Attached files
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EX-31.1 - EX-31.1 - OUTDOOR CHANNEL HOLDINGS INC | a59420exv31w1.htm |
EX-32.2 - EX-32.2 - OUTDOOR CHANNEL HOLDINGS INC | a59420exv32w2.htm |
EX-31.2 - EX-31.2 - OUTDOOR CHANNEL HOLDINGS INC | a59420exv31w2.htm |
EX-32.1 - EX-32.1 - OUTDOOR CHANNEL HOLDINGS INC | a59420exv32w1.htm |
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
þ | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended March 31, 2011
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: 000-17287
Outdoor Channel Holdings, Inc.
(Exact name of Registrant as specified in its charter)
Delaware | 33-0074499 | |
(State or other Jurisdiction of incorporation or organization) |
(IRS Employer Identification Number) |
43445 Business Park Drive, Suite 103
Temecula, California 92590
(Address and zip code of principal executive offices)
Temecula, California 92590
(Address and zip code of principal executive offices)
(951) 699-6991
(Issuers telephone number, including area code)
(Issuers telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
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. þ Yes o No
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files).
o Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in
Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o | Smaller Reporting Company o | |||
(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).
o Yes þ No
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of
the latest practicable date:
Class | Number of Shares Outstanding at May 2, 2011 | |||
Common Stock, $0.001 par value |
25,426,804 |
OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
Quarterly Report on Form 10-Q
For the Period Ended March 31, 2011
Quarterly Report on Form 10-Q
For the Period Ended March 31, 2011
Table of Contents
* * *
2
Table of Contents
PART IFINANCIAL INFORMATION
ITEM 1. Financial Statements.
OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
(unaudited) | ||||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 31,073 | $ | 32,578 | ||||
Investments in available-for-sale securities |
27,987 | 26,995 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $1,411 and $1,394 |
10,077 | 16,754 | ||||||
Income tax refund receivable |
181 | 13 | ||||||
Deferred tax assets, net |
2,944 | 2,944 | ||||||
Prepaid programming and production costs |
6,289 | 5,228 | ||||||
Other current assets |
2,318 | 2,805 | ||||||
Total current assets |
80,869 | 87,317 | ||||||
Property, plant and equipment, net |
11,962 | 12,315 | ||||||
Amortizable intangible assets, net |
536 | 513 | ||||||
Goodwill |
43,160 | 43,160 | ||||||
Investments in auction-rate securities |
5,086 | 5,075 | ||||||
Deferred tax assets, net |
2,165 | 1,774 | ||||||
Subscriber acquisition fees |
2,560 | 2,963 | ||||||
Deposits and other assets |
478 | 535 | ||||||
Totals |
$ | 146,816 | $ | 153,652 | ||||
Liabilities and Stockholders Equity |
||||||||
Current liabilities: |
||||||||
Accounts payable and accrued expenses |
$ | 9,771 | $ | 14,011 | ||||
Deferred revenue |
835 | 516 | ||||||
Current portion of deferred obligations |
89 | 54 | ||||||
Current portion of unfavorable lease |
152 | 149 | ||||||
Income taxes payable |
| 2,399 | ||||||
Total current liabilities |
10,847 | 17,129 | ||||||
Deferred obligations |
125 | 136 | ||||||
Unfavorable lease |
805 | 845 | ||||||
Total liabilities |
11,777 | 18,110 | ||||||
Commitments and contingencies |
||||||||
Stockholders equity: |
||||||||
Preferred stock, $0.001 par value; 25,000 shares authorized; none issued |
| | ||||||
Common stock, $0.001 par value; 75,000 shares authorized; 25,434 and 25,354
shares issued and outstanding |
25 | 25 | ||||||
Additional paid-in capital |
167,753 | 167,437 | ||||||
Accumulated other comprehensive loss |
(341 | ) | (352 | ) | ||||
Accumulated deficit |
(32,398 | ) | (31,568 | ) | ||||
Total stockholders equity |
135,039 | 135,542 | ||||||
Totals |
$ | 146,816 | $ | 153,652 | ||||
See Notes to Unaudited Condensed Consolidated Financial Statements.
3
Table of Contents
OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Revenues: |
||||||||
Advertising |
$ | 7,585 | $ | 7,292 | ||||
Subscriber fees |
4,747 | 4,831 | ||||||
Production services |
2,480 | 5,698 | ||||||
Total revenues |
14,812 | 17,821 | ||||||
Cost of services: |
||||||||
Programming |
1,630 | 1,590 | ||||||
Satellite transmission fees |
399 | 391 | ||||||
Production and operations |
4,553 | 6,813 | ||||||
Other direct costs |
92 | 112 | ||||||
Total cost of services |
6,674 | 8,906 | ||||||
Other expenses: |
||||||||
Advertising |
305 | 286 | ||||||
Selling, general and administrative |
8,283 | 10,397 | ||||||
Depreciation and amortization |
746 | 911 | ||||||
Total other expenses |
9,334 | 11,594 | ||||||
Loss from operations |
(1,196 | ) | (2,679 | ) | ||||
Interest and other income, net |
9 | 12 | ||||||
Loss from operations before income taxes |
(1,187 | ) | (2,667 | ) | ||||
Income tax benefit |
(357 | ) | (1,154 | ) | ||||
Net loss |
$ | (830 | ) | $ | (1,513 | ) | ||
Loss per common share data: |
||||||||
Basic |
$ | (0.03 | ) | $ | (0.06 | ) | ||
Diluted |
$ | (0.03 | ) | $ | (0.06 | ) | ||
Weighted average common shares outstanding: |
||||||||
Basic |
24,605 | 24,395 | ||||||
Diluted |
24,605 | 24,395 | ||||||
See Notes to Unaudited Condensed Consolidated Financial Statements.
4
Table of Contents
OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statement of Stockholders Equity
For the Three Months Ended March 31, 2011
(In thousands)
Additional | Accumulated Other | |||||||||||||||||||||||
Common Stock | Paid-in | Comprehensive | Accumulated | |||||||||||||||||||||
Shares | Amount | Capital | Income (Loss) | Deficit | Total | |||||||||||||||||||
Balance, December 31, 2010 |
25,354 | $ | 25 | $ | 167,437 | $ | (352 | ) | $ | (31,568 | ) | $ | 135,542 | |||||||||||
Comprehensive income (loss): |
||||||||||||||||||||||||
Net loss |
| | | | (830 | ) | (830 | ) | ||||||||||||||||
Change in fair value of
available-for-sale and
auction-rate securities |
| | | 11 | | 11 | ||||||||||||||||||
Total comprehensive loss |
| | | | | (819 | ) | |||||||||||||||||
Issuance of restricted stock
to employees for services to
be rendered, net of forfeited
shares |
141 | | | | | | ||||||||||||||||||
Share-based employee and
service provider compensation
expense |
| | 787 | | | 787 | ||||||||||||||||||
Purchase and retirement of
treasury stock related to
employee and service provider
share-based compensation
activity |
(61 | ) | | (471 | ) | | | (471 | ) | |||||||||||||||
Balance, March 31, 2011 |
25,434 | $ | 25 | $ | 167,753 | $ | (341 | ) | $ | (32,398 | ) | $ | 135,039 | |||||||||||
See Notes to Unaudited Condensed Consolidated Financial Statements.
5
Table of Contents
OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Operating activities: |
||||||||
Net loss |
$ | (830 | ) | $ | (1,513 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating
activities: |
||||||||
Depreciation and amortization |
746 | 911 | ||||||
Amortization of subscriber acquisition fees |
408 | 404 | ||||||
Loss (gain) on sale of equipment |
2 | (34 | ) | |||||
Gain on sale of available-for-sale and auction-rate securities |
| (11 | ) | |||||
Provision for doubtful accounts |
79 | 413 | ||||||
Share-based employee and service provider compensation |
787 | 1,064 | ||||||
Deferred tax benefit, net |
(391 | ) | (1,158 | ) | ||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
6,598 | 4,279 | ||||||
Income tax refund receivable and payable, net |
(2,567 | ) | (653 | ) | ||||
Prepaid programming costs |
(1,060 | ) | 218 | |||||
Other current assets |
487 | (301 | ) | |||||
Deposits and other assets |
47 | 24 | ||||||
Subscriber acquisition fees |
(191 | ) | (1,389 | ) | ||||
Accounts payable and accrued expenses |
(4,049 | ) | (5,016 | ) | ||||
Deferred revenue |
319 | (26 | ) | |||||
Deferred obligations |
23 | (4 | ) | |||||
Unfavorable lease obligations |
(37 | ) | (33 | ) | ||||
Net cash provided by (used in) operating activities |
371 | (2,825 | ) | |||||
Investing activities: |
||||||||
Purchases of property, plant and equipment |
(338 | ) | (409 | ) | ||||
Purchase of intangibles |
(75 | ) | | |||||
Proceeds from sale of equipment |
| 68 | ||||||
Purchases of available-for-sale securities |
(27,992 | ) | (31,993 | ) | ||||
Proceeds from sale of available-for-sale and auction-rate securities |
27,000 | 27,200 | ||||||
Net cash used in investing activities |
(1,405 | ) | (5,134 | ) | ||||
Financing activities: |
||||||||
Purchase of treasury stock |
(471 | ) | (367 | ) | ||||
Purchase and retirement of treasury stock related to stock repurchase program |
| (341 | ) | |||||
Net cash used in financing activities |
(471 | ) | (708 | ) | ||||
Net decrease in cash and cash equivalents |
(1,505 | ) | (8,667 | ) | ||||
Cash and cash equivalents, beginning of period |
32,578 | 20,848 | ||||||
Cash and cash equivalents, end of period |
$ | 31,073 | $ | 12,181 | ||||
Supplemental disclosure of cash flow information: |
||||||||
Income taxes paid |
$ | 2,542 | $ | 653 | ||||
Supplemental disclosures of non-cash investing and financing activities: |
||||||||
Effect of net increase in fair value of available-for-sale and
auction-rate securities |
$ | 11 | $ | 10 | ||||
Property, plant and equipment costs incurred but not paid |
$ | 5 | $ | 54 | ||||
See Notes to Unaudited Condensed Consolidated Financial Statements.
