Gray Reports Record Operating Results

Gray Reports Record Operating Results

ATLANTA, Feb. 26, 2016 /PRNewswire/ -- Gray Television, Inc. ("Gray," "we," "us" or "our") (NYSE: GTN and GTN.A) today announced results of operations for the three-months and year ended December 31, 2015. For the three-months and year ended December 31, 2015, these results included revenue of $169.5 million and $597.4 million, respectively, and net income of $15.0 million and $39.3 million, respectively. For the three-months and year ended December 31, 2015, broadcast cash flow was $67.8 million and $224.5 million, respectively. Also for the three-months and year ended December 31, 2015, net income per diluted weighted average share was $0.21 and $0.57, respectively, and free cash flow per diluted weighted average share was $0.40 and $1.36, respectively.

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Highlights:


-- Record Revenue and Broadcast Cash Flow - For the three-months ended
December 31, 2015, our revenue of $169.5 million included record
retransmission consent revenue of $39.5 million. For the year ended
December 31, 2015, we achieved record revenue of $597.4 million that
included record retransmission consent revenue of $152.0 million. We
also achieved record broadcast cash flow of $224.5 million for the year
ended December 31, 2015.
-- Total Leverage Ratio - As of December 31, 2015, our total leverage
ratio, as defined in our Senior Credit Facility, was 4.8 times on a
trailing eight-quarter basis, netting all cash on our balance sheet
against our debt balance.
-- Acquisitions - As previously announced, between July 1, 2015 and
December 31, 2015, we added seven television stations and four new
markets to our operations. The aggregate purchase price for these
stations was approximately $184.4 million, all of which was funded from
cash on hand.
-- Schurz Acquisition and Related Transactions Completed - During the first
quarter of 2016, we completed the acquisition of the broadcast
operations of Schurz Communications, Inc. ("Schurz" and the "Schurz
Acquisition"). In order to facilitate regulatory approval for the Schurz
Acquisition, and to better align the operations acquired from Schurz
with our existing operations, we arranged for the divestiture of certain
television stations and all of the Schurz radio stations, in exchange
for two television stations and cash (together with the Schurz
Acquisition, the "Schurz Acquisition and Related Transactions"). The
purchase price, net of proceeds received from dispositions and excluding
transaction costs, was approximately $415.3 million. This amount was
funded by additional borrowings under our Senior Credit Facility. The
Schurz Acquisition and Related Transactions increased our station group
to include 50 television markets broadcasting approximately 180 separate
programming streams, including 35 affiliates of the CBS Network ("CBS"),
26 affiliates of the NBC Network ("NBC"), 19 affiliates of the ABC
Network ("ABC") and 13 affiliates of the FOX Network ("FOX").
-- Transaction Costs - In connection with our acquisition activities, we
incurred professional fees of approximately $2.0 million and $6.5
million for the three-months and year ended December 31, 2015,
respectively. These expenses are included in our corporate and
administrative operating expenses.
-- Termination of National Sales Agreements - Effective January 1, 2016, we
terminated nearly all of our remaining national advertising sales
representation agreements. Our full year 2015 results include a charge
of approximately $6.3 million to our broadcast operating expenses to
reflect the anticipated termination fees. In the first quarter of 2016,
we have paid all amounts due and have no further obligations under these
agreements. As a result of these terminations, and excluding the
one-time charge of $6.3 million, we anticipate savings of approximately
$8.0 million to $9.0 million of broadcast operating expense in the year
ending December 31, 2016 as compared to the year ended December 31,
2015, with net savings continuing thereafter.
Effects of Acquisitions and Divestitures on Our Results of Operations

From October 31, 2013 through December 31, 2015, we completed 16 acquisition transactions and two divestiture transactions. These transactions added a net total of 31 television stations in 20 television markets to our operations, including 15 new television markets. On July 1, 2015, we completed the following five acquisition transactions that added six television stations to our operations:


-- KOSA-TV (CBS) in Odessa, Texas;
-- KMVT-TV (CBS) and KSVT-LD (FOX) in Twin Falls, Idaho;
-- Certain non-licensed assets including programming streams, of WFXS-TV
(FOX) in Wausau, Wisconsin, whose programming streams are now broadcast
on our digital low power television station in Wausau, WZAW-LD;
-- WAGM-TV (CBS/FOX) in Presque Isle, Maine; and
-- Certain non-licensed assets, including programming streams, of KVTV-TV
(CBS) in Laredo, Texas, whose programming streams are now broadcast on
our digital low power television station in Laredo, KYLX-LD.
On September 1, 2015, we announced and completed the initial phase of our acquisition of KCRG-TV (ABC) in Cedar Rapids, Iowa (the "Cedar Rapids Acquisition") by acquiring certain non-licensed assets of that television station and entering into a local programming and marketing agreement (the "LMA") with the licensee. We completed the remaining phases of the Cedar Rapids Acquisition and terminated the LMA on November 1, 2015.

Collectively, we refer to the stations acquired on July 1, 2015 and the Cedar Rapids Acquisition as the "2015 Acquired Stations." During 2014, we completed seven acquisitions, which transactions collectively added a total of 22 television stations in 12 markets (10 new markets) to our operations at various times during that year, and we refer to the stations acquired in those acquisitions as the "2014 Acquired Stations." During the fourth quarter of 2013, we completed two acquisition transactions that together added five television stations in four markets (three in new markets) to our operations, and we refer to the stations acquired in those acquisitions as the "2013 Acquired Stations." Unless the context of the following discussions requires otherwise, we refer to the 2015 Acquired Stations, the 2014 Acquired Stations and the 2013 Acquired Stations, collectively, as the "Acquired Stations."

