-----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, HTSYhsbZDY4gPt/xNScbB419rGnRhaZvh/05NWOhZ6rkLacg0AxRnJyFE1LSLxFr 6gmIVsnQyhLEcQW2p2zLjw== 0000950130-97-002949.txt : 19970627 0000950130-97-002949.hdr.sgml : 19970627 ACCESSION NUMBER: 0000950130-97-002949 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970626 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GRANITE BROADCASTING CORP CENTRAL INDEX KEY: 0000839621 STANDARD INDUSTRIAL CLASSIFICATION: TELEVISION BROADCASTING STATIONS [4833] IRS NUMBER: 133458782 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-19728 FILM NUMBER: 97630679 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/A 1 AMENDMENT #1 TO FORM 10-Q - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997 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 March 31, 1997; Common Stock (Nonvoting), par value $.01 per share - 8,582,091 shares outstanding at March 31, 1997. PART I. FINANCIAL INFORMATION GRANITE BROADCASTING CORPORATION CONSOLIDATED BALANCE SHEET
March 31, December 31, ASSETS 1997 1996 ------ ------------- ------------- (Unaudited) Current assets: Cash and cash equivalents $ 1,379,969 $ 555,753 Accounts receivable, net 27,716,377 27,057,451 Film contract rights 7,411,219 6,276,660 Other assets 4,952,653 9,784,966 ------------ ------------ Total current assets 41,460,218 43,674,830 Property and equipment, net 34,644,844 33,562,019 Film contract rights and other noncurrent assets 3,956,218 4,284,578 Deferred financing fees, net 13,239,423 14,181,662 Intangible assets, net 530,850,164 356,860,115 ------------ ------------ $624,150,867 $452,563,204 ============ ============ LIABILITIES AND STOCKHOLDERS' DEFICIT ------------------------------------- Current liabilities: Accounts payable $ 3,228,490 $ 4,016,964 Accrued interest 10,545,686 6,071,378 Other accrued liabilities 5,440,423 4,497,534 Film contract rights and other current liabilities 15,448,384 9,578,365 ------------ ------------ Total current liabilities 34,662,983 24,164,241 Long-term debt 373,745,995 351,560,900 Film contract rights payable 4,180,786 3,383,428 Deferred tax and other noncurrent liabilities 30,837,953 31,102,272 Commitments Redeemable preferred stock 193,140,326 45,487,500 Stockholders' deficit: Common Stock: 41,000,000 shares authorized consisting of 1,000,000 shares of Voting Common Stock, $.01 par value, and 40,000,000 shares of Common Stock (Nonvoting), $.01 par value; 178,500 shares of Voting Common Stock and 8,582,091 shares of Common Stock (Nonvoting) (8,499,716 shares at December 31,1996) issued and outstanding 87,605 86,782 Additional paid-in capital 41,349,518 45,547,145 Accumulated deficit (50,653,486) (45,375,910) Less: Unearned compensation (2,313,938) (2,506,279) Note receivable from officer (886,875) (886,875) ------------ ------------ Total stockholders' deficit (12,417,176) (3,135,137) ------------ ------------ $624,150,867 $452,563,204 ============ ============
See accompanying notes. -1- GRANITE BROADCASTING CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended March 31, ---------------------------- 1997 1996 ----------- ----------- (Unaudited) Net revenue $32,297,811 $28,629,635 Station operating expenses 19,796,761 17,517,927 Time brokerage agreement fees 150,000 --- Depreciation expense 1,375,476 1,473,380 Amortization expense 3,170,736 2,427,468 Corporate expense 1,473,754 990,014 Non-cash compensation expense 192,336 114,537 ----------- ----------- Operating income 6,138,748 6,106,309 Other expenses: Equity in net loss of investee 400,000 --- Interest expense, net 9,778,119 8,849,730 Non-cash interest expense 575,555 523,810 Other 191,696 125,633 ----------- ----------- Loss before income taxes and extraordinary item (4,806,622) (3,392,864) Provision for income taxes 150,150 61,089 ----------- ----------- Loss before extraordinary item (4,956,772) (3,453,953) Extraordinary loss on early extinguishment of debt (320,804) (3,510,152) ----------- ----------- Net loss $(5,277,576) $(6,964,105) =========== =========== Net loss attributable to common stockholders $(9,474,380) $(7,845,424) =========== =========== Per common share: Loss before extraordinary item $(1.05) $ (0.51) Extraordinary loss on early extinguishment of debt (0.04) (0.42) ----------- ----------- Net loss $(1.09) $ (0.93) =========== =========== Weighted average common shares outstanding 8,735,879 8,464,012
See accompanying notes. -2- GRANITE BROADCASTING CORPORATION CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT Three Months Ended March 31, 1997 (Unaudited)
Class A Common Additional Total Common Stock Paid-in Accumulated Unearned Note Receivable Stockholders' Stock (Nonvoting) Capital Deficit Compensation from Officer Deficit ---------- ----------- ----------- ------------- ------------- -------------- -------------- Balance at December 31, 1996 $1,785 $84,997 $45,547,145 $(45,375,910) $(2,506,279) $(886,875) $(3,135,137) Dividend on redeemable preferred stock (4,121,945) (4,121,945) Accretion of offering costs related to Cumulative Exchangeable Preferred Stock (74,859) (74,859) Issuance of Common Stock (Nonvoting) 823 (823) - Stock expense related to Management Stock Plan 192,341 192,341 Net loss (5,277,576) (5,277,576) ------- ------- ----------- ------------- ------------ ---------- ------------- Balance at March 31, 1997 $1,785 $85,820 $41,349,518 $(50,653,486) $(2,313,938) $(886,875) $(12,417,176) ======= ======= =========== ============= ============ ========== =============