6
Table of Contents
OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
(In thousands, except share data)
NOTE 1ORGANIZATION AND BUSINESS
Description of Operations
Outdoor Channel Holdings, Inc. (Outdoor Channel Holdings) is incorporated under the laws of the
State of Delaware. Collectively, with its subsidiaries, the terms we, us, our and the
Company refer to Outdoor Channel Holdings, Inc. as a consolidated entity, except where noted or
where the context makes clear the reference is only to Outdoor Channel Holdings, Inc. or one of our
subsidiaries. Outdoor Channel Holdings, Inc. wholly owns OC Corporation which in turn wholly owns
The Outdoor Channel, Inc. (TOC). Outdoor Channel Holdings is also the sole member of 43455 BPD,
LLC, the entity that owns the building that houses our broadcast facility. TOC operates Outdoor
Channel, which is a national television network devoted to traditional outdoor activities, such as
hunting, fishing and shooting sports, as well as off-road motor sports and other related lifestyle
programming. Outdoor Channel Holdings also wholly owns Winnercomm, Inc., which in turn wholly owns
CableCam, LLC and SkyCam, LLC (collectively referred to as Winnercomm). The Winnercomm businesses
relate to the production, development and marketing of sports programming and aerial camera
systems.
In the opinion of management, the accompanying unaudited condensed consolidated financial
statements reflect all adjustments, consisting of normal recurring adjustments, necessary to
present fairly the financial position of the Company as of March 31, 2011 and its results of
operations and cash flows for the three months ended March 31, 2011 and 2010. Pursuant to the rules
and regulations of the Securities and Exchange Commission, certain information and disclosures
normally included in financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been condensed or omitted from these
financial statements. Accordingly, these unaudited condensed consolidated financial statements
should be read in conjunction with the audited consolidated financial statements and notes thereto
included in our Annual Report on Form 10-K for the year ended December 31, 2010, as filed with the
Securities and Exchange Commission on March 10, 2011 (the 2010 Annual Report).
Operating results for the three months ended March 31, 2011 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2011. The preparation of financial
statements in conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect reported amounts of
assets and liabilities as of the dates of the condensed consolidated balance sheets and reported
amounts of revenues and expenses for the periods presented. Accordingly, actual results could
materially differ from those estimates.
Our revenues include advertising fees from advertisements aired on Outdoor Channel, including fees
paid by outside producers to purchase advertising time in connection with the airing of their
programs on Outdoor Channel and subscriber fees paid by cable, telephone companies and satellite
service providers that air Outdoor Channel. Production Services revenue includes revenue from
advertising fees, revenue from production services for customer-owned telecasts, revenue from
camera services for customer-owned telecasts and revenue from website design, management, marketing
and hosting services.
Certain prior year amounts have been reclassified to conform to the current period presentation.
NOTE 2STOCK INCENTIVE PLANS
The measurement and recognition of compensation expense is recognized in the financial statements
over the service period for the fair value of all awards granted after January 1, 2006 as well as
for existing awards for which the requisite service had not been rendered as of January 1, 2006.
Our stock incentive plans provide for the granting of qualified and nonqualified options,
restricted stock, restricted stock units (RSUs), stock appreciation rights (SARs) and
performance units to our officers, directors and employees. Outstanding options generally vest over
a period ranging from 90 days to four years after the date of the grant and expire no more than ten
years after the grant. We satisfy the exercise of options and awards of restricted stock by issuing
previously unissued common shares. Currently we have not awarded any SARs but have awarded
performance units and RSUs.
We have two stock incentive plans: 2004 Long-Term Incentive Plan (LTIP Plan) and Non-Employee
Director Stock Option Plan (NEDSOP). No more options can be issued under the NEDSOP Plan. We also
may grant stock options that are not covered under any of the stock incentive plans, with
appropriate shareholder approvals. Options and stock grants are subject to terms and conditions as
determined by our Board of Directors. Stock option grants are generally exercisable in
increments of 25% during each year of employment beginning three months to one year from the date
of grant. Generally, stock options expire five years from the date of grant. Options issued under
our NEDSOP Plan are generally exercisable 40% after the first 3 months of service and 20% on the
first anniversary of appointment and each anniversary thereafter until 100% are vested. These
options generally have 10 year lives.
7
Table of Contents
Our Board of Directors has discretion to allow our employees and Directors to forego shares in
lieu of paying requisite withholding taxes on vested restricted shares. In turn, we remit to the
appropriate taxing authorities the U.S. Federal and state withholding taxes on the total
compensation the employees have realized as a result of the vesting of these shares. During the
three months ended March 31, 2011 and 2010, approximately 61,000 and 62,000 shares were repurchased
with a market value of approximately $471 and $367, respectively.
2004 Long-Term Incentive Plan (LTIP Plan). During 2005 through March 31, 2011, all options
to purchase common stock, restricted stock awards, restricted stock units and performance units to
our employees, service providers, and Board of Directors were issued under the LTIP Plan. Options
granted under the LTIP Plan expire five years from the date of grant and typically vest equally
over four years. Restricted stock awards granted under the LTIP Plan do not expire, but are
surrendered upon termination of employment if unvested. These awards generally vest annually over
three to five years, however, some awards vest monthly or quarterly. RSUs vest over one year and,
upon satisfaction of the service vesting requirement, the holder is entitled to shares equal to the
current value of the units and, provided the holder has not elected to defer settlement, will have
compensation income equal to that value. Performance units vest based upon criteria established at
the time of grant. Options or awards that are surrendered or cease to be exercisable continue to be
available for future grant under the LTIP Plan. There are 4,050,000 shares of common stock reserved
for issuance under the LTIP Plan. As of March 31, 2011, options to purchase 335,000 shares of
common stock, 685,600 restricted shares, 100,500 RSUs and 400,000 performance unit shares were
outstanding. There were 1,029,411 shares of common stock available for future grant as of March 31,
2011.
Non-Employee Director Stock Option Plan (NEDSOP). Under the NEDSOP, nonqualified stock
options to purchase common stock were granted to three prior non-employee directors during periods
of their appointment and to two of our current non-employee directors. Options granted under the
NEDSOP expire 10 years from the date of grant. These grants are generally exercisable 40% after the
first 3 months of service and 20% on the first anniversary of appointment and each anniversary
thereafter until 100% vested. The NEDSOP has 1,000,000 shares of common stock reserved for
issuance. As of March 31, 2011, options to purchase 250,000 shares of common stock were outstanding
and no further option grants can be issued under this plan.
The fair value of the shares and options, adjusted for a forfeiture assumption, at the respective
dates of grant (which represents deferred compensation not required to be recorded initially in the
consolidated balance sheet) is amortized to share-based compensation expense as the rights to the
restricted stock and options vest with an equivalent amount added to additional paid-in capital.
Changes to forfeiture assumptions are based on actual experience and are recorded in accordance
with the rules related to accounting for changes in estimates. The fair value of nonvested shares
for grants is determined based on the closing trading price of our shares on the grant date.
