Attached files

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EX-32.1 - 906 CERTIFICATION OF CEO AND CFO FOR LIN TV CORP - LIN TELEVISION CORPexhibit321.htm
EX-10.3 - AMENDMENT TO EMPLOYMENT AGREEMENT DENISE M. PARENT - LIN TELEVISION CORPexhibit103.htm
EX-10.6 - AMENDMENT TO EMPLOYMENT AGREEMENT NICHOLAS N. MOHAMED - LIN TELEVISION CORPexhibit106.htm
EX-31.1 - 302 CERTIFICATION OF CEO FOR LIN TV CORP - LIN TELEVISION CORPexhibit311.htm
EX-10.4 - AMENDMENT TO EMPLOYMENT AGREEMENT RICHARD SCHMAELING - LIN TELEVISION CORPexhibit104.htm
EX-31.2 - 302 CERTIFICATION OF CFO FOR LIN TV CORP - LIN TELEVISION CORPexhibit312.htm
EX-31.3 - 302 CERTIFICATION OF CEO FOR LIN TELEVISION CORPORATION - LIN TELEVISION CORPexhibit313.htm
EX-10.1 - AMENDMENT TO EMPLOYMENT AGREEMENT VINCENT L. SADUSKY - LIN TELEVISION CORPexhibit101.htm
EX-31.4 - 302 CERTIFICATION OF CFO FOR LIN TELEVISION CORPORATION - LIN TELEVISION CORPexhibit314.htm
EX-10.2 - AMENDMENT TO EMPLOYMENT AGREEMENT SCOTT M. BLUMENTHAL - LIN TELEVISION CORPexhibit102.htm
EX-10.5 - AMENDMENT TO EMPLOYMENT AGREEMENT ROBERT RICHTER - LIN TELEVISION CORPexhibit105.htm
EX-32.2 - 906 CERTIFICATION OF CEO AND CFO FOR LIN TELEVISION CORPORATION - LIN TELEVISION CORPexhibit322.htm
EX-10.7 - CLARIFICATION OF THE SUPPLEMENTAL BENEFIT RETIREMENT PLAN OF LIN TELEVISION CORPORATION AND SUBSIDIARY COMPANIES - LIN TELEVISION CORPexhibit107.htm



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

Quarterly Report pursuant to Section 13 OR 15 (d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2009

Commission file number: 001-31311
Commission file number: 000-25206
   
 
LIN Television
LIN TV Corp.
Corporation
(Exact name of registrant as
(Exact name of registrant as
specified in its charter)
specified in its charter)
   
Delaware
Delaware
(State or other jurisdiction of
(State or other jurisdiction of
incorporation or organization)
incorporation or organization)
   
05-0501252
13-3581627
(I.R.S. Employer
(I.R.S. Employer
Identification No.)
Identification No.)

Four Richmond Square, Suite 200, Providence, Rhode Island 02906
(Address of principal executive offices)

(401) 454-2880
(Registrant’s telephone number, including area code)

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 R  No £

Indicate by check mark whether the registrant has submitted electronically and posted to its corporate Web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding twelve months (or for such shorter period that the registrant was required to submit and post such files).  Yes £  No £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer £
Accelerated filer R
Non-accelerated  filer £
Smaller reporting company £
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes £  No R

This combined Form 10-Q is separately filed by (i) LIN TV Corp. and (ii) LIN Television Corporation. LIN Television Corporation meets the conditions set forth in general instruction H (1) (a) and (b) of Form 10-Q and is, therefore, filing this form with the reduced disclosure format permitted by such instruction.

LIN TV Corp. Class A common stock, $0.01 par value, outstanding at October 28, 2009: 28,810,510 shares
LIN TV Corp. Class B common stock, $0.01 par value, outstanding at October 28, 2009: 23,502,059 shares.
LIN TV Corp. Class C common stock, $0.01 par value, outstanding at October 28, 2009: 2 shares.
LIN Television Corporation common stock, $0.01 par value, outstanding at October 28, 2009: 1,000 shares.
 

 





 
   
 
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LIN TV Corp.
(unaudited)
   
September 30,
   
December 31,
 
   
2009
   
2008
 
 
(in thousands, except share data)
 
ASSETS
           
Current assets:
           
Cash and cash equivalents
 
$
11,762
   
 $
20,106
 
Restricted cash
   
2,000
     
-
 
Accounts receivable, less allowance for doubtful accounts (2009 - $2,652; 2008 - $2,761)
   
61,927
     
68,277
 
Program rights
   
2,256
     
3,311
 
Assets held for sale
   
-
     
430
 
Other current assets
   
5,705
     
5,045
 
Total current assets
   
83,650
     
97,169
 
Property and equipment, net
   
166,420
     
180,679
 
Deferred financing costs
   
9,304
     
8,511
 
Program rights
   
1,982
     
3,422
 
Goodwill
   
114,486
     
117,159
 
Broadcast licenses and other intangible assets, net
   
392,856
     
430,142
 
Assets held for sale
   
-
     
8,872
 
Other assets
   
4,008
     
6,640
 
Total assets
 
$
772,706
   
$
852,594
 
                 
LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS' DEFICIT
               
Current liabilities:
               
Current portion of long-term debt
 
$
15,900
   
$
15,900
 
Accounts payable
   
4,666
     
7,988
 
Accrued expenses
   
45,727
     
56,701
 
Program obligations
   
10,789
     
10,109
 
Liabilities held for sale
   
-
     
429
 
Total current liabilities
   
77,082
     
91,127
 
Long-term debt, excluding current portion
   
664,924
     
727,453
 
Deferred income taxes, net
   
153,382
     
141,702
 
Program obligations
   
2,512
     
5,336
 
Other liabilities
   
63,219
     
69,226
 
Total liabilities
   
961,119
     
1,034,844
 
                 
Stockholders' Deficit:
               
Class A common stock, $0.01 par value, 100,000,000 shares authorized,
               
Issued: 29,684,218 and 29,733,672 shares at September 30, 2009 and December 31, 2008, respectively
               
Outstanding: 27,877,790 and 27,927,244 shares at September 30, 2009 and December 31, 2008, respectively
   
294
     
294
 
Class B common stock, $0.01 par value, 50,000,000 shares authorized,  23,502,059 shares at September 30, 2009 and December 31, 2008, issued and outstanding; convertible into an equal number of shares of Class A or Class C common stock
   
235
     
235
 
Class C common stock, $0.01 par value, 50,000,000 shares authorized, 2 shares at September 30, 2009 and December 31, 2008, respectively, issued and outstanding; convertible into an equal number of shares of Class A common stock
   
-
     
-
 
Treasury stock, 1,806,428 shares of Class A common stock at September 30, 2009 and December 31, 2008, at cost
   
(18,005
)
   
(18,005
)
Additional paid-in capital
   
1,103,364
     
1,101,919
 
Accumulated deficit
   
(1,240,739
)
   
(1,239,090
)
Accumulated other comprehensive loss
   
(33,562
)
   
(34,634
)
Total stockholders' deficit
   
(188,413
)
   
(189,281
)
Preferred stock of Banks Broadcasting, Inc.
   