See accompanying notes. -3- GRANITE BROADCASTING CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS
Three Months Ended March 31, ------------------------------------ 1997 1996 ------------- ------------- (Unaudited) Cash flows from operating activities: Net loss $ (5,277,576) $ (6,964,105) Adjustments to reconcile net loss to net cash provided by operating activities: Amortization of intangible assets and deferred financing fees 3,746,291 2,951,278 Depreciation 1,375,476 1,473,380 Non-cash compensation expense 192,336 114,537 Extraordinary loss 320,804 3,510,152 Equity in net loss of investee 400,000 --- Change in assets and liabilities net of effects from acquisitions of stations: (Increase) decrease in accounts receivable (658,886) 3,553,454 Increase in accounts payable and accrued liabilities 4,497,915 1,073,716 Decrease in film contract rights and other noncurrent assets 1,848,637 740,983 Increase in film contract rights payable and other liabilities 3,311,182 734,423 Increase in other assets (1,058,641) (823,238) ------------- ------------- Net cash provided by operating activities 8,697,538 6,364,580 Cash flows from investing activities: Payment for acquisitions of stations, net of cash acquired (172,713,906) --- Investment in Datacast (250,000) --- Capital expenditures (657,289) (1,443,898) ------------- ------------- Net cash used in investing activities (173,621,195) (1,443,898) Cash flows from financing activities: Proceeds from bank financing 41,500,000 1,000,000 Proceeds from senior subordinated notes --- 109,450,000 Repayment of bank debt --- (107,000,000) Retirement of senior subordinated notes (19,405,000) --- Dividends paid (881,320) (881,319) Payment of deferred financing fees (208,307) (3,230,056) Proceeds from issuance of preferred stock 144,742,500 --- ------------- ------------- Net cash provided by (used in) financing activities 165,747,873 (661,375) ------------- ------------- Net increase in cash and cash equivalents 824,216 4,259,307 Cash and cash equivalents, beginning of period 555,753 95,123 ------------- ------------- Cash and cash equivalents, end of period $ 1,379,969 $ 4,354,430 ============= ============= Supplemental information: Cash paid for interest $ 5,444,816 $ 5,967,996 Income taxes paid 166,594 12,500 Non-cash capital expenditures 208,307 101,993 Non-cash dividends 3,240,625 ---
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 generally accepted accounting principles for complete financial statements. Operating results for the three month period ended March 31, 1997 are not necessarily indicative of the results that may be expected for the year ended December 31, 1997. For further information, refer to the Company's consolidated financial statements and notes thereto for the year ended December 31, 1996 which were included in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. All significant intercompany accounts and transactions have been eliminated. Data at and for the year ended December 31, 1996 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 - Acquisitions - --------------------- On January 31, 1997, the Company acquired substantially all of the assets of WXON-TV, the WB affiliate serving Detroit, Michigan, for $175,000,000 and the assumption of certain liabilities. The Company financed the acquisition by borrowing approximately $27,500,000 under its credit agreement and issuing 150,000 shares of its 12-3/4% Cumulative Exchangeable Preferred Stock, par value $0.01 per share (the "New Preferred Stock"), at $1,000 per share. Dividends on the New Preferred Stock are payable semi-annually on April 1 and October 1 and may be paid, at the Company's option, either in cash or by the issuance of additional shares of New Preferred Stock. Note 3 - Long term debt - ----------------------- In March 1997, the Company purchased $19,405,000 face amount of its 9-3/8% Senior Subordinated Notes due December 1, 2005 (the "9-3/8% Notes") at a discount. As a result, the Company recognized an extraordinary loss, after the write-off of a portion of related deferred financing fees, of $320,804. Note 4 - Net loss per common share - ----------------------------------- Net loss per common share for the three months ended March 31, 1997 and 1996 is calculated by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding. The inclusion of additional shares assuming the exercise of outstanding stock options and the conversion of certain preferred stock into Common Stock (Nonvoting) would have been antidilutive for both periods presented. In February 1997, the Financial Accounting Standards Board issued Statement No. 128 "Earnings Per Share" (FAS 128),which establishes new standards for computing and presenting earnings per share. FAS 128 is effective for financial statements issued for periods ending after December 15, 1997, including interim