The following tables summarize share-based compensation expense for the three months ended March
31, 2011 and 2010:
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Nature of Award: |
||||||||
Restricted stock |
$ | 639 | $ | 1,033 | ||||
RSUs |
148 | | ||||||
Options |
| 23 | ||||||
Performance vesting |
| 8 | ||||||
Total share-based compensation expense |
$ | 787 | $ | 1,064 | ||||
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Classification of Compensation Expense: |
||||||||
Cost of services: |
||||||||
Production and operations |
$ | 57 | $ | 73 | ||||
Other expenses: |
||||||||
Selling, general and administrative |
730 | 991 | ||||||
Total share-based compensation expense |
$ | 787 | $ | 1,064 | ||||
8
Table of Contents
Stock Options
A summary of the status of the options granted under our stock incentive plans and outside of those
plans as of March 31, 2011 and the changes in options outstanding during the three months then
ended is as follows:
Weighted | ||||||||||||||||
Weighted | Average | |||||||||||||||
Average | Remaining | |||||||||||||||
Exercise | Contractual | Aggregate | ||||||||||||||
Options | Shares | Price | Term (Yrs.) | Intrinsic Value | ||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Outstanding at beginning of period |
635 | $ | 12.52 | |||||||||||||
Granted |
| | ||||||||||||||
Exercised |
| | ||||||||||||||
Forfeited |
| | ||||||||||||||
Expired |
(50 | ) | 14.86 | |||||||||||||
Outstanding at end of period |
585 | $ | 12.32 | 1.47 | $ | | ||||||||||
Vested or expected to vest at end of period |
585 | $ | 12.32 | 1.47 | $ | | ||||||||||
Exercisable at end of period |
585 | $ | 12.32 | 1.47 | $ | | ||||||||||
Additional information regarding options outstanding for all plans as of March 31, 2011 is as
follows:
Options Outstanding | Options Exercisable | |||||||||||||||||||
Weighted | ||||||||||||||||||||
Average | Weighted | Weighted | ||||||||||||||||||
Remaining | Average | Average | ||||||||||||||||||
Number | Contractual | Exercise | Number | Exercise | ||||||||||||||||
Range of Exercise Prices | Outstanding | Term (Yrs.) | Price | Exercisable | Price | |||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||
$10.19 $10.19 |
10 | 0.01 | $ | 10.19 | 10 | $ | 10.19 | |||||||||||||
$12.10 $12.10 |
300 | 0.55 | 12.10 | 300 | 12.10 | |||||||||||||||
$12.50 $12.50 |
125 | 2.72 | 12.50 | 125 | 12.50 | |||||||||||||||
$12.58 $12.58 |
25 | 0.18 | 12.58 | 25 | 12.58 | |||||||||||||||
$12.80 $12.80 |
125 | 2.80 | 12.80 | 125 | 12.80 | |||||||||||||||
Total |
585 | 1.47 | $ | 12.32 | 585 | $ | 12.32 | |||||||||||||
There were no options granted during the three months ended March 31, 2011 or 2010.
Restricted Stock
A summary of the status of our nonvested restricted shares as of March 31, 2011 and the changes in
restricted shares outstanding during the three months then ended is as follows:
Three Months Ended | ||||||||
March 31, 2011 | ||||||||
Weighted | ||||||||
Average | ||||||||
Grant-Date | ||||||||
Shares | Fair Value | |||||||
(in thousands) | ||||||||
Nonvested at beginning of period |
713 | $ | 6.65 | |||||
Granted |
143 | 7.71 | ||||||
Vested |
(169 | ) | 6.34 | |||||
Forfeited |
(2 | ) | 7.31 | |||||
Nonvested at end of period |
685 | $ | 6.95 | |||||
During the three months ended March 31, 2011 and 2010, we issued 143,000 and 114,000 shares,
respectively, of restricted stock to employees while 2,000 and 107,000 shares of restricted stock,
respectively, were canceled due to employee turnover.
9
Table of Contents
Restricted Stock Units
A summary of the status of our RSUs as of March 31, 2011 and the changes in RSUs outstanding during
the three months then ended is as follows:
Three Months Ended | ||||||||
March 31, 2011 | ||||||||
Weighted | ||||||||
Number of | Average | |||||||
Restricted | Grant-Date | |||||||
Stock Units | Fair Value | |||||||
(in thousands) | ||||||||
RSUs outstanding at beginning of period |
101 | $ | 5.97 | |||||
Granted |
| | ||||||
Vested |
| | ||||||
Forfeited |
| | ||||||
Nonvested at end of period |
101 | $ | 5.97 | |||||
There were no restricted stock units granted during the three months ended March 31, 2011 or
2010.
Expense to be Recognized
Expense associated with our share-based compensation plans yet to be recognized as compensation
expense over the employees remaining requisite service periods as of March 31, 2011 are as
follows:
March 31, 2011 | ||||||||
Weighted Average | ||||||||
Expense Yet | Remaining | |||||||
to be | Requisite Service | |||||||
Recognized | Periods | |||||||
Restricted stock |
$ | 3,609 | 1.8 years | |||||
RSUs |
90 | 0.1 year | ||||||
Total |
$ | 3,699 | 1.8 years | |||||
NOTE 3EARNINGS (LOSS) PER COMMON SHARE
Basic earnings (loss) per common share is calculated by dividing net income (loss) by the weighted
average number of common shares outstanding during each period. Diluted earnings (loss) per common
share reflects the potential dilution of securities by including common stock equivalents, such as
unvested restricted stock and stock units in the weighted average number of common shares
outstanding for a period, if dilutive.
The following table sets forth a reconciliation of the basic and diluted number of weighted average
shares outstanding used in the calculation of earnings (loss) per share for the three months ended
March 31 (in thousands):
2011 | 2010 | |||||||
Weighted average shares used to calculate basic earnings (loss) per share |
24,605 | 24,395 | ||||||
Dilutive effect of potentially issuable common shares upon exercise of
dilutive stock options, performance units, unvested restricted stock and
stock units |
| | ||||||
Weighted average shares used to calculate diluted earnings (loss) per share |
24,605 | 24,395 | ||||||
As of March 31, 2011 and 2010, unvested restricted stock, outstanding options and performance units
to purchase a total of approximately 1,000,000 and 1,696,000 shares of common stock, respectively,
were not included in the calculation of diluted earnings (loss) per share because their effect was
antidilutive.
10
Table of Contents
NOTE 4INVESTMENTS IN AVAILABLE-FOR-SALE SECURITIES
Assets recorded at fair value in the balance sheet as of March 31, 2011 are categorized based upon
the level of judgment associated with the inputs used to measure their fair value. Hierarchical
levels are directly related to the amount of subjectivity associated with the inputs to fair
valuation of these assets and are as follows:
Level 1
|
Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date; | |
Level 2
|
Inputs other than Level 1 inputs that are either directly or indirectly observable; and | |
Level 3
|
Unobservable inputs developed using estimates and assumptions developed by management, which reflect those that a market participant would use. |
We measure the following financial assets at fair value on a recurring basis. The fair value of
these financial assets was determined using the following inputs at March 31, 2011:
Quoted Prices | Significant | |||||||||||||||
in Active | Other | Significant | ||||||||||||||
Markets for | Observable | Unobservable | ||||||||||||||
Identical Assets | Inputs | Inputs | ||||||||||||||
Total | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Cash and cash equivalents (1) |
$ | 31,073 | $ | 31,073 | $ | | $ | | ||||||||
Investments in available-for-sale securities (2) |
27,987 | 27,987 | | | ||||||||||||
Non-current investments in auction-rate securities (3) |
5,086 | | | 5,086 | ||||||||||||
Total |
$ | 64,146 | $ | 59,060 | $ | | $ | 5,086 | ||||||||
(1) | Cash and cash equivalents consist primarily of treasury bills, commercial paper and money market funds with original maturity dates of three months or less, for which we determine fair value through quoted market prices. | |
(2) | Investments in available-for-sale securities consist of treasury bills and commercial paper with original maturity dates in excess of three months, for which we determine fair value through quoted market prices. | |
(3) | Investments in auction-rate securities consist of one auction-rate municipal security and one closed-end perpetual preferred auction-rate security (PPS). We use a discounted cash flow analysis to more accurately measure possible liquidity discounts. |
As of March 31, 2011, our investments in auction-rate securities (ARS) consisted of one
auction-rate municipal security collateralized by federally backed student loans and one closed-end
perpetual preferred security which has redemption features which call for redemption at 100% of par
value and have maintained at least A3 credit rating despite the failure of the auction process. To
date, we have collected all interest due on all of our ARS in accordance with their stated terms.
Historically, the carrying value (par value) of the ARS approximated fair market value due to the
frequent resetting of variable interest rates. Beginning in February 2008, however, the auctions
for ARS began to fail and were largely unsuccessful, requiring us to hold them beyond their typical
auction reset dates. As a result, the interest rates on these investments reset to the maximum
based on formulas contained in the securities. The rates are generally equal to or higher than the
current market for similar securities. The par value of the ARS associated with these failed
auctions will not be available to us until a successful auction occurs, a buyer is found outside of
the auction process, the securities are called or the underlying securities have matured. Due to
these liquidity issues, we performed a discounted cash flow analysis to determine the estimated
fair value of these investments. The assumptions used in preparing the models include, but are not
limited to, interest rate yield curves for similar securities, market rates of returns, and the
expected term of each security. In making assumptions of required rates of return, we considered
risk-free interest rates and credit spreads for investments of similar credit quality. Based on
these models, we recorded an unrealized gain on our PPS of $11 in the three months ended March 31,
2011. As a result of the lack of liquidity in the PPS market, we have an unrealized loss on our PPS
of $341, which is included in accumulated other comprehensive loss on our consolidated balance
sheet as of March 31, 2011. We deemed the loss to be temporary because we do not plan to sell any
of the PPS prior to maturity at an amount below the original purchase value and, at this time, do
not deem it probable that we will receive less than 100% of the principal and accrued interest.