-
     
7,031
 
Total deficit
   
(188,413
)
   
(182,250
)
Total liabilities, preferred stock and stockholders' deficit
 
$
772,706
   
$
852,594
 
                 
The accompanying notes are an integral part of the unaudited consolidated financial statements.
 
 

 
LIN TV Corp.
(unaudited)
                         
   
Three months ended September 30,
   
Nine months ended September 30,
 
   
2009
   
2008
   
2009
   
2008
 
 
(in thousands)
 
                         
Net revenues
 
$
81,371
   
$
 
 
                                   98,804
   
$
238,363
   
$
295,571
 
                                 
Operating costs and expenses:
                               
Direct operating
   
25,635
     
28,977
     
79,083
     
88,666
 
Selling, general and administrative
   
24,727
     
28,321
     
75,089
     
85,157
 
Amortization of program rights
   
6,317
     
5,856
     
18,221
     
17,620
 
Corporate
   
4,206
     
3,683
     
13,193
     
14,922
 
Depreciation
   
7,561
     
7,308
     
23,135
     
22,125
 
Amortization of intangible assets
   
24
     
44
     
64
     
228
 
Impairment of goodwill and broadcast licenses
   
-
     
-
     
39,894
     
296,972
 
Restructuring charge
   
-
     
-
     
498
     
-
 
(Gain) loss from asset dispositions
   
(886
)
   
74
     
(3,544
)
   
(296
)
Operating income (loss)
   
13,787
     
24,541
     
(7,270
)
   
(229,823
)
                                 
Other expense (income):
                               
Interest expense, net
   
11,259
     
13,241
     
32,314
     
41,554
 
Share of loss (income) in equity investments
   
2,000
     
(662)
     
2,000
     
(861
)
Loss (income) on extinguishment of debt
   
-
     
491
     
(50,149
)
   
4,195
 
Other, net
   
(232)
     
1,036
     
(176)
     
622
 
Total other expense (income), net
   
13,027
     
14,106
     
(16,011
)
   
45,510
 
                                 
Income (loss) from continuing operations before provision for income taxes
   
760
     
10,435
     
8,741
     
(275,333
)
Provision for (benefit from) income taxes
   
1,635
     
218
     
9,944
     
(70,666
)
(Loss) income from continuing operations
   
(875
)
   
10,217
     
(1,203
)
   
(204,667
)
Discontinued operations:
                               
(Loss) income from discontinued operations, net of gain from the sale of discontinued operations of $11 for the nine months ended September 30, 2009 and net of provision for income taxes of $74 for the three months ended September 30, 2008, and net of (benefit from) provision for income taxes of $(628) and $215 for the nine months ended September 30, 2009 and 2008, respectively
   
-
     
(196
)
   
(446
)
   
184
 
Net (loss) income
 
$
(875
)
 
$
10,021
   
$
(1,649
)
 
$
(204,483
)
Basic (loss) income per common share:
                               
(Loss) income from continuing operations
 
$
(0.02
)
 
$
0.20
   
$
(0.02
)
 
$
(4.04
)
(Loss) income from discontinued operations, net of tax
   
-
     
-
     
(0.01
)
   
0.01
 
Net (loss) income
 
$
(0.02
)
 
$
0.20
   
$
(0.03
)
 
$
(4.03
)
Weighted - average number of common shares outstanding
                         
used in calculating basic (loss) income per common share
   
51,367
     
50,620
     
51,371
     
50,714
 
                                 
Diluted (loss) income per common share:
                               
(Loss) income from continuing operations
 
$
(0.02
)
 
$
0.20
   
$
(0.02
)
 
$
(4.04
)
(Loss) income from discontinued operations, net of tax
   
-
     
-
     
(0.01
)
   
0.01
 
Net (loss) income
 
$
(0.02
)
 
$
0.20
   
$
(0.03
)
 
$
(4.03
)
                                 
Weighted - average number of common shares outstanding
                         
used in calculating diluted (loss) income per common share
   
51,367
     
50,620
     
51,371
     
50,714
 
                                 
The accompanying notes are an integral part of the unaudited consolidated financial statements.
   


 
LIN TV Corp.
(unaudited)
(in thousands)
                                                                   
                                   
 
   
Accumulated Other
   
Total
   
Preferred Stock
   
 
 
         
Class A
   
Class B
   
Class C
   
Treasury Stock                Additional Paid-                Accumulated
     Comprehensive        Stockholders'            of Banks      Comprehensive  
   
Total Deficit
 
Amount
   
Amount
   
Amount
             (at cost)            In Capital              Deficit                 Loss               Deficit        Broadcasting              Loss  
 Balance at December 31, 2008
  $ (182,250 )   $ 294     $ 235     $ -     $ (18,005 )   $ 1,101,919     $ (1,239,090 )   $ (34,634 )   $ (189,281 )   $ 7,031        
 Amortization of prior service cost, net of tax of $9
    14       -       -       -       -       -       -       14       14       -       14  
 Amortization of net loss on pension plan assets, net of tax of $50
    74       -       -       -       -       -       -       74       74       -       74  
 Unrealized loss on cash flow hedge, net of tax of $653
    984       -       -       -       -       -       -       984       984       -       984  
 Stock-based compensation, continuing operations
    1,445       -       -       -       -       1,445       -       -       1,445       -          
 Distribution to minority shareholders
    (2,644 )     -       -       -       -       -       -       -       -       (2,644 )        
 Net loss
    (6,036 )     -       -       -       -       -       (1,649 )     -       (1,649 )     (4,387 )     (1,649 )
Comprehensive loss - September 30, 2009
                                                                            $ (577 )
 Balance at September 30, 2009
  $ (188,413 )   $ 294     $ 235     $ -     $ (18,005 )   $ 1,103,364     $ (1,240,739 )   $ (33,562 )   $ (188,413 )   $ -          
                                                                                         
The accompanying notes are an integral part of the unaudited consolidated financial statements



LIN TV Corp.
Consolidated Statements of Stockholders' Equity and Comprehensive Loss
(unaudited)
(in thousands)
                                                                   
                                 
 
       
Accumulated Other
   
Total
   
Preferred Stock
   
 
 
