Washington, D.C. 20549

 

Form 10-Q

 

ý           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2005

 

OR

 

o           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 of Incorporation)		(I.R.S. Employer Identification No.)

 

767 Third Avenue, 34th Floor
New York, New York 10017
(212) 826-2530

(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive offices)

 

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   ý   No   o

 

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the act).  Yes   o   No   ý

 

(APPLICABLE ONLY TO CORPORATE ISSUERS:)

 

As of May 3, 2005, the Registrant had 98,250 shares of Class A Voting Common Stock, par value $.01 per share outstanding; and 19,478,436 shares of Common Stock (Nonvoting), par value $.01 per share outstanding.

 

 

DOCUMENTS INCORPORATED BY REFERENCE:  None

 

 

GRANITE BROADCASTING CORPORATION

Form 10-Q

Table of Contents

 

			Page
PART I		FINANCIAL INFORMATION	3
	Item 1.	Financial Statements	3
		Consolidated Balance Sheets as of March 31, 2005 (unaudited) and December 31, 2004	3
		Consolidated Statements of Operations for the Three Months Ended March 31, 2005 and 2004 (unaudited)	4
		Consolidated Statement of Stockholders’ Deficit for the Three Months Ended March 31, 2005 (unaudited)	5
		Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2005 and 2004 (unaudited)	6
		Notes to Consolidated Financial Statements	7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
	Item 4.	Controls and Procedures	27
PART II		OTHER INFORMATION	28
	Item 4.	Submission of Matters to a Vote of Security Holders	28
	Item 5.	Other Information	28
	Item 6.	Exhibits	28
SIGNATURES			29

 

Granite Broadcasting Corporation is a Delaware corporation. As used in this Quarterly Report on Form 10-Q and unless the context otherwise requires, (1) ”Granite,” the “Company,” “we,” “us” and “our” refer to Granite Broadcasting Corporation, together with its direct and indirect subsidiaries, and (2) ”Malara Broadcast Group” and “Malara” refer to Malara Broadcast Group, Inc., together with its direct and indirect subsidiaries.  Our principal executive offices are located at 767 Third Avenue, 34th Floor, New York, NY 10017, and our telephone number at that address is (212) 826-2530. Our web site is located at http://www.granitetv.com. The information on our web site is not part of this report.

 

As of March 8, 2005, we have shared services agreements and advertising representation agreements (which we generally refer to as local service agreements) relating to the two television stations owned by Malara Broadcast Group, but do not own any of the equity interests in Malara Broadcast Group.  For a description of the relationship between us and Malara Broadcast Group, see Item 2.  “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Recent Developments.”

 

1

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

 

This report includes and incorporates forward-looking statements.  We have based these forward-looking statements on our current expectations and projections about future events.  Generally, the words “anticipates,” “believes,” “expects,” “intends,” “estimates,” “projects,” “plans” and similar expressions identify forward-looking statements. We believe that the forward-looking statements contained in this report are based upon reasonable assumptions, we can give no assurance that our goals will be achieved. These forward-looking statements are subject to risks, uncertainties and assumptions about us, including, among other things:

 

•      inability to implement our strategy, or, having implemented it, failure to realize anticipated cost savings or revenue opportunities available through implementation of our strategy;

 

•      inability to effect dispositions or acquisitions of television stations, which are an important part of our strategy;

 

•      the effects of governmental regulation of broadcasting, including adverse changes in, or interpretations of, the exceptions to the Federal Communications Commission’s duopoly rule which could restrict, or eliminate, our ability to enter into duopoly-type operating arrangements and implement our operating strategy;

 

•      pricing fluctuations in national and local advertising;

 

•      volatility or increases in programming costs;

 

•      restrictions on our operations due to, and the effect of, our significant leverage and limited sources of liquidity;

 

•      the impact of changes in national and regional economies;

 

•      delay in any economic recovery or the recovery not being as robust as might otherwise have been anticipated;

 

•      our ability to service our outstanding debt;

 

•      successful integration of acquired television stations (including achievement of synergies and cost reductions);

 

•      successful results of local services arrangement with Malara Broadcast Group stations in Fort Wayne, Indiana and Duluth, Minnesota;

 

•      any extraordinary, newsworthy event, including hostilities or terrorist attacks;

 

•      competition in the markets in which the stations we own and the stations to which we provide services are located;

 

•      loss of network affiliations or changes in the terms of network affiliation agreements upon renewal; and

 

•      technological change and innovation in the broadcasting industry.

 

Other matters set forth in this report, as well as risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2004, filed with the Securities and Exchange Commission may also cause actual results in the future to differ materially from those described in the forward-looking statements.  We undertake no obligation to update and revise any forward-looking statements, whether as a result of new information, future events or otherwise.  In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this report might not occur.

 

2

 

PART I. FINANCIAL INFORMATION

 

Item 1.   Financial Statements

GRANITE BROADCASTING CORPORATION

CONSOLIDATED BALANCE SHEETS

 