Due to the significant effect that our acquisitions and divestitures have had on our results of operations, and in order to provide more meaningful period over period comparisons, we also present herein certain financial information on a "Combined Historical Basis." Unless otherwise defined, Combined Historical Basis reflects financial results that have been compiled by adding Gray's historical revenue and broadcast expenses to the historical revenue and broadcast expenses of the Acquired Stations; and removing the historical revenues and historical broadcast expenses of divested stations; as if they had been acquired and divested, respectively, on January 1, 2013 (the beginning of the earliest period presented). In addition, our Combined Historical Basis non-GAAP terms "Broadcast Cash Flow", "Broadcast Cash Flow Less Cash Corporate Expenses", "Operating Cash Flow as Defined in our Senior Credit Facility" and "Combined Historical Free Cash Flow" give effect to the financings related to the acquisition of the Acquired Stations, as if these financings occurred on January 1, 2013, and certain anticipated net expense savings resulting from the completed acquisitions.



Select Operating Data on As-Reported Basis:
-------------------------------------------


Three Months Ended December 31,
-------------------------------

2015 2014 % Change 2013 % Change
2015 to 2015 to
2014 2013
----

(dollars in thousands, except per share data)

Revenue (less agency commissions):

Total $169,487 $177,886 (5)% $95,556 77 %

Political $9,213 $48,538 (81)% $1,829 404 %


Operating expenses (1):

Broadcast $101,969 $86,386 18 % $58,594 74 %

Corporate and administrative $11,030 $7,585 45 % $6,223 77 %


Net income $14,987 $31,253 (52)% $5,201 188 %


Non-GAAP Cash Flow (2):

Broadcast Cash Flow $67,849 $91,399 (26)% $36,815 84 %

Broadcast Cash Flow Less

Cash Corporate Expenses $57,609 $84,540 (32)% $30,847 87 %

Free Cash Flow $28,996 $53,596 (46)% $12,544 131 %


Free Cash Flow Per Share:

Basic $0.40 $0.93 $0.22

Diluted $0.40 $0.92 $0.22


Year Ended December 31,
-----------------------

2015 2014 % Change 2013 % Change
2015 to 2015 to
2014 2013
----

(dollars in thousands, except per share data)

Revenue (less agency commissions):

Total $597,356 $508,134 18 % $346,298 73 %

Political $17,163 $81,975 (79)% $4,598 273 %


Operating expenses (1):

Broadcast $374,182 $285,990 31 % $217,411 72 %

Corporate and administrative $34,343 $29,203 18 % $19,810 73 %


Net income $39,301 $48,061 (18)% $18,288 115 %


Non-GAAP Cash Flow (2):

Broadcast Cash Flow $224,484 $220,977 2 % $128,234 75 %

Broadcast Cash Flow Less

Cash Corporate Expenses $193,261 $195,306 (1)% $110,398 75 %

Free Cash Flow $93,984 $95,240 (1)% $39,153 140 %


Free Cash Flow Per Share:

Basic $1.38 $1.65 $0.68

Diluted $1.36 $1.63 $0.68


(1) Excludes depreciation, amortization, and loss on disposal of assets.

(2) See definition of non-GAAP terms and reconciliation of the non-GAAP amounts to net income included elsewhere herein.






Selected Operating Data on Combined Historical Basis:
-----------------------------------------------------


Three Months Ended December 31,
-------------------------------

% Change % Change

2015 to 2015 to

2015 2014 2014 2013 2013
---- ---- ---- ---- ----

(dollars in thousands, except per share data)

Revenue (less agency commissions):

Total $169,487 $192,614 (12)% $137,553 23 %

Political $9,213 $53,395 (83)% $2,752 235 %


Operating expenses (1):

Broadcast $101,969 $92,312 10 % $81,660 25 %

Corporate and administrative $11,030 $7,585 45 % $6,223 77 %


Net income $14,987 $38,090 (61)% $16,128 (7)%


Non-GAAP Cash Flow (2):

Broadcast Cash Flow $67,536 $101,143 (33)% $61,864 9 %

Broadcast Cash Flow Less

Cash Corporate Expenses $57,296 $94,284 (39)% $55,896 3 %

Operating Cash Flow as Defined in

the Senior Credit Facility $57,829 $94,218 (39)% $56,996 1 %

Free Cash Flow $30,704 $63,497 (52)% $31,439 (2)%


Free Cash Flow Per Share:

Basic $0.43 $1.10 $0.54

Diluted $0.42 $1.09 $0.54


Year Ended December 31,
-----------------------

% Change % Change

2015 to 2015 to

2015 2014 2014 2013 2013
---- ---- ---- ---- ----

(dollars in thousands, except per share data)

Revenue (less agency commissions):

Total $621,302 $621,018 0 % $510,977 22 %

Political $17,652 $94,158 (81)% $6,838 158 %


Operating expenses (1):

Broadcast $389,306 $350,059 11 % $319,307 22 %

Corporate and administrative $34,343 $29,203 18 % $19,810 73 %


Net income $47,264 $75,852 (38)% $39,190 21 %


Non-GAAP Cash Flow (2):

Broadcast Cash Flow $238,230 $277,248 (14)% $205,465 16 %

Broadcast Cash Flow Less

Cash Corporate Expenses $207,007 $251,577 (18)% $187,629 10 %

Operating Cash Flow as Defined in

the Senior Credit Facility $212,281 $257,109 (17)% $191,507 11 %

Free Cash Flow $114,034 $151,375 (25)% $90,169 26 %


Free Cash Flow Per Share:

Basic $1.67 $2.62 $1.56

Diluted $1.65 $2.59 $1.56


(1) Excludes depreciation, amortization, and loss on disposal of assets.

(2) See definition of non-GAAP terms and reconciliation of the non-GAAP amounts to net income included elsewhere herein.


Results of Operations for the Three-Months Ended December 31, 2015:

Revenue (less Agency Commissions) on As-Reported Basis.

The table below presents our revenue (less agency commissions) or "net revenue" by type for the three-month periods ended December 31, 2015 and 2014, respectively (dollars in thousands):



Three Months Ended December 31,
-------------------------------

2015 2014
---- ----

Percent Percent

Amount of Total Amount of Total
------ -------- ------ --------

Revenue (less agency commissions):

Local $87,061 51.4% $76,017 42.7%

National 23,505 13.9% 20,626 11.6%

Internet 7,482 4.4% 7,569 4.3%

Political 9,213 5.4% 48,538 27.3%

Retransmission consent 39,468 23.3% 21,444 12.1%

Other 2,758 1.6% 3,692 2.0%

Total $169,487 100.0% $177,886 100.0%
======== ===== ======== =====


Total revenue decreased $8.4 million, or 5%, to $169.5 million for the fourth quarter of 2015 compared to the fourth quarter of 2014. The 2015 Acquired Stations and 2014 Acquired Stations, collectively, accounted for approximately $53.4 million of our total revenue in the fourth quarter of 2015, and the 2014 Acquired Stations accounted for approximately $42.7 million of our total revenue for the fourth quarter of 2014.