         
Class A
   
Class B
   
Class C
   
Treasury Stock             Additional Paid-              Accumulated
   
 Comprehensive
     Stockholders'      of Banks      Comprehensive  
   
Total Equity
 
Amount
   
Amount
   
Amount
     (at cost)           In Capital              Deficit                Loss      Equity      Broadcasting         Loss  
 Balance at December 31, 2007
  $ 665,144     $ 292     $ 235     $ -     $ (18,005 )   $ 1,096,455     $ (408,726 )   $ (14,153 )   $ 656,098     $ 9,046        
 Amortization of prior service cost, net of tax of $36
    54       -       -       -       -       -       -       54       54       -       54  
 Amortization of net loss on pension plan assets, net of tax of $57
    87       -       -       -       -       -       -       87       87       -       87  
 Unrealized loss on cash flow hedge, net of tax of $123
    184       -       -       -       -       -       -       184       184       -       184  
 Exercises of employee and director stock based compensation
    1,185       1       -       -       -       1,184               -       1,185       -          
 Stock-based compensation, continuing operations
    3,573       -       -       -       -       3,573       -       -       3,573       -          
 Stock-based compensation, discontinued operations
    8                                       8               -       8       -          
 Tax benefit from stock option exercises
    134       -       -       -       -       134               -       134       -          
 Net loss
    (206,434 )     -       -       -       -       -       (204,483 )     -       (204,483 )     (1,951 )     (204,483 )
Comprehensive loss - September 30, 2008
                                                                            $ (204,158 )
 Balance at September 30, 2008
  $ 463,935     $ 293     $ 235     $ -     $ (18,005 )   $ 1,101,354     $ (613,209 )   $ (13,828 )   $ 456,840     $ 7,095          
                                                                                         
The accompanying notes are an integral part of the unaudited consolidated financial statements
 

 
LIN TV Corp.
 
 
(unaudited)
 
   
Nine Months Ended September 30,
 
   
2009
 
2008
 
 
(in thousands)
 
OPERATING ACTIVITIES:
         
Net loss
 
$
(1,649
)
$
(204,483
)
Loss (income) from discontinued operations
   
446
   
(184
)
Adjustment to reconcile net loss to net cash provided by operating activities:
             
Depreciation
   
23,135
   
22,125
 
Amortization of intangible assets
   
64
   
228
 
Impairment of goodwill, broadcast licenses and broadcast equipment
   
39,894
   
296,972
 
Amortization of financing costs and note discounts
   
2,945
   
4,782
 
Amortization of program rights
   
18,221
   
17,620
 
Program payments
   
(18,322
)
 
(19,909
)
(Gain) loss on extinguishment of debt
   
(50,149
)
 
4,195
 
Share of loss (income) in equity investments
   
2,000
   
(861
)
Deferred income taxes, net
   
10,462
   
(71,082
)
Stock-based compensation
   
1,615
   
3,583
 
Gain from asset dispositions
   
(3,539
)
 
(296
)
Other, net
   
2,120
   
25
 
Changes in operating assets and liabilities, net of acquisitions and disposals:
             
Accounts receivable
   
6,350
   
11,602
 
Other assets
   
(164)
   
2,104
 
Accounts payable
   
(3,322
)
 
(6,822
)
Accrued interest expense
   
5,914
   
8,889
 
Other accrued expenses
   
(17,220
)
 
(2,076
)
Net cash provided by operating activities, continuing operations
   
18,801
   
66,412
 
Net cash used in operating activities, discontinued operations
   
(101)
   
(1,142
)
Net cash provided by operating activities
   
18,700
   
65,270
 
               
INVESTING ACTIVITIES:
             
Capital expenditures
   
(4,772
)
 
(16,314
)
Cash paid for broadcast license rights
   
(7,561)
   
-
 
Change in restricted cash
   
(2,000)
   
-
 
Distributions from equity investments
   
-
   
2,649
 
Other investments, net
   
-
   
401
 
Net cash used in investing activities, continuing operations
   
(14,333
)
 
(13,264
)
Net cash provided by (used in) investing activities, discontinued operations
   
5,875
   
(693
)
Net cash used in investing activities
   
(8,458)
   
(13,957
)
               
FINANCING ACTIVITIES:
             
Net proceeds on exercises of employee and director stock based compensation
   
-
   
1,183
 
Proceeds from borrowings on long-term debt
   
81,000
   
115,000
 
Principal payments on long-term debt
   
(93,280
)
 
(190,025
)
Payment of long-term debt financing costs
   
(3,662)
   
(1,232)
 
 
Net cash used in financing activities, continuing operations
   
(15,942
)
 
(75,074
)
Net cash used in financing activities, discontinued operations
   
(2,644
)
 
-
 
Net cash used in financing activities
   
(18,586
)
 
(75,074
)
               
Net decrease in cash and cash equivalents
   
(8,344
)
 
(23,761
)
Cash and cash equivalents at the beginning of the period
   
20,106
   
40,031
 
Cash and cash equivalents at the end of the period
 
$
11,762
 
$
16,270
 
               
Supplemental schedule of non-cash investing activities:
  Accrual for estimated loan to the joint venture with NBC Universal for cash flow shortfalls
 
$
2,000
 
$
-
 
The accompanying notes are an integral part of the unaudited consolidated financial statements.
 
 
 
LIN TV Corp.

Note 1 — Basis of Presentation and Summary of Significant Accounting Policies

Description of Business

LIN TV Corp. (“LIN TV”), together with its subsidiaries, including LIN Television Corporation (“LIN Television”), is a television station group operator in the United States. In these notes, the terms “Company,” “LIN TV,” “we,” “us” or “our” mean LIN TV Corp. and all subsidiaries included in our unaudited consolidated financial statements.

Financial Condition

Our operating plan for the next 12 months requires that we generate cash from operations, utilize borrowings, and repay amounts, including mandatory repayments of term loans under our credit facility. Our ability to borrow under our revolving credit facility is contingent on our compliance with certain financial covenants, which are measured, in part, by the level of earnings before interest expense, taxes, depreciation and amortization (“EBITDA”) we generate from our operations.   During the six months ended June 30, 2009, we experienced declines in revenues compared to the same periods in 2008, which were in excess of our original 2009 plan.  As a result, and to ensure continued compliance with the financial covenants in our credit agreement, on July 31, 2009 we entered into an Amended and Restated Credit Agreement (the “Amended Credit Agreement”) with JPMorgan Chase Bank, N.A., as Administrative Agent, and banks and financial institutions party thereto. For further information regarding the terms of the Amended Credit Agreement see Note 5 – “Debt”.  As of September 30, 2009, we were in compliance with all financial and non-financial covenants in our credit agreement. 

During the three months ended September 30, 2009, we continued to experience declines in revenues compared to the same periods in 2008.  These declines in revenues were in excess of our original 2009 plan and we anticipate continued weakness in revenues during the remainder of this year.