		March 31,			December 31,
		2005			2004
		(Unaudited)
Assets
Current assets:
Cash and cash equivalents (Excludes $24,997,500 of restricted cash equivalents at March 31, 2005, which is shown separately below.)		$	37,951,592		$	60,858,710
Marketable securities, at fair value		2,502,465			5,603,500
Accounts receivable, less allowance for doubtful accounts ($812,456 at March 31, 2005 and $896,465 at December 31, 2004)		19,815,622			20,551,203
Film contract rights		9,694,579			11,605,637
Other current assets		5,399,757			4,442,080
Total current assets		75,364,015			103,061,130
Restricted cash equivalents		24,997,500			—
Property and equipment, net		49,975,498			45,739,747
Film contract rights		4,021,223			5,180,140
Other non current assets		4,795,176			8,430,731
Deferred financing fees, less accumulated amortization ($2,509,582 at March 31, 2005 and $1,989,038 at December 31, 2004)		13,481,937			11,760,080
Goodwill, net		65,374,586			47,632,113
Broadcast licenses, net		134,755,735			127,331,829
Network affiliations, net		102,429,224			80,793,410
Total assets		$	475,194,894		$	429,929,180
Liabilities and stockholders’ deficit
Current liabilities:
Accounts payable		$	1,741,470		$	1,859,291
Accrued interest		13,162,500			3,290,625
Other accrued liabilities		6,420,290			7,376,683
Film contract rights payable		22,998,384			24,526,448
Other current liabilities		4,975,230			3,785,399
Total current liabilities		49,297,874			40,838,446
Long-term debt		454,467,473			400,791,298
Film contract rights payable		14,499,103			17,976,348
Deferred tax liability		19,107,125			19,347,007
Redeemable preferred stock		198,924,682			198,835,862
Accrued dividends on redeemable preferred stock		76,643,534			70,256,573
Other non current liabilities		13,728,342			13,973,794
Stockholders’ deficit:
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; 98,250 shares of Class A Common Stock and 19,478,436 shares of Common Stock (Nonvoting) (19,283,924 shares at December 31, 2004) issued and outstanding at March 31, 2005.		195,766			193,820
Additional paid-in capital		364,812			361,088
Accumulated other comprehensive gain (loss)		7,021			(12,914		)
Accumulated deficit		(350,904,073		)	(331,410,284		)
Less: Unearned compensation		(261,090		)	(346,183		)
Treasury stock, at cost		(875,675		)	(875,675		)
Total stockholders’ deficit		(351,473,239		)	(332,090,148		)
Total liabilities and stockholders’ deficit		$	475,194,894		$	429,929,180

 

See accompanying notes.

 

3

 

GRANITE BROADCASTING CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

		Three Months Ended March 31,
		2005			2004
Net revenues		$	25,736,910		$	26,000,641
Operating expenses:
Direct operating expenses (exclusive of depreciation and amortization expenses shown separately below)		12,313,010			13,001,237
Selling, general and administrative expenses (exclusive of depreciation and amortization expenses shown separately below)		8,835,437			8,090,039
Corporate expense (exclusive of depreciation expense shown separately below)		2,697,899			3,020,718
Depreciation		1,828,660			1,762,477
Amortization of intangible assets		2,039,740			1,882,238
Performance award expense		319,797			524,271
Non-cash compensation expense (1)		94,593			302,824
Operating loss		(2,392,226		)	(2,583,163		)
Other expenses (income):
Interest expense		10,190,153			9,872,593
Interest income		(448,754		)	(232,527		)
Non-cash interest expense		1,072,541			1,146,441
Non-cash preferred stock dividend		6,386,961			6,386,961
Other		79,406			139,938
Loss before income taxes		(19,672,533		)	(19,896,569		)
Benefit for income taxes		(178,744		)	(2,483,672		)
Net loss		$	(19,493,789	)	$	(17,412,897	)
Net loss attributable to common shareholders		$	(19,493,789	)	$	(17,412,897	)
Basic and diluted net loss per share		$	(1.00	)	$	(0.90	)
Weighted average common shares outstanding		19,501,042			19,319,460

 

(1) Allocation of non-cash compensation expense to other operating expenses:

 

Station expenses		$	19,903		$	28,536
Corporate expense		74,690			274,288
Non-cash compensation expense		$	94,593		$	302,824

 

See accompanying notes.

 

4

 

GRANITE BROADCASTING CORPORATION

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT

(Unaudited)

 

		Class A Common Stock			Common Stock (Nonvoting)			Additional Paid-in Capital			Other Comprehensive Income/(Loss)			Accumulated Deficit			Unearned Compensation			Treasury Stock			Total Stockholders’ Deficit
Balance at December 31, 2004		$	982		$	192,838		$	361,088		$	(12,914	)	$	(331,410,284	)	$	(346,183	)	$	(875,675	)	$	(332,090,148	)
Issuance of Common Stock (Nonvoting)					1,946			(1,946		)													—
Stock expense related to stock plans								5,670									37,785						43,455
Discount on loans to officers																	47,308						47,308
Net loss														(19,493,789		)							(19,493,789		)
Unrealized gain on investment											19,935												19,935
Comprehensive loss																							(19,473,854		)
Balance at March 31, 2005		$	982		$	194,784		$	364,812		$	7,021		$	(350,904,073	)	$	(261,090	)	$	(875,675	)	$	(351,473,239	)

 

See accompanying notes.

 

5

 

GRANITE BROADCASTING CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

		Three Months Ended March 31,
		2005			2004
Cash flows from operating activities:
Net loss		$	(19,493,789	)	$	(17,412,897	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of intangible assets		2,039,740			1,882,238
Depreciation		1,828,660			1,762,477
Performance award expense		319,797			524,271
Non-cash compensation expense		94,593			302,824
Non-cash interest expense		1,072,541			1,146,441
Non-cash preferred stock dividend		6,386,961			6,386,961
Deferred tax benefit		(178,744		)	(2,483,672		)
Change in assets and liabilities:
Decrease in accounts receivable		2,971,742			3,176,124
Increase in accrued liabilities		8,502,920			7,440,437
(Decrease) Increase in accounts payable		(359,704		)	360,743
WB affiliation payment		(630,857		)	(1,057,532		)
Decrease in film contract rights and other assets		5,886,462			2,998,885
Decrease in film contract rights payable and other liabilities		(4,958,525		)	(5,409,536		)
Net cash provided by (used in) operating activities		3,481,797			(382,236		)
Cash flows from investing activities:
Sales (purchases) of marketable securities and other investments		3,115,062			(8,749,003		)
Payment for acquisition of assets		(55,487,780		)	—
Purchase of U.S. Government Securities		(24,997,500		)	—
Capital expenditures		(276,296		)	(1,270,292		)
Net cash used in investing activities		(77,646,514		)	(10,019,295		)
Cash flows from financing activities:
Proceed from senior credit facility		53,500,000			—
Payment of deferred financing fees		(2,242,401		)	(42,716		)
Net cash provided by (used in) financing activities		51,257,599			(42,716		)
Net decrease in cash and cash equivalents		(22,907,118		)	(10,444,247		)
Cash and cash equivalents, beginning of period		60,858,710			90,213,995
Cash and cash equivalents, end of period		$	37,951,592		$	79,769,748
Supplemental information:
Cash paid for interest		$	260,082		$	—
Cash paid for income taxes		19,000			3,100
Non-cash capital expenditures		51,027			33,622

 

See accompanying notes.