periods. Management does not believe that the implementation of FAS 128 will have a material impact on the Company's per share amounts. -5- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Introduction - ------------ The consolidated financial statements of the Company reflect increases between the three month periods ended March 31, 1997 and 1996 in substantially all line items. The principal reasons for such increases are the acquisition of WXON-TV on January 31, 1997 and the operation of WLAJ-TV under a time brokerage agreement which commenced in October 1996. It is anticipated that the Company's consolidated financial statements for the year ended December 31, 1997 will reflect significant increases in substantially all line items compared to the prior year due to the acquisition of WXON-TV and the operation of WLAJ-TV. 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. Numbers referred to in the following discussion have been rounded to the nearest thousand. The following table sets forth certain operating data for the three months ended March 31, 1997 and 1996:
Three months ended March 31, ---------------------------- 1997 1996 ------------- ------------- Operating income $ 6,139,000 $ 6,106,000 Add: Time brokerage agreement fees 150,000 --- Depreciation and amortization 4,546,000 3,901,000 Corporate expense 1,474,000 990,000 Non-cash compensation 192,000 115,000 ----------- ----------- Broadcast cash flow $12,501,000 $11,112,000 =========== ===========
"Broadcast cash flow" means operating income plus time brokerage agreement fees, depreciation, amortization, corporate expense and non-cash compensation. The Company has included broadcast cash flow data because such data are commonly used as a measure of performance for broadcast companies and are 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, 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 March 31, 1997 and 1996 - ------------------------------------------ Net revenue for the three months ended March 31, 1997 totaled $32,298,000, an increase of $3,668,000 or 13 percent compared to $28,630,000 for the three months ended March 31, 1996. Of this increase, $3,581,000 was due to the inclusion of two months of operations of WXON-TV and three months of operations of WLAJ-TV. The remaining increase was primarily due to increased local and national advertising revenue and incremental revenue from the Company's various internet ventures, partially offset by lower political advertising revenue in a non-election year. -6- Station operating expenses totaled $19,797,000, an increase of $2,279,000 or 13 percent compared to $17,518,000 for the three months ended March 31, 1996. Of this increase, $1,367,000 was due to the inclusion of two months of operations of WXON-TV and three months of operations of WLAJ-TV. The remaining increase was primarily due to increased news and administrative expenses, partially offset by lower promotion expenses. Depreciation and amortization increased $645,000, or 17% during the three months ended March 31, 1997 compared to the same period a year earlier primarily due to the inclusion of two months of operations of WXON-TV. Corporate expense increased $484,000 or 49% during the three months ended March 31, 1997 compared to the same period a year earlier, primarily due to higher administrative costs associated with the expansion of the Company's corporate office to manage its expanded station group. Non-cash compensation expense increased $77,000 or 67% during the three months ended March 31, 1997 compared to the same period a year earlier due to the granting of additional awards payable in Common Stock (Nonvoting) to certain executive employees of the Company under the Management Stock Plan. The equity in net loss of investee of $400,000 for the three months ended March 31, 1997 resulted from the Company recognizing its pro rata share of the net loss of Datacast, LLC under the equity method of accounting. Net interest expense was $9,778,000 compared to $8,850,000 a year earlier, an increase of 10 percent, primarily due to the fact that the Company's 9-3/8% Notes, which were issued on February 22, 1996, were outstanding for a full quarter. Loss before extraordinary item for the three months ended March 31, 1997 totaled $4,957,000 compared to a loss before extraordinary item of $3,454,000 for the same period a year earlier, an increase of $1,503,000. The increase was primarily due to the changes in the line items discussed above. During the three months ended March 31, 1997, the Company purchased $19,405,000 face amount of its 9-3/8% Notes at a discount and replaced it with borrowings under its credit agreement which bear interest at a lower rate, thereby reducing its cost of borrowing. In conjunction with the repurchase of this debt, the Company recognized an extraordinary loss, after the write-off of a portion of related deferred financing fees, of $321,000. During the three months ended March 31, 1996, the Company repaid all then outstanding term loan and revolving credit borrowings under its then existing bank credit agreement using the proceeds from the sales of its 9-3/8% Notes. In connection