Our joint venture with NBC Universal continues to be adversely impacted by the current economic downturn.  Under an agreement we reached with NBC Universal, the joint venture may access the existing $15.0 million debt service reserve fund, defer management fees to conserve cash balances, and borrow funds under shortfall loans provided by us and NBC Universal through April 1, 2010, if the joint venture does not have sufficient cash to cover interest obligations under the General Electric Capital Corporation (“GECC”) Note.  Our obligation under the shortfall funding agreement is to provide the joint venture with a shortfall loan on the basis of our 20.38 percentage of economic interest in the joint venture.  During the nine months ended September 30, 2009, the joint venture used approximately $12.9 million of the existing debt service cash reserves, leaving approximately $2.2 million available.  Based on the most recent 2009 forecast provided by the joint venture, there will be an estimated debt service shortfall through December 31, 2009 of $3.0 to $5.0 million.  Additionally, based on current discussions with the joint venture, we estimate an additional shortfall of $5.0 to $7.0 million for the first quarter of 2010.  As a result, as of September 30, 2009, we have accrued $2.0 million for our portion of the estimable and probable obligations under the shortfall funding agreement which expires on April 1, 2010.  Due to the uncertainty surrounding the joint venture’s ability to repay the shortfall loan, we have concurrently impaired the loan as of September 30, 2009.  We plan to use our available cash balances or available borrowings under our credit facility to fund any shortfall loan.

The joint venture has not provided a forecast for 2010, and we have not had any discussions with NBC Universal regarding how, if at all, we and NBC Universal may share responsibility for any shortfall in cash at the joint venture to cover interest obligations under the GECC Note after April 1, 2010.  If the joint venture experiences further cash shortfalls beyond April 1, 2010, it is possible that we could decide to fund a portion of such cash shortfalls through further loans or equity contributions to the joint venture, subject to compliance with restrictions under our senior credit facility and the indentures governing our senior notes.  We have not accrued for any shortfalls beyond April 1, 2010 as these amounts have been determined to be neither probable nor estimable.  If the joint venture defaults on its obligations to pay interest under the GECC Note, GECC would have the right to exercise its remedies under such note, including enforcing our guarantee of such note.  Refer to Note 14 – "Commitments and Contingencies" in our Annual Report on Form 10-K for further information on the organization of the joint venture and the consequences of an event of default under the GECC Note by the joint venture to us as it relates to our guarantee of the GECC Note.

Basis of Presentation

Our consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”). Our significant accounting policies are described below.

On July 1, 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) 105-10, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles”, (collectively, the “Codification”). The Codification establishes the exclusive authoritative reference for U.S. GAAP for use in financial statements, except for Securities and Exchange Commission (“SEC”) rules and interpretive releases, which are also authoritative GAAP for SEC registrants. The Codification supersedes all existing non-SEC accounting and reporting standards relating to U.S. GAAP.

Our consolidated financial statements have been prepared without audit, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Certain financial statement accounts have been reclassified in the prior period financial statements to conform to the current period financial statement presentation.

In the opinion of management, the accompanying unaudited interim financial statements contain all normal recurring adjustments necessary to present fairly our financial position, results of operations and cash flows for the periods presented. Due to seasonal fluctuations and other factors, the interim results of operations are not necessarily indicative of the results to be expected for the full year.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited consolidated financial statements and the notes to the unaudited consolidated financial statements. Our actual results could differ from these estimates. Estimates are used for the allowance for doubtful accounts in receivables, valuation of goodwill and intangible assets, amortization of program rights and intangible assets, stock-based-compensation, pension costs, barter transactions, income taxes, employee medical insurance claims, useful lives of property and equipment, contingencies, litigation and net assets of businesses acquired.

Changes in Classifications

In December 2007, the FASB issued ASC 810-10 “Non-controlling Interests in Consolidated Financial Statements”, which amends ARB 51, “Consolidated Financial Statements”. (“ASC 810-10”). ASC 810-10 is effective for quarterly and annual reporting periods that begin after December 15, 2008. ASC 810-10 establishes accounting and reporting standards with respect to non-controlling interests (also called minority interests) in an effort to improve the relevance, comparability and transparency of financial information that a company provides with respect to its non-controlling interests. The significant requirements under ASC 810-10 are the reporting of the non-controlling interests separately in the equity section of the balance sheet and the reporting of the net income or loss of the controlling and non-controlling interests separately on the face of the statement of operations. We adopted ASC 810-10 effective January 1, 2009, and as a result, reclassified the preferred stock of Banks Broadcasting, Inc. (“Banks Broadcasting”), representing a non-controlling interest, to the equity section of our balance sheet.

Net Earnings per Common Share

Basic earnings per share (“EPS”) is based upon net earnings divided by the weighted average number of common shares outstanding during the period. Diluted EPS reflects the effect of the assumed exercise of stock options, vesting of restricted shares and the potential common shares from the assumed conversion of the contingently convertible debt only in periods in which such effect would have been dilutive.

For the three and nine months ended September 30, 2009 and 2008, because the Company incurred a net loss, there was no difference between basic and diluted income per share.  As a result of the net loss, all potential common shares from the exercise of stock options, the vesting of restricted stock and the potential common shares from the assumed conversion of the contingently convertible debt were anti-dilutive.

Recently Issued Accounting Pronouncements

In October 2009, the FASB issued ASU 2009-15 “Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements—a consensus of the FASB Emerging Issues Task Force” (“ASC 470-20”). ASC 470-20 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. ASC 470-20 addresses how to separate deliverables and how to measure and allocate arrangement consideration to one or more units of accounting. We plan to adopt ASC 470-20 effective June 30, 2010, and we do not expect it to have a material impact on our financial position or results of operations.

In August 2009, the FASB issued ASU 2009-05 “Measuring Liabilities at Fair Value” (“ASC 820-10”). ASC 820-10 is effective for the first reporting period, including interim periods, beginning after issuance. ASC 820-10 clarifies the application of certain valuation techniques in circumstances in which a quoted price in an active market for the identical liability is not available and clarifies that when estimating the fair value of a liability, the fair value is not adjusted to reflect the impact of contractual restrictions that prevent its transfer. ASC 820-10 becomes effective for us on October 1, 2009.  We adopted ASC 820-10 effective September 30, 2009, and it did not have a material impact on our financial position or results of operations.

In June 2009, the FASB issued FAS 167, “Amendments to FASB Interpretation No. 46(R)” (“FAS 167”).  FAS 167 is effective for interim and annual reporting periods beginning after November 15, 2009. FAS 167 amends certain guidance in FIN 46(R) to eliminate the exemption for special purpose entities, require a new qualitative approach for determining who should consolidate a variable interest entity and change the requirement for when to reassess who should consolidate a variable interest entity. We plan to adopt FAS 167 effective January 1, 2010, and we do not expect it to have a material impact on our financial position or results of operations.