 

6

 

GRANITE BROADCASTING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

Note 1 – Operations of the Company

 

The business operations of Granite Broadcasting Corporation and its wholly owned subsidiaries (the “Company”) consist of eight network affiliated television stations in the United States, consisting of four NBC-affiliated television stations, one ABC-affiliated station, one CBS-affiliated television station and two WB Network stations. The Company’s stations are located in New York, California, Michigan, Indiana, Illinois and Minnesota. Through various local service agreements (as fully discussed below), Granite Broadcasting Corporation provides advertising sales, promotion, administrative services and selected programming to two television stations owned by Malara Broadcast Group, Inc (“Malara Broadcast Group”).

 

As more fully discussed in Note 3, the Company completed the sale of its Fort Wayne, Indiana ABC affiliate, WPTA-TV, to Malara Broadcast Group and acquired the Fort Wayne, Indiana NBC affiliate, WISE-TV from New Vision Group, LLC. in March 2005.  Malara Broadcast Group also acquired KDLH-TV, the CBS affiliate serving Duluth, Minnesota from New Vision Group, LLC. The Company entered into a strategic arrangement with Malara Broadcast Group, under which the Company provides advertising sales, promotion and administrative services, and selected programming to WPTA-TV and KDLH-TV under local services agreements. Although the Company does not own Malara Broadcast Group or its television stations, the Company is deemed to be the primary beneficiary of Malara Broadcast Group as defined under Financial Accounting Standards Board Interpretation No. 46, Consolidation of Variable Interest Entities (“Interpretation 46”). As a result, Interpretation 46 requires the Company to consolidate Malara Broadcast Group’s financial position, results of operations and cash flows for the period ended March 31, 2005.

 

Malara Broadcast Group financed its acquisition of WPTA-TV and KDLH-TV with the proceeds of a Senior Credit Facility (the “Malara Broadcast Group Senior Credit Facility”) consisting of two terms loans totaling $48.5 million and a revolving loan of $5 million. The $23.5 million Malara Broadcast Group Term Loan A is secured by a letter of credit. To secure the reimbursement obligations in the event of a draw on the letter of credit, pursuant to the terms and conditions of an Application and Agreement for Standby Letter of Credit, the Company pledged $25 million of U.S. Government Securities. The $25 million Malara Broadcast Group Term Loan B and the $5 million revolving loan are secured by the assets of WPTA-TV and KDLH-TV, and guaranteed on an unsecured basis by the Company.

 

As of May 9, 2005, the Company had approximately $37,191,000 of cash, cash equivalents and marketable securities on hand, which excluded $24,997,500 in U.S. Government Securities which are pledged to secure the reimbursement obligations in the event of a draw on the letter of credit that serves as collateral for the Term Loan A under Malara Broadcast Group’s Senior Credit Facility and is restricted and not available for working capital or any other purposes.  To the extent that principal payments are made on the Term Loan A, the letter of credit shall be proportionately reduced and the Company shall be permitted to proportionately reduce the amount of pledged U.S. Government Securities. Absent changes to its capital structure and station ownership, the Company may not have enough liquidity to service its existing obligations over the next twelve months.  In order to improve the Company’s existing liquidity position, the Company is currently exploring the sale of assets and the raising of additional capital.  However, under its Indenture, the Company’s use of the net proceeds from the sale of assets is restricted.  Of the net proceeds received in an asset sale, $5 million may be used for working capital purposes and the remainder must be used either:

 

•      to make an investment in properties and assets that replace the properties and assets that were the subject of such asset sale or in properties and assets that will be used in the business of the Company and its Restricted Subsidiaries as existing on the Issue Date or in businesses reasonably related thereto (“Replacement Assets”) or to finance, directly or indirectly, a Permitted Business Acquisition or enter into a definitive agreement to effectuate such acquisition; provided that (A) the primary purpose of such acquisition of Replacement Assets or Permitted Business Acquisition is to acquire, and there is acquired, a television station with a Big-4 (ABC, CBS, NBC or Fox) network affiliation agreement in place or the creation (through ownership by the Company and its Restricted Subsidiaries) of a “duopoly” in a market and (B) that the Company shall use all reasonable best efforts to promptly dispose of any other assets acquired in such acquisition or Permitted Business Acquisition (as such terms are defined in the Indenture); or

 

•      to make an offer to all holders of the Notes to purchase such amount of the Notes less any such net proceeds used to acquire qualifying Replacement Assets or to make a Permitted Business Acquisition.

 

Assuming the Company is successful in selling assets and raising additional capital, it believes that the available proceeds together with the cash, cash equivalents and marketable securities on hand and internally generated funds from operations will be sufficient to satisfy

 

7

 

our cash requirements for our existing operations for the next twelve months. However, a lack of liquidity would have a material adverse effect on the Company’s business strategy and therefore affect its ability to continue as a going concern. The 2005 quarterly financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Note 2 – Summary of Significant Accounting Policies

 

Interim Financial Statements

 

The accompanying unaudited consolidated financial statements include the accounts of the Company and have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by United States generally accepted accounting principles for complete financial statements.  Operating results for the three month period ended March 31, 2005 are not necessarily indicative of the results that may be expected for the year ended December 31, 2005.  For further information, refer to the Company’s consolidated financial statements and notes thereto for the year ended December 31, 2004, which were included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004.  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.

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of the Company and the accounts of independently-owned Malara Broadcast Group where it is deemed that the Company is the primary beneficiary of a variable interest entity in accordance with Interpretation 46. All intercompany account balances and transactions have been eliminated in consolidation.

 

Reclassification

 

Certain balances in the prior period have been reclassified to conform to the current period’s presentation.