Based on our cash and cash equivalents balance of $31,073 and our expected operating cash flows, we
do not believe a lack of liquidity associated with our PPS will adversely affect our ability to
conduct business, and believe we have the ability to hold the securities throughout the currently
estimated recovery period. We will continue to evaluate any changes in the market value of the
failed ARS that have not been liquidated subsequent to year-end and in the future, depending upon
existing market conditions, we may be required to record additional other-than-temporary declines
in market value. We are not certain how long we may be required to hold each security. However,
given our current cash and cash equivalent
position, short-term investments in available-for-sale securities, and cash flow from operations,
we believe we have the ability and we intend to hold the failed PPS as long-term investments until
the market stabilizes.
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All of our assets measured at fair value on a recurring basis using significant Level 3 inputs as
of March 31, 2011 were auction-rate securities. The one closed-end perpetual preferred auction-rate
security totaling $2,866 had an interest rate of 1.50% and an auction reset of 28 days. The
municipal security totaling $2,220 had an interest rate of 0.96%, an auction reset of 28 days and a
maturity date of December 1, 2045. As of March 31, 2011 the next auction reset date for both
securities was April 12, 2011. The following table summarizes our fair value measurements using
significant Level 3 inputs, and changes therein, for the three month period ended March 31, 2011:
Three Months Ended | ||||
March 31, 2011 | ||||
Auction-Rate Securities: |
||||
Balance at beginning of period |
$ | 5,075 | ||
Unrealized gain included in accumulated other
comprehensive loss |
11 | |||
Balance as of March 31, 2011 |
$ | 5,086 | ||
We consider the yields we recognize from auction-rate securities and from cash held in our treasury
bills, commercial paper and money market accounts to be interest income and are recorded in
interest and other income, net for the three months ended March 31, 2011 and 2010 as follows:
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Interest income |
$ | 31 | $ | 25 | ||||
Interest expense |
(22 | ) | (24 | ) | ||||
Gain on redemption of auction-rate
securities |
| 11 | ||||||
Total interest and other income, net |
$ | 9 | $ | 12 | ||||
NOTE 5COMPREHENSIVE INCOME (LOSS)
The following table provides the composition of other comprehensive loss:
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Net loss, as reported |
$ | (830 | ) | $ | (1,513 | ) | ||
Unrealized gain on
available-for-sale and
auction-rate securities |
11 | 10 | ||||||
Comprehensive loss |
$ | (819 | ) | $ | (1,503 | ) | ||
NOTE 6GOODWILL AND INTANGIBLE ASSETS
We review goodwill for impairment annually and whenever events or changes in circumstances indicate
the carrying value of an asset may not be recoverable, pursuant to a two-step impairment test. In
the first step, we compare the fair value of each of our reporting units to its carrying value as
of October 1 of each year. We determine the fair values of our reporting units using the income
approach. If the fair value of any of our reporting units exceeds the carrying values of the net
assets assigned to that unit, goodwill is not impaired and we are not required to perform further
testing. If the carrying value of the net assets assigned to any of our reporting units exceeds the
fair value, then we must perform the second step in order to determine the implied fair value of
the reporting units goodwill and compare it to the carrying value of the reporting units
goodwill. If the carrying value of a reporting units goodwill exceeds its implied fair value, then
we must record an impairment loss equal to the difference.
We currently have two reporting units, TOC and Production Services. The Production Services
reporting unit consists of our Winnercomm, CableCam and SkyCam businesses which were acquired on
January 12, 2009. All of the Companys goodwill is currently attributed to our TOC reporting unit.
There were no changes to our reporting units or allocation of goodwill by reporting units during
2010 or 2011.
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Determining the fair value of a reporting unit involves the use of significant estimates and
assumptions. The estimate of fair value of each of our reporting units is based on our projection
of revenues, cost of services, other expenses and cash flows considering historical and estimated
future results, general economic and market conditions as well as the impact of planned business
and operational strategies. We base our fair value estimates on assumptions we believe to be
reasonable at the time, but such assumptions are subject to inherent uncertainty. Actual results
may differ from those estimates. The valuations employ present value techniques to measure fair
value and consider market factors.
Intangible assets that are subject to amortization consist of the following as of March 31, 2011:
March 31, 2011 | ||||||||||||
Accumulated | ||||||||||||
Gross | Amortization | Net | ||||||||||
Trademark |
$ | 219 | $ | 207 | $ | 12 | ||||||
Internet domain names |
172 | 103 | 69 | |||||||||
Customer relationships |
980 | 569 | 411 | |||||||||
Patents |
80 | 36 | 44 | |||||||||
Total amortizable intangible assets |
$ | 1,451 | $ | 915 | $ | 536 | ||||||
As of
March 31, 2011, the weighted average amortization period for the above intangibles is 2.6
years. Based on our most recent analysis, we believe that no impairment exists at March 31, 2011
with respect to our goodwill and other intangible assets. For the three months ended March 31, 2011
and 2010, we recognized amortization expense related to these assets of $52 and $96, respectively.
Estimated future amortization expense related to intangible assets at March 31, 2011 is as follows:
Years Ending December 31, | Amount | |||
2011 (remaining 9 months) |
$ | 162 | ||
2012 |
204 | |||
2013 |
165 | |||
2014 |
5 | |||
Total |
$ | 536 | ||
NOTE 7LINES OF CREDIT
On August 10, 2010, the Board of Directors approved the renewal of the revolving line of credit
agreement (the Revolver) with U.S. Bank N.A. (the Bank), extending the maturity date to
September 5, 2012 and renewing the total amount which can be drawn upon under the Revolver to
$10,000. The Revolver provides that the interest rate per annum as selected by the Company shall be
prime rate (3.25% and 3.25% as of March 31, 2011 and 2010, respectively) plus 0.25% or LIBOR (0.25%
and 0.25% as of March 31, 2011 and 2010, respectively) plus 2.25%. The Revolver is unsecured. This
credit facility contains customary financial and other covenants and restrictions, as amended,
including a change of control provision and minimum liquidity metrics. As of March 31, 2011, we did
not have any amounts outstanding under this credit facility and we were in compliance with all of
the Revolver covenants. This Revolver is guaranteed by TOC.
NOTE 8ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses as of March 31, 2011 and December 31, 2010 consist of the
following:
March 31, 2011 | December 31, 2010 | |||||||
Trade accounts payable |
$ | 1,497 | $ | 3,137 | ||||
Accrued payroll and related expenses |
2,164 | 3,554 | ||||||
Estimated make-good accrual |
1,465 | 1,587 | ||||||
Estimated most-favored nation accrual |
2,003 | 1,750 | ||||||
Accrued launch support commitment |
| 185 | ||||||
Accrued expenses |
2,642 | 3,798 | ||||||
Total |
$ | 9,771 | $ | 14,011 | ||||
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NOTE 9INCOME TAX BENEFIT
The income tax benefit reflected in the accompanying unaudited condensed consolidated statement of
operations for the three months ended March 31, 2011 and 2010 is different than that computed based
on the applicable statutory Federal income tax rate of 34% primarily due to state taxes, the tax
effect of accounting for share-based compensation and the limitations on the deductibility of
executive compensation as provided for in Internal Revenue Code Section 162(m).
We file income tax returns in the United States and various state and local tax jurisdictions. We
have state net operating losses and credit carryforwards that will be subject to examination beyond
the year in which they are ultimately utilized. Our policy is to record interest and penalties on
uncertain tax positions as income tax expense.
NOTE 10RELATED PARTY TRANSACTIONS
We lease certain of our administrative facilities from Musk Ox Properties, LP, which in turn is
owned by Messrs. Perry T. Massie, Chairman of the Board and Thomas H. Massie, both of whom are
principal stockholders and directors of the Company. The lease agreement had a five-year term and
expired on December 31, 2010. In January 2011 we entered into a six-month lease with Musk Ox
Properties, LP. Monthly rent payments for the new lease, which will expire on June 30, 2011, are
approximately $19. We paid Musk Ox Properties, LP approximately $57 and $57 in the three months
ended March 31, 2011 and 2010, respectively. We recognized rent expense related to this lease of
$57 and $53 in the three months ended March 31, 2011 and 2010, respectively.
We lease our SkyCam facility from Case and Associates Properties, Inc., which in turn is partially
owned by James E. Wilburn, Chairman of Winnercomm. The lease agreement has a ten year term expiring
in May 2016. Monthly rent payments under this lease agreement were $43. We paid Case and Associates
Properties, Inc., approximately $123 and $120 in the three months ended March 31, 2011 and 2010,
respectively. We recognized rent expense related to this lease of $66
and $73 in the three months
ended March 31, 2011 and 2010, respectively.
In October 2010 we engaged WATV, LLC to produce one off-road motorsport series for a total contract
value of $390. Roger L. Werner, Chief Executive Officer, is a partner in WATV. During 2011, we paid
WATV $138 related to the production of this series.