Our revenue increased primarily due to the additional revenue from the 2015 Acquired Stations and 2014 Acquired Stations and increases in retransmission consent revenue primarily due to increased subscriber rates. These increases were offset, in part, by decreases in political advertising revenue, which decreased due to 2015 being the "off year" of the two-year election cycle.

The principal types of revenue for the fourth quarter of 2015 compared to the fourth quarter of 2014 were as follows:


-- Local advertising revenue increased $11.0 million, or 15%, to $87.1
million.
-- National advertising revenue increased $2.9 million, or 14%, to $23.5
million.
-- Internet advertising revenue was unchanged at $7.5 million.
-- Political advertising revenue decreased $39.3 million, or 81%, to $9.2
million.
-- Retransmission consent revenue increased $18.0 million, or 84%, to $39.5
million.
-- Other revenue decreased $0.9 million, or 25%, to $2.8 million.
Within our local and national advertising revenue categories, and excluding revenue from the 2015 Acquired Stations and 2014 Acquired Stations, our five largest customer categories experienced the following changes during the fourth quarter of 2015 compared to the fourth quarter of 2014:


-- Automotive increased 7%;
-- Medical increased 8%;
-- Restaurant decreased 10%;
-- Furniture and appliances increased 20%; and
-- Communications increased 3%.
Revenue on Combined Historical Basis.

On a Combined Historical Basis, total revenue decreased $23.1 million, or 12%, to $169.5 million in the fourth quarter of 2015 as compared to the fourth quarter of 2014. On a Combined Historical Basis, the principal types of revenue for the fourth quarter of 2015 compared to the fourth quarter of 2014 were approximately as follows:


-- Local advertising revenue increased $5.7 million, or 7%, to $87.1
million.
-- National advertising revenue decreased $0.7 million, or 3%, to $23.5
million.
-- Internet advertising revenue decreased $0.3 million, or 4%, to $7.5
million.
-- Political advertising revenue decreased $44.2 million, or 83%, to $9.2
million.
-- Retransmission consent revenue increased $16.4 million, or 71%, to $39.5
million.
-- Other revenue decreased $0.1 million, or 4%, to $2.8 million.
Within our local and national advertising revenue categories, and including the revenue attributable to the 2015 Acquired Stations and 2014 Acquired Stations, our five largest customer categories experienced the following changes in revenue for the fourth quarter of 2015 compared to the fourth quarter of 2014:


-- Automotive increased 3%;
-- Medical increased 9%;
-- Restaurant decreased 15%;
-- Furniture and appliances increased 25%; and
-- Communications increased 10%.
Broadcast Operating Expenses on As-Reported Basis.

Broadcast expenses (before depreciation, amortization and (gain) loss on disposal of assets) increased $15.6 million, or 18%, to $102.0 million for the fourth quarter of 2015 compared to the fourth quarter of 2014. The 2015 Acquired Stations and 2014 Acquired Stations, collectively, accounted for approximately $28.4 million of our broadcast operating expenses in the fourth quarter of 2015, and the 2014 Acquired Stations accounted for approximately $19.2 million of our total broadcast expenses for the fourth quarter of 2014.


-- Non-compensation expense increased $9.3 million in the fourth quarter of
2015, primarily due to network program fees that increased $12.1 million
reflecting increased fees payable to networks under our affiliation
agreements, as well as the commencement, in the first quarter of 2015,
of network program fees payable to CBS. National sales commissions
decreased $2.0 million in the fourth quarter of 2015 primarily as a
result of decreases in political advertising revenues in the fourth
quarter of 2015 compared to the fourth quarter of 2014, reflecting the
off-year of the political advertising cycle. All other operating
expenses increased in the fourth quarter of 2015 as a result of expenses
associated with the 2015 Acquired Stations and 2014 Acquired Stations.
-- Compensation expense increased by $6.3 million in the fourth quarter of
2015, primarily as a result of $4.4 million in additional salary and
bonus expense attributable to the 2015 Acquired Stations and 2014
Acquired Stations. In addition, matching contributions and discretionary
profit sharing contributions to our defined contribution 401(k) plan
increased by $2.5 million in the fourth quarter of 2015 compared to the
fourth quarter of 2014. These increases were offset, in part, by a
decrease of $1.4 million in expenses of our defined benefit pension plan
in the fourth quarter of 2015 related to the freezing of the plan.
Non-cash share based compensation expenses were $0.2 million in the
fourth quarter of 2015 compared to $0.3 million in the fourth quarter of
2014.
Broadcast Operating Expenses on Combined Historical Basis.

On a Combined Historical Basis, broadcast expenses (before depreciation, amortization and loss on disposal of assets) increased $9.7 million, or 10%, to $102.0 million in the fourth quarter of 2015 as compared to the fourth quarter of 2014. The increase reflects, in part, the following:


-- Network program fees increased $11.7 million consistent with the growth
of retransmission consent revenue under our network affiliation
agreements, as well as the commencement in the first quarter of 2015, of
network program fees payable to CBS. National sales commissions
decreased $2.3 million primarily as a result of reductions in national
political revenue in the off-year of the two year political advertising
cycle. In addition, other programming fees, news services, professional
fees and promotions together decreased by approximately $2.0 million.
-- Compensation expense increased by approximately $2.0 million in the
fourth quarter of 2015 compared to the fourth quarter of 2014. Non-cash
share based compensation expenses were $0.2 million in the fourth
quarter of 2015 compared to $0.3 million in the fourth quarter of 2014.
Corporate and Administrative Operating Expenses on As-Reported Basis.

