (the "Credit Agreement") that provided for revolving credit borrowings of $260,000,000 and permits borrowings of up to an additional $240,000,000 on an uncommitted basis. On August 31, 1999, the Company sold its Austin television station for $160,000,000, the proceeds of which were used to repay outstanding debt, including borrowings then outstanding under the Credit Agreement. As a result of this sale, the Company had Net Cash Proceeds, as defined in the Credit Agreement, of approximately $62,000,000. Pursuant to the terms of the Credit Agreement, the Company was required to reduce the revolving commitment by the amount of the Net Cash Proceeds. The Credit Agreement can be used to fund future acquisitions of broadcast stations and for general working capital purposes, subject to certain limitations of the financial covenants thereunder. As of February 16 and March 17, 2000, the Company amended the Credit Agreement to revise the maximum total debt ratio contained therein. The Company was not in compliance with the maximum total debt ratio and the minimum fixed charge coverage ratio at September 30, 2000, however the banks waived compliance with such ratios at September 30, 2000 until March 30, 2001. In addition, the Credit Agreement was amended to, among other things, revise the maximum total debt ratio and minimum fixed charge ratio through December 31, 2000 and change the maturity date of the Credit Agreement from December 31, 2005 to March 31, 2002. The Company expects to terminate the Credit Agreement and repay all outstanding borrowings under the Credit Agreement with the proceeds from the sale of senior debt securities. If required, the Company will explore other alternatives including the sale of assets or equity. As of November 13, 2000, the Company had $101,672,000 in borrowings outstanding under the Credit Agreement. In the event that the Company does not repay all outstanding borrowings under the Credit Agreement prior to March 30, 2001, the Company will be in default under the Credit Agreement unless it obtains further waivers from the banks thereunder. Cash flows provided by operating activities was $5,903,000 during the nine months ended September 30, 2000 compared to $5,690,000 during the nine months ended September 30, 1999, an increase of $213,000 or 4 percent. The decrease was primarily due to lower cash paid for interest, offset in part by lower operating cash flow. Cash flows used in investing activities was $10,128,000 during the nine months ended September 30, 2000 compared to cash flows provided by investing activities of $163,363,000 during the nine months ended September 30, 1999, a decrease of $173,491,000. The decrease was primarily due to the proceeds from the -10- disposition of the Austin station in 1999 and reduced insurance proceeds from the damage sustained at the Duluth station. Cash flows provided by financing activities was $3,282,000 during the nine months ended September 30, 2000 compared to cash used in financing activities of $114,777,000 during the nine months ended September 30, 1999, an increase of $118,059,000. The increase was due to significantly less net debt repayments during 2000 and the elimination of cash dividend payments. The Company anticipates that future requirements for capital expenditures will include those incurred during the ordinary course of business, approximately $13,500,000 of costs associated with the implementation of digital television technology over the next eighteen months and costs associated with the expansion of KNTV's studio building over the next three years in excess of $20,000,000. The Company believes that internally generated funds from operations and excess proceeds from the planned sale of senior debt securities will be sufficient to satisfy the Company's cash requirements for its existing operations for the next twelve months, and for the forseeable future thereafter. If required, the Company will explore other alternatives including the sale of assets or equity. -11- PART II OTHER INFORMATION ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company's earnings are affected by changes in short-term interest rates as a result of its Credit Agreement. Under its Credit Agreement, the Company pays interest at floating rates based on Eurodollar. The Company has not entered into any agreements to hedge such risk. Assuming the balance under the Credit Agreement as of December 31, 1999 remains outstanding in 2000, a 2% increase