We license a program on a barter basis that is produced by an entity owned by Thomas H. Massie, who
is a principal stockholder and director of the Company. The program airs during off-peak hours and
the license period is from March 2009 through March 2012.
NOTE 11COMMITMENTS AND CONTINGENCIES
From time to time we are involved in litigation as both plaintiff and defendant arising in the
ordinary course of business. In the opinion of management, the results of any pending litigation
should not have a material adverse effect on our consolidated financial position or operating
results.
We lease facilities and equipment, including access to satellites for television transmission,
under non-cancelable operating leases that expire at various dates through 2016. Generally, the
most significant leases are our satellite lease.
Rental expenses including satellite and transponder expense, equipment and facilities rent expense,
aggregated to approximately $756 and $908 for the three months ended March 31, 2011 and 2010,
respectively.
In addition to the lease commitments noted in Note 10, we also have operating leases for general
office and production facilities in Tulsa, Chatsworth, CA, New York City, Chicago and Greenwich, CT
with varying expiration dates ranging from June 2011 through May 2016.
NOTE 12SEGMENT INFORMATION
We report segment information in the same format as reviewed by our chief operating decision maker
in deciding how to allocate resources and in assessing performance. Our chief operating decision
maker is our chief executive officer. We have two reporting segments, TOC and Production Services.
TOC is a separate business activity that broadcasts television programming on Outdoor Channel 24
hours a day, seven days a week. TOC generates revenue primarily from advertising fees (which
include fees paid by outside producers to purchase advertising time in connection with the airing
of their programs on Outdoor Channel) and subscriber fees. Production Services is a separate
business activity that relates to the production, development and marketing of sports programming
and the rental of aerial camera systems. Production Services generates revenue from advertising
fees, production services for customer-owned telecasts, from aerial camera services for
customer-owned telecasts and from website design, management, marketing and hosting services.
Intersegment revenues
were generated by Production Services of approximately $584 and $522, respectively, for the three
months ended March 31, 2011 and 2010, and intersegment cost of services were generated by
Production Services of approximately $500 and $490, respectively for the three months ended March
31, 2011 and 2010.
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Information with respect to these reportable segments as of and for the three months ended March
31, 2011 and 2010 is as follows:
Three Months Ended | ||||||||
March 31, | ||||||||
Revenues | 2011 | 2010 | ||||||
TOC |
$ | 12,332 | $ | 12,123 | ||||
Production Services |
3,064 | 6,220 | ||||||
Eliminations |
(584 | ) | (522 | ) | ||||
Total revenues |
$ | 14,812 | $ | 17,821 | ||||
Three Months Ended | ||||||||
March 31, | ||||||||
Income (Loss) from Operations | 2011 | 2010 | ||||||
TOC* |
$ | 277 | $ | (401 | ) | |||
Production Services* |
(1,389 | ) | (2,246 | ) | ||||
Eliminations |
(84 | ) | (32 | ) | ||||
Total loss from operations |
$ | (1,196 | ) | $ | (2,679 | ) | ||
March 31, | December 31, | |||||||
Total Assets | 2011 | 2010 | ||||||
TOC |
$ | 83,832 | $ | 87,783 | ||||
Production Services |
3,923 | 6,833 | ||||||
Corporate assets* |
59,379 | 59,270 | ||||||
Eliminations |
(318 | ) | (234 | ) | ||||
Total assets |
$ | 146,816 | $ | 153,652 | ||||
Three Months Ended | ||||||||
March 31, | ||||||||
Depreciation and Amortization | 2011 | 2010 | ||||||
TOC |
$ | 390 | $ | 405 | ||||
Production Services |
356 | 506 | ||||||
Total |
$ | 746 | $ | 911 | ||||
* | Corporate overhead expenses consist primarily of executive, legal and administrative functions not associated directly with either TOC or Production Services. We allocate a portion of these expenses to our Production Services segment, but the majority is captured in our TOC segment. Corporate assets consist primarily of cash not held in our operating accounts and available-for-sale securities. |
NOTE 13RECENT ACCOUNTING PRONOUNCEMENTS
During the three months ended March 31, 2011, there were no new accounting pronouncements that
would have had a material effect on our unaudited condensed consolidated financial statements. For
a description of recent accounting pronouncements relevant to us, refer to Recent Accounting
Pronouncements included in Item 7 of our 2010 Annual Report.
NOTE 14SUBSEQUENT EVENTS
The Company has completed an evaluation of all subsequent events through the date the consolidated
financial statements were issued and concluded no subsequent events occurred that required
recognition or disclosure.
* * *
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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
Safe Harbor Statement
The information contained in this report may include forward-looking statements. Our actual results
could differ materially from those discussed in any forward-looking statements. The statements
contained in this report that are not historical are forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and
Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), including
statements, without limitation, regarding our expectations, beliefs, intentions or strategies
regarding the future. We intend that such forward-looking statements be subject to the safe-harbor
provisions contained in those sections. Such forward-looking statements relate to, among other
things: (1) expected revenue and earnings growth and changes in mix; (2) anticipated expenses
including advertising, programming, personnel, integration costs and others; (3) Nielsen Media
Research, which we refer to as Nielsen, estimates regarding total households and cable and
satellite homes subscribing to and viewers (ratings) of Outdoor Channel; and (4) other matters. We
undertake no obligation to publicly update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
These statements involve significant risks and uncertainties and are qualified by important factors
that could cause our actual results to differ materially from those reflected by the
forward-looking statements. Such factors include but are not limited to risks and uncertainties
which are included in Part II, Item 1A Risk Factors below and other risks and uncertainties
discussed elsewhere in this report. In assessing forward-looking statements contained herein,
readers are urged to read carefully all cautionary statements contained in this Form 10-Q and in
our other filings with the Securities and Exchange Commission. For these forward-looking
statements, we claim the protection of the safe harbor for forward-looking statements in Section
27A of the Securities Act and Section 21E of the Exchange Act.
Managements discussion and analysis of result of operations and financial condition is provided as
a supplement to and should be read in conjunction with the unaudited condensed consolidated
financial statements and related notes to enhance the understanding of our results of operations,
financial condition and cash flows. Additional context can also be found in our 2010 Annual Report.
Significant components of managements discussion and analysis of results of operations and
financial condition include:
| Overview. The overview section provides a summary of our business. | ||
| Consolidated Results of Operations. The consolidated results of operations section provides an analysis of our results on a consolidated basis for the quarter ended March 31, 2011 compared to the quarter ended March 31, 2010. | ||
| Segment Results of Operations. The segment results of operations section provides an analysis of our results on a reportable operating segment basis for the quarter ended March 31, 2011 compared to the quarter ended March 31, 2010. | ||
| Liquidity and Capital Resources. The liquidity and capital resources section provides a discussion of our cash flows for the three months ended March 31, 2011 compared to the three months ended March 31, 2010. |
OVERVIEW
Outdoor Channel Holdings, Inc. is an entertainment and media company. We are organized into two
operating segments, Outdoor Channel (or TOC) and Production Services. Each of these operating
segments has unique characteristics and faces different opportunities and challenges. An overview
of our two operating segments follows.
Outdoor Channel
Outdoor Channel is a national television network devoted primarily to traditional outdoor
activities, such as hunting, fishing and shooting sports, as well as off-road motor sports and
other outdoor related lifestyle programming. TOC revenues include advertising fees, including those
from advertisements aired on Outdoor Channel and fees paid by third-party programmers to purchase
advertising time in connection with the airing of their programs on Outdoor Channel, and subscriber
fees paid by cable and satellite service providers that air Outdoor Channel.
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Our advertising revenue for TOC consists of advertising bought on our cable network and advertising
revenue related to ads placed on our website, outdoorchannel.com. Advertising revenues are
generally driven by audience delivery, which in turn are determined by our subscriber base and the
ratings our programs achieve in those homes. A portion of TOCs advertising
contracts, primarily those with national non-endemic advertisers, may guarantee the advertiser a
minimum audience for its advertisements over the term of the contracts. This requires us to make
estimates of the audience size that will be delivered throughout the terms of the contracts at the
time we enter into such contracts. We base our estimate of audience size on our Nielsen ratings
from prior years. If after running the advertising we determine we did not deliver the guaranteed
audience, an accrual for make-good advertisements is recorded as a reduction of revenue, and we
then provide the advertiser with additional advertising time to reach the aggregate minimum
audience that we guaranteed and then recognize such revenue at that time. Any estimated make-good
accrual is adjusted throughout the terms of the advertising contracts. During 2011, TOCs Nielsen
reported ratings for our program offerings have declined in certain male demographics from year-ago
levels which have had an adverse impact on our ability to increase our reported advertising
revenues for TOC, although we have increased our volume of business with national advertisers
considerably over the past year. The continued growth of our advertising revenues will, to a
certain extent, be dependent on the growth of our audience viewing and subscriber base, as well as
the general health of the advertising marketplace.