 

Malara Broadcast Group

 

Malara Broadcast Group is included in these consolidated financial statements because the Company is deemed to be the primary beneficiary of Malara Broadcast Group as defined by Interpretation 46 as a result of (1) the Company’s guarantee of the obligations incurred under Malara Broadcast Group’s Senior Secured Credit Facility, (2) local service agreements the Company has with Malara Broadcast Group and (3) put or call option agreements the Company has with Malara Broadcast Group to acquire all of the assets and assume the liabilities of each Malara Broadcast Group television station, subject to FCC approval (see Note 3 for further details on the aforementioned).

 

Restricted Cash Equivalents

 

The $23.5 million Term Loan A under the Malara Broadcast Group Senior Credit Facility is secured by a letter of credit.  To secure the reimbursement obligations in the event of a draw on the letter of credit and pursuant to the terms and conditions of an Application and Agreement for Standby Letter of Credit, the Company pledged $25 million of U.S. Government Securities, which are not available for working capital or any other purposes and held in escrow. To the extent that principal payments are made on the Term Loan A, the letter of credit shall be proportionately reduced and the Company shall be permitted to proportionately reduce the amount of the pledged U.S. Government Securities. As of March 31, 2005, the restricted U.S. Government Securities totaled $24,997,500.

 

Cash Equivalents and Investments in Marketable Securities

 

All highly liquid investments with a maturity of ninety days or less from the date of purchase are considered cash equivalents. The marketable securities are classified as available-for-sale in accordance with the provisions of Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities.  These securities are carried at fair market value based on current market quotes. Unrealized gains and losses are reported in stockholders’ equity as a separate component of other comprehensive income / (loss) until realized.  Gains and losses on securities sold are based on the specific identification method. The Company does not hold these securities for speculative or trading purposes. As of March 31, 2005, the Company’s unrealized holding gains totaled approximately $7,000.  For the three months ended March 31, 2005, the Company recorded realized loss of approximately $11,000.

 

8

 

Stock-Based Compensation

 

The Company has adopted the disclosure provisions of Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure, or Statement 148, to require disclosure in the summary of accounting policies of the effects of an entity’s accounting policy with respect to stock-based compensation on reported net income / (loss) and earnings per share in annual and interim financial statements.

 

The Company accounts for stock option grants under the recognition and measurement principles of Accounting Principles Board (“APB”) No 25, Accounting for Stock Issued to Employees and related interpretations. Under APB No. 25, because the exercise price of the Company’s stock options equals the market price (fair value) of the underlying stock on the date of grant, no compensation expense is recorded.

 

The following table illustrates the effect on net loss and loss per share as if the Company had applied the fair value recognition provisions of Statement of Financial Accounting Standards No. 123 Accounting for Stock-Based Compensation,, as amended by Statement 148, to stock-based compensation for the three months ended March 31, 2005 and 2004 which may not be representative of the impact in future years.

 

		Three Months Ended March 31,
		2005			2004
		(unaudited)			(unaudited)
Net loss attributable to common shareholders, as reported		$	(19,493,789	)	$	(17,412,897	)
Add: pro forma compensation expense		104,000			357,374
Less: compensation expense, as reported		9,500			12,000
Pro forma net loss attributable to common shareholders		$	(19,588,289	)	$	(17,758,271	)
Basic and diluted net loss per share, as reported		$	(1.00	)	$	(0.90	)
Pro forma compensation expense		(0.00		)	(0.02		)
Pro forma basic and diluted net loss per share		$	(1.00	)	$	(0.92	)

 

The fair value for each option grant was estimated at the date of grant using the Black-Scholes options pricing model.  The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable.  In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility.  The Company’s employee stock options have characteristics significantly different from those of traded options and changes in the subjective input assumptions can materially affect the fair value estimate.

 

Recent Accounting Pronouncements

 

In December 2004, FASB issued Statement of Financial Accounting Standards No. 123(R), Share-Based Payment, or Statement 123(R). Statement 123(R) addresses the accounting for share-based payment transactions in which an enterprise receives employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. Statement 123(R) requires an entity to recognize the grant-date fair-value expense of stock options or other equity based compensation issued to employees in the statement of operations. The revised Statement generally requires that an entity account for those transactions using the fair-value-based method, and eliminates the intrinsic value method of accounting in Accounting Principles Board No. 25, Accounting for Stock Issued to Employees, or APB 25.   The revised Statement requires entities to disclose information about the nature of the share-based payment transactions and the effects of those transactions on the financial position, results of operations or cash flows.

 

Statement 123(R) is effective for public companies that do not file as small business issuers as of the beginning of the first annual reporting period that begins after June 15, 2005. All public companies must use either the modified prospective or modified retrospective transition method. Early adoption of Statement 123(R) for interim or annual periods for which financial statements or interim reports have not been issued is encouraged but not required. The Company has not fully evaluated the impact, if any, of adopting this pronouncement which must be adopted in the first quarter of 2006, but it believes that the adoption of this Statement will not have a significant accounting impact. See “Stock-Based Compensation” for the pro forma impact if compensation costs for the Company’s stock option plans had been determined based on the fair value method set forth in Statement 123(R).

 

9

 

Note 3 – Acquisitions and Dispositions

 

On March 7, 2005, the Company completed the sale of its Fort Wayne, Indiana ABC affiliate, WPTA-TV to a subsidiary of Malara Broadcast Group Inc. (“Malara Broadcast Group”) for approximately $45.4 million, pursuant to the terms and conditions of an asset purchase agreement, dated April 23, 2004.  In addition, on March 8, 2005, the Company completed its purchase of WISE-TV, the NBC affiliate serving Fort Wayne from New Vision Group, LLC, or New Vision Television, for approximately $43.5 million, pursuant to the terms and conditions of a stock purchase agreement, dated April 23, 2004.

 

In addition, another subsidiary of Malara Broadcast Group acquired CBS affiliate KDLH-TV, Duluth, Minnesota from New Vision Television on March 8, 2005 for approximately $9.5 million, pursuant to the terms and conditions of an asset purchase agreement, dated April 23, 2004.