in Eurodollar would increase interest expense by $340,000. This analysis does not consider the effects of the reduced level of overall economic activity that could exist in such an environment. Further, in the event of an increase in interest rates, management could potentially take actions to mitigate its exposure to the change. ITEM 6. Exhibits and Reports on Form 8-K a. EXHIBITS 10.49 Form of Limited Waiver and Fourth Amendment, dated November 6, 2000, to Fourth and Restated Credit Agreement, dated as of June 10, 1998, as amended, by and among the Company, the lenders listed therein, and Bankers Trust Company, as Administrative Agent, The Bank of New York as Documentation Agent, and Goldman Sachs Credit Partners L.P., Union Bank of California, N.A. and ABN-Amro Bank N.V. as Co-Agents. 27. Financial Data Schedule. b. REPORTS ON FORM 8-K NONE -12- SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed by an officer and the principal accounting officer on its behalf by the undersigned thereunto duly authorized. GRANITE BROADCASTING CORPORATION Registrant Date November 14, 2000 /s/ W. DON CORNWELL ------------------------------------------ (W. Don Cornwell) Chief Executive Officer Date November 14, 2000 /s/ LAWRENCE I. WILLS ------------------------------------------ (Lawrence I. Wills) Vice President, Finance and Controller (Principal Accounting Officer) -13- EX-10.49 2 a2030442zex-10_49.txt EXHIBIT 10.49 Exhibit 10.49 EXECUTION GRANITE BROADCASTING CORPORATION LIMITED WAIVER AND FOURTH AMENDMENT TO FOURTH AMENDED AND RESTATED CREDIT AGREEMENT This LIMITED WAIVER AND FOURTH AMENDMENT TO FOURTH AMENDED AND RESTATED CREDIT AGREEMENT (this "AMENDMENT AND WAIVER") is dated as of November 6, 2000 and entered into by and among GRANITE BROADCASTING CORPORATION, a Delaware corporation ("COMPANY"), the financial institutions listed on the signature pages hereof ("LENDERS") and BANKERS TRUST COMPANY ("BANKERS"), as administrative agent for Lenders ("ADMINISTRATIVE AGENT"), and, for purposes of Section 3 hereof, the Credit Support Parties (as defined in Section 3 hereof) listed on the signature pages hereof, and is made with reference to that certain Fourth Amended and Restated Credit Agreement dated as of June 10, 1998 by and among Company, Lenders, Administrative Agent, The Bank of New York as Documentation Agent, and Goldman Sachs Credit Partners L.P., Union Bank of California, N.A. and ABN Amro Bank N.V., as Co-Agents, as amended by that certain First Amendment dated as of March 23, 1999, and that certain Second Amendment dated as of February 16, 2000 and that certain Third Amendment dated as of March 17, 2000 (as so amended, the "CREDIT AGREEMENT"). Capitalized terms used herein without definition shall have the same meanings herein as set forth in the Credit Agreement. RECITALS WHEREAS, Company has notified Administrative Agent and Lenders that it is in default of the financial covenants set forth in subsections 7.6A and 7.6C of the Credit Agreement with respect to the fiscal quarter ending as of September 30, 2000; WHEREAS, Company has requested Administrative Agent and Requisite Lenders to waive such defaults and to make certain amendments to the financial covenants set forth in the Credit Agreement; WHEREAS, Administrative Agent and Requisite Lenders are willing to waive such defaults and make such amendments, but only on the terms and conditions set forth herein: NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, and in reliance on the representations and warranties of Company and the Credit Support Parties herein contained, the parties hereto agree as follows: SECTION 1. LIMITED WAIVER Subject to the terms and conditions set forth herein and in reliance on the representations and warranties of Company herein contained, Lenders hereby waive compliance with the provisions of subsections 7.6A, and 7.6C of the Credit Agreement with respect to the fiscal quarter ending as of September 30, 2000; PROVIDED, that the ratio of Consolidated Total Debt to Consolidated Broadcast Cash Flow as of September 30, 2000, as calculated in accordance with subsection 7.6A, does not exceed 8.25 to 1; PROVIDED, FURTHER, that (a) such waiver shall terminate on March 30, 2001; (b) no more than $140,000,000 in aggregate principal amount of Loans may be outstanding at any time; (c) no Additional Credit Commitments shall be requested by Company pursuant to subsection 2.1A(ii) without the prior written consent of Administrative