In June 2009, the FASB issued FAS 166 “Accounting for Transfers of Financial Assets – an amendment of FAS Statement No. 140” (“FAS 166”). FAS 166 is effective for interim and annual reporting periods beginning after November 15, 2009 and must be applied to transfers occurring on or after the effective date.  FAS 166 clarifies that the objective of paragraph 9 of Statement 140 is to determine whether a transferor and all of the entities included in the transferor’s financial statements being presented have surrendered control over transferred financial assets. We plan to adopt FAS 166 effective January 1, 2010, and we do not expect it to have a material impact on our financial position or results of operations.

In May 2009, the FASB issued ASC 855-10 “Subsequent Events” (“ASC 855-10”). ASC 855-10 is effective for interim and annual reporting periods ending after June 15, 2009. ASC 855-10 introduces the concept of financial statements being available to be issued and requires disclosure of the date through which an entity has evaluated subsequent events and the basis for that date. We adopted ASC 855-10 effective June 30, 2009 and included the required disclosure in Note 14 – “Subsequent Events”. ASC 855-10 did not have a material impact on our financial position or results of operations.

In April 2009, the FASB issued ASC 825-10, “Interim Disclosures about Fair Value of Financial Instruments” (“ASC 825-10”), which requires public entities to disclose in their interim financial statements the fair value of all financial instruments within the scope of FASB Statement No. 107, “Disclosures about Fair Value of Financial Instruments”, as well as the method(s) and significant assumptions used to estimate the fair value of those financial instruments.  We adopted the provisions of ASC 825-10 by including the required additional financial statement disclosures as of June 30, 2009 in Note 6 – Derivative Financial Instruments and Note 7 - Fair Value Measurement.  The adoption of ASC 825-10 had no financial impact on our financial position or results of operations.

Also in April 2009, the FASB issued ASC 320-10, “Recognition and Presentation of Other-Than-Temporary Impairments” (“ASC 320-10”), to change the method for determining whether an other-than-temporary impairment exists for debt securities and the amount of an impairment charge to be recorded in earnings.  ASC 320-10 also requires enhanced disclosures, including the Company’s methodology and key inputs used for determining the amount of credit losses recorded in earnings. We adopted ASC 320-10 during the second quarter of 2009 and the adoption had no impact on our financial position or results of operations.

Additionally, in April 2009 the FASB issued ASC 820-10, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“ASC 820-10”). ASC 820-10 provides additional guidance to highlight and expand on the factors that should be considered in estimating fair value when there has been a significant decrease in market activity for a financial asset. ASC 820-10 also requires new disclosures relating to fair value measurement inputs and valuation techniques (including changes in inputs and valuation techniques). We adopted ASC 820-10 during the second quarter of 2009.  The adoption of ASC 820-10 had no impact on our financial position or results of operations.  See Note 4 (Fair Value) for further detail.

Effective January 1, 2009, the Company adopted ASC 805-10, “Business Combinations” (“ASC 805-10”). ASC 805-10 establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree; how the acquirer recognizes and measures the goodwill acquired in a business combination; and how the acquirer determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. The adoption of ASC 805-10 did not have a material impact on our financial position or results of operations as of or for the period ended September 30, 2009.  

In December 2008, the FASB issued ASC 715-10, “Employers’ Disclosures about Postretirement Benefit Plan Assets” (“ASC 715-20”). ASC 715-20 is effective for fiscal years ending after December 15, 2009. ASC 715-20 increases disclosure requirements related to an employer’s defined benefit pension or other postretirement plans.  We plan to adopt ASC 715-10 effective December 31, 2009, and we do not expect it to have a material impact on our financial position or results of operations.

In November 2008, the FASB issued ASC 605-25, “Revenue Arrangements with Multiple Deliverables” (“ASC 605-25”). ASC 605-25 is effective for revenue arrangements entered into or materially modified in fiscal years beginning on or after December 31, 2009 and shall be applied on a prospective basis.  Earlier application is permitted as of the beginning of a fiscal year. ASC 605-25 addresses some aspects of the accounting by a vendor for arrangements under which it will perform multiple revenue-generating activities. We plan to adopt ASC 605-25 effective December 31, 2009, and we do not expect it to have a material impact on our financial position or results of operations.

Note 2 — Discontinued Operations

Our consolidated financial statements reflect the operations, assets and liabilities of Banks Broadcasting as discontinued for all periods presented.

Banks Broadcasting

On April 23, 2009, Banks Broadcasting completed the sale of KNIN-TV, a CW affiliate in Boise, for $6.6 million to Journal Broadcast Corporation. As a result of the sale we received, on the basis of our economic interest in Banks Broadcasting, a distribution of $2.6 million during the quarter ended June 30, 2009. The operating loss for the nine months ended September 30, 2009 includes an impairment charge of $1.9 million to reduce the carrying value of broadcast licenses to fair value based on the final sale price of KNIN-TV of $6.6 million. Net loss included within discontinued operations for the nine months ended September 30, 2009 reflects our 50% share of net losses of Banks Broadcasting, net of taxes, through the April 23, 2009 disposal date.

Banks Broadcasting distributed $2.5 million to us for the nine months ended September 30, 2008.  We provided no capital contributions to Banks Broadcasting during either the three or nine months ended September 30, 2009 and 2008.

Following the sale of KNIN-TV on April 23, 2009, substantially all of the assets of Banks Broadcasting had been liquidated.

The following presents summarized information for the discontinued operations (in thousands):


   
Three Months Ended September 30,
   
Nine Months Ended September 30,
 
   
2009
   
2008
   
2009
   
2008
 
                         
Net revenues
  $ -     $ 680     $ 823     $ 2,247  
Operating (loss) income
    -       (190 )     (3,141 )     919  
Net (loss) income
    -       (196 )     (446 )     184  
 
 
 
Note 3 — Equity Investments

Joint Venture with NBC Universal

We own a 20.38% interest in Station Venture Holdings, LLC (“SVH”), a joint venture with NBC Universal, and account for our interest using the equity method as we do not have a controlling interest. SVH wholly owns Station Venture Operations, LP (“SVO”), which is the operating company that manages KXAS-TV and KNSD-TV, the television stations that comprise the joint venture. The following presents the summarized financial information of SVH (in thousands):


   
Three Months Ended September 30,
   
Nine Months Ended September 30,
 
   
2009
   
2008
   
2009
   
2008
 
                         
Cash distributions to SVH from SVO
 
 $
9,150     $ 23,940      $ 36,402     $ 62,888  
                                 
Income to SVH from SVO
  $ 9,180     $ 19,922     $ 18,409     $ 53,879  
Other expense, net (primarily interest on the GECC note)
    (16,491 )     (16,672 )     (49,473 )     (49,655 )
Net (loss) income of SVH
  $ (7,311 )   $ 3,250     $ (31,064 )   $ 4,224  
                                 
Cash distributions to us
  $ -     $ 1,630     $ -     $ 2,649  

During the three and nine months ended September 30, 2009, we did not recognize our 20.38% share of SVH’s net loss, because the investment was written down to zero during the year ended December 31, 2008.  SVH had cash on hand of $2.2 million and $15.1 million as of September 30, 2009 and December 31, 2008, respectively.