 

On March 8, 2005, the Company entered into a strategic arrangement with Malara Broadcast Group, under which the Company provides advertising sales, promotion and administrative services, and selected programming to WPTA-TV and KDLH-TV in return for certain fees that will be paid by Malara Broadcast Group to the Company. The fees payable to the Company will be paid after current debt service as well as certain other expenses Malara Broadcast Group incurs directly are satisfied.

 

Malara Broadcast Group financed its acquisition of WPTA-TV and KDLH-TV with the proceeds of the Malara Broadcast Group Senior Credit Facility (see Note 6).

 

The Company does not own Malara Broadcast Group or its television stations. However, as a result of the Company’s guarantee of the obligations incurred under Malara Broadcast Group’s senior secured credit facility with respect to the Term Loan B and the revolving loan and due to its arrangements under the local service agreements and put or call option agreements, under Interpretation 46, the Company is required to consolidate Malara Broadcast Group’s financial position, results of operations and cash flows. In addition, in accordance with the provisions of Interpretation 46, the Company did not account for the sale of the assets of WPTA-TV and no gain therefrom was recognized in the consolidated statements of operations. Additionally, the Company did not apply the provisions of purchase accounting to Malara Broadcast Group’s acquisition of WPTA-TV.

 

In May 2004, an application was filed with the Federal Communications Commission, of FCC, seeking consent to assign the license of television station KDLH to a subsidiary of Malara Broadcast Group.  A petition to deny the application was filed with the FCC jointly by two competing television station licensees in the Duluth market asserting that the Company will have a prohibited ownership interest in KDLH by virtue of the operating arrangement between Malara Broadcast Group and the Company.  The FCC’s Media Bureau (“Bureau”) denied the petition and granted the assignment application in December 2004.  In January 2005, the petitioning broadcasters filed an application for review seeking Commission-level review of the Bureau’s decision.  Malara Broadcast Group filed an opposition to the application for review, and the petitioning broadcasters filed a response to that opposition.  The FCC has not yet ruled on the application for review.  Although the Company believes that the application for review is without merit and anticipates that the FCC will affirm the grant of the assignment application for KDLH, it is not possible to predict how the FCC will rule on the application for review.  It also is not possible to predict any remedial action or possible sanction that may be imposed by the FCC in the event that it grants the application for review.  An FCC grant of the application for review ultimately could result in a reformation or rescission of these agreements, the assignment of the KDLH license back to New Vision Group, LLC, or a sale by Malara Broadcast Group of its ownership of KDLH.

 

Each of the acquisitions listed below was consummated during the three months ended March 31, 2005. The Company’s acquisition of WISE and Malara Broadcast Group’s acquisition of KDLH were accounted for under the purchase method of accounting. The consolidated financial statements continue to include the operating results of WPTA as well as the operating results of WISE and KDLH from the date of consummation of the acquisition. In accordance with the provisions of Interpretation 46, the Company did not account for the sale of the assets of WPTA.

 

Station		Network Affiliation		Market		Date Acquired		Acquiring Company
WISE		NBC		Fort Wayne, Indiana		March 8, 2005		Granite Broadcast Corporation
WPTA (1), (2)		ABC		Fort Wayne, Indiana		March 7, 2005		Malara Broadcast Group
KDLH (1)		CBS		Duluth, Minnesota		March 8, 2005		Malara Broadcast Group

 

(1)   Operations under local service agreements, whereby, the Company provides advertising, sales, promotions, administrative services and selected programming services to Malara Broadcast Group television stations in return for certain fees that will be paid to the Company by Malara Broadcast Group.

(2)   In accordance with Interpretation 46, the Company did not account for the sale of the assets of WPTA-TV and no gain therefrom was recognized in the consolidated statements of operations. In addition, the Company did not apply the provisions of purchase accounting to Malara Broadcast Group’s acquisition of WPTA-TV.

 

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WISE

 

On March 8, 2005, the Company acquired the stock of WISE-TV from New Vision Group, LLC for $43.5 million plus approximately $2,100,000 of transactions costs. The acquisition was accounted for under the purchase method of accounting and accordingly, the purchase price was allocated to assets acquired based on their estimated fair value on the acquisition date.

 

The following table summarizes the allocation of the purchase price of WISE-TV on March 8, 2005. The Company is currently obtaining a third-party valuation of certain acquired intangible assets and therefore the allocation below is preliminary and estimated and is subject to change once the third-party valuation is completed. In addition, net assets acquired are subject to future working capital adjustments and therefore the amount below is preliminary and estimated and subject to change.

 

		Value at
		March 8, 2005
Purchase Price		$	45,649,000
Net Assets Acquired		1,999,000
FCC License (indefinite lived)		5,424,000
Network Affiliation (estimated useful life, 25 years)		20,797,000
Goodwill, including transaction costs (indefinite lived)		$	17,429,000

 

KDLH

 

On March 8, 2005, Malara Broadcast Group acquired substantially all of the assets of KDLH-TV from New Vision Group, LLC for $9.5 million plus approximately $300,000 of transactions costs. The acquisition was accounted for under the purchase method of accounting and accordingly, the purchase price was allocated to assets acquired based on their estimated fair value on the acquisition date.

 

The following table summarizes the allocation of the purchase price of KDLH-TV acquired on March 8, 2005. Malara Broadcast Group is currently obtaining a third-party valuation of certain acquired intangible assets and therefore the allocation below is preliminary and estimated and is subject to change once the third-party valuation is completed. In addition, net assets acquired are subject to future working capital adjustments and therefore the amount below is preliminary and estimated and subject to change.