Agent and Requisite Lenders; (d) Company shall have presented to Administrative Agent and Lenders on or before December 31, 2000, a plan satisfactory in substance and detail to Administrative Agent and Requisite Lenders to take specified actions (which may include the issuance of equity on or before March 31, 2001) that will cause the Company to be in compliance with the financial covenants set forth in subsections 7.6A, B, C and D of the Credit Agreement for the fiscal quarters ending on March 31, 2001 and thereafter, together with projected financial statements based on reasonable assumptions and otherwise satisfactory in substance and detail to Administrative Agent and Requisite Lenders demonstrating pro forma compliance with subsections 7.6A, B, C and D of the Credit Agreement for the fiscal quarters ending on and after March 31, 2001; (e) Company shall report to Administrative Agent and Lenders on the status and progress of the actions described in such plan at least once every two weeks thereafter and shall provide such updates and revisions to the plan and related projected financial statements as are necessary to continue to demonstrate such pro forma compliance; and (f) at all times on and after December 31, 2000, Administrative Agent and Requisite Lenders shall continue to be satisfied with the status, progress and viability of such plan. SECTION 2. AMENDMENTS TO THE CREDIT AGREEMENT 2.1 AMENDMENTS TO SUBSECTION 1.1: CERTAIN DEFINED TERMS. (a) The definition of "APPLICABLE MARGIN" contained in subsection 1.1 of the Credit Agreement is hereby amended and restated in its entirety as follows: `"APPLICABLE MARGIN" means, for each Loan, a percentage per annum determined by reference to the Leverage Ratio as set forth below:
--------------------------------------------------------------------------------------------------- PRICING LEVERAGE RATIO BASE RATE LOANS EURODOLLAR RATE LOANS --------------------------------------------------------------------------------------------------- 7.0 to 1 1.75% 3.00% --------------------------------------------------------------------------------------------------- 6.5 to 1 and less than 7.0 to 1 1.50% 2.75% --------------------------------------------------------------------------------------------------- 6.0 to 1 and less than 6.5 to 1 1.25% 2.50% --------------------------------------------------------------------------------------------------- 5.5 to 1 and less than 6.0 to 1 1.00% 2.25% --------------------------------------------------------------------------------------------------- 5.0 to 1 and less than 5.5 to 1 0.75% 2.00% --------------------------------------------------------------------------------------------------- less than 5.0 to 1 0.50% 1.75% ---------------------------------------------------------------------------------------------------
and the increase in Applicable Margin shall take effect upon the Fourth Amendment Effective Date (as defined in subsection 5.6 of this Amendment and Waiver) with respect to all Loans, including without limitation all Loans outstanding on the Fourth Amendment Effective Date. (b) Subsection 1.1 of the Credit Agreement is hereby further amended by inserting the following new definition in proper alphabetical order: "NET SECURITIES PROCEEDS" means the cash proceeds (net of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses) from the issuance of Securities or incurrence of Indebtedness (other than the Loans) by Company. 2.2 AMENDMENT TO SUBSECTION 2.4A: SCHEDULED COMMITMENT REDUCTIONS. Clause (i) of subsection 2.4A of the Credit Agreement shall be amended by deleting the table set forth in clause (i) thereof in its entirety and substituting the following table therefor:
- -------------------------------------------------------------------------------------------------------- SCHEDULED REDUCTION REVOLVING COMMITMENT (SUBJECT TO DATE AMOUNT 2.4B(ii) AND 2.4B(iii)) - -------------------------------------------------------------------------------------------------------- December 31, 2000 $4,933,400 $192,402,600 - -------------------------------------------------------------------------------------------------------- March 31, 2001 $52,402,600 $140,000,000 - -------------------------------------------------------------------------------------------------------- March 31, 2002 $140,000,000 $0 - --------------------------------------------------------------------------------------------------------