Corporate and administrative expenses (before depreciation, amortization and (gain) loss on disposal of assets) increased $3.4 million, or 45%, to $11.0 million in the fourth quarter of 2015 as compared to the fourth quarter of 2014. The increase reflects, in part, the following:


-- Non-compensation expense increased $2.6 million in the fourth quarter of
2015 primarily due to professional fees related to the acquisition of
the 2015 Acquired Stations compared to professional fees incurred in the
fourth quarter of 2014 related to acquisition of the 2014 Acquired
Stations.
-- Compensation expense increased $0.8 million primarily due to increases
in incentive compensation costs; offset, in part, by reductions in
relocation and employee retirement expenses. Non-cash share based
compensation expenses were $0.8 million in the fourth quarter of 2015
compared to $0.7 million in the fourth quarter of 2014.
Results of Operations for the Year Ended December 31, 2015:

Revenue (Less Agency Commissions) on As-Reported Basis.

The table below presents our revenue (less agency commissions) or "net revenue" by type for the years ended December 31, 2015 and 2014, respectively (dollars in thousands):



Year Ended December 31,
-----------------------

2015 2014
---- ----

Percent Percent

Amount of Total Amount of Total
------ -------- ------ --------

Revenue (less agency commissions):

Local $308,179 51.6% $245,768 48.4%

National 81,110 13.6% 64,958 12.8%

Internet 28,292 4.7% 28,245 5.6%

Political 17,163 2.9% 81,975 16.1%

Retransmission consent 151,957 25.4% 74,894 14.7%

Other 10,655 1.8% 12,294 2.4%

Total $597,356 100.0% $508,134 100.0%
======== ===== ======== =====


Total revenue increased $89.2 million, or 18%, to $597.4 million for the year ended December 31, 2015 compared to the year ended December 31, 2014. The 2015 Acquired Stations and 2014 Acquired Stations, collectively, accounted for approximately $163.4 million of our total revenue for the year ended December 31, 2015. The 2014 Acquired Stations accounted for approximately $72.1 million of our total revenue for the year ended December 31, 2014.

Our revenue increased primarily due to the additional revenue from the 2015 Acquired Stations and 2014 Acquired Stations and increases in retransmission consent revenue primarily due to increased subscriber rates. These increases were offset, in part, by decreases in political advertising revenue, which decreased due to 2015 being the "off year" of the two-year election cycle.

The principal types of revenue for the year ended December 31, 2015 compared to the year ended December 31, 2014 were as follows:


-- Local advertising revenue increased $62.4 million, or 25%, to $308.2
million.
-- National advertising revenue increased $16.2 million, or 25%, to $81.1
million.
-- Internet advertising revenue was unchanged at $28.3 million.
-- Political advertising revenue decreased $64.8 million, or 79%, to $17.2
million.
-- Retransmission consent revenue increased $77.1 million, or 103%, to
$152.0 million.
-- Other revenue decreased $1.6 million, or 13%, to $10.7 million.
Within our local and national advertising revenue categories, and excluding revenue from the 2015 Acquired Stations and 2014 Acquired Stations, our five largest customer categories experienced the following changes during the year ended December 31, 2015 compared to the year ended December 31, 2014:


-- Automotive increased 3%;
-- Medical increased 9%;
-- Restaurant increased less than 1%;
-- Furniture and appliances increased 13%; and
-- Communications decreased 1%.
Revenue on Combined Historical Basis.

On a Combined Historical Basis, total revenue increased $0.3 million, or less than 1%, to $621.3 million for the year ended December 31, 2015 compared to the year ended December 31, 2014. On a Combined Historical Basis, the principal types of revenue for the year ended December 31, 2015 compared to the year ended December 31, 2014 were approximately as follows:


-- Local advertising revenue increased $18.1 million, or 6%, to $318.1
million.
-- National advertising revenue increased $2.5 million, or 3%, to $89.5
million.
-- Internet advertising revenue decreased $1.6 million, or 5%, to $28.9
million.
-- Political advertising revenue decreased $76.5 million, or 81%, to $17.7
million.
-- Retransmission consent revenue increased $64.5 million, or 71%, to
$155.8 million.
-- Other revenue decreased $6.8 million, or 37%, to $11.4 million.
Within our local and national advertising revenue categories, and including revenue from the 2015 Acquired Stations and 2014 Acquired Stations, our five largest customer categories experienced the following changes in revenue during the year ended December 31, 2015 compared to the year ended December 31, 2014:


-- Automotive increased 2%;
-- Medical increased 9%;
-- Restaurant decreased 1%;
-- Furniture and appliances increased 14%; and
-- Communications increased 7%.
Broadcast Operating Expenses on As-Reported Basis.

Broadcast expenses (before depreciation, amortization and (gain) loss on disposal of assets) increased $88.2 million, or 31%, to $374.2 million for the year ended December 31, 2015 compared to the year ended December 31, 2014. The 2015 Acquired Stations and the 2014 Acquired Stations accounted for approximately $91.4 million of our broadcast operating expenses in the year ended December 31, 2015. The 2014 Acquired Stations accounted for approximately $34.8 million of our total broadcast expenses for the year ended December 31, 2014.


-- Non-compensation expense increased $60.3 million in 2015 primarily due
to network affiliation fees that increased $50.6 million reflecting
increased fees payable to networks under our affiliation agreements, as
well as the commencement, in the first quarter of 2015, of network
program fees payable to CBS. Other programming costs increased $2.6
million in 2015. National sales commissions increased $3.0 million in
2015 primarily as a result of the accrual, in the third quarter of 2015,
of a $6.3 million expense resulting from our decision to terminate
nearly all of our remaining national advertising sales representation
agreements effective January 1, 2016, which was partially offset by
lower commissions resulting from decreases in political advertising
revenue in 2015.
-- Compensation expense increased by $27.9 million, primarily as a result
of $25.5 million in additional compensation and related costs resulting
primarily from the addition of employees at the 2015 Acquired Stations
and 2014 Acquired Stations. In addition, expenses related to matching
contributions and discretionary profit sharing contributions to our
defined contribution 401(k) plan increased by $3.4 million. These added
employee benefit costs were offset, in part, by a decrease of $1.6
million in expenses related to our defined benefit pension plan.
Non-cash share based compensation expenses were $0.9 million in the year
ended December 31, 2015 compared to $1.5 million in the year ended
December 31, 2014.
Broadcast Operating Expenses on Combined Historical Basis.