 

		Value at
		March 8, 2005
Purchase Price		$	9,840,000
Net Assets Acquired		4,648,000
FCC License (indefinite lived)		2,000,000
Network Affiliation (estimated useful life, 25 years)		2,879,000
Goodwill, including transaction costs (indefinite lived)		$	313,000

 

The following unaudited pro forma information for the three months ended March 31, 2005 and 2004 has been presented as if the Company’s acquisition of WISE-TV and Malara Broadcast Group’s acquisition of KDLH-TV had occurred on January 1, of each year:

 

		Three Months Ended March 31,
		2005			2004
		Pro Forma			Pro Forma
Net Revenues		$	27,588,000		$	28,861,000
Operating Expenses		30,564,000			31,497,000
Loss from Operations		(2,976,000		)	(2,636,000		)
Other Expenses		18,205,000			18,556,000
Loss before Taxes		(21,181,000		)	(21,192,000		)
Benefit for income taxes		(179,000		)	(2,484,000		)
Net loss attributable to common shareholders		(21,002,000		)	(18,708,000		)
Basic and diluted net loss per share		$	(1.08	)	$	(0.97	)
Weighted average common shares outstanding		19,501,042			19,319,460

 

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The selected unaudited pro forma information is presented for illustrative purposes only and is not necessarily indicative of results of operations in the future periods or results that would have been achieved had the Company’s acquisition of WISE-TV and Malara Broadcast Group’s acquisition of KDLH-TV had occurred during the specified periods.

 

Note 4 – Related Parties

 

In February 2003, the Compensation Committee recommended, and the Board of Directors approved, an incentive award of $3,286,065 to each of Mr. Cornwell and Mr. Beck to be paid, subject to vesting terms, only upon the occurrence of the refinancing with a maturity of at least two years, of the senior debt due April 15, 2004. On December 22, 2003, the Company issued $405 million aggregate principal amount of 9 3/4 % Senior Secured Notes, the proceeds of which were used by the Company in part to repay all outstanding borrowings (plus accrued interest) under the Company’s then outstanding senior credit agreement, which satisfied the performance objective of the awards.  Mr. Cornwell’s award, which vests in one-third tranches over three years from the refinancing date, will be used to repay in full his outstanding loan from the Company of $3,286,065 due January 25, 2006.  Mr. Cornwell has irrevocably elected to defer payment of the first two tranches under his performance award until January 25, 2006 when his loan is repaid.  On March 1, 2005, the Board of Directors approved the acceleration of payment of the third tranche of Mr. Cornwell’s award to January 25, 2006.

 

On September 21, 2004, Stuart Beck resigned from the Company to accept the appointment as Ambassador/Permanent Representative of the Republic of Palau to the United Nations.  Mr. Beck remains on the Company’s Board of Directors. Pursuant to his separation agreement, the Company granted Mr. Beck severance totaling $1,008,000, payable in equal installments over eighteen months from the date of separation.  In addition, Mr. Beck was awarded a pro-rated bonus of approximately $255,600 based upon achievements of certain financial targets in 2004 which was paid during the three months ended March 31, 2005.

 

Under the terms of the separation agreement, the Company and Stuart J. Beck amended the Performance Award and deferral of such payments pursuant to the Separation Agreement.  Under the amended terms of the Performance Award, Mr. Beck’s Performance Award fully vested as of the separation date and payment of $221,200 was made on September 30, 2004 to repay his outstanding promissory note to the Company.  The remaining vested award of $3,065,000 is payable in cash on December 22, 2006. In addition, the Company modified the terms of Mr. Beck’s outstanding stock option awards to allow his options to continue to vest and have the right to exercise his options until the earlier of (A) the later of January 2, 2007 and 30 days after the last day of Mr. Beck’s continuous service on the Company’s Board of Directors and (B) the fixed date on which each stock option award was initially set to expire.

 

During the fourth quarter of 2004 and pursuant to the separation agreement, Mr. Beck exchanged 80,250 shares of the Company’s Class A Voting Common Stock, par value $0.01 per share, for 80,250 shares of the Company’s Class B Non-Voting Common Stock, par value $0.01 per share.

 

The Company allows Mr. Beck to use office space at no charge. The Company anticipates that Mr. Beck will continue to use this office space through 2005.

 

Note 5 – Restructuring and Severance Charges

 

Restructuring Charges

 

During 2004, the Company recognized a $2,027,000 restructuring charge relating to employee separations at both its corporate office and its Buffalo, New York television station.  Of the total $2,027,000, approximately $1,406,000 related to severance and other benefits, associated with the departure of Stuart J. Beck (see Note 4, Related Parties) and administrative support staff at the corporate office which is being paid over an eighteen month period from date of separation, September 21, 2004. The remaining $621,000 restructuring charge includes severance and other benefits resulting from a reduction in the workforce at the Buffalo, New York television station.

 

In connection with the acquisition of KDLH-TV in March 2005, the Company recognized a $252,000 restructuring charge related to employee separations, which included severance and other benefits. These charges were not costs directly attributable to Malara Broadcast Group’s acquisition of KDLH-TV due to fact that upon Malara’s acquiring of KDLH-TV certain employees were retained by Malara with the remaining employees becoming employees of the Company’s KBJR-TV station and were either retained or subsequently terminated. The Company anticipates additional charges in future periods relating to stay-bonuses awarded to transitional employees of KBJR-TV upon separation.

 

At March 31, 2005, the accruals for restructuring activities were included in “other accrued liabilities” on the consolidated Balance Sheets and the related expense for the charge at the Buffalo, New York television station and KBJR-TV station are included

 

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in “station operating expenses” and the related expense for the corporate charges are included in “corporate separation agreement expenses” on the consolidated Statement of Operations.  These costs were recognized in accordance with the provisions of Statement of Financial Accounting Standards No. 146, Accounting for Costs Associated with Exit or Disposal Activities.

 

Acquisition Charges

 

In connection with the Company’s acquisition of WISE-TV in March 2005, the Company accrued $590,000 related to employee separations, which included severance and other benefits as part of the Company’s purchase accounting. These accrued costs were a result of employees not retained by the Company subsequent to its acquisition of WISE-TV, which included line through management employees. The Company anticipates additional charges in future periods, in the form of restructuring charges, relating to stay-bonuses awarded to transitional employees of WISE upon separation.