2.3 AMENDMENT TO SUBSECTION 2.4B: MANDATORY PREPAYMENTS. Clause (iii) of subsection 2.4B (Mandatory Prepayments and Mandatory Reductions of Commitments) is hereby amended by: (i) deleting clause (a) thereof in its entirety and substituting the following therefor: "(a) PREPAYMENTS AND REDUCTIONS FROM ASSET SALES. No later than the date of receipt by Company or any of its Subsidiaries of the Cash Proceeds of any Asset Sale, Company shall prepay the Loans and permanently reduce the Revolving Loan Commitments in an amount equal to the Net Cash Proceeds of such Asset Sale."; and (ii) deleting clauses (c) and (d) thereof in their entirety and substituting the following clause (c) therefor: "(c) PREPAYMENTS AND REDUCTIONS DUE TO ISSUANCE OF DEBT/EQUITY SECURITIES. On the date of receipt of the Net Securities Proceeds from the issuance of any equity securities of Company or any Indebtedness of Company (other than the Loans), Company shall prepay the Loans and permanently reduce the Revolving Loan Commitments in an amount equal to such Net Securities Proceeds." 2.4 AMENDMENT TO SUBSECTION 6.1: FINANCIAL STATEMENTS AND OTHER REPORTS. Clause (i) of subsection 6.1 of the Credit Agreement is hereby amended by deleting the title therefrom and substituting the new title "MONTHLY AND QUARTERLY FINANCIALS:" in its place, designating the existing provision as subclause (B) and inserting the following immediately following the title as a new subclause (A) thereto: "(A) MONTHLY STATION OPERATING STATEMENTS: as soon as available and in any event within 20 days after the end of each calendar month, station operating statements (setting forth detailed information concerning the revenue, expenses and broadcast cash flow for such station for such period) for each station operated by Company and its Subsidiaries as at the end of such calendar month and for the period from the beginning of the then current Fiscal Year to the end of such calendar month, setting forth in each case in comparative form the corresponding figures for the corresponding periods of the previous Fiscal Year and the corresponding figures from the consolidated plan and financial forecast for the current Fiscal Year delivered pursuant to subsection 6.1(xiii), all in reasonable detail and certified by the chief financial officer of Company as true, correct and complete;" 2.5 AMENDMENT TO SUBSECTION 6.13: NEW SUBSIDIARIES. Subsection 6.13 of the Credit Agreement is hereby amended by inserting the following proviso at the end thereof: "PROVIDED, that Company shall not be required to cause the actions required pursuant to this subsection with respect to WNGS, Inc. and WNGS License, Inc., so long as neither WNGS, Inc. nor WNGS License, Inc. is engaged in any business or has any assets and each is dissolved, liquidated or wound-up in accordance with the provisions of subsection 7.7 on or before December 31, 2000." 2.6 AMENDMENT TO SUBSECTION 7.3: INVESTMENTS; JOINT VENTURES. Clause (iii) of subsection 7.3 is hereby amended by inserting the words "to the extent permitted by Section 7.17," at the beginning thereof. 2.7 AMENDMENT TO SUBSECTION 7.5: RESTRICTED JUNIOR PAYMENTS. Subsection 7.5 of the Credit Agreement is hereby amended by: (i) deleting clause (i) thereof in its entirety and substituting the following therefor: "(i) Company may make payments on the Existing Subordinated Notes and in respect of any of the Additional Subordinated Indebtedness as required by the terms of the Existing Subordinated Notes or the instruments evidencing such Additional Subordinated Indebtedness respectively, but subject, in each case to the subordination provisions contained therein;" (ii) deleting clause (iv) thereof in its entirety and substituting the following therefor: "(iv) [INTENTIONALLY OMITTED]"; (iii) deleting the proviso to clause (v) thereof in its entirety and substituting the following proviso therefor: "; PROVIDED, that such dividends shall not be paid in cash except as permitted pursuant to subsection 7.5(vii)." (iv) deleting clause (vi) thereof in its entirety and substituting the following therefor: "(vi) [INTENTIONALLY OMITTED]"; and (v) deleting clause (ix) thereof in its entirety and substituting the following therefor: "(ix) [INTENTIONALLY OMITTED]". 2.8 AMENDMENTS TO SUBSECTION 7.6A: MAXIMUM TOTAL DEBT RATIO. Subsection 7.6A of the Credit Agreement is hereby amended by deleting the provisos thereto and inserting the following proviso in place thereof: "; PROVIDED, that notwithstanding anything in the foregoing to the contrary, for any fiscal quarter ending during any period set forth below, the following ratios shall apply:
--------------------------------------------------------------------------------- PERIOD MAXIMUM TOTAL DEBT RATIO --------------------------------------------------------------------------------- 10/01/2000 - 12/31/2000 10.50 to 1 ---------------------------------------------------------------------------------
2.9 AMENDMENTS TO SUBSECTION 7.6C: MINIMUM FIXED CHARGE COVERAGE RATIO. Subsection 7.6C of the Credit Agreement is hereby amended by inserting the words "(other than the fiscal quarter ending on December 31, 2000)" after the words "occurring during any period from and after the Closing Date," in lines 4 and 5 thereof. 2.10 NEW SUBSECTION 7.6D: MINIMUM INTEREST COVERAGE RATIO Subsection 7.6 is hereby further amended by inserting the following as a new subsection 7.6D: "D. MINIMUM INTEREST COVERAGE RATIO. Company shall not permit the ratio of (i) Consolidated Adjusted EBITDA to (ii) Consolidated Cash Interest Expense as of the last day of the fiscal quarter of Company ending on December 31, 2000 to be less than 1:1 (such amounts to be determined by reference to the twelve-month period ending on such day). 2.11 AMENDMENT TO SUBSECTION 7.7: RESTRICTION ON FUNDAMENTAL CHARGES; ASSET SALES Subsection 7.7 of the Credit Agreement is hereby amended by deleting the proviso from clause (iv) thereof in its. 2.12 NEW SUBSECTION 7.17: CONSOLIDATED CAPITAL EXPENDITURES Section 7 of the Credit Agreement is hereby further amended by inserting the following as a new subsection 7.17 at the end thereof: "7.17 CONSOLIDATED CAPITAL EXPENDITURES. Company shall not, and shall not permit any of its Subsidiaries to, make or incur Consolidated Capital Expenditures during any fiscal quarter indicated below, in an aggregate amount in excess of the corresponding amount set forth below opposite such fiscal quarter.
----------------------------------------------------------------------------------------------- FISCAL QUARTER ENDING MAXIMUM CONSOLIDATED EXPENDITURES ----------------------------------------------------------------------------------------------- December 31, 2000 $3,000,000 ----------------------------------------------------------------------------------------------- March 31, 2001 $5,000,000 -----------------------------------------------------------------------------------------------
SECTION 3. COMPANY'S REPRESENTATIONS AND WARRANTIES In order to induce Lenders to enter into this Amendment and Waiver and to amend the Credit Agreement in the manner provided herein, Company represents and warrants to each Lender that the following statements are true, correct and complete: A. CORPORATE POWER AND AUTHORITY. Company has all requisite corporate power and authority to enter into this Amendment and Waiver and to carry out the transactions contemplated by, and perform its obligations under, the Credit Agreement as amended by this Amendment and Waiver (the "AMENDED AGREEMENT"). B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of this Amendment and Waiver and the performance of the Amended Agreement have been duly authorized by all necessary corporate action on the part of Company. C. NO CONFLICT. The execution and delivery by Company of this Amendment and Waiver and the performance by Company of the Amended Agreement do not and will not (i) violate any provision of any law or any governmental rule or regulation applicable to Company or any of its Subsidiaries, the Certificate of Incorporation or Bylaws of Company or any of its Subsidiaries or any order, judgment or decree of any court or other agency of government binding on Company or any of its Subsidiaries, (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any Contractual Obligation of Company or any of its Subsidiaries, (iii) result in or require the creation or imposition of any Lien upon any of the properties or assets of Company or any of its Subsidiaries (other than Liens created under any of the Loan Documents in favor of Administrative Agent on behalf of Lenders), or (iv) require any approval of stockholders or any approval or consent of any Person under any Contractual Obligation of Company or any of its Subsidiaries. D. GOVERNMENTAL CONSENTS. The execution and delivery by Company of this Amendment and Waiver and the performance by Company of the Amended Agreement do not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by, any federal, state or other governmental authority or regulatory body. E. BINDING OBLIGATION. This Amendment and the Amended Agreement have been duly executed and delivered by Company and are the legally valid and binding obligations of Company, enforceable against Company in accordance with their respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors' rights generally or by equitable principles relating to enforceability. F. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT AGREEMENT. The representations and warranties contained in Section 5 of the Credit Agreement are and will be true, correct and complete in all material respects on and as of the date hereof to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true, correct and complete in all material respects on and as of such earlier date. Without limiting the generality of the foregoing, Company hereby represents and warrants that on and as of the date hereof: (i) all the Subsidiaries of Company other than WNGS, Inc. and WNGS License, Inc. are identified on SCHEDULE 1 annexed hereto, which is identical to SCHEDULE 5.1 of the Credit Agreement as supplemented and amended through the date hereof; (ii) all real property owned or leased by the Credit Parties, and any other interest in real property held by any Credit Party, are identified on SCHEDULE 2 annexed hereto, which is a true, correct and complete list of all real property interests held by the Credit Parties and is identical to SCHEDULE 5.19 of the Credit Agreement as supplemented and amended through the date hereof, and, except as identified on SCHEDULE 2 hereto, each such real property interest is subject to a Mortgage; and (iii) set forth on SCHEDULE 3 annexed hereto is the correct name of each Credit Party, together with the location of its chief place of business and chief executive office, the place where it keeps its records regarding accounts and the address of each location at which any of its personal property is located. G. ABSENCE OF DEFAULT. After giving effect to the amendment and waiver set forth herein, no event has occurred and is continuing or will result from the consummation of the transactions contemplated by this Amendment and Waiver that would constitute an Event of Default or a Potential Event of Default. SECTION 4. ACKNOWLEDGEMENT AND CONSENT Company is a party to the Borrower Pledge and Security Agreement and the Borrower Mortgage, in each case as amended through the date hereof, pursuant to which Company has created Liens in favor of Agent on certain Collateral to secure the Obligations. Each of Company's Subsidiaries is a party to the Subsidiary Guaranty and the Subsidiary Pledge Agreement and each of Company's Subsidiaries (other than the License Cos. and Granite Response Television Inc.) is a party to one or more Subsidiary Mortgages, in each case as amended through the date hereof, pursuant to which such Subsidiary has (i) guarantied the Obligations and (ii) created Liens (subject to Liens permitted by the Credit Agreement) in favor of Administrative Agent on certain Collateral (except to the extent prohibited by the FCC or the Communications Act) to secure the obligations of such Subsidiary under the Subsidiary Guaranty. Company and each Subsidiary Guarantor are collectively referred to herein as the "CREDIT SUPPORT PARTIES", and the Borrower Pledge and Security Agreement, the Borrower Mortgage, the Subsidiary Guaranty, the Subsidiary Pledge Agreement and the Subsidiary Mortgages are collectively referred to herein as the "CREDIT SUPPORT DOCUMENTS". Each Credit Support Party hereby acknowledges that it has reviewed the terms and provisions of the Credit Agreement and this Amendment and Waiver and consents to the amendment and limited waiver of the Credit Agreement effected pursuant to this Amendment and Waiver. Each Credit Support Party hereby confirms that each Credit Support Document to which it is a party or otherwise bound and all Collateral encumbered thereby will continue to guaranty or secure, as the case may be, to the fullest extent possible the payment and performance of all "Guarantied Obligations" and "Secured Obligations," as the case may be (in each case as such terms are defined in the applicable Credit Support Document), including without limitation the payment and performance of all such "Guarantied Obligations" or "Secured Obligations," as the case may be, in respect of the Obligations of Company