For March 2011, Nielsen estimated that Outdoor Channel had 34.5 million subscriber homes compared
to 35.9 million for the same period a year ago. Nielsen revises its estimate of the number
of subscribers to our channel each month, and for May 2011 Nielsens estimate was at 35.1 million
subscribers. Nielsen is the leading provider of television audience measurement and advertising
information services worldwide, and its estimates and methodology are generally accepted and used
in the advertising industry. The estimate regarding Outdoor Channels subscriber base is made by
Nielsen Media Research and is theirs alone, and does not represent our opinions, forecasts or
predictions. It should not be implied that we endorse nor necessarily concur with such information,
simply due to our reference to or distribution of their estimate. Although we realize Nielsens
estimate is typically greater than the number of subscribers on which a network is paid by the
service providers, we are currently experiencing a greater difference in these two different
numbers of subscribers than we would expect. We anticipate this percentage difference to decrease
as we grow our total subscriber base, and we have seen it decrease over the past year. There can be
no assurances that Nielsen will continue to report growth of its estimate of our subscribers and in
fact at some point Nielsen may even report additional declines in our subscriber estimate. If that
were to happen, we could suffer a reduction in advertising revenue.
We are pursuing subscriber growth by utilizing various means including offering lower
per-subscriber fees for broader distribution and payment of subscriber acquisition or launch
support fees among other tactics. Such launch support fees are capitalized and amortized over the
period that the pay television distributor is required to carry the newly acquired TOC subscriber.
To the extent revenue is associated with the incremental subscribers, the amortization is charged
to offset the related revenue. Any excess of launch support amortization over the related
subscriber fee revenue is charged to expense as other direct costs. If we are successful with these
tactics, our net subscriber fee revenue may decrease over the short-term future. Also, we often
gain or lose subscribers when our distributors decide to realign their programming lineups and
offerings.
Production Services
Production Services is comprised of our wholly owned subsidiary, Winnercomm, Inc., which in turn
wholly owns CableCam, LLC and SkyCam, LLC. These businesses are involved in the production,
development and marketing of sports programming and aerial camera systems. Production Services
revenues include revenue from sponsorship and advertising fees from company ad inventory, revenue
from production services for customer-owned telecasts, revenue from camera services for
customer-owned telecasts and revenue from website design, management, marketing and hosting fees.
Since our acquisition of Winnercomm and its aerial camera business in January 2009, we have been
focused on eliminating Winnercomms low margin production business and returning the Production
Services unit to profitability. In addition to focusing on higher
margin production business, our
Winnercomm unit is increasingly being used to produce high quality programming for TOC.
Both TOC and our Production Services segments generate a higher proportion of their revenue and
operating income in the second half of our fiscal year due to higher viewed hunting programming
which coincides with the fall hunting season at TOC and to football driven revenues at our
Production Services unit.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting principles generally accepted
in the United States requires us to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses during the reporting period.
Actual results could materially differ from those estimates.
For further information regarding our critical accounting policies, judgments and estimates, please
see Critical Accounting Policies and Estimates in Item 7 of our 2010 Annual Report.
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CONSOLIDATED RESULTS OF OPERATIONS
Our consolidated results of operations are presented below for the quarter ended March 31, 2011 and
2010.
Comparison of Consolidated Operating Results for the Three Months Ended March 31, 2011 and March
31, 2010
The following table discloses certain financial information for the periods presented, expressed in
terms of dollars, dollar change, percentage change and as a percent of total revenue (all dollar
amounts are in thousands):
Change | % of Total Revenue | |||||||||||||||||||||||
2011 | 2010 | $ | % | 2011 | 2010 | |||||||||||||||||||
Revenues: |
||||||||||||||||||||||||
Advertising |
$ | 7,585 | $ | 7,292 | $ | 293 | 4 | % | 51 | % | 41 | % | ||||||||||||
Subscriber fees |
4,747 | 4,831 | (84 | ) | (2 | ) | 32 | 27 | ||||||||||||||||
Production services |
2,480 | 5,698 | (3,218 | ) | (57 | ) | 17 | 32 | ||||||||||||||||
Total revenues |
14,812 | 17,821 | (3,009 | ) | (17 | ) | 100 | 100 | ||||||||||||||||
Cost of services: |
||||||||||||||||||||||||
Programming |
1,630 | 1,590 | 40 | 3 | 11 | 9 | ||||||||||||||||||
Satellite transmission fees |
399 | 391 | 8 | 2 | 3 | 2 | ||||||||||||||||||
Production and operations |
4,553 | 6,813 | (2,260 | ) | (33 | ) | 31 | 38 | ||||||||||||||||
Other direct costs |
92 | 112 | (20 | ) | (18 | ) | 1 | 1 | ||||||||||||||||
Total cost of services |
6,674 | 8,906 | (2,232 | ) | (25 | ) | 45 | 50 | ||||||||||||||||
Other expenses: |
||||||||||||||||||||||||
Advertising |
305 | 286 | 19 | 7 | 2 | 2 | ||||||||||||||||||
Selling, general and administrative |
8,283 | 10,397 | (2,114 | ) | (20 | ) | 56 | 58 | ||||||||||||||||
Depreciation and amortization |
746 | 911 | (165 | ) | (18 | ) | 5 | 5 | ||||||||||||||||
Total other expenses |
9,334 | 11,594 | (2,260 | ) | (20 | ) | 63 | 65 | ||||||||||||||||
Loss from operations |
(1,196 | ) | (2,679 | ) | 1,483 | (55 | ) | (8 | ) | (15 | ) | |||||||||||||
Interest and other income, net |
9 | 12 | (3 | ) | (25 | ) | | | ||||||||||||||||
Loss from operations before income taxes |
(1,187 | ) | (2,667 | ) | 1,480 | (56 | ) | (8 | ) | (15 | ) | |||||||||||||
Income tax benefit |
(357 | ) | (1,154 | ) | 797 | (69 | ) | (2 | ) | (7 | ) | |||||||||||||
Net loss |
$ | (830 | ) | $ | (1,513 | ) | $ | 683 | (45 | )% | (6 | )% | (9 | )% | ||||||||||
(percentages may not add due to rounding)
Revenues
Total revenues for the three months ended March 31, 2011 were $14.8 million, a decrease of $3.0
million, or 17%, compared to revenues of $17.8 million for the three months ended March 31, 2010.
The decrease was due primarily to lower revenue at our Production Services unit and, to a lesser
extent, lower subscriber fee revenue, offset by increases in our advertising revenue, all as
discussed further in our segment results of operations below.
Cost of Services
Total cost of services for the three months ended March 31, 2011 was $6.7 million, a decrease of
$2.2 million, or 25%, compared to $8.9 million for the three months ended March 31, 2010. The
decrease was primarily driven by lower production costs at our Production Services unit, net of
increases in programming and operational expenses at our Outdoor Channel unit, as further discussed
in the segment results of operations below.
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Other Expenses
Advertising expenses for the three months ended March 31, 2011 were $305,000, a 7% increase
compared to $286,000 for the three months ended March 31, 2010 due primarily to increased spending
on advertising materials, programs and campaigns.
Selling, general and administrative (SG&A) expenses for the three months ended March 31, 2011
were $8.3 million, a 20% decrease compared to SG&A expenses of $10.4 million for the three months
ended March 31, 2010. The decrease in SG&A was primarily due to lower professional fees related to
public company and corporate governance matters, a decrease in accounting fees, reduced payroll and
related compensation expenses associated with a reduction in headcount, reduced incentive
compensation expense and a decrease in the provision for doubtful accounts at our Production
Services unit as further discussed in the segment results of operations below.
Depreciation and amortization expense for the three months ended March 31, 2011 was $746,000, an
18% decrease compared to depreciation and amortization expense of $911,000 for the three months
ended March 31, 2010. The decrease primarily relates to more assets having become fully depreciated
than depreciation on assets acquired in the current year.
Loss from Operations
Loss from operations for the three months ended March 31, 2011 was $1.2 million, a decrease of $1.5
million compared to a loss of $2.7 million for the three months ended March 31, 2010. As discussed
below in our segment results of operations, the decrease in our loss was driven primarily by a
decrease in SG&A expenses.
Interest and Other Income, Net
Interest and other income, net for the three months ended March 31, 2011 was income of $9,000, a
decrease of $3,000 compared to income of $12,000 for the three months ended March 31, 2010,
essentially unchanged.
Loss from Operations Before Income Taxes
Loss from operations before income taxes as a percentage of revenues was 8% for the three months
ended March 31, 2011 compared to 15% for the three months ended March 31, 2010 due primarily to
lower SG&A expenses and a lower proportion of our overall revenue being contributed by our lower
margin Production Services unit.
Income Tax Benefit
Income tax benefit for the three months ended March 31, 2011 was $357,000 compared to $1.2 million
for the three months ended March 31, 2010. The income tax benefit reflected in the accompanying
unaudited condensed consolidated statement of operations for the three ended March 31, 2011 and
2010 is different than that computed based on the applicable statutory Federal income tax rate of
34% primarily due to state taxes, the tax effect of accounting for share-based compensation and the
limitations on the deductibility of executive compensation as provided for in Internal Revenue Code
Section 162(m).