During the quarter ended September 30, 2009, we recognized a contingent liability of $2.0 million based on our estimate of amounts that we expect to loan to the SVH joint venture pursuant to our shortfall funding agreement with NBC Universal, as discussed further in Note 1 and Note 13 – “Commitments and Contingencies”.  Because of uncertainty surrounding the joint venture’s ability to repay the shortfall loan, we concluded that it is more likely than not that the amount of the accrued shortfall loan will not be recovered within a reasonable period of time, and therefore, the loan was fully impaired.  Accordingly, we recognized a charge of $2.0 million, which has been classified as Share of loss (income) in equity investments during the quarter ended September 30, 2009 to reflect the impairment of the loan.
 
Note 4 — Intangible Assets

The following table summarizes the carrying amount of intangible assets (in thousands):


   
September 30, 2009
   
December 31, 2008
 
   
Gross Carrying Amount
   
Accumulated Amortization
   
Gross Carrying Amount
   
Accumulated Amortization
 
                         
Goodwill
  $ 114,486     $ -     $ 117,159     $ -  
Broadcast licenses
    391,803       -       429,024       -  
Intangible assets subject to amortization (1)
    7,796       (6,743 )     7,796       (6,678 )
Total intangible assets
  $ 514,085     $ (6,743 )   $ 553,979     $ (6,678 )
_________

 
(1)
Intangibles subject to amortization are amortized on a straight line basis and include acquired advertising contracts, advertiser lists, advertiser relationships, favorable operating leases, tower rental income leases, option agreements and network affiliations.

We recorded an impairment charge of $39.9 million during the second quarter of 2009 that included an impairment to the carrying values of our broadcast licenses of $37.2 million, relating to 26 of our television stations; and an impairment to the carrying values of our goodwill of $2.7 million, relating to two of our television stations. As required by ASC 350-10, “Goodwill and Other Intangible Assets”, we tested for impairment of our indefinite lived intangible assets at June 30, 2009, between the required annual tests, because we believed events had occurred and circumstances changed that would more likely than not reduce the fair value of our broadcast licenses and goodwill below their carrying amounts. The need for an impairment analysis at June 30, 2009 was triggered by the continued decline in advertising revenue at certain of our stations, due to the ongoing effects of the economic downturn, that resulted in downward adjustments to their respective forecasts.

We used the income approach to test our broadcast licenses for impairments as of June 30, 2009 and we used the same assumptions as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2008, except for the following adjustments: a) the discount rate was adjusted from 11.0% to 12.0%; b) average market growth rate was adjusted from 1.0% to 0.2%; and c) average operating profit margins were adjusted from 26.6% to 30.5%.

We used the income approach to test goodwill for impairments as of June 30, 2009 and we used the same assumptions as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2008, except for the following adjustments: a) the discount rate was adjusted from 14.5% to 15.0%; b) average market growth rate was adjusted from 1.0% to 0.5%; and c) average operating profit margins were adjusted from 34.0% to 36.4%.

These assumptions are based on the actual historical performance of our stations and management’s estimates of future performance of our stations. The increase in the discount rate used for our broadcast licenses and goodwill reflects an increase in the average beta for the public equity of companies in the television and media sector since December 31, 2008. The changes in the market growth rates and operating profit margins for both our broadcast licenses and goodwill reflect changes in the outlook for advertising revenues in certain markets where our stations operate.

Determining the fair value of our television stations requires our management to make a number of judgments about assumptions and estimates that are highly subjective and that are based on unobservable inputs or assumptions. The actual results may differ from these assumptions and estimates; and it is possible that such differences could have a material impact on our financial statements.

The changes in the carrying amount of goodwill for the nine months and year ended September 30, 2009 and December 31, 2008 respectively, are as follows:


   
2009
   
2008
 
             
Goodwill
  $ 666,812     $ 664,103  
Accumulated impairment losses
    (549,653 )     (128,685 )
Balance as of January 1
  $ 117,159     $ 535,418  
                 
Tax Adjustments
    -       2,709  
Impairments
    (2,673 )     (420.968
                 
Goodwill
  $ 666,812     $ 666,812  
Accumulated impairment losses
    (552,326 )     (549,653 )
Balance as of September 30, 2009 and December 31, 2008, respectively
  $ 114,486     $ 117,159  


As of September 30, 2009 there were no indicators that our tangible or intangible assets were impaired.  For further discussion of our accounting policy related to impairments refer to Note 1 – Basis of Presentation and Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the year ended December 31, 2008.

Note 5 — Debt

Debt consisted of the following (in thousands):
 
             
   
September 30,
   
December 31,
 
   
2009
   
2008
 
Credit Facility:
           
Revolving credit loans
  $ 203,000     $ 135,000  
Term loans
    65,950       77,875  
6½% Senior Subordinated Notes due 2013
    275,883       355,583  
$141,316 and $183,285, 6½% Senior Subordinated Notes due 2013 - Class B, net of discount of $5,325 and $8,390 at September 30, 2009 December 31, 2008, respectively
    135,991       174,895  
Total debt
    680,824       743,353  
Less current portion
    15,900       15,900  
Total long-term debt
  $ 664,924     $ 727,453  

We repaid $11.9 million of principal of the term loans, related to mandatory quarterly payments, under our credit facility, from operating cash balances during the nine months ended September 30, 2009.

During 2008, we commenced a plan under Rule 10b5-1 of the Securities Exchange Act of 1934 to purchase a portion of our 6½% Senior Subordinated Notes and 6½%  Senior Subordinated Notes – Class B at market prices using available balances under our revolving credit facility and available cash balances. During the nine months ended September 30, 2009, we purchased a total principal amount of $79.7 million and $42.0 million of our 6½% Senior Subordinated Notes and 6½% Senior Subordinated Notes – Class B, respectively, under this plan. The total purchase price for the transactions was $68.4 million, resulting in a gain on extinguishment of debt of $50.1 million, net of a write-off of deferred financing fees and discount related to the notes of $1.3 million and $1.9 million, respectively.