 

At March 31, 2005, the accruals for acquisition activities of WISE-TV were included in “other accrued liabilities” on the consolidated Balance Sheets. These charges were recognized in accordance with the provisions of Emerging Issues Task Force Issue No. 95-3 Recognition of Liabilities in Connection with a Purchase Business Combination.

 

The following is a reconciliation of the aggregate liability recorded for restructuring and acquisition charges as of March 31, 2005:

 

		Reconciliation of Aggregate Liability Recorded for Restructuring and Acquisition Charges
		Three Months Ended March 31, 2005
		December 31, 2004			Provision			Payments			March 31, 2005
Buffalo, New York		$	250,000		$	—		$	119,000		$	131,000
KBJR-TV		—			252,000			148,000			104,000
WISE-TV		—			590,000			365,000			225,000
Corporate		1,214,000			—			332,000			882,000
Total		$	1,464,000		$	842,000		$	964,000		$	1,342,000

 

The liability for the restructuring and acquisition charges will be paid in accordance with the provisions of the severance agreements and payments are expected to be completed at various times through March 2006.

 

Note 6 – Long-Term Debt

 

Long-term debt consists of the following:

 

		March 31, 2005			December 31, 2004
9 3/4% Senior Secured Notes, due 2010, net of discount of $4,032,527 at March 31, 2005 and $4,208,702 at December 31, 2004		$	400,967,473		$	400,791,298
Malara Broadcast Group Senior Credit Facility		53,500,000			—
Total		$	454,467,473		$	400,791,298

 

The Company’s 9 3/4 % Senior Secured Notes

 

On December 22, 2003, the Company completed a $405,000,000 offering of our 9 3/4 % Senior Secured Notes (the “Notes”) due December 1, 2010, at a discount, resulting in proceeds to the Company of $400,067,100.  Interest on the Notes is payable on December 1 and June 1 of each year, which commenced on June 1, 2004.  The Company used the net proceeds from the offering in part to (i) repay all outstanding borrowings, plus accrued interest, under its senior credit agreement, (ii) redeem at par, plus accrued interest, all of its 9 3/8 % and 10 3/8 % senior subordinated notes due May and December 2005, respectively, and (iii) to repurchase at par, plus accrued interest, all of its 8 7/8 % senior subordinated notes due May 2008.  The remaining proceeds were invested in short-term securities as well as being used for general working capital purposes.

 

The Notes are the Company’s senior secured obligations. The Notes are guaranteed by each of its domestic restricted subsidiaries. The Notes and the guarantees are secured by substantially all of its assets.  The Company may redeem some or all of the

 

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Notes at any time on or after December 1, 2006. The Company may also redeem up to 35% of the aggregate principal amount of the Notes using the proceeds of one or more equity offerings on or before December 1, 2005.

 

The Indenture, which governs the Company’s Notes, restricts its ability and the ability of its restricted subsidiaries to, among other things: (i) incur additional debt and issue preferred stock; (ii) make certain distributions, investments and other restricted payments; (iii) create certain liens; (iv) enter into transactions with affiliates; (v) enter into agreements that restrict its restricted subsidiaries from making payments to the Company; (vi) merge, consolidate or sell substantially all of its assets; (vii) limit the ability of its subsidiaries to issue preferred stock; (viii) sell or acquire assets; and (ix) enter into new lines of business.

 

Under the Indenture, the Malara Broadcast Group companies to which the Company provides services pursuant to the local services agreements are subject to the terms of the Indenture applicable to Restricted Subsidiaries that are not Guarantors, as such terms are defined in the Indenture.

 

Malara Broadcast Group’s Senior Credit Facility

 

Malara Broadcast Group financed its acquisition of WPTA-TV and KDLH-TV in March 2005 with the proceeds of the Malara Broadcast Group Senior Credit Facility, consisting of two terms loans totaling $48.5 million and a revolving loan of $5 million. The $23.5 million Malara Broadcast Group Term Loan A is secured by a letter of credit. To secure the reimbursement obligations in the event of a draw on the letter of credit, pursuant to the terms and conditions of an Application and Agreement for Standby Letter of Credit, the Company pledged $25 million of U.S. Government Securities. To the extent that principal payments are made on the Term Loan A, the letter of credit shall be proportionately reduced and the Company shall be permitted to proportionately reduce the amount of the pledged U.S. Government Securities.  The $25 million Malara Broadcast Group Term Loan B and the $5 million revolving loan are secured by the assets of WPTA-TV and KDLH-TV, and guaranteed on an unsecured basis by the Company pursuant to a guaranty agreement (the “Granite Guaranty”).

 

The Malara Broadcast Group Senior Credit Facility contains covenants restricting the ability of Malara Broadcast Group and its subsidiaries to, among other things, (i) incur additional debt, (ii) incur liens, (iii) make loans and investments, (iv) incur contingent obligations (including hedging arrangements), (v) declare dividends or redeem or repurchase capital stock or debt, (vi) engage in certain mergers, acquisitions and asset sales, (vii) engage in transactions with affiliates, (viii) engage in sale-leaseback transactions and (ix) change the nature of its business and the business conducted by its subsidiaries.  Malara Broadcast Group is also required to comply with financial covenants with respect to a minimum interest coverage ratio, minimum consolidated available cash flow, a maximum leverage ratio and minimum consolidated net revenue and limits on capital expenditures.

 

Interest rates associated with the Term Loan A are based, at Malara Broadcast Group’s option, at either (i) the higher of the Prime Rate or the Federal Funds Effective Rate plus 0.50% (the “Base Rate”) or (ii) the Adjusted Eurodollar Rate plus 0.60% per annum, as such terms are defined in the Malara Broadcast Group Senior Credit Facility.  Interest rates associated with the Term Loan B and Revolving Loan are based, at Malara Broadcast Group’s option, at either (i) the Base Rate plus 4.625% per annum or (ii) the Adjusted Eurodollar Rate plus 7.375% per annum.  In addition, Deferred Interest (as defined in the Malara Broadcast Group Senior Credit Facility) accrues with respect to, and is added to the principal amount of, the Term Loan B and Revolving Loan at a rate of 3% per annum. Additionally, Malara Broadcast Group is required to pay monthly commitment fees on the unused portion of its revolving loan commitment at a rate of 0.50% per annum.  Cash interest payments are payable monthly.