The income tax benefit for the three months ended March 31, 2011 included a discrete tax expense
related to option tax deductions upon exercise or lapse of restrictions on restricted stock that is
less than the book compensation previously recorded of $74,000. There were no discrete tax expense
items for the three months ended March 31, 2010.
Net Loss
Net loss for the three months ended March 31, 2011 was $830,000, a decrease of $683,000 compared to
a net loss of $1.5 million for the three months ended March 31, 2010.
SEGMENT RESULTS OF OPERATIONS
Transactions between reportable segments are accounted for as third-party arrangements for the
purposes of presenting reporting segment results of operations below. Typical intersegment
transactions include the purchase by our TOC segment of programs to air on Outdoor Channel and
website design, management and maintenance services from our Production Services segment.
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TOC
Comparison of Operating Results for the Three Months Ended March 31, 2011 and March 31, 2010
The following table discloses certain financial information for the periods presented, expressed in
terms of dollars, dollar change and percentage change (all dollar amounts are in thousands):
Three Months Ended March 31, | ||||||||||||||||
Change | ||||||||||||||||
2011 | 2010 | $ | % | |||||||||||||
Revenues: |
||||||||||||||||
Advertising |
$ | 7,585 | $ | 7,292 | $ | 293 | 4 | % | ||||||||
Subscriber fees |
4,747 | 4,831 | (84 | ) | (2 | ) | ||||||||||
Total revenues |
12,332 | 12,123 | 209 | 2 | ||||||||||||
Cost of services: |
||||||||||||||||
Programming |
1,757 | 1,692 | 65 | 4 | ||||||||||||
Satellite transmission
fees |
399 | 391 | 8 | 2 | ||||||||||||
Production and operations |
2,167 | 2,015 | 152 | 8 | ||||||||||||
Other direct costs |
92 | 112 | (20 | ) | (18 | ) | ||||||||||
Total cost of services |
4,415 | 4,210 | 205 | 5 | ||||||||||||
Other expenses: |
||||||||||||||||
Advertising |
305 | 286 | 19 | 7 | ||||||||||||
Selling, general and
administrative |
6,945 | 7,623 | (678 | ) | (9 | ) | ||||||||||
Depreciation and
amortization |
390 | 405 | (15 | ) | (4 | ) | ||||||||||
Total other expenses |
7,640 | 8,314 | (674 | ) | (8 | ) | ||||||||||
Income (loss) from
operations |
$ | 277 | $ | (401 | ) | $ | 678 | (169 | )% | |||||||
(percentages may not add due to rounding)
Revenues
Advertising revenue for the three months ended March 31, 2011 was $7.6 million, an increase of
$293,000, or 4%, compared to $7.3 million for the three months ended March 31, 2010. The increase
in advertising revenue was due primarily to an increase in short-form, time-buy and website
advertising on higher pricing, partially offset by lower infomercial revenues. We currently expect
our year-over-year short-form advertising revenue from endemic advertisers to remain relatively
constant. However, due to the guaranteed nature of the contracts for short-form advertising with
national advertisers, we expect our ability to report increased advertising revenues for TOC to be
limited over the near term because of lower year-over-year ratings.
Subscriber fees for the three months ended March 31, 2011 were $4.7 million, a decrease of $84,000
or 2% compared to $4.8 million for the three months ended March 31, 2010. This decrease in
subscriber fees was primarily due to an increase in our estimated potential most-favored nation
liabilities with certain of our distributors.
Cost of Services
Programming expenses for the three months ended March 31, 2011 were $1.8 million, an increase of
$65,000, or 4%, compared to $1.7 million for the three months ended March 31, 2010. This increase
was due primarily to an increase in the cost of programs airing during the current year period
compared to the prior year period.
Satellite transmission fees for the three months ended March 31, 2011 were $399,000, an increase of
$8,000, or 2%, compared to $391,000 for the three months ended March 31, 2010. The increase was
primarily due to higher uplink and transponder expenses.
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Production and operations costs for the three months ended March 31, 2011 were $2.2 million, an
increase of $152,000, or 8%, compared to $2.0 million for the three months ended March 31, 2010.
The increase in costs was driven primarily by increased broadband services costs as we continue to
expand our online presence and improve our website.
Other direct costs for the three months ended March 31, 2011 were $92,000, a decrease of $20,000,
or 18%, compared to $112,000 for the three months ended March 31, 2010. This decrease was due
primarily to a decrease in subscriber acquisition fees amortization.
Other Expenses
Advertising expenses for the three months ended March 31, 2011 were $305,000, an increase of
$19,000, or 7%, compared to $286,000 for the three months ended March 31, 2010 due primarily to
increased spending on advertising materials, programs and campaigns.
SG&A expenses for the three months ended March 31, 2011 were $6.9 million, a decrease of $678,000,
or 9%, compared to $7.6 million for the three months ended March 31, 2010. This decrease relates
primarily to decreases in professional fees, including our annual audit costs, costs related to
public company and corporate governance matters and decreased legal and consulting fees related to
potential acquisition activity in the prior year. These decreases were partially offset by an
increase in the provision for doubtful accounts and increased expenses associated with an annual
marketing event.
Depreciation and amortization for the three months ended March 31, 2011 was $390,000, a decrease of
$15,000, or 4%, compared to $405,000 for the three months ended March 31, 2010. The decrease in
depreciation and amortization primarily relates to items becoming fully depreciated as of March 31,
2011, partially offset by increased depreciation related to fixed asset additions in 2011.
Income (Loss) from Operations
Income from operations for the three months ended March 31, 2011 was income of $277,000 compared to
an operating loss of $401,000 for the three months ended March 31, 2010. As discussed above, the
improvement in our income (loss) from operations was driven primarily by reductions in SG&A
expenses.
Production Services
Comparison of Operating Results for the Three Months Ended March 31, 2011 and March 31, 2010
The following table discloses certain financial information for the periods presented, expressed in
terms of dollars, dollar change and percentage change (all dollar amounts are in thousands):
Three Months Ended March 31, | ||||||||||||||||
Change | ||||||||||||||||
2011 | 2010 | $ | % | |||||||||||||
Revenues: |
||||||||||||||||
Production services |
$ | 3,064 | $ | 6,220 | $ | (3,156 | ) | (51 | )% | |||||||
Total revenues |
3,064 | 6,220 | (3,156 | ) | (51 | ) | ||||||||||
Cost of services: |
||||||||||||||||
Production and operations |
2,759 | 5,186 | (2,427 | ) | (47 | ) | ||||||||||
Total cost of services |
2,759 | 5,186 | (2,427 | ) | (47 | ) | ||||||||||
Other expenses: |
||||||||||||||||
Selling, general and
administrative |
1,338 | 2,774 | (1,436 | ) | (52 | ) | ||||||||||
Depreciation and
amortization |
356 | 506 | (150 | ) | (30 | ) | ||||||||||
Total other expenses |
1,694 | 3,280 | (1,586 | ) | (48 | ) | ||||||||||
Loss from operations |
$ | (1,389 | ) | $ | (2,246 | ) | $ | 857 | (38 | )% | ||||||
(percentages may not add due to rounding)
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Revenues
Production services revenue for the three months ended March 31, 2011 was $3.1 million, a decrease
of $3.2 million, or 51%, as compared to $6.2 million for the three months ended March 31, 2010. The
decrease in revenue was due primarily to a reduction in the number of production contracts that
were renewed in the current year period and a decrease in events and related revenue at our aerial
cameras operations.
Cost of Services
Production and operations costs for the three months ended March 31, 2011 were $2.8 million, a
decrease of $2.4 million, or 47%, compared to $5.2 million for the three months ended March 31,
2010. The decrease in costs relates primarily to decreased production costs caused by fewer
production contracts being renewed in the current year and reduced payroll and related compensation
costs associated with a reduction in headcount.
Other Expenses
SG&A expenses for the three months ended March 31, 2011 were $1.3 million, a decrease of $1.4
million, or 52%, compared to $2.8 million for the three months ended March 31, 2010. The decrease
relates primarily to reduced payroll and related compensation costs associated with a reduction in
headcount, reduced professional fees, a reduction in our provision for doubtful accounts, and
reduced rent expense resulting from the 2010 lease renewal of less square footage at our Winnercomm
Tulsa office facilities.
Depreciation and amortization for the three months ended March 31, 2011 was $356,000, a decrease of
$150,000, or 30%, compared to $506,000 for the three months ended March 31, 2010. The decrease in
depreciation and amortization primarily relates to reduced amortization of leasehold improvements
in the current year due to the renewal of less square footage at our Tulsa office lease and to
certain intangible assets becoming fully amortized prior to the current year period.
Loss from Operations
Loss from operations for the three months ended March 31, 2011 was $1.4 million, a decrease of
$857,000 compared to an operating loss of $2.2 million for the three months ended March 31, 2010.
As discussed above, the decrease in loss from operations for the three months ended March 31, 2011
as compared to the same prior year period was due primarily to reductions in SG&A expense and to
reductions in personnel and related compensation and overhead costs.