On a Combined Historical Basis, broadcast expenses (before depreciation, amortization and loss on disposal of assets) increased $39.2 million, or 11%, to $389.3 million for the year ended December 31, 2015 compared to the year ended December 31, 2014. This increase reflects in part the following:


-- Network program fees increased $45.8 million in 2015 consistent with the
growth of the related retransmission consent revenue under our network
affiliation agreements, as well as the commencement in the first quarter
of 2015 of network program fees payable to CBS. National sales
commissions increased $1.9 million primarily as a result of the accrual,
in the third quarter of 2015, of a $6.3 million expense resulting from
our decision to terminate nearly all of our remaining national
advertising sales representation agreements effective January 1, 2016,
which was partially offset by lower commissions resulting from decreases
in political advertising revenue in 2015. Programming fees, news
services and other professional fees decreased by approximately $6.4
million.
-- Compensation expense for the year ended December 31, 2015 was consistent
with that of the prior year. Non-cash share based compensation expenses
were $0.9 million in the year ended December 31, 2015 compared to $1.5
million in the year ended December 31, 2014.
Corporate and Administrative Operating Expenses on As-Reported Basis.

Corporate and administrative expenses (before depreciation, amortization and (gain) loss on disposal of assets) increased $5.1 million, or 18%, to $34.3 million for the year ended December 31, 2015 compared to the year ended December 31, 2014. This increase reflects in part the following:





-- Non-compensation expense increased $2.4 million in 2015 primarily due to
increases of $2.3 million in legal and other professional fees primarily
due to professional fees related to the acquisition of the 2015 Acquired
Stations compared to professional fees incurred in 2014 related to the
acquisition of the 2014 Acquired Stations.
-- Compensation expense increased $2.8 million in 2015 primarily due to
increased incentive compensation, relocation costs and routine increases
in salary expense. Non-cash share based compensation expenses were $3.1
million in the year ended December 31, 2015 compared to $3.5 million in
the year ended December 31, 2014.
Detailed table of operating results - As Reported:



Gray Television, Inc.

Selected Operating Data (Unaudited)

(in thousands except for net income per share data)


Three Months Ended Year Ended

December 31, December 31,
------------ ------------


2015 2014 2015 2014
---- ---- ---- ----


Revenue (less agency commissions) $169,487 $177,886 $597,356 $508,134

Operating expenses before depreciation, amortization

and (gain) loss on disposal of assets, net:

Broadcast 101,969 86,386 374,182 285,990

Corporate and administrative 11,030 7,585 34,343 29,203

Depreciation 9,806 8,650 36,712 30,248

Amortization of intangible assets 3,267 3,006 11,982 8,297

(Gain) loss on disposal of assets, net (482) 238 80 623

Operating expenses 125,590 105,865 457,299 354,361
------- ------- ------- -------

Operating income 43,897 72,021 140,057 153,773

Other income (expense):

Miscellaneous income, net 1 9 103 23

Interest expense (18,649) (19,195) (74,411) (68,913)

Loss from early extinguishment of debt - (189) - (5,086)
--- ---- --- ------

Income before income tax 25,249 52,646 65,749 79,797

Income tax expense 10,262 21,393 26,448 31,736

Net income $14,987 $31,253 $39,301 $48,061
======= ======= ======= =======


Basic per share information:

Net income $0.21 $0.54 $0.58 $0.83
===== ===== ===== =====

Weighted-average shares outstanding 71,638 57,874 68,330 57,862
====== ====== ====== ======


Diluted per share information:

Net income $0.21 $0.53 $0.57 $0.82
===== ===== ===== =====

Weighted-average shares outstanding 72,439 58,466 68,987 58,364
====== ====== ====== ======


Political advertising revenue (less agency commissions) $9,213 $48,538 $17,163 $81,975


Revenue related to Olympic broadcasts (less agency

commissions) $ - $ - $ - $3,778


Other Financial Data:



December 31, 2015 December 31, 2014
----------------- -----------------

(in thousands)


Cash $97,318 $30,769

Long-
term
debt
including
current
portion $1,235,537 $1,236,401

Borrowing
availability
under
our
senior
credit
facility $50,000 $50,000


Year Ended December 31,

2015 2014
---- ----

(in thousands)


Net
cash
provided
by
operating
activities $105,614 $134,219

Net
cash
used
in
investing
activities (206,382) (501,892)

Net
cash
provided
by
financing
activities 167,317 384,964

Net
increase
in
cash $66,549 $17,291
======= =======


Guidance for the Quarter Ending March 31, 2016 (the "first quarter of 2016"):

Based on our current forecasts for the first quarter of 2016, we anticipate the changes from the three-months ended March 31, 2015 (the "first quarter of 2015") as outlined below. Our total revenue estimates for the first quarter of 2016 include approximately $30.0 million of revenue and $19.2 million of broadcast operating expense estimated to be contributed by the 2015 Acquired Stations and the stations acquired in the Schurz Acquisition and Related Transactions. We acquired the 2015 Acquired Stations subsequent to March 31, 2015.



Low End % Change High End % Change

Guidance for From Guidance for From Actual

the First Actual First the First Actual First First

Quarter of Quarter of Quarter of Quarter of Quarter of

Selected operating data: 2016 2015 2016 2015 2015
------------------------ ---- ---- ---- ---- ----

(dollars in thousands)

OPERATING REVENUE:

Revenue (less agency commissions) $167,000 25 % $171,000 28 % $133,303


OPERATING EXPENSES

(before depreciation, amortization and

gain or loss on disposals of assets):

Broadcast $110,000 27 % $113,000 30 % $86,847

Corporate and administrative $13,600 99 % $14,600 113 % $6,847


OTHER SELECTED DATA:

Political advertising revenue

(less agency commissions) $7,000 504 % $8,000 590 % $1,159


Comments on First Quarter 2016 Guidance:

Revenue on As-Reported Basis.