The fair values of our long-term debt are estimated based on quoted market prices for the same or similar issues, or based on the current rates offered to us for debt of the same remaining maturities. The carrying amounts and fair values of our long-term debt were as follows (in thousands):


   
September 30, 2009
 
December 31, 2008
 
Carrying amount
  $ 680,824     $ 743,353  
Fair value
    568,630       402,524  
 

On July 31, 2009, we entered into an Amended Credit Agreement, which provides that our aggregate revolving credit commitments are $225.0 million and our outstanding term loans remained at $69.9 million (as of July, 31 2009). The terms of the Amended Credit Agreement include, but are not limited to, changes to financial covenants, including our consolidated leverage ratio, consolidated interest coverage ratio and consolidated senior leverage ratio, a general tightening of the exceptions to our negative covenants (principally by means of reducing the types and amounts of permitted transactions) and an increase in the interest rates and fees payable with respect to the borrowings under the Amended Credit Agreement.  Certain revised financial condition covenants, and other key terms, are as follows:


   
Prior
   
As Amended
 
Consolidated Leverage Ratio:
           
July 1, 2009 through September 30, 2009
    7.00 x     9.00 x
October 1, 2009 to December 31, 2009
    7.00 x     10.50 x
January 1, 2010 through March 31, 2010
    6.50 x     10.00 x
April 1, 2010 through June 30, 2010
    6.50 x     9.00 x
July 1, 2010 through September 30, 2010
    6.00 x     7.50 x
October 1, 2010 and thereafter
    6.00 x     6.00 x
                 
Consolidated Interest Coverage Ratio:
               
July 1, 2009 through September 30, 2009
    2.00 x     1.75 x
October 1, 2009 through December 31, 2009
    2.00 x     1.50 x
January 1, 2010 through June 30, 2010
    2.25 x     1.75 x
July 1, 2010 through September 30, 2010
    2.25 x     2.00 x
October 1, 2010 and thereafter
    2.25 x     2.25 x
                 
Consolidated Senior Leverage Ratio:
               
July 1, 2009 through September 30, 2009
    3.50 x     3.75 x
October 1, 2009 through December 31, 2009
    3.50 x     4.25 x
January 1, 2010 through March 31, 2010
    3.50 x     4.00 x
April 1, 2010 through June 30, 2010
    3.50 x     3.75 x
July 1, 2010 through September 30, 2010
    3.50 x     3.00 x
October 1, 2010 and thereafter
    3.50 x     2.25 x
                 
Interest rate on borrowings
 
  LIBOR + 150bps*
 
       LIBOR + 375bps
                 
* At consolidated leverage of 7x or greater.
               

The Amended Credit Agreement revises the calculation of Consolidated Total Debt used in our consolidated leverage ratios to exclude the netting of cash and cash equivalents against total debt.

On an annual basis following the delivery of our year-end financial statements, the Amended Credit Agreement requires mandatory prepayments of principal, as well as a permanent reduction in revolving credit commitments, subject to a computation of excess cash flow for the preceding fiscal year, as more fully set forth in the Amended Credit Agreement. In addition, the Amended Credit Agreement restricts the use of proceeds from asset sales or from the issuance of debt (with the result that such proceeds, subject to certain exceptions, must be used for mandatory prepayments of principal and permanent reductions in revolving credit commitments), and includes an anti-cash hoarding provision which requires that LIN Television utilize unrestricted cash and cash equivalent balances in excess of $12.5 million to repay principal amounts outstanding, but not permanently reduce capacity, under our revolving credit facility.

In connection with the Amended Credit Agreement, we incurred costs of approximately $3.9 million during the third quarter related primarily to lender, arrangement and legal fees, of which, $3.8 million was capitalized as deferred financing costs and $0.1 million was recognized as expense during the quarter ended September 30, 2009. Additionally, as a result of the Amended Credit Agreement, we expect cash interest expense, on an annualized basis, to increase by approximately $7.0 million, based on the total principal amounts outstanding as of July 31, 2009.

Note 6 — Derivative Financial Instruments

We use derivative financial instruments in the management of our interest rate exposure for our long-term debt, principally our credit facility. In accordance with our policy, we do not use derivative instruments unless there is an underlying exposure. We do not hold or enter into derivative financial instruments for speculative trading purposes.

During the second quarter of 2006, we entered into a contract to hedge a notional amount of the declining balances of our term loan (“2006 interest rate hedge”). To mitigate changes in our cash flows resulting from fluctuations in interest rates, we entered into the 2006 interest rate hedge that effectively converted floating LIBOR rate-based-payments to fixed payments at 5.33% plus the applicable margin rate calculated under our credit facility, which expires in November 2011. We designated the 2006 interest rate hedge as a cash flow hedge. The fair value of the 2006 interest rate hedge liability was $4.9 million and $6.5 million at September 30, 2009 and December 31, 2008, respectively. The effective portion of this amount will be released into earnings over the life of the 2006 interest rate hedge through periodic interest payments. The notional amount of the 2006 interest rate hedge was $70.0 million and $81.3 million at September 30, 2009 and December 31, 2008, respectively. During the three and nine months ended September 30, 2009, we recorded a charge of $17,000 and $12,000, respectively, to the Other Expense line within statement of operations, associated with the ineffective portion of this hedge.

The 2006 interest rate hedge is carried on our consolidated balance sheet as other liabilities at fair value, which is calculated using the discounted expected future cash outflows from a series of three-month LIBOR strips through November 4, 2011, the same maturity date as our credit facility. The fair value of this derivative was calculated by using observable inputs (Level 2) as defined under ASC 820-10 as noted in Note 7 – “Fair Value Measurements”.

The 2.50% Exchangeable Senior Subordinated Debentures that we repurchased in 2008 had certain embedded derivative features that were required to be separately identified and recorded at fair value each period. The fair value of these derivatives upon issuance of the debentures was $21.1 million and this amount was recorded as an original issue discount and accreted through interest expense from the date of issuance through May 15, 2008 when they were all tendered to us and purchased. As a result of the purchase of the debentures, we recorded a gain of $0.4 million during the first quarter of 2008 to earnings for the remaining fair value of these derivatives.