now or hereafter existing under or in respect of the Amended Agreement and the Notes defined therein. Each Credit Support Party acknowledges and agrees that any of the Credit Support Documents to which it is a party or otherwise bound shall continue in full force and effect and that all of its obligations thereunder shall be valid and enforceable and shall not be impaired or limited by the execution or effectiveness of this Amendment and Waiver. Each Credit Support Party represents and warrants that all representations and warranties contained in the Amended Agreement and the Credit Support Documents to which it is a party or otherwise bound are true, correct and complete in all material respects on and as of the date hereof to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true, correct and complete in all material respects on and as of such earlier date. Each Credit Support Party (other than Company) acknowledges and agrees that (i) notwithstanding the conditions to effectiveness set forth in this Amendment and Waiver, such Credit Support Party is not required by the terms of the Credit Agreement or any other Loan Document to consent to the amendments to the Credit Agreement effected pursuant to this Amendment and Waiver and (ii) nothing in the Credit Agreement, this Amendment and Waiver or any other Loan Document shall be deemed to require the consent of such Credit Support Party to any future amendments to the Credit Agreement. SECTION 5. MISCELLANEOUS A. LIMITATION ON WAIVER Without limiting the generality of the provisions of subsection 10.6 of the Credit Agreement, the waiver set forth herein shall be limited precisely as written and relates solely to the noncompliance by Company with the provisions of subsections 7.6A and 7.6C of the Credit Agreement in the manner and to the extent described above, and nothing in this Amendment and Waiver shall be deemed to (a) constitute a waiver of compliance by Company with respect to (i) subsections 7.6A and 7.6C of the Credit Agreement in any other instance or on or after March 30, 2001 or (ii) any other term, provision or condition of the Credit Agreement or any other instrument or agreement referred to therein or (b) prejudice any right or remedy that Agent or any Lender may now have (except to the extent such right or remedy was based upon existing defaults that will not exist after giving effect to this Amendment and Waiver) or may have in the future under or in connection with the Credit Agreement or any other instrument or agreement referred to therein. Except as expressly set forth herein, the terms, provisions and conditions of the Credit Agreement and the other Loan Documents shall remain in full force and effect and in all other respects are hereby ratified and confirmed. B. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS. (i) On and after the date hereof, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or words of like import referring to the Credit Agreement, and each reference in the other Loan Documents to the "Credit Agreement", "thereunder", "thereof" or words of like import referring to the Credit Agreement shall mean and be a reference to the Amended Agreement. (ii) Except as specifically amended by this Amendment and Waiver, the Credit Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed. (iii) The execution, delivery and performance of this Amendment and Waiver shall not, except as expressly provided herein, constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of Administrative Agent or any Lender under, the Credit Agreement or any of the other Loan Documents. C. FEES AND EXPENSES. Company acknowledges that all costs, fees and expenses as described in Subsection 10.2 of the Credit Agreement incurred by Administrative Agent and its counsel with respect to this Amendment and Waiver and the documents and transactions contemplated hereby shall be for the account of Company. D. HEADINGS. Section and subsection headings in this Amendment and Waiver are included herein for convenience of reference only and shall not constitute a part of this Amendment and Waiver for any other purpose or be given any substantive effect. E. APPLICABLE LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. F. COUNTERPARTS; EFFECTIVENESS; AMENDMENT FEE. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. This Amendment shall become effective (the "FOURTH AMENDMENT EFFECTIVE DATE") upon (i) the execution of a counterpart hereof by Company, Requisite Lenders and each of the Credit Support Parties and receipt by Company and Administrative Agent of written or telephonic notification of such execution and authorization of delivery thereof and (ii) the payment by Company to Administrative Agent, for distribution to the Lenders that have executed this Amendment of a non-refundable amendment fee in immediately available funds in an amount equal to 0.125% of each such Lender's Commitment. [Remainder of page intentionally left blank] EXECUTION IN WITNESS WHEREOF, the parties hereto have caused this Amendment and Waiver to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above. ADMINISTRATIVE AGENT: BANKERS TRUST COMPANY, individually and as Administrative Agent and Collateral Agent By: /s/ SUSAN L. LEFEVRE ---------------------------- Name: ---------------------- Title: --------------------- LENDERS: THE BANK OF NEW YORK, as Documentation Agent and a Lender By: /s/ TRISHA E. HARDY ------------------------------ Name: ------------------------ Title: ----------------------- GOLDMAN SACHS CREDIT PARTNERS L.P., as a Co-Agent and a Lender By: /s/ STEPHEN KING ------------------------------ Name: ----------------------- Title: ----------------------- UNION BANK OF CALIFORNIA, N.A., as a Co-Agent and a Lender By: ------------------------------ Name: ----------------------- Title: ----------------------- ABN AMRO BANK N.V. as a Co-Agent and a Lender By: /s/ FRANCIS O.R. LOGAN ------------------------------ Name: ----------------------- Title: ----------------------- By: /s/ DAVID CARRINGTON ------------------------------ Name: ----------------------- Title: ----------------------- NATEXIS BANQUE POPULAIRES, as a Lender By: /s/ EVAN S. KRAUS ------------------------------ Name: ----------------------- Title: ----------------------- CREDIT INDUSTRIEL ET COMMERCIAL, as a Lender By: /s/ MARCUS EDWARDS ------------------------------ Name: ----------------------- Title: ----------------------- By: /s/ ANTHONY ROCK ------------------------------ Name: ----------------------- Title: ----------------------- HELLER FINANCIAL, INC., as a Lender By: /s/ ROBERT M. REEG ------------------------------ Name: ----------------------- Title: ----------------------- BNP PARIBAS, as a Lender By: /s/ SERGE DESRAYAVD ------------------------------ Name: ----------------------- Title: ----------------------- By: /s/ GREGG W. BONARDI ------------------------------ Name: ----------------------- Title: ----------------------- THE BANK OF NOVA SCOTIA, as a Lender By: /s/ PAUL A. WEISSENBERGER ------------------------------ Name: ----------------------- Title: ----------------------- MELLON BANK, N.A., as a Lender By: /s/ PAUL F. NOEL ------------------------------ Name: ----------------------- Title: ----------------------- BANK OF TOKYO-MITSUBISHI TRUST COMPANY, as a Lender By: /s/ MICHAEL J. WISKIND ------------------------------ Name: ----------------------- Title: ----------------------- FINOVA CAPITAL CORPORATION, as a Lender By: ------------------------------ Name: ----------------------- Title: ----------------------- SOUTHERN PACIFIC BANK, as a Lender By: /s/ CHERYL A. WASILEWSKI ------------------------------ Name: ----------------------- Title: ----------------------- COMPANY: GRANITE BROADCASTING CORPORATION By: /s/ ELLEN MCCLAIN HAIME ------------------------------ Name: ----------------------- Title: ----------------------- SUBSIDIARIES: GRANITE RESPONSE TELEVISION, INC. KBVO, INC. KBVO LICENSE, INC. KNTV, INC. KNTV LICENSE, INC. RJR COMMUNICATIONS, INC. KBJR LICENSE, INC. SAN JOAQUIN COMMUNICATIONS CORPORATION KSEE LICENSE, INC., WPTA-TV, INC. WPTA-TV LICENSE, INC. WTVH L.L.C. WTVH LICENSE, INC. WWMT-TV, INC. WWMT-TV LICENSE, INC. WKBW-TV LICENSE, INC. QUEEN CITY BROADCASTING OF NEW YORK, INC. WEEK, INC. WEEK LICENSE, INC. WXON, INC. WXON LICENSE, INC. WLAJ, INC. WLAJ LICENSE, INC. WEEK-TV LICENSE, INC. PACIFIC FM INCORPORATED KOFY-TV LICENSE, INC. By: /s/ LAWRENCE I. WILLS ------------------------------ Name: ----------------------- Title: ----------------------- EX-27 3 a2030442zex-27.txt EXHIBIT 27
5 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 4,510,340 0 27,054,704 302,939 0 64,854,233 76,289,190 33,906,864 719,618,783 39,429,313 299,381,845 0 0 184,381 20,216,618 719,618,783 0 103,153,475 0 109,733,517 1,700,688 0 22,126,710 (30,407,440) (6,404,942) (24,002,498) 0 3,710,204 0 (20,292,294) (2.25) 0
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