Based on our current forecasts for the first quarter of 2016, we anticipate the changes from the first quarter of 2015 as outlined below. Our total revenue estimates for the first quarter of 2016 include approximately $30.0 million of revenue estimated to be contributed by the 2015 Acquired Stations and the stations acquired in the Schurz Acquisition and Related Transactions.


-- We believe our first quarter of 2016 local advertising revenue,
excluding political advertising revenue, will increase within a range of
approximately 17% to 19%.
-- We expect our first quarter of 2016 national advertising revenue,
excluding political advertising revenue, will increase within a range of
approximately 25% to 26%.
-- We anticipate our first quarter of 2016 internet advertising revenue,
excluding political advertising revenue, will increase within a range of
approximately 16% to 17%.
-- We believe our first quarter of 2016 political revenue will be within a
range of approximately $7.0 million to $8.0 million. Our first quarter
of 2015 political revenue was approximately $1.2 million.
-- We believe our first quarter of 2016 retransmission consent revenue will
be within a range of approximately $46.0 million to $47.0 million.
Broadcast Operating Expenses (before depreciation, amortization and gain or loss on disposal of assets) on As-Reported Basis.

For the first quarter of 2016, we anticipate our broadcast operating expenses will increase from the first quarter of 2015, reflecting anticipated increases in payroll and related employee benefits. We anticipate that our broadcast operating expenses will also reflect increases in network fees of approximately $5.4 million. Operating expenses to be incurred collectively by the 2015 Acquired Stations and the stations acquired in the Schurz and Related Transactions in the first quarter of 2016 are expected to be approximately $19.2 million, which includes approximately $1.2 million of network fees.

Corporate and Administrative Operating Expenses (before depreciation, amortization and gain on disposal of assets) on As-Reported Basis.

For the first quarter of 2016, we anticipate our corporate and administrative operating expense will increase to within a range of approximately $13.6 million to $14.7 million, reflecting an anticipated increase from the first quarter of 2015 of approximately $5.8 million in acquisition related expenses. The increase in acquisition related expenses is primarily attributable to the Schurz Acquisition and Related Transactions in the first quarter of 2016.

First Quarter of 2016 on Combined Historical Basis.

Based on our current forecasts for the first quarter of 2016, we anticipate the changes from the first quarter of 2015 on a Combined Historical Basis, as outlined below. For the purposes hereof, our Combined Historical Basis for the first quarter of 2015 has been adjusted to give effect to both the 2015 Acquired Stations and the Schurz Acquisition and Related Transactions.

Revenue on Combined Historical Basis:


-- We believe our first quarter of 2016 total revenue will be within a
range of approximately $180.6 million to $184.6 million (or
approximately +10%).
-- We believe our first quarter of 2016 local advertising revenue,
excluding political advertising revenue, will be within a range of
approximately $85.8 million to $87.8 million (or approximately +3%).
-- We expect our first quarter of 2016 national advertising revenue,
excluding political advertising revenue, will be within a range of
approximately $23.0 million to $24.0 million (or approximately -2%).
-- We anticipate our first quarter of 2016 internet advertising revenue,
excluding political advertising revenue, will be within a range of
approximately $7.5 million to $8.5 million (or approximately +3%).
-- We believe our first quarter of 2016 political revenue will be within a
range of approximately $7.0 million to $8.0 million.
-- We believe our first quarter of 2016 retransmission consent revenue will
be within a range of approximately $50.0 million to $51.2 million (or
approximately +20%).
Broadcast Operating Expenses (before depreciation, amortization and gain or loss on disposal of assets) on Combined Historical Basis:

Our total broadcast operating expenses for the first quarter of 2016 are anticipated to increase from the first quarter of 2015 on a Combined Historical Basis by approximately $10.0 million to approximately $121.4 million. This increase reflects expected increases of $6.5 million in network fees to approximately $25.0 million in the first quarter of 2016. Consistent with our strategy, and the realization of our operating synergies, we believe that our Combined Historical Basis broadcast compensation costs will increase by approximately $3.5 million in the first quarter of 2016 compared to the first quarter of 2015.

Non-GAAP Terms

From time to time, Gray supplements its financial results prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") by disclosing the non-GAAP financial measures Broadcast Cash Flow, Broadcast Cash Flow Less Cash Corporate Expenses, operating cash flow as defined in Gray's Senior Credit Facility ("Operating Cash Flow") and Free Cash Flow. These non-GAAP amounts are used by us to approximate the amount used to calculate a key financial performance covenant contained in our debt agreements. These non-GAAP amounts may also be provided on an As-Reported Basis as well as a Combined Historical Basis.

Broadcast Cash Flow is defined as net income plus loss from early extinguishment of debt, corporate and administrative expenses, broadcast non-cash stock based compensation, depreciation and amortization (including amortization of intangible assets and program broadcast rights), any loss on disposal of assets, any miscellaneous expense, interest expense, any income tax expense, non-cash 401(k) expense less any gain on disposal of assets, any miscellaneous income, any income tax benefits, payments for program broadcast obligations and network compensation revenue.

Broadcast Cash Flow Less Cash Corporate Expenses is defined as net income plus loss from early extinguishment of debt, non-cash stock based compensation, depreciation and amortization (including amortization of intangible assets and program broadcast rights), any loss on disposal of assets, any miscellaneous expense, interest expense, any income tax expense, non-cash 401(k) expense less any gain on disposal of assets, any miscellaneous income, any income tax benefits, payments for program broadcast obligations and network compensation revenue.

Operating Cash Flow is defined in Gray's Senior Credit Facility as net income plus loss from early extinguishment of debt, non-cash stock based compensation, depreciation and amortization (including amortization of intangible assets and program broadcast rights), any loss on disposal of assets, any miscellaneous expense, interest expense, any income tax expense, non-cash 401(k) expense less any gain on disposal of assets, any miscellaneous income, any income tax benefits, payments for program broadcast obligations, network compensation revenue, plus pension expense but less cash contributions to pension plans.