LIQUIDITY AND CAPITAL RESOURCES
We generated $0.4 million of cash in our operating activities in the three months ended March 31,
2011, an increase of $3.2 million compared to a usage of cash of $2.8 million in the three months
ended March 31, 2010. Our cash and cash equivalent balance was $31.1 million at March 31, 2011, a
decrease of $1.5 million from the balance of $32.6 million at December 31, 2010. The increase in
cash flows from operating activities in the three months ended March 31, 2011 compared to the same
period in 2010 was due primarily to a reduction in our operating loss, higher actual payments of
executive incentive compensation and subscriber acquisition costs in the first quarter 2010 and
other working capital changes, net of increased income tax payments in the first quarter 2011. Net
working capital decreased to $70.0 million at March 31, 2011, compared to $70.2 million at December
31, 2010, essentially unchanged.
Net cash used in investing activities was $1.4 million in the three months ended March 31, 2011
compared to cash used of $5.1 million for the three months ended March 31, 2010. The decrease in
cash used in investing activities related principally to reduced net purchases of short-term
available-for-sale securities partially offset by an increase in capital expenditures for fixed
asset replacements and intangibles.
As of March 31, 2011, we held $5.1 million of auction-rate securities classified as long-term
assets. Auction-rate securities are investment vehicles with long-term or perpetual maturities
which pay interest monthly at current market rates reset through a Dutch auction. Beginning in
February 2008, the majority of auctions for these types of securities failed due to liquidity
issues experienced in global credit and capital markets. Our auction-rate securities followed this
trend and experienced multiple failed auctions due to insufficient investor demand. As there is a
limited secondary market for auction-rate securities, we have been unable to convert our positions
to cash. We do not anticipate being in a position to liquidate all of these investments until there
is a successful auction or the security issuer redeems their security, and accordingly, have
reflected our investments in auction-rate securities as non-current assets on our balance sheet.
Due to these liquidity issues, we performed a discounted cash flow analysis to determine the
estimated fair value of these investments. The assumptions used in preparing the models include,
but are not limited to, interest rate yield curves for similar securities, market rates of returns,
and the expected term of each security. In making assumptions of required rates of return, we
considered risk-free interest rates and credit spreads for investments of similar credit quality.
Our auction-rate security investments continue to
pay interest according to their stated terms, are fully collateralized by underlying financial
instruments (primarily closed-end preferred and municipalities) and have maintained at least A3
credit ratings despite the failure of the auction process. We believe that based on the Companys
current cash, cash equivalents and investments in available-for-sale securities balances at March
31, 2011, the current lack of liquidity in the credit and capital markets will not have a material
impact on our liquidity, cash flow, financial flexibility or our ability to fund our operations.
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We continue to monitor the market for auction-rate securities and consider its impact (if any) on
the fair value of our investments. If the current market conditions deteriorate further, or the
anticipated recovery in fair values does not occur, we may be required to record additional
impairment charges in future periods.
Cash used by financing activities was $471,000 in the three months ended March 31, 2011 compared to
cash used of $708,000 in the three months ended March 31, 2010. The cash used by financing
activities in the three months ended March 31, 2011 and 2010 was principally the cash used for the
purchase and retirement of treasury stock as employees used stock to satisfy withholding taxes
related to vesting of restricted shares. Additionally, during the prior year period, cash used by
financing activities also included the purchase and retirement of common stock in connection with
the stock repurchase program.
On August 10, 2010, the Board of Directors approved the renewal of the revolving line of credit
agreement (the Revolver) with U.S. Bank N.A. (the Bank), extending the maturity date to
September 5, 2012 and renewing the total amount which can be drawn upon under the Revolver to
$10,000,000. The Revolver provides that the interest rate per annum as selected by the Company
shall be prime rate (3.25% and 3.25% as of March 31, 2011 and 2010, respectively) plus 0.25% or
LIBOR (0.25% and 0.25% as of March 31, 2011 and 2010, respectively) plus 2.25%. The Revolver is
unsecured. This credit facility contains customary financial and other covenants and restrictions,
as amended, including a change of control provision and minimum liquidity metrics. As of March 31,
2011, we did not have any amounts outstanding under this credit facility. This Revolver is
guaranteed by TOC. As of March 31, 2011, we were in full compliance with all the covenants of the
Revolver.
As of March 31, 2011, we had $59.1 million of cash and available-for-sale securities and we expect
that these funds and our cash flow from operations will meet our short-term cash flow requirements
and be sufficient to fund our operations at current levels and anticipated capital requirements
through at least the next twelve months. To the extent that such amounts are insufficient to
finance our working capital requirements or our desire to expand operations beyond current levels,
we could draw on our Revolver or seek additional financing. There can be no assurance that equity
or debt financing will be available if needed or, if available, will be on terms favorable to us.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
At March 31, 2011 and December 31, 2010, our investment portfolio included fixed-income securities
of $5,086,000 and $5,075,000, respectively. At March 31, 2011, all of our securities were
auction-rate securities with long-term maturities. These securities are subject to interest rate
risk and will decline in value if interest rates increase. However, due to the amount of our
investment portfolio, an immediate 10% change in interest rates would have no material impact on
our financial condition, operating results or cash flows. Declines in interest rates over time
will, however, reduce our interest income while increases in interest rates over time may increase
our interest expense.
We currently do not have significant transactions denominated in currencies other than U.S. dollars
and as a result we currently have little to no foreign currency exchange rate risk. The effect of
an immediate 10% change in foreign exchange rates would have no material impact on our financial
condition, operating results or cash flows.
As of March 31, 2011 and as of the date of this report, we did not have any outstanding
borrowings. The rate of interest on our line-of-credit is variable, but we currently have no
outstanding balance under this credit facility. Because of these reasons, an immediate 10% change
in interest rates would have no material, immediate impact on our financial condition, operating
results or cash flows.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of disclosure controls and procedures. We maintain disclosure controls and procedures
designed to provide reasonable assurance of achieving the objective that information in our
Exchange Act reports is recorded, processed, summarized and reported within the time periods
specified and pursuant to the regulations of the Securities and Exchange Commission. Disclosure
controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act, include
controls and procedures designed to ensure the information required to be disclosed by us in the
reports we file or submit under the Exchange Act is accumulated and communicated to our management,
including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure. It should be noted that
our system of controls, however well designed and operated, can provide only reasonable, and not
absolute, assurance that the objectives of the system are met.
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Our management, with the participation of our Chief Executive Officer and Chief Financial
Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31,
2011, the end of the period covered by this report. Based on this evaluation, we have concluded
that our disclosure controls and procedures were effective, as of the end of the period covered by
this report, to provide reasonable assurance that information required to be disclosed by us in
reports that we file or submit under the Exchange Act are recorded, processed, summarized and
reported, completely and accurately, within the time periods specified in Securities and Exchange
Commission rules and forms.
Changes in internal control over financial reporting. There were no changes in our internal
control over financial reporting that occurred during the period covered by this report that have
materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting.
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PART IIOTHER INFORMATION
ITEM 1. Legal Proceedings.
Item 1. Legal Proceedings of our Form 10-K includes a discussion of our legal proceedings. There
have been no material changes from the legal proceedings described in our 2010 Annual Report.
ITEM 1A. Risk Factors.
Item 1A. Risk Factors of our Form 10-K includes a discussion of our risk factors. There have been
no material changes from the risk factors described in our 2010 Annual Report.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
ITEM 3. Defaults Upon Senior Securities.
None.
ITEM 4. Removed and Reserved.
ITEM 5. Other Information.
None.
ITEM 6. Exhibits.
Exhibit | ||
Number | Description | |
3.1
|
Certificate of Incorporation of Outdoor Channel Holdings, Inc, a Delaware corporation (filed as Exhibit 3.1 to the Companys Current Report on Form 8-K filed on September 20, 2004 and incorporated herein by reference) | |
3.2
|
By-Laws of Outdoor Channel Holdings, Inc., a Delaware corporation (filed as Exhibit 3.2 to the Companys Current Report on Form 8-K filed on September 20, 2004 and incorporated herein by reference) | |
4.1
|
Instruments defining the rights of security holders, including debentures (see Exhibits 3.1 and 3.2 above and Exhibit 4.1 to the Companys Form 10-Q for the period ended June 30, 2005) | |
31.1
|
Certification by Chief Executive Officer | |
31.2
|
Certification by Chief Financial Officer | |
32.1 *
|
Section 1350 Certification by Chief Executive Officer | |
32.2 *
|
Section 1350 Certification by Chief Financial Officer |
* | Pursuant to Commission Release No. 33-8238, this certification will be treated as accompanying this Quarterly Report on Form 10-Q and not filed as part of such report for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of Section 18 of the Securities Exchange Act of 1934, as amended, and this certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
OUTDOOR CHANNEL HOLDINGS, INC. |
||||
/s/ Thomas D. Allen | ||||
Thomas D. Allen | ||||
Authorized Officer, Chief Financial Officer and
Principal Accounting Officer
Date: May 5, 2011 |
26