with the repayment of the term loan, the Company incurred an extraordinary loss on the early extinguishment of debt of $3,510,000 related to the write-off of deferred financing fees. Liquidity and Capital Resources - ------------------------------- In October 1996, the Company entered into agreements with the owner of WLAJ-TV, the ABC affiliate serving Lansing, Michigan, including a time brokerage agreement pursuant to which the Company operates WLAJ-TV and an agreement to acquire substantially all the assets used in the operation of WLAJ-TV for approximately $19.4 million in cash and the assumption of certain liabilities. The Company anticipates financing the acquisition of WLAJ-TV with borrowings under its credit agreement's revolving working capital facility. In connection with these agreements, the Company agreed to provide a loan guarantee of up to $12,000,000 in favor of the owner of WLAJ-TV. On January 31, 1997, the Company acquired substantially all of the assets of WXON-TV for $175,000,000 and the assumption of certain liabilities. The Company financed the acquisition through the sale of 150,000 shares of its New Preferred Stock at $1,000 per share and borrowings of $27,500,000 under its credit agreement. -7- The Company's existing credit agreement allows for revolving credit borrowings of $200,000,000 and permits borrowings of up to $300,000,000 in the aggregate. The revolving credit facility can be used to fund future acquisitions of broadcast stations and for general corporate purposes. As of May 10, 1997, subject to compliance with financial covenants, the Company had $137,000,000 of the revolving credit facility borrowings available under the credit agreement available for acquisitions and working capital purposes. Cash flows provided by operating activities were $8,698,000 during the three months ended March 31, 1997 compared to cash flows provided by operating activities of $6,365,000 during the three months ended March 31, 1996, an increase of $2,333,000 or 37 percent. The increase was primarily due to higher broadcast cash flow and a decrease in net operating assets offset, in part, by higher cash interest expense. Cash flows used in investing activities were $173,621,000 during the three months ended March 31, 1997 compared to $1,444,000 during the three months ended March 31, 1996. Cash flows used in investing activities during the three months ended March 31, 1997 related primarily to the acquisition of WXON-TV while cash flows used in investing activities during the three months ended March 31, 1996 were related entirely to capital expenditures. Cash flows provided by financing activities were $165,748,000 during the three months ended March 31, 1997 compared to cash flows used in financing activities of $661,000 during the three months ended March 31, 1996. The increase resulted primarily from the issuance of the 12-3/4% Cumulative Exchangeable Preferred Stock, an increase in net borrowings and a decrease in payments for deferred financing fees. The Company believes that internally generated funds from operations and borrowings under its credit agreement's revolving working capital facility, if necessary, will be sufficient to satisfy the Company's cash requirements for its existing operations for the next twelve months and for the foreseeable future thereafter. -8- PART II ------- OTHER INFORMATION ----------------- ITEM 6. Exhibits and Reports on Form 8-K -------------------------------- a. Exhibits -------- 10.1 Granite Broadcasting Corporation Stock Option Plan, as amended through April 29, 1997. 10.31 Non-Employee Directors' Stock Plan of Granite Broadcasting Corporation dated April 29, 1997. 11. Statement of Computation of Per Share Earnings 27. Financial Data Schedule (Incorporated by reference to the similarly numbered exhibit to the Company's Amendment No. 2 to the Registration Statement on Form S-4 (Registration No. 333-24907) filed on June 24, 1997). b. Reports on Form 8-K ------------------- 1. Current Report on Form 8-K filed January 15, 1997, reporting the announcement by Granite Broadcasting Corporation of its intention to commence a private offering of securities to raise funds to consummate the acquisition of WXON-TV. No financial statements were filed at such time. 2. Current Report on Form 8-K filed February 7, 1997, announcing the completion of the acquisition by Granite Broadcasting Corporation of substantially all of the assets used in the operation of WXON-TV. Pro Forma Condensed Consolidated Financial Statements (unaudited) were filed on such date. 3. Current Report on Form 8-K/A filed April 14, 1997, amending that certain Current Report on Form 8-K filed February 7, 1997. Audited financial statements related to WXON-TV were filed on such date. -9- 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 June 26, 1997 /s/ W. DON CORNWELL ------------- ------------------------------------- (W. Don Cornwell) Chief Executive Officer Date June 26, 1997 /s/ LAWRENCE I. WILLS ------------- ------------------------------------- (Lawrence I. Wills) Vice President, Finance and Controller (Principal Accounting Officer) -----END PRIVACY-ENHANCED MESSAGE-----