 

Malara Broadcast Group is required to make monthly principal payments on the Term Loan B as follows: (i) $125,000 payable at the end of each month from June 1, 2006 through March 31, 2007, (ii) $158,333.33 payable at the end of each month from April 1, 2007, through March 31, 2008, and (iii) $216,667 payable at the end of each month from April 1, 2008, through February 1, 2010.

 

Malara Broadcast Group is required to make monthly principal payments on the Term Loan A and the Revolving Loan equal to the product of (i) the Repayment Percentage (which is 25% unless there is an Event of Default or the Consolidated Loan to Stick Value is less than 70%, in which case the Repayment Percentage is 100%) and (ii) the Consolidated Excess Free Cash Flow for the month preceding the month in which such installment is due, as such terms are defined in the Malara Broadcast Group Senior Credit Facility.  All such payments shall be applied first to repay the outstanding Revolving Loan to the full extent thereof (without a corresponding reduction in the Revolving Loan Commitment Amount) and second to repay the outstanding Term Loan A to the full extent thereof; provided that, if the Repayment Percentage for such monthly installment is 100%, the excess 75% of such monthly installment shall be applied first to repay the outstanding Revolving Loan to the full extent thereof and second to repay the outstanding Term Loan B to the full extent thereof.

 

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Note 7 – Condensed Consolidating Financial Information

 

The Granite Broadcasting Corporation column represents the registrant’s financial information. The Malara Broadcast Group column represents the consolidated financial information of Malara Broadcast Group, an independently owned entity in which the Company is deemed to be the primary beneficiary (see Note 3) and is required to be consolidated as a variable interest entity in accordance with Interpretation 46.

 

BALANCE SHEET

March 31, 2005

 

		Granite Broadcasting Corporation			Malara Broadcast Group			Eliminations			Consolidated Company
Assets
Current assets:
Cash and cash equivalents		$	37,233,056		$	718,536		$	—		$	37,951,592
Marketable securities, at fair value		2,502,465			—			—			2,502,465
Accounts receivable, net		17,477,960			2,337,662			—			19,815,622
Other current assets		13,871,542			1,222,794			—			15,094,336
Due from consolidated entity		1,520,192			31,519			(1,551,711		)	—
Total current assets		72,605,215			4,310,511			(1,551,711		)	75,364,015
Restricted cash equivalents		24,997,500			—			—			24,997,500
Property and equipment, net		41,316,661			8,658,837			—			49,975,498
Other non current assets		24,513,496			1,431,508			(3,646,668		)	22,298,336
Intangibles, net		285,340,440			44,950,205			(27,731,100		)	302,559,545
Total assets		$	448,773,312		$	59,351,061		$	(32,929,479	)	$	475,194,894
Liabilities and stockholders’ deficit
Current liabilities:
Accounts payable and other accrued liabilities		$	20,890,735		$	433,525		$	—		$	21,324,260
Other current liabilities		26,995,738			977,876			—			27,973,614
Due to consolidated entity		31,519			1,520,192			(1,551,711		)	—
Total current liabilities		47,917,992			2,931,593			(1,551,711		)	49,297,874
Long-term debt		400,967,473			53,500,000			—			454,467,473
Other non current liabilities		47,004,705			3,976,533			(3,646,668		)	47,334,570
Redeemable preferred stock		198,924,682			—			—			198,924,682
Accrued dividends on redeemable preferred stock		76,643,534			—			—			76,643,534
Stockholders’ deficit:
Common stock		195,766			—			—			195,766
Additional paid-in capital		364,812			—			—			364,812
Accumulated other comprehensive gain		7,021			—			—			7,021
Accumulated deficit		(322,115,908		)	(1,057,065		)	(27,731,100		)	(350,904,073		)
Less: Unearned compensation		(261,090		)	—			—			(261,090		)
Treasury stock, at cost		(875,675		)	—			—			(875,675		)
Total stockholders’ deficit		(322,685,074		)	(1,057,065		)	(27,731,100		)	(351,473,239		)
Total liabilities and stockholders’ deficit		$	448,773,312		$	59,351,061		$	(32,929,479	)	$	475,194,894

 

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STATEMENT OF OPERATIONS

For the three months ended March 31, 2005

 

		Granite Broadcasting Corporation			Malara Broadcast Group			Eliminations			Consolidated Company
Net revenues		$	25,853,760		$	517,021		$	(633,871	)	$	25,736,910
Station operating expenses:
Direct operating expenses (exclusive of depreciation and amortization expenses shown separately below)		12,189,071			123,939						12,313,010
Selling, general and administrative expenses (exclusive of depreciation and amortization expenses shown separately below)		8,769,310			699,998			(633,871		)	8,835,437
Corporate expense (exclusive of depreciation expense shown separately below)		2,697,899			—						2,697,899
Depreciation and amortization		3,802,621			65,779						3,868,400
Performance award expense		319,797			—						319,797
Non-cash compensation expense		94,593			—						94,593
Operating loss		(2,019,531		)	(372,695		)				(2,392,226		)
Other expenses (income):
Interest expense		9,872,570			317,583						10,190,153
Interest income		(448,754		)	—						(448,754		)
Non-cash interest expense		1,055,360			17,181						1,072,541
Non-cash preferred stock dividend		6,386,961			—						6,386,961
Other		(270,200		)	349,606						79,406
Loss before income taxes		(18,615,468		)	(1,057,065		)				(19,672,533		)
Benefit for income taxes		(178,744		)	—						(178,744		)
Net loss		$	(18,436,724	)	$	(1,057,065	)				$	(19,493,789	)
Net loss attributable to common shareholders		$	(18,436,724	)	$	(1,057,065	)				$	(19,493,789	)
Basic and diluted net loss per share		$	(0.95	)	N/A						$	(1.00	)
Weighted average common shares outstanding		19,501,042			N/A						19,501,042

 

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