Free Cash Flow is defined as net income plus loss from early extinguishment of debt, non-cash stock based compensation, depreciation and amortization (including amortization of intangible assets and program broadcast rights), any loss on disposal of assets, any miscellaneous expense, amortization of deferred financing costs, any income tax expense, non-cash 401(k) expense, pension expense less any gain on disposal of assets, any miscellaneous income, any income tax benefits, payments for program broadcast obligations, network compensation revenue, contributions to pension plans, amortization of original issue discount on our debt, capital expenditures (net of any insurance proceeds) and the payment of income taxes (net of any refunds received).

These non-GAAP terms are not defined in GAAP and our definitions may differ from, and therefore not be comparable to, similarly titled measures used by other companies, thereby limiting their usefulness. Such terms are used by management in addition to and in conjunction with results presented in accordance with GAAP and should be considered as supplements to, and not as substitutes for, net income and cash flows reported in accordance with GAAP.


Reconciliation on As-Reported Basis - Quarter:

Reconciliation of net income to the non-GAAP terms, in thousands:



Three Months Ended

December 31,
------------

2015 2014 2013
---- ---- ----

Net income $14,987 $31,253 $5,201

Adjustments to reconcile from
net income to

Broadcast Cash Flow Less Cash
Corporate Expenses:

Depreciation 9,806 8,650 6,334

Amortization of intangible
assets 3,267 3,006 296

Non-cash stock based
compensation 1,009 980 255

(Gain) loss on disposal of
assets, net (482) 238 821

Miscellaneous income, net (1) (9) -

Interest expense 18,649 19,195 14,655

Loss from early
extinguishment of debt - 189 -

Income tax expense 10,262 21,393 3,432

Amortization of program
broadcast rights 4,123 3,644 2,875

Common stock contributed to
401(k) plan

excluding corporate 401(k)
contributions 7 7 7

Network compensation revenue
recognized - (113) (145)

Payments for program
broadcast rights (4,018) (3,893) (2,884)

Corporate and administrative
expenses excluding

depreciation, amortization of
intangible assets and

non-cash stock based
compensation 10,240 6,859 5,968
------ ----- -----

Broadcast Cash Flow 67,849 91,399 36,815

Corporate and administrative
expenses excluding

depreciation, amortization of
intangible assets and

non-cash stock based
compensation (10,240) (6,859) (5,968)
------- ------ ------

Broadcast Cash Flow Less Cash
Corporate Expenses 57,609 84,540 30,847

Pension expense 17 1,515 2,162

Contributions to pension
plans (1,505) (2,057) (1,062)

Interest expense (18,649) (19,195) (14,655)

Amortization of deferred
financing costs 798 812 668

Amortization of original
issue (premium) discount

on 7 1/2% senior notes due
2020 (216) (216) 197

Purchase of property and
equipment (8,972) (11,763) (5,612)

Income taxes paid, net of
refunds (86) (40) (1)

Free Cash Flow $28,996 $53,596 $12,544
======= ======= =======


Reconciliation on As-Reported Basis - Year to Date:

Reconciliation of net income to the non-GAAP terms, in thousands:



Year Ended

December 31,
------------

2015 2014 2013
---- ---- ----

Net income $39,301 $48,061 $18,288

Adjustments to reconcile from
net income to

Broadcast Cash Flow Less Cash
Corporate Expenses:

Depreciation 36,712 30,248 24,096

Amortization of intangible
assets 11,982 8,297 336

Non-cash stock based
compensation 4,020 5,012 1,974

Loss on disposal of assets,
net 80 623 765

Miscellaneous income, net (103) (23) -

Interest expense 74,411 68,913 52,445

Loss from early
extinguishment of debt - 5,086 -

Income tax expense 26,448 31,736 13,147

Amortization of program
broadcast rights 14,960 12,871 11,367

Common stock contributed to
401(k) plan

excluding corporate 401(k)
contributions 26 25 28

Network compensation revenue
recognized - (456) (615)

Payments for program
broadcast rights (14,576) (15,087) (11,433)

Corporate and administrative
expenses excluding

depreciation, amortization of
intangible assets and

non-cash stock based
compensation 31,223 25,671 17,836
------ ------ ------

Broadcast Cash Flow 224,484 220,977 128,234

Corporate and administrative
expenses excluding

depreciation, amortization of
intangible assets and

non-cash stock based
compensation (31,223) (25,671) (17,836)
------- ------- -------

Broadcast Cash Flow Less Cash
Corporate Expenses 193,261 195,306 110,398

Pension expense 4,207 6,126 8,626

Contributions to pension
plans (5,421) (6,770) (4,748)

Interest expense (74,411) (68,913) (52,445)

Amortization of deferred
financing costs 3,194 2,970 1,903

Amortization of original
issue (premium) discount

on 7 1/2% senior notes due
2020 (863) (863) (9)

Purchase of property and
equipment (24,222) (32,215) (24,053)

Income taxes paid, net of
refunds (1,761) (401) (519)

Free Cash Flow $93,984 $95,240 $39,153
======= ======= =======


Reconciliation on Combined Historical Basis - Quarter:

Reconciliation of net income to the non-GAAP terms, in thousands:



Three Months Ended

December 31,
------------

2015 2014 2013
---- ---- ----


Net income $14,987 $38,090 $16,128

Adjustments to
reconcile from net
income to Broadcast
Cash

Flow Less Cash
Corporate Expenses:

Depreciation 9,806 8,413 8,642

Amortization of
intangible assets 3,267 2,782 39

Non-cash stock-based
compensation 1,009 980 255

(Gain) loss on disposal
of assets, net (482) (208) 906

Miscellaneous expense
(income), net (1) (3,191) (4,018)

Interest expense 18,649 19,514 19,326

Loss from early
extinguishment of debt - 189 -

Income tax expense 10,262 25,789 7,223

Amortization of program
broadcast rights 4,123 3,644 4,598

Common stock
contributed to 401(k)
plan -

excluding corporate
401(k) contributions 7 7 7

Network compensation
revenue recognized - (113) (145)