The following tables summarizes our derivative activity during the three and nine months ended September 30 (in thousands):

   
Loss (gain) on Derivative Instruments
 
   
Three Months Ended September 30,
   
Nine Months Ended September 30,
 
   
2009
   
2008
   
2009
   
2008
 
Mark-to-Market Adjustments on:
                       
2.50% Exchangeable Senior Subordinated Debentures
  $ -     $ -     $ -     $ (375 )
2006 interest rate hedge
    17       -       12       -  
    $ 17     $ -     $ 12     $ (375 )



   
Comprehensive Income, Net of Tax
 
   
Three Months Ended September 30,
   
Nine Months Ended September 30,
 
   
2009
   
2008
   
2009
   
2008
 
Mark-to-Market Adjustments on:
                       
2006 interest rate hedge
  $ 153     $ 32     $ 984     $ 184  
    $ 153     $ 32     $ 984     $ 184  



The following table summarizes the balances for our derivative liability included in other liabilities in our consolidated balance sheet (in thousands):


   
September 30, 2009
 
December 31, 2008
 
2006 interest rate hedge
  $ 4,867     $ 6,493  
 

Note 7 – Fair Value Measurement

We record certain financial assets and liabilities at fair value on a recurring basis consistent with ASC 820-10. The following table summarizes the financial assets and liabilities measured at fair value in the accompanying financial statements using the three-level fair value hierarchy established by ASC 820-10 as of September 30, 2009 (in thousands):


   
September 30, 2009
 
   
Quoted prices in active markets
   
Significant observable inputs
   
Total
 
   
(Level 1)
   
(Level 2)
 
                   
Assets:
                 
Deferred compensation related investments
  $ 1,323     $ -     $ 1,323  
                         
                       
2006 interest rate hedge
    -       4,867       4,867  
Deferred compensation related liabilities
    1,323       -       1,323  

The fair value of our deferred compensation plan is determined based on the fair value of the investments selected by employees.

Note 8 — Retirement Plans

The following table shows the components of the net periodic pension benefit cost and the contributions to the 401(k) Plan and to the retirement plans (in thousands):


   
Three Months Ended September 30,
   
Nine Months Ended September 30,
 
   
2009
   
2008
   
2009
   
2008
 
Net periodic pension benefit cost:
                       
Service cost
  $ -     $ 538     $ 385     $ 1,614  
Interest cost
    1,587       1,592       4,765       4,776  
Expected return on plan assets
    (1,641 )     (1,705 )     (4,969 )     (5,115 )
Amortization of prior service cost
    -       30       31       90  
Amortization of net loss
    -       48       165       144  
Curtailment
    -       -       438       -  
Net periodic benefit cost
  $ (54 )   $ 503     $ 815     $ 1,509  
Contributions
                               
401(k) Plan
  $ 56     $ 532     $ 393     $ 1,206  
Retirement plans
    -       -       -       2,250  
Total contributions
  $ 56     $ 532     $ 393     $ 3,456  

We do not expect to make any contributions to our defined benefit retirement plans during the remainder of 2009. See Note 11 — “Retirement Plans” included in Item 15 of our Annual Report on Form 10-K for the year ended December 31, 2008 for a full description of our retirement plans.

We recorded a curtailment during the nine months ended September 30, 2009 as a result of freezing benefit accruals to the plan during 2009. The $0.4 million charge relates to the recognition of prior service cost associated with the plan.

As of September 30, 2009, our pension plan was underfunded by greater than 20% primarily due to the significant decline in the equity markets over the last twelve months. At this funding level, withdrawal restrictions are required by the Internal Revenue Service for those cash balance participants who request lump sum distributions. Former employees who request a lump sum distribution including rollovers will receive 50% of their account balance until the funded status of our plan increases to above 80%.

Note 9 — Stock-Based Compensation

On June 2, 2009, we completed an exchange offer which enabled employees and non-employee directors to exchange some or all of their outstanding options to purchase shares of our Class A common stock, for new options to purchase shares of our Class A common stock, on a one for one basis.  A total of 257 employees participated in the exchange, in which options to purchase an aggregate of 2,931,285 shares of our Class A common stock were exchanged.  The new options have an exercise price of $1.99 per share, equal to the closing price per share of our Class A common stock on June 2, 2009. The new stock options vest ratably over three years. As a result of the exchange offer, we will recognize an incremental charge of $2.1 million over the vesting period of the new grants.

Note 10 — Restructuring

During the second quarter of 2009, we recorded a restructuring charge of $0.5 million as a result of the consolidation of certain activities at our stations which resulted in the termination of 28 employees.  We made cash payments of $0.3 million and $0.5 million during the three and nine months ended September 30, 2009 related to this restructuring.

During the fourth quarter of 2008, we effected a restructuring that included a workforce reduction and the cancellation of certain syndicated television program contracts. The total charge for the plan was $12.9 million, including $4.3 million for a workforce reduction of 144 employees and $8.6 million for the cancellation of the contracts. We made cash payments of $0.2 million and $8.8 million for the three and nine months ended September 30, 2009, respectively, related to these restructuring activities. Cumulatively under the plan, we have made payments of $12.4 million through September 30, 2009. As of September 30, 2009, we had $0.5 million in accrued expenses and accounts payable in the consolidated balance sheet for this restructuring and expect to make cash payments of $0.1 million during the remainder of 2009 and the remaining $0.4 million during 2010 and thereafter.
 
The following table details the amounts for both of these restructurings for the three and nine months ended September 30, 2009.
 
 
Balance as of
June 30, 2009
   
Three Months Ended September 30, 2009
   
Balance as of
September 30, 2009
 
       
Charge
   
Payments
     
Severance and related
  $ 319     $ -     $ 319     $ -  
Contractual and other
    747       -       257       490  
     Total
  $ 1,066     $ -     $ 576     $ 490  

   
Balance as of
December 31, 2008
   
Nine Months Ended September 30, 2009
   
Balance as of
September 30, 2009
 
       
Charge
   
Payments
     
Severance and related
  $ 3,493     $ (498)     $ 3,991     $ -  
Contractual and other
    5,868       -       5,378       490  
     Total
  $ 9,361     $ (498)     $ 9,369     $ 490  

 
Note 11 – Concentration of Credit Risk

On April 30, 2009, Chrysler LLC (“Chrysler”) filed for Chapter 11 bankruptcy protection.  On June 1, 2009, General Motors Corporation (“GM”) filed for Chapter 11 bankruptcy protection.  We currently have a concentration of credit risk within our accounts receivable due from both Chrysler and GM.  We have reviewed our reserves related to receivables from these customers and auto dealers whose advertising campaigns are subsidized by both Chrysler and GM.  As of September 30, 2009, we have determined that we are adequately reserved for all receivables due from these customers and their affiliates.

Note 12 — Income Taxes

We recorded a provision for income taxes of $1.6 million and $9.9 million for the three and nine months ended September 30, 2009, respectively, compared to a provision for income taxes of $.2 million and a benefit of $70.7 million for the three and nine months ended September 30, 2008, respectively.  Our effective income tax rate was 215.1% and 2.1% for the three months ended September  30, 2009 and 2008, respectively.  Our effect