Payments for program
broadcast rights (4,018) (3,893) (4,607)

Corporate and
administrative
expenses excluding

depreciation,
amortization of
intangible assets and

non-cash stock-based
compensation 10,240 6,859 5,968

Other (313) 2,281 7,542

Broadcast Cash Flow 67,536 101,143 61,864

Corporate and
administrative
expenses excluding

depreciation,
amortization of
intangible assets and

non-cash stock-based
compensation (10,240) (6,859) (5,968)
------- ------ ------

Broadcast Cash Flow
Less Cash Corporate
Expenses 57,296 94,284 55,896

Pension expense 17 1,515 2,162

Contributions to
pension plans (1,505) (2,057) (1,062)

Other 2,021 476 -
----- --- ---

Operating Cash Flow as
Defined in Senior
Credit Facility 57,829 94,218 56,996

Interest expense (18,649) (19,514) (19,326)

Amortization of
deferred financing
costs 798 812 668

Amortization of net
original issue
discount (premium) .

on 7 1/2% senior notes
due 2020 (216) (216) (215)

Purchase of property
and equipment (8,972) (11,763) (6,683)

Income taxes paid, net
of refunds (86) (40) (1)

Free Cash Flow $30,704 $63,497 $31,439
======= ======= =======


Reconciliation on Combined Historical Basis - Year to Date:

Reconciliation of net income to the non-GAAP terms, in thousands:






Year Ended

December 31,
------------

2015 2014 2013
---- ---- ----


Net income $46,181 $75,852 $39,190

Adjustments to reconcile from
net income to Broadcast Cash

Flow Less Cash Corporate
Expenses:

Depreciation 38,152 35,998 34,748

Amortization of intangible
assets 12,071 8,782 1,336

Non-cash stock-based
compensation 4,020 5,012 1,974

Loss on disposal of assets,
net 138 171 850

Miscellaneous expense
(income), net (37) (69) 360

Interest expense 74,595 75,225 75,339

Loss from early
extinguishment of debt - 5,086 -

Income tax expense 26,691 39,361 18,613

Amortization of program
broadcast rights 14,960 12,871 13,090

Common stock contributed to
401(k) plan

excluding corporate 401(k)
contributions 26 25 28

Network compensation revenue
recognized - (456) (615)

Payments for program
broadcast rights (14,576) (15,087) (13,156)

Corporate and administrative
expenses excluding

depreciation, amortization of
intangible assets and

non-cash stock-based
compensation 31,223 25,671 17,836

Other 4,786 8,806 15,872
-----

Broadcast Cash Flow 238,230 277,248 205,465

Corporate and administrative
expenses excluding

depreciation, amortization of
intangible assets and

non-cash stock-based
compensation (31,223) (25,671) (17,836)
------- ------- -------

Broadcast Cash Flow Less Cash
Corporate Expenses 207,007 251,577 187,629

Pension expense 4,207 6,126 8,626

Contributions to pension
plans (5,421) (6,770) (4,748)

Other 6,488 6,176 -
----- ----- ---

Operating Cash Flow as
Defined in Senior Credit
Facility 212,281 257,109 191,507

Interest expense (74,595) (75,225) (75,339)

Amortization of deferred
financing costs 3,194 2,970 1,903

Amortization of net original
issue discount (premium)

on 7 1/2% senior notes due
2020 (863) (863) (9)

Purchase of property and
equipment (24,222) (32,215) (27,374)

Income taxes paid, net of
refunds (1,761) (401) (519)

Free Cash Flow $114,034 $151,375 $90,169
======== ======== =======


The Company

We are a television broadcast company headquartered in Atlanta, Georgia, that owns and operates television stations and leading digital assets in markets throughout the United States. We own and/or operate television stations in 50 television markets that broadcast approximately 180 separate program streams including 35 channels affiliated with the CBS Network, 26 channels affiliated with the NBC Network, 19 channels affiliated with the ABC Network and 13 channels affiliated with the FOX Network. We own the number-one or number-two ranked television station operations in 49 of those 50 markets. Our stations reach approximately 9.4 percent of total United States television households.

Cautionary Statements for Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act

This press release contains statements that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and the federal securities laws. These "forward-looking statements" are not statements of historical facts, and may include, among other things, statements regarding our current expectations and beliefs of operating results for the first quarter of 2016 or other periods, the impact of recently completed transactions, future expenses and other future events. Actual results are subject to a number of risks and uncertainties and may differ materially from the current expectations and beliefs discussed in this press release. All information set forth in this release is as of February 26, 2016. We do not intend, and undertake no duty, to update this information to reflect future events or circumstances. Information about certain potential factors that could affect our business and financial results and cause actual results to differ materially from those expressed or implied in any forward-looking statements are included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in our Annual Report on Form 10-K for the year ended December 31, 2015 and may be contained in reports subsequently filed with the U.S. Securities and Exchange Commission (the "SEC") and available at the SEC's website at www.sec.gov.

Conference Call Information

We will host a conference call to discuss our fourth quarter operating results on February 26, 2016. The call will begin at 1:00 p.m. Eastern Time. The live dial-in number is 1 (888) 504-7963 and the confirmation code is 4394147. The call will be webcast live and available for replay at www.gray.tv. The taped replay of the conference call will be available at 1 (888) 203-1112, Confirmation Code: 4394147 until March 26, 2016.

Web site: www.gray.tv

Logo - http://photos.prnewswire.com/prnh/20160210/331974LOGO

SOURCE Gray Television, Inc.

Photo:http://photos.prnewswire.com/prnh/20160210/331974LOGO
http://photoarchive.ap.org/
Photo:http://photos.prnewswire.com/prnh/20160210/331974LOGO
http://photoarchive.ap.org/
Gray Television, Inc.

CONTACT: Hilton Howell, President and Chief Executive Officer, (404) 266-5512, or Kevin Latek, Executive Vice President and Chief Legal and Development Officer, (404) 266-8333, or Jim Ryan, Executive Vice President and Chief Financial Officer, (404) 504-9828

Web Site: http